BlackLine Announces Third Quarter Financial Results

LOS ANGELES, Nov. 01, 2018 (GLOBE NEWSWIRE) -- BlackLine, Inc. (Nasdaq: BL), today announced financial results for the third quarter ended September 30, 2018.

Therese Tucker, Founder and CEO, commented, “The fundamentals of the market and business remained strong, and we continued to execute on our initiatives for the year that we view as the key building blocks of our long-term growth strategy. We continue to see strong demand globally and a large and growing market opportunity ahead of us as companies across all industries increasingly look to modernize, automate and transform their businesses. We believe BlackLine is at the forefront of change in our industry and well positioned to help our customers embrace digital transformation in their finance and accounting departments." 

Third Quarter 2018 Financial Highlights

  • Total GAAP revenues of $58.7 million for the third quarter of 2018, an increase of 29% compared to the third quarter of 2017.  Subscription and support revenue grew 31% year-over-year to reach $56.2 million for the third quarter of 2018.

  • GAAP net loss of $4.5 million, or $0.08 per share, on 54.3 million weighted average shares outstanding.

  • Non-GAAP net income of $4.1 million, or $0.07 per share, on 57.9 million diluted weighted average shares outstanding. This compares with non-GAAP net income of $0.3 million in the third quarter of 2017.

  • Operating cash flow of $4.8 million, compared with $3.5 million in the third quarter of 2017.

  • Free cash flow of $2.4 million, compared with ($0.5) million in the third quarter of 2017.

Key Metrics and Recent Business Highlights

  • Added 92 net new customers in the third quarter for a total of 2,494 customers at September 30, 2018.

  • Expanded the company’s user base to 214,747 at September 30, 2018.

  • Achieved a dollar-based net revenue retention rate of 109% at September 30, 2018.

  • Named by Gartner as a Leader for the second year in a row, with Gartner positioning BlackLine in the Leaders quadrant of its "2018 Magic Quadrant for Cloud Financial Close Solutions."

  • Entered into a reseller agreement with SAP. Under the terms of the new agreement, SAP will have the ability to resell BlackLine’s market-leading cloud-based finance and accounting solutions to businesses around the world.

  • Established a joint venture with Japan Cloud to help build BlackLine's presence in Japan, one of the world's largest software markets.

  • Appointed B2B cloud software marketing veteran, Andres Botero, as chief marketing officer.

  • Named Susan Otto as the company’s first chief people officer.

  • Added Former Deloitte Advisory CEO, Owen Ryan, to Board of Directors.

Financial Outlook

Fourth Quarter 2018

  • Total GAAP revenue is expected to be in the range of $61 million to $62 million.

  • Non-GAAP net income is expected to be approximately breakeven.

Full Year 2018

  • Total GAAP revenue is expected to be in the range of $226.5 million to $227.5 million.

  • Non-GAAP net income is expected to be in the range of $4.4 million to $5.4 million, or $0.08 to $0.09 per share, on 57.6 million diluted weighted average shares outstanding.

Concurrently with the signing of the new reseller agreement with SAP, the Company also announced that it has entered into amendment of its current Software Development Cooperation Agreement with SAP (the “SAP EBS Agreement”), under which BlackLine had agreed to pay SAP a fee based on a percentage of revenues from BlackLine’s new customers that use an SAP ERP system over the term of their subscription agreements. Under the terms of the amendment, effective October 1, 2018, BlackLine is no longer obligated to pay a fee to SAP pursuant to the SAP EBS Agreement. This change is not expected to have a material impact on BlackLine's fourth quarter results and is reflected in management’s guidance for the quarter.

BlackLine adopted the new revenue standard, ASC 606, effective January 1, 2018 and its guidance for the fourth quarter and full year 2018 is according to the new standard. The company adopted the new revenue standard on a full retrospective basis such that prior periods presented are comparable. Guidance for non-GAAP net income and net income per share does not include the impact of the benefit from income taxes that we were able to recognize as a result of the deferred tax liabilities associated with the intangible assets established upon the acquisition in the fourth quarter of 2016 of Runbook B.V. (the “Runbook Acquisition”), amortization of acquired intangible assets resulting from the acquisition of the company by its principal stockholders in 2013 (the “2013 Acquisition”) and the Runbook Acquisition, stock-based compensation, the change in fair value of contingent consideration, costs incurred in connection with our secondary offering, and costs incurred with our shelf offering.  Reconciliations of non-GAAP net income and net income per share guidance to the most directly comparable U.S. GAAP measures, or net income and net income per share, are not available on a forward-looking basis without unreasonable efforts due to the unpredictability and complexity of the charges excluded from non-GAAP net income and net income per share.  The company expects the variability of the above changes could have a significant, and potentially unpredictable, impact on its future GAAP net income and net income per share.

Quarterly Conference Call

BlackLine, Inc. will hold a conference call to discuss its third quarter results at 2:00 p.m. Pacific time on Thursday, November 1, 2018. A live audio webcast will be accessible on BlackLine’s investor relations website at https://investors.blackline.com. The call can also be accessed domestically at (844) 229-7595 and internationally at (314) 888-4260, passcode 6287609. A telephonic replay will be available through Thursday, November 8, 2018 at (855) 859-2056 or (404) 537-3406, passcode 6287609. A replay of the webcast will be available at https://investors.blackline.com/ for 12 months. BlackLine has used, and intends to continue to use, its Investor Relations website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About BlackLine

BlackLine, Inc. is a provider of cloud-based solutions for Finance & Accounting (F&A) that automate, centralize and streamline financial close operations and other key F&A processes for large and midsize organizations. More than 2,400 customers with users around the world trust BlackLine to help ensure balance sheet integrity and confidence in their financial statements. For more information about BlackLine, Inc., visit https://www.blackline.com.

Forward-looking Statements

This release and the conference call referenced above contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology.  Forward-looking statements in this release and quarterly conference call include, but are not limited to, statements regarding BlackLine’s future financial and operational performance, including, without limitation, GAAP and non-GAAP guidance, our expectations for our business in 2018 and our ability to execute on our long-term plans and key initiatives, expectations regarding dollar-based net revenue retention rate, free cash flow, revenue mix, operating expenses and capital expenditures, the impact of ASC 606 on the company’s financial results, the company’s expectation that it will have positive cash flows and profitability in a specified time period, the impact of seasonality on the company’s financial results, market opportunity, competitive position, the demand for and benefits from the use of BlackLine’s current and future solutions, growth strategies including international expansion, customer growth, extension of distribution channels, sales strategy and product innovation, expansion of relationships with partners, customer service initiatives and expectations regarding deal size and increased focus on strategic products.

Any forward-looking statements contained in this press release or the quarterly conference call are based upon BlackLine’s historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved.  Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs and assumptions as of that time with respect to future events, and are subject to risks and uncertainties.  If any of these risks or uncertainties materialize or if any assumptions prove incorrect, actual performance or results may differ materially from those expressed in or suggested by the forward looking statements.  These risks and uncertainties include, but are not limited to risks related to the company’s ability to attract new customers and expand sales to existing customers; the extent to which customers renew their subscription agreements or increase the number of users; the company’s ability to manage growth and scale effectively, including additional headcount and entry into new geographies; the company’s ability to provide successful enhancements, new features and modifications to its software solutions; the company’s ability to develop new products and software solutions and the success of any new product and service introductions; the success of the company’s strategic relationships with technology vendors and business process outsourcers, channel partners and alliance partners; any breaches of the company’s security measures; a disruption in the company’s hosting network infrastructure; costs and reputational harm that could result from defects in the company’s solution; the loss of any key employees; continued strong demand for the company’s software in the United States, Europe, Asia Pacific and Latin America; the company’s ability to compete as the financial close management provider for organizations of all sizes; the timing and success of solutions offered by competitors; changes in the proportion of the company’s customer base that is comprised of enterprise or mid-sized organizations; the company’s ability to expand its enterprise and mid-market sales teams and effectively manage its sales forces and their performance and productivity; fluctuations in our financial results due to long and increasingly variable sales cycles, failure to protect the company’s intellectual property; the company’s ability to integrate acquired businesses and technologies successfully or achieve the expected benefits of such transactions; unpredictable macro-economic conditions; seasonality; changes in current tax or accounting rules; cyber attacks and the risk that the company’s security measures may not be sufficient to secure its customer or confidential data adequately; acts of terrorism or other vandalism, war or natural disasters; and other risks and uncertainties described in the other filings we make with the Securities and Exchange Commission from time to time, including the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission on March 8, 2018.  Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.  Forward-looking statements should not be read as a guarantee of future performance or results, and you should not place undue reliance on such statements.  Except as required by law, we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, BlackLine has provided in this release and the quarterly conference call held on November 1, 2018 certain financial measures that have not been prepared in accordance with GAAP defined as “non-GAAP financial measures,” which include (i) non-GAAP gross profit and non-GAAP gross margin, (ii) non-GAAP operating expenses, (iii) non-GAAP income (loss) from operations, (iv) non-GAAP net income (loss) and non-GAAP net income (loss) per share, and (v) free cash flow.

BlackLine’s management uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating BlackLine’s ongoing operational performance and trends and in comparing its financial measures with other companies in the same industry, many of which present similar non-GAAP financial measures to help investors understand the operational performance of their businesses.  However, it is important to note that the particular items BlackLine excludes from, or includes in, its non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures has been provided in the tables included as part of this press release.

Non-GAAP Gross Profit and Non-GAAP Gross Margin.  Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for the amortization of acquired developed technology resulting from the 2013 Acquisition and the Runbook Acquisition and stock-based compensation. Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenues. BlackLine believes that presenting non-GAAP gross margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison of gross margin between periods.

Non-GAAP Operating Expenses.  Non-GAAP operating expenses include (a) non-GAAP sales and marketing expense, (b) non-GAAP research and development expense and (c) non-GAAP general and administrative expense.  Non-GAAP sales and marketing expense is defined as GAAP sales and marketing expense adjusted for the amortization of acquired intangibles resulting from the 2013 Acquisition and the Runbook Acquisition and stock-based compensation.  Non-GAAP research and development expense is defined as GAAP research and development expense adjusted for stock-based compensation.  Non-GAAP general and administrative expense is defined as GAAP general and administrative expense as adjusted for the amortization of acquired intangibles resulting from the 2013 Acquisition and Runbook Acquisition, stock-based compensation, the change in fair value of contingent consideration, costs incurred in connection with our secondary offering, and costs incurred in connection with our shelf offering.  BlackLine believes that presenting each of the non-GAAP operating expenses is useful to investors as it eliminates the impact of certain cash and non-cash expenses and allows a direct comparison of operating expenses between periods.

Non-GAAP Income (Loss) from Operations.  Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations adjusted for the amortization of acquired intangible assets resulting from the 2013 Acquisition and the Runbook Acquisition, stock-based compensation, the change in fair value of contingent consideration, costs incurred in connection with our secondary offering, and costs incurred in connection with our shelf offering. The company believes that presenting non-GAAP income (loss) from operations is useful to investors as it eliminates the impact of items that have been impacted by the 2013 Acquisition and the Runbook Acquisition and other related costs in order to allow a direct comparison of loss from operations between all periods presented.

Non-GAAP Net Income (Loss).  Non-GAAP net income (loss) is defined as GAAP net income (loss) adjusted for the impact of the provision for (benefit from) income taxes that we were able to recognize as a result of the deferred tax liabilities associated with the intangible assets established upon the 2013 Acquisition and the Runbook Acquisition, amortization of acquired intangible assets resulting from the 2013 Acquisition and the Runbook Acquisition, stock-based compensation, the change in the fair value of contingent consideration, the change in fair value of the common stock warrant liability, costs incurred in connection with our secondary offering, and costs incurred in connection with our shelf offering.  Non-GAAP diluted net income (loss) per common share includes the adjustment for shares resulting from the elimination of stock-based compensation.  The company believes that presenting non-GAAP net income (loss) is useful to investors as it eliminates the impact of items that have been impacted by the 2013 Acquisition and the Runbook Acquisition and other related costs in order to allow a direct comparison of net loss between all periods presented.

Free Cash Flow.  Free cash flow is defined as cash flows used in operating activities less cash flows used in investing activities related to purchase of property and equipment and capitalized software development. BlackLine believes that presenting free cash flow is useful to investors as it provides a measure of the company’s liquidity used by management to evaluate the amount of cash generated by the company’s business including the impact of purchases of property and equipment and cost of capitalized software development.

Use of Operating Metrics

BlackLine has provided in this release and the quarterly conference call held on November 1, 2018 certain operating metrics, including (i) number of customers, (ii) number of users and (iii) dollar-based net revenue retention rate, which BlackLine uses to evaluate its business, measure its performance, identify trends affecting its business, formulate financial projections and make strategic decisions.  These operating metrics exclude the impact of Runbook licensed customers and users as these customers did not have an active subscription agreement with BlackLine as of September 30, 2018.

Dollar-based Net Revenue Retention Rate.  Dollar-based net revenue retention rate is calculated as the implied monthly subscription and support revenue at the end of a period for the base set of customers from which the company generated subscription revenue in the year prior to the calculation, divided by the implied monthly subscription and support revenue one year prior to the date of calculation for that same customer base. This calculation does not reflect implied monthly subscription and support revenue for new customers added during the one-year period but does include the effect of customers who terminated during the period.  Implied monthly subscription and support revenue is defined as the total amount of minimum subscription and support revenue contractually committed to, under each of BlackLine’s customer agreements over the entire term of the agreement, divided by the number of months in the term of the agreement.  BlackLine believes that dollar-based net revenue retention rate is an important metric to measure the long-term value of customer agreements and the company’s ability to retain and grow its relationships with existing customers over time.

Number of Customers.  A customer is defined as an entity with an active subscription agreement as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer. However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer.  BlackLine believes that its ability to expand its customer base is an indicator of the company’s market penetration and the growth of its business.

Number of Users.  Since BlackLine’s customers generally pay fees based on the number of users of its platform within their organization, the company believes the total number of users is an indicator of the growth of its business.

Media Contact:
BlackLine
Kimberly Uberti
Kimberly.uberti@blackline.com

Investor Relations Contact:
The Blueshirt Group
Maria Riley
415.217.7722
maria@blueshirtgroup.com

BlackLine, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
   
  September 30, 2018 December 31, 2017
    *As Adjusted
ASSETS    
Cash and cash equivalents $  38,401  $  31,104 
Marketable securities    86,715     81,476 
Accounts receivable, net of allowance    63,398     61,918 
Prepaid expenses and other current assets    15,979     13,956 
Total current assets    204,493     188,454 
Capitalized software development costs, net    8,925     6,824 
Property and equipment, net    13,155     12,769 
Intangible assets, net    30,868     40,808 
Goodwill    185,138     185,138 
Other assets    32,115     26,820 
Total assets $  474,694  $  460,813 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Accounts payable $  2,902  $  7,254 
Accrued expenses and other current liabilities    20,174     20,874 
Deferred revenue    118,260     104,184 
Short-term portion of contingent consideration    2,008     2,008 
Total current liabilities    143,344     134,320 
Contingent consideration    4,145     3,858 
Deferred tax liabilities    1,300     1,743 
Deferred revenue, noncurrent    317     468 
Other long-term liabilities    3,155     3,119 
Total liabilities    152,261     143,508 
     
Stockholders' equity:    
Common stock    547     530 
Additional paid-in capital    444,840     419,628 
Accumulated other comprehensive loss    (92)    (63)
Accumulated deficit    (122,862)    (102,790)
Total stockholders' equity    322,433     317,305 
     
Total liabilities and stockholders' equity $  474,694  $  460,813 
     
*Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted on January 1, 2018.
     

 

BlackLine, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
         
  Quarter Ended Nine Months Ended
  September 30, September 30,
  2018 2017 2018 2017
    *As Adjusted   *As Adjusted
Revenues        
Subscription and support $  56,170  $  43,032  $  157,842  $  119,422 
Professional services    2,564     2,392     7,630     6,164 
Total revenues    58,734     45,424     165,472     125,586 
Cost of revenues        
Subscription and support    11,174     8,680     30,048     24,662 
Professional services    2,343     2,191     6,941     5,776 
Total cost of revenues    13,517     10,871     36,989     30,438 
Gross profit    45,217     34,553     128,483     95,148 
Operating expenses        
Sales and marketing    31,709     32,048     93,086     77,860 
Research and development    7,261     5,883     22,001     17,840 
General and administrative    11,268     8,920     34,808     25,639 
Total operating expenses    50,238     46,851     149,895     121,339 
Loss from operations    (5,021)    (12,298)    (21,412)    (26,191)
Other income (expense)        
Interest income    578     281     1,474     749 
Interest expense    —     (6)    (4)    (13)
Change in fair value of the common
  stock warrant liability
    —     —     —     (3,490)
Other income (expense), net    578     275     1,470     (2,754)
Loss before income taxes    (4,443)    (12,023)    (19,942)    (28,945)
Provision for (benefit from) income taxes    17     51     130     (60)
Net loss $  (4,460) $  (12,074) $  (20,072) $  (28,885)
Basic net loss per share:        
Basic net loss per share $  (0.08) $  (0.23) $  (0.37) $  (0.56)
Shares used to calculate basic net loss per share    54,263     52,592     53,660     51,910 
Diluted net loss per share:        
Diluted net loss per share $  (0.08) $  (0.23) $  (0.37) $  (0.56)
Shares used to calculate diluted net loss per share    54,263     52,592     53,660     51,910 
         
*Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted on January 1, 2018.

 

BlackLine, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
         
  Quarter Ended Nine Months Ended
  September 30, September 30,
  2018 2017 2018 2017
    *As Adjusted   *As Adjusted
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss $  (4,460) $  (12,074) $  (20,072) $  (28,885)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization    5,836     5,087     16,767     14,786 
Change in fair value of common stock warrant liability    -     -     -     3,490 
Change in fair value of contingent consideration    97     178     287     367 
Stock-based compensation    5,340     9,115     14,707     12,951 
(Accretion)/amortization of purchase discounts/premiums on marketable securities, net    (298)    (33)    (602)    100 
Net foreign currency (gains) losses    (69)    -     334     - 
Deferred income taxes    (136)    (249)    (443)    (420)
Provision for (benefit from) doubtful accounts receivable    24     602     (19)    602 
Changes in operating assets and liabilities        
Accounts receivable    (2,387)    (2,310)    (1,735)    (3,541)
Prepaid expenses and other current assets    232     (446)    (2,392)    (1,324)
Other assets    (1,563)    (2,131)    (5,017)    (4,623)
Accounts payable    509     (1,698)    (4,401)    (4,185)
Accrued expenses and other current liabilities    1,073     2,141     (58)    59 
Deferred revenue    775     5,339     13,925     14,425 
Other long-term liabilities    (159)    (14)    36     (128)
Net cash provided by operating activities    4,814     3,507     11,317     3,674 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of marketable securities    (36,710)    (26,248)    (103,624)    (51,647)
Proceeds from maturities of marketable securities    36,509     24,941     98,958     49,561 
Capitalized software development costs    (1,527)    (1,362)    (4,640)    (3,345)
Purchases of property and equipment    (892)    (2,611)    (4,588)    (3,729)
Net cash used in investing activities     (2,620)    (5,280)    (13,894)    (9,160)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Principal payments on capital lease obligations    -     -     (443)    (549)
Proceeds from exercises of stock options    7,455     2,911     13,520     8,672 
Acquisition of common stock for tax withholding obligations    (112)    -     (3,325)    - 
Payments of initial public offering costs    -     -     -     (110)
Net cash provided by financing activities    7,343     2,911     9,752     8,013 
         
Net increase in cash, cash equivalents, and restricted cash    9,537     1,138     7,175     2,527 
Cash, cash equivalents, and restricted cash, beginning of period    29,142     23,907     31,504     22,518 
Cash, cash equivalents, and restricted cash, end of period $  38,679  $  25,045  $  38,679  $  25,045 
         
Cash and cash equivalents at end of period $  38,401  $  24,645  $  38,401  $  24,645 
Restricted cash included within other assets at end of period    278     400     278     400 
Total cash, cash equivalents, and restricted cash at end of period shown
  in the consolidated statements of cash flows
 $  38,679  $  25,045  $  38,679  $  25,045 
         
         
*Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), and ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230), both of which we adopted on January 1, 2018.

 

BlackLine, Inc.
Reconciliations of Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
         
  Quarter Ended Nine Months Ended
  September 30, September 30,
  2018 2017 2018 2017
    *As Adjusted   *As Adjusted
Non-GAAP Gross Profit        
Gross profit $  45,217  $  34,553  $  128,483  $  95,148 
Amortization of developed technology    1,721     1,716     5,144     5,133 
Stock-based compensation    869     334     2,389     855 
Total Non-GAAP Gross Profit $  47,807  $  36,603  $  136,016  $  101,136 
Gross margin  77.0%  76.1%  77.6%  75.8%
Non-GAAP gross margin  81.4%  80.6%  82.2%  80.5%
         
Non-GAAP Operating Income (Loss):        
Loss from operations $  (5,021) $  (12,298) $  (21,412) $  (26,191)
Amortization of intangible assets    3,305     3,325     9,940     9,988 
Stock-based compensation    5,340     9,115     14,707     12,951 
Change in fair value of contingent consideration    97     178     287     367 
Secondary offering costs    -     -     -     809 
Shelf offering costs    -     -     401     - 
Total non-GAAP operating income (loss) $  3,721  $  320  $  3,923  $  (2,076)
         
Non-GAAP Net Income (Loss)        
Net loss $  (4,460) $  (12,074) $  (20,072) $  (28,885)
Benefit from income taxes    (137)    (258)    (327)    (450)
Amortization of intangible assets    3,305     3,325     9,940     9,988 
Stock-based compensation    5,340     9,115     14,707     12,951 
Change in fair value of contingent consideration    97     178     287     367 
Change in fair value of the common stock warrant liability    -     -     -     3,490 
Secondary offering costs    -     -     -     809 
Shelf offering costs    -     -     401     - 
Total non-GAAP net income (loss) $  4,145  $  286  $  4,936  $  (1,730)
Basic non-GAAP net income (loss) per share:        
Basic non-GAAP net income (loss) per share $  0.08  $  0.01  $  0.09  $  (0.03)
Shares used to calculate basic non-GAAP net income (loss) per share    54,263     52,592     53,660     51,910 
Diluted non-GAAP net income (loss) per share:        
Dilluted non-GAAP net income (loss) per share $  0.07  $  0.01  $  0.09  $  (0.03)
Shares used to calculate diluted non-GAAP net income (loss) per share    57,895     55,851     57,283     51,910 
         
*Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted on January 1, 2018.
         
  Quarter Ended Nine Months Ended
  September 30, September 30,
  2018 2017 2018 2017
    *As Adjusted   *As Adjusted
Non-GAAP Sales and Marketing Expense:        
Sales and marketing expense $  31,709  $  32,048  $  93,086  $  77,860 
Amortization of intangible assets    (987)    (970)    (2,922)    (2,903)
Stock-based compensation    (2,182)    (7,761)    (5,927)    (9,169)
Total non-GAAP sales and marketing expense $  28,540  $  23,317  $  84,237  $  65,788 
         
Non-GAAP Research and Development Expense:        
Research and development expense $  7,261  $  5,883  $  22,001  $  17,840 
Stock-based compensation    (651)    (236)    (1,755)    (534)
Total non-GAAP research and development expense $  6,610  $  5,647  $  20,246  $  17,306 
         
Non-GAAP General and Administrative Expense:        
General and administrative expense $  11,268  $  8,920  $  34,808  $  25,639 
Amortization of intangible assets    (597)    (639)    (1,874)    (1,952)
Stock-based compensation    (1,638)    (784)    (4,636)    (2,393)
Change in fair value of contingent consideration    (97)    (178)    (287)    (367)
Secondary offering costs    -     -     -     (809)
Shelf offering costs    -     -     (401)    - 
Total non-GAAP general and administrative expense $  8,936  $  7,319  $  27,610  $  20,118 
         
Total Non-GAAP Operating Expenses $  44,086  $  36,283  $  132,093  $  103,212 
         
Free Cash Flow        
Net cash provided by operating activities $  4,814  $  3,507  $  11,317  $  3,674 
Capitalized software development costs    (1,527)    (1,362)    (4,640)    (3,345)
Purchases of property and equipment    (892)    (2,611)    (4,588)    (3,729)
Free cash flow $  2,395  $  (466) $  2,089  $  (3,400)
         
*Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), and ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230), both of which we adopted on January 1, 2018.
         

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