q1 fy2020 earnings conference...

Q1 FY2020 Earnings Conference Call May 28, 2019

Copyright © Anaplan Inc., 2018 2

Cautionary Note Regarding Forward-Looking StatementsThis document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended, including all statements other than statements of historical fact contained in this document and, in particular, statements about the Company’s growth, plans, strategies and prospects, estimates of enterprise cloud-market growth, market demand, competitive position, current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, short- and long-term business operations and objectives, and financial needs. These statements identify prospective information and may include words such as “expects,” “intends,” “continue,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “should,” “may,” “will,” or the negative version of these words, variations of these words and comparable terminology. These forward-looking statements are based on information available to the Company as of the date of this document and are based on management’s current views and assumptions. These forward-looking statements are conditioned upon and also involve a number of known and unknown risks, uncertainties, and other factors that could cause actual results, performance or events to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the Company’s control and may pose a risk to the Company’s operating and financial condition. Such risks and uncertainties include, but are not limited to: we have a limited history of operating at our current scale and under our current strategy, which makes it difficult to predict our future operating results, and we may not achieve our expected operating results in the future; due to our history of net losses, we anticipate increasing our operating expenses in the future, and we do not expect to be profitable for the foreseeable future; our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business; because we derive substantially all of our revenue from a single software platform, failure of our Connected Planning solutions in general and our platform in particular to satisfy customer demands or to achieve increased market acceptance would adversely affect our business, results of operations, financial condition, and growth prospects; if we are unable to attract new customers, both domestically and internationally, the growth of our revenue will be adversely affected and our business may be harmed; our business depends substantially on our customers renewing their subscriptions and expanding their use of our platform and failure to achieve renewals and expansions may result in a material adverse effect on our business operations; the markets in which we participate are intensely competitive, and if we do not compete effectively, our business and operating results could be adversely affected; if we experience a security incident, our platform may be perceived as not being secure, our reputation may be harmed, customers may reduce the use of or stop using our platform, we may incur significant liabilities, and our business could be materially adversely affected; real or perceived errors, failures, bugs, service outages, or disruptions in our platform could adversely affect our reputation and harm our business; we have experienced rapid growth in recent periods and expect to continue to invest in our growth for the foreseeable future; if we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service, or adequately address competitive challenges; we could incur substantial costs in protecting or defending our intellectual property rights, and any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand; our global operations and sales to customers outside the United States or with international operations subject us to risks inherent in international operations that can harm our business, results of operations, and financial condition; the uncertainty in and volatility of the broader stock market generally or the stock price of our common stock specifically may result in stockholder not being able to resell their shares at or above the price at which they purchased shares. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this document is contained in the Company’s annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 29, 2019, the “Risk Factors” section of which is incorporated into this document by reference, and other documents filed with or furnished to the Securities and Exchange Commission. These forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date and the Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.


Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this document and the accompanying tables contain non-GAAP financial measures, including non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and free cash flow. The non-GAAP financial information is presented for supplemental informational purposes only, and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. The non-GAAP measures presented here may be different from similarly-titled non-GAAP measures used by other companies.

We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures, when viewed collectively with the GAAP measures, may be helpful to investors because they provide consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results.

There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. The definitions of our non-GAAP measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may utilize metrics that are not similar to ours. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. Please see the reconciliation tables at the end of this document for the reconciliation of GAAP and non-GAAP results.


Financial HighlightsKey Financial Results – Q1 Fiscal 2020

• Revenue $75.8M, up 47% YoY

• Billings $87.1M, up 57% YoY

• Dollar-based Net Expansion Rate 123%

• Customers with ARR >$250K: 279

• Non-GAAP Operating Loss $20.1M

• Non-GAAP Operating Margin (26.5%)

• Non-GAAP Net Loss per Share was $0.16

• Free Cash Flow ($5.0M)

• Ending Cash and Cash Equivalents $332.7M

Copyright © Anaplan Inc., 2018

42

34

44%42%45%52%51%

30

Y/Y

ANNUAL SUBSCRIPTION REVENUE $M QUARTERLY SUBSCRIPTION REVENUE $M

Strong, Consistent Subscription Growth

5

91

144

209

FY'17 FY'18 FY'19

+45%

+57%

42 45 50

54 60

65

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

45%

KEY

Y/Y Growth Rates

Subscription Revenue


CUSTOMERS WITH >$250K ARR GROWING STEADILY

59

213

181

113

Capturing a Greater Share of Wallet

DOLLAR-BASED NET EXPANSION RATE

6

Net Expansion Rate (“NRR”) is calculated as the ARR at the end of a period for the base set of customers from which we had ARR in the year prior to the calculation, divided by the ARR one year prior to the date of calculation for that same customer base.

123%123%

135%

113

181

248

FY'17 FY'18 FY'19

123%122%

123%

FY'17 FY'18 FY'19

113

181

248 279

FY'17 FY'18 FY'19 Q1'20

123%122%

123% 123%

FY'17 FY'18 FY'19 Q1'20


Non-GAAP Gross Margin

Non-GAAP gross margin calculated as gross profit, excluding the effect of stock-based compensation expense, employer payroll tax expense related to employee stock plans, and amortization of acquired intangibles, as a percentage of revenue. See appendix for a reconciliation of non-GAAP gross margin to GAAP gross margin.

80

117

81

KEY Total Gross Profit

Subscription Gross Margin %

Total Gross Margin %Non-GAAP

GROSS MARGIN BY YEAR

81 117

175

68% 70%73%

90%86%

83%

FY'17 FY'18 FY'19

34 38 42 45

50 55

73% 73% 73% 73% 72% 73%

82% 83% 82% 83% 83% 84%

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

GROSS MARGIN BY QUARTER


FREE CASH FLOW $M AND AS PERCENTAGE OF REVENUEOPERATING EXPENSE AS A % OF REVENUE

KEY

R&D G&A

S&M

Note: All numbers are Non-GAAP; See appendix for a reconciliation of non-GAAP operating margin to GAAP operating margin. Free cash flow defined as net cash used in operating activities less purchase of property and equipment and capitalized internal-use software.

KEY

Free CashFlow Margin

Free Cash Flow

Non-GAAP Operating Expense and Free Cash Flow Margins

8

23 30 45 13

7197

161

50

20

27

44

13

114154

249

75

95% 92%

104% 99%

FY'17 FY'18 FY'19 Q1'20

-31 -30

-68

-5

(26%)(18%)

(28%)

(7%)

FY'17 FY'18 FY'19 Q1'20


Annual and Quarterly Billings

Y/Y

ANNUAL BILLINGS $M QUARTERLY BILLINGS $M

66 56 61

72

101 87

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

KEY

Y/Y GrowthRates

Calculated Billings

144

204

290

FY'17 FY'18 FY'19

+42%

+41%

42% 34% 33% 43% 54% 57%Note: Calculated Billings is defined as revenue plus the change in deferred revenue.


Thank You

Non-GAAP Reconciliation

11

(In thousands, except percentages and per share data) Three Months Ended(Unaudited) April 30, 2019 April 30, 2018

Revenue 75,830$ 51,550$

GAAP operating loss (37,109)$ (25,306)$ Stock-based compensation 16,302 1,960 Employer payroll tax expense related to employee stock plans 682 - Amortization of acquired intangibles 35 53

Non-GAAP operating loss (20,090)$ (23,293)$ GAAP operating margin % -48.9% -49.1%

Stock-based compensation % 21.5% 3.8%Employer payroll tax expense related to employee stock plans % 0.9% 0.0%Amortization of acquired intangibles % 0.0% 0.1%

Non-GAAP operating margin % -26.5% -45.2%

GAAP net loss (37,191)$ Stock-based compensation 16,302 Employer payroll tax expense related to employee stock plans 682 Amortization of acquired intangibles 35

Non-GAAP net loss (20,172)$

GAAP net loss per share, basic and diluted (0.30)$ Stock-based compensation 0.13 Employer payroll tax expense related to employee stock plans 0.01Amortization of acquired intangibles 0.00Impact of difference in number of GAAP and non-GAAP shares (0.00)

Non-GAAP net loss per share (0.16)$

Shares used to compute GAAP and non-GAAP net loss per share attributable to common stockholders, basic and diluted 122,992


12

(In thousands, except percentages) Three Months Ended(Unaudited) April 30, 2019 April 30, 2018 2019 2018 2017

Revenue 75,830$ 51,550$ 240,642$ 168,347$ 120,499$

GAAP operating expenses 91,362$ 62,824$ 301,507$ 162,281$ 120,027$ Stock-based compensation 15,319 1,858 51,124 7,984 5,718 Employer payroll tax expense related to employee stock plans 670 - 834 - - Amortization of acquired intangibles 35 53 212 212 224

Non-GAAP operating expenses 75,338$ 60,913$ 249,337$ 154,085$ 114,085$ GAAP operating expenses as a % of revenue 120% 125% 96% 100%

Stock-based compensation as a % of revenue -20% -21% -4% -5%Employer payroll tax expense related to employee stock plans as a % of revenue -1% 0% 0% 0%Amortization of acquired intangibles as a % of revenue 0% 0% 0% 0%

Non-GAAP operating expenses as a % of revenue 99% 104% 92% 95%

GAAP research and development 15,059$ 48,998$ 30,908$ 23,868$ Stock-based compensation 1,836 3,826 742 634 Employer payroll tax expense related to employee stock plans 48 Amortization of acquired intangibles 35 212 212 224

Non-GAAP research and development 13,140$ 44,960$ 29,954$ 23,010$

GAAP sales and marketing 56,290$ 176,323$ 100,654$ 73,656$ Stock-based compensation 6,617 15,475 3,496 2,555 Employer payroll tax expense related to employee stock plans 169 - - -

Non-GAAP sales and marketing 49,504$ 160,848$ 97,158$ 71,101$

GAAP general and administrative 20,013$ 76,186$ 30,719$ 22,503 Stock-based compensation 6,866 31,823 3,746 2,529 Employer payroll tax expense related to employee stock plans 453 834 - -

Non-GAAP general and administrative 12,694$ 43,529$ 26,973$ 19,974$

GAAP net cash used in operating activities (1,900)$ (45,853)$ (14,501)$ (26,161)$ Purchase of property and equipment (922) (15,122) (9,565) (2,787) Capitalized internal-use software (2,161) (7,397) (5,801) (2,184)

Non-GAAP free cash flow (4,983)$ (68,372)$ (29,867)$ (31,132)$

GAAP net cash used in operating activities % -3% -19% -9% -22%Purchase of property and equipment % -1% -6% -6% -2%Capitalized internal-use software % -3% -3% -3% -2%

Non-GAAP free cash flow margin % -7% -28% -18% -26%

Year Ended January 31,


13

(In thousands, except percentages)(Unaudited) 2019 2018 2017

Revenue 240,642$ 168,347$ 120,499$

GAAP gross profit 173,244$ 116,362$ 81,092$ Stock-based compensation 1,682 655 385

Non-GAAP gross profit 174,926$ 117,017$ 81,477$ GAAP gross margin % 72% 69% 67%

Stock-based compensation % 1% 1% 1%Non-GAAP gross margin % 73% 70% 68%

Subscription revenue 208,605$ 143,542$ 91,416$

GAAP subscription gross profit 172,105$ 123,615$ 82,344$ Stock-based compensation 831 148 49

Non-GAAP subscription gross profit 172,936$ 123,763$ 82,393$ GAAP subscription gross margin % 83% 86% 90%

Stock-based compensation % 0% 0% 0%Non-GAAP subscription gross margin % 83% 86% 90%

Year Ended January 31,


14

(In thousands, except percentages)(Unaudited) April 30, 2019 January 31, 2019 October 31, 2018 July 31, 2018 April 30, 2018 January 31, 2018

Revenue 75,830$ 69,250$ 62,014$ 57,828$ 51,550$ 46,339$

GAAP gross profit 54,253$ 49,088$ 44,769$ 41,869$ 37,518$ 33,783$ Stock-based compensation 983 935 491 154 102 142 Employer payroll tax expense related to employee stock plans 12 - - - - -

Non-GAAP gross profit 55,248$ 50,023$ 45,260$ 42,023$ 37,620$ 33,925$ GAAP gross margin % 72% 71% 72% 72% 73% 73%

Stock-based compensation % 1% 1% 1% 1% 0% 0%Employer payroll tax expense related to employee stock plans as a % of revenue 0% 0% 0% 0% 0% 0%

Non-GAAP gross margin % 73% 72% 73% 73% 73% 73%

Subscription revenue 65,085$ 59,700$ 54,366$ 49,618$ 44,921$ 41,524$

GAAP subscription gross profit 53,994$ 49,115$ 45,025$ 40,830$ 37,135$ 34,033$ Stock-based compensation 491 462 231 75 63 78 Employer payroll tax expense related to employee stock plans 8 - - - - -

Non-GAAP subscription gross profit 54,493$ 49,577$ 45,256$ 40,905$ 37,198$ 34,111$ GAAP subscription gross margin % 83% 82% 83% 82% 83% 82%

Stock-based compensation % 1% 1% 0% 0% 0% 0%Employer payroll tax expense related to employee stock plans as a % of revenue 0% 0% 0% 0% 0% 0%

Non-GAAP subscription gross margin % 84% 83% 83% 82% 83% 82%

Professional services revenue 10,745$ 6,629$

GAAP professional services gross profit 259$ 383$ Stock-based compensation 492 39 Employer payroll tax expense related to employee stock plans 4 -

Non-GAAP professional services gross profit 755$ 422$ GAAP professional services gross margin % 2% 6%

Stock-based compensation % 5% 0%Employer payroll tax expense related to employee stock plans as a % of revenue 0% 0%

Non-GAAP professional services gross margin % 7% 6%

Three Months Ended

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