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Cloud Stocks: Is Anaplan a Prospect for Oracle, SAP?

Posted on Thursday, Jun 18th 2020

According to a recent Fortune Business Insights report, the global ERP software market is expected to grow at 8.5% CAGR to reach $71.63 billion by 2026. Cloud-based planning software provider Anaplan (NYSE:PLAN) recently reported its first quarter results that delivered mixed results despite the growth forecast.

Anaplan’s Financials

Revenues for the first quarter grew 37% to $103.8 million, ahead of the Street’s forecast of $101.08 million. Adjusted loss for the quarter improved 37.5% over the year to $0.10 per share, compared with the Street’s forecast of a loss of $0.14 per share.

By segment, subscription revenues grew 44% to $93.8 million and professional services revenues reduced 7% to $10 million.

Among key metrics, the company now has 367 customers with more than $250,000 in annual recurring revenues, recording a growth of 32% over the year. Its dollar-based expansion rate was 117%.

Anaplan did not provide an earnings guidance for the second quarter. It expects Q2 revenues in the range of $103-$104 million, significantly short of the Street’s estimate of $110.2 million.

Anaplan’s Growth Concerns

Anaplan attributed the slower revenues to customers refocusing their investments to managing Covid-related issues instead of investing in Anaplan-related projects. However, the redistribution of priorities varies across industries. For instance, it saw a greater impact in hospitality and travel due to the pandemic. At the same time it is witnessing growth in healthcare. Its solution is addressing this demand as experts have created 17 production-ready models that can be downloaded and deployed at no cost by any Anaplan customer. These healthcare focused models address COVID-19 specific use cases such as hospital bed planning, PPE redistribution, and FEMA-type expense tracking. It also recently launched a 90-day free trial and met with nonprofit organizations and government authorities to address their challenges related to COVID-19.

During the quarter, Anaplan continued to grow the number of certified Master Anaplanners and delivered significantly higher number of training sessions. With employees looking to expand their skills, its training offerings are in high demand. As part of its partner ecosystem expansion, it recently added Genpact as a new partner. Genpact is a leader in driving finance transformations and boasts of more than 90,000 global consultants.

Despite the current conditions, and its latest performance, Anaplan is reassuring the investors of its future prospects. It is confident that the demand for Connected Planning solution will grow as companies will look to drive digital change to deliver faster responses to the changing conditions. Its calculation engine and partner ecosystem are expected to help it deliver long-term success.

According to a report published late last year, the global Enterprise Performance Management (EPM) market grew 14.2% in 2018 to $3.2 billion in EPM license, maintenance, and subscription revenues. Oracle led the market with a 27% market share, followed by SAP and IBM. Anaplan was the fifth-largest provider. Former close partner, now rival, Workday is making big moves in this market as well. In 2018, Workday announced the acquisition of Adaptive Insights. The acquisition is helping it deliver a unified solution that provides finance teams insights into planning, analytics, and transactions as well as compete with the likes of Oracle and SAP. With both Oracle and SAP looking to continue to grow their cloud-based offerings, one of them could very well be looking at a potential acquisition of Anaplan.

Anaplan’s stock is currently trading at $47.13 with a market capitalization of $6.5 billion. It touched a 52-week high of $63.71 in February this year. The stock hit a 52-week low of $26.04 in the recent market turmoil. Anaplan had listed at $17 in October 2018 when it raised $263.5 million at a valuation of $1.8 billion.

This segment is a part in the series : Cloud Stocks


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