Model N Announces Second Quarter Fiscal Year 2020 Financial Results

SAN MATEO, Calif.--()--Model N, Inc. (NYSE: MODN), the leading provider of cloud revenue management solutions for Life Sciences and High Tech companies, today announced financial results for the second quarter fiscal year 2020 ended March 31, 2020.

“Our second quarter results exceeded our revenue and profitability guidance. Our financial metrics demonstrate that the strategic focus we brought to the company over the last two years is delivering meaningful improvements in growth and profitability. This strong financial position combined with our go-to-market execution, commitment to customer success, and mission-critical products position us to weather this challenging environment and to grow over time,” said Jason Blessing, president and chief executive officer of Model N. “As the COVID-19 pandemic spread over the last several weeks, we quickly made adjustments to our global operations to allow our team to work remotely across sales, services and product development. Our team is doing well and remains committed to supporting our customers, many of which are playing important roles on the front lines of the pandemic.”

Recent Highlights

  • Model N Is Actively Responding to Customer Needs During the COVID-19 Pandemic – Model N’s employees efficiently transitioned to remote work, utilizing tools and processes created for a global workforce. This approach has allowed our teams to deliver projects remotely and to provide uninterrupted support. We also are in a unique position to provide creative solutions for our customers because of our heritage serving biopharmaceutical and semiconductor companies and our industry specific cloud services. We are doing everything possible to support our customers during this demanding time.
  • Several Leading Life Sciences Companies Transitioning to Model N’s Revenue Cloud – The U.S. branch of a large, Asia-based multinational pharmaceutical company and the specialty brands division of a leading global biopharmaceutical company both agreed to transition to Model N’s Revenue Cloud. Also, a top 30 pharmaceutical company selected Model N’s Revenue Cloud in an effort to stay current with ever-changing business requirements. Each of these customers has reported that they have realized improved regulatory compliance, increased operational efficiency, and the flexibility provided by Model N cloud services.
  • Customer Success and Go-Lives Continue at a Healthy Pace – Customers across our vertical markets went live on Model N’s Revenue Cloud, on time and on budget. The generics division of multibillion-dollar Mallinckrodt Pharmaceuticals became the first generics customer to transition to Model N’s Revenue Cloud and one of our fastest implementations. Mallinckrodt joins Gilead, Biogen, and Novo Nordisk as customers that have transitioned to Model N’s Revenue Cloud. In high tech, AVX Corporation, an international manufacturer of advanced electronic components, completed a global roll out.
  • 2020 State of Revenue Report Reveals Companies Increasingly Struggle to Achieve Effective Revenue Management – A recent survey of over 300 senior executives found that tools and processes for discounting, quoting and monitoring revenue performance led to lost revenue at companies of all sizes as revenue management became increasingly complex. Over 90% believe their organizations would benefit from cloud-based solutions that would give them real-time visibility into revenue performance, channel sales and inventory, and eliminate inefficiencies in their revenue management systems.

Second Quarter 2020 Financial Highlights

  • Revenues: Total revenues were $40.0 million, an increase of 15% from the second quarter of fiscal year 2019. Subscription revenues were $29.0 million, an increase of 12% from the second quarter of fiscal year 2019.
  • Gross Profit: Gross profit was $23.5 million, an increase of 30% from the second quarter of fiscal year 2019. Gross margin was 59% compared to 52% for the second quarter of fiscal year 2019. Non-GAAP gross profit was $24.8 million, an increase of 27% from the second quarter of fiscal year 2019. Non-GAAP gross margin was 62% compared to 56% for the second quarter of fiscal year 2019. Subscription gross margin was 70% compared to 66% for the second quarter of fiscal year 2019. Non-GAAP subscription gross margin was 72% compared to 70% for the second quarter of fiscal year 2019.
  • GAAP Loss and Non-GAAP Income from Operations: GAAP loss from operations was $(4.1) million, an improvement of 13% from the second quarter of fiscal year 2019. Non-GAAP income from operations was $3.0 million, an increase of 102% from the second quarter of fiscal year 2019.
  • GAAP Net Loss: GAAP net loss was $(4.6) million, an improvement of 22% from the second quarter of fiscal year 2019. GAAP basic and diluted net loss per share attributable to common stockholders was $(0.14) based upon weighted average shares outstanding of 33.8 million compared to net loss per share of $(0.18) for the second quarter of fiscal year 2019 based upon weighted average shares outstanding of 32.0 million.
  • Non-GAAP Net Income: Non-GAAP net income was $2.6 million compared to a non-GAAP net income of $0.4 million for the second quarter of fiscal year 2019. Non-GAAP net income per diluted share was $0.07 based upon diluted weighted average shares outstanding of 35.1 million compared to non-GAAP net income per diluted share of $0.01 for the second quarter of fiscal year 2019 based upon diluted weighted average shares outstanding of 33.0 million.
  • Adjusted EBITDA: Adjusted EBITDA was $3.2 million, an increase of 76% from the second quarter of fiscal year 2019.
  • Cash and Cash Flows: Cash and cash equivalents as of March 31, 2020 totaled $61.3 million. During the quarter, we paid down $5.0 million in debt. Net cash provided by operating activities was $3.4 million for the first six months of fiscal year 2020, compared with net cash provided by operating activities of $0.5 million in the prior fiscal year period. Free cash flow was $3.3 million for the first six months of fiscal year 2020, compared with free cash flow of $0.3 million in the prior fiscal year period.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release.

Guidance

The impact of COVID-19 and its effect on our business is included in the guidance that we are providing for the third quarter of fiscal year 2020 and the full fiscal year ending September 30, 2020 and reflects our outlook as of May 5, 2020.

(in $ millions, except per share)

Third Quarter Fiscal 2020

Full Year Fiscal 2020

Total revenues

39.4 – 39.8

154.0 – 156.0

Subscription revenues

28.7 – 29.1

114.0 – 115.0

Non-GAAP income from operations

3.2 – 3.6

13.0 – 14.0

Non-GAAP net income per share

0.05 – 0.07

0.28 – 0.31

Adjusted EBITDA

3.4 – 3.8

14.0 – 15.0

Quarterly Results Conference Call

Model N will host a conference call today at 2:00 PM Pacific Time (5:00 PM Eastern Time) to review the company’s financial results for the second quarter fiscal year 2020 ended March 31, 2020. The conference call can be accessed by dialing 877-407-4018 from the United States or +1-201-689-8471 internationally with reference to the company name and conference title, and a live webcast and replay of the conference call can be accessed from the investor relations page of Model N’s website at investor.modeln.com. Following the completion of the call through 11:59 p.m. ET on May 19, 2020, a telephone replay will be available by dialing 844-512-2921 from the United States or +1-412-317-6671, internationally, with recording access code 13701446.

About Model N

Model N is a leading provider of cloud revenue management solutions for Life Sciences and High Tech companies. Our software helps companies drive mission-critical business processes such as pricing, quoting, contracting, regulatory compliance, rebates and incentives. With deep industry expertise, Model N supports the complex business needs of the world’s leading brands in pharmaceutical, medical technology, semiconductor, and High Tech manufacturing across more than 120 countries, including Johnson & Johnson, AstraZeneca, Novartis, Microchip Technology and ON Semiconductor. For more information, visit www.modeln.com.

Model N® is the registered trademark of Model N, Inc. Any other company names mentioned are the property of their respective owners and are mentioned for identification purposes only.

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding Model N’s third quarter and full year fiscal 2020 financial results, the impact COVID-19 will have on our business, Model N’s profitability and benefits from our products. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) delays in closing customer contracts; (ii) our ability to improve and sustain our sales execution; (iii) the timing of new orders and the associated revenue recognition; (iv) adverse changes in general economic or market conditions; (v) delays or reductions in information technology spending and resulting variability in customer orders from quarter to quarter; (vi) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our competitors; (vii) our ability to manage our growth effectively; and (viii) acceptance of our applications and services by customers; (ix) success of new products; (x) the risk that the strategic initiatives that we may pursue will not result in significant future revenues; (xi) changes in health care regulation and policy and tax in the United States and worldwide; (xii) our ability to retain customers and (xiii) adverse impacts on our business and financial condition due to COVID-19. Further information on risks that could affect Model N’s results is included in our filings with the Securities and Exchange Commission (“SEC”), including our most recent quarterly report on Form 10-Q and our annual report on Form 10-K for the fiscal year ended September 30, 2019, and any current reports on Form 8-K that we may file from time to time. Should any of these risks or uncertainties materialize, actual results could differ materially from expectations. Model N assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Non-GAAP Financial Measures:

We have provided in this release financial information that has not been prepared in accordance with accounting standards generally accepted in the United States of America (“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 below. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Our reported results include certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP subscription gross profit, non-GAAP subscription gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share, and adjusted EBITDA. Non-GAAP gross profit excludes stock-based compensation expenses, amortization of intangible assets, and deferred revenue adjustments as they are often excluded by other companies to help investors understand the operational performance of their business. Non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude stock-based compensation expense, amortization of intangible assets, and deferred revenue adjustments. Additionally, stock-based compensation expense varies from period to period and from company to company due to such things as valuation methodologies and changes in stock price. Adjusted EBITDA is defined as net loss, adjusted for depreciation and amortization, stock-based compensation expense, acquisition & integration related expenses, deferred revenue adjustment, interest (income) expense, net, other (income) expenses, net, and provision for (benefit from) income taxes. Reconciliation tables are provided in this press release.

We have not reconciled guidance for non-GAAP financial measures to their most directly comparable GAAP measures because certain items that impact these measures are uncertain, out of our control and/or cannot be reasonably predicted or estimated, such as the difficulties of estimating certain items such as charges to stock-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

Model N, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

As of
March 31, 2020

 

As of
September 30, 2019

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

61,283

 

 

$

60,780

 

Accounts receivable, net

26,448

 

 

26,953

 

Prepaid expenses

1,347

 

 

2,776

 

Other current assets

6,898

 

 

4,039

 

Total current assets

95,976

 

 

94,548

 

Property and equipment, net

726

 

 

1,043

 

Operating lease right-of-use assets

5,707

 

 

 

Goodwill

39,283

 

 

39,283

 

Intangible assets, net

26,723

 

 

29,131

 

Other assets

5,394

 

 

5,588

 

Total assets

$

173,809

 

 

$

169,593

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

3,172

 

 

$

2,302

 

Accrued employee compensation

11,148

 

 

19,906

 

Accrued liabilities

4,561

 

 

4,354

 

Operating lease liabilities, current portion

2,593

 

 

 

Deferred revenue, current portion

45,579

 

 

44,875

 

Long term debt, current portion

944

 

 

4,911

 

Total current liabilities

67,997

 

 

76,348

 

Long-term liabilities

 

 

 

Long term debt

38,479

 

 

39,371

 

Operating lease liabilities, less current portion

3,481

 

 

 

Other long-term liabilities

1,630

 

 

1,152

 

Total long-term liabilities

43,590

 

 

40,523

 

Total liabilities

111,587

 

 

116,871

 

Stockholders’ equity

 

 

 

Common stock

5

 

 

5

 

Preferred stock

 

 

 

Additional paid-in capital

284,099

 

 

266,295

 

Accumulated other comprehensive loss

(1,846

)

 

(1,169

)

Accumulated deficit

(220,036

)

 

(212,409

)

Total stockholders’ equity

62,222

 

 

52,722

 

Total liabilities and stockholders’ equity

$

173,809

 

 

$

169,593

 

Model N, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

 

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

2020

 

2019

 

2020

 

2019

Revenues

 

 

 

 

 

 

 

Subscription

$

28,991

 

 

$

25,940

 

 

$

57,173

 

 

$

51,142

 

Professional services

10,961

 

 

8,903

 

 

21,167

 

 

18,778

 

Total revenues

39,952

 

 

34,843

 

 

78,340

 

 

69,920

 

Cost of revenues

 

 

 

 

 

 

 

Subscription

8,798

 

 

8,852

 

 

17,508

 

 

17,590

 

Professional services

7,685

 

 

7,894

 

 

15,327

 

 

15,723

 

Total cost of revenues

16,483

 

 

16,746

 

 

32,835

 

 

33,313

 

Gross profit

23,469

 

 

18,097

 

 

45,505

 

 

36,607

 

Operating expenses

 

 

 

 

 

 

 

Research and development

9,102

 

 

7,415

 

 

17,618

 

 

14,827

 

Sales and marketing

10,953

 

 

8,598

 

 

19,966

 

 

16,650

 

General and administrative

7,545

 

 

6,833

 

 

14,510

 

 

12,989

 

Total operating expenses

27,600

 

 

22,846

 

 

52,094

 

 

44,466

 

Loss from operations

(4,131

)

 

(4,749

)

 

(6,589

)

 

(7,859

)

Interest expense, net

402

 

 

891

 

 

965

 

 

1,624

 

Other expenses (income), net

(243

)

 

127

 

 

(255

)

 

412

 

Loss before income taxes

(4,290

)

 

(5,767

)

 

(7,299

)

 

(9,895

)

Provision for income taxes

339

 

 

141

 

 

328

 

 

739

 

Net loss

$

(4,629

)

 

$

(5,908

)

 

$

(7,627

)

 

$

(10,634

)

Net loss per share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.14

)

 

$

(0.18

)

 

$

(0.23

)

 

$

(0.34

)

Weighted average number of shares used in computing net loss per share:

 

 

 

 

 

 

 

Basic and diluted

33,794

 

 

31,999

 

 

33,468

 

 

31,741

 

Model N, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

Six Months Ended March 31,

 

2020

 

2019

Cash Flows from Operating Activities

 

 

 

Net loss

$

(7,627

)

 

$

(10,634

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

2,813

 

 

3,533

 

Stock-based compensation

11,832

 

 

9,099

 

Amortization of debt discount and issuance cost

140

 

 

290

 

Deferred income taxes

35

 

 

6

 

Amortization of capitalized contract acquisition costs

1,242

 

 

780

 

Other non-cash charges

(20

)

 

(108

)

Changes in assets and liabilities

 

 

 

Accounts receivable

529

 

 

8,353

 

Prepaid expenses and other assets

(1,278

)

 

595

 

Accounts payable

876

 

 

862

 

Accrued employee compensation

(4,895

)

 

(4,438

)

Other current and long-term liabilities

(1,603

)

 

708

 

Deferred revenue

1,391

 

 

(8,581

)

Net cash provided by operating activities

3,435

 

 

465

 

Cash Flows from Investing Activities

 

 

 

Purchases of property and equipment

(98

)

 

(167

)

Net cash used in investing activities

(98

)

 

(167

)

Cash Flows from Financing Activities

 

 

 

Proceeds from exercise of stock options and issuance of employee stock purchase plan

2,242

 

 

2,018

 

Principal payments on debt

(5,000

)

 

(5,000

)

Net cash used in financing activities

(2,758

)

 

(2,982

)

Effect of exchange rate changes on cash and cash equivalents

(76

)

 

70

 

Net increase (decrease) in cash and cash equivalents

503

 

 

(2,614

)

Cash and cash equivalents

 

 

 

Beginning of period

60,780

 

 

56,704

 

End of period

$

61,283

 

 

$

54,090

 

Model N, Inc.

Reconciliation of GAAP to Non-GAAP Operating Results

(in thousands, except per share amounts)

 

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2020

 

2019

 

2020

 

2019

Reconciliation from GAAP net loss to adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(4,629

)

 

$

(5,908

)

 

$

(7,627

)

 

$

(10,634

)

Reversal of non-GAAP items

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

6,009

 

 

4,896

 

 

11,832

 

 

9,099

 

Depreciation and amortization

 

1,361

 

 

1,691

 

 

2,813

 

 

3,533

 

Interest expense, net

 

402

 

 

891

 

 

965

 

 

1,624

 

Other expenses (income), net

 

(243

)

 

127

 

 

(255

)

 

412

 

Provision for income taxes

 

339

 

 

141

 

 

328

 

 

739

 

Adjusted EBITDA

 

$

3,239

 

 

$

1,838

 

 

$

8,056

 

 

$

4,773

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2020

 

2019

 

2020

 

2019

Reconciliation from GAAP gross profit to non-GAAP gross profit

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

23,469

 

 

$

18,097

 

 

$

45,505

 

 

$

36,607

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

1,055

 

 

1030

 

 

2,174

 

 

1,969

 

Amortization of intangible assets (b)

 

282

 

 

476

 

 

629

 

 

952

 

Non-GAAP gross profit

 

$

24,806

 

 

$

19,603

 

 

$

48,308

 

 

$

39,528

 

Percentage of revenue

 

62.1

%

 

56.3

%

 

61.7

%

 

56.5

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2020

 

2019

 

2020

 

2019

Reconciliation from GAAP subscription gross profit to non-GAAP subscription gross profit

 

 

 

 

 

 

 

 

GAAP subscription gross profit

 

$

20,193

 

 

$

17,088

 

 

$

39,665

 

 

$

33,552

 

Reversal of non-GAAP expenses

 

 

 

 

 

 

 

 

Stock-based compensation (a)

 

495

 

 

469

 

 

1,017

 

 

929

 

Amortization of intangible assets (b)

 

282

 

 

476

 

 

629

 

 

952

 

Non-GAAP subscription gross profit

 

$

20,970

 

 

$

18,033

 

 

$

41,311

 

 

$

35,433

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

2020

2019

 

2020

2019

Reconciliation from GAAP operating loss to non-GAAP operating income

 

 

 

 

 

GAAP operating loss

$

(4,131

)

$

(4,749

)

 

$

(6,589

)

$

(7,859

)

Reversal of non-GAAP expenses

 

 

 

 

 

Stock-based compensation (a)

6,009

 

4,896

 

 

11,832

 

9,099

 

Amortization of intangible assets (b)

1,171

 

1,365

 

 

2,408

 

2,736

 

Non-GAAP operating income

$

3,049

 

$

1,512

 

 

$

7,651

 

$

3,976

 

 

 

 

 

 

 

Numerator

 

 

 

 

 

Reconciliation between GAAP net loss and non-GAAP net income

 

 

 

 

 

GAAP net loss

$

(4,629

)

$

(5,908

)

 

$

(7,627

)

$

(10,634

)

Reversal of non-GAAP expenses

 

 

 

 

 

Stock-based compensation (a)

6,009

 

4,896

 

 

11,832

 

9,099

 

Amortization of intangible assets (b)

1,171

 

1,365

 

 

2,408

 

2,736

 

Non-GAAP net income

$

2,551

 

$

353

 

 

$

6,613

 

$

1,201

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

Reconciliation between GAAP and non-GAAP net income (loss) per share

 

 

 

 

 

Shares used in computing GAAP net loss per share:

 

 

 

 

 

Basic

33,794

 

31,999

 

 

33,468

 

31,741

 

Diluted

33,794

 

31,999

 

 

33,468

 

31,741

 

Shares used in computing non-GAAP net income per share

 

 

 

 

 

Basic

33,794

 

31,999

 

 

33,468

 

31,741

 

Diluted

35,071

 

32,997

 

 

34,854

 

32,707

 

GAAP net loss per share

 

 

 

 

 

Basic and diluted

$

(0.14

)

$

(0.18

)

 

$

(0.23

)

$

(0.34

)

Non-GAAP net income per share

 

 

 

 

 

Basic

$

0.08

 

$

0.01

 

 

$

0.20

 

$

0.04

 

Diluted

$

0.07

 

$

0.01

 

 

$

0.19

 

$

0.04

 

 

Three Months Ended March 31,

Six Months Ended March 31,

 

2020

2019

2020

2019

Amortization of intangibles assets recorded in the statements of operations

 

 

 

 

Cost of revenues

 

 

 

 

Subscription

$

282

$

476

$

629

$

952

Professional services

Total amortization of intangibles assets in cost of revenue (b)

282

476

629

952

Operating expenses

 

 

 

 

Research and development

Sales and marketing

889

889

1,779

1,784

General and administrative

Total amortization of intangibles assets in operating expense (b)

889

889

1,779

1,784

Total amortization of intangibles assets (b)

$

1,171

$

1,365

$

2,408

$

2,736

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2020

 

2019

 

2020

 

2019

Stock-based compensation recorded in the statements of operations

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

Subscription

 

$

495

 

 

$

469

 

 

$

1,017

 

 

$

929

 

Professional services

 

560

 

 

561

 

 

1,157

 

 

1,040

 

Total stock-based compensation in cost of revenue (a)

 

1,055

 

 

1,030

 

 

2,174

 

 

1,969

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

1,243

 

 

861

 

 

2,669

 

 

1,625

 

Sales and marketing

 

1,656

 

 

1,239

 

 

3,062

 

 

2,384

 

General and administrative

 

2,055

 

 

1,766

 

 

3,927

 

 

3,121

 

Total stock-based compensation in operating expense (a)

 

4,954

 

 

3,866

 

 

9,658

 

 

7,130

 

Total stock-based compensation (a)

 

$

6,009

 

 

$

4,896

 

 

$

11,832

 

 

$

9,099

 

 

 

 

 

 

 

 

 

 

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements presented on a GAAP basis, Model N uses non-GAAP measures of adjusted EBITDA, gross profit, gross margin, income from operations, net income, weighted average shares outstanding and net income per share, which are adjusted to exclude stock-based compensation expense and amortization of intangible assets and include dilutive shares where applicable. We believe these adjustments are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Model N’s underlying operating results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance that are considered by management for the purpose of making operational decisions. In addition, these non-GAAP results are the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for operating loss, net loss or basic and diluted net loss per share prepared in accordance with generally accepted accounting principles in the United States. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.

While a large component of our expenses incurred in certain periods, we believe investors may want to exclude the effects of these items in order to compare our financial performance with that of other companies and between time periods:

(a)

Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. Stock-based compensation is a non-cash item. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies.

 

 

(b)

Amortization of intangible assets resulted principally from acquisitions. Intangible asset amortization is a non-cash item. As such, we believe exclusion of these expenses provides for a better comparison of our operating results to prior periods and to our peer companies.

 

Contacts

Investor Relations Contact:
Gwyn Lauber
Model N, Inc.
650-610-4998
investorrelations@modeln.com

Media Contact:
Laura Ruark
Bospar
laura@bospar.com

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Contacts

Investor Relations Contact:
Gwyn Lauber
Model N, Inc.
650-610-4998
investorrelations@modeln.com

Media Contact:
Laura Ruark
Bospar
laura@bospar.com