K. Liu's Week in Review
This past week was relatively quiet on the news front with one notable acquisition, a couple of secondary offerings and an IPO filing from PagerDuty, which provides a platform for automating incidence response and plans to list under the ticker PD. The week began with F5’s (FFIV) acquisition of open source application delivery and API management vendor NGINX for a total enterprise value of $670MM, positioning the company to provide end-to-end visibility from the application server through delivery and linking DevOps with NetOps. While the combination makes strategic sense, the purchase price represents a TTM EV/Sales multiple in excess of 25x and is expected to be slightly dilutive to earnings both this year and next. FFIV shares declined 2.7% for the week. eGain (EGAN), a provider of contact center software, raised $22MM in gross proceeds after selling 2MM shares in an overnight deal at an 11.7% discount to the prior day’s close. Heading into the weekend, Ceridian (CDAY) also announced plans for an underwritten secondary offering of 11MM shares, although all shares will be offered by selling stockholder Thomas H. Lee Partners.
Earnings this week came mostly from those with January fiscal year ends and a couple of remaining calendar year end reporters. Standout performers from a results and share price perspective included Domo (DOMO) and MongoDB (MDB), with the latter’s print and guide particularly notable given fears that Amazon (AMZN) would eat its lunch. DocuSign (DOCU) also delivered a beat and raise but shares were up only marginally for the week. More interesting, in our view, were those under pressure this week. Synchronoss (SNCR) reported mixed results and guidance, and shares were off 25.7% for the week. Management’s commentary during the earnings call suggested a number of recent wins could generate meaningful new revenue streams, but plans for heightened investments weighed on the outlook. With a financial restatement in its rearview mirror and a relatively new executive team attempting a turnaround, SNCR is a hairy story but one that appears interesting at first glance. Cloudera’s (CLDR) results and guidance were also mixed with sentiment negative post-print as the recently closed acquisition of Hortonworks will create higher than anticipated revenue dis-synergies in the near-term. The following table depicts each company’s reported results versus consensus as well as subsequent estimate revisions by the Street for the current fiscal quarter and year.
Lastly, we highlight a couple of executive moves this week. Majesco (MJCO) announced that Normal Carroll, who joined MJCO upon the acquisition of the company he co-founded, will lead its European operations and assume the role of Managing Director. Elsewhere, Shutterstock (SSTK) announced that Stan Pavlovsky will become Co-Chief Operating Officer and Head of Strategic Operations effective April 1, 2019. Mr. Pavlovsky previously served as President of Meredith Digital and was also Executive Vice President of Meredith Corporation.
Mergers and Acquisitions
FFIV announced the acquisition of NGINX, an open source leader in application delivery and API management solutions, for a total enterprise value of $670.0MM.
The combination of the two companies’ solutions provides end-to-end visibility from the application server to application delivery and links DevOps and NetOps.
NGINX increased revenue by 65% Y/Y to $26MM in 2018, implying a TTM EV/Sales multiple of over 25x.
The acquisition increases FFIV’s revenue FY ’19 to FY ’20 growth target from a low- to mid-single digit increase to mid-single digit growth, but will be modestly dilutive to earnings over that timeframe.
The acquisition will be funded with cash on hand, and the company is suspending its share repurchase program.
Notable News
CDAY: Ceridian Launches Secondary Public Offering
CDAY announced that affiliates of Thomas H. Lee Partners L.P. plan to offer 11MM shares of the company’s common stock in an underwritten public offering.
The underwriters will also be granted a 30-day option to purchase up to an additional 1.65MM shares of CDAY common stock at the public offering price.
CDAY will not receive any proceeds from the offering.
EGAN: eGain Announces Pricing of Public Offering of Common Stock
In an overnight offering, EGAN sold 2.0MM shares of its common stock at a price per share of $11.00, generating gross proceeds of $22.0MM to the company. The offering price represents an 11.7% discount to the close price prior to the announcement.
The underwriters have also been granted a 30-day option to purchase up to an additional 300k shares.
MJCO: Majesco Announces Norman Carroll as Managing Director of European Operations
MJCO announced that Normal Carroll will lead the company’s European operation, assuming the role of Managing Director.
Mr. Carroll joined MJCO upon its acquisition of SaaS customer experience solutions provider Exaxe, which he co-founded.
SSTK: Shutterstock Announces Stan Pavlovsky to Join as Co-Chief Operating Officer
SSTK announced the appointment of Stan Pavlovsky to Co-Chief Operating Officer and Head of Strategic Operations, effective April 1, 2019.
In the newly created role, Mr. Pavlovsky will oversee product, marketing and technology.
Mr. Pavlovsky most recently served as President of Meredith Digital and Executive Vice President, Meredith Corporation.
Earnings Releases
ADBE: Adobe Reports Record Revenue
Under ASC 605, total revenue was $2.58B, ahead of management’s $2.54B guidance and the Street’s $2.55B forecast, and non-GAAP EPS were $1.65, also above management’s $1.60 guidance and consensus of $1.62. Under ASC 606, total revenue was $2.60B, non-GAAP operating income was $844.0MM (32.4% margin) and non-GAAP EPS were $1.71.
Key metrics: net new Digital Media ARR of $357MM and total Digital Media ARR of $7.07B; net new Creative ARR of $292MM and total Creative ARR of $6.21B; net new Document Cloud ARR of $65MM and total Document Cloud ARR of $856MM.
Management’s Q2 guidance includes revenue of $2.7B, in line with consensus, and non-GAAP EPS of $1.77, below consensus of $1.88.
For FY ’19, management raised its non-GAAP EPS guidance from $7.75 to $7.80, while leaving its prior revenue outlook unchanged at $11.15B.
ASUR: Asure Software Announces Record Fourth Quarter Revenue and Full Year 2018 Financial Results
ASUR reported Q4 ’18 results above consensus and reaffirmed its prior FY ’19 guidance.
Total revenue of $24.4MM (+59.5% Y/Y) was above consensus of $23.9MM. Adjusted EBITDA of $5.9MM (24.0% margin) also exceeded consensus of $5.3MM. Non-GAAP EPS of $0.15 beat the Street by a penny.
Key metrics: cloud bookings increased 32% Y/Y in Q4; short-term backlog was $29.4MM and total backlog currently exceeds $50.0MM.
Contract duration is elongating with 27% of new deals in 2018 having terms in excess of two years versus 1% in 2016.
Productivity per sales rep has been up 23% and 24% over the last two years, and ASUR anticipates hiring about 20 new sales reps over the course of FY ’19.
Management reiterated its prior FY ’19 guidance calling for $104.0MM-$107.0MM in revenue and $23.0MM-$25.0MM in adjusted EBITDA.
CLDR: Cloudera Reports Fourth Quarter and Fiscal Year 2019 Financial Results
CLDR reported mixed Q4 ’19 results and guidance.
Total revenue of $144.5MM (+36.7% Y/Y) was above management’s guidance of $119.0MM-$122.0MM and consensus of $121.0MM. The acquisition of Hortonworks contributed $20.0MM to total revenue. Non-GAAP operating income was $(30.2)MM (-20.9% margin). Non-GAAP EPS were $(0.15), below management’s guidance of $(0.12)-$(0.10) and consensus of $(0.11).
Key metrics: adjusted annualized recurring revenue (ARR) was $680.6MM (+24.4% Y/Y); 976 customers with ARR in excess of $100k.
Management’s Q1 guidance, which includes the recent acquisition of Hortonworks, calls for revenue of $187.0MM-$190.0MM, well above consensus of $122.3MM, which did not reflect the acquisition. Non-GAAP EPS guidance of $(0.25)-$(0.22) fell short of the Street’s $(0.11) projection.
For FY ’20, management’s guidance includes adjusted ARR of $800.0MM-$825.0MM (+18%-21% Y/Y), revenue of $835.0MM-$855.0MM and non-GAAP EPS of $(0.36)-$(0.32). Consensus called for $537.9MM in revenue and $(0.26) in non-GAAP EPS.
COUP: Coupa Software Reports Fourth Quarter and Full Year Fiscal 2019 Financial Results
COUP reported Q4 ’19 results above expectations, but issued mixed guidance for Q1 and FY ’20.
Total revenues were $74.9MM (+39.4% Y/Y), exceeding management’s $67.8MM-$68.3MM guidance and consensus of $68.0MM. Non-GAAP operating income of $2.4MM (3.1% margin) was also ahead of management’s guidance of breakeven and consensus of $0.1MM. Non-GAAP EPS of $0.05 beat management’s guidance and consensus of $0.00.
Over 100 customers went live during the fiscal year with over 80% led by partners.
Calculated billings increased 51% Y/Y to $127MM driven by largest new ACV for a quarter, largest renewal quarter ever and billings contribution from the Hiperos acquisition.
Management’s Q1 guidance calls for $73.5MM-$74.0MM in revenues, $(3.5)MM-$(2.0)MM in non-GAAP operating income and $(0.06)-$(0.03) in non-GAAP EPS. Consensus called for $70.3MM in revenues, $1.4MM in non-GAAP operating income and $0.02 in non-GAAP EPS.
For FY ’20, management’s guidance includes revenues, non-GAAP operating income and non-GAAP EPS of $325.0MM-$327.0MM, $3.0MM-$7.0MM and $0.04-$0.10, respectively. Consensus called for $315.1MM in revenues, $16.9MM in non-GAAP operating income and $0.23 in non-GAAP EPS.
DOCU: DocuSign Announces Fourth Quarter and Fiscal Year 2019 Financial Results
DOCU reported Q4 ’19 results above expectations and provided strong FY ’20 guidance.
Total revenue was $199.7MM (+34% Y/Y), exceeding management’s guidance of $192.0MM-$194.0MM and consensus of $193.6MM. Billings of $262.4MM (+30.7% Y/Y) also outpaced management’s $245.0MM-$255.0MM guidance. Non-GAAP EPS of $0.06 beat consensus of $0.01.
Key metrics: added 23k customers in Q4 and exited with 477k (+28% Y/Y) total customers; 56k (+32% Y/Y) enterprise and commercial customers; 310 (+50% Y/Y) customers with ACV in excess of $300k; net dollar retention of 112%.
The acquisition of contract lifecycle management leader SpringCM in September 2018 has been well received by DOCU’s customer base.
Management’s Q1 guidance calls for $205.0MM-$210.0MM in revenue, above consensus of $197.7MM, and implies non-GAAP EPS of $(0.02)-$0.11 versus consensus of $0.04.
For FY ’20, management’s guidance includes revenue of $910.0MM-$915.0MM and implies non-GAAP EPS of $(0.06)-$0.40, both of which compared favorably with consensus of $861.6MM in revenue and $0.19 in non-GAAP EPS.
DOMO: Domo Announces Fourth Quarter and Fiscal 2019 Financial Results
DOMO reported Q4 ’19 results above expectations and guided FY ’20 ahead of consensus.
Total revenue of $39.4MM (+31.0% Y/Y) exceeded management’s $37.5MM-$37.9MM guidance and consensus of $37.8MM. Non-GAAP operating income was $(22.9)MM (-58.0% margin). Non-GAAP EPS were $(0.94), beating management’s $(1.27)-$(1.23) guidance and the Street’s $(1.24).
Key metrics: billings increased 26.1% Y/Y to $57.2MM; added 17 enterprise customers; dollar-based net renewal rate remains in excess of 100%.
DOMO has already hired 11 sales reps in Q1 and plans to increase rep headcount by 30% in FY ’20 as the company looks to accelerate billings growth; management guided to $40.0MM-$41.0MM in billings for Q1 and $198.0MM for the full year.
Management’s Q1 guidance calls for revenue of $40.0MM-$41.0MM and non-GAAP EPS of $(1.30)-$(1.26), both of which were above the Street’s $39.2MM and $(1.40) estimates.
For FY ’20, management’s guidance includes revenue of $173.0MM-$174.0MM, above consensus of $170.1MM, and non-GAAP EPS of $(4.07)-$(3.99), also above the Street’s $(4.27).
In conjunction with its earnings release, DOMO announced the appointment of Carine Clark, President and CEO of Banyan, to the company’s Board of Directors.
MDB: MongoDB, Inc. Announces Fourth Quarter and Full Year Fiscal 2019 Financial Results
MDB reported Q4 ’19 results well above expectations and guided FY ’20 higher than consensus.
Total revenue of $85.5MM (+70.8% Y/Y) was well above management’s $73.0MM-$74.0MM guidance and consensus of $74.0MM. Non-GAAP operating income of $(9.7)MM (-11.3% margin) also exceeded management’s guidance and consensus of $(20.7)MM. Non-GAAP EPS of $(0.17) easily topped management’s $(0.39)-$(0.38) guidance and the Street’s $(0.38).
Key metrics: 39 (+77% Y/Y) customers with annualized spend greater than $1MM; 557 (+57% Y/Y) customers with at least $100k in ARR or annualized MRR; total customers in excess of 13,400; net ARR expansion rate remained above 120%.
In FY ’20, management plans to focus on extending the company’s product leadership, expanding different go-to-market channels, increasing the number of partner relationships and enhancing existing partnerships.
Promoted Cedric Pech, who previously led MDB’s EMEA sales team, to Chief Revenue Officer.
Management’s guidance for Q1 includes revenue of $82.0MM-$84.0MM, non-GAAP operating income of $(14.0)MM-$(13.0)MM and non-GAAP EPS of $(0.25)-$(0.23), exceeding Street expectations for $75.0MM in revenue, $(20.7)MM in non-GAAP operating income and $(0.37) in non-GAAP EPS.
For FY ’20, management’s guidance calls for revenue of $363.0MM-$371.0MM, non-GAAP operating income of $(59.0)MM-$(55.0)MM and non-GAAP EPS of $(1.06)-$(0.98), surpassing consensus estimates of $247.4MM, $(72.0)MM and $(1.28), respectively.
ORCL: Q3 FY19 GAAP EPS Increased to $0.76 and Non-GAAP EPS Up 8% to $0.87
ORCL reported Q3 ’19 results above Street expectations.
Total revenues of $9.614B (-0.6% Y/Y) were above consensus of $9.587B. Non-GAAP operating income was $4.276B (44.5% margin). Non-GAAP EPS of $0.87 beat the Street’s $0.84.
The company’s Fusion HCM, ERP, Supply Chain and Manufacturing Cloud applications revenue grew 32% in aggregate during Q3.
Autonomous Database customers reached nearly 1,000 at quarter end with approximately 4,000 new trials added in Q3.
Management’s Q4 guidance assumes a 3% currency headwind on the top line and $0.03 headwind on the bottom line. Thus, management’s constant currency guidance of a 1%-3% increase in revenues and $1.08-$1.12 in non-GAAP EPS equates to nominal revenues and non-GAAP EPS of $11.026B-$11.364B and $1.05-$1.09, respectively, in line with consensus of $11.149B and $1.05.
ORCL also announced a 26% increase in the company’s quarterly cash dividend to $0.24 per share.
PVTL: Pivotal Reports Fourth Quarter and Full Year Fiscal 2019 Financial Results
PVTL reported mixed Q4 ’19 results and guidance.
Total revenue was $169.2MM (+27.0% Y/Y), within management’s $169.0MM-$171.0MM guidance but shy of the Street’s $170.1MM. Non-GAAP operating income of $(20.8)MM (-12.3% margin) was ahead of management’s $(26.0)MM-$(25.0)MM guidance and consensus of $(25.3)MM. Non-GAAP EPS of $(0.07) also beat management’s guidance and consensus of $(0.09).
Key metrics: added nine net new logos for a total 58 (+32% Y/Y) net new customers in FY ’19; 377 (+18% Y/Y) subscription customers at the end of Q4; dollar-based net expansion rate was 149%.
For Q1, management’s guidance calls for $183.0MM-$185.0MM in revenue, $(13.5)MM-$(12.5)MM in non-GAAP operating income and $(0.06)-$(0.05) in non-GAAP EPS. Consensus called for $190.1MM, $(17.7)MM and $(0.06) in revenue, non-GAAP operating income and non-GAAP EPS, respectively.
Management’s FY ’20 guidance was similarly mixed with revenue of $798.0MM-$806.0MM below consensus of $811.8MM, but non-GAAP operating income and non-GAAP EPS of $(38.0)MM-$(36.0)MM and $(0.15)-$(0.13), respectively, above the Street’s $(52.2)MM and $(0.17).
SNCR: Synchronoss Technologies Announces Fourth Quarter and Full Year 2018 Results
SNCR reported mixed results and guidance.
Net revenues in Q4 reached $82.1MM (-22.7% Y/Y), below consensus of $86.6MM. Adjusted EBITDA of $15.4MM (18.8% margin) was above the Street’s $12.8MM. Non-GAAP EPS of $(2.49) missed consensus of $0.84.
The company has closed several new deals recently that management believes will lead to material new revenue streams across each of SNCR’s major platforms.
Announced that Assurance, a global provider of risk management solutions and a market leader in mobile device protection, has selected SNCR’s personal cloud platform to deliver an enhanced device and content protection bundle to its operators worldwide.
Wrote down the remaining balance of a $66MM note receivable due from STI.
Repurchased approximately $113MM of convertible notes early in Q4 and an additional $11.5MM in Q1.
Management has identified another $25MM in annualized cost savings that will be realized throughout FY ’19, but also plans to invest $20MM-$25MM back into the business.
Management’s FY ’19 guidance includes total revenue of $340.0MM-$345.0MM and adjusted EBITDA of $30.0MM-$40.0MM.