News Releases

Mimecast Announces Second Quarter 2021 Financial Results

November 2, 2020 at 4:10 PM EST

Exceeded High End of Revenue Guidance by $0.9 Million

Solid Execution and Capital Discipline Drove Improved Operating Leverage

LEXINGTON, Mass., Nov. 02, 2020 (GLOBE NEWSWIRE) -- Mimecast Limited (NASDAQ: MIME), a leading email and data security company, today announced financial results for the second fiscal quarter ended September 30, 2020.

Overall Highlights

  • Total revenue of $122.7 million grew 19% year-over-year on a GAAP and constant currency basis.
  • Added 500 net new customers. Total customers 39,200 globally.
  • Revenue retention rate of 105%.
  • GAAP gross profit percentage of 76%, Non-GAAP gross profit percentage of 78%.
  • GAAP EPS of $0.15 per diluted share, Non-GAAP EPS of $0.32 per diluted share.
  • Named a leader in the Gartner Magic Quadrant for Enterprise Information Archiving.
  • Achieved Federal Risk and Authorization Management Program (FedRAMP) ‘Ready’ status, a precursor to becoming FedRAMP fully authorized.
  • Endorsed under Australia’s Information Security Registered Assessors Program.
  • Hosted a virtual ribbon cutting commencing commercial operation of a Mimecast Data Center Pair in Canada.
  • Mimecast and CrowdStrike Announce an Integration to Strengthen the Security Posture of Joint Customers

“We are pleased to deliver results that underscore the strength and durability of our business model, and our success in evolving our platform to anticipate customers’ needs and the changing nature of cyber threats,” said Peter Bauer, chief executive officer of Mimecast. “Amid a challenging operating environment, we are focusing on the elements we can control, winning new customers, strengthening our relationships with existing customers by expanding and innovating our platform, and running our business efficiently and profitably.”

Mimecast’s chief financial officer, Rafe Brown, commented, “The second quarter was marked by operational focus that led us to beat the high end of our revenue guidance while exceeding our profitability goals. We continue to build long-term efficiencies into our operating model to drive bottom-line margin expansion.”

Financial and Operating Highlights

  • Revenue: Revenue for the second quarter of 2021 was $122.7 million, an increase of 19% compared to revenue of $103.4 million in the second quarter of 2020. Revenue on a constant currency basis increased 19% compared to the second quarter of 2020.
  • Customers: Added 500 net new customers in the second quarter of 2021, and now serve 39,200 organizations globally.
  • Revenue Retention Rate: Revenue retention rate was 105% in the second quarter of 2021.
  • Gross Profit Percentage: Gross profit percentage was 76% in the second quarter of 2021, compared to 75% in the second quarter of 2020.
  • Non-GAAP Gross Profit Percentage: Non-GAAP gross profit percentage was 78% in the second quarter of 2021, compared to 76% in the second quarter of 2020.
  • Net Income: Net income was $10.1 million, or $0.15 per diluted share, based on 65.6 million diluted shares outstanding in the second quarter of 2021, compared to net loss of $0.9 million, or $(0.01) per diluted share, based on 61.8 million diluted shares outstanding in the second quarter of 2020.
  • Non-GAAP Net Income: Non-GAAP net income was $20.7 million, or $0.32 per diluted share, based on 65.6 million diluted shares outstanding in the second quarter of 2021, compared to non-GAAP net income of $8.5 million or $0.13 per diluted share, based on 63.9 million diluted shares outstanding in the second quarter of 2020.
  • Adjusted EBITDA: Adjusted EBITDA was $33.6 million in the second quarter of 2021, representing an Adjusted EBITDA margin of 27.4%, up from 19.3% in the second quarter of 2020.
  • Operating Cash Flow: Operating cash flow was $31.0 million in the second quarter of 2021, compared to $17.7 million in the second quarter of 2020.
  • Free Cash Flow and Cash: Free cash flow was $21.6 million in the second quarter of 2021, compared to $4.0 million in the second quarter of 2020. Cash and cash equivalents as of September 30, 2020 were $230.7 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.”

Financial Outlook

Mimecast is providing guidance for the third quarter and fiscal year 2021.

Third Quarter 2021 Guidance:

  • For the third quarter of 2021, revenue is expected to be in the range of $126.0 million to $127.0 million and constant currency revenue growth is expected to be in the range of 15% to 16%.
  • Adjusted EBITDA for the third quarter is expected to be in the range of $28.0 million to $29.0 million.
  • Operating cash flow for the third quarter is expected to be approximately $24.0 million.
  • Free Cash flow for the third quarter is expected to be approximately $16.0 million.

Our revenue guidance for the third quarter is based on exchange rates as of October 26, 2020 and includes an estimated negative impact of $0.5 million resulting from the strengthening of the U.S. dollar compared to the prior year.

Fiscal Year 2021 Guidance:

  • For the full year 2021, revenue is expected to be in the range of $490.5 million to $493.5 million and constant currency revenue growth is expected to be in the range of 16% to 17%.
  • Foreign exchange rate fluctuations are negatively impacting this guidance by an estimated $4.4 million compared to the rates in effect in the prior year.
  • Full year 2021 Adjusted EBITDA is expected to be in the range of $109.0 million to $110.5 million.
  • Operating cash flow for the full year 2021 is expected to be in the range of $116.5 million to $118.0 million.
  • Free Cash Flow for the full year 2021 is expected to be in the range of $82.5 million to $84.0 million.

GAAP net income (loss) is the most comparable GAAP measure to Adjusted EBITDA. Adjusted EBITDA differs from GAAP net income (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). 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 income (loss) or a reconciliation of forward-looking Adjusted EBITDA guidance to GAAP net income (loss).

The financial guidance provided above includes forward-looking statements within the meaning of U.S. securities laws. While the financial guidance considers the anticipated impact of the global COVID-19 pandemic, the societal and economic impact of the pandemic is unprecedented and the future effect of the pandemic on the global economy and Mimecast’s financial results is highly uncertain. Mimecast’s actual results may differ materially. See “Safe Harbor for Forward-Looking Statements” below.

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 2, 2020. 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# 7783078. 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# 7783078. 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 (NASDAQ: MIME) was born in 2003 with a focus on delivering relentless protection. Each day, we take on cyber disruption for our tens of thousands of customers around the globe; always putting them first, and never giving up on tackling their biggest security challenges together. We are the company that built an intentional and scalable design ideology that solves the number one cyberattack vector – email. We continuously invest to thoughtfully integrate brand protection, security awareness training, web security, compliance and other essential capabilities. Mimecast is here to help protect large and small organizations from malicious activity, human error and technology failure; and to lead the movement toward building a more resilient world. 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 2021, 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 intangible assets 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 income (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 income (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 income (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 income (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). 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, the impact of the global COVID-19 pandemic on Mimecast’s operations and financial performance, the impact of foreign exchange rates, Mimecast’s achievement of FedRAMP ‘Ready’ status as a precursor to becoming FedRAMP fully authorized, the strength and durability of Mimecast’s business model, the evolution of Mimecast’s product platform, future operating efficiencies, and Mimecast’s future financial performance on both a GAAP and non-GAAP basis under the heading “Financial 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, uncertainties and risks relating to the impact of the global COVID-19 pandemic on the Company’s business, operations, employees and financial results, the ability to attract new customers and retain existing customers, particularly during challenging economic times, competitive conditions, data breaches, compliance with data privacy and data transfer laws and regulations, service disruptions, 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 successful integration of the Company’s acquisitions, including DMARC Analyzer B.V., Segasec Labs Limited and MessageControl and other acquisitions the Company may complete, the global nature of the Company’s business, including foreign currency exchange rate fluctuations and the potential disparate economic impact of the global COVID-19 pandemic on the jurisdictions in which the Company operates, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
Revenue   $ 122,693     $ 103,357     $ 237,869     $ 202,588  
Cost of revenue     29,742       26,134       58,211       51,601  
Gross profit     92,951       77,223       179,658       150,987  
Operating expenses                                
Research and development     22,287       19,320       45,089       38,705  
Sales and marketing     43,994       41,165       88,037       84,535  
General and administrative     16,583       16,756       33,751       32,203  
Total operating expenses     82,864       77,241       166,877       155,443  
Income (loss) from operations     10,087       (18 )     12,781       (4,456 )
Other income (expense)                                
Interest income     174       1,114       351       2,096  
Interest expense     (790 )     (1,195 )     (1,673 )     (2,475 )
Foreign exchange income (expense) and other, net     1,161       (704 )     2,924       252  
Total other income (expense), net     545       (785 )     1,602       (127 )
Income (loss) before income taxes     10,632       (803 )     14,383       (4,583 )
Provision for income taxes     582       118       1,195       348  
Net income (loss)   $ 10,050     $ (921 )   $ 13,188     $ (4,931 )
                                 
Net income (loss) per ordinary share                                
Basic   $ 0.16     $ (0.01 )   $ 0.21     $ (0.08 )
Diluted   $ 0.15     $ (0.01 )   $ 0.20     $ (0.08 )
                                 
Weighted-average number of ordinary shares outstanding                                
Basic     63,517       61,829       63,268       61,638  
Diluted     65,581       61,829       65,114       61,638  

 

 

 

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

    As of September 30,     As of March 31,  
    2020     2020  
Assets                
Current assets                
Cash and cash equivalents   $ 230,708     $ 173,958  
Accounts receivable, net     81,143       97,659  
Deferred contract costs, net     12,988       11,133  
Prepaid expenses and other current assets     19,799       16,145  
Total current assets     344,638       298,895  
                 
Property and equipment, net     86,885       85,178  
Operating lease right-of-use assets     134,201       116,564  
Intangible assets, net     45,130       38,394  
Goodwill     169,812       150,525  
Deferred contract costs, net of current portion     40,775       36,664  
Other assets     3,363       3,614  
Total assets   $ 824,804     $ 729,834  
                 
Liabilities and shareholders' equity                
Current liabilities                
Accounts payable   $ 10,169     $ 14,907  
Accrued expenses and other current liabilities     47,598       41,607  
Deferred revenue     189,956       194,151  
Current portion of finance lease obligations     755       1,058  
Current portion of operating lease liabilities     34,515       30,379  
Current portion of long-term debt     7,828       6,573  
Total current liabilities     290,821       288,675  
                 
Deferred revenue, net of current portion     11,356       12,816  
Long-term finance lease obligations     15       323  
Operating lease liabilities     118,773       105,321  
Long-term debt     99,532       86,258  
Other non-current liabilities     10,056       4,386  
Total liabilities     530,553       497,779  
                 
Commitments and contingencies                
                 
Shareholders' equity                
Ordinary shares, $0.012 par value, 300,000,000 shares authorized; 63,842,964 and 62,791,691 shares issued and outstanding as of September 30, 2020 and March 31, 2020, respectively     766       754  
Additional paid-in capital     368,813       325,808  
Accumulated deficit     (70,472 )     (83,660 )
Accumulated other comprehensive loss     (4,856 )     (10,847 )
Total shareholders' equity     294,251       232,055  
    Total liabilities and shareholders' equity   $ 824,804     $ 729,834  

 

 

 

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

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
Operating activities                                
Net income (loss)   $ 10,050     $ (921 )   $ 13,188     $ (4,931 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                                
Depreciation and amortization     9,495       7,538       18,347       14,980  
Share-based compensation expense     13,619       9,938       27,272       19,972  
Amortization of deferred contract costs     3,175       2,260       6,044       4,376  
Amortization of debt issuance costs     115       114       229       271  
Amortization of operating lease right-of-use assets     7,504       8,050       14,615       15,727  
Other non-cash items           (29 )           (71 )
Unrealized currency (gains) losses on foreign denominated transactions     (684 )     993       (3,417 )     137  
Changes in assets and liabilities:                                
Accounts receivable     6,893       (3,172 )     19,298       8,755  
Prepaid expenses and other current assets     (2,651 )     (2,765 )     (3,148 )     6,091  
Deferred contract costs     (5,527 )     (5,434 )     (10,730 )     (10,240 )
Other assets     (502 )     (655 )     (346 )     (1,293 )
Accounts payable     (464 )     2,884       (2,501 )     2,076  
Deferred revenue     (6,033 )     1,353       (11,678 )     2,648  
Operating lease liabilities     (6,954 )     (4,963 )     (15,175 )     (10,108 )
Accrued expenses and other liabilities     3,007       2,492       8,350       (2,183 )
Net cash provided by operating activities     31,043       17,683       60,348       46,207  
Investing activities                                
Purchases of property, equipment and capitalized software     (9,399 )     (13,705 )     (20,170 )     (22,866 )
Purchases of strategic investments                       (3,025 )
Maturities of investments           14,000             28,000  
Payments for acquisitions, net of cash acquired     (17,044 )           (17,044 )      
Net cash (used in) provided by investing activities     (26,443 )     295       (37,214 )     2,109  
Financing activities                                
Proceeds from issuance of ordinary shares     10,840       1,937       18,975       11,099  
Withholding taxes related to net share settlement of ESPP purchases and vesting of RSUs     (733 )     (397 )     (3,308 )     (1,826 )
Payments on debt     (1,875 )     (1,250 )     (3,125 )     (1,875 )
Payments on finance lease obligations     (264 )     (252 )     (611 )     (418 )
Proceeds from long-term debt including revolving credit facilities     17,500             17,500        
Net cash provided by financing activities     25,468       38       29,431       6,980  
Effect of foreign exchange rates on cash     2,099       (1,656 )     4,185       (1,700 )
Net increase in cash and cash equivalents     32,167       16,360       56,750       53,596  
                                 
Cash and cash equivalents at beginning of period     198,541       174,812       173,958       137,576  
Cash and cash equivalents at end of period   $ 230,708     $ 191,172     $ 230,708     $ 191,172  

 

 

 

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,  
    2020     2019     2020     2019  
       
    (dollars in thousands)  
Revenue constant currency growth rate (1)     19 %     29 %     20 %     30 %
Revenue retention rate (2)     105 %     110 %     105 %     110 %
Total customers (3)     39,200       36,100       39,200       36,100  
Gross profit percentage     76 %     75 %     76 %     75 %
Adjusted EBITDA (1)   $ 33,604     $ 19,986     $ 59,269     $ 33,489  

____________

(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. In determining the number of customers, we do not include customers we acquired from DMARC Analyzer that transact with us on a credit card basis.

 

 

 

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,
 
    2020     2019     2020     2019  
       
    (dollars in thousands)  
Reconciliation of Revenue Constant Currency Growth Rate:                                
Revenue, as reported   $ 122,693     $ 103,357     $ 237,869     $ 202,588  
Revenue year-over-year growth rate, as reported     19 %     26 %     17 %     26 %
Estimated impact of foreign currency fluctuations     %     3 %     3 %     4 %
Revenue constant currency growth rate     19 %     29 %     20 %     30 %
                                 
Exchange rate for period                                
USD     1.000       1.000       1.000       1.000  
ZAR     0.059       0.068       0.057       0.069  
GBP     1.291       1.233       1.266       1.259  
AUD     0.715       0.686       0.686       0.693  

 

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

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
Reconciliation of Non-GAAP Gross Profit:                                
GAAP gross profit   $ 92,951     $ 77,223     $ 179,658     $ 150,987  
GAAP gross profit percentage     76 %     75 %     76 %     75 %
                                 
Plus:                                
Share-based compensation expense     1,163       906       2,288       1,693  
Amortization of acquired intangible assets     1,030       628       1,970       1,253  
Non-GAAP gross profit   $ 95,144     $ 78,757     $ 183,916     $ 153,933  
Non-GAAP gross profit percentage     78 %     76 %     77 %     76 %

 

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
GAAP research and development   $ 22,287     $ 19,320     $ 45,089     $ 38,705  
Less:                                
Share-based compensation expense     3,895       2,693       7,779       5,242  
Amortization of acquired intangible assets                        
Acquisition-related expenses                        
Litigation-related expenses                        
Non-GAAP research and development   $ 18,392     $ 16,627     $ 37,310     $ 33,463  

 

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
GAAP sales and marketing   $ 43,994     $ 41,165     $ 88,037     $ 84,535  
Less:                                
Share-based compensation expense     4,451       3,531       8,888       7,313  
Amortization of acquired intangible assets     33       24       60       54  
Acquisition-related expenses                        
Litigation-related expenses                        
Non-GAAP sales and marketing   $ 39,510     $ 37,610     $ 79,089     $ 77,168  

 

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
GAAP general and administrative   $ 16,583     $ 16,756     $ 33,751     $ 32,203  
Less:                                
Share-based compensation expense     4,110       2,808       8,317       5,724  
Amortization of acquired intangible assets                        
Acquisition-related expenses     302       71       667       71  
Litigation-related expenses           2,350             2,700  
Non-GAAP general and administrative   $ 12,171     $ 11,527     $ 24,767     $ 23,708  

 

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
GAAP income (loss) from operations   $ 10,087     $ (18 )   $ 12,781     $ (4,456 )
Plus:                                
Share-based compensation expense     13,619       9,938       27,272       19,972  
Amortization of acquired intangible assets     1,063       652       2,030       1,307  
Acquisition-related expenses     302       71       667       71  
Litigation-related expenses           2,350             2,700  
Non-GAAP income from operations   $ 25,071     $ 12,993     $ 42,750     $ 19,594  

 

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

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
Reconciliation of Non-GAAP Net Income:                                
Net income (loss)   $ 10,050     $ (921 )   $ 13,188     $ (4,931 )
Share-based compensation expense     13,619       9,938       27,272       19,972  
Amortization of acquired intangible assets     1,063       652       2,030       1,307  
Acquisition-related expenses (1)     302       71       667       71  
Litigation-related expenses (2)           2,350             2,700  
Income tax effect of Non-GAAP adjustments     (4,321 )     (3,639 )     (8,290 )     (5,705 )
Non-GAAP net income   $ 20,713     $ 8,451     $ 34,867     $ 13,414  
Non-GAAP net income per ordinary share - basic   $ 0.33     $ 0.14     $ 0.55     $ 0.22  
Non-GAAP net income per ordinary share - diluted   $ 0.32     $ 0.13     $ 0.54     $ 0.21  
Weighted-average number of ordinary shares used in
computing Non-GAAP net income per ordinary share:
                               
Basic     63,517       61,829       63,268       61,638  
Diluted     65,581       63,889       65,114       63,886  

____________

(1)   Acquisition-related expenses relate to costs incurred for acquisition activity. See Note 10 of the notes to our unaudited condensed consolidated financial statements, included in the Company’s Quarterly Report on Form 10-Q for further information.
(2)   Litigation-related expenses relate to amounts incurred for litigation settlement. See Note 13 of the notes to our unaudited condensed 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 income (loss) to Adjusted EBITDA (in thousands):

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
       
    (in thousands)  
Reconciliation of Adjusted EBITDA:                                
Net income (loss)   $ 10,050     $ (921 )   $ 13,188     $ (4,931 )
Depreciation, amortization and disposals of long-lived assets     9,495       7,538       18,347       14,993  
Interest expense, net     616       81       1,322       379  
Provision for income taxes     582       118       1,195       348  
Share-based compensation expense     13,619       9,938       27,272       19,972  
Foreign exchange (income) expense     (1,060 )     811       (2,722 )     (43 )
Acquisition-related expenses (1)     302       71       667       71  
Litigation-related expenses (2)           2,350             2,700  
Adjusted EBITDA   $ 33,604     $ 19,986     $ 59,269     $ 33,489  

____________

(1)   Acquisition-related expenses relate to costs incurred for acquisition activity. See Note 10 of the notes to our unaudited condensed consolidated financial statements, included in the Company’s Quarterly Report on Form 10-Q for further information.
(2)   Litigation-related expenses relate to amounts incurred for litigation settlement. See Note 13 of the notes to our unaudited condensed 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 cash provided by operating activities to Free Cash Flow (in thousands):

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
Reconciliation of Free Cash Flow:                                
Net cash provided by operating activities   $ 31,043     $ 17,683     $ 60,348     $ 46,207  
Purchases of property, equipment and capitalized software     (9,399 )     (13,705 )     (20,170 )     (22,866 )
Free Cash Flow   $ 21,644     $ 3,978     $ 40,178     $ 23,341  

 

Share-based compensation expense for the three and six months ended September 30, 2020 and 2019 (in thousands):

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
Cost of revenue   $ 1,163     $ 906     $ 2,288     $ 1,693  
Research and development     3,895       2,693       7,779       5,242  
Sales and marketing     4,451       3,531       8,888       7,313  
General and administrative     4,110       2,808       8,317       5,724  
Total share-based compensation expense   $ 13,619     $ 9,938     $ 27,272     $ 19,972  

 

Amortization of acquired intangible assets for the three and six months ended September 30, 2020 and 2019 (in thousands):

    Three months ended
September 30,
    Six months ended
September 30,
 
    2020     2019     2020     2019  
Cost of revenue   $ 1,030     $ 628     $ 1,970     $ 1,253  
Sales and marketing     33       24       60       54  
Total amortization of acquired intangible assets   $ 1,063     $ 652     $ 2,030     $ 1,307  

 

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

    Three months ending
December 31,
    Year ending
March 31,
 
    2020     2021  
Reconciliation of Free Cash Flow:                
Net cash provided by operating activities   $ 24     $ 117 - 118  
Purchases of property, equipment and capitalized software     (8 )     (34 )
Free Cash Flow   $ 16     $ 83 - 84  

 

 

Mimecast Social Media Resources

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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