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Carbonite: Fiscal 1Q16 Financial Results

Sales up 46% Y/Y and 31% Q/Q with EVault, but expected to decline next quarter

(in $ million) 1Q15 1Q16 Growth
Revenue
33.0 48.1 46%
Net income (loss) 6.2 4.7  

Carbonite, Inc. announced financial results for the quarter ended March 31, 2016.

1Q16 Highlights:

  • Non-GAAP revenue of $48.7 million increased 47% year over year.1 Revenue of $48.1 million increased 46% year over year.
  • Bookings of $52.3 million increased 42% year over year.
  • SMB bookings grew 124% year over year.
  • Non-GAAP net income (loss) per share was $0.15 compared with ($0.05) year over year.4 Net loss per share was ($0.17) compared with ($0.23) year over year.

I am very pleased to report that SMB bookings grew by more than 120% year over year, and for the first time, SMB accounted for more than 50% of total quarterly bookings. SMB demand for cloud backup and DR solutions continues to grow, driven by the need to protect valuable data against an evolving threat landscape. With the Carbonite product line-up providing market-leading cloud backup for small businesses, and the EVault product suite providing best-in-class DR as a service (DRaaS) solutions for mid-size businesses, we are well positioned to capitalize on all of the opportunities ahead,” said Mohamad Ali, president and CEO.

Our strong performance in the first quarter was driven by bookings of EVault-branded products combined with better than 25% bookings growth of Carbonite-branded SMB products, led by our Carbonite Server Backup solution. Both consumer and SMB retention rates remained at all-time highs and we drove gross margin improvement and improved profitability through disciplined cost management,” said Anthony Folger, CFO.

1Q16 Results:

  • Revenue for the first quarter was $48.1 million, an increase of 46% from $33.0 million in the first quarter of 2015.  Non-GAAP revenue for the first quarter was $48.7 million, an increase of 47% from $33.0 million in the first quarter of 2015.
  • Bookings for the first quarter were $52.3 million, an increase of 42% from $36.9 million in the first quarter of 2015.
  • Gross margin for the first quarter was 69.3%, compared to 69.7% in the first quarter of 2015.
  • Non-GAAP gross margin was 71.9% in the first quarter, compared to 71.1% in the first quarter of 2015.
  • Net loss for the first quarter was ($4.7) million, compared to a net loss of ($6.2) million in the first quarter of 2015. Non-GAAP net income for the first quarter was $4.1 million, compared to non-GAAP net loss of ($1.4) million in the first quarter of 2015.
  • Net loss per share for the first quarter was ($0.17) (basic and diluted), compared to a net loss per share of ($0.23) (basic and diluted) in the first quarter of 2015. Non-GAAP net income per share was $0.15 (basic and diluted) for the first quarter, compared to non-GAAP net loss per share of ($0.05) (basic and diluted) in the first quarter of 2015.
  • Total cash, cash equivalents and marketable securities were $42.0 million as of March 31, 2016, compared to $64.9 million as of December 31, 2015.
  • Cash flow from operations for the first quarter was ($6.8) million, compared to $2.6 million in the first quarter of 2015. Free cash flow for the first quarter was ($0.5) million, compared to $2.6 million in the first quarter of 2015.

Business Outlook

  • For the second quarter of 2016, non-GAAP revenues are expected to be in the range of $42.5-$47.5 million and non-GAAP net income per share to be in the range of $0.01 – $0.05 (basic and diluted).
  • For the full year of 2016, non-GAAP revenues are expected to be in the range of $177.5-$192.5 million and non-GAAP net income per share to be in the range of $0.31 – $0.35 (basic and diluted).
  • Carbonite’s expectations of non-GAAP net income per share for the second quarter and full year of 2016 excludes the impact of purchase accounting adjustments, stock-based compensation expense, litigation-related expense, acquisition-related expense, amortization expense on intangible assets and assumes a 2016 effective tax rate of 0% and weighted average shares outstanding of approximately 27.1 million for the second quarter and full year of 2016.

Comments

Abstracts of the earnings call transcript:

Mohamad Ali, president and CEO:
"We also continue to strengthen EVault's relationships with strategic alliance partners like Iron Mountain and SunGard, as well as Managed Service Provider, MSP, which is a new go-to-market for Carbonite.
"Over the past 12 months, Carbonite has helped 5,000 of our customers recover from ransomware, including a healthcare management company which lost 14 years of files to a cryptovirus attack, and a community organization, which lost 170,000 files."

Anthony Folger, CFO:
"(..) Q1 SMB bookings (...) consisted of 24.3 million in subscription bookings and 5.1 million in software, hardware, and professional services.
" (...) on the consumer side, bookings declined by 3% to approximately 23 million
"Customer retention was strong coming in at the high-end of our historical quarterly range of 96% to 97%"

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