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Mimecast: Fiscal 4Q17 Financial Results

Next year guidance: 28% to 32% revenue growth

(in $ million) 4Q16 4Q17 FY16 FY17
Revenue 36.9 52.4 141.8 186.6
Growth   42%   32%
Net income (loss) (2.0) (2.6) (3.2) (5.4)

Mimecast Limited announced financial results for the fourth quarter and full year ended March 31, 2017.

2017 was a year of outperformance for Mimecast. We exceeded our expectations for both top and bottom line growth. We hired aggressively and acquired industry leading talent across the organization. We expanded our ecosystem with channel and marketing partners. Importantly, we launched new products, like Internal Email Protect, to support our future success,” stated Peter Bauer, CEO.

CFO Peter Campbell noted: “We are very pleased that our revenue growth accelerated to 42% as reported and 45% on a constant currency basis in the fourth quarter. We are also pleased that we signed on more mid and large customers this quarter, driving higher average order values.”

Fourth Quarter 2017 Financial Highlights

  • Revenue: GAAP revenue for the fourth quarter of 2017 was $52.4 million, an increase of 42% compared to $36.9 million of GAAP revenue in the fourth quarter of 2016. Revenue on a constant currency basis increased 45% compared to the fourth quarter of 2016.
  • CustomersAdded 1,500 net new customers in the fourth quarter of 2017. We now serve over 26,400 organizations globally.
  • Revenue Retention Rate: Was 111% in the fourth quarter of 2017, up from 109% in the fourth quarter of 2016.
  • Gross Profit Percentage: Was 74% in the fourth quarter of 2017, up from 70% in the fourth quarter of 2016.
  • GAAP Net Loss: Was $2.6 million, or $(0.05) per basic and diluted share, based on 55.4 million weighted-average shares outstanding.
  • Adjusted EBITDA: Was $3.6 million, representing an Adjusted EBITDA margin of 6.8% up from 1.3% in the fourth quarter of 2016.
  • Non-GAAP Net Loss: Was $0.2 million, or $(0.00) per share, based on 55.4 million diluted shares outstanding.
  • Free Cash Flow and Cash: The firm generated $4.8 million of free cash flow in the fourth quarter of 2017. Cash and short-term investments as of March 31, 2017 were $111.7 million.

Full Year 2017 Financial Highlights

  • Revenue: GAAP revenue for 2017 was $186.6 million, an increase of 32% compared to the $141.8 million of GAAP revenue in 2016. Revenue on a constant currency basis grew 39% compared to 2016.
  • Customers: Added 8,400 net new customers in 2017.
  • Revenue Retention Rate: Was 111% for 2017.
  • Gross Profit Percentage: Was 73% in 2017, up from 71% in 2016.
  • GAAP Net Loss: Was $5.4 million, or $(0.10) per basic and diluted share, based on 54.8 million weighted-average shares outstanding.
  • Adjusted EBITDA: Was $11.8 million, representing an Adjusted EBITDA margin of 6.3% down from 11.2% in 2016.
  • Non-GAAP Net Income: Was $4.6 million, or $0.08 per share, based on 59.0 million diluted shares outstanding.
  • Cash and Free Cash Flow: The company generated $14.0 million of free cash flow in 2017.

Fourth Quarter 2017 Business Highlights

  • Sales of Targeted Threat Protection increased during the fourth quarter, with more than 1,400 new customers and over 600 existing customers purchasing the service. Organizations continue to be challenged by advanced threats and increasingly are turning to Mimecast for protection. A total of 38% of our customers are now using Targeted Threat Protection.
  • A total of 21% of customers used Mimecast in conjunction with Microsoft Office 365 during the fourth quarter compared to 19% in the third quarter of 2017. More than 5,600 customers of all sizes have selected Mimecast to enhance their security, archive their data, and to provide uptime assurance for their Office 365 investments.
  • Mimecast launched Internal Email Protect, a new component of its Target Treat Protection suite of services, now providing customers the ability to analyze and remediate email traffic that originates and is delivered inside an organization, protecting against threats that operate behind the corporate firewall. This first-to-market service can be deployed to any email environment weather on premise, in the cloud or hybrid.
  • The company introduced, Email Security Risk Assessor (ESRA). This tool has uncovered millions of email attacks that have gotten through incumbent email systems. Prospective customers now have the ability to identify security threats that Mimecast can block but pass through their current email gateways.

1FQ18 Guidance
Constant currency revenue growth is expected to be in the range of 35% to 36% and revenue is expected to be in the range of $54.7 million to $55.3 million. Our guidance is based on exchange rates as of April 30, 2017 and includes an estimated negative impact of $1.0 million resulting from the strengthening of the U.S. dollar compared to the prior year. This resulted from a negative impact related to the British Pound of $2.0 million but was offset by positive impacts from the South African Rand of $1.0 million. Adjusted EBITDA for the first quarter is expected to be in the range of $3.3 million to $4.3 million.
 
FY18 Guidance
Revenue is expected to be the range of $239.4 million to $247.6 million or 28% to 32% revenue growth in constant currency. Foreign exchange rate fluctuations are positively impacting this guidance by an estimated $0.9 million. Adjusted EBITDA is expected to be in the range of $18.7 million to $20.7 million.

To read the earnings call transcript

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