August 2, 2016

Carbonite Announces Second Quarter 2016 Financial Results

Revenue Growth Drives Record Profitability; Company Increases 2016 Outlook

BOSTON, Aug. 02, 2016 (GLOBE NEWSWIRE) -- Carbonite, Inc. (NASDAQ:CARB), a leading provider of cloud backup and restore solutions for small and midsize businesses (SMBs), today announced financial results for the quarter ended June 30, 2016.

Q2'16 Highlights:

  • Revenue of $53.4 million increased 57% year over year.
  • Net income (loss) per share was $0.04, as compared to ($0.18) in the second quarter of 2015.

"I am very pleased with our progress, especially the expansion of our SMB business which grew approximately 150%. The EVault integration is exceeding expectations, yielding faster and better-than-expected synergies. Market demand for our expanded set of solutions is strong and growing, and I am confident in the team's ability to continue to drive results," said Mohamad Ali, President and CEO of Carbonite.

"We delivered strong revenue and bookings growth that drove record profitability in the quarter and resulted in our raised outlook for 2016.  Our rapidly growing SMB business now represents the majority of total bookings and the strength of that business is a key driver of our improving financial results," said Anthony Folger, CFO of Carbonite.

Second Quarter 2016 Results:

  • Revenue for the second quarter was $53.4 million, an increase of 57% from $34.0 million in the second quarter of 2015.  Non-GAAP revenue for the second quarter was $54.2 million, an increase of 60% from $34.0 million in the second quarter of 2015.1
  • Bookings for the second quarter were $53.7 million, an increase of 50% from $35.7 million in the second quarter of 2015.2
  • Gross margin for the second quarter was 70.3%, compared to 71.2% in the second quarter of 2015. Non-GAAP gross margin was 72.5% in the second quarter, compared to 72.6% in the second quarter of 2015.3
  • Net income for the second quarter was $1.2 million, compared to a net loss of ($4.8) million in the second quarter of 2015. Non-GAAP net income for the second quarter was $5.2 million, compared to non-GAAP net loss of ($0.3) million in the second quarter of 2015.4
  • Net income per share for the second quarter was $0.04 (basic and diluted), compared to a net loss per share of ($0.18) (basic and diluted) in the second quarter of 2015. Non-GAAP net income per share was $0.19 (basic and diluted) for the second quarter, compared to non-GAAP net loss per share of ($0.01) (basic and diluted) in the second quarter of 2015.4
  • Total cash, cash equivalents and marketable securities were $43.2 million as of June 30, 2016, compared to $64.9 million as of December 31, 2015.
  • Cash flow from operations for the second quarter was $5.1 million, compared to $4.0 million in the second quarter of 2015. Adjusted free cash flow for the second quarter was $7.3 million, compared to $3.2 million in the second 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 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.
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, CEO transition expense, and the income tax effect of non-GAAP adjustments.
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.

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 third quarter of 2016, revenues are expected to be in the range of $44.5-$49.5 million and non-GAAP revenues are expected to be in the range of $45.0-$50.0 million.  Non-GAAP net income per share is expected to be in the range of $0.06 - $0.10.

For the full year of 2016 the Company is raising its financial guidance.  Revenues are expected to be in the range of $192.7-$202.7 million and non-GAAP revenues are expected to be in the range of $195.0-$205.0 million. Non-GAAP net income per share is expected to be in the range of $0.48 - $0.52.

Carbonite's expectations of non-GAAP net income per share for the third 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 the income tax effect of non-GAAP adjustments.  Non-GAAP net income per share assumes an effective tax rate of 11% for the full year of 2016.  Non-GAAP net income per share assumes fully-diluted weighted average shares outstanding of approximately 27.0 million for the third quarter and full year of 2016.

Conference Call and Webcast Information

In conjunction with this announcement, Carbonite will host a conference call on Tuesday, August 2, 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 46452332.

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 August 2, 2017.

Non-GAAP Financial Measures

Carbonite provides all financial information required in accordance with generally accepted accounting principles (GAAP).  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 (loss) and non-GAAP net income (loss) per share, non-GAAP operating expense and adjusted free cash flow. In preparing our non-GAAP information, we have excluded certain amounts as set forth in the attached financial tables.

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. Exclusion of certain amounts in the calculation of non-GAAP financial measures should not be construed as an inference that these exclusions are unusual or infrequent.  We anticipate that these exclusions will continue to be made in the future presentation of the Company's non-GAAP financial measures.  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.

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

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) is a leading provider of cloud backup and restore solutions for small and mid-sized businesses. Together with our partners we protect millions of devices and their valuable data for businesses and individuals around the world who rely on us to ensure their important data is secure, available and useful. To learn more visit Carbonite.com.

 
Carbonite, Inc.
Condensed Consolidated Statement of Operations (unaudited)
(In thousands, except share and per share amounts)
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2016 2015 2016 2015
Revenue$53,435  $33,972  $101,550  $66,998 
Cost of revenue15,864  9,800  30,619  19,814 
Gross profit37,571  24,172  70,931  47,184 
Operating expenses:       
Research and development8,380  7,448  17,116  14,377 
General and administrative10,389  7,624  21,809  15,200 
Sales and marketing17,323  13,570  34,205  27,951 
Restructuring charges32  6  805  125 
Total operating expenses36,124  28,648  73,935  57,653 
Income (loss) from operations1,447  (4,476) (3,004) (10,469)
Interest and other income (expense), net3  59  (147) 26 
Income (loss) before income taxes1,450  (4,417) (3,151) (10,443)
Provision for income taxes290  403  385  607 
Net income (loss)$1,160  $(4,820) $(3,536) $(11,050)
Net income (loss) per share:       
Basic$0.04  $(0.18) $(0.13) $(0.41)
Diluted$0.04  $(0.18) $(0.13) $(0.41)
Weighted-average shares outstanding:       
Basic26,901,419  27,217,528  26,977,919  27,226,067 
Diluted27,012,361  27,217,528  26,977,919  27,226,067 


Carbonite, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In thousands)
 
 June 30,
2016
 December 31,
2015
Assets   
Current assets   
Cash and cash equivalents$43,203  $63,936 
Marketable securities  1,000 
Trade accounts receivable, net17,175  3,736 
Prepaid expenses and other current assets7,507  3,188 
Restricted cash135  135 
Total current assets68,020  71,995 
Property and equipment, net24,907  22,083 
Other assets176  167 
Acquired intangible assets, net15,962  8,640 
Goodwill24,322  23,105 
Total assets$133,387  $125,990 
Liabilities and Stockholders' Equity   
Current liabilities   
Accounts payable$3,620  $8,384 
Accrued expenses15,988  11,559 
Current portion of deferred revenue88,360  80,269 
Total current liabilities107,968  100,212 
Deferred revenue, net of current portion21,689  18,434 
Other long-term liabilities5,791  6,271 
Total liabilities135,448  124,917 
Stockholders' equity   
Common stock281  278 
Additional paid-in capital170,297  165,391 
Treasury stock, at cost(10,319) (5,693)
Accumulated deficit(164,478) (160,943)
Accumulated other comprehensive income2,158  2,040 
Total stockholders' (deficit) equity(2,061) 1,073 
Total liabilities and stockholders' (deficit) equity$133,387  $125,990 


Carbonite, Inc.
Condensed Consolidated Statement of Cash Flows (unaudited)
(In thousands)
 
 Six Months Ended
June 30,
 2016 2015
Operating activities   
Net loss$(3,536) $(11,050)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:   
Depreciation and amortization8,378  6,838 
Loss (gain) on disposal of equipment468  (33)
Accretion of discount on marketable securities  (9)
Stock-based compensation expense4,498  4,873 
Other non-cash items, net280  58 
Changes in assets and liabilities, net of acquisition:   
Accounts receivable(13,458) (1,045)
Prepaid expenses and other current assets(2,026) 338 
Other assets1  530 
Accounts payable(4,113) 418 
Accrued expenses3,841  124 
Other long-term liabilities(522) (60)
Deferred revenue4,516  5,565 
Net cash (used in) provided by operating activities(1,673) 6,547 
Investing activities   
Purchases of property and equipment(2,809) (4,906)
Proceeds from sale of property and equipment  33 
Proceeds from maturities of marketable securities and derivatives1,000  14,442 
Purchases of marketable securities and derivatives(1,476) (436)
Decrease in restricted cash  693 
Payment for acquisition, net of cash acquired(11,625)  
Net cash (used in) provided by investing activities(14,910) 9,826 
Financing activities   
Proceeds from exercise of stock options381  1,622 
Repurchase of common stock(4,626) (2,990)
Net cash (used in) provided by financing activities(4,245) (1,368)
Effect of currency exchange rate changes on cash95  (160)
Net (decrease) increase in cash and cash equivalents(20,733) 14,845 
Cash and cash equivalents, beginning of period63,936  46,084 
Cash and cash equivalents, end of period$43,203  $60,929 

 

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,
 2016 2015 2016 2015
GAAP revenue$53,435  $33,972  $101,550  $66,998 
Add:       
Fair value adjustment of acquired deferred revenue (1)800    1,363   
Non-GAAP revenue$54,235  $33,972  $102,913  $66,998 
                
(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
June 30,
 Six Months Ended
June 30,
 2016 2015 2016 2015
Gross profit$37,571  $24,172  $70,931  $47,184 
Add:       
Fair value adjustment of acquired deferred revenue800    1,363   
Amortization of intangibles675  313  1,357  629 
Stock-based compensation expense197  162  411  329 
Acquisition-related expense54    236   
Non-GAAP gross profit$39,297  $24,647  $74,298  $48,142 
Non-GAAP gross margin72.5% 72.6% 72.2% 71.9%
            

 

Calculation of Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2016 2015 2016 2015
Net income (loss)$1,160  $(4,820) $(3,536) $(11,050)
Add:       
Fair value adjustment of acquired deferred revenue800    1,363   
Amortization of intangibles991  474  1,988  953 
Stock-based compensation expense2,155  2,405  4,498  4,873 
Litigation-related expense  1,104  1  1,192 
Restructuring-related expense32    800  115 
Acquisition-related expense618  369  4,766  725 
Hostile takeover-related expense  215    1,512 
CEO transition expense      54 
Less:       
Income tax-effect of non-GAAP adjustments548    591   
Non-GAAP net income (loss)$5,208  $(253) $9,289  $(1,626)
Non-GAAP net income (loss) per share:       
Basic$0.19  $(0.01) $0.34  $(0.06)
Diluted$0.19  $(0.01) $0.34  $(0.06)
Weighted-average shares outstanding:       
Basic26,901,419  27,217,528  26,977,919  27,226,067 
Diluted27,012,361  27,217,528  27,063,158  27,226,067 
            


Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2016 2015 2016 2015
Research and development$8,380  $7,448  $17,116  $14,377 
Less:       
Stock-based compensation expense229  313  514  638 
Acquisition-related expense72  167  310  167 
Non-GAAP research and development$8,079  $6,968  $16,292  $13,572 
        
General and administrative$10,389  $7,624  $21,809  $15,200 
Less:       
Amortization of intangibles68  53  138  107 
Stock-based compensation expense1,454  1,596  3,087  3,329 
Litigation-related expense  1,104  1  1,192 
Acquisition-related expense494  501  4,103  562 
Hostile takeover-related expense  215    1,512 
CEO transition expense      54 
Non-GAAP general and administrative$8,373  $4,155  $14,480  $8,444 
        
Sales and marketing$17,323  $13,570  $34,205  $27,951 
Less:       
Amortization of intangibles248  108  493  217 
Stock-based compensation expense275  334  486  577 
Acquisition-related expense(2) (299) 117  (4)
Non-GAAP sales and marketing$16,802  $13,427  $33,109  $27,161 
        
Restructuring charges$32  $6  $805  $125 
Less:       
Restructuring-related expense32    800  115 
Non-GAAP restructuring charges$  $6  $5  $10 
                


Calculation of Bookings
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2016 2015 2016 2015
Revenue$53,435  $33,972  $101,550  $66,998 
Add:       
Deferred revenue ending balance110,049  96,815  110,049  96,815 
Impact of foreign exchange87      165 
Less:       
Impact of foreign exchange  76  58   
Beginning deferred revenue from acquisitions    6,830   
Deferred revenue beginning balance109,878  95,007  98,703  91,424 
Change in deferred revenue balance258  1,732  4,458  5,556 
Bookings$53,693  $35,704  $106,008  $72,554 
                


Calculation of Adjusted Free Cash Flow
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2016 2015 2016 2015
Net cash provided by (used in) operating activities$5,084  $3,976  $(1,673) $6,547 
Subtract:       
Purchases of property and equipment885  1,617  2,809  4,906 
Free cash flow4,199  2,359  (4,482) 1,641 
        
Add:       
Payments related to corporate headquarter relocation      1,309 
Acquisition-related payments2,735  306  9,791  381 
Hostile takeover-related payments  401    1,663 
CEO transition payments      29 
Restructuring-related payments239    341   
Cash portion of lease exit charge85  89  151  711 
Litigation-related payments  9  924  9 
Adjusted free cash flow$7,258  $3,164  $6,725  $5,743 
                
Investor Relations Contact:
Jeremiah Sisitsky
Carbonite
781-928-0713
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


Close window | Back to top

Copyright 2017 Carbonite