SAN MATEO, Calif., May 08, 2019 (GLOBE NEWSWIRE) -- SurveyMonkey Inc. (“SurveyMonkey”), a leading global survey software company, announced today that its parent company, SVMK Inc. (Nasdaq: SVMK, and collectively with SurveyMonkey referred to as “SVMK”, “we” or “us”), reported first quarter 2019 financial results for the period ended March 31, 2019, and posted a shareholder letter with complete first quarter 2019 financial results and management commentary on its investor relations website at investor.surveymonkey.com.

Q1 2019 Key Results

“Our Q1 2019 results mark a strong start to the year and demonstrate the continued progress against the execution plan we outlined during our IPO. Our paying user growth continues to accelerate driven by sales of SurveyMonkey Enterprise and adoption of our collaborative Teams plans with approximately 90% of the net adds in the quarter from annual plans. Our recent acquisition of Usabilla strengthens our international presence and we believe our combined software solutions offer unparalleled value to customer-centric marketers and will further accelerate our enterprise sales,” said SurveyMonkey CEO Zander Lurie. “We continue to deliver solid revenue growth and robust cash flow, and have increased confidence in the strategy we are executing to scale our business.”

Financial Outlook

Q2 2019
Revenue$72 million - $73 million15% - 16% YoY growth
Non-GAAP operating margin(4%) - (2%) 


FY 2019
Revenue$298 million - $304 million17% - 20% YoY growth
Non-GAAP operating margin(1%) - +1% 
Unlevered free cash flow$50 million - $53 million17% margin

With the strength in our Teams offering and enterprise sales, coupled with the acquisition of Usabilla, we’re updating our financial outlook for Q2 2019 and full-year 2019.

Our financial outlook includes contribution from Usabilla beginning April 1, 2019. The revenue contribution from Usabilla will be impacted by ASC 805 fair value purchase accounting adjustments to deferred revenue that will reduce the amount of revenue to be recognized. We expect the headwind from the deferred revenue adjustment to be strongest in Q2 2019 and then have decreasing impact over the course of the year. Post the deferred revenue adjustment, we expect Usabilla to contribute approximately two points of revenue growth towards our full year 2019 financial outlook – a disproportionate percentage of which will be recognized in the second half of the year. We also expect Usabilla to be a headwind on non-GAAP operating margin and unlevered free cash flow margin.

We are forecasting revenue in Q2 2019 to grow 15% to 16%. In Q2 2018, we benefited from the pricing changes to our self-serve customers that began in mid-2017 and drove maximum core revenue impact with 21% year-over-year growth, setting up a more difficult comparison from a year-over-year growth perspective in Q2 2019.

We expect our growth initiatives in enterprise sales and our collaborative Teams offering, combined with the integration of Usabilla, to drive accelerating revenue growth in the second half of 2019.

As we shared previously, we adopted the new lease accounting guidance under ASC 842, effective January 1, 2019. Under this guidance, lease payments associated with our San Mateo headquarters are now accounted for as an operating expense in the condensed consolidated statements of operations. Prior to the adoption of ASC 842, these lease payments were primarily accounted for as interest expense. As a result of this change, non-GAAP operating income in Q1 2019 was impacted by approximately $1.5 million and we expect the full-year impact to be approximately $6 million. There is no impact to free cash flow from this change. For comparison purposes, under the new accounting guidance, non-GAAP operating margin for Q2 2018 and full-year 2018 would have been 6.1% and 3.6%, respectively.

Conference Call Information

We will host a conference call today to discuss our Q1 2019 business and financial results. This call is scheduled to begin at 2:00 pm PT / 5:00 pm ET and can be accessed by dialing (866) 417-2046 or (409) 217-8231. To listen to a live audio webcast, please visit SurveyMonkey’s Investor Relations website at investor.surveymonkey.com. A replay of the audio webcast will be available on the same website following the call. A telephonic replay will be available through May 15, 2019 by dialing (855) 859-2056 or (404) 537-3406 and entering passcode 2065413#.

Upcoming Events

Zander Lurie, CEO and Interim CFO, will be presenting at the 2019 J.P. Morgan Global Technology, Media & Communications Conference in Boston, MA on Tuesday, May 14, 2019. A live webcast will be accessible from the SurveyMonkey investor relations website at investor.surveymonkey.com. Following the event, a replay will be made available at the same location.     

About SurveyMonkey

SurveyMonkey is a leading global survey software company on a mission to power the curious. The company’s People Powered Data platform empowers over 17 million active users to measure and understand feedback from employees, customers, website and app users, and the market. SurveyMonkey’s products, enterprise solutions and integrations enable 350,000+ organizations to solve daily challenges, from delivering better customer experiences to increasing employee retention. With SurveyMonkey, organizations around the world can transform feedback into business intelligence that drives growth and innovation.

Investor Relations Contact:
Karim Damji
investors@surveymonkey.com

Media Contact:
Sandra Gharib
sandrag@surveymonkey.com

Source: SurveyMonkey Inc.

SVMK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (1)

 (in thousands) March 31,
2019		  December 31,
2018		 
Assets        
Current assets:        
Cash and cash equivalents $165,910  $153,807 
Accounts receivable, net of allowance  7,189   7,336 
Deferred commissions, current  2,248   1,981 
Prepaid expenses and other current assets  15,219   7,081 
Total current assets  190,566   170,205 
Property and equipment, net  45,532   117,718 
Operating lease right-of-use assets  60,266   — 
Capitalized internal-use software, net  33,710   33,280 
Acquisition intangible assets, net  8,299   9,324 
Goodwill  336,861   336,861 
Deferred commissions, non-current  3,932   3,317 
Other assets  8,554   8,643 
Total assets $687,720  $679,348 
Liabilities and stockholders’ equity        
Current liabilities:        
Accounts payable $2,983  $2,804 
Accrued expenses and other current liabilities  11,937   9,692 
Accrued compensation  11,730   20,070 
Deferred revenue  110,691   101,236 
Operating lease liabilities, current  6,139   — 
Debt, current  1,900   1,900 
Total current liabilities  145,380   135,702 
Deferred tax liabilities  4,341   4,246 
Debt, non-current  215,040   215,515 
Financing obligation on leased facility  —   92,009 
Operating lease liabilities, non-current  82,528   — 
Other non-current liabilities  5,436   12,493 
Total liabilities  452,725   459,965 
Commitments and contingencies        
Stockholders’ equity:        
Preferred stock  —   — 
Common stock  1   1 
Additional paid-in capital  582,652   551,937 
Accumulated other comprehensive loss  (306)  (287)
Accumulated deficit  (347,352)  (332,268)
Total stockholders’ equity  234,995   219,383 
Total liabilities and stockholders’ equity $687,720  $679,348 
         

(1)  The Company adopted ASC 842 as of January 1, 2019 on a prospective basis.  Amounts presented for as of March 31, 2019 are under ASC 842 and amounts presented as of December 31, 2018 are under ASC 840.


SVMK INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (1)

  Three Months Ended
March 31,		 
(in thousands, except per share amounts) 2019  2018 
Revenue $68,641  $58,491 
Cost of revenue(2)(3)  17,530   18,063 
Gross profit  51,111   40,428 
Operating expenses:        
Research and development(2)  20,806   17,940 
Sales and marketing (2)(3)  26,050   17,421 
General and administrative(2)  20,556   13,018 
Restructuring  (66)  5 
Total operating expenses  67,346   48,384 
Loss from operations  (16,235)  (7,956)
Interest expense  3,659   7,094 
Other non-operating income (expense), net  1,979   633 
Loss before income taxes  (17,915)  (14,417)
Provision for (benefit from) income taxes  (138)  300 
Net loss $(17,777) $(14,717)
Net loss per share, basic and diluted $(0.14) $(0.15)
Weighted-average shares used in computing basic and diluted net loss per share  126,786   101,212 

(1)  The Company adopted ASC 842 as of January 1, 2019 on a prospective basis.  Amounts presented for the three months ended March 31, 2019 are under ASC 842 and amounts presented for the three months ended March 31, 2018 are under ASC 840.

(2)  Includes stock-based compensation, net of amounts capitalized as follows:

  Three Months Ended
March 31,		 
(in thousands) 2019  2018 
Cost of revenue $1,096  $658 
Research and development  4,766   3,447 
Sales and marketing  2,780   768 
General and administrative  6,469   3,667 
Stock-based compensation, net of amounts capitalized $15,111  $8,540 
         

(3) Includes amortization of acquisition intangible assets as follows:

  Three Months Ended
March 31,		 
(in thousands) 2019  2018 
Cost of revenue $488  $488 
Sales and marketing  537   604 
Amortization of acquisition intangible assets $1,025  $1,092 
         


SVMK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

  Three Months Ended March 31, 
(in thousands) 2019  2018 
Cash flows from operating activities        
Net loss $(17,777) $(14,717)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization  9,655   11,979 
Non-cash leases expense  1,338   — 
Stock-based compensation expense, net of amounts capitalized  15,111   8,540 
Amortization of debt discount and issuance costs  75   242 
Deferred income taxes  95   143 
Gain on sale of a private company investment  (1,001)  (999)
Other  (154)  175 
Changes in assets and liabilities:        
Accounts receivable  163   (763)
Prepaid expenses and other assets  (2,184)  (1,857)
Accounts payable and accrued liabilities  2,991   1,099 
Accrued interest on financing lease obligation, net of payments  —   (358)
Accrued compensation  (8,359)  (7,449)
Deferred revenue  9,575   9,728 
Operating lease liabilities  (1,725)  — 
Net cash provided by operating activities  7,803   5,763 
Cash flows from investing activities        
Purchases of property and equipment  (581)  (880)
Capitalized internal-use software  (3,150)  (2,640)
Proceeds from sale of a private company investment  1,001   999 
Net cash used in investing activities  (2,730)  (2,521)
Cash flows from financing activities        
Proceeds from stock option exercises  7,640   1 
Employee payroll taxes paid for net share settlement of restricted stock units  —   (1,765)
Repayment of debt  (550)  (750)
Net cash provided by (used in) financing activities  7,090   (2,514)
Effect of exchange rate changes on cash  (44)  — 
Net increase in cash, cash equivalents and restricted cash  12,119   728 
Cash, cash equivalents and restricted cash at beginning of period  154,371   35,345 
Cash, cash equivalents and restricted cash at end of period $166,490  $36,073 
Supplemental cash flow data:        
Interest paid for term debt $3,423  $5,126 
Interest paid for financing obligation on leased facility $—  $2,038 
Cash paid for operating leases $3,438  $— 
Income taxes paid (refunds received) $247  $(33)
Non-cash investing and financing transactions:        
Stock compensation included in capitalized software costs $953  $327 
Proceeds receivable from stock option exercises $6,779  $— 
Accrued unpaid capital expenditures $517  $1,893 
Derecognized financing obligation related to building due to adoption of ASC 842 $92,009  $— 
Derecognized building due to adoption of ASC 842 $71,781  $— 
Reconciliation of cash, cash equivalents and restricted cash:        
Cash and cash equivalents at beginning of period $153,807  $35,345 
Restricted cash (included in other assets) at beginning of period  564   — 
Total cash, cash equivalents and restricted cash at beginning of period $154,371  $35,345 
Cash and cash equivalents at end of period $165,910  $36,073 
Restricted cash (included in other assets) at end of period  580   — 
Total cash, cash equivalents and restricted cash at end of period $166,490  $36,073 
         


SVMK INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) (1)

  Three Months Ended March 31, 2019 
(in thousands, except percentages and per share amounts) GAAP GAAP
% of Revenue(3)		  Stock-based
compensation,
net		  Amortization
of intangible
assets		  Restructuring  Gain on sale
of a private
company
investment		  Non-GAAP Non-GAAP
% of Revenue(3)		 
Revenue $68,641  100% $—  $—  $—  $—  $68,641  100%
Cost of revenue  17,530  26%  (1,096)  (488)  —   —   15,946  23%
Gross profit  51,111  74%  1,096   488   —   —   52,695  77%
Operating expenses:                              
Research and development  20,806  30%  (4,766)  —   —   —   16,040  23%
Sales and marketing  26,050  38%  (2,780)  (537)  —   —   22,733  33%
General and administrative  20,556  30%  (6,469)  —   —   —   14,087  21%
Restructuring  (66) —%  —   —   66   —   —  —%
Total operating expenses  67,346  98%  (14,015)  (537)  66   —   52,860  77%
Loss from operations  (16,235) (24)%  15,111   1,025   (66)  —   (165) —%
Interest expense  3,659  5%  —   —   —   —   3,659  5%
Other non-operating income (expense), net  1,979  3%  —   —   —   (1,001)  978  1%
Loss before income taxes  (17,915) (26)%  15,111   1,025   (66)  (1,001)  (2,846) (4)%
Benefit from income taxes(2)  (138) —%  —   (94)  —   —   (232) —%
Net loss $(17,777) (26)% $15,111  $1,119  $(66) $(1,001) $(2,614) (4)%
Net loss per share, basic and diluted $(0.14)                    $(0.02)   
Weighted-average shares used in computing basic and diluted net loss per share  126,786                      126,786    

(1)  Please see Appendix A for explanation of non-GAAP measures used.
(2)  Due to the full valuation allowance on our US deferred tax assets, there were no tax effects associated with the Non-GAAP adjustments for stock-based compensation, net, restructuring and gain on sale of a private company investment. Non-GAAP adjustments to our benefit from income taxes pertains to deferred tax expense related to amortization of acquisition intangible assets.
(3)  Percentages may not sum due to rounding.


SVMK INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) (1)

  Three Months Ended March 31, 2018 
(in thousands, except percentages and per share amounts) GAAP GAAP
% of Revenue(3)		  Stock-based
compensation,
net		  Amortization of
intangible
assets		  Restructuring  Gain on sale
of a private
company
investment		  Non-GAAP Non-GAAP
% of Revenue(3)		 
Revenue $58,491  100% $—  $—  $—  $—  $58,491  100%
Cost of revenue  18,063  31%  (658)  (488)  —   —   16,917  29%
Gross profit  40,428  69%  658   488   —   —   41,574  71%
Operating expenses:                              
Research and development  17,940  31%  (3,447)  —   —   —   14,493  25%
Sales and marketing  17,421  30%  (768)  (604)  —   —   16,049  27%
General and administrative  13,018  22%  (3,667)  —   —   —   9,351  16%
Restructuring  5  —%  —   —   (5)  —   —  —%
Total operating expenses  48,384  83%  (7,882)  (604)  (5)  —   39,893  68%
(Loss) Income from operations  (7,956) (14)%  8,540   1,092   5   —   1,681  3%
Interest expense  7,094  12%  —   —   —   —   7,094  12%
Other non-operating income (expense), net  633  1%  —   —   —   (999)  (366) (1)%
Loss before income taxes  (14,417) (25)%  8,540   1,092   5   (999)  (5,779) (10)%
Provision for income taxes(2)  300  1%  —   (139)  —   —   161  —%
Net loss $(14,717) (25)% $8,540  $1,231  $5  $(999) $(5,940) (10)%
Net loss per share, basic and diluted $(0.15)                    $(0.06)   
Weighted-average shares used in computing basic and diluted net loss per share  101,212                      101,212    

(1)  Please see Appendix A for explanation of non-GAAP measures used.
(2)  Due to the full valuation allowance on our US deferred tax assets, there were no tax effects associated with the Non-GAAP adjustments for stock-based compensation, net, restructuring, and gain on sale of a private company investment. Non-GAAP adjustments to our provision for income taxes pertains to deferred tax expense related to amortization of acquisition intangible assets.
(3)  Percentages may not sum due to rounding.


SVMK INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) (1)(2)

Calculation of Unlevered Free Cash Flow

  Three Months Ended March 31, 
(in thousands) 2019  2018 
Net cash provided by operating activities $7,803  $5,763 
Purchases of property and equipment, net  (581)  (880)
Capitalized internal-use software  (3,150)  (2,640)
Interest paid for term debt  3,423   5,126 
Unlevered free cash flow $7,495  $7,369 
         

Calculation of Adjusted EBITDA

  Three Months Ended March 31, 
(in thousands) 2019  2018 
Net loss $(17,777) $(14,717)
Provision for (benefit from) income taxes  (138)  300 
Other non-operating (income) expenses, net  (1,979)  (633)
Interest expense  3,659   7,094 
Depreciation and amortization  9,655   11,979 
Stock-based compensation, net  15,111   8,540 
Restructuring  (66)  5 
Adjusted EBITDA $8,465  $12,568 
         

(1) Please see Appendix A for explanation of non-GAAP measures used.
(2) The Company adopted ASC 842 as of January 1, 2019 on a prospective basis.  Amounts presented for the three months ended March 31,  2019 are under ASC 842 and amounts presented for the three months ended March 31, 2018 are under ASC 840.


APPENDIX A

SVMK INC.
EXPLANATION OF NON-GAAP MEASURES

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP (“GAAP”), we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP net loss, non-GAAP net loss per share, adjusted EBITDA and unlevered free cash flow. Our definition for each non-GAAP measure used is provided below, however a limitation of non-GAAP financial measures are that they do not have uniform definitions. Accordingly, our definitions for non-GAAP measures used will likely differ from similarly titled non-GAAP measures used by other companies thereby limiting comparability.

With regards to the Non-GAAP guidance provided above, a reconciliation to the corresponding GAAP amounts are not provided as the quantification of certain items excluded from each respective non-GAAP measure, which may be significant, cannot be reasonably calculated or predicted at this time without unreasonable efforts.  For example, the non-GAAP adjustment for stock-based compensation expense, net, requires additional inputs such as number of shares granted and market price that are not currently ascertainable.

Non-GAAP gross profit, non-GAAP gross margin: We define non-GAAP gross profit as GAAP gross profit less stock-based compensation, net and less amortization of intangible assets. Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue.

Non-GAAP operating income (loss): We define non-GAAP operating income (loss) as GAAP operating loss less stock-based compensation, net, less amortization of intangible assets and less restructuring.

Non-GAAP net loss, non-GAAP net loss per share: We define non-GAAP net loss as GAAP net loss less stock-based compensation, net, less amortization of intangible assets, less restructuring, and less gain on sale of a private company investment. Non-GAAP net loss per share is defined as non-GAAP net loss divided by the weighted-average shares outstanding.

We use these non-GAAP measures to compare and evaluate our operating results across periods in order to manage our business, for purposes of determining executive and senior management incentive compensation, and for budgeting and developing our strategic operating plans. We believe that these non-GAAP measures provide useful information about our operating results, enhance the overall understanding of our past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by our management in evaluating our financial performance and for operational decision making, but they 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.

We have excluded the effect of the following items from the aforementioned non-GAAP measures because they are non-cash and/or are non-recurring in nature and because we believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. We further believe this measure is useful to investors in that it allows for greater transparency to certain line items in our financial statements and facilitates comparisons to historical operating results and comparisons to peer operating results. A description of the non-GAAP adjustments for the above measures is as follows:

For more information on the non-GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP Data” section of this press release. The accompanying tables provide details on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures and the related reconciliations between those financial measures.

Adjusted EBITDA: We define adjusted EBITDA as net loss excluding provision for (benefit from) income taxes, other non-operating expenses (income), net, interest expense, depreciation and amortization, stock-based compensation, net, and restructuring. We consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business that are excluded from adjusted EBITDA. Adjusted EBITDA has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures. Some of the limitations of adjusted EBITDA are that it excludes recurring expenses for interest payments, does not reflect the dilution that results from stock-based compensation, and does not reflect the cost to replace depreciated property and equipment. It may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

Unlevered free cash flow: Unlevered free cash flow is a liquidity measure used by management in evaluating the cash generated by our operations after purchases of property and equipment and capitalized internal-use software but prior to the impact of our capital structure. The usefulness of unlevered free cash flow as an analytical tool is limited because it excludes certain items which are settled in cash, does not represent residual cash flow available for discretionary expenses, does not reflect our future contractual commitments, and is calculated differently by other companies in our industry. Accordingly, it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities.

Safe Harbor Statement

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking statements about our products, including our investments in products, technology and other key strategic areas. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

The risks and uncertainties referred to above include - but are not limited to - risks related to our ability to retain and upgrade customers; our revenue growth rate; our brand; our marketing strategies; our self-serve business model; the length of our sales cycles; the growth and development of our salesforce; security measures; expectations regarding our ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that our products and services are accessible at all times; competition; our debt; revenue recognition; our ability to manage our growth; our culture and talent; our data centers;  privacy, security and data transfer concerns, as well as changes in regulations, which could impact our ability to serve our customers or curtail our monetization efforts; litigation and regulatory issues; expectations regarding the return on our strategic investments; execution of our plans and strategies, including with respect to mobile products and features and expansion into new areas and businesses; our international operations; intellectual property; the application of U.S. and international tax laws on our tax structure and any changes to such tax laws; acquisitions we have made or may make in the future; the price volatility of our common stock; and general economic conditions.

Further information on these and other factors that could affect our financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the Form 10-Q that will be filed for the quarter ended March 31, 2019, which should be read in conjunction with these financial results. These documents are or will be available on the SEC Filings section of our Investor Relations website page at investor.surveymonkey.com. All information provided in this release and in the attachments is as of May 8, 2019, and we undertake no obligation to update this information.