美國軟件行業(yè)盈利手冊：Q4盈利預(yù)覽

1、29January2019North AmericaEQUITIESInside HYPERLINK l _bookmark0 FQ418Earnings Preview2 HYPERLINK l _bookmark1 MicrosoftFQ219 Preview7 HYPERLINK l _bookmark2 ServiceNowFQ418 Preview15 HYPERLINK l _bookmark3 ProofpointFQ418 Preview23 HYPERLINK l _bookmark4 DropboxFQ418 Preview31 HYPERLINK l _bookmark5

2、 2uFQ418 Preview38 HYPERLINK l _bookmark6 TableauFQ418 Preview45 HYPERLINK l _bookmark7 InstructureFQ418 Preview52 HYPERLINK l _bookmark8 Check PointFQ418 Preview59 HYPERLINK l _bookmark9 Rapid7FQ418 Preview66 HYPERLINK l _bookmark10 Casa SystemsFQ418Preview73 HYPERLINK l _bookmark11 SolarWinds FQ41

3、8 Preview79 HYPERLINK l _bookmark12 Symantec FQ319 Preview86Changes to our MSFT estimates on Pages 8 - 9. Changes to our NOW estimates on Pages 16 -17.AnalystsMacquarie Capital (USA) Inc. HYPERLINK /directory/people/details?analystId=4797 Sarah Hindlian +1 212 231 1371 HYPERLINK mailto:sarah.hindlia

4、n sarah.hindlian HYPERLINK /directory/people/details?analystId=4823 Frederick Havemeyer +1 212 231 1830 HYPERLINK mailto:frederick.havemeyer frederick.havemeyerSoftware Earnings HandbookFQ418 Earnings PreviewKey pointsKey points We expect to see generally strong IT software spending to have persiste

5、d in FQ4, though less upside than usual due to stock market vol. However, we are expecting co.s to be conservative on guidance given a 35-day govt shutdown, rising dollar, and macro risks like Brexit. We would look to add post Q1. Valuation high, but note standout pos. channel results at DATA. Stead

6、y solid results at NOW and PFPT, in line at CHKP.Our Findings on Overall Software Environment, Key Spending AreasOur detailed channel work on the fourth quarter of 2018 with 40 application and infrastructure security resellers and partners suggests that FQ418 was a generally solid quarter backed by

7、a very strong IT spending environment, with digital transformation for business optimization a driving force. The areas where partners we queried noted seeing strong early budgets in 2019 include: front-office software such as CRM, data analytics, cloud email, identity security, and back-office such

8、 as cloud HR, cloud security, cloud General Ledger, and IaaS. Areas of spending that are seeing lower priority according to partners queried across their customer base included: enterprise firewalls, web proxies, payroll software, SEIM, and endpoint, after solid spending in 2018. Overall, we expect

9、good FQ4 reports, and only a handful of partners suggested that the stock market volatility in Dec. adversely impacted general spending. EMEA was robust, but the industrial and manufacturing verticals were generally softer, while the govt shutdown was diminutive in period.We Expect Conservative Outl

10、ooks Given Govt, Macro, FX, ASC 606We estimate overall software has 7% of annual revenues exposed to the US federal govt, with some entities higher such as PANW, SPLK, MSFT, SYMC, and others.While 60% of spending occurs at Fed year-end in CQ3, we do believe the 35-day US govt shutdown will create so

11、me headwinds. Partners noted DoD continued to spend, but other areas were softer with 15% of large SIs flagging a slowdown in FQ1 from this issue. With headwinds ahead such as Brexit, trade wars, and difficult comps against ASC 606, we expect conservative outlooks. Given valuations are38% and 35% ab

12、ove 10-year averages on EV/Sales and EV/FCF, respectively, and 17% above last years on FY2 cons. EV/Sales, we would trim and look to add to top names like MSFT, NOW, and PFPT post EPS. Findings on EPS are inside.Stand-Out Channel Checks of Note: +DATA, SYMC Improves, PFPT Lands Big Wins in EMEA, Ste

13、ady at NOW, though cons. looks high for FY19, More.We detail data on our channel work with leading partners, and our views on stocks into EPS. We are advising investors that valuations in some spots have gotten frothy and headwinds exist, so save ammunition in case of some softness. We had notably b

14、etter checks at Tableau and Symantec, both Neutral-rated names which we go over inside as to why, whereas we had steadily solid checks at ServiceNow and Microsoft Azure Services (looking for 70% Y/Y growth). PFPT won some large EMEA logos, but N.A. more in-line. CHKP, RPD, SWI, CASA and more inside.

15、Please refer to page HYPERLINK l _bookmark13 94 for important disclosures and analyst certification, or on our website HYPERLINK /research/disclosures /research/disclosures.FQ418 Earnings PreviewFX and Valuation TrendsThe FX environment broadly worsened during the quarter as the EUR and GBP period a

16、verage exchange rates depreciated by 1.3% and 1.7% against the USD respectively, while the JPY period average exchange rate appreciated by 0.7%.Valuations across our covered markets have been volatile with the recent market sell-off, though valuations remain elevated Y/Y and vs. historical averages.

17、Growth software valuations on EV/Sales have expanded 15.2% vs. 3 months ago but have depreciated 8.3% vs. 6 months ago. On EV/FCF the group has expanded just 2.5% vs. 3 months ago but has expanded 14.4% vs. 6 months ago. Growth software valuations remain elevated vs. the prior year, with the group a

18、verage EV/Sales valuation up 16.3% above last year, while the group average EV/FCF valuation is up just 3.8% above last year. The growth software group is presently trading 1 STD above the historical 5-year average on forward EV/FCF and 2 STD above the historical 5-year average on forward EV/Sales.T

19、raditionalsoftwarevendoraverageP/Evaluationshavegenerallycontracted,withthecurrentgroup average valuation roughly flat vs. 3 months ago, down 11.0% vs. 6 months ago, and down 10.3% vs. last year. The group on average is trading at 22.1x, near the 15-year mean group average of19.4xOur broadest measur

20、e of the software marketplace, which includes 165 stocks, shows that valuations on EV/Sales are roughly flat vs. 3 months ago and down 11.4% vs. 6 months ago, though valuations remain 13.5% above last year. On EV/FCF software group valuations have contracted 6.1% vs. 3 months ago and 12.6% vs. 6 mon

21、ths ago, though valuations have expanded 6.1% vs. last year.Valuations in this software group continue to trade near 2 STD above the historical 10-year group average on EV/Sales and around 1 STD above the historical 10-year group average on EV/FCF.Fig 1 Growth Software Sector Historical EV/Sales Val

22、uation (N=54)Source: FactSet, Macquarie Capital (USA), January 2019Fig 2 Growth Software Sector Historical EV/FCF Valuation (N=54)Source: FactSet, Macquarie Capital (USA), January 2019Fig 3 Traditional Software Sector Historical P/E ValuationSource: FactSet, Macquarie Capital (USA), January 2019Fig

23、4 Broad Software Sector Historical EV/Sales Valuation (N=165)Source: FactSet, Macquarie Capital (USA), January 2019Fig 5Broad Software Sector Historical EV/FCF Valuation(N=165)Source: FactSet, Macquarie Capital (USA), January 2019Government Shutdown Lasted 35 Days, May Recur ShortlyThe recent US Fed

24、eral Government shutdown was the longest in US history, eclipsing 20 others that preceded it. Out of the 20 prior shutdowns, most were short-lived, with only a handful surpassing 10 daysthe longest being 21 days during the Clinton administration in 1995, and the most recent being 16 days in 2013 dur

25、ing former President Obamas time. The 2018-2019 Federal Government shutdownwas centered on the division between Congress and President Trump around funding a border wall between the US and Mexico which caused non-essential government operations to close due to lack of appropriated funding.In the 201

26、3 Federal Government shutdownthe only notable shutdown this centurywe generally find impact to enterprise software vendors was mostly de minimis. We note Cisco was one of the few technology vendors who called out and quantified the impact as an approximate $50mn headwind in its Q12014 quarter; still

27、 only amounting to 50 bps of the top line. We remind investors that the federal government tends to spend the most in FQ3 with federal year end Sept. 30th, such that the timing of this shutdown was also ideal, with most deals already closed. We estimate that with 7% of software spending in US federa

28、l, another 3% in state, that 60% of that spending occurs in FQ3, with the remaining spread out over the remaining 3quarters.However, for companies under our coverage including Microsoft, Oracle, and Palo Alto Networks who all have more significant exposure to the Federal government, we expect financ

29、ial risks would begin to accumulate on a prolonged shutdown or on the back of reoccurrence. Companies like SolarWinds also have high exposure to govt spending, though it may be spread out between areas that are still open and others that are closed. We show exposure below, and note that the shutdown

30、 may cause pushouts in awarding new contracts (JEDI cloud contract) or result in lower demand for products/services, in addition to delayed payment for services already rendered.History of US Government ShutdownsStart DateAdministrationLength12/21/2018Trump3512/15/1995Clinton219/30/1978Carter179/30/

31、2013Obama169/30/1977Carter129/30/1979Carter119/30/1976Ford1010/31/1977Carter811/30/1977Carter811/13/1995Clinton512/17/1982Reagan311/10/1983Reagan310/5/1990Bush311/20/1981Reagan29/30/1984Reagan21/19/2018Trump29/30/1982Reagan110/3/1984Reagan110/16/1986Reagan112/18/1987Reagan12/8/2018Trump1Source: Forb

32、es, Statista, Macquarie Research, January 2019We note some potential impacts from the govt shutdown below:Delays in appointing new contracts and higher scrutiny of non-essentialcontractsCash flow impact on companies if funds are not appropriated for services alreadyrenderedTiming or any shifts aroun

33、d the large JEDI $10B cloud contract, though DoD is stilloperatingPossible Q4 /Q1 revenue hit for companies with greater exposure to government contractslarge enterprise software vendors, cybersecuritycompanies.Risks of cyber breaches with lack of govtstaff.For investors looking for companies who ha

34、ve highlighted government shutdown exposure in the past, companies like Citrix have noted: “From time to time, we could maintain individually significant accounts receivable balances from our distributors or customers, which are comprised of large business enterprises, governments and small and medi

35、um-sized businesses. If the financial condition of our distributors or customers deteriorates, our operating results could be adversely affected.Microsoft, also notes that “. An extended federal government shutdown resulting from the failure to pass budget appropriations, adopt continuing funding re

36、solutions or raise the debt ceiling, as well as other budgetary decisions limiting or delaying federal government spending generally, could reduce government IT spending on our products and services and adversely affect our revenues. ”also notes such risks, as do others, while Cisco in particular af

37、ter the next longest shutdown noted: “From a customer markets standpoint, in the first quarter of fiscal 2014 we had moderate revenue growth in the public sector and commercial markets, and slower growth in the enterprise market.Revenueincreasedinthepublicsectormarket,ledbyhigherspendingfromUSstatea

38、ndlocal governments in first quarter of fiscal 2014 as compared with the first quarter of fiscal 2013. Although we do not believe that the US Federal government shutdown, which occurred during our first quarter of fiscal 2014, had a significant direct impact on our US public sector orders and revenu

39、e, we believe it impacts global business confidence and thus our order and revenue momentum morebroadly.However, the next quarter the co. also noted that “The last month of our quarter was during the US government shutdown. The impact on our federal business was approximately $50 million. Our team t

40、here did an exceptionally good job managing through this challenging period. However, the shutdown, debt ceiling negotiations, and delay of key decisions exacerbated the lack of confidence among business leaders we had highlighted over the past few quarters.”Palo Alto also highlights this as a risk

41、noting, “despite continued uncertainty in the macroeconomic environment, in particular, weakness in EMEA and a slowdown in spending by and the temporary shutdown of the US Government. These macroeconomic factors may continue to impact overall spending in information technology (IT) by our customers,

42、 which could adversely affect our revenues and operating results” The co. also notes in its risk disclosures that “Government demand and payment for our products and services may be impacted by public sector budgetary cycles and funding authorizations.”O(jiān)verall, we do expect there to be modest headwi

43、nds to the FQ1 software outlooks from the 35-day federal government shutdown. Our companies with significant federal govt revenue exposure include Microsoft, Oracle, Symantec, Palo Alto Networks, Solar Winds, ServiceNow, Splunk, and Salesforce, while our names with little to no direct federal govt s

44、pending exposure include Instructure, 2U (US Department of Education remained funded and open during this recent shutdown), and Check Point. Companies with modest exposure (5% or less of govt) include Tableau, Proofpoint, Workday and Rapid7.Macro BackdropOverall, we do not find the general macro bac

45、kdrop to be favorable right now, with trade wars not yet resolved, Brexit unclear, the government shutdown only temporarily being alleviated after 35 days, the rising dollar, and simply the duration of the current bullish cycle. However, within the S&P, we expect software to outperform, given a larg

46、e base of recurring revenues, improving margins and FCF, declining SBC, and of course, a leading role in the digitalization of the global economy. However, in the near term, we see valuations as extended and show that EV/Sales multiples are 38% above the 10- year EV/Sales average and 35% above the 1

47、0-year EV/FCF average of our 165 software group tracker (Figures 4 and 5 above).Microsoft FQ219 PreviewMicrosoft will report earnings on Wednesday January 30th after the close. We are expecting a solid report from Microsoft. Our view is supported by our findings of strength in Azure, which should su

48、pport above 70% Y/Y growth (which appears to be the buyside expectation), ongoing enterprise Windows upgrades and Office 365 migrations (we are expecting O365 Commercial seat growth of 27% Y/Y vs 29% Y/Y last quarter, 30% in the prior year period, and 29% in FY”18), gaming momentum to continue on th

49、e back of strong holiday demand for Fortnite (Apples App Store saw record downloads with Fortnite and other online gaming platforms cited) and more.We note that investor sentiment has become muted in the name, with many concerned about difficult comps in the 2H of 2019 due to strength in 2H18, the r

50、ate of deceleration of Azure and how to model the trajectory of the business, the declining PC environment, difficult gaming comps due to Fortnite, and heavy federal govt exposure while the dollar strengthens.We expect upside to FQ2 driven by strength in uptake of hybrid solutions, our work that sho

51、ws Microsoft continuing to gain mindshare in enterprise budgets, in particular for Azure, while cloud email is seeing higher demand this year vs last in our channel dialogues.However, we are expecting the co. to issue a conservative outlook due to its heavy federal government exposure, but believe t

52、hat this has been reflected in recent share price to some extent, and a more modest valuation than its 15-year peak of 27.5x forward 24 months P/E in Jan. 2018. However, we do think the tape is lofty and would look to add after the print as we do not expect shares to rally on a conservative outlook.

53、Corporate PC Refresh Solid, Though Chip Shortages and China Cited for Declining PC ShipmentsAlthough overall PC shipments declined Y/Y during CQ418 according to estimates by both IDC and Gartner, declines were less than anticipated and primarily due to consumer weakness. Corporate PC refreshes are o

54、ngoing ahead of the Windows 7 end of life in Jan 2020. While investors are worried about Windows 10 potentially slowing, and Windows revenues showed below-normal sequential declines last quarter, we believe we have ample runway due to Win 7 EOL.For CQ418 IDC estimates PC shipments of 68.1mn units, d

55、eclining 3.7% Y/Y but better than its forecast of a 4.7% Y/Y decline, while Gartner estimated global PC shipments of 68.6mn units, down4.3% Y/Y.Both processor shortages and US-China trade tensions have been noted in addition to consumer weakness as contributors to FQ4 declines, with IDC noting that

56、it expects Intels processor shortage to persist through 1H19 with improvements occurring around back-to-school season which could create a more conservative outlook.Github Acquisition Closes as Microsoft Expands Open Source InvestmentsMicrosoft closed its acquisition of GitHub during the first month

57、 of the quarter, underscoring Microsofts commitment to fostering a stronger open-source community around Azure. Recall that the company guided for the acquisition to be minimally dilutive (65% of its installed commercial Office customer base transitioned to Office 365 by FY19, with the company track

58、ing nicely along with this goal, and targeted 70% of the exchange email server installed base migrated to the cloud by FY19, up from 65% in FY18.Key Topics for the Call: 1) Growth of Azure, where we believe buyside estimates are in the low 70s% growth Y/Y; 2) impact from federal govt shutdown; 3) O3

59、65 commercial seat migration with high 20s% Y/Y growth as a buyside expectation; 4) Server & Tools performance into the back half given difficult comps; 5) overall PC environment with chipset shortages; and 6) Gaming performance with strong holiday spending but difficult comps in the 2H.We show our

60、estimates vs. cons. and updates to our model to take into account the federal govt shutdown by shifting revenues per Figures 6, 7 and 8 below.Fig 6 Macquaries FQ219 Microsoft Estimate Changes vs. Consensus and GuidanceFQ219 Changes to Estimates vs. Guidance and ConsensusPrior Macquarie EstimatesCons