K. Liu's Week in Review
Amidst the deluge of earnings this week, a couple of tuck-in acquisitions were also announced. Upland Software (UPLD) remained an active acquirer, purchasing PostUp, a leading provider of email and audience development solutions targeted at publishing and media brands. The $35 million purchase price equates to EV/Sales and EV/EBITDA multiples of 3.1x and 7.0x, respectively, assuming management’s post-integration targets are achieved. The acquisition was funded with $30 million in new term debt as well as a draw down of the company’s existing revolver. To reflect the anticipated contribution from PostUp, Upland Software raised its FY ’19 revenue and adjusted EBITDA guidance. In announcing plans to acquire Realm for $39 million in cash, MongoDB (MDB) sought to deepen its relationships with developer communities focused on mobile and serverless. Realm boasts over 100,000 active developers utilizing its mobile database and synchronization platform. MongoDB expects Realm to be a natural fit with its Atlas offering and to complement its Stitch serverless platform.
Of course, quarterly earnings dominated the headlines this week. Of the 18 companies we tracked, 14 delivered results ahead of expectations, one had a mixed performance and three missed. Taking guidance into account, half of the outperformers also raised their outlooks for the year, and all but one saw shares appreciate meaningfully in concert. Those that beat and raised included Aspen Technology (AZPN), Brightcove (BCOV), Manhattan Associates (MANH), ServiceNow (NOW), LogMeIn (LOGM), PROS Holdings (PRO) and SPS Commerce (SPSC). Microsoft (MSFT) may as well be included in that group considering that its in-line fiscal Q4 guidance coupled with its Q3 outperformance implies an uptick in full year expectations. Proofpoint (PFPT) would have joined the others too if not for a change to the calculation of its non-GAAP income tax provision, which prompted a reduction in its non-GAAP EPS expectations for the year. Dassault Systèmes (DSY-FR) actually did raise its guidance, but as the increase was attributed to favorable currency tailwinds, we consider the outlook unchanged. Citrix (CTRX) beat and reaffirmed its prior FY ’19 guidance, but also disclosed that Chief Financial Officer Andrew Del Matto was moving on to greener pastures. While SAP (SAP) left its revenue targets intact, increases to its near- and longer-term operating income targets, along with plans to review its capital allocation priorities, sent shares soaring. HealthStream (HSTM) also raised its operating income guidance on unchanged revenue expectations, but shares came in slightly for the week as declines in a legacy product line could present a headwind to growth this year and next. PTC (PTC) was the only one amongst those that beat to reduce revenue and billings expectations for the year. Management attributed the downward revisions to a slower pace of sales hiring than originally planned and larger than anticipated decreases in its more mature products areas that are being managed for profitability. PTC also announced the hiring of a new Chief Financial Officer, Kristian Talvitie, who had previously been with the company from 2008-2016 and most recently served as Chief Financial Officer at Syncsort.
Although many software companies performed well, the first quarter appears to have presented challenges to those selling to creative folks. At least that’s what we would infer from digesting results out of Monotype Imaging Holdings (TYPE) and Shutterstock (SSTK), both of whom license creative assets to design and marketing professionals. Both companies missed Street expectations in Q1, yet both opted to reaffirm full year expectations. Monotype’s challenges arose on several fronts, including delays in closing several enterprise deals, declines in its digital commerce sales and a larger than anticipated drop in legacy printer imaging revenues. On a positive note, management indicated that two-thirds of the delayed enterprise sales have since closed, and Olapic, which faced significant headwinds in 2018, tripled its new business signings on a sequential basis. Although heavily back-end weighted, achieving guidance may not be as farfetched as it appears on the surface if the enterprise pipeline is indeed as strong as management insinuates. Shutterstock saw strength in its digital business, but enterprise sales lagged behind and currency also proved a headwind. We have often wondered whether the two companies ought to merge given the benefits of scale, similar efforts to license digital assets to brands and other creative professionals, and complementary strengths in enterprise and e-commerce sales.
Moving on to the vendors straddling the line between hardware and software, F5 Networks (FFIV) reported mixed results and guidance while A10 Networks missed Street expectations and guided lower. The former continues to experience declines in legacy system sales, but indicated new software consumptions models drove an increase in software sales of 30% Y/Y. The latter remains focused on its growth aspirations in security and 5G, highlighting a 22% Y/Y increase in security product revenues and another design win with a top mobile carrier in Korea. However, a pause in spending by web giant customers continues to weigh on results. While obviously early, we believe investors should keep an eye on these appliance-based vendors as any signs that their business models could transition successfully to software subscriptions could prompt a re-rating of shares. For the week, both stocks traded down slightly, suggesting fairly limited market expectations. The table below depicts the reporting companies we tracked this week, their share price performance for the week, their results relative to consensus expectations and subsequent estimate revisions by the Street.
Rounding out the news this week were several executive and board appointments. Daniel Daniel, a former managing director at Blackrock, joined Domo’s (DOMO) Board of Directors, and Christopher Lafond, Chief Financial Officer at Insurity, was appointed to Pegasystem’s Board of Directors. Nuance appointed Tracy Krumme Senior Vice President, Investor Relations. Finally, Sonic Foundry (SOFO) announced the retirement of its Chief Executive Officer, Gary Weis, who will be succeeded by the company’s current Chief Operating Officer, Michael Norregaard.
Mergers and Acquisitions
MDB: MongoDB Strengthens Mobile Offerings with Acquisition of Realm
MongoDB announced that the company has entered into an agreement to acquire Realm for $39.0 million in cash.
Over 100,000 active developers utilize the Realm mobile database and Synchronization Platform, enabling MongoDB to deepen its relationships with developer communities focused on mobile and serverless development.
Realm is expected to be a natural fit with MongoDB Atlas and complement the company’s Stitch serverless platform.
The acquisition is expected to close in MongoDB’s fiscal Q2.
UPLD: Upland Software Acquires PostUp, Raises Guidance
Upland Software announced the acquisition of PostUp, a leading provider of email and audience development solutions for publishing and media brands, for $35.0 million in cash.
PostUp is expected to add $11.0 million in revenue and $5.0 million in adjusted EBITDA on an annual basis once integrated.
Reflecting the acquisition, Upland Software raised its FY ’19 guidance, which now calls for total revenue of $202.4 million to $206.4 million and adjusted EBITDA of $73.7 million to $76.1 million, up from $194.8 million to $198.8 million in revenue and $70.8 million to $73.2 million in adjusted EBITDA previously.
To help fund the acquisition, $30.0 million in new term debt was drawn and $10.0 million was drawn against a revolver resulting in gross debt outstanding of $321.4 million and cash on hand of approximately $307.0 million.
Notable News
DOMO: Domo Welcomes Daniel Daniel, Former Blackrock Managing Director, to Its Board of Directors
Domo announced the appointment of Daniel Daniel to its Board of Directors, filling the seat vacated by Matt Cohler, Domo’s first VC investor.
Mr. Daniel was previously a Managing Director at Blackrock, responsible for investments across various technology markets.
NUAN: Nuance Appoints Tracy Krumme as Senior Vice President, Investor Relations
Nuance announced the appointment of Tracy Krumme as Senior Vice President, Investor Relations.
Ms. Krumme has previously led investor relations at Luxoft, NCR, CECO Environmental, Fuel Tech and Hollinger International.
PEGA: Pegasystems Appoints Christopher Lafond to its Board of Directors
Pegasystems announced the appointment of Christopher Lafond to its Board of Directors.
Mr. Lafond currently serves as Chief Financial Officer at Insurity, a provider of property and casualty insurance technology, and prior to that was Chief Financial Officer of Intralinks.
PTC: PTC Names Kristian Talvitie Chief Financial Officer
PTC announced the appointment of Kristian Talvitie as Executive Vice President and Chief Financial Officer, effective May 15, 2019.
Mr. Talvitie most recently served as CFO of Syncsort and previously served in several executive finance roles at PTC from 2008 to 2016.
SOFO: Sonic Foundry CEO Gary Weis Announces Retirement
Sonic Foundry announced the retirement of Chief Executive Officer Gary Weis, effective May 1, 2019.
Mr. Weis will remain a Senior Advisor to the company until April 30, 2020 and remain on the Board of Directors.
Michael Norregaard, Sonic Foundry’s current Chief Operating Officer, will assume the role of Chief Executive Officer.
Earnings Releases
ATEN: A10 Networks Reports First Quarter 2019 Financial Results
A10 Networks reported Q1 ’19 results within management’s guidance, but guided Q2 below Street expectations.
Revenue of $50.3 million (+2.3% Y/Y) was within management’s $49.0-$53.0 million guidance, but shy of the Street’s $51.7 million. Non-GAAP operating income was $(5.9) million (-11.4% margin), below consensus of $(4.9) million. Non-GAAP EPS of $(0.09) were also within guidance of $(0.10)-$(0.03), but below consensus of $(0.07).
Security product revenue increased 22% Y/Y and represented 34% of product sales led by A10 Network’s Thunder CFW solution. Other key metrics included 177 new customers, a 20% Y/Y increase in the pipeline of security deals and a slight decline in sales productivity.
5G represents an exciting market opportunity for the company’s security solutions and A10 Networks secured a new design win with another mobile provider in Korea, adding to its five design wins in 2018.
Activity with new partner Arrow Electronics began to ramp in Q1 with the addition of nine new security-focused VARs in the quarter.
Management’s Q2 guidance calls for revenue of $51.0-$56.0 million and non-GAAP EPS of $(0.08) to breakeven, below consensus of $57.7 million in revenue and $0.01 in non-GAAP EPS.
AZPN: Aspen Technology Announces Financial Results for the Third Quarter of Fiscal 2019
Aspen Technology (“AspenTech”) reported Q3 ’19 results above expectations and raised guidance for FY ’19.
Total revenue of $148.0 million (+15.8% Y/Y) exceeded consensus of $136.4 million. Non-GAAP operating income of $78.3 million (+52.9% margin) also surpassed the Street’s $66.7 million. Non-GAAP EPS of $0.96 beat consensus of $0.83.
Annual spend was $526 million (+9.7% Y/Y) at quarter-end and total bookings were $160 million (+29% Y/Y).
The company continues to see signs of recovery in the E&C business with a few renewals resulting in lower than anticipated reductions in spend and more cases in which customers increased their token entitlement after reaching limits.
The MSC suite is on track for another year of double-digit growth driven by the performance of AspenTech’s multivariable control and refinery planning products.
The APM suite had a strong quarter highlighted by the first seven-figure annual spend transaction, and management plans to expand the APM team to enhance its go-to-market presence and capacity for managing pilots.
In Q3, the company repurchased approximately 800 thousand shares for $75 million.
Management raised its prior FY ’19 guidance ranges across the board and now anticipates $549.0-$569.0 million in revenue, up from $545.0-$567.0 million; $272.0-$289.0 million in non-GAAP operating income, up from $268.0-$287.0 million; $3.42-$3.62 in non-GAAP EPS, up from $3.37-$3.60; and a 9.5%-10.0% increase in annual spend growth versus 8.5%-9.5% previously.
BCOV: Brightcove Announces Financial Results for First Quarter Fiscal Year 2019
BCOV reported Q1 ’19 results above expectations and raised guidance for FY ’19.
Revenue of $41.8 million (+1.6% Y/Y) was ahead of management’s $40.0-$40.5 million guidance and consensus of $40.2 million. Adjusted EBITDA of $1.3 million (+3.1% margin) also exceeded management’s $(0.2)-$0.3 million guidance and consensus of $0.1 million. Non-GAAP EPS were $(0.01), beating management’s $(0.05)-$(0.03) guidance and the Street’s $(0.03).
Management attributed the upside in the quarter to higher than anticipated overage revenue.
Key metrics: 3,696 customers at quarter-end including 2,227 premium customers; average annual subscription revenue per premium customer was $78,000, while starter customers averaged $4,600 in annualized revenue; recurring dollar retention rate of 95%.
Management’s Q2 guidance includes revenue of $45.5-$46.0 million, adjusted EBITDA of $(1.0)-$(0.5) million and non-GAAP EPS of $(0.07)-$(0.06). Consensus called for $41.5 million in revenue, $0.3 million in adjusted EBITDA and $(0.03) in non-GAAP EPS.
Management raised its prior FY ’19 revenue guidance from $168.0-$172.0 million to $183.0-$186.0 million, of which $14.0 million of the increase is attributable to the recent acquisition of Ooyala. Management’s adjusted EBITDA and non-GAAP EPS guidance, which now includes $1.0 million from Ooyala, was also raised from $5.2-$8.2 million and $(0.03)-$0.05, respectively, to $7.2-$9.7 million and $0.02-$0.09.
CTXS: Citrix Reports First Quarter 2019 Financial Results
Citrix reported Q1 ’19 results ahead of expectations and reaffirmed prior guidance for FY ’19.
Net revenues of $719.1 million (+3.1% Y/Y) exceeded management’s $700.0-$710.0 million guidance and consensus of $707.8 million. Non-GAAP operating income was $203.0 million (28.2% margin), above consensus of $198.4 million. Non-GAAP EPS were $1.27, beating management’s $1.15-$1.20 guidance and the Street’s $1.17.
Strength in the quarter was driven by Workspace, which saw a 13% Y/Y increase in revenue, and SaaS growth, which included a 43% Y/Y increase in revenue and a 21% Y/Y increase in future committed revenue, partially offset by ongoing headwinds with strategic service provider customers.
Management’s Q2 guidance calls for net revenues of $765.0-$775.0 million and non-GAAP EPS of $1.30-$1.35. Consensus called for $768.3 million in revenues and $1.42 in non-GAAP EPS.
Guidance for FY ’19 remains unchanged and includes net revenues of $3.08-$3.09 billion, non-GAAP operating margin of 31.5%-32.0% and non-GAAP EPS of approximately $6.00.
DSY-FR reported Q1 ’19 results above expectations and raised guidance for FY ’19 to reflect more favorable currency trends.
Non-IFRS revenue was €964.0 million (+17.5% Y/Y), well above management’s €925.0-€945.0 million guidance. Non-IFRS operating income was €316.4 million (32.8% margin), also exceeding guidance for a 31.0%-31.5% non-IFRS operating margin. Non-IFRS EPS of €0.87 beat management’s €0.78-€0.82 guidance.
Software revenue increased double-digits in seven of the eleven industries covered by the company and strength was seen in China, Southern Europe and North America due to strong momentum with the 3DEXPERIENCE platform.
CATIA software increased 6% Y/Y; ENOVIA had growth of 19% Y/Y; SOLIDWORKS increased 5% Y/Y; and other software increased 22% Y/Y led by SIMULIA, DELMIA and Centric PLM, which now counts over 850 brands as customers.
Management’s Q2 guidance calls for total revenue of €920.0-€940.0 million; non-IFRS operating margin of ~29.5%, which implies non-IFRS operating income of $€271.4-€277.3 million; and non-IFRS EPS of €0.74-€0.77, in line with consensus of €931.5 million in revenue, €271.7 million in non-IFRS operating income and €0.76 in non-IFRS EPS.
Reflecting a more favorable currency outlook, management raised its prior FY ’19 guidance ranges from €3.810-€3.840 billion and €3.35-€3.40 in revenue and non-IFRS EPS, respectively, to €3.845-€3.875 billion and €3.40-€3.45.
The Board of Directors recommended a dividend per share of €0.65 for FY ’18, representing a 12% increase Y/Y.
F5 Networks reported mixed Q2 ’19 results and provided mixed guidance for Q3.
Revenue of $544.9 million (+2.2% Y/Y) was at the lower end of management’s $543.0-$553.0 million guidance and below consensus of $547.0 million. Non-GAAP operating income was $190.2 million (34.9% margin). Non-GAAP EPS of $2.57 was above management’s $2.53-$2.56 guidance and the Street’s $2.55.
New software consumption models contributed to software revenue growth of 30% and the company launched F5 Cloud Services and its first SaaS offering on that platform during Q2.
Security services, including advanced WAF and bot mitigation, are leading the vast majority of customer conversations.
Systems revenue declined 5% in the quarter as customers continue to adopt a cloud-first mentality and carefully evaluate hardware investment and uses cases, which is elongating deal cycles.
Management’s Q3 guidance, which excludes contribution from the pending acquisition of NGINX, calls for revenue of $550-$560 million and non-GAAP EPS of $2.54-$2.57. Consensus stood at $557.5 million in revenue and $2.61 in non-GAAP EPS.
HSTM: HealthStream Announces First Quarter 2019 Results
HealthStream reported Q1 ’19 results above consensus and raised its FY ’19 operating income guidance.
Revenues of $65.2 million (+18.8% Y/Y) exceeded consensus of $61.2 million. Both operating income of $5.4 million (8.2% margin) and adjusted EBITDA of $12.5 million (19.1% margin) also exceeded consensus of $2.6 million and $9.7 million, respectively. EPS of $0.15 beat the Street’s $0.07.
Key metrics: 1.84 million contracted subscriptions to hStream at quarter-end and 70 contracted customers for the new Verity SaaS platform, which is used to manage credentialing and privileging.
In the first 90 days since HealthStream launched its new Red Cross Resuscitation Suite, the company has contracted with eight new customers.
During the earnings call, management stated its belief that sales of legacy resuscitation products peaked towards the end of Q1 and will decline throughout the remainder of this year and next before reaching zero in 2021.
Operating expenses are also expected to increase in the coming quarters as the company moves its corporate headquarters to a new location and incremental investments are made in product development, sales and marketing.
Management reaffirmed its prior FY ’19 revenue guidance of $251.0 million to $258.0 million and raised its operating income guidance slightly from $10.0-$12.4 million to $11.0-$13.0 million.
LOGM: LogMeIn Announces First Quarter 2019 Results
LogMeIn reported Q1 ’19 results ahead of expectations and raised its FY ’19 guidance.
Non-GAAP revenue was $308.1 million (+9.9% Y/Y), exceeding management’s $304.0-$306.0 million guidance and consensus of $305.5 million. Adjusted EBITDA of $96.8 million (31.4% margin) was also above guidance and consensus of $95.2 million. Non-GAAP EPS of $1.17 beat management’s $1.12-$1.15 guidance and the Street’s $1.14.
The company remains focused on accelerating growth by asserting leadership on three fronts: Unified Communication and Collaboration (UCC), Customer Engagement and Support (CES) and Identity-as-a-Service (IDaaS).
The aforementioned growth products comprised 20% of revenue exiting FY ’18, accounted for 22% of revenue in Q1 and should reach 25% at year-end if management’s targets are achieved.
Guidance for Q2 includes non-GAAP revenue of $310.0-$312.0 million, adjusted EBITDA of $94.0-$95.0 million and non-GAAP EPS of $1.12-$1.14, which was mixed versus Street expectations for $311.3 million in revenue, $100.8 million in adjusted EBITDA and $1.21 in non-GAAP EPS.
Management raised its prior FY ’19 guidance ranges slightly and now anticipates non-GAAP revenue of $1.253-$1.263 billion, adjusted EBITDA of $409.0-$413.0 million and non-GAAP EPS of $4.96-$5.02. Management previously guided to $1.250-$1.260 billion, $407.0-$412.0 million and $4.90-$4.97 in non-GAAP revenue, adjusted EBITDA and non-GAAP EPS, respectively.
MANH: Manhattan Associates Reports Record First Quarter 2019 Performance
Manhattan Associates reported Q1 ’19 results ahead of expectations and raised its FY ’19 guidance.
Total revenue of $148.4 million (+13.7% Y/Y) exceeded consensus of $137.6 million. Non-GAAP operating income of $35.6 million (24.0% margin) was above consensus of $29.1 million. Non-GAAP EPS of $0.41 beat the Street’s $0.34.
Manhattan’s four areas of focus are product innovation, strengthening global pipelines, improving consulting services and investing in sales and marketing.
Win rates remain strong at about 70%; 25% of license and cloud sales come from new customers; and retail, consumer goods and food and beverage are among the verticals accounting for over 50% of license and cloud revenues.
Manhattan Active Omni accounted for over 50% of Q1 cloud bookings with 85% of deal activity coming from the Americas.
For Q2, management anticipates revenue of approximately $142.2 million, in line with consensus of $143.0 million Non-GAAP operating income is expected to range from $28.6 million to $31.0 million, leaving consensus at the high-end.
Management remains cautious on global macro volatility, but raised its prior FY ’19 revenue guidance from $564.0-$576.0 million to $582.0-$592.0 million, maintained its prior non-GAAP operating margin guidance of 21.0%-21.2%, and increased its non-GAAP EPS guidance from $1.38-$1.42 to $1.42-$1.46 to reflect strong demand for products and services.
MSFT: Microsoft Cloud Strength Drives Third Quarter Results
Microsoft reported Q3 ’19 results ahead of expectations and guided Q4 in line with consensus.
Revenue was $30.6 billion (+14% Y/Y), exceeding consensus of $29.9 billion. Operating income of $10.3 billion (33.8% margin) was also above consensus of $9.2 billion. EPS of $1.14 beat the Street’s $1.00.
Commercial bookings were strong, increasing 30% Y/Y and 34% Y/Y in constant currency.
Office 365 commercial seats grew 27%, while consumer subscribers reached 34.2 million.
Microsoft is leading two emerging categories, robotic process automation and mixed reality, through its Power Platform.
For Q4, management’s segment and expense expectations imply total revenue of $32.2-$32.9 million, operating income of $10.9-$11.3 million and EPS of $1.17-$1.21, all of which were consistent with consensus forecasts for $32.7 million in revenue, $11.1 million in operating income and $1.18 in EPS.
Management anticipates double-digit growth in revenue and operating income during FY ’20 with stable operating margins.
TYPE: Monotype Announces First Quarter 2019 Results
Monotype reported Q1 ’19 results below expectations, but reaffirmed its prior FY ’19 revenue and adjusted EBITDA outlook.
Revenue of $51.4 million (-9% Y/Y) was well below management’s $55.5-$59.5 million guidance and consensus of $57.9 million. Adjusted EBITDA was $11.0 million (21.5% margin), also short of management’s guidance and consensus of $14.3 million. Non-GAAP EPS were $0.19, at the low-end of management’s $0.19-$0.25 guidance and below the Street’s $0.22.
The Q1 shortfall was attributed to delays in closing enterprise deals, declines in digital commerce sales and larger than anticipated declines in printer revenues.
While Olapic revenues declined Y/Y, new business signed more than tripled sequentially and, including upsell, was more than double the amount signed during the height of the 2018 privacy disruption.
Management’s Q2 guidance was mixed with revenue expectations of $54.5-$59.5 million below consensus of $61.9 million, adjusted EBITDA guidance of $13.8-$17.3 million leaving consensus at the high-end and non-GAAP EPS of $0.23-$0.31 in line with the Street’s $0.27 due to a lower assumed tax rate.
Despite the slow start to the year, management reaffirmed its prior FY ’19 revenue and adjusted EBITDA guidance of $247.0-$257.0 million and $71.5-$78.5 million, respectively, and increased its non-GAAP EPS guidance from $1.18-$1.30 to $1.29-$1.43 to reflect a lower tax rate assumption.
Management also reaffirmed its longer-term expectations for 3%-7% revenue growth and adjusted EBITDA margins between 32% and 36%.
PFPT: Proofpoint Announces First Quarter 2019 Financial Results
Proofpoint reported Q1 ’19 results above expectations and increased its revenue and billings guidance for the year, but management lowered its FY ’19 non-GAAP EPS expectations due to a new rule for calculating its non-GAAP tax provision.
Total revenue was $202.9 million (+24.9% Y/Y), above management’s $198.0-$200.0 million guidance and consensus of $199.3 million. Billings of $215.0 million (+15.5% Y/Y) also exceeded management’s $211.5-$213.5 million guidance. On an apples-to-apples basis, non-GAAP EPS of $0.40 beat management’s $0.31-$0.35 guidance and consensus of $0.34. Under the company’s revised reporting under SEC C&DI 102.11, non-GAAP EPS were $0.34.
Business momentum remains strong driven by demand for Proofpoint’s next-generation cloud security and compliance platform, the ongoing migration to the cloud and the company’s unique visibility into the rapidly evolving threat landscape.
Renewal rates remain nicely above 90% and duration for the quarter was at the middle of the company’s targeted range of 14 to 20 months.
Guidance for Q2 includes total revenue of $210.0-$212.0 million, billings of $228.0-$230.0 million and non-GAAP EPS of $0.34-$0.37. Consensus called for Q2 revenue of $209.7 million and non-GAAP EPS of $0.36.
Management raised its FY ’19 guidance ranges for revenue and billings from $870.0-$874.0 million and $1,058-$1,062 million, respectively, to $874.0-$878.0 million and $1,062-$1,066 million, but lowered its non-GAAP EPS guidance from $1.60-$1.67 to $1.43-$1.49 due to a change in the company’s calculation of its non-GAAP provision for income taxes.
PRO: PROS Holdings, Inc. Reports First Quarter 2019 Financial Results
PROS Holdings reported Q1 ’19 results above expectations and raised guidance for FY ’19.
Total revenue of $56.1 million (+17.2% Y/Y) exceeded management’s $54.0-$55.0 million guidance and consensus of $54.8 million. Adjusted EBITDA of $(4.6) million (-8.1% margin) was just above the midpoint of guidance and ahead of the Street’s $(4.9) million. Non-GAAP EPS of $(0.11) also beat guidance of $(0.15)-$(0.13) and consensus of $(0.13).
Deal volume increased over 40% Y/Y with B2B business growing at an accelerated rate and more customers adopting the company’s combined Smart CPQ and Guidance solutions.
Management’s Q2 guidance includes revenue of $61.0-$62.0 million, adjusted EBITDA of $(4.0)-$(3.0) million and non-GAAP EPS of $(0.11)-$(0.09), all of which compared favorably with consensus of $56.2 million in revenue, $(3.9) million in adjusted EBITDA and $(0.12) in non-GAAP EPS.
For FY ’19, management’s revised outlook reflects an increase in revenue from $231.0-$233.0 million to $241.0-$242.0 million and an uptick in adjusted EBITDA from $(13.0)-$(11.0) million to $(9.5)-$(8.5) million.
PTC: PTC Announces Second Quarter Fiscal Year 2019 Results
PTC reported Q2 ’19 results above expectations, but guided Q3 below consensus and reduced its FY ’19 revenue outlook.
Total revenue of $315.5 million (+2.5% Y/Y) was at the high-end of management’s guidance and above consensus of $312.3 million. Non-GAAP operating income of $65.6 million (20.8% margin) was also ahead of the Street’s $61.2 million. Non-GAAP EPS of $0.38 beat management’s $0.31-$0.36 guidance and consensus of $0.35.
Key metrics: annualized recurring revenue was $1,065 million (+15% Y/Y constant currency); license and subscription bookings were $112 million (+18% Y/Y constant currency); converted 15 direct customers and 93 channel customers from support to subscription.
PTC’s IoT business had an exceptional quarter, outperforming the CAD business for the first time, and appears to be on track to outperform the 30%-40% market growth rate this year.
On the partnership front, the number of Rockwell Automation deals closed in Q2 doubled versus the prior quarter and 300 opportunities were added to the pipeline, while 35 deals were closed with Microsoft and that co-sell pipeline grew to 240 .
Under ASC 605, management’s Q3 guidance includes total revenue of $320.0-$325.0 million and non-GAAP EPS of $0.31-$0.36, falling short of the Street’s $331.5 million in revenue and $0.40 in non-GAAP EPS.
Bookings guidance for the full year was trimmed by $15 million at the midpoint, which management attributed to a slower pace of sales hires than anticipated and larger than expected decreases in ALM and SLM solutions.
Management lowered its prior FY ’19 revenue guidance from $1,325-$1,340 million to $1,313-$1,325 million while maintaining prior expectations for $1.75-$1.85 in non-GAAP EPS.
SAP reported Q1 ’19 results above consensus and raised its near and long-term targets for non-IFRS operating income.
Non-IFRS revenue of €6,118 million (+16.3% Y/Y) was above consensus of €5,957 million. Non-IFRS operating income of €1,467 (24.0% margin) also exceeded consensus of €1,404 million. Non-IFRS EPS of €0.90 beat the Street’s €0.83.
S/4HANA adoption grew to more than 10,099 (+30% Y/Y) customers.
Management reaffirmed its prior FY ’19 cloud and software revenue guidance of €22.4-€22.7 billion and raised its non-IFRS operating income guidance from €7.70-€8.00 billion to €7.85-€8.05 billion.
SAP also updated its longer-term ambitions for 2020 and 2023, reaffirming its prior revenue targets but raising its outlook for profitability in both periods.
Separately, the company announced a comprehensive review to accelerate operational excellence and plans to host a Special Capital Markets Day on November 12, 2019 to present new initiatives designed to achieve 75% non-IFRS cloud gross margin in 2023 and average 100bps of non-IFRS margin expansion per year from 2018 through 2023.
In addition, SAP is committing to a disciplined capital allocation approach, including an annual dividend payout ratio of 40% or more of the prior year’s after-tax profits, evaluation of a multi-year share repurchase program and tuck-in acquisitions.
NOW: ServiceNow Reports First Quarter 2019 Financial Results
ServiceNow delivered Q1 ’19 results above expectations and raised guidance for FY ’19.
Total revenues of $788.9 million (+33.9% Y/Y) exceeded consensus of $767.0 million. Non-GAAP operating income of $148.8 million (18.9% margin) also topped consensus of $125.2 million. Non-GAAP EPS of $0.67 beat the Street’s $0.54.
Key metrics: 25 transactions over $1 million in net new annual contract value; 717 customers with over $1 million in annual contract value; 98% renewal rate for the quarter; over 5,400 enterprise customers at quarter-end.
Q1 was highlighted by strength in the Americas region driven by strong performance with U.S. federal agencies, which accounted for three of the ten largest net new ACV deals.
Guidance for Q2 includes subscription billings of $798-$803 million, subscription revenue of $793-$798 million, and non-GAAP operating margin of 17%.
Management raised its FY ’19 guidance for subscription billings and revenue from $3,772-$3,792 million and $3,256-$3,276 million, respectively, to $3,797-$3,812 million and $3,280-$3,295 million, and left its prior non-GAAP operating margin guidance of 21% intact.
SSTK: Shutterstock Reports First Quarter 2019 Financial Results
Shutterstock reported Q1 ’19 results below consensus, but reaffirmed its prior FY ’19 guidance.
Revenue of $163.3 million (+6.7% Y/Y) fell short of the Street’s $166.8 million. Adjusted EBITDA was $25.5 million (15.6% margin), also below consensus of $27.6 million. Non-GAAP EPS of $0.35 missed consensus of $0.42.
Excluding the impact of the Webdam divestiture last year, revenue would have increased 8.7% Y/Y and 11.1% Y/Y constant currency.
The e-commerce channel grew 9.3% Y/Y driven by image products, while enterprise increased 7.7% Y/Y due to growth in footage offerings and in Europe and APAC.
Key metrics: 47.2 million (+8.0% Y/Y) paid downloads; revenue per download of $3.42 (+0.6% Y/Y); image collection in excess of 260 million (+39.3% Y/Y) images and video collection with over 14 million (+43.7% Y/Y) clips.
Shutterstock is seeing traction for its editorial offerings, its Shutterstock Select video offering and platform solution offering.
Management reaffirmed its prior FY ’19 guidance for $685.0-$695.0 million in revenue and $118.0-$123.0 million in adjusted EBITDA.
SPSC: SPS Commerce Reports First Quarter 2019 Financial Results
SPS Commerce reported Q1 ’19 results above expectations and raised guidance for FY ’19.
Revenue was $66.9 million (+13.3% Y/Y), above the high-end of management’s $65.8-$66.3 million guidance and consensus of $66.2 million. Adjusted EBITDA of $16.5 million (24.6% margin) also exceeded guidance and consensus of $15.3 million. Non-GAAP EPS were $0.60, beating management’s $0.50-$0.52 guidance and consensus of $0.51.
Recurring revenue customers increased 14% Y/Y to 29,500; wallet share was approximately flat Y/Y at $8,500 despite the acquisition of CovalentWorks, which added over 2,000 customers and reduced the consolidated company average wallet share by approximately $500.
Guidance for Q2 calls for revenue of $67.7-$68.2 million, adjusted EBITDA of $15.8-$16.3 million and non-GAAP EPS of $0.51-$0.53, all of which were generally consistent with Street expectations for $68.1 million, $15.5 million and $0.51 in revenue, adjusted EBITDA and non-GAAP EPS, respectively.
Management raised its FY ’19 guidance ranges across the board and now anticipates revenue of $275.0-$276.5 million, adjusted EBITDA of $65.0-$66.5 million and non-GAAP EPS of $2.16-$2.22. Guidance previously included revenue, adjusted EBITDA and non-GAAP EPS of $273.5-$275.7 million, $62.5-$64.0 million and $2.03-$2.09, respectively.
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 Brightcove (BCOV).