Exceeded high-end of guidance for revenue and
non-GAAP operating profit
Focused execution drove revenue of $226.9
million, reduced GAAP operating loss and achieved non-GAAP
profitability one quarter earlier than planned
New Relic, Inc. (NYSE: NEWR), the all-in-one observability
platform for every engineer, today announced financial results for
the second quarter of fiscal year 2023.
“Our focused execution against our key priorities enabled us to
beat the high-end of our guidance. We continue to innovate rapidly
to further expand our all-in-one observability platform,” said New
Relic CEO Bill Staples. “We feel very well positioned as a
strategic partner to our customers helping them standardize their
observability practice on New Relic, which can improve uptime and
grow revenue, accelerate time to market, and lower tooling and
engineering cost. We are winning new platform customers at industry
leading levels and seeing continued success with customers
expanding their use of the platform.”
Fiscal 2023 Second Quarter Results:
- Revenue: Second quarter revenue was $226.9 million, up
16% from $195.7 million one year ago.
- Gross Margin and Non-GAAP Gross Margin(1): Second
quarter gross margin was 72%, compared to 67% one year ago, an
increase of 5 percentage points year over year. Non-GAAP gross
margin for the second quarter was 74%, compared to 69% one year
ago, up 5 percentage points year over year.
- Operating Income and Non-GAAP Operating Income(1):
Second quarter loss from operations was $(45.3) million, compared
to $(47.0) million one year ago, an improvement of $1.7 million
year over year, and an improvement of $10.4 million quarter over
quarter. Non-GAAP operating income for the second quarter was $6.9
million, compared to $(6.4) million loss one year ago, an increase
of $13.3 million year over year, and an increase of $24.0 million
quarter over quarter.
- Net Income Per Share and Non-GAAP Net Income Per
Share(1): For the second quarter, fully diluted net loss per
share was $(0.70), compared to $(0.84) one year ago, while non-GAAP
fully diluted net income per share was $0.13, compared to $(0.10)
loss per share one year ago.
- Cash, Cash Equivalents and Short-Term Investments:
Second quarter cash, cash equivalents and short-term investments
were $833.3 million.
- Cash Flows From Operating Activities and Free Cash Flow:
Trailing four quarter cash flows from operating activities was
$36.3 million, compared to $(5.3) million one year ago, an increase
of $41.6 million year over year. Trailing four quarter free cash
flow was $16.4 million, compared to $(26.9) million one year ago,
an increase of $43.3 million year over year.
Recent Business Highlights:
- Launching Vulnerability Management Public Preview —
Launched Vulnerability Management public preview, empowering
organizations to manage their security posture and risk as a core
part of their observability strategy.
- Expanding the New Relic All-in-one Observability
Platform — New Relic launched support for Amazon Virtual
Private Cloud (VPC), released product integrations with GitHub,
Lacework, and Snyk to address security scenarios of the platform,
and expanded New Relic Instant Observability, the industry’s
largest open source integrations ecosystem to cross 500
integrations, tools, and pre-built observability resources.
- Empowering More Users – New Relic launched a refreshed
single user interface (UI), enhanced collaboration and joined the
Atlassian Platform Partner Program as part of the Atlassian Open
DevOps solution, launching an integrated New Relic Errors Inbox
with Atlassian Open DevOps to easily access and track software
errors from inside Jira Software.
- New Customer Traction – Our product-led growth (PLG)
engine added more than 800 net new paid platform customers during
the second quarter. In addition, large enterprise customers like
Tesco and Confluent committed to the New Relic all-in-one platform
as the standard observability platform for their businesses.
- Building Out the Leadership Team – New Relic added three
key leaders to drive our consumption business including Mark Dodds
as Chief Revenue Officer, David Barter as Chief Financial Officer,
and Siva Padisetty as SVP and GM of Telemetry Data Platform and
Global Infrastructure.
- Attracting Top Talent – New Relic was named a 2022 Best
Workplace in Technology by Fortune, and earned a spot on Peoples’
2022 Companies that Care list.
- Deepening our Commitment to Environmental, Social, and
Governance (ESG) Initiatives – Published our inaugural New
Relic Impact report highlighting the results of weaving ESG
initiatives into the strategy for our technology, people, and
business. Download the report at www.newrelic.com/esg.
Financial Outlook:
New Relic is providing guidance for its fiscal third quarter
ending December 31, 2022 as follows:
- Revenue between $230 million and $235 million, representing
year-over-year growth of 13.0% and 15.4% respectively.
- Non-GAAP income from operations between $9 million and $11
million(2).
- Non-GAAP net income attributable to New Relic per diluted share
between $0.14 and $0.17(2).
New Relic is providing updated guidance for its fiscal year
ending March 31, 2023 as follows:
- Revenue between $912 million and $920 million, representing
year-over-year growth of 16.1% and 17.1% respectively.
- Non-GAAP income from operations between $8 million and $12
million(2).
- Non-GAAP net income attributable to New Relic per diluted share
between $0.16 and $0.22(2).
Conference Call Information:
New Relic will host a conference call at 2:00 p.m. PT / 5:00
p.m. ET to review the financial results and business outlook with
the investment community. A live webcast and replay of the event
will be available on the New Relic Investor Relations website at
http://ir.newrelic.com.
What:
New Relic second quarter of fiscal year
2023 results conference call
When:
November 8, 2022 at 2:00 p.m. Pacific Time
/ 5:00 p.m. Eastern Time
Online Registration:
https://events.q4inc.com/attendee/698633280
_______
(1) This press release uses non-GAAP financial metrics that are
adjusted for the impact of various GAAP items. See the section
titled “Non-GAAP Financial Measures” and the tables entitled
“Reconciliation from GAAP to Non-GAAP Results” below for
details.
(2) New Relic has not reconciled its expectations as to non-GAAP
income from operations or non-GAAP net income 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.
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 delivers the only unified data
platform that empowers engineers to get all telemetry—metrics,
events, logs, and traces—paired with powerful full stack analysis
tools to help engineers do their best work with data, not opinions.
Delivered through the industry’s first usage-based consumption
pricing that’s intuitive and predictable, New Relic gives engineers
more value for the money by helping improve planning cycle times,
change failure rates, release frequency, and mean time to
resolution. This helps the world’s leading brands including adidas
Runtastic, American Red Cross, Australia Post, Banco Inter, Chegg,
GoTo Group, Ryanair, Sainsbury’s, Signify Health, TopGolf, and
World Fuel Services (WFS) improve uptime, reliability, and
operational efficiency to deliver exceptional customer experiences
that fuel innovation and growth. www.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: (a) our plans and intentions to
further expand our platform, win new customers, and expand existing
relationships; (b) our expectations regarding future financial
performance, including our ability to deliver healthy levels of
revenue growth and profitability; (c) our commitment to certain
initiatives and strategic plans and our ability to accomplish them,
including our environmental, social, and governance initiatives;
(d) our outlook on financial results for the third quarter and the
full year of fiscal 2023, including as to revenue, expected
year-over-year revenue growth, non-GAAP income from operations,
non-GAAP net income attributable to New Relic per diluted share,
accelerating revenue growth, and non-GAAP profitability in fiscal
2023, and the drivers and various factors related thereto; (e) our
expectations for the impact of macroeconomic factors on our
business and financial results, including the anticipated impact of
foreign exchange rates; (f) anticipated market trends and growth
rates in the intermediate and long term, including our ability to
achieve our goal of profitable growth; (g) our expectations for the
results of efforts to drive breadth and depth of adoption across
our customer base; (h) the relationship between consumption, CRR,
and ACR, and profitable growth and value creation in the long-term,
as well as potential trends in commitments and consumption over
commitments going forward; (i) expectations for our vulnerability
management product, including timeline for general availability and
anticipated customer adoption; (j) New Relic’s competitive
advantage obtained by its new data-centric approach; (k)
anticipated impacts of the macroeconomic environment on New Relic’s
business and financial results; and (l) our ability to improve
efficiency and achieve lower customer acquisition costs and higher
productivity in the future, as well as the results of initiatives
to reduce costs. 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 macroeconomic factors on
New Relic’s business and on global economies and financial markets
generally; unfavorable movements in foreign currency exchange
rates; 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; 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 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) adjustment to
redeemable non-controlling interest, and (9) 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. Following New
Relic’s adoption of ASU No. 2020-06, Accounting for Convertible
Instruments and Contract on an Entity’s Own Equity, the expense for
the amortization of debt issuance costs (including those
attributable to New Relic’s convertible senior notes due in 2023)
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.
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 prior 12
months. In August 2022, New Relic commenced a new restructuring
plan to realign its cost structure with its business needs as it
moves to focus its resources on top priorities. As a result of each
of these restructuring plans, New Relic incurred charges of
approximately $7.2 million and $12.8 million for the six months
ended September 30, 2022 and 2021, respectively, for employee
terminations and other costs associated with the restructuring
plans. New Relic believes it is appropriate to exclude the
restructuring charges because they are 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 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.
New Relic, Inc. Condensed
Consolidated Statements of Operations (In thousands, except per
share data; unaudited)
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Revenue
$
226,912
$
195,694
$
443,371
$
376,178
Cost of revenue
64,783
64,262
128,676
123,526
Gross profit
162,129
131,432
314,695
252,652
Operating expenses: Research and development
68,730
51,368
133,499
100,098
Sales and marketing
96,203
93,067
200,623
195,880
General and administrative
42,483
34,014
81,513
77,579
Total operating expenses
207,416
178,449
415,635
373,557
Loss from operations
(45,287
)
(47,017
)
(100,940
)
(120,905
)
Other income (expense): Interest income
2,425
724
3,535
1,662
Interest expense
(1,233
)
(1,228
)
(2,465
)
(2,454
)
Other income (expense)
207
(43
)
(2
)
(379
)
Loss before income taxes
(43,888
)
(47,564
)
(99,872
)
(122,076
)
Income tax provision (benefit)
(381
)
506
(114
)
53
Net loss
$
(43,507
)
$
(48,070
)
$
(99,758
)
$
(122,129
)
Net loss and adjustment attributable to redeemable non-controlling
interest
(3,268
)
(5,699
)
2,744
(10,054
)
Net loss attributable to New Relic
$
(46,775
)
$
(53,769
)
$
(97,014
)
$
(132,183
)
Net loss attributable to New Relic per share, basic and diluted
$
(0.70
)
$
(0.84
)
$
(1.45
)
$
(2.07
)
Weighted-average shares used to compute net loss per share, basic
and diluted
67,207
64,277
66,816
63,811
New Relic, Inc.Condensed Consolidated Balance
Sheets(In thousands, except par value; unaudited)
September 30, 2022 March 31, 2022 Assets
Current assets: Cash and cash equivalents
$
471,064
$
268,695
Short-term investments
362,264
559,984
Accounts receivable, net of allowances of $2,562 and $3,073,
respectively
112,612
226,182
Prepaid expenses and other current assets
25,172
29,447
Deferred contract acquisition costs
18,587
24,058
Total current assets
989,699
1,108,366
Property and equipment, net
62,183
68,368
Restricted cash
5,779
5,775
Goodwill
172,298
163,677
Intangible assets, net
18,453
15,636
Deferred contract acquisition costs, non-current
5,732
10,463
Lease right-of-use assets
44,599
50,465
Other assets, non-current
6,135
4,916
Total assets
$
1,304,878
$
1,427,666
Liabilities, redeemable non-controlling interest, and
stockholders’ equity Current liabilities: Accounts payable
$
34,459
$
32,545
Accrued compensation and benefits
36,520
37,023
Other current liabilities
35,125
36,098
Convertible senior notes, net
498,851
-
Deferred revenue
284,130
398,754
Lease liabilities
11,025
11,103
Total current liabilities
900,110
515,523
Convertible senior notes, net
-
497,663
Lease liabilities, non-current
42,842
49,809
Deferred revenue, non-current
1,156
108
Other liabilities, non-current
18,863
20,173
Total liabilities
962,971
1,083,276
Redeemable non-controlling interest
18,942
21,686
Stockholders’ equity: Common stock, $0.001 par value
68
66
Treasury stock - at cost (260 shares)
(263
)
(263
)
Additional paid-in capital
1,215,315
1,114,221
Accumulated other comprehensive loss
(11,833
)
(8,012
)
Accumulated deficit
(880,322
)
(783,308
)
Total stockholders’ equity
322,965
322,704
Total liabilities, redeemable non-controlling interest and
stockholders’ equity
$
1,304,878
$
1,427,666
New Relic, Inc. Condensed
Consolidated Statements of Cash Flows (In thousands;
unaudited)
Six Months Ended September
30,
2022
2021
Cash flows from operating activities: Net loss attributable
to New Relic:
$
(97,014
)
$
(132,183
)
Net loss and adjustment attributable to redeemable non-controlling
interest
(2,744
)
10,054
Net loss:
$
(99,758
)
$
(122,129
)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization
34,298
45,426
Stock-based compensation expense
74,734
79,758
Amortization of debt discount and issuance costs
1,188
1,176
Loss on facilities exit
2,717
-
Other
(588
)
(124
)
Changes in operating assets and liabilities, net of acquisition of
businesses: Accounts receivable, net
113,570
70,924
Prepaid expenses and other assets
2,075
(2,362
)
Deferred contract acquisition costs
(3,489
)
(758
)
Lease right-of-use assets
5,411
5,077
Accounts payable
1,544
15,191
Accrued compensation and benefits and other liabilities
(5,519
)
(12,111
)
Lease liabilities
(7,045
)
(4,177
)
Deferred revenue
(113,575
)
(103,022
)
Net cash provided by (used in) operating activities
5,563
(27,131
)
Cash flows from investing activities: Purchases of property
and equipment
(2,416
)
(2,826
)
Proceeds from sale of property and equipment
1,724
-
Cash paid for acquisition, net of cash acquired
(257
)
(7,192
)
Purchases of short-term investments
(50,373
)
(134,350
)
Proceeds from sale and maturity of short-term investments
243,475
155,613
Capitalized software development costs
(7,907
)
(6,047
)
Net cash provided by investing activities
184,246
5,198
Cash flows provided by financing activities: Proceeds from
employee stock purchase plan
6,062
5,417
Proceeds from exercise of employee stock options
6,502
7,614
Net cash provided by financing activities
12,564
13,031
Net increase (decrease) in cash, cash equivalents and restricted
cash
202,373
(8,902
)
Cash, cash equivalents and restricted cash at beginning of period
274,470
246,463
Cash, cash equivalents and restricted cash at end of period
$
476,843
$
237,561
New Relic, Inc. Reconciliation
from GAAP to Non-GAAP Results (In thousands, except per share
data; unaudited)
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Reconciliation of gross profit and gross
margin: GAAP gross profit
$
162,129
$
131,432
$
314,695
$
252,652
Plus: Stock-based compensation
1,533
1,303
2,877
2,375
Plus: Amortization of purchased intangibles
2,292
1,676
4,583
3,352
Plus: Amortization of stock-based compensation capitalized in
software development costs
748
620
1,493
1,040
Plus: Employer payroll tax on employee equity incentive plans
71
53
119
105
Plus: Restructuring charges (1)
407
-
407
-
Non-GAAP gross profit
$
167,180
$
135,084
$
324,174
$
259,524
GAAP gross margin
72
%
67
%
71
%
67
%
Non-GAAP adjustments
2
%
2
%
2
%
2
%
Non-GAAP gross margin
74
%
69
%
73
%
69
%
Reconciliation of operating
expenses: GAAP research and development
$
68,730
$
51,368
$
133,499
$
100,098
Less: Stock-based compensation expense
(14,442
)
(12,147
)
(27,728
)
(23,111
)
Less: Employer payroll tax on employee equity incentive plans
(380
)
(261
)
(619
)
(560
)
Less: Restructuring charges (1)
(1,435
)
-
(1,435
)
-
Non-GAAP research and development
$
52,473
$
38,960
$
103,717
$
76,427
GAAP sales and marketing
$
96,203
$
93,067
$
200,623
$
195,880
Less: Stock-based compensation expense
(12,874
)
(13,548
)
(23,457
)
(25,082
)
Less: Employer payroll tax on employee equity incentive plans
(188
)
(143
)
(356
)
(388
)
Less: Restructuring charges (1)
(3,757
)
3
(3,757
)
(11,068
)
Non-GAAP sales and marketing
$
79,384
$
79,379
$
173,053
$
159,342
GAAP general and administrative
$
42,483
$
34,014
$
81,513
$
77,579
Less: Stock-based compensation expense
(11,003
)
(10,573
)
(20,672
)
(29,190
)
Less: Transaction costs related to acquisitions
(929
)
-
(929
)
(361
)
Less: Lawsuit litigation cost and other expense
(262
)
-
(88
)
-
Less: Employer payroll tax on employee equity incentive plans
(221
)
(326
)
(518
)
(543
)
Less: Restructuring charges (1)
(1,610
)
6
(1,610
)
(1,202
)
Non-GAAP general and administrative
$
28,458
$
23,121
$
57,696
$
46,283
Reconciliation of income (loss) from
operations and operating margin: GAAP loss from
operations
$
(45,287
)
$
(47,017
)
$
(100,940
)
$
(120,905
)
Plus: Stock-based compensation expense
39,852
37,571
74,734
79,758
Plus: Amortization of purchased intangibles
2,292
1,676
4,583
3,352
Plus: Transaction costs related to acquisitions
929
-
929
361
Plus: Amortization of stock-based compensation capitalized in
software development costs
748
620
1,493
1,040
Plus: Lawsuit litigation cost and other expense
262
-
88
-
Plus: Employer payroll tax on employee equity incentive plans
860
783
1,612
1,596
Plus: Restructuring charges (1)
7,210
(9
)
7,210
12,270
Non-GAAP income (loss) from operations
$
6,866
$
(6,376
)
$
(10,291
)
$
(22,528
)
GAAP operating margin
-20
%
-24
%
-23
%
-32
%
Non-GAAP adjustments
23
%
21
%
20
%
26
%
Non-GAAP operating margin
3
%
-3
%
-3
%
-6
%
Reconciliation of net income
(loss): GAAP net loss attributable to New Relic
$
(46,775
)
$
(53,769
)
$
(97,014
)
$
(132,183
)
Plus: Stock-based compensation expense
39,852
37,571
74,734
79,758
Plus: Amortization of purchased intangibles
2,292
1,676
4,583
3,352
Plus: Transaction costs related to acquisitions
929
-
929
361
Plus: Amortization of stock-based compensation capitalized in
software development costs
748
620
1,493
1,040
Plus: Lawsuit litigation cost and other expense
262
-
88
-
Plus: Employer payroll tax on employee equity incentive plans
860
783
1,612
1,596
Plus: Amortization of debt discount and issuance costs
594
589
1,187
1,176
Plus: Adjustment to redeemable non-controlling interest
3,196
5,840
(2,670
)
10,235
Plus: Restructuring charges (1)
7,210
(9
)
7,210
12,270
Non-GAAP net income (loss) attributable to New Relic
$
9,168
$
(6,699
)
$
(7,848
)
$
(22,395
)
Non-GAAP net income (loss) attributable to New Relic per
share: Basic
$
0.14
$
(0.10
)
$
(0.12
)
$
(0.35
)
Diluted
$
0.13
$
(0.10
)
$
(0.12
)
$
(0.35
)
Shares used in non-GAAP per share calculations: Basic
67,207
64,277
66,816
63,811
Diluted
68,224
64,277
66,816
63,811
(1) Includes $0.5 million stock-based compensation expense
for the six months ended September 30, 2021 due to the
restructuring activities commenced in April 2021. There was no
corresponding expense for the six months ended September 30, 2022.
New Relic, Inc. 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,
2022
2021
2022
2021
Net cash provided by (used in) operating activities
$
(37,446
)
$
(37,003
)
$
5,563
$
(27,131
)
Capital expenditures
(1,122
)
(600
)
(2,416
)
(2,826
)
Capitalized software development costs
(4,520
)
(3,187
)
(7,907
)
(6,047
)
Free cash flows (Non-GAAP)
$
(43,088
)
$
(40,790
)
$
(4,760
)
$
(36,004
)
Net cash provided by investing activities
$
194,182
$
791
$
184,246
$
5,198
Net cash provided by financing activities
$
10,839
$
8,234
$
12,564
$
13,031
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108005951/en/
Investor Contact Ingo Friedrichowitz New Relic, Inc.
IR@newrelic.com
Media Contact Kerry Baker New Relic, Inc
PR@newrelic.com
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