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8-K - 8-K - PROOFPOINT INCa14-4716_18k.htm

Exhibit 99.1

 

 

Proofpoint Announces Record Fourth Quarter and Full Year 2013 Financial Results

 

Fourth Quarter Highlights

 

·                        Total revenue of $40.8 million, up 43% year-over-year

·                        Subscription revenue increased 43% year-over-year to $39.3 million

·                        Billings of $48.9 million, up 33% year-over-year

·                        GAAP EPS loss of $0.35; Non-GAAP EPS loss of $0.07

·                        Generated operating cash flow of $5.3 million and free cash flow of $2.2 million

 

SUNNYVALE, Calif., — January 30, 2014 — Proofpoint, Inc. (NASDAQ: PFPT), a leading security-as-a-service provider, today announced financial results for the fourth quarter and full year ended December 31, 2013.

 

“Our record revenue, billings and free cash flow during the fourth quarter resulted from strong execution, as well as the ongoing robust demand for our integrated, cloud-based platform,” stated Gary Steele, chief executive officer of Proofpoint.  “The investments in our sales and product development, along with the addition of key acquisitions, have resulted in increased global leadership as we continued to penetrate some of the largest enterprises in the world.”

 

Steele continued, “Looking forward, we entered 2014 with strong momentum as we continue to see an increase in the number and types of security threats worldwide, including advanced persistent threats.  We believe Proofpoint remains well positioned to grow market share driven by our commitment to innovation and expanding global reach as the competitive landscape continues to shift in our favor.”

 

Fourth Quarter 2013 Financial Highlights

 

·                  Billings: Billings were $48.9 million for the fourth quarter of 2013, an increase of 33% compared to $36.7 million in the fourth quarter of 2012.  The company defines billings, a non-GAAP financial measure, as revenue recognized during the period plus the net change in deferred revenue from the beginning to the end of the period.  During the fourth quarter of 2013, billings excluded a one-time $14.5 million deferred revenue contribution from the Sendmail acquisition, the majority of which will be recognized as revenue over the next two years.  This contribution was not anticipated at the time of acquisition.

 

·                  Revenue: Total revenue for the fourth quarter of 2013 was $40.8 million, an increase of 43% compared to $28.6 million in the prior-year period.  Within total revenue, subscription revenue was $39.3 million, an increase of 43% on a year-over-year basis.  Hardware and services revenue contributed the remaining $1.5 million of total revenue.  During the fourth quarter of 2013, total revenue included $2.8 million from the deferred revenue contribution related to the acquisition of Sendmail.

 



 

·                  Gross Profit: GAAP gross profit for the fourth quarter was $28.1 million compared to $20.4 million for the fourth quarter of 2012.  Non-GAAP gross profit for the quarter was $29.5 million compared to $21.0 million in the year ago period.  Non-GAAP gross margin was 72% for the fourth quarter of 2013 compared to 73% for the same period last year.

 

·                  Operating Loss: GAAP operating loss for the fourth quarter was $11.7 million compared to a loss of $5.4 million during the fourth quarter last year.  Non-GAAP operating loss for the fourth quarter of 2013 was $2.1 million, compared to a loss of $3.0 million during the same period last year.

 

·                  Net Loss: GAAP net loss for the fourth quarter was $12.6 million or $0.35 per share based on 36.0 million weighted average shares outstanding.  This compares to a GAAP net loss of $5.5 million or $0.17 per share based on 32.4 million weighted average shares outstanding in the prior-year period.

 

Non-GAAP net loss for the fourth quarter of 2013 was $2.5 million or $0.07 per share based on 36.0 million weighted average shares outstanding.  This compares to a loss of $3.1 million or $0.10 per share based on 32.4 million weighted average shares outstanding during the same period last year.

 

·                  Adjusted EBITDA: Adjusted EBITDA for the fourth quarter of 2013 was negative $0.4 million compared to negative $1.7 million for the fourth quarter of 2012.

 

·                  Cash and Cash Flow: As of December 31, 2013, Proofpoint had cash, cash equivalents and short term investments of $251.8 million, as compared to $71.6 million as of September 30, 2013. The increase was primarily due to Proofpoint’s convertible senior note offering in December 2013, which generated net proceeds of approximately $195.4 million, including the full exercise of the initial purchasers’ option.

 

The company generated $5.3 million in net cash from operations for the fourth quarter of 2013 compared to generating $4.9 million during the fourth quarter of 2012.  The company generated $2.2 million in free cash flow for the quarter compared to $2.9 million during the fourth quarter of 2012.

 

Full Year 2013 Financial Highlights

 

·                  Billings: Billings were $160.5 million for the full year of 2013, an increase of 37% compared to 2012.

 

·                  Revenue: Total revenue for the full year of 2013 was $137.9 million, an increase of 30% compared to $106.3 million in the prior-year period.  Within total revenue, subscription revenue was $132.1 million, an increase of 30% on a year-over-year basis.  Hardware and services revenue contributed the remaining $5.9 million of total revenue.  See comments under the fourth quarter 2013 financial highlights regarding the impact of the Sendmail acquisition to revenue and billings.

 

·                  Gross Profit: GAAP gross profit for the full year of 2013 was $96.3 million compared to $73.2 million for 2012.  Non-GAAP gross profit for the year was $99.8 million compared to $76.7 million in 2012.  Non-GAAP gross margin was 72% for the full year of 2013, which was consistent with the full year of 2012.

 



 

·                  Operating Loss: GAAP operating loss for the full year of 2013 was $30.2 million compared to a loss of $19.6 million during fiscal 2012.  Non-GAAP operating loss for the full year of 2013 was $10.2 million, compared to a loss of $9.0 million during 2012.

 

·                  Net Loss: GAAP net loss for the full year of 2013 was $28.2 million or $0.81 per share based on 34.9 million weighted average shares outstanding.  This compares to a GAAP net loss of $20.4 million or $0.85 per share based on 24.1 million weighted average shares outstanding in the prior-year period.

 

Non-GAAP net loss for the full year of 2013 was $11.3 million or $0.32 per share based on 34.9 million weighted average shares outstanding.  This compares to a loss of $9.8 million or $0.31 per share based on 31.8 million weighted average shares outstanding during 2012.

 

·                  Adjusted EBITDA: Adjusted EBITDA for the full year of 2013 was negative $4.3 million compared to negative $4.5 million for the full year of 2012.

 

·                  Cash Flow: The company generated $12.6 million in net cash from operations for the full year of 2013 compared to generating $6.8 million during 2012.  The company generated $5.0 million in free cash flow for the full year of 2013 compared to $0.9 million during 2012.

 

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release.  An explanation of these measures and how they are calculated are also included below under the heading “Non-GAAP Financial Measures.”

 

Fourth Quarter and Recent Business Highlights:

 

·                  Closed the offering of $201.25 million aggregate principal amount of 1.25% Convertible Senior Notes due 2018 at an initial conversion price of approximately $39.02 per share.

 

·                  Positioned in the Leaders quadrant of Gartner’s 2013 Magic Quadrant for Enterprise Information Archiving for the second consecutive year.

 

·                  Ranked Number 418 on Deloitte’s Technology Fast 500TM, a ranking of the 500 fastest growing technology, media, telecommunications, life sciences, and clean technology companies in North America.

 

·                  Appointed Richard Turner to the position of Vice President of European Sales, bringing nearly two decades of global leadership expertise and security industry knowledge.

 

“We were very pleased with our execution during the fourth quarter, which resulted in our ability to exceed expectations across all key operating metrics and achieve a very strong finish to 2013,” stated Paul Auvil, chief financial officer of Proofpoint.  “With a significantly strengthened balance sheet and improving competitive environment, Proofpoint remains in position to increase market share globally.”

 



 

Financial Outlook

 

As of January 30, 2014 Proofpoint is providing guidance for its first quarter and full year 2014 as follows:

 

·                  First Quarter 2014 Guidance: Total revenue is expected to be in the range of $40.0 million to $41.0 million.  Billings are expected to be in the range of $43.0 million to $45.0 million.  Adjusted EBITDA loss is expected to be in the range of $4.5 million to $3.5 million.  Non-GAAP EPS loss is expected to be in the range of $0.21 to $0.18 based on approximately 36.5 million weighted average shares outstanding.

 

·                  Full Year 2014 Guidance: Total revenue is expected to be in the range of $174.5 million to $176.5 million.  Billings is expected to be in the range of $203.0 million to $205.0 million.  Adjusted EBITDA loss is expected to be in the range of $7.0 million to $5.0 million.  Non-GAAP EPS loss is expected to be in the range of $0.53 to $0.48 based on approximately 37.6 million weighted average shares outstanding.  Free cash flow, defined as operating cash flow less capital expenditures, is expected to be approximately positive $10.0 million, which assumes capital expenditures of $13.0 million to $15.0 million for the full year.

 

Quarterly Conference Call

 

Proofpoint will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to review the company’s financial results for the fourth quarter and full year ended December 31, 2013.  To access this call, dial 800-967-7187 for the U.S. and Canada or 719-457-2607 for international callers with conference ID #8101016.  A live webcast of the conference call will be accessible from the Investors section of Proofpoint’s website at investors.proofpoint.com, and a recording will be archived and accessible at investors.proofpoint.com.  An audio replay of this conference call will also be available through February 13, 2014, by dialing 877.870.5176 for the U.S. and Canada or 858.384.5517 for international callers and entering passcode #8101016.

 

About Proofpoint, Inc.

 

Proofpoint, Inc. (NASDAQ:PFPT) is a leading security-as-a-service provider that focuses on cloud-based solutions for threat protection, compliance, archiving & governance, and secure communications. Organizations around the world depend on Proofpoint’s expertise, patented technologies, and on-demand delivery system to protect against phishing, malware and spam, safeguard privacy, encrypt sensitive information, and archive and govern messages and critical enterprise information. More information is available at www.proofpoint.com.

 

Proofpoint is a trademark or registered trademark of Proofpoint, Inc. in the U.S. and other countries. All other trademarks contained herein are the property of their respective owners.

 



 

Forward-Looking Statements

 

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the market position, future growth, market share and future financial results. It is possible that future circumstances might differ from the assumptions on which such statements are based. Important factors that could cause results to differ materially from the statements herein include: the effect of general economic conditions, including as a result of the U.S. budget process; specific economic risks in different geographies and among different industries; or other risks that may inhibit our drive to expand our business and global market share; failure to maintain or increase renewals and increased business from existing customers and failure to generate increased  business through existing or new channel partner relationships; uncertainties related to continued success in sales growth and market share gains; failure to convert sales opportunities into definitive customer agreements; risks associated with successful implementation of multiple integrated software products and other product functionality; competition, particularly from larger companies with more resources than Proofpoint; risks related to new target markets, new product introductions and innovation; the ability to attract and retain key personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; the time it takes new sales personnel to become fully productive; unforeseen delays in developing new technologies and the uncertain market acceptance of new products or features; technological changes that make Proofpoint’s products and services less competitive; risks associated with the adoption of, and demand for, the Security-as-a-Service model in general and by specific industries; risks related to integrating the employees, customers and technologies of acquired businesses; assumption of unknown liabilities from acquisitions; ability to retain customers of acquired entities; and the other risk factors set forth from time to time in our filings with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and the other reports we file with the SEC, copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department.  All forward-looking statements herein reflect our opinions only as of the date of this release, and Proofpoint undertakes no obligation, and expressly disclaims any obligation, to update forward-looking statements herein in light of new information or future events.

 

Non-GAAP Financial Measures

 

We have provided in this 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 below. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this

 



 

press release.

 

Non-GAAP gross profit. We define non-GAAP gross profit as GAAP gross profit, less stock-based compensation expense and the amortization of intangibles associated with acquisitions. We consider this non-GAAP financial measure to be a useful metric for management and investors because they exclude the effect of stock-based compensation expense and the amortization of intangibles associated with acquisitions so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP gross profit versus gross profit calculated in accordance with GAAP. Non-GAAP gross profit excludes stock-based compensation expense. Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in our business. Stock-based compensation is an important part of our employees’ compensation and impacts their performance. In addition, the components of the costs that we exclude in our calculation of non-GAAP gross profit may differ from the components that our peer companies exclude when they report their non-GAAP results.  Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP gross profit and evaluating non-GAAP gross profit together with gross profit calculated in accordance with GAAP.

 

Non-GAAP operating loss. We define non-GAAP operating loss as operating loss less stock-based compensation expense and the amortization of intangibles and non-recurring costs associated with acquisitions. We consider this non-GAAP financial measure to be a useful metric for management and investors because they exclude the effect of stock-based compensation expense and the amortization of intangibles and non-recurring costs associated with acquisitions so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating loss versus operating loss calculated in accordance with GAAP. For example, non-GAAP operating loss excludes stock-based compensation expense. Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in our business. Stock-based compensation is an important part of our employees’ compensation and impacts their performance. In addition, the components of the costs that we exclude in our calculation of non-GAAP operating loss 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 loss and evaluating non-GAAP operating loss together with operating loss calculated in accordance with GAAP.

 

Non-GAAP net loss. We define non-GAAP net loss as net loss less stock-based compensation expense and the amortization of intangibles and non-recurring costs associated with acquisitions, and non-cash interest expense related to the convertible debt discount and non-recurring issuance costs for the convertible debt offering. We consider this non-GAAP financial measure to be a useful metric for management and investors for the same reasons that we use non-GAAP operating loss. However, in order to provide a complete picture of our recurring core business operating results, we also exclude from non-GAAP net loss the tax effects associated with stock-based compensation and the amortization of intangibles and non-recurring costs associated with acquisitions, and non-cash interest expense related to the convertible debt discount and non-recurring issuance costs for the convertible debt

 



 

offering. We used an 8 percent effective tax rate to calculate non-GAAP net loss for the fourth quarter of 2013 and 6 percent for the fourth quarter of 2012. We believe that a 15-20% effective tax rate range is a reasonable estimate of the near-term normalized tax rate under our current global operating structure. The same limitations described above regarding our use of non-GAAP operating loss also apply to our use of non-GAAP net loss.

 

Billings. We define billings as revenue recognized plus the change in deferred revenue from the beginning to the end of the period, but excluding additions to deferred revenue from acquisitions.  We consider billings to be a useful metric for management and investors because billings drive deferred revenue, which is an important indicator of the health and visibility of our business, and has historically represented a majority of the quarterly revenue that we recognize. There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP.  Billings include amounts that have not yet been recognized as revenue, but excluding additions to deferred revenue from acquisitions.  We may also calculate billings in a manner that is different from other companies that report similar financial measures. Management compensates for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with revenues calculated in accordance with GAAP.

 

Adjusted EBITDA. We define adjusted EBITDA as net loss, adjusted to exclude: depreciation, amortization of intangibles, interest income (expense), net, provision for income taxes, stock-based compensation, acquisition-related expense, other income, and other expense. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We use adjusted EBITDA in conjunction with traditional GAAP operating performance measures 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 and to communicate with our board of directors concerning our financial performance. We do not place undue reliance on adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using this non-GAAP financial measure, including that other companies may calculate this measure differently than we do, that it does not reflect our capital expenditures or future requirements for capital expenditures and that it does not reflect changes in, or cash requirements for, our working capital.

 

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 and equipment, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” section of our quarterly and annual reports filed with the SEC.

 



 

Proofpoint, Inc.

Condensed Consolidated Statements of Operations

(On a GAAP basis)

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

Revenue:

 

 

 

 

 

 

 

 

 

Subscription

 

$

39,330

 

$

27,460

 

$

132,062

 

$

101,470

 

Hardware and services

 

1,507

 

1,189

 

5,869

 

4,825

 

Total revenue

 

40,837

 

28,649

 

137,931

 

106,295

 

Cost of revenue:(1)(2)

 

 

 

 

 

 

 

 

 

Subscription

 

10,440

 

6,832

 

35,482

 

28,246

 

Hardware and services

 

2,291

 

1,401

 

6,142

 

4,867

 

Total cost of revenue

 

12,731

 

8,233

 

41,624

 

33,113

 

Gross profit

 

28,106

 

20,416

 

96,307

 

73,182

 

Operating expense:(1)(2)

 

 

 

 

 

 

 

 

 

Research and development

 

11,215

 

6,460

 

34,675

 

24,827

 

Sales and marketing

 

22,256

 

15,488

 

72,038

 

55,239

 

General and administrative

 

6,328

 

3,822

 

19,765

 

12,693

 

Total operating expense

 

39,799

 

25,770

 

126,478

 

92,759

 

Operating loss

 

(11,693

)

(5,354

)

(30,171

)

(19,577

)

Interest (expense) income, net

 

(637

)

2

 

(641

)

(108

)

Other expense, net

 

(52

)

(54

)

(215

)

(154

)

Loss before (provision for) benefit from income taxes

 

(12,382

)

(5,406

)

(31,027

)

(19,839

)

(Provision for) benefit from income taxes

 

(190

)

(91

)

2,808

 

(521

)

Net loss

 

$

(12,572

)

$

(5,497

)

$

(28,219

)

$

(20,360

)

Net loss per share, basic and diluted

 

$

(0.35

)

$

(0.17

)

$

(0.81

)

$

(0.85

)

Weighted average shares outstanding, basic and diluted

 

35,978

 

32,388

 

34,874

 

24,056

 

 

 

 

 

 

 

 

 

 

 

(1)  Includes stock-based compensation expense as follows:

 

 

 

 

 

 

 

 

 

Cost of subscription revenue

 

$

419

 

$

214

 

$

1,050

 

$

657

 

Cost of hardware and services revenue

 

94

 

24

 

214

 

70

 

Research and development

 

2,267

 

460

 

3,833

 

1,869

 

Sales and marketing

 

2,025

 

801

 

4,527

 

3,103

 

General and administrative

 

1,364

 

439

 

3,147

 

1,622

 

Total stock-based compensation expense

 

$

6,169

 

$

1,938

 

$

12,771

 

$

7,321

 

(2)  Includes intangible amortization expense as follows:

 

 

 

 

 

 

 

 

 

Cost of subscription revenue

 

$

913

 

$

333

 

$

2,220

 

$

2,785

 

Research and development

 

23

 

7

 

47

 

30

 

Sales and marketing

 

1,124

 

72

 

1,743

 

461

 

General and administrative

 

11

 

 

34

 

 

Total intangible amortization expense

 

$

2,071

 

$

412

 

$

4,044

 

$

3,276

 

 



 

Proofpoint, Inc.

Condensed Consolidated Balance Sheets

(On a GAAP basis)

(In thousands, except per share amounts)

(Unaudited)

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

243,786

 

$

39,254

 

Short-term investments

 

8,015

 

47,263

 

Accounts receivable, net

 

26,221

 

18,115

 

Inventory

 

860

 

567

 

Deferred product costs, current

 

1,103

 

1,184

 

Prepaid expenses and other current assets

 

7,963

 

3,491

 

Total current assets

 

287,948

 

109,874

 

Property and equipment, net

 

11,221

 

8,560

 

Deferred product costs, noncurrent

 

357

 

326

 

Intangible assets, net

 

86,740

 

21,470

 

Other noncurrent assets

 

4,392

 

211

 

Total assets

 

$

390,658

 

$

140,441

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

7,379

 

$

2,496

 

Accrued liabilities

 

19,261

 

12,078

 

Notes payable and lease obligations

 

1,655

 

1,658

 

Deferred rent

 

297

 

462

 

Deferred revenue

 

89,450

 

62,642

 

Total current liabilities

 

118,042

 

79,336

 

Convertible senior notes

 

152,928

 

 

Notes payable and lease obligations, noncurrent

 

695

 

2,354

 

Other long term liabilities, noncurrent

 

7,300

 

726

 

Deferred revenue, noncurrent

 

34,533

 

24,217

 

Total liabilities

 

313,498

 

106,633

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Common stock, $0.0001 par value; 200,000 shares authorized at December 31, 2013 and 2012; 36,140 and 33,044 shares issued and outstanding at December 31, 2013 and 2012, respectively

 

4

 

3

 

Additional paid-in capital

 

287,853

 

216,280

 

Accumulated other comprehensive income

 

 

3

 

Accumulated deficit

 

(210,697

)

(182,478

)

Total stockholders’ equity

 

77,160

 

33,808

 

Total liabilities and stockholders’ equity

 

$

390,658

 

$

140,441

 

 



 

Proofpoint, Inc.

Condensed Consolidated Statements of Cash Flows

(On a GAAP basis)

(In thousands)

(Unaudited)

 

 

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

Cash flows from operating activities

 

 

 

 

 

Net loss

 

$

(28,219

)

$

(20,360

)

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

 

 

 

 

 

Depreciation and amortization

 

9,967

 

7,710

 

Loss on disposal of property and equipment

 

2

 

 

Accretion of investments

 

575

 

520

 

Provision for allowance for doubtful accounts

 

40

 

54

 

Stock-based compensation

 

12,771

 

7,321

 

Change in fair value of contingent earn-outs

 

9

 

 

Amortization of debt issuance costs and accretion of debt discount

 

489

 

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(4,500

)

(2,380

)

Inventory

 

(223

)

162

 

Deferred products costs

 

51

 

1,280

 

Prepaid expenses and other current assets

 

(3,637

)

(934

)

Noncurrent assets

 

(3,436

)

97

 

Accounts payable

 

996

 

(683

)

Accrued liabilities

 

5,569

 

3,485

 

Earn-out payment

 

(1

)

 

Deferred rent

 

(437

)

(55

)

Deferred revenue

 

22,575

 

10,619

 

Net cash provided by operating activities

 

12,591

 

6,836

 

Cash flows from investing activities

 

 

 

 

 

Proceeds from sales and maturities of short-term investments

 

59,046

 

15,264

 

Purchase of short-term investments

 

(20,376

)

(60,095

)

Purchase of property and equipment

 

(7,633

)

(5,904

)

Acquisitions of business (net of cash acquired)

 

(40,972

)

 

Net cash used in investing activities

 

(9,935

)

(50,735

)

Cash flows from financing activities

 

 

 

 

 

Proceeds from issuance of common stock, net of repurchases

 

16,367

 

6,060

 

Proceeds from initial public offering, net of offering costs

 

 

68,295

 

Proceeds from issuance of convertible senior notes, net of discount and issuance costs

 

195,641

 

 

Repayments of notes payable and loans

 

(10,033

)

(969

)

Earn-out payment

 

(99

)

 

Net cash provided by financing activities

 

201,876

 

73,386

 

Net increase in cash and cash equivalents

 

204,532

 

29,487

 

Cash and cash equivalents

 

 

 

 

 

Beginning of period

 

39,254

 

9,767

 

End of period

 

$

243,786

 

$

39,254

 

 



 

Reconciliation of Non-GAAP Measures

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

28,106

 

$

20,416

 

$

96,307

 

$

73,182

 

Plus:

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

513

 

238

 

1,264

 

727

 

Intangible amortization expense

 

913

 

333

 

2,220

 

2,785

 

Non-GAAP gross profit

 

29,532

 

20,987

 

99,791

 

76,694

 

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

 

(11,693

)

(5,354

)

(30,171

)

(19,577

)

Plus:

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

6,169

 

1,938

 

12,771

 

7,321

 

Intangible amortization expense

 

2,071

 

412

 

4,044

 

3,276

 

Non-recurring acquisition expense

 

1,319

 

 

3,107

 

3

 

Non-GAAP operating loss

 

(2,134

)

(3,004

)

(10,249

)

(8,977

)

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

(12,572

)

(5,497

)

(28,219

)

(20,360

)

Plus:

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

6,169

 

1,938

 

12,771

 

7,321

 

Intangible amortization expense

 

2,071

 

412

 

4,044

 

3,276

 

Non-recurring acquisition expense

 

1,319

 

 

3,107

 

3

 

Interest expense - debt discount and debt issuance costs

 

489

 

 

489

 

 

Non-recurring income tax benefit

 

(12

)

 

(3,474

)

 

Non-GAAP net loss

 

(2,536

)

(3,147

)

(11,282

)

(9,760

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic and diluted

 

35,978

 

32,388

 

34,874

 

24,056

 

Plus:

 

 

 

 

 

 

 

 

 

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

 

 

 

 

7,708

 

Shares used in computing non-GAAP net loss per share, basic and diluted

 

35,978

 

32,388

 

34,874

 

31,764

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net loss, basic and diluted

 

$

(0.07

)

$

(0.10

)

$

(0.32

)

$

(0.31

)

 



 

Reconciliation of Net Loss to Adjusted EBITDA

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(12,572

)

$

(5,497

)

$

(28,219

)

$

(20,360

)

Depreciation

 

1,773

 

1,260

 

5,923

 

4,434

 

Amortization of intangible assets

 

2,071

 

412

 

4,044

 

3,276

 

Interest expense (income), net

 

637

 

(2

)

641

 

108

 

Provision (benefit) for income taxes

 

190

 

91

 

(2,808

)

521

 

EBITDA

 

$

(7,901

)

$

(3,736

)

$

(20,419

)

$

(12,021

)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

$

6,169

 

$

1,938

 

$

12,771

 

$

7,321

 

Acquisition-related expenses

 

1,319

 

 

3,107

 

3

 

Other income

 

(10

)

(6

)

(37

)

(18

)

Other expense

 

62

 

60

 

252

 

172

 

Adjusted EBITDA

 

$

(361

)

$

(1,744

)

$

(4,326

)

$

(4,543

)

 

Reconciliation of Total Revenue to Billings

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

40,837

 

$

28,649

 

$

137,931

 

$

106,295

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

 

 

 

 

 

 

 

Ending

 

123,983

 

86,859

 

123,983

 

86,859

 

Beginning

 

101,328

 

78,836

 

86,859

 

76,240

 

Net Change

 

22,655

 

8,023

 

37,124

 

10,619

 

Less:

 

 

 

 

 

 

 

 

 

Deferred revenue contributed by acquisitons

 

(14,549

)

 

(14,549

)

 

Billings

 

$

48,943

 

$

36,672

 

$

160,506

 

$

116,914

 

 



 

MEDIA CONTACT:

 

INVESTOR CONTACT:

ORLANDO DEBRUCE

 

SETH POTTER

PROOFPOINT, INC.

 

ICR FOR PROOFPOINT, INC.

408-338-6870

 

646-277-1230

ODEBRUCE@PROOFPOINT.COM

 

SETH.POTTER@ICRINC.COM