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Carbonite: Fiscal 3Q14 Financial Results

Good results from server backup product, offset by softer demand for endpoint backup products

This is a Press Release edited by StorageNewsletter.com on November 10, 2014 at 3:14 pm
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(in $ million) 3Q13 3Q14 9 mo. 13 9 mo. 14
Revenues 27.7 31.3 78.4 90.7
Growth   13%   16%
Net income (loss) (1.2) (0.7) (10.9) (4.2)

Carbonite, Inc. announced financial results for the third quarter ended September 30, 2014.
 
Third Quarter 2014 Results:

  • Revenue was $31.3 million, an increase of 13% from $27.7 million in the third quarter of 2013.
  • Bookings were $30.6 million, an increase of 11% from $27.6 million in the third quarter of 2013.
  • Net loss was ($0.7) million, compared to a net loss of ($1.2) million in the third quarter of 2013. Non-GAAP net income for the third quarter was $1.0 million, compared to non-GAAP net income of $0.2 million in the third quarter of 2013.1
  • Net loss was ($0.03) per share (basic and diluted), compared to a net loss of ($0.05) per share (basic and diluted) in the third quarter of 2013. Non-GAAP net income was $0.04 per share (basic and diluted) for the third quarter, compared to non-GAAP net income of $0.01 per share (basic and diluted) in the third quarter of 2013.
  • Gross margin was 69.4%, compared to 67.9% in the third quarter of 2013. Non-GAAP gross margin was 70.2% in the third quarter, compared to 68.7% in the third quarter of 2013.2
  • Total cash and investments were $71.5 million as of September 30, 2014, compared to $62.3 million as of September 30, 2013.
  • Cash flow from operations was $4.0 million, compared to $2.4 million in the third quarter of 2013. Non-GAAP free cash flow for the third quarter was $2.1 million, compared to $1.4 million in the third quarter of 2013.3

“In the third quarter of 2014, we saw more and more small and medium-sized businesses turning to Carbonite for their backup and BC needs,” said David Friend, president and CEO. “We were excited to see demand for our Carbonite Server Backup product remain strong and early indicators of the success of the HT10 appliance with small businesses were encouraging. These results show the continued progress Carbonite is making with the products we have designed specifically for SMBs and these products well-position us for long-term growth in the BC market.”
 
Recent Highlights:

  • Moved corporate HQs to a 50,000 sq. ft. office building in Boston’s Innovation District to support its expansion strategy. This move better positions the company to hire additional talent and expand its portfolio of BC solutions for SMBs.
  • Launched operations in Munich as part of international expansion strategy. The team is working with select partners to build the channel eco-system and leverage market opportunities in Europe.
  • Winner of The ChannelPro-SMB Readers’ Choice Awards for best backup and DR provider and best cloud backup and DR provider. Voters included more than 800 channel professionals.

Business Outlook

  • For the fourth quarter of 2014, revenues are expected to be in the range of $31.7-$32.1 million and non-GAAP net (loss) per share to be in the range of ($0.04)-($0.02).
  • For the full year of 2014, revenues are expected to be in the range of $122.4-$122.8 million and non-GAAP net earnings/(loss) per share to be in the range of ($0.01)-$0.01.
  • Expectations of non-GAAP net earnings/(loss) per share for the fourth quarter and full year excludes stock-based compensation expense, patent litigation expense, amortization expense on intangible assets and assumes a tax rate of 0% and weighted average shares outstanding of approximately 26.8 million for the quarter and 26.7 million for the full year 2014.

Comments

Abstracts of the earnings call transcript:

David Friend, executive vhairman, CEO and president:
"SMB bookings grew 28%, driven by excellent results from our Carbonite Server Backup product, offset by softer demand for our endpoint backup products.
"In the past year, we grew the number of active channel partners by 35%, now numbering over 5,400. And as of today, we have reached a milestone of 75,000 small business customers.
"We have roughly 250 employees in Boston, about 250 in Maine, 25 in Silicon Valley, 40 full-time contractors in Eastern Europe and a small team in India."

Anthony Folger, CFO:
"During the quarter, total bookings increased 11% year-over-year to $30.6 million. Consumer bookings grew 5% to $21.1 million, and SMB bookings grew 28% to $9.5 million and accounted for 31% of total bookings during the quarter compared to 27% in the third quarter of 2013.
"Carbonite Server Backup (...) contributed more than 15% of total SMB bookings during Q3 and more than 10% of total SMB bookings on a year-to-date basis.
"We believe that our SMB bookings growth rate for the year will come in at or slightly below the low end of the estimate we gave you last quarter of 30% to 45%. And our consumer growth estimate continues to be in the range of flat to low single digits."

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