Post by
retiredcf on May 05, 2022 12:05pm
CIBC
EQUITY RESEARCH
May 5, 2022 Flash Research
MAGNET FORENSICS INC.
Q1/F22 First Look: Growth Momentum Continues
Conclusion: Magnet reported a Q1 beat, with net revenue that was 11%
higher than consensus and EBITDA margins that were 120 bps above
expectations. ARR growth remains strong, with Y/Y growth accelerating to
49% in the quarter. Magnet reaffirmed its revenue and adjusted EBITDA
outlook with the results and continues to expect growth to be stronger in the
second half. Magnet also announced another acquisition with results,
acquiring the IP assets of Comae Technologies as it continues to use IPO
proceeds to drive both organic and inorganic growth. We will be looking for
additional details on recent logo wins, the launch of Magnet IGNITE and
integration plans for Comae Technologies on the call at 8AM ET.
Key Highlights
Q1/22 Results: Magnet reported revenue of $19.8 million, 11% above
consensus ($17.9 million) and in line with CIBCe ($19.8 million). Adjusted
EBITDA of $2.5 million was above consensus ($2.0 million) but shy of our
estimate ($3.2 million). The EBITDA margin of 12.4% was 120 bps above
consensus at 11.2% and 370 bps below our expectation of 16.1%.
ARR Growth Driven By Contract Wins & Cross-sell Efforts: Magnet
reported Annual Recurring Revenue of $66.0 million, up 49% Y/Y and 13%
Q/Q. The Y/Y acceleration in ARR growth is a sign of good sales momentum,
as the 49% growth rate is up from 46% in the prior year.
Segmented Results: Term license revenue of $4.7 million grew 53% Y/Y,
up from $3.1 million in Q1/F21. Perpetual license revenue of $0.4 million was
down from $1.2 million in the year-ago period as the company transitions to a
term license model. Maintenance & support revenue of $12.6 million was up
44% Y/Y. Professional services revenue was $2.1 million, up 30% Y/Y.
Profitability: Gross margins in the quarter were 92.4%, above consensus
(90%) but roughly in line with CIBCe (92.5%). Gross margins were down 260
bps Y/Y given higher contribution from lower-margin professional services
revenue. Adjusted EBITDA margins in the quarter were 12.4%, above
consensus (11.2%) but below CIBCe (16.1%).
Outlook For 2022 Maintained: Magnet reiterated its 2022 financial outlook,
expecting revenue of $91.5 million - $93.5 million with stronger revenue
growth to come in the second half of the year. Adjusted EBITDA is expected
to be in the range of $13 million - $15 million, implying margins of 14%-16%.
Acquisition Of Comae Technologies: Magnet acquired Comae, a
cybersecurity firm specializing in incident response and memory analysis.
Comae founder Matt Suiche will join Magnet to lead R&D in this area going
forward. No terms of the acquisition were disclosed.
Conference Call Details: Management will host a conference call to discuss
results on Thursday, May 5, at 8:00 a.m. ET. Dial-in: 877-284-0335
(participant code: 8726066
(They have a $34.00 target)