K. Liu's Week in Review
M&A activity slowed somewhat, but this week still saw two notable transactions. Palo Alto Networks (PANW) announced plans to acquire Demisto, a leader in security orchestration, automation and response solutions, for $560MM in a cash and stock deal. Demisto’s automated playbooks have reduced the number of alerts requiring human intervention by as much as 95%, which considering the number of security tools in use across large enterprises and the corresponding volume of alerts generated, should resonate with PANW’s customer base. Also bolstering its suite of offerings for customers, Instructure (INST) acquired Portfolium for approximately $37MM in cash and stock. Portfolium provides a platform enabling students to showcase their achievements, projects and competencies to potential employers. Combined with the company’s learning management platform, Portfolium fits well within INST’s mission of helping people “learn and develop from their first day of school to their last day of work.”
Earnings season remained in full swing as we tracked results and guidance from 18 software companies. No company reported an outright miss for calendar Q4 ’18 this week and nearly all posted top and bottom line beats. The majority also saw revenue and earnings expectations rise for the full year. Companies that beat and saw expectations rise this week included Five9 (FIVN), Intuit (INTU), ShotSpotter (SSTI) and Workiva (WK). Those hardest hit included Appian (APPN), Carbon Black (CBLK), Dropbox (DBX), Stamps.com (STMP) and Wix (WIX).
We have written previously about the positive virtues of STMP’s positioning in the shipping software space. Unfortunately, shares were shellacked this week on the bombshell that the company had terminated a longstanding commission agreement with the USPS, prompting far lower FY ’19 guidance than the Street and we had projected. As we had assumed the agreement would be extended with only nominal changes, the news prompted a substantial reduction in our estimates and valuation for the company. However, we remain steadfast in our belief that the company’s market leading multi-carrier shipping solutions leave it well-positioned to benefit from growth in e-commerce. Our Q4 ’18 recap provides more insight into our thoughts following the break-up with the USPS, but suffice to say, we think the current stock price reflects a compelling entry point. Subsequent to the company’s results and guidance, the USPS posted financial data for the month of January to the Postal Regulatory Commission’s website. PC Postage revenues for the month increased 11.1% Y/Y, continuing the positive trend seen since 2H ’18. While the data point is a little less relevant today given the loss of direct payments on postage volumes, it should still be viewed positively given STMP’s remaining exposure to reseller revenue shares and plans to apply a 3% surcharge on NSA-related volumes.
This past week also saw several 5G-related announcements from the likes of NETSCOUT (NTCT) and others in the service assurance and security space. The press releases coincide with Mobile World Congress, which kicks-off this coming Monday. Notable executive moves this week included American Software’s (AMSWA) hiring of a new global sales leader, Mac McGary, for its Logility supply chain management solution. Mr. McGary had previously served in a similar role at GT Nexus, where sales increased 6x during his tenure and the company was eventually acquired by Infor. Also announcing new hires were Blackline (BL), which appointed Peter Hirsch as CTO, and Splunk (SPLK), which welcomed Carrie Palin as CMO. Mr. Hirsch joined from Ellie Mae, and Ms. Palin joined from SendGrid. Finally, Pluralsight (PS) promoted Brandon Peay to Chief Strategy and Operations Officer, while NTCT appointed current COO Michael Szabados and Vivian Vitale to its Board of Directors following the retirement of Vincent Mullarkey.
Mergers and Acquisitions
INST: Instructure Enters Into Agreement to Acquire Student Success Network Portfolium
INST announced plans to acquire Portfolium, a platform enabling students to showcase their achievements, projects and competencies to potential employers.
Portfolium has been utilized by millions of students across over 3,600 academic institutions.
The transaction closed on February 21, 2019.
The purchase price is comprised of $25.8MM in cash and 400,489 shares of INST common stock, which had an aggregate value of $17.1MM based on INST’s closing price on the date the acquisition was consummated.
PANW: Palo Alto Networks Announces Intent to Acquire Demisto
PANW announced that the company has entered into a definitive agreement to acquire Demisto, a leading provider of security orchestration, automation and response solutions with over 150 customers.
The total purchase price of $560MM is comprised of cash and stock with the mix varying based on the elections of Demisto’s stockholders and the average closing price of PANW for the 20-trading day period ending the third day prior to the closing of the transaction, which is expected in PANW’s FQ3 ‘19.
Demisto’s automated playbooks can reduce alerts requiring human intervention by as much as 95%.
Management plans to share more details regarding Demisto’s financial profile when the company reports its quarterly results next week.
Notable News
AMSWA: Logility Names Mac McGary Executive Vice President of Global Sales
AMSWA announced that Mac McGary has been named EVP of Global Sales for Logility.
Mr. McGary was most recently president of Sweetbridge Alliance, but prior to that had served as EVP of Global Sales at GT Nexus, where sales increased 6x during his tenure and was ultimately acquired by Infor.
BL: Peter Hirsch Joins Blackline as Chief Technology Officer
BL announced the hiring of Peter Hirsch as chief technology officer (CTO).
Mr. Hirsch will be responsible for the company’s cloud platform as well as its internal technology roadmap.
Mr. Hirsch most recently served as EVP of Technology & Operations at Ellie Mae and prior to that served as SVP and chief architect at Ariba.
NTCT: NETSCOUT Appoints Vivian Vitale and Michael Szabados to Board of Directors
NTCT announced the appointments of Vivian Vitale and Michael Szabados to the company’s Board of Directors.
The expansion of the Board coincides with the retirement of Vincent Mullarkey from NTCT’s Board of Directors after 18 years of service.
Ms. Vitale currently operates Vivian Vitale Consulting, which is focused on assisting organizations with people management practices, organizational transitions and leadership coaching. She previously served as EVP of Human Resources at Veracode.
Mr. Szabados, NTCT’s current COO, has been with the company since 1997 and has also been named Vice Chairman of the Board.
NTCT: NETSCOUT Accelerates the 5G Transformation Opportunity for Service Providers
NTCT announced support for the entire 5G life cycle through the availability of its InfiniStreamNG (ISNG) Smart Data platform.
Some of NTCT’s largest customers are already using technical innovations with NETSCOUT 5G propagation modeling for planning and optimizing 5G services.
The latest release of the ISNG 5G solution supports non-standalone 5G networks, end-to-end, with or without Control and User Plane Separation.
“Our customers must be ready to compete in this 5G world with NFV-ready monitoring solutions for new services including IoT that are running in the edge-cloud.” – Bruce Kelly, CTO of NETSCOUT
PS: Pluralsight Promotes Brandon Peay to Chief Strategy and Operations Officer
PS announced the promotion of Senior Vice President of Strategy and Operations, Brandon Peay, to Chief Strategy and Operations Officer effective immediately.
Mr. Peay joined PS in 2014 and will now have responsibilities for creating company-wide alignment to effectively execute the company’s corporate strategy and ensuring operational excellence to drive greater growth.
SPLK: Splunk Welcomes Carrie Palin as Chief Marketing Officer
SPLK has appointed Carrie Palin as senior vice president, chief marketing officer (CMO), a role in which she will oversee the company’s global marketing strategy.
Ms. Palin previously served as CMO of SendGrid, which was recently acquired by Twilio, and prior to that was CMO at Box.
Earnings Releases
AMSWA: American Software Reports Preliminary Third Quarter of Fiscal Year 2019 Results
AMSWA reported mixed Q3 ’19 results as non-GAAP EPS beat despite lower revenues.
Revenues of $27.0MM (-10.3% Y/Y) were below consensus of $28.9MM. Non-GAAP operating income was $3.2MM (11.8% margin), and adjusted EBITDA of $4.6MM (16.9% margin) exceeded consensus of $4.1MM. Non-GAAP EPS of $0.10 beat the Street’s $0.07.
The decline in revenues reflects the company’s ongoing transition to SaaS as well as a difficult comparison in the year ago period due to the closure of an unusually large license deal.
Cloud services Annual Contract Value (ACV) increased 48% Y/Y to $16.1MM; ACV associated with new contracts increased from $0.5MM in Q1 to $1.3MM in Q2 to $1.6MM in Q3.
APPN: Appian Announces Fourth Quarter and Full Year 2018 Financial Results
APPN reported Q4 ’18 results ahead of expectations and guided FY ’19 revenues above consensus.
Total revenue of $60.2MM (+19.1% Y/Y) was above consensus of $55.7MM and management’s $59.5MM-$59.8MM guidance. Non-GAAP operating income of $(8.5)MM (-14.1% margin) was also ahead of the Street’s $(9.8)MM and management’s guidance. Non-GAAP EPS of $(0.14) exceeded consensus of $(0.16).
Key metrics: subscription revenue retention rate of 117%; 87 net new subscription customers added for the year; ended with 378 subscription customers and 436 total customers; annual revenue per client of $520k; 38 seven-figure ARR customers at year-end.
Management’s Q1 guidance includes revenues of $59.5MM-$59.8MM, non-GAAP operating loss of $(10.5)MM-$(10.0)MM and non-GAAP EPS of $(0.17)-$(0.16). Consensus called for revenues of $58.6MM, non-GAAP operating loss of $(7.6)MM and non-GAAP EPS of $(0.12).
For FY ’19, management’s guidance of $258.5MM-$262.5MM in revenues was above the Street’s $254.2MM, while expectations for non-GAAP operating income of $(29.5)MM-$(27.5)MM and non-GAAP EPS of $(0.46)-$(0.42) were in line with consensus of $(28.7)MM and $(0.44), respectively.
CBLK: Carbon Black Announces Fourth Quarter and Full Year Fiscal 2018 Financial Results
CBLK reported Q4 ’18 results above expectations, but issued mixed guidance for FY ’19.
Total revenue of $56.9MM (+27.4% Y/Y) was above management’s $55.3MM-$55.8MM guidance and consensus of $55.7MM. Non-GAAP operating income of $(15.0)MM (-26.4% margin) was also above management’s guidance and the Street’s $(16.5)MM. Non-GAAP EPS of $(0.20) beat management’s $(0.25)-$(0.24) guidance and consensus of $(0.24).
Key metrics: added 400 customers in Q4 bringing total customers at quarter end to 5,025 (+34% Y/Y), including 2,851 (+78% Y/Y) cloud customers; ARR was $217.0MM at the end of Q4, including $81.3MM in cloud ARR; gross retention rate was 87%.
CBLK’s 2019 strategy is to land larger new customer wins, expand back-to-base sales, migrate existing CB Response customers to CB ThreatHunter and cross-sell additional PSC offerings.
Management’s Q1 guidance fell short of expectations as revenues of $56.5MM-$57.5MM, non-GAAP operating income of $(16.0)MM-$(15.5)MM and non-GAAP EPS of $(0.23)-$(0.22) were all below consensus of $58.5MM, $(15.0)MM and $(0.21), respectively.
For FY ’19, management guided to revenues of $240.0MM-$244.0MM, non-GAAP operating income of $(45.0)MM-$(43.0)MM and non-GAAP EPS of $(0.64)-$(0.61). Consensus called for $256.7MM in revenues, $(49.0)MM in non-GAAP operating income and $(0.69) in non-GAAP EPS.
The company continues to target positive free cash flow by the fourth quarter of 2020.
In the corresponding 8-K filing, CBLK also disclosed that CFO Mark Sullivan announced his intention to resign and would be succeeded by Stephen Webber, who most recently served as COO and CFO of BackOffice Associates, LLC.
DBX: Dropbox Announces Fourth Quarter and Fiscal 2018 Results
DBX reported Q4 ’18 results ahead of consensus and provided mixed guidance for Q1 and FY ’19.
Total revenue was $375.9MM (+23.0% Y/Y), above management’s $367.0MM-$370.0MM guidance and consensus of $370.0MM. Non-GAAP operating income of 41.5MM (11.0% margin) also exceeded the Street’s $36.9MM. Non-GAAP EPS of $0.10 beat consensus by $0.02.
Key metrics: paying users totaled $12.7MM (+15.5% Y/Y); ARPU was $119.61 (+5.5% Y/Y).
Management’s Q1 guidance calls for $379.0MM-$382.0MM in revenues and a 7%-8% non-GAAP operating margin, implying $26.5MM-$30.6MM in non-GAAP operating income. Consensus called for revenues of $378.0MM and non-GAAP operating income of $45.9MM.
For FY ’19, management’s guidance includes $1.627B-$1.642B in revenues, above the Street’s $1.604B, and non-GAAP operating margin of 10.5%-11.5%, or $170.8MM-$188.8MM in non-GAAP operating income. Consensus called for $216.0MM in non-GAAP operating income.
EVBG: Everbridge Announces Fourth Quarter and Full Year 2018 Financial Results
EVBG reported Q4 results above expectations and guided FY ’19 ahead of consensus.
Revenue of $41.8MM (+43.4% Y/Y) was at the high-end of the upwardly revised range provided in mid-January when the company completed a secondary offering and above consensus of $41.1MM. Non-GAAP operating income was $(1.4)MM (-3.3% margin), while adjusted EBITDA was $0.8MM (1.9% margin). Non-GAAP EPS of $(0.09) beat the high-end of management’s guidance and consensus by a penny.
Key operating metrics: added 155 net new enterprise clients in the quarter bringing the total to 4,422 (+28.9% Y/Y) at quarter end; dollar-based retention in the mid-90% range and over 110% on a net basis; closed 32 deals valued at over $100k per year and increased TTM ASP to over $67k (+31% Y/Y).
Management’s Q1 guidance was mixed with revenues of $42.0MM-$42.3MM in line with the Street’s $42.1MM, but adjusted EBITDA and non-GAAP EPS guidance of $(2.7)MM-$(2.4)MM and $(0.19)-$(0.18), respectively, falling short of the Street’s $(0.8)MM and $(0.13).
Guidance for FY ’19 included revenues of $195.1MM-$196.6MM, adjusted EBITDA of $4.0MM-$5.0MM and non-GAAP EPS of $(0.29)-$(0.26), all of which compared favorably with consensus of $185.7MM, $3.6MM and $(0.33).
FIVN: Five9 Reports Fourth Quarter Revenue Growth of 31% to a Record $72.3 Million
FIVN reported Q4 ’18 results above expectations and guided FY ’19 ahead of consensus.
Revenue of $72.3MM (+30.6% Y/Y) exceeded management’s $65.8MM-$66.8MM guidance and consensus of $66.4MM. Non-GAAP operating income was $13.7MM (18.9% margin) and adjusted EBITDA was $16.4MM (22.7% margin). Non-GAAP EPS of $0.23 easily beat management’s $0.13-$0.14 guidance and the Street’s $0.14.
Key metrics: over 40 customers generating $1MM+ in Q4 annualized ARR; dollar-based retention rate of 103%; average concurrent seat count +28% Y/Y to 105.3k.
Management guided Q1 non-GAAP EPS in line with consensus on higher revenues. Specifically, Q1 guidance includes revenues of $70.0MM-$71.0MM, above consensus of $68.9MM, and non-GAAP EPS of $0.11-$0.13, in line with the Street’s $0.12.
For FY ’19, management’s guidance calls for revenues of $298.5MM-$301.5MM and non-GAAP EPS of $0.58-$0.62, both of which compare favorably with consensus of $295.8MM and $0.59, respectively.
FIVN remains on track to reach an adjusted EBITDA margin of 27%+ in approximately four years.
GDDY: GoDaddy Reports Fourth Quarter and Full Year 2018 Results
GDDY reported Q4 ’18 results above expectations and guided FY ’19 generally in line with consensus.
Revenue of $695.8MM (+15.5% Y/Y) was above consensus of $693.5MM. EPS of $0.24 were also above the Street’s $0.13. Unlevered free cash flow was $126.8MM (18.2% margin).
Key metrics: total bookings of $732.4MM (+11.3% Y/Y); total customers of 18.5k (+6.8% Y/Y) at the end of Q4; ARPU of $148 (+6.6% Y/Y).
Management’s Q1 guidance calls for revenues of $705.0MM-$715.0MM, below consensus of $716.3MM. For FY ’19, management guided to revenues of $2.97B-$3.00B, generally consistent with consensus of $2.99B, and unlevered free cash flow of $730.0MM-$745.0MM.
HSTM: HealthStream Announces Fourth Quarter and Full-Year 2018 Results
HSTM reported Q4 ’18 results above expectations and provided mixed guidance for FY ’19.
Revenues of $59.8MM (+8.2% Y/Y) were above consensus of $58.9MM. Non-GAAP operating income was $2.9MM (4.9% margin) and adjusted EBITDA was $9.5MM (15.8% margin). Non-GAAP EPS of $0.09 beat the Street’s $0.06.
4,823k total subscribers implemented at the end of Q4 and 4,933k total subscribers contracted; 1.51MM hStream subscriptions under contract.
HSTM’s addressable market has expanded from 8.5MM healthcare professionals to 10.5MM and the company plans to expand its sales organization to take advantage.
Management’s FY ’19 guidance includes revenues of $251.0MM-$258.0MM and operating income of $10.0MM-$12.4MM. Consensus called for revenues of $241.7MM and operating income of $15.0MM.
INST: Instructure Reports Fourth Quarter and Full Year 2018 Financial Results
INST reported Q4 ’18 results ahead of expectations, but provided mixed guidance for FY ’19.
Revenue of $56.3MM (+25.7% Y/Y) was above the top end of management’s $55.2MM-$56.2MM guidance and consensus of $55.8MM. Non-GAAP operating income was $(1.0)MM (-1.8% margin). Non-GAAP EPS were $(0.01), easily exceeding management’s $(0.16)-$(0.14) guidance and the Street’s $(0.15).
Management highlighted three of six defined growth initiatives expected to broaden the company’s offerings and meaningfully expand its TAM, including connecting the academic and professional worlds through the launch of a student success platform; combining a technology platform that features analytics, data science and artificial intelligence with a comprehensive SaaS database on the educational experience to deliver more value to customers; and Bridge, an employee engagement and development offering.
Guidance for Q1 calls for $56.9MM-$57.5MM in revenues, below consensus of $59.3MM, and $(0.16)-$(0.14) in non-GAAP EPS, in line with the Street’s $(0.16).
Management’s FY ’19 outlook includes revenues of $256.0MM-$260.0MM, consistent with consensus of $258.9MM, and non-GAAP EPS of $(0.65)-$(0.59), below the Street’s $(0.55).
INTU reported Q2 ’19 results above expectations and reaffirmed prior guidance for FY 19.
Net revenue of $1.50B (+12.2% Y/Y) exceeded management’s $1.47B-$1.49B guidance and consensus of $1.48B. Non-GAAP operating income of $339.0MM (22.6% margin) also exceeded guidance and Street expectations. Non-GAAP EPS of $1.00 beat the Street’s $0.86 and management’s $0.85-$0.88 guidance.
Key metrics: QuickBooks online subscribers grew 38% Y/Y to ~3.9MM; self-employed subscribers rose from 489k to 845k; QuickBooks capital had $88MM in loans outstanding at the end of Q2.
Management noted that the company does not see any evidence of a macro-inspired slowdown in INTU’s business.
Management’s Q3 guidance calls for revenue growth of 10%-12%, implying $3.22B-$3.28B in revenues versus consensus of $3.20B. Non-GAAP EPS guidance of $5.35-$5.40 was in line with the Street’s $5.38.
For FY ’19, management reaffirmed prior guidance for $6.53B-$6.63B in revenues, $2.117B-$2.22B in non-GAAP operating income and $6.40-$6.50 in non-GAAP EPS.
LPSN: LivePerson Announces Fourth Quarter 2018 Financial Results
LPSN reported Q4 ’18 results ahead of expectations, but provided mixed guidance for FY ’19 due to plans for significant investments in sales and marketing.
Total revenue of $65.7MM (+14.5% Y/Y) exceeded management’s $63.9MM-$65.9MM guidance and consensus of $65.1MM. Adjusted EBITDA of $5.3MM (8.0% margin) was also ahead of guidance and consensus. Non-GAAP EPS of $0.04 beat the Street’s $0.02.
Key metrics: signed 124 (+23% Y/Y) deals in the quarter, including 60 new customer contracts; TTM average revenue per enterprise increased over 25% Y/Y to $285k; 2018 revenue retention rate over 110%.
LPSN plans to expand its global field organization in 2019, including a 50%+ increase in quota carrying headcount and doubling the number of lead generation reps and enterprise partner managers.
Q1 guidance includes revenues of $65.8MM-$66.8MM, consistent with the Street’s $66.1MM. Guidance for adjusted EBITDA of $(4.3)MM-$(2.3)MM was well below consensus of $2.2MM.
For FY ’19, management guided to revenues of $284.5MM-$291.5MM and adjusted EBITDA of $10.0MM-$15.0MM. Guidance was above Street expectations for $284.0MM in revenues, but short of the $16.8MM consensus forecast for adjusted EBITDA.
Management anticipated high-teens growth by Q4 ’19 and at least 20% growth in 2020; LPSN plans to share a detailed long-term financial model at its upcoming Analyst Day in May.
PEGA: Cloud Drives Strong 2018 Performance and Year-Over-Year Growth
PEGA reported Q4 ’18 results above expectations and provided mixed guidance for FY ’19.
Total revenue of $256.4MM (+0.7% Y/Y) was ahead of the Street’s $252.7MM. Non-GAAP operating income was in line with consensus of $34.7MM (13.5% margin). Non-GAAP EPS of $0.36 beat consensus of $0.32.
Total ACV of $570MM (+23% Y/Y), including Term and Cloud ACV of $300MM (+40% Y/Y); 50% of new client commitments in 2018 were for Pega Cloud versus 30% anticipated.
PEGA’s cloud transition should cross the midpoint in 2020 and be complete sometime in early 2022 assuming cloud commitments continue to represent half of total commitments.
Management’s FY ’19 guidance calls for $965.0MM in revenues, above the Street’s $941.9MM, and $0.50 in non-GAAP EPS, just shy of the Street’s $0.53.
Management reaffirmed the company’s commitment to achieving the Rule of 40 (revenue growth plus operating margin) by 2022.
SSTI: ShotSpotter Reports Fourth Quarter and Full Year 2018 Financial Results
SSTI announced Q4 ’18 results above expectations and reaffirmed management’s prior FY ’19 guidance.
Revenues of $9.7MM (+48.9% Y/Y) exceeded consensus of $9.5MM. Adjusted EBITDA was $2.1MM (21.7% margin). EPS of $0.03 were above the Street’s $0.01.
Added 24 net new “go-live” square miles in Q4, bringing the total to 643 at year end; zero miles of attrition in Q4; revenue retention rate of 118% this year ex-Chicago expansion and 139% including Chicago.
New Verizon reseller agreement should help with SSTI’s goal of adding approximately 100 new customers over the next four-plus years.
Focused on adding more Tier 2 and Tier 3 cities this year along with more international deployments.
Management reaffirmed its prior FY ’19 revenue guidance of $45.0MM-$47.0MM. Consistent with Street expectations heading into the print, GAAP EPS is expected to be negative for Q1, but positive for the full year.
STMP: Stamps.com Reports Fourth Quarter and Fiscal 2018 Results
STMP reported Q4 ’18 results above expectations, but guided FY ’19 well below the Street.
Total revenues of $170.2MM (+28.5% Y/Y) exceeded consensus of $160.0MM. Adjusted EBITDA of $71.3MM (41.9% margin) also exceeded the Street’s $69.1MM. Non-GAAP EPS of $3.73 were well above consensus of $2.90.
Key metrics: 736k (flat Y/Y) paid customers at quarter end; monthly ARPU of $74.93 (+29% Y/Y); average monthly churn of 2.9%; $1.8B (+5% Y/Y) in customer postage printed.
During the earnings call, management indicated that the company had terminated a lucrative commission agreement with the USPS due to an impasse over exclusivity. STMP hopes to expand its partnerships with other carriers.
Reflecting the loss of its USPS agreement, management guided FY ’19 well below Street expectations, calling for revenues of $540.0MM-$570.0MM, adjusted EBITDA of $145.0MM-$165.0MM and non-GAAP EPS of $5.15-$6.15. Consensus called for $689.1MM in revenues, $293.2MM in adjusted EBITDA and $10.79 in non-GAAP EPS.
TYL: Tyler Technologies Reports Earnings for Fourth Quarter 2018
TYL’s Q4 ’18 results and FY ’19 guidance were mixed relative to Street expectations.
Non-GAAP total revenues of $243.0MM (+11.5% Y/Y) were below consensus of $246.3MM. Non-GAAP operating income was $65.2MM (26.8% margin), while adjusted EBITDA was $72.1MM (29.7% margin). Non-GAAP EPS of $1.26 were in line with the Street.
Key metrics: total backlog at year-end was $1.25B (+1.7% Y/Y), including software-related backlog of $1.21B (+1.9% Y/Y); bookings declined 13% Y/Y due to a difficult comp; average new subscription contract term was 4.1 years; added 83 new subscription-based arrangements and had 19-on premise conversions; subscription clients represented 44% of the number of new software contracts in Q4 and 40% of new software contract value; signed 46 new contracts with software licenses greater than $100k with an average license of $371k.
Q4 results were negatively impacted by a higher mix of subscription contracts than anticipated and several public safety deals that slipped out of the quarter.
Management’s FY ’19 guidance includes revenues of $1.09B-$1.11B and non-GAAP EPS of $5.20-$5.35. Consensus called for revenues of $1.04B and non-GAAP EPS of $5.37.
VERI: Veritone Reports Financial Results for the Fourth Quarter and Full Year 2018
VERI announced Q4 ’18 results above consensus and guided Q1 ahead of expectations.
Net revenues of $10.9MM (+212.8% Y/Y) was at the high-end of management’s pre-announced range of $10.7MM-$10.9MM and above consensus of $10.5MM. Adjusted EBITDA of $(8.9)MM was in line with consensus. GAAP EPS of $(0.92) were below the Street’s $(0.61).
Key metrics: 97 (+70% Y/Y) AI customers and 814 (+74% Y/Y) total AI accounts at the end of Q4; 287 (+90% Y/Y) active cognitive engines; MRR of $229k (+32% Y/Y); total contract value of bookings in Q4 of $$898k (+149% Y/Y); 76 (+33% Y/Y) active Veritone One Advertising Business clients in Q4; average media spend per client of $616k (+33% Y/Y).
Management’s Q1 guidance calls for revenues of $11.5MM-$11.9MM, above consensus of $10.2MM.
WIX: Wix Reports Fourth Quarter and Full Year 2018 Results
WIX reported Q4 ’18 results above expectations, but guided FY ’19 revenues below consensus.
Revenues of $164.2MM (+38.5% Y/Y) exceeded management’s $161.0MM-$162.0MM guidance and consensus of $162.0MM. Non-GAAP operating income was $18.8MM (11.5% margin). Non-GAAP EPS of $0.42 beat the Street’s $0.31.
Key metrics: added 147k net premium subscribers in Q4 to reach 4.0MM (+23.6% Y/Y) at quarter end; added 5.9MM registered users in Q4 for a total of 142.4MM (+19.4% Y/Y) at quarter end;
Collections per subscription is becoming a more important metric as the company’s product has evolved to include more monetization opportunities; collections per subscription in the U.S. is already up approximately 25% Y/Y in Q1.
Management’s Q1 guidance calls for $172.0MM-$173.0MM in revenues, below consensus of $176.4MM. For FY ’19, management guided to $755.0MM-$761.0MM in revenues, below the Street’s $761.8MM.
WK: Workiva Announces Fourth Quarter and Full Year 2018 Financial Results
WK reported Q4 ’18 results ahead of expectations and guided FY ’19 mixed relative to consensus.
Total revenue of $64.4MM (+18.2% Y/Y) exceeded management’s $62.4MM-$62.8MM guidance and consensus of $62.7MM. Non-GAAP operating income of $(0.3)MM (-0.4% margin) also beat guidance and consensus of $(4.4)MM. Non-GAAP EPS of breakeven was well above management’s $(0.11)-$(0.10) guidance and the Street’s $(0.10).
Key metrics: total customers reached 3,340(+8.3% Y/Y) with the addition of 51 customers in Q4; revenue retention rate excluding add-on revenue was 96.1% and 107.1% including add-on revenue; customers with ACV of over $100k totaled 443 (+37% Y/Y) and those with over $150k totaled 190 (+30% Y/Y).
Management guided Q1 ’19 above Street expectations, calling for revenues of $68.8MM-$69.3MM, non-GAAP operating income of $(2.0)MM-$(1.5)MM and non-GAAP EPS of $(0.05)-$(0.04), all of which were above consensus of $68.2MM, $(2.9)MM and $(0.06), respectively.
For the full year, management’s guidance includes revenues of $282.5MM-$284.5MM, above the Street’s $279.1MM. However, non-GAAP operating income and non-GAAP EPS guidance of $(17.0)MM-$(15.0)MM and $(0.39)-$(0.34) were below the Street’s $(13.3)MM and $(0.30).
Disclosure(s):
K. Liu & Company LLC has received compensation from American Software (AMSWA) for non-investment banking services within the past 12 months.
The author holds a long position in NetScout Systems (NTCT).
The author holds a long position in Stamps.com (STMP).