K. Liu's Week in Review
Earnings season for those with an April quarter-end concluded this week, providing an added glimpse into how business has trended since the onset of the COVID-19 crisis. The latter half of March and April proved challenging for most organizations as customers focused on their own operations. Client engagement and selling activity bounced back in May but are still tracking below pre-COVID levels. At the very least, pipelines appear to be healthy as those homebound have been far more inclined to attend virtual events and consume content from vendors. Whether this translates into conversions down the line, only time will tell. The most striking difference between those reporting of late and those following the standard calendar cycle is the increased willingness to offer guidance for both the current quarter and year. Timing obviously plays a role here as there was no semblance of stabilization for the earlier reporting group. The general consensus seems to be a trough in sales activity during the current quarter followed by a slow but steady recovery through year-end. Also worth noting, the dramatic decline in online advertising rates proved beneficial to those employing a self-serve channel and others reliant on digital marketing to drive customer acquisition.
Not surprisingly, companies enabling customers to work-from-home (or really work-from-anywhere) benefited greatly from the COVID-19 disruption. While everyone likely assumed Zoom Video Communications (ZM) would beat expectations, any adjective used to describe the magnitude of the upside would still likely understate the company’s performance. Like Zoom, CrowdStrike (CRWD), Domo (DOMO) and Slack (WORK) also experienced an uptick in demand during the quarter and raised top and bottom-line expectations accordingly for both the current quarter and fiscal year. Shares of Slack fared less well, however, as billings were affected by COVID-19 headwinds to a degree, and management pulled its billings outlook for the full year given heightened macro uncertainty. Smartsheet’s (SMAR) shares sold-off even more as its billings fell short of expectations due to elevated churn amongst its SMB customer base and accommodations extended to customers hit hard by the pandemic. Medallia (MDLA) and MongoDB (MDB) also saw double-digit declines for the week with the former guiding to a sequential dip in recurring revenue after modifying terms for certain customers, and the latter indicating growth in its existing Atlas base slowed as consumption declined in concert with the business volume declines experienced by customers.
Outside of earnings, news flow was largely dominated by several more sizable convertible debt issuances but NICE (NICE) was on the tape with a tuck-in acquisition for its financial services focused security business unit, NICE Actimize. The company has agreed to acquire Guardian Analytics, which leverages behavioral analytics and artificial intelligence to detect and prevent financial crime, and now boasts a complete cloud platform for managing financial crime and compliance. Dynatrace (DT) priced a secondary offering of 30.0 million shares by selling stockholders at $35.00 per share, a 9.0% discount to the close price prior to the announcement of the offering. HubSpot (HUBS), Palo Alto Networks (PANW) and Splunk (SPLK) were the latest to issue convertible senior notes due 2025, pricing offerings of $400 million, $1.75 billion and $1.1 billion, respectively. Both HubSpot and Splunk plan to use a portion of the proceeds to finance the repurchases or exchanges of a portion of their outstanding convertible notes with earlier maturities.
Mergers & Acquisitions
NICE (NICE) has agreed to acquire Guardian Analytics, which leverages behavior-based analytics and artificial intelligence to detect and prevent financial crime.
The combination of Guardian Analytics with NICE Actimize is expected to result in the most complete cloud platform for managing financial crime and compliance.
The acquisition is expected to close towards the end of this year.
Earnings Releases
Cloudera Reports First Quarter Fiscal 2021 Financial Results
Cloudera (CLDR) reported Q1 results above expectations and raised its FY ’21 profitability outlook on lower revenue.
Revenue was $210.5 million (+12.3% Y/Y), above guidance for $202.0-$207.0 million and consensus of $204.6 million. Non-GAAP operating income was $17.3 million (8.2% margin), exceeding guidance for $(3.0)-$2.0 million and consensus of $0.7 million. Non-GAAP EPS of $0.05 beat guidance for $(0.01)-$0.01 and the Street’s $0.00.
Key metrics: annualized recurring revenue (ARR) of $723.4 million (+11% Y/Y); subscription revenue of $187.1 million (+21% Y/Y) was above guidance for $180.0-$183.0 million; 1,003 customers with ARR over $100,000.
Strong renewals and ARR growth were both driven by existing customers expanding at a higher rate due to increased confidence in Cloudera’s new solution set.
As Cloudera’s focus for this year was on supporting existing customers as they transition to Cloudera Data Platform (CDP), achieving its financial plan is not predicated upon winning substantial new business from new customers.
Although Cloudera has yet to see any significant slowdown in customer interactions for pipeline development, the company has accelerated cost reduction initiatives affecting personnel and outside contractors given the downturn in the economy.
Q2 guidance for revenue of $206.0-$209.0 million, non-GAAP operating income of $18.0-$23.0 million and non-GAAP EPS of $0.06-$0.07 was mixed versus Street expectations for $212.2 million in revenue, $15.7 million in non-GAAP operating income and $0.05 in non-GAAP EPS.
For FY ’21, management lowered its revenue outlook from $860.0-$880.0 million to $825.0-$845.0 million but increased its non-GAAP operating income and EPS guidance from $82.0-$92.0 million and $0.25-$0.29, respectively, to $85.0-$95.0 million and $0.26-$0.30.
CrowdStrike Reports Fiscal First Quarter 2021 Financial Results
CrowdStrike Holdings (CRWD) reported Q1 ’21 results ahead of expectations and raised its guidance for FY ’21.
Revenue of $178.1 million (+85.3% Y/Y) was above guidance for $164.3-$167.6 million and consensus of $165.1 million. Non-GAAP operating income was $1.2 million (0.7% margin), exceeding guidance for $(16.2)-$(13.9) million and consensus of $(15.0) million. Non-GAAP EPS of $0.02 beat guidance for $(0.07)-$(0.06) and consensus of $(0.06).
Key metrics: annual recurring revenue (ARR) of $686.1 million (+88% Y/Y); added 830 net new subscription customers for a total of 6,261 (+105% Y/Y) at quarter-end; dollar-based net retention rate over 120%.
The quarter began and ended with strong momentum with good deal flow among both large and SMB customers across multiple industries and geographies.
Partners are increasingly turning to CrowdStrike as Symantec abandons large segments of the market, resulting in deal registrations from partners increasing over 200% Y/Y.
Travel restrictions late in the quarter resulted in a $1.5 million decrease versus the prior quarter, and Q2 should see those savings increase to over $5.0 million.
Q2 guidance for revenue of $185.8-$190.3 million, non-GAAP operating income of $(3.1)-$0.0 million and non-GAAP EPS of $(0.02)-$0.00 exceeded Street expectations for $172.8 million, $(14.1) million and $(0.06), respectively.
Management raised its FY ’21 revenue, non-GAAP operating income and non-GAAP EPS guidance from $723.3-$733.5 million, $(37.1)-$(29.9) million and $(0.14)-$(0.10), respectively, to $761.2-$772.6 million, $(19.2)-$(11.1) million and $(0.08)-$(0.05).
DocuSign Announces First Quarter Fiscal 2021 Financial Results
DocuSign (DOCU) reported Q1 ’21 results above expectations and raised its revenue and billings guidance for FY ’21.
Revenue was $297.0 million (+38.8% Y/Y), exceeding guidance for $280.0-$284.0 million and consensus of $281.1 million. Non-GAAP operating income was $23.2 million (7.8% margin), above consensus of $20.3 million. Non-GAAP EPS of $0.12 beat consensus of $0.10.
Key metrics: billings were $342.1 million (+59% Y/Y), exceeding guidance for $279.0-$289.0 million; 661,000 customers (+30% Y/Y) at quarter-end; 89,000 enterprise and commercial customers (+49% Y/Y); net dollar retention rate was 119%.
Strong growth in the quarter was driven by use case expansion across a broad cross-section of the installed base as well as the addition of 10,000 net new direct customers and nearly 58,000 self-service customers.
Demand for eSignature surged in Q1 as organizations suddenly needed a way to sign and manage agreements from anywhere and bodes well for adoption of other agreement cloud products over time.
Sales capacity hires were pulled forward and marketing efforts expanded to capitalize on current demand and prepare for future growth.
Q2 guidance for revenue of $316.0-$320 million exceeded the Street’s $303.0 million, while the implied non-GAAP EPS guidance of breakeven to $0.15 was in line with consensus of $0.10.
Management raised its revenue and billings guidance from $1.272-$1.276 billion and $1.430-$1.450 billion, respectively, to $1.515-$1.535 billion, and narrowed its implied non-GAAP EPS guidance from $0.17-$0.76 to $0.19-$0.73.
Domo Announces First Quarter Fiscal 2021 Financial Results
Domo (DOMO) reported Q1 ’21 results above expectations and raised its outlook for FY ’21.
Revenue was $48.6 million (+19.0% Y/Y), above guidance for $46.0-$47.0 million and consensus of $45.7 million. Non-GAAP operating income was $(15.5) million (-32.0% margin), exceeding consensus of $(22.6) million. Non-GAAP EPS of $(0.65) beat guidance for $(1.08)-$(1.04) and consensus of $(0.91).
Key metrics: billings of $46.5 million (+13% Y/Y); renewal rate was above 85%.
The strong performance in Q1 was driven by Domo’s ability to quickly adjust go-to-market efforts towards companies in the healthiest sectors of the economy and to adapt its product to respond to governments in need of data to manage the COVID-19 crisis, which yielded $4.5 million in new recurring business.
Domo remains on track to meet its $35 million expense reduction target for the year.
Management’s COVID-19 downside case assumes a 20% downturn in new business and an 80% renewal rate for the year, so with the Q1 outperformance, Domo is tracking towards $197 million in billings for FY ‘21.
Q2 guidance for revenue of $48.5-$49.5 million and non-GAAP EPS of $(0.52)-$(0.48) exceeded Street expectations for $45.8 million in revenue and $(0.60) in non-GAAP EPS.
Management raised its FY ’21 revenue and non-GAAP EPS guidance from $192.0-$198.0 million and $(3.32)-$(3.22), respectively, to $194.0-$200.0 million and $(2.06)-$(1.96).
Elastic N.V. Reports Strong Fourth Quarter and Fiscal 2020 Financial Results
Elastic (ESTC) reported Q4 ’20 results above expectations and provided a mixed outlook for FY ’21.
Revenue of $123.6 million (+53.4% Y/Y) was above guidance for $119.0-$120.0 million and consensus of $117.0 million. Non-GAAP operating income was $(12.7) million (-10.3% margin), exceeding the Street’s $(24.0) million and guidance for a (20.5)%-(19.5)% non-GAAP operating margin. Non-GAAP EPS of $(0.12) beat guidance for $(0.32)-$(0.30) and consensus of $(0.31).
Key metrics: billings of $175.1 million (+52% Y/Y); over 11,300 subscription customers (+40% Y/Y); 610 customers with annual contract value over $100,000 (+39% Y/Y); net expansion rate over 130%.
Elastic saw a pause in business momentum from mid- to late-March as customers focused on their employees and business continuity plans, but the company finished the month on a strong note and carried that momentum into April.
Elastic Workplace Search stands to benefit from the massive shift towards virtual workplaces and phones.
Management expects the environment to remain challenging in the near-term given COVID-19 with only a gradual recovery over time, which portends a headwind to billings over the next couple of quarters.
Q1 guidance for revenue of $119.0-$122.0 million was in line with consensus of $120.6 million while guidance for a non-GAAP operating margin of (12.0)%-(11.0)% and non-GAAP EPS of $(0.19)-$(0.17) compared favorably with Street expectations for $(29.0) million in non-GAAP operating income and $(0.38) in non-GAAP EPS.
Management’s FY ’21 outlook for $530.0-$540.0 million in revenue, a non-GAAP operating margin of (15.0)%-(13.0)% and non-GAAP EPS of $(0.98)-$(0.85) was mixed versus consensus of $556.6 million, $(103.8) million and $(2.27), respectively.
Guidewire Software (GWRE) reported Q3 ’20 results above expectations and guided Q4 slightly below consensus.
Revenue was $168.2 million (+3.3% Y/Y), exceeding guidance for $153.0-$157.0 million and consensus of $152.6 million. Non-GAAP operating income was $5.8 million (3.4% margin), exceeding guidance for $(11.0)-$(7.0) million and consensus of $(9.8) million. Non-GAAP EPS of $0.09 beat guidance for $(0.06)-$(0.02) and consensus of $(0.05).
Key metrics: annual recurring revenue (ARR) was $483 million (+5% Y/Y); completed nine core data or digital go-lives as well as six major version core upgrades.
New business activity was not as strong as a typical Q3 but momentum for Guidewire Cloud and InsuranceNow continued in the quarter, and results were solid considering an uncertain environment.
Existing deals and projects continue to move forward but Guidewire has seen sales cycles lengthen and some customers delay decision-making.
Steve Sherry, Chief Sales Officer, plans to retire and will be succeeded by Frank O’Dowd, who joins the company from Oracle where he most recently served as a Group Vice President in the cloud sales division.
Jeff Cooper, interim Chief Financial Officer, has been named Chief Financial Officer, and Priscilla Hung has been promoted to President in addition to her current role as Chief Operating Officer.
Q4 guidance for revenue of $204.9-$212.9 million left consensus of $212.2 million near the high-end, while non-GAAP operating income and EPS expectations of $36.7-$44.7 million and $0.41-$0.49, respectively, fell short of the Street’s $48.6 million and $0.52.
Medallia Reports Record Revenue in First Quarter Fiscal 2021
Medallia (MDLA) reported Q1 ’21 results above expectations and provided a mixed outlook for Q2.
Revenue of $112.7 million (+20.4% Y/Y) was above guidance for $109.0-$111.0 million and consensus of $109.4 million. Non-GAAP operating income was $3.5 million (3.1% margin), exceeding guidance for $(2.3)-$(1.3) million and consensus of $(1.5) million. Non-GAAP EPS of $0.02 was at the high-end of guidance for $(0.01)-$0.02 and beat the Street’s $(0.02).
Key metrics: subscription billings of $367.5 million (+22.8% Y/Y); 782 customers (+38.4% Y/Y) at quarter-end; TTM dollar-based net retention rate was 117%; remaining performance obligation of $631 million (+35% Y/Y).
Medallia pivoted some of its go-to-market efforts to focus on upsells and cross-sells to the existing base and completed 40% more deployments in Q1 than the prior year, reflecting the team’s ability to deliver services remotely.
While management originally anticipated $3 million in termination fees associated with its user conference, the company managed to avoid any fees after working closely with its vendors.
Although April was negatively impacted by the pandemic, the company is off to a stronger start in Q2 with several delayed deals closing in May, including the renewal of a five-year $40 million contract with a financial services customer.
Medallia has offered modified subscription or flexible payment terms in exchange for contract extensions to a limited number of customers, which will reduce SaaS revenue by approximately $1 million in Q2.
Q2 guidance for revenue of $109.0-$111.0 million, non-GAAP operating income of $1.8-$2.3 million and non-GAAP EPS of $(0.00)-$0.01 was mixed versus Street expectations for $113.8 million in revenue, $(0.8) million in non-GAAP operating income and $(0.01) in non-GAAP EPS.
Due to the uncertainty surrounding the COVID-19 pandemic, management withdrew its FY ’21 guidance.
MongoDB, Inc. Announces First Quarter Fiscal 2021 Financial Results
MongoDB (MDB) reported Q1 ’21 results above expectations and narrowed its guidance for FY ’21.
Revenue of $130.3 million (+45.8% Y/Y) was ahead of guidance for $119.0-$121.0 million and consensus of $119.6 million. Non-GAAP operating income was $(7.4) million (-5.7% margin), exceeding guidance for $(14.0)-$(12.0) million and consensus of $(13.5) million. Non-GAAP EPS of $(0.13) beat guidance for $(0.25)-$(0.22) and consensus of $(0.25).
Key metrics: over 18,400 customers (+30% Y/Y) at quarter-end; over 16,800 MongoDB Atlas customers (+37% Y/Y); 780 customers with over $100,000 in annualized recurring revenue (+30% Y/Y); net ARR expansion rate above 120%.
Q1 was a strong quarter for new business with COVID-19 having less of an impact than anticipated due to strong demand for Enterprise Advanced and a meaningful increase in registrations from the self-serve side.
The disruption from COVID-19 has accelerated secular trends such as digital transformation, adoption of platforms enabling speed and agility, and multi-cloud implementation, all of which MongoDB stands to benefit from over the long-term.
Online advertising rates have declined as much as 30% since the pandemic started, providing an excellent opportunity to increase investments in digital marketing and build on the strength in self-serve customer acquisitions.
Q2 guidance for revenue of $125.0-$127.0 million, non-GAAP operating income of $(24.0)-$(22.0) million and non-GAAP EPS of $(0.41)-$(0.38) was mixed versus consensus of $121.3 million in revenue, $(20.9) million in non-GAAP operating income and $(0.37) in non-GAAP EPS.
Management raised the low-end of its FY ’21 revenue guidance, reduced the high-end of its non-GAAP operating income guidance and raised its non-GAAP EPS guidance range, resulting in guidance for $520.0-$530.0 million in revenue, $(78.0)-$(70.0) million in non-GAAP operating income and $(1.34)-$(1.21) in non-GAAP EPS.
PagerDuty Announces First Quarter Fiscal Year 2021 Financial Results
PagerDuty (PD) reported Q1 ’21 results above expectations and fine-tuned its guidance for FY ’21.
Revenue of $49.8 million (+33.4% Y/Y) was above guidance for $48.0-$49.0 million and consensus of $48.0 million. Non-GAAP operating income was $(4.3) million (-8.6% margin), exceeding consensus of $(7.0) million. Non-GAAP EPS of $(0.04) beat guidance for $(0.09)-$(0.08) and consensus of $(0.09).
Key metrics: 13,060 customers (+12% Y/Y) at quarter-end; added 25 customers with annual recurring revenue (ARR) over $100,000 for a total of 348 (+44% Y/Y) at quarter-end; dollar-based net retention rate was 121%.
Although churn was more elevated than usual in SMB, new logo acquisition in enterprise produced strong growth in the quarter and validated the large and early total addressable market for digital operations management.
PagerDuty has seen delays in some enterprise and mid-market opportunities as companies grapple with economic uncertainty but remains optimistic given limited exposure to the most impacted industries, which comprise 7% of ARR.
Q2 guidance for revenue of $50.0-$51.0 million and non-GAAP EPS of $(0.07)-$(0.06) exceeded Street expectations for $49.8 million in revenue and $(0.08) in non-GAAP EPS.
Management reduced the low-end of its FY ’21 revenue guidance and increased the low-end of its non-GAAP EPS guidance, resulting in a revised outlook for the year of $204.0-$213.0 million in revenue and $(0.30)-$(0.25) in non-GAAP EPS.
Secureworks Reports First Quarter Fiscal 2021 Results
Secureworks (SCWX) reported Q1 ’21 results above expectations and guided Q2 above consensus.
Revenue of $141.2 million (+6.3% Y/Y) was above guidance for $133.5-$137.5 million and consensus of $134.9 million. Adjusted EBITDA was $5.6 million (4.0% margin), exceeding consensus of $0.1 million. Non-GAAP EPS of $0.03 beat guidance for $(0.06)-$(0.02) and consensus of $(0.05).
Key metrics: added 50 Red Cloak Managed Detection and Response customers; exited Q1 with $438 million in annual recurring revenue.
Per management, ACV signings were below plan but good considering the COVID-19 pandemic.
DSOs increased slightly due primarily to payment delay requests from customers; these requests amounted to 6% of receivables as of the end of Q1.
Q2 guidance for revenue of $135.0-$137.0 million and non-GAAP EPS of $0.01-$0.03 compared favorably with Street expectations for $135.3 million in revenue and $(0.03) in non-GAAP EPS.
Slack Announces Record First Quarter Fiscal Year 2021 Results
Slack (WORK) reported Q1 ’21 results above expectations and raised its outlook for FY ‘21.
Revenue of $201.7 million (+49.6% Y/Y) exceeded guidance for $185.0-$188.0 million and consensus of $188.1 million. Non-GAAP operating income was $(16.6) million (-8.3% margin), ahead of guidance for $(42.0)-$(38.0) million and consensus of $(38.3) million. Non-GAAP EPS of $(0.02) beat guidance for $(0.07)-$(0.06) and consensus of $(0.06).
Key metrics: billings of $206.0 million (+38% Y/Y); added 12,000 net new paid customers for a total of over 122,000 (+28% Y/Y) at quarter-end; 963 paid customers with over $100,000 in annual recurring revenue (+49% Y/Y); net dollar retention rate was 132%; remaining performance obligations of $379 million (+97% Y/Y).
The shift to work-from-home in Q1 concentrated multiple quarters of Slack adoption into a few weeks with tens of thousands of new organizations and millions of new users trying Slack for the first time.
Billings were impacted by $17 million of headwinds, comprised of $10 million from prior year billings that will be renewed over the remaining three quarters of FY ’21 and $7 million of COVID-19-related headwinds to support distressed customers.
Q2 guidance for revenue of $206.0-$209.0 million, non-GAAP operating income of $(22.0)-$(18.0) million and non-GAAP EPS of $(0.04)-$(0.03) exceeded Street expectations for $199.8 million, $(34.1) million and $(0.06), respectively.
Management raised its FY ’21 revenue, non-GAAP operating income and non-GAAP EPS guidance from $842-$862 million, $(130)-$(120) million and $(0.21)-$(0.19), respectively, to $855-$870 million, $(110)-$(100) million and $(0.19)-$(0.17).
Thus far, work-from-home tailwinds related to COVID-19 have outpaced headwinds arising from customers in impacted industries and higher churn in the SMB base, but given greater macroeconomic uncertainty going forward, management withdrew its billings guidance for FY ’21.
Smartsheet Inc. Announces First Quarter Fiscal Year 2021 Results
Smartsheet (SMAR) reported Q1 results above consensus and raised its FY ’21 profitability expectations on lower revenue.
Revenue of $85.5 million (+52.1% Y/Y) was above guidance for $82.0-$83.0 million and consensus of $81.3 million. Non-GAAP operating income was $(13.6) million (-15.9% margin), exceeding guidance for $(26.0)-$(24.0) million and consensus of $(24.6) million. Non-GAAP EPS of $(0.11) beat guidance for $(0.21)-$(0.19) and consensus of $(0.19).
Key metrics: billings of $89.9 million (+30% Y/Y) fell short of guidance for $97.0-$98.0 million; 9,576 customers with annualized contract values (ACV) of $5,000 or more (+41% Y/Y); 391 customers with ACV of $100,000 or more (+107% Y/Y); average ACV per domain-based customer of $3,866 (+45% Y/Y); dollar-based net retention rate was 132%.
Billings fell short of expectations due to lower net dollar retention arising from churn among SMB customers as well as accommodations provided to customers impacted by the COVID-19 pandemic, which reduced billings by $2 million.
Nearly 100 federal, state and local agencies have taken advantage of the company’s Smartsheet Gov offer, which is being provided free of charge and without obligation to aid the government in responding to the current crisis.
Preliminary analysis of pipeline development and sales performance in May suggests disruption caused by COVID is stabilizing.
Q2 guidance for revenue of $86.0-$87.0 million, non-GAAP operating income of $(21.0)-$(19.0) million and non-GAAP EPS of $(0.18)-$(0.16) fell short of Street expectations for $88.2 million, $(17.6) million and $(0.14), respectively.
Management lowered its FY ’21 revenue guidance from $373.0-$378.0 million to $360.0-$370.0 million but raised its non-GAAP operating income and EPS guidance from $(75.0)-$(67.0) million and $(0.62)-$(0.55), respectively, to $(65.0)-$(55.0) million and $(0.54)-$(0.45).
Guidance for FY ’21 billings and free cash flow was withdrawn although management indicated free cash flow should exceed the low-end of its previously issued guidance.
Yext, Inc. Announces First Quarter Fiscal 2021 Results
Yext (YEXT) reported Q1 ’21 results above expectations and provided a mixed outlook for Q2.
Revenue of $85.4 million (+24.2% YY) was within guidance for $85.0-$87.0 million and above consensus of $84.3 million. Non-GAAP operating income was $(11.8) million (-13.8% margin), ahead of the Street’s $(15.0) million. Non-GAAP EPS of $(0.10) beat guidance for $(0.14)-$(0.11) and consensus of $(0.12).
Key metrics: annual recurring revenue (ARR) was $326 million (+24% Y/Y); closed 73 deals with at least $100,000 in total contract value; nearly 2,100 customers (+36% Y/Y) at quarter-end; net dollar retention rate was 106%.
Yext had the strongest pipeline in its history heading into Q1 but experienced headwinds in bookings and retention as customers delayed purchasing decisions due to the pandemic.
While 25% to 30% of ARR was in challenged industries at the end of Q1, Yext has seen signs of recovery and faster growth in other industries.
The pipeline for Q2 remains strong and retention levels have already improved in May.
Moving forward, management expects to drive sales efficiency with its new land with Answers sales approach.
Q2 guidance for revenue of $84.0-$86.0 million and non-GAAP EPS of $(0.13)-$(0.11) was mixed versus the Street’s $86.9 million in revenue and $(0.13) in non-GAAP EPS.
Due to the uncertainty related to the COVID-19 pandemic, management withdrew its prior guidance for FY ’21.
Zoom Reports First Quarter Results for Fiscal Year 2021
Zoom Video Communications (ZM) reported Q1 ’21 results well above expectations and raised its guidance for FY ’21.
Revenue of $328.2 million (+169.0% Y/Y) was considerably ahead of guidance for $199.0-$201.0 million and consensus of $202.5 million. Non-GAAP operating income was $54.6 million (16.6% margin), exceeding guidance for $25.0-$27.0 million and consensus of $23.0 million. Non-GAAP EPS of $0.20 beat guidance for $0.10 and consensus of $0.09.
Key metrics: 265,400 customers with over 10 employees (+354% Y/Y); 769 customers with over $100,000 in TTM revenue (+90% Y/Y); TTM net dollar expansion rate in customers with over 10 employees exceeded 130%.
Work-from-home and social distancing initiatives meaningfully accelerated adoption and traffic on the Zoom Video Communications platform with a peak of 300 million daily meeting participants reached in April.
Growth was predominantly driven by new customers, and Zoom experienced a mix shift of customer cohorts in which customers with ten or fewer employees represented 30% of revenue in Q1 versus 20% in the prior quarter.
The company provided a one-time bonus equivalent to two weeks of pay to all Zoom non-commissioned employees to offset costs associated with any disruption caused by the crisis.
Q2 guidance for revenue of $495.0-$500.0 million, non-GAAP operating income of $130.0-$135.0 million and non-GAAP EPS of $0.44-$0.46 exceeded Street expectations for $223.3 million in revenue, $28.5 million in non-GAAP operating income and $0.11 in non-GAAP EPS.
Management raised its FY ’21 revenue, non-GAAP operating income and non-GAAP EPS guidance from $905.0-$915.0 million, $110.0-$120.0 million and $0.42-$0.45, respectively, to $1.775-$1.800 billion, $355.0-$380.0 million and $1.21-$1.29.
Zuora Reports First Quarter Fiscal 2021 Results
Zuora (ZUO) reported Q1 ’21 results above expectations and guided Q2 generally in line with consensus.
Revenue of $73.9 million (+15.3% Y/Y) was ahead of guidance for $70.0-$73.0 million and consensus of $70.9 million. Non-GAAP operating income was $(7.7) million (-10.4% margin), exceeding guidance for $(12.0)-$(10.5) million and consensus of $(11.4) million. Non-GAAP EPS of $(0.06) beat guidance for $(0.11)-$(0.10) and consensus of $(0.10).
Key metrics: billings of $53.7 million (+10% YY); added 19 net new customers with ACV of $100,000 or more for a total of 643 (+18% Y/Y) at quarter-end; dollar-based retention rate was 103%; 12.3 billion in transaction volume (+27% Y/Y).
Several deals pushed into Q2 and upsell and cross-sell activity was down from the prior year due to the current environment.
Zuora has seen a restart of projects that were paused when the crisis first hit as well as steady month-over-month improvement throughout the quarter and in the quality of the pipeline.
75% of deals that slipped from Q1 were closed in May, and for long-standing customers in industries like sports and travel, the company has extended volume credits and payment deferrals.
Q2 guidance for $72.5-$75.0 million in revenue, non-GAAP operating income of (8.0)-$(7.0) million and non-GAAP EPS of $(0.08)-$(0.07) was generally consistent with consensus of $74.5 million in revenue, $(9.1) million in non-GAAP operating income and $(0.08) in non-GAAP EPS.
Due to uncertainties related to the COVID-19 pandemic, management withdrew its prior guidance for FY ’21.
Notable News
Dynatrace Announces Pricing of Follow-On Offering by Selling Stockholders
Dynatrace (DT) priced an underwritten public offering of 30.0 million shares of common stock by certain selling stockholders at a public offering price of $35.00 per share, a 9.0% discount to the close price prior the announcement of the offering.
The selling stockholders have also granted the underwriters an option to purchase up to an additional 4.5 million shares.
The offering was upsized from initial plans to offer 25.0 million shares with an over-allotment option of 3.75 million shares.
Dynatrace will not receive any proceeds from the offering.
HubSpot, Inc. Announces Pricing of Offering of $400 Million of Convertible Senior Notes
HubSpot (HUBS) priced an offering of $400.0 million aggregate principal amount of 0.375% Convertible Senior Notes due 2025 with an initial conversion price of $282.52 per share, representing a 41.3% premium to the close price prior to the announcement of the planned offering.
The company has also granted the initial purchasers of the notes an option to purchase up to an additional $60 million aggregate principal amount of notes.
Net proceeds are expected to total $391.3 million (or $450.1 million if the initial purchasers exercise their option in full), of which $283.0 million will be used to fund the cash portion of the consideration used to finance the exchanges of $272.1 million of HubSpot’s 0.25% Convertible Senior Notes due 2022.
Palo Alto Networks (PANW) priced an offering of $1.75 billion aggregate principal amount of 0.375% convertible senior notes due 2025 with an initial conversion price of $297.60 per share, a 24.1% premium to the close price prior to the announcement of the planned offering.
The company has also granted the initial purchasers a 30-day option to purchase up to an additional $250 million aggregate principal amount of notes.
Net proceeds are expected to be $1.7 billion (assuming no exercise of the initial purchasers’ over-allotment option), of which $147.0 million will be used for convertible note hedge transactions with the remainder for general corporate purposes.
Splunk Announces Pricing of Upsized $1.1 Billion Convertible Senior Notes Offering
Splunk (SPLK) priced an offering of $1.1 billion aggregate principal amount of 1.125% Convertible Senior Notes due 2027 with an initial conversion price of $255.34, a 36.9% premium to the close price prior to the announcement of the offering.
The offering was upsized from initial plans to offer $900 million aggregate principal amount of convertible senior notes.
Splunk has also granted the initial purchasers an option to purchase up to an additional $165.0 million aggregate principal amount of notes.
Net proceeds are estimated to be $1.08 billion (or $1.24 billion if the initial purchasers exercise their option in full), of which $691.6 million will be used to repurchase up to $488.3 million aggregate principal amount of Splunk’s outstanding 0.500% Convertible Senior Notes due 2023.