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MuleSoft Continues to Roll; Platform Is Winning New Customers

By Simon Erickson - Feb 20, 2018 at 10:26AM

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The application network provider reported strong fourth-quarter results and issued solid full-year guidance.

MuleSoft (MULE) delivered fourth-quarter results on Friday that pleased investors. Between 60% revenue growth and strong guidance, the stock ended the day up nearly 18%.

MuleSoft develops application networks, which allow companies to connect their applications, data, and devices. In one example, Wells Fargo uses MuleSoft to create a unified experience for customers using their mobile devices, enabling them to deposit checks or make recurring payments without having to visit a physical branch. As another, Buffalo Wild Wings uses MuleSoft to monitor the flow rates from their beer taps, to know in real time how much customers are drinking and to accordingly adjust inventory and distribution routes.

Behind the scenes, MuleSoft helps more than 1,000 customers integrate their operations to make faster and better-informed decisions. Their solution is an important one in today's data-driven world.

A drawing that lays out a MuleSoft application network, which shows product, transaction, and shipment information all tied together.

An example of a MuleSoft application network. Image source: MuleSoft.

MuleSoft results: The raw numbers

Metric Q4 2017 Q4 2016 Year-Over-Year Change
Revenue $88.7 million $55.3 million 60%
Operating income ($25.5 million) ($12.8 million) N/A
Adjusted earnings per share ($0.12) ($0.10) N/A

Data source: MuleSoft.

What happened with MuleSoft this quarter?

MuleSoft reported several developments that make it look like the good times will continue to roll in 2018:

  • Subscription and support revenue increased 57% in the fourth quarter, to $70.6 million. MuleSoft's capacity-based pricing model grows as customers use the platform, which they're clearly doing more of.
  • Deferred revenue increased 56% to $211.4 million. Deferred revenue is more than double the company's annual revenue, which is a sign that it has plenty of future business lined up.
  • MuleSoft ended the year with 45 customers that were worth at least $1 million of contract value in 2017. This is 50% higher than the 30 it had at the end of 2016.
  • Yvonne Wassenaar and Marcus Ryu have joined MuleSoft's board of directors. Wassenaar is the CEO of Airware, and Ryu is CEO of Guidewire Software. Both bring a highly informed perspective about hardware and software integration.

What management had to say

Chairman and CEO Greg Schott nicely described MuleSoft's successful fourth quarter and upcoming ambitions, saying in a company press release:

Robust market demand and strong sales execution enabled us to deliver fourth quarter and fiscal 2017 revenue well ahead of expectations. We are excited about MuleSoft's growth opportunity and expect to reach $1 billion in total revenue in 2021. Our disruptive platform is addressing one of the largest areas of enterprise IT spend, and we're confident in our long-term strategy to become the de facto application network platform for our customers to become more agile and to transform their businesses.

Looking forward

MuleSoft guided for between $405 million and $415 million of revenue for 2018, which would represent 38% growth over the $296 million in 2017. The company has gotten into a habit of beating expectations. Investors will be looking to see if it can continue to land large deals and scale its operating expenses and thus keep exceeding estimates.

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