SAN MATEO, Calif., April 24, 2014 /PRNewswire/ -- Marketo
(NASDAQ: MKTO), the leading provider of marketing software, today
announced its first quarter 2014 financial results.
Highlights:
- Revenue increased 64% year over year to $32.3 million
- Deferred revenue increased 86% year over year to
$45.6 million
- Customer count increased to 3,215
- Expanded globally to Japan
in Joint Venture with Dentsu eMarketing One and Sunbridge
Corporation
- Continued innovation with release of groundbreaking
Real-Time Personalization application
"The first quarter was a great start to 2014 as we saw strong
growth across the business, successfully integrated a strategic
acquisition and established our presence in Japan," said Phil
Fernandez, Chairman and CEO of Marketo. "We built on
this momentum in early April with the introduction of our customer
engagement platform, which completely changes the game for
marketers everywhere. Through our software, marketers for the
first time have a single technology platform that enables them to
plan, orchestrate, personalize and execute their entire marketing
strategy. When paired with the more than 250 solutions now in our
LaunchPoint ecosystem and a new strategic alliance with Acxiom,
Marketo is continuing to set the agenda with the most innovative
offering in the market."
Results for the first quarter of 2014:
- Revenue: Revenue was $32.3
million, an increase of 64% over the prior year period and
an increase of 15% from the quarter ended December 31, 2013.
- Deferred Revenue: Deferred revenue at March 31, 2014 was $45.6
million, up 86% year over year from $24.5 million at March 31,
2013, and up 10% compared to the $41.4 million at December
31, 2013.
- Net Loss: GAAP net loss was $12.5
million, and GAAP net loss per common share, basic and
diluted, was $(0.32). Non-GAAP net
loss was $7.0 million, and non- GAAP
net loss per common share, basic and diluted, was $(0.18). Non-GAAP net loss and non-GAAP net loss
per share amounts exclude approximately $5.0
million in stock-based compensation expense and $484,000 of amortization of acquired intangible
assets. GAAP and non-GAAP net loss per common share calculations
are based on 39.4 million weighted average common shares
outstanding.
- Total Cash and Cash Equivalents: As of March 31, 2014, total cash and cash equivalents
was $119.6 million.
Outlook
As of April 24, 2014, Marketo is
initiating revenue and EPS guidance for its second quarter of 2014
and updating full year 2014 guidance.
For the second quarter of 2014, Marketo expects to
report:
- Revenue in the range of $33 to $34
million
- GAAP net loss per share in the range of $(0.46) to $(0.48)
- Non-GAAP net loss per share in the range of $(0.30) to $(0.32), excluding stock-based
compensation expenses of approximately $6.2
million,$471,000 of
amortization of acquired intangible assets and assuming
approximately 40.7 million weighted average common shares
outstanding
For the full year 2014, Marketo expects to report:
- Revenue in the range of $138 to $141
million
- GAAP net loss per share in the range of $(1.65) to $(1.71)
- Non-GAAP net loss per share in the range of $(1.00) to $(1.06), excluding stock-based
compensation expenses of approximately $24.7
million,$1.9 million of
amortization of acquired intangible assets and assuming
approximately 41.0 million weighted average common shares
outstanding
Conference Call Information
Marketo will host a conference call and live webcast to discuss
the financial results at 2:00 p.m. Pacific Time, 5:00
p.m. Eastern Time, today, Thursday, April
24, 2014. The conference call can be accessed by dialing
1-877-941-8416-, or 1-480-629-9808 (outside the U.S. and
Canada). A live
webcast will be available on the Investor Relations page of the
Marketo corporate website at www.marketo.com and via replay
beginning approximately two hours after the completion of the call
for 90 days. An audio replay of the call will also be
available by dialing 1-800-406-7325 or 1-303-590-3030 (outside the
U.S. and Canada) and entering
passcode 4677816#.
Use of Non-GAAP Financial Information
Marketo provides financial statements that are prepared in
accordance with generally accepted accounting principles (GAAP). To
help understand Marketo's past financial performance and future
results, Marketo has supplemented its financial results that it
provides in accordance with GAAP with certain non-GAAP financial
measures. The method Marketo uses to produce non-GAAP financial
results is not computed according to GAAP and may differ from the
methods used by other companies. Non-GAAP financial measures are
not meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read only in conjunction
with the company's consolidated financial statements prepared in
accordance with GAAP. Specifically, management is excluding
the following items from its non-GAAP historic and estimated net
loss and net loss per common share, basic and diluted:
- Stock-Based Compensation Expenses: The company's compensation
strategy includes the use of stock-based compensation to attract
and retain employees and executives. It is principally aimed at
aligning their interests with those of our stockholders and at
long-term employee retention, rather than to motivate or reward
operational performance for any particular period. Thus,
stock-based compensation expense varies for reasons that are
generally unrelated to operational decisions and performance in any
particular period.
- Amortization of Acquired Intangible Assets: The company views
amortization of acquisition-related intangible assets, such as the
amortization of the cost associated with an acquired company's
research and development efforts, trade names, customer lists and
customer relationships, as items arising from pre-acquisition
activities determined at the time of an acquisition. While these
intangible assets are continually evaluated for impairment,
amortization of the cost of purchased intangibles is a static
expense, one that is not typically affected by operations during
any particular period.
"Safe harbor" statement under the Private Securities
Litigation Reform Act of 1995
This press release contains forward-looking statements. These
forward-looking statements include general statements about our
opportunities for growth and specific statements about our expected
GAAP and non-GAAP financial results for the second quarter and the
full year of 2014, including revenue, net loss, EPS, stock-based
compensation expenses and amortization of acquired intangible
assets. The achievement or success of the matters covered by such
forward-looking statements involves risks, uncertainties and
assumptions. If any such risks or uncertainties materialize or if
any of the assumptions prove incorrect, the company's results could
differ materially from the results expressed or implied by the
forward-looking statements we make.
The risks and uncertainties that could cause actual results to
differ from the results predicted include, but are not limited to,
risks associated with: possible fluctuations in the company's
financial and operating results; the company's rate of growth and
anticipated revenue run rate, including the company's ability to
convert deferred revenue and unbilled deferred revenue into revenue
and, as appropriate, cash flow, and the continued growth and
ability to maintain deferred revenue and unbilled deferred revenue;
errors, interruptions or delays in the company's service or the
company's Web hosting; breaches of the company's security measures;
the financial impact of any previous and future acquisitions; the
nature of the company's business model; the company's ability to
continue to release, and gain customer acceptance of, new and
improved versions of the company's service; successful customer
deployment and utilization of the company's existing and future
services; changes in the company's sales cycle; competition;
relationships with platform providers; various financial aspects of
the company's subscription model; unexpected increases in attrition
or decreases in new business; the emerging markets in which the
company operates; unique aspects of entering or expanding in
international markets; the company's ability to hire, retain and
motivate employees and manage the company's growth; changes in the
company's customer base; technological developments; regulatory
developments; litigation related to intellectual property and other
matters, and any related claims, negotiations and settlements;
unanticipated changes in the company's effective tax rate;
fluctuations in the number of shares we have outstanding and the
price of such shares; foreign currency exchange rates; collection
of receivables; interest rates; factors affecting our deferred tax
assets and ability to value and utilize them; the risks and
expenses associated with the company's real estate and office
facilities space; and general developments in the economy,
financial markets, and credit markets.
Further information about factors that could affect the
company's financial results is included in the reports on Forms
10-K, 10-Q and 8-K and in other filings the Company makes with the
Securities and Exchange Commission from time to time.
Marketo assumes no obligation and does not intend to update
these forward-looking statements, except as required by law.
About Marketo: Marketing Software. Easy, Powerful,
Complete.
Marketo (NASDAQ: MKTO) provides the leading marketing
software for companies of all sizes to build and sustain engaging
customer relationships. Spanning today's digital, social, mobile
and offline channels, Marketo's® customer engagement platform
powers a set of breakthrough applications to help marketers tackle
all aspects of digital marketing from the planning and
orchestration of marketing activities to the delivery of
personalized interactions that can be optimized in real-time.
Marketo's applications are known for their ease-of-use, and are
complemented by the Marketing Nation™, a thriving network of more
than 250 third-party solutions through our LaunchPoint™ ecosystem
and over 40,000 marketers who share and learn from each other to
grow their collective marketing expertise. The result for modern
marketers is unprecedented agility and superior results.
Headquartered in San Mateo, CA
with offices in Europe,
Australia and a joint-venture in
Japan, Marketo serves as a
strategic marketing partner to more than 3,000 large enterprises
and fast-growing small companies across a wide variety of
industries. For more information, visit
www.marketo.com.
Marketo, the Marketo logo, Marketing Nation and LaunchPoint
are trademarks of Marketo, Inc. All other trademarks are the
property of their respective owners.
MARKETO,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
119,572
|
|
$
128,299
|
Accounts receivable,
net
|
|
25,240
|
|
26,946
|
Prepaid expenses and
other current assets
|
|
6,874
|
|
3,218
|
Total current
assets
|
|
151,686
|
|
158,463
|
Property and
equipment, net
|
|
15,567
|
|
13,856
|
Goodwill
|
|
26,045
|
|
25,941
|
Intangible assets,
net
|
|
6,768
|
|
7,095
|
Other
assets
|
|
945
|
|
484
|
Total
assets
|
|
$
201,011
|
|
$
205,839
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
3,964
|
|
$
3,527
|
Accrued expenses and
other current liabilities
|
|
13,488
|
|
23,055
|
Deferred
revenue
|
|
45,606
|
|
41,356
|
Current portion of
credit facility
|
|
2,564
|
|
2,187
|
Total current
liabilities
|
|
65,622
|
|
70,125
|
Credit facility, net
of current portion
|
|
4,702
|
|
5,372
|
Other long-term
liabilities
|
|
1,812
|
|
1,900
|
Total
liabilities
|
|
72,136
|
|
77,397
|
|
|
|
|
|
Redeemable
non-controlling interests
|
|
1,572
|
|
-
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
4
|
|
4
|
Additional paid-in
capital
|
|
269,219
|
|
257,801
|
Accumulated other
comprehensive income
|
|
150
|
|
198
|
Accumulated
deficit
|
|
(142,070)
|
|
(129,561)
|
Total stockholders'
equity
|
|
127,303
|
|
128,442
|
Total liabilities,
redeemable non-controlling interests and stockholders'
equity
|
|
$
201,011
|
|
$
205,839
|
MARKETO,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three
Months
Ended March
31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Subscription and
support
|
|
$
28,611
|
|
$ 17,555
|
|
Professional services
and other
|
|
3,681
|
|
2,181
|
|
Total
revenue
|
|
32,292
|
|
19,736
|
|
Cost of revenue
(1):
|
|
|
|
|
|
Subscription and
support
|
|
6,235
|
|
5,820
|
|
Professional services
and other
|
|
4,841
|
|
2,618
|
|
Total cost of
revenue
|
|
11,076
|
|
8,438
|
|
Gross
profit:
|
|
|
|
|
|
Subscription and
support
|
|
22,376
|
|
11,735
|
|
Professional services
and other
|
|
(1,160)
|
|
(437)
|
|
Total gross
profit
|
|
21,216
|
|
11,298
|
|
Operating expenses
(1):
|
|
|
|
|
|
Research and
development
|
|
7,131
|
|
4,996
|
|
Sales and
marketing
|
|
20,368
|
|
12,318
|
|
General and
administrative
|
|
6,192
|
|
3,427
|
|
Total operating
expenses
|
|
33,691
|
|
20,741
|
|
Loss from
operations
|
|
(12,475)
|
|
(9,443)
|
|
Other income
(expense), net
|
|
(59)
|
|
(61)
|
|
Loss before provision
for income taxes
|
|
(12,534)
|
|
(9,504)
|
|
Provision for income
taxes
|
|
(14)
|
|
20
|
|
Net loss
|
|
(12,520)
|
|
(9,524)
|
|
Net loss attributable
to redeemable non-controlling interests
|
|
11
|
|
-
|
|
Net loss attributable
to Marketo
|
|
$(12,509)
|
|
$ (9,524)
|
|
|
|
|
|
|
|
Net loss per share of
common stock, basic and diluted
|
|
$
(0.32)
|
|
$
(2.99)
|
|
Shares used in
computing net loss per share of common stock,
basic and diluted
|
|
39,379
|
|
3,181
|
|
|
|
|
|
|
|
(1) Amounts include
stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
Ended March
31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Cost of subscription
and support revenue
|
|
$
384
|
|
$
63
|
|
Cost of professional
services and other revenue
|
|
447
|
|
93
|
|
Research and
development
|
|
1,079
|
|
210
|
|
Sales and
marketing
|
|
1,779
|
|
230
|
|
General and
administrative
|
|
1,318
|
|
405
|
|
Total stock-based
compensation expense
|
|
$
5,007
|
|
$
1,001
|
|
|
|
|
|
|
|
MARKETO,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
|
2014
|
|
2013
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net
loss
|
|
$ (12,520)
|
|
$ (9,524)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
2,131
|
|
806
|
|
Stock-based
compensation expense
|
|
5,007
|
|
1,001
|
|
Deferred income
taxes
|
|
(74)
|
|
-
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts receivable,
net
|
|
1,709
|
|
(109)
|
|
Prepaid expenses and
other current assets
|
|
(3,724)
|
|
(1,848)
|
|
Other
assets
|
|
(393)
|
|
164
|
|
Accounts
payable
|
|
44
|
|
1,924
|
|
Accrued expenses and
other current liabilities
|
|
(9,628)
|
|
(1,296)
|
|
Deferred
revenue
|
|
4,251
|
|
3,906
|
|
Other
liabilities
|
|
(14)
|
|
71
|
|
Net cash used in
operating activities
|
|
(13,211)
|
|
(4,905)
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(2,579)
|
|
(2,877)
|
|
Capitalized software
development
|
|
(179)
|
|
-
|
|
Net cash used in
investing activities
|
|
(2,758)
|
|
(2,877)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of common stock upon exercise of stock
options
|
|
2,518
|
|
490
|
|
Proceeds from
issuance of common stock issued under employee stock purchase
plan
|
|
3,384
|
|
-
|
|
Investment from
redeemable non-controlling interests
|
|
1,953
|
|
-
|
|
Repurchase of
unvested common stock from terminated employees
|
|
(23)
|
|
(2)
|
|
Withholding taxes
remitted for the net share settlement of an equity award
|
|
(15)
|
|
-
|
|
Repayment of
debt
|
|
(293)
|
|
-
|
|
Payment incurred for
common stock registration related to acquisition
|
|
(155)
|
|
-
|
|
Payment of deferred
initial public offering and follow-on offering
costs
|
|
(104)
|
|
(794)
|
|
Net cash provided by
(used in) financing activities
|
|
7,265
|
|
(306)
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
|
(23)
|
|
17
|
|
Net decrease in cash
and cash equivalents
|
|
(8,727)
|
|
(8,071)
|
|
Cash and cash
equivalents — beginning of period
|
|
128,299
|
|
44,247
|
|
Cash and cash
equivalents —end of period
|
|
$119,572
|
|
$36,176
|
|
MARKETO, INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(In thousands, except
per share data)
|
(Unaudited)
|
To supplement our
condensed consolidated financial statements presented on a GAAP
basis, Marketo uses non-GAAP measures of operating loss, net loss
and net loss per share, which are adjusted to exclude certain
costs, expenses, gains and losses we believe 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 Marketo's
underlying operational results and trends and our marketplace
performance. In addition, these adjusted non-GAAP results are among
the information 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 results prepared in accordance with generally
accepted accounting principles in the United States of
America.
|
|
|
|
Three Months
Ended
December 31,
2013
|
|
Three Months
Ended
March 31,
2014
|
|
Three Months
Ended
March 31,
2013
|
Revenue:
|
|
|
|
|
|
|
|
Subscription and
support
|
|
$
25,153
|
|
$
28,611
|
|
$
17,555
|
|
Professional services
and other
|
|
3,018
|
|
3,681
|
|
2,181
|
Total
Revenue
|
|
$
28,171
|
|
$
32,292
|
|
$
19,736
|
|
|
|
|
|
|
|
|
Cost of revenue
reconciliation:
|
|
|
|
|
|
|
|
GAAP Subscription and
support
|
|
$
6,295
|
|
$
6,235
|
|
$
5,820
|
|
Stock-based
compensation
|
|
(179)
|
|
(384)
|
|
(63)
|
|
Amortization of
acquired intangible assets
|
|
(95)
|
|
(285)
|
|
(57)
|
|
Non-GAAP subscription
and support
|
|
$
6,021
|
|
$
5,566
|
|
$
5,700
|
|
|
|
|
|
|
|
|
|
GAAP Professional
services and other
|
|
$
3,991
|
|
$
4,841
|
|
$
2,618
|
|
Stock-based
compensation
|
|
(245)
|
|
(447)
|
|
(93)
|
|
Amortization of
acquired intangible assets
|
|
-
|
|
-
|
|
-
|
|
Non-GAAP professional
services and other
|
|
$
3,746
|
|
$
4,394
|
|
$
2,525
|
|
|
|
|
|
|
|
|
Gross profit and
gross margin reconciliation:
|
|
|
|
|
|
|
|
Non-GAAP subscription
and support gross profit
|
|
$
19,132
|
|
$
23,045
|
|
$
11,855
|
|
Non-GAAP professional
services and other gross profit
|
|
(728)
|
|
(713)
|
|
(344)
|
|
Non-GAAP gross
profit
|
|
$
18,404
|
|
$
22,332
|
|
$
11,511
|
|
Non-GAAP
subscription and support gross margin
|
|
76.1%
|
|
80.5%
|
|
67.5%
|
|
Non-GAAP
professional services and other gross margin
|
|
-24.1%
|
|
-19.4%
|
|
-15.8%
|
|
Non-GAAP gross
margin
|
|
65.3%
|
|
69.2%
|
|
58.3%
|
|
|
|
|
|
|
|
|
Operating expenses
reconciliation:
|
|
|
|
|
|
|
|
GAAP Research and
development
|
|
$
6,402
|
|
$
7,131
|
|
$
4,996
|
|
Stock-based
compensation
|
|
(479)
|
|
(1,079)
|
|
(210)
|
|
Amortization of
acquired intangible assets
|
|
-
|
|
-
|
|
-
|
|
Non-GAAP research and
development
|
|
$
5,923
|
|
$
6,052
|
|
$
4,786
|
|
As a % of total
revenues, non-GAAP
|
|
21.0%
|
|
18.7%
|
|
24.3%
|
|
|
|
|
|
|
|
|
|
GAAP Sales and
marketing
|
|
$
19,719
|
|
$
20,368
|
|
$
12,318
|
|
Stock-based
compensation
|
|
(647)
|
|
(1,779)
|
|
(230)
|
|
Amortization of
acquired intangible assets
|
|
(52)
|
|
(153)
|
|
(43)
|
|
Non-GAAP sales and
marketing
|
|
$
19,020
|
|
$
18,436
|
|
$
12,045
|
|
As a % of total
revenues, non-GAAP
|
|
67.5%
|
|
57.1%
|
|
61.0%
|
|
|
|
|
|
|
|
|
|
GAAP General and
administrative
|
|
$
6,996
|
|
$
6,192
|
|
$
3,427
|
|
Stock-based
compensation
|
|
(885)
|
|
(1,318)
|
|
(405)
|
|
Amortization of
acquired intangible assets
|
|
(29)
|
|
(46)
|
|
(25)
|
|
Litigation
settlement
|
|
(950)
|
|
-
|
|
-
|
|
Acquisition related
costs
|
|
(734)
|
|
-
|
|
-
|
|
Non-GAAP general and
administrative
|
|
$
4,398
|
|
$
4,828
|
|
$
2,997
|
|
As a % of total
revenues, non-GAAP
|
|
15.6%
|
|
15.0%
|
|
15.2%
|
|
|
|
|
|
|
|
|
Loss from
operations reconciliation:
|
|
|
|
|
|
|
|
GAAP loss from
operations
|
|
$
(15,232)
|
|
$
(12,475)
|
|
$
(9,443)
|
|
Stock-based
compensation
|
|
2,435
|
|
5,007
|
|
1,001
|
|
Amortization of
acquired intangible assets
|
|
176
|
|
484
|
|
125
|
|
Litigation
settlement
|
|
950
|
|
-
|
|
-
|
|
Acquisition related
costs
|
|
734
|
|
-
|
|
-
|
|
Non-GAAP loss from
operations
|
|
$
(10,937)
|
|
$
(6,984)
|
|
$
(8,317)
|
|
|
|
|
|
|
|
|
Net loss
reconciliation:
|
|
|
|
|
|
|
|
GAAP Net loss
attributable to Marketo
|
|
$
(15,495)
|
|
$
(12,509)
|
|
$
(9,524)
|
|
Stock-based
compensation
|
|
2,435
|
|
5,007
|
|
1,001
|
|
Amortization of
acquired intangible assets
|
|
176
|
|
484
|
|
125
|
|
Litigation
settlement
|
|
950
|
|
-
|
|
-
|
|
Acquisition related
costs
|
|
734
|
|
-
|
|
-
|
|
Non-GAAP Net loss
attributable to Marketo
|
|
$
(11,200)
|
|
$
(7,018)
|
|
$
(8,398)
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share
|
|
|
|
|
|
|
|
GAAP
|
|
$
(0.41)
|
|
$
(0.32)
|
|
$
(2.99)
|
|
Non-GAAP
|
|
$
(0.29)
|
|
$
(0.18)
|
|
$
(2.64)
|
|
|
|
|
|
|
|
|
Shares used to
compute basic and diluted GAAP and
Non-GAAP net loss per share
|
|
38,257
|
|
39,379
|
|
3,181
|
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SOURCE Marketo