Zoom Video Communications (ZM -1.59%) and Teladoc Health (TDOC -3.10%) have been getting a lot of press. This attention is well deserved as their products and services are helping many people and entities around the world mitigate the fallout from the novel coronavirus pandemic, and stem the spread of COVID-19.
Zoom's video-first communications platform is enabling office workers, educators, and others to more effectively work remotely. It's also allowing people to virtually socialize while much of the global population is under some form of a lockdown order. Management said on last month's fourth quarter earnings call that it's "definitely seen an uptick in usage" related to the coronavirus. And Teladoc's telahealth services are enabling patients and healthcare providers to avoid in-person office visits.
This increased attention has lit a fire under their stocks. Since the market peak on Feb. 19, shares of Zoom and Teladoc have soared 23.4% and 33.1%, respectively, as of Friday, April 3. The S&P 500 (including dividends) has plunged 26.3% over this period.
These's still a lot to like about both stocks, as long as you have a long-term outlook. But if you're looking for a much lesser-known stock that is also poised to get a tailwind from the pandemic, you might want to explore Everbridge (EVBG 0.03%).
Image source: Getty Images.
Everbridge's key stats
Along with significantly outperforming the market since the S&P peaked in mid-February, the stock has crushed the market in 2020 and over the three-year period. (That's the longest full-year period possible, as we'll get to in a moment.)
|
Company |
Market Cap |
Projected Annualized 5-Year EPS Growth* |
Return Since the Market Peak on Feb. 19 |
YTD 2020 Return |
3-Year Return |
|---|---|---|---|---|---|
| Everbridge | $3.6 billion | 559% | 0.3% | 33.8% | 437% |
|
S&P 500 |
--- | -- | (26.3%) | (22.6%) | 12% |
Data sources: Yahoo! Finance and YCharts. Data as of April 3, 2020. EPS = earnings per share. YTD = year to date. *Wall Street's consensus estimate.
Everbridge's business
Everbridge is a critical event management (CEM) specialist. Its platform provides communications and applications that help businesses and government entities keep people safe and mitigate or prevent disruptions to their operations during critical events. These include public safety threats such as active shooter situations, terrorist attacks, and severe weather conditions; and business-specific events such as IT outages, cyberattacks, and supply chain disruptions. This list also includes pandemics.
The company, based in the Boston area, was founded in 2002 in the wake of the 9/11 terrorist attacks and held its initial public offering (IPO) in September 2016. The fact that it's only been publicly traded for about three and a half years is no doubt one reason it flies under the radar of many investors. Another reason is likely that its business is not that "sexy," or exciting. However, its low profile seems poised to change due to the coronavirus pandemic.
Helping to manage the impact of the coronavirus pandemic
On Feb. 13, Everbridge announced that it had launched a "new specialized risk intelligence package to assist organizations with managing the impact of the coronavirus on their people, assets, customers, facilities, supply chains, and brand."
And on March 23, the company announced that it had acquired the Netherlands-based global cell broadcast technology leader one2many. This acquisition enabled the launch of what the company touts as the "industry's first unified public warning platform to combat the COVID-19 pandemic globally." It combines Everbridge's location-based mobile messaging with cell broadcast for countrywide population alerting.
The new hybrid platform "enables countries to protect against coronavirus; share updates on viral hotspots and pandemic best practices; coordinate first responders and healthcare resources; establish two-way communications with at-risk populations; and manage disruptions to transportation, education and other critical services," according to the press release.
The European Union (EU) recently mandated that its member countries have a population-wide alerting system up and running by June 2022. So Everbridge's new system, which exceeds the EU's requirements, seems poised to capture a good chunk of new business.
Image source: Everbridge.
Business model, customers, and financials
Everbridge has a software-as-a-service (SaaS) business model, which is often a very attractive model because it enables a company to generate a steady stream of subscription revenue.
Its more than 5,000 global customers include nine of the 10 largest U.S. cities, seven of the top 10 U.S. tech companies, 25 of the 25 busiest North American airports, seven of the 10 largest U.S. healthcare systems, and more than 40 federal agencies. It has a greater than 95% retention rate, indicating high customer satisfaction.
The company's revenue is growing fast, though it's not yet profitable on either a reported or adjusted basis for the trailing 12 months. In 2019, its revenue jumped 37% year over year to $200.9 million. It posted a net loss of $52.3 million, or $1.58 per share, compared with a net loss of $47.5 million, or $1.63 per share, in 2018. Adjusted for one-time items, the net loss was $6.9 million, or $0.21 per share, compared with $15.8 million, or $0.54 per share, in 2018.
As is rather typical for SaaS companies, Everbridge's free cash flow exceeds its net income (or, more specifically, its cash outflow is less than its net loss), which is a positive as net income is merely an accounting measure. In 2019, free cash flow was negative $2.8 million, an improvement from the year-ago outflow of $6.9 million.
Everbridge ended the year with cash and cash equivalents of $531.6 million.
The company seems to have a clear path to profitability. Wall Street expects it to increase adjusted earnings at a torrid average annual pace of 559% over the next five years.
