Revolve (RVLV), Inspire Medical (INSP) and Sprout Social (SPT) Report.
Revolve (RVLV) beat on both the top and bottom lines. Revenue of $283.5 million was up 58% and beat by $26.7 million. GAAP EPS of $0.30 was flat with the year-ago quarter and beat estimates by $0.03, despite a 28% increase in the effective tax rate. Gross margin was up almost half a percentage point to a record 54.5% despite higher freight costs. REVOLVE segment sales grew by 56% (now 84% of sales) while FWRD segment sales grew by 71% (16% of sales). Domestic sales grew 66% while international grew 28%. Active customers grew 38% (to 2.04 million), orders placed grew 68% (2.16 million) and average order value grew 13% (to $288). Stepping back, pretty much everything sounded good as younger consumers continue to upgrade/refresh their wardrobes and get back out into the world. The challenge here is that investors have been less willing to pay premium valuations for high-growth names, even the best of breed names (which Revolve is). And looking out into the second half of the year, when sales are typically a bit slower, it may be increasingly difficult for Revolve to impress. To be clear, this is one of the best names in e-commerce retail and growth is terrific. But if investors don’t care for several quarters RVLV could be a challenging stock to hold on to. Let’s see how the market’s reaction is today (it was down a whopping 16% at the open) and go from there. Maintaining at HOLD
Inspire Medical (INSP) beat on both the top and bottom lines and raised full-year guidance. Revenue of $69.4 million was up 72% and beat by $5.2 million. GAAP EPS of -$0.61 was a penny less than the year-ago quarter and beat by $0.14. Full year revenue guidance went up significantly, to a range of $336 - $344 million (+44% - 47%) from $318 - $326 million (+36% - 40%) previously. Management attributes the strong performance to new center activations (49 net new in the quarter, total of 733 now), territory management hiring/execution (17 new sales territories, total of 174 now) and overall higher procedure volumes. A 5% price increase (went into effect May 1) should boost revenue in upcoming quarters. There was a lot on the international front. Management said it completed its first procedures in the U.K., entered into exclusive distribution agreements for Singapore and Hong Kong, and received country-wide reimbursement in France. Expect expansion into Australia and South Korea before long. Progress continues on the next gen product, Inspire V. Everything seems to be ticking along very well and I would hope to see the stock up on this news. Keep holding. HOLD
Sprout Social (SPT) beat on both the top and bottom lines and raised full-year 2022 guidance. Revenue of $57.4 million was up 41% and beat by $1.2 million. Adjusted EPS of -$0.03 improved two cents from the year ago quarter and beat by a penny. Full year guidance was given for $252 - $253 million (+34% - 35%), an increase of $3 million. The company’s solutions continue to become increasingly strategic to customers, evidenced by more spend by larger customers (+$50,000 customers grew by 97%, +$10,000 customers grew 52%) and strong partnership growth (Salesforce integrations with Service Cloud and Sales Cloud now, management says new partnerships coming in Q2). Sprout is also working toward break even and management says Q2 will be the low water mark in terms of margins. Profitability is on the horizon in 2024 assuming revenue growth remains over 30%, which seems like an increasingly comfortable lower bound for several years. The big question remains just how much investors are willing to pay for shares. We’ll keep at hold for now and see how the market digests this report (as well as others from the software space). Maintaining at HOLD