Anaplan Announces Third Quarter Fiscal Year 2020 Financial Results

• Third Quarter Subscription Revenue up 47% Year-Over-Year
• Remaining Performance Obligation of $590 million, up 55% Year-Over-Year
• Dollar-Based Net Expansion of 123%

SAN FRANCISCO--(BUSINESS WIRE)--Anaplan, Inc. (NYSE:PLAN), a pioneer in Connected Planning, today announced financial results for its third quarter ended October 31, 2019.

“We are proud of all our accomplishments during this first year as a public company. It’s been impressive to see how Connected Planning has resonated throughout the enterprise planning ecosystem,” said Frank Calderoni, chief executive officer at Anaplan. “We hear consistently from our customers that the value they see with our platform is essential and a major competitive advantage.”

Third Quarter Fiscal 2020 Financial Results

• Total revenue was $89.4 million, an increase of 44% year-over-year. Subscription revenue was $79.7 million, an increase of 47% year-over-year.

• GAAP operating loss was $32.5 million or 36.4% of total revenue, compared to $50.3 million in the third quarter of fiscal 2019 or 81.2% of total revenue. Non-GAAP operating loss was $8.8 million, or 9.9% of total revenue, compared to $18.3 million in the third quarter of fiscal 2019, or 29.5% of total revenue.

• GAAP loss per share was $0.26, compared to $1.11 in the third quarter of fiscal 2019. Non-GAAP loss per share was $0.08, compared to $0.18 in the third quarter of fiscal 2019.

• Cash and Cash Equivalents were $310.8 million as of October 31, 2019.

Financial Outlook

The Company is providing the following guidance for its fourth quarter fiscal 2020:

• Total revenue is expected to be between $96.5 and $97.5 million.
• Non-GAAP operating margin is expected to be between negative 14% and 15%.

The Company is updating its previous guidance provided on August 27, 2019 for full year fiscal 2020:

• Total revenue is now expected to be between $346 and $347 million (was between $339 and $343 million).
• Non-GAAP operating margin is now expected to be between negative 17% and 18% (was between negative 19.5% and 20.5%).

The section titled “Non-GAAP Financial Measures” below contains a description of the non-GAAP financial measures used in this press release, definitions of our operating metrics and a reconciliation of GAAP and non-GAAP financial measures is contained in the tables below. A reconciliation of non-GAAP measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, the costs and expenses that may be incurred in the future and therefore, cannot be reasonably predicted. The effect of these excluded items may be significant.

Recent Highlights

• Anaplan Ranked Among Fastest Growing Companies on Deloitte’s 2019 Technology Fast 500™
• Anaplan Enables Planning at the Edge with New User Experience and Mobile App, Now Available
• Anaplan Platform Can Deliver a 3X Return, According to Total Economic Impact™ Study

Webcast and Conference Call Information

Anaplan will host a conference call for investors on November 21, 2019 at 5:30 a.m. Pacific Time and 8:30 a.m. Eastern Time to share the company’s financial results and business highlights. Investors are invited to listen to a live webcast of the conference call by visiting https://investors.anaplan.com. A replay of the webcast will be available for one year. The call can also be accessed live via phone by dialing [phone] or, for international callers, [phone] with conference ID 8452399. An audio replay will be available shortly after the call and can be accessed by dialing [phone] or, for international callers [phone]. The passcode for the replay is 8452399.

Upcoming Investor Events

Anaplan management will be participating in the following investor conference:

Barclays Global Technology, Media and Telecommunications Conference
San Francisco, CA
December 11, 2019
1:00 PM (PT) / 4:00 PM (ET)

Interested parties can listen to the live audio webcast of Anaplan’s presentation available on Anaplan’s Investor Center website at https://investors.anaplan.com. A replay of the presentation will be available on the website following the completion of the event.

About Anaplan

Anaplan, Inc. (NYSE: PLAN) is pioneering the category of Connected Planning. Our platform, powered by our proprietary Hyperblock® technology, purpose-built for Connected Planning, enables dynamic, collaborative, and intelligent planning. Large global enterprises use our solution to connect people, data, and plans to enable real-time planning and decision-making in rapidly changing business environments to give our customers a competitive advantage. Based in San Francisco, we have over 20 offices globally, 175 partners, and more than 1,300 customers worldwide. To learn more, visit anaplan.com.

Forward-Looking Statements

This press release 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 press release and, in particular, estimates regarding the value of the Company’s platform to its customers, the quotations from management, financial outlook and earnings guidance, statements about the Company’s 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 press release 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 stockholders not being able to resell their shares at or above the price at which they purchased shares; we may engage in acquisitions and strategic transactions that do not yield the expected results. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this press release is contained in the Company’s quarterly report on Form 10-Q filed with the U.S. Securities and Exchange Commission on September 9, 2019, the “Risk Factors” section of which is incorporated into this press release 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. The information contained in, or that can be accessed through, Anaplan’s website and social media channels are not part of this press release.

Preliminary Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended October 31,						Nine Months Ended October 31,
(In thousands, except percentages and per share amounts)	2019			2018			2019			2018
Revenue:
Subscription revenue	$	79,695		$	54,366		$	218,378		$	148,905
Professional services revenue		9,715			7,648			31,402			22,487
Total revenue		89,410			62,014			249,780			171,392
Cost of revenue:
Cost of subscription revenue (1)		13,108			9,341			36,406			25,915
Cost of professional services revenue (1)		9,376			7,904			30,162			21,321
Total cost of revenue		22,484			17,245			66,568			47,236
Gross profit		66,926			44,769			183,212			124,156
Operating expenses:
Research and development (1)		16,462			12,207			47,963			36,056
Sales and marketing (1)		60,644			48,540			180,931			126,462
General and administrative (1)		22,344			34,348			65,158			57,218
Total operating expenses		99,450			95,095			294,052			219,736
Loss from operations		(32,524	)		(50,326	)		(110,840	)		(95,580	)
Interest income, net		1,180			314			3,770			439
Other income (expense), net		(2,398	)		(602	)		(2,096	)		(1,242	)
Loss before income taxes		(33,742	)		(50,614	)		(109,166	)		(96,383	)
Provision for income taxes		(959	)		(617	)		(3,368	)		(2,077	)
Net loss	$	(34,701	)	$	(51,231	)	$	(112,534	)	$	(98,460	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.26	)	$	(1.11	)	$	(0.88	)	$	(3.24	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		132,352			46,085			128,286			30,416
(1) Includes stock-based compensation expense as follows:
Cost of subscription revenue	$	689		$	231		$	1,817		$	369
Cost of professional services revenue		539			260			1,577			378
Research and development		2,790			1,571			7,120			2,107
Sales and marketing		8,927			6,833			23,728			8,869
General and administrative		7,948			23,088			23,072			25,160
Total stock-based compensation expense	$	20,893		$	31,983		$	57,314		$	36,883

Preliminary Consolidated Balance Sheets
(In thousands)
(Unaudited)
	As of
	October 31,			January 31,
	2019			2019
ASSETS
Current assets:
Cash and cash equivalents	$	310,840		$	326,863
Accounts receivable, net		97,573			92,597
Deferred commissions, current portion		22,688			15,827
Prepaid expenses and other current assets		11,841			13,377
Total current assets		442,942			448,664
Property and equipment, net		45,809			43,340
Deferred commissions, net of current portion		50,062			35,063
Intangible asset, net		7,188			35
Goodwill		31,935			-
Operating lease right-of-use asset		38,250			-
Other noncurrent assets		1,939			1,667
TOTAL ASSETS	$	618,125		$	528,769
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,401		$	6,182
Accrued expenses		71,687			52,570
Deferred revenue, current portion		190,312			149,611
Operating lease liabilities, current portion		7,824			-
Total current liabilities		277,224			208,363
Deferred revenue, net of current portion		1,647			1,232
Operating lease liabilities, net of current portion		33,740			-
Other noncurrent liabilities		11,099			11,696
TOTAL LIABILITIES		323,710			221,291
Commitments and contingencies
Stockholders' equity:
Common stock		13			12
Accumulated other comprehensive loss		(2,189	)		(3,036	)
Additional paid-in capital		752,361			653,738
Accumulated deficit		(455,770	)		(343,236	)
TOTAL STOCKHOLDERS' EQUITY		294,415			307,478
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	618,125		$	528,769

Preliminary Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Nine Months Ended October 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(112,534	)	$	(98,460	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		14,355			8,920
Amortization of deferred commissions		14,053			8,117
Stock-based compensation		57,314			36,883
Amortization of operating lease right-of-use assets and accretion of operating lease liabilities		7,840			-
Loss on disposal of property and equipment		594			457
Changes in operating assets and liabilities:
Accounts receivable, net		(4,495	)		3,249
Prepaid expenses and other current assets		1,795			1,755
Other noncurrent assets		(170	)		410
Deferred commissions		(36,134	)		(21,382	)
Accounts payable and accrued expenses		16,039			7,462
Deferred revenue		39,375			21,741
Payments for operating lease liabilities		(7,595	)		-
Other noncurrent liabilities		(3,271	)		933
Net cash used in operating activities		(12,834	)		(29,915	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(2,455	)		(13,545	)
Capitalized internal-use software		(8,021	)		(5,364	)
Business combinations, net of acquired cash		(29,192	)		-
Net cash used in investing activities		(39,668	)		(18,909	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering, net of underwriting discounts and commissions		-			281,813
Proceeds from issuance of common stock in private placement		-			20,000
Proceeds from exercise of stock options		18,862			5,576
Proceeds from repayment of promissory notes		11,526			1,644
Proceeds from employee stock purchase plan		9,088			-
Payment of exercise of warrants		-			12
Principal payments on capital lease obligations		(3,777	)		(818	)
Net cash provided by financing activities		35,699			308,227
Effect of exchange rate changes on cash and cash equivalents		780			(2,232	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(16,023	)		257,171
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - Beginning of period		326,863			117,026
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - End of period	$	310,840		$	374,197

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages and per share amounts)
(Unaudited)
	Three Months Ended October 31,						Nine Months Ended October 31,
(In thousands, except percentages and per share amounts)	2019			2018			2019			2018
Revenue	$	89,410		$	62,014		$	249,780		$	171,392
GAAP operating loss	$	(32,524	)	$	(50,326	)	$	(110,840	)	$	(95,580	)
Stock-based compensation		20,893			31,983			57,314			36,883
Employer payroll tax expense related to employee stock plans		1,303			-			6,432			-
Business combination and other related cost		1,390			-			1,390			-
Amortization of acquired intangibles		112			53			147			159
Non-GAAP operating loss	$	(8,826	)	$	(18,290	)	$	(45,557	)	$	(58,538	)
GAAP operating margin %		-36.4%			-81.2%			-44.4%			-55.8%
Stock-based compensation %		23.4%			51.6%			22.9%			21.5%
Employer payroll tax expense related to employee stock plans %		1.4%			0.0%			2.6%			0.0%
Amortization of acquired intangibles %		1.7%			0.1%			0.7%			0.1%
Non-GAAP operating margin %		-9.9%			-29.5%			-18.2%			-34.2%
GAAP net loss	$	(34,701	)	$	(51,231	)	$	(112,534	)	$	(98,460	)
Stock-based compensation		20,893			31,983			57,314			36,883
Employer payroll tax expense related to employee stock plans		1,303			-			6,432			-
Business combination and other related cost		1,390			-			1,390			-
Amortization of acquired intangibles		112			53			147			159
Non-GAAP net loss	$	(11,003	)	$	(19,195	)	$	(47,251	)	$	(61,418	)
GAAP net loss per share, basic and diluted	$	(0.26	)	$	(1.11	)	$	(0.88	)	$	(3.24	)
Stock-based compensation		0.16			0.69			0.45			1.21
Employer payroll tax expense related to employee stock plans		0.01			0.00			0.05			0.00
Business combination and other related cost		0.01			0.00			0.01			0.00
Amortization of acquired intangibles		-			-			-			0.01
Impact of difference in number of GAAP and non-GAAP shares		-			0.24			-			1.41
Non-GAAP net loss per share	$	(0.08	)	$	(0.18	)	$	(0.37	)	$	(0.61	)
Shares used to compute GAAP net loss per share attributable to common stockholders, basic and diluted		132,352			46,085			128,286			30,416
Weighted average effect of the assumed conversion of convertible preferred stock from the date of issuance		-			57,605			-			68,214
Weighted average effect of the assumed vesting of restricted stock unit from the date of issuance		-			1,680			-			1,982
Shares used to compute Non-GAAP net loss per share		132,352			105,370			128,286			100,612
GAAP net cash provided by (used in) operating activities	$	(16,029	)	$	(14,220	)	$	(12,834	)	$	(29,915	)
Purchase of property and equipment		(852	)		(1,126	)		(2,455	)		(13,545	)
Capitalized internal-use software		(2,970	)		(1,985	)		(8,021	)		(5,364	)
Non-GAAP free cash flow	$	(19,851	)	$	(17,331	)	$	(23,310	)	$	(48,824	)

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release 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 in this release for the reconciliation of GAAP and non-GAAP results.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate stock-based compensation expense using a variety of valuation methodologies and subjective assumptions.

Employer payroll tax expense related to employee stock plans. We exclude employer payroll tax expense related to employee stock plans, which is a cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, this expense is tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of exercise or vesting, which may vary from period to period independent of the operating performance of our business.

Amortization of acquired intangible assets. We exclude amortization of acquired intangible assets, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of intangible assets are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business.

Internal-use software. We include capitalization and the subsequent amortization of internal-use software, which is a non-cash expense, in certain of our non-GAAP financial measures. We capitalize certain costs incurred for the development of computer software for internal use and then amortize those costs over the estimated useful life. Capitalization and amortization of software development costs can vary significantly depending on the timing of products reaching technological feasibility and being made generally available.

Purchase of property and equipment. We include purchase of property and equipment in certain of our non-GAAP financial measures, such as free cash flow. Our management reviews cash flows generated from operations after taking into consideration capital expenditures such as purchase of property and equipment as these expenditures are considered to be a necessary component of ongoing operations.

Business combinations and related cost. We include transaction and integration expenses that are directly related to business combinations. Such expenses primarily include transaction closing costs, professional service fees and retention payments.

Operating Metrics

Annual recurring revenue (ARR) is calculated as subscription revenue already booked and in backlog that will be recorded over the next 12 months, assuming any contract expiring in those 12 months is renewed and continues on its existing terms and at its prevailing rate of utilization.

Dollar-based Net Expansion Rate 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.