RPD
$55.77
Rapid7
$.54
.98%
Earnings Details
Quarter December 2019
Monday, February 10, 2020 4:05:00 PM
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Summary

Rapid7 Provides Mixed Guidance

Rapid7 (RPD) reported a Quarter December 2019 loss of $0.06 per share on revenue of $91.6 million. The consensus estimate was a loss of $0.01 per share on revenue of $88.4 million. The Earnings Whisper number was for breakeven results. Revenue grew 33.3% on a year-over-year basis.

The company said it expects a first quarter non-GAAP loss of $0.13 to $0.11 per share on revenue of $91.6 million to $93.2 million and 2020 earnings of $0.11 to $0.18 per share on revenue of $396.0 million to $404.0 million. The current consensus estimate is for breakeven results on revenue of $90.9 million for the quarter ending March 31, 2020 and earnings of $0.25 per share on revenue of $392.8 million for the year ending December 31, 2020.

Results
Reported Earnings
($0.06)
Earnings Whisper
$0.00
Consensus Estimate
($0.01)
Reported Revenue
$91.6 Mil
Revenue Estimate
$88.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results

  • Annualized recurring revenue (ARR) of $338.7 million, an increase of 35% year-over-year
  • Fourth quarter 2019 revenue of $91.6 million and full year 2019 revenue of $326.9 million
  • Fourth quarter 2019 year-over-year revenue growth of 33% and full-year 2019 year-over-year revenue growth of 34%
  • Customer growth of 16% year-over-year
  • Guiding 2020 ARR year-over-year growth between 24% to 26% and year-over-year revenue growth between 21% and 24%

BOSTON, Feb. 10, 2020 (GLOBE NEWSWIRE) -- Rapid7, Inc. (NASDAQ: RPD), a leading provider of security analytics and automation, today announced financial results for the fourth quarter and full-year 2019.

"Rapid7 capped off another great year in 2019 with strong full-year operating results. Our ARR grew by 35% and we again exceeded the high end of our guidance with revenue growth of 34% while delivering a 9-point improvement in non-GAAP operating margin from the prior year," said Corey Thomas, Chairman and CEO of Rapid7.

"These results reflect a healthy demand environment and consistent execution. With a leading and well-diversified product portfolio, we see a large opportunity in front of us and are well positioned for future growth. As a result, for 2020, we expect strong ARR growth of 25%, at the midpoint, while continuing to deliver operating leverage."

Fourth Quarter 2019 Financial Results and Other Metrics 

 Three Months Ended December 31,
      
 2019 2018 % Change
      
 (dollars in thousands)
Annualized recurring revenue$338,714  $251,819  35%
Number of customers9,022  7,808  16%
ARR per customer$37.5  $32.3  16%
Recurring revenue as a percentage of total revenue87% 83%  
Renewal rate*108% 119%  

* For the three months ended December 31, 2018, our renewal rate was adjusted from 120%, as previously disclosed, to 119% based on a reclassification of certain upsells and cross-sells.

    
 Three Months Ended December 31, Year Ended December 31,
            
 2019 2018 % Change 2019 2018 % Change
            
 (in thousands, except per share data)
Products revenue$74,326  $50,420  47% $261,119  $168,571  55%
Maintenance and support revenue8,671  10,246  (15)% 36,778  42,223  (13)%
Professional services revenue8,651  8,104  7% 29,050  33,297  (13)%
Total revenue$91,648  $68,770  33% $326,947  $244,091  34%
            
North America revenue$76,258  $58,488  30% $274,481  $207,727  32%
Rest of world revenue15,390  10,282  50% 52,466  36,364  44%
Total revenue$91,648  $68,770  33% $326,947  $244,091  34%
            
GAAP gross profit$66,286  $49,484    $235,801  $173,008   
GAAP gross margin72% 72%   72% 71%  
Non-GAAP gross profit$68,554  $51,138    $244,720  $178,685   
Non-GAAP gross margin75% 74%   75% 73%  
            
GAAP loss from operations$(12,315) $(10,812)   $(45,995) $(53,038)  
GAAP operating margin(13)% (16)%   (14)% (22)%  
Non-GAAP income (loss) from operations$785  $(2,695)   $2,404  $(20,381)  
Non-GAAP operating margin1% (4)%   1% (8)%  
            
GAAP net loss$(14,346) $(13,020)   $(53,845) $(55,545)  
GAAP net loss per share, basic and diluted$(0.29) $(0.27)   $(1.10) $(1.20)  
Non-GAAP net income (loss)$1,484  $(2,368)   $4,306  $(19,057)  
Non-GAAP net income (loss) per share, basic$0.03  $(0.05)   $0.09  $(0.41)  
Non-GAAP net income (loss) per share, diluted$0.03  $(0.05)   $0.08  $(0.41)  
            
Adjusted EBITDA$3,654  $(658)   $12,453  $(13,428)  
            
Cash provided by (used in) operating activities$7,824  $11,934    $(1,420) $6,066   
                    

Recent Business Highlights

  • In November 2019, Forrester Consulting conducted a study on behalf of Rapid7 which highlighted that InsightVM customers could realize more than 300% ROI over a three-year period, over 20% reduction in false positives and 60% reduction in patching efforts compared to their incumbent vulnerability management solution.
  • In December 2019, Rapid7 announced that InsightIDR, its cloud Security Information and Event Management (SIEM) offering is available for purchase in Amazon Web Services (AWS) Marketplace, highlighting Rapid7's ongoing commitment to helping its customers secure their cloud environments.
  • In January 2020, Frost & Sullivan recognized Rapid7 with its 2019 Global SOAR Company of the year award, highlighting Rapid7's focus on mid-market enterprises.

Please see investors.rapid7.com for our Financial Metrics spreadsheet.

For additional details on the reconciliation of non-GAAP measures and certain other business metrics to their nearest comparable GAAP measures, please refer to the accompanying financial data tables included in this press release.

First Quarter and Full-Year 2020 Guidance

Rapid7 anticipates annualized recurring revenue, revenue, non-GAAP (loss) income from operations, and non-GAAP net (loss) income per share to be in the following ranges:

First Quarter and Full-Year 2020 Guidance (in millions, except per share data)
      
 First Quarter 2020 Full-Year 2020
Annualized recurring revenue    $420.0  $426.8 
Year-over-year growth    24% 26%
Revenue$91.6 to$93.2  $396.0 to$404.0 
Year-over-year growth25%to27% 21%to24%
Non-GAAP (loss) income from operations$(6.3)to$(5.3) $7.0 to$11.0 
Non-GAAP net (loss) income per share$(0.13)to$(0.11) $0.11 to$0.18 
Weighted average shares outstanding  50.2     55.0 

Guidance for the first quarter and full-year 2020 does not include any potential impact of foreign exchange gains or losses. The weighted average shares outstanding for the first quarter of 2020 represent basic shares outstanding given our projected non-GAAP net loss. The weighted average shares outstanding for full year 2020 represent non-GAAP diluted shares outstanding given our projected non-GAAP net income.

Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs, and certain non-recurring items. Rapid7 has provided a reconciliation of  each non-GAAP guidance measure to the most comparable GAAP measures in the financial statement tables included in this press release. The reconciliation does not reflect any items that are unknown at this time, such as acquisition-related expenses, follow-on public offering costs, and litigation-related expenses which we are not able to predict without unreasonable effort due to their inherent uncertainty.

Conference Call and Webcast Information

Rapid7 will host a conference call today, February 10, 2020, to discuss its results at 4:30 p.m. Eastern Time. The call will be accessible by telephone at 877-357-4230 (domestic) or 629-228-0721 (international). The call will also be available live via webcast on the Company’s website at http://investors.rapid7.com. A telephone replay of the conference call will be available at 855-859-2056 or 404-537-3406 (access code 1729437) until February 18, 2020. A webcast replay will be available at http://investors.rapid7.com

About Rapid7

Rapid7 (Nasdaq: RPD) is advancing security with visibility, analytics, and automation delivered through our Insight cloud. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks. Over 9,000 customers rely on Rapid7 technology, services, and research to improve security outcomes and securely advance their organizations. For more information, visit our website, check out our blog, or follow us on Twitter.

Non-GAAP Financial Measures and Other Business Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with certain non-GAAP financial measures and other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.

Non-GAAP Financial Measures
We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share and adjusted EBITDA.

We define non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs and certain other items such as acquisition-related expenses, follow-on public offering costs, and litigation-related expenses. Non-GAAP net income (loss) per basic and dilutive share is calculated as non-GAAP net income (loss) divided by the weighted average shares used to compute net income (loss) per share, with the number of weighted average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with the 1.25% convertible senior note issued in August 2018.

We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:

Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.

Amortization of debt discount and issuance costs. In August 2018, we issued $230 million of convertible senior notes, which bear interest at an annual fixed rate of 1.25%. The imputed interest rate of the convertible senior notes was approximately 7.37%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.

Litigation-related expenses. We exclude certain litigation-related expenses consisting of professional fees and related costs incurred by us related to significant litigation outside the ordinary course of business. We believe it is useful to exclude such expenses because we do not consider such amounts to be part of our ongoing operations.

Acquisition-related expenses and follow-on public offering costs. We exclude acquisition-related expenses and follow-on public offering costs as costs that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results.

Anti-dilutive impact of capped call transaction. In connection with the issuance of our convertible senior notes, we entered into capped call transactions to offset potential dilution from the embedded conversion feature in the notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per basic and diluted share to provide investors with useful information in evaluating the financial performance of the company on a per share basis.

Adjusted EBITDA (non-GAAP). Adjusted EBITDA is a non-GAAP measure that we define as net loss before (1) interest income, (2) interest expense, (3) other income (expense), net, (4) provision for income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, and (8) certain other items.  We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using this non-GAAP financial measure, including that other companies may calculate this measure differently than we do, that it does not reflect our capital expenditures or future requirements for capital expenditures and that it does not reflect changes in, or cash requirements for, our working capital and excludes some items that are cash based.

Other Metrics
Annualized Recurring Revenue (ARR). ARR is defined as the annual value of all recurring revenue related contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue and can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations.

Number of Customers. We define a customer as any entity that has (1) an active Rapid7 contract or a contract that expired within 90 days or less of the applicable measurement date; and for Logentries products, those customers with a contract value equal to or greater than $2,400 per year, or (2) purchased Rapid7 professional services within the 12 months preceding the applicable measurement date.

ARR per Customer. We define ARR per customer as ARR divided by the number of customers at the end of the period.

Recurring Revenue. We define recurring revenue as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support.

Renewal Rate. We calculate our renewal rate by dividing the dollar value of renewed customer agreements, including upsells and cross-sells of additional products, but excluding professional services, in a trailing 12-month period by the dollar value of the corresponding customer agreements.

Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our anticipated future financial and business performance for the first quarter and full-year 2020, market opportunities, future growth and operating leverage are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our rapid growth and ability to sustain our revenue growth rate, the ability of our products and professional services to correctly detect vulnerabilities, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our ability to integrate acquired operations, our ability to operate in compliance with applicable laws as well as other risks and uncertainties set forth in the “Risk Factors” section of our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarter ended September 30, 2019 filed with the Securities and Exchange Commission on November 5, 2019, and subsequent reports that we file with the Securities and Exchange Commission.  Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

Investor contact:

Neeraj Mahajan, CFA
Vice President, Investor Relations
investors@rapid7.com
(857) 990-4074

Press contact:

Caitlin Doherty
press@rapid7.com
(857) 990-4240

     
RAPID7, INC. 
Consolidated Balance Sheets (Unaudited)  
(in thousands)
     
  December 31, 2019 December 31, 2018
Assets    
Current assets:    
Cash and cash equivalents $123,413  $99,565 
Short-term investments 116,158  159,210 
Accounts receivable, net 87,927  74,935 
Deferred contract acquisition and fulfillment costs, current portion 17,047  12,321 
Prepaid expenses and other current assets 20,051  9,746 
Total current assets 364,596  355,777 
Long-term investments 22,887  44,892 
Property and equipment, net 50,670  17,523 
Operating lease right-of-use assets 60,984   
Deferred contract acquisition and fulfillment costs, non-current portion 34,213  27,634 
Goodwill 97,866  88,420 
Intangible assets, net 28,561  23,955 
Other assets 5,136  1,168 
Total assets $664,913  $559,369 
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable $6,836  $7,048 
Accrued expenses 41,021  37,376 
Operating lease liabilities, current portion 7,179   
Deferred revenue, current portion 231,518  189,855 
Other current liabilities 119  707 
Total current liabilities 286,673  234,986 
Convertible senior notes, net 185,200  174,688 
Operating lease liabilities, non-current portion 72,294   
Deferred revenue, non-current portion 36,226  58,716 
Other long-term liabilities 1,352  3,660 
Total liabilities 581,745  472,050 
Stockholders’ equity:    
Common stock 499  476 
Treasury stock (4,764) (4,764)
Additional paid-in-capital 605,650  556,223 
Accumulated other comprehensive loss 213  (31)
Accumulated deficit (518,430) (464,585)
Total stockholders’ equity 83,168  87,319 
Total liabilities and stockholders’ equity $664,913  $559,369 


     
RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
     
  Three Months Ended December 31, Year Ended December 31,
  2019 2018  2019 2018
Revenue:         
Products $74,326   $50,420    $261,119   $168,571  
Maintenance and support 8,671   10,246    36,778   42,223  
Professional services 8,651   8,104    29,050   33,297  
Total revenue 91,648   68,770    326,947   244,091  
Cost of revenue:         
Products 17,016   11,430    59,684   39,810  
Maintenance and support 2,454   1,921    8,495   7,678  
Professional services 5,892   5,935    22,967   23,595  
Total cost of revenue 25,362   19,286    91,146   71,083  
Total gross profit 66,286   49,484    235,801   173,008  
Operating expenses:         
Research and development 21,719   17,828    79,364   67,743  
Sales and marketing 44,508   32,531    157,722   123,310  
General and administrative 12,374   9,937    44,710   34,993  
Total operating expenses 78,601   60,296    281,796   226,046  
Loss from operations (12,315)  (10,812)   (45,995)  (53,038) 
Other income (expense), net:         
Interest income 1,253   1,709    6,014   3,229  
Interest expense (3,449)  (3,253)   (13,389)  (4,934) 
Other income (expense), net 294   (269)   (433)  (336) 
Loss before income taxes (14,217)  (12,625)   (53,803)  (55,079) 
Provision for income taxes 129   395    42   466  
Net loss $(14,346)  $(13,020)   $(53,845)  $(55,545) 
Net loss per share, basic and diluted $(0.29)  $(0.27)   $(1.10)  $(1.20) 
Weighted-average common shares outstanding, basic and diluted 49,604,522   47,397,034    48,731,791   46,456,825  


     
RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
     
  Three Months Ended December 31, Year Ended December 31,
  2019 2018 2019 2018
Cash flows from operating activities:        
Net loss $(14,346) $(13,020) $(53,845) $(55,545)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
Depreciation and amortization 4,559  3,360  16,528  11,097 
Amortization of debt discount and issuance costs 2,730  2,535  10,513  3,831 
Stock-based compensation expense 11,174  6,594  40,664  27,593 
Provision for doubtful accounts 459  260  2,241  740 
Deferred income taxes 116  (69) (645) (69)
Foreign currency re-measurement (gain) loss (315) 191  255  757 
Other non-cash items (254) (161) (1,889) (506)
Changes in operating assets and liabilities:        
Accounts receivable (25,660) (20,972) (14,800) (1,685)
Deferred contract acquisition and fulfillment costs (5,903) (6,405) (11,306) (12,790)
Prepaid expenses and other assets (3,813) 2,147  (13,691) (287)
Accounts payable (1,040) 3,110  92  3,675 
Accrued expenses 9,581  8,192  4,759  6,018 
Deferred revenue 30,810  25,183  18,686  22,870 
Other liabilities (274) 989  1,018  367 
Net cash provided by (used in) operating activities 7,824  11,934  (1,420) 6,066 
Cash flows from investing activities:        
Business acquisitions, net of cash acquired   (14,460) (14,607) (14,460)
Purchases of property and equipment (2,375) (4,409) (29,428) (12,813)
Capitalization of internal-use software costs (1,401) (760) (6,087) (3,265)
Purchases of investments (33,839) (54,476) (148,047) (233,421)
Sales/maturities of investments 37,693  30,650  214,980  70,226 
Net cash provided by (used in) investing activities 78  (43,455) 16,811  (193,733)
Cash flows from financing activities:        
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $6,879   (408)   223,121 
Purchase of capped calls related to convertible senior notes       (26,910)
Proceeds from follow-on public offering, net of offering costs of $608       30,907 
Taxes paid related to net share settlement of equity awards (2,026) (485) (6,952) (2,197)
Proceeds from employee stock purchase plan     5,521  3,637 
Proceeds from stock option exercises 2,295  1,085  10,219  7,606 
Net cash provided by financing activities 269  192  8,788  236,164 
Effect of exchange rate changes on cash, cash equivalents and restricted cash 317  (266) (331) (694)
Net increase (decrease) in cash, cash equivalents and restricted cash 8,488  (31,595) 23,848  47,803 
Cash, cash equivalents and restricted cash, beginning of period 114,925  131,160  99,565  51,762 
Cash, cash equivalents and restricted cash, end of period $123,413  $99,565  $123,413  $99,565 

    

     
RAPID7, INC. 
GAAP to Non-GAAP Reconciliation (Unaudited) 
(in thousands, except share and per share data)
     
  Three Months Ended December 31, Year Ended December 31,
  2019 2018 2019 2018
Total gross profit (GAAP) $66,286  $49,484  $235,801  $173,008 
Add: Stock-based compensation expense1 610  371  2,580  1,692 
Add: Amortization of acquired intangible assets2 1,658  1,283  6,339  3,985 
Total gross profit (non-GAAP) $68,554  $51,138  $244,720  $178,685 
Gross margin (non-GAAP) 74.8% 74.4% 74.9% 73.2%
Gross profit (GAAP) - Products $57,310  $38,990  $201,435  $128,761 
Add: Stock-based compensation expense 209  69  789  493 
Add: Amortization of acquired intangible assets 1,658  1,283  6,339  3,985 
Total gross profit (non-GAAP) - Products $59,177  $40,342  $208,563  $133,239 
Gross margin (non-GAAP) - Products 79.6% 80.0% 79.9% 79.0%
Gross profit (GAAP) - Maintenance and support $6,217  $8,325  $28,283  $34,545 
Add: Stock-based compensation expense 160  72  616  233 
Total gross profit (non-GAAP) - Maintenance and support $6,377  $8,397  $28,899  $34,778 
Gross margin (non-GAAP) - Maintenance and support 73.5% 82.0% 78.6% 82.4%
Gross profit (GAAP) - Professional services $2,759  $2,169  $6,083  $9,702 
Add: Stock-based compensation expense 241  230  1,175  966 
Total gross profit (non-GAAP) - Professional services $3,000  $2,399  $7,258  $10,668 
Gross margin (non-GAAP) - Professional services 34.7% 29.6% 25.0% 32.0%
GAAP Loss from operations $(12,315) $(10,812) $(45,995) $(53,038)
Add: Stock-based compensation expense1 11,174  6,594  40,664  27,593 
Add: Amortization of acquired intangible assets2 1,690  1,323  6,479  4,144 
Add: Acquisition-related expenses3     514  115 
Add: Follow-on public offering costs4       205 
Add: Litigation-related expenses5 236  200  742  600 
Non-GAAP Income (loss) from operations $785  $(2,695) $2,404  $(20,381)
GAAP Net loss $(14,346) $(13,020) $(53,845) $(55,545)
Add: Stock-based compensation expense1 11,174  6,594  40,664  27,593 
Add: Amortization of acquired intangible assets2 1,690  1,323  6,479  4,144 
Add: Acquisition-related expenses3     514  115 
Add: Follow-on public offering costs4       205 
Add: Litigation-related expenses5 236  200  742  600 
Add: Release of valuation allowance, acquisition-related     (761)  
Add: Amortization of debt discount and issuance costs 2,730  2,535  10,513  3,831 
Non-GAAP Net income (loss) $1,484  $(2,368) $4,306  $(19,057)
         
Reconciliation of net income (loss) per share, basic:        
GAAP net loss per share, basic $(0.29) $(0.27) $(1.10) $(1.20)
Non-GAAP adjustment to net loss per share $0.32  $0.22  $1.19  $0.79 
Non-GAAP net income (loss) per share, basic $0.03  $(0.05) $0.09  $(0.41)
         
Reconciliation of net income (loss) per share, diluted:        
GAAP net loss per share, diluted $(0.29) $(0.27) $(1.10) $(1.20)
Non-GAAP adjustment to net loss per share $0.32  $0.22  $1.18  $0.79 
Non-GAAP net income (loss) per share, diluted $0.03  $(0.05) $0.08  $(0.41)
         
Weighted average shares used in GAAP per share calculation, basic and diluted 49,604,522  47,397,034  48,731,791  46,456,825 
         
Weighted average common shares used in non-GAAP per share calculation:        
Basic 49,604,522  47,397,034  48,731,791  46,456,825 
Diluted 52,584,791  47,397,034  52,058,103  46,456,825 
         
1 Includes stock-based compensation expense as follows:        
Cost of revenue $610  $371  $2,580  $1,692 
Research and development 4,446  2,422  15,670  10,822 
Sales and marketing 3,430  1,885  11,883  7,569 
General and administrative 2,688  1,916  10,531  7,510 
2 Includes amortization of acquired intangible assets as follows:        
Cost of revenue $1,658  $1,283  $6,339  $3,985 
Sales and marketing 32  39  137  154 
General and administrative   1  3  5 
3 Includes acquisition-related expenses as follows:        
General and administrative $  $  $514  $115 
4 Includes follow-on public offering costs as follows:        
General and administrative $  $  $  $205 
5 Includes litigation-related expenses as follows:        
General and administrative $236  $200  $742  $600 



     
Reconciliation of GAAP Net Loss to Adjusted EBITDA (Unaudited)
(in thousands)
     
  Three Months Ended December 31, Year Ended December 31,
  2019 2018 2019 2018
Net loss $(14,346) $(13,020) $(53,845) $(55,545)
Interest income (1,253) (1,709) (6,014) (3,229)
Interest expense 3,449  3,253  13,389  4,934 
Other (income) expense, net (294) 269  433  336 
Provision for income taxes 129  395  42  466 
Depreciation expense 2,537  1,870  8,963  6,486 
Amortization of intangible assets 2,022  1,490  7,565  4,611 
Stock-based compensation expense 11,174  6,594  40,664  27,593 
Acquisition-related expenses     514  115 
Follow-on public offering costs       205 
Litigation-related expenses 236  200  742  600 
Adjusted EBITDA $3,654  $(658) $12,453  $(13,428)


        
First Quarter and Full-Year 2020 Guidance
GAAP to Non-GAAP Reconciliation 
(in millions, except per share data)
        
 First Quarter 2020 Full-Year 2020
Reconciliation of GAAP to non-GAAP (loss) income from operations:       
Anticipated GAAP loss from operations$(20.8)to$(19.8) $(55.5)to$(51.5)
Add: Anticipated stock-based compensation expense12.8 to12.8  55.8 to55.8 
Add: Anticipated amortization of acquired intangible assets1.7 to1.7  6.7 to6.7 
Anticipated non-GAAP (loss) income from operations$(6.3)to$(5.3) $7.0 to$11.0 
        
Reconciliation of GAAP to non-GAAP net (loss) income:       
Anticipated GAAP net loss$(23.8)to$(22.8) $(68.1)to$(64.1)
Add: Anticipated stock-based compensation expense12.8 to12.8  55.8 to55.8 
Add: Anticipated amortization of acquired intangible assets1.7 to1.7  6.7 to6.7 
Add: Anticipated amortization of debt discount and issuance costs2.7 to2.7  11.4 to11.4 
Anticipated non-GAAP net (loss) income$(6.6)to$(5.6) $5.8 to$9.8 
        
Anticipated GAAP net loss per share$(0.47) $(0.45) $(1.33) $(1.25)
Anticipated non-GAAP net (loss) income per share$(0.13) $(0.11) $0.11  $0.18 
        
Weighted average shares used in GAAP per share calculation, basic and diluted  50.2     51.1 
          
Weighted average shares used in non-GAAP per share calculation:         
Basic  50.2     51.1 
Diluted  50.2     55.0 

 

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