Online survey platform Momentive (NASDAQ:MNTV) reported results in line with analyst expectations in Q1 FY2023 quarter, with revenue up 1.57% year on year to $118.8 million. Momentive made a GAAP loss of $23.8 million, improving on its loss of $37.4 million, in the same quarter last year.
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Momentive (MNTV) Q1 FY2023 Highlights:
- Revenue: $118.8 million vs analyst estimates of $119 million (small miss)
- EPS (non-GAAP): $0.08 vs analyst estimates of $0.05 ($0.03 beat)
- Free cash flow was negative $10 million, down from positive free cash flow of $6.62 million in previous quarter
- Customers: 878,600, down from 887,400 in previous quarter
- Gross Margin (GAAP): 82.7%, up from 80.7% same quarter last year
Previously known as SurveyMonkey, Momentive (NASDAQ:MNTV) offers software as a service that makes it easy for users create, manage and distribute online surveys.
The Internet has given customers more choice on whom to conduct business with and has also given them the power to easily share their experiences with other customers. These twin dynamics effectively have increased pressure on companies to both improve their customer service and also monitor their brand reputation online, driving the need for customer experience software offerings.
As you can see below, Momentive's revenue growth has been unremarkable over the last two years, growing from quarterly revenue of $102.3 million in Q1 FY2021, to $118.8 million.
Momentive's quarterly revenue was only up 1.57% year on year, which might disappoint some shareholders. But the revenue actually decreased by $3.57 million in Q1, compared to $1.02 million increase in Q4 2022. If we take a closer look, we'll observe a similar revenue decline in the same quarter last year, which could suggest the decline is seasonal. However, the management is guiding for a further drop in revenue in the next quarter, so it is definitely worth keeping an eye on the situation.
Ahead of the earnings results the analysts covering the company were estimating sales to grow 4.81% over the next twelve months.
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You can see below that Momentive reported 878,600 customers at the end of the quarter, a decrease of 8800 on last quarter. That is better customer growth than last quarter but while it is still quite a bit below what we have typically seen over the last year, it is suggesting that the company may be reinvigorating growth.
Key Takeaways from Momentive's Q1 Results
With a market capitalization of $1.41 billion Momentive is among smaller companies, but its more than $199.1 million in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.
It was good to see that Momentive’s customer growth is staying on a steady trajectory. On the other hand, revenue growth was quite weak and gross margin deteriorated a little. Free cash flow also missed. Overall, it seems to us that this was a complicated quarter for Momentive. The company is flat on the results and currently trades at $9.38 per share.
Should you invest in Momentive right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.
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The author has no position in any of the stocks mentioned.