Model N's (MODN) Revenue Cloud Solutions Deployed by AVX

Model N MODN recently announced that AVX Corporation (or AVX) is now fully powered by its revenue management cloud offerings after the latter completed the deployment of the Model N software across its international operations.

AVX deployed the cloud offerings across both its U.S. direct business division and distribution division in February and April 2020, respectively. Model N’s cloud offerings will help AVX in both deal and channel management.

The revenue management software solutions will enable AVX to keep a better control over inventory and facilitate better pricing processes.

Model N, Inc. Price and Consensus

Model N, Inc. price-consensus-chart | Model N, Inc. Quote

It will also generate insights in real-time about ODMs, OEMs, distributors as well as end customers to offer more visibility for the sales and distribution channel and offer exact POS (Point of Sale) measurement across the distribution operations. The solutions will be helpful in validating and processing of debit as well as ship claims.

Further, the solutions will facilitate setting up of standard quoting, and pricing processes for both its domestic and international sales operations.

AVX is a well-known manufacturer and distributor of electronic components, and hence this deal win is a testament to strength in Model N’s revenue management offerings and augurs well for Model N.

Model N’s expanding clientele with notable names like AVX, is expected to bolster the top line in the quarters ahead and instil investors’ optimism in the stock. Notably, shares of Model N have increased 1.7% compared with the industry’s rally of 75.1%.

Momentum in Revenue Software Solutions Augurs Well

Cloud continues to be a rapidly-growing market with huge prospects. Per a Gartner Report, by 2022, public cloud services market is projected to hit $364.1 billion, up 50% from $242.7 billion in 2019. The SaaS market is expected to rally 38% to $140.6 billion by 2022 from 2019.

Further, worldwide revenue management system market is expected to witness a CAGR of 9.6% to reach $22.4 billion by 2024 owing to the demand for competitive pricing, complicated regulatory compliances along with penetration of mobile devices, per MarketsAndMarkets data.

Model N has significant growth opportunity in the revenue management market, especially in the high-tech and life sciences verticals, as enterprises continue to replace legacy processes that were error prone and expensive. Model N’s revenue cloud offerings provide higher Return on Investment as well as close gaps in the end-to-end revenue management process where legacy systems fail.

Model N, currently carrying a Zacks Rank #2 (Buy), is focusing on generating most revenues from the cloud instead of on-premise, which will increase recurring revenues. The company is making steady progress in its transformation to a Software-as-a-Service (SaaS) based model, which is driving top-line growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In third-quarter fiscal 2020, subscription revenues of $29.3 million (71% of total revenues) increased 10% year over year, driven by strong go-to-market execution and new logo additions. In the quarter, a leading medtech company selected Model N’s Global Tender Management solution to ramp up its tendering process in 14 countries.

At present, Model N manages client revenues worth billions across 120 countries. It has also bagged deals from some of the biggest names in tech and pharma verticals like  Microchip Technology MCHP, ON Semiconductor ON, Johnson & Johnson and Novartis.

Headwinds Remain

Coronavirus crisis-triggered sluggish spending across small and medium businesses owing to restricted economic activity, and weak job market are likely to exert pressure on adoption of Model N’s revenue management software solutions in the foreseeable future.

Moreover, increasing expenses on enhancing Revenue Cloud, amid stiff competition from Oracle’s ORCL Revenue Management and Billing Cloud services, and Workday Revenue Management is likely to impede margins, at least in the near term.

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