MobileIron Announces Strong Fourth Quarter 2018 Results

Delivers Record Revenue and non-GAAP Operating Results

Recurring Revenue Growth of 21% in Q4, Highest in 9 Quarters

15% Billings Growth

MOUNTAIN VIEW, Calif.–(BUSINESS WIRE)–MobileIron (NASDAQ:MOBL), the secure foundation for modern work, today
announced results for its fourth quarter and full year ended December
31, 2018.

Fourth Quarter 2018 Financial Highlights

  • Recurring revenue was $40.8 million, up 21% year-over-year.
  • Revenue was $54.1 million, up 10% year-over-year.
  • Billings were $69.5 million, up 15% year-over-year.
  • GAAP net loss per share was $0.07; non-GAAP net income per share was
    $0.03.
  • Cash generated in operating activities was $7.1 million.

Full Year 2018 Financial Highlights

  • Recurring revenue was $151.1 million, up 18% year-over-year.
  • Revenue was $193.2 million, up 7% year-over-year.
  • Billings were $223.3 million, up 11% year-over-year.
  • GAAP operating margin was -22.2%; non-GAAP operating margin was -2.2%
  • GAAP net loss per share was $0.42; non-GAAP net loss per share was
    $0.04.
  • Cash generated in operating activities was $14.2 million.

“In 2018 the team at MobileIron did an exceptional job driving improved
performance. Our steady execution and commitment to reinvigorate growth
has clearly paid off as we steadily increased our growth rate through
the year and achieved record non-GAAP operating income in each of the
last two quarters,” said Simon Biddiscombe, CEO, MobileIron. “The Zero
Trust threat landscape requires security that starts at the endpoint and
stretches seamlessly to the cloud services modern work relies on.
MobileIron delivers the most comprehensive security suite to ensure
valuable company data is not compromised. With a strong and cohesive
team and best-in-class products, I am confident that MobileIron has
resumed an upward trajectory and will continue our progress in 2019.”

Financial Outlook

The company is providing the following outlook for its first quarter
2019 (ending March 31, 2019):

  • Revenue is expected to be between $46 million and $49 million, growth
    of 5% to 12% year-over-year.
  • Non-GAAP gross margin is expected to be approximately 82%.
  • Non-GAAP operating expenses are expected to be between $45 million and
    $46 million.

The company is providing the following outlook for 2019 (ending December
31, 2019):

  • Revenue is expected to be between $205 million and $215 million,
    growth between 6% and 11% over 2018.
  • We expect ending ARR1 to grow by approximately 20% by year
    end.
  • We expect to generate non-GAAP operating profit in 2019.

Fourth Quarter 2018 Business Highlights

Milestones and Recognition

  • Named a Leader by Forrester Research in the Forrester Wave™: Unified
    Endpoint Management, Q4 2018 report. MobileIron garnered the highest
    possible score across 16 criteria in application security, product
    vision, and roadmap execution.
  • Appointed Rhonda Shantz as Chief Marketing Officer. Ms. Shantz brings
    over 25 years of experience driving revenue growth at cybersecurity
    and enterprise businesses including Centrify, Symantec and Rocketfuel.
  • Recognized by Google™ as a partner in its Android Enterprise
    Recommended program for Enterprise Mobility Management (EMM) providers.
  • Awarded 5 additional US patents for mobile security, bringing
    MobileIron’s total number of awarded patents to 82.
  • Released 42 major and 85 minor product releases for the full year
    2018, across our suite of solutions.

Platform

  • Released new versions of MobileIron Access, Cloud, Core, AppConnect,
    Email+ Docs@Work, Tunnel, and Web@Work.
  • Integrated with Aruba (HPE) and Cisco Security Connector to control
    network access.
  • Integrated with Cortado Workplace and DRACOON for file syncing and
    sharing.
  • Integrated with Fluid Mobility and Inpixon for location-based services.

All forward-looking non-GAAP financial measures contained in this
section exclude estimates for stock-based compensation expenses and
amortization of intangible assets. While a reconciliation of non-GAAP
guidance measures to corresponding GAAP measures is not available on a
forward-looking basis, the company has provided a reconciliation of GAAP
to non-GAAP financial measures in the financial statement tables
included in this press release for its fourth quarter of 2017 and 2018
and for fiscal year 2017 and 2018.

1Annual
Recurring Revenue (ARR).
MobileIron will transition from
reporting Annualized Recurring Revenue, which was defined as the
recurring revenue recognized during a quarter multiplied by four, to
reporting Annual Recurring Revenue per the definition and detail that
follows. ARR is a financial measure that we define as the annualized
value of all recurring revenue contracts active at the end of a
reporting period. ARR includes the annualized value of subscriptions and
the annualized value software support contracts related to perpetual
licenses active at the end of a reporting period and does not include
revenue reported as perpetual license or professional services in our
consolidated statement of operations. ARR should be viewed independently
of revenue, unearned revenue, and customer arrangements with termination
rights as ARR is an operating metric and is not intended to be combined
with or replace these items. ARR is not a forecast of future revenue and
can be impacted by contract start and end dates and renewal rates.

Conference Call and Webcast

MobileIron will report final results for the fourth quarter and fiscal
year 2018 on Thursday, February 7, 2019 after the close of the market
and host a conference call and live webcast at 1:30 p.m. Pacific Time
(4:30 p.m. ET) to discuss the company’s financial results and business
highlights. Interested parties may access the call by dialing
1-866-602-7050 in the U.S. or 1-409-216-6455 from international
locations (passcode 9796668). The live webcast will be available on the
MobileIron Investor Relations website at http://investors.mobileiron.com.
A replay will be available through the same link.

Safe Harbor Statement

This press release contains forward-looking statements that involve
risks and uncertainties, including, but not limited to, statements
regarding MobileIron’s revenue, operating expenses, cost structure, GAAP
and non-GAAP financial metrics, projected financial results, and trends
in MobileIron’s business and statements relating to the timing and
extent of any stock repurchases. There are a significant number of
factors that could cause actual results to differ materially from
statements made in this press release, including, but not limited to,
our limited operating history, quarterly fluctuations in our operating
results, one-time expenses, including restructuring charges,
seasonality, our need to develop new solutions and enhancements to
compete in rapidly evolving markets, product defects, strength of
intellectual property portfolio, customer adoption, competitive
pressures, billings type mix shift, our ability to scale, our ability to
recruit and retain key personnel, and the quality of our support
services.

Additional information on potential factors that could affect
MobileIron’s financial results is included in our SEC filings, including
our reports on Forms 10-K, 10-Q and 8-K and other filings that we make
with the SEC from time to time. MobileIron does not assume any
obligation to update the forward-looking statements provided to reflect
events that occur or circumstances that exist after the date on which
they were made.

Disclosure Information

MobileIron uses the investor relations section on its website as the
means of complying with its disclosure obligations under Regulation FD.
Accordingly, we recommend that investors should monitor MobileIron’s
investor relations website in addition to following MobileIron’s press
releases, SEC filings, and public conference calls and webcasts.

About MobileIron

MobileIron provides the secure foundation for modern work. For more
information, please visit www.mobileiron.com.

“MobileIron” is a registered trademark of MobileIron, Inc. in the United
States and other countries. Trade names, trademarks, and service marks
of other companies that are used in this press release belong to their
respective owners.

Financial Results

       
MOBILEIRON, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2017 AND 2018
(Amounts in thousands)
(Unaudited)
 
  December 31, 2017   December 31, 2018

Assets

Current assets:
Cash and cash equivalents (1) $ 85,833 $ 104,613
Short-term investments (1) 6,797 1,000
Accounts receivable – net 50,629 60,994
Deferred commissions – current 9,285 8,265
Prepaid expenses and other current assets   5,510     8,367  
Total current assets 158,054 183,239
Property and equipment – net 8,812 7,046
Deferred commissions – noncurrent 9,123 9,066
Goodwill 5,475 5,475
Other assets   2,976     5,561  
Total assets $ 184,440   $ 210,387  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 1,369 $ 2,154
Accrued expenses 25,070 27,347
Unearned revenue – current 55,105 74,177
Customer arrangements with termination rights   19,546     19,367  
Total current liabilities 101,090 123,045
Unearned revenue – noncurrent 21,917 31,660
Other long-term liabilities   1,881     1,565  
Total liabilities   124,888     156,270  
Stockholders’ equity:
Common stock 10 11
Additional paid-in capital 420,525 462,004
Treasury stock (3,831 )
Accumulated deficit   (360,983 )   (404,067 )
Total stockholders’ equity   59,552     54,117  
Total liabilities and stockholders’ equity $ 184,440   $ 210,387  
 
 
(1) Total cash and cash equivalents, short-term and long-term
investments
$ 92,630 $ 105,613
 
       
MOBILEIRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 AND 2018
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended
December 31, 2017 December 31, 2018
Revenue:
License $ 18,306 $ 18,011
Cloud services 10,617 14,533
Software support and services   20,140     21,579  
Total revenue   49,063     54,123  
Cost of revenue:
License (2) 514 1,795
Cloud services (1) 2,335 4,095
Software support and services (1)   4,369     4,673  
Total cost of revenue   7,218     10,563  
Gross profit   41,845     43,560  
Operating expenses:
Research and development (1) 18,910 19,975
Sales and marketing (1) 23,079 23,335
General and administrative (1) 6,853 7,800
Restructuring charge   549      
Total operating expenses   49,391     51,110  
Operating loss (7,546 )

(7,550

)

Other income (expense) – net   287     645  
Loss before income taxes   (7,259 )   (6,905 )
Income tax expense   261     304  
Net loss $ (7,520 ) $ (7,209 )
Net loss per share, basic and diluted $ (0.08 ) $ (0.07 )
Weighted-average shares used to compute net loss per share, basic
and diluted
  96,574     105,967  
 
 
(1) Includes stock-based compensation expense as follows:
Cost of revenue
License $ $
Cloud services 262 468
Software support and professional services 651 866
Research and development 3,474 4,201
Sales and marketing 2,047 2,123
General and administrative   1,048     2,285  
$ 7,482   $ 9,943  
 
(2) Includes amortization of intangible assets as follows:
Cost of revenue
License $ 100   $  
$ 100   $  
 
       
MOBILEIRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMEBER 31, 2017 AND 2018
(Amounts in thousands, except for per share data)
(Unaudited)
Twelve Months Ended
December 31, 2017 December 31, 2018
Revenue:
License $ 64,035 $ 59,338
Cloud services 38,728 50,714
Software support and services   76,995     83,140  
Total revenue   179,758     193,192  
Cost of revenue:
License (2) 2,203 3,270
Cloud services (1) 8,847 12,719
Software support and services (1) 19,176 18,933
Restructuring charge   311      
Total cost of revenue   30,537     34,922  
Gross profit   149,221     158,270  
Operating expenses:
Research and development (1) 75,350 78,047
Sales and marketing (1) 96,807 94,204
General and administrative (1) 28,091 28,880
Litigation settlement charge 1,143
Restructuring charge   1,038      
Total operating expenses   202,429     201,131  
Operating loss (53,208 ) (42,861 )
Other income (expense) – net   988     1,124  
Loss before income taxes   (52,220 )   (41,737 )
Income tax expense   1,142     1,347  
Net loss $ (53,362 ) $ (43,084 )
Net loss per share, basic and diluted $ (0.57 ) $ (0.42 )
Weighted-average shares used to compute net loss per share, basic
and diluted
  93,770     102,527  
 
 

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

Cost of revenue
License $ $
Cloud services 837 1,530
Software support and professional services 2,935 3,476
Research and development 14,520 15,981
Sales and marketing 8,659 9,464
General and administrative   6,780     7,985  
$ 33,731   $ 38,436  
 
(2) Includes amortization of intangible assets as follows:
Cost of revenue
License $ 545   $ 100  
$ 545   $ 100  
 
       
MOBILEIRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2017 AND 2018
(Amounts in thousands)
(Unaudited)
Twelve Months Ended
December 31, 2017 December 31, 2018
 
Cash flows from operating activities:
Net loss $ (53,362 ) $ (43,084 )
Adjustments to reconcile net loss to net cash used in operating
activities:
Stock-based compensation expense 33,731 38,436
Depreciation 3,389 3,846
Amortization of intangible assets 545 100
Amortization (accretion) of premium on investment securities (57 ) (50 )
Provision for doubtful accounts 149 199
Loss (gain) on disposal of equipment (16 ) 25
Changes in operating assets and liabilities:
Accounts receivable (4,916 ) (10,564 )
Deferred commissions 329 1,078
Other current and noncurrent assets (1,006 ) (5,535 )
Accounts payable 439 715
Unearned revenue 16,434 28,815
Customer arrangements with termination rights 5,348

(179

)
Accrued expenses and other long-term liabilities   2,029    

355

 
Net cash provided by operating activities   3,036     14,157  
 
Cash flows from investing activities:
Purchase of property and equipment (6,454 ) (1,956 )
Maturities of investment securities 38,015 15,900
Purchases of investment securities   (8,570 )   (10,053 )
Net cash provided by investing activities   22,991     3,891  
 
Cash flows from financing activities:
Proceeds from employee stock purchase plan 4,798 4,424
Proceeds from exercise of stock options 4,114 6,514
Taxes paid for net settlement of equity awards (3,149 ) (4,862 )
Amounts withheld for net settlement of equity awards (1,513 )
Repurchases of common stock       (3,831 )
Net cash provided by financing activities   5,763     732  
 
Net change in cash and cash equivalents 31,790 18,780
Cash and cash equivalents at beginning of period   54,043     85,833  
Cash and cash equivalents at end of period $ 85,833   $ 104,613  
 

Non-GAAP Financial Measures and Reconciliations

To supplement our financial results presented on a U.S. GAAP basis, we
provide investors with certain non-GAAP financial measures, including
billings, non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating income (loss), non-GAAP operating margin, non-GAAP net income
(loss), non-GAAP net income (loss) per share and free cash flow. These
non-GAAP financial measures exclude stock-based compensation,
amortization of intangible assets, a litigation settlement charge, and
restructuring charges.

Stock-based compensation expenses: In our
non-GAAP financial measures, we have excluded the effect of stock-based
compensation expenses. We exclude stock-based compensation expense
because it is non-cash in nature and excluding this expense provides
meaningful supplemental information regarding our operational
performance. In particular, because of varying available valuation
methodologies, subjective assumptions and the variety of award types
that companies can use under FASB ASC Topic 718, we believe that
providing non-GAAP financial measures that exclude this expense allows
investors the ability to make more meaningful comparisons between
MobileIron operating results and those of other companies. Stock-based
compensation expenses will recur in future periods.

Amortization of intangible assets: In our
non-GAAP financial measures, we have excluded the effect of the
amortization of intangible assets. Amortization of intangible assets can
be significantly affected by the timing and size of our acquisitions.
Beginning our second quarter ended June 30, 2018, we no longer have
amortizing intangible assets.

Litigation settlement charges: In our
non-GAAP financial measures, we have excluded the charge for the cost of
the settlement of our shareholder litigation. While it is possible that
we will have material litigation-related charges in the future, we do
not expect it to be a consistently recurring expense.

Restructuring charges: In our non-GAAP
financial measures, we have excluded the effect of severance and other
expenses related to a reduction in our workforce. Restructuring charges
may recur in the future; however, the timing and amounts are difficult
to predict.

Non-GAAP gross profit, non-GAAP gross margin,
non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss,
and non-GAAP net loss per share:
We believe that the exclusion of
stock-based compensation expense, the amortization of intangible assets,
the litigation settlement charge, and restructuring charges from various
non-GAAP financial metrics such as gross profit, gross margin, operating
income (loss), operating margin, net income (loss), and net income
(loss) per share provides useful measures for management and investors.
Stock-based compensation, restructuring charges, and the amortization of
intangible assets have been and can continue to be inconsistent in
amount from period to period. Other than in 2017, we have not
historically had a material litigation-related settlement charge. While
it is possible that we will have material litigation settlement charges
in the future, we do not expect it to be a consistently recurring
expense. We believe the inclusion of these items makes it difficult to
compare periods and understand the growth and performance of our
business. In addition, we evaluate our business performance and
compensate management based in part on these non-GAAP measures. There
are limitations in using non-GAAP financial measures because the
non-GAAP financial measures are not prepared in accordance with GAAP,
may be different from non-GAAP financial measures used by our
competitors and exclude expenses that may have a material impact on our
reported financial results. Further, stock-based compensation expense
has been and will continue to be for the foreseeable future a
significant recurring expense in our business and an important part of
the compensation provided to our employees.

Billings and free cash flow: Our non-GAAP
financial measures also include: billings, which we define as
total revenue plus the change in unearned revenue plus the change in
customer arrangements in termination rights minus the change in unbilled
accounts receivable in a period; and free cash flow, which we
define as cash provided by (used in) operating activities less the
amount of property and equipment purchased. We consider billings
to be a useful metric for management and investors because subscription
billings and software support and services billings drive
unearned revenue and customer arrangements with termination rights,
which are important indicators of future revenue. There are limitations
related to the use of billings. First, billings include
amounts that have not yet been recognized as revenue. Changes in
contract duration and the timing of large transactions, for example, may
significantly impact quarterly billings, but have little impact on
revenue. Second, our calculation of billings may be different
from other companies that report similar financial measures. We
compensate for these limitations by evaluating billings together
with revenue calculated in accordance with GAAP, including recurring
revenue. Management believes that information regarding free cash flow
provides investors with an important perspective on the cash available
to invest in our business and fund ongoing operations. However, our
calculation of free cash flow may not be comparable to similar measures
used by other companies.

We believe these non-GAAP financial measures are helpful in
understanding our past financial performance and our future results. Our
non-GAAP financial measures are not meant to be considered in isolation
or as a substitute for comparable GAAP measures and should be read only
in conjunction with our consolidated financial statements prepared in
accordance with GAAP. Our management regularly uses our supplemental
non-GAAP financial measures internally to understand, manage and
evaluate our business, and make operating decisions. These non-GAAP
measures are among the primary factors management uses in planning for
and forecasting future periods. Compensation of our executives is based
in part on the performance of our business using certain of these
non-GAAP measures.

     
MOBILEIRON, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in thousands, except for per share data and percentages)
(Unaudited)
Three Months Ended
December 31, 2017 December 31, 2018
 

Non-GAAP gross profit reconciliation:

GAAP gross profit $ 41,845 $ 43,560
Stock-based compensation expenses 913 1,334
Amortization of intangible assets   100      
Non-GAAP gross profit $ 42,858   $ 44,894  
 

Non-GAAP gross margin reconciliation:

GAAP gross margin: GAAP gross profit over GAAP total revenue 85.3 % 80.5 %
GAAP to non-GAAP gross margin adjustments   2.1   %   2.4   %
Non-GAAP gross margin: Non-GAAP gross profit over non-GAAP total
revenue
  87.4   %   82.9   %
 

Non-GAAP operating income (loss)
reconciliation:

GAAP operating loss $ (7,546 ) $ (7,550 )
Stock-based compensation expenses 7,482 9,943
Amortization of intangible assets 100
Restructuring charge   549      
Non-GAAP operating income $ 585   $ 2,393  
 

Non-GAAP operating margin
reconciliation:

GAAP operating margin: GAAP operating loss over GAAP total revenue (15.4 ) % (13.9 ) %
GAAP to non-GAAP operating margin adjustments   16.6   %   18.3   %
Non-GAAP operating margin: Non-GAAP operating income over non-GAAP
total revenue
  1.2   %   4.4   %
 

Non-GAAP net income (loss)
reconciliation:

GAAP net loss $ (7,520 ) $ (7,209 )
Stock-based compensation expenses 7,482 9,943
Amortization of intangible assets 100
Restructuring charge   549      
Non-GAAP net income $ 611   $ 2,734  
 
       
MOBILEIRON, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in thousands, except for per share data and percentages)
(Unaudited)
  Three Months Ended
  December 31, 2017   December 31, 2018

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

GAAP net loss per share $ (0.08 ) $ (0.07 )
Stock-based compensation expenses per share 0.08 0.10
Amortization of intangible assets
Restructuring charge   0.01      
Non-GAAP net income per share $ 0.01   $ 0.03  
 

Billings reconciliation:

Total revenue $ 49,063 $ 54,123
Total unearned revenue, end of period 77,022 105,837
Less: Total unearned revenue, beginning of period (68,242 ) (92,974 )
Total customer arrangements with termination rights, end of period 19,546 19,367
Less: Total customer arrangements with termination rights, beginning
of period
(17,272 ) (16,506 )
Total unbilled accounts receivable, end of period (3,435 ) (1,974 )
Less: Total unbilled accounts receivable, beginning of period   3,636     1,608  
Total change   11,255     15,358  
Billings $ 60,318   $ 69,481  
 

Free cash flow reconciliation:

Cash provided by operating activities $ 10,399 $ 7,062
Purchase of property and equipment   (1,408 )   (576 )
Free cash flow $ 8,991   $ 6,486  
 

Contacts

Erik Bylin
MobileIron
ir@mobileiron.com
650-282-7555

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