Earnings updates: KRNT, EVBG, LAW, FVRR
Kornit Digital (KRNT) reported Q3 results that missed on the top line and matched consensus on the bottom line. Net of the $7.9 million impact from warrants, revenue was up 51% to $86.7 million ($89.2 million expected) while adjusted EPS of $0.27 was in line. Guidance for Q4 revenue in the $89 million to $93 million range was just ahead of consensus of $88.1 million. In the early going the stock has been a little up and down (roughly flat at time of writing). We’ll continue to keep at buy for now. BUY
Everbridge (EVBG) reported Q3 results that beat on the top and bottom lines. Revenue was up 35.7% to $96.7 million (beating by $2.46 million) while adjusted EPS of $0.05 demolished expectations by $0.19. Management said they added a record number of $500,000 or larger deals in Q3 and that average deal price surpassed $100,000 for the second consecutive quarter. With 61% growth in international, 32% of business is now coming from beyond the U.S. (up from 28% last quarter). This isn’t surprising given the number of international wins reported in the media in recent months (Spain, the Netherlands, etc.) and the pace of wins in the EU specifically could pick up heading into 2022 given the EU mandate to have population-wide alerting solutions in place by June 2022. The U.S. infrastructure bill could also be a tailwind, though nothing concrete on that front to discuss right now. Customer count grew by 120 to 6,010, a slightly slower pace than last quarter (+142 customers). Full-year revenue guidance was increased to $367.7 million (versus consensus at $360 million). All in all, it was a fine quarter, perhaps a slight disappointment given how good Q2 was. Still, the EU mandate looms large and, with shares of EVBG not stretched valuation-wise, considerable upside remains. BUY
CS Disco (LAW) reported another beat-and-raise quarter with Q3 revenue of $29.9 million (up 67%) surpassing consensus of $25.7 million and adjusted EPS of -$0.17 surpassing consensus of -$0.22. As hoped, management said that newer products, such as Case Builder, are gaining traction. Guidance for Q4 implies revenue will dip a little, which is explained by the company having signed a large client last quarter and with a usage-based business model it’s prudent to be conservative as that client may have less activity on the platform as they work through cases. On the flip side, usage may be steady, or increase, and/or newer clients may pick up usage. Bottom line here is the usage model makes it harder to predict the near-term revenue trend but means CS Disco is leveraged to activity on the platform, which, with disruptive solutions in high demand, is a good thing (for now). On that front, management is saying the biggest growth constraint is hiring and getting salespeople out there, which means ongoing investments in sales and marketing that will likely come at the expense of margin/profit improvements. This is a fine tradeoff for a company like this at an early stage of growth – they need to capture whatever market share they can now. The market isn’t loving the guidance, but then again, the market backdrop today is pretty muddy for reporting companies. I like LAW and am keeping at buy as I think it’s a big winner long term. BUY
Fiverr (FVRR) did what we thought it would, surpassing conservative expectations that were set on the last conference call and which management even admitted weeks later were a little too gloomy. Shares are up around 15% today. Let’s hope it holds. Revenue of $74.3 million was up 42% and surpassed expectations of $71.1 million. Active buyers grew by 30% to 4.1 million, spend per buyer grew 20% to $234 and take rate expanded by 1.4% to 28.4%. Adjusted EPS of $0.21 was up nicely from $0.13 last year. Management raised full-year revenue guidance by $10 million to a range of $292.4 million - $295.4 million (54% to 56% growth). Management discussed its long-term vision for the business and how it’s trying to build an ecosystem for freelancers and businesses to work together. I like the trend and, provided FVRR can keep momentum going, we’ll stick with it. That said, we’ve had it at buy for a while and have caught this updraft. Before allocating more capital to the name I want to see some follow-through in the stock. Moving to hold. HOLD