SurveyMonkey Should Do A Platform Strategy

According to a recent report, the global online survey software market is estimated to have grown 12% annually over the period 2014 to 2018 to $2.8 billion in 2018. The industry is estimated to grow to $5.7 billion by the year 2020. Billion Dollar Unicorn SurveyMonkey (Nasdaq: SVMK) recently reported its fourth quarter results that failed to impress the market.

SurveyMonkey’s Financials

SurveyMonkey saw revenues grow 19% to $67.9 million, ahead of the market’s forecast of $65.9 million. But while revenues were impressive, the significant losses that the company reported in the year were shocking. It ended the quarter with a net loss of $25 million compared with a net income of $8 million reported a year ago. On an adjusted basis, losses of $0.03 per share were in line with the market’s estimates. SurveyMonkey attributed the heavy losses to the steep IPO costs that it incurred as it went public last year.

Among key metrics, paying users for the service grew 7% over the year and 4% over the quarter to 646,727. Growth in paying users was attributed to the sales of SurveyMonkey Enterprise and adoption of its self-serve Teams plans. Self-serve business accounted for 87% of total revenues and enterprise sales revenue brought in the remaining 13% of revenues. During the quarter, SurveyMonkey grew its enterprise sales customers by 29% over the year and 11% over the quarter to 3,566. Nearly 77% of its paying users are now on annual plans, compared with 76% from a year ago. Average revenue per user grew 13% over the year and 2% over the quarter to $425.

SurveyMonkey ended the year with revenues growing 16% to $254.3 million. Losses grew from $24 million a year ago to $155 million for the year.

Besides the losses, the market was also disappointed with the announcement of retirement of its CFO and COO Timothy Maly. Maly had been with SurveyMonkey for over ten years.

For the current quarter, SurveyMonkey expects to report revenues of $67.5-$68.5 million with an operating margin of 0%-1%. It expects to end the current year with revenues of $290-$295 million. The market was looking for revenues of $68.2 million for the quarter and $293.6 million for the year.

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