K. Liu's Week in Review
Monthly data from the United States Postal Service (USPS) revealed an ongoing trend of robust growth in PC Postage revenue, leaving us confident that Stamps.com (STMP) remains poised for another meaningful beat and raise this quarter. Our positive near-term outlook coupled with the pull-back in shares since the company last reported creates an attractive buying opportunity for those looking to add to or establish a position, in our opinion. For further details, we point readers to our recently published report, “USPS PC Postage Revenue +52% Y/Y in August.”
Coinciding with its Summit20 virtual conference this week, PagerDuty (PD) agreed to acquire Rundeck for approximately $100 million in cash and stock. Rundeck enables incident response teams to automate the prevention, diagnosis and remediation of incidents via its runbooks. The acquisition adds revenue in the high single-digit millions of dollars, implying a valuation north of 10x sales. CrowdStrike (CRWD) also announced a cash and stock deal, agreeing to acquire Preempt Security for $96 million. The acquisition marks CrowdStrike’s entry into the Identity Security market, thereby expanding its addressable market opportunity by an estimated $2 billion. The company plans to integrate Preempt’s Zero Trust and conditional access technology into its Falcon platform, providing customers with greater protection against identity-based attacks and insider threats.
Blackberry (BB) reported its fiscal Q2 ’21 results this week, exceeding Street expectations top to bottom. Management attributed the performance to continued momentum for its core Spark platform, which again benefited from the shift to work-from-anywhere and budding interest in the company’s recently launched Spark Suites. Although softness in auto production remained a headwind for Blackberry’s QNX platform, the company still secured a number of new design wins across both the auto sector and general embedded market. Looking forward, signs of recovery in the auto industry and increasing traction for Spark Suites amongst both the installed base and new logos point to a stronger 2H performance relative to 1H. While management again refrained from providing detailed guidance, prior expectations for full year revenue of approximately $950 million were reaffirmed.
As for other notable news this week, Crexendo (CXDO), a unified communications as a service (UCaaS) provider that recently uplisted to NASDAQ, priced an offering of 2.8 million shares at $5.50 per share, representing a 26.8% discount to the close price prior to announcement of the planned offering. The offering included 1.75 million primary shares and 1.05 million shares held by selling stockholders. Net proceeds to the company will be used for general corporate purposes. Synchronoss Technologies (SNCR) is on the hunt for a permanent CEO in the wake of Glenn Lurie’s resignation following the Board of Directors’ investigation into personal misconduct allegations. In the meantime, Jeff Miller, Synchronoss’ Chief Commercial Officer, has taken on additional responsibilities as interim President and CEO. Finally, Splunk (SPLK) promoted John Sabino and Christian Smith to Chief Customer Officer and Chief Revenue Officer, respectively, following Susan St. Ledger’s decision to join Okta. She had served as Splunk’s President, Worldwide Field Operations since October 2017.
Mergers and Acquisitions
CrowdStrike to Acquire Preempt Security to Offer Customers Enhanced Zero Trust Security Capabilities
CrowdStrike (CRWD) has agreed to acquire Preempt Security for approximately $96 million, comprised of $86 million in cash and $10 million in stock.
The addition of Preempt Security’s Zero Trust and conditional access technology to the CrowdStrike Falcon platform will provide customers with enhanced protection against identity-based attacks and insider threats.
CrowdStrike’s expansion into the Identity Security market expands its addressable market by an estimated $2 billion.
PagerDuty to Acquire Rundeck to Expand DevOps Automation Capabilities Across Digital Operations
PagerDuty (PD) has agreedto Rundeck for approximately $100 million, of which approximately 60% will be paid in cash and the remaining 40% in stock.
Rundeck provides incident response teams in functional areas such as engineering, IT, customer service and security with runbooks, which are automated workflows used to prevent, diagnose and resolve incidents.
Rundeck boasts over 150 paying customers and generates revenue in the high single-digit millions of dollars.
Earnings Releases
BlackBerry (BB) reported Q2 ’21 results ahead of expectations.
Non-GAAP revenue of $266 million (+2% Y/Y) exceeded consensus of $238 million. Adjusted EBITDA was $81 million (30% margin), well above consensus of $28 million. Non-GAAP EPS of $0.11 beat the Street’s $0.02.
Key metrics: ARR of $486 million; dollar-based net retention was 92%; net customer churn of approximately 3%.
The core Spark platform continued to perform well due to work-from-anywhere momentum, while QNX was again impacted by the slowdown in auto production but showed signs of recovery.
The launch of Spark Suites has garnered strong customer interest and demand, leaving management optimistic that a significant number of upgrades will be secured within the installed base along with the addition of new logos.
QNX secured 15 new design wins, including five in the auto sector and 14 in the general embedded market.
Management refrained from providing detailed guidance for FY ’21 but indicated that revenue should end up around $950 million, consistent with prior expectations.
Notable News
Crexendo Announces Pricing of Public Offering of Common Stock
Crexendo (CXDO) priced an offering of 2.8 million shares, including 1.75 million primary shares and 1.05 million shares held by selling stockholders, at $5.50 per share, a discount of 26.8% from the close price prior to disclosure of the planned offering.
The underwriters have been granted a 30-day option to purchase up to 420,000 additional shares.
Gross proceeds to the company are expected to be $9.6 million, or $11.9 million if the underwriters exercise their over-allotment option in full, and will be used for general corporate purposes.
Synchronoss Technologies Appoints Jeff Miller Interim President and Chief Executive Officer
Synchronoss Technologies (SNCR) appointed Jeff Miller as interim President and Chief Executive Officer, effective immediately, in addition to his role as Chief Commercial Officer.
Mr. Miller succeeds Glenn Lurie who resigned following the Board of Directors’ review of personal misconduct allegations.
Synchronoss also reaffirmed its prior FY ’20 guidance for adjusted EBITDA of $20.0-$25.0 million.
Splunk Names New Chief Customer and Chief Revenue Officers
Splunk (SPLK) has promoted John Sabino, Senior Vice President, Customer Success, to Chief Customer Officer and Christian Smith, Senior Vice President, Global Sales, to Chief Revenue Officer.
The new executive appointments come in the wake of Susan St. Ledger’s decision to join Okta; she has served as Splunk’s President, Worldwide Field Operations since October 2017.
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 Stamps.com (STMP).