K. Liu’s Week in Review
Several secondary and convertible debt offerings priced this week, while M&A activity was somewhat muted. Verisk’s (VRSK) acquisition of SAP’s (SAP) Content-as-a-Service business, which includes the teams and data assets associated with environmental health and safety compliance, was the most notable transaction. The acquisition is expected to strengthen the two companies’ strategic partnership to codevelop the next generation of product compliance solutions. Benefitfocus (BNFT) announced the tuck-in acquisition of Connecture, a healthcare IT company focused on streamlining the distribution of health insurance, for $24.0MM. In a flurry of news, BNFT also reported mixed results and guidance, and priced a secondary offering of approximately 5.7MM shares held by Goldman Sachs & Co. and Mercer. The offering priced at a 16.5% discount to the close price prior to the announced secondary, and shares ended down 23.3% on the week. GoDaddy (GDDY) also priced a secondary offering in which selling stockholders Kohlberg Kravis Roberts & Co. and Silver Lake Partners unloaded approximately 8.5MM shares and GDDY offered 8k primary shares at $75.35 per share, matching the close price prior to the announcement. Finally, LivePerson (LPSN) issued $200.0MM in convertible senior notes maturing in 2024 that bear interest at a rate of 0.75% and are initially convertible at $38.58 per share, representing a nearly 35% premium to the prior day’s close.
Even as the calendar Q4 ’18 earning season winds down, those companies with fiscal quarters ending in January have begun reporting. Of the twenty companies we tracked this week, 80% outperformed on the top line and 90% beat on the bottom line. Companies delivering the much sought beat and raise included Altair (ALTR), Anaplan (PLAN), ANSYS (ANSS), Elastic (ESTC), Veeva (VEEV), VMware (VMW), Workday (WDAY) and Zscaler (ZS), a longer list than the past two weeks. Hardest hit were Nutanix (NTNX), down 36.5% for the week, and Box (BOX), down 18.0% this week. NTNX reported strong Q2 ’19 results, but imbalanced spending for lead generation and a slower than desired pace of sales hiring prompted management to guide the current quarter well below expectations. BOX reported mixed Q4 ’19 results owing to softness in EMEA and elongated sales cycles for seven-figure deals, and management guided FY ’20 below expectations. The company plans to increase its sales force by 10%-15% in its current fiscal year, focusing primarily on the U.S. and Japan.
Rounding out the news for the week, we highlight NICE’s (NICE) introduction of its Enhanced Strategic Planner solution, which leverages artificial intelligence to enable contact centers to precisely plan and predict capacity needs. The week also saw fewer executive moves, although ShotSpotter (SSTI) announced the hiring of Nasim Golzadeh as Senior Vice President of Customer Support and Professional Services. Ms. Golzadeh joins from CentralSquare Technologies and is a veteran of the public safety space. Elsewhere, VEEV’s President, Matt Wallach, is retiring but will join the company’s Board early next year.
Mergers and Acquisitions
VRSK: Verisk and SAP Announce Strategic Partnership to Reimagine Product Compliance
VRSK and SAP plan to codevelop the next generation of product compliance solutions.
To strengthen the partnership, VRSK will acquire SAP’s Content-as-a-Service business, which includes the teams and data assets associated with Environmental Health and Safety Regulatory Content (ERC) and Environmental Health and Safety Regulatory Documentation (ERD).
The acquired business will become part of Verisk 3E, which focuses on providing intelligent compliance solutions in the environmental health and safety and product compliance space.
The partnership expands VRSK 3E’s ability to power SAP’s Product Compliance platforms with regulatory content and business logic.
Notable News
BNFT: Benefitfocus Announces Pricing of Secondary Offering
BNFT announced the pricing of its secondary offering at $48.25 per share, a 16.5% discount to the close price prior to the announcement of the planned secondary offering.
Earlier in the week, the company announced that certain funds managed by Goldman Sachs & Co. and Mercer planned to offer approximately 5.7MM shares for sale in an underwritten secondary offering.
The underwriters have also been granted a 3-day option to purchase up to 855.7k additional shares.
BNFT will not receive any proceeds from the offering.
GDDY: GoDaddy Announces Pricing of Proposed Sale of Shares of Common Stock
GDDY announced the pricing of an underwritten public offering of ~8.5MM shares at $75.35 per share, matching the close price prior to the announcement of the offering.
Aside from 8,000 shares offered by GDDY, nearly all of the shares sold in the secondary were held by entities affiliated with Kohlberg Kravis Roberts & Co. and Silver Lake Partners.
LPSN priced a private offering of $200.0MM aggregate principal amount of convertible senior notes due 2024.
The notes will bear interest of 0.75% per year payable semi-annually in arrears and will have an initial conversion rate of 25.9182 shares of LPSN common stock per $1,000 principal amount, equivalent to an initial conversion price of $38.58 per share, which represents an approximately 35% premium to the prior day’s close.
The offering was upsized from the previously anticipated $150.0MM aggregate principal amount, and the initiation purchasers of the notes have been granted a 13-day option to purchase an additional $30.0MM.
Proceeds from the notes offering, net of the cost of capped call transactions the company has entered into, will be used for general corporate purposes.
NICE: NICE Unveils Enhanced Strategic Planner, Unleashing the Power of AI Based Long-Term Planning
NICE introduced NICE Enhanced Strategic Planner, a cloud-based solution leveraging artificial intelligence to enable contact centers to precisely plan and predict capacity needs.
NICE ESP utilizes numerous statistical models to generate forecasts that adapt to historical data, enables “what-if” planning to incorporate numerous business scenarios, provides solutions based on the optimization of multiple metrics, and integrates with NICE Workforce Management.
SSTI announced that Nasim Golzadeh has joined the company’s executive management team and will serve as Senior Vice President, Customer Support and Professional Services.
Ms. Golzadeh’s responsibilities will include SSTI’s technical support operations and Incident Review Center as well as oversight of the company’s forensic services, data integration services and training.
Ms. Golzadeh has ample experience in the public safety space and has held various leadership roles over her past 13 years at CentralSquare Technologies, most recently serving as Vice President of Operations and Professional Services.
VEEV: Veeva Announces Transition of Its President
VEEV announced that Matt Wallach will retire from his role as president in June 2019 and join the company’s Board of Directors effective January 2020.
Mr. Wallach has been with the company for 12 years and his responsibilities will be assumed by his senior leadership team.
Earnings Releases
AAXN: Axon Delivers Record Q4 and Full Year 2018 Revenue and Bookings; Introduces 2019 Guidance
AAXN reported mixed Q4 ’18 results and provided solid guidance for FY ’19.
Net sales of $114.8MM (+21.3% Y/Y) exceeded consensus of $104.0MM. Adjusted EBITDA of $11.0MM (9.6% margin) was below the Street’s $12.2MM, while non-GAAP EPS of $(0.08) missed by $0.03.
Key metrics: software and sensors bookings of $109.8MM (+54.3% Y/Y); software and sensors ARR of $108.5MM (+55.1% Y/Y); 347.2k (+72.3% Y/Y) cumulative Axon Cloud seats booked.
TASER 7 began shipping at the end of 2018 and initial momentum and customer response has been positive.
Management’s FY ’19 guidance calls for revenues of $480.0MM-$490.00MM, above consensus of $478.0MM, and adjusted EBITDA of $80.0MM-$85.0MM, in line with the Street’s $83.7MM.
The first operational milestone under the company’s recently approved exponential stock performance plan is either $710.0MM in revenue or $125.0MM in adjusted EBITDA, and management is focused on achieving those first goals and beyond.
ADSK: Autodesk Reports Strong Fourth Quarter Results Led by Annualized Recurring Revenue (ARR)
ADSK reported Q4 ’19 results ahead of expectations, but provided mixed guidance for FY ’20.
Revenue was $737.3MM (+33.1% Y/Y), above management’s $700.0MM-$710.0MM guidance and consensus of $707.3MM. Non-GAAP operating income was $139.2MM (18.9% margin). Non-GAAP EPS were $0.46, above management’s $0.40-$0.44 guidance and the Street’s $0.42.
Key metrics: total ARR of $2.75B (+34% Y/Y), including $27.0MM from acquisitions completed in the quarter; 252k subscriptions added, including 127k from acquisitions; total subscriptions of 4.33MM.
Management’s Q1 guidance includes revenue of $735.0MM-$745.0MM, above consensus of $723.7MM, and non-GAAP EPS of $0.40-$0.44, below consensus of $0.57.
For FY ’20, management’s guidance calls for revenue of $3.25B-$3.30B and non-GAAP EPS of $2.71-$2.90. Consensus included revenue and non-GAAP EPS of $3.22B and $3.11, respectively.
ALTR: Altair Announces Fourth Quarter and Full Year 2018 Financial Results
ALTR reported Q4 ’18 results above expectations and guided FY ’19 ahead of consensus.
Total revenue of $103.0MM exceeded management’s $98.0MM-$99.0MM guidance and consensus of $98.7MM. Adjusting for a change in accounting standards, total revenue increased 15.6% Y/Y. Adjusted EBITDA was $12.9MM (12.4% margin), also ahead of management’s guidance and the Street’s $11.9MM estimate. Non-GAAP EPS of $0.05 were below consensus of $0.10.
ALTR is moving quickly to streamline Datawatch’s brand offerings and merge their products with its other solutions and business models; management anticipates Datawatch bookings in 2019 will be consistent with last year.
SimSolid, acquired in October 2018, has unique technology and will be available under HyperWorks units, as a standalone solution sold by resellers and as a pure cloud SaaS offering.
Management’s Q1 guidance includes revenue of $125.2MM-$127.2MM, adjusted EBITDA of $23.0MM-$25.0MM and non-GAAP net income of $15.8MM-$17.8MM, all of which were ahead of consensus.
For FY ’20, management’s guidance calls for $479.0MM-$483.0MM in revenue, $61.0MM-$65.0MM in adjusted EBITDA and $40.2MM-$44.2MM in non-GAAP net income, implying non-GAAP EPS of $0.52-$0.57. Consensus called for revenue, adjusted EBITDA and non-GAAP EPS of $433.9MM, $55.2MM and $0.50, respectively. We note that guidance includes the company’s acquisitions of Datawatch and SimSolid, while consensus did not appear to incorporate any contribution.
ANSS exceeded expectations for Q4 ’18 and guided FY ’19 above consensus.
Non-GAAP revenue under ASC 606 totaled $418.0MM, above consensus of $361.2MM. Non-GAAP revenue under ASC 605 increased 12.1% Y/Y to $340.1MM. Non-GAAP operating income was $215.6MM (51.6% margin). Non-GAAP EPS of $2.13 exceeded management’s $1.39-$1.55 guidance and consensus of $1.49.
Key metrics: ACV of $480.5MM (+26.2% Y/Y); 68 customers with orders over $1MM.
2019 growth strategy remains consistent with last year: grow the core, expand into selected adjacencies, drive partnerships and pursue appropriate M&A. Plans include adding approximately 300 new employees.
Management’s Q1 guidance calls for revenue of $290.0MM-$310.0MM and non-GAAP EPS of $0.98-$1.11, below consensus of $315.7MM and $1.30, respectively.
For FY ’19, management’s guidance includes revenue of $1.41B-$1.47B and non-GAAP EPS of $5.55-$6.00, comparing favorably with the Street’s revenue and non-GAAP EPS estimates of $1.37B and $5.63, respectively. Guidance for ACV is $1.410B-$1.465B, representing constant currency growth of 8%-12%.
Management remains confident that ANSS is tracking towards its 2020 objective of sustaining double-digit growth while maintaining industry leading margins.
AYX: Alteryx Announces Fourth Quarter and Full Year 2018 Financial Results
AYX reported Q4 ’18 results ahead of Street expectations and guided FY ’19 above consensus. We note that consensus may not have reflected expectations under ASC 606 whereas management’s guidance does.
Under ASC 605, revenue was $60.5MM (+56.8% Y/Y), above management’s $56.5MM-$57.5MM guidance and consensus of $57.6MM. Non-GAAP operating income was $(1.0)MM (-1.6% margin), in line with management’s guidance and consensus. Non-GAAP EPS of $(0.01) beat management’s $(0.03)-$(0.02) guidance and consensus of $(0.02).
Key metrics: ended Q4 with 4,696 customers; added 381 (+12.7% Y/Y) net new customers in the quarter; dollar-based net expansion rate of 132%.
Heading into 2019, management plans to further build the company’s global footprint.
Management’s Q1 guidance calls for revenues of $69.0MM-$72.0MM, non-GAAP operating income of $(8.0)MM-$(5.0)MM and non-GAAP EPS of $(0.13)-$(0.08). Consensus called for $60.7MM in revenues, $(1.0)MM in non-GAAP operating income and $(0.02) in non-GAAP EPS.
For FY ’19, management’s guidance includes revenue of $345.0MM-$350.0MM, non-GAAP operating income of $30.0MM-$35.0MM and non-GAAP EPS of $0.36-$0.42, well above consensus of $272.1MM, $(0.7)MM and $(0.02), respectively.
BNFT: Benefitfocus Announces Fourth Quarter and Full Year 2018 Financial Results
BNFT reported mixed Q4 ’18 results and guidance.
Revenue of $74.8MM (+10.2% Y/Y) exceeded the high-end of management’s $71.0MM-$74.0MM guidance and consensus of $73.0MM. Adjusted EBITDA of $12.0MM (16.0% margin) also surpassed guidance and consensus of $10.4MM. Non-GAAP EPS of $0.14 were near the high-end of management’s $0.06-$0.15 guidance and $0.04 above the Street.
Key metrics: net benefit eligible lives of 13.3MM (+18.8% Y/Y); large employer customers totaled 1,024 (+11.3% Y/Y).
Focused on three complementary priorities for 2019: grow the platform, strengthen the core and advance BNFT’s market leadership through higher investment in quota-carrying sales reps, enabling inside sales to sell to customers of all sizes and growing the company’s Premier Broker relationships.
Acquired certain commercial software assets of Connecture for $24MM in cash and BNFT anticipates mid-single digit points of revenue growth and slight dilution in 2019 from the deal.
Management’s Q1 guidance includes $66.5MM-$68.5MM in revenue and $(0.5)MM-$1.5MM in adjusted EBITDA, both of which fell short of the Street’s $71.5MM and $2.7MM.
For FY ’19, management’s guidance calls for revenue of $301.0MM-$309.0MM, above the Street’s $297.6MM, and adjusted EBITDA of $15.0MM-$20.0MM, below consensus of $22.1MM.
Separately, the company announced a secondary offering of shares held by Goldman Sachs & Co. and Mercer; BNFT will not receive any proceeds from the offering.
BOX reported mixed Q4 ’19 results and issued Q1 and FY ’20 below consensus.
Revenue of $163.7MM (+19.8% Y/Y) was within management’s $163.5MM-$164.5MM guidance, but shy of the Street’s $164.2MM. Non-GAAP operating income was $8.5MM (5.2% margin). Non-GAAP EPS of $0.06 were above management’s $0.02-$0.03 guidance and consensus of $0.02.
Q4 billings of $237.7MM (+16.2% Y/Y) were below expectations due to underperformance in EMEA and elongated sales cycles for larger seven-figure deals.
Key metrics: closed 94 (+19.0% Y/Y) deals over $100k; over 900 customers paying at least $100k annually; 14% of revenues from add-on products now versus 10% a year ago; 12MM paid users; 108% net retention rate.
The company’s focus heading into FY ’20 is on building the category-defining cloud content management platform and accelerating its customers’ digital transformation through go-to-market efforts.
BOX enters FY ’20 with 300 quota-carrying sales reps and plans to grow its sales force 10%-15%, focusing on field hires in the U.S. and Japan.
Management’s Q1 guidance of $161.0MM-$162.0MM in revenue and $(0.06)-$(0.05) in non-GAAP EPS was below consensus of $169.7MM in revenue and $(0.01) in non-GAAP EPS.
Similarly, management’s FY ’20 guidance for revenue of $700.0MM-$704.0MM and non-GAAP EPS of $(0.03)-$0.01 fell short of the Street’s $732.8MM and $0.03 estimates.
ESTC: Elastic N.V. Reports Strong Third Quarter Fiscal 2019 Financial Results
ESTC reported Q3 ’19 results above expectations and raised guidance for FY ’19.
Total revenue was $70.8MM (+69.9% Y/Y), above management’s $64.0MM-$66.0MM guidance and consensus of $65.7MM. Non-GAAP operating income was $(11.7)MM (-16.6% margin), also above guidance and Street expectations. Non-GAAP EPS of $(0.16) beat management’s $(0.32)-$(0.30) guidance and consensus of $(0.30).
Key metrics: over 7,200 subscription customers; over 280 customers with ACV greater than $100k; net expansion rate remained over 130%.
Management’s Q4 guidance includes revenues of $74.0MM-$76.0MM, non-GAAP operating income of $(19.2)MM-$(18.2)MM and non-GAAP EPS of $(0.30)-$(0.28), all of which compared favorably with consensus of $72.0MM in revenues, $(23.4)MM in non-GAAP operating income and $(0.30) in non-GAAP EPS.
The Q3 beat coupled with strong Q4 guidance prompted management to raise its prior FY ’19 projections.
Initial commentary on FY ’20 suggests ESTC plans to accelerate headcount investments with much of that investment weighted towards Q1.
KXS: Kinaxis Inc. Reports Fourth Quarter and Full Year 2018 Results
KXS reported Q4 ’18 results below Street expectations and provided mixed guidance for FY ’19.
Revenue of $38.3MM fell short of management’s expectations and the Street’s $40.0MM estimate due to lower than anticipated contribution from Professional services. Adjusting for the adoption of new accounting standards, revenue increased 14.7% Y/Y. Adjusted EBITDA was $9.0MM (23.5% margin), below consensus of $9.4MM. Non-GAAP EPS of $0.22 beat consensus by a penny.
Management attributed the Q4 softness in Professional services to the timing and scheduling of customer engagements as well as an increasing mix of partner-led engagements. The company’s partner network continues to expand with the addition of EY, which will initially focus on Europe and North America.
Total minimum backlog was $237.5MM at the end of December of which $222.3MM relates to SaaS subscription products.
The company plans to expand further in Europe and Asia throughout 2019, while making further investments in product development. Management was pleased with the ROI from KXS’ European expansion over the past year given the additions of Novartis, Unilever and Dyson to the customer base.
Management stated that the pipeline heading into 2019 appears balanced across the company’s six key verticals, but automotive and consumer packaged goods stand out as potential growth accelerators and even aerospace and defense has returned to growth.
Management’s FY ’19 guidance includes revenue of $183.0MM-$188.0MM and adjusted EBITDA margin of 23%-25%, implying adjusted EBITDA of $42.1MM-$47.0MM. Guidance was mixed relative to Street expectations for $183.7MM in revenue and $52.3MM in adjusted EBITDA. Of note, the contribution from term licenses appeared to be a negative surprise as the higher level anticipated implied lower SaaS growth versus Street expectations.
KXS remains focused on organic growth, but continues to evaluate potential acquisitions although none appear imminent. Management seeks technically accretive tuck-ins that allow for penetration into new verticals or add new functionality to the platform.
NTNX: Nutanix Reports Second Quarter Fiscal 2019 Financial Results
NTNX reported Q2 ’19 results above expectations, but guided Q3 well below consensus.
Revenue of $335.4MM (+17.0% Y/Y) was just above the high-end of management’s $325.0MM-$335.0MM guidance and consensus of $331.2MM. Non-GAAP operating income was $(20.2)MM (-6.0% margin). Non-GAAP EPS of $(0.14) beat management’s guidance and consensus of $(0.25).
Key metrics: billings were $413.4MM (+16.2% Y/Y), of which 57% were attributable to Subscriptions; added 920 new end-customers during the quarter; total customer count of 12,410; 779 (+44% Y/Y) customers with at least $1MM of lifetime spend.
The company is making adjustments in three key business areas: imbalances in lead generation spending that have negatively impacted the sales pipeline; the pace of sales hiring, which has trailed the company’s bullish goals; and sales execution in the Americas region for which current head of EMEA sales, Chris Kaddaras, will now lead as well.
Management’s Q3 guidance calls for $290.0MM-$300.0MM in revenue, well below consensus of $349.2MM. Non-GAAP EPS guidance of $(0.60) was also short of the Street’s $(0.28).
PLAN: Anaplan Announces Fourth Quarter and Full Fiscal Year 2019 Financial Results
PLAN reported Q4 ’19 results ahead of Street expectations and issued Q1 and FY ‘20 guidance above consensus.
Total revenue was $69.3MM (+49.4% Y/Y), above management’s $63.0MM-$64.0MM guidance and consensus of $63.7MM. Non-GAAP operating income of $(15.9)MM (-22.9% margin) also exceeded management’s guidance and consensus of $(23.4)MM. Non-GAAP EPS of $(0.13) beat the Street’s $(0.18).
Key metrics: 248 (+37.0% Y/Y) customers with ARR greater than $250k; dollar-based net expansion rate of 123%; over 1,110 customers at year-end.
Partners have certified over 1,000 consultants and approximately half of all deals include a partner.
Management’s Q1 guidance includes revenue of $70.0MM-$71.0MM and non-GAAP operating margin of (35.5)%-(34.5)%, implying non-GAAP operating income of $(24.9)MM-$(24.5)MM. Consensus called for $65.9MM in revenue and $(31.2)MM in non-GAAP operating income.
For FY ’20, management’s guidance includes revenue of $310.0MM-$314.0MM and non-GAAP operating margin of (27.0)%-(26.0)%, or $(83.7)MM-$(81.6)MM in non-GAAP operating income. The full year outlook was ahead of Street expectations for $301.1MM in revenue and $(108.2)MM in non-GAAP operating income.
PANW: Palo Alto Networks Reports Fiscal Second Quarter 2019 Financial Results
PANW reported Q2 ’19 results well above expectations and provided mixed guidance for Q3.
Total revenue of $711.2MM (+30.4% Y/Y) was well ahead of management’s $675.0MM-$685.0MM guidance and consensus of $682.1MM. Non-GAAP EPS of $1.51 also exceeded management’s $1.20-$1.22 guidance and the Street’s $1.22.
Billings increased 26.6% Y/Y to $852.5MM.
Demisto, which PANW agreed to acquire last week, is projected to generate $50.0MM-$55.0MM in billings for the twelve months post-acquisition.
Management’s Q3 guidance calls for total revenue of $697.0MM-$707.0MM, above the Street’s $696.7MM. Non-GAAP EPS guidance of $1.23-$1.25 leaves consensus at the high-end.
PANW also announced a $1.0B share repurchase authorization.
RP: RealPage Reports Fourth Quarter and Full Year 2018 Financial Results
RP announced Q4 ’18 results slightly above consensus, but guided FY ’19 slightly below.
Non-GAAP revenue of $228.0MM (+21.0% Y/Y) was within management’s $227.5MM-$230.5MM guidance and in line with consensus. Adjusted EBITDA of $60.8MM (26.7% margin) was at the high-end of management’s guidance and above the Street’s $60.2MM. Non-GAAP EPS of $0.39 beat consensus and guidance by a penny.
Key metrics: ending on demand units of 16,219 (+24.7% Y/Y); average on demand units of 16,146 (+27.9% Y/Y); ACV of $876.6k (+16.7% Y/Y) and RPU of $54.05 (-6.4% Y/Y); bookings increase of 28% beat internal expectations.
A big focus for 2019 is to reduce backlog through more efficient implementations as process inefficiencies in overall implementations and especially with larger platform sales impacted RP in the quarter and year.
Management’s Q1 guidance of $233.0MM-$235.0MM in non-GAAP revenue, $64.0MM-$66.0MM in adjusted EBITDA and $0.39-$0.41 in non-GAAP EPS fell short of the Street’s $238.7MM, $66.5MM and $0.41 projections for revenue, adjusted EBITDA and non-GAAP EPS, respectively.
For FY ’20, management guided to non-GAAP revenue of $980.0MM-$1.0B, adjusted EBITDA of $275.0MM-$285.0MM and non-GAAP EPS of $1.70-$1.79, also short of the Street’s $1.003B in revenues, $285.7MM in adjusted EBITDA and $1.76 in non-GAAP EPS.
Management remains confident in achieving RP’s 2020 goal of $1.5B in revenue and $500MM in adjusted EBITDA.
SPLK: Splunk Inc. Announces Fiscal Fourth Quarter and Full Year 2019 Financial Results
SPLK reported Q4 ’19 results ahead of expectations and raised guidance for FY ’20.
Total revenues were $622.1MM (+35.3% Y/Y), above management’s $560.0MM guidance and consensus of $562.9MM. Non-GAAP operating income was $166.4MM (26.8% margin), ahead of management’s guidance and consensus of $143.3MM. Non-GAAP EPS of $0.93 easily exceeded consensus of $0.76.
Signed more than 600 new enterprises in Q4; exited the year with over 17,500 customers; recorded 179 seven-figure orders vs. 136 last year; total RPO of $1.3B at year-end, up 57% Y/Y.
Seeing momentum internationally; customers at .conf18 were particularly excited by Data Stream Processor (DSP) and Data Fabric Search (DFS), which deliver next-gen monitoring and analytics.
Q1 guidance calls for revenues of approximately $395.0MM, above consensus of $392.9MM, and non-GAAP operating margin of (8)%, which implies non-GAAP operating income of $(31.6)MM. Consensus called for non-GAAP operating income of $(5.8)MM.
For FY ’20, management raised its prior revenue outlook from $2.15B to $2.20B, while maintaining non-GAAP operating margin guidance of 14%.
SSTK: Shutterstock Reports Fourth Quarter and Full Year 2018 Financial Results
SSTK reported mixed Q4 ’18 results and guided FY ’19 in line with expectations.
Revenue of $162.1MM (+6.7% Y/Y) was below consensus of $165.5MM. Adjusted EBITDA of 33.9MM (20.9% margin) was above consensus of $32.3MM. Non-GAAP EPS of $0.59 beat the Street’s $0.48.
Q4 enterprise growth did not meet expectations and SSTK is focused on improving this performance with better execution of go-to-market strategies and customer product offerings.
Key metrics for Q4: customer count of nearly 1.9MM (+3.5% Y/Y); 46.8MM (+6.6% Y/Y) paid downloads; revenue per download of $3.40 (+2.1% Y/Y); 241.7MM (+42.1% Y/Y) images and 13.1MM (+44.0% Y/Y) video clips in collection at quarter end.
Management’s FY ’19 guidance includes $685.0MM-$695.0MM in revenue and $118.0MM-$123.0MM in adjusted EBITDA, in line with consensus of $691.5MM in revenue and $121.6MM in adjusted EBITDA.
Still striving for long-term revenue growth of 20% despite near-term growth rates below that level.
TWOU: 2U Reports Fourth Quarter and Full-Year 2018 Financial Results
TWOU reported Q4 ’18 results slightly above expectations and guided FY ’19 in line with consensus.
Revenue of $115.1MM (+32.8% Y/Y) was within management’s $114.4MM-$115.3MM guidance and a hair above consensus of $114.9MM. Adjusted EBITDA of $20.1MM (17.4% margin) was also within guidance and consistent with Street expectations. Non-GAAP EPS of $0.23 beat guidance of $0.20-$0.21 and consensus of $0.21.
Key metrics: 34,695 (+28.1% Y/Y) Graduate Program full course equivalent enrollments; Graduate Program average revenue per full course equivalent enrollment of $2,792 (+1.2% Y/Y); 9,041 (+33.9% Y/Y) Short Course full course equivalent enrollments; Short Course average revenue per full course equivalent enrollment of 2,015 (+13.3% Y/Y).
New partnership with Keypath opens the door to a broader spectrum of grad programs given lower requisite investment levels. Under the partnership, TWOU receives gross revenue share for all Powered by Keypath programs and reverts a portion of the university’s payment to Keypath.
Management’s Q1 guidance includes revenue of $121.5MM-$122.1MM, adjusted EBITDA of $(4.6)MM-$(4.2)MM and non-GAAP EPS of $(0.19)-$(0.18), consistent with Street expectations for $121.6MM in revenue, $(4.6)MM in adjusted EBITDA and $(0.20) in non-GAAP EPS.
For FY ’19, management’s guidance calls for revenues of $546.6MM-$550.8MM, adjusted EBITDA of $11.8MM-$14.2MM and non-GAAP EPS of $(0.37)-$(0.33), in line with the Street’s $547.1MM, $12.4MM and $(0.37), respectively.
Looking to 2020, management targets the launch of 21 programs with two slotted thus far.
VEEV: Veeva Announces Fourth Quarter and Fiscal Year 2019 Results
VEEV reported Q4 ’19 results ahead of expectations and guided FY ’20 above the Street.
Total revenues of $232.3MM (+24.9% Y/Y) exceeded management’s $226.0MM-$227.0MM guidance and consensus of $227.2MM. Non-GAAP operating income of $84.3MM (36.3% margin) also exceeded guidance and the Street’s $76.6MM. Non-GAAP EPS of $0.45 were ahead of management’s guidance and consensus of $0.40.
Key metrics: subscription revenue retention rate was 122% for FY ’19; annual customer count reached 715 (+14.4% Y/Y), including 332 (+6.8% Y/Y) Veeva Commercial Cloud customers and 572 (+27.4% Y/Y) Veeva Vault customers; VEEV added 15 SMB CRM customers in Q4 and 46 in 2018.
Guidance for Q1 includes revenues of $238.0MM-$239.0MM, non-GAAP operating income of $85.0MM-$86.0MM and non-GAAP EPS of $0.44-$0.45, all of which were above consensus of $233.1MM, $76.4MM and $0.40, respectively.
Management’s FY ’20 guidance calls for revenues of $1.025B-$1.030B, non-GAAP operating income of $365.0MM-$370.0MM and non-GAAP EPS of $1.91-$1.94. Guidance compares favorably with Street expectations for $1.020B in revenues, $345.8MM in non-GAAP operating income and $1.78 in non-GAAP EPS.
VMW: VMware Reports Fourth Quarter and Fiscal Year 2019 Results
VMW reported Q4 ’19 results above expectations and raised its FY ’20 revenue and non-GAAP operating income guidance.
Revenue was $2.59B (+16.4% Y/Y), exceeding management’s guidance and consensus of $2.5B. Non-GAAP operating income was 967.0MM (37.3% margin), ahead of the Street’s $931.9MM. Non-GAAP EPS were $1.98, above consensus of $1.88.
Key metrics for Q4: closed 23 deals over $10MM; total bookings for NSX surpassed $500MM; vSAN license bookings increased 60% Y/Y; EUC license bookings up mid-single digits Y/Y; Core SDDC license bookings up over 20% and total bookings growth in the mid-teens; Cloud Management license and total bookings up double-digits.
VMW remains committed to a balanced capital allocation plan, including delivering on growth aspirations, maintaining flexibility for M&A and returning capital to shareholders.
Management’s Q1 guidance calls for total revenue of $2.245B, above consensus of $2.225B, and non-GAAP operating margin of 29.2%. Guidance implies non-GAAP operating income of $655.5MM, slightly below consensus of $655.5MM, and non-GAAP EPS expectations of $1.27 also fell short of the Street’s $1.32.
For FY ’20, management expects total revenue of $10.030B, above consensus of $9.890B, and non-GAAP operating margin of 33%, implying non-GAAP operating income of $3.310B versus consensus of $3.300B. Non-GAAP EPS guidance of $6.49, below the Street’s $6.68 due to a $0.40 impact from reduced interest income following the company’s $11.0B special dividend in December.
WDAY: Workday Announces Fourth Quarter and Full Fiscal Year 2019 Financial Results
WDAY reported Q4 ’19 results above expectations and guided Q1 and FY ’20 above consensus.
Total revenues were $788.6MM (+35.4% Y/Y), above management’s $775.0MM-$777.0MM guidance and consensus of $776.9MM. Non-GAAP operating income was $92.7MM (11.8% margin), above the Street’s $80.1MM. Non-GAAP EPS of $0.41 were ahead of consensus of $0.32.
Key metrics: over 2,600 customers at quarter-end; added 79 core Financial Management customers; added over 200 new Planning customers for the standalone offering as well as 80 add-on sales; triple-digit ACV growth for Workday Prism Analytics; subscription revenue backlog was $6.74B; net retention was over 100%.
Management’s Q1 guidance calls for total revenues of $812.0MM-$814.0MM, above consensus of $805.1MM. Non-GAAP operating margin guidance of 13.0% implies non-GAAP operating income of $105.6MM-$105.8MM, also above consensus of $96.5MM.
For FY ’20, management’s guidance includes revenues and non-GAAP operating margin of $3.530B-$3.545B and 12.3%, which implies non-GAAP operating income of $434.2MM-$436.0MM. Consensus stood at $3.521B and $429.3MM in revenues and non-GAAP operating income, respectively.
ZS: Zscaler Reports Second Quarter Fiscal 2019 Financial Results
ZS reported Q2 ’19 results above expectations and raised guidance for FY ’19.
Revenue of $74.3MM (+65.2% Y/Y) exceeded management’s $65.0MM-$67.0MM guidance and consensus of $66.4MM. Non-GAAP operating income was $10.0MM (13.4% margin), well ahead of management’s guidance for a loss and consensus of $(1.5)MM. Non-GAAP EPS of $0.09 also beat guidance of $(0.02)-$0.00 and consensus of $(0.01).
Calculated billings increased 74.4% Y/Y to $115.0MM.
Management’s Q3 guidance calls for revenue of $74.0MM-$75.0MM, non-GAAP operating income of $0-$1.0MM and non-GAAP EPS of $0.01, all of which were ahead of consensus expectations for $68.6MM in revenue, $(2.2)MM in non-GAAP operating income and $(0.02) in non-GAAP EPS.
For FY ’19, management raised its full year guidance ranges from $268.0MM-$272.0MM, $(6.0)MM-$(4.0)MM and $(0.03)-$(0.01) in revenue, non-GAAP operating income and non-GAAP EPS, respectively, to $289.0MM-$291.0MM, $11.0MM-$13.0MM and $0.11-$0.13.