Document


 
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): February 12, 2018

 
CARBONITE, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-35264
 
33-1111329
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
Two Avenue de Lafayette, Boston, Massachusetts 02111
(Address of principal executive offices, including ZIP code)
(617) 587-1100
(Registrant’s telephone number, including area code)
 
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
¨
Written communications pursuant to Rule 425 under the Securities Act (17 C.F.R. §230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 C.F.R. §230.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 C.F.R. §14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 C.F.R. §13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ¨
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. ¨

 





Item 1.01
Entry into a Material Definitive Agreement
On February 12, 2018, Carbonite, Inc. (the “Company”) entered into a definitive Master Acquisition Agreement (the “Agreement”) with EMC Corporation (“EMC”), Mozy, Inc. (“Mozy”) and Dell Technologies Inc. pursuant to which the Company will acquire all of the issued and outstanding capital stock of Mozy, a cloud backup service for consumers and businesses, and certain related business assets owned by EMC or its affiliates, for a purchase price of $145.8 million in cash, subject to potential adjustments for working capital. The Company expects the acquisition to close during the first quarter of 2018.
The Agreement contains customary representations, warranties, covenants and indemnities, including a covenant of the Company to use its reasonable best efforts to obtain debt financing for the transaction in accordance with the terms of a commitment letter for a $120.0 million revolving credit facility. Consummation of the transaction is also subject to various conditions, including receipt of governmental approvals and other customary closing conditions. The Agreement contains termination rights, including a right for either party to terminate the Agreement if the closing shall not have occurred on or before July 1, 2018, subject to certain conditions.
Item 2.02
Results of Operations and Financial Condition
On February 13, 2018, Carbonite, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and full year ended December 31, 2017. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished under this Item 2.02, including Exhibit 99.1 incorporated by reference herein, shall not be deemed “filed” for the 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 and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01
Regulation FD Disclosure
In connection with the issuance of the press release attached hereto as Exhibit 99.1, the Company is holding a public conference call and webcast on February 13, 2018, at 5:30 p.m. ET, during which the Company will provide the investor presentation attached as Exhibit 99.2 to this Current Report. The presentation will also be posted on the investor relations portion of the Company’s website.
The information furnished under this Item 7.01, including Exhibit 99.1 and Exhibit 99.2 incorporated by reference herein, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
    
Item 9.01
Exhibits
 
(d)
Exhibits.
 
Press Release dated February 13, 2018
 
Investor Presentation dated February 13, 2018





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 on February 13, 2018.
 
 
CARBONITE, INC.
 
 
 
 
By:
/s/ Danielle Sheer
 
Name:
Danielle Sheer
 
Title:
General Counsel


Exhibit


Exhibit 99.1
Carbonite Announces Fourth Quarter and Full Year 2017 Financial Results
FY 2017 Revenue Growth of 16% with Expanding Profitability
Announces Agreement to Acquire Mozy, Inc. from Dell Technologies Inc.
BOSTON, MA - February 13, 2018 - Carbonite, Inc. (NASDAQ: CARB), a leader in data protection, today announced financial results for the quarter and full year ended December 31, 2017. The Company also announced it has entered into a definitive agreement to acquire Mozy, Inc. ("Mozy") from a subsidiary of Dell Technologies Inc. The deal expands Carbonite’s customer base and better positions Carbonite to offer its data protection platform to every segment of the market.
“We are thrilled to announce the acquisition of Mozy,” said Mohamad Ali, President and CEO of Carbonite. “Carbonite’s competitive advantage is our flexible data protection platform, which serves every scenario, from backing up individual laptops to maintaining uptime for hundreds of business servers. This deal provides Mozy customers scalable options for the future and gives Carbonite a broader base to which we offer our solutions.”
The total purchase price for Mozy is $145.8 million in cash. The Company will fund the transaction with existing cash and newly secured financing commitments in the form of a $120.0 million revolving credit facility. The credit agreement will allow the Company to borrow, as needed, for general corporate purposes, including acquisitions. The transaction is expected to close during the first quarter of 2018 and is subject to customary closing conditions and regulatory approvals. Barclays acted as financial advisor to the Company for the acquisition of Mozy.  Stifel also acted as an advisor.
Full Year 2017 Highlights:
Revenue of $239.5 million increased 16% year-over-year.
Non-GAAP revenue of $246.1 million increased 18% year-over-year.1 
Bookings of $245.9 million increased 17% year-over-year.2 
Net loss per share was ($0.14), as compared to ($0.15) in 2016 (basic and diluted).
Non-GAAP net income per share was $0.82 (basic) and $0.79 (diluted), as compared to $0.61 (basic) and $0.60 (diluted) in 2016.4 
“2017 was another successful year for Carbonite. We built and integrated the major elements of our leading data protection platform for businesses. We launched new programs and tools to better enable our partners, and again we were recognized for excellence in customer support. I am confident in our path forward and our ability to continue to execute the long-term strategic transformation we started just a few years ago,” said Mohamad Ali, President and CEO of Carbonite.
“We delivered solid bookings and revenue growth for the year and a meaningful increase in profitability. We remain focused on operational excellence, continuing to streamline the business and efficiently drive results. Our guidance for 2018 calls for balanced organic and inorganic growth with another significant increase in non-GAAP net income per share,” said Anthony Folger, CFO of Carbonite.
The Company uses a variety of operational and financial metrics, including non-GAAP financial measures, to evaluate its performance and financial condition. The accompanying financial data includes additional information regarding these metrics and a reconciliation of non-GAAP financial information to GAAP. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Fourth Quarter 2017 Results:
Revenue for the fourth quarter was $61.7 million, an increase of 15% from $53.5 million in the fourth quarter of 2016. Non-GAAP revenue for the fourth quarter was $62.8 million, an increase of 17% from $53.9 million in the fourth quarter of 2016.1 
Bookings for the fourth quarter were $60.2 million, an increase of 11% from $54.0 million in the fourth quarter of 2016.2 
Gross margin for the fourth quarter was 72.8%, compared to 72.2% in the fourth quarter of 2016. Non-GAAP gross margin was 77.6% in the fourth quarter, compared to 74.0% in the fourth quarter of 2016.3 
Net loss for the fourth quarter was ($1.6) million, compared to net loss of ($0.7) million in the fourth quarter of 2016. Non-GAAP net income for the fourth quarter was $8.8 million, compared to non-GAAP net income of $3.3 million in the fourth quarter of 2016.4 





Net loss per share for the fourth quarter was ($0.06) (basic and diluted), compared to net loss per share of ($0.02) (basic and diluted) in the fourth quarter of 2016. Non-GAAP net income per share was $0.31 (basic) and $0.30 (diluted) for the fourth quarter, compared to non-GAAP net income per share of $0.12 (basic and diluted) in the fourth quarter of 2016.4 
Cash flow from operations for the fourth quarter was $13.9 million, compared to $9.8 million in the fourth quarter of 2016. Adjusted free cash flow for the fourth quarter was $9.7 million, compared to $6.9 million in the fourth quarter of 2016.5 

Full Year 2017 Results:
Revenue for the full year was $239.5 million, an increase of 16% from $207.0 million in 2016. Non-GAAP revenue for the full year was $246.1 million, an increase of 18% from $209.3 million in 2016.1 
Bookings for the full year were $245.9 million, an increase of 17% from $209.3 million in 2016.2 
Gross margin for the full year was 70.7%, compared to 70.6% in 2016. Non-GAAP gross margin was 75.5% in the full year, compared to 72.6% in 2016.3 
Net loss for the full year was ($4.0 million), compared to a net loss of ($4.1 million) in 2016. Non-GAAP net income for the full year was $22.8 million, compared to non-GAAP net income of $16.4 million in 2016.4 
Net loss per share for the full year was ($0.14) (basic and diluted), compared to a net loss per share of ($0.15) (basic and diluted) in 2016. Non-GAAP net income per share was $0.82 (basic) and $0.79 (diluted) for the full year, compared to non-GAAP net income per share of $0.61 (basic) and $0.60 (diluted) in 2016.4 
Total cash and cash equivalents were $128.2 million as of December 31, 2017, compared to $59.2 million as of December 31, 2016.
Cash flow from operations for the full year was $31.3 million, compared to $13.2 million in 2016. Adjusted free cash flow for the full year was $20.2 million, compared to $18.2 million in 2016.5 
 
1 
Non-GAAP revenue excludes the impact of purchase accounting adjustments for significant acquisitions.
2 
Bookings represent the aggregate dollar value of customer subscriptions and software arrangements, which may include multiple revenue elements, such as software licenses, hardware, professional services and post-contractual support, received during a period and are calculated as revenue recognized during a particular period plus the change in total deferred revenue, excluding deferred revenue recorded in connection with acquisitions and divestitures, net of foreign exchange during the same period.
3 
Non-GAAP gross margin excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, acquisition-related expense and intangible asset impairment charges.
4 
Non-GAAP net income and non-GAAP net income per share excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, intangible asset impairment charges, non-cash convertible debt interest expense and the income tax effect of non-GAAP adjustments.
5 
Adjusted free cash flow is calculated by subtracting the cash paid for the purchase of property and equipment and adding the payments related to acquisitions, restructuring, litigation and the cash portion of the lease exit charge from net cash provided by operating activities.

Business Outlook

Based on the information available as of February 13, 2018, Carbonite expects the following for the first quarter and full year of 2018:

First Quarter 2018:
 
Current Guidance
(2/13/2018)
GAAP Revenue
$61.7 - $63.7 million
Non-GAAP Revenue
$63.0 - $65.0 million
Non-GAAP Net Income Per Share
$0.20 - $0.24










Full Year 2018:
 
Current Guidance
(2/13/2018)
Business Bookings
$223.8 - $234.8 million
Consumer Bookings Y/Y Growth
5% - 15% growth
GAAP Revenue
$294.0 - $304.0 million
Non-GAAP Revenue
$302.5 - $312.5 million
Non-GAAP Net Income Per Share (Diluted)
$1.45 - $1.55
Non-GAAP Gross Margin
76.0% - 77.0%
Adjusted Free Cash Flow
$32.0 - $38.0 million
The guidance provided above reflects the estimated impact of ASC 606, which Carbonite is adopting in the first quarter of 2018.   Carbonite’s expectations of non-GAAP net income per share for the first quarter and full year of 2018 excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments. Non-GAAP net income per share assumes an effective tax rate of 11% for the full year of 2018. Non-GAAP net income per share assumes fully-diluted weighted average shares outstanding of approximately 29.7 million for the first quarter and 29.9 million for the full year of 2018.
Conference Call and Webcast Information
In conjunction with this announcement, Carbonite will host a conference call on Tuesday, February 13, 2018 at 5:30 p.m. ET to review the results. This call will be webcast live and can be found in the investor relations section of the Company's website at http://investor.carbonite.com. The conference call can also be accessed by dialing (877) 303-1393 in the United States or (315) 625-3228 internationally with the passcode 1669107.
Following the completion of the call, a recorded replay will be available on the Company’s website, http://investor.carbonite.com, under “Events & Presentations”.
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with GAAP, this press release contains non-GAAP financial measures, including bookings, non-GAAP revenue, non-GAAP gross margin, non-GAAP net income and non-GAAP net income per share, non-GAAP operating expense and adjusted free cash flow.
The Company believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and ordinary results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods and uses these measures in financial reports prepared for management and the Company’s board of directors. The Company 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 the Company’s financial measures with other software-as-a-service companies, many of which present similar non-GAAP financial measures to investors.
The Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant items that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management. The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures provided in the tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.
With respect to our expectations under "Business Outlook" above, the Company has not reconciled non-GAAP net income per share to net (loss) income per share in this press release because we do not provide guidance for stock-based compensation expense, litigation-related expense, acquisition-related expense, amortization expense on intangible assets, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments as we are unable to quantify certain of these amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.





Cautionary Language Concerning Forward-Looking Statements
Certain matters discussed in this press release, including under “Business Outlook,” have "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our ability to complete the acquisition of Mozy, our ability to integrate Mozy into our operations and achieve the expected benefits of the acquisition, our ability to profitably attract new customers and retain existing customers, our dependence on the market for cloud backup services, our ability to manage growth, changes in economic or regulatory conditions or other trends affecting the Internet and the information technology industry, and those discussed in the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission (the "SEC"), which is available on www.sec.gov, and elsewhere in any subsequent periodic or current reports filed by us with the SEC. Except as required by applicable law, we do not undertake any obligation to update our forward-looking statements to reflect future events, new information or circumstances.
About Carbonite
Carbonite provides a robust Data Protection Platform for businesses, including backup, disaster recovery, high availability and workload migration technology. The Carbonite Data Protection Platform supports any size business, in locations around the world with secure and scalable global cloud infrastructure. To learn more visit www.Carbonite.com.
Investor Relations Contact:
Jeremiah Sisitsky
Carbonite
781-928-0713
investor.relations@carbonite.com

Media Contacts:

Sarah King
Carbonite
617-421-5601
media@carbonite.com









Carbonite, Inc.
Consolidated Statement of Operations (unaudited)
(In thousands, except share and per share amounts)

 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Revenue
$
61,692

 
$
53,488

 
$
239,462

 
$
206,986

Cost of revenue
16,811

 
14,859

 
70,067

 
60,937

Gross profit
44,881

 
38,629

 
169,395

 
146,049

Operating expenses:
 
 
 
 
 
 
 
Research and development
12,125

 
8,026

 
46,160

 
33,298

General and administrative
9,586

 
10,464

 
43,331

 
41,332

Sales and marketing
21,568

 
20,278

 
90,922

 
73,347

Restructuring charges
1,047

 
22

 
1,047

 
856

Total operating expenses
44,326

 
38,790

 
181,460

 
148,833

Income (loss) from operations
555

 
(161
)
 
(12,065
)
 
(2,784
)
Interest (expense) income, net
(2,219
)
 
(12
)
 
(6,866
)
 
(122
)
Other income (expense), net
123

 
72

 
1,252

 
190

Loss before income taxes
(1,541
)
 
(101
)
 
(17,679
)
 
(2,716
)
Provision (benefit) for income taxes
73

 
569

 
(13,677
)
 
1,383

Net loss
$
(1,614
)
 
$
(670
)
 
$
(4,002
)
 
$
(4,099
)
Net loss per share:
 
 
 
 
 
 
 
Basic
$
(0.06
)
 
$
(0.02
)
 
$
(0.14
)
 
$
(0.15
)
Diluted
$
(0.06
)
 
$
(0.02
)
 
$
(0.14
)
 
$
(0.15
)
Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
27,971,459

 
27,183,545

 
27,779,098

 
27,028,636

Diluted
27,971,459

 
27,183,545

 
27,779,098

 
27,028,636







Carbonite, Inc.
Consolidated Balance Sheets (unaudited)
(In thousands)
 
 
December 31, 2017
 
December 31, 2016
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
128,231

 
$
59,152

Trade accounts receivable, net
22,219

 
16,639

Prepaid expenses and other current assets
6,823

 
7,325

Restricted cash

 
135

Total current assets
157,273

 
83,251

Property and equipment, net
28,790

 
23,872

Other assets
804

 
157

Acquired intangible assets, net
44,994

 
13,751

Goodwill
80,958

 
23,728

Total assets
$
312,819

 
$
144,759

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
10,842

 
$
5,819

Accrued expenses
21,675

 
19,768

Current portion of deferred revenue
100,241

 
86,311

Total current liabilities
132,758

 
111,898

Long-term debt
111,819

 

Deferred revenue, net of current portion
24,273

 
21,280

Other long-term liabilities
5,704

 
5,747

Total liabilities
274,554

 
138,925

Stockholders’ equity
 
 
 
Common stock
301

 
285

Additional paid-in capital
233,343

 
177,931

Treasury stock, at cost
(26,616
)
 
(10,657
)
Accumulated deficit
(169,344
)
 
(165,042
)
Accumulated other comprehensive income
581

 
3,317

Total stockholders’ equity
38,265

 
5,834

Total liabilities and stockholders’ equity
$
312,819

 
$
144,759








Carbonite, Inc.
Consolidated Statement of Cash Flows (unaudited)
(In thousands)
 
 
Twelve Months Ended
December 31,
 
2017
 
2016
Operating activities
 
 
 
Net loss
$
(4,002
)
 
$
(4,099
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
21,731

 
15,869

(Gain) loss on disposal of equipment
(907
)
 
748

Intangible asset impairment charges
352

 

Impairment of capitalized software
1,048

 

Stock-based compensation expense
12,742

 
8,900

Benefit for deferred income taxes
(15,392
)
 
(15
)
Non-cash interest expense related to amortization of debt discount
4,434

 

Other non-cash items, net
(533
)
 
68

Changes in assets and liabilities, net of acquisition:
 
 
 
Accounts receivable
1,786

 
(13,412
)
Prepaid expenses and other current assets
389

 
(1,547
)
Other assets
(580
)
 
17

Accounts payable
5,035

 
(3,345
)
Accrued expenses
(995
)
 
8,183

Other long-term liabilities
53

 
(586
)
Deferred revenue
6,169

 
2,384

Net cash provided by operating activities
31,330

 
13,165

Investing activities
 
 
 
Purchases of property and equipment
(17,351
)
 
(6,582
)
Proceeds from sale of property and equipment
955

 
13

Proceeds from maturities of marketable securities and derivatives
534

 
3,395

Purchases of derivatives
(5,040
)
 
(1,476
)
Proceeds from sale of businesses
295

 

Payment for intangibles
(1,250
)
 

Payment for acquisition, net of cash acquired
(69,798
)
 
(11,625
)
Net cash used in investing activities
(91,655
)
 
(16,275
)
Financing activities
 
 
 
Proceeds from exercise of stock options
4,987

 
3,560

Proceeds from issuance of treasury stock under employee stock purchase plan
1,052

 

Proceeds from long-term borrowings, net of debt issuance costs
177,797

 

Payments on long-term borrowings
(39,200
)
 

Repurchase of common stock
(17,014
)
 
(4,964
)
Net cash provided by (used in) financing activities
127,622

 
(1,404
)
Effect of currency exchange rate changes on cash
1,782

 
(270
)
Net increase (decrease) in cash and cash equivalents
69,079

 
(4,784
)
Cash and cash equivalents, beginning of period
59,152

 
63,936

Cash and cash equivalents, end of period
$
128,231

 
$
59,152








Carbonite, Inc.
Reconciliation of GAAP to Non-GAAP Measures (unaudited)
(In thousands, except share and per share amounts)

Reconciliation of GAAP Revenue to Non-GAAP Revenue
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
GAAP revenue
$
61,692

 
$
53,488

 
$
239,462

 
$
206,986

Add:
 
 
 
 
 
 
 
Fair value adjustment of acquired deferred revenue (1)
1,130

 
415

 
6,628

 
2,314

Non-GAAP revenue
$
62,822

 
$
53,903

 
$
246,090

 
$
209,300

(1) Excludes the impact of purchase accounting adjustments for significant acquisitions.

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Gross profit
$
44,881

 
$
38,629

 
$
169,395

 
$
146,049

Gross margin
72.8
%
 
72.2
%
 
70.7
%
 
70.6
%
Add:
 
 
 
 
 
 
 
Fair value adjustment of acquired deferred revenue
1,130

 
415

 
6,628

 
2,314

Amortization of intangibles
2,226

 
633

 
8,179

 
2,632

Stock-based compensation expense
274

 
206

 
1,061

 
806

Acquisition-related expense
92

 

 
401

 
251

Intangible asset impairment charges
127

 

 
127

 

Non-GAAP gross profit
$
48,730

 
$
39,883

 
$
185,791

 
$
152,052

Non-GAAP gross margin
77.6
%
 
74.0
%
 
75.5
%
 
72.6
%

































Calculation of Non-GAAP Net Income and Non-GAAP Net Income per Share
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Net loss
$
(1,614
)
 
$
(670
)
 
$
(4,002
)
 
$
(4,099
)
Add:
 
 
 
 
 
 
 
Fair value adjustment of acquired deferred revenue
1,130

 
415

 
6,628

 
2,314

Amortization of intangibles
2,783

 
932

 
10,271

 
3,870

Stock-based compensation expense
3,523

 
2,272

 
12,742

 
8,900

Litigation-related expense
181

 

 
374

 
1

Restructuring-related expense
1,047

 
22

 
1,047

 
852

Acquisition-related expense
430

 
657

 
6,794

 
5,464

Intangible asset impairment charges
352

 

 
352

 

Non-cash convertible debt interest expense
1,491

 

 
4,434

 

Less:
 
 
 
 
 
 
 
Income tax effect of non-GAAP adjustments
566

 
318

 
15,807

 
876

Non-GAAP net income
$
8,757

 
$
3,310

 
$
22,833

 
$
16,426

GAAP net loss per share:
 
 
 
 
 
 
 
Basic
$
(0.06
)
 
$
(0.02
)
 
$
(0.14
)
 
$
(0.15
)
Diluted
$
(0.06
)
 
$
(0.02
)
 
$
(0.14
)
 
$
(0.15
)
Non-GAAP net income per share:
 
 
 
 
 
 
 
Basic
$
0.31

 
$
0.12

 
$
0.82

 
$
0.61

Diluted
$
0.30

 
$
0.12

 
$
0.79

 
$
0.60

GAAP weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
27,971,459

 
27,183,545

 
27,779,098

 
27,028,636

Diluted
27,971,459

 
27,183,545

 
27,779,098

 
27,028,636

Non-GAAP weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
27,971,459

 
27,183,545

 
27,779,098

 
27,028,636

Diluted
29,322,013

 
28,286,618

 
29,079,105

 
27,491,064








Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Research and development
$
12,125

 
$
8,026

 
$
46,160

 
$
33,298

Less:
 
 
 
 
 
 
 
Stock-based compensation expense
665

 
79

 
1,969

 
869

Acquisition-related expense
77

 
40

 
1,249

 
349

Non-GAAP research and development
$
11,383

 
$
7,907

 
$
42,942

 
$
32,080

 
 
 
 
 
 
 
 
General and administrative
$
9,586

 
$
10,464

 
$
43,331

 
$
41,332

Less:
 
 
 
 
 
 
 
Amortization of intangibles
123

 
62

 
469

 
262

Stock-based compensation expense
2,027

 
1,685

 
7,827

 
6,160

Litigation-related expense
181

 

 
374

 
1

Acquisition-related expense
145

 
617

 
4,448

 
4,748

Non-GAAP general and administrative
$
7,110

 
$
8,100

 
$
30,213

 
$
30,161

 
 
 
 
 
 
 
 
Sales and marketing
$
21,568

 
$
20,278

 
$
90,922

 
$
73,347

Less:
 
 
 
 
 
 
 
Amortization of intangibles
434

 
237

 
1,623

 
976

Stock-based compensation expense
557

 
302

 
1,885

 
1,065

Acquisition-related expense
116

 

 
696

 
116

Intangible asset impairment charges
225

 

 
225

 

Non-GAAP sales and marketing
$
20,236

 
$
19,739

 
$
86,493

 
$
71,190

 
 
 
 
 
 
 
 
Restructuring charges
$
1,047

 
$
22

 
$
1,047

 
$
856

Less:
 
 
 
 
 
 
 
Restructuring-related expense
1,047

 
22

 
1,047

 
851

Non-GAAP restructuring charges
$

 
$

 
$

 
$
5








Reconciliation of Revenue to Bookings
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Revenue
$
61,692

 
$
53,488

 
$
239,462

 
$
206,986

Add:
 
 
 
 
 
 
 
Deferred revenue ending balance
124,514

 
107,591

 
124,514

 
107,591

Deferred revenue divested

 

 
373

 

Impact of foreign exchange

 
404

 

 
240

Less:
 
 
 
 
 
 
 
Impact of foreign exchange
324

 

 
1,474

 

Beginning deferred revenue from acquisitions

 

 
9,420

 
6,830

Deferred revenue beginning balance
125,705

 
107,445

 
107,591

 
98,703

Change in deferred revenue balance
(1,515
)
 
550

 
6,402

 
2,298

Bookings
$
60,177

 
$
54,038

 
$
245,864

 
$
209,284


Calculation of Adjusted Free Cash Flow
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Net cash provided by operating activities
$
13,864

 
$
9,801

 
$
31,330

 
$
13,165

Subtract:
 
 
 
 
 
 
 
Purchases of property and equipment
5,407

 
2,867

 
17,351

 
6,582

Free cash flow
8,457

 
6,934

 
13,979

 
6,583

 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
Acquisition-related payments
864

 
8

 
5,707

 
9,989

Restructuring-related payments
359

 

 
359

 
341

Cash portion of lease exit charge

 
(11
)
 

 
343

Litigation-related payments
51

 

 
188

 
924

Adjusted free cash flow
$
9,731

 
$
6,931

 
$
20,233

 
$
18,180



carbq4financialresultssl
carbonite.com 1 Carbonite, Inc. Q4 and FY 2017 Financial Results February 13, 2018


 
carbonite.com 2 Safe Harbor Statement Certain matters discussed in these slides and accompanying oral presentation have "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our ability to profitably attract new customers and retain existing customers, our dependence on the market for cloud backup services, our ability to manage growth, changes in economic or regulatory conditions or other trends affecting the Internet and the information technology industry, and those discussed in the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission (the "SEC"), which is available on www.sec.gov, and elsewhere in any subsequent periodic or current reports filed by us with the SEC. Except as required by applicable law, we do not undertake any obligation to update our forward-looking statements to reflect future events, new information or circumstances. This presentation contains non-GAAP financial measures including, but not limited to, Bookings, non-GAAP Revenue, non-GAAP Gross Margin, non-GAAP Net Income and non-GAAP Net Income Per Share, and Adjusted Free Cash Flow. A reconciliation to GAAP can be found in the financial schedules included in our most recent earnings press release located on Carbonite’s website, http://investor.carbonite.com, in the Company’s filings or with the SEC at www.sec.gov. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.


 
carbonite.com 3 Financial Results Conference Call Details What: Carbonite Q4 and FY 2017 Financial Results Conference Call When: Tuesday, February 13, 2018 Time: 5:30 p.m. ET Live Call: 877-303-1393 (U.S.) 315-625-3228 (International) Conference ID: 1669107 Live / Recorded Webcast: http://investor.carbonite.com


 
carbonite.com 4 Definitions of non-GAAP Measures Bookings: Bookings represent the aggregate dollar value of customer subscriptions and software arrangements, which may include multiple revenue elements, such as software licenses, hardware, professional services and post-contractual support, received during a period and are calculated as revenue recognized during a particular period plus the change in total deferred revenue, excluding deferred revenue recorded in connection with acquisitions and divestitures, net of foreign exchange during the same period. Non-GAAP revenue: Excludes the impact of purchase accounting adjustments in connection with acquisitions. Non-GAAP gross margin: Excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, acquisition-related expense and intangible asset impairment charges. Non-GAAP net income and non-GAAP net income per share: Non-GAAP net income and non-GAAP net income per share excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, intangible asset impairment charges, non-cash convertible debt interest expense and the income tax effect of non-GAAP adjustments. Adjusted Free cash flow: Adjusted free cash flow is calculated by subtracting the cash paid for the purchase of property and equipment and adding the payments related to acquisitions, restructuring, litigation and the cash portion of the lease exit charge from net cash provided by operating activities. For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com


 
carbonite.com 5 Carbonite Announces Acquisition of Mozy Mozy is one of the leading providers in online backup • ~35,000 business customers • ~100,000 consumers • +2,000 partners / resellers • Capitalizing on the Carbonite data protection platform • Profitably adds new customers • Meaningfully expands the partner channel • Creates opportunity for cross-sell


 
carbonite.com 6 Transaction Details The Deal Acquiring Mozy, Inc. from a subsidiary of Dell Technologies Inc. Purchase Price $145.8 million in cash Source of Funds Financed through cash on-hand and new $120 million revolving credit facility Transaction Closing Expected to close later in Q1 2018 Subject to customary closing conditions and regulatory approval


 
carbonite.com 7 Carbonite’s Transformation – 2014 - Today >2x $25m>40% 620 Bps Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com More than doubled non-GAAP revenue More than 40% business bookings CAGR 620 Bps increase in non-GAAP Gross Margin ~$25 m in share repurchases


 
carbonite.com 8 Hours Minutes Seconds Backup Disaster recovery High availability Our transformation to a data protection platform From laptop backup to complete data protection for any IT environment Cloud Virtual Physical


 
carbonite.com 9 Carbonite is building the data protection platform Computer Physical server Virtual server Cloud server Backup & Archiving Workload portability Carbonite Endpoint Backup Carbonite Hybrid Backup Carbonite Cloud Backup Carbonite Move Carbonite Cloud Migration Carbonite MailStore Carbonite Endpoint Backup DR as a Service (DRaaS ) & High availability Carbonite Availability Carbonite DRaaS Not applicable


 
carbonite.com 10 2018: one solution, easy to consume & world’s best support One solution across all systems Exceptional support before, during and after an outage From physical to virtual, legacy systems and cloud Easy to consume via single API and UX Easy to configure, operate, test, fail over and fail back 24x7 support, ensuring tests successful, recovery smooth 2017 Gold Stevie Awards for Contact Center of the year and Customer Service Leader of the Year


 
carbonite.com 11 Carbonite Recover – Disaster-Recovery-as-a-Service


 
carbonite.com 12 Summary Q4 Financial Results Q4 2017 Outlook Q4 2017 Results GAAP Revenue $61.5 M to $63.5 M $61.7 M (+15% YoY) Non-GAAP Revenue $63.0 M to $65.0 M $62.8 M (+17% YoY) GAAP Net Loss Per Share Not guided $(0.06) Non-GAAP Net Income Per Share (Basic / Diluted) $0.27 to $0.31 $0.31 /$0.30 Consumer Bookings YoY Growth Not guided $19.4 M (-4% YoY) Business Bookings Not guided $40.8 M (+20% YoY) Non-GAAP Gross Margin Not guided 77.6% Adjusted Free Cash Flow Not guided $9.7 M *With respect to expectations under “Q4 2017 Outlook" above, the Company has not reconciled non-GAAP net income per share to net income (loss) per share because we do not provide guidance for stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, amortization expense on intangible assets and the income tax effect of non-GAAP adjustments as we are unable to quantify certain of these amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com


 
carbonite.com 13 Summary FY 2017 Financial Results FY 2017 Outlook FY 2017 Results GAAP Revenue $239.2 M to $241.2 M $239.5 M (+16% YoY) Non-GAAP Revenue $246.3 M to $248.3 M $246.1 M (+18% YoY) GAAP Net Loss Per Share Not guided $(0.14) Non-GAAP Net Income Per Share (Basic / Diluted) $0.76 to $0.80 $0.82 / $0.79 Consumer Bookings (10%) to 0% growth $81.8 M (-4% YoY) Business Bookings $163.8 M to $168.8 M $164.1 M (+32% YoY) Non-GAAP Gross Margin ~75.0% 75.5% Adjusted Free Cash Flow $16.0 M to $20.0 M $20.2 M *With respect to expectations under “FY 2017 Outlook" above, the Company has not reconciled non-GAAP net income per share to net income (loss) per share because we do not provide guidance for stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, amortization expense on intangible assets and the income tax effect of non-GAAP adjustments as we are unable to quantify certain of these amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com


 
carbonite.com 14 Subscription Business Bookings Bookings Growth Annual Bookings ($M) Approximate, may not foot due to rounding. Source: SEC Filings and company estimates; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com Quarterly Bookings ($M) Business BookingsConsumer Bookings +11% Q4 ‘17 YoY growth -4% +20% +15% +17% FY ‘17 YoY growth -4% +32% $19 $32 $40 $55 $124 $164 $80 $84 $88 $90 $85 $82 $98 $116 $128 $145 $209 $246 2012 2013 2014 2015 2016 2017 $28.8 $33.9 $40.1 $43.0 $40.2 $40.8 $20.4 $20.1 $22.0 $20.9 $19.5 $19.4 $23.4 $26.1 $27.3 $29.3 $27.6 $30.0 $49.2 $54.0 $62.1 $63.9 $59.7 $60.2 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17


 
carbonite.com 15 Revenue Growth Annual non-GAAP Revenue ($M) Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com Quarterly non-GAAP Revenue ($M) $84.0 $107.2 $122.6 $136.6 $209.3 $246.1 2012 2013 2014 2015 2016 2017 $52.5 $53.9 $59.1 $61.1 $63.1 $62.8 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17


 
carbonite.com 16 Improving Gross Margin Annual non-GAAP Gross Margin* Quarterly non-GAAP Gross Margin* +360 Bps +930 Bps *As a percentage of non-GAAP revenue; Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com 66.2% 68.4% 69.3% 73.1% 72.6% 75.5% 2012 2013 2014 2015 2016 2017 72.2% 74.0% 73.8% 74.1% 76.3% 77.6% Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17


 
carbonite.com 17 Driving Operating Leverage Sales and Marketing* *As a percentage of non-GAAP revenue; Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com Research and Development* -490 Bps-1,460 Bps 49.7% 42.9% 39.6% 38.1% 34.0% 35.1% 2012 2013 2014 2015 2016 2017 22.3% 18.6% 18.6% 19.5% 15.3% 17.4% 2012 2013 2014 2015 2016 2017


 
carbonite.com 18 2018 Expected Financial Impact* – Mozy FY 2018 Expected Mozy Contribution Bookings** $50.0 M to $55.0 M Non-GAAP Revenue $40.0 M to $45.0 M Non-GAAP Net Income Per Share (Diluted) ~$0.25 *With respect to our expectations above, the Company has not reconciled non-GAAP net income per share to net income (loss) per share because we do not provide guidance for stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, amortization expense on intangible assets, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments as we are unable to quantify certain of these amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com **Expect approximately 85% of bookings are business bookings


 
carbonite.com 19 Business Outlook (as of February 13, 2018)* Q1 2018 Outlook FY 2018 Outlook Growth at midpoint (YoY) GAAP Revenue $61.7 M to $63.7 M $294.0 M to $304.0 M +25% Non-GAAP Revenue $63.0 M to $65.0 M $302.5 M to $312.5 M +25% Non-GAAP Net Income Per Share (Diluted) $0.20 to $0.24 $1.45 to $1.55 +90% Business Bookings Not guided $223.8 M to $234.8 M +40% Consumer Bookings YoY Growth Not guided 5% to 15% growth +1,000 Bps Non-GAAP Gross Margin Not guided 76.0% to 77.0% +100 Bps Adjusted Free Cash Flow Not guided $32.0 M to $38.0 M +73% *With respect to our expectations under "Business Outlook" above, the Company has not reconciled non-GAAP net income per share to net income (loss) per share because we do not provide guidance for stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, amortization expense on intangible assets, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments as we are unable to quantify certain of these amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Source: SEC Filings; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com


 
carbonite.com 20 Carbonite ASC 606 Impact • Minimal impact, majority of revenue is SaaS • Revenue from term licenses and certain MSP arrangements currently recognized ratably will now be primarily recognized upfront Revenue Profitability • Commissions and third-party referral fees were expensed in period will now be recognized ratably over multiple periods • The actual impact of the adoption of ASC 606 will depend on the timing and mix of our 2018 bookings