59% Business Subscription Bookings Growth and Better-than-Expected Profitability

BOSTON, MA – Nov. 01, 2018 — — Carbonite, Inc. (NASDAQ: CARB), a global leader in data protection, today announced financial results for the quarter ended September 30, 2018.

Third Quarter 2018 Highlights:

  • Revenue of $77.7 million increased 26% year-over-year.
  • Non-GAAP revenue of $79.1 million increased 25% year-over-year.1
  • Business subscription bookings of $43.9 million increased 59% year-over-year.2
  • Net income for the third quarter was $0.6 million, compared to net loss of ($3.6) million in the third quarter of 2017.
  • Net income (loss) per share was $0.02 (basic and diluted), as compared to ($0.13) in 2017 (basic and diluted).
  • Non-GAAP net income per share was $0.53 (basic) and $0.48 (diluted), as compared to $0.26 (basic) and $0.25 (diluted) in 2017.3
  • Adjusted EBITDA of $23.0 million, or 29% of non-GAAP revenue, compared to $11.3 million, or 18% of non-GAAP revenue in 2017.4

“We continue to deliver strong results across the board while successfully executing against our strategic plan,” said Mohamad Ali, CEO of Carbonite. “With the newly launched Carbonite Data Protection Console and our robust server backup solution that now includes purpose-built protection for virtual machines, our solutions address all of the market’s most pressing data protection needs. In addition to our strengthening product portfolio, we are making investments in our partner network to effectively enable our partners to sell the full suite of Carbonite data protection solutions.”

“In Q3 we delivered strong bookings growth, significantly expanded gross margin, and drove a meaningful increase in free cash flow. Our focus on driving total growth and delivering operating efficiencies across the business continues to yield exceptional results,” said Anthony Folger, CFO of Carbonite.

The Company uses a variety of operational and financial metrics, including non-GAAP financial measures, to evaluate its performance and financial condition. The accompanying financial data includes additional information regarding these metrics and a reconciliation of non-GAAP financial information to GAAP. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Third Quarter 2018 Results:

  • Revenue for the third quarter was $77.7 million, an increase of 26% from $61.6 million in the third quarter of 2017. Non-GAAP revenue for the third quarter was $79.1 million, an increase of 25% from $63.1 million in the third quarter of 2017.1
  • Bookings for the third quarter were $78.8 million, an increase of 32% from $59.7 million in the third quarter of 2017.2
  • Net income for the third quarter was $0.6 million, compared to net loss of ($3.6) million in the third quarter of 2017. Non-GAAP net income for the third quarter was $17.3 million, compared to non-GAAP net income of $7.3 million in the third quarter of 2017.3
  • Net income per share for the third quarter was $0.02 (basic and diluted), compared to net loss per share of ($0.13) (basic and diluted) in the third quarter of 2017. Non-GAAP net income per share was $0.53 (basic) and $0.48 (diluted) for the third quarter, compared to non-GAAP net income per share of $0.26 (basic) and $0.25 (diluted) in the third quarter of 2017.3
  • Adjusted EBITDA for the third quarter was $23.0 million, compared to $11.3 million in the third quarter of 2017.4
  • Gross margin for the third quarter was 71.9%, compared to 71.5% in the third quarter of 2017. Non-GAAP gross margin was 78.4% in the third quarter, compared to 76.3% in the third quarter of 2017.5
  • Cash flow from operations for the third quarter was $17.0 million, compared to $6.9 million in the third quarter of 2017. Adjusted free cash flow for the third quarter was $17.3 million, compared to $6.0 million in the third quarter of 2017.6
1 Non-GAAP revenue excludes the impact of purchase accounting adjustments for acquisitions.
2 Bookings represent the aggregate dollar value of customer subscriptions and software arrangements, which may include multiple revenue elements, such as software licenses, hardware, professional services and post-contractual support, received during a period and are calculated as revenue recognized during a particular period plus the change in total deferred revenue, excluding deferred revenue recorded in connection with acquisitions, divestitures and the adoption impact of Topic 606, net of foreign exchange and the change in unbilled revenue during the same period. Business subscription bookings specifically include sales of software-as-a-service offerings, royalty arrangements and term software licenses.
3 Non-GAAP net income and non-GAAP net income per share excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, non-cash convertible debt interest expense and the income tax effect of non-GAAP adjustments.
4 Adjusted EBITDA is calculated by excluding the impact of interest expense, net, income taxes, depreciation, amortization, purchase accounting adjustments on acquired deferred revenue, stock-based compensation expense, litigation-related expense, restructuring-related expense, and acquisition-related expense from net income (loss).
5 Non-GAAP gross margin excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, and acquisition-related expense.
6 Adjusted free cash flow is calculated by subtracting the cash paid for the purchase of property and equipment and adding the payments related to acquisitions, restructuring, and litigation from net cash provided by operating activities.

Business Outlook
Based on the information available as of November 1, 2018, Carbonite expects the following for the fourth quarter and full year of 2018:

Fourth Quarter 2018:
Current Guidance
(11/1/2018)
GAAP Revenue $77.6 – $80.6 million
Non-GAAP Revenue $78.6 – $81.6 million
Non-GAAP Net Income Per Share (Diluted) $0.40 – $0.44

 

Full Year 2018:
Prior Guidance
(8/2/2018)		 Current Guidance
(11/1/2018)
Business Bookings $223.8 – $234.8 million $205.0 – $210.0 million
Consumer Bookings Y/Y Growth 10% – 15% growth 15% – 20% growth
GAAP Revenue $296.9 – $306.9 million $297.0 – $300.0 million
Non-GAAP Revenue $302.5 – $312.5 million $302.5 – $305.5 million
Non-GAAP Net Income Per Share (Diluted) $1.51 – $1.59 $1.61 – $1.65
Non-GAAP Gross Margin 76.5% – 77.5% 76.5% – 77.5%
Adjusted Free Cash Flow $40.0 – $45.0 million $43.0 – $46.0 million

Carbonite’s expectations of non-GAAP net income per share for the fourth quarter and full year of 2018 excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments. Non-GAAP net income per share assumes an effective tax rate of 8% for the full year of 2018. Non-GAAP net income per share assumes fully-diluted weighted average shares outstanding of approximately 37.8 million for the fourth quarter and 34.0 million for the full year of 2018.

Conference Call and Webcast Information
Carbonite will host a conference call on Thursday, November 1, 2018 at 5:30 p.m. ET to review these results. This call will be webcast live and can be found in the investor relations section of the Company’s website at http://investor.carbonite.com. The conference call can also be accessed by dialing (877) 303-1393 in the United States or (315) 625-3228 internationally with the passcode 7758358.

Following the completion of the call, a recorded replay will be available on the Company’s website, http://investor.carbonite.com, under “Events & Presentations”.

Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with GAAP, this press release contains non-GAAP financial measures, including bookings, non-GAAP revenue, non-GAAP gross margin, non-GAAP net income and non-GAAP net income per share, non-GAAP operating expense, adjusted EBITDA and adjusted free cash flow.

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 ordinary 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. The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures provided in the tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.

With respect to our expectations under “Business Outlook” above, the Company has not reconciled non-GAAP net income per share to net income per share in this press release because we do not provide guidance for amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments as we are unable to quantify certain of these amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.

Cautionary Language Concerning Forward-Looking Statements
Certain matters discussed in this press release, including under “Business Outlook,” have “forward-looking statements”  intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our ability to integrate acquisitions into our operations and achieve the expected benefits of such acquisitions, our ability to profitably attract new customers and retain existing customers, our dependence on the market for cloud backup services, our ability to manage growth, changes in economic or regulatory conditions or other trends affecting the Internet and the information technology industry, and those discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission (the “SEC”), which is available on www.sec.gov, and elsewhere in any subsequent periodic or current reports filed by us with the SEC. Except as required by applicable law, we do not undertake any obligation  to update our forward-looking statements to reflect future events, new information or circumstances.

About Carbonite
Carbonite provides a robust Data Protection Platform for businesses, including backup, disaster recovery, high availability and workload migration technology. The Carbonite Data Protection Platform supports global businesses with secure cloud infrastructure. To learn more visit www.Carbonite.com

For detailed financials, visit: https://bit.ly/2P2L0nA

Investor Relations Contact:
Jeremiah Sisitsky
Carbonite
781-928-0713
investor.relations@carbonite.com

Media Contact:

Sarah King
Carbonite
617-421-5601
media@carbonite.com

Source: Carbonite

 

 

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