K. Liu's Week in Review
With the unofficial end of summer upon us, the recent run of multiple expansion across the software sector has also seemingly ground to a halt. The week began with Zoom Video Communications (ZM) shattering Street expectations once again as the company continued to benefit from heightened demand amidst the COVID-19 pandemic. Customer churn was also less than thought although management cautioned attrition may remain at elevated levels in the near-term considering 36% of revenue now comes from customers with fewer than ten employees versus 20% pre-pandemic. Regardless, management guided Q3 well above consensus and raised its outlook for the year. The ensuing excitement lifted Zoom’s shares to even loftier heights and produced a rising tide across the SaaS universe. The enthusiasm for all things software proved short-lived, however, as mid-week results from a host of companies reminded investors that not all have benefited from the rapid shift to work- and learn-from-anywhere. In particular, significant post-earnings sell-offs in shares of PagerDuty (PD), Smartsheet (SMAR) and Zuora (ZUO) marked a clear reversal in sentiment, which carried through to the weekend. In our view, the primary concern investors have at this juncture is the level of churn and down-sells arising from soft economic conditions and the corresponding impact on dollar-based net retention rates, which have decelerated at the aforementioned companies. Combined with a lack of earnings and significant variation in the EV/Sales multiples afforded to companies at various ends of the growth spectrum, we surmise valuation and assessments of potential downside risk may finally be moving to the fore of market considerations. As anecdotal evidence, we highlight DocuSign’s (DOCU) stellar results and outlook late in the week, which failed to garner a move higher a la Zoom despite the company also proving to be a clear beneficiary of the ongoing pandemic. Assuming there is further fallout following the long weekend, we wonder if more companies will follow Proofpoint’s (PFPT) lead and institute new share repurchase authorizations.
Aside from reporting results, DocuSign also promoted its CFO, Mike Sheridan, to President of International. He had previously taken on additional responsibilities as GM of EMEA and will now be tasked with driving growth across all international markets. Stepping into the CFO role will be Cynthia Gaylor, who joined DocuSign’s board in 2018 and most recently served as CFO of Pivotal software. At Yext, President and Chief Revenue Officer, Jim Steele, will transition to an advisor role. In his stead, David Rudnitsky and Patrick Blair have both been promoted to Chief Revenue Officer and will split responsibilities by geography and business unit. Mel Zeledon joins BlackLine (BL) as Senior Vice President of Channel & Alliances. He most recently served as Workday’s (WDAY) Vice President of Global Channels. Lastly, American Software (AMSWA) formally announced the addition of three new executives to the company, which was first disclosed during the company’s fiscal Q1 earnings call. Kevin McInturff has been appointed Executive Vice President of Research and Development; Alex Price has been named Senior Vice President, Alliance Partners and Sales; and Shawn Reynolds has been appointed Executive Vice President of Marketing. Mr. McInturff fills a newly created role as the company aims to consolidate R&D efforts across its four branded offerings, while Mr. Price and Mr. Reynolds fill vacancies in key roles expected to support American Software’s growth aspirations.
In M&A news, Medallia (MDLA) agreed to pay $100 million in cash for Stella Connect, which offers a real-time feedback, coaching and quality management platform for contact centers. Revenue contribution is expected to be nominal in the near-term although management indicated that the multiple paid for Stella Connect was significantly less than its own multiple, so perhaps $15-$20 million on an annual basis is a reasonable guess. Elsewhere, RealPage (RP) has acquired STRATIS IoT as part of its new connected building initiative, the details of which will be unveiled at REALWORLD2020 later this month. As for Smartsheet’s $155 million purchase of Brandfolder, which was announced last week, management’s updated FY ’21 guidance assumes $2 million in revenue and $6 million in billings along with in an incremental $10 million in operating losses during 2H ’21.
Mergers and Acquisitions
Medallia (MDLA) has agreed to acquire Stella Connect, a real-time feedback, coaching and quality management platform for customer service teams, for approximately $100 million in cash.
Stella Connect automates the process of coaching interactions in the contact center, resulting in a better customer experience as well as increased employee engagement.
The acquisition is expected to close this month and will contribute nominally to revenue and billings in Q3.
Stella Connect’s revenue run rate was not disclosed although management indicated the multiple paid was significantly less than Medallia’s own multiple.
RealPage (RP) has acquired STRATIS IoT, which offers a single resident app connected to smart apartment systems and devices available from over 100 providers.
STRATIS IoT’s resident experience spans over 380,000 units across the globe.
The acquisition is expected to complement RealPage’s new connected building initiative, which will be unveiled at REALWORLD2020 later this month.
Earnings Releases
Cloudera Reports Second Quarter Fiscal 2021 Financial Results
Cloudera (CLDR) reported Q2 ’21 results ahead of expectations and raised its guidance for FY ’21.
Revenue was $214.3 million (+9.0% Y/Y), above guidance for $206.0-$209.0 million and consensus of $208.1 million. Non-GAAP operating income was $29.8 million (13.9% margin), ahead of guidance for $18.0-$23.0 million and consensus of $20.9 million. Non-GAAP EPS of $0.10 beat guidance or $0.06-$0.07 and the Street’s $0.06.
Key metrics: annualized recurring revenue was $739 million (+12% Y/Y); 1,007 customers with over $100,000 of ARR; 172 customers with over $1 million of ARR (+25% Y/Y).
The outperformance was driven by strong execution on all measures, increased growth in both new bookings and expansion bookings and a record quarter for converting nonpaying users to subscribers.
Momentum continues to build for Cloudera Data Platform (CDP) with the number of CDP Public Cloud customers more than doubling in the quarter and driving a similarly strong bookings result.
The services business has been impacted by the pandemic but Cloudera continues to deliver virtual consulting and training services whenever possible.
Q3 guidance for revenue of $207.0-$210.0 million, non-GAAP operating income of $27.0-$31.0 million and non-GAAP EPS of $0.08-$0.10 was ahead of Street expectations for $205.5 million, $22.4 million and $0.07, respectively.
Management raised its FY ’21 revenue, non-GAAP operating income and non-GAAP EPS guidance from $825.0-$845.0 million, $85.0-$95.0 million and $0.26-$0.30, respectively, to $839.0-$853.0 million, $102.0-$112.0 million and $0.32-$0.35.
CrowdStrike Reports Fiscal Second Quarter 2021 Financial Results
CrowdStrike (CRWD) reported Q2 ’21 results above expectations and raised its guidance for FY ’21.
Revenue of $199.0 million (+84.0% Y/Y) was above guidance for $185.8-$190.3 million and consensus of $188.5 million. Non-GAAP operating income was $7.8 million (3.9% margin), exceeding guidance for $(3.1) million to breakeven and consensus of $(1.7) million. Non-GAAP EPS of $0.03 beat guidance for $(0.02)-$0.00 and the Street’s $(0.01).
Key metrics: added net new annual recurring revenue (ARR) of $104.5 million for a total of $790.6 million (+87% Y/Y) at quarter-end; added 969 net new subscription customers for a total of 7,230 (+91% Y/Y) at quarter-end.
As organizations adapt to the new distributed workforce paradigm and move more workloads to the cloud, the endpoint has become the new security perimeter, providing a strong secular tailwind to growth.
Results were ahead of pre-COVID expectations driven by continued strong partner engagement, deal flow among both large and SMB customers and rapid module adoption by both new and existing customers.
CrowdStrike closed the second largest deal in its history during Q2, amounting to the low eight-figures in ARR, and exited the quarter with record pipeline.
The company continued to invest aggressively in sales and marketing, although spending shifted from in-person activities to digital and to ramp hiring in key areas.
Q3 guidance for revenue of $210.6-$215.0 million, non-GAAP operating income of $(1.4)-$1.6 million and non-GAAP EPS of $(0.01)-$0.00 exceeded consensus of $195.8 million, $(12.1) million and $(0.05), respectively.
Management raised its FY ’21 guidance ranges across the board and now anticipates revenue of $809.1-$826.7 million, non-GAAP operating income of $3.6-$16.4 million and non-GAAP EPS of $0.02-$0.08.
DocuSign Announces Second Quarter Fiscal 2021 Financial Results
DocuSign (DOCU) reported Q2 ’21 results above expectations and raised its guidance for FY ’21.
Revenue of $342.2 million (+45.2% Y/Y) exceeded guidance for $316.0-$320.0 million and consensus of $318.6 million. Non-GAAP operating income of $33.7 million (9.9% margin) was well above the Street’s $15.8 million. Non-GAAP EPS of $0.17 beat consensus of $0.08.
Key metrics: billings of $405.7 million (+61% Y/Y) exceeded guidance for $333.0-$343.0 million; added over 88,000 new customers for a total of nearly 749,000 (+39% Y/Y); approximately 99,000 enterprise and commercial customers (+55% Y/Y); dollar-based net retention rate of 120%.
The need to agree electronically and remotely has never been stronger and is causing greater adoption of DocuSign’s offerings.
DocuSign has seen a sustained rise in demand for its core eSignature offering from both new customers and those expanding across use cases, departments and orders.
The acquisition of Liveoak Technologies will accelerate the launch of DocuSign Notary, which is slated for beta release later this year and will initially be offered to existing customers that already have a notary capability within their organization.
Q3 guidance for revenue of $358.0-$362.0 million was ahead of consensus of $335.1 million and implies non-GAAP operating income and EPS of $7.7-$42.6 million and $0.02-$0.21, respectively, consistent with consensus of $24.9 million and $0.12.
Management raised its FY ’21 guidance and now anticipates revenue of $1.384-$1.388 billion and billings of $1.623-$1.643 billion; guidance also implies non-GAAP operating income and EPS of $52.4-$169.3 million and $0.23-$0.84, respectively.
Domo Announces Second Quarter Fiscal 2021 Financial Results
Domo (DOMO) reported Q2 ’21 results above expectations and raised its guidance for FY ’21.
Revenue was $51.1 million (+22.7% Y/Y), above guidance for $48.5-$49.5 million and consensus of $49.0 million. Non-GAAP operating income was $(8.2) million (-16.1% margin), ahead of the Street’s $(11.8) million. Non-GAAP EPS of $(0.37) beat guidance for $(0.52)-$(0.48) and consensus of $(0.50).
Key metrics: billings of $47.6 million (+23% Y/Y); renewal rate over 85% and net retention rate over 100%; remaining performance obligation +16% Y/Y.
The macro environment is driving the need to digitize business processes and the need for real-time data and analytics, thereby increasing the portion of IT budgets allocated to modernizing BI and analytics functions.
Strong billings growth was attributed to wins across a number of industries, expansion with the state of Iowa, a strong renewal rate and consistent execution across the business, particularly in the enterprise segment.
Domo has already secured a seven-figure per year upsell early in Q3 with a large retail conglomerate.
Q3 guidance for revenue of $51.2-$52.2 million and non-GAAP EPS of $(0.46)-$(0.42) compared favorably with Street expectations for revenue of $49.6 million and non-GAAP EPS of $(0.45).
Management raised its FY ’21 revenue and non-GAAP EPS guidance from $194.0-$200.0 million and $(2.06)-$(1.96), respectively, to $202.5-$206.5 million and $(1.91)-$(1.83).
eGain Reports 34% Growth in SaaS Revenue for Fiscal 2020 Fourth Quarter
eGain (EGAN) reported Q4 ’20 results at the high-end of its pre-announced ranges and guided Q1 ahead of consensus.
Revenue was $19.0 million (+13.1% Y/Y), consistent with the pre-announced range of $18.7-$19.0 million and ahead of the Street’s $18.7 million. Non-GAAP operating income was $3.1 million (16.2% margin), exceeding consensus of $1.7 million. Non-GAAP EPS of $0.08 were in line with the pre-announced range of $0.07-$0.08 and above consensus of $0.05.
Key metrics: SaaS business was 91% of total revenue; SaaS net retention rate was 114%; ARR per SaaS customer of approximately $350,000 (+40% Y/Y).
Some of the new logo opportunities that slipped from March closed in Q4 while others remain in flight, and the spike in business from customers looking to deflect phone interactions to digital at the outset of the pandemic has begun to normalize.
Interest in eGain’s recently announced Messaging Hub with its “bring your own bot” architecture has been strong but given macro uncertainty associated with the pandemic, management expects investment decisions to be delayed and anticipates increased scrutiny on renewals.
After announcing its new OEM agreement with Avaya earlier this year, eGain announced the general availability of the product in March and closed its first deal with Avaya at the end of Q4.
Management plans to invest in sales and marketing to capture a significant growth opportunity in the installed base of 150 SaaS customers, expand partner support and digital marketing to attract new logos, and convince legacy customers to migrate.
Q1 guidance for revenue of $18.6-$19.3 million and non-GAAP EPS of $0.05-$0.08 compared favorably versus Street expectations for $18.6 million in revenue and $0.03 in non-GAAP EPS.
Guidewire Software Announces Fourth Quarter and Fiscal Year 2020 Financial Results
Guidewire Software (GWRE) reported Q4 ’20 results ahead of expectations but guided FY ’21 below consensus.
Revenue was $243.7 million (+17.2% Y/Y), exceeding guidance for $204.9-$212.9 million and consensus of $208.9 million. Non-GAAP operating income was $76.4 million (31.4% margin), well above guidance for $36.7-$44.7 million and consensus of $40.7 million. Non-GAAP EPS of $0.83 beat guidance for $0.41-$0.49 and consensus of $0.45.
Key metrics: annual recurring revenue of $514 million (+12% Y/Y); added ten InsuranceSuite Cloud customers and three InsuranceNow customers; 14 customer go-lives in Q4.
The upside in Q4 was driven by strong momentum in expansions and new sales combined with on-premise add-ons.
Over 1,500 people attended the virtual launch of Aspen, Guidewire’s first cloud optimized product release for InsuranceSuite.
Just over half of ARR added during the year came from new deals sold to new and existing customers with the remainder from ARR step-ups in ramp deals sold in prior years.
ARR is expected to decline sequentially due to a large contract consolidation and the sunsetting of support for acquired on-premise ISCS customers.
Q1 guidance for revenue of $162.0-$166.0 million and non-GAAP operating income of $(10.0)-$(6.0) million fell short of Street expectations for revenue of $167.7 million and non-GAAP operating income of $6.5 million.
Management’s FY ’21 guidance includes revenue and non-GAAP operating income of $723.0-$733.0 million and $(5.0)-$5.0 million, respectively, falling short of Street expectations for $771.6 million and $87.1 million; guidance for ARR of $560.0-$571.0 million represents growth of 9%-11% Y/Y.
Jamf Announces Second Quarter 2020 Financial Results
Jamf (JAMF) reported Q2 ’20 results above expectations and guided FY ’20 ahead of consensus.
Revenue of $62.2 million (+28.8% Y/Y) was ahead of Street expectations for $61.6 million. Non-GAAP operating income was $11.2 million (18.0% margin), above consensus of $10.2 million. Non-GAAP EPS of $0.05 missed consensus of $0.07.
Key metrics: ARR of $241 million (+36% Y/Y); 17.2 million devices running Jamf (+19% Y/Y); over 40,000 active customers; TTM dollar-based net retention rate was 117%.
Jamf’s goal is to empower people with Apple technology and to make every enterprise experience as seamless and simple as Apple’s consumer experience.
The company’s platform connects users, protects devices and manages Apple workflows that are critical to productivity.
The global total addressable market for Apple Enterprise Management was an estimated $10.3 billion in 2019 and is expected to grow at a compounded annual growth rate of 17.8% to $23.4 billion by 2024.
Jamf has seen customers reduce staff and lower contracted devices at renewal, some requests for payment delays and many budget cuts and deferrals, but these challenges have been mostly offset by demand for implementing work-at-home, telehealth and distance learning workloads.
Some planned spending in Q2 was delayed due to COVID-19 but a portion of those savings will be invested in 2H ’20 with the majority of that occurring in Q4.
Q3 guidance for revenue of $65.0-$66.0 million and non-GAAP operating income of $5.0-$7.0 million exceeded Street expectations for revenue of $61.3 million and non-GAAP operating income of $1.8 million.
Management’s FY ’20 guidance calls for revenue of $255.0-$257.0 million and non-GAAP operating income of $20.0-$23.0 million, above consensus of $246.9 million and $17.0 million, respectively.
Medallia Reports Record Second Quarter Fiscal 2021 Revenue
Medallia (MDLA) reported Q2 ’21 results above expectations but provided a mixed outlook for Q3.
Revenue of $115.5 million (+20.8% Y/Y) was ahead of guidance for $109.0-$111.0 million and consensus of $110.4 million. Non-GAAP operating income was $2.5 million (2.2% margin), above guidance for $1.8-$2.3 million and consensus of $1.7 million. Non-GAAP EPS of $0.01 was at the high-end of guidance for $(0.00)-$0.01 and beat consensus by a penny.
Key metrics: added 57 enterprise customers for a total of 839 (+37% Y/Y) at quarter-end; 146 customer go-lives; dollar-based net retention rate was 117%; remaining performance obligation of $728 million (+33% Y/Y).
Medallia’s new economy sales motion focused on e-commerce, telehealth, digital and work-from-anywhere sectors showed great promise, and increasing feedback volumes in hospitality and improved performance in retail bode well for the business.
Modified subscription terms reduced SaaS revenue in Q2 by approximately $1.0 million and negatively impacted SaaS billings by $2.5 million.
Management noted that Medallia is off to a good start in August and has already secured a seven-figure plus annual contract value agreement for its new Medallia Speech solution.
Q3 guidance for revenue of $115.6-$117.6 million and non-GAAP operating income of $0.2-$0.7 million was mixed relative to consensus of $116.5 million and $1.0 million, respectively.
MongoDB, Inc. Announces Second Quarter Fiscal 2021 Financial Results
MongoDB (MDB) reported Q2 ’21 results well above expectations and raised its outlook for FY ’21.
Revenue of $138.3 million (+39.2% Y/Y) exceeded guidance for $125.0-$127.0 million and consensus of $126.8 million. Non-GAAP operating income was $(10.2) million (-7.4% margin), well above guidance for $(24.0)-$(22.0) million and consensus of $(22.7) million. Non-GAAP EPS of $(0.22) beat guidance for $(0.41)-$(0.38) and the Street’s $(0.39).
Key metrics: over 20,200 customers (+35% Y/Y); over 18,800 MongoDB Atlas customers (+42% Y/Y); over 2,500 direct sales customers (+35% Y/Y); 819 customers with $100,000 or more in ARR (+32% Y/Y); net ARR expansion rate over 120%.
MongoDB has always believed that JSON, a data format based on the document model, is the best way to work with data, and Oracle’s efforts to emulate what MongoDB has done and its public comments acknowledging JSON has become the main data model for new applications provide validation for MongoDB’s fundamental premise.
Q2 results reflected increasing efficiency in the company’s go-to-market efforts, which have been centered on increasing synergies across four sales channels: the field sales force, the inside sales team, the self-service channel and partners.
Per management, the impact of COVID-19 on new business in Q2 was less than feared, expansion with existing customers improved from the slowdown experienced in Q1, and Atlas continues to be the biggest contributor to growth.
Q3 guidance for revenue of $137.0-$139.0 million, non-GAAP operating income of $(27.0)-$(25.0) million and non-GAAP EPS of $(0.48)-$(0.45) was mixed relative to Street expectations for $130.3 million, $(22.5) million and $(0.38), respectively.
Management raised its FY ’21 revenue and non-GAAP operating income guidance from $520.0-$530.0 million and $(78.0)-$(70.0) million, respectively, to $549.0-$554.0 million and $(71.0)-$(66.0) million and narrowed its non-GAAP EPS guidance from $(1.34)-$(1.21) to $(1.29)-$(1.21).
PagerDuty Announces Second Quarter Fiscal 2021 Financial Results
PagerDuty (PD) reported Q2 ’21 non-GAAP EPS above expectations and narrowed its guidance for FY ’21.
Revenue of $50.7 million (+25.7% Y/Y) was within guidance for $50.0-$51.0 million and in line with consensus. Non-GAAP operating income was $(3.5) million (-6.9% margin), above consensus of $(5.6) million. Non-GAAP EPS of $(0.04) beat guidance for $(0.07)-$(0.06) and consensus of $(0.07).
Key metrics: 13,346 customers at quarter-end; 369 customers with annual recurring revenue over $100,000 (+35% Y/Y); dollar-based net retention rate was 116%.
PagerDuty had a challenging start to Q2 as macro conditions reduced pipeline conversion, lengthened sales cycles and drove higher than normal churn and contraction but bookings and pipeline generation strengthened as the quarter progressed.
The company entered August with better pipeline coverage and closed one of its largest enterprise lands ever.
Q3 guidance for revenue of $52.0-$53.0 million and non-GAAP EPS of $(0.11)-$(0.10) was mixed relative to Street expectations for revenue of $52.6 million and non-GAAP EPS of $(0.09).
Management narrowed its FY ’21 guidance ranges from $204.0-$213.0 million in revenue and $(0.30)-$(0.25) in non-GAAP EPS to $206.0-$211.0 million and $(0.30)-$(0.27), respectively.
Smartsheet Inc. Announces Second Quarter Fiscal Year 2021 Results
Smartsheet (SMAR) reported Q2 ’21 results above expectations but provided a mixed outlook for the remainder of the year.
Revenue of $91.2 million (+41.1% Y/Y) was above guidance for $86.0-$87.0 million and consensus of $86.6 million. Non-GAAP operating income was $(7.4) million (-8.1% margin), exceeding guidance for $(21.0)-$(19.0) million and consensus of $(20.1) million. Non-GAAP EPS of $(0.06) beat guidance for $(0.18)-$(0.16) and consensus of $(0.16).
Key metrics: billings of $97.3 million (+22.4% Y/Y) was above guidance for $91.0-$93.0 million; 10,049 customers with annualized contract values (ACV) of $5,000 or more (+31% Y/Y); 433 customers with ACV of $100,000 or more (+92% Y/Y); average ACV per domain-based customer was $4,156 (+40% Y/Y); dollar-based net retention rate was 128%.
Q2 results reflected stabilization in the market and green shoot signals for customers expanding to address critical challenges.
Special terms extended to customers impacted by COVID had an estimated impact of $2 million on billings.
The recent acquisition of Brandfolder is expected to contribute $2 million to revenue and $6 million to billings in FY ’21 and result in an incremental $(10) million in operating losses during 2H ‘21.
Q3 guidance for revenue of $94.0-$95.0 million, non-GAAP operating income of $(28.0)-$(26.0) million and non-GAAP EPS of $(0.23)-$(0.22) was mixed versus Street expectations for $92.8 million, $(16.7) million and $(0.14), respectively.
Management raised its FY ’21 revenue guidance from $360.0-$370.0 million to $367.0-$373.0 million but lowered its non-GAAP operating income and EPS expectations from $(65.0)-$(55.0) million and $(0.54)-$(0.45), respectively, to $(66.0)-$(60.0) million and $(0.54)-$(0.49).
Yext, Inc. Announces Second Quarter Fiscal 2021 Results
Yext (YEXT) reported Q2 ’21 results above expectations but provided mixed guidance for Q3.
Revenue of $88.1 million (+21.7% Y/Y) was above guidance for $84.0-$86.0 million and consensus of $85.2 million. Non-GAAP operating income of $(7.0) million (-8.0% margin) exceeded consensus of $(14.6) million. Non-GAAP EPS of $(0.07) beat guidance for $(0.13)-$(0.11) and the Street’s $(0.12).
Key metrics: annual recurring revenue (ARR) of $338 million (+22% Y/Y); nearly 2,200 customers (+27% Y/Y) at quarter-end; closed 114 new and renewal deals with at least $100,000 of total contract value; TTM net dollar-based retention rate of 105%; remaining performance obligations (RPO) of $294 million.
Answers led the way in Q2, comprising 30% of new and upsell bookings in the North America enterprise business and ending the quarter with over 150 live customers.
Momentum in new and upsell ACV picked up throughout the quarter with more customers working on new projects or resuming temporarily paused projects.
Sales efficiency has improved following the rollout of Yext’s Answers free trial and the next phase calls for making Answers totally self-serve so anyone can integrate the Answers engine into their own website.
David Rudnitsky and Patrick Blair will both be promoted to Chief Revenue Officer, while Jim Steele, Yext’s President and Chief Revenue Officer, will transition to a new role as an advisor.
Q3 guidance for revenue of $86.0-$88.0 million and non-GAAP EPS of $(0.09)-$(0.07) was mixed relative to Street expectations for $89.0 million in revenue and $(0.13) in non-GAAP EPS.
Zoom Reports Second Quarter Results for Fiscal Year 2021
Zoom Video Communications (ZM) reported Q2 ’21 results well above expectations and raised its outlook for FY ‘21
Revenue of $663.5 million (+355% Y/Y) exceeded guidance for $495.0-$500.0 million and consensus of $500.5 million. Non-GAAP operating income was $277.0 million (41.7% margin), more than doubling guidance for $130.0-$135.0 million and consensus of $123.8 million. Non-GAAP EPS of $0.92 beat guidance for $0.44-$0.46 and the Street’s $0.45.
Key metrics: 370,200 customers with over 10 employees (+458% Y/Y); added 219 customers with over $100,000 in TTM revenue for a total of 988 (+112% Y/Y) at quarter-end; TTM net dollar expansion rate in customers with over 10 employees was above 130%.
Results outperformed due primarily to heightened demand from new customers, lower than anticipated churn and exceptional sales execution.
Zoom Phone received FedRAMP authorization in mid-June, and Zoom now supports local telephone services and domestic calling in over 40 countries and territories.
Investments in R&D will continue as Zoom plans to diversify its engineering talent via expansion in the U.S. and India; ramping sales capacity quickly is also a priority.
With 36% of revenue now coming from customers with 10 or fewer employees, management’s guidance assumes churn will remain elevated relative to historical levels.
Q3 guidance for revenue of $685.0-$690.0 million, non-GAAP operating income of $225.0-$230.0 million and non-GAAP EPS of $0.73-$0.74 exceeded Street expectations for $492.9 million, $96.2 million and $0.35, respectively.
Management raised its FY ’21 guidance from $1.775-$1.800 billion in revenue, $355.0-$380.0 million in non-GAAP operating income and $1.21-$1.29 in non-GAAP EPS to $2.370-$2.390 billion, $730.0-$750.0 million and $2.40-$2.47, respectively.
Zuora Reports Second Quarter Fiscal 2021 Results
Zuora (ZUO) reported Q2 ’21 results above expectations but provided a mixed Q3 outlook.
Revenue of $75.0 million (+7.5% Y/Y) was at the high-end of guidance for $72.5-$75.0 million and above the Street’s $73.5 million. Non-GAAP operating income was $(1.6) million (-2.1% margin), exceeding guidance for $(8.0)-$(7.0) million and consensus of $(7.6) million. Non-GAAP EPS of $(0.00) beat guidance for $(0.08)-$(0.07) and the Street’s $(0.07).
Key metrics: 645 customers with ACV of $100,000 or more (+14% Y/Y); dollar-based retention rate was 99%; $12.7 billion in transaction volume through Zuora’s billings platform (+26% Y/Y).
Full customer churn had a 200 basis point impact on dollar-based retention while down-sells were nearly 3x higher Q/Q.
Zuora is seeing good demand with double-digit pipeline growth Q/Q, and sales productivity per rep continues to improve.
Management plans to retool pricing and deal structures to rightsize initial lands and support growth with existing customers.
Going forward, the company will also focus primarily in three verticals: high-tech, media and manufacturing.
Q3 guidance for revenue of $73.0-$75.0 million, non-GAAP operating income of $(5.5)-$(4.5) million and non-GAAP EPS of $(0.05)-$(0.04) was mixed relative to consensus of $75.6 million, $(5.5) million and $(0.05), respectively.
Notable News
American Software Accelerates Growth and Innovation with Three New Executive Appointments
American Software (AMSWA) has appointed Kevin McInturff as Executive Vice President of Research and Development; Alex Price as Senior Vice President, Alliance Partners and Sales; and Shawn Reynolds as Executive Vice President of Marketing.
Mr. McInturff joins the company from Deluxe Corporation where he expanded the product development group from two developers to over 300.
Mr. Price joins the company from Blue Yonder where most recently served as Global Vice President, Alliances, Channels & Technology Ecosystem Strategy.
Mr. Reynolds joins the company from enosix where he was Chief Marketing Officer and has previously served as Chief Marketing Officer at Telit Wireless and as Global Vice President responsible for digital supply chain marketing at SAP.
BlackLine (BL) has appointed Mel Zeledon as Senior Vice President of Channels and Alliances, a role in which he will oversee all alliance, reseller, technology and outsourcing partnership initiatives.
Mr. Zeledon joins the company from Workday where he most recently served as Vice President of Global Channels.
DocuSign Promotes Sheridan to Lead International and Welcomes Gaylor as New CFO
DocuSign (DOCU) has promoted CFO, Mike Sheridan, to President of International and has appointed Cynthia Gaylor, a member of the company’s board and audit committee chair, as its new CFO.
Mr. Sheridan previously took on the role of GM of EMEA earlier this year and will now be tasked with driving growth across all international markets.
Ms. Gaylor most recently served as CFO of Pivotal Software and joined DocuSign’s board in 2018.
Proofpoint Announces $300 Million Share Repurchase Program
Proofpoint’s (PFPT) Board of Directors has approved the repurchase of up to $300 million of its common stock, representing approximately 5% of the current market capitalization.
Any repurchases are expected to be funded from existing cash on hand or the company’s cash flow from operations.
In conjunction with the announcement, Proofpoint also reaffirmed its prior Q3 and FY ’20 financial guidance.
Disclosure(s):
K. Liu & Company LLC has received compensation from American Software (AMSWA) for non-investment banking services within the past 12 months.