Look For MuleSoft To Kick Into Growth Mode In 2017

Analysts Bhavan Suri and David Griffin clarified that most customers they spoke with using MuleSoft on a relatively small scale are looking to expand usage, with most newer customers looking to double usage in 2017.

"We estimate the average tenured customer we talked to planned for at least 30–50 percent growth," the analysts said.

Customers And Prospects Go Gung Ho

• Every customer the firm spoke with called out that the ability of MuleSoft's Anypoint platform to create reusable integration building blocks is driving significant gains in efficiency and agility.
• A handful of other customers cited productivity improvements in the 5- to 10-times range.
• Accenture Plc ACN and Deloitte said productivity improvement of this scale is catalyzing an inflection in market awareness of the application network architecture.
• Prospective customers said they were considering deployment of MuleSoft, as they had heard it was the gold standard.

Q1 Expectations

Going by the feedback from customers and partners who suggested healthy deal activity, William Blair said, "We like MuleSoft's chances for delivering at least $1 million of upside to the Street's $58 million (48.5 percent growth) revenue forecast, which we would expect to drive modest margin upside."

The consensus estimates call for an operating loss of $11.8 million and loss per share of $0.11 per share.

The company will be releasing its first financial results as a public company, with the earnings scheduled for May 4.

Competition Might Not Bite

The firm's conversations showed that MuleSoft's differentiated technology is allowing it to witness high win rates on competitive deals. Additionally, the intensity of competition is being limited by the strong growth in demand for next-generation solutions and large opportunity to displace point-to-point integrations, the firm added.

Concluding, the firm said, "We believe these dynamics provide strong support for the company's premium multiple and point to a potential for further appreciation in shares coming from both upside to estimates and modest multiple expansion."

William Blair rates MuleSoft an Outperform.

At last check, MuleSoft shares were down 0.75 percent at $22.41.

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