BOSTON, Aug. 02, 2018 (GLOBE NEWSWIRE) -- Carbonite, Inc. (NASDAQ: CARB), a global leader in data protection, today announced financial results for the quarter ended June 30, 2018.

Second Quarter 2018 Highlights:

-- Revenue of $77.7 million increased 32% year-over-year. -- Non-GAAP revenue of $79.9 million increased 31% year-over-year.1 -- Bookings of $81.8 million increased 28% year-over-year.2 -- Net loss per share was ($0.20) (basic and diluted), as compared to ($0.23) in 2017 (basic and diluted). -- Non-GAAP net income per share was $0.50 (basic) and $0.45 (diluted), as compared to $0.15 (basic and diluted) in 2017.4

“I am very pleased with our financial and operating results in the second quarter,” said Mohamad Ali, CEO of Carbonite. “We closed our acquisition of Mozy in March and the integration continues to progress well. We completed a successful equity offering in July strengthening our balance sheet and positioning us to become the premier data protection company.”

“In the second quarter we again delivered financial results that were at or above the top of our guidance range. Business subscription bookings increased approximately 50% year-over-year, and we drove a meaningful expansion in profitability. Our focus on delivering growth and our disciplined approach to investing in the business and integrating acquisitions yielded another quarter of strong financial results,” said Anthony Folger, CFO of Carbonite.

The Company uses a variety of operational and financial metrics, including non-GAAP financial measures, to evaluate its performance and financial condition. The accompanying financial data includes additional information regarding these metrics and a reconciliation of non-GAAP financial information to GAAP. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Second Quarter 2018 Results:

-- Revenue for the second quarter was $77.7 million, an increase of 32% from $59.0 million in the second quarter of 2017. Non-GAAP revenue for the second quarter was $79.9 million, an increase of 31% from $61.1 million in the second quarter of 2017.1 -- Bookings for the second quarter were $81.8 million, an increase of 28% from $63.9 million in the second quarter of 2017.2 -- Gross margin for the second quarter was 70.3%, compared to 69.0% in the second quarter of 2017. Non-GAAP gross margin was 77.1% in the second quarter, compared to 74.1% in the second quarter of 2017.3 -- Net loss for the second quarter was $(5.7) million, compared to net loss of ($6.4) million in the second quarter of 2017. Non-GAAP net income for the second quarter was $14.2 million, compared to non-GAAP net income of $4.3 million in the second quarter of 2017.4 -- Net loss per share for the second quarter was ($0.20) (basic and diluted), compared to net loss per share of ($0.23) (basic and diluted) in the second quarter of 2017. Non-GAAP net income per share was $0.50 (basic) and $0.45 (diluted) for the second quarter, compared to non-GAAP net income per share of $0.15 (basic and diluted) in the second quarter of 2017.4 -- Cash flow from operations for the second quarter was $13.6 million, compared to $2.9 million in the second quarter of 2017. Adjusted free cash flow for the second quarter was $13.3 million, compared to $2.1 million in the second quarter of 2017.5

1 Non-GAAP revenue excludes the impact of purchase accounting adjustments for acquisitions.2 Bookings represent the aggregate dollar value of customer subscriptions and software arrangements, which may include multiple revenue elements, such as software licenses, hardware, professional services and post-contractual support, received during a period and are calculated as revenue recognized during a particular period plus the change in total deferred revenue, excluding deferred revenue recorded in connection with acquisitions, divestitures and the adoption impact of Topic 606, net of foreign exchange and the change in unbilled revenue during the same period.3 Non-GAAP gross margin excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, and acquisition-related expense.4 Non-GAAP net income and non-GAAP net income per share excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, non-cash convertible debt interest expense and the income tax effect of non-GAAP adjustments.5 Adjusted free cash flow is calculated by subtracting the cash paid for the purchase of property and equipment and adding the payments related to acquisitions, restructuring, and litigation from net cash provided by operating activities.

Business Outlook

Based on the information available as of August 2, 2018, Carbonite expects the following for the third quarter and full year of 2018:

Third Quarter 2018:

Current Guidance (8/2/2018) --------------------- GAAP Revenue $77.6 - $79.6 million Non-GAAP Revenue $79.0 - $81.0 million Non-GAAP Net Income Per Share (Diluted) $0.40 - $0.42

Full Year 2018:

Prior Guidance Prior Guidance Current Guidance (5/7/2018) (7/16/2018) (8/2/2018) ----------------------- ----------------------- ----------------------- Business Bookings $223.8 - $234.8 million Not provided $223.8 - $234.8 million Consumer Bookings Y/Y Growth 5% - 15% growth Not provided 10% - 15% growth GAAP Revenue $296.9 - $306.9 million $296.9 - $306.9 million $296.9 - $306.9 million Non-GAAP Revenue $302.5 - $312.5 million $302.5 - $312.5 million $302.5 - $312.5 million Non-GAAP Net Income Per Share $1.51 - $1.59 $1.62 - $1.68 $1.51 - $1.59 (Diluted) Non-GAAP Gross Margin 76.0% - 77.0% Not provided 76.5% - 77.5% Adjusted Free Cash Flow $32.0 - $38.0 million Not provided $40.0 - $45.0 million

Carbonite’s expectations of non-GAAP net income per share for the third quarter and full year of 2018 excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments. Non-GAAP net income per share assumes an effective tax rate of 8% for the full year of 2018. Non-GAAP net income per share assumes fully-diluted weighted average shares outstanding of approximately 36.3 million for the third quarter and 34.0 million for the full year of 2018.

Conference Call and Webcast Information

Carbonite will host a conference call on Thursday, August 2, 2018 at 5:30 p.m. ET to review these results. This call will be webcast live and can be found in the investor relations section of the Company's website at http://investor.carbonite.com. The conference call can also be accessed by dialing (877) 303-1393 in the United States or (315) 625-3228 internationally with the passcode 3577539.

Following the completion of the call, a recorded replay will be available on the Company’s website, http://investor.carbonite.com, under “Events & Presentations”.

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with GAAP, this press release contains non-GAAP financial measures, including bookings, non-GAAP revenue, non-GAAP gross margin, non-GAAP net income and non-GAAP net income per share, non-GAAP operating expense and adjusted free cash flow.

The Company believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and ordinary results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods and uses these measures in financial reports prepared for management and the Company’s board of directors. The Company 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 the Company’s financial measures with other software-as-a-service companies, many of which present similar non-GAAP financial measures to investors.

The Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant items that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management. The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures provided in the tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.

With respect to our expectations under "Business Outlook" above, the Company has not reconciled non-GAAP net income per share to net income per share in this press release because we do not provide guidance for amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, non-cash convertible debt interest expense, and the income tax effect of non-GAAP adjustments as we are unable to quantify certain of these amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.

Cautionary Language Concerning Forward-Looking Statements

Certain matters discussed in this press release, including under “Business Outlook,” have "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our ability to integrate recent acquisitions into our operations and achieve the expected benefits of the acquisition, our ability to profitably attract new customers and retain existing customers, our dependence on the market for cloud backup services, our ability to manage growth, changes in economic or regulatory conditions or other trends affecting the Internet and the information technology industry, and those discussed in the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission (the "SEC"), which is available on www.sec.gov, and elsewhere in any subsequent periodic or current reports filed by us with the SEC. Except as required by applicable law, we do not undertake any obligation to update our forward-looking statements to reflect future events, new information or circumstances.

About Carbonite

Carbonite provides a robust Data Protection Platform for businesses, including backup, disaster recovery, high availability and workload migration technology. The Carbonite Data Protection Platform supports businesses in locations around the world with secure global cloud infrastructure. To learn more visit www.Carbonite.com.

Investor Relations Contact:

Jeremiah SisitskyCarbonite781-928-0713investor.relations@carbonite.com

Media Contacts:

Caitlin O'MalleyCarbonite781-928-0762media@carbonite.com

Carbonite, Inc. Consolidated Statement of Operations (unaudited) (In thousands, except share and per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ----------- ----------- Revenue $ 77,734 $ 59,034 $ 141,760 $ 116,133 Cost of revenue 23,057 18,311 41,369 35,666 -------- - -------- - --------- - --------- - Gross profit 54,677 40,723 100,391 80,467 -------- - -------- - --------- - --------- - Operating expenses: Research and development 15,719 10,927 28,238 21,254 General and administrative 13,460 10,954 27,920 23,723 Sales and marketing 22,086 22,963 41,946 46,034 Amortization of intangible assets 3,652 532 4,591 982 Restructuring charges 41 — 903 — -------- - -------- - --------- - --------- - Total operating expenses 54,958 45,376 103,598 91,993 -------- - -------- - --------- - --------- - Loss from operations (281 ) (4,653 ) (3,207 ) (11,526 ) Interest expense (3,420 ) (2,373 ) (6,021 ) (2,595 ) Interest income 169 134 413 154 Other income (expense), net 183 915 195 1,195 -------- - -------- - --------- - --------- - Loss before income taxes (3,349 ) (5,977 ) (8,620 ) (12,772 ) Provision (benefit) for income taxes 2,338 403 (14,877 ) (13,987 ) -------- - -------- - --------- - --------- - Net (loss) income $ (5,687 ) $ (6,380 ) $ 6,257 $ 1,215 - ------ - - ------ - - ------- - - ------- - Net (loss) income per share: Basic $ (0.20 ) $ (0.23 ) $ 0.22 $ 0.04 Diluted $ (0.20 ) $ (0.23 ) $ 0.20 $ 0.04 Weighted-average shares outstanding: 28,628,17 27,525,64 28,485,695 27,672,804 Basic 3 7 28,628,17 27,525,64 30,885,633 28,354,616 Diluted 3 7

Carbonite, Inc. Consolidated Balance Sheets (unaudited) (In thousands) June 30, December 2018 31, 2017 ----------- ----------- Assets Current assets Cash and cash equivalents $ 70,982 $ 128,231 Trade accounts receivable, net 32,078 22,219 Prepaid expenses and other current assets 10,620 6,823 --------- - --------- - Total current assets 113,680 157,273 Property and equipment, net 36,587 28,790 Other assets 12,337 804 Acquired intangible assets, net 134,770 44,994 Goodwill 155,341 80,958 --------- - --------- - Total assets $ 452,715 $ 312,819 - ------- - - ------- - Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 5,820 $ 10,842 Accrued compensation 9,989 9,892 Accrued expenses and other current liabilities 18,922 11,783 Current portion of deferred revenue 121,032 100,241 --------- - --------- - Total current liabilities 155,763 132,758 Long-term debt 194,992 111,819 Deferred revenue, net of current portion 27,682 24,273 Other long-term liabilities 5,876 5,704 --------- - --------- - Total liabilities 384,313 274,554 Stockholders’ equity Common stock 308 301 Additional paid-in capital 243,077 233,343 Treasury stock, at cost (26,867 ) (26,616 ) Accumulated deficit (149,207 ) (169,344 ) Accumulated other comprehensive income 1,091 581 --------- - --------- - Total stockholders’ equity 68,402 38,265 --------- - --------- - Total liabilities and stockholders’ equity $ 452,715 $ 312,819 - ------- - - ------- -

Carbonite, Inc. Consolidated Statement of Cash Flows (unaudited) (In thousands) Six Months Ended June 30, 2018 2017 ---------- ----------- Operating activities Net income $ 6,257 $ 1,215 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,763 10,392 Amortization of deferred costs 931 — Gain on disposal of equipment (141 ) (928 ) Impairment of capitalized software 653 — Stock-based compensation expense 8,478 5,965 Benefit for deferred income taxes (16,317 ) (14,964 ) Non-cash interest expense related to amortization of debt discount 3,101 1,466 Other non-cash items, net 64 (249 ) Changes in assets and liabilities, net of acquisition: Accounts receivable (6,437 ) (89 ) Prepaid expenses and other current assets (1,541 ) (193 ) Other assets (3,771 ) (137 ) Accounts payable (3,895 ) 627 Accrued expenses and other current liabilities 2,549 (2,340 ) Other long-term liabilities 53 120 Deferred revenue 9,099 9,548 -------- - --------- - Net cash provided by operating activities 16,846 10,433 -------- - --------- - Investing activities Purchases of property and equipment (7,795 ) (10,039 ) Proceeds from sale of property and equipment and businesses 534 855 Proceeds from maturities of derivatives 1,680 370 Purchases of derivatives (1,403 ) (2,433 ) Payment for intangibles (1,250 ) — Payment for acquisition, net of cash acquired (144,597 ) (60,198 ) -------- - --------- - Net cash used in investing activities (152,831 ) (71,445 ) -------- - --------- - Financing activities Proceeds from exercise of stock options 942 3,337 Proceeds from issuance of treasury stock under employee stock purchase plan 1,215 — Payments of withholding taxes in connection with restricted stock unit vesting (1,184 ) (1,009 ) Proceeds from long-term borrowings, net of debt issuance costs 88,068 177,797 Payments on long-term borrowings (10,000 ) (39,200 ) Repurchase of common stock — (14,964 ) -------- - --------- - Net cash provided by financing activities 79,041 125,961 -------- - --------- - Effect of currency exchange rate changes on cash (305 ) 863 Net (decrease) increase in cash, cash equivalents and restricted cash (57,249 ) 65,812 Cash, cash equivalents and restricted cash, beginning of period 128,231 59,287 -------- - --------- - Cash, cash equivalents and restricted cash, end of period $ 70,982 $ 125,099 - ------ - - ------- -

Carbonite, Inc. Reconciliation of GAAP to Non-GAAP Measures (unaudited) (In thousands, except share and per share amounts) Reconciliation of GAAP Revenue to Non-GAAP Revenue Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 --------- --------- ---------- ---------- GAAP revenue $ 77,734 $ 59,034 $ 141,760 $ 116,133 Add: Fair value adjustment of acquired deferred revenue 2,116 2,045 2,998 4,033 --------- --------- Non-GAAP revenue $ 79,850 $ 61,079 $ 144,758 $ 120,166 - ------ - ------ - ------- - -------

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ----------- ---------- Gross profit $ 54,677 $ 40,723 $ 100,391 $ 80,467 Gross margin 70.3 % 69.0 % 70.8 % 69.3 % Add: Fair value adjustment of acquired deferred revenue 2,116 2,045 2,998 4,033 Amortization of intangibles 4,325 2,124 6,750 3,750 Stock-based compensation expense 413 269 738 500 Acquisition-related expense 3 115 57 133 -------- - -------- - --------- - -------- - Non-GAAP gross profit $ 61,534 $ 45,276 $ 110,934 $ 88,883 - ------ - - ------ - - ------- - - ------ - Non-GAAP gross margin 77.1 % 74.1 % 76.6 % 74.0 %

Reconciliation of GAAP Net (Loss) Income and Net (Loss) Income per Share to Non-GAAP Net Income and Net Income per Share Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ---------- ---------- --------- -------- GAAP net (loss) income $ (5,687 ) $ (6,380 ) $ 6,257 $ 1,215 Add: Fair value adjustment of acquired deferred revenue 2,116 2,045 2,998 4,033 Amortization of intangibles 7,977 2,656 11,341 4,732 Stock-based compensation expense 4,741 3,188 8,478 5,965 Litigation-related expense 46 89 63 144 Restructuring-related expense 41 — 903 — Acquisition-related expense 2,357 1,255 5,977 4,278 Non-cash convertible debt interest expense 1,558 1,466 3,101 1,466 Less: Income tax effect of non-GAAP adjustments (1,027 ) 66 16,818 15,051 -------- - -------- - -------- ------- Non-GAAP net income $ 14,176 $ 4,253 $ 22,300 $ 6,782 - ------ - - ------ - - ------ - ----- GAAP net (loss) income per share: Basic $ (0.20 ) $ (0.23 ) $ 0.22 $ 0.04 Diluted $ (0.20 ) $ (0.23 ) $ 0.20 $ 0.04 Non-GAAP net income per share: Basic $ 0.50 $ 0.15 $ 0.78 $ 0.25 Diluted $ 0.45 $ 0.15 $ 0.72 $ 0.23 GAAP weighted-average shares outstanding: 28,628,17 27,525,64 28,485,69 27,672,8 Basic 3 7 5 04 28,628,17 27,525,64 30,885,63 28,354,6 Diluted 3 7 3 16 Non-GAAP weighted-average shares outstanding: 28,628,17 27,525,64 28,485,69 27,672,8 Basic 3 7 5 04 31,718,23 28,793,34 30,885,63 28,991,9 Diluted 2 6 3 68

Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 --------- --------- --------- --------- Research and development $ 15,719 $ 10,927 $ 28,238 $ 21,254 Less: Stock-based compensation expense 1,047 405 1,734 714 Acquisition-related expense 2 65 37 134 -------- -------- -------- -------- Non-GAAP research and development $ 14,670 $ 10,457 $ 26,467 $ 20,406 - ------ - ------ - ------ - ------ General and administrative $ 13,460 $ 10,954 $ 27,920 $ 23,723 Less: Stock-based compensation expense 2,494 1,983 4,618 3,940 Litigation-related expense 46 89 63 144 Acquisition-related expense 2,321 908 5,811 3,809 -------- -------- Non-GAAP general and administrative $ 8,599 $ 7,974 $ 17,428 $ 15,830 - ------ - ------ - ------ - ------ Sales and marketing $ 22,086 $ 22,963 $ 41,946 $ 46,034 Less: Stock-based compensation expense 787 531 1,388 811 Acquisition-related expense 31 167 72 202 -------- -------- -------- -------- Non-GAAP sales and marketing $ 21,268 $ 22,265 $ 40,486 $ 45,021 - ------ - ------ - ------ - ------ Amortization of intangible assets $ 3,652 $ 532 $ 4,591 $ 982 Less: Amortization of intangible assets 3,652 532 4,591 982 -------- -------- -------- Non-GAAP amortization of intangible assets $ — $ — $ — $ — - ------ - ------ - ------ - ------ Restructuring charges $ 41 $ — $ 903 $ — Less: Restructuring-related expense 41 — 903 — -------- -------- -------- -------- Non-GAAP restructuring charges $ — $ — $ — $ — - ------ - ------ - ------ - ------

Reconciliation of Revenue to Bookings Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 --------- --------- ---------- ---------- GAAP revenue $ 77,734 $ 59,034 $ 141,760 $ 116,133 Add: Change in deferred revenue 4,388 5,113 24,200 19,389 Deferred revenue divested — 373 288 373 Impact of Topic 606 adoption — — 3,998 — Impact of foreign exchange 543 — 122 — Less: Impact of foreign exchange — 620 — 773 Beginning deferred revenue from acquisitions 130 — 19,740 9,100 Change in unbilled revenue 749 — 1,254 — -------- -------- --------- --------- Change in deferred revenue and adjustments 4,052 4,866 7,614 9,889 -------- -------- --------- --------- Bookings $ 81,786 $ 63,900 $ 149,374 $ 126,022 - ------ - ------ - ------- - -------

Calculation of Adjusted Free Cash Flow Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 --------- --------- --------- --------- Net cash provided by operating activities $ 13,555 $ 2,872 $ 16,846 $ 10,433 Subtract: Purchases of property and equipment 4,507 3,471 7,795 10,039 -------- ------- - -------- -------- Free cash flow 9,048 (599 ) 9,051 394 Add: Acquisition-related payments 3,681 2,659 5,328 3,889 Restructuring-related payments 461 — 1,125 — Litigation-related payments 85 37 212 69 -------- ------- - -------- -------- Adjusted free cash flow $ 13,275 $ 2,097 $ 15,716 $ 4,352 - ------ - ----- - - ------ - ------