Greenberg: RealPage Gets Ripped

(This originally ran in Herb Greenberg's Reality Check)

SAN DIEGO (TheStreet) -- This update to our Reality Check of two weeks ago on RealPage (RP):

Not only did the apartment-management software company miss fourth-quarter revenue and earnings, but it missed and guided down on perhaps the most important metric of all: Organic growth -- and not in a small way.

At RealPage, the target was 20% to 25%. As recently as a quarter ago, the company appeared to be exceedingly confident it would easily hit it.

Consider this exchange between analyst Jobin Mathew of Deutsche Bank and CFO Tim Barker:


"In the past, you've always talked about kind of your target growth model of operating between the 20% to 25% range. So looking out into 2014, without actually providing a guidance number, do you think you could step up closer to the high end of your target range?"


"Yes, we like to provide consistent guidance one year out and stick with providing our guidance when we have the visibility for the year. We've executed 20% this year. Since we've gone public, the organic on-demand growth has been 22.5%. We've had periods in the 25% and periods in the 20%...we'll continue to execute on a consistent basis and drive towards our target model."

Compare that with what the company is saying now:

"On-demand revenue for the first three quarters of the year trended at 20% organic growth, and the full-year came in at 18%. Despite this, fourth quarter organic on-demand revenue growth slowed significantly to 12%. Some of the factors driving fourth-quarter performance will take time to turn around and we expect other factors to show improvement more quickly."

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