Exhibit 99.1
New Relic Announces First Quarter Fiscal Year 2022 Results
First quarter revenue increased 11% year-over-year to $180 million
Quarterly GAAP operating loss of $(73.9) million; Non-GAAP operating loss of $(16.2) million
San Francisco – August 3, 2021 – New Relic, Inc. (NYSE: NEWR), the observability company, today announced financial results for the first quarter of fiscal year 2022.
“We aspire to help millions of developers and engineers build better software, faster and with less toil, by making observability a daily part of a data-driven engineering approach across the entire software lifecycle,” said Bill Staples, CEO, New Relic. “My top priority is to return our revenue to market growth rates by making this vision a reality for engineers, and delivering unique value to our customers to support their success.”
First Quarter Fiscal Year 2022 Financial Highlights:
•Revenue of $180 million, compared to $163 million for the first quarter of fiscal 2021.
•GAAP gross margin of 67% and non-GAAP gross margin of 69%.
•GAAP loss from operations was $(73.9) million, compared to $(26.1) million for the first quarter of fiscal 2021.
•Non-GAAP income (loss) from operations was $(16.2) million, compared to $7.6 million for the first quarter of fiscal 2021.
•GAAP net loss attributable to New Relic per basic share was $(1.24), compared to a loss of $(0.50) per basic share for the first quarter of fiscal 2021.
•Non-GAAP net income (loss) attributable to New Relic per diluted share was $(0.25), compared to $0.15 per diluted share for the first quarter of fiscal 2021.
•Cash provided by operating activities was $9.9 million and free cash flow was $4.8 million for the first quarter of fiscal 2022.
•Cash, cash equivalents and short-term investments were $817 million at the end of the first quarter of fiscal 2022, compared with $816 million at the end of the fourth quarter of fiscal 2021.
•Remaining performance obligations were $654 million at the end of the first quarter of fiscal 2022, compared with $727 million at the end of the fourth quarter of fiscal 2021. This represents the aggregate unrecognized transaction price of remaining performance obligations as of each of June 30, 2021 and March 31, 2021.
Key Operating Metrics1:
| Jun-20 | Sep-20 | Dec-20 | Mar-21 | Jun-21 | |||||||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | |||||||||||||
| Active Customer Accounts | 15,400 | 14,500 | 13,900 | 14,100 | 14,100 | ||||||||||||
| Active Customer Accounts >$100,000 | 862 | 894 | 913 | 945 | 964 | ||||||||||||
| Percentage of Revenue from Active Customer Accounts >$100,000 | 76% | 77% | 78% | 79% | 79% | ||||||||||||
| Net Revenue Retention Rate (NRR) | 122% | 119% | 115% | 112% | 111% | ||||||||||||
1 Beginning with fiscal 2022, we introduced new key operating metrics and changed the methodology we are using to count customer accounts. Total customer accounts are now aggregated at the parent hierarchy level and include any account for which we have recognized any revenue in the fiscal quarter. Please refer to the appendix for the definitions of these new key operating metrics.
Recent Business Highlights:
•Promoted Bill Staples to CEO effective July 1, 2021. [https://ir.newrelic.com/press-releases/Press-Release-Details/2021/New-Relic-to-Promote-Cloud-Industry-Veteran-Bill-Staples-to-CEO/default.aspx]
•Launched Industry’s First HIPAA-Compliant Observability Platform. [https://ir.newrelic.com/press-releases/Press-Release-Details/2021/New-Relic-Launches-Industrys-First-HIPAA-Compliant-Observability-Platform-to-Help-Healthcare-and-Life-Sciences-Organizations-Deliver-More-Perfect-Software/default.aspx]
•Appointed Anita Lynch as Chief Data Officer. [https://ir.newrelic.com/press-releases/Press-Release-Details/2021/New-Relic-Announces-Appointment-of-Former-Disney-Executive-Anita-Lynch-as-Chief-Data-Officer-and-Promotions-to-C-Suite-Leadership/default.aspx]
•Appointed RK Mahendran as Director. [https://ir.newrelic.com/press-releases/Press-Release-Details/2021/New-Relic-Appoints-RK-Mahendran-Partner-at-HMI-Capital-as-Director/default.aspx]
•Named a leader in the 2021 Gartner Magic Quadrant for Application Performance Monitoring for the Ninth Time. [https://ir.newrelic.com/press-releases/Press-Release-Details/2021/New-Relic-Named-a-Leader-in-the-2021-Gartner-Magic-Quadrant-for-Application-Performance-Monitoring-for-the-Ninth-Time/default.aspx]
Outlook:
•Second Quarter Fiscal 2022 Outlook:
◦Revenue between $181 million and $183 million, representing year-over-year growth of approximately 9% and 10%.
◦Non-GAAP loss from operations between $(13) million and $(15) million.
◦Non-GAAP net loss attributable to New Relic per diluted share between $(0.11) and $(0.15).
•Full Year Fiscal 2022 Outlook:
◦Revenue between $730 million and $735 million, representing year-over-year growth of approximately 9% and 10%.
◦Non-GAAP loss from operations between $(53) million and $(55) million.
◦Non-GAAP net loss attributable to New Relic per diluted share between $(0.49) and $(0.52).
New Relic has not reconciled its expectations as to non-GAAP income (loss) from operations or non-GAAP net income (loss) per diluted share to their most directly comparable GAAP measures as a result of uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation expense, lawsuit litigation cost and other expense, employer payroll taxes on equity incentive plans and gain or loss from lease modification. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to New Relic’s results computed in accordance with GAAP.
Conference Call and Investor Letter Details:
•What: New Relic financial results for the first quarter of fiscal year 2022 and outlook for the second quarter and the full year of fiscal 2022.
•When: August 3, 2021 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time)
•Dial in: To access the call in the United States, please dial (844) 757-5730, and for international callers, please dial (412) 542-4120. Callers may provide confirmation number 10158237 to access the call more quickly, and are encouraged to dial into the call at least 15 minutes prior to the start to prevent any delay in joining.
•Webcast: http://ir.newrelic.com (live and replay)
•Investor Letter: Available at http://ir.newrelic.com
•Replay: Following the completion of the call through 11:59 PM Eastern Time on August 10, 2021, a telephone replay will be available by dialing (877) 344-7529 from the United States or (412) 317-0088 internationally with conference ID 10158237.
About New Relic
The world’s best engineering teams rely on New Relic to visualize, analyze and troubleshoot their software. New Relic One is the most powerful cloud-based observability platform built to help companies create more perfect software. Learn why developers trust New Relic for improved uptime and performance, greater scale and efficiency, and accelerated time to market at newrelic.com.
Forward-Looking Statements
This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the federal securities laws, including but not limited to statements regarding: New Relic’s future financial performance, including its outlook on financial results for the second quarter and the full year of fiscal 2022, such as revenue, non-GAAP loss from operations, non-GAAP net loss attributable to New Relic per diluted share, our ability to achieve our five strategic priorities, including statements regarding reacceleration of revenue growth and returning to market growth rates, ability to exceed our target revenue percentage on the new consumption model, growing the number of paying customers, delivering unique value and demonstrating our differentiated platform vision, and improving internal execution efficiency and costs, improvements in gross margins, churn, ability to complete our cloud migration, benefits and features of new products and partnerships, including Errors Inbox, Logs, Kubernetes and Network Monitoring, trends related to sales and marketing and research and development spend as a percentage of revenue, our revenue mix in the intermediate and longer-term, expectations of growth in awareness and increase adoption in the observability community, and related ability to continue to drive growth in our data, users and accounts. These forward-looking statements are based on New Relic’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause New Relic’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, New Relic’s ability to determine optimal prices for its products and the potential challenges presented by New Relic’s evolving pricing models; the effect of the COVID-19 pandemic on New Relic’s business and on global economies and financial markets generally; New Relic’s ability to generate sufficient revenue to achieve and sustain profitability, particularly in light of its significant ongoing expenses; New Relic’s short operating history in an evolving industry; New Relic’s ability to manage its significant recent growth; the dependence of New Relic’s business on its customers remaining on its platform and increasing their spend with New Relic; New Relic’s ability to develop enhancements to its products, increase adoption and usage of its products and introduce new products that achieve market acceptance; the dependence on customers expanding their use of New Relic’s products beyond the current predominant use cases; New Relic’s ability to expand its marketing and sales capabilities and increase sales of its solutions; privacy concerns, including changes in privacy laws and regulations, which could result in additional cost and liability to New Relic or inhibit sales; New Relic’s ability to effectively compete in intensely competitive markets and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs, requirements or preferences; fluctuation of New Relic’s quarterly results; New Relic’s dependence on lead generation strategies to drive sales and revenue; interruptions or performance problems associated with New Relic’s technology and infrastructure; New Relic’s dependence on SaaS technologies and related services from third parties; defects or disruptions in New Relic’s products; the expense and complexity of New Relic’s ongoing and planned investments in data center hosting facilities and expenditures on cloud hosting providers; risks associated with international operations; New Relic’s ability to protect its intellectual property rights; risks related to the acquisition and integration of businesses or technologies; risks related to sales to government entities and highly regulated organizations; certain risks associated with incurring indebtedness, including risks related to servicing New Relic’s convertible senior notes and related capped call transactions; and other “Risk Factors” set forth in New Relic’s most recent filings with the Securities and Exchange Commission (the “SEC”).
Further information on these and other factors that could affect New Relic’s financial results and the forward-looking statements in this press release and in the earnings call referencing this press release is included in the filings New Relic makes with the SEC from time to time, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including our Annual
Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and subsequent filings. Copies of these documents may be obtained by visiting New Relic’s Investor Relations website at http://ir.newrelic.com or the SEC’s website at www.sec.gov.
All information provided in this press release and in the earnings call is as of the date hereof and New Relic assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
Non-GAAP Financial Measures
New Relic discloses the following non-GAAP financial measures in this press release and the earnings call referencing this press release: non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net income (loss) attributable to New Relic, non-GAAP net income (loss) attributable to New Relic per diluted share, non-GAAP net income (loss) attributable to New Relic per basic share and free cash flow. New Relic uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate New Relic’s financial performance. In addition, New Relic’s bonus plan for eligible employees and executives is based in part on non-GAAP income (loss) from operations. New Relic believes these non-GAAP financial measures are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. New Relic’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on New Relic’s reported financial results.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.
New Relic defines non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net income (loss) attributable to New Relic, non-GAAP net income (loss) attributable to New Relic per diluted share and non-GAAP net income (loss) attributable to New Relic per basic share as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense, (2) amortization of stock-based compensation capitalized in software development costs, (3) the amortization of purchased intangibles, (4) employer payroll tax expense on equity incentive plans, (5) amortization of debt discount and issuance costs, (6) the transaction costs related to acquisitions, (7) lawsuit litigation cost and other expense, (8) gain or loss from lease modification, (9) adjustment to redeemable non-controlling interest, and (10) restructuring charges. Non-GAAP net income (loss) per basic and diluted share is calculated as non-GAAP net income (loss) attributable to New Relic divided by weighted-average shares used to compute net income (loss) attributable to New Relic per share, basic and diluted, with the number of weighted-average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with the 0.50% Convertible Senior Notes due 2023 issued in May 2018. New Relic defines free cash flow as GAAP cash from operations, minus capital expenditures and minus capitalized software. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.
Management believes these non-GAAP financial measures are useful to investors and others in assessing New Relic’s operating performance due to the following factors:
Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs. New Relic utilizes share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.
Amortization of purchased intangibles and transaction costs related to acquisitions. New Relic views amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period. Similarly, New Relic views acquisition-related expenses as events that are not necessarily reflective of operational performance during a period.
Employer payroll tax expense on equity incentive plans. New Relic excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of New Relic’s common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of New Relic’s business.
Amortization of debt discount and issuance costs. In May 2018, New Relic issued $500.25 million of convertible senior notes due in 2023, which bear interest at an annual fixed rate of 0.50%. The effective interest rate of the convertible senior notes was approximately 5.74%. Effective April 1, 2021 New Relic adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity. As a result of the adoption, the debt conversion option and debt issuance costs previously attributable to the equity component will no longer be presented in equity. Similarly, the debt discount, which is equal to the carrying value of the embedded conversion feature upon issuance, will no longer be amortized into income as interest expense over the life of the instrument. The debt issuance costs are amortized as interest expense. The expense for the amortization of debt issuance costs is a non-cash item, and New Relic believes the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.
Transaction costs related to acquisitions. New Relic may from time to time incur direct transaction costs related to acquisitions. New Relic believes it is useful to exclude such charges because it does not consider such amounts to be part of the ongoing operation of New Relic’s business.
Lawsuit litigation cost and other expense. New Relic may from time to time incur charges or benefits related to litigation that are outside of the ordinary course of New Relic’s business. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic’s business and because of the singular nature of the claims underlying the matter.
Gain or loss from lease modification. New Relic may incur a gain or loss from modification related to lease agreements. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic’s business and because of the singular nature of benefit or charge from such events.
Adjustment to redeemable non-controlling interest. In second quarter fiscal year 2022, New Relic made an adjustment to the value of redeemable non-controlling interest in connection with its joint venture in New Relic K.K. New Relic believes it is useful to exclude the adjustment to redeemable non-controlling interest because it may not be indicative of future operating results and that investors benefit from an understanding of the company’s operating results without giving effect to this adjustment.
Restructuring charges. In April 2021, New Relic commenced a restructuring plan to realign its cost structure to better reflect significant product and business model innovation over the past 12 months. As a result of the
restructuring plan, New Relic incurred charges of approximately $13.0 million for employee terminations and other costs associated with the restructuring plan. Most of these charges consisted of cash expenditures and stock-based compensation expense and were recognized in the first quarter of fiscal 2022. New Relic believes it is appropriate to exclude the restructuring charges because it is not indicative of its future operating results.
Anti-dilutive impact of capped call transactions. In connection with the issuance of its convertible senior notes due in 2023, New Relic entered into capped call transactions to offset potential dilution from the embedded conversion feature in the notes. Although New Relic cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, New Relic does reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) attributable to New Relic per share, basic and diluted, to provide investors with useful information in evaluating the financial performance of the company on a per share basis.
Additionally, New Relic’s management believes that the non-GAAP financial measure free cash flow is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures and the capitalization of software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations.
Operating Metrics
Active Customer Accounts. New Relic defines an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, aggregated at the parent hierarchy level, for which New Relic has recognized any revenue in the fiscal quarter. The number of Active Customer Accounts that is reported as of a particular date is rounded down to the nearest hundred.
Number of Active Customer Accounts with Revenue Greater than $100,000. As a measure of New Relic’s ability to scale with its customers and attract large enterprises to its platform, New Relic counts the number of Active Customer Accounts for which it has recognized greater than $100,000 in revenue in the trailing 12-months.
Percentage of Revenue from Active Customer Accounts Greater than $100,000. New Relic also looks at its percentage of overall revenue it receives from its Active Customer Accounts with revenue greater than $100,000 in any given quarter as an indicator of its relative performance when selling to New Relic’s large customer relationships or its smaller revenue accounts.
Net Revenue Retention Rate (“NRR”). NRR monitors the growth in use of New Relic’s platform by its existing active customer accounts and allows New Relic to measure the health of its business and future growth prospects. To calculate NRR, New Relic first identifies the cohort of Active Customer Accounts that were Active Customer Accounts in the same quarter of the prior fiscal year. Next, New Relic identifies the measurement period as the 12-month period ending with the period reported and the prior comparison period as the corresponding period in the prior year. NRR is the quotient obtained by dividing the revenue generated from a cohort of Active Customer Accounts in the measurement period by the revenue generated from that same cohort in the prior comparison period.
New Relic is a registered trademark of New Relic, Inc.
All product and company names herein may be trademarks of their registered owners.
Investor Contact
Peter Goldmacher
New Relic, Inc.
503-336-9280
IR@newrelic.com
Media Contact
New Relic, Inc
PR@newrelic.com
Condensed Consolidated Statements of Operations
(In thousands, except per share data; unaudited)
| Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Revenue | $ | 180,484 | $ | 162,585 | |||||||
| Cost of revenue | 59,264 | 33,273 | |||||||||
| Gross profit | 121,220 | 129,312 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 48,730 | 40,844 | |||||||||
| Sales and marketing | 102,813 | 85,136 | |||||||||
| General and administrative | 43,565 | 29,434 | |||||||||
| Total operating expenses | 195,108 | 155,414 | |||||||||
| Loss from operations | (73,888) | (26,102) | |||||||||
| Other income (expense): | |||||||||||
| Interest income | 938 | 2,781 | |||||||||
| Interest expense | (1,226) | (6,104) | |||||||||
| Other expense | (336) | (395) | |||||||||
| Loss before income taxes | (74,512) | (29,820) | |||||||||
| Income tax provision (benefit) | (453) | 332 | |||||||||
| Net loss | $ | (74,059) | $ | (30,152) | |||||||
| Net loss and adjustment attributable to redeemable non-controlling interest | (4,355) | 396 | |||||||||
| Net loss attributable to New Relic | $ | (78,414) | $ | (29,756) | |||||||
| Net loss attributable to New Relic per share, basic and diluted | $ | (1.24) | $ | (0.50) | |||||||
| Weighted-average shares used to compute net loss per share, basic and diluted | 63,339 | 59,927 | |||||||||
Condensed Consolidated Balance Sheets
(In thousands, except par value; unaudited)
| June 30, 2021 | March 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 259,897 | $ | 240,821 | |||||||
| Short-term investments | 557,223 | 575,254 | |||||||||
Accounts receivable, net of allowances of $2,464 and $2,633, respectively | 93,477 | 174,027 | |||||||||
| Prepaid expenses and other current assets | 22,172 | 21,944 | |||||||||
| Deferred contract acquisition costs | 33,032 | 36,210 | |||||||||
| Total current assets | 965,801 | 1,048,256 | |||||||||
| Property and equipment, net | 84,645 | 91,308 | |||||||||
| Restricted cash | 5,642 | 5,642 | |||||||||
| Goodwill | 163,677 | 144,253 | |||||||||
| Intangible assets, net | 21,610 | 12,986 | |||||||||
| Deferred contract acquisition costs, non-current | 25,707 | 32,579 | |||||||||
| Lease right-of-use assets | 55,034 | 57,425 | |||||||||
| Other assets, non-current | 5,976 | 6,170 | |||||||||
| Total assets | $ | 1,328,092 | $ | 1,398,619 | |||||||
| Liabilities, redeemable non-controlling interest and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 27,631 | $ | 24,171 | |||||||
| Accrued compensation and benefits | 32,319 | 37,196 | |||||||||
| Other current liabilities | 15,779 | 19,174 | |||||||||
| Deferred revenue | 316,458 | 373,594 | |||||||||
| Lease liabilities | 7,714 | 7,886 | |||||||||
| Total current liabilities | 399,901 | 462,021 | |||||||||
| Convertible senior notes, net | 495,893 | 449,380 | |||||||||
| Lease liabilities, non-current | 57,578 | 59,924 | |||||||||
| Deferred revenue, non-current | 1,044 | 1,674 | |||||||||
| Other liabilities, non-current | 15,789 | 8,256 | |||||||||
| Total liabilities | 970,205 | 981,255 | |||||||||
| Redeemable non-controlling interest | 7,744 | 3,389 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock, $0.001 par value | 64 | 64 | |||||||||
| Treasury stock - at cost (260 shares) | (263) | (263) | |||||||||
| Additional paid-in capital | 962,512 | 1,001,309 | |||||||||
| Accumulated other comprehensive loss | (850) | (19) | |||||||||
| Accumulated deficit | (611,320) | (587,116) | |||||||||
| Total stockholders’ equity | 350,143 | 413,975 | |||||||||
| Total liabilities, redeemable non-controlling interest, and stockholders’ equity | $ | 1,328,092 | $ | 1,398,619 | |||||||
Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited)
| Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss attributable to New Relic | $ | (78,414) | $ | (29,756) | |||||||
| Net loss and adjustment attributable to redeemable non-controlling interest | $ | 4,355 | $ | (396) | |||||||
| Net loss: | $ | (74,059) | $ | (30,152) | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 23,025 | 21,051 | |||||||||
| Stock-based compensation expense | 42,187 | 31,208 | |||||||||
| Amortization of debt discount and issuance costs | 587 | 5,466 | |||||||||
| Other | (922) | (222) | |||||||||
| Changes in operating assets and liabilities, net of acquisition of business: | |||||||||||
| Accounts receivable, net | 80,550 | 36,065 | |||||||||
| Prepaid expenses and other assets | 18 | (3,155) | |||||||||
| Deferred contract acquisition costs | (190) | (9,388) | |||||||||
| Lease right-of-use assets | 2,692 | (2,249) | |||||||||
| Accounts payable | 4,894 | (3,923) | |||||||||
| Accrued compensation and benefits and other liabilities | (8,627) | 5,573 | |||||||||
| Lease liabilities | (2,517) | 1,347 | |||||||||
| Deferred revenue | (57,766) | (16,473) | |||||||||
| Net cash provided by operating activities | 9,872 | 35,148 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | (2,226) | (8,225) | |||||||||
| Cash paid for acquisition, net of cash acquired | (7,192) | — | |||||||||
| Purchases of short-term investments | (23,828) | (73,422) | |||||||||
| Proceeds from sale and maturity of short-term investments | 40,513 | 13,100 | |||||||||
| Capitalized software development costs | (2,860) | (3,668) | |||||||||
| Net cash provided by (used in) investing activities | 4,407 | (72,215) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from exercise of employee stock options | 4,797 | 1,424 | |||||||||
| Net cash provided by financing activities | 4,797 | 1,424 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 19,076 | (35,643) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 246,463 | 298,164 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 265,539 | $ | 262,521 | |||||||
Reconciliation from GAAP to Non-GAAP Results
(In thousands, except per share data; unaudited)
| Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Reconciliation of gross profit and gross margin: | |||||||||||
| GAAP gross profit | $ | 121,220 | $ | 129,312 | |||||||
| Plus: Stock-based compensation expense | 1,072 | 1,502 | |||||||||
| Plus: Amortization of purchased intangibles | 1,676 | 1,276 | |||||||||
| Plus: Amortization of stock-based compensation capitalized in software development costs | 420 | 239 | |||||||||
| Plus: Employer payroll tax on employee equity incentive plans | 52 | 91 | |||||||||
| Non-GAAP gross profit | $ | 124,440 | $ | 132,420 | |||||||
| GAAP gross margin | 67 | % | 80 | % | |||||||
| Non-GAAP adjustments | 2 | % | 1 | % | |||||||
| Non-GAAP gross margin | 69 | % | 81 | % | |||||||
| Reconciliation of operating expenses: | |||||||||||
| GAAP research and development | $ | 48,730 | $ | 40,844 | |||||||
| Less: Stock-based compensation expense | (10,964) | (8,804) | |||||||||
| Less: Employer payroll tax on employee equity incentive plans | (299) | (349) | |||||||||
| Non-GAAP research and development | $ | 37,467 | $ | 31,691 | |||||||
| GAAP sales and marketing | $ | 102,813 | $ | 85,136 | |||||||
| Less: Stock-based compensation expense | (11,534) | (13,308) | |||||||||
| Less: Employer payroll tax on employee equity incentive plans | (245) | (359) | |||||||||
Less: Restructuring charges (1) | (11,071) | — | |||||||||
| Non-GAAP sales and marketing | $ | 79,963 | $ | 71,469 | |||||||
| GAAP general and administrative | $ | 43,565 | $ | 29,434 | |||||||
| Less: Stock-based compensation expense | (18,617) | (7,594) | |||||||||
| Less: Transaction costs related to acquisitions | (361) | — | |||||||||
| Less: Employer payroll tax on employee equity incentive plans | (217) | (149) | |||||||||
Less: Restructuring charges (1) | (1,208) | — | |||||||||
| Non-GAAP general and administrative | $ | 23,162 | $ | 21,691 | |||||||
| Reconciliation of income (loss) from operations and operating margin: | |||||||||||
| GAAP loss from operations | $ | (73,888) | $ | (26,102) | |||||||
| Plus: Stock-based compensation expense | 42,187 | 31,208 | |||||||||
| Plus: Amortization of purchased intangibles | 1,676 | 1,276 | |||||||||
| Plus: Transaction costs related to acquisitions | 361 | — | |||||||||
| Plus: Amortization of stock-based compensation capitalized in software development costs | 420 | 239 | |||||||||
| Plus: Employer payroll tax on employee equity incentive plans | 813 | 948 | |||||||||
Plus: Restructuring charges (1) | 12,279 | — | |||||||||
| Non-GAAP income (loss) from operations | $ | (16,152) | $ | 7,569 | |||||||
| GAAP operating margin | (41) | % | (16) | % | |||||||
| Non-GAAP adjustments | 32 | % | 21 | % | |||||||
| Non-GAAP operating margin | (9) | % | 5 | % | |||||||
| Reconciliation of net income (loss): | |||||||||||
| GAAP net loss attributable to New Relic | $ | (78,414) | $ | (29,756) | |||||||
| Plus: Stock-based compensation expense | 42,187 | 31,208 | |||||||||
| Plus: Amortization of purchased intangibles | 1,676 | 1,276 | |||||||||
| Plus: Transaction costs related to acquisitions | 361 | — | |||||||||
| Plus: Amortization of stock-based compensation capitalized in software development costs | 420 | 239 | |||||||||
| Plus: Employer payroll tax on employee equity incentive plans | 813 | 948 | |||||||||
| Plus: Amortization of debt discount and issuance costs | 587 | 5,466 | |||||||||
| Plus: Adjustment to redeemable non-controlling interest | 4,395 | — | |||||||||
Plus: Restructuring charges (1) | 12,279 | — | |||||||||
| Non-GAAP net income (loss) attributable to New Relic | $ | (15,696) | $ | 9,381 | |||||||
| Non-GAAP net income (loss) attributable to New Relic per share: | |||||||||||
| Basic | $ | (0.25) | $ | 0.16 | |||||||
| Diluted | $ | (0.25) | $ | 0.15 | |||||||
| Shares used in non-GAAP per share calculations: | |||||||||||
| Basic | 63,339 | 59,927 | |||||||||
| Diluted | 63,339 | 61,285 | |||||||||
(1) Restructuring related charge for the stock-based compensation expense of $0.5 million is included on its respective line items.
Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow
(In thousands; unaudited)
| Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net cash provided by operating activities | $ | 9,872 | $ | 35,148 | |||||||
| Capital expenditures | (2,226) | (8,225) | |||||||||
| Capitalized software development costs | (2,860) | (3,668) | |||||||||
| Free cash flow (Non-GAAP) | $ | 4,786 | $ | 23,255 | |||||||
| Net cash provided by (used in) investing activities | $ | 4,407 | $ | (72,215) | |||||||
| Net cash provided by financing activities | $ | 4,797 | $ | 1,424 | |||||||