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Model N (MODN) Q2 Earnings and Revenues Surpass Estimates
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Model N, Inc. (MODN - Free Report) reported second-quarter fiscal 2020 non-GAAP earnings of 7 cents per share, which surpassed the Zacks Consensus Estimate by 250% and improved 600% year over year.
Revenues came in at $40 million, which beat the Zacks Consensus Estimate by 5% and increased 15% year over year. The figure was also higher than the guided range of $38.8-$39.2 million.
Robust adoption of the company’s revenue cloud platform drove the top line. Notably, a leading Asia-based pharmaceutical company and generics division of Mallinckrodt Pharmaceuticals completed their transition to Model N’s Revenue Cloud platform during the quarter under review.
Moreover, the company is making steady progress in its transformation to a Software-as-a-Service (SaaS) based model, which is aiding top-line growth.
Notably, shares of Model N have gained 52.1% in the past year, outperforming the industry’s growth of 2.9%.
Quarter in Detail
Model N reports earnings under two business lines — Subscription and Professional Services.
In second-quarter fiscal 2020, Subscription revenues were $29 million, up 12% year over year. This was driven by strong Go to Market execution and new logo additions.
Professional Services revenues increased 23% on a year-over-year basis to $11 million.
Operating Details
Non-GAAP gross margin expanded 580 basis points (bps) from the year-ago-figure to 62.1%. Non-GAAP subscription gross margin during the reported quarter expanded 200 bps year over year to 72%.
Adjusted EBITDA during the quarter came in at $3.2 million, up 76%year over year.
Non-GAAP operating income was $3 million, up 102% year over year. Non-GAAP operating margin (as a percentage of total revenues) expanded 330 bps to 7.6%.
Balance Sheet & Cash Flow
As of Mar 31, 2020, Model N had cash and cash equivalents of $61.3 million compared with $55.8 million as of Dec 31, 2019.
As of Mar 31, 2020, the company had total debt (including current portion) of $39.4 million, compared with $44.3 million reported as of Dec 31, 2019.
Net cash flow from operating activities was $3.4 million for the first six months ended Mar 31, 2020, compared with $0.5 million in the prior-year period. Free cash flow was reported at $3.3 million for the first six months of fiscal year 2020, compared with free cash flow of $0.3 million in the prior-year period.
Guidance
The company anticipates fiscal third-quarter 2020 total revenues between $39.4 million and $39.8 million. The Zacks Consensus Estimate for revenues is pegged at $37.3 million.
Subscription revenues are anticipated in the range of $28.7-$29.1 million.
Non-GAAP net income is anticipated in the range of 5-7 cents per share. The Zacks Consensus Estimate for earnings is pegged at 6 cents per share.
Adjusted EBITDA is anticipated between $3.4 million to $3.8 million.
For fiscal 2020, Model N expects total revenues in the range of $154-$156 million. The Zacks Consensus Estimate for revenues is pegged at $151.8 million.
Fiscal 2020 subscription revenues are projected in the range of $114-$115 million.
Non-GAAP earnings are expected in the range of 28-31 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 28 cents per share.
Adjusted EBITDA is projected in the range of $14 million to $15 million.
Zacks Rank & Stocks to Consider
Currently, Model N carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for ASE Technology, Twilio and InterDigital is pegged at 26.63%, 26.61% and 15%, respectively.
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Model N (MODN) Q2 Earnings and Revenues Surpass Estimates
Model N, Inc. (MODN - Free Report) reported second-quarter fiscal 2020 non-GAAP earnings of 7 cents per share, which surpassed the Zacks Consensus Estimate by 250% and improved 600% year over year.
Revenues came in at $40 million, which beat the Zacks Consensus Estimate by 5% and increased 15% year over year. The figure was also higher than the guided range of $38.8-$39.2 million.
Robust adoption of the company’s revenue cloud platform drove the top line. Notably, a leading Asia-based pharmaceutical company and generics division of Mallinckrodt Pharmaceuticals completed their transition to Model N’s Revenue Cloud platform during the quarter under review.
Moreover, the company is making steady progress in its transformation to a Software-as-a-Service (SaaS) based model, which is aiding top-line growth.
Notably, shares of Model N have gained 52.1% in the past year, outperforming the industry’s growth of 2.9%.
Quarter in Detail
Model N reports earnings under two business lines — Subscription and Professional Services.
In second-quarter fiscal 2020, Subscription revenues were $29 million, up 12% year over year. This was driven by strong Go to Market execution and new logo additions.
Professional Services revenues increased 23% on a year-over-year basis to $11 million.
Operating Details
Non-GAAP gross margin expanded 580 basis points (bps) from the year-ago-figure to 62.1%. Non-GAAP subscription gross margin during the reported quarter expanded 200 bps year over year to 72%.
Adjusted EBITDA during the quarter came in at $3.2 million, up 76%year over year.
Model N, Inc. Price, Consensus and EPS Surprise
Model N, Inc. price-consensus-eps-surprise-chart | Model N, Inc. Quote
Non-GAAP operating income was $3 million, up 102% year over year. Non-GAAP operating margin (as a percentage of total revenues) expanded 330 bps to 7.6%.
Balance Sheet & Cash Flow
As of Mar 31, 2020, Model N had cash and cash equivalents of $61.3 million compared with $55.8 million as of Dec 31, 2019.
As of Mar 31, 2020, the company had total debt (including current portion) of $39.4 million, compared with $44.3 million reported as of Dec 31, 2019.
Net cash flow from operating activities was $3.4 million for the first six months ended Mar 31, 2020, compared with $0.5 million in the prior-year period. Free cash flow was reported at $3.3 million for the first six months of fiscal year 2020, compared with free cash flow of $0.3 million in the prior-year period.
Guidance
The company anticipates fiscal third-quarter 2020 total revenues between $39.4 million and $39.8 million. The Zacks Consensus Estimate for revenues is pegged at $37.3 million.
Subscription revenues are anticipated in the range of $28.7-$29.1 million.
Non-GAAP net income is anticipated in the range of 5-7 cents per share. The Zacks Consensus Estimate for earnings is pegged at 6 cents per share.
Adjusted EBITDA is anticipated between $3.4 million to $3.8 million.
For fiscal 2020, Model N expects total revenues in the range of $154-$156 million. The Zacks Consensus Estimate for revenues is pegged at $151.8 million.
Fiscal 2020 subscription revenues are projected in the range of $114-$115 million.
Non-GAAP earnings are expected in the range of 28-31 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 28 cents per share.
Adjusted EBITDA is projected in the range of $14 million to $15 million.
Zacks Rank & Stocks to Consider
Currently, Model N carries a Zacks Rank #3 (Hold).
ASE Technology Holding Co., Ltd. (ASX - Free Report) , Twilio Inc. (TWLO - Free Report) and InterDigital, Inc. (IDCC - Free Report) are some better-ranked stocks worth considering in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for ASE Technology, Twilio and InterDigital is pegged at 26.63%, 26.61% and 15%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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