Duck Creek Technologies Shares Crack After Q3 Results, Lowers FY22 Revenue Guidance

Duck Creek Technologies Inc DCT reported third-quarter revenue growth of 7% year-over-year to $72.4 million, beating the estimate of $72.15 million. Subscription revenue was $38 million (+13% Y/Y), and SaaS Annual Recurring Revenue grew 25% Y/Y.

Adjusted income from operations was $1.8 million, down from $4.8 million a year ago. Adjusted EPS $0.01, down from $0.03 in 3Q21.

Adjusted EBITDA for the quarter declined to $2.41 million (-56.5% Y/Y), and margin fell to 3% from 8% in 3Q21.

Duck Creek generated net cash by operating activities of $17.4 million in Q3 compared to $6.9 million a year ago. Free cash flow was $16.5 million.

As of May 31, 2022, Duck Creek had $141.7 million in cash and cash equivalents, $223.5 million in short-term investments, and no debt.

4Q22 Outlook: DCT expects revenue of $72.8 million to $74.8 million vs. a consensus of $80.37 million, Subscription revenue of $36.7 million to $38.2 million. It expects Adjusted EBITDA of $3 million to $5 million; and Adjusted EPS of $0.01 to $0.02, vs. a consensus of $0.02.

FY22 Outlook: The company sees revenue of $295 million to $297 million (prior expectations of $301 million to $305 million) vs. consensus of $302.4 million, Subscription revenue of $150 million to $151.5 million (prior $151. million to $153 million).

It expects Adjusted EBITDA of $20.5 million to $22.5 million; and Adjusted EPS of $0.09 to $0.10 vs. a consensus of $0.10.

Price Action: DCT shares are trading lower by 12% at $16 during the post-market session on Wednesday.