Delaware | 001-35840 | 77-0528806 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
777 Mariners Island Boulevard, Suite 300 San Mateo, California 94404 | ||
(Address of Principal Executive Offices) (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
Exhibit Number | Description | |
99.1 | ||
MODEL N, INC. | ||
(Registrant) | ||
By: | /s/ David Barter | |
David Barter | ||
Senior Vice President and Chief Financial Officer |
• | Revenues: SaaS and maintenance revenues were $35.0 million compared to $29.6 million for the fourth quarter of fiscal 2017. Total revenues were $36.7 million compared to $35.6 million for the fourth quarter of fiscal 2017. |
• | Gross Profit: Gross profit was $21.9 million compared to $20.1 million for the fourth quarter of fiscal 2017. Gross margins were 60% compared to 57% for the fourth quarter of fiscal 2017. Non-GAAP gross profit was $23.0 million compared to $22.7 million for the fourth quarter of fiscal 2017. Non-GAAP gross margins were 63% compared to 61% for the fourth quarter of fiscal 2017. |
• | (Loss) income from operations: GAAP loss from operations was $(3.4) million compared to a GAAP loss from operations of $(7.2) million for the fourth quarter of fiscal 2017. Non-GAAP income from operations was $2.0 million compared to a Non-GAAP income from operations of $0.1 million for the fourth quarter of fiscal 2017. |
• | Net loss: GAAP net loss was $(3.6) million compared to a net loss of $(9.0) million for the fourth quarter of fiscal 2017. GAAP basic and diluted net loss per share attributable to common stockholders was $(0.12) based upon weighted average shares outstanding of 31.3 million, as compared to net loss per share of $(0.31) for the fourth quarter of fiscal 2017 based upon weighted average shares outstanding of 29.2 million. |
• | Non-GAAP net income (loss): Non-GAAP net income was $1.8 million as compared to a Non-GAAP net loss of $(1.7) million for the fourth quarter of fiscal 2017. Non-GAAP net income per share was $0.06 based upon weighted average shares outstanding of 31.3 million, as compared to Non-GAAP net loss per share of $(0.06) for the fourth quarter of fiscal 2017 based upon weighted average shares outstanding of 29.2 million. |
• | Adjusted EBITDA: Adjusted EBITDA was $2.5 million compared to $1.0 million for the fourth quarter of fiscal 2017. |
• | Revenues: SaaS and maintenance revenues were $135.9 million compared to $108.1 million in fiscal 2017. Total revenues were $154.6 million compared to $131.2 million for fiscal 2017. |
• | Gross Profit: Gross profit was $89.3 million compared to $70.1 million for fiscal 2017. Gross margins were 58% compared to 53% for fiscal 2017. Non-GAAP gross profit was $94.5 million, compared to $79.5 million for fiscal 2017. Non-GAAP gross margins were 61% compared to 58% for fiscal 2017. |
• | (Loss) income from operations: GAAP loss from operations was $(20.8) million compared to a loss from operations of $(38.6) million for fiscal 2017. Non-GAAP income from operations was $8.7 million compared to a Non-GAAP loss from operations of $(11.8) million for fiscal 2017. |
• | Net loss: GAAP net loss was $(28.2) million compared to net loss of $(39.5) million for fiscal 2017. GAAP basic and diluted net loss per share attributed to common stockholders was $(0.93) based upon weighted average shares outstanding of 30.4 million as compared to net loss per share of $(1.38) for fiscal 2017 based upon weighted average shares outstanding of 28.6 million. |
• | Non-GAAP net income (loss): Non-GAAP net income was $1.3 million as compared to Non-GAAP net loss of $(16.9) million for fiscal 2017. Non-GAAP net income per share was $0.04 based upon weighted average shares outstanding of 30.4 million, as compared to Non-GAAP net loss per share of $(0.59) for fiscal 2017 based upon weighted average shares outstanding of 28.6 million. |
• | Adjusted EBITDA: Adjusted EBITDA was $11.5 million compared to $(8.3) million for fiscal 2017. |
• | Leading life sciences companies Novo Nordisk and Biogen, among others, subscribed to Revenue Cloud as part of our SaaS transition program, which will enable each customer to migrate from an on-premise system to a modern SaaS solution. |
• | Seagate, a global leader in data storage solutions, expanded their usage of Revenue Cloud with a subscription to our Channel Data Management application. |
• | Our cloud optimization initiative, which centers on improving delivery and development by powering Revenue Cloud with AWS's infrastructure, progressed this quarter with the transition of Edwards Life Sciences, Shionogi, Ipsen, and Allegro Microsystems, among others. |
• | Integra Life Sciences recently added an acquired business unit to Revenue Cloud and in their next phase they will roll out our cloud platform to their international business units. |
(in $ millions, except per share outlook) | First Quarter Fiscal 2019 | Full Year Fiscal 2019 |
Total GAAP Revenues (1),(2) | 34.0 - 34.4 | 138.0 - 142.0 |
Subscription and other (1) | 24.2 - 24.6 | 100.0 - 105.0 |
Non-GAAP income from operations | 1.5 - 1.9 | 7.0 - 11.0 |
Non-GAAP net income (loss) per share | (0.01) - 0.01 | 0.05 - 0.17 |
Adjusted EBITDA | 2.0 - 2.4 | 8.5 - 12.5 |
As of September 30, 2018 | As of September 30, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 56,704 | $ | 57,558 | |||
Accounts receivable, net | 28,273 | 24,784 | |||||
Prepaid expenses | 3,631 | 3,733 | |||||
Other current assets | 455 | 1,013 | |||||
Total current assets | 89,063 | 87,088 | |||||
Property and equipment, net | 2,146 | 4,611 | |||||
Goodwill | 39,283 | 39,283 | |||||
Intangible assets, net | 34,597 | 40,156 | |||||
Other assets | 1,064 | 798 | |||||
Total assets | $ | 166,153 | $ | 171,936 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,664 | $ | 3,002 | |||
Accrued employee compensation | 14,211 | 14,996 | |||||
Accrued liabilities | 3,182 | 4,979 | |||||
Deferred revenue, current portion | 52,176 | 49,186 | |||||
Long term debt, current portion | 1,375 | 4,753 | |||||
Total current liabilities | 72,608 | 76,916 | |||||
Long-term liabilities: | |||||||
Long term debt | 52,329 | 52,452 | |||||
Other long-term liabilities | 1,182 | 1,307 | |||||
Total long-term liabilities | 53,511 | 53,759 | |||||
Total liabilities | 126,119 | 130,675 | |||||
Stockholders' equity: | |||||||
Common Stock | 5 | 4 | |||||
Preferred Stock | — | — | |||||
Additional paid-in capital | 244,814 | 217,052 | |||||
Accumulated other comprehensive loss | (1,285 | ) | (502 | ) | |||
Accumulated deficit | (203,500 | ) | (175,293 | ) | |||
Total stockholders' equity | 40,034 | 41,261 | |||||
Total liabilities and stockholders' equity | $ | 166,153 | $ | 171,936 |
Three Months Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
SaaS and maintenance | $ | 34,984 | $ | 29,628 | $ | 135,927 | $ | 108,055 | |||||||
License and implementation | 1,730 | 5,977 | 18,705 | 23,114 | |||||||||||
Total revenues | 36,714 | 35,605 | 154,632 | 131,169 | |||||||||||
Cost of Revenues: | |||||||||||||||
SaaS and maintenance | 13,414 | 12,345 | 53,903 | 46,872 | |||||||||||
License and implementation | 1,413 | 3,118 | 11,431 | 14,224 | |||||||||||
Total cost of revenues | 14,827 | 15,463 | 65,334 | 61,096 | |||||||||||
Gross profit | 21,887 | 20,142 | 89,298 | 70,073 | |||||||||||
Operating Expenses: | |||||||||||||||
Research and development | 7,555 | 7,762 | 32,416 | 31,064 | |||||||||||
Sales and marketing | 8,637 | 10,258 | 35,482 | 41,339 | |||||||||||
General and administrative | 9,079 | 9,332 | 42,178 | 36,281 | |||||||||||
Total operating expenses | 25,271 | 27,352 | 110,076 | 108,684 | |||||||||||
Loss from operations | (3,384 | ) | (7,210 | ) | (20,778 | ) | (38,611 | ) | |||||||
Interest expense (income), net | 828 | 1,370 | 8,178 | 4,159 | |||||||||||
Other expenses (income), net | (416 | ) | (15 | ) | (722 | ) | 62 | ||||||||
Loss before income taxes | (3,796 | ) | (8,565 | ) | (28,234 | ) | (42,832 | ) | |||||||
(Benefit) provision for income taxes | (177 | ) | 457 | (27 | ) | (3,285 | ) | ||||||||
Net loss | $ | (3,619 | ) | $ | (9,022 | ) | $ | (28,207 | ) | $ | (39,547 | ) | |||
Net loss per share attributable to common stockholders: | |||||||||||||||
Basic and diluted | $ | (0.12 | ) | $ | (0.31 | ) | (0.93 | ) | $ | (1.38 | ) | ||||
Weighted average number of shares used in computing net loss per share attributable to common stockholders: | |||||||||||||||
Basic and diluted | 31,342 | 29,198 | 30,370 | 28,649 |
Fiscal year ended September 30, | |||||||
2018 | 2017 | ||||||
Cash Flows From Operating Activities: | |||||||
Net loss | $ | (28,207 | ) | $ | (39,547 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities | |||||||
Depreciation and amortization | 8,299 | 8,185 | |||||
Stock-based compensation | 23,324 | 10,560 | |||||
Amortization of debt discount and issuance cost | 800 | 683 | |||||
Deferred income taxes | (392 | ) | (3,952 | ) | |||
Other non-cash charges | 137 | 216 | |||||
Loss on debt extinguishment | 3,142 | — | |||||
Changes in assets and liabilities, net of acquisition: | |||||||
Accounts receivable | (3,555 | ) | 1,420 | ||||
Prepaid expenses and other assets | (960 | ) | 2,117 | ||||
Deferred cost of implementation services | 486 | 1,502 | |||||
Accounts payable | (1,434 | ) | (1,558 | ) | |||
Accrued employee compensation | (687 | ) | 2,626 | ||||
Other accrued and long-term liabilities | (1,622 | ) | 13 | ||||
Deferred revenue | 3,192 | 5,770 | |||||
Net cash provided by (used in) operating activities | 2,523 | (11,965 | ) | ||||
Cash Flows From Investing Activities: | |||||||
Purchases of property and equipment | (252 | ) | (359 | ) | |||
Acquisition of businesses, net of cash acquired | — | (47,773 | ) | ||||
Capitalization of software development costs | — | (369 | ) | ||||
Net cash used in investing activities | (252 | ) | (48,501 | ) | |||
Cash Flows From Financing Activities: | |||||||
Proceeds from exercise of stock options and issuance of employee stock purchase plan | 4,439 | 3,986 | |||||
Proceeds from term loan | 49,588 | 48,686 | |||||
Debt issuance costs | (280 | ) | (806 | ) | |||
Principal payments on loan | (55,250 | ) | — | ||||
Early payment penalty | (1,500 | ) | — | ||||
Net cash (used in) provided by financing activities | (3,003 | ) | 51,866 | ||||
Effect of exchange rate changes on cash and cash equivalents | (122 | ) | 9 | ||||
Net decrease in cash and cash equivalents | (854 | ) | (8,591 | ) | |||
Cash and cash equivalents | |||||||
Beginning of period | 57,558 | 66,149 | |||||
End of period | $ | 56,704 | $ | 57,558 |
Model N Inc. | |||||||||||||||
Reconciliation of GAAP to Non-GAAP Operating Results | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
Three month ended September 30, | Fiscal year ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Reconciliation from GAAP net loss to adjusted EBITDA: | |||||||||||||||
GAAP net loss: | $ | (3,619 | ) | $ | (9,022 | ) | $ | (28,207 | ) | $ | (39,547 | ) | |||
Reversal of non-GAAP items: | |||||||||||||||
Stock-based compensation expense | 4,012 | 3,625 | 23,324 | 10,560 | |||||||||||
Depreciation and amortization | 1,889 | 2,319 | 8,299 | 8,185 | |||||||||||
Deferred revenue adjustment | — | 1,341 | 627 | 5,151 | |||||||||||
Acquisition and integration related costs | — | 970 | — | 6,446 | |||||||||||
Interest expense (income), net | 828 | 1,370 | 8,178 | 4,159 | |||||||||||
Other expenses (income), net | (416 | ) | (15 | ) | (722 | ) | 62 | ||||||||
(Benefit) provision for income taxes | (177 | ) | 457 | (27 | ) | (3,285 | ) | ||||||||
Adjusted EBITDA | $ | 2,517 | $ | 1,045 | $ | 11,472 | $ | (8,269 | ) | ||||||
Three month ended September 30, | Fiscal year ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Reconciliation from GAAP revenue to revenue before deferred revenue adjustment: | |||||||||||||||
GAAP revenue: | $ | 36,714 | $ | 35,605 | $ | 154,632 | $ | 131,169 | |||||||
Deferred revenue adjustment (d) | — | 1,341 | 627 | 5,151 | |||||||||||
Revenue before deferred revenue adjustment | $ | 36,714 | $ | 36,946 | $ | 155,259 | $ | 136,320 | |||||||
Three month ended September 30, | Fiscal year ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Reconciliation from GAAP gross profit to non-GAAP gross profit: | |||||||||||||||
GAAP gross profit: | $ | 21,887 | $ | 20,142 | $ | 89,298 | $ | 70,073 | |||||||
Reversal of non-GAAP expenses: | |||||||||||||||
Stock-based compensation (a) | 684 | 540 | 2,656 | 2,022 | |||||||||||
Amortization of intangible assets (b) | 476 | 476 | 1,904 | 1,694 | |||||||||||
Acquisition and integration related expenses (c) | — | 159 | — | 578 | |||||||||||
Deferred revenue adjustment (d) | — | 1,341 | 627 | 5,151 | |||||||||||
Non-GAAP gross profit | $ | 23,047 | $ | 22,658 | $ | 94,485 | $ | 79,518 | |||||||
Percentage of revenue before deferred revenue adjustment | 62.8 | % | 61.3 | % | 60.9 | % | 58.3 | % | |||||||
Three month ended September 30, | Fiscal year ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Reconciliation from GAAP loss from operations to non-GAAP income (loss) from operations: | |||||||||||||||
GAAP net loss from operations: | $ | (3,384 | ) | $ | (7,210 | ) | $ | (20,778 | ) | $ | (38,611 | ) | |||
Reversal of non-GAAP expenses: | |||||||||||||||
Stock-based compensation (a) | 4,012 | 3,625 | 23,324 | 10,560 | |||||||||||
Amortization of intangible assets (b) | 1,381 | 1,418 | 5,562 | 4,629 | |||||||||||
Acquisition and integration related expenses (c) | — | 970 | — | 6,446 |
Deferred revenue adjustment (d) | — | 1,341 | 627 | 5,151 | |||||||||||
Non-GAAP income (loss) from operations | $ | 2,009 | $ | 144 | $ | 8,735 | $ | (11,825 | ) | ||||||
Three month ended September 30, | Fiscal year ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Numerator: | |||||||||||||||
Reconciliation between GAAP and non-GAAP net income (loss): | |||||||||||||||
GAAP net loss: | $ | (3,619 | ) | $ | (9,022 | ) | $ | (28,207 | ) | $ | (39,547 | ) | |||
Reversal of non-GAAP expenses: | |||||||||||||||
Stock-based compensation (a) | 4,012 | 3,625 | 23,324 | 10,560 | |||||||||||
Amortization of intangible assets (b) | 1,381 | 1,418 | 5,562 | 4,629 | |||||||||||
Acquisition and integration related expenses (c) | — | 970 | — | 6,446 | |||||||||||
Deferred revenue adjustment (d) | — | 1,341 | 627 | 5,151 | |||||||||||
Deferred tax valuation allowances (f) | — | — | — | (4,165 | ) | ||||||||||
Non-GAAP net income (loss) attributable to Model N Inc. common stockholders | $ | 1,774 | $ | (1,668 | ) | $ | 1,306 | $ | (16,926 | ) | |||||
Denominator: | |||||||||||||||
Reconciliation between GAAP and non-GAAP net income (loss) per share attributable to Model N Inc. common stockholders: | |||||||||||||||
Weighted average number of shares used in computing GAAP dilutive net loss per share | 31,342 | 29,198 | 30,370 | 28,649 | |||||||||||
GAAP dilutive net loss per share attributable to Model N Inc. common stockholders | $ | (0.12 | ) | $ | (0.31 | ) | $ | (0.93 | ) | $ | (1.38 | ) | |||
Non-GAAP net income (loss) per share attributable to Model N Inc. common stockholders | $ | 0.06 | $ | (0.06 | ) | $ | 0.04 | $ | (0.59 | ) | |||||
Three month ended September 30, | Fiscal year ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Amortization of intangibles assets recorded in the statement of operations: | |||||||||||||||
Cost of revenues: | |||||||||||||||
SaaS and maintenance | $ | 476 | $ | 476 | 1,904 | 1,694 | |||||||||
License and implementation | — | — | — | — | |||||||||||
Total amortization of intangibles assets in cost of revenue (b) | 476 | 476 | 1,904 | 1,694 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | — | — | — | — | |||||||||||
Sales and marketing | 905 | 942 | 3,658 | 2,935 | |||||||||||
General and administrative | — | — | — | — | |||||||||||
Total amortization of intangibles assets in operating expense (b) | 905 | 942 | 3,658 | 2,935 | |||||||||||
Total amortization of intangibles assets (b) | $ | 1,381 | $ | 1,418 | $ | 5,562 | $ | 4,629 | |||||||
Three month ended September 30, | Fiscal year ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 |
Stock-based compensation recorded in the statement of operations: | |||||||||||||||
Cost of revenues: | |||||||||||||||
SaaS and maintenance | $ | 308 | $ | 265 | 1,269 | 1,007 | |||||||||
License and implementation | 376 | 275 | 1,387 | 1,015 | |||||||||||
Total stock-based compensation in cost of revenue (a) | 684 | 540 | 2,656 | 2,022 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 839 | 471 | 2,983 | 1,744 | |||||||||||
Sales and marketing | 1,007 | 907 | 3,524 | 2,651 | |||||||||||
General and administrative | 1,482 | 1,707 | 14,161 | 4,143 | |||||||||||
Total stock-based compensation in operating expense (a) | 3,328 | 3,085 | 20,668 | 8,538 | |||||||||||
Total stock-based compensation (a) | $ | 4,012 | $ | 3,625 | $ | 23,324 | $ | 10,560 |
(a) | Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. Stock-based compensation is a non-cash item. 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. In the third quarter of fiscal year 2018, the Company issued Mr. Rinat 572,601 common shares, with fair value approximately $10.5 million, in connection with his transition agreement when he resigned as Chief Executive Officer and Chairman of Board. Mr. Rinat’s 375,234 performance-based restricted stock units were cancelled and the previously recorded expense of approximately $2.0 million was reversed into general and administrative expenses. |
(b) | Amortization of intangible assets resulted principally from acquisitions. Intangible asset amortization is a non-cash item. As such, we believe exclusion of these expenses provides for a better comparison of our operation results to prior periods and to our peer companies. |
(c) | In January 2017, we acquired Revitas, as part of the acquisition we incurred certain non-recurring integration costs. We believe that exclusion of these acquisition related adjustments and costs provides for a better comparison of our operation results to prior periods and to our peer companies. |
(d) | Represents deferred revenue adjustment resulting from purchase price accounting that is related to the Revitas acquisition and is a non-cash item. As such, we believe this adjustment provides for a better comparison of our operation results to prior periods and to our peer companies. |
(e) | In the third quarter of fiscal 2018, we recorded approximately $3.1 million of expense in connection with the repayment of our first term loan, of which approximately $1.6 million is non-cash unamortized discounts and deferred financing costs and $1.5 million in prepayment penalty. The charges were recorded as interest expense. |