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Model N Announces Fourth Quarter and Fiscal Year 2021 Financial Results

11/09/2021
  • Total Q4 Revenue Grew 24% Year-over-Year
  • Q4 Subscription Revenue Grew 29% Year-over-Year

SAN MATEO, Calif.--(BUSINESS WIRE)-- Model N, Inc. (NYSE: MODN), the leader in cloud revenue management solutions, today announced financial results for the fourth quarter and fiscal year 2021 ended September 30, 2021.

“We finished fiscal 2021 with a healthy contribution from all of our growth levers. During the fourth quarter, we signed multiple new logos and SaaS transitions, numerous customer base expansions, and we also enjoyed strong renewals across the board. Our results clearly illustrate the success of our strategic focus on the Life Sciences and High Tech verticals and the value our customers place on our mission-critical products,” said Jason Blessing, president and chief executive officer of Model N. “I'm proud of our execution this past year, and I’m optimistic about the opportunity ahead for Model N. We are entering fiscal 2022 with positive momentum.”

Recent Highlights

  • Strong performance in Life Sciences Vertical Powered by the Addition of New Customers, Expansions with Existing Customers and SaaS Transition Commitments – Model N continued to bolster its stronghold in the Life Sciences vertical, adding new and expanding with existing customers as well as securing additional commitments for SaaS transitions. During the quarter, the Company signed new agreements with Cerecor and Jazz Pharmaceuticals, among others. Model N also expanded our relationship with AstraZeneca, Fresenius and Viatris. Also in the quarter, two long-time Model N customers committed to SaaS transitions, such as EMD Serono, the biopharmaceutical business of Merck in the U.S. and Canada, as well as Alkermes, a fully integrated, global biopharmaceutical company developing innovative medicines in the fields of neuroscience and oncology. EMD Serono and Alkermes are deepening their relationships with the Company and continuing Model N’s success in moving its customers to its cloud platform.
  • High Tech Vertical Adds New Customers – In the fourth quarter, the Company demonstrated growing momentum in the High Tech vertical with the addition of Cricut, a $1 billion manufacturer of computer-controlled cutting machines and scanners used for designing in the consumer market, and Ergotron, a global manufacturer of innovative, ergonomic mounting and mobility products for computer monitors, notebooks and flat panels.
  • Positioned as a Leader in the IDC MarketScape: Worldwide B2B Price Optimization and Management Applications 2021 Vendor Assessment – During the fourth quarter, Model N was recognized as a leader in a new IDC Marketscape report. The report cited multiple strengths of Model N’s cloud revenue management platform for High Tech, including pricing and Deal Guidance, Readiness for the Future and Value Delivered. IDC noted that, “Because of Model N’s focus on this industry, the suite has highly configurable features and workflows that are tailored for selling in this industry, such as pricing models that support the fast turnover due to technology evolution, deal management, price protection, claims processing, high-tech revenue intelligence and margin optimization, rebates, payouts, and Ship and Debit.” The report further states that organizations in the high-tech hardware and/or semiconductor industries should consider Model N when they “need an end-to-end revenue management solution for managing pricing and channel incentives.”

Fourth Quarter 2021 Financial Highlights

  • Revenues: Total revenues were $51.5 million, an increase of 24% from the fourth quarter of fiscal year 2020. Subscription revenues were $38.2 million, an increase of 29% from the fourth quarter of fiscal year 2020. Business Services, acquired from Deloitte, contributed $6.0 million in total revenues for the fourth quarter of fiscal year 2021.
  • Gross Profit: Gross profit was $28.8 million, an increase of 16% from the fourth quarter of fiscal year 2020. Gross margin was 56% compared to 60% for the fourth quarter of fiscal year 2020. Non-GAAP gross profit was $31.7 million, an increase of 21% from the fourth quarter of fiscal year 2020. Non-GAAP gross margin was 62% compared to 63% for the fourth quarter of fiscal year 2020. Subscription gross margin was 65% compared to 71% for the fourth quarter of fiscal year 2020. Non-GAAP subscription gross margin was 70% compared to 74% for the fourth quarter of fiscal year 2020. Both GAAP and Non-GAAP gross margins for the fourth quarter of fiscal year 2021 were impacted by the revenue mix coming from the acquisition of Business Services.
  • GAAP Income (Loss) and Non-GAAP Income from Operations: GAAP loss from operations was $(2.4) million compared to income from operations of $0.4 million for the fourth quarter of fiscal year 2020. Non-GAAP income from operations was $7.7 million, an increase of 13% from the fourth quarter of fiscal year 2020.
  • GAAP Net Loss: GAAP net loss was $(6.1) million compared to a net loss of $(3.7) million for the fourth quarter of fiscal year 2020. GAAP basic and diluted net loss per share attributable to common stockholders was $(0.17) based upon weighted average shares outstanding of 35.9 million compared to net loss per share of $(0.11) for the fourth quarter of fiscal year 2020 based upon weighted average shares outstanding of 34.7 million.
  • Non-GAAP Net Income: Non-GAAP net income was $6.6 million, an increase of 31% from the fourth quarter of fiscal year 2020. Non-GAAP net income per diluted share was $0.18 based upon diluted weighted average shares outstanding of 36.5 million compared to non-GAAP net income per diluted share of $0.14 for the fourth quarter of fiscal year 2020 based upon diluted weighted average shares outstanding of 36.4 million.
  • Adjusted EBITDA: Adjusted EBITDA was $7.9 million, an increase of 14% from the fourth quarter of fiscal year 2020.

Fiscal Year 2021 Financial Highlights

  • Revenues: Total revenues were $193.4 million, an increase of 20% from fiscal year 2020. Subscription revenues were $142.4 million, an increase of 23% from fiscal year 2020. Business Services, which we acquired from Deloitte, contributed $18.5 million in total revenues for fiscal year 2021.
  • Gross Profit: Gross profit was $106.8 million, an increase of 12% from fiscal year 2020. Gross margin was 55% compared to 59% for fiscal year 2020. Non-GAAP gross profit was $116.9 million, an increase of 16% from fiscal year 2020. Non-GAAP gross margins were 60% compared to 63% for fiscal year 2020. Subscription gross margin was 65% compared to 70% for fiscal year 2020. Non-GAAP subscription gross margin was 69% compared to 73% for fiscal year 2020. Both GAAP and Non-GAAP gross margins for fiscal year 2021 were impacted by the revenue mix coming from the acquisition of Business Services.
  • GAAP Loss and Non-GAAP Income from Operations: GAAP loss from operations was $(14.4) million compared to $(6.6) million for fiscal year 2020. Non-GAAP income from operations was $25.3 million, an increase of 22% from fiscal year 2020.
  • GAAP Net Loss: GAAP net loss was $(29.7) million compared to $(13.7) million for fiscal year 2020. GAAP basic and diluted net loss per share attributed to common stockholders was $(0.84) based upon weighted average shares outstanding of 35.5 million compared to net loss per share of $(0.40) for fiscal year 2020 based upon weighted average shares outstanding of 34.0 million.
  • Non-GAAP Net Income: Non-GAAP net income was $19.8 million, an increase of 16% from fiscal year 2020. Non-GAAP net income per diluted share was $0.54 based upon diluted weighted average shares outstanding of 36.5 million compared to non-GAAP net income per diluted share of $0.48 for fiscal year 2020 based upon diluted weighted average shares outstanding of 35.4 million.
  • Adjusted EBITDA: Adjusted EBITDA was $26.0 million, an increase of 22% from fiscal year 2020.
  • Cash and Cash Flows: Cash and cash equivalents as of September 30, 2021 totaled $165.5 million. Net cash provided by operating activities was $19.6 million for fiscal year 2021 compared with $14.4 million in fiscal year 2020. Free cash flow was $18.5 million for fiscal year 2021 compared with $13.8 million in fiscal year 2020.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release.

Guidance

As of November 9, 2021, we are providing guidance for the first quarter fiscal year 2022 and issuing guidance for the full fiscal year ending September 30, 2022.

(in $ millions, except per share)

First Quarter Fiscal 2022

Full Year Fiscal 2022

Total revenues

49.5 – 50.0

211.0 – 214.0

Subscription revenues

37.0 – 37.5

152.0 – 155.0

Non-GAAP income from operations

4.3 – 4.8

22.0 – 24.0

Non-GAAP net income per share

0.08 – 0.09

0.44 – 0.49

Adjusted EBITDA

4.5 – 5.0

23.0 – 25.0

Quarterly Results Conference Call

Model N will host a conference call today at 2:00 PM Pacific Time (5:00 PM Eastern Time) to review the company’s financial results for the fourth quarter and fiscal year 2021 ended September 30, 2021. The conference call can be accessed by dialing 877-407-4018 from the United States or +1-201-689-8471 internationally with reference to the company name and conference title, and a live webcast and replay of the conference call can be accessed from the investor relations page of Model N’s website at investor.modeln.com. Following the completion of the call through 11:59 p.m. ET on November 23, 2021, a telephone replay will be available by dialing 844-512-2921 from the United States or +1-412-317-6671, internationally, with recording access code 13723796.

About Model N

Model N enables life sciences and high tech companies to drive growth and market share, minimizing revenue leakage throughout the revenue lifecycle. With deep industry expertise and solutionspurpose-built for these industries, Model N delivers comprehensive visibility, insight and control over the complexities of commercial operations and compliance. Its integrated cloud solution is proven to automate pricing, incentive and contract decisions to scale business profitably and grow revenue. Model N is trusted across more than 120 countries by the world’s leading pharmaceutical, medical technology, semiconductor, and high tech companies, including Johnson & Johnson, AstraZeneca, Stryker, Seagate Technology, Broadcom and Microchip Technology. For more information, visit www.modeln.com.

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding Model N’s first quarter and full year fiscal 2022 financial results, Model N’s profitability, future planned enhancements to our products and benefits from our products, and expected benefits from our acquisition. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) delays in closing customer contracts; (ii) our ability to improve and sustain our sales execution; (iii) the timing of new orders and the associated revenue recognition; (iv) adverse changes in general economic or market conditions; (v) delays or reductions in information technology spending and resulting variability in customer orders from quarter to quarter; (vi) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our competitors; (vii) our ability to manage our growth effectively; (viii) acceptance of our applications and services by customers; (ix) success of new products; (x) the risk that the strategic initiatives that we may pursue will not result in significant future revenues; (xi) changes in health care regulation and policy and tax in the United States and worldwide; (xii) our ability to retain customers; (xiii) adverse impacts on our business and financial condition due to COVID-19; and (xiv) the possibility that the expected benefits related to our acquisition may not materialize as expected and our ability to successfully integrate Deloitte’s life sciences pricing and contracting solutions business and underlying technology. Further information on risks that could affect Model N’s results is included in our filings with the Securities and Exchange Commission (“SEC”), including our most recent quarterly report on Form 10-Q and our annual report on Form 10-K for the fiscal year ended September 30, 2020, and any current reports on Form 8-K that we may file from time to time. Should any of these risks or uncertainties materialize, actual results could differ materially from expectations. Model N assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Non-GAAP Financial Measures

We have provided in this release financial information that has not been prepared in accordance with accounting standards generally accepted in the United States of America (“GAAP”). We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures below. A reconciliation of our 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.

Our reported results include certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP subscription gross profit, non-GAAP subscription gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share, and adjusted EBITDA. Non-GAAP gross profit excludes stock-based compensation expenses, amortization of intangible assets, and deferred revenue adjustments as they are often excluded by other companies to help investors understand the operational performance of their business. Non-GAAP income (loss) from operations excludes stock-based compensation expense, amortization of intangible assets, acquisition-related expense, and deferred revenue adjustments. Non-GAAP net income (loss) excludes stock-based compensation expense, amortization of intangible assets, acquisition-related expense, amortization of debt discount and issuance costs, and deferred revenue adjustments. Additionally, stock-based compensation expense varies from period to period and from company to company due to such things as valuation methodologies and changes in stock price. Adjusted EBITDA is defined as net loss, adjusted for depreciation and amortization, stock-based compensation expense, acquisition-related expense, deferred revenue adjustment, interest (income) expense, net, other (income) expenses, net, and provision for (benefit from) income taxes. Reconciliation tables are provided in this press release.

We have not reconciled guidance for non-GAAP financial measures to their most directly comparable GAAP measures because certain items that impact these measures are uncertain, out of our control and/or cannot be reasonably predicted or estimated, such as the difficulties of estimating certain items such as charges to stock-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

Model N, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

As of

September 30, 2021

 

As of

September 30, 2020

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

165,467

 

 

$

200,491

 

Funds held for customers

316

 

 

 

Accounts receivable, net

43,185

 

 

35,796

 

Prepaid expenses

4,920

 

 

2,797

 

Other current assets

8,442

 

 

7,314

 

Total current assets

222,330

 

 

246,398

 

Property and equipment, net

1,907

 

 

1,034

 

Operating lease right-of-use assets

20,565

 

 

3,332

 

Goodwill

65,665

 

 

39,283

 

Intangible assets, net

45,394

 

 

24,380

 

Other assets

7,929

 

 

5,863

 

Total assets

$

363,790

 

 

$

320,290

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

4,802

 

 

$

3,009

 

Customer funds payable

316

 

 

 

Accrued employee compensation

24,662

 

 

17,056

 

Accrued liabilities

4,719

 

 

5,237

 

Operating lease liabilities, current portion

4,529

 

 

1,460

 

Deferred revenue, current portion

57,431

 

 

50,904

 

Total current liabilities

96,459

 

 

77,666

 

Long-term liabilities

 

 

 

Long term debt

124,301

 

 

114,438

 

Operating lease liabilities, less current portion

17,229

 

 

2,067

 

Other long-term liabilities

2,283

 

 

1,448

 

Total long-term liabilities

143,813

 

 

117,953

 

Total liabilities

240,272

 

 

195,619

 

Stockholders’ equity

 

 

 

Common stock

5

 

 

5

 

Preferred stock

 

 

 

Additional paid-in capital

380,528

 

 

351,952

 

Accumulated other comprehensive loss

(1,205

)

 

(1,213

)

Accumulated deficit

(255,810

)

 

(226,073

)

Total stockholders’ equity

123,518

 

 

124,671

 

Total liabilities and stockholders’ equity

$

363,790

 

 

$

320,290

 

Model N, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

Revenues

 

 

 

 

 

 

 

Subscription

$

38,164

 

 

$

29,672

 

 

$

142,448

 

 

$

116,184

 

Professional services

13,317

 

 

11,788

 

 

50,997

 

 

44,872

 

Total revenues

51,481

 

 

41,460

 

 

193,445

 

 

161,056

 

Cost of revenues

 

 

 

 

 

 

 

Subscription

13,408

 

 

8,579

 

 

49,933

 

 

34,461

 

Professional services

9,297

 

 

8,009

 

 

36,715

 

 

31,035

 

Total cost of revenues

22,705

 

 

16,588

 

 

86,648

 

 

65,496

 

Gross profit

28,776

 

 

24,872

 

 

106,797

 

 

95,560

 

Operating expenses

 

 

 

 

 

 

 

Research and development

11,795

 

 

8,455

 

 

44,661

 

 

34,361

 

Sales and marketing

11,128

 

 

9,297

 

 

43,239

 

 

38,979

 

General and administrative

8,259

 

 

6,757

 

 

33,311

 

 

28,826

 

Total operating expenses

31,182

 

 

24,509

 

 

121,211

 

 

102,166

 

Income (loss) from operations

(2,406

)

 

363

 

 

(14,414

)

 

(6,606

)

Interest expense, net

3,699

 

 

3,371

 

 

14,344

 

 

6,322

 

Other expenses (income), net

35

 

 

347

 

 

210

 

 

(76

)

Loss before income taxes

(6,140

)

 

(3,355

)

 

(28,968

)

 

(12,852

)

Provision for (benefit from) income taxes

(71

)

 

302

 

 

769

 

 

812

 

Net loss

$

(6,069

)

 

$

(3,657

)

 

$

(29,737

)

 

$

(13,664

)

Net loss per share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.17

)

 

$

(0.11

)

 

$

(0.84

)

 

$

(0.40

)

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

 

 

 

 

 

 

 

Basic and diluted

35,921

 

 

34,684

 

 

35,461

 

 

34,008

 

Model N, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

Twelve Months Ended September 30,

 

2021

 

2020

Cash Flows from Operating Activities

 

 

 

Net loss

$

(29,737

)

 

$

(13,664

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

7,972

 

 

5,498

 

Stock-based compensation

29,963

 

 

22,500

 

Amortization of debt discount and issuance costs

9,863

 

 

3,405

 

Deferred income taxes

95

 

 

389

 

Amortization of capitalized contract acquisition costs

3,114

 

 

2,459

 

Loss on early extinguishment of debt

 

 

319

 

Other non-cash charges

10

 

 

(4

)

Changes in assets and liabilities, net of acquisition

 

 

 

Accounts receivable

(3,542

)

 

(8,836

)

Prepaid expenses and other assets

(4,224

)

 

(3,091

)

Accounts payable

1,695

 

 

544

 

Accrued employee compensation

1,933

 

 

927

 

Other current and long-term liabilities

(2,003

)

 

(2,433

)

Deferred revenue

4,451

 

 

6,393

 

Net cash provided by operating activities

19,590

 

 

14,406

 

Cash Flows from Investing Activities

 

 

 

Purchases of property and equipment

(1,055

)

 

(579

)

Acquisition of business

(57,849

)

 

 

Net cash used in investing activities

(58,904

)

 

(579

)

Cash Flows from Financing Activities

 

 

 

Proceeds from exercise of stock options and issuance of employee stock purchase plan

4,307

 

 

4,234

 

Proceeds from issuance of convertible senior notes, net of issuance costs

 

 

166,409

 

Principal payments on debt

 

 

(44,750

)

Net changes in customer funds payable

316

 

 

 

Net cash provided by financing activities

4,623

 

 

125,893

 

Effect of exchange rate changes on cash and cash equivalents

(17

)

 

(9

)

Net increase (decrease) in cash and cash equivalents

(34,708

)

 

139,711

 

Cash and cash equivalents

 

 

 

Beginning of period

200,491

 

 

60,780

 

End of period

$

165,783

 

 

$

200,491

 

Model N, Inc.

Reconciliation of GAAP to Non-GAAP Operating Results

(in thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation from GAAP net loss to adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(6,069

)

 

$

(3,657

)

 

$

(29,737

)

 

$

(13,664

)

Reversal of non-GAAP items

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

8,113

 

 

5,268

 

 

29,963

 

 

22,500

 

Depreciation and amortization

 

2,232

 

 

1,335

 

 

7,972

 

 

5,498

 

Acquisition-related expense

 

 

 

 

 

2,509

 

 

 

Interest expense, net

 

3,699

 

 

3,371

 

 

14,344

 

 

6,322

 

Other expenses (income), net

 

35

 

 

347

 

 

210

 

 

(76

)

Provision for (benefit from) income taxes

 

(71

)

 

302

 

 

769

 

 

812

 

Adjusted EBITDA

 

$

7,939

 

 

$

6,966

 

 

$

26,030

 

 

$

21,392

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation from GAAP gross profit to non-GAAP gross profit

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

28,776

 

 

$

24,872

 

 

$

106,797

 

 

$

95,560

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

2,230

 

 

980

 

 

7,690

 

 

4,094

 

Amortization of intangible assets (b)

 

709

 

 

282

 

 

2,409

 

 

1,193

 

Non-GAAP gross profit

 

$

31,715

 

 

$

26,134

 

 

$

116,896

 

 

$

100,847

 

Percentage of revenue

 

61.6

%

 

63.0

%

 

60.4

%

 

62.6

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation from GAAP subscription gross profit to non-GAAP subscription gross profit

 

 

 

 

 

 

 

 

GAAP subscription gross profit

 

$

24,756

 

 

$

21,093

 

 

$

92,515

 

 

$

81,723

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

1,114

 

 

436

 

 

3,658

 

 

1,865

 

Amortization of intangible assets (b)

 

709

 

 

282

 

 

2,409

 

 

1,193

 

Non-GAAP subscription gross profit

 

$

26,579

 

 

$

21,811

 

 

$

98,582

 

 

$

84,781

 

Percentage of subscription revenue

 

69.6

%

 

73.5

%

 

69.2

%

 

73.0

%

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation from GAAP professional services gross profit to non-GAAP professional services gross profit

 

 

 

 

 

 

 

 

GAAP professional services gross profit

 

$

4,020

 

 

$

3,779

 

 

$

14,282

 

 

$

13,837

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

1,116

 

 

544

 

 

$

4,032

 

 

$

2,229

 

Non-GAAP professional services gross profit

 

$

5,136

 

 

$

4,323

 

 

$

18,314

 

 

$

16,066

 

Percentage of professional services revenue

 

38.6

%

 

36.7

%

 

35.9

%

 

35.8

%

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation from GAAP operating income (loss) to non-GAAP operating income

 

 

 

 

 

 

 

 

GAAP operating income (loss)

 

$

(2,406

)

 

$

363

 

 

$

(14,414

)

 

$

(6,606

)

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

8,113

 

 

5,268

 

 

29,963

 

 

22,500

 

Amortization of intangible assets (b)

 

2,008

 

 

1,171

 

 

7,196

 

 

4,751

 

Acquisition-related expense (c)

 

 

 

 

 

2,509

 

 

 

Non-GAAP operating income

 

$

7,715

 

 

$

6,802

 

 

$

25,254

 

 

$

20,645

 

 

 

 

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

 

 

Reconciliation between GAAP net loss and non-GAAP net income

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(6,069

)

 

$

(3,657

)

 

$

(29,737

)

 

$

(13,664

)

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

8,113

 

 

5,268

 

 

29,963

 

 

22,500

 

Amortization of intangible assets (b)

 

2,008

 

 

1,171

 

 

7,196

 

 

4,751

 

Acquisition-related expense (c)

 

 

 

 

 

2,509

 

 

 

Amortization of debt discount and issuance costs (d)

 

2,577

 

 

2,287

 

 

9,863

 

 

3,405

 

Non-GAAP net income

 

$

6,629

 

 

$

5,069

 

 

$

19,794

 

 

$

16,992

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

Reconciliation between GAAP and non-GAAP net income (loss) per share

 

 

 

 

 

 

 

 

Shares used in computing GAAP net loss per share:

 

 

 

 

 

 

 

 

Basic

 

35,921

 

 

34,684

 

 

35,461

 

 

34,008

 

Diluted

 

35,921

 

 

34,684

 

 

35,461

 

 

34,008

 

Shares used in computing non-GAAP net income per share

 

 

 

 

 

 

 

 

Basic

 

35,921

 

 

34,684

 

 

35,461

 

 

34,008

 

Diluted

 

36,475

 

 

36,413

 

 

36,542

 

 

35,366

 

GAAP net loss per share

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.17

)

 

$

(0.11

)

 

$

(0.84

)

 

$

(0.40

)

Non-GAAP net income per share

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

 

$

0.15

 

 

$

0.56

 

 

$

0.50

 

Diluted

 

$

0.18

 

 

$

0.14

 

 

$

0.54

 

 

$

0.48

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Amortization of intangibles assets recorded in the statements of operations

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

Subscription

 

$

709

 

 

$

282

 

 

$

2,409

 

 

$

1,193

 

Professional services

 

 

 

 

 

 

 

 

Total amortization of intangibles assets in cost of revenue (b)

 

709

 

 

282

 

 

2,409

 

 

1,193

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

 

 

 

 

 

 

Sales and marketing

 

1,299

 

 

889

 

 

4,787

 

 

3,558

 

General and administrative

 

 

 

 

 

 

 

 

Total amortization of intangibles assets in operating expense (b)

 

1,299

 

 

889

 

 

4,787

 

 

3,558

 

Total amortization of intangibles assets (b)

 

$

2,008

 

 

$

1,171

 

 

$

7,196

 

 

$

4,751

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Stock-based compensation recorded in the statements of operations

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

Subscription

 

$

1,114

 

 

$

436

 

 

$

3,658

 

 

$

1,865

 

Professional services

 

1,116

 

 

544

 

 

4,032

 

 

2,229

 

Total stock-based compensation in cost of revenue (a)

 

2,230

 

 

980

 

 

7,690

 

 

4,094

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

1,531

 

 

882

 

 

6,051

 

 

4,625

 

Sales and marketing

 

1,930

 

 

1,571

 

 

7,541

 

 

6,160

 

General and administrative

 

2,422

 

 

1,835

 

 

8,681

 

 

7,621

 

Total stock-based compensation in operating expense (a)

 

5,883

 

 

4,288

 

 

22,273

 

 

18,406

 

Total stock-based compensation (a)

 

$

8,113

 

 

$

5,268

 

 

$

29,963

 

 

$

22,500

 

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP measures of adjusted EBITDA, gross profit, gross margin, income from operations, net income, weighted average shares outstanding and net income per share, which are adjusted to exclude stock-based compensation expense, amortization of intangible assets, acquisition-related expense, and amortization of debt discount and issuance costs and include dilutive shares where applicable. We believe these adjustments are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of our underlying operating results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance that are considered by management for the purpose of making operational decisions. In addition, these non-GAAP results are the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for operating income (loss), net loss or basic and diluted net loss per share prepared in accordance with generally accepted accounting principles in the United States. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.

While a large component of our expenses incurred in certain periods, we believe investors may want to exclude the effects of these items in order to compare our financial performance with that of other companies and between time periods:

(a)

Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies.

 

(b)

Amortization of intangible assets resulted principally from acquisitions. Intangible asset amortization is a non-cash item. As such, we believe exclusion of these expenses provides for a better comparison of our operating results to prior periods and to our peer companies.

 

(c)

Acquisition-related expense. Acquisition-related expense is incurred in connection with the acquisition and is non-recurring. As such, we believe that exclusion of these acquisition-related expense provides for a better comparison of our operation results to prior periods and to our peer companies.

 

(d)

Amortization of debt discount and issuance costs. Amortization of debt discount and issuance costs is a non-cash item. As such, we believe exclusion of these expenses provides for a better comparison of our operating results to prior periods and to our peer companies.

 

Investor Relations Contact:

Carolyn Bass
Market Street Partners
investorrelations@modeln.com

Media Contact:

Judith Rich
Model N, Inc.
516-884-6879
jrich@modeln.com

Source: Model N, Inc.

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