MobileIron Announces First Quarter 2018 Results

MOUNTAIN VIEW, Calif., April 26, 2018 /PRNewswire/ -- MobileIron (NASDAQ:MOBL), the secure foundation for modern work, today announced results for its first quarter ended March 31, 2018.

First Quarter 2018 Financial Highlights

• Revenue was $43.7 million, up 4% year-over-year.
• Recurring revenue was $33.8 million, up 12% year-over-year.
• Billings were $46.0 million, up 1% year-over-year.
• GAAP net loss per share was $0.17; non-GAAP net loss per share was $0.06.
• Cash generated from operating activities was $9.2 million.

"We delivered a solid start to 2018 by hitting our targets for the quarter, reaffirming our full year outlook, and continuing our growth in recurring revenue," said Simon Biddiscombe, CEO, MobileIron. "Our partnerships with market leaders Lenovo and Google validate MobileIron's unique, comprehensive, modern security solution while extending our reach into new markets. We are excited to capitalize on these opportunities and broaden our presence in the expanding cloud and mobile security market."

First Quarter 2018 Business Highlights
Platform

• Launched MobileIron Access Risk Discovery Assessment to enable customers to identify unauthorized devices and apps accessing business cloud services like Office 365 and Salesforce.
• Released new versions of MobileIron Cloud, Access, AppConnect, Docs@Work, Derived Credentials (PIV-D), Email+, Monitor, Sentry, and Web@Work.

Channels/Partnerships

• Announced collaboration with Google Cloud on an e-commerce platform for enterprise cloud services, designed for operators and enterprises with a focus on making it easier and more secure for enterprises to buy and use cloud services.

Milestones and Recognition

• Appointed Sohail Parekh Senior Vice President of Engineering. Mr. Parekh brings more than 20 years of experience deploying best-in-class products on cloud platforms.
• Named the Leader in Unified Endpoint Management (UEM) by the German market research firm Crisp Research AG. MobileIron was positioned highest in product value creation and vendor performance.
• Shortlisted for four Data News Awards for Excellence, including: Cloud Innovator Award for Excellence; Best Product Award for Excellence: Mobile Device Management; Mobile Innovator Award for Excellence; Cybersecurity Innovator Award for Excellence.
• Awarded two additional US patents for mobile security, bringing the total to 67.

Financial Outlook
The company is providing the following outlook for its second quarter 2018 (ending June 30, 2018):

• Revenue is expected to be between $43 million and $46 million, flat to up 7% year-over-year.
• Billings are expected to be between $46 million and $49 million, up 3% to 9% year-over- year.
• Non-GAAP gross margin is expected to be between 84% and 85%.
• Non-GAAP operating expenses are expected to be between $44 million and $45 million.

The company is reaffirming the following outlook for 2018 (ending December 31, 2018):

• Revenue is expected to be between $190 million and $200 million, growth between 8% and 13% over 2017.
• Billings are expected to be between $210 million and $220 million, growth between 5% and 10% over 2017.
• Non-GAAP operating margin is expected to be between -5% and break-even for 2018.

All forward-looking non-GAAP financial measures contained in this section exclude estimates for stock-based compensation expenses. While a reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis, the company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables included in this press release for its first quarter of 2017 and 2018.

Conference Call and Webcast
MobileIron will report final results for the first quarter of fiscal year 2018 on Thursday, April 26, 2018 after the close of the market and host a conference call and live webcast at 1:30 p.m. Pacific Daylight Time (4:30 p.m. EDT) to discuss the company's financial results and business highlights. Interested parties may access the call by dialing 1-855-327-6837 in the U.S. or 1-631-891-4304 from international locations. The live webcast will be available on the MobileIron Investor Relations website at http://investors.mobileiron.com. A replay will be available through the same link.

Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding MobileIron's revenue, operating expenses, cost structure, GAAP and non-GAAP financial metrics, projected financial results and trends in MobileIron's business. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including, but not limited to, our limited operating history, quarterly fluctuations in our operating results, seasonality, our need to develop new solutions and enhancements to compete in rapidly evolving markets, product defects, customer adoption, competitive pressures, billings type mix shift, our ability to scale, our ability to recruit and retain key personnel, and the quality of our support services.

Additional information on potential factors that could affect MobileIron's financial results is included in our SEC filings, including our reports on Forms 10-K, 10-Q and 8-K and other filings that we make with the SEC from time to time and as available on our website, as applicable. MobileIron 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.  

About MobileIron
MobileIron provides the secure foundation for companies around the world to transform into Mobile First organizations. For more information, please visit www.mobileiron.com.

"MobileIron" and the MobileIron Planet M logo are registered trademarks of MobileIron, Inc. in the United States and other countries. Trade names, trademarks, and service marks of other companies that are used in this press release belong to their respective owners.

Transition from ASC 605 to ASC 606

On January 1, 2018 we adopted Accounting Standards Codification 606, Revenue from Contracts with Customers, or ASC 606, using the full retrospective method. As a result of adopting ASC 606, the following financial information has changed:

Revenue captions in the statements of operations
Under Accounting Standards Codification 605, Revenue Recognition, or ASC 605, we reported perpetual license, subscription, and software support and services revenue. Upon the adoption of ASC 606, we now report license, cloud services, and software support and services revenue.

• License revenue consists primarily of revenue from on-premises perpetual licenses and the license portion of on-premises subscriptions.
• Cloud services revenue includes sales of cloud-based solutions that allow customers to use hosted software over a contract period without taking possession of our software and is typically provided on a subscription or usage basis.
• Software support and services revenue consists of revenue from arrangements to provide software upgrades, updates and technical support to customers with perpetual software licenses and on-premises subscriptions, and professional services.

Revenue recognition and recurring revenue
The most significant impact to revenue from ASC 606 comes from the elimination of the requirement to have vendor specific objective evidence, or VSOE, of fair value to separate and recognize revenue for products and services in a contract. The elimination of the VSOE requirement causes a significant change to the timing of revenue recognition for on-premises software term license revenue and other multiple-element arrangements with products or services that lacked VSOE of fair value. Our on-premises term license agreements include distinct software licenses and software update and support services. Under ASC 606, we recognize the software license revenue from on-premises subscriptions at the time of delivery and recognize the associated software update and support services revenue ratably over the term of subscription agreements. Under ASC 605, we recognized all revenue from those arrangements ratably over the term of the subscription agreements.  In addition, the concept of standalone selling price replaces VSOE in determining the value of each component of an arrangement. Because the values assigned to the components of an arrangement using standalone selling price may differ from the values assigned to components of an arrangement using VSOE, different amounts may be allocated to revenue recognized at a point-in-time versus revenue recognized over time.

For the reasons noted above, recurring revenue calculated under ASC 606 is different than recurring revenue calculated under ASC 605. Because under ASC 606 the license component of on-premises subscriptions is recognized upfront instead of ratably over the contract term as it was under ASC 605, recurring revenue reported under the new guidance may show more quarterly variability than it did previously. The year-over-year recurring revenue growth rate from Q4 2016 to Q4 2017 under the ASC 606 method was 12%, which is 3 percentage points lower than the 15% growth rate under ASC 605. For the full year of 2017, we reported a 15% recurring revenue growth rate under ASC 605 and under ASC 606, the growth rate was 14%.

Unearned revenue and customer arrangements with termination rights
Current and noncurrent deferred revenue has been replaced by current and noncurrent unearned revenue and customer arrangements with termination rights. Because some of our arrangements with customers contain termination rights, they do not meet the definition of a contract under ASC 606 and the balances are not recorded as unearned revenue and are instead recorded as "customer arrangements with termination rights" on our consolidated balance sheets. We recognize revenue from those arrangements, including the distinct licenses contained therein, as the termination rights expire which generally results in the arrangement being recognized ratably over the contract term.

Unbilled accounts receivable and DSOs
Under ASC 606 we began to report current and noncurrent unbilled accounts receivable. Unbilled accounts receivable are recorded, for example, when a customer commits to a multi-year subscription term for our on-premises licenses and pays for the subscription in annual installments. This is true even though the unbilled receivables have not yet been invoiced and are not yet due to us. In that example, we record upfront revenue for the license component of the transaction that is not fully billed and record unbilled accounts receivable for the difference between the license revenue recognized and the amount billed. DSOs are impacted because we now include the current portion of unbilled accounts receivable in accounts receivable.  Current unbilled accounts receivable included in accounts receivable at December 31, 2017 and March 31, 2018 was $2.5 million and $1.9 million, respectively. As a result of this change, DSO increased by 5 days at December 31, 2017 and 4 days at March 31, 2018.

Sales commissions
Under the new guidance we capitalize and amortize sales commissions to closely match the expense with the expected revenue recognition period.  Previously we expensed sales commissions as they were earned. Consequently, we recorded $17.4 million and $18.4 million of deferred commissions on our balance sheets as of March 31, 2018 and December 31, 2017, respectively.  For the restated periods we observed a general increase in commission expense in the first half of the year and a decrease in the second half of the year.

Financial Results