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Anaplan Shows Beginnings of a PaaS Strategy

Posted on Thursday, Mar 21st 2019

Cloud-based enterprise planning services provider Anaplan (NYSE:PLAN) went public in October last year. For the few months that the stock has been listed, it has delivered robust growth. Last month, Anaplan announced its quarterly results that surpassed market expectations and sent the stock soaring.

Anaplan’s Financials

For the fourth quarter of the year, Anaplan’s revenues grew 49% to $69.3 million. The company continued to report losses and ended the quarter with GAAP operating losses of $32.7 million. On an adjusted basis, it reported a non-GAAP loss per share of $0.13, compared with $0.18 a year ago. The market was looking for revenues of $63.18 million with a loss per share of $0.18 for the quarter.

By segment, subscription revenues grew 44% to $59.7 million, and professional services revenues nearly doubled to $9.6 million.

Anaplan ended the year with revenues growing 43% to $240.6 million and a non-GAAP loss of $0.73 per share.

Anaplan expects to end the current quarter with revenues of $70-$71 million. It forecast revenues of $310-$314 million for the year. The Street had forecast revenues of $65.99 million for the quarter and revenues of $301.19 for the year.

Anaplan’s Market Focus

Anaplan is driving growth by focusing on a few key areas. First, it is focusing on product innovation by adding new features and ways to allow customers to make better decisions. Earlier last year, it launched Optimizer, a UI-driven algorithm-based analytical engine that helps determine the best responses to any complex problem.

Second, it is focusing on community development of users. It has user groups in 26 cities worldwide and has launched several new programs and features that are helping them expand their reach from being a content provider to a one-stop shop for Connected Planning content.

Third, it has built an exclusive program to certify expert model builders called master Anaplaners who are pioneers of Connected Planning and are building best practices within the industry. These leaders represent the top 1% of Anaplan users and are acting as brand champions for its Connected Planning solutions. Anaplan also released a University Connect program that connects Anaplan to educational institutions and communities and helps students come prepared with Anaplan modeling skills.

Finally, it is driving adoption with its expanded partner ecosystem that includes consulting and implementation partners. Anaplan has more than 1,000 individual partners trained as Anaplan consultants.

Anaplan is also stepping into a PaaS strategy to fuel growth. Its open data platform allows organizations to build apps that can solve sophisticated planning problems. The Anaplan platform makes it easier for these apps to be extended to multiple business cases and scenarios and to meet different levels of business sophistication. Its platform is helping little known professional consultants like Akili, TwelveCG ,and Alvarez & Marsal to offer their services to a wider audience. These consultants have partnered with Anaplan and built apps that make it easier to perform a wide range of activities including financial forecasting, project management, and merchandise planning. Anaplan offers more than 200 such pre-built models to its customers, clearly signifying a promising beginning to a PaaS strategy.

So far, Anaplan has not made any significant acquisitions. Its last acquisition was in 2016 when it bought Burlingame-based startup Chartcube for an undisclosed sum. Chartcube was a small start-up that had raised $4.6 million to create a mobile data analytics, reporting, and collaboration solution. Anaplan should continue to promote its platform to help smaller startups build complementary service offerings that it can later acquire. As I have said earlier, for a company that intends to grow through acquisitions, launching a PaaS is the best way to ensure that adjacent products built on compatible stacks are growing in their eco-systems, but doing so without taxing their P&Ls. When the time comes, acquiring and integrating such companies tends to be relatively easier and seamless. What services do you think Anaplan’s developers should be focusing on if they are looking for such an exit option?

Till October last year, Anaplan was venture funded and had raised $300 million in financing from PremjiInvest, Baillie Gifford, Brookside Capital, Coatue Management, Founders Circle Capital, Harmony Ventures, Sands Capital Management, Salesforce Ventures, Sands Capital Ventures, DFJ Growth, Shasta Ventures, Meritech Capital Partners, and Granite Ventures. Its latest round of funding was held in January last year when it raised $60 million at a valuation of $1.4 billion.

Anaplan raised $263.5 million last October when it sold 15.5 million shares at $17 each. It was valued at $1.8 billion at the time of listing. The stock has done well since it went public. It is currently trading at $38.31 with a market capitalization of $4.8 billion. It had reached a high of $41.42 earlier this week.

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