February 9, 2017

Carbonite Announces Fourth Quarter and Full Year 2016 Financial Results

Carbonite Delivers a Strong Close to a Transformative Year

BOSTON, Feb. 09, 2017 (GLOBE NEWSWIRE) -- Carbonite, Inc. (NASDAQ:CARB), a leading provider of data protection solutions for small and midsize businesses, today announced financial results for the quarter and full year ended December 31, 2016.

Full Year 2016 Highlights:

  • Revenue of $207.0 million increased 52% year-over-year.
  • Non-GAAP revenue of $209.3 million increased 53% year-over-year.1
  • Net loss per share was ($0.15), as compared to ($0.80) in 2015.
  • Non-GAAP diluted net income per share was $0.60, as compared to $0.12 in 2015.4

"2016 was a transformative year for Carbonite. We continued to successfully execute our strategy, acquiring and developing solutions to better serve the expanding data protection needs of businesses. The acquisition of EVault early in 2016 strengthened our technology portfolio and solidified our shift to the mid-market and we continue that momentum into 2017 with our acquisition of Double-Take Software. With a significantly expanded suite of products, a unified go-to-market organization and a strong channel, we enter 2017 well positioned to capitalize on the sizeable and growing data protection market," said Mohamad Ali, President and CEO of Carbonite.

"I am very pleased with our strong financial performance in 2016. We grew SMB to represent approximately 60% of our total bookings for the year. We drove a dramatic increase in profitability, delivering five times the non-GAAP net income and non-GAAP net income per share that we delivered in 2015. We also meaningfully exceeded our adjusted free cash flow expectations for the year. We delivered great results across the board and I am excited about our continued momentum as we start 2017," 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 2016 Results:

  • Revenue for the fourth quarter was $53.5 million, an increase of 53% from $35.1 million in the fourth quarter of 2015. Non-GAAP revenue for the fourth quarter was $53.9 million, an increase of 54% from $35.1 million in the fourth quarter of 2015.1
  • Bookings for the fourth quarter were $54 million, an increase of 45% from $37.4 million in the fourth quarter of 2015.2
  • Gross margin for the fourth quarter was 72.2%, compared to 73.8% in the fourth quarter of 2015. Non-GAAP gross margin was 74.0% in the fourth quarter, compared to 75.3% in the fourth quarter of 2015.3
  • Net loss for the fourth quarter was ($0.7) million, compared to a net loss of ($4.6 million) in the fourth quarter of 2015. Non-GAAP net income for the fourth quarter was $3.3 million, compared to non-GAAP net income of $2.7 million in the fourth quarter of 2015.4
  • Net loss per share for the fourth quarter was ($0.02) (basic and diluted), compared to a net loss per share of ($0.17) (basic and diluted) in the fourth quarter of 2015. Non-GAAP net income per share was $0.12 (basic and diluted) for the fourth quarter, compared to non-GAAP net income per share of $0.10 (basic and diluted) in the fourth quarter of 2015.4
  • Cash flow from operations for the fourth quarter was $11.0 million, compared to $4.6 million in the fourth quarter of 2015. Adjusted free cash flow for the fourth quarter was $6.9 million, compared to $7.1 million in the fourth quarter of 2015.5

Full Year 2016 Results:

  • Revenue for the full year was $207 million, an increase of 52% from $136.6 million in 2015. Non-GAAP revenue for the full year was $209.3 million, an increase of 53% from $136.6 million in 2015.1
  • Bookings for the full year were $209.3 million, an increase of 45% from $144.1 million in 2015.2
  • Gross margin for the full year was 70.6%, compared to 71.6% in 2015. Non-GAAP gross margin was 72.6% in the full year, compared to 73.1% in 2015.3
  • Net loss for the full year was ($4.1 million), compared to a net loss of ($21.6 million) in 2015. Non-GAAP net income for the full year was $16.4 million, compared to non-GAAP net income of $3.2 million in 2015.4
  • Net loss per share for the full year was ($0.15) (basic and diluted), compared to a net loss per share of ($0.80) (basic and diluted) in 2015. Non-GAAP net income per share was $0.61 (basic) and $0.60 (diluted) for the full year, compared to non-GAAP net income per share of $0.12 (basic and diluted) in 2015.4
  • Total cash, cash equivalents and marketable securities were $59.2 million as of December 31, 2016, compared to $64.9 million as of December 31, 2015.
  • Cash flow from operations for the full year was $14.4 million, compared to $13.2 million in 2015. Adjusted free cash flow for the full year was $18.2 million, compared to $14.3 million in 2015.5

_________________________________

1 Non-GAAP revenue excludes the impact of purchase accounting adjustments for the acquisition of EVault.
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, 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 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, hostile takeover-related expense, CEO transition 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 corporate headquarter relocation, acquisition-related payments, hostile takeover-related payments, CEO transition payments, restructuring-related payments, litigation-related payments 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 9, 2017, Carbonite expects the following for the first quarter and full year of 2017:

First Quarter 2017:

 First Quarter
2017
GAAP revenue$51.3 - $55.3 million
Non-GAAP revenue$55.1 - $59.1 million
Non-GAAP net income per share$0.06 - $0.08
  

Full Year 2017:

 Full Year
2017
SMB Bookings$158.6 - $170.2 million
Consumer Bookings Y/Y Growth(10%) - 0% growth
GAAP revenue$223.0 - $243.0 million
Non-GAAP revenue$232.5 - $252.5 million
Non-GAAP net income per share$0.72 - $0.80
Non-GAAP Gross Margin74.0% - 75.0%
Adjusted Free Cash Flow$14.0 - $18.0 million
  

Carbonite's expectations of non-GAAP net income per share for the first quarter and full year of 2017 excludes the impact of purchase accounting adjustments, stock-based compensation expense, litigation-related expense, acquisition-related expense, amortization expense on intangible assets and the income tax effect of non-GAAP adjustments. Non-GAAP net income per share assumes an effective tax rate of 12% for the full year of 2017. Non-GAAP net income per share assumes fully-diluted weighted average shares outstanding of approximately 28.8 million for the first quarter and 29.0 million for the full year of 2017.

Conference Call and Webcast Information

In conjunction with this announcement, Carbonite will host a conference call on Thursday, February 9, 2017 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 47867747.

Following the completion of the call, a recorded replay will be available on the Company's website, http://investor.carbonite.com, under "Events & Presentations" through February 9, 2018.

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 (loss) 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 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 statements include, but are not limited to, statements regarding guidance on our future financial results and other projections or measures of future performance; the expected future results of the acquisition of Double-Take Software, including revenues, non-GAAP EPS and growth rates; the Company's ability to successfully integrate Double-Take Software's business; and the Company's expectations regarding its future performance. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control. The Company's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including, but not limited to, the Company's ability to profitably attract new customers and retain existing customers, the Company's dependence on the market for cloud backup services, the Company's ability to manage growth, and changes in economic or regulatory conditions or other trends affecting the Internet and the information technology industry. These and other important risk factors are discussed under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 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 (NASDAQ:CARB) is a leading provider of cloud and hybrid data protection solutions for small and midsized businesses. Together with our partners, we support more than 1.5 million individuals and small businesses around the world who rely on us to ensure their important data is protected, available and useful. To learn more about the cloud solutions voted #1 by PC Magazine readers, as well as our partner program and our award-winning customer support, visit us at Carbonite.com.

 
Carbonite, Inc.
Condensed Consolidated Statement of Operations (unaudited)
(In thousands, except share and per share amounts)
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2016 2015 2016 2015
Revenue$53,488  $35,065  $206,986  $136,616 
Cost of revenue14,859  9,196  60,937  38,784 
Gross profit38,629  25,869  146,049  97,832 
Operating expenses:       
Research and development8,026  6,585  33,298  28,085 
General and administrative10,464  11,792  41,332  37,265 
Sales and marketing20,278  12,860  73,347  53,671 
Restructuring charges23  120  857  469 
Total operating expenses38,791  31,357  148,834  119,490 
Loss from operations(162) (5,488) (2,785) (21,658)
Interest and other income (expense), net60  (20) 68  145 
Loss before income taxes(102) (5,508) (2,717) (21,513)
Provision (benefit) for income taxes569  (909) 1,383  102 
Net loss$(671) $(4,599) $(4,100) $(21,615)
Net loss per share:       
Basic and diluted$(0.02) $(0.17) $(0.15) $(0.80)
Weighted-average shares outstanding:       
Basic and diluted27,183,545  27,120,633  27,028,636  27,187,910 


Carbonite, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In thousands)
 
 December 31,
2016
 December 31,
2015
Assets   
Current assets   
Cash and cash equivalents$59,152  $63,936 
Marketable securities  1,000 
Trade accounts receivable, net16,639  3,736 
Prepaid expenses and other current assets7,325  3,188 
Restricted cash135  135 
  Total current assets83,251  71,995 
Property and equipment, net23,872  22,083 
Other assets157  167 
Acquired intangible assets, net13,751  8,640 
Goodwill23,728  23,105 
Total assets$144,759  $125,990 
Liabilities and Stockholders' Equity   
Current liabilities   
Accounts payable$5,819  $8,384 
Accrued expenses19,768  11,559 
Current portion of deferred revenue86,311  80,269 
  Total current liabilities111,898  100,212 
Deferred revenue, net of current portion21,280  18,434 
Other long-term liabilities5,747  6,271 
Total liabilities138,925  124,917 
Stockholders' equity   
Common stock285  278 
Additional paid-in capital177,931  165,391 
Treasury stock, at cost(10,657) (5,693)
Accumulated deficit(165,042) (160,943)
Accumulated other comprehensive income3,317  2,040 
  Total stockholders' equity5,834  1,073 
Total liabilities and stockholders' equity$144,759  $125,990 


Carbonite, Inc.
Condensed Consolidated Statement of Cash Flows (unaudited)
(In thousands)
 
 Twelve Months Ended
December 31,
 2016 2015
Operating activities   
Net loss$(4,100) $(21,615)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation and amortization15,869  13,634 
Loss (gain) on disposal of equipment748  (192)
Accretion of discount on marketable securities  (9)
Stock-based compensation expense8,900  10,216 
Other non-cash items, net68  (100)
Changes in assets and liabilities, net of acquisition:   
Accounts receivable(13,412) (1,406)
Prepaid expenses and other current assets(1,547) 1,019 
Other assets17  2,029 
Accounts payable(2,156) 2,864 
Accrued expenses8,204  595 
Other long-term liabilities(601) (1,372)
Deferred revenue2,384  7,511 
Net cash provided by operating activities14,374  13,174 
Investing activities   
Purchases of property and equipment(7,792) (9,730)
Proceeds from sale of property and equipment13  286 
Proceeds from maturities of marketable securities and derivatives3,395  19,149 
Purchases of marketable securities and derivatives(1,476) (750)
Decrease in restricted cash  693 
Payment for acquisition, net of cash acquired(11,625) (1,325)
Net cash (used in) provided by investing activities(17,485) 8,323 
Financing activities   
Proceeds from exercise of stock options3,560  2,254 
Excess tax benefit from equity awards  23 
Repurchase of common stock(4,964) (5,671)
Net cash used in financing activities(1,404) (3,394)
Effect of currency exchange rate changes on cash(269) (251)
Net (decrease) increase in cash and cash equivalents(4,784) 17,852 
Cash and cash equivalents, beginning of period63,936  46,084 
Cash and cash equivalents, end of period$59,152  $63,936 


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,
 2016 2015 2016 2015
GAAP revenue$53,488  $35,065  $206,986  $136,616 
Add:       
Fair value adjustment of acquired deferred revenue (1)415    2,314   
Non-GAAP revenue$53,903  $35,065  $209,300  $136,616 
(1)  Excludes the impact of purchase accounting adjustments for the acquisition of EVault.


Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2016 2015 2016 2015
Gross profit$38,629  $25,869  $146,049  $97,832 
Gross margin72.2% 73.8% 70.6% 71.6%
Add:       
Fair value adjustment of acquired deferred revenue415    2,314   
Amortization of intangibles633  327  2,632  1,281 
Stock-based compensation expense206  206  806  730 
Acquisition-related expense  8  251  8 
Non-GAAP gross profit$39,883  $26,410  $152,052  $99,851 
Non-GAAP gross margin74.0% 75.3% 72.6% 73.1%


Calculation of Non-GAAP Net Income and Non-GAAP Net Income per Share
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2016 2015 2016 2015
Net loss$(671) $(4,599) $(4,100) $(21,615)
Add:       
Fair value adjustment of acquired deferred revenue415    2,314   
Amortization of intangibles932  530  3,870  2,005 
Stock-based compensation expense2,272  2,798  8,900  10,216 
Litigation-related expense  968  1  6,409 
Restructuring-related expense23    852  334 
Acquisition-related expense657  4,486  5,464  5,625 
Hostile takeover-related expense      1,657 
CEO transition expense      54 
Less:       
Income tax effect of non-GAAP adjustments (1)318  1,456  876  1,456 
Non-GAAP net income$3,310  $2,727  $16,425  $3,229 
Non-GAAP net income per share:       
Basic$0.12  $0.10  $0.61  $0.12 
Diluted$0.12  $0.10  $0.60  $0.12 
Weighted-average shares outstanding:       
Basic27,183,545  27,120,633  27,028,636  27,187,910 
Diluted28,286,618  27,259,065  27,491,064  27,282,043 
(1) In connection with the SEC Staff updating its interpretive guidance on non-GAAP financial measures, the Company reassessed its calculation of the income tax effect of non-GAAP adjustments. For both the three and twelve months ended December, 31, 2015 the effect was $856K. Furthermore, the Company reclassified $600K previously included in acquisition-related expense to the income tax effect of non-GAAP adjustments. These adjustments impacted both non-GAAP net income and non-GAAP net income per share.


Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2016 2015 2016 2015
Research and development$8,026  $6,585  $33,298  $28,085 
Less:       
Stock-based compensation expense79  260  869  1,171 
Acquisition-related expense40  89  349  340 
Non-GAAP research and development$7,907  $6,236  $32,080  $26,574 
        
General and administrative$10,464  $11,792  $41,332  $37,265 
Less:       
Amortization of intangibles62  40  262  200 
Stock-based compensation expense1,685  2,152  6,160  7,226 
Litigation-related expense  966  1  6,407 
Acquisition-related expense617  4,330  4,748  5,222 
Hostile takeover-related expense      1,657 
CEO transition expense      54 
Non-GAAP general and administrative$8,100  $4,304  $30,161  $16,499 
        
Sales and marketing$20,278  $12,860  $73,347  $53,671 
Less:       
Amortization of intangibles237  163  976  524 
Stock-based compensation expense302  180  1,065  1,089 
Litigation-related expense  2    2 
Acquisition-related expense  59  116  55 
Non-GAAP sales and marketing$19,739  $12,456  $71,190  $52,001 
        
Restructuring charges$23  $120  $857  $469 
Less:       
Restructuring-related expense23    852  334 
Non-GAAP restructuring charges$  $120  $5  $135 


Calculation of Bookings
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2016 2015 2016 2015
Revenue$53,488  $35,065  $206,986  $136,616 
Add:       
Deferred revenue ending balance107,591  98,703  107,591  98,703 
Impact of foreign exchange404  58  240  211 
Less:       
Beginning deferred revenue from acquisitions    6,830   
Impact of foreign exchange       
Deferred revenue beginning balance107,445  96,452  98,703  91,424 
Change in deferred revenue balance550  2,309  2,298  7,490 
Bookings$54,038  $37,374  $209,284  $144,106 


Calculation of Adjusted Free Cash Flow
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2016 2015 2016 2015
Net cash provided by operating activities$11,010  $4,634  $14,374  $13,174 
Subtract:       
Purchases of property and equipment4,077  1,457  7,792  9,730 
Free cash flow6,933  3,177  6,582  3,444 
        
Add:       
Payments related to corporate headquarter relocation      1,309 
Acquisition-related payments8  509  9,989  1,406 
Hostile takeover-related payments      1,791 
CEO transition payments      29 
Restructuring-related payments    341   
Cash portion of lease exit charge(11) 101  343  887 
Litigation-related payments  3,346  924  5,385 
Adjusted free cash flow$6,930  $7,133  $18,179  $14,251 

 

Investor Relations Contact:

Jeremiah Sisitsky
Carbonite
781-928-0713
investor.relations@carbonite.com

Media Contacts:

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

Kelsey Shively
Weber Shandwick (for Carbonite)
425-306-2090
wswnacarbonite@webershandwick.com


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