Cvent Picks Up Steam But Sees Profit Worries Ahead

By Markets Fool.com


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Handling logistics of getting a large group of people to the same place at the same time can be a nightmare. Cloud-based event planning specialist Cvent aims to make it easier to organize events such as business conferences. Coming into Monday morning's first-quarter financial report, Cvent investors hoped the company would begin 2015 with some positive momentum that it could carry through the year. Yet despite solid results that included faster growth in revenue and a good-sized profit on an adjusted basis, Cvent warned that earnings for the full year might fall short of what it had previously expected. Let's take a closer look at how Cvent did over the past quarter.

Cvent has a profitable get-together
Cvent has historically grown its sales at a rapid pace, and its momentum didn't slow during the first quarter. Revenue climbed 31% to $41.1 million, outpacing the 27% growth most investors had expected. The bottom-line results weren't quite as impressive, with adjusted net income falling about 40% to $1.6 million. That equated to adjusted earnings of $0.04 per share, which was nevertheless far better than the breakeven results most of those following the stock had forecast.

Neither of Cvent's major business divisions really stood out on overall growth. The majority of Cvent's revenue comes from platform subscriptions, and that segment's sales jumped 30% from the year-ago quarter to $28.3 million. Revenue in the newly renamed hospitality cloud segment climbed 32% to $12.8 million, a nearly identical growth rate that shows Cvent's balanced approach to make the most of its opportunities.

From a business perspective, Cvent highlighted some noteworthy accomplishments during the quarter. The company attracted major new enterprise-solutions customers from the accounting, pharmaceutical, and information-technology industries, as well as winning new and expanded business in the event-management area from clients such as Verizon Wireless and the pension fund CalPERS. Mobile-app and ticketing technology also brought in a number of large companies, and new hospitality-cloud clients included several well-known players in the casino industry, including Caesars Palace and the Paris hotel in Las Vegas.


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Should Cvent investors worry?
CEO Reggie Aggarwal talked up Cvent's results in the earnings press release, citing "increasing momentum for our Enterprise solutions and growing interest for our meeting and events platform to support larger and more complex events." Aggarwal also pointed to the hospitality-cloud's growth and teased some coming advances on that score as well.

The problem for investors, though, was that Cvent reined in its outlook for 2015 somewhat. Second-quarter revenue of $45.5 million to $46 million is ahead of what investors expect, but adjusted earnings between breakeven and $0.01 per share are well short of those expectations. Similarly, for the full year, Cvent upgraded its revenue guidance to $181 million to $183 million, but cut its earnings expectations to $0.20 to $0.23 per share.

Some of that revision comes from Cvent's just-announced acquisition of event-management solutions provider SignUp4. The company paid $22 million for SignUp4, which management believes will add to Cvent's customer base and improve the reach of its cloud offering. Even with a hit to earnings this year, Cvent thinks the transaction should add to adjusted operating earnings by 2016.

Still, the company is going through some growing pains. Cvent announced that CFO Pete Childs will leave his position and that it will conduct an executive search to replace him. With Childs having played a key role in Cvent's initial public offering, the change marks a key transition point for the company.

Cvent investors weren't happy with the news, sending the stock down 4% in the opening minutes of trading following the announcement. Yet if the company keeps investing in its long-term success, Cvent's results should eventually speak for themselves -- and make those who ignored short-term fluctuations happy they did.

The article Cvent Picks Up Steam But Sees Profit Worries Ahead originally appeared on Fool.com.

Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple and Cvent. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.