Castlight Health Announces Third Quarter 2016 Results
Total Revenue of $25.5 Million, Up 31% Y-o-Y; GAAP & Non-GAAP Gross Margin Increases by 1,300+ Basis Points Y-o-Y; GAAP & Non-GAAP Operating Loss Reduced by $9 Million and $10 Million Y-o-Y, Respectively
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SAN FRANCISCO, CA -- (Marketwired) -- 11/02/16 -- Castlight Health, Inc. (NYSE: CSLT), a leading health benefits platform provider, today announced results for its third quarter ended September 30, 2016.
"We were pleased to pass a milestone during the third quarter by reaching $100 million in annualized revenue run rate. We also added 14 net new logos, with a majority of our new customers buying our full platform solution," said Giovanni Colella, M.D., co-founder and chief executive officer of Castlight Health. "As the market increasingly moves toward mainstream buyers, we see growing demand for a comprehensive, cloud-based platform that addresses a broad range of health benefits challenges. We believe Castlight is a natural platform to drive utilization across multiple solutions, positioning us well in a multi-billion dollar market opportunity."
Financial Performance for the Three Months Ended September 30, 2016
- Total revenue for the third quarter of 2016 was $25.5 million, an increase of 31% from the third quarter of 2015. Subscription revenue was $23.9 million, an increase of 31% on a year-over-year basis.
- Gross margin for the third quarter of 2016 was 68.8%, compared to a gross margin of 55.5% in the third quarter of 2015. Non-GAAP gross margin for the third quarter of 2016 was 72.1% compared to a non-GAAP gross margin of 59.3% in the third quarter of 2015.
- Operating loss for the third quarter of 2016 was $11.5 million, compared to an operating loss of $20.1 million in the third quarter of 2015. Non-GAAP operating loss for the third quarter of 2016 was $5.5 million, compared to a non-GAAP operating loss of $15.9 million in the third quarter of 2015.
- Net loss per basic and diluted share was $0.11 in the third quarter of 2016, compared to a net loss per basic and diluted share of $0.21 in the third quarter of 2015. The non-GAAP net loss per basic and diluted share for the third quarter of 2016 was $0.05, compared to a net loss per basic and diluted share of $0.17 in the third quarter of 2015. For both GAAP and non-GAAP purposes, the weighted average basic and diluted share count for the third quarter of 2016 was 103.1 million compared to 94.4 million in the third quarter of 2015.
- Total cash, cash equivalents and marketable securities were $116.4 million at the end of the third quarter of 2016. Cash used in operations for the third quarter of 2016 was $9.4 million, compared to $14.5 million used in operations in the third quarter of 2015.
A reconciliation of GAAP to non-GAAP results has been provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures".
"Over the last 5 quarters, we have reduced our quarterly non-GAAP operating expenses by 16% while non-GAAP gross margins have increased by 1,300 basis points and our revenue run rate has grown by 38%. Along the way, we have continued to increase investments in product development while also putting in place strategic channel partners that we expect will drive growth in our business during 2017 and beyond," said John Doyle, President and COO of Castlight Health. "The reduction of our third quarter non-GAAP operating loss to the lowest level in 4 years puts us well on track to bringing our business to cash flow break-even in mid-2017, and positioning us with a meaningful cash balance to continue funding our strategic growth initiatives."
Business Outlook
Full Year 2016 Guidance: The Company continues to expect revenue to track toward the mid-point of its $99.0 million to $102.0 million guidance range for the full year 2016. The Company expects to outperform its previously issued non-GAAP operating loss guidance range of $40.0 million to $42.0 million, as well as its previously issued non-GAAP net loss per share guidance range of $0.40 to $0.42 based on 100 million to 101 million weighted average basic and diluted common shares outstanding.
For the full year 2016, non-GAAP guidance excludes the effects of stock-based compensation expense, charge related to reduction in workforce and the capitalization and amortization of internal-use software.
Quarterly Conference Call
Castlight Health will host a conference call to discuss its third quarter 2016 results today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company's Investor Relations website at http://ir.castlighthealth.com. In addition, an archive of the webcast can be accessed through the same link. Participants who choose to call in to the conference call can do so by dialing 1-866-393-4306. The conference ID number is 94707357. A replay will be available for one week at 1-855-859-2056, passcode 94707357.
About Castlight Health
Our mission is to empower people to make the best choices for their health and to help companies make the most of their health benefits. We offer a health benefits platform that engages employees to make better healthcare decisions and can guide them to the right program, care, and provider. The platform also enables benefit leaders to communicate and measure their programs while driving employee engagement with targeted, relevant communications. Castlight has partnered with enterprise customers, spanning millions of lives, to improve healthcare outcomes, lower costs, and increase benefits satisfaction.
For more information visit www.castlighthealth.com. Follow us on Twitter and LinkedIn and Like us on Facebook.
Non-GAAP Financial Measures
To supplement Castlight Health's financial statements presented in accordance with generally accepted accounting principles (GAAP), we also use and provide investors and others with non-GAAP measures of certain components of financial performance, including non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share. These non-GAAP financial measures differ from GAAP financial measures in that they exclude stock-based compensation, warrant expense, litigation settlement, charges related to a reduction in workforce, and capitalization and amortization of internal-use software and the associated tax impact of these items, where applicable.
We believe that these non-GAAP financial measures provide useful supplemental information to investors and others, facilitate the analysis of the company's core operating results and comparison of operating results across reporting periods, and can help enhance overall understanding of the company's historical financial performance.
We have provided a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, except that we have not reconciled our non-GAAP operating loss and net loss per share guidance for the full year 2016 to comparable GAAP operating loss and net loss per share guidance because we do not provide guidance for stock-based compensation expense and capitalization and amortization of internal-use software, which are reconciling items between GAAP and non-GAAP operating loss. The factors that may impact our future stock-based compensation expense and capitalization and amortization of internal-use software are out of our control and/or cannot be reasonably predicted, and therefore we are unable to provide such guidance without unreasonable effort.
These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Castlight Health encourages investors and others to review the company's financial information in its entirety and not rely on a single financial measure.
Safe Harbor For Forward-Looking Statements
This press release contains forward-looking statements about Castlight Health's expectations, plans, intentions, and strategies, including, but not limited to, statements regarding Castlight Health's 2016 full year projections, our expectations for future performance of our business, market growth and business conditions, future innovation by the company and future developments with respect to the digital healthcare industry. Statements including words such as "anticipate," "believe," "estimate," "will," "continue," "expect," or "future," and statements in the future tense are forward-looking statements. These forward-looking statements involve risks and uncertainties, as well as assumptions, which, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties include those described in Castlight Health's documents filed with or furnished to the Securities and Exchange Commission. All forward-looking statements in this press release are based on information available to Castlight Health as of the date hereof. Castlight Health assumes no obligation to update these forward-looking statements.
Copyright 2016 Castlight Health, Inc. Castlight Health® is the registered trademark of Castlight Health, Inc. Other company and product names may be trademarks of the respective companies with which they are associated.
CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
As of
---------------------------
September 30, December 31,
2016 2015
------------- -------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 55,108 $ 19,150
Marketable securities 61,326 101,274
Accounts receivable, net 15,888 12,751
Deferred commissions 7,746 5,438
Prepaid expenses and other current assets 3,884 3,772
------------- -------------
Total current assets 143,952 142,385
Property and equipment, net 5,912 6,896
Marketable securities, noncurrent - 13,335
Restricted cash, noncurrent 1,000 1,000
Deferred commissions, noncurrent 3,861 4,923
Other assets 4,691 4,735
------------- -------------
Total assets $ 159,416 $ 173,274
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,603 $ 3,384
Accrued expenses and other current liabilities 4,894 4,550
Accrued compensation 7,146 11,477
Deferred revenue 30,730 26,590
------------- -------------
Total current liabilities 46,373 46,001
Deferred revenue, noncurrent 6,700 7,522
Other liabilities, noncurrent 1,255 1,397
------------- -------------
Total liabilities 54,328 54,920
Stockholders' equity 105,088 118,354
------------- -------------
Total liabilities and stockholders' equity $ 159,416 $ 173,274
============= =============
CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2016 2015 2016 2015
--------- --------- --------- ---------
Revenue:
Subscription $ 23,867 $ 18,233 $ 66,859 $ 50,417
Professional services 1,634 1,306 4,944 3,583
--------- --------- --------- ---------
Total revenue 25,501 19,539 71,803 54,000
--------- --------- --------- ---------
Cost of revenue:
Cost of subscription (1) 3,988 3,081 12,218 8,532
Cost of professional services (1) 3,978 5,606 13,941 15,581
--------- --------- --------- ---------
Total cost of revenue 7,966 8,687 26,159 24,113
--------- --------- --------- ---------
Gross profit 17,535 10,852 45,644 29,887
--------- --------- --------- ---------
Operating expenses:
Sales and marketing (1) 13,143 16,731 44,877 50,835
Research and development (1) 10,573 7,868 30,619 21,853
General and administrative (1) 5,338 6,311 19,902 18,291
--------- --------- --------- ---------
Total operating expenses 29,054 30,910 95,398 90,979
--------- --------- --------- ---------
Operating loss (11,519) (20,058) (49,754) (61,092)
Other income, net 116 51 304 230
--------- --------- --------- ---------
Net loss $(11,403) $(20,007) $(49,450) $(60,862)
========= ========= ========= =========
Net loss per share, basic and
diluted $ (0.11) $ (0.21) $ (0.50) $ (0.65)
========= ========= ========= =========
Weighted-average shares used to
compute basic and diluted net loss
per share 103,147 94,409 99,734 93,343
========= ========= ========= =========
(1) Includes stock-based compensation expense as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2016 2015 2016 2015
--------- --------- --------- ---------
Cost of revenue:
Cost of subscription $ 139 $ 96 $ 367 $ 196
Cost of professional services 456 647 1,468 1,522
Sales and marketing 2,190 2,058 6,644 5,883
Research and development 1,631 981 4,300 2,344
General and administrative 1,236 1,177 3,476 3,100
CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2016 2015 2016 2015
--------- --------- --------- ---------
Operating activities:
Net loss $(11,403) $(20,007) $(49,450) $(60,862)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 822 468 2,407 1,378
Stock-based compensation 5,652 4,959 16,255 13,045
Amortization of deferred
commissions 1,042 917 3,157 2,576
Accretion and amortization of
marketable securities 101 299 406 1,126
Changes in operating assets and
liabilities:
Accounts receivable (3,397) (2,597) (3,137) (2,548)
Deferred commissions (1,479) (1,595) (4,403) (3,346)
Prepaid expenses and other
assets 745 792 (68) (1,026)
Accounts payable 410 (542) 300 716
Accrued expenses and other
liabilities (3,583) 1,429 (4,046) (1,740)
Deferred revenue 1,733 1,367 3,318 5,770
--------- --------- --------- ---------
Net cash used in operating
activities (9,357) (14,510) (35,261) (44,911)
--------- --------- --------- ---------
Investing activities:
Restricted cash - - - (1,000)
Investment in related party - (1,000) - (4,125)
Purchase of property and equipment (345) (1,806) (1,587) (3,499)
Purchase of marketable securities (11,971) (67,366) (73,163) (86,324)
Sales of marketable securities - - - 5,000
Maturities of marketable
securities 35,570 78,466 126,157 140,019
--------- --------- --------- ---------
Net cash provided by investing
activities 23,254 8,294 51,407 50,071
--------- --------- --------- ---------
Financing activities:
Proceeds from the exercise of
stock options 636 354 2,576 3,180
Proceeds from issuance of common
stock and warrants - - 17,358 -
Payments of issuance costs (76) - (122) (94)
--------- --------- --------- ---------
Net cash provided by financing
activities 560 354 19,812 3,086
--------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents 14,457 (5,862) 35,958 8,246
Cash and cash equivalents at
beginning of period 40,651 31,533 19,150 17,425
--------- --------- --------- ---------
Cash and cash equivalents at end of
period $ 55,108 $ 25,671 $ 55,108 $ 25,671
========= ========= ========= =========
CASTLIGHT HEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
-------------------------------- ---------------------
September September September September
30, June 30, 30, 30, 30,
2016 2016 2015 2016 2015
---------- ---------- ---------- ---------- ----------
Gross profit:
GAAP gross profit
subscription $ 19,879 $ 17,861 $ 15,152 $ 54,641 $ 41,885
Stock-based
compensation 139 120 96 367 196
Amortization of
internal-use
software 244 244 24 732 72
Reduction in
workforce - 5 - 5 -
---------- ---------- ---------- ---------- ----------
Non-GAAP gross profit
subscription 20,262 18,230 15,272 55,745 42,153
========== ========== ========== ========== ==========
GAAP gross margin
subscription 83.3% 81.4% 83.1% 81.7% 83.1%
Non-GAAP gross margin
subscription 84.9% 83.0% 83.8% 83.4% 83.6%
GAAP gross loss
professional
services $ (2,344) $ (3,220) $ (4,300) $ (8,997) $(11,998)
Stock-based
compensation 456 535 647 1,468 1,522
Capitalization of
internal-use
software - - (33) - (33)
Reduction in
workforce 4 99 - 103 -
---------- ---------- ---------- ---------- ----------
Non-GAAP gross loss
professional
services $ (1,884) $ (2,586) $ (3,686) $ (7,426) $(10,509)
========== ========== ========== ========== ==========
GAAP gross margin
professional
services (143)% (198)% (329)% (182)% (335)%
Non-GAAP gross margin
professional
services (115)% (159)% (282)% (150)% (293)%
GAAP gross profit $ 17,535 $ 14,641 $ 10,852 $ 45,644 $ 29,887
Impact of non-GAAP
adjustments 843 1,003 734 2,675 1,757
---------- ---------- ---------- ---------- ----------
Non-GAAP gross profit $ 18,378 $ 15,644 $ 11,586 $ 48,319 $ 31,644
========== ========== ========== ========== ==========
GAAP gross margin 68.8% 62.1% 55.5% 63.6% 55.3%
Non-GAAP gross margin 72.1% 66.3% 59.3% 67.3% 58.6%
Operating expense:
GAAP sales and
marketing $ 13,143 $ 15,452 $ 16,731 $ 44,877 $ 50,835
Stock-based
compensation (2,190) (2,219) (2,058) (6,644) (5,883)
Reduction in
workforce (48) (374) - (422) -
---------- ---------- ---------- ---------- ----------
Non-GAAP sales and
marketing $ 10,905 $ 12,859 $ 14,673 $ 37,811 $ 44,952
---------- ---------- ---------- ---------- ----------
GAAP research and
development $ 10,573 $ 9,961 $ 7,868 $ 30,619 $ 21,853
Stock-based
compensation (1,631) (1,264) (981) (4,300) (2,344)
Capitalization of
internal-use
software - - 841 - 1,636
Reduction in
workforce (18) (118) - (136) -
---------- ---------- ---------- ---------- ----------
Non-GAAP research and
development $ 8,924 $ 8,579 $ 7,728 $ 26,183 $ 21,145
---------- ---------- ---------- ---------- ----------
GAAP general and
administrative $ 5,338 $ 6,019 $ 6,311 $ 19,902 $ 18,291
Stock-based
compensation (1,236) (971) (1,177) (3,476) (3,100)
Litigation
settlement - (141) - (2,876) -
Reduction in
workforce (10) (80) - (90) -
---------- ---------- ---------- ---------- ----------
Non-GAAP general and
administrative $ 4,092 $ 4,827 $ 5,134 $ 13,460 $ 15,191
---------- ---------- ---------- ---------- ----------
GAAP operating
expense $ 29,054 $ 31,432 $ 30,910 $ 95,398 $ 90,979
Impact of non-GAAP
adjustments (5,133) (5,167) (3,375) (17,944) (9,691)
---------- ---------- ---------- ---------- ----------
Non-GAAP operating
expense $ 23,921 $ 26,265 $ 27,535 $ 77,454 $ 81,288
========== ========== ========== ========== ==========
Operating loss:
GAAP operating loss $(11,519) $(16,791) $(20,058) $(49,754) $(61,092)
Impact of non-GAAP
adjustments 5,976 6,170 4,109 20,619 11,448
---------- ---------- ---------- ---------- ----------
Non-GAAP operating
loss $ (5,543) $(10,621) $(15,949) $(29,135) $(49,644)
========== ========== ========== ========== ==========
Net loss and net loss
per share:
GAAP net loss $(11,403) $(16,692) $(20,007) $(49,450) $(60,862)
Total pre-tax
impact of non-GAAP
adjustments 5,976 6,170 4,109 20,619 11,448
Income tax impact
of non-GAAP
adjustments - - - - -
---------- ---------- ---------- ---------- ----------
Non-GAAP net loss $ (5,427) $(10,522) $(15,898) $(28,831) $(49,414)
========== ========== ========== ========== ==========
GAAP net loss per
share, basic and
diluted $ (0.11) $ (0.17) $ (0.21) $ (0.50) $ (0.65)
Non-GAAP net loss per
share, basic and
diluted $ (0.05) $ (0.11) $ (0.17) $ (0.29) $ (0.53)
---------- ---------- ---------- ---------- ----------
Shares used in basic
and diluted net loss
per share
computation 103,147 99,728 94,409 99,734 93,343
---------- ---------- ---------- ---------- ----------
Investor Contact: Seth [email protected] Contact: Jim Rivas [email protected]
Source: Castlight Health
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