K. Liu's Week in Review
On the deal front this week, Akamai Technologies (AKAM) acquired KryptCo’s multifactor authentication technology for an undisclosed price. Targeted at enterprises, the technology is resistant to phishing and offers a simplified user experience that does not require the entering of pin codes. KryptCo’s CEO, Alex Grinman, has also joined Akamai and will support its Zero Trust solution. SailPoint Technologies Holdings (SAIL) priced an upsized offering of $350 million aggregate principal amount of 0.125% convertible senior notes due 2024 at an initial conversion price of $28.42 per share, representing a 31% premium to the close price prior to the announcement of the planned offering. Assuming the initial purchasers exercise their option to purchase an additional $50 million aggregate principal amount in full, SailPoint estimates net proceeds will be approximately $391 million, a portion of which will be put towards capped call transactions with the remainder used for general corporate purposes. Shopify (SHOP) completed a secondary offering of its Class A shares, selling 2.185 million shares at a price of $317.50, a 6% discount to the close price prior to the announcement of the offering. Proceeds from the equity raise will provide Shopify with added flexibility to fund its growth strategy.
Adobe (ADBE) was the lone reporting company this week, delivering fiscal Q3 ’19 results above expectations. The record results were highlighted by continued strong growth in Digital Media Annual Recurring Revenue. However, management indicated that subscription bookings for Marketo fell short of expectations in the mid-market, and the company experienced delays in securing Analytics Cloud bookings despite significant customer interest. Guidance for Q4 was below consensus and shares subsequently traded lower. Adobe’s stock price performance for the week, results versus expectations, and subsequent consensus estimate revisions appear in the table below.
In conjunction with announcing several management changes, New Relic (NEWR) reaffirmed its fiscal Q2 ’20 revenue guidance but lowered its revenue outlook for the year. Current Board member Michael Christenson has been appointed President and Chief Operating Officer, a newly created role in which he will oversee go-to-market and business operations across the company. Mr. Christenson previously served as managing director at Allen & Company and prior to that, he was President and Chief Operating Officer at CA. Both Jim Gochee, Chief Technology Officer, and Erica Schultz, Chief Revenue Officer, have resigned.
At AudioEye (AEYE), Todd Bankofier has transitioned to the newly created role of Chief Revenue Officer and will lead the company’s direct sales efforts. He was previously AudioEye’s Chief Executive Officer, and a search for his successor is underway. In the interim, Executive Chairman Carr Bettis has assumed operating responsibilities. IZEA Worldwide (IZEA) appointed Justin Andrews as Chief Financial Officer. Mr. Andrews previously acted as the division CFO for multiple portfolios of ESW Capital (Trilogy) in his role as Vice President of Finance. Bill Crawford joins Ceridian HCM Holding (CDAY) as Chief Value Officer, a role in which he will be responsible for the company’s growing network of system integrators, the Customer Relationship Executive organization, and brand building. Suresh Kannan, formerly General Manager of IQVIA, joins Model N (MODN) as its Chief Product Officer. Tufin (TUFN) named Jeff Wilmot as Vice President of Sales, Americas. He previously served as Senior Vice President, Americas at Beyond Trust. Finally, Yext (YEXT) appointed Deepika Rayala as Chief Information Officer. Ms. Rayala joins the company from Apttus where she was Vice President of Enterprise Applications and PMO.
Mergers and Acquisitions
Akamai Technologies Inc. Acquires Authentication Technology from KryptCo
Akamai Technologies (AKAM) has acquired KryptCo’s multifactor authentication technology for an undisclosed price.
KryptCo’s technology is resistant to phishing and offers a simplified user experience that does not require entering pin codes.
KryptCo’s CEO, Alex Grinman, has joined Akamai and will support the company’s Zero Trust solution.
Earnings Releases
Adobe (ADBE) reported Q3 ’19 results above expectations but guided Q4 slightly below consensus.
Revenue of $2.834 billion (+23.7% Y/Y) was above management’s guidance of ~$2.800 billion and consensus of $2.815 billion. Non-GAAP operating income of $1.153 billion (40.7% margin) was ahead of the Street’s $1.113 billion. Non-GAAP EPS of $2.05 beat guidance of ~$1.95 and consensus of $1.97.
Net new Digital Media Annual Recurring Revenue (ARR) was $386 million, above management’s $360 million guidance, and included an increase in Creative ARR of $314 million and net new Document Cloud ARR of $72 million.
Key metrics: Digital Media ARR was $7.86 billion; Creative ARR was $6.87 billion; Document Cloud ARR was $993 million; Remaining Performance Obligation was $8.77 billion.
In Q3, the company announced Adobe Fresco, a drawing and painting app that will be available on iPad in the fall, and introduced Adobe Sign for small business.
Magento Commerce bookings increased over 40% Y/Y, but management indicated Marketo subscription bookings growth in the mid-market failed to meet expectations and Analytics Cloud experienced delays in subscription bookings.
Guidance for Q4 includes revenue of ~$2.97 billion and non-GAAP EPS of ~$2.25, below consensus of $3.02 billion in revenue and $2.30 in non-GAAP EPS.
Notable News
AudioEye Appoints Todd Bankofier as Chief Revenue Officer
AudioEye (AEYE) has named Todd Bankofier as its Chief Revenue Officer, a new position in which he will lead the company’s Direct Channel and have responsibility for driving growth in the enterprise segment of the market.
Mr. Bankofier previously served as AudioEye’s Chief Executive Officer, and a search for his replacement is underway.
In the interim, Executive Chairman Carr Bettis has assumed operating responsibilities.
Ceridian Hires Bill Crawford as Chief Value Officer
Ceridian HCM Holding (CDAY) has hired Bill Crawford as Chief Value Officer, a role in which he will lead functions focused on enhancing the company’s value proposition in the market, including a growing network of system integrators, the Customer Relationship Executive organization, and brand building.
Mr. Crawford previously led sales teams and oversaw sales operations and channel development at a global HCM provider.
IZEA Appoints Justin Andrews as Chief Financial Officer
IZEA Worldwide (IZEA) has appointed Justin Andrews as Chief Financial Officer.
Mr. Andrews previously served as Vice President of Finance at ESW Capital (Trilogy) where he acted as the division CFO for multiple portfolios.
Model N Announces New Chief Product Officer
Model N (MODN) has appointed Suresh Kannan as Chief Product Officer, succeeding Neeraj Gokhale, who will remain in an advisory capacity for the next six months to ensure a smooth transition.
Mr. Kannan joins the company from IQVIA where he was General Manager and led all functions for IQVIA’s Content Management Solutions business.
New Relic (NEWR) has appointed current Board member Michael Christenson as President and Chief Operating Officer, a newly created role in which he will oversee go-to-market and business operations across the company.
Mr. Christenson previously served as a managing director at Allen & Company, and prior to that was President and Chief Operating Officer of CA.
The company’s Chief Technology Officer, Jim Gochee, and Chief Revenue Officer, Erica Schultz, have resigned.
Revenue guidance for Q2 of $143.0-$145.0 million was affirmed, but the company reduced its FY ’20 revenue outlook from $600.0-$607.0 million to $586.0-$593.0 million.
SailPoint Announces Pricing of Upsized $350 Million Convertible Senior Notes Offering
SailPoint Technologies Holdings (SAIL) priced an offering of $350 million aggregate principal amount of 0.125% convertible senior notes due 2024 at an initial conversion price of approximately $28.42 per share, a 31% premium to the close price prior to the company’s announcement of the planned offering.
The offering was upsized from $300 million initially, and SailPoint has also granted the initial purchasers of the notes a 13-day option to purchase up to an additional $50 million aggregate principal amount of the notes.
Net proceeds from the offering are estimated to be approximately $342 million (or $391 million if the initial purchasers exercise their option in full) and are expected to be used to pay the cost of capped call transactions with the remainder put towards general corporate purposes.
Shopify (SHOP) completed an offering of 2.185 million Class A subordinate voting shares at a price to the public of $317.50 per share, a 6.0% discount to the close price prior to the announcement of the planned offering.
Net proceeds from the offering will strengthen the company’s balance sheet, providing flexibility to fund its growth strategies.
Tufin Names Jeff Wilmot as Vice President of Sales, Americas
Tufin (TUFN) has named Jeff Wilmot as Vice President of Sales, Americas, a role in which he will oversee a team of regional vice presidents and sales engineering directors to drive growth in North and South America.
Mr. Wilmot previously served as Senior Vice President, Americas at BeyondTrust.
Yext Appoints Deepika Rayala as Chief Information Officer
Yext (YEXT) has appointed Deepika Rayala as Chief Information Officer, a role in which she will lead the company’s global IT organization and drive its enterprise applications and analytics, infrastructure and operations roadmap.
Ms. Rayala most recently served as Vice President of Enterprise Applications and PMO at Apttus.