Shares of Castlight Health Inc. (CSLT - Free Report) went up more 23% on Mar 1, 2019 after the company reported fourth-quarter 2018 results. Notably, Castlight shares have gained 82% year over year, substantially outperforming the 25.8% rally of the industry it belongs to.
The company reported non-GAAP net earnings of 1 cent per share which was in line with the Zacks Consensus Estimate. The figure improved from the year-ago quarter’s loss of 3 cents per share.
Revenues surged 13% year over year to $42.1 million and surpassed the Zacks Consensus Estimate of $41 million.
Subscription revenues (94% of total revenues) increased 17% to $39.4 million. Professional services & other (6% of total revenues) declined 22.7%year over year to almost $2.7 million.
On a pro forma basis, the company ended fiscal 2018 with annualized recurring revenues (“ARR”) of $150.5 million which was flat year over year, primarily owing to a loss of a major customer in July.
Transparency-only ARR accounted for 11% of total ARR in fiscal 2018, down 20% year over year. Platform clients accounted for the remaining 89% of total ARR.
The company had approximately 270 signed customers at the end of the quarter, out of which roughly 30% were Fortune 500 companies.
Operating Details
Non-GAAP gross margin came in at 68%, flat year over year. Subscription gross margin expanded 380 basis points (bps) to reach 82.7%.
Non-GAAP sales & marketing expenses as percentage of revenues contracted 900 bps to 22.6% in the reported quarter. General & administrative expenses contracted 230 bps to 11.9%.
Moreover, non-GAAP research & development expenses contracted 440 bps to 29.7%.
Castlight reported non-GAAP operating income of $1.9 million against the year-ago quarter’s operating loss of $4.4 million.
Cash Position
As on Dec 31, 2018, total cash, cash equivalents & marketable securities was $77.3 million. Cash flow from operating activities during the quarter came in at $7.5 million.
Guidance
For 2019, Castlight forecast revenues between $153 million and $158 million. The Zacks Consensus Estimate is pegged at $157.2 million.
Non-GAAP operating income is expected in the range of $0-$5 million. Non-GAAP earnings per share are anticipated between 0-3 cents per share. The Zacks Consensus Estimate is pegged at 1 cent.
Zacks Rank and Key Picks
Castlight carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Symantec Corporation , Pegasystems Inc. (PEGA - Free Report) and Fortinet, Inc. (FTNT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Symantec, Pegasystems and Fortinet have a long-term earnings growth rate of 7.9%, 8% and 16.8%, respectively.
Zacks' Top 10 Stocks for 2019
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From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
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Shares of Castlight Health Inc. (CSLT - Free Report) went up more 23% on Mar 1, 2019 after the company reported fourth-quarter 2018 results. Notably, Castlight shares have gained 82% year over year, substantially outperforming the 25.8% rally of the industry it belongs to.
The company reported non-GAAP net earnings of 1 cent per share which was in line with the Zacks Consensus Estimate. The figure improved from the year-ago quarter’s loss of 3 cents per share.
Revenues surged 13% year over year to $42.1 million and surpassed the Zacks Consensus Estimate of $41 million.
Subscription revenues (94% of total revenues) increased 17% to $39.4 million. Professional services & other (6% of total revenues) declined 22.7%year over year to almost $2.7 million.
On a pro forma basis, the company ended fiscal 2018 with annualized recurring revenues (“ARR”) of $150.5 million which was flat year over year, primarily owing to a loss of a major customer in July.
Transparency-only ARR accounted for 11% of total ARR in fiscal 2018, down 20% year over year. Platform clients accounted for the remaining 89% of total ARR.
The company had approximately 270 signed customers at the end of the quarter, out of which roughly 30% were Fortune 500 companies.
Operating Details
Non-GAAP gross margin came in at 68%, flat year over year. Subscription gross margin expanded 380 basis points (bps) to reach 82.7%.
Non-GAAP sales & marketing expenses as percentage of revenues contracted 900 bps to 22.6% in the reported quarter. General & administrative expenses contracted 230 bps to 11.9%.
Moreover, non-GAAP research & development expenses contracted 440 bps to 29.7%.
Castlight reported non-GAAP operating income of $1.9 million against the year-ago quarter’s operating loss of $4.4 million.
Cash Position
As on Dec 31, 2018, total cash, cash equivalents & marketable securities was $77.3 million. Cash flow from operating activities during the quarter came in at $7.5 million.
Guidance
For 2019, Castlight forecast revenues between $153 million and $158 million. The Zacks Consensus Estimate is pegged at $157.2 million.
Non-GAAP operating income is expected in the range of $0-$5 million. Non-GAAP earnings per share are anticipated between 0-3 cents per share. The Zacks Consensus Estimate is pegged at 1 cent.
Zacks Rank and Key Picks
Castlight carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Symantec Corporation , Pegasystems Inc. (PEGA - Free Report) and Fortinet, Inc. (FTNT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Symantec, Pegasystems and Fortinet have a long-term earnings growth rate of 7.9%, 8% and 16.8%, respectively.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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