Press Release

Mandiant Reports Financial Results for Fourth Quarter and Full Year 2021

Feb 08, 2022
34 mins read
  • 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

Reston, Va. – Feb. 8, 2022 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.

Contacts

Media Inquiries
Media.Relations@mandiant.com

Investor Inquiries
Investor.Relations@mandiant.com

Source: Mandiant

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

 

           78,337

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 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