SaaS Software Cloud Update – June 2018

Navidar | July 11, 2018

Public Markets and M&A Activity 

The Navidar SaaS Software Cloud Index remained flat in June and advanced 19.6% so far in 2018, compared with the NASDAQ’s +0.9% and +8.8%, the Russell 2000’s +0.7% and +7.4%, and the S&P 500’s +0.5% and +1.7%, respectively. Following is a summary of the company-specific issues related to selected stocks in our coverage universe that meaningfully out- or under-performed as well as relevant M&A activity.

Twitter (NYSE: TWTR +25.9%)the social media platform provider was added to the S&P 500 stock index, a move that meant mutual funds and exchange-traded funds, bought TWTR shares to ensure they have the proper weighting. TWTR visibility has skyrocketed since President Donald Trump entered the White House, who has been using the digital communications platform to tweet messages on topics from trade and the economy. The Company will be added to the broad “information technology” sector of the S&P 500.

Snap (NYSE: SNAP +14.9%)the social media provider is reportedly working on a gaming platform for its signature application, slated for launch later this year. SNAP decided to reverse the most controversial component of its redesign last month. From helping SeatGeek drum up event ticket sales, to landing cable network giants the young viewers, the Company is growing despite the lack of respect it has historically garnered on Wall Street. SNAP CEO Evan Spiegel gave a rare television interview to CNBC at the Cannes Lions Festival, indicating that the Company was open to pursuing inorganic growth opportunities.

Coupa Software (NASDAQ: COUP +16.6%)the cloud-based spend management platform provider reported strong 1Q19 results, outperforming top and bottom-line expectations. COUP revenues increase by 37% to $56.4M in 1Q19, compared to the same quarter last year. Subscription revenue grew by 40% Y-o-Y to $50.0M. Adjusted EBIT was reported at $0.3M during the quarter, compared to a loss of ($4.6M) in 1Q18. The Company expanded its customer base by adding blue chip and high growth customers and is believed to be well positioned to deliver on its business and financial objectives for the year. Its cumulative spending under management reached $747B, and is expected to surpass $1T during the current fiscal.

2U (NASDAQ: TWOU –11.9%) the online education services provider announced plans to acquire Critiquelt, a digital annotation tool provider, which allows marking of images, documents, videos and presentations, in real time. The deal is part of TWOU efforts to improve the technology of online learning by boosting interaction between teachers and students. The terms of the deal were not disclosed.

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