New Relic Announces First Quarter of Fiscal Year 2017 Results
“During the first quarter we continued to see mainstream global
customers and industries turn to
Lew Cirne, founder and CEO,
“While continuing to focus on growth, once again we were able to show significant leverage in our operating model and achieved positive cash from operations and free cash flow,” said
Mark Sachleben, CFO,
First Quarter 2017 Financial Highlights:
-
Revenue of
\\$58.6 million , up 54% compared with the first quarter of fiscal 2016 and 12% from the fourth quarter of fiscal 2016. -
GAAP loss from operations was
\\$18.0 million for the first quarter of fiscal 2017, compared with\\$15.1 million for the first quarter of fiscal 2016. Non-GAAP loss from operations was\\$9.8 million for the first quarter of fiscal 2017, compared with\\$10.1 million for the first quarter of fiscal 2016. -
GAAP net loss per share was
\\$0.36 for the first quarter of fiscal 2017 based on 50.2 million weighted-average shares outstanding, compared with\\$0.32 for the first quarter of fiscal 2016 based on 47.2 million weighted-average shares outstanding. Non-GAAP net loss per share was\\$0.20 for the first quarter of fiscal 2017, compared with\\$0.21 for the first quarter of fiscal 2016. -
Cash, cash equivalents and short-term investments were
\\$196.1 million at the end of the first quarter of fiscal 2017, compared with\\$191.3 million at the end of the fourth quarter of fiscal 2016.
Customer Highlights:
-
Paid Business Accounts as of
June 30, 2016 of 14,048. - Dollar-Based Net Expansion Rate for the first quarter of fiscal 2017 of 118%.
-
New or expanded customers in the first quarter of fiscal 2017
included: Alliance Payroll Services, Ancestry.com, Atom Tickets,
Australia Post ,Bain Capital , Best Western Hotels & Resorts,Domain Group ,Finnair ,HOTEL DE GmbH , Intercom,Irish Distillers Group ,Kibo Software Inc. ,MIT Resources Development ,New Zealand Lotteries Commission , OLX, Quicken, Ring,Schneider Electric ,Skandiabanken ,State of Louisiana ,Symantec , Telenor Digital,TopGolf International , Total Wine & More, Trainline, Webroot andWillis Towers Watson .
First Quarter & Recent Business Highlights:
- Achieved Amazon Web Services Partner Network Migration Competency.
-
Announced expansion of FutureStack
technology event and user conference into a global series taking place
in
London ,New York andSan Francisco . - Announced real-user monitoring support for web applications built with single-page application (SPA) frameworks and libraries.
- Released public beta featuring support for modern applications using the Go programming language.
Outlook:
-
Second Quarter Fiscal 2017 Outlook:
-
Revenue between
\\$61.0 million and \\$62.0 million , representing year-over-year growth of between 42% and 44%. -
Non-GAAP loss from operations of between
\\$8.1 million and \\$9.1 million . -
Non-GAAP net loss per share of between
\\$0.16 and \\$0.18 . This assumes 51.0 million weighted average common shares outstanding.
-
Revenue between
-
Full Year Fiscal 2017 Outlook:
-
Revenue between
\\$251.0 million and \\$255.0 million , representing year-over-year growth of between 38% and 41%. -
Non-GAAP loss from operations of between
\\$31.0 million and \\$34.0 million . -
Non-GAAP net loss per share of between
\\$0.60 and \\$0.66 . This assumes 51.7 million non-GAAP weighted average common shares outstanding.
-
Revenue between
Conference Call Details:
-
What:
New Relic financial results for the first quarter fiscal 2017 and outlook for the second quarter of fiscal 2017 and the full year of fiscal 2017 -
When:
August 2, 2016 at2:00 P.M. Pacific Time (5:00 P.M. Eastern Time ) - Dial in: To access the call in the U.S., please dial (877) 201-0168, and for international callers, please dial (647) 788-4901. Callers may provide confirmation number 46197650 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.
- Webcast: http://ir.newrelic.com (live and replay)
-
Replay: Following the completion of the call through
11:59 PM Eastern Time onAugust 9, 2016 , a telephone replay will be available by dialing (855) 859-2056 fromthe United States or (404) 537-3406 internationally with conference ID 46197650.
About
Forward-Looking Statements
This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the federal securities laws, including but not limited to statements regarding New Relic’s future financial performance, including its outlook on financial results for the second quarter of fiscal 2017 and for the full year of fiscal 2017, such as revenue, non-GAAP operating loss, non-GAAP net loss per share, non-GAAP operating income, cash from operations, free cash flow, and capital expenditures, market trends and opportunity, potential seasonality, New Relic’s customer adoption, momentum, competitive advantages, and value proposition to its customers, the increase in mainstream and larger customers and transaction sizes, the timing of the release of New Relic’s infrastructure monitoring product in beta and general availability as well as demand therefor, the effect of New Relic Essentials and cloud pricing, and changes to New Relic’s days sales outstanding, deferred revenue, and overall invoice duration. These forward-looking statements are based on New Relic’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause New Relic’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are not
limited to,
Further information on these and other factors that could affect New
Relic’s financial results and the forward-looking statements in this
press release is included in the filings
Non-GAAP Financial Measures
Management believes these non-GAAP financial measures are useful to
investors and others in assessing
Stock-based Compensation and amortization of stock-based compensation
capitalized in software development costs:
Amortization of purchased intangibles and transaction costs related
to acquisition.
Lawsuit litigation expense.
Employer payroll tax expense on equity incentive plans.
Additionally,
Operating Metrics
New Relic’s dollar-based net expansion rate compares its recurring subscription revenue from customers from one period to the next. It is increased when customers increase their use of New Relic’s products, use additional products, or upgrade to a higher subscription tier. New Relic’s dollar-based net expansion rate is reduced when customers decrease their use of New Relic’s products, use fewer products, or downgrade to a lower subscription tier.
All product and company names herein may be trademarks of their registered owners.
Condensed Consolidated Statements of Operations | ||||||||||
(In thousands, except per share data; unaudited) | ||||||||||
Three Months Ended June 30, | ||||||||||
2016 | 2015 | |||||||||
Revenue | \\$ | 58,607 | \\$ | 38,145 | ||||||
Cost of revenue | 11,655 | 7,866 | ||||||||
Gross profit | 46,952 | 30,279 | ||||||||
Operating expenses: | ||||||||||
Research and development | 15,969 | 8,754 | ||||||||
Sales and marketing | 38,786 | 28,683 | ||||||||
General and administrative | 10,236 | 7,984 | ||||||||
Total operating expenses | 64,991 | 45,421 | ||||||||
Loss from operations | (18,039 | ) | (15,142 | ) | ||||||
Other income (expense): | ||||||||||
Interest income | 221 | 141 | ||||||||
Interest expense | (21 | ) | (14 | ) | ||||||
Other expense, net | (111 | ) | (2 | ) | ||||||
Loss before income taxes | (17,950 | ) | (15,017 | ) | ||||||
Income tax provision | 121 | 102 | ||||||||
Net loss | \\$ | (18,071 | ) | \\$ | (15,119 | ) | ||||
Net loss per share, basic and diluted | \\$ | (0.36 | ) | \\$ | (0.32 | ) | ||||
Weighted-average shares used to compute net loss per share, basic and diluted | 50,224 | 47,190 | ||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In thousands, except par value; unaudited) | |||||||||
June 30, | March 31, | ||||||||
2016 | 2016 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | \\$ | 81,655 | \\$ | 65,914 | |||||
Short-term investments | 114,474 | 125,414 | |||||||
Accounts receivable, net of allowance for doubtful accounts of
\\$628 and \\$664, |
28,819 | 32,514 | |||||||
Prepaid expenses and other current assets | 9,762 | 6,109 | |||||||
Total current assets | 234,710 | 229,951 | |||||||
Property and equipment, net | 40,202 | 40,147 | |||||||
Restricted cash | 8,115 | 8,115 | |||||||
Goodwill | 11,828 | 11,828 | |||||||
Intangible assets, net | 3,416 | 3,661 | |||||||
Other assets | 772 | 742 | |||||||
Total assets | \\$ | 299,043 | \\$ | 294,444 | |||||
Liabilities and stockholders’ equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | \\$ | 7,265 | \\$ | 4,450 | |||||
Accrued compensation and benefits | 10,829 | 11,631 | |||||||
Other current liabilities | 5,183 | 4,725 | |||||||
Deferred revenue | 80,661 | 72,397 | |||||||
Total current liabilities | 103,938 | 93,203 | |||||||
Deferred rent, non-current | 5,952 | 4,658 | |||||||
Deferred revenue, non-current | 1,567 | 2,326 | |||||||
Other liabilities, non-current | 1,006 | 1,024 | |||||||
Total liabilities | 112,463 | 101,211 | |||||||
Stockholders’ equity: | |||||||||
Common stock, \\$0.001 par value | 51 | 50 | |||||||
Treasury stock - at cost (260 shares) | (263 | ) | (263 | ) | |||||
Additional paid-in capital | 403,918 | 392,511 | |||||||
Accumulated other comprehensive income | 32 | 22 | |||||||
Accumulated deficit | (217,158 | ) | (199,087 | ) | |||||
Total stockholders’ equity | 186,580 | 193,233 | |||||||
Total liabilities and stockholders’ equity | \\$ | 299,043 | \\$ | 294,444 | |||||
Condensed Consolidated Statements of Cash Flows | |||||||||
(In thousands; unaudited) | |||||||||
Three Months Ended June 30, | |||||||||
2016 | 2015 | ||||||||
Cash flows from operating activities: | |||||||||
Net loss: | \\$ | (18,071 | ) | \\$ | (15,119 | ) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||
Depreciation and amortization | 4,222 | 3,301 | |||||||
Stock-based compensation expense | 7,338 | 4,659 | |||||||
Other | 293 | 418 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 3,695 | (4,721 | ) | ||||||
Prepaid expenses and other assets | (3,567 | ) | (384 | ) | |||||
Accounts payable | 996 | (387 | ) | ||||||
Accrued compensation and benefits and other liabilities | (324 | ) | 827 | ||||||
Deferred revenue | 7,505 | 9,332 | |||||||
Deferred rent | 1,319 | (70 | ) | ||||||
Net cash provided by (used in) operating activities | 3,406 | (2,144 | ) | ||||||
Cash flows from investing activities: | |||||||||
Purchases of property and equipment | (1,527 | ) | (2,671 | ) | |||||
Purchases of short-term investments | (24,875 | ) | (43,146 | ) | |||||
Proceeds from sale and maturity of short-term investments | 35,774 | 13,625 | |||||||
Capitalized software development costs | (712 | ) | (2,209 | ) | |||||
Net cash provided by (used in) investing activities | 8,660 | (34,401 | ) | ||||||
Cash flows from financing activities: | |||||||||
Proceeds from issuance of common stock from employee stock options | 3,675 | 1,516 | |||||||
Net cash provided by financing activities | 3,675 | 1,516 | |||||||
Net increase (decrease) in cash and cash equivalents | 15,741 | (35,029 | ) | ||||||
Cash and cash equivalents, beginning of period | 65,914 | 105,257 | |||||||
Cash and cash equivalents, end of period | \\$ | 81,655 | \\$ | 70,228 | |||||
Reconciliation from GAAP to Non-GAAP Results | ||||||||||
(In thousands, except per share data; unaudited) | ||||||||||
Three Months Ended June 30, | ||||||||||
2016 | 2015 | |||||||||
Reconciliation of gross profit and gross margin: | ||||||||||
GAAP gross profit | \\$ | 46,952 | \\$ | 30,279 | ||||||
Plus: Stock-based compensation | 381 | 251 | ||||||||
Plus: Amortization of purchased intangibles | 200 | 200 | ||||||||
Plus: Amortization of stock-based compensation capitalized in software development costs | 165 | 100 | ||||||||
Plus: Employer payroll tax on employee equity incentive plans | 22 | – | ||||||||
Non-GAAP gross profit | \\$ | 47,720 | \\$ | 30,830 | ||||||
GAAP gross margin | 80 | % | 79 | % | ||||||
Non-GAAP adjustments | 1 | % | 2 | % | ||||||
Non-GAAP gross margin | 81 | % | 81 | % | ||||||
Reconciliation of operating expenses: | ||||||||||
GAAP research and development | \\$ | 15,969 | \\$ | 8,754 | ||||||
Less: Stock-based compensation | (2,541 | ) | (1,038 | ) | ||||||
Less: Employer payroll tax on employee equity incentive plans | (128 | ) | – | |||||||
Non-GAAP research and development | \\$ | 13,300 | \\$ | 7,716 | ||||||
GAAP sales and marketing | \\$ | 38,786 | \\$ | 28,683 | ||||||
Less: Stock-based compensation | (2,762 | ) | (1,976 | ) | ||||||
Less: Amortization of purchased intangibles | (11 | ) | (13 | ) | ||||||
Less: Employer payroll tax on employee equity incentive plans | (129 | ) | – | |||||||
Non-GAAP sales and marketing | \\$ | 35,884 | \\$ | 26,694 | ||||||
GAAP general and administrative | \\$ | 10,236 | \\$ | 7,984 | ||||||
Less: Stock-based compensation | (1,654 | ) | (1,394 | ) | ||||||
Less: Lawsuit litigation | (2 | ) | (17 | ) | ||||||
Less: Amortization of purchased intangibles | (34 | ) | (40 | ) | ||||||
Less: Employer payroll tax on employee equity incentive plans | (210 | ) | – | |||||||
Non-GAAP general and administrative | \\$ | 8,336 | \\$ | 6,533 | ||||||
Reconciliation of loss from operations and operating margin: | ||||||||||
GAAP loss from operations | \\$ | (18,039 | ) | \\$ | (15,142 | ) | ||||
Plus: Stock-based compensation | 7,338 | 4,659 | ||||||||
Plus: Lawsuit litigation | 2 | 17 | ||||||||
Plus: Amortization of purchased intangibles | 245 | 253 | ||||||||
Plus: Amortization of stock-based compensation capitalized in software development costs | 165 | 100 | ||||||||
Plus: Employer payroll tax on employee equity incentive plans | 489 | – | ||||||||
Non-GAAP loss from operations | \\$ | (9,800 | ) | \\$ | (10,113 | ) | ||||
GAAP operating margin | (31 | %) | (40 | %) | ||||||
Non-GAAP adjustments | 14 | % | 13 | % | ||||||
Non-GAAP operating margin | (17 | %) | (27 | %) | ||||||
Reconciliation of net loss: | ||||||||||
GAAP net loss | \\$ | (18,071 | ) | \\$ | (15,119 | ) | ||||
Plus: Stock-based compensation | 7,338 | 4,659 | ||||||||
Plus: Lawsuit litigation | 2 | 17 | ||||||||
Plus: Amortization of purchased intangibles | 245 | 253 | ||||||||
Plus: Amortization of stock-based compensation capitalized in software development costs | 165 | 100 | ||||||||
Plus: Employer payroll tax on employee equity incentive plans | 489 | – | ||||||||
Non-GAAP net loss | \\$ | (9,832 | ) | \\$ | (10,090 | ) | ||||
Reconciliation of net loss per share, basic and diluted: | ||||||||||
GAAP net loss per share, basic and diluted | \\$ | (0.36 | ) | \\$ | (0.32 | ) | ||||
Non-GAAP adjustments to net loss | 0.16 | 0.11 | ||||||||
Non-GAAP net loss per share, basic and diluted | (0.20 | ) | (0.21 | ) | ||||||
Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flows | |||||||||
(In thousands; unaudited) | |||||||||
Three Months Ended June 30, | |||||||||
2016 | 2015 | ||||||||
Net cash provided by (used in) operating activities | \\$ | 3,406 | \\$ | (2,144 | ) | ||||
Capital expenditures | (1,527 | ) | (2,671 | ) | |||||
Capitalized software development costs | (712 | ) | (2,209 | ) | |||||
Free cash flows (Non-GAAP) | \\$ | 1,167 | \\$ | (7,024 | ) | ||||
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