SurveyMonkey (Nasdaq: SVMK), a leader in agile software solutions
for customer experience, market research, and survey feedback,
today reported first quarter results for the period ended March 31,
2021.
“Our first quarter can be summarized in one
word: execution,” said Zander Lurie, chief executive officer of
SurveyMonkey. “We are moving up-market through agile, AI-powered
solutions that help customers like Cedars Sinai, Glassdoor,
Kawasaki Motors, and The Very Group manage their stakeholders’
experiences. We exceeded the high-end of our Q1 revenue guidance
range and accelerated our leading indicators for
growth – RPO and deferred revenue – which increased
21% and 23% year-over-year, respectively. We are increasing our
full year 2021 revenue outlook, reflecting our confidence in our
long-term growth strategy and our ability to execute.”
Q1 2021 Key Results
- Total revenue was $102.3 million,
an increase of 16% year-over-year.
- Enterprise sales revenue was $31.2
million, an increase of 24% year-over year. Enterprise sales
revenue accounted for approximately 30% of total revenue, up from
approximately 29% in Q1 2020. We ended the quarter with
approximately 8,800 enterprise sales customers, up 29% from
approximately 6,800 in Q1 2020.
- Self-serve revenue was $71.1
million, an increase of 13% year-over-year.
- Deferred revenue was $187.5
million, an increase of 23% year-over-year. Remaining performance
obligations (RPO) were $204.9 million, an increase of 21%
year-over-year.
- Paying users totaled approximately
845,800, an increase of approximately 99,600, or 13% from
approximately 746,200 in Q1 2020, and an increase of approximately
25,500 paying users from Q4 2020. Approximately 89% of our paying
users were on annual plans, up from 85% a year ago.
- Average revenue per user was $498,
up approximately 3% from $483 in Q1 2020.
- GAAP operating margin was negative
26.2% and non-GAAP operating margin was negative 0.6%.
- GAAP net loss was $29.6 million and
GAAP diluted net loss per share was $0.20. Non-GAAP net loss was
$3.3 million and non-GAAP diluted net loss per share was
$0.02.
- Net cash provided by operating
activities was $17.3 million and free cash flow was $15.1 million
for 16.9% and 14.7% margin, respectively.
- Cash and cash
equivalents totaled $247.4 million and total debt was $213.1
million for net cash of $34.3 million as of March 31, 2021.
Q1 2021 Product Updates
- Launched the
latest features of GetFeedback, including AI-powered listening,
visualization features, and sentiment analysis supported across ten
languages. The latest release enables customers to collect feedback
in even more places like ATMs and high-security websites. The new
GetFeedback website also brings the solution into a more unified
brand with SurveyMonkey.
- Announced the availability of
SurveyMonkey Brand Tracker and SurveyMonkey Industry
Tracker, two new, agile market research solutions that enable
brands and financial services firms to continuously monitor shifts
in market perception and quickly react to fuel growth.
- Expanded its Return-to-Work
solutions for businesses, including automated insights, industry
benchmarking, trend analysis, and quick setup guided by
SurveyMonkey Genius™, which combines AI, machine learning and
decades of industry expertise.
- Launched a
solution for healthcare organizations that utilizes SurveyMonkey
Enterprise to capture critical experience and sentiment feedback
from patients and employees who are on the front lines of the
COVID-19 pandemic.
Q1 2021 Diversity, Equity and Inclusion
Updates
- Launched a
partnership with the Eva Longoria Foundation to provide Latina
entrepreneurs free resources, including access to SurveyMonkey
products and training modules to help their businesses
succeed.
- Launched a survey with AAPI
Data to increase awareness of the ongoing hate crimes and hate
incidents experienced by the Asian American and Pacific Islander
community.
- Launched a
minority small business index with Operation HOPE to quantify
the experiences and hopefulness of Black small business owners and
aspiring entrepreneurs.
SurveyMonkey posted a shareholder letter with
its first quarter 2021 financial results and management commentary
on its investor relations website at investor.surveymonkey.com.
Financial Outlook
For the second quarter and full year of 2021,
SurveyMonkey currently expects the following:
|
Q2 2021 |
FY 2021 |
RevenueY-o-Y growth at mid-point |
$106 million - $108 million18% |
$440 million - $447 million18% |
Non-GAAP operating margin |
0.0% to 2.0% |
2.0% to 4.0% |
Free cash flow |
NA |
$47 million - $52 million |
For the second quarter of 2021, the company
expects basic weighted average shares outstanding to be
approximately 146 million and diluted weighted average shares
outstanding to be approximately 149 million. For the full year
2021, the company expects basic weighted average shares outstanding
to be approximately 147 million and dilutive weighted average
shares outstanding to be approximately 154 million. For a detailed
explanation of the company’s non-GAAP measures, please refer to the
appendix section of this press release.
Conference Call Information
SurveyMonkey senior management will host a
conference call today to discuss the company’s Q1 2021 financial
results. This call is scheduled to begin at 2:00 pm PT / 5:00 pm ET
and can be accessed by dialing (833) 900-1542 or (236) 712-2281
(ID: 2993662). An archived webcast of the conference call will be
accessible on SurveyMonkey’s Investor Relations page,
investor.surveymonkey.com. A telephonic replay of the conference
call will be available until Thursday, May 13, 2021, and can be
accessed by dialing (800) 585-8367 or (416) 621-4642 and entering
the passcode 2993662.
About SurveyMonkey
SurveyMonkey is a leader in agile software
solutions for customer experience, market research, and survey
feedback. The company’s platform empowers more than 20 million
active users to analyze and act on feedback from employees,
customers, website and app users, and market research respondents.
SurveyMonkey’s products, enterprise solutions, and integrations
enable more than 345,000 organizations to deliver better customer
experiences, increase employee retention, and unlock growth and
innovation. Ultimately, SurveyMonkey’s vision is to raise the bar
for human experiences by amplifying individual voices.
Investor Relations Contact:Gary
J. Fuges, CFAinvestors@surveymonkey.com
Media Contact:Sandra
Gharibpr@surveymonkey.com
Source: SVMK Inc.
SVMK INC.CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands) |
|
March 31, 2021 |
|
|
December 31, 2020 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
247,418 |
|
|
$ |
224,390 |
|
Accounts receivable, net |
|
|
23,617 |
|
|
|
24,177 |
|
Deferred commissions, current |
|
|
6,112 |
|
|
|
5,429 |
|
Prepaid expenses and other current assets |
|
|
12,298 |
|
|
|
10,520 |
|
Total current assets |
|
|
289,445 |
|
|
|
264,516 |
|
Property and equipment, net |
|
|
15,392 |
|
|
|
18,924 |
|
Operating lease right-of-use
assets |
|
|
57,815 |
|
|
|
56,986 |
|
Capitalized internal-use
software, net |
|
|
29,395 |
|
|
|
29,462 |
|
Acquisition intangible assets,
net |
|
|
18,330 |
|
|
|
21,207 |
|
Goodwill |
|
|
465,913 |
|
|
|
468,764 |
|
Deferred commissions,
non-current |
|
|
11,105 |
|
|
|
10,018 |
|
Other assets |
|
|
8,329 |
|
|
|
7,940 |
|
Total assets |
|
$ |
895,724 |
|
|
$ |
877,817 |
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
6,863 |
|
|
$ |
3,348 |
|
Accrued expenses and other current liabilities |
|
|
20,940 |
|
|
|
15,198 |
|
Accrued compensation |
|
|
22,643 |
|
|
|
32,149 |
|
Deferred revenue, current |
|
|
186,917 |
|
|
|
169,872 |
|
Operating lease liabilities, current |
|
|
9,123 |
|
|
|
8,318 |
|
Debt, current |
|
|
1,900 |
|
|
|
1,900 |
|
Total current liabilities |
|
|
248,386 |
|
|
|
230,785 |
|
Deferred revenue,
non-current |
|
|
626 |
|
|
|
760 |
|
Deferred tax liabilities |
|
|
5,243 |
|
|
|
5,153 |
|
Debt, non-current |
|
|
211,241 |
|
|
|
211,716 |
|
Operating lease liabilities,
non-current |
|
|
74,034 |
|
|
|
74,487 |
|
Other non-current
liabilities |
|
|
8,708 |
|
|
|
8,560 |
|
Total liabilities |
|
|
548,238 |
|
|
|
531,461 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
|
— |
|
Common stock |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
869,174 |
|
|
|
835,444 |
|
Accumulated other comprehensive income |
|
|
2,255 |
|
|
|
5,208 |
|
Accumulated deficit |
|
|
(523,944 |
) |
|
|
(494,297 |
) |
Total stockholders’ equity |
|
|
347,486 |
|
|
|
346,356 |
|
Total liabilities and stockholders’ equity |
|
$ |
895,724 |
|
|
$ |
877,817 |
|
SVMK INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|
Three Months
EndedMarch 31, |
|
(in thousands, except per share amounts) |
|
2021 |
|
|
2020 |
|
Revenue |
|
$ |
102,298 |
|
|
$ |
88,265 |
|
Cost of revenue (1)(2) |
|
|
20,772 |
|
|
|
19,944 |
|
Gross profit |
|
|
81,526 |
|
|
|
68,321 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development (1) |
|
|
32,983 |
|
|
|
26,557 |
|
Sales and marketing (1)(2) |
|
|
52,036 |
|
|
|
42,091 |
|
General and administrative (1) |
|
|
23,322 |
|
|
|
21,932 |
|
Total operating expenses |
|
|
108,341 |
|
|
|
90,580 |
|
Loss from operations |
|
|
(26,815 |
) |
|
|
(22,259 |
) |
Interest expense |
|
|
2,299 |
|
|
|
3,086 |
|
Other non-operating (income)
expense, net |
|
|
315 |
|
|
|
(1,236 |
) |
Loss before income taxes |
|
|
(29,429 |
) |
|
|
(24,109 |
) |
Provision for income taxes |
|
|
218 |
|
|
|
141 |
|
Net loss |
|
$ |
(29,647 |
) |
|
$ |
(24,250 |
) |
Net loss per share, basic and
diluted |
|
$ |
(0.20 |
) |
|
$ |
(0.18 |
) |
Weighted-average shares used in
computing basic and diluted net loss per share |
|
|
144,692 |
|
|
|
136,911 |
|
(1) Includes stock-based compensation, net of amounts
capitalized as follows:
|
|
Three Months
EndedMarch 31, |
|
(in thousands) |
|
2021 |
|
|
2020 |
|
Cost of revenue |
|
$ |
1,482 |
|
|
$ |
960 |
|
Research and development |
|
|
9,497 |
|
|
|
6,457 |
|
Sales and marketing |
|
|
5,778 |
|
|
|
4,343 |
|
General and administrative |
|
|
6,842 |
|
|
|
5,742 |
|
Stock-based compensation, net of amounts capitalized |
|
$ |
23,599 |
|
|
$ |
17,502 |
|
(2) Includes amortization of acquisition intangible assets as
follows:
|
|
Three Months
EndedMarch 31, |
|
(in thousands) |
|
2021 |
|
|
2020 |
|
Cost of revenue |
|
$ |
1,490 |
|
|
$ |
2,010 |
|
Sales and marketing |
|
|
1,133 |
|
|
|
1,358 |
|
Amortization of acquisition intangible assets |
|
$ |
2,623 |
|
|
$ |
3,368 |
|
SVMK INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
|
|
Three Months Ended March 31, |
|
(in thousands) |
|
2021 |
|
|
2020 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(29,647 |
) |
|
$ |
(24,250 |
) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
10,694 |
|
|
|
12,288 |
|
Non-cash leases expense |
|
|
3,340 |
|
|
|
3,423 |
|
Stock-based compensation expense, net of amounts capitalized |
|
|
23,599 |
|
|
|
17,502 |
|
Deferred income taxes |
|
|
99 |
|
|
|
97 |
|
Bad debt expense |
|
|
307 |
|
|
|
421 |
|
Gain on sale of a private company investment |
|
|
— |
|
|
|
(1,001 |
) |
Other |
|
|
508 |
|
|
|
317 |
|
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(76 |
) |
|
|
(1,953 |
) |
Prepaid expenses and other assets |
|
|
(4,682 |
) |
|
|
(2,208 |
) |
Accounts payable and accrued liabilities |
|
|
9,251 |
|
|
|
2,647 |
|
Accrued compensation |
|
|
(9,274 |
) |
|
|
(10,452 |
) |
Deferred revenue |
|
|
16,985 |
|
|
|
11,229 |
|
Operating lease liabilities |
|
|
(3,786 |
) |
|
|
(3,827 |
) |
Net cash provided by operating activities |
|
|
17,318 |
|
|
|
4,233 |
|
Cash flows from investing
activities |
|
|
|
|
|
|
|
|
Purchases of property and
equipment |
|
|
— |
|
|
|
(406 |
) |
Capitalized internal-use
software |
|
|
(2,268 |
) |
|
|
(2,946 |
) |
Proceeds from sale of a private
company investment |
|
|
— |
|
|
|
1,001 |
|
Net cash used in investing activities |
|
|
(2,268 |
) |
|
|
(2,351 |
) |
Cash flows from financing
activities |
|
|
|
|
|
|
|
|
Proceeds from stock option
exercises |
|
|
9,553 |
|
|
|
13,815 |
|
Repayment of debt |
|
|
(550 |
) |
|
|
(550 |
) |
Net cash provided by financing activities |
|
|
9,003 |
|
|
|
13,265 |
|
Effect of exchange rate changes on cash |
|
|
(309 |
) |
|
|
(1,267 |
) |
Net increase in cash,
cash equivalents and restricted cash |
|
|
23,744 |
|
|
|
13,880 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
|
224,614 |
|
|
|
131,683 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
248,358 |
|
|
$ |
145,563 |
|
Supplemental cash flow
data: |
|
|
|
|
|
|
|
|
Interest paid for term debt |
|
$ |
2,177 |
|
|
$ |
2,967 |
|
Non-cash investing
transactions: |
|
|
|
|
|
|
|
|
Stock compensation included in capitalized software costs |
|
$ |
559 |
|
|
$ |
776 |
|
Accrued unpaid capital expenditures |
|
$ |
547 |
|
|
$ |
204 |
|
Lease liabilities arising from obtaining right-of-use assets,
net |
|
$ |
2,676 |
|
|
$ |
— |
|
SVMK INC.SUPPLEMENTAL
DISAGGREGATED REVENUE DATA (unaudited)
Quarterly Disaggregated Revenue
|
|
Three Months Ended |
(in thousands) |
|
Mar. 31, 2021 |
|
Dec. 31, 2020 |
|
Sep. 30, 2020 |
|
Jun. 30, 2020 |
|
Mar. 31, 2020 |
Self-serve revenue |
|
$ |
71,112 |
|
$ |
71,197 |
|
$ |
68,001 |
|
$ |
65,398 |
|
$ |
63,107 |
Enterprise revenue |
|
|
31,186 |
|
|
29,778 |
|
|
27,428 |
|
|
25,543 |
|
|
25,158 |
Revenue |
|
$ |
102,298 |
|
$ |
100,975 |
|
$ |
95,429 |
|
$ |
90,941 |
|
$ |
88,265 |
Self-serve revenues are generated from products purchased
independently through our website.Enterprise revenues are generated
from products sold to organizations through our sales team.
SVMK INC.RECONCILIATION
OF GAAP TO NON-GAAP DATA (unaudited)
(1)
Reconciliation of GAAP to Non-GAAP (Loss) Income from
operations
|
|
Three Months
EndedMarch 31, |
|
(in thousands, except percentages) |
|
2021 |
|
|
2020 |
|
GAAP Loss from operations |
|
$ |
(26,815 |
) |
|
$ |
(22,259 |
) |
GAAP Operating margin |
|
|
(26 |
)% |
|
|
(25 |
)% |
Stock-based compensation, net |
|
|
23,599 |
|
|
|
17,502 |
|
Amortization of acquisition intangible assets |
|
|
2,623 |
|
|
|
3,368 |
|
Non-GAAP Loss from
operations |
|
$ |
(593 |
) |
|
$ |
(1,389 |
) |
Non-GAAP Operating margin |
|
|
(1 |
)% |
|
|
(2 |
)% |
Reconciliation of GAAP to Non-GAAP (Loss) Income and
(Loss) Income per diluted share
|
|
Three Months
EndedMarch 31, |
|
(in thousands, except per share amounts) |
|
2021 |
|
|
2020 |
|
GAAP Net Loss |
|
$ |
(29,647 |
) |
|
$ |
(24,250 |
) |
GAAP Net Loss per diluted
share |
|
$ |
(0.20 |
) |
|
$ |
(0.18 |
) |
Weighted-average shares used to
compute GAAP net loss per diluted share |
|
|
144,692 |
|
|
|
136,911 |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation, net |
|
|
23,599 |
|
|
|
17,502 |
|
Amortization of acquisition intangible assets |
|
|
2,623 |
|
|
|
3,368 |
|
Gain on sale of a private company investment |
|
|
— |
|
|
|
(1,001 |
) |
Income tax effect on Non-GAAP adjustments (2) |
|
|
96 |
|
|
|
97 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Loss |
|
$ |
(3,329 |
) |
|
$ |
(4,284 |
) |
Non-GAAP Net Loss per diluted
share |
|
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
Weighted-average shares used to
compute Non-GAAP net loss per diluted share |
|
|
144,692 |
|
|
|
136,911 |
|
(1) Please see Appendix A for explanation of non-GAAP
measures used.(2) Due to the full valuation allowance on
our US deferred tax assets, there were no tax effects associated
with the Non-GAAP adjustments for stock-based compensation, net,
and gain on sale of a private company investment. Non-GAAP
adjustments pertain to the income tax effects of amortization of
acquisition-related intangible assets.
Calculation of Free Cash Flow
|
|
Three Months
EndedMarch 31, |
|
(in thousands) |
|
2021 |
|
|
2020 |
|
Net cash provided by operating activities |
|
$ |
17,318 |
|
|
$ |
4,233 |
|
Purchases of property and
equipment |
|
|
— |
|
|
|
(406 |
) |
Capitalized internal-use
software |
|
|
(2,268 |
) |
|
|
(2,946 |
) |
Free cash flow |
|
$ |
15,050 |
|
|
$ |
881 |
|
SVMK INC.RECONCILIATION
OF GAAP TO NON-GAAP DATA (unaudited)
(1)
Supplemental GAAP and Non-GAAP Information
|
|
Three Months
EndedMarch 31, |
|
(in thousands, except percentages) |
|
2021 |
|
|
2020 |
|
GAAP Gross profit |
|
$ |
81,526 |
|
|
$ |
68,321 |
|
GAAP Gross margin |
|
|
80 |
% |
|
|
77 |
% |
Stock-based compensation, net |
|
|
1,482 |
|
|
|
960 |
|
Amortization of acquisition intangible assets |
|
|
1,490 |
|
|
|
2,010 |
|
Non-GAAP Gross profit |
|
$ |
84,498 |
|
|
$ |
71,291 |
|
Non-GAAP Gross margin |
|
|
83 |
% |
|
|
81 |
% |
|
|
|
|
|
|
|
|
|
GAAP Research and
development |
|
$ |
32,983 |
|
|
$ |
26,557 |
|
GAAP Research and development
margin |
|
|
32 |
% |
|
|
30 |
% |
Stock-based compensation, net |
|
|
9,497 |
|
|
|
6,457 |
|
Non-GAAP Research and
development |
|
$ |
23,486 |
|
|
$ |
20,100 |
|
Non-GAAP Research and development
margin |
|
|
23 |
% |
|
|
23 |
% |
|
|
|
|
|
|
|
|
|
GAAP Sales and marketing |
|
$ |
52,036 |
|
|
$ |
42,091 |
|
GAAP Sales and marketing
margin |
|
|
51 |
% |
|
|
48 |
% |
Stock-based compensation, net |
|
|
5,778 |
|
|
|
4,343 |
|
Amortization of acquisition intangible assets |
|
|
1,133 |
|
|
|
1,358 |
|
Non-GAAP Sales and marketing |
|
$ |
45,125 |
|
|
$ |
36,390 |
|
Non-GAAP Sales and marketing
margin |
|
|
44 |
% |
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
GAAP General and
administrative |
|
$ |
23,322 |
|
|
$ |
21,932 |
|
GAAP General and administrative
margin |
|
|
23 |
% |
|
|
25 |
% |
Stock-based compensation, net |
|
|
6,842 |
|
|
|
5,742 |
|
Non-GAAP General and
administrative |
|
$ |
16,480 |
|
|
$ |
16,190 |
|
Non-GAAP General and
administrative margin |
|
|
16 |
% |
|
|
18 |
% |
(1) Please see Appendix A for explanation of non-GAAP
measures used.
APPENDIX A
SVMK INC.EXPLANATION OF
NON-GAAP MEASURES
To supplement our condensed consolidated
financial statements, which are prepared and presented in
accordance with US GAAP (“GAAP”), we use the following Non-GAAP
financial measures: Non-GAAP (loss) income from operations,
Non-GAAP operating margin, Non-GAAP net (loss) income, Non-GAAP net
(loss) income per diluted share, Non-GAAP gross profit, Non-GAAP
gross margin, Non-GAAP research and development, Non-GAAP research
and development margin, Non-GAAP sales and marketing, Non-GAAP
sales and marketing margin, Non-GAAP general and administrative,
Non-GAAP general and administrative margin, and free cash flow. Our
definition for each Non-GAAP measure used is provided below,
however a limitation of Non-GAAP financial measures are that they
do not have uniform definitions. Accordingly, our definitions for
Non-GAAP measures used will likely differ from similarly titled
Non-GAAP measures used by other companies thereby limiting
comparability.
With regards to the Non-GAAP guidance provided
above, a reconciliation to the corresponding GAAP amounts is not
provided as the quantification of certain items excluded from each
respective Non-GAAP measure, which may be significant, cannot be
reasonably calculated or predicted at this time without
unreasonable efforts. For example, the Non-GAAP adjustment for
stock-based compensation expense, net, requires additional inputs
such as number of shares granted and market price that are not
currently ascertainable.
Non-GAAP (loss) income from operations, Non-GAAP
operating margin: We define Non-GAAP (loss) income from operations
as GAAP loss from operations excluding stock-based compensation,
net, and amortization of acquisition intangible assets. Non-GAAP
operating margin is defined as Non-GAAP (loss) income from
operations divided by revenue.
Non-GAAP net (loss) income, Non-GAAP net (loss)
income per diluted share: We define Non-GAAP net (loss) income as
GAAP net loss excluding stock-based compensation, net, amortization
of acquisition intangible assets, gain on sale of a private company
investment, and including the income tax effect on Non-GAAP
adjustments. Non-GAAP net (loss) income per diluted share is
defined as Non-GAAP net (loss) income divided by the
weighted-average shares outstanding.
Non-GAAP gross profit, Non-GAAP gross margin: We
define Non-GAAP gross profit as GAAP gross profit excluding
stock-based compensation, net and amortization of acquisition
intangible assets. Non-GAAP gross margin is defined as Non-GAAP
gross profit divided by revenue.
Non-GAAP research and development, Non-GAAP
research and development margin: We define Non-GAAP research and
development as GAAP research and development excluding stock-based
compensation, net. Non-GAAP research and development margin is
defined as Non-GAAP research and development divided by
revenue.
Non-GAAP sales and marketing, Non-GAAP sales and
marketing margin: We define Non-GAAP sales and marketing as GAAP
sales and marketing excluding stock-based compensation, net and
amortization of acquisition intangible assets. Non-GAAP sales and
marketing margin is defined as Non-GAAP sales and marketing divided
by revenue.
Non-GAAP general and administrative, Non-GAAP
general and administrative margin: We define Non-GAAP general and
administrative as GAAP general and administrative excluding
stock-based compensation, net. Non-GAAP general and administrative
margin is defined as Non-GAAP general and administrative divided by
revenue.
We use these Non-GAAP measures to compare and
evaluate our operating results across periods in order to manage
our business, for purposes of determining executive and senior
management incentive compensation, and for budgeting and developing
our strategic operating plans. We believe that these Non-GAAP
measures provide useful information about our operating results,
enhance the overall understanding of our past financial performance
and future prospects, and allow for greater transparency with
respect to key metrics used by our management in evaluating our
financial performance and for operational decision making, but they
are not meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read only in conjunction
with our condensed consolidated financial statements prepared in
accordance with GAAP.
We have excluded the effect of the following
items from the aforementioned Non-GAAP measures because they are
non-cash and/or are non-recurring in nature and because we believe
that the Non-GAAP financial measures excluding this item provide
meaningful supplemental information regarding operational
performance and liquidity. We further believe these measures are
useful to investors in that it allows for greater transparency to
certain line items in our financial statements and facilitates
comparisons to historical operating results and comparisons to peer
operating results. A description of the Non-GAAP adjustments for
the above measures is as follows:
- Stock-based
compensation, net: We incur stock based-compensation expense on a
GAAP basis resulting from equity awards granted to our employees.
Although stock-based compensation is a key incentive offered to our
employees, and we believe such compensation contributed to the
revenues earned during the periods presented and also believe it
will contribute to the generation of future period revenues, we
continue to evaluate our business performance excluding stock-based
compensation expenses. Stock-based compensation expenses will recur
in future periods.
- Amortization of
acquisition intangible assets: We incur amortization expense on
intangible assets on a GAAP basis resulting from prior
acquisitions. Amortization of acquired intangible assets is
inconsistent in amount and frequency and is significantly affected
by the timing and size of any acquisitions. Investors should note
that the use of intangible assets contributed to our revenues
earned during the periods presented and will contribute to our
future period revenues as well. Amortization of acquisition
intangible assets will recur in future periods.
- Gain on sale of a
private company investment: Gain on sale of a private company
investment was recognized on a GAAP basis resulting from the sale
of certain corporate assets. We expect that such transactions will
be infrequent in occurrence and are therefore excluded from our
Non-GAAP results as they do not otherwise relate to our core
business operations.
For more information on the Non-GAAP financial
measures, please see the “Reconciliation of GAAP to Non-GAAP Data”
section of this press release. The accompanying tables provide
details on the GAAP financial measures that are most directly
comparable to the Non-GAAP financial measures and the related
reconciliations between those financial measures.
Free cash flow: We define free cash flow as GAAP
net cash provided by operating activities less purchases of
property and equipment and capitalized internal-use software. We
consider free cash flow to be an important measure because it
measures our liquidity after deducting capital expenditures for
purchases of property and equipment and capitalized software
development costs, which we believe provides a more accurate view
of our cash generation and cash available to grow our business. We
expect to generate positive free cash flow over the long term. Free
cash flow has limitations as an analytical tool, and it should not
be considered in isolation or as a substitute for analysis of other
GAAP financial measures, such as net cash provided by operating
activities. Some of the limitations of free cash flow are that free
cash flow does not reflect our future contractual commitments and
may be calculated differently by other companies in our industry,
limiting its usefulness as a comparative measure.
Safe Harbor Statement
“Safe Harbor” statement under the Private
Securities Litigation Reform Act of 1995: This press release may
contain forward-looking statements about our financial outlook,
outstanding shares, products, including our investments in
products, technology and other key strategic areas. The achievement
of the matters covered by such forward-looking statements involves
risks, uncertainties and assumptions. If any of these 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 the
company makes.
The risks and uncertainties referred to above
include – but are not limited to – risks related to the
COVID-19 coronavirus pandemic; our ability to retain and upgrade
customers; our revenue growth rate; our brand; our marketing
strategies; our self-serve business model; the length of our sales
cycles; the growth and development of our salesforce; security
measures; expectations regarding our ability to timely and
effectively scale and adapt existing technology and network
infrastructure to ensure that our products and services are
accessible at all times; competition; our debt; revenue
recognition; our ability to manage our growth; our culture and
talent; our data centers; privacy, security and data transfer
concerns, as well as changes in regulations, which could impact our
ability to serve our customers or curtail our monetization efforts;
litigation and regulatory issues; expectations regarding the return
on our strategic investments; execution of our plans and
strategies, including with respect to mobile products and features
and expansion into new areas and businesses; our international
operations; intellectual property; the application of U.S. and
international tax laws on our tax structure and any changes to such
tax laws; acquisitions we have made or may make in the future; the
price volatility of our common stock; and general economic
conditions.
Further information on these and other factors
that could affect our financial results are included in documents
filed with the Securities and Exchange Commission from time to
time, including the section entitled “Risk Factors” in the
Quarterly Report on Form 10-Q that will be filed for the quarter
ended March 31, 2021, which should be read in conjunction with
these financial results. These documents are or will be available
on the SEC Filings section of our Investor Relations website page
at investor.surveymonkey.com. All information provided in this
release and in the attachments is as of May 6, 2021, and we
undertake no obligation to update this information.
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