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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 8-K 


CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 19, 2019 


CARBON BLACK, INC.

(Exact name of registrant as specified in its charter)


Delaware

001-38478

55-0810166

 

 

 

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

1100 Winter Street

 

 

Waltham, MA

 

02451

(Address of principal executive offices)

 

(Zip Code)

(617) 393-7400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

 

 


 

Item 2.02           Results of Operations and Financial Condition.

On February 20, 2019, Carbon Black, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2018. The Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information included in this Item 2.02 of the Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 5.02           Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Retirement of Mark Sullivan

On February 19, 2019, Mark Sullivan announced his intention to resign as the Company’s Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Treasurer and Assistant Secretary, effective March 11, 2019 (the “Transition Date”), in connection with his retirement. Mr. Sullivan is expected to remain with the Company through June 30, 2019 to ensure a smooth transition of his duties (the “Transition Period”). The Company agreed to extend the exercise periods for each stock option awarded to Mr. Sullivan pursuant to the Company’s equity plans and any applicable option agreements or stock-based award agreements (the “Equity Documents”) that is vested as of Mr. Sullivan’s last date of employment until March 31, 2020.  As of the date hereof, any other terms of Mr. Sullivan’s retirement, including any changes to Mr. Sullivan’s compensation during or following such Transition Period, have not been determined or approved.  The Company will file an amendment to this Current Report on Form 8-K disclosing such information when it has been determined.

Appointment of Stephen Webber

On February 19, 2019, the Board of Directors of the Company elected Stephen Webber as Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Treasurer and Assistant Secretary of the Company, effective as of the Transition Date.

Mr. Webber, 48, most recently served as Chief Operating Officer and Chief Financial Officer of BackOffice Associates, LLC since 2018.  He has also served as Chief Financial Officer of Cynosure, Inc. between 2016 and 2017, and Virtustream, Inc. between 2015 and 2016.  Prior to those positions, Mr. Webber held various senior finance leadership roles at EMC Corporation, including Senior Vice President of Finance, over a nearly twenty year career at that company.   He holds an M.B.A. from the F.W. Olin Graduate School of Business and a B.S. from Babson College.

In connection with Mr. Webber’s election as Chief Financial Officer,  Principal Accounting Officer, Executive Vice President, Treasurer and Assistant Secretary, the Company entered into an Offer Letter with Mr. Webber and an Employment Agreement effective February 20, 2019, which supersedes such Offer Letter (collectively, the “Employment Agreement”), establishing his compensation as summarized below.  Mr. Webber’s compensation will include, among other things: (i) a base salary of $430,000; (ii) target annual incentive compensation of 55% of such base salary. In addition, in connection with his election and subject to Board of Directors approval, Mr. Webber will be granted an equity award having an aggregate value of $3,000,000 on the date of grant, consisting of options to purchase shares of the Company’s common stock and restricted stock units and (iii) severance and change in control benefits contingent upon Mr. Webber’s agreeing to a general release of claims in favor of the Company following termination of employment. Mr. Webber’s  option award will vest over a period of four years, with 25% of the shares subject to the option vesting one year following the vesting commencement date and the remainder vesting in equal monthly installments for three years thereafter, subject to Mr. Webber’s continued employment with the Company on the applicable vesting date. Mr. Webber’s  restricted stock unit award will vest over a period of four years, with 25% of the restricted stock units vesting one year following the vesting commencement date and the remainder vesting in


 

equal quarterly installments for three years thereafter, subject to Mr. Webber’s continued employment with the Company on the applicable vesting date. The Company expects the grant date of these awards to be on or around April 24, 2019.  The foregoing description is not complete and is qualified in its entirety by reference to the full text of Mr. Webber’s Employment Agreement, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q to be filed by the Company with the Securities and Exchange Commission for the quarter ending March 31, 2019.

The Company will also enter into an indemnification agreement with Mr. Webber in connection with his election, which will be in substantially the same form as that entered into with the other executive officers of the Company and is incorporated herein by reference.

There are no family relationships between Mr. Webber and any director or executive officer of the Company, and other than as described in this Item 5.02, Mr. Webber has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Item 9.01            Financial Statements and Exhibits.

(d)        Exhibits

 

 

 

 

 

Exhibit
No.

   

Description

 

 

 

 

 

99.1

 

Press Release of Carbon Black, Inc., dated February 20, 2019.

 

 

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Carbon Black, Inc.

 

 

 

 

 

 

Dated: February 20, 2019

By:

/s/ Patrick Morley

 

 

Patrick Morley

 

 

Chief Executive Officer

 


cblk_Ex99_1

Exhibit 99.1

Carbon Black Announces Fourth Quarter and Full Year Fiscal 2018 Financial Results

Fourth Quarter 2018 Total Revenue of $56.9 million, up 27% Year-over-Year

Fourth Quarter 2018 Subscription, License and Support Revenue of $54.4 million, up 31% Year-over-Year

Fourth Quarter 2018 Recurring Revenue of $52.9 million, up 32% Year-over-Year

Fourth Quarter 2018 Cloud Revenue of $18.8 million, up 102% Year-over-Year

Ended the quarter with 5,025 total customers, including 2,851 cloud customers

 

Waltham, Mass. – February 20, 2019 - Carbon Black, Inc. (NASDAQ: CBLK), a leader in next-generation endpoint security delivered via the cloud, today announced its financial results for the fourth quarter and full year ended December 31, 2018.

“Carbon Black’s fourth quarter results were highlighted by 32% recurring revenue growth and 102% growth in cloud revenue,” said Patrick Morley, President and Chief Executive Officer of Carbon Black. “2018 was a critical year for Carbon Black, as we successfully transitioned to a cloud-first company.  The endpoint protection market is at the very beginning stages of a once-in-a-generation platform shift to the cloud.  We believe the powerful set of offerings available on our CB Predictive Security Cloud™  positions Carbon Black as the leading next-generation cloud platform and will enable us to consolidate the fragmented next-generation endpoint security market.”

 

Morley continued, “We introduced a significant number of innovative cloud products onto the Predictive Security Cloud during 2018. In 2019 we will focus on refining our demand generation and sales and channel enablement capabilities to sell our expanded cloud security platform.  We expect this will have a near-term impact on growth and believe it is essential to maximizing the long-term market opportunity for the company.”

Fourth Quarter 2018 Financial Highlights

·

Revenue: Total revenue was $56.9 million in the fourth quarter fiscal 2018, an increase of 27% year-over-year. Subscription, license and support revenue was $54.4 million, an increase of 31% year-over-year, and services revenue was $2.5 million, a decrease of 17% year-over-year.  

·

Gross Profit: Gross profit was $44.3 million in the fourth quarter fiscal 2018, representing a 78% gross margin, in line with the year-ago period. Non-GAAP gross profit was $44.9 million, representing a 79% non-GAAP gross margin, in line with the year-ago period.

·

Loss from Operations: Loss from operations was ($19.5) million in the fourth quarter fiscal 2018, compared to ($14.0) million in the year-ago period. Non-GAAP loss from operations was ($15.0) million in the fourth quarter fiscal 2018, compared to ($11.3) million in the year-ago period.

·

Net Loss: Net loss was ($18.6) million in the fourth quarter fiscal 2018. Net loss attributable to common stockholders was ($18.6) million, or ($0.27) per share based on 68.8 million weighted-average shares outstanding, in the fourth quarter fiscal 2018. In the year-ago period, net loss was ($14.8) million and net loss attributable to common stockholders was ($27.1) million, or ($2.51) per share based on 10.8 million weighted-average shares outstanding.  Non-GAAP net loss was ($14.1) million, or ($0.20) per share based on 68.8 million weighted-average shares outstanding. This compares to ($11.3) million, or ($1.04) per share based on 10.8 million weighted-average shares outstanding, in the year-ago period.

·

Cash and Cash Flow: As of December 31, 2018, Carbon Black had $160.6 million in cash, cash equivalents and short-term investments. During the three months ended December 31, 2018, Carbon Black used ($9.2) million of cash in operations and ($1.1) million in capital expenditures and capitalized software development costs, leading to negative free cash flow of ($10.3) million, compared to positive free cash flow of $3.6 million in the year-ago period.

 


 

Full Year Fiscal 2018 Financial Highlights

·

Revenue: Total revenue was $209.7 million for the full year fiscal 2018, an increase of 30% year-over-year. Subscription, license and support revenue was $198.5 million, an increase of 33% year-over-year, and services revenue was $11.2 million, a decrease of 6% year-over-year.

·

Gross Profit: Gross profit was $164.0 million for the full year fiscal 2018, representing a 78% gross margin, in line with the year-ago period. Non-GAAP gross profit was $166.2 million, representing a 79% non-GAAP gross margin, in line with the year-ago period.

·

Loss from Operations: Loss from operations was ($74.6) million for the full year fiscal 2018, compared to ($52.6) million for the year-ago period. Non-GAAP loss from operations was ($55.5) million for the full year fiscal 2018, compared to ($42.1) million for the year-ago period.

·

Net Loss: Net loss was ($82.1) million for the full year fiscal 2018. Net loss attributable to common stockholders was ($281.5) million, or ($5.82) per share based on 48.4 million weighted-average shares outstanding, for the full year fiscal 2018. For the year-ago period, net loss was ($53.2) million and net loss attributable to common stockholders was ($81.3) million, or ($7.83) per share based on 10.4 million weighted-average shares outstanding.  Non-GAAP net loss was ($54.2) million, or ($1.12) per share based on 48.4 million weighted-average shares outstanding. This compares to ($41.9) million, or ($4.03) per share based on 10.4 million weighted-average shares outstanding, for the year-ago period.

·

Cash Flow: During the twelve months ended December 31, 2018, Carbon Black used ($37.3) million of cash for operations and ($8.4) million for capital expenditures and capitalized software development costs, leading to negative free cash flow of ($45.7) million, compared to negative free cash flow of $(13.7) million for the year-ago period.

 

A reconciliation of each of recurring revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss per share and free cash flow to the most directly comparable GAAP measure has been provided in the tables at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

 

Fourth Quarter 2018 and Recent Business Highlights

·

Continued to grow our customer base, ending the quarter with 5,025 total customers, up 34% from the year-ago period, and 2,851 cloud customers, up 78% from the year-ago period. Growth was driven by demand for the CB Predictive Security Cloud and customer acquisition across a broad range of industries.

·

Announced the general availability of CB LiveOps and CB ThreatHunter, the newest solutions available on the CB Predictive Security Cloud.  CB LiveOps is our real-time endpoint query and remediation solution that enables security and IT Operations teams to assess the current state of endpoints across their enterprise, take actions to remediate identified issues, and simplify operational reporting.  CB ThreatHunter builds off the industry leading incident response tools of CB Response and continuously records and centrally stores all activity of an endpoint, providing a unique and valuable view of a customer’s threat profile across its environment.

·

Appointed Vanessa Pegueros and Jill Ward to the Board of Directors. Pegueros currently serves as Vice President and Chief Information Security Officer (CISO) for DocuSign, Inc. (NASDAQ: DOCU). Ward recently served as President, COO, and CEO-elect of Fleetmatics and was previously VP and SVP/General Manager at Intuit.

·

Appointed Brad Rinklin, a seasoned industry leader with more than 20 years of experience in B2B technology and cybersecurity marketing, as Chief Marketing Officer (CMO).  Rinklin is based at the company’s headquarters in Waltham, Mass. and leads all marketing activity, reporting to Thomas Hansen, Carbon Black’s Chief Operating Officer (COO).


 

Business Outlook

Based on information as of today, February 20, 2019, Carbon Black is issuing the following financial guidance for the first quarter and full year fiscal 2019:

 

First Quarter Fiscal 2019

Full Year Fiscal 2019

Total Revenue

$ 56.5 million to $ 57.5 million

$ 240.0 million to $ 244.0 million

Non-GAAP Loss from Operations

($16.0) million to ($15.5) million

($45.0) million to ($43.0) million

Non-GAAP Net Loss per Share

($0.23) to ($0.22)

($0.64) to ($0.61)

 

Carbon Black’s forward-looking non-GAAP loss from operations and non-GAAP net loss per share exclude estimates for stock-based compensation expense, amortization of acquired intangibles, legal settlement amount, change in fair value of warrant liability and accretion of preferred stock to redemption value. Reconciliation of non-GAAP loss from operations and non-GAAP net loss per share guidance to the most directly comparable GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, particularly with respect to stock-based compensation expense. Stock-based compensation expense is directly impacted by unpredictable fluctuations in our stock price and by future hiring, turnover and retention needs, all of which are difficult to predict and subject to change. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP loss from operations and GAAP net loss per share.

 

Conference Call Information

Carbon Black will host a conference call today, February 20, 2019, at 5:00 p.m. (Eastern Time) to discuss its financial results, business outlook and other matters. A live webcast of the conference call will be available on available on the “Events” page of the Carbon Black investor relations website at https://investors.carbonblack.com/. To access the call by phone, dial (866) 394-4596 (domestic) or (210) 874-7849 (international). A replay of this conference call will be available for a limited time at (855) 859-2056 (domestic) or (404) 537-3406 (international) with passcode 5486638. A replay of the webcast will also be available for a limited time at https://investors.carbonblack.com/.

 

About Carbon Black

Carbon Black (NASDAQ: CBLK) is a leader in endpoint security dedicated to keeping the world safe from cyberattacks. The company’s big data and analytics platform, the CB Predictive Security Cloud (PSC), consolidates endpoint security and IT operations into an extensible cloud platform that prevents advanced threats, provides actionable insight and enables businesses of all sizes to simplify operations. By analyzing billions of security events per day across the globe,


 

Carbon Black has key insights into attackers’ behavior patterns, enabling customers to detect, respond to and stop emerging attacks.

More than 5,000 global customers, including 34 of the Fortune 100, trust Carbon Black to protect their organizations from cyberattacks. The company’s partner ecosystem features more than 500 MSSPs, VARs, distributors and technology integrations, as well as many of the world’s leading IR firms, who use Carbon Black’s technology in more than 500 breach investigations per year.

Carbon Black, CB Predictive Security Cloud, and CB LiveOps, are registered trademarks or trademarks of Carbon Black, Inc. in the United States and other jurisdictions.

 

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning our financial guidance for the first quarter and full year fiscal 2019, our predictions about the endpoint security market transition toward the cloud, our position to execute on our go-to-market strategy, our introduction of future product enhancements and the potential advantages of those enhancements, and our ability to expand our leadership position and drive revenue growth. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control including, without limitation: our history of losses; failure (or the perceived failure) of our products to detect cyber attacks; our investments in new products and our ability to introduce new features, services or enhancements; the intense competition that we face in our market; our ability to effectively expand our sales and marketing organization; our ability to add new customers or increase sales to our existing customers; our ability to maintain, protect, enforce and enhance our intellectual property; the growth in the market for next-generation endpoint security solutions and adjacent security markets and our ability to penetrate those markets; our ability to manage our growth effectively and successfully recruit additional highly-qualified personnel; the price volatility of our common stock; and other risks detailed under the caption “Risk Factors” in the final prospectus for our initial public offering filed on May 4, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended, with the Securities and Exchange Commission (“SEC”), as updated by our subsequently filed quarterly reports on Form 10-Q and our other SEC filings. Except as required by law, we undertake no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.

 

Non-GAAP Financial Measures

This press release includes the following financial measures defined as non-GAAP financial measures by the SEC: recurring revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss per share and free cash flow. Recurring revenue is defined as subscription, license and support revenue (which includes revenue relating to support for perpetual licenses) less perpetual license revenue. Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations and non-GAAP net loss exclude stock-based compensation expense, amortization of acquired intangibles, legal settlement amount, and, in the case of non-GAAP net loss, change in fair value of warrant liability and accretion of preferred stock to redemption value. Non-GAAP net loss per share is calculated by dividing non-GAAP net loss by the weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted. Carbon Black uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Carbon Black’s ongoing operational performance. Carbon Black believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and


 

in comparing its financial results with other companies in Carbon Black’s industry, many of which present similar non-GAAP financial measures to investors.

Free cash flow represents net cash used in operating activities less capital expenditures and capitalized software development costs, if any. Carbon Black uses free cash flow to understand and evaluate its liquidity and to generate future operating plans. The exclusion of capital expenditures and amounts capitalized for software development facilitates comparisons of Carbon Black’s liquidity on a period-to-period basis and excludes items that it does not consider to be indicative of its liquidity. Carbon Black believes that free cash flow is a measure of liquidity that provides useful information to investors in understanding and evaluating the strength of its liquidity and future ability to generate cash that can be used for strategic opportunities or investing in its business.

Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In particular, other companies may report recurring revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss per share, free cash flow or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, as presented below. This earnings press release and any future releases containing such non-GAAP reconciliations can also be found on the Investor Relations page of Carbon Black’s website at http://investors.carbonblack.com/.

 

Investor Relations Contact

Brian Denyeau

ICR for Carbon Black

646-277-1251

investorrelations@carbonblack.com

 

Media Relations Contact

Ryan Murphy

Carbon Black

Senior PR Manager

917-693-2788

rmurphy@carbonblack.com

 

 

 


 

CARBON BLACK, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

67,868 

 

$

36,073 

Short-term investments

 

 

92,770 

 

 

-

Accounts receivable, net

 

 

62,555 

 

 

60,850 

Prepaid expenses and other current assets

 

 

8,751 

 

 

6,040 

Deferred commissions, current portion

 

 

13,078 

 

 

9,551 

Total current assets

 

 

245,022 

 

 

112,514 

Deferred commissions, net of current portion

 

 

25,076 

 

 

20,404 

Property and equipment, net

 

 

14,370 

 

 

12,459 

Intangible assets, net

 

 

2,529 

 

 

4,092 

Goodwill

 

 

119,656 

 

 

119,656 

Deferred tax assets

 

 

483 

 

 

-

Other long-term assets

 

 

601 

 

 

2,436 

Total assets

 

$

407,737 

 

$

271,561 

Liabilities, Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,663 

 

$

2,481 

Accrued expenses

 

 

20,669 

 

 

18,846 

Deferred revenue, current portion

 

 

152,522 

 

 

130,165 

Deferred rent

 

 

1,216 

 

 

944 

Total current liabilities

 

 

179,070 

 

 

152,436 

Deferred revenue, net of current portion

 

 

40,371 

 

 

38,535 

Warrant liability

 

 

-

 

 

2,766 

Deferred rent, net of current portion

 

 

2,651 

 

 

3,114 

Deferred tax liability

 

 

49 

 

 

33 

Other long-term liabilities

 

 

42 

 

 

42 

Total liabilities

 

 

222,183 

 

 

196,926 

 

 

 

 

 

 

 

Redeemable convertible preferred stock

 

 

-

 

 

333,204 

 

 

 

 

 

 

 

Series A convertible preferred stock

 

 

-

 

 

1,510 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Common stock

 

 

70 

 

 

11 

Treasury stock, at cost

 

 

(6)

 

 

(6)

Additional paid-in capital

 

 

723,051 

 

 

13,429 

Accumulated other comprehensive loss

 

 

(49)

 

 

-

Accumulated deficit

 

 

(537,512)

 

 

(273,513)

Total stockholders’ equity (deficit)

 

 

185,554 

 

 

(260,079)

Total liabilities, redeemable convertible and convertible preferred stock and stockholders’ equity (deficit)

 

$

407,737 

 

$

271,561 

 


 

CARBON BLACK, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

    

2018

    

2017

    

2018

    

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription, license and support

 

$

54,402 

 

$

41,655 

 

$

198,508 

 

$

148,790 

Services

 

 

2,481 

 

 

2,978 

 

 

11,216 

 

 

11,988 

Total revenue

 

 

56,883 

 

 

44,633 

 

 

209,724 

 

 

160,778 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription, license and support

 

 

9,659 

 

 

6,800 

 

 

33,937 

 

 

24,217 

Services

 

 

2,883 

 

 

3,061 

 

 

11,829 

 

 

11,421 

Total cost of revenue

 

 

12,542 

 

 

9,861 

 

 

45,766 

 

 

35,638 

Gross profit

 

 

44,341 

 

 

34,772 

 

 

163,958 

 

 

125,140 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

38,626 

 

 

28,261 

 

 

140,283 

 

 

103,339 

Research and development

 

 

17,432 

 

 

14,253 

 

 

64,627 

 

 

52,047 

General and administrative

 

 

7,770 

 

 

6,277 

 

 

33,609 

 

 

22,337 

Total operating expenses

 

 

63,828 

 

 

48,791 

 

 

238,519 

 

 

177,723 

Loss from operations

 

 

(19,487)

 

 

(14,019)

 

 

(74,561)

 

 

(52,583)

Interest income, net

 

 

846 

 

 

27 

 

 

2,039 

 

 

32 

Change in fair value of warrant liability

 

 

-

 

 

(889)

 

 

(8,838)

 

 

(810)

Other income (expense), net

 

 

(327)

 

 

12 

 

 

(874)

 

 

227 

Loss before income taxes

 

 

(18,968)

 

 

(14,869)

 

 

(82,234)

 

 

(53,134)

Benefit from (provision for) income taxes

 

 

418 

 

 

30 

 

 

177 

 

 

(78)

Net loss

 

 

(18,550)

 

 

(14,839)

 

 

(82,057)

 

 

(53,212)

Accretion of preferred stock to redemption value

 

 

-

 

 

(12,305)

 

 

(199,492)

 

 

(28,056)

Net loss attributable to common stockholders

 

$

(18,550)

 

$

(27,144)

 

$

(281,549)

 

$

(81,268)

Net loss per share attributable to common stockholders—basic and diluted

 

$

(0.27)

 

$

(2.51)

 

$

(5.82)

 

$

(7.83)

Weighted-average common shares outstanding—basic and   diluted

 

 

68,784,675 

 

 

10,794,618 

 

 

48,372,897 

 

 

10,382,701 

 

 


 

CARBON BLACK, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

    

2018 

    

2017 

    

2018 

    

2017 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(18,550)

 

$

(14,839)

 

$

(82,057)

 

$

(53,212)

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

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

2,084 

 

 

1,885 

 

 

7,965 

 

 

7,089  

Stock-based compensation expense

 

 

4,106 

 

 

2,308 

 

 

13,576 

 

 

8,956  

Provisions for doubtful accounts

 

 

144 

 

 

(188)

 

 

284 

 

 

(347)

Non-cash interest expense

 

 

13 

 

 

 

 

47 

 

 

22  

Change in fair value of warrant liability

 

 

-

 

 

889 

 

 

8,838 

 

 

810  

Deferred income taxes

 

 

(472)

 

 

(31)

 

 

(468)

 

 

(31)

Other non-cash income

 

 

(445)

 

 

-

 

 

(560)

 

 

-  

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(11,117)

 

 

(14,384)

 

 

(1,990)

 

 

(16,901)

Prepaid expenses and other assets

 

 

133 

 

 

1,048 

 

 

(2,786)

 

 

(867)

Deferred commissions

 

 

(3,182)

 

 

(4,141)

 

 

(8,199)

 

 

(8,263)

Accounts payable

 

 

993 

 

 

(1,832)

 

 

2,229 

 

 

(696)

Accrued expenses

 

 

1,073 

 

 

5,888 

 

 

1,824 

 

 

4,202  

Deferred revenue

 

 

16,063 

 

 

28,306 

 

 

24,194 

 

 

52,017  

Deferred rent

 

 

(82)

 

 

(194)

 

 

(191)

 

 

(394)

Other long-term liabilities

 

 

-

 

 

(4)

 

 

(1)

 

 

(63)

Net cash (used in) provided by operating activities

 

 

(9,239)

 

 

4,718 

 

 

(37,295)

 

 

(7,678)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(1,977)

 

 

-

 

 

(96,558)

 

 

-

Sale and maturities of short-term investments

 

 

4,300 

 

 

-

 

 

4,300 

 

 

-

Purchases of property and equipment

 

 

(687)

 

 

(917)

 

 

(6,041)

 

 

(5,145)

Capitalization of internal-use software costs

 

 

(418)

 

 

(208)

 

 

(2,319)

 

 

(922)

Net cash provided by (used in) investing activities

 

 

1,218 

 

 

(1,125)

 

 

(100,618)

 

 

(6,067)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

6,790 

 

 

1,553 

 

 

10,138 

 

 

3,902  

Repayments of line of credit

 

 

-

 

 

-

 

 

-

 

 

(5,500)

Proceeds from initial public offering, net of offering costs

 

 

-

 

 

-

 

 

159,617 

 

 

-  

Payments of deferred financing costs

 

 

-

 

 

-

 

 

(47)

 

 

(84)

Payments of initial public offering costs

 

 

-

 

 

(3)

 

 

-

 

 

(3)

Net cash provided by (used in) financing activities

 

 

6,790 

 

 

1,550 

 

 

169,708 

 

 

(1,685)

Net (decrease) increase in cash and cash equivalents

 

 

(1,231)

 

 

5,143 

 

 

31,795 

 

 

(15,430)

Cash and cash equivalents at beginning of period

 

 

69,099 

 

 

30,930 

 

 

36,073 

 

 

51,503  

Cash and cash equivalents at end of period

 

$

67,868 

 

$

36,073 

 

$

67,868 

 

$

36,073  

 


 

CARBON BLACK, INC.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

  

Amount

  

% of
Revenue

  

Amount

  

% of
Revenue

  

Amount

  

% of
Revenue

  

Amount

  

% of
Revenue

  

GAAP total revenue

 

$

56,883 

 

100.0 

%  

$

44,633 

 

100.0 

%  

$

209,724 

 

100.0 

%  

$

160,778 

 

100 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of subscription, license and support

 

$

9,659 

 

17.0 

%  

$

6,800 

 

15.2 

%  

$

33,937 

 

16.2 

%  

$

24,217 

 

15.1 

%

Less: Stock-based compensation

 

 

(172)

 

0.3

%  

 

(131)

 

0.3

%  

 

(600)

 

0.3

%  

 

(403)

 

0.3

%

Less: Amortization of acquired intangibles

 

 

(330)

 

0.6

%  

 

(330)

 

0.7

%  

 

(1,320)

 

0.6

%  

 

(1,320)

 

0.8

%

Non-GAAP cost of subscription, license and support

 

$

9,157 

 

16.1 

%  

$

6,339 

 

14.2 

%  

$

32,017 

 

15.3 

%  

$

22,494 

 

14.0 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of services

 

$

2,883 

 

5.1 

%  

$

3,061 

 

6.9 

%  

$

11,829 

 

5.6 

%  

$

11,421 

 

7.1 

%

Less: Stock-based compensation

 

 

(89)  

 

0.2

%  

 

(60)  

 

0.1

%  

 

(302)

 

0.1

%  

 

(227)

 

0.1

%

Non-GAAP cost of services

 

$

2,794 

 

4.9 

%  

$

3,001 

 

6.7 

%  

$

11,527 

 

5.5 

%  

$

11,194 

 

7.0 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

44,341 

 

78.0 

%  

$

34,772 

 

77.9 

%  

$

163,958 

 

78.2 

%  

$

125,140 

 

77.8 

%

Plus: Stock-based compensation

 

 

261 

 

0.5 

%  

 

191 

 

0.4 

%  

 

902 

 

0.4 

%  

 

630 

 

0.4 

%

Plus: Amortization of acquired intangibles

 

 

330 

 

0.6 

%  

 

330 

 

0.7 

%  

 

1,320 

 

0.6 

%  

 

1,320 

 

0.8 

%

Non-GAAP gross profit

 

$

44,932 

 

79.0 

%  

$

35,293 

 

79.1 

%  

$

166,180 

 

79.2 

%  

$

127,090 

 

79.0 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

38,626 

 

67.9 

%  

$

28,261 

 

63.3 

%  

$

140,283 

 

66.9 

%  

$

103,339 

 

64.3 

%

Less: Stock-based compensation

 

 

(1,766)

 

3.1

%  

 

(888)

 

2.0

%  

 

(5,471)

 

2.6

%  

 

(3,310)

 

2.1

%

Less: Amortization of acquired intangibles

 

 

(22)  

 

0.0 

%  

 

(22)  

 

0.0 

%  

 

(88)  

 

0.0 

%  

 

(88)  

 

0.1

%

Non-GAAP sales and marketing

 

$

36,838 

 

64.8 

%  

$

27,351 

 

61.3 

%  

$

134,724 

 

64.2 

%  

$

99,941 

 

62.2 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development

 

$

17,432 

 

30.6 

%  

$

14,253 

 

31.9 

%  

$

64,627 

 

30.8 

%  

$

52,047 

 

32.4 

%

Less: Stock-based compensation

 

 

(964)

 

1.7

%  

 

(580)

 

1.3

%  

 

(3,170)

 

1.5

%  

 

(2,506)

 

1.6

%

Less: Amortization of acquired intangibles

 

 

(39)  

 

0.1

%  

 

(39)  

 

0.1

%  

 

(155)

 

0.1

%  

 

(155)

 

0.1

%

Non-GAAP research and development

 

$

16,429 

 

28.9 

%  

$

13,634 

 

30.5 

%  

$

61,302 

 

29.2 

%  

$

49,386 

 

30.7 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

 

$

7,770 

 

13.7 

%  

$

6,277 

 

14.1 

%  

$

33,609 

 

16.0 

%  

$

22,337 

 

13.9 

%

Less: Stock-based compensation

 

 

(1,115)

 

2.0

%  

 

(649)

 

1.5

%  

 

(4,033)

 

1.9

%  

 

(2,510)

 

1.6

%

Less: Legal settlement

 

 

-

 

0.0 

%  

 

-

 

0.0 

%  

 

(3,900)

 

1.9

%  

 

-

 

0.0 

%

Non-GAAP general and administrative

 

$

6,655 

 

11.7 

%  

$

5,628 

 

12.6 

%  

$

25,676 

 

12.2 

%  

$

19,827 

 

12.3 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of loss from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss from operations

 

$

(19,487)

 

34.3

%  

$

(14,019)

 

31.4

%  

$

(74,561)

 

35.6

%  

$

(52,583)

 

32.7

%

Plus: Stock-based compensation

 

 

4,106 

 

7.2 

%  

 

2,308 

 

5.2 

%  

 

13,576 

 

6.5 

%  

 

8,956 

 

5.6 

%

Plus: Legal settlement

 

 

-

 

0.0 

%  

 

-

 

0.0 

%  

 

3,900 

 

1.9 

%  

 

-

 

0.0 

%

Plus: Amortization of acquired intangibles

 

 

391 

 

0.7 

%  

 

391 

 

0.9 

%  

 

1,563 

 

0.7 

%  

 

1,563 

 

1.0 

%

Non-GAAP loss from operations

 

$

(14,990)

 

26.4

%  

$

(11,320)

 

25.4

%  

$

(55,522)

 

26.5

%  

$

(42,064)

 

26.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss attributable to common stockholders

 

$

(18,550)

 

32.6

%  

$

(27,144)

 

60.8

%  

$

(281,549)

 

134.2

%  

$

(81,268)

 

50.5

%

Plus: Accretion of preferred stock to redemption value

 

 

-

 

0.0 

%  

 

12,305 

 

27.6 

%  

 

199,492 

 

95.1 

%  

 

28,056 

 

17.5 

%

GAAP net loss

 

 

(18,550)

 

32.6

%  

 

(14,839)

 

33.2

%  

 

(82,057)

 

39.1

%  

 

(53,212)

 

33.1

%

Plus: Stock-based compensation

 

 

4,106 

 

7.2 

%  

 

2,308 

 

5.2 

%  

 

13,576 

 

6.5 

%  

 

8,956 

 

5.6 

%

Plus: Legal settlement

 

 

-

 

0.0 

%  

 

-

 

0.0 

%  

 

3,900 

 

1.9 

%  

 

-

 

0.0 

%

Plus: Amortization of acquired intangibles

 

 

391 

 

0.7 

%  

 

391 

 

0.9 

%  

 

1,563 

 

0.7 

%  

 

1,563 

 

1.0 

%

Plus: Change in fair value of warrant liability

 

 

-

 

0.0 

%  

 

889 

 

2.0 

%  

 

8,838 

 

4.2 

%  

 

810 

 

0.5 

%

Non-GAAP net loss

 

$

(14,053)

 

24.7

%  

$

(11,251)

 

25.2

%  

$

(54,180)

 

25.8

%  

$

(41,883)

 

26.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

basic and diluted

 

$

(0.27)

 

 

 

$

(2.51)

 

 

 

$

(5.82)

 

 

 

$

(7.83)

 

 

 

Plus: Accretion of preferred stock to redemption value

 

 

-

 

 

 

 

1.14 

 

 

 

 

4.12 

 

 

 

 

2.70 

 

 

 

Plus: Stock-based compensation

 

 

0.06 

 

 

 

 

0.21 

 

 

 

 

0.28 

 

 

 

 

0.86 

 

 

 

Plus: Legal settlement

 

 

-

 

 

 

 

-

 

 

 

 

0.08 

 

 

 

 

-

 

 

 

Plus: Amortization of acquired intangibles

 

 

0.01 

 

 

 

 

0.04 

 

 

 

 

0.03 

 

 

 

 

0.15 

 

 

 

Plus: Change in fair value of warrant liability

 

 

-

 

 

 

 

0.08 

 

 

 

 

0.18 

 

 

 

 

0.08 

 

 

 

Non-GAAP net loss per share, basic and diluted

 

$

(0.20)

 

 

 

$

(1.04)

 

 

 

$

(1.12)

 

 

 

$

(4.03)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in GAAP and non-GAAP net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

per share, basic and diluted

 

 

68,784,675 

 

 

 

 

10,794,618 

 

 

 

 

48,372,897 

 

 

 

 

10,382,701 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of free cash flow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

$

(9,239)

 

 

 

$

4,718 

 

 

 

$

(37,295)

 

 

 

$

(7,678)

 

 

 

Less: Purchases of property and equipment

 

 

(687)

 

 

 

 

(917)

 

 

 

 

(6,041)

 

 

 

 

(5,145)

 

 

 

Less: Capitalization of internal-use software costs

 

 

(418)

 

 

 

 

(208)

 

 

 

 

(2,319)

 

 

 

 

(922)

 

 

 

Free cash flow

 

$

(10,344)

 

 

 

$

3,593 

 

 

 

$

(45,655)

 

 

 

$

(13,745)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of recurring revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription, license and support revenue

 

$

54,402 

 

 

 

$

41,655 

 

 

 

$

198,508 

 

 

 

$

148,790 

 

 

 

Less: Perpetual license revenue

 

 

(1,514)

 

 

 

 

(1,509)

 

 

 

 

(6,262)

 

 

 

 

(6,408)

 

 

 

Recurring revenue

 

$

52,888 

 

 

 

$

40,146 

 

 

 

$

192,246 

 

 

 

$

142,382