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Earnings Preview: 5/31 - 6/3
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Earnings Preview: 5/31 - 6/3

A Preview of this Week's Earnings Reports - What to Watch

Nine to Five Investing
May 30
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Earnings Preview: 5/31 - 6/3
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Crowdstrike (CRWD)

Crowdstrike reports Q1 2023 results on June 2nd after market close. I’ll be watching several operating metrics very closely. First, Annual Recurring Revenue, which came in at $1.19B as of Q1 2022, representing a 74% YoY growth rate from Q1 2021. The company also reports total subscriptions (and number of subscriptions added in the quarter). Q1 2022 saw 1,524 new subscription customers, bringing the total to 11,420, representing 82% YoY growth. All of these subscription metrics demonstrate the growth of the company’s core business, so it will be important to watch these numbers as they provide investors insight into the demand for the company’s products. Zscaler (ZS), another cybersecurity leader, reported incredibly strong enterprise demand and also raised guidance for the year, which bodes well for Crowdstrike.

I will also be watching gross margin, cash flow and cash on hand, all of which are numbers typically reported on a quarterly basis. In Q1 2022, management reported 79% gross margins on the subscription business, compared to 78% the year before. I would expect these numbers to be fairly similar this quarter. The company also generated $117M in free cash flow in Q1 2022 while reporting nearly $1.7B in cash. Boasting over 30% free cash flow margins each of the last two years, I expect free cash flow to be strong once again this quarter.

Revenue / Earnings Estimates:

  • Revenue: $458M - $465M

  • Income / Loss from Operations (non-GAAP): $61.7M - $66.4M

  • Net Income (non-GAAP): $52M - $56.7M

  • EPS (non-GAP): $0.22 - $0.24

Full-Year 2023 Guidance

  • Revenue: $2.13B - $2.16B

  • Income / Loss from Operations (non-GAAP): $289M - $311M

  • Net Income (non-GAAP): $251M - $273M

Given the positive outlook provided by Zscaler last week, I want to see Crowdstrike management possibly raise guidance for the full-year. Lowered guidance would be cause for concern seeing as the industry is experiencing increasingly strong demand.

Position: 3.7%

Elastic (ESTC)

Elastic reports earnings on June 1st after market close. I’ll be focusing on the SaaS revenue growth relative to the growth of the overall business. In Q4 2021, Cloud revenue grew 77% compared to overall revenue growth of 44%. This is the higher-margin product that is taking a larger revenue share each quarter, so I want to see this sector continue to outpace overall top line growth.

I will also be watching cash flow. In Q4 2021, Elastic reported negative free cash flow of $3.1M. That figure has since improved to positive $15.8M in Q3 2022 but it’s important that the company keeps growing this figure going into a possible recession.

Looking at customer count, Elastic reported 15,000 total customers in Q4 2021 and 730 customers with over $100k Annual Contract Value (ACV). I want to see both of these figures continue to grow without any notable deceleration. Finally, I’ll also be curious to watch the net expansion rate, which has historically hovered around 130%. This figure demonstrates Elastic’s ability to increase customer usage across the platform.

Revenue / Earnings Estimates:

  • Revenue: $230M - $232M

  • Non-GAAP Operating Margin: (5.5%) - (4.5%)

  • Non-GAAP EPS: ($0.24) - ($0.20)

Full-Year 2022 Estimates:

  • Revenue: $853M - $855M

  • Non-GAAP Operating Margin: (0.4%) - (0.2%)

  • Non-GAAP EPS: ($0.42) - ($0.38)

Position: 2.3%

MongoDB (MDB)

MongoDB reports earnings on June 1st after market close. As Atlas takes over the majority of revenue share, I will be watching those growth numbers very closely. Q1 2022 saw 73% YoY growth to Atlas, MongoDB’s managed database as a service platform. I’ll also be paying attention to free cash flow and cash balance. In Q1 2022, MongoDB posted $8.4M in free cash flow while sporting over $935M in cash. This free cash flow number actually grew from negative $8.5M in Q1 2021, so I hope to see this continue trending the right direction.

Revenue / Earnings Estimates:

  • Revenue: $263M - $267M

  • Loss from Operations (non-GAAP): ($5M) - ($2M)

  • EPS (non-GAAP): ($0.12) - ($0.08)

Full-Year 2023 Estimates

  • Revenue: $1.15B - $1.81B

  • Loss from Operations (non-GAAP): ($22M) - ($7M)

  • EPS (non-GAAP): ($0.51) - ($0.29)

Position: 2.4%

Veeva (VEEV)

Veeva will report Q1 2023 results after market close on June 1st. Aside from revenue and income numbers, I am most interested in customer metrics, specifically customer count. In their Q1 2022 release, Veeva reported 1,000 total customers, a number that has since grown to 1,205. Management typically details new customer wins across the various product suites, so I’ll also be interested to hear their commentary on customers adopting different applications. Particularly, I always pay attention to commentary on the Clinical suite, which is Veeva’s bread and butter that has established this company as a market leader. It will also be interesting to see the number of new customers in consumer goods, which is a new vertical Veeva has recently expanded into.

Veeva doesn’t always report net revenue retention numbers on a quarterly basis, but I would certainly be interested to see that number, as it has fallen a bit in recent reports (~119% last report). They do, however, report cash flow, so I will be watching that number as well as current cash totals, which came in at $1.15B last quarter.

Revenue / Earnings Estimates:

  • Revenue : $494M - $496M

  • Operating Income (non-GAAP): $187M - $189M

  • EPS (non-GAAP): $0.91 - $0.92

Full-Year 2023 Estimates

  • Revenue: $2.16B - $2.17B

  • Operating Income (non-GAAP): $825M

  • EPS (non-GAAP): $4.02

Position: 4%

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