Mandiant Reports Financial Results for Fourth Quarter and Full Year 2021

02/08/2022
  • Revenue from continuing operations increased 21 percent from the fourth quarter of 2020
  • Annualized recurring revenue for continuing operations increased 23 percent from the end of the fourth quarter of 2020 to $279 million1
  • Deferred revenue increased 44 percent from the end of the fourth quarter of 2020 to $410 million
  • Repurchased $200 million of common stock in the fourth quarter under Board-approved stock repurchase program

Mandiant, Inc. (NASDAQ: MNDT), the leader in dynamic cyber defense and response, today announced financial results for the fourth quarter and full year ended December 31, 2021.

“We achieved a significant milestone in Q4, divesting the FireEye Products business and positioning Mandiant to deliver accelerating growth and extend our leadership position in expertise and intelligence,” said Kevin Mandia, Mandiant Chief Executive Officer. “We are uniquely positioned to address an enormous market need and can concentrate all of our attention on helping organizations close their cyber security gap.”

“We had record billings and revenue for Threat Intelligence and Consulting in the fourth quarter, and our overall performance highlights the early financial and operational success in the relaunch of our company,” added Mandia.

On October 8, 2021, Mandiant completed the sale of the FireEye Products business to McAfee Enterprise, which is backed by a consortium led by Symphony Technology Group. Accordingly, financial results for the FireEye Products business for the first eight days of the fourth quarter were classified as discontinued operations in the condensed consolidated statements of operations and excluded from continuing operations. Results of discontinued operations include all revenue and expenses directly attributable to the FireEye Products business, and exclude expenses for shared resources and general corporate overhead that remain in continuing operations for Mandiant.

Fourth Quarter 2021 Financial Highlights for Continuing Operations

  • Revenue of $133 million, an increase of 21 percent from the fourth quarter of 2020
  • Annualized recurring revenue of $279 million, an increase of 23 percent from the end of the fourth quarter of 20201
  • Deferred revenue of $410 million, an increase of 44 percent from the end of the fourth quarter of 2020
  • GAAP operating margin of negative 83 percent, compared to GAAP operating margin of negative 62 percent in the fourth quarter of 2020
  • Non-GAAP operating margin of negative 17 percent, compared to non-GAAP operating margin of negative 22 percent in the fourth quarter of 20202
  • GAAP net loss per basic share attributable to common stockholders of 54 cents, compared to GAAP net loss per basic share attributable to common stockholders of 37 cents in the fourth quarter of 2020
  • Non-GAAP net loss per basic share attributable to common stockholders of 10 cents, compared to non-GAAP net loss per basic share attributable to common stockholders of 11 cents in the fourth quarter of 20202

Full Year 2021 Financial Highlights for Continuing Operations

  • Revenue of $483 million, an increase of 21 percent year-over-year
  • GAAP operating margin of negative 73 percent, compared to GAAP operating margin of negative 75 percent in 2020
  • Non-GAAP operating margin of negative 23 percent, compared to non-GAAP operating margin of negative 30 percent in 20202
  • GAAP net loss per basic share attributable to common stockholders of $1.81, compared to GAAP net loss per basic share attributable to common stockholders of $1.59 in 2020
  • Non-GAAP net loss per basic share attributable to common stockholders of 51 cents, compared to non-GAAP net loss per basic share attributable to common stockholders of 57 cents in 20202

1 Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period.
2 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”

First Quarter and 2022 Outlook

The company provides the guidance below based on current market conditions and expectations. The company emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below.

 

Q1 2022 Outlook

2022 Outlook

Revenue

$128 - $131 million

$555 - $565 million

Annualized recurring revenue

$291 - $297 million

$360 - $366 million

Non-GAAP gross margin

59% - 60%

61.5% - 62.5%

Non-GAAP operating margin

(22)% - (24)%

(13)% - (14)%

Net interest income (expense)

$(2.0) million

($8) – ($9) million

Provision for non-GAAP income taxes

$1 million

$4 million

Weighted average basic shares outstanding

234 million

240 million

Non-GAAP net income (loss) per share attributable to common stockholders, basic and diluted

($0.13) – ($0.15)

($0.36) – ($0.38)

Guidance for non-GAAP financial measures excludes stock-based compensation, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, discrete tax provision (benefit), dividends on Series A convertible preferred stock, accretion of Series A convertible preferred stock, transformation and transition expense, other special non-recurring items, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive. A reconciliation of non-GAAP guidance measures to the most directly comparable GAAP financial measures is not available on a forward-looking basis due to the uncertainty regarding, and the potential variability of, the amounts of stock-based compensation expense, amortization of intangible assets, and non-recurring expenses that may be incurred in the future. Stock-based compensation expense is impacted by the company’s future hiring and retention needs, as well as the future fair market value of the company’s common stock, all of which are difficult to predict and subject to constant change. The actual amount of stock-based compensation expense in the first quarter of 2022 and full year 2022 will have a significant impact on the company’s GAAP operating margin and net loss per share attributable to common stockholders. Further, amortization of intangible assets, as well as other non-recurring expenses, if any, will also impact results. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the most directly comparable GAAP financial measures for future periods is not available without unreasonable effort.

Share Buyback Update

Mandiant repurchased approximately $200 million of Mandiant common stock during the fourth quarter of 2021 under the Board-approved stock repurchase program announced in June 2021. Through December 31, 2021, the company has repurchased approximately $300 million of Mandiant common stock under the stock repurchase program. There remains authorization of an additional approximately $200 million of Mandiant common stock under the $500 million stock repurchase program.

First Quarter 2022 Conference Participation and Investor Events

In addition, Mandiant today announced conference participation and investor events for the first quarter of 2022:

Date

Presentation Time (PDT)

Conference/Event

March 10, 2022

TBD

Virtual Analyst Day for Investors and Financial Analysts

March 15, 2022

TBD

William Blair Virtual Tech Innovators Conference

The above presentations will be webcast. Links to live and archived audio webcasts for these events will be available on the Investor Relations section of the company’s website at https://investors.mandiant.com.

Conference Call Information

Mandiant will host a conference call today, February 8, 2022 at 5 p.m. Eastern time (2 p.m. Pacific time) to discuss its fourth quarter and full year 2021 financial results and the company’s outlook for the first quarter and full year 2022. Interested parties may access the conference call by dialing 844-200-6205 (toll free) or 646-904-5544 (toll) and entering passcode 708954. A live audio webcast of the call can be accessed from the Investor Relations section of the company's website at https://investors.mandiant.com. An archived version of the webcast will be available at the same website shortly after the conclusion of the live event.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to future financial results for the first quarter and full year 2022, including revenue, annualized recurring revenue, non-GAAP gross margin, non-GAAP operating margin, net interest expense, provision for non-GAAP income taxes, weighted average basic shares outstanding, and non-GAAP net loss per share attributable to common stockholders in the section entitled “First Quarter and 2022 Outlook” above, as well as statements regarding plans, expectations, opportunities and growth.

These forward-looking statements involve risks and uncertainties, as well as assumptions which, if they do not fully materialize or prove incorrect, could cause Mandiant’s results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause Mandiant’s results to differ materially from those expressed or implied by such forward-looking statements include retention of existing executive leadership team members; difficulties in improving go forward execution and development of offerings during transitions; the ability of Mandiant to successfully execute strategic plans; the ability of Mandiant to maintain customer and partner relationships; the ability of Mandiant to achieve its cost and operating efficiency goals; the anticipated growth of certain market segments; Mandiant’s sales pipeline and business strategy; the timing and market acceptance of new offerings and upgrades; the successful development of new offerings and the degree to which these offerings gain market acceptance; whether and when Mandiant further executes on its stock repurchase program; customer demand and adoption of Mandiant’s offerings, solutions and services; real or perceived defects, errors or vulnerabilities in Mandiant's offerings, solutions or services; any delay in the release of Mandiant's new offerings, solutions or services; the impact of the COVID-19 pandemic, including but not limited to the federal vaccination mandate and other governmental actions, on Mandiant's business, results of operations, liquidity and capital resources and its ability to retain key employees; Mandiant's ability to react to trends and challenges in its business and the markets in which it operates; Mandiant's ability to anticipate market needs or develop new or enhanced products, solutions and services to meet those needs; Mandiant’s ability to hire and retain key executives and employees, including but not limited to a new CFO to replace Mr. Verdecanna; Mandiant’s ability to attract new and retain existing customers and train its sales force; the budgeting cycles, seasonal buying patterns and length of Mandiant’s sales cycle; risks associated with new offerings; sales and marketing execution risks; the failure to achieve expected synergies and efficiencies of operations between Mandiant and its acquired companies; the ability of Mandiant and its acquired companies to successfully integrate their respective market opportunities, technologies, products, personnel and operations; the ability of Mandiant and its partners to execute their strategies, plans, objectives and expected investments with respect to Mandiant’s partnerships; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Mandiant’s Form 10-Q filed with the Securities and Exchange Commission on November 9, 2021, which should be read in conjunction with these financial results and is available on the Investor Relations section of Mandiant’s website at investors.mandiant.com and on the SEC website at www.sec.gov.

All forward-looking statements in this press release are based on information available to the company as of the date hereof, and Mandiant 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, except as required by law. Any future product, service, feature, or related specification that may be referenced in this release is for informational purposes only and is not a commitment to deliver any offering, technology or enhancement. Mandiant reserves the right to modify future product or service plans at any time.

Non-GAAP Financial Measures

In this release Mandiant has provided financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). These non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. The company uses these non-GAAP financial measures internally in analyzing its financial results and believes the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends, and in comparing the company's financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP financial measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

Non-GAAP gross margin. Mandiant defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue.

Non-GAAP operating income (loss) from continuing operations and non-GAAP operating margin from continuing operations. Mandiant defines non-GAAP operating income (loss) from continuing operations as operating income (loss) from continuing operations excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, and other special or non-recurring items. Mandiant defines non-GAAP operating margin as non-GAAP operating income (loss) divided by total revenue.

Non-GAAP operating income (loss) from combined continuing and discontinued operations and non-GAAP operating margin from combined continuing and discontinued operations. Mandiant defines non-GAAP operating income (loss) from combined continuing and discontinued operations as operating income (loss) from continuing operations plus operating income from discontinued operations, excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, and other special or non-recurring items. Mandiant defines non-GAAP operating margin from combined continuing and discontinued operations as non-GAAP operating income (loss) from continuing operations plus non-GAAP operating income from discontinued operations, divided by revenue from continuing operations plus revenue from discontinued operations.

Non-GAAP net loss from continuing operations attributable to common stockholders. Mandiant defines non-GAAP net loss from continuing operations attributable to common stockholders as net loss from continuing operations excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, and other special or non-recurring items.

Non-GAAP net income (loss) attributable to common stockholders. Mandiant defines non-GAAP net income (loss)attributable to common stockholders as net income (loss) from continuing operations plus net income (loss) from discontinued operations, excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, discrete tax provision (benefit), dividends on Series A convertible preferred stock, accretion of Series A convertible preferred stock, and other special or non-recurring items.

Non-GAAP net income (loss) per basic share from continuing operations attributable to common stockholders. Mandiant defines non-GAAP net loss per basic share from continuing operations attributable to common stockholders as non-GAAP net loss from continuing operations attributable to common stockholders divided by weighted average basic shares outstanding, which excludes stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive.

Non-GAAP net income (loss) per basic share attributable to common stockholders. Mandiant defines non-GAAP net income per basic share attributable to common stockholders as non-GAAP net loss from continuing operations attributable to common stockholders plus non-GAAP net income from discontinued operations, divided by weighted average basic shares outstanding. Weighted average basic shares used to calculate non-GAAP net income per basic share attributable to common stockholders excludes stock options, restricted stock units, performance stock units, shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive.

Non-GAAP net income attributable to common stockholders and non-GAAP net income per basic share attributable to common stockholders in the fourth quarter and full year of 2021 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018,and dividends on Series A convertible preferred stock. Weighted average basic shares outstanding used to calculate non-GAAP net income per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that were anti-dilutive.

Non-GAAP net income attributable to common stockholders and non-GAAP net income per basic share attributable to common stockholders in the fourth quarter and full year of 2020 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, restructuring charges, and non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018. Weighted average basic shares outstanding used to calculate non-GAAP net income per basic share attributable to common stockholders excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes that were anti-dilutive.

Mandiant considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, transformation and transition expense, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, dividends on Series A convertible preferred stock, and other non-recurring and discrete items so that management and investors can compare the company's core business operating results over multiple periods.

There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures exclude stock-based compensation expense. Stock-based compensation is an important part of Mandiant employees' overall compensation and has been, and will continue to be for the foreseeable future, a significant recurring expense in the company's business. Second, the components of the costs that Mandiant excludes in its calculation of these non-GAAP financial measures, including not only stock-based compensation, but also amortization of stock-based compensation expense capitalized in software development costs, non-recurring or non-operating items such as amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, and dividends on Series A convertible preferred stock, may differ from the components excluded by peer companies when they report their non-GAAP results of operations. Mandiant compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP financial measures together with their nearest GAAP equivalents.

About Mandiant, Inc.

Since 2004, Mandiant® has been a trusted partner to security-conscious organizations. Effective security is based on the right combination of expertise, intelligence, and adaptive technology, and the Mandiant Advantage SaaS platform scales decades of frontline experience and industry-leading threat intelligence to deliver a range of dynamic cyber defense solutions. Mandiant’s approach helps organizations develop more effective and efficient cyber security programs and instills confidence in their readiness to defend against and respond to cyber threats.

© 2022 Mandiant, Inc. All rights reserved. Mandiant is a registered trademark of Mandiant, Inc. in the United States and other countries. All other brands, products, or service names are or may be trademarks or service marks of their respective owners.

Mandiant, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

 

December 31, 2021

 

December 31, 2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,154,458

 

 

$

673,234

 

Short-term investments

 

1,039,339

 

 

 

624,824

 

Accounts receivable, net

 

146,460

 

 

 

70,563

 

Prepaid expenses and other current assets

 

69,036

 

 

 

39,670

 

Current assets held for sale

 

 

 

 

153,954

 

Total current assets

 

2,409,293

 

 

 

1,562,245

 

Property and equipment, net

 

46,329

 

 

 

64,336

 

Operating lease right-of-use assets, net

 

25,768

 

 

 

36,728

 

Goodwill

 

1,060,023

 

 

 

1,050,962

 

Intangible assets, net

 

79,511

 

 

 

120,555

 

Deposits and other long-term assets

 

21,798

 

 

 

18,084

 

Long-term assets held for sale

 

 

 

 

392,974

 

Total Assets

$

3,642,722

 

 

$

3,245,884

 

 

 

 

 

Liabilities, Convertible preferred stock and Stockholders' equity

 

 

 

Current Liabilities:

 

 

 

Accounts payable

$

32,585

 

 

$

4,027

 

Operating lease liabilities, current

 

13,306

 

 

 

14,556

 

Accrued and other current liabilities

 

94,990

 

 

 

19,730

 

Accrued compensation

 

71,660

 

 

 

71,784

 

Convertible senior notes, current, net

 

451,030

 

 

 

 

Deferred revenue, current

 

307,611

 

 

 

226,356

 

Current liabilities held for sale

 

 

 

 

417,291

 

Total current liabilities

 

971,182

 

 

 

753,744

 

Convertible senior notes, non-current, net

 

556,240

 

 

 

960,896

 

Deferred revenue, non-current

 

102,717

 

 

 

57,897

 

Operating lease liabilities, non-current

 

52,132

 

 

 

41,802

 

Other long-term liabilities

 

7,377

 

 

 

12,339

 

Long-term liabilities held for sale

 

 

 

 

285,251

 

Total liabilities

 

1,689,648

 

 

 

2,111,929

 

Commitments and contingencies:

 

 

 

Series A convertible preferred stock

 

419,404

 

 

 

401,050

 

Stockholders' equity:

 

 

 

Common stock

 

23

 

 

 

24

 

Additional paid-in capital

 

3,511,444

 

 

 

3,623,243

 

Treasury stock

 

(80,000

)

 

 

(80,000

)

Accumulated other comprehensive income

 

(2,172

)

 

 

3,834

 

Accumulated deficit

 

(1,895,625

)

 

 

(2,814,196

)

Total stockholders’ equity

 

1,533,670

 

 

 

732,905

 

Total Liabilities, Convertible preferred stock and Stockholders' equity

$

3,642,722

 

 

$

3,245,884

 

Mandiant, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

Platform, cloud subscription and managed services

$

66,893

 

 

$

56,729

 

 

$

235,077

 

 

$

198,695

 

Professional services

 

65,994

 

 

 

53,544

 

 

 

248,378

 

 

 

201,014

 

Total revenue

 

132,887

 

 

 

110,273

 

 

 

483,455

 

 

 

399,709

 

Cost of revenue: (1)(2)(3)

 

 

 

 

 

 

 

Platform, cloud subscription and managed services

 

29,433

 

 

 

28,084

 

 

 

113,014

 

 

 

107,872

 

Professional services

 

37,244

 

 

 

32,144

 

 

 

141,378

 

 

 

117,645

 

Total cost of revenue

 

66,677

 

 

 

60,228

 

 

 

254,392

 

 

 

225,517

 

Total gross profit

 

66,210

 

 

 

50,045

 

 

 

229,063

 

 

 

174,192

 

Operating expenses:

 

 

 

 

 

 

 

Research and development (1)(2)(3)

 

39,244

 

 

 

32,986

 

 

 

166,893

 

 

 

122,045

 

Sales and marketing (1)(2)

 

70,083

 

 

 

57,312

 

 

 

260,213

 

 

 

224,357

 

General and administrative (1)

 

34,003

 

 

 

27,005

 

 

 

121,134

 

 

 

106,347

 

Restructuring charges (5)

 

32,649

 

 

 

1,487

 

 

 

34,576

 

 

 

21,084

 

Total operating expenses

 

175,979

 

 

 

118,790

 

 

 

582,816

 

 

 

473,833

 

Operating loss

 

(109,769

)

 

 

(68,745

)

 

 

(353,753

)

 

 

(299,641

)

Other expense, net (6)

 

(12,118

)

 

 

(12,181

)

 

 

(52,536

)

 

 

(49,237

)

Loss before income taxes from continuing operations before income taxes

 

(121,887

)

 

 

(80,926

)

 

 

(406,289

)

 

 

(348,878

)

Provision for income taxes (7)

 

940

 

 

 

(1,004

)

 

 

3,381

 

 

 

460

 

Loss from continuing operations

 

(122,827

)

 

 

(79,922

)

 

 

(409,670

)

 

 

(349,338

)

Net income from discontinued operations, net of income taxes

 

1,224,962

 

 

 

41,321

 

 

 

1,328,241

 

 

 

142,037

 

Net income (loss)

$

1,102,135

 

 

$

(38,601

)

 

$

918,571

 

 

$

(207,301

)

Dividend on series A convertible preferred stock (8)

 

(4,666

)

 

 

(1,050

)

 

 

(18,354

)

 

 

(1,050

)

Accretion of series A convertible preferred stock (9)

 

 

 

 

(4,653

)

 

 

(82

)

 

 

(4,653

)

Net income (loss) attributable to common stockholders

$

1,097,469

 

 

$

(44,304

)

 

$

900,135

 

 

$

(213,004

)

Net income (loss) per share attributable to common stockholders, basic and diluted:

 

 

 

 

 

 

 

Continuing operations

$

(0.54

)

 

$

(0.37

)

 

$

(1.81

)

 

$

(1.59

)

Discontinued operations

 

5.19

 

 

 

0.18

 

 

 

5.62

 

 

 

0.64

 

Net income (loss) per share attributable to common stockholders, basic and diluted

$

4.65

 

 

$

(0.19

)

 

$

3.81

 

 

$

(0.95

)

Weighted average shares used in computing net income (loss) per share, basic and diluted

 

236,255

 

 

 

229,203

 

 

 

236,367

 

 

 

223,308

 

Mandiant, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

Year Ended December 31,

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss from continuing operations

$

(409,670

)

 

$

(349,338

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

 

94,723

 

 

 

79,337

 

Stock-based compensation

 

152,225

 

 

 

113,698

 

Non-cash interest expense related to convertible senior notes

 

46,374

 

 

 

46,728

 

Deferred income taxes

 

795

 

 

 

(754

)

Other

 

20,830

 

 

 

1,303

 

Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:

 

 

 

Accounts receivable

 

(76,139

)

 

 

2,613

 

Prepaid expenses and other assets

 

2,177

 

 

(1,589

)

Accounts payable

 

27,877

 

 

 

(10,036

)

Accrued liabilities

 

(23,285

)

 

 

(3,363

)

Accrued compensation

 

(124

)

 

 

28,559

 

Deferred revenue

 

126,075

 

 

 

8,349

 

Other long-term liabilities

 

(9,366

)

 

 

(14,916

)

Net cash provided by (used by) used in operating activities - continuing operations

 

(47,508

)

 

 

(100,409

)

Net cash provided by operating activities - discontinued operations

 

111,772

 

 

 

195,304

 

Net cash provided by operating activities

 

64,264

 

 

 

94,895

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of property and equipment and demonstration units

 

(25,537

)

 

 

(17,928

)

Purchases of short-term investments

 

(938,938

)

 

 

(393,442

)

Proceeds from maturities of short-term investments

 

506,861

 

 

 

443,396

 

Proceeds from sales of short-term investments

 

2,008

 

 

 

29,161

 

Business acquisitions, net of cash acquired

 

(11,678

)

 

 

(82,247

)

Proceeds from sale of FireEye Products division

 

1,180,839

 

 

 

 

Purchase of investment in privately held company

 

 

 

 

(1,000

)

Lease deposits

 

1,371

 

 

 

(231

)

Net cash provided by (used in) investing activities - continuing operations

 

714,926

 

 

 

(22,291

)

Net cash used in investing activities - discontinued operations

 

(16,311

)

 

 

(49,867

)

Net cash used in investing activities

 

698,615

 

 

 

(72,158

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Repurchase of convertible senior notes

 

 

 

 

(96,392

)

Share repurchases

 

(300,001

)

 

 

 

Series A convertible preferred stock issuance costs

 

(82

)

 

 

(4,653

)

Series A convertible preferred stock

 

 

 

 

400,000

 

Payment related to shares withheld for taxes

 

(11,232

)

 

 

(9,363

)

Proceeds from employee stock purchase plan

 

19,835

 

 

 

22,188

 

Proceeds from exercise of equity awards

 

6,605

 

 

 

7,334

 

Net cash used in financing activities

 

(284,875

)

 

 

319,114

 

Net change in cash and cash equivalents

 

478,004

 

 

 

341,851

 

Cash and cash equivalents, beginning of period

 

673,234

 

 

 

331,383

 

Cash and cash equivalents held for sale, beginning of period

 

3,220

 

 

 

3,220

 

Cash and cash equivalents held for sale, end of period

 

 

 

 

(3,220

)

Cash and cash equivalents, end of period

$

1,154,458

 

 

$

673,234

 

Mandiant, Inc.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share amounts)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

GAAP operating loss

$

(109,769

)

 

$

(68,745

)

 

$

(353,753

)

 

$

(299,641

)

Stock-based compensation expense (1)

 

40,099

 

 

 

31,596

 

 

 

151,365

 

 

 

113,384

 

Amortization of stock-based compensation capitalized in software development costs (3)

 

616

 

 

 

542

 

 

 

2,156

 

 

 

1,828

 

Amortization of intangible assets (2)

 

11,203

 

 

 

10,860

 

 

 

44,444

 

 

 

41,280

 

Transformation and transition expense (10)

 

2,636

 

 

 

 

 

 

9,005

 

 

 

 

Acquisition related expenses (4)

 

500

 

 

 

425

 

 

 

724

 

 

 

425

 

Restructuring charges (5)

 

32,649

 

 

 

1,487

 

 

 

34,576

 

 

 

21,084

 

Non-GAAP operating income (loss)

$

(22,066

)

 

$

(23,835

)

 

$

(111,483

)

 

$

(121,640

)

GAAP gross margin

 

50

%

 

 

45

%

 

 

47

%

 

 

44

%

Stock-based compensation expense (1)

 

8

%

 

 

8

%

 

 

8

%

 

 

6

%

Amortization of intangible assets (2)

 

5

%

 

 

6

%

 

 

6

%

 

 

7

%

Non-GAAP gross margin

 

63

%

 

 

59

%

 

 

61

%

 

 

57

%

GAAP operating margin

 

(83

)%

 

 

(62

)%

 

 

(73

)%

 

 

(75

)%

Stock-based compensation expense (1)

 

30

%

 

 

29

%

 

 

31

%

 

 

29

%

Amortization of stock-based compensation capitalized in software development costs (3)

 

1

%

 

 

%

 

 

1

%

 

 

1

%

Amortization of intangible assets (2)

 

8

%

 

 

10

%

 

 

9

%

 

 

10

%

Transformation and transition expense (10)

 

2

%

 

 

%

 

 

2

%

 

 

%

Restructuring charges (5)

 

25

%

 

 

1

%

 

 

7

%

 

 

5

%

Non-GAAP operating margin

 

(17

)%

 

 

(22

)%

 

 

(23

)%

 

 

(30

)%

GAAP net loss attributable to common stockholders

$

1,097,469

 

 

$

(44,304

)

 

$

900,135

 

 

$

(213,004

)

Continuing operations:

 

 

 

 

 

 

 

Stock-based compensation expense (1)

 

40,099

 

 

 

31,596

 

 

 

151,365

 

 

 

113,384

 

Amortization of stock-based compensation capitalized in software development costs (3)

 

616

 

 

 

542

 

 

 

2,156

 

 

 

1,828

 

Amortization of intangible assets (2)

 

11,203

 

 

 

10,860

 

 

 

44,444

 

 

 

41,280

 

Acquisition related expenses (4)

 

500

 

 

 

425

 

 

 

724

 

 

 

425

 

Restructuring charges (5)

 

32,649

 

 

 

1,487

 

 

 

34,576

 

 

 

21,084

 

Non-cash interest expense related to convertible senior notes (6)

 

11,804

 

 

 

11,248

 

 

 

46,374

 

 

 

46,728

 

Adjustment to provision (benefit) from income taxes (7)

 

(10

)

 

 

(1,546

)

 

 

(152

)

 

 

(1,861

)

Dividend on series A convertible preferred stock (8)

 

4,666

 

 

 

1,050

 

 

 

18,354

 

 

 

1,050

 

Accretion of series A convertible preferred stock (9)

 

 

 

 

4,653

 

 

 

82

 

 

 

4,653

 

Transformation and transition expense (10)

 

2,636

 

 

 

 

 

 

9,005

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

Non-GAAP adjustments for discontinued operations (11)

 

(1,222,351

)

 

 

12,249

 

 

 

(1,167,555

)

 

 

54,734

 

Non-GAAP net income (loss) attributable to common stockholders

$

(20,719

)

 

$

28,260

 

 

$

39,508

 

 

$

70,301

 

GAAP net income (loss) per share attributable to common stockholders, basic and diluted

$

4.65

 

 

$

(0.19

)

 

$

3.81

 

$

(0.95

)

Continuing operations:

 

 

 

 

 

 

 

Stock-based compensation expense (1)

 

0.17

 

 

 

0.14

 

 

 

0.64

 

 

 

0.51

 

Amortization of stock-based compensation capitalized in software development costs (3)

 

 

 

 

 

 

 

0.01

 

 

 

0.01

 

Amortization of intangible assets (2)

 

0.04

 

 

 

0.05

 

 

 

0.19

 

 

 

0.18

 

Restructuring charges (5)

 

0.14

 

 

 

0.01

 

 

 

0.15

 

 

 

0.09

 

Non-cash interest expense related to convertible senior notes (6)

 

0.05

 

 

 

0.05

 

 

 

0.19

 

 

 

0.21

 

Adjustment to provision (benefit) from income taxes (7)

 

 

 

 

(0.01

)

 

 

 

 

 

(0.01

)

Dividend on series A convertible preferred stock (8)

 

0.02

 

 

 

 

 

 

0.08

 

 

 

 

Accretion of series A convertible preferred stock (9)

 

 

 

 

0.02

 

 

 

 

 

 

0.02

 

Transformation and transition expense (10)

 

0.01

 

 

 

 

 

 

0.04

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

Non-GAAP adjustments for discontinued operations (11)

 

(5.17

)

 

 

0.05

 

 

 

(4.94

)

 

 

0.25

 

Non-GAAP net income (loss) per share attributable to common stockholders, basic and diluted

$

(0.09

)

 

$

0.12

 

 

$

0.17

 

$

0.31

 

Weighted average shares used in per share calculation for GAAP, basic and diluted

 

236,255

 

 

 

229,203

 

 

 

236,367

 

 

 

223,308

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Cost of platform, cloud subscription and managed services revenue

$

3,578

 

 

$

2,805

 

 

$

13,330

 

 

$

10,337

 

Cost of professional services revenue

 

7,089

 

 

 

5,029

 

 

 

24,663

 

 

 

17,499

 

Research and development expense

 

9,148

 

 

 

7,345

 

 

 

36,535

 

 

 

23,943

 

Sales and marketing expense

 

10,556

 

 

 

9,679

 

 

 

42,161

 

 

 

36,428

 

General and administrative expense

 

9,728

 

 

 

6,738

 

 

 

34,676

 

 

 

25,177

 

Total stock-based compensation expense

$

40,099

 

 

$

31,596

 

 

$

151,365

 

 

$

113,384

 

 

 

 

 

 

 

 

 

(2) Includes amortization of intangible assets as follows:

 

 

 

 

 

 

 

Cost of platform, cloud subscription and managed services revenue

$

7,253

 

 

$

6,770

 

 

$

28,549

 

 

$

26,055

 

Sales and marketing expense

 

3,950

 

 

 

4,090

 

 

 

15,895

 

 

 

15,225

 

Total amortization of intangible assets

$

11,203

 

 

$

10,860

 

 

$

44,444

 

 

$

41,280

 

 

 

 

 

 

 

 

 

(3) Includes amortization of stock-based compensation capitalized in software development costs as follows:

 

 

 

 

 

 

 

Research and development expense

 

616

 

 

 

542

 

 

 

2,156

 

 

 

1,828

 

Total amortization of stock-based compensation capitalized in software development costs

$

616

 

 

$

542

 

 

$

2,156

 

 

$

1,828

 

 

 

 

 

 

 

 

 

(4) Includes acquisition related expenses as follows:

 

 

 

 

 

 

 

General and administrative expense

$

500

 

 

$

425

 

 

$

724

 

 

$

425

 

 

 

 

 

 

 

 

 

(5) Includes restructuring charges as follows:

 

 

 

 

 

 

 

Restructuring charges

$

32,649

 

 

$

1,487

 

 

$

34,576

 

 

$

21,084

 

 

 

 

 

 

 

 

 

(6) Includes non-cash interest expense related to convertible senior notes as follows:

 

 

 

 

 

 

 

Other income, net

$

11,804

 

 

$

11,248

 

 

$

46,374

 

 

$

46,728

 

 

 

 

 

 

 

 

 

(7) Includes income tax effect of non-GAAP adjustments as follows:

 

 

 

 

 

 

 

Adjustment to provision (benefit) from income taxes

$

(10

)

 

$

(1,546

)

 

$

(152

)

 

$

(1,861

)

 

 

 

 

 

 

 

 

(8) Dividend on series A convertible preferred stock

$

4,666

 

 

$

1,050

 

 

$

18,354

 

 

$

1,050

 

 

 

 

 

 

 

 

 

(9) Accretion of series A convertible preferred stock

$

 

 

$

4,653

 

 

$

82

 

 

$

4,653

 

 

 

 

 

 

 

 

 

(10) Transformation and transition expense

$

2,636

 

 

$

 

 

$

9,005

 

 

$

 

 

 

 

 

 

 

 

 

(11) Includes non-GAAP adjustments for discontinued operations as follows:

 

 

 

 

 

 

 

Stock-based compensation expense

$

(6,420

)

 

$

10,917

 

 

$

31,910

 

 

$

42,408

 

Amortization of intangibles

 

 

 

 

809

 

 

 

1,221

 

 

 

4,601

 

Amortization of stock-based compensation capitalized in software development costs

 

 

 

 

523

 

 

 

1,618

 

 

 

2,302

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

5,423

 

Gain on sale of discontinued operations

 

(1,232,940

)

 

 

 

 

 

(1,232,940

)

 

 

 

Divestiture related costs

 

17,009

 

 

 

 

 

 

30,636

 

 

 

 

 

$

(1,222,351

)

 

$

12,249

 

 

$

(1,167,555

)

 

$

54,734

 

Mandiant, Inc.

SUMMARY OF CONTINUING OPERATIONS, DISCONTINUED OPERATIONS, AND COMBINED OPERATIONS

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share amounts)

 

 

Three Months Ended December 31, 2021

 

Continuing

 

Discontinued

 

Combined

 

 

 

 

 

 

Revenue

$

132,887

 

 

$

11,112

 

 

$

143,999

 

Cost of revenue

 

66,677

 

 

 

587

 

 

 

67,264

 

Total gross profit

 

66,210

 

 

 

10,525

 

 

 

76,735

 

 

 

 

 

 

 

Research and development

 

39,244

 

 

 

714

 

 

 

39,958

 

Sales and marketing

 

70,083

 

 

 

779

 

 

 

70,862

 

General and administrative

 

34,003

 

 

 

17,009

 

 

 

51,012

 

Restructuring charges

 

32,649

 

 

 

 

 

 

32,649

 

GAAP operating income (loss)

 

(109,769

)

 

 

(7,977

)

 

 

(117,746

)

Non-GAAP adjustments

 

87,703

 

 

 

10,588

 

 

 

98,291

 

Non-GAAP operating income (loss)

$

(22,066

)

 

$

2,611

 

 

$

(19,455

)

 

 

 

 

 

 

Other income and expense, provision for income tax & dividends on series A convertible preferred stock

$

(17,724

)

 

$

1,232,941

 

 

$

1,215,217

 

Net loss attributable to common stockholders

$

(127,493

)

 

$

1,224,962

 

 

$

1,097,469

 

 

 

 

 

 

 

GAAP operating margin

 

(83

)%

 

 

(72

)%

 

 

(82

)%

Non-GAAP adjustments related to operating income (loss)

 

66

%

 

 

95

%

 

 

68

%

Non-GAAP operating margin

 

(17

)%

 

 

23

%

 

 

(14

)%

 

 

 

 

 

 

Non-GAAP Adjustments:

 

 

 

 

 

Stock-based compensation expense

$

40,099

 

 

$

(6,420

)

 

$

33,679

 

Amortization of intangible assets

 

11,203

 

 

 

 

 

 

11,203

 

Amortization of stock-based compensation capitalized in software development costs

 

616

 

 

 

 

 

 

616

 

Restructuring charges

 

32,649

 

 

 

 

 

 

32,649

 

Acquisition related cost

 

500

 

 

 

 

 

 

500

 

Divestiture related costs

 

 

 

 

17,010

 

 

 

17,010

 

Transformation and transition expense

 

2,636

 

 

 

 

 

 

2,636

 

Non-GAAP adjustments related to operating income (loss)

$

87,703

 

 

$

10,590

 

 

$

98,293

 

 

 

 

 

 

 

Non-cash interest expense related to convertible senior notes

$

11,804

 

 

$

 

 

$

11,804

 

Dividend on series A convertible preferred stock

 

4,666

 

 

 

 

 

 

4,666

 

Accretion of series A convertible preferred stock

 

 

 

 

 

 

 

 

Adjustment to provision (benefit) from income taxes

$

(10

)

 

 

 

 

$

(10

)

Gain from sale of FireEye Products 

$

 

 

$

(1,232,940

)

 

$

(1,232,940

)

Non-GAAP adjustments below operating income (loss)

$

16,460

 

 

$

(1,232,940

)

 

$

(1,216,480

)

Total non-GAAP adjustments

$

104,163

 

 

$

(1,222,350

)

 

$

(1,118,187

)

 

 

 

 

 

 

GAAP net income (loss) per share attributable to common stockholders, basic

$

(0.54

)

 

$

5.19

 

 

$

4.65

 

Non-GAAP net income (loss) per share attributable to common stockholders, basic

$

(0.10

)

 

$

0.01

 

 

$

(0.09

)

Weighted average shares used in per share calculation for non-GAAP, basic

 

236,255

 

 

 

236,255

 

 

 

236,255

 

 

 

Three Months Ended December 31, 2020

 

Continuing

 

Discontinued

 

Combined

 

 

 

 

 

 

Revenue

$

110,273

 

 

$

137,230

 

 

$

247,503

 

Cost of revenue

 

60,228

 

 

 

29,224

 

 

 

89,452

 

Total gross profit

 

50,045

 

 

 

108,006

 

 

 

158,051

 

 

 

 

 

 

 

Research and development

 

32,986

 

 

 

27,017

 

 

 

60,003

 

Sales and marketing

 

57,312

 

 

 

38,723

 

 

 

96,035

 

General and administrative

 

27,005

 

 

 

 

 

 

27,005

 

Restructuring charges

 

1,487

 

 

 

 

 

 

1,487

 

GAAP operating income (loss)

 

(68,745

)

 

 

42,266

 

 

 

(26,479

)

Non-GAAP adjustments

 

44,910

 

 

 

12,249

 

 

 

57,159

 

Non-GAAP operating income (loss)

$

(23,835

)

 

$

54,515

 

 

$

30,680

 

 

 

 

 

 

 

Other income and expense, provision for income tax & dividends on series A convertible preferred stock

$

(16,880

)

 

$

(946

)

 

$

(17,826

)

Net loss attributable to common stockholders

$

(85,625

)

 

$

41,321

 

 

$

(44,304

)

 

 

 

 

 

 

GAAP operating margin

 

(62

)%

 

 

31

%

 

 

(11

)%

Non-GAAP adjustments related to operating income (loss)

 

40

%

 

 

9

%

 

 

23

%

Non-GAAP operating margin

 

(22

)%

 

 

40

%

 

 

12

%

 

 

 

 

 

 

Non-GAAP Adjustments:

 

 

 

 

 

Stock-based compensation expense

$

31,596

 

 

$

10,917

 

 

$

42,513

 

Amortization of intangible assets

 

10,860

 

 

 

809

 

 

 

11,669

 

Amortization of stock-based compensation capitalized in software development costs

 

542

 

 

 

523

 

 

 

1,065

 

Restructuring charges

 

1,487

 

 

 

 

 

 

1,487

 

Acquisition related costs

 

425

 

 

 

 

 

 

425

 

Non-GAAP adjustments related to operating income (loss)

$

44,910

 

 

$

12,249

 

 

$

57,159

 

 

 

 

 

 

 

Non-cash interest expense related to convertible senior notes

$

11,248

 

 

$

 

 

$

11,248

 

Dividend on series A convertible preferred stock

 

1,050

 

 

 

 

 

 

1,050

 

Accretion of series A convertible preferred stock

 

4,653

 

 

 

 

 

 

4,653

 

Adjustment to provision (benefit) from income taxes

 

(1,546

)

 

 

 

 

 

(1,546

)

Non-GAAP adjustments below operating income (loss)

$

15,405

 

 

$

 

 

$

15,405

 

Total non-GAAP adjustments

$

60,315

 

 

$

12,249

 

 

$

72,564

 

 

 

 

 

 

 

GAAP net income (loss) per share attributable to common stockholders, basic

$

(0.37

)

 

$

0.18

 

 

$

(0.19

)

Non-GAAP net income (loss) per share attributable to common stockholders, basic

$

(0.11

)

 

$

0.23

 

 

$

0.12

 

Weighted average shares used in per share calculation for non-GAAP, basic

 

229,203

 

 

 

229,203

 

 

 

229,203

 

 

 

Year Ended December 31,

 

 

2021

 

2020

 

 

 

 

 

Loss from continuing operations

 

$

(409,670

)

 

$

(349,338

)

Dividend on series A convertible preferred stock

 

 

(18,354

)

 

 

(1,050

)

Accretion of series A convertible preferred stock

 

 

(82

)

 

 

(4,653

)

Net loss attributable to common stockholders

 

 

(428,106

)

 

 

(355,041

)

Total Non-GAAP Adjustments

 

 

306,925

 

 

 

228,571

 

Non-GAAP net loss attributable to common stockholders

 

 

(121,181

)

 

 

(126,470

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(1.81

)

 

$

(1.59

)

Non-GAAP net loss per share attributable to common stockholders, basic and diluted

 

$

(0.51

)

 

$

(0.57

)

Weighted average shares used in per share calculation for GAAP, basic and diluted

 

 

236,367

 

 

 

223,308

 

Weighted average shares used in per share calculation for Non-GAAP, basic and diluted

 

 

236,367

 

 

 

223,308

 

Mandiant, Inc.

RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE

(Unaudited, in thousands)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

Revenue

$

132,887

 

 

$

110,273

 

 

$

483,455

 

 

$

399,709

 

Add: deferred revenue, end of period

 

410,329

 

 

 

284,253

 

 

 

410,329

 

 

 

284,253

 

Less: deferred revenue, beginning of period

 

(314,676

)

 

 

(243,623

)

 

 

(284,253

)

 

 

(273,241

)

Less: deferred revenue assumed from acquisitions

(2,664

)

(2,664

)

Billings (non-GAAP)

$

228,540

 

 

$

148,239

 

 

$

609,531

 

 

$

408,057

 

Mandiant, Inc.

BILLINGS BREAKOUT

(Unaudited, in thousands)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

Platform, cloud subscription and managed services billings

$

136,363

 

$

74,313

 

$

323,319

 

$

195,357

Professional services billings

 

92,177

 

 

73,926

 

 

286,212

 

 

212,700

Billings (non-GAAP)

$

228,540

 

$

148,239

 

$

609,531

 

$

408,057

 

Source: Mandiant

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