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): August 2, 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 2.02
Results of Operations and Financial Condition
On August 2, 2018, Carbonite, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2018. 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 August 2, 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.
 
99.1
 
99.2





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 on August 2, 2018.
 
 
CARBONITE, INC.
 
 
 
 
By:
/s/ Danielle Sheer
 
Name:
Danielle Sheer
 
Title:
General Counsel


Exhibit


Exhibit 99.1
Carbonite Announces Second Quarter 2018 Financial Results
Delivered Strong Bookings Growth and Better-than-Expected Profitability
BOSTON, MA - August 2, 2018 - Carbonite, Inc. (NASDAQ: CARB), a global leader in data protection, today announced financial results for the quarter ended June 30, 2018.
Second Quarter 2018 Highlights:
Revenue of $77.7 million increased 32% year-over-year.
Non-GAAP revenue of $79.9 million increased 31% year-over-year.1 
Bookings of $81.8 million increased 28% year-over-year.2 
Net loss per share was ($0.20) (basic and diluted), as compared to ($0.23) in 2017 (basic and diluted).
Non-GAAP net income per share was $0.50 (basic) and $0.45 (diluted), as compared to $0.15 (basic and diluted) in 2017.4 
“I am very pleased with our financial and operating results in the second quarter,” said Mohamad Ali, CEO of Carbonite. “We closed our acquisition of Mozy in March and the integration continues to progress well. We completed a successful equity offering in July strengthening our balance sheet and positioning us to become the premier data protection company.”
“In the second quarter we again delivered financial results that were at or above the top of our guidance range. Business subscription bookings increased approximately 50% year-over-year, and we drove a meaningful expansion in profitability. Our focus on delivering growth and our disciplined approach to investing in the business and integrating acquisitions yielded another quarter of strong financial results,” 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.
Second Quarter 2018 Results:
Revenue for the second quarter was $77.7 million, an increase of 32% from $59.0 million in the second quarter of 2017. Non-GAAP revenue for the second quarter was $79.9 million, an increase of 31% from $61.1 million in the second quarter of 2017.1 
Bookings for the second quarter were $81.8 million, an increase of 28% from $63.9 million in the second quarter of 2017.2 
Gross margin for the second quarter was 70.3%, compared to 69.0% in the second quarter of 2017. Non-GAAP gross margin was 77.1% in the second quarter, compared to 74.1% in the second quarter of 2017.3 
Net loss for the second quarter was $(5.7) million, compared to net loss of ($6.4) million in the second quarter of 2017. Non-GAAP net income for the second quarter was $14.2 million, compared to non-GAAP net income of $4.3 million in the second quarter of 2017.4 
Net loss per share for the second quarter was ($0.20) (basic and diluted), compared to net loss per share of ($0.23) (basic and diluted) in the second quarter of 2017. Non-GAAP net income per share was $0.50 (basic) and $0.45 (diluted) for the second quarter, compared to non-GAAP net income per share of $0.15 (basic and diluted) in the second quarter of 2017.4 
Cash flow from operations for the second quarter was $13.6 million, compared to $2.9 million in the second quarter of 2017. Adjusted free cash flow for the second quarter was $13.3 million, compared to $2.1 million in the second quarter of 2017.5 
 
1 
Non-GAAP revenue excludes the impact of purchase accounting adjustments for 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, divestitures and the adoption impact of Topic 606, net of foreign exchange and the change in unbilled revenue 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, and acquisition-related expense.





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, 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, and litigation from net cash provided by operating activities.

Business Outlook

Based on the information available as of August 2, 2018, Carbonite expects the following for the third quarter and full year of 2018:

Third Quarter 2018:
 
Current Guidance
(8/2/2018)
GAAP Revenue
$77.6 - $79.6 million
Non-GAAP Revenue
$79.0 - $81.0 million
Non-GAAP Net Income Per Share (Diluted)
$0.40 - $0.42

Full Year 2018:
 
Prior Guidance
(5/7/2018)
Prior Guidance
(7/16/2018)
Current Guidance
(8/2/2018)
Business Bookings
$223.8 - $234.8 million
Not provided
$223.8 - $234.8 million
Consumer Bookings Y/Y Growth
5% - 15% growth
Not provided
10% - 15% growth
GAAP Revenue
$296.9 - $306.9 million
$296.9 - $306.9 million
$296.9 - $306.9 million
Non-GAAP Revenue
$302.5 - $312.5 million
$302.5 - $312.5 million
$302.5 - $312.5 million
Non-GAAP Net Income Per Share (Diluted)
$1.51 - $1.59
$1.62 - $1.68
$1.51 - $1.59
Non-GAAP Gross Margin
76.0% - 77.0%
Not provided
76.5% - 77.5%
Adjusted Free Cash Flow
$32.0 - $38.0 million
Not provided
$40.0 - $45.0 million
Carbonite’s expectations of non-GAAP net income per share for the third 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 8% for the full year of 2018. Non-GAAP net income per share assumes fully-diluted weighted average shares outstanding of approximately 36.3 million for the third quarter and 34.0 million for the full year of 2018.
Conference Call and Webcast Information
Carbonite will host a conference call on Thursday, August 2, 2018 at 5:30 p.m. ET to review these 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 3577539.
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 income per share in this press release because we do not provide guidance for amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, 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 integrate recent acquisitions 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, 2017 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 businesses in locations around the world with secure 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:

Caitlin O'Malley
Carbonite
781-928-0762
media@carbonite.com





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

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Revenue
$
77,734

 
$
59,034

 
$
141,760

 
$
116,133

Cost of revenue
23,057

 
18,311

 
41,369

 
35,666

Gross profit
54,677

 
40,723

 
100,391

 
80,467

Operating expenses:
 
 
 
 
 
 
 
Research and development
15,719

 
10,927

 
28,238

 
21,254

General and administrative
13,460

 
10,954

 
27,920

 
23,723

Sales and marketing
22,086

 
22,963

 
41,946

 
46,034

Amortization of intangible assets
3,652

 
532

 
4,591

 
982

Restructuring charges
41

 

 
903

 

Total operating expenses
54,958

 
45,376

 
103,598

 
91,993

Loss from operations
(281
)
 
(4,653
)
 
(3,207
)
 
(11,526
)
Interest expense
(3,420
)
 
(2,373
)
 
(6,021
)
 
(2,595
)
Interest income
169

 
134

 
413

 
154

Other income (expense), net
183

 
915

 
195

 
1,195

Loss before income taxes
(3,349
)
 
(5,977
)
 
(8,620
)
 
(12,772
)
Provision (benefit) for income taxes
2,338

 
403

 
(14,877
)
 
(13,987
)
Net (loss) income
$
(5,687
)
 
$
(6,380
)
 
$
6,257

 
$
1,215

Net (loss) income per share:
 
 
 
 
 
 
 
Basic
$
(0.20
)
 
$
(0.23
)
 
$
0.22

 
$
0.04

Diluted
$
(0.20
)
 
$
(0.23
)
 
$
0.20

 
$
0.04

Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
28,628,173

 
27,525,647

 
28,485,695

 
27,672,804

Diluted
28,628,173

 
27,525,647

 
30,885,633

 
28,354,616







Carbonite, Inc.
Consolidated Balance Sheets (unaudited)
(In thousands)
 
 
June 30, 2018
 
December 31, 2017
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
70,982

 
$
128,231

Trade accounts receivable, net
32,078

 
22,219

Prepaid expenses and other current assets
10,620

 
6,823

Total current assets
113,680

 
157,273

Property and equipment, net
36,587

 
28,790

Other assets
12,337

 
804

Acquired intangible assets, net
134,770

 
44,994

Goodwill
155,341

 
80,958

Total assets
$
452,715

 
$
312,819

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
5,820

 
$
10,842

Accrued compensation
9,989

 
9,892

Accrued expenses and other current liabilities
18,922

 
11,783

Current portion of deferred revenue
121,032

 
100,241

Total current liabilities
155,763

 
132,758

Long-term debt
194,992

 
111,819

Deferred revenue, net of current portion
27,682

 
24,273

Other long-term liabilities
5,876

 
5,704

Total liabilities
384,313

 
274,554

Stockholders’ equity
 
 
 
Common stock
308

 
301

Additional paid-in capital
243,077

 
233,343

Treasury stock, at cost
(26,867
)
 
(26,616
)
Accumulated deficit
(149,207
)
 
(169,344
)
Accumulated other comprehensive income
1,091

 
581

Total stockholders’ equity
68,402

 
38,265

Total liabilities and stockholders’ equity
$
452,715

 
$
312,819








Carbonite, Inc.
Consolidated Statement of Cash Flows (unaudited)
(In thousands)
 
 
Six Months Ended
June 30,
 
2018
 
2017
Operating activities
 
 
 
Net income
$
6,257

 
$
1,215

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
17,763

 
10,392

Amortization of deferred costs
931

 

Gain on disposal of equipment
(141
)
 
(928
)
Impairment of capitalized software
653

 

Stock-based compensation expense
8,478

 
5,965

Benefit for deferred income taxes
(16,317
)
 
(14,964
)
Non-cash interest expense related to amortization of debt discount
3,101

 
1,466

Other non-cash items, net
64

 
(249
)
Changes in assets and liabilities, net of acquisition:
 
 
 
Accounts receivable
(6,437
)
 
(89
)
Prepaid expenses and other current assets
(1,541
)
 
(193
)
Other assets
(3,771
)
 
(137
)
Accounts payable
(3,895
)
 
627

Accrued expenses and other current liabilities
2,549

 
(2,340
)
Other long-term liabilities
53

 
120

Deferred revenue
9,099

 
9,548

Net cash provided by operating activities
16,846

 
10,433

Investing activities
 
 
 
Purchases of property and equipment
(7,795
)
 
(10,039
)
Proceeds from sale of property and equipment and businesses
534

 
855

Proceeds from maturities of derivatives
1,680

 
370

Purchases of derivatives
(1,403
)
 
(2,433
)
Payment for intangibles
(1,250
)
 

Payment for acquisition, net of cash acquired
(144,597
)
 
(60,198
)
Net cash used in investing activities
(152,831
)
 
(71,445
)
Financing activities
 
 
 
Proceeds from exercise of stock options
942

 
3,337

Proceeds from issuance of treasury stock under employee stock purchase plan
1,215

 

Payments of withholding taxes in connection with restricted stock unit vesting
(1,184
)
 
(1,009
)
Proceeds from long-term borrowings, net of debt issuance costs
88,068

 
177,797

Payments on long-term borrowings
(10,000
)
 
(39,200
)
Repurchase of common stock

 
(14,964
)
Net cash provided by financing activities
79,041

 
125,961

Effect of currency exchange rate changes on cash
(305
)
 
863

Net (decrease) increase in cash, cash equivalents and restricted cash
(57,249
)
 
65,812

Cash, cash equivalents and restricted cash, beginning of period
128,231

 
59,287

Cash, cash equivalents and restricted cash, end of period
$
70,982

 
$
125,099








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
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
GAAP revenue
$
77,734

 
$
59,034

 
$
141,760

 
$
116,133

Add:
 
 
 
 
 
 
 
Fair value adjustment of acquired deferred revenue
2,116

 
2,045

 
2,998

 
4,033

Non-GAAP revenue
$
79,850

 
$
61,079

 
$
144,758

 
$
120,166


Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Gross profit
$
54,677

 
$
40,723

 
$
100,391

 
$
80,467

Gross margin
70.3
%
 
69.0
%
 
70.8
%
 
69.3
%
Add:
 
 
 
 
 
 
 
Fair value adjustment of acquired deferred revenue
2,116

 
2,045

 
2,998

 
4,033

Amortization of intangibles
4,325

 
2,124

 
6,750

 
3,750

Stock-based compensation expense
413

 
269

 
738

 
500

Acquisition-related expense
3

 
115

 
57

 
133

Non-GAAP gross profit
$
61,534

 
$
45,276

 
$
110,934

 
$
88,883

Non-GAAP gross margin
77.1
%
 
74.1
%
 
76.6
%
 
74.0
%


































Reconciliation of GAAP Net (Loss) Income and Net (Loss) Income per Share to Non-GAAP Net Income and Net Income per Share
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
GAAP net (loss) income
$
(5,687
)
 
$
(6,380
)
 
$
6,257

 
$
1,215

Add:
 
 
 
 
 
 
 
Fair value adjustment of acquired deferred revenue
2,116

 
2,045

 
2,998

 
4,033

Amortization of intangibles
7,977

 
2,656

 
11,341

 
4,732

Stock-based compensation expense
4,741

 
3,188

 
8,478

 
5,965

Litigation-related expense
46

 
89

 
63

 
144

Restructuring-related expense
41

 

 
903

 

Acquisition-related expense
2,357

 
1,255

 
5,977

 
4,278

Non-cash convertible debt interest expense
1,558

 
1,466

 
3,101

 
1,466

Less:
 
 
 
 
 
 
 
Income tax effect of non-GAAP adjustments
(1,027
)
 
66

 
16,818

 
15,051

Non-GAAP net income
$
14,176

 
$
4,253

 
$
22,300

 
$
6,782

GAAP net (loss) income per share:
 
 
 
 
 
 
 
Basic
$
(0.20
)
 
$
(0.23
)
 
$
0.22

 
$
0.04

Diluted
$
(0.20
)
 
$
(0.23
)
 
$
0.20

 
$
0.04

Non-GAAP net income per share:
 
 
 
 
 
 
 
Basic
$
0.50

 
$
0.15

 
$
0.78

 
$
0.25

Diluted
$
0.45

 
$
0.15

 
$
0.72

 
$
0.23

GAAP weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
28,628,173

 
27,525,647

 
28,485,695

 
27,672,804

Diluted
28,628,173

 
27,525,647

 
30,885,633

 
28,354,616

Non-GAAP weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
28,628,173

 
27,525,647

 
28,485,695

 
27,672,804

Diluted
31,718,232

 
28,793,346

 
30,885,633

 
28,991,968








Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Research and development
$
15,719

 
$
10,927

 
$
28,238

 
$
21,254

Less:
 
 
 
 
 
 
 
Stock-based compensation expense
1,047

 
405

 
1,734

 
714

Acquisition-related expense
2

 
65

 
37

 
134

Non-GAAP research and development
$
14,670

 
$
10,457

 
$
26,467

 
$
20,406

 
 
 
 
 
 
 
 
General and administrative
$
13,460

 
$
10,954

 
$
27,920

 
$
23,723

Less:
 
 
 
 
 
 
 
Stock-based compensation expense
2,494

 
1,983

 
4,618

 
3,940

Litigation-related expense
46

 
89

 
63

 
144

Acquisition-related expense
2,321

 
908

 
5,811

 
3,809

Non-GAAP general and administrative
$
8,599

 
$
7,974

 
$
17,428

 
$
15,830

 
 
 
 
 
 
 
 
Sales and marketing
$
22,086

 
$
22,963

 
$
41,946

 
$
46,034

Less:
 
 
 
 
 
 
 
Stock-based compensation expense
787

 
531

 
1,388

 
811

Acquisition-related expense
31

 
167

 
72

 
202

Non-GAAP sales and marketing
$
21,268

 
$
22,265

 
$
40,486

 
$
45,021

 
 
 
 
 
 
 
 
Amortization of intangible assets
$
3,652

 
$
532

 
$
4,591

 
$
982

Less:
 
 
 
 
 
 
 
Amortization of intangible assets
3,652

 
532

 
4,591

 
982

Non-GAAP amortization of intangible assets
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
Restructuring charges
$
41

 
$

 
$
903

 
$

Less:
 
 
 
 
 
 
 
Restructuring-related expense
41

 

 
903

 

Non-GAAP restructuring charges
$

 
$

 
$

 
$








Reconciliation of Revenue to Bookings
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
GAAP revenue
$
77,734

 
$
59,034

 
$
141,760

 
$
116,133

Add:
 
 
 
 
 
 
 
Change in deferred revenue
4,388

 
5,113

 
24,200

 
19,389

Deferred revenue divested

 
373

 
288

 
373

Impact of Topic 606 adoption

 

 
3,998

 

Impact of foreign exchange
543

 

 
122

 

Less:
 
 
 
 
 
 
 
Impact of foreign exchange

 
620

 

 
773

Beginning deferred revenue from acquisitions
130

 

 
19,740

 
9,100

Change in unbilled revenue
749

 

 
1,254

 

Change in deferred revenue and adjustments
4,052

 
4,866

 
7,614

 
9,889

Bookings
$
81,786

 
$
63,900

 
$
149,374

 
$
126,022


Calculation of Adjusted Free Cash Flow
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Net cash provided by operating activities
$
13,555

 
$
2,872

 
$
16,846

 
$
10,433

Subtract:
 
 
 
 
 
 
 
Purchases of property and equipment
4,507

 
3,471

 
7,795

 
10,039

Free cash flow
9,048

 
(599
)
 
9,051

 
394

 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
Acquisition-related payments
3,681

 
2,659

 
5,328

 
3,889

Restructuring-related payments
461

 

 
1,125

 

Litigation-related payments
85

 
37

 
212

 
69

Adjusted free cash flow
$
13,275

 
$
2,097

 
$
15,716

 
$
4,352



q22018financialresults
Investor Presentation Q2 2018 Financial Results August 2nd, 2018 © 2018 ALL RIGHTS RESERVED


 
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 integrate recent acquisitions 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, 2017 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. 2


 
Financial results conference call details What: Carbonite Q2 2018 Financial Results Conference Call When: Thursday, August 2nd, 2018 Time: 5:30 p.m. ET Live Call: 877-303-1393 (U.S.) 315-625-3228 (International) Conference ID: 3577539 Live / Recorded Webcast: http://investor.carbonite.com 3


 
Carbonite’s mission To become the world’s leading data protection company, enabling businesses to operate continuously, regardless of attacks, accidents or disasters 4


 
Summary Q2 performance • Strong financial results across the board • Business subscription bookings up 48% year-over-year • Non-GAAP net income per share (diluted) was $0.45 up 200% year-over-year • Non-GAAP gross margin was 77.1% up 300 Bps year-over-year • Adjusted free cash flow was $13.3 million, up 533% year over year • Better-than-expected results from the recent acquisition of Mozy 5


 
Summary Q2 financial results Q2 2018 Outlook Q2 2018 Preliminary Q2 2018 Results (5/7/2018) Results (7/16/2018) GAAP Revenue $75.8 M to $77.8 M $77.3 M to $78.0 M $77.7 M (+32% YoY) Non-GAAP Revenue $78.0 M to $80.0 M $79.3 M to $80.0 M $79.9 M (+31% YoY) GAAP Net Loss Per Share (Diluted) Not guided $(0.23) to $(0.20) $(0.20) (+13% YoY) Non-GAAP Net Income Per Share (Diluted) $0.34 to $0.38 $0.41 to $0.44 $0.45 (+200% YoY) Consumer Bookings Not guided Not guided $27.0 (+29% YoY) Business Bookings Not guided Not guided $54.8 M (+27% YoY) Non-GAAP Gross Margin Not guided Not guided 77.1% (+300 Bps YoY) Adjusted Free Cash Flow Not guided Not guided $13.3 M (+533% YoY) *With respect to expectations under “Q2 2018 Outlook" above, the Company has not reconciled non-GAAP net income per share to net income 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. 6 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 bookings growth Q2 ‘18 YoY growth $100 28% growth $81.8 +28% 19% growth $75 $67.6 $63.9 $62.1 $59.7 $60.2 $53.7 $54.0 $27.0 +29% $49.2 $50 $20.9 $22.0 $22.0 $19.5 $19.4 $21.4 $20.1 $43.4 +48% $20.4 $25 $32.2 $27.3 $29.3 $27.6 $30.0 $24.5 $23.4 $26.1 $32.3 $28.8 $33.9 $40.1 $43.0 $40.2 $40.8 $45.6 $54.8 +27% $0 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Subscription Business Bookings Business Bookings Consumer Bookings 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 7


 
Strong and consistent non-GAAP revenue growth ($ in millions) Annual Half-year Quarterly $246.1 20% CAGR $209.3 20% $144.8 $136.6 $122.6 $120.2 31% $107.2 $84.0 $79.9 $61.1 2012 2013 2014 2015 2016 2017 1H'17 1H'18 Q2'17 Q2'18 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 8


 
Driving operating leverage (% of non-GAAP revenue) Non-GAAP Gross Margin 77% Non-GAAP Sales & Marketing 75% 73% 73% 50% 69% 68% 43% 67% 40% 38% 66% 67% 34% 35% 59% 29% 24% 27% 15% 38% 11% 9% 31% 7% 5% 27% 19% 2012 2013 2014 2015 2016 2017 Q2'18 2012 2013 2014 2015 2016 2017 Q2'18 Non-GAAP Gross Margin Business Bookings as % of Total Bookings S&M Advertising Non-GAAP Research & Development Non-GAAP General & Administrative 22% 19% 14% 19% 19% 12% 12% 18% 11% 17% 10% 11% 8% 15% 2012 2013 2014 2015 2016 2017 Q2'18 2012 2013 2014 2015 2016 2017 Q2'18 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 9


 
Business outlook (as of August 2nd, 2018)* Q3 2018 FY 2018 FY ‘18 Growth Outlook Outlook (at midpoint) GAAP Revenue $77.6 M to $79.6 M $296.9 M to $306.9 M +26% Non-GAAP Revenue $79.0 M to $81.0 M $302.5 M to $312.5 M +25% Non-GAAP Net Income Per Share (Diluted) $0.40 to $0.42 $1.51 to $1.59 +96% Business Bookings Not guided $223.8 M to $234.8 M +40% Consumer Bookings YoY Growth Not guided 10% to 15% growth +1,250 Bps Non-GAAP Gross Margin Not guided 76.5% to 77.5% +150 Bps Adjusted Free Cash Flow Not guided $40.0 M to $45.0 M +111% *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. 10 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


 
Share count impact to FY 2018 business outlook FY 2018 Current FY 2018 Change business outlook business outlook (at midpoint) (as of 5/7/2018) (as of 8/2/2018) Non-GAAP net income per share $1.51 - $1.59 $1.51 - $1.59 No change Weighted average shares outstanding 31.3 M 34.0 M** +2.7 M (WASO) FY 2018 non-GAAP net income* $47.3 M - $49.8 M $51.3 M - $54.1 M +$4.2 M (as calculated) WASO included in Current FY 2018 business outlook Shares associated with convertible note and in-the-money share price 1.3 M Shares associated with equity offering 2.2 M (4.8 M shares issued) *Metric as calculated, not guided to **Timing of the offering reduces share count impact to FY 2018 WASO; full impact of shares associated with the offering impacts FY 2019 WASO, dilutive impact associated with the convertible note is dependent on the stock price 11 Source: SEC Filings, Carbonite estimates; For a full reconciliation of GAAP to non-GAAP, please visit the investor relations portion of the Carbonite web site – investor.carbonite.com


 
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 and the change in unbilled revenue 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, and acquisition-related expense. • 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, stock-based compensation expense, litigation- related expense, restructuring-related expense, acquisition-related expense, 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, and litigation from net cash provided by operating activities. 12 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