Market Newsdesk

September 9, 2021 4:08 pm

Rezolute Announces Initiation of Dosing in the Second Cohort of its Phase 2b Trial of RZ358 for Congenital Hyperinsulinism

Tracking to Announce Top line data in Q1 2022

REDWOOD CITY, Calif., Sept. 09, 2021 (GLOBE NEWSWIRE) — Rezolute, Inc. (Nasdaq: RZLT), a clinical-stage biopharmaceutical company developing transformative therapies for metabolic diseases associated with chronic glucose imbalance, today announced that it has begun dosing patients in the second cohort of its Phase 2b clinical trial of RZ358 (RIZE). RZ358 is a monoclonal antibody targeting the treatment of hypoglycemia caused by excessive insulin levels and is currently in clinical development for congenital hyperinsulinism (HI), a rare pediatric endocrine disorder.

Rezolute reported that a dose escalation review committee, comprised of HI expert investigators, voted to approve dose escalation and initiation of cohort 2 (6 mg/kg), based on their interim review of safety data from Cohort 1 (3 mg/kg). Following completion of the second cohort, the company plans to initiate a third and likely final cohort at 9 mg/kg.

“We are making great strides with the RIZE study and based on our recent clinical trial activity, we are tracking toward the original timeline we laid out prior to the COVID-19 pandemic. In that regard, we are expecting to substantially complete enrollment by the end of 2021 and have top-line data in Q1 of 2022,” said Brian Roberts, MD, Senior Vice President and Head of Clinical Development at Rezolute. “We will continue to monitor the evolution of the pandemic, including the impact of the Delta variant, which could alter our ability to screen and enroll patients in a timely fashion.”

Rezolute also announced the addition of Adrian Vella, MD, Professor of Medicine in the Endocrinology Division at the Mayo Clinic College of Medicine, to the Company’s Scientific Advisory Board. Dr. Vella is a leading expert in hypoglycemic disorders and will provide guidance on the development of RZ358.

Dr. Roberts noted, “We are pleased to welcome Dr. Vella to our Scientific Advisory Board. Given his background and knowledge of RZ358, he will be extremely valuable to Rezolute as we advance the development of RZ358 for HI and evaluate the possibility of expanding into other related and applicable indications.”

Dr. Vella is a Professor of Medicine in the Mayo Clinic College of Medicine and has published over 160 peer reviewed articles related to endocrinology, metabolic disorders, and diabetes. He is regularly the lead author or editor on evidence-based reviews of hyperinsulinism and hypoglycemia.

About RIZE (RZ358-606)

The open-label, repeat-dose Phase 2b study is designed to assess the safety and tolerability of intravenously administered RZ358 in patients with congenital hyperinsulinism inadequately controlled on existing therapies. The Company intends to enroll up to four sequential dosing cohorts, each with up to six to eight patients, starting at a dose of 3 mg/kg and increasing to as high as 9 mg/kg in the final cohort, as needed and tolerated. RZ358 will be administered bi-weekly for a total treatment duration of 8 weeks. The study is being conducted at leading HI centers by Rezolute and its global study partners.

About RZ358

RZ358 is an intravenously administered human monoclonal antibody that binds to a unique site (allosteric) on the insulin receptor throughout the body, such as in the liver, fat, and muscle. The antibody modifies insulin’s binding and signaling to maintain glucose levels in a normal range which counteracts the effects of elevated insulin in the body. Therefore, the company believes that RZ358 is ideally suited as a potential therapy for conditions characterized by excessive insulin levels, and it is being developed to treat the hyperinsulinism and low blood sugar characteristic of diseases such as congenital HI. As RZ358 acts downstream from the beta cells, it has the potential to be universally effective at treating congenital HI caused by any of the underlying genetic defects.

RZ358 received Orphan Drug Designation in the United States and European Union as well as Pediatric Rare Disease Designation in the US. Rezolute is currently evaluating RZ358 in the RIZE trial, a Phase 2b clinical trial in patients with congenital hyperinsulinism.

About Rezolute, Inc.

Rezolute is developing transformative therapies for metabolic diseases related to chronic glucose imbalance. The Company’s lead clinical asset, RZ358, is in Phase 2b development for treatment of congenital hyperinsulinism (HI), a rare pediatric endocrine disorder. The Company is also developing RZ402, an orally available plasma kallikrein inhibitor, for the treatment of diabetic macular edema. For more information, visit www.rezolutebio.com or follow us on Twitter.

Forward-Looking Statements

This release, like many written and oral communications presented by Rezolute, Inc. and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of said safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “could,” “may,” “should,” “will,” “would,” or similar expressions. Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Except as required by applicable law or regulation, Rezolute undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

Media and Investor Contact

Argot Partners
[email protected]
212-600-1902

September 9, 2021 4:08 pm

Verint Announces Another Quarter of Strong Cloud Growth

Verint Announces Another Quarter of Strong Cloud Growth

Strong Momentum in First Half; Raising Guidance for the Year

MELVILLE, N.Y.–(BUSINESS WIRE)–Verint® (Nasdaq: VRNT), The Customer Engagement Company™, today announced results for the three and six months ended July 31, 2021 (FYE 2022). Revenue for the three months ended July 31, 2021 was $215 million on a GAAP basis representing 5% year-over-year growth and $216 million on a non-GAAP basis representing 4% year-over-year growth. Revenue for the six months ended July 31, 2021 was $416 million on a GAAP basis representing 7% year-over-year growth and $418 million on a non-GAAP basis representing 5% year-over-year growth. For the three months ended July 31, 2021, diluted EPS was $0.00 on a GAAP basis and, $0.58 on a non-GAAP basis. For the six months ended July 31, 2021, net loss per common share was ($0.04) on a GAAP basis, and diluted EPS was $1.01 on a non-GAAP basis.

“Since the completion of the Cognyte spin at the beginning of the year, we have experienced strong cloud momentum and believe we have crossed the mid-point of our cloud transition. We expect our cloud momentum to continue in the second half of the year and we are raising our annual outlook for non-GAAP revenue, cloud revenue and diluted EPS. We are also raising our annual outlook for new perpetual license equivalent bookings growth, which we believe is an important metric during our cloud transition and a leading indicator of future revenue growth,” said Dan Bodner, Verint CEO.

Bodner added: “Behind our strong momentum is our strategy to drive automation in customer engagement across the enterprise with our open cloud platform. We believe that more and more brands are embracing digital first engagement and that we are uniquely positioned to help them with our open, partner friendly, infrastructure-agnostic cloud platform. We continue to rapidly innovate our cloud platform to power the workforce of people and bots, to embrace an enterprise-wide customer experience culture, and to harness data to drive more AI and analytics into their business.”

Second Quarter Key Cloud Metrics

Strong Cloud Growth: Cloud revenue up more than 43% year-over-year
Strong Software Bookings Growth: New perpetual license equivalent (PLE) bookings up 17% year-over-year
SaaS Bookings Mix: 53% of PLE bookings from SaaS compared to 43% in the same quarter in the prior year
Improving Visibility from Multi-year Cloud Deals: Remaining performance obligations (RPO) increased 29% year-over-year to $627 million

FYE 2022 Outlook

We are increasing our non-GAAP annual outlook for the year ending January 31, 2022 as follows:

Cloud Revenue Growth: 35% (up from a range of 30% to 35%)
New PLE Bookings Growth: 15% (up from 10%+)
Revenue: $872 million with a range of +/- 2% (up from $860 million)
- We expect Q3 revenue to be between $215 to $220 million and to finish the year with our typical seasonally strong fourth quarter revenue.
Diluted EPS: $2.25 at the midpoint of our revenue guidance (up from $2.23)
- We expect Q3 diluted EPS of $0.53 at the midpoint of our revenue guidance and to finish the year with our typical seasonally strong fourth quarter profitability.

Our non-GAAP outlook for the three months ending October 31, 2021 and year ending January 31, 2022 excludes the following GAAP measures which we are able to quantify with reasonable certainty:

Amortization of intangible assets of approximately $11 million and $45 million, for the three months ending October 31, 2021 and year ending January 31, 2022, respectively.
Expenses and losses on debt modification or retirement of $0 million and $2 million, for the three months ending October 31, 2021 and year ending January 31, 2022, respectively.
Favorable change in fair value of future tranche right of $0 million and $16 million, for the three months ending October 31, 2021 and year ending January 31, 2022, respectively.
Unrealized losses on derivatives, net of $0 million and $14 million, for the three months ending October 31, 2021 and year ending January 31, 2022, respectively.

Our non-GAAP outlook for the three months ending October 31, 2021 and year ending January 31, 2022 excludes the following GAAP measures for which we are able to provide a range of probable significance:

Revenue adjustments are expected to be between approximately $1 million and $2 million, and $3 million and $4 million, for the three months ending October 31, 2021 and year ending January 31, 2022, respectively.
Stock-based compensation expenses are expected to be between approximately $15 million and $17 million, and $64 million and $70 million, for the three months ending October 31, 2021 and year ending January 31, 2022, respectively, assuming market prices for our common stock approximately consistent with current levels.
Further costs associated with Verint’s February 1, 2021 separation into two independent public companies are expected to be between approximately $2 million and $3 million, and $12 million and $15 million, for the three months ending October 31, 2021 and year ending January 31, 2022, respectively.

Our non-GAAP outlook does not include the potential impact of any in-process business acquisitions that may close after the date hereof, and, unless otherwise specified, reflects foreign currency exchange rates approximately consistent with current rates.

We are unable, without unreasonable efforts, to provide a reconciliation for other GAAP measures which are excluded from our non-GAAP outlook, including the impact of future business acquisitions or acquisition expenses, future restructuring expenses, and non-GAAP income tax adjustments due to the level of unpredictability and uncertainty associated with these items. For these same reasons, we are unable to assess the probable significance of these excluded items. While historical results may not be indicative of future results, actual amounts for the three and six months ended July 31, 2021 and 2020 for the GAAP measures excluded from our non-GAAP outlook appear in Tables 2, 3 and 4 of this press release.

Conference Call Information

We will conduct a conference call today at 4:30 p.m. ET to discuss our results for the three and six months ended July 31, 2021, outlook, and long-term targets. An online, real-time webcast of the conference call and webcast slides will be available on our website at www.verint.com. The webcast slides will be available on our website until at least October 31, 2021. The conference call can also be accessed live via telephone at 1-844-309-0615 (United States and Canada) and 1-661-378-9462 (international) and the passcode is 5623319. Please dial in 5-10 minutes prior to the scheduled start time.

About Non-GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of non-GAAP financial measures presented for completed periods to the most directly comparable financial measures prepared in accordance with GAAP, please see the tables below as well as “Supplemental Information About Non-GAAP Financial Measures and Operating Metrics” at the end of this press release.

About Verint Systems Inc.

Verint^® (Nasdaq: VRNT) helps the world’s most iconic brands – including over 85 of the Fortune 100 companies – build enduring customer relationships by connecting work, data, and experiences across the enterprise. The Verint Customer Engagement portfolio draws on the latest advancements in AI and analytics, an open cloud architecture, and The Science of Customer Engagement^™ to help customers close The Engagement Capacity Gap™.

Verint. The Customer Engagement Company^™. Learn more at Verint.com.

Cautions About Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Verint Systems Inc. These forward-looking statements are not guarantees of future performance and they are based on management’s expectations that involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, any of which could cause our actual results or conditions to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause our actual results or conditions to differ materially from current expectations include, among others: uncertainties regarding the impact of changes in macroeconomic and/or global conditions, including as a result of slowdowns, recessions, economic instability, political unrest, armed conflicts, natural disasters, or outbreaks of disease, such as the COVID-19 pandemic, as well as the resulting impact on information technology spending by enterprises and government customers, on our business; risks that our customers delay, cancel, or refrain from placing orders, refrain from renewing subscriptions or service contracts, or are unable to honor contractual commitments or payment obligations due to liquidity issues or other challenges in their budgets and business, due to the COVID-19 pandemic or otherwise; risks that restrictions resulting from the COVID-19 pandemic or actions taken in response to the pandemic adversely impact our operations or our ability to fulfill orders, complete implementations, or recognize revenue; challenges associated with our cloud transition, including increased importance of subscription renewal rates, and risk of increased variability in our period to period results based on the mix, terms, and timing of our transactions; risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards; to adapt to changing market potential from area to area within our markets; and to successfully develop, launch, and drive demand for new, innovative, high-quality products that meet or exceed customer challenges and needs in both existing and new areas, while simultaneously preserving our legacy businesses and migrating away from areas of commoditization; risks due to aggressive competition in all of our markets, including with respect to maintaining revenue, margins, and sufficient levels of investment in our business and operations, and competitors with greater resources than we have; risks relating to our ability to properly manage investments in our business and operations, execute on growth or strategic initiatives, and enhance our existing operations and infrastructure, including the proper prioritization and allocation of limited financial and other resources; risks associated with our ability to identify suitable targets for acquisition or investment or successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with valuations, reputational considerations, capital constraints, costs and expenses, maintaining profitability levels, expansion into new areas, management distraction, post-acquisition integration activities, and potential asset impairments; challenges associated with selling sophisticated solutions, including with respect to longer sales cycles, more complex sales processes, and assisting customers in understanding and realizing the benefits of our solutions, as well as with developing, offering, implementing, and maintaining a broad solution portfolio; risks that we may be unable to maintain, expand, and enable our relationships with partners as part of our growth strategy; risks associated with our reliance on third-party suppliers, partners, or original equipment manufacturers (“OEMs”) for certain components, products, or services, including companies that may compete with us or work with our competitors, as well as cloud hosting providers; risks associated with our ability to retain, recruit, and train qualified personnel in regions in which we operate, including in new markets and growth areas we may enter; risks associated with our significant international operations, exposure to regions subject to political or economic instability, fluctuations in foreign exchange rates, and challenges associated with a significant portion of our cash being held overseas; risks associated with a significant part of our business coming from government contracts and associated procurement processes; risks associated with complex and changing domestic and foreign regulatory environments, relating to our own operations, the products and services we offer, and/or the use of our solutions by our customers, including, among others, with respect to data privacy and protection, government contracts, anti-corruption, trade compliance, tax, and labor matters; risks associated with the mishandling or perceived mishandling of sensitive or confidential information and data, including personally identifiable information or other information that may belong to our customers or other third parties, including in connection with our SaaS or other hosted or managed service offerings or when we are asked to perform service or support; risks that our solutions or services, or those of third-party suppliers, partners, or OEMs which we use in or with our offerings or otherwise rely on, including third-party hosting platforms, may contain defects, develop operational problems, or be vulnerable to cyber-attacks; risk of security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures, or disruptions; risks that our intellectual property rights may not be adequate to protect our business or assets or that others may make claims on our intellectual property, claim infringement on their intellectual property rights, or claim a violation of their license rights, including relative to free or open source components we may use; risks associated with leverage resulting from our current debt position or our ability to incur additional debt, including with respect to liquidity considerations, covenant limitations and compliance, fluctuations in interest rates, dilution considerations (with respect to our convertible notes), and our ability to maintain our credit ratings; risks that we may experience liquidity or working capital issues and related risks that financing sources may be unavailable to us on reasonable terms or at all; risks arising as a result of contingent or other obligations or liabilities assumed in our acquisition of our former parent company, Comverse Technology, Inc. (“CTI”), or associated with formerly being consolidated with, and part of a consolidated tax group with, CTI, or as a result of the successor to CTI’s business operations, Mavenir, Inc., being unwilling or unable to provide us with certain indemnities to which we are entitled; risks associated with changing accounting principles or standards, tax laws and regulations, tax rates, and the continuing availability of expected tax benefits; risks relating to the adequacy of our existing infrastructure, systems, processes, policies, procedures, internal controls, and personnel, and our ability to successfully implement and maintain enhancements to the foregoing, for our current and future operations and reporting needs, including related risks of financial statement omissions, misstatements, restatements, or filing delays; risks associated with market volatility in the prices of our common stock and convertible notes based on our performance, third-party publications or speculation, or other factors and risks associated with actions of activist stockholders; risks associated with Apax Partners’ significant ownership position and potential that its interests will not be aligned with those of our common stockholders; and risks associated with the spin-off of our Cyber Intelligence Solutions business, including the possibility that the spin-off does not achieve the benefits anticipated, does not qualify as a tax-free transaction, or exposes us to unexpected claims or liabilities. We assume no obligation to revise or update any forward-looking statement, except as otherwise required by law. For a detailed discussion of these risk factors, see our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, our Quarterly Report on Form 10-Q for the quarter ended April 30, 2021, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, when filed, and other filings we make with the SEC.

VERINT, THE CUSTOMER ENGAGEMENT COMPANY, BOUNDLESS CUSTOMER ENGAGEMENT, THE ENGAGEMENT CAPACITY GAP and THE SCIENCE OF CUSTOMER ENGAGEMENT are trademarks of Verint Systems Inc. or its subsidiaries. Verint and other parties may also have trademark rights in other terms used herein.

Table 1
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
(in thousands, except per share data)	2021			2020			2021			2020
Revenue:
Recurring	$	156,178		$	139,267		$	300,631		$	268,337
Nonrecurring		58,439			64,813			114,890			121,608
Total revenue		214,617			204,080			415,521			389,945
Cost of revenue:
Recurring		37,636			32,936			75,712			67,864
Nonrecurring		30,505			29,776			60,385			61,395
Amortization of acquired technology		4,426			4,189			8,810			8,545
Total cost of revenue		72,567			66,901			144,907			137,804
Gross profit		142,050			137,179			270,614			252,141
Operating expenses:
Research and development, net		31,792			30,148			60,940			62,560
Selling, general and administrative		91,376			77,739			179,022			154,566
Amortization of other acquired intangible assets		7,345			7,719			14,673			15,483
Total operating expenses		130,513			115,606			254,635			232,609
Operating income		11,537			21,573			15,979			19,532
Other income (expense), net:
Interest income		23			422			46			903
Interest expense		(2,199	)		(10,123	)		(7,218	)		(20,812	)
Losses on early retirements of debt		—			(143	)		(2,474	)		(143	)
Other income (expense), net		156			(12,754	)		4,206			(14,576	)
Total other expense, net		(2,020	)		(22,598	)		(5,440	)		(34,628	)
Income (loss) from continuing operations before provision for income taxes		9,517			(1,025	)		10,539			(15,096	)
Provision for income taxes		4,201			8,345			4,129			8,692
Net income (loss) from continuing operations		5,316			(9,370	)		6,410			(23,788	)
Net income from discontinued operations		—			19,957			—			30,400
Net income		5,316			10,587			6,410			6,612
Net income from continuing operations attributable to noncontrolling interests		316			327			611			567
Net income from discontinued operations attributable to noncontrolling interests		—			1,766			—			3,565
Net income attributable to Verint Systems Inc.		5,000			8,494			5,799			2,480
Dividends on preferred stock		(5,200	)		(2,484	)		(8,522	)		(2,484	)
Net (loss) income attributable to Verint Systems Inc. common shares	$	(200	)	$	6,010		$	(2,723	)	$	(4	)

Net (loss) income attributable to Verint Systems Inc. common shares
Net loss from continuing operations attributable to Verint Systems Inc. common shares	$	(200	)	$	(12,181	)	$	(2,723	)	$	(26,839	)
Net income from discontinued operations attributable to Verint Systems Inc. common shares	$	—		$	18,191		$	—		$	26,835

Basic net (loss) income per common share attributable to Verint Systems Inc.:
Continuing operations	$	—		$	(0.19	)	$	(0.04	)	$	(0.42	)
Discontinued operations		—			0.28			—			0.42
Total basic net (loss) income per common share attributable to Verint Systems Inc.	$	—		$	0.09		$	(0.04	)	$	—

Diluted net (loss) income per common share attributable to Verint Systems Inc.:
Continuing operations	$	—		$	(0.18	)	$	(0.04	)	$	(0.42	)
Discontinued operations		—			0.27			—			0.42
Total diluted net (loss) income per common share attributable to Verint Systems Inc.	$	—		$	0.09		$	(0.04	)	$	—

Weighted-average common shares outstanding:
Basic		65,194			64,954			65,417			64,670
Diluted		65,194			65,849			65,417			64,670

Table 2
VERINT SYSTEMS INC. AND SUBSIDIARIES
GAAP to Non-GAAP Cloud Metrics
(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
(in thousands)	2021			2020			2021			2020
Table of Reconciliation from GAAP Cloud Revenue to Non-GAAP Cloud Revenue
SaaS revenue – GAAP	$	76,384		$	48,229		$	139,976		$	89,117
Bundled SaaS revenue – GAAP		42,940			35,818			82,249			69,211
Unbundled SaaS revenue – GAAP		33,444			12,411			57,727			19,906
Optional managed services revenue – GAAP		16,872			14,328			33,330			28,460
Cloud revenue – GAAP	$	93,256		$	62,557		$	173,306		$	117,577

Estimated SaaS revenue adjustments	$	872		$	2,750		$	1,716		$	5,676
Estimated bundled SaaS revenue adjustments		872			2,706			1,654			5,588
Estimated unbundled SaaS revenue adjustments		—			44			62			88
Estimated optional managed services revenue adjustments		132			268			319			549
Estimated cloud revenue adjustments	$	1,004		$	3,018		$	2,035		$	6,225

SaaS revenue – non-GAAP	$	77,256		$	50,979		$	141,692		$	94,793
Bundled SaaS revenue – non-GAAP		43,812			38,524			83,903			74,799
Unbundled SaaS revenue – non-GAAP		33,444			12,455			57,789			19,994
Optional managed services revenue – non-GAAP		17,004			14,596			33,649			29,009
Cloud revenue – non-GAAP	$	94,260		$	65,575		$	175,341		$	123,802

Table of New SaaS ACV
New SaaS ACV	$	26,568		$	16,697		$	45,372		$	28,589
New SaaS ACV Growth YoY		59.1	%		64.7	%		58.7	%		56.1	%

Table of New Perpetual License Equivalent Bookings
New perpetual license equivalent bookings	$	73,059		$	62,218		$	134,041		$	109,910
New perpetual license equivalent bookings change YoY		17.4	%		1.1	%		22.0	%		(11.4	)%
% of new perpetual license equivalent bookings from SaaS		52.6	%		43.1	%		51.9	%		41.9	%

Table 3
VERINT SYSTEMS INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
(in thousands, except per share data)	2021			2020			2021			2020
REVENUE
Recurring revenue – GAAP	$	156,178		$	139,267		$	300,631		$	268,337
Nonrecurring revenue – GAAP		58,439			64,813			114,890			121,608
Total GAAP revenue		214,617			204,080			415,521			389,945
Recurring revenue adjustments		1,013			3,066			2,052			6,328
Nonrecurring revenue adjustments		—			—			—			—
Total revenue adjustments		1,013			3,066			2,052			6,328
Recurring revenue – non-GAAP		157,191			142,333			302,683			274,665
Nonrecurring revenue – non-GAAP		58,439			64,813			114,890			121,608
Total non-GAAP revenue	$	215,630		$	207,146		$	417,573		$	396,273

GROSS PROFIT AND GROSS MARGIN
Recurring costs	$	37,636		$	32,936		$	75,712		$	67,864
Nonrecurring costs		30,505			29,776			60,385			61,395
Amortization of acquired technology		4,426			4,189			8,810			8,545
Total GAAP cost of revenue		72,567			66,901			144,907			137,804
GAAP gross profit		142,050			137,179			270,614			252,141
GAAP gross margin		66.2	%		67.2	%		65.1	%		64.7	%
Revenue adjustments		1,013			3,066			2,052			6,328
Amortization of acquired technology		4,426			4,189			8,810			8,545
Stock-based compensation expenses		1,426			1,157			2,688			1,694
Acquisition expenses, net		25			53			50			242
Restructuring expenses		85			(59	)		547			1,560
Separation expenses⁽³⁾		—			—			78			—
Discontinued operations corporate overhead adjustment		—			452			—			1,877
Allocation methodology difference		—			250			—			(293	)
Non-GAAP gross profit	$	149,025		$	146,287		$	284,839		$	272,094
Non-GAAP gross margin		69.1	%		70.6	%		68.2	%		68.7	%

RESEARCH AND DEVELOPMENT, NET
GAAP research and development, net	$	31,792		$	30,148		$	60,940		$	62,560
As a percentage of GAAP revenue		14.8	%		14.8	%		14.7	%		16.0	%
Stock-based compensation expenses		(2,027	)		(1,496	)		(3,800	)		(2,669	)
Acquisition expenses, net		(56	)		(20	)		(80	)		(221	)
Restructuring expenses		(129	)		(213	)		(313	)		(1,140	)
Separation expenses⁽³⁾		(10	)		—			(467	)		—
Discontinued operations corporate overhead adjustment		—			(3,973	)		—			(8,494	)
Allocation methodology difference		—			1,829			—			4,031
Non-GAAP research and development, net	$	29,570		$	26,275		$	56,280		$	54,067
As a percentage of non-GAAP revenue		13.7	%		12.7	%		13.5	%		13.6	%

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
GAAP selling, general and administrative expenses	$	91,376		$	77,739		$	179,022		$	154,566
As a percentage of GAAP revenue		42.6	%		38.1	%		43.1	%		39.6	%
Stock-based compensation expenses		(14,640	)		(10,676	)		(28,006	)		(19,644	)
Acquisition (expenses) benefit, net		(3,343	)		(3,141	)		(4,987	)		602
Restructuring expenses		(1,914	)		(490	)		(2,523	)		(2,508	)
Separation expenses⁽³⁾		(3,209	)		—			(8,736	)		—
Other adjustments		(605	)		889			(649	)		788
Discontinued operations corporate overhead adjustment		—			(6,221	)		—			(13,787	)
Allocation methodology difference		—			(1,693	)		—			(3,047	)
Non-GAAP selling, general and administrative expenses	$	67,665		$	56,407		$	134,121		$	116,970
As a percentage of non-GAAP revenue		31.4	%		27.2	%		32.1	%		29.5	%

OPERATING INCOME AND OPERATING MARGIN
GAAP operating income	$	11,537		$	21,573		$	15,979		$	19,532
GAAP operating margin		5.4	%		10.6	%		3.8	%		5.0	%
Revenue adjustments		1,013			3,066			2,052			6,328
Amortization of acquired technology		4,426			4,189			8,810			8,545
Amortization of other acquired intangible assets		7,345			7,719			14,673			15,483
Stock-based compensation expenses		18,093			13,329			34,494			24,007
Acquisition expenses (benefit), net		3,424			3,214			5,117			(139	)
Restructuring expenses		2,128			644			3,383			5,208
Separation expenses⁽³⁾		3,219			—			9,281			—
Other adjustments		605			(889	)		649			(788	)
Discontinued operations corporate overhead adjustment		—			10,646			—			24,158
Allocation methodology difference		—			114			—			(1,277	)
Non-GAAP operating income	$	51,790		$	63,605		$	94,438		$	101,057
Non-GAAP operating margin		24.0	%		30.7	%		22.6	%		25.5	%

Table of Reconciliation from GAAP Other Expense, Net to Non-GAAP Other Expense, Net
GAAP other expense, net	$	(2,020	)	$	(22,598	)	$	(5,440	)	$	(34,628	)
Unrealized (gains) losses on derivatives, net		—			(173	)		14,305			(173	)
Amortization of convertible note discount		—			3,174			—			6,400
Expenses and losses on debt modification or retirement		—			1,462			2,474			1,462
Change in fair value of future tranche right		—			13,610			(15,810	)		13,610
Acquisition (benefit) expenses, net		(148	)		54			(3,348	)		66
Non-GAAP other expense, net⁽¹⁾	$	(2,168	)	$	(4,471	)	$	(7,819	)	$	(13,263	)

Table of Reconciliation from GAAP Provision for Income Taxes to Non-GAAP Provision for Income Taxes
GAAP provision for income taxes	$	4,201		$	8,345		$	4,129		$	8,692
GAAP effective income tax rate		44.1	%		(814.1	)%		39.2	%		(57.6	)%
Non-GAAP tax adjustments		887			(3,422	)		4,627			(1,385	)
Non-GAAP provision for income taxes	$	5,088		$	4,923		$	8,756		$	7,307
Non-GAAP effective income tax rate		10.3	%		8.3	%		10.1	%		8.3	%

Table of Reconciliation from GAAP Net Loss from Continuing Operations Attributable to Verint Systems Inc. Common Shares to Non-GAAP Net Income from Continuing Operations Attributable to Verint Systems Inc. Common Shares
GAAP net loss from continuing operations attributable to Verint Systems Inc. common shares	$	(200	)	$	(12,181	)	$	(2,723	)	$	(26,839	)
Revenue adjustments		1,013			3,066			2,052			6,328
Amortization of acquired technology		4,426			4,189			8,810			8,545
Amortization of other acquired intangible assets		7,345			7,719			14,673			15,483
Stock-based compensation expenses		18,093			13,329			34,494			24,007
Unrealized (gains) losses on derivatives, net		—			(173	)		14,305			(173	)
Amortization of convertible note discount		—			3,174			—			6,400
Expenses and losses on debt modification or retirement		—			1,462			2,474			1,462
Change in fair value of future tranche right		—			13,610			(15,810	)		13,610
Acquisition expenses (benefit), net		3,276			3,268			1,769			(73	)
Restructuring expenses		2,128			644			3,383			5,208
Separation expenses⁽³⁾		3,219			—			9,281			—
Other adjustments		605			(889	)		649			(788	)
Discontinued operations corporate overhead adjustment		—			10,646			—			24,158
Allocation methodology difference		—			114			—			(1,277	)
Non-GAAP tax adjustments		(887	)		3,422			(4,627	)		1,385
Dividends, reversed due to assumed conversion of preferred stock⁽⁴⁾		5,200			2,484			—			2,484
Total adjustments		44,418			66,065			71,453			106,759
Non-GAAP net income from continuing operations attributable to Verint Systems Inc. common shares	$	44,218		$	53,884		$	68,730		$	79,920

Table Comparing GAAP Diluted Net Loss from Continuing Operations Per Common Share Attributable to Verint Systems Inc. to Non-GAAP Diluted Net Income from Continuing Operations Per Common Share Attributable to Verint Systems Inc.
GAAP diluted net loss from continuing operations per common share attributable to Verint Systems Inc.	$	—		$	(0.18	)	$	(0.04	)	$	(0.42	)
Non-GAAP diluted net income from continuing operations per common share attributable to Verint Systems Inc.⁽⁴⁾	$	0.58		$	0.78		$	1.01		$	1.18

GAAP weighted-average shares used in computing diluted net loss from continuing operations per common share attributable to Verint Systems Inc.		65,194			65,849			65,417			64,670
Additional weighted-average shares applicable to non-GAAP diluted net income from continuing operations per common share attributable to Verint Systems Inc.		10,684			3,495			2,311			2,815
Non-GAAP diluted weighted-average shares used in computing net income from continuing operations per common share attributable to Verint Systems Inc.⁽⁴⁾		75,878			69,344			67,728			67,485

Table of Reconciliation from GAAP Net Income (Loss) from Continuing Operations to Adjusted EBITDA
GAAP net income (loss) from continuing operations	$	5,316		$	(9,370	)	$	6,410		$	(23,788	)
As a percentage of GAAP revenue		2.5	%		(4.6	)%		1.5	%		(6.1	)%
Provision for income taxes		4,201			8,345			4,129			8,692
Other expense, net		2,020			22,598			5,440			34,628
Depreciation and amortization⁽²⁾		17,830			18,861			36,111			37,886
Revenue adjustments		1,013			3,066			2,052			6,328
Stock-based compensation expenses		18,093			13,329			34,494			24,007
Acquisition expenses (benefit), net		3,424			3,214			5,117			(139	)
Restructuring expenses		2,129			644			3,383			5,208
Separation expenses⁽³⁾		3,218			—			8,914			—
Other adjustments		605			(889	)		649			(788	)
Discontinued operations corporate overhead adjustment		—			10,646			—			24,158
Allocation methodology difference		—			114			—			(1,277	)
Adjusted EBITDA	$	57,849		$	70,558		$	106,699		$	114,915
As a percentage of non-GAAP revenue		26.8	%		34.1	%		25.6	%		29.0	%

Table of Reconciliation from Gross Debt to Net Debt	July 31, 2021		January 31, 2021
Current maturities of long-term debt	$	—	$	386,713
Long-term debt		405,873		402,781
Unamortized debt discounts and issuance costs		9,127		7,518
Gross debt		415,000		797,012
Less:
Cash and cash equivalents		320,439		585,273
Restricted cash and cash equivalents, and restricted bank time deposits		14		15
Short-term investments		666		46,300
Net debt, excluding long-term restricted cash, cash equivalents, time deposits, and investments		93,881		165,424
Long-term restricted cash, cash equivalents, time deposits and investments		446		651
Net debt, including long-term restricted cash, cash equivalents, time deposits, and investments	$	93,435	$	164,773

(1) For the three months ended July 31, 2021, non-GAAP other expense, net of $2.2 million was comprised of $1.7 million of interest and other expense, net of $0.5 million of foreign exchange gains primarily related to balance sheet translations.

(2) Adjusted for financing fee amortization.

(3) For the three and six months ended July 31, 2020, separation expenses are considered part of discontinued operations and are, therefore, not included in the reported results from continuing operations.

(4) EPS calculation includes the more dilutive of either preferred stock dividends or conversion of preferred stock shares. Average shares for the calculation of adjusted diluted EPS for the six months ended July 31, 2021, excludes shares associated with our convertible preferred stock and therefore earnings include the preferred stock dividends. Conversion of the outstanding preferred shares was more dilutive in all other periods presented.

Table 4
VERINT SYSTEMS INC. AND SUBSIDIARIES
GAAP to Non-GAAP Recurring and Nonrecurring Revenue and Gross Profit
(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
(in thousands)	2021			2020			2021			2020
Table of Reconciliation from GAAP Recurring and Nonrecurring Revenue to Non-GAAP Recurring and Nonrecurring Revenue
Recurring revenue – GAAP	$	156,178		$	139,267		$	300,631		$	268,337
Cloud revenue – GAAP		93,256			62,557			173,306			117,577
Support revenue – GAAP		62,922			76,710			127,325			150,760
Nonrecurring revenue – GAAP	$	58,439		$	64,813		$	114,890		$	121,608
Perpetual revenue – GAAP		32,349			35,829			61,672			64,354
Professional services revenue – GAAP		26,090			28,984			53,218			57,254
Total revenue – GAAP	$	214,617		$	204,080		$	415,521		$	389,945

Estimated recurring revenue adjustments	$	1,013		$	3,066		$	2,052		$	6,328
Estimated cloud revenue adjustments		1,004			3,018			2,035			6,225
Estimated support revenue adjustments		9			48			17			103
Estimated nonrecurring revenue adjustments	$	—		$	—		$	—		$	—
Estimated perpetual revenue adjustments		—			—			—			—
Estimated professional services revenue adjustments		—			—			—			—
Total estimated revenue adjustments	$	1,013		$	3,066		$	2,052		$	6,328

Recurring revenue – non-GAAP	$	157,191		$	142,333		$	302,683		$	274,665
Cloud revenue – non-GAAP		94,260			65,575			175,341			123,802
Support revenue – non-GAAP		62,931			76,758			127,342			150,863
Nonrecurring revenue – non-GAAP	$	58,439		$	64,813		$	114,890		$	121,608
Perpetual revenue – non-GAAP		32,349			35,829			61,672			64,354
Professional services revenue – non-GAAP		26,090			28,984			53,218			57,254
Total revenue – non-GAAP	$	215,630		$	207,146		$	417,573		$	396,273

Table of Reconciliation from GAAP Recurring Gross Profit to Non-GAAP Recurring Gross Profit
GAAP recurring revenue	$	156,178		$	139,267		$	300,631		$	268,337
GAAP recurring costs		37,636			32,936			75,712			67,864
GAAP recurring gross profit		118,542			106,331			224,919			200,473
GAAP recurring gross margin		75.9	%		76.4	%		74.8	%		74.7	%

Recurring revenue adjustments		1,013			3,066			2,052			6,328
Recurring stock-based compensation expenses		562			472			991			737
Recurring acquisition expenses, net		25			26			50			54
Recurring restructuring expenses		91			2			444			783
Recurring separation expenses⁽¹⁾		—			—			32			—
Recurring discontinued operations corporate overhead adjustment		—			241			—			465
Recurring allocation methodology difference		—			93			—			300
Non-GAAP recurring gross profit	$	120,233		$	110,231		$	228,488		$	209,140
Non-GAAP recurring gross margin		76.5	%		77.4	%		75.5	%		76.1	%

Table of Reconciliation from GAAP Nonrecurring Gross Profit to Non-GAAP Nonrecurring Gross Profit
GAAP nonrecurring revenue	$	58,439		$	64,813		$	114,890		$	121,608
GAAP nonrecurring costs		30,505			29,776			60,385			61,395
GAAP nonrecurring gross profit		27,934			35,037			54,505			60,213
GAAP nonrecurring gross margin		47.8	%		54.1	%		47.4	%		49.5	%

Nonrecurring revenue adjustments		—			—			—			—
Nonrecurring stock-based compensation expenses		864			685			1,697			957
Nonrecurring acquisition expenses, net		—			27			—			188
Nonrecurring restructuring expenses		(6	)		(61	)		103			777
Nonrecurring separation expenses⁽¹⁾		—			—			46			—
Nonrecurring discontinued operations corporate overhead adjustment		—			211			—			1,412
Nonrecurring allocation methodology difference		—			157			—			(593	)
Non-GAAP nonrecurring gross profit	$	28,792		$	36,056		$	56,351		$	62,954
Non-GAAP nonrecurring gross margin		49.3	%		55.6	%		49.0	%		51.8	%

(1) For the three and six months ended July 31, 2020, separation expenses are considered part of discontinued operations and are, therefore, not included in the reported results from continuing operations.

Table 5
VERINT SYSTEMS INC. AND SUBSIDIARIES
Calculation of Change in Revenue on a Constant Currency Basis
(Unaudited)

	GAAP Revenue						Non-GAAP Revenue
(in thousands, except percentages)	Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
Revenue for the three and six months ended July 31, 2020	$	204,080		$	389,945		$	207,146		$	396,273
Revenue for the three and six months ended July 31, 2021	$	214,617		$	415,521		$	215,630		$	417,573
Revenue for the three and six months ended July 31, 2021 at constant currency⁽¹⁾	$	210,000		$	406,000		$	211,000		$	408,000
Reported period-over-period revenue growth		5.2	%		6.6	%		4.1	%		5.4	%
% impact from change in foreign currency exchange rates		(2.3	)%		(2.5	)%		(2.2	)%		(2.4	)%
Constant currency period-over-period revenue growth		2.9	%		4.1	%		1.9	%		3.0	%

(1) Revenue for the three and six months ended July 31, 2021 at constant currency is calculated by translating current-period GAAP or non-GAAP foreign currency revenue (as applicable) into U.S. dollars using average foreign currency exchange rates for the three and six months ended July 31, 2020 rather than actual current-period foreign currency exchange rates.

For further information see “Supplemental Information About Constant Currency” at the end of this press release.

Table 6
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)

	July 31,			January 31,
(in thousands, except share and per share data)	2021			2021
Assets
Current Assets:
Cash and cash equivalents	$	320,439		$	585,273
Restricted cash and cash equivalents, and restricted bank time deposits		14			15
Short-term investments		666			46,300
Accounts receivable, net of allowance for doubtful accounts of $1.2 million and $1.6 million, respectively		150,242			206,157
Contract assets, net		38,081			36,716
Inventories		5,425			5,541
Prepaid expenses and other current assets		57,628			42,814
Current assets of discontinued operations		—			354,926
Total current assets		572,495			1,277,742
Property and equipment, net		67,722			69,090
Operating lease right-of-use assets		48,303			57,849
Goodwill		1,335,816			1,327,407
Intangible assets, net		123,534			143,744
Other assets		130,149			104,511
Long-term assets of discontinued operations		—			280,952
Total assets	$	2,278,019		$	3,261,295

Liabilities, Temporary Equity, and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	31,518		$	35,463
Accrued expenses and other current liabilities		132,059			211,517
Current maturities of long-term debt		—			386,713
Contract liabilities		228,040			261,033
Current liabilities of discontinued operations		—			268,713
Total current liabilities		391,617			1,163,439
Long-term debt		405,873			402,781
Long-term contract liabilities		16,571			16,502
Operating lease liabilities		46,738			56,712
Other liabilities		36,231			75,710
Long-term liabilities of discontinued operations		—			58,118
Total liabilities		897,030			1,773,262
Commitments and Contingencies
Temporary Equity:
Preferred Stock – $0.0001 par value; authorized 2,207,000 shares
Series A Preferred Stock; 200,000 shares issued and outstanding at July 31, 2021 and January 31, 2021, respectively; aggregate liquidation preference and redemption value of $200,867 and $206,067 at July 31, 2021 and January 31, 2021, respectively.		200,628			200,628
Series B Preferred Stock; 200,000 shares issued and outstanding at July 31, 2021; no shares issued and outstanding at January 31, 2021; aggregate liquidation preference and redemption value of $200,867 at July 31, 2021.		235,693			—
Equity component of currently redeemable convertible notes		—			4,841
Total temporary equity		436,321			205,469
Stockholders’ Equity:
Common stock – $0.001 par value; authorized 120,000,000 shares. Issued 70,402,000 and 70,177,000 shares; outstanding 65,412,000 and 65,773,000 shares at July 31, 2021 and January 31, 2021, respectively.		70			70
Additional paid-in capital		1,342,130			1,726,166
Treasury stock, at cost – 4,990,000 and 4,404,000 shares at July 31, 2021 and January 31, 2021, respectively.		(234,524	)		(208,124	)
Accumulated deficit		(63,123	)		(113,797	)
Accumulated other comprehensive loss		(102,508	)		(136,878	)
Total Verint Systems Inc. stockholders’ equity		942,045			1,267,437
Noncontrolling interests		2,623			15,127
Total stockholders’ equity		944,668			1,282,564
Total liabilities, temporary equity, and stockholders’ equity	$	2,278,019		$	3,261,295

Table 7
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	Six Months Ended July 31,
(in thousands)	2021			2020
Cash flows from operating activities:
Net income	$	6,410		$	6,612
(Income) from discontinued operations, net of income taxes		—			(30,400	)
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		37,669			41,750
Stock-based compensation, excluding cash-settled awards		34,489			23,998
Change in fair value of future tranche right		(15,810	)		13,610
Amortization of discount on convertible notes		—			6,400
Non-cash losses (gains) on derivative financial instruments, net		14,374			(137	)
Losses on early retirements of debt		2,474			143
Other, net		(878	)		(266	)
Changes in operating assets and liabilities:
Accounts receivable		55,664			57,746
Contract assets		(1,334	)		5,957
Inventories		(206	)		(1,195	)
Prepaid expenses and other assets		(27,926	)		(10,428	)
Accounts payable and accrued expenses		(27,271	)		12,483
Contract liabilities		(33,466	)		(34,777	)
Deferred income taxes		(16,521	)		628
Other, net		(815	)		5,999
Net cash provided by operating activities – continuing operations		26,853			98,123
Net cash (used in) provided by operating activities – discontinued operations		(12,294	)		38,608
Net cash provided by operating activities		14,559			136,731

Cash flows from investing activities:
Cash paid for business combinations, including adjustments, net of cash acquired		(7,000	)		—
Purchases of property and equipment		(7,575	)		(7,388	)
Purchases of investments		—			(59,800	)
Maturities and sales of investments		45,640			9,000
Cash paid for capitalized software development costs		(3,697	)		(4,574	)
Change in restricted bank time deposits, and other investing activities, net		22			(27	)
Net cash provided by (used in) investing activities – continuing operations		27,390			(62,789	)
Net cash used in investing activities – discontinued operations		—			(5,699	)
Net cash provided by (used in) investing activities		27,390			(68,488	)

Cash flows from financing activities:
Proceeds from issuance of preferred stock		198,731			197,254
Proceeds from borrowings		315,000			155,000
Repayments of borrowings and other financing obligations		(311,335	)		(3,794	)
Settlement of 2014 Notes		(386,887	)		—
Purchases of capped calls		(41,060	)		—
Payments of debt-related costs		(10,531	)		(2,207	)
Purchases of treasury stock and common stock for retirement		(75,460	)		(36,836	)
Payments to repurchase convertible notes		—			(13,032	)
Preferred stock dividend payments		(12,856	)		—
Distributions paid to noncontrolling interest		(245	)		(649	)
Payment for termination of interest rate swap		(16,502	)		—
Net cash transferred to Cognyte Software Ltd.		(114,657	)		—
Dividend and other settlements received from Cognyte Software Ltd.		38,280			—
Payments of contingent consideration for business combinations (financing portion) and other financing activities		(4,390	)		(8,452	)
Net cash (used in) provided by financing activities – continuing operations		(421,912	)		287,284
Net cash used in financing activities – discontinued operations		—			(3,382	)
Net cash (used in) provided by financing activities		(421,912	)		283,902
Foreign currency effects on cash, cash equivalents, restricted cash, and restricted cash equivalents		340			(796	)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents		(379,623	)		351,349
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period		700,133			411,657
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	320,510		$	763,006

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period to the condensed consolidated balance sheets:
Cash and cash equivalents	$	320,439		$	731,101
Restricted cash and cash equivalents included in restricted cash and cash equivalents, and restricted bank time deposits		14			22,890
Restricted cash and cash equivalents included in other assets		57			9,015
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	320,510		$	763,006

Verint Systems Inc. and Subsidiaries

Supplemental Information About Non-GAAP Financial Measures and Operating Metrics

This press release contains non-GAAP financial measures, consisting of non-GAAP revenue, non-GAAP recurring revenue, non-GAAP nonrecurring revenue, non-GAAP perpetual revenue, non-GAAP support revenue, non-GAAP professional services revenue, non-GAAP cloud revenue, non-GAAP SaaS revenue, non-GAAP bundled SaaS revenue, non-GAAP unbundled SaaS revenue, non-GAAP optional managed services revenue, non-GAAP recurring gross profit and gross margins, non-GAAP nonrecurring gross profit and gross margins, non-GAAP gross profit and gross margins, non-GAAP research and development, net, non-GAAP selling, general and administrative expenses, non-GAAP operating income and operating margins, non-GAAP other income (expense), net, non-GAAP provision for (benefit from) income taxes and non-GAAP effective income tax rate, non-GAAP net income from continuing operations attributable to Verint Systems Inc. common shares, non-GAAP diluted net income from continuing operations per common share attributable to Verint Systems Inc., adjusted EBITDA and adjusted EBITDA margins, net debt and constant currency measures. The tables above include a reconciliation of each non-GAAP financial measure for completed periods presented in this press release to the most directly comparable GAAP financial measure.

We believe these non-GAAP financial measures, used in conjunction with the corresponding GAAP measures, provide investors with useful supplemental information about the financial performance of our business by:

facilitating the comparison of our financial results and business trends between periods, by excluding certain items that either can vary significantly in amount and frequency, are based upon subjective assumptions, or in certain cases are unplanned for or difficult to forecast,
facilitating the comparison of our financial results and business trends with other technology companies who publish similar non-GAAP measures, and
allowing investors to see and understand key supplementary metrics used by our management to run our business, including for budgeting and forecasting, resource allocation, and compensation matters.

We also make these non-GAAP financial measures available because a number of our investors have informed us that they find this supplemental information useful.

Non-GAAP financial measures should not be considered in isolation as substitutes for, or superior to, comparable GAAP financial measures. The non-GAAP financial measures we present have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, and these non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures. These non-GAAP financial measures do not represent discretionary cash available to us to invest in the growth of our business, and we may in the future incur expenses similar to or in addition to the adjustments made in these non-GAAP financial measures. Other companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

Our non-GAAP financial measures are calculated by making the following adjustments to our GAAP financial measures:

Revenue adjustments. We exclude from our non-GAAP revenue the impact of fair value adjustments required under GAAP relating to cloud services and customer support contracts acquired in a business acquisition, which would have otherwise been recognized on a stand-alone basis. We believe that it is useful for investors to understand the total amount of revenue that we and the acquired company would have recognized on a stand-alone basis under GAAP, absent the accounting adjustment associated with the business acquisition. Our non-GAAP revenue also reflects certain adjustments from aligning an acquired company’s revenue recognition policies to our policies. We believe that our non-GAAP revenue measure helps management and investors understand our revenue trends and serves as a useful measure of ongoing business performance.

Amortization of acquired technology and other acquired intangible assets. When we acquire an entity, we are required under GAAP to record the fair values of the intangible assets of the acquired entity and amortize those assets over their useful lives. We exclude the amortization of acquired intangible assets, including acquired technology, from our non-GAAP financial measures because they are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. We also exclude these amounts to provide easier comparability of pre- and post-acquisition operating results.

Stock-based compensation expenses. We exclude stock-based compensation expenses related to restricted stock awards, stock bonus programs, bonus share programs, and other stock-based awards from our non-GAAP financial measures. We evaluate our performance both with and without these measures because stock-based compensation is typically a non-cash expense and can vary significantly over time based on the timing, size and nature of awards granted, and is influenced in part by certain factors which are generally beyond our control, such as the volatility of the price of our common stock. In addition, measurement of stock-based compensation is subject to varying valuation methodologies and subjective assumptions, and therefore we believe that excluding stock-based compensation from our non-GAAP financial measures allows for meaningful comparisons of our current operating results to our historical operating results and to other companies in our industry.

Unrealized gains and losses on certain derivatives, net. We exclude from our non-GAAP financial measures unrealized gains and losses on certain derivatives which are not designated as hedges under accounting guidance. We exclude unrealized gains and losses on foreign currency derivatives that serve as economic hedges against variability in the cash flows of recognized assets or liabilities, or of forecasted transactions. These contracts, if designated as hedges under accounting guidance, would be considered “cash flow” hedges. These unrealized gains and losses are excluded from our non-GAAP financial measures because they are non-cash transactions which are highly variable from period to period. Upon settlement of these foreign currency derivatives, any realized gain or loss is included in our non-GAAP financial measures.

Amortization of convertible note discount. Our non-GAAP financial measures for periods prior to February 1, 2021 exclude the amortization of the imputed discount on our convertible notes. Under GAAP, certain convertible debt instruments that may be settled in cash upon conversion were required to be bifurcated into separate liability (debt) and equity (conversion option) components in a manner that reflected the issuer’s assumed non-convertible debt borrowing rate. For GAAP purposes, we were required to recognize imputed interest expense on the difference between our assumed non-convertible debt borrowing rate and the coupon rate on our 1.50% convertible notes. This difference is excluded from our non-GAAP financial measures because we believe that this expense is based upon subjective assumptions and does not reflect the cash cost of our convertible debt. Effective with the February 1, 2021 adoption of Accounting Standards Update (” ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, we no longer record the conversion feature of our convertible senior notes in equity. Instead, we combined the previously separated equity component with the liability component, which together is classified as debt, thereby eliminating the subsequent amortization of the debt discount as interest expense.

Expenses and losses on debt modification or retirement. We exclude from our non-GAAP financial measures losses on early retirements of debt attributable to refinancing or repaying our debt, and expenses incurred to modify debt terms, because we believe they are not reflective of our ongoing operations.

Change in fair value of future tranche right. On December 4, 2019, we entered into an Investment Agreement with an affiliate of Apax Partners (the “Apax Investor”), whereby the Apax Investor agreed to make an investment in us of up to $400.0 million of convertible preferred stock. In connection with the Apax Investor’s first $200.0 million investment on May 7, 2020 (for 200,000 shares of Series A Preferred Stock), we determined that our obligation to issue, and the Apax Investor’s obligation to purchase the Series B Preferred Stock in connection with the completion of the spin-off of Cognyte Software Ltd. (our former Cyber Intelligence Solutions business) and other customary closing conditions (the “Future Tranche Right”) met the definition of a freestanding financial instrument. This Future Tranche Right was reported at fair value as an asset or liability on our consolidated balance sheet and was remeasured at fair value each reporting period until the settlement of the right at the time of issuance of the Series B Preferred Stock, which occurred on April 6, 2021. Changes in its fair value were recognized as a non-cash charge or benefit within other income (expense), net on the condensed consolidated statement of operations. We excluded this change in fair value of the Future Tranche Right from our non-GAAP financial measures because it is unusual in nature, can vary significantly in amount, and is unrelated to our ongoing operations.

Acquisition expenses (benefit), net. In connection with acquisition activity (including with respect to acquisitions that are not consummated), we incur expenses (benefits), including legal, accounting, and other professional fees, integration costs, changes in the fair value of contingent consideration obligations, and other costs. Integration costs may consist of information technology expenses as systems are integrated across the combined entity, consulting expenses, marketing expenses, and professional fees, as well as non-cash charges to write-off or impair the value of redundant assets. We exclude these expenses from our non-GAAP financial measures because they are unpredictable, can vary based on the size and complexity of each transaction, and are unrelated to our continuing operations or to the continuing operations of the acquired businesses.

Restructuring expenses. We exclude restructuring expenses from our non-GAAP financial measures, which include employee termination costs, facility exit costs, certain professional fees, asset impairment charges, and other costs directly associated with resource realignments incurred in reaction to changing strategies or business conditions. All of these costs can vary significantly in amount and frequency based on the nature of the actions as well as the changing needs of our business and we believe that excluding them provides easier comparability of pre- and post-restructuring operating results.

Separation expenses. On February 1, 2021, we completed the previously announced spin-off of Cognyte Software Ltd., whose business and operations consist of our former Cyber Intelligence Solutions business. We have incurred and expect to incur, significant expenses in connection with the spin-off, including third-party advisory, accounting, legal, consulting, and other similar services related to the separation as well as costs associated with the operational separation of the two businesses, including those related to human resources, brand management, real estate, and information technology (which are included in Separation expenses to the extent not capitalized). Separation expenses also include incremental cash income taxes related to the reorganization of legal entities and operations in order to effect the separation. These costs are incremental to our normal operating expenses and are being incurred solely as a result of the separation transaction. Accordingly, we are excluding these separation expenses from our non-GAAP financial measures in order to evaluate our performance on a comparable basis.

Impairment charges and other adjustments. We exclude from our non-GAAP financial measures asset impairment charges (other than those already included within restructuring or acquisition activity), rent expense for redundant facilities, gains or losses on sales of property, gains or losses on settlements of certain legal matters, and certain professional fees unrelated to our ongoing operations, all of which are unusual in nature and can vary significantly in amount and frequency.

Discontinued operations corporate overhead adjustment. These amounts represent general corporate overhead costs related to executive management, finance, legal, information technology, and other shared services functions that were historically allocated to Cognyte, but are not permitted to be included in discontinued operations under GAAP guidelines as they represent indirect expenses of Cognyte.

Allocation methodology difference. These amounts are the result of presenting our former Cyber Intelligence Solutions business on a discontinued operations basis for quarters previously reported due to the completion of the spin-off on February 1, 2021. This adjustment represents the difference between the allocation of shared corporate support expenses under GAAP guidelines for reporting discontinued operations compared to management’s previously estimated allocations of those shared corporate support expenses.

Non-GAAP income tax adjustments. We exclude our GAAP provision for (benefit from) income taxes from our non-GAAP measures of net income attributable to Verint Systems Inc., and instead include a non-GAAP provision for income taxes, determined by applying a non-GAAP effective income tax rate to our income before provision for income taxes, as adjusted for the non-GAAP items described above. The non-GAAP effective income tax rate is generally based upon the income taxes we expect to pay in the reporting year. Our GAAP effective income tax rate can vary significantly from year to year as a result of tax law changes, settlements with tax authorities, changes in the geographic mix of earnings including acquisition activity, changes in the projected realizability of deferred tax assets, and other unusual or period-specific events, all of which can vary in size and frequency. We believe that our non-GAAP effective income tax rate removes much of this variability and facilitates meaningful comparisons of operating results across periods. Our non-GAAP effective income tax rate for the year ending January 31, 2022 is currently approximately 10% and was 8% for the year ended January 31, 2021. We evaluate our non-GAAP effective income tax rate on an ongoing basis, and it can change from time to time. Our non-GAAP income tax rate can differ materially from our GAAP effective income tax rate.

Revenue Metrics and Operating Metrics

Recurring revenue, on both a GAAP and non-GAAP basis, is the portion of our revenue that we believe is likely to be renewed in the future, and primarily consists of cloud revenue and initial and renewal post contract support.

Nonrecurring revenue, on both a GAAP and non-GAAP basis, primarily consists of our perpetual licenses, consulting, implementation and installation services, hardware, and training.

Cloud revenue primarily consists of SaaS and optional managed services.

SaaS revenue includes bundled SaaS, software with standard managed services and unbundled SaaS (including associated support) that we account for as term licenses where managed services are purchased separately.

Optional Managed Services is recurring services that are intended to improve our customers operations and reduce expenses.

New SaaS Annual Contract Value (ACV) includes the annualized contract value of all new SaaS contracts received within the period; in cases where SaaS is offered to partners through usage-based contracts, we include the incremental value of usage contracts over a rolling four quarters.

New Perpetual License Equivalent Bookings are used to normalize between perpetual and SaaS bookings and measure overall software bookings growth. We calculate new perpetual license equivalent bookings by adding to perpetual licenses an amount equal to New SaaS ACV bookings multiplied by a conversion factor that normalizes the mix of bundled and unbundled SaaS and perpetual bookings in a given period. The conversion factor used is based on our order mix and may change from period to period. Management uses perpetual license equivalent bookings to understand our performance, including our software bookings growth and SaaS/perpetual license mix. This metric should not be viewed in isolation from other operating metrics that we make available to investors.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before interest expense, interest income, income taxes, depreciation expense, amortization expense, stock-based compensation expenses, revenue adjustments, restructuring expenses, acquisition expenses, and other expenses excluded from our non-GAAP financial measures as described above. We believe that adjusted EBITDA is also commonly used by investors to evaluate operating performance between companies because it helps reduce variability caused by differences in capital structures, income taxes, stock-based compensation expenses, accounting policies, and depreciation and amortization policies. Adjusted EBITDA is also used by credit rating agencies, lenders, and other parties to evaluate our creditworthiness.

Net Debt

Net Debt is a non-GAAP measure defined as the sum of long-term and short-term debt on our consolidated balance sheet, excluding unamortized discounts and issuance costs, less the sum of cash and cash equivalents, restricted cash, restricted cash equivalents, restricted bank time deposits, and restricted investments (including long-term portions), and short-term investments. We use this non-GAAP financial measure to help evaluate our capital structure, financial leverage, and our ability to reduce debt and to fund investing and financing activities and believe that it provides useful information to investors.

Supplemental Information About Constant Currency

Because we operate on a global basis and transact business in many currencies, fluctuations in foreign currency exchange rates can affect our consolidated U.S. dollar operating results. To facilitate the assessment of our performance excluding the effect of foreign currency exchange rate fluctuations, we calculate our GAAP and non-GAAP revenue, cost of revenue, and operating expenses on both an as-reported basis and a constant currency basis, allowing for comparison of results between periods as if foreign currency exchange rates had remained constant. We perform our constant currency calculations by translating current-period foreign currency results into U.S. dollars using prior-period average foreign currency exchange rates or hedge rates, as applicable, rather than current period exchange rates. We believe that constant currency measures, which exclude the impact of changes in foreign currency exchange rates, facilitate the assessment of underlying business trends.

Unless otherwise indicated, our financial outlook, which is provided on a non-GAAP basis, reflects foreign currency exchange rates approximately consistent with rates in effect when the outlook is provided.

We also incur foreign exchange gains and losses resulting from the revaluation and settlement of monetary assets and liabilities that are denominated in currencies other than the entity’s functional currency. We periodically report our historical non-GAAP diluted net income per share both inclusive and exclusive of these net foreign exchange gains or losses. Our financial outlook for diluted earnings per share includes net foreign exchange gains or losses incurred to date, if any, but does not include potential future gains or losses.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210909005951/en/

Investor Relations

Matthew Frankel, CFA

Verint Systems Inc.

(631) 962-9672

[email protected]

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Marketing Data Management Communications Technology Software Networks Internet

MEDIA:

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September 9, 2021 4:08 pm

Vince Holding Corp. Reports Second Quarter 2021 Results

Vince Holding Corp. Reports Second Quarter 2021 Results

NEW YORK–(BUSINESS WIRE)–
Vince Holding Corp. (NYSE:VNCE), a leading global contemporary group (“Vince” or the “Company”), today reported its financial results for the second quarter 2021 ended July 31, 2021.

In this press release, the Company is presenting its historical financial results in conformity with U.S. generally accepted accounting principles (“GAAP”) as well as on an “adjusted” basis. Adjusted results presented in this press release are non-GAAP financial measures. See “Non-GAAP Financial Measures” below for more information about the Company’s use of non-GAAP financial measures and Exhibit 3 to this press release for a reconciliation of GAAP measures to such non-GAAP measures.

Highlights for the second quarter ended July 31, 2021:

Net sales increased 112.5% to $78.7 million as compared to $37.0 million in the same period last year reflecting a 108.5% increase in Vince brand sales and a 139.4% increase in Rebecca Taylor and Parker.
Gross margin rate was 45.0% compared to 36.0% in the same period last year.
Income from operations was $2.6 million compared to a loss from operations of $14.0 million in the same period last year.
Net loss was $0.6 million or $0.05 per share compared to a net loss of $15.1 million or $1.28 per share in the same period last year.

Jack Schwefel, Chief Executive Officer, commented, “We are pleased with our performance in the quarter, particularly with the Vince brand approaching pre-pandemic levels driven by strength in our direct-to-consumer business. The brand continues to resonate with both women and men with sophisticated, high-quality assortments. Going forward, we will continue to focus on accelerating direct-to-consumer as well as our growth strategies of building out our ecommerce capabilities, strengthening brand awareness through marketing, and accelerating growth in men’s. At Rebecca Taylor, we remain encouraged by the long-term potential we see for this brand as we continue to leverage the same strategies that made the Vince brand turnaround so successful.”

For the second quarter ended July 31, 2021:

Total Company net sales increased 112.5% to $78.7 million compared to $37.0 million in the second quarter of fiscal 2020.
Gross profit was $35.4 million, or 45.0% of net sales, compared to gross profit of $13.3 million, or 36.0% of net sales, in the second quarter of fiscal 2020. The increase in the gross margin rate was primarily due to channel mix, lower year-over-year adjustments to inventory reserves, and lower promotional activity in the direct-to-consumer channel.
Selling, general, and administrative expenses, were $32.7 million, or 41.6% of sales, compared to $27.3 million, or 73.9% of sales, in the second quarter of fiscal 2020. The increase in SG&A dollars was primarily the result of higher payroll and compensation expense, increased investments in marketing as well as higher consulting and other third-party costs.
Income from operations was $2.6 million compared to a loss from operations of $14.0 million in the same period last year.
Income tax expense was $1.3 million as a result of the non-cash deferred tax expense created by the current period amortization of indefinite-lived goodwill and intangible assets for tax but not for book purposes
Net loss was $0.6 million or $0.05 per share compared to a net loss of $15.1 million or $1.28 per share in the same period last year.
The Company ended the quarter with 78 company-operated Vince and Rebecca Taylor stores, a net increase of 10 stores since the second quarter of fiscal 2020.

Vince

Net sales increased 108.5% to $67.2 million as compared to the second quarter of fiscal 2020.
Wholesale segment sales increased 105.0% to $35.2 million compared to the second quarter of fiscal 2020.
Direct-to-consumer segment sales increased 112.5% to $32.0 million compared to the second quarter of fiscal 2020.
Income from operations excluding unallocated corporate expenses was $15.6 million compared to a loss of $1.1 million in the same period last year.

Rebecca Taylor and Parker

Net sales increased 139.4% to $11.5 million as compared to the second quarter of fiscal 2020.
Loss from operations was $1.6 million compared to a loss of $3.1 million in the same period last year.

Net Sales and Operating Results by Segment:

	Three Months Ended
	July 31,			August 1,
(in thousands)	2021			2020
Net Sales:
Vince Wholesale	$	35,170		$	17,159
Vince Direct-to-consumer		31,982			15,051
Rebecca Taylor and Parker		11,521			4,812
Total net sales	$	78,673		$	37,022

Income (loss) from operations:
Vince Wholesale	$	9,441		$	4,404
Vince Direct-to-consumer		6,126			(5,525	)
Rebecca Taylor and Parker		(1,571	)		(3,059	)
Subtotal		13,996			(4,180	)
Unallocated corporate*		(11,361	)		(9,828	)
Total income (loss) from operations	$	2,635		$	(14,008	)

* Unallocated corporate expenses are related to the Vince brand and are comprised of selling, general and administrative expenses attributable to corporate and administrative activities (such as marketing, design, finance, information technology, legal and human resource departments), and other charges that are not directly attributable to the Company’s Vince Wholesale and Vince Direct-to-consumer reportable segments.

Balance Sheet

At the end of the second quarter of fiscal 2021, total borrowings under the Company’s debt agreements totaled $87.3 million and the Company had $34.4 million of excess availability under its revolving credit facility.

Subsequent to the end of the quarter, on September 7^th, the Company entered into a new $35 million senior secured term loan credit facility, replacing its prior facility of approximately $25 million. This step further enhances the Company’s liquidity position by increasing its availability as well as reducing associated covenants. The Company concurrently entered into a restated and amended revolving credit facility which reflects the terms of the new term loan credit facility. As a result of the amendment to the revolving credit facility and new term loan credit facility, the Company has also reduced its margin rate to pre-pandemic levels reducing its current cost of capital. Furthermore, the Company entered into an amendment to its third lien credit facility, which also reflects other applicable terms of the new term loan credit facility. The new term loan facility and amended revolving credit facility now mature in 2026 and the third lien credit facility now matures in 2027.

Net inventory at the end of the second quarter of fiscal 2021 was $74.3 million compared to $92.1 million at the end of the second quarter of fiscal 2020. As a reminder, the Company experienced an increase in seasonal inventory levels in the second quarter of fiscal 2020 due to order cancellations in the wholesale channel and temporary store closures. As a result of the actions taken to work through prior seasonal product, the healthier inventory levels also reflect an improved balance of newness.

2021 Second Quarter Earnings Conference Call

A conference call to discuss the second quarter results will be held today, September 9, 2021, at 4:30 p.m. ET, hosted by Vince Holding Corp. Chief Executive Officer, Jack Schwefel, and Chief Financial Officer, David Stefko. During the conference call, the Company may make comments concerning business and financial developments, trends and other business or financial matters. The Company’s comments, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.

Those who wish to participate in the call may do so by dialing (833) 392-0629, conference ID 4054989. Any interested party will also have the opportunity to access the call via the Internet at http://investors.vince.com/. To listen to the live call, please go to the website at least 15 minutes early to register and download any necessary audio software. For those who cannot listen to the live broadcast, a recording will be available for 12 months after the date of the event. Recordings may be accessed at http://investors.vince.com.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, the Company has provided, with respect to financial results relating to six months ended August 1, 2020, adjusted operating income (loss), adjusted income (loss) before income taxes, adjusted income taxes, adjusted net income (loss) and adjusted earnings (loss) per share, which are non-GAAP measures, in order to eliminate the effect of non-cash asset impairment charges and the TRA adjustment. The Company believes that the presentation of these non-GAAP measures facilitates an understanding of the Company’s continuing operations without the impact associated with the aforementioned items. While these types of events can and do recur periodically, they are excluded from the indicated financial information due to their impact on the comparability of earnings across periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP results has been provided in Exhibit 3 to this press release.

ABOUT VINCE HOLDING CORP.

Vince Holding Corp. is a global contemporary group, consisting of three brands: Vince, Rebecca Taylor and Parker. Vince, established in 2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style. Known for its range of luxury products, Vince offers women’s and men’s ready-to-wear, footwear and accessories through 50 full-price retail stores, 18 outlet stores, and its e-commerce site, vince.com and through its subscription service Vince Unfold, www.vinceunfold.com, as well as through premium wholesale channels globally. Rebecca Taylor, founded in 1996 in New York City, is a high-end women’s contemporary womenswear line lauded for its signature prints, romantic detailing, and vintage inspired aesthetic reimagined for a modern era. The Rebecca Taylor collection is available at 12 retail stores, through our e-commerce site at rebeccataylor.com and through its subscription service Rebecca Taylor RNTD, www.rebeccataylorrntd.com, as well as through major department and specialty stores in the US and select international markets. Parker, founded in 2008 in New York City, is a contemporary women’s fashion brand that is trend focused. Please visit www.vince.com for more information.

Forward-Looking Statements: This document, and any statements incorporated by reference herein, contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company’s future results and financial condition, revenues, store openings and closings, margins, expenses and earnings and are indicated by words or phrases such as “may,” “will,” “should,” “believe,” “expect,” “seek,” “anticipate,” “intend,” “estimate,” “plan,” “target,” “project,” “forecast,” “envision” and other similar phrases. Although we believe the assumptions and expectations reflected in these forward-looking statements are reasonable, these assumptions and expectations may not prove to be correct and we may not achieve the results or benefits anticipated. These forward-looking statements are not guarantees of actual results, and our actual results may differ materially from those suggested in the forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, including, without limitation: the impact of the novel coronavirus (COVID-19) pandemic on our business, results of operations and liquidity; our ability to continue having the liquidity necessary to service our debt, meet contractual payment obligations, and fund our operations; further impairment of our goodwill and indefinite-lived intangible assets; general economic conditions; our ability to realize the benefits of our strategic initiatives; our ability to maintain our larger wholesale partners; the loss of certain of our wholesale partners; our ability to make lease payments when due; the execution and management of our retail store growth plans; the expected effects of the acquisition of the Acquired Businesses on the Company; our ability to successfully manage the transition of the new Chief Executive Officer; our ability to expand our product offerings into new product categories, including the ability to find suitable licensing partners; our ability to remediate the identified material weakness in our internal control over financial reporting; our ability to optimize our systems, processes and functions; our ability to mitigate system security risk issues, such as cyber or malware attacks, as well as other major system failures; our ability to comply with privacy-related obligations; our ability to comply with domestic and international laws, regulations and orders; our ability to anticipate and/or react to changes in customer demand and attract new customers, including in connection with making inventory commitments; our ability to remain competitive in the areas of merchandise quality, price, breadth of selection and customer service; our ability to keep a strong brand image; our ability to attract and retain key personnel; our ability to protect our trademarks in the U.S. and internationally; the execution and management of our international expansion, including our ability to promote our brand and merchandise outside the U.S. and find suitable partners in certain geographies; our current and future licensing arrangements; seasonal and quarterly variations in our revenue and income; our ability to ensure the proper operation of the distribution facilities by third-party logistics providers; the extent of our foreign sourcing; fluctuations in the price, availability and quality of raw materials; commodity, raw material and other cost increases; our reliance on independent manufacturers; other tax matters; and other factors as set forth from time to time in our Securities and Exchange Commission filings, including those described under “Item 1A—Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We intend these forward-looking statements to speak only as of the time of this release and do not undertake to update or revise them as more information becomes available, except as required by law.

Vince Holding Corp. and Subsidiaries													Exhibit (1)
Condensed Consolidated Statements of Operations
(Unaudited, amounts in thousands except percentages, share and per share data)

	Three Months Ended						Six Months Ended
	July 31,			August 1,			July 31,			August 1,
	2021			2020			2021			2020
Net sales	$	78,673		$	37,022		$	136,206		$	76,040
Cost of products sold		43,295			23,682			75,345			46,700
Gross profit		35,378			13,340			60,861			29,340
as a % of net sales		45.0	%		36.0	%		44.7	%		38.6	%
Impairment of goodwill and intangible assets		—			—			—			13,848
Impairment of long-lived assets		—			—			—			13,026
Selling, general and administrative expenses		32,743			27,348			65,327			65,892
as a % of net sales		41.6	%		73.9	%		48.0	%		86.7	%
Income (loss) from operations		2,635			(14,008	)		(4,466	)		(63,426	)
as a % of net sales		3.3	%		(37.8	)%		(3.3	)%		(83.4	)%
Interest expense, net		1,927			1,022			3,805			2,047
Other expense (income), net		—			4			–			(2,303	)
Income (loss) before income taxes		708			(15,034	)		(8,271	)		(63,170	)
Provision for income taxes		1,298			28			3,941			70
Net loss	$	(590	)	$	(15,062	)	$	(12,212	)	$	(63,240	)
Loss per share:
Basic loss per share	$	(0.05	)	$	(1.28	)	$	(1.03	)	$	(5.39	)
Diluted loss per share	$	(0.05	)	$	(1.28	)	$	(1.03	)	$	(5.39	)
Weighted average shares outstanding:
Basic		11,898,360			11,784,007			11,855,535			11,739,061
Diluted		11,898,360			11,784,007			11,855,535			11,739,061

Vince Holding Corp. and Subsidiaries							Exhibit (2)
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
	July 31,		January 30,		August 1,
	2021		2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	1,524	$	3,777	$	782
Trade receivables, net		31,158		31,878		18,589
Inventories, net		74,336		68,226		92,122
Prepaid expenses and other current assets		5,614		6,703		3,483
Total current assets		112,632		110,584		114,976
Property and equipment, net		17,687		17,741		18,823
Operating lease right-of-use assets		88,992		91,982		89,004
Intangible assets, net		76,163		76,491		76,819
Goodwill		31,973		31,973		31,973
Other assets		3,745		4,173		5,112
Total assets	$	331,192	$	332,944	$	336,707

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	50,789	$	40,216	$	58,450
Accrued salaries and employee benefits		5,268		4,231		9,021
Other accrued expenses		12,451		15,688		11,265
Short-term lease liabilities		24,231		22,085		19,186
Current portion of long-term debt		1,375		—		2,063
Total current liabilities		94,114		82,220		99,985
Long-term debt		84,759		84,485		72,898
Long-term lease liabilities		90,655		97,144		95,042
Deferred income tax liability and other liabilities		6,761		2,888		416
Stockholders’ equity		54,903		66,207		68,366
Total liabilities and stockholders’ equity	$	331,192	$	332,944	$	336,707

Vince Holding Corp. and Subsidiaries														Exhibit (3)
Reconciliation of GAAP to Non-GAAP measures
(Unaudited, amounts in thousands)
	For the three months ended July 31, 2021
	As Reported (GAAP)			Long-lived Assets Impairment Charge		Goodwill and Intangibles Impairment Charge		TRA Adjustment		As Adjusted (Non- GAAP)

Income from operations	$	2,635		$	—	$	—	$	—	$	2,635
Interest expense, net		1,927			—		—		—		1,927
Other (income) expense, net		—			—		—		—		—
Income before income taxes		708			—		—		—		708
Provision for income taxes		1,298			—		—		—		1,298
Net loss	$	(590	)	$	—	$	—	$	—	$	(590	)
Earnings per share	$	(0.05	)	$	—	$	—	$	—	$	(0.05	)	⁽¹⁾



	For the three months ended August 1, 2020
	As Reported (GAAP)			Long-lived Assets Impairment Charge		Goodwill and Intangibles Impairment Charge		TRA Adjustment		As Adjusted (Non- GAAP)

Loss from operations	$	(14,008	)	$	—	$	—	$	—	$	(14,008	)
Interest expense, net		1,022			—		—		—		1,022
Other (income) expense, net		4			—		—		—		4
(Loss) income before income taxes		(15,034	)		—		—		—		(15,034	)
Provision for income taxes		28			—		—		—		28
Net loss	$	(15,062	)	$	—	$	—	$	—	$	(15,062	)
Loss per share	$	(1.28	)	$	—	$	—	$	—	$	(1.28	)	⁽²⁾

⁽¹⁾		Based on weighted-average shares outstanding of 11,898,360 for the three months ended July 31, 2021, which excludes the effect of dilutive equity securities.
⁽²⁾		Based on weighted-average shares outstanding of 11,784,007 for the three months ended August 1, 2020, which excludes the effect of dilutive equity securities.

	For the six months ended July 31, 2021
	As Reported (GAAP)			Long-lived Assets Impairment Charge			Goodwill and Intangibles Impairment Charge			TRA Adjustment			As Adjusted (Non- GAAP)

Loss from operations	$	(4,466	)	$	—		$	—		$	—		$	(4,466	)
Interest expense, net		3,805			—			—			—			3,805
Other (income) expense, net		—			—			—			—			—
Loss before income taxes		(8,271	)		—			—			—			(8,271	)
Provision for income taxes		3,941			—			—			—			3,941
Net loss	$	(12,212	)	$	—		$	—		$	—		$	(12,212	)
Loss per share	$	(1.03	)	$	–		$	–		$	–		$	(1.03	)	⁽³⁾



	For the six months ended August 1, 2020
	As Reported (GAAP)			Long-lived Assets Impairment Charge			Goodwill and Intangibles Impairment Charge			TRA Adjustment			As Adjusted (Non- GAAP)

Loss from operations	$	(63,426	)	$	(13,026	)	$	(13,848	)	$	—		$	(36,552	)
Interest expense, net		2,047			—			—			—			2,047
Other (income) expense, net		(2,303	)		—			—			(2,320	)		17
(Loss) income before income taxes		(63,170	)		(13,026	)		(13,848	)		2,320			(38,616	)
Provision for income taxes		70			—			—			—			70
Net (loss) income	$	(63,240	)	$	(13,026	)	$	(13,848	)	$	2,320		$	(38,686	)
(Loss) earnings per share	$	(5.39	)	$	(1.11	)	$	(1.18	)	$	0.20		$	(3.30	)	⁽⁴⁾

⁽³⁾		Based on weighted-average shares outstanding of 11,855,535 for the six months ended July 31, 2021, which excludes the effect of dilutive equity securities.
⁽⁴⁾		Based on weighted-average shares outstanding of 11,739,061 for the six months ended August 1, 2020, which excludes the effect of dilutive equity securities.

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ICR, Inc.

Jean Fontana, 646-277-1214

[email protected]

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September 9, 2021 4:08 pm

Zscaler Reports Fourth Quarter and Fiscal 2021 Financial Results

Fourth Quarter Highlights

Revenue grows 57% year-over-year to $197.1 million
Calculated billings grows 70% year-over-year to $332.2 million
Deferred revenue grows 71%
year-over-year to $630.6 million
GAAP net loss of $81.0 million compared to GAAP net loss of $49.5 million on a year-over-year basis
Non-GAAP net income of $20.3 million compared to non-GAAP net income of $12.0 million on a year-over-year basis

SAN JOSE, Calif., Sept. 09, 2021 (GLOBE NEWSWIRE) — Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its fiscal fourth quarter and fiscal year ended July 31, 2021.

“We delivered outstanding results for the fourth quarter, with a record number of large deals across diverse sectors driving 57% revenue growth and 70% billings growth year over year, finishing the fiscal year with strong business momentum,” said Jay Chaudhry, Chairman and CEO of Zscaler. “Enterprises of all sizes are adopting Zscaler’s Zero Trust Exchange to accelerate their secure digital transformation journey as they turn away from legacy castle-and-moat security. We continue to invest and innovate across all our product pillars and help our customers adopt a Zero Trust architecture designed to secure the cloud and mobile world.”

Fourth Quarter Fiscal 2021 Financial Highlights

Revenue: $197.1 million, an increase of 57% year-over-year.
Income (loss) from operations: GAAP loss from operations was $67.4 million, or 34% of total revenue, compared to $44.9 million, or 36% of total revenue, in the fourth quarter of fiscal 2020. Non-GAAP income from operations was $20.6 million, or 10% of total revenue, compared to $12.4 million, or 10% of total revenue, in the fourth quarter of fiscal 2020.
Net income (loss): GAAP net loss was $81.0 million, compared to $49.5 million in the fourth quarter of fiscal 2020. Non-GAAP net income was $20.3 million, compared to $12.0 million in the fourth quarter of fiscal 2020.
Net income (loss) per share: GAAP net loss per share was $0.59, compared to $0.38 in the fourth quarter of fiscal 2020. Non-GAAP net income per share was $0.14, compared to $0.08 in the fourth quarter of fiscal 2020.
Cash flow: Cash provided by operations was $44.7 million, or 23% of revenue, compared to $31.6 million, or 25% of revenue, in the fourth quarter of fiscal 2020. Free cash flow was $27.7 million, or 14% of revenue, compared to $10.9 million, or 9% of revenue, in the fourth quarter of fiscal 2020.
Deferred revenue: $630.6 million as of July 31, 2021, an increase of 71% year-over-year.
Cash, cash equivalents and short-term investments: $1,502.6 million as of July 31, 2021, an increase of $132.0 million from July 31, 2020.

Full Year Fiscal 2021 Financial Highlights

Revenue: $673.1 million, an increase of 56% year-over-year.
Income (loss) from operations: GAAP loss from operations was $207.8 million, or 31% of total revenue, compared to $114.0 million, or 26% of total revenue, in fiscal 2020. Non-GAAP income from operations was $78.0 million, or 12% of total revenue, compared to $38.2 million, or 9% of total revenue, in fiscal 2020.
Net income (loss): GAAP net loss was $262.0 million, compared to $115.1 million in fiscal 2020. Non-GAAP net income was $75.7 million, compared to $40.8 million in fiscal 2020.
Net income (loss) per share: GAAP net loss per share was $1.93, compared to $0.89 in fiscal 2020. Non-GAAP net income per share was $0.52, compared to $0.30 in fiscal 2020.
Cash flow: Cash provided by operations was $202.0 million, or 30% of revenue, compared to $79.3 million, or 18% of revenue, in fiscal 2020. Free cash flow was $143.7 million, or 21% of revenue, compared to $27.5 million, or 6% of revenue, in fiscal 2020.

Recent Business Highlights

Hosted virtual Zenith Live 2021 across the Americas, Europe and Asia Pacific, with keynote participants from Accenture, Freddie Mac, HSBC and other global leaders in their space. The two-day summit also featured more than 50 cybersecurity training sessions, workshops, and panel discussions to help organizations adopt zero trust to secure work-from-anywhere, prevent cyberthreats and data loss, and improve the digital experience for users everywhere.
Announced new integrations with ServiceNow, the leading digital workflow company, allowing customers to further benefit from zero trust architecture by gaining control of sensitive cloud-based data and enabling fast threat detection and response as they accelerate their secure digital transformation journey.
Selected as a key partner for the new Zero Trust Architecture Project by the National Institute of Standards and Technology (NIST)’s National Cybersecurity Center of Excellence (NCCoE). Zscaler will work alongside the NCCoE and other top Federal IT vendors on innovative approaches for implementing zero trust architecture.
The Zscaler ThreatLabZ research team leveraged unique data from the Zscaler cloud to reveal the current state of IoT malware on devices still connected inside empty office campuses during the pandemic. The Zscaler Zero Trust Exchange successfully blocked more than 800 IoT malware attacks per hour against these devices alone, representing a 700% increase in attacks year-over-year.

Change in Non-GAAP Measures Presentation

Effective August 1, 2020, the beginning of our fiscal year ending July 31, 2021, we have presented employer payroll taxes related to employee equity award transactions, which is a cash expense, as part of stock-based compensation expense in our non-GAAP results. These payroll taxes have been excluded from our non-GAAP results because they are tied to the timing and size of the exercise or vesting of the underlying equity awards and the price of our common stock at the time of vesting or exercise may vary from period to period independent of the operating performance of our business. Prior periods amounts have been recasted to conform to this presentation.

Financial Outlook

For the first quarter of fiscal 2022, we expect:

Total revenue of $210 million to $212 million
Non-GAAP income from operations of $18 million to $19 million
Non-GAAP net income per share of approximately $0.12, assuming approximately 148 million common shares outstanding

For the full year fiscal 2022, we expect:

Total revenue of $940 million to $950 million
Calculated billings of $1,230 million to $1,250 million
Non-GAAP income from operations of $85 million to $90 million
Non-GAAP net income per share of $0.52 to $0.56, assuming approximately 149 million to 150 million common shares outstanding

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Guidance for non-GAAP income from operations excludes stock-based compensation expense and related payroll taxes, amortization expense of acquired intangible assets, asset impairment related to facility exit, certain litigation-related expenses, amortization of debt discount and issuance costs and income tax effects generated by intangible assets acquired in business acquisitions. Guidance for non-GAAP net income per share includes the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes issued in June 2020. We have not reconciled our expectations to non-GAAP income from operations and non-GAAP net income per share to their most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation for the guidance for non-GAAP income from operations and non-GAAP net income per share is not available without unreasonable effort.

Conference Call and Webcast Information

Zscaler will host a conference call for analysts and investors to discuss its fourth quarter fiscal 2021 earnings results and outlook for its first quarter of fiscal 2022 and full year fiscal 2022 today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time).

Date:	Thursday, September 9, 2021
Time:	1:30 p.m. PT
Webcast:	https://ir.zscaler.com
Dial-in number:	918-922-3018

Upcoming Conferences

First quarter of fiscal 2022 virtual investor conference participation schedule:

Deutsche Bank Technology Conference
Friday, September 10, 2021

Piper Sandler Global Technology Conference
Tuesday, September 14, 2021

Citi’s 2021 Global Technology Virtual Conference
Wednesday, September 15, 2021

Sessions which offer a webcast will be available on the Investor Relations section of the Zscaler website at https://ir.zscaler.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future financial and operating performance, including our financial outlook for the first quarter of fiscal 2022 and full year fiscal 2022. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including but not limited to: the duration and global impact of COVID-19 on our business, operations and financial results and the economy in general; our ability as an organization to acquire and integrate other companies, products or technologies in a successful manner; our limited operating history; our ability to identify and effectively implement the necessary changes to address execution challenges; risks associated with managing our rapid growth, including fluctuations from period to period; our limited experience with new product and subscription and support introductions and the risks associated with new products and subscription and support offerings, including the discovery of software bugs; our ability to attract and retain new customers; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscription and support; rapidly evolving technological developments in the market for network security products and subscription and support offerings and our ability to remain competitive; length of sales cycles; and general market, political, economic and business conditions.

Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth from time to time in our filings and reports with the Security Exchange Commission (SEC), including our Quarterly Report on Form 10-Q for the three months ended April 30, 2021 filed on June 3, 2021, as well as future filings and reports by us, copies of which are available on our website at ir.zscaler.com and on the SEC’s website at www.sec.gov. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Use of Non-GAAP Financial Information

We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Explanation of Non-GAAP Financial Measures” section of this press release.

About Zscaler

Zscaler (Nasdaq: ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across more than 150 data centers globally, the SASE-based Zero Trust Exchange is the world’s largest in-line cloud security platform.

Zscaler™ and the other trademarks listed at https://www.zscaler.com/legal/trademarks are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.

Investor Relations Contacts

Bill Choi, CFA
SVP, Investor Relations and Strategic Finance
(408) 816-1478
[email protected]

Natalia Wodecki
Media Relations Contact
[email protected]

ZSCALER, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended						Year Ended
	July 31,						July 31,
	2021			2020			2021			2020
Revenue	$	197,074		$	125,887		$	673,100		$	431,269
Cost of revenue ^{(1) (2)}	45,478			31,358			150,317			95,733
Gross profit	151,596			94,529			522,783			335,536
Operating expenses:
Sales and marketing ^{(1) (2)}	136,385			89,222			459,407			277,981
Research and development ^{(1) (2)}	56,180			32,785			174,653			97,879
General and administrative ^{(1) (3) (4)}	26,428			17,409			96,535			73,632
Total operating expenses	218,993			139,416			730,595			449,492
Loss from operations	(67,397		)	(44,887		)	(207,812		)	(113,956		)
Interest income	524			1,072			2,812			6,477
Interest expense ⁽⁵⁾	(13,634		)	(5,025		)	(53,364		)	(5,025		)
Other income (expense), net	329			(252		)	1,186			(224		)
Loss before income taxes	(80,178		)	(49,092		)	(257,178		)	(112,728		)
Provision for income taxes	845			457			4,851			2,388
Net loss	$	(81,023	)	$	(49,549	)	$	(262,029	)	$	(115,116	)
Net loss per share, basic and diluted	$	(0.59	)	$	(0.38	)	$	(1.93	)	$	(0.89	)
Weighted-average shares used in computing net loss per share, basic and diluted	137,778			131,660			135,654			129,323

⁽¹⁾ Includes stock-based compensation expense and related payroll taxes as follows:

Cost of revenue	$	5,033	$	3,117	$	15,272	$	7,851
Sales and marketing	42,957		32,054		144,273		71,468
Research and development	25,558		13,458		73,238		31,937
General and administrative	12,395		7,351		45,779		18,380
Total	$	85,943	$	55,980	$	278,562	$	129,636

⁽²⁾ Includes amortization expense of acquired intangible assets as follows:

Cost of revenue	$	1,958	$	1,272	$	6,468	$	2,030
Sales and marketing	108		50		327		74
Research and development	—		—		—		1,280
Total	$	2,066	$	1,322	$	6,795	$	3,384

⁽³⁾Includes asset impairment related to facility exit as follows:

—

416

746

⁽⁴⁾ Includes litigation-related expenses as follows:

—

18,356

⁽⁵⁾Includes amortization of debt discount and issuance costs as follows:

13,274

4,885

51,923

4,885

ZSCALER, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
	July 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	275,898		$	141,851
Short-term investments	1,226,654			1,228,722
Accounts receivable, net	257,109			147,584
Deferred contract acquisition costs	57,373			32,240
Prepaid expenses and other current assets	31,269			31,396
Total current assets	1,848,303			1,581,793
Property and equipment, net	108,576			75,734
Operating lease right-of-use assets	44,339			36,119
Deferred contract acquisition costs, noncurrent	149,657			77,675
Acquired intangible assets, net	32,129			24,024
Goodwill	58,977			30,059
Other noncurrent assets	15,650			8,054
Total assets	$	2,257,631		$	1,833,458

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	12,547		$	5,233
Accrued expenses and other current liabilities	22,908			16,361
Accrued compensation	93,622			49,444
Deferred revenue	571,286			337,263
Operating lease liabilities	19,842			15,600
Total current liabilities	720,205			423,901
Convertible senior notes, net	913,538			861,615
Deferred revenue, noncurrent	59,315			32,504
Operating lease liabilities, noncurrent	31,225			28,023
Other noncurrent liabilities	4,453			2,586
Total liabilities	1,728,736			1,348,629
Stockholders’ Equity
Common stock	139			133
Additional paid-in capital	1,131,006			823,804
Accumulated other comprehensive income (loss)	(650		)	463
Accumulated deficit	(601,600		)	(339,571		)
Total stockholders’ equity	528,895			484,829
Total liabilities and stockholders’ equity	$	2,257,631		$	1,833,458

ZSCALER, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Year Ended
	July 31,
	2021			2020
Cash Flows From Operating Activities
Net loss	$	(262,029	)	$	(115,116	)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization expense	29,663			17,734
Amortization expense of acquired intangible assets	6,795			3,384
Amortization of deferred contract acquisition costs	40,558			24,922
Amortization of debt discount and issuance costs	51,923			4,885
Non-cash operating lease costs	20,995			13,555
Stock-based compensation expense	258,535			121,395
Amortization of investments purchased at a premium	11,715			50
Deferred income taxes	(2,406		)	(1,172		)
Impairment of assets	416			746
Other	307			321
Changes in operating assets and liabilities, net of effects of business acquisitions
Accounts receivable	(111,605		)	(54,222		)
Deferred contract acquisition costs	(137,673		)	(65,052		)
Prepaid expenses, other current and noncurrent assets	(3,388		)	(13,580		)
Accounts payable	7,451			862
Accrued expenses, other current and noncurrent liabilities	6,532			2,292
Accrued compensation	43,877			27,900
Deferred revenue	262,425			118,017
Operating lease liabilities	(22,051		)	(7,604		)
Net cash provided by operating activities	202,040			79,317
Cash Flows From Investing Activities
Purchases of property, equipment and other assets	(48,165		)	(43,072		)
Capitalized internal-use software	(10,132		)	(8,737		)
Payments for business acquisitions, net of cash acquired	(40,530		)	(39,601		)
Purchases of strategic investments	(3,077		)	(2,000		)
Purchases of short-term investments	(815,480		)	(1,255,629		)
Proceeds from maturities of short-term investments	785,217			289,785
Proceeds from sale of short-term investments	22,499			21,092
Net cash used in investing activities	(109,668		)	(1,038,162		)
Cash Flows From Financing Activities
Proceeds from issuance of common stock upon exercise of stock options	18,221			21,602
Proceeds from issuance of common stock under the employee stock purchase plan	25,704			15,333
Payment of deferred consideration related to a business acquisition	(2,250		)	—
Proceeds from issuance of convertible senior notes, net of issuance costs	—			1,130,522
Purchases of capped calls related to convertible senior notes	—			(145,245		)
Net cash provided by financing activities	41,675			1,022,212
Net increase in cash and cash equivalents ⁽¹⁾	134,047			63,367
Cash and cash equivalents at beginning of period ⁽¹⁾	141,851			78,484
Cash and cash equivalents at end of period ⁽¹⁾	$	275,898		$	141,851

_________

⁽¹⁾ We did not hold restricted cash for any periods presented.

ZSCALER, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)

	Three Months Ended								Year Ended
	July 31,								July 31,
	2021				2020				2021				2020

Revenue	$	197,074			$	125,887			$	673,100			$	431,269

Non-GAAP Gross Profit and Non-GAAP Gross Margin
GAAP gross profit	$	151,596			$	94,529			$	522,783			$	335,536
Add:
Stock-based compensation expense and related payroll taxes	5,033				3,117				15,272				7,851
Amortization expense of acquired intangible assets	1,958				1,272				6,468				2,030
Non-GAAP gross profit	$	158,587			$	98,918			$	544,523			$	345,417
GAAP gross margin	77			%	75			%	78			%	78			%
Non-GAAP gross margin	80			%	79			%	81			%	80			%

Non-GAAP Income from Operations and Non-GAAP Operating Margin
GAAP loss from operations	$	(67,397	)		$	(44,887	)		$	(207,812	)		$	(113,956	)
Add:
Stock-based compensation expense and related payroll taxes	85,943				55,980				278,562				129,636
Litigation-related expenses	—				3				—				18,356
Amortization expense of acquired intangible assets	2,066				1,322				6,795				3,384
Asset impairment related to facility exit ⁽¹⁾	—				—				416				746
Non-GAAP income from operations	$	20,612			$	12,418			$	77,961			$	38,166
GAAP operating margin	(34		)	%	(36		)	%	(31		)	%	(26		)	%
Non-GAAP operating margin	10			%	10			%	12			%	9			%

___________

⁽¹⁾ Consists of asset impairment charges related to the relocation of our corporate headquarters.

ZSCALER, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended						Year Ended
	July 31,						July 31,
	2021			2020			2021			2020
Non-GAAP Net Income per Share, Diluted
GAAP net loss	$	(81,023	)	$	(49,549	)	$	(262,029	)	$	(115,116	)
Stock-based compensation expense and related payroll taxes	85,943			55,980			278,562			129,636
Litigation-related expenses	—			3			—			18,356
Amortization of debt discount and issuance costs	13,274			4,885			51,923			4,885
Amortization expense of acquired intangible assets	2,066			1,322			6,795			3,384
Asset impairment related to facility exit ⁽¹⁾	—			—			416			746
Provision for income taxes ⁽²⁾	—			(620		)	—			(1,110		)
Non-GAAP net income	$	20,260		$	12,021		$	75,667		$	40,781

GAAP net loss per share, diluted	$	(0.59	)	$	(0.38	)	$	(1.93	)	$	(0.89	)
Stock-based compensation expense and related payroll taxes	0.59			0.40			1.92			0.94
Litigation-related expenses	—			—			—			0.13
Amortization of debt discount and issuance costs	0.09			0.03			0.36			0.04
Amortization expense of acquired intangible assets	0.01			0.01			0.05			0.02
Asset impairment related to facility exit ⁽¹⁾	—			—			—			0.01
Provision for income taxes ⁽²⁾	—			—			—			(0.01		)
Adjustment to total fully diluted earnings per share ⁽³⁾	0.04			0.02			0.12			0.06
Non-GAAP net income per share, diluted	$	0.14		$	0.08		$	0.52		$	0.30

Denominator:
Weighted-average shares used in computing GAAP net loss per share, diluted	137,778			131,660			135,654			129,323
Potentially diluted shares	9,869			9,805			10,361			8,911
Antidilutive impact of capped call transactions ⁽⁴⁾	(1,973		)	—			(1,167		)	—
Weighted-average shares used in computing non-GAAP net income per share, diluted	145,674			141,465			144,848			138,234

___________
⁽¹⁾ Consists of asset impairment charges related to the relocation of our corporate headquarters.

⁽²⁾We use our GAAP provision for income taxes for purposes of determining our non-GAAP income tax expense. The difference between our GAAP and non-GAAP income tax expense represents the effects of stock-based compensation expense recognized in foreign jurisdictions and any income tax benefits associated with business combinations. The income tax benefit related to stock-based compensation expense included in the GAAP provision for income taxes was not material for all periods presented. In the fiscal quarter ended April 30, 2020 and July 31, 2020, we recorded a tax benefit of $0.5 million and $0.6 million, respectively, associated with intangible assets recognized as a result of our acquisitions of Cloudneeti Corporation and Edgewise Networks Inc., respectively.

⁽³⁾ The sum of the fully diluted earnings per share impact of individual reconciling items may not total to fully diluted Non-GAAP net income per share due to the weighted-average shares used in computing the GAAP net loss per share differs from the weighted-average shares used in computing the Non-GAAP net income per share and due to rounding of the individual reconciling items. The GAAP net loss per share calculation uses a lower share count as it excludes potentially dilutive shares, which are included in calculating the non-GAAP net income per share.

⁽⁴⁾ We exclude the in-the-money portion of our convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our capped call transactions. Our outstanding capped call transactions are antidilutive under GAAP but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.

ZSCALER, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)

	Three Months Ended								Year Ended
	July 31,								July 31,
	2021				2020				2021				2020
Calculated Billings
Revenue	$	197,074			$	125,887			$	673,100			$	431,269
Add: Total deferred revenue, end of period	630,601				369,767				630,601				369,767
Less: Total deferred revenue, beginning of period	(495,434		)		(300,791		)		(369,767		)		(251,202		)
Calculated billings	$	332,241			$	194,863			$	933,934			$	549,834

Free Cash Flow
Net cash provided by operating activities	$	44,736			$	31,635			$	202,040			$	79,317
Less: Purchases of property, equipment and other assets	(13,950		)		(18,279		)		(48,165		)		(43,072		)
Less: Capitalized internal-use software	(3,085		)		(2,441		)		(10,132		)		(8,737		)
Free cash flow	$	27,701			$	10,915			$	143,743			$	27,508
As a percentage of revenue:
Net cash provided by operating activities	23			%	25			%	30			%	18			%
Less: Purchases of property, equipment and other assets	(7		)	%	(14		)	%	(7		)	%	(10		)	%
Less: Capitalized internal-use software	(2		)	%	(2		)	%	(2		)	%	(2		)	%
Free cash flow margin	14			%	9			%	21			%	6			%

ZSCALER, INC.

Explanation of Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States of America (GAAP), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. 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 particular, free cash flow is not a substitute for cash provided by operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period. 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. A reconciliation of our historical non-GAAP financial measures to their most directly comparable financial measures stated in accordance with GAAP has been included in this press release. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review these reconciliations, and not to rely on any single financial measure to evaluate our business.

Expenses Excluded from Non-GAAP Measures

Stock-based compensation expense is excluded primarily because it is a non-cash expense that management believes is not reflective of our ongoing operational performance. Effective August 1, 2020, the beginning of our fiscal year ending July 31, 2021, we have presented employer payroll taxes related to employee equity award transactions, which is a cash expense, as part of stock-based compensation expense in our non-GAAP results. These payroll taxes have been excluded from our non-GAAP results as these are tied to the timing and size of the exercise or vesting of the underlying equity awards and the price of our common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of our business. Prior period amounts have been recasted to conform to this presentation. Amortization expense of acquired intangible assets is excluded because these are considered by management to be outside of our core business operating performance. Asset impairments related to facility exit costs are excluded because such charges are not reflective of our ongoing operational performance. Amortization of debt discount and issuance costs from our convertible senior notes are excluded because they are non-cash expenses and are not reflective of our ongoing operational performance. We also exclude certain litigation-related expenses consisting of professional fees and related costs incurred by us in defending against significant claims that we deem not to be in the ordinary course of our business and, if applicable, actual losses and accruals related to estimated losses in connection with these claims. There are many uncertainties and potential outcomes associated with any litigation, including the expense of litigation, timing of such expenses, court rulings, unforeseen developments, complications and delays, each of which may affect our results of operations from period to period, as well as the unknown magnitude of the potential loss relating to any lawsuit, all of which are inherently subject to change, difficult to predict and could adversely affect our results of operations. We estimate the tax effect of these items on our non-GAAP results and may adjust our GAAP provision for income taxes, if such effects have a material impact to our non-GAAP results.

Non-GAAP Financial Measures

Non-GAAP Gross Profit and Non-GAAP Gross Margin
. We define non-GAAP gross profit as GAAP gross profit excluding stock-based compensation expense and related payroll taxes and amortization expense of acquired intangible assets. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

Non-GAAP Income from Operations and Non-GAAP Operating Margin
. We define non-GAAP income from operations as GAAP loss from operations excluding stock-based compensation expense and related payroll taxes, amortization expense of acquired intangible assets, asset impairment related to facility exit and certain litigation-related expenses. We define non-GAAP operating margin as non-GAAP income from operations as a percentage of revenue.

Non-GAAP Net Income per Share, Diluted
. We define non-GAAP net income as GAAP net loss excluding stock-based compensation expense and related payroll taxes, amortization expense of acquired intangible assets, asset impairment related to facility exit, amortization of debt discount and issuance costs, certain litigation-related expenses, income tax effects generated by the effects of stock-based compensation expense recognized in foreign jurisdictions and any income tax benefits associated with business combinations. We define non-GAAP net income per share, diluted, as non-GAAP net income divided by the weighted-average diluted shares outstanding, which includes the dilutive effect of potentially diluted common stock equivalents outstanding during the period and the antidilutive impact of the capped call transactions entered into in connection with our convertible senior notes issued in June 2020.

Calculated Billings
. We define calculated billings as total revenue plus the change in deferred revenue in a period. Calculated billings in any particular period aims to reflect amounts invoiced for subscriptions to access our cloud platform, together with related support services related to our new and existing customers. We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance.

Free Cash Flow and Free Cash Flow Margin
. We define free cash flow as net cash provided by operating activities less purchases of property, equipment and other assets and capitalized internal-use software. We define free cash flow margin as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin are meaningful indicators of liquidity information to management and investors about the amount of cash generated from our operations that, after the investments in property, equipment and other assets and capitalized internal-use software, can be used for strategic initiatives.

September 9, 2021 4:08 pm

Affirm Reports Fourth Quarter and Fiscal Year 2021 Results

Affirm Reports Fourth Quarter and Fiscal Year 2021 Results

Exceeds Fourth Quarter Financial Outlook

Accelerates Q4 Gross Merchandise Volume Growth to 106% and Total Revenue Growth to 71% Year Over Year

Expands Network by Nearly Doubling Active Consumers and Growing Active Merchants by Over 400% Year Over Year

Expects Fiscal Year 2022 GMV Growth of At Least 50%, or 70% Excluding Peloton, Prior to Any Benefit from the Recently Announced Amazon Partnership

SAN FRANCISCO–(BUSINESS WIRE)–
Affirm Holdings, Inc. (NASDAQ:AFRM) (“Affirm” or the “Company”), the payment network that empowers consumers and helps merchants drive growth, today reported financial results for its fourth quarter and fiscal year ended June 30, 2021.

“Affirm’s strong results this quarter and fiscal year demonstrate the progress we are making in rapidly expanding our network,” said Max Levchin, Founder and Chief Executive Officer of Affirm. “More consumers and merchants are continuing to choose Affirm because of our ability to offer a variety of ways to pay, thanks to our unrivaled technology. During the fourth quarter, we increased the number of merchants on our platform by more than fivefold, more than doubled gross merchandise volume and grew active consumers by 97% year over year.”

Levchin continued, “The secular shift toward flexible and transparent financial products continues to accelerate. With our superior technology, Affirm is strongly positioned to build a more valuable two-sided network for consumers and merchants. We remain focused on extending our leadership position with our core products, while capitalizing on our vast opportunities to empower more people with the new ones we continue to launch.”

Fourth Quarter and Fiscal Year 2021 Operating Highlights:

All comparisons are made versus the same period in fiscal year 2020 unless otherwise stated.

Gross merchandise volume (“GMV”) for the fourth quarter of fiscal 2021 was $2.5 billion, an increase of 106%, or 178% excluding Peloton; GMV for fiscal year 2021 was $8.3 billion, an increase of 79%, or 91% excluding Peloton
Active merchants grew by 412% to nearly 29,000 for the fourth quarter of fiscal 2021, including several thousand newly integrated Shopify merchants
Active consumers grew 97% to 7.1 million
Transactions per active consumer increased 8% to approximately 2.3 as of June 30, 2021

Fourth Quarter of Fiscal Year 2021 Financial Highlights:¹All comparisons are made versus the same period in fiscal year 2020 unless otherwise stated.

Total revenue was $261.8 million, a 71% increase, driven by increases in network revenue and interest income, related to growth in GMV and loans held for investment, respectively, as well as gains on loan sales
Total revenue less transaction costs was $147.7 million, compared to $107.6 million in the fourth quarter of fiscal 2020, owing to the strong revenue growth; the prior year included a $32.2 million gain in provision for credit losses due to stronger than expected repayments and reduced stress multiples from the initial stress levels at the onset of the COVID-19 pandemic
Operating loss was $124.7 million compared to operating income of $39.3 million in the fourth quarter of fiscal 2020, and includes a $105.2 million increase in stock-based compensation following the Company’s January 2021 initial public offering (“IPO”)
Adjusted operating income for the fourth quarter of fiscal 2021 was $14.2 million, compared to adjusted operating income of $46.7 million reported in the fourth quarter of fiscal 2020
Net loss for the fourth quarter of fiscal 2021 was $128.2 million compared to net income of $34.8 million in the fourth quarter of fiscal 2020, and includes the above-mentioned increase in stock-based compensation following the IPO

Fiscal Year 2021 Financial Highlights:¹All comparisons are made versus fiscal year 2020 unless otherwise stated.

Total revenue was $870.5 million, a 71% increase, driven primarily by growth in network revenue and interest income related to growth in GMV and loans held for investment, respectively
Total revenue less transaction costs was $431.4 million, compared to $160.9 million in fiscal year 2020, driven by strong revenue growth, and offset by a $90.4 million increase in transaction costs
Operating loss was $379.2 million compared to $107.8 million in fiscal year 2020. Fiscal year 2021 operating loss included a $257.9 million year-to-year increase in stock-based compensation following the company’s IPO, as well as $64.8 million in amortization expense for stock warrants related to the Company’s commercial agreement with Shopify, offset by a $39.2 million decrease in provision for credit losses year on year
Adjusted operating income was $14.3 million, compared to an adjusted operating loss of $68.3 million
Net loss was $430.9 million compared to $112.6 million in fiscal year 2020, and includes a $257.9 million increase in stock-based compensation following the IPO and the above-mentioned Shopify warrant expense

Recent Business Highlights

In June 2021, the Company advanced its exclusive partnership with Shopify by making Shop Pay Installments, exclusively powered by Affirm, available to all eligible Shopify merchants in the United States
In August 2021, the Company completed a $500 million securitization of its point-of-sale installment loans, which represented the Company’s most successful and efficient issuance to date with attractive terms
In August 2021, the Company announced a non-exclusive partnership with Amazon to offer Affirm’s flexible payment solutions to consumers who shop on Amazon.com in the U.S., allowing them to split the total cost of purchases of $50 or more into simple monthly payments, without late or hidden fees. Amazon and Affirm are testing with select customers now, and in the coming months, Amazon plans to make Affirm more broadly available to its customers

“We delivered another set of excellent results to close out our fiscal year with GMV and revenue growth continuing to accelerate,” said Michael Linford, CFO of Affirm. “During the fourth quarter, we delivered strong unit economics while driving even greater capital efficiency. The strategic progress we achieved in fiscal year 2021 sets us up for long-term growth. We have never been more confident and excited in Affirm’s future.”

Financial Outlook

The following table summarizes Affirm’s financial outlook for the first quarter and fiscal year 2022 periods.

	Fiscal Q1 2022	Fiscal Year 2022
GMV	$2.42 to $2.52 billion	$12.45 to $12.75 billion
Revenue	$240 to $250 million	$1,160 to $1,190 million
Transaction Costs	$145 to $150 million	$605 to $620 million
Revenue Less Transaction Costs	$95 to $100 million	$555 to $570 million
Adjusted Operating Loss²	$(68) to $(63) million	$(145) to $(135) million
Weighted Average Shares Outstanding	275 million	290 million

Affirm’s financial outlook assumes the following for GMV and revenue:

The Company has not included estimates of potential contributions to GMV or revenue from the recently announced partnership with Amazon, which is currently being tested with select customers. The Company plans to provide additional detail on the financial impact of the partnership in subsequent quarters
The Company has also not included any potential GMV or Revenue contributions from its forthcoming rollout of Affirm Debit+ and plans to update its outlook as the offering is more widely available
The Company expects a moderation in GMV and revenue from Peloton in fiscal year 2022

In fiscal year 2022, Affirm expects GMV to grow faster than revenue as the Company’s GMV mix shifts toward shorter duration Split Pay volume, and the volume coming from longer-duration Peloton financing de-concentrates.

Affirm’s fiscal year 2022 financial outlook also reflects its strategy to drive growth in its network through continued investment in product as well as merchant and consumer acquisition and retention efforts. The Company is intentionally prioritizing increased investments in both its product and engineering teams, while also increasing its brand and direct response marketing efforts. These investments are expected to benefit the Company’s product innovation capabilities and brand awareness in support of its long-term growth objectives.

Conference Call

Affirm will host a conference call and webcast to discuss fourth quarter fiscal year 2021 financial results on Thursday, September 9, 2021, at 5:00 pm ET. Hosting the call will be Max Levchin, Founder and Chief Executive Officer, and Michael Linford, Chief Financial Officer. The conference call will be webcast live from the Company’s investor relations website at https://investors.affirm.com/. A replay will be available on the investor relations website following the call.

Investor Forum

Affirm will also hold a virtual event after the close of market on September 28, 2021 to provide an update on its strategic, financial and product initiatives. The event will feature keynote presentations by Max Levchin, Founder and Chief Executive Officer, and Michael Linford, Chief Financial Officer, and Q&A sessions with Mr. Levchin, Mr. Linford and additional members of its executive leadership team. The event will be webcast from Affirm’s investor relations website at https://investors.affirm.com/ and a replay will be available following the event.

Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators

	Three Months Ended June 30,						Year Ended June 30,
	2021			2020			2021			2020
	(in millions, except GMV and percent data) (unaudited)
GMV (in billions)	$	2.5		$	1.2		$	8.3		$	4.6
Total Revenue, net	$	261.8		$	153.3		$	870.5		$	509.5
Total Revenue as a % of GMV	10.5		%	12.7		%	10.5		%	11.0		%
Transaction Costs (Non-GAAP)	$	114.0		$	45.8		$	439.0		$	348.7
Transaction Costs as a % of GMV	4.6		%	3.8		%	5.3		%	7.5		%
Revenue Less Transaction Costs (Non-GAAP)	$	147.7		$	107.6		$	431.4		$	160.9
Revenue Less Transaction Costs as a % of GMV (Non-GAAP)	5.9		%	8.9		%	5.2		%	3.5		%
Operating (Loss) Income	$	(124.7	)	$	39.3		$	(379.2	)	$	(107.8	)
Operating Margin	(47.6		)%	25.6		%	(43.6		)%	(21.2		)%
Adjusted Operating Income (Loss) (Non-GAAP)	$	14.2		$	46.7		$	14.3		$	(68.3	)
Adjusted Operating Margin (Non-GAAP)	5.4		%	30.5		%	1.6		%	(13.4		)%
Net (Loss) Income	$	(128.2	)	$	34.8		$	(430.9	)	$	(112.6	)

	June 30, 2021			June 30, 2020			June 30, 2019
	(unaudited)
Active Consumers (in millions)	7.1			3.6			2.0
Transactions per Active Consumer	2.3			2.1			2.0
Active Merchants (in thousands)	29.0			5.7			3.1
Total Platform Portfolio (Non-GAAP) (in billions)	$	4.7		$	2.5		$	1.4
Equity Capital Required (Non-GAAP) (in millions)	$	178.1		$	220.8		$	169.6
Equity Capital Required as a % of Total Platform Portfolio (Non-GAAP)	3.8		%	8.9		%	12.0		%
Allowance for Credit Losses as a % of Loans Held for Investment	5.8		%	9.2		%	9.0		%

Key Operating Metrics

Gross Merchandise Volume (“GMV”) – The Company defines GMV as the total dollar amount of all transactions on the Affirm platform during the applicable period, net of refunds. GMV does not represent revenue earned by the Company. However, the Company believes that GMV is a useful operating metric to both the Company and investors in assessing the volume of transactions that take place on the Company’s platform, which is an indicator of the success of the Company’s merchants and the strength of that platform.
Active Consumers – The Company defines an active consumer as a consumer who engages in at least one transaction on its platform during the 12 months prior to the measurement date. The Company believes that active consumers is a useful operating metric to both the Company and investors in assessing consumer adoption and engagement and measuring the size of the Company’s network.
Transactions per Active Consumer – Transactions per active consumer is defined as the average number of transactions that an active consumer has conducted on its platform during the 12 months prior to the measurement date. The Company believes that transactions per active consumer is a useful operating metric to both the Company and investors in assessing consumer engagement and repeat usage, which is an indicator of the value of the Company’s network.

Non-GAAP Financial Measures

Transaction Costs – The Company defines transaction costs as the sum of loss on loan purchase commitment, provision for credit losses, funding costs, and processing and servicing expense. The Company believes that transaction costs is a useful financial measure to both the Company and investors of those costs, which vary with the volume of transactions processed on the Company’s platform.
Transaction Costs as a Percentage of GMV – The Company defines transaction costs as a percentage of GMV as transaction costs, as defined above, as a percentage of GMV, as defined above. The Company believes that transaction costs as a percentage of GMV is a useful financial measure to both the Company and investors as it approximates the variable cost efficiency of transactions processed on the Company’s platform.
Revenue Less Transaction Costs – The Company defines revenue less transaction costs as GAAP total revenue less transaction costs, as defined above. The Company believes that revenue less transaction costs is a useful financial measure to both the Company and investors of the economic value generated by transactions processed on the Company’s platform.
Revenue Less Transaction Costs as a Percentage of GMV – The Company defines revenue less transaction costs as a percentage of GMV as revenue less transaction costs, as defined above, as a percentage of GMV, as defined above. The Company believes that revenue less transaction costs as a percentage of GMV is a useful financial measure to both the Company and investors of the unit economics of transactions processed on the Company’s platform.
Adjusted Operating (Loss) Income – The Company defines adjusted operating (loss) income as its GAAP operating loss, excluding: (a) depreciation and amortization; (b) stock-based compensation included in GAAP operating loss; (c) the amortization of its commercial agreement asset; and (d) certain other costs as set forth in the reconciliation of adjusted operating (loss) income to GAAP operating loss included in the tables at the end of this press release. Adjusted operating (loss) income is presented because the Company believes that it is a useful financial measure to both the Company and investors for evaluating its operating performance and that it facilitates period to period comparisons of the Company’s results of operations as the items excluded generally are not a function of the Company’s operating performance.
Adjusted Operating Margin – The Company defines adjusted operating margin as its adjusted operating (loss) income, as defined above, as a percentage of its GAAP total revenue. Similar to adjusted operating (loss) income, the Company believes that adjusted operating margin is a useful financial measure to both the Company and investors for evaluating its operating performance and that it facilitates period to period comparisons of the Company’s results of operations as the items excluded generally are not a function of the Company’s operating performance.
Total Platform Portfolio – The Company defines total platform portfolio as the unpaid principal balance outstanding of all loans facilitated through its platform as of the balance sheet date, including loans held for investment, loans held for sale, and loans owned by third-parties. The Company believes that total platform portfolio is a useful financial measure to both the Company and investors in assessing the scale of funding requirements for the Company’s network.
Equity Capital Required – The Company defines equity capital required as the sum of the balance of loans held for investment and loans held for sale, less the balance of funding debt and notes issued by securitization trusts as of the balance sheet date. The Company believes that equity capital required is a useful financial measure to both the Company and investors in assessing the amount of the Company’s total platform portfolio that the Company funds with its own equity capital.
Equity Capital Required as a Percentage of Total Platform Portfolio – The Company defines equity capital required as a percentage of total platform portfolio as equity capital required, as defined above, as a percentage of total platform portfolio, as defined above. The Company believes that equity capital required as a percentage of total platform portfolio is a useful financial measure to both the Company and investors in assessing the proportion of outstanding loans on the Company’s platform that are funded by the Company’s own equity capital.

Supplemental Performance Indicators

Active Merchants – The Company defines an active merchant as a merchant which engages in at least one transaction on its platform during the 12 months prior to the measurement date. The Company believes that active merchants is a useful performance indicator to both the Company and investors because it measures the reach of the Company’s network.
Total Revenue as a Percentage of GMV – The Company defines total revenue as a percentage of GMV as GAAP total revenue as a percentage of GMV, as defined above. The Company believes that total revenue as a percentage of GMV is a useful performance indicator to both the Company and investors of the revenue generated on a transaction processed on the Company’s platform.
Allowance for Credit Losses as a Percentage of Loans Held for Investment – The Company defines allowance for credit losses as a percentage of loans held for investment as GAAP allowance for credit losses as a percentage of GAAP loans held for investment. The Company believes that allowance for credit losses as a percentage of loans held for investment is a useful performance indicator to both the Company and investors of the future estimated credit losses on the Company’s outstanding loans held for investment.

Use of Non-GAAP Financial Measures

To supplement the Company’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company presents the following non-GAAP financial measures: transaction costs, transaction costs as a percentage of GMV, revenue less transaction costs, revenue less transaction costs as a percentage of GMV, adjusted operating (loss) income, adjusted operating margin, total platform portfolio, equity capital required, and equity capital required as a percentage of total platform portfolio. Definitions of these non-GAAP financial measures are included under “Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators” above, and reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures are included in the tables below.

Summaries of the reasons why the Company believes that the presentation of each of these non-GAAP financial measures provides useful information to the Company and investors are included under “Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators” above. In addition, the Company uses these non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of its annual operating budget, and for evaluating the effectiveness of its business strategy. However, these non-GAAP financial measures are presented for supplemental informational purposes only, and these non-GAAP financial measures have limitations as analytical tools. Some of these limitations are as follows:

Revenue less transaction costs and revenue less transaction costs as a percentage of GMV are not intended to be measures of operating profit or loss as they exclude key operating expenses such as technology and data analytics, sales and marketing, and general and administrative expenses;
Adjusted operating (loss) income and adjusted operating margin exclude certain recurring, non-cash charges such as depreciation and amortization, although the assets being depreciated and amortized may need to be replaced in the future, and share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of the Company’s compensation strategy; and
Other companies, including companies in the same industry, may calculate these non-GAAP financial measures differently from how the Company calculates them or not at all, which reduces its usefulness as a comparative measure.

Accordingly, investors should not consider these non-GAAP financial measures in isolation or as substitutes for analysis of the Company’s financial results as reported under GAAP, and these non-GAAP measures should be considered along with other operating and financial performance measures presented in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate the business.

Cautionary Note About Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. All statements other than statements of historical fact are forward-looking statements, including statements regarding: the Company’s strategy and future operations, including the Company’s partnerships with Amazon and Shopify; the development, innovation, introduction and performance of the Company’s products, including the Debit+ Card; acquisition and retention of merchants and consumers; the Company’s future growth, investments, network expansion, product mix, brand awareness, financial position, gross market value, revenue, transaction costs, operating income, provision for credit losses, and cash flows; and general economic trends and trends in the Company’s industry and markets. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Risks, uncertainties and assumptions include factors relating to: the Company’s need to attract additional merchants and consumers and retain and grow its relationships with existing merchants and consumers; its need to maintain a consistently high level of consumer satisfaction and trust in its brand; the concentration of a large percentage of its revenue with a single merchant partner; its ability to sustain its revenue growth rate or the growth rate of its related key operating metrics; the highly competitive nature of its industry; the terms of its agreement with one of its originating bank partners; its existing funding arrangements that may not be renewed or replaced or its existing funding sources that may be unwilling or unable to provide funding to it on terms acceptable to it, or at all; its ability to effectively underwrite loans facilitated through its platform and accurately price credit risk; the performance of loans facilitated through its platform; changes in market interest rates; its securitizations, warehouse credit facilities and forward flow agreements; the impact on its business of general economic conditions, the financial performance of its merchants, and fluctuations in the U.S. consumer credit market; its ability to grow effectively through acquisitions or other strategic investments or alliances; and other risks that are described in its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021 and in its other filings with the U.S. Securities and Exchange Commission.

These forward-looking statements reflect the Company’s views with respect to future events as of the date hereof and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. The forward-looking statements are made as of the date hereof, and the Company assumes no obligation and does not intend to update these forward-looking statements.

About Affirm

Affirm’s mission is to deliver honest financial products that improve lives. By building a new kind of payment network — one based on trust, transparency and putting people first — we empower millions of consumers to spend and save responsibly, and give thousands of businesses the tools to fuel growth. Unlike credit cards and other pay-over-time options, we show consumers exactly what they will pay up front, never increase that amount, and never charge any late or hidden fees.

AFRM-F

AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)

	June 30, 2021			June 30, 2020
Assets
Cash and cash equivalents	$	1,466,558		$	267,059
Restricted cash	226,074			61,069
Loans held for sale	13,030			4,459
Loans held for investment	2,022,320			1,034,312
Allowance for credit losses	(117,760		)	(95,137		)
Loans held for investment, net	1,904,560			939,175
Accounts receivable, net	91,575			59,001
Securitization notes receivable and residual certificates (at fair value)	16,170			—
Property, equipment and software, net	62,499			48,140
Goodwill	516,515			1,255
Intangible assets	67,930			2,496
Commercial agreement assets	227,377			—
Other assets	274,679			19,597
Total Assets	$	4,866,967		$	1,402,251
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit
Liabilities:
Accounts payable	$	57,758		$	18,361
Payable to third-party loan owners	50,079			24,998
Accrued interest payable	2,751			1,860
Accrued expenses and other liabilities	317,951			27,810
Convertible debt	—			74,222
Notes issued by securitization trusts	1,176,673			—
Funding debt	680,602			817,926
Total liabilities	2,285,814			965,177
Redeemable convertible preferred stock, $0.00001 par value, 30,000,000 and 124,453,009 shares authorized as of June 30, 2021 and June 30, 2020, respectively; zero and 122,115,971 shares issued and outstanding as of June 30, 2021 and June 30, 2020, respectively; liquidation preference of $0 and $809,032 as of June 30, 2021 and June 30, 2020, respectively	—			804,170
Stockholders’ deficit:
Common stock, $0.00001 par value, no shares authorized, issued and outstanding at June 30, 2021; 232,000,000 shares authorized, 47,684,427 shares issued and outstanding as of June 30, 2020	—			—
Class A common stock, par value $0.00001 per share: 3,030,000,000 shares authorized, 181,131,728 shares issued and outstanding as of June 30, 2021; no shares authorized, issued and outstanding as of June 30, 2020	2			—
Class B common stock, par value $0.00001 per share: 88,226,376 shares authorized, issued and outstanding as of June 30, 2021; no shares authorized, no shares issued and outstanding as of June 30, 2020	1			—
Additional paid in capital	3,462,762			80,373
Accumulated deficit	(888,381		)	(447,167		)
Accumulated other comprehensive gain (loss)	6,769			(302		)
Total stockholders’ equity (deficit)	2,581,153			(367,096		)
Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit	$	4,866,967		$	1,402,251

AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except share and per share amounts)

	Three Months Ended June 30,						Year Ended June 30,
	2021			2020			2021			2020
Revenue
Merchant network revenue	$	88,657		$	85,249		$	379,551		$	256,752
Virtual card network revenue	19,264			2,699			49,851			19,340
Total network revenue	107,921			87,948			429,402			276,092
Interest income	103,793			49,117			326,417			186,730
Gain on sales of loans	42,582			11,578			89,926			31,907
Servicing income	7,484			4,689			24,719			14,799
Total Revenue, net	$	261,780		$	153,332		$	870,464		$	509,528
Operating Expenses^(a)
Loss on loan purchase commitment	$	51,010		$	55,311		$	246,700		$	161,452
Provision for credit losses	25,489			(32,171		)	65,878			105,067
Funding costs	15,623			7,817			52,700			32,316
Processing and servicing	21,924			14,806			73,767			49,831
Technology and data analytics	71,233			31,744			256,082			122,378
Sales and marketing	63,544			5,066			184,279			25,044
General and administrative	137,647			31,439			370,251			121,230
Total Operating Expenses	386,470			114,012			1,249,657			617,318
Operating (Loss) Income	$	(124,690	)	$	39,320		$	(379,193	)	$	(107,790	)
Other income (expense), net	(5,985		)	(4,413		)	(54,073		)	(4,432		)
(Loss) Income Before Income Taxes	$	(130,675	)	$	34,907		$	(433,266	)	$	(112,222	)
Income tax (benefit) expense	(2,448		)	94			(2,343		)	376
Net (Loss) Income	$	(128,227	)	$	34,813		$	(430,923	)	$	(112,598	)
Excess return to preferred stockholders on repurchase	—			—			—			(13,205		)
Net (Loss) Income Attributable to Common Stockholders	$	(128,227	)	$	34,813		$	(430,923	)	$	(125,803	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments	$	1,994		$	562		$	7,042		$	(302	)
Unrealized gains on investments	29			—			29			—
Net Other Comprehensive Income (Loss)	2,023			562			7,071			(302		)
Comprehensive (Loss) Income	$	(126,204	)	$	35,375		$	(423,852	)	$	(112,900	)
Per share data:
Net loss per share attributable to common stockholders for Common stock, Class A common stock and Class B common stock:
Basic	$	(0.48	)	$	0.73		$	(2.72	)	$	(2.63	)
Diluted	$	(0.48	)	$	0.17		$	(2.88	)	$	(2.63	)
Weighted average common shares outstanding
Basic	267,282,166			47,552,288			158,367,923			47,856,720
Diluted	267,282,166			199,238,064			159,244,611			47,856,720

^(a)Amounts include stock-based compensation as follows:
	Three Months Ended June 30,				Year Ended June 30,
	2021		2020		2021		2020
	(in thousands)
General and administrative	$	81,771	$	2,496	$	183,055	$	13,682
Technology and data analytics	21,922		1,988		83,390		12,285
Sales and marketing	6,415		868		19,181		4,040
Processing and servicing	473		28		2,407		82
Total stock-based compensation in operating expenses	$	110,581	$	5,380	$	288,033	$	30,089

AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

	Three Months Ended June 30,						Year Ended June 30,
	2021			2020			2021			2020
Cash Flows from Operating Activities
Net (Loss) Income	$	(128,227	)	$	34,813		$	(430,923	)	$	(112,598	)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Provision for credit losses	25,489			(32,171		)	65,878			105,067
Amortization of premiums and discounts on loans, net	(29,666		)	(6,937		)	(90,371		)	(27,605		)
Gain on sales of loans	(42,582		)	(11,578		)	(89,926		)	(31,907		)
Changes in fair value of assets and liabilities	6,345			3,553			51,655			2,847
Amortization of commercial agreement assets	19,006			—			69,103			—
Amortization of debt issuance costs	2,741			652			6,416			2,313
Stock-based compensation	110,581			5,036			288,033			29,625
Depreciation and amortization	7,887			2,023			19,979			9,444
Impairment of right of use assets	403			—			11,544			—
Purchases of loans held for sale	(1,000,062		)	(465,533		)	(2,640,734		)	(2,101,483		)
Proceeds from the sale of loans held for sale	995,281			446,171			2,594,835			2,021,938
Other	(1,893		)	661			5,129			81
Change in operating assets and liabilities:
Accounts receivable, net	(16,473		)	(15,036		)	(22,934		)	(19,049		)
Other assets	(22,004		)	(4,539		)	(209,139		)	19,936
Accrued interest payable	(1,140		)	(365		)	1,395			428
Accounts payable	28,159			5,950			32,223			7,514
Accrued expenses and other liabilities	16,923			6,814			119,625			13,868
Payable to third-party loan owners	13,556			2,039			25,082			8,279
Net Cash Used in Operating Activities	(15,676		)	(28,447		)	(193,130		)	(71,302		)
Cash Flows from Investing Activities
Purchases and originations of loans held for investment	(1,583,418		)	(797,034		)	(5,897,252		)	(2,830,320		)
Proceeds from the sale of loans held for investment	475,816			91,730			824,011			303,433
Principal repayments and other loan servicing activity	1,322,267			686,946			4,324,618			2,294,833
Acquisition, net of cash and restricted cash acquired	(117,657		)	—			(222,433		)	—
Additions to property, equipment and software	(7,838		)	(2,315		)	(20,252		)	(21,019		)
Other investing cash inflows	1,116			—			1,453			—
Other investing cash outflows	(10,178		)	—			(32,178		)	—
Net Cash Provided by (Used in) Investing Activities	80,108			(20,673		)	(1,022,033		)	(253,073		)
Cash Flows from Financing Activities
Proceeds from funding debt	645,988			604,058			2,942,254			2,132,805
Payment of debt issuance costs	(1,233		)	(6,304		)	(12,499		)	(7,687		)
Principal repayments of funding debt	(727,043		)	(552,995		)	(3,165,103		)	(1,882,155		)
Proceeds from issuance of notes and residual trust certificates by securitization trusts	(350		)	—			1,395,879			—
Principal repayments of notes issued by securitization trusts	(65,865		)	—			(210,368		)	—
Proceeds from issuance of convertible debt, net	—			75,000			—			75,000
Proceeds from issuance of redeemable convertible preferred stock, net	—			—			434,542			15,481
Repurchases and conversion of redeemable convertible preferred stock	—			—			(13		)	(22,591		)
Proceeds from initial public offering, net	(125		)	—			1,305,176			—
Proceeds from exercise of common stock options and warrants	3,227			958			47,042			2,733
Repurchases of common stock	(14		)	—			(800		)	(18,854		)
Payments of tax withholding for stock-based compensation	(30,714		)	—			(158,280		)	—
Net Cash Provided by (Used in) Financing Activities	(176,129		)	120,717			2,577,830			294,732
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,673		)	—			1,837			—
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(114,370		)	71,597			1,364,504			(29,643		)
Cash and cash equivalents and restricted cash, beginning of period	1,807,002			256,531			328,128			357,771
Cash and Cash Equivalents and Restricted Cash, end of period	$	1,692,632		$	328,128		$	1,692,632		$	328,128

AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT.
(Unaudited)
(in thousands)

	Three Months Ended June 30,				Year Ended June 30,
	2021		2020		2021		2020
Supplemental Disclosures of Cash Flow Information
Cash payments for interest	$	13,115	$	6,013	$	41,690	$	28,085
Cash paid for income taxes	138		—		219		—
Cash paid for operating leases	3,489		—		13,215		—
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Stock-based compensation included in capitalized internal-use software	$	4,530	$	572	$	13,999	$	2,921
Additions to property and equipment included in accrued expenses	6		27		6		27
Issuance of warrants in exchange for commercial agreement	—		—		270,579		—
Acquisition of commercial agreement assets	—		—		25,900		—
Conversion of redeemable convertible preferred stock	—		—		1,327,271		—
Conversion of convertible debt	—		—		88,559		—
Issuance of common stock in connection with acquisition	214,475		—		331,498		—
Right of use assets obtained in exchange for operating lease liabilities	—		—		78,421		—

Reconciliation of Non-GAAP Financial Measures

The following tables present a reconciliation of transaction costs, revenue less transaction costs, adjusted operating income (loss), adjusted operating margin, and equity capital required to their most directly comparable financial measures prepared in accordance with GAAP for each of the periods indicated.

	Three Months Ended June 30,						Year Ended June 30,
	2021			2020			2021			2020
	(in thousands, except percent data) (unaudited)
Operating Expenses
Loss on loan purchase commitment	$	51,010		$	55,311		$	246,700		$	161,452
Provision for credit losses	25,489			(32,171		)	65,878			105,067
Funding costs	15,623			7,817			52,700			32,316
Processing and servicing	21,924			14,806			73,767			49,831
Transaction Costs (Non-GAAP)	$	114,046		$	45,763		$	439,045		$	348,666
Technology and data analytics	71,233			31,744			256,082			122,378
Sales and marketing	63,544			5,066			184,279			25,044
General and administrative	137,647			31,439			370,251			121,230
Total Operating Expenses	$	386,470		$	114,012		$	1,249,657		$	617,318

Total Revenue, net	$	261,780		$	153,332		$	870,464		$	509,528
Less: Transaction Costs (Non-GAAP)	(114,046		)	(45,763		)	(439,045		)	(348,666		)
Revenue Less Transaction Costs (Non-GAAP)	$	147,734		$	107,569		$	431,419		$	160,862

Operating (Loss) Income	$	(124,690	)	$	39,320		$	(379,193	)	$	(107,790	)
Add: Depreciation and amortization	7,887			2,023			19,979			9,444
Add: Stock-based compensation included in operating expenses	110,581			5,380			288,033			30,089
Add: Amortization of Shopify Inc. commercial agreement asset	16,853			—			64,820			—
Add: Other costs³	3,582			—			20,697			—
Adjusted Operating Income (Loss) (Non-GAAP)	$	14,213		$	46,723		$	14,336		$	(68,257	)
Divided by: Total Revenue, net	$	261,780		$	153,332		$	870,464		$	509,528
Adjusted Operating Margin (Non-GAAP)	5.4		%	30.5		%	1.6		%	(13.4		)%

	June 30, 2021			June 30, 2020			June 30, 2019
	(in thousands) (unaudited)
Loans held for investment	$	2,022,320		$	1,034,312		$	735,414
Add: Loans held for sale	13,030			4,459			3,420
Less: Funding debt	(680,602		)	(817,926		)	(569,234		)
Less: Notes issued by securitization trusts	(1,176,673		)	—			—
Equity Capital Required (Non-GAAP)	$	178,075		$	220,845		$	169,600

_______________

¹ Information about Affirm’s use of non-GAAP financial measures is provided under “Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators” and “Use of Non-GAAP Financial Measures” below, and reconciliation of GAAP results to non-GAAP results are provided in the tables at the end of this press release.

² A reconciliation of adjusted operating loss to the comparable GAAP measure is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future.

³ Other costs consists of one-time expenses incurred in the period associated with the Company’s initial public offering, its strategic acquisitions, and impairment of right of use assets.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210909006033/en/

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KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Professional Services Finance

MEDIA:

September 9, 2021 4:08 pm

Zumiez Inc. Announces Fiscal 2021 Second Quarter Results

Net Sales Increased 7.3% to $268.7 Million

Diluted Earnings Per Share of $0.94

LYNNWOOD, Wash., Sept. 09, 2021 (GLOBE NEWSWIRE) — Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of apparel, footwear, equipment and accessories for young men and women, today reported results for the second quarter ended July 31, 2021.

Net sales for the second quarter ended July 31, 2021 (13 weeks) increased 7.3% to $268.7 million from $250.4 million in the second quarter ended August 1, 2020 (13 weeks). Compared to the second quarter ended August 3, 2019 (13 weeks), second quarter 2021 net sales increased 17.6%. Net income in the second quarter of fiscal 2021 was $24.0 million, or $0.94 per diluted share, compared to net income of $25.4 million, or $1.01 per diluted share, in the second quarter of the prior fiscal year. Net income for the second quarter of 2019 was $9.0 million, or $0.36 per diluted share. Our second quarter 2021 net income was negatively impacted by $2.8 million, or approximately $0.08 per diluted share related to the conditional settlement of a California class action lawsuit.

Total net sales for the six months (26 weeks) ended July 31, 2021 increased 41.1% to $547.7 million from $388.2 million reported for the six months (26 weeks) ended August 1, 2020. Compared to the first six months (26 weeks) ended August 3, 2019, net sales increased 24.1%. Net income for the first six months of 2021 was $50.4 million, or $1.96 per diluted share, compared to net income for the first six months of fiscal 2020 of $4.3 million, or $0.17 per diluted share, and compared to net income for the first six months of fiscal 2019 of $9.8 million, or $0.39 per diluted share.

At July 31, 2021, the Company had cash and current marketable securities of $412.0 million compared to cash and current marketable securities of $299.1 million at August 1, 2020. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures. The Company repurchased 0.2 million shares during the quarter at an average cost of $44.21 per share and a total cost of $10.9 million.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “Our second quarter performance reflects the sustained success our business has experienced over the past several years. After driving solid growth as we reopened our stores in the second quarter of last year, our teams once again did a terrific job adapting to the current environment to fulfill robust demand for our distinct merchandise offering. Stronger than expected full priced selling helped offset a portion of expenses that were reintroduced following temporary cost savings last year during the height of the pandemic, resulting in second quarter profitability that meaningfully exceeded our projections. The third quarter has started off well driven by a more normalized back to school shopping season, and while operating conditions remain volatile, we believe the flexibility of our business model provides us with key competitive advantages that we can leverage to maintain our positive momentum heading into the holidays. With our strong balance sheet and differentiated strategies, we are well positioned to add to our global market share and return increased value to our shareholders over the long-term.”

Third Quarter To-Date

Total third quarter-to-date total sales for the 37 days ending September 6, 2021 increased 23.2%, compared with the same 37-day time period in the prior year ended September 7, 2020. Compared to the 37-day period ended September 9, 2019, total net sales increased 6.7%. Total comparable sales for the 37-day period ending September 6, 2021 were up 10.5% from the comparable period in the prior year, and increased 5.4% from the comparable period in 2019. Third quarter to date as of September 7, 2021, the Company has repurchased an additional 0.5 million shares of stock at an average price of $41.62 and a total cost of $20.5 million. This brings 2021 fiscal year-to-date share repurchases to 0.7 million shares at an average cost of $42.49 per share for a total cost of $31.4 million.

Outlook

Due to the continued fast-moving nature of this situation and the uncertainty of impacts on revenue and costs, the Company is not providing an outlook at this time for the third quarter or the year.

Conference call Information

A conference call will be held today to discuss second quarter fiscal 2021 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (844) 309-0606 (domestic) or (574) 990-9934 (international) followed by the conference identification code of 8085802.

About Zumiez Inc.

Zumiez is a leading specialty retailer of apparel, footwear, accessories and hardgoods for young men and women who want to express their individuality through the fashion, music, art and culture of action sports, streetwear, and other unique lifestyles. As of August 28, 2021, we operated 727 stores, including 603 in the United States, 52 in Canada, 55 in Europe and 17 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, zumiez.ca, blue-tomato.com and fasttimes.com.au.

Safe Harbor Statement

Certain statements in this press release and oral statements relating thereto made from time to time by representatives of the Company may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, predictions and guidance relating to the Company’s future financial performance, brand and product category diversity, ability to adjust product mix, integration of acquired businesses, growing customer demand for our products and new store openings. In some cases, you can identify forward-looking statements by terminology such as, “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology. These forward-looking statements are based on management’s current expectations but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, which include, without limitation, those described in the Company’s annual report on Form 10-K for the fiscal year ended January 30, 2021 as filed with the Securities and Exchange Commission and available at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

ZUMIEZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	July 31, 2021			% of Sales			August 1, 2020	% of Sales
Net sales	$	268,666		100.0	%	$	250,392	100.0	%
Cost of goods sold		163,701		60.9	%		159,542	63.7	%
Gross profit		104,965		39.1	%		90,850	36.3	%
Selling, general and administrative expenses		73,011		27.2	%		57,738	23.1	%
Operating profit		31,954		11.9	%		33,112	13.2	%
Interest income, net		965		0.4	%		794	0.3	%
Other (expense) income, net		(151	)	(0.1	%)		392	0.2	%
Earnings before income taxes		32,768		12.2	%		34,298	13.7	%
Provision for income taxes		8,770		3.3	%		8,906	3.6	%
Net income	$	23,998		8.9	%	$	25,392	10.1	%
Basic earnings per share	$	0.95				$	1.02
Diluted earnings per share	$	0.94				$	1.01
Weighted average shares used in computation of earnings per share:
Basic		25,274					24,837
Diluted		25,651					25,128

	Six Months Ended
	July 31, 2021			% of Sales			August 1, 2020	% of Sales
Net sales	$	547,735		100.0	%		388,164	100.0	%
Cost of goods sold		339,602		62.0	%		273,578	70.5	%
Gross profit		208,133		38.0	%		114,586	29.5	%
Selling, general and administrative expenses		141,900		25.9	%		109,322	28.1	%
Operating profit		66,233		12.1	%		5,264	1.4	%
Interest income, net		1,940		0.4	%		1,868	0.5	%
Other income, net		103		0.0	%		498	0.1	%
Earnings before income taxes		68,276		12.5	%		7,630	2.0	%
Provision for income taxes		17,893		3.3	%		3,339	0.9	%
Net income	$	50,383		9.20	%		4,291	1.1	%

Basic earnings per share	$	2.00					0.17
Diluted earnings per share	$	1.96					0.17
Weighted average shares used in computation of earnings per share:
Basic		25,221					24,938
Diluted		25,675					25,277

ZUMIEZ INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	July 31, 2021			January 30, 2021		August 1, 2020
	(Unaudited)					(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	74,207		$	73,622	$	133,905
Marketable securities		337,772			301,920		165,227
Receivables		24,834			16,558		24,811
Inventories		149,368			134,354		126,701
Prepaid expenses and other current assets		11,656			8,823		10,560
Total current assets		597,837			535,277		461,204
Fixed assets, net		92,921			98,352		106,151
Operating lease right-of-use assets		246,592			267,152		277,322
Goodwill		60,440			61,470		60,225
Intangible assets, net		15,629			16,029		15,577
Deferred tax assets, net		5,879			9,927		7,080
Other long-term assets		11,444			10,157		9,337
Total long-term assets		432,905			463,087		475,692
Total assets	$	1,030,742		$	998,364	$	936,896

Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable	$	80,174		$	69,751	$	75,318
Accrued payroll and payroll taxes		23,371			27,911		17,816
Income taxes payable		7,494			6,317		5,534
Operating lease liabilities		65,844			66,993		74,558
Other liabilities		28,270			24,480		30,374
Total current liabilities		205,153			195,452		203,600
Long-term operating lease liabilities		223,043			246,123		259,412
Other long-term liabilities		8,250			4,193		3,858
Total long-term liabilities		231,293			250,316		263,270
Total liabilities		436,446			445,768		466,870

Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding		—			—		—
Common stock, no par value, 50,000 shares authorized; 25,559 shares issued and outstanding at July 31, 2021, 25,599 shares issued and outstanding at January 30, 2021, and and 25,450 shares issued and outstanding at August 1, 2020		176,951			171,628		165,056
Accumulated other comprehensive (loss) income		(2,144	)		939		(3,123	)
Retained earnings		419,489			380,029		308,093
Total shareholders’ equity		594,296			552,596		470,026
Total liabilities and shareholders’ equity	$	1,030,742		$	998,364	$	936,896

ZUMIEZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	July 31, 2021			August 1, 2020
Cash flows from operating activities:
Net income	$	50,383		$	4,291
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		11,639			12,005
Noncash lease expense		32,044			30,167
Deferred taxes		4,260			(1,144	)
Stock-based compensation expense		3,431			3,146
Impairment of long-lived assets		2,079			2,128
Other		1,064			(428	)
Changes in operating assets and liabilities:
Receivables		(5,353	)		(5,871	)
Inventories		(15,408	)		9,926
Prepaid expenses and other assets		(4,173	)		(937	)
Trade accounts payable		10,178			27,323
Accrued payroll and payroll taxes		(4,462	)		(6,134	)
Income taxes payable		(304	)		(317	)
Operating lease liabilities		(40,413	)		(20,868	)
Other liabilities		7,165			8,718
Net cash provided by operating activities		52,130			62,005
Cash flows from investing activities:
Additions to fixed assets		(5,418	)		(5,024	)
Purchases of marketable securities and other investments		(112,888	)		(35,720	)
Sales and maturities of marketable securities and other investments		75,234			71,387
Net cash (used in) provided by investing activities		(43,072	)		30,643
Cash flows from financing activities:
Proceeds from issuance and exercise of stock-based awards		2,452			545
Payments for tax withholdings on equity awards		(560	)		(93	)
Common stock repurchased		(10,481	)		(13,417	)
Net cash used in financing activities		(8,589	)		(12,965	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		139			2,146
Net increase in cash, cash equivalents, and restricted cash		608			81,829
Cash, cash equivalents, and restricted cash, beginning of period		80,690			58,991
Cash, cash equivalents, and restricted cash, end of period	$	81,298		$	140,820
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes	$	13,542		$	4,630
Accrual for purchases of fixed assets		686			381
Accrual for repurchase of common stock		442			—

Company Contact:

Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:

ICR
Brendon Frey
(203) 682-8200

September 9, 2021 4:08 pm

Hibbett Announces Promotion of Jared Briskin to Executive Vice President

Hibbett Announces Promotion of Jared Briskin to Executive Vice President

BIRMINGHAM, Ala.–(BUSINESS WIRE)–
Hibbett, Inc. (Nasdaq/GS: HIBB), an athletic-inspired fashion retailer, announced the promotion of Jared Briskin to Executive Vice President, Merchandising; effective immediately. In this new role, Mr. Briskin will be responsible for Merchandising, Planning, Allocation, and Supply Chain.

Mr. Briskin joined the Company in April 1998 as a buyer and has held positions of increasing responsibility over the years in such leadership roles as Vice President over various aspects of the business from June 2004 through September 2014 to Senior Vice President and Chief Merchant since September 2014.

Mike Longo, President and Chief Executive Officer, stated, “Jared has been a cornerstone of Hibbett’s success and growth over his many years of service with the Company. Jared is an important asset to the organization and will gain increased responsibility for supply chain to develop and execute strategies that build the position of Hibbett|City Gear as a leading fashion specialty retailer.”

On his promotion, Mr. Briskin commented, “I am excited and honored to transition into this new leadership role. Since joining Hibbett, I have been fortunate to work with outstanding teams and leadership during the last 23 years. I look forward to working with our dynamic team to capitalize on our strong growth opportunities.”

About Hibbett

Hibbett, headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer with 1,080 Hibbett and City Gear specialty stores located in 35 states nationwide. Hibbett has a rich history of convenient locations, personalized customer service and access to coveted footwear, apparel and equipment from top brands like Nike, Jordan and adidas. Consumers can browse styles, find new releases, shop looks and make purchases online or in their nearest store by visiting www.hibbett.com. Follow us @hibbettsports and @citygear on Facebook, Instagram, and Twitter.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210909005853/en/

David Benck

Senior Vice President and General Counsel

(205) 942-4292

KEYWORDS: United States North America Alabama

INDUSTRY KEYWORDS: Fashion Retail Sports Department Stores Specialty General Sports

MEDIA:

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September 9, 2021 4:08 pm

Cohu to Present at Citi’s 2021 Global Technology Virtual Conference

Cohu to Present at Citi’s 2021 Global Technology Virtual Conference

POWAY, Calif.–(BUSINESS WIRE)–
Cohu, Inc. (NASDAQ: COHU), a global leader in back-end semiconductor equipment and services, today announced that management will participate at Citi’s 2021 Global Technology Virtual Conference on Monday, September 13, 2021 with a one-on-one meeting format and fireside chat.

Presentation materials will be made concurrently available on the Investor Relations section of the Company’s website, www.cohu.com. Portfolio managers and analysts should contact their respective banking representatives to schedule a meeting at these conferences.

About Cohu:

Cohu (NASDAQ: COHU) is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors. Additional information can be found at www.cohu.com.

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210909005795/en/

Cohu, Inc.

Jeffrey D. Jones – Investor Relations

858-848-8106

KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Technology Semiconductor

MEDIA:

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September 9, 2021 4:08 pm

Corcept Announces Presentation of Positive Results From Randomized, Controlled, Phase 2 Trial of Relacorilant in Patients With Recurrent Platinum-Resistant Ovarian Cancer at ESMO 2021

Data from Corcept’s 178-patient, randomized, controlled, Phase 2 trial to be featured in a proffered paper oral presentation at the upcoming ESMO conference on September 17, 2021
Results show benefit experienced by women with recurrent platinum-resistant ovarian cancer who were treated with nab-paclitaxel plus Corcept’s proprietary selective cortisol modulator, relacorilant

MENLO PARK, Calif., Sept. 09, 2021 (GLOBE NEWSWIRE) — Corcept Therapeutics Incorporated (NASDAQ: CORT), a commercial-stage company engaged in the discovery and development of drugs to treat severe metabolic, oncologic and psychiatric disorders by modulating the effects of cortisol, today announced that results from its 178-patient, randomized, controlled, Phase 2 trial of relacorilant plus nab-paclitaxel in patients with recurrent platinum-resistant ovarian cancer will be featured in a proffered paper oral presentation at the European Society for Medical Oncology (ESMO) Congress 2021. The congress will take place from September 16 – 21, 2021.

“We are extremely excited by the potential of relacorilant to treat women with recurrent platinum-resistant ovarian cancer,” said Joseph K. Belanoff, MD, Corcept’s Chief Executive Officer. “As we announced when we released our preliminary results, delaying disease progression without increasing side effect burden was a tremendous benefit to the women in this trial. In the first quarter of next year, we plan to initiate a pivotal Phase 3 trial to confirm these positive results.”

Presentation Title: Relacorilant, a selective glucocorticoid receptor modulator, in combination with nab-paclitaxel improves progression-free survival in patients with recurrent platinum-resistant ovarian cancer: A 3-arm, randomized, open-label, phase II study

Speaker: Dr. Domenica Lorusso, Gynecologic Oncology Unit Fondazione Policlinico Universitario Gemelli IRCCS

Presentation Number: 721O

Session: Gynecological Cancers Proffered Paper Session

Presentation Date/Time: Friday, September 17, 2021 at 13:40 – 13:50 CEST | Channel 3

About Relacorilant

Relacorilant is a non-steroidal, selective modulator of the glucocorticoid receptor that does not bind to the body’s other hormone receptors. Corcept is studying relacorilant in a variety of serious disorders, including ovarian, adrenal and castration-resistant prostate cancer and Cushing’s syndrome. Relacorilant is proprietary to Corcept and is protected by composition of matter and method of use patents. It has received orphan drug designation in the United States for the treatment of Cushing’s syndrome and pancreatic cancer.

About Corcept Therapeutics

Corcept is a commercial-stage company engaged in the discovery and development of drugs to treat severe metabolic, oncologic and psychiatric disorders by modulating the effects of the hormone cortisol. Korlym^® was the first drug approved by the U.S. Food and Drug Administration for patients with Cushing’s syndrome. Corcept has discovered a large portfolio of proprietary compounds, including relacorilant, that selectively modulate the effects of cortisol. The company owns extensive United States and foreign intellectual property covering the composition of its selective cortisol modulators and the use of cortisol modulators to treat a variety of serious disorders.

Forward Looking Statements

Statements in this press release, other than statements of historical fact, are forward-looking statements based on our current plans and expectations that are subject to risks and uncertainties that might cause our actual results to differ materially from those such statements express or imply. These risks and uncertainties concern, but are not limited to, the design and results of our clinical trials; our ability to achieve our goals during the COVID-19 pandemic; the development of relacorilant as a treatment for ovarian cancer, including its clinical attributes, regulatory approvals, mandates and oversight, and other requirements; and the scope and protective power of our intellectual property. In this press release, forward-looking statements, include those concerning the clinical attributes of relacorilant and its potential benefits in patients with ovarian cancer, results of our Phase 2 trial and our planning for a Phase 3 pivotal trial. These and other risks are set forth in our SEC filings, which are available at our website and the SEC’s website. We disclaim any intention or duty to update forward-looking statements made in this press release.

CONTACT:

Corcept Therapeutics
Investor Relations
[email protected]
www.corcept.com

September 9, 2021 4:08 pm

Floor & Decor Launches the Grand Opening of Its Bohemia, New York Store on September 16, 2021

Floor & Decor Launches the Grand Opening of Its Bohemia, New York Store on September 16, 2021

Grand Opening Celebration and Pro Event

ATLANTA–(BUSINESS WIRE)–Floor & Decor (NYSE: FND) a leading specialty retailer of hard-surface flooring, will expand its nationwide footprint when it opens the doors to its newest location in Bohemia, New York on September 16, 2021. This opening marks the third store in the Long Island market. The 79,000 square-foot Floor & Decor warehouse store and design center will open with a team of about 50 full-time and part-time associates led by Wanda Hidalgo, the new store’s Chief Executive Merchant.

“Floor & Decor is thrilled to open our doors in Bohemia,” said Hidalgo. “We are excited to introduce both Professional customers, as well as Homeowners, to our one-stop solution for their flooring needs with an extensive selection of in-stock, trend-right flooring options. We offer unmatched service and quality flooring at unbeatable prices. With our free design services, we look forward to helping every customer turn their vision into reality.”

$5,000 Floor Makeover Sweepstakes

The Bohemia Floor & Decor store will be giving away a $5,000 Floor Makeover as part of its grand opening festivities. Starting on September 16, customers will have the chance to register to win a $5,000 gift card from Floor & Decor. Interested parties can register online at www.floormakeoverbohemia.com. Registration ends on October 15, 2021.

Calling All Pros

Floor & Decor welcomes its valued builders, contractors, architects, designers, remodelers, flooring installers and realtors to visit the new location in Bohemia. Pros are invited to text 257PRO to 26786 to schedule a personal tour of the new store. Those scheduling tours from August 30, 2021 thru October 13, 2021 will be able to register to win a Chevrolet Colorado truck and other great prizes like iPad, Nintendo Switch, Yeti Cooler, GoPro Hero and so much more! During the tour, visitors will get to meet the PRO Services Team and learn about Floor & Decor’s products and services.

“Building relationships with our local professionals is very important to us. Their success is our success,” said Hidalgo. “The store tours and giveaways give us a chance to support our community and tell them about our PRO Premier Rewards and all the benefits it can bring to their business.”

Store Address: 5151 Sunrise Highway, Bohemia, NY 11716

About Floor & Decor: Founded in 2000, Atlanta-based Floor & Decor is a leading high growth specialty retailer of hard-surface flooring, operating 147 warehouse stores and two design studios in 33 states at the end of the second quarter of fiscal 2021. The stores offer homeowners and professionals the industry’s broadest in-stock selection of tile, natural wood, natural stone, laminate and luxury vinyl plank, under one roof. In addition, Floor & Decor stocks the necessary tools, decorative materials, wall tile, and related accessories for hard-surface flooring projects. Stores carry over 1 million square feet of in-stock flooring and offer free design services, as well as a dedicated pro sales team. The company directly sources products from manufacturers around the globe, which enables it to bring the world’s best and most innovative flooring trends to its customers, at everyday low prices. Floor & Decor has locations nationwide, but each store is bolstered by a local focus that creates a store experience and mix of products that meet the needs of each market served.

Additional company information can be found at www.flooranddecor.com and on Facebook (www.facebook.com/flooranddecor).

View source version on businesswire.com: https://www.businesswire.com/news/home/20210909005786/en/

CONTACT: Jennifer Greenberg

Floor & Decor

[email protected]

678-505-3906

KEYWORDS: United States North America New York Georgia

INDUSTRY KEYWORDS: Specialty Retail

MEDIA: