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    Model N Announces First Quarter Fiscal Year 2024 Financial Results

    2/6/24 4:05:00 PM ET
    $MODN
    Computer Software: Programming Data Processing
    Technology
    Get the next $MODN alert in real time by email

    Subscription Revenue Grew 8% Year-over-Year

    SaaS ARR Grew 16% Year-over-Year

    Model N, Inc. (NYSE:MODN), the leader in cloud revenue management solutions, today announced financial results for the first quarter of fiscal year 2024 ended December 31, 2023.

    "Our first quarter results beat expectations. We exceeded guidance for total revenue, subscription revenue, professional services revenue and adjusted EBITDA." said Jason Blessing, president and chief executive officer of Model N. "Our strong performance in Q1 was driven by a healthy contribution from all areas of the business. We signed new logos, closed one of our few remaining SaaS transition, saw numerous customer base expansions, and we also enjoyed solid renewals. As we look ahead, we continue to remain focused on driving profitable growth and I'm optimistic about the year ahead."

    Recent Company Highlights

    • Released the results of its sixth annual State of Revenue Report which identifies the top challenges and opportunities for pharmaceutical, med tech and high-tech manufacturers.
    • Launched Price Management, a new solution that enables semiconductor, electronic component, and high-tech manufacturers to manage price execution across direct and channel sales teams globally.

    First Quarter 2024 Financial Highlights

    • Revenues: Total revenues were $63.5 million, an increase of 7% from the first quarter of fiscal year 2023. Subscription revenues were $47.7 million, an increase of 8% from the first quarter of fiscal year 2023.
    • Gross Profit: Gross profit was $35.6 million, an increase of 8% from the first quarter of fiscal year 2023. Gross margin was 56% for the first quarter of fiscal year 2024 and 2023. Non-GAAP gross profit was $38.3 million, an increase of 6% from the first quarter of fiscal year 2023. Non-GAAP gross margin was 60% for the first quarter of fiscal year 2024 compared to 61% for the first quarter of fiscal year 2023. Subscription gross margin was 65% for the first quarter of fiscal year 2024 and 2023. Non-GAAP subscription gross margin was 68% compared to 69% for the first quarter of fiscal year 2023.
    • GAAP Loss and Non-GAAP Income from Operations: GAAP loss from operations was $2.7 million compared to loss from operations of $3.5 million for the first quarter of fiscal year 2023. Non-GAAP income from operations was $9.6 million, an increase of 9% from the first quarter of fiscal year 2023.
    • GAAP Net Loss: GAAP net loss was $1.8 million compared to a net loss of $4.1 million for the first quarter of fiscal year 2023. GAAP diluted net loss per share attributable to common stockholders was $0.05 based upon weighted average shares outstanding of 38.9 million compared to net loss per share of $0.11 for the first quarter of fiscal year 2023 based upon weighted average shares outstanding of 37.5 million.
    • Non-GAAP Net Income: Non-GAAP net income, was $10.9 million, an increase of 26% from the first quarter of fiscal year 2023. Non-GAAP net income per diluted share was $0.28 based upon diluted weighted average shares outstanding of 39.1 million compared to non-GAAP net income per diluted share of $0.22 for the first quarter of fiscal year 2023 based upon diluted weighted average shares outstanding of 38.7 million.
    • Adjusted EBITDA: Adjusted EBITDA was $9.9 million, an increase of 8% from the first quarter of fiscal year 2023. Adjusted EBITDA margin was 16% compared to 15% for the first quarter of fiscal year 2023.
    • SaaS ARR and SaaS Net Dollar Retention: SaaS ARR hit $134.8 million, representing growth of 16% year-over-year. Trailing 12-month SaaS net dollar retention was 115%.

    A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release.

    Guidance

    As of February 6, 2024, we are providing guidance for the second quarter of the fiscal year 2024 ending March 31, 2024 and the full fiscal year ending September 30, 2024.

    (in $ millions, except per share)

    Second Quarter Fiscal 2024

    Full Year Fiscal 2024

    Total revenues

    63.5 - 64.5

    260.5 - 263.5

    Subscription revenues

    48.5 - 49.0

    193.5 - 195.5

    Non-GAAP income from operations

    9.2 - 10.2

    46.9 - 49.9

    Non-GAAP net income per share

    0.24 - 0.27

    1.25 - 1.32

    Adjusted EBITDA

    9.0 - 10.0

    48.0 - 51.0

    Quarterly Results Conference Call

    Model N will host a conference call today at 2:00 PM Pacific Time (5:00 PM Eastern Time) to review the company's financial results for the first quarter fiscal year 2024 ended December 31, 2023. The conference call can be accessed by dialing 877-407-4018 from the United States or +1-201-689-8471 internationally. A live webcast and replay of the conference call can be accessed from the investor relations page of Model N's website at investor.modeln.com. Following the completion of the call through 11:59 p.m. ET on February 20, 2024, a telephone replay will be available by dialing 844-512-2921 from the United States or +1-412-317-6671, internationally, with recording access code 13743584.

    About Model N

    Model N is the leader in revenue optimization and compliance for pharmaceutical, medtech, and high-tech innovators. Our intelligent platform powers your digital transformation with integrated technology, data, analytics, and expert services that deliver deep insight and control.

    Our integrated cloud solution is proven to automate pricing, incentive, and contract decisions to scale business profitably and grow revenue. Model N is trusted across more than 120 countries by the world's leading pharmaceutical, medical technology, semiconductor, and high-tech companies, including Johnson & Johnson, AstraZeneca, Stryker, Seagate Technology, Broadcom, and Microchip Technology. For more information, visit www.modeln.com.

    Forward-Looking Statements

    This press release contains forward-looking statements including, among other things, statements regarding Model N's second quarter and full year fiscal 2024 financial results, Model N's profitability, future planned enhancements to our products and benefits from our products. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) delays in closing customer contracts; (ii) our ability to improve and sustain our sales execution; (iii) the timing of new orders and the associated revenue recognition; (iv) adverse changes in general economic or market conditions; (v) delays or reductions in information technology spending and resulting variability in customer orders from quarter to quarter; (vi) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our competitors; (vii) our ability to manage our growth effectively; (viii) acceptance of our applications and services by customers; (ix) success of new products; (x) the risk that the strategic initiatives that we may pursue will not result in significant future revenues; (xi) changes in health care regulation and policy and tax in the United States and worldwide; (xii) our ability to retain customers; and (xiii) adverse impacts on our business and financial condition due to macroeconomic and geopolitical factors, such as inflation, rising interests, pandemics, banking system instability and geopolitical conflicts. Further information on risks that could affect Model N's results is included in our filings with the Securities and Exchange Commission ("SEC"), including our most recent quarterly report on Form 10-Q and our annual report on Form 10-K for the fiscal year ended September 30, 2023, and any current reports on Form 8-K that we may file from time to time. Should any of these risks or uncertainties materialize, actual results could differ materially from expectations. Model N assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

    Non-GAAP Financial Measures

    We have provided in this release financial information that has not been prepared in accordance with accounting standards generally accepted in the United States of America ("GAAP"). We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.

    Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures below. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

    Our reported results include certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP subscription gross profit, non-GAAP subscription gross margin, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. Non-GAAP gross profit and subscription gross profit excludes stock-based compensation expenses and amortization of intangible assets as they are often excluded by other companies to help investors understand the operational performance of their business. Non-GAAP income from operations excludes stock-based compensation expense and amortization of intangible assets. Non-GAAP net income excludes stock-based compensation expense, amortization of intangible assets, and amortization of debt issuance costs. Additionally, stock-based compensation expense varies from period to period and from company to company due to such things as valuation methodologies and changes in stock price. Adjusted EBITDA is defined as net loss, adjusted for depreciation and amortization, stock-based compensation expense, interest expenses, interest income, other income (expenses), net, and provision for income taxes. Reconciliation tables are provided in this press release.

    SaaS ARR is defined as the annualized value of our SaaS revenue, which is derived by dividing the SaaS portion of our recurring subscription revenue for the quarter by the number of days in the quarter, and multiplying it by 365 to get an annualized number. SaaS Net Dollar Retention uses the same SaaS ARR calculations to measure the percentage change in SaaS ARR from customers that are in both the current period and the year-ago period. SaaS ARR that has been added from new customers that were not in the year-ago calculation is excluded from the SaaS Net Dollar Retention calculation. SaaS ARR and SaaS Net Dollar Retention should be viewed independently of revenue, deferred revenue, and remaining performance obligations, and are not intended to be a substitute for, or combined with, any of these items.

    Free cash flow is defined as net cash provided by operating activities less cash used for purchase of property plant and equipment.

    We have not reconciled guidance for non-GAAP financial measures to their most directly comparable GAAP measures because certain items that impact these measures are uncertain, out of our control and/or cannot be reasonably predicted or estimated, such as the difficulties of estimating certain items such as charges to stock-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

    Model N, Inc.

    Condensed Consolidated Balance Sheets

    (in thousands)

     

     

    As of December 31, 2023

     

    As of September 30, 2023

    Assets

     

     

     

    Current assets

     

     

     

    Cash and cash equivalents

    $

    303,375

     

     

    $

    301,355

     

    Funds held for customers

     

    84

     

     

     

    91

     

    Accounts receivable, net

     

    83,077

     

     

     

    61,761

     

    Prepaid expenses

     

    5,115

     

     

     

    5,922

     

    Other current assets

     

    9,893

     

     

     

    14,777

     

    Total current assets

     

    401,544

     

     

     

    383,906

     

    Property and equipment, net

     

    1,049

     

     

     

    1,242

     

    Operating lease right-of-use assets

     

    8,779

     

     

     

    9,885

     

    Goodwill

     

    65,665

     

     

     

    65,665

     

    Intangible assets, net

     

    28,450

     

     

     

    30,176

     

    Other assets

     

    9,687

     

     

     

    9,221

     

    Total assets

    $

    515,174

     

     

    $

    500,095

     

    Liabilities and Stockholders' Equity

     

     

     

    Current liabilities

     

     

     

    Accounts payable

    $

    3,423

     

     

    $

    3,888

     

    Customer funds payable

     

    84

     

     

     

    91

     

    Accrued employee compensation

     

    12,064

     

     

     

    14,645

     

    Accrued liabilities

     

    6,060

     

     

     

    8,700

     

    Operating lease liabilities, current portion

     

    4,254

     

     

     

    4,408

     

    Deferred revenue, current portion

     

    74,393

     

     

     

    61,745

     

    Total current liabilities

     

    100,278

     

     

     

    93,477

     

    Long-term liabilities

     

     

     

    Long term debt

     

    280,779

     

     

     

    280,358

     

    Operating lease liabilities, less current portion

     

    5,740

     

     

     

    6,755

     

    Other long-term liabilities

     

    4,034

     

     

     

    4,042

     

    Total long-term liabilities

     

    290,553

     

     

     

    291,155

     

    Total liabilities

     

    390,831

     

     

     

    384,632

     

    Stockholders' equity

     

     

     

    Common stock

     

    6

     

     

     

    6

     

    Additional paid-in capital

     

    425,127

     

     

     

    414,562

     

    Accumulated other comprehensive loss

     

    (2,132

    )

     

     

    (2,245

    )

    Accumulated deficit

     

    (298,658

    )

     

     

    (296,860

    )

    Total stockholders' equity

     

    124,343

     

     

     

    115,463

     

    Total liabilities and stockholders' equity

    $

    515,174

     

     

    $

    500,095

     

     

     

     

     

    Model N, Inc.

    Condensed Consolidated Statements of Operations

    (in thousands, except per share amounts)

     

     

    Three Months Ended December 31,

     

     

    2023

     

     

     

    2022

     

    Revenues

     

     

     

    Subscription

    $

    47,655

     

     

    $

    44,214

     

    Professional services

     

    15,836

     

     

     

    14,940

     

    Total revenues

     

    63,491

     

     

     

    59,154

     

    Cost of revenues

     

     

     

    Subscription

     

    16,711

     

     

     

    15,606

     

    Professional services

     

    11,158

     

     

     

    10,665

     

    Total cost of revenues

     

    27,869

     

     

     

    26,271

     

    Gross profit

     

    35,622

     

     

     

    32,883

     

    Operating expenses

     

     

     

    Research and development

     

    12,680

     

     

     

    12,764

     

    Sales and marketing

     

    13,960

     

     

     

    12,977

     

    General and administrative

     

    11,649

     

     

     

    10,691

     

    Total operating expenses

     

    38,289

     

     

     

    36,432

     

    Loss from operations

     

    (2,667

    )

     

     

    (3,549

    )

    Interest expense

     

    1,834

     

     

     

    1,434

     

    Interest income

     

    (3,540

    )

     

     

    (1,300

    )

    Other expenses (income), net

     

    117

     

     

     

    (65

    )

    Loss before income taxes

     

    (1,078

    )

     

     

    (3,618

    )

    Provision for income taxes

     

    720

     

     

     

    432

     

    Net loss

    $

    (1,798

    )

     

    $

    (4,050

    )

    Net loss per share:

     

     

     

    Basic and diluted

    $

    (0.05

    )

     

    $

    (0.11

    )

    Weighted average number of shares used in computing net loss per share:

     

     

     

    Basic and diluted

     

    38,901

     

     

     

    37,527

     

     

     

     

     

    Model N, Inc.

    Condensed Consolidated Statements of Cash Flows

    (in thousands)

     

     

    Three Months Ended December 31,

     

     

    2023

     

     

     

    2022

     

    Cash Flows from Operating Activities:

     

     

     

    Net loss

    $

    (1,798

    )

     

    $

    (4,050

    )

    Adjustments to reconcile net loss to net cash provided by operating activities:

     

     

     

    Depreciation and amortization

     

    1,960

     

     

     

    2,273

     

    Stock-based compensation

     

    10,565

     

     

     

    10,404

     

    Amortization of debt issuance costs

     

    421

     

     

     

    302

     

    Deferred income taxes

     

    72

     

     

     

    157

     

    Amortization of capitalized contract acquisition costs

     

    1,278

     

     

     

    1,196

     

    Other non-cash charges

     

    143

     

     

     

    56

     

    Changes in assets and liabilities, net of acquisition:

     

     

     

    Accounts receivable

     

    (21,330

    )

     

     

    (17,080

    )

    Prepaid expenses and other assets

     

    5,136

     

     

     

    43

     

    Accounts payable

     

    (437

    )

     

     

    (775

    )

    Accrued employee compensation

     

    (2,608

    )

     

     

    (10,630

    )

    Other current and long-term liabilities

     

    (3,604

    )

     

     

    (4,961

    )

    Deferred revenue

     

    12,307

     

     

     

    4,773

     

    Net cash provided by (used in) operating activities

     

    2,105

     

     

     

    (18,292

    )

    Cash Flows from Investing Activities:

     

     

     

    Purchases of property and equipment

     

    (99

    )

     

     

    (26

    )

    Net cash used in investing activities

     

    (99

    )

     

     

    (26

    )

    Cash Flows from Financing Activities:

     

     

     

    Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

     

    —

     

     

     

    27

     

    Net changes in customer funds payable

     

    (7

    )

     

     

    (469

    )

    Net cash used in financing activities

     

    (7

    )

     

     

    (442

    )

    Effect of exchange rate changes on cash and cash equivalents

     

    14

     

     

     

    (39

    )

    Net increase (decrease) in cash and cash equivalents

     

    2,013

     

     

     

    (18,799

    )

    Cash and cash equivalents

     

     

     

    Beginning of period

     

    301,446

     

     

     

    194,127

     

    End of period

    $

    303,459

     

     

    $

    175,328

     

     

     

     

     

    Model N, Inc.

    Reconciliation of GAAP to Non-GAAP Operating Results

    (in thousands, except per share amounts)

     

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

     

    2022

     

    Reconciliation from GAAP net loss to adjusted EBITDA

     

     

     

     

    GAAP net loss

     

    $

    (1,798

    )

     

    $

    (4,050

    )

    Reversal of non-GAAP items

     

     

     

     

    Stock-based compensation expense

     

     

    10,565

     

     

     

    10,404

     

    Depreciation and amortization

     

     

    1,960

     

     

     

    2,273

     

    Interest expense

     

     

    1,834

     

     

     

    1,434

     

    Interest income

     

     

    (3,540

    )

     

     

    (1,300

    )

    Other (income) expense, net

     

     

    117

     

     

     

    (65

    )

    Provision for income taxes

     

     

    720

     

     

     

    432

     

    Adjusted EBITDA

     

    $

    9,858

     

     

    $

    9,128

     

     

     

     

     

     

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

     

    2022

     

    Reconciliation from GAAP gross profit to non-GAAP gross profit

     

     

     

     

    GAAP gross profit

     

    $

    35,622

     

     

    $

    32,883

     

    Reversal of non-GAAP expenses

     

     

     

     

    Stock-based compensation (a)

     

     

    2,214

     

     

     

    2,477

     

    Amortization of intangible assets (b)

     

     

    427

     

     

     

    709

     

    Non-GAAP gross profit

     

    $

    38,263

     

     

    $

    36,069

     

    Percentage of revenue

     

     

    60.3

    %

     

     

    61.0

    %

     

     

     

     

     

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

     

    2022

     

    Reconciliation from GAAP subscription gross profit to non-GAAP subscription gross profit

     

     

     

     

    GAAP subscription gross profit

     

    $

    30,944

     

     

    $

    28,608

     

    Reversal of non-GAAP expenses

     

     

     

     

    Stock-based compensation (a)

     

     

    1,229

     

     

     

    1,337

     

    Amortization of intangible assets (b)

     

     

    427

     

     

     

    709

     

    Non-GAAP subscription gross profit

     

    $

    32,600

     

     

    $

    30,654

     

    Percentage of subscription revenue

     

     

    68.4

    %

     

     

    69.3

    %

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

     

    2022

     

    Reconciliation from GAAP professional services gross profit to non-GAAP professional services gross profit

     

     

     

     

    GAAP professional services gross profit

     

    $

    4,678

     

     

    $

    4,275

     

    Reversal of non-GAAP expenses

     

     

     

     

    Stock-based compensation (a)

     

     

    985

     

     

     

    1,140

     

    Non-GAAP professional services gross profit

     

    $

    5,663

     

     

    $

    5,415

     

    Percentage of professional services revenue

     

     

    35.8

    %

     

     

    36.2

    %

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

     

    2022

     

    Reconciliation from GAAP operating loss to non-GAAP operating income

     

     

     

     

    GAAP operating loss

     

    $

    (2,667

    )

     

    $

    (3,549

    )

    Reversal of non-GAAP expenses

     

     

     

     

    Stock-based compensation (a)

     

     

    10,565

     

     

     

    10,404

     

    Amortization of intangible assets (b)

     

     

    1,726

     

     

     

    2,008

     

    Non-GAAP operating income

     

    $

    9,624

     

     

    $

    8,863

     

     

     

     

     

     

    Numerator

     

     

     

     

    Reconciliation between GAAP net loss and non-GAAP net income

     

     

     

     

    GAAP net loss

     

    $

    (1,798

    )

     

    $

    (4,050

    )

    Reversal of non-GAAP expenses

     

     

     

     

    Stock-based compensation (a)

     

     

    10,565

     

     

     

    10,404

     

    Amortization of intangible assets (b)

     

     

    1,726

     

     

     

    2,008

     

    Amortization of debt issuance costs (c)

     

     

    421

     

     

     

    302

     

    Non-GAAP net income

     

    $

    10,914

     

     

    $

    8,664

     

     

     

     

     

     

    Denominator

     

     

     

     

    Reconciliation between GAAP net loss and non-GAAP net income per share

     

     

     

     

    Shares used in computing GAAP net loss per share:

     

     

     

     

    Basic and diluted

     

     

    38,901

     

     

     

    37,527

     

    Shares used in computing non-GAAP net income per share

     

     

     

     

    Basic

     

     

    38,901

     

     

     

    37,527

     

    Add: effect of shares for stock plan activity

     

     

    236

     

     

     

    622

     

    Add: effect of shares related to convertible senior notes

     

     

    —

     

     

     

    594

     

    Diluted

     

     

    39,137

     

     

     

    38,743

     

    GAAP net loss per share

     

     

     

     

    Basic and diluted

     

    $

    (0.05

    )

     

    $

    (0.11

    )

    Non-GAAP net income per share

     

     

     

     

    Basic

     

    $

    0.28

     

     

    $

    0.23

     

    Diluted

     

    $

    0.28

     

     

    $

    0.22

     

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

    2022

    Amortization of intangibles assets recorded in the statements of operations

     

     

     

     

    Cost of revenues

     

     

     

     

    Subscription

     

    $

    427

     

    $

    709

    Total amortization of intangibles assets in cost of revenue (b)

     

     

    427

     

     

    709

    Operating expenses

     

     

     

     

    Sales and marketing

     

     

    1,299

     

     

    1,299

    Total amortization of intangibles assets in operating expense (b)

     

     

    1,299

     

     

    1,299

    Total amortization of intangibles assets (b)

     

    $

    1,726

     

    $

    2,008

     

     

     

     

     

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

    2022

    Stock-based compensation recorded in the statements of operations

     

     

     

     

    Cost of revenues

     

     

     

     

    Subscription

     

    $

    1,229

     

    $

    1,337

    Professional services

     

     

    985

     

     

    1,140

    Total stock-based compensation in cost of revenue (a)

     

     

    2,214

     

     

    2,477

    Operating expenses

     

     

     

     

    Research and development

     

     

    1,719

     

     

    1,821

    Sales and marketing

     

     

    2,561

     

     

    2,388

    General and administrative

     

     

    4,071

     

     

    3,718

    Total stock-based compensation in operating expense (a)

     

     

    8,351

     

     

    7,927

    Total stock-based compensation (a)

     

    $

    10,565

     

    $

    10,404

     

     

    Three Months Ended December 31,

     

     

     

    2023

     

     

     

    2022

     

    Free cash flow

     

     

     

     

    Net cash provided by (used in) operating activities

     

    $

    2,105

     

     

    $

    (18,292

    )

    Purchases of property and equipment

     

     

    (99

    )

     

     

    (26

    )

    Free cash flow

     

    $

    2,006

     

     

    $

    (18,318

    )

    Use of Non-GAAP Financial Measures

    To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP measures of adjusted EBITDA, gross profit, gross margin, income from operations, net income, weighted average shares outstanding and net income per share, which are adjusted to exclude stock-based compensation expense, amortization of intangible assets, depreciation of fixed assets, amortization of debt issuance costs, and include dilutive shares where applicable. We believe these adjustments are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of our underlying operating results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance that are considered by management for the purpose of making operational decisions. In addition, these non-GAAP results are the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for operating loss, net loss or basic and diluted net loss per share prepared in accordance with generally accepted accounting principles in the United States. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.

    While a large component of our expenses incurred in certain periods, we believe investors may want to exclude the effects of these items in order to compare our financial performance with that of other companies and between time periods:

    (a)

    Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies.

    (b)

    Amortization of intangible assets resulted principally from acquisitions. Intangible asset amortization is a non-cash item. As such, we believe exclusion of these expenses provides for a better comparison of our operating results to prior periods and to our peer companies.

    (c)

    Amortization of debt issuance costs. We believe exclusion of these expenses provides for a better comparison of our operating results to prior periods and to our peer companies.

     

    View source version on businesswire.com: https://www.businesswire.com/news/home/20240206111657/en/

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