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8-K - FROM 8-K - NEW RELIC, INC.d35738d8k.htm

Exhibit 99.1

 

LOGO

New Relic Announces Third Quarter of Fiscal Year 2016 Results

Revenue increased 64% year-over-year to $47.7 million in the third quarter

First quarter of positive operating cash flow

San Francisco – February 4, 2016 – Software analytics company New Relic, Inc. (NYSE: NEWR) today announced financial results for the third fiscal quarter ended December 31, 2015.

“We are continuing to drive momentum for the New Relic Software Analytics Cloud as companies of all sizes – from start-ups to Fortune 10 enterprises – entrust their digital future to New Relic,” said Lew Cirne, CEO and founder, New Relic. “Whether you’re a developer, an IT operations professional or an executive, we see New Relic rapidly becoming the first, best place to look when you need to understand what’s happening in your digital business.”

Third Quarter Fiscal 2016 Financial Highlights:

 

    Revenue of $47.7 million, up 64% compared with the third quarter of fiscal 2015 and 11% from the second quarter of fiscal 2016.

 

    GAAP loss from operations was $18.2 million for the third quarter of fiscal 2016, compared with $15.6 million for the third quarter of fiscal 2015. Non-GAAP loss from operations was $10.7 million for the third quarter of fiscal 2016, compared with $11.8 million for the third quarter of fiscal 2015.

 

    GAAP net loss per share was $0.37 for the third quarter of fiscal 2016 based on 49.0 million weighted-average shares outstanding, compared with $0.70 for the third quarter of fiscal 2015 based on 22.8 million weighted-average shares outstanding. Non-GAAP net loss per share was $0.22 for the third quarter of fiscal 2016 based on 49.0 million non-GAAP weighted-average shares outstanding, compared with $0.28 for the third quarter of fiscal 2015 based on 42.3 million non-GAAP weighted-average shares outstanding.

 

    Cash, cash equivalents and short-term investments were $191.0 million at the end of the third quarter of fiscal 2016, compared with $189.0 million at the end of the second quarter of fiscal 2016.

Customer Highlights:

 

    As of December 31, 2015, total Paid Business Accounts were 13,126.

 

    Dollar-Based Net Expansion Rate for the quarter ended December 31, 2015 was 129%.


    New customers in the quarter included: Cirque du Soleil, FlightNetwork.com, France Télévisions SA, Hachette Book Group, Hy-Vee, Inc., Isolation Network, Inc., Lighthouse eDiscovery, Major League Soccer, NYC-DOT, New Zealand Media and Entertainment, Office Depot International in Europe and Royal Opera House.

 

    Expanded customer relationships in the quarter included: Adobe Systems Incorporated, American Eagle Outfitters, Inc., Citrix, Despegar.com, Eastern Bank Corporation, Fox Sports, Globosat, Hogg Robinson plc, iHeartMedia, Jive, Kent State University, Multiplus, NBCUniversal, Ocado, REI, Sensis, VenueNext, Yellow Pages Limited and Zenefits.

Third Quarter & Recent Business Highlights:

 

    Acquired Opsmatic, Inc. [https://ir.newrelic.com/press-releases/Press-Release-Details/2015/New-Relic-Acquires-Real-time-Infrastructure-Monitoring-Company-Opsmatic], a San Francisco-based startup focused on live-state infrastructure monitoring for modern DevOps teams.

 

    Announced the appointment of Robson Grieve [https://ir.newrelic.com/press-releases/Press-Release-Details/2015/Robson-Grieve-Joins-New-Relic-as-Chief-Marketing-Officer] as Chief Marketing Officer.

 

    Expanded the New Relic Software Analytics Cloud [https://ir.newrelic.com/press-releases/Press-Release-Details/2015/New-Relic-Embeds-Analytics-Across-Product-Line-for-the-Modern-Enterprise] at FutureStack15 to deliver a single platform with real-time analytics embedded into every product.

 

    Ranked as the fastest growing public software company [https://ir.newrelic.com/press-releases/Press-Release-Details/2015/New-Relic-Ranked-as-One-of-the-Fastest-Growing-Companies-in-North-America-on-Deloittes-2015-Technology-Fast-500] with a market capitalization over $100M in Deloitte’s Technology Fast 500TM.

 

    Launched partnership with Carahsoft Technology Corp. [https://ir.newrelic.com/press-releases/Press-Release-Details/2015/New-Relic-Launches-Partnership-With-Carahsoft-Technology-Corp], to help expand the New Relic Software Analytics Cloud in the public sector.

Outlook:

New Relic is initiating its outlook for its fourth quarter of fiscal 2016, as well as updating its outlook for the full fiscal year 2016.

 

    Fourth Quarter Fiscal 2016 Outlook:

 

    Revenue between $49.8 million and $50.8 million, representing year-over-year growth of between 49% and 52%.

 

    Non-GAAP loss from operations of between $11.5 million and $12.5 million.

 

    Non-GAAP net loss per share of between $0.23 and $0.25. This assumes 49.7 million non-GAAP weighted average common shares outstanding.

 

    Full Year Fiscal 2016 Outlook:

 

    Revenue between $178.6 million and $179.6 million, representing year-over-year growth of between 62% and 63%.

 

    Non-GAAP loss from operations of between $40.8 million and $41.8 million.

 

    Non-GAAP net loss per share of between $0.83 and $0.85. This assumes 48.9 million non-GAAP weighted average common shares outstanding.


Conference Call Details:

 

    What: New Relic financial results for the third quarter of fiscal year 2016 and outlook for the fourth quarter of fiscal 2016 and the full year of fiscal 2016.

 

    When: February 4, 2016 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time).

 

    Dial in: To access the call in the U.S., please dial (877) 201-0168, and for international callers, please dial (647) 788-4901. Callers may provide confirmation number 19381228 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.

 

    Webcast: http://ir.newrelic.com (live and replay).

 

    Replay: Following the completion of the call through 11:59 PM Eastern Time on February 12, 2015, a telephone replay will be available by dialing (855) 859-2056 from the United States or (404) 537-3406 internationally with conference ID 19381228.

About New Relic

New Relic is a software analytics company that delivers real-time insights to more than 500,000 users and 13,000 paid business accounts. As a multi-tenant SaaS platform, the New Relic Software Analytics Cloud helps companies securely monitor their production software in virtually any environment, without having to build or maintain dedicated infrastructure. New Relic helps companies improve application performance, create delightful customer experiences, and realize business success. Learn more at newrelic.com.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the federal securities laws, including but not limited to statements regarding New Relic’s future financial performance, including its outlook on financial results for the fourth quarter of fiscal year 2016 and for the full fiscal year 2016, market trends and opportunity, customer adoption and momentum of New Relic’s products, competitive advantages, potential growth, including growth in the public sector, quantity and range of data types collected by New Relic’s customers, New Relic’s value proposition to its customers, the benefits of collaborative efforts and acquisitions, and New Relic’s ability to execute on its vision. These forward-looking statements are based on New Relic’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause New Relic’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, New Relic’s ability to generate sufficient revenue to achieve and sustain profitability, particularly in light of its significant ongoing expenses; New Relic’s short operating history in an evolving industry; New Relic’s ability to manage its significant recent growth; fluctuation of New Relic’s quarterly results; the development of the overall market for SaaS business software; the dependence of New Relic’s business on its customers purchasing additional subscriptions and products from it and renewing their subscriptions; New Relic’s


ability to develop enhancements to its products, increase adoption and usage of its products and introduce new products that achieve market acceptance; New Relic’s ability to persuade New Relic’s customers to expand their use of New Relic’s products to additional use cases; New Relic’s ability to determine optimal prices for its products; New Relic’s ability to expand its marketing and sales capabilities and increase sales of its solutions to large enterprises while mitigating the risks associated with serving such customers; privacy concerns, which could result in additional cost and liability to New Relic or inhibit sales; changes in privacy laws, regulations and standards; New Relic’s ability to effectively compete in the intensely competitive market for application performance monitoring solutions and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs, requirements or preferences; New Relic’s dependence on lead generation strategies to drive sales and revenue; interruptions or performance problems associated with New Relic’s technology and infrastructure; defects or disruptions in New Relic’s products; the expense and complexity of New Relic’s ongoing and planned investments in data center hosting facilities; risks associated with international operations; New Relic’s ability to protect its intellectual property rights; and other “Risk Factors” set forth in New Relic’s most recent filings with the Securities and Exchange Commission (the “SEC”).

Further information on these and other factors that could affect New Relic’s financial results and the forward-looking statements in this press release is included in the filings we make with the SEC from time to time, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including the Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015. Copies of these documents may be obtained by visiting New Relic’s Investor Relations website at http://ir.newrelic.com or the SEC’s website at www.sec.gov.

New Relic assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Non-GAAP Financial Measures

New Relic discloses the following non-GAAP financial measures in this release and the earnings call referencing this press release: non-GAAP loss from operations, non-GAAP net loss, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating margin, non-GAAP sales and marketing, non-GAAP research and development, non-GAAP general and administrative and non-GAAP weighted average shares used to compute net loss per share attributable to common stockholders. New Relic uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance. New Relic 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.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical 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. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.


New Relic defines non-GAAP gross profit, non-GAAP sales and marketing, non-GAAP research and development, non-GAAP general and administrative, non-GAAP operating loss and non-GAAP net loss as the respective GAAP balances, adjusted for: (1) stock-based compensation expense, (2) amortization of stock-based compensation capitalized in software development costs, (3) the amortization of purchased intangibles, (4) lawsuit litigation expense, (5) the transaction costs related to acquisition and (6) employer payroll tax expense on equity incentive plans, as applicable. New Relic excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of New Relic’s common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of New Relic’s business. Non-GAAP net loss per share is calculated as non-GAAP net loss divided by the non-GAAP weighted average shares used to compute net loss per share attributable to common stockholders that are adjusted to assume the conversion of outstanding preferred shares to common shares as of the beginning of the period.

With respect to New Relic’s outlook under “Outlook” above, New Relic has not reconciled its expectations as to non-GAAP loss from operations to GAAP loss from operations or non-GAAP net loss per share to GAAP net loss per share because certain items such as stock-based compensation, lawsuit litigation expenses and employer payroll taxes on equity incentive plans are out of New Relic’s control or cannot be reasonably predicted. Accordingly, reconciliation is not available without unreasonable effort.

Operating Metrics

New Relic’s dollar-based net expansion rate compares its recurring subscription revenue from customers from one period to the next. It is increased when customers increase their use of New Relic’s products, use additional products, or upgrade to a higher subscription tier. New Relic’s dollar-based net expansion rate is reduced when customers decrease their use of New Relic’s products, use fewer products, or downgrade to a lower subscription tier.

New Relic is a registered trademark of New Relic, Inc.

All product and company names herein may be trademarks of their registered owners.

Investor Contact

Jonathan Parker

New Relic, Inc.

503-336-9280

IR@newrelic.com

Media Contact

Andrew Schmitt

New Relic, Inc.

415-869-7109

aschmitt@newrelic.com


Condensed Consolidated Statements of Operations

(In thousands, except per share data; unaudited)

 

     Three Months Ended
December 31,
    Nine Months Ended
December 31,
 
     2015     2014     2015     2014  

Revenue

   $ 47,744      $ 29,029      $ 128,817      $ 77,003   

Cost of revenue

     9,744        5,940        26,562        15,001   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     38,000        23,089        102,255        62,002   

Operating expenses:

        

Research and development

     12,015        6,410        31,385        16,659   

Sales and marketing

     35,153        25,460        93,201        63,094   

General and administrative

     9,070        6,864        26,014        17,464   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     56,238        38,734        150,600        97,217   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (18,238     (15,645     (48,345     (35,215

Other income (expense):

        

Interest income

     158        47        448        65   

Interest expense

     (20     (54     (47     (83

Other expense, net

     (163     (381     (196     (195
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (18,263     (16,033     (48,140     (35,428

Income tax provision (benefit)

     92        (104     153        (104
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (18,355   $ (15,929   $ (48,293   $ (35,324
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common stockholders, basic and diluted

   $ (0.37   $ (0.70   $ (1.01   $ (1.94
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted

     48,953        22,847        48,001        18,182   
  

 

 

   

 

 

   

 

 

   

 

 

 


Condensed Consolidated Balance Sheets

(In thousands, except par value; unaudited)

 

     December 31,     March 31,  
     2015     2015  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 71,901      $ 105,257   

Short-term investments

     119,105        95,503   

Accounts receivable, net of allowance for doubtful accounts of $478 and $282, respectively

     23,408        13,813   

Prepaid expenses and other current assets

     5,676        4,299   
  

 

 

   

 

 

 

Total current assets

     220,090        218,872   

Property and equipment, net

     40,398        35,397   

Restricted cash

     8,023        4,623   

Goodwill

     11,828        2,053   

Intangible assets, net

     3,919        2,300   

Other assets, non-current

     1,583        1,466   
  

 

 

   

 

 

 

Total assets

   $ 285,841      $ 264,711   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 6,630      $ 4,969   

Accrued compensation and benefits

     8,893        6,288   

Other current liabilities

     4,516        3,623   

Deferred revenue

     55,370        29,185   
  

 

 

   

 

 

 

Total current liabilities

     75,409        44,065   

Deferred rent, non-current

     4,770        4,638   

Deferred revenue, non-current

     2,689        124   

Other liabilities, non-current

     1,616        1,014   
  

 

 

   

 

 

 

Total liabilities

     84,484        49,841   

Stockholders’ equity:

    

Common stock, $0.001 par value

     50        47   

Treasury stock—at cost (260 shares)

     (263     (263

Additional paid-in capital

     381,634        346,671   

Accumulated other comprehensive (loss) income

     (171     15   

Accumulated deficit

     (179,893     (131,600
  

 

 

   

 

 

 

Total stockholders’ equity

     201,357        214,870   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 285,841      $ 264,711   
  

 

 

   

 

 

 


Condensed Consolidated Statements of Cash Flows

(In thousands; unaudited)

 

     Nine Months Ended
December 31,
 
     2015     2014  

Cash flows from operating activities:

    

Net loss:

   $ (48,293   $ (35,324

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     11,058        6,089   

Stock-based compensation expense

     16,603        7,592   

Other

     817        208   

Changes in operating assets and liabilities, net of acquisition of business:

  

Accounts receivable

     (10,010     (6,754

Prepaid expenses and other assets

     (1,265     (1,443

Accounts payable

     859        (777

Accrued compensation and benefits and other liabilities

     4,068        2,936   

Deferred rent

     199        771   

Deferred revenue

     28,750        13,273   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     2,786        (13,429

Cash flows from investing activities:

    

Purchases of property and equipment

     (8,119     (10,628

Acquisition of business, net of cash acquired

     (5,498     (2,262

Increase in restricted cash

     (3,400     (25

Purchases of short-term investments

     (80,046     (37,189

Proceeds from sale and maturity of short-term investments

     55,692        —     

Capitalized software development costs

     (5,316     (6,667
  

 

 

   

 

 

 

Net cash used in investing activities

     (46,687     (56,771

Cash flows from financing activities:

    

Proceeds from issuances of preferred stock, net of issuance costs

     —          97,243   

Proceeds from initial public offering, net of issuance costs

     —          120,601   

Principal payments on debt

     —          (271

Proceeds from issuance of common stock

     10,545        914   
  

 

 

   

 

 

 

Net cash provided by financing activities

     10,545        218,487   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (33,356     148,287   

Cash and cash equivalents, beginning of period

     105,257        19,453   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 71,901      $ 167,740   
  

 

 

   

 

 

 


Reconciliation from GAAP to Non-GAAP Results

(In thousands, except per share data; unaudited)

 

     Three Months Ended
December 31,
    Nine Months Ended
December 31,
 
     2015     2014     2015     2014  

Reconciliation of gross profit and gross margin:

    

GAAP gross profit

   $ 38,000      $ 23,089      $ 102,255      $ 62,002   

Plus: Stock-based compensation

     333        166        893        359   

Plus: Amortization of purchased intangibles

     339        198        739        198   

Plus: Amortization of stock-based compensation capitalized in software development costs

     167        51        388        113   

Plus: Employer payroll tax on employee equity incentive plans

     9        —          12        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 38,848      $ 23,504      $ 104,287      $ 62,672   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP gross margin

     80     80     79     81

Non-GAAP adjustments

     1     1     2     1
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     81     81     81     82
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of operating expenses:

        

GAAP research and development

   $ 12,015      $ 6,410      $ 31,385      $ 16,659   

Less: Stock-based compensation

     (1,684     (721     (4,223     (1,178

Less: Employer payroll tax on employee equity incentive plans

     (127     —          (195     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP research and development

   $ 10,204      $ 5,689      $ 26,967      $ 15,481   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP sales and marketing

   $ 35,153      $ 25,460      $ 93,201      $ 63,094   

Less: Stock-based compensation

     (2,588     (1,474     (6,634     (3,378

Less: Amortization of purchased intangibles

     (10     (12     (35     (12

Less: Employer payroll tax on employee equity incentive plans

     (85     —          (416     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP sales and marketing

   $ 32,470      $ 23,974      $ 86,116      $ 59,704   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP general and administrative

   $ 9,070      $ 6,864      $ 26,014      $ 17,464   

Less: Stock-based compensation

     (1,751     (1,065     (4,853     (2,677

Less: Lawsuit litigation

     (16     (94     (43     (1,217

Less: Amortization of purchased intangibles

     (32     (37     (106     (37

Less: Transaction costs related to acquisition

     (281     (71     (385     (71

Less: Employer payroll tax on employee equity incentive plans

     (132     —          (210     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP general and administrative

   $ 6,858      $ 5,597      $ 20,417      $ 13,462   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of loss from operations and operating margin:

        

GAAP loss from operations

   $ (18,238   $ (15,645   $ (48,345   $ (35,215

Plus: Stock-based compensation

     6,356        3,426        16,603        7,592   

Plus: Lawsuit litigation

     16        94        43        1,217   

Plus: Amortization of purchased intangibles

     381        247        880        247   

Plus: Transaction costs related to acquisition

     281        71        385        71   

Plus: Amortization of stock-based compensation capitalized in software development costs

     167        51        388        113   

Plus: Employer payroll tax on employee equity incentive plans

     353        —          833        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP loss from operations

   $ (10,684   $ (11,756   $ (29,213   $ (25,975
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP operating margin

     (38 %)      (54 %)      (38 %)      (46 %) 

Non-GAAP adjustments

     16     14     15     12
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     (22 %)      (40 %)      (23 %)      (34 %) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of net loss:

        

GAAP net loss

   $ (18,355   $ (15,929   $ (48,293   $ (35,324

Plus: Stock-based compensation

     6,356        3,426        16,603        7,592   

Plus: Lawsuit litigation

     16        94        43        1,217   

Plus: Amortization of purchased intangibles

     381        247        880        247   

Plus: Transaction costs related to acquisition

     281        71        385        71   

Plus: Amortization of stock-based compensation capitalized in software development costs

     167        51        388        113   

Plus: Employer payroll tax on employee equity incentive plans

     353        —          833        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss

   $ (10,801   $ (12,040   $ (29,161   $ (26,084
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of net loss per share attributable to common stockholders, basic and diluted:

    

GAAP net loss per share attributable to common stockholders, basic and diluted

   $ (0.37   $ (0.70   $ (1.01   $ (1.94

Non-GAAP adjustments to net loss

     0.15        0.17        0.40        0.51   

Non-GAAP adjustment to weighted-average shares used to compute net loss per share

     —          0.25        —          0.80   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss per share attributable to common stockholders, basic and diluted

     (0.22     (0.28     (0.61     (0.63
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of weighted-average shares used to compute net loss per share attributable to common stockholders:

        

GAAP weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted

     48,953        22,847        48,001        18,182   

Conversion of preferred stock

     —          19,476        —          23,076   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted

     48,953        42,323        48,001        41,258