You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled "Risk Factors" and in other parts of this Quarterly Report on Form 10-Q.
Overview
Box is the Content Cloud: one secure, cloud-native platform for managing the entire content journey. Content - from blueprints to wireframes, videos to documents, proprietary formats to PDFs - is the source of an organization's unique value. Our cloud content management platform enables our customers, including 67% of the Fortune 500, to securely manage the entire content lifecycle, from the moment a file is created or ingested to when it's shared, edited, published, approved, signed, classified, and retained. Box keeps content secure and compliant, while also allowing easy access and sharing of this content from anywhere, on any device - both within the organization and with external partners.
With our Software-as-a-Service (SaaS) platform, users can collaborate on content both internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security and compliance features to comply with legal and regulatory requirements, internal policies and industry standards and regulations. The Box Content Cloud accelerates business processes, improves employee productivity, enables secure remote work, and protects an organization's most valuable data. Our platform enables a broad set of high-value business use cases across enterprises, hundreds of file formats and media types, and user experiences. Our platform integrates with leading enterprise business applications, and is compatible with multiple application environments, operating systems and devices, ensuring that workers can securely access their critical business content whenever and wherever they need it.
In addition, we continue to innovate by expanding our core services and
offerings with a focus on frictionless security and compliance, seamless
internal and external collaboration and workflow, and integration with
best-of-breed applications. For example, we provide Box Shield, our advanced
security offering that helps customers reduce the risk of accidental data
leakage and protect their business from insider threats and account compromise;
Box KeySafe, a solution that builds on top of Box's strong encryption and
security capabilities to give customers greater control over the encryption keys
used to secure the file contents that are stored with Box; Box Governance, which
gives customers a better way to comply with regulatory policies, satisfy
e-discovery requests and effectively manage sensitive business information; Box
Relay, which allows our end users to easily build, manage and track their own
workflows; Box Platform, which further enables customers and partners to build
enterprise apps using our open APIs and developer tools; and Box Zones, which
gives global customers the ability to store their data locally in certain
regions. With
We are also continuing to expand the scope of what customers can do with their
content using Box. In
We offer our solution to our customers as a subscription-based service, with subscription fees based on the requirements of our customers, including the number of users and functionality deployed. The majority of our customers subscribe to our service through one-year contracts, although we also offer our services for terms ranging from one month to three years or more. We typically invoice our customers at the beginning of the term, in multiyear, annual, quarterly or monthly installments. We recognize revenue as we satisfy a performance obligation. Accordingly, due to our subscription model, we recognize revenue for our subscription and premier services ratably over the term of the contract.
Current Period Highlights
For the three months ended
26
--------------------------------------------------------------------------------
ended
COVID-19
We continue to monitor, analyze and respond to evolving developments regarding the COVID-19 pandemic, which has significantly impacted global economic activity and social practices. As part of these efforts, we have taken steps to protect the health and welfare of our employees by temporarily closing most of our offices and suspending almost all business-related travel, while continuing our commitment and efforts to serve customers that rely on us. In addition, we have shifted our customer and marketing events to virtual-only experiences.
Although the COVID-19 pandemic has not had a material adverse impact on our financial results for the first quarter of our fiscal year 2022, the pandemic has negatively impacted some of our customers and prospects. As a result, we have experienced, and may continue to experience, increased customer churn and delayed sales cycles, as well as customers and prospective customers reducing budgets related to services that we offer. Despite these adverse impacts, the COVID-19 pandemic has also created additional opportunities for Box by enabling our customers' and prospects' employees to engage in secure remote work through our platform.
The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations, and financial position will depend on future developments, which are uncertain and cannot be predicted at this time, and include the severity and duration of the pandemic, the availability and effectiveness of COVID-19 vaccines globally, actions that may be taken by government authorities to contain the virus and minimize its economic impact, passing of or not passing further stimulus packages by governments, the impact of COVID-19 on our customers, business partners and employees, and other factors identified in Part II, Item 1A "Risk Factors" of this Form 10-Q. As a result, the extent and magnitude of the impact COVID-19 will have on our business and operating results cannot be predicted at this time.
Key Business Metrics
We use the key metrics below for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these key metrics provide meaningful supplemental information regarding our performance. We believe that both management and investors benefit from referring to these key metrics in assessing our performance and when planning, forecasting, and analyzing future periods. These key metrics also facilitate management's internal comparisons to our historical performance as well as comparisons to certain competitors' operating results. We believe these key metrics are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help analyze the health of our business. The below data is presented in millions, except for percentage rate data.
Three Months EndedApril 30, 2021 2020
Remaining performance obligations (period end)
20 % 13 % Billings$ 159.4 $ 128.1 Billings growth rate 24 % 8 % Free cash flow$ 75.9 $ 39.9 Net retention rate (period end) 103 % 107 %
Remaining Performance Obligations
Remaining performance obligations (RPO) represent, at a point in time, contracted revenue that has not yet been recognized. RPO consists of deferred revenue and backlog, offset by contract assets. Backlog is defined as non-cancellable contracts deemed certain to be invoiced and recognized as revenue in future periods. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty is due upon cancellation, and invoicing is not dependent on a future event such as the delivery of a specific new product or feature, or the achievement of contractual contingencies. While Box believes RPO is a leading indicator of revenue as it represents sales activity not yet recognized in revenue, it is not necessarily indicative of future revenue growth as it is influenced by several factors, including seasonality, contract renewal timing, average contract terms and foreign currency exchange rates. Box monitors RPO to manage the business and evaluate performance. We do not consider RPO to be a non-GAAP financial measure given that it is calculated in accordance with GAAP.
27
--------------------------------------------------------------------------------
RPO as of
Billings
Billings represent our revenue plus the changes in deferred revenue and contract assets in the period. Billings we record in any particular period primarily reflect subscription renewals and expansion within existing customers plus sales to new customers, and represent amounts invoiced for all of our products and professional services. We typically invoice our customers at the beginning of the term, in multiyear, annual, quarterly or monthly installments. If the customer negotiates to pay the full subscription amount at the beginning of the period, the total subscription amount for the entire term will be reflected in billings. If the customer negotiates to be invoiced annually or more frequently, only the amount billed for such period will be included in billings.
Billings help investors better understand our sales activity for a particular period, which is not necessarily reflected in our revenue given that we recognize subscription revenue ratably over the contract term. We consider billings a significant performance measure. We monitor billings to manage our business, make planning decisions, evaluate our performance and allocate resources. We believe that billings offer valuable supplemental information regarding the performance of our business and will help investors better understand the sales volumes and performance of our business. We do not consider billings to be a non-GAAP financial measure given that it is calculated using exclusively revenue, deferred revenue, and contract assets, all of which are financial measures calculated in accordance with GAAP.
Billings for the three months ended
Our use of billings has certain limitations as an analytical tool and should not be considered in isolation or as a substitute for revenue or an analysis of our results as reported under GAAP. Billings are recognized when invoiced, while the related subscription and premier services revenue is recognized ratably over the contract term as we satisfy a performance obligation. Also, other companies, including companies in our industry, may not use billings, may calculate billings differently, may have different billing frequencies, or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of billings as a comparative measure.
Over time, we expect to continue to normalize payment durations. In addition, as we have gained and expect to continue to gain more traction with large enterprise customers, we also anticipate our quarterly billings to increasingly concentrate in the back half of our fiscal year, especially in the fourth quarter.
A calculation of billings starting with revenue, the most directly comparable GAAP financial measure, is presented below (in thousands):
Three Months Ended April 30, 2021 2020 GAAP revenue$ 202,441 $ 183,561 Deferred revenue, end of period 423,249 368,349
Less: deferred revenue, beginning of period (465,613 ) (423,849 ) Contract assets, beginning of period
25 - Less: contract assets, end of period (677 ) - Billings$ 159,425 $ 128,061 Free Cash Flow
We define free cash flow as cash flows from operating activities less purchases of property and equipment, principal payments of finance lease liabilities, capitalized internal-use software costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside of our core business. We specifically identify adjusting items in our reconciliation of GAAP to non-GAAP financial measures. We consider free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. A reconciliation of free cash flow to net cash provided by operating activities, its nearest
28
--------------------------------------------------------------------------------
GAAP equivalent, is presented in the non-GAAP Financial Measures section of this report. The presentation of free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
For the three months ended
Net Retention Rate
Net retention rate is defined as the net percentage of Total Account Value (TAV) retained from existing customers, including expansion. We calculate our net retention rate as of a period end by starting with the TAV from customers as of 12 months prior to such period end (Prior Period TAV) and a subscription customer of Box for at least 12 months. We then calculate TAV from these same customers as of the current period end (Current Period TAV). Finally, we divide the Current Period TAV by the Prior Period TAV and report the average of this calculation over the prior 12 months to arrive at our net retention rate. We believe our net retention rate is an important metric that provides insight into the long-term value of our subscription agreements and our ability to retain and grow revenue from our customer base. Net retention rate is an operational metric and there is no comparable GAAP financial measure to which we can reconcile this particular key metric.
Our net retention rates were 103% and 107% as of
Components of Results of Operations
Revenue
We derive our revenue primarily from three sources: (1) subscription revenue, which is comprised of subscription fees from customers who have access to our cloud content management platform and other subscription-based services, which all include routine customer support; (2) revenue from customers purchasing our premier services package; and (3) revenue from professional services such as implementing best practice use cases, project management and implementation consulting services.
To date, practically all of our revenue has been derived from subscription and premier services. Subscription and premier services revenue are driven primarily by the number of customers, the number of seats sold to each customer and the price of our services.
We recognize revenue as we satisfy a performance obligation. Accordingly, due to our subscription model, we recognize revenue for our subscription and premier services ratably over the contract term. We typically invoice our customers at the beginning of the term, in multiyear, annual, quarterly or monthly installments. Our subscription and premier services contracts are typically non-cancellable and do not contain refund-type provisions. The majority of our customers subscribe to our service through one-year contracts, although we also offer our services for terms ranging between one month to three years or more.
Professional services are generally billed on a fixed price basis, for which revenue is recognized over time based on the proportion performed. Professional services revenue was not material as a percentage of total revenue for all periods presented.
Revenue is presented net of sales and other taxes we collect on behalf of governmental authorities.
Cost of Revenue
Our cost of revenue consists primarily of costs related to providing our subscription services to our paying customers, including employee compensation and related expenses for data center operations, customer support and professional services personnel, payments to outside technology service providers, depreciation of servers and equipment, security services and other tools, as well as amortization expense associated with acquired technology and capitalized internally developed software. We allocate overhead such as rent, information technology costs and employee benefit costs to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each of the operating expense categories set forth below.
29
--------------------------------------------------------------------------------
Operating Expenses
Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of each category of operating expenses. Operating expenses also include allocated overhead costs for facilities, information technology costs and employee benefit costs.
Research and Development. Research and development expense consists primarily of employee compensation and related expenses, as well as allocated overhead. Our research and development efforts are focused on scaling our platform, building an ecosystem of best-of-breed applications and platforms, infrastructure, adding enterprise grade features, functionality and enhancements such as workflow automation, intelligent content management capabilities, and advanced security to enhance the ease of use of our cloud content management services. We capitalize certain qualifying costs to develop software for internal use incurred during the application development stage.
Sales and Marketing. Sales and marketing expense consists primarily of employee compensation and related expenses, sales commissions, marketing programs, travel-related expenses, as well as allocated overhead. Marketing programs include but are not limited to advertising, events, corporate communications, brand building, and product marketing. Sales and marketing expense also consists of data center and customer support costs related to providing our cloud-based services to our free users. We market and sell our cloud content management services worldwide through our direct sales organization and through indirect distribution channels such as strategic resellers.
General and Administrative. General and administrative expense consists primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, recruiting, information systems, security, compliance, fees for external professional services and cloud-based enterprise systems, as well as allocated overhead. External professional services fees are primarily comprised of outside legal, accounting, audit and outsourcing services.
Interest and Other Expense, Net
Interest and other expense, net consists of interest expense, interest income, gains and losses from foreign currency transactions, and other income and expense. Interest expense consists primarily of interest charges for our line of credit and interest rate swap agreement, interest expense related to finance leases, unused commitment fees on our line of credit, the amortization of capitalized debt issuance costs, fees on our letters of credit, and the amortization of issuance costs of our convertible senior notes. Interest income consists primarily of interest earned on our cash and cash equivalents and short-term investments. We have historically invested our cash and cash equivalents in overnight deposits, certificates of deposit, money market funds, and short term, investment-grade corporate debt, marketable securities and asset backed securities.
Provision for Income Taxes
Provision for income taxes consists primarily of income taxes in certain foreign
jurisdictions in which we conduct business and state income taxes in
30
--------------------------------------------------------------------------------
Results of Operations
The following tables set forth our results of operations for the periods presented (in thousands, except per share amounts, and as a percentage of our revenue): Three Months Ended April 30, 2021 2020 Revenue$ 202,441 $ 183,561 Cost of revenue (1) 60,947 53,995 Gross profit 141,494 129,566 Operating expenses: Research and development (1) 50,859 53,114 Sales and marketing (1) 69,811 72,750 General and administrative (1) 31,087 27,942 Total operating expenses 151,757 153,806 Loss from operations (10,263 ) (24,240 ) Interest and other expense, net (3,999 ) (1,103 ) Loss before provision for income taxes (14,262 ) (25,343 ) Provision for income taxes 311 207 Net loss$ (14,573 ) $ (25,550 ) Net loss per share, basic and diluted$ (0.09 ) $ (0.17 ) Weighted-average shares used to compute net loss per share, basic and diluted 161,733 151,943
(1) Includes stock-based compensation expense as follows:
Three Months Ended April 30, 2021 2020 Cost of revenue$ 5,340 $ 4,541 Research and development 15,453 17,287 Sales and marketing 11,551 10,079 General and administrative 9,446 8,136
Total stock-based compensation
Three Months Ended April 30, 2021 2020 Percentage of Revenue: Revenue 100 % 100 % Cost of revenue (1) 30 29 Gross profit 70 71 Operating expenses: Research and development (1) 25 29 Sales and marketing (1) 35 40 General and administrative (1) 15 15 Total operating expenses 75 84 Loss from operations (5 ) (13 ) Interest expense, net (2 ) (1 ) Other income, net - - Loss before provision for income taxes (7 ) (14 ) Provision for income taxes - - Net loss (7 ) % (14 ) %
(1) Includes stock-based compensation expense as follows:
31
--------------------------------------------------------------------------------
Three Months Ended April 30, 2021 2020 Cost of revenue 3 % 3 % Research and development 7 9 Sales and marketing 6 6 General and administrative 5 4
Total stock-based compensation 21 % 22 %
Comparison of the Three Months Ended
Revenue Three Months Ended April 30, 2021 2020 $ Change % Change (dollars in thousands) Revenue$ 202,441 $ 183,561 $ 18,880 10 %
The increase in revenue was primarily driven by expansion within our existing
customers as they broadened their deployment of our product offerings with
strong attach rates of add-on products at higher price per seat. Additionally,
the increase in subscription services was also driven by the addition of new
customers, as the number of paying organizations increased by 6% from
Cost of Revenue Three Months Ended April 30, 2021 2020 $ Change % Change (dollars in thousands) Cost of revenue$ 60,947 $ 53,995 $ 6,952 13 % Percentage of revenue 30 % 29 %
The increase in absolute dollars was primarily due to an increase of
Research and Development Three Months Ended April 30, 2021 2020 $ Change % Change (dollars in thousands) Research and development$ 50,859 $ 53,114 $ (2,255 ) -4 % Percentage of revenue 25 % 29 %
The decrease in absolute dollars was primarily due to decreases of
32
--------------------------------------------------------------------------------
stable as a percentage of revenue over time, as we continue to make significant improvements to our content cloud product offerings and services, including the introduction Box Sign and the expansion of our advanced security, compliance, collaboration, workflow automation, and integration capabilities.
Sales and Marketing Three Months Ended April 30, 2021 2020 $ Change % Change (dollars in thousands) Sales and marketing$ 69,811 $ 72,750 $ (2,939 ) -4 % Percentage of revenue 35 % 40 %
The decrease in absolute dollars was primarily due to decreases of
Our sales and marketing expenses are generally higher for acquiring new, or expanding existing, customers than for renewals of existing customer subscriptions. We expect to continue to invest in capturing our large market opportunity globally and capitalize on our competitive position with a continued focus on our profitability objectives. We expect our sales and marketing expenses to increase in dollars but continue to decrease as a percentage of revenue over time, as our existing customer base grows and a relatively higher percentage of our revenue is attributable to renewals versus new or expanding Box deployments and as we continue to focus on improving sales productivity and simplifying our product offerings. While we expect certain expenses that were reduced due to COVID-19 to partially return over time, we do not expect to return to pre-COVID-19 levels, even after we return to an office-based environment.
General and Administrative Three Months Ended April 30, 2021 2020 $ Change % Change (dollars in thousands) General and administrative$ 31,087 $ 27,942 $ 3,145 11 % Percentage of revenue 15 % 15 %
The increase in absolute dollars was primarily due to an increase of
Interest and Other Expense, Net
Three Months Ended April 30, 2021 2020 $ Change % Change (dollars in thousands)
Interest and other expense, net
* Percentage change not meaningful.
33
--------------------------------------------------------------------------------
The increase in interest and other expense, net is primarily due to an increase
of
Liquidity and Capital Resources
As of
Cash Flows
For the three months endedApril 30, 2021 and 2020, our cash flows were as follows (in thousands): Three Months Ended April 30, 2021 2020 Net cash provided by operating activities$ 94,772 $ 61,917 Net cash used in investing activities (108,965 ) (4,591 )
Net cash (used in) provided by financing activities (18,848 ) 15,303
Operating Activities
For the three months ended
The primary drivers for the changes in operating assets and liabilities include
a
Investing Activities
Cash used in investing activities of
Financing Activities
Cash used in financing activities of
34
--------------------------------------------------------------------------------
Debt
In
On
Off-Balance Sheet Arrangements
Through
Contractual Obligations and Commitments
Our principal commitments consist of (i) obligations under operating leases for
office spaces and data centers, (ii) obligations under finance leases for
servers and related equipment for or data center operations, (iii) purchase
obligations not recognized on the condensed consolidated balance sheet as of
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with
accounting principles generally accepted in
Except for items discussed under Use of Estimates and Recently Adopted
Accounting Pronouncements under Part I, Item 1. Financial Statements-Note 1,
there have been no material changes to our critical accounting policies and
estimates during the three months ended
Recent Accounting Pronouncements
Refer to Part I, Item 1. Financial Statements-Note 1 for information regarding the effect of new accounting pronouncements on our financial statements.
Non-GAAP Financial Measures
Regulation S-K Item 10(e), "Use of Non-GAAP Financial Measures in Commission Filings," defines and prescribes the conditions for use of non-GAAP financial information. Our measures of non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, and free cash flow (collectively, the non-GAAP financial measures) each meet the definition of a non-GAAP financial measure.
We use these non-GAAP financial measures and our key metrics for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures and key metrics provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures and key metrics in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures and key metrics also facilitate management's internal comparisons to our historical performance as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures and key metrics are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
35
--------------------------------------------------------------------------------
Non-GAAP operating income (loss) and non-GAAP operating margin
We define non-GAAP operating income (loss) as operating income (loss) excluding expenses related to stock-based compensation (SBC), acquired intangible assets amortization, and as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income (loss) divided by revenue. Although SBC is an important aspect of the compensation of our employees and executives, determining the fair value of certain of the stock-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. For restricted stock unit awards, the amount of stock-based compensation expenses is not reflective of the value ultimately received by the grant recipients. Management believes it is useful to exclude SBC in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. Management also views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's developed technology and trade names, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period. Furthermore, Box excludes the following expenses as they are considered by management to be special items outside of Box's core operating results: (1) fees related to shareholder activism, which include directly applicable third-party advisory and professional service fees, (2) expenses related to certain litigation, (3) expenses associated with restructuring activities, consisting primarily of severance and other personnel-related costs, and (4) expenses related to announced acquisitions, including transaction and discrete tax costs. There are no expenses related to litigation or restructuring activities excluded from non-GAAP operating income (loss) in any of the periods presented.
Non-GAAP net income (loss) and net income (loss) per share
We define non-GAAP net income (loss) as net loss excluding expenses related to stock-based compensation, acquired intangible assets amortization and as applicable, other special items. We specifically identify other adjusting items in our reconciliation of GAAP to non-GAAP net income (loss). These items include expenses related to certain litigation and the amortization of the issuance costs associated with our Notes, which are amortized as interest expense, because they are considered by management to be special items outside our core operating results. We define non-GAAP net income (loss) per share as non-GAAP net income (loss) divided by the weighted-average outstanding shares. Similarly, the same adjusting items specified in our reconciliation of GAAP to non-GAAP net income (loss) are also excluded from the calculation of non-GAAP net income (loss) per share.
Free Cash Flow
We define free cash flow as cash flows from operating activities less purchases of property and equipment, principal payments of finance lease liabilities, capitalized internally developed software costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside of our core business. We specifically identify other adjusting items in our reconciliation of GAAP to non-GAAP financial measures. We consider free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the balance sheet; but it is not intended to represent the residual cash flow available for discretionary expenditures. A reconciliation of free cash flow to net cash provided by operating activities, its nearest GAAP equivalent, is presented below. The presentation of free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
Limitations on the use of non-GAAP financial measures
A limitation of our non-GAAP financial measures is that they do not have uniform definitions. Our definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. Additionally, in the case of stock-based compensation expense, if we did not pay a portion of compensation in the form of stock-based compensation expense, the cash salary expense included in costs of revenue and operating expenses would be higher which would affect our cash position.
We compensate for these limitations by reconciling non-GAAP financial measures to the most comparable GAAP financial measures. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view our non-GAAP financial measures in conjunction with the most comparable GAAP financial measures.
36
--------------------------------------------------------------------------------
Our reconciliation of the non-GAAP financial measures for the three months endedApril 30, 2021 and 2020 are as follows (in thousands, except per share data and percentages): Three Months Ended April 30, 2021 2020 GAAP operating loss$ (10,263 ) $ (24,240 ) Stock-based compensation 41,790 40,043 Acquired intangible assets amortization 901 - Acquisition-related expenses 920 - Fees related to shareholder activism 1,050 1,402 Non-GAAP operating income$ 34,398 $ 17,205 GAAP operating margin (5 ) % (13 ) % Stock-based compensation 21 22 Acquired intangible assets amortization - - Acquisition-related expenses - - Fees related to shareholder activism 1 - Non-GAAP operating margin 17 % 9 % GAAP net loss$ (14,573 ) $ (25,550 ) Stock-based compensation 41,790 40,043 Acquired intangible assets amortization 901 - Acquisition-related expenses 920 - Fees related to shareholder activism 1,050 1,402 Amortization of debt issuance costs 469 - Non-GAAP net income$ 30,557 $ 15,895 GAAP net loss per share, basic and diluted$ (0.09 ) $ (0.17 ) Stock-based compensation 0.26 0.26 Acquired intangible assets amortization - - Acquisition-related expenses 0.01 - Fees related to shareholder activism 0.01 0.01 Amortization of debt issuance costs - - Non-GAAP net income per share, basic$ 0.19 $ 0.10 Non-GAAP net income per share, diluted$ 0.18 $ 0.10
Weighted-average shares used to compute GAAP net loss per share, basic and diluted
161,733 151,943
Weighted-average shares used to compute Non-GAAP net income per share Basic
161,733 151,943 Diluted 169,221 157,608
GAAP net cash provided by operating activities
(1,145 ) (1,407 ) Principal payments of finance lease liabilities (13,262 ) (17,356 ) Capitalized internal-use software costs (4,475 ) (3,291 ) Non-GAAP free cash flow$ 75,890 $ 39,863 GAAP net cash used in investing activities$ (108,965 ) $ (4,591 ) GAAP net cash (used in) provided by financing activities$ (18,848 ) $ 15,303 37
--------------------------------------------------------------------------------
© Edgar Online, source