K. Liu's Week in Review
We made a pit stop in Indy to attend the United States Postal Service’s (USPS) National Postal Forum to start the week. After a few laps around the exhibit hall, we concluded that it was business as usual between Stamps.com/Endicia and the USPS. Despite the loss of direct incentives from the USPS, the company’s sales reps continue to work closely with the postal service with the primary difference being the ability to refer shippers interested in multi-carrier capabilities to one of the company’s alternative multi-carrier platforms. While we had hoped to garner more insight into the integration of Shipping with Amazon with ShipStation, reps in attendance were mum on all things Amazon. More generally, however, ShipStation continues to add value for its customers by focusing not only on carriers, but also on connecting merchants with other services to support their growth such as fulfillment houses. While the economic arrangements were not specified, we believe these partnership endeavors enable the company to refer business in exchange for fees or revenue shares. To the extent a fulfillment house utilizes one of the company’s platforms, directing volumes to that fulfillment house may also boost the fees paid to Stamps.com. Our short stint at the event was all for naught, however, as we failed to pick up on the only new development that mattered. As management shared during its Q1 ’19 earnings call, the USPS is currently re-negotiating its agreements with resellers that could crimp the revenue share dollars available to those in the postal service’s ecosystem. Given that Stamps.com has benefited significantly from these arrangements in the past, the changes prompted management to reduce its guidance for FY ’19. For the second time in as many quarters, the stock was cut by more than half post-earnings despite upside results for the quarter. We refer readers to our update, Stamps.com Q1 ’19 Recap: The Good, the Bad and the Ugly, for more detailed thoughts and analysis. Our travels also took us to the Big Easy for QAD’s (QADA) Explore conference and to Huntington Beach for Avalara’s (AVLR) CRUSH conference. As hitting the road and processing a seemingly unending stream of earnings has delayed our production a bit, consider this a tease for our post-event takeaways during the week to come.
As the calendar Q1 ’19 earnings season draws to a close, only six of the 28 companies we tracked this week delivered a beat and raise. Sales tax specialist Avalara was the standout performer and public safety-focused Everbridge also saw a nice bump in shares. Despite strong results and guidance, shares of Cornerstone OnDemand (CSOD), Dropbox (DBX), and HubSpot (HUBS) were all down slightly for the week. Forescout Technologies (FSCT) also beat and raised its outlook for the year, but its shares declined 16.2% for the week as disappointing Q2 guidance and the back-end weighted nature of management’s higher expectations left the market skeptical. 2U (TWOU) shares tumbled 33.4% this week as upside Q1 results were negated by growth headwinds that are surfacing in the company’s Grad business. SailPoint Technologies Holdings’ (SAIL) shares fell by almost as much as the company’s increasing focus on the mid-market detracted from ensuring larger enterprise deals continued to move along, prompting management to cut its full year outlook. SailPoint separately announced that current Chief Financial Officer Cam McMartin will transition to the role of Chief Operating Officer, and Jason Ream, most recently Chief Financial Officer at Mitratech, Relativity and Solarwinds, will join the company as its new CFO. Both ChannelAdvisor (ECOM) and ShotSpotter (SSTI) were down in excess of 18% for the week with the former reducing its revenue guidance on decelerating GMV growth at Amazon and eBay as well as disruption from a sales reorg, and the latter lowering growth expectations following a customer loss and delays in securing new wins for its gunshot detection platform. ChannelAdvisor also announced the retirement of Chief Financial Officer Mark Cook, who will be replaced by the company’s current Vice President, Finance and Chief Accounting Officer, Richard Cornetta. Customer experience software provider eGain’s (EGAN) decline was also notable in that the company delivered results above expectations and its guidance held no surprises, yet the stock still dropped 18.7% this week. The following table depicts each reporting company’s share price movement for the week, quarterly performance, and subsequent revisions to consensus estimates for the current fiscal quarter and year.
In the cybersecurity space, both Proofpoint (PFPT) and Zix (ZIXI) were active on the M&A front with the former acquiring Meta Networks for $120 million in cash and stock and the latter buying DeliverySlip for $14 million in cash. Meta Networks’ technology limits employee and contractor access to only authorized resources as opposed to the entire corporate network and will be integrated with Proofpoint’s cloud access security broker and web isolation product lines. The acquisition is not anticipated to have much of an impact on Proofpoint’s 2019 results or guidance, but the potential repatriation of acquired intellectual property may result in a one-time cash income tax charge in Q3 or Q4. DeliverySlip’s technology brings large file transfer capabilities to Zix’s email security suite. From a financial perspective, the deal also boosts Zix’s margins immediately as the royalty paid to DeliverySlip by AppRiver, another Zix acquisition, goes away. Zix anticipates a $2.0 million bump in adjusted EBITDA next year. Turning to the capital markets, both Izea (IZEA) and Upland Software (UPLD) priced equity offerings this week. Izea, which provides a platform for influencer marketing, raised net proceeds of $9.4 million through the sale of approximately 14.3 million shares at a price per share of $0.70. Upland Software, which provides enterprise work management solutions, sold 3.3 million shares at $42.00 per share. Both companies plan to put the proceeds towards executing upon their growth strategies and for working capital and other general purposes.
In other news, conversational commerce play LivePerson (LPSN) hosted an investor day during which management provided expectations for the company to exit 2019 at a high-teens to 20% growth rate, accelerate growth to at least 25% in the next three to five years, and achieve an adjusted EBITDA margin of at least 15%. Separately, Verint (VRNT) announced preliminary Q1 revenue results above expectations to assuage fears that a ransomware attack weighed on performance. Executive moves this week included Alteryx’s (AYX) hiring of Alan Jacobson, formerly Ford Motor Company’s director of global analytics, as its Chief Data and Analytics Officer. Box (BOX) appointed former President and CEO of BMC Software, Peter Leav, to its Board. F5 Networks (FFIV) appointed Mika Yamamoto as Executive Vice President and Chief Marketing and Customer Experience Officer and also appointed Geng Lin as Executive Vice President and Chief Technology Officer. Ms. Yamamoto joins the company from Marketo, where she served as Global President, and Mr. Lin joins from J.P. Morgan Chase, where he served as Managing Director, Chief Development Officer, and Head of Engineering for consumer and community banking. Finally, New Relic (NEWR) appointed Andrew Johnson as Executive Vice President and General Manager of EMEA. Mr. Johnson previously led the UKI and Europe teams at Salesforce.
Mergers and Acquisitions
Proofpoint announced its intent to acquire Meta Networks, an innovator in zero trust network access, for $111 million in cash and $9 million in PFPT common stock and options.
Meta Networks’ technology limits employee and contractor access to only authorized resources as opposed to the entire corporate network and will be integrated with Proofpoint’s cloud access security broker and web isolation product lines.
The acquisition is not anticipated to have much of an impact on the company’s 2019 results or guidance, although the potential repatriation of acquired intellectual property may result in a one-time cash income tax expense in Q3 or Q4 of 2019.
ZIXI: Zix Acquires the Assets of Email Security Provider DeliverySlip
Zix has acquired the assets of Cirius Messaging and its wholly-owned subsidiary, DeliverySlip, for $14 million in cash.
DeliverySlip provides email encryption, e-signatures, and secure file-sharing solutions and boasts over 5 million users at 11,000+ organizations.
The acquisition adds large file transfer capabilities to Zix’s email security suite, eliminates the third-party royalty AppRiver was paying DeliverySlip, and should contribute approximately $2 million of adjusted EBITDA next year.
Notable News
Alteryx announced that Alan Jacobson has joined the company as Chief Data and Analytics Officer and will lead the company’s data initiatives and assist customers with the implementation and execution of their digital transformation strategies.
Mr. Jacobsen most recently served as director of global analytics at Ford Motor Company and held numerous leadership roles there across engineering, marketing, sales, and new business development during his 20+ year tenure.
Box appointed former President and CEO of BMC Software, Peter Leav, to its Board of Directors, marking the third new director added over the past year.
Mr. Leav will replace Steven Krausz, a General Partner of U.S. Venture Partners, who plans to step down following the 2019 annual meeting.
ECOM: ChannelAdvisor Announces CFO Transition
ChannelAdvisor announced the retirement of Chief Financial Officer, Mark Cook.
Richard Cornetta, ChannelAdvisor’s Vice President, Finance and Chief Accounting Officer, has been appointed as the company’s new Chief Financial Officer.
FFIV: F5 Welcomes New Marketing and Technology Executives
F5 Networks announced the appointments of Mika Yamamoto as Executive Vice President and Chief Marketing & Customer Experience Officer and Geng Lin as Executive Vice President and Chief Technology Officer.
Ms. Yamamoto previously served as Global President of Marketo and will be responsible for F5’s marketing strategies across segments, channels, and geographies.
Mr. Lin joins F5 from J.P. Morgan Chase where he served as Managing Director, Chief Development Officer, and Head of Engineering for consumer and community banking, and he will be responsible for setting the company’s technical vision.
IZEA: IZEA Announces Pricing of its Public Offering of Common Stock
IZEA Worldwide announced the pricing of an underwritten registered public offering of 14,285,714 shares at a price of $0.70 per share, raising gross proceeds of approximately $10.0 million.
Net proceeds to the company are expected to total $9.4 million, which will be put towards the company’s growth strategy, working capital and other general corporate purposes.
LPSN: LivePerson Outlines Growth Strategy at Investor Day
At its Investor Day in New York City, LivePerson discussed its growth strategy and announced its 2020 goals as well as its three to five-year financial targets.
Management anticipates exiting 2019 with a high-teens to 20% run rate in revenue growth, expects to accelerate growth to at least 25% over the next three to five years, and achieve an adjusted EBITDA margin of at least 15% over that same timeframe.
NEWR: Andrew Johnson Joins New Relic as Executive Vice President and General Manager of EMEA
New Relic announced the appointment of Andrew Johnson as Executive Vice President and General Manager of EMEA with responsibility for leading the company’s growth and strategy across the region.
Mr. Johnson previously led the UKI and EMEA teams at Salesforce.
SailPoint Technologies Holdings announced that current Chief Financial Officer Cam McMartin with transition to the role of Chief Operating Officer, and Jason Ream will join the company as its incoming Chief Financial Officer.
Mr. Ream most recently served as Chief Financial Officer for Mitratech, Relativity and Solarwinds.
UPLD: Upland Software Announces Pricing of Public Offering of Common Stock
Upland Software announced pricing of an underwritten public offering of 3.3 million shares of common stock at a price of $42.00 per share, a 9.6% discount to the close price prior to the announcement of the planned offering.
The underwriters have been granted a 30-day option to purchase up to an additional 495,000 shares.
Proceeds from the offering are expected to be put towards its acquisition strategy and general corporate purposes.
VRNT: Verint Announces Preliminary Q1 Revenue Above Guidance
Verint announced expectations for Q1 non-GAAP revenue to exceed its $315 million guidance by 1%-2% and drive healthy EPS with non-GAAP EPS growing faster than revenue.
The preannouncement was provided to eliminate speculation of underachievement in Q1 following a recent ransomware attack on April 16.
Earnings Releases
TWOU: 2U, Inc. Reports First Quarter 2019 Financial Results
2U reported Q1 ’19 results above expectations and guided FY ’19 profitability higher despite a lower revenue outlook.
Revenue was $122.2 million (+32.4% Y/Y), above management’s $121.5-$122.1 million guidance and consensus of $121.8 million. Adjusted EBITDA was $(3.2) million (-2.6% margin), also exceeding guidance and consensus of $(4.4) million. Non-GAAP EPS were $(0.15), beating guidance of $(0.19)-$(0.18) and consensus of $(0.18).
Key metrics: Graduate Program full course equivalent enrollments of 39,512 (+32.7% Y/Y); Graduate Program average revenue per full course equivalent enrollment of 2,637 (-2.5% Y/Y); Alternative Credential full course equivalent enrollments of 9,128 (+52.1% Y/Y); Alternative Credential average revenue per full course equivalent enrollment of 1,979 (+1.3% Y/Y).
Management highlighted three developing trends in the Grad business that are expected to weigh on growth going forward: partners being more selective and therefore lowering admit rates, pressure on the rate at which students are submitting applications for review, and delayed launch dates in the 2019 cohort.
In the Alternative Credential segment, Trilogy will be dilutive to earnings and margins this year, but long-term both the short course and boot camp components can achieve steady state adjusted EBITDA margins in the high-teens to 20% range.
Guidance for Q2 includes $124.3-$125.0 million in revenue, $(13.1)-$(12.6) million in adjusted EBITDA, and $(0.36)-$(0.35) in non-GAAP EPS, all of which fell short of the Street’s $128.8 million, $(12.2) million, and $(0.34) estimates for revenue, adjusted EBITDA, and non-GAAP EPS, respectively.
Management lowered its prior FY ’19 revenue expectations from $546.6-$550.8 million to $534.0-$537.0 million, but increased its adjusted EBITDA and non-GAAP EPS guidance from $11.8-$14.2 million and $(0.37)-$(0.33), respectively, to $12.5-$14.3 million and $(0.34)-$(0.31).
ABT-CA: Absolute Reports Fiscal 2019 Third Quarter Financial Results
Absolute reported Q3 ’19 results above consensus and the company’s updated FY ’19 guidance implies Q4 targets consistent with Street expectations.
Total revenue was $24.9 million (+6.6% Y/Y), above consensus of $24.5 million. Adjusted EBITDA was $5.8 million (23.3% margin), also exceeding consensus of $4.6 million. EPS of $0.06 were a penny above Street expectations.
Key metrics: Annual Contract Value (ACV) Base of $95.2 million (+5% Y/Y) at quarter-end; $1.1 million in incremental ACV from new customers versus Q3 ’18; net ACV retention rate of 99%.
Enterprise (53% of ACV Base) and Government (12% of ACV Base) both exhibited strong Y/Y growth partially offset by a 3% decrease in Education (35% of ACV Base).
Management raised the low-end of its prior FY ’19 revenue guidance and raised its FY ’19 adjusted EBITDA margin guidance from 16%-19% to 18%-20%, implying Q4 revenue of $23.9-$25.4 million and adjusted EBITDA $3.2-$5.4 million. Consensus Q4 expectations included $24.9 million in revenue and $4.6 million in adjusted EBITDA.
ALTR: Altair Announces First Quarter 2019 Financial Results
Altair reported Q1 ’19 results above expectations and raised its FY ’19 adjusted EBITDA guidance.
Non-GAAP total revenue was $130.1 million (+14.9% Y/Y), above management’s $123.0-$125.0 million guidance and consensus of $126.2 million. Adjusted EBITDA was $26.2 million (20.2% margin), also above guidance and consensus of $23.9 million. Non-GAAP EPS were $0.26, beating consensus of $0.22.
APAC and Europe saw exceptional growth and momentum in the Americas is increasing as Altair focuses on hiring, training, and investing to build out its direct and indirect sales and marketing operations.
The integration of Datawatch is going well but not without some challenges.
Management’s Q2 guidance includes non-GAAP revenue of $108.2-$110.2 million and adjusted EBITDA of $6.0-$8.0 million, falling short of Street expectations for $113.2 million in revenue and $10.5 million in adjusted EBITDA.
Management reaffirmed prior FY ’19 non-GAAP revenue guidance of $479.0-$483.0 million and raised its adjusted EBITDA guidance from $61.0-$65.0 million to $62.0-$66.0 million.
AMBR: Amber Road Announces First Quarter 2019 Financial Results
Amber Road announced Q1 ’19 results above expectations and raised profitability expectations for FY ’19.
Total revenue was $21.1 million (+5.1% Y/Y), above management’s $20.3-$20.9 million guidance and consensus of $20.6 million. Non-GAAP operating income was $0.3 million (1.3% margin), also above guidance and consensus of $(0.4) million. Non-GAAP EPS were $(0.01), exceeding management’s $(0.04)-$(0.02) guidance and the Street’s $(0.03).
Amber Road is benefiting from increased complexity and changing conditions in global trade.
The company’s sales pipeline is well balanced across geographies and products and at a higher level than seen historically.
The implementation of account based marketing is beginning to pay dividends.
Guidance for Q2 includes $21.3-$21.9 million in revenue, $(1.2)-$(0.6) million in non-GAAP operating income, and $(0.06)-$(0.04) in non-GAAP EPS, all of which were short of Street expectations for $22.1 million in revenue, $(0.2) million in non-GAAP operating income, and $(0.02) in non-GAAP EPS.
Management raised its prior non-GAAP operating income and EPS guidance from $0-$3.0 million and $(0.06)-$0.04, respectively, to $0.7-$3.7 million and $(0.04)-$0.07; prior FY ’19 revenue guidance of $88.7-$91.7 million was reaffirmed.
ASUR: Asure Software Announces Record First Quarter 2019 Results
Asure Software reported Q1 ’19 results above expectations and reaffirmed prior guidance for FY ’19.
Total revenue of $26.8 million (+38.6% Y/Y) was above consensus of $25.7 million. Adjusted EBITDA of $6.9 million (25.6% margin) also exceeded consensus of $5.4 million, and non-GAAP EPS of $0.22 beat the Street’s $0.11.
Key metrics: bookings increased 44% Y/Y; short-term backlog was $31.2 million; total backlog in excess of $50.0 million.
Asure’s pipeline in Workspace has increased 3x-4x Y/Y and the company remains on track to hire 20 new sales reps in 2019.
Management reaffirmed prior FY ’19 guidance of $104.0-$107.0 million in revenue and $23.0-$25.0 million in adjusted EBITDA.
Acquisition opportunities remain in the pipeline, but management appears more focused on integration of prior acquisitions and demonstrating the economic model.
AVLR: Avalara Announces First Quarter 2019 Financial Results
Avalara reported Q1 ’19 results ahead of expectations and raised its guidance for FY ’19.
Revenue was $85.0 million (+38.4% Y/Y), exceeding management’s $78.0-$79.0 million guidance and consensus of $78.7 million. Non-GAAP operating income was $(1.5) million (-1.8% margin), well above management’s guidance and consensus of $(10.8) million. Non-GAAP EPS were $(0.01), beating the Street’s $(0.16).
Key metrics: added 630 core customers for a total of approximately 9,700 (+25.0% Y/Y) at quarter-end; 107% net revenue retention rate; $96.4 million (+32.0% Y/Y) in billings.
While results would have been strong regardless, Q1 also benefited from $2.0 million in non-recurring revenue from third-party merchant registrations in Europe and a benefit of $6.4 million in sales and marketing from the adoption of ASC 606.
Q2 guidance includes revenue of $84.0-$85.0 million and non-GAAP operating income of $(8.5)-$(7.5) million, exceeding consensus expectations for $79.8 million in revenue and $(10.3) million in non-GAAP operating income.
Management raised its FY ’19 guidance from $328.0-$332.0 million and $(35.0)-$(30.0) million in revenue and non-GAAP operating income, respectively, to $346.0-$349.0 million and $(15.0)-$(10.0) million.
Axon reported strong Q1 ’19 results and raised its revenue guidance for FY ’19.
Revenue of $115.8 million (+14.4% Y/Y) exceeded consensus of $110.6 million. Adjusted EBITDA of $14.0 million (12.0% margin) was short of the Street’s $14.9 million. Non-GAAP EPS of $0.21 beat consensus of $0.15.
Q1 was the first quarter in which Axon began recognizing high margin software revenue on its TASER program.
Key metrics: shipped 8,800 TASER 7 units; $122.3 million (+46.8% Y/Y) in annual recurring revenue; 371,100 (+63.6% Y/Y) cumulative Axon software seats booked; software and sensor bookings of $76.4 million (-21.7% Y/Y); total future contracted revenue of $930 million (+43.1% Y/Y).
TASER margins are being negatively impacted by trade-in credits being offered to major agencies.
Q2 adjusted EBITDA is expected to be flat sequentially and Y/Y, implying approximately $14 million versus consensus of $16.5 million.
Management raised its prior FY ’19 revenue outlook from $480.0-$490.0 million to $485.0-$495.0 million and reaffirmed prior adjusted EBITDA expectations of $80.0-$85.0 million.
ChannelAdvisor reported mixed Q1 ’19 results and raised its FY ’19 adjusted EBITDA guidance on a lower revenue outlook.
Total revenue was $31.6 million (+0.4% Y/Y), at the lower end of management’s guidance and just shy of the Street’s $31.8 million. Adjusted EBITDA of $2.6 million (8.3% margin) was well above management’s $0.6-$1.0 million guidance and consensus of $1.1 million. Non-GAAP EPS of $0.04 beat the Street’s $(0.02).
Top line results were negatively impacted by deceleration in Amazon and eBay GMV growth, which affected variable and strategic partner revenue.
The company began to implement a territory-based system in lieu of its historical rotation-based account assignment model mid-quarter, which disrupted the sales team more than anticipated.
Key metrics: added 50 net new brand customers for the TTM period ended March 31, 2019; increased the number of marketplace integrations to 133 (+24.3% Y/Y); average revenue per customer of $46,530 (+5.9% Y/Y); total customers of 2,774 (-2.8% Y/Y) at quarter-end.
April sales performance has been strong with 40% of the internal Q2 bookings target already achieved.
Management’s Q2 guidance includes $31.5-$32.0 million in revenue and $1.5-$2.0 million in adjusted EBITDA, below consensus expectations for $33.9 million in revenue and $2.4 million in adjusted EBITDA.
Management lowered its prior FY ’19 revenue guidance from $136.0-$139.0 million to $131.0-$134.0 million, but increased its adjusted EBITDA guidance from $13.0-$15.0 million to $15.0-$17.0 million.
CSOD: Cornerstone OnDemand Announces First Quarter 2019 Financial Results
Cornerstone OnDemand reported Q1 ’19 results above expectations and raised guidance for FY ’19.
Revenue of $140.1 million (+5.3% Y/Y) exceeded management’s $134.5-$136.5 million guidance and consensus of $135.5 million. Non-GAAP operating income was $19.6 million (14.0% margin), also above consensus of $16.0 million. Non-GAAP EPS were $0.25, beating the Street’s $0.19.
Key metrics: added 32 net new clients for a total of 3,567 clients (+8.8% Y/Y) at quarter-end; over 40 million active users.
The combination of Cornerstone’s Learning Suite and emerging content offering is creating a flywheel effect and distancing the company from the competition.
Guidance for Q2 calls for $137.0-$140.0 million in revenue, in line with consensus of $137.4 million, and a low double-digit operating margin.
Management raised its prior FY ’19 ARR, revenue, and non-GAAP operating income guidance from $575.0-$590.0 million, $558.0-$568.0 million and $74.0-$84.0 million, respectively, to $578.0-$590.0 million, $562.0-$570.0 million, and $78.0-$85.0 million.
Management continues to target the Rule of 40, defined as subscription growth plus unlevered free cash flow margin, in 2020.
DBX: Dropbox Announces Fiscal 2019 First Quarter Results
Dropbox reported Q1 ’19 results ahead of expectations and raised its FY ’19 guidance.
Revenue of $385.6 million (+21.9% Y/Y) exceeded management’s $379.0-$382.0 million guidance and consensus of $381.6 million. Non-GAAP operating income was $39.0 million (10.1% margin), above consensus of $29.8 million. Non-GAAP EPS were $0.10, beating consensus of $0.06.
Key metrics: 13.2 million (+14.8% Y/Y) paying users and average revenue per paying user of $121.04 (+5.9% Y/Y).
Growth in ARPU reflects strong adoption of the company’s premium Professional and Advanced plans by new paying users.
Dropbox is strengthening the growth engine by utilizing data science models to create new tools for its outbound sales team, implementing a device limit for Dropbox Basic that prompts users to upgrade to a paid SKU for over three linked devices, and by integrating HelloSign to provide a frictionless experience for users.
Management’s Q2 guidance calls for revenue of $399.0-$401.0 million and a non-GAAP operating margin of 9.0%-10.0%, implying non-GAAP operating income of $35.9-$40.1 million. Consensus called for $400.3 million in revenue and $37.8 million in non-GAAP operating income.
Management raised its prior FY ’19 revenue and non-GAAP operating margin guidance from $1.627-$1.642 billion and 10.5%-11.5%, respectively, to $1.634-$1.646 billion and 11.0%-12.0%.
EGAN: eGain Reports 31% SaaS Revenue Growth in Fiscal Third Quarter
eGain reported Q3 ’19 results above Street expectations.
Total revenue was $17.0 million (+8.0% Y/Y), ahead of the Street’s $16.6 million estimate. Non-GAAP operating income of $2.4 million (13.8% margin) was above consensus of $0.8 million. Non-GAAP EPS of $0.06 beat consensus of breakeven.
Flat SaaS revenue on a sequential basis was driven by the timing of seasonal revenues.
Enterprises are focusing their innovation budgets on digitization and with voice-based contact volumes starting to drop in absolute terms, digital customer engagement is becoming a given.
eGain completed an equity raise in the quarter and was therefore able to fully pay down debt.
Management anticipates FY ’19 SaaS revenue growth at the higher end of the 30%-35% range previously provided and reaffirmed expectations for 13%-16% subscription revenue growth.
EVBG: Everbridge Announces First Quarter 2019 Financial Results
Everbridge reported Q1 ’19 results above expectations and raised guidance for FY ’19.
Total revenue of $42.8 million (+40.3% Y/Y) was ahead of management’s $42.0-$42.3 million guidance and consensus of $42.2 million. Adjusted EBITDA was $(1.9) million (-4.4% margin), also above guidance and consensus of $(2.5) million. Non-GAAP EPS were $(0.15), beating guidance of $(0.19)-$(0.18) and the Street’s $(0.18).
Q1 was driven by continued momentum with Everbridge’s Critical Event Management suite and significant wins across all key solutions and geographies.
Launched Crisis Management in Q1 and early feedback has been encouraging.
Key metrics: added 110 new customers for a total of 4,532 enterprise customers (+28.1% Y/Y) at quarter-end; signed 22 deals in excess of $100,000; overall ASP on a TTM basis increased to $71,000; dollar-based net retention rate over 110%.
Management’s Q2 guidance includes $47.8-$48.1 million in revenue, $(0.1)-$0.2 million in adjusted EBITDA, and $(0.09)-$(0.08) in non-GAAP EPS, which was mixed versus consensus expectations for $47.7 million in revenue, $0.5 million in adjusted EBITDA and $(0.09) in non-GAAP EPS.
Management raised its prior FY ’19 guidance ranges, which now include revenue of $196.4-$197.4 million, adjusted EBITDA of $4.2-$5.2 million, and non-GAAP EPS of $(0.28)-$(0.25).
FSCT: Forescout Technologies Reports First Quarter 2019 Financial Results
Forescout Technologies reported Q1 ’19 results above expectations and raised guidance for FY ’19.
Total revenue was $75.6 million (+26.6% Y/Y), above management’s $71.9-$74.9 million guidance and consensus of $73.7 million. Non-GAAP operating income was $(17.8) million (-24% margin), near the high-end of guidance and above consensus of $(18.1) million. Non-GAAP EPS of $(0.41) beat management’s $(0.45)-$(0.43) guidance and consensus of $(0.44).
Three primary trends are driving Forescout’s market opportunity: the explosion of connected network devices, increasing interconnectivity, and automation.
Added 1.6 million devices under management and landed 89 new logos in the quarter.
Management’s pipeline review suggests deals originally expected to close in Q2 will close later in the year.
Guidance for Q2 includes $75.3-$78.3 million in revenue, $(20.8)-$(20.0) million in non-GAAP operating income, and $(0.48)-$(0.46) in non-GAAP EPS, well below consensus expectations for $82.7 million in revenue, $(10.3) million in non-GAAP operating income, and $(0.25) in non-GAAP EPS.
For FY ’19, management raised its prior FY ’19 guidance ranges and now anticipates $365.3-$375.3 million in revenue, $(15.6)-$(11.6) million in non-GAAP operating income, and $(0.41)-$(0.34) in non-GAAP EPS.
HUBS: HubSpot Reports Q1 2019 Results
HubSpot delivered Q1 ’19 results above expectations and raised its outlook for FY ’19.
Total revenue was $151.8 million (+32.5% Y/Y), exceeding management’s $146.5-$147.5 million guidance and consensus of $147.5 million. Non-GAAP operating income was $13.0 million (8.6% margin), also beating guidance and consensus of $10.2 million. Non-GAAP EPS of $0.36 were well ahead of management’s $0.23-$0.25 guidance and consensus of $0.25.
Key metrics: total customers of 60,814 (+35% Y/Y) at quarter-end; average subscription revenue per customer of $9,811 (-2% Y/Y); Q1 revenue retention was in the high-90% range.
HubSpot is seeing major multi-product adoption with large numbers of new customers buying its whole growth suite upfront.
Management’s Q2 guidance includes $156.5-$157.5 million in revenue, $9.2-$10.2 million in non-GAAP operating income, and non-GAAP EPS of $0.24-$0.26, comparing favorably with Street expectations for $156.1 million in revenue, $9.5 million in non-GAAP operating income, and $0.23 in non-GAAP EPS.
For FY ’19, management raised its prior guidance ranges, which now reflect revenue of $655.5-$658.5 million, non-GAAP operating income of $50.0-$52.0 million, and non-GAAP EPS of $1.26-$1.30, up from $648.0-$652.0 million in revenue, $46.0-$50.0 million in non-GAAP operating income, and $1.08-$1.16 in non-GAAP EPS previously.
KXS-CA: Kinaxis Inc. Reports First Quarter 2019 Results
Kinaxis reported Q1 ’19 results above expectations and raised its FY ’19 adjusted EBITDA guidance.
Total revenue of $45.8 million (+24.2% Y/Y) was above consensus of $44.8 million. Adjusted EBITDA was $15.9 million (34.8% margin), well ahead of the Street’s $11.9 million. EPS of $0.26 were below consensus of $0.29.
Q1 bookings did not meet management’s expectations as several large and active deals are taking longer to finalize.
Management remains confident in delivering strong SaaS bookings and has already begun to expand sales capacity beyond its initial plan for 2019.
Key metrics: remaining performance obligations totaled $234.5 million of which $88.2 million will be recognized in FY ’19; total bookings were $35.9 million, including $17.7 million of SaaS bookings.
Management raised its FY ’19 adjusted EBITDA margin guidance from 23%-25% to 25%-27% while leaving its prior revenue guidance of $183.0-$188.0 million intact.
As term licenses tend to average three years, subscription term license revenue is likely to be half the level of 2019 in 2020, should resemble 2018 in 2021, and return to 2019 levels in 2022.
MAMS: MAM Software Reports Fiscal Third Quarter 2019 Results
MAM Software reported Q3 ’19 results in line with expectations and reaffirmed its FY ’19 adjusted EBITDA guidance despite offering a cautious revenue outlook.
Net revenues of $9.5 million (+4.1% Y/Y) were in line with consensus of $9.4 million. Adjusted EBITDA was $1.5 million (15.3% margin), consistent with consensus of $1.6 million. EPS of $0.07 were also in line with Street expectations.
Key metrics: rolled out 15 VAST Online locations for a total of 22 at quarter-end; Autopart Online customers reached 511 with 6,204 users subscribed to the platform; Autowork Online customer base grew to 3,024 subscribers.
Management reaffirmed prior FY ’19 adjusted EBITDA guidance of $6.2-$6.7 million, but indicated that the timing and nature of certain opportunities may cause revenue growth to fall short of prior expectations for 10% constant currency growth.
NUAN: Nuance Announces Second Quarter 2019 Results
Nuance reported Q2 ’19 results above Street expectations and raised its earnings expectations for FY ’19.
On an ASC 605 basis, non-GAAP revenue was $451.0 million (-3.9% Y/Y), near the high-end of management’s guidance and above consensus of $445.6 million. Non-GAAP operating income was $123.3 million (27.3% margin), ahead of the Street’s $114.4 million. Non-GAAP EPS were $0.29, exceeding management’s $0.24-$0.27 guidance and consensus of $0.25.
Upside in the quarter was attributed to overachievement in the Enterprise business, disciplined expense management and a favorable revenue mix in Healthcare.
Nuance repaid its remaining 5.375% bonds at par and repurchased 1.2 million shares at an average price of $13.81 per share.
The Automotive spin is now targeted for October 1, 2019.
Guidance for Q3 includes non-GAAP revenue of $453.0-$467.0 million and non-GAAP EPS of $0.27-$0.30, consistent with Street expectations for $461.7 million in revenue and $0.27 in non-GAAP EPS.
Management narrowed its prior FY ’19 non-GAAP revenue guidance to $1.852-$1.884 billion, leaving the midpoint unchanged, and increased its non-GAAP EPS expectations from $1.10-$1.18 to $1.13-$1.21.
PEGA: Pega Cloud Soars in First Quarter 2019
Pegasystems reported Q1 ’19 results below Street expectations.
Total revenue was $212.5 million (-9.6% Y/Y), below consensus of $236.7 million. Non-GAAP operating income was $(12.7) million (-6.0% margin). Non-GAAP EPS were $(0.12), missing consensus of $0.12.
The shortfall in reported results was attributed to the higher skew towards cloud deals in Q1; management noted each 1% shift towards Pega Cloud can potentially reduce revenue by approximately $3.7 million for the full year.
Key metrics: Pega Cloud ACV of $129 million (+76% Y/Y); Pega and Client Cloud ACV of $591 million (+20% Y/Y); Pega Cloud comprised 70% of new commitments versus 50% last year; remaining performance obligations increased 37.7% Y/Y to $632.6 million.
QUOT: Quotient Technology Inc. Reports First Quarter 2019 Financial Results
Quotient Technology reported Q1 ’19 results above expectations and reaffirmed guidance for FY ’19.
Total revenue was $98.1 million (+13.1% Y/Y), above management’s $94.0-$98.0 million guidance and consensus of $96.1 million. Adjusted EBITDA was $8.4 million (8.5% margin), also above guidance and consensus of $7.3 million. EPS of $(0.14) missed consensus of $(0.12).
Growth would be in excess of 20% Y/Y if not for ongoing spend reductions from three large CPG customers.
Key metrics: 120% annual dollar-based net retention rate; 944.8 million transactions (-8.0% Y/Y).
In the coming months, the company plans to launch printed coupons at checkout, a market estimated at $250 million annually.
The Board has authorized a more aggressive stock buyback program of up to $60.0 million following the expiration of the company’s prior authorization in which a total of $41.3 million was repurchased.
For Q2, management’s guidance calls for $102.0-$106.0 million in revenue and $11.0-$14.0 million in adjusted EBITDA, in line with Street expectations for $103.6 million in revenue and $14.0 million in adjusted EBITDA.
Management reaffirmed its prior FY ’19 revenue and adjusted EBITDA guidance of $460.0-$470.0 million and $66.0-$71.0 million, respectively.
RDCM: RADCOM Reports First Quarter 2019 Results
RADCOM reported Q1 ’19 results above expectations and reaffirmed its prior FY ’19 guidance.
Total revenues were $6.0 million (-44.5% Y/Y), exceeding consensus of $3.8 million. Non-GAAP operating income of $(2.8) million (-46.9% margin) was also above consensus of $(4.2) million. Non-GAAP EPS were $(0.20), beating the Street’s $(0.29).
Management reiterated its prior FY ’19 revenue guidance of $28.0-$32.0 million.
RP: RealPage Reports First Quarter 2019 Financial Results
RealPage reported Q1 ’19 results in line with expectations and raised the low-end of its prior FY ’19 guidance ranges.
Revenue of $234.3 million (+16.4% Y/Y) was within management’s $232.8-$234.8 million guidance and in line with consensus of $234.2 million. Adjusted EBITDA of $65.2 million (27.8% margin) reflected the midpoint of guidance and met the Street’s $65.0 million estimate. Non-GAAP EPS of $0.40 were also at the midpoint of guidance and in line with consensus.
Management remains focused on shedding the company’s product company roots and evolving into a platform provider.
New sales bookings growth was consistent with revenue growth and strategic suite and multi-product bookings continue to represent a larger percentage of bookings.
Elevated backlog remains a modest headwind to growth, but the Yes-To-Success initiative designed to speed client implementation and usage of the platform should start to make a dent in the coming quarters.
Key metrics: ending on demand units of 16,401 (+24.5% Y/Y); average on demand units of 16,310 (+24.6% Y/Y); ACV of $912.1 million (+17.0% Y/Y); RPU of $55.61 (-6.0% Y/Y).
Management’s Q2 guidance includes $241.9-$243.9 million in revenue, $67.0-$69.0 million in adjusted EBITDA, and $0.42-$0.44 in non-GAAP EPS, which was mixed compared to consensus of $246.5 million in revenue, $68.8 million in adjusted EBITDA, and $0.43 in non-GAAP EPS.
Management raised the low-end of its prior FY ’19 guidance ranges, which now call for revenue of $982.0 million to $1.0 billion, adjusted EBITDA of $276.0-$285.0 million, and non-GAAP EPS of $1.71-$1.79.
The company’s long-term goal is $1.5 billion in revenue and $500.0 million in adjusted EBITDA in 2022.
SAIL: SailPoint Announces First Quarter 2019 Financial Results
SailPoint Technologies Holdings reported Q1 ’19 results in line with expectations, but reduced its guidance for FY ’19.
Total revenue of $60.6 million (+23.8% Y/Y) was within management’s $59.5-$61.0 million guidance and in line with consensus of $60.5 million. Non-GAAP operating income was $0.5 million (0.9% margin), also in line with guidance and the Street’s $0.6 million. Non-GAAP EPS of $(0.00) were consistent with management’s $(0.02)-$0.00 guidance and consensus of $(0.00).
Key metrics: added 46 net new customers; ended the quarter with 1,061 employees.
Management indicated that the sales pipeline has not matured at the rate initially anticipated due to expansion into the mid-market that detracted from the company’s focus on enterprise and mid-market growth has yet to reach desired levels.
For Q2, guidance includes $59.7-$61.2 million in revenue, non-GAAP operating income of $(3.5)-$(3.0) million, and non-GAAP EPS of $(0.05), all of which were below consensus expectations for revenue, non-GAAP operating income, and non-GAAP EPS of $65.3 million, $2.6 million, and $0.02, respectively.
Management lowered its prior FY ’19 guidance from $293.0-$299.0 million in revenue, $28.0-$31.0 million in non-GAAP operating income, and $0.25-$0.29 in non-GAAP EPS of $277.0-$281.5 million in revenue, $17.1-$18.6 million in non-GAAP operating income, and $0.14-$0.16 in non-GAAP EPS.
SHSP: SharpSpring Reports First Quarter 2019 Results
SharpSpring reported Q1 ’19 results in line with expectations.
Total revenue of $5.3 million (+27.3% Y/Y) was in line with consensus. Adjusted EBITDA of $(1.8) million (-34.4% margin) was also in line with Street expectations. Non-GAAP EPS of $(0.23) were ahead of the Street’s $(0.28).
Key metrics: added 327 new customers; 1,804 agency customers and over 7,700 businesses on the SharpSpring Marketing Automation Platform at quarter-end.
SharpSpring also announced an agreement with SHSP Holdings for the conversion and retirement of the $8 million unsecured convertible promissory note issued in March 2018; total shares to be issued are approximately 1.2 million and the total settled principal and interest equates to approximately $9.3 million.
SSTI: ShotSpotter Reports First Quarter 2019 Financial Results
ShotSpotter reported Q1 ’19 results short of Street expectations and reduced its FY ’19 revenue guidance.
Revenues of $9.6 million (+38.9% Y/Y) were just shy of the Street’s $9.8 million estimate. Adjusted EBITDA was $1.6 million (16.8% margin), in line with consensus of $1.5 million. EPS of $(0.03) were below consensus of $(0.01).
Key metrics: added 12 net new “go-live” square miles of coverage for a total of 660 at quarter-end.
Gross miles added was 19, but one customer in the northeast accounting for seven square miles churned in the quarter.
Management anticipates adding approximately 50 new miles in the next 90+ days and believes the company remains on track to add 300 new miles over the course of two years.
ASPs in international deployments are 2x-3.5x higher than what the company charges domestically.
Citing delays in contract negotiations and approvals with two potential clients and the loss of one customer, management lowered its FY ’19 revenue guidance from $45.0-$47.0 million to $44.5-$45.5 million and reaffirmed expectations to achieve GAAP profitability.
ShotSpotter continues to believe a 30% CAGR for the foreseeable future is achievable.
STMP: Stamps.com Reports First Quarter Results
Stamps.com reported Q1 ’19 results above expectations, but significantly reduced its prior FY ’19 guidance.
Total revenue was $136.0 million (+2.1% Y/Y), exceeding consensus of $127.2 million. Adjusted EBITDA was $39.2 million (28.8% margin), also above consensus of $31.8 million. Non-GAAP EPS of $1.23 beat the Street’s $1.11.
Key metrics: 736,000 customers (-0.6% Y/Y) at quarter-end; average monthly revenue per user of $60.05 (+1.8% Y/Y); average monthly churn of 3.1%; $1.63 billion in customer postage printed (+2.2% Y/Y).
During the earnings call, management announced that the company was notified by its reseller partners that the USPS is re-negotiating existing agreements that could result in margin compression in each of the next three years, which would negatively impact the revenue share Stamps.com receives from these partnerships.
Due to adverse developments in the USPS’ reseller program, management reduced its prior FY ’19 revenue, adjusted EBITDA, and non-GAAP EPS guidance ranges from $540.0-$570.0 million, $145.0-$165.0 million, and $5.15-$6.15, respectively, to $510.0-$560.0 million, $110.0-$150.0 million, and $3.35-$4.85, respectively.
SNCR: Synchronoss Technologies Announces First Quarter 2019 Results
Revenue was $88.1 million (+5.3% Y/Y), above consensus of $83.4 million. Adjusted EBITDA was $6.6 million (7.5% margin), also above consensus of $3.9 million. Non-GAAP EPS of $(0.36) beat consensus of $(0.44).
A key growth driver in the quarter was the next phase of Synchronoss’ advanced messaging initiative with three major mobile operators in Japan.
There is very strong interest in the company’s cloud line of business as Verizon’s transition from freemium to premium has allowed the company to go from a cost center to a growing profit center, and management announced the signing of an agreement for an unnamed substantial new customer.
Management reaffirmed prior FY ’19 guidance of $340.0-$355.0 million in revenue and $30.0-$40.0 million in adjusted EBITDA.
TLND: Talend Reports First Quarter 2019 Financial Results
Talend reported mixed Q1 ’19 results and guidance.
Revenue of $57.8 million (+23.6% Y/Y) exceeded management’s $56.0-$57.0 million guidance and consensus of $56.6 million. Non-GAAP operating income of $(9.3) million (-16.1% margin) was at the low-end of guidance and below consensus of $(8.9) million. Non-GAAP EPS of $(0.32) also matched the low-end of guidance and missed the Street’s $(0.30).
Key metrics: $205.1 million (+28% Y/Y) in annualized recurring revenue (ARR); dollar-based net expansion rate of 118% on a constant currency basis.
Talend Cloud grew over 100% Y/Y for the 11th consecutive quarter and represented 36% of new ARR in Q1.
Guidance for Q2 includes $58.8-$59.8 million in revenue, $(10.1)-$(9.1) million in non-GAAP operating income, and $(0.35)-$(0.31) in non-GAAP EPS, which was mixed versus the Street’s $58.1 million, $(8.6) million, and $(0.29) estimates for revenue, non-GAAP operating income, and non-GAAP EPS, respectively.
Management lowered its prior FY ’19 non-GAAP operating income and non-GAAP EPS expectations from $(27.3)-$(25.3) million and $(0.94)-$(0.88), respectively, to $(29.3)-$(27.3) million and $(1.01)-$(0.95), but reaffirmed FY ’19 revenue guidance of $248.0-$250.0 million.
VERI: Veritone Reports Financial Results for the First Quarter of 2019
Veritone reported mixed Q1 ’19 results and guided Q2 revenues in line with consensus.
Net revenues of $12.1 million (+176.3% Y/Y) exceeded management’s $11.5-$11.9 million guidance and consensus of $11.6 million. Organic growth was +35.0% Y/Y. Adjusted EBITDA was $(9.3) million (-76.6% margin), below consensus of $(8.9) million. EPS of $(0.48) beat the Street’s $(0.71).
Key advertising metrics: added 14 net new clients; 107 clients with active advertising campaigns in Q1; average advertising spend per client of $486,000.
Key aiWare SaaS metrics: 129 customers (+84.3% Y/Y), 911 accounts on platform (+54.1% Y/Y), 343 active cognitive engines (+86.4% Y/Y), and $494,000 in monthly recurring revenue under agreements in effect (+192.3% Y/Y) at quarter-end; total contract value of new bookings received of $1.3 million (+455.3% Y/Y) in Q1.
Guidance for Q2 calls for $12.1-$12.5 million in revenues, in line with consensus of $12.2 million.
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).