Elastic Reports Strong Fourth Quarter and Fiscal 2022 Financial Results
Q4 Revenue of $239.4 million, Up 35% year-over-year (37% in constant currency) Q4 Elastic Cloud Revenue of $87.7 million, Up 71% year-over-year (72% in constant currency) FY22 Revenue of $862.4 million, Up 42% year-over-year (41% in constant currency)
Elastic (NYSE: ESTC) ("Elastic"), the company behind Elasticsearch and the Elastic Stack, announced strong results for its fourth quarter and full fiscal year (ended April 30, 2022).
Fourth Quarter Fiscal 2022 Financial Highlights
Total revenue was $239.4 million, an increase of 35%
year-over-year, or 37% on a constant currency basis
Elastic Cloud revenue was $87.7 million, an increase of 71%
year-over-year, or 72% on a constant currency basis
GAAP operating loss was $59.6 million; GAAP operating margin
was -25%
Non-GAAP operating loss was $7.9 million; non-GAAP operating
margin was -3%
GAAP net loss per share was $0.70; non-GAAP net loss per
share was $0.16
Operating cash flow was -$3.1 million with adjusted free
cash flow of -$5.3 million
Cash and cash equivalents were $860.9 million as of April
30, 2022
Full Fiscal 2022 Financial Highlights
Total revenue was $862.4 million, an increase of 42%
year-over-year, or 41% on a constant currency basis
Elastic Cloud revenue was $298.6 million, an increase of 80%
year-over-year, or 79% on a constant currency basis
GAAP operating loss was $173.7 million; GAAP operating
margin was -20%
Non-GAAP operating profit was $0.9 million; non-GAAP
operating margin was 0%
GAAP net loss per share was $2.20; non-GAAP net loss per
share was $0.33
Operating cash flow was $5.7 million with adjusted free cash
flow of $10.7 million
“We had a strong fourth quarter and closed out an excellent
year, driven by robust growth in Elastic Cloud, which grew 80%
year-over-year in fiscal year 2022, and increased to 37% of
total revenue in Q4,” said Ash Kulkarni, CEO, Elastic. “The
strong momentum in Elastic Cloud puts us on the path to
deliver over 50% of total revenue from Elastic Cloud exiting
Q4 of fiscal year 2024, which is ahead of our prior outlook.
The enormous market opportunity, the strategic relevance of
our solutions to our customers and partners, and the momentum
in Elastic Cloud make us confident that we can achieve $2
billion in total revenue in fiscal year 2025.”
Fourth Quarter Fiscal 2022 Key Metrics and Recent Business
Highlights
Key Customer Metrics
Total subscription customer count was over 18,600, compared
to over 17,900 in Q3 FY22, and over 15,000 in Q4 FY21
Total customer count with Annual Contract Value (ACV)
greater than $100,000 was over 960, compared to over 890 in
Q3 FY22, and over 730 in Q4 FY21
Net Expansion Rate was just under 130%, and was flat
compared to Q3 FY22
Cloud Partner Momentum
Announced expanded collaboration with AWS to accelerate
momentum and build, market, and deliver seamless access for
shared customers
Announced expanded strategic partnership with Microsoft to
simplify cloud operations, launch co-selling activities, and
make it easy to bring data from Azure services into Elastic,
and added four new Azure regions in the Americas, Asia, and
Africa
Joined the Data Cloud Alliance, led by Google Cloud, as a
founding member to accelerate the path to value creation and
solve the modern data challenges of today’s enterprises
Product Innovations and Updates
Announced Elastic 8.1 with new capabilities to help
customers defend against cyberattacks and accelerate app
development with expanded data integrations, faster indexing
speeds, and more efficient storage utilization
Announced Elastic 8.2 with new capabilities that enable
customers to build seamless search experiences, accelerate
troubleshooting of cloud-native services, and streamline
security analyst workflows
Enhanced machine learning and natural language processing
capabilities across both releases to deliver more relevant
results
Achieved Payment Card Industry Data Security Standard
(PCI-DSS) compliance across all Elastic Cloud regions
Other Business Highlights
Named a Strong Performer by Forrester Research in The
Forrester Wave™: Endpoint Detection and Response (EDR)
Providers, Q2 2022
Appointed Carolyn Herzog as chief legal officer
Appointed Janesh Moorjani as chief operating officer in
addition to his role as chief financial officer
Financial Outlook
The Company is providing the following guidance:
For the first quarter of fiscal 2023 (ending July 31, 2022):
Total revenue is expected to be between $244 million and
$246 million, representing 27% year-over-year growth at the
midpoint (32% year-over-year constant currency growth at the
midpoint)
Non-GAAP operating margin is expected to be between -3.8%
and -2.8%
Non-GAAP net loss per share is expected to be between $0.20
and $0.16, assuming between 94.0 million and 95.0 million
weighted average ordinary shares outstanding
For fiscal 2023 (ending April 30, 2023):
Total revenue is expected to be between $1,080 million and
$1,086 million, representing 26% year-over-year growth at
the midpoint (29% year-over-year constant currency growth at
the midpoint)
Non-GAAP operating margin is expected to be between 0.0% and
0.5%
Non-GAAP net loss per share is expected to be between $0.36
and $0.28, assuming between 95.0 million and 97.0 million
weighted average ordinary shares outstanding
See the section titled “Forward-Looking Statements” below for
information on the factors that could cause our actual results
to differ materially. We present forward-looking non-GAAP
financial measures in addition to, and not as a substitute
for, or superior to, financial measures calculated in
accordance with GAAP. See the section entitled “About Non-GAAP
Financial Measures” for an explanation of these non-GAAP
measures. A reconciliation of non-GAAP guidance measures to
corresponding GAAP measures for operating margin and net loss
per share is not available on a forward-looking basis without
unreasonable effort due to the uncertainty regarding, and the
potential variability of, many of the costs and expenses that
may be incurred in the future. These items necessary to
reconcile such non-GAAP measures could be material and have a
significant impact on the Company’s results computed in
accordance with GAAP.
Conference Call and Webcast
Elastic’s executive management team will host a conference
call today at 2:00 p.m. PT/5:00 p.m. ET to discuss the
Company’s financial results and business outlook. A live audio
webcast of the conference call will be available through
Elastic’s Investor Relations website at ir.elastic.co. Slides
will accompany the webcast. The replay of the webcast and
slides will be available for two months.
About Elastic
Elastic (NYSE: ESTC) is a leading platform for search-powered
solutions. We help organizations, their employees, and their
customers accelerate the results that matter. With solutions
in Enterprise Search, Observability, and Security, we enhance
customer and employee search experiences, keep
mission-critical applications running smoothly, and protect
against cyber threats. Delivered wherever data lives, in one
cloud, across multiple clouds, or on-premise, Elastic enables
its customers to achieve new levels of success at scale and on
a single platform. Learn more at elastic.co.
Elastic and associated marks are trademarks or
registered trademarks of Elastic N.V. and its subsidiaries.
All other company and product names may be trademarks of their
respective owners.
Use of Non-GAAP Financial Measures
In relation to constant currency non-GAAP financial measures,
the only reconciling item between GAAP financial measures and
non-GAAP financial measures is the effect of foreign currency
rate fluctuations. Further details on how we calculate such
effects can be found in the definition of “Constant Currency”
below. Reconciliations of other GAAP financial measures to
their respective non-GAAP financial measures are included at
the end of this press release following the accompanying
financial data. For a description of non-GAAP financial
measures, including the reasons management uses each measure,
please see the section of this press release titled “About
Non-GAAP Financial Measures.”
Forward-Looking Statements
This press release contains forward-looking statements that
involve substantial risk and uncertainties, which include, but
are not limited to, statements regarding our expected
financial results for the fiscal quarter ending July 31, 2022
and the fiscal year ending April 30, 2023, our expectations
regarding demand for our products and solutions and our future
revenue, our assessments of the strength of our solutions and
products, the expected performance or benefits of our
offerings, our expectations regarding market and growth
opportunities and our ability to address those opportunities,
our expectations regarding the growth and adoption of our
Elastic Cloud offering, and the expected benefits of our
investments. These forward-looking statements are subject to
the safe harbor provisions under the Private Securities
Litigation Reform Act of 1995. Our expectations and beliefs in
light of currently available information regarding these
matters may not materialize. Actual outcomes and results may
differ materially from those contemplated by these
forward-looking statements due to uncertainties, risks, and
changes in circumstances, including but not limited to those
related to: our future financial performance, including our
expectations regarding our revenue, cost of revenue, gross
profit or gross margin, operating expenses (which include
changes in sales and marketing, research and development and
general and administrative expenses), and our ability to
achieve and maintain future profitability; the effects of
currency movements on our financial results, our ability to
continue to deliver and improve our offerings and develop new
offerings, including security-related product and Elastic
Cloud offerings; customer acceptance and purchase of our
existing offerings and new offerings, including the expansion
and adoption of our Elastic Cloud offerings; our inability to
realize value from investments in the business, including
R&D investments and strategic transactions; our ability to
maintain and expand our user and customer base; the impact of
the COVID-19 pandemic, including any variants, on the
macroeconomic environment, on our business, operations, hiring
and financial results, and on businesses of our customers and
partners, including their spending priorities, the effect of
lockdowns, restrictions and new regulations; the impact of our
licensing model on the use and adoption of our software; our
pricing model strategies and their anticipated impacts on our
business and results of operations; the impact of foreign
currency exchange rate and interest rate fluctuations on our
results; our international expansion strategy; our operating
results and cash flows; our beliefs and objectives for future
operations; the sufficiency of our capital resources; our
ability to successfully execute our go-to-market strategy,
including by expanding our relationships with our partners,
and expand in our existing markets and into new markets, and
our ability to forecast customer retention and expansion; and
general market, political, economic and business conditions
(including impacts arising from the ongoing military conflict
between Russia and Ukraine).
Any additional or unforeseen effect from the COVID-19 pandemic
or ongoing conflict between Russia and Ukraine may exacerbate
these risks. Additional risks and uncertainties that could
cause actual outcomes and results to differ materially are
included in our filings with the Securities and Exchange
Commission (the “SEC”), including our Annual Report on Form
10-K for the fiscal year ended April 30, 2021 and any
subsequent reports filed with the SEC. SEC filings are
available on the Investor Relations section of Elastic’s
website at ir.elastic.co and the SEC’s website at www.sec.gov. Elastic assumes no obligation
to, and does not currently intend to, update any such
forward-looking statements, except as required by law.
Contact Information
Nikolay Beliov
Elastic Investor Relations
ir@elastic.co
(amounts in thousands, except share and per share
amounts)
(Unaudited)
Three Months Ended April 30,
Year Ended April 30,
2022
2021
2022
2021
Revenue
License - self-managed
$
22,507
$
22,321
$
76,964
$
67,994
Subscription - self-managed and SaaS
199,207
142,218
721,806
499,345
Total subscription revenue
221,714
164,539
798,770
567,339
Professional services
17,641
13,071
63,604
41,150
Total revenue
239,355
177,610
862,374
608,489
Cost of revenue
Cost of license - self-managed
306
347
1,548
1,386
Cost of subscription - self-managed and SaaS
50,559
34,663
176,656
121,127
Total cost of revenue - subscription
50,865
35,010
178,204
122,513
Cost of professional services
16,499
10,797
53,990
38,541
Total cost of revenue
67,364
45,807
232,194
161,054
Gross profit
171,991
131,803
630,180
447,435
Operating expenses
Research and development
78,867
55,437
273,761
199,203
Sales and marketing
118,603
82,165
406,658
273,877
General and administrative
34,143
31,278
123,441
103,833
Total operating expenses
231,613
168,880
803,860
576,913
Operating loss
(59,622
)
(37,077
)
(173,680
)
(129,478
)
Other income (expense), net
Interest expense
(6,389
)
(107
)
(20,716
)
(185
)
Other income (expense), net
(2,884
)
(553
)
(3,393
)
7,949
Loss before income taxes
(68,895
)
(37,737
)
(197,789
)
(121,714
)
Provision for (benefit from) income taxes
(3,285
)
5,564
6,059
7,720
Net loss
$
(65,610
)
$
(43,301
)
$
(203,848
)
$
(129,434
)
Net loss per share attributable to ordinary
shareholders, basic and diluted
$
(0.70
)
$
(0.48
)
$
(2.20
)
$
(1.48
)
Weighted-average shares used to compute net loss per
share attributable to ordinary shareholders, basic
and diluted
93,806,902
90,028,822
92,547,145
87,207,094
Elastic N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share
amounts)
(Unaudited)
As of April 30, 2022
As of April 30, 2021
Assets
Current assets:
Cash and cash equivalents
$
860,949
$
400,814
Restricted cash
2,688
2,894
Accounts receivable, net of allowance for credit
losses of $2,700 and $2,344 as of April 30, 2022 and
April 30, 2021, respectively
215,228
160,415
Deferred contract acquisition costs
43,628
36,089
Prepaid expenses and other current assets
41,215
37,002
Total current assets
1,163,708
637,214
Property and equipment, net
7,207
8,881
Goodwill
303,906
198,851
Operating lease right-of-use assets
25,437
25,464
Intangible assets, net
45,800
36,286
Deferred contract acquisition costs, non-current
74,419
50,263
Deferred tax assets
5,811
3,697
Other assets
16,643
12,516
Total assets
$
1,642,931
$
973,172
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
$
28,403
$
7,248
Accrued expenses and other liabilities
53,930
28,909
Accrued compensation and benefits
68,002
52,525
Operating lease liabilities
11,219
8,528
Deferred revenue
431,776
352,805
Total current liabilities
593,330
450,015
Deferred revenue, non-current
33,518
44,895
Long-term debt, net
566,520
—
Operating lease liabilities, non-current
16,482
19,649
Other liabilities, non-current
17,648
7,782
Total liabilities
1,227,498
522,341
Commitments and contingencies
Shareholders’ equity:
Convertible preference shares, €0.01 par value;
165,000,000 shares authorized, 0 shares issued and
outstanding as of April 30, 2022 and April 30, 2021
—
—
Ordinary shares, par value €0.01 per share:
165,000,000 shares authorized; 94,174,914 and
90,533,985 shares issued and outstanding as of April
30, 2022 and April 30, 2021, respectively
990
948
Treasury stock
(369
)
(369
)
Additional paid-in capital
1,250,108
1,071,675
Accumulated other comprehensive loss
(18,130
)
(8,105
)
Accumulated deficit
(817,166
)
(613,318
)
Total shareholders’ equity
415,433
450,831
Total liabilities and shareholders’ equity
$
1,642,931
$
973,172
Elastic N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
Three Months Ended April 30,
Year Ended April 30,
2022
2021
2022
2021
Cash flows from operating activities
Net loss
$
(65,610
)
$
(43,301
)
$
(203,848
)
$
(129,434
)
Adjustments to reconcile net loss to cash provided
by (used in) operating activities:
Depreciation and amortization
5,170
4,381
19,728
17,237
Amortization of deferred contract acquisition costs
17,365
12,536
60,738
40,991
Amortization of debt issuance costs
249
—
803
—
Non-cash operating lease cost
2,377
2,671
8,636
7,927
Stock-based compensation expense, net of amounts
capitalized
43,641
28,375
140,612
93,680
Deferred income taxes
(2,211
)
321
(2,430
)
33
Foreign currency transaction (gain) loss
277
(44
)
1,984
(9,507
)
Other
—
(153
)
98
(142
)
Changes in operating assets and liabilities:
Accounts receivable, net
(71,988
)
(39,283
)
(62,187
)
(24,037
)
Deferred contract acquisition costs
(35,521
)
(26,525
)
(96,755
)
(81,137
)
Prepaid expenses and other current assets
(777
)
(9,009
)
(3,427
)
(4,192
)
Other assets
1,628
(9,344
)
825
(4,107
)
Accounts payable
6,584
1,546
21,036
(4,775
)
Accrued expenses and other liabilities
9,653
6,422
27,192
8,118
Accrued compensation and benefits
13,089
9,726
17,775
3,867
Operating lease liabilities
(2,450
)
(2,512
)
(8,888
)
(7,914
)
Deferred revenue
75,474
62,628
83,780
115,937
Net cash provided by (used in) operating activities
(3,050
)
(1,565
)
5,672
22,545
Cash flows from investing activities
Purchases of property and equipment
(1,498
)
(1,180
)
(2,485
)
(3,912
)
Capitalization of internal-use software costs
(705
)
(317
)
(4,932
)
(317
)
Business acquisitions, net of cash acquired
—
—
(119,854
)
—
Other
—
1,391
—
2,711
Net cash used in investing activities
(2,203
)
(106
)
(127,271
)
(1,518
)
Cash flows from financing activities
Proceeds from the issuance of senior notes
—
—
575,000
—
Proceeds from issuance of ordinary shares upon
exercise of stock options
8,870
9,704
36,410
77,258
Payments of debt issuance costs
—
—
(9,283
)
—
Net cash provided by financing activities
8,870
9,704
602,127
77,258
Effect of exchange rate changes on cash, cash
equivalents, and restricted cash
(8,271
)
186
(20,599
)
6,034
Net increase (decrease) in cash, cash equivalents,
and restricted cash
(4,654
)
8,219
459,929
104,319
Cash, cash equivalents, and restricted cash,
beginning of period
868,291
395,489
403,708
299,389
Cash, cash equivalents, and restricted cash, end of
period
$
863,637
$
403,708
$
863,637
$
403,708
Elastic N.V.
REVENUE BY TYPE
(amounts in thousands, except percentages)
(Unaudited)
Three Months Ended April 30,
Year Ended April 30,
2022
2021
2022
2021
Amount
% of
Total
Revenue
Amount
% of
Total
Revenue
Amount
% of
Total
Revenue
Amount
% of
Total
Revenue
Elastic Cloud
$
87,652
37
%
$
51,335
29
%
$
298,615
35
%
$
166,319
27
%
Other subscription
134,062
56
%
113,204
64
%
500,155
58
%
401,020
66
%
Total subscription revenue
221,714
93
%
164,539
93
%
798,770
93
%
567,339
93
%
Professional services
17,641
7
%
13,071
7
%
63,604
7
%
41,150
7
%
Total revenue
$
239,355
100
%
$
177,610
100
%
$
862,374
100
%
$
608,489
100
%
Elastic N.V.
RECONCILIATION OF GAAP TO NON-GAAP DATA
CALCULATED BILLINGS
(amounts in thousands)
(Unaudited)
Three Months Ended April 30,
Year Ended April 30,
2022
2021
2022
2021
Total revenue
$
239,355
$
177,610
$
862,374
$
608,489
Add: Increase in deferred revenue
75,474
62,628
83,780
115,937
Less: Decrease (increase) in unbilled accounts
receivable
(1,939
)
632
(4,041
)
(2,582
)
Calculated billings
$
312,890
$
240,870
$
942,113
$
721,844
Elastic N.V.
RECONCILIATION OF GAAP TO NON-GAAP DATA
ADJUSTED FREE CASH FLOW
(amounts in thousands, except percentages)
(Unaudited)
Three Months Ended April 30,
Year Ended April 30,
2022
2021
2022
2021
Net cash provided by (used in) operating activities
$
(3,050
)
$
(1,565
)
$
5,672
$
22,545
Less: Purchases of property and equipment
(1,498
)
(1,180
)
(2,485
)
(3,912
)
Less: Capitalization of internal-use software
(705
)
(317
)
(4,932
)
(317
)
Add: Interest paid on long-term debt
—
—
12,452
—
Adjusted free cash flow
$
(5,253
)
$
(3,062
)
$
10,707
$
18,316
Net cash used in investing activities
$
(2,203
)
$
(106
)
$
(127,271
)
$
(1,518
)
Net cash provided by financing activities
$
8,870
$
9,704
$
602,127
$
77,258
Net cash provided by (used in) operating activities
(as a percentage of total revenue)
(1
)%
(1
)%
1
%
4
%
Less: Purchases of property and equipment (as a
percentage of total revenue)
(1
)%
(1
)%
—
%
(1
)%
Less: Capitalization of internal-use software (as a
percentage of total revenue)
—
%
—
%
(1
)%
—
%
Add: Interest paid on long-term debt (as a
percentage of total revenue)
—
%
—
%
1
%
—
%
Adjusted free cash flow margin
(2
)%
(2
)%
1
%
3
%
Elastic N.V.
RECONCILIATION OF GAAP TO NON-GAAP DATA
(amounts in thousands, except percentages, share
and per share amounts)
(Unaudited)
Three Months Ended April 30,
Year Ended April 30,
2022
2021
2022
2021
Gross Profit Reconciliation:
GAAP gross profit
$
171,991
$
131,803
$
630,180
$
447,435
Stock-based compensation expense
3,976
3,577
14,831
11,929
Employer payroll taxes on employee stock
transactions
328
424
1,393
1,335
Amortization of acquired intangibles
2,947
2,109
10,503
8,437
Non-GAAP gross profit
$
179,242
$
137,913
$
656,907
$
469,136
Gross Margin Reconciliation(1):
GAAP gross margin
71.9
%
74.2
%
73.1
%
73.5
%
Stock-based compensation expense
1.7
%
2.0
%
1.7
%
2.0
%
Employer payroll taxes on employee stock
transactions
0.1
%
0.2
%
0.2
%
0.2
%
Amortization of acquired intangibles
1.2
%
1.2
%
1.2
%
1.4
%
Non-GAAP gross margin
74.9
%
77.6
%
76.2
%
77.1
%
Operating Loss Reconciliation:
GAAP operating loss
$
(59,622
)
$
(37,077
)
$
(173,680
)
$
(129,478
)
Stock-based compensation expense
43,641
28,375
141,194
93,680
Employer payroll taxes on employee stock
transactions
1,327
3,940
9,961
14,376
Amortization of acquired intangibles
4,139
3,537
15,783
14,167
Acquisition-related expenses
2,633
—
7,632
—
Non-GAAP operating income (loss)
$
(7,882
)
$
(1,225
)
$
890
$
(7,255
)
Operating Margin Reconciliation(1):
GAAP operating margin
(24.9
)%
(20.9
)%
(20.1
)%
(21.3
)%
Stock-based compensation expense
18.2
%
16.0
%
16.4
%
15.4
%
Employer payroll taxes on employee stock
transactions
0.6
%
2.2
%
1.2
%
2.4
%
Amortization of acquired intangibles
1.7
%
2.0
%
1.8
%
2.3
%
Acquisition-related expenses
1.1
%
0.0
%
0.9
%
0.0
%
Non-GAAP operating margin
(3.3
)%
(0.7
)%
0.1
%
(1.2
)%
Net Loss Reconciliation:
GAAP net loss
$
(65,610
)
$
(43,301
)
$
(203,848
)
$
(129,434
)
Stock-based compensation expense
43,641
28,375
141,194
93,680
Employer payroll taxes on employee stock
transactions
1,327
3,940
9,961
14,376
Amortization of acquired intangibles
4,139
3,537
15,783
14,167
Acquisition-related expenses
2,633
—
7,632
—
Income tax(2)
(817
)
(200
)
(1,496
)
(777
)
Non-GAAP net loss
$
(14,687
)
$
(7,649
)
$
(30,774
)
$
(7,988
)
Non-GAAP net loss per share attributable to ordinary
shareholders, basic and diluted
$
(0.16
)
$
(0.08
)
$
(0.33
)
$
(0.09
)
Weighted-average shares used to compute net loss per
share attributable to ordinary shareholders, basic
and diluted
93,806,902
90,028,822
92,547,145
87,207,094
(1) Totals may not sum, due to rounding.
Gross margin, operating margin, and earnings per
share are calculated based upon the respective
underlying, non-rounded data.
(2) Non-GAAP financial information for
the quarter is adjusted for a tax rate equal to our
annual estimated tax rate on non-GAAP income. This
rate is based on our estimated annual GAAP income
tax rate forecast, adjusted to account for items
excluded from GAAP income in calculating the
non-GAAP financial measures presented above as well
as significant tax adjustments. Our estimated tax
rate on non-GAAP income is determined annually and
may be adjusted during the year to take into account
events or trends that we believe materially impact
the estimated annual rate including, but not limited
to, significant changes resulting from tax
legislation, material changes in the geographic mix
of revenue and expenses and other significant
events. Due to the differences in the tax treatment
of items excluded from non-GAAP earnings, as well as
the methodology applied to our estimated annual tax
rates as described above, our estimated tax rate on
non-GAAP income may differ from our GAAP tax rate
and from our actual tax liabilities.
Elastic N.V.
RECONCILIATION OF GAAP TO NON-GAAP DATA
(amounts in thousands)
(Unaudited)
Three Months Ended April 30,
Year Ended April 30,
2022
2021
2022
2021
Cost of revenue reconciliation:
GAAP cost of license - self-managed
$
306
$
347
$
1,548
$
1,386
Amortization of acquired intangibles
(306
)
(347
)
(1,548
)
(1,386
)
Non-GAAP cost of license - self -managed
$
—
$
—
$
—
$
—
GAAP cost of subscription - self-managed and SaaS
$
50,559
$
34,663
$
176,656
$
121,127
Stock-based compensation expense
(2,106
)
(2,040
)
(8,368
)
(7,105
)
Employer payroll taxes on employee stock
transactions
(207
)
(187
)
(681
)
(674
)
Amortization of acquired intangibles
(2,641
)
(1,762
)
(8,955
)
(7,051
)
Non-GAAP cost of subscription - self-managed and
SaaS
$
45,605
$
30,674
$
158,652
$
106,297
GAAP cost of professional services
$
16,499
$
10,797
$
53,990
$
38,541
Stock-based compensation expense
(1,870
)
(1,537
)
(6,463
)
(4,824
)
Employer payroll taxes on employee stock
transactions
(121
)
(237
)
(712
)
(661
)
Non-GAAP cost of professional services
$
14,508
$
9,023
$
46,815
$
33,056
Operating expenses reconciliation:
GAAP research and development expense
$
78,867
$
55,437
$
273,761
$
199,203
Stock-based compensation expense
(18,127
)
(10,958
)
(59,911
)
(35,267
)
Employer payroll taxes on employee stock
transactions
(400
)
(968
)
(3,316
)
(3,670
)
Acquisition-related expenses
(2,409
)
—
(6,104
)
—
Non-GAAP research and development expense
$
57,931
$
43,511
$
204,430
$
160,266
GAAP sales and marketing expense
$
118,603
$
82,165
$
406,658
$
273,877
Stock-based compensation expense
(15,000
)
(9,062
)
(45,798
)
(31,581
)
Employer payroll taxes on employee stock
transactions
(413
)
(1,905
)
(4,287
)
(5,399
)
Amortization of acquired intangibles
(1,192
)
(1,428
)
(5,280
)
(5,730
)
Non-GAAP sales and marketing expenses
$
101,998
$
69,770
$
351,293
$
231,167
GAAP general and administrative expense
$
34,143
$
31,278
$
123,441
$
103,833
Stock-based compensation expense
(6,538
)
(4,778
)
(20,654
)
(14,903
)
Employer payroll taxes on employee stock
transactions
(186
)
(643
)
(965
)
(3,972
)
Acquisition-related expenses
(224
)
—
(1,528
)
—
Non-GAAP general and administrative expense
$
27,195
$
25,857
$
100,294
$
84,958
About Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S.
GAAP, we believe the non-GAAP measures listed below are useful
in evaluating our operating performance. We use these non-GAAP
financial measures to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, may
be helpful to investors because it provides consistency and
comparability with past financial performance. However,
non-GAAP financial information is presented for supplemental
informational purposes only, has limitations as an analytical
tool and should not be considered in isolation or as a
substitute for financial information presented in accordance
with U.S. GAAP. In addition, other companies, including
companies in our industry, may calculate similarly-titled
non-GAAP measures differently or may use other measures to
evaluate their performance, all of which could reduce the
usefulness of our non-GAAP financial measures as tools for
comparison. Investors are cautioned that there are a number of
limitations associated with the use of non-GAAP financial
measures and key metrics as analytical tools. Investors are
encouraged to review the differences between GAAP financial
measures and the corresponding non-GAAP financial measures,
and not to rely on any single financial measure to evaluate
our business.
Non-GAAP Gross Profit and Non-GAAP Gross Margin
We define non-GAAP gross profit and non-GAAP gross margin as
GAAP gross profit and GAAP gross margin, respectively,
excluding stock-based compensation expense, employer payroll
taxes on employee stock transactions, and amortization of
acquired intangible assets. We believe non-GAAP gross profit
and non-GAAP gross margin provide our management and investors
consistency and comparability with our past financial
performance and facilitate period-to-period comparisons of
operations, as these metrics generally eliminate the effects
of certain variables from period to period for reasons
unrelated to overall operating performance.
Non-GAAP Operating Income (Loss) and Non-GAAP Operating
Margin
We define non-GAAP operating income (loss) and non-GAAP
operating margin as GAAP operating loss and GAAP operating
margin, respectively, excluding stock-based compensation
expense, employer payroll taxes on employee stock
transactions, amortization of acquired intangible assets, and
acquisition-related expenses. We believe non-GAAP operating
income (loss) and non-GAAP operating margin provide our
management and investors consistency and comparability with
our past financial performance and facilitate period-to-period
comparisons of operations, as these metrics generally
eliminate the effects of certain variables from period to
period for reasons unrelated to overall operating performance.
Non-GAAP Net Loss Per Share
We define non-GAAP net loss per share as GAAP net loss per
share, excluding stock-based compensation expense, employer
payroll taxes on employee stock transactions, amortization of
acquired intangible assets, acquisition-related expenses and
the tax effects related to the foregoing. We believe non-GAAP
net loss per share provides our management and investors
consistency and comparability with our past financial
performance and facilitates period-to-period comparisons of
operations, as this metric generally eliminates the effects of
certain variables from period to period for reasons unrelated
to overall operating performance.
Adjusted Free Cash Flow and Adjusted Free Cash Flow
Margin
Adjusted free cash flow is a non-GAAP financial measure that
we define as net cash provided by (used in) operating
activities adjusted for cash paid for interest less cash used
for investing activities for purchases of property and
equipment, and capitalized internal-use software costs.
Adjusted free cash flow margin is calculated as adjusted free
cash flow divided by total revenue. Adjusted free cash flow
does not represent residual cash flow available for
discretionary expenditures since, among other things, we have
mandatory debt service requirements.
Calculated Billings
We define calculated billings as total revenue plus the
increase (decrease) in total deferred revenue as presented on
or derived from our consolidated statements of cash flows less
the (increase) decrease in total unbilled accounts receivable
in a given period. Calculated billings exclude deferred
revenue and unbilled accounts receivable acquired through
acquisitions in the period of acquisition. We typically
invoice our customers annually in advance, and to a lesser
extent multi-year in advance, quarterly in advance, monthly in
advance, monthly in arrears or upon delivery. Our management
uses calculated billings to understand and evaluate our
near-term cash flows and operating results.
Constant Currency
We compare the percent change in certain results from one
period to another period using constant currency information
to provide a framework for assessing how our business
performed excluding the effect of foreign currency rate
fluctuations. In presenting this information, current and
comparative prior period results are converted into United
States dollars at the exchange rates in effect on the last day
of our prior fiscal year, rather than the actual exchange
rates in effect during the respective periods.