May 3, 2016

Carbonite Announces Fiscal First Quarter 2016 Results

Revenue and Bookings Growth Exceeds 40%; Company Increases 2016 Outlook

BOSTON, May 03, 2016 (GLOBE NEWSWIRE) -- Carbonite, Inc. (NASDAQ:CARB), a leading provider of cloud backup and disaster recovery solutions for small and midsize businesses (SMBs), today announced financial results for the quarter ended March 31, 2016.

Q1'16 Highlights: 

  • Non-GAAP revenue of $48.7 million increased 47% year over year.1 Revenue of $48.1 million increased 46% year over year.
  • Bookings of $52.3 million increased 42% year over year.2
  • SMB bookings grew 124% year over year.
  • Non-GAAP net income (loss) per share was $0.15 compared with ($0.05) year over year.4 Net loss per share was ($0.17) compared with ($0.23) year over year.

"I am very pleased to report that SMB bookings grew by more than 120% year over year, and for the first time, SMB accounted for more than 50% of total quarterly bookings. SMB demand for cloud backup and disaster recovery solutions continues to grow, driven by the need to protect valuable data against an evolving threat landscape.  With the Carbonite product line-up providing market-leading cloud backup for small businesses, and the EVault product suite providing best-in-class disaster recovery as a service (DRaaS) solutions for mid-size businesses, we are well positioned to capitalize on all of the opportunities ahead," said Mohamad Ali, President and CEO of Carbonite.

"Our strong performance in the first quarter was driven by bookings of EVault-branded products combined with better than 25% bookings growth of Carbonite-branded SMB products, led by our Carbonite Server Backup solution. Both consumer and SMB retention rates remained at all-time highs and we drove gross margin improvement and improved profitability through disciplined cost management," said Anthony Folger, CFO of Carbonite.

First Quarter 2016 Results: 

  • Revenue for the first quarter was $48.1 million, an increase of 46% from $33.0 million in the first quarter of 2015.  Non-GAAP revenue for the first quarter was $48.7 million, an increase of 47% from $33.0 million in the first quarter of 2015.1
  • Bookings for the first quarter were $52.3 million, an increase of 42% from $36.9 million in the first quarter of 2015.2
  • Gross margin for the first quarter was 69.3%, compared to 69.7% in the first quarter of 2015. Non-GAAP gross margin was 71.9% in the first quarter, compared to 71.1% in the first quarter of 2015.3
  • Net loss for the first quarter was ($4.7) million, compared to a net loss of ($6.2) million in the first quarter of 2015. Non-GAAP net income for the first quarter was $4.1 million, compared to non-GAAP net loss of ($1.4) million in the first quarter of 2015.4
  • Net loss per share for the first quarter was ($0.17) (basic and diluted), compared to a net loss per share of ($0.23) (basic and diluted) in the first quarter of 2015. Non-GAAP net income per share was $0.15 (basic and diluted) for the first quarter, compared to non-GAAP net loss per share of ($0.05) (basic and diluted) in the first quarter of 2015.4
  • Total cash, cash equivalents and marketable securities were $42.0 million as of March 31, 2016, compared to $64.9 million as of December 31, 2015.
  • Cash flow from operations for the first quarter was ($6.8) million, compared to $2.6 million in the first quarter of 2015. Free cash flow for the first quarter was ($0.5) million, compared to $2.6 million in the first quarter of 2015.5

Non-GAAP revenue excludes the impact of purchase accounting adjustments for the acquisition of EVault.
Bookings represent the aggregate dollar value of customer subscriptions 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.
Non-GAAP gross margin excludes the impact of purchase accounting adjustments, amortization expense on intangible assets, stock-based compensation expense and acquisition-related expense.
Non-GAAP net income (loss) and non-GAAP net income (loss) per share excludes the impact of purchase accounting adjustments, 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, restructuring-related payments, litigation-related payments and the cash portion of the lease exit charge from net cash provided by operating activities.

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

Business Outlook

For the second quarter of 2016, non-GAAP revenues are expected to be in the range of $42.5-$47.5 million and non-GAAP net income per share to be in the range of $0.01 - $0.05 (basic and diluted).

For the full year of 2016, non-GAAP revenues are expected to be in the range of $177.5-$192.5 million and non-GAAP net income per share to be in the range of $0.31 - $0.35 (basic and diluted).

Carbonite's expectations of non-GAAP net income per share for the second quarter and full year of 2016 excludes the impact of purchase accounting adjustments, stock-based compensation expense, litigation-related expense, acquisition-related expense, amortization expense on intangible assets and assumes a 2016 effective tax rate of 0% and weighted average shares outstanding of approximately 27.1 million for the second quarter and full year of 2016.

Conference Call and Webcast Information

In conjunction with this announcement, Carbonite will host a conference call on Tuesday, May 3, 2016 at 8:30 a.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 80071329.

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 May 3, 2017.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures including bookings, non-GAAP revenue, non-GAAP gross margin, non-GAAP net income (loss) and non-GAAP net income (loss) 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 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. Non-GAAP revenue excludes the impact of purchase accounting adjustments for the acquisition of EVault.  Non-GAAP gross margin excludes the impact of purchase accounting adjustments, amortization expense on intangible assets, stock-based compensation expense and acquisition-related expense. Non-GAAP net income (loss) and non-GAAP net income (loss) per share excludes the impact of purchase accounting adjustments, 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, restructuring-related 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 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. 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, 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, Inc. (Nasdaq:CARB) provides cloud backup and recovery solutions to secure personal and business data. The Carbonite family of cloud backup software, together with the EVault disaster recovery portfolio, offer a full data protection suite for users that range from individuals to midsize businesses. Learn why more than 1.5 million customers trust Carbonite with their data by visiting Carbonite.com.

          
Carbonite, Inc. 
Condensed Consolidated Statement of Operations (unaudited) 
(In thousands, except per share data) 
          
          
  Three Months Ended     
  March 31,     
   2016   2015      
          
Revenue $  48,115  $  33,026      
Cost of revenue    14,755     10,014      
Gross profit    33,360     23,012      
          
Operating expenses:         
Research and development    8,736     6,929      
General and administrative    11,420     7,576      
Sales and marketing    16,882     14,381      
Restructuring charges    773     119      
Total operating expenses    37,811     29,005      
          
Loss from operations    (4,451)    (5,993)     
          
Interest and other income (expense), net    (150)    (33)     
          
Loss before income taxes    (4,601)    (6,026)     
          
Provision (benefit) for income taxes    95     204      
          
Net loss $  (4,696) $  (6,230)     
          
Net loss per share:         
Basic $  (0.17) $  (0.23)     
Assuming Dilution $  (0.17) $  (0.23)     
          
Weighted-average shares outstanding:         
Basic    27,055,269     27,239,201      
Assuming Dilution    27,055,269     27,239,201      
          
    
    
    
Carbonite, Inc.   
Condensed Consolidated Balance Sheets (unaudited)   
(In thousands)   
          
    March 31, December 31,   
     2016   2015    
          
Assets         
Current assets         
Cash and cash equivalents    $  41,009  $  63,936    
Marketable securities      1,000     1,000    
Trade accounts receivable, net      12,743     3,736    
Prepaid expenses and other current assets       10,514     3,188    
Restricted cash      135     135    
  Total current assets    65,401   71,995    
          
Property and equipment, net    26,377   22,083    
Other assets    220   167    
Acquired intangible assets, net    17,053   8,640    
Goodwill    23,620   23,105    
Total assets   $  132,671  $  125,990    
          
Liabilities and Stockholders' Equity         
Current liabilities          
Accounts payable   $  5,129  $  8,384    
Accrued expenses      16,478     11,559    
Current portion of deferred revenue      89,824     80,269    
  Total current liabilities       111,431     100,212    
          
Deferred revenue, net of current portion    20,054   18,434    
Other long-term liabilities    5,970   6,271    
Total liabilities    137,455   124,917    
          
Stockholders' equity         
Common stock    279   278    
Additional paid-in capital    168,047   165,391    
Treasury stock, at cost     (8,938)  (5,693)   
Accumulated deficit    (165,639)  (160,943)   
Accumulated other comprehensive income     1,467   2,040    
  Total stockholders' (deficit) equity     (4,784)  1,073    
Total liabilities and stockholders' (deficit) equity    $  132,671  $  125,990    
          
          
  
  
  
Carbonite, Inc. 
Condensed Consolidated Statement of Cash Flows (unaudited) 
(In thousands) 
          
      Three Months Ended 
      March 31, 
       2016   2015  
          
Operating activities         
Net loss     $  (4,696) $  (6,230) 
Adjustments to reconcile net loss to net cash provided by operating activities:     
Depreciation and amortization        4,339     3,354  
Loss (gain) on disposal of equipment        432     (33) 
Accretion of discount on marketable securities        -      (9) 
Stock-based compensation expense        2,343     2,468  
Provision for (reduction of) reserves on accounts receivable      759     (20) 
Warrant remeasurement        -      -   
Other non-cash items, net        360     107  
Changes in assets and liabilities, net of acquisition:         
Accounts receivable        (9,711)    (795) 
Prepaid expenses and other current assets        (5,408)    (1,065) 
Other assets        (40)    218  
Accounts payable        (2,523)    1,172  
Accrued expenses        3,549     (611) 
Other long-term liabilities        (381)    184  
Deferred revenue        4,220     3,831  
Net cash (used in) provided by operating activities       (6,757)    2,571  
          
Investing activities          
Purchases of property and equipment        (1,924)    (3,289) 
Proceeds from sale of property and equipment        -      33  
Proceeds from maturities of marketable securities and derivatives      -      12,712  
Purchases of marketable securities and derivatives        (538)    -   
Increase in restricted cash        -      (136) 
Payment for acquisition, net of cash acquired        (11,000)    -   
Net cash (used in) provided by investing activities      (13,462)    9,320  
          
Financing activities         
Proceeds from exercise of stock options        314     1,276  
Repurchase of common stock        (3,246)    -   
Net cash (used in) provided by financing activities      (2,932)    1,276  
          
Effect of currency exchange rate changes on cash        224     (212) 
Net increase in cash and cash equivalents        (22,927)    12,955  
Cash and cash equivalents, beginning of period        63,936     46,084  
Cash and cash equivalents, end of period     $  41,009  $  59,039  
          
          
  
  
  
Carbonite, Inc. 
Reconciliation of GAAP to Non-GAAP Measures (unaudited) 
(In thousands, except share and per share amounts) 
          
Calculation of Bookings 
          
  Three Months Ended     
  March 31,     
   2016   2015      
          
Revenue $48,115  $33,026      
          
Add :         
Deferred revenue ending balance  109,878   95,007      
Impact of foreign exchange  -   241      
Less :         
Beginning total deferred revenue from acquisitions  6,830   -      
Impact of foreign exchange  145   -      
Deferred revenue beginning balance  98,703   91,424      
 Change in deferred revenue balance  4,200   3,824      
          
Bookings $52,315  $36,850      
          
Reconciliation of GAAP Revenue to Non-GAAP Revenue 
          
  Three Months Ended     
  March 31,     
   2016   2015      
GAAP revenue $48,115  $33,026      
Fair value adjustment of acquired deferred revenue  563   -      
Non-GAAP revenue $48,678  $33,026      
          
Calculation of Non-GAAP Net Loss and Non-GAAP Net Loss per Share 
          
  Three Months Ended     
  March 31,     
   2016   2015      
          
GAAP net loss $(4,696) $(6,230)     
          
Add:         
Fair value adjustment of acquired deferred revenue  563   0      
Amortization of intangibles  997   479      
Stock-based compensation expense  2,343   2,468      
Litigation-related expense  1   88      
Restructuring-related expense  768   115      
Acquisition-related expense  4,148   356      
Hostile takeover-related expense  -   1,297      
CEO transition expense  -   54      
Non-GAAP net income $4,124  $(1,373)     
          
Weighted-average shares outstanding:         
Basic  27,055,269   27,239,201      
Assuming Dilution  27,055,269   27,239,201      
          
Net income per share:         
Basic $0.15  $(0.05)     
Assuming Dilution $0.15  $(0.05)     
          
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit 
          
  Three Months Ended     
  March 31,     
   2016   2015      
          
Gross profit $  33,360  $  23,012      
Add:         
Fair value adjustment of acquired deferred revenue    563   -      
Amortization of intangibles  682     316      
Stock-based compensation expense  214     167      
Acquisition-related expense  182     -       
Non-GAAP gross profit $  35,001  $  23,495      
Non-GAAP gross margin  71.9%  71.1%     
          
          
          
Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense 
          
  Three Months Ended     
  March 31,     
   2016   2015      
          
Research and development $  8,736  $  6,929      
Less:          
Stock-based compensation expense  285     325      
Acquisition-related expense  238     -       
Non-GAAP research and development $  8,213  $  6,604      
          
General and administrative $  11,420  $  7,576      
Less:          
Amortization of intangibles  70     54      
Stock-based compensation expense  1,633     1,733      
Litigation-related expense  1     88      
Acquisition-related expense  3,609     61      
Hostile takeover-related expense  0     1,297      
CEO transition expense  0     54      
Non-GAAP general and administrative $  6,107  $  4,289      
          
Sales and marketing $  16,882  $  14,381      
Less:          
Amortization of intangibles  245     109      
Stock-based compensation expense  211     243      
Litigation-related expense  0     -       
Acquisition-related expense  119     295      
Non-GAAP sales and marketing $  16,307  $  13,734      
          
Restructuring charges $  773  $  119      
Less:          
Restructuring-related expense    768     115      
Non-GAAP restructuring charges $  5  $  4      
          
Calculation of Free Cash Flow 
          
  Three Months Ended     
  March 31,     
   2016   2015      
          
Net cash provided by operating activities $  (6,757) $  2,571      
          
Subtract:         
Purchases of property and equipment  1,924   3,289      
Add:         
Payments related to corporate headquarter relocation    -     1,309      
Acquisition-related payments    7,056     75      
Hostile takeover-related payments    -     1,262      
CEO transition payments    -     29      
Restructuring-related payments    102     -      
Cash portion of lease exit charge    66     622      
Litigation-related payments    924     -      
          
Free cash flow $  (533) $  2,579      
          

Investor Relations Contact:

Emily Walt
Carbonite
617-927-1972
investor.relations@carbonite.com

Media Contact:

Emily Held, PAN Communications (for Carbonite)
617-502-4300
carbonite@pancomm.com

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


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