Market Newsdesk

May 4, 2023 4:45 pm

Teradata Reports First Quarter 2023 Financial Results

Teradata Reports First Quarter 2023 Financial Results

Public cloud ARR of $388 million, an increase of 86% as reported and 89% in constant currency from the prior year period⁽¹⁾
Total ARR of $1.506 billion, an increase of 6% as reported and 7% in constant currency from the prior year period⁽¹⁾
First quarter total revenue of $476 million, a decrease of 4% as reported and flat in constant currency⁽¹⁾
First quarter recurring revenue of $389 million, an increase of 1% as reported and 4% in constant currency from the prior year period⁽¹⁾
First quarter GAAP diluted earnings per share of $0.39
First quarter Non-GAAP diluted earnings per share of $0.61⁽²⁾
First quarter cash from operations of $109 million and free cash flow of $105 million⁽³⁾

SAN DIEGO–(BUSINESS WIRE)–
Teradata (NYSE: TDC) today announced its first quarter 2023 financial results.

“Teradata is off to a strong start in 2023 with sequential growth in total ARR, and we closed one of the largest deals in Teradata’s history…tangible proof points of our cloud-first strategy in action,” said Steve McMillan, President and CEO, Teradata. “Customers are expanding their cloud environments, underscoring the power of the Teradata platform, and driving demand for our differentiated analytics. We are excited for the year ahead and are on track to achieve all elements of our annual outlook.”

First Quarter 2023 Financial Highlights Compared to First Quarter 2022

Public cloud ARR increased to $388 million from $209 million, an increase of 86% as reported and 89% in constant currency⁽¹⁾
Total ARR increased to $1.506 billion from $1.427 billion, an increase of 6% as reported and 7% in constant currency⁽¹⁾
Total revenue was $476 million versus $496 million, a decrease of 4% as reported and flat in constant currency⁽¹⁾
Recurring revenue was $389 million versus $386 million, an increase of 1% as reported and 4% in constant currency⁽¹⁾
Recurring revenue was 82% of total revenue in the first quarter, up from 78% the prior year period
GAAP gross margin was 63.4% versus 60.7%
Non-GAAP gross margin was 64.3% versus 62.9%⁽²⁾
GAAP operating income was $79 million versus $68 million
Non-GAAP operating income was $108 million versus $115 million⁽²⁾
GAAP diluted EPS was $0.39 versus $0.33 per share
Non-GAAP diluted EPS was $0.61 versus $0.65⁽²⁾
Cash flow from operations was $109 million compared to $151 million
Free cash flow was $105 million compared to $150 million⁽³⁾

Outlook

For the second quarter of 2023:

GAAP diluted EPS is expected to be in the range of $0.14 to $0.18
Non-GAAP diluted EPS is expected to be in the range of $0.43 to $0.47⁽²⁾

For the full year 2023, Teradata re-affirms the following outlook elements:

Public cloud ARR is expected to increase in the range of 53% to 57% year-over-year
Total ARR is expected to increase in the range of 6% to 8% year-over-year
Recurring revenue is expected to increase in the range of 4% to 7% year-over-year
Total revenue is expected to increase in the range of 1% to 4% year-over-year
Free cash flow is expected to be in the range of $320 million to $360 million⁽³⁾

Teradata updates the following outlook for full year 2023:

GAAP diluted EPS is narrowed to be in the range of $0.65 to $0.77 versus the range of $0.63 to $0.79 previously provided
Non-GAAP diluted EPS is narrowed to be in the range of $1.92 to $2.04 versus the range of $1.90 to $2.06 previously provided⁽²⁾
Cash flow from operations is now expected to be in the range $340 million to $380 million versus the range of $345 million to $385 million previously provided

Earnings Conference Call

A conference call is scheduled for today at 2:00 p.m. PT to discuss the Company’s first quarter 2023 results and provide a business and financial update. Access to the conference call, as well as a replay of the conference call, is available on Teradata’s website at investor.teradata.com.

Supplemental Financial Information

Additional information regarding Teradata’s operating results is provided below as well as on Teradata’s website at investor.teradata.com.

The impact of currency is determined by calculating the prior-period results using the current-year monthly average currency rates. See the foreign currency fluctuation schedule, which is used to determine revenue on a constant currency (“CC”) basis, on the Investor Relations page of the Company’s website at investor.teradata.com.

Revenue
(in millions)
	For the Three Months ended March 31
		2023		2022	% Change as Reported		% Change in CC
Recurring revenue	$	389	$	386	1	%	4	%
Perpetual software licenses, hardware and other		13		26	(50	%)	(43	%)
Consulting services		74		84	(12	%)	(5	%)
Total revenue	$	476	$	496	(4	%)	0	%

Americas	$	292	$	290	1	%	2	%
EMEA		117		129	(9	%)	(1	%)
APJ		67		77	(13	%)	(5	%)
Total revenue	$	476	$	496	(4	%)	0	%


	As of March 31
		2023		2022	% Change as Reported		% Change in CC
Annual recurring revenue*	$	1,506	$	1,427	6	%	7	%
Public cloud ARR**	$	388	$	209	86	%	89	%

*	Total annual recurring revenue (“ARR”) is defined as the annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights, and maintenance. Total ARR does not include managed services and third-party software. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.

**	Public cloud ARR is defined as the annual value at a point in time of all contracts related to public cloud implementations of Teradata VantageCloud and does not include ARR related to private or managed cloud implementations. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.

2.	Teradata reports its results in accordance with GAAP. However, as described below, the Company believes that certain non-GAAP measures such as free cash flow, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and non-GAAP diluted earnings per share, all of which exclude certain items, and which may be reported on a constant currency basis, are useful for investors. Our non-GAAP measures are not meant to be considered in isolation to, as substitutes for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Each of our non-GAAP measures do not have a uniform definition under GAAP and therefore, Teradata’s definition may differ from other companies’ definitions of these measures.

	The following tables reconcile Teradata’s actual and projected results and EPS under GAAP to the Company’s actual and projected non-GAAP results and EPS for the periods presented, which exclude certain specified items. Our management internally uses supplemental non-GAAP financial measures, such as gross profit, operating income, net income, and EPS, excluding certain items, to understand, manage and evaluate our business and support operating decisions on a regular basis. The Company believes such non-GAAP financial measures (1) provide useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations, (2) are useful for period-over-period comparisons of such operations and results, that may be more easily compared to peer companies and allow investors a view of the Company’s operating results excluding stock-based compensation expense and special items, (3) provide useful information to management and investors regarding present and future business trends, and (4) provide consistency and comparability with past reports and projections of future results.

	For the Three Months
(in millions, except per share data)	ended March 31
Gross Profit:		2023			2022		% Chg.
GAAP Gross Profit	$	302		$	301
% of Revenue		63.4	%		60.7	%

Excluding:
Stock-based compensation expense		4			5
Reorganization and transformation cost		–			6
Non-GAAP Gross Profit	$	306		$	312		-2	%
% of Revenue		64.3	%		62.9	%
Operating Income
GAAP Operating Income	$	79		$	68
% of Revenue		16.6	%		13.7	%

Excluding:
Stock-based compensation expense		28			31
Reorganization and transformation cost		1			16
Non-GAAP Operating Income	$	108		$	115		-6	%
% of Revenue		22.7	%		23.2	%

Net Income
GAAP Net Income	$	40		$	36
% of Revenue		8.4	%		7.3	%

Excluding:
Stock-based compensation expense		28			31
Reorganization and transformation cost		1			16
Income tax adjustments⁽ⁱ⁾		(6	)		(12	)
Non-GAAP Net Income	$	63		$	71		-11	%
% of Revenue		13.2	%		14.3	%

	For the Three Months ended March 31		2023 Outlook
Earnings Per Share:	2023	2022	Q2	FY
GAAP Earnings Per Share	$0.39	$0.33	$0.14 – $0.18	$0.65 – $0.77
Excluding:
Stock-based compensation expense	0.27	0.28	0.33	1.30
Reorganization and transformation cost	0.01	0.15	0.01	0.20
Income tax adjustments⁽ⁱ⁾	(0.06)	(0.11)	(0.05)	(0.23)
Non-GAAP Diluted Earnings Per Share	$0.61	$0.65	$0.43 – $0.47	$1.92 – $2.04

i.	Represents the income tax effect of the pre-tax adjustments to reconcile GAAP to Non-GAAP income based on the applicable jurisdictional statutory tax rate of the underlying item. Including the income tax effect assists investors in understanding the tax provision associated with those adjustments and the effective tax rate related to the underlying business and performance of the Company’s ongoing operations. As a result of these adjustments, the Company’s non-GAAP effective tax rate for the three months ended March 31, 2023 was 27.6% and March 31, 2022 was 30.4%.


3.	As described below, the Company believes that free cash flow is a useful non-GAAP measure for investors. Free cash flow does not have a uniform definition under GAAP in the United States and therefore, Teradata’s definition may differ from other companies’ definitions of this measure. Teradata defines free cash flow as cash provided by/used in operating activities, less capital expenditures for property and equipment and additions to capitalized software. Teradata’s management uses free cash flow to assess the financial performance of the Company and believes it is useful for investors because it relates the operating cash flow of the Company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures which can be used for among other things, investments in the Company’s existing businesses, strategic acquisitions, strengthening the Company’s balance sheet, repurchase of Company stock and repay the Company’s debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other non-discretionary expenditures that are not deducted from the measure. This non-GAAP measure should not be considered as a substitute for, or superior to, cash flows from operating activities under GAAP.

(in millions)	For the Three Months
	ended March 31						Outlook
		2023			2022		2023

Cash provided by operating activities (GAAP)	$	109		$	151		$340 to $380
Less total capital expenditures		(4	)		(1	)	(~20)
Free Cash Flow (non-GAAP measure)	$	105		$	150		$320 to $360

Note to Investors

This release contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements generally relate to opinions, beliefs, and projections of expected future financial and operating performance, business trends, liquidity, and market conditions, among other things. These forward-looking statements are based upon current expectations and assumptions and often can be identified by words such as “expect,” “strive,” “looking ahead,” “outlook,” “guidance,” “forecast,” “anticipate,” “continue,” “plan,” “estimate,” “believe,” “will,” “would,” “likely,” “intend,” “potential,” or similar expressions. Forward-looking statements in this release include our 2023 second quarter and full year financial guidance. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, including those relating to: the global economic environment and business conditions in general, including inflation and/or recessionary conditions, the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers; the rapidly changing and intensely competitive nature of the information technology industry and the data analytics business; fluctuations in our operating, capital allocation, and cash flow results; our ability to execute and realize the anticipated benefits of our business transformation program or other restructuring and cost saving initiatives; risks inherent in operating in foreign countries, including sanctions, foreign currency fluctuations, and/or acts of war; risks associated with the ongoing and uncertain impact of the COVID-19 pandemic on our business, financial condition and operating results and on our customers and suppliers; risks associated with data privacy, cyberattacks and maintaining secure and effective products for our customers, as well as, internal information technology and control systems; the timely and successful development, production or acquisition, availability and/or market acceptance of new and existing products, product features and services; tax rates; turnover of our workforce and the ability to attract and retain skilled employees; protecting our intellectual property; availability and successful execution of new alliance and acquisition opportunities; subscription arrangements that may be cancelled or fail to be renewed; the impact on our business and financial reporting from changes in accounting rules; and other factors described from time to time in Teradata’s filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K, and subsequent quarterly reports on Forms 10-Q or current reports on Forms 8-K, as well as Teradata’s annual report to stockholders. Teradata does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Teradata

Teradata is the connected multi-cloud data platform for enterprise analytics company. Our enterprise analytics solve business challenges from start to scale. Only Teradata gives you the flexibility to handle the massive and mixed data workloads of the future, today. Learn more at Teradata.com.

The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the U.S. and worldwide.

				Schedule A

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts – unaudited)

	For the Period Ended March 31
	Three Months
		2023			2022		% Chg
Revenue

Recurring	$	389		$	386		1	%
Perpetual software licenses, hardware and other		13			26		(50	%)
Consulting services		74			84		(12	%)
Total revenue		476			496		(4	%)

Gross profit

Recurring		291			281
% of Revenue		74.8	%		72.8	%
Perpetual software licenses, hardware and other		2			8
% of Revenue		15.4	%		30.8	%
Consulting services		9			12
% of Revenue		12.2	%		14.3	%

Total gross profit		302			301
% of Revenue		63.4	%		60.7	%

Selling, general and administrative expenses		153			157
Research and development expenses		70			76

Income from operations		79			68
% of Revenue		16.6	%		13.7	%

Other expense, net		(21	)		(13	)

Income before income taxes		58			55
% of Revenue		12.2	%		11.1	%

Income tax expense		18			19
% Tax rate		31.0	%		34.5	%

Net income	$	40		$	36
% of Revenue		8.4	%		7.3	%

Net income per common share
Basic	$	0.39		$	0.34
Diluted	$	0.39		$	0.33

Weighted average common shares outstanding
Basic		101.4			105.0
Diluted		103.8			108.6

							Schedule B

TERADATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions – unaudited)


	March 31,			December 31,				March 31,
		2023			2022				2022
Assets

Current assets
Cash and cash equivalents	$	551		$	569			$	404
Accounts receivable, net		341			364				330
Inventories		7			8				16
Other current assets		107			87				113
Total current assets		1,006			1,028				863

Property and equipment, net		252			244				274
Right of use assets – operating lease, net		11			13				22
Goodwill		391			390				395
Capitalized contract costs, net		84			92				109
Deferred income taxes		204			213				200
Other assets		38			42				32
Total assets	$	1,986		$	2,022			$	1,895

Liabilities and stockholders’ equity

Current liabilities
Current portion of long-term debt	$	–		$	–			$	75
Current portion of finance lease liability		70			67				76
Current portion of operating lease liability		8			8				11
Accounts payable		92			94				78
Payroll and benefits liabilities		95			137				91
Deferred revenue		634			589				580
Other current liabilities		100			112				82
Total current liabilities		999			1,007				993

Long-term debt		498			498				324
Finance lease liability		62			54				56
Operating lease liability		8			10				15
Pension and other postemployment plan liabilities		96			101				133
Long-term deferred revenue		4			8				19
Deferred tax liabilities		7			7				16
Other liabilities		82			79				102
Total liabilities		1,756			1,764				1,658

Stockholders’ equity
Common stock		1			1				1
Paid-in capital		1,962			1,941				1,792
Accumulated deficit		(1,613	)		(1,565	)			(1,425	)
Accumulated other comprehensive loss		(120	)		(119	)			(131	)

Total stockholders’ equity		230			258				237

Total liabilities and stockholders’ equity	$	1,986		$	2,022			$	1,895

				Schedule C

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions – unaudited)

	For the Period Ended March 31
	Three Months
		2023				2022
Operating activities
Net (loss) income	$	40			$	36

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		28				40
Stock-based compensation expense		28				31
Deferred income taxes		7				8
Changes in assets and liabilities:
Receivables		23				6
Inventories		1				10
Current payables and accrued expenses		(41	)			(49	)
Deferred revenue		41				20
Other assets and liabilities		(18	)			49

Net cash provided by operating activities		109				151

Investing activities
Expenditures for property and equipment		(4	)			(1	)
Additions to capitalized software		–				–
Other investing activities		–				–

Net cash used in investing activities		(4	)			(1	)

Financing activities
Repurchases of common stock		(84	)			(300	)
Proceeds from long-term borrowings		–				–
Repayments of long-term borrowings		–				(13	)
Payments of finance leases		(20	)			(22	)
Other financing activities, net		(7	)			4

Net cash used in financing activities		(111	)			(331	)

Effect of exchange rate changes on cash and cash equivalents		(10	)			(6	)

Increase (decrease) in cash, cash equivalents and restricted cash		(16	)			(187	)
Cash, cash equivalents and restricted cash at beginning of period		571				595

Cash, cash equivalents and restricted cash at end of period	$	555			$	408

Supplemental cash flow disclosure:
Non-cash investing and financing activities:
Assets acquired by finance leases	$	30			$	24
Assets acquired by operating leases	$	1			$	1



							Schedule D

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions – unaudited)

	For the Three Months Ended March 31
		2023			2022		% Change As Reported		% Change Constant Currency⁽²⁾
Segment Revenue

Americas	$	292		$	290		1	%	2	%
EMEA		117			129		(9	%)	(1	%)
APJ		67			77		(13	%)	(5	%)

Total segment revenue		476			496		(4	%)	0	%

Segment gross profit

Americas		193			189
% of Revenue		66.1	%		65.2	%
EMEA		74			78
% of Revenue		63.2	%		60.5	%
APJ		39			45
% of Revenue		58.2	%		58.4	%

Total segment gross profit		306			312
% of Revenue		64.3	%		62.9	%

Reconciling items⁽¹⁾		(4	)		(11	)

Total gross profit	$	302		$	301
% of Revenue		63.4	%		60.7	%


⁽¹⁾Reconciling items include stock-based compensation, amortization of acquisition-related intangible assets and acquisition, integration and reorganization-related items.
⁽²⁾The impact of currency is determined by calculating the prior period results using the current-year monthly average currency rates.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230502006266/en/

INVESTOR CONTACT

Christopher T. Lee

858-485-2523 office

[email protected]

MEDIA CONTACT

Jennifer Donahue

858-485-3029 office

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Software Networks Data Analytics Internet Data Management Professional Services Technology Other Technology

MEDIA:

May 4, 2023 4:45 pm

Cohu Reports First Quarter 2023Results

Cohu Reports First Quarter 2023Results

Gross margin of 48.1%; non-GAAP gross margin of 48.2%
Received large order for SiC device test automation & inspection equipment
Expanding Philippines factory to support interface business growth plans

POWAY, Calif.–(BUSINESS WIRE)–
Cohu, Inc. (NASDAQ: COHU), a global leader in semiconductor equipment and services, today reported fiscal 2023 first quarter net sales of $179.4 million and GAAP income of $15.7 million or $0.33 per share. Cohu also reported first quarter 2023 non-GAAP income of $26.9 million or $0.56 per share.


GAAP Results
(in millions, except per share amounts)		Q1 FY 2023	Q4 FY 2022	Q1 FY 2022

	Net sales	$179.4	$191.1	$197.8

	Net income	$15.7	$21.6	$21.6
	Net income per share	$0.33	$0.45	$0.44



Non-GAAP Results
(in millions, except per share amounts)		Q1 FY 2023	Q4 FY 2022	Q1 FY 2022

	Net income	$26.9	$33.5	$32.6
	Net income per share	$0.56	$0.70	$0.66

Total cash and investments at the end of first quarter 2023 were $324.3 million and, after making a $35 million prepayment, our Term Loan B principal amount was $32.0 million. Cohu repurchased 99,682 shares of its common stock in the first quarter for an aggregate amount of approximately $3.5 million.

“First quarter profitability reflects our focus on continuing improvements in operational performance and a recurring business that delivered $334 million revenue over the last 12 months,” said Cohu President and CEO Luis Müller. “Going forward, we are aligning investments with major trends in industrial automation, autonomous vehicles, increased processing and sensing power. We are expanding our factory footprint in the Philippines to support future growth in recurring business; building a new business in software to optimize industrial productivity; developing new products to support compound semiconductor manufacturing; and actively targeting test and inspection design-wins in upstream processes at wafer- and die-level. These actions are in support of Cohu’s strategy to expand served addressable markets and deliver long-term growth.”

Cohu expects second quarter 2023 sales to be between $161 million and $173 million.

Conference Call Information:

The Company will host a live conference call and webcast with slides to discuss first quarter 2023 results at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time on May 4, 2023. Interested parties may listen live via webcast on Cohu’s investor relations website at https://edge.media-server.com/mmc/p/f6cmpbex. To participate via telephone and join the call live, please register in advance at https://register.vevent.com/register/BI3667d1974b4b4694bd1bcef574d60195 to receive the dial-in number along with a unique PIN number that can be used to access the call.

About Cohu:

Cohu (NASDAQ: COHU) is a global technology leader supplying test, automation, inspection and metrology products and services to the semiconductor industry. Cohu’s differentiated and broad product portfolio enables optimized yield and productivity, accelerating customers’ manufacturing time-to-market. Additional information can be found at www.cohu.com.

Use of Non-GAAP Financial Information:

Included within this press release and accompanying materials are non-GAAP financial measures, including non-GAAP Gross Margin/Profit, Income and Income (adjusted earnings) per share, Operating Income, Operating Expense, effective tax rate, free cash flow and Adjusted EBITDA that supplement the Company’s Condensed Consolidated Statements of Operations prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company’s actual results prepared under GAAP to exclude charges and the related income tax effect for: share-based compensation, the amortization of purchased intangible assets, manufacturing transition and severance costs, acquisition-related costs and associated professional fees, restructuring costs, inventory step-up, depreciation of purchase accounting adjustments to property, plant and equipment, employer payroll taxes related to accelerated vesting share-based awards, amortization of cloud-based software implementation costs (Adjusted EBITDA only) and loss on extinguishment of debt (Adjusted EBITDA only). Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Condensed Consolidated Statements of Operations. With respect to any forward-looking non-GAAP figures, we are unable to provide without unreasonable efforts, at this time, a GAAP to non-GAAP reconciliation of any forward-looking figures due to their inherent uncertainty.

These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company’s management believes that this information can assist investors in evaluating the Company’s operational trends, financial performance, and cash generating capacity. Management uses non-GAAP measures for a variety of reasons, including to make operational decisions, to determine executive compensation in part, to forecast future operational results, and for comparison to our annual operating plan. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.

Forward Looking Statements:

Certain statements contained in this release and accompanying materials may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding continuing improvements in operational performance; aligning investments with major trends in industrial automation, autonomous vehicles, increased processing and sensing power; expanding our factory footprint in the Philippines; future growth in recurring; building a new business in software to optimize industrial productivity; developing new products to support compound semiconductor (SiC) manufacturing; targeting test and inspection design-wins in upstream processes at wafer- and die-level; other design wins; NY32W and cGator opportunities; strategy to expand served addressable markets and deliver long-term growth; growth into adjacent areas; resiliency of recurring business; expanding our software business including DI-Core; estimated test cell utilization; Cohu’s FY2023 outlook; % of incremental revenue expected to fall to operating income; Cohu’s second quarter 2023 sales forecast, guidance, sales mix, non-GAAP operating expenses, gross margin, operating income, adjusted EBITDA, effective tax rate, free cash flow, cap ex, cash and/or shares outstanding; estimated minimum cash needed; estimated EBITDA breakeven point; Cohu’s Mid-Term Financial Targets; any future Term Loan B principal reduction; the amount, timing or manner of any share repurchases; and any other statements that are predictive in nature and depend upon or refer to future events or conditions; and/or include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend;” and/or other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Any third-party industry analyst forecasts quoted are for reference only and Cohu does not adopt or affirm any such forecasts.

Actual results and future business conditions could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: cyclical COVID-19 pandemic impacts; new product investments and product enhancements which may not be commercially successful; inability to effectively manage multiple manufacturing sites in Asia and secure reliable and cost-effective raw materials; failure of sole source contract manufacturer; ongoing inflationary pressures on material and operational costs coupled with rising interest rates; economic recession; instability of financial institutions where we maintain cash deposits and potential loss of uninsured cash deposits; the semiconductor industry is seasonal, cyclical, volatile and unpredictable; the semiconductor equipment industry is intensely competitive; rapid technological changes and product introductions and transitions; a limited number of customers account for a substantial percentage of net sales; significant exports to foreign countries with economic and political instability and competition from a number of Asia-based manufacturers; loss of key personnel; reliance on foreign locations and geopolitical instability in such locations critical to Cohu and its customers; natural disasters, war and climate-related changes; increasingly restrictive trade and export regulations impacting our ability to sell products, specifically within China; significant goodwill and other intangibles as percentage of our total assets; risks associated with the MCT acquisition, such as integration and synergies, and other risks associated with additional potential acquisitions, investments and divestitures; levels of debt; financial or operating results that are below forecast or credit rating changes impacting our stock price or financing ability; law/regulatory and including tax law changes; significant volatility in our stock price; and the risk of cybersecurity breaches.

These and other risks and uncertainties are discussed more fully in Cohu’s filings with the SEC, including our most recent Form 10-K and Form 10-Q, and the other filings made by Cohu with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Except as required by applicable law, Cohu does not undertake any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

For press releases and other information of interest to investors, please visit Cohu’s website at www.cohu.com.

COHU, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)

		Three Months Ended ⁽¹⁾
		April 1,			March 26,
		2023⁽²⁾			2022

Net sales		$	179,371		$	197,757
Cost and expenses:
	Cost of sales (excluding amortization)		93,153			106,601
	Research and development		22,510			23,106
	Selling, general and administrative		34,189			31,246
	Amortization of purchased intangible assets		8,754			8,535
	Restructuring charges		888			576
			159,494			170,064
Income from operations			19,877			27,693
Other (expense) income:
	Interest expense		(1,128	)		(981	)
	Interest income		2,718			111
	Foreign transaction gain (loss)		(440	)		1,144
	Loss on extinguishment of debt		(369	)		(104	)
Income from operations before taxes			20,658			27,863
Income tax provision			4,973			6,294
Net income		$	15,685		$	21,569

	Income per share:
	Basic:	$	0.33		$	0.44
	Diluted:	$	0.33		$	0.44

	Weighted average shares used in
	computing income per share:
	Basic		47,343			48,778
	Diluted		48,171			49,569

(1)		The three- month periods ended April 1, 2023 and March 26, 2022 were both comprised of 13 weeks.
(2)		On January 30, 2023 the Company completed the acquisition of MCT Worldwide, LLC (“MCT”) and the results of its operations have been included since that date.

COHU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
			April 1,		December 31,
			2023		2022
Assets:
Current assets:
	Cash and investments⁽¹⁾		$	324,295	$	385,576
	Accounts receivable			176,257		176,148
	Inventories			176,189		170,141
	Other current assets			32,755		32,986
		Total current assets		709,496		764,851
Property, plant & equipment, net				67,208		65,011
Goodwill				223,552		213,539
Intangible assets, net				143,946		140,104
Operating lease right of use assets				21,718		22,804
Other assets				21,679		21,105
		Total assets	$	1,187,599	$	1,227,414

Liabilities & Stockholders’ Equity:
Current liabilities:
	Short-term borrowings		$	1,883	$	1,907
	Current installments of long-term debt			4,538		4,404
	Deferred profit			5,738		8,022
	Other current liabilities			132,869		146,539
		Total current liabilities		145,028		160,872
Long-term debt				37,719		72,664
Non-current operating lease liabilities				18,017		19,209
Other noncurrent liabilities				48,056		45,828
Cohu stockholders’ equity				938,779		928,841
		Total liabilities & stockholders’ equity	$	1,187,599	$	1,227,414

(1)

The decrease in cash and investments was driven by cash used to acquire MCT and prepay amounts outstanding on the Term Loan B during the quarter ended April 1, 2023.

COHU, INC.
Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share amounts)
			Three Months Ended
			April 1,			December 31,			March 26,
			2023			2022			2022
Income from operations – GAAP basis (a)			$	19,877		$	27,243		$	27,693
Non-GAAP adjustments:
	Share-based compensation included in (b):
		Cost of sales (COS)		180			168			145
		Research and development (R&D)		866			767			752
		Selling, general and administrative (SG&A)		2,868			2,888			2,525
				3,914			3,823			3,422
	Amortization of purchased intangible assets (c)			8,754			8,103			8,535
	Restructuring charges related to inventory adjustments in COS (d)			(28	)		(35	)		(175	)
	Restructuring charges (d)			888			5			576
	Manufacturing and sales transition costs included in (e):
		COS		18			(13	)		–
		R&D		–			(7	)		–
		SG&A		253			1,723			–
				271			1,703			–
	Inventory step-up included in COS (f)			124			–			–
	Acquisition costs included in SG&A (g)			385			72			–
	Depreciation of PP&E Step-up included in SG&A (h)			9			–			–
	Payroll taxes related to accelerated vesting of share-based
		awards included in SG&A (i)		–			–			132
Income from operations – non-GAAP basis (j)			$	34,194		$	40,914		$	40,183

Net income – GAAP basis			$	15,685		$	21,628		$	21,569
	Non-GAAP adjustments (as scheduled above)			14,317			13,671			12,490
	Tax effect of non-GAAP adjustments (k)			(3,057	)		(1,761	)		(1,483	)
Net income – non-GAAP basis			$	26,945		$	33,538		$	32,576

GAAP net income per share – diluted			$	0.33		$	0.45		$	0.44

Non-GAAP net income per share – diluted (l)			$	0.56		$	0.70		$	0.66

Management believes the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company’s operating performance. Our management uses these non-GAAP financial measures in assessing the Company’s operating results, as well as when planning, forecasting and analyzing future periods and these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. Management views share-based compensation as an expense that is unrelated to the Company’s operational performance as it does not require cash payments and can vary in amount from period to period and the elimination of amortization charges provides better comparability of pre- and post-acquisition operating results and to results of businesses utilizing internally developed intangible assets. Management initiated certain restructuring activities including employee headcount reductions and other organizational changes to align our business strategies in light of the merger with Xcerra and the acquisition of MCT. Restructuring costs have been excluded because such expense is not used by Management to assess the core profitability of Cohu’s business operations. Acquisition costs have been excluded by management as they are unrelated to the core operating activities of the Company and the frequency and variability in the nature of the charges can vary significantly from period to period. Employer payroll taxes related to accelerated severance stock-based compensation are dependent on the Company’s stock price and the timing and size of the vesting of their restricted stock, over which management has limited to no control, and as such management does not believe it correlates to the company’s operation of the business. Excluding this data provides investors with a basis to compare Cohu’s performance against the performance of other companies without this variability. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

(a)		11.1%, 14.3% and 14.0% of net sales, respectively.
(b)		To eliminate compensation expense for employee stock options, stock units and our employee stock purchase plan.
(c)		To eliminate the amortization of acquired intangible assets.
(d)		To eliminate restructuring costs incurred related to the integration of MCT and Xcerra.
(e)		To eliminate the manufacturing transition and severance costs.
(f)		To eliminate amortization of inventory step up charges related to MCT acquisition.
(g)		To eliminate professional fees and other direct incremental expenses incurred related to acquisitions.
(h)		To eliminate depreciation of PP&E step up charges related to MCT acquisition.
(i)		To eliminate the impact of employer payroll taxes associated with the acceleration of Pascal Rondé share-based awards under the terms of his separation agreement.
(j)		19.1%, 21.4% and 20.3% of net sales, respectively.
(k)		To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates.
(l)		All periods presented were computed using the number of GAAP diluted shares outstanding.

COHU, INC.
Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited)
(in thousands)
				Three Months Ended
				April 1,			December 31,			March 26,
				2023			2022			2022

Gross Profit Reconciliation
	Gross profit – GAAP basis (excluding amortization)⁽¹⁾			$	86,218		$	93,151		$	91,156
			Non-GAAP adjustments to cost of sales (as scheduled above)		294			120			(30	)
	Gross profit – Non-GAAP basis			$	86,512		$	93,271		$	91,126

	As a percentage of net sales:
			GAAP gross profit		48.1	%		48.7	%		46.1	%
			Non-GAAP gross profit		48.2	%		48.8	%		46.1	%

Adjusted EBITDA Reconciliation
	Net income – GAAP Basis			$	15,685		$	21,628		$	21,569
			Income tax provision		4,973			4,483			6,294
			Interest expense		1,128			1,249			981
			Interest income		(2,718	)		(2,461	)		(111	)
			Amortization of purchased intangible assets		8,754			8,103			8,535
			Depreciation		3,337			3,268			3,132
			Amortization of cloud-based software implementation costs⁽²⁾		700			626			478
			Loss on extinguishment of debt		369			–			104
			Other non-GAAP adjustments (as scheduled above)		5,554			5,568			3,955
	Adjusted EBITDA			$	37,782		$	42,464		$	44,937

	As a percentage of net sales:
			Net income – GAAP Basis		8.7	%		11.3	%		10.9	%
			Adjusted EBITDA		21.1	%		22.2	%		22.7	%

Operating Expense Reconciliation
	Operating Expense – GAAP basis			$	66,341		$	65,908		$	63,463
			Non-GAAP adjustments to operating expenses (as scheduled above)		(14,023	)		(13,551	)		(12,520	)
	Operating Expenses – Non-GAAP basis			$	52,318		$	52,357		$	50,943

(1		)	Excludes amortization of $6,891, $6,350 and $6,696 for the three months ending April 01, 2023, December 31, 2022 and March 26, 2022, respectively.
(2		)	Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within SG&A.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005385/en/

Cohu, Inc.

Jeffrey D. Jones – Investor Relations

858-848-8106

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Technology Semiconductor

MEDIA:

Logo

May 4, 2023 4:44 pm

Onto Innovation Reports 2023 First Quarter Results

Onto Innovation Reports 2023 First Quarter Results

WILMINGTON, Mass.–(BUSINESS WIRE)–
Onto Innovation Inc. (NYSE: ONTO) (“Onto Innovation,” “Onto,” or the “Company”) today announced financial results for the first fiscal quarter of 2023.

2023 First Quarter Financial Highlights

Total revenue of $199 million.
GAAP operating income and GAAP net income of $29 million.
Non-GAAP operating income of $49 million and non-GAAP net income of $45 million.
GAAP diluted earnings per share of $0.59 and non-GAAP^{diluted earnings per share of $0.92.}
Cash generated from operations is $50 million, representing 25% of revenue.

First Quarter Business Highlights

A top three semiconductor manufacturer finalized a volume purchase agreement in excess of $90 million for deliveries in 2023 for Onto’s process control portfolio.
Iris^™ thin film metrology systems were delivered to 13 customers in the first quarter, expanding the number of customers and end-markets evaluating and/or purchasing these systems.
A total of 18 power customers placed first-time orders for new tools that spanned the entire power portfolio, which now includes: Atlas^® OCD metrology; Iris^™ thin film metrology; Echo^™ thick metal film metrology; IVS^™ overlay metrology; Element^™ epitaxial metrology; Dragonfly^® macro inspection; and Discover^® software.
Two new customers selected our Dragonfly system for wafer inspection and our JetStep^® 3500 stepper for substrate lithography to begin production of fan-out wafer level packaging (FOWLP).

Michael Plisinski, chief executive officer of Onto Innovation, commented, “Customer investment in advanced logic products remained strong in the quarter, with over 90% of our revenue tied to nodes from 5nm down to 2nm. Our successes in qualifications for advanced packaging lines and adding new power device customers sets the foundation for our anticipated growth as we move beyond these uncertain market conditions.”

He continued, “After extraordinary growth in 2022, we are now able to focus on strategic supply chain initiatives and other operational programs that were affected during our manufacturing ramping. During the first quarter, we reduced SG&A expenses while targeting and increasing specific product R&D programs that we believe will move our results toward our long-term operating model.”

Onto Innovation Inc.
Key Quarterly Financial Data
(In thousands, except per share amounts)

US GAAP
	April 1, 2023			December 31, 2022			April 2, 2022
Revenue	$	199,165		$	253,270		$	241,350
Gross profit margin		53	%		54	%		54	%
Operating income	$	29,035		$	61,212		$	58,744
Net income	$	29,068		$	66,214		$	53,330
Net income per diluted share	$	0.59		$	1.34		$	1.07

US NON-GAAP
	April 1, 2023			December 31, 2022			April 2, 2022
Revenue	$	199,165		$	253,270		$	241,350
Gross profit margin		54	%		54	%		54	%
Operating income	$	48,895		$	76,082		$	74,264
Net income	$	45,047		$	77,544		$	65,628
Net income per diluted share	$	0.92		$	1.57		$	1.31

Outlook

For the second fiscal quarter ending July 1, 2023, the Company is providing the following guidance:

Revenue is expected to be $203 million plus or minus 4%.
GAAP diluted earnings per share is expected to be in the range of $0.47 to $0.61.
Non-GAAP diluted earnings per share is expected to be in the range of $0.75 to $0.90.

Webcast & Conference Call Details

Onto Innovation will host a conference call at 4:30 p.m. Eastern Time today, May 4, 2023, to discuss its first quarter 2023 financial results and other matters in greater detail. To participate in the call, please dial (888) 394-8218 or International: +1 (646) 828-8193 and reference conference ID 1186059 at least five (5) minutes prior to the scheduled start time. A live webcast will also be available at www.ontoinnovation.com.

To listen to the live webcast, please go to the website at least fifteen (15) minutes early to register, download and install any necessary audio software. There will be a replay of the conference call available for one year on the Company’s website at www.ontoinnovation.com.

Discussion of Non-GAAP Financial Measures

The Company has provided in this release non-GAAP financial measures, including non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP operating margin, which exclude amortization of acquisition-related intangible assets, certain acquisition-related expenses and benefits, litigation expenses and restructuring costs. Non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP operating margin can also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. More specifically, management adjusts for the excluded items for the following reasons:

Amortization of purchased intangibleassets: we do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to the purchased intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of purchased intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.

Merger or acquisition related expenses and benefits: we incur expenses or benefits with respect to certain items associated with our mergers and acquisitions, such as transaction and integration costs, change in control payments, adjustments to the fair value of assets, etc. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business.

Restructuring charges: we incur restructuring and impairment charges on individual or groups of employed assets, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.

Significant litigation charges or benefits and legal costs: we may incur charges or benefits as well as legal costs in connection with litigation and other contingencies unrelated to our core operations. We exclude these charges or benefits, when significant, as well as legal costs associated with significant legal matters, because we do not believe they are reflective of on-going business and operating results.

Income tax expense: we estimate the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes. We also adjust for items for which the nature and/or tax jurisdiction requires the application of a specific tax rate or treatment.

From time to time in the future, there may be other items excluded if we believe that doing so is consistent with the goal of providing useful information to investors and management.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) which include, but are not limited to, statements regarding Onto Innovation’s business momentum and future growth; the benefit to customers and capabilities of Onto Innovation’s products and customer service; Onto Innovation’s ability to both deliver products and services consistent with our customers’ demands and expectations and strengthen its market position; Onto Innovation’s expectations regarding the semiconductor market outlook; Onto Innovation’s future quarterly and annual financial outlook; as well as other matters that are not purely historical data. Onto Innovation wishes to take advantage of the “safe harbor” provided for by the Act and cautions that actual results may differ materially from those projected as a result of various factors, including risks and uncertainties, many of which are beyond Onto Innovation’s control. Such factors include, but are not limited to, the Company’s ability to leverage its resources to improve its position in its core markets; its ability to weather difficult economic environments; its ability to open new market opportunities and target high-margin markets; the strength/weakness of the back-end and/or front-end semiconductor market segments; fluctuations in customer capital spending; the Company’s ability to effectively manage its supply chain and adequately source components from suppliers to meet customer demand; the effects of political, economic, legal, and regulatory changes or conflicts on the Company’s global operations; its ability to adequately protect its intellectual property rights and maintain data security; the effects of natural disasters or public health emergencies, such as the current COVID-19 pandemic, on the global economy and on the Company’s customers, suppliers, employees, and business; its ability to effectively maneuver global trade issues and changes in trade and export regulations and license policies; the Company’s ability to maintain relationships with its customers and manage appropriate levels of inventory to meet customer demands; and the Company’s ability to successfully integrate acquired businesses and technologies. Additional information and considerations regarding the risks faced by Onto Innovation are available in Onto Innovation’s Form 10-K report for the year ended December 31, 2022, and other filings with the Securities and Exchange Commission. As the forward-looking statements are based on Onto Innovation’s current expectations, the Company cannot guarantee any related future results, levels of activity, performance, or achievements. Onto Innovation does not assume any obligation to update the forward-looking information contained in this press release, except as required by law.

About Onto Innovation

Onto Innovation is a leader in process control, combining global scale with an expanded portfolio of leading-edge technologies that include: Un-patterned wafer quality; 3D metrology spanning chip features from nanometer scale transistors to large die interconnects; macro defect inspection of wafers and packages; elemental layer composition; overlay metrology; factory analytics; and lithography for advanced semiconductor packaging. Our breadth of offerings across the entire semiconductor value chain combined with our connected thinking approach results in a unique perspective to help solve our customers’ most difficult yield, device performance, quality, and reliability issues. Onto Innovation strives to optimize customers’ critical path of progress by making them smarter, faster and more efficient. With headquarters and manufacturing in the U.S., Onto Innovation supports customers with a worldwide sales and service organization. Additional information can be found at www.ontoinnovation.com.

Source: Onto Innovation Inc.

ONTO-I

(Financial tables follow)

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) – (Unaudited)

April 1, 2023

December 31, 2022

ASSETS

Current assets

Cash, cash equivalents and marketable securities

$

583,518

$

547,784

Accounts receivable, net

209,624

241,395

Inventories

338,358

324,282

Prepaid and other assets

23,596

21,411

Total current assets

1,155,096

1,134,872

Net property, plant and equipment

97,624

91,980

Goodwill and intangibles, net

524,184

538,008

Other assets

25,940

30,003

Total assets

$

1,802,844

$

1,794,863

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable and accrued liabilities

$

91,504

$

103,362

Other current liabilities

56,914

57,196

Total current liabilities

148,418

160,558

Other non-current liabilities

29,801

37,879

Total liabilities

178,219

198,437

Stockholders’ equity

1,624,625

1,596,426

Total liabilities and stockholders’ equity

$

1,802,844

$

1,794,863

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) – (Unaudited)

Three Months Ended

April 1, 2023

April 2, 2022

Revenue

$

199,165

$

241,350

Cost of revenue

94,190

110,327

Gross profit

104,975

131,023

Operating expenses:

Research and development

27,242

26,341

Sales and marketing

15,637

15,632

General and administrative

19,237

16,487

Amortization

13,824

13,819

Total operating expenses

75,940

72,279

Operating income

29,035

58,744

Interest income, net

3,448

377

Other expense, net

(281

)

(204

)

Income before income taxes

32,202

58,917

Provision for income taxes

3,134

5,587

Net income

$

29,068

$

53,330

Earnings per share:

Basic

$

0.60

$

1.08

Diluted

$

0.59

$

1.07

Weighted average shares outstanding:

Basic

48,788

49,437

Diluted

49,109

49,915

ONTO INNOVATION INC.

NON-GAAP FINANCIAL SUMMARY

(In thousands, except percentage and per share amounts) – (Unaudited)

Three Months Ended

April 1, 2023

April 2, 2022

Revenue

$

199,165

$

241,350

Gross profit

$

107,294

$

131,018

Gross margin as percentage of revenue

54

%

54

%

Operating expenses

$

58,399

$

56,754

Operating income

$

48,895

$

74,264

Operating margin as a percentage of revenue

25

%

31

%

Net income

$

45,047

$

65,628

Net income per diluted share

$

0.92

$

1.31

RECONCILIATION OF GAAP GROSS PROFIT,

OPERATING EXPENSES AND OPERATING INCOME TO NON-GAAP

GROSS PROFIT, OPERATING EXPENSES AND OPERATING INCOME

(In thousands, except percentages) – (Unaudited)

Three Months Ended

April 1, 2023

April 2, 2022

U.S. GAAP gross profit

$

104,975

$

131,023

Pre-tax non-GAAP items:

Merger and acquisition related expenses

40

(5

)

Restructuring expenses

2,279

—

Non-GAAP gross profit

$

107,294

$

131,018

U.S. GAAP gross margin as a percentage ofrevenue

53

%

54

%

Non-GAAP gross margin as a percentage of revenue

54

%

54

%

U.S. GAAP operating expenses

$

75,940

$

72,279

Pre-tax non-GAAP items:

Merger and acquisition related expenses

1,008

657

Restructuring expenses

2,034

—

Litigation expenses

675

1,049

Amortization of intangibles

13,824

13,819

Non-GAAP operating expenses

58,399

56,754

Non-GAAP operating income

$

48,895

$

74,264

GAAP operating margin as a percentage of revenue

15

%

24

%

Non-GAAP operating margin as a percentage of revenue

25

%

31

%

ONTO INNOVATION INC.

RECONCILIATION OF GAAP NET INCOME TO

NON-GAAP NET INCOME

(In thousands, except share and per share data) – (Unaudited)

Three Months Ended

April 1, 2023

April 2, 2022

U.S. GAAP net income

$

29,068

$

53,330

Pre-tax non-GAAP items:

Merger and acquisition related expenses

1,048

652

Restructuring expenses

4,313

—

Litigation expenses

675

1,049

Amortization of intangibles

13,824

13,819

Net tax provision adjustments

(3,881

)

(3,222)

Non-GAAP net income

$

45,047

$

65,628

Non-GAAP net income per diluted share

$

0.92

$

1.31

ONTO INNOVATION INC

SUPPLEMENTAL INFORMATION – RECONCILIATION OF SECOND QUARTER 2023

GAAP TO NON-GAAP GUIDANCE

Low

High

Estimated GAAP net income per diluted share

$

0.47

$

0.61

Estimated non-GAAP items:

Amortization of intangibles

0.28

0.28

Merger and acquisition related expenses

0.01

0.01

Litigation expenses

0.02

0.02

Restructuring expenses

0.04

0.04

Net tax provision adjustments

(0.07

)

(0.06

)

Estimated non-GAAP net income per diluted share $
0.75

$

0.90

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005830/en/

Michael Sheaffer

+1.978.253.6273

[email protected]

KEYWORDS: Massachusetts United States North America

INDUSTRY KEYWORDS: Technology Hardware Semiconductor Other Technology

MEDIA:

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Posted on May 4, 2023 4:44 pm
Demand for Yelp’s Advertising Products Drove Strong First Quarter 2023 Results

Demand for Yelp’s Advertising Products Drove Strong First Quarter 2023 Results

First quarter Net Revenue increased by 13% year over year to a record $312 million

Net Loss remained relatively consistent year over year at ($1) million

Adjusted EBITDA increased by 12% year over year to $54 million

SAN FRANCISCO–(BUSINESS WIRE)–
Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the first quarter ended March 31, 2023 in the Q1 2023 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

“Yelp’s strong results mark the sixth straight quarter of record net revenue driven by our product-led strategy,” said Jeremy Stoppelman, Yelp co-founder and chief executive officer. “We continued to generate robust advertiser demand, particularly in home services, which saw revenue growth of approximately 25% year over year. I’m excited about the progress we’ve made on our roadmap for the year, launching more than a dozen new product updates to make it even easier for consumers to discover and connect with great local businesses. We remain focused on executing against our strategic initiatives and are confident in our ability to deliver profitable growth over the long term.”

“Demand for our broad-based local advertising platform drove a 13% year-over-year increase in first quarter net revenue as we continued to deliver value to advertisers and match them with our high-intent audience,” said David Schwarzbach, Yelp’s chief financial officer. “Services continued its strong performance in the quarter with advertising revenue from businesses in these categories increasing 15% year over year to a record $184 million. Looking ahead, we are raising our full-year net revenue outlook, which we now expect to be in the range of $1.295 billion to $1.315 billion.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the first quarter financial results and outlook for the second quarter and full year 2023. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at www.yelp-ir.com. A replay of the webcast will be available at the same website.

About Yelp

Yelp Inc. (yelp.com) is a community-driven platform that connects people with great local businesses. Millions of people rely on Yelp for useful and trusted local business information, reviews and photos to help inform their spending decisions. As a one-stop local platform, Yelp helps consumers easily discover, connect and transact with businesses across a broad range of categories by making it easy to request a quote for a service, book a table at a restaurant, and more. Yelp was founded in San Francisco in 2004.

Yelp intends to make future announcements of material financial and other information through its Investor Relations website. Yelp will also, from time to time, disclose this information through press releases, filings with the Securities and Exchange Commission, conference calls, or webcasts, as required by applicable law.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, Yelp’s future performance, its investment plans, and its ability to deliver profitable growth over the long term, that are based on its current expectations, forecasts, and assumptions that involve risks and uncertainties.

Yelp’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to:

macroeconomic uncertainty — including related to inflation, rising interest rates, supply chain issues, and the ongoing impact of the COVID-19 pandemic and efforts to contain it — and its effect on consumer behavior, user activity and advertiser spending;

the impact of fears or actual outbreaks of disease, including COVID-19 and any variants thereof, and any resulting changes in consumer behavior, economic conditions or governmental actions;

Yelp’s ability to maintain and expand its base of advertisers, particularly if advertiser turnover substantially worsens from recent trends and/or consumer demand significantly degrades;

Yelp’s ability to continue to operate effectively with a primarily remote work force and attract and retain key talent;

Yelp’s limited operating history in an evolving industry; and

Yelp’s ability to generate and maintain sufficient high-quality content from its users.

Factors that could cause or contribute to such differences also include, but are not limited to, those factors that could affect Yelp’s business, operating results and stock price included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yelp’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC’s website at www.sec.gov.

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

March 31,

2023

December 31,

2022

Assets

Current assets:

Cash and cash equivalents

$

289,298

$

306,379

Short-term marketable securities

124,903

94,244

Accounts receivable, net

140,401

131,902

Prepaid expenses and other current assets

36,992

63,467

Total current assets

591,594

595,992

Property, equipment and software, net

76,936

77,224

Operating lease right-of-use assets

87,100

97,392

Goodwill

103,195

102,328

Intangibles, net

8,656

8,997

Other non-current assets

154,201

133,989

Total assets

$

1,021,682

$

1,015,922

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued liabilities

$

152,860

$

137,950

Operating lease liabilities — current

39,023

39,674

Deferred revenue

7,414

5,200

Total current liabilities

199,297

182,824

Operating lease liabilities — long-term

77,184

86,661

Other long-term liabilities

41,073

36,113

Total liabilities

317,554

305,598

Stockholders’ equity:

Common stock

—

—

Additional paid-in capital

1,692,923

1,649,692

Treasury stock

(37

)

—

Accumulated other comprehensive loss

(13,758

)

(15,545

)

Accumulated deficit

(975,000

)

(923,823

)

Total stockholders’ equity

704,128

710,324

Total liabilities and stockholders’ equity

$

1,021,682

$

1,015,922

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

March 31,

2023

2022

Net revenue

$

312,438

$

276,628

Costs and expenses:

Cost of revenue ⁽¹⁾

26,059

23,429

Sales and marketing ⁽¹⁾

147,455

126,097

Product development ⁽¹⁾

88,197

80,685

General and administrative⁽¹⁾

46,509

39,383

Depreciation and amortization

10,805

11,490

Total costs and expenses

319,025

281,084

Loss from operations

(6,587

)

(4,456

)

Other income, net

5,212

929

Loss before income taxes

(1,375

)

(3,527

)

Benefit from income taxes

(197

)

(2,612

)

Net loss attributable to common stockholders

$

(1,178

)

$

(915

)

Net loss per share attributable to common stockholders

Basic

$

(0.02

)

$

(0.01

)

Diluted

$

(0.02

)

$

(0.01

)

Weighted-average shares used to compute net loss per share attributable to common stockholders

Basic

69,821

71,639

Diluted

69,821

71,639

⁽¹⁾Includes stock-based compensation expense as follows:

Three Months Ended

March 31,

2023

2022

Cost of revenue

$

1,382

$

1,305

Sales and marketing

9,114

8,655

Product development

25,867

23,125

General and administrative

9,894

7,975

Total stock-based compensation

$

46,257

$

41,060

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

March 31,

2023

2022

Operating Activities

Net loss

$

(1,178

)

$

(915

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

10,805

11,490

Provision for doubtful accounts

6,784

7,562

Stock-based compensation

46,257

41,060

Amortization of right-of-use assets

7,899

8,453

Deferred income taxes

(19,862

)

(11,074

)

Amortization of deferred contract cost

5,738

4,039

Asset impairment

3,555

—

Other adjustments, net

576

248

Changes in operating assets and liabilities:

Accounts receivable

(15,283

)

(11,968

)

Prepaid expenses and other assets

20,709

(7,494

)

Operating lease liabilities

(10,397

)

(9,492

)

Accounts payable, accrued liabilities and other liabilities

18,641

27,994

Net cash provided by operating activities

74,244

59,903

Investing Activities

Purchases of marketable securities — available-for-sale

(53,157

)

—

Sales and maturities of marketable securities — available-for-sale

23,355

—

Purchases of property, equipment and software

(7,518

)

(6,636

)

Other investing activities

40

61

Net cash used in investing activities

(37,280

)

(6,575

)

Financing Activities

Proceeds from issuance of common stock for employee stock-based plans

14,647

540

Taxes paid related to the net share settlement of equity awards

(19,354

)

(18,487

)

Repurchases of common stock

(49,999

)

(50,006

)

Net cash used in financing activities

(54,706

)

(67,953

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

439

(101

)

Change in cash, cash equivalents and restricted cash

(17,303

)

(14,726

)

Cash, cash equivalents and restricted cash — Beginning of period

307,138

480,641

Cash, cash equivalents and restricted cash — End of period

$

289,835

$

465,915

Non-GAAP Financial Measures

This press release and statements made during the above referenced webcast may include information relating to Adjusted EBITDA and Adjusted EBITDA margin, each of which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.”

We define Adjusted EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items, such as impairment charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

Adjusted EBITDA, which is not prepared under any comprehensive set of accounting rules or principles, has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of Yelp’s financial results as reported in accordance with generally accepted accounting principles in the United States (“GAAP”). In particular, Adjusted EBITDA should not be viewed as a substitute for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. Some of these limitations are:

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

Adjusted EBITDA does not reflect changes in, or cash requirements for, Yelp’s working capital needs;

Adjusted EBITDA does not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to Yelp;

Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

Adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as impairment charges; and

other companies, including those in Yelp’s industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, net income (loss) and Yelp’s other GAAP results.

The following is a reconciliation of net loss to Adjusted EBITDA, as well as the calculation of net loss margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):

Three Months Ended

March 31,

2023

2022

Reconciliation of Net Loss to Adjusted EBITDA:

Net loss

$

(1,178

)

$

(915

)

Benefit from income taxes

(197

)

(2,612

)

Other income, net

(5,212

)

(929

)

Depreciation and amortization

10,805

11,490

Stock-based compensation

46,257

41,060

Asset impairment⁽¹⁾

3,555

—

Adjusted EBITDA

$

54,030

$

48,094

Net revenue

$

312,438

$

276,628

Net loss margin

—

%

—

%

Adjusted EBITDA margin

17

%

17

%

⁽¹⁾Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005788/en/

Investor Relations Contact:

Kate Krieger

[email protected]

Press Contact:

Amber Albrecht

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Technology Other Retail Publishing Marketing Communications Professional Services Business Small Business Internet Retail

MEDIA:

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Posted on May 4, 2023 4:43 pm
Xponential Fitness, Inc. Announces First Quarter 2023 Financial Results

Xponential Fitness, Inc. Announces First Quarter 2023 Financial Results

Grew Q1 2023 revenue 40% and North America system-wide sales 42%, compared to Q1 2022

Sold 188 franchise licenses and opened 115 new studios in Q1 2023

Sold 5,638 total franchise licenses and had 2,756 total studios operating as of Q1 2023

Raises full year 2023 outlook in North America system-wide sales, revenue and Adjusted EBITDA at +33%, +20% and +40%, respectively, year-over-year at the midpoint of guidance

IRVINE, Calif.–(BUSINESS WIRE)–
Xponential Fitness, Inc. (NYSE: XPOF) (“Xponential” or the “Company”), the largest global franchisor of boutique fitness brands, today reported financial results for the first quarter ended March 31, 2023. All financial figures included in this release refer to global numbers, unless otherwise noted. Definitions for the non-GAAP measures and a reconciliation to the corresponding GAAP measures are included in the tables that accompany this release.

Financial Highlights: Q1 2023 Compared to Q1 2022

Grew revenue 40% to $70.7 million.

Increased North America system-wide sales¹ by 42% to $317.8 million.

Reported North America same store sales² growth of 20%, compared to growth of 47% in Q1 of 2022.

Reported North America quarterly run-rate average unit volume (AUV)³ of $542,000, compared to $450,000.

Posted net loss of $15.0 million, or a loss of $1.38 per basic share, on a share count of 30.8 million shares of Class A Common Stock, compared to a net loss of $15.2 million, or a loss of $1.51 per basic share, on a share count of 22.7 million shares of Class A Common Stock.

Posted adjusted net income of $1.3 million, or a loss of $0.02 per basic share, compared to an adjusted net loss of $5.3 million, or a loss of $0.19 per basic share.

Reported Adjusted EBITDA⁴ of $22.9 million, compared to $14.5 million.

“The growth in our North American AUVs and same store sales during the quarter is compelling, indicating consumers continue to prioritize spending on our experiential offerings,” said Anthony Geisler, CEO of Xponential Fitness, Inc. “The results speak to the strength of our brands, the quality of our franchisees, and the support they are receiving. We are seeing momentum continue through the first part of the second quarter; with this growth, we are raising our annual guidance expectations.”

Results for the First Quarter Ended March 31, 2023

For the first quarter of 2023, total revenue increased $20.3 million, or 40%, to $70.7 million, up from $50.4 million in the prior year period. This increase included a corresponding North America same store sales increase of 20%.

Net loss totaled $15.0 million, or a loss of $1.38 per share, compared to a loss of $15.2 million, or a loss of $1.51 per share, in the prior year period. The decrease in net loss was the result of $2.8 million of lower overall profitability, a $6.2 million increase in non-cash contingent consideration primarily related to the Rumble acquisition, and a $9.2 million decrease in non-cash equity-based compensation expense. Please see the table at the end of this press release for a calculation of the basic and diluted loss per share for the quarter ended March 31, 2023.

Consistent with previous periods, the Rumble acquisition non-cash contingent consideration liability is marked-to-market based on Xponential’s share price, contributing to a $15.7 million liability increase in the first quarter of 2023.

Adjusted Net Income for the first quarter 2023, which excludes the $15.7 million non-cash contingent consideration related primarily to the Rumble acquisition and $0.6 million related to the re-measurement of the Company’s tax receivable agreement, was $1.3 million, or a loss of $0.02 per basic share, on a share count of 30.8 million shares of Class A Common Stock.

Adjusted EBITDA, which is defined as net income (loss) before interest, taxes, depreciation and amortization, adjusted for equity-based compensation and related employer payroll taxes, acquisition and transaction expenses, litigation expenses, financial transaction fees and related expenses, and tax receivable agreement remeasurement, increased to $22.9 million, up from $14.5 million in the prior year period.

Liquidity and Capital Resources

As of March 31, 2023, the Company had approximately $28.1 million of cash, cash equivalents and restricted cash and $266.7 million in total long-term debt. Net cash provided by operating activities was $11.4 million for the three months ended March 31, 2023.

2023 Outlook

Based on the Company’s performance in the first quarter and the beginning of the second quarter, Xponential is increasing its full-year 2023 guidance for system-wide sales, revenue and Adjusted EBITDA, and re-affirming guidance for net new studio openings as follows:

Net new studio openings in the range of 540 to 560, or an increase of 8% at the midpoint as compared to full year 2022;

North America system-wide sales in the range of $1.37 billion to $1.38 billion, or an increase of 33% at the midpoint as compared to full year 2022; this compares to previous guidance of $1.34 billion to $1.35 billion;

Revenue in the range of $290.0 million to $300.0 million, or an increase of 20% at the midpoint as compared to full year 2022; this compares to previous guidance of $285.0 million to $295.0 million; and

Adjusted EBITDA in the range of $102.0 million to $106.0 million, or an increase of 40% at the midpoint as compared to full year 2022; this compares to previous guidance of $101.0 million to $105.0 million.

Additional key assumptions for full year 2023 include:

Tax rate in the mid-to-high single digits;

Share count of 32.6 million shares of Class A Common Stock for the GAAP EPS and Adjusted EPS calculations. A full explanation of the Company’s share count calculation and associated EPS and Adjusted EPS calculations can be found in the tables at the end of this press release; and

$1.9 million in quarterly dividends paid related to the Company’s Convertible Preferred Stock.

First Quarter 2023 Conference Call

The Company will host a conference call today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its first quarter 2023 financial results. Participants may join the conference call by dialing 1-877-407-9716 (United States) or 1-201-493-6779 (International).

A live webcast of the conference call will also be available on the Company’s Investor Relations site at https://investor.xponential.com/. For those unable to participate in the conference call, a telephonic replay of the call will be available shortly after the completion of the call, until 11:59 p.m. ET on Thursday, May 18, 2023, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13737385.

About Xponential Fitness, Inc.

Xponential Fitness, Inc. (NYSE: XPOF) is the largest global franchisor of boutique fitness brands. Through its mission to make boutique fitness accessible to everyone, the Company operates a diversified platform of ten brands spanning across verticals including Pilates, indoor cycling, barre, stretching, rowing, dancing, boxing, running, functional training and yoga. In partnership with its franchisees, Xponential Fitness offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations across 49 U.S. states and Canada, and through master franchise or international expansion agreements in 16 additional countries. Xponential Fitness’ portfolio of brands includes Club Pilates, the largest Pilates brand in the United States; CycleBar, the largest indoor cycling brand in the United States; StretchLab, a concept offering one-on-one and group stretching services; Row House, the largest franchised indoor rowing brand in the United States; AKT, a dance-based cardio workout combining toning, interval and circuit training; YogaSix, the largest franchised yoga brand in the United States; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements, and the largest Barre brand in the United States; STRIDE, a treadmill-based cardio and strength training concept; Rumble, a boxing-inspired full-body workout; and BFT, a functional training and strength-based program. For more information, please visit the Company’s website at xponential.com.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe non-GAAP measures are useful in evaluating our operating performance. We use certain non-GAAP financial information, such as EBITDA, Adjusted EBITDA, adjusted net income (loss), and adjusted net earnings (loss) per share, which exclude certain non-operating or non-recurring items, including but not limited to, equity-based compensation expenses, acquisition and transaction expenses, litigation expenses, employee retention credit, financial transaction fees and related expenses, and tax receivable agreement remeasurement, that we believe are not representative of our core business or future operating performance, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively with comparable GAAP financial measures, is helpful to investors because it provides consistency and comparability with past financial performance and provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We seek to compensate such limitations by providing a detailed reconciliation for the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. For a reconciliation of non-GAAP to GAAP measures discussed in this release, please see the tables at the end of this press release. In addition, we are not able to provide a quantitative reconciliation of the estimated full-year Adjusted EBITDA for fiscal year ending December 31, 2023 without unreasonable efforts to the most directly comparable GAAP financial measure due to the high variability, complexity and low visibility with respect to certain items such as taxes, TRA remeasurements, and income and expense from changes in fair value of contingent consideration from acquisitions. We expect the variability of these items to have a potentially unpredictable and potentially significant impact on future GAAP financial results, and, as such, we also believe that any reconciliations provided would imply a degree of precision that would be confusing or misleading to investors.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management’s judgment, beliefs, current trends, and anticipated financial performance. These forward-looking statements include, without limitation, statements relating to expected growth of our business; projected number of net new studio openings; anticipated industry trends; projected financial and performance information such as system-wide sales; projected annual revenue, Adjusted EBITDA and other statements under the section “2023 Outlook”; our competitive position in the boutique fitness industry; and ability to execute our business strategies. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, our relationships with master franchisees, franchisees and international partners; difficulties and challenges in opening studios by franchisees; the ability of franchisees to generate sufficient revenues; risks relating to expansion into international markets; loss of reputation and brand awareness; general economic conditions and industry trends; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the full year ended December 31, 2022 filed by Xponential with the SEC and other periodic reports filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today’s date, unless otherwise stated, and Xponential undertakes no duty to update such information, except as required under applicable law.

Xponential Fitness, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share amounts)

March 31,

December 31,

2023

2022

Assets

Current Assets:

Cash, cash equivalents and restricted cash
$

28,135

$

37,370

Accounts receivable, net

22,408

25,555

Inventories

12,962

10,864

Prepaid expenses and other current assets

9,918

6,294

Deferred costs, current portion

4,083

4,131

Notes receivable from franchisees, net

1,501

1,520

Total current assets

79,007

85,734

Property and equipment, net

19,171

18,524

Right-of-use assets

40,487

30,079

Goodwill

165,697

165,697

Intangible assets, net

134,691

137,175

Deferred costs, net of current portion

43,530

43,620

Notes receivable from franchisees, net of current portion

851

1,067

Other assets

862

795

Total assets
$

484,296

$

482,691

Liabilities, redeemable convertible preferred stock and equity (deficit)

Current Liabilities:

Accounts payable
$

18,741

$

16,185

Accrued expenses

14,328

12,295

Deferred revenue, current portion

31,276

31,996

Current portion of long-term debt

4,260

3,035

Other current liabilities

8,553

9,265

Total current liabilities

77,158

72,776

Deferred revenue, net of current portion

110,809

109,465

Contingent consideration from acquisitions

43,665

28,182

Long-term debt, net of current portion, discount and issuance costs

257,626

133,039

Lease liability

39,888

30,583

Other liabilities

6,611

8,633

Total liabilities

535,757

382,678

Commitments and contingencies

Redeemable convertible preferred stock, $0.0001 par value, 400 shares authorized, 115 and 200 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

227,290

308,075

Stockholders’ equity (deficit):

Undesignated preferred stock, $0.0001 par value, 4,600 shares authorized, none issued and outstanding as of March 31, 2023 and December 31, 2022

—

—

Class A common stock, $0.0001 par value, 500,000 shares authorized, 32,899 and 27,571 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

3

3

Class B common stock, $0.0001 par value, 500,000 shares authorized, 16,731 and 21,647 shares issued, and 16,656 and 21,572 shares outstanding as of March 31, 2023 and December 31, 2022, respectively

2

2

Additional paid-in capital

438,038

505,186

Receivable from shareholder

(19,956

)

(16,369

)

Accumulated deficit

(639,207

)

(641,903

)

Treasury stock, at cost, 75 shares outstanding as of March 31, 2023 and December 31, 2022

(1,697

)

(1,697

)

Total stockholders’ deficit attributable to Xponential Fitness, Inc.

(222,817

)

(154,778

)

Noncontrolling interests

(55,934

)

(53,284

)

Total stockholders’ deficit

(278,751

)

(208,062

)

Total liabilities, redeemable convertible preferred stock and stockholders’ deficit
$

484,296

$

482,691

Xponential Fitness, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

Three Months Ended March 31,

2023

2022

Revenue, net:

Franchise revenue
$

32,966

$

25,500

Equipment revenue

13,094

7,779

Merchandise revenue

7,164

6,083

Franchise marketing fund revenue

6,211

4,435

Other service revenue

11,255

6,565

Total revenue, net

70,690

50,362

Operating costs and expenses:

Costs of product revenue

14,035

9,592

Costs of franchise and service revenue

4,032

4,234

Selling, general and administrative expenses

34,885

33,919

Depreciation and amortization

4,197

3,492

Marketing fund expense

5,006

4,355

Acquisition and transaction expenses

15,742

9,544

Total operating costs and expenses

77,897

65,136

Operating loss

(7,207

)

(14,774

)

Other (income) expense:

Interest income

(636

)

(389

)

Interest expense

7,977

2,861

Other expense

554

—

Total other expense

7,895

2,472

Loss before income taxes

(15,102

)

(17,246

)

Income tax benefit

(123

)

(2,067

)

Net loss

(14,979

)

(15,179

)

Less: net loss attributable to noncontrolling interests

(4,996

)

(7,660

)

Net loss attributable to Xponential Fitness, Inc.
$

(9,983

)

$

(7,519

)

Net loss per share of Class A common stock:

Basic
$

(1.38

)

$

(1.51

)

Diluted
$

(1.38

)

$

(1.51

)

Weighted average shares of Class A common stock outstanding:

Basic

30,754

22,737

Diluted

30,754

22,737

Xponential Fitness, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited) (in thousands)

Three Months Ended March 31,

2023

2022

Cash flows from operating activities:

Net loss
$

(14,979

)

$

(15,179

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

4,197

3,492

Amortization and write off of debt issuance cost

283

33

Amortization of discount on long-term debt

609

151

Change in contingent consideration from acquisitions

15,742

9,546

Amortization of right-of-use assets

1,212

469

Bad debt recovery

(21

)

(617

)

Equity-based compensation

6,056

15,248

Non-cash interest

(478

)

(208

)

Gain on disposal of assets

—

(43

)

Changes in assets and liabilities:

Accounts receivable

3,230

(3,300

)

Inventories

(2,098

)

(2,289

)

Prepaid expenses and other current assets

(3,083

)

(2,117

)

Operating lease liabilities

(1,228

)

(489

)

Deferred costs

138

(818

)

Notes receivable, net

2

5

Accounts payable

2,794

(2,758

)

Accrued expenses

433

(4,633

)

Other current liabilities

(1,800

)

20

Deferred revenue

624

5,924

Other assets

(68

)

(10

)

Other liabilities

(214

)

461

Net cash provided by operating activities

11,351

2,888

Cash flows from investing activities:

Purchases of property and equipment

(2,127

)

(1,798

)

Proceeds from sale of assets

—

65

Purchase of intangible assets

(470

)

(316

)

Notes receivable issued

—

(585

)

Notes receivable payments received

212

426

Net cash used in investing activities

(2,385

)

(2,208

)

Cash flows from financing activities:

Borrowings from long-term debt

126,100

—

Payments on long-term debt

(1,065

)

(740

)

Debt issuance costs

(115

)

(46

)

Payment of preferred stock dividend and deemed dividend

(1,320

)

(4,875

)

Payment of contingent consideration

—

(589

)

Payments for taxes related to net share settlement of restricted share units

(7,935

)

—

Payments for redemption of preferred stock

(130,766

)

—

Loan to shareholder

(3,100

)

—

Net cash used in financing activities

(18,201

)

(6,250

)

Decrease in cash, cash equivalents and restricted cash

(9,235

)

(5,570

)

Cash, cash equivalents and restricted cash, beginning of period

37,370

21,320

Cash, cash equivalents and restricted cash, end of period
$

28,135

$

15,750

Xponential Fitness, Inc.

Net Loss to GAAP EPS Per Share

(in thousands, except per share amounts)

Three Months

Ended

March 31,

2023

2022

Numerator:

Net loss
$

(14,979

)

$

(15,179

)

Less: net loss attributable to noncontrolling interests

24,588

35,003

Less: dividends on preferred shares

(2,069

)

(3,250

)

Less: deemed dividend

(62,660

)

(50,931

)

Add: deemed contribution from redemption of convertible preferred stock

12,679

–

Net loss attributable to XPO Inc. – basic and diluted
$

(42,441

)

$

(34,357

)

Denominator:

Weighted average shares of Class A common stock outstanding – basic and diluted

30,754

22,737

Net loss per share attributable to Class A common stock – basic
$

(1.38

)

$

(1.51

)

Net loss per share attributable to Class A common stock – diluted
$

(1.38

)

$

(1.51

)

Anti-dilutive shares excluded from diluted loss per share of Class A common stock:

Rumble Class A common stock

–

1,300

Restricted stock units

1,781

2,360

Convertible preferred stock

7,963

13,889

Conversion of Class B common stock to Class A common stock

16,656

24,564

Treasury share options

75

–

Rumble contingent shares

2,024

2,024

Profits interests, time vesting

4

48

Xponential Fitness, Inc.

Reconciliations of GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

Three Months Ended March 31,

2023

2022

Net loss
$

(14,979

)

$

(15,179

)

Interest expense, net

7,341

2,472

Income tax benefit

(123

)

(2,067

)

Depreciation and amortization

4,197

3,492

EBITDA

(3,564

)

(11,282

)

Equity-based compensation

6,056

15,248

Employer payroll taxes related to equity-based compensation

474

—

Acquisition and transaction expenses

15,742

9,544

Litigation expenses

2,045

2,740

Employee retention credit

—

(2,597

)

Financial transaction fees and related expenses

1,565

487

TRA remeasurement

554

313

Adjusted EBITDA
$

22,872

$

14,453

Three Months

Ended

March 31,

2023

2022

Net loss
$

(14,979

)

$

(15,179

)

Change in fair value of contingent consideration

15,742

9,546

TRA remeasurement

554

313

Adjusted net income (loss)
$

1,317

$

(5,320

)

Adjusted net income (loss) attributable to noncontrolling interest

496

(2,685

)

Adjusted net income (loss) attributable to Xponential Fitness, Inc.

821

(2,635

)

Dividends on preferred shares

(1,290

)

(1,610

)

Numerator – basic and diluted
$

(469

)

$

(4,245

)

Adjusted net loss per share – basic and diluted
$

(0.02

)

$

(0.19

)

Weighted average shares of Class A common stock outstanding – basic and diluted

30,754

22,737

Shares excluded from diluted earnings per share of Class A common stock

Rumble Class A common stock

—

1,300

Restricted stock units

1,781

2,360

Convertible preferred stock

7,963

13,889

Conversion of Class B common stock to Class A common stock

16,656

24,564

Treasury share options

75

—

Rumble contingent shares

2,024

2,024

Profits interests, time vesting

4

48

Note: The above adjusted net income (loss) per share is computed by dividing the adjusted net income (loss) attributable to holders of Class A common stock by the weighted average shares of Class A common stock outstanding during the period. Total share count does not include potential future shares vested upon achieving certain earn-out thresholds. Net income, however, continues to take into account the non-cash contingent liability primarily due to Rumble.

Footnotes

¹System-wide sales represent gross sales by all North America studios. System-wide sales include sales by franchisees that are not revenue realized by us in accordance with GAAP. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, this operating metric relates to our revenue because we receive approximately 7% and 2% of the sales by franchisees as royalty revenue and marketing fund revenue, respectively. We believe that this operating measure aids in understanding how we derive our royalty revenue and marketing fund revenue and is important in evaluating our performance. System-wide sales growth is driven by net new studio openings and increases in same store sales. Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors.

² Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales base to include studios in North America that have been open for at least 13 calendar months as of the measurement date. Any transfer of ownership of a studio does not affect this metric. We measure same store sales based solely upon monthly sales as reported by franchisees. This measure highlights the performance of existing studios, while excluding the impact of net new studio openings. Management reviews same store sales to assess the health of the franchised studios.

³AUV is calculated by dividing sales during the applicable period for all studios being measured by the number of studios being measured. Quarterly run-rate AUV consists of average quarterly sales for all studios that are at least 6 months old at the beginning of the respective quarter, multiplied by four. Monthly run-rate AUV is calculated as the monthly AUV multiplied by twelve, for studios that are at least 6 months old at the beginning of the respective month. AUV growth is primarily driven by changes in same store sales and is also influenced by net new studio openings. Management reviews AUV to assess studio economics.

⁴We define Adjusted EBITDA as EBITDA (net income/loss before interest, taxes, depreciation and amortization), adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity-based compensation and related employer payroll taxes, acquisition and transaction expenses (including change in contingent consideration), litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business), employee retention credit (a tax credit for retaining employees throughout the COVID-19 pandemic), fees for financial transactions, such as secondary public offering expenses for which we do not receive proceeds (including bonuses paid to executives related to completion of such transactions) and expense related to the remeasurement of our TRA obligation that we do not believe reflect our underlying business performance and affect comparability. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that Adjusted EBITDA, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230502006293/en/

Kimberly Esterkin

Addo Investor Relations

[email protected]

(310) 829-5400

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Fitness & Nutrition Health Lifestyle Consumer

MEDIA:

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Posted on May 4, 2023 4:42 pm
Spruce Biosciences to Present Findings on Retrospective Analysis of Completion Rates for CAH Studies at Pediatric Endocrine Society 2023 Annual Meeting

Spruce Biosciences to Present Findings on Retrospective Analysis of Completion Rates for CAH Studies at Pediatric Endocrine Society 2023 Annual Meeting

Mitchell Geffner, M.D., to Present on May 7, 2023 from 12:30 pm – 2 pm PT

SOUTH SAN FRANCISCO, Calif.–(BUSINESS WIRE)–Spruce Biosciences, Inc. (Nasdaq: SPRB), a late-stage biopharmaceutical company focused on developing and commercializing novel therapies for rare endocrine disorders with significant unmet medical need, today announced that a submitted abstract was accepted for poster presentation at the Pediatric Endocrine Society (PES) 2023 Annual Meeting taking place May 5-8, 2023, in San Diego, Calif. Mitchell Geffner, M.D., will present findings on a retrospective analysis of completion rates for adult and pediatric congenital adrenal hyperplasia (CAH) studies.

Details are as follows:

Title: Clinical Trials in CAH: So Many Starting, but Not So Many Finishing

Abstract Number: 6407

Poster Session: 3

Session Date & Time: Sunday, May 7, 2023 from 12:30 pm – 2 pm PT

Presenter: Mitchell E. Geffner, M.D., Co-Director of the Congenital Adrenal Hyperplasia Comprehensive Care Clinic and Professor of Pediatrics, Keck School of Medicine of University of Southern California

Authors: P.J. Ramtin, R. Will Charlton M.D., M.A.S., Mitchell E. Geffner M.D.

Access more information about PES 2023 here.

About Spruce Biosciences

Spruce Biosciences is a late-stage biopharmaceutical company focused on developing and commercializing novel therapies for rare endocrine disorders with significant unmet medical need. Spruce is initially developing its wholly-owned product candidate, tildacerfont, as the potential first non-steroidal therapy for patients suffering from classic congenital adrenal hyperplasia (CAH). Spruce is also developing tildacerfont for women suffering from polycystic ovary syndrome (PCOS) with primary adrenal androgen excess. To learn more, visit www.sprucebiosciences.com and follow us on Twitter @Spruce_Bio, LinkedIn, Facebook and YouTube.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005432/en/

Media

Will Zasadny

Evoke Canale

(619) 961-8848

[email protected]

[email protected]

Investors

Xuan Yang

Solebury Strategic Communications

(415) 971-9412

[email protected]

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Health Clinical Trials Research Pharmaceutical Science Biotechnology

MEDIA:

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Posted on May 4, 2023 4:41 pm
Inogen Announces First Quarter 2023 Financial Results

Inogen Announces First Quarter 2023 Financial Results

Total Revenue of $72.2 Million In Line with Company Expectations

Rental Revenue Year-over-Year Growth of 25%

GOLETA, Calif.–(BUSINESS WIRE)–Inogen, Inc. (Nasdaq: INGN), a medical technology company offering innovative respiratory products for use in the homecare setting, today announced financial results for the quarter ended March 31, 2023.

First Quarter 2023 Highlights

All comparisons are to the prior year period unless otherwise noted.

Reported total revenue of $72.2 million, in line with company expectations, reflecting a decrease of 10.2%; currency fluctuations accounted for 1.7% of the decrease.

Continued progress on rental strategy led to a 25.4% increase in rental revenue, primarily due to higher rental patients on service and higher reimbursement rates.

GAAP net loss of $20.3 million, adjusted net loss of $14.5 million and adjusted EBITDA was a loss of $11.8 million, all slightly better than company expectations.

Increased total covered lives to approximately 160 million with the recent additions of two large private healthcare payers in support of Inogen’s prescriber channel and overall rental strategy.

Notified that we will be granted reimbursement in France for Rove 6.

“First quarter revenue was in line with our internal expectations. We remain confident that our focus on revenue growth and disciplined execution will support our return to profitability and result in an anticipated positive adjusted EBITDA by Q4 2023,” said Nabil Shabshab, President and Chief Executive Officer. “We believe that 2023 is an inflection point for Inogen with continued successful execution on our channel strategy, further advancement of our innovation agenda, and focus on returning to profitability.”

First Quarter 2023 Financial Results

First quarter total revenue decreased 10.2% to $72.2 million from $80.4 million in the first quarter of 2022, primarily due to a decrease in direct-to-consumer sales and international business-to-business sales, partially offset by higher domestic business-to-business sales and higher rental revenue.

Total gross margin was 42.6% in the first quarter of 2023 versus 43.5% in the comparative period in 2022. The decline was driven primarily by channel mix, partially offset by improved manufacturing productivity and higher average selling prices.

Total operating expense for the quarter, excluding restructuring costs, increased 4.6%. Total operating expense with restructuring costs was $52.6 million compared to $48.6 million in the first quarter of 2022, representing an increase of 8.3%.

GAAP net loss for the first quarter of 2023 was $20.3 million compared to GAAP net loss of $14.2 million in the first quarter of 2022. Adjusted net loss was $14.5 million compared to adjusted net loss of $8.7 million in the first quarter of 2022.

Adjusted EBITDA was a negative $11.8 million in the first quarter of 2023 compared to a negative $5.0 million in the first quarter of 2022.

Cash, cash equivalents and marketable securities were $174.6 million as of March 31, 2023, and no debt outstanding.

A reconciliation of adjusted EBITDA and adjusted net loss for the three months ended March 31, 2023 and 2022 are provided in the financial schedules that are a part of this press release. An explanation of these non-GAAP financial measures is also included below under the heading “Reconciliation of U.S. GAAP to Other Non-GAAP Financial Measures.”

Quarterly Conference Call Information

Inogen will issue first quarter 2023 financial results after the market closes on Thursday, May 4, 2023. On the same day, the Company will host a conference call at 2:00 pm Pacific Time / 5:00 pm Eastern Time. Individuals interested in listening to the conference call may do so by dialing:

US domestic callers (888) 645-4404

Non-US callers (862) 298-0702

Please reference Inogen to join the call. To listen to a live webcast, please visit the Investor Relations section of Inogen’s website at: http://investor.inogen.com/. This webcast will also be archived on the website for 6 months.

A replay of the call will be available approximately three hours after the live webcast ends and will be accessible through May 11, 2023. To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Conference ID: 13737870.

Inogen has used, and intends to continue to use, its Investor Relations website, http://investor.inogen.com/, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. For more information, visit http://investor.inogen.com/.

About Inogen

Inogen, Inc. (Nasdaq: INGN) is a leading global medical technology company offering innovative respiratory products for use in the homecare setting. Inogen supports patient respiratory care by developing, manufacturing, and marketing innovative best-in-class portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. Inogen partners with patients, prescribers, home medical equipment providers, and distributors to make its oxygen therapy products widely available allowing patients the chance to remain ambulatory while managing the impact of their disease.

For more information, please visit www.inogen.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, Inogen’s expectations for future revenue growth and profitability; and expectations for positive adjusted EBITDA by Q4 2023. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “intends,” “potential,” “possible,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially fromcurrently anticipated results, including but not limited to, risks arising from the possibility that Inogen will not realize anticipated revenue or expenses will not decrease; risks related cost inflation for components; the risks our innovation pipeline will not produce meaningful results; the impact of changes in reimbursement rates and reimbursement and regulatory policies; and the possible loss of key employees, customers, or suppliers; the risk that expenses and costs will exceed Inogen’s expectations. Information on these and additional risks, uncertainties, and other information affecting Inogen’s business operating results are contained in its Annual Report on Form 10-K for the year ended December 31, 2022, and in its other filings with the Securities and Exchange Commission. Additional information will also be set forth in Inogen’s Quarterly Report on Form 10-Q for the period ended March 31, 2023, to be filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Inogen disclaims any obligation to update these forward-looking statements except as may be required by law.

Non-GAAP Financial Measures

Inogen has presented certain financial information in accordance with U.S. GAAP and also on a non-GAAP basis for the three months ended March 31, 2022, and March 31, 2023. Management believes that non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of Inogen’s core operating results. Management uses non-GAAP measures to compare Inogen’s performance relative to forecasts and strategic plans, to benchmark Inogen’s performance externally against competitors, and for certain compensation decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Inogen’s operating results as reported under U.S. GAAP. Inogen encourages investors to carefully consider its results under U.S. GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between U.S. GAAP and non-GAAP results are presented in the accompanying tables of this release. For future periods, Inogen is unable to provide a reconciliation of non-GAAP measures without unreasonable effort as a result of the uncertainty regarding, and the potential variability of, the amounts of interest income, interest expense, depreciation and amortization, stock-based compensation, provision for income taxes, and certain other infrequently occurring items, such as acquisition-related costs, that may be incurred in the future.

Consolidated Statements of Comprehensive Loss

(unaudited)

(amounts in thousands, except share and per share amounts)

Three months ended

March 31,

2023

2022

Revenue

Sales revenue

$

55,887

$

67,402

Rental revenue

16,275

12,983

Total revenue

72,162

80,385

Cost of revenue

Cost of sales revenue

33,964

39,500

Cost of rental revenue, including depreciation of $3,078 and $2,638, respectively

7,465

5,879

Total cost of revenue

41,429

45,379

Gross profit

30,733

35,006

Operating expense

Research and development

5,344

5,364

Sales and marketing

28,441

28,039

General and administrative

18,863

15,189

Total operating expense

52,648

48,592

Loss from operations

(21,915

)

(13,586

)

Other income (expense)

Interest income

1,525

29

Other income (expense)

237

(433

)

Total other income (expense), net

1,762

(404

)

Loss before provision for income taxes

(20,153

)

(13,990

)

Provision for income taxes

196

224

Net loss

$

(20,349

)

$

(14,214

)

Other comprehensive income (loss), net of tax

Change in foreign currency translation adjustment

170

(203

)

Change in net unrealized gains (losses) on foreign currency hedging

—

(528

)

Less: reclassification adjustment for net (gains) losses included in net income

—

454

Total net change in unrealized gains (losses) on foreign currency hedging

—

(74

)

Change in net unrealized gains (losses) on marketable securities

69

(8

)

Total other comprehensive income (loss), net of tax

239

(285

)

Comprehensive loss

$

(20,110

)

$

(14,499

)

Basic net loss per share attributable to common stockholders⁽¹⁾

$

(0.88

)

$

(0.62

)

Diluted net loss per share attributable to common stockholders ^{(1) (2)}

$

(0.88

)

$

(0.62

)

Weighted-average number of shares used in calculating net loss per share attributable to common stockholders:

Basic common shares

23,009,617

22,754,421

Diluted common shares

23,009,617

22,754,421

(1)

Reconciliations of net loss attributable to common stockholders basic and diluted can be found in Inogen’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission.

(2)

Due to a net loss for the three months ended March 31, 2023 and March 31, 2022 diluted loss per share is the same as basic.

Consolidated Balance Sheets

(unaudited)

(amounts in thousands)

March 31,

December 31,

2023

2022

Assets

Current assets

Cash and cash equivalents

$

164,137

$

187,014

Marketable securities

10,428

—

Accounts receivable, net

53,885

62,725

Inventories, net

38,822

34,093

Income tax receivable

1,859

1,626

Prepaid expenses and other current assets

14,016

19,187

Total current assets

283,147

304,645

Property and equipment, net

45,942

43,269

Goodwill

32,887

32,852

Operating lease right-of-use asset

21,108

21,653

Other assets

2,590

2,622

Total assets

$

385,674

$

405,041

Liabilities and stockholders’ equity

Current liabilities

Accounts payable and accrued expenses

$

32,183

$

33,974

Accrued payroll

10,757

11,190

Warranty reserve – current

8,075

7,790

Operating lease liability – current

3,570

3,515

Deferred revenue – current

8,794

8,880

Total current liabilities

63,379

65,349

Warranty reserve – noncurrent

12,018

12,123

Operating lease liability – noncurrent

19,179

19,764

Deferred revenue – noncurrent

9,801

10,399

Total liabilities

104,377

107,635

Stockholders’ equity

Common stock

23

23

Additional paid-in capital

316,127

312,126

Accumulated deficit

(34,849

)

(14,500

)

Accumulated other comprehensive loss

(4

)

(243

)

Total stockholders’ equity

281,297

297,406

Total liabilities and stockholders’ equity

$

385,674

$

405,041

Condensed Consolidated Cash Flow

(unaudited)

(amounts in thousands)

Three months ended March 31,

2023

2022

Cash flows from operating activities

Net loss

$

(20,349

)

$

(14,214

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

4,086

5,760

Loss on rental units and other assets

1,099

706

Gain on sale of former rental assets

(21

)

(52

)

Provision for sales revenue returns and doubtful accounts

2,258

2,953

Provision for inventory losses

603

934

Stock-based compensation expense

3,442

2,665

Change in fair value of earnout liability

—

630

Changes in operating assets and liabilities

2,581

(17,480

)

Net cash used in operating activities

(6,301

)

(18,098

)

Cash flows from investing activities

Purchases of available-for-sale securities

(10,359

)

—

Investment in property and equipment

(1,076

)

(1,366

)

Production and purchase of rental equipment

(5,733

)

(2,777

)

Proceeds from sale of former assets

58

91

Net cash used in investing activities

(17,110

)

(4,052

)

Cash flows from financing activities

Proceeds from stock options exercised

384

29

Proceeds from employee stock purchases

630

915

Payment of employment taxes related to release of restricted stock

(455

)

(1,052

)

Net cash provided by (used in) financing activities

559

(108

)

Effect of exchange rates on cash

(25

)

133

Net decrease in cash and cash equivalents

$

(22,877

)

$

(22,125

)

Supplemental Financial Information

(unaudited)

(in thousands, except units and patients)

Three months ended

March 31,

2023

2022

Revenue by region and category

Business-to-business domestic sales

$

12,585

$

5,101

Business-to-business international sales

18,972

27,941

Direct-to-consumer domestic sales

24,330

34,360

Direct-to-consumer domestic rentals

16,275

12,983

Total revenue

$

72,162

$

80,385

Additional financial measures

Units sold

26,900

30,400

Net rental patients as of period-end

45,800

43,200

Reconciliation of U.S. GAAP to Other Non-GAAP Financial Measures

(unaudited)

(in thousands)

Three months ended

March 31,

Non-GAAP EBITDA and Adjusted EBITDA

2023

2022

Net loss (GAAP)

$

(20,349

)

$

(14,214

)

Non-GAAP adjustments:

Interest income

(1,525

)

(29

)

Provision for income taxes

196

224

Depreciation and amortization

4,086

5,760

EBITDA (non-GAAP)

(17,592

)

(8,259

)

Stock-based compensation

3,442

2,665

Acquisition-related expenses

554

—

Restructuring-related and other charges ⁽¹⁾

1,809

—

Change in fair value of earnout liability

—

630

Adjusted EBITDA (non-GAAP)

$

(11,787

)

$

(4,964

)

Three months ended March 31,

Net Loss

Diluted EPS

Non-GAAP Adjusted Net Loss and Diluted EPS

2023

2022

2023

2022

Financial Results (GAAP)

$

(20,349

)

$

(14,214

)

$

(0.88

)

$

(0.62

)

Non-GAAP adjustments:

Amortization of intangibles

26

2,147

Stock-based compensation

3,442

2,665

Acquisition-related expenses

554

Restructuring-related and other charges ⁽¹⁾

1,809

—

Change in fair value of earnout liability

—

630

Income tax impact of adjustments ⁽²⁾

—

87

Adjusted

$

(14,518

)

$

(8,685

)

$

(0.63

)

$

(0.38

)

(1)

Charges represent the costs associated with workforce reductions and associated costs and other restructuring-related activities.

(2)

Income tax impact of adjustments represents the tax impact related to the non-GAAP adjustments listed above and reflects an effective tax rate of 0% for 2023 and -1.6% for 2022, which is due to the recording of a valuation allowance.

Three months ended

March 31,

Non-GAAP constant currency revenue

2023

2022

Business-to-business domestic sales

$

12,585

$

5,101

Business-to-business international sales

18,972

27,941

Direct-to-consumer domestic sales

24,330

34,360

Direct-to-consumer domestic rentals

16,275

12,983

Total revenue (GAAP)

72,162

80,385

Hedging gains

—

600

Total revenue, excluding hedging effect (non-GAAP)

72,162

79,785

Exchange rate impact

860

1,424

Constant currency revenues (non-GAAP)

$

73,022

$

81,209

Revenue growth (GAAP)

-10.2

%

Constant currency revenue growth (non-GAAP)

-8.5

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005281/en/

Agnes Lee

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Health Technology Health Medical Devices

MEDIA:

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Posted on May 4, 2023 4:41 pm
AbCellera Reports Q1 2023 Business Results

AbCellera Reports Q1 2023 Business Results

Total revenue of $12 million, compared to $317 million in Q1 2022

Total cumulative partnered program starts of 101, up 20% from Q1 2022

Net loss of $0.14 per share on a basic and diluted basis, compared to net earnings of $0.59 (basic) and $0.54 (diluted) per share in Q1 2022

VANCOUVER, British Columbia–(BUSINESS WIRE)–AbCellera (Nasdaq: ABCL) today announced financial results for the first quarter of 2023. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

“In the first quarter we have continued to execute on our strategy of building the industry’s preferred engine for the discovery and development of antibody therapeutics. Notably, new data on our T-cell engager platform demonstrates that we can generate TCEs with superior properties on a highly accelerated timeline, and against challenging tumor targets,” said Carl Hansen, Ph.D., founder and CEO of AbCellera. “As we progress further into 2023, we remain steadfast in our strategy of building best-in-world capabilities for the discovery and development of antibody therapeutics.”

Q1 2023 Business Summary

Earned $12.2 million in total revenue.

Generated a net loss of $40.1 million, compared to net earnings of $168.6 million in Q1 2022.

Reached a cumulative total of 177 programs under contract with 41 different partners.

Maintained a cumulative total of 101 partnered program starts.

Reporting the advancement of one additional molecule into the clinic, bringing the cumulative total to nine molecules in the clinic.

Key Business Metrics

Cumulative Metrics

March 31, 2022

March 31, 2023

Change %

Number of discovery partners

36

41

14

%

Programs under contract

158

177

12

%

Partnered program starts

84

101

20

%

Molecules in the clinic

6

9

50

%

AbCellera added three partnered programs in Q1 2023 to reach a cumulative total of 177 programs under contract (up from 158 on March 31, 2022) that are either completed, in progress, or under contract with 41 different partners as of March 31, 2023 (up from 36 on March 31, 2022). AbCellera maintained a cumulative total of 101 partnered program starts in Q1 2023 (up from 84 on March 31, 2022). AbCellera’s partners advanced an additional molecule into the clinic in Q1 2023, bringing the cumulative total of molecules in the clinic to nine (up from six on March 31, 2022).

Discussion of Q1 2023 Financial Results

Revenue – Total revenue was$12.2 million, compared to $316.6 million in Q1 2022. The partnership business generated research fees of $10.6 million, compared to $9.3 million in Q1 2022. Milestone payments were $1.3 million and licensing revenue was $0.4 million.

Research & Development (R&D) Expenses – R&D expenses were $52.6 million, compared to $26.4 million in Q1 2022, reflecting continuing investments in the capacity and capabilities of AbCellera’s engine for antibody discovery and development, and in co-development programs.

Sales & Marketing (S&M) Expenses – S&M expenses were $3.8 million, compared to $2.4 million in Q1 2022. The increase reflects continued investments in business development.

General & Administrative (G&A) Expenses – G&A expenses were $15.1 million, compared to $14.3 million in Q1 2022, with the increase driven by investments to support the growth of the company.

Net Loss – Net loss of $40.1 million, or $(0.14) per share on a basic and diluted basis, compared to net earnings of $168.6 million, or $0.59 per share on a basic and $0.54 on a diluted basis in Q1 2022.

Liquidity – $821.5 million of total cash, cash equivalents, and marketable securities.

Conference Call and Webcast

AbCellera will host a conference call and live webcast to discuss these results today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).

The live webcast of the earnings conference call can be accessed on the Events and Presentations section of AbCellera’s Investor Relations website. A replay of the webcast will be available through the same link following the conference call.

About AbCellera Biologics Inc.

AbCellera is breaking the barriers of conventional antibody discovery to bring better medicines to patients, sooner. AbCellera’s engine integrates expert teams, technology, and facilities with the data science and automation needed to propel antibody-based medicines from target to clinic in nearly every therapeutic area with precision and speed. AbCellera provides innovative biotechs and leading pharmaceutical companies with a competitive advantage that empowers them to move quickly, reduce cost, and tackle the toughest problems in drug development. For more information, please visit www.abcellera.com.

Definition of Key Business Metrics

We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. We believe that the following metrics are important to understand our current business. These metrics may change or may be substituted for additional or different metrics as our business develops.

Number of discovery partnersrepresents the unique number of partners with whom we have executed partnership contracts. We view this metric as an indication of the competitiveness of our engine and our level of market penetration. The metric also relates to our opportunities to secure programs under contract.

Programs under contractrepresent the number of antibody development programs that are under contract for delivery of discovery research activities. A program under contract is counted when a contract is executed with a partner under which we commit to discover or deliver antibodies against one selected target. A target is any relevant antigen for which a partner seeks our support in developing binding antibodies. We view this metric as an indication of commercial success and technological competitiveness. It further relates to revenue from access fees. The cumulative number of programs under contract with downstream participation is related to our ability to generate future revenue from milestone payments and royalties.

Partnered program starts represent the number of unique programs under contract for which we have commenced the discovery effort. The discovery effort commences on the later of (i) the day on which we receive sufficient reagents to start discovery of antibodies against a target and (ii) the day on which the kick-off meeting for the program is held. We view this metric as an indication of our operational capacity to execute on programs under contract. It is also an indication of the selection and initiation of discovery projects by our partners and the resulting potential for near-term payments. Cumulatively, partnered program starts with downstream participation indicate our total opportunities to earn downstream revenue from milestone fees and royalties in the mid- to long-term.

Molecules in the clinic represent the count of unique molecules for which an Investigational New Drug, or IND, New Animal Drug, or equivalent under other regulatory regimes, application has been approved based on an antibody that was discovered either by us or by a partner using licensed AbCellera technology. Where the date of such application approval is not known to us, the date of the first public announcement of a clinical trial will be used for the purpose of this metric. We view this metric as an indication of our near- and mid-term potential revenue from milestone fees and potential royalty payments in the long term.

AbCellera Forward-Looking Statements

This press release contains forward-looking statements, including statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. All statements contained in this release other than statements of historical fact are forward-looking statements, including statements regarding our ability to develop, commercialize and achieve market acceptance of our current and planned products and services, our research and development efforts, and other matters regarding our business strategies, use of capital, results of operations and financial position, and plans and objectives for future operations.

In some cases, you can identify forward-looking statements by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks, uncertainties and other factors are described under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. We caution you that forward-looking statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. As a result, the forward-looking statements may not prove to be accurate. The forward-looking statements in this press release represent our views as of the date hereof. We undertake no obligation to update any forward-looking statements for any reason, except as required by law.

Source: AbCellera Biologics Inc.

AbCellera Biologics Inc.

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(All figures in U.S. dollars. Amounts are expressed in thousands except share and per share data)

(Unaudited)

Three months ended March 31,

2022

2023

Revenue:

Research fees

$

9,333

$

10,570

Licensing revenue

231

372

Milestone payments

–

1,250

Royalty revenue

307,017

–

Total revenue

316,581

12,192

Operating expenses:

Royalty fees

44,637

–

Research and development⁽¹⁾

26,366

52,647

Sales and marketing⁽¹⁾

2,370

3,771

General and administrative⁽¹⁾

14,268

15,134

Depreciation and amortization

3,990

5,514

Total operating expenses

91,631

77,066

Income (loss) from operations

224,950

(64,874

)

Other (income) expense

Interest (income)

(665

)

(9,759

)

Grants and incentives

(5,194

)

(3,374

)

Other

–

(3,593

)

Total other (income)

(5,859

)

(16,726

)

Net earnings (loss) before income tax

230,809

(48,148

)

Income tax (recovery) expense

62,236

(8,038

)

Net earnings (loss)

$

168,573

$

(40,110

)

Foreign currency translation adjustment

507

(630

)

Comprehensive income (loss)

$

169,080

$

(40,740

)

Net earnings (loss) per share attributable to common shareholders

Basic

$

0.59

$

(0.14

)

Diluted

$

0.54

$

(0.14

)

Weighted-average common shares outstanding

Basic

283,895,020

287,767,136

Diluted

311,482,017

287,767,136

(1) Exclusive of depreciation and amortization

AbCellera Biologics Inc.

Condensed Consolidated Balance Sheet

(All figures in U.S. dollars. Amounts are expressed in thousands except share data)

(Unaudited)

December 31, 2022

March 31, 2023

Assets

Current assets:

Cash and cash equivalents

$

386,535

$

193,017

Marketable securities

499,950

603,478

Total cash, cash equivalents, and marketable securities

886,485

796,495

Accounts and accrued receivable

38,593

20,003

Restricted cash

25,000

25,000

Other current assets

75,413

99,155

Total current assets

1,025,491

940,653

Long-term assets:

Property and equipment, net

217,255

233,187

Intangible assets, net

131,502

128,845

Goodwill

47,806

47,806

Investments in and loans to equity accounted investees

72,522

57,583

Other long-term assets

46,331

89,845

Total long-term assets

515,416

557,266

Total assets

$

1,540,907

$

1,497,919

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable and other liabilities

$

33,150

$

31,814

Current portion of contingent consideration payable

44,211

42,876

Accrued royalties payable

19,347

3,094

Deferred revenue

21,612

11,807

Total current liabilities

118,320

89,591

Long-term liabilities:

Operating lease liability

76,675

77,265

Deferred revenue

19,516

25,416

Deferred grant funding

40,801

45,026

Contingent consideration payable

16,054

15,733

Deferred tax liability

33,178

33,426

Other long-term liabilities

3,086

2,962

Total long-term liabilities

189,310

199,828

Total liabilities

307,630

289,419

Commitments and contingencies

Shareholders’ equity:

Common shares: no par value, unlimited authorized shares at December 31, 2022 and March 31, 2023: 286,851,595 and 288,426,514 shares issued and outstanding at December 31, 2022 and March 31, 2023, respectively

734,365

742,816

Additional paid-in capital

74,118

81,630

Accumulated other comprehensive (loss)

(1,391

)

(2,021

)

Accumulated earnings

426,185

386,075

Total shareholders’ equity

1,233,277

1,208,500

Total liabilities and shareholders’ equity

$

1,540,907

$

1,497,919

AbCellera Biologics Inc.

Condensed Consolidated Statement of Cash Flows

(Expressed in thousands of U.S. dollars)

(Unaudited)

Three months ended March 31,

2022

2023

Cash flows from operating activities:

Net earnings (loss)

$

168,573

$

(40,110

)

Cash flows from operating activities:

Depreciation of property and equipment

1,391

2,858

Amortization of intangible assets

2,606

2,656

Amortization of operating lease right-of-use assets

976

1,606

Stock-based compensation

12,291

15,474

Other

(592

)

(3,634

)

Changes in operating assets and liabilities:

Accounts and accrued research fees receivable

(8,751

)

7,915

Accrued royalties receivable

(167,914

)

9,260

Income taxes payable

69,965

(12,614

)

Accounts payable and accrued liabilities

751

(5,778

)

Deferred revenue

941

(3,905

)

Accrued royalties payable

22,857

(16,253

)

Deferred grant revenue

4,682

4,525

Other assets

(7,557

)

(6,063

)

Net cash provided by (used in) operating activities

100,219

(44,063

)

Cash flows from investing activities:

Purchases of property and equipment

(14,495

)

(14,984

)

Purchase of marketable securities

(51,774

)

(360,752

)

Proceeds from marketable securities

57,294

262,638

Receipt of grant funding

2,596

2,693

Long-term investments and other assets

(11,657

)

(34,735

)

Investment in and loans to equity accounted investees

(8,335

)

(4,469

)

Net cash used in investing activities

(26,371

)

(149,609

)

Cash flows from financing activities:

Payment of liability for in-licensing agreement and contingent consideration

(5,072

)

(948

)

Proceeds from long-term debt and exercise of stock options

1,941

490

Net cash used in financing activities

(3,131

)

(458

)

Effect of exchange rate changes on cash and cash equivalents

(204

)

(213

)

Increase (decrease) in cash and cash equivalents

70,513

(194,343

)

Cash and cash equivalents and restricted cash, beginning of period

501,142

414,650

Cash and cash equivalents and restricted cash, end of period

$

571,655

$

220,307

Restricted cash included in other assets

937

2,290

Total cash, cash equivalents and restricted cash shown on the balance sheet

$

570,718

$

218,017

Supplemental disclosure of non-cash investing and financing activities

Property and equipment in accounts payable

2,353

8,918

Right-of-use assets obtained in exchange for operating lease obligation

658

2,124

View source version on businesswire.com: https://www.businesswire.com/news/home/20230502006253/en/

Inquiries

Media: Jessica Yingling, Ph.D.; [email protected], +1(236) 521-6774

Business Development: Murray McCutcheon, Ph.D.; [email protected], +1(604) 559-9005

Investor Relations: Josephine Hellschlienger, Ph.D.; [email protected], +1(778) 729-9116

KEYWORDS: United States North America Canada

INDUSTRY KEYWORDS: Biotechnology Pharmaceutical Health

MEDIA:

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Posted on May 4, 2023 4:40 pm
Nuvation Bio Reports First Quarter 2023 Financial Results and Provides Business Update

Nuvation Bio Reports First Quarter 2023 Financial Results and Provides Business Update

Enrollment ongoing in the Phase 1b study of NUV-868 in combination with olaparib or enzalutamide

Enrollment ongoing in the Phase 1 monotherapy study of NUV-868

Expect to submit an IND for first Drug-Drug Conjugate (DDC) clinical candidate by year end 2023

Strong balance sheet with cash, cash equivalents and marketable securities of $646.6 million as of March 31, 2023

NEW YORK–(BUSINESS WIRE)–
Nuvation Bio Inc. (NYSE: NUVB), a biopharmaceutical company tackling some of the greatest unmet needs in oncology by developing differentiated and novel therapeutic candidates, today reported its financial results for the first quarter ended March 31, 2023, and provided a business update.

“We saw strong clinical execution in the first quarter as we continued to enroll patients in the Phase 1 monotherapy and Phase 1b combination studies of NUV-868,” said David Hung, M.D., Founder, President, and Chief Executive Officer of Nuvation Bio. “We look forward to submitting an IND for our first DDC clinical candidate by the end of this year, demonstrating our ongoing effort to tackle some of the greatest unmet needs in oncology.”

Recent Business Updates

NUV-868, BD2-Selective BETi: Advanced solid tumors

Dosing underway in both regimens of the Phase 1b combination study. The Company continues to enroll the Phase 1b study of NUV-868 in combination with olaparib in patients with ovarian cancer, pancreatic cancer, metastatic castration-resistant prostate cancer (mCRPC), triple negative breast cancer and other solid tumors, and in combination with enzalutamide in patients with mCRPC.

Dosing underway in the Phase 1 monotherapy study. The Company continues to enroll the Phase 1 monotherapy study in advanced solid tumors.

Drug-Drug Conjugate Platform:Solid tumors

Nominated first clinical candidate. Nuvation Bio remains on track to submit an Investigational New Drug (IND) application for an undisclosed DDC candidate with the U.S. Food and Drug Administration by year end 2023.

First Quarter 2023 Financial Results

As of March 31, 2023, Nuvation Bio had cash, cash equivalents and marketable securities of $646.6 million. For the three months ended March 31, 2023, research and development expenses were $18.8 million, compared to $20.7 million for the three months ended March 31, 2022. The decrease was primarily due to a $1.3 million decrease in personnel-related costs driven by a headcount reduction as well as a $0.6 million decrease in third-party costs related to research services and manufacturing primarily due to the termination of the NUV-422 program.

For the three months ended March 31, 2023, general and administrative expenses were $7.7 million, compared to $7.5 million for the three months ended March 31, 2022. The increase was primarily due to a $1.1 million increase in personnel-related costs driven by stock-based compensation and other benefits offset by a $0.3 million decrease in insurance, a $0.3 million decrease in legal fees and a $0.3 million decrease in other professional fees.

For the three months ended March 31, 2023, Nuvation Bio reported a net loss of $21.7 million, or $(0.10) per share. This compares to a net loss of $21.3 million, or $(0.10) per share, for the comparable period in 2022.

About Nuvation Bio

Nuvation Bio is a biopharmaceutical company tackling some of the greatest unmet needs in oncology by developing differentiated and novel therapeutic candidates. Nuvation Bio’s proprietary portfolio includes mechanistically distinct oncology therapeutic product candidates, each targeting some of the most difficult-to-treat types of cancer. Nuvation Bio was founded in 2018 by biopharma industry veteran David Hung, M.D., who previously founded Medivation, Inc., which brought to patients one of the world’s leading prostate cancer medicines. Nuvation Bio has offices in New York and San Francisco. For more information, please visit www.nuvationbio.com.

Forward Looking Statements

Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are sometimes accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the potential therapeutic benefit of Nuvation Bio’s product candidates, the expected continued momentum of Nuvation Bio’s clinical trials and the expected timing of an IND filing for Nuvation Bio’s first DDC clinical candidate. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the management team of Nuvation Bio and are not predictions of actual performance. These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ from those anticipated by the forward-looking statements, including but not limited to the challenges associated with conducting drug discovery and initiating or conducting clinical trials due to, among other things, difficulties or delays in the regulatory process, enrolling subjects or manufacturing or acquiring necessary products; the emergence or worsening of adverse events or other undesirable side effects; risks associated with preliminary and interim data, which may not be representative of more mature data; and competitive developments. Risks and uncertainties facing Nuvation Bio are described more fully in its Form 10-Q to be filed with the SEC on May 4, 2023, under the heading “Risk Factors,” and other documents that Nuvation Bio has filed or will file with the SEC. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this press release. Nuvation Bio disclaims any obligation or undertaking to update, supplement or revise any forward-looking statements contained in this press release.

NUVATION BIO INC. and Subsidiaries

Condensed Balance Sheets

Unaudited

(In thousands, except share and per share data)
March 31,

December 31,

2023

2022

Assets

Current assets:

Cash and cash equivalents
$

30,071

$

101,099

Prepaid expenses and other current assets

3,682

3,819

Marketable securities

616,538

559,915

Interest receivable on marketable securities

2,273

2,485

Total current assets

652,564

667,318

Property and equipment, net

838

894

Lease security deposit

138

138

Operating lease right-of-use assets

3,519

3,791

Total assets
$

657,059

$

672,141

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable
$

2,945

$

2,139

Current operating lease liabilities

1,244

1,206

Accrued expenses

8,362

9,816

Total current liabilities

12,551

13,161

Warrant liability

708

850

Non-current operating lease liabilities

2,727

3,054

Total liabilities

15,986

17,065

Stockholders’ equity

Class A and Class B common stock and additional paid in capital, $0.0001 par value per share; 1,060,000,000 (Class A 1,000,000,000, Class B 60,000,000) shares authorized as of March 31, 2023 and December 31, 2022, 218,803,722 (Class A 217,803,722, Class B 1,000,000) and 218,632,699 (Class A 217,632,699, Class B 1,000,000) shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

932,739

927,604

Accumulated deficit

(288,728

)

(267,002

)

Accumulated other comprehensive income

(2,938

)

(5,526

)

Total stockholders’ equity

641,073

655,076

Total liabilities and stockholders’ equity
$

657,059

$

672,141

NUVATION BIO INC. and Subsidiaries

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

For The Three Months Ended March 31,

2023

2022

Operating expenses:

Research and development
$

18,787

$

20,729

General and administrative

7,734

7,463

Total operating expenses

26,521

28,192

Loss from operations

(26,521

)

(28,192

)

Other income (expense):

Interest income

4,979

958

Investment advisory fees

(230

)

(169

)

Change in fair value of warrant liability

142

6,324

Net loss on marketable securities

(96

)

(214

)

Total other income (expense), net

4,795

6,899

Loss before income taxes

(21,726

)

(21,293

)

Provision for income taxes

—

—

Net loss
$

(21,726

)

$

(21,293

)

Net loss per share attributable to common stockholders, basic and diluted
$

(0.10

)

$

(0.10

)

Weighted average common shares outstanding, basic and diluted

218,741

213,411

Comprehensive loss:

Net loss
$

(21,726

)

$

(21,293

)

Other comprehensive loss, net of taxes:

Unrealized gain (loss) on available-for-sale securities, net

2,588

(5,032

)

Comprehensive loss
$

(19,138

)

$

(26,325

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005070/en/

Nuvation Bio Investor Contact:

[email protected]

Nuvation Bio Media Contact:

[email protected]

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Biotechnology General Health Health Pharmaceutical Oncology

MEDIA:

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Posted on May 4, 2023 4:40 pm
Dropbox Announces Fiscal 2023 First Quarter Results

Dropbox Announces Fiscal 2023 First Quarter Results

First Quarter Revenue of $611.1 Million, up 8.7% year-over-year; on a constant currency basis, up 11.6% year-over-year

Net Cash Provided by Operating Activities of $139.9 Million and Free Cash Flow of $138.0 Million

SAN FRANCISCO–(BUSINESS WIRE)–
Dropbox, Inc. (NASDAQ: DBX), today announced financial results for its first quarter ended March 31, 2023.

“We’re pleased with our financial results in Q1, beating our guidance across all metrics,” said Dropbox Co-Founder and Chief Executive Officer Drew Houston. “While the economic backdrop remains tough for our existing businesses, the AI era of computing has arrived and we see a huge opportunity to apply AI/ML to our products to transform knowledge work. I’m committed to ensuring Dropbox is at the forefront of this era and excited to bring more AI-powered products to market for our customers.”

First Quarter Fiscal 2023 Results

Total revenue was $611.1 million, an increase of 8.7% from the same period last year. On a constant currency basis, year-over-year growth would have been 11.6%.⁽¹⁾

Total ARR ended at $2.468 billion, an increase of 7.8% from the same period last year. On a constant currency basis, Total ARR grew $37.5 million quarter-over-quarter, and year-over-year growth would have been 11.6%.⁽²⁾

Paying users ended at 17.90 million, as compared to 17.09 million for the same period last year. Average revenue per paying user was $138.97, as compared to $134.63 for the same period last year.

GAAP gross margin was 80.9%, as compared to 79.9% for the same period last year. Non-GAAP gross margin was 82.4%, as compared to 81.3% for the same period last year.

GAAP operating margin was 13.8%, as compared to 15.9% for the same period last year. Non-GAAP operating margin was 28.6%, as compared to 30.3% for the same period last year.

GAAP net income was $69.0 million, as compared to $79.7 million for the same period last year. Non-GAAP net income was $146.1 million, as compared to $141.5 million for the same period last year.

Net cash provided by operating activities was $139.9 million, as compared to $141.4 million for the same period last year. Free cash flow was $138.0 million, as compared to $130.7 million for the same period last year.

GAAP diluted net income per share attributable to common stockholders was $0.20, as compared to $0.21 for the same period last year. Non-GAAP diluted net income per share attributable to common stockholders was $0.42, as compared to $0.38 for the same period last year.⁽³⁾

Cash, cash equivalents and short-term investments ended at $1.253 billion.

⁽¹⁾We calculate constant currency revenue growth rates by applying the prior period weighted average exchange rates to current period results.

⁽²⁾We calculate total annual recurring revenue (“Total ARR”) as the number of users who have active paid licenses for access to our platform as of the end of the period, multiplied by their annualized subscription price to our platform. We adjust our exchange rates used to calculate Total ARR on an annual basis, at the beginning of each fiscal year. We calculate constant currency Total ARR growth rates by applying the current period exchange rate to prior period results.

⁽³⁾GAAP and Non-GAAP diluted net income per share attributable to common stockholders is calculated based upon 348.8 million and 372.9 million diluted weighted-average shares of common stock for the three months ended March 31, 2023 and 2022, respectively.

Financial Outlook

Dropbox will provide forward-looking guidance in connection with this quarterly earnings announcement on its conference call, webcast, and on its investor relations website at http://investors.dropbox.com.

Conference Call Information

Dropbox plans to host a conference call today to review its first quarter financial results and to discuss its financial outlook. This call is scheduled to begin at 2:00 p.m. PT / 5:00 p.m. ET and can be accessed by using the web link at http://investors.dropbox.com.

Other Upcoming Events

Tim Regan, Chief Financial Officer, will be presenting at the J.P. Morgan Global Technology, Media and Communications Conference on Monday, May 22, 2023.

Tim Regan, Chief Financial Officer, will be hosting meetings at the Bank of America Securities Global Technology Conference on Wednesday, June 7, 2023.

During these events, a live webcast will be accessible from the Dropbox investor relations website at http://investors.dropbox.com. Following the event, a replay will be made available at the same location.

About Dropbox

Dropbox is the one place to keep life organized and keep work moving. With more than 700 million registered users across approximately 180 countries, we’re on a mission to design a more enlightened way of working. Dropbox is headquartered in San Francisco, CA, and has employees around the world. For more information on our mission and products, visit http://dropbox.com.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “About Non-GAAP Financial Measures.”

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, among other things, our expectations regarding distributed work trends, related market opportunities and our ability to capitalize on those opportunities. Words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plans,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to risks, uncertainties, and assumptions including, but not limited to: (i) our ability to retain and upgrade paying users, and increase our recurring revenue; (ii) our ability to attract new users or convert registered users to paying users; (iii) our expectations regarding general economic, political, and market trends and their respective impacts on our business; (iv) impacts to our financial results and business operations as a result of pricing and packaging changes to our subscription plans; (v) our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, operating expenses, paying users, and free cash flow; (vi) our ability to achieve or maintain profitability; (vii) our liability for any unauthorized access to our data or our users’ content, including through privacy and data security breaches; (viii) significant disruption of service on our platform or loss of content; (ix) any decline in demand for our platform or for content collaboration solutions in general; (x) changes in the interoperability of our platform across devices, operating systems, and third-party applications that we do not control; (xi) competition in our markets; (xii) our ability to respond to rapid technological changes, extend our platform, develop new features or products, or gain market acceptance for such new features or products; (xiii) our ability to improve quality and ease of adoption of our new and enhanced product experiences, features, and capabilities; (xiv) our ability to manage our growth or plan for future growth; (xv) our various acquisitions of businesses and the potential of such acquisitions to require significant management attention, disrupt our business, or dilute stockholder value; (xvi) our ability to attract, retain, integrate, and manage key and other highly qualified personnel, including as a result of our transition to a Virtual First model with an increasingly distributed workforce and in light of the recently announced reduction of our workforce; (xvii) our capital allocation plans with respect to our stock repurchase program and other investments; and (xviii) the dual class structure of our common stock and its effect of concentrating voting control with certain stockholders who held our capital stock prior to the completion of our initial public offering. Further information on risks that could affect Dropbox’s results is included in our filings with the Securities and Exchange Commission (“SEC”), including our Form 10-K for the year ended December 31, 2022. Additional information will be made available in our quarterly report on Form 10-Q for the quarter ended March 31, 2023 and other reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Dropbox assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by applicable law.

Dropbox, Inc.

Condensed Consolidated Statements of Operations

(In millions, except per share data)

(Unaudited)

Three Months Ended

March 31,

2023

2022

Revenue

$

611.1

$

562.4

Cost of revenue⁽¹⁾

116.8

112.9

Gross profit

494.3

449.5

Operating expenses⁽¹⁾:

Research and development

235.2

210.8

Sales and marketing

119.2

95.7

General and administrative

55.8

53.5

Total operating expenses

410.2

360.0

Income from operations

84.1

89.5

Interest income (expense), net

3.9

(1.4

)

Other income (expense), net

(0.4

)

5.7

Income before income taxes

87.6

93.8

Provision for income taxes

(18.6

)

(14.1

)

Net income

$

69.0

$

79.7

Basic net income per share

$

0.20

$

0.22

Diluted net income per share

$

0.20

$

0.21

Weighted-average shares used in computing net income per share attributable to common stockholders, basic

347.1

370.7

Weighted-average shares used in computing net income per share attributable to common stockholders, diluted

348.8

372.9

⁽¹⁾ Includes stock-based compensation expense as follows (in millions):

Three Months Ended

March 31,

2023

2022

Cost of revenue

$

5.4

$

5.7

Research and development⁽²⁾

52.9

50.5

Sales and marketing

5.5

4.5

General and administrative

12.2

11.6

⁽²⁾ On March 15, 2023, our President resigned, resulting in the reversal of $6.7 million in stock-based compensation expense. Of the total amount reversed, $4.4 million related to expense recognized prior to January 1, 2023.

Dropbox, Inc.

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

As of

March 31, 2023

December 31, 2022

Assets

Current assets:

Cash and cash equivalents

$

332.7

$

232.8

Short-term investments

920.4

1,110.6

Trade and other receivables, net

57.6

53.8

Prepaid expenses and other current assets

89.0

92.6

Total current assets

1,399.7

1,489.8

Property and equipment, net

307.2

308.4

Operating lease right-of-use asset

248.2

260.6

Intangible assets, net

80.8

88.3

Goodwill

402.5

403.3

Deferred tax assets

495.4

498.7

Other assets

59.9

61.0

Total assets

$

2,993.7

$

3,110.1

Liabilities and stockholders’ deficit

Current liabilities:

Accounts payable

$

38.6

$

38.6

Accrued and other current liabilities

167.1

139.9

Accrued compensation and benefits

40.1

131.7

Operating lease liability

64.8

68.9

Finance lease obligation

114.2

114.8

Deferred revenue

727.7

702.6

Total current liabilities

1,152.5

1,196.5

Operating lease liability, non-current

569.6

585.2

Finance lease obligation, non-current

154.8

151.7

Convertible senior notes, net, non-current

1,375.0

1,374.0

Other non-current liabilities

107.0

112.1

Total liabilities

3,358.9

3,419.5

Stockholders’ deficit:

Additional paid-in-capital

2,501.6

2,511.6

Accumulated deficit

(2,827.5

)

(2,772.1

)

Accumulated other comprehensive loss

(39.3

)

(48.9

)

Total stockholders’ deficit

(365.2

)

(309.4

)

Total liabilities and stockholders’ deficit

$

2,993.7

$

3,110.1

Dropbox, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

Three Months Ended

March 31,

2023

2022

Cash flows from operating activities

Net income

$

69.0

$

79.7

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

42.5

39.4

Stock-based compensation

76.0

72.3

Amortization of debt issuance costs

1.0

1.0

Amortization of deferred commissions

10.7

9.0

Non-cash operating lease expense

12.7

17.2

Deferred taxes

3.4

6.4

Other

0.7

1.8

Changes in operating assets and liabilities:

Trade and other receivables, net

(3.8

)

4.8

Prepaid expenses and other current assets

(7.2

)

(9.7

)

Other assets

1.1

2.5

Accounts payable

(0.3

)

(1.0

)

Accrued and other current liabilities

25.6

14.7

Accrued compensation and benefits

(91.6

)

(94.5

)

Deferred revenue

24.7

19.5

Other non-current liabilities

(4.7

)

(2.3

)

Operating lease liabilities

(19.9

)

(20.3

)

Tenant improvement allowance reimbursement

—

0.9

Net cash provided by operating activities

139.9

141.4

Cash flows from investing activities

Capital expenditures

(1.9

)

(10.7

)

Purchases of short-term investments

(30.9

)

(81.6

)

Proceeds from sales of short-term investments

152.7

51.8

Proceeds from maturities of short-term investments

77.6

137.5

Other

3.3

4.0

Net cash provided by investing activities

200.8

101.0

Cash flows from financing activities

Payments for taxes related to net share settlement of restricted stock units and awards

(34.1

)

(36.7

)

Proceeds from issuance of common stock, net of taxes withheld

0.2

0.2

Principal payments on finance lease obligations

(32.0

)

(32.4

)

Common stock repurchases

(175.4

)

(259.9

)

Net cash (used in) financing activities

(241.3

)

(328.8

)

Effect of exchange rate changes on cash and cash equivalents

0.5

(1.1

)

Change in cash and cash equivalents

99.9

(87.5

)

Cash and cash equivalents – beginning of period

232.8

533.0

Cash and cash equivalents – end of period

$

332.7

$

445.5

Supplemental cash flow data:

Property and equipment acquired under finance leases

$

34.5

$

19.7

Dropbox, Inc.

Three Months Ended March 31, 2023

Reconciliation of GAAP to Non-GAAP results

(In millions, except for percentages, which may not foot due to rounding)

(Unaudited)

GAAP

Stock-based

compensation

Acquisition-

related and

other expenses

Intangibles

amortization

Non-GAAP

Cost of revenue

$

116.8

$

(5.4

)

$

—

$

(3.6

)

$

107.8

Cost of revenue margin

19.1

%

(0.9

%)

—

%

(0.6

%)

17.6

%

Gross profit

494.3

5.4

—

3.6

503.3

Gross margin

80.9

%

0.9

%

—

%

0.6

%

82.4

%

Research and development

235.2

(52.9

)

(5.4

)

—

176.9

Research and development margin

38.5

%

(8.7

%)

(0.9

%)

—

%

28.9

%

Sales and marketing

119.2

(5.5

)

(1.7

)

(3.4

)

108.6

Sales and marketing margin

19.5

%

(0.9

%)

(0.3

%)

(0.6

%)

17.8

%

General and administrative

55.8

(12.2

)

(0.3

)

—

43.3

General and administrative margin

9.1

%

(2.0

%)

—

%

—

%

7.1

%

Income from operations

$

84.1

$

76.0

$

7.4

$

7.0

$

174.5

Operating margin

13.8

%

12.4

%

1.2

%

1.1

%

28.6

%

Dropbox, Inc.

Three Months Ended March 31, 2022

Reconciliation of GAAP to Non-GAAP results

(In millions, except for percentages, which may not foot due to rounding)

(Unaudited)

GAAP

Stock-based

compensation

Acquisition-

related and

other expenses

Intangibles

amortization

Non-GAAP

Cost of revenue

$

112.9

$

(5.7

)

$

—

$

(2.0

)

$

105.2

Cost of revenue margin

20.1

%

(1.0

%)

—

%

(0.4

%)

18.7

%

Gross profit

449.5

5.7

—

2.0

457.2

Gross margin

79.9

%

1.0

%

—

%

0.4

%

81.3

%

Research and development

210.8

(50.5

)

(3.2

)

—

157.1

Research and development margin

37.5

%

(9.0

%)

(0.6

%)

—

%

27.9

%

Sales and marketing

95.7

(4.5

)

(1.7

)

(1.5

)

88.0

Sales and marketing margin

17.0

%

(0.8

%)

(0.3

) %

(0.3

%)

15.6

%

General and administrative

53.5

(11.6

)

(0.1

)

—

41.8

General and administrative margin

9.5

%

(2.1

%)

—

%

—

%

7.4

%

Income from operations

$

89.5

$

72.3

$

5.0

$

3.5

$

170.3

Operating margin

15.9

%

12.9

%

0.9

%

0.6

%

30.3

%

Dropbox, Inc.

Three Months Ended March 31, 2023 and 2022

Reconciliation of GAAP net income to Non-GAAP net income and Non-GAAP diluted net income per share

(In millions, except per share data)

(Unaudited)

Three Months Ended

March 31,

2023

2022

GAAP net income

$

69.0

$

79.7

Stock-based compensation

76.0

72.3

Acquisition-related and other expenses

7.4

5.0

Amortization of acquired intangible assets

7.0

3.5

Income tax effects of non-GAAP adjustments

(13.3

)

(19.0

)

Non-GAAP net income

$

146.1

$

141.5

Non-GAAP diluted net income per share

$

0.42

$

0.38

Weighted-average shares used to compute Non-GAAP diluted net income per share

348.8

372.9

Dropbox, Inc.

Three Months Ended March 31, 2023 and 2022

Reconciliation of free cash flow and supplemental cash flow disclosure

(In millions, except for percentages)

(Unaudited)

Three Months Ended

March 31,

2023

2022

Free cash flow reconciliation:

Net cash provided by operating activities

$

139.9

$

141.4

Less:

Capital expenditures

(1.9

)

(10.7

)

Free cash flow

$

138.0

$

130.7

Free cash flow margin

22.6

%

23.2

%

Supplemental disclosures:

Key employee holdback payments related to acquisitions⁽¹⁾

$

10.7

$

14.3

⁽¹⁾ For the first quarter ended March 31, 2023, we made payments in the amount of $10.7 million related to employee holdbacks pertaining to our acquisitions. The related expenses are recognized within research and development and sales and marketing expenses over the required service period.

About Non-GAAP Financial Measures

To provide investors and others with additional information regarding Dropbox’s results, we have disclosed the following non-GAAP financial measures: revenue growth and Total ARR growth excluding foreign exchange effect, which we refer to as on a constant currency basis, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP operating expenses (including research and development, sales and marketing and general and administrative), non-GAAP income from operations, non-GAAP net income, free cash flow (“FCF”) and non-GAAP diluted net income per share. Dropbox has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Non-GAAP cost of revenue, gross profit, operating expenses, income from operations, and net income differ from GAAP in that they exclude stock-based compensation expense, amortization of acquired intangible assets, other acquisition-related expenses, which include third-party diligence costs and expenses related to key employee holdback agreements, and the income tax effect of the aforementioned adjustments. FCF differs from GAAP net cash provided by operating activities in that it treats capital expenditures as a reduction to net cash provided by operating activities. Free cash flow margin is calculated as FCF divided by revenue. In order to present revenue on a constant currency basis for the quarter ended March 31, 2023, Dropbox calculates constant currency revenue growth rates by applying the prior period weighted average exchange rates to current period results. Dropbox calculates constant currency Total ARR growth rates by applying the current period rate to prior period results. Dropbox presents constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations.

Dropbox’s management uses these non-GAAP financial measures 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 Dropbox’s financial performance and the ability to generate cash from operations. Management believes these non-GAAP financial measures reflect Dropbox’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in Dropbox’s business, as they exclude expenses that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial measures provide useful supplemental information to investors and others in understanding and evaluating Dropbox’s operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.

We believe that the non-GAAP financial measures, non-GAAP cost of revenue, gross profit, operating expenses, income from operations, net income, and diluted net income per share are meaningful to investors because they help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude.

We believe that FCF is an indicator of our liquidity over the long term and provides useful information regarding cash provided by operating activities and cash used for investments in property and equipment required to maintain and grow our business. FCF is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. FCF has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities. Some of the limitations of FCF are that FCF does not reflect our future contractual commitments, excludes investments made to acquire assets under finance leases, includes capital expenditures, and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

The use of non-GAAP cost of revenue, gross profit, operating expenses, income from operations, net income, free cash flow, and diluted net income per share measures has certain limitations as they do not reflect all items of income, expense, and cash expenditures, as applicable, that affect Dropbox’s operations. Dropbox mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. Additionally, we have provided supplemental disclosures in our reconciliation of net cash provided by operating activities to free cash flow to include expenses related to key employee holdback payments related to our various acquisitions. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review Dropbox’s financial information in its entirety and not rely on a single financial measure.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005716/en/

Investors:

Kern Kapoor

[email protected]

or

Media:

Alissa Stewart

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Data Management Apps/Applications Technology Mobile/Wireless Software Internet

MEDIA:

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Clean Energy Technologies Receives Notice of Deficiency from Nasdaq April 23, 2026 6:09 am

HighPeak Energy, Inc. Announces 2026 First Quarter Earnings Release and Conference Call Dates April 23, 2026 6:08 am

Seagate Introduces Storage Built for Consumer Data Explosion April 23, 2026 6:05 am

Beyond Meat® Launches New Beyond Chicken® Pieces Spicy Buffalo at Kroger Stores Nationwide April 23, 2026 6:05 am

Gentherm Reports 2026 First Quarter Results April 23, 2026 6:05 am

Greenwich LifeSciences Announces Acceptance of Abstract at ASCO 2026 April 23, 2026 6:04 am

Katapult to Announce First Quarter 2026 Financial Results on May 7, 2026 April 23, 2026 6:04 am

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