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Marketo Announces First Quarter 2016 Results

SAN MATEO, Calif., April 26, 2016 /PRNewswire/ -- Marketo, Inc. MKTO, +1.88% the leading provider of engagement marketing software and solutions, today announced its first quarter 2016 financial results.

Highlights:

  • First quarter revenue increased 35 percent year over year to $62.2 million
  • Deferred revenue increased 37 percent year over year to $91.7 million
  • Improved operating leverage year over year
  • Launched new solutions to address expanded range of customer demand

"Our first quarter performance marks a solid start to 2016, as we saw strong revenue growth and improved operating leverage," said Phil Fernandez, chairman and CEO of Marketo. "Marketing automation has expanded beyond just the marketing department and is becoming a strategic weapon among CMOs, as well as CIOs and the entire C-suite. Marketo is well-positioned to capitalize on the broader market opportunity in 2016, as companies expand their digital transformation agendas."

Results for the first quarter of 2016:

  • Revenue: Revenue was $62.2 million, an increase of 35 percent over the same period of the prior year.
  • Deferred Revenue: Deferred revenue at March 31, 2016 was $91.7 million, compared to $92.0 million at December 31, 2015 and $66.9 million at March 31, 2015.
  • Calculated Billings: Calculated billings were $62.0 million, an increase of 24 percent over $49.9 million in the same period of the prior year.
  • Net Loss: GAAP net loss attributable to Marketo was $18.4 million, and net loss per common share, basic and diluted, was $(0.42). Non-GAAP net loss was $7.7 million, and non-GAAP net loss per common share, basic and diluted, was $(0.17).
  • Cash Flow: Cash used in operating activities was $10.0 million, as compared to cash used in operating activities of $8.5 million in the same period of the prior year.
  • Total Cash and Cash Equivalents: As of March 31, 2016, total cash and cash equivalents was $94.7 million.

Outlook As of April 26, 2016, Marketo is initiating revenue and EPS guidance for its second quarter and updating full year 2016 guidance.

For the second quarter of 2016, Marketo expects to report:

  • Revenue in the range of $65 to $66 million
  • GAAP net loss per share in the range of $(0.41) to $(0.43)
  • Non-GAAP net loss per share in the range of $(0.12) to $(0.14)

For the full year 2016, Marketo expects to report:

  • Revenue in the range of $269 to $275 million
  • GAAP net loss per share in the range of $(1.56) to $(1.60)
  • Non-GAAP net loss per share in the range of $(0.46) to $(0.50)

Reconciliations of the non-GAAP financial measures included in this release to their nearest GAAP equivalents are provided at the end of this release.

Conference Call Information Marketo will host a conference call and live webcast to discuss financial results at 5:00 p.m. ET/2:00 p.m. PT, today, Tuesday, April 26, 2016. The conference call can be accessed by dialing (888) 572-7033, or +1 (719) 325-2376 (outside the U.S. and Canada). A live webcast will be available at http://investors.marketo.com. An audio replay of the call will also be available by dialing (888) 203-1112 or +1 (719) 457-0820 (outside the U.S. and Canada) and entering passcode 9155433#.

Use of Non-GAAP Financial Information Marketo provides financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand Marketo's past financial performance and future results, Marketo has supplemented its financial results that it provides in accordance with GAAP with certain non-GAAP financial measures. The method Marketo uses to produce non-GAAP financial results may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. Specifically, management is excluding the following items from its non-GAAP historical and estimated net loss and net loss per common share, basic and diluted:

  • Stock-Based Compensation Expenses: The company's compensation strategy includes the use of stock-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
  • Amortization of Acquired Intangible Assets: The company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
  • Adjustment to the value of redeemable non-controlling interest to the redemption amount is excluded as the company believes it may not be indicative of future operating results and that investors benefit from an understanding of the company's operating results without giving effect to this adjustment.

Additionally, the company believes the following supplemental non-GAAP financial information is useful to investors and others in assessing its operating performance. A calculation of the supplemental non-GAAP financial information is provided in the table titled 'Non-GAAP Supplemental financial information'.

  • Calculated billings is calculated as revenue plus the change in total deferred revenue as presented on the balance sheet.
  • Free cash flow is calculated as cash flow provided by (used in) operations less the purchase of property and equipment and capitalized software development costs presented on the statement of cash flows.

Marketo believes calculated billings offers investors useful supplemental information regarding the performance of its business, and will help investors better understand the sales volumes and performance of its business. The free cash flow metric is useful as it provides investors an enhanced view of the company's operational performance and the cash available to fund on-going operations. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.

The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the related reconciliations, to more fully understand its business. Reconciliations of these GAAP and non-GAAP financial measures are presented in the tables at the end of this release.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995 This press release contains forward-looking statements. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as "expects," "anticipates," "believes," "could," "seeks," "estimates," "intends," "may," "plans," "potential," "predicts," "projects," "should," "will," "would" or similar expressions and the negatives of those terms. Examples of forward-looking statements include, but are not limited to, statements about our opportunities for growth and our GAAP and non-GAAP financial guidance for the second quarter and the full year of 2016, including revenue, net loss, EPS, stock-based compensation expenses, amortization of acquired intangible assets and adjustments to the value...


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