MobileIron Announces Solid First Quarter 2019 Results

ARR Growth of 18%

 

Double digit revenue growth for second quarter in a row

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- MobileIron (NASDAQ: MOBL), the secure foundation for modern work, today announced results for its first quarter ended March 31, 2019.

First Quarter 2019 Financial Highlights

  • Revenue was $48.1 million, up 10% year-over-year.
  • ARR was $167.2 million, up 18% year-over-year.
  • Cash generated in operating activities was $7.8 million.

“MobileIron began 2019 with a solid first quarter, delivering revenue growth of 10% and robust ARR growth of 18%. Our team is executing on our objective of growing our recurring revenue base through subscription solutions with our best-in-class cloud products,” said Simon Biddiscombe, CEO, MobileIron. “As IT departments shift to address the threats of a Zero Trust world, we believe we are ideally poised to capitalize on this market. Already possessing the most comprehensive mobile security suite to address a Zero Trust environment, MobileIron will continue to deliver a roadmap of innovation to strengthen our security framework while enhancing the user’s experience. I am confident that our focus on market-leading innovation and customer satisfaction will continue to propel us on our upward growth trajectory.”

                           
ARR Composition
              Three Months Ended
              March 31,
(in millions, except percentages)            

      2018      

     

      2019      

Total ARR             $ 142.2       $ 167.2
Year-over-year percentage increase              

13%

 

     

18%

Subscription ARR             $ 77.6       $ 100.4
Year-over-year percentage increase              

17%

 

     

29%

Perpetual license support ARR             $ 64.6       $ 66.8
Year-over-year percentage increase              

9%

 

     

3%

                           

Financial Outlook

The company is providing the following outlook for its second quarter 2019 (ending June 30, 2019):

  • Revenue is expected to be between $49 million and $52 million, for growth of 6% to 13% year-over-year.
  • Non-GAAP gross margin is expected to be approximately 82%.
  • Non-GAAP operating expenses are expected to be approximately $46 million.

The company is reaffirming the following outlook for 2019 (ending December 31, 2019):

  • Revenue is expected to be between $205 million and $215 million, for growth of 6% to 11%.
  • We expect ARR to grow by approximately 20% by year end.
  • We expect to generate non-GAAP operating profit.

First Quarter 2019 Business Highlights

Milestones and Recognition

  • Recognized as a 2019 Gartner Peer Insights Customers’ Choice for Unified Endpoint Management Tools, for the second consecutive year. MobileIron is the only Leader in the Gartner UEM Magic Quadrant to be recognized with this distinction.
  • Became the first UEM vendor to receive Common Criteria certification for MDM Protection Profile Version 3.0, from the US government-operated National Information Assurance Partnership (NIAP).
  • Obtained certification from the Service Capability & Performance Standards for excellence in customer support for the second year in a row and MobileIron remains the only UEM vendor to receive this certification for excellence.
  • Appointed Leslie Stretch to our Board of Directors. Currently Mr. Stretch is the CEO of the cloud company Medallia. He was previously the CEO of Callidus, which he transitioned from a perpetual license business to a cloud and subscription model.
  • Announced partnership with NetMotion Software to enable secure, reliable access to mission-critical mobile apps and real-time data for mobile workforces for MobileIron’s UEM, Core, and Cloud offerings.
  • Recognized as a Customer Experience Award winner by Info-Tech Research Group, an IT research and advisory company, for MobileIron’s top scores in the categories of Fair-Cost to Value (user satisfaction given software cost) and Net Emotional Footprint (user feeling towards vendor and product). This report is a detailed analysis of software vendors in the market and the report’s results are based on end-user feedback.
  • Awarded two additional US patents for mobile security, bringing MobileIron’s total number of awarded patents to 84.

Platform

  • Announced new capabilities to improve workforce productivity by strengthening access to corporate applications and services, including Mobile Application Management (MAM) for unmanaged devices and Frontline worker enablement, optimized security with mobile threat detection, and expanded OS compatibility for macOS, Android, and Windows 10 endpoints.
  • Released new versions of MobileIron Cloud, Access, Core, AppConnect, Docs@Work, Derived Credentials (PIV-D), Email+, Tunnel, Sentry, and Web@Work.
  • Integrated with Mopria Alliance for Android Enterprise mobile printing.
  • Integrated with Mobile Box for iOS email and PIM.
  • EBF published new Microsoft Office AppConfig integrations for Excel, OneDrive, OneNote, Outlook, PowerPoint, and Word.
  • MobileIron Access now documented as an authentication provider with PingFederate delegated-IdP flow.
  • Announced partnership with IDEMIA for eSIM and connectivity management.

All forward-looking non-GAAP financial measures contained in this section exclude estimates for stock-based compensation expense, amortization of intangible assets and restructuring expense. 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 2018 and 2019.

Conference Call and Webcast

MobileIron will report final results for the first quarter and fiscal year 2019 on Thursday, April 25, 2019 after the close of the market and host a conference call and live webcast at 1:30 p.m. Pacific Time (4:30 p.m. ET) to discuss the company's financial results, product announcements and business highlights. Interested parties may access the call by dialing 1-866-602-7050 in the U.S. or 1-409-216-6455 from international locations (passcode 4868103). 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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as “may,” “will,” “might,” “expect,” “believe,” “anticipate,” “could,” “would,” “estimate,” “continue,” “pursue,” or the negative thereof or comparable terminology, and may include (without limitation) information regarding our expectations, goals or intentions regarding future performance. Forward-looking statements in this press release include, but are not limited to, statements regarding MobileIron's revenue, operating expenses, cost structure, GAAP and non-GAAP financial metrics, as well as statements that we expect to continue to see progress through 2019 on executing on our objective of growing our recurring revenue base through subscription solutions with our best in class cloud products, that we believe we are ideally poised to capitalize on the market of IT departments shifting to address the threats of a Zero Trust world, that we will continue to deliver a roadmap of innovation to strengthen our security framework while enhancing the user’s experience, that our continued focus on market-leading innovation and customer satisfaction will continue to propel us on our upward growth trajectory, and all statements under the heading “Financial Outlook.” Forward-looking statements involve certain risks and uncertainties, and 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, one-time expenses, including restructuring charges, seasonality, our need to develop new solutions and enhancements to compete in rapidly evolving markets, product defects, strength of our intellectual property portfolio, litigation, 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. All forward-looking statements in this press release are made as of the date hereof, based on information available to us as of the date hereof, and 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.

Disclosure Information

MobileIron uses the investor relations section on its website as the means of complying with its disclosure obligations under Regulation FD. Accordingly, we recommend that investors should monitor MobileIron’s investor relations website in addition to following MobileIron’s press releases, SEC filings, and public conference calls and webcasts.

About MobileIron

MobileIron provides the secure foundation for modern work. For more information, please visit www.mobileiron.com.

"MobileIron" is a registered trademark 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.

Financial Results

             
MOBILEIRON, INC.
CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2018 AND MARCH 31, 2019

(Amounts in thousands)
(Unaudited)
             
    December 31, 2018  

March 31, 2019

Assets            
Current assets:            
Cash and cash equivalents (1)   $ 104,613     $ 106,447  
Short-term investments (1)     1,000       547  
Accounts receivable - net     60,994       38,173  
Deferred commissions - current     8,265       8,785  
Prepaid expenses and other current assets     8,367       11,501  
Total current assets     183,239       165,453  
Property and equipment - net     7,046       6,455  
Operating lease right-of-use assets     -       16,328  
Deferred commissions - noncurrent     9,066       8,580  
Goodwill     5,475       5,475  
Other assets     5,561       5,076  
Total assets   $ 210,387     $ 207,367  
             
Liabilities and stockholders' equity            
Current liabilities:            
Accounts payable   $ 2,154     $ 2,431  
Accrued expenses     27,347       17,838  
Lease liabilities - current     -       6,278  
Unearned revenue - current     74,177       74,112  
Customer arrangements with termination rights     19,367       17,183  
Total current liabilities     123,045       117,842  
Lease liabilities - noncurrent     -       11,802  
Unearned revenue - noncurrent     31,660       28,767  
Other long-term liabilities     1,565       155  
Total liabilities     156,270       158,566  
Stockholders’ equity:            
Common stock     11       11  
Additional paid-in capital     462,004       477,389  
Treasury stock     (3,831 )     (7,432 )
Accumulated deficit     (404,067 )     (421,167 )
Total stockholders’ equity     54,117       48,801  
             
Total liabilities and stockholders' equity   $ 210,387     $ 207,367  
             
             
(1) Total cash and cash equivalents and short-term investments   $ 105,613     $ 106,994  
             
MOBILEIRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2019
(Amounts in thousands, except for per share data)
(Unaudited)
    Three Months Ended
    March 31, 2018   March 31, 2019
Revenue:            
Cloud services   $ 11,150     $ 15,261  
License     12,441       11,371  
Software support and services     20,098       21,450  
Total revenue     43,689       48,082  
Cost of revenue:            
Cloud services (1)     2,571       4,710  
License (2)     431       554  
Software support and services (1)     4,975       5,023  
Restructuring expense     -       76  
Total cost of revenue     7,977       10,363  
Gross profit     35,712       37,719  
Operating expenses:            
Research and development (1)     21,335       21,829  
Sales and marketing (1)     23,681       24,487  
General and administrative (1)     7,222       7,919  
Restructuring expense     -       539  
Total operating expenses     52,238       54,774  
Operating loss     (16,526 )     (17,055 )
Other income (expense) - net     503       412  
Loss before income taxes     (16,023 )     (16,643 )
Income tax expense     347       457  
Net loss   $ (16,370 )   $ (17,100 )
Net loss per share, basic and diluted   $ (0.17 )   $ (0.16 )
Weighted-average shares used to compute net loss per share, basic and diluted     98,645       107,352  
             
             
(1) Includes stock-based compensation expense as follows:            
Cost of revenue            
License   $ -     $ -  
Cloud services     344       612  
Software support and services     1,038       929  
Research and development     4,767       4,111  
Sales and marketing     2,529       2,274  
General and administrative     2,015       2,364  
    $ 10,693     $ 10,290  
             
(2) Includes amortization of intangible assets as follows:            
Cost of revenue            
Perpetual license   $ 100     $ -  
    $ 100     $ -  
             
MOBILEIRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2019
(Amounts in thousands)
(Unaudited)
    Three Months Ended
    March 31, 2018   March 31, 2019
             
Cash flows from operating activities:            
Net loss   $ (16,370 )   $ (17,100 )
Adjustments to reconcile net loss to net cash provided by operating activities:            
Stock-based compensation expense     10,693       10,290  
Depreciation     970       932  
Amortization of intangible assets     100       -  
Accretion of premium on investment securities     (12 )     -  
Gain on disposal of fixed assets     41       -  
Changes in operating assets and liabilities:            
Accounts receivable     14,438       22,821  
Deferred commissions     974       (35 )
Other current and noncurrent assets     (656 )     (2,647 )
Accounts payable     3       186  
Unearned revenue     3,903       (2,958 )
Customer arrangements with termination rights     (2,360 )     (2,184 )
Accrued expenses and other long-term liabilities     (2,544 )     (1,489 )
Net cash provided by operating activities     9,180       7,816  
             
Cash flows from investing activities:            
Purchase of property and equipment     (516 )     (177 )
Maturities of investment securities     6,800       1,000  
Purchases of investment securities     (2,986 )     (546 )
Net cash provided by investing activities     3,298       277  
             
Cash flows from financing activities:            
Proceeds from employee stock purchase plan     1,069       953  
Taxes paid for net settlement of equity awards     (3,724 )     (4,409 )
Proceeds from exercise of stock options     655       798  
Repurchase of common stock     -       (3,601 )
Net cash used in financing activities     (2,000 )     (6,259 )
             
Net change in cash and cash equivalents     10,478       1,834  
Cash and cash equivalents at beginning of period     85,833       104,613  
Cash and cash equivalents at end of period   $ 96,311     $ 106,447  
             

Non-GAAP Financial Measures and Reconciliations and Other Metrics

Non-GAAP Financial Measures

To supplement our financial results presented on a U.S. GAAP basis, we provide investors with certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, 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. These non-GAAP financial measures exclude stock-based compensation, amortization of intangible assets, and restructuring expense.

Stock-based compensation expenses: In our non-GAAP financial measures, we have excluded the effect of stock-based compensation expenses. We exclude stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding our operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, we believe that providing non-GAAP financial meas

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