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Cloud Stocks: SurveyMonkey Counts on Enterprise Segment for Growth

Posted on Thursday, Aug 22nd 2019

According to an Orbis Research report, the global online survey software market is expected to grow 11% annually over the next few years from $1.01 billion in 2018 to double that by the year 2024. SurveyMonkey (Nasdaq: SVMK) is delivering strong results in wake of this growth projection.

SurveyMonkey’s Financials

SurveyMonkey’s second quarter revenues grew 20% over the year to $75.1 million, ahead of the market’s forecast of $72.5 million. Net loss was $18.48 million or $0.14 per share, compared to a loss of $12.46 million or $0.12 per share a year ago. On an adjusted basis, losses reduced to $0.01 per share compared with $0.02 per share a year ago, and were better than the Street’s estimate of a loss of $0.05 per share.

The growth in revenue was driven by increased paid subscriber base and a continued acceleration of Average Revenue Per User (ARPU). For the quarter, paying users grew 12% to just over 692,000, driven by sales of SurveyMonkey enterprise and the continuing adoption of Teams. 80% of its paying users are now on annual plans, compared with 78% a quarter ago and 75% a year ago. The company has been actively working on shifting the composition of its paid user base to a higher mix of annual users as it believes that the lifetime value from these customers is significantly higher than that from the monthly users. The annual users are also more likely to adapt the other products cross-sold by the company.

During the quarter, ARPU grew 8% over the year and 4% over the quarter to $442. The increase in ARPU was driven by stronger pricing in the self-serve and enterprise plans and the audience solution.

For the current quarter, SurveyMonkey expects to report revenues of $77-$78 million with an adjusted operating breakeven performance. It expects to end the current year with revenues of $302-$306 million.

SurveyMonkey’s Enterprise Focus

To attract enterprise customers, SurveyMonkey is focusing on its platform. Through its open ecosystem approach, enterprise customers are finding it simpler to integrate SurveyMonkey into their existing systems of record such as Salesforce, Microsoft, Google, Oracle, and Tableau. During the quarter, it built out Lightning Flows for the SurveyMonkey connector for Salesforce, to help SurveyMonkey integrate even more tightly into the native Salesforce UI framework. For Microsoft customers, it improved the experience offered in the Microsoft Teams integration tool so as to empower workers to solicit and share feedback.

These actions are seeing results as SurveyMonkey now has 20% of its revenues coming from enterprise customers compared with 11% a year ago. Enterprise customers grew 60% over the year to just under 4,780. New enterprise customers added during the quarter include names like MercadoLibre, TriNet, Bonneville Power administration and TripActions.

Earlier this month, SurveyMonkey announced the acquisition of customer experience management player GetFeedback for an estimated $68 million. San Francisco-based GetFeedback was founded in 2013 to help companies understand and improve their customer experience with a simple, easy-to-use software solution. The founders for GetFeedback were Salesforce alumni and designed the solution with key focus on the Salesforce platform. According to the Salesforce AppExchange, GetFeedback is a leading feedback solution for Salesforce. It serves more than 10,000 leading brands, including enterprise customers like Cisco, 3M, Caterpillar, Johnson & Johnson, Walgreens, and Salesforce.

Prior to the acquisition, GetFeedback had raised $2.3 million from Salesforce Ventures at an undisclosed valuation. Owler estimates that the company was operating at annualized revenues of $35 million. The acquisition of GetFeedback will help SurveyMonkey continue to scale its enterprise offerings.

SurveyMonkey’s stock is currently trading at $17.50 with a market capitalization of $2.3 billion. It had climbed to a 52-week high of $20 last month. The stock had fallen to a 52-week low of $10.05 in November last year. In September last year, SurveyMonkey had raised $180 million from its IPO by selling shares at $12 apiece at a valuation of $1.5 billion.

This segment is a part in the series : Cloud Stocks

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