CDLX, SPT and INSP Report Q1 Results
Cardlytics (CDLX)
reported last night that Q1 revenue grew by 17% to $53.2 million (beating by $2 million) and that adjusted EPS came in at -$0.34, a drop from -$0.26 in the year ago quarter (and $0.03 shy of expectations). Overall, the quarter showed continued improvement in the business as revenue, Q1 billings ($76.3 million) and adjusted contribution ($24.3 million) were all either at or slightly ahead of consensus estimates. The Dosh acquisition (closed on March 9) added a sliver to the results, but even excluding that, Cardlytics’ results were slightly ahead. Notable positives include a return to growth in the restaurant vertical, continued ramping of the self-serve buying platform, debut of an Ad server with U.S. Bank (further expansion to other banks throughout 2021 expected) and expected contributions from both the Dosh and Bridg acquisitions (Bridg expected to close this month) throughout 2021.Given that shares of CDLX have held up reasonably well in 2021 (stock entered today roughly 20% off its February high, even after a secondary offering at 130 in March) it’s not cheaply valued. And that may well be why shares are off roughly 10% early today. CDLX trades around 10-times estimated 2022 revenue. Given that reality, but the growing potential in the business to benefit from the economic recovery and multiple significant alternatives, I think it’s a stock worth holding some of. Still, with this earnings seasons proving to be a little dicey and having a full position, it may make sense to lighten up a little. Let’s sell a quarter position for a better than 200% gain to reduce our risk and sit on the rest for now. We’ll watch the stock’s reaction today and throughout the week for clues on how best to proceed. SELL A QUARTER, HOLD REST
Sprout Social (SPT) reported yesterday afternoon that Q1 revenue grew by 33.6% to $40.8 million (beating by $1.1 million) while adjusted EPS of -$0.05 (which beat by $0.05) improved by 64% over a loss of -$0.14 in the year ago quarter. Customers grew from 24,083 to 28,122 over the last year and new customers signed in Q1 included Performance Food Groups, Danaher, Oliver Wyman and Brother International, while deal expansions were signed with Hanes Brans, Tumi, Sur La Table, McKesson, Cole Haan, Grammarly and more. Management also raised 2021 guidance and now forecasts 32% revenue growth ($176 to $177 million) and an adjusted EPS loss of around -$0.35. Both figures are ahead of consensus, which was at $170 million in revenue and a loss of -$0.37. This result is very solid and supports my view that Sprout is one of those software stocks that can continue to do well even in the face of the selling pressure that’s preventing many peers from performing these days. I’m not saying the stock is going to 100 in the next month or anything like that, but there is enough here to keep leaning bullish and look further down the road, when I expect SPT will trade materially higher. There’s likely no rush to go out and buy today, but nevertheless I’ll stick with that rating. BUY
Inspire Therapy (INSP) reported yesterday that Q1 revenue grew by 89% to $40.4 million (beating by $3.4 million) while adjusted EPS of -$0.60 (which beat by $0.05) improved 10% from a loss of -$0.67 in the year ago quarter. The strong quarter was driven by coverage wins (100% Medicare coverage and 220 million total covered lives), the addition of 47 new US centers (analysts had expected 34) and continued division of sales territories helping sales team efficiency. Management increased 2021 revenue guidance growth to 66% - 70% ($192 - $196 million), up from around 60% previously. Looking out over the remainder of the year we should see better utilization as centers bring more patients through their systems (aided by lower procedure times because of new Inspire FDA approvals), international expansion (Japan not factored into guidance), and continued progress on reimbursement. Overall, the quarter was what we’ve come to expect – very good – out of Inspire. The stock’s not having a terrific day, but let’s not rush to judgement here. Prior to the report INSP was trading almost at an all-time high and like so many stocks INSP is selling off on the news. In this case I think modestly aggressive investors can step in here and buy. The stock can certainly go lower (185 would be a critical zone of support) so you don’t need to buy a huge position here (around 203), but maybe a more modest position makes sense if you don’t have any shares yet. BUY