November 3, 2016

Carbonite Announces Third Quarter 2016 Financial Results

Strong Bookings and Revenue Growth; Company Increases 2016 Outlook

BOSTON, Nov. 03, 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 September 30, 2016.

Q3'16 Highlights:

  • Revenue of $51.9 million increased 50% year over year.
  • Net income (loss) per share was $0.00, as compared to ($0.22) in the third quarter of 2015.

"I am very pleased with the continued execution by our team.  We delivered strong results across multiple dimensions, we remain ahead of plan integrating EVault, and I am excited about the path forward," said Mohamad Ali, President and CEO of Carbonite.

"We drove strong bookings and revenue growth, and achieved both GAAP and non-GAAP profitability in the third quarter.  As a result, we are again raising our outlook for 2016," said Anthony Folger, CFO of Carbonite.

Third Quarter 2016 Results:

  • Revenue for the third quarter was $51.9 million, an increase of 50% from $34.6 million in the third quarter of 2015.  Non-GAAP revenue for the third quarter was $52.5 million, an increase of 52% from $34.6 million in the third quarter of 2015.1
  • Bookings for the third quarter were $49.2 million, an increase of 44% from $34.2 million in the third quarter of 2015.2
  • Gross margin for the third quarter was 70.2%, compared to 71.7% in the third quarter of 2015. Non-GAAP gross margin was 72.2% in the third quarter, compared to 73.2% in the third quarter of 2015.3
  • Net income for the third quarter was $0.1 million, compared to a net loss of ($6.0 million) in the third quarter of 2015. Non-GAAP net income for the third quarter was $3.8 million, compared to non-GAAP net income of $2.1 million in the third quarter of 2015.4
  • Net income per share for the third quarter was $0.00 (basic and diluted), compared to a net loss per share of ($0.22) (basic and diluted) in the third quarter of 2015. Non-GAAP net income per share was $0.14 (basic and diluted) for the third quarter, compared to non-GAAP net income per share of $0.08 (basic and diluted) in the third quarter of 2015.4
  • Total cash, cash equivalents and marketable securities were $49.1 million as of September 30, 2016, compared to $64.9 million as of December 31, 2015.
  • Cash flow from operations for the third quarter was $5.0 million, compared to $2.0 million in the third quarter of 2015. Adjusted free cash flow for the third quarter was $4.5 million, compared to $1.4 million in the third 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 and non-GAAP net income 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

Based on the information available as of November 3, 2016, Carbonite is issuing guidance for the fourth quarter and full year of 2016 as follows:

Fourth Quarter 2016: 

 Current Guidance
(11/3/2016)
GAAP revenue$46.6 - $51.6 million
Non-GAAP revenue$47.1 - $52.1 million
Non-GAAP net income per share $0.07 - $0.11



Full Year 2016:

 Prior Guidance
(8/2/2016)
Current Guidance
(11/3/2016)
GAAP revenue$192.7 - $202.7 million$200.1 - $205.1 million
Non-GAAP revenue$195.0 - $205.0 million $202.5 - $207.5 million
Non-GAAP net income per share $0.48 - $0.52$0.56 - $0.60


Carbonite's expectations of non-GAAP net income per share for the fourth 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 27.6 million for the fourth quarter and 27.3 million for the full year of 2016.

Conference Call and Webcast Information

In conjunction with this announcement, Carbonite will host a conference call on Thursday, November 3, 2016 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 93537371.

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 November 3, 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 and non-GAAP net income 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
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Revenue$51,948  $34,553  $153,498  $101,551 
Cost of revenue15,459  9,774  46,078  29,588 
Gross profit36,489  24,779  107,420  71,963 
Operating expenses:       
Research and development8,156  7,123  25,272  21,500 
General and administrative9,059  10,273  30,868  25,473 
Sales and marketing18,864  12,860  53,069  40,811 
Restructuring charges29  224  834  349 
Total operating expenses36,108  30,480  110,043  88,133 
Income (loss) from operations381  (5,701) (2,623) (16,170)
Interest and other income (expense), net155  139  8  165 
Income (loss) before income taxes536  (5,562) (2,615) (16,005)
Provision for income taxes429  404  814  1,011 
Net income (loss)$107  $(5,966) $(3,429) $(17,016)
Net income (loss) per share:       
Basic$0.00  $(0.22) $(0.13) $(0.63)
Diluted$0.00  $(0.22) $(0.13) $(0.63)
Weighted-average shares outstanding:       
Basic26,973,507  27,173,360  26,976,432  27,212,038 
Diluted27,532,509  27,173,360  26,976,432  27,212,038 


Carbonite, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In thousands)
 
 September 30,
2016
 December 31,
2015
Assets   
Current assets   
Cash and cash equivalents$49,107  $63,936 
Marketable securities  1,000 
Trade accounts receivable, net17,007  3,736 
Prepaid expenses and other current assets6,946  3,188 
Restricted cash135  135 
Total current assets73,195  71,995 
Property and equipment, net22,591  22,083 
Other assets107  167 
Acquired intangible assets, net15,087  8,640 
Goodwill24,455  23,105 
Total assets$135,435  $125,990 
Liabilities and Stockholders' Equity   
Current liabilities   
Accounts payable$2,866  $8,384 
Accrued expenses18,096  11,559 
Current portion of deferred revenue86,860  80,269 
Total current liabilities107,822  100,212 
Deferred revenue, net of current portion20,585  18,434 
Other long-term liabilities5,594  6,271 
Total liabilities134,001  124,917 
Stockholders' equity   
Common stock283  278 
Additional paid-in capital174,085  165,391 
Treasury stock, at cost(10,446) (5,693)
Accumulated deficit(164,371) (160,943)
Accumulated other comprehensive income1,883  2,040 
Total stockholders' equity1,434  1,073 
Total liabilities and stockholders' equity$135,435  $125,990 


Carbonite, Inc.
Condensed Consolidated Statement of Cash Flows (unaudited)
(In thousands)
 
 Nine Months Ended
September 30,
 2016 2015
Operating activities   
Net loss$(3,429) $(17,016)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation and amortization12,227  10,296 
Loss (gain) on disposal of equipment518  (25)
Accretion of discount on marketable securities  (9)
Stock-based compensation expense6,628  7,418 
Other non-cash items, net168  (80)
Changes in assets and liabilities, net of acquisition:   
Accounts receivable(13,243) (1,181)
Prepaid expenses and other current assets(1,822) 1,063 
Other assets69  539 
Accounts payable(5,187) 1,312 
Accrued expenses6,327  1,398 
Other long-term liabilities(734) (368)
Deferred revenue1,842  5,193 
Net cash provided by operating activities3,364  8,540 
Investing activities   
Purchases of property and equipment(3,715) (8,273)
Proceeds from sale of property and equipment4  113 
Proceeds from maturities of marketable securities and derivatives1,198  17,524 
Purchases of marketable securities and derivatives(1,476) (750)
Decrease in restricted cash  693 
Payment for acquisition, net of cash acquired(11,625) (992)
Net cash (used in) provided by investing activities(15,614) 8,315 
Financing activities   
Proceeds from exercise of stock options2,020  1,853 
Repurchase of common stock(4,753) (3,023)
Net cash used in financing activities(2,733) (1,170)
Effect of currency exchange rate changes on cash154  (146)
Net (decrease) increase in cash and cash equivalents(14,829) 15,539 
Cash and cash equivalents, beginning of period63,936  46,084 
Cash and cash equivalents, end of period$49,107  $61,623 


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
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
GAAP revenue$51,948  $34,553  $153,498  $101,551 
Add:       
Fair value adjustment of acquired deferred revenue (1)536    1,899   
Non-GAAP revenue$52,484  $34,553  $155,397  $101,551 
(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
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Gross profit$36,489  $24,779  $107,420  $71,963 
Gross margin70.2% 71.7% 70.0% 70.9%
Add:       
Fair value adjustment of acquired deferred revenue536    1,899   
Amortization of intangibles642  325  1,999  954 
Stock-based compensation expense189  195  600  524 
Acquisition-related expense15    251   
Non-GAAP gross profit$37,871  $25,299  $112,169  $73,441 
Non-GAAP gross margin72.2% 73.2% 72.2% 72.3%

 

Calculation of Non-GAAP Net Income and Non-GAAP Net Income per Share
    
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Net income (loss)$107  $(5,966) $(3,429) $(17,016)
Add:       
Fair value adjustment of acquired deferred revenue536    1,899   
Amortization of intangibles950  522  2,938  1,475 
Stock-based compensation expense2,130  2,545  6,628  7,418 
Litigation-related expense  4,249  1  5,440 
Restructuring-related expense29  219  829  334 
Acquisition-related expense41  414  4,807  1,139 
Hostile takeover-related expense  145    1,657 
CEO transition expense      54 
Less:       
Income tax-effect of non-GAAP adjustments(33)   558   
Non-GAAP net income$3,826  $2,128  $13,115  $501 
Non-GAAP net income per share:       
Basic$0.14  $0.08  $0.49  $0.02 
Diluted$0.14  $0.08  $0.48  $0.02 
Weighted-average shares outstanding:       
Basic26,973,507  27,173,360  26,976,432  27,212,038 
Diluted27,532,509  27,408,388  27,221,328  27,291,242 


Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Research and development$8,156  $7,123  $25,272  $21,500 
Less:       
Stock-based compensation expense276  273  790  911 
Acquisition-related expense(1) 84  309  251 
Non-GAAP research and development$7,881  $6,766  $24,173  $20,338 
        
General and administrative$9,059  $10,273  $30,868  $25,473 
Less:       
Amortization of intangibles62  53  200  160 
Stock-based compensation expense1,388  1,745  4,475  5,074 
Litigation-related expense  4,249  1  5,440 
Acquisition-related expense28  330  4,131  892 
Hostile takeover-related expense  145    1,657 
CEO transition expense      54 
Non-GAAP general and administrative$7,581  $3,751  $22,061  $12,196 
        
Sales and marketing$18,864  $12,860  $53,069  $40,811 
Less:       
Amortization of intangibles246  144  739  361 
Stock-based compensation expense277  332  763  909 
Acquisition-related expense(1)   116  (4)
Non-GAAP sales and marketing$18,342  $12,384  $51,451  $39,545 
        
Restructuring charges$29  $224  $834  $349 
Less:       
Restructuring-related expense29  219  829  334 
Non-GAAP restructuring charges$  $5  $5  $15 


Calculation of Bookings
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Revenue$51,948  $34,553  $153,498  $101,551 
Add:       
Deferred revenue ending balance107,445  96,452  107,445  96,452 
Impact of foreign exchange      153 
Less:       
Beginning deferred revenue from acquisitions    6,830   
Impact of foreign exchange106  12  164   
Deferred revenue beginning balance110,049  96,815  98,703  91,424 
Change in deferred revenue balance(2,710) (375) 1,748  5,181 
Bookings$49,238  $34,178  $155,246  $106,732 


Calculation of Adjusted Free Cash Flow
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Net cash provided by operating activities$5,037  $1,993  $3,364  $8,540 
Subtract:       
Purchases of property and equipment906  3,367  3,715  8,273 
Free cash flow4,131  (1,374) (351) 267 
        
Add:       
Payments related to corporate headquarter relocation      1,309 
Acquisition-related payments190  516  9,981  897 
Hostile takeover-related payments  128    1,791 
CEO transition payments      29 
Restructuring-related payments    341   
Cash portion of lease exit charge203  75  354  786 
Litigation-related payments  2,030  924  2,039 
Adjusted free cash flow$4,524  $1,375  $11,249  $7,118 

 

Investor Relations Contact:

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

Media Contact:

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

Kelsey Shively
Weber Shandwick
206-576-5589
wswnacarbonite@webershandwick.com


Close window | Back to top

Copyright 2017 Carbonite