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Aug. 5, 2019, 4:10 p.m. EDT

Mimecast Announces First Quarter 2020 Financial Results

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(unaudited)







                                                                Three months ended June 30,
                                                                2019              2018
        Revenue                                                 $    99,231       $    78,404
        Cost of revenue                                              25,467            20,976
        Gross profit                                                 73,764            57,428
        Operating expenses
        Research and development                                     19,385            13,100
        Sales and marketing                                          43,370            34,203
        General and administrative                                   15,447            12,214
        Total operating expenses                                     78,202            59,517
        Loss from operations                                         (4,438 )          (2,089 )
        Other income (expense)
        Interest income                                              982               444
        Interest expense                                             (1,280 )          (527   )
        Foreign exchange income (expense) and other, net             956               (441   )
        Total other income (expense), net                            658               (524   )
        Loss before income taxes                                     (3,780 )          (2,613 )
        Provision for income taxes                                   230               858
        Net Loss                                                $    (4,010 )     $    (3,471 )
        Net loss per ordinary share
        Basic and diluted                                       $    (0.07  )     $    (0.06  )
        Weighted-average number of ordinary shares outstanding
        Basic and diluted                                            61,444            59,175
        


MIMECAST LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)







                                                                                                                                                                                        As of June 30,     As of March 31,
                                                                                                                                                                                        2019               2019
        Assets
        Current assets
        Cash and cash equivalents                                                                                                                                                       $       174,812    $       137,576
        Short-term investments                                                                                                                                                                  22,025             35,941
        Accounts receivable, net                                                                                                                                                                68,495             80,953
        Deferred contract costs, net                                                                                                                                                            8,802              8,140
        Prepaid expenses and other current assets                                                                                                                                               15,621             25,871
        Total current assets                                                                                                                                                                    289,755            288,481
        Property and equipment, net                                                                                                                                                             65,655             94,202
        Operating lease right-of-use assets                                                                                                                                                     133,350            --
        Intangible assets, net                                                                                                                                                                  29,154             30,623
        Goodwill                                                                                                                                                                                108,722            107,575
        Deferred contract costs, net of current portion                                                                                                                                         30,103             28,250
        Other assets                                                                                                                                                                            6,195              5,156
        Total assets                                                                                                                                                                    $       662,934    $       554,287
        Liabilities and shareholders' equity
        Current liabilities
        Accounts payable                                                                                                                                                                $       7,411      $       9,457
        Accrued expenses and other current liabilities                                                                                                                                          37,438             44,309
        Deferred revenue                                                                                                                                                                        162,814            163,102
        Current portion of finance lease obligations                                                                                                                                            938                844
        Current portion of operating lease obligations                                                                                                                                          27,846             --
        Current portion of long-term debt                                                                                                                                                       4,695              4,059
        Total current liabilities                                                                                                                                                               241,142            221,771
        Deferred revenue, net of current portion                                                                                                                                                12,309             12,472
        Long-term finance lease obligations                                                                                                                                                     1,122              1,381
        Operating lease liabilities                                                                                                                                                             121,330            --
        Long-term debt                                                                                                                                                                          91,655             92,797
        Construction financing lease obligations                                                                                                                                                --                 36,650
        Other non-current liabilities                                                                                                                                                           4,268              15,581
        Total liabilities                                                                                                                                                                       471,826            380,652
        Commitments and contingencies
        Shareholders' equity
        Ordinary shares, $0.012 par value, 300,000,000 shares authorized; 61,728,891 and 61,158,051 shares issued and outstanding as of June 30, 2019 and
		 March 31, 2019, respectively          740                734
        Additional paid-in capital                                                                                                                                                              281,130            263,388
        Accumulated deficit                                                                                                                                                                     (85,470 )          (83,632 )
        Accumulated other comprehensive loss                                                                                                                                                    (5,292  )          (6,855  )
        Total shareholders' equity                                                                                                                                                              191,108            173,635
        Total liabilities and shareholders' equity                                                                                                                                      $       662,934    $       554,287
        


MIMECAST LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)







                                                                                         Three months ended June 30,
                                                                                         2019               2018
        Operating activities
        Net loss                                                                         $    (4,010  )     $    (3,471  )
        Adjustments to reconcile net loss to net cash provided by operating activities:
        Depreciation and amortization                                                         7,442              6,926
        Share-based compensation expense                                                      10,034             5,181
        Amortization of deferred contract costs                                               2,116              1,386
        Amortization of debt issuance costs                                                   157                --
        Amortization of operating lease right-of-use assets                                   7,677              --
        Other non-cash items                                                                  (42     )          (19     )
        Unrealized currency gains on foreign denominated transactions                         (856    )          (111    )
        Changes in assets and liabilities:
        Accounts receivable                                                                   11,927             6,079
        Prepaid expenses and other current assets                                             8,856              1,569
        Deferred contract costs                                                               (4,806  )          (3,835  )
        Other assets                                                                          (638    )          (98     )
        Accounts payable                                                                      (808    )          108
        Deferred revenue                                                                      1,295              2,521
        Operating lease liabilities                                                           (5,145  )          --
        Accrued expenses and other liabilities                                                (4,675  )          398
        Net cash provided by operating activities                                             28,524             16,634
        Investing activities
        Purchases of strategic investments                                                    (3,025  )          --
        Maturities of investments                                                             14,000             17,000
        Purchases of property, equipment and capitalized software                             (9,161  )          (7,575  )
        Net cash provided by investing activities                                             1,814              9,425
        Financing activities
        Proceeds from issuance of ordinary shares                                             8,870              5,904
        Withholding taxes related to net share settlement of restricted share units           (1,137  )          --
        Payments on debt                                                                      (625    )          --
        Payments on finance lease obligations                                                 (166    )          (203    )
        Payments on construction financing lease obligations                                  --                 (413    )
        Net cash provided by financing activities                                             6,942              5,288
        Effect of foreign exchange rates on cash                                              (44     )          (2,156  )
        Net increase in cash and cash equivalents                                             37,236             29,191
        Cash and cash equivalents at beginning of period                                      137,576            78,339
        Cash and cash equivalents at end of period                                       $    174,812       $    107,530
        


Key Performance Indicators

In addition to traditional financial metrics, such as revenue and revenue growth trends, we monitor several other non-GAAP financial measures and non-financial metrics to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies. The key performance indicators that we monitor are as follows:







                                                   Three months ended June 30,
                                                   2019              2018
                                                   (dollars in thousands)
        Revenue constant currency growth rate (1)       32     %          31     %
        Revenue retention rate (2)                      111    %          110    %
        Total customers (3)                             35,300            31,300
        Gross profit percentage                         74     %          73     %
        Adjusted EBITDA (1)                        $    13,503       $    9,958
        


__________________







        (1 ) Adjusted EBITDA and revenue constant currency growth rates are non-GAAP measures. For a reconciliation of Adjusted EBITDA and revenue constant
		 currency growth rates to the nearest comparable GAAP measures, see "Reconciliation of Non-GAAP Financial Measures" below.
        (2 ) We calculate our revenue retention rate by annualizing constant currency revenue recorded on the last day of the measurement period for only
		 those customers in place throughout the entire measurement period. This revenue includes renewed revenue contracts as well as additional revenue
		 derived from the sale of additional seat licenses as well as additional services sold to these existing customers. We divide the result by revenue
		 on a constant currency basis on the first day of the measurement period for all customers in place at the beginning of the measurement period. The
		 measurement period is the trailing twelve months. The revenue on a constant currency basis is based on the average exchange rates in effect during
		 the respective period.
        (3 ) Reflects the customer count on the last day of the period rounded to the nearest hundred customers. We define a customer as an entity with an
		 active subscription contract as of the measurement date. A customer is typically a parent company or, in a few cases, a significant subsidiary that
		 works with us directly.
        


Reconciliation of Non-GAAP Financial Measures

The following table presents a reconciliation of revenue growth rate, as reported, to revenue constant currency growth rate:







                                                                  Three months ended June 30,
                                                                  2019              2018
                                                                  (dollars in thousands)
        Reconciliation of Revenue Constant Currency Growth Rate:
        Revenue, as reported                                      $    99,231       $    78,404
        Revenue year-over-year growth rate, as reported                27     %          35     %
        Estimated impact of foreign currency fluctuations              5      %          (4     )%
        Revenue constant currency growth rate                          32     %          31     %
        Exchange rate for period
        USD                                                            1.000             1.000
        ZAR                                                            0.070             0.079
        GBP                                                            1.286             1.362
        AUD                                                            0.700             0.757
        


The following tables present a reconciliation of selected GAAP results to Non-GAAP results (in thousands):







                                                    Three months ended June 30,
                                                    2019              2018
                                                    (dollars in thousands)
        Reconciliation of Non-GAAP Gross Profit:
        GAAP gross profit                           $    73,764       $    57,428
        GAAP gross profit percentage                     74     %          73     %
        Plus:
        Share-based compensation expense                 787               404
        Amortization of acquired intangible assets       625               39
        Non-GAAP gross profit                       $    75,176       $    57,871
        Non-GAAP gross profit percentage                 76     %          74     %
        








                                                    Three months ended June 30,
                                                    2019          2018
        GAAP research and development               $    19,385   $    13,100
        Less:
        Share-based compensation expense                 2,549         1,330
        Amortization of acquired intangible assets       --            --
        Acquisition-related expenses                     --            --
        Litigation-related expenses                      --            --
        Non-GAAP research and development           $    16,836   $    11,770
        








                                                    Three months ended June 30,
                                                    2019          2018
        GAAP sales and marketing                    $    43,370   $    34,203
        Less:
        Share-based compensation expense                 3,782         1,831
        Amortization of acquired intangible assets       30            4
        Acquisition-related expenses                     --            --
        Litigation-related expenses                      --            --
        Non-GAAP sales and marketing                $    39,558   $    32,368
        








                                                    Three months ended June 30,
                                                    2019          2018
        GAAP general and administrative             $    15,447   $    12,214
        Less:
        Share-based compensation expense                 2,916         1,616
        Amortization of acquired intangible assets       --            --
        Acquisition-related expenses                     --            730
        Litigation-related expenses                      350           --
        Non-GAAP general and administrative         $    12,181   $    9,868
        








                                                    Three months ended June 30,
                                                    2019              2018
        GAAP loss from operations                   $    (4,438 )     $    (2,089 )
        Plus:
        Share-based compensation expense                 10,034            5,181
        Amortization of acquired intangible assets       655               43
        Acquisition-related expenses                     --                730
        Litigation-related expenses                      350               --
        Non-GAAP income from operations             $    6,601        $    3,865
        


The following table presents a reconciliation of net loss to Non-GAAP net income (in thousands, except per share amounts):







                                                            Three months ended June 30,
                                                            2019              2018
        Reconciliation of Non-GAAP Net Income:
        Net loss                                            $    (4,010 )     $    (3,471 )
        Share-based compensation expense                         10,034            5,181
        Amortization of acquired intangible assets               655               43
        Acquisition-related expenses (1)                         --                730
        Litigation-related expenses (2)                          350               --
        Income tax effect of Non-GAAP adjustments                (2,066 )          (275   )
        Non-GAAP net income                                 $    4,963        $    2,208
        Non-GAAP net income per ordinary share - basic      $    0.08         $    0.04
        Non-GAAP net income per ordinary share - diluted    $    0.08         $    0.04
        Weighted-average number of ordinary shares used in
        computing Non-GAAP net income per ordinary share:
        Basic                                                    61,444            59,175
        Diluted                                                  63,871            62,584
        


_________________







        (1 ) Acquisition-related expenses relate to costs incurred for acquisition activity in the year ended March 31, 2019. See Note 10 of the notes to
		 our consolidated financial statements, included in the Company's Quarterly Report on Form 10-Q for further information.
        (2 ) Litigation-related expenses relate to amounts accrued for loss contingencies. See Note 13 of the notes to our consolidated financial statements,
		 included in the Company's Quarterly Report on Form 10-Q for further information.
        


The following table presents a reconciliation of Net loss to Adjusted EBITDA (in thousands):







                                                                       Three months ended June 30,
                                                                       2019              2018
        Reconciliation of Adjusted EBITDA:
        Net loss                                                       $    (4,010 )     $    (3,471 )
        Depreciation, amortization and disposals of long-lived assets       7,455             6,926
        Rent expense related to build-to-suit facilities                    --                (890   )
        Interest expense, net                                               298               83
        Provision for income taxes                                          230               858
        Share-based compensation expense                                    10,034            5,181
        Foreign exchange (income) expense                                   (854   )          541
        Acquisition-related expenses (1)                                    --                730
        Litigation-related expenses (2)                                     350               --
        Adjusted EBITDA                                                $    13,503       $    9,958
        


_________________







        (1 ) Acquisition-related expenses relate to costs incurred for acquisition activity in the year ended March 31, 2019. See Note 10 of the notes to
		 our consolidated financial statements, included in the Company's Quarterly Report on Form 10-Q for further information.
        (2 ) Litigation-related expenses relate to amounts accrued for loss contingencies. See Note 13 of the notes to our consolidated financial statements,
		 included in the Company's Quarterly Report on Form 10-Q for further details.
        


The following table presents a reconciliation of Net cash provided by operating activities to Free Cash Flow (in thousands):







                                                                   Three months ended June 30,
                                                                   2019              2018
        Reconciliation of Free Cash Flow:
        Net cash provided by operating activities                  $    28,524       $    16,634
        Purchases of property, equipment and capitalized software       (9,161 )          (7,575 )
        Free Cash Flow                                             $    19,363       $    9,059
        


Share-based compensation expense for the three months ended June 30, 2019 and 2018 (in thousands):







                                                Three months ended June 30,
                                                2019          2018
        Cost of revenue                         $    787      $    404
        Research and development                     2,549         1,330
        Sales and marketing                          3,782         1,831
        General and administrative                   2,916         1,616
        Total share-based compensation expense  $    10,034   $    5,181
        


Amortization of acquired intangible assets for the three months ended June 30, 2019 and 2018 (in thousands):







                                                          Three months ended June 30,
                                                          2019        2018
        Cost of revenue                                   $    625    $    39
        Sales and marketing                                    30          4
        Total amortization of acquired intangible assets  $    655    $    43
        


Mimecast Social Media Resources

-- LinkedIn: Mimecast

-- Facebook: Mimecast

-- Twitter: @Mimecast

-- Blog: Cyber Resilience Insights

Press Contact

Alison Raymond Walsh

Press@Mimecast.com

617-393-7126

Investor Contact

Robert Sanders

Investors@Mimecast.com

617-393-7074

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