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Why Is Model N (MODN) Up 4.8% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Model N, Inc. (MODN - Free Report) . Shares have added about 4.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Model N reported second-quarter 2017 adjusted loss of $0.25 per share, which was wider than the year-ago quarter’s loss of $0.21.
However, including stock-based compensation, a loss of $0.34 per share was narrower than the Zacks Consensus Estimate of a loss of $0.35.
Revenues of $33.3 million increased 27.6% year over year but missed the Zacks Consensus Estimate of $34 million.
Quarter in Detail
Model N has two reportable segments namely License & Implementation and SaaS & Maintenance.
License & Implementation revenues (18% of total revenues) of $6 million grew 24.4% on a year-over-year basis. SaaS & Maintenance revenues (82% of total revenues) of $27.2 million grew 28.4% year over year.
The reported results showed that Model N remains on track to shift its business model to a 100% SaaS and Maintenance revenue model.
Model N’s revenue management platform continues to attract big players from the life sciences and high tech field.
Johnson & Johnson signed the second part of a major deal to implement revenue cloud in its pharmaceutical business. Teva, Pfizer and Novartis, among others, also signed new subscriptions for their U.S. business.
Model N added Otsuka as a customer during the quarter. The company now has over top 25 pharmaceutical companies as customers.
Recently, Intel – Model N’s long-time customer – bought a subscription for the company’s revenue cloud for High Tech.
Adjusted gross profit increased 58.9% year over year to $20 million while margin increased to 60.2% from 48.3%. Gross margin benefited from higher percentage of SaaS & Maintenance revenues.
Adjusted EBITDA was ($4.4) million compared with ($4.5) million in the year-ago quarter.
Adjusted operating expenses increased 52.5% year over year to $32.2 million. As a percentage of revenues, operating expenses increased to 96.9% from 81.1% in the year-ago quarter.
Adjusted operating loss was $7.9 million compared with a loss of $8.2 million in the year-ago quarter.
Balance Sheet
Model N exited the quarter with cash and cash equivalent balance of $53.6 million, up from $52.4 million at the end of first-quarter 2017. During the quarter, the company used $5.4 million of cash toward operational activities compared with $9 million in the previous quarter.
Guidance
Model N provided guidance for the third quarter of fiscal 2017. It expects third-quarter revenues to come in the range of $33.5 million to $33.8 million.
Management expects non-GAAP gross margin (excluding stock-based compensation) to continue at or be near the 58% range that the company achieved in the second quarter.
Non-GAAP operating loss is projected to be between $3 million and $3.5 million. Non-GAAP net loss is likely to be between $0.17 and $0.19 per share for the third quarter.
Cost savings synergies from the Revitas acquisition is now expected to be toward the top-end of management’s guided range of $11-13 million.
Management remains confident in reported profitable adjusted EBITDA in the fourth quarter of fiscal 2017.
For fiscal 2017, revenues before the purchase accounting adjustment are expected to be in the range of $134.5-135.1 million. Management continues to expect annualized recurring revenue (ARR) to be between $46 million and $48 million. This represents 31% to 36% year-over-year growth.
Non-GAAP loss from operation is expected to be in the range of $14 million to $14.5 million, better than the previous guidance of a loss of $16 million.
Non-GAAP net loss is expected to be in the range of $0.68-$0.66 per share for the fiscal year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Model N's stock has an average Growth Score of 'C', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable for both growth and momentum investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for below average returns from the stock in the next few months.
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Why Is Model N (MODN) Up 4.8% Since the Last Earnings Report?
It has been about a month since the last earnings report for Model N, Inc. (MODN - Free Report) . Shares have added about 4.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Model N reported second-quarter 2017 adjusted loss of $0.25 per share, which was wider than the year-ago quarter’s loss of $0.21.
However, including stock-based compensation, a loss of $0.34 per share was narrower than the Zacks Consensus Estimate of a loss of $0.35.
Revenues of $33.3 million increased 27.6% year over year but missed the Zacks Consensus Estimate of $34 million.
Quarter in Detail
Model N has two reportable segments namely License & Implementation and SaaS & Maintenance.
License & Implementation revenues (18% of total revenues) of $6 million grew 24.4% on a year-over-year basis. SaaS & Maintenance revenues (82% of total revenues) of $27.2 million grew 28.4% year over year.
The reported results showed that Model N remains on track to shift its business model to a 100% SaaS and Maintenance revenue model.
Model N’s revenue management platform continues to attract big players from the life sciences and high tech field.
Johnson & Johnson signed the second part of a major deal to implement revenue cloud in its pharmaceutical business. Teva, Pfizer and Novartis, among others, also signed new subscriptions for their U.S. business.
Model N added Otsuka as a customer during the quarter. The company now has over top 25 pharmaceutical companies as customers.
Recently, Intel – Model N’s long-time customer – bought a subscription for the company’s revenue cloud for High Tech.
Adjusted gross profit increased 58.9% year over year to $20 million while margin increased to 60.2% from 48.3%. Gross margin benefited from higher percentage of SaaS & Maintenance revenues.
Adjusted EBITDA was ($4.4) million compared with ($4.5) million in the year-ago quarter.
Adjusted operating expenses increased 52.5% year over year to $32.2 million. As a percentage of revenues, operating expenses increased to 96.9% from 81.1% in the year-ago quarter.
Adjusted operating loss was $7.9 million compared with a loss of $8.2 million in the year-ago quarter.
Balance Sheet
Model N exited the quarter with cash and cash equivalent balance of $53.6 million, up from $52.4 million at the end of first-quarter 2017. During the quarter, the company used $5.4 million of cash toward operational activities compared with $9 million in the previous quarter.
Guidance
Model N provided guidance for the third quarter of fiscal 2017. It expects third-quarter revenues to come in the range of $33.5 million to $33.8 million.
Management expects non-GAAP gross margin (excluding stock-based compensation) to continue at or be near the 58% range that the company achieved in the second quarter.
Non-GAAP operating loss is projected to be between $3 million and $3.5 million. Non-GAAP net loss is likely to be between $0.17 and $0.19 per share for the third quarter.
Cost savings synergies from the Revitas acquisition is now expected to be toward the top-end of management’s guided range of $11-13 million.
Management remains confident in reported profitable adjusted EBITDA in the fourth quarter of fiscal 2017.
For fiscal 2017, revenues before the purchase accounting adjustment are expected to be in the range of $134.5-135.1 million. Management continues to expect annualized recurring revenue (ARR) to be between $46 million and $48 million. This represents 31% to 36% year-over-year growth.
Non-GAAP loss from operation is expected to be in the range of $14 million to $14.5 million, better than the previous guidance of a loss of $16 million.
Non-GAAP net loss is expected to be in the range of $0.68-$0.66 per share for the fiscal year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Model N, Inc. Price and Consensus
Model N, Inc. Price and Consensus | Model N, Inc. Quote
VGM Scores
At this time, Model N's stock has an average Growth Score of 'C', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable for both growth and momentum investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for below average returns from the stock in the next few months.