Mimecast: Fiscal 4Q19 Financial Results

Mimecast Limited announced financial results for the fourth quarter and full year ended March 31, 2019.

“I am very proud of the strides we made this year to more fully protect our customers from the ever-changing cyber threats they face while at the same time reducing complexity and simplifying IT,” stated Peter Bauer, CEO.

CFO, Rafe Brown, commented: “In 2019, Mimecast delivered strong revenue growth and margin expansion, giving the company momentum as it moves into the new fiscal year. With impressive innovation like Mimecast Threat Center and the new product Mimecast Awareness Training one sees why we were able to add 4,000 net new customers to the Mimecast platform while experiencing 111% revenue retention from our existing relationships.”

4FQ19 Financial Highlights

• Revenue was $92.2 million, an increase of 26% compared to $73.4 million of revenue in 4FQ18. Revenue on a constant currency basis increased 32% compared to 4FQ18.
• Added 1,100 net new customers compared to 1,200 net new customers in 4FQ18, 34,400 organizations globally.
• Revenue retention rate was 111%, compared to 110% in 4FQ18.
• Gross profit percentage was 73%, compared to 73% in 4FQ18.
• Net loss was $1.9 million, or $(0.03) per diluted share, based on 60.7 million diluted shares outstanding compared to a net loss of $6.6 million, or $(0.11) per diluted share based on 58.3 million diluted shares outstanding in 4FQ18.
• Non-GAAP net income was $4.6 million, or $0.07 per diluted share, based on 63.3 million diluted shares outstanding compared to a non-GAAP net loss of $3.1 million or $(0.05) per diluted share based on 58.3 million diluted shares outstanding in 4FQ18.
• Adjusted EBITDA was $15.8 million, representing an Adjusted EBITDA margin of 17.1% up from 9.8% in 4FQ18.
• Operating cash flow was $18.3 million, compared to $14.8 in 4FQ18.
• Free cash flow was $13.4 million compared to $1.9 million in 4FQ18. Cash and short-term investments as of March 31, 2019 were $173.5 million.

FY19 Highlights

• Revenue for 2019 was $340.4 million, an increase of 30% compared to $261.9 million of revenue in 2018.  Revenue on a constant currency basis increased 32% compared to 2018.
• Added 4,000 net new customers in 2019.
• Revenue retention rate was 111% for 2019.
• Gross profit percentage was 73% in 2019, consistent with 73% in 2018.
• Net loss was $7.0 million, or $(0.12) per diluted share, based on 60.0 million diluted shares outstanding compared to a net loss of $12.4 million, or $(0.22) per diluted share based on 57.3 million diluted shares outstanding in 2018.
• Adjusted EBITDA was $54.0 million, representing an Adjusted EBITDA margin of 15.9% up from 9.8% in 2018.
• Operating cash flow was $66.2 million for 2019 compared to $46.4 million for 2018.
• Non-GAAP net income was $16.4 million, or $0.26 per diluted share, based on 62.8 million diluted shares outstanding compared to a non-GAAP net loss of $0.9 million or $(0.01) per diluted share based on 57.3 million diluted shares outstanding in 2018.
• Free cash flow was $37.4 million compared to $11.9 million for the full year 2018.

Business Highlights

• Mimecast Threat Center, launched in March, is focused on providing threat intelligence that helps organizations convert threat information into value for the business. Led by Joshua Douglas, the Threat Center will leverage email and web data to offer threat intelligence insights to security professionals.
• Mimecast Supervision Solution is now available. Integrated with the Mimecast Cloud Archive, users can facilitate an auditable, managed supervision review process. The solution is flexible to meet the needs of customers while utilizing a scalable SEC 17a-4 validated and tamper proof archive.
• Sales of Targeted Threat Protection grew rapidly as 1,800 new and existing customers adopted the service in 4FQ19. In total, 23,100 customers now use the service.
• On average, Mimecast customers used 3.1 services in 4FQ19. This represents an increase from the average of 2.9 services used by customers in 4FQ18.
• A total of 43% of customers used Mimecast in conjunction with Microsoft Office 365 during 4FQ19 compared to 31% in 4FQ18. In total 15,000 customers of all sizes have selected Mimecast to enhance their security, archive their data, and provide uptime assurance for their Office 365 investments.

Business Outlook
For 1FQ20, revenue is expected to be in the range of $96.7 million to $97.7 million and constant currency revenue growth is expected to be in the range of 28% to 29%. This guidance is based on exchange rates as of April 30, 2019 and includes an estimated negative impact of $3.6 million resulting from the strengthening of the U.S. dollar compared to the prior year. Adjusted EBITDA for the first quarter is expected to be in the range of $12.1 million to $13.1 million.

For FY20, revenue is expected to be in the range of $413 million to $427 million and constant currency revenue growth is expected to be in the range of 23% to 27%.  Foreign exchange rate fluctuations are negatively impacting this guidance by an estimated $5.2 million. Adjusted EBITDA is expected to be in the range of $70.7 million to $72.7 million.

To read the earnings call transcript