Press Release: Mimecast Limited : Mimecast Announces First Quarter 2017 Financial Results

Press Release: Mimecast Limited : Mimecast Announces First Quarter 2017 Financial Results

 
   -- Total revenue of $41.5 million grew 24% yoy on a GAAP basis and 32% in 
      constant currency 
 
   -- Added 1,900 new customers. Total customers 19,900 globally 
 
   -- Revenue retention rate of 110% 
 
   -- Gross profit percentage of 73% 
 
   -- GAAP EPS of $0.00 per basic and diluted share, Non-GAAP EPS of $0.04 
 
   -- Increasing FY 2017 constant currency revenue growth guidance and 
      establishing a FY 2017 guidance range for Adjusted EBITDA 
 
 
   WATERTOWN, Mass., Aug. 08, 2016 (GLOBE NEWSWIRE) -- Mimecast Limited 
https://www.mimecast.com/ (NASDAQ:MIME), a leading email and data 
security company, today announced financial results for the first 
quarter ended June 30, 2016. 
 
   "We are very pleased with our first quarter results," stated Peter Bauer, 
CEO of Mimecast. "Organizations of all sizes across the globe are 
turning to Mimecast to fortify their cyber resilience, protecting 
employees, data and operations." 
 
   "Mimecast performed well across our key metrics and delivered strong 
growth in the quarter," said Peter Campbell, CFO of Mimecast. "We are 
especially pleased with new customer growth which outpaced our 
expectations. Our strong customer retention, track record of upselling 
and over 95% recurring revenue model, combined with the strength we are 
seeing in new customer additions will benefit our full year revenue 
growth." 
 
   First Quarter 2017 Financial Highlights 
 
 
   -- Revenue: Revenue on a constant currency basis increased 32% compared to 
      the first quarter of 2016.  GAAP Revenue for the first quarter of 2017 
      was $41.5 million, an increase of 24% compared to the $33.3 million of 
      revenue recognized in the first quarter of 2016. 
 
   -- Customers: Added 1,900 net new customers in the first quarter of 2017. 
      We now serve over 19,900 organizations globally. 
 
   -- Revenue Retention Rate: Revenue retention rate was 110% in the first 
      quarter of 2017, an increase from the 109% recognized in the prior 
      quarter and up from the 108% in the first quarter of 2016. 
 
   -- Gross Profit Percentage: Gross profit percentage was 73% for the first 
      quarter of 2017, an increase over the 70% realized in the first quarter 
      of 2016. 
 
   -- Adjusted EBITDA: Adjusted EBITDA was $1.9 million, representing an 
      Adjusted EBITDA margin of 4.5% up from 1% in the prior quarter. 
 
   -- GAAP Net Income:  GAAP net income was $0.2 million or $0.00 per basic and 
      diluted share based on 54.3 million and 57.7 million weighted-average 
      shares outstanding, respectively. 
 
   -- Non-GAAP Net Income: Non-GAAP net income was $2.3 million or $0.04 per 
      share. 
 
   -- Cash and Free Cash Flow: Mimecast generated $3.7 million of free cash 
      flow in the first quarter of 2017.  Cash and cash equivalents as of June 
      30, 2016 were $108.7 million. 
 
 
   Reconciliations of the non-GAAP financial measures provided in this 
press release to their most directly comparable GAAP financial measures 
are provided in the financial tables included at the end of this press 
release.  An explanation of these measures and how they are calculated 
is also included below under the heading "Non-GAAP Financial Measures." 
 
   First Quarter Business Highlights 
 
 
   -- Mimecast added 1,900 customers in the first quarter, the majority of 
      which were in the United States, our fastest growing region. 
 
   -- Sales of Targeted Threat Protection increased during the first quarter, 
      with more than 1,200 new customers purchasing the service. A total of 23% 
      of our customers are now using Targeted Threat Protection. 
 
   -- A total of 16% of customers are using Mimecast in conjunction with 
      Microsoft(R) Office 365(TM) during the first quarter compared to 14% in 
      the fourth quarter of fiscal 2016.  Office 365(TM) continues to be a 
      growth driver for the Company.  More than 660 new and existing customers 
      of all sizes chose Mimecast to enhance the security, the archive, or to 
      provide uptime assurance for their Office 365 subscriptions. 
 
   -- We launched Mimecast Administrative Console V4.0, a significant upgrade 
      that provides IT professionals an enhanced unified view across all 
      Mimecast services. 
 
   -- Mimecast joined the Coalition for Cybersecurity Policy, bringing deep 
      email security and cyber resilience expertise.  Launched in February 
      2016, the Coalition has led a call-to-arms for fighting against an 
      increasingly pervasive cyberattack landscape. 
 
 
   Business Outlook 
 
   Mimecast is providing guidance for the second quarter and full year 
2017. 
 
   Second Quarter 2017 Guidance: 
 
   For the second quarter of 2017 constant currency revenue growth is 
expected to be in the range of 30% and 32% and revenue in the range of 
$41.5 million and $41.9 million.  Exchange rates have weakened in the 
period, primarily due to the strengthening of the US dollar compared to 
British Pound in the same period in the prior year.  Fluctuations in 
these rates have impacted our revenue guidance by $2.8 million. 
Approximately $0.5 million of this impact relates to the translation of 
South African Rand based revenue and $2.3 million relates to British 
Pound based revenue. We believe that constant currency revenue growth is 
a useful way to measure the underlying strength of our business as it 
excludes these short term fluctuations.  Adjusted EBITDA is expected to 
be in the range of $1.6 to $2.4 million. 
 
   Full Year 2017 Guidance: 
 
   For the full year 2017 constant currency revenue growth is expected to 
be in the range of 29% to 31% and revenue to be in the range of $172.0 
million to $175.6 million.  Foreign exchange rate fluctuations are 
impacting this guidance by $7.8 million of which $0.9 million relates to 
the South African Rand and $6.9 million relates to the British Pound. 
Adjusted EBITDA is expected to be in the range of $9.0 to $11.0 million. 
 
   GAAP net income (loss) is the most comparable GAAP measure to Adjusted 
EBITDA.  Adjusted EBITDA differs from GAAP net income (loss) in that it 
excludes depreciation and amortization, share-based compensation expense, 
interest income and interest expense, the provision for income taxes and 
foreign exchange income (expense).  Mimecast is unable to predict with 
reasonable certainty the ultimate outcome of these exclusions without 
unreasonable effort.  Therefore, Mimecast has not provided guidance for 
GAAP net income (loss) or a reconciliation of the foregoing 
forward-looking Adjusted EBITDA guidance to GAAP net income (loss). 
 
   Conference Call and Webcast Information 
 
   Mimecast will host a conference call to discuss these financial results 
for investors and analysts at 5:00 pm EDT (UTC-05:00) on August 8, 2016. 
To access the conference call, dial (844) 815-2878 for the U.S. and 
Canada and (615) 800-6885 for international callers and enter conference 
ID #46077901.  The call will also be webcast live on the investor 
relations section of the Company's website at 
http://investors.mimecast.com.  An audio replay of the call will be 
available two hours after the live call ends by dialing (855) 859-2056 
for U.S. and Canada or (404) 537-3406 for international callers, and 
entering passcode #46077901.  In addition, an archive of the webcast 
will be available on the investor relations section of the company's 
website at http://investors.mimecast.com. 
 
   About Mimecast Limited 
 
   Mimecast Limited (NASDAQ:MIME) makes business email and data safer for 
more than 19,900 customers and millions of employees worldwide. Founded 
in 2003, the Company's next-generation cloud-based security, archiving 
and continuity services protect email, and deliver comprehensive email 
risk management in a single, fully-integrated subscription service. 
Mimecast reduces email risk and the complexity and cost of managing the 
array of point solutions traditionally used to protect email and its 
data. For customers that have migrated to cloud services like 
Microsoft(R) Office 365(TM), Mimecast mitigates single vendor exposure 
by strengthening security coverage, combating downtime and improving 
archiving. 
 
   Safe Harbor for Forward-Looking Statements 
 
   Statements in this press release regarding management's future 
expectations, beliefs, intentions, goals, strategies, plans or prospects, 
including, without limitation, the statements relating to Mimecast's 
future financial performance on both a GAAP and non-GAAP basis under the 
heading "Business Outlook" above, may constitute forward-looking 
statements within the meaning of the Private Securities Litigation 
Reform Act of 1995 and other federal securities laws.  All statements, 
other than statements of historical fact, are statements that could be 
deemed forward-looking statements, including statements containing the 
words "predicts," "plan," "expects," "anticipates," "believes," "goal," 
"target," "estimate," "potential," "may," "might," "could," "see," "seek, 
" "forecast," and similar words. Mimecast intends all such 
forward-looking statements to be covered by the safe harbor provisions 
for forward-looking statements contained in Section 21E of the Exchange 
Act and the Private Securities Litigation Reform Act of 1995.  Such 
forward-looking statements involve known and unknown risks, 
uncertainties and other factors including those risks, uncertainties and 
factors detailed in Mimecast's filings with the Securities and Exchange 
Commission. As a result of such risks, uncertainties and factors, 
Mimecast's actual results may differ materially from any future results, 
performance or achievements discussed in or implied by the 
forward-looking statements contained herein. Mimecast is providing the 
information in this press release as of this date and assumes no 
obligations to update the information included in this press release or 
revise any forward-looking statements, whether as a result of new 
information, future events or otherwise. 
 
   Non-GAAP Financial Measures 
 
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Press Release: Mimecast Limited : Mimecast -2-

   We have provided in this release financial information that has not been 
prepared in accordance with GAAP.  We use these non-GAAP financial 
measures internally in analyzing our financial results and believe they 
are useful to investors, as a supplement to GAAP measures, in evaluating 
our ongoing operational performance.  We believe that the use of these 
non-GAAP financial measures provides an additional tool for investors to 
use in evaluating ongoing operating results and trends and in comparing 
our financial results with other companies in our industry, many of 
which present similar non-GAAP financial measures to investors. 
 
   Non-GAAP financial measures should not be considered in isolation from, 
or as a substitute for, financial information prepared in accordance 
with GAAP.  Investors are encouraged to review the reconciliation of 
these non-GAAP financial measures to their most directly comparable GAAP 
financial measures provided in the financial statement tables included 
below in this press release 
 
   Revenue Constant Currency Growth Rate. We believe revenue constant 
currency growth rate is a key indicator of our operating results. We 
calculate revenue constant currency growth rate by translating revenue 
from entities reporting in foreign currencies into U.S. dollars using 
the comparable foreign currency exchange rates from the prior fiscal 
period.  To determine projected revenue growth rates on a constant 
currency basis for first quarter and full year 2017, expected revenue 
from entities reporting in foreign currencies was translated into U.S. 
dollars using the comparable prior year period's monthly average foreign 
currency exchange rates. 
 
   Adjusted EBITDA and Adjusted EBITDA margin. We believe that Adjusted 
EBITDA and Adjusted EBITDA margin are key indicators of our operating 
results. We define Adjusted EBITDA as net income (loss), adjusted to 
exclude: depreciation and amortization, share-based compensation expense, 
interest income and interest expense, the provision for income taxes and 
foreign exchange income (expense) predominantly related to the 
elimination of intercompany balances. We define Adjusted EBITDA margin 
as Adjusted EBITDA over revenue in the period. 
 
   Non-GAAP net income (loss). We define non-GAAP net income (loss) as net 
income (loss) less share-based compensation expense. We consider this 
non-GAAP financial measure to be a useful metric for management and 
investors because it excludes the effect of share-based compensation 
expense so that our management and investors can compare our recurring 
core business net results over multiple periods. There are a number of 
limitations related to the use of non-GAAP net income (loss) versus net 
income (loss) calculated in accordance with GAAP. For example, as noted 
above, non-GAAP net income (loss) excludes share-based compensation 
expense. In addition, the components of the costs that we exclude in our 
calculation of non-GAAP net income (loss) may differ from the components 
that our peer companies exclude when they report their non-GAAP results 
of operations. Management compensates for these limitations by providing 
specific information regarding the GAAP amounts excluded from non-GAAP 
net income (loss) and evaluating non-GAAP net income (loss) together 
with net income (loss) calculated in accordance with GAAP. 
 
   Free cash flow. We define free cash flow as net cash provided by 
operating activities minus capital expenditures. We consider free cash 
flow to be a liquidity measure that provides useful information to 
management and investors about the amount of cash generated by the 
business that, after the acquisition of property and equipment, can be 
used for strategic opportunities, including investing in our business, 
and strengthening the balance sheet. Analysis of free cash flow 
facilitates management's comparisons of our operating results to 
competitors' operating results. A limitation of using free cash flow 
versus the GAAP measure of net cash provided by operating activities as 
a means for evaluating our company is that free cash flow does not 
represent the total increase or decrease in the cash balance from 
operations for the period because it excludes cash used for capital 
expenditures during the period. Management compensates for this 
limitation by providing information about our capital expenditures on 
the face of the cash flow statement and in the "Management's Discussion 
and Analysis of Financial Condition and Results of Operations - 
Liquidity and Capital Resources" section of our reports filed with the 
SEC. 
 
 
 
 
 
                            MIMECAST LIMITED 
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
                (in thousands, except per share amounts) 
                               (unaudited) 
 
                                                          Three months 
                                                         ended June 30, 
                                                         2016      2015 
Revenue                                                 $41,460   $33,328 
Cost of revenue                                          11,339     9,876 
Gross profit                                             30,121    23,452 
Operating expenses 
Research and development                                  5,149     3,530 
Sales and marketing                                      21,463    13,121 
General and administrative                                6,456     4,691 
Total operating expenses                                 33,068    21,342 
(Loss) income from operations                            (2,947)    2,110 
Other income (expense) 
Interest income                                              67        17 
Interest expense                                           (107)     (177) 
Foreign exchange income (expense)                         4,096    (3,841) 
Total other income (expense), net                         4,056    (4,001) 
Income (loss) before income taxes                         1,109    (1,891) 
Provision for income taxes                                  865       358 
Net income (loss)                                       $   244   $(2,249) 
Net income (loss) available to ordinary shareholders 
 - basic and diluted                                    $   244   $(2,249) 
Net income (loss) per ordinary share: 
Basic                                                   $  0.00   $ (0.07) 
Diluted                                                 $  0.00   $ (0.07) 
Weighted-average number of ordinary shares 
outstanding: 
Basic                                                    54,287    33,066 
Diluted                                                  57,655    33,066 
 
 
 
 
                                MIMECAST LIMITED 
                     CONDENSED CONSOLIDATED BALANCE SHEETS 
               (in thousands, except share and per share amounts) 
                                  (unaudited) 
 
                                                            At June    At March 
                                                              30,         31, 
                                                              2016       2016 
Assets 
Current assets 
Cash and cash equivalents                                   $108,658   $ 106,140 
Accounts receivable, net                                      30,708      33,738 
Prepaid expenses and other current assets                      5,976       7,362 
Total current assets                                         145,342     147,240 
 
Property and equipment, net                                   28,971      24,806 
Other assets                                                   2,547       3,081 
Total assets                                                $176,860   $ 175,127 
 
Liabilities and shareholders' equity 
Current liabilities 
Accounts payable                                            $  6,234   $   2,891 
Accrued expenses and other current liabilities                15,067      15,110 
Deferred revenue                                              60,433      60,889 
Current portion of long-term debt                              3,966       4,910 
Total current liabilities                                     85,700      83,800 
 
Deferred revenue, net of current portion                       9,443       9,151 
Long-term debt                                                 1,296       1,981 
Other non-current liabilities                                  2,047       2,121 
Total liabilities                                             98,486      97,053 
 
Contingencies 
 
Shareholders' equity 
Ordinary shares, $0.012 par value, 300,000,000 shares 
 authorized; 
 54,476,620 and 54,216,738 shares issued and outstanding 
 at 
 June 30, 2016 and March 31, 2016, respectively                  654         651 
Additional paid-in capital                                   172,553     169,037 
Accumulated deficit                                          (88,332)    (88,576) 
Accumulated other comprehensive loss                          (6,501)     (3,038) 
Total shareholders' equity                                    78,374      78,074 
Total liabilities and shareholders' equity                  $176,860   $ 175,127 
 
 
 
 
                               MIMECAST LIMITED 
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
                                (in thousands) 
                                 (unaudited) 
 
                                                           Three months ended 
                                                                June 30, 
                                                            2016       2015 
Operating activities 
Net income (loss)                                         $    244   $  (2,249) 
Adjustments to reconcile net income (loss) to net 
 cash provided by operating activities: 
Depreciation and amortization                                2,764       2,536 
Share-based compensation expense                             2,043         843 
 

Press Release: Mimecast Limited : Mimecast -3-

Provision for doubtful accounts                                 20          25 
Loss on disposal of fixed assets                                 2           3 
Non-cash interest expense                                       25          27 
Excess tax benefits related to exercise of share options      (466)       (289) 
Unrealized currency (gain) loss on foreign denominated 
 intercompany transactions                                  (3,817)      3,367 
Changes in assets and liabilities: 
Accounts receivable                                          2,128       1,949 
Prepaid expenses and other current assets                    1,496       1,524 
Other assets                                                     -         192 
Accounts payable                                             1,993        (548) 
Deferred revenue                                             2,450       1,152 
Accrued expenses and other liabilities                         425        (721) 
Net cash provided by operating activities                    9,307       7,811 
Investing activities 
Purchases of property and equipment                         (5,586)     (4,769) 
Net cash used in investing activities                       (5,586)     (4,769) 
Financing activities 
Proceeds from exercises of share options                     1,014         414 
Excess tax benefits related to exercise of share options       466         289 
Payments on debt                                            (1,293)     (1,373) 
Net cash provided by (used in) financing activities            187        (670) 
Effect of foreign exchange rates on cash                    (1,390)      1,248 
Net increase in cash and cash equivalents                    2,518       3,620 
 
Cash and cash equivalents at beginning of period           106,140      32,890 
Cash and cash equivalents at end of period                $108,658   $  36,510 
 
 
 
   Key Performance Indicators 
 
   In addition to traditional financial metrics, such as revenue and 
revenue growth trends, we monitor several other non-GAAP financial 
measures and non-financial metrics to help us evaluate growth trends, 
establish budgets, measure the effectiveness of our sales and marketing 
efforts and assess operational efficiencies. The key performance 
indicators that we monitor are as follows: 
 
 
 
 
                                      Three months ended June 30, 
                                        2016                2015 
 
                                        (dollars in thousands) 
Gross profit percentage                         73%               70% 
Revenue constant currency growth 
 rate (1)                                       32%               32% 
Revenue retention rate (2)                     110%              108% 
Total customers (3)                         19,900            14,500 
Adjusted EBITDA (1)                 $        1,860       $     5,489 
 
 
 
 
  (1) Adjusted EBITDA and revenue constant currency 
   growth rates are non-GAAP measures. For a reconciliation 
   of Adjusted EBITDA and revenue constant currency growth 
   rates to the nearest comparable GAAP measures, see 
   "Reconciliation of Non-GAAP Financial Measures" below. 
  (2) We calculate our revenue retention rate by annualizing 
   constant currency revenue recorded on the last day 
   of the measurement period for only those customers 
   in place throughout the entire measurement period. 
   We include add-on, or upsell, revenue from additional 
   employees and services purchased by existing customers. 
   We divide the result by revenue on a constant currency 
   basis on the first day of the measurement period for 
   all customers in place at the beginning of the measurement 
   period. The measurement period is the trailing twelve 
   months. The revenue on a constant currency basis is 
   based on the average exchange rates in effect during 
   the respective period. 
  (3) Reflects the customer count on the last day of 
   the period rounded to the nearest hundred customers. 
   We define a customer as an entity with an active subscription 
   contract as of the measurement date. A customer is 
   typically a parent company or, in a few cases, a significant 
   subsidiary that works with us directly. 
 
 
 
   Reconciliation of Non-GAAP Financial Measures 
 
 
 
 
                                                      Three months ended June 30, 
                                                          2016              2015 
 
                                                         (dollars in thousands) 
Reconciliation of Revenue Constant Currency Growth 
 Rate: 
Revenue, as reported                                    $    41,460        $33,328 
Revenue year-over-year growth rate, as reported                  24%            24% 
Estimated impact of foreign currency fluctuations                 8%             8% 
Revenue constant currency growth rate                            32%            32% 
 
 
 
   The following table presents a reconciliation of net income (loss) to 
Adjusted EBITDA: 
 
 
 
 
                                        Three months ended June 30, 
                                         2016                 2015 
 
                                              (in thousands) 
Reconciliation of Adjusted 
EBITDA: 
Net income (loss)                    $          244       $      (2,249) 
Depreciation and amortization                 2,764               2,536 
Interest expense, net                            40                 160 
Provision for income taxes                      865                 358 
Share-based compensation expense              2,043                 843 
Foreign exchange (income) expense            (4,096)              3,841 
Adjusted EBITDA                      $        1,860       $       5,489 
 
 
 
   The following table presents a reconciliation of Net income (loss) to 
Non-GAAP net income (loss) (in thousands, except per share amounts): 
 
 
 
 
                                                            Three months 
                                                           ended June 30, 
                                                           2016     2015 
Reconciliation of Non-GAAP Net Income (Loss): 
Net income (loss)                                         $   244  $(2,249) 
Share-based compensation expense                            2,043      843 
Non-GAAP net income (loss)                                $ 2,287  $(1,406) 
Non-GAAP net income (loss) per ordinary share - basic     $  0.04  $ (0.04) 
Weighted-average number of ordinary shares used in 
 computing 
 Non-GAAP net income (loss) per ordinary share - basic     54,287   33,066 
 
 
 
   The following table presents a reconciliation of Net cash provided by 
operating activities to Free Cash Flow (in thousands): 
 
 
 
 
                                        Three months ended June 30, 
                                         2016                 2015 
Reconciliation of Free Cash Flow: 
Net cash provided by operating 
 activities                          $        9,307       $       7,811 
Purchases of property and 
 equipment                                   (5,586)             (4,769) 
Free Cash Flow                       $        3,721       $       3,042 
 
 
 
   Share-based compensation expense for three months ended June 30, 2016 
and 2015 (in thousands): 
 
 
 
 
                                        Three months ended June 30, 
                                            2016              2015 
Cost of revenue                        $             170   $        22 
Research and development                             372            29 
Sales and marketing                                  973            83 
General and administrative                           528           709 
Total share-based compensation 
 expense                               $           2,043   $       843 
 
 
 
   Revenue Constant Currency Growth Rate reconciliation (dollars in 
millions): 
 
 
 
 
                            Three months ended June 30, 
                          2016A           2015A       % Change 
Total revenue as 
 reported              $        41.5   $        33.3        24% 
Estimated impact of 
 foreign currency 
 fluctuations                                                8% 
Total revenue 
 constant currency 
 growth rate                                                32% 
 
Exchange rate for 
period 
USD                            1.000           1.000 
ZAR                            0.067           0.083 
GBP                            1.434           1.532 
AUD                            0.746           0.778 
 
   Media Contact: 
 
   Lona Therrien / Mimecast Limited / (781) 996-5340 / press[a]mimecast.com 
 
   Investor Contact: 
 
   Robert Sanders / Mimecast Limited / (781) 996-5340 / 
investors[a]mimecast.com 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Mimecast Limited via Globenewswire 
 
   HUG#2033623 
 
 
 
 
 

Press Release: Mimecast Limited : Mimecast Announces First Quarter 2017 Financial Results

 
   -- Total revenue of $41.5 million grew 24% yoy on a GAAP basis and 32% in 
      constant currency 
 
   -- Added 1,900 new customers. Total customers 19,900 globally 
 
   -- Revenue retention rate of 110% 
 
   -- Gross profit percentage of 73% 
 
   -- GAAP EPS of $0.00 per basic and diluted share, Non-GAAP EPS of $0.04 
 
   -- Increasing FY 2017 constant currency revenue growth guidance and 
      establishing a FY 2017 guidance range for Adjusted EBITDA 
 
 
   WATERTOWN, Mass., Aug. 08, 2016 (GLOBE NEWSWIRE) -- Mimecast Limited 
https://www.mimecast.com/ (NASDAQ:MIME), a leading email and data 
security company, today announced financial results for the first 
quarter ended June 30, 2016. 
 
   "We are very pleased with our first quarter results," stated Peter Bauer, 
CEO of Mimecast. "Organizations of all sizes across the globe are 
turning to Mimecast to fortify their cyber resilience, protecting 
employees, data and operations." 
 
   "Mimecast performed well across our key metrics and delivered strong 
growth in the quarter," said Peter Campbell, CFO of Mimecast. "We are 
especially pleased with new customer growth which outpaced our 
expectations. Our strong customer retention, track record of upselling 
and over 95% recurring revenue model, combined with the strength we are 
seeing in new customer additions will benefit our full year revenue 
growth." 
 
   First Quarter 2017 Financial Highlights 
 
 
   -- Revenue: Revenue on a constant currency basis increased 32% compared to 
      the first quarter of 2016.  GAAP Revenue for the first quarter of 2017 
      was $41.5 million, an increase of 24% compared to the $33.3 million of 
      revenue recognized in the first quarter of 2016. 
 
   -- Customers: Added 1,900 net new customers in the first quarter of 2017. 
      We now serve over 19,900 organizations globally. 
 
   -- Revenue Retention Rate: Revenue retention rate was 110% in the first 
      quarter of 2017, an increase from the 109% recognized in the prior 
      quarter and up from the 108% in the first quarter of 2016. 
 
   -- Gross Profit Percentage: Gross profit percentage was 73% for the first 
      quarter of 2017, an increase over the 70% realized in the first quarter 
      of 2016. 
 
   -- Adjusted EBITDA: Adjusted EBITDA was $1.9 million, representing an 
      Adjusted EBITDA margin of 4.5% up from 1% in the prior quarter. 
 
   -- GAAP Net Income:  GAAP net income was $0.2 million or $0.00 per basic and 
      diluted share based on 54.3 million and 57.7 million weighted-average 
      shares outstanding, respectively. 
 
   -- Non-GAAP Net Income: Non-GAAP net income was $2.3 million or $0.04 per 
      share. 
 
   -- Cash and Free Cash Flow: Mimecast generated $3.7 million of free cash 
      flow in the first quarter of 2017.  Cash and cash equivalents as of June 
      30, 2016 were $108.7 million. 
 
 
   Reconciliations of the non-GAAP financial measures provided in this 
press release to their most directly comparable GAAP financial measures 
are provided in the financial tables included at the end of this press 
release.  An explanation of these measures and how they are calculated 
is also included below under the heading "Non-GAAP Financial Measures." 
 
   First Quarter Business Highlights 
 
 
   -- Mimecast added 1,900 customers in the first quarter, the majority of 
      which were in the United States, our fastest growing region. 
 
   -- Sales of Targeted Threat Protection increased during the first quarter, 
      with more than 1,200 new customers purchasing the service. A total of 23% 
      of our customers are now using Targeted Threat Protection. 
 
   -- A total of 16% of customers are using Mimecast in conjunction with 
      Microsoft(R) Office 365(TM) during the first quarter compared to 14% in 
      the fourth quarter of fiscal 2016.  Office 365(TM) continues to be a 
      growth driver for the Company.  More than 660 new and existing customers 
      of all sizes chose Mimecast to enhance the security, the archive, or to 
      provide uptime assurance for their Office 365 subscriptions. 
 
   -- We launched Mimecast Administrative Console V4.0, a significant upgrade 
      that provides IT professionals an enhanced unified view across all 
      Mimecast services. 
 
   -- Mimecast joined the Coalition for Cybersecurity Policy, bringing deep 
      email security and cyber resilience expertise.  Launched in February 
      2016, the Coalition has led a call-to-arms for fighting against an 
      increasingly pervasive cyberattack landscape. 
 
 
   Business Outlook 
 
   Mimecast is providing guidance for the second quarter and full year 
2017. 
 
   Second Quarter 2017 Guidance: 
 
   For the second quarter of 2017 constant currency revenue growth is 
expected to be in the range of 30% and 32% and revenue in the range of 
$41.5 million and $41.9 million.  Exchange rates have weakened in the 
period, primarily due to the strengthening of the US dollar compared to 
British Pound in the same period in the prior year.  Fluctuations in 
these rates have impacted our revenue guidance by $2.8 million. 
Approximately $0.5 million of this impact relates to the translation of 
South African Rand based revenue and $2.3 million relates to British 
Pound based revenue. We believe that constant currency revenue growth is 
a useful way to measure the underlying strength of our business as it 
excludes these short term fluctuations.  Adjusted EBITDA is expected to 
be in the range of $1.6 to $2.4 million. 
 
   Full Year 2017 Guidance: 
 
   For the full year 2017 constant currency revenue growth is expected to 
be in the range of 29% to 31% and revenue to be in the range of $172.0 
million to $175.6 million.  Foreign exchange rate fluctuations are 
impacting this guidance by $7.8 million of which $0.9 million relates to 
the South African Rand and $6.9 million relates to the British Pound. 
Adjusted EBITDA is expected to be in the range of $9.0 to $11.0 million. 
 
   GAAP net income (loss) is the most comparable GAAP measure to Adjusted 
EBITDA.  Adjusted EBITDA differs from GAAP net income (loss) in that it 
excludes depreciation and amortization, share-based compensation expense, 
interest income and interest expense, the provision for income taxes and 
foreign exchange income (expense).  Mimecast is unable to predict with 
reasonable certainty the ultimate outcome of these exclusions without 
unreasonable effort.  Therefore, Mimecast has not provided guidance for 
GAAP net income (loss) or a reconciliation of the foregoing 
forward-looking Adjusted EBITDA guidance to GAAP net income (loss). 
 
   Conference Call and Webcast Information 
 
   Mimecast will host a conference call to discuss these financial results 
for investors and analysts at 5:00 pm EDT (UTC-05:00) on August 8, 2016. 
To access the conference call, dial (844) 815-2878 for the U.S. and 
Canada and (615) 800-6885 for international callers and enter conference 
ID #46077901.  The call will also be webcast live on the investor 
relations section of the Company's website at 
http://investors.mimecast.com.  An audio replay of the call will be 
available two hours after the live call ends by dialing (855) 859-2056 
for U.S. and Canada or (404) 537-3406 for international callers, and 
entering passcode #46077901.  In addition, an archive of the webcast 
will be available on the investor relations section of the company's 
website at http://investors.mimecast.com. 
 
   About Mimecast Limited 
 
   Mimecast Limited (NASDAQ:MIME) makes business email and data safer for 
more than 19,900 customers and millions of employees worldwide. Founded 
in 2003, the Company's next-generation cloud-based security, archiving 
and continuity services protect email, and deliver comprehensive email 
risk management in a single, fully-integrated subscription service. 
Mimecast reduces email risk and the complexity and cost of managing the 
array of point solutions traditionally used to protect email and its 
data. For customers that have migrated to cloud services like 
Microsoft(R) Office 365(TM), Mimecast mitigates single vendor exposure 
by strengthening security coverage, combating downtime and improving 
archiving. 
 
   Safe Harbor for Forward-Looking Statements 
 
   Statements in this press release regarding management's future 
expectations, beliefs, intentions, goals, strategies, plans or prospects, 
including, without limitation, the statements relating to Mimecast's 
future financial performance on both a GAAP and non-GAAP basis under the 
heading "Business Outlook" above, may constitute forward-looking 
statements within the meaning of the Private Securities Litigation 
Reform Act of 1995 and other federal securities laws.  All statements, 
other than statements of historical fact, are statements that could be 
deemed forward-looking statements, including statements containing the 
words "predicts," "plan," "expects," "anticipates," "believes," "goal," 
"target," "estimate," "potential," "may," "might," "could," "see," "seek, 
" "forecast," and similar words. Mimecast intends all such 
forward-looking statements to be covered by the safe harbor provisions 
for forward-looking statements contained in Section 21E of the Exchange 
Act and the Private Securities Litigation Reform Act of 1995.  Such 
forward-looking statements involve known and unknown risks, 
uncertainties and other factors including those risks, uncertainties and 
factors detailed in Mimecast's filings with the Securities and Exchange 
Commission. As a result of such risks, uncertainties and factors, 
Mimecast's actual results may differ materially from any future results, 
performance or achievements discussed in or implied by the 
forward-looking statements contained herein. Mimecast is providing the 
information in this press release as of this date and assumes no 
obligations to update the information included in this press release or 
revise any forward-looking statements, whether as a result of new 
information, future events or otherwise. 
 
   Non-GAAP Financial Measures 
 
 

Press Release: Mimecast Limited : Mimecast -2-

   We have provided in this release financial information that has not been 
prepared in accordance with GAAP.  We use these non-GAAP financial 
measures internally in analyzing our financial results and believe they 
are useful to investors, as a supplement to GAAP measures, in evaluating 
our ongoing operational performance.  We believe that the use of these 
non-GAAP financial measures provides an additional tool for investors to 
use in evaluating ongoing operating results and trends and in comparing 
our financial results with other companies in our industry, many of 
which present similar non-GAAP financial measures to investors. 
 
   Non-GAAP financial measures should not be considered in isolation from, 
or as a substitute for, financial information prepared in accordance 
with GAAP.  Investors are encouraged to review the reconciliation of 
these non-GAAP financial measures to their most directly comparable GAAP 
financial measures provided in the financial statement tables included 
below in this press release 
 
   Revenue Constant Currency Growth Rate. We believe revenue constant 
currency growth rate is a key indicator of our operating results. We 
calculate revenue constant currency growth rate by translating revenue 
from entities reporting in foreign currencies into U.S. dollars using 
the comparable foreign currency exchange rates from the prior fiscal 
period.  To determine projected revenue growth rates on a constant 
currency basis for first quarter and full year 2017, expected revenue 
from entities reporting in foreign currencies was translated into U.S. 
dollars using the comparable prior year period's monthly average foreign 
currency exchange rates. 
 
   Adjusted EBITDA and Adjusted EBITDA margin. We believe that Adjusted 
EBITDA and Adjusted EBITDA margin are key indicators of our operating 
results. We define Adjusted EBITDA as net income (loss), adjusted to 
exclude: depreciation and amortization, share-based compensation expense, 
interest income and interest expense, the provision for income taxes and 
foreign exchange income (expense) predominantly related to the 
elimination of intercompany balances. We define Adjusted EBITDA margin 
as Adjusted EBITDA over revenue in the period. 
 
   Non-GAAP net income (loss). We define non-GAAP net income (loss) as net 
income (loss) less share-based compensation expense. We consider this 
non-GAAP financial measure to be a useful metric for management and 
investors because it excludes the effect of share-based compensation 
expense so that our management and investors can compare our recurring 
core business net results over multiple periods. There are a number of 
limitations related to the use of non-GAAP net income (loss) versus net 
income (loss) calculated in accordance with GAAP. For example, as noted 
above, non-GAAP net income (loss) excludes share-based compensation 
expense. In addition, the components of the costs that we exclude in our 
calculation of non-GAAP net income (loss) may differ from the components 
that our peer companies exclude when they report their non-GAAP results 
of operations. Management compensates for these limitations by providing 
specific information regarding the GAAP amounts excluded from non-GAAP 
net income (loss) and evaluating non-GAAP net income (loss) together 
with net income (loss) calculated in accordance with GAAP. 
 
   Free cash flow. We define free cash flow as net cash provided by 
operating activities minus capital expenditures. We consider free cash 
flow to be a liquidity measure that provides useful information to 
management and investors about the amount of cash generated by the 
business that, after the acquisition of property and equipment, can be 
used for strategic opportunities, including investing in our business, 
and strengthening the balance sheet. Analysis of free cash flow 
facilitates management's comparisons of our operating results to 
competitors' operating results. A limitation of using free cash flow 
versus the GAAP measure of net cash provided by operating activities as 
a means for evaluating our company is that free cash flow does not 
represent the total increase or decrease in the cash balance from 
operations for the period because it excludes cash used for capital 
expenditures during the period. Management compensates for this 
limitation by providing information about our capital expenditures on 
the face of the cash flow statement and in the "Management's Discussion 
and Analysis of Financial Condition and Results of Operations - 
Liquidity and Capital Resources" section of our reports filed with the 
SEC. 
 
 
 
 
 
                            MIMECAST LIMITED 
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
                (in thousands, except per share amounts) 
                               (unaudited) 
 
                                                          Three months 
                                                         ended June 30, 
                                                         2016      2015 
Revenue                                                 $41,460   $33,328 
Cost of revenue                                          11,339     9,876 
Gross profit                                             30,121    23,452 
Operating expenses 
Research and development                                  5,149     3,530 
Sales and marketing                                      21,463    13,121 
General and administrative                                6,456     4,691 
Total operating expenses                                 33,068    21,342 
(Loss) income from operations                            (2,947)    2,110 
Other income (expense) 
Interest income                                              67        17 
Interest expense                                           (107)     (177) 
Foreign exchange income (expense)                         4,096    (3,841) 
Total other income (expense), net                         4,056    (4,001) 
Income (loss) before income taxes                         1,109    (1,891) 
Provision for income taxes                                  865       358 
Net income (loss)                                       $   244   $(2,249) 
Net income (loss) available to ordinary shareholders 
 - basic and diluted                                    $   244   $(2,249) 
Net income (loss) per ordinary share: 
Basic                                                   $  0.00   $ (0.07) 
Diluted                                                 $  0.00   $ (0.07) 
Weighted-average number of ordinary shares 
outstanding: 
Basic                                                    54,287    33,066 
Diluted                                                  57,655    33,066 
 
 
 
 
                                MIMECAST LIMITED 
                     CONDENSED CONSOLIDATED BALANCE SHEETS 
               (in thousands, except share and per share amounts) 
                                  (unaudited) 
 
                                                            At June    At March 
                                                              30,         31, 
                                                              2016       2016 
Assets 
Current assets 
Cash and cash equivalents                                   $108,658   $ 106,140 
Accounts receivable, net                                      30,708      33,738 
Prepaid expenses and other current assets                      5,976       7,362 
Total current assets                                         145,342     147,240 
 
Property and equipment, net                                   28,971      24,806 
Other assets                                                   2,547       3,081 
Total assets                                                $176,860   $ 175,127 
 
Liabilities and shareholders' equity 
Current liabilities 
Accounts payable                                            $  6,234   $   2,891 
Accrued expenses and other current liabilities                15,067      15,110 
Deferred revenue                                              60,433      60,889 
Current portion of long-term debt                              3,966       4,910 
Total current liabilities                                     85,700      83,800 
 
Deferred revenue, net of current portion                       9,443       9,151 
Long-term debt                                                 1,296       1,981 
Other non-current liabilities                                  2,047       2,121 
Total liabilities                                             98,486      97,053 
 
Contingencies 
 
Shareholders' equity 
Ordinary shares, $0.012 par value, 300,000,000 shares 
 authorized; 
 54,476,620 and 54,216,738 shares issued and outstanding 
 at 
 June 30, 2016 and March 31, 2016, respectively                  654         651 
Additional paid-in capital                                   172,553     169,037 
Accumulated deficit                                          (88,332)    (88,576) 
Accumulated other comprehensive loss                          (6,501)     (3,038) 
Total shareholders' equity                                    78,374      78,074 
Total liabilities and shareholders' equity                  $176,860   $ 175,127 
 
 
 
 
                               MIMECAST LIMITED 
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
                                (in thousands) 
                                 (unaudited) 
 
                                                           Three months ended 
                                                                June 30, 
                                                            2016       2015 
Operating activities 
Net income (loss)                                         $    244   $  (2,249) 
Adjustments to reconcile net income (loss) to net 
 cash provided by operating activities: 
Depreciation and amortization                                2,764       2,536 
Share-based compensation expense                             2,043         843 
 

Press Release: Mimecast Limited : Mimecast -3-

Provision for doubtful accounts                                 20          25 
Loss on disposal of fixed assets                                 2           3 
Non-cash interest expense                                       25          27 
Excess tax benefits related to exercise of share options      (466)       (289) 
Unrealized currency (gain) loss on foreign denominated 
 intercompany transactions                                  (3,817)      3,367 
Changes in assets and liabilities: 
Accounts receivable                                          2,128       1,949 
Prepaid expenses and other current assets                    1,496       1,524 
Other assets                                                     -         192 
Accounts payable                                             1,993        (548) 
Deferred revenue                                             2,450       1,152 
Accrued expenses and other liabilities                         425        (721) 
Net cash provided by operating activities                    9,307       7,811 
Investing activities 
Purchases of property and equipment                         (5,586)     (4,769) 
Net cash used in investing activities                       (5,586)     (4,769) 
Financing activities 
Proceeds from exercises of share options                     1,014         414 
Excess tax benefits related to exercise of share options       466         289 
Payments on debt                                            (1,293)     (1,373) 
Net cash provided by (used in) financing activities            187        (670) 
Effect of foreign exchange rates on cash                    (1,390)      1,248 
Net increase in cash and cash equivalents                    2,518       3,620 
 
Cash and cash equivalents at beginning of period           106,140      32,890 
Cash and cash equivalents at end of period                $108,658   $  36,510 
 
 
 
   Key Performance Indicators 
 
   In addition to traditional financial metrics, such as revenue and 
revenue growth trends, we monitor several other non-GAAP financial 
measures and non-financial metrics to help us evaluate growth trends, 
establish budgets, measure the effectiveness of our sales and marketing 
efforts and assess operational efficiencies. The key performance 
indicators that we monitor are as follows: 
 
 
 
 
                                      Three months ended June 30, 
                                        2016                2015 
 
                                        (dollars in thousands) 
Gross profit percentage                         73%               70% 
Revenue constant currency growth 
 rate (1)                                       32%               32% 
Revenue retention rate (2)                     110%              108% 
Total customers (3)                         19,900            14,500 
Adjusted EBITDA (1)                 $        1,860       $     5,489 
 
 
 
 
  (1) Adjusted EBITDA and revenue constant currency 
   growth rates are non-GAAP measures. For a reconciliation 
   of Adjusted EBITDA and revenue constant currency growth 
   rates to the nearest comparable GAAP measures, see 
   "Reconciliation of Non-GAAP Financial Measures" below. 
  (2) We calculate our revenue retention rate by annualizing 
   constant currency revenue recorded on the last day 
   of the measurement period for only those customers 
   in place throughout the entire measurement period. 
   We include add-on, or upsell, revenue from additional 
   employees and services purchased by existing customers. 
   We divide the result by revenue on a constant currency 
   basis on the first day of the measurement period for 
   all customers in place at the beginning of the measurement 
   period. The measurement period is the trailing twelve 
   months. The revenue on a constant currency basis is 
   based on the average exchange rates in effect during 
   the respective period. 
  (3) Reflects the customer count on the last day of 
   the period rounded to the nearest hundred customers. 
   We define a customer as an entity with an active subscription 
   contract as of the measurement date. A customer is 
   typically a parent company or, in a few cases, a significant 
   subsidiary that works with us directly. 
 
 
 
   Reconciliation of Non-GAAP Financial Measures 
 
 
 
 
                                                      Three months ended June 30, 
                                                          2016              2015 
 
                                                         (dollars in thousands) 
Reconciliation of Revenue Constant Currency Growth 
 Rate: 
Revenue, as reported                                    $    41,460        $33,328 
Revenue year-over-year growth rate, as reported                  24%            24% 
Estimated impact of foreign currency fluctuations                 8%             8% 
Revenue constant currency growth rate                            32%            32% 
 
 
 
   The following table presents a reconciliation of net income (loss) to 
Adjusted EBITDA: 
 
 
 
 
                                        Three months ended June 30, 
                                         2016                 2015 
 
                                              (in thousands) 
Reconciliation of Adjusted 
EBITDA: 
Net income (loss)                    $          244       $      (2,249) 
Depreciation and amortization                 2,764               2,536 
Interest expense, net                            40                 160 
Provision for income taxes                      865                 358 
Share-based compensation expense              2,043                 843 
Foreign exchange (income) expense            (4,096)              3,841 
Adjusted EBITDA                      $        1,860       $       5,489 
 
 
 
   The following table presents a reconciliation of Net income (loss) to 
Non-GAAP net income (loss) (in thousands, except per share amounts): 
 
 
 
 
                                                            Three months 
                                                           ended June 30, 
                                                           2016     2015 
Reconciliation of Non-GAAP Net Income (Loss): 
Net income (loss)                                         $   244  $(2,249) 
Share-based compensation expense                            2,043      843 
Non-GAAP net income (loss)                                $ 2,287  $(1,406) 
Non-GAAP net income (loss) per ordinary share - basic     $  0.04  $ (0.04) 
Weighted-average number of ordinary shares used in 
 computing 
 Non-GAAP net income (loss) per ordinary share - basic     54,287   33,066 
 
 
 
   The following table presents a reconciliation of Net cash provided by 
operating activities to Free Cash Flow (in thousands): 
 
 
 
 
                                        Three months ended June 30, 
                                         2016                 2015 
Reconciliation of Free Cash Flow: 
Net cash provided by operating 
 activities                          $        9,307       $       7,811 
Purchases of property and 
 equipment                                   (5,586)             (4,769) 
Free Cash Flow                       $        3,721       $       3,042 
 
 
 
   Share-based compensation expense for three months ended June 30, 2016 
and 2015 (in thousands): 
 
 
 
 
                                        Three months ended June 30, 
                                            2016              2015 
Cost of revenue                        $             170   $        22 
Research and development                             372            29 
Sales and marketing                                  973            83 
General and administrative                           528           709 
Total share-based compensation 
 expense                               $           2,043   $       843 
 
 
 
   Revenue Constant Currency Growth Rate reconciliation (dollars in 
millions): 
 
 
 
 
                            Three months ended June 30, 
                          2016A           2015A       % Change 
Total revenue as 
 reported              $        41.5   $        33.3        24% 
Estimated impact of 
 foreign currency 
 fluctuations                                                8% 
Total revenue 
 constant currency 
 growth rate                                                32% 
 
Exchange rate for 
period 
USD                            1.000           1.000 
ZAR                            0.067           0.083 
GBP                            1.434           1.532 
AUD                            0.746           0.778 
 
   Media Contact: 
 
   Lona Therrien / Mimecast Limited / (781) 996-5340 / press[a]mimecast.com 
 
   Investor Contact: 
 
   Robert Sanders / Mimecast Limited / (781) 996-5340 / 
investors[a]mimecast.com 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Mimecast Limited via Globenewswire 
 
   HUG#2033623