Mimecast Ltd. (MIME) delivered better-than-expected Q1 results and raised its full-year guidance for revenue and adjusted EBITDA. Following the Q1 beat and upbeat outlook, shares of the email security and risk management services provider closed 5.2% higher on August 3.
The company delivered earnings of $0.32 a share on revenues of $142.55 million. This compares favorably to the Street’s estimates. Analysts expected Mimecast to post earnings of $0.30 a share on revenues of $138.13 million.
Management now expects FY22 revenue to be in the range of $576.7 million to $583.4 million, up from the previous guidance range of $569.7 million to $579.7 million. Meanwhile, adjusted EBITDA is now expected to be between $152.0 million to $154.0 million, compared to the earlier forecast of $148.5 million to $150.5 million.
In response to Mimecast’s Q1 earnings release, Needham analyst Alex Henderson said, “Mime is seeing a solid improvement in demand conditions across the board.” Henderson raised his FY21 and FY22 revenue and EPS estimates, citing improvement in demand and high net retention/upsell.
Notably, Mimecast had a strong quarter, especially from the upsell and KPIs’ (key performance indicator) perspective. Its net revenue retention rate stood at 105%, reflecting sequential improvement on the back of improving upsell of 113% and lower churn rate.
Furthermore, it added 600 net new customers, while its average services per customer increased to 3.6 from 3.4 in the prior-year period. Also, its average order value per customer increased 9% in Q1.
Improving demand environment, solid recurring revenue base, and improving KPIs have led to a 37% growth in its stock in three months. (See Mimecast stock charts on TipRanks)
Despite the decent growth, Henderson’s price target represents further upside in Mimecast stock. Henderson highlighted that the company’s “full subscription Security-as-a-Service model helps mitigate downside risk and offers higher continuity and predictability with 98% Recurring Revenues.” The analyst reiterated a Buy rating on the stock with a price target of $75 (29.3% upside potential).
In addition to Henderson, the majority of the analysts are leaned to the bullish side. Mimecast’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. The average Mimecast price target of $65.67 implies approximately 13% upside potential to current levels.
Furthermore, TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Mimecast stock, with 11% of investors who hold portfolios on TipRanks having increased their exposure in the last seven days.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
