U.S. markets open in 1 hour 2 minutes
  • S&P Futures

    3,271.00
    -4.00 (-0.12%)
     
  • Dow Futures

    26,969.00
    -86.00 (-0.32%)
     
  • Nasdaq Futures

    11,009.25
    +20.25 (+0.18%)
     
  • Russell 2000 Futures

    1,478.60
    -4.20 (-0.28%)
     
  • Crude Oil

    39.38
    +0.07 (+0.18%)
     
  • Gold

    1,910.80
    +0.20 (+0.01%)
     
  • Silver

    24.18
    -0.20 (-0.83%)
     
  • EUR/USD

    1.1745
    -0.0028 (-0.23%)
     
  • 10-Yr Bond

    0.6710
    0.0000 (0.00%)
     
  • Vix

    28.02
    +2.19 (+8.48%)
     
  • GBP/USD

    1.2798
    -0.0020 (-0.15%)
     
  • USD/JPY

    104.5930
    -0.0870 (-0.08%)
     
  • BTC-USD

    10,467.45
    +29.72 (+0.28%)
     
  • CMC Crypto 200

    221.38
    -14.20 (-6.03%)
     
  • FTSE 100

    5,824.76
    +20.47 (+0.35%)
     
  • Nikkei 225

    23,360.30
    +40.90 (+0.18%)
     

Model N (MODN) Q3 Earnings and Revenues Surpass Estimates

Zacks Equity Research

Model N, Inc. MODN reported third-quarter fiscal 2020 non-GAAP earnings of 15 cents per share, which surpassed the Zacks Consensus Estimate by 150%. The bottom line also improved 150% year over year.

Revenues were $41.3 million, which beat the Zacks Consensus Estimate by 4.4% and increased 19% year over year. The figure was also higher than the guided range of $39.4-$39.8 million.

Robust adoption of the company’s revenue cloud platform drove the top line. Notably, a leading medtech company selected Model N’s Global Tender Management solution to accelerate its tendering process in 14 countries.

Moreover, the company is making steady progress in its transformation to a Software-as-a-Service (SaaS) based model, which is driving top-line growth.

Quarter in Detail

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

In third-quarter fiscal 2020, Subscription revenues were $29.3 million, up 10% year over year. This was driven by strong go-to-market execution and new logo additions.

Professional Services revenues increased 47.6% on a year-over-year basis to $11.9 million.

Model N, Inc. Price, Consensus and EPS Surprise

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

Operating Details

Non-GAAP gross margin expanded 560 basis points (bps) from the year-ago-figure to 64%.

Adjusted EBITDA during the quarter was $6.4 million, up 93.5%year over year.

Non-GAAP operating income was $6.2 million, up 106.5% year over year. Non-GAAP operating margin (as a percentage of total revenues) expanded 640 bps to 15%.

Balance Sheet & Cash Flow

As of Jun 30, 2020, Model N had cash and cash equivalents of $192.4 million compared with $61.3 million as of Mar 31, 2020.

As of Jun 30, 2020, the company had total debt (including current portion) of $112.2 million, compared with $39.4 million reported as of Mar 31, 2020.

Net cash flow from operating activities was $7.2 million for the first nine month-period ended Jun 30, 2020, compared with $4.8 million in the prior-year period. Free cash flow was reported at $7 million for the nine month-period of fiscal year 2020, compared with free cash flow of $4.6 million in the prior-year period.

Guidance

The company anticipates fiscal fourth-quarter 2020 total revenues between $40.1 million and $40.5 million. The Zacks Consensus Estimate for revenues is pegged at $37.4 million.

Subscription revenues are projectedin the range of $29-$29.4 million.

Non-GAAP net income is anticipated in the range of 7-9 cents per share. The Zacks Consensus Estimate for earnings is pegged at 4 cents per share.

Adjusted EBITDA is expected between $4.6 million and $5 million.

For fiscal 2020, Model N now expects total revenues in the range of $159.7-$160.1 million compared with prior guided range of $154-$156 million. The Zacks Consensus Estimate for revenues stands at $155.2 million.

Fiscal 2020 subscription revenues are now forecast in the range of $115.5-$115.9 million compared with $114-$115 million.

Non-GAAP earnings are now expected in the range of 41-43 cents per share compared with the prior guided range of 28-31 cents. The Zacks Consensus Estimate for earnings is currently pegged at 29 cents per share.

Adjusted EBITDA is now projected in the band of $19-19.4 million, compared with the prior guided range of $14-$15 million.

Zacks Rank & Stocks to Consider

Currently, Model N carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Dropbox DBX, Asure Software, Inc. ASUR and Analog Devices ADI. While both Dropbox and Asure Software sport a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dropbox, Asure Software, and Analog Devices are scheduled to report earnings on Aug 6, Aug 10 and Aug 19, respectively.

Long-term earnings growth rate of Dropbox, Asure Software, and Analog Devices is pegged at 16.83%, 14% and 13.33%, respectively.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Analog Devices, Inc. (ADI) : Free Stock Analysis Report
 
Asure Software Inc (ASUR) : Free Stock Analysis Report
 
Model N, Inc. (MODN) : Free Stock Analysis Report
 
Dropbox, Inc. (DBX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research