Anaplan Inc (NYSE:PLAN) is scheduled to release its 3Q18 results before the open tomorrow, in what will be the company’s first quarterly report since going public on October 12.
As some may recall, PLAN’s IPO got off to a hot start, pricing at the high end of expectations ($17 vs. $15-$17), and then it opened for trading with a considerable 43% opening pop to $24.25. The strong start came despite the fact the IPO market was beginning to show signs of cooling off.
Anaplan Inc (NYSE:PLAN) promulgates itself as a company that provides a cloud-based connected planning platform.
Its platform unites traditionally distinct or disconnected database structures, including relational, columnar, and online analytical processing with in-memory data storage and calculation that is used in various lines of business, such as finance, sales, supply chain, marketing, human resources, and operations.
Where it Went Wrong
Since that hot start, however, it has been a much different story for PLAN. The strong debut created a frothy valuation, and at the same time, the stock market has soured and investors have become more risk-averse. Consequently, the stock was unable to create any positive momentum as the stock traded within a $22.50-$26.50 range, before ultimately sinking down to the $21-$22 area.
The silver lining, though, is that the risk/reward profile looks more enticing heading into tomorrow’s report. Had the stock already surged to new highs, the stock would be susceptible to a profit-taking, sell-the-news type of reaction. Therefore, the lackluster performance is providing new prospective investors with a more compelling opportunity to play rebound on a solid report.
As for expectations, analysts are forecasting the company to post a loss per share of ($0.19) on revenue of $57.5 mln, representing growth of about 30%. Assuming the company issues guidance for Q4, it would need to guide for a loss of ($0.19)/share and revenue of $59.3 mln, in order to meet expectations.
Rewinding back to Q2, in its IPO prospectus, PLAN reported that revenue increased 41% to $109.4 mln. Impressively, gross margin expanded sharply to 73% from 69%, due to the growth in subscription revenue, which carries higher margins than professional services. But, still, the company’s operating loss expanded sharply to ($45.3) mln from ($15.9) mln as its Sales & Marketing costs soared by 84% to $77.9 mln. PLAN has been aggressively adding to its workforce and sales team, pushing salaries and benefit expenses higher. Whether the company has reigned these costs in more will be of importance for its Q3 report.
Outside of the headline numbers, there are a couple other key metrics that investors should keep an eye on. Specifically, they are total customers and dollar-based net expansion rate. Here is a closer look at each:
Customers: PLAN has been expanding its customer base at a good clip. At July 31, 2018, it ended the period with 979 total customers, up 13% from January 31, 2018. At January 31, it had 864 customers, which was up a very healthy 31% yr/yr.
Dollar-based Net Expansion Rate: Perhaps its most encouraging and impressive metric, PLAN’s net expansion rate continues to hover well above 100%. This illustrates that not only is PLAN hanging onto its existing customers, but, it is also successfully up-selling more seats and/or new products to them. At July 31, 2018, its dollar-based net expansion rate came in at 123%, up a tick from 122% at January 31, 2018.
To conclude, it’s been a rough ride for PLAN since its successful IPO in mid-October. But, with a strong, upside report tomorrow morning, the stock could be poised for a nice rebound, especially given the apparently lower bar to hurdle.