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Box Financial Analyst Days21.q4cdn.com/328470014/files/doc_presentations/... · 2 Analyst Day...
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September 30, 2015
Box Financial Analyst Day
2
Analyst Day Agenda
Company Overview & BoxWorks Recap
‒ Aaron Levie, co-founder and CEO
Competitive Dynamics
‒ Aaron Levie, co-founder and CEO
‒ Jeetu Patel, SVP of Platform and CSO
Q&A with Aaron and Jeetu
Box for Industries Panel
‒ Moderator: Karen Appleton, SVP Industries
‒ Jeetu Patel, SVP of Platform and CSO
‒ Missy Krasner, Managing Director, Healthcare & Life Sciences
‒ Sonny Hashmi, Managing Director, Government
‒ Adam Ross, Managing Director, Financial Services
Financial Model
‒ Dylan Smith, co-founder and CFO
Q&A
‒ Executive team
11:30-12:05
12:05-12:15
12:30-1:15
1:15- 2:00
2:00- 2:30
12:15-12:30
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• This presentation contains forward-looking statements relating to our future performance that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the third quarter and full fiscal year 2016 and beyond, our expectations regarding expansion of sales to existing customers, sales to new customers, future expenses, our ability to achieve positive free cash flow, profitability, expected gross and operating margins, future pricing of our products and services, the availability and success of future products, services and product features, and the benefits that we may realize from our partnerships with third-parties.
• Our actual results may differ materially from the forward-looking statements included in this presentation for a variety of reasons, including, but not limited to: adverse changes in general economic or market conditions; delays or reductions in information technology spending; factors related to our intensely competitive market, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our current or future competitors; the development of the cloud-based Enterprise Collaboration and Content Management market; risks associated with our ability to manage our rapid growth effectively; our limited operating history, which makes it difficult to predict future results; the risk that our customers do not renew their subscriptions or expand their use of our services; our ability to provide successful enhancements, new features and modifications to our services; and actual or perceived security vulnerabilities in our services or any breaches of our security controls; our ability to realize the anticipated benefits from our partnerships with third-parties. Further information on these and other factors that could affect the forward-looking statements we make in this presentation can be found in the documents that we file with or furnish to the US Securities and Exchange Commission, including our most recent Quarterly Report on Form 10-Q for the quarter ended July 31, 2015.
• You should not rely on any forward-looking statements, and we assume no obligation, nor do we intend, to update these statements after the date this presentation is first given. All information in this presentation is as of September 30, 2015.
• This presentation contains non-GAAP financial measures relating to the company's performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the appendix at the end of this presentation. Except as otherwise noted, all financial measures are presented on a non-GAAP basis.
• All growth rates represent year-over-year comparisons, except as otherwise noted.
Investor Disclosure: Forward-Looking Statements and Non-GAAP Financial Measures
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Company OverviewAaron Levie, co-founder and CEO
5
We’re building the next generation
enterprise content management and
collaboration platform
6
7
CRM
HCM
Content
ERP
IT Services
8
40MM+ Users
50K+Customers
52%Fortune 500
9
10
Over the past year we’ve advanced our
leadership position even further
11
Advanced Enterprise & Security Capabil i t ies
Box Governance
& Compliance IRMBox Enterprise
Key Management
12
13
14
NonprofitsRetail Healthcare Media EducationFinance
Government Engineering &
ConstructionLife Sciences
Box for Industries
15
We’re just getting started
16
Our mission is to transform the way that
people and organizations work
17
Everything about the way we work is changing
18
Box sits at the center of this new way to work
19
BoxWorks News
Reimagining how you
work in the cloud
Transforming your business
with the Box Platform
20
Experience
rich, interactive
content on Box
Connect mobile
content to business
workflows
Work on your
files seamlessly
in leading apps
21
22
23
24
25
26
27
28
29
30
• Capture photos, videos, contextual data
• Automatically trigger workflows
• Secure and compliant
• Built on Box mobile SDKs
31
32
BoxWorks News
Reimagining how you
work in the cloud
Transforming your business
with the Box Platform
33
Box launched its first open API in 2006
34
6BThird party API calls
per month
1600Apps in our
marketplace
50KDevelopers
35
But we’re thinking
much bigger
36
Companies in every industry are
reinventing themselves through the
strategic use of technology
37
Education Publisher Teachers & Students
Financial Advisory Firm Private Wealth Clients
Hospital Patients
Retailer Customers & Suppliers
Consulting Firm Clients
38
To build digital experiences, enterprises need
new platforms
39
Powering content services for your apps
Content Experience
Preview
Comments & Tasks
Sharing
Content Management
Storage Infrastructure
Document Services
Permissioning
Content Security
Encryption Services
Compliance &
Certifications
IRM
40
We’re building the platform to help our customers go digital
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Content Management
Content Experience
Content Security
App User Your userYour app
42
Managed Users
43
Managed UsersApp Users
44
This fundamentally changes our business model
45
ENTERPRISE25 Users
50 GB Storage
50 GB Bandwidth
DEVELOPER
FREE
100 Users
250 GB Storage
250 GB Bandwidth$500 per month
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For Customers
Key Benefits of Box Platform
For Partners For Box
1. Create. Secure. Engage
2. Focus on Core Competency
3. Strategic to CIO & LOB
1. Services Revenue
2. Distribution
3. Brand
1. Stickiness
2. Larger TAM
3. Strategic to CIO & LOB
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Large and Growing Addressable Market
Project Mgmt
Collaboration
Cloud Storage
Content Mgmt
Project Mgmt
Collaboration
Cloud Storage
Content Mgmt
Source: IDC: Worldwide Project and Portfolio Management Forecast 2015-2019. Worldwide Content Management Software Forecast, 2015-2019. Worldwide Storage for Public and Private Cloud 2014-2019 Forecast. Worldwide Collaborative Applications Forecast, 2015-2019.
$42B
$32B
2015 2018
33
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Competitive DynamicsAaron Levie, co-founder and CEOJeetu Patel, SVP of Platform and CSO
50
The Market has Evolved
• Online business spinoff, questionable future
• Divested Syncplicity, questionable future in ECM
• Enterprise infancy and haven’t proven success
• Integrating with & partnering with Box
• Exited EFSS market, global Box partnership
• Integrating with & partnering with Box
51
Box Has Evolved & Thrived…
• Leader and “Most Strategic provider” in ECM
• Leader again in EFSS
• Strategic partnership and integrations with
Microsoft
• Global partnership with IBM
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…And Leads The Pack
EFSS ECM
53
Box and Microsoft are Strategic Partners
54
Cloud Productivity SuiteCloud Content Platform
Box and Microsoft
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Basic
Enablement
Basic Sync &
ShareSecure
FTP
Client Contract
Management
More Use Cases, Replacing More Infrastructure
File Shares
& Personal
Drives
Virtual Deal
Room
RecordsMgmt
Replace Corporate Business
Processes
Advanced Use
Cases
HR,
Finance
Automation
Custom
Mobile
Apps
Developer Platform
SOX
Compliance
EFSS ECM Platform
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Basic
Enablement
Basic Sync &
ShareSecure
FTP
Client Contract
Management
More Use Cases, Replacing More Infrastructure
Virtual Deal
Room
RecordsMgmt
Replace
HR,
Finance
Automation
File Shares
& Personal
Drives
Corporate Business
Processes
Advanced Use
Cases
Custom
Mobile
Apps
SOX
Compliance
EFSS ECM Platform
Developer Platform
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Basic
Enablement
Basic Sync &
ShareSecure
FTP
Client Contract
Management
More Use Cases, Replacing More Infrastructure
Virtual Deal
Room
RecordsMgmt
Replace
HR,
Finance
Automation
File Shares
& Personal
Drives
Corporate Business
Processes
Custom
Mobile
Apps
SOX
Compliance
Advanced Use
Cases
EFSS ECM Platform
Developer Platform
58
Basic
Enablement
Basic Sync &
ShareSecure
FTP
HR,
Finance
Automation
Client Contract
Management
More Use Cases, Replacing More Infrastructure
Virtual Deal
Room
RecordsMgmt
Replace
File Shares
& Personal
Drives
Corporate Business
Processes
Custom
Mobile
Apps
SOX
Compliance
Advanced Use
Cases
EFSS ECM Platform
Developer Platform
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Q&A With Aaron &
Jeetu
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Box for Industries PanelModerator: Karen Appleton, SVP Industries
Jeetu Patel, SVP of Platform and CSOMissy Krasner, Managing Director, Healthcare & Life SciencesSonny Hashmi, Managing Director, GovernmentAdam Ross, Managing Director, Financial Services
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Enabling customers to build tailored industry solutions on top
of our platform
Leveraging the platform to build an ecosystem of content
centric industry-specific 3rd party applications
Platform + Box Industries
62
Targeted industries grew 21% faster than the rest of Box
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Targeted industries grew 21% faster than the rest of Box
Top
Industries
Healthcare &
Life Sciences
Financial
Services
Retail, CPG
& Hospitality
Professional
ServicesGovernment
Media &
Entertainment
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Healthcare & Life Sciences
Uses Box to collaborate on
cancer research, eliminating
need for USB drives/FTP
sites
Uses Box to securely
communicate with CROs and
other contracted vendor
Uses Box to enhance sales
productivity and increase
mobility for 15,000 sales reps
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Financial Services
Rapid adoption of Box due to
intuitive interface and user
security settings
Built a cloud-based loan
process service on Box
platform reducing loan
approval time
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Government
DOJ uses Box to
simplify collaboration between
59 component agencies
Argonne uses Box to
collaborate securely on
research leading to lower
operating costs
DSA uses Box real-time from
any device for coordination
between offices, the field and
clients
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Financial ModelDylan Smith, co-founder and CFO
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Driving Growth
Compelling Customer Economics
Achieving Positive Free Cash Flow
Q&A
1
2
3
4
Topics We’ll Cover
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Driving Growth
Achieving Positive Free Cash Flow
Q&A
1
3
4
Compelling Customer Economics2
Topics We’ll Cover
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Strong Top Line GrowthRare Combination of 40%+ Growth and ~$300M Scale
$59
$124
$216
$97
$139
FY2013 FY2014 FY2015 1HFY15 1HFY16
Revenue ($M)
$86
$174
$246
$99
$149
FY2013 FY2014 FY2015 1HFY15 1HFY16
Billings ($M)
Note: Billings is a non-GAAP measure and is determined by adding the change in deferred revenue to GAAP revenue recognized during the quarter.
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Growth Catalysts
Grow paid user base via new and existing customers
Accelerate Box Platform business model
Drive adoption of EKM, Governance and future products
Leverage growing channel partnerships
Grow international presence and expand distribution
72
Predictable Revenue GrowthSticky Customers and Business Model Provide High Visibility
Quarterly subscription revenue under contract at
start of quarter
~95% ~96%Dollar-weighted
annualized retention
SHORT TERM VISIBILITY LONG TERM VISIBILITY
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Powerful Land and Expand DynamicNew and Existing Customers Drive Growth
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
Beginning ARR Churn Net Expansion Installed BaseARR
New CustomerARR
Total ARR
4% 25% ~60:40Ratio of net
expansion to
new customer
ARR
1. Note: "Existing Customers" = customers with $5k+ in annual contract value (ACV) 12 months ago. "Net Expansion" = net increase in ACV from customers who both
(a) had $5K+ in ACV12 months ago and (b) continue to be customers today.
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Significant Expansion Opportunity Ahead52% of Fortune 500 are Box Paying Customers
4%Seat Penetration
52%
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Core Content ServicesPriced per seat
Expanding Cross-Sell Product PortfolioMultiple Product Releases Planned Per Year
Price uplift of 20-30%
on top of core
Box
Governance
Bundled pricing for
select # of seats
Box
Platform
e.g. Workflow and
Threat Detection
Potential Future
Services
Price uplift of 20-30%
on top of core
Enterprise Key
Management
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$500 / month / app
• 100 application users
• 250 GB storage
• 250 GB bandwidth
FREE
• 25 application users
• 50 GB storage
• 50 GB bandwidth
New Box PlatformDramatically Expands Market Opportunity
Developer EnterpriseContent Management
Content Security
Content Experience
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Growing Reseller Partner Ecosystem
+
Additional Channel Partners Extend Global Sales Reach
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Expanding InternationallyLeveraging Coverage within Existing Sales Footprint
• Grow existing presence in UK, Japan, Australia and other regions
• 25% of all reps are international and gaining tenure
• Leverage IBM global professional services team and IBM international data centers for localization
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Driving Growth
Compelling Customer Economics
Achieving Positive Free Cash Flow
Q&A
1
3
4
2
Topics We’ll Cover
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Strong Retention Rate
Retention Rate(1)
Best-in-class
121% 25% 4%Net Expansion(2)
Remain above 20%
for foreseeable future
Full Churn
Product stickiness
improved over time
1. We calculate Retention Rate by dividing (a) the current annual contract value of customers who had $5K+ in annual contract value 12 months ago by (b) their annual contract
value 12 months ago.
2. "Net Expansion" = net increase in annual contract value from customers who both (a) had $5K+ in annual contract value 12 months ago and (b) continue to be customers
today.
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$5
$7
$9
$11
$13
Q315 Q415 Q116 Q216
Stable Price per SeatCross-Sell Features Provide Opportunities to Increase Price
Note: Price per Seat excludes Enterprise License Agreements, our IBM contract, and contracts with education customers through our partnership with I2.
Price per Seat
82
Strong Gross Margin ProfileBusiness Model Drives Future Leverage
78% 81% 80%76%
75-80%
FY2013 FY2014 FY2015 1HFY2016 Long TermTarget
Investment Areas:
• Data center expansion
• Building consulting capacity
• Double rent in FY16
Note: Gross Margin is presented on a non-GAAP basis.
83
Driving Sales and Marketing EfficiencyRevenue Growth Outpacing Spending Growth
Q2FY15
3%
• Strong business model traction drives leverage
• More tenured sales force drives sales productivity improvements
Q2FY16
67%
17%
53%
13%
7%
• Greater focus on paying customers drives down FUM
Improvement Drivers7%
S&M spend as % Revenue
Facilities and IT
Free User Marketing
People and Programs
Note: Sales and marketing expenses by type as a percentage
of revenue are presented on a non-GAAP basis.
84
With Further Improvement ExpectedInitiatives Underway to Deliver Continued Leverage
Q2FY15 Q2FY16
67%
17%
7%
53%
13%
7%
S&M spend as % Revenue
Facilities and IT
Free User Marketing
People and Programs
Driving Future Improvements
Note: Sales and marketing expenses by type as a percentage of revenue are presented on a non-GAAP basis.
85
With Further Improvement ExpectedInitiatives Underway to Deliver Continued Leverage
Q2FY15 Q2FY16
67%
17%
7%
53%
13%
7%
S&M spend as % Revenue
• Lower facilities expense post new HQ move
Facilities and IT
Free User Marketing
People and Programs
Driving Future Improvements
Note: Sales and marketing expenses by type as a percentage of revenue are presented on a non-GAAP basis.
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With Further Improvement ExpectedInitiatives Underway to Deliver Continued Leverage
Q2FY15 Q2FY16
67%
17%
7%
53%
13%
7%
• Continued leverage from user base
S&M spend as % Revenue
• Lower facilities expense post new HQ move
Facilities and IT
Free User Marketing
People and Programs
Driving Future Improvements
Note: Sales and marketing expenses by type as a percentage of revenue are presented on a non-GAAP basis.
87
Q2FY15 Q2FY16
67%
17%
7%
53%
13%
7%
Driving Future Improvements
• Continued sales productivity improvements
• New product SKUs increase ACV via more efficient expansion sale
• Maturity of channel relationships and self-service features drives lower touch sale
• Lower marketing spend as a % of revenue as we grow customer footprint and brand awareness grows
S&M spend as % Revenue
With Further Improvement ExpectedInitiatives Underway to Deliver Continued Leverage
• Continued leverage from user base
• Lower facilities expense post new HQ move
Facilities and IT
Free User Marketing
People and Programs
Note: Sales and marketing expenses by type as a percentage of revenue are presented on a non-GAAP basis.
88
Expand
Renew
$300M ARR
X
Land
Note: This slide is for illustrative purposes only and is not intended to represent Box's expectations regarding future ARR growth.
Revenue Less S&MSales and Marketing Expenses
Expand
Renew
Land
ARR:S&M ~ 3:2 ARR:S&M ~ 5:2
Inherent Business Model Leverage
Total ARR
Total ARR
$500M ARR
Growing Revenue from Existing Customers Drives Increasing Margin
89
Unit Margins 101Recoup Sales and Marketing Costs in 2 Years
New ARR $1.00
- Customer Acquisition Cost ($1.70)
- Cost to Serve ($0.25)
1-Year Unit Contribution Margin ($0.95)
Note: Customer Acquisition Cost is blended across sales to new customers and upsells to existing customers.
90
Unit Margins 101Significantly Shorter Payback Period for Future Sales
New ARR $1.00
- Customer Acquisition Cost ($1.70)
- Cost to Serve ($0.25)
1-Year Unit Contribution Margin ($0.95)
Annual Growth 20%
Annual Churn 4%
- Upsell Customer Acquisition Cost per $1 Upsell ARR ($1.00)
- Renewal Expenses per $1 Recurring Revenue ($0.05)
1-Year Unit Contribution Margin for Future Upsell ($0.05)
Note: Customer Acquisition Cost is blended across sales to new customers and upsells to existing customers.
91
New ARR Land SalesRevenue
CustomerAcquisition
Cost
Cost To Serve Land Sale UnitContribution
Margin
Expand SalesRevenue
CustomerAcquisition
Cost
Cost To Serve Total UnitContribution
Margin
$1 of New ARR Today Has Massive Future ReturnStrong Unit Economics Offset Cost of Acquisition
Upsell expansion10-Year Period
$1
$4
92
New ARR Land SalesRevenue
CustomerAcquisition
Cost
Cost To Serve Land Sale UnitContribution
Margin
Expand SalesRevenue
CustomerAcquisition
Cost
Cost To Serve Total UnitContribution
Margin
$1 of New ARR Today Has Massive Future ReturnLand and Expand Compounding Creates Significant Future Value
Upsell expansion10-Year Period
$9
$1
$4
93
New ARR Land SalesRevenue
CustomerAcquisition
Cost
Cost To Serve Land Sale UnitContribution
Margin
Expand SalesRevenue
CustomerAcquisition
Cost
Cost To Serve Total UnitContribution
Margin
New Products Create Opportunities for Faster GrowthNew Products Introduce an Efficient Expansion Vector
Cross-sell expansion10-Year Period
$9+
$1
$4
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Significant Embedded Value in Customer Base Existing Revenue Base Alone Delivers ~$2B in Value over 10 Years
$0M
$400M
$800M
$1,200M
$1,600M
$2,000M
0 1 2 3 4 5 6 7 8 9 10
Years
95
Driving Growth
Compelling Customer Economics
Achieving Positive Free Cash Flow
Q&A
1
3
4
2
Topics We’ll Cover
96
Sales & Marketing decreased 15 points
YoY due to increased leverage in our
sales model and focus on driving
efficiency in our marketing spend.
Steady Progress Toward Profitability
37%29% 23% 28%
20%
47%
34%
25% 22%27%
166%
134%
91%95%
76%
0%
50%
100%
150%
200%
FY2013 FY2014 FY 2015 1HFY15 1HFY16
Non-GAAP Operating Expenses(% of Revenue)
G&A R&D S&M
-172%
-117%
-59% -63%
-47%
FY2013 FY2014 FY2015 1H2015 1H2016
Non-GAAP Operating Margin(% of Revenue)
Driving Operating Leverage Across the Business
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Understanding Billings GrowthStrong Track Record of ~35-55% Normalized Growth Rate
Note: Normalized Year-Over-Year (YoY) Growth represents what the year-over-year billings growth rate would have been had the multi-year billing terms in our customer agreements in the period presented been weighted the same as the multi-year billing terms in the same period one year earlier.
32%
53%
33%
58%
45%
37%
54%
37%
53%
45%
Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16
Unadjusted YoY Growth
Normalized YoY Growth
Large deals and variable payment durations impact growth comparisons
98
Levers to Achieve Positive Free Cash Flow
• ARR continues to grow via land and expand, new partnerships, new add on features such as Box Platform, EKM and Governance
• Modest improvement to payment durations
• Non-GAAP operating loss has been steady as expenses are gaining leverage and mature customers require lower sales and marketing costs
• Cash flow from operations improving with tighter working capital management
• Fully funded to achieve positive free cash flow in the January 2017 quarter
Realizing Business Model Scale and Operational Efficiency
99
Trending Towards Positive Free Cash FlowOn Track for Quarter Ending January 2017
*Actual Operating Cash Flow excludes $25M in restricted cash set aside to secure a letter of credit for our Redwood City headquarters.
100
Long Term Targets
FY13 FY14 FY15 1HFY16 Long Term Targets
Gross
Margin78% 81% 80% 76% 75-80%
S&M as a %
of revenue166% 134% 91% 76% 35-40%
R&D as a %
of revenue47% 34% 25% 27% 13-15%
G&A as a %
of revenue37% 29% 23% 20% 7-9%
Operating
Margin(172%) (117%) (59%) (47%) 15-20%
Free Cash
Flow Margin(172%) (94%) (57%) (41%)* 20-25%
*Excludes $25M in restricted cash set aside to secure a letter of credit for our Redwood City headquarters.
Note: Gross Margin, S&M as % of revenue, R&D as % of revenue, G&A as % of revenue, Operating Margin, and Free Cash Flow Margin are non-GAAP measures.
101
We’re on our way to achieving positive free cash flow
in quarter ending January 2017 and delivering a sustainable cash-
generating business
102
Driving Growth
Compelling Customer Economics
Achieving Positive Free Cash Flow
Q&A
1
3
4
2
Topics We’ll Cover
103
Q&AAll
104
Appendix
105
GAAP to Non-GAAP Reconciliation – Billings
($ in thousands) FY2013 FY2014 FY2015 1HFY15 1HFY16
GAAP revenue $58,797 $124,192 $216,440 $96,753 $139,071
Deferred revenue, end of
period$40,099 $90,072 $120,057 $92,594 $130,349
Less: deferred revenue,
beginning of period($13,169) ($40,099) ($90,072) ($90,072) ($120,057)
Billings $85,727 $174,165 $246,425 $99,275 $149,363
106
GAAP to Non-GAAP Reconciliation – Gross Margin
($ in thousands) FY2013
As a %
of
revenue
FY2014
As a %
of
revenue
FY2015
As a %
of
revenue
1HFY16
As a %
of
revenue
GAAP gross margin $44,517 75.7% $98,218 79.1% $169,167 78.2% $101,282 72.8%
Add: stock-based
compensation$1,087 $450 $1,492 $1,892
Add: Intangible assets
amortization$- $1,813 $3,455 $2,579
Non-GAAP gross margin $45,604 77.6% $100,481 80.9% $174,114 80.4% $105,753 76.0%
107
GAAP to Non-GAAP Reconciliation – Operating Expenses
($ in thousands)1HFY15
As a % of
revenue1HFY16
As a % of
revenue
GAAP research and development $31,243 32% $49,587 36%
Less: stock-based compensation ($5,013) ($11,566)
Non-GAAP research and development $26,230 27% $38,021 27%
GAAP sales and marketing $97,097 100% $114,955 83%
Less: stock-based compensation ($5,184) ($9,025)
Non-GAAP sales and marketing $91,913 95% $105,930 76%
GAAP general and administrative $24,421 25% $33,147 24%
Less: stock-based compensation ($3,004) ($4,960)
Less: Intangible assets amortization ($85) ($78)
Less: Accruals related to a legal verdict $- ($978)
Non-GAAP general and administrative $21,332 22% $27,131 20%
108
GAAP to Non-GAAP Reconciliation – Operating Expenses (Cont’d)
($ in thousands)FY2013
As a % of
revenueFY2014
As a % of
revenueFY2015
As a % of
revenue
GAAP research and development $28,996 49% $45,967 37% $66,402 31%
Less: stock-based compensation ($1,211) ($3,154) ($11,767)
Non-GAAP research and development $27,785 47% $42,813 34% $54,635 25%
GAAP sales and marketing $99,221 169% $171,188 138% $207,749 96%
Less: stock-based compensation ($1,893) ($5,017) ($11,616)
Non-GAAP sales and marketing $97,328 166% $166,171 134% $196,133 91%
GAAP general and administrative $25,429 43% $39,843 32% $61,672 28%
Less: stock-based compensation ($3,345) ($3,128) ($7,054)
Less: Intangible assets amortization ($176) ($174) ($169)
Less: Accruals related to a legal verdict $- $- ($3,900)
Non-GAAP general and administrative $21,908 37% $36,541 29% $50,549 23%
109
GAAP to Non-GAAP Reconciliation – Sales and Marketing Expenses by Type
($ in thousands)
GAAP general
and
administrative
As a % of
revenue
Less: stock-
based
compensation
As a % of
revenue
Non-GAAP
general and
administrative
As a % of
revenue
Q2 FY15
Facilities and IT $3,701 7% $- -% $3,701 7%
Free User Marketing $8,863 17% ($260) -% $8,603 17%
People and Programs $37,093 72% ($2,859) (5%) $34,234 67%
Total $49,657 96% ($3,119) (5%) $46,538 91%
Q2 FY16
Facilities and IT $5,361 7% $- -% $5,361 7%
Free User Marketing $9,839 14% ($431) (1%) $9,408 13%
People and Programs $43,260 59% ($4,311) (6%) $38,949 53%
Total $58,460 80% ($4,742) (7%) $53,718 73%
110
GAAP to Non-GAAP Reconciliation – Operating Margin
($ in thousands)1HFY15
As a % of
revenue1HFY16
As a % of
revenue
GAAP operating margin ($76,069) (79%) ($96,407) (69%)
Less: stock-based compensation $13,831 $27,443
Less: Intangible assets amortization $1,496 $2,657
Less: Accruals related to a legal verdict $- $978
Non-GAAP operating margin ($60,742) (63%) ($65,329) (47%)
111
GAAP to Non-GAAP Reconciliation – Operating Margin (Cont’d)
($ in thousands)FY2013
As a % of
revenueFY2014
As a % of
revenueFY2015
As a % of
revenue
GAAP operating margin ($109,129) (186%) ($158,780) (128%) ($166,656) (77%)
Less: stock-based compensation $7,536 $11,749 $31,929
Less: Intangible assets amortization $176 $1,987 $3,624
Less: Accruals related to a legal verdict $- $- $3,900
Non-GAAP operating margin ($101,417) (172%) ($145,044) (117%) ($127,203) (59%)
112
GAAP to Non-GAAP Reconciliation – Free Cash Flow Margin
($ in thousands) FY2013
As a %
of
revenue
FY2014
As a %
of
revenue
FY2015
As a %
of
revenue
1HFY16
As a %
of
revenue
Net cash used in
operating activities($81,751) (139%) ($91,769) (74%) ($84,900) (39%) ($53,843) (39%)
Add: restricted cash used to guarantee a letter of credit for Redwood City HQ
$- $- $- $25,000
Less: purchases of property and equipment
($19,499) ($24,424) ($38,681) ($27,844)
Free cash flow ($101,250) (172%) ($116,193) (94%) ($123,581) (57%) ($56,687) (41%)