2020Q4 - slides

Q4’20 and 2020 Results

February 2, 2021

COPYRIGHT © 2021, FIREEYE, INC. ALL RIGHTS RESERVED.

Safe Harbor Statement

This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

Exchange Act of 1934, as amended. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to

management. Forward-looking statements include information concerning: possible or assumed future results of operations, financial metrics and goals; impact of the

COVID-19 pandemic; our priorities, plans, initiatives and investments; the threat landscape, industry environment, and customer buying preferences; competitive

position; market opportunities; drivers and expectations for growth and business transformation; new, future and enhanced offerings; go to market strategies; and the

effects of competition.

Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,”

“estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking

statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different

from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our

management’s beliefs and assumptions only as of the date of this presentation. You should read our filings with the SEC, including the Risk Factors set forth therein,

completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law we assume no

obligation to update these forward-looking statements publicly, or to update the reasons why actual results could differ materially from those anticipated in the forwardlooking

statements, even if new information becomes available in the future.

Any future offering, feature, or related specification that may be referenced in this presentation is for information purposes only and is not a commitment to deliver any

offering, technology or enhancement. We reserve the right to modify future product and service plans at any time.

This presentation includes certain non-GAAP financial measures as defined by the SEC rules. As required by Regulation G, we have provided a reconciliation of those

measures to the most directly comparable GAAP measures, which is available in the appendix.

Page 2

©2021 FireEye

Q4’20 Business and Financial Highlights

• Record revenue, annualized recurring revenue, non-GAAP operating

margin, cash flow from operations and free cash flow

• Continuing shift to strategic growth areas of business

• Platform, cloud subscription and managed services up 20% YoY;

53% of total ARR

• 11 th consecutive quarter of record Services revenue

Network Security with Smartvision

First Place in

Network Detection Challenge

• Launched Mandiant Advantage platform with Threat Intelligence

• Closed first Managed Validation transactions

• Acquired Respond Software, a leader in AI-driven XDR

• Closed $400M Blackstone and ClearSky investment

Mandiant Security Validation

Winner in

Risk Assessment & Management Category

Page 3

©2021 FireEye

Business Transformation Fuels Financial Results

1

Growing Mix of

Strategic Solutions

2

Expanding

ARR

3

Increasing Op Income &

Cash Flows

Professional

services

Platform,

cloud sub, and

managed svcs

Product and

related

subscription

and support

ANNUAL REVENUE

with 3-year CAGR

$780

+17%

+22%

-4%

$941

2017 2020

47%

2020

$638M

ARR

ANNUALIZED RECURRING

REVENUE

53%

Cloud Platform & MS

Product-related Subs & Support

8%

Year-over-Year

Growth

20%

Cloud, Platform

& MS YoY Growth

-3%

Product-related

Subs & Support

YoY Growth

$ Millions

($2)

NON-GAAP

OPERATING

INCOME 1

$23

$12

$78

$ Millions

CASH FLOW

FROM

OPERATIONS

$17

$68

$95

2017 2018 2019 2020

($59)

2017 2018 2019 2020

1. Non-GAAP, reconciliations to the nearest GAAP financial metric available in the Appendix.

Page 4

©2021 FireEye

Q4’20 Financial Results

Q4’20 Guidance

as of 10/27/20

Q4’20 Q4’19

Y/Y

Change

Revenue $237M - $241M $248M $235M +5%

Annualized recurring revenue 1 n/a $638M $592M +8%

Non-GAAP gross margin 2,3 70% - 71% 72% 73% -1 pt

Non-GAAP operating margin 2,3 10% - 11% 12% 7% +5 pts

Non-GAAP net income (loss) per share attributable

to common stockholders, diluted 2 $0.09 - $0.11 $0.12 $0.07 +$0.05

Cash flow provided (used) by operating activities n/a $71M $40M +$31M

Capital expenditures ~ $6M $4M $7M $(3)M

1. Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period.


3. As a % of revenue.

Page 5

©2021 FireEye

2020 Financial Results

2020 Guidance

as of 10/27/20

2020 2019

Y/Y

Change

Revenue $930M - $934M $941M $889M +6%

Annualized recurring revenue 1 n/a $638M $592M +8%

Non-GAAP gross margin 2,3 70.5% - 71.5% 71% 73% -2 pts

Non-GAAP operating margin 2,3 7.5% - 8.0% 8% 1% +7 pts


to common stockholders, diluted 2 $0.28 - $0.30 $0.31 $0.05 +$0.26

Cash flow provided (used) by operating activities n/a $95M $68M +$27M

Capital expenditures $27 - $29M $26M $46M $(20)M

1. Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period.



Page 6

©2021 FireEye

Trended Quarterly Billings 1 and Revenue Breakdown

$350

$300

$250

$265

$218

$274

$235

Q4’20 Billings +12% Y/Y

Q4’20 Revenue +5% Y/Y

$308

$248

$ in millions

$200

$150

$100

$50

$0

Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

Revenue - Product and related subscription and support

Revenue - Professional services

Revenue - Platform, cloud sub, and managed svcs

Billings

1. Billings are a non-GAAP metric. See Appendix for reconciliation to nearest GAAP financial metric.

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©2021 FireEye

Q4’20 Revenue by Category

Q4'20 Revenue Mix By Category

Professional

services

23%

Platform, cloud

sub & managed

svcs

35%

$247.5M

Product &

related

subscription &

support

42%

Page 8

©2021 FireEye

2020 Revenue by Category

2020 Revenue Mix By Category

Professional

services

23%

Platform, cloud sub

& managed svcs

32%

$940.6M

Product & related

subscription &

support

45%

Page 9

©2021 FireEye

Q4’20 Revenue by Region

Asia-Pacific

15%

Q4'20 Revenue Mix By Region

Other

7%

$247.5M

EMEA

17%

US

61%

Page 10 ©2021 FireEye

2020 Revenue by Region

Asia-Pacific

15%

2020 Revenue Mix By Region

Other

6%

$940.6M

EMEA

17%

US

62%


Customer Metrics

New Logo Customers Added Per Quarter

Number of > $1M Transactions Per Quarter

400

350

300

250

200

150

100

50

0

354

345

318

261

276

279

258

237

223

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

70

60

50

40

30

20

10

0

64

60

45

45

45

37

39

33

23

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20


Annualized Recurring Revenue (ARR) 1,2

$700

$600

$500

$400

$300

$200

$100

$554

Annualized Recurring Revenue (ARR)

$ in millions

$592

$638

$213 $284 $340

$341 $308 $298

Q4'18 Q4'19 Q4'20

Platform, cloud sub & managed services (Y/Y %) 19% 33% 20%

% of total 39% 48% 53%

Product & related subscription & support (Y/Y %) 3% -10% -3%

% of total 61% 52% 47%

Total Annualized Recurring Revenue (Y/Y %) 9% 7% 8%

$0

Q4'18 Q4'19 Q4'20

Product & related subscription & support

Platform, cloud sub & managed services

1. FireEye adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), effective January 1, 2018 using the full retrospective method.

2. Annualized recurring revenue (ARR) is defined as a yearly value of subscription contracts active on the last day of the quarter based on their daily revenue rate. Appliance and services revenue contracts are not included in ARR.


Trended ARR 1 by Category

ARR - Product and related subscription and support

ARR - Platform, cloud sub, and managed svcs

$350

$350

$300

$300

$250

$200

$150

$100

$50

$0

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

$ in milions

Mar-20

Jun-20

Sep-20

Dec-20

$ in milions

$250

$200

$150

$100

$50

$0

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

1. Annualized recurring revenue (ARR) is defined as a yearly value of subscription contracts active on the last day of the quarter based on their daily revenue rate. Appliance and services revenue contracts are not included in ARR.


Deferred Revenue Detail 1

$1,000

$800

$600

$400

$200

$0

1. FireEye adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), effective

January 1, 2018 using the full retrospective method.


DEFERRED REVENUE BY CATEGORY

$ in millions

7% 10% 12%

28% 31%

35%

65% 59% 53%

Q4'18 Q4'19 Q4'20

Professional services

Platform, cloud sub, and managed svcs

Product and related subscription and support

$800

$600

$400

$200

$0

$400

$300

$200

$100

$0

Product & Related Subscription & Support

$ in millions

$608 $574

$270 $256

$510

$220

$338 $318 $290

Q4'18 Q4'19 Q4'20

Current Deferred

$261

$106

Non-current Deferred

Platform, Cloud Sub & Managed Svcs

$ in millions

$304

$113

$336

$122

$155 $191 $214

Q4'18 Q4'19 Q4'20

Current Deferred

Non-current Deferred

Deferred Revenue Detail 1

$1,000

$975

Total Deferred Revenue

$ in millions

$920 $893 $894

$956

$800

$371

$347 $330 $327

$343

$600

$400

$200

$0

$604 $573 $563 $567 $613

Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

Current Deferred Non-current Deferred

1. FireEye adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), effective

January 1, 2018 using the full retrospective method.


Non-GAAP Gross Margin, Operating Expense,

and Operating Margin Trends 1

Non-GAAP gross margin

as a % of revenue

Non-GAAP operating expenses

as a % of revenue

Non-GAAP operating margin

as a % of revenue

79%

77%

75%

73%

71%

69%

67%

65%

75.1%

73.0%

71.7%

90%

80%

70%

60%

50%

69.7%

65.9%

59.5%

20%

15%

10%

5%

0%

-5%

-10%

5.4%

7.0%

12.2%

Q4'18

Q1'19

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q4'18

Q1'19

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q4'18

Q1'19

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

1. Non-GAAP metrics. See Appendix for reconciliation to nearest GAAP financial metric.


Cash Flow Reconciliations 1

Q1'20 Q2'20 Q3'20 Q4'20 2020 2019 '20 vs '19

Billings $170.0 $202.9 $239.2 $307.7 $919.8 $926.1 ($6.3)

Cash Collections 2 201.3 223.2 225.2 288.0 937.7 912.5 25.2

Cash expenses and changes to WC 3 225.7 208.5 191.9 216.6 842.8 845.0 (2.2)

Reported CFFO ($24.5) $14.7 $33.3 $71.4 $94.9 $67.5 $27.4

Capital Expenditures 11.7 5.9 4.6 4.1 26.3 45.6 (19.3)

Free Cash Flow ($36.1) $8.8 $28.6 $67.3 $68.6 $21.9 $46.6

1. Billings and Free Cash Flow are non-GAAP metrics. See Appendix for Q3’2020 reconciliations to nearest GAAP financial metrics.

2. Calculated as Billings + Beginning Accounts Receivable - Ending Accounts Receivable.

3. GAAP expenses less adjustments to reconcile net loss to changes in net cash and changes in expense-related working capital per the cash flow statement.


Q1’21 and 2021 Outlook

As of February 2, 2021

Q1’21 Outlook

Q1’21

as of 02/02/21

Q1’20

Y/Y Change

At Midpoint

Revenue $235M - $238M $225M +5%

Non-GAAP gross margin 1,2 70% - 71% 71% -0.5 pts

Non-GAAP operating margin 1,2 6.5% - 7.5% (1)% +8 pts

Net interest income (expense) $(1)M - $(1)M

Provision for non-GAAP income taxes 1 $1M - $2M $1M +$0.5M

Weighted average shares outstanding, diluted 238M 218M 3 +9%


to common stockholders, diluted 1 $0.05 - $0.07 $(0.02) +$0.08

Capital expenditures ~ $6M $12M $(6)M

1. Non-GAAP. Reconciliations are not available for forward looking metrics.


3. As a result of the net loss in Q1’20, basic shares were used in the calculation for non-GAAP net income per share, diluted


Q1’21 Outlook Assumptions

Total revenue

Product and Related Subscriptions and

Support Revenue

Platform, Cloud Subscriptions and

Managed Services revenue

Services revenue


Weighted average shares outstanding,

diluted

Comments

Sequential decline from Q4’20 due to seasonality in up-front revenue

categories

Year-over-year growth consistent with Q4’20

Year-over-year growth consistent with Q4’20

Expect revenue approximately equal to Q4’20 revenue of $57.8 million; Note

there are two fewer billable days in Q1 than in Q4

Implies sequential increase in expenses due to resumption of certain payroll

costs and a full quarter of Respond

Increase reflects full weighting of 4.2 million shares issued for Respond

Software and effect of employee stock programs.


2021 Outlook

2021

as of 02/02/21

2020

Y/Y Change

At Midpoint

Revenue $990M - $1,010M $941M +6%

Non-GAAP gross margin 1,2 70.5% - 71.5% 71% -

Non-GAAP operating margin 1,2 9% - 10% 8% +1.5 pts

Net interest income (expense) $(3)M - $(4)M $(3)M $(0.5)M

Provision for non-GAAP income taxes 1 $4M - $6M $5M -

Weighted average shares outstanding, diluted 240M - 245M 226M +7%


to common stockholders, diluted 1 $0.35 - $0.37 $0.31 +$0.05

Capital expenditures ~ $25M $26M $(1)M




2021 Outlook Assumptions

Full Year 2021

Total revenue

Total billings

Product and related subscriptions and

support revenue

Platform, cloud subscription and

managed services revenue

Comments

Services revenue Growth rate of 15-20%


Operating cash flow margin

Revenue growth rate increases by 1% each quarter from Q1’21 implied

growth rate at the midpoint of the guidance range of 5%

Approximately $1 billion, consistent with historical linearity; consistent

growth rate through the year. Contract length is expected to be ~24 months,

consistent with levels in the past 2 years.

Declines by 10-11% YoY, consistent with our long-term model

Year-over-year growth 20-25%, higher in 2H as deferred revenue balances

increase (consistent with a subscription model)

Gradual improvement through the year with revenue growth. Assumes

resumption of T&E and facilities expenses, although at less than prepandemic

levels

Almost all operating cash flow expected to be generated in the second half of

the year (weighted to Q4), due to historically low DSOs at the end of Q4’20

and seasonality of Q1 billings.


Historical Billings Linearity 1

Billings Linearity, Excluding Deals > $10M

Actual 2 Q1 Q2 Q3 Q4 1H 2H Year

2014 17% 19% 28% 36% 36% 64% 100%

2015 19% 22% 26% 32% 41% 59% 100%

2016 21% 24% 27% 28% 45% 55% 100%

2017 19% 23% 27% 31% 42% 58% 100%

2018 20% 22% 26% 32% 42% 58% 100%

2019 20% 24% 27% 30% 44% 56% 100%

2020 18% 22% 26% 33% 41% 59% 100%

Range 17% - 21% 19% - 24% 26% - 28% 28% - 36% 36% - 45% 55% - 64% 100%

Average ('14 - '20) 18.5% 23.0% 26.5% 32.0% 41.5% 58.5% 100.0%


2. Excludes the impact of $10M+ deals in Q1'16, Q4'17, Q1'18, and Q2'18.


Appendix

Q1’21 Conference Participation

Event Date Location

Goldman Sachs Technology and Internet Conference 2021

JMP Securities Technology Conference

Morgan Stanley Technology, Media and Telecom Conference

Truist Securities Technology, Internet & Services Conference

Wednesday

February 10, 2021

Monday

March 1, 2021

Tuesday

March 2, 2021

Wednesday

March 10, 2021

VIRTUAL

VIRTUAL

VIRTUAL

VIRTUAL


Business Transformation by Recurring, Services, Product 1

Q4 BILLINGS MIX

Q4 REVENUE MIX

100%

80%

15%

20%

10% 8%

25% 26%

100%

80%

20% 16% 13%

18%

21% 23%

60%

60%

40%

65% 65% 66%

40%

62% 63% 64%

20%

20%

0%

Q4'18 Q4'19 Q4'20

0%

Q4'18 Q4'19 Q4'20

Recurring Services Product

Recurring Services Product

1. Billings are a non-GAAP metric. See Appendix for reconciliation to nearest GAAP financial metric.


Q4'20 Billings 1 Mix

PRODUCT & RELATED

Professional

services

26%

Product

24%

BREAKOUT DETAIL 2 Q4'20

As reported $ in millions Y/Y %

Platform,

cloud sub &

managed

services

40%

Product &

related

subscription &

support

34%

Productrelated

subscriptions

& support

76%

Product & related subscription & support $104.9 -7%

Platform, cloud subscription, and managed services $124.0 36%

Professional services $78.7 12%

Total billings $307.7 12%

1. Billings, including breakouts, are non-GAAP. Reconciliation to nearest GAAP financial metric is included in the Appendix.

2. Definition and product family mapping in the Appendix.


Weighted Average Contract Length

35

ACL FOR PLATFORM, CLOUD SUB & MANAGED SVCS

ACL (IN MONTHS)

35

30

25

20

ACL FOR RECURRING SUBSCRIPTIONS AND SUPPORT BILLINGS

26

27

26

24

24

25

24

24

25

ACL (IN MONTHS)

30

25

20

15

35

27

24 24

25 24 24

23

26 26

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

ACL FOR SUBSCRIPTION & SUPPORT BILLINGS WITHIN PRODUCT &

RELATED

15

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

ACL (IN MONTHS)

30

25

20

25

24

29

24 24

26 26 26

24


15

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

Billings and Free Cash Flow Reconciliation

FireEye, Inc.

BILLINGS RECONCILIATION

(Unaudited, in thousands)

Three Months Ended

December 31,

Year Ended

December 31,

2020 2019 2020 2019

Revenue $ 247,502 $ 235,086 $ 940,584 $ 889,152

Add: deferred revenue, end of period 956,457 974,567 956,457 974,567

Less: deferred revenue, beginning of period (893,615) (935,407) (974,567) (934,828)

Less: deferred revenue assumed through acquisitions (2.664) — (2.664) (2,750)

Billings (non-GAAP) $ 307,680 $ 274,246 $ 919,810 $ 926,141

FireEye, Inc.

FREE CASH FLOW RECONCILIATION


Three Months Ended December 31, Year Ended December 31,

2020 2019 2020 2019

Net cash provided by operating activities

$ 71,394 $ 39,515 $ 94,895 $ 67,537

Less: purchase of property and equipment and demonstration units

(4,127) (6,990) (26,326) (45,605)

Free cash flow (non-GAAP) $ 67,267 $ 32,525 $ 68,569 $ 21,932


Annualized Recurring Revenue & Revenue Breakout

FireEye, Inc.

ANNUALIZED RECURRING REVENUE BREAKOUT


As of December 31,

2020 2019

Product and related subscription and support 297,530 307,718

Platform, cloud subscription and managed services 340,080 284,205

Total annualized recurring revenue $ 637,610 $ 591,923

FireEye, Inc.

REVENUE BREAKOUT



2020 2019 2020 2019

Product and related subscription and support revenue $ 104,589 $ 114,050 $ 422,812 $ 467,823

Platform, cloud subscription and managed services

revenue 85,132 70,958 302,133 241,013

Product, subscription and support revenue 189,721 185,008 724,945 708,836

Professional services revenue 57,781 50,078 215,639 180,316

Total revenue $ 247,503 $ 235,086 $ 940,584 $ 889,152


Billings and Revenue Breakout Categories

Supplemental Breakout Category

Product Offering

606 Revenue

Recognition

Management & Forensic Appliances (CMS, PX), Tech fees

Up front

Product and

related

subscription

and support

(on premise)

Virtual & Physical Detection/Protection Appliances (NX, EX, FX, AX, HX)

Support & Maintenance

Dynamic threat intelligence (DTI) cloud; URL/Attachment database

(Email Security-Server Edition only), Network, Email, Endpoint

subscription (includes Cloud MVX)

Ratable

(4 years)

Ratable over

contract term

SINGLE

PERFORMANCE

OBLIGATION

Platform, cloud subscription

and managed services

Email Threat Prevention (ETP), Managed Defense, Threat Intelligence,

Platform (Helix, Verodin), Network Security in AWS, FireEye Detection

on Demand, Cloud Secure Web Gateway (iBoss integration), Mandiant

Defense (Respond XDR)

Term licenses

up front;

Subscriptions

ratable over

contract term

Professional services Mandiant Professional Services, Expertise on Demand As Delivered

SOLUTIONS


Definitions

Metric

Average contract length (ACL)

Definition

Reported in months. Calculated as the weighted average contract length of subscription and support

contracts billed during the period.

Constant Average Contract Length (ACL)

Annual Contract Value (ACV)

Annualized recurring revenue (ARR)

Normalizes subscription/recurring billings for changes in the average contract length for comparison

purposes. Calculation:

(current period subscription billings / current period ACL) x prior period ACL

Another way to normalize subscription/recurring billings for changes in contract length to compare to

prior periods. Equals:

(current period subscription billings / current period ACL) x 12

Defined as the annualized contract value of recurring contracts outstanding on the last day of the

quarter, including term licenses.

Billings

Total sales billed in the period. Mathematically equivalent to revenue plus the change in deferred

revenue.

Free Cash Flow

Equals:

Cash flow from operations less capital expenditures (purchases of property, plant and equipment)


Non-GAAP Reconciliations

Non-GAAP gross margin. FireEye defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software

development costs, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue.

Non-GAAP operating income (loss) and non-GAAP operating margin. FireEye defines non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, amortization of

stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, and other special or non-recurring items.

FireEye defines non-GAAP operating margin as non-GAAP operating income (loss) divided by total revenue.

Non-GAAP net income (loss) attributable to common stockholders. FireEye defines non-GAAP net income (loss) attributable to common stockholders as net income (loss) excluding stock-based compensation

expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, non-cash interest

expense related to the company’s convertible senior notes, discrete tax provision (benefits), dividends on Series A convertible preferred stock, and other special or non-recurring items.

Non-GAAP net income (loss) per share attributable to common stockholders. FireEye defines non-GAAP net income attributable to common stockholders per diluted share as non-GAAP net income attributable to

common stockholders divided by weighted average diluted shares outstanding. Weighted average diluted shares used to calculate non-GAAP net income per diluted share attributable to common stockholders

excludes shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive. FireEye defines non-GAAP net loss per share attributable to

common stockholders as non-GAAP net loss attributable to common stockholders divided by weighted average basic shares outstanding, which excludes stock options, restricted stock units, performance stock

units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive.

Non-GAAP net income attributable to common stockholders and non-GAAP net income per diluted share attributable to common stockholders in the fourth quarter and full year of 2020 excluded stock-based

compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, noncash

interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, discrete tax provision (benefit) , and dividends on Series A convertible preferred stock. Weighted

average diluted shares outstanding used to calculate non-GAAP net income per diluted share attributable to common stockholders excluded shares issuable upon conversion of the company's convertible senior

notes and Series A convertible preferred shares that were anti-dilutive.

Non-GAAP net income attributable to common stockholders and non-GAAP net income attributable to common stockholders per share in the fourth quarter and full year of 2019 excluded stock-based compensation

expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest

expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, and discrete tax provision (benefit). Weighted average basic shares outstanding used to calculate non-GAAP net

income per share excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes.


Non-GAAP Reconciliations (1 of 4)


2020 2019 2020 2019

GAAP operating loss $ (26,479) $ (35,086) $ (155,172) $ (210,034)

Stock-based compensation expense (1) 42,514 36,355 156,107 153,517

Amortization of stock-based compensation capitalized

in software development costs (3) 1,065 968 4,128 3,524

Amortization of intangible assets (2) 11,669 14,531 45,882 53,943

Acquisition related expenses (4) 425 — 425 597

Restructuring charges (5) 1,487 (15) 26,507 10,265

Non-GAAP operating income (loss) $ 30,681 $ 16,753 $ 77,877 $ 11,812

GAAP gross margin 65 % 66 % 64 % 65 %

Stock-based compensation expense (1) 4 % 3 % 4 % 4 %

Amortization of intangible assets (2) 3 % 4 % 3 % 4 %

Non-GAAP gross margin 72 % 73 % 71 % 73 %

GAAP operating margin (11)% (15)% (16)% (24)%

Stock-based compensation expense (1) 17 % 16 % 16 % 17 %

Amortization of stock-based compensation capitalized

in software development costs (3) — % — % — % — %

Amortization of intangible assets (2) 5 % 6 % 5 % 6 %

Restructuring charges (5) 1 % — % 3 % 2 %

Non-GAAP operating margin 12 % 7 % 8 % 1 %




2020 2019 2020 2019

GAAP net loss attributable to common stockholders $ (39,653) $ (49,216) $ (208,354) $ (257,409)

Stock-based compensation expense (1) 42,514 36,355 156,107 153,517

Amortization of stock-based compensation

capitalized in software development costs (3) 1,065 968 4,128 3,524

Amortization of intangible assets (2) 11,669 14,531 45,882 53,943

Acquisition related expenses (4) 425 — 425 597

Restructuring charges (5) 1,487 (15) 26,507 10,265

Non-cash interest expense related to convertible

senior notes (6) 11,248 12,215 46,728 47,983

Adjustment to provision (benefit) from income taxes

(7) (1,545) 43 (1,861) (861)

Dividend on series A convertible preferred stock (8) 1,050 — 1,050 —

Non-GAAP net income attributable to common stock

holders

$ 28,260 $ 14,881 $ 70,612 $ 11,559

GAAP net loss per common share attributable to

common stockholders, basic and diluted $ (0.17) $ (0.23) $ (0.93) $ (1.24)

Stock-based compensation expense (1) 0.19 0.17 0.70 0.74

Amortization of stock-based compensation

capitalized in software development costs (3) — — 0.02 0.02

Amortization of intangible assets (2) 0.05 0.07 0.21 0.26

Acquisition related expenses (4) — — — —

Restructuring charges (5) 0.01 — 0.12 0.05

Non-cash interest expense related to convertible

senior notes (6) 0.05 0.06 0.21 0.23

Adjustment to provision (benefit) from income taxes

(7) (0.01) — (0.01) —

Dividend on series A convertible preferred stock (8) — — — —




2020 2019 2020 2019

Non-GAAP net income (loss) per common share

attributable to common stockholders, basic

$ 0.12 $ 0.07 $ 0.32 $ 0.06

Non-GAAP net income (loss) per common share

attributable to common stockholders diluted

$ 0.12 $ 0.07 $ 0.31 $ 0.05

Weighted average shares used in per share calculation

for Non GAAP basic

229,203 214,565 223,308 207,234

Weighted average shares used in per share calculation

for Non-GAAP, diluted 233,287 220,421 226,549 213,043

(1) Includes stock-based compensation expense as

follows:

Cost of product, subscription and support revenue $ 4,356 $ 3,404 $ 16,393 $ 14,905

Cost of professional services revenue 5,329 3,333 18,695 13,972

Research and development expense 12,631 10,445 45,867 45,476

Sales and marketing expense 13,460 11,179 49,662 49,198

General and administrative expense 6,738 7,994 25,176 29,966

Restructuring charges — — 314 —

Total stock-based compensation expense $ 42,514 $ 36,355 $ 156,107 $ 153,517

(2) Includes amortization of intangible assets as follows:

Cost of product, subscription and support revenue $ 7,228 $ 10,332 $ 28,739 $ 37,643

Research and development expense 22 109 349 445

Sales and marketing expense 4,419 4,090 16,794 15,855

Total amortization of intangible assets $ 11,669 $ 14,531 $ 45,882 $ 53,943




2020 2019 2020 2019

(3) Includes amortization of stock-based compensation

capitalized in software development costs as follows:

Cost of product, subscription and support revenue $ 48 $ 190 $ 200 $ 782

Cost of professional services revenue 24 95 100 391

Research and development expense 993 683 3,828 2,350

Total amortization of stock-based compensation

capitalized in software development costs

$ 1,065 $ 968 $ 4,128 $ 3,523

(4) Includes acquisition related expenses as follows:

General and administrative expense $ 425 $ — $ 425 $ 597

(5) Includes restructuring charges as follows:

Restructuring charges $ 1,487 $ (15) $ 26,507 $ 10,265

(6) Includes non-cash interest expense related to

convertible senior notes as follows:

Other income, net $ 11,248 $ 12,215 $ 46,728 $ 47,983

(7) Includes income tax effect of non-GAAP

adjustments as follows:

Provision (benefit) from income taxes $ (1,545) $ 43 $ (1,861) $ (861)

(8) Dividend on series A convertible preferred stock $ 1,050 $ — $ 1,050 $ —


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