NEWR New Relic Inc

Total revenue of $242.8 million, up 7% year over year

GAAP operating margin of (8)%, non-GAAP operating margin of 19%

New Relic, Inc. (NYSE: NEWR), the all-in-one observability platform for every engineer, announced financial results for the second quarter of fiscal year 2024.

Fiscal 2024 Second Quarter Results:

• Revenue: Total revenue was $242.8 million, up 7% from $226.9 million one year ago. Consumption revenue was $223.3 million, up 33% year over year.
• Gross Margin and Non-GAAP Gross Margin(1): Gross margin was 78.3%, compared to 71.5% one year ago. Non-GAAP gross margin was 79.7%, compared to 73.7% one year ago.
• Operating Income and Non-GAAP Operating Income(1): Loss from operations was $(20.5) million, compared to $(45.3) million one year ago. Non-GAAP operating income was $45.2 million, compared to $6.9 million one year ago.
• Operating Margin and Non-GAAP Operating Margin(1): Operating margin was (8.4)%, compared to (20.0)% one year ago. Non-GAAP operating margin was 18.6%, compared to 3.0% one year ago.
• Net Income Per Share and Non-GAAP Net Income Per Share(1): Fully diluted net loss per share was $(0.34), compared to $(0.70) one year ago, while non-GAAP fully diluted net income per share was $0.51, compared to $0.14 one year ago. Fully diluted share count was 72.5 million.
• Cash, Cash Equivalents and Short-Term Investments: Cash, cash equivalents, and short-term investments were $436.6 million as of September 30, 2023.
• Cash Flows From Operating Activities and Free Cash Flow: Trailing four quarter cash flows from operating activities was $94.4 million, compared to $36.3 million one year ago. Trailing four quarter free cash flow was $76.6 million, compared to $16.4 million one year ago.

Recent Business Highlights:

• Continuing to Enhance AIOps Capabilities – Launched recommended alerts, which provides the ability to quickly detect and easily resolve alert coverage gaps by using AI to identify anomalous behavior, determine areas of the technology stack that aren’t being monitored, and recommend new alerts to engineers.
• Expanding Digital Experience Monitoring (DEM) Capabilities – Launched New Relic Session Replay to provide engineers with vital context through a video-like playback feature to reproduce and resolve issues faster.
• Providing Insight into Observability Trends – Published the 2023 Observability Forecast report, the largest and most comprehensive study on the state and future of observability. One key finding revealed that enterprises realize 2X ROI using observability solutions, with 41% receiving more than $1 million total annual value.
• Attracting Top Talent – For the second year in a row, New Relic earned a spot on the 2023 PEOPLE Companies that CareⓇ list for its comprehensive employee benefits and commitment to charitable work.
• Leading in ESG – New Relic earned a spot on Newsweek’s list of America’s Greenest Companies for 2024 for its commitment to being good stewards of the environment.

Transaction with Private Equity Consortium

Given the announcement made on July 31, 2023, regarding New Relic’s entry into a definitive agreement to be acquired by Francisco Partners and TPG, New Relic will not host an earnings conference call or provide financial guidance in conjunction with this earnings release. The company’s previously issued guidance for full year fiscal 2024 should no longer be relied upon. For further detail and discussion of New Relic’s financial performance please refer to New Relic’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed today with the SEC.

_______

(1) This press release uses non-GAAP financial metrics that are adjusted for the impact of various GAAP items. See the section titled “Non-GAAP Financial Measures” and the tables entitled “Reconciliation from GAAP to Non-GAAP Results” below for details.

About New Relic

As a leader in observability, New Relic empowers engineers with a data-driven approach to planning, building, deploying, and running great software. New Relic delivers the only unified data platform that empowers engineers to get all telemetry—metrics, events, logs, and traces—paired with powerful full stack analysis tools to help engineers do their best work with data, not opinions. Delivered through the industry’s first usage-based consumption pricing that’s intuitive and predictable, New Relic gives engineers more value for the money by helping improve planning cycle times, change failure rates, release frequency, and mean time to resolution. This helps the world’s leading brands including adidas Runtastic, American Red Cross, Australia Post, Banco Inter, Chegg, GoTo Group, Ryanair, Sainsbury’s, Signify Health, TopGolf, and World Fuel Services (WFS) improve uptime, reliability, and operational efficiency to deliver exceptional customer experiences that fuel innovation and growth. www.newrelic.com

Important Information and Where to Find It

This communication is being made in respect of the proposed transaction involving New Relic, FP and TPG. A special stockholder meeting will be held on November 1, 2023 to obtain stockholder approval in connection with the proposed transaction. New Relic has filed with the Securities and Exchange Commission (the “SEC”) a proxy statement and other relevant documents in connection with the proposed merger. The definitive proxy statement sent or given to the stockholders of New Relic contains important information about the proposed transaction and related matters. INVESTORS OF NEW RELIC ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors may obtain a free copy of these materials and other documents filed by the Company with the SEC at the SEC’s website at www.sec.gov, at New Relic’s website at ir.newrelic.com/financial-information.

Participants in the Solicitation

New Relic and certain of its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from its stockholders in connection with the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of New Relic’s stockholders in connection with the proposed merger are set forth in New Relic’s definitive proxy statement for its special stockholder meeting. Additional information regarding these individuals and any direct or indirect interests they may have in the proposed merger are set forth in the definitive proxy statement filed with the SEC in connection with the proposed merger.

Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on New Relic’s current expectations, estimates and projections about the expected date of closing of the proposed transaction and the potential benefits thereof, its business and industry, management’s beliefs and certain assumptions made by New Relic, FP and TPG, all of which are subject to change. Words such as “may,” “will,” “should,” “would,” “might,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, estimates and projections. The forward-looking statements in this communication include statements regarding the transaction and the ability to consummate the transaction. Forward-looking statements speak only as of the date they are made, and New Relic undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: (i) the completion of the proposed transaction on anticipated terms and timing, including obtaining stockholder and regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of New Relic’s business and other conditions to the completion of the transaction; (ii) conditions to the closing of the transaction may not be satisfied; (iii) the transaction may involve unexpected costs, liabilities or delays; (iv) the outcome of any legal proceedings related to the transaction; (v) the failure by FP and TPG to obtain the necessary debt financing arrangements set forth in the commitment letters received in connection with the transaction; (vi) New Relic’s ability to implement its business strategy; (vii) significant transaction costs associated with the proposed transaction; (viii) potential litigation relating to the proposed transaction; (ix) the risk that disruptions from the proposed transaction will harm New Relic’s business, including current plans and operations; (x) the ability of New Relic to retain and hire key personnel; (xi) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; (xii) legislative, regulatory and economic developments affecting New Relic’s business; (xiii) general economic and market developments and conditions; (xiv) the evolving legal, regulatory and tax regimes under which New Relic operates; (xv) potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect New Relic’s financial performance; (xvi) restrictions during the pendency of the proposed transaction that may impact New Relic’s ability to pursue certain business opportunities or strategic transactions; and (xvii) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as New Relic’s response to any of the aforementioned factors. While the list of factors presented here is considered representative, such list should not be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on New Relic’s financial condition, results of operations, or liquidity. New Relic does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

Non-GAAP Financial Measures

New Relic discloses the following non-GAAP financial measures in this press release and the earnings call referencing this press release: non-GAAP operating income (loss), non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, and general and administrative), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, non-GAAP net income (loss) per basic share and free cash flow. New Relic uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate New Relic’s financial performance. In addition, New Relic’s bonus plan for eligible employees and executives is based in part on non-GAAP income (loss) from operations. New Relic believes these non-GAAP financial measures are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. New Relic’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on New Relic’s reported financial results.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, or superior to, financial information prepared in accordance with GAAP. A reconciliation of the historical 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.

New Relic defines non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and non-GAAP net income (loss) per basic share as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation-related expenses, (2) the amortization of purchased intangibles, (3) the amortization of debt discount and issuance costs, (4) the transaction costs related to acquisitions, (5) expenses related to litigation and other transaction-related expenses, (6) restructuring charges, and (7) non-GAAP tax adjustment. Non-GAAP net income (loss) per basic and diluted share is calculated as non-GAAP net income (loss) divided by weighted-average shares used to compute net income (loss) per share, basic and diluted, with the number of weighted-average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with the 0.50% Convertible Senior Notes due 2023 issued in May 2018. New Relic defines free cash flow as GAAP cash from operations, minus capital expenditures and minus capitalized software. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing New Relic’s operating performance due to the following factors:

Stock-based compensation-related expenses. New Relic’s stock-based compensation-related expenses include stock-based compensation expense, amortization of stock-based compensation capitalized in software development costs and employer payroll tax expense on equity incentive plans. New Relic utilizes share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of the Company’s stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period. The Company further excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of the Company’s common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of the Company’s business.

Amortization of purchased intangibles. New Relic views amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period. Amortization of purchased intangibles varies in amount and frequency and is significantly impacted by the timing and size of the Company’s acquisitions. Management finds it useful to exclude these non-cash charges from operating expenses to assist in budgeting, planning, and forecasting future periods. The use of intangible assets contributed to the Company’s revenues during the periods presented and will also contribute to its revenues in future periods. Amortization of purchased intangible assets will recur in future periods.

Amortization of debt discount and issuance costs. In May 2018, New Relic issued $500.25 million of its 0.50% convertible senior notes due 2023 (the “Notes”), which bore interest at an annual fixed rate of 0.5%. The Notes matured and were repaid in cash on May 1, 2023. The debt issuance costs were amortized as interest expense. The expense for the amortization of debt issuance costs is a non-cash item, and New Relic believes the exclusion of this interest expense will provide for a more useful comparison of its operational performance in different periods.

Transaction costs related to acquisitions. New Relic may from time to time incur direct transaction costs related to acquisitions. New Relic believes it is useful to exclude such charges because it does not consider such amounts to be part of the ongoing operation of New Relic’s business.

Expenses related to litigation and other transaction-related expenses. New Relic may from time to time incur charges or benefits related to litigation or transactions that are outside of the ordinary course of New Relic’s business. In connection with the Merger Agreement entered into on July 30, 2023, New Relic incurred transaction expenses of $16.7 million and $19.3 million in the three and six months ended September 30, 2023, respectively. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic’s business and because of the singular nature of the claims underlying the matter.

Restructuring charges. In August 2022, New Relic commenced a restructuring plan to realign its cost structure with its business needs as the Company moved to focus resources on top priorities, and in March 2023, the Company approved a new restructuring plan in connection with the reduction of its global real estate footprint in line with its Flex First philosophy. In the first fiscal quarter of 2024, the Company announced the adoption of a new restructuring plan focused on realigning resources with the Company’s business needs in driving the growth of its consumption business. As a result of this and previously announced restructuring plans, New Relic incurred charges of approximately $1.5 million and $23.2 million consisting of termination benefits and lease exit costs for the three and six months ended September 30, 2023, respectively. New Relic believes it is appropriate to exclude the restructuring charges because they are not indicative of future operating results.

Non-GAAP tax adjustment. The Company used a long-term projected non-GAAP tax rate to provide consistency across interim reporting periods with non-GAAP net income. As the Company was forecasted to be non-GAAP profitable on an annual basis starting in fiscal year 2024, New Relic applied the non-GAAP tax rate prospectively in the first fiscal quarter of 2024. In determining the non-GAAP tax rate, New Relic excluded the impact of nonrecurring items and made assumptions including those about tax legislation and its tax positions. New Relic projected a 24.0% non-GAAP tax rate based on non-GAAP financial projections and applied it to the non-GAAP profit before tax.

Additionally, New Relic’s management believes that the non-GAAP financial measure free cash flow is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures and the capitalization of software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations.

Operating Metrics

Active Customer Accounts. New Relic defines an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, aggregated at the parent hierarchy level, for which New Relic has recognized any revenue in the fiscal quarter. The number of Active Customer Accounts that is reported as of a particular date is rounded down to the nearest hundred.

Number of Active Customer Accounts with Revenue Greater than $100,000. As a measure of New Relic’s ability to scale with its customers and attract large enterprises to its platform, New Relic counts the number of Active Customer Accounts for which it has recognized greater than $100,000 in revenue in the trailing 12-months.

Percentage of Revenue from Active Customer Accounts Greater than $100,000. New Relic also looks at its percentage of overall revenue it receives from its Active Customer Accounts with revenue greater than $100,000 in any given quarter as an indicator of its relative performance when selling to New Relic’s large customer relationships or its smaller revenue accounts.

Net Revenue Retention Rate (“NRR”). NRR monitors the growth in use of New Relic’s platform by its existing active customer accounts and allows New Relic to measure the health of its business and future growth prospects. To calculate NRR, New Relic first identifies the cohort of Active Customer Accounts that were Active Customer Accounts in the same quarter of the prior fiscal year. Next, New Relic identifies the measurement period as the 12-month period ending with the period reported and the prior comparison period as the corresponding period in the prior year. NRR is the quotient obtained by dividing the revenue generated from a cohort of Active Customer Accounts in the measurement period by the revenue generated from that same cohort in the prior comparison period.

New Relic is a registered trademark of New Relic, Inc.

All product and company names herein may be trademarks of their registered owners.

New Relic, Inc.Condensed Consolidated Statements of Operations(In thousands, except per share data; unaudited)   Three Months Ended September 30, Six Months Ended September 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

$

242,757

 

$

226,912

 

$

485,385

 

$

443,371

 

Cost of revenue

 

52,709

 

 

64,783

 

 

107,149

 

 

128,676

 

Gross profit

 

190,048

 

 

162,129

 

 

378,236

 

 

314,695

 

Operating expenses: Research and development

 

69,411

 

 

68,730

 

 

149,721

 

 

133,499

 

Sales and marketing

 

84,096

 

 

96,203

 

 

178,115

 

 

200,623

 

General and administrative

 

57,020

 

 

42,483

 

 

103,869

 

 

81,513

 

Total operating expenses

 

210,527

 

 

207,416

 

 

431,705

 

 

415,635

 

Loss from operations

 

(20,479

)

 

(45,287

)

 

(53,469

)

 

(100,940

)

Other income (expense): Interest income

 

3,896

 

 

2,425

 

 

8,489

 

 

3,535

 

Interest expense

 

(15

)

 

(1,233

)

 

(444

)

 

(2,465

)

Other income (expense), net

 

(75

)

 

207

 

 

(1,741

)

 

(2

)

Loss before income taxes

 

(16,673

)

 

(43,888

)

 

(47,165

)

 

(99,872

)

Income tax provision (benefit)

 

76

 

 

(381

)

 

2,906

 

 

(114

)

Net loss

$

(16,749

)

$

(43,507

)

$

(50,071

)

$

(99,758

)

Net loss and adjustment attributable to redeemable non-controlling interest

 

(7,003

)

 

(3,268

)

 

(11,112

)

 

2,744

 

Net loss attributable to New Relic

$

(23,752

)

$

(46,775

)

$

(61,183

)

$

(97,014

)

Net loss attributable to New Relic per share, basic and diluted

$

(0.34

)

$

(0.70

)

$

(0.87

)

$

(1.45

)

Weighted-average shares used to compute net loss per share, basic and diluted

 

70,484

 

 

67,207

 

 

70,018

 

 

66,816

 

  New Relic, Inc.Supplemental Revenue Disaggregation(In thousands; unaudited)   Three Months Ended September 30, Six Months Ended September 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Subscription

$

19,409

$

59,555

$

48,129

$

122,635

Consumption

 

223,348

 

 

167,357

 

 

437,256

 

 

320,736

 

Total revenue

$

242,757

 

$

226,912

 

$

485,385

 

$

443,371

 

  New Relic, Inc.Condensed Consolidated Balance Sheets(In thousands, except par value; unaudited)   September 30, 2023 March 31, 2023 Assets Current assets: Cash and cash equivalents

$

301,879

 

$

625,727

 

Short-term investments

 

134,693

 

 

254,085

 

Accounts receivable, net of allowances of $2,257 and $3,121, respectively

 

150,271

 

 

234,287

 

Prepaid expenses and other current assets

 

22,062

 

 

17,747

 

Deferred contract acquisition costs

 

13,849

 

 

14,962

 

Total current assets

 

622,754

 

 

1,146,808

 

Property and equipment, net

 

46,770

 

 

48,509

 

Restricted cash

 

5,816

 

 

5,795

 

Goodwill

 

172,298

 

 

172,298

 

Intangible assets, net

 

8,653

 

 

11,603

 

Deferred contract acquisition costs, non-current

 

18,278

 

 

8,558

 

Lease right-of-use assets

 

15,384

 

 

19,678

 

Other assets, non-current

 

5,057

 

 

5,759

 

Total assets

$

895,010

 

$

1,419,008

 

Liabilities, redeemable non-controlling interest, and stockholders’ equity Current liabilities: Accounts payable

$

28,277

 

$

29,452

 

Accrued compensation and benefits

 

40,935

 

 

37,552

 

Other current liabilities

 

37,719

 

 

39,424

 

Convertible senior notes, current

 

-

 

 

500,044

 

Deferred revenue

 

278,628

 

 

370,987

 

Lease liabilities

 

9,195

 

 

10,928

 

Total current liabilities

 

394,754

 

 

988,387

 

Lease liabilities, non-current

 

33,533

 

 

38,384

 

Deferred revenue, non-current

 

7,004

 

 

3,800

 

Other liabilities, non-current

 

38,064

 

 

24,897

 

Total liabilities

 

473,355

 

 

1,055,468

 

Redeemable non-controlling interest

 

34,217

 

 

23,105

 

Stockholders’ equity: Common stock, $0.001 par value

 

70

 

 

69

 

Treasury stock - at cost (260 shares)

 

(263

)

 

(263

)

Additional paid-in capital

 

1,417,512

 

 

1,311,615

 

Accumulated other comprehensive loss

 

(5,144

)

 

(7,432

)

Accumulated deficit

 

(1,024,737

)

 

(963,554

)

Total stockholders’ equity

 

387,438

 

 

340,435

 

Total liabilities, redeemable non-controlling interest and stockholders’ equity

$

895,010

 

$

1,419,008

 

  New Relic, Inc.Condensed Consolidated Statements of Cash Flows(In thousands; unaudited)   Six Months Ended September 30,

 

2023

 

 

2022

 

Cash flows from operating activities: Net loss attributable to New Relic:

$

(61,183

)

$

(97,014

)

Net loss and adjustment attributable to redeemable non-controlling interest

 

11,112

 

 

(2,744

)

Net loss:

$

(50,071

)

$

(99,758

)

Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization

 

12,326

 

 

20,607

 

Amortization of deferred contract acquisition costs

 

10,526

 

 

13,691

 

Stock-based compensation expense

 

90,594

 

 

74,734

 

Amortization of debt discount and issuance costs

 

206

 

 

1,188

 

Loss on facilities exit

 

-

 

 

2,717

 

Non-cash charges related to restructuring activities

 

3,167

 

 

-

 

Other

 

540

 

 

(588

)

Changes in operating assets and liabilities, net of acquisition of business: Accounts receivable, net

 

84,016

 

 

113,570

 

Prepaid expenses and other assets

 

(3,577

)

 

2,075

 

Deferred contract acquisition costs

 

(19,133

)

 

(3,489

)

Lease right-of-use assets

 

2,794

 

 

5,411

 

Accounts payable

 

(967

)

 

1,544

 

Accrued compensation and benefits and other liabilities

 

6,807

 

 

(5,519

)

Lease liabilities

 

(1,889

)

 

(7,045

)

Deferred revenue

 

(89,155

)

 

(113,575

)

Net cash provided by operating activities

 

46,184

 

 

5,563

 

Cash flows from investing activities: Purchases of property and equipment

 

(747

)

 

(2,416

)

Proceeds from sale of property and equipment

 

669

 

 

1,724

 

Cash paid for acquisition, net of cash acquired

 

-

 

 

(257

)

Purchases of short-term investments

 

-

 

 

(50,373

)

Proceeds from sale and maturity of short-term investments

 

121,450

 

 

243,475

 

Capitalized software development costs

 

(7,377

)

 

(7,907

)

Net cash provided by investing activities

 

113,995

 

 

184,246

 

Cash flows from financing activities: Payment of convertible senior notes

 

(500,250

)

 

-

 

Proceeds from employee stock purchase plan

 

5,552

 

 

6,062

 

Proceeds from exercise of employee stock options

 

10,692

 

 

6,502

 

Net cash provided by (used in) financing activities

 

(484,006

)

 

12,564

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(323,827

)

 

202,373

 

Cash, cash equivalents and restricted cash at beginning of period

 

631,522

 

 

274,470

 

Cash, cash equivalents and restricted cash at end of period

$

307,695

 

$

476,843

 

  New Relic, Inc.Reconciliation from GAAP to Non-GAAP Results(In thousands, except per share data; unaudited)   Three Months Ended September 30, Six Months Ended September 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reconciliation of gross profit and gross margin: GAAP gross profit

$

190,048

 

$

162,129

 

$

378,236

 

$

314,695

 

Plus: Stock-based compensation-related expenses

 

1,832

 

 

2,352

 

 

3,682

 

 

4,489

 

Plus: Amortization of purchased intangibles

 

1,475

 

 

2,292

 

 

2,950

 

 

4,583

 

Plus: Restructuring charges

 

46

 

 

407

 

 

1,106

 

 

407

 

Non-GAAP gross profit

$

193,401

 

$

167,180

 

$

385,974

 

$

324,174

 

GAAP gross margin

 

78.3

%

 

71.5

%

 

77.9

%

 

71.0

%

Non-GAAP adjustments

 

1.4

%

 

2.2

%

 

1.6

%

 

2.1

%

Non-GAAP gross margin

 

79.7

%

 

73.7

%

 

79.5

%

 

73.1

%

Reconciliation of operating expenses: GAAP research and development

$

69,411

 

$

68,730

 

$

149,721

 

$

133,499

 

Less: Stock-based compensation-related expenses

 

(16,366

)

 

(14,822

)

 

(33,625

)

 

(28,347

)

Less: Restructuring charges

 

(516

)

 

(1,435

)

 

(9,337

)

 

(1,435

)

Non-GAAP research and development

$

52,529

 

$

52,473

 

$

106,759

 

$

103,717

 

GAAP sales and marketing

$

84,096

 

$

96,203

 

$

178,115

 

$

200,623

 

Less: Stock-based compensation-related expenses

 

(12,515

)

 

(13,062

)

 

(24,819

)

 

(23,813

)

Less: Restructuring charges

 

(726

)

 

(3,757

)

 

(8,511

)

 

(3,757

)

Non-GAAP sales and marketing

$

70,855

 

$

79,384

 

$

144,785

 

$

173,053

 

GAAP general and administrative

$

57,020

 

$

42,483

 

$

103,869

 

$

81,513

 

Less: Stock-based compensation-related expenses

 

(15,086

)

 

(11,224

)

 

(27,393

)

 

(21,190

)

Less: Transaction costs related to acquisitions

 

-

 

 

(929

)

 

-

 

 

(929

)

Less: Expenses related to litigation and other transaction-related expenses

 

(16,885

)

 

(262

)

 

(19,458

)

 

(88

)

Less: Restructuring charges

 

(205

)

 

(1,610

)

 

(4,196

)

 

(1,610

)

Non-GAAP general and administrative

$

24,844

 

$

28,458

 

$

52,822

 

$

57,696

 

Reconciliation of income (loss) from operations and operating margin: GAAP loss from operations

$

(20,479

)

$

(45,287

)

$

(53,469

)

$

(100,940

)

Plus: Stock-based compensation-related expenses

 

45,799

 

 

41,460

 

 

89,519

 

 

77,839

 

Plus: Amortization of purchased intangibles

 

1,475

 

 

2,292

 

 

2,950

 

 

4,583

 

Plus: Transaction costs related to acquisitions

 

-

 

 

929

 

 

-

 

 

929

 

Plus: Expenses related to litigation and other transaction-related expenses

 

16,885

 

 

262

 

 

19,458

 

 

88

 

Plus: Restructuring charges

 

1,493

 

 

7,210

 

 

23,150

 

 

7,210

 

Non-GAAP income (loss) from operations

$

45,173

 

$

6,866

 

$

81,608

 

$

(10,291

)

GAAP operating margin

 

(8.4

%)

 

(20.0

%)

 

(11.0

%)

 

(22.8

%)

Non-GAAP adjustments

 

27.0

%

 

23.0

%

 

27.8

%

 

20.4

%

Non-GAAP operating margin

 

18.6

%

 

3.0

%

 

16.8

%

 

(2.4

%)

Reconciliation of net income (loss): GAAP net loss

$

(16,749

)

$

(43,507

)

$

(50,071

)

$

(99,758

)

Plus: Stock-based compensation-related expenses

 

45,799

 

 

41,460

 

 

89,519

 

 

77,839

 

Plus: Amortization of purchased intangibles

 

1,475

 

 

2,292

 

 

2,950

 

 

4,583

 

Plus: Transaction costs related to acquisitions

 

-

 

 

929

 

 

-

 

 

929

 

Plus: Expenses related to litigation and other transaction-related expenses

 

16,885

 

 

262

 

 

19,458

 

 

88

 

Plus: Amortization of debt discount and issuance costs

 

-

 

 

594

 

 

206

 

 

1,187

 

Plus: Restructuring charges

 

1,493

 

 

7,210

 

 

23,150

 

 

7,210

 

Less: Non-GAAP tax adjustment

 

(11,661

)

 

-

 

 

(17,545

)

 

-

 

Non-GAAP net income (loss)

$

37,242

 

$

9,240

 

$

67,667

 

$

(7,922

)

Non-GAAP net income (loss) per share: Basic

$

0.53

 

$

0.14

 

$

0.97

 

$

(0.12

)

Diluted

$

0.51

 

$

0.14

 

$

0.94

 

$

(0.12

)

Shares used in non-GAAP per share calculations: Basic

 

70,484

 

 

67,207

 

 

70,018

 

 

66,816

 

Diluted

 

72,519

 

 

68,224

 

 

72,000

 

 

66,816

 

  New Relic, Inc.Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow(In thousands; unaudited)   Six Months Ended September 30,

 

2023

 

 

2022

 

Net cash provided by operating activities

$

46,184

 

$

5,563

 

Capital expenditures

 

(747

)

 

(2,416

)

Capitalized software development costs

 

(7,377

)

 

(7,907

)

Free cash flows (Non-GAAP)

$

38,060

 

$

(4,760

)

Net cash provided by investing activities

$

113,995

 

$

184,246

 

Net cash provided by (used in) financing activities

$

(484,006

)

$

12,564

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231026335340/en/

Investor Contact Ingo Friedrichowitz New Relic, Inc. IR@newrelic.com

Media Contact Elena Keamy New Relic, Inc PR@newrelic.com