Duck Creek Delivers Upbeat Q1 Results; Shares Gain 8%

Duck Creek Technologies (NASDAQ: DCT) shares jumped almost 8% during the extended trading session on January 6, after the Software as a service (SaaS) provider to Property and Casualty (P&C) insurance industry, reported stronger-than-expected fiscal Q1 results, topping both earnings and revenue estimates.  

The quarterly beat was driven by strong performance across all segments and robust demand from new and existing customers as they continue to make meaningful investments in their core systems.

Q1 Numbers

Notably, adjusted earnings of $0.04 per share doubled year-over-year, exceeding analysts’ expectations of $0.01 per share. The company reported earnings of $0.02 per share for the prior-year period.

Furthermore, revenues jumped 25% year-over-year to $73.4 million, exceeding analysts’ estimates of $69.01 million. The increase in revenues reflects a surge in SaaS Annual Recurring Revenue, which increased 40%.

Segment-wise, Subscription revenue grew 28% to $35.7 million, while Professional Services revenue jumped 26% to $29.5 million. Furthermore, License revenue soared 42% to $1.9 million, with a 1% increase in Maintenance and Support revenue to $6.3 million.

Fiscal 2022 Outlook

Based on its Q1 results, management provided the financial guidance for fiscal 2022. The company forecasts adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of $19 million to $21 million. Revenues are expected to be in the range of $298 million to $304 million.

For the fiscal second quarter, adjusted EBITDA is likely to range between $1.5 million and $2.5 million. Revenues are projected to be in the range of $71.5 million to $73.5 million.

CEO Comments

Duck Creek CEO, Michael Jackowski, commented, “We remain focused on executing on our key strategic priorities, which will enable us to fully capitalize on the generational opportunity to modernize insurers’ core systems with our SaaS platform.”

He further added, “The early, notable success we had internationally in the quarter was an exciting example of the numerous levers we have to deliver high levels of growth over time.”

Analysts Recommendation

Following the Q1 results, JMP Securities analyst Joe Goodwin reiterated a Buy rating on the stock with a price target of $35 (26% upside potential).

Overall, the stock has a Strong Buy consensus rating based on 8 Buys and 1 Hold. The average Duck Creek Technologies stock forecast of $39.33 implies 35.57% upside potential from current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 100% Bullish on DCT stock, compared to a sector average of 71%.

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