Though the company has been around since the dot-com era, SurveyMonkey parent SVMK Inc. (SVMK +0.00%) only recently went public in a highly anticipated initial public offering (IPO). The cloud-based survey specialist made headlines: first by pricing its shares at $12, above the anticipated range of $9 to $11, then soaring as much as 56% out of the gate, before settling for a 44% gain on its first day of trading.
Since that auspicious beginning, it's been largely downhill, as tech stocks have taken it on the chin and broader market indexes have flirted with correction. Investors have also been eagerly awaiting the company's initial earnings report in order to assess the company's growth prospects -- and SurveyMonkey gave investors plenty to celebrate, driving the stock up as much as 15% in the wake of its report.
Image source: SurveyMonkey.
Better-than-expected first showing
|
Metric |
Q3 2018 |
Q3 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$65.2 million |
$55.3 million |
18% |
|
Operating income (loss) |
($94.5 million) |
($5.9 million) |
N/A |
|
Net income (loss) |
($102.4 million) |
($13.0 million) |
N/A |
|
Earnings (loss) per share |
($0.99) |
($0.13) |
N/A |
Data source: SurveyMonkey third-quarter financial release.
For the just completed third quarter, SurveyMonkey reported revenue of $65.2 million, up 18% year over year, and surpassing analysts' consensus estimates of $63 million. Excluding the $89.9 million IPO-related stock-based compensation charge, the company's adjusted loss per share of $0.01 was far better than the $0.05 loss expected by analysts.
Paying customers grew to 621,000, up 3.5% compared to the prior-year quarter, with 75% of users now opting for annual plans. The company generates more than 90% of its revenue from subscriptions. Average revenue per user (ARPU) grew to $418, up 15% year over year. The number of questions answered on the company's platform crossed 47 billion, and SurveyMonkey is seeing more than 2 million survey respondents per day. The company boasts more than 16 million active users across 300,000 organizational domains.
"We delivered healthy revenue growth and robust cash flow in the third quarter," said SurveyMonkey CFO and COO Tim Maly. "We see continued momentum in our core self-serve channel and acceleration in our sales-assisted channel with our enterprise-grade survey platform and suite of purpose-built software solutions."
Other noteworthy news
One of SurveyMonkey's chief rivals, market-analytics and sentiment tracking specialist Qualtrics, was preparing for its own IPO when it was acquired by enterprise giant SAP SE (SAP 3.36%) just this past weekend, in a deal valued at $8 billion, taking another independent player off the table. In an interview after the deal was announced, SurveyMonkey CEO Zander Lurie said that "SAP helped validate what a huge multibillion dollar market" the company is in.
We don't need to take Lurie's word for it. According to recent regulatory filings, SurveyMonkey was on the receiving end of a $44 million investment from a longtime partner, customer relationship management specialist salesforce.com (CRM 0.50%). Salesforce users have long used SurveyMonkey to seamlessly integrate surveys and customer feedback questionnaires into the Salesforce app.
Image source: Getty Images.
A look ahead
For the upcoming fourth quarter, SurveyMonkey is anticipating revenue in a range of $64.8 million to $66.8 million, for year-over-year growth of between 14% and 17%. The company is also forecasting non-GAAP operating margin of between 2% and 3%. The company did not provide earnings-per-share estimates.
To put that into perspective of broader market sentiment, the analysts' consensus forecast is for a breakeven adjusted EPS of $0 on revenue of $64.99 million.
For the full year, SurveyMonkey is guiding for revenue of $252.2 million, up 17.5% year over year at the midpoint of its guidance. The company is expecting non-GAAP operating margin of 6% and unlevered free cash flow of between $43 million and $45 million.
The biggest question for investors is whether the online survey market is big enough to sustain SurveyMonkey's growth, or the company will eventually hit a wall. We won't have the answer to that question for some time. But with the combination of better-than-expected results and the confidence provided by a big backer like Salesforce, I think SurveyMonkey is off to a promising start.
