October 28, 2015

Carbonite Reports Record Revenues and Gross Margins for the Third Quarter of 2015

BOSTON, Oct. 28, 2015 (GLOBE NEWSWIRE) -- Carbonite, Inc. (NASDAQ:CARB), a leading provider of cloud and hybrid business continuity solutions for small and midsize businesses (SMBs), today announced financial results for the third quarter ended September 30, 2015. The Company reported record revenue of $34.6 million for the third quarter, an increase of 10% year over year, and total bookings of $34.2 million for the third quarter, an increase of 12% year over year.

"We continued to see strong performance driven by the steady demand for our Carbonite Server Backup and Mailstore products," said Mohamad Ali, President and CEO of Carbonite. "With recent enhancements to our entire product portfolio, including the launch of a new line-up of Carbonite Backup Appliances, and Carbonite Server Backup with bare metal recovery, we are well-positioned to meet the evolving backup and disaster recovery needs of consumers and small businesses."

Anthony Folger, Chief Financial Officer and Treasurer said, "In the third quarter we again showed double digit year over year revenue and bookings growth. Along with gross margin expansion through improved operational execution across the business, we continue to improve profitability and generate positive free cash flow, putting us in a strong financial position as we head into the fourth quarter."

Third Quarter 2015 Results:

  • Revenue for the third quarter was $34.6 million, an increase of 10% from $31.3 million in the third quarter of 2014.
  • Bookings for the third quarter were $34.2 million, an increase of 12% from $30.6 million in the third quarter of 2014.1
  • Cash flow from operations for the third quarter was $2.0 million, compared to $4.0 million in the third quarter of 2014. Free cash flow for the third quarter was $1.4 million, compared to $2.1 million in the third quarter of 2014.2
  • Total cash, cash equivalents and marketable securities were $62.6 million as of September 30, 2015, compared to $61.1 million as of December 31, 2014.
  • Gross margin for the third quarter was 71.7%, compared to 69.4% in the third quarter of 2014. Non-GAAP gross margin was 73.2% in the third quarter, compared to 70.2% in the third quarter of 2014.3
  • Net loss for the third quarter was ($4.5) million, compared to a net loss of ($0.7) million in the third quarter of 2014. Non-GAAP net income for the third quarter was $2.1 million, compared to non-GAAP net income of $1.0 million in the third quarter of 2014.4
  • Net loss per share for the third quarter was ($0.16) (basic and diluted), compared to a net loss per share of ($0.03) (basic and diluted) in the third quarter of 2014. Non-GAAP net income per share was $0.08 (basic and diluted) for the third quarter, compared to non-GAAP net income per share of $0.04 (basic and diluted) in the third quarter of 2014.4

_____________

1 Bookings represent the aggregate dollar value of customer subscriptions received during a period and are calculated as revenue recognized during the period plus the change in total deferred revenue, net of foreign exchange (excluding deferred revenue recorded in connection with acquisitions) during the same period.
2 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, litigation-related payments and the cash portion of the lease exit charge from net cash provided by operating activities.
3 Non-GAAP gross margin excludes amortization expense on intangible assets and stock-based compensation expense.
Non-GAAP net income and non-GAAP net income per share excludes amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, hostile takeover-related expense, and CEO transition expense.

An explanation of non-GAAP measures is provided under the heading "Non-GAAP Financial Measures" below, and a reconciliation to the most comparable GAAP measures is provided in the tables at the end of this press release.

Business Outlook

For the fourth quarter of 2015, revenues are expected to be in the range of $35.2-$35.6 million and non-GAAP net income per share to be in the range of $0.07-$0.09 (basic and diluted).

For the full year of 2015, revenues are expected to be in the range of $136.8-$137.2 million and non-GAAP net income per share to be in the range of $0.09-$0.11 (basic and diluted).

Carbonite's expectations of non-GAAP net income per share for the quarter and full year excludes stock-based compensation expense, litigation-related expense, hostile takeover-related expense, amortization expense on intangible assets and assumes a 2015 effective tax rate of 0% and weighted average shares outstanding of approximately 27.3 million for the quarter and 27.2 million for the full year 2015.

Recent Highlights

Enhancements to Full Product Suite

  • Introduced latest version of workstation backup solution, Carbonite Pro which includes improved user experience, enablement of partner trials and capability for remote deployment and management for large user groups.
  • Launched new version of server backup, Carbonite Server Advanced, offering businesses bare metal recovery and flexible, granular protection for their critical server data.
  • Announced availability of Carbonite Backup Appliances, a lineup of five new appliances ranging from four to eight terabytes offering bare metal recovery to existing, new or dissimilar hardware with image backup and advanced management capabilities.

Acquisitions

  • Acquired core technology, patents and other assets from Rebit, Inc., a developer of backup and recovery software for home users and small businesses.

Industry Recognition

  • Winner of PC Magazine's Business Readers' Choice Award for Cloud Computing Services over Dropbox, Google Drive, Microsoft and Box.
  • Recipient of Six Stevie Awards for Customer Service in the U.S. and internationally, including three gold awards.
  • Winner of a Massachusetts Economic Impact Award for outstanding contributions to the Massachusetts economy.

Conference Call and Webcast Information

In conjunction with this announcement, Carbonite will host a conference call on Wednesday, October 28, 2015 at 8:30 a.m. EDT 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 56318046.

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 October 28, 2016.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures including bookings, non-GAAP gross margin, non-GAAP net income and non-GAAP net income per share, non-GAAP operating expense and free cash flow. Bookings represent the aggregate dollar value of customer subscriptions received during a period and are calculated as revenue recognized during the period plus the change in total deferred revenue, net of foreign exchange (excluding deferred revenue recorded in connection with acquisitions) during the same period. Non-GAAP gross margin excludes amortization expense on intangible assets and stock-based compensation expense. Non-GAAP net income and non-GAAP net income per share excludes amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, hostile takeover-related expense, and CEO transition expense. Non-GAAP operating expense excludes amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, hostile takeover-related expense, and CEO transition expense. 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, litigation-related payments and the cash portion of the lease exit charge from net cash provided by operating activities.

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 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. In order to compensate for these limitations, management presents its non-GAAP financial measures in connection with its GAAP results. The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.

Cautionary Language Concerning Forward-Looking Statements

This Press Release contains "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company's views as of the date they were first made based on the current intent, belief or expectations, estimates, forecasts, assumptions and projections of the Company and members of our management team. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Those statements include, but are not limited to, statements regarding guidance on our future financial results and other projections or measures of 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, 2014 filed with the Securities and Exchange Commission, which is available on www.sec.gov. Except as required by 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 business continuity 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 per share data)
         
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2015 2014 2015 2014
         
Revenue  $ 34,553  $ 31,274  $ 101,551  $ 90,706
Cost of revenue  9,774  9,585  29,588  28,566
Gross profit  24,779  21,689  71,963  62,140
         
Operating expenses:        
Research and development  7,123  6,114  21,500  17,689
General and administrative  8,773  3,997  23,973  11,348
Sales and marketing  12,860  12,056  40,811  37,061
Restructuring charges  224  3  349  12
Total operating expenses  28,980  22,170  86,633  66,110
         
Loss from operations  (4,201)  (481)  (14,670)  (3,970)
         
Interest and other income (expense), net  139  (208)  165  (217)
         
Loss before income taxes  (4,062)  (689)  (14,505)  (4,187)
         
Provision for income taxes  404  10  1,011  30
         
Net loss  $ (4,466)  $ (699)  $ (15,516)  $ (4,217)
         
Net loss per share:        
Basic and diluted  $ (0.16)  $ (0.03)  $ (0.57)  $ (0.16)
         
Weighted-average shares outstanding:        
Basic and diluted  27,173,360  26,887,069  27,212,038  26,747,451
         
Carbonite, Inc.  
Condensed Consolidated Balance Sheets (unaudited)  
(In thousands)  
         
    September 30, December 31,  
    2015 2014  
         
Assets        
Current assets        
Cash and cash equivalents    $ 61,623  $ 46,084  
Marketable securities    1,002  15,031  
Trade accounts receivable, net    3,533  2,412  
Prepaid expenses and other current assets    3,867  5,224  
Restricted cash    --   828  
Total current assets   70,025 69,579  
         
Property and equipment, net   23,887 25,944  
Other assets   1,679 2,181  
Acquired intangible assets, net   9,004 10,322  
Goodwill   23,405 23,728  
Total assets    $ 128,000  $ 131,754  
         
Liabilities and Stockholders' Equity        
Current liabilities        
Accounts payable    $ 7,234  $ 7,346  
Accrued expenses    10,943  10,506  
Current portion of deferred revenue    78,805  75,494  
Total current liabilities    96,982  93,346  
         
Deferred revenue, net of current portion   17,647 15,930  
Other long-term liabilities   7,340 7,940  
Total liabilities   121,969 117,216  
         
Stockholders' equity        
Common stock   275 272  
Additional paid-in capital   162,173 152,920  
Treasury stock, at cost   (3,045) (22)  
Accumulated deficit   (154,844) (139,328)  
Accumulated other comprehensive income   1,472 696  
Total stockholders' equity   6,031 14,538  
Total liabilities and stockholders' equity    $ 128,000  $ 131,754  
         
         
Carbonite, Inc.
Condensed Consolidated Statement of Cash Flows (unaudited)
(In thousands)
         
      Nine Months Ended
      June 30,
      2015 2014
         
Operating activities        
Net loss      $ (15,516)  $ (4,217)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization      10,296  9,377
Gain on disposal of equipment      (25)  -- 
Accretion of discount on marketable securities      (9)  (20)
Stock-based compensation expense      7,418  4,295
Provision for reserves on accounts receivable      6  76
Other non-cash items, net      (80)  -- 
Changes in assets and liabilities, net of acquisition:        
Accounts receivable      (1,187)  (570)
Prepaid expenses and other current assets      1,063  (2,215)
Other assets      539  103
Accounts payable      1,312  (587)
Accrued expenses      (102)  1,423
Other long-term liabilities      (368)  3,921
Deferred revenue      5,193  3,001
Net cash provided by operating activities      8,540  14,587
         
Investing activities        
Purchases of property and equipment      (8,273)  (10,602)
Proceeds from sale of property and equipment      113  -- 
Proceeds from maturities of marketable securities and derivatives      17,524  10,250
Purchases of marketable securities and derivatives      (750)  (10,233)
Decrease in restricted cash      693  -- 
Payment for acquisition, net of cash acquired      (992)  -- 
Net cash provided by (used in) investing activities      8,315  (10,585)
         
Financing activities        
Proceeds from exercise of stock options      1,853  1,885
Repurchase of common stock      (3,023)  -- 
Net cash (used in) provided by financing activities      (1,170)  1,885
         
Effect of currency exchange rate changes on cash      (146)  190
Net increase in cash and cash equivalents      15,539  6,077
Cash and cash equivalents, beginning of period      46,084  50,392
Cash and cash equivalents, end of period      $ 61,623  $ 56,469
         
         
Carbonite, Inc.
Reconciliation of GAAP to Non-GAAP Measures (unaudited)
(In thousands, except share and per share amounts)
 
Calculation of Bookings
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2015 2014 2015 2014
         
Revenue  $ 34,553  $ 31,274  $ 101,551  $ 90,706
         
Add :        
Deferred revenue ending balance  96,452  87,001  96,452  87,001
Impact of foreign exchange  --    153  
Less :        
Impact of foreign exchange  12  --  --  --
Deferred revenue beginning balance  96,815  87,671  91,424  84,000
Change in deferred revenue balance  (375)  (670)  5,181  3,001
         
Bookings  $ 34,178  $ 30,604  $ 106,732  $ 93,707
         
 
Calculation of Non-GAAP Net Loss and Non-GAAP Net Loss per Share
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2015 2014 2015 2014
         
Net loss  $ (4,466)  $ (699)  $ (15,516)  $ (4,217)
         
Add:        
Amortization of intangibles  522  217  1,475  676
Stock-based compensation expense  2,545  1,441  7,418  4,295
Litigation-related expense  2,749  20  3,940  42
Restructuring-related expense  219  --   334  -- 
Acquisition-related expense  414  --   1,139  -- 
Hostile takeover-related expense  145  --   1,657  -- 
CEO transition expense  --   --   54  -- 
Non-GAAP net income  $ 2,128  $ 979  $ 501  $ 796
         
Weighted-average shares outstanding:        
Basic and diluted  27,173,360  26,887,069  27,212,038  26,747,451
         
Net income per share:        
Basic and diluted  $ 0.08  $ 0.04  $ 0.02  $ 0.03
 
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2015 2014 2015 2014
         
Gross profit  $ 24,779  $ 21,689  $ 71,963  $ 62,140
Add:        
Amortization of intangibles 325  110 954  329
Stock-based compensation expense 195  147 524  390
Non-GAAP gross profit  $ 25,299  $ 21,946  $ 73,441  $ 62,859
Non-GAAP gross margin 73.2% 70.2% 72.3% 69.3%
         
         
 
Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2015 2014 2015 2014
         
Research and development  $ 7,123  $ 6,114  $ 21,500  $ 17,689
Less:        
Stock-based compensation expense 273  252 911  1,016
Acquisition-related expense 84  --  251  -- 
Non-GAAP research and development  $ 6,766  $ 5,862  $ 20,338  $ 16,673
         
General and administrative  $ 8,773  $ 3,997  $ 23,973  $ 11,348
Less:        
Amortization of intangibles 53  39 160  117
Stock-based compensation expense 1,745  767 5,074  2,126
Litigation-related expense 2,749  20 3,940  42
Acquisition-related expense 330  --  892  -- 
Hostile takeover-related expense 145  --  1,657  -- 
CEO transition expense 0  --  54  -- 
Non-GAAP general and administrative  $ 3,751  $ 3,171  $ 12,196  $ 9,063
         
Sales and marketing  $ 12,860  $ 12,056  $ 40,811  $ 37,061
Less:        
Amortization of intangibles 144  68 361  230
Stock-based compensation expense 332  275 909  763
Acquisition-related expense 0  --  (4)  -- 
Non-GAAP sales and marketing  $ 12,384  $ 11,713  $ 39,545  $ 36,068
         
Restructuring charges  $ 224  $ 3  $ 349  $ 12
Less:        
Restructuring-related expense  219  --   334  -- 
Non-GAAP restructuring charges  $ 5  $ 3  $ 15  $ 12
         
 
Calculation of Free Cash Flow
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2015 2014 2015 2014
         
Net cash provided by operating activities  $ 1,993  $ 3,987  $ 8,540  $ 14,587
         
Subtract:        
Purchases of property and equipment 3,367 5,562 8,273 10,602
Add:        
Payments related to corporate headquarter relocation  --  3,649  1,309  3,803
Acquisition-related payments  516  --  897  --
Hostile takeover-related payments  128  --  1,791  --
CEO transition payments  --  --  29  --
Cash portion of lease exit charge  75  --  786  --
Litigation-related payments  2,030  --  2,039  --
         
Free cash flow  $ 1,375  $ 2,074  $ 7,118  $ 7,788
         
CONTACT: Investor Relations Contact:

         Emily Walt

         Carbonite

         617-927-1972

         investor.relations@carbonite.com

         

         Media Contact:

         Megan Wittenberger

         Carbonite

         617-421-5687

         media@carbonite.com


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