K. Liu's Week in Review
Coronavirus continued to dominate the headlines, making for another volatile week in the markets. By week’s end, California had enacted a stay-at-home order with several other states expected to follow suit in short order. With COVID-19 affecting economic activity in a major way, news flow was mostly limited to fiscal Q4 ‘20 earnings releases from a handful of companies. Among our covered companies, QAD (QADA) reported a solid finish to its FY ’20. While the near-term uncertainty arising from coronavirus precluded management from providing its usual guidance, the company did put forth its recurring revenue targets for Q1, including a subscription revenue forecast ahead of our estimate. Given the sell-off in the stock amidst the broader market weakness of late, QADA shares now trade at an extremely low multiple of recurring revenue, creating a compelling buying opportunity in our opinion. For a more detailed discussion of our view, we refer readers to our recap, “QAD’s Fiscal Q4 ’20 Results Highlighted by Robust Cloud Bookings Growth and Margin Expansion.”
As for the other reporting companies, we note that every single one ultimately traded higher for the week. CrowdStrike’s (CRWD) results and outlook were particularly impressive, reflecting continued strong growth and seemingly no impact from recent coronavirus concerns. Management attributed thes strong Q4 performance to larger lands within its new enterprise customers, which adopted more modules from the outset and contributed to a doubling of customers that started with over $1 million in ARR. While CrowdStrike has yet to see any impact from COVID-19, management indicated that guidance had been de-risked to account for any potential macroeconomic weakness to come. Even so, guidance for FY ’21 still exceeded consensus forecasts. Both Coupa Software (COUP) and PagerDuty (PD) also topped expectations for Q4 and guided FY ’21 revenue ahead of consensus. Neither company has seen an impact from coronavirus on their pipeline to date, but both remain watchful and have factored in some conservatism into their forecasts. In a similar vein, Smartsheet (SMAR) also beat and guided FY ’21 in line with expectations. MongoDB (MDB), which also posted a strong finish to its FY ’20, was the only company to explicitly call out an impact from coronavirus on its outlook with management estimating a $15-$25 million hit to revenue from potentially softer bookings in 1H ’21.
Elsewhere, ShotSpotter (SSTI) reduced its revenue expectations for the year as restrictions on travel and customer requests to delay deployments in the near-term will limit the number of “go-live” miles deployed. Radware (RDWR) authorized a special $20 million share repurchase program, which is in addition to an existing $40 million share repurchase plan. Finally, a number of insiders also stepped up to buy shares at companies including American Software (AMSWA), ChannelAdvisor (ECOM) and Cloudera (CLDR).
Earnings Releases
Coupa Software Reports Fourth Quarter & Full Year Fiscal 2020 Financial Results
Coupa Software (COUP) reported Q4 ’20 results above expectations and provided a mixed outlook for FY ’21.
Revenues were $111.5 million (+48.8% Y/Y), exceeding guidance for $101.5-$102.5 million and consensus of $102.4 million. Non-GAAP operating income was $13.3 million (12.0% margin), also exceeding guidance for $3.0-$4.5 million and consensus of $4.0 million. Non-GAAP EPS of $0.21 beat guidance for $0.03-$0.06 and consensus of $0.05.
Professional services and other revenue benefited from a few strategic direct services arrangements that continued into Q4 and are now nearing completion, and billings of $181 million were by far the largest ever for a quarter.
Community Intelligence, now powered by nearly $1.7 trillion in spend under management, is in the early innings of providing significant value creation to customers.
Coupa Pay has seen strong early momentum in the addition of new customers and in early deployments, and management indicated that deals including Coupa Pay were 20% higher on average than deals without in FY ‘20.
Coupa’s Business Spend Index for Q1 continues to suggest that U.S. businesses remain cautious about the economy, and in the past several weeks, purchase patterns in categories like office sanitizing equipment, personal protective equipment and business travel predictably followed consumer spending trends due to coronavirus.
Yapta, now rebranded as Coupa Travel Saver, is expected to contribute $1.0-$2.0 million in revenue in Q1.
Q1 guidance for $111.5-$112.5 million in revenue, $4.0-$5.5 million in non-GAAP operating income and $0.06-$0.08 in non-GAAP EPS was mixed relative to consensus of $106.9 million, $5.6 million and $0.07, respectively.
Management’s FY ’21 guidance for $488.0-$490.0 million in revenue, $21.0-$23.0 million in non-GAAP operating income and $0.30-$0.33 in non-GAAP EPS was also mixed relative to consensus of $487.5 million, $38.2 million and $0.47, respectively.
CrowdStrike Reports Fourth Quarter and Fiscal Year 2020 Financial Results
CrowdStrike (CRWD) reported Q4 ’20 results above expectations and guided FY ’21 ahead of consensus.
Revenue was $152.1 million (+89.1% Y/Y), exceeding guidance for $135.9-$138.6 million and consensus of $137.7 million. Non-GAAP operating income was $(6.7) million (-4.4% margin), well above guidance for $(21.6)-$(19.7) million and consensus of $(20.4) million. Non-GAAP EPS of $(0.02) beat guidance for $(0.09)-$(0.08) and consensus of $(0.08).
Key metrics: annual recurring revenue (ARR) of $600.5 million (+92% Y/Y); added $98.7 million in net new ARR during Q4; added 870 net new subscription customers for a total of 5,431 (+116% Y/Y) at quarter-end; dollar-based net retention rate of 124%; gross retention rate of 98%.
Within new enterprise customers, CrowdStrike landed bigger with more modules and more than doubled the number of customers starting out with ARR of $1 million or more.
As Broadcom (AVGO) began integrating Symantec, CrowdStrike saw an increase in inquiries among customers and partners, resulting in pipeline expansion, an acceleration in overall customer adoption and more engagement with partners.
Q1 guidance includes revenue of $164.3-$167.6 million, non-GAAP operating income of $(16.2)-$(13.9) million and non-GAAP EPS of $(0.07)-$(0.06), exceeding consensus of $147.9 million, $(19.3) million and $(0.08), respectively.
Management’s FY ’21 guidance for $723.3-$733.5 million in revenue, $(37.1)-$(29.9) million in non-GAAP operating income and $(0.14)-$(0.10) in non-GAAP EPS also exceeded Street expectations for $675.9 million $(45.7) million and $(0.18).
MongoDB, Inc. Announces Fourth Quarter and Full Year Fiscal 2020 Financial Results
MongoDB (MDB) reported Q4 ’20 results well above expectations but guided FY ’21 below consensus.
Revenue of $123.5 million (+44.5% Y/Y) exceeded guidance for $109.0-$111.0 million and consensus of $110.6 million. Non-GAAP operating income was $(12.0) million (-9.8% margin), above guidance for $(16.5)-$(15.5) million and consensus of $(15.9) million. Non-GAAP EPS of $(0.25) beat guidance for $(0.29)-$(0.27) and consensus of $(0.28).
Key metrics: added over 1,100 customers for a total of over 17,000 at quarter-end; over 2,000 direct sales customers and over 15,400 MongoDB Atlas customers; 751 (+35% Y/Y) customers with $100,000 or more in annualized recurring revenue (ARR); net ARR expansion rate remained above 120%.
The strong performance arose from broad-based demand for both Atlas and Enterprise Advanced with one large multi-year deal for the latter driving $3.5 million of the outperformance.
Per management, the salesforce is executing at a high level, and MongoDB saw meaningful productivity increases in both the enterprise and corporate channels; the self-serve business also made progress with a record number of customer additions.
With IDC projecting the global database market to be $71 billion 2020 growing to $97 billion in 2023, MongoDB has less than 1% share and has a long runway for growth as new and existing workloads migrate to the cloud.
Management’s guidance for Q1 and FY ‘21 reflect revenue headwinds of $1.0-$2.0 million and $15.0-$25.0 million, respectively, from COVID-19.
Q1 guidance for $119.0-$121.0 million in revenue, $(14.0)-$(12.0) million in non-GAAP operating income and $(0.25)-$(0.22) in non-GAAP EPS compared favorably with consensus of $116.4 million, $(14.3) million and $(0.24), respectively.
Management’s FY ’21 outlook for $510.0-$531.0 million in revenue, $(78.0)-$(68.0) million in non-GAAP operating income and $(1.40)-$(1.23) in non-GAAP EPS fell short the Street’s $533.0 million, $(45.2) million and $(0.79), respectively.
Eliot Horowitz, co-founder and CTO of MongoDB, has decided to step down as CTO and a director of the company.
PagerDuty Announces Fourth Quarter and Full Year Results for Fiscal 2020
PagerDuty (PD) reported Q4 ’20 results above expectations and provided a mixed outlook for FY ’21.
Revenue of $45.9 million (+35.8% Y/Y) was above guidance for $44.5-$45.5 million and consensus of $45.1 million. Non-GAAP operating income was $(3.9) million (-8.6% margin), ahead of consensus of $(5.7) million. Non-GAAP EPS of $(0.03) beat guidance for $(0.07)-$(0.06) and consensus of $(0.06).
Key metrics: 12,774 customers (+14% Y/Y) at quarter-end, including 323 (+42% Y/Y) with ARR over $100,000; over 500,000 users on the platform; dollar-based net retention rate was 122%; churn remains below 5% on an annualized basis.
Growth was driven by new customers, new users and new product adoption.
The performance of tenured salespeople remains strong, and new sales enablement programs and tools to support overall rep effectiveness are bearing positive results.
Management has seen some early indicators of changing demand signals related to COVID-19 but nothing material to date.
PagerDuty does not have significant industry concentration outside of software and tech, which comprise one-third of revenue, but the company does have a meaningful business in retail, e-commerce and financial services.
Q1 guidance for revenue of $48.0-$49.0 million and non-GAAP EPS of $(0.09)-$(0.08) was generally consistent with Street expectations for $47.6 million in revenue and $(0.08) in non-GAAP EPS.
Management’s FY ’21 outlook includes revenue of $208.0-$213.0 million and non-GAAP EPS of $(0.31)-$(0.25), which was mixed versus Street expectations for $201.4 million in revenue and $(0.23) in non-GAAP EPS.
Smartsheet Inc. Announces Fourth Quarter and Full Year Fiscal 2020 Results
Smartsheet (SMAR) reported Q4 ’20 results above expectations and guided FY ’21 in line with consensus.
Revenue of $78.5 million (+50.6% Y/Y) was ahead of guidance for $77.0-$78.0 million and consensus of $77.7 million. Non-GAAP operating income was $(17.3) million (-22.0% margin), above guidance for $(21.5)-$(19.5) million and consensus of $(21.3) million. Non-GAAP EPS of $(0.13) beat guidance for $(0.17)-$(0.16) and the Street’s $(0.16).
Key metrics: billings of $101.5 million (+58% Y/Y); 84,000 domain-based customers at quarter-end; 961 (+116% Y/Y) customers with ACV of $50,000 or more and 350 (+138% Y/Y) customers with ACV of $100,000 or more; average ACV per domain-based customer of $3,643 (+48% Y/Y); dollar-based net retention rate was 135%; churn rate below 8%.
Growth was driven by continued strong execution across the business and significant expansion within existing customers.
Smartsheet has released a set of free templates that may be used to create a COVID-19 operations dashboard containing CDC documentation and other resources, which thousands of organizations have deployed already.
Q1 guidance includes revenue of $82.0-$83.0 million, non-GAAP operating income of $(26.0)-$(24.0) million and non-GAAP EPS of $(0.21)-$(0.19), which was mixed versus consensus of $81.9 million, $(19.3) million and $(0.15), respectively.
Guidance for FY ’21 calls for revenue of $373.0-$378.0 million, non-GAAP operating income of $(75.0)-$(67.0) million and non-GAAP EPS of $(0.62)-$(0.55), which was generally consistent with the Street’s $376.5 million, $(72.4) million and $(0.53).
Notable News
Radware Announces $20 Million Share Repurchase Plan in Addition to the Previous Plan
Radware’s (RDWR) board of directors has authorized a new $20 million share repurchase plan that is exceptional and in addition to the company’s previously announced $40 million share repurchase plan.
ShotSpotter Responds to COVID-19 Challenge
ShotSpotter (SSTI) has temporarily closed its headquarters and required all employees to work from home in response to the COVID-19 outbreak.
The company expects its gunshot detection services to continue uninterrupted, but a travel ban through the end of this month and customer requests to delay deployments are expected to reduce the number of new miles deployed.
Reflecting the delays, ShotSpotter has reduced its FY ’20 revenue guidance from $48.0-$50.0 million to $46.0-$48.0 million.
Disclosure(s):
K. Liu & Company LLC has received compensation from American Software (AMSWA) for non-investment banking services within the past 12 months.