Cloud computing has made many tasks a lot easier for people to handle, and Cvent (CVT) has used the cloud to simplify the process of event planning. By organizing logistical efforts on everything from massive business conferences to smaller corporate events, Cvent has opened up a niche in the industry.
Coming into Cvent's second-quarter financial report, investors were looking for solid sales growth and break-even results on the bottom line. Cvent did its shareholders one better, posting an adjusted profit, and growing revenue at a faster-than-anticipated pace. Let's look more closely at how Cvent did, and what it means for its future.
Cvent celebrates an eventful quarter
Cvent is still in high-growth mode, and the company succeeded in the unusual feat of having revenue gains accelerate during the second quarter. Sales jumped 39%, to $47.3 million, topping the 31% growth in the first quarter, as well as expectations for just $45.8 million in revenue for the quarter. Moreover, although adjusted net income of $2 million was less than year-ago levels, it produced earnings per share of $0.05, a nickel higher than the break-even results investors had expected to see.
As we've seen in past quarters, Cvent got good contributions to growth from both of its major segments. Platform Subscription growth jumped 35% and made up more than two-thirds of Cvent's overall sales, but the smaller Hospitality Cloud division saw revenue climb by nearly half, showing the opportunities that the segment has to boost Cvent's overall results.
Cvent also highlighted some major business events during the quarter. The Cvent CONNECT customer conference gave more than 2,300 attendees exposure to many of the initiatives that the company is pursuing, and the cloud-event planner's Onsite Solutions product signed up more than 20 new customers, several of which topped $100,000 in annual value.
New clients like Northwestern University's Kellogg School of Management and Duke University helped drive Cvent's penetration into the mid-market for event management, and the hospitality cloud also got interest from areas like Costa Rica's convention bureau and a variety of hotel companies across the globe. With enterprise-solutions customers also coming onboard in fairly high numbers, Cvent is seeking to grow as quickly as possible.
What's next for Cvent?
CEO Reggie Aggarwal was pleased with Cvent's outpaced sales gains, noting that expense management helped more of its newfound revenue work its way down to the bottom line. At the same time, Aggarwal discussed the Cvent CONNECT conference, and how it "provided us with an ideal forum to demonstrate firsthand how technologies like event mobile apps, self-service check-in kiosks, and SocialWall media displays can enhance attendee engagement and the success of meetings and events."
Some of Aggarwal's enthusiasm made it into Cvent's guidance for the third quarter and full 2015 year. Third-quarter revenue should be between $47.5 million and $47.9 million, which would be 2% to 3% higher than current expectations, and adjusted earnings of $0.07 to $0.08 per share would be consistent with what investors think Cvent will achieve. For the full year, Cvent now expects between $185 million to $186 million, up about $3.5 million, and adjusted earnings of $0.22 to $0.24 per share reflects guidance that's a penny or two higher than Cvent's previous forecast.
One thing that Cvent will have to watch closely is the trend toward increasing expenses. Even with rising revenue, sales and marketing expenses climbed at an even faster rate of 44%, and general and administrative costs nearly doubled. To the extent that those expenses reflect business-generating activity like the Cvent CONNECT conference, they're likely worth the cost, as is a nearly 50% jump in research and development spending. In the long run, though, Cvent might need to consider ways to control cost increases, especially once sales growth starts to slow.
Cvent investors applauded the news, sending the stock soaring by more than 15% the day after the announcement. With so much excitement and continued strong growth, Cvent has plenty of room for further gains ahead of it if it successfully can execute on its business strategy.
