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Carbonite Announces Third Quarter 2012 Financial Results

Oct 25, 2012 (04:10 PM EDT)
URL: http://www.techweb.com/show-press-release/X930180/carbonite-announces-third-quarter-2012-financial-results.html

Record Revenue of $21.6 million; increases 35%

BOSTON, Oct. 25, 2012 /PRNewswire/ -- Carbonite, Inc. (NASDAQ: CARB), a leading provider of online backup solutions for consumers and small and medium sized businesses, today announced financial results for the third quarter ended September 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120124/NE40289LOGO )

"During the third quarter, we achieved record revenue. We also continued to realize leverage in our model, which is benefiting from better returns on marketing initiatives and increasing scale in the business enabling us to exceed our non-GAAP loss per share expectations," said David Friend, Chairman and CEO of Carbonite.  "We are having success increasing website conversions and are now experiencing double digit site yield improvements over our former website. Furthermore, we continue to strengthen our SMB initiatives, including an increased contribution from our resellers. We have also announced a definitive agreement to acquire Zmanda, which will enable us to expand our market opportunity and enhance our ability to more fully address the unique backup needs of small businesses by adding cloud server and database backup." 

Financial and Operating Metrics for the Third Quarter Ended September 30, 2012

  • Bookings for the third quarter of 2012 were $24.3 million, an increase of 19% from $20.5 million in the third quarter of 2011.
  • Revenue for the third quarter of 2012 was $21.6 million, an increase of 35% from $15.9 million in the third quarter of 2011. 
  • Gross margin for the third quarter of 2012 was 66.6%, compared to 61.6% in the third quarter of 2011.
  • Net loss for the third quarter of 2012 was ($3.4) million, compared to ($7.4) million in the third quarter of 2011.
  • Net loss attributable to common stockholders for the third quarter of 2012 was ($0.13) per share (basic and diluted), compared to a net loss of ($0.47) per share (basic and diluted) in the third quarter of 2011.
  • Non-GAAP net loss for the third quarter of 2012, which excludes amortization expense on intangible assets, stock-based compensation expense, and patent litigation expense was ($1.9) million, compared to ($6.6) million in the third quarter of 2011.
  • Non-GAAP net loss per common share for the third quarter of 2012 was ($0.07), compared to a non-GAAP net loss per common share of ($0.26) in the third quarter of 2011.
  • Cash flow from operations for the third quarter of 2012 was $2.4 million, compared to $1.9 million in the third quarter of 2011.
  • Non-GAAP free cash flow for the third quarter of 2012 was $567,000, compared to ($489,000) in the third quarter of 2011.
  • Cash, cash equivalents, and marketable securities were $66.3 million as of September 30, 2012, compared to $65.7 million as of June 30, 2012.
  • Quarterly retention rate was in the 96% to 97% range, consistent with prior quarters since 2009.

An explanation of non-GAAP measures is provided under the "Non-GAAP Financial Measures" below and reconciliation to the most comparable GAAP measures is provided in the tables at the end of this press release.

Recent Business Highlights:

  • Announced Carbonite has signed a definitive agreement to acquire Zmanda, Inc., a leading global provider of open source and cloud backup solutions.  This acquisition will enhance Carbonite's offerings for small to medium businesses (SMBs) with the ability to backup databases and file systems to the cloud, and will enable SMBs and resellers to obtain the backup solutions they need from one vendor.
  • Released a new mobile app that extends Carbonite's signature data protection capabilities to mobile devices.  Carbonite Mobile allows users to back up the photos and videos on their mobile devices to the cloud, and also includes features that protect a user's mobile device and personal data in the event of loss or theft.
  • Announced added features to Carbonite Business to help SMBs with HIPAA compliance. A critical aspect of HIPAA regulations is data protection, requiring compliant backup methods to ensure the security and confidentiality of stored data. Carbonite Business solutions deliver an easy to install and use service, and backs up an unlimited number of computers, external hard drives, NAS devices and Windows servers for a low flat fee.

Business Outlook

Based on information available as of October 25, 2012, Carbonite is issuing guidance for the fourth quarter and full year 2012 as follows:

Fourth Quarter 2012: The Company expects total revenue for the fourth quarter to be in the range of $23.1 million to $23.3 million and non-GAAP net loss per common share to be in the range of ($0.06) to ($0.07). Carbonite's expectations of non-GAAP net loss per common share for the fourth quarter excludes amortization expense on intangible assets, stock-based compensation expense, and patent litigation expense and assume a tax rate of 0% and weighted average shares outstanding of approximately 25.7 million.

Full Year 2012: The Company expects 2012 total revenue to be in the range of $83.5 million to $83.7 million and non-GAAP net loss per common share to be in the range of ($0.51) to ($0.52). Carbonite's expectations of non-GAAP net loss per common share for the full year excludes amortization expense on intangible assets, stock-based compensation expense, patent litigation expense, and a lease exit charge and assumes a tax rate of 0% and weighted average shares outstanding of approximately 25.7 million.

Conference Call and Webcast Information

Carbonite will host a conference call on October 25, 2012, at 5:00 p.m. Eastern Time (ET) to discuss the Company's third quarter financial results and its business outlook. To access this call, dial 888-427-9415 (domestic) or +1-719-457-2660 (international). A replay of this conference call will be available until November 6, 2012 at 877-870-5176 (domestic) or +1-858-384-5517 (international). The replay pass code is 2043452. A live web cast of this conference call will also be available in the investor relations section on the Company's website at http://investor.carbonite.com under "Events and Presentations" and a replay will be archived on the website as well.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures including bookings, non-GAAP net loss and non-GAAP net loss per common share, and free cash flow. Bookings represent the aggregate dollar value of customer subscriptions received during a period and are calculated as revenue recognized during the period plus the change in total deferred revenue during the same period.  Non-GAAP net loss and non-GAAP net loss per common share exclude amortization expenses on intangible assets, stock-based compensation expenses, a lease exit charge associated with our data center relocation, and patent litigation expenses from net loss and give effect to the conversion of preferred stock and issuance of common stock in connection with the Company's initial public offering as if both had happened at the beginning of the period. Non-GAAP free cash flow is calculated by adding the cash portion of the lease exit charge and subtracting cash paid for the purchase of property and equipment from net cash provided by operating activities. Quarterly retention rate is defined as the percentage of customers on the last day of the prior quarter who remain customers on the last day of the current quarter.

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 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. 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 quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.

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 of this press release 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, and our expectations concerning market opportunities and our ability to capitalize on them.  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 online computer 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 or referenced in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed with the Securities and Exchange Commission, which is available on www.sec.gov, under the heading "Risk Factors" and elsewhere, and any subsequent periodic or current reports filed by us with the SEC. The Company anticipates that subsequent events and developments will cause its views to change. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances. 

About Carbonite 
Carbonite, Inc. (NASDAQ: CARB), is a leading provider of online backup solutions for consumers and small and medium sized businesses.  Subscribers in more than 100 countries rely on Carbonite to provide easy-to-use, affordable and secure online backup solutions with anytime, anywhere data access. Carbonite's online backup solution runs on both the Windows and Mac platforms. The company has backed up nearly 200 billion files, restored more than 7 billion files and currently backs up more than 300 million files each day. For more information, please visit www.carbonite.com, twitter.com/carbonite, twitter.com/carbonitebiz, or facebook.com/CarboniteOnlineBackup

 

Carbonite, Inc.

Condensed Consolidated Statement of Operations (unaudited)

(In thousands, except per share data)


















Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011









Revenue

$    21,573


$    15,926


$      60,367


$     43,168

Cost of revenue

7,205


6,109


20,984


16,420

Gross profit

14,368


9,817


39,383


26,748









Operating expenses:








Research and development

4,890


4,336


14,759


12,046

General and administrative

2,658


1,841


7,271


4,719

Sales and marketing

10,179


11,078


32,864


27,436

Lease exit charge

-


-


1,174


-

Total operating expenses

17,727


17,255


56,068


44,201









Loss from operations

(3,359)


(7,438)


(16,685)


(17,453)









Interest and other income, net

(1)


22


(2)


48









Loss before income taxes

(3,360)


(7,416)


(16,687)


(17,405)









Provision for income taxes

(10)


-


(30)


-









Net loss

$     (3,370)


$    (7,416)


$    (16,717)


$   (17,405)









Accretion of redeemable convertible preferred stock

-


(23)


-


(128)









Net loss attributable to common stockholders

$     (3,370)


$    (7,439)


$    (16,717)


$   (17,533)

















Basic and diluted net loss per share attributable to common stockholders

$       (0.13)


$      (0.47)


$        (0.66)


$       (2.01)









Weighted-average number of common shares used in computing basic and diluted net loss per share

25,626,654


15,955,532


25,434,690


8,707,865

 

Carbonite, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(In thousands)






September 30,


December 31,


2012


2011





Assets




Current assets:




Cash and cash equivalents

$         58,797


$           59,842

Marketable securities

7,508


12,684

Accounts receivable, net

1,454


944

Prepaid expenses and other current assets

1,887


1,730

     Total current assets

69,646


75,200





Property and equipment, net

24,209


21,648

Other assets

151


189

Restricted cash

500


-

Acquired intangible assets, net

855


1,055

Goodwill

1,514


1,514

Total assets

$         96,875


$           99,606





Liabilities, Preferred Stock, and Stockholders' Equity




Current liabilities:




Accounts payable 

$           3,677


$             6,858

Accrued expenses

7,792


4,999

Current portion of deferred revenue

55,210


44,505

     Total current liabilities 

66,679


56,362





Deferred revenue, net of current portion

15,073


15,191

Other long-term liabilities

468


451

Total liabilities

82,220


72,004





Stockholders' equity:




Common stock

256


251

Additional paid-in capital

131,563


127,807

Accumulated deficit

(117,154)


(100,437)

Treasury stock, at cost 

(22)


(22)

Accumulated other comprehensive income

12


3

     Total stockholders' equity 

14,655


27,602

Total liabilities and stockholders' equity 

$         96,875


$           99,606





Carbonite, Inc.

Condensed Consolidated Statement of Cash Flows (unaudited)

(In thousands)






Nine Months Ended


September 30,


2012


2011





Operating activities




Net loss

$         (16,717)


$        (17,405)

Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation and amortization

7,877


5,651

Amortization of premium on marketable securities

152


-

Stock-based compensation expense

2,974


963

Provision for bad debt

53


3

Non-cash lease exit charge

1,022


-

Re-measurement of preferred stock warrant liability

-


(8)

Changes in assets and liabilities, net of acquisition:




     Accounts receivable

(563)


(227)

     Prepaid expenses and other current assets

(124)


(1,194)

     Other assets

38


(150)

     Accounts payable

(3,181)


(3,082)

     Accrued expenses

1,771


3,562

 Other long-term liabilities

43


51

     Deferred revenue 

10,587


14,546

    Net cash provided by (used in) operating activities

3,932


2,710





Investing activities 




Purchases of property and equipment

(10,238)


(9,568)

Proceeds from maturities of marketable securities

6,204


10,000

Purchases of marketable securities

(1,210)


-

Net increase in restricted cash

(500)


-

Payment for acquisition, net of cash acquired

-


(1,949)

          Net cash provided by (used in) investing activities

(5,744)


(1,517)





Financing activities




Proceeds from exercise of stock options

761


925

Proceeds from the issuance of common stock

-


55,709

Repurchase of common stock

-


(22)

          Net cash provided by (used in) financing activities

761


56,612





Effect of currency exchange rate changes on cash

6


2

Net increase (decrease) in cash and cash equivalents

(1,045)


57,807

Cash and cash equivalents, beginning of period

59,842


13,855

Cash and cash equivalents, end of period

$           58,797


$          71,662





 

Carbonite, Inc.

Reconciliation of GAAP to Non-GAAP Measures (unaudited)

(In thousands, except share and per share amounts)









Calculation of Bookings










Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011









Revenue

$    21,573


$    15,926


$        60,367


$       43,168









Add :








    Deferred revenue ending balance

70,283


53,854


70,283


53,854

Less :








    Beginning total deferred revenue from acquisitions

-


-


-


586

    Deferred revenue beginning balance

67,527


49,312


59,696


38,722

Change in deferred revenue balance

2,756


4,542


10,587


14,546









Bookings

$    24,329


$    20,468


$        70,954


$       57,714
























Calculation of Non-GAAP Net Loss and Non-GAAP Net Loss per Share










Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011









Net loss

$     (3,370)


$    (7,416)


$      (16,717)


$     (17,405)









Add:








Amortization of intangibles

67


69


200


89

Stock-based compensation expense

1,015


411


2,974


963

Patent litigation expense

430


352


948


664

Lease exit charge

-


-


1,174


-









Non-GAAP net loss

(1,858)


(6,584)


(11,421)


(15,689)









Weighted average shares outstanding (basic)

25,626,654


15,955,532


25,434,690


8,707,865

Add :








Additional weighted average shares giving effect to initial public offering and conversion of preferred stock at the beginning of the period

-


9,033,399


-


16,152,339









Weighted average shares outstanding used in computing non-GAAP per share amounts

25,626,654


24,988,931


25,434,690


24,860,204









Non-GAAP net loss per share

$       (0.07)


$      (0.26)


$          (0.45)


$         (0.63)









 

Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit












Three Months Ended


Nine Months Ended



September 30,


September 30,



2012


2011


2012


2011










Gross Profit


$    14,368


$  9,817


$   39,383


$     26,748

Add:









Amortization of intangibles


44


44


132


59

Stock-based compensation expense


113


55


314


142

Non-GAAP gross profit


14,525


9,916


39,829


26,949

Non-GAAP gross margin


67.3%


62.3%


66.0%


62.4%










Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense












Three Months Ended


Nine Months Ended



September 30,


September 30,



2012


2011


2012


2011










Research and development


$      4,890


$      4,336


$      14,759


$     12,046

Less: 









Stock-based compensation expense


259


163


825


358

Non-GAAP research and development


4,631


4,173


13,934


11,688










General and administrative


$      2,658


$      1,841


$        7,271


$       4,719

Less: 









Amortization of intangibles


8


8


23


10

Stock-based compensation expense


413


91


1,178


202

Patent litigation expense


430


352


948


664

Non-GAAP general and administrative


1,807


1,390


5,122


3,843










Sales and marketing


$    10,179


$    11,078


$      32,864


$     27,436

Less: 









Amortization of intangibles


15


17


45


20

Stock-based compensation expense


230


102


657


261

Non-GAAP sales and marketing


9,934


10,959


32,162


27,155










 

Calculation of Free Cash Flow










Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011









Net cash provided by (used in) operating activities

$   2,388


$    1,889


$  3,932


$   2,710









Add








Cash portion of lease exit charge

-


-


157


-

Subtract:








Purchase of property and equipment

1,821


2,378


10,238


9,568









Free cash flow

$      567


$     (489)


$ (6,149)


$ (6,858)









Investor Relations Contact:
Cassandra Hudson
Carbonite
617-587-1144   
chudson@carbonite.com  

Staci Mortenson
ICR    
617-587-1102
investor.relations@carbonite.com

Media Contact:
Erin Delaney
Carbonite
617-421-5637
media@carbonite.com 

SOURCE Carbonite, Inc.