Anaplan (NYSE:PLAN) Surprises With Q2 Sales, Stock Jumps 15.8%

Radek Strnad /
2021/08/31 4:16 pm EDT

Financial planning software company Anaplan (NYSE:PLAN) reported Q2 FY2022 results that beat analyst expectations, with revenue up 35.5% year on year to $144.3 million. Anaplan made a GAAP loss of $51.1 million, down on its loss of $35.5 million, in the same quarter last year.

Is now the time to buy Anaplan? Access our full analysis of the earnings results here, it's free.

Anaplan (PLAN) Q2 FY2022 Highlights:

  • Revenue: $144.3 million vs analyst estimates of $133.8 million (7.86% beat)
  • EPS (non-GAAP): -$0.09 vs analyst estimates of -$0.13
  • Revenue guidance for Q3 2022 is $146 million at the midpoint, above analyst estimates of $142.3 million
  • The company lifted revenue guidance for the full year, from $557.5 million to $572.5 million at the midpoint, a 2.69% increase
  • Free cash flow was negative -$23.99 million, down from positive free cash flow of $7.61 million in previous quarter
  • Net Revenue Retention Rate: 119%, in line with previous quarter
  • Gross Margin (GAAP): 74.8%, in line with previous quarter

“We are pleased with our strong performance and healthy momentum across the business,” said Frank Calderoni, chief executive officer of Anaplan.

Founded by Michael Gould in 2006 in a stone barn in Yorkshire, England, Anaplan is a financial modelling software that helps large enterprises with complex decision-making around budgets and financial forecasts.

With the growing complexity of operations and supply chains of many corporations, there is a growing market for cloud-based software solutions that enable collaborative finance reporting and planning.

Sales Growth

As you can see below, Anaplan's revenue growth has been strong over the last year, growing from quarterly revenue of $106.5 million, to $144.3 million.

Anaplan Total Revenue

And unsurprisingly, this was another great quarter for Anaplan with revenue up an absolutely stunning 35.5% year on year. On top of that, revenue increased $14.4 million quarter on quarter, a very strong improvement on the $7.3 million increase in Q1 2022, and a sign of acceleration of growth.

Analysts covering the company are expecting the revenues to grow 21.6% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

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Product Success

One of the best things about software as a service businesses (and a reason why they trade at such high multiples) is that customers tend to spend more with the company over time.

Anaplan Net Revenue Retention Rate

Anaplan's net revenue retention rate, an important measure of how much customers from a year ago were spending at the end of the quarter, was at 119% in Q2. That means even if they didn't win any new customers, Anaplan would have grown its revenue 19% year on year. That is a good retention rate and a proof that Anaplan's customers are satisfied with their software and are getting more value from it over time. That is good to see.

Key Takeaways from Anaplan's Q2 Results

With a market capitalization of $8.88 billion Anaplan is among smaller companies, but its more than $312.9 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.

We were impressed by how strongly Anaplan outperformed analysts’ revenue expectations this quarter. And we were also excited to see the really strong revenue growth. Overall, we think this was a really good quarter, that should leave shareholders feeling very positive. The company is up 15.8% on the results and currently trades at $69.5 per share.

Should you invest in Anaplan 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.