• Third Quarter Subscription Revenue up 33.1% Year-Over-Year
  • Remaining Performance Obligation of $923.2 million, up 24.8% Year-Over-Year
  • Dollar-Based Net Expansion of 119%

Anaplan, Inc. (NYSE:PLAN), provider of a leading cloud-native platform for orchestrating business performance, today announced financial results for its third quarter ended October 31, 2021.

“With a constantly changing environment, we solve our customers’ complex challenges. I am excited about our innovation with the Anaplan Autonomous Enterprise, which provides a real-time, scalable, and intelligent approach to plan, analyze and act,” said Frank Calderoni, chief executive officer of Anaplan. “We delivered another solid quarter and the robust demand for an enterprise-wide planning solution positions us well to capitalize on growth opportunities.”

Third Quarter Fiscal 2022 Financial Results

  • Total revenue was $155.3 million, an increase of 35.2% year-over-year. Subscription revenue was $139.3 million, an increase of 33.1% year-over-year.
  • GAAP operating loss was $48.2 million or 31.0% of total revenue, compared to $35.9 million in the third quarter of fiscal 2021 or 31.2% of total revenue. Non-GAAP operating loss was $6.9 million or 4.4% of total revenue, compared to $6.1 million in the third quarter of fiscal 2021 or 5.3% of total revenue.
  • GAAP loss per share was $0.28, compared to $0.26 in the third quarter of fiscal 2021. Non-GAAP loss per share was $0.05, flat compared to the third quarter of fiscal 2021.
  • Cash and Cash Equivalents were $312.4 million as of October 31, 2021.

Financial Outlook

The company is providing the following guidance for its fourth quarter fiscal 2022:

  • Total revenue is expected to be between $154.0 and $155.0 million.
  • Non-GAAP operating margin is expected to be between negative 10.0% and 11.0%.
  • As a baseline for third quarter, we expect billings to be in the range of $213 million to $214 million.

The company is updating its previous guidance provided on August 31, 2021 for its full year fiscal 2022:

  • Total revenue is expected to be between $583.5 and $584.5 million (was between $571.5 and $573.5 million).
  • Non-GAAP operating margin is expected to be between negative 7.5% and 8.5%.

The guidance provided above are forward-looking statements and actual results may differ materially. Refer to the “Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

The section titled “Non-GAAP Financial Measures” below contains a description of the non-GAAP financial measures used in this press release, definitions of our operating metrics and a reconciliation of GAAP and non-GAAP financial measures is contained in the tables below. A reconciliation of non-GAAP measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, costs and expenses, including the impact of stock-based compensation, which is dependent on factors such as future stock price and volume of equity awards granted in the future, that may be incurred in the future and therefore, cannot be reasonably predicted. The effect of these excluded items may be significant.

Recent Highlights

  • Anaplan introduced next-generation Anaplan Polaris™ Calculation Engine for early adopters
  • Anaplan on AWS launched on the AWS Marketplace for customers in the United States
  • Anaplan on Google Cloud Platform launched for customers in Japan, the partnership’s second market
  • Anaplan announced as a Google Cloud partner for Supply Chain Twin solution
  • Gartner named Anaplan a 2021 Gartner Peer Insights Customers’ Choice for Cloud Financial Planning & Analysis Solutions and Sales Performance Management
  • Correlation One and Anaplan expanded Anaplan for All to help customers and partners build diverse Anaplan talent ecosystems

Webcast and Conference Call Information

Event: Anaplan Third Quarter Fiscal Year 2022 Earnings Conference Call When: Tuesday, November 23, 2021 Time: 2:00 p.m. PT / 5:00 p.m. ET Live Call: Please see online registration Replay: (800) 770-2030 or (647) 362-9199 with passcode 47794 Live Webcast: https://investors.anaplan.com or with replay available for 12 months

Upcoming Investor Events

Anaplan management will be participating in the following investor conferences:

Barclays Global Technology, Media and Telecommunications Conference Tuesday, December 7, 2021 10:50am PT/1:50pm ET

About Anaplan

Anaplan (NYSE: PLAN) is a transformative way to see, plan, and run your business. Using our proprietary Hyperblock™ technology, Anaplan lets you contextualize real-time performance, and forecast future outcomes for faster, confident decisions. Because connecting strategy and plans to collaborative execution across your enterprise is required to move business FORWARD today. Based in San Francisco, Anaplan has over 175 partners and more than 1,800 customers worldwide. To learn more, visit Anaplan.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended, including all statements other than statements of historical fact contained in this press release and includes, without limitation, statements about the impact of the COVID-19 pandemic and resulting global economic uncertainty, the quotations from management, statements regarding market demand, market opportunity, competitive position including of the company’s solutions compared to the offerings of competitors, use of the company’s solutions and the results of such use, statements regarding the need for, or interest in, enterprise planning or digital transformation, statements about the company’s plans, strategies and prospects, statements about offerings, solutions, services and functionality, statements regarding growth and momentum, statements about customers’ challenges, plans and priorities, the financial outlook and guidance, which may include expected GAAP and non-GAAP financial and other results, for the company’s fourth fiscal quarter ending January 31, 2022 and for the full fiscal year ending January 31, 2022 and the underlying assumptions, and statements about events and trends including events and trends that we believe may affect our financial condition, results of operations, short- and long-term business operations and objectives, and financial needs. These statements identify prospective information and may include words such as “expects,” “intends,” “continue,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “should,” “may,” “will,” or the negative version of these words, variations of these words and comparable terminology. These forward-looking statements are based on information available to the company as of the date of this press release and are based on management’s current views and assumptions. These forward-looking statements are conditioned upon and also involve a number of known and unknown risks, uncertainties, and other factors that could cause actual results, performance or events to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the company’s control and may pose a risk to the company’s operating and financial condition. Such risks and uncertainties include, but are not limited to, the following risks: the ongoing COVID-19 pandemic, and resulting global economic uncertainty, has impacted how we, our customers, and our partners are operating, and could result in a material adverse effect on our business, financial condition, operating results and cash flows; we have a limited history of operating at our current scale and under our current strategy, which makes it difficult to predict our future operating results, and we may not achieve our expected operating results in the future; our recent revenue growth rates may not be indicative of our future performance or growth; we have a history of net losses, we anticipate increasing our operating expenses in the future, and we do not expect to be profitable for the near future; our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business; we have experienced rapid growth and expect to continue to invest in our growth in the future, and if we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service, or adequately address competitive challenges and our business, financial condition and results of operations may be adversely affected; we derive substantially all of our revenue from a single software platform and if our platform fails to satisfy customer demands or to achieve widespread market acceptance it would adversely affect our business, operating results, financial condition, and growth prospects; if we are unable to attract new customers, both domestically and internationally, the growth of our revenue will be adversely affected and our business may be harmed; our business depends substantially on our customers renewing their subscriptions and expanding their use of our platform and if we fail to achieve renewals or expansions or our customers renew or expand their subscriptions on less favorable terms or if they fail to add more users in more functional areas or upgrade to a higher level of functionality on our platform, our business and operating results will be adversely affected; failure to effectively expand our sales and marketing capabilities, including to hire and retain direct sales personnel, could harm our ability to increase our customer base and achieve broader market acceptance of our service; our growth depends in part on the success of our strategic relationships with third parties and their continued performance; if our customers and partners do not have access to highly skilled and trained users of our platform, our customers may not be able to unlock the full potential of our platform, customer satisfaction may suffer, and our results of operations, financial condition and growth prospects may be adversely affected; if we fail to continue to enhance our platform, satisfy the cloud infrastructure priorities of our clients or adapt to rapid technological change, our ability to remain competitive could be impaired; if we experience a security incident affecting our platform, networks, systems or data or the data of our customers, or are perceived to have experienced such a security incident, our platform may be perceived as not being secure, our reputation may be harmed, customers may reduce the use of or stop using our platform, we may incur significant liabilities, and our business could be materially adversely affected; real or perceived errors, failures, bugs, service outages, or disruptions in our platform could adversely affect our reputation and harm our business; we depend on the experience and expertise of our senior management team and certain key employees, especially engineering, research and development and sales personnel, and our inability to retain these executive officers and key employees or recruit them in a timely manner, could harm our business, operating results, and financial condition; the markets in which we participate are intensely competitive, and if we do not compete effectively, our business and operating results could be adversely affected; we collect, process and store personal information and furthermore, our platform could be used by customers to do the same, and evolving domestic and international privacy and security laws, regulations and other obligations could result in additional costs and liabilities to us or inhibit sales of our platform. Furthermore, the additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may amplify many of these risks. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this press release is contained in the company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including its annual report on Form 10-K filed with the SEC on March 12, 2021, and other documents the company may file with or furnish to the SEC from time to time such as annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. These forward-looking statements should not be relied upon as representing the company’s views as of any subsequent date and the company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made. The information contained in, or that can be accessed through, Anaplan’s website and social media channels are not part of this press release.

Preliminary Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

(In thousands, except per share amounts)

2021

 

2020

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

Subscription revenue

$

139,343

 

 

 

$

104,707

 

 

 

$

388,437

 

 

 

$

295,648

 

 

Professional services revenue

16,005

 

 

 

10,168

 

 

 

41,060

 

 

 

29,582

 

 

Total revenue

155,348

 

 

 

114,875

 

 

 

429,497

 

 

 

325,230

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of subscription revenue (1)

25,627

 

 

 

19,187

 

 

 

69,601

 

 

 

50,520

 

 

Cost of professional services revenue (1)

16,512

 

 

 

10,188

 

 

 

41,586

 

 

 

29,037

 

 

Total cost of revenue

42,139

 

 

 

29,375

 

 

 

111,187

 

 

 

79,557

 

 

Gross profit

113,209

 

 

 

85,500

 

 

 

318,310

 

 

 

245,673

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development (1)

40,782

 

 

 

24,629

 

 

 

110,211

 

 

 

72,986

 

 

Sales and marketing (1)

92,859

 

 

 

73,893

 

 

 

277,610

 

 

 

218,481

 

 

General and administrative (1)

27,732

 

 

 

22,851

 

 

 

77,362

 

 

 

66,514

 

 

Total operating expenses

161,373

 

 

 

121,373

 

 

 

465,183

 

 

 

357,981

 

 

Loss from operations

(48,164

)

 

 

(35,873

)

 

 

(146,873

)

 

 

(112,308

)

 

Interest income (expense), net

(122

)

 

 

(208

)

 

 

(404

)

 

 

119

 

 

Other income (expense), net

(368

)

 

 

(291

)

 

 

(3,202

)

 

 

3,385

 

 

Loss before income taxes

(48,654

)

 

 

(36,372

)

 

 

(150,479

)

 

 

(108,804

)

 

Benefit from (provision for) income taxes

7,676

 

 

 

(420

)

 

 

6,889

 

 

 

(3,114

)

 

Net loss

$

(40,978

)

 

 

$

(36,792

)

 

 

$

(143,590

)

 

 

$

(111,918

)

 

Net loss per share attributable to common stockholders, basic and diluted

$

(0.28

)

 

 

$

(0.26

)

 

 

$

(0.99

)

 

 

$

(0.81

)

 

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

146,966

 

 

 

140,603

 

 

 

145,549

 

 

 

138,448

 

 

(1) Includes stock-based compensation expense as follows:

 

 

 

 

 

 

 

Cost of subscription revenue

$

2,184

 

 

 

$

953

 

 

 

$

5,536

 

 

 

$

2,537

 

 

Cost of professional services revenue

1,170

 

 

 

506

 

 

 

2,992

 

 

 

1,706

 

 

Research and development

9,748

 

 

 

5,235

 

 

 

25,098

 

 

 

13,261

 

 

Sales and marketing

16,907

 

 

 

12,570

 

 

 

51,604

 

 

 

33,814

 

 

General and administrative

8,984

 

 

 

7,696

 

 

 

23,292

 

 

 

23,114

 

 

Total stock-based compensation expense

$

38,993

 

 

 

$

26,960

 

 

 

$

108,522

 

 

 

$

74,432

 

 

 

Preliminary Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

As of

 

October 31, 2021

 

January 31, 2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

312,367

 

 

$

320,990

 

Accounts receivable, net

138,825

 

 

147,005

 

Deferred commissions, current portion

43,309

 

 

36,797

 

Prepaid expenses and other current assets

27,295

 

 

24,252

 

Total current assets

521,796

 

 

529,044

 

Property and equipment, net

60,912

 

 

51,603

 

Deferred commissions, net of current portion

92,787

 

 

82,405

 

Goodwill

32,379

 

 

32,379

 

Operating lease right-of-use asset

33,587

 

 

33,985

 

Other noncurrent assets

17,027

 

 

9,709

 

TOTAL ASSETS

$

758,488

 

 

$

739,125

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,227

 

 

$

7,949

 

Accrued expenses

103,651

 

 

101,507

 

Deferred revenue, current portion

320,064

 

 

287,778

 

Operating lease liabilities, current portion

9,576

 

 

7,951

 

Total current liabilities

443,518

 

 

405,185

 

Deferred revenue, net of current portion

3,658

 

 

7,765

 

Operating lease liabilities, net of current portion

28,580

 

 

30,130

 

Other noncurrent liabilities

17,652

 

 

18,032

 

TOTAL LIABILITIES

493,408

 

 

461,112

 

Stockholders’ equity:

 

 

 

Common stock

14

 

 

14

 

Accumulated other comprehensive loss

(9,338)

 

 

(7,528)

 

Additional paid-in capital

1,064,972

 

 

932,505

 

Accumulated deficit

(790,568)

 

 

(646,978)

 

TOTAL STOCKHOLDERS’ EQUITY

265,080

 

 

278,013

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

758,488

 

 

$

739,125

 

 

Preliminary Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Nine Months Ended October 31,

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss

$

(143,590

)

 

 

$

(111,918

)

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

21,465

 

 

 

18,934

 

 

Amortization of deferred commissions

31,003

 

 

 

24,418

 

 

Stock-based compensation

108,522

 

 

 

74,432

 

 

Reduction of operating lease right-of-use assets and accretion of operating lease liabilities

7,549

 

 

 

7,642

 

 

Foreign currency remeasurement losses (gains)

1,565

 

 

 

(3,178

)

 

Release of deferred tax valuation allowance

(7,639

)

 

 

 

 

Other non-cash items

582

 

 

 

2,609

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

7,241

 

 

 

(22,012

)

 

Prepaid expenses and other current assets

(3,143

)

 

 

1,290

 

 

Other noncurrent assets

(698

)

 

 

(1,376

)

 

Deferred commissions

(49,292

)

 

 

(43,439

)

 

Accounts payable and accrued expenses

5,620

 

 

 

10,271

 

 

Deferred revenue

29,304

 

 

 

26,831

 

 

Payments for operating lease liabilities, net

(6,956

)

 

 

(6,907

)

 

Other noncurrent liabilities

554

 

 

 

7,468

 

 

Net cash provided by (used in) operating activities

2,087

 

 

 

(14,935

)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchase of property and equipment

(9,089

)

 

 

(5,243

)

 

Capitalized internal-use software

(10,207

)

 

 

(7,666

)

 

Net cash used in investing activities

(19,296

)

 

 

(12,909

)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from exercise of stock options

7,891

 

 

 

12,575

 

 

Proceeds from employee stock purchase plan

11,514

 

 

 

9,481

 

 

Principal payments on capital lease obligations

(7,579

)

 

 

(6,160

)

 

Net cash provided by financing activities

11,826

 

 

 

15,896

 

 

Effect of exchange rate changes on cash and cash equivalents

(3,240

)

 

 

1,005

 

 

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

(8,623

)

 

 

(10,943

)

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - Beginning of period

320,990

 

 

 

309,894

 

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - End of period

$

312,367

 

 

 

$

298,951

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages and per share amounts)

(Unaudited)

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

(In thousands, except percentages and per share amounts)

2021

 

2020

 

2021

 

2020

Revenue

$

155,348

 

 

 

$

114,875

 

 

 

$

429,497

 

 

 

$

325,230

 

 

GAAP operating loss

$

(48,164

)

 

 

$

(35,873

)

 

 

$

(146,873

)

 

 

$

(112,308

)

 

Stock-based compensation

38,993

 

 

 

26,960

 

 

 

108,522

 

 

 

74,432

 

 

Employer payroll tax expense related to employee stock plans

1,334

 

 

 

1,622

 

 

 

4,936

 

 

 

4,982

 

 

Business combination and other related cost

644

 

 

 

880

 

 

 

2,205

 

 

 

2,835

 

 

Amortization of acquired intangibles

335

 

 

 

335

 

 

 

1,005

 

 

 

1,005

 

 

Non-GAAP operating loss

$

(6,858

)

 

 

$

(6,076

)

 

 

$

(30,205

)

 

 

$

(29,054

)

 

GAAP operating margin %

-31.0

 

%

 

-31.2

 

%

 

-34.2

 

%

 

-34.5

 

%

Stock-based compensation %

25.1

 

%

 

23.5

 

%

 

25.3

 

%

 

22.9

 

%

Employer payroll tax expense related to employee stock plans %

0.9

 

%

 

1.4

 

%

 

1.2

 

%

 

1.5

 

%

Business combination and other related cost %

0.4

 

%

 

0.7

 

%

 

0.5

 

%

 

0.9

 

%

Amortization of acquired intangibles %

0.2

 

%

 

0.3

 

%

 

0.2

 

%

 

0.3

 

%

Non-GAAP operating margin %

-4.4

 

%

 

-5.3

 

%

 

-7.0

 

%

 

-8.9

 

%

GAAP net loss

$

(40,978

)

 

 

$

(36,792

)

 

 

$

(143,590

)

 

 

$

(111,918

)

 

Stock-based compensation

38,993

 

 

 

26,960

 

 

 

108,522

 

 

 

74,432

 

 

Employer payroll tax expense related to employee stock plans

1,334

 

 

 

1,622

 

 

 

4,936

 

 

 

4,982

 

 

Business combination and other related cost

644

 

 

 

880

 

 

 

2,205

 

 

 

2,835

 

 

Amortization of acquired intangibles

335

 

 

 

335

 

 

 

1,005

 

 

 

1,005

 

 

Non-GAAP tax adjustments

(7,639

)

 

 

 

 

 

(7,639

)

 

 

1,250

 

 

Non-GAAP net loss

$

(7,311

)

 

 

$

(6,995

)

 

 

$

(34,561

)

 

 

$

(27,414

)

 

GAAP net loss per share, basic and diluted

$

(0.28

)

 

 

$

(0.26

)

 

 

$

(0.99

)

 

 

$

(0.81

)

 

Stock-based compensation

0.27

 

 

 

0.19

 

 

 

0.74

 

 

 

0.54

 

 

Employer payroll tax expense related to employee stock plans

0.01

 

 

 

0.01

 

 

 

0.03

 

 

 

0.03

 

 

Business combination and other related cost

 

 

 

0.01

 

 

 

0.02

 

 

 

0.02

 

 

Amortization of acquired intangibles

 

 

 

 

 

 

0.01

 

 

 

0.01

 

 

Non-GAAP tax adjustments

(0.05

)

 

 

 

 

 

(0.05

)

 

 

0.01

 

 

Non-GAAP net loss per share

$

(0.05

)

 

 

$

(0.05

)

 

 

$

(0.24

)

 

 

$

(0.20

)

 

Shares used to compute GAAP net loss per share attributable to common stockholders, basic and diluted

146,966

 

 

 

140,603

 

 

 

145,549

 

 

 

138,448

 

 

Shares used to compute Non-GAAP net loss per share

146,966

 

 

 

140,603

 

 

 

145,549

 

 

 

138,448

 

 

GAAP net cash provided by (used in) operating activities

$

5,560

 

 

 

$

(6,479

)

 

 

$

2,087

 

 

 

$

(14,935

)

 

Purchase of property and equipment

(2,721

)

 

 

(247

)

 

 

(9,089

)

 

 

(5,243

)

 

Capitalized internal-use software

(3,672

)

 

 

(2,286

)

 

 

(10,207

)

 

 

(7,666

)

 

Non-GAAP free cash flow

$

(833

)

 

 

$

(9,012

)

 

 

$

(17,209

)

 

 

$

(27,844

)

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures, including non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and free cash flow. The non-GAAP financial information is presented for supplemental informational purposes only, and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. The non-GAAP measures presented here may be different from similarly-titled non-GAAP measures used by other companies.

We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures, when viewed collectively with the GAAP measures, may be helpful to investors because they provide consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results.

There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. The definitions of our non-GAAP measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may utilize metrics that are not similar to ours. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. Please see the reconciliation tables in this release for the reconciliation of GAAP and non-GAAP results.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate stock-based compensation expense using a variety of valuation methodologies and subjective assumptions.

Employer payroll tax expense related to employee stock plans. We exclude employer payroll tax expense related to employee stock plans, which is a cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, this expense is tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of exercise or vesting, which may vary from period to period independent of the operating performance of our business.

Amortization of acquired intangible assets. We exclude amortization of acquired intangible assets, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of intangible assets are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business.

Business combinations and related cost. We exclude transaction, integration, and retention expenses that are directly related to business combinations from certain of our non-GAAP financial measures because we believe that excluding these items provides meaningful supplemental information regarding operational performance.

Non-GAAP tax adjustments. We exclude discrete tax expenses associated with non-recurring intercompany transactions and release of deferred tax valuation allowance because we believe that excluding these items facilitate a comparison of the non-GAAP tax provision in the current and prior periods.

Free cash flow. Our management reviews cash flows generated from operations after taking into consideration capital expenditures such as purchase of property and equipment and internal-use software as these expenditures are considered to be a necessary component of ongoing operations. We define non-GAAP free cash flow as net cash provided by (used in) operating activities, reduced by purchase of property and equipment and capitalization of internal-use software.

Operating Metrics

Annual recurring revenue (ARR) is calculated as subscription revenue already booked and in backlog that will be recorded over the next 12 months, assuming any contract expiring in those 12 months is renewed and continues on its existing terms and at its prevailing rate of utilization.

Dollar-based Net Expansion Rate is calculated as the ARR at the end of a period for the base set of customers from which we had ARR in the year prior to the calculation, divided by the ARR one year prior to the date of calculation for that same customer base.

Investor Contact: Edelita Tichepco investors@anaplan.com

Media Contact: Anthony Harrison press@anaplan.com

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