Castlight Health. Q Financial & Business Update May 10, 2018 Q1 FY

Transcription

1 Castlight Health Q Financial & Business Update May 10, 2018 Q1 FY

2 Safe Harbor Statement This presentation contains forward-looking statements regarding our trends, our strategies and the anticipated performance of our business, including our guidance for the full year of 2018 and timing of cash flow and non-gaap operating break-even. These statements were made as of May 10, 2018, and reflect management s views and expectations at that time, and are subject to various risks, uncertainties and assumptions. If this presentation is viewed after May 10, 2018, the information in the presentation may no longer be current or accurate. We disclaim any obligation to update or revise any forward-looking statements. Undue reliance should not be placed on these statements. We provide guidance in this presentation, but we will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. Please refer to the Company s May 10, 2018 press release and the risk factors included in the company s filings with the Securities and Exchange Commission for discussion of important factors that may cause actual events or results to differ materially from those contained in our forward-looking statements. This presentation also includes certain non- GAAP metrics, such as non-gaap gross profit and margin percent, non- GAAP operating expenses, non-gaap operating loss, and non-gaap earnings per share that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics, on a historical basis, can be found in the appendix section of this presentation. Q1 FY

3 John Doyle CEO Q1 FY

4 Q1 2018: Solid Start to the Year Health navigation is more relevant than ever Strong success launching Engage. Record number of launches in Q Castlight Complete tracking for 2H 18 Driving to 2018 goals on growth & health, innovation and sustainability Q1 FY

5 Q1 2018: Highlights G R O W T H & H E A LT H $164M in ARR, up 17% on a pro forma basis Platform business now 81% of ARR Transparency on track to be <15% of YE ARR A N T H E M E N G A G E Large-scale launch with consumer-grade NPS Power of care guidance & wellbeing in one app Validation of go-to-market collaboration I N N O VAT I O N On-track to deliver Castlight Complete in 2H 18: personalized health navigation functionality & ecosystem integrations in one app 12% of customers have bought ecosystem partners from CSLT S U S TA I N A B I L I T Y Continued strong opex management $74.6M in cash & investments at end of Q1 On-track to hit cash flow break-even in Q4 Please see Appendix for definition of Non-GAAP financial measures Q1 FY

6 Siobhan Nolan Mangini CFO Q1 FY

7 Revenue by Quarter ($M) GAAP Revenue Under ASC 606 Accounting Standard $40 $30 Services Subscription $27.7 $1.8 $32.6 $2.3 $34.5 $3.1 $37.2 $36.5 $3.5 $3.5 $20 $10 $25.9 $30.4 $31.4 $33.7 $33.0 $0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q/Q Growth NA 18% 6% 8% (2)% Y/Y Growth NA NA NA NA 32% Note: Includes Jiff financial results starting Q Columns may not sum due to rounding. Q1 FY

8 Gross Profit by Quarter ($M) Non-GAAP Gross Profit & Margin Under ASC 606 Accounting Standard $35 $30 $25 $20 $15 $10 $5 74% $20.4 Gross Profit (L Axis) Gross Margin (R Axis) 67% 67% 68% $22.0 $23.1 $25.3 Cost of Revenue investments made to support record launch quarter 63% $ % 60% 50% 40% Gross Margin by Quarter (%) $0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q/Q Growth NA 8% 5% 10% (9)% Y/Y Growth NA NA NA NA 13% 30% Note: Includes Jiff financial results starting Q Please see Appendix for definition of non-gaap financial measures Q1 FY

9 Operating Expense ($M) Non-GAAP Operating Expense Under ASC 606 Accounting Standard $35 $30 $25 G&A R&D S&M $25.7 $5.1 $30.7 $5.3 $29.3 $29.7 $5.1 $5.3 $30.7 $5.6 $20 $15 $9.0 $12.8 $12.2 $12.7 $12.8 $10 $5 $11.6 $12.5 $12.0 $11.7 $12.3 $0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q/Q Growth NA 19% (5)% 1% 3% Y/Y Growth NA NA NA NA 19% Note: Includes Jiff financial results starting Q Columns may not sum due to rounding. Please see Appendix for definition of non-gaap financial measures Q1 FY

10 Non-GAAP Operating Loss ($M) Non-GAAP Operating Loss ASC 606 Accounting Standard $0 ($5) ($5.3) ($8.7) ($6.2) ($4.4) ($7.7) ($10) ($15) Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Note: Includes Jiff financial results starting Q Please see Appendix for definition of non-gaap financial measures Q1 FY

11 Cash and Investments Balance Expect to reach cash flow break-even in Q with > $65 million of cash Cash * as of March 31, 2018 Q Cash Used in Operations $74.6 million $19 million * Cash and marketable securities Q1 FY

12 2018 Guidance Metric GAAP Revenue Range $150mm $155mm Non-GAAP Operating (Loss) $ (15)mm $(20)mm Non-GAAP EPS $(0.11) $(0.15) Weighted Average Shares Outstanding 137mm 138mm Cash Used in Operations Mid-$20mm range Guidance as of 05/10/18. Please see Appendix for definition of non-gaap financial measures. Q1 FY

13 Q&A Session Q1 FY

14 Appendix Q1 FY

15 Gross Profit: Reconciliation of GAAP to Non-GAAP March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 (Adjusted for 606) (Adjusted for 606) (Adjusted for 606) (Adjusted for 606) Gross profit: GAAP gross profit subscription $ 21,651 $ 22,676 $ 23,255 $ 25,376 $ 23,815 Stock-based compensation Amortization of internal-use software Amortization of intangibles Acquisition related costs 52 Non-GAAP gross profit subscription $ 22,022 $ 23,976 $ 24,508 $ 26,613 $ 24,954 GAAP gross margin subscription 83.6 % 74.6 % 74.1 % 75.3 % 72.2 % Non-GAAP gross margin subscription 85.0 % 78.9 % 78.1 % 78.9 % 75.6 % GAAP gross loss professional services and other $ (2,003) $ (2,378) $ (1,677) $ (1,532) $ (2,279) Stock-based compensation Acquisition related costs (4) Non-GAAP gross loss professional services $ (1,610) $ (1,999) $ (1,437) $ (1,304) $ (1,978) GAAP gross margin professional services and other (111)% (106)% (53.9)% (44.0)% (65.3)% Non-GAAP gross margin professional services and other (89.1)% (88.8)% (46.1)% (37.4)% (56.7)% GAAP gross profit $ 19,648 $ 20,298 $ 21,578 $ 23,844 $ 21,536 Impact of non-gaap adjustments 764 1,679 1,493 1,465 1,440 Non-GAAP gross profit $ 20,412 $ 21,977 $ 23,071 $ 25,309 $ 22,976 GAAP gross margin 70.9 % 62.2 % 62.6 % 64.1 % 59.0 % Non-GAAP gross margin 73.7 % 67.4 % 66.9 % 68.0 % 63.0 % Q1 FY

16 Operating Expense: Reconciliation of GAAP to Non-GAAP March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 (Adjusted for 606) (Adjusted for 606) (Adjusted for 606) (Adjusted for 606) Operating expenses: GAAP sales and marketing $ 14,145 $ 15,935 $ 15,538 $ 14,149 $ 13,912 Stock-based compensation (2,154) (2,441) (3,110) (1,960) (1,138) Amortization of intangibles (448) (448) (448) (448) Acquisition related costs (405) (518) 14 Non-GAAP sales and marketing $ 11,586 $ 12,528 $ 11,994 $ 11,741 $ 12,326 GAAP research and development $ 11,071 $ 15,194 $ 13,809 $ 14,428 $ 15,371 Stock-based compensation (1,790) (2,254) (1,631) (1,740) (1,654) Loss on sublease (916) Acquisition related costs (267) (126) Non-GAAP research and development $ 9,014 $ 12,814 $ 12,178 $ 12,688 $ 12,801 GAAP general and administrative $ 8,998 $ 6,766 $ 10,307 $ 2,754 $ 6,825 Stock-based compensation (1,295) (1,169) (1,121) (1,368) (1,257) Litigation settlement (250) Amortization of intangibles (17) (17) (17) (17) Change in fair value of contingent consideration liability 643 (3,931) 3,959 Acquisition related costs (2,340) (899) (126) (58) Non-GAAP general and administrative $ 5,113 $ 5,324 $ 5,112 $ 5,270 $ 5,551 GAAP operating expense $ 34,214 $ 37,895 $ 39,654 $ 31,331 $ 36,108 Impact of non-gaap adjustments (8,501) (7,229) (10,370) (1,632) (5,430) Non-GAAP operating expense $ 25,713 $ 30,666 $ 29,284 $ 29,699 $ 30,678 Operating loss: GAAP operating loss $ (14,566) $ (17,597) $ (18,076) $ (7,487) $ (14,572) Impact of non-gaap adjustments 9,265 8,908 11,863 3,097 6,870 Non-GAAP operating loss $ (5,301) $ (8,689) $ (6,213) $ (4,390) $ (7,702) Q1 FY

17 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 profit and margin, non-gaap operating expense, non-gaap operating loss, non-gaap other income, net, non-gaap net loss and non-gaap net loss per share. Non-GAAP gross profit and margin, non-gaap operating expense, non-gaap operating loss, non-gaap other income, net and non- GAAP net loss exclude stock-based compensation, litigation settlement, amortization of intangibles, capitalization and amortization of internal-use software, loss on sublease, gain on sale of investment in related party, expense related to expiration of SAP warrant, changes in fair value of contingent consideration liability, and charges related to the acquisition of Jiff 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 2018 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. Factors include our market capitalization and related volatility of our stock price and our inability to project the cost or scope of internally produced software. 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. Q1 FY