K. Liu's Week in Review
Amid declines in the number of COVID-19 cases across the U.S. and with another round of stimulus on the horizon, investors and management teams alike appear sanguine about the outlook for 2021. Calendar Q4 ’20 results to date have largely been positive, exhibiting further sequential improvement in revenue and other leading growth indicators. The ongoing recovery from the depths of the pandemic coupled with a weaker U.S. dollar has bolstered confidence amongst many management teams that reaccelerating growth is in the cards as the year unfolds. Dynatrace (DT), Fortinet (FTNT), Manhattan Associates (MANH), OpenText (OTEX) and Zendesk (ZEN) stood out in this regard with all putting forth strong results for the past quarter, planning for incremental investments in growth and guiding favorably versus Street expectations. Both Manhattan and Zendesk also highlighted lofty three-year goals with the former providing explicit targets for backlog and cloud revenue growth through FY ’23 and the latter now on a journey towards tripling revenues after achieving its prior long-term target of $1 billion. Perhaps overlooked this week due to a deceleration in its growth rate over the past year, Proofpoint’s (PFPT) results and commentary also seemed indicative of better days to come.
Of course, not every company has returned to more solid footing as of yet. Mimecast (MIME) continues to face pandemic-related headwinds in certain international markets like the U.K. and South Africa and is still working through its recently disclosed security incident. While demand for B2B solutions has been a bright spot for PROS Holdings (PRO), customer bankruptcies continue to weigh on growth and passenger demand for airline travel is not expected to return to pre-COVID levels this year. A more unique situation from our perspective is New Relic’s (NEWR) transition to a consumption-based model, which coincides with the launch of its next-generation platform, New Relic One. Although we have no opinion on how the transition plays out at this juncture, we think investors should stay attuned to the company’s transformation as we believe others may ultimately follow suit, whether voluntarily or as a byproduct of a shift in customer preferences. After all, as more transactional systems of record move to the cloud and adoption of artificial intelligence and machine learning reduces the need for human intervention, traditional user-oriented subscriptions may spur adoption of pricing based on transaction volumes, resources consumed or another usage-based determinant. The initial impact of such a shift is a likely decline in near-term revenue as existing contracts renew at a flat to lower minimum-contracted amount, thereby eschewing the typical expansion sought by SaaS vendors. During the latter months of the engagement, however, revenue may spike if consumption ultimately exceeds the minimum threshold. We refer investors to New Relic’s Q3 ’21 Investor Letter, which provides a helpful illustration of the impact on annual recurring revenue and revenue recognition over the course of a year.
On the M&A front, Box (BOX) agreed to acquire e-signature vendor SignRequest for $55 million in cash. SignRequest will serve as the foundation for a new offering, Box Sign, which will be natively integrated into Box and made available free of charge to Business and Enterprise plan customers. In addition to positioning the company to capture a portion of a fast-growing market, we believe the deal will also bolster gross customer retention rates and accelerate adoption of Box Suites since e-signatures are a natural extension of the content management and workflow processes supported by Box. Other notable transactions this week included Rapid7’s (RPD) $50 million acquisition of Alcide.IO and Akamai’s (AKAM) purchase of Inverse. Alcide’s technology integrates Kubernetes security into the DevOps process, which combined with Rapid7’s cloud security posture management and infrastructure entitlement capabilities will provide customers with a comprehensive platform for managing cloud-native application security. Inverse brings Akamai a data repository and algorithms used to identify IoT, mobile and other device types, which will be combined with Akamai’s own data to create a comprehensive solution for applying zero trust security across devices and the workforce. Rounding out the news for the week, Mitek Systems (MITK) priced an upsized offering of $135 million aggregate principal amount of 0.750% convertible senior notes due 2026, and Workday (WDAY) promoted its Doug Robinson, its Head of Sales in North America, to Executive Vice President of Global Sales.
Mergers and Acquisitions
Akamai Technologies Acquires Inverse Inc., Adds to Zero Trust Security Platform
Akamai Technologies (AKAM) has agreed to acquire Inverse, which offers a data repository and algorithms used to identify IoT, mobile and other device types.
The combination of Inverse’s Fingerbank data lake with its own security data will enable Akamai to develop a robust solution for applying zero trust security across a broad range of devices and the workforce.
The all-cash transaction is not expected to have an impact on the company’s FY ‘20 results or guidance.
Box Announces Intent to Acquire E-Signature Innovator SignRequest
Box (BOX) is acquiring SignRequest, which offers a cloud-based solution for electronic signatures, for $55 million in cash.
The acquisition provides the foundation for Box Sign, an e-signature capability that will be natively integrated into Box and included in the company’s business and enterprise plans.
Box will also offer e-signature APIs at an added cost.
Ceridian (CDAY) is acquiring Ascender, a payroll and HR solutions provider serving the Asia Pacific Japan (APJ) region.
Post-acquisition, Ceridian will have 1,500 customers and 2.5 million employees across 30 countries in the APJ region.
HubSpot Signs Agreement to Acquire The Hustle, Adding Content to Help Scaling Companies Grow Better
HubSpot (HUBS) has agreed to acquire The Hustle, a media company that produces a business-focused newsletter; a podcast, My First Million; and premium research content available on its subscription platform, Trends.
HubSpot believes the acquisition will help the company better serve the needs of its customers and community by providing relevant content through their preferred medium.
Rapid7 Acquires Leading Kubernetes Security Provider, Alcide
Rapid7 (RPD) has acquired Alcide.IO, a provider of Kubernetes security, for $50 million.
Alcide’s technology integrates Kubernetes security into the DevOps lifecycle and processes, ensuring applications can be deployed rapidly without loss of protection from malicious attacks.
Alcide’s cloud workload protection capabilities coupled with Rapid7’s cloud security posture management and infrastructure entitlements capabilities will provide customers with a unified platform for managing cloud-native application security.
Earnings Releases
Check Point Software Technologies Reports 2020 Fourth Quarter and Full Year Financial Results
Check Point Software Technologies (CHKP) reported Q4 ’20 results above expectations but provided mixed FY ’21 guidance.
Revenues of $563.8 million (+3.7% Y/Y) were within guidance for $525.0-$575.0 million and above consensus of $555.5 million. Non-GAAP operating income of $285.3 million (50.6% margin) was ahead of consensus of $282.1 million. Non-GAAP EPS of $2.17 was near the high-end of guidance for $2.00-$2.18 and beat the Street’s $2.11.
Check Point saw strength in its strategic areas with the CloudGuard family producing high double-digit growth, Infinity sustaining momentum across different verticals and the recently launched Quantum appliances series being well received.
Management focus for 2021 is to secure users in any location by leveraging CloudGuard for the cloud and Quantum for the network while providing customers with a unified management and control tool through a new suite, Infinity Vision.
Q1 guidance for revenues of $485.0-$515.0 million and non-GAAP EPS of $1.45-$1.55 was in line with Street expectations for revenues of $501.9 million and non-GAAP EPS of $1.51.
Management’s FY ’21 guidance for revenues of $2.08-$2.18 billion and non-GAAP EPS of $6.45-$6.85 was mixed relative to Street expectations for revenue of $2.12 billion and non-GAAP EPS of $6.92.
Dynatrace Reports Third Quarter of Fiscal Year 2021 Financial Results
Dynatrace (DT) reported Q3 ’21 results ahead of expectations and guided Q4 above consensus.
Revenue of $182.9 million (+27.6% Y/Y) was above guidance for $171.0-$173.0 million and consensus of $172.3 million. Non-GAAP operating income was $53.4 million (29.2% margin), exceeding guidance for $43.0-$45.0 million and consensus of $43.9 million. Non-GAAP EPS of $0.17 beat guidance for $0.12-$0.13 and the Street’s $0.13.
Key metrics: ARR of $722.0 million (+35% Y/Y); added 189 new logos for a total of 2,794 customers at quarter-end; ARR per Dynatrace customer was $251,000 (+20% Y/Y); net expansion rate over 120%.
Favorable long-term market trends fueled by digital transformation combined with new logo additions and existing customer expansion drove the strength in the quarter.
To take advantage of the market momentum, Dynatrace now plans to increase the size of its sales organization by 25%-30% this year versus 20%-25% previously and is focusing on expansion of its alliances with AWS, Google and Microsoft.
Management believes the company’s recent entry into the cloud application security market has the potential to expand its total addressable market by $18 billion over time.
Q4 guidance for revenue of $190.0-$192.0 million, non-GAAP operating income of $44.0-$46.0 million and non-GAAP EPS of $0.13-$0.14 was ahead of Street expectations for $176.4 million, $41.8 million and $0.12, respectively.
FireEye Reports Financial Results for Fourth Quarter and Full Year 2020
FireEye (FEYE) reported Q4 ’20 results above expectations and guided FY ’21 in line with consensus.
Revenue of $247.5 million (+5.3% Y/Y) was above guidance for $237.0-$241.0 million and consensus of $240.0 million. Non-GAAP operating income was $30.7 million (12.4% margin), ahead of guidance for a 10.0%-11.0% margin and consensus of $25.3 million. Non-GAAP EPS of $0.12 beat guidance for $0.09-$0.11 and the Street’s $0.10.
Key metrics: annualized recurring revenue of $637.6 million (+8% Y/Y), including platform, cloud subscription and managed services ARR of $340.1 million (+20% Y/Y); closed 64 transactions over $ million.
FireEye saw strong performances in Mandiant Threat Intelligence and Security Validation as well as a continuation of record results in its Mandiant Services business.
The SUNBURST incident had minimal impact on services revenue in Q4 as FireEye was already operating near capacity when the breach was discovered.
Q1 guidance for revenue of $235.0-$238.0 million, a non-GAAP operating margin of 6.5%-7.5% (implies non-GAAP operating income of $15.3-$17.9 million) and non-GAAP EPS of $0.05-$0.07 compared favorably with Street expectations for revenue of $233.8 million, non-GAAP operating income of $16.0 million and non-GAAP EPS of $0.07.
Management’s FY ’21 guidance for revenue of $990-$1,010 million, a non-GAAP operating margin of 9%-10% (implies non-GAAP operating income of $89.1-$101.0 million) and non-GAAP EPS of $0.35-$0.37 was consistent with Street expectations for $992.1 million in revenue, $91.3 million in non-GAAP operating income and $0.36 in non-GAAP EPS.
Fortinet Reports Fourth Quarter and Full Year 2020 Financial Results
Fortinet (FTNT) reported Q4 ’20 results above expectations and guided FY ’21 revenue ahead of consensus.
Revenue of $748.0 million (+21.0% Y/Y) was above guidance for $710.0-$730.0 million and consensus of $722.4 million. Non-GAAP operating income was $219.9 million (29.4% margin), ahead of guidance for a 27.0%-29.0% margin and consensus of $203.5 million. Non-GAAP EPS of $1.06 beat guidance for $0.95-$0.97 and the Street’s $0.97.
Key metrics: billings of $960.9 million (+20% Y/Y) exceeded guidance for $890.0-$920.0 million; 68 deals over $1 million (+6% Y/Y), including 16 secure SD-WAN deals over $1 million (+46% Y/Y).
Strength in the quarter was driven by a substantial sequential acceleration in growth for the Security Fabric platform and FortiGates across all form factors – hardware, software and virtual machine.
Secure SD-WAN use cases accounted for 13% of billings and remained a strong contributor to growth but management indicated that product sales were driven more so by the other operating system capabilities embedded in FortiGates.
Per management, the release of FortiOS 7.0 positions Fortinet as the only major cybersecurity vendor offering firewall-based Zero Trust Network Access, enabling remote access to replace the traditional VPN.
Q1 guidance for revenue of $670.0-$685.0 million, non-GAAP operating margin of 22.5%-23.5% (implies non-GAAP operating income of $150.8-$161.0 million) and non-GAAP EPS of $0.70-$0.75 was in line with consensus of $670.6 million in revenue, $155.7 million in non-GAAP operating income and $0.74 in non-GAAP EPS.
Management’s FY ’21 guidance includes revenue, non-GAAP operating margin and non-GAAP EPS of $3.025-$3.075 billion, 25.0%-27.0% (implies non-GAAP operating income of $756.3-$830.3 million) and $3.60-$3.75, respectively, consistent with Street expectations for $2.969 billion, $777.2 million and $3.63.
Manhattan Associates Reports Solid Fourth Quarter and Full Year 2020 Results
Manhattan Associates (MANH) reported Q4 ’20 results above expectations and guided FY ’21 in line with consensus.
Revenue of $147.1 million (-3.8% Y/Y) was above guidance for $134.7-$139.5 million and consensus of $138.0 million. Non-GAAP operating income was $37.6 million (25.6% margin), exceeding guidance for $24.6-$28.7 million and consensus of $27.9 million. Non-GAAP EPS of $0.45 beat guidance for $0.30-$0.34 and the Street’s $0.32.
Key metrics: remaining performance obligations (RPO) of $308.8 million (+80% Y/Y).
Manhattan saw broad revenue outperformance across its business lines, which combined with an ongoing focus on expense management drove significant operating leverage.
Competitive win rates remained strong at about 70% and the retail, consumer goods, food and beverage and grocery verticals accounted for over 50% of cloud and license revenue in Q4.
Manhattan Active Warehouse Management has been well received with a double-digit number of deals already closed.
Pipeline bookings are at record levels, 90% of which reflect cloud opportunities and 40% potential new logos.
Q1 guidance for revenue of $141.0-$146.0 million, non-GAAP operating income of $26.0-$28.0 million and non-GAAP EPS of $0.31-$0.33 was in line with consensus of $142.0 million, $27.0 million and $0.32, respectively.
FY ’21 guidance calls for revenue of $595.0-$625.0 million, a non-GAAP operating margin of 20.5%-21.5% (implies non-GAAP operating income of $122.0-$134.4 million) and non-GAAP EPS of $1.44-$1.59, consistent with Street expectations for $605.9 million in revenue, $126.5 million in non-GAAP operating income and $1.47 in non-GAAP EPS.
Management also introduced FY ’22 and FY ’23 targets for RPO ($625-$775 million and $850-$1,000 million), cloud revenue ($135-$150 million and $190-$215 million) and non-GAAP operating margin (22% and 23%).
Mimecast Announces Third Quarter 2021 Financial Results
Mimecast’s (MIME) Q3 ’21 results and Q4 guidance beat expectations but its outlook for FY ’22 was mixed.
Revenue of $129.6 million (+17.7% Y/Y) was above guidance for $126.0-$127.0 million and consensus of $126.7 million. Adjusted EBITDA was $34.6 million (26.7% margin), exceeding guidance for $28.0-$29.0 million and consensus of $28.7 million. Non-GAAP EPS of $0.33 beat the Street’s $0.24.
Key metrics: added 500 net new customers for a total of 39,600; average order value per customer of $13,400 (+8% Y/Y); average service per customer increased Y/Y from 3.3 to 3.5; net revenue retention rate of 104%.
Mimecast continues to navigate the impacts of the pandemic and is working through the security incident disclosed in January.
Bookings picked up marginally in North America late in Q3, although pipeline generation slowed in January and the U.K. and South African economies appear to be struggling still.
Execution upon the company’s three-pronged strategy of expanding into the enterprise market, cross-selling multiple products into the existing base and improving efficiency in the SMB market and channel has produced results.
With growth remaining below pre-pandemic expectations, Mimecast is reducing its workforce by approximately 4%.
Management expects revenue growth to improve over time driven by an increase in the net retention rate and a gradual reacceleration in new customer additions and currently anticipates a U-shaped recovery in the coming fiscal year.
Q4 guidance for revenue of $130.5-$131.5 million and adjusted EBITDA of $28.3-$29.3 million was ahead of Street expectations for revenue of $128.1 million and adjusted EBITDA of $22.5 million.
Management’s initial outlook for FY ’22 calls for revenue of $558.0-$568.0 million and adjusted EBITDA of $146.0 million, which was mixed relative to consensus of $571.5 million in revenue and $125.4 million in adjusted EBITDA.
New Relic Announces Third Quarter Fiscal Year 2021 Results
New Relic (NEWR) reported Q3 ’21 results above expectations but guided Q4 below consensus.
Revenue of $166.3 million (+8.7% Y/Y) was above guidance for $163.0-$165.0 million and consensus of $165.1 million. Non-GAAP operating income was $(8.4) million, ahead of guidance for $(11.0)-$(9.0) million and consensus of $(10.1) million. Non-GAAP EPS of $(0.14) were in line with guidance for $(0.17)-$(0.13) and consensus of $(0.14).
Key metrics: annual recurring revenue (ARR) of $668.7 million (+10% Y/Y); dollar-based net expansion rate of 108%; 1,051 paid business accounts over $100,000 (+13% Y/Y); remaining performance obligations of $648.3 million (+33% Y/Y).
Q3 was the first full quarter in which the New Relic One platform was in market and the transformation from a subscription model to a consumption model was underway.
Sign-ups for Product-Led Growth have remained relatively unchanged but the number of customers converting from the free tier to a paid tier is accelerating, resulting in approximately 550 accounts now paying over $2,000 per year.
New Relic spent less than planned on AWS as its migration out of its own data centers to the cloud continued.
Sales compensation plans will more fully reflect the conversion to a consumption-oriented business in FY ’22 by largely eliminating sales incentives for up-front commitments.
Q4 guidance for revenue of $166.0-$167.0 million, non-GAAP operating income of $(31.0)-$(29.0) million and non-GAAP EPS of $(0.49)-$(0.45) missed Street expectations for $170.8 million, $(9.2) million and $(0.12), respectively.
OpenText Reports Second Quarter Fiscal Year 2021 Financial Results
OpenText (OTEX) reported Q2 ’21 results above expectations and raised its outlook for FY ‘21.
Revenues of $855.6 million (+10.9% Y/Y) exceeded consensus of $814.8 million. Adjusted EBITDA was $360.8 million (42.2% margin), above consensus of $327.8 million. Non-GAAP EPS of $0.95 beat the Street’s $0.85.
Key metrics: annual recurring revenues of $684.9 million (+21.5% Y/Y); cloud revenues of $350.5 million (+41.1% Y/Y); cloud renewal rate ex-Carbonite was 96%.
Per management, the cloud, network and edge are inextricably linked, and OpenText’s new architecture and platform of Cloud Editions has placed its information management solutions in the heart of demand conversations.
Strong cloud growth was driven by the acquisition of Carbonite, Cloud Editions, a rebound in business network volumes and ongoing momentum in SMB-C and enterprise content services.
Q3 guidance for flat revenue Y/Y and an adjusted EBITDA margin 100 to 200 basis points above year-ago levels implies revenue and adjusted EBITDA of $814.7 million and $267.2-$275.4 million, respectively, which was mixed relative to consensus of $786.6 million and $277.0 million.
Management raised its FY ’21 cloud and total revenue growth targets from mid-teens and flat to low single-digit, respectively, to high-teens and mid-single digit; guidance for adjusted EBITDA margin remains unchanged at 37%-38%.
Paylocity Announces Second Quarter Fiscal Year 2021 Financial Results
Paylocity (PCTY) reported Q2 ’21 results above expectations but provided a mixed outlook for FY ’21.
Revenue was $146.3 million (+10.5% Y/Y), above guidance for $141.0-$145.0 million and consensus of $143.5 million. Adjusted EBITDA was $35.0 million (23.9% margin), exceeding guidance for $26.5-$29.5 million and the Street’s $28.4 million. Non-GAAP EPS of $0.39 beat the Street’s $0.25.
Despite ongoing headwinds related to COVID, Paylocity had a strong selling season and started more business this January than last January.
Unit strength continues to come from clients with less than 50 employees and momentum remains healthy in the core and upper end of the company’s markets.
Channel referrals represented over 25% of new business in the quarter driven by increased use of virtual broker connection activities, events and gatherings.
Management anticipates double-digit headwinds on recurring revenue growth due to the sustained lower level of client employees on the platform.
Q3 guidance for revenue of $182.5-$186.5 million and adjusted EBITDA of $59.0-$62.0 million was short of Street expectations for revenue of $188.7 million and adjusted EBITDA of $64.3 million.
Management’s FY ’21 guidance for $623.5-$628.5 million in revenue and $152.0-$156.0 million in adjusted EBITDA was mixed versus Street expectations for $626.9 million in revenue and $157.6 million in adjusted EBITDA.
Proofpoint Announces Fourth Quarter and Full Year 2020 Financial Results
Proofpoint (PFPT) reported Q4 ’20 results above expectations and provided a mixed outlook for FY ’21.
Revenue of $275.1 million (+13.0% Y/Y) was above guidance for $268.0-$270.0 million and consensus of $269.3 million. Non-GAAP operating income was $43.3 million (15.7% margin), exceeding consensus of $33.1 million. Non-GAAP EPS of $0.51 beat guidance for $0.41-$0.44 and the Street’s $0.42.
Key metrics: billings of $374.9 million (+8% Y/Y); nearly 8,000 enterprise customers at year-end; 5,600 customers have purchased three or more products (+40% Y/Y); ARR retention rate was 90%.
Demand for Proofpoint’s Insider Threat Management and Cloud App Security Broker solutions was exceptional in Q4, and the recently launched enterprise DLP platform has already generated pipeline and some initial orders.
Billings growth reflected exceptional linearity, solid demand for core protection and TAP solutions, and accelerating demand for emerging products and bundled services.
The competitive environment remains favorable, leaving management confident that growth will reaccelerate this year.
Q1 guidance for revenue of $280.0-$282.0 million and non-GAAP EPS of $0.39-$0.40 was ahead of Street expectations for revenue of $275.2 million and non-GAAP EPS of $0.38.
Management’s FY ’21 guidance for $1.19-$1.20 billion in revenue and $1.91-$1.99 in non-GAAP EPS was mixed relative to Street expectations for $1.19 billion in revenue and $2.05 in non-GAAP EPS.
PROS Holdings, Inc. Reports Fourth Quarter and Full Year 2020 Financial Results
PROS Holdings (PRO) reported Q4 ’20 results above expectations but guided Q1 below consensus.
Revenue of $60.9 million (-8.0% Y/Y) was above guidance for $58.9-$59.9 million and consensus of $59.3 million. Adjusted EBITDA was $(4.2) million, ahead of guidance for $(9.1)-$(8.1) million and consensus of $(8.4) million. Non-GAAP EPS of $(0.14) beat guidance for $(0.18)-$(0.16) and the Street’s $(0.18).
Key metrics: ARR was $209.7 million; gross revenue retention rate was 88% for the year; remaining performance obligations totaled $389.7 million.
Revenue was impacted by customers significantly affected by COVID, including some that declared bankruptcy.
Demand for B2B solutions remains strong as businesses look to embrace omnichannel digital sales experiences with robust self-service capabilities.
Management expects passenger demand to improve further during 2021 but does not anticipate a recovery to pre-COVID levels in the travel business.
PROS realized savings of approximately $25 million from a cost savings program initiated in Q2 ’20, exceeding its original target of $13 million.
Quota-carrying headcount fell to 51 at the end of last year but is expected to ramp to over 60 by the end of this year.
Q1 guidance for revenue of $59.7-$60.7 million, adjusted EBITDA of $(13.0)-$(12.0) million and non-GAAP EPS of $(0.29)-$(0.27) missed Street expectations for $62.3 million, $(5.7) million and $(0.14), respectively.
Tenable Announces Fourth Quarter and Full Year 2020 Financial Results
Tenable (TENB) reported Q4 ’20 results above expectations but provided mixed guidance for FY ’21.
Revenue of $118.1 million (+21.7% Y/Y) was above guidance for $113.0-$115.0 million and consensus of $114.9 million. Non-GAAP operating income was $15.4 million (13.1% margin), exceeding guidance for $8.0-$9.0 million and consensus of $9.2 million. Non-GAAP EPS of $0.13 beat guidance for $0.05-$0.06 and the Street’s $0.06.
Key metrics: current billings of $150.5 million (+20% Y/Y); added 460 new enterprise platform customers, including 66 net new six-figure enterprise customers.
Dialogue with customers and partners suggests the strategic importance of vulnerability management (VM) is rising rapidly with enterprises continuing to prioritize VM as the critical building block in understanding their cybersecurity risk.
Expansion activity with existing customers accelerated as products like Lumin, web application security and OT experienced strong adoption and growth.
Q1 guidance for revenue of $118.0-$120.0 million, non-GAAP operating income of $7.0-$9.0 million and non-GAAP EPS of $0.04-$0.06 was mixed relative to Street expectations for $121.0 million, $5.8 million and $0.04, respectively.
Management’s FY ’21 outlook includes revenue of $510.0-$515.0 million, non-GAAP operating income of $40.0-$45.0 million and non-GAAP EPS of $0.26-$0.30, which was mixed relative to Street expectations for $520.8 million in revenue, $34.8 million in non-GAAP operating income and $0.26 in non-GAAP EPS.
VIAVI Announces Second Quarter Fiscal 2021 Results
VIAVI (VIAV) reported Q2 ’21 results above expectations and guided Q3 ahead of consensus.
Net revenue of $299.9 million (-4.4% Y/Y) was at the high-end of guidance for $280.0-$300.0 million and above consensus of $290.5 million. Non-GAAP operating income was $66.8 million (22.3% margin), above consensus of $58.2 million. Non-GAAP EPS of $0.23 beat guidance for $0.18-$0.20 and the Street’s $0.19.
Upside in the quarter was driven by strong demand for anti-counterfeiting and 3D sensing solutions in the Optical Security and Performance Products (OSP) segment and a recovery in Network and Service Enablement (NSE) revenue.
NSE demand is expected to improve in calendar 2021 on increasing demand for 5G field instruments as 5G service providers begin ramping up their network buildouts during the latter half of the year.
The search for a CFO is underway and an announcement is expected to be made in March.
Q3 guidance for revenue of $280.0-$300.0 million, a non-GAAP operating margin of 17.5%-18.5% (implies non-GAAP operating income of $49.0-$55.5 million) and non-GAAP EPS of $0.16-$0.18 was ahead of Street expectations for revenue of $271.9 million, non-GAAP operating income of $46.4 million and non-GAAP EPS of $0.15.
Zendesk Announces Fourth Quarter and Fiscal Year 2020 Results
Zendesk (ZEN) reported mixed Q4 ’20 results and guided FY ’21 revenue ahead of consensus.
Revenue of $283.5 million (+23.3% Y/Y) was above guidance for $274.0-$279.0 million and consensus of $277.9 million. Non-GAAP operating income was $18.5 million (6.5% margin), within guidance for $16.0-$20.0 million but shy of the Street’s $19.0 million. Non-GAAP EPS of $0.11 missed consensus of $0.15.
Key metrics: dollar-based net expansion rate of 112%; 173,600 paid customer accounts (+11% Y/Y); 44% of Support ARR from paid accounts with over 100 agents; remaining performance obligations of $925 million (+44% Y/Y).
Business trends demonstrated strong momentum in Q4 driven by robust demand from both new and existing customers.
Zendesk recently repackaged and repriced its products in response to the new reality and will now lead with its Suite product.
Management plans to invest to reaccelerate growth in 2021 and hopes to more than triple revenue over the next five years.
Elena Gomez, Chief Financial Officer, is leaving the company in the coming months.
Q1 guidance for revenue of $291.0-$296.0 million and non-GAAP operating income of $15.0-$19.0 million compared favorably with Street expectations for revenue of $290.6 million and non-GAAP operating income of $15.4 million.
Management’s FY ’21 guidance for revenue of $1.280-$1.305 billion and non-GAAP operating income of $90.0-$105.0 million also compared favorably with Street expectations for $1.275 billion and $100.3 million, respectively.
Notable News
Mitek Announces Pricing of $135,000,000 Private Offering of 0.750% Convertible Senior Notes
Mitek (MITK) priced an offering of $135.0 million aggregate principal amount of 0.750% Convertible Senior Notes due 2026 with an initial conversion price of $20.85 per share, a 23.9% premium to the close price prior to disclosure of the offering.
The offering was upsized from initial plans to offer $125.0 million aggregate principal amount of notes and the initial purchasers have been granted an option to purchase up to an additional $20.25 million aggregate principal amount.
Net proceeds from the offering will be used for general corporate purposes.
Workday Appoints Doug Robinson to Executive Vice President of Global Sales
Workday (WDAY) has promoted Doug Robinson to executive vice president of global sales, a role in which he will lead the company’s global sales efforts with an emphasis on international expansion.
Mr. Robinson joined the company in 2010 and most recently served as head of sales in North America.
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 Box, Inc. (BOX).