MobileIron Announces Strong Fourth Quarter 2018 Results

MobileIron (NASDAQ:MOBL), the secure foundation for modern work, today announced results for its fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Financial Highlights

• Recurring revenue was $40.8 million, up 21% year-over-year.
• Revenue was $54.1 million, up 10% year-over-year.
• Billings were $69.5 million, up 15% year-over-year.
• GAAP net loss per share was $0.07; non-GAAP net income per share was $0.03.
• Cash generated in operating activities was $7.1 million.

Full Year 2018 Financial Highlights

• Recurring revenue was $151.1 million, up 18% year-over-year.
• Revenue was $193.2 million, up 7% year-over-year.
• Billings were $223.3 million, up 11% year-over-year.
• GAAP operating margin was -22.2%; non-GAAP operating margin was -2.2%
• GAAP net loss per share was $0.42; non-GAAP net loss per share was $0.04.
• Cash generated in operating activities was $14.2 million.

“In 2018 the team at MobileIron did an exceptional job driving improved performance. Our steady execution and commitment to reinvigorate growth has clearly paid off as we steadily increased our growth rate through the year and achieved record non-GAAP operating income in each of the last two quarters,” said Simon Biddiscombe, CEO, MobileIron. “The Zero Trust threat landscape requires security that starts at the endpoint and stretches seamlessly to the cloud services modern work relies on. MobileIron delivers the most comprehensive security suite to ensure valuable company data is not compromised. With a strong and cohesive team and best-in-class products, I am confident that MobileIron has resumed an upward trajectory and will continue our progress in 2019.”

Financial Outlook

The company is providing the following outlook for its first quarter 2019 (ending March 31, 2019):

• Revenue is expected to be between $46 million and $49 million, growth of 5% to 12% year-over-year.
• Non-GAAP gross margin is expected to be approximately 82%.
• Non-GAAP operating expenses are expected to be between $45 million and $46 million.

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

• Revenue is expected to be between $205 million and $215 million, growth between 6% and 11% over 2018.
• We expect ending ARR1 to grow by approximately 20% by year end.
• We expect to generate non-GAAP operating profit in 2019.

Fourth Quarter 2018 Business Highlights

Milestones and Recognition

• Named a Leader by Forrester Research in the Forrester Wave™: Unified Endpoint Management, Q4 2018 report. MobileIron garnered the highest possible score across 16 criteria in application security, product vision, and roadmap execution.
• Appointed Rhonda Shantz as Chief Marketing Officer. Ms. Shantz brings over 25 years of experience driving revenue growth at cybersecurity and enterprise businesses including Centrify, Symantec and Rocketfuel.
• Recognized by Google™ as a partner in its Android Enterprise Recommended program for Enterprise Mobility Management (EMM) providers.
• Awarded 5 additional US patents for mobile security, bringing MobileIron’s total number of awarded patents to 82.
• Released 42 major and 85 minor product releases for the full year 2018, across our suite of solutions.

Platform

• Released new versions of MobileIron Access, Cloud, Core, AppConnect, Email+ Docs@Work, Tunnel, and Web@Work.
• Integrated with Aruba (HPE) and Cisco Security Connector to control network access.
• Integrated with Cortado Workplace and DRACOON for file syncing and sharing.
• Integrated with Fluid Mobility and Inpixon for location-based services.

All forward-looking non-GAAP financial measures contained in this section exclude estimates for stock-based compensation expenses and amortization of intangible assets. While a reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis, the company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables included in this press release for its fourth quarter of 2017 and 2018 and for fiscal year 2017 and 2018.

1Annual Recurring Revenue (ARR). MobileIron will transition from reporting Annualized Recurring Revenue, which was defined as the recurring revenue recognized during a quarter multiplied by four, to reporting Annual Recurring Revenue per the definition and detail that follows. ARR is a financial measure that we define as the annualized value of all recurring revenue contracts active at the end of a reporting period. ARR includes the annualized value of subscriptions and the annualized value software support contracts related to perpetual licenses active at the end of a reporting period and does not include revenue reported as perpetual license or professional services in our consolidated statement of operations. ARR should be viewed independently of revenue, unearned revenue, and customer arrangements with termination rights as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue and can be impacted by contract start and end dates and renewal rates.

Conference Call and Webcast

MobileIron will report final results for the fourth quarter and fiscal year 2018 on Thursday, February 7, 2019 after the close of the market and host a conference call and live webcast at 1:30 p.m. Pacific Time (4:30 p.m. ET) to discuss the company's financial results and business highlights. Interested parties may access the call by dialing 1-866-602-7050 in the U.S. or 1-409-216-6455 from international locations (passcode 9796668). The live webcast will be available on the MobileIron Investor Relations website at http://investors.mobileiron.com. A replay will be available through the same link.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding MobileIron's revenue, operating expenses, cost structure, GAAP and non-GAAP financial metrics, projected financial results, and trends in MobileIron's business and statements relating to the timing and extent of any stock repurchases. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including, but not limited to, our limited operating history, quarterly fluctuations in our operating results, one-time expenses, including restructuring charges, seasonality, our need to develop new solutions and enhancements to compete in rapidly evolving markets, product defects, strength of intellectual property portfolio, customer adoption, competitive pressures, billings type mix shift, our ability to scale, our ability to recruit and retain key personnel, and the quality of our support services.

Additional information on potential factors that could affect MobileIron's financial results is included in our SEC filings, including our reports on Forms 10-K, 10-Q and 8-K and other filings that we make with the SEC from time to time. MobileIron does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Disclosure Information

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

About MobileIron

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

"MobileIron" is a registered trademark of MobileIron, Inc. in the United States and other countries. Trade names, trademarks, and service marks of other companies that are used in this press release belong to their respective owners.

Financial Results

Non-GAAP Financial Measures and Reconciliations

To supplement our financial results presented on a U.S. GAAP basis, we provide investors with certain non-GAAP financial measures, including billings, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share and free cash flow. These non-GAAP financial measures exclude stock-based compensation, amortization of intangible assets, a litigation settlement charge, and restructuring charges.

Stock-based compensation expenses: In our non-GAAP financial measures, we have excluded the effect of stock-based compensation expenses. We exclude stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding our operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, we believe that providing non-GAAP financial measures that exclude this expense allows investors the ability to make more meaningful comparisons between MobileIron operating results and those of other companies. Stock-based compensation expenses will recur in future periods.

Amortization of intangible assets: In our non-GAAP financial measures, we have excluded the effect of the amortization of intangible assets. Amortization of intangible assets can be significantly affected by the timing and size of our acquisitions. Beginning our second quarter ended June 30, 2018, we no longer have amortizing intangible assets.

Litigation settlement charges: In our non-GAAP financial measures, we have excluded the charge for the cost of the settlement of our shareholder litigation. While it is possible that we will have material litigation-related charges in the future, we do not expect it to be a consistently recurring expense.

Restructuring charges: In our non-GAAP financial measures, we have excluded the effect of severance and other expenses related to a reduction in our workforce. Restructuring charges may recur in the future; however, the timing and amounts are difficult to predict.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, and non-GAAP net loss per share: We believe that the exclusion of stock-based compensation expense, the amortization of intangible assets, the litigation settlement charge, and restructuring charges from various non-GAAP financial metrics such as gross profit, gross margin, operating income (loss), operating margin, net income (loss), and net income (loss) per share provides useful measures for management and investors. Stock-based compensation, restructuring charges, and the amortization of intangible assets have been and can continue to be inconsistent in amount from period to period. Other than in 2017, we have not historically had a material litigation-related settlement charge. While it is possible that we will have material litigation settlement charges in the future, we do not expect it to be a consistently recurring expense. We believe the inclusion of these items makes it difficult to compare periods and understand the growth and performance of our business. In addition, we evaluate our business performance and compensate management based in part on these non-GAAP measures. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by our competitors and exclude expenses that may have a material impact on our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

Billings and free cash flow: Our non-GAAP financial measures also include: billings, which we define as total revenue plus the change in unearned revenue plus the change in customer arrangements in termination rights minus the change in unbilled accounts receivable in a period; and free cash flow, which we define as cash provided by (used in) operating activities less the amount of property and equipment purchased. We consider billings to be a useful metric for management and investors because subscription billings and software support and services billings drive unearned revenue and customer arrangements with termination rights, which are important indicators of future revenue. There are limitations related to the use of billings. First, billings include amounts that have not yet been recognized as revenue. Changes in contract duration and the timing of large transactions, for example, may significantly impact quarterly billings, but have little impact on revenue. Second, our calculation of billings may be different from other companies that report similar financial measures. We compensate for these limitations by evaluating billings together with revenue calculated in accordance with GAAP, including recurring revenue. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to invest in our business and fund ongoing operations. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.

We believe these non-GAAP financial measures are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures 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 consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business using certain of these non-GAAP measures.

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