Carbonite: Fiscal 3Q12 Financial Results

Carbonite, Inc. announced financial results for the quarter ended September 30, 2012.

"During the third quarter, we achieved record revenue. We also continued to realize leverage in our model, which is benefiting from better returns on marketing initiatives and increasing scale in the business enabling us to exceed our non-GAAP loss per share expectations," said David Friend, chairman and CEO of Carbonite. "We are having success increasing website conversions and are now experiencing double digit site yield improvements over our former website. Furthermore, we continue to strengthen our SMB initiatives, including an increased contribution from our resellers. We have also announced a definitive agreement to acquire Zmanda, which will enable us to expand our market opportunity and enhance our ability to more fully address the unique backup needs of small businesses by adding cloud server and database backup."

Financial and Operating Metrics for 3Q12

• Bookings for the third quarter of 2012 were $24.3 million, an increase of 19% from $20.5 million in the third quarter of 2011.
• Revenue for the third quarter of 2012 was $21.6 million, an increase of 35% from $15.9 million in the third quarter of 2011.
• Gross margin for the third quarter of 2012 was 66.6%, compared to 61.6% in the third quarter of 2011.
• Net loss for the third quarter of 2012 was ($3.4) million, compared to ($7.4) million in the third quarter of 2011.
• Net loss attributable to common stockholders for the third quarter of 2012 was ($0.13) per share (basic and diluted), compared to a net loss of ($0.47) per share (basic and diluted) in the third quarter of 2011.
• Non-GAAP net loss for the third quarter of 2012, which excludes amortization expense on intangible assets, stock-based compensation expense, and patent litigation expense was ($1.9) million, compared to ($6.6) million in the third quarter of 2011.
• Non-GAAP net loss per common share for the third quarter of 2012 was ($0.07), compared to a non-GAAP net loss per common share of ($0.26) in the third quarter of 2011.
• Cash flow from operations for the third quarter of 2012 was $2.4 million, compared to $1.9 million in the third quarter of 2011.
• Non-GAAP free cash flow for the third quarter of 2012 was $567,000, compared to ($489,000) in the third quarter of 2011.
• Cash, cash equivalents, and marketable securities were $66.3 million as of September 30, 2012, compared to $65.7 million as of June 30, 2012.
• Quarterly retention rate was in the 96% to 97% range, consistent with prior quarters since 2009.

Recent Business Highlights

• Announced Carbonite has signed a definitive agreement to acquire Zmanda, Inc., a provider of open source and cloud backup solutions. This acquisition will enhance Carbonite’s offerings for SMBs with the ability to backup databases and file systems to the cloud, and will enable SMBs and resellers to obtain the backup solutions they need from one vendor.
• Released a new mobile app that extends Carbonite’s signature data protection capabilities to mobile devices. Carbonite Mobile allows users to back up the photos and videos on their mobile devices to the cloud, and also includes features that protect a user’s mobile device and personal data in the event of loss or theft.
• Announced added features to Carbonite Business to help SMBs with HIPAA compliance. A critical aspect of HIPAA regulations is data protection, requiring compliant backup methods to ensure the security and confidentiality of stored data. Carbonite Business solutions deliver an easy to install and use service, and backs up an unlimited number of computers, external hard drives, NAS devices and Windows servers for a low flat fee.

Business Outlook
Based on information available as of October 25, 2012, Carbonite is issuing guidance for the fourth quarter and full year 2012 as follows:

• Fourth Quarter 2012: The company expects total revenue for the fourth quarter to be in the range of $23.1 million to $23.3 million
• Year 2012: The company expects 2012 total revenue to be in the range of $83.5 million to $83.7 million and non-GAAP net loss per common share to be in the range of ($0.51) to ($0.52). Carbonite’s expectations of non-GAAP net loss per common share for the full year excludes amortization expense on intangible assets, stock-based compensation expense, patent litigation expense, and a lease exit charge and assumes a tax rate of 0% and weighted average shares outstanding of approximately 25.7 million.

and non-GAAP net loss per common share to be in the range of ($0.06) to ($0.07). Carbonite’s expectations of non-GAAP net loss per common share for the fourth quarter excludes amortization expense on intangible assets, stock-based compensation expense, and patent litigation expense and assume a tax rate of 0% and weighted average shares outstanding of approximately 25.7 million.