Press Release: New Relic Announces Third Quarter -3-

· 02/04/2021 16:05

Condensed Consolidated Statements of Operations (In thousands, except per share data; unaudited) Three Months Ended Nine Months Ended December 31, December 31, -------------------------- ----------------------- 2020 2019 2020 2019 ---------- -------------- ----------- ---------- Revenue $ 166,340 $ 153,028 $ 494,979 $ 439,853 Cost of revenue 45,968 26,402 124,439 75,164 ---------- -------------- ----------- ---------- Gross profit 120,372 126,626 370,540 364,689 Operating expenses: Research and development 45,773 38,387 131,245 106,858 Sales and marketing 92,392 87,704 266,906 244,711 General and administrative 30,249 24,751 89,481 71,129 ---------- -------------- ----------- ---------- Total operating expenses 168,414 150,842 487,632 422,698 ---------- -------------- ----------- ---------- Loss from operations (48,042) (24,216) (117,092) (58,009) Other income (expense): Interest income 1,734 3,793 6,735 11,944 Interest expense (6,229) (5,953) (18,549) (17,660) Other income (expense), net (811) (465) (1,810) 2,828 ---------- -------------- ----------- ---------- Loss before income taxes (53,348) (26,841) (130,716) (60,897) Income tax provision 564 894 1,276 1,518 ---------- -------------- ----------- ---------- Net loss $ (53,912) $ (27,735) $ (131,992) $ (62,415) ---------- -------------- ----------- ---------- Net loss attributable to redeemable non-controlling interest 286 540 1,059 1,437 ---------- -------------- ----------- ---------- Net loss attributable to New Relic $ (53,626) $ (27,195) $ (130,933) $ (60,978) ========== ============== =========== ========== Net loss attributable to New Relic per share, basic and diluted $ (0.88) $ (0.46) $ (2.16) $ (1.05) ========== ============== =========== ========== Weighted-average shares used to compute net loss per share, basic and diluted 61,209 58,733 60,562 58,352 Condensed Consolidated Balance Sheets (In thousands, except par value; unaudited) December 31, 2020 March 31, 2020 ----------------- -------------- Assets Current assets: Cash and cash equivalents $ 211,145 $ 292,523 Short-term investments 573,472 512,574 Accounts receivable, net of allowances of $2,376 and $3,636, respectively 143,775 147,361 Prepaid expenses and other current assets 16,236 15,979 Deferred contract acquisition costs 34,738 32,016 ----------------- -------------- Total current assets 979,366 1,000,453 Property and equipment, net 93,011 100,294 Restricted cash 5,662 5,641 Goodwill 144,253 45,112 Intangible assets, net 14,662 13,691 Deferred contract acquisition costs, non-current 30,295 28,141 Lease right-of-use assets 59,475 57,777 Other assets, non-current 6,785 7,325 ----------------- -------------- Total assets $ 1,333,509 $ 1,258,434 ================= ============== Liabilities, redeemable non-controlling interest and stockholders' equity Current liabilities: Accounts payable $ 22,034 $ 12,565 Accrued compensation and benefits 39,416 29,054 Other current liabilities 15,838 13,120 Deferred revenue 301,750 313,161 Lease liabilities 5,600 8,682 ----------------- -------------- Total current liabilities 384,638 376,582 Convertible senior notes, net 443,676 427,044 Lease liabilities, non-current 62,849 57,394 Deferred revenue, non-current 1,681 3,166 Other liabilities, non-current 8,092 1,940 ----------------- -------------- Total liabilities 900,936 866,126 Redeemable non-controlling interest 610 1,669 Stockholders' equity:

Gain or loss from lease modification. New Relic may incur a gain or loss from modification related to lease agreements. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic's business and because of the singular nature of benefit or charge from such events.

Anti-dilutive impact of capped call transactions. In connection with the issuance of its convertible senior notes due in 2023, New Relic entered into capped call transactions to offset potential dilution from the embedded conversion feature in the notes. Although New Relic cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, New Relic does reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) attributable to New Relic per share, basic and diluted, to provide investors with useful information in evaluating the financial performance of the company on a per share basis.

Additionally, New Relic's management believes that the non-GAAP financial measure free cash flow is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures and the capitalization of software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations.

Operating Metrics

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

New Relic's monthly recurring revenue represents the revenue that New Relic would contractually expect to receive from those customers over the following month, including partner revenue or revenue from support subscriptions, without any increase or reduction in any of their subscriptions.

Similarly, annual recurring revenue ("ARR") represents the revenue New Relic would contractually expect to receive from those customers over the following 12-month period, including partner revenue or revenue from support subscriptions, without any increase or reduction in any of their contractual commitments. The net change New Relic reports in ARR reflects any increase in ARR from existing customers and new customers, which is referred to as "new ARR," as well as any reduction in ARR from customers who reduced their spend or terminated their relationship with New Relic, which is referred to as "lost ARR."

For contracts entered into under the new pricing model announced on July 30, 2020, New Relic only recognizes as ARR the committed contractual amount for customers under the Annual Pool of Funds model; therefore, the definition of ARR would not include contracts under the Pay as You Go model. Meanwhile, ARR for contracts under Annual Pool of Funds is calculated as the original dollar commitment for the annual contract period, plus any incremental additional dollar commitments added during the term of the period. ARR is measured without reference or adjustments for historic data usage, and therefore excludes assumptions related to overage spend or expected or received overages above committed amounts.

New Relic's dollar-based net expansion rate compares its recurring revenue from customers from one period to the next. It is increased when customers increase their contractual spend amounts in order to increase their use of New Relic's products or use additional products. New Relic's dollar-based net expansion rate is reduced when customers decrease or terminate their contractual spend amounts in order to decrease or cease use of New Relic's products or use fewer products.

New Relic is a registered trademark of New Relic, Inc.

All product and company names herein may be trademarks of their registered owners.

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February 04, 2021 16:05 ET (21:05 GMT)