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01/11 18:49
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with 25% revenue growth, 34% SaaS growth, and record high recurring revenue percentage. The company also reported margin expansion and a strategic acquisition. Despite challenges like economic uncertainty and AI governance, the guidance remains optimistic with strong ARR growth expectations. The Q&A section highlights stable demand and competitive advantages. Share repurchases further support a positive outlook. Given the market cap of $1.9 billion, a positive stock price movement of 2% to 8% is likely over the next two weeks.
Total Revenues $93,100,000, up 25% year over year, driven by strong SaaS growth and large deals in the APAC region.
SaaS Revenue $68,900,000, representing year over year growth of 34% on a constant currency basis, comprising 74% of total revenues compared to 69% a year ago.
Term License and Support Revenue Grew 12% in Q1, primarily driven by several large deals in the APAC region.
Combined Subscription Revenues (SaaS + Term License) Grew 31% in Q1, an acceleration from Q4.
Maintenance Revenue Declined year over year, both in dollars and as a percentage of total revenues, as expected.
Service Revenues Grew 4% year over year, but declined as a percentage of revenues to less than 12% for the quarter.
Recurring Revenue Percentage More than 88% of total Q1 revenues were recurring, the highest ever mix.
North America SaaS Revenue Growth 31% year over year, representing 82% of total North America revenues, which grew 22% year over year.
EMEA SaaS Revenue Growth 36% year over year, representing 85% of total EMEA revenues, which grew 29% year over year.
APAC SaaS Revenue Growth 40% year over year, representing 51% of total APAC revenues, which grew 24% year over year.
Total ARR $345,500,000, representing year over year growth of 26% to 28% when adjusted for FX.
Net New ARR $18,500,000, representing organic growth of 57% year over year, the highest ever as a public company.
Customer Count with ARR over $100,000 689 customers, an increase of 23 from the prior year, the highest growth rate in ten quarters.
Gross Profit $69,800,000, representing a gross margin of 75%, up from 74.1% in Q1 of 2024, primarily due to increased high margin subscription revenue.
Operating Expenses $56,500,000 or 61% of revenues, down from $48,600,000 or 65% of revenues a year ago.
Operating Income $13,400,000 or an operating margin of 14.4%, compared to non GAAP operating income of $6,600,000 in the prior year, representing year over year margin expansion of nearly 550 basis points.
Cash and Cash Equivalents $351,800,000, including $87,300,000 of proceeds from warrant exercises in Q1.
Cash Generated from Operations $495,000 for Q1, down from $7,800,000 in the first quarter of 2024, primarily due to $7,000,000 in one-time tax payments.
Free Cash Flow Negative $1,000,000, compared to positive $7,300,000 in the first quarter of 2024.
Share Repurchase 800,000 shares repurchased for approximately $12,000,000.
New Product Launch: Launched the MSP platform, Elements, to enhance functionality for managed service providers.
Product Expansion: Expanded platform capabilities with enhanced multi-cloud features and deeper integration of AI-powered solutions.
Market Expansion: Acquired Identik, contributing to total ARR growth.
Customer Acquisition: Secured new customers across various sectors, including a global leader in human capital management and a prestigious business school in EMEA.
Operational Efficiency: Achieved a gross margin of 75%, up from 74.1% year-over-year, due to increased high-margin subscription revenue.
Customer Retention: Improved gross retention rate to 89% and net retention rate to 111%.
Strategic Shift: Focus on integrated platform solutions to address converging data management challenges, particularly in AI and security.
Sales Strategy: Increased emphasis on channel sales, with 63% of incremental ARR coming from the channel.
Tariff Uncertainty: The company is facing tariff uncertainty which could impact their business and the global economy.
Cybersecurity Threats: The cybersecurity threat landscape is escalating, with ransomware attacks becoming more targeted, posing risks to data security.
Regulatory Complexity: Regulatory frameworks are expanding globally, adding layers of operational and legal complexity for businesses.
AI Implementation Challenges: As companies shift from testing to implementing AI, there is a growing need for responsible AI governance frameworks, which presents challenges.
Economic Environment: The macroeconomic environment is fluid, and potential second-order impacts may arise in the second half of the year, necessitating cautious guidance.
Customer Hesitation: There is a need to monitor for potential customer hesitation or longer sales cycles due to the macroeconomic climate.
Competitive Pressures: The competitive environment is evolving, with a focus on data governance and security as key drivers for new customer acquisitions.
Vision for 2029: Achieving a billion dollar ARR target by 2029.
Platform Strategy: Integrated platform approach addressing data management challenges, focusing on security, governance, and AI readiness.
Customer Wins: Secured significant new customers across various industries, demonstrating the effectiveness of the platform.
MSP Growth: MSP segment growing rapidly, with a 60% CAGR from 2020 to 2024.
Q2 Revenue Guidance: Expected total revenues of $95.3M to $97.3M, growth of 22% to 25%.
Full Year ARR Guidance: Total ARR expected to be $411.8M to $417.8M, growth of 26% to 28%.
Full Year Revenue Guidance: Total revenues expected to be $397.4M to $405.4M, growth of 20% to 23%.
Non-GAAP Operating Income Guidance: Expected to be $61.4M to $64.4M, operating margin of 15.5% to 15.9%.
Share Repurchase: In the first quarter, the company repurchased 800,000 shares for approximately $12,000,000.
The earnings call summary presents a mixed picture: strong revenue growth and ARR projections, but concerns about federal downsell and dependency on Microsoft. The Q&A reveals uncertainty in the federal sector and lack of clarity in management's responses. Despite optimistic guidance and new capabilities, the cautious ARR guidance and reliance on Microsoft temper enthusiasm. The stock's small-cap nature suggests potential for volatility, but overall, the sentiment remains neutral due to balancing positive growth prospects with existing uncertainties.
The earnings call summary and Q&A reveal strong financial performance and growth prospects. Revenue guidance is raised, driven by healthy demand and strategic investments in sales capacity. The MSP business and control suite show robust growth, and AI governance presents significant future opportunities. Despite some management ambiguity on certain issues, the overall sentiment is positive, supported by increased guidance and favorable market trends. Given the company's market cap, a positive stock price movement of 2% to 8% is expected over the next two weeks.
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