Given the weakness in the stock, its 1Q20 earnings report came at an opportune time, rekindling enthusiasm for its growth story.
Last night, it reported a loss per share of ($0.22), in-line with the consensus, with revenue increasing 49% yr/yr to $37.3 mln, topping the $34.9 mln expectation.
It also provided upside guidance for FY20 and a mixed outlook for Q2.
Click here to access PD's earnings press release.
PD's cloud-based platform harnesses digital signals from any kind of device, sends that data to human teams, and then orchestrates appropriate responses to resolve problems that arise during digital transactions.
As a quick and simple example, if a consumer is trying to make a purchase through their mobile phone and proceeds to the check-out function but is unable to complete the transaction because it times out, PD's software analyzes the cause and sends the data to the appropriate response team.
Therefore, its products help enterprises protect against losing potential revenue while helping deliver a seamless and better digital purchasing experience.
The ongoing digital transformation for retailers is one obvious and potent growth catalyst for PD. During the earnings call last night, its CEO stated that digital transformation has become a top three priority among large and medium-sized businesses.
Although this trend towards digital commerce isn't new, the incident management aspect of digital commerce is an up-and-coming field. In fact, PD believes it has only penetrated about 1% of its $25 bln addressable market.
These bullish dynamics, combined with the company’s convenient self-serve model, are the main forces behind the robust growth in its customer base. This quarter, it added a record 468 net new customers for a total of 11,680.
PD is also launching new products and adding new features to drive higher revenue per customer. For instance, last year it launched Event Intelligence and Analytics Visibility, helping customers to proactively manage digital services in order to prevent issues from occurring.
Lastly, its cloud-based architecture and programmatic approach to customer service limits costs and creates an efficient operating model. As a result, it achieved a very healthy non-GAAP gross margin of 84.7% this quarter.
Key Takeaways: PD's Q1 earnings report put the company back on the map, allowing it to remind investors of its compelling growth potential.
The company is only scratching the surface in terms of market penetration as the digital transformation continues to unfold.
However, investors must pay a steep price for its growth potential, as the stock holds a forward P/S north of 20x.