Company Quick10K Filing
Mimecast
Price36.06 EPS-0
Shares62 P/E-349
MCap2,234 P/FCF35
Net Debt-104 EBIT2
TEV2,130 TEV/EBIT883
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-03
10-Q 2020-09-30 Filed 2020-11-02
10-Q 2020-06-30 Filed 2020-08-03
10-K 2020-03-31 Filed 2020-05-22
10-Q 2019-12-31 Filed 2020-02-10
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-05
10-K 2019-03-31 Filed 2019-05-29
10-Q 2018-12-31 Filed 2019-02-11
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-09
10-K 2018-03-31 Filed 2018-05-29
20-F 2017-03-31 Filed 2017-05-26
20-F 2016-03-31 Filed 2016-05-25
8-K 2020-11-02
8-K 2020-10-07
8-K 2020-08-31
8-K 2020-08-03
8-K 2020-07-30
8-K 2020-07-30
8-K 2020-05-11
8-K 2020-04-27
8-K 2020-02-10
8-K 2020-01-21
8-K 2020-01-06
8-K 2019-11-14
8-K 2019-11-07
8-K 2019-11-06
8-K 2019-10-03
8-K 2019-09-20
8-K 2019-08-05
8-K 2019-05-13
8-K 2019-04-05
8-K 2019-03-13
8-K 2019-02-11
8-K 2019-02-07
8-K 2019-01-29
8-K 2018-12-18
8-K 2018-11-08
8-K 2018-10-04
8-K 2018-09-04
8-K 2018-08-09
8-K 2018-07-31
8-K 2018-07-23
8-K 2018-07-09
8-K 2018-05-22
8-K 2018-05-14
8-K 2018-03-31

MIME 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 6. Exhibits.
EX-31.1 mime-ex311_9.htm
EX-31.2 mime-ex312_6.htm
EX-32.1 mime-ex321_7.htm
EX-32.2 mime-ex322_8.htm

Mimecast Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
0.70.60.40.30.10.02015201620182020
Assets, Equity
0.20.10.10.0-0.0-0.12015201620182020
Rev, G Profit, Net Income
0.10.0-0.0-0.1-0.1-0.22015201620182020
Ops, Inv, Fin

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________________ to __________________

 

Commission File Number: 001-37637

 

MIMECAST LIMITED

(Exact Name of Registrant as Specified in its Charter)

 

 

Bailiwick of Jersey

Not applicable

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1 Finsbury Avenue

London EC2M 2PF

United Kingdom

EC2M 2PF

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (781) 996-5340

Securities registered pursuant to Section 12(b) of the Act:

 

(Title of each class)

(Trading Symbol)

(Name of each exchange on which registered)

Ordinary Shares, nominal value $0.012 per share

MIME

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of January 28, 2021, the registrant had 64,382,729 shares of ordinary shares, $0.012 par value per share, outstanding.

 

 

 


 

Summary of the Material and Other Risks Associated with Our Business

The following is a summary of the material and other risks that could adversely affect our business and financial results:

 

Business and Operational Risks

 

 

The global COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business and operations.

 

 

 

Data security and integrity are critically important to our business, and breaches of our information and technology networks and unauthorized access to a customer’s data could harm our business and operating results.

 

 

 

If we are unable to attract new customers, sell additional services, features and products to our existing customers, and retain customers, our business and results of operations will be affected adversely.

 

 

 

The markets in which we participate are highly competitive, and our failure to compete successfully would make it difficult for us to add and retain customers and would reduce or impede the growth of our business.

 

 

 

Failure to effectively expand our sales and marketing capabilities could harm our ability to acquire new customers.

 

 

 

Our business and results of operations may be negatively impacted by the United Kingdom’s withdrawal from the European Union.

 

 

 

Any serious disruptions in our services may cause us to lose revenue and market acceptance.

 

 

 

If we are unable to increase sales to large enterprises, our business, financial position and results of operations may suffer.

 

 

 

We must maintain successful relationships with our channel partners.

 

 

 

We provide service level commitments under our subscription agreements and service disruptions, including any related to our recently disclosed security incident, could obligate us to provide refunds and we could face subscription terminations.

 

 

 

We have acquired, and may acquire in the future, other businesses, products or technologies, which could require significant management attention, disrupt our business, dilute shareholder value and adversely affect our results of operations.

 

 

 

If we are not able to provide successful updates, enhancements and features to our technology to, among other things, keep up with emerging cyber threats and customer needs, our business could be adversely affected.

 

 

 

We are subject to a number of risks associated with global sales and operations.

 

 

 

If the prices we charge for our services are unacceptable to our customers, our operating results will be harmed.

 

 

 

Our research and development efforts may not produce new services or enhancements to existing services.

 

 

 

We employ third-party licensed software for use in or with our services, and the inability to maintain these licenses or errors in the software we license could result in increased costs, or reduced service levels, which would adversely affect our business.

 

 

 

Interruptions or performance problems associated with our information and technology infrastructure that could impair the delivery of our services and harm our business.

 

 

 

Our restructuring actions may be costly and may not be as effective as anticipated.

 

 

Legal and Regulatory Risks

 

 

Data privacy concerns, evolving regulations of cloud computing, cross-border data transfer restrictions and other domestic or foreign laws and regulations may limit the use and adoption of, or require modification of, our products and services.

 

 

 

We are subject to governmental export controls and funds dealings restrictions that could impair our ability to compete in certain international markets and subject us to liability if we are not in full compliance with applicable laws.

 

 

 

We may become involved in other litigation that may materially adversely affect us.

 

 

 

i


Human Capital Risks

 

 

We are dependent on the continued services and performance of our key employees, including our co-founder.

 

 

 

If we are unable to hire, retain and motivate qualified personnel, our business may be adversely impacted.

 

 

 

Our planned workforce reductions may adversely affect our business.

 

 

Risks Related to Intellectual Property

 

 

Third parties have sued us for alleged infringement of their proprietary rights.

 

 

 

Failure to protect our intellectual property rights could impair our ability to protect our technology and our brand.

 

 

 

Our employees may disclose trade secrets and other proprietary information.

 

 

 

Our employees or contractors may wrongfully use alleged trade secrets of their former employers or other parties.

 

 

 

The use of open source software in our offerings may expose us to additional risks and harm our intellectual property.

 

 

Financial Risks

 

 

Because we recognize revenue from subscriptions for our services over the term of the agreement, downturns or upturns in new business may not be immediately reflected in our operating results and may be difficult to discern.

 

 

 

We have incurred net losses in the past, and we may not be able to achieve or sustain profitability for the foreseeable future.

 

 

 

Fluctuations in currency exchange rates could adversely affect our business.

 

 

 

Financial covenants and other restrictions under our Credit Agreement create default risks and reduce our flexibility

 

 

 

We must maintain the adequacy of internal controls over financial reporting.

 

 

Tax Risks

 

 

We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, including issues related to our tax residence, allocations of our taxable income among our subsidiaries, and limitations on our use of net operating losses or tax credit carryforwards.

 

 

Risks Related to Owning Our Ordinary Shares and Our Organization in Jersey, Channel Islands

 

 

Our share price has been and may continue to be volatile based on many factors, many of which are not within our control.

 

 

 

If securities or industry analysts cease to publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

 

 

 

We do not expect to pay dividends and investors should not buy our ordinary shares expecting to receive dividends.

 

 

 

The rights afforded to shareholders are governed by Jersey law. Not all rights available to shareholders under English law or U.S. law will be available to shareholders, potentially including the ability to enforce civil liabilities against us.

 

 

The summary described above should be read together with the text of the full risk factors below and in the other information set forth in this Quarterly Report on Form 10-Q, including our consolidated financial statements and the related notes, as well as in other documents that we file with the Securities and Exchange Commission. If any such risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations. For more information on these risk factors, see Part II, Item 1A, Risk Factors, included in this Quarterly Report on Form 10-Q.


ii


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020

1

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2020 and 2019

2

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2020 and 2019

3

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended December 31, 2020 and 2019

4

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2020 and 2019

5

 

Notes to Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

37

PART II.

OTHER INFORMATION

38

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 6.

Exhibits

59

Signatures

63

 

 

iii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MIMECAST LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

As of December 31,

 

 

As of March 31,

 

 

 

2020

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

270,897

 

 

$

173,958

 

Accounts receivable, net

 

 

97,640

 

 

 

97,659

 

Deferred contract costs, net

 

 

14,771

 

 

 

11,133

 

Prepaid expenses and other current assets

 

 

19,205

 

 

 

16,145

 

Total current assets

 

 

402,513

 

 

 

298,895

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

94,099

 

 

 

85,178

 

Operating lease right-of-use assets

 

 

134,051

 

 

 

116,564

 

Intangible assets, net

 

 

45,829

 

 

 

38,394

 

Goodwill

 

 

178,645

 

 

 

150,525

 

Deferred contract costs, net of current portion

 

 

46,236

 

 

 

36,664

 

Other assets

 

 

3,513

 

 

 

3,614

 

Total assets

 

$

904,886

 

 

$

729,834

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,690

 

 

$

14,907

 

Accrued expenses and other current liabilities

 

 

58,071

 

 

 

41,607

 

Deferred revenue

 

 

210,295

 

 

 

194,151

 

Current portion of finance lease obligations

 

 

589

 

 

 

1,058

 

Current portion of operating lease liabilities

 

 

33,398

 

 

 

30,379

 

Current portion of long-term debt

 

 

8,459

 

 

 

6,573

 

Total current liabilities

 

 

321,502

 

 

 

288,675

 

 

 

 

 

 

 

 

 

 

Deferred revenue, net of current portion

 

 

12,462

 

 

 

12,816

 

Long-term finance lease obligations

 

 

4

 

 

 

323

 

Operating lease liabilities

 

 

118,522

 

 

 

105,321

 

Long-term debt

 

 

97,104

 

 

 

86,258

 

Other non-current liabilities

 

 

9,373

 

 

 

4,386

 

Total liabilities

 

 

558,967

 

 

 

497,779

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

Ordinary shares, $0.012 par value, 300,000,000 shares authorized;

   64,346,682 and 62,791,691 shares issued and outstanding as of

   December 31, 2020 and March 31, 2020, respectively

 

 

772

 

 

 

754

 

Additional paid-in capital

 

 

393,911

 

 

 

325,808

 

Accumulated deficit

 

 

(59,683

)

 

 

(83,660

)

Accumulated other comprehensive income (loss)

 

 

10,919

 

 

 

(10,847

)

Total shareholders' equity

 

 

345,919

 

 

 

232,055

 

Total liabilities and shareholders' equity

 

$

904,886

 

 

$

729,834

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


1


 

 

MIMECAST LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three months ended December 31,

 

 

Nine months ended December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

129,636

 

 

$

110,158

 

 

$

367,505

 

 

$

312,746

 

Cost of revenue

 

 

31,572

 

 

 

28,455

 

 

 

89,783

 

 

 

80,056

 

Gross profit

 

 

98,064

 

 

 

81,703

 

 

 

277,722

 

 

 

232,690

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

25,408

 

 

 

20,801

 

 

 

70,497

 

 

 

59,506

 

Sales and marketing

 

 

45,187

 

 

 

42,753

 

 

 

133,224

 

 

 

127,288

 

General and administrative

 

 

16,649

 

 

 

16,520

 

 

 

50,400

 

 

 

48,723

 

Total operating expenses

 

 

87,244

 

 

 

80,074

 

 

 

254,121

 

 

 

235,517

 

Income (loss) from operations

 

 

10,820

 

 

 

1,629

 

 

 

23,601

 

 

 

(2,827

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

261

 

 

 

727

 

 

 

612

 

 

 

2,823

 

Interest expense

 

 

(578

)

 

 

(1,106

)

 

 

(2,251

)

 

 

(3,581

)

Foreign exchange income (expense) and other, net

 

 

1,441

 

 

 

(93

)

 

 

4,365

 

 

 

159

 

Total other income (expense), net

 

 

1,124

 

 

 

(472

)

 

 

2,726

 

 

 

(599

)

Income (loss) before income taxes

 

 

11,944

 

 

 

1,157

 

 

 

26,327

 

 

 

(3,426

)

Provision for income taxes

 

 

1,155

 

 

 

951

 

 

 

2,350

 

 

 

1,299

 

Net income (loss)

 

$

10,789

 

 

$

206

 

 

$

23,977

 

 

$

(4,725

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per ordinary share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

 

$

0.00

 

 

$

0.38

 

 

$

(0.08

)

Diluted

 

$

0.16

 

 

$

0.00

 

 

$

0.37

 

 

$

(0.08

)

Weighted-average number of ordinary shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,987

 

 

 

62,189

 

 

 

63,509

 

 

 

61,822

 

Diluted

 

 

66,023

 

 

 

63,996

 

 

 

65,419

 

 

 

61,822

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


 

MIMECAST LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

 

 

Three months ended December 31,

 

 

Nine months ended December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income (loss)

 

$

10,789

 

 

$

206

 

 

$

23,977

 

 

$

(4,725

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized losses on investments, net of tax

 

 

 

 

 

(21

)

 

 

 

 

 

(28

)

Change in foreign currency translation adjustment

 

 

15,775

 

 

 

3,220

 

 

 

21,766

 

 

 

5,775

 

Total other comprehensive income

 

 

15,775

 

 

 

3,199

 

 

 

21,766

 

 

 

5,747

 

Comprehensive income

 

$

26,564

 

 

$

3,405

 

 

$

45,743

 

 

$

1,022

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


3


 

MIMECAST LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

 

 

 

Three months ended December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Ordinary Shares

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Number of

 

 

 

 

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance as of September 30, 2020

 

 

63,843

 

 

$

766

 

 

$

368,813

 

 

$

(70,472

)

 

$

(4,856

)

 

$

294,251

 

Net income

 

 

 

 

 

 

 

 

 

 

 

10,789

 

 

 

 

 

 

10,789

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,775

 

 

 

15,775

 

Issuance of ordinary shares upon exercise of share options

 

 

378

 

 

 

5

 

 

 

8,812

 

 

 

 

 

 

 

 

 

8,817

 

Share-based compensation

 

 

 

 

 

 

 

 

13,833

 

 

 

 

 

 

 

 

 

13,833

 

ESPP Purchases

 

 

91

 

 

 

1

 

 

 

3,320

 

 

 

 

 

 

 

 

 

3,321

 

Tax withholding on ESPP purchases and vesting of RSUs

 

 

(17

)

 

 

 

 

 

(867

)

 

 

 

 

 

 

 

 

(867

)

Vesting of RSUs

 

 

52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2020

 

 

64,347

 

 

$

772

 

 

$

393,911

 

 

$

(59,683

)

 

$

10,919

 

 

$

345,919

 

 

 

 

Nine months ended December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Ordinary Shares

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Number of

 

 

 

 

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance as of March 31, 2020

 

 

62,792

 

 

$

754

 

 

$

325,808

 

 

$

(83,660

)

 

$

(10,847

)

 

$

232,055

 

Net income

 

 

 

 

 

 

 

 

 

 

 

23,977

 

 

 

 

 

 

23,977

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,766

 

 

 

21,766

 

Issuance of ordinary shares upon exercise of share options

 

 

1,160

 

 

 

14

 

 

 

24,683

 

 

 

 

 

 

 

 

 

24,697

 

Share-based compensation

 

 

 

 

 

 

 

 

41,183

 

 

 

 

 

 

 

 

 

41,183

 

ESPP Purchases

 

 

178

 

 

 

2

 

 

 

6,414

 

 

 

 

 

 

 

 

 

6,416

 

Tax withholding on ESPP purchases and vesting of RSUs

 

 

(109

)

 

 

(1

)

 

 

(4,174

)

 

 

 

 

 

 

 

 

(4,175

)

Vesting of RSUs

 

 

326

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2020

 

 

64,347

 

 

$

772

 

 

$

393,911

 

 

$

(59,683

)

 

$

10,919

 

 

$

345,919

 

 

 

 

Three months ended December 31, 2019