Subscription Revenue Grew 8%
Year-over-Year SaaS ARR Grew 16% Year-over-Year
Model N, Inc. (NYSE: MODN), the leader in cloud revenue
management solutions, today announced financial results for the
first quarter of fiscal year 2024 ended December 31, 2023.
“Our first quarter results beat expectations. We exceeded
guidance for total revenue, subscription revenue, professional
services revenue and adjusted EBITDA.” said Jason Blessing,
president and chief executive officer of Model N. “Our strong
performance in Q1 was driven by a healthy contribution from all
areas of the business. We signed new logos, closed one of our few
remaining SaaS transition, saw numerous customer base expansions,
and we also enjoyed solid renewals. As we look ahead, we continue
to remain focused on driving profitable growth and I’m optimistic
about the year ahead.”
Recent Company
Highlights
- Released the results of its sixth annual State of Revenue
Report which identifies the top challenges and opportunities for
pharmaceutical, med tech and high-tech manufacturers.
- Launched Price Management, a new solution that enables
semiconductor, electronic component, and high-tech manufacturers to
manage price execution across direct and channel sales teams
globally.
First Quarter 2024 Financial
Highlights
- Revenues: Total revenues were $63.5 million, an increase
of 7% from the first quarter of fiscal year 2023. Subscription
revenues were $47.7 million, an increase of 8% from the first
quarter of fiscal year 2023.
- Gross Profit: Gross profit was $35.6 million, an
increase of 8% from the first quarter of fiscal year 2023. Gross
margin was 56% for the first quarter of fiscal year 2024 and 2023.
Non-GAAP gross profit was $38.3 million, an increase of 6% from the
first quarter of fiscal year 2023. Non-GAAP gross margin was 60%
for the first quarter of fiscal year 2024 compared to 61% for the
first quarter of fiscal year 2023. Subscription gross margin was
65% for the first quarter of fiscal year 2024 and 2023. Non-GAAP
subscription gross margin was 68% compared to 69% for the first
quarter of fiscal year 2023.
- GAAP Loss and Non-GAAP Income from Operations: GAAP loss
from operations was $2.7 million compared to loss from operations
of $3.5 million for the first quarter of fiscal year 2023. Non-GAAP
income from operations was $9.6 million, an increase of 9% from the
first quarter of fiscal year 2023.
- GAAP Net Loss: GAAP net loss was $1.8 million compared
to a net loss of $4.1 million for the first quarter of fiscal year
2023. GAAP diluted net loss per share attributable to common
stockholders was $0.05 based upon weighted average shares
outstanding of 38.9 million compared to net loss per share of $0.11
for the first quarter of fiscal year 2023 based upon weighted
average shares outstanding of 37.5 million.
- Non-GAAP Net Income: Non-GAAP net income, was $10.9
million, an increase of 26% from the first quarter of fiscal year
2023. Non-GAAP net income per diluted share was $0.28 based upon
diluted weighted average shares outstanding of 39.1 million
compared to non-GAAP net income per diluted share of $0.22 for the
first quarter of fiscal year 2023 based upon diluted weighted
average shares outstanding of 38.7 million.
- Adjusted EBITDA: Adjusted EBITDA was $9.9 million, an
increase of 8% from the first quarter of fiscal year 2023. Adjusted
EBITDA margin was 16% compared to 15% for the first quarter of
fiscal year 2023.
- SaaS ARR and SaaS Net Dollar Retention: SaaS ARR hit
$134.8 million, representing growth of 16% year-over-year. Trailing
12-month SaaS net dollar retention was 115%.
A reconciliation of GAAP to non-GAAP financial measures has been
provided in the financial tables included in this press
release.
Guidance
As of February 6, 2024, we are providing guidance for the second
quarter of the fiscal year 2024 ending March 31, 2024 and the full
fiscal year ending September 30, 2024.
(in $ millions, except per share)
Second Quarter Fiscal
2024
Full Year Fiscal 2024
Total revenues
63.5 - 64.5
260.5 - 263.5
Subscription revenues
48.5 - 49.0
193.5 - 195.5
Non-GAAP income from operations
9.2 - 10.2
46.9 - 49.9
Non-GAAP net income per share
0.24 - 0.27
1.25 - 1.32
Adjusted EBITDA
9.0 - 10.0
48.0 - 51.0
Quarterly Results Conference
Call
Model N will host a conference call today at 2:00 PM Pacific
Time (5:00 PM Eastern Time) to review the company’s financial
results for the first quarter fiscal year 2024 ended December 31,
2023. The conference call can be accessed by dialing 877-407-4018
from the United States or +1-201-689-8471 internationally. A live
webcast and replay of the conference call can be accessed from the
investor relations page of Model N’s website at
investor.modeln.com. Following the completion of the call through
11:59 p.m. ET on February 20, 2024, a telephone replay will be
available by dialing 844-512-2921 from the United States or
+1-412-317-6671, internationally, with recording access code
13743584.
About Model N
Model N is the leader in revenue optimization and compliance for
pharmaceutical, medtech, and high-tech innovators. Our intelligent
platform powers your digital transformation with integrated
technology, data, analytics, and expert services that deliver deep
insight and control.
Our integrated cloud solution is proven to automate pricing,
incentive, and contract decisions to scale business profitably and
grow revenue. Model N is trusted across more than 120 countries by
the world’s leading pharmaceutical, medical technology,
semiconductor, and high-tech companies, including Johnson &
Johnson, AstraZeneca, Stryker, Seagate Technology, Broadcom, and
Microchip Technology. For more information, visit www.modeln.com.
Forward-Looking
Statements
This press release contains forward-looking statements
including, among other things, statements regarding Model N’s
second quarter and full year fiscal 2024 financial results, Model
N’s profitability, future planned enhancements to our products and
benefits from our products. The words “believe,” “may,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,” and
similar expressions are intended to identify forward-looking
statements. These forward-looking statements are subject to risks,
uncertainties, and assumptions. If the risks materialize or
assumptions prove incorrect, actual results could differ materially
from the results implied by these forward-looking statements. Risks
include, but are not limited to: (i) delays in closing customer
contracts; (ii) our ability to improve and sustain our sales
execution; (iii) the timing of new orders and the associated
revenue recognition; (iv) adverse changes in general economic or
market conditions; (v) delays or reductions in information
technology spending and resulting variability in customer orders
from quarter to quarter; (vi) competitive factors, including but
not limited to pricing pressures, industry consolidation, entry of
new competitors and new applications and marketing initiatives by
our competitors; (vii) our ability to manage our growth
effectively; (viii) acceptance of our applications and services by
customers; (ix) success of new products; (x) the risk that the
strategic initiatives that we may pursue will not result in
significant future revenues; (xi) changes in health care regulation
and policy and tax in the United States and worldwide; (xii) our
ability to retain customers; and (xiii) adverse impacts on our
business and financial condition due to macroeconomic and
geopolitical factors, such as inflation, rising interests,
pandemics, banking system instability and geopolitical conflicts.
Further information on risks that could affect Model N’s results is
included in our filings with the Securities and Exchange Commission
(“SEC”), including our most recent quarterly report on Form 10-Q
and our annual report on Form 10-K for the fiscal year ended
September 30, 2023, and any current reports on Form 8-K that we may
file from time to time. Should any of these risks or uncertainties
materialize, actual results could differ materially from
expectations. Model N assumes no obligation to, and does not
currently intend to, update any such forward-looking statements
after the date of this release.
Non-GAAP Financial
Measures
We have provided in this release financial information that has
not been prepared in accordance with accounting standards generally
accepted in the United States of America (“GAAP”). We use these
non-GAAP financial measures internally in analyzing our financial
results and believe they are useful to investors, as a supplement
to GAAP measures, in evaluating our ongoing operational
performance. We believe 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
our financial results with other companies in our industry, many of
which present similar non-GAAP financial measures to investors.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Investors are encouraged to
review the reconciliation of these non-GAAP financial measures to
their most directly comparable GAAP financial measures below. A
reconciliation of our non-GAAP financial measures to their most
directly comparable GAAP measures has been provided in the
financial statement tables included below in this press
release.
Our reported results include certain non-GAAP financial
measures, including non-GAAP gross profit, non-GAAP gross margin,
non-GAAP subscription gross profit, non-GAAP subscription gross
margin, non-GAAP income from operations, non-GAAP net income,
non-GAAP net income per share, adjusted EBITDA and free cash flow.
Non-GAAP gross profit and subscription gross profit excludes
stock-based compensation expenses and amortization of intangible
assets as they are often excluded by other companies to help
investors understand the operational performance of their business.
Non-GAAP income from operations excludes stock-based compensation
expense and amortization of intangible assets. Non-GAAP net income
excludes stock-based compensation expense, amortization of
intangible assets, and amortization of debt issuance costs.
Additionally, stock-based compensation expense varies from period
to period and from company to company due to such things as
valuation methodologies and changes in stock price. Adjusted EBITDA
is defined as net loss, adjusted for depreciation and amortization,
stock-based compensation expense, interest expenses, interest
income, other income (expenses), net, and provision for income
taxes. Reconciliation tables are provided in this press
release.
SaaS ARR is defined as the annualized value of our SaaS revenue,
which is derived by dividing the SaaS portion of our recurring
subscription revenue for the quarter by the number of days in the
quarter, and multiplying it by 365 to get an annualized number.
SaaS Net Dollar Retention uses the same SaaS ARR calculations to
measure the percentage change in SaaS ARR from customers that are
in both the current period and the year-ago period. SaaS ARR that
has been added from new customers that were not in the year-ago
calculation is excluded from the SaaS Net Dollar Retention
calculation. SaaS ARR and SaaS Net Dollar Retention should be
viewed independently of revenue, deferred revenue, and remaining
performance obligations, and are not intended to be a substitute
for, or combined with, any of these items.
Free cash flow is defined as net cash provided by operating
activities less cash used for purchase of property plant and
equipment.
We have not reconciled guidance for non-GAAP financial measures
to their most directly comparable GAAP measures because certain
items that impact these measures are uncertain, out of our control
and/or cannot be reasonably predicted or estimated, such as the
difficulties of estimating certain items such as charges to
stock-based compensation expense. Accordingly, a reconciliation of
the non-GAAP financial measure guidance to the corresponding GAAP
measures is not available without unreasonable effort.
Model N, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
As of December 31,
2023
As of September 30,
2023
Assets
Current assets
Cash and cash equivalents
$
303,375
$
301,355
Funds held for customers
84
91
Accounts receivable, net
83,077
61,761
Prepaid expenses
5,115
5,922
Other current assets
9,893
14,777
Total current assets
401,544
383,906
Property and equipment, net
1,049
1,242
Operating lease right-of-use assets
8,779
9,885
Goodwill
65,665
65,665
Intangible assets, net
28,450
30,176
Other assets
9,687
9,221
Total assets
$
515,174
$
500,095
Liabilities and Stockholders’
Equity
Current liabilities
Accounts payable
$
3,423
$
3,888
Customer funds payable
84
91
Accrued employee compensation
12,064
14,645
Accrued liabilities
6,060
8,700
Operating lease liabilities, current
portion
4,254
4,408
Deferred revenue, current portion
74,393
61,745
Total current liabilities
100,278
93,477
Long-term liabilities
Long term debt
280,779
280,358
Operating lease liabilities, less current
portion
5,740
6,755
Other long-term liabilities
4,034
4,042
Total long-term liabilities
290,553
291,155
Total liabilities
390,831
384,632
Stockholders’ equity
Common stock
6
6
Additional paid-in capital
425,127
414,562
Accumulated other comprehensive loss
(2,132
)
(2,245
)
Accumulated deficit
(298,658
)
(296,860
)
Total stockholders’ equity
124,343
115,463
Total liabilities and stockholders’
equity
$
515,174
$
500,095
Model N, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except per share
amounts)
Three Months Ended December
31,
2023
2022
Revenues
Subscription
$
47,655
$
44,214
Professional services
15,836
14,940
Total revenues
63,491
59,154
Cost of revenues
Subscription
16,711
15,606
Professional services
11,158
10,665
Total cost of revenues
27,869
26,271
Gross profit
35,622
32,883
Operating expenses
Research and development
12,680
12,764
Sales and marketing
13,960
12,977
General and administrative
11,649
10,691
Total operating expenses
38,289
36,432
Loss from operations
(2,667
)
(3,549
)
Interest expense
1,834
1,434
Interest income
(3,540
)
(1,300
)
Other expenses (income), net
117
(65
)
Loss before income taxes
(1,078
)
(3,618
)
Provision for income taxes
720
432
Net loss
$
(1,798
)
$
(4,050
)
Net loss per share:
Basic and diluted
$
(0.05
)
$
(0.11
)
Weighted average number of shares used in
computing net loss per share:
Basic and diluted
38,901
37,527
Model N, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
Three Months Ended December
31,
2023
2022
Cash Flows from Operating Activities:
Net loss
$
(1,798
)
$
(4,050
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
1,960
2,273
Stock-based compensation
10,565
10,404
Amortization of debt issuance costs
421
302
Deferred income taxes
72
157
Amortization of capitalized contract
acquisition costs
1,278
1,196
Other non-cash charges
143
56
Changes in assets and liabilities, net of
acquisition:
Accounts receivable
(21,330
)
(17,080
)
Prepaid expenses and other assets
5,136
43
Accounts payable
(437
)
(775
)
Accrued employee compensation
(2,608
)
(10,630
)
Other current and long-term
liabilities
(3,604
)
(4,961
)
Deferred revenue
12,307
4,773
Net cash provided by (used in) operating
activities
2,105
(18,292
)
Cash Flows from Investing Activities:
Purchases of property and equipment
(99
)
(26
)
Net cash used in investing activities
(99
)
(26
)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options
and issuance of common stock under employee stock purchase plan
—
27
Net changes in customer funds payable
(7
)
(469
)
Net cash used in financing activities
(7
)
(442
)
Effect of exchange rate changes on cash
and cash equivalents
14
(39
)
Net increase (decrease) in cash and cash
equivalents
2,013
(18,799
)
Cash and cash equivalents
Beginning of period
301,446
194,127
End of period
$
303,459
$
175,328
Model N, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Results
(in thousands, except per share
amounts)
Three Months Ended December
31,
2023
2022
Reconciliation from GAAP net loss to
adjusted EBITDA
GAAP net loss
$
(1,798
)
$
(4,050
)
Reversal of non-GAAP items
Stock-based compensation expense
10,565
10,404
Depreciation and amortization
1,960
2,273
Interest expense
1,834
1,434
Interest income
(3,540
)
(1,300
)
Other (income) expense, net
117
(65
)
Provision for income taxes
720
432
Adjusted EBITDA
$
9,858
$
9,128
Three Months Ended December
31,
2023
2022
Reconciliation from GAAP gross profit to
non-GAAP gross profit
GAAP gross profit
$
35,622
$
32,883
Reversal of non-GAAP expenses
Stock-based compensation (a)
2,214
2,477
Amortization of intangible assets (b)
427
709
Non-GAAP gross profit
$
38,263
$
36,069
Percentage of revenue
60.3
%
61.0
%
Three Months Ended December
31,
2023
2022
Reconciliation from GAAP subscription
gross profit to non-GAAP subscription gross profit
GAAP subscription gross profit
$
30,944
$
28,608
Reversal of non-GAAP expenses
Stock-based compensation (a)
1,229
1,337
Amortization of intangible assets (b)
427
709
Non-GAAP subscription gross profit
$
32,600
$
30,654
Percentage of subscription revenue
68.4
%
69.3
%
Three Months Ended December
31,
2023
2022
Reconciliation from GAAP professional
services gross profit to non-GAAP professional services gross
profit
GAAP professional services gross
profit
$
4,678
$
4,275
Reversal of non-GAAP expenses
Stock-based compensation (a)
985
1,140
Non-GAAP professional services gross
profit
$
5,663
$
5,415
Percentage of professional services
revenue
35.8
%
36.2
%
Three Months Ended December
31,
2023
2022
Reconciliation from GAAP operating loss to
non-GAAP operating income
GAAP operating loss
$
(2,667
)
$
(3,549
)
Reversal of non-GAAP expenses
Stock-based compensation (a)
10,565
10,404
Amortization of intangible assets (b)
1,726
2,008
Non-GAAP operating income
$
9,624
$
8,863
Numerator
Reconciliation between GAAP net loss and
non-GAAP net income
GAAP net loss
$
(1,798
)
$
(4,050
)
Reversal of non-GAAP expenses
Stock-based compensation (a)
10,565
10,404
Amortization of intangible assets (b)
1,726
2,008
Amortization of debt issuance costs
(c)
421
302
Non-GAAP net income
$
10,914
$
8,664
Denominator
Reconciliation between GAAP net loss and
non-GAAP net income per share
Shares used in computing GAAP net loss per
share:
Basic and diluted
38,901
37,527
Shares used in computing non-GAAP net
income per share
Basic
38,901
37,527
Add: effect of shares for stock plan
activity
236
622
Add: effect of shares related to
convertible senior notes
—
594
Diluted
39,137
38,743
GAAP net loss per share
Basic and diluted
$
(0.05
)
$
(0.11
)
Non-GAAP net income per share
Basic
$
0.28
$
0.23
Diluted
$
0.28
$
0.22
Three Months Ended December
31,
2023
2022
Amortization of intangibles assets
recorded in the statements of operations
Cost of revenues
Subscription
$
427
$
709
Total amortization of intangibles assets
in cost of revenue (b)
427
709
Operating expenses
Sales and marketing
1,299
1,299
Total amortization of intangibles assets
in operating expense (b)
1,299
1,299
Total amortization of intangibles assets
(b)
$
1,726
$
2,008
Three Months Ended December
31,
2023
2022
Stock-based compensation recorded in the
statements of operations
Cost of revenues
Subscription
$
1,229
$
1,337
Professional services
985
1,140
Total stock-based compensation in cost of
revenue (a)
2,214
2,477
Operating expenses
Research and development
1,719
1,821
Sales and marketing
2,561
2,388
General and administrative
4,071
3,718
Total stock-based compensation in
operating expense (a)
8,351
7,927
Total stock-based compensation (a)
$
10,565
$
10,404
Three Months Ended December
31,
2023
2022
Free cash flow
Net cash provided by (used in) operating
activities
$
2,105
$
(18,292
)
Purchases of property and equipment
(99
)
(26
)
Free cash flow
$
2,006
$
(18,318
)
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements
presented on a GAAP basis, we use non-GAAP measures of adjusted
EBITDA, gross profit, gross margin, income from operations, net
income, weighted average shares outstanding and net income per
share, which are adjusted to exclude stock-based compensation
expense, amortization of intangible assets, depreciation of fixed
assets, amortization of debt issuance costs, and include dilutive
shares where applicable. We believe these adjustments are
appropriate to enhance an overall understanding of our past
financial performance and also our prospects for the future. These
adjustments to our current period GAAP results are made with the
intent of providing both management and investors a more complete
understanding of our underlying operating results and trends and
our marketplace performance. The non-GAAP results are an indication
of our baseline performance that are considered by management for
the purpose of making operational decisions. In addition, these
non-GAAP results are the primary indicators management uses as a
basis for our planning and forecasting of future periods. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for operating loss, net
loss or basic and diluted net loss per share prepared in accordance
with generally accepted accounting principles in the United States.
Non-GAAP financial measures are not based on a comprehensive set of
accounting rules or principles and are subject to limitations.
While a large component of our expenses incurred in certain
periods, we believe investors may want to exclude the effects of
these items in order to compare our financial performance with that
of other companies and between time periods:
(a)
Stock-based compensation is a non-cash
expense accounted for in accordance with FASB ASC Topic 718. We
believe that the exclusion of stock-based compensation expense
provides for a better comparison of our operating results to prior
periods and to our peer companies.
(b)
Amortization of intangible assets resulted
principally from acquisitions. Intangible asset amortization is a
non-cash item. As such, we believe exclusion of these expenses
provides for a better comparison of our operating results to prior
periods and to our peer companies.
(c)
Amortization of debt issuance costs. We
believe exclusion of these expenses provides for a better
comparison of our operating results to prior periods and to our
peer companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206111657/en/
Investor Relations Contact: Carolyn Bass Market Street
Partners investorrelations@modeln.com
Media Contact: BLASTmedia Press@modeln.com
Model N (NYSE:MODN)
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Model N (NYSE:MODN)
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부터 5월(5) 2023 으로 5월(5) 2024