Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Mandiant Reports Financial Results for First Quarter 2022 By: Mandiant via Business Wire May 03, 2022 at 16:01 PM EDT Mandiant, Inc. (NASDAQ: MNDT) today announced financial results for the first quarter ended March 31, 2022. Unless otherwise noted, all 2021 results in this release, including the financial tables and reconciliations, reflect only continuing operations. First Quarter 2022 Financial Highlights Revenue of $130 million, an increase of 13 percent from the first quarter of 2021 Annualized recurring revenue of $287 million, an increase of 22 percent from the end of the first quarter of 20211 Deferred revenue of $400 million, an increase of 43 percent from the end of the first quarter of 2021 GAAP operating margin of negative 69 percent, compared to GAAP operating margin of negative 64 percent in the first quarter of 2021 Non-GAAP operating margin of negative 26 percent, compared to non-GAAP operating margin of negative 24 percent in the first quarter of 20212 GAAP net loss per basic share attributable to common stockholders of 42 cents, compared to GAAP net loss per basic share attributable to common stockholders of 39 cents in the first quarter of 2021 Non-GAAP net loss per basic share attributable to common stockholders of 15 cents, compared to non-GAAP net loss basic share attributable to common stockholders of 13 cents in the first quarter of 20212 1 Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period. 2 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.” Business Outlook and Conference Call Given the announcement made on March 8, 2022, regarding the company’s entry into a definitive agreement to be acquired by Google LLC, Mandiant will not be providing financial guidance for the second quarter of 2022 or updated financial guidance for the full-year 2022. The company’s previously issued full-year 2022 financial guidance should no longer be relied upon. Due to the pending transaction with Google LLC, Mandiant will not host a conference call in conjunction with this release. For further detail and discussion of the company’s financial performance, please refer to the company’s upcoming quarterly report on Form 10-Q for the first quarter ended March 31, 2022. Non-GAAP Financial Measures In this release Mandiant has provided financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). These non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. The company uses these non-GAAP financial measures internally in analyzing its financial results and believes the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends, and in comparing the company's financial results with other companies in its industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP financial measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation. Non-GAAP gross margin. Mandiant defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue. Non-GAAP operating income (loss) and non-GAAP operating margin. Mandiant defines non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, and other special or non-recurring items. Mandiant defines non-GAAP operating margin as non-GAAP operating income (loss) divided by total revenue. Non-GAAP net loss attributable to common stockholders. Mandiant defines non-GAAP net loss attributable to common stockholders as net loss excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, discrete tax provision (benefit), dividends on Series A convertible preferred stock, accretion of Series A convertible preferred stock, and other special or non-recurring items. Non-GAAP net loss per basic share attributable to common stockholders. Mandiant defines non-GAAP net loss per basic share attributable to common stockholders as non-GAAP net loss attributable to common stockholders divided by weighted average basic shares outstanding, which excludes stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive. Non-GAAP net loss attributable to common stockholders and non-GAAP net loss per basic share attributable to common stockholders in the first quarter 2022 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, and dividends on Series A convertible preferred stock. Weighted average basic shares outstanding used to calculate non-GAAP net loss per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that were anti-dilutive. Non-GAAP net loss attributable to common stockholders and non-GAAP net loss per basic share attributable to common stockholders in the first quarter 2021 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, adjustment to provision from income taxes, dividends on Series A convertible preferred stock, accretion of series A convertible preferred stock and non-GAAP adjustments for discontinued operations. Weighted average basic shares outstanding used to calculate non-GAAP net loss per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes that were anti-dilutive. Mandiant considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, dividends on Series A convertible preferred stock, and other non-recurring and discrete items so that management and investors can compare the company's core business operating results over multiple periods. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures exclude stock-based compensation expense. Stock-based compensation is an important part of Mandiant employees' overall compensation and has been, and will continue to be for the foreseeable future, a significant recurring expense in the company's business. Second, the components of the costs that Mandiant excludes in its calculation of these non-GAAP financial measures, including not only stock-based compensation, but also amortization of stock-based compensation expense capitalized in software development costs, non-recurring or non-operating items such as amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, and dividends on Series A convertible preferred stock, may differ from the components excluded by peer companies when they report their non-GAAP results of operations. Mandiant compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP financial measures together with their nearest GAAP equivalents. About Mandiant, Inc. Since 2004, Mandiant® has been a trusted partner to security-conscious organizations. Effective security is based on the right combination of expertise, intelligence, and adaptive technology, and the Mandiant Advantage SaaS platform scales decades of frontline experience and industry-leading threat intelligence to deliver a range of dynamic cyber defense solutions. Mandiant’s approach helps organizations develop more effective and efficient cyber security programs and instills confidence in their readiness to defend against and respond to cyber threats. © 2022 Mandiant, Inc. All rights reserved. Mandiant is a registered trademark of Mandiant, Inc. in the United States and other countries. All other brands, products, or service names are or may be trademarks or service marks of their respective owners. Mandiant, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) March 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 771,967 $ 1,154,458 Short-term investments 1,359,105 1,039,339 Accounts receivable, net 104,066 146,460 Prepaid expenses and other current assets 76,145 73,079 Total current assets 2,311,283 2,413,336 Property and equipment, net 52,790 46,329 Operating lease right-of-use assets, net 28,462 25,768 Goodwill 1,060,023 1,060,023 Intangible assets, net 70,818 79,511 Deposits and other long-term assets 25,021 26,220 Total Assets $ 3,548,397 $ 3,651,187 Liabilities, Convertible preferred stock and Stockholders' equity Current Liabilities: Accounts payable $ 25,779 $ 32,585 Operating lease liabilities, current 14,928 13,306 Accrued and other current liabilities 102,555 105,886 Accrued compensation 52,743 71,660 Convertible senior notes, current, net 459,717 451,030 Deferred revenue, current 302,857 307,611 Total current liabilities 958,579 982,078 Convertible senior notes, non-current, net 617,775 556,240 Deferred revenue, non-current 97,132 102,717 Operating lease liabilities, non-current 53,993 52,132 Other long-term liabilities 7,366 7,376 Total liabilities 1,734,845 1,700,543 Commitments and contingencies: Series A convertible preferred stock 424,122 419,404 Stockholders' equity: Common stock 23 23 Additional paid-in capital 3,271,041 3,511,444 Treasury stock (80,000 ) (80,000 ) Accumulated other comprehensive income (13,873 ) (2,172 ) Accumulated deficit (1,787,761 ) (1,898,055 ) Total stockholders’ equity 1,389,430 1,531,240 Total Liabilities, Convertible preferred stock and Stockholders' equity $ 3,548,397 $ 3,651,187 Mandiant, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2022 2021 Revenue: Platform, cloud subscription and managed services $ 57,629 $ 55,999 Professional services 72,515 58,689 Total revenue 130,144 114,688 Cost of revenue: (1)(2) Platform, cloud subscription and managed services 30,121 26,613 Professional services 42,081 32,472 Total cost of revenue 72,202 59,085 Total gross profit 57,942 55,603 Operating expenses: Research and development (1)(3)(10) 44,461 41,905 Sales and marketing (1)(2) 69,409 61,213 General and administrative (1)(4)(10) 32,413 25,351 Restructuring charges (5) 1,040 — Total operating expenses 147,323 128,469 Operating loss (89,381 ) (72,866 ) Other expense, net (6) (1,844 ) (12,409 ) Loss before income taxes from continuing operations before income taxes (91,225 ) (85,275 ) Provision for income taxes (7) 789 1,180 Loss from continuing operations (92,014 ) (86,455 ) Net income from discontinued operations, net of income taxes (11) — 35,809 Net loss $ (92,014 ) $ (50,646 ) Dividend on series A convertible preferred stock (8) (4,718 ) (4,512 ) Accretion of series A convertible preferred stock (9) — (82 ) Net income (loss) attributable to common stockholders $ (96,732 ) $ (55,240 ) Net income (loss) per share attributable to common stockholders, basic and diluted: Continuing operations $ (0.42 ) $ (0.39 ) Discontinued operations — 0.15 Net loss per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.24 ) Weighted average shares used in computing net income (loss) per share, basic and diluted 230,584 234,740 Mandiant, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss from continuing operations $ (92,014 ) $ (86,455 ) Adjustments to reconcile net loss from continuing operations to net cash used in continuing operating activities: Depreciation and amortization 17,505 23,770 Stock-based compensation 38,310 33,401 Non-cash interest expense related to convertible senior notes 1,074 11,384 Deferred income taxes 62 (126 ) Loss (gain) on disposal of property and equipment 21 (103 ) Other 354 37 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: Accounts receivable 42,104 13,409 Prepaid expenses and other assets (1,375 ) 4,528 Accounts payable 4,173 5,314 Accrued liabilities (1,721 ) 2,730 Accrued compensation (18,918 ) (12,389 ) Deferred revenue (10,339 ) (3,963 ) Other long-term liabilities (2,571 ) (7,109 ) Net cash used in operating activities - continuing operations (23,335 ) (15,572 ) Net cash provided by operating activities - discontinued operations — 36,433 Net cash provided by (used in) operating activities (23,335 ) 20,861 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment and demonstration units (9,002 ) (5,627 ) Purchases of short-term investments (441,153 ) (339,801 ) Proceeds from maturities of short-term investments 107,226 176,755 Business acquisitions, net of cash acquired — 49 FireEye Products business sale transaction costs (735 ) — Lease deposits 307 457 Net cash used in investing activities - continuing operations (343,357 ) (168,167 ) Net cash used in investing activities - discontinued operations — (4,392 ) Net cash used in investing activities (343,357 ) (172,559 ) CASH FLOWS FROM FINANCING ACTIVITIES: Settlement of share repurchases (11,483 ) — Series A convertible preferred stock issuance costs — (82 ) Payment related to shares withheld for taxes (5,834 ) (8,798 ) Proceeds from exercise of equity awards 1,518 1,097 Net cash used in financing activities (15,799 ) (7,783 ) Net change in cash and cash equivalents (382,491 ) (159,481 ) Cash and cash equivalents, beginning of period 1,154,458 673,234 Cash and cash equivalents held for sale, beginning of period — 3,220 Cash and cash equivalents held for sale, end of period — (3,220 ) Cash and cash equivalents, end of period $ 771,967 $ 513,753 Mandiant, Inc. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2022 2021 GAAP operating loss $ (89,381 ) $ (72,866 ) Stock-based compensation expense (1) 38,310 33,401 Amortization of stock-based compensation capitalized in software development costs (3) 668 534 Amortization of intangible assets (2) 8,693 11,110 Transformation and transition expense (10) 6,108 — Acquisition related expenses (4) 500 — Restructuring charges (5) 1,040 — Non-GAAP operating income (loss) $ (34,062 ) $ (27,821 ) GAAP gross margin 45 % 48 % Stock-based compensation expense (1) 8 % 7 % Amortization of stock-based compensation capitalized in software development costs (3) — % — % Amortization of intangible assets (2) 5 % 7 % Non-GAAP gross margin 58 % 62 % GAAP operating margin (69 )% (64 )% Stock-based compensation expense (1) 29 % 29 % Amortization of stock-based compensation capitalized in software development costs (3) 1 % 1 % Amortization of intangible assets (2) 7 % 10 % Transformation and transition expense (10) 5 % — % Restructuring charges (5) 1 % — % Non-GAAP operating margin (26 )% (24 )% GAAP net loss attributable to common stockholders $ (96,732 ) $ (55,240 ) Continuing operations: Stock-based compensation expense (1) 38,310 33,401 Amortization of stock-based compensation capitalized in software development costs (3) 668 534 Amortization of intangible assets (2) 8,693 11,110 Acquisition related expenses (4) 500 — Restructuring charges (5) 1,040 — Non-cash interest expense related to convertible senior notes (6) 1,074 11,384 Adjustment to provision (benefit) from income taxes (7) — 200 Dividend on series A convertible preferred stock (8) 4,718 4,512 Accretion of series A convertible preferred stock (9) — 82 Transformation and transition expense (10) 6,108 — Discontinued operations: Non-GAAP adjustments for discontinued operations (11) — 16,299 Non-GAAP net income (loss) attributable to common stockholders $ (35,621 ) $ 22,282 GAAP net income (loss) per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.24 ) Continuing operations: Stock-based compensation expense (1) 0.17 0.14 Amortization of stock-based compensation capitalized in software development costs (3) — — Amortization of intangible assets (2) 0.05 0.05 Acquisition related expenses (4) — — Restructuring charges (5) — — Non-cash interest expense related to convertible senior notes (6) — 0.05 Adjustment to provision (benefit) from income taxes (7) — — Dividend on series A convertible preferred stock (8) 0.02 0.02 Accretion of series A convertible preferred stock (9) — — Transformation and transition expense (10) 0.03 — Discontinued operations: Non-GAAP adjustments for discontinued operations (11) — 0.07 Non-GAAP net income (loss) per share attributable to common stockholders, basic and diluted $ (0.15 ) $ 0.09 Weighted average shares used in per share calculation for GAAP, basic and diluted 230,584 234,740 (1) Includes stock-based compensation expense as follows: Cost of platform, cloud subscription and managed services revenue $ 3,616 $ 2,814 Cost of professional services revenue 7,339 5,186 Research and development expense 9,194 8,423 Sales and marketing expense 10,631 9,890 General and administrative expense 7,530 7,088 Total stock-based compensation expense $ 38,310 $ 33,401 (2) Includes amortization of intangible assets as follows: Cost of platform, cloud subscription and managed services revenue $ 6,764 $ 7,112 Sales and marketing expense 1,929 3,998 Total amortization of intangible assets $ 8,693 $ 11,110 (3) Includes amortization of stock-based compensation capitalized in software development costs as follows: Research and development expense 668 534 Total amortization of stock-based compensation capitalized in software development costs $ 668 $ 534 (4) Includes acquisition related expenses as follows: General and administrative expense $ 500 $ — (5) Includes restructuring charges as follows: Restructuring charges $ 1,040 $ — (6) Includes non-cash interest expense related to convertible senior notes as follows: Other income, net $ 1,074 $ 11,384 (7) Includes income tax effect of non-GAAP adjustments as follows: Adjustment to provision (benefit) from income taxes $ — $ 200 (8) Dividend on series A convertible preferred stock $ 4,718 $ 4,512 (9) Accretion of series A convertible preferred stock $ — $ 82 (10) Includes transformation and transition expense as follows: Research and development expense $ 672 $ — General and administrative expense 5,436 — Total transformation and transition expense $ 6,108 $ — (11) Includes non-GAAP adjustments for discontinued operations as follows: Stock-based compensation expense $ — $ 12,366 Amortization of intangibles — 735 Amortization of stock-based compensation capitalized in software development costs — 538 Divestiture related costs — 2,660 $ — $ 16,299 Mandiant, Inc. SUMMARY OF CONTINUING OPERATIONS, DISCONTINUED OPERATIONS, AND COMBINED OPERATIONS RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2021 Continuing Discontinued Combined Revenue $ 114,688 $ 131,659 $ 246,347 Cost of revenue 59,085 27,801 86,886 Total gross profit 55,603 103,858 159,461 Research and development 41,905 27,420 69,325 Sales and marketing 61,213 37,644 98,857 General and administrative 25,351 2,660 28,011 GAAP operating income (loss) (72,866 ) 36,134 (36,732 ) Non-GAAP adjustments 45,045 16,298 61,343 Non-GAAP operating income (loss) $ (27,821 ) $ 52,432 $ 24,611 Other income and expense, provision for income tax & dividends on series A convertible preferred stock $ (18,183 ) $ (325 ) $ (18,508 ) Net loss attributable to common stockholders $ (91,049 ) $ 35,809 $ (55,240 ) GAAP operating margin (64 )% 28 % (15 )% Non-GAAP adjustments related to operating income (loss) 40 % 12 % 25 % Non-GAAP operating margin (24 )% 40 % 10 % Non-GAAP Adjustments: Stock-based compensation expense $ 33,401 $ 12,366 $ 45,767 Amortization of intangible assets 11,110 735 11,845 Amortization of stock-based compensation capitalized in software development costs 534 538 1,072 Divestiture related costs — 2,660 2,660 Non-GAAP adjustments related to operating income (loss) $ 45,045 $ 16,299 $ 61,344 Non-cash interest expense related to convertible senior notes $ 11,384 $ — $ 11,384 Dividend on series A convertible preferred stock 4,512 — 4,512 Accretion of series A convertible preferred stock 82 — 82 Adjustment to provision (benefit) from income taxes 200 — 200 Non-GAAP adjustments below operating income (loss) $ 16,178 $ — $ 16,178 Total non-GAAP adjustments $ 61,223 $ 16,299 $ 77,522 GAAP net income (loss) per share attributable to common stockholders, basic $ (0.39 ) $ 0.15 $ (0.24 ) Non-GAAP net income (loss) per share attributable to common stockholders, basic $ (0.13 ) $ 0.22 $ 0.09 Weighted average shares used in per share calculation for non-GAAP, basic 234,740 234,740 234,740 Three Months Ended March 31, 2022 2021 Loss from continuing operations $ (92,014 ) $ (86,455 ) Dividend on series A convertible preferred stock (4,718 ) (4,512 ) Accretion of series A convertible preferred stock — (82 ) Net loss attributable to common stockholders (96,732 ) (91,049 ) Total Non-GAAP Adjustments 61,111 61,223 Non-GAAP net loss attributable to common stockholders, (35,621 ) (29,826 ) Net loss per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.39 ) Non-GAAP net loss per share attributable to common stockholders, basic and diluted $ (0.15 ) $ (0.13 ) Weighted average shares used in per share calculation for GAAP, basic and diluted 230,584 234,740 Weighted average shares used in per share calculation for Non-GAAP, basic and diluted 230,584 234,740 Mandiant, Inc. RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Revenue $ 130,144 $ 114,688 Add: deferred revenue, end of period 399,989 280,291 Less: deferred revenue, beginning of period (410,328 ) (284,253 ) Billings (non-GAAP) $ 119,805 $ 110,726 Mandiant, Inc. BILLINGS BREAKOUT (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Platform, cloud subscription and managed services billings $ 50,213 $ 52,335 Professional services billings 69,592 58,391 Billings (non-GAAP) $ 119,805 $ 110,726 View source version on businesswire.com: https://www.businesswire.com/news/home/20220503006228/en/Contacts Media Inquiries: Media.Relations@mandiant.com Investor Inquiries: Investor.Relations@mandiant.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Mandiant Reports Financial Results for First Quarter 2022 By: Mandiant via Business Wire May 03, 2022 at 16:01 PM EDT Mandiant, Inc. (NASDAQ: MNDT) today announced financial results for the first quarter ended March 31, 2022. Unless otherwise noted, all 2021 results in this release, including the financial tables and reconciliations, reflect only continuing operations. First Quarter 2022 Financial Highlights Revenue of $130 million, an increase of 13 percent from the first quarter of 2021 Annualized recurring revenue of $287 million, an increase of 22 percent from the end of the first quarter of 20211 Deferred revenue of $400 million, an increase of 43 percent from the end of the first quarter of 2021 GAAP operating margin of negative 69 percent, compared to GAAP operating margin of negative 64 percent in the first quarter of 2021 Non-GAAP operating margin of negative 26 percent, compared to non-GAAP operating margin of negative 24 percent in the first quarter of 20212 GAAP net loss per basic share attributable to common stockholders of 42 cents, compared to GAAP net loss per basic share attributable to common stockholders of 39 cents in the first quarter of 2021 Non-GAAP net loss per basic share attributable to common stockholders of 15 cents, compared to non-GAAP net loss basic share attributable to common stockholders of 13 cents in the first quarter of 20212 1 Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period. 2 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.” Business Outlook and Conference Call Given the announcement made on March 8, 2022, regarding the company’s entry into a definitive agreement to be acquired by Google LLC, Mandiant will not be providing financial guidance for the second quarter of 2022 or updated financial guidance for the full-year 2022. The company’s previously issued full-year 2022 financial guidance should no longer be relied upon. Due to the pending transaction with Google LLC, Mandiant will not host a conference call in conjunction with this release. For further detail and discussion of the company’s financial performance, please refer to the company’s upcoming quarterly report on Form 10-Q for the first quarter ended March 31, 2022. Non-GAAP Financial Measures In this release Mandiant has provided financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). These non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. The company uses these non-GAAP financial measures internally in analyzing its financial results and believes the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends, and in comparing the company's financial results with other companies in its industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP financial measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation. Non-GAAP gross margin. Mandiant defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue. Non-GAAP operating income (loss) and non-GAAP operating margin. Mandiant defines non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, and other special or non-recurring items. Mandiant defines non-GAAP operating margin as non-GAAP operating income (loss) divided by total revenue. Non-GAAP net loss attributable to common stockholders. Mandiant defines non-GAAP net loss attributable to common stockholders as net loss excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, discrete tax provision (benefit), dividends on Series A convertible preferred stock, accretion of Series A convertible preferred stock, and other special or non-recurring items. Non-GAAP net loss per basic share attributable to common stockholders. Mandiant defines non-GAAP net loss per basic share attributable to common stockholders as non-GAAP net loss attributable to common stockholders divided by weighted average basic shares outstanding, which excludes stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive. Non-GAAP net loss attributable to common stockholders and non-GAAP net loss per basic share attributable to common stockholders in the first quarter 2022 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, and dividends on Series A convertible preferred stock. Weighted average basic shares outstanding used to calculate non-GAAP net loss per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that were anti-dilutive. Non-GAAP net loss attributable to common stockholders and non-GAAP net loss per basic share attributable to common stockholders in the first quarter 2021 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, adjustment to provision from income taxes, dividends on Series A convertible preferred stock, accretion of series A convertible preferred stock and non-GAAP adjustments for discontinued operations. Weighted average basic shares outstanding used to calculate non-GAAP net loss per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes that were anti-dilutive. Mandiant considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, dividends on Series A convertible preferred stock, and other non-recurring and discrete items so that management and investors can compare the company's core business operating results over multiple periods. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures exclude stock-based compensation expense. Stock-based compensation is an important part of Mandiant employees' overall compensation and has been, and will continue to be for the foreseeable future, a significant recurring expense in the company's business. Second, the components of the costs that Mandiant excludes in its calculation of these non-GAAP financial measures, including not only stock-based compensation, but also amortization of stock-based compensation expense capitalized in software development costs, non-recurring or non-operating items such as amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, and dividends on Series A convertible preferred stock, may differ from the components excluded by peer companies when they report their non-GAAP results of operations. Mandiant compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP financial measures together with their nearest GAAP equivalents. About Mandiant, Inc. Since 2004, Mandiant® has been a trusted partner to security-conscious organizations. Effective security is based on the right combination of expertise, intelligence, and adaptive technology, and the Mandiant Advantage SaaS platform scales decades of frontline experience and industry-leading threat intelligence to deliver a range of dynamic cyber defense solutions. Mandiant’s approach helps organizations develop more effective and efficient cyber security programs and instills confidence in their readiness to defend against and respond to cyber threats. © 2022 Mandiant, Inc. All rights reserved. Mandiant is a registered trademark of Mandiant, Inc. in the United States and other countries. All other brands, products, or service names are or may be trademarks or service marks of their respective owners. Mandiant, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) March 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 771,967 $ 1,154,458 Short-term investments 1,359,105 1,039,339 Accounts receivable, net 104,066 146,460 Prepaid expenses and other current assets 76,145 73,079 Total current assets 2,311,283 2,413,336 Property and equipment, net 52,790 46,329 Operating lease right-of-use assets, net 28,462 25,768 Goodwill 1,060,023 1,060,023 Intangible assets, net 70,818 79,511 Deposits and other long-term assets 25,021 26,220 Total Assets $ 3,548,397 $ 3,651,187 Liabilities, Convertible preferred stock and Stockholders' equity Current Liabilities: Accounts payable $ 25,779 $ 32,585 Operating lease liabilities, current 14,928 13,306 Accrued and other current liabilities 102,555 105,886 Accrued compensation 52,743 71,660 Convertible senior notes, current, net 459,717 451,030 Deferred revenue, current 302,857 307,611 Total current liabilities 958,579 982,078 Convertible senior notes, non-current, net 617,775 556,240 Deferred revenue, non-current 97,132 102,717 Operating lease liabilities, non-current 53,993 52,132 Other long-term liabilities 7,366 7,376 Total liabilities 1,734,845 1,700,543 Commitments and contingencies: Series A convertible preferred stock 424,122 419,404 Stockholders' equity: Common stock 23 23 Additional paid-in capital 3,271,041 3,511,444 Treasury stock (80,000 ) (80,000 ) Accumulated other comprehensive income (13,873 ) (2,172 ) Accumulated deficit (1,787,761 ) (1,898,055 ) Total stockholders’ equity 1,389,430 1,531,240 Total Liabilities, Convertible preferred stock and Stockholders' equity $ 3,548,397 $ 3,651,187 Mandiant, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2022 2021 Revenue: Platform, cloud subscription and managed services $ 57,629 $ 55,999 Professional services 72,515 58,689 Total revenue 130,144 114,688 Cost of revenue: (1)(2) Platform, cloud subscription and managed services 30,121 26,613 Professional services 42,081 32,472 Total cost of revenue 72,202 59,085 Total gross profit 57,942 55,603 Operating expenses: Research and development (1)(3)(10) 44,461 41,905 Sales and marketing (1)(2) 69,409 61,213 General and administrative (1)(4)(10) 32,413 25,351 Restructuring charges (5) 1,040 — Total operating expenses 147,323 128,469 Operating loss (89,381 ) (72,866 ) Other expense, net (6) (1,844 ) (12,409 ) Loss before income taxes from continuing operations before income taxes (91,225 ) (85,275 ) Provision for income taxes (7) 789 1,180 Loss from continuing operations (92,014 ) (86,455 ) Net income from discontinued operations, net of income taxes (11) — 35,809 Net loss $ (92,014 ) $ (50,646 ) Dividend on series A convertible preferred stock (8) (4,718 ) (4,512 ) Accretion of series A convertible preferred stock (9) — (82 ) Net income (loss) attributable to common stockholders $ (96,732 ) $ (55,240 ) Net income (loss) per share attributable to common stockholders, basic and diluted: Continuing operations $ (0.42 ) $ (0.39 ) Discontinued operations — 0.15 Net loss per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.24 ) Weighted average shares used in computing net income (loss) per share, basic and diluted 230,584 234,740 Mandiant, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss from continuing operations $ (92,014 ) $ (86,455 ) Adjustments to reconcile net loss from continuing operations to net cash used in continuing operating activities: Depreciation and amortization 17,505 23,770 Stock-based compensation 38,310 33,401 Non-cash interest expense related to convertible senior notes 1,074 11,384 Deferred income taxes 62 (126 ) Loss (gain) on disposal of property and equipment 21 (103 ) Other 354 37 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: Accounts receivable 42,104 13,409 Prepaid expenses and other assets (1,375 ) 4,528 Accounts payable 4,173 5,314 Accrued liabilities (1,721 ) 2,730 Accrued compensation (18,918 ) (12,389 ) Deferred revenue (10,339 ) (3,963 ) Other long-term liabilities (2,571 ) (7,109 ) Net cash used in operating activities - continuing operations (23,335 ) (15,572 ) Net cash provided by operating activities - discontinued operations — 36,433 Net cash provided by (used in) operating activities (23,335 ) 20,861 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment and demonstration units (9,002 ) (5,627 ) Purchases of short-term investments (441,153 ) (339,801 ) Proceeds from maturities of short-term investments 107,226 176,755 Business acquisitions, net of cash acquired — 49 FireEye Products business sale transaction costs (735 ) — Lease deposits 307 457 Net cash used in investing activities - continuing operations (343,357 ) (168,167 ) Net cash used in investing activities - discontinued operations — (4,392 ) Net cash used in investing activities (343,357 ) (172,559 ) CASH FLOWS FROM FINANCING ACTIVITIES: Settlement of share repurchases (11,483 ) — Series A convertible preferred stock issuance costs — (82 ) Payment related to shares withheld for taxes (5,834 ) (8,798 ) Proceeds from exercise of equity awards 1,518 1,097 Net cash used in financing activities (15,799 ) (7,783 ) Net change in cash and cash equivalents (382,491 ) (159,481 ) Cash and cash equivalents, beginning of period 1,154,458 673,234 Cash and cash equivalents held for sale, beginning of period — 3,220 Cash and cash equivalents held for sale, end of period — (3,220 ) Cash and cash equivalents, end of period $ 771,967 $ 513,753 Mandiant, Inc. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2022 2021 GAAP operating loss $ (89,381 ) $ (72,866 ) Stock-based compensation expense (1) 38,310 33,401 Amortization of stock-based compensation capitalized in software development costs (3) 668 534 Amortization of intangible assets (2) 8,693 11,110 Transformation and transition expense (10) 6,108 — Acquisition related expenses (4) 500 — Restructuring charges (5) 1,040 — Non-GAAP operating income (loss) $ (34,062 ) $ (27,821 ) GAAP gross margin 45 % 48 % Stock-based compensation expense (1) 8 % 7 % Amortization of stock-based compensation capitalized in software development costs (3) — % — % Amortization of intangible assets (2) 5 % 7 % Non-GAAP gross margin 58 % 62 % GAAP operating margin (69 )% (64 )% Stock-based compensation expense (1) 29 % 29 % Amortization of stock-based compensation capitalized in software development costs (3) 1 % 1 % Amortization of intangible assets (2) 7 % 10 % Transformation and transition expense (10) 5 % — % Restructuring charges (5) 1 % — % Non-GAAP operating margin (26 )% (24 )% GAAP net loss attributable to common stockholders $ (96,732 ) $ (55,240 ) Continuing operations: Stock-based compensation expense (1) 38,310 33,401 Amortization of stock-based compensation capitalized in software development costs (3) 668 534 Amortization of intangible assets (2) 8,693 11,110 Acquisition related expenses (4) 500 — Restructuring charges (5) 1,040 — Non-cash interest expense related to convertible senior notes (6) 1,074 11,384 Adjustment to provision (benefit) from income taxes (7) — 200 Dividend on series A convertible preferred stock (8) 4,718 4,512 Accretion of series A convertible preferred stock (9) — 82 Transformation and transition expense (10) 6,108 — Discontinued operations: Non-GAAP adjustments for discontinued operations (11) — 16,299 Non-GAAP net income (loss) attributable to common stockholders $ (35,621 ) $ 22,282 GAAP net income (loss) per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.24 ) Continuing operations: Stock-based compensation expense (1) 0.17 0.14 Amortization of stock-based compensation capitalized in software development costs (3) — — Amortization of intangible assets (2) 0.05 0.05 Acquisition related expenses (4) — — Restructuring charges (5) — — Non-cash interest expense related to convertible senior notes (6) — 0.05 Adjustment to provision (benefit) from income taxes (7) — — Dividend on series A convertible preferred stock (8) 0.02 0.02 Accretion of series A convertible preferred stock (9) — — Transformation and transition expense (10) 0.03 — Discontinued operations: Non-GAAP adjustments for discontinued operations (11) — 0.07 Non-GAAP net income (loss) per share attributable to common stockholders, basic and diluted $ (0.15 ) $ 0.09 Weighted average shares used in per share calculation for GAAP, basic and diluted 230,584 234,740 (1) Includes stock-based compensation expense as follows: Cost of platform, cloud subscription and managed services revenue $ 3,616 $ 2,814 Cost of professional services revenue 7,339 5,186 Research and development expense 9,194 8,423 Sales and marketing expense 10,631 9,890 General and administrative expense 7,530 7,088 Total stock-based compensation expense $ 38,310 $ 33,401 (2) Includes amortization of intangible assets as follows: Cost of platform, cloud subscription and managed services revenue $ 6,764 $ 7,112 Sales and marketing expense 1,929 3,998 Total amortization of intangible assets $ 8,693 $ 11,110 (3) Includes amortization of stock-based compensation capitalized in software development costs as follows: Research and development expense 668 534 Total amortization of stock-based compensation capitalized in software development costs $ 668 $ 534 (4) Includes acquisition related expenses as follows: General and administrative expense $ 500 $ — (5) Includes restructuring charges as follows: Restructuring charges $ 1,040 $ — (6) Includes non-cash interest expense related to convertible senior notes as follows: Other income, net $ 1,074 $ 11,384 (7) Includes income tax effect of non-GAAP adjustments as follows: Adjustment to provision (benefit) from income taxes $ — $ 200 (8) Dividend on series A convertible preferred stock $ 4,718 $ 4,512 (9) Accretion of series A convertible preferred stock $ — $ 82 (10) Includes transformation and transition expense as follows: Research and development expense $ 672 $ — General and administrative expense 5,436 — Total transformation and transition expense $ 6,108 $ — (11) Includes non-GAAP adjustments for discontinued operations as follows: Stock-based compensation expense $ — $ 12,366 Amortization of intangibles — 735 Amortization of stock-based compensation capitalized in software development costs — 538 Divestiture related costs — 2,660 $ — $ 16,299 Mandiant, Inc. SUMMARY OF CONTINUING OPERATIONS, DISCONTINUED OPERATIONS, AND COMBINED OPERATIONS RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2021 Continuing Discontinued Combined Revenue $ 114,688 $ 131,659 $ 246,347 Cost of revenue 59,085 27,801 86,886 Total gross profit 55,603 103,858 159,461 Research and development 41,905 27,420 69,325 Sales and marketing 61,213 37,644 98,857 General and administrative 25,351 2,660 28,011 GAAP operating income (loss) (72,866 ) 36,134 (36,732 ) Non-GAAP adjustments 45,045 16,298 61,343 Non-GAAP operating income (loss) $ (27,821 ) $ 52,432 $ 24,611 Other income and expense, provision for income tax & dividends on series A convertible preferred stock $ (18,183 ) $ (325 ) $ (18,508 ) Net loss attributable to common stockholders $ (91,049 ) $ 35,809 $ (55,240 ) GAAP operating margin (64 )% 28 % (15 )% Non-GAAP adjustments related to operating income (loss) 40 % 12 % 25 % Non-GAAP operating margin (24 )% 40 % 10 % Non-GAAP Adjustments: Stock-based compensation expense $ 33,401 $ 12,366 $ 45,767 Amortization of intangible assets 11,110 735 11,845 Amortization of stock-based compensation capitalized in software development costs 534 538 1,072 Divestiture related costs — 2,660 2,660 Non-GAAP adjustments related to operating income (loss) $ 45,045 $ 16,299 $ 61,344 Non-cash interest expense related to convertible senior notes $ 11,384 $ — $ 11,384 Dividend on series A convertible preferred stock 4,512 — 4,512 Accretion of series A convertible preferred stock 82 — 82 Adjustment to provision (benefit) from income taxes 200 — 200 Non-GAAP adjustments below operating income (loss) $ 16,178 $ — $ 16,178 Total non-GAAP adjustments $ 61,223 $ 16,299 $ 77,522 GAAP net income (loss) per share attributable to common stockholders, basic $ (0.39 ) $ 0.15 $ (0.24 ) Non-GAAP net income (loss) per share attributable to common stockholders, basic $ (0.13 ) $ 0.22 $ 0.09 Weighted average shares used in per share calculation for non-GAAP, basic 234,740 234,740 234,740 Three Months Ended March 31, 2022 2021 Loss from continuing operations $ (92,014 ) $ (86,455 ) Dividend on series A convertible preferred stock (4,718 ) (4,512 ) Accretion of series A convertible preferred stock — (82 ) Net loss attributable to common stockholders (96,732 ) (91,049 ) Total Non-GAAP Adjustments 61,111 61,223 Non-GAAP net loss attributable to common stockholders, (35,621 ) (29,826 ) Net loss per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.39 ) Non-GAAP net loss per share attributable to common stockholders, basic and diluted $ (0.15 ) $ (0.13 ) Weighted average shares used in per share calculation for GAAP, basic and diluted 230,584 234,740 Weighted average shares used in per share calculation for Non-GAAP, basic and diluted 230,584 234,740 Mandiant, Inc. RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Revenue $ 130,144 $ 114,688 Add: deferred revenue, end of period 399,989 280,291 Less: deferred revenue, beginning of period (410,328 ) (284,253 ) Billings (non-GAAP) $ 119,805 $ 110,726 Mandiant, Inc. BILLINGS BREAKOUT (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Platform, cloud subscription and managed services billings $ 50,213 $ 52,335 Professional services billings 69,592 58,391 Billings (non-GAAP) $ 119,805 $ 110,726 View source version on businesswire.com: https://www.businesswire.com/news/home/20220503006228/en/Contacts Media Inquiries: Media.Relations@mandiant.com Investor Inquiries: Investor.Relations@mandiant.com
Mandiant, Inc. (NASDAQ: MNDT) today announced financial results for the first quarter ended March 31, 2022. Unless otherwise noted, all 2021 results in this release, including the financial tables and reconciliations, reflect only continuing operations. First Quarter 2022 Financial Highlights Revenue of $130 million, an increase of 13 percent from the first quarter of 2021 Annualized recurring revenue of $287 million, an increase of 22 percent from the end of the first quarter of 20211 Deferred revenue of $400 million, an increase of 43 percent from the end of the first quarter of 2021 GAAP operating margin of negative 69 percent, compared to GAAP operating margin of negative 64 percent in the first quarter of 2021 Non-GAAP operating margin of negative 26 percent, compared to non-GAAP operating margin of negative 24 percent in the first quarter of 20212 GAAP net loss per basic share attributable to common stockholders of 42 cents, compared to GAAP net loss per basic share attributable to common stockholders of 39 cents in the first quarter of 2021 Non-GAAP net loss per basic share attributable to common stockholders of 15 cents, compared to non-GAAP net loss basic share attributable to common stockholders of 13 cents in the first quarter of 20212 1 Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period. 2 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.” Business Outlook and Conference Call Given the announcement made on March 8, 2022, regarding the company’s entry into a definitive agreement to be acquired by Google LLC, Mandiant will not be providing financial guidance for the second quarter of 2022 or updated financial guidance for the full-year 2022. The company’s previously issued full-year 2022 financial guidance should no longer be relied upon. Due to the pending transaction with Google LLC, Mandiant will not host a conference call in conjunction with this release. For further detail and discussion of the company’s financial performance, please refer to the company’s upcoming quarterly report on Form 10-Q for the first quarter ended March 31, 2022. Non-GAAP Financial Measures In this release Mandiant has provided financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). These non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. The company uses these non-GAAP financial measures internally in analyzing its financial results and believes the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends, and in comparing the company's financial results with other companies in its industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP financial measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation. Non-GAAP gross margin. Mandiant defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue. Non-GAAP operating income (loss) and non-GAAP operating margin. Mandiant defines non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, and other special or non-recurring items. Mandiant defines non-GAAP operating margin as non-GAAP operating income (loss) divided by total revenue. Non-GAAP net loss attributable to common stockholders. Mandiant defines non-GAAP net loss attributable to common stockholders as net loss excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, discrete tax provision (benefit), dividends on Series A convertible preferred stock, accretion of Series A convertible preferred stock, and other special or non-recurring items. Non-GAAP net loss per basic share attributable to common stockholders. Mandiant defines non-GAAP net loss per basic share attributable to common stockholders as non-GAAP net loss attributable to common stockholders divided by weighted average basic shares outstanding, which excludes stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive. Non-GAAP net loss attributable to common stockholders and non-GAAP net loss per basic share attributable to common stockholders in the first quarter 2022 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, and dividends on Series A convertible preferred stock. Weighted average basic shares outstanding used to calculate non-GAAP net loss per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that were anti-dilutive. Non-GAAP net loss attributable to common stockholders and non-GAAP net loss per basic share attributable to common stockholders in the first quarter 2021 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, adjustment to provision from income taxes, dividends on Series A convertible preferred stock, accretion of series A convertible preferred stock and non-GAAP adjustments for discontinued operations. Weighted average basic shares outstanding used to calculate non-GAAP net loss per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes that were anti-dilutive. Mandiant considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, dividends on Series A convertible preferred stock, and other non-recurring and discrete items so that management and investors can compare the company's core business operating results over multiple periods. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures exclude stock-based compensation expense. Stock-based compensation is an important part of Mandiant employees' overall compensation and has been, and will continue to be for the foreseeable future, a significant recurring expense in the company's business. Second, the components of the costs that Mandiant excludes in its calculation of these non-GAAP financial measures, including not only stock-based compensation, but also amortization of stock-based compensation expense capitalized in software development costs, non-recurring or non-operating items such as amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, and dividends on Series A convertible preferred stock, may differ from the components excluded by peer companies when they report their non-GAAP results of operations. Mandiant compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP financial measures together with their nearest GAAP equivalents. About Mandiant, Inc. Since 2004, Mandiant® has been a trusted partner to security-conscious organizations. Effective security is based on the right combination of expertise, intelligence, and adaptive technology, and the Mandiant Advantage SaaS platform scales decades of frontline experience and industry-leading threat intelligence to deliver a range of dynamic cyber defense solutions. Mandiant’s approach helps organizations develop more effective and efficient cyber security programs and instills confidence in their readiness to defend against and respond to cyber threats. © 2022 Mandiant, Inc. All rights reserved. Mandiant is a registered trademark of Mandiant, Inc. in the United States and other countries. All other brands, products, or service names are or may be trademarks or service marks of their respective owners. Mandiant, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) March 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 771,967 $ 1,154,458 Short-term investments 1,359,105 1,039,339 Accounts receivable, net 104,066 146,460 Prepaid expenses and other current assets 76,145 73,079 Total current assets 2,311,283 2,413,336 Property and equipment, net 52,790 46,329 Operating lease right-of-use assets, net 28,462 25,768 Goodwill 1,060,023 1,060,023 Intangible assets, net 70,818 79,511 Deposits and other long-term assets 25,021 26,220 Total Assets $ 3,548,397 $ 3,651,187 Liabilities, Convertible preferred stock and Stockholders' equity Current Liabilities: Accounts payable $ 25,779 $ 32,585 Operating lease liabilities, current 14,928 13,306 Accrued and other current liabilities 102,555 105,886 Accrued compensation 52,743 71,660 Convertible senior notes, current, net 459,717 451,030 Deferred revenue, current 302,857 307,611 Total current liabilities 958,579 982,078 Convertible senior notes, non-current, net 617,775 556,240 Deferred revenue, non-current 97,132 102,717 Operating lease liabilities, non-current 53,993 52,132 Other long-term liabilities 7,366 7,376 Total liabilities 1,734,845 1,700,543 Commitments and contingencies: Series A convertible preferred stock 424,122 419,404 Stockholders' equity: Common stock 23 23 Additional paid-in capital 3,271,041 3,511,444 Treasury stock (80,000 ) (80,000 ) Accumulated other comprehensive income (13,873 ) (2,172 ) Accumulated deficit (1,787,761 ) (1,898,055 ) Total stockholders’ equity 1,389,430 1,531,240 Total Liabilities, Convertible preferred stock and Stockholders' equity $ 3,548,397 $ 3,651,187 Mandiant, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2022 2021 Revenue: Platform, cloud subscription and managed services $ 57,629 $ 55,999 Professional services 72,515 58,689 Total revenue 130,144 114,688 Cost of revenue: (1)(2) Platform, cloud subscription and managed services 30,121 26,613 Professional services 42,081 32,472 Total cost of revenue 72,202 59,085 Total gross profit 57,942 55,603 Operating expenses: Research and development (1)(3)(10) 44,461 41,905 Sales and marketing (1)(2) 69,409 61,213 General and administrative (1)(4)(10) 32,413 25,351 Restructuring charges (5) 1,040 — Total operating expenses 147,323 128,469 Operating loss (89,381 ) (72,866 ) Other expense, net (6) (1,844 ) (12,409 ) Loss before income taxes from continuing operations before income taxes (91,225 ) (85,275 ) Provision for income taxes (7) 789 1,180 Loss from continuing operations (92,014 ) (86,455 ) Net income from discontinued operations, net of income taxes (11) — 35,809 Net loss $ (92,014 ) $ (50,646 ) Dividend on series A convertible preferred stock (8) (4,718 ) (4,512 ) Accretion of series A convertible preferred stock (9) — (82 ) Net income (loss) attributable to common stockholders $ (96,732 ) $ (55,240 ) Net income (loss) per share attributable to common stockholders, basic and diluted: Continuing operations $ (0.42 ) $ (0.39 ) Discontinued operations — 0.15 Net loss per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.24 ) Weighted average shares used in computing net income (loss) per share, basic and diluted 230,584 234,740 Mandiant, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss from continuing operations $ (92,014 ) $ (86,455 ) Adjustments to reconcile net loss from continuing operations to net cash used in continuing operating activities: Depreciation and amortization 17,505 23,770 Stock-based compensation 38,310 33,401 Non-cash interest expense related to convertible senior notes 1,074 11,384 Deferred income taxes 62 (126 ) Loss (gain) on disposal of property and equipment 21 (103 ) Other 354 37 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: Accounts receivable 42,104 13,409 Prepaid expenses and other assets (1,375 ) 4,528 Accounts payable 4,173 5,314 Accrued liabilities (1,721 ) 2,730 Accrued compensation (18,918 ) (12,389 ) Deferred revenue (10,339 ) (3,963 ) Other long-term liabilities (2,571 ) (7,109 ) Net cash used in operating activities - continuing operations (23,335 ) (15,572 ) Net cash provided by operating activities - discontinued operations — 36,433 Net cash provided by (used in) operating activities (23,335 ) 20,861 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment and demonstration units (9,002 ) (5,627 ) Purchases of short-term investments (441,153 ) (339,801 ) Proceeds from maturities of short-term investments 107,226 176,755 Business acquisitions, net of cash acquired — 49 FireEye Products business sale transaction costs (735 ) — Lease deposits 307 457 Net cash used in investing activities - continuing operations (343,357 ) (168,167 ) Net cash used in investing activities - discontinued operations — (4,392 ) Net cash used in investing activities (343,357 ) (172,559 ) CASH FLOWS FROM FINANCING ACTIVITIES: Settlement of share repurchases (11,483 ) — Series A convertible preferred stock issuance costs — (82 ) Payment related to shares withheld for taxes (5,834 ) (8,798 ) Proceeds from exercise of equity awards 1,518 1,097 Net cash used in financing activities (15,799 ) (7,783 ) Net change in cash and cash equivalents (382,491 ) (159,481 ) Cash and cash equivalents, beginning of period 1,154,458 673,234 Cash and cash equivalents held for sale, beginning of period — 3,220 Cash and cash equivalents held for sale, end of period — (3,220 ) Cash and cash equivalents, end of period $ 771,967 $ 513,753 Mandiant, Inc. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2022 2021 GAAP operating loss $ (89,381 ) $ (72,866 ) Stock-based compensation expense (1) 38,310 33,401 Amortization of stock-based compensation capitalized in software development costs (3) 668 534 Amortization of intangible assets (2) 8,693 11,110 Transformation and transition expense (10) 6,108 — Acquisition related expenses (4) 500 — Restructuring charges (5) 1,040 — Non-GAAP operating income (loss) $ (34,062 ) $ (27,821 ) GAAP gross margin 45 % 48 % Stock-based compensation expense (1) 8 % 7 % Amortization of stock-based compensation capitalized in software development costs (3) — % — % Amortization of intangible assets (2) 5 % 7 % Non-GAAP gross margin 58 % 62 % GAAP operating margin (69 )% (64 )% Stock-based compensation expense (1) 29 % 29 % Amortization of stock-based compensation capitalized in software development costs (3) 1 % 1 % Amortization of intangible assets (2) 7 % 10 % Transformation and transition expense (10) 5 % — % Restructuring charges (5) 1 % — % Non-GAAP operating margin (26 )% (24 )% GAAP net loss attributable to common stockholders $ (96,732 ) $ (55,240 ) Continuing operations: Stock-based compensation expense (1) 38,310 33,401 Amortization of stock-based compensation capitalized in software development costs (3) 668 534 Amortization of intangible assets (2) 8,693 11,110 Acquisition related expenses (4) 500 — Restructuring charges (5) 1,040 — Non-cash interest expense related to convertible senior notes (6) 1,074 11,384 Adjustment to provision (benefit) from income taxes (7) — 200 Dividend on series A convertible preferred stock (8) 4,718 4,512 Accretion of series A convertible preferred stock (9) — 82 Transformation and transition expense (10) 6,108 — Discontinued operations: Non-GAAP adjustments for discontinued operations (11) — 16,299 Non-GAAP net income (loss) attributable to common stockholders $ (35,621 ) $ 22,282 GAAP net income (loss) per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.24 ) Continuing operations: Stock-based compensation expense (1) 0.17 0.14 Amortization of stock-based compensation capitalized in software development costs (3) — — Amortization of intangible assets (2) 0.05 0.05 Acquisition related expenses (4) — — Restructuring charges (5) — — Non-cash interest expense related to convertible senior notes (6) — 0.05 Adjustment to provision (benefit) from income taxes (7) — — Dividend on series A convertible preferred stock (8) 0.02 0.02 Accretion of series A convertible preferred stock (9) — — Transformation and transition expense (10) 0.03 — Discontinued operations: Non-GAAP adjustments for discontinued operations (11) — 0.07 Non-GAAP net income (loss) per share attributable to common stockholders, basic and diluted $ (0.15 ) $ 0.09 Weighted average shares used in per share calculation for GAAP, basic and diluted 230,584 234,740 (1) Includes stock-based compensation expense as follows: Cost of platform, cloud subscription and managed services revenue $ 3,616 $ 2,814 Cost of professional services revenue 7,339 5,186 Research and development expense 9,194 8,423 Sales and marketing expense 10,631 9,890 General and administrative expense 7,530 7,088 Total stock-based compensation expense $ 38,310 $ 33,401 (2) Includes amortization of intangible assets as follows: Cost of platform, cloud subscription and managed services revenue $ 6,764 $ 7,112 Sales and marketing expense 1,929 3,998 Total amortization of intangible assets $ 8,693 $ 11,110 (3) Includes amortization of stock-based compensation capitalized in software development costs as follows: Research and development expense 668 534 Total amortization of stock-based compensation capitalized in software development costs $ 668 $ 534 (4) Includes acquisition related expenses as follows: General and administrative expense $ 500 $ — (5) Includes restructuring charges as follows: Restructuring charges $ 1,040 $ — (6) Includes non-cash interest expense related to convertible senior notes as follows: Other income, net $ 1,074 $ 11,384 (7) Includes income tax effect of non-GAAP adjustments as follows: Adjustment to provision (benefit) from income taxes $ — $ 200 (8) Dividend on series A convertible preferred stock $ 4,718 $ 4,512 (9) Accretion of series A convertible preferred stock $ — $ 82 (10) Includes transformation and transition expense as follows: Research and development expense $ 672 $ — General and administrative expense 5,436 — Total transformation and transition expense $ 6,108 $ — (11) Includes non-GAAP adjustments for discontinued operations as follows: Stock-based compensation expense $ — $ 12,366 Amortization of intangibles — 735 Amortization of stock-based compensation capitalized in software development costs — 538 Divestiture related costs — 2,660 $ — $ 16,299 Mandiant, Inc. SUMMARY OF CONTINUING OPERATIONS, DISCONTINUED OPERATIONS, AND COMBINED OPERATIONS RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2021 Continuing Discontinued Combined Revenue $ 114,688 $ 131,659 $ 246,347 Cost of revenue 59,085 27,801 86,886 Total gross profit 55,603 103,858 159,461 Research and development 41,905 27,420 69,325 Sales and marketing 61,213 37,644 98,857 General and administrative 25,351 2,660 28,011 GAAP operating income (loss) (72,866 ) 36,134 (36,732 ) Non-GAAP adjustments 45,045 16,298 61,343 Non-GAAP operating income (loss) $ (27,821 ) $ 52,432 $ 24,611 Other income and expense, provision for income tax & dividends on series A convertible preferred stock $ (18,183 ) $ (325 ) $ (18,508 ) Net loss attributable to common stockholders $ (91,049 ) $ 35,809 $ (55,240 ) GAAP operating margin (64 )% 28 % (15 )% Non-GAAP adjustments related to operating income (loss) 40 % 12 % 25 % Non-GAAP operating margin (24 )% 40 % 10 % Non-GAAP Adjustments: Stock-based compensation expense $ 33,401 $ 12,366 $ 45,767 Amortization of intangible assets 11,110 735 11,845 Amortization of stock-based compensation capitalized in software development costs 534 538 1,072 Divestiture related costs — 2,660 2,660 Non-GAAP adjustments related to operating income (loss) $ 45,045 $ 16,299 $ 61,344 Non-cash interest expense related to convertible senior notes $ 11,384 $ — $ 11,384 Dividend on series A convertible preferred stock 4,512 — 4,512 Accretion of series A convertible preferred stock 82 — 82 Adjustment to provision (benefit) from income taxes 200 — 200 Non-GAAP adjustments below operating income (loss) $ 16,178 $ — $ 16,178 Total non-GAAP adjustments $ 61,223 $ 16,299 $ 77,522 GAAP net income (loss) per share attributable to common stockholders, basic $ (0.39 ) $ 0.15 $ (0.24 ) Non-GAAP net income (loss) per share attributable to common stockholders, basic $ (0.13 ) $ 0.22 $ 0.09 Weighted average shares used in per share calculation for non-GAAP, basic 234,740 234,740 234,740 Three Months Ended March 31, 2022 2021 Loss from continuing operations $ (92,014 ) $ (86,455 ) Dividend on series A convertible preferred stock (4,718 ) (4,512 ) Accretion of series A convertible preferred stock — (82 ) Net loss attributable to common stockholders (96,732 ) (91,049 ) Total Non-GAAP Adjustments 61,111 61,223 Non-GAAP net loss attributable to common stockholders, (35,621 ) (29,826 ) Net loss per share attributable to common stockholders, basic and diluted $ (0.42 ) $ (0.39 ) Non-GAAP net loss per share attributable to common stockholders, basic and diluted $ (0.15 ) $ (0.13 ) Weighted average shares used in per share calculation for GAAP, basic and diluted 230,584 234,740 Weighted average shares used in per share calculation for Non-GAAP, basic and diluted 230,584 234,740 Mandiant, Inc. RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Revenue $ 130,144 $ 114,688 Add: deferred revenue, end of period 399,989 280,291 Less: deferred revenue, beginning of period (410,328 ) (284,253 ) Billings (non-GAAP) $ 119,805 $ 110,726 Mandiant, Inc. BILLINGS BREAKOUT (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Platform, cloud subscription and managed services billings $ 50,213 $ 52,335 Professional services billings 69,592 58,391 Billings (non-GAAP) $ 119,805 $ 110,726 View source version on businesswire.com: https://www.businesswire.com/news/home/20220503006228/en/