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New Relic Announces Second Quarter Fiscal Year 2020 Results

November 5, 2019

SAN FRANCISCO--(BUSINESS WIRE)--Nov 5, 2019--

New Relic, Inc. (NYSE: NEWR), the industry’s largest and most comprehensive cloud-based observability platform built to help customers create more perfect software, today announced financial results for the second quarter of fiscal year 2020.

“We delivered a record number of platform innovations on top of the New Relic One observability platform during the second fiscal quarter, including New Relic Logs, New Relic Metrics, New Relic Traces, and programmability,” said Lew Cirne, CEO and founder, New Relic. “The reaction to these capabilities during our global FutureStack events over the past two months has been incredibly positive. Field training and enablement is underway and we are committed to engaging our significant base and improving execution in the second half.”

Second Quarter Fiscal Year 2020 Financial Highlights:

Second Quarter & Recent Business Highlights:

Outlook:

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.

Conference Call Details:

About New Relic

New Relic is the industry’s largest and most comprehensive cloud-based observability platform built to help customers create more perfect software. The world’s best software and DevOps teams rely on New Relic to move faster, make better decisions and create best-in-class digital experiences. If you run software, you need to run New Relic. Learn why more than 50% of the Fortune 100 trust New Relic to make the world’s software run 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 for the full year of fiscal 2020, such as revenue, non-GAAP income from operations, non-GAAP net income attributable to New Relic per diluted share, cash from operations, free cash flow, gross margins, operating margins, deferred revenue, capital expenditures and capitalized software; New Relic being acutely focused on driving better results from its go-to-market organization in the second half; New Relic’s expectation of being in a position to better leverage its scale, significant installed base, and entire observability platform going forward; the benefits resulting from management changes, including regarding New Relic’s $1 billion annual revenue goal and the reallocation of Mr. Cirne’s time to driving strategic product initiatives; New Relic’s confidence in its ability to execute in the second half; the scalability of certain deals due to organizational enhancements and the broader field enablement that accompanies the general availability of New Relic’s new product offerings; anticipated improvements in deferred revenue in subsequent quarters; and New Relic’s key initiatives for the second half of fiscal 2020. 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 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 development of the overall market for SaaS business software; the dependence of New Relic’s business on its customers purchasing additional subscriptions and products from it and renewing their subscriptions; 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 determine optimal prices for its products; New Relic’s ability to expand its marketing and sales capabilities and increase sales of its solutions to large enterprises while mitigating the risks associated with serving such customers; 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; the expense and complexity of New Relic’s ongoing and planned investments in data center hosting facilities; 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; 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 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 attributable to New Relic, non-GAAP net income attributable to New Relic per diluted share, non-GAAP net income 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 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 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 attributable to New Relic, non-GAAP net income attributable to New Relic per diluted share and non-GAAP net income attributable to New Relic per basic share as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense, (2) lease exit costs and accelerated depreciation, (3) amortization of stock-based compensation capitalized in software development costs, (4) the amortization of purchased intangibles, (5) employer payroll tax expense on equity incentive plans, (6) amortization of debt discount and issuance costs, and in certain periods (7) the transaction costs related to acquisitions, (8) lawsuit litigation cost and other expense and (9) gain or loss from lease modification. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income attributable to New Relic divided by weighted-average shares used to compute net income 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.

Lease exit costs and accelerated depreciation. New Relic entered into an agreement to exit the lease of its 123 Mission premises in San Francisco, California. In connection with this agreement and subsequent relocation, New Relic accelerated depreciation and other expenses associated with the remaining lease term. New Relic believes it is useful to exclude this depreciation and these other expenses because it does not consider such amounts to be part of the ongoing operation of its business.

Amortization of purchased intangibles and transaction costs related to acquisitions. 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. Similarly, New Relic views acquisition-related expenses as events that are not necessarily reflective of operational performance during a period.

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.

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%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.

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.

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 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

New Relic defines the number of paid business accounts at the end of any particular period as the number of accounts at the end of the period as identified by a unique account identifier for which New Relic has recognized revenue on the last day of the period indicated. A single organization or customer may have multiple paid business accounts for separate divisions, segments, or subsidiaries. New Relic defines an enterprise paid business account as a paid business account that New Relic measures to have over 1,000 employees.

New Relic’s monthly recurring revenue represents the revenue that New Relic would contractually expect to receive from those customers over the following month, without any increase or reduction in any of their subscriptions. Similarly, annual recurring revenue represents the revenue that New Relic would contractually expect to receive from those customers over the following 12-month period, without any increase or reduction in any of their subscriptions.

New Relic’s dollar-based net expansion rate compares its recurring subscription revenue from customers from one period to the next. It is increased when customers increase their use of New Relic’s products, use additional products, or upgrade to a higher subscription tier. New Relic’s dollar-based net expansion rate is reduced when customers decrease their use of New Relic’s products, use fewer products, or downgrade to a lower subscription tier.

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,

 

2019

 

2018

 

2019

 

2018

Revenue

 $

               145,815

 

 

 $

               114,896

 

 

 $

               286,825

 

 

 $

               223,117

 

Cost of revenue

 

                    25,149

 

 

 

                    18,447

 

 

 

                    48,762

 

 

 

                    35,497

 

Gross profit

 

                  120,666

 

 

 

                    96,449

 

 

 

                  238,063

 

 

 

                  187,620

 

Operating expenses:       
Research and development

 

                    34,132

 

 

 

                    23,962

 

 

 

                    68,471

 

 

 

                    46,565

 

Sales and marketing

 

                    80,157

 

 

 

                    61,142

 

 

 

                  157,007

 

 

 

                  118,630

 

General and administrative

 

                    23,278

 

 

 

                    16,880

 

 

 

                    46,378

 

 

 

                    31,591

 

Total operating expenses

 

                  137,567

 

 

 

                  101,984

 

 

 

                  271,856

 

 

 

                  196,786

 

Loss from operations

 

                  (16,901

)

 

 

                    (5,535

)

 

 

                  (33,793

)

 

 

                    (9,166

)

Other income (expense):       
Interest income

 

                      4,011

 

 

 

                      3,259

 

 

 

                      8,151

 

 

 

                      5,104

 

Interest expense

 

                    (5,888

)

 

 

                    (5,597

)

 

 

                  (11,707

)

 

 

                    (8,263

)

Other income (expense), net

 

                         315

 

 

 

                       (435

)

 

 

                      3,293

 

 

 

                    (1,277

)

Loss before income taxes

 

                  (18,463

)

 

 

                    (8,308

)

 

 

                  (34,056

)

 

 

                  (13,602

)

Income tax provision

 

                         660

 

 

 

                         225

 

 

 

                         624

 

 

 

                         546

 

Net loss

 $

               (19,123

)

 

 $

                 (8,533

)

 

 $

               (34,680

)

 

 $

               (14,148

)

Net loss attributable to redeemable non-controlling interest

 

                         509

 

 

 

                         197

 

 

 

                         897

 

 

 

                         197

 

Net loss attributable to New Relic

 $

               (18,614

)

 

 $

                 (8,336

)

 

 $

               (33,783

)

 

 $

               (13,951

)

Net loss attributable to New Relic per share, basic and diluted

 $

                   (0.32

)

 

 $

                   (0.15

)

 

 $

                   (0.58

)

 

 $

                   (0.25

)

Weighted-average shares used to compute net loss per share, basic and diluted

 

                    58,372

 

 

 

                    56,706

 

 

 

                    58,161

 

 

 

                    56,446

 

 
Condensed Consolidated Balance Sheets
(In thousands, except par value; unaudited)
   
 

September 30,

 

March 31,

 

2019

 

2019

Assets   
Current assets:   
Cash and cash equivalents

 $

                   242,407

 

 

 $

                   234,356

 

Short-term investments

 

 529,068

 

 

 

 510,372

 

Accounts receivable, net of allowance for doubtful accounts of $2,153 and $2,457, respectively

 

 76,954

 

 

 

 120,605

 

Prepaid expenses and other current assets

 

 17,029

 

 

 

 21,838

 

Deferred contract acquisition costs

 

 29,331

 

 

 

 27,161

 

Total current assets

 

 894,789

 

 

 

 914,332

 

Property and equipment, net

 

 100,742

 

 

 

 80,742

 

Restricted cash

 

 5,658

 

 

 

 8,805

 

Goodwill

 

 41,512

 

 

 

 41,512

 

Intangible assets, net

 

 12,975

 

 

 

 13,855

 

Deferred contract acquisition costs, non-current

 

 26,349

 

 

 

 26,218

 

Lease right-of-use assets

 

 61,766

 

  —
Other assets, non-current

 

 6,580

 

 

 

 4,763

 

Total assets

 $

                1,150,371

 

 

 $

                1,090,227

 

Liabilities, redeemable non-controlling interest, and stockholders’ equity   
Current liabilities:   
Accounts payable

 $

                     19,502

 

 

 $

                     10,249

 

Accrued compensation and benefits

 

 22,805

 

 

 

 23,537

 

Other current liabilities

 

 14,057

 

 

 

 14,572

 

Deferred revenue

 

 233,176

 

 

 

 267,000

 

Lease liabilities

 

 7,780

 

  —
Total current liabilities

 

 297,320

 

 

 

 315,358

 

Convertible senior notes, net

 

 416,341

 

 

 

 405,937

 

Lease liabilties, non-current

 

 61,513

 

  —
Deferred rent, non-current — 

 

 11,025

 

Deferred revenue, non-current

 

 39

 

 

 

 4,597

 

Other liabilities, non-current

 

 1,184

 

 

 

 947

 

Total liabilities

 

 776,397

 

 

 

 737,864

 

Redeemable non-controlling interest

 

 2,814

 

 

 

 2,733

 

Stockholders’ equity:   
Common stock, $0.001 par value

 

 59

 

 

 

 58

 

Treasury stock - at cost (260 shares)

 

 (263

)

 

 

 (263

)

Additional paid-in capital

 

 708,761

 

 

 

 654,759

 

Accumulated other comprehensive income

 

 1,955

 

 

 

 645

 

Accumulated deficit

 

 (339,352

)

 

 

 (305,569

)

Total stockholders’ equity

 

 371,160

 

 

 

 349,630

 

Total liabilities, redeemable non-controlling interest, and stockholders’ equity

 $

                1,150,371

 

 

 $

                1,090,227

 

 
Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited) 
   
 

Six Months Ended September 30,

 

2019

 

2018

Cash flows from operating activities:   
Net loss attributable to New Relic:

 $

                 (33,783

)

 

 $

                 (13,951

)

Net loss attributable to redeemable non-controlling interest

 

                         (897

)

 

 

                         (197

)

Net loss:

 $

                 (34,680

)

 

 $

                 (14,148

)

Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation and amortization

 

 37,268

 

 

 

 24,823

 

Stock-based compensation expense

 

 44,546

 

 

 

 24,860

 

Amortization of debt discount and issuance costs

 

 10,404

 

 

 

 7,292

 

Gain on lease modification

 

 (3,006

)

  —
Other

 

 (1,465

)

 

 

 588

 

Changes in operating assets and liabilities:   
Accounts receivable, net

 

 43,651

 

 

 

 23,345

 

Prepaid expenses and other assets

 

368

 

 

 

724

Deferred contract acquisition costs

 

 (18,038

)

 

 

 (17,415

)

Lease right-of-use assets

 

 17,512

 

  —
Accounts payable

 

 3,208

 

 

 

 1,960

 

Accrued compensation and benefits and other liabilities

 

 275

 

 

 

 4,570

 

Lease liabilities

 

 (16,157

)

  —
Deferred revenue

 

 (38,382

)

 

 

 639

 

Deferred rent — 

 

 976

 

Net cash provided by operating activities

 

 45,504

 

 

 

 58,214

 

Cash flows from investing activities:   
Purchases of property and equipment

 

 (31,570

)

 

 

 (14,255

)

Purchases of short-term investments

 

 (263,321

)

 

 

 (496,229

)

Proceeds from sale and maturity of short-term investments

 

 247,379

 

 

 

 76,683

 

Capitalized software development costs

 

 (3,053

)

 

 

 (3,062

)

Net cash used in investing activities

 

 (50,565

)

 

 

 (436,863

)

Cash flows from financing activities:   
Investment from redeemable non-controlling interest

 

 978

 

 

 

 3,596

 

Proceeds from issuance of convertible senior notes, net of issuance costs
 — 

 

 488,669

 

Purchase of capped call related to convertible senior notes — 

 

 (63,182

)

Proceeds from employee stock purchase plan

 

 5,933

 

 

 

 4,887

 

Proceeds from exercise of employee stock options

 

 3,054

 

 

 

 8,998

 

Net cash provided by financing activities

 

 9,965

 

 

 

 442,968

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 4,904

 

 

 

 64,319

 

Cash, cash equivalents and restricted cash at beginning of period

 

 243,161

 

 

 

 140,681

 

Cash, cash equivalents and restricted cash at end of period

 $

                 248,065

 

 

 $

                 205,000

 

 
Reconciliation from GAAP to Non-GAAP Results
(In thousands, except per share data; unaudited)
       
 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Reconciliation of gross profit and gross margin:   
GAAP gross profit

 $

               120,666

 

 

 $

                 96,449

 

 

 $

               238,063

 

 

 $

               187,620

 

Plus: Stock-based compensation expense

 

1,300

 

 

 

                         895

 

 

 

2,522

 

 

 

                      1,588

 

Plus: Lease exit costs and accelerated depreciation expense

 

73

 

  — 

 

73

 

  —
Plus: Amortization of purchased intangibles

 

440

 

 

 

                         197

 

 

 

880

 

 

 

                         394

 

Plus: Amortization of stock-based compensation capitalized in software development costs

 

                         227

 

 

 

                         174

 

 

 

                         434

 

 

 

                         363

 

Plus: Employer payroll tax on employee equity incentive plans

 

49

 

 

 

                           87

 

 

 

153

 

 

 

                         184

 

Non-GAAP gross profit

 $

               122,755

 

 

 $

                 97,802

 

 

 $

               242,125

 

 

 $

               190,149

 

GAAP gross margin

 

83

%

 

 

84

%

 

 

83

%

 

 

84

%

Non-GAAP adjustments

 

1

%

 

 

1

%

 

 

1

%

 

 

1

%

Non-GAAP gross margin

 

84

%

 

 

85

%

 

 

84

%

 

 

85

%

Reconciliation of operating expenses:       
GAAP research and development

 $

                 34,132

 

 

 $

                 23,962

 

 

 $

                 68,471

 

 

 $

                 46,565

 

Less: Stock-based compensation expense

 

(7,434

)

 

 

                    (3,858

)

 

 

(14,462

)

 

 

                    (7,121

)

Less: Lease exit costs and accelerated depreciation expense

 

(326

)

  — 

 

(326

)

  —
Less: Employer payroll tax on employee equity incentive plans

 

                       (153

)

 

 

                       (269

)

 

 

                       (521

)

 

 

                       (617

)

Non-GAAP research and development

 $

                 26,219

 

 

 $

                 19,835

 

 

 $

                 53,162

 

 

 $

                 38,827

 

GAAP sales and marketing

 $

                 80,157

 

 

 $

                 61,142

 

 

 $

               157,007

 

 

 $

               118,630

 

Less: Stock-based compensation expense

 

(10,533

)

 

 

                    (6,028

)

 

 

(19,592

)

 

 

                  (10,818

)

Less: Lease exit costs and accelerated depreciation expense

 

(2,240

)

  — 

 

(2,240

)

  —
Less: Employer payroll tax on employee equity incentive plans

 

                       (123

)

 

 

                       (209

)

 

 

                       (438

)

 

 

                       (561

)

Non-GAAP sales and marketing

 $

                 67,261

 

 

 $

                 54,905

 

 

 $

               134,737

 

 

 $

               107,251

 

GAAP general and administrative

 $

                 23,278

 

 

 $

                 16,880

 

 

 $

                 46,378

 

 

 $

                 31,591

 

Less: Stock-based compensation expense

 

                    (4,091

)

 

 

(3,052

)

 

 

                    (7,970

)

 

 

(5,333

)

Less: Lease exit costs and accelerated depreciation expense

 

(1,002

)

  — 

 

(1,002

)

  —
Less: Transaction costs related to acquisition — 

 

(330

)

  — 

 

(330

)

Less: Lawsuit litigation cost and other expense  —  — 

 

(1,521

)

  —
Less: Employer payroll tax on employee equity incentive plans

 

                         (61

)

 

 

                         (95

)

 

 

                       (192

)

 

 

                       (233

)

Non-GAAP general and administrative

 $

                 18,124

 

 

 $

                 13,403

 

 

 $

                 35,693

 

 

 $

                 25,695

 

Reconciliation of income (loss) from operations and operating margin:       
GAAP loss from operations

 $

               (16,901

)

 

 $

                 (5,535

)

 

 $

               (33,793

)

 

 $

                 (9,166

)

Plus: Stock-based compensation expense

 

23,358

 

 

 

                    13,833

 

 

 

44,546

 

 

 

                    24,860

 

Plus: Lease exit costs and accelerated depreciation expense

 

3,641

 

  — 

 

3,641

 

  —
Plus: Amortization of purchased intangibles

 

                         440

 

 

 

                         197

 

 

 

                         880

 

 

 

                         394

 

Plus: Transaction costs related to acquisition — 

 

                         330

 

  — 

 

                         330

 

Plus: Amortization of stock-based compensation capitalized in software development costs

 

                         227

 

 

 

                         174

 

 

 

                         434

 

 

 

                         363

 

Plus: Lawsuit litigation cost and other expense —  — 

 

                      1,521

 

  —
Plus: Employer payroll tax on employee equity incentive plans

 

                         386

 

 

 

                         660

 

 

 

                      1,304

 

 

 

                      1,595

 

Non-GAAP income from operations

 $

                 11,151

 

 

 $

                   9,659

 

 

 $

                 18,533

 

 

 $

                 18,376

 

GAAP operating margin

 

-12

%

 

 

-5

%

 

 

-12

%

 

 

-4

%

Non-GAAP adjustments

 

20

%

 

 

13

%

 

 

18

%

 

 

12

%

Non-GAAP operating margin

 

8

%

 

 

8

%

 

 

6

%

 

 

8

%

Reconciliation of net income (loss):       
GAAP net loss attributable to New Relic

 $

               (18,614

)

 

 $

                 (8,336

)

 

 $

               (33,783

)

 

 $

               (13,951

)

Plus: Stock-based compensation expense

 

                    23,358

 

 

 

                    13,833

 

 

 

                    44,546

 

 

 

                    24,860

 

Plus: Lease exit costs and accelerated depreciation expense

 

                      3,641

 

  — 

 

                      3,641

 

  —
Plus: Amortization of purchased intangibles

 

                         440

 

 

 

                         197

 

 

 

                         880

 

 

 

                         394

 

Plus: Transaction costs related to acquisition — 

 

                         330

 

  — 

 

                         330

 

Plus: Amortization of stock-based compensation capitalized in software development costs

 

                         227

 

 

 

                         174

 

 

 

                         434

 

 

 

                         363

 

Plus: Lawsuit litigation cost and other expense —  — 

 

                      1,521

 

  —
Plus: Employer payroll tax on employee equity incentive plans

 

                         386

 

 

 

                         660

 

 

 

                      1,304

 

 

 

                      1,595

 

Plus: Amortization of debt discount and issuance costs

 

                      5,239

 

 

 

                      4,952

 

 

 

                    10,404

 

 

 

                      7,292

 

Less: Gain on lease modification —  — 

 

                    (3,006

)

  —
Non-GAAP net income attributable to New Relic

 $

                 14,677

 

 

 $

                 11,810

 

 

 $

                 25,941

 

 

 $

                 20,883

 

Non-GAAP net income attributable to New Relic per share:       
Basic

 $

                     0.25

 

 

 $

                     0.21

 

 

 $

                     0.45

 

 

 $

                     0.37

 

Diluted

 $

                     0.24

 

 

 $

                     0.20

 

 

 $

                     0.43

 

 

 $

                     0.35

 

Shares used in non-GAAP per share calculations:       
Basic

 

                    58,372

 

 

 

                    56,706

 

 

 

                    58,161

 

 

 

                    56,446

 

Diluted

 

                    60,174

 

 

 

                    59,848

 

 

 

                    60,246

 

 

 

                    59,639

 

Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flows
(In thousands; unaudited)
    
 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Net cash provided by operating activities

 $

                8,988

 

 

 $

               7,830

 

 

 $

            45,504

 

 

 $

            58,214

 

Capital expenditures

 

(15,336

)

 

 

(7,215

)

 

 

(31,570

)

 

 

(14,255

)

Capitalized software development costs

 

(1,670

)

 

 

(1,212

)

 

 

(3,053

)

 

 

(3,062

)

Free cash flows (Non-GAAP)

 $

              (8,018

)

 

 $

                 (597

)

 

 $

            10,881

 

 

 $

            40,897

 

Net cash used in investing activities

 $

              (5,176

)

 

 $

          (377,594

)

 

 $

          (50,565

)

 

 $

        (436,863

)

Net cash provided by financing activities

 $

                7,694

 

 

 $

             11,687

 

 

 $

              9,965

 

 

 $

          442,968

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191105006139/en/

CONTACT: Investor

Tony Righetti

New Relic, Inc.

503-336-9280

IR@newrelic.comMedia

Andrew Schmitt

New Relic, Inc.

415-869-7109

pr@newrelic.com

KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: DATA MANAGEMENT TECHNOLOGY OTHER TECHNOLOGY MOBILE/WIRELESS SOFTWARE NETWORKS

SOURCE: New Relic Corporate Communications

Copyright Business Wire 2019.

PUB: 11/05/2019 04:05 PM/DISC: 11/05/2019 04:05 PM

http://www.businesswire.com/news/home/20191105006139/en