Second quarter revenue increased 18%
year-over-year to $196 million
Quarterly GAAP operating loss of $(47.0)
million; Non-GAAP operating loss of $(6.4) million
New Relic, Inc. (NYSE: NEWR), the observability company, today
announced financial results for the second quarter of fiscal year
2022.
“This quarter marks the completion of our business turnaround
and the beginning of a new chapter of growth for New Relic,” said
Bill Staples, CEO, New Relic. “We recently laid out five strategic
priorities to guide our company forward, and we are pleased with
the progress we’ve already made in advancing these objectives.
Today, New Relic has a strong foundation for the future, as we
continue our work to help millions of developers and engineers
build better software by making observability a daily part of a
data-driven engineering approach, across the entire software
lifecycle.”
Second Quarter Fiscal Year 2022 Financial Highlights:
- Revenue of $196 million, compared to $166 million for the
second quarter of fiscal 2021, a year-over-year increase of
18%.
- GAAP gross margin of 67% and non-GAAP gross margin of 69%.
- GAAP loss from operations was $(47.0) million, compared to
$(42.9) million for the second quarter of fiscal 2021.
- Non-GAAP loss from operations was $(6.4) million, compared to
$(5.3) million for the second quarter of fiscal 2021.
- GAAP net loss attributable to New Relic per basic and diluted
share was $(0.84), compared to a loss of $(0.79) per basic and
diluted share for the second quarter of fiscal 2021.
- Non-GAAP net loss attributable to New Relic per diluted share
was $(0.10), compared to $(0.07) per diluted share for the second
quarter of fiscal 2021.
- Cash provided by operating activities was $(37.0) million and
free cash flow was $(40.8) million for the second quarter of fiscal
2022.
- Cash, cash equivalents and short-term investments were $784
million at the end of the second quarter of fiscal 2022, compared
with $817 million at the end of the first quarter of fiscal
2022.
- Remaining performance obligations were $597 million at the end
of the second quarter of fiscal 2022, compared with $654 million at
the end of the first quarter of fiscal 2022. This represents the
aggregate unrecognized transaction price of remaining performance
obligations as of each of September 30, 2021 and June 30,
2021.
Key Operating Metrics*:
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
2Q21
3Q21
4Q21
1Q22
2Q22
Active Customer Accounts
14,500
13,900
14,100
14,100
14,300
Active Customer Accounts >$100,000
894
913
945
964
1,011
Percentage of Revenue from Active Customer
Accounts >$100,000
77%
78%
79%
79%
81%
Net Revenue Retention Rate (NRR)
119%
115%
112%
111%
112%
* Beginning with the first quarter of fiscal 2022, we introduced
new key operating metrics and changed the methodology we are using
to count customer accounts. Total customer accounts are now
aggregated at the parent hierarchy level and include any account
for which we have recognized any revenue in the fiscal quarter.
Please refer to the appendix for the definitions of these new key
operating metrics.
Recent Business Highlights:
- Launched New Relic Instant Observability, the industry's
largest open source ecosystem of quickstarts and partner
integrations.
- Launched Industry’s Most Comprehensive Global Research on
Observability.
- Promoted Bill Staples to CEO effective July 1, 2021.
Outlook:
- Third Quarter Fiscal 2022 Outlook:
- Revenue between $198 million and $202 million, representing
year-over-year growth of approximately 19% and 22%.
- Non-GAAP loss from operations between $(10) million and $(12)
million.
- Non-GAAP net loss attributable to New Relic per diluted share
between $(0.15) and $(0.18)
- Full-Year Fiscal 2022 Outlook:
- Revenue between $778 million and $782 million, representing
year-over-year growth of approximately 16% and 17%.
- Non-GAAP loss from operations between $(35) million and $(39)
million.
- Non-GAAP net loss attributable to New Relic per diluted share
between $(0.54) and $(0.60).
New Relic has not reconciled its expectations as to non-GAAP
income (loss) from operations or non-GAAP net income (loss) per
diluted share to their most directly comparable GAAP measures as a
result of uncertainty regarding, and the potential variability of,
reconciling items such as stock-based compensation expense, lawsuit
litigation cost and other expense, employer payroll taxes on equity
incentive plans and gain or loss from lease modification.
Accordingly, reconciliation is not available without unreasonable
effort, although it is important to note that these factors could
be material to New Relic’s results computed in accordance with
GAAP.
Conference Call and Investor Letter Details:
- What: New Relic financial results for the second quarter
of fiscal year 2022 and outlook for the third quarter and the full
year of fiscal 2022.
- When: November 8, 2021 at 2:00 P.M. Pacific Time (5:00
P.M. Eastern Time)
- Dial in: To access the call in the United States, please
dial (844) 757-5730, and for international callers, please dial
(412) 542-4120. Callers may provide confirmation number 10160817 to
access the call more quickly, and are encouraged to dial into the
call at least 15 minutes prior to the start to prevent any delay in
joining.
- Webcast: http://ir.newrelic.com (live and replay)
- Investor Letter: Available at
http://ir.newrelic.com
- Replay: Following the completion of the call through
11:59 PM Eastern Time on November 15, 2021, a telephone replay will
be available by dialing (877) 344-7529 from the United States or
(412) 317-0088 internationally with conference ID 10160817.
About New Relic
As a leader in observability, New Relic empowers engineers with
a data-driven approach to planning, building, deploying and running
great software. New Relic One delivers the only unified data
platform that empowers engineers to get all telemetry—metrics,
events, logs and traces—paired with the most powerful full stack
analysis tools to help engineers get past the ‘what’ to uncover the
‘why.’ Delivered through the industry’s only consumption pricing
that’s intuitive and predictable, New Relic gives engineers more
value for the money by helping improve planning cycle times,
decrease change failure rates, accelerate release frequency and
reduce mean time to resolution. This helps the world’s leading
brands including AB InBev, Australia Post, Banco Inter, Chegg,
Gojek, REI, Signify Health, TopGolf, World Fuel Services (WFS) and
Zalora improve uptime and reliability, drive operational efficiency
and deliver exceptional customer experiences that fuel innovation
and growth. Uncover the ‘why’ with New Relic at newrelic.com.
Forward-Looking Statements
This press release and the earnings call referencing this press
release contain “forward-looking” statements, as that term is
defined under the federal securities laws, including but not
limited to statements regarding: New Relic’s future financial
performance, including its outlook on financial results for the
third quarter and the full year of fiscal 2022, such as revenue,
non-GAAP loss from operations, non-GAAP net loss attributable to
New Relic per diluted share, New Relic’s ability to achieve its
five strategic priorities, including statements regarding
reacceleration of revenue growth and returning to market growth
rates, ability to exceed its target revenue percentage on the new
consumption model, growing the number of paying customers,
delivering unique value and demonstrating its differentiated
platform vision, and improving internal execution efficiency and
costs, improvement in gross margins, churn, benefits and features
of new products and partnerships, expectations of New Relic’s
ability to forecast consumption and its revenue mix in the
intermediate and longer-term, expectations regarding growth and
margin performance as a result of the transition to the cloud,
expectations of growth in awareness and increased adoption in the
observability community, and related ability to continue to drive
growth in New Relic’s data, paid users and accounts. These
forward-looking statements are based on New Relic’s current
assumptions, expectations and beliefs and are subject to
substantial risks, uncertainties, assumptions and changes in
circumstances that may cause New Relic’s actual results,
performance or achievements to differ materially from those
expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are
not limited to, New Relic’s ability to determine optimal prices for
its products and the potential challenges presented by New Relic’s
evolving pricing models; the effect of the COVID-19 pandemic on New
Relic’s business and on global economies and financial markets
generally; New Relic’s ability to generate sufficient revenue to
achieve and sustain profitability, particularly in light of its
significant ongoing expenses; New Relic’s short operating history
in an evolving industry; New Relic’s ability to manage its
significant recent growth; the dependence of New Relic’s business
on its customers remaining on its platform and increasing their
spend with New Relic; New Relic’s ability to develop enhancements
to its products, increase adoption and usage of its products and
introduce new products that achieve market acceptance; the
dependence on customers expanding their use of New Relic’s products
beyond the current predominant use cases; New Relic’s ability to
expand its marketing and sales capabilities and increase sales of
its solutions; privacy concerns, including changes in privacy laws
and regulations, which could result in additional cost and
liability to New Relic or inhibit sales; New Relic’s ability to
effectively compete in intensely competitive markets and respond
effectively to rapidly changing technology, evolving industry
standards and changing customer needs, requirements or preferences;
fluctuation of New Relic’s quarterly results; New Relic’s
dependence on lead generation strategies to drive sales and
revenue; interruptions or performance problems associated with New
Relic’s technology and infrastructure; New Relic’s dependence on
SaaS technologies and related services from third parties; defects
or disruptions in New Relic’s products; estimates or judgments
relating to New Relic’s critical accounting policies; the expense
and complexity of New Relic’s ongoing and planned investments in
cloud hosting providers and expenditures on transitioning its
services and customers from its data center hosting facilities to
public cloud providers; risks associated with international
operations; New Relic’s ability to protect its intellectual
property rights; risks related to the acquisition and integration
of businesses or technologies; risks related to sales to government
entities and highly regulated organizations; certain risks
associated with incurring indebtedness, including risks related to
servicing New Relic’s convertible senior notes and related capped
call transactions; and other “Risk Factors” set forth in New
Relic’s most recent filings with the Securities and Exchange
Commission (the “SEC”).
Further information on these and other factors that could affect
New Relic’s financial results and the forward-looking statements in
this press release and in the earnings call referencing this press
release is included in the filings New Relic makes with the SEC
from time to time, particularly under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” including our Annual Report on Form
10-K and subsequent Quarterly Reports on Form 10-Q and subsequent
filings. Copies of these documents may be obtained by visiting New
Relic’s Investor Relations website at http://ir.newrelic.com or the
SEC’s website at www.sec.gov.
All information provided in this press release and in the
earnings call is as of the date hereof and New Relic assumes no
obligation and does not intend to update these forward-looking
statements, except as required by law.
Non-GAAP Financial Measures
New Relic discloses the following non-GAAP financial measures in
this press release and the earnings call referencing this press
release: non-GAAP income (loss) from operations, non-GAAP gross
profit, non-GAAP gross margin, non-GAAP operating expenses (sales
and marketing, research and development, general and
administrative), non-GAAP operating margin, non-GAAP net income
(loss) attributable to New Relic, non-GAAP net income (loss)
attributable to New Relic per diluted share, non-GAAP net income
(loss) attributable to New Relic per basic share and free cash
flow. New Relic uses each of these non-GAAP financial measures
internally to understand and compare operating results across
accounting periods, for internal budgeting and forecasting
purposes, for short- and long-term operating plans, and to evaluate
New Relic’s financial performance. In addition, New Relic’s bonus
plan for eligible employees and executives is based in part on
non-GAAP income (loss) from operations. New Relic believes these
non-GAAP financial measures are useful to investors, as a
supplement to GAAP measures, in evaluating its operational
performance, as further discussed below. New Relic’s non-GAAP
financial measures may not provide information that is directly
comparable to that provided by other companies in its industry, as
other companies in its industry may calculate non-GAAP financial
results differently, particularly related to non-recurring and
unusual items. In addition, there are limitations in using non-GAAP
financial measures because the non-GAAP financial measures are not
prepared in accordance with GAAP and may be different from non-GAAP
financial measures used by other companies and exclude expenses
that may have a material impact on New Relic’s reported financial
results.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. A reconciliation of the
historical 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.
New Relic defines non-GAAP income (loss) from operations,
non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses (sales and marketing, research and development, general
and administrative), non-GAAP operating margin, non-GAAP net income
(loss) attributable to New Relic, non-GAAP net income (loss)
attributable to New Relic per diluted share and non-GAAP net income
(loss) attributable to New Relic per basic share as the respective
GAAP balances, adjusted for, as applicable: (1) stock-based
compensation expense, (2) amortization of stock-based compensation
capitalized in software development costs, (3) the amortization of
purchased intangibles, (4) employer payroll tax expense on equity
incentive plans, (5) amortization of debt discount and issuance
costs, (6) the transaction costs related to acquisitions, (7)
lawsuit litigation cost and other expense, (8) gain or loss from
lease modification, (9) adjustment to redeemable non-controlling
interest, and (10) restructuring charges. Non-GAAP net income
(loss) per basic and diluted share is calculated as non-GAAP net
income (loss) attributable to New Relic divided by weighted-average
shares used to compute net income (loss) attributable to New Relic
per share, basic and diluted, with the number of weighted-average
shares decreased to reflect the anti-dilutive impact of the capped
call transactions entered into in connection with the 0.50%
Convertible Senior Notes due 2023 issued in May 2018. New Relic
defines free cash flow as GAAP cash from operations, minus capital
expenditures and minus capitalized software. Investors are
encouraged to review the reconciliation of these historical
non-GAAP financial measures to their most directly comparable GAAP
financial measures.
Management believes these non-GAAP financial measures are useful
to investors and others in assessing New Relic’s operating
performance due to the following factors:
Stock-based compensation expense and amortization of stock-based
compensation capitalized in software development costs. New Relic
utilizes share-based compensation to attract and retain employees.
It is principally aimed at aligning their interests with those of
its stockholders and at long-term retention, rather than to address
operational performance for any particular period. As a result,
share-based compensation expenses vary for reasons that are
generally unrelated to financial and operational performance in any
particular period.
Amortization of purchased intangibles. New Relic views
amortization of purchased intangible assets as items arising from
pre-acquisition activities determined at the time of an
acquisition. While these intangible assets are evaluated for
impairment regularly, amortization of the cost of purchased
intangibles is an expense that is not typically affected by
operations during any particular period.
Employer payroll tax expense on equity incentive plans. New
Relic excludes employer payroll tax expense on equity incentive
plans as these expenses are tied to the exercise or vesting of
underlying equity awards and the price of New Relic’s common stock
at the time of vesting or exercise. As a result, these taxes may
vary in any particular period independent of the financial and
operating performance of New Relic’s business.
Amortization of debt discount and issuance costs. In May 2018,
New Relic issued $500.25 million of convertible senior notes due in
2023, which bear interest at an annual fixed rate of 0.50%. The
effective interest rate of the convertible senior notes was
approximately 5.74%. Effective April 1, 2021 New Relic adopted ASU
No. 2020-06, Accounting for Convertible Instruments and Contract on
an Entity’s Own Equity. As a result of the adoption, the debt
conversion option and debt issuance costs previously attributable
to the equity component are no longer presented in equity.
Similarly, the debt discount, which was equal to the carrying value
of the embedded conversion feature upon issuance, is no longer
amortized into income as interest expense over the life of the
instrument. The debt issuance costs are amortized as interest
expense. The expense for the amortization of debt issuance costs is
a non-cash item, and New Relic believes the exclusion of this
interest expense will provide for a more useful comparison of our
operational performance in different periods.
Transaction costs related to acquisitions. New Relic may from
time to time incur direct transaction costs related to
acquisitions. New Relic believes it is useful to exclude such
charges because it does not consider such amounts to be part of the
ongoing operation of New Relic’s business.
Lawsuit litigation cost and other expense. New Relic may from
time to time incur charges or benefits related to litigation that
are outside of the ordinary course of New Relic’s business. New
Relic believes it is useful to exclude such charges or benefits
because it does not consider such amounts to be part of the ongoing
operation of New Relic’s business and because of the singular
nature of the claims underlying the matter.
Gain or loss from lease modification. New Relic may incur a gain
or loss from modification related to lease agreements. New Relic
believes it is useful to exclude such charges or benefits because
it does not consider such amounts to be part of the ongoing
operation of New Relic’s business and because of the singular
nature of benefit or charge from such events.
Adjustment to redeemable non-controlling interest. New Relic
adjusts the value of redeemable non-controlling interest in
connection with its joint venture in New Relic K.K. New Relic
believes it is useful to exclude the adjustment to redeemable
non-controlling interest because it may not be indicative of future
operating results and that investors benefit from an understanding
of the company’s operating results without giving effect to this
adjustment.
Restructuring charges. In April 2021, New Relic commenced a
restructuring plan to realign its cost structure to better reflect
significant product and business model innovation over the past 12
months. As a result of the restructuring plan, New Relic incurred
charges of approximately $13.0 million for employee terminations
and other costs associated with the restructuring plan. Most of
these charges consisted of cash expenditures and stock-based
compensation expense and were recognized in the first quarter of
fiscal 2022. New Relic believes it is appropriate to exclude the
restructuring charges because it is not indicative of its future
operating results.
Anti-dilutive impact of capped call transactions. In connection
with the issuance of its convertible senior notes due in 2023, New
Relic entered into capped call transactions to offset potential
dilution from the embedded conversion feature in the notes.
Although New Relic cannot reflect the anti-dilutive impact of the
capped call transactions under GAAP, New Relic does reflect the
anti-dilutive impact of the capped call transactions in non-GAAP
net income (loss) attributable to New Relic per share, basic and
diluted, to provide investors with useful information in evaluating
the financial performance of the company on a per share basis.
Additionally, New Relic’s management believes that the non-GAAP
financial measure free cash flow is meaningful to investors because
management reviews cash flows generated from operations after
taking into consideration capital expenditures and the
capitalization of software development costs due to the fact that
these expenditures are considered to be a necessary component of
ongoing operations.
Operating Metrics
Active Customer Accounts. New Relic defines an Active Customer
Account at the end of any period as an individual account, as
identified by a unique account identifier, aggregated at the parent
hierarchy level, for which New Relic has recognized any revenue in
the fiscal quarter. The number of Active Customer Accounts that is
reported as of a particular date is rounded down to the nearest
hundred.
Number of Active Customer Accounts with Revenue Greater than
$100,000. As a measure of New Relic’s ability to scale with its
customers and attract large enterprises to its platform, New Relic
counts the number of Active Customer Accounts for which it has
recognized greater than $100,000 in revenue in the trailing
12-months.
Percentage of Revenue from Active Customer Accounts Greater than
$100,000. New Relic also looks at its percentage of overall revenue
it receives from its Active Customer Accounts with revenue greater
than $100,000 in any given quarter as an indicator of its relative
performance when selling to New Relic’s large customer
relationships or its smaller revenue accounts.
Net Revenue Retention Rate (“NRR”). NRR monitors the growth in
use of New Relic’s platform by its existing active customer
accounts and allows New Relic to measure the health of its business
and future growth prospects. To calculate NRR, New Relic first
identifies the cohort of Active Customer Accounts that were Active
Customer Accounts in the same quarter of the prior fiscal year.
Next, New Relic identifies the measurement period as the 12-month
period ending with the period reported and the prior comparison
period as the corresponding period in the prior year. NRR is the
quotient obtained by dividing the revenue generated from a cohort
of Active Customer Accounts in the measurement period by the
revenue generated from that same cohort in the prior comparison
period.
New Relic is a registered trademark of New Relic, Inc.
All product and company names herein may be trademarks of their
registered owners.
Condensed Consolidated Statements of
Operations
(In thousands, except per share data;
unaudited)
Three Months Ended September 30, Six Months Ended
September 30,
2021
2020
2021
2020
Revenue
$
195,694
$
166,054
$
376,178
$
328,639
Cost of revenue
64,262
45,198
123,526
78,471
Gross profit
131,432
120,856
252,652
250,168
Operating expenses: Research and development
51,368
44,628
100,098
85,472
Sales and marketing
93,067
89,378
195,880
174,514
General and administrative
34,014
29,798
77,579
59,232
Total operating expenses
178,449
163,804
373,557
319,218
Loss from operations
(47,017
)
(42,948
)
(120,905
)
(69,050
)
Other income (expense): Interest income
724
2,220
1,662
5,001
Interest expense
(1,228
)
(6,216
)
(2,454
)
(12,320
)
Other expense
(43
)
(604
)
(379
)
(999
)
Loss before income taxes
(47,564
)
(47,548
)
(122,076
)
(77,368
)
Income tax provision
506
380
53
712
Net loss
$
(48,070
)
$
(47,928
)
$
(122,129
)
$
(78,080
)
Net loss and adjustment attributable to redeemable non-controlling
interest
(5,699
)
377
(10,054
)
773
Net loss attributable to New Relic
$
(53,769
)
$
(47,551
)
$
(132,183
)
$
(77,307
)
Net loss attributable to New Relic per share, basic and diluted
$
(0.84
)
$
(0.79
)
$
(2.07
)
$
(1.28
)
Weighted-average shares used to compute net loss per share, basic
and diluted
64,277
60,545
63,811
60,237
Condensed Consolidated Balance
Sheets
(In thousands, except par value;
unaudited)
September 30, 2021
March 31, 2021
Assets Current assets: Cash and cash equivalents
$
231,918
$
240,821
Short-term investments
551,594
575,254
Accounts receivable, net of allowances of $2,251 and $2,633
respectively
103,103
174,027
Prepaid expenses and other current assets
24,759
21,944
Deferred contract acquisition costs
29,852
36,210
Total current assets
941,226
1,048,256
Property and equipment, net
78,993
91,308
Restricted cash
5,643
5,642
Goodwill
163,677
144,253
Intangible assets, net
19,933
12,986
Deferred contract acquisition costs, non-current
19,846
32,579
Lease right-of-use assets
53,019
57,425
Other assets, non-current
5,143
6,170
Total assets
$
1,287,480
$
1,398,619
Liabilities, redeemable non-controlling interest, and
stockholders’ equity Current liabilities: Accounts payable
$
37,888
$
24,171
Accrued compensation and benefits
31,879
37,196
Other current liabilities
13,004
19,174
Deferred revenue
271,687
373,594
Lease liabilities
8,928
7,886
Total current liabilities
363,386
462,021
Convertible senior notes, net
496,482
449,380
Lease liabilities, non-current
54,705
59,924
Deferred revenue, non-current
559
1,674
Other liabilities, non-current
17,037
8,256
Total liabilities
932,169
981,255
Redeemable non-controlling interest
13,443
3,389
Stockholders’ equity: Common stock, $0.001 par value
65
64
Treasury stock - at cost (260 shares)
(263
)
(263
)
Additional paid-in capital
1,008,363
1,001,309
Accumulated other comprehensive loss
(1,208
)
(19
)
Accumulated deficit
(665,089
)
(587,116
)
Total stockholders’ equity
341,868
413,975
Total liabilities, redeemable non-controlling interest and
stockholders’ equity
$
1,287,480
$
1,398,619
Condensed Consolidated Statements of
Cash Flows
(In thousands; unaudited)
Six Months Ended September
30,
2021
2020
Cash flows from operating activities: Net loss attributable
to New Relic
$
(132,183
)
$
(77,307
)
Net loss and adjustment attributable to redeemable non-controlling
interest
$
10,054
$
(773
)
Net loss:
$
(122,129
)
$
(78,080
)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: Depreciation and amortization
45,426
43,404
Stock-based compensation expense
79,758
66,575
Amortization of debt discount and issuance costs
1,176
11,010
Other
(124
)
2,354
Changes in operating assets and liabilities: Accounts receivable,
net
70,924
45,980
Prepaid expenses and other assets
(2,362
)
473
Deferred contract acquisition costs
(758
)
(19,662
)
Lease right-of-use assets
5,077
(1,086
)
Accounts payable
15,191
14,870
Accrued compensation and benefits and other liabilities
(12,111
)
1,941
Lease liabilities
(4,177
)
1,008
Deferred revenue
(103,022
)
(40,729
)
Net cash provided by (used in) operating activities
(27,131
)
48,058
Cash flows from investing activities: Purchases of property
and equipment
(2,826
)
(12,641
)
Cash paid for acquisition, net of cash acquired
(7,192
)
-
Purchases of short-term investments
(134,350
)
(227,347
)
Proceeds from sale and maturity of short-term investments
155,613
173,950
Capitalized software development costs
(6,047
)
(6,843
)
Net cash provided by (used in) investing activities
5,198
(72,881
)
Cash flows from financing activities: Proceeds from employee
stock purchase plan
5,417
6,494
Proceeds from exercise of employee stock options
7,614
2,650
Net cash provided by financing activities
13,031
9,144
Net decrease in cash, cash equivalents and restricted cash
(8,902
)
(15,679
)
Cash, cash equivalents and restricted cash at beginning of period
246,463
298,164
Cash, cash equivalents and restricted cash at end of period
$
237,561
$
282,485
Reconciliation from GAAP to Non-GAAP
Results
(In thousands, except per share data;
unaudited)
Three Months Ended September
30,
Six Months Ended September
30,
2021
2020
2021
2020
Reconciliation of gross profit and gross
margin: GAAP gross profit
$
131,432
$
120,856
$
252,652
$
250,168
Plus: Stock-based compensation
1,303
1,622
2,375
3,124
Plus: Amortization of purchased intangibles
1,676
1,276
3,352
2,552
Plus: Amortization of stock-based compensation capitalized in
software development costs
620
265
1,040
504
Plus: Employer payroll tax on employee equity incentive plans
53
50
105
141
Non-GAAP gross profit
$
135,084
$
124,069
$
259,524
$
256,489
GAAP gross margin
67
%
73
%
67
%
76
%
Non-GAAP adjustments
2
%
2
%
2
%
2
%
Non-GAAP gross margin
69
%
75
%
69
%
78
%
Reconciliation of operating
expenses: GAAP research and development
$
51,368
$
44,628
$
100,098
$
85,472
Less: Stock-based compensation expense
(12,147
)
(10,450
)
(23,111
)
(19,254
)
Less: Employer payroll tax on employee equity incentive plans
(261
)
(210
)
(560
)
(559
)
Non-GAAP research and development
$
38,960
$
33,968
$
76,427
$
65,659
GAAP sales and marketing
$
93,067
$
89,378
$
195,880
$
174,514
Less: Stock-based compensation expense
(13,548
)
(14,537
)
(25,082
)
(27,845
)
Less: Employer payroll tax on employee equity incentive plans
(143
)
(157
)
(388
)
(516
)
Less: Restructuring charges (1)
3
-
(11,068
)
-
Non-GAAP sales and marketing
$
79,379
$
74,684
$
159,342
$
146,153
GAAP general and administrative
$
34,014
$
29,798
$
77,579
$
59,232
Less: Stock-based compensation expense
(10,573
)
(8,758
)
(29,190
)
(16,352
)
Less: Transaction costs related to acquisition
0
-
(361
)
-
Less: Lawsuit litigation cost and other expense
-
(37
)
-
(37
)
Less: Employer payroll tax on employee equity incentive plans
(326
)
(294
)
(543
)
(443
)
Less: Restructuring charges (1)
6
-
(1,202
)
-
Non-GAAP general and administrative
$
23,121
$
20,709
$
46,283
$
42,400
Reconciliation of income (loss) from
operations and operating margin: GAAP loss from
operations
$
(47,017
)
$
(42,948
)
$
(120,905
)
$
(69,050
)
Plus: Stock-based compensation expense
37,571
35,367
79,758
66,575
Plus: Amortization of purchased intangibles
1,676
1,276
3,352
2,552
Plus: Transaction costs related to acquisition
-
-
361
-
Plus: Amortization of stock-based compensation capitalized in
software development costs
620
265
1,040
504
Plus: Lawsuit litigation cost and other expense
-
37
-
37
Plus: Employer payroll tax on employee equity incentive plans
783
711
1,596
1,659
Plus: Restructuring charges (1)
(9
)
-
12,270
-
Non-GAAP income (loss) from operations
$
(6,376
)
$
(5,292
)
$
(22,528
)
$
2,277
GAAP operating margin
-24
%
-26
%
-32
%
-21
%
Non-GAAP adjustments
21
%
23
%
26
%
22
%
Non-GAAP operating margin
-3
%
-3
%
-6
%
1
%
Reconciliation of net income
(loss): GAAP net loss attributable to New Relic
$
(53,769
)
$
(47,551
)
$
(132,183
)
$
(77,307
)
Plus: Stock-based compensation expense
37,571
35,367
79,758
66,575
Plus: Amortization of purchased intangibles
1,676
1,276
3,352
2,552
Plus: Transaction costs related to acquisition
-
-
361
-
Plus: Amortization of stock-based compensation capitalized in
software development costs
620
265
1,040
504
Plus: Lawsuit litigation cost and other expense
-
37
-
37
Plus: Employer payroll tax on employee equity incentive plans
783
711
1,596
1,659
Plus: Amortization of debt discount and issuance costs
589
5,544
1,176
11,010
Plus: Adjustment to redeemable non-controlling interest
5,840
-
10,235
-
Plus: Restructuring charges
(9
)
-
12,270
-
Non-GAAP net income (loss) attributable to New Relic
$
(6,699
)
$
(4,351
)
$
(22,395
)
$
5,030
Non-GAAP net income (loss) attributable to New Relic per
share: Basic
$
(0.10
)
$
(0.07
)
$
(0.35
)
$
0.08
Diluted
$
(0.10
)
$
(0.07
)
$
(0.35
)
$
0.08
Shares used in non-GAAP per share calculations: Basic
64,277
60,545
63,811
60,237
Diluted
64,277
60,545
63,811
61,567
(1) Restructuring related charge for the stock-based compensation
expense of $0.5 million is included on its respective line items.
Reconciliation of GAAP Cash Flows from Operating Activities
to Free Cash Flow
(In thousands; unaudited)
Three Months Ended September
30,
Six Months Ended September
30,
2021
2020
2021
2020
Net cash provided by (used in) operating activities
$
(37,003
)
$
12,910
$
(27,131
)
$
48,058
Capital expenditures
(600
)
(4,416
)
(2,826
)
(12,641
)
Capitalized software development costs
(3,187
)
(3,175
)
(6,047
)
(6,843
)
Free cash flow (Non-GAAP)
$
(40,790
)
$
5,319
$
(36,004
)
$
28,574
Net cash provided by (used in) investing activities
$
791
$
(666
)
$
5,198
$
(72,881
)
Net cash provided by financing activities
$
8,234
$
7,720
$
13,031
$
9,144
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211108006002/en/
Investor Contact Peter Goldmacher New Relic, Inc.
503-336-9280 IR@newrelic.com
Media Contact New Relic, Inc PR@newrelic.com
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