ANAPLAN, INC.

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Anaplan : First Quarter Fiscal 2021 Earnings Conference Call Presentation

05/26/2020 | 09:53am

Q1 FY2021 Earnings Conference Call

May 26, 2020

Cautionary Note Regarding Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended, including all statements other than statements of historical fact contained in this document and includes, without limitation, statements about the company's expectations regarding the impact of the COVID-19 pandemic and resulting global economic uncertainty, statements about the company's growth, plans, strategies, opportunities and prospects, statements regarding market demand and competitive position, statements about events and trends including events and trends that we believe may affect our financial condition, results of operations, short- and long-term business operations and objectives, and financial needs. These statements identify prospective information and may include words such as "expects," "intends," "continue," "plans," "anticipates," "believes," "estimates," "predicts," "projects," "potential," "should," "may," "will," or the negative version of these words, variations of these words and comparable terminology. These forward-looking statements are based on information available to the company as of the date of this document and are based on management's current views and assumptions. These forward-looking statements are conditioned upon and also involve a number of known and unknown risks, uncertainties, and other factors that could cause actual results, performance or events to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the company's control and may pose a risk to the company's operating and financial condition. Such risks and uncertainties include, but are not limited to: the COVID-19 pandemic, and any resulting global economic downturn, could significantly disrupt our business operations, prolong our sales cycle and result in a material adverse effect on our financial condition, operating results and cash flows; we have a limited history of operating at our current scale and under our current strategy, which makes it difficult to predict our future operating results, and we may not achieve our expected operating results in the future; we have a history of net losses, we anticipate increasing our operating expenses in the future, and we do not expect to be profitable for the foreseeable future; our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business; economic uncertainty and volatility in the broader financial markets may result in our customers and prospective customers reducing their spending, scaling back their digital transformation efforts, delaying purchasing decisions or deferring implementation projects, any of which may adversely impact our business, financial condition and cash flows; if we are unable to achieve and sustain a level of liquidity sufficient to support our operations and fulfill our obligations, our business, operating results and financial position could be adversely affected; if we are unable to attract new customers, both domestically and internationally, the growth of our revenue will be adversely affected and our business may be harmed; our business depends substantially on our customers renewing their subscriptions and expanding their use of our platform and if we fail to achieve renewals and expansions or our customers renew or expand their subscriptions on less favorable terms, our business operations and financial condition may be materially and adversely affected; the markets in which we participate are intensely competitive, and if we do not compete effectively, our business and operating results could be adversely affected; our success depends in part on the continued performance of our strategic partners, and uncertain economic conditions including those caused by the COVID-19 pandemic may disrupt the operations and performance of our partners and ultimately adversely impact our financial results; if we experience a security incident, our platform may be perceived as not being secure, our reputation may be harmed, customers may reduce the use of or stop using our platform, we may incur significant liabilities, and our business could be materially adversely affected; real or perceived errors, failures, bugs, service outages, or disruptions in our platform could adversely affect our reputation and harm our business; our success depends upon training our customers to effectively utilize our platform and providing high-quality support services and if our ability to provide effective training or support is limited by the COVID-19 pandemic and ensuing remote work restrictions, then our results of operations and financial condition may be adversely affected; we could incur substantial costs in protecting or defending our intellectual property rights, and any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand; our global operations and sales to customers outside the United States or with international operations subject us to risks inherent in international operations that can harm our business, results of operations, and financial condition; and the uncertainty in and volatility of the broader stock market generally or the stock price of our common stock specifically may result in stockholders not being able to resell their shares at or above the price at which they purchased shares. Furthermore, the additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may amplify many of these risks. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this document is contained in the company's filings with the U.S. Securities and Exchange Commission ("SEC"), including its annual report on Form 10-K filed with the SEC on March 30, 2020, and other documents the company may file with or furnish to the SEC from time to time such as quarterly reports on Form 10-Q and current reports on Form 8-K. These forward-looking statements should not be relied upon as representing the company's views as of any subsequent date and the company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.

Copyright © Anaplan Inc., 2018

2

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this document and the accompanying tables contain non-GAAP financial measures, including non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and free cash flow. The non-GAAP financial information is presented for supplemental informational purposes only and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. The non-GAAP measures presented here may be different from similarly-titlednon-GAAP measures used by other companies.

We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures, when viewed collectively with the GAAP measures, may be helpful to investors because they provide consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results.

There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. The definitions of our non-GAAP measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may utilize metrics that are not similar to ours. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. Please see the reconciliation tables at the end of this document for the reconciliation of GAAP and non-GAAP results.

Copyright © Anaplan Inc., 2018

3

Financial Highlights

Q1 Fiscal Year 2021

Revenue $103.8M, up 37% YoY

GAAP Operating Margin (37.3%)

Billings $95.9M, up 10% YoY

Non-GAAP Operating Margin (12.9%)

Remaining Performance Obligation (RPO) $646.8M, up 37% YoY

GAAP Net Loss per Share $0.29

Dollar-based Net Expansion Rate (NRR) 117%

Non-GAAP Net Loss per Share was $0.10

Customers with ARR >$250K, up 32% YoY

Non-GAAP Free Cash Flow ($6.0M)

Copyright © Anaplan Inc., 2018

4

Strong, Consistent Subscription Growth

ANNUAL SUBSCRIPTION REVENUE $M

QUARTERLY SUBSCRIPTION REVENUE $M

KEY

+48%Subscription Revenue

Y/Y Growth Rates

+45%

+57%

308

90

94

65

74

80

209

60

144

91

FY'17

FY'18

FY'19

FY'20

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q1'21

Y/Y

44%

45%

48%

47%

50%

44%

Copyright © Anaplan Inc., 2018

5

Capturing a Greater Share of Wallet

CUSTOMERS WITH >$250K ARR GROWING STEADILY

DOLLAR-BASED NET EXPANSION RATE

367

353

181

248

122%

123%

122%

117%

FY'18

FY'19

FY'20

Q1'21

FY'18

FY'19

FY'20

Q1'21

Net Expansion Rate ("NRR") is calculated as the ARR at the end of a period for the base set of customers from which we had ARR in the year prior to the calculation, divided by the ARR one year prior to the date of calculation for that same customer base.

Copyright © Anaplan Inc., 2018

6

Annual and Quarterly Remaining Performance Obligation

ANNUAL RPO $M

QUARTERLY RPO $M

KEY

+49%

Remaining Performance Obligation

Y/Y Growth Rates

+44%

656

590

656

647

440

440

473

516

305

FY'18

FY'19

FY'20

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q1'21

Y/Y

44%

53%

56%

55%

49%

37%

Copyright © Anaplan Inc., 2018

7

Annual and Quarterly Billings

ANNUAL BILLINGS $MQUARTERLY BILLINGS $M

+44%

KEY

+42%

Calculated Billings

Y/Y Growth

Rates

+41%

417

290

114

126

101

96

87

89

204

144

FY'17

FY'18

FY'19

FY'20

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q1'21

Y/Y

54%

57%

46%

59%

25%

10%

Note: Calculated Billings is defined as revenue plus the change in deferred revenue.

Copyright © Anaplan Inc., 2018

8

Non-GAAP Gross Margin

GROSS MARGIN BY YEAR

90%

86%

117

84%

83%

68%

70%

73%

76%

8180

263

175

117

81

FY'17

FY'18

FY'19

FY'20

KEY

Total Gross

Subscription

Total Gross

Non-GAAP

Profit

Gross Margin %

Margin %

Copyright © Anaplan Inc., 2018

GROSS MARGIN BY QUARTER

83%

84%

84%

85%

84%

85%

72%

73%

75%

76%

77%

78%

68

76

81

63

55

50

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q1'21

Non-GAAP gross margin calculated as gross profit, excluding the effect of stock-based compensation expense, employer payroll tax expense related to employee stock plans,and amortization of acquired intangibles, as a percentage of revenue. See appendix for a reconciliation of non-GAAP gross margin to GAAP gross margin.

9

Non-GAAP Operating Expense and Free Cash Flow Margins

OPERATING EXPENSE AS A % OF REVENUE

KEY

S&M

R&D

G&A

104%

92%

92%

319

249

53

154

44

210

27

161

97

30

45

56

FY'18

FY'19

FY'20

91%

94

14

61

19

Q1'21

FREE CASH FLOW $M AND AS PERCENTAGE OF REVENUE

FY'18

FY'19

FY'20

Q1'21

-30

-29

-6

-68

(8%)(6%)

(18%)

(28%)

KEY

Free Cash Flow

Free Cash

Flow Margin

Note: All numbers are Non-GAAP; See appendix for a reconciliation of non-GAAP operating margin to GAAP operating margin. Free cash flow defined as net cash used in operating activities less purchase of property and equipment and capitalized internal-use software.

Copyright © Anaplan Inc., 2018

10

Thank You

Non-GAAP Reconciliation

(In thousands, except percentages and per share data)

Three Months Ended

Three Months Ended

(Unaudited)

April 30, 2020

April 30, 2019

Revenue

$

103,844

$

75,830

GAAP operating loss

$

(38,760)

$

(37,109)

Stock-based compensation

22,493

16,302

Employer payroll tax expense related to employee stock plans

1,485

682

Business combination and other related cost

1,019

-

Amortization of acquired intangibles

335

35

Non-GAAP operating loss

$

(13,428)

$

(20,090)

GAAP operating margin %

-37.3%

-48.9%

Stock-based compensation %

21.7%

21.5%

Employer payroll tax expense related to employee stock plans %

1.4%

0.9%

Business combination and other related cost %

1.0%

0.0%

Amortization of acquired intangibles %

0.3%

0.0%

Non-GAAP operating margin %

-12.9%

-26.5%

GAAP net loss

$

(39,602)

Stock-based compensation

22,493

Employer payroll tax expense related to employee stock plans

1,485

Business combination and other related cost

1,019

Amortization of acquired intangibles

335

Non-GAAP net loss

$

(14,270)

GAAP net loss per share, basic and diluted

$

(0.29)

Stock-based compensation

0.17

Employer payroll tax expense related to employee stock plans

0.01

Business combination and other related cost

0.01

Amortization of acquired intangibles

-

Non-GAAP net loss per share

$

(0.10)

Shares used to compute GAAP and non-GAAP net loss per share attributable to

common stockholders, basic and diluted

136,362

GAAP net cash used in operating activities

$

(1,504)

Purchase of property and equipment

(1,583)

Capitalized internal-use software

(2,880)

Non-GAAP free cash flow

$

(5,967)

12

Non-GAAP Reconciliation

(In thousands, except percentages)

Year Ended January 31,

Three Months Ended

(Unaudited)

2020

2019

2018

April 30, 2020

April 30, 2019

Revenue

$

348,022

$

240,642

$

168,347

$

103,844

$

75,830

GAAP operating expenses

$

405,678

$

301,507

$

162,281

$

117,864

$

91,362

Stock-based compensation

75,300

51,124

7,984

21,277

15,319

Employer payroll tax expense related to employee stock plans

8,168

834

-

1,400

670

Business combination and other related cost

2,720

-

-

1,019

-

Amortization of acquired intangibles

135

212

212

75

35

Non-GAAP operating expenses

$

319,355

$

249,337

$

154,085

$

94,093

$

75,338

GAAP operating expenses as a % of revenue

117%

125%

96%

114%

Stock-based compensation as a % of revenue

-22%

-21%

-4%

-21%

Employer payroll tax expense related to employee stock plans as a % of revenue

-2%

0%

0%

-1%

Business combination and other related cost as a % of revenue

-1%

0%

0%

-1%

Amortization of acquired intangibles as a % of revenue

0%

0%

0%

0%

Non-GAAP operating expenses as a % of revenue

92%

104%

92%

91%

GAAP research and development

$

68,396

$

48,998

$

30,908

$

23,762

Stock-based compensation

10,608

3,826

742

3,646

Employer payroll tax expense related to employee stock plans

865

-

-

153

Business combination and other related cost

917

-

-

668

Amortization of acquired intangibles

35

212

212

-

Non-GAAP research and development

$

55,971

$

44,960

$

29,954

$

19,295

GAAP sales and marketing

$

250,430

$

176,323

$

100,654

$

71,674

Stock-based compensation

34,428

15,475

3,496

10,031

Employer payroll tax expense related to employee stock plans

5,246

-

-

824

Business combination and other related cost

173

-

-

129

Amortization of acquired intangibles

100

-

-

75

Non-GAAP sales and marketing

$

210,483

$

160,848

$

97,158

$

60,615

GAAP general and administrative

$

86,852

$

76,186

$

30,719

$

22,428

Stock-based compensation

30,264

31,823

3,746

7,600

Employer payroll tax expense related to employee stock plans

2,057

834

-

423

Business combination and other related cost

1,630

-

-

222

Non-GAAP general and administrative

$

52,901

$

43,529

$

26,973

$

14,183

GAAP net cash used in operating activities

$

(14,405)

$

(45,853)

$

(14,501)

$

(1,504)

Purchase of property and equipment

(3,991)

(15,122)

(9,565)

(1,583)

Capitalized internal-use software

(11,023)

(7,397)

(5,801)

(2,880)

Non-GAAP free cash flow

$

(29,419)

$

(68,372)

$

(29,867)

$

(5,967)

GAAP net cash used in operating activities %

-4%

-19%

-9%

-1%

Purchase of property and equipment %

-1%

-6%

-6%

-2%

Capitalized internal-use software %

-3%

-3%

-3%

-3%

Non-GAAP free cash flow margin %

-8%

-28%

-18%

-6%

13

Non-GAAP Reconciliation

(In thousands, except percentages)

Year Ended January 31,

(Unaudited)

2020

2019

2018

2017

Revenue

$

348,022

$

240,642

$

168,347

$

120,499

GAAP gross profit

$

257,245

$

173,244

$

116,362

$

81,092

Stock-based compensation

4,746

1,682

655

385

Employer payroll tax expense related to employee stock plans

470

-

-

-

Amortization of acquired intangibles

347

-

-

-

Non-GAAP gross profit

$

262,808

$

174,926

$

117,017

$

81,477

GAAP gross margin %

74%

72%

69%

67%

Stock-based compensation %

1%

1%

1%

1%

Employer payroll tax expense related to employee stock plans %

1%

0%

0%

0%

Amortization of acquired intangibles %

0%

0%

0%

0%

Non-GAAP gross margin %

76%

73%

70%

68%

Subscription revenue

$

307,890

$

208,605

$

143,542

$

91,416

GAAP subscription gross profit

$

256,430

$

172,105

$

123,615

$

82,344

Stock-based compensation

2,547

831

148

49

Employer payroll tax expense related to employee stock plans

276

-

-

-

Amortization of acquired intangibles

347

-

-

-

Non-GAAP subscription gross profit

$

259,600

$

172,936

$

123,763

$

82,393

GAAP subscription gross margin %

83%

83%

86%

90%

Stock-based compensation %

1%

0%

0%

0%

Employer payroll tax expense related to employee stock plans %

0%

0%

0%

0%

Amortization of acquired intangibles %

0%

0%

0%

0%

Non-GAAP subscription gross margin %

84%

83%

86%

90%

14

Non-GAAP Reconciliation

(In thousands, except percentages)

Three Months Ended

(Unaudited)

April 30, 2020

January 31, 2020

October 31, 2019

July 31, 2019

April 30, 2019

January 31, 2019

Revenue

$

103,844

$

98,242

$

89,410

$

84,540

$

75,830

$

69,250

GAAP gross profit

$

79,104

$

74,033

$

66,926

$

62,033

$

54,253

$

49,088

Stock-based compensation

1,216

1,352

1,228

1,183

983

935

Employer payroll tax expense related to employee stock plans

85

219

34

205

12

-

Amortization of acquired intangibles

260

261

86

-

-

-

Non-GAAP gross profit

$

80,665

$

75,865

$

68,274

$

63,421

$

55,248

$

50,023

GAAP gross margin %

76%

75%

75%

73%

72%

71%

Stock-based compensation %

1%

1%

1%

1%

1%

1%

Employer payroll tax expense related to employee stock plans as a % of revenue

0%

1%

0%

1%

0%

0%

Amortization of acquired intangibles as a % of revenue

1%

0%

0%

0%

0%

0%

Non-GAAP gross margin %

78%

77%

76%

75%

73%

72%

Subscription revenue

$

93,824

$

89,512

$

79,695

$

73,598

$

65,085

$

59,700

GAAP subscription gross profit

$

78,639

$

74,458

$

66,587

$

61,391

$

53,994

$

49,115

Stock-based compensation

708

730

689

637

491

462

Employer payroll tax expense related to employee stock plans

43

145

20

103

8

-

Amortization of acquired intangibles

260

261

85

-

-

-

Non-GAAP subscription gross profit

$

79,650

$

75,594

$

67,381

$

62,131

$

54,493

$

49,577

GAAP subscription gross margin %

84%

83%

84%

83%

83%

82%

Stock-based compensation %

1%

1%

1%

1%

1%

1%

Employer payroll tax expense related to employee stock plans as a % of revenue

0%

0%

0%

0%

0%

0%

Amortization of acquired intangibles as a % of revenue

0%

0%

0%

0%

0%

0%

Non-GAAP subscription gross margin %

85%

84%

85%

84%

84%

83%

Professional services revenue

$

10,020

$

10,745

GAAP professional services gross profit

$

465

$

259

Stock-based compensation

508

492

Employer payroll tax expense related to employee stock plans

42

4

Non-GAAP professional services gross profit

$

1,015

$

755

GAAP professional services gross margin %

5%

2%

Stock-based compensation %

5%

5%

Employer payroll tax expense related to employee stock plans as a % of revenue

0%

0%

Non-GAAP professional services gross margin %

10%

7%

15

Definitions

Customer Lifetime Value (LTV)

We define customer lifetime value as the increase in subscription gross profit comparing the last twelve months of subscription gross profit to the twelve months a year prior, divided by an assumed churn rate.

Customer Acquisition Cost (CAC)

We define customer acquisition cost as the last twelve months of sales and marketing expense, a year prior.

Annual Recurring Revenue (ARR)

We define annual recurring revenue as subscription revenue already booked and in backlog that will be recorded over the next 12 months, assuming any contract expiring in those 12 months is renewed and continues on its existing terms and at its prevailing rate of utilization.

Dollar-based Net Expansion Rate (NRR)

We define dollar-based net expansion rate as the ARR at the end of a period for the base set of customers from which we had ARR in the year prior to the calculation, divided by the ARR one year prior to the date of calculation for that same customer base.

Copyright © Anaplan Inc., 2018

16

Disclaimer

Anaplan Inc. published this content on 26 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 May 2020 13:52:03 UTC

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