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Press Release Details

New Relic Announces Third Quarter Fiscal Year 2022 Results

February 8, 2022

Third quarter revenue increased 22% year-over-year to $204 million
Quarterly GAAP operating loss of $(52) million; Non-GAAP operating loss of $(11) million

SAN FRANCISCO--(BUSINESS WIRE)-- New Relic, Inc. (NYSE: NEWR), the observability company, today announced financial results for the third quarter of fiscal year 2022.

“In our third quarter we re-accelerated revenue sequentially and year-over-year, surpassing the high end of our guidance,” said New Relic CEO Bill Staples. “We’re executing well against our strategic priorities: we’ve successfully migrated 80% of our business to a consumption model one quarter ahead of schedule, and we’re growing the total number of paid accounts getting value from New Relic One. We are focused on delivering on our mission of making observability a daily, data-driven practice for millions of engineers across the entire software lifecycle.”

Third Quarter Fiscal Year 2022 Financial Highlights:

  • Revenue of $204 million, compared to $166 million for the third quarter of fiscal 2021, a year-over-year increase of 22%.
  • GAAP gross margin of 66% and non-GAAP gross margin of 68%.
  • GAAP loss from operations was $(52) million, compared to $(48) million for the third quarter of fiscal 2021.
  • Non-GAAP loss from operations was $(11) million, compared to $(8.4) million for the third quarter of fiscal 2021.
  • GAAP net loss attributable to New Relic per basic and diluted share was $(0.96), compared to a loss of $(0.88) per basic and diluted share for the third quarter of fiscal 2021.
  • Non-GAAP net loss attributable to New Relic per diluted share was $(0.18), compared to $(0.14) per diluted share for the third quarter of fiscal 2021.
  • Cash used in operating activities was $(19) million and free cash flow was $(23) million for the third quarter of fiscal 2022.
  • Cash, cash equivalents and short-term investments were $780 million at the end of the third quarter of fiscal 2022, compared with $784 million at the end of the second quarter of fiscal 2022.
  • Remaining performance obligations were $610 million at the end of the third quarter of fiscal 2022, compared with $597 million at the end of the second quarter of fiscal 2022. This represents the aggregate unrecognized transaction price of remaining performance obligations as of each of December 31, 2021 and September 30, 2021.

Key Operating Metrics*:

 

Dec-20

Mar-21

Jun-21

Sep-21

Dec-21

3Q21

4Q21

1Q22

2Q22

3Q22

Active Customer Accounts

13,900

14,100

14,100

14,300

14,600

Active Customer Accounts >$100,000

913

945

964

1,011

1,064

Percentage of Revenue from Active Customer Accounts >$100,000

78%

79%

79%

81%

81%

Net Revenue Retention Rate (NRR)

115%

112%

111%

112%

116%

* Beginning with the first quarter of fiscal 2022, we introduced new key operating metrics and changed the methodology we use to count customer accounts. Total customer accounts are now aggregated at the parent hierarchy level and include any account for which we have recognized any revenue in the fiscal quarter. Please refer to the appendix for the definitions of these new key operating metrics.

Recent Business Highlights:

  • Appointed Takeshi Numoto to Board of Directors.
  • Named an Inc. ‘Best Led Company’.
  • Launched New Relic CodeStream, a first-of-its-kind developer experience that brings observability and code collaboration into the most widely used Integrated Development Environments (IDE).

Outlook:

  • Fourth Quarter Fiscal 2022 Outlook:
    • Revenue between $204 million and $206 million, representing year-over-year growth of approximately 18% and 19%.
    • Non-GAAP loss from operations between $(12) million and $(14) million.
    • Non-GAAP net loss attributable to New Relic per diluted share between $(0.19) and $(0.22).
  • Full-Year Fiscal 2022 Outlook:
    • Revenue between $784 million and $786 million, representing year-over-year growth of approximately 17% and 18%.
    • Non-GAAP loss from operations between $(45) million and $(47) million.
    • Non-GAAP net loss attributable to New Relic per diluted share between $(0.72) and $(0.75).

New Relic has not reconciled its expectations as to non-GAAP loss from operations or non-GAAP net loss per diluted share to their most directly comparable GAAP measures as a result of uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation expense, lawsuit litigation cost and other expense, employer payroll taxes on equity incentive plans and gain or loss from lease modification. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to New Relic’s results computed in accordance with GAAP.

Conference Call and Investor Letter Details:

  • What: New Relic financial results for the third quarter of fiscal year 2022 and outlook for the fourth quarter and the full year of fiscal 2022.
  • When: February 8, 2022 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time)
  • Dial in: To access the call in the United States, please dial (844) 757-5730, and for international callers, please dial (412) 542-4120. Callers may provide confirmation number 10162359 to access the call more quickly, and are encouraged to dial into the call at least 15 minutes prior to the start to prevent any delay in joining.
  • Webcast: http://ir.newrelic.com (live and replay)
  • Investor Letter: Available at http://ir.newrelic.com
  • Replay: Following the completion of the call through 11:59 PM Eastern Time on February 15, 2022, a telephone replay will be available by dialing (877) 344-7529 from the United States or (412) 317-0088 internationally with conference ID 5269356.

About New Relic

As a leader in observability, New Relic empowers engineers with a data-driven approach to planning, building, deploying and running great software. New Relic One delivers the only unified data platform that empowers engineers to get all telemetry—metrics, events, logs and traces—paired with the most powerful full stack analysis tools to help engineers get past the ‘what’ to uncover the ‘why.’ Delivered through the industry’s only consumption pricing that’s intuitive and predictable, New Relic gives engineers more value for the money by helping improve planning cycle times, decrease change failure rates, accelerate release frequency and reduce mean time to resolution. This helps the world’s leading brands including AB InBev, Australia Post, Banco Inter, Chegg, Gojek, REI, Signify Health, TopGolf, World Fuel Services (WFS) and Zalora improve uptime and reliability, drive operational efficiency and deliver exceptional customer experiences that fuel innovation and growth. Uncover the ‘why’ with New Relic at newrelic.com.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the federal securities laws, including but not limited to statements regarding: New Relic’s future financial performance, including its outlook on financial results for the fourth quarter and the full year of fiscal 2022, such as revenue, non-GAAP loss from operations, non-GAAP net loss attributable to New Relic per diluted share, accelerating revenue growth and non-GAAP profitability in fiscal 2023, relationship between data ingest, profitable growth and value creation in the long-term, non-GAAP gross margins in the fourth quarter and full year fiscal 2022, completion of New Relic’s transition to the cloud over the next two years and impact on gross margins, potential trends in commitments and consumption over commitments going forward, anticipation of 25% market growth rates in the intermediate term, data ingest trends in the intermediate term, non-GAAP gross margin expectations and dependence on mix of users and data, New Relic’s competitive advantage obtained by its new data-centric approach, New Relic’s unique positioning to help developers and engineers communicate about relevant data sets, expectation that near term investments will improve internal execution efficiency, anticipated non-cash commission expense in the fourth quarter fiscal 2022, future plans to release a new infrastructure monitoring solution, expected increase capacity and focus across sales and marketing and research and development teams on improving consumption rates, anticipation of a new fiscal year plan, steady improvements in profitability, and New Relic’s plans for investor day in May 2022. These forward-looking statements are based on New Relic’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause New Relic’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, New Relic’s ability to determine optimal prices for its products and the potential challenges presented by New Relic’s evolving pricing models; the effect of the COVID-19 pandemic on New Relic’s business and on global economies and financial markets generally; New Relic’s ability to generate sufficient revenue to achieve and sustain profitability, particularly in light of its significant ongoing expenses; New Relic’s short operating history in an evolving industry; New Relic’s ability to manage its significant recent growth; the dependence of New Relic’s business on its customers remaining on its platform and increasing their spend with New Relic; New Relic’s ability to develop enhancements to its products, increase adoption and usage of its products and introduce new products that achieve market acceptance; the dependence on customers expanding their use of New Relic’s products beyond the current predominant use cases; New Relic’s ability to expand its marketing and sales capabilities and increase sales of its solutions; privacy concerns, including changes in privacy laws and regulations, which could result in additional cost and liability to New Relic or inhibit sales; New Relic’s ability to effectively compete in intensely competitive markets and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs, requirements or preferences; fluctuation of New Relic’s quarterly results; New Relic’s dependence on lead generation strategies to drive sales and revenue; interruptions or performance problems associated with New Relic’s technology and infrastructure; New Relic’s dependence on SaaS technologies and related services from third parties; defects or disruptions in New Relic’s products; estimates or judgments relating to New Relic’s critical accounting policies; the expense and complexity of New Relic’s ongoing and planned investments in cloud hosting providers and expenditures on transitioning its services and customers from its data center hosting facilities to public cloud providers; risks associated with international operations; New Relic’s ability to protect its intellectual property rights; risks related to the acquisition and integration of businesses or technologies; risks related to sales to government entities and highly regulated organizations; certain risks associated with incurring indebtedness, including risks related to servicing New Relic’s convertible senior notes and related capped call transactions; and other “Risk Factors” set forth in New Relic’s most recent filings with the Securities and Exchange Commission (the “SEC”).

Further information on these and other factors that could affect New Relic’s financial results and the forward-looking statements in this press release and in the earnings call referencing this press release is included in the filings New Relic makes with the SEC from time to time, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and subsequent filings. Copies of these documents may be obtained by visiting New Relic’s Investor Relations website at http://ir.newrelic.com or the SEC’s website at www.sec.gov.

All information provided in this press release and in the earnings call is as of the date hereof and New Relic assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Non-GAAP Financial Measures

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

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

New Relic defines non-GAAP loss from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net loss attributable to New Relic, non-GAAP net loss attributable to New Relic per diluted share and non-GAAP net loss attributable to New Relic per basic share as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense, (2) amortization of stock-based compensation capitalized in software development costs, (3) the amortization of purchased intangibles, (4) employer payroll tax expense on equity incentive plans, (5) amortization of debt discount and issuance costs, (6) the transaction costs related to acquisitions, (7) lawsuit litigation cost and other expense, (8) gain or loss from lease modification, (9) adjustment to redeemable non-controlling interest, and (10) restructuring charges. Non-GAAP net loss per basic and diluted share is calculated as non-GAAP net loss attributable to New Relic divided by weighted-average shares used to compute net loss attributable to New Relic per share, basic and diluted, with the number of weighted-average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with the 0.50% Convertible Senior Notes due 2023 issued in May 2018. New Relic defines free cash flow as GAAP cash from operations, minus capital expenditures and minus capitalized software. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

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

Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs. New Relic utilizes share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Amortization of purchased intangibles. New Relic views amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period.

Employer payroll tax expense on equity incentive plans. New Relic excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of New Relic’s common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of New Relic’s business.

Amortization of debt discount and issuance costs. In May 2018, New Relic issued $500.25 million of convertible senior notes due in 2023, which bear interest at an annual fixed rate of 0.50%. The effective interest rate of the convertible senior notes was approximately 5.74%. Effective April 1, 2021 New Relic adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity. As a result of the adoption, the debt conversion option and debt issuance costs previously attributable to the equity component are no longer presented in equity. Similarly, the debt discount, which was equal to the carrying value of the embedded conversion feature upon issuance, is no longer amortized into income as interest expense over the life of the instrument. The debt issuance costs are amortized as interest expense. The expense for the amortization of debt issuance costs is a non-cash item, and New Relic believes the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.

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

Lawsuit litigation cost and other expense. New Relic may from time to time incur charges or benefits related to litigation that are outside of the ordinary course of New Relic’s business. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic’s business and because of the singular nature of the claims underlying the matter.

Gain or loss from lease modification. New Relic may incur a gain or loss from modification related to lease agreements. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic’s business and because of the singular nature of benefit or charge from such events.

Adjustment to redeemable non-controlling interest. New Relic adjusts the value of redeemable non-controlling interest in connection with its joint venture in New Relic K.K. New Relic believes it is useful to exclude the adjustment to redeemable non-controlling interest because it may not be indicative of future operating results and that investors benefit from an understanding of the company’s operating results without giving effect to this adjustment.

Restructuring charges. In April 2021, New Relic commenced a restructuring plan to realign its cost structure to better reflect significant product and business model innovation over the past 12 months. As a result of the restructuring plan, New Relic incurred charges of approximately $13.0 million for employee terminations and other costs associated with the restructuring plan. Most of these charges consisted of cash expenditures and stock-based compensation expense and were recognized in the first quarter of fiscal 2022. New Relic believes it is appropriate to exclude the restructuring charges because it is not indicative of its future operating results.

Anti-dilutive impact of capped call transactions. In connection with the issuance of its convertible senior notes due in 2023, New Relic entered into capped call transactions to offset potential dilution from the embedded conversion feature in the notes. Although New Relic cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, New Relic does reflect the anti-dilutive impact of the capped call transactions in non-GAAP net loss attributable to New Relic per share, basic and diluted, to provide investors with useful information in evaluating the financial performance of the company on a per share basis.

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

Operating Metrics

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

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

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

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

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

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

Condensed Consolidated Statements of Operations
(In thousands, except per share data; unaudited)

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue

$

203,591

 

$

166,340

 

$

579,769

 

$

494,979

 

Cost of revenue

 

68,793

 

 

45,968

 

 

192,319

 

 

124,439

 

Gross profit

 

134,798

 

 

120,372

 

 

387,450

 

 

370,540

 

Operating expenses:
Research and development

 

53,362

 

 

45,773

 

 

153,460

 

 

131,245

 

Sales and marketing

 

97,723

 

 

92,392

 

 

293,603

 

 

266,906

 

General and administrative

 

35,614

 

 

30,249

 

 

113,193

 

 

89,481

 

Total operating expenses

 

186,699

 

 

168,414

 

 

560,256

 

 

487,632

 

Loss from operations

 

(51,901

)

 

(48,042

)

 

(172,806

)

 

(117,092

)

Other income (expense):
Interest income

 

575

 

 

1,734

 

 

2,237

 

 

6,735

 

Interest expense

 

(1,228

)

 

(6,229

)

 

(3,682

)

 

(18,549

)

Other expense

 

(268

)

 

(811

)

 

(647

)

 

(1,810

)

Loss before income taxes

 

(52,822

)

 

(53,348

)

 

(174,898

)

 

(130,716

)

Income tax provision

 

763

 

 

564

 

 

816

 

 

1,276

 

Net loss

$

(53,585

)

$

(53,912

)

$

(175,714

)

$

(131,992

)

Net loss and adjustment attributable to redeemable non-controlling interest

$

(9,121

)

$

286

 

$

(19,175

)

$

1,059

 

Net loss attributable to New Relic

$

(62,706

)

$

(53,626

)

$

(194,889

)

$

(130,933

)

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

$

(0.96

)

$

(0.88

)

$

(3.04

)

$

(2.16

)

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

 

64,983

 

 

61,209

 

 

64,203

 

 

60,562

 

 
Condensed Consolidated Balance Sheets
(In thousands, except par value; unaudited)
 
December 31, 2021 March 31, 2021
Assets
Current assets:
Cash and cash equivalents

$

245,827

 

$

240,821

 

Short-term investments

 

533,952

 

 

575,254

 

Accounts receivable, net of allowances of $2,701 and $2,633 respectively

 

177,080

 

 

174,027

 

Prepaid expenses and other current assets

 

24,935

 

 

21,944

 

Deferred contract acquisition costs

 

27,027

 

 

36,210

 

Total current assets

 

1,008,821

 

 

1,048,256

 

Property and equipment, net

 

73,432

 

 

91,308

 

Restricted cash

 

5,775

 

 

5,642

 

Goodwill

 

163,677

 

 

144,253

 

Intangible assets, net

 

17,928

 

 

12,986

 

Deferred contract acquisition costs, non-current

 

14,789

 

 

32,579

 

Lease right-of-use assets

 

51,718

 

 

57,425

 

Other assets, non-current

 

5,338

 

 

6,170

 

Total assets

$

1,341,478

 

$

1,398,619

 

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

$

25,874

 

$

24,171

 

Accrued compensation and benefits

 

37,061

 

 

37,196

 

Other current liabilities

 

24,253

 

 

19,174

 

Deferred revenue

 

307,890

 

 

373,594

 

Lease liabilities

 

9,594

 

 

7,886

 

Total current liabilities

 

404,672

 

 

462,021

 

Convertible senior notes, net

 

497,072

 

 

449,380

 

Lease liabilities, non-current

 

52,328

 

 

59,924

 

Deferred revenue, non-current

 

150

 

 

1,674

 

Other liabilities, non-current

 

27,344

 

 

8,256

 

Total liabilities

 

981,566

 

 

981,255

 

Redeemable non-controlling interest

 

22,564

 

 

3,389

 

Stockholders’ equity:
Common stock, $0.001 par value

 

66

 

 

64

 

Treasury stock - at cost (260 shares)

 

(263

)

 

(263

)

Additional paid-in capital

 

1,068,297

 

 

1,001,309

 

Accumulated other comprehensive income

 

(2,957

)

 

(19

)

Accumulated deficit

 

(727,795

)

 

(587,116

)

Total stockholders’ equity

 

337,348

 

 

413,975

 

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

$

1,341,478

 

$

1,398,619

 

 
Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited)

Nine Months Ended December 31,

 

2021

 

 

 

2020

 

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

$

(194,889

)

$

(130,933

)

Net loss and adjustment attributable to redeemable non-controlling interest

$

19,175

 

$

(1,059

)

Net loss:

$

(175,714

)

$

(131,992

)

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

 

66,787

 

 

66,315

 

Stock-based compensation expense

 

117,549

 

 

103,044

 

Amortization of debt discount and issuance costs

 

1,766

 

 

16,632

 

Other

 

(204

)

 

1,812

 

Changes in operating assets and liabilities:
Accounts receivable, net

 

(3,053

)

 

3,586

 

Prepaid expenses and other assets

 

(2,990

)

 

(999

)

Deferred contract acquisition costs

 

(1,668

)

 

(33,093

)

Lease right-of-use assets

 

6,743

 

 

(1,338

)

Accounts payable

 

2,922

 

 

10,015

 

Accrued compensation and benefits and other liabilities

 

14,650

 

 

18,141

 

Lease liabilities

 

(5,888

)

 

2,158

 

Deferred revenue

 

(67,228

)

 

(12,896

)

Net cash provided by (used in) operating activities

 

(46,328

)

 

41,385

 

Cash flows from investing activities:
Purchases of property and equipment

 

(3,177

)

 

(15,799

)

Cash paid for acquisition, net of cash acquired

 

(7,192

)

 

(41,536

)

Purchases of short-term investments

 

(175,668

)

 

(293,844

)

Proceeds from sale and maturity of short-term investments

 

212,328

 

 

228,050

 

Capitalized software development costs

 

(9,406

)

 

(9,739

)

Net cash provided by (used in) investing activities

 

16,885

 

 

(132,868

)

Cash flows from financing activities:
Proceeds from employee stock purchase plan

 

5,417

 

 

6,494

 

Proceeds from exercise of employee stock options

 

29,165

 

 

3,632

 

Net cash provided by financing activities

 

34,582

 

 

10,126

 

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

 

5,139

 

 

(81,357

)

Cash, cash equivalents and restricted cash at beginning of period

 

246,463

 

 

298,164

 

Cash, cash equivalents and restricted cash at end of period

$

251,602

 

$

216,807

 

 
Reconciliation from GAAP to Non-GAAP Results
(In thousands, except per share data; unaudited)

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Reconciliation of gross profit and gross margin:
GAAP gross profit

$

134,798

 

$

120,372

 

$

387,450

 

$

370,540

 

Plus: Stock-based compensation

 

1,382

 

 

1,472

 

 

3,757

 

 

4,596

 

Plus: Amortization of purchased intangibles

 

2,006

 

 

1,277

 

 

5,358

 

 

3,829

 

Plus: Amortization of stock-based compensation capitalized in software development costs

 

640

 

 

339

 

 

1,680

 

 

843

 

Plus: Employer payroll tax on employee equity incentive plans

 

63

 

 

36

 

 

168

 

 

177

 

Non-GAAP gross profit

$

138,889

 

$

123,496

 

$

398,413

 

$

379,985

 

GAAP gross margin

 

66

%

 

72

%

 

67

%

 

75

%

Non-GAAP adjustments

 

2

%

 

2

%

 

2

%

 

2

%

Non-GAAP gross margin

 

68

%

 

74

%

 

69

%

 

77

%

Reconciliation of operating expenses:
GAAP research and development

$

53,362

 

$

45,773

 

$

153,460

 

$

131,245

 

Less: Stock-based compensation expense

 

(13,117

)

 

(10,960

)

 

(36,228

)

 

(30,214

)

Less: Employer payroll tax on employee equity incentive plans

 

(301

)

 

(154

)

 

(861

)

 

(713

)

Non-GAAP research and development

$

39,944

 

$

34,659

 

$

116,371

 

$

100,318

 

GAAP sales and marketing

$

97,723

 

$

92,392

 

$

293,603

 

$

266,906

 

Less: Stock-based compensation expense

 

(12,537

)

 

(15,115

)

 

(37,619

)

 

(42,960

)

Less: Employer payroll tax on employee equity incentive plans

 

(182

)

 

(155

)

 

(570

)

 

(671

)

Less: Restructuring charges (1)

 

143

 

 

-

 

 

(10,925

)

 

-

 

Non-GAAP sales and marketing

$

85,147

 

$

77,122

 

$

244,489

 

$

223,275

 

GAAP general and administrative

$

35,614

 

$

30,249

 

$

113,193

 

$

89,481

 

Less: Stock-based compensation expense

 

(10,755

)

 

(8,922

)

 

(39,945

)

 

(25,274

)

Less: Transaction costs related to acquisition

 

-

 

 

(885

)

 

(361

)

 

(885

)

Less: Lawsuit litigation cost and other expense

 

(59

)

 

(217

)

 

(59

)

 

(254

)

Less: Employer payroll tax on employee equity incentive plans

 

(410

)

 

(116

)

 

(953

)

 

(559

)

Less: Restructuring charges (1)

 

8

 

 

-

 

 

(1,194

)

 

-

 

Non-GAAP general and administrative

$

24,398

 

$

20,109

 

$

70,681

 

$

62,509

 

Reconciliation of loss from operations and operating margin:
GAAP loss from operations

$

(51,901

)

$

(48,042

)

$

(172,806

)

$

(117,092

)

Plus: Stock-based compensation expense

 

37,791

 

 

36,469

 

 

117,549

 

 

103,044

 

Plus: Amortization of purchased intangibles

 

2,006

 

 

1,277

 

 

5,358

 

 

3,829

 

Plus: Transaction costs related to acquisition

 

-

 

 

885

 

 

361

 

 

885

 

Plus: Amortization of stock-based compensation capitalized in software development costs

 

640

 

 

339

 

 

1,680

 

 

843

 

Plus: Lawsuit litigation cost and other expense

 

59

 

 

217

 

 

59

 

 

254

 

Plus: Employer payroll tax on employee equity incentive plans

 

956

 

 

461

 

 

2,552

 

 

2,120

 

Plus: Restructuring charges (1)

 

(151

)

 

-

 

 

12,119

 

 

-

 

Non-GAAP loss from operations

$

(10,600

)

$

(8,394

)

$

(33,128

)

$

(6,117

)

GAAP operating margin

 

-25

%

 

-29

%

 

-30

%

 

-24

%

Non-GAAP adjustments

 

20

%

 

24

%

 

24

%

 

23

%

Non-GAAP operating margin

 

-5

%

 

-5

%

 

-6

%

 

-1

%

Reconciliation of net loss:
GAAP net loss attributable to New Relic

$

(62,706

)

$

(53,626

)

$

(194,889

)

$

(130,933

)

Plus: Stock-based compensation expense

 

37,791

 

 

36,469

 

 

117,549

 

 

103,044

 

Plus: Amortization of purchased intangibles

 

2,006

 

 

1,277

 

 

5,358

 

 

3,829

 

Plus: Transaction costs related to acquisition

 

-

 

 

885

 

 

361

 

 

885

 

Plus: Amortization of stock-based compensation capitalized in software development costs

 

640

 

 

339

 

 

1,680

 

 

843

 

Plus: Lawsuit litigation cost and other expense

 

59

 

 

217

 

 

59

 

 

254

 

Plus: Employer payroll tax on employee equity incentive plans

 

956

 

 

461

 

 

2,552

 

 

2,120

 

Plus: Amortization of debt discount and issuance costs

 

590

 

 

5,622

 

 

1,766

 

 

16,632

 

Plus: Adjustment to redeemable non-controlling interest

 

9,215

 

 

-

 

 

19,450

 

 

-

 

Plus: Restructuring charges

 

(151

)

 

-

 

 

12,119

 

 

-

 

Non-GAAP net loss attributable to New Relic

$

(11,600

)

$

(8,356

)

$

(33,995

)

$

(3,326

)

Non-GAAP net loss attributable to New Relic per share:
Basic

$

(0.18

)

$

(0.14

)

$

(0.53

)

$

(0.05

)

Diluted

$

(0.18

)

$

(0.14

)

$

(0.53

)

$

(0.05

)

Shares used in non-GAAP per share calculations:
Basic

 

64,983

 

 

61,209

 

 

64,203

 

 

60,562

 

Diluted

 

64,983

 

 

61,209

 

 

64,203

 

 

60,562

 

(1) Restructuring related charge for the stock-based compensation expense of $0.5 million is included on its respective line items.
 
Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow
(In thousands; unaudited)

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net cash provided by (used in) operating activities

$

(19,197

)

$

(6,673

)

$

(46,328

)

$

41,385

 

Capital expenditures

 

(351

)

 

(3,158

)

 

(3,177

)

 

(15,799

)

Capitalized software development costs

 

(3,359

)

 

(2,896

)

 

(9,406

)

 

(9,739

)

Free cash flow (Non-GAAP)

$

(22,907

)

$

(12,727

)

$

(58,911

)

$

15,847

 

Net cash provided by (used in) investing activities

$

11,687

 

$

(59,987

)

$

16,885

 

$

(132,868

)

Net cash provided by financing activities

$

21,551

 

$

982

 

$

34,582

 

$

10,126

 

 

 

Investor Contact
Peter Goldmacher
New Relic, Inc.
503-336-9280
IR@newrelic.com

Media Contact
New Relic, Inc
PR@newrelic.com

Source: New Relic Corporate Communications

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