Tue, May 19, 6:54 PM
- As part of a change in analyst coverage for cloud software stocks, Needham's Scott Berg has launched coverage on Workday (NYSE:WDAY) and HealthStream (NASDAQ:HSTM) at Buy, upgraded Cornerstone OnDemand (NASDAQ:CSOD) to Strong Buy, and upgraded Ultimate Software (NASDAQ:ULTI) to Buy after the close. Though their product lines differ, all 4 companies have exposure to the cloud HR/talent management space.
- Berg on Workday: "[W]e believe WDAY has the combination that growth investors seek: large market, well positioned product versus industry megatrends, and a financial model that yields significant revenue visibility ... Although we believe the company's current valuation assumes almost flawless near-term sales execution to further expand its valuation multiples, we believe its execution within a HCM market exhibiting high demand creates a positive risk/reward scenario..." The remarks come ahead of Workday's May 26 FQ1 report.
- Berg on HealthStream: "We believe HealthStream uniquely benefits from two significant mega-trends; 1) the strong secular adoption rates within the Talent Management Enterprise Software subsector, and also 2) an environment that is increasingly regulated, requiring its products’ end users to evaluate competencies and train employees on a more frequent basis." The cloud healthcare software firm is a month removed from posting a Q1 beat.
- WDAY +0.7% AH to $91.28. CSOD +1.9% to $32.44. ULTI +1.2% to $170.29. HealthStream hasn't yet moved AH.
Tue, May 19, 5:40 PM
Wed, May 6, 7:10 PM
- In addition to beating Q1 revenue estimates (while missing on EPS), Cornerstone OnDemand (NASDAQ:CSOD) has guided on its CC (webcast) for 2015 revenue of $337.5M-$341.5M, up from prior guidance of $336M-$341M and mostly above a $337.9M consensus. EPS guidance of -$0.30 is slightly below a -$0.29 consensus.
- The cloud talent management software vendor's Q1 bookings totaled $63.5M, +28% Y/Y but trailing revenue of $74.4M (seasonality played a role). The deferred revenue balance rose 38% to $180.9M.
- GAAP operating expenses rose 27% Y/Y to $67M, a much slower pace than Q4's 42%. The customer base rose by ~100 Q/Q to over 2,200, and end-users by ~1M to over 19.1M.
- Shares have risen to $31.25 AH. Cornerstone says it plans to show off analytics tools and a cloud app platform (PaaS) solution (presumably for apps that integrate with Cornerstone's) at its May 11-13 Convergence conference.
- Q1 results, PR
Wed, Apr. 29, 3:02 PM
- After following markets lower most of today, enterprise cloud software vendors have jumped thanks to a Bloomberg report stating cloud CRM software giant Salesforce ($51B market cap) has been approached by a potential buyer, and is working with bankers to field offers.
- Gainers include Workday (WDAY +6%), ServiceNow (NOW +4.3%), NetSuite (N +4.3%), Marketo (MKTO +2.7%), Zendesk (ZEN +1.2%), Cornerstone OnDemand (CSOD +1.6%), Castlight (CSLT +2.4%), and Jive Software (JIVE +1.5%).
- Though the cloud software market has seen plenty of M&A activity, a Salesforce deal would easily be its largest. Workday ($17.5B market cap) is the second-largest enterprise cloud pure-play. ServiceNow ($11.6B) is #3.
Wed, Apr. 1, 3:14 PM
- With the Nasdaq down 0.8%, only a handful of tech companies are posting big gains. Notable gainers include search toolbar/mobile ad provider Perion (PERI +4.2%) , low-end Android OEM InfoSonics (IFON +7.1%), and Chinese mobile app developer Sungy Mobile (GOMO +8.2%).
- Notable decliners include local reviews leader Yelp (YELP -4.6%), cloud IT service management software vendor ServiceNow (NOW -4.5%), cloud talent management software vendor Cornerstone OnDemand (CSOD -4%), enterprise cloud storage/file-sharing platform Box (BOX -5.5%), software analytics tool provider New Relic (NEWR -5.9%), online family care marketplace marketplace Care.com (CRCM -5%), and e-commerce software provider Demandware (DWRE -4.9%).
- Perion announced this morning it has added Mike Vorhaus, president of consulting firm Magid Advisors, to its board. ServiceNow has announced its Q1 report will arrive on April 16. Yelp, which has been volatile in recent weeks, is now just slightly over $3 above a 52-week low of $42.10. Care.com is less than $1 away from a post-IPO low of $6.50.
- Previously covered: Solar stocks, cybersecurity stocks, Axcelis, GoDaddy, ON Semi, Voltari
Thu, Feb. 12, 12:51 AM
- Though Cornerstone OnDemand (NASDAQ:CSOD) beat Q4 revenue estimates and posted in-line EPS, it guided on its CC (transcript) for Q1 revenue of $72M-$73M (below a $76.4M consensus), and full-year revenue of $336M-$341M and EPS of -$0.29 (below a consensus of $341.6M and -$0.14).
- The cloud talent management software insists a strong dollar is the main culprit. CEO Adam Miller: "[T]he guidance is solely reflecting the FX hit, otherwise it’s exactly where the Street was, I think from next year perspective ... our pipeline is much stronger at the beginning of this year for strategic accounts than it was a year ago, and we’re feeling good about our ability to compete at the end of the market with the largest best-known companies in the world."
- Q4 bookings totaled $115.2M, +35% Y/Y and soundly exceeding revenue of $76.4M. For the whole of 2014, bookings rose 36% to $316.1M. That helped the deferred revenue balance rise 38% to $191.3M.
- 197 clients were added in Q4, raising the total base to over 2,100. GAAP operating expenses rose 42% Y/Y to $67M.
- Shares fell 6.7% in AH trading to $33.50.
- Q4 results, PR
Fri, Jan. 30, 11:54 AM
- Salesforce (CRM -2.2%), ServiceNow (NOW -2.2%), Paylocity (PCTY -5.8%), Castlight (CSLT -4.1%), Cornerstone OnDemand (CSOD -3.6%), InContact (SAAS -2.2%), and Zendesk (ZEN -2.1%) are selling off after cloud ERP/HR/e-commerce software vendor NetSuite (N -11.7%) offered light Q1 and 2015 sales guidance to go with a Q4 beat. The Nasdaq is down 0.4%.
- As one would expect, NetSuite states forex has much to do with its guidance. On the CC (transcript), CFO Ronald Gill noted "the weighted average value of the foreign currencies in which we recognize international revenue has fallen more than 8% against the dollar." However, it's worth noting only 27% of NetSuite's Q4 revenue was international.
- NetSuite's Q4 numbers were solid: Subscription/support revenue grew 34%, and billings rose 34% to $201M (well above revenue of $157.9M). 54 customers were added for NetSuite's SuiteCommerce e-commerce software platform - CEO Zach Nelson humbly observes that was more than 3x the 17 customer adds rival Demandware (DWRE -1.6%) reported for Q3 (a seasonally weaker quarter).
- ServiceNow, the top player in the cloud IT service desk software market, provided above-consensus guidance on Wednesday.
Wed, Jan. 21, 11:00 AM
- D.A. Davidson has upgraded Cornerstone OnDemand (CSOD +3%) to Buy ahead of its Feb. 11 Q4 report, and hiked its target by $5 to $42.
- The cloud talent management software vendor remains 45% below its 52-week high of $61.85 (set 11 months ago). Goldman downgraded two weeks ago, and Northland upgraded last month.
Fri, Jan. 9, 10:49 AM
- In addition to cutting Nuance to Sell, Goldman has downgraded Qlik (QLIK -2.7%) and Cornerstone OnDemand (CSOD -4.4%) to Neutral. Its targets are respectively $32 and $35.
- Evercore downgraded Qlik yesterday, but shares rose higher anyway. On Wednesday, Northland hiked its Cornerstone target by $2 to $42, citing "strong 4Q industry checks that we believe indicate the company will report upside to consensus billings estimates." The firm added it thinks "CSOD will be in a stronger competitive position in 2015 that should drive higher realized pricing."
- Cornerstone reports on Feb. 11, and Qlik on Feb. 12.
Nov. 6, 2014, 9:14 AM
- Gainers: PLNR +74%. PESI +24%. SWIR +20%. MEET +13%. RVLT +11%. COT +11%. DATA +11%. ACAS +10%. NDLS +9%. KATE +8%. KATE +8%. WFM +9%. HZNP +6%. CECO +6%. DRYS +5%. TRUE +5%.
- Losers: AEZS -51%. SZYM -47%. SNMX -26%. GNW -24%. WWWW -22%. CSOD -19%. PHMD -17%. GERN -14%. MCP -12%. GNRC -11%. WAC -9%. QCOM -7%. Z -7%. PBR -5%.
Oct. 22, 2014, 1:22 PM
- Enterprise software vendors are having a rough day after VMware (VMW -5.6%) provided light Q4 guidance to go with a Q3 beat.
- On its CC (transcript), VMware also reported its bookings fell Q/Q in Q3. They were hurt by Russian and German softness, and a failure to close a major enterprise license agreement (ELA) with a federal client. ELAs made up 29% of Q3 bookings, down from 37% in Q2.
- Rivals Oracle (ORCL -1.5%), Red Hat (RHT -3.3%), and Citrix (CTXS -1.5%) are among the decliners, as are Splunk (SPLK -4.7%), Tableau (DATA -2.8%), Qlik (QLIK -2.5%), and MicroStrategy (MSTR -0.9%). Oracle provided light guidance last month.
- Several enterprise cloud software stocks are also selling off: N -2.5%. VEEV -2.9%. ZEN -4.2%. CSOD -2.3%. SAAS -3.2%. NOW -1.7%.
- Nomura and Raymond James have downgraded VMware. Nomura thinks 2015 guidance (expected in January) will also be light, and believes slow vSphere server virtualization growth (affected by competition and high penetration rates) will remain a headwind, given it's still over half of VMware's business. "Growth has to come from the vCloud Suite ... other newer products are just too small still to matter."
- Some of those "other newer products" are doing well: VMware's end-user computing license bookings (boosted by the AirWatch acquisition) rose over 60% Y/Y in Q3, and its much-hyped NSX software-defined networking platform now has 250+ paying customers (up from just 100 a few months ago).
- A slew of enterprise tech names sold off on Monday in response to IBM's Q3 report. Big Blue's software sales fell 2% Y/Y in Q3, after rising 1% in Q2. CA, Citrix, and ServiceNow report after the bell.
Sep. 22, 2014, 1:45 PM
- High-beta tech stocks are selling off hard as the Nasdaq registers a 1.3% decline. The selling is broad-based, with Internet, solar, and enterprise tech stocks all well-represented among the ranks of major decliners.
- Major Internet decliners: BIDU -4.7%. ANGI -7%. YELP -5.9%. AWAY -5.1%. CHGG -5.9%. GRUB -5.8%. P -5.2%. Z -4.6%. TRLA -4.8%. ATHM -7.9%. BITA -7%. DANG -5.9%. WB -5.3%.
- Solar: FSLR -4.5%. SCTY -7.5%. SPWR -4.5%. DQ -7.6%. JKS -5.5%. ASTI -6.3%. ENPH -5.5%. CSIQ -4.8%.
- Enterprise: WDAY -5.4%. GIMO -6.7%. VMEM -7.7%. IMPV -4.8%. MKTO -4.9%. SPRT -5.1%. CSOD -5.5%.
- Others: HIMX -4.6%. SIGM -5.6%. WATT -9.7%. CYNI -5.3%. ADNC -5.7%. PXLW -5%. SWIR -5.8%. MITK -6%. OCLR -6%.
Aug. 29, 2014, 1:00 PM
- Low expectations and a high short interest (11.9M shares as of Aug. 15) are proving a good mix for Veeva (VEEV +18.1%) following its FQ2 beat and guidance hike. Several firms have raised their targets.
- Workday (WDAY +5.5%), which sold off yesterday (and took peers down with it) following its FQ2 report, is following Veeva higher. As are Veeva partner Salesforce (CRM +2.1%) and several other cloud software names. NOW +2.9%. CTCT +3.4%. JIVE +2.5%. CSOD +2%. ULTI +1.9%. MKTO +1.9%.
- "We like [Veeva's] momentum with new products, the pace of customer deployments, and view the second-half guidance as likely conservative," says Deutsche (Buy).
- Pac Crest (Outperform) likes the fact Veeva's billings and subscription revenue each rose over 60% Y/Y, and that its large deal activity also grew. It sees a $5B addressable market for life sciences CRM/content management software.
Aug. 28, 2014, 2:45 PM
- Workday (WDAY -4.7%) has received several target hikes after beating FQ2 estimates and upping its FY15 (ends Jan. '15) guidance. But there have also been some cautious notes focused on cloud HR/financial software giant's valuation.
- Citi observes Workday trades at 15x 2015E sales, and says it has trouble seeing upside catalysts at current levels. Goldman points out Workday is trading at 11x estimated enterprise value/billings even if its upside scenario plays out.
- Cantor (target raised to $121) sees several reasons to be bullish. Among them: The ramp of Workday's recently-launched recruiting product; the pending launch of Workday Student; an enterprise software upgrade cycle; strong international growth (echoes of Salesforce); and expected announcements at the November Workday Rising conference.
- Wedbush (target raised to $106) expects new big data/analytics products to be shown off at the conference. It also sees room for a fresh guidance hike in 3 months, though it thinks it might be smaller than yesterday's hike.
- Workday used its CC (transcript) to hike its FY15 billings guidance by $50M to $940M-$960M (above revenue guidance of $760M-$770M). FQ3 billings guidance is at $225M-$230M (above revenue guidance of $200M-$205M).
- Salesforce (CRM -2%) and several other cloud software names are following Workday lower. CSOD -3.3%. MKTO -3.3%. DWRE -2.2%. JIVE -1.6%. N -1.4%.
Aug. 7, 2014, 3:51 PM
- Cornerstone OnDemand (CSOD -7.3%) missed Q2 estimates and guided on its CC (transcript) for Q3 revenue of $67M-$69M, below a $69.7M consensus. However, full-year guidance for revenue of $267.5M-$270.5M is reiterated (consensus is at $269.5M).
- CFO Perry Wallack suggested the timing of services delivery for enterprise and government clients is responsible for near-term weakness. He added Q2 sales were "unusually back-weighted, leading to less-than-anticipated software and services revenue recognized from new client sales in that quarter."
- Bookings rose 44% Y/Y in Q2 to $70.1M, exceeding revenue of $61.5M (+39%). The cloud talent management software vendor's client base rose by 123 Q/Q and 415 Y/Y to 1,411. Users grew by 1M Q/Q and 3.2M Y/Y to 15.5M.
- Q2 results, PR
Jul. 30, 2014, 3:58 PM
- Ultimate Software (ULTI +7.4%) beat Q2 estimates on the back of a 26% Y/Y increase in recurring revenue (84% of total revenue). The cloud HR software vendor also disclosed on its CC (transcript) it added three new enterprise clients with 10K or more employees; the largest has 40K.
- Full-year guidance for 23% revenue growth (25% recurring growth) has been reiterated. Q3 guidance for revenue of $127M is roughly in-line with a $127.3M consensus.
- A number of cloud software peers have also rallied. Cloud HR/talent management peers Workday (WDAY +6.5%) and Cornerstone OnDemand (CSOD +5.1%) are among the biggest gainers, but others are also doing quite well. CRM +2.7%. NOW +4.7%. LPSN +5.3%. MKTO +4.1%. CNQR +4.8%. JIVE +3.6%. N +4.2%.
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