[May 01, 2018] |
|
SendGrid Announces First Quarter 2018 Results and Updates Outlook
SendGrid, Inc. (NYSE: SEND), a leading
digital communications platform that drives engagement and growth,
today announced first quarter 2018 financial results.
First Quarter Financial Highlights
-
Total revenue of $32.6 million for the first quarter was up 31%
compared with the first quarter of 2017.
-
SendGrid's Email API revenue of $25.9 million for the first quarter
grew by 30% compared with the first quarter of 2017, representing 79%
of total revenue, while Marketing Campaigns revenue grew by 102% to
$5.4 million compared with the first quarter of 2017 and represented
17% of total revenue.
-
Gross margin in the quarter was 73.9%, flat compared with the year-ago
period.
-
GAAP net loss in the quarter was $(1.3) million, or $(0.03) per share,
compared with $(1.8) million, or $(0.23) per share, in the first
quarter of 2017. First quarter 2018 net loss included $1.8 million of
stock compensation expense, up from $0.6 million in the first quarter
of 2017.
-
Non-GAAP adjusted net income (ANI) was $1.0 million in the quarter, an
increase of $1.0 million from first quarter 2017.
-
Net cash flows from operating activities in the first quarter were
$(0.04) million, with free cash flow of $(7.8) million, a $6.2 million
decrease from first quarter 2017. This was driven by one-time costs
related to moves to new offices, and typical seasonal employee-related
expenses.
-
The company ended the quarter with $168.6 million in cash and cash
equivalents.
Non-Financial Highlights
-
Ended the first quarter with more than 69,000 customers, up 35%
compared with first quarter 2017 totals.
-
Delivered email volume of 130.4 billion for the first quarter, up 29%
compared with first quarter 2017.
-
The company was named one of the Best Small and Medium Workplaces in
Technology by Great Place to Work® and Fortune.
-
Moved into a new office in Irvine, California in support of the
company's future growth.
-
Announced new enhancements to its API sending experience, providing
customers with a comprehensive view of their email delivery and
engagement data.
-
Announced the Adaptive Communication Engine, a compilation of the
company's artificial intelligence capabilities, including a new
capability, neural protection, which helps customers avoid
deliverability pitfalls by using the power of neural networks.
-
Closed on a follow-on public stock offering on April 10, 2018, in
which the company issued 600,000 new shares, with another 6.9 million
shares sold by pre-IPO investors and members of management.
"Our results this quarter represent a strong first full quarter of being
a public company, delivering on our commitment to driving growth and
profitability," said Sameer Dholakia, CEO of SendGrid. "We continue to
execute on our mission to build engagement and growth for our customers."
Full Year and Second Quarter 2018 Outlook
Based on information available as of today, SendGrid is increasing its
outlook for full year 2018 and setting its outlook for the second
quarter 2018. For 2018, the Company now expects to deliver 2018
full-year revenue in a range of $140.3 million to $142.3 million, up 26%
year over year at the midpoint, and non-GAAP adjusted net income in a
range of $4.5 to $6.5 million. For the second quarter 2018, the company
expects revenue in a range of $34.2 million to $34.4 million, up 27% at
the midpoint, and non-GAAP adjusted net income of approximately $0.5
million to $1.0 million in the second quarter 2018, which does not
include approximately $2.5 million to $3.0 million of stock compensation
expense, and less than $500,000 of restructuring and M&A-related expense.
A reconciliation of non-GAAP adjusted net income to the most directly
comparable GAAP measure, or net income (loss), for the full year 2018 is
not available on a forward-looking basis without unreasonable efforts
and uncertainty due to the unpredictability and complexity of the
charges excluded from non-GAAP adjusted net income (loss), including,
without limitation, stock-based compensation. Stock-based compensation
expenses are impacted by future hiring and retention needs, as well as
the future fair market value of SendGrid's common stock, all of which
are difficult to predict and subject to change. SendGrid expects the
above charges, including stock-based compensation, collectively will
have a significant, and potentially unpredictable, impact on its GAAP
net income (loss) for 2018.
Conference Call Information
-
When: Tuesday, May 1, 2018 at 5 pm Eastern Time (3 pm Mountain Time)
-
Domestic Dial In: To access the call toll-free via telephone in North
America, please dial: 844-842-1230 (Conference ID: 6734919)
-
International Dial In: To access the call toll-free internationally,
please dial: 647-253-8797 (Conference ID: 6734919)
Forward-Looking Statements
This press release contains "forward-looking" statements that are based
on our management's beliefs and assumptions and on information currently
available to management. Forward-looking statements include, but are not
limited to, statements about SendGrid's outlook for the quarter ending
June 30, 2018 and the full year ending December 31, 2018 and SendGrid's
expectations regarding possible or assumed business strategies,
potential growth and innovation opportunities, new products, and
potential market opportunities.
Forward-looking statements generally relate to future events or our
future financial or operating performance. Forward-looking statements
include all statements that are not historical facts and can be
identified by terms such as "believes," "continue," "could,"
"potential," "remain," "will," "would" or similar expressions and the
negatives of those terms. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. These risks include, but are not limited to,
risks and uncertainties related to: our ability to achieve future growth
and sustain our growth rate, our ability attract and retain customers
and increase sales to our customers, our ability to develop and release
new products and services and to scale our platform, our ability to
increase adoption of our platform through our self-service model, our
ability to maintain and grow our relationships with strategic partners,
the highly competitive and rapidly evolving market in which we
participate, our ability to identify targets for, execute on and realize
the benefits of potential acquisitions and our international expansion
strategies. Further information on risks that could cause actual results
to differ materially from forecasted results is included in our filings
with the SEC, including our Annual Report on Form 10-K for the fiscal
year ended December 31, 2017 and our Quarterly Report on Form 10-Q for
the period ended March 31, 2018 to be filed with the SEC later today.
Any forward-looking statements contained in this press release are based
on assumptions that we believe to be reasonable as of this date. Except
as required by law, we assume no obligation to update these
forward-looking statements, or to update the reasons if actual results
differ materially from those anticipated in the forward-looking
statements.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared
and presented in accordance with GAAP, we use certain non-GAAP financial
measures, as described below, to understand and evaluate our core
operating performance. These non-GAAP financial measures, which may be
different than similarly titled measures used by other companies, are
presented to enhance investors' overall understanding of our financial
performance and should not be considered a substitute for, or superior
to, the financial information prepared and presented in accordance with
GAAP. Investors are encouraged to review the reconciliation of these
non-GAAP measures to their most directly comparable GAAP financial
measures. A reconciliation of the non-GAAP financial measures to such
GAAP measures can be found in the accompanying financial statements
included with this press release.
We believe that these non-GAAP financial measures provide useful
information about our financial performance, enhance the overall
understanding of our past performance and future prospects, and allow
for greater transparency with respect to important metrics used by our
management for financial and operational decision-making. We are
presenting these non-GAAP financial metrics to assist investors in
seeing our financial performance through the eyes of management, and
because we believe that these measures provide an additional tool for
investors to use in comparing our core financial performance over
multiple periods with other companies in our industry.
We use the non-GAAP financial measure of adjusted net income, which is
defined as GAAP net income (loss), excluding stock-based compensation
expense, restructuring expense, costs associated with mergers and
acquisitions, warrant interest expense and non-capitalizable costs
associated with our initial public offering. Due to our significant
federal and state net operating loss carryforwards, as well as a full
valuation against our net deferred tax assets, there is no income tax
effect on adjusted net income in the presented periods. We believe that
adjusted net income helps identify underlying trends in our business
that could otherwise be masked by the effect of the expenses that we
exclude in adjusted net income. Additionally, our executive compensation
structure uses an adjusted net income target as one of the components
when calculating payments that have been earned. There are a number of
limitations related to the use of adjusted net income as compared to net
loss, including that adjusted net income excludes stock-based
compensation expense, which has been, and will continue to be for the
foreseeable future, a significant recurring expense in our business and
an important part of our compensation strategy.
We use the non-GAAP financial measure of free cash flow, which is
defined as GAAP net cash flows from operating activities, reduced by
purchases of property and equipment and principal payments on capital
lease obligations. We believe free cash flow is an important liquidity
measure of the cash that is available, after capital expenditures, for
operational expenses, investment in our business and to make
acquisitions. Free cash flow is useful to investors as a liquidity
measure because it measures our ability to generate or use cash. Once
our business needs and obligations are met, cash can be used to maintain
a strong balance sheet and invest in future growth. There are a number
of limitations related to the use of free cash flow as compared to net
cash from operating activities, including that free cash flow does not
reflect future contractual commitments.
About SendGrid
SendGrid is a leading digital communication platform, enabling
businesses to engage with their customers via email reliably,
effectively and at scale. A leader in email deliverability, SendGrid has
processed over 40 billion emails each month for internet and
mobile-based customers as well as more traditional enterprises.
Disclosure of Material Information
SendGrid announces material information to its investors using SEC
filings, press releases, public conference calls and on its investor
relations page of the company's website at https://investors.sendgrid.com.
|
SENDGRID, INC.
|
Condensed Consolidated Statements of Operations
|
(Unaudited)
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands, except per share data)
|
|
|
2018
|
|
2017
|
Revenue
|
|
|
|
|
|
Email API
|
|
|
$
|
25,868
|
|
|
$
|
19,946
|
|
Marketing Campaigns
|
|
|
|
5,445
|
|
|
|
2,700
|
|
Predecessor email marketing service
|
|
|
|
-
|
|
|
|
1,520
|
|
Other
|
|
|
|
1,256
|
|
|
|
665
|
|
Total revenue
|
|
|
|
32,569
|
|
|
|
24,831
|
|
Cost of revenue
|
|
|
|
8,488
|
|
|
|
6,471
|
|
Gross profit
|
|
|
|
24,081
|
|
|
|
18,360
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
|
|
8,934
|
|
|
|
6,524
|
|
Selling and marketing
|
|
|
|
7,936
|
|
|
|
6,588
|
|
General and administrative
|
|
|
|
8,866
|
|
|
|
7,044
|
|
Loss on disposal of assets
|
|
|
|
62
|
|
|
|
-
|
|
Total operating expenses
|
|
|
$
|
25,798
|
|
|
$
|
20,156
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
(1,717
|
)
|
|
|
(1,796
|
)
|
Other income (expense), net
|
|
|
|
444
|
|
|
|
(5
|
)
|
Net loss
|
|
|
$
|
(1,273
|
)
|
|
$
|
(1,801
|
)
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
42,520
|
|
|
|
7,848
|
|
Net loss per share attributable to common stockholders
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Reconciliation of Net Loss to Adjusted Net Income (ANI)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands)
|
|
|
2018
|
|
2017
|
Net loss
|
|
|
$
|
(1,273
|
)
|
|
$
|
(1,801
|
)
|
Stock-based compensation expense
|
|
|
|
1,828
|
|
|
|
588
|
|
Restructuring expense
|
|
|
|
276
|
|
|
|
847
|
|
Merger and acquisition expenses
|
|
|
|
167
|
|
|
|
257
|
|
Adjustment to redeemable preferred stock warrant
|
|
|
|
-
|
|
|
|
(26
|
)
|
Certain IPO costs
|
|
|
|
-
|
|
|
|
160
|
|
Adjusted Net Income (ANI)
|
|
|
$
|
998
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Condensed Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands)
|
|
|
2018
|
|
2017
|
Cash flows from operating activities:
|
|
|
|
|
|
Net loss
|
|
|
$
|
(1,273
|
)
|
|
$
|
(1,801
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
2,517
|
|
|
|
2,128
|
|
Stock-based compensation
|
|
|
|
1,828
|
|
|
|
588
|
|
Adjustment to redeemable preferred stock warrant liability
|
|
|
|
-
|
|
|
|
(26
|
)
|
Non-cash interest expense and other
|
|
|
|
11
|
|
|
|
5
|
|
Loss on disposal of assets and restructuring of assets
|
|
|
|
183
|
|
|
|
350
|
|
Reimbursement of tenant improvements
|
|
|
|
1,203
|
|
|
|
473
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(60
|
)
|
|
|
(434
|
)
|
Prepaid expenses and other assets
|
|
|
|
483
|
|
|
|
103
|
|
Accounts payable and accrued liabilities
|
|
|
|
(3,836
|
)
|
|
|
301
|
|
Other liabilities
|
|
|
|
(1,095
|
)
|
|
|
43
|
|
Net cash flows from operating activities
|
|
|
|
(39
|
)
|
|
|
1,730
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
|
(6,062
|
)
|
|
|
(1,794
|
)
|
Cash paid for business combination
|
|
|
|
-
|
|
|
|
(2,726
|
)
|
Cash acquired in business combination
|
|
|
|
-
|
|
|
|
527
|
|
Decrease (increase) in restricted cash
|
|
|
|
-
|
|
|
|
78
|
|
Net cash flows from investing activities
|
|
|
|
(6,062
|
)
|
|
|
(3,915
|
)
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from stock option exercises
|
|
|
|
893
|
|
|
|
221
|
|
Payments for stock issuance costs
|
|
|
|
-
|
|
|
|
(33
|
)
|
Principal payments on capital lease obligations
|
|
|
|
(1,694
|
)
|
|
|
(1,517
|
)
|
Net cash flows from financing activities
|
|
|
|
(801
|
)
|
|
|
(1,329
|
)
|
|
|
|
|
|
|
Effect of foreign currency exchange rates on cash
|
|
|
|
3
|
|
|
|
-
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
(6,899
|
)
|
|
|
(3,514
|
)
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
175,496
|
|
|
|
40,400
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
168,597
|
|
|
$
|
36,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Reconciliation of Net Cash Flows Provided by Operating Activities
to Free Cash Flow
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands)
|
|
|
2018
|
|
|
2017
|
Net cash flows from operating activities
|
|
|
$
|
(39
|
)
|
|
|
$
|
1,730
|
|
Purchase of property and equipment
|
|
|
|
(6,062
|
)
|
|
|
|
(1,794
|
)
|
Principal payments on capital lease obligations
|
|
|
|
(1,694
|
)
|
|
|
|
(1,517
|
)
|
Free cash flow
|
|
|
$
|
(7,795
|
)
|
|
|
$
|
(1,581
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Condensed Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
|
As of March 31,
|
|
As of December 31,
|
(in thousands)
|
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
168,597
|
|
|
$
|
175,496
|
|
Accounts receivable - trade, net of allowance
|
|
|
|
5,791
|
|
|
|
5,765
|
|
Prepaid expenses and other current assets
|
|
|
|
7,996
|
|
|
|
9,087
|
|
Total current assets
|
|
|
|
182,384
|
|
|
|
190,348
|
|
|
|
|
|
|
|
Noncurrent Assets:
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
34,529
|
|
|
|
29,192
|
|
Intangible assets, net
|
|
|
|
1,675
|
|
|
|
1,795
|
|
Other assets
|
|
|
|
306
|
|
|
|
300
|
|
Goodwill
|
|
|
|
1,648
|
|
|
|
1,648
|
|
Total noncurrent assets
|
|
|
|
38,158
|
|
|
|
32,935
|
|
Total assets
|
|
|
$
|
220,542
|
|
|
$
|
223,283
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
9,790
|
|
|
$
|
13,837
|
|
Current portion of capital lease obligations
|
|
|
|
6,218
|
|
|
|
6,110
|
|
Current portion of deferred rent
|
|
|
|
797
|
|
|
|
328
|
|
Other current liabilities
|
|
|
|
1,150
|
|
|
|
1,575
|
|
Total current liabilities
|
|
|
|
17,955
|
|
|
|
21,850
|
|
|
|
|
|
|
|
Long-Term Obligations, Net of Current Portion:
|
|
|
|
|
|
Capital lease obligations, net of current portion
|
|
|
|
11,138
|
|
|
|
11,095
|
|
Deferred rent, net of current portion
|
|
|
|
9,889
|
|
|
|
10,054
|
|
Other long-term liabilities
|
|
|
|
528
|
|
|
|
510
|
|
Total long-term obligations, net of current portion:
|
|
|
|
21,555
|
|
|
|
21,659
|
|
Total liabilities
|
|
|
|
39,510
|
|
|
|
43,509
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock, $0.001 par value
|
|
|
|
40
|
|
|
|
39
|
|
Additional paid-in capital
|
|
|
|
232,747
|
|
|
|
229,594
|
|
Accumulated deficit
|
|
|
|
(51,756
|
)
|
|
|
(49,857
|
)
|
Accumulated other comprehensive loss
|
|
|
|
1
|
|
|
|
(2
|
)
|
Total stockholders' equity
|
|
|
|
181,032
|
|
|
|
179,774
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
220,542
|
|
|
$
|
223,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Reconciliation to Non-GAAP Financial Measures
|
(Unaudited)
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands)
|
|
|
2018
|
|
2017
|
Cost of revenue
|
|
|
$
|
8,488
|
|
$
|
6,471
|
Less:
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
202
|
|
|
53
|
Restructuring expense
|
|
|
|
-
|
|
|
-
|
Merger and acquisition expenses
|
|
|
|
20
|
|
|
18
|
Adjustment to redeemable preferred stock warrant
|
|
|
|
-
|
|
|
-
|
Certain IPO costs
|
|
|
|
-
|
|
|
-
|
Non-GAAP cost of revenue
|
|
|
$
|
8,266
|
|
$
|
6,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Reconciliation to Non-GAAP Financial Measures
|
(Unaudited)
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands)
|
|
|
2018
|
|
2017
|
Research and development
|
|
|
$
|
8,934
|
|
$
|
6,524
|
Less:
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
594
|
|
|
147
|
Restructuring expense
|
|
|
|
-
|
|
|
-
|
Merger and acquisition expenses
|
|
|
|
154
|
|
|
-
|
Adjustment to redeemable preferred stock warrant
|
|
|
|
-
|
|
|
-
|
Certain IPO costs
|
|
|
|
-
|
|
|
-
|
Non-GAAP research and development
|
|
|
$
|
8,186
|
|
$
|
6,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Reconciliation to Non-GAAP Financial Measures
|
(Unaudited)
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands)
|
|
|
2018
|
|
2017
|
Selling and marketing
|
|
|
$
|
7,936
|
|
$
|
6,588
|
Less:
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
224
|
|
|
135
|
Restructuring expense
|
|
|
|
-
|
|
|
-
|
Merger and acquisition expenses
|
|
|
|
5
|
|
|
12
|
Adjustment to redeemable preferred stock warrant
|
|
|
|
-
|
|
|
-
|
Certain IPO costs
|
|
|
|
-
|
|
|
-
|
Non-GAAP selling and marketing
|
|
|
$
|
7,707
|
|
$
|
6,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENDGRID, INC.
|
Reconciliation to Non-GAAP Financial Measures
|
(Unaudited)
|
|
|
|
|
For the Three Months Ended March 31,
|
(in thousands)
|
|
|
2018
|
|
2017
|
General and administrative
|
|
|
$
|
8,866
|
|
|
$
|
7,044
|
Less:
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
808
|
|
|
|
253
|
Restructuring expense
|
|
|
|
-
|
|
|
|
-
|
Merger and acquisition expenses
|
|
|
|
(12
|
)
|
|
|
227
|
Adjustment to redeemable preferred stock warrant
|
|
|
|
-
|
|
|
|
-
|
Certain IPO costs
|
|
|
|
-
|
|
|
|
-
|
Non-GAAP general and administrative
|
|
|
$
|
8,070
|
|
|
$
|
6,564
|
|
|
|
|
|
|
|
|
|
Source: SendGrid, Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180501006781/en/
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