EverQuote (EVER) and Everbridge (EVBG) Blastoff After Reporting
EverQuote (EVER) Q3 Wrap up: Touchdown!!
You know those group celebration dances NFL players do in the endzone after a big touchdown? That’s what I imagine the management team at EverQuote doing after the Q3 earnings conference call. Just not quite as smooth with the moves.
These guys just crushed it in Q3. Revenue was up 61% to $67.1 million, beating by $8.8 million. That’s 15% better than expected. And the company earned its first quarterly profit since going public, delivering EPS of $0.01. That’s $0.09 better than expected. Virtually all metrics were awesome:
• Automotive insurance was up 60% to $57.3 million
• Other insurance verticals, which includes new products like life, commercial, health, etc. was up 68% to $9.8 million.
• Management said health is off to a great start, exceeding expectations.
• Variable Marketing margin was up 67% to $20.9 million
• Technology integrations, which streamline consumer shopping experiences, increased by 24
• 93% of revenue came from insurance providers that have been with the co. for over one year
• Overall quote requests were up 81% to 5.5 million
• Cost per quote request dropped 13% (a good thing)
• Revenue per quote request dropped 11% (not great, but with the quote volume not totally surprising)
• Full year revenue guidance jumps from $215 million - $219 million to $242 million - $244 million, implying $20 million above consensus and 52% annual revenue growth
The bottom line here is this team is doing amazingly well, far exceeding even the most bullish expectations. Clearly, their data teams have zeroed in on doing what matters most to drive the business forward. And the introduction of new product verticals is only in the early innings but has massive upside, such that management sees the business accelerating from Q3 into Q4 ($67 million to $69 million guided to), which is essentially unheard of.
We got into EverQuote because I’m a fan of investing in the intersection of emerging trends and cloud software. The transition of shopping for insurance on the phone to online is one such trend.
Nobody’s going to run around the streets yelling at the top of their lungs about how awesome online insurance shopping is and that investors can make some big bucks investing in the movement. At least not yet (when they do its probably time to sell!). But it is pretty awesome. And EverQuote’s results show that smart people, who have deep knowledge of a specialty market and know how to work with data and the cloud, can do some impressive things.
What to do now? EVER has blasted 30% higher today and analyst price targets are moving into the mid-30s. It’s impossible to predict the future, but if I had to guess I’d say we’ll probably see EVER move another 10% to 20% higher by the end of November, then level off and possibly pull back again before the Q4 report. After that, who knows. I suspect management is leaving enough room in guidance to beat again, which is somewhat stunning to think about.
In short, you can probably make some more money in the next month if you buy now. But don’t be surprised if EVER runs for a few weeks then pulls back to around where it is now, or even lower. Just look at what’s happened since the Q2 report. My official rating moves to buy, with the aforementioned caveats. BUY.
Everbridge (EVBG) Q3: The Message is … Still Growing
Everbridge reported Q3 results last night that have reinvigorated the stock today. It’s up almost 17%. Revenue was up 35% to $52.5 million (beating by $1.1 million) while adjusted EPS of -$0.04 beat by a penny. The quarter was good. Good enough to get the stock moving and alleviate some concerns about the soft billings number in Q2 that likely inspired some investors to take profits a few weeks later, in early September. In Q3, billings were up to almost $71 million, versus consensus of $60 million. On the conference call management warned against looking too much at this number (as it did last quarter) because the timing of deals and invoicing is just too lumpy to make it smooth every quarter. That makes sense to me.
In terms of specifics, management said the recent California deal was in the $5 million range, roughly 50% bigger than the Florida deal. But it also said not to get too hung up on that because a lot of these deals grow over time as more services are added. In terms of growth in Europe, where we’ve been expecting a lot of action given the directive to get public alerting services implemented, there wasn’t a ton of new information. When prompted for more details, management said it sees action heating up as we get into 2020 as the mandate gets closer. Everbridge is hiring staff and putting together marketing plans and thought leadership strategies to get teams on the same page and position the company to win more than its fair share of business. I think it will. They think some of the progress they’ve made already with countrywide deals will help because there is a network effect that could motivate other countries to be on the same platform as their neighbors. In other words, be patient. And expect some more commentary around competition in Europe in 2020.
Big picture, I think what we’re seeing with Everbridge is that investors got ahead of themselves in terms of expectations and drove the stock up to the 100 level a little too fast. Baked into that price were likely assumptions of more big deals in Europe and, potentially, some acceleration in the roughly $18 million in annual revenue that was expected to come from the NC4 acquisition. Now, we’re seeing that Europe is growing, but not exploding (yet). And NC4 is more like a $10 million to $12 million business with strategic purposes, and around $6 million of business is going to be let go because it doesn’t fit with where Everbridge is going.
This is all to say that I think Everbridge is going to get back to $100 (about 28% above where it is now), but it might not be until we get a few months into 2020. In the immediate term is it a buy? If you don’t own any, yes. If you own some already, not quite yet. I’d like to see how shares trade over the next week before getting super aggressive on it. Until then, Everbridge is a hold. HOLD.