Carbonite: Fiscal 3Q11 Financial Results

Carbonite, Inc. announced financial results for the quarter ended September 30, 2011.

David Friend, Chairman and Chief Executive Officer of Carbonite, stated: "This was a strong quarter for Carbonite with revenue increasing 54% year over year. Our founding premise, that every device that creates or stores data needs backup and online backup is the best way to do it, continues to prove out in our marketplace. Our solution is easy to use, affordable, trusted and secure. It continues to gain significant traction, allowing us to extend our leadership position."

Friend added: "We are pleased to have completed our successful IPO in August. This is an important milestone in the company’s development and further builds on our brand awareness and increases the resources we have to continue to drive growth and expand our market share."

Financial and Operating Metrics
for the Third Quarter Ended September 30, 2011

• Bookings for the third quarter of 2011 were $20.5 million, an increase of 45% from 14.1 million in the third quarter 2010.
• Revenue for the third quarter of 2011 was $15.9 million, an increase of 54% from $10.3 million in the third quarter of 2010.
• Gross margin for the third quarter of 2011 was 61.6%, compared to 58.7% in the third quarter 2010.
• Net loss for the third quarter of 2011 was ($7.4) million, compared to ($6.7) million in the third quarter 2010.
• Net loss per share attributable to common stockholders for the third quarter 2011 was ($0.47) per share (basic and diluted), compared to a net loss of ($1.52) per share (basic and diluted) in the third quarter of 2010.
• Non-GAAP net loss for the third quarter of 2011, which excludes amortization expense on intangible assets, stock-based compensation expense and patent litigation expense was ($6.6) million, compared to ($6.5) million in the third quarter of 2010.
• Non-GAAP net loss per share for the third quarter 2011 was ($0.26), compared to a Non-GAAP net loss per share of ($0.27) in the third quarter of 2010.
• Cash flow from operations for the third quarter of 2011 was $1.9 million, compared to ($1.5) million in the third quarter 2010.
• Free cash flow for the third quarter of 2011 was ($489,000) compared to ($4.5) million in the third quarter 2010.
• Cash and cash equivalents were $71.7 million as of September 30, 2011, compared to $16.2 million as of June 30, 2011 and $13.9 million as of December 31, 2010. The increase in cash was primarily the result of approximately $55.7 million in net proceeds that were raised through the company’s initial public offering, which was completed on August 16, 2011.

Total customers at the end of the third quarter of 2011 increased 34% to 1,164,000 from 869,000 at the end of the third quarter of 2010.

Quarterly retention rates for the third quarter of 2011 were in the 96% to 97% range, consistent with prior quarters since 2009. The retention rate for the quarter excludes the forced attrition of approximately 20,000 customers as a result of a terminated channel relationship.

Recent Business Highlights:

• Completed the transition of customer support from overseas third-party providers to Carbonite’s domestic location. The company hired and trained employees to staff its new support center in Lewiston, Maine. The company now supports all customer interactions using U.S.-based resources, including those interactions that were formerly outsourced to third-party providers in India.
• Announced the availability of new solutions for its consumer and home office customers. The new offerings complement the company’s current Carbonite Home solution by including additional features and expanded functionality. Carbonite HomePlus includes full system backup, as well as backup and restore features for external hard drives. Carbonite HomePremier also includes automatic online backup for video files and a recovery-by-mail feature.
• Announced Carbonite was named to the Inc. 500/5000 list, a ranking of the nation’s most entrepreneurial and fastest growing companies in America, for the second consecutive year.
• Announced the appointment of Oussama El-Hilali as Senior Vice President of Engineering. With more than 20 years of experience in software development, data protection and data integrity, El-Hilali is building and managing the company’s engineering organizations and overseeing new product development.

Business Outlook
Based on information available as of November 9, 2011, Carbonite is issuing guidance for the fourth quarter and full year 2011 as follows:

• Fourth Quarter 2011: The company expects total revenue for the fourth quarter to be in the range of $16.5 million to $16.9 million and non-GAAP net loss per common share to be in the range of ($0.22) to ($0.23). Carbonite’s expectations of non-GAAP net loss per diluted common share for the fourth quarter exclude stock-based compensation expense, patent litigation expense and amortization expense on intangible assets and assume a tax rate of 0% and weighted average shares outstanding of approximately 25.1 million.
• Full Year 2011: The company expects 2011 total revenue to be in the range of $59.7 million to $60.1 million and non-GAAP net loss per diluted common share to be in the range of ($0.85) to ($0.86). Carbonite’s expectations of non-GAAP net loss per common share for the full year excludes stock-based compensation expense, patent litigation expense and amortization expense on intangible assets and assumes a tax rate of 0% and weighted average shares outstanding of approximately 25.0 million.