K. Liu's Week in Review

In what has become a month-long fade in software stocks, there was again more red than green on our screen. Those that benefited greatly during the pandemic continued to be judged more harshly than those facing easier comparisons going forward. To wit, BigCommerce (BIGC) was the latest e-commerce platform provider to deliver upside results and offer a relatively optimistic outlook yet shares slid lower. Wix (WIX) faced a pronounced sell-off even as management suggested any shift from online to offline spend as economies reopen would not necessarily have a negative impact on the company given its exposure to restaurant and other in-person service providers. Of course, a near-term revenue outlook sitting just below Street expectations was not especially comforting but the company did raise its full year targets. ON24 (ONTF), a newer entrant to the public markets and purveyor of a platform for creating and managing digital experiences, also took a hit despite strong results and higher guidance.

Among the final flurry of calendar Q1 results reported this week, Absolute Software (ABST) warrants a closer look given another strong performance and a transformative acquisition. For those unfamiliar with the company, Absolute may be better known as the LoJack for Laptops as its technology enables users to remotely access, locate and secure endpoints. As the company’s software is embedded in the BIOS of hardware devices and sits below the operating system, its endpoint agents are nearly impossible to remove or disable. In recent years, Absolute has moved beyond selling the persistence of its own technology and now helps organizations ensure that critical applications and data are ever present on their endpoints even under the most trying circumstances. With the COVID-19 pandemic creating new paradigms for remote work and learning, Absolute saw elevated demand for its endpoint security capabilities, a trend that was reflected once again in its fiscal Q3 results. Per management, continued strong demand in the education sector and expansion with existing customers across verticals drove ARR growth to 19% and increased net dollar retention to 110%. Not content to simply ride the current tailwind, however, Absolute has agreed to acquire NetMotion for $340 million in cash, representing a TTM EV/Sales multiple of 5.7x. NetMotion enables customers to deliver secure network access to remote workers via a platform that combines a virtual private network, digital experience monitoring and zero trust network access capabilities. This expansion into the Secure Access Service Edge (SASE) market increases Absolute’s total addressable market from $68 billion to $111 billion, reduces the company’s exposure to the education sector and is expected to be accretive to ARR growth, net dollar expansion and adjusted EBITDA margin. In aggregate, the combined company will boast over $175 million in ARR and an adjusted EBITDA margin in the mid- to high-20% range.

Touching briefly on the observability space, both Dynatrace (DT) and New Relic (NEWR) delivered results ahead of expectations and offered guidance that was generally constructive. However, ServiceNow’s (NOW) agreement to acquire Lightstep, a next-generation observability solution, meant competition was a hot topic on both earnings calls. This latest development along with pricing and packaging changes at Splunk (SPLK) and New Relic is sure to keep things interesting. Worth noting, New Relic has promoted its President and Chief Product Officer, Bill Staples, to Chief Executive Officer, effective July 1, 2021. He succeeds Founder & CEO Lew Cirne, who will transition to Executive Chairman of the Board. As Mr. Staples played a critical role in the launch of New Relic One and the corresponding changes to the company’s go-to-market strategy, the transition should be a smooth one. That said, New Relic’s transition to a consumption-based model is far from complete and the performance may be difficult to judge in the near-term as metrics like ARR and net dollar retention rate have less relevance now and will no longer be provided.

Other notable developments include Alteryx’s (AYX) appointment of Paula Hansen as Chief Revenue Officer and VMware’s (VMW) promotion of Raghu Raghuram as Chief Executive Officer. Ms. Hansen joins Alteryx from SAP (SAP), where she served as CRO for SAP Customer Experience and grew that business to $1 billion in ARR. Mr. Raghuram joined VMware in 2003 and currently serves as Executive Vice President and Chief Operating Officer, Products and Cloud Services. In addition to his appointment, VMware also promoted Sumit Dhawan, Senior Vice President and Chief Customer Officer, to President. Sanjay Poonen, Chief Operating Officer, Customer Operations will be leaving the company. In conjunction with the changes, VMware also pre-announced fiscal Q1 ’22 results ahead of expectations. Speaking of pre-announcements, Intuit (INTU) indicated its fiscal Q3 ’21 results would fall short of its original guidance due to the extension of the IRS filing deadline. However, the company expects that its full year performance to exceed the high-end of management’s prior guidance and plans to revise its outlook accordingly during the next earnings call. Finally, we note that Starboard Value has nominated a slate of candidates for election to Box’s (BOX) Board of Directors at the company’s upcoming Annual Meeting of Stockholders. The nominees include Deborah Conrad, former Chief Marketing Officer at Intel; Peter Feld, Head of Research at Starboard; Jack McCormac, former CEO of Websense; and Xavier Williams, former President of AT&T’s Public Sector and First Net.

Mergers and Acquisitions

Absolute Software to Acquire NetMotion, to Deliver the Next Generation of Endpoint Resilience

  • Absolute Software (ABST) has agreed to acquire NetMotion for $340 million in cash.

  • NetMotion offers a secure access service edge (SASE) platform, which combines a virtual private network, digital experience monitoring and zero-trust network access capabilities to provide remote workers with secure network access.

  • The acquisition expands Absolute’s total addressable market from $68 billion to $111 billion and adds approximately $55 million in ARR, $60 million in revenue and $18 million in adjusted EBITDA.

  • NetMotion’s net dollar retention rate is in excess of 115% and the company’s TTM revenue growth rate of 18% reflects an ongoing transition from license sales to subscriptions.

  • Absolute plans to fund the transaction with $65 million in cash and $275 million in debt.

Descartes Acquires Portrix Logistics Software

  • Descartes Systems Group (DSGX) has acquired Portrix Logistics Software for €22.0 million, or $26.7 million, in cash.

  • Portrix’s primary product offering is Global Price Management, which used by logistics service providers to manage the routing, pricing, rating and allocation of shipments.

  • The combination of Portrix with Descartes’ investments in Kontainers and QuestWeb will enable Descartes to offer an end-to-end solution for logistics service provides looking to digitize their operations.

ServiceNow to Acquire Lightstep, Combining Next-Generation Observability with the World’s Leading Enterprise Digital Workflow Platform

  • ServiceNow (NOW) has agreed to acquire Lightstep, which offers a next-generation observability solution that analyzes metrics and tracing data to identify issues associated with application performance, reliability and development.

  • With the addition of Lightstep, ServiceNow customers will be able to monitor and respond to changes in application performance and leverage the Now Platform to coordinate the technical and team response.

  • The acquisition is expected to close in Q2 ’21.

Vertex Acquires Taxamo to Expand Global Commerce and Compliance Solutions

  • Vertex (VERX) has acquired Taxamo, which offers a cloud-based tax and payment automation platform for global e-commerce and marketplaces, for $200 million in cash.

  • Taxamo’s solutions will be integrated into the Vertex cloud portfolio, thereby adding new capabilities and expanding digital content to the company’s existing customer base.

  • The acquisition also advances Vertex’s expansion in the mid-market and in Europe, the latter of which is expected to provide a tailwind to growth as new EU marketplace and e-commerce regulations begin to take effect in July.

  • Taxamo is expected to contribute $9 million in revenue for the remainder of 2021 and decrease adjusted EBITDA by $2 million; management expects a more significant impact to revenue in FY ’22 due to new regulations in Europe and a full year of contribution.

Earnings Releases

Absolute Software Reports Third Quarter Fiscal 2021 Financial Results

  • Absolute Software (ABST) reported Q3 ’21 results above expectations and provided mixed guidance for Q4.

  • Revenue was $30.7 million (+18% Y/Y), above consensus of $30.1 million. Adjusted EBITDA was $7.7 million (25.1% margin), ahead of consensus of $6.5 million. Non-GAAP EPS of $0.10 beat the Street’s $0.03.

  • Key metrics: total ARR was $120.4 million (+19% Y/Y); new logo ARR was $2.6 million; net dollar retention was 110%.

  • Strong demand for Endpoint Resilience capabilities as organizations adapt to remote and hybrid working models drove new customer wins and existing customer expansions, particularly in the insurance, healthcare and manufacturing verticals.

  • Growth in the quarter reflected strength in the education sector, which continues to execute upon digital transformation strategies and benefit from robust funding support.

  • Management’s revised FY ’21 outlook for revenue of $119.0-$120.0 million and an adjusted EBITDA margin of 24%-25% implies Q4 revenue and adjusted EBITDA of $30.0-$31.0 million and $4.7-$6.1 million, respectively, which was mixed relative to consensus of $30.3 million and $6.4 million.

AppFolio, Inc. Announces First Quarter 2021 Financial Results

  • AppFolio (APPF) reported Q1 ’21 results shy of Street expectations but guided FY ’21 revenue ahead of consensus.

  • Revenue of $78.9 million (+8.9% Y/Y) was short of consensus of $79.4 million. Non-GAAP operating income of $(2.9) million was below consensus of $2.2 million. Non-GAAP EPS of $0.09 beat the Street’s $0.07 due to a tax benefit.

  • Key metrics: 16,178 property manager customers (+10% Y/Y); 5.62 million units under management (+17% Y/Y).

  • Adjusted for the sale of MyCase, revenue increased 22% Y/Y in Q1 and is expected to increase 23.5% in FY ’21 based on the midpoint of management’s guidance.

  • Demand for electronic payment services continued to increase in Q1 as residents, property managers, owners and customers transacted more business online.

  • Ida Kane, Chief Financial Officer, plans to leave the company but will remain until a mutually determined date.

  • FY ’21 guidance for revenue of $348.0-$355.0 million was above consensus of $346.9 million.

BigCommerce Announces First Quarter Financial Results

  • BigCommerce (BIGC) reported Q1 ’21 results above expectations and raised its outlook for FY ’21.

  • Revenue of $46.7 million (+40.7% Y/Y) was above guidance for $41.8-$42.3 million and consensus of $42.2 million. Non-GAAP operating income was $(3.1) million, ahead of guidance for $(8.2)-$(7.9) million and consensus of $(8.0) million. Non-GAAP EPS of $(0.04) beat the Street’s $(0.11).

  • Key metrics: ARR was $196.3 million (+43% Y/Y), including $163.7 million from accounts over $2,000 in ACV (+51% Y/Y); 10,509 accounts over $2,000 in ACV (+17% Y/Y); average revenue per account was $15,582 (+29% Y/Y).

  • Business momentum again accelerated as BigCommerce increased share in the mid-market and large enterprise segments.

  • Online consumer spending and merchant activity was strong and resilient in Q1, bucking the usual seasonal decrease in transaction volume coming out of the Q4 holiday season.

  • Via the WineDirect partnership, 15% of U.S. wineries will be able to power their online storefronts using BigCommerce.

  • Q2 guidance for revenue of $46.4-$46.9 million was above consensus of $45.7 million, while guidance for non-GAAP operating income of $(8.6)-$(8.1) million was in line with the Street’s $(8.5) million.

  • Management raised its FY ’21 revenue and non-GAAP operating income guidance from $189.0-$191.0 million and $(34.5)-$(33.3) million, respectively, to $196.7-$198.2 million and $(32.5)-$(31.0) million.

Cerence Announces Record Second Quarter 2021 Results

  • Cerence (CRNC) reported Q2 ’21 results above expectations and raised its outlook for FY ’21.

  • Revenue of $98.7 million (+13.6% Y/Y) was above guidance for $92.0-$95.0 million and consensus of $93.4 million. Adjusted EBITDA was $39.3 million (39.9% margin), above guidance for $34.0-$37.0 million and consensus of $35.0 million. Non-GAAP EPS of $0.69 beat the Street’s $0.52.

  • Key metrics: 52% of worldwide auto production with Cerence Technology; average contract duration of 6.5 years; Cerence connected cars shipped -10% Y/Y on TTM basis; billings per car +10% Y/Y on TTM basis.

  • The Q2 performance reflected strong growth in license and connected services with the former reflecting a strong recovery in auto product and the latter fueled by adoption of new connected service offerings.

  • China has historically been the company’s least penetrated geography but that is quickly changing as Cerence has established a presence with several EV startups and some traditional OEMs.

  • There was minimal effect on revenue from the semiconductor shortage affecting the auto industry although Q3 guidance does reflect a modest impact.

  • First half bookings of $293 million were approximately flat with 2H ’20 but management anticipates a burst in the latter half of this year with over $100 million already booked in Q3.

  • Q3 guidance for revenue of $94.0-$97.0 million and adjusted EBITDA of $34.0-$37.0 million compared favorably with Street expectations for revenue of $94.9 million and adjusted EBITDA of $33.4 million.

  • Management raised its FY ’21 revenue and adjusted EBITDA guidance from $370.0-$380.0 million and $131.0-$140.0 million, respectively, to $380.0-$390.0 million and $143.0-$152.0 million.

Dynatrace Reports Fourth Quarter and Full Year Fiscal 2021 Financial Results

  • Dynatrace (DT) reported Q4 ’21 results above expectations and provided a mixed outlook for FY ’22.

  • Revenue of $196.5 million (+30.5% Y/Y) was above guidance for $190.0-$192.0 million and consensus of $191.8 million. Non-GAAP operating income was $49.5 million (25.2% margin), exceeding guidance for $44.0-$46.0 million and consensus of $45.4 million. Non-GAAP EPS of $0.15 beat guidance for $0.13-$0.14 and the Street’s $0.14.

  • Key metrics: ARR of $774.1 million (+35% Y/Y); added 173 new logos (+19% Y/Y); net expansion rate over 120%; remaining performance obligation of $1.2 billion (+38% Y/Y).

  • Dynatrace is seeing signs of stabilization in the vertical markets most heavily impacted by the pandemic.

  • Management is targeting a 30% increase in quota-carriers in fiscal Q1 and for the balance of the year.

  • Q1 guidance for revenue of $202.0-$204.0 million, non-GAAP operating income of $49.0-$51.0 million and non-GAAP EPS of $0.14-$0.15 compared favorably with Street expectations for $197.0 million, $51.2 million and $0.14, respectively.

  • Management’s FY ’22 guidance for $885.0-$900.0 million in revenue, $203.0-$216.0 million in non-GAAP operating income and $0.59-$0.62 in non-GAAP EPS was mixed relative to consensus of $868.2 million in revenue, $225.2 million in non-GAAP operating income and $0.63 in non-GAAP EPS.

eGain Reports SaaS Revenue Growth of 19% for First Nine Months of Fiscal 2021

  • eGain (EGAN) reported Q3 ’21 results above expectations and guided Q4 in line with consensus.

  • Revenue was $19.7 million (+7.6% Y/Y), above guidance for $18.3-$18.8 million and consensus of $18.6 million. Non-GAAP operating income of $1.9 million (9.9% margin) was above consensus of $0.3 million. Non-GAAP EPS of $0.05 beat guidance for $(0.03)-$0.00 and the Street’s $0.00.

  • During the quarter, eGain won some nice new SaaS logos and saw healthy expansion bookings with existing clients, resulting in a net retention rate north of 100% and higher than in Q2.

  • Sales performance was ahead of expectations in Q3 due to healthy partner contributions from Cisco and BT as well as the aforementioned expansion business within the installed base.

  • eGain’s brand awareness is up significantly with website traffic up 144% Y/Y between January 1 and April 30 this year, marketing leads up 49% Y/Y and total opportunities up 70% Y/Y.

  • Management’s FY ’21 guidance for revenue of $77.3-$77.9 million and non-GAAP EPS of $0.19-$0.22 implies Q4 revenue and non-GAAP EPS of $19.3-$19.9 million and $0.00-$0.03, respectively, in line with consensus of $19.5 million and $0.01.

  • Over the next year or two, management anticipates SaaS revenue growth to revert back to 20% or more with total revenue growth moving into the mid-teens; both metrics are expected to reach the mid-20% range in three to five years.

New Relic Announces Fourth Quarter and Full Fiscal Year 2021 Results

  • New Relic’s (NEWR) fiscal Q4 ’21 results beat expectations and its FY ’22 guidance was generally in line with consensus.

  • Revenue of $172.7 million (+8.1% Y/Y) was above guidance for $166.0-$167.0 million and consensus of $167.1 million. Non-GAAP operating income of $(18.5) million exceeded guidance for $(31.0)-$(29.0) million and consensus of $(28.8) million. Non-GAAP EPS of $(0.27) beat guidance for $(0.49)-$(0.45) and the Street’s $(0.45).

  • Key metrics: ARR of $673.7 million (+5% Y/Y); dollar-based net expansion rate of 99%; 1,048 paid business accounts over $100,000 (+5% Y/Y); remaining performance obligations of $726.8 million (+14% Y/Y).

  • Renewal yields were negatively affected by the transition towards a consumption-based model as well as the loss of two seven-figure customers that left to build their own observability solutions.

  • New Relic One pricing will apply to over 80% of the base by the end of FY ’22 versus 59% at the end of FY ‘21.

  • For deals worth about $25,000 annually, New Relic now has a Self Serve channel, and for those above that threshold, the company maintains a traditional direct sales model dubbed Sales Led Growth.

  • New Relic has already signed up 2,000 pay-as-you-go customers in the Self Serve channel and churn on these customers has been a respectable 1%-2% per month.

  • The transition away from its own data centers and into the cloud means gross margin will be in the low 70% range in FY ’22 but management expects gross margin to revert back to the 80% range in about two years.

  • Q1 guidance for revenue of $172.0-$174.0 million, non-GAAP operating income of $(26.0)-$(24.0) million and non-GAAP EPS of $(0.40)-$(0.37) was mixed relative to consensus of $169.3 million, $(18.2) million and $(0.26), respectively.

  • Management’s FY ’22 guidance for revenue of $709.0-$711.0 million, non-GAAP operating income of $(55.0)-$(53.0) million and non-GAAP EPS of $(0.83)-$(0.80) was largely in line with the Street’s $709.7 million, $(55.3) million and $(0.79).

NICE Reports 32% Growth in Cloud Revenue for the First Quarter of 2021

  • NICE (NICE) reported Q1 results above expectations and raised its guidance for FY ’21.

  • Non-GAAP revenue of $457.0 million (+11.1% Y/Y) was above guidance for $445.0-$455.0 million and consensus of $450.8 million. Non-GAAP operating income of $128.8 million (28.2% margin) was ahead of consensus of $125.0 million. Non-GAAP EPS of $1.54 beat guidance for $1.42-$1.52 and the Street’s $1.49.

  • NICE continues to see increased adoption of cloud, digital, automation and self-service solutions and technologies.

  • CXone fueled strong growth and reached record pipeline levels in Q1.

  • The company is seeing the most success with large enterprises but both mid-market and international are also doing well.

  • During the quarter, partner bookings exhibited strong growth and new logos increased 38% Y/Y.

  • Q2 guidance for non-GAAP revenue of $445.0-$455.0 million was above consensus of $432.9 million while guidance for non-GAAP EPS of $1.45-$1.55 was in line with the Street’s $1.46.

  • Management raised its FY ’21 non-GAAP revenue and EPS guidance from $1.790-$1.810 billion and $6.12-$6.32, respectively, to $1.800-$1.820 billion and $6.19-$6.39.

ON24 Announces First Quarter 2021 Financial Results

  • ON24 (ONTF) reported Q1 ’21 results above expectations and raised its outlook for FY ’21.

  • Revenue of $50.1 million (+102.5% Y/Y) was above guidance for $48.5-$49.0 million and consensus of $48.9 million. Non-GAAP operating income was $2.8 million (5.5% margin), ahead of guidance for $0.5-$1.0 million and consensus of $0.7 million. Non-GAAP EPS of $0.05 beat guidance for $0.00-$0.01 and the Street’s $0.01.

  • Key metrics: ARR was $163.1 million (+90% Y/Y); added 68 net new customers for a total of 2,062 customers (+37% Y/Y) at quarter-end, including 325 with ARR over $100,000 (+102% Y/Y).

  • Management believes digital-first hybrid engagement is the future, and even with physical events coming back to an extent, such events will be used to complement and augment the digital-first strategy.

  • ON24 plans to add sales capacity, enter new international markets and develop new products to expand its platform.

  • Q2 guidance for revenue of $50.5-$51.5 million, non-GAAP operating income of $0-$1.0 million and non-GAAP EPS of $(0.01) was ahead of Street expectations for $50.1 million, $(0.8) million and $(0.02), respectively.

  • Management raised its FY ’21 guidance across the board and now anticipates revenue of $207.5-$210.5 million, non-GAAP operating income of $(2.0)-$1.0 million and non-GAAP EPS of $(0.08)-$(0.02).

RADCOM Reports First Quarter 2021 Results

  • RADCOM (RDCM) reported Q1 ’21 non-GAAP EPS ahead of consensus and reaffirmed its guidance for FY ’21.

  • Revenues of $9.1 million (+9.8% Y/Y) were approximately in line with consensus of $9.2 million. Non-GAAP operating income was $(1.1) million, ahead of consensus of $(1.3) million. Non-GAAP EPS of $(0.07) beat the Street’s $(0.08).

  • Q1 results reflected the company’s fulfillment of multiyear software and services agreements with leading operators.

  • RADCOM is seeing more opportunities and is engaged with multiple prospects at different stages of the sales cycle, leaving the company well positioned to win more market share as 5G continues to evolve.

  • Management reaffirmed its prior FY ’21 guidance for revenue of $39.0-$41.0 million.

ShotSpotter Reports First Quarter 2021 Financial Results

  • ShotSpotter (SSTI) reported Q1 ’21 results above expectations and raised its revenue outlook for FY ’21.

  • Revenues of $15.0 million (+43.6% Y/Y) were above consensus of $13.3 million. Adjusted EBITDA of $3.3 million (22.2% margin) was above consensus of $2.8 million. EPS of $0.01 beat the Street’s $0.00.

  • Key metrics: six go-lives and five expansions with ShotSpotter Respond.

  • Even with robust go-live activity in Q1, ShotSpotter enters Q2 with a solid number of new city and expansion projects slated to go live in the next 60 to 90 days.

  • Stimulus dollars going into cities from the federal government are having a measurable and beneficial impact on the business with prospects moving forward quickly and attrition related to financial constraints likely to be lower than initially thought.

  • Management raised its FY ’21 revenue guidance from $58.0-$60.0 million to $60.0-$61.0 million and continues to expect GAAP profitability for the year.

Synchronoss Reports First Quarter Adjusted EBITDA of $5.5 Million, a 215% Increase Year Over Year; Increases Adjusted EBITDA Guidance for Full Year 2021

  • Synchronoss (SNCR) reported Q1 ’21 results above expectations and raised its adjusted EBITDA guidance for FY ’21.

  • Revenue was $65.5 million (-15.1% Y/Y), above consensus of $63.5 million. Adjusted EBITDA was $5.5 million (8.5% margin), exceeding consensus of $2.5 million. Non-GAAP EPS of $(0.33) missed consensus of $(0.14).

  • Q1 saw the signing of several new customer contracts, including two significant deals in Southeast Asia, and continued growth within the existing cloud customer subscriber base.

  • The dissolution of the Common Carrier Messaging Initiative in the U.S. will not negatively impact Synchronoss’ 2021 results, and management believes the U.S. carriers will still move forward with their own rollouts of RCS.

  • Synchronoss anticipates double-digit subscriber growth across its global base of cloud customers this year.

  • Management issued FY ’21 revenue guidance of $275.0-$285.0 million, which was in line with consensus of $277.9 million, and raised its adjusted EBITDA guidance from $30.0-$35.0 million to $32.0-$37.0 million.

Vertex Announces First Quarter 2021 Financial Results

  • Vertex (VERX) reported Q1 ’21 results above expectations and provided a mixed outlook due to the Taxamo acquisition.

  • Revenues of $98.2 million (+10.1% Y/Y) were above guidance for $94.5-$96.5 million and consensus of $95.6 million. Adjusted EBITDA was $18.2 million (18.5% margin), above guidance for $15.5-$17.5 million and consensus of $16.5 million. Non-GAAP EPS of $0.07 beat the Street’s $0.05.

  • Key metrics: annual recurring revenue of $320.1 million (+13% Y/Y); net revenue retention rate of 105%; gross revenue retention was 95%.

  • Per management, Vertex’s win rate in the enterprise market remains dominant and momentum in the middle market continues to grow due to the value proposition and competitiveness of its cloud products.

  • New logos comprised 34% of new sales in Q1, of which 92% were cloud deals.

  • The Taxamo acquisition is expected to contribute $9.0 million to revenues and decreased adjusted EBITDA by $2.0 million for the remainder of FY ’21 but should have a more significant revenue impact next year due to tailwinds from new marketplace and e-commerce regulations in Europe.

  • Q2 guidance for revenue of $99.0-$100.0 million was ahead of consensus of $97.7 million while guidance for adjusted EBITDA of $15.5-$16.5 million was in line with the Street’s $16.3 million.

  • Management raised its FY ’21 revenue guidance from $401.0-$405.0 million to $410.0-$414.0 million but lowered its adjusted EBITDA guidance from $68.0-$72.0 million to $66.0-$70.0 million.

Wix Reports First Quarter 2021 Results

  • Wix (WIX) reported Q1 ’21 results above expectations and raised its guidance for FY ’21.

  • Revenue of $304.1 million (+40.8% Y/Y) was above guidance for $291.0-$296.0 million and consensus of $295.2 million. Non-GAAP operating income was $(36.3) million, above consensus of $(44.3) million. Non-GAAP EPS of $(0.54) beat the Street’s $(0.64).

  • Key metrics: collections of $351 million (+41% Y/Y) were above guidance for $340-$350 million and included Creative Subscriptions collections of $268 million (+28% Y/Y) and Business Solutions collections of $83 million (+107% Y/Y); added over 7.5 million new users for a total of over 204 million registered users at quarter-end.

  • As economies have reopened, Wix has experienced a resurgence in Wix Events as well as Wix Restaurants for reservations and segments of Wix Bookings for various in-person services.

  • Wix plans to continue expanding its take rate, defined as payments revenue as a percent of GPV, by attracting more online commerce users to Wix Payments, offering differentiated products like Wix POS and expanding geographically.

  • Q2 guidance for revenue of $308.0-$312.0 million left consensus of $312.3 million at the high-end.

  • Management raised its FY ’21 revenue and collections guidance from $1.272-$1.286 billion and $1.435-$1.455 billion, respectively, to $1.280-$1.290 billion and $1.440-$1.460 billion.

Notable News

Alteryx Appoints Paula Hansen as Chief Revenue Officer

  • Alteryx (AYX) has appointed Paula Hansen as Chief Revenue Officer, a role in which she will lead worldwide sales, channels and all industry-specific go-to-market initiatives.

  • Ms. Hansen joins the company from SAP, where she was CRO of SAP Customer Experience.

Intuit Expects to Exceed Full Fiscal Year 2021 Guidance; Adjusts Third Quarter Expectations Reflecting Significant Revenue Shift Due to the IRS Filing Deadline Extension

  • Intuit (INTU) pre-announced fiscal Q3 ’21 results below its prior guidance due to the IRS’ extension of its filing deadline, but the company expects FY ’21 results to exceed the high-end of its prior outlook.

  • For Q3, Intuit anticipates revenue of $4.165-$4.170 billion, non-GAAP operating income of $2.195-$2.200 billion and non-GAAP EPS of $6.00-$6.05, below guidance for $4.605-$4.655 billion, $2.475-$2.515 billion and $6.75-$6.85, respectively.

  • The company plans to update its FY ‘21 guidance during its Q3 earnings call on May 25

New Relic to Promote Cloud Industry Veteran Bill Staples to CEO

  • New Relic (NEWR) has promoted Bill Staples, current President and Chief Product Officer, as its Chief Executive Officer, effective July 1, 2021.

  • Mr. Staples, who has been an instrumental figure in the company’s launch of New Relic One and corresponding changes in packaging and pricing, succeeds Founder & CEO Lew Cirne, who will become Executive Chairman of the Board.

Starboard Nominates Slate of Highly Qualified Director Candidates for Election at Box’s 2021 Annual Meeting

  • Starboard Value, which owns approximately 8% of Box’s (BOX) outstanding shares, has nominated a slate of director candidates for election to Box’s Board of Directors at the upcoming 2021 Annual Meeting of Stockholders.

  • The nominees include Deborah Conrad, currently Interim Chief Marketing Officer at NovaSignal and formerly Corporate Vice President and Chief Marketing Officer at Intel; Peter Feld, Managing Member and Head of Research at Starboard; Jack McCormac, previously CEO of Websense; and Xavier Williams, CEO and a director of American Virtual Cloud Technologies and formerly President of AT&T’s Public Sector and First Net.

VMware Board Names Raghu Raghuram as CEO

  • VMware (VMW) has appointed Raghu Raghuram as Chief Executive Officer and a member of the Board of Directors.

  • Mr. Raghuram joined the company in 2003 and is currently VMware’s Executive Vice President and Chief Operating Officer, Products and Cloud Services.

  • Sumit Dhawan, currently Senior Vice President and Chief Customer Officer, has been named President and will lead all go-to-market functions, including Worldwide Sales, Worldwide Partner and Commercial Organization, Customer Experience and Success, Marketing, and Communications.

  • Sanjay Poonen, currently Chief Operating Officer, Customer Operations, has decided to leave the company.

  • In conjunction with the appointments, VMware pre-announced fiscal Q1 ’22 revenue of $2.994 billion, a non-GAAP operating margin of 30.8% and non-GAAP EPS of $1.76, all of which exceeded its prior guidance for revenue of $2.910 billion, a non-GAAP operating margin of 27.5% and non-GAAP EPS of $1.49.

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).