Investor Overview NYSE: CSLT

Transcription

1 Investor Overview NYSE: CSLT August 2017

2 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 2017 and timing of cash flow breakeven. These statements were made as of August 2, 2017, 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 August 2, 2017, the information in the presentation may no longer be current or accurate. We disclaim any obligation to update or revise any forward-looking statements. Safe Harbor Statement 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 August 2, 2017 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, operating expenses, and operating loss, 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. In addition, please note the close date of the Jiff acquisition was April 3 rd. Accordingly, the deferred revenue fair value adjustment discussed in this presentation is a preliminary estimate and is subject to change upon the completion of purchase price accounting. 2

3 Castlight is a health benefits platform that engages employees to make better health decisions and enables benefit leaders to communicate and measure their programs 3

4 Investment Highlights LARGE MARKET OPPORTUNITY WITH CONSUMERISM TAILWINDS MOST COMPREHENSIVE HEALTH BENEFITS PLATFORM STRATEGIC GO-TO- MARKET ANTHEM PARTNERSHIP HIGH GROWTH SAAS BUSINESS MODEL 4

5 73% of employees don t fully understand their health benefits Program utilization is typically lower than 10% Employees pay up to 10X more for the same service Health Benefits Today: low engagement & poor health decisions Up to 20% of surgeries are unnecessary 5-6% increase in health spending each year for employers 5

6 Why aren t employees engaged? Explosion of vendors Soaring consumer expectations Convoluted healthcare system 6

7 The Solution: One End-to-End Platform Health Benefits Platform FOR EMPLOYEES: FOR EMPLOYERS: Improve every aspect of the health experience Stay healthy Access care Manage a condition A single platform to manage all health benefits Engage with full population Purchase & deploy vendors Measure impact 7

8 The Castlight Health Benefits Platform One end-to-end platform Integrate Engage Evaluate Simple, integrated way to help UNDERSTAND & ACCESS benefits Personalized content and timely outreach & to GUIDE employees to better decisions Real-time INSIGHT into engagement with benefits and programs 8

9 The Castlight Health Benefits Platform One end-to-end platform Integrate Engage Evaluate* Cost Predict Health Risks Back pain: 2.7x increase Quality Personalized Recommendations Diabetes: 1.8x increase Educational Content Multi-Channel Outreach Adult Preventative Care: 1.8x increase * Increase in preventative services. Early results from claims-based analysis aggregated from customers that have been deployed on Castlight Action for over 6 months 9

10 The Jiff Wellbeing Platform Central hub for wellbeing that drives employee engagement App store approach integrates with over 50+ solutions that sync seamlessly Mobile-first technology with a world-class user experience Rewards Layer: Personalized incentives drive desired micro-behaviors Model: PEPM-based subscription and service fees, contract terms typically three-years paid monthly, quarterly or annually 10

11 Jiff s Ecosystem & Deep Partner Integrations Activity Tracking Food Tracking Sleep Tracking Fitness Tracking Biometrics HRA Health Coaching Nutritional Coaching Resilience Smoking Cessation Fertility / Pregnancy Parenting Cardiovascular Health Financial Health Bi-directional flow of data Scalable Integration Framework Reseller Contracts Incentivize specific targeted behavior deep within third party solutions Collect digital exhaust on users for personalization and reporting Purchase a wide range of solutions directly thru Jiff 11

12 Castlight-Jiff Joint Value Proposition Simplify navigation for all benefit resources, globally Improve Health Access Care Manage a Condition Interact with employees throughout the year Real time intercept when your employee is about to become a patient Target most expensive conditions and employees Increase employee happiness while decreasing risk Improve efficiency of the health care system and quality of care Lower costs for most expensive population 12

13 Financial Update

14 Financial Highlights STRONG GROWTH HEALTHY MARGIN PROFILE SCALING BUSINESS $115M IN LTM REVENUE GROSS MARGIN TRENDING BACK TO 70%-75% TARGET REDUCTION IN Y/Y OPERATING LOSSES 36% Growth $24 $32 66% 67% -$10.5 -$9.8 2Q'16 2Q'17 2Q'16 2Q'17 2Q'16 2Q'17 Note: Includes Jiff financial results starting Q

15 Q2 Highlights Solid Q2 Financial Performance Annual Recurring Revenue Growth Good Renewals Progress Demonstrated Power of Castlight-Jiff Integration Q2 FY

16 Cash and Investments Balance Expect to reach cash flow breakeven by the end of 2018 with at least $60 million of cash Cash as of 06/30/17 Q Cash Used in Operations $96 million $4.1 million Note: Includes Jiff financial results starting Q Q2 FY

17 2017 Guidance & Key Initiatives FY 2017 outlook includes Jiff starting in 2Q FY 2017 Guidance* 2017 Key Initiatives Metric GAAP Revenue Range $132mm to $136mm Drive faster platform adoption by new customers Non-GAAP Operating Income (Loss) $(35)mm to $(31)mm Non-GAAP EPS $(0.28) to $(0.24) Basic & Diluted Avg. Wgt. Shares O/S 125mm to 127mm * Guidance as of 08/02/17. Please see the Appendix for a discussion of the Company s non-gaap metrics. Drive customer stickiness Integrate Castlight & Jiff to unlock the strategic value of combined company 17

18 Investor Overview NYSE: CSLT August 2017

19 Appendix August 2017

20 Business Model Platform sold on a price per employee per month (PEPM) basis Typically three-year contracts Long-term gross margin target range of 70%-75% Target Customers Targets US self-insured employers Platform purchased by health benefits manager/hr 240 customers, including 70+ Fortune 500 Castlight s Business Model & Go-To-Market Go-To-Market Direct sales team/channel partner approach Strategic relationships with Anthem and SAP Expanding relationships with health benefits consultants 20

21 Gross Profit: Reconciliation of GAAP to Non-GAAP Three Months Ended December 31, March 31, June 30, September 30, December 31, March 31, June 30, Gross profit: GAAP gross profit subscription $ 16,048 $ 16,901 $ 17,861 $ 19,879 $ 23,912 $ 21,520 $ 22,128 Stock-based compensation Amortization of internal-use software Amortization of Intangibles Acquisition related costs Reduction in workforce Non-GAAP gross profit subscription $ 16,259 $ 17,253 $ 18,230 $ 20,262 $ 24,295 $ 21,891 $ 23,428 GAAP gross margin subscription 80.5% 80.3% 81.4% 83.3% 84.9% 83.5% 74.2% Non-GAAP gross margin subscription 81.6% 81.9% 83.0% 84.9% 86.3% 85.0% 78.5% GAAP gross loss professional services $ (4,388) $ (3,433) $ (3,220) $ (2,344) $ (2,417) $ (2,009) $ (2,528) Stock-based compensation Capitalization of internal-use software (30) Acquisition related costs Reduction in workforce Non-GAAP gross loss professional services $ (3,765) $ (2,956) $ (2,586) $ (1,884) $ (1,924) $ (1,401) $ (1,914) GAAP gross margin professional services (318)% (204)% (198)% (143)% (139)% (102)% (112)% Non-GAAP gross margin professional services (272)% (176)% (159)% (115)% (111)% (71)% (85)% GAAP gross profit $ 11,660 $ 13,468 $ 14,641 $ 17,535 $ 21,495 $ 19,511 $ 19,600 Impact of non-gaap adjustments , ,914 Non-GAAP gross profit $ 12,494 $ 14,297 $ 15,644 $ 18,378 $ 22,371 $ 20,490 $ 21,514 GAAP gross margin 54.7% 59.3% 62.1% 68.8% 71.9% 70.3% 61.1% Non-GAAP gross margin 58.6% 62.9% 66.3% 72.1% 74.8% 73.9% 67.0% 21

22 Operating Expense: Reconciliation of GAAP to Non-GAAP Three Months Ended December 31, March 31, June 30, September 30, December 31, March 31, June 30, Operating expense: GAAP sales and marketing $ 16,579 $ 16,282 $ 15,452 $ 13,143 $ 13,923 $ 14,443 $ 16,575 Stock-based compensation (1,822) (2,235) (2,219) (2,190) (2,199) (2,154) (2,441) Acquisition related costs (405) (518) Amortization of Intangibles (448) Reduction in workforce - - (374) (48) Non-GAAP sales and marketing $ 14,757 $ 14,047 $ 12,859 $ 10,905 $ 11,724 $ 11,884 $ 13,168 GAAP research and development $ 8,224 $ 10,085 $ 9,961 $ 10,573 $ 9,841 $ 11,071 $ 15,194 Stock-based compensation (1,154) (1,405) (1,264) (1,631) (1,659) (1,790) (2,254) Capitalization of internal-use software Acquisition related costs (267) (126) Reduction in workforce - - (118) (18) Non-GAAP research and development $ 7,690 $ 8,680 $ 8,579 $ 8,924 $ 8,182 $ 9,014 $ 12,814 GAAP general and administrative $ 5,983 $ 8,545 $ 6,019 $ 5,338 $ 6,957 $ 8,998 $ 6,766 Stock-based compensation (1,069) (1,269) (971) (1,236) (1,267) (1,295) (1,169) Litigation settlement - (2,735) (141) - - (250) - Acquisition related costs (1,731) (2,340) (899) Amortization of Intangibles (17) Change in FV of contigent consideration Reduction in workforce - - (80) (10) Non-GAAP general and administrative $ 4,914 $ 4,541 $ 4,827 $ 4,092 $ 3,959 $ 5,113 $ 5,324 GAAP operating expense $ 30,786 $ 34,912 $ 31,432 $ 29,054 $ 30,721 $ 34,512 $ 38,535 Impact of non-gaap adjustments (3,425) (7,644) (5,167) (5,133) (6,856) (8,501) (7,229) Non-GAAP operating expense $ 27,361 $ 27,268 $ 26,265 $ 23,921 $ 23,865 $ 26,011 $ 31,306 Operating loss: GAAP operating loss $ (19,126) $ (21,444) $ (16,791) $ (11,519) $ (9,226) $ (15,001) $ (18,935) Impact of non-gaap adjustments 4,259 8,473 6,170 5,976 7,732 9,480 9,143 Non-GAAP operating loss $ (14,867) $ (12,971) $ (10,621) $ (5,543) $ (1,494) $ (5,521) $ (9,792) 22

23 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 on-gaap gross profit and gross margin, non-gaap operating expense, non-gaap operating loss, non-gaap net loss and non-gaap net loss per share and free cash flow. Non-GAAP gross profit and gross margin, non-gaap operating expense, and non-gaap operating loss exclude stock-based compensation, litigation settlement, charges related to a reduction in workforce, amortization of intangibles, capitalization and amortization of internal-use software and charges related to the acquisition 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 2017 to comparable GAAP operating loss and net loss per share guidance because we do not provide guidance for stock-based compensation expense, capitalization and amortization of internal-use software and charges related to the acquisition, 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 and charges related to the proposed acquisition for the year. 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. Q2 FY

24 Evaluate Back Pain Diabetes Adult Preventative Care About the Campaign Individuals with lower back pain (who aren t using PT or chiropractic care) Individuals with or at risk for diabetes (who have not had a glucose test) Adults who have not had a preventive service within one year Campaign Recommendation Start PT or chiropractic care Take a glucose test Complete a preventive service Impact on Preventive Services 2.7x increase 1.8x increase 1.7x increase Note: Early results from claims-based analysis aggregated from customers that have been deployed on Castlight Action for over 6 months 24