K. Liu's Week in Review
Stamps.com’s (STMP) shareholders approved the company’s proposed sale to Thoma Bravo for $330.00 per share in cash, paving the way for the transaction to close this coming week. Of course, our coverage of Stamps.com will come to an end with the closing of the deal. Elsewhere in our coverage universe, NetScout Systems (NTCT) highlighted a couple of collaborations underway in its security business. First, the company is working closely with NTT Communications to better discover, analyze and prevent DDoS and other cyberattacks. Additionally, NetScout’s Arbor Sightline and Arbor Edge Defense solutions have been fully integrated with Palo Alto Networks’ (PANW) Cortex XSOAR platform, enabling joint customers to improve their detection, analysis and mitigation of security threats in hybrid environments. Although these developments are unlikely to move the needle from a business perspective, we believe NetScout’s expanded security portfolio will be critical to reaccelerating growth in the years to come and integration with other best-of-breed providers is essential given the myriad of solutions required to combat cybersecurity threats.
Zoom Video Communications’ (ZM) proposed acquisition of Five9 (FIVN) fell by the wayside after the latter was unable to secure support from its shareholders. The two companies will remain partners, however, and will continue to support integrations between their solutions as well as joint go-to-market efforts. Five9 plans to host a Financial Analyst Day in mid-November to discuss its strategy, outlook and business opportunities as it moves forward as a standalone company. Also on the M&A front, Akamai (AKAM) agreed to acquire Guardicore, which offers a micro-segmentation solution that helps protect enterprises against ransomware and other malware threats, for $600 million in cash. In essence, Guardicore restricts communications and data flow between applications to limit the spread and impact of any malware that has found its way into the network. The acquisition expands Akamai’s Zero Trust security portfolio and is expected to add $30-$35 million in revenue in FY ’22. Although the addition of Guardicore is expected to bring Akamai’s FY ’22 non-GAAP operating margin down to 29%-30%, management anticipates a rebound to at least 30% the following year.
As for other notable news, Intuit (INTU) reaffirmed its prior Q1 and FY ’22 guidance in conjunction with its virtual investor day. Adobe (ADBE) appointed Dan Durn as its next Chief Financial Officer, succeeding John Murphy, who previously announced his retirement. Mr. Durn joins the company from Applied Materials, where he also served as CFO. Lastly, Altair (ALTR) raised $200 million in cash via a private placement of approximately 2.9 million shares of its Class A common stock at a price of $68.13, an 8.5% discount to the last closing price prior to the announcement.
Mergers and Acquisitions
Akamai to Acquire Guardicore to Extend Its Zero Trust Solutions to Help Stop Ransomware
Akamai Technologies (AKAM) has agreed to acquire Guardicore, which offers security services to protect enterprises from ransomware and malware, for $600 million in cash.
Guardicore’s micro-segmentation solution limits user access to only those applications that are authorized to communicate with each other, thereby restricting the spread of malware and protecting the flow of data across networks.
The addition of Guardicore expands Akamai’s Zero Trust security portfolio, which includes solutions such as Web Application Firewall, Zero Trust Network Access, Domain Name System Firewall and Secure Web Gateway.
Akamai expects the acquisition to contribute $30-$35 million in revenue and anticipates a non-GAAP operating margin of 29%-30% for the combined company in FY ‘22 before returning to a margin of at least 30% the following year.
Five9 and Zoom Mutually Agree to Terminate Merger Agreement
Five9 (FIVN) and Zoom Video Communications (ZM) have mutually agreed to terminate their merger agreement after Five9 shareholders opted not to approve the deal.
The companies will remain partners and continue to support integrations between their respective solutions and joint go-to-market efforts.
Stamps.com Stockholders Approve Merger with Thoma Bravo
Stamps.com (STMP) announced that its stockholders approved the company’s proposed sale to Thoma Bravo for $330.00 per share in cash.
Approximately 77.9% of the shares issued and outstanding as of the record date for the Special Meeting voted in favor of the transaction, which is expected to close the week of October 4, 2021.
Earnings Releases
Intuit Hosts Virtual Investor Day, Reaffirms First-Quarter and Fiscal 2022 Guidance
Intuit (INTU) reiterated its Q1 and FY ’22 guidance in conjunction with its virtual investor day.
Q1 guidance calls for revenue of $1.795-$1.825 billion, non-GAAP operating income of $353-$368 million and non-GAAP EPS of $0.94-$0.99.
FY ’22 guidance includes revenue of $11.050-$11.200 billion, non-GAAP operating income of $4.050-$4.125 billion and non-GAAP EPS of $11.05-$11.25.
Notable News
Adobe Appoints Dan Durn Chief Financial Officer
Adobe (ADBE) has appointed Dan Durn as executive vice president and chief financial officer, effective October 18, 2021.
Mr. Durn joins the company from Applied Materials, where he has served as CFO since 2017.
Altair (ALTR) raised $200 million from Matrix Capital Management, one of the company’s largest shareholders, via a private placement of 2,935,564 shares of its Class A common stock.
The implied offering price of $68.13 represents an 8.5% discount to the last closing price prior to disclosure of the deal.
Terms of the agreement include a one-year lockup period for the shares.
NetScout Systems (NTCT) has integrated its Arbor Sightline and Omnis AED solutions with Palo Alto Networks’ Cortex XSOAR platform, enabling their joint customers to better detect and mitigate security threats in hybrid environments.
The integrations are available on the Cortex XSOAR marketplace.
NETSCOUT Engaged with NTT Communications on Threat Intelligence and DDoS Attack Resilience Research
NetScout Systems (NTCT) is working with NTT Communications to conduct research and resilience testing to discover, analyze and prevent DDoS and other cyberattacks.
The research initiative will be in effect between September 2021 and December 2021.
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 NetScout Systems (NTCT).