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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 7, 2018

 


 

Carbon Black, Inc.

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

001-38478

 

55-0810166

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

1100 Winter Street, Waltham, Massachusetts

 

02451

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (617) 393-7400

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  x

 

 

 



 

Item 2.02               Results of Operations and Financial Condition.

 

On June 7, 2018, Carbon Black, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2018. The Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 7.01.             Regulation FD Disclosure.

 

On June 7, 2018, Mark P. Sullivan, Executive Vice President and Chief Financial Officer of the Company, made the investor deck included with this Current Report on Form 8-K as Exhibit 99.2 available to the public. The investor deck will also be available for viewing at the Company’s investor website, investors.carbonblack.com, although the Company reserves the right to discontinue that availability at any time.

 

The information included in this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

 

Item 9.01               Financial Statements and Exhibits.

 

(d)      Exhibits

 

Exhibit
No.

 

Description

 

 

 

99.1

 

Press Release of Carbon Black, Inc., dated June 7, 2018.

 

 

 

99.2

 

ASC 606 Investor Deck, dated June 7, 2018.

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

Carbon Black, Inc.

 

 

Dated: June 7, 2018

By:

/s/ Mark P. Sullivan

 

 

Mark P. Sullivan

 

 

Executive Vice President and Chief Financial Officer

 

3


Exhibit 99.1

 

Carbon Black Announces First Quarter 2018 Financial Results

 

First Quarter 2018 Total Revenue of $48.4 million, up 35% Year-over-Year

First Quarter 2018 Cloud Revenue of $11.7 million, up 195% Year-over-Year

Ended the quarter with 4,006 total customers, including 1,870 cloud customers

 

Waltham, Mass. - June 7, 2018 - Carbon Black, Inc. (NASDAQ: CBLK), a leader in next-generation endpoint security, today announced its financial results for the first quarter ended March 31, 2018.

 

“We began 2018 with strong financial and operational results highlighted by 195% cloud revenue growth,” said Patrick Morley, President and Chief Executive Officer of Carbon Black. “Our performance was driven by growing demand for our next-generation endpoint security platform, the Cb Predictive Security Cloud. The PSC protects customers from today’s most advanced cyber threats, including ransomware and new types of attacks that have never been seen before and are undetectable by legacy AV products.”

 

Morley continued, “The Cb Predictive Security Cloud platform leverages our unique ability to capture and analyze unfiltered endpoint data, positioning us to disrupt a $19 billion addressable market comprised of endpoint security market and adjacent categories. Our successful IPO provides significant resources to pursue our long-term growth strategy, which we believe will increase the value we deliver to customers and generate attractive returns for shareholders.”

 

First Quarter 2018 Financial Highlights

 

· Revenue: Total revenue was $48.4 million in the first quarter fiscal 2018, an increase of 35% year-over-year. Subscription revenue was $45.4 million, an increase of 38% year-over-year, and services revenue was $3.0 million, an increase of 4% year-over-year.

 

· Gross Profit: Gross profit was $38.2 million in the first quarter fiscal 2018, representing a 78.9% gross margin, consistent with the year-ago period. Non-GAAP gross profit was $38.7 million, representing an 80.0% non-GAAP gross margin.

 

· Loss from Operations: Loss from operations was ($17.8) million in the first quarter fiscal 2018, compared to ($12.5) million in the year-ago period. Non-GAAP loss from operations was ($11.1) million, compared to ($9.9) million in the year-ago period.

 

· Net Loss: Net loss was ($20.6 million). Net loss attributable to common stockholders was ($60.6) million, or ($5.38) per share based on 11.3 million weighted-average shares outstanding, in the first quarter fiscal 2018. Net loss attributable to common stockholders includes ($40.0) million of accretion of preferred stock to redemption value. In the year ago period, net loss was ($12.4) million and net loss attributable to common stockholders was ($24.1) million, or ($2.40) per share based on 10.0 million weighted-average shares outstanding. Non-GAAP net loss was ($11.0) million, or ($0.98) per share based on 11.3 million weighted-average shares outstanding. This compares to ($10.0) million, or ($0.99) per share based on 10.0 million non-GAAP weighted-average shares outstanding, in the year-ago period.

 

· Cash Flow: As of March 31, 2018, Carbon Black had $33.7 million in cash and cash equivalents. During the three months ended March 31, 2018, Carbon Black used ($0.8) million of cash in operations and ($1.8) million in capital expenditures and capitalized software development costs, leading to negative free cash flow of ($2.6) million, compared to negative free cash flow of ($8.1) million in the year-ago period. Subsequent to the end of the quarter, the company closed its initial public offering of common stock on May 8, 2018, which generated proceeds, net of underwriting discounts and commissions, of $162.6 million.

 



 

A reconciliation of each of non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss per share and free cash flow to the most directly comparable GAAP measure has been provided in the tables at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

 

Please note that all results and guidance are based on the new revenue recognition standard ASC 606.

 

First Quarter 2018 and Recent Business Highlights

 

·                  Successfully completed its initial public offering and listed its shares on the Nasdaq Global Market in May 2018.  Carbon Black sold 9,200,000 shares of common stock at a price of $19.00 per share, including the full exercise of the underwriter’s option to purchase an additional 1,200,000 shares of common stock, for total proceeds of approximately $162.6 million net of underwriters’ discounts and commissions.

 

·                  Continued to grow its customer base, ending the quarter with 4,006 total customers, up from 2,648 in the year-ago period and from 3,739 at the end of the previous quarter. Growth was driven by strong demand across the entire product portfolio and customer acquisition across a broad range of industries. New customers, for example, included a top 10 global automaker, a leading global ecommerce company, a large European healthcare provider, and one of the world’s largest military organizations.

 

·                  Continued traction with our cloud products, providing powerful customer validation of the Cb Predictive Security Cloud™ (PSC) platform. Growth of customers who licensed at least one cloud product increased to 1,870 at the end of the first quarter, compared to 552 in the year-ago period and 1,605 at the end of the previous quarter.

 

·                  Delivered Cb Defense for VMware, a new offering on the Predictive Security Cloud platform, jointly developed through an exclusive partnership with VMware and designed to bring a new level of security to software-defined data centers. Carbon Black also saw significant uptake in its first full quarter of shipping Cb ThreatSight, a managed triage alert service that leverages the Predictive Security Cloud to help understaffed security teams prioritize the most threatening alerts in their environment.

 

·                  Expanded its relationship with IBM Security by integrating the Cb Predictive Security Cloud with the newly launched IBM X-Force Threat Management Services. Carbon Black also announced that strong customer adoption of existing Carbon Black / IBM integrations has fueled two new integrations between Cb Defense and IBM Security’s QRadar and BigFix.

 

Business Outlook

 

Based on information as of today, June 7, 2018, Carbon Black is issuing the following financial guidance for the second quarter and full year fiscal 2018:

 

 

 

Second Quarter Fiscal 2018

 

Full Year Fiscal 2018

Total Revenue

 

$48.5 million to $49.0 million

 

$203.0 million to $204.5 million

Non-GAAP Loss from Operations

 

($18.0) million to ($17.5) million

 

($63.5) million to ($62.0) million

Non-GAAP Net Loss per Share

 

($0.42) to ($0.41)

 

($1.35) to ($1.32)

 



 

Carbon Black’s forward-looking non-GAAP loss from operations and non-GAAP net loss per share exclude estimates for stock-based compensation expense, amortization of acquired intangibles, legal settlement amount, change in fair value of warrant liability and accretion of preferred stock to redemption value. Reconciliation of non-GAAP loss from operations and non-GAAP net loss per share guidance to the most directly comparable GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, particularly with respect to stock-based compensation expense. Stock-based compensation expense is directly impacted by unpredictable fluctuations in our stock price and by future hiring, turnover and retention needs, all of which are difficult to predict and subject to change. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP loss from operations and GAAP net loss per share.

 

Conference Call Information

 

Carbon Black will host a conference call today, June 7, 2018, at 5:00 p.m. (Eastern Time) to discuss its financial results and business outlook. A live webcast of the conference call will be available on available on the “Events” page of the Carbon Black investor relations website at https://investors.carbonblack.com/. To access the call by phone, dial (866) 394-4596 (domestic) or (210) 874-7849 (international). A replay of this conference call will be available for a limited time at (855) 859-2056 (domestic) or (404) 537-3406 (international) with passcode 7788959. A replay of the webcast will also be available for a limited time at https://investors.carbonblack.com/.

 

About Carbon Black

 

Carbon Black (NASDAQ: CBLK) is a leading provider of next-generation endpoint security. Carbon Black serves more than 4,000 customers globally, including 33 of the Fortune 100. As a cybersecurity innovator, Carbon Black has pioneered multiple endpoint security categories, including application control, endpoint detection and response (EDR), and next-generation antivirus (NGAV). Leveraging its big data and analytics cloud platform — the Cb Predictive Security Cloud — Carbon Black solutions enable customers to defend against the most advanced cyber threats, including malware, ransomware, and non-malware attacks. Deployed via the cloud, on premise, or as a managed service, customers use Carbon Black solutions to lock down critical systems, hunt threats, and replace legacy antivirus.

 

Forward-Looking Statements

 

This press release includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning our financial guidance for the second quarter and full year fiscal 2018, our position to execute on our go-to-market strategy, our introduction of future

 



 

product enhancements and the potential advantages of those enhancements, and our ability to expand our leadership position and drive revenue growth. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control including, without limitation: our history of losses; failure (or the perceived failure) of our products to detect cyber attacks; our investments in new products and our ability to introduce new features, services or enhancements; the intense competition that we face in our market; our ability to effectively expand our sales and marketing organization; our ability to add new customers or increase sales to our existing customers; our ability to maintain, protect, enforce and enhance our intellectual property; the growth in the market for next-generation endpoint security solutions and adjacent security markets and our ability to penetrate those markets; our ability to manage our growth effectively and successfully recruit additional highly-qualified personnel; the price volatility of our common stock; and other risks detailed under the caption “Risk Factors” in the final prospectus for our initial public offering filed on May 4, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended, with the Securities and Exchange Commission (“SEC”), as updated by our subsequently filed quarterly report on Form 10-Q and our other SEC filings. Except as required by law, we undertake no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.

 

Non-GAAP Financial Measures

 

This press release includes the following financial measures defined as non-GAAP financial measures by the SEC: non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss per share and free cash flow. Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations and non-GAAP net loss exclude stock-based compensation expense, amortization of acquired intangibles, legal settlement amount, and, in the case of non-GAAP net loss, change in fair value of warrant liability and accretion of preferred stock to redemption value. Non-GAAP net loss per share is calculated by dividing non-GAAP net loss by the weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted. Carbon Black uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Carbon Black’s ongoing operational performance. Carbon Black believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Carbon Black’s industry, many of which present similar non-GAAP financial measures to investors.

 

Free cash flow represents net cash used in operating activities less capital expenditures and capitalized software development costs, if any. Carbon Black uses free cash flow to understand and evaluate its liquidity and to generate future operating plans. The exclusion of capital expenditures and amounts capitalized for software development facilitates comparisons of Carbon Black’s liquidity on a period-to-period basis and excludes items that it does not consider to be indicative of its liquidity. Carbon Black believes that free cash flow is a measure of liquidity that provides useful information to investors in understanding and evaluating the strength of its liquidity and future ability to generate cash that can be used for strategic opportunities or investing in its business in the same manner as Carbon Black’s management and board of directors.

 



 

Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In particular, other companies may report non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss per share, free cash flow or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, as presented below. This earnings press release and any future releases containing such non-GAAP reconciliations can also be found on the Investor Relations page of Carbon Black’s website at http://investors.cabonblack.com/.

 

Carbon Black and Predictive Security Cloud are registered trademarks or trademarks of Carbon Black, Inc. in the United States and other jurisdictions.

 

Investor Relations Contact

 

Brian Denyeau

ICR for Carbon Black

646-277-1251

investorrelations@carbonblack.com

 

Media Relations Contact

 

Ryan Murphy

Carbon Black

Senior PR Manager

917-693-2788

rmurphy@carbonblack.com

 



 

CARBON BLACK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

 

 

March 31, 2018

 

December 31, 2017

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

33,686

 

$

36,073

 

Accounts receivable

 

36,800

 

60,850

 

Prepaid expenses and other current assets

 

7,857

 

6,040

 

Deferred commissions, current portion

 

10,440

 

9,551

 

Total current assets

 

88,783

 

112,514

 

Deferred commissions, net of current portion

 

20,008

 

20,404

 

Property and equipment, net

 

12,796

 

12,459

 

Intangible assets, net

 

3,701

 

4,092

 

Goodwill

 

119,656

 

119,656

 

Other long-term assets

 

3,649

 

2,436

 

Total assets

 

$

248,593

 

$

271,561

 

Liabilities, Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Deficit

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

2,858

 

$

2,481

 

Accrued expenses

 

16,542

 

18,846

 

Deferred revenue, current portion

 

123,746

 

130,165

 

Deferred rent

 

1,041

 

944

 

Total current liabilities

 

144,187

 

152,436

 

Deferred revenue, net of current portion

 

38,250

 

38,535

 

Warrant liability

 

5,647

 

2,766

 

Deferred rent, net of current portion

 

2,935

 

3,114

 

Deferred tax liability

 

37

 

33

 

Other long-term liabilities

 

42

 

42

 

Total liabilities

 

191,098

 

196,926

 

 

 

 

 

 

 

Redeemable convertible preferred stock

 

373,243

 

333,204

 

 

 

 

 

 

 

Series A convertible preferred stock

 

1,599

 

1,510

 

Stockholders’ deficit:

 

 

 

 

 

Common stock

 

11

 

11

 

Treasury stock, at cost

 

(6

)

(6

)

Additional paid-in capital

 

 

13,429

 

Accumulated deficit

 

(317,352

)

(273,513

)

Total stockholders’ deficit

 

(317,347

)

(260,079

)

Total liabilities, redeemable convertible and convertible preferred stock and stockholders’ deficit

 

$

248,593

 

$

271,561

 

 



 

CARBON BLACK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

Subscription, license and support

 

$

45,391

 

$

33,005

 

Services

 

3,043

 

2,940

 

Total revenue

 

48,434

 

35,945

 

Cost of revenue:

 

 

 

 

 

Subscription, license and support - Cost of

 

7,212

 

4,831

 

Services

 

3,003

 

2,770

 

Total cost of revenue

 

10,215

 

7,601

 

Gross profit

 

38,219

 

28,344

 

Operating expenses:

 

 

 

 

 

Sales and marketing

 

30,678

 

24,359

 

Research and development

 

14,922

 

11,547

 

General and administrative

 

10,426

 

4,929

 

Total operating expenses

 

56,026

 

40,835

 

Loss from operations

 

(17,807

)

(12,491

)

Interest income

 

68

 

42

 

Interest expense

 

(23

)

(73

)

Change in fair value of warrant liability

 

(2,881

)

126

 

Other income (expense), net

 

120

 

(26

)

Loss before income taxes

 

(20,523

)

(12,422

)

Provision for income taxes

 

71

 

17

 

Net loss and comprehensive loss

 

(20,594

)

(12,439

)

Accretion of preferred stock to redemption value

 

(40,039

)

(11,647

)

Net loss attributable to common stockholders

 

$

(60,633

)

$

(24,086

)

Net loss per share attributable to common stockholders— basic and diluted

 

$

(5.38

)

$

(2.40

)

Weighted-average common shares outstanding—basic and diluted

 

11,264,252

 

10,039,592

 

 



 

CARBON BLACK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(20,594

)

$

(12,439

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization expense

 

1,905

 

1,658

 

Stock-based compensation expense

 

2,389

 

2,207

 

Provisions for doubtful accounts

 

19

 

(155

)

Non-cash interest expense

 

9

 

1

 

Change in fair value of warrant liability

 

2,881

 

(126

)

Deferred income taxes

 

4

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

24,031

 

14,314

 

Prepaid expenses and other assets

 

(1,861

)

(2,469

)

Deferred commissions

 

(494

)

(154

)

Accounts payable

 

25

 

1,050

 

Accrued expenses

 

(2,305

)

(6,060

)

Deferred revenue

 

(6,703

)

(4,596

)

Deferred rent

 

(82

)

(206

)

Other long-term liabilities

 

(1

)

(67

)

Net cash used in operating activities

 

(777

)

(7,042

)

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(1,495

)

(828

)

Capitalization of internal-use software costs

 

(293

)

(204

)

Net cash used in investing activities

 

(1,788

)

(1,032

)

Cash flows from financing activities:

 

 

 

 

 

Proceeds from exercise of stock options

 

1,065

 

557

 

Payments of deferred financing costs

 

(47

)

(76

)

Payments of initial public offering costs

 

(840

)

(2

)

Net cash provided by financing activities

 

178

 

479

 

Net decrease in cash and cash equivalents

 

(2,387

)

(7,595

)

Cash and cash equivalents at beginning of period

 

36,073

 

51,503

 

Cash and cash equivalents at end of period

 

$

33,686

 

$

43,908

 

 



 

CARBON BLACK, INC.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

2017

 

 

 

Amount

 

% of Revenue

 

Amount

 

% of Revenue

 

 

 

 

 

 

 

 

 

 

 

GAAP total revenue

 

$

48,434

 

100%

 

$

35,945

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of cost of revenue

 

 

 

 

 

 

 

 

 

GAAP cost of subscription, license and support

 

$

7,212

 

14.9%

 

$

4,831

 

13.4%

 

Less: Stock-based compensation

 

(136

)

-0.3%

 

(75

)

-0.2%

 

Less: Amortization of acquired intangibles

 

(330

)

-0.7%

 

(330

)

-0.9%

 

Non-GAAP cost of subscription, license and support

 

$

6,746

 

13.9%

 

$

4,426

 

12.3%

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of services

 

$

3,003

 

6.2%

 

$

2,770

 

7.7%

 

Less: Stock-based compensation

 

(57

)

-0.1%

 

(54

)

-0.2%

 

Non-GAAP cost of services

 

$

2,946

 

6.1%

 

$

2,716

 

7.6%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of gross profit

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

38,219

 

78.9%

 

$

28,344

 

78.9%

 

Plus: Stock-based compensation

 

193

 

0.4%

 

129

 

0.4%

 

Plus: Amortization of acquired intangibles

 

330

 

0.7%

 

330

 

0.9%

 

Non-GAAP gross profit

 

$

38,742

 

80.0%

 

$

28,803

 

80.1%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating expenses

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

30,678

 

63.3%

 

$

24,359

 

67.8%

 

Less: Stock-based compensation

 

(936

)

-1.9%

 

(873

)

-2.4%

 

Less: Amortization of acquired intangibles

 

(22

)

0.0%

 

(22

)

-0.1%

 

Non-GAAP sales and marketing

 

$

29,720

 

61.4%

 

$

23,464

 

65.3%

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development

 

$

14,922

 

30.8%

 

$

11,547

 

32.1%

 

Less: Stock-based compensation

 

(564

)

-1.2%

 

(619

)

-1.7%

 

Less: Amortization of acquired intangibles

 

(39

)

-0.1%

 

(39

)

-0.1%

 

Non-GAAP research and development

 

$

14,319

 

29.6%

 

$

10,889

 

30.3%

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

 

$

10,426

 

21.5%

 

$

4,929

 

13.7%

 

Less: Stock-based compensation

 

(696

)

-1.4%

 

(586

)

-1.6%

 

Less: Legal settlement

 

(3,900

)

-8.1%

 

 

0.0%

 

Non-GAAP general and administrative

 

$

5,830

 

12.0%

 

$

4,343

 

12.1%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of loss from operations

 

 

 

 

 

 

 

 

 

GAAP loss from operations

 

$

(17,807

)

-36.8%

 

$

(12,491

)

-34.8%

 

Plus: Stock-based compensation

 

2,389

 

4.9%

 

2,207

 

6.1%

 

Plus: Legal settlement

 

3,900

 

8.1%

 

 

0.0%

 

Plus: Amortization of acquired intangibles

 

391

 

0.8%

 

391

 

1.1%

 

Non-GAAP loss from operations

 

$

(11,127

)

-23.0%

 

$

(9,893

)

-27.5%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net loss

 

 

 

 

 

 

 

 

 

GAAP net loss attributable to common stockholders

 

$

(60,633

)

-125.2%

 

$

(24,086

)

-67.0%

 

Plus: Accretion of preferred stock to redemption value

 

40,039

 

82.7%

 

11,647

 

32.4%

 

GAAP net loss

 

(20,594

)

-42.5%

 

(12,439

)

-34.6%

 

Plus: Stock-based compensation

 

2,389

 

4.9%

 

2,207

 

6.1%

 

Plus: Legal settlement

 

3,900

 

8.1%

 

 

0.0%

 

Plus: Amortization of acquired intangibles

 

391

 

0.8%

 

391

 

1.1%

 

Plus (Less): Change in fair value of warrant liability

 

2,881

 

5.9%

 

(126

)

-0.4%

 

Non-GAAP net loss

 

$

(11,033

)

-22.8%

 

$

(9,967

)

-27.7%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net loss per share

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders, basic and diluted

 

$

(5.38

)

 

 

$

(2.40

)

 

 

Plus: Accretion of preferred stock to redemption value

 

3.55

 

 

 

1.16

 

 

 

Plus: Stock-based compensation

 

0.21

 

 

 

0.22

 

 

 

Plus: Legal settlement

 

0.35

 

 

 

 

 

 

Plus: Amortization of acquired intangibles

 

0.03

 

 

 

0.04

 

 

 

Plus (Less): Change in fair value of warrant liability

 

0.26

 

 

 

(0.01

)

 

 

Non-GAAP net loss per share, basic and diluted

 

$

(0.98

)

 

 

$

(0.99

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in GAAP and non-GAAP net loss per share, basic and diluted

 

11,264,252

 

 

 

10,039,592

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of free cash flow

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(777

)

 

 

$

(7,042

)

 

 

Less: Purchases of property and equipment

 

(1,495

)

 

 

(828

)

 

 

Less: Capitalization of internal-use software costs

 

(293

)

 

 

(204

)

 

 

Free cash flow

 

$

(2,565

)

 

 

$

(8,074

)

 

 

 


Exhibit 99.2

 

ASC 606 Investor Deck (unaudited)

GRAPHIC

 


ASC 606 Adoption Summary Adoption Date: January 1, 2018 Adoption Method: Full retrospective adoption (FY16 and FY17 restated) Revenue Impact: Minimal impact as a vast majority of our revenue remains ratable under our subscription model Operating Expense Impact: Incremental costs to obtain customer contracts (primarily commissions) amortized over a period of benefit of five years, whereas under prior GAAP such costs were amortized over the term of the underlying revenue contracts (generally one or three years) Cash Flow: No impact

GRAPHIC

 


ASC 606 Impact Summary ($ in millions; unaudited) Q1'17 Q2'17 Q3'17 Q4'17 FY17 Revenue ASC 605 - Original 36.8 39.1 41.4 44.8 162.0 ASC 606 - Restated 35.9 38.7 41.5 44.6 160.8 Impact (0.8) (0.4) 0.1 (0.2) (1.2) Sales and marketing expense ASC 605 - Original 25.3 25.7 26.9 29.3 107.2 ASC 606 - Restated 24.4 24.7 26.0 28.3 103.3 Impact (0.9) (1.0) (0.9) (1.0) (3.8) Operating loss ASC 605 - Original (12.6) (13.0) (14.7) (14.8) (55.2) ASC 606 - Restated (12.5) (12.4) (13.7) (14.0) (52.6) Impact 0.1 0.6 1.0 0.8 2.6 Net loss ASC 605 - Original (12.6) (13.0) (14.6) (15.7) (55.8) ASC 606 - Restated (12.4) (12.3) (13.6) (14.8) (53.2) Impact 0.1 0.6 1.0 0.8 2.6

GRAPHIC

 


Consolidated Balance Sheets – FY17 Quarterly

 


Consolidated Statement of Operations – FY17

GRAPHIC

 


Consolidated Statement of Operations – FY17 Quarterly

GRAPHIC

 


Consolidated Statement of Cash Flows – FY17

 


Consolidated Statement of Cash Flows – FY17 Quarterly

 


Non-GAAP Financial Metrics – FY17

GRAPHIC

 


Non-GAAP Financial Metrics – FY17 Quarterly