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Anaplan: Not A Cool Kid In Pandemic Times

Jun. 05, 2020 1:23 PM ETAnaplan, Inc. (PLAN)GENZ2 Comments


  • Anaplan has reported Q1 2021 results with a large hit by the coronavirus pandemic.
  • Revenue growth was decent at 37%, but billings growth was only 10%, and the net retention rate was down to 117%.
  • The long-term opportunity remains intact, and there is some evidence that suggests strength in the business model.
  • Still, the market response to the data was soft and the valuation is high, given the new circumstances, so I would wait for a better price to buy in.

Amidst pandemic-related uncertainties and recent sales execution issues, Anaplan (NYSE:PLAN) reported financial results for its first quarter of fiscal 2021. The most shocking highlights were a historically low net retention rate of 117% and a growth in calculated billings of 10% - down from 25% last quarter, which was itself a poor result. These figures suggest that the company is having a difficult time due to the coronavirus pandemic, and the market didn't think before selling on the news. In fact, the stock was down up to 10% in the after-hour market of the earnings day. Although the pandemic is hurting Anaplan, there is evidence that suggests that the fundamental forces behind this growth story are only on hold while the pandemic persists. Also, the company is seizing this pandemic in a way that may boost growth beyond normal levels after the pandemic issue is over. The market response to the data, although negative, was soft, and still left the valuation high for a company that may end 2020 growing below 20%. I remain confident in the long-term growth potential for Anaplan, but I'll be on the sidelines waiting for a better price.

Anaplan Is Out Of The WFH Party… And It Is Hurting

Unfortunately for its shareholders, Anaplan is not one of those IT companies that have benefited from the boost to work-from-home or e-commerce trends. It was rather affected by the delay in investments on digital transformation projects that such a pandemic is causing. Have in mind that Anaplan has a top-down selling model, and that buying a subscription to its platform is an important and significant decision for a customer that requires approval from the top executive level (the average customer pays Anaplan in excess of $200,000 per year).

Thanks to the recurring nature of the company's

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Comments (2)

Nice read. I’m also waiting for a good re-entry point. I bought earlier this year and sold last month. This article clarified a few things for me. Thanks.
AlphaBeta Asset Management profile picture
@Ziggy60 I'm glad you found it helpful. Thanks for the feedback.
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