Anaplan's (NYSE:PLAN) Q4 Sales Top Estimates, Stock Soars

Kayode Omotosho /
2022/03/02 4:41 pm EST

Financial planning software company Anaplan (NYSE:PLAN) announced better-than-expected results in the Q4 FY2022 quarter, with revenue up 32.7% year on year to $162.6 million. The company expects that next quarter's revenue would be around $165 million, which is the midpoint of the guidance range. That was in roughly line with analyst expectations. Anaplan made a GAAP loss of $60 million, down on its loss of $42 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) Q4 FY2022 Highlights:

  • Revenue: $162.6 million vs analyst estimates of $154.7 million (5.09% beat)
  • EPS (non-GAAP): -$0.11 vs analyst estimates of -$0.10
  • Revenue guidance for Q1 2023 is $165 million at the midpoint, above analyst estimates of $163.5 million
  • Management's revenue guidance for upcoming financial year 2023 is $745 million at the midpoint, beating analyst estimates by 2.08% and predicting 25.8% growth (vs 32.1% in FY2022)
  • Free cash flow was negative $21.9 million, compared to negative free cash flow of $833 thousand in previous quarter
  • Net Revenue Retention Rate: 118%, in line with previous quarter
  • Gross Margin (GAAP): 72.2%, down from 75.9% same quarter last year

“I am proud that Anaplan delivered a very strong fourth quarter and finished the year with over 1,900 customers. As we start the new fiscal year, we are well positioned with our growth strategy and the next level of innovation to take advantage of the opportunities ahead,” said Frank Calderoni, chief executive officer of Anaplan.

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

Finance and accounting software benefits from dual trends around costs savings and ease of use. First is the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software. Second is the consumerization of business software, whereby multiple standalone processes like supply chain and tax management are aggregated into a single, easy to use platforms.

Sales Growth

As you can see below, Anaplan's revenue growth has been very strong over the last year, growing from quarterly revenue of $122.5 million, to $162.6 million.

Anaplan Total Revenue

And unsurprisingly, this was another great quarter for Anaplan with revenue up 32.7% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $7.33 million in Q4, compared to $11 million in Q3 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 Anaplan is expecting revenue to grow 27% year on year to $165 million, in line with the 25% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $745 million at the midpoint, growing 25.8% compared to 32.1% increase in FY2022.

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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 118% in Q4. That means even if they didn't win any new customers, Anaplan would have grown its revenue 18% year on year. Trending up over the last year, this 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 Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Anaplan’s balance sheet, but we note that with a market capitalization of $6.71 billion and more than $299.3 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We liked to see that Anaplan beat analysts’ revenue expectations pretty strongly this quarter. And we were also excited to see the really strong revenue growth. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is up 5.71% on the results and currently trades at $49.42 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.