Fiverr (FVRR) Crushes. Q2 Holdings (QTWO) Solid but Subdued. Taking profits on Ping Identity (PING)
Fiverr International (FVRR) reported Q1 results this morning that topped management’s guidance from just a few weeks ago when it pre-announced revenue would be $33 million on the high side. As it turns out revenue was up 44% to $34.2 million while adjusted EPS of -$0.08 beat by $0.05. Revenue growth guidance moves up to 37% to 41% for Q2 while 2020 guidance goes up 5% to a range of $145.5 million to $147.5 million and adjusted EBITDA guidance improves materially to a range of -$7 million to -$9 million (from -$13 million to -$15 million). This is amazing.
There are plenty of additional positive metrics. Active buyers have gone up 17% to 2.5 million while spend per buyer has gone up 18% to $177. Costs have gone down due to lower sales and marketing spend. Fiverr has launched in more markets, with non-English speaking countries now making up a third of revenue.
The bottom line is we’ve caught another tiger by the tail here and shares are sure to trade materially higher today, barring any jarring news from the morning’s conference call (which I missed due to a conflict with the timing of the one from Q2 Holding’s management). Keep holding. HOLD
Q2 Holdings (QTWO) reported yesterday afternoon and results topped expectations and management discussed the pluses and minuses of COVID-19 on demand for digital banking software. The takeaway is that the company should continue to do reasonably well and the user base for digital banking solutions (i.e. consumers like you and me) will likely go higher and stay higher after this pandemic subsides. The trend of user adds was running about 500,000 per quarter but it spiked to 800,000 in the Q1. With the pandemic only hitting in March that suggests second quarter user growth could move materially higher. This push could be a good tailwind for Q2.
Banks and credit unions are aware of this potential accelerant in demand and could prioritize digital banking solutions. On the flip side, implementation delays are likely given travel/work restrictions, and banks have a lot going on right now so moving a major software platform implementation to the top of the to do list could be a challenge. Expect delays in both implementations and bookings.
As far as the results, Q2 grew revenue by 30% to $92.4 million which missed by a fraction, while adjusted EPS of -$0.09 beat by $0.03. The company signed two tier 1 digital banking deals and two tier 1 digital lending deals, which illustrate that prior to the pandemic demand remained strong.
Management is reserved in the short-term, but very optimistic about the long-term. Continue to hold. HOLD
Ping Identity (PING) reported Q1 results yesterday with revenue up 22% to $61.4 million (beating by $1.08 million) and adjusted EPS of -$0.05 beating by $0.08. As expected, management said the priority lately has been to help clients quickly shift to work from home environments. Ping continued to close deals throughout the quarter and into April while keeping existing customers (net revenue retention still tracking at 114%). Unfortunately, management did pull 2020 guidance and said Q2 revenue is seen in a range of $49 million to $53 million (below Q2 2019 revenue of $62.5 million), which is well below prior expectations for $63.6 million. The stock closed 12% off prior highs yesterday so there’s a good amount of meat on this bone for investors to cut position size at a profit.
Shares are set to open materially lower today. Given the murkiness I suggest taking profits. Moving to Sell. This is a stock where we have made a healthy little profit (should be above 30%, depending on how the day goes) in about a month and the reduced guidance is quite significant. When the market pulls back, which it’s bound to do at some point (right?) stocks that reduced guidance will likely dip further than those that didn’t. Moving to Sell and will keep an eye on PING for possible inclusion in the future. SELL