For Immediate Release
Chicago, IL – August 31, 2017 – Zacks Equity Research AppFolio Inc.(NASDAQ: (APPF - Free Report) – Free Report)as the Bull of the Day, Cree Inc. (NASDAQ: (CREE - Free Report) – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onExpedia(NASDAQ: (EXPE - Free Report) – Free Report).
Here is a synopsis of all three stocks:
Bull of the Day:
AppFolio Inc.(NASDAQ: (APPF - Free Report) – Free Report), a Zacks Ranked #1 (Strong Buy), offers cloud-based software solutions for property management and legal industries. It offers AppFolio Property Manager, a solution for the property managers including activities of posting and tracking tenant vacancies, handling the entire leasing process electronically, administering maintenance and repairs with their vendor networks, managing accounting and reporting to property owners. MyCase solution for practitioners and small law firms, providing time tracking, billing and payments, client communication, coordination with other lawyers and support staff, legal document management and assembly and general office administration services. Value+ services include Websites and electronic payment services. AppFolio, Inc. is headquartered Goleta, California.
Recent News and Earnings
The company recently reported Q2 17 earnings where they beat both the Zacks consensus earnings and revenue estimates for the fifth consecutive quarter. Total revenues grew by +37%, and total billings were up +32.2% on a year over year (YoY) basis. The Value+ services saw the biggest YoY improvement in revenues as they were up +43%. The Property Management arm of the business saw the number of customers increase by +17% YoY, and the number of units under management rise by +22% YoY. The Legal segment saw customer growth improve by +21% YoY to almost 9,000 customers. The average revenues per unit jumped up by +38% as management streamlined sales, improved marketing performance, and targeted higher value customers.
Due to the impressive quarterly performance, management increased FY 17 guidance from a range between $136-138 million to a range between $138-139 million indicating a +31-32% YoY increase.
The Board of Directors also announced that the current CEO Brian Donahoo will be retiring and that Jason Randall will take over the position. Mr. Donahoo will be available through the end of the year to ensure a smooth transition. Mr. Randall was the SVP, and has been with the company for over nine years. While the retirement was not expected, the street viewed the transition as a positive.
Bear of the Day:
Cree Inc.(NASDAQ: (CREE - Free Report) – Free Report), a Zacks Ranked #5 (Strong Sell) company is a market-leading innovator and manufacturer of semiconductors that enhance the value of solid-state lighting, power and communications products by significantly increasing their energy performance and efficiency. Key to Cree's market advantage is its world-class materials expertise in silicon carbide and gallium nitride for chips and packaged devices that can handle more power in a smaller space while producing less heat than other available technologies, materials and products.
Recent Earnings Results
Last week, management announced both F4Q17 and FY 17 results and overall it was a mixed bag. First the positives, both the LED and Wolfspeed businesses did better than expected on a year over year (YoY) basis; LED product revenues were up almost 10% while Wolfspeed revenues were up +8.4%. Now the negatives; on a YoY basis the company saw declines in revenues -8%, non-GAAP net income -78.9%. On a fiscal year basis for 2017 revenues were down -9% while non-GAAP net income was down -43.2%.
The big drag on the company was the lighting segment which saw revenues fall by almost -21% YoY, due to increased competition. This is not just a quarterly event as the segment has been underperforming for over a year. Another issue facing the company is the search for a new CEO as the previous CEO announced his departure in May. But there has been little to no movement on this front. Further, the current management team announced significantly increased capex plans; rising to an estimated $220 million from just $87 million in FY 2017. This increase in spending is almost solely focused on the Wolfspeed segment with the goal of doubling its capacity over the next 12 months.
Given the increased expenditures, management was forced to reduce F1Q17 revenue guidance from an expected consensus of $361 million to a range of $353-367 million. But EPS is expected to be more negatively impacted by this spending as non-GAAP EPS fell from a consensus of $0.11 to a range of $0.02-0.06. Lastly, non-GAAP gross margins will also be negatively impacted as they were lowered by almost a full percentage point; from 29.8% to almost 29%.
New Uber CEO Wants IPO on Timetable
On Wednesday, newly announced CEO of ride hailing giant Uber, Dara Khosrowshahi, said that the troubled tech startup should go public in the next 18 to 36 months.
During a meeting with employees at Uber’s headquarters in San Francisco, the former chief executive of Expedia (NASDAQ: EXPE – Free Report) said that he plans to make it a priority to “pay the bills.” This comes in opposition to Uber’s former leader and founder Travis Kalanick’s stance on an IPO, who famously was opposed to the idea, telling CNBC last year that he wanted “to make sure [an IPO] happens as late as possible.”
Uber, however, is notorious for losing insane amounts of money. Last year, the company lost a total of $2.8 billion, and in the first three months of this year, it lost $708 million (also read: Will Uber Be the Hottest IPO of 2017?).
In addition to divulging his IPO plans for his new company, Khosrowshahi also gave some insight into how he may run Uber. According to tweets from the handle @Uber_Comms, Uber’s new CEO said things like “I won’t B.S. you, and I hope you won’t B.S. me,” and “I’m all in, and I’m going to fight for you with every bone in my body.”
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