News Releases

Mimecast Announces Second Quarter 2020 Financial Results

November 7, 2019 at 4:10 PM EST

Second Quarter Highlights

  • Total revenue of $103.4 million grew 26% yoy on a GAAP basis and 29% in constant currency
  • Added 800 net new customers. Total customers 36,100 globally
  • Revenue retention rate of 110%
  • Gross profit percentage of 75%, Non-GAAP gross profit percentage of 76%
  • GAAP EPS of $(0.01) per diluted share, Non-GAAP EPS of $0.13 per diluted share

LEXINGTON, Mass., Nov. 07, 2019 (GLOBE NEWSWIRE) -- Mimecast Limited (NASDAQ: MIME), a leading email and data security company, today announced financial results for the second quarter ended September 30, 2019.

“Email Security 3.0 furthers our defenses beyond the perimeter, addressing pervasive threats to protect customer’s brands and reputations while simplifying IT,” stated Peter Bauer, CEO of Mimecast.

Mimecast’s CFO, Rafe Brown, commented, “For the first time we surpassed $100 million in quarterly revenue.  A tremendous achievement on the back of solid execution that led us to exceed the high end of our guidance for both revenue and adjusted EBITDA.”

Second Quarter 2020 Financial Highlights

  • Revenue: Revenue for the second quarter of 2020 was $103.4 million, an increase of 26% compared to $82.2 million of revenue in the second quarter of 2019. Revenue on a constant currency basis increased 29% compared to the second quarter of 2019.
  • Customers: Added 800 net new customers in the second quarter of 2020, and now serve 36,100 organizations globally.
  • Revenue Retention Rate: Revenue retention rate was 110% in the second quarter of 2020 consistent with the second quarter of 2019.
  • Gross Profit Percentage: Gross profit percentage was 75% in the second quarter of 2020, compared to 73% in the second quarter of 2019.
  • Non-GAAP Gross Profit Percentage: Non-GAAP gross profit percentage was 76% in the second quarter of 2020, compared to 74% in the second quarter of 2019.
  • Net Loss: Net loss was $0.9 million, or $(0.01) per diluted share, based on 61.8 million diluted shares outstanding, compared to a net loss of $2.1 million, or $(0.03) per diluted share, based on 59.8 million diluted shares outstanding in the second quarter of 2019.
  • Non-GAAP Net Income: Non-GAAP net income was $8.5 million, or $0.13 per diluted share, based on 63.9 million diluted shares outstanding, compared to a non-GAAP net income of $3.6 million or $0.06 per diluted share, based on 62.8 million diluted shares outstanding in the second quarter of 2019.
  • Adjusted EBITDA: Adjusted EBITDA was $20.0 million, representing an Adjusted EBITDA margin of 19.3%, up from 15.0% in the second quarter of 2019.
  • Operating Cash Flow: Operating cash flow was $17.7 million in the second quarter of 2020, compared to $12.5 million in the second quarter of 2019.
  • Free Cash Flow, Cash and Investments: Free cash flow was $4.0 million in the second quarter of 2020, compared to $4.2 million in the second quarter of 2019. Cash and short-term investments as of September 30, 2019 were $199.2 million.

Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures and how they are calculated is also included under the heading “Non-GAAP Financial Measures.”

Business Highlights

  • Email Security 3.0 advances cyber resilience beyond the network perimeter to address pervasive threats seeking to defraud brands and reputations.
  • Mimecast Secure Email Gateway was recognized as a 2019 Gartner Peer Insights Customers’ Choice for Email Security. 
  • Mimecast's API platform expanded to include integration with Rapid7®.
  • Announced that Alpna Doshi will join our board of directors in December as an independent director and a member of the Compensation Committee.
  • Announced that Heather Bentley will join Mimecast’s leadership team later in November as the Senior Vice President of Customer Operations.
  • Susan Vaillancourt joined Mimecast as Vice President, Brand Strategy.
  • Mimecast opened a new 79,000 square foot headquarters in central London to support expansion and job creation.
  • More than 500 customers and partners came together in October to attend Mimecast’s Cyber Resilience Summit in Dallas, TX.
  • Mimecast Targeted Threat Protection added 1,200 new subscriptions in the second quarter. In total, 25,700 customers now use the service.
  • On average, Mimecast customers used 3.2 services in the second quarter of 2020. This represents an increase from the average of 3.0 services used by customers in the second quarter of 2019.

Business Outlook

Mimecast is providing guidance for the third quarter and fiscal year 2020.

Third Quarter 2020 Guidance:

For the third quarter of 2020, revenue is expected to be in the range of $107.4 million to $108.5 million and constant currency revenue growth is expected to be in the range of 24% to 25%. Adjusted EBITDA for the third quarter is expected to be in the range of $17.7 million to $18.7 million. Our revenue guidance for the third quarter is based on exchange rates as of October 31, 2019 and includes an estimated negative impact of $0.9 million resulting from the strengthening of the U.S. dollar compared to the prior year.

Fiscal Year 2020 Guidance:

For the full year 2020, revenue is expected to be in the range of $420.8 million to $425.3 million and constant currency revenue growth is expected to be in the range of 26% to 28%. Adjusted EBITDA is expected to be in the range of $72.9 million to $74.4 million. Our revenue guidance for full year 2020 is based on exchange rates as of October 31, 2019 and includes an estimated negative impact of $9.2 million resulting from the strengthening of the U.S. dollar compared to the prior year, and a positive foreign exchange impact of $2.0 million compared to our prior fiscal year 2020 guidance.

GAAP net loss is the most comparable GAAP measure to Adjusted EBITDA. Adjusted EBITDA differs from GAAP net loss in that it excludes depreciation, amortization, disposals and impairment of long-lived assets, acquisition-related gains and expenses, litigation-related expenses, share-based compensation expense, restructuring expense, interest income and interest expense, the provision for income taxes and foreign exchange income (expense). Prior to the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (ASC 842), on April 1, 2019, Adjusted EBITDA also included rent paid in the period related to locations which had been accounted for as build-to-suit facilities. Mimecast is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort. Therefore, Mimecast has not provided guidance for GAAP net loss or a reconciliation of forward-looking Adjusted EBITDA guidance to GAAP net loss.

Conference Call and Webcast Information

Mimecast will host a conference call to discuss these financial results for investors and analysts at 4:30 pm EST (UTC-05:00) on November 7, 2019.  To access the conference call, dial (844) 402-0879 for the U.S. and Canada and (478) 219-0767 for international callers and enter conference ID# 3396635.  The call will also be webcast live on the investor relations section of the Company’s website https://investors.mimecast.com.  An audio replay of the call will be available two hours after the live call ends by dialing (855) 859-2056 for U.S. and Canada and (404) 537-3406 for international callers and entering conference ID# 3396635.  In addition, an archive of the webcast will be available on the investor relations section of the Company’s website https://investors.mimecast.com.

About Mimecast

Mimecast is a cybersecurity provider that helps thousands of organizations worldwide make email safer, restore trust and bolster cyber resilience. Mimecast’s expanded cloud suite enables organizations to implement a comprehensive cyber resilience strategy. From email and web security, archive and data protection to awareness training, uptime assurance and more, Mimecast helps organizations stand strong in the face of cyberattacks, human error and technical failure. www.mimecast.com

Mimecast and the Mimecast logo are registered trademarks of Mimecast. All other third-party trademarks and logos contained in this press release are the property of their respective owners.

Non-GAAP Financial Measures

We have provided in this press release financial information that has not been prepared in accordance with GAAP. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe 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 our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables included below in this press release.

Revenue Constant Currency Growth Rate. We believe revenue constant currency growth rate is a key indicator of our operating results. We calculate revenue constant currency growth rate by translating revenue from entities reporting in foreign currencies into U.S. dollars using the comparable foreign currency exchange rates from the prior fiscal period. To determine projected revenue growth rates on a constant currency basis for the third quarter and full year 2020, expected revenue from entities reporting in foreign currencies is translated into U.S. dollars using the comparable prior year period’s monthly average foreign currency exchange rates.

Non-GAAP gross profit and Non-GAAP gross profit percentage. We define non-GAAP gross profit as gross profit, adjusted to exclude: share-based compensation expense and amortization of acquired intangible assets. We define non-GAAP gross profit percentage as non-GAAP gross profit divided by GAAP revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of non-cash charges for share-based compensation expense and amortization of acquired intangibles so that our management and investors can compare our recurring core business net results over multiple periods. There are a number of limitations related to the use of non-GAAP gross profit and non-GAAP gross profit percentage versus gross profit and gross profit percentage calculated in accordance with GAAP. For example, as noted above, non-GAAP gross profit and gross profit percentage excludes share-based compensation expense and amortization of acquired intangible assets. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP gross profit and non-GAAP gross profit percentage and evaluates non-GAAP gross profit and non-GAAP gross profit percentage together with gross profit and gross profit percentage calculated in accordance with GAAP.

Non-GAAP operating expenses and Non-GAAP income from operations. We provide investors with certain non-GAAP financial measures, including non-GAAP research and development expense, non-GAAP sales and marketing expense, non-GAAP general and administrative expense and non-GAAP income from operations (collectively the “non-GAAP operating financial measures”). These non-GAAP operating financial measures exclude the following, as applicable (as reflected in the reconciliation tables that follow):  share-based compensation expense, amortization of acquired intangible assets, impairment of long-lived assets, restructuring expense, acquisition-related gains and expenses and litigation-related expenses. We consider these non-GAAP operating financial measures to be useful metrics for management and investors because it excludes the effect of share-based compensation expense and certain “one-time” charges so that our management and investors can compare our recurring core business net results over multiple periods. There are a number of limitations related to the use of these non-GAAP operating financial measures versus the applicable financial measures calculated in accordance with GAAP. For example, as noted above, the non-GAAP operating financial measures exclude share-based compensation expense and certain “one-time” charges. In addition, the components of the costs that we exclude in our calculation of non-GAAP operating financial measures may differ from the components that our peer companies exclude when they report their non-GAAP results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating financial measures and evaluates non-GAAP operating financial measures together with the applicable financial measures calculated in accordance with GAAP.

Non-GAAP net income. We define non-GAAP net income as net loss, adjusted to exclude: share-based compensation expense, amortization of acquired intangible assets, impairment of long-lived assets, restructuring expense, acquisition-related gains and expenses, litigation-related expenses and the income tax effect of non-GAAP adjustments. We consider this non-GAAP financial measure to be a useful metric for management and investors because it excludes the effect of share-based compensation expense, certain “one-time” charges and related income tax effects so that our management and investors can compare our recurring core business net results over multiple periods. There are a number of limitations related to the use of non-GAAP net income versus net loss calculated in accordance with GAAP. For example, as noted above, non-GAAP net income excludes share-based compensation expense, certain “one-time” charges and related income tax effects. In addition, the components of the costs that we exclude in our calculation of non-GAAP net income may differ from the components that our peer companies exclude when they report their non-GAAP results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and evaluating non-GAAP net income together with net loss calculated in accordance with GAAP.

Adjusted EBITDA and Adjusted EBITDA margin. We believe that Adjusted EBITDA and Adjusted EBITDA margin are key indicators of our operating results. We define Adjusted EBITDA as net loss, adjusted to exclude: depreciation, amortization, disposals and impairment of long-lived assets, acquisition-related gains and expenses, litigation-related expenses, share-based compensation expense, restructuring expense, interest income and interest expense, the provision for income taxes and foreign exchange income (expense). Prior to the adoption of ASC 842 on April 1, 2019, Adjusted EBITDA also included rent paid in the period related to locations which had been accounted for as build-to-suit facilities.  We define Adjusted EBITDA margin as Adjusted EBITDA over GAAP revenue in the period. We use Adjusted EBITDA as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies, to communicate with our board of directors concerning our financial performance and for establishing incentive compensation metrics for executives and other senior employees.

Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property, equipment and capitalized software, can be used for strategic opportunities, including investing in our business, and strengthening the balance sheet. Analysis of free cash flow facilitates management’s comparisons of our operating results to competitors’ operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating our company is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Management compensates for this limitation by providing information about our capital expenditures on the face of the cash flow statement and in the liquidity and capital resources discussion included in our annual and quarterly reports filed with the Securities and Exchange Commission.

Safe Harbor for Forward-Looking Statements

Statements in this press release regarding management’s future expectations, beliefs, intentions, goals, strategies, plans or prospects, including, without limitation, Mimecast’s Email Security 3.0 initiatives, the impact of API platform integrations, and Mimecast’s future financial performance on both a GAAP and non-GAAP basis under the heading “Business Outlook” above, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words “predicts,” “plan,” “expects,” “anticipates,” “believes,” “goal,” “target,” “estimate,” “potential,” “may,” “might,” “could,” “see,” “seek,” “forecast,” and similar words. Mimecast intends all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including, but not limited to, the ability to attract new customers and retain existing customers, competitive conditions, data breaches, compliance with data privacy and data transfer laws and regulations, service disruptions, the impact of acquisitions, the effect of the withdrawal of the United Kingdom from the European Union, risks associated with failure to protect the Company’s intellectual property or claims that the Company infringes the intellectual property of others, the global nature of the Company’s business, including foreign currency exchange rate fluctuations, and the other risks, uncertainties and factors detailed in Mimecast’s filings with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, Mimecast’s actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. Mimecast is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


MIMECAST LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
Revenue   $ 103,357     $ 82,169     $ 202,588     $ 160,573  
Cost of revenue     26,134       21,938       51,601       42,914  
Gross profit     77,223       60,231       150,987       117,659  
Operating expenses                                
Research and development     19,320       14,157       38,705       27,257  
Sales and marketing     41,165       34,705       84,535       68,908  
General and administrative     16,756       12,448       32,203       24,662  
Restructuring           (170 )           (170 )
Total operating expenses     77,241       61,140       155,443       120,657  
Loss from operations     (18 )     (909 )     (4,456 )     (2,998 )
Other income (expense)                                
Interest income     1,114       543       2,096       987  
Interest expense     (1,195 )     (1,568 )     (2,475 )     (2,095 )
Foreign exchange (expense) income and other, net     (704 )     498       252       57  
Total other income (expense), net     (785 )     (527 )     (127 )     (1,051 )
Loss before income taxes     (803 )     (1,436 )     (4,583 )     (4,049 )
Provision for income taxes     118       622       348       1,480  
Net Loss   $ (921 )   $ (2,058 )   $ (4,931 )   $ (5,529 )
                                 
Net loss per ordinary share                                
  Basic and diluted   $ (0.01 )   $ (0.03 )   $ (0.08 )   $ (0.09 )
                                 
Weighted-average number of ordinary shares outstanding                                
  Basic and diluted     61,829       59,800       61,638       59,489  


MIMECAST LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)

    As of September 30,     As of March 31,  
    2019     2019  
Assets                
Current assets                
Cash and cash equivalents   $ 191,172     $ 137,576  
Short-term investments     8,017       35,941  
Accounts receivable, net     70,172       80,953  
Deferred contract costs, net     9,491       8,140  
Prepaid expenses and other current assets     17,948       25,871  
Total current assets     296,800       288,481  
                 
Property and equipment, net     74,095       94,202  
Operating lease right-of-use assets     127,254        
Intangible assets, net     31,572       30,623  
Goodwill     110,467       107,575  
Deferred contract costs, net of current portion     31,877       28,250  
Other assets     6,652       5,156  
Total assets   $ 678,717     $ 554,287  
                 
Liabilities and shareholders' equity                
Current liabilities                
Accounts payable   $ 12,574     $ 9,457  
Accrued expenses and other current liabilities     42,256       44,309  
Deferred revenue     161,686       163,102  
Current portion of finance lease obligations     949       844  
Current portion of operating lease obligations     29,632        
Current portion of long-term debt     5,321       4,059  
Total current liabilities     252,418       221,771  
                 
Deferred revenue, net of current portion     11,598       12,472  
Long-term finance lease obligations     859       1,381  
Operating lease liabilities     116,624        
Long-term debt     89,856       92,797  
Construction financing lease obligations           36,650  
Other non-current liabilities     4,742       15,581  
Total liabilities     476,097       380,652  
                 
Commitments and contingencies                
                 
Shareholders' equity                
Ordinary shares, $0.012 par value, 300,000,000 shares authorized; 61,953,197 and 61,158,051 shares issued and outstanding as of September 30, 2019 and March 31, 2019, respectively     743       734  
Additional paid-in capital     292,575       263,388  
Accumulated deficit     (86,391 )     (83,632 )
Accumulated other comprehensive loss     (4,307 )     (6,855 )
Total shareholders' equity     202,620       173,635  
Total liabilities and shareholders' equity   $ 678,717     $ 554,287  


MIMECAST LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
Operating activities                                
Net loss   $ (921 )   $ (2,058 )   $ (4,931 )   $ (5,529 )
Adjustments to reconcile net loss to net cash provided by operating activities:                                
Depreciation and amortization     7,538       7,354       14,980       14,280  
Share-based compensation expense     9,938       6,109       19,972       11,290  
Amortization of deferred contract costs     2,260       1,493       4,376       2,879  
Amortization of debt issuance costs     114       123       271       123  
Amortization of operating lease right-of-use assets     8,050             15,727        
Other non-cash items     (29 )     (353 )     (71 )     (372 )
Unrealized currency losses (gains) on foreign denominated transactions     993       (388 )     137       (499 )
Changes in assets and liabilities:                                
Accounts receivable     (3,172 )     (3,622 )     8,755       2,457  
Prepaid expenses and other current assets     (2,765 )     1,713       6,091       3,282  
Deferred contract costs     (5,434 )     (3,936 )     (10,240 )     (7,771 )
Other assets     (655 )     (1,110 )     (1,293 )     (1,208 )
Accounts payable     2,884       2,863       2,076       2,971  
Deferred revenue     1,353       4,125       2,648       6,646  
Operating lease liabilities     (4,963 )           (10,108 )      
Accrued expenses and other liabilities     2,492       156       (2,183 )     554  
Net cash provided by operating activities     17,683       12,469       46,207       29,103  
Investing activities                                
Purchases of strategic investments                 (3,025 )      
Purchases of investments           (6,984 )           (6,984 )
Maturities of investments     14,000       23,500       28,000       40,500  
Purchases of property, equipment and capitalized software     (13,705 )     (8,268 )     (22,866 )     (15,843 )
Payments for acquisitions, net of cash acquired           (108,913 )           (108,913 )
Net cash provided by (used in) investing activities     295       (100,665 )     2,109       (91,240 )
Financing activities                                
Proceeds from issuance of ordinary shares     1,937       3,307       10,807       9,211  
Withholding taxes related to net share settlement of restricted share units     (397 )           (1,534 )      
Payments on debt     (1,250 )     (625 )     (1,875 )     (625 )
Payments on finance lease obligations     (252 )     (239 )     (418 )     (442 )
Payments on construction financing lease obligations           (427 )           (840 )
Proceeds from issuance of debt, net of issuance costs           97,748             97,748  
Net cash provided by financing activities     38       99,764       6,980       105,052  
Effect of foreign exchange rates on cash     (1,656 )     (217 )     (1,700 )     (2,373 )
Net increase in cash and cash equivalents     16,360       11,351       53,596       40,542  
                                 
Cash and cash equivalents at beginning of period     174,812       107,530       137,576       78,339  
Cash and cash equivalents at end of period   $ 191,172     $ 118,881     $ 191,172     $ 118,881  


Key Performance Indicators

In addition to traditional financial metrics, such as revenue and revenue growth trends, we monitor several other non-GAAP financial measures and non-financial metrics to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies. The key performance indicators that we monitor are as follows:

    Three months ended September 30,     Six Months Ended September 30,  
    2019     2018     2019     2018  
    (dollars in thousands)  
Revenue constant currency growth rate (1)     29 %     32 %     30 %     32 %
Revenue retention rate (2)     110 %     110 %     110 %     110 %
Total customers (3)     36,100       32,200       36,100       32,200  
Gross profit percentage     75 %     73 %     75 %     73 %
Adjusted EBITDA (1)   $ 19,986     $ 12,312     $ 33,489     $ 22,270  


(1 ) Adjusted EBITDA and revenue constant currency growth rates are non-GAAP measures. For a reconciliation of Adjusted EBITDA and revenue constant currency growth rates to the nearest comparable GAAP measures, see “Reconciliation of Non-GAAP Financial Measures” below.
(2 ) We calculate our revenue retention rate by annualizing constant currency revenue recorded on the last day of the measurement period for only those customers in place throughout the entire measurement period. This revenue includes renewed revenue contracts as well as additional revenue derived from the sale of additional seat licenses as well as additional services sold to these existing customers. We divide the result by revenue on a constant currency basis on the first day of the measurement period for all customers in place at the beginning of the measurement period. The measurement period is the trailing twelve months. The revenue on a constant currency basis is based on the average exchange rates in effect during the respective period.
(3 ) Reflects the customer count on the last day of the period rounded to the nearest hundred customers. We define a customer as an entity with an active subscription contract as of the measurement date. A customer is typically a parent company or, in a few cases, a significant subsidiary that works with us directly.


Reconciliation of Non-GAAP Financial Measures

The following table presents a reconciliation of revenue growth rate, as reported, to revenue constant currency growth rate:

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
    (dollars in thousands)  
Reconciliation of Revenue Constant Currency Growth Rate:                                
Revenue, as reported   $ 103,357     $ 82,169     $ 202,588     $ 160,573  
Revenue year-over-year growth rate, as reported     26 %     30 %     26 %     32 %
Estimated impact of foreign currency fluctuations     3 %     2 %     4 %     %
Revenue constant currency growth rate     29 %     32 %     30 %     32 %
                                 
Exchange rate for period                                
USD     1.000       1.000       1.000       1.000  
ZAR     0.068       0.071       0.069       0.075  
GBP     1.233       1.303       1.259       1.332  
AUD     0.686       0.731       0.693       0.744  


The following tables present a reconciliation of selected GAAP results to Non-GAAP results (in thousands):

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
    (dollars in thousands)  
Reconciliation of Non-GAAP Gross Profit:                                
GAAP gross profit   $ 77,223     $ 60,231     $ 150,987     $ 117,659  
GAAP gross profit percentage     75 %     73 %     75 %     73 %
                                 
Plus:                                
Share-based compensation expense     906       420       1,693       824  
Amortization of acquired intangible assets     628       348       1,253       387  
Non-GAAP gross profit   $ 78,757     $ 60,999     $ 153,933     $ 118,870  
Non-GAAP gross profit percentage     76 %     74 %     76 %     74 %


    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
GAAP research and development   $ 19,320     $ 14,157     $ 38,705     $ 27,257  
Less:                                
  Share-based compensation expense     2,693       1,571       5,242       2,901  
  Amortization of acquired intangible assets                        
  Acquisition-related expenses                        
  Litigation-related expenses                        
Non-GAAP research and development   $ 16,627     $ 12,586     $ 33,463     $ 24,356  


    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
GAAP sales and marketing   $ 41,165     $ 34,705     $ 84,535     $ 68,908  
Less:                                
  Share-based compensation expense     3,531       1,965       7,313       3,796  
  Amortization of acquired intangible assets     24       22       54       26  
  Acquisition-related expenses                        
  Litigation-related expenses                        
Non-GAAP sales and marketing   $ 37,610     $ 32,718     $ 77,168     $ 65,086  


    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
GAAP general and administrative   $ 16,756     $ 12,448     $ 32,203     $ 24,662  
Less:                                
  Share-based compensation expense     2,808       2,153       5,724       3,769  
  Amortization of acquired intangible assets                        
  Acquisition-related expenses     71       717       71       1,447  
  Litigation-related expenses     2,350             2,700        
Non-GAAP general and administrative   $ 11,527     $ 9,578     $ 23,708     $ 19,446  


    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
GAAP loss from operations   $ (18 )   $ (909 )   $ (4,456 )   $ (2,998 )
Plus:                                
  Share-based compensation expense     9,938       6,109       19,972       11,290  
  Amortization of acquired intangible assets     652       370       1,307       413  
  Acquisition-related expenses     71       717       71       1,447  
  Restructuring           (170 )           (170 )
  Litigation-related expenses     2,350             2,700        
Non-GAAP income from operations   $ 12,993     $ 6,117     $ 19,594     $ 9,982  

The following table presents a reconciliation of Net loss to Non-GAAP net income (in thousands, except per share amounts):

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
Reconciliation of Non-GAAP Net Income:                                
Net loss   $ (921 )   $ (2,058 )   $ (4,931 )   $ (5,529 )
Share-based compensation expense     9,938       6,109       19,972       11,290  
Amortization of acquired intangible assets     652       370       1,307       413  
Acquisition-related expenses (1)     71       717       71       1,447  
Litigation-related expenses (2)     2,350             2,700        
Restructuring           (170 )           (170 )
Gain on previously held asset           (338 )           (338 )
Income tax effect of Non-GAAP adjustments     (3,639 )     (1,028 )     (5,705 )     (1,303 )
Non-GAAP net income   $ 8,451     $ 3,602     $ 13,414     $ 5,810  
Non-GAAP net income per ordinary share - basic   $ 0.14     $ 0.06     $ 0.22     $ 0.10  
Non-GAAP net income per ordinary share - diluted   $ 0.13     $ 0.06     $ 0.21     $ 0.09  
Weighted-average number of ordinary shares used in
  computing Non-GAAP net income per ordinary share:
                               
Basic     61,829       59,800       61,638       59,489  
Diluted     63,889       62,783       63,886       62,689  
  1. Acquisition-related expenses relate to costs incurred for acquisition activity. See Note 10 of the notes to our consolidated financial statements, included in the Company’s Quarterly Report on Form 10-Q for further information.
  2. Litigation-related expenses relate to amounts accrued for loss contingencies. See Note 13 of the notes to our consolidated financial statements, included in the Company’s Quarterly Report on Form 10-Q for further information.

The following table presents a reconciliation of Net loss to Adjusted EBITDA (in thousands):

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
Reconciliation of Adjusted EBITDA:                                
Net loss   $ (921 )   $ (2,058 )   $ (4,931 )   $ (5,529 )
Depreciation, amortization and disposals of long-lived assets     7,538       7,354       14,993       14,280  
Rent expense related to build-to-suit facilities           (1,028 )           (1,918 )
Interest expense, net     81       1,025       379       1,108  
Provision for income taxes     118       622       348       1,480  
Share-based compensation expense     9,938       6,109       19,972       11,290  
Restructuring           (170 )           (170 )
Foreign exchange expense (income)     811       79       (43 )     620  
Acquisition-related expenses (1)     71       717       71       1,447  
Litigation-related expenses (2)     2,350             2,700        
Gain on previously held asset           (338 )           (338 )
Adjusted EBITDA   $ 19,986     $ 12,312     $ 33,489     $ 22,270  
  1. Acquisition-related expenses relate to costs incurred for acquisition activity. See Note 10 of the notes to our consolidated financial statements, included in the Company’s Quarterly Report on Form 10-Q for further information.
  2. Litigation-related expenses relate to amounts accrued for loss contingencies. See Note 13 of the notes to our consolidated financial statements, included in the Company’s Quarterly Report on Form 10-Q for further details.

The following table presents a reconciliation of Net cash provided by operating activities to Free Cash Flow (in thousands):

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
Reconciliation of Free Cash Flow:                                
Net cash provided by operating activities   $ 17,683     $ 12,469     $ 46,207     $ 29,103  
Purchases of property, equipment and capitalized software     (13,705 )     (8,268 )     (22,866 )     (15,843 )
Free Cash Flow   $ 3,978     $ 4,201     $ 23,341     $ 13,260  

Share-based compensation expense for the three and six months ended September 30, 2019 and 2018 (in thousands):

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
Cost of revenue   $ 906     $ 420     $ 1,693     $ 824  
Research and development     2,693       1,571       5,242       2,901  
Sales and marketing     3,531       1,965       7,313       3,796  
General and administrative     2,808       2,153       5,724       3,769  
Total share-based compensation expense   $ 9,938     $ 6,109     $ 19,972     $ 11,290  

Amortization of acquired intangible assets for the three and six months ended September 30, 2019 and 2018 (in thousands):

    Three months ended September 30,     Six months ended September 30,  
    2019     2018     2019     2018  
Cost of revenue   $ 628     $ 348     $ 1,253     $ 387  
Sales and marketing     24       22       54       26  
Total amortization of acquired intangible assets   $ 652     $ 370     $ 1,307     $ 413  

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Press Contact
Alison Raymond Walsh
Press@Mimecast.com 
617-393-7126

Investor Contact
Robert Sanders
Investors@Mimecast.com 
617-393-7074

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Source: Mimecast Limited

Primary IR Contact

Robert Sanders
Mimecast Limited
(800) 614-4530
investors@mimecast.com