Bear,
Thanks for your (and others') great analysis on this board. I've given your question about PLAN a first bash, happy to hear your views.
Key metrics last FY:
$m Q1 Q2 Q3 Q4
Rev. 75.8 84.5 89.4 98.2
yoy% 47% 46% 44% 42% < ++ >40% rev growth but decelerating
Sub Rev 65 74 80 90
% Rev 86% 88% 89% 92% < ++ Increasing subscription rev as % of total
Billing 87 89 114 126
yoy% 57% 46% 59% 25% < - key issue, billings growth down dramatically
RPO 473 516 590 656
yoy% 53% 56% 55% 49% < +/- revenue already in the bag; growth slowing
NRR 123% 121% 123% 122% < ++ Stable and positive NRR
Ad Loss -20.1 -16.1 -11 -10.1
Margin% -27% -19% -12% -10% < +/- Improving margins but still properly negative
FCF -5 1.5 -19.9 -6.1
Cash 332 356 311 310 < + Enough cash on hand
Other interesting metrics:
Payback period 22 months (improved vs prior Qs)
LTV:CAC - 5.4 times (improved vs prior Qs)
Key issue:
Billing growth dropped from >50% in prior Qs to 25% in Q4.??
Chief Growth Officer:
Mark Anderson was appointed 5 Aug 2019 and left 27 Feb 2020. They mention the US as a problem area with
some disruption and execution challenges. So looks like this hire did not work out. His role will not
be backfilled.
Distribution:
More refined customer segmentation implemented. They are going after larger and more complex customers
with higher propensity to buy.
More agile GTM team now led by MDs of 3 regions: Aisia-Pac, Europe, Americas, now reporting directly to
CEO will drive heightened focus, esp relevant for the US where execution has been lacking in Q4.
Partners:
Big partner ecosystem with Deloitte very prominent: digital transformation projects with Anaplan+ being
part of the total solution; the following are now in place with Deloitte (and CEO very excited about
this):?
Anaplan + Salesforce
Anaplan + Adobe
Anaplan + Google Cloud
Customers:
They have success in sales, supply chain, finance, ops. They mention a large European telecoms customer
as a big success story (Possibly Vodafone: [https://www.anaplan.com/customers/vodafone/](https://www.anaplan.com/customers/vodafone/))
A personal anecdote, having worked at said large Telco. The annual integrated marketing/sales planning
and budgeting process was extremely cumbersome during my time there and the forecasting process sucked
in the whole senior team from all subsidiary companies/territories for 3-4 months each year with
enormous amounts of time spent going backwards and forwards between various spreadsheets and systems.
So I can imagine huge efficiency gains through a platform such as Anaplan. I can also easily see it
expanding from the sales team to the marketing and finance teams, or ther other way round, if it takes
some of the pain away.
Outlook:
Revenue $102-103m (+34.5%) <- so slowdown in growth, but they stress this is conservative in the Q&A.
Continued investment in innovation and sales
NRR >120%
Q&A from earnings call:
Q: Execution challenges in US?
A: They were focused on putting in place ways to id customers with largest propensity to buy. Key was
to have this in place at beginning of the year.
Leadership changes in the US -> a relatively large number of new hires and some were new to Anaplan and
that caused some disruption in Q4.
Q: Billings growth to rebound after slump in Q4?
A: Don’t forecast billings, but new focus should give good amount of opportunity. When things are
growing so fast, it can cause a little disruption; but did not lose any opportunities.
Q: Why no backfilling of Mark’s role?
A: "I feel very comfortable and very happy" with talent in sales org. Asia Pac performed very well with
strong leader. Europe doing very well with very strong leader: largest customer expand there. Americas:
strong leader and supplemented the leadership team - they are adding 14 new regional account teams
reporting into these three leaders. Didn’t feel we needed the additional layer (i.e. Mark). "I feel
good about it." Sales kick-off 1st Feb: had over 200 partners at this event.
Q: Billings growth given Covid-19?
A: Will always be very prudent on forward guidance.
Q: All the changes in sales, how are you thinking about new hires?
A: All changes in the sales org related to the refinement of the GTM is now done - done in early Feb.
Q: Why make all of these sales org changes in Q4 and not Q1?
A: Refinement of GTM, important to get in place at beginning of year, as you expand you need to add when you can.
Q: Was there a misread of what was going on with customers in Q4, was handover not good?
A: Key thing is there was no loss of customers, secondly in the competitive landscape nothing has
changed and Anaplan still very well positioned, transformation is accelerating, partner ecosystem is
strong. "I feel good about the refinement."
Forbes write-up:
[https://www.forbes.com/sites/robertdefrancesco/2020/03/10/an...](https://www.forbes.com/sites/robertdefrancesco/2020/03/10/anaplan-refocuses-on-sales-execution-after-billings-miss/#4f4dead02c2d)
Q4 IR release:
[https://investors.anaplan.com/news/news-details/2020/Anaplan...](https://investors.anaplan.com/news/news-details/2020/Anaplan-Announces-Fourth-Quarter-and-Full-Fiscal-Year-2020-Financial-Results/default.aspx)
My take:
If there is more and faster digital transformation, PLAN should win.
COVID-19 is accelerating this type of transformation in large organisations.
I find the answers about what they did to fix the sales team and org convincing; market may have overreacted.
Valuation is attractive (P/S of 15.6 ttm).
-> I believe PLAN will surprise on the upside when they report Q1 on 26 May and will do well long-term. I’ve added a 8% position today.
Hope this is a good start for further analysis,
WSM
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