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Model N (MODN) Down 1.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Model N . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Model N due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Model N Beats Q4 Earnings Estimates
Model N, Inc. reported strong fourth-quarter fiscal 2022 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate driven by the successful transition to a SAAS platform as part of its transformation to a cloud company. With a healthy contribution from all of its growth levers, the company ended fiscal 2022 on a positive note and expects this momentum to continue in the impending quarters.
Quarter Details
The company recorded a GAAP loss of $8.1 million or a loss of 22 cents per share compared with a loss of $6.1 million or a loss of 17 cents per share in the prior-year quarter. Despite top-line growth, the wider loss for the quarter was due to higher operating expenses. Non-GAAP earnings were 20 cents per share, which surpassed the Zacks Consensus Estimate by a penny.
In fiscal 2022, GAAP loss aggregated $28.6 million or a loss of 78 cents per share compared with a loss of $29.7 million or a loss of 84 cents per share in fiscal 2021. Non-GAAP earnings in fiscal 2022 were 72 cents per share compared with 54 cents per share in fiscal 2021.
Revenues improved to $58.2 million from $51.5 million and surpassed the consensus estimate of $56 million as the company successfully transitioned its customers onto its SaaS platform. Model N strengthened its foothold in the quarter by closing two SaaS transitions, signed multiple new logos and renewals and continued to witness strong contributions from subscription booking across its portfolio.
In fiscal 2022, revenues improved to $219.2 million from $193.4 million in fiscal 2021.
Operating Details
Subscription revenues (73.7% of total quarterly revenues) were $42.9 million, up 12.3% year over year, while Professional Services revenues (26.3%) increased 15% to $15.3 million.
Non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter’s figure to 62.3%. While non-GAAP subscription gross margin was 70%, that for professional services was 41%. Adjusted EBITDA was $8.2 million, up 3.8% year over year. Non-GAAP operating income was $8 million, up 3%.
Cash Flow & Liquidity
In fiscal 2022, Model N generated $25.3 million from operating activities compared with $19.6 million a year ago. As of Sep 30, 2022, the company had $193.5 million in cash and cash equivalents with $135.4 million of long-term debt compared with the respective tallies of $165.5 million and $124.3 million in the year-ago period.
Guidance
The company anticipates first-quarter fiscal 2023 total revenues between $57 million and $58 million. Subscription revenues are projected in the range of $42.5-$43 million. Adjusted EBITDA is expected to be between $8.5 million and $9.5 million. Non-GAAP operating income is expected in the range of $8.3-$9.3 million, while non-GAAP earnings per share are anticipated in the band of 21-23 cents per share.
For fiscal 2023, Model N expects total revenues in the band of $241-$244 million. Subscription revenues are estimated in the range of $178-$180 million. Adjusted EBITDA is projected within $37-$40 million. Non-GAAP operating income is expected in the range of $36-$39 million. Non-GAAP earnings are expected to be 90-97 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 100% due to these changes.
VGM Scores
At this time, Model N has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Model N has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Model N belongs to the Zacks Internet - Software industry. Another stock from the same industry, Paycom Software (PAYC - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Paycom reported revenues of $334.17 million in the last reported quarter, representing a year-over-year change of +30.4%. EPS of $1.27 for the same period compares with $0.92 a year ago.
For the current quarter, Paycom is expected to post earnings of $1.46 per share, indicating a change of +31.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
Paycom has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Model N (MODN) Down 1.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Model N . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Model N due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Model N Beats Q4 Earnings Estimates
Model N, Inc. reported strong fourth-quarter fiscal 2022 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate driven by the successful transition to a SAAS platform as part of its transformation to a cloud company. With a healthy contribution from all of its growth levers, the company ended fiscal 2022 on a positive note and expects this momentum to continue in the impending quarters.
Quarter Details
The company recorded a GAAP loss of $8.1 million or a loss of 22 cents per share compared with a loss of $6.1 million or a loss of 17 cents per share in the prior-year quarter. Despite top-line growth, the wider loss for the quarter was due to higher operating expenses. Non-GAAP earnings were 20 cents per share, which surpassed the Zacks Consensus Estimate by a penny.
In fiscal 2022, GAAP loss aggregated $28.6 million or a loss of 78 cents per share compared with a loss of $29.7 million or a loss of 84 cents per share in fiscal 2021. Non-GAAP earnings in fiscal 2022 were 72 cents per share compared with 54 cents per share in fiscal 2021.
Revenues improved to $58.2 million from $51.5 million and surpassed the consensus estimate of $56 million as the company successfully transitioned its customers onto its SaaS platform. Model N strengthened its foothold in the quarter by closing two SaaS transitions, signed multiple new logos and renewals and continued to witness strong contributions from subscription booking across its portfolio.
In fiscal 2022, revenues improved to $219.2 million from $193.4 million in fiscal 2021.
Operating Details
Subscription revenues (73.7% of total quarterly revenues) were $42.9 million, up 12.3% year over year, while Professional Services revenues (26.3%) increased 15% to $15.3 million.
Non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter’s figure to 62.3%. While non-GAAP subscription gross margin was 70%, that for professional services was 41%. Adjusted EBITDA was $8.2 million, up 3.8% year over year. Non-GAAP operating income was $8 million, up 3%.
Cash Flow & Liquidity
In fiscal 2022, Model N generated $25.3 million from operating activities compared with $19.6 million a year ago. As of Sep 30, 2022, the company had $193.5 million in cash and cash equivalents with $135.4 million of long-term debt compared with the respective tallies of $165.5 million and $124.3 million in the year-ago period.
Guidance
The company anticipates first-quarter fiscal 2023 total revenues between $57 million and $58 million. Subscription revenues are projected in the range of $42.5-$43 million. Adjusted EBITDA is expected to be between $8.5 million and $9.5 million. Non-GAAP operating income is expected in the range of $8.3-$9.3 million, while non-GAAP earnings per share are anticipated in the band of 21-23 cents per share.
For fiscal 2023, Model N expects total revenues in the band of $241-$244 million. Subscription revenues are estimated in the range of $178-$180 million. Adjusted EBITDA is projected within $37-$40 million. Non-GAAP operating income is expected in the range of $36-$39 million. Non-GAAP earnings are expected to be 90-97 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 100% due to these changes.
VGM Scores
At this time, Model N has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Model N has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Model N belongs to the Zacks Internet - Software industry. Another stock from the same industry, Paycom Software (PAYC - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Paycom reported revenues of $334.17 million in the last reported quarter, representing a year-over-year change of +30.4%. EPS of $1.27 for the same period compares with $0.92 a year ago.
For the current quarter, Paycom is expected to post earnings of $1.46 per share, indicating a change of +31.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
Paycom has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.