Click here to access PLAN's earnings press release.
Since going public in October 2018, PLAN has issued earnings reports on three occasions. Each time, the company has topped the Street's EPS and revenue forecasts, generated 40-50% top-line growth, and provided upside guidance.
Consequently, through its lifetime, the stock has soared by 160% vs. its IPO price.
The fundamental driver to its strong performance and growth is the "connected planning" platform that it pioneered to help businesses make better and faster decisions. PLAN built its connected planning software to replace outdated methods to planning, such as using inefficient tools like spreadsheets with manual processes.
Additionally, its platform isn't confined to only the finance department, where most planning has traditionally taken place. Instead, it has the capability to connect all people within an organization to data and plans.
Similarly to how Workday (WDAY) brought human capital management functions to the cloud, PLAN has done the same with business planning. Also like WDAY, PLAN’s pathway for growth is extensive, especially as the digital transformation unfolds.
During this morning's earnings call, PLAN commented that its platform is quickly becoming the new core digital technology standard that has the ability to improve the financial performance of any type of business.
This is reflected in its financial results. Outside of the main headline numbers, a few other key metrics illustrate the underlying strength in the company’s business.
For instance, the company continues to sign larger initial deals while also ramping up business with existing customers. At the end of Q1, it served 279 customers with more than $250K in annual recurring revenue, up 43% yr/yr.
This trend is also reflected in its dollar-based net expansion rate, which came in at 123% for both this quarter and Q4. In fact, PLAN has now achieved a dollar-based net expansion rate of over 120% for eight straight quarters.
What this success tells us is that its land-and-expand business model is working exceptionally well.
After customers sign a smaller initial contract, oftentimes for a single use case, they are expanding their usage to include more product options and more users. This speaks to the effectiveness of the company’s platform.
As PLAN continues to grow, it is also beginning to generate more leverage and scale within its financial model. In Q1, its operating margin improved by 19 percentage points to (26.5)% from (45.2)% in the year ago quarter.
The company expects further improvement in profitability this year, raising its FY20 Non-GAAP operating margin guidance to (23.5)%-(22.5)% from its prior outlook of (27.0)%-(26.0)%. It also raised its revenue guidance to $326-$331 mln vs. its original expectation of $310-$314 mln.
Key Takeaways: This earnings season, the number of companies posting clean "beat and raise" quarters wasn't overly impressive. But PLAN is one such company that did, making it a premier growth stock.
As companies continue to transition towards digital commerce, the need for faster and better decision making is paramount.
PLAN's connected planning platform is quickly becoming a must-have tool to help businesses gain a competitive edge during this transformation.