CVT - Cvent: Tackling The Change In The Industry Landscape

Summary

• COVID has changed the event industry landscape, which CVT’s solution is well-positioned for.
• CVT offers an easy-to-use one platform approach to manage events, and it automates key processes.
• Hospitality Cloud industry is competitive and full of under-investments, in which CVT solution addresses them.

Overview

I believe Cvent ( CVT ) is undervalued. Cvent is an event marketing and management platform that also generates leads between event organizers and hotels. With the emerging trend and demand for a hybrid approach, virtual meetings and events are expected to play a greater role in effective marketing channels. This means that the demand for CVT's integrated services and proprietary technology as a leading cloud-based platform for event marketing and management is expected to swiftly increase over the next few years.

Business description

CVT is a cloud-based platform for enterprise event marketing and management, as well as hospitality solutions. CVT's Event Cloud and Hospitality Cloud solutions enable the marketing and management of meetings and events.

1. CVT Event Cloud includes tools that allow event organizers to manage the whole event lifecycle and provide engaging experiences across all event types and delivery models.
2. CVT Hospitality Cloud is a marketplace that connects event planners looking for a suitable venue for their in-person and online events with hotels and event spaces through a search engine supported by a database of venue information.

Investment thesis

Covid has changed the event industry landscape

Customer events, user conferences, industry trade shows, and group meetings were all typically held in-person before the global COVID-19 pandemic. In general, virtual events were narrow in scope, had sparse audiences, and featured content that failed to stand out. Most of the current ways to host these online events were made for one-way interactions, didn't give many chances to take part, and weren't always integrated into the company's larger marketing technology stack.

Nonetheless, I concur that the global COVID-19 pandemic necessitated a radical rethinking of what we mean by "virtual events." Immediately, major events that had previously only been held in person were shifted to virtual spaces. In a world where technology has become the event's venue, the need for effective marketing and management tools has never been greater. Organizations need a software platform that optimizes the following activities before they can host virtual events on a large scale:

• Create immersive, interactive, and seamlessly branded experiences;
• Run multiple live or on-demand sessions at the same time;
• Make it easy for attendees to talk to each other;
• Collect attendees, exhibitors, and sponsor data, and
• Keep people engaged throughout the event.

Given that event technology is the venue, virtual platforms must be ensured to be safe, scalable, and stable, or the whole event could be hacked, run late, or cancelled.

After the success of the virtual events held during the pandemic, I believe that many of these in-person events will be turned into hybrid events that prominently have virtual aspects. This will allow event organizers to reach and engage the largest audience possible. I agree with CVT that companies will still host in-person and virtual events separately, but the hybrid event model will become the industry standard. This will allow event organizers to get the best of both worlds from a single event and get the most out of their investment.

Going one step deeper into this discussion. Meetings and events allow businesses to engage with customers for longer periods. As a result, they can represent some of the most effective and valuable touch points along the entire customer journey. In that sense, virtual and hybrid events have increased event opportunities to directly engage with a larger audience. Companies have a lot of marketing and sales opportunities at marquee events like user conferences and tradeshows, where hundreds or thousands of their prospects, customers, and business partners are present. This means that business events and meetings can be a powerful marketing channel.

Given the importance of the associated spending, the ability of events to generate engagement to highlight buyer interests, and the event's expected direct impact on the sales pipeline, I believe that chief marketing officers and other C-suite executives will be more interested in their success and effectiveness. In fact, CVT's S-1 used a figure from Forrester that said events make up 24% of the average budget for a B2B marketing program.

CVT offers an easy-to-use one platform approach to manage events

The CVT platform gives companies the ability to manage and carry out events both inside and outside the company, regardless of their size, complexity, or delivery model. CVT powers events that a company hosts for its external customers, as well as conferences and tradeshows that the company attends as an exhibitor or sponsor. These types of events are considered customer-facing events.

Cvent's platform serves as the Total Event Program's single system of record, allowing event planners to make the most of attendee registration and engagement data at every stage of the event's lifecycle. This consolidated database of interactions with the company at various events throughout the customer journey can provide an actionable understanding of customers' preferences. Compared to competitors who only offer point solutions for individual processes or hybrid event delivery models, I think CVT's ability to offer an integrated platform that maximizes live engagement across a full suite of event marketing and management solutions is a big competitive advantage.

CVT’s event solution automates key processes

The event marketing and management solutions provided by CVT allow businesses to automate workflows and streamline labor-intensive business processes associated with the organization, marketing, and execution of meetings and events. The CVT enables identifying, contacting, and negotiating with potential venues in a more timely manner through its Cvent Supplier Network, which allows event organizers to:

• Quickly search for suitable venues;
• Send requests for proposals [RFPs], and
• Compare the resulting bids side-by-side.

The solution provided by the company also makes it possible for event organizers to generate highly sophisticated and fully customized event websites as well as virtual event experiences without the need for professional web design or back-end coding. As soon as they are built, these websites can be reproduced and then only minimally modified to generate brand-new events in a matter of minutes. CVT provides a user-friendly interface that enables users to:

• Drag and drop elements;
• Automated validation for best practices;
• Logic checks;
• Link checks;
• Version history control;
• Responsive design; and
• Other features

In addition to these processes, the CVT solution automates several traditionally manual processes throughout the event lifecycle. These processes include:

• Online registrations and payments process;
• Collection of attendee information and preferences;
• Creation of custom schedules for attendees, and

Auto-update of attendees on schedule changes via an event-specific mobile application.

Hospitality Cloud industry is competitive but full of under-investments

Hoteliers make money from three main types of business: leisure travel; business travel; and events and group business. Meetings also bring in money for hotels through food and drinks, event space, audio-visual support, equipment rental, transportation, and other services. Also, most of the people who go to events are hotel guests who can use the hotel's restaurants, shops, spas, and other paid services. Since events and group meetings can be very profitable, there is a lot more competition between hotels to get and keep this business. As a result, hotel owners who are still trying to get back on their feet after the global COVID-19 pandemic have to work harder to win events and group meetings.

On the other hand, event organizers work in many different departments and have many different titles. Hoteliers often struggle to find qualified leads and market to event planners in most organizations due to the decentralized and non-standard nature of event planning within enterprises. Because of this problem and the fact that it usually takes a lot of manual work, hotels don't put enough money into sales and marketing to attract and book group meetings, even though they’re a key source of revenue. Hotels are forced to rely on less targeted marketing strategies or inbound leads because they lack an efficient way to conduct outbound marketing. This makes it hard for hotels to get people interested in their services and book them for events and meetings with a lot of people.

Event organizers send hotel inquiries and bids via email, phone, or PDF, Word, or Excel files. In response, hoteliers and venue operators use word processing, spreadsheets, and scanned documents to process these applications. Hoteliers and event organizers often use these general tools to collect guest information, book rooms, and keep track of room reservations when managing confirmed group meetings. This non-standard process increases RFP time and cost for both parties and may increase data privacy risks and entry errors. As hotels try to streamline their work and make sure they are following the rules, they will need more technology solutions.

CVT believes hotels and venues that leverage its scalable technology solutions built for their intended audience can generate more business and boost their return on marketing spend.

CVT Hospitality Cloud solution solves the industry pain points

CVT specializes in connecting businesses with event space. Hoteliers and venue operators can target event organizers looking for event space through CVT's online marketing solutions. Hoteliers and venue owners can more easily market to relevant and difficult-to-identify event organizers within organizations thanks to the tens of thousands of event organizers that Cvent attracts to its sourcing networks. CVT claims that this results in more qualified sales leads and confirmed bookings for events and conferences. I think this is a good idea to look into because, compared to other marketing channels, it's a scalable and inexpensive way to bring in new event clients and make more money.

In addition, CVT allows hotels and event spaces to streamline and standardize the process by which they receive requests for proposals from event planners and submit responses to those proposals. With the help of CVT's standardized framework, hotels and other venues can populate many responses in advance. This paves the way for the staff at these organizations to provide timely and precise responses to RFPs. I believe CVT's solution enables hoteliers and venue owners to automate marketing and sales operations, allowing them to drive efficiency with fewer employees in the wake of the global COVID-19 pandemic. Hotels and event spaces can use CVT software to streamline not only the sourcing process but also the whole group lifecycle.

Forecast

My model suggests that CVT could possibly be ~4x from today’s share price over the next decade. This is assuming that

1. Revenue would meet management’s initial guidance to generate between $623 and $763 million in FY22/23
2. Revenue growth would go into a slow decline over 10 years to a long-term risk-free rate. This is assuming CVT does not venture into adjacent markets, which could extend its growth runway.
3. FCF margin to reach maturity (i.e. management’s long-term modeling guidance) of 25% in FY27
4. 10% discount rate. This is arbitrary, but I believe 10% is the hurdle that I want as an investor

Using these assumptions, CVT could be worth 4x more than its current share price of 5.50.

Red flags

Significant competition

CVT competes in a dynamic market. Event marketing and management software are developing, competitive, and fragmented. Competition is projected to intensify in the future. Due to the huge increase in virtual events and virtual event providers, there is a potential for a new wave of market entrants as a result of the growing need for event marketing and management solutions.

Another COVID situation would be bad news

Meetings and events are susceptible to discretionary business spending and grow slower or even drop during economic downturns. Organizers and participants may spend less, reducing demand for CVT's event marketing, management solutions, and sales. Furthermore, if fewer organizers employ CVTS marketing solutions, sales of CVTS marketing solutions to hotels and venues may suffer.

Conclusion

CVT's current share price has the potential to fourfold. Given the current demand for an effective hybrid approach due to COVID-19’s impact that redefined group meetings and events, CVT offers an easy-to-use one-platform approach to manage events and automate key processes. Its complete package of lead generation, integrated services, and proprietary technology allows CVT clients to reduce time and costs in marketing and managing events. There is also a lot of underinvestment in the industry. CVT is ahead of the curve when it comes to solving the industry's pain points, which helps it deal with red flags like tough competition and possible economic downturns.

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