K. Liu's Week in Review
A promising development in the fight against COVID-19 seemingly prompted a rotation out of software stocks, many of which have performed exceedingly well since the broad market sell-off at the onset of the pandemic. In particular, companies that have experienced a tailwind from the shift to e-commerce, work-from-home and other digital transformation initiatives were in the red as investors considered the impact of a return to pre-COVID norms. In our view, there is no going back, at least not in terms of reversing the trends that have accelerated during the pandemic. Brick-and-mortar retail was already in secular decline even prior to the pandemic as consumers that embraced e-commerce permanently shifted a growing portion of their spend into online channels. We doubt the latest cohort of consumers discovering the convenience of e-commerce will exhibit markedly different behaviors post-pandemic. In a similar vein, an extended trial period for remote work has demonstrated that employees and businesses can continue to function effectively without being tethered to the office. Given the flexibility and potential savings afforded to all parties, we surmise enterprises are likely to continue prioritizing investments in applications, infrastructure and security that ensure the new way of working can be accommodated. All that said, we continue to point to Stamps.com (STMP) as a major beneficiary of accelerating e-commerce growth. The stock has been under pressure since the company issued a highly conservative Q4 outlook and the recent sale of shares by CEO Ken McBride certainly hasn’t helped matters. Nonetheless, we remain optimistic that a record peak season is in the cards and believe intra-quarter data points from the United States Postal Service (USPS) and others levered to e-commerce could serve as a positive catalyst in the coming months.
The calendar Q3 earnings season also wrapped up this week with roughly two dozen companies reporting. By and large, results outperformed with the vast majority highlighting positive trends on a sequential basis and indicating business activity was approaching pre-pandemic levels. As usual, we summarize each company’s results later in this report but highlight a couple of notable items here. Relevant to our coverage of NetScout Systems (NTCT), RADCOM (RDCM) reported results ahead of expectations and reaffirmed its guidance for the year. Much of the company’s growth continues to be tied to two strategic customers, AT&T and Rakuten Mobile, but management indicated that multiple 5G opportunities and trials are now underway with some operators already moving towards selection of their service assurance vendors. Outside of our coverage universe, a significant sell-off in shares of contact center software provider eGain (EGAN) caught our attention. eGain has exhibited solid growth of late following a successful transition to a SaaS model and has been profitable to boot. However, the company’s better than expected Q1 ’21 results were marred by reduced economics with one client and the termination of a contract with another that weighed on its outlook for Q2. Regardless, management plans to ramp investments in digital marketing, partner enablement and sales force capacity with an eye towards accelerating growth in FY ’22.
Rounding out this week’s news was a healthy dose of M&A, a few secondary offerings and a couple of key executive moves. Adobe (ADBE) shelled out $1.5 billion for Workfront, which provides a work management platform geared at marketing teams. Palo Alto Networks (PANW) agreed to acquire Expanse, which scans for and maps exposed and unknown assets to help customers manage their attack surface. The aggregate purchase price of $800 million, comprised of cash, stock and replacement equity awards, equates to a multiple of 11.9x recurring revenue for a business expected to double in size. ShotSpotter (SSTI) paid $22.0 million, or 2.2x revenue, for an investigative case management solution that expands its offerings to the law enforcement community. Shutterstock (SSTK) acquired assets from Amper Music to strengthen its capabilities in content search and discovery of audio tracks. Zix (ZIXI) entered the cloud backup and recovery market with the acquisition of CloudAlly for $30 million, representing a multiple of 3.8x recurring revenue. Both BigCommerce (BIGC) and Duck Creek Technologies (DCT) completed secondary offerings this week, although the latter did not sell any primary shares. F5 Networks (FFIV) put forth new intermediate-term targets ahead of its analyst and investor meeting this week, Autodesk’s (ADSK) CFO is leaving for Cisco and PTC (PTC) has a new COO.
Mergers and Acquisitions
Adobe (ADBE) has agreed to acquire Workfront, which offers a work management platform for marketers, for $1.5 billion.
Workfront boasts over 3,000 customers and over 1 million users that leverage its platform to manage content, plan and track marketing campaigns and execute complex workflows across teams.
Adobe and Workfront have partnered for some time and already share a growing base of over 1,000 customers.
Palo Alto Networks Announces Intent to Acquire Expanse
Palo Alto Networks (PANW) has agreed to acquire Expanse for $670 million in cash and stock as well as $130 million in replacement equity awards.
Expanse provides customers with a view of their exposed and untracked assets to better manage their attack surface, evaluate and prioritize risk, and mitigate potential issues.
The integration of Expanse’s platform with Palo Alto’s Cortex product suite will provide customers with a comprehensive view of both internal and external security threats.
The acquisition is expected to contribute $67 million of ARR to Palo Alto’s current fiscal year ending July 2021.
ShotSpotter Signs Definitive Agreement to Acquire Leeds, Maker of CrimeCenter Investigative Software
ShotSpotter (SSTI) has agreed to acquire Leeds, LLC d/b/a CrimeCenter Software for $22.0 million, comprised of $15.0 million in cash, $2.0 million in stock and a potential earnout of up to $5 million in cash.
CrimeCenter’s namesake product is a SaaS-based investigative case management solution used to automate investigative work and improve case clearance rates.
The acquisition expands ShotSpotter’s suite of law enforcement solutions and increases the company’s total addressable market by approximately $300 million.
Shutterstock Announces Acquisition of Amper Music
Shutterstock (SSTK) has acquired certain assets from Amper Music, an AI-driven music platform enabling users to create and customize original music by leveraging over one million individual audio samples.
The acquisition strengthens Shutterstock’s capabilities in content search and discovery of tracks.
Zix Acquires Leading Cloud-Based Backup and Recovery Provider CloudAlly
Zix (ZIXI) has acquired CloudAlly, a provider of cloud backup and recovery solutions, for $30 million in cash.
The cloud backup market is estimated at approximately $1.3 billion and is growing at 25%.
CloudAlly serves over 5,000 customers and 250,000 users and is supported by 600 Manage Service Provider partners.
The acquisition is expected to add approximately $8.0 million in annual recurring revenue.
Earnings Releases
AppFolio, Inc. Announces Third Quarter 2020 Financial Results
AppFolio (APPF) reported Q3 ’20 results short of Street expectations.
Revenue of $84.1 million (+23.8% Y/Y) was just shy of the Street’s $84.5 million. Non-GAAP operating income of $6.5 million (7.7% margin) was below consensus of $7.9 million. EPS of $3.86 included a one-time gain of $3.89 from the company’s sale of MyCase. Without the gain, EPS fell short of the Street’s $0.19.
Key metrics: 15,352 property manager customers (+9% Y/Y); 5.12 million units under management (+16% Y/Y).
Q3 results included $9.5 million in revenue from MyCase, which was divested on September 30, 2020, as well as nonrecurring expenses related to the divestiture of $2.3 million.
AppFolio’s electronic payment services continued to see increasing demand as residents, property managers, owners and customers transacted more business online, which in turn drove robust growth in Value+ services revenue.
New resident screening and lease renewal functionality has been added to AppFolio’s virtual leasing experiences; an automated accounts payable service has been launched to drive efficiencies for APM Plus customers; and new capabilities to manage capital and grow investment portfolios have been released for AppFolio Investment Management.
Asure Announces Third Quarter 2020 Results
Asure (ASUR) reported Q3 ’20 results above expectations.
Revenue of $16.0 million (-10.3% Y/Y) was above consensus of $14.6 million. Adjusted EBITDA was $1.0 million (6.2% margin), also ahead of consensus of $0.9 million. Non-GAAP EPS of $(0.03) fell short of the Street’s $0.01.
New small business bookings increased over 100% Y/Y and other key metrics benefited as well from a backdrop of gradually improving economic conditions, including higher employment levels and increased business activity.
Asure has seen the number of customers that paused during the pandemic improve from 1,050 in March to just 150 in October, and its same-store sales metric has also improved from -14% Y/Y in Q2 to -9% in Q3.
The number of sales reps has increased from 33 at the beginning of the year to 64, and although the pace of hiring has been faster than anticipated, management expressed delight regarding the rate at which reps are becoming productive.
Due to family health reasons, CFO Jay Powers has resigned and will be succeeded by John Pence, who most recently served as CFO of a leading HR benefits provider.
No specific financial guidance was provided although management indicated the trajectory of revenue growth should continue to improve relative to the past couple of quarters.
AudioEye Reports Third Quarter 2020 Results
AudioEye (AEYE) reported Q3 ’20 results above Street expectations.
Revenue of $5.3 million (+92.4% Y/Y) was above consensus of $4.9 million. Non-GAAP operating income was $(0.2) million (-3.5% margin), exceeding consensus of $(3.0) million. Non-GAAP EPS of $(0.02) beat consensus of $(0.32).
Key metrics: monthly recurring revenue (MRR) of $1.7 million (+67% Y/Y); ~22,000 customers (+500% Y/Y) at quarter-end.
The strong results were driven by growing adoption of AudioEye in its vertical partner and enterprise channels.
Some deals have been delayed on the new business front and flexible pricing has been extended to some customers on a case-by-case basis to help them manage through the pandemic.
Gross margin expanded substantially due to increasing efficiency and a focus on remediation automation.
Management continues to anticipate growth in MRR and positive cash flow in 2021.
CyberArk Announces Third Quarter 2020 Results
CyberArk (CYBR) reported mixed Q3 ’20 results and provided a mixed outlook for Q4.
Revenue of $106.6 million (-1.4% Y/Y) was shy of guidance for $107.0-$115.0 million and below consensus of $112.0 million. Non-GAAP operating income was $13.1 million (12.3% margin), within guidance for $8.0-$15.0 million and ahead of consensus of $12.6 million. Non-GAAP EPS of $0.31 was also within guidance for $0.19-$0.33 and beat the Street’s $0.29.
Key metrics: annual recurring revenue (ARR) of $250 million (+40% Y/Y); signed over 190 new logos; add-on business was 77% of license revenue in Q3.
An acceleration in the mix of recurring revenue bookings, which reached over 45% of new license bookings in Q3 versus 10% last year and 35% year-to-date, impacted CyberArk’s reported revenue and profitability.
Customers have increasingly asked CyberArk to secure additional identity use cases, including users, machines, applications and tools, which is significantly expanding the company’s total addressable market.
Management anticipates completing its subscription transition in approximately eight quarters, reflecting a timeframe on the earlier end of the usual eight to ten quarter transition period experienced by most companies.
Q4 guidance for revenue of $125.0-$135.0 million, non-GAAP operating income of $25.0-$33.0 million and non-GAAP EPS of $0.52-$0.67 was mixed relative to Street expectations for $136.5 million, $29.9 million and $0.63, respectively.
Datadog Announces Third Quarter Results
Datadog (DDOG) reported Q3 ’20 results above expectations and guided Q4 ahead of consensus.
Revenue of $154.7 million (+61.3% Y/Y) was above guidance for $143.0-$145.0 million and consensus of $144.3 million. Non-GAAP operating income was $13.8 million (8.9% margin), exceeding guidance for $(1.0)-$1.0 million and consensus of $0.6 million. Non-GAAP EPS of $0.05 beat guidance for $0.00-$0.01 and the Street’s $0.01.
Key metrics: billings of $155.9 million (+39% Y/Y); 1,107 customers with ARR of $100,000 or more (+52% Y/Y); 13,110 customers (+38% Y/Y) at quarter-end; dollar-based net retention rate was over 130%.
Usage growth of existing customers was robust, returning to levels broadly in line with pre-COVID levels after slowing in Q2, and new logo generation also rebounded to pre-COVID levels, resulting in a very successful quarter.
Datadog’s platform strategy continues to resonate with customers as evidenced by 71% of customers now using two or more products; uptake of newer products like Synthetics and Network Performance Management has been encouraging.
Billings growth in Q3 was negatively impacted by an invoice timing difference that increased billings in the year-ago period and a few large customers moving from annual billings to shorter duration arrangements upon renewal this year.
Q4 guidance for revenue of $162.0-$164.0 million, non-GAAP operating income of $3.0-$5.0 million and non-GAAP EPS of $0.01-$0.02 was above Street expectations for $155.2 million, $0.5 million and $0.01, respectively.
eGain (EGAN) reported Q1 ’21 results above expectations but guided Q2 below consensus.
Revenue was $19.1 million (+10.9% Y/Y), in line with guidance for $18.6-$19.3 million and consensus of $19.1 million. Non-GAAP operating income was $2.8 million (14.9% margin), above consensus of $2.0 million. Non-GAAP EPS of $0.08 was at the high-end of guidance for $0.05-$0.08 and beat the Street’s $0.06.
The pace of new logo wins doubled from a year ago and the average ARR per new logo signed was $115,000, providing ample opportunity for expansion given the average ARR per existing customer is north of $300,000.
The pipeline at the end of Q1 was up 35% Y/Y in dollar terms with new logos comprising 2/3 of the opportunities.
One out-of-band attrition and another termination in Q1 will negatively impact quarterly SaaS revenue by $750,000 in Q2 but management views these as isolated incidents.
Q2 guidance for revenue of $18.1-$18.7 million and non-GAAP EPS of $(0.02)-$0.02 was below Street expectations for revenue of $19.8 million and non-GAAP EPS of $0.06.
FY ’21 is expected to be an investment year as eGain significantly increases its spending on digital marketing programs, expands its partner enablement programs, and double its direct sales capacity.
Jamf Announces Third Quarter 2020 Financial Results
Jamf (JAMF) reported Q3 ’20 results above expectations and guided Q4 ahead of consensus.
Revenue of $70.4 million (+29.0% Y/Y) was above guidance for $65.0-$66.0 million and consensus of $65.5 million. Non-GAAP operating income was $12.0 million (17.0% margin), exceeding guidance for $5.0-$7.0 million and consensus of $5.9 million. Non-GAAP EPS of $0.07 beat the Street’s $0.03.
Key metrics: ARR of $261.5 million (+37% Y/Y); 18.6 million devices on platform; dollar-based net retention rate of 117%.
The tailwinds of telehealth, distance learning and remote work offset economic headwinds in Q3 and drove strong sales growth and customer acquisition for Jamf.
A favorable mix shift towards products geared for the education vertical and Jamf Connect produced more in-quarter recurring revenue than anticipated.
Jamf is now offering a new user-based pricing bundle called Jamf Business Plan, which combines its Pro, Protect and Connect solutions across all Apple devices used by employees.
Q4 guidance for revenue of $70.0-$71.0 million and non-GAAP operating income of $1.0-$2.0 million was ahead of Street expectations for $68.1 million and $0.8 million, respectively.
Model N Announces Fourth Quarter and Fiscal Year 2020 Financial Results
Model N (MODN) reported Q4 ’20 results ahead of expectations but guided FY ’21 below consensus.
Revenues were $41.5 million (+13.3% Y/Y), above guidance for $40.1-$40.5 million and consensus of $40.4 million. Adjusted EBITDA was $7.0 million (16.8% margin), exceeding guidance for $4.6-$5.0 million and consensus of $5.1 million. Non-GAAP EPS of $0.14 beat guidance for $0.07-$0.09 and the Street’s $0.09.
Four new logos, several expansions within the customer base and new SaaS transitions were signed in Q4.
Model N closed the highest quarterly deal volume in its history during Q4 but with the trade-off that near-term revenue contribution was lower and will hopefully renew at more favorable economic terms down the line.
Q1 guidance for revenues, adjusted EBITDA and non-GAAP EPS of $40.2-$40.6 million, $4.1-$4.5 million and $0.05-$0.08, respectively, was short of Street expectations for $41.4 million, $5.2 million and $0.10.
Management’s FY ’21 outlook for revenues of $170.0-$172.0 million, adjusted EBITDA of $18.0-$20.0 million and non-GAAP EPS of $0.27-$0.35 fell short of consensus of $174.6 million, $22.8 million and $0.43, respectively.
NICE Reports 35% Record Cloud Growth for Third Quarter 2020
NICE (NICE) reported Q3 ’20 results above expectations and guided Q4 in line with consensus.
Non-GAAP revenue of $412.4 million (+6.5% Y/Y) was near the high-end of guidance for $403.0-$413.0 million and above consensus of $408.0 million. Non-GAAP operating income was $116.8 million (28.3% margin), ahead of consensus of $115.7 million. Non-GAAP EPS of $1.41 was within guidance for $1.33-$1.43 and above the Street’s $1.39.
Q3 saw continued acceleration in NICE’s cloud business driven by substantial growth in new customers, rapid adoption by large enterprises, and new verticals that are now embracing remote service and digital transformation.
Many new CXone customers were the result of an 80% conversion rate of CXone@home to a paid subscription.
Government and rapidly growing, new breed technology companies are now recognizing the importance of agility and flexibility in their customer service operations, driving incremental opportunities for NICE.
Management’s FY ’20 guidance for non-GAAP revenue and EPS of $1.645-$1.655 billion and $5.63-$5.73, respectively, implies Q4 non-GAAP revenue and EPS of $426.3-$436.3 million and $1.50-$1.60 versus consensus of $430.7 million and $1.52.
RADCOM Reports Third Quarter 2020 Results
RADCOM (RDCM) reported Q3 ’20 results above Street expectations and reaffirmed prior guidance for FY ’20.
Revenues of $9.8 million (+4.7% Y/Y) were above consensus of $9.2 million. Non-GAAP operating income was $0.2 million (2.4% margin), ahead of consensus of $(0.8) million. Non-GAAP EPS of $0.02 beat the Street’s $(0.04).
Rakuten Mobile has selected RADCOM ACE as its 5G assurance and analytics solution for its non-standalone 5G service launched in September as well as its standalone 5G service, which is expected to launch in 2021.
RADCOM is involved in multiple 5G opportunities and trials at various stages and sees some operators already moving beyond the initial step of selecting network providers to choose assurance vendors.
Management reaffirmed its FY ’20 revenue guidance of $35.0-$38.0 million, implying Q4 revenue of $7.7-$10.7 million versus consensus of $9.5 million.
RingCentral Announces Third Quarter 2020 Results
RingCentral (RNG) reported Q3 ’20 results above expectations and guided Q4 ahead of consensus.
Revenue of $303.6 million (+30.1% Y/Y) exceeded guidance for $283.5-$289.5 million and consensus of $287.3 million. Non-GAAP operating income was $30.9 million (10.2% margin), at the high-end of guidance for a 10.0%-10.2% margin and above consensus of $29.0 million. Non-GAAP EPS of $0.26 beat guidance and consensus of $0.24.
Key metrics: annualized exit monthly recurring subscriptions (ARR) was $1.2 billion (+34% Y/Y); RingCentral Office ARR was $1.1 billion (+36% Y/Y); Mid-market and Enterprise ARR was $633 million (+49% Y/Y); Enterprise ARR was $401 million (+55% Y/Y); Channel ARR was $419 million (+59% Y/Y).
RingCentral saw its new logo business increase at a record pace, further momentum in enterprise upsells and strong contribution from strategic partnerships.
COVID-driven churn stabilized at levels similar to Q2 and was better than what management had assumed in its guidance.
Q4 guidance for revenue of $315.0-$318.0 million, a non-GAAP operating margin of 10.0%-10.1% (implies non-GAAP operating income of $31.5-$32.1 million) and non-GAAP EPS of $0.26-$0.27 compared favorably with consensus of $307.6 million in revenue, $31.1 million in non-GAAP operating income and $0.26 in non-GAAP EPS.
SharpSpring Reports Third Quarter 2020 Results
SharpSpring (SHSP) reported Q3 ’20 results short of Street expectations and lowered its FY ’20 revenue guidance.
Revenue of $7.3 million (+27.7% Y/Y) was shy of the Street’s $7.5 million. Adjusted EBITDA of $(0.5) million (-6.4% margin) was below consensus of $(0.1) million. Non-GAAP EPS of $(0.06) missed consensus of $(0.04).
Key metrics: monthly recurring revenue (MRR) from new customers was $176,000 (+21% Y/Y); new customers expected to generate $2.1 million in ARR; net revenue retention rate was 90.1%; customer acquisition cost of $7,900 (-26% Y/Y).
MRR from new customers has completely rebounded from the pressure seen earlier in the year although some pressure on unit sales remains.
After contracting a bit at the onset of the pandemic, agencies have begun to expand by adding more of their clients to the platform on a net basis.
The Perfect Audience digital advertising business underperformed as advertising spending has remained under pressure amid uncertain economic conditions.
Management lowered its FY ’20 revenue guidance from $29.5-$30.5 million to $29.0-$29.4 million, implying Q4 revenue of $7.4-$7.8 million versus consensus of $8.0 million.
ShotSpotter Reports Third Quarter 2020 Financial Results
ShotSpotter (SSTI) reported Q3 ’20 results above expectations and guided Q4 revenue in line with consensus.
Revenues of $11.4 million (+13.7% Y/Y) was ahead of consensus of $11.2 million. Adjusted EBITDA was $3.3 million (28.7% margin), above consensus of $2.7 million. EPS of $0.05 beat the Street’s $0.03.
Key metrics: 3 new “go-live” square miles of coverage; 6 square miles of attrition; total live miles of 758 at quarter-end.
The go-live cadence was below management’s expectations due to headwinds arising from responses to the pandemic and the social unrest many police department customers were focused on during the quarter.
To date, customer attrition has totaled less than $0.5 million when netted against price increases on renewals, which is lower than the $2.0 million impact previously estimated for the year.
Management narrowed its FY ’20 revenue guidance from $43.5-$45.5 million to $44.5-$45.0 million, implying Q4 revenue of $11.4-$11.9 million versus consensus of $11.7 million.
Including an estimated $10.0 million from the acquisition of Leeds, management is targeting revenues of $58.0-$60.0 million, which implies organic revenues slightly below prior Street expectations for $51.1 million.
Synchronoss Technologies (SNCR) reported mixed Q3 ’20 results and guided Q4 adjusted EBITDA short of consensus.
Revenue of $68.6 million (+31.5% Y/Y) was below consensus of $70.3 million. Adjusted EBITDA was $8.1 million (11.8% margin), exceeding consensus of $3.8 million. Non-GAAP EPS of $0.04 beat the Street’s $(0.25).
Despite an unexpected leadership change during the quarter, Synchronoss executed well in a challenging environment and closed on its previously announced five-year contract extension with Verizon Cloud, helped AT&T launch its own cloud product and saw TracFone expand its cloud solution offerings to more brands.
COVID impacted some customer decisions although no opportunities were lost and several new agreements were signed.
Messaging revenue declined despite the recognition of additional license revenue from Japanese carriers as well as orders to deliver additional functionality to Synchronoss’ CCMI messaging platform due to inherent lumpiness in perpetual license sales.
Synchronoss remains on track to realize or slightly exceed the $45 million in cost savings targeted for this year.
Refinancing the company’s preferred stock remains the top priority, and with a shelf already filed, management is actively evaluating financing alternatives.
Management raised its FY ’20 adjusted EBITDA guidance from $20.0-$25.0 million to $23.0-$26.0 million, implying Q4 adjusted EBITDA of $1.6-$4.6 million versus consensus of $5.5 million.
Talend Reports Third Quarter 2020 Financial Results
Talend (TLND) reported Q3 ’20 results above expectations and guided Q4 ahead of consensus.
Revenue of $72.7 million (+16.4% Y/Y) was above guidance for $69.2-$70.2 million and consensus of $69.9 million. Non-GAAP operating income was $(4.2) million (-5.8% margin), exceeding guidance for $(11.6)-$(10.6) million and consensus of $(10.7) million. Non-GAAP EPS of $(0.16) beat guidance for $(0.39)-$(0.36) and the Street’s $(0.37).
Key metrics: ARR of $268.9 million (+20% Y/Y); Cloud ARR of $87.8 million (+113% Y/Y); over 3,250 cloud customers; added 28 customers with ARR of $100,000 or more for a total of 642 at quarter-end; dollar-based net expansion rate of 107%.
COVID continues to reinforce the importance for organizations to digitize their businesses and take control of their data, providing a tailwind for Talend given its role in facilitating digital transformation through Talend Data Fabric.
Both the number and velocity of deals increased from the prior year period and the percentage of deals closed rose relative to Q2; management was also pleased with linearity and the mix of business with new and existing customers in Q3.
Q4 guidance for revenue of $74.2-$75.2 million, non-GAAP operating income of $(9.5)-$(8.5) million and non-GAAP EPS of $(0.32)-$(0.29) was ahead of Street expectations for $73.0 million, $(12.4) million and $(0.40), respectively.
Tufin Announces Third Quarter 2020 Results
Tufin (TUFN) reported Q3 ’20 results above expectations and guided Q4 in line with consensus.
Revenue of $25.6 million (flat Y/Y) was above consensus of $23.6 million. Non-GAAP operating income of $(1.0) million (-4.0% margin) was ahead of consensus of $(5.1) million. Non-GAAP EPS of $(0.03) beat the Street’s $(0.16).
Product revenues improved significantly from the COVID-impacted results seen earlier in the year driven by growth in new logos, and renewals have returned to pre-COVID levels.
Automation and the move towards zero-trust security are driving demand for Tufin’s products and becoming increasingly powerful trends in the wake of COVID-19.
Q4 guidance for revenue of $24.0-$28.0 million and non-GAAP operating income of $(5.9)-$(1.6) million encompassed Street expectations for $28.0 million and $(3.3) million, respectively.
Veritone Beats Top- and Bottom-Line Guidance with Record Q3 2020 Financial Results
Veritone (VERI) reported Q3 ’20 results above expectations and guided Q4 ahead of consensus.
Revenue of $15.7 million (+22.7% Y/Y) was above guidance for $14.2-$14.6 million and consensus of $14.3 million. Non-GAAP operating income of $(4.3) million (-27.1% margin) was above consensus of $(5.6) million. Non-GAAP EPS of $(0.15) beat guidance for $(0.21)-$(0.19) and the Street’s $(0.20).
Key metrics: average gross billings per active Advertising client was $625,000 (+28% Y/Y); 1,791 aiWARE accounts on platform (+83% Y/Y) at quarter-end; new aiWARE SaaS bookings received in Q3 was $2.1 million (+51% Y/Y).
Both revenue growth and bookings accelerated in the government, legal and compliance (GLC) business driven by Veritone’s AI-driven solutions for public safety, which help expedite the release of video footage of crime and police interactions.
Veritone’s momentum was further boosted by the launch of Veritone Energy, which helps utilities predict, optimize, dispatch and trade energy to meet grid demand in real time.
aiWARE-enabled advertising services exhibited strong growth and outperformed internal expectations due to the initial ramp of the company’s VeriAds offerings, which was partially offset by lower content licensing revenues.
Q4 guidance for revenue of $16.0-$16.4 million and non-GAAP net loss of $(4.5)-$(4.0) million, which implies non-GAAP EPS of $(0.16)-$(0.14), exceeded Street expectations for revenue of $15.0 million and non-GAAP EPS of $(0.19).
Vertex Announces Third Quarter 2020 Financial Results
Vertex (VERX) reported Q3 ’20 results above expectations and guided Q4 revenue ahead of consensus.
Revenue of $94.6 million (+14.8% Y/Y) was above guidance for $89.0-$91.0 million and consensus of $90.1 million. Adjusted EBITDA of $22.5 million (23.8% margin) was ahead of guidance for $17.5-$18.5 million and consensus of $18.0 million. Non-GAAP EPS of $0.15 beat the Street’s $0.08.
Key metrics: annual recurring revenue (ARR) of $306.5 million (+15.4% Y/Y); net revenue retention rate was 108%; gross revenue retention rate was 91%; existing customers comprised 73% of software sales; new logos were 27% of software sales.
Vertex saw accelerated cloud adoption among both new and existing customers and noted that the increased scale and complexity of its customers’ tax operations is fueling momentum in the business.
Several existing customers accelerating their omnichannel strategies increased their investments with Vertex to manage tax complexities arising from expansion across multiple regions and business applications.
Q4 guidance for revenue of $93.0-$95.0 million and adjusted EBITDA of $18.5-$19.5 million compared favorably with Street expectations for revenue of $92.8 million and adjusted EBITDA of $19.1 million.
Wix Reports Third Quarter 2020 Results
Wix (WIX) reported Q3 ’20 results above expectations and guided Q4 revenue ahead of consensus.
Revenue of $254.2 million (+29.2% Y/Y) was above guidance for $247.0-$250.0 million and consensus of $249.9 million. Non-GAAP operating income was $(8.5) million (-3.3% margin), above consensus of $(13.7) million. Non-GAAP EPS of $(0.14) beat consensus by a penny.
Key metrics: collections of $280.9 million (+36% Y/Y) were above guidance for $270.0-$275.0 million; Creative Subscriptions ARR was $840.5 million (+24% Y/Y); added 302,000 net premium subscriptions (+164% Y/Y) for a total of 5.3 million (+20% Y/Y) at quarter-end; added 7.8 million registered users (+42% Y/Y) for a total of 189.4 million (+19% Y/Y) at quarter-end.
Even as economies in some parts of the world began to reopen, Wix continued to see strong demand as individuals and businesses alike recognize that an online presence is essential.
Wix’s e-commerce growth rate is more than double that of the company’s overall growth rate and its growth with agencies and partners is also above the company average.
Q4 guidance includes revenue of $266.0-$271.0 million versus consensus of $265.2 million, collections of $295.0-$305.0 million (+30%-35% Y/Y) and free cash flow of $16.0-$21.0 million.
Zix Reports Third Quarter 2020 Financial Results
Zix (ZIXI) reported Q3 ’20 results above expectations and guided Q4 ahead of consensus.
Revenue of $54.8 million (+14.6% Y/Y) was above guidance for $53.5-$54.0 million and consensus of $53.7 million. Adjusted EBITDA was $13.8 million (25.1% margin), above guidance for a 24.0%-25.0% margin and consensus of $13.2 million. Non-GAAP EPS of $0.17 beat guidance for $0.15-$0.16 and the Street’s $0.15.
Key metrics: annual recurring revenue (ARR) was $222.3 million (+11% Y/Y); Cloud ARR was $190.3 million (+19% Y/Y); billings of $54.6 million (+18% Y/Y); added 50,276 cloud mailboxes in Q3; AppRiver direct customers and Managed Service Provider partners started 3,038 trials; net dollar retention rate was 99%.
The move by customers to secure modern workplaces has driven strong adoption of Zix’s Secure Cloud platform.
The acquisition of CloudAlly adds cloud backup and recovery to Zix’s solution set and fills the top partner request of what they want to buy next from the company.
Q4 guidance for revenue of $56.4-$57.4 million (includes $1.0 million from the acquisition of CloudAlly), an adjusted EBITDA margin of 25% (implies adjusted EBITDA of $14.1-$14.4 million) and non-GAAP EPS of $0.16-$0.17 was ahead of Street expectations for $55.3 million in revenue, $14.0 million in adjusted EBITDA and $0.15 in non-GAAP EPS.
ZoomInfo Announces Third Quarter 2020 Financial Results
ZoomInfo (ZI) reported Q3 ’20 results above expectations and guided Q4 ahead of consensus.
Revenue of $123.4 million (+56.0% Y/Y) was above guidance for $116.0-$118.0 million and consensus of $117.4 million. Non-GAAP operating income was $58.5 million (47.4% margin), exceeding guidance for $53.0-$55.0 million and consensus of $54.1 million. Non-GAAP EPS of $0.11 beat guidance for $0.08-$0.09 and the Street’s $0.09.
Key metrics: allocated combined receipts of $123.6 million (+41% Y/Y); over 720 customers with $100,000 or more in ACV.
ZoomInfo saw record quarterly new sales, record engagement levels and a high-water mark of customers spending over $100,000 annually with the company as customers sought to modernize their go-to-market motions.
40% of new ACV was generated from industries outside of software and business services, and Q3 was also the company’s best quarter ever on the land-and-expand side.
Engage, a sales engagement offering designed to maximize sales productivity, was launched in Q3 and is expected to drive incremental growth in 2021.
Over 60% of ACV has already migrated to the company’s new platform, typically with a modest uplift on a like-for-like functionality basis.
Q4 guidance for revenue of $129.0-$131.0 million, non-GAAP operating income of $58.0-$60.0 million and non-GAAP EPS of $0.09-$0.10 was ahead of Street expectations for $122.6 million, $55.9 million and $0.09, respectively.
Notable News
Autodesk Announces Executive Change
Autodesk (ADSK) announced that CFO Scott Herren is leaving the company in mid-December to become CFO at Cisco.
The company also indicated that its fiscal Q3 ’21 results are expected to exceed its prior guidance ranges across the board.
BigCommerce Announces Pricing of Follow-on Public Offering
BigCommerce Holdings (BIGC) priced a follow-on offering comprised of 1.0 million primary shares of its Series 1 common stock and 4.0 million shares offered by selling stockholders at a price to the public of $68.00 per share, an 8.9% discount to the close price prior to announcement of the planned offering.
The selling stockholders have also granted the underwriters an option to purchase up to an additional 750,000 shares.
Duck Creek Technologies Announces Pricing of Secondary Offering of Common Stock
Duck Creek Technologies (DCT) priced a secondary offering of 8.0 million shares by certain selling stockholders at a public offering price of $41.00 per share, a 13.1% discount to the close price prior to announcement of the planned offering.
The selling stockholders have also granted the underwriters an option to purchase up to an additional 1.2 million shares.
The company will not receive any proceeds from the offering.
F5 Networks Previews Upcoming Analyst and Investor Meeting and Status of Strategic Transformation
F5 Networks (FFIV) provided its Horizon 2 (FY ’21-FY ’22) outlook calling for a CAGR in revenue of 6%-7%; a CAGR in software revenue of 35%-40%; a non-GAAP operating margin of 31%-32% and 32%-34% in FY ’21 and FY ’22, respectively; double-digit non-GAAP EPS growth; and a commitment to achieving the “Rule of 40” by FY ’22.
Longer-term targets include revenue growth of 8%-9%, software revenue growth in excess of 20%, a non-GAAP operating margin in the mid-30% range and sustained double-digit non-GAAP EPS growth by FY ’25.
F5 Networks also plans to return $1 billion in capital to shareholders over the next two years and return 50% of free cash flow to shareholders via repurchases beginning in FY ’23.
PTC Expands Executive Leadership Team, Names Troy K. Richardson as EVP and Chief Operating Officer
PTC (PTC) has appointed Troy K. Richardson as EVP and Chief Operating Officer, a role in which he will lead the company’s field operations teams, including global sales, commercial marketing, customer service and customer success.
Mr. Richardson most recently served as SVP, Global Head of Sales for DXC Technologies.
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 NetScout Systems (NTCT).
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 Stamps.com (STMP).