Carbonite Announces First Quarter 2018 Financial Results

May 7, 2018 at 4:05 PM EDT

Financial and Operating Results Highlight Strong Start to the Year

BOSTON, May 07, 2018 (GLOBE NEWSWIRE) -- Carbonite, Inc. (NASDAQ: CARB), a leader in data protection, today announced financial results for the quarter ended March 31, 2018.

First Quarter 2018 Highlights:

  • Revenue of $64.0 million increased 12% year-over-year.
     
  • Non-GAAP revenue of $64.9 million increased 10% year-over-year.1
     
  • Bookings of $67.6 million increased 9% year-over-year.2
     
  • Net income per share was $0.42 (basic) and $0.40 (diluted), as compared to $0.27 in 2017 (basic and diluted).
     
  • Non-GAAP net income per share was $0.29 (basic) and $0.27 (diluted), as compared to $0.09 (basic and diluted) in 2017.4

“Q1 was a great start to the year for Carbonite. We closed the Mozy acquisition, and we started integrating and onboarding the team. We continue to successfully execute our strategy, building the leading data protection platform for businesses, positioning us well to serve a large and growing market opportunity,” said Mohamad Ali, CEO of Carbonite.

“In the first quarter we delivered financial results that were at or above the top of our guidance range. At the same time, we are making the system and platform investments that will allow us to continue to drive meaningful operating synergies over time. Our Q1 results coupled with the acquisition of Mozy position us well for continued growth and profitability expansion,” 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.

First Quarter 2018 Results:

  • Revenue for the first quarter was $64.0 million, an increase of 12% from $57.1 million in the first quarter of 2017. Non-GAAP revenue for the first quarter was $64.9 million, an increase of 10% from $59.1 million in the first quarter of 2017.1
     
  • Bookings for the first quarter were $67.6 million, an increase of 9% from $62.1 million in the first quarter of 2017.2
     
  • Gross margin for the first quarter was 71.4%, compared to 69.6% in the first quarter of 2017. Non-GAAP gross margin was 76.1% in the first quarter, compared to 73.8% in the first quarter of 2017.3
     
  • Net income for the first quarter was $11.9 million, compared to net income of $7.6 million in the first quarter of 2017. Non-GAAP net income for the first quarter was $8.1 million, compared to non-GAAP net income of $2.5 million in the first quarter of 2017.4
     
  • Net income per share for the first quarter was $0.42 (basic) and $0.40 (diluted), compared to net income per share of $0.27 (basic and diluted) in the first quarter of 2017. Non-GAAP net income per share was $0.29 (basic) and $0.27 (diluted) for the first quarter, compared to non-GAAP net income per share of $0.09 (basic and diluted) in the first quarter of 2017.4
     
  • Cash flow from operations for the first quarter was $3.3 million, compared to $7.6 million in the first quarter of 2017. Adjusted free cash flow for the first quarter was $2.4 million, compared to $2.3 million in the first quarter of 2017.5
 

 

1 Non-GAAP revenue excludes the impact of purchase accounting adjustments for acquisitions.
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, divestitures and the adoption impact of Topic 606, net of foreign exchange and the change in unbilled revenue 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, non-cash convertible debt interest 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 acquisitions, restructuring, and litigation from net cash provided by operating activities.

Business Outlook

Based on the information available as of May 7, 2018, Carbonite expects the following for the second quarter and full year of 2018:

Second Quarter 2018:

   
  Current Guidance
(5/7/2018)
GAAP Revenue $75.8 - $77.8 million
Non-GAAP Revenue $78.0- $80.0 million
Non-GAAP Net Income Per Share $0.34 - $0.38
   

Full Year 2018:

     
  Prior Guidance
(2/13/2018)
Current Guidance
(5/7/2018)
Business Bookings $223.8 - $234.8 million $223.8 - $234.8 million
Consumer Bookings Y/Y Growth 5% - 15% growth 5% - 15% growth
GAAP Revenue $294.0 - $304.0 million $296.9 - $306.9 million
Non-GAAP Revenue $302.5 - $312.5 million $302.5 - $312.5 million
Non-GAAP Net Income Per Share (Diluted) $1.45 - $1.55 $1.51 - $1.59
Non-GAAP Gross Margin 76.0% - 77.0% 76.0% - 77.0%
Adjusted Free Cash Flow $32.0 - $38.0 million $32.0 - $38.0 million
     

Carbonite’s expectations of non-GAAP net income per share for the second quarter and full year of 2018 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, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments. Non-GAAP net income per share assumes an effective tax rate of 8% for the full year of 2018. Non-GAAP net income per share assumes fully-diluted weighted average shares outstanding of approximately 31.2 million for the second quarter and 31.3 million for the full year of 2018.

Conference Call and Webcast Information

Carbonite will host a conference call on Monday, May 7, 2018 at 5:30 p.m. ET to review these 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 9759657.

Following the completion of the call, a recorded replay will be available on the Company’s website, http://investor.carbonite.com, under “Events & Presentations”.

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 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, non-cash convertible debt interest expense, 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 forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our ability to integrate Mozy into our operations and achieve the expected benefits of the acquisition, our ability to profitably attract new customers and retain existing customers, our dependence on the market for cloud backup services, our ability to manage growth, changes in economic or regulatory conditions or other trends affecting the Internet and the information technology industry, and those discussed in the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 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 provides a robust Data Protection Platform for businesses, including backup, disaster recovery, high availability and workload migration technology. The Carbonite Data Protection Platform supports businesses, in locations around the world with secure global cloud infrastructure. To learn more visit www.Carbonite.com.

Investor Relations Contact:

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

Media Contacts:

Caitlin O'Malley
Carbonite
781-928-0762
media@carbonite.com

 
Carbonite, Inc.
Consolidated Statement of Operations (unaudited)
(In thousands, except share and per share amounts)
   
  Three Months Ended
March 31,
  2018   2017
Revenue:      
Services $ 54,574     $ 50,115  
Product 9,452     6,984  
Total revenue 64,026     57,099  
Cost of revenue:      
Services 15,330     15,283  
Product 557     446  
Amortization of intangible assets 2,425     1,626  
Total cost of revenue 18,312     17,355  
Gross profit 45,714     39,744  
Operating expenses:      
Research and development 12,519     10,327  
General and administrative 14,460     12,769  
Sales and marketing 19,860     23,071  
Amortization of intangible assets 939     450  
Restructuring charges 862      
Total operating expenses 48,640     46,617  
Loss from operations (2,926 )   (6,873 )
Interest expense (2,601 )   (222 )
Interest income 244     20  
Other income (expense), net 12     280  
Loss before income taxes (5,271 )   (6,795 )
Benefit for income taxes (17,215 )   (14,390 )
Net income $ 11,944     $ 7,595  
Net income per share:      
Basic $ 0.42     $ 0.27  
Diluted $ 0.40     $ 0.27  
Weighted-average shares outstanding:      
Basic 28,341,633     27,821,596  
Diluted 30,043,783     28,504,811  

 

 
Carbonite, Inc.
Consolidated Balance Sheets (unaudited)
(In thousands)
       
  March 31,
2018
  December 31,
2017
Assets      
Current assets      
Cash and cash equivalents $ 71,009     $ 128,231  
Trade accounts receivable, net 31,159     22,219  
Prepaid expenses and other current assets 8,680     6,823  
Total current assets 110,848     157,273  
Property and equipment, net 38,622     28,790  
Other assets 10,844     804  
Acquired intangible assets, net 138,595     44,994  
Goodwill 157,215     80,958  
Total assets $ 456,124     $ 312,819  
Liabilities and Stockholders’ Equity      
Current liabilities      
Accounts payable $ 9,561     $ 10,842  
Accrued expenses 25,165     21,675  
Current portion of deferred revenue 116,859     100,241  
Total current liabilities 151,585     132,758  
Long-term debt 203,398     111,819  
Deferred revenue, net of current portion 27,467     24,273  
Other long-term liabilities 6,230     5,704  
Total liabilities 388,680     274,554  
Stockholders’ equity      
Common stock 305     301  
Additional paid-in capital 237,883     233,343  
Treasury stock, at cost (27,166 )   (26,616 )
Accumulated deficit (143,520 )   (169,344 )
Accumulated other comprehensive income (58 )   581  
Total stockholders’ equity 67,444     38,265  
Total liabilities and stockholders’ equity $ 456,124     $ 312,819  

 

 
Carbonite, Inc.
Consolidated Statement of Cash Flows (unaudited)
(In thousands)
   
  Three Months Ended
March 31,
  2018   2017
Operating activities      
Net income $ 11,944     $ 7,595  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 6,077     4,884  
Amortization of deferred costs 424      
Loss on disposal of equipment 58      
Impairment of capitalized software 653      
Stock-based compensation expense 3,737     2,777  
Benefit for deferred income taxes (17,662 )   (14,842 )
Non-cash interest expense related to amortization of debt discount 1,543      
Other non-cash items, net 66     (385 )
Changes in assets and liabilities, net of acquisition:      
Accounts receivable (4,616 )   1,212  
Prepaid expenses and other current assets 86     (384 )
Other assets (2,211 )   (927 )
Accounts payable (4,214 )   3,322  
Accrued expenses 3,016     (689 )
Other long-term liabilities 252     (96 )
Deferred revenue 4,138     5,094  
Net cash provided by operating activities 3,291     7,561  
Investing activities      
Purchases of property and equipment (3,288 )   (6,568 )
Proceeds from sale of property and equipment and businesses 330     295  
Proceeds from maturities of derivatives     370  
Purchases of derivatives (1,403 )   (403 )
Payment for intangibles (1,250 )    
Payment for acquisition, net of cash acquired (144,603 )   (59,740 )
Net cash used in investing activities (150,214 )   (66,046 )
Financing activities      
Proceeds from exercise of stock options 726     2,445  
Payments of withholding taxes in connection with restricted stock unit vesting (550 )   (524 )
Proceeds from long-term borrowings, net of debt issuance costs 88,984     39,063  
Net cash provided by financing activities 89,160     40,984  
Effect of currency exchange rate changes on cash 541     27  
Net decrease in cash, cash equivalents and restricted cash (57,222 )   (17,474 )
Cash, cash equivalents and restricted cash, beginning of period 128,231     59,287  
Cash, cash equivalents and restricted cash, end of period $ 71,009     $ 41,813  

 

 
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
March 31,
  2018   2017
GAAP revenue $ 64,026     $ 57,099  
Add:      
Fair value adjustment of acquired deferred revenue 882     1,988  
Non-GAAP revenue $ 64,908     $ 59,087  

 

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin
   
  Three Months Ended
March 31,
  2018   2017
Gross profit $ 45,714     $ 39,744  
Gross margin 71.4 %   69.6 %
Add:      
Fair value adjustment of acquired deferred revenue 882     1,988  
Amortization of intangibles 2,425     1,626  
Stock-based compensation expense 325     231  
Acquisition-related expense 54     18  
Non-GAAP gross profit $ 49,400     $ 43,607  
Non-GAAP gross margin 76.1 %   73.8 %

 

Calculation of Non-GAAP Net Income and Non-GAAP Net Income per Share
  
  Three Months Ended
March 31,
  2018   2017
Net income $ 11,944     $ 7,595  
Add:      
Fair value adjustment of acquired deferred revenue 882     1,988  
Amortization of intangibles 3,364     2,076  
Stock-based compensation expense 3,737     2,777  
Litigation-related expense 17     55  
Restructuring-related expense 862      
Acquisition-related expense 3,620     3,023  
Non-cash convertible debt interest expense 1,543      
Less:      
Income tax effect of non-GAAP adjustments 17,845     14,985  
Non-GAAP net income $ 8,124     $ 2,529  
GAAP net income per share:      
Basic $ 0.42     $ 0.27  
Diluted $ 0.40     $ 0.27  
Non-GAAP net income per share:      
Basic $ 0.29     $ 0.09  
Diluted $ 0.27     $ 0.09  
GAAP weighted-average shares outstanding:      
Basic 28,341,633     27,821,596  
Diluted 30,043,783     28,504,811  
Non-GAAP weighted-average shares outstanding:      
Basic 28,341,633     27,821,596  
Diluted 30,043,783     28,504,811  

 

 

 
Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
   
  Three Months Ended
March 31,
  2018   2017
Research and development $ 12,519     $ 10,327  
Less:      
Stock-based compensation expense 687     309  
Acquisition-related expense 35     69  
Non-GAAP research and development $ 11,797     $ 9,949  
       
General and administrative $ 14,460     $ 12,769  
Less:      
Stock-based compensation expense 2,124     1,957  
Litigation-related expense 17     55  
Acquisition-related expense 3,490     2,901  
Non-GAAP general and administrative $ 8,829     $ 7,856  
       
Sales and marketing $ 19,860     $ 23,071  
Less:      
Stock-based compensation expense 601     280  
Acquisition-related expense 41     35  
Non-GAAP sales and marketing $ 19,218     $ 22,756  
       
Amortization of intangible assets $ 939     $ 450  
Less:      
Amortization of intangible assets 939     450  
Non-GAAP amortization of intangible assets $     $  
       
Restructuring charges $ 862     $  
Less:      
Restructuring-related expense 862      
Non-GAAP restructuring charges $     $  

 

 

 
Reconciliation of Revenue to Bookings
   
  Three Months Ended
March 31,
  2018   2017
GAAP revenue $ 64,026     $ 57,099  
Add:      
Change in deferred revenue 19,812     14,276  
Deferred revenue divested 288      
Impact of Topic 606 adoption 3,998      
Less:      
Impact of foreign exchange 421     153  
Beginning deferred revenue from acquisitions 19,610     9,100  
Change in unbilled revenue 505      
Change in deferred revenue and adjustments 3,562     5,023  
Bookings $ 67,588     $ 62,122  

 

 

 
Calculation of Adjusted Free Cash Flow
   
  Three Months Ended
March 31,
  2018   2017
Net cash provided by operating activities $ 3,291     $ 7,561  
Subtract:      
Purchases of property and equipment 3,288     6,568  
Free cash flow 3     993  
       
Add:      
Acquisition-related payments 1,647     1,230  
Restructuring-related payments 665      
Litigation-related payments 127     32  
Adjusted free cash flow $ 2,442     $ 2,255  

Primary Logo

 

Source: Carbonite, Inc.


Shareholder Tools

Search Investor Relations