Model N Announces Third Quarter of Fiscal Year 2018 Financial Results

 

Model N Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 
    As of
June 30,
2018
    As of
September 30,
2017
Assets
Current assets:
Cash and cash equivalents $ 57,645 $ 57,558
Accounts receivable, net 31,707 24,784
Prepaid expenses 3,307 3,733
Other current assets   405   1,013
Total current assets 93,064 87,088
Property and equipment, net 2,496 4,611
Goodwill 39,283 39,283
Intangible assets, net 35,977 40,156
Other assets   996   798
Total assets $ 171,816 $ 171,936
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,383 $ 3,002
Accrued employee compensation 12,376 14,996
Accrued liabilities 4,041 4,979
Deferred revenue, current portion 54,902 49,186
Long term debt, current portion   5,995   4,753
Total current liabilities 78,697 76,916
Long-term liabilities:
Long term debt 52,846 52,452
Other long-term liabilities   1,651   1,307
Total long-term liabilities   54,497   53,759
Total liabilities   133,194   130,675
Stockholders' equity:
Common Stock 5 4
Preferred Stock
Additional paid-in capital 239,372 217,052
Accumulated other comprehensive loss (874 ) (502 )
Accumulated deficit   (199,881 )   (175,293 )
Total stockholders' equity   38,622   41,261
Total liabilities and stockholders' equity $ 171,816 $ 171,936
 
 

Model N Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

 
    Three Months Ended June 30,     Nine months ended June 30,
2018     2017 2018     2017
Revenues:
SaaS and maintenance $ 35,623 $ 28,530 $ 100,943 $ 78,427
License and implementation   3,994   5,714   16,975   17,137
Total revenues 39,617 34,244 117,918 95,564
Cost of Revenues:
SaaS and maintenance 14,599 12,439 40,489 34,527
License and implementation   1,846   3,333   10,018   11,106
Total cost of revenues   16,445   15,772   50,507   45,633
Gross profit 23,172 18,472 67,411 49,931
Operating Expenses:
Research and development 7,746 8,393 24,861 23,302
Sales and marketing 9,338 10,739 26,845 31,081
General and administrative   17,044   8,096   33,099   26,949
Total operating expenses   34,128   27,228   84,805   81,332
Loss from operations (10,956 ) (8,756 ) (17,394 ) (31,401 )
Interest expense (income), net 4,478 1,442 7,350 2,789
Other expenses (income), net   (344 )   3   (306 )   77
Loss before income taxes (15,090 ) (10,201 ) (24,438 ) (34,267 )
(Benefit) provision for income taxes   345   234   150   (3,742 )
Net loss $ (15,435 ) $ (10,435 ) $ (24,588 ) $ (30,525 )
Net loss per share attributable to common stockholders:
Basic and diluted $ (0.50 ) $ (0.36 )   (0.82 ) $ (1.07 )

Weighted average number of shares used in computing net
loss per share attributable to common stockholders:

Basic and diluted   30,749   28,936   30,042   28,464
 
 

Model N Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

   
Nine Months Ended June 30,
2018     2017
Cash Flows From Operating Activities:
Net loss $ (24,588 ) $ (30,525 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 6,410 5,866
Stock-based compensation 19,312 6,935
Amortization of debt discount and issuance cost 686 502
Deferred income taxes (581 ) (4,019 )
Other non-cash charges (30 ) 239
Loss on debt extinguishment 3,142
Changes in assets and liabilities, net of acquisition:
Accounts receivable (6,833 ) (7,561 )
Prepaid expenses and other assets (102 ) 2,592
Deferred cost of implementation services 488 1,289
Accounts payable (1,752 ) (854 )
Accrued employee compensation (2,541 ) 1,482
Other accrued and long-term liabilities (639 ) (1,085 )
Deferred revenue   6,386   8,875
Net cash used in operating activities   (642 )   (16,264 )
Cash Flows From Investing Activities:
Purchases of property and equipment (165 ) (290 )
Acquisition of businesses, net of cash acquired (47,773 )
Capitalization of software development costs     (335 )
Net cash used in investing activities   (165 )   (48,398 )
Cash Flows From Financing Activities:
Proceeds from exercise of stock options and issuance of employee stock purchase plan 3,008 2,457
Proceeds from term loan 49,588 48,686
Debt issuance costs (145 ) (806 )
Principal payments on loan (50,000 )
Early payment penalty   (1,500 )  
Net cash provided by financing activities   951   50,337
Effect of exchange rate changes on cash and cash equivalents (57 ) 7
Net decrease in cash and cash equivalents 87 (14,318 )
Cash and cash equivalents
Beginning of period   57,558   66,149
End of period $ 57,645 $ 51,831
 
 
Model N Inc.
Reconciliation of GAAP to Non-GAAP Operating Results
(in thousands, except per share amounts)
(unaudited)
               
Three Months Ended June 30, Nine months ended June 30,
2018 2017 2018 2017
Reconciliation from GAAP net loss to adjusted EBITDA:
GAAP net loss: $ (15,435 ) $ (10,435 ) $ (24,588 ) $ (30,525 )
Reversal of non-GAAP items:
Stock-based compensation expense 12,030 2,487 19,312 6,935
Depreciation and amortization 1,983 2,373 6,410 5,866
Deferred revenue adjustment 1,710 627 3,810
Acquisition and integration related costs 711 5,476
Interest expense (income), net 4,478 1,442 7,350 2,789
Other expenses (income), net (344 ) 3 (306 ) 77
(Benefit) provision for income taxes   345   234   150   (3,742 )
Adjusted EBITDA $ 3,057 $ (1,475 ) $ 8,955 $ (9,314 )
 
Three Months Ended June 30, Nine months ended June 30,
2018 2017 2018 2017
Reconciliation from GAAP revenue to revenue before deferred revenue adjustment:
GAAP revenue: $ 39,617 $ 34,244 $ 117,918 $ 95,564
Deferred revenue adjustment (d)     1,710   627   3,810
Revenue before deferred revenue adjustment $ 39,617 $ 35,954 $ 118,545 $ 99,374
 
Three Months Ended June 30, Nine months ended June 30,
2018 2017 2018 2017
Reconciliation from GAAP gross profit to non-GAAP gross profit:
GAAP gross profit: $ 23,172 $ 18,472 $ 67,411 $ 49,931
Reversal of non-GAAP expenses:
Stock-based compensation (a) 699 586 1,972 1,482
Amortization of intangible assets (b) 476 476 1,428 1,218
Acquisition and integration related expenses (c) 196 419
Deferred revenue adjustment (d)     1,710   627   3,810
Non-GAAP gross profit $ 24,347 $ 21,440 $ 71,438 $ 56,860
Percentage of revenue before deferred revenue adjustment 61.5 % 59.6 % 60.3 % 57.2 %
 
Three Months Ended June 30, Nine months ended June 30,
2018 2017 2018 2017
Reconciliation from GAAP loss from operations to non-GAAP

loss from operations:

GAAP net loss from operations: $ (10,956 ) $ (8,756 ) $ (17,394 ) $ (31,401 )
Reversal of non-GAAP expenses:
Stock-based compensation (a) 12,030 2,487 19,312 6,935
Amortization of intangible assets (b) 1,381 1,418 4,181 3,211
Acquisition and integration related expenses (c) 711 5,476
Deferred revenue adjustment (d)     1,710   627   3,810
Non-GAAP income (loss) from operations $ 2,455 $ (2,430 ) $ 6,726 $ (11,969 )
 
Three Months Ended June 30, Nine months ended June 30,
2018 2017 2018 2017
Numerator:
Reconciliation between GAAP and non-GAAP net loss:
GAAP net loss: $ (15,435 ) $ (10,435 ) $ (24,588 ) $ (30,525 )
Reversal of non-GAAP expenses:
Stock-based compensation (a) 12,030 2,487 19,312 6,935
Amortization of intangible assets (b) 1,381 1,418 4,181 3,211
Acquisition and integration related expenses (c) 711 5,476
Deferred revenue adjustment (d) 1,710 627 3,810
Deferred tax valuation allowances (f)         (4,165 )

Non-GAAP net income (loss) attributable to Model N Inc.
common stockholders

$ (2,024 ) $ (4,109 ) $ (468 ) $ (15,258 )
Denominator:

Reconciliation between GAAP and non-GAAP net loss per share
attributable to Model N Inc.
common stockholders:

Weighted average number of shares used in computing
GAAP dilutive net loss per share

  30,749   28,936   30,042   28,464

GAAP dilutive net loss per share attributable to Model N Inc.
common stockholders

$ (0.50 ) $ (0.36 ) $ (0.82 ) $ (1.07 )

Non-GAAP net income (loss) per share attributable to Model N Inc.
common stockholders

  (0.07 )   (0.14 )   (0.02 )   (0.54 )
 
Three Months Ended June 30, Nine months ended June 30,
2018 2017 2018 2017
Amortization of intangibles assets recorded in the statement of operations:
Cost of revenues:
SaaS and maintenance $ 476 $ 476 1,428 1,218
License and implementation            
Total amortization of intangibles assets in cost of revenue (b)   476   476   1,428   1,218
Operating expenses:
Research and development
Sales and marketing 905 942 2,753 1,993
General and administrative        
Total amortization of intangibles assets in operating expense (b)   905   942   2,753   1,993
Total amortization of intangibles assets (b) $ 1,381 $ 1,418 $ 4,181 $ 3,211
 
Three Months Ended June 30, Nine months ended June 30,
2018 2017 2018 2017
Stock-based compensation recorded in the statement of operations:
Cost of revenues:
SaaS and maintenance $ 326 $ 290 961 742
License and implementation   373   296   1,011   740
Total stock-based compensation in cost of revenue (a)   699   586   1,972   1,482
Operating expenses:
Research and development 744 512 2,144 1,273
Sales and marketing 986 835 2,517 1,744
General and administrative   9,601   554   12,679   2,436
Total stock-based compensation in operating expense (a)   11,331   1,901   17,340   5,453
Total stock-based compensation (a) $ 12,030 $ 2,487 $ 19,312 $ 6,935
 

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