K. Liu's Week in Review
As we begin to turn the page on another earnings season, a few trends were particularly notable during the third quarter of 2019. First, exposure to the public sector proved beneficial, especially for those doing business with the Federal government. Whereas project funding was an issue in recent years, commentary from companies this time around suggests the seasonal strength typically associated with government spending in Q3 actually materialized. Regarding Europe, the most pronounced impact on results still seems to be from FX headwinds. Not surprisingly, those attributing elongating sales cycles to macro uncertainties most frequently cited the U.K. with Germany also receiving its fair share of mentions. Finally, incremental investments to support growth in 2020 and beyond continue to drive mixed near-term outlooks for many companies, although as we noted in last week’s update, this may also reflect a desire to ensure a steady stream of beats each quarter. With the magnitude of upward revisions to the top line seemingly dwindling each quarter, however, companies may be pressed to exhibit more meaningful operating leverage in the coming year.
Even as the pace of earnings reached a fever pitch, several sizeable strategic acquisitions also commanded headlines. Workday (WDAY) entered into an agreement to purchase Scout RFP, a leading SaaS platform provider focused on strategic sourcing and supplier engagement, for approximately $540 million cash. Scout RFP boasts over 240 customers managing in excess of $38.5 billion in project spend. Workday’s accelerated push into the spend management market may well mark a shot across the bow for investors in category leader Coupa Software (COUP), which traded lower following the news. In the security space, Proofpoint (PFPT) agreed to acquire ObserveIT for $225 million in cash. The acquisition adds endpoint visibility and an insider threat management platform to Proofpoint’s information protection suite. Aside from product integration, which is targeted for completion next year, Proofpoint also plans to transition ObserveIT’s business from a perpetual licensing model to a subscription-based model, resulting in limited billings and revenue contribution in 2020 to offset the acquired company’s annualized expense run rate of just over $40 million.
RealPage (RP), Quotient Technology (QUOT), and HubSpot (HUBS) were all on the tape with both acquisition and earnings announcements this week. In a bid to expand more broadly into the SMB market segment, RealPage is buying Buildium, a SaaS property management solution provider, for $580 million in cash, representing a multiple of approximately 10x projected 2019 revenue. Buildium serves over 17,000 customers with approximately two million residential units under management. By adding a more expansive set of value-added services to Buildium’s current offerings, management believes the company can further penetrate smaller multifamily, single-family, HOA and Condo Associations, and commercial real estate owners collectively estimated to represent 50 million units in the U.S. While the acquisition appears sound strategically, the high price tag coupled with a disappointing Q4 outlook weighed on the stock. On the other hand, Quotient’s shares soared even as management guided Q4 below consensus. Commentary that the three major CPG customers that had pared spending for much of this year are likely to return to growth in 1H ’20, along with indications that significant marketing dollars could shift from free-standing inserts to digital promotions in the near future, boosted sentiment. Quotient also announced plans to acquire Ubimo for $15 million in cash and an earnout of up to $25 million over the next two years. The addition of Ubimo’s demand-side platform is expected to accelerate Quotient’s efforts to develop a self-service solution for marketers to plan, buy and optimize media campaigns directly from an automated platform. No substantial revenue is anticipated in 2020, although Ubimo should be accretive to adjusted EBITDA. Also worth noting, CFO Ron Fior is retiring and will be succeeded by Poly’s (PLT) CFO Pamela Strayer. As for HubSpot (HUBS), the company’s desire to move from a suite offering to a platform play prompted the purchase of PieSync, a real-time data synchronization solution. Revenue contribution from the deal is expected to be nominal, while associated expenses have been incorporated into the company’s Q4 outlook, which reflected an in-line revenue guide and lower earnings relative to Street expectations.
While the majority of reporting companies this week beat expectations for the quarter, only four of the nearly three dozen we tracked also guided the December quarter above consensus. These companies included financial automation software provider BlackLine (BL), cloud contact center solution vendor Five9 (FIVN), and cybersecurity solutions focused CyberArk (CYBR) and Mimecast (MIME). Stamps.com (STMP) also posted a big beat and raised guidance for the year. Those interested in our recap of Stamps.com’s results should take a look at our report, “Q3 ’19 Results Beat; What Can Brown Do For You?” In the public safety space, both Everbridge (EVBG) and Axon Enterprise (AAXN) posted strong results and saw a commensurate bump in shares. Human capital management software vendor Ceridian (CDAY) also outperformed as did SailPoint (SAIL), a security vendor focused on identity governance.
Notable companies in the red this week included Synchronoss Technologies (SNCR), Bandwidth (BAND), and LivePerson (LPSN). At Synchronoss, delays in the ramp up of new cloud customers along with management’s decision to write-off receivables from Sequential Technology International (STI) (and recognize STI revenue as cash is collected in future periods) resulted in a Q3 miss and guide down for the year. Absent the STI impact, management suggested prior FY ’19 expectations would have remained within reach. Turning to Bandwidth, the company’s Q3 ’19 results beat but both CPaaS revenue and Q4 guidance were light. Management noted that Bandwidth’s recent success in securing large strategic customers has yielded more expansive engagements and constrained its service delivery capacity, therefore delaying the time to revenue recognition. As for LivePerson (LPSN), the trailblazer in conversational commerce again delivered upside revenues in Q3 ’19 while falling short on adjusted EBITDA. This time, expenses ran high due to higher than anticipated interest in its customer marketing events, the buildout of its services organization to meet demand, and a renewed focus on the Midmarket and Small Business segment. One early indication that LivePerson remains the leader in messaging is the 30 brands already live on Apple’s recently introduced Chat Suggest, which is akin to IVR-deflection designed to drive usage of Apple Business Chat. Management continues to anticipate an acceleration in top line growth to 20% exiting the year.
In other news, Adobe (ADBE) hosted an Analyst Day during which management presented data showing a total addressable market expected to reach approximately $128 billion by 2022. Prior Q4 revenue and non-GAAP EPS expectations were reaffirmed, while preliminary targets for FY ’20 were set above Street expectations. Enterprise video management vendor Qumu (QUMU) raised net proceeds of $7.1 million, selling approximately 3.2 million shares of common stock in an overnight offering at a price of $2.50 per share, representing a 10.7% discount to the prior day’s close. Finally, RADCOM (RDCM) named Eyal Harari, the company’s COO and CEO of its North American subsidiary, as CEO. He succeeds Yaron Ravkaie who will join RADCOM’s Board of Directors.
Mergers and Acquisitions
HubSpot (HUBS) has acquired PieSync, an Integration Platform as a Service (iPaaS) solution used to sync customer data across applications and other tools in real-time.
Paying HubSpot customers are currently being offered a 25% discount off PieSync Professional.
Proofpoint (PFPT) has agreed to acquire ObserveIT, a leading insider threat management platform, for $225 million in cash.
The acquisition extends Proofpoint’s data loss prevention capabilities, adding endpoint visibility to the company’s email, CASB and data-at-rest solutions.
ObserveIT has historically sold its product under a perpetual licensing model, which Proofpoint plans to transition to a subscription model, and has an annualized expense run rate slightly above $40 million.
Contribution to 2020 billings and revenue is expected to be limited given the transition to a subscription model.
Quotient Signs Definitive Agreement to Acquire Ubimo
Quotient Technology (QUOT) has agreed to acquire Ubimo, a data and media activation company enabling marketers to improve the efficacy of media campaigns, for $15 million in cash and an earnout of up to $25 million.
The acquisition of Ubimo’s demand-side platform (DSP) is expected to accelerate the company’s development of a self-service platform for marketers to plan, buy and optimize media campaigns directly from an automated platform.
No material revenue contribution is anticipated in Q4 or 2020, but Ubimo should be accretive to adjusted EBITDA in 2020.
RealPage (RP) has agreed to acquire Buildium, a SaaS property management solution provider, for $580 million in cash.
Buildium boasts over 17,000 customers with approximately two million residential units under management.
RealPage intends to expand Buildium’s basic screening, payments and Renters Insurance offerings with broader value-added capabilities to further penetrate the SMB segment, which include the smaller multifamily, single-family, HOA and Condo Associations, and commercial real estate markets collectively estimated to represent 50 million units in the U.S.
Buildium generated approximately $50 million in revenue on a TTM basis and is expected to reach $60 million in revenue for 2019, representing growth of 30% Y/Y.
Adjusted EBITDA was $(1.4) million for the TTM period ending September 30, 2019 but should turn positive in Q4.
Workday Announces Intent to Acquire Scout RFP
Workday (WDAY) has signed a definitive agreement to acquire Scout RFP for approximately $540 million in cash.
The acquisition of Scout RFP, a leading cloud-based platform for strategic sourcing and supplier engagement, accelerates the company’s investment and momentum in the spend management market.
Scout RFP is used by over 240 customers managing over $38.5 billion in project spend.
Additional details will be provided during the company’s Q3 ’20 earnings call on Tuesday, December 3, 2019.
Earnings Releases
ANSYS Announces Record Q3 Financial Results With Double-Digit Growth in Revenue and ACV
ANSYS (ANSS) reported Q3 ’19 results above expectations and provided mixed guidance for Q4.
Non-GAAP revenue of $345.5 million (+17.9% Y/Y) exceeded management’s guidance of $320.0-$340.0 million and consensus of $334.0 million. Non-GAAP operating income of $149.7 million (43.3% margin) was well above consensus of $134.4 million. Non-GAAP EPS of $1.42 beat guidance of $1.15-$1.28 and consensus of $1.26.
Strength in Q3 was across-the-board with the Americas sustaining the performance seen throughout the year, Europe bouncing back from a slow 1H and expected to have a robust Q4, and Asia doing well despite muted growth in China.
Key metrics: annual contract value of $290.9 million (+13% Y/Y); deferred revenue and backlog of $650.4 million (+19% Y/Y).
The recent acquisitions of Dynardo and LSTC are expected to add an incremental $10 million in revenue to 2019.
Q4 guidance includes non-GAAP revenue of $454.1-$479.1 million and non-GAAP EPS of $1.87-$2.05, which was mixed relative to consensus of $465.4 million in revenue and $2.07 in non-GAAP EPS.
Avalara Announces Third Quarter 2019 Financial Results
Avalara (AVLR) reported Q3 ’19 results above expectations and provided mixed guidance for Q4.
Revenue of $98.5 million (+40.9% Y/Y) exceeded guidance of $92.5-$93.5 million and consensus of $93.1 million. Non-GAAP operating income was $(2.2) million (-2.2% margin), ahead of management’s $(8.0)-$(7.0) million guidance and consensus of $(7.5) million. Non-GAAP EPS of $(0.01) beat consensus of $(0.08).
Growth was driven by new customer wins across a wide range of industries, segments, and geographies as well as strong customer retention and upsell activity.
Key metrics: billings of $108.5 million (+38% Y/Y); 11,240 (+32% Y/Y) core customers at quarter-end, of which 80 were from the Compli acquisition; net revenue retention rate was 113%.
International expansion remains a key priority with Avalara already providing solutions for complying with global tax regimes like VAT and GST, supporting two of the largest marketplaces in the world with its cross-border commerce offering, and partnering and building other services to help sellers with local fiscal representation where physical presence is required.
As of October 1, 33 states and Washington, D.C. have marketplace facilitator laws in effect, placing the burden on marketplaces to collect and remit sales tax on behalf of all sellers utilizing their platforms, and member states in the EU have agreed to make online marketplaces responsible for charging and collecting VAT for all their non-EU sellers.
Q4 guidance calls for revenue of $99.5-$100.5 million, above consensus of $96.2 million, and non-GAAP operating income of $(8.0)-$(7.0) million, slightly below the Street’s $(6.6) million.
Management’s preliminary outlook for 2020 reflects mid-20% revenue growth, a non-GAAP operating loss margin in the low to mid-single digit range, and modest cash burn, implying revenue ahead of consensus but a higher non-GAAP operating loss versus Street expectations.
Axon Enterprise (AAXN) reported Q3 ’19 results above expectations and guided Q4 mixed versus consensus.
Revenue of $130.8 million (+24.8% Y/Y) exceeded guidance for $120.0-$125.0 million and consensus of $122.7 million. Adjusted EBITDA was $24.0 million (18.4% margin), above the Street’s $22.3 million. Non-GAAP EPS of $0.28 beat consensus by a penny.
Key metrics: annual recurring revenue of $141.5 million (+39% Y/Y); Axon software seats booked totaled 428,600 (+32% Y/Y); Software and Sensors bookings of $128.2 million (+38% Y/Y); future contracted revenue of $1.13 billion (+38% Y/Y).
Approximately one-third of total quarterly bookings, averaging about five years per contract, were tied to some version of the Officer Safety Plan, which includes access to benefits such as TASER 7, Axon Body 3, and a host of Axon cloud services.
Axon Body 3 shipped as planned in September, while an agency-wide deployment of Axon Records, the company’s offering for disrupting the Records Management Systems (RMS) software market, went live at the Fresno Police Department.
Management raised its FY ’19 revenue outlook from $485.0-$495.0 million to $500.0-$510.0 million and reiterated prior adjusted EBITDA expectations for $80.0-$85.0 million, implying Q4 revenue and adjusted EBITDA of $126.0-$136.0 million and $30.4-$35.4 million, respectively, versus consensus of $138.2 million and $31.3 million.
Bandwidth Announces Third Quarter 2019 Financial Results
Bandwidth (BAND) reported Q3 ’19 results above expectations but guided Q4 short of consensus.
Revenue of $60.5 million (+19.9% Y/Y) exceeded guidance of $58.4-$58.9 million and consensus of $58.7 million. Adjusted EBITDA was $(0.6) million (-1.1% margin), above consensus of $(1.9) million. Non-GAAP EPS of $(0.06) beat guidance of $(0.16)-$(0.14) and consensus of $(0.15).
Key metrics: CPaaS revenue of $51.5 million (+24% Y/Y); added 143 net new customers for a total of 1,160 (+39% Y/Y) Active CPaaS customers at quarter-end; dollar-based net retention rate of 116%; free cash flow of $(4.4) million (-7% margin).
While Bandwidth has secured a five-year multimillion-dollar agreement with a Fortune 500 company as well as other strategic customers, the exclusivity for services provided and breadth of these engagements have resulted in delayed revenue ramps.
New messaging products have driven consistent growth, particularly with customers facing challenges in deliverability.
Q4 guidance calls for revenue of $58.4-$58.9 million and non-GAAP EPS of $(0.17)-$(0.15), below consensus of $66.6 million in revenue and $(0.14) in non-GAAP EPS.
For 2020, management anticipates CPaaS revenue growth will accelerate to 22% and believes the company will make strides in returning to profitability in 2021.
BlackLine Announces Third Quarter Financial Results
BlackLine’s (BL) Q3 ’19 results exceeded expectations and management guided Q4 above consensus.
Revenues of $74.9 million (+27.6% Y/Y) exceeded guidance of $71.7-$72.7 million and consensus of $72.3 million. Non-GAAP operating income of $4.6 million (6.1% margin) was above consensus of $1.7 million. Non-GAAP EPS of $0.12 beat guidance of $0.02-$0.04 and consensus of $0.03.
Upside in the quarter was driven by higher retention, deal timing and acceleration in services revenue.
Key metrics: added 87 net new customers for a total of 2,871 at quarter-end; expanded the user base to 244,515; dollar-based net revenue retention rate of 109%; renewal rate of 98%; SAP partnership revenue was 23% of total revenue.
Year-to-date, BlackLine has had over 2,000 enablement touch points at 63 events across 13 countries as part of its partnership with SAP, and the company is seeing more conversations centered around BlackLine as a first step in the S4/HANA journey.
Q4 guidance includes revenue of $77.3-$78.3 million and non-GAAP EPS of $0.12-$0.13, above consensus of $76.6 million in revenue and $0.08 in non-GAAP EPS.
Ceridian Reports Third Quarter 2019 Results
Ceridian HCM Holding (CDAY) reported Q3 ’19 results above expectations and provided mixed guidance for Q4.
Revenue of $202.3 million (+13.6% Y/Y) exceeded guidance of $195.0-$197.0 million and consensus of $196.5 million. Adjusted EBITDA was $46.4 million (22.9% margin), also exceeding guidance of $41.0-$43.0 million and consensus of $42.6 million. Non-GAAP EPS of $0.11 beat consensus of $0.10.
Dayforce revenue was $143.7 million (+30.2% Y/Y), including recurring revenue of $109.4 million (+32.6% Y/Y), while Cloud revenue was $165.5 million (+25.7% Y/Y).
Key metrics: added 163 net new Dayforce customers for a total of 4,169 (+20% Y/Y); Dayforce revenue per customer was $127,201 (+7% Y/Y constant currency) on a TTM basis.
The acquisition of RITEQ added 325 customers in the ANZ region that the company can move to Dayforce, and management believes its strategy of acquiring a solid customer base to migrate to Dayforce along with localized knowledge to enhance the Dayforce offering can be replicated across the globe to accelerate international expansion.
Management raised its FY ’19 revenue guidance to $822.0-$825.0 million and reaffirmed its adjusted EBITDA guidance of $182.0-$187.0 million, implying Q4 revenue and adjusted EBITDA of $219.7-$222.7 million and $41.8-$46.8 million, respectively, which was mixed versus consensus of $217.5 million and $49.6 million.
CFO Arthur Gitajn plans to retire at the end of 2020 and a search is underway for his replacement.
ChannelAdvisor Reports Third Quarter 2019 Results; Adjusted EBITDA Significantly Exceeds Guidance
ChannelAdvisor’s (ECOM) Q3 ’19 results beat on the bottom line but Q4 was guided short of consensus.
Revenue was $31.7 million (-2.0% Y/Y), within guidance of $31.5-$32.0 million and in line with consensus. Adjusted EBITDA was $5.2 million (16.3% margin), exceeding guidance of $4.0-$4.5 million and consensus of $4.2 million. Non-GAAP EPS of $0.12 beat consensus of $0.09.
Both EMEA and Australia saw strong double-digit revenue growth on a constant currency basis, reflecting solid execution against bookings and churn targets with brands.
Domestic bookings improved modestly on a sequential basis but revenues were still down Y/Y, and management noted that the U.S. remains the primary area of focus for improvement, which is being addressed initially with a ramp in sales capacity.
Key metrics: total customer count was 2,718 (-3.4% Y/Y); average revenue per customer (ARPC) on a TTM basis was $47,005 (+2.0% Y/Y); brands comprised 20% of the customer base at quarter-end.
Gross Merchandise Value (GMV) on Amazon is now more than double that of eBay, which declined Y/Y, while other marketplaces like Rakuten U.S. and Target Plus performed well.
Q4 guidance includes revenue of $33.8-$34.8 million and adjusted EBITDA of $7.2-$7.7 million, shy of the Street’s $34.9 million and $7.9 million estimates for revenue and adjusted EBITDA, respectively.
Cornerstone OnDemand Announces Third Quarter 2019 Financial Results
Cornerstone OnDemand (CSOD) reported Q3 ’19 results above expectations and guided Q4 in line with consensus.
Revenue of $145.0 million (+8.2% Y/Y) was above guidance for $141.0-$143.0 million and consensus of $142.1 million. Non-GAAP operating income was $24.3 million (16.7% margin), exceeding consensus of $21.2 million. Non-GAAP EPS of $0.31 beat consensus of $0.27.
Q3 results reflected success in the public sector where several large deals were secured and in the small and medium-sized business segment, partially offset by a soft Q3 for enterprise, which experienced some deal slippage.
The majority of the slipped deals have since closed and the rest should be secured by year-end.
Key metrics: added 41 net new clients for a total of 3,645 (+6% Y/Y) at quarter-end; $21.7 million (15% margin) in unlevered free cash flow; annual dollar retention rate has declined of late due to strong multi-year signings in prior years.
Management sees a massive opportunity to sell both content and its broader talent management tools into the existing base.
Guidance for Q4 calls for revenue of $145.1-$147.1 million and non-GAAP operating income of $25.1-$27.1 million, in line with consensus of $145.9 million and $25.1 million, respectively.
Management raised its FY ’19 annual recurring revenue (ARR) guidance from $579.5-$589.5 million to $581.0-$590.0 million and increased the low-end of its unlevered free cash flow guidance from $85.0-$92.0 million to $86.0-$92.0 million.
For 2020, management anticipates subscription revenue growth in the teens and professional services growth of $5.0-$10.0 million per quarter.
The company also remains on track to achieve the Rule of 40 in 2020 with unlevered free cash flow margin accounting for more of the contribution, resulting in expectations for approximately $150 million in unlevered free cash flow next year.
CyberArk Announces Strong Third Quarter 2019 Results
CyberArk’s (CYBR) Q3 ’19 results beat expectations and management guided Q4 above consensus.
Revenue of $108.1 million (+27.7% Y/Y) exceeded management’s $102.0-$104.0 million guidance and consensus of $103.1 million. Non-GAAP operating income of $29.4 million (27.2% margin) also exceeded guidance of $21.8-$23.3 million and consensus of $22.6 million. Non-GAAP EPS of $0.65 beat guidance of $0.45-$0.48 and consensus of $0.47.
In Q3, CyberArk achieved record revenue in the Americas, a record for Endpoint Privilege Manager (EPM) SaaS bookings, and record business in the government vertical.
The company now has over 400 channel partners and advisory firms extending its go-to-market reach.
Key metrics: signed 200 new customers bringing the total count to over 5,000; 65% of revenue in Q3 was from the channel.
Despite macro headlines regarding Europe, Q4 is off to a strong start in EMEA.
Q4 guidance includes revenue of $125.0-$127.0 million, non-GAAP operating income of $38.5-$40.0 million, and non-GAAP EPS of $0.78-$0.82, all of which exceeded consensus of $123.2 million, $32.8 million, and $0.68, respectively.
Dropbox Announces Fiscal 2019 Third Quarter Results
Dropbox (DBX) reported Q3 ’19 results ahead of expectations.
Revenue of $428.2 million (+18.8% Y/Y) was above guidance for $421.0-$424.0 million and consensus of $423.5 million. Non-GAAP operating income was $56.0 million (13.1% margin), exceeding management’s guidance for an 11%-12% margin and consensus of $49.9 million. Non-GAAP EPS of $0.13 beat consensus of $0.11.
Strong adoption of premium, professional, and advanced plans by paying users and the repricing and repackaging of its Plus SKU drove expansion in average revenue per paying user (ARPU).
Key metrics: paying users totaled $14.0 million (+14% Y/Y); ARPU was $123.15 (+4% Y/Y); free cash flow was $102.5 million (23.9% margin).
Early indications from the rollout of the new Dropbox have been positive with the new foreground experience increasing user engagement with features like the face file and driving solo users to take more collaborative actions.
As the company has now moved into its new headquarters, Q3 was the last quarter in which duplicative expenses from its old and new facilities were reflected in operating expenses.
Guidance for Q4 calls for revenue of $442.0-$444.0 million and a non-GAAP operating margin of 14%-15% (implies non-GAAP operating income of $61.9-$66.6 million), comparing favorably versus consensus of $442.0 million in revenue and $62.8 million in non-GAAP operating income.
eGain Reports SaaS Revenue Growth of 30% Year over Year in Q1 2020
eGain (EGAN) reported Q1 ’20 results above expectations and reiterated guidance for FY ’20.
Revenue of $17.2 million (+9.5% Y/Y) was at the high-end of management’s guidance and ahead of consensus of $17.0 million. Non-GAAP operating income was $1.6 million (9.4% margin), above consensus of $0.7 million. Non-GAAP EPS of $0.05 beat guidance of $0.02-$0.03 and consensus of $0.02.
eGain saw nice bookings in the quarter driven by a healthy mix of new customers and expansion opportunities.
Key metrics: SaaS revenue of $12.4 million (+29.6% Y/Y) was above guidance for $11.8-$12.1 million; TTM SaaS retention rates remained in the low- to mid-90% range on a gross basis while net retention was in excess of 100%.
Pipeline growth is benefiting from increased sales investments in channel-led growth.
Management anticipates less of a seasonal impact in Q2 than last year as an increase in base-level business and the evolution of certain agreements will reduce overages that boosted results in the year-ago period.
Q2 guidance includes revenue of $17.2-$17.7 million, below consensus of $18.7 million, and non-GAAP EPS of $0.01-$0.02, in line with consensus of $0.02.
Management reaffirmed prior FY ’20 guidance for $72.0-$73.6 million in revenue and $0.00-$0.06 in non-GAAP EPS.
Management expects legacy revenue to comprise less than 10% of revenue by the end of 2020.
Everbridge Announces Third Quarter 2019 Financial Results
Everbridge (EVBG) reported Q3 ’19 results above expectations and guided Q4 ahead of consensus.
Revenue was $52.5 million (+35.0% Y/Y), above management’s $51.3-$51.6 million guidance and consensus of $51.4 million. Adjusted EBITDA was $1.6 million (3.1% margin), slightly above the high-end of guidance and ahead of the Street’s $1.4 million. Non-GAAP EPS of $(0.04) beat guidance of $(0.06)-$(0.05) and consensus of $(0.05).
The core business, specifically Mass Notification, delivered record results in Q3, while demand continued to build for both the Critical Event Management suite in North America and the population warning solution in International markets.
Key metrics: added 184 net new customers, including 30 from the NC4 acquisition, for a total of 4,851 (+14% Y/Y) customers at quarter-end; 29 deals valued at over $100,000; average selling price over the past 12 months of $75,000 (+36% Y/Y); dollar-based net retention rate over 110%.
The acquisition of NC4 contributed approximately $2.0 million to revenue in Q3, exceeding management’s expectation, and is expected to contribute $4.5 million for the year and approximately $10.0-$12.0 million in 2020.
With the recent countrywide alerting wins and even larger European Union opportunities to come, the company remains well positioned for robust growth going forward.
Guidance for Q4 includes revenue of $56.1-$56.4 million, adjusted EBITDA of $4.9-$5.2 million, and non-GAAP EPS of $0.04-$0.05, all exceeding consensus of $55.8 million in revenue, $4.3 million in adjusted EBITDA and $0.03 in non-GAAP EPS.
Fastly Announces Third Quarter 2019 Financial Results
Fastly (FSLY) reported Q3 ’19 results above expectations and guided Q4 in line with consensus.
Revenue of $49.8 million (+35.2% Y/Y) was above guidance of $47.0-$49.0 million and consensus of $48.1 million. Non-GAAP operating income was $(8.9) million (-17.9% margin), above guidance for $(13.0)-$(11.0) million and consensus of $(12.2) million. Non-GAAP EPS of $(0.09) beat guidance of $(0.15)-$(0.12) and consensus of $(0.13).
The strong results continue to be driven by adoption of the company’s edge cloud platform.
Key metrics: added 12 enterprise customers for a total of 274; average enterprise customer spend of $575,000; dollar-based net expansion rate of 135%; total customer count was 1,684.
Fastly recently announced its next-generation serverless offering: ComputeEdge, a language-agnostic compute environment built for scale and performance, which includes tooling to support Rust in addition to Varnish Configuration Language.
Q4 guidance calls for revenue of $52.5-$56.5 million, non-GAAP operating income of $(13.0)-$(9.0) million, and non-GAAP EPS of $(0.13)-$(0.10), in line with consensus of $53.0 million, $(10.7) million, and $(0.11), respectively.
Five9 Reports Third Quarter Revenue Growth of 28% to a Record $83.8 Million
Five9 (FIVN) reported Q3 ’19 results above expectations and guided Q4 ahead of consensus.
Revenue of $83.8 million (+28.3% Y/Y) exceeded guidance of $78.0-$79.0 million and consensus of $78.9 million. Adjusted EBITDA of $15.0 million (18.0% margin) also surpassed consensus of $12.0 million. Non-GAAP EPS of $0.20 beat guidance of $0.14-$0.15 and consensus of $0.15.
In Q3, enterprise bookings exhibited strong growth and reached record levels for a quarter, the pipeline also reached new highs, and deal sizes continued to get larger with over 60% of opportunities influenced by partners.
Key metrics: Enterprise subscription revenue +36% on a TTM basis; Commercial subscription revenue grew single-digits on a TTM basis; dollar-based retention was 107% for the TTM period ending in Q3.
Management believes recent changes to the unified communications landscape have the potential to accelerate decisions to upgrade to Five9’s cloud-based contact center solutions.
Investments made in product and go-to-market leave the company well positioned to sustain 30% growth in enterprise subscription revenue for years to come.
Q4 guidance calls for revenue of $86.0-$87.0 million and non-GAAP EPS of $0.21-$0.23, above consensus of $83.2 million and $0.21, respectively.
Management expressed comfort with FY ’20 consensus expectations for $368.2 million in revenue and $0.85 in non-GAAP EPS but noted that Street expectations for Q1 failed to account for typical sequential declines in non-GAAP net income.
GoDaddy Reports Third Quarter 2019 Earnings Results
GoDaddy (GDDY) reported mixed Q3 ’19 results and narrowed its guidance ranges for FY ’19.
Revenue of $760.5 million (+11.9% Y/Y) was within guidance of $755.0-$765.0 million but shy of the Street’s $761.4 million estimate. Operating income of $91.4 million was well above consensus of $61.0 million. EPS of $042 beat consensus of $0.21.
The company is making progress on its shift from an infrastructure focused company to a customer-led software company.
Credit card abuse added a point to total bookings but nets out in refunds, so neither net bookings nor revenue are impacted.
Key metrics: total bookings of $851.0 million (+15% Y/Y); total customers of 19,110 (+5% Y/Y) at quarter-end; ARPU of $155 (+7% Y/Y); unlevered free cash flow of $191.3 million (25% margin).
Priorities heading into 2020 include delivering a stronger platform, increasing the pace of experimentation, and accelerating the delivery of product experiences and outcomes that benefit customers.
Management narrowed its FY ’19 revenue and unlevered free cash flow guidance from $2.97-$3.00 billion and $730.0-$745.0 million, respectively, to $2.98-$2.99 billion, and $730.0-$740.0 million.
HubSpot Reports Q3 2019 Results
HubSpot (HUBS) beat expectations in Q3 but provided a mixed outlook for Q4.
Revenue of $173.6 million (+31.7% Y/Y) exceeded management’s $168.0-$169.0 million guidance and consensus of $168.9 million. Non-GAAP operating income was $10.5 million (6.1% margin), above guidance of $8.0-$9.0 million and consensus of $8.7 million. Non-GAAP EPS of $0.32 beat guidance of $0.22-$0.24 and consensus of $0.24.
Key metrics: total customers of 68,803 (+31% Y/Y); average subscription revenue per customer of $9,992 (+0.3% Y/Y); free cash flow of $6.7 million (4% margin).
Over the past year, HubSpot has ramped investments in engineering to ensure its suite is more reliable, more secure, and faster to use, resulting in over 25,000 multi-hub customers.
With the acquisition of PieSync, HubSpot is aiming to move from a suite company to a platform company.
PieSync is not expected to contribute much revenue in Q4 but will have a slightly more meaningful impact on operating expenses, which has been accounted for in guidance.
Q4 guidance includes revenue of $180.3-$181.3 million, in line with consensus of $180.8 million, and non-GAAP operating income and EPS of $17.1-$18.1 million and $0.40-$0.42, respectively, below consensus of $19.3 million and $0.44.
LivePerson Announces Third Quarter 2019 Financial Results
LivePerson (LPSN) reported mixed Q3 ’19 results and provided a mixed outlook for Q4.
Revenue was $75.2 million (+17.1% Y/Y), slightly above the high-end of management’s $74.0-$75.0 million guidance and consensus of $74.6 million. Adjusted EBITDA was $(6.3) million (-8.4% margin), below guidance for $0-$3.0 million and consensus of $1.5 million. Non-GAAP EPS of $(0.21) mixed consensus of $(0.06).
Key metrics: signed 154 (+47% Y/Y) deals, including 77 new and 77 existing customer contracts; TTM average revenue per enterprise and mid-market customer was $330,000 (+21% Y/Y); revenue retention remains between 105% and 115%.
Adoption of AI is driving platform usage as evidenced by average revenues per user for messaging brands with AI nearly doubling that of customers without AI.
LivePerson has over 30 brands live on Chat Suggest, an option for brands to redirect consumers to Apple Business Chat in lieu of making a phone call, and management estimates LivePerson has launched 4x more brands than any other Apple partner.
Due to higher than anticipated interest in its customer events, the buildout of service delivery teams, and a renewed focus on the Midmarket and Small Business segment, expenses were approximately $6.0 million higher than planned in Q3.
LivePerson ended Q3 with 95 quota carrying reps versus 50 last year and remains on track to reach 100 by year-end.
Q4 guidance calls for revenue of $77.0-$80.0 million and adjusted EBITDA of $0-$3.0 million, which was mixed versus Street expectations for $78.8 million in revenue and $9.3 million in adjusted EBITDA.
Management continues to anticipate an acceleration in revenue growth to at least 20% in 2020.
Mimecast Announces Second Quarter 2020 Financial Results
Mimecast (MIME) reported Q2 ’20 results above expectations and raised guidance for FY ’20.
Revenue of $103.4 million (+25.8% Y/Y) was above management’s $101.1-$102.2 million guidance and consensus of $101.7 million. Adjusted EBITDA was $20.0 million (19.3% margin), exceeding guidance of $17.6-$18.6 million and consensus of $17.9 million. Non-GAAP EPS of $0.13 beat consensus of $0.10.
Key metrics: added 800 net new customers for a total of 36,100 at quarter-end; revenue retention rate of 110%; average order value stands at $11,700 (+14% constant currency); free cash flow of $4.0 million (3.8% margin).
Mimecast continued to see success with larger accounts in Q3, closing 30 transactions over six figures.
Q3 guidance includes revenue of $107.4-$108.5 million, above consensus of $106.6 million, and adjusted EBITDA of $17.7-$18.7 million, below consensus of $19.2 million.
Management raised its FY ’20 revenue and adjusted EBITDA guidance from $414.0-$422.6 million and $71.6-$73.6 million, respectively, to $420.8-$425.3 million and $72.9-$74.4 million.
Model N Announces Fourth Quarter and Fiscal Year 2019 Financial Results
Model N (MODN) reported Q4 ’19 results above expectations and guided FY ’20 in line with Street expectations.
Revenues of $36.6 million (-0.3% Y/Y) were above management’s $35.5-$35.9 million guidance and consensus of $35.8 million. Non-GAAP operating income was $4.8 million (13.2% margin), also above guidance of $3.2-$4.2 million and consensus of $4.1 million. Non-GAAP EPS of $0.12 beat guidance of $0.06-$0.10 and consensus of $0.08.
The company’s decision to focus on its two core vertical markets, life sciences and high tech, has paid dividends, and the realignment of sales teams, build-out of a customer success function, simplified delivery model via templated implementations, and executive additions provides a foundation for profitable growth in the coming years.
Entering FY ’20, visibility is healthy with subscription revenue expected to increase approximately 20% while maintenance declines at a single-digit rate; the migration of the remaining 20 customers from older cloud environments will have a one-time impact on expenses.
Management’s Q1 guidance calls for revenues of $37.0-$37.4 million, non-GAAP operating income of $2.9-$3.3 million, and non-GAAP EPS of $0.05-$0.07, comparing favorably with consensus of $36.7 million, $2.9 million, and $0.05, respectively.
For FY ’20, management’s guidance for $152.0-$155.0 million in revenue, $11.0-$14.0 million in non-GAAP operating income, and $0.22-$0.31 in non-GAAP EPS was consistent with Street expectations for $152.8 million in revenue, $9.4 million in non-GAAP operating income, and $0.28 in non-GAAP EPS.
New Relic Announces Second Quarter Fiscal Year 2020 Results
New Relic (NEWR) reported Q2 ’20 results above expectations and raised its non-GAAP EPS guidance for FY ’20.
Revenue of $145.8 million (+26.9% Y/Y) was just above the high-end of guidance and ahead of the Street’s $143.4 million. Non-GAAP operating income was $11.2 million (7.6% margin), exceeding management’s $5.0-$6.0 million guidance and consensus of $5.5 million. Non-GAAP EPS of $0.24 also beat guidance of $0.14-$0.16 and consensus of $0.15.
Management believes the company has executed well on the strategic imperatives discussed in the prior earnings call, extensibility and programmability, and is now focused on driving better results from the go-to-market organization.
Key metrics: 906 (+15% Y/Y) $100K+ Paid Business Accounts; 62% of ARR from Enterprise Paid Business Accounts versus 56% a year ago; dollar-based net expansion rate of 112% versus 124% in the prior quarter.
Ending deferred revenue was lower than anticipated due to aggressive modeling assumptions, slightly lower sales attainment, and an in-quarter invoicing change from a million-dollar account.
New Relic added over 150 net new hires in the quarter, although the start dates were fairly back-end loaded.
Key initiatives in 2H ’20 include enabling the field to sell the open, connected and programmable platform, increasing the productivity of the customer solutions group, and further differentiating the company’s observability platform.
Q3 guidance calls for revenue and non-GAAP operating income of $148.0-$150.0 million and $3.0-$4.0 million, respectively, in line with consensus of $149.0 million and $3.1 million, and non-GAAP EPS of $0.12-$0.13, above consensus of $0.10.
Management raised the low-end of its FY ’20 revenue and non-GAAP operating income guidance, which now stands at $588.0-$593.0 million and $21.0-$25.0 million, respectively, and raised its non-GAAP EPS guidance from $0.55-$0.63 to $0.60-$0.67.
Pega Cloud ACV Grows 51% in the First Three Quarters of 2019
Pegasystems (PEGA) reported mixed Q3 ’19 results.
Revenue of $216.7 million (+6.6% Y/Y) was in line with consensus. Non-GAAP operating income was $(23.9) million (-11.0% margin), well below consensus of $(3.6) million. Non-GAAP EPS of $(0.23) missed consensus of $(0.05).
The government vertical was a source of strength in the quarter.
Key metrics: Total annual contract value (ACV) of $634.4 million (+18.2% Y/Y), comprised of Client Cloud ACV of $488.8 million (+11.5% Y/Y) and Pega Cloud ACV of $145.5 million (+48.0% Y/Y); remaining performance obligations of $608.6 million (+16.5% Y/Y).
Pega has been increasing its sales capacity and management is pleased with the early returns given the corresponding impact to pipeline growth.
Investments in go-to-market are on pace with the company’s original expectations while investment in Pega Cloud has increased faster than anticipated due to greater adoption of Pega Cloud.
Heading into 2020, the company is about midway through its cloud transition, which implies the optics around the business begin to improve over the next two years before normalizing in 2022.
Quotient Technology Inc. Reports Third Quarter 2019 Financial Results
Quotient Technology (QUOT) reported Q3 ’19 results above expectations but guided Q4 below consensus.
Revenue of $114.8 million (+10.8% Y/Y) exceeded management’s $108.0-$112.0 million guidance and consensus of $109.7 million. Adjusted EBITDA was $13.6 million (11.8% margin), slightly above the high-end of management’s guidance and ahead of consensus of $11.7 million. EPS of $(0.12) fell short of consensus of $(0.09).
Growth in retailer-specific paperless coupons nearly doubled versus the prior year, while national coupons (excluding digital print) continued to decline due to spend reductions from three large CPGs.
Following strong campaign results, the three large CPGs referenced previously are now in discussions for the full breadth of Quotient’s platform, and management anticipates a return to growth from these customers in 1H 2020.
Over the past quarter, retailers and CPGs have also started planning for the shift of significant sums from free-standing inserts into digital engagement with some Quotient RPM retailers requiring CPGs to commit up to 1.5% of their gross sales to be spent on digital marketing and merchandising.
Q4 guidance includes revenue of $107.4-$111.4 million and adjusted EBITDA of $9.3-$11.3 million, below consensus expectations for $114.2 million in revenue and $12.6 million in adjusted EBITDA.
Between the promotion growth anticipated in 2020 and the utilization of Ubimo’s technology, management anticipates five to six points of improvement in gross margin at some point next year.
Current Chief Financial Officer Ron Fior plans to retire at year-end and will be succeeded by Pamela Strayer, who joins the company from Poly (PLT) where she also served as Chief Financial Officer, effective November 11, 2019.
RADCOM Reports Third Quarter 2019 Results
RADCOM (RDCM) posted a top line beat in Q3 ’19 and raised the low-end of its FY ’19 revenue guidance.
Revenues of $9.4 million (+10.2% Y/Y) exceeded consensus of $8.5 million. Non-GAAP operating income was $(1.1) million (-12.2% margin), consistent with consensus of $(1.2) million. Non-GAAP EPS of $(0.07) were a penny below consensus.
Growth in the quarter reflected the addition of Rakuten Mobile as a significant strategic customer as well as strong relationships with existing clients.
In October, RADCOM signed an agreement with VimpelCom, a top tier operator in Russia with over 50 million customers.
The company is seeing more pipeline activity and discussions with customers around the 5G evolution.
Management raised the low-end of its prior FY ’19 revenue guidance, which now calls for $31.0-$33.0 million in revenue, implying Q4 revenue of $7.0-$9.0 million versus consensus of $8.7 million.
Even without any new business, the company’s current backlog supports expectations for further growth in 2020.
Radware Announces Third Quarter 2019 Earnings
Radware (RDWR) beat on the bottom line in Q3 ’19 and provided a mixed outlook for Q4 relative to consensus.
Revenues of $62.9 million (+7.0% Y/Y) were within guidance of $62.0-$64.0 million and in line with consensus. Non-GAAP operating income of $9.2 million (14.6% margin) exceeded consensus of $6.7 million. Non-GAAP EPS of $0.25 beat guidance of $0.16-$0.18 and consensus of $0.17.
Growth in the quarter was driven by EMEA and APAC, which offset a high single-digit decline in the Americas; strong enterprise growth of 13% Y/Y offset a 6% decline in revenues from carrier customers.
Gross margin continues to trend up reflecting both product mix and an increasing proportion of subscription revenues.
In Q3, management had planned for higher investment in sales and marketing expenses, including more sales force hiring than ultimately achieved, which resulted in better than anticipated operating leverage.
While EMEA has generally performed in line with expectations, business in the U.K. and Germany has declined, and management expects to deliver stronger results in the U.S. as it ramps investments in growth.
Guidance for Q4 includes revenue of $67.0-$68.0 million and non-GAAP EPS of $0.23-$0.24, which was mixed versus Street expectations for $68.9 million in revenue and $0.22 in non-GAAP EPS.
Rapid7 Announces Third Quarter 2019 Financial Results
Rapid7 (RPD) delivered Q3 ’19 results above expectations but provided mixed guidance for Q4.
Revenue of $83.2 million (+33.3% Y/Y) exceeded management’s $79.2-$80.8 million guidance and consensus of $80.2 million. Non-GAAP operating income was $0.5 million (0.7% margin), ahead of guidance for $(2.5)-$(1.5) million and consensus of $(1.8) million. Non-GAAP EPS of $0.01 beat guidance of $(0.04)-$(0.02) and consensus of $(0.02).
Accelerating customer growth and contribution from all platform products amidst a good demand environment drove the strong performance in Q3.
Key metrics: 8,625 (+17% Y/Y) customers at quarter-end; annualized recurring revenue (ARR) of $310.2 million (+43% Y/Y); ARR per customer of $36.0 (+22% Y/Y); renewal rate of 111% versus 118% a year ago.
Q4 guidance calls for revenue of $87.4-$89.0 million, non-GAAP operating income of $(1.6)-$(0.6) million, and non-GAAP EPS of $(0.02) to breakeven, which was mixed versus Street expectations for $87.4 million in revenue, $1.5 million in non-GAAP operating income, and $0.04 in non-GAAP EPS.
RealPage Reports Third Quarter 2019 Financial Results
RealPage (RP) reported solid Q3 ’19 results and guided Q4 slightly below consensus.
Non-GAAP revenue of $255.2 million (+13.3% Y/Y) was just above the high-end of guidance and above consensus of $254.3 million. Adjusted EBITDA of $72.1 million (28.3% margin) was at the midpoint of management’s guidance and in line with consensus of $72.0 million. Non-GAAP EPS of $0.45 was also at the midpoint of guidance and in line with consensus.
Key metrics: Non-GAAP On Demand revenue was $245.7 million (+13.8% Y/Y); ending on demand units of 16,779 (+4.4% Y/Y); annual client value (ACV) of $990,800 (+11.7% Y/Y); revenue per unit (RPU) of $59.05 (+7.0% Y/Y).
While innovations in RealPage’s Leasing and Marketing suite have received positive early feedback, management believes it will take longer than originally anticipated for clients to adopt its newer solutions, which combined with pressure in the utility management business is weighing on the outlook.
Q4 guidance calls for non-GAAP revenue and adjusted EBITDA of $250.0-$252.0 million and $74.0-$76.0 million, respectively, below consensus of $258.7 million and $77.4 million, and non-GAAP EPS of $0.47-$0.49, in line with consensus of $0.48.
For 2020, management anticipates making further strides towards the Rule of 40 with gains anticipated to come more so from organic growth; the acquisition of Buildium is expected to be neutral to the company’s progress in this regard.
RingCentral Announces Third Quarter 2019 Results
RingCentral (RNG) reported Q3 ’19 results above expectations and guided Q4 above consensus.
Revenue of $233.4 million (+34.2% Y/Y) exceeded guidance of $220.0-$222.0 million and consensus of $221.3 million. Non-GAAP operating income was $21.7 million (9.3% margin), above consensus of $20.4 million. Non-GAAP EPS of $0.22 beat guidance of $0.18-$0.20 and consensus of $0.19.
RingCentral closed a record level of $1 million-plus TCV wins, a positive sign given that Q3 tends to be seasonally slower.
Annualized exit monthly recurring subscriptions (ARR) totaled $881 million (+31% Y/Y).
RingCentral Office ARR was $800 million (+35% Y/Y); Mid-market and Enterprise ARR was $426 million (+61% Y/Y); Enterprise ARR was $259 million (+77% Y/Y); Channel ARR was $263 million (+63% Y/Y).
The company has expanded its relationship with AT&T, which will offer AT&T Office@Hand powered by RingCentral as its lead UCaaS solution, and the companies will also jointly develop global capabilities and technologies to further integrate with AT&T’s network.
Guidance for Q4 calls for revenue of $238.0-$240.0 million, a non-GAAP operating margin of 9.6%, and non-GAAP EPS of $0.21, comparing favorably versus Street expectations for $237.4 million in revenue, $22.8 million in non-GAAP operating income, and $0.21 in non-GAAP EPS.
SailPoint Announces Third Quarter 2019 Financial Results
SailPoint Technologies Holdings (SAIL) beat expectations for Q3 ’19 and provided mixed guidance for Q4.
Revenue of $75.9 million (+15.4% Y/Y) exceeded management’s $69.5-$71.0 million guidance and consensus of $70.5 million. Non-GAAP operating income was $9.0 million (11.9% margin), also exceeding guidance of $3.0-$3.5 million and consensus of $3.3 million. Non-GAAP EPS of $0.07 beat guidance and consensus of $0.02.
In Q3, the company continued to see significant interest in identity governance, strong support from its partner ecosystem, solid performance from its U.S. business, and strong growth in SaaS bookings.
License revenue was above expectations due to improved execution in the U.S., including a few deals expected to close in Q4 that were pulled into Q3.
Maintenance continues to represent the majority of dollar growth in subscription revenue but is being bolstered by increasing contribution from faster growing SaaS subscriptions.
Q4 guidance calls for revenue of $84.5-$86.0 million, in line with consensus of $85.8 million, and non-GAAP operating income and EPS of $10.0-$11.0 million and $0.07-$0.08, respectively, below consensus of $16.2 million and $0.12.
Shutterstock Reports Third Quarter 2019 Financial Results
Shutterstock (SSTK) posted mixed Q3 ’19 results and reaffirmed prior expectations for FY ’19.
Revenue of $159.1 million (+5.0% Y/Y) was below consensus of $161.8 million. Adjusted EBITDA was $21.6 million (13.6% margin), above consensus of $19.4 million. Non-GAAP EPS of $0.29 beat consensus of $0.18.
Shutterstock continues to focus on operational improvements to enhance its platform in order to address its customers’ changing needs, and management indicated that steady progress has been made in evaluating its enterprise channel and sustaining strong growth in the e-commerce business.
E-commerce revenue was $96.2 million (+8.5% Y/Y), while Enterprise revenue was $62.8 million (-0.2% Y/Y).
Key metrics: paid downloads of 46.3 million (+5% Y/Y); revenue per download of $3.40 (flat Y/Y); approximately 297 million (+34% Y/Y) images collected and approximately 16 million (+33% Y/Y) clips in the video collection.
Key initiatives to drive growth include a new go-to-market approach with large accounts, rebuilding the SMB pipeline, extending the platform and API solutions in the enterprise, scaling custom and editorial offerings, and increasing engagement and retention in the e-commerce business.
Higher marketing and customer acquisitions costs as well as investments in infrastructure depressed profitability versus the year ago period.
The search for Shutterstock’s next Chief Financial Officer is going well.
Management reiterated prior FY ’19 guidance for $645.0-$670.0 million in revenue and $93.0-$107.0 million in adjusted EBITDA, implying Q4 revenue and adjusted EBITDA of $160.8-$185.8 million and $20.8-$34.8 million, respectively.
Synchronoss Technologies (SNCR) reported Q3 ’19 results below expectations and reduced guidance for FY ‘19.
Non-GAAP revenue was $78.2 million (-6.0% Y/Y), below consensus of $86.9 million. Adjusted EBITDA was $5.8 million (7.4% margin), also short of the Street’s $6.8 million. Non-GAAP EPS of $(0.62) missed consensus of $(0.40).
Due to Sequential Technology International’s (STI) evaluation of strategic alternatives, management has taken a more conservative approach to the relationship, resulting in the write-off of $26.0 million of related receivables and a corresponding reduction in Q3 GAAP revenue from $78.2 million to $52.2 million.
Future revenue from STI, estimated at $2.5-$3.0 million per quarter, will be recognized as cash is collected.
The company secured its third new cloud deal of the year with a major Tier 1 carrier based in the U.S.
The Verizon cloud offering has delivered healthy double-digit subscriber growth since the end of 2018, and a new family plan providing two terabytes of storage for $12.99 per month is seeing good early traction.
The new cloud customer announced in Q2 delayed its launch from Q3 to Q4, revenue recognition from Assurant will also begin in Q4 as associated customers begin to migrate to the Synchronoss Cloud, and initial revenues from application-to-person messaging (A2P) should also start to flow by year-end.
Momentum also continues to build for the company’s digital business, DXP, as well as its Internet of Things (IoT) platform for which the company has secured a partnership with Accruent.
Reflecting the STI write-off and lower STI revenues in Q4, management reduced its FY ’19 revenue and adjusted EBITDA guidance from $340.0-$355.0 million and $30.0-$40.0 million, respectively, to $308.0-$315.0 million and $24.0-$30.0 million.
Talend Reports Third Quarter 2019 Financial Results
Talend’s (TLND) Q3 ’19 results beat expectations but Q4 guidance left consensus at the high-end.
Revenue of $62.6 million (+20.3% Y/Y) was just above the high-end of management’s guidance and consensus of $62.1 million. Non-GAAP operating income was $(2.8) million (-4.4% margin), ahead of guidance for $(7.3)-$(6.3) million and consensus of $(6.5) million. Non-GAAP EPS of $(0.08) beat guidance of $(0.25)-$(0.22) and consensus of $(0.23).
Key metrics: annual recurring revenue (ARR) of $224.8 million (+24% Y/Y); Talend Cloud was 49% of new ARR; dollar-based net expansion rate of 114% on a constant currency basis; nearly 4,000 customers of which over 2,000 are in the cloud; 74 customers with Cloud ARR over $100,000; 521 enterprise customers with over $100,000 in annualized subscription revenue.
The company executed well on its cloud transition with strong momentum in adding new cloud customers, but sequential growth in ARR was weighed down by performance in Europe.
As the company experienced headwinds in its European business during Q3, particularly for on-premise bookings, management remains cautious on the region for the remainder of the year.
Q4 guidance includes revenue of $65.4-$66.4 million and non-GAAP EPS of $(0.22)-$(0.19), leaving consensus at the high-end, and non-GAAP operating income of $(4.5)-$(3.5) million, above consensus of $(5.7) million.
Upland Software Reports Third Quarter 2019 Financial Results
Upland Software (UPLD) reported Q3 ’19 results consistent with expectations and guided Q4 in line with consensus.
Revenue was $55.1 million (+48.2% Y/Y), within guidance of $54.1-$56.1 million and approximately in line with consensus of $55.3 million. Adjusted EBITDA was $20.7 million (37.6% margin), also within guidance and in line with consensus of $20.6 million. Non-GAAP EPS of $0.52 missed consensus of $0.57.
Organic growth was 6% and the M&A engine continues to hum with three acquisitions closed since the end of Q2.
Key metrics: added 95 new customer relationships, including 22 major accounts; expanded 204 existing customer relationships, including 24 major expansions.
The acquisition pipeline remains robust and Q4 is already off to a good start with some outstanding sales activity.
Q4 guidance calls for revenue of $61.2-$64.2 million and adjusted EBITDA of $23.4-$24.8 million, in line with consensus of $62.7 million in revenue and $23.8 million in adjusted EBITDA.
Veritone Reports Financial Results for Third Quarter of 2019
Veritone (VERI) reported Q3 ’19 results generally consistent with consensus but provided a mixed outlook for Q4.
Revenues of $12.8 million (+69.7% Y/Y) were at the midpoint of guidance and in line with consensus. Adjusted EBITDA of $(9.6) million (-75.2% margin) was short of the Street’s $(9.2) million. Non-GAAP EPS of $(0.43) were in line with consensus.
Management indicated that bookings are at record levels, the pipeline of new SaaS business entering 2020 is at the strongest point ever, and the company has optimized its operations and team structure to capitalize on these opportunities.
Despite strong bookings and minimal customer attrition, SaaS revenues were lower than anticipated in Q3 due to a reduction in the usage component of project-based revenues and longer sales cycles with government customers.
Key metrics: aiWARE SaaS monthly recurring revenue was $547,000; aiWARE SaaS bookings were $1.3 million.
The company has implemented certain acquisition integration and business realignment actions expected to deliver $7.0-$9.0 million in annualized savings beginning in Q1 2020.
In Q3, Veritone raised net proceeds of $5.3 million under its ATM facility, which still leaves $27.7 million available today.
Guidance for Q4 includes revenues of $12.0-$12.4 million, below consensus of $13.4 million, and adjusted EBITDA of $(8.7)-$(8.3) million, above consensus of $(9.0) million.
For Q1 ’20, management anticipates revenues of $12.6-$13.4 million and adjusted EBITDA of $(7.8)-$(7.2) million, also mixed versus consensus expectations for $14.7 million in net revenues and $(8.3) million in adjusted EBITDA.
Workiva Announces Third Quarter 2019 Financial Results
Workiva (WK) reported Q3 ’19 results above expectations and provided mixed guidance for Q4.
Revenue of $74.2 million (+21.9% Y/Y) was above guidance for $72.0-$72.5 million and consensus of $72.3 million. Non-GAAP operating income was $(6.3) million (-8.4% margin), ahead of guidance for $(8.0)-$(7.5) million and consensus of $(7.6) million. Non-GAAP EPS of $(0.12) beat guidance of $(0.17)-$(0.16) and consensus of $(0.17).
Wdata is increasing the number and size of deals across many of Workiva’s solutions due to the ability for customers to integrate their systems and applications with the company’s platform.
The company is seeing strong bookings growth in EMEA, and the number of meetings with customers and prospects is rising due to Europe’s impending European Single Electronic Format (ESEF) regulatory mandate.
Key metrics: 3,454 (+5% Y/Y) customers at quarter-end; 94.5% revenue retention rate excluding add-on revenue; 112.8% revenue retention rate including add-on revenue; 611 (+54% Y/Y) customers with an annual contract value (ACV) over $100,000; 261 (+51% Y/Y) customers with an ACV over $150,000.
Q4 guidance includes revenue of $75.3-$75.8 million, above consensus of $74.9 million, and non-GAAP operating income and EPS of $(8.8)-$(8.3) million and $(0.16)-$(0.15), respectively, below consensus of $(6.3) million and $(0.13).
Management’s preliminary outlook for 2020 calls for revenue in excess of $340.0 million, above consensus of $338.1 million, and a lower non-GAAP operating loss than in 2019.
Notable News
Adobe (ADBE) shared its strategy to leverage its market leadership in several categories to drive sustainable, long-term growth in 2020 and beyond at a financial analyst meeting held in conjunction with its Adobe MAX conference.
Management presented data showing a total addressable market expected to reach approximately $128 billion by 2022, comprised of $31 billion for Creative Cloud, $13 billion for Document Cloud, and $84 billion for Experience Cloud.
Adobe raised its Q4 ’19 target for Digital Media net new annualized recurring revenue (ARR) by $25 million to $475 million and affirmed prior Q4 revenue and non-GAAP EPS expectations for $2.97 billion and $2.25, respectively.
Preliminary targets for 2020 include total revenue of approximately $13.15 billion and non-GAAP EPS of approximately $9.75, above consensus of $13.14 billion and $9.70 in revenue and non-GAAP EPS, respectively.
Mimecast Hires New Talent to Help Drive Next Phase of Growth
Mimecast (MIME) has hired Heather Bentley and Susan Vaillancourt as Senior Vice President of Customer Success and Vice President of Brand Strategy, respectively, and has appointed Alpna Doshi to the Board of Directors.
Ms. Bentley joins the company from Automation Anywhere where she was Head of Customer Success in Europe.
Ms. Vaillancourt joins the company from Optiv where she was Vice President of Brand and Communications.
Ms. Doshi, who is currently Chief Digital Officer at Riverbed Technology, has been elected to the company’s Board of Directors, effective December 1, 2019.
Model N Announces New Chief Marketing Officer
Model N (MODN) has appointed Dave Michaud as Chief Marketing Officer.
Mr. Michaud most recently served as Senior Vice President of Marketing at Plex.
Qumu Announces Pricing of Public Offering of Common Stock
Qumu (QUMU) priced an overnight offering of 3,175,652 shares of its common stock at a price to the public of $2.50 per share, representing a 10.7% discount to the close price prior to the announced offering.
The company has granted the underwriter a 30-day option to purchase up to an addition 476,348 shares of common stock.
Net proceeds from the offering are expected to be $7.1 million, of which $4.5 million will be put towards the repayment of outstanding principal and accrued interest under the company’s term loan credit agreement with ESW Holdings.
RADCOM Names Eyal Harari as CEO and Appoints Yaron Ravkaie to Board of Directors
RADCOM (RDCM) has named Eyal Harari, the company’s Chief Operating Officer and Chief Executive Officer of its North American subsidiary, as Chief Executive Officer, effective January 1, 2020.
Mr. Harari succeeds current Chief Executive Officer Yaron Ravkaie who will join the company’s Board of Directors.
Disclosure(s):
The analyst, a member of the analyst’s household, and/or an account in which the analyst exercises discretion hold(s) a long position in the common stock of Stamps.com (STMP).