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Model N Announces Fourth Quarter and Fiscal Year 2022 Financial Results

11/08/2022

Total Q4 and Fiscal Year Revenue Grew 13% Year-over-Year

Net Cash Provided by Operating Activities for the Fiscal Year Grew 29% Year-over-Year

SaaS ARR Grew 31% 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 2022 ended September 30, 2022.

“We ended fiscal 2022 with a healthy contribution from all of our growth levers. During the fourth quarter, we signed multiple new logos and SaaS transitions, expanded with many existing customers, 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 solutions. We are building a durable SaaS business for the long-term,” said Jason Blessing, president and chief executive officer of Model N. “I'm extremely pleased with our execution this past year and I'm excited about the year ahead.”

Fourth Quarter 2022 Financial Highlights

  • Revenues: Total revenues were $58.2 million, an increase of 13% from the fourth quarter of fiscal year 2021. Subscription revenues were $42.9 million, an increase of 12% from the fourth quarter of fiscal year 2021.
  • Gross Profit: Gross profit was $32.6 million, an increase of 13% from the fourth quarter of fiscal year 2021. Gross margin was 56% for the fourth quarter of fiscal year 2022 and 2021. Non-GAAP gross profit was $36.2 million, an increase of 14% from the fourth quarter of fiscal year 2021. Non-GAAP gross margin was 62% for the fourth quarter of fiscal year 2022 and 2021. Subscription gross margin was 64% for the fourth quarter of fiscal year 2022 compared to 65% for the fourth quarter of fiscal year 2021. Non-GAAP subscription gross margin was 70% for the fourth quarter of fiscal year 2022 and 2021.
  • GAAP Loss and Non-GAAP Income from Operations: GAAP loss from operations was $4.9 million compared to loss from operations of $2.4 million for the fourth quarter of fiscal year 2021. Non-GAAP income from operations was $8.0 million, an increase of 3% from the fourth quarter of fiscal year 2021.
  • GAAP Net Loss: GAAP net loss was $8.1 million compared to a net loss of $6.1 million for the fourth quarter of fiscal year 2021. GAAP basic and diluted net loss per share attributable to common stockholders was $0.22 based upon weighted average shares outstanding of 37.2 million compared to net loss per share of $0.17 for the fourth quarter of fiscal year 2021 based upon weighted average shares outstanding of 35.9 million.
  • Non-GAAP Net Income: Non-GAAP net income was $7.7 million, an increase of 16% from the fourth quarter of fiscal year 2021. Non-GAAP net income per diluted share was $0.20 based upon diluted weighted average shares outstanding of 37.5 million compared to non-GAAP net income per diluted share of $0.18 for the fourth quarter of fiscal year 2021 based upon diluted weighted average shares outstanding of 36.5 million.
  • Adjusted EBITDA: Adjusted EBITDA was $8.2 million, an increase of 4% from the fourth quarter of fiscal year 2021. Adjusted EBITDA margin was 14% compared to 15% for the fourth quarter of fiscal year 2021.
  • SaaS ARR and SaaS Net Dollar Retention: SaaS ARR reached $109.4 million, and growth accelerated to 31% year-over-year. Trailing 12-month SaaS net dollar retention increased to 129% from 123% in the prior quarter.

Fiscal Year 2022 Financial Highlights

  • Revenues: Total revenues were $219.2 million, an increase of 13% from fiscal year 2021. Subscription revenues were $159.8 million, an increase of 12% from fiscal year 2021.
  • Gross Profit: Gross profit was $122.0 million, an increase of 14% from fiscal year 2021. Gross margin was 56% compared to 55% for fiscal year 2021. Non-GAAP gross profit was $133.8 million, an increase of 14% from fiscal year 2021. Non-GAAP gross margins were 61% compared to 60% for fiscal year 2021. Subscription gross margin was 63% compared to 65% for fiscal year 2021. Non-GAAP subscription gross margin was 68% compared to 69% for fiscal year 2021.
  • GAAP Loss and Non-GAAP Income from Operations: GAAP loss from operations was $13.0 million compared to $14.4 million for fiscal year 2021. Non-GAAP income from operations was $31.1 million, an increase of 23% from fiscal year 2021.
  • GAAP Net Loss: GAAP net loss was $28.6 million compared to $29.7 million for fiscal year 2021. GAAP basic and diluted net loss per share attributed to common stockholders was $0.78 based upon weighted average shares outstanding of 36.7 million compared to net loss per share of $0.84 for fiscal year 2021 based upon weighted average shares outstanding of 35.5 million.
  • Non-GAAP Net Income: Non-GAAP net income was $26.6 million, an increase of 34% from fiscal year 2021. Non-GAAP net income per diluted share was $0.72 based upon diluted weighted average shares outstanding of 37.0 million compared to non-GAAP net income per diluted share of $0.54 for fiscal year 2021 based upon diluted weighted average shares outstanding of 36.5 million
  • Adjusted EBITDA: Adjusted EBITDA was $32.1 million, an increase of 23% from fiscal year 2021.
  • Cash and Cash Flows: Cash and cash equivalents as of September 30, 2022 totaled $193.5 million. Net cash provided by operating activities was $25.3 million for fiscal year 2022 compared with $19.6 million in fiscal year 2021. Free cash flow was $24.3 million for fiscal year 2022 compared with $18.5 million in fiscal year 2021.

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 8, 2022, we are providing guidance for the first quarter fiscal year 2023 ending December 31, 2022 and the full fiscal year ending September 30, 2023.

(in $ millions, except per share)

First Quarter Fiscal 2023

Full Year Fiscal 2023

Total revenues

57.0 - 58.0

241.0 - 244.0

Subscription revenues

42.5 - 43.0

178.0 -180.0

Non-GAAP income from operations

8.3 - 9.3

36.0 - 39.0

Non-GAAP net income per share

0.21 - 0.23

0.90 - 0.97

Adjusted EBITDA

8.5 - 9.5

37.0 - 40.0

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 2022 ended September 30, 2022. The conference call can be accessed by dialing 877-407-4018 from the United States or +1-201-689-8471 internationally. 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 22, 2022, 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 13725728.

About Model N

Model N is the leader in revenue optimization and compliance for pharmaceutical, medtech, and high-tech innovators. Our intelligent platform powers your digital transformation with integrated technology, data, analytics, and expert services that deliver deep insight and control.

Our 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 2023 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; and (xiii) adverse impacts on our business and financial condition due to macroeconomic and geopolitical factors, such as inflation, rising interests, pandemics and geopolitical conflicts. 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, 2022, 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 from operations, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. Non-GAAP gross profit and subscription gross profit excludes stock-based compensation expenses and amortization of intangible assets as they are often excluded by other companies to help investors understand the operational performance of their business. Non-GAAP income from operations excludes stock-based compensation expense, amortization of intangible assets and acquisition-related expense. Non-GAAP net income excludes stock-based compensation expense, amortization of intangible assets, acquisition-related expense and amortization of debt discount and issuance costs. 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, interest expense, net, other (income) expenses, net, and provision for income taxes. Reconciliation tables are provided in this press release.

SaaS ARR is defined as the annualized value of our SaaS revenue, which is derived by taking the SaaS portion of our recurring subscription revenue for the quarter, dividing it by the number of days in the quarter, and multiplying it by 365 to get an annualized number. SaaS Net Dollar Retention uses the same SaaS ARR calculations to measure the percentage change in SaaS ARR from customers that are in both the current period and the year-ago period. SaaS ARR that has been added from new customers that were not in the year-ago calculation is excluded from the SaaS Net Dollar Retention calculation. SaaS ARR and SaaS Net Dollar Retention should be viewed independently of revenue, deferred revenue, and remaining performance obligations, and are not intended to be a substitute for, or combined with, any of these items.

Free cash flow is defined as net cash provided by operating activities less cash used for purchase of property plant and equipment.

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,
2022

 

As of September 30,
2021

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

193,524

 

 

$

165,467

 

Funds held for customers

 

603

 

 

 

316

 

Accounts receivable, net

 

49,121

 

 

 

43,185

 

Prepaid expenses

 

5,772

 

 

 

4,920

 

Other current assets

 

12,516

 

 

 

8,442

 

Total current assets

 

261,536

 

 

 

222,330

 

Property and equipment, net

 

1,838

 

 

 

1,907

 

Operating lease right-of-use assets

 

15,392

 

 

 

20,565

 

Goodwill

 

65,665

 

 

 

65,665

 

Intangible assets, net

 

37,362

 

 

 

45,394

 

Other assets

 

10,454

 

 

 

7,929

 

Total assets

$

392,247

 

 

$

363,790

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

5,820

 

 

$

4,802

 

Customer funds payable

 

603

 

 

 

316

 

Accrued employee compensation

 

26,712

 

 

 

24,662

 

Accrued liabilities

 

6,860

 

 

 

4,719

 

Operating lease liabilities, current portion

 

4,651

 

 

 

4,529

 

Deferred revenue, current portion

 

62,282

 

 

 

57,431

 

Total current liabilities

 

106,928

 

 

 

96,459

 

Long-term liabilities

 

 

 

Long term debt

 

135,417

 

 

 

124,301

 

Operating lease liabilities, less current portion

 

12,142

 

 

 

17,229

 

Other long-term liabilities

 

3,139

 

 

 

2,283

 

Total long-term liabilities

 

150,698

 

 

 

143,813

 

Total liabilities

 

257,626

 

 

 

240,272

 

Stockholders’ equity

 

 

 

Common stock

 

6

 

 

 

5

 

Additional paid-in capital

 

421,473

 

 

 

380,528

 

Accumulated other comprehensive loss

 

(2,413

)

 

 

(1,205

)

Accumulated deficit

 

(284,445

)

 

 

(255,810

)

Total stockholders’ equity

 

134,621

 

 

 

123,518

 

Total liabilities and stockholders’ equity

$

392,247

 

 

$

363,790

 

 

 

 

 

Model N, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

 

 

 

 

 

 

Subscription

$

42,881

 

 

$

38,164

 

 

$

159,766

 

 

$

142,448

 

Professional services

 

15,290

 

 

 

13,317

 

 

 

59,398

 

 

 

50,997

 

Total revenues

 

58,171

 

 

 

51,481

 

 

 

219,164

 

 

 

193,445

 

Cost of revenues

 

 

 

 

 

 

 

Subscription

 

15,260

 

 

 

13,408

 

 

 

58,509

 

 

 

49,933

 

Professional services

 

10,351

 

 

 

9,297

 

 

 

38,611

 

 

 

36,715

 

Total cost of revenues

 

25,611

 

 

 

22,705

 

 

 

97,120

 

 

 

86,648

 

Gross profit

 

32,560

 

 

 

28,776

 

 

 

122,044

 

 

 

106,797

 

Operating expenses

 

 

 

 

 

 

 

Research and development

 

12,569

 

 

 

11,795

 

 

 

47,604

 

 

 

44,661

 

Sales and marketing

 

12,845

 

 

 

11,128

 

 

 

47,719

 

 

 

43,239

 

General and administrative

 

12,060

 

 

 

8,259

 

 

 

39,676

 

 

 

33,311

 

Total operating expenses

 

37,474

 

 

 

31,182

 

 

 

134,999

 

 

 

121,211

 

Loss from operations

 

(4,914

)

 

 

(2,406

)

 

 

(12,955

)

 

 

(14,414

)

Interest expense, net

 

3,344

 

 

 

3,699

 

 

 

14,763

 

 

 

14,344

 

Other expenses (income), net

 

(277

)

 

 

35

 

 

 

(558

)

 

 

210

 

Loss before income taxes

 

(7,981

)

 

 

(6,140

)

 

 

(27,160

)

 

 

(28,968

)

Provision for (benefit from) for income taxes

 

131

 

 

 

(71

)

 

 

1,475

 

 

 

769

 

Net loss

$

(8,112

)

 

$

(6,069

)

 

$

(28,635

)

 

$

(29,737

)

Net loss per share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.22

)

 

$

(0.17

)

 

$

(0.78

)

 

$

(0.84

)

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

 

 

 

 

 

 

 

Basic and diluted

 

37,199

 

 

 

35,921

 

 

 

36,744

 

 

 

35,461

 

 

 

 

 

 

 

 

 

Model N, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

Twelve Months Ended September 30,

 

 

2022

 

 

 

2021

 

Cash Flows from Operating Activities

 

 

 

Net loss

$

(28,635

)

 

$

(29,737

)

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

 

 

 

Depreciation and amortization

 

8,991

 

 

 

7,972

 

Stock-based compensation

 

36,054

 

 

 

29,963

 

Amortization of debt discount and issuance costs

 

11,114

 

 

 

9,863

 

Deferred income taxes

 

389

 

 

 

95

 

Amortization of capitalized contract acquisition costs

 

4,349

 

 

 

3,114

 

Other non-cash charges

 

(797

)

 

 

10

 

Changes in assets and liabilities, net of acquisition

 

 

 

Accounts receivable

 

(5,685

)

 

 

(3,542

)

Prepaid expenses and other assets

 

(7,108

)

 

 

(4,224

)

Accounts payable

 

1,049

 

 

 

1,695

 

Accrued employee compensation

 

2,946

 

 

 

1,933

 

Other current and long-term liabilities

 

(2,197

)

 

 

(2,003

)

Deferred revenue

 

4,817

 

 

 

4,451

 

Net cash provided by operating activities

 

25,287

 

 

 

19,590

 

Cash Flows from Investing Activities

 

 

 

Purchases of property and equipment

 

(993

)

 

 

(1,055

)

Acquisition of business

 

 

 

 

(57,849

)

Net cash used in investing activities

 

(993

)

 

 

(58,904

)

Cash Flows from Financing Activities

 

 

 

Proceeds from exercise of stock options and issuance of common stock under employee stock purchase

plan

 

4,255

 

 

 

4,307

 

Net changes in customer funds payable

 

288

 

 

 

316

 

Net cash provided by financing activities

 

4,543

 

 

 

4,623

 

Effect of exchange rate changes on cash and cash equivalents

 

(493

)

 

 

(17

)

Net increase (decrease) in cash and cash equivalents

 

28,344

 

 

 

(34,708

)

Cash and cash equivalents

 

 

 

Beginning of period

 

165,783

 

 

 

200,491

 

End of period

$

194,127

 

 

$

165,783

 

 

 

 

 

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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Reconciliation from GAAP net loss to adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(8,112

)

 

$

(6,069

)

 

$

(28,635

)

 

$

(29,737

)

Reversal of non-GAAP items

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

10,867

 

 

 

8,113

 

 

 

36,054

 

 

 

29,963

 

Depreciation and amortization

 

 

2,266

 

 

 

2,232

 

 

 

8,991

 

 

 

7,972

 

Acquisition-related expense

 

 

 

 

 

 

 

 

 

 

 

2,509

 

Interest expense, net

 

 

3,344

 

 

 

3,699

 

 

 

14,763

 

 

 

14,344

 

Other expenses (income), net

 

 

(277

)

 

 

35

 

 

 

(558

)

 

 

210

 

Provision for income taxes

 

 

131

 

 

 

(71

)

 

 

1,475

 

 

 

769

 

Adjusted EBITDA

 

$

8,219

 

 

$

7,939

 

 

$

32,090

 

 

$

26,030

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Reconciliation from GAAP gross profit to non-GAAP gross profit

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

32,560

 

 

$

28,776

 

 

$

122,044

 

 

$

106,797

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

 

2,972

 

 

 

2,230

 

 

 

8,961

 

 

 

7,690

 

Amortization of intangible assets (b)

 

 

709

 

 

 

709

 

 

 

2,836

 

 

 

2,409

 

Non-GAAP gross profit

 

$

36,241

 

 

$

31,715

 

 

$

133,841

 

 

$

116,896

 

Non-GAAP gross margin

 

 

62.3

%

 

 

61.6

%

 

 

61.1

%

 

 

60.4

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

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

 

 

 

 

 

 

 

 

GAAP subscription gross profit

 

$

27,621

 

 

$

24,756

 

 

$

101,257

 

 

$

92,515

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

 

1,585

 

 

 

1114

 

 

 

4,888

 

 

 

3,658

 

Amortization of intangible assets (b)

 

 

709

 

 

 

709

 

 

 

2,836

 

 

 

2,409

 

Non-GAAP subscription gross profit

 

$

29,915

 

 

$

26,579

 

 

$

108,981

 

 

$

98,582

 

Non-GAAP subscription gross margin

 

 

69.8

%

 

 

69.6

%

 

 

68.2

%

 

 

69.2

%

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

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

 

 

 

 

 

 

 

 

GAAP professional services gross profit

 

$

4,938

 

 

$

4,020

 

 

$

20,787

 

 

$

14,282

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

 

1,387

 

 

 

1,116

 

 

$

4,073

 

 

$

4,032

 

Non-GAAP professional services gross profit

 

$

6,325

 

 

$

5,136

 

 

$

24,860

 

 

$

18,314

 

Non-GAAP professional services gross margin

 

 

41.4

%

 

 

38.6

%

 

 

41.9

%

 

 

35.9

%

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Reconciliation from GAAP operating loss to non-GAAP operating income

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(4,914

)

 

$

(2,406

)

 

$

(12,955

)

 

$

(14,414

)

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

 

10,867

 

 

 

8,113

 

 

 

36,053

 

 

 

29,963

 

Amortization of intangible assets (b)

 

 

2,008

 

 

 

2,008

 

 

 

8,032

 

 

 

7,196

 

Acquisition-related expense (c)

 

 

 

 

 

 

 

 

 

 

 

2,509

 

Non-GAAP operating income

 

$

7,961

 

 

$

7,715

 

 

$

31,130

 

 

$

25,254

 

 

 

 

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

 

 

Reconciliation between GAAP net loss and non-GAAP net income

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(8,112

)

 

$

(6,069

)

 

$

(28,635

)

 

$

(29,737

)

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

 

10,867

 

 

 

8,113

 

 

 

36,053

 

 

 

29,963

 

Amortization of intangible assets (b)

 

 

2,008

 

 

 

2,008

 

 

 

8,032

 

 

 

7,196

 

Acquisition-related expense (c)

 

 

 

 

 

 

 

 

 

 

 

2,509

 

Amortization of debt discount and issuance costs (d)

 

 

2,904

 

 

 

2,577

 

 

 

11,114

 

 

 

9,863

 

Non-GAAP net income

 

$

7,667

 

 

$

6,629

 

 

$

26,564

 

 

$

19,794

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Shares used in computing GAAP net loss per share:

 

 

 

 

 

 

 

 

Basic

 

 

37,199

 

 

 

35,921

 

 

 

36,744

 

 

 

35,461

 

Diluted

 

 

37,199

 

 

 

35,921

 

 

 

36,744

 

 

 

35,461

 

Shares used in computing non-GAAP net income per share

 

 

 

 

 

 

 

 

Basic

 

 

37,199

 

 

 

35,921

 

 

 

36,744

 

 

 

35,461

 

Diluted

 

 

37,488

 

 

 

36,475

 

 

 

36,996

 

 

 

36,542

 

GAAP net loss per share

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.22

)

 

$

(0.17

)

 

$

(0.78

)

 

$

(0.84

)

Non-GAAP net income per share

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

 

$

0.18

 

 

$

0.72

 

 

$

0.56

 

Diluted

 

$

0.20

 

 

$

0.18

 

 

$

0.72

 

 

$

0.54

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Amortization of intangibles assets recorded in the statements of operations

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

Subscription

 

$

709

 

$

709

 

$

2,836

 

$

2,409

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

 

 

709

 

 

709

 

 

2,836

 

 

2,409

Operating expenses

 

 

 

 

 

 

 

 

Sales and marketing

 

 

1,299

 

 

1,299

 

 

5,196

 

 

4,787

Total amortization of intangibles assets in operating expense (b)

 

 

1,299

 

 

1,299

 

 

5,196

 

 

4,787

Total amortization of intangibles assets (b)

 

$

2,008

 

$

2,008

 

$

8,032

 

$

7,196

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Stock-based compensation recorded in the statements of operations

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

Subscription

 

$

1,585

 

$

1,114

 

$

4,888

 

$

3,658

Professional services

 

 

1,387

 

 

1,116

 

 

4,073

 

 

4,032

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

 

 

2,972

 

 

2,230

 

 

8,961

 

 

7,690

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

2,039

 

 

1,531

 

 

6,655

 

 

6,051

Sales and marketing

 

 

2,467

 

 

1,930

 

 

8,136

 

 

7,541

General and administrative

 

 

3,389

 

 

2,422

 

 

12,301

 

 

8,681

Total stock-based compensation in operating expense (a)

 

 

7,895

 

 

5,883

 

 

27,092

 

 

22,273

Total stock-based compensation (a)

 

$

10,867

 

$

8,113

 

$

36,053

 

$

29,963

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Free cash flow

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

7,954

 

 

$

9,900

 

 

$

25,287

 

 

$

19,590

 

Purchases of property and equipment

 

$

(507

)

 

$

(213

)

 

$

(993

)

 

$

(1,055

)

Free cash flow

 

 

7,447

 

 

 

9,687

 

 

 

24,294

 

 

 

18,535

 

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 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:
BLASTmedia
Press@modeln.com

Source: Model N, Inc.

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