Announces Workforce Reduction Plan
Momentive (NASDAQ: MNTV), the maker of SurveyMonkey, today
reported fourth quarter and full year results for the period ended
December 31, 2022.
“Our fourth quarter results illustrate our continued execution
against our top priorities: driving meaningful operating leverage
and positioning the company for more profitable growth,” said
Zander Lurie, chief executive officer of Momentive. “Today, we are
announcing plans to decrease costs and prioritize the products and
pricing models that efficiently drive customer acquisition,
retention, and expansion. While this is a difficult decision, we
have conviction these steps will enable us to navigate a more
challenging selling environment in the short-term, expand margins
meaningfully in full year 2023, and deliver sustained, profitable
growth over time.”
- Q4 2022 Key Results
- Total revenue was $122.4 million, an increase of 4%
year-over-year. On a constant currency basis, revenue increased 7%
year-over-year.
- Sales-assisted revenue was $49.3 million, an increase of 23%
year-over-year. Sales-assisted revenue accounted for approximately
40% of total revenue, up from approximately 34% in Q4 2021. We
ended the quarter with approximately 14,500 sales-assisted
customers, up 23% from approximately 11,900 in Q4 2021.
- Self-serve revenue was $73.1 million, a decrease of 6%
year-over-year.
- Deferred revenue was $207.4 million, an increase of 3%
year-over-year. Remaining performance obligations were $238.8
million, an increase of 5% year-over-year.
- Paying users totaled approximately 887,400, an increase of 1%
from approximately 879,600 in Q4 2021. Approximately 93% of our
paying users were on annual plans, up from 91% a year ago.
- Average revenue per user was approximately $544, up 3% from
approximately $530 in Q4 2021.
- GAAP operating margin was negative 3.7% and non-GAAP operating
margin was 18.8%.
- GAAP net loss was $3.6 million and GAAP diluted net loss per
share was $0.02. Non-GAAP net income was $20.7 million and non-GAAP
diluted net income per share was $0.14.
- Net cash from operating activities was $8.2 million and free
cash flow was $6.6 million.
Full Year 2022 Key Results
- Total revenue was $480.9 million, an increase of 8%
year-over-year. On a constant currency basis, revenue increased 9%
year-over-year.
- Sales-assisted revenue was $181.3 million, an increase of 27%
year-over-year.
- Self-serve revenue was $299.6 million, approximately flat
year-over-year.
- GAAP operating margin was negative 16.9% and non-GAAP operating
margin was 7.9%.
- GAAP net loss was $89.9 million and GAAP diluted net loss per
share was $0.61. Non-GAAP net income was $27.1 million and non-GAAP
diluted net income per share was $0.18.
- Net cash provided by operating activities was $8.8 million and
free cash flow was $0.1 million.
- Cash and cash equivalents totaled $202.8 million and total debt
was $184.8 million for net cash of $18.0 million as of December 31,
2022.
- The company repurchased approximately 6.6 million shares of
common stock for approximately $83.5 million. As of December 31,
2022, the company’s remaining share repurchase authorization was
approximately $116.5 million.
Workforce Reduction
In a Form 8-K filed with the Securities and Exchange Commission
today, Momentive also announced a plan designed to further improve
its operating margin (the “Plan”). The Plan involves a reduction of
the company’s workforce by approximately 14%.
We estimate that we will incur approximately $7.0 million to
$9.0 million in charges related to employee severance, employee
benefits, and related facilitation costs in connection with the
Plan. We expect that the majority of these costs will be incurred
and paid during the first quarter of 2023, and that the execution
of the Plan, including cash payments, will be substantially
complete by the end of the second quarter of 2023.
Potential position eliminations in each country are subject to
local law and consultation requirements, which may extend this
process beyond the first quarter of 2023 in certain countries. The
charges that we expect to incur are subject to a number of
assumptions, including local law requirements in various
jurisdictions, and actual expenses may differ materially from the
estimates disclosed above. The costs associated with the Plan will
be included in our GAAP results but are expected to be excluded
from our non-GAAP financial results.
Financial Outlook
For the first quarter of 2023, Momentive currently expects the
following:
Q1 2023
Revenue Growth (year-over-year)
0% to 2%
Non-GAAP operating margin
6% to 8%
For the first quarter of 2023, the company expects basic and
diluted weighted average shares outstanding to be approximately 149
million. The basic and diluted weighted average shares outstanding
for the first quarter of 2023 do not include any forecasts for
share repurchases after December 31, 2022.
Momentive is not providing full year 2023 revenue guidance due
to the current macroeconomic environment. However, improving
operating margin will remain a top priority in 2023 and the changes
to the cost structure announced today put the company on a path to
double non-GAAP operating margin in full year 2023 compared to full
year 2022.
For a detailed explanation of the company’s non-GAAP measures,
please refer to the appendix section of this press release. For
more information on the company’s fourth quarter and full year 2022
financial results, please visit the Momentive investor relations
website at investor.momentive.ai.
Conference Call Information
Momentive senior management will host a conference call today to
discuss the company’s fourth quarter and full year 2022 financial
results. This call is scheduled to begin at 2:00 pm PT / 5:00 pm ET
and can be accessed by dialing (844) 200-6205 or (646) 904-5544
(ID: 687393). A telephonic replay of the conference call will be
available until Thursday, February 23, 2023, and can be accessed by
dialing (866) 813-9403 or (929) 458-6194 and entering the passcode
619341. An archived webcast of the Q4 earnings conference call will
be accessible on investor.momentive.ai.
About Momentive
Momentive (NASDAQ: MNTV), maker of SurveyMonkey, collects and
analyzes human sentiment at scale. Momentive products, including
SurveyMonkey and Momentive brand and market insights solutions,
equip decision-makers at 345,000 organizations worldwide with the
insights they need to make decisions with speed and confidence.
Millions of users rely on Momentive to fuel market insights, brand
insights, employee experience, customer experience, and product
experience. Ultimately, the company’s vision is to broaden the
world’s perspective to shape the future of business. Learn more at
momentive.ai.
MOMENTIVE GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(in thousands)
December 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
202,816
$
305,525
Accounts receivable, net
33,656
32,489
Deferred commissions, current
9,775
7,945
Prepaid expenses and other current
assets
17,207
11,363
Total current assets
263,454
357,322
Property and equipment, net
1,006
5,442
Operating lease right-of-use assets
32,252
52,232
Capitalized internal-use software, net
29,595
28,158
Acquisition intangible assets, net
5,156
10,773
Goodwill
459,817
463,736
Deferred commissions, non-current
14,307
13,200
Other assets
4,568
9,061
Total assets
$
810,155
$
939,924
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
16,418
$
7,204
Accrued expenses and other current
liabilities
24,969
30,725
Accrued compensation
31,893
45,873
Deferred revenue, current
206,728
200,658
Operating lease liabilities, current
8,046
9,587
Debt, current
1,900
1,900
Total current liabilities
289,954
295,947
Deferred revenue, non-current
719
1,165
Deferred tax liabilities
6,337
5,701
Debt, non-current
182,916
209,816
Operating lease liabilities,
non-current
39,584
66,938
Other non-current liabilities
3,885
5,883
Total liabilities
523,395
585,450
Commitments and contingencies
Stockholders’ equity:
Preferred stock
—
—
Common stock
1
2
Additional paid-in capital
997,621
971,604
Accumulated other comprehensive income
(loss)
(3,425
)
414
Accumulated deficit
(707,437
)
(617,546
)
Total stockholders’ equity
286,760
354,474
Total liabilities and stockholders’
equity
$
810,155
$
939,924
MOMENTIVE GLOBAL INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended December
31,
Year Ended December
31,
(in thousands, except per share
amounts)
2022
2021
2022
2021
Revenue
$
122,393
$
117,342
$
480,917
$
443,786
Cost of revenue (1)(2)(3)
19,601
21,800
86,251
86,421
Gross profit
102,792
95,542
394,666
357,365
Operating expenses:
Research and development (1)(3)
30,671
38,383
138,091
139,262
Sales and marketing (1)(2)(3)
47,917
61,829
223,827
224,008
General and administrative (1)(3)
24,139
34,709
107,522
106,667
Restructuring (1)(2)
4,581
—
6,563
—
Total operating expenses
107,308
134,921
476,003
469,937
Loss from operations
(4,516
)
(39,379
)
(81,337
)
(112,572
)
Interest expense
3,780
2,321
11,476
9,261
Other non-operating (income) expense,
net
(5,127
)
195
(4,513
)
934
Loss before income taxes
(3,169
)
(41,895
)
(88,300
)
(122,767
)
Provision for (benefit from) income
taxes
464
(433
)
1,591
482
Net loss
$
(3,633
)
$
(41,462
)
$
(89,891
)
$
(123,249
)
Net loss per share, basic and diluted
$
(0.02
)
$
(0.28
)
$
(0.61
)
$
(0.84
)
Weighted-average shares used in computing
basic and diluted net loss per share
148,043
149,368
148,476
147,045
(1) Includes stock-based compensation, net
of amounts capitalized as follows:
Three Months Ended December
31,
Year Ended December
31,
(in thousands)
2022
2021
2022
2021
Cost of revenue
$
1,551
$
1,161
$
6,164
$
5,862
Research and development
8,594
10,930
34,711
40,821
Sales and marketing
4,563
5,721
22,860
23,585
General and administrative
7,829
6,986
32,196
28,296
Restructuring
—
—
2,761
—
Stock-based compensation, net of amounts
capitalized
$
22,537
$
24,798
$
98,692
$
98,564
(2) Includes amortization of acquisition
intangible assets as follows:
Three Months Ended December
31,
Year Ended December
31,
(in thousands)
2022
2021
2022
2021
Cost of revenue
$
—
$
1,436
$
2,234
$
5,868
Sales and marketing
370
989
2,916
4,274
Restructuring
135
—
450
—
Amortization of acquisition intangible
assets
$
505
$
2,425
$
5,600
$
10,142
(3) Includes acquisition-related
transaction costs as follows:
Three Months Ended December
31,
Year Ended December
31,
(in thousands)
2022
2021
2022
2021
Cost of revenue
$
—
$
281
$
638
$
281
Research and development
—
1,337
3,363
1,337
Sales and marketing
—
1,246
3,090
1,246
General and administrative
—
9,546
4,809
9,957
Acquisition-related transaction costs
$
—
$
12,410
$
11,900
$
12,821
MOMENTIVE GLOBAL INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
Year Ended December
31,
(in thousands)
2022
2021
Cash flows from operating
activities
Net loss
$
(89,891
)
$
(123,249
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
28,725
42,857
Non-cash leases expense
10,693
13,057
Gain on lease modification
(6,370
)
—
Stock-based compensation expense, net of
amounts capitalized
98,692
98,564
Deferred income taxes
415
(331
)
Bad debt expense
2,756
1,248
Gain on sale of a private company
investment
(3,202
)
—
Impairment of long-lived assets
838
503
Unrealized foreign currency (gains)
losses, net and other
1,652
1,379
Changes in assets and liabilities:
Accounts receivable
(4,500
)
(9,817
)
Prepaid expenses and other assets
(11,728
)
(14,231
)
Accounts payable and accrued
liabilities
1,788
17,453
Accrued compensation
(13,669
)
14,044
Deferred revenue
5,592
31,249
Operating lease liabilities
(12,990
)
(14,959
)
Net cash provided by operating
activities
8,801
57,767
Cash flows from investing
activities
Purchases of property and equipment
(449
)
(735
)
Capitalized internal-use software
(8,205
)
(8,443
)
Proceeds from sale of property and
equipment
—
170
Net cash used in investing activities
(8,654
)
(9,008
)
Cash flows from financing
activities
Proceeds from stock option exercises
2,827
27,953
Proceeds from employee stock purchase
plan
5,589
7,453
Payments to repurchase common stock
(83,487
)
—
Repayment of debt
(27,200
)
(2,200
)
Net cash provided by (used in) financing
activities
(102,271
)
33,206
Effect of exchange rate changes on
cash
(739
)
(458
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(102,863
)
81,507
Cash, cash equivalents and restricted cash
at beginning of period
306,121
224,614
Cash, cash equivalents and restricted cash
at end of period
$
203,258
$
306,121
Supplemental cash flow data:
Interest paid for term debt
$
10,668
$
8,620
Income taxes paid
$
695
$
996
Non-cash investing and financing
transactions:
Stock compensation included in capitalized
software costs
$
2,395
$
2,213
Lease liabilities arising from obtaining
right-of-use assets, net of terminations and modifications
$
(13,620
)
$
2,676
MOMENTIVE GLOBAL INC.
SUPPLEMENTAL DISAGGREGATED
REVENUE DATA (unaudited)
Quarterly Disaggregated Revenue
Three Months Ended
(in thousands)
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Self-serve revenue
$
73,105
$
74,629
$
76,055
$
75,803
$
77,389
$
77,134
$
75,462
$
71,112
Sales-assisted revenue
49,288
46,746
44,108
41,183
39,953
37,620
33,930
31,186
Revenue
$
122,393
$
121,375
$
120,163
$
116,986
$
117,342
$
114,754
$
109,392
$
102,298
Annual Disaggregated Revenue
Year Ended December
31,
(in thousands)
2022
2021
2020
Self-serve revenue
$
299,592
$
301,097
$
267,703
Sales-assisted revenue
181,325
142,689
107,907
Revenue
$
480,917
$
443,786
$
375,610
Self-serve revenues are generated from products purchased
independently through our website.
Sales-assisted revenues are generated from products sold to
organizations through our sales team.
MOMENTIVE GLOBAL INC.
RECONCILIATION OF GAAP TO
NON-GAAP DATA (unaudited) (1)
Reconciliation of GAAP to Non-GAAP
(Loss) Income from operations
Three Months Ended December
31,
Year Ended December
31,
(in thousands, except
percentages)
2022
2021
2022
2021
GAAP Loss from operations
$
(4,516
)
$
(39,379
)
$
(81,337
)
$
(112,572
)
GAAP Operating margin
(4
)%
(34
)%
(17
)%
(25
)%
Stock-based compensation, net
22,537
24,798
98,692
98,564
Amortization of acquisition intangible
assets
505
2,425
5,600
10,142
Acquisition-related transaction costs
—
12,410
11,900
12,821
Restructuring
4,446
—
3,352
—
Non-GAAP Income from operations
$
22,972
$
254
$
38,207
$
8,955
Non-GAAP Operating margin
19
%
—
%
8
%
2
%
Reconciliation of GAAP to Non-GAAP
(Loss) Income and (Loss) Income per diluted share
Three Months Ended December
31,
Year Ended December
31,
(in thousands, except per share
amounts)
2022
2021
2022
2021
GAAP Net Loss
$
(3,633
)
$
(41,462
)
$
(89,891
)
$
(123,249
)
GAAP Net Loss per diluted share
$
(0.02
)
$
(0.28
)
$
(0.61
)
$
(0.84
)
Weighted-average shares used to compute
GAAP net loss per diluted share
148,043
149,368
148,476
147,045
Stock-based compensation, net
22,537
24,798
98,692
98,564
Amortization of acquisition intangible
assets
505
2,425
5,600
10,142
Acquisition-related transaction costs
—
12,410
11,900
12,821
Restructuring
4,446
—
3,352
—
Gain on sale of a private company
investment
(3,202
)
—
(3,202
)
—
Income tax effect on Non-GAAP adjustments
(2)
57
290
650
799
Non-GAAP Net (Loss) Income
$
20,710
$
(1,539
)
$
27,101
$
(923
)
Non-GAAP Net (Loss) Income per diluted
share
$
0.14
$
(0.01
)
$
0.18
$
(0.01
)
Weighted-average shares used to compute
Non-GAAP net (loss) income per diluted share
148,132
149,368
148,909
147,045
(1)
Please see Appendix A for explanation of
non-GAAP measures used.
(2)
Due to the full valuation allowance on our
US deferred tax assets, there were no tax effects associated with
the Non-GAAP adjustments for acquisition-related transaction costs,
restructuring costs and gain on sale of a private company
investment. Non-GAAP adjustments pertain to the income tax effects
of amortization of acquisition-related intangible assets and
stock-based compensation, net.
Calculation of Free Cash Flow
Three Months Ended December
31,
Year Ended December
31,
(in thousands)
2022
2021
2022
2021
Net cash provided by (used in) operating
activities
$
8,150
$
(2,541
)
$
8,801
$
57,767
Purchases of property and equipment
—
(348
)
(449
)
(735
)
Capitalized internal-use software
(1,526
)
(1,993
)
(8,205
)
(8,443
)
Free cash flow
$
6,624
$
(4,882
)
$
147
$
48,589
MOMENTIVE GLOBAL INC.
RECONCILIATION OF GAAP TO
NON-GAAP DATA (unaudited) (1)
Calculation of Constant Currency
Revenue and Constant Currency Revenue Growth Rate
Three Months Ended December
31,
Year Ended December
31,
(in thousands, except
percentages)
2022
2021
Growth Rates
2022
2021
Growth Rates
GAAP Revenue
$
122,393
$
117,342
4
%
$
480,917
$
443,786
8
%
Effects of foreign currency exchange
rates
2,848
4,131
Constant currency revenue
$
125,241
7
%
$
485,048
9
%
Supplemental GAAP and Non-GAAP
Information
Three Months Ended December
31,
Year Ended December
31,
(in thousands, except
percentages)
2022
2021
2022
2021
GAAP Gross profit
$
102,792
$
95,542
$
394,666
$
357,365
GAAP Gross margin
84
%
81
%
82
%
81
%
Stock-based compensation, net
1,551
1,161
6,164
5,862
Amortization of acquisition intangible
assets
—
1,436
2,234
5,868
Acquisition-related transaction costs
—
281
638
281
Non-GAAP Gross profit
$
104,343
$
98,420
$
403,702
$
369,376
Non-GAAP Gross margin
85
%
84
%
84
%
83
%
GAAP Research and development
$
30,671
$
38,383
$
138,091
$
139,262
GAAP Research and development margin
25
%
33
%
29
%
31
%
Stock-based compensation, net
8,594
10,930
34,711
40,821
Acquisition-related transaction costs
—
1,337
3,363
1,337
Non-GAAP Research and development
$
22,077
$
26,116
$
100,017
$
97,104
Non-GAAP Research and development
margin
18
%
22
%
21
%
22
%
GAAP Sales and marketing
$
47,917
$
61,829
$
223,827
$
224,008
GAAP Sales and marketing margin
39
%
53
%
47
%
50
%
Stock-based compensation, net
4,563
5,721
22,860
23,585
Amortization of acquisition intangible
assets
370
989
2,916
4,274
Acquisition-related transaction costs
—
1,246
3,090
1,246
Non-GAAP Sales and marketing
$
42,984
$
53,873
$
194,961
$
194,903
Non-GAAP Sales and marketing margin
35
%
46
%
41
%
44
%
GAAP General and administrative
$
24,139
$
34,709
$
107,522
$
106,667
GAAP General and administrative margin
20
%
30
%
22
%
24
%
Stock-based compensation, net
7,829
6,986
32,196
28,296
Acquisition-related transaction costs
—
9,546
4,809
9,957
Non-GAAP General and administrative
$
16,310
$
18,177
$
70,517
$
68,414
Non-GAAP General and administrative
margin
13
%
15
%
15
%
15
%
GAAP Restructuring
$
4,581
$
—
$
6,563
$
—
GAAP Restructuring margin
4
%
0
%
1
%
0
%
Stock-based compensation, net
—
—
2,761
—
Amortization of acquisition intangible
assets
135
—
450
—
Other restructuring costs
4,446
—
3,352
—
Non-GAAP Restructuring
$
—
$
—
$
—
$
—
Non-GAAP Restructuring margin
0
%
0
%
0
%
0
%
(1) Please see Appendix A for explanation
of non-GAAP measures used.
APPENDIX A
MOMENTIVE GLOBAL INC. EXPLANATION OF
NON-GAAP MEASURES
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with US GAAP
(“GAAP”), we use the following Non-GAAP financial measures:
Non-GAAP (loss) income from operations, Non-GAAP operating margin,
Non-GAAP net (loss) income, Non-GAAP net (loss) income per diluted
share, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP
research and development, Non-GAAP research and development margin,
Non-GAAP sales and marketing, Non-GAAP sales and marketing margin,
Non-GAAP general and administrative, Non-GAAP general and
administrative margin, Non-GAAP restructuring, Non-GAAP
restructuring margin, free cash flow, constant currency revenue,
and constant currency revenue growth rate. Our definition for each
Non-GAAP measure used is provided below, however, a limitation of
Non-GAAP financial measures is that they do not have uniform
definitions. Accordingly, our definitions for Non-GAAP measures
used will likely differ from similarly titled Non-GAAP measures
used by other companies thereby limiting comparability.
Non-GAAP (loss) income from operations,
Non-GAAP operating margin: We define Non-GAAP (loss) income
from operations as GAAP loss from operations excluding stock-based
compensation, net, amortization of acquisition intangible assets,
acquisition-related transaction costs, and restructuring. Non-GAAP
operating margin is defined as Non-GAAP (loss) income from
operations divided by revenue.
Non-GAAP net (loss) income, Non-GAAP net
(loss) income per diluted share: We define Non-GAAP net
(loss) income as GAAP net loss excluding stock-based compensation,
net, amortization of acquisition intangible assets,
acquisition-related transaction costs, restructuring, gain on sale
of a private company investment, and including the income tax
effect on Non-GAAP adjustments. Non-GAAP net (loss) income per
diluted share is defined as Non-GAAP net (loss) income divided by
the weighted-average shares outstanding.
Non-GAAP gross profit, Non-GAAP gross
margin: We define Non-GAAP gross profit as GAAP gross profit
excluding stock-based compensation, net, amortization of
acquisition intangible assets, and acquisition-related transaction
costs. Non-GAAP gross margin is defined as Non-GAAP gross profit
divided by revenue.
Non-GAAP research and development,
Non-GAAP research and development margin: We define Non-GAAP
research and development as GAAP research and development excluding
stock-based compensation, net and acquisition-related transaction
costs. Non-GAAP research and development margin is defined as
Non-GAAP research and development divided by revenue.
Non-GAAP sales and marketing, Non-GAAP
sales and marketing margin: We define Non-GAAP sales and
marketing as GAAP sales and marketing excluding stock-based
compensation, net, amortization of acquisition intangible assets,
and acquisition-related transaction costs. Non-GAAP sales and
marketing margin is defined as Non-GAAP sales and marketing divided
by revenue.
Non-GAAP general and administrative,
Non-GAAP general and administrative margin: We define
Non-GAAP general and administrative as GAAP general and
administrative excluding stock-based compensation, net and
acquisition-related transaction costs. Non-GAAP general and
administrative margin is defined as Non-GAAP general and
administrative divided by revenue.
Non-GAAP restructuring, Non-GAAP
restructuring margin: We define Non-GAAP restructuring as
GAAP Restructuring excluding stock-based compensation, net,
amortization of acquisition intangible assets, and other
restructuring costs. Non-GAAP Restructuring margin is defined as
Non-GAAP Restructuring divided by revenue.
Free cash flow: We define free cash
flow as GAAP net cash provided by or used in operating activities
less purchases of property and equipment and capitalized
internal-use software. We consider free cash flow to be an
important measure because it measures our liquidity after deducting
capital expenditures for purchases of property and equipment and
capitalized software development costs, which we believe provides a
more accurate view of our cash generation and cash available to
grow our business. We expect to generate positive free cash flow
over the long term. Free cash flow has limitations as an analytical
tool, and it should not be considered in isolation or as a
substitute for analysis of other GAAP financial measures, such as
net cash provided by or used in operating activities. Some of the
limitations of free cash flow are that free cash flow does not
reflect our future contractual commitments and may be calculated
differently by other companies in our industry, limiting its
usefulness as a comparative measure.
Constant currency revenue, Constant
currency revenue growth rate: We define constant currency
revenue as GAAP revenue excluding the effects of foreign currency
exchange rate fluctuations. We believe providing revenue on a
constant currency basis helps our investors to better understand
our underlying performance, independent of foreign currency
movements. Constant currency revenue compares results between
periods as if exchange rates had remained constant period over
period and is calculated by translating current period foreign
currency revenues using average exchange rates from prior year
comparable period. Constant currency revenue growth rate is
calculated by determining the percentage change in current period
constant currency revenue over comparable prior period GAAP
revenue.
We use these Non-GAAP measures to compare and evaluate our
operating results across periods in order to manage our business,
for purposes of determining executive and senior management
incentive compensation, and for budgeting and developing our
strategic operating plans. We believe that these Non-GAAP measures
provide useful information about our operating results, enhance the
overall understanding of our past financial performance and future
prospects, and allow for greater transparency with respect to key
metrics used by our management in evaluating our financial
performance and for operational decision making, but they are not
meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read only in conjunction
with our condensed consolidated financial statements prepared in
accordance with GAAP.
We have excluded the effect of the following items from the
aforementioned Non-GAAP measures because they are non-cash and/or
are non-recurring in nature and because we believe that the
Non-GAAP financial measures excluding these items provide
meaningful supplemental information regarding operational
performance and liquidity. We further believe these measures are
useful to investors in that they allow for greater transparency to
certain line items in our financial statements and facilitate
comparisons to historical operating results and comparisons to peer
operating results. A description of the Non-GAAP adjustments for
the above measures is as follows:
- Stock-based compensation, net: We
incur stock based-compensation expense on a GAAP basis resulting
from equity awards granted to our employees. Although stock-based
compensation is a key incentive offered to our employees, and we
believe such compensation contributed to the revenues earned during
the periods presented and also believe it will contribute to the
generation of future period revenues, we continue to evaluate our
business performance excluding stock-based compensation expenses.
Stock-based compensation expenses will recur in future
periods.
- Amortization of acquisition intangible
assets: We incur amortization expense on intangible assets
on a GAAP basis resulting from prior acquisitions. Amortization of
acquired intangible assets is inconsistent in amount and frequency
and is significantly affected by the timing and size of any
acquisitions. Investors should note that the use of intangible
assets contributed to our revenues earned during the periods
presented and will contribute to our future period revenues as
well. Amortization of acquisition intangible assets will recur in
future periods.
- Acquisition-related transaction
costs: We incur transaction costs on a GAAP basis resulting
from our acquisitions, including our terminated acquisition by
Zendesk. These costs relate to advisory, legal and accounting
services, and retention payments to certain employees.
Acquisition-related transaction costs is inconsistent in amount and
frequency and is significantly affected by the timing and size of
any acquisitions and are therefore excluded from our Non-GAAP
results as they do not otherwise relate to our core business
operations. However, we may incur these expenses in future periods
in connection with any new acquisitions.
- Restructuring: Restructuring
expenses consist of employee severance, lease termination charges
and related gains or losses from lease modifications, impairment of
certain assets, and other exit costs. We believe it is useful for
investors to understand the effects of these items on our total
operating expenses. We expect that restructuring costs will
generally diminish over time with respect to strategic initiatives
and/or past acquisitions. However, we may incur these expenses in
future periods in connection with any new strategic initiatives
and/or acquisitions.
- Gain on sale of a private company
investment: Gain on sale of a private company investment was
recognized on a GAAP basis resulting from the sale of certain
corporate assets. We expect that such transactions will be
infrequent in occurrence and are therefore excluded from our
Non-GAAP results as they do not otherwise relate to our core
business operations.
For more information on the Non-GAAP financial measures, please
see the “Reconciliation of GAAP to Non-GAAP Data” section of this
press release. The accompanying tables provide details on the GAAP
financial measures that are most directly comparable to the
Non-GAAP financial measures and the related reconciliations between
those financial measures.
With regards to the Non-GAAP outlook provided above, a
reconciliation to the corresponding GAAP amounts is not provided as
the quantification of certain items excluded from each respective
Non-GAAP measure, which may be significant, cannot be reasonably
calculated or predicted at this time without unreasonable efforts.
For example, the Non-GAAP adjustment for stock-based compensation
expense, net, requires additional inputs such as number of shares
granted and market price that are not currently ascertainable, and
the Non-GAAP adjustment for amortization of acquisition intangible
assets depends on the timing and value of intangible assets
acquired that cannot be accurately forecasted.
Safe Harbor Statement
“Safe Harbor” statement under the Private Securities Litigation
Reform Act of 1995: This press release may contain forward-looking
statements about our financial outlook, the costs, timing and
financial impacts of restructuring initiatives, outstanding shares,
products, including our investments in products, technology and
other key strategic areas. The achievement of the matters covered
by such forward-looking statements involves risks, uncertainties
and assumptions. If any of these risks or uncertainties materialize
or if any of the assumptions prove incorrect, the company’s results
could differ materially from the results expressed or implied by
the forward-looking statements the company makes.
The risks and uncertainties referred to above include - but are
not limited to - risks related to our ability to successfully
implement our cost-saving initiatives and to capture expected
efficiencies; our ability to retain and upgrade customers; our
revenue growth rate; our brand (including our rebranding); our
marketing strategies; our self-serve business model; the length of
our sales cycles; the growth and development of our salesforce;
security measures; expectations regarding our ability to timely and
effectively scale and adapt existing technology and network
infrastructure to ensure that our products and services are
accessible at all times; competition; our debt; revenue
recognition; our ability to manage our growth; our culture and
talent; our data centers; privacy, security and data transfer
concerns, as well as changes in regulations, which could impact our
ability to serve our customers or curtail our monetization efforts;
litigation and regulatory issues; expectations regarding the return
on our strategic investments; our ability to execute on our share
repurchase program; execution of our plans and strategies,
including with respect to mobile products and features and
expansion into new areas and businesses; our international
operations; intellectual property; the application of U.S. and
international tax laws on our tax structure and any changes to such
tax laws; acquisitions we have made or may make in the future; the
price volatility of our common stock; and general economic
conditions.
Further information on these and other factors that could affect
our financial results are included in documents filed with the
Securities and Exchange Commission from time to time, including the
section entitled “Risk Factors” in the Annual Report on Form 10-K
that will be filed for the year ended December 31, 2022, which
should be read in conjunction with these financial results. These
documents are or will be available on the SEC Filings section of
our Investor Relations website page at investor.momentive.ai. All
information provided in this release and in the attachments is as
of February 16, 2023, and we undertake no obligation to update this
information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230216005751/en/
Investor Relations Contact: Gary J. Fuges, CFA
investors@momentive.ai Media Contact: Katie Miserany
pr@momentive.ai
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