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Castlight (CSLT) Q4 Earnings In Line, Revenues Beat Estimates

Shares of Castlight Health Inc.CSLT went up more 23% on Mar 1, 2019 after the company reported fourth-quarter 2018 results. Notably, Castlight shares have gained 82% year over year, substantially outperforming the 25.8% rally of the industry it belongs to.

The company reported non-GAAP ne of 1 cent per share which was in line with the Zacks Consensus Estimate. The figure improved from the year-ago quarter's loss of 3 cents per share.

The company reported non-GAAP ne t earnings of 1 cent per share which was in line with the Zacks Consensus Estimate. The figure improved from the year-ago quarter's loss of 3 cents per share.

Revenues surged 13% year over year to $42.1 million and surpassed the Zacks Consensus Estimate of $41 million.

Subscription revenues (94% of total revenues) increased 17% to $39.4 million. Professional services & other (6% of total revenues) declined 22.7%year over year to almost $2.7 million.

On a pro forma basis, the company ended fiscal 2018 with annualized recurring revenues ("ARR") of $150.5 million which was flat year over year, primarily owing to a loss of a major customer in July.

Transparency-only ARR accounted for 11% of total ARR in fiscal 2018, down 20% year over year. Platform clients accounted for the remaining 89% of total ARR.

The company had approximately 270 signed customers at the end of the quarter, out of which roughly 30% were Fortune 500 companies.

Operating Details

Non-GAAP gross margin came in at 68%, flat year over year. Subscription gross margin expanded 380 basis points (bps) to reach 82.7%.

Non-GAAP sales & marketing expenses as percentage of revenues contracted 900 bps to 22.6% in the reported quarter. General & administrative expenses contracted 230 bps to 11.9%.

Moreover, non-GAAP research & development expenses contracted 440 bps to 29.7%.

Castligh t report ed non-GAAP operating income of $1.9 million against the year-ago quarter's operating loss of $4.4 million.

Cash Position

As on Dec 31, 2018, total cash, cash equivalents & marketable securities was $77.3 million. Cash flow from operating activities during the quarter came in at $7.5 million.

Guidance

For 2019, Castlight forecast revenues between $153 million and $158 million. The Zacks Consensus Estimate is pegged at $157.2 million.

Non-GAAP operating income is expected in the range of $0-$5 million. Non-GAAP earnings per share are anticipated between 0-3 cents per share. The Zacks Consensus Estimate is pegged at 1 cent.

Zacks Rank and Key Picks

Castlight carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Symantec Corporation SYMC , Pegasystems Inc. PEGA and Fortinet, Inc. FTNT , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Symantec, Pegasystems and Fortinet have a long-term earnings growth rate of 7.9%, 8% and 16.8%, respectively.

Zacks' Top 10 Stocks for 2019

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From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 - 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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