Momentive (NASDAQ:MNTV) Reports Q3 In Line With Expectations But Guidance Underwhelms

Kayode Omotosho /
2022/11/03 4:36 pm EDT

Online survey platform Momentive (NASDAQ:MNTV) reported results in line with analyst expectations in Q3 FY2022 quarter, with revenue up 5.76% year on year to $121.3 million. However, guidance for the next quarter was less impressive, coming in at $121 million at the midpoint, being 2.59% below analyst estimates. Momentive made a GAAP loss of $20.3 million, improving on its loss of $22.9 million, in the same quarter last year.

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Momentive (MNTV) Q3 FY2022 Highlights:

  • Revenue: $121.3 million vs analyst estimates of $121 million (small beat)
  • EPS (non-GAAP): $0.04 vs analyst estimates of $0.04 (5.26% beat)
  • Revenue guidance for Q4 2022 is $121 million at the midpoint, below analyst estimates of $124.2 million
  • Free cash flow of $177 thousand, down 85.8% from previous quarter
  • Customers: 897,500, down from 909,700 in previous quarter
  • Gross Margin (GAAP): 82.4%, up from 80.6% same quarter last year

“In the third quarter, we remained focused on our long-term revenue growth and profitability targets while navigating an increasingly challenging macroeconomic environment,” said Zander Lurie, chief executive officer of Momentive.

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.

Sales Growth

As you can see below, Momentive's revenue growth has been mediocre over the last two years, growing from quarterly revenue of $95.4 million in Q3 FY2020, to $121.3 million.

Momentive Total Revenue

Momentive's quarterly revenue was only up 5.76% year on year, which might disappoint some shareholders. But the growth did slow down compared to last quarter, as the revenue increased by just $1.21 million in Q3, compared to $3.17 million in Q2 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates Momentive is expecting revenue to grow 3.11% year on year to $121 million, slowing down from the 16.2% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 9.05% over the next twelve months.

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Customer Growth

You can see below that Momentive reported 897,500 customers at the end of the quarter, a decrease of 12200 on last quarter. That is suggesting that the customer acquisition momentum is slowing a little bit. That is slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing a little bit.

Momentive Customers

Key Takeaways from Momentive's Q3 Results

With a market capitalization of $1.1 billion Momentive is among smaller companies, but its more than $193 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 nice that Momentive improved their gross margin, even if just slightly. That feature of these results really stood out as a positive. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations and there was a slowdown in customer growth. Overall, this quarter's results were mixed. The company is up 2.54% on the results and currently trades at $7.24 per share.

Momentive may have had a tough quarter, but does that actually create an opportunity to invest 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.