Category: Software Stocks
Momentive Global (NASDAQ: MNTV)
Momentive Global (NASDAQ: MNTV), formerly SurveyMonkey, is a leading provider of cloud-based survey software products that enable companies to better engage with customers and employees. Founded as SurveyMonkey in 1999, and based in San Mateo, California, the company is best known for its flagship SurveyMonkey customer feed-back software. An out-of-favor stock, Momentive Global has had a storied history since its IPO five years ago.
The company, then known as SurveyMonkey, priced its 15 million share IPO at $12 per share on the NASDAQ on September 25th 2018. The underwriters subsequently exercised their option to purchase an additional 2.25 million shares. The IPO was led by J.P. Morgan Securities, Allen & Company and BofA Merrill Lynch. Credit Suisse, UBS, Wells Fargo, SunTrust Robinson Humphrey, Code Advisors, Foros, JMP Securities and LionTree Advisors.
Momentive Global is best known for its namesake SurveyMonkey cloud-based questionnaire software that is primarily used for customer feed-back, TechValidate, a marketing content automation software solution, and SurveyMonkey Engage, which is focused on internal employee surveys and feed-back.
In June of 2021, the company changed its name to Momentive Global, reflecting its wider range of customer and employee experience management offerings, which include the addition of market research services. In October of 2021, the company announced that it would be acquired by Zendesk in an all-stock transaction for roughly $4.1 billion. With the intent to expand from customer service to a broader market of global customer intelligence, Zendesk, at the time, appeared to be particularly interested in the SurveyMonkey portion of the business. However, the deal was ultimately rejected by Zendesk shareholders, and Zendesk was forced to terminate the transaction. Zendesk was ultimately taken private in June of last year in a $10 billion acquisition by an investor group led by Permira and Hellman and Friedman.
Today, more than 345,000 organizations around the world use one or more of MNTV’s products, and the company notes that it has over 17 million active users that draw on market insights, brand insights, as well as employee, customer, and product experiences. Over 95 percent of the Fortune 500 use a Momentive product.
In a measure to return cash to shareholders, the company initiated a share repurchase plan in February of 2022 with the intent to repurchase up to $200 million of its common stock. Through the first three quarters of last year, Momentive had repurchased $84 million. At the end of Q3, MNTV held $193 million in cash along with $183 million in debt, for a net cash position of $183 million. The company’s DSOs are 23 days, a reasonable level, attesting to the short-term nature of most of its customer contracts, which are said to be of a duration of one year or less. The company announced an 11 percent workforce reduction, coinciding with its Q3 2022 earnings results. Last month, the company appointed a new CFO, Rich Sullivan, whose experience includes stints at Dreamworks, Twitter, and AT&T.
Atlassian: Team Player
One of the more intriguing enterprise software IPOs of the last number of months is Atlassian (NASDAQ: TEAM), a company which focuses on team-oriented custom software development. Founded in Sydney, Australia in 2002, the company is led by co-CEOs Mike Cannon-Brookes and Scott Farquhar. Fiscal Year 2016 (ending June 30th) Consensus revenue and EPS estimates call for $458 million and $0.33. This implies revenue growth of 40 percent over fiscal year 2015, though we note that the company executed a couple of tuck-in acquisitions in that year.
Atlassian made its debut on the NASDAQ on December 10, 2015, at a price of $21.00 per share. The offering featured 22 million Class A common shares, all of which came from the company, enabling it to raise roughly $430 million. Investment banks Goldman Sachs and Morgan Stanley were the lead underwriters of the stock offering, with Allen & Company, UBS Securities, and Jefferies, Canaccord Genuity, JMP Securities, Raymond James, and William Blair all fighting for a share of the IPO pot. Atlassian, recently trading in the vicinity of $22, carries a market cap of roughly $4.7 billion.
Atlassian’s mission calls for the power to “unleash the potential in every team,” in this case software developer teams focused on customized software for corporations, government agencies and non-profits. Each of the more than 20 software products offered by Atlassian helps teams complete, organize, and discuss their work. Atlassian offers a portfolio of software tools that include JIRA, for team planning and product management, Confluence, for team content creation and sharing, HipChat, for team messaging and communication, Bitbucket for team code sharing and management, and JIRA Service Desk, for team services and support applications.
Atlassian’s products are built for teams of all sizes, and are utilized in almost every industry. Atlassian boasts over five million monthly users, and over 57,000 customers, including 79 of the Fortune 100, and 273 of the Fortune 500. Roughly 30 percent of sales comes from subscriptions, 50 percent from maintenance, 15 percent from perpetual licenses, and five percent from other.
Post-IPO, Atlassian has a strong balance sheet with over $700 million in cash, and no debt. To learn more about how Atlassian screens relative to its software peers, please contact Battle Road Research.