SolarWinds Announces Fourth Quarter and Full Year 2023 Results
Fourth Quarter 2023 Financial Highlights
-
Total revenue for the fourth quarter of
$198.1 million , representing 6% year-over-year growth, and total recurring revenue representing 92% of total revenue. -
Net loss for the fourth quarter of
$0.6 million . -
Adjusted EBITDA for the fourth quarter of
$87.0 million , representing a margin of 44% of total revenue and 17% year-over-year growth.
Full Year 2023 Financial Highlights
-
Total revenue for the full year of
$758.7 million , representing 5% year-over-year growth, and total recurring revenue representing 92% of total revenue. -
Net loss for the full year of
$9.1 million . -
Adjusted EBITDA for the full year of
$328.6 million , representing a margin of 43% of total revenue and 17% year-over-year growth. -
Subscription Annual Recurring Revenue (ARR) of
$233.2 million , representing year-over-year growth of 34%, and Total ARR of$684.1 million , representing year-over-year growth of 8%.
For a reconciliation of our GAAP to non-GAAP results, please see the tables below.
“We are pleased to finish the year with fourth quarter and full-year revenue and adjusted EBITDA results that exceeded our guidance, while also expanding our margins,” said
Recent Business Highlights
-
In October,
SolarWinds announced findings from its Service Desk Customer Report, including that the average SolarWinds Service Desk customer saved 23 hours a week due to reduced ticket volumes. -
In November,
SolarWinds announced SolarWinds Database Observability, which provides full visibility into databases to increase the performance, scalability, and efficiency of digital services and applications. -
At AWS re:Invent 2023,
SolarWinds unveiled the latest enhancements to SolarWinds Observability, including support for OpenTelemetry, new Kubernetes® application-centric intelligence, and the addition of cloud-enabled open-source and No-SQL database observability capabilities. -
SolarWinds appeared in the Gartner Market Guide for IT Service Management Platforms, 2023 report and as a “Contender” for the first time in the Forrester Wave for Enterprise Service Management, 2023 report. -
SolarWinds received several industry awards and recognitions in the fourth quarter, including Tech Ascension DevOps Innovation of the Year; Business Intelligence Product of the Year for IT Service Management; IT Security Awards 2023 winner in the Cloud Security category for Secure by Design; Cloud Awards finalist for Best Hybrid Cloud Solution; Dev Insider 2023 Awards silver winner in the observability category; Public Relations Department of the Year in the BIG Public Relations & Marketing Excellence Awards; and IP Insider 2023 Awards gold winner in the network monitoring category. -
In
January 2024 ,SolarWinds refinanced its first lien term loans and decreased the applicable margin for its secured overnight financing rate (“SOFR”) borrowings.
Balance Sheet
At
The financial results included in this press release are preliminary and pending final review by the company and its external auditors. Financial results will not be final until
Financial Outlook
As of
Financial Outlook for First Quarter of 2024
SolarWinds’ management currently expects to achieve the following results for the first quarter of 2024:
-
Total revenue in the range of
$187 to$192 million , representing growth of approximately 2% over the first quarter of 2023 total revenue at the midpoint of the range. -
Adjusted EBITDA of approximately
$81.5 to$84.5 million , representing growth of approximately 7% over the first quarter of 2023 adjusted EBITDA at the midpoint of the range. -
Non-GAAP diluted earnings per share of
$0.20 to$0.22 . - Weighted average outstanding diluted shares of approximately 171.3 million.
Financial Outlook for Full Year of 2024
SolarWinds’ management currently expects to achieve the following results for the full year of 2024:
-
Total revenue in the range of
$771 to$786 million , representing growth of approximately 3% over the full year of 2023 total revenue at the midpoint of the range. -
Adjusted EBITDA of approximately
$350 to$360 million , representing growth of approximately 8% over the full year of 2023 adjusted EBITDA at the midpoint of the range. -
Non-GAAP diluted earnings per share of
$0.95 to$1.00 . - Weighted average outstanding diluted shares of approximately 173.2 million.
Additional details on the company's outlook will be provided on the conference call.
Conference Call and Webcast
In conjunction with this announcement,
Forward-Looking Statements
This press release contains “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the first quarter and the full year 2024. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “aim,” “anticipate,” “believe,” “can,” “could,” “seek,” “should,” “feel,” “expect,” “will,” “would,” “plan,” “project,” “intend,” “estimate,” “continue,” “may,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) risks related to the Cyber Incident, including with respect to (1) litigation and investigation risks related to the Cyber Incident, including as a result of the pending civil complaint filed by the
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. We believe that these non-GAAP financial measures provide supplemental information that is meaningful when assessing our operating performance because they exclude the impact of certain amounts that our management and board of directors do not consider part of core operating results when assessing our operational performance, allocating resources, preparing annual budgets and determining compensation. Accordingly, these non-GAAP financial measures may provide insight to investors into the motivation and decision-making of management in operating the business.
There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (loss).
As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, the most comparable GAAP measures.
Non-GAAP Revenue on a Constant Currency Basis.
We provide non-GAAP revenue on a constant currency basis to provide a framework for assessing our performance excluding the effect of foreign currency rate fluctuations. To present this information, current period results for entities reporting in currencies other than
Non-GAAP Cost of Revenue and Non-GAAP Operating Income. We provide non-GAAP cost of revenue and non-GAAP operating income and related non-GAAP margins excluding such items as amortization of acquired intangible assets, stock-based compensation expense and related employer-paid payroll taxes, acquisition and other costs, restructuring costs, Cyber Incident costs, and goodwill and indefinite-lived asset impairment. Management believes these measures are useful for the following reasons:
- Amortization of Acquired Intangible Assets. We provide non-GAAP information that excludes expenses related to purchased intangible assets associated with our acquisitions, including our acquired technologies. We believe that eliminating this expense from our non-GAAP measures is useful to investors, because the amortization of acquired intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.
- Stock-Based Compensation Expense and Related Employer-Paid Payroll Taxes. We provide non-GAAP information that excludes expenses related to stock-based compensation and related employer-paid payroll taxes. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions, and the variety of award types. Employer-paid payroll taxes on stock-based compensation is dependent on our stock price and the timing of the taxable events related to the equity awards, over which our management has little control, and does not correlate to the core operation of our business. Because of these unique characteristics of stock-based compensation and related employer-paid payroll taxes, management excludes these expenses when analyzing the organization’s business performance.
- Acquisition and Other Costs. We exclude certain expense items resulting from acquisitions, such as legal, accounting and advisory fees, changes in fair value of contingent consideration, costs related to integrating the acquired businesses, deferred compensation, severance, and retention expense. In addition, we exclude certain other non-recurring costs, including internal investigation costs. We consider these adjustments, to some extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, acquisitions result in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations. We believe that providing these non-GAAP measures that exclude acquisition and other costs, allows users of our financial statements to better review and understand the historical and current results of our operations, and also facilitates comparisons to our historical results and results of less acquisitive peer companies, both with and without such adjustments.
- Restructuring Costs. We provide non-GAAP information that excludes restructuring costs, such as severance, lease impairments and other costs incurred in connection with the exiting of certain leased facilities, and other contracts as they relate to our corporate restructuring and exit activities, and costs related to the separation of employment with executives of the Company. These costs are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these costs for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
- Cyber Incident Costs. We exclude certain expenses resulting from the Cyber Incident. Expenses include costs to investigate and remediate the Cyber Incident, costs of lawsuits and investigations related thereto, including settlement costs and legal and other professional services, consulting services being provided to customers at no charge, and estimated loss contingencies. Cyber Incident costs are provided net of expected and received insurance reimbursements, although the timing of recognizing insurance reimbursements has differed from the timing of recognizing the associated expenses. We expect to incur significant legal and other professional services expenses associated with the Cyber Incident in future periods. The Cyber Incident results in operating expenses that would not have otherwise been incurred by us in the normal course of our organic business operations. We believe that providing non-GAAP measures that exclude these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance. We continue to invest significantly in cybersecurity and expect to make additional investments. These investments are in addition to the Cyber Incident costs and not included in the net Cyber Incident costs reported.
-
Goodwill and Indefinite-Lived Intangible Asset Impairment. We provide non-GAAP information that excludes non-cash goodwill and indefinite-lived intangible asset impairment charges. We believe that providing these non-GAAP measures that exclude these non-cash impairment charges allows users of our financial statements to better review and understand our historical and current operating results. In addition, as a significant portion of our goodwill and indefinite-lived intangible assets were derived from theFebruary 2016 take-private transaction, providing these non-GAAP measures that exclude these impairment charges facilitates comparisons to our peers who may not have undertaken a transformational acquisition resulting in significant goodwill and indefinite-lived intangible assets.
Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share. We believe that the use of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share is helpful to our investors to clarify and enhance their understanding of past performance and future prospects. Non-GAAP net income (loss) is calculated as net income (loss) excluding the adjustments to non-GAAP cost of revenue and non-GAAP operating income, certain other non-operating gains and losses and the income tax effect of the non-GAAP exclusions. We define non-GAAP net income (loss) per diluted share as non-GAAP net income (loss) divided by the weighted average outstanding diluted common shares.
Adjusted EBITDA and Adjusted EBITDA Margin. We regularly monitor adjusted EBITDA and adjusted EBITDA margin, as it is a measure we use to assess our operating performance. We define adjusted EBITDA as net income (loss), excluding amortization of acquired intangible assets and developed technology, depreciation expense, stock-based compensation expense and related employer-paid payroll taxes, restructuring costs, acquisition and other costs, Cyber Incident costs, net, goodwill and indefinite-lived intangible asset impairment, interest expense, net, debt-related costs including fees related to our credit agreements, debt extinguishment and refinancing costs, unrealized foreign currency (gains) losses, and income tax expense (benefit). We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; adjusted EBITDA excludes the impact of restructuring impairment charges related to exited leased facilities which may continue to require future cash rent payments; adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Unlevered Free Cash Flow .Unlevered free cash flow is a measure of our liquidity used by management to evaluate cash flow from operations, after the deduction of capital expenditures and prior to the impact of our capital structure, acquisition and other costs, restructuring costs, Cyber Incident costs, net, employer-paid payroll taxes on stock awards and other one-time items, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.
Other Defined Terms
Subscription Annual Recurring Revenue (Subscription ARR) . Subscription ARR represents the annualized recurring value of all active subscription contracts at the end of a reporting period.
Total Annual Recurring Revenue (Total ARR) . Total ARR represents the sum of Subscription ARR and the annualized value of all maintenance contracts related to perpetual licenses active at the end of a reporting period.
We use Subscription ARR and Total ARR to better understand and assess the performance of our business, as our mix of revenue generated from recurring revenue has increased in recent years. Subscription ARR and Total ARR each provides a normalized view of customer retention, renewal and expansion, as well as growth from new customers. Subscription ARR and Total ARR should each be viewed independently of revenue and deferred revenue and are not intended to be combined with or to replace either of those items.
#SWIfinancials
About
The
© 2024
|
Consolidated Balance Sheets (In thousands, except share and per share information) (Unaudited) |
|||||||
|
|
|
||||||
|
|
2023 |
|
2022 |
||||
|
Assets |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
284,695 |
|
|
$ |
121,738 |
|
|
Short-term investments |
|
4,477 |
|
|
|
27,114 |
|
|
Accounts receivable, net of allowances of |
|
103,455 |
|
|
|
100,204 |
|
|
Income tax receivable |
|
459 |
|
|
|
987 |
|
|
Prepaid and other current assets |
|
28,241 |
|
|
|
57,350 |
|
|
Total current assets |
|
421,327 |
|
|
|
307,393 |
|
|
Property and equipment, net |
|
19,669 |
|
|
|
26,634 |
|
|
Operating lease assets |
|
43,776 |
|
|
|
61,418 |
|
|
Deferred taxes |
|
133,224 |
|
|
|
134,922 |
|
|
|
|
2,397,545 |
|
|
|
2,380,059 |
|
|
Intangible assets, net |
|
183,688 |
|
|
|
243,980 |
|
|
Other assets, net |
|
51,686 |
|
|
|
45,600 |
|
|
Total assets |
$ |
3,250,915 |
|
|
$ |
3,200,006 |
|
|
Liabilities and stockholders’ equity |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable |
$ |
9,701 |
|
|
$ |
14,045 |
|
|
Accrued liabilities and other |
|
56,643 |
|
|
|
68,284 |
|
|
Current operating lease liabilities |
|
14,925 |
|
|
|
15,005 |
|
|
Accrued interest payable |
|
942 |
|
|
|
579 |
|
|
Income taxes payable |
|
29,240 |
|
|
|
11,841 |
|
|
Current portion of deferred revenue |
|
344,907 |
|
|
|
337,541 |
|
|
Current debt obligation |
|
12,450 |
|
|
|
9,338 |
|
|
Total current liabilities |
|
468,808 |
|
|
|
456,633 |
|
|
Long-term liabilities: |
|
|
|
||||
|
Deferred revenue, net of current portion |
|
42,070 |
|
|
|
38,945 |
|
|
Non-current deferred taxes |
|
1,933 |
|
|
|
8,582 |
|
|
Non-current operating lease liabilities |
|
49,848 |
|
|
|
59,235 |
|
|
Other long-term liabilities |
|
55,278 |
|
|
|
74,193 |
|
|
Long-term debt, net of current portion |
|
1,190,934 |
|
|
|
1,192,765 |
|
|
Total liabilities |
|
1,808,871 |
|
|
|
1,830,353 |
|
|
Commitments and contingencies |
|
|
|
||||
|
Stockholders’ equity: |
|
|
|
||||
|
Common stock, |
|
167 |
|
|
|
162 |
|
|
Preferred stock, |
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
2,688,854 |
|
|
|
2,627,370 |
|
|
Accumulated other comprehensive loss |
|
(28,103 |
) |
|
|
(48,114 |
) |
|
Accumulated deficit |
|
(1,218,874 |
) |
|
|
(1,209,765 |
) |
|
Total stockholders’ equity |
|
1,442,044 |
|
|
|
1,369,653 |
|
|
Total liabilities and stockholders’ equity |
$ |
3,250,915 |
|
|
$ |
3,200,006 |
|
|
Consolidated Statements of Operations (In thousands, except per share information) (Unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Revenue: |
|
|
|
|
|
|
|
||||||||
|
Subscription |
$ |
67,726 |
|
|
$ |
49,701 |
|
|
$ |
234,236 |
|
|
$ |
167,676 |
|
|
Maintenance |
|
115,123 |
|
|
|
115,053 |
|
|
|
462,072 |
|
|
|
458,901 |
|
|
Total recurring revenue |
|
182,849 |
|
|
|
164,754 |
|
|
|
696,308 |
|
|
|
626,577 |
|
|
License |
|
15,290 |
|
|
|
22,315 |
|
|
|
62,432 |
|
|
|
92,790 |
|
|
Total revenue |
|
198,139 |
|
|
|
187,069 |
|
|
|
758,740 |
|
|
|
719,367 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
||||||||
|
Cost of recurring revenue |
|
18,752 |
|
|
|
17,994 |
|
|
|
73,636 |
|
|
|
67,848 |
|
|
Amortization of acquired technologies |
|
3,096 |
|
|
|
3,632 |
|
|
|
13,369 |
|
|
|
28,135 |
|
|
Total cost of revenue |
|
21,848 |
|
|
|
21,626 |
|
|
|
87,005 |
|
|
|
95,983 |
|
|
Gross profit |
|
176,291 |
|
|
|
165,443 |
|
|
|
671,735 |
|
|
|
623,384 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
|
Sales and marketing |
|
63,836 |
|
|
|
67,274 |
|
|
|
249,265 |
|
|
|
257,746 |
|
|
Research and development |
|
24,993 |
|
|
|
24,238 |
|
|
|
100,173 |
|
|
|
92,330 |
|
|
General and administrative |
|
32,596 |
|
|
|
32,956 |
|
|
|
123,716 |
|
|
|
149,461 |
|
|
Amortization of acquired intangibles |
|
11,496 |
|
|
|
12,938 |
|
|
|
48,208 |
|
|
|
52,325 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
891,101 |
|
|
Total operating expenses |
|
132,921 |
|
|
|
137,406 |
|
|
|
521,362 |
|
|
|
1,442,963 |
|
|
Operating income (loss) |
|
43,370 |
|
|
|
28,037 |
|
|
|
150,373 |
|
|
|
(819,579 |
) |
|
Other income (expense): |
|
|
|
|
|
|
|
||||||||
|
Interest expense, net |
|
(28,510 |
) |
|
|
(25,705 |
) |
|
|
(115,848 |
) |
|
|
(83,374 |
) |
|
Other expense, net |
|
(189 |
) |
|
|
(3,213 |
) |
|
|
(386 |
) |
|
|
(5,074 |
) |
|
Total other expense |
|
(28,699 |
) |
|
|
(28,918 |
) |
|
|
(116,234 |
) |
|
|
(88,448 |
) |
|
Income (loss) before income taxes |
|
14,671 |
|
|
|
(881 |
) |
|
|
34,139 |
|
|
|
(908,027 |
) |
|
Income tax expense |
|
15,247 |
|
|
|
9,530 |
|
|
|
43,248 |
|
|
|
21,386 |
|
|
Net loss |
$ |
(576 |
) |
|
$ |
(10,411 |
) |
|
$ |
(9,109 |
) |
|
$ |
(929,413 |
) |
|
Net loss available to common stockholders |
$ |
(576 |
) |
|
$ |
(10,411 |
) |
|
$ |
(9,109 |
) |
|
$ |
(929,413 |
) |
|
Net loss available to common stockholders per share: |
|
|
|
|
|
|
|
||||||||
|
Basic loss per share |
$ |
— |
|
|
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
$ |
(5.78 |
) |
|
Diluted loss per share |
$ |
— |
|
|
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
$ |
(5.78 |
) |
|
Weighted-average shares used to compute net loss available to common stockholders per share: |
|
|
|
|
|
|
|
||||||||
|
Shares used in computation of basic loss per share |
|
166,239 |
|
|
|
161,721 |
|
|
|
164,631 |
|
|
|
160,841 |
|
|
Shares used in computation of diluted loss per share |
|
166,239 |
|
|
|
161,721 |
|
|
|
164,631 |
|
|
|
160,841 |
|
|
Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
|||||||
|
|
Twelve Months Ended |
||||||
|
|
2023 |
|
2022 |
||||
|
Cash flows from operating activities |
|
|
|
||||
|
Net loss |
$ |
(9,109 |
) |
|
$ |
(929,413 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization |
|
82,198 |
|
|
|
94,981 |
|
|
|
|
— |
|
|
|
906,350 |
|
|
Provision for losses on accounts receivable |
|
(389 |
) |
|
|
951 |
|
|
Stock-based compensation expense |
|
75,727 |
|
|
|
67,050 |
|
|
Amortization of debt issuance costs |
|
10,718 |
|
|
|
9,056 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
3,822 |
|
|
Deferred taxes |
|
(1,140 |
) |
|
|
(6,741 |
) |
|
(Gain) loss on foreign currency exchange rates |
|
(14 |
) |
|
|
1,525 |
|
|
Lease impairment charges |
|
11,392 |
|
|
|
— |
|
|
Other non-cash (benefits) expenses |
|
192 |
|
|
|
(30 |
) |
|
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: |
|
|
|
||||
|
Accounts receivable |
|
(1,568 |
) |
|
|
(6,846 |
) |
|
Income taxes receivable |
|
539 |
|
|
|
99 |
|
|
Prepaid and other assets |
|
29,391 |
|
|
|
(28,898 |
) |
|
Accounts payable |
|
(4,357 |
) |
|
|
6,751 |
|
|
Accrued liabilities and other |
|
(15,339 |
) |
|
|
25,759 |
|
|
Accrued interest payable |
|
362 |
|
|
|
426 |
|
|
Income taxes payable |
|
(1,616 |
) |
|
|
(9,290 |
) |
|
Deferred revenue |
|
6,389 |
|
|
|
19,689 |
|
|
Other long-term liabilities |
|
89 |
|
|
|
(735 |
) |
|
Net cash provided by operating activities |
|
183,465 |
|
|
|
154,506 |
|
|
Cash flows from investing activities |
|
|
|
||||
|
Purchases of investments |
|
(8,388 |
) |
|
|
(67,133 |
) |
|
Maturities of investments |
|
30,535 |
|
|
|
39,633 |
|
|
Purchases of property and equipment |
|
(4,353 |
) |
|
|
(7,463 |
) |
|
Capitalized software development costs |
|
(13,674 |
) |
|
|
(13,037 |
) |
|
Purchases of intangible assets |
|
(244 |
) |
|
|
(250 |
) |
|
Acquisitions, net of cash acquired |
|
— |
|
|
|
(6,500 |
) |
|
Other investing activities |
|
564 |
|
|
|
437 |
|
|
Net cash provided by (used in) investing activities |
|
4,440 |
|
|
|
(54,313 |
) |
|
Cash flows from financing activities |
|
|
|
||||
|
Proceeds from issuance of common stock under employee stock purchase plan |
|
3,377 |
|
|
|
3,151 |
|
|
Repurchase of common stock and incentive restricted stock |
|
(18,830 |
) |
|
|
(11,130 |
) |
|
Exercise of stock options |
|
143 |
|
|
|
59 |
|
|
Repayments of borrowings from credit agreement |
|
(9,338 |
) |
|
|
(664,350 |
) |
|
Payment of debt issuance costs |
|
— |
|
|
|
(36,925 |
) |
|
Net cash used in financing activities |
|
(24,648 |
) |
|
|
(709,195 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(300 |
) |
|
|
(1,376 |
) |
|
Net increase (decrease) in cash and cash equivalents |
|
162,957 |
|
|
|
(610,378 |
) |
|
Cash and cash equivalents |
|
|
|
||||
|
Beginning of period |
|
121,738 |
|
|
|
732,116 |
|
|
End of period |
$ |
284,695 |
|
|
$ |
121,738 |
|
|
|
|
|
|
||||
|
Supplemental disclosure of cash flow information |
|
|
|
||||
|
Cash paid for interest |
$ |
111,861 |
|
|
$ |
79,614 |
|
|
Cash paid for income taxes |
$ |
40,964 |
|
|
$ |
33,117 |
|
|
|
|
|
|
||||
|
Non-cash investing and financing transactions |
|
|
|
||||
|
Stock-based compensation included in capitalized software development costs |
$ |
1,246 |
|
|
$ |
1,171 |
|
|
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands, except margin and per share data) |
||||||||||||||
|
GAAP cost of revenue |
$ |
21,848 |
|
|
$ |
21,626 |
|
|
$ |
87,005 |
|
|
$ |
95,983 |
|
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(496 |
) |
|
|
(491 |
) |
|
|
(2,085 |
) |
|
|
(2,077 |
) |
|
Amortization of acquired technologies |
|
(3,096 |
) |
|
|
(3,632 |
) |
|
|
(13,369 |
) |
|
|
(28,135 |
) |
|
Restructuring costs |
|
— |
|
|
|
— |
|
|
|
(377 |
) |
|
|
— |
|
|
Cyber Incident costs |
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
(178 |
) |
|
Non-GAAP cost of revenue |
$ |
18,256 |
|
|
$ |
17,494 |
|
|
$ |
71,174 |
|
|
$ |
65,593 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP gross profit |
$ |
176,291 |
|
|
$ |
165,443 |
|
|
$ |
671,735 |
|
|
$ |
623,384 |
|
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
496 |
|
|
|
491 |
|
|
|
2,085 |
|
|
|
2,077 |
|
|
Amortization of acquired technologies |
|
3,096 |
|
|
|
3,632 |
|
|
|
13,369 |
|
|
|
28,135 |
|
|
Restructuring costs |
|
— |
|
|
|
— |
|
|
|
377 |
|
|
|
— |
|
|
Cyber Incident costs |
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
178 |
|
|
Non-GAAP gross profit |
$ |
179,883 |
|
|
$ |
169,575 |
|
|
$ |
687,566 |
|
|
$ |
653,774 |
|
|
GAAP gross margin |
|
89.0 |
% |
|
|
88.4 |
% |
|
|
88.5 |
% |
|
|
86.7 |
% |
|
Non-GAAP gross margin |
|
90.8 |
% |
|
|
90.6 |
% |
|
|
90.6 |
% |
|
|
90.9 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP sales and marketing expense |
$ |
63,836 |
|
|
$ |
67,274 |
|
|
$ |
249,265 |
|
|
$ |
257,746 |
|
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(7,482 |
) |
|
|
(5,810 |
) |
|
|
(26,444 |
) |
|
|
(22,597 |
) |
|
Acquisition and other costs |
|
(12 |
) |
|
|
— |
|
|
|
(225 |
) |
|
|
— |
|
|
Restructuring costs |
|
— |
|
|
|
— |
|
|
|
(2,857 |
) |
|
|
(163 |
) |
|
Cyber Incident costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(130 |
) |
|
Non-GAAP sales and marketing expense |
$ |
56,342 |
|
|
$ |
61,464 |
|
|
$ |
219,739 |
|
|
$ |
234,856 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP research and development expense |
$ |
24,993 |
|
|
$ |
24,238 |
|
|
$ |
100,173 |
|
|
$ |
92,330 |
|
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(1,887 |
) |
|
|
(2,860 |
) |
|
|
(11,659 |
) |
|
|
(11,230 |
) |
|
Restructuring costs |
|
(148 |
) |
|
|
— |
|
|
|
(2,093 |
) |
|
|
— |
|
|
Cyber Incident costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
Non-GAAP research and development expense |
$ |
22,958 |
|
|
$ |
21,378 |
|
|
$ |
86,421 |
|
|
$ |
81,098 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP general and administrative expense |
$ |
32,596 |
|
|
$ |
32,956 |
|
|
$ |
123,716 |
|
|
$ |
149,461 |
|
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(10,951 |
) |
|
|
(7,391 |
) |
|
|
(37,215 |
) |
|
|
(32,117 |
) |
|
Acquisition and other costs |
|
(672 |
) |
|
|
(108 |
) |
|
|
(2,387 |
) |
|
|
(540 |
) |
|
Restructuring costs |
|
114 |
|
|
|
(90 |
) |
|
|
(14,921 |
) |
|
|
(1,400 |
) |
|
Cyber Incident costs, net |
|
(2,205 |
) |
|
|
(5,931 |
) |
|
|
2,084 |
|
|
|
(25,923 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,249 |
) |
|
Non-GAAP general and administrative expense |
$ |
18,882 |
|
|
$ |
19,436 |
|
|
$ |
71,277 |
|
|
$ |
74,232 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP operating expenses |
$ |
132,921 |
|
|
$ |
137,406 |
|
|
$ |
521,362 |
|
|
$ |
1,442,963 |
|
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(20,320 |
) |
|
|
(16,061 |
) |
|
|
(75,318 |
) |
|
|
(65,944 |
) |
|
Amortization of acquired intangibles |
|
(11,496 |
) |
|
|
(12,938 |
) |
|
|
(48,208 |
) |
|
|
(52,325 |
) |
|
Acquisition and other costs |
|
(684 |
) |
|
|
(108 |
) |
|
|
(2,612 |
) |
|
|
(540 |
) |
|
Restructuring costs |
|
(34 |
) |
|
|
(90 |
) |
|
|
(19,871 |
) |
|
|
(1,563 |
) |
|
Cyber Incident costs, net |
|
(2,205 |
) |
|
|
(5,931 |
) |
|
|
2,084 |
|
|
|
(26,055 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(906,350 |
) |
|
Non-GAAP operating expenses |
$ |
98,182 |
|
|
$ |
102,278 |
|
|
$ |
377,437 |
|
|
$ |
390,186 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP operating income (loss) |
$ |
43,370 |
|
|
$ |
28,037 |
|
|
$ |
150,373 |
|
|
$ |
(819,579 |
) |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
20,816 |
|
|
|
16,552 |
|
|
|
77,403 |
|
|
|
68,021 |
|
|
Amortization of acquired technologies |
|
3,096 |
|
|
|
3,632 |
|
|
|
13,369 |
|
|
|
28,135 |
|
|
Amortization of acquired intangibles |
|
11,496 |
|
|
|
12,938 |
|
|
|
48,208 |
|
|
|
52,325 |
|
|
Acquisition and other costs |
|
684 |
|
|
|
108 |
|
|
|
2,612 |
|
|
|
540 |
|
|
Restructuring costs |
|
34 |
|
|
|
90 |
|
|
|
20,248 |
|
|
|
1,563 |
|
|
Cyber Incident costs, net |
|
2,205 |
|
|
|
5,940 |
|
|
|
(2,084 |
) |
|
|
26,233 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
906,350 |
|
|
Non-GAAP operating income |
$ |
81,701 |
|
|
$ |
67,297 |
|
|
$ |
310,129 |
|
|
$ |
263,588 |
|
|
GAAP operating margin |
|
21.9 |
% |
|
|
15.0 |
% |
|
|
19.8 |
% |
|
|
(113.9 |
)% |
|
Non-GAAP operating margin |
|
41.2 |
% |
|
|
36.0 |
% |
|
|
40.9 |
% |
|
|
36.6 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP net loss |
$ |
(576 |
) |
|
$ |
(10,411 |
) |
|
$ |
(9,109 |
) |
|
$ |
(929,413 |
) |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
20,816 |
|
|
|
16,552 |
|
|
|
77,403 |
|
|
|
68,021 |
|
|
Amortization of acquired technologies |
|
3,096 |
|
|
|
3,632 |
|
|
|
13,369 |
|
|
|
28,135 |
|
|
Amortization of acquired intangibles |
|
11,496 |
|
|
|
12,938 |
|
|
|
48,208 |
|
|
|
52,325 |
|
|
Acquisition and other costs |
|
684 |
|
|
|
108 |
|
|
|
2,612 |
|
|
|
540 |
|
|
Restructuring costs |
|
34 |
|
|
|
90 |
|
|
|
20,248 |
|
|
|
1,523 |
|
|
Cyber Incident costs, net |
|
2,205 |
|
|
|
5,940 |
|
|
|
(2,084 |
) |
|
|
26,233 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
906,350 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
1,892 |
|
|
|
— |
|
|
|
3,822 |
|
|
Tax (benefits) expense associated with above adjustments |
|
1,729 |
|
|
|
(560 |
) |
|
|
(6,201 |
) |
|
|
(23,708 |
) |
|
Non-GAAP net income |
$ |
39,484 |
|
|
$ |
30,181 |
|
|
$ |
144,446 |
|
|
$ |
133,828 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP diluted loss per share |
$ |
— |
|
|
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
$ |
(5.78 |
) |
|
Non-GAAP diluted earnings per share |
$ |
0.24 |
|
|
$ |
0.19 |
|
|
$ |
0.88 |
|
|
$ |
0.83 |
|
|
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA (Unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands, except margin data) |
||||||||||||||
|
Net loss |
$ |
(576 |
) |
|
$ |
(10,411 |
) |
|
$ |
(9,109 |
) |
|
$ |
(929,413 |
) |
|
Amortization and depreciation |
|
19,387 |
|
|
|
20,874 |
|
|
|
80,023 |
|
|
|
94,981 |
|
|
Income tax expense |
|
15,247 |
|
|
|
9,530 |
|
|
|
43,248 |
|
|
|
21,386 |
|
|
Interest expense, net |
|
28,510 |
|
|
|
25,705 |
|
|
|
115,848 |
|
|
|
83,374 |
|
|
Unrealized foreign currency (gains) losses |
|
600 |
|
|
|
2,423 |
|
|
|
(14 |
) |
|
|
1,525 |
|
|
Acquisition and other costs |
|
684 |
|
|
|
108 |
|
|
|
2,612 |
|
|
|
540 |
|
|
Debt-related costs(1) |
|
99 |
|
|
|
3,687 |
|
|
|
400 |
|
|
|
5,909 |
|
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
20,816 |
|
|
|
16,552 |
|
|
|
77,403 |
|
|
|
68,021 |
|
|
Restructuring costs(2) |
|
34 |
|
|
|
90 |
|
|
|
20,248 |
|
|
|
1,523 |
|
|
Cyber Incident costs, net |
|
2,205 |
|
|
|
5,940 |
|
|
|
(2,084 |
) |
|
|
26,233 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
906,350 |
|
|
Adjusted EBITDA |
$ |
87,006 |
|
|
$ |
74,498 |
|
|
$ |
328,575 |
|
|
$ |
280,429 |
|
|
Adjusted EBITDA margin |
|
43.9 |
% |
|
|
39.8 |
% |
|
|
43.3 |
% |
|
|
39.0 |
% |
|
________ |
|||
|
(1) |
Debt-related costs for the three and twelve months ended |
||
|
(2) |
Restructuring costs for the twelve months ended |
|
Reconciliation of Revenue to Non-GAAP Revenue on a Constant Currency Basis (Unaudited) |
|||||||||||||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||||
|
|
2023 |
|
2022 |
|
Growth Rate |
|
2023 |
|
2022 |
|
Growth Rate |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands, except percentages) |
||||||||||||||||||
|
Total GAAP revenue |
$ |
198,139 |
|
|
$ |
187,069 |
|
5.9 |
% |
|
$ |
758,740 |
|
|
$ |
719,367 |
|
5.5 |
% |
|
Estimated foreign currency impact(1) |
|
(1,499 |
) |
|
|
— |
|
(0.8 |
) |
|
|
(1,703 |
) |
|
|
— |
|
(0.2 |
) |
|
Non-GAAP total revenue on a constant currency basis |
$ |
196,640 |
|
|
$ |
187,069 |
|
5.1 |
% |
|
$ |
757,037 |
|
|
$ |
719,367 |
|
5.2 |
% |
| ________ | |||
|
(1) |
The estimated foreign currency impact is calculated using the average foreign currency exchange rates in the comparable prior year monthly periods and applying those rates to foreign-denominated revenue in the corresponding monthly periods in the three and twelve months ended |
||
|
Reconciliation of Unlevered Free Cash Flow (Unaudited) |
|||||||
|
|
Twelve Months Ended |
||||||
|
|
2023 |
|
2022 |
||||
|
|
|
|
|
||||
|
|
(in thousands) |
||||||
|
Net cash provided by operating activities |
$ |
183,465 |
|
|
$ |
154,506 |
|
|
Capital expenditures(1) |
|
(18,271 |
) |
|
|
(20,750 |
) |
|
Free cash flow |
|
165,194 |
|
|
|
133,756 |
|
|
Cash paid for interest and other debt related items |
|
105,168 |
|
|
|
75,978 |
|
|
Cash paid for acquisition and other costs, restructuring costs, Cyber Incident costs, net, employer-paid payroll taxes on stock awards and other one-time items |
|
13,194 |
|
|
|
33,498 |
|
|
Unlevered free cash flow (excluding forfeited tax shield) |
|
283,556 |
|
|
|
243,232 |
|
|
Forfeited tax shield related to interest payments(2) |
|
(29,084 |
) |
|
|
(19,505 |
) |
|
Unlevered free cash flow |
$ |
254,472 |
|
|
$ |
223,727 |
|
|
_______________ |
|||
|
(1) |
Includes purchases of property and equipment, capitalized software development costs and purchases of intangible assets. |
||
|
(2) |
Forfeited tax shield related to interest payments assumes a statutory rate of 26.0% for the twelve months ended |
||
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