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Model N (MODN) Beats Earnings & Revenue Estimates in Q1

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Model N, Inc. (MODN - Free Report) reported first-quarter fiscal 2022 non-GAAP earnings of 15 cents per share, which surpassed the Zacks Consensus Estimate by 87.5% but decreased 6.3% year over year.

Revenues were $51.5 million, which beat the Zacks Consensus Estimate by 4% and increased 20.6% year over year.

Model N strengthened its foothold in the Life Sciences vertical and secured additional commitments for Software-as-a-Service (SaaS) transitions. Business Services, which was acquired from Deloitte, contributed $5.8 million to total revenues in the quarter.

The company inked new logos, closed four SaaS transitions, expanded within existing customers and witnessed solid renewals.

Model N, Inc. Price, Consensus and EPS Surprise Model N, Inc. Price, Consensus and EPS Surprise

Model N, Inc. price-consensus-eps-surprise-chart | Model N, Inc. Quote

Quarter Details & Business Highlights

Model N reports under two business lines — Subscription and Professional Services.

Subscription revenues (73.9% of total revenues) were $38.1 million, up 21.2% year over year.

Professional Services revenues (26.1%) increased 19.1% to $13.5 million.

During the quarter, Model N inked a deal with a Japan-based pharmaceutical and biotechnology company. It expanded relationships with Akorn Pharmaceuticals. Four Model N customers committed to SaaS transitions, including Abbott Diagnostics Division, AstraZeneca plc, ConMed Corporation and Stryker Orthopaedics.

In the High Tech vertical, Model N witnessed growth with the addition of Solidigm Technology, a global provider of NAND flash technology that was recently spun out of Intel. It also expanded relationships with Advanced Micro Devices, Diodes Incorporated, Marvell Technology and Western Digital.

Operating Details

Non-GAAP gross margin contracted 310 basis points (bps) from the year-ago quarter’s figure to 60.3%.

Non-GAAP subscription gross margin declined 640 bps from the prior-year quarter’s levels to 67.6%. Non-GAAP professional services gross margin expanded 580 bps to 39.7%.

Adjusted EBITDA was $7.2 million, down 3.7% year over year. Non-GAAP operating income was $7 million, down 4.9%.

Cash Flow & Liquidity

During the quarter, Model N used $9.7 million of net cash from operating activities. As of Dec 31, 2021, the company had cash and cash equivalents of $155.5 million and $127 million of long-term debt.

Guidance

The company anticipates second-quarter fiscal 2022 total revenues between $51 million and $51.5 million. Subscription revenues are projected in the range of $37-$37.5 million. Adjusted EBITDA is expected between $4 million and $4.5 million. Non-GAAP income from operations is expected in the range of $3.8-$4.3 million. Non-GAAP earnings per share are anticipated in the range of 6-8 cents per share.

For fiscal 2022, Model N expects total revenues in the band of $212-$214.5 million. Subscription revenues are estimated in the range of $153-$155.5 million. Adjusted EBITDA is projected within $24-$26 million. Non-GAAP operating income is expected in the range of $23-$25 million. Non-GAAP earnings are expected to be 46-52 cents per share.

Zacks Rank & Stocks to Consider

Model N currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vocera Communications, Inc. (VCRA - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector that sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised 6.2% upward over the past 60 days.

Vocera Communications delivered a trailing four-quarter earnings surprise of 109.6%, on average. The stock has returned 82.3% in the past year.

SeaChange International, Inc. (SEAC - Free Report) carries a Zacks Rank #2 (Buy). The consensus estimate for current-year earnings has been revised 10% upward over the past 60 days.

SeaChange International delivered a trailing four-quarter earnings surprise of 37.2%, on average. The stock has moved down 16.7% in the past year.

Qualcomm, Inc. (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick for investors. The consensus estimate for current-year earnings has been revised 0.7% upward over the past 60 days.

Qualcomm delivered a trailing four-quarter earnings surprise of 12.2%, on average. It has appreciated 22.7% in the past year.