After unveiling fiscal first-quarter results for the period ending April 30 that exceeded industry watchers' predictions, shares in budget-forecasting software stock Anaplan (PLAN) were rallying 18% at 11:30 a.m. EDT on Tuesday.
In the past, financial planning relied upon incomplete data that was difficult to access and lacked flexibility. Anaplan's forecasting software allows thousands of concurrent users to see the immediate impact of changing financial assumptions, giving managers greater insight into decision-making.
Based on Anaplan's fiscal Q1 results, the solution is resonating with users. Management reports that sales in the quarter jumped 47% year-over-year to $75.8 million, which was about $5 million better than Wall Street analysts were modeling. The better-than-hoped top line allowed management to make progress toward profitability, too. After one-time adjustments, its loss of $0.16 per share was $0.04 better than forecasts and an improvement from its $0.25 per share loss in the same quarter last year.
The solid performance was driven by new customers and ongoing penetration into existing accounts. The company's dollar-based net expansion rate, a measure of spending by existing clients over the past year, was 123%. That continues a streak of 120% or higher rates that's lasted longer than three years.
Anaplan's quarter has management increasingly optimistic about its fiscal full year. It now expects that total revenue will exceed $326 million, up from its prior forecast of $310 million. It also predicts its adjusted operating margin will improve to negative 22.5% this fiscal year, which is better than its previous negative 26% outlook.
The company's still got work to do before it rewards investors with profit, but it could only be a matter of time before that happens. The "connected-planning" market it targets is worth an estimated $20 billion per year. Given that CEO Frank Calderoni knows a thing or two about the pain points facing its customers (he's the former CFO of Red Hat), this could be a stock that's worth buying in long-haul growth portfolios.