ZeroFox Holdings, Inc. (Nasdaq: ZFOX), an enterprise
software-as-a-service leader in external cybersecurity, today
announced financial results for the fourth quarter and fiscal year
ended January 31, 2024.
“Q4 was another positive quarter for ZeroFox
with sustained top line growth and positive free cash flow” said
James C. Foster. Founder and CEO of ZeroFox. “We believe that our
results validate the growing need for an AI-enabled, converged
external cybersecurity platform to protect enterprises from
advanced external threats.”
Fourth Quarter Fiscal Year 2024
Financial Highlights
- Revenue: Total
revenue was $60.5 million, an increase of 33% year-over-year.
- Annual Recurring Revenue
(“ARR”) was $188.4 million, an increase of 20%
year-over-year.
- Gross margin: GAAP
gross margin was 35% and non-GAAP gross margin was 44%. GAAP
subscription gross margin was 53% and non-GAAP subscription gross
margin was 73%.
- Loss from
Operations: GAAP loss from operations was $228.6 million.
Non-GAAP loss from operations was $2.2 million. GAAP loss from
operations includes a goodwill impairment charge of $212.1
million.
- Cash and Cash
Equivalents were $33.1 million on January 31, 2024, an
increase of approximately $3.3 million from October 31, 2023.
Full Year Fiscal Year 2024 Financial
Highlights
- Revenue: Total
revenue was $233.3 million.
- Gross margin: GAAP
gross margin was 32% and non-GAAP gross margin was 41%. GAAP
subscription gross margin was 51% and non-GAAP subscription gross
margin was 73%.
- Loss from
Operations: GAAP loss from operations was $353.0 million.
Non-GAAP loss from operations was $17.9 million. GAAP loss from
operations includes a goodwill impairment charge of $284.2
million.
Recent Highlights
- Announced $289 million in contract
awards from the U.S. Office of Personnel Management (OPM) for the
continued provision of digital identity protection services to the
22.1 million individuals impacted by previous security
incidents.
- Awarded nine badges in G2’s Winter
2024 Report across five categories, including brand protection,
dark web monitoring, fraud detection, and threat intelligence.
Proposed Transaction with Haveli
InvestmentsAs announced on February 6, 2024, ZeroFox has
entered into a definitive agreement to be acquired by Haveli
Investments, a private equity firm focused on the software and
technology-enabled services sectors, in an all-cash transaction
with an enterprise value of approximately $350 million. The
transaction is expected to close in the first half of 2024, subject
to customary closing conditions, including approval by ZeroFox
stockholders and the receipt of required regulatory approvals. The
transaction is not subject to any financing condition. Upon the
completion of the transaction, ZeroFox’s common stock and warrants
will no longer be publicly listed on the Nasdaq Global Market and
the Nasdaq Capital Market, respectively, and ZeroFox will become a
privately held company. For more information about the pending
transaction with Haveli Investments, please see ZeroFox’s Current
Report on Form 8-K filed with the U.S. Securities and Exchange
Commission (the “SEC”) on February 6, 2024, and the Company’s
preliminary proxy statement on Schedule 14A filed with the SEC on
March 8, 2024.
Given the transaction with Haveli Investments,
ZeroFox will not be hosting an earnings conference call or live
webcast to discuss its fourth quarter and fiscal year 2024
financial results and ZeroFox will not be providing guidance for
the first quarter or full fiscal year 2025. For further detail and
discussion of ZeroFox’s financial performance please refer to
ZeroFox’s Annual Report on Form 10-K for the fiscal year ended
January 31, 2024.
Additional information regarding the non-GAAP
financial measures and key business measures discussed in this
release, including an explanation of these measures and how each is
calculated, is included below under the heading “Use of Non-GAAP
Financial Measures and Key Business Measures.” A reconciliation of
non-GAAP to GAAP financial measures has also been provided in the
financial tables included below and is available on our Investor
Relations website.
About ZeroFoxZeroFox (Nasdaq:
ZFOX), an enterprise software-as-a-service leader in external
cybersecurity, has redefined security outside the corporate
perimeter on the internet, where businesses operate, and threat
actors thrive. The ZeroFox platform combines advanced AI analytics,
digital risk and privacy protection, full-spectrum threat
intelligence, and a robust portfolio of breach, incident and
takedown response capabilities to expose and disrupt phishing and
fraud campaigns, botnet exposures, credential theft,
impersonations, data breaches, and physical threats that target
your brands, domains, people, and assets. Join thousands of
customers, including some of the largest public sector
organizations as well as finance, media, technology and retail
companies to stay ahead of adversaries and address the entire
lifecycle of external cyber risks. ZeroFox and the ZeroFox logo are
trademarks or registered trademarks of ZeroFox, Inc. and/or its
affiliates in the U.S. and other countries. Visit www.zerofox.com
for more information.
Forward-Looking Statements
Certain statements in this press release are
“forward-looking statements” under the Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical fact, that address activities, events or
developments that we expect, believe or anticipate will or may
occur in the future, including statements related to the proposed
transaction with Haveli Investments (the “Merger”). Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those anticipated by these
forward-looking statements. The inclusion of any statement in this
press release does not constitute an admission by ZeroFox or any
other person that the events or circumstances described in such
statement are material. These risks and uncertainties include, but
are not limited to, the following: our ability to meet expectations
regarding the timing and completion of the proposed Merger; the
possibility that the conditions to the closing of the proposed
Merger are not satisfied, including the risk that the required
regulatory approvals are not obtained or that our stockholders do
not approve the proposed Merger; the occurrence of any event,
change or other circumstances that could result in the definitive
agreement to be acquired (the “Merger Agreement”) being terminated
or the proposed Merger not being completed on the terms reflected
in the Merger Agreement, or at all; the risk that the Merger
Agreement may be terminated in circumstances that require us to pay
a termination fee; potential litigation relating to the proposed
Merger; the risk that the proposed Merger and its announcement
could have adverse effects on the market price of our common stock;
the ability of each party to consummate the proposed Merger; risks
related to the possible disruption of management’s attention from
our ongoing business operations due to the proposed Merger; the
effect of the announcement of the proposed Merger on our ability to
retain and hire key personnel and maintain relationships with
customers and business partners; the risk of unexpected costs or
expenses resulting from the proposed Merger; defects, errors, or
vulnerabilities in the ZeroFox platform, the failure of the ZeroFox
platform to block malware or prevent a security breach, misuse of
the ZeroFox platform, or risks of product liability claims that
would harm our reputation and adversely impact our business,
operating results, and financial condition; if our enterprise
platform offerings do not interoperate with our customers’ network
and security infrastructure, or with third-party products, websites
or services, our results of operations may be harmed; we may not
timely and cost-effectively scale and adapt our existing technology
to meet our customers’ performance and other requirements; our
ability to introduce new products and solutions and features is
dependent on adequate research and development resources and our
ability to successfully complete acquisitions; our success depends,
in part, on the integrity and scalability of our systems and
infrastructure; we rely on third-party cloud providers to host and
operate our platform, and any disruption of or interference with
our use of these offerings may negatively affect our ability to
maintain the performance and reliability of our platform which
could cause our business to suffer; we rely on software and
services from other parties; we have a history of losses, and we
may not be able to achieve or sustain profitability in the future;
if organizations do not adopt cloud, and/or SaaS-delivered external
cybersecurity solutions that may be based on new and untested
security concepts, our ability to grow our business and our results
of operations may be adversely affected; we have experienced rapid
growth in recent periods, and if we do not manage our future
growth, our business and results of operations will be adversely
affected; we face intense competition and could lose market share
to our competitors, which could adversely affect our business,
financial condition, and results of operations; competitive pricing
pressure may reduce revenue, gross profits, and adversely affect
our financial results; adverse general and industry-specific
economic and market conditions and reductions in customer spending,
in either the private or public sector, including as a result of
inflation and geopolitical uncertainty such as the ongoing conflict
between Russia and Ukraine and the Israel-Hamas War, may reduce
demand for our platform or products and solutions, which could harm
our business, financial condition and results of operations; if we
fail to adapt to rapid technological change, evolving industry
standards and changing customer needs, requirements or preferences,
our ability to remain competitive could be impaired; one U.S.
government customer accounts for a substantial portion of our
revenues; and we rely heavily on the services of our senior
management team.
Additional information concerning these, and
other risks, is described under the “Risk Factors” section of our
Annual Report on Form 10-K for the fiscal year ended January 31,
2023 filed with the U.S. Securities and Exchange Commission on
March 30, 2023, as updated by our subsequent Quarterly Reports on
Form 10-Q. We expressly disclaim any obligation to update any of
these forward-looking statements, except to the extent required by
applicable law.
Additional Information and Where to Find
It
This communication relates to the proposed
transaction involving ZeroFox. This communication does not
constitute a solicitation of any vote or approval. In
connection with the proposed transaction, ZeroFox filed a
preliminary proxy statement on Schedule 14A with the U.S.
Securities and Exchange Commission (the “SEC”) on March 8, 2024
relating to a special meeting of its stockholders, and will file
other documents with the SEC relating to the proposed transaction,
including a definitive proxy statement on Schedule 14A (the
“Definitive Proxy Statement”). This communication is not a
substitute for the Definitive Proxy Statement or any other document
that ZeroFox may file with the SEC or send to its stockholders in
connection with the proposed transaction. BEFORE MAKING ANY VOTING
DECISION, STOCKHOLDERS OF ZEROFOX ARE URGED TO READ THE DEFINITIVE
PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY
OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC AND ANY
AMENDMENTS OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY
REFERENCE THEREIN, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED
TRANSACTION. Any vote in respect of resolutions to be proposed at a
stockholder meeting of ZeroFox to approve the proposed transaction
or related matters, or other responses in relation to the proposed
transaction, should be made only on the basis of the information
contained in the Definitive Proxy Statement. Investors and security
holders will be able to obtain the Definitive Proxy Statement and
other documents ZeroFox files with the SEC (when available) free of
charge at the SEC’s website (http://www.sec.gov) or at ZeroFox’s
investor relations website at: https://ir.zerofox.com/ or by
emailing investor@ZeroFox.com.
Participants in the
Solicitation
ZeroFox and its directors and executive
officers, including Adam Gerchen, Todd P. Headley, Paul Hooper,
Thomas F. Kelly, Samskriti King, Teresa H. Shea and Barbara
Stewart, all of whom are members of ZeroFox’s board of directors,
as well as James C. Foster, ZeroFox’s Chief Executive Officer and
Chairman of the board of directors, Timothy S. Bender, ZeroFox’s
Chief Financial Officer, Thomas P. FitzGerald, ZeroFox’s General
Counsel and Corporate Secretary, Scott O’Rourke, ZeroFox’s Chief
Revenue Officer, John R. Prestridge III, ZeroFox’s Chief Product
Officer, Michael Price, ZeroFox’s Chief Technology Officer, and
Kevin T. Reardon, ZeroFox’s Chief Operating Officer, may be deemed
to be participants in the solicitation of proxies from ZeroFox’s
stockholders in connection with the proposed transaction.
Information regarding such persons’ direct or indirect interests,
by security ownership or otherwise, can be found in ZeroFox’s
preliminary proxy statement on Schedule 14A for ZeroFox’s Special
Meeting of Stockholders, filed with the U.S. Securities and
Exchange Commission on March 8, 2024 under the sections entitled
“The Merger—Interests of the Company’s Directors and Executive
Officers in the Merger” and “Security Ownership of Certain
Beneficial Owners and Management.”
Use of Non-GAAP Financial Measures and
Key Business Measures
In addition to our results determined in
accordance with GAAP, we believe the following non-GAAP measures
and key business measures are useful in evaluating our operating
performance. We use the following non-GAAP financial information
and key business measures to evaluate our ongoing operations and
for internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, may be
helpful to investors because it provides consistency and
comparability with past financial performance by excluding certain
items that may not be indicative of our business, results of
operations or outlook. However, non-GAAP financial information is
presented for supplemental informational purposes only, has
limitations as an analytical tool, and should not be considered in
isolation or as a substitute for financial information presented in
accordance with GAAP.
Other companies, including companies in our
industry, may calculate similarly titled non-GAAP measures and key
business measures differently or may use other measures to evaluate
their performance, all of which could reduce the usefulness of our
non-GAAP financial measures and key business measures as tools for
comparison.
A reconciliation is provided below for each
non-GAAP financial measure to the most directly comparable
financial measure stated in accordance with GAAP. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measures and not rely on any
single financial measure to evaluate our business.
Non-GAAP Gross Profit and Non-GAAP Gross
Margin
We define non-GAAP gross profit and non-GAAP
gross margin as GAAP gross profit and GAAP gross margin,
respectively, excluding stock-based compensation expense and
amortization of acquired intangible assets.
Non-GAAP Subscription Gross Profit and
Non-GAAP Subscription Gross Margin
We define non-GAAP subscription gross profit and
non-GAAP subscription gross margin as GAAP subscription gross
profit and GAAP subscription gross margin, respectively, excluding
stock-based compensation expense and amortization of acquired
intangible assets.
Non-GAAP Services Gross Profit and
Non-GAAP Services Gross Margin
We define non-GAAP services gross profit and
non-GAAP services gross margin as GAAP services gross profit and
GAAP services gross margin, respectively, excluding stock-based
compensation expense and amortization of acquired intangible
assets.
Non-GAAP Research and Development
Expense, Non-GAAP Sales and Marketing Expense and Non-GAAP General
and Administrative Expense
We define these non-GAAP measures as their
respective GAAP measures, excluding stock-based compensation
expense, amortization of acquired intangible assets, costs incurred
for the August 2022 business combination, and purchase accounting
adjustments from the August 2022 business combination.
Non-GAAP Loss from
Operations
We define non-GAAP loss from operations as GAAP
loss from operations, excluding stock-based compensation expense,
amortization of acquired intangible assets, costs incurred for the
August 2022 Business Combination, purchase accounting adjustments
from the August 2022 business combination, and goodwill impairment
charge.
Annual Recurring Revenue
(ARR)
We define ARR as the annualized contract value
of all recurring revenue related to contracts in place as of the
reporting date assuming any contract is renewed on its existing
terms. We continue to include ARR from customers whose term has
expired within 90 days of the applicable measurement date for which
we are actively negotiating renewal.
Subscription Customers
We define a subscription customer as any entity
that has entered into a distinct subscription agreement for access
to the ZeroFox platform or services for which the term has not
ended or with which we are continuing to provide service and
negotiating a renewal contract that expired within 90 days of the
applicable measurement date. We do not consider our channel
partners as customers. We treat managed service security providers,
who may purchase our offerings on behalf of multiple companies, as
a single subscription customer.
ZEROFOX HOLDINGS, INC. Consolidated Statement of
Operations(Unaudited) |
|
(in thousands, except share and per share
data) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Subscription |
|
$ |
24,117 |
|
|
$ |
16,505 |
|
|
$ |
89,308 |
|
Services |
|
|
36,391 |
|
|
|
28,892 |
|
|
|
143,992 |
|
Total revenue |
|
|
60,508 |
|
|
|
45,397 |
|
|
|
233,300 |
|
Cost of revenue (1)(2) |
|
|
|
|
|
|
|
|
|
Subscription |
|
|
11,435 |
|
|
|
9,304 |
|
|
|
44,137 |
|
Services |
|
|
27,605 |
|
|
|
22,241 |
|
|
|
114,199 |
|
Total cost of revenue |
|
|
39,040 |
|
|
|
31,545 |
|
|
|
158,336 |
|
Gross profit |
|
|
21,468 |
|
|
|
13,852 |
|
|
|
74,964 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (1)(2) |
|
|
|
|
|
|
|
|
|
Research and development |
|
|
7,906 |
|
|
|
6,497 |
|
|
|
31,190 |
|
Sales and marketing |
|
|
20,067 |
|
|
|
19,112 |
|
|
|
73,790 |
|
General and administrative |
|
|
10,026 |
|
|
|
9,316 |
|
|
|
38,758 |
|
Goodwill impairment |
|
|
212,092 |
|
|
— |
|
|
|
284,240 |
|
Total operating expenses |
|
|
250,091 |
|
|
|
34,925 |
|
|
|
427,978 |
|
Loss from operations |
|
|
(228,623 |
) |
|
|
(21,073 |
) |
|
|
(353,014 |
) |
Other (expense) income |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(3,984 |
) |
|
|
(3,439 |
) |
|
|
(15,202 |
) |
Change in fair value of purchase consideration liability |
|
|
(1,189 |
) |
|
— |
|
|
|
2,456 |
|
Change in fair value of warrant liability |
|
|
164 |
|
|
|
(473 |
) |
|
|
(349 |
) |
Change in fair value of sponsor earnout shares |
|
|
(134 |
) |
|
|
423 |
|
|
|
2,053 |
|
Total other expense |
|
|
(5,143 |
) |
|
|
(3,489 |
) |
|
|
(11,042 |
) |
Loss before income taxes |
|
|
(233,766 |
) |
|
|
(24,562 |
) |
|
|
(364,056 |
) |
Provision for (benefit from)
income taxes |
|
|
1,038 |
|
|
|
(8,073 |
) |
|
|
(7,746 |
) |
Net loss after tax |
|
$ |
(234,804 |
) |
|
$ |
(16,489 |
) |
|
$ |
(356,310 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders, basic and diluted |
|
$ |
(1.85 |
) |
|
$ |
(0.14 |
) |
|
$ |
(2.88 |
) |
Weighted-average shares used
in computation of net loss per share attributable to common
stockholders, basic and diluted |
|
|
127,227,074 |
|
|
|
116,870,963 |
|
|
|
123,813,143 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
43 |
|
|
|
(83 |
) |
|
|
(248 |
) |
Total other comprehensive
income (loss) |
|
|
43 |
|
|
|
(83 |
) |
|
|
(248 |
) |
Total comprehensive loss |
|
$ |
(234,761 |
) |
|
$ |
(16,572 |
) |
|
$ |
(356,558 |
) |
|
|
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Consolidated Statement of
Operations(Unaudited) |
|
1 Includes stock-based compensation as
follows: |
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
Cost of revenue - subscription |
|
$ |
81 |
|
|
$ |
89 |
|
|
$ |
219 |
|
Cost of revenue -
services |
|
|
32 |
|
|
|
35 |
|
|
|
111 |
|
Research and development |
|
|
524 |
|
|
|
395 |
|
|
|
1,637 |
|
Sales and marketing |
|
|
455 |
|
|
|
434 |
|
|
|
1,612 |
|
General and
administrative |
|
|
1,028 |
|
|
|
1,242 |
|
|
|
3,946 |
|
Total stock-based compensation
expense |
|
$ |
2,120 |
|
|
$ |
2,195 |
|
|
$ |
7,525 |
|
2 Includes amortization of acquired intangible
assets as follows: |
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
Cost of revenue - subscription |
|
$ |
4,933 |
|
|
$ |
4,790 |
|
|
$ |
19,603 |
|
Sales and marketing |
|
|
6,337 |
|
|
|
6,044 |
|
|
|
23,280 |
|
General and
administrative |
|
|
908 |
|
|
|
883 |
|
|
|
3,607 |
|
Total amortization of acquired
intangible assets |
|
$ |
12,178 |
|
|
$ |
11,717 |
|
|
$ |
46,490 |
|
|
|
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Consolidated Balance Sheet(Unaudited) |
|
(in thousands, except share data) |
|
January 31, 2024 |
|
January 31, 2023 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
33,149 |
|
|
$ |
47,549 |
|
Accounts receivable, net of allowance for doubtful accounts |
|
|
38,923 |
|
|
|
29,609 |
|
Deferred contract acquisition costs, current |
|
|
5,351 |
|
|
|
5,456 |
|
Prepaid expenses and other assets |
|
|
8,202 |
|
|
|
5,300 |
|
Total current assets |
|
|
85,625 |
|
|
|
87,914 |
|
|
|
|
|
|
|
|
Property and equipment, net of
accumulated depreciation |
|
|
1,198 |
|
|
|
671 |
|
Capitalized software, net of
accumulated amortization |
|
|
342 |
|
|
|
253 |
|
Deferred contract acquisition
costs, net of current portion |
|
|
4,755 |
|
|
|
7,751 |
|
Acquired intangible assets,
net of accumulated amortization |
|
|
233,854 |
|
|
|
262,444 |
|
Goodwill |
|
|
134,100 |
|
|
|
406,608 |
|
Operating lease right-of-use
assets |
|
|
3,553 |
|
|
|
720 |
|
Other assets |
|
|
1,410 |
|
|
|
550 |
|
Total assets |
|
$ |
464,837 |
|
|
$ |
766,911 |
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,772 |
|
|
$ |
3,099 |
|
Accrued compensation, accrued expenses, and other current
liabilities |
|
|
17,126 |
|
|
|
18,751 |
|
Current portion of long-term debt |
|
|
938 |
|
|
|
15,938 |
|
Deferred revenue, current |
|
|
79,406 |
|
|
|
47,977 |
|
Operating lease liabilities, current |
|
|
1,638 |
|
|
|
406 |
|
Total current liabilities |
|
|
101,880 |
|
|
|
86,171 |
|
|
|
|
|
|
|
|
Deferred revenue, net of
current portion |
|
|
7,440 |
|
|
|
5,981 |
|
Long-term debt, net of
deferred financing costs |
|
|
196,827 |
|
|
|
157,843 |
|
Other liabilities |
|
|
11,310 |
|
|
|
27,618 |
|
Operating lease liabilities,
net of current portion |
|
|
2,111 |
|
|
|
427 |
|
Total liabilities |
|
|
319,568 |
|
|
|
278,040 |
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
Common stock, $0.0001 par value; 1,000,000,000 authorized shares;
124,639,135 and 118,190,135 shares issued and outstanding,
respectively |
|
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
|
1,256,593 |
|
|
|
1,243,637 |
|
Accumulated deficit |
|
|
(1,110,987 |
) |
|
|
(754,677 |
) |
Accumulated other comprehensive loss |
|
|
(349 |
) |
|
|
(101 |
) |
Total stockholders’ equity |
|
|
145,269 |
|
|
|
488,871 |
|
Total liabilities and
stockholders' equity |
|
$ |
464,837 |
|
|
$ |
766,911 |
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Consolidated Statement of Cash
Flows(Unaudited) |
|
(in thousands) |
|
Year Ended January 31,
2024 |
|
|
|
|
Cash flows from operating
activities: |
|
|
|
Net loss |
|
$ |
(356,310 |
) |
Adjustments to reconcile net loss to net cash used
in operating activities: |
|
|
|
Goodwill impairment |
|
|
284,240 |
|
Depreciation and amortization |
|
|
1,703 |
|
Amortization of software development costs |
|
|
129 |
|
Amortization of acquired intangible assets |
|
|
46,490 |
|
Amortization of right-of-use assets |
|
|
1,802 |
|
Amortization of deferred debt issuance costs |
|
|
117 |
|
Stock-based compensation |
|
|
7,525 |
|
Provision for bad debts |
|
|
118 |
|
Gain on disposal of property and equipment |
|
|
(4 |
) |
Change in fair value of warrants |
|
|
349 |
|
Change in fair value of purchase consideration liability |
|
|
(2,456 |
) |
Change in fair value of sponsor earnout shares |
|
|
(2,053 |
) |
Deferred taxes |
|
|
(9,140 |
) |
Noncash interest expense |
|
|
14,353 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
|
(6,198 |
) |
Deferred contract acquisition costs |
|
|
(6,890 |
) |
Prepaid expenses and other assets |
|
|
(1,992 |
) |
Accounts payable, accrued compensation, accrued expenses, and
other current liabilities |
|
|
(3,913 |
) |
Deferred revenue |
|
|
22,038 |
|
Operating lease liabilities |
|
|
(1,949 |
) |
Net cash used in operating activities |
|
|
(12,041 |
) |
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Business acquisition - LookingGlass, net of cash acquired |
|
|
(7,892 |
) |
Purchases of property and equipment |
|
|
(600 |
) |
Capitalized software |
|
|
(217 |
) |
Net cash used in investing activities |
|
|
(8,709 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Exercise of stock options |
|
|
298 |
|
Proceeds from issuance of notes payable, net of issuance costs |
|
|
7,425 |
|
Repayment of debt |
|
|
(938 |
) |
Net cash provided by financing activities |
|
|
6,785 |
|
|
|
|
|
Foreign exchange translation
adjustment |
|
|
(219 |
) |
|
|
|
|
Net change in cash, cash
equivalents, and restricted cash |
|
|
(14,184 |
) |
Cash, cash equivalents, and
restricted cash at beginning of year |
|
|
47,649 |
|
Cash, cash equivalents, and
restricted cash at end of year |
|
$ |
33,465 |
|
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
|
Cash paid for interest |
|
$ |
2,021 |
|
Cash paid for income taxes |
|
|
1,913 |
|
|
|
|
|
|
Non-cash investing and
financing activities: |
|
|
|
|
Issuance of warrants along with issuance of debt |
|
$ |
126 |
|
Issuance of common stock to partially satisfy purchase
consideration liability |
|
|
2,647 |
|
Accrual of purchase consideration in connection with business
acquisition |
|
|
9,466 |
|
Convertible note issued in connection with business
acquisition |
|
|
3,333 |
|
Operating lease liabilities arising from obtaining right-of-use
assets |
|
|
3,895 |
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Non-GAAP Financial Measures and
Reconciliation to GAAP Results(Unaudited) |
|
Non-GAAP Gross Profit
and Non-GAAP Gross Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
Revenue |
|
$ |
60,508 |
|
|
$ |
45,397 |
|
|
$ |
233,300 |
|
Gross profit |
|
|
21,468 |
|
|
|
13,852 |
|
|
|
74,964 |
|
Add: Stock-based compensation
expense |
|
|
113 |
|
|
|
124 |
|
|
|
330 |
|
Add: Amortization of acquired
intangible assets |
|
|
4,933 |
|
|
|
4,790 |
|
|
|
19,603 |
|
Non-GAAP gross profit |
|
$ |
26,514 |
|
|
$ |
18,766 |
|
|
$ |
94,897 |
|
Gross margin |
|
|
35 |
% |
|
|
31 |
% |
|
|
32 |
% |
Non-GAAP gross margin |
|
|
44 |
% |
|
|
41 |
% |
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Subscription Gross Profit and Non-GAAP Subscription Gross
Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
Subscription revenue |
|
$ |
24,117 |
|
|
$ |
16,505 |
|
|
$ |
89,308 |
|
Subscription gross profit |
|
|
12,682 |
|
|
|
7,201 |
|
|
|
45,171 |
|
Add: Stock-based compensation
expense |
|
|
81 |
|
|
|
89 |
|
|
|
219 |
|
Add: Amortization of acquired
intangible assets |
|
|
4,933 |
|
|
|
4,790 |
|
|
|
19,603 |
|
Non-GAAP subscription gross
profit |
|
$ |
17,696 |
|
|
$ |
12,080 |
|
|
$ |
64,993 |
|
Subscription gross margin |
|
|
53 |
% |
|
|
44 |
% |
|
|
51 |
% |
Non-GAAP subscription gross
margin |
|
|
73 |
% |
|
|
73 |
% |
|
|
73 |
% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Services Gross Profit and Non-GAAP Services Gross
Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
Services revenue |
|
$ |
36,391 |
|
|
$ |
28,892 |
|
|
$ |
143,992 |
|
Services gross profit |
|
|
8,786 |
|
|
|
6,651 |
|
|
|
29,793 |
|
Add: Stock-based compensation
expense |
|
|
32 |
|
|
|
35 |
|
|
|
111 |
|
Non-GAAP services gross
profit |
|
$ |
8,818 |
|
|
$ |
6,686 |
|
|
$ |
29,904 |
|
Services gross margin |
|
|
24 |
% |
|
|
23 |
% |
|
|
21 |
% |
Non-GAAP services gross
margin |
|
|
24 |
% |
|
|
23 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Non-GAAP Financial Measures and
Reconciliation to GAAP Results(Unaudited) |
|
Non-GAAP Research and
Development Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
Research and development expense |
|
$ |
7,906 |
|
|
$ |
6,497 |
|
|
$ |
31,190 |
|
Less: Stock-based compensation
expense |
|
|
524 |
|
|
|
395 |
|
|
|
1,637 |
|
Non-GAAP research and
development expense |
|
$ |
7,382 |
|
|
$ |
6,102 |
|
|
$ |
29,553 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Sales and
Marketing Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31,
2023 |
|
Year Ended January 31,
2024 |
Sales and marketing
expense |
|
$ |
20,067 |
|
|
$ |
19,112 |
|
|
$ |
73,790 |
|
Less: Stock-based compensation
expense |
|
|
455 |
|
|
|
434 |
|
|
|
1,612 |
|
Less: Amortization of acquired
intangible assets |
|
|
6,337 |
|
|
|
6,044 |
|
|
|
23,280 |
|
Less: Purchase accounting
adjustment from the August 2022 business combination |
|
— |
|
|
— |
|
|
|
(3,147 |
) |
Non-GAAP sales and marketing
expense |
|
$ |
13,275 |
|
|
$ |
12,634 |
|
|
$ |
52,045 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP General and
Administrative Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended January 31,
2024 |
|
Three Months Ended January 31, 2023 |
|
|
Year Ended January 31,
2024 |
General and administrative
expense |
|
$ |
10,026 |
|
|
$ |
9,316 |
|
|
$ |
38,758 |
|
Less: Stock-based compensation
expense |
|
|
1,028 |
|
|
|
1,242 |
|
|
|
3,946 |
|
Less: Amortization of acquired
intangible assets |
|
|
908 |
|
|
|
883 |
|
|
|
3,607 |
|
Non-GAAP general and
administrative expense |
|
$ |
8,090 |
|
|
$ |
7,191 |
|
|
$ |
31,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Loss from
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended January 31, 2024 |
|
Three Months Ended January 31, 2023 |
|
Year Ended January 31, 2024 |
Loss from operations |
|
$ |
(228,623 |
) |
|
$ |
(21,073 |
) |
|
$ |
(353,014 |
) |
Add: Stock-based compensation
expense |
|
|
2,120 |
|
|
|
2,195 |
|
|
|
7,525 |
|
Add: Amortization of acquired
intangible assets |
|
|
12,178 |
|
|
|
11,717 |
|
|
|
46,490 |
|
Add: Purchase accounting
adjustment from the August 2022 business combination |
|
|
— |
|
|
|
— |
|
|
|
(3,147 |
) |
Add: Goodwill impairment |
|
|
212,092 |
|
|
|
— |
|
|
|
284,240 |
|
Non-GAAP loss from
operations |
|
$ |
(2,233 |
) |
|
$ |
(7,161 |
) |
|
$ |
(17,906 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Media InquiriesMaisie Guzi,
ZeroFoxpress@zerofox.com
Investor RelationsTodd Weller,
ZeroFoxinvestor@zerofox.com
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