FireEye Reports Financial Results for Third Quarter 2020

  • All-time record revenue of $238 million, an increase of 6 percent from the third quarter of 2019
  • All-time record non-GAAP operating income, net income, and earnings per share1
  • All-time record ending annualized recurring revenue of $612 million, an increase of 6 percent compared to the end of the third quarter of 20192
  • All-time record ending annualized recurring revenue of $314 million for Platform, cloud subscription and managed services, an increase of 18 percent compared to the end of the third quarter of 20192
  • Increased guidance ranges for 2020 revenue, non-GAAP operating margin, and earnings per share1

MILPITAS, Calif. – October 27, 2020 – FireEye, Inc. (NASDAQ: FEYE), the intelligence-led security company, today announced financial results for the third quarter ended September 30, 2020.

“Our third quarter results reflect the progress we have made transforming our business,” said Kevin Mandia, FireEye chief executive officer. "We delivered record revenue, and record non-GAAP operating income, operating margin, and earnings per share as our revenue mix continued to shift to higher growth Mandiant Solutions compared to the third quarter of 2019."

“We remain focused on innovation that builds upon our competitive advantages in threat intelligence and cyber security expertise. We released our cloud-native Mandiant Advantage platform in October, making our intelligence and expertise easily accessible and actionable to any security organization, regardless of the security controls they deploy. We also announced a collaboration with Microsoft to provide cybersecurity services based on Microsoft security products. Both announcements reflect the technology-agnostic approach of Mandiant Solutions and allow us to expand our addressable market beyond the installed base of current FireEye customers," added Mandia.

Third Quarter 2020 Financial Results

 

Q3 2020

Q3 2019

Y/Y change

Revenue

$238 million

$226 million

+6%

Annualized recurring revenue2

$612 million

$580 million

+6%

GAAP gross margin

65%

65%

-

Non-GAAP gross margin1

71%

73%

-2 pts

GAAP operating margin

(11)%

(24)%

+13 pts

Non-GAAP operating margin1

12%

2%

+10 pts

GAAP net income (loss) per share, basic and diluted

$(0.17)

$(0.31)

+$0.14

Non-GAAP net income (loss) per share, diluted1

$0.11

$0.02

+$0.09

Cash flow provided (used) by operating activities

$33 million

$18 million

$15 million

Capital expenditures

$5 million

$10 million

$(5) million

1 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”

2 Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period.

Fourth Quarter and Updated 2020 Outlook

FireEye provides guidance based on current market conditions and expectations. The company emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic.

 

Q4 2020 Outlook

Updated 2020 Outlook

Revenue

$237 - $241 million

$930 - $934 million

Non-GAAP gross margin

70% - 71%

70.5% - 71.5%

Non-GAAP operating margin

10% - 11%

7.5% - 8.0%

Net interest income (expense)

$0 - $(1) million

$(2) - $(3) million

Provision for non-GAAP income taxes

$1 - $2 million

$4 - $5 million

Weighted average shares outstanding, diluted

230 million

227 million

Non-GAAP net income per share, diluted

$0.09 - $0.11

$0.28 - $0.30

Capital expenditures

~ $6 million

$27 - $29 million

Guidance for non-GAAP financial measures excludes stock-based compensation, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, and other non-recurring items. A reconciliation of non-GAAP guidance measures to the most directly comparable GAAP financial measures is not available on a forward-looking basis due to the uncertainty regarding, and the potential variability of, the amounts of stock-based compensation expense, amortization of intangible assets, and non-recurring expenses that may be incurred in the future. Stock-based compensation expense is impacted by the company’s future hiring and retention needs, as well as the future fair market value of the company’s common stock, all of which are difficult to predict and subject to constant change. The actual amount of stock-based compensation expense in the fourth quarter of 2020 and full year 2020 will have a significant impact on the company’s GAAP operating margin and net loss per share. Further, amortization of intangible assets, as well as other non-recurring expenses, if any, will also impact results. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the most directly comparable GAAP financial measures for future periods is not available without unreasonable effort.

Conference Call Information

FireEye will host a conference call today, October 27, 2020, at 5 p.m. Eastern time (2 p.m. Pacific time) to discuss its third quarter financial results and the company’s outlook for the fourth quarter and full year 2020. Interested parties may access the conference call by dialing 877-312-5521 (domestic) or 678-894-3048 (international). A live audio webcast of the call can be accessed from the Investor Relations section of the company's website at https://investors.fireeye.com. An archived version of the webcast will be available at the same website shortly after the conclusion of the live event.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to future financial results for the fourth quarter and full year 2020, including revenue, non-GAAP gross margin, non-GAAP operating margin, net interest income and expense, provision for non-GAAP income taxes, weighted average shares outstanding, non-GAAP net income per share, and capital expenditures in the section entitled “Fourth Quarter and Updated 2020 Outlook” above, as well as statements regarding plans and opportunities and continued investments.

These forward-looking statements involve risks and uncertainties, as well as assumptions which, if they do not fully materialize or prove incorrect, could cause FireEye’s results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause FireEye’s results to differ materially from those expressed or implied by such forward-looking statements include customer demand and adoption of FireEye’s products, solutions and services; real or perceived defects, errors or vulnerabilities in FireEye's products, solutions or services; any delay in the release of FireEye's new products, solutions or services; FireEye's ability to realize the expected benefits resulting from its first half 2020 restructuring plans; the potential disruption or perception of disruption to FireEye's business due to the restructuring plans; the impact of the COVID-19 pandemic on FireEye's business, results of operations, liquidity and capital resources; FireEye's ability to react to trends and challenges in its business and the markets in which it operates; FireEye's ability to anticipate market needs or develop new or enhanced products, solutions and services to meet those needs; FireEye’s ability to hire and retain key executives and employees; FireEye’s ability to attract new and retain existing customers and train its sales force; the budgeting cycles, seasonal buying patterns and length of FireEye’s sales cycle; risks associated with new offerings; sales and marketing execution risks; the failure to achieve expected synergies and efficiencies of operations between FireEye and its acquired companies; the ability of FireEye and its acquired companies to successfully integrate their respective market opportunities, technologies, products, personnel and operations; the ability of FireEye and its partners to execute their strategies, plans, objectives and expected investments with respect to FireEye’s partnerships; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in FireEye’s Form 10-Q filed with the Securities and Exchange Commission on July 31, 2020, which should be read in conjunction with these financial results and is available on the Investor Relations section of FireEye’s website at investors.fireeye.com and on the SEC website at www.sec.gov.

All forward-looking statements in this press release are based on information available to the company as of the date hereof, and FireEye does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law. Any future product, service, feature, or related specification that may be referenced in this release is for informational purposes only and is not a commitment to deliver any offering, technology or enhancement. FireEye reserves the right to modify future product or service plans at any time.

Non-GAAP Financial Measures

In this release FireEye has provided financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). These non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. The company uses these non-GAAP financial measures internally in analyzing its financial results and believes the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends, and in comparing the company's financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP financial measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

Non-GAAP gross margin, operating income (loss), operating margin, net income (loss), and net income (loss) per basic and diluted share. FireEye defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue.

FireEye defines non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, and other special or non-recurring items. FireEye defines non-GAAP operating margin as non-GAAP operating income (loss) divided by total revenue.

FireEye defines non-GAAP net income (loss) as net income (loss) excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, other special or non-recurring items, non-cash interest expense related to the company’s convertible senior notes, and discrete tax provision (benefits). FireEye defines non-GAAP net income per diluted share as non-GAAP net income divided by weighted average diluted shares outstanding. Weighted average diluted shares used to calculate non-GAAP net income per diluted share excludes shares issuable upon conversion of the company's convertible senior notes that are anti-dilutive. FireEye defines non-GAAP net loss per share as non-GAAP net loss divided by weighted average basic shares outstanding, which excludes stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes that are anti-dilutive.

Non-GAAP net income and net income per diluted share in the third quarter of 2020 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, restructuring charges, and non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018. Weighted average diluted shares outstanding used to calculate non-GAAP net income per diluted share excluded shares issuable upon conversion of the company's convertible senior notes that were anti-dilutive.

Non-GAAP net loss and net loss per share in the third quarter of 2019 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, restructuring charges, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, and benefit from income taxes. Weighted average basic shares outstanding used to calculate non-GAAP net loss per share excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes that were anti-dilutive.

FireEye considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, non-cash interest expense related to the company’s convertible senior notes, restructuring charges, and other non-recurring and discrete items so that management and investors can compare the company's core business operating results over multiple periods.

There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures exclude stock-based compensation expense. Stock-based compensation is an important part of FireEye employees' overall compensation and has been, and will continue to be for the foreseeable future, a significant recurring expense in the company's business. Second, the components of the costs that FireEye excludes in its calculation of these non-GAAP financial measures, including not only stock-based compensation, but also amortization of stock-based compensation expense capitalized in software development costs, non-recurring or non-operating items such as acquisition related expenses, amortization of intangible assets, non-cash interest expense related to the company’s convertible senior notes, restructuring charges, and discrete tax provision (benefits), may differ from the components excluded by peer companies when they report their non-GAAP results of operations. FireEye compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP financial measures together with their nearest GAAP equivalents.

About FireEye, Inc.

FireEye is the intelligence-led security company. Working as a seamless, scalable extension of customer security operations, FireEye offers a single platform that blends innovative security technologies, nation-state grade threat intelligence, and world-renowned Mandiant® consulting. With this approach, FireEye eliminates the complexity and burden of cyber security for organizations struggling to prepare for, prevent, and respond to cyber attacks. FireEye has over 9,600 customers across 103 countries, including more than 50 percent of the Forbes Global 2000.

© 2020 FireEye, Inc. All rights reserved. FireEye and Mandiant are registered trademarks or trademarks of FireEye, Inc. in the United States and other countries. All other brands, products, or service names are or may be trademarks or service marks of their respective owners.

Contacts:

Media
[email protected]

Investors
[email protected]

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

September 30, 2020

 

December 31, 2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

314,250 

 

 

$

334,603 

 

Short-term investments

627,892 

 

 

704,955 

 

Accounts receivable, net

133,897 

 

 

171,459 

 

Inventories

5,371 

 

 

5,892 

 

Prepaid expenses and other current assets

97,207 

 

 

96,827 

 

Total current assets

1,178,617 

 

 

1,313,736 

 

Property and equipment, net

83,997 

 

 

93,812 

 

Operating lease right-of-use assets, net

51,604 

 

 

58,758 

 

Goodwill

1,213,454 

 

 

1,205,292 

 

Intangible assets, net

105,856 

 

 

134,420 

 

Deposits and other long-term assets

70,994 

 

 

84,468 

 

TOTAL ASSETS

$

2,704,522 

 

 

$

2,890,486 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

6,095 

 

 

$

26,271 

 

Operating lease liabilities, current

18,109 

 

 

18,437 

 

Accrued and other current liabilities

21,333 

 

 

24,496 

 

Accrued compensation

86,276 

 

 

59,513 

 

Convertible senior notes, current, net

— 

 

 

117,288 

 

Deferred revenue, current

567,201 

 

 

603,944 

 

Total current liabilities

699,014 

 

 

849,949 

 

Convertible senior notes, non-current, net

949,648 

 

 

893,273 

 

Deferred revenue, non-current

326,414 

 

 

370,623 

 

Operating lease liabilities, non-current

61,882 

 

 

70,481 

 

Other long-term liabilities

4,404 

 

 

4,494 

 

Total liabilities

2,041,362 

 

 

2,188,820 

 

Stockholders' equity:

 

 

 

Common stock

23 

 

 

22 

 

Additional paid-in capital

3,513,618 

 

 

3,457,359 

 

Treasury stock

(80,000)

 

 

(150,000)

 

Accumulated other comprehensive income

5,114 

 

 

1,180 

 

Accumulated deficit

(2,775,595)

 

 

(2,606,895)

 

Total stockholders’ equity

663,160 

 

 

701,666 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,704,522 

 

 

$

2,890,486 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

Product, subscription and support

$

183,836 

 

 

$

179,823 

 

 

$

535,224 

 

 

$

523,828 

 

Professional services

54,624 

 

 

46,091 

 

 

157,858 

 

 

130,238 

 

Total revenue

238,460 

 

 

225,914 

 

 

693,082 

 

 

654,066 

 

Cost of revenue: (1)(2)(3)

 

 

 

 

 

 

 

Product, subscription and support

54,933 

 

 

54,272 

 

 

162,095 

 

 

155,938 

 

Professional services

29,473 

 

 

24,948 

 

 

84,889 

 

 

72,243 

 

Total cost of revenue

84,406 

 

 

79,220 

 

 

246,984 

 

 

228,181 

 

Total gross profit

154,054 

 

 

146,694 

 

 

446,098 

 

 

425,885 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development (1)(2)(3)

61,662 

 

 

68,857 

 

 

189,762 

 

 

203,790 

 

Sales and marketing (1)(2)

93,961 

 

 

98,355 

 

 

284,202 

 

 

303,745 

 

General and administrative (1)

23,096 

 

 

27,717 

 

 

75,806 

 

 

83,019 

 

Restructuring charges (5)

1,488 

 

 

6,481 

 

 

25,020 

 

 

10,280 

 

Total operating expenses

180,207 

 

 

201,410 

 

 

574,790 

 

 

600,834 

 

Operating loss

(26,153)

 

 

(54,716)

 

 

(128,692)

 

 

(174,949)

 

Other expense, net (6)

(12,032)

 

 

(10,239)

 

 

(37,056)

 

 

(29,982)

 

Loss before income taxes

(38,185)

 

 

(64,955)

 

 

(165,748)

 

 

(204,931)

 

Provision for income taxes (7)

933 

 

 

540 

 

 

2,952 

 

 

3,262 

 

Net loss

$

(39,118)

 

 

$

(65,495)

 

 

$

(168,700)

 

 

$

(208,193)

 

Net loss per share, basic and diluted

$

(0.17)

 

 

$

(0.31)

 

 

$

(0.76)

 

 

$

(1.02)

 

Weighted average shares used in per share calculations, basic and diluted

224,807 

 

 

212,207 

 

 

221,329 

 

 

204,855 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

Nine Months Ended September 30,

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss

$

(168,700)

 

 

$

(208,193)

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

71,238 

 

 

76,238 

 

Stock-based compensation

113,593 

 

 

117,162 

 

Non-cash interest expense related to convertible senior notes

35,480 

 

 

35,768 

 

Deferred income taxes

91 

 

 

(661)

 

Other

6,836 

 

 

463 

 

Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:

 

 

 

Accounts receivable

36,148 

 

 

5,929 

 

Inventories

1,576 

 

 

29 

 

Prepaid expenses and other assets

13,476 

 

 

4,824 

 

Accounts payable

(17,292)

 

 

2,127 

 

Accrued liabilities

(4,902)

 

 

1,206 

 

Accrued compensation

26,763 

 

 

2,448 

 

Deferred revenue

(80,952)

 

 

(2,172)

 

Other long-term liabilities

(9,854)

 

 

(7,146)

 

Net cash provided by operating activities

23,501 

 

 

28,022 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of property and equipment and demonstration units

(22,198)

 

 

(38,615)

 

Purchases of short-term investments

(305,180)

 

 

(493,038)

 

Proceeds from maturities of short-term investments

355,820 

 

 

502,100 

 

Proceeds from sales of short-term investments

28,208 

 

 

— 

 

Business acquisitions, net of cash acquired

(12,948)

 

 

(127,249)

 

Purchase of investment in privately held company

(1,000)

 

 

— 

 

Lease deposits

68 

 

 

637 

 

Net cash provided by (used in) investing activities

42,770 

 

 

(156,165)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Repurchase of convertible senior notes

(96,392)

 

 

— 

 

Payment related to shares withheld for taxes

(8,802)

 

 

— 

 

Proceeds from employee stock purchase plan

12,300 

 

 

12,315 

 

Proceeds from exercise of equity awards

6,270 

 

 

3,159 

 

Net cash provided by (used in) financing activities

(86,624)

 

 

15,474 

 

Net change in cash and cash equivalents

(20,353)

 

 

(112,669)

 

Cash and cash equivalents, beginning of period

334,603 

 

 

409,829 

 

Cash and cash equivalents, end of period

$

314,250 

 

 

$

297,160 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share amounts)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

GAAP operating loss

$

(26,153)

 

 

$

(54,716)

 

 

$

(128,693)

 

 

$

(174,949)

 

Stock-based compensation expense (1)

40,369 

 

 

36,688 

 

 

113,593 

 

 

117,162 

 

Amortization of stock-based compensation capitalized in software development costs (3)

1,034 

 

 

916 

 

 

3,063 

 

 

2,556 

 

Amortization of intangible assets (2)

11,008 

 

 

14,334 

 

 

34,213 

 

 

39,412 

 

Acquisition related expenses (4)

— 

 

 

— 

 

 

— 

 

 

597 

 

Restructuring charges (5)

1,488 

 

 

6,481 

 

 

25,020 

 

 

10,280 

 

Non-GAAP operating income (loss)

$

27,746 

 

 

$

3,703 

 

 

$

47,196 

 

 

$

(4,942)

 

GAAP gross margin

65 

%

 

65 

%

 

64 

%

 

65 

%

Stock-based compensation expense (1)

%

 

%

 

%

 

%

Amortization of intangible assets (2)

%

 

%

 

%

 

%

Non-GAAP gross margin

71 

%

 

73 

%

 

71 

%

 

73 

%

GAAP operating margin

(11)

%

 

(24)

%

 

(19)

%

 

(27)

%

Stock-based compensation expense (1)

17 

%

 

16 

%

 

17 

%

 

18 

%

Amortization of stock-based compensation capitalized in software development costs (3)

— 

%

 

%

 

— 

%

 

— 

%

Amortization of intangible assets (2)

%

 

%

 

%

 

%

Restructuring charges (5)

%

 

%

 

%

 

%

Non-GAAP operating margin

12 

%

 

%

 

%

 

(1)

%

GAAP net loss

$

(39,118)

 

 

$

(65,495)

 

 

$

(168,700)

 

 

$

(208,193)

 

Stock-based compensation expense (1)

40,369 

 

 

36,688 

 

 

113,593 

 

 

117,162 

 

Amortization of stock-based compensation capitalized in software development costs (3)

1,034 

 

 

916 

 

 

3,063 

 

 

2,556 

 

Amortization of intangible assets (2)

11,008 

 

 

14,334 

 

 

34,213 

 

 

39,412 

 

Acquisition related expenses (4)

— 

 

 

— 

 

 

— 

 

 

597 

 

Restructuring charges (5)

1,488 

 

 

6,481 

 

 

25,020 

 

 

10,280 

 

Non-cash interest expense related to convertible senior notes (6)

11,113 

 

 

12,068 

 

 

35,480 

 

 

35,768 

 

Adjustment to provision (benefit) from income taxes (7)

— 

 

 

(681)

 

 

(315)

 

 

(904)

 

Non-GAAP net income (loss)

$

25,894 

 

 

$

4,311 

 

 

$

42,354 

 

 

$

(3,322)

 

GAAP net loss per common share, basic and diluted

$

(0.17)

 

 

$

(0.31)

 

 

$

(0.76)

 

 

$

(1.02)

 

Stock-based compensation expense (1)

0.18 

 

 

0.17 

 

 

0.51 

 

 

0.57 

 

Amortization of stock-based compensation capitalized in software development costs (3)

— 

 

 

— 

 

 

0.01 

 

 

0.01 

 

Amortization of intangible assets (2)

0.05 

 

 

0.07 

 

 

0.15 

 

 

0.19 

 

Acquisition related expenses (4)

— 

 

 

— 

 

 

— 

 

 

— 

 

Restructuring charges (5)

0.01 

 

 

0.03 

 

 

0.11 

 

 

0.05 

 

Non-cash interest expense related to convertible senior notes (6)

0.05 

 

 

0.06 

 

 

0.16 

 

 

0.18 

 

Adjustment to provision (benefit) from income taxes (7)

— 

 

 

— 

 

 

— 

 

 

— 

 

Non-GAAP net income (loss) per common share, basic

$

0.12 

 

 

$

0.02 

 

 

$

0.18 

 

 

$

(0.02)

 

Non-GAAP net income (loss) per common share, diluted

$

0.11 

 

 

$

0.02 

 

 

$

0.19 

 

 

$

(0.02)

 

Weighted average shares used in per share calculation for GAAP, basic and diluted

224,807 

 

 

212,207 

 

 

221,329 

 

 

204,855 

 

Weighted average shares used in per share calculation for Non-GAAP, basic

224,807 

 

 

212,207 

 

 

221,329 

 

 

204,855 

 

Weighted average shares used in per share calculation for Non-GAAP, diluted

227,496 

 

 

217,037 

 

 

224,286 

 

 

204,855 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation expense as follows:

 

 

 

 

 

 

 

Cost of product, subscription and support revenue

$

4,245 

 

 

$

3,590 

 

 

$

12,037 

 

 

$

11,501 

 

Cost of professional services revenue

5,015 

 

 

3,289 

 

 

13,366 

 

 

10,639 

 

Research and development expense

11,830 

 

 

10,718 

 

 

33,236 

 

 

35,031 

 

Sales and marketing expense

13,306 

 

 

12,252 

 

 

36,202 

 

 

38,019 

 

General and administrative expense

5,952 

 

 

6,839 

 

 

18,438 

 

 

21,972 

 

Restructuring charges

21 

 

 

— 

 

 

314 

 

 

— 

 

Total stock-based compensation expense

$

40,369 

 

 

$

36,688 

 

 

$

113,593 

 

 

$

117,162 

 

 

 

 

 

 

 

 

 

(2) Includes amortization of intangible assets as follows:

 

 

 

 

 

 

 

Cost of product, subscription and support revenue

$

6,772 

 

 

$

10,135 

 

 

$

21,511 

 

 

$

27,311 

 

Research and development expense

109 

 

 

109 

 

 

327 

 

 

336 

 

Sales and marketing expense

4,127 

 

 

4,090 

 

 

12,375 

 

 

11,765 

 

Total amortization of intangible assets

$

11,008 

 

 

$

14,334 

 

 

$

34,213 

 

 

$

39,412 

 

 

 

 

 

 

 

 

 

(3) Includes amortization of stock-based compensation capitalized in software development costs as follows:

 

 

 

 

 

 

 

Cost of product, subscription and support revenue

$

44 

 

 

$

193 

 

 

$

152 

 

 

$

592 

 

Cost of professional services revenue

22 

 

 

97 

 

 

76 

 

 

296 

 

Research and development expense

968 

 

 

626 

 

 

2,835 

 

 

1,668 

 

Total amortization of stock-based compensation capitalized in software development costs

$

1,034 

 

 

$

916 

 

 

$

3,063 

 

 

$

2,556 

 

 

 

 

 

 

 

 

 

(4) Includes acquisition related expenses as follows:

 

 

 

 

 

 

 

General and administrative expense

$

— 

 

 

$

— 

 

 

$

— 

 

 

$

597 

 

 

 

 

 

 

 

 

 

(5) Includes restructuring charges as follows:

 

 

 

 

 

 

 

Restructuring charges

$

1,488 

 

 

$

6,481 

 

 

$

25,020 

 

 

$

10,280 

 

 

 

 

 

 

 

 

 

(6) Includes non-cash interest expense related to convertible senior notes as follows:

 

 

 

 

 

 

 

Other income, net

$

11,113 

 

 

$

12,068 

 

 

$

35,480 

 

 

$

35,768 

 

 

 

 

 

 

 

 

 

(7) Includes income tax effect of non-GAAP adjustments as follows:

 

 

 

 

 

 

 

Benefit from income taxes

$

— 

 

 

$

(681)

 

 

$

(315)

 

 

$

(904)

 

 

REVENUE BREAKOUT

(Unaudited, in thousands)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Product and related subscription and support revenue

$

108,731 

 

 

$

117,835 

 

 

$

318,223 

 

 

$

353,773 

 

Platform, cloud subscription and managed services revenue

75,105 

 

 

61,988 

 

 

217,001 

 

 

170,055 

 

Product, subscription and support revenue

183,836 

 

 

179,823 

 

 

535,224 

 

 

523,828 

 

Professional services revenue

54,624 

 

 

46,091 

 

 

157,858 

 

 

130,238 

 

Total revenue

$

238,460 

 

 

$

225,914 

 

 

$

693,082 

 

 

$

654,066 

 

 

 

ANNUALIZED RECURRING REVENUE BREAKOUT

(Unaudited, in thousands)

 

As of September 30,

 

2020

 

2019

Product and related subscription and support

$

298,040 

 

 

$

313,035 

 

Platform, cloud subscription and managed services

313,869 

 

 

266,762 

 

Total annualized recurring revenue

$

611,909 

 

 

$

579,797