ZeroFox Holdings, Inc. (Nasdaq: ZFOX), an enterprise
software-as-a-service leader in external cybersecurity, today
announced financial results for the third quarter ended October 31,
2023.
“Q3 was another positive quarter for ZeroFox
where we experienced strong top line growth while also generating
positive free cash flow for the second consecutive quarter” said
James C. Foster, Chairman and CEO of ZeroFox. “Our results validate
that customers are increasingly seeking a converged, external
cybersecurity platform to address complex, evolving cyber threats
outside the perimeter. We believe we are the only AI-enabled
platform that successfully combines Digital Risk Protection, Threat
Intelligence, External Attack Surface Management, and Disruption to
protect our growing customer base at scale. The breadth of our
platform combined with our strength in on-demand response services
positions us well for continued growth in the external
cybersecurity market.”
Third Quarter Fiscal Year 2024 Financial
Highlights
- Revenue: Total revenue was $65.0 million.
- Annual Recurring Revenue ("ARR") was $185.9
million.
- Gross margin: GAAP gross margin was 30% and
non-GAAP gross margin was 38%. GAAP subscription gross margin was
52% and non-GAAP subscription gross margin was 73%.
- Loss from Operations: GAAP loss from
operations was $86.9 million. Non-GAAP loss from operations was
$2.5 million.
- Cash and Cash Equivalents were $29.9 million
on October 31, 2023, an increase of approximately $900,000 from
July 31, 2023.
Recent Highlights
- Ended the quarter with 1,330 subscription customers, including
182 subscription customers with ARR greater than $100,000 – an
increase of 27% year-over-year.
- Announced the renewal and expansion of an 8-figure contract
with a strategic U.S. federal agency focused on cybersecurity.
Through this contract and program, the ZeroFox platform is used by
thousands of users across more than 200 departments and agencies
across federal, state, and local governments to provide cyber
threat intelligence, attack surface intelligence, and advanced
security operations support.
- Launched multiple anti-phishing capabilities providing
customers continuous protection against evolving domain-based
threats. Key capabilities include anti-cloaking capabilities, SSL
monitoring, enhanced subdomain coverage, and weblog
monitoring.
- Announced new enhancements to physical security intelligence
services including interactive mapping capabilities that allow
security teams to better visualize and detect physical threats in
close proximity to their critical assets and people.
- Released the annual 2024 Threat Forecast Report providing an
in-depth assessment of anticipated external threat trends and
strategic recommendations to counter threats and enhance
cybersecurity resilience. ZeroFox intelligence experts predict
increasing threats from ransomware and digital extortion incidents,
initial access brokers, social engineering, artificial
intelligence, and election-related threats among others.
- Awarded the 2023 CyberSecurity Breakthrough Award for “Overall
Incident Response Solution of the Year.”
- Recognized as a technology leader in the 2023 Quadrant SPARK
Matrix™ by Quadrant Knowledge Solutions.
Financial Outlook
For the fourth quarter of fiscal year 2024, the
Company currently expects:
- Revenue of $56.0 million to $58.0 million.
- Non-GAAP loss from operations of $5.8 million to $4.8
million.
For the full fiscal year 2024, the Company
currently expects:
- Revenue of $228.7 million to $230.7 million.
- Non-GAAP loss from operations of $21.4 million to $20.4
million.
ZeroFox has not reconciled its expectations as to non-GAAP loss
from operations to their most directly comparable GAAP measures
because certain items are out of ZeroFox’s control or cannot be
reasonably predicted. Accordingly, a reconciliation for
forward-looking non-GAAP loss from operations is not available
without unreasonable effort.
Additional information regarding the non-GAAP financial measures
and key business measures discussed in this release, including an
explanation of these measures and how each is calculated, is
included below under the heading “Use of Non-GAAP Financial
Measures and Key Business Measures.” A reconciliation of non-GAAP
to GAAP financial measures has also been provided in the financial
tables included below and is available on our Investor Relations
website.
About ZeroFox
ZeroFox (Nasdaq: ZFOX), an enterprise
software-as-a-service leader in external cybersecurity, has
redefined security outside the corporate perimeter on the internet,
where businesses operate, and threat actors thrive. The ZeroFox
platform combines advanced AI analytics, digital risk and privacy
protection, full-spectrum threat intelligence, and a robust
portfolio of breach, incident and takedown response capabilities to
expose and disrupt phishing and fraud campaigns, botnet exposures,
credential theft, impersonations, data breaches, and physical
threats that target your brands, domains, people, and assets. Join
thousands of customers, including some of the largest public sector
organizations as well as finance, media, technology and retail
companies to stay ahead of adversaries and address the entire
lifecycle of external cyber risks. ZeroFox and the ZeroFox logo are
trademarks or registered trademarks of ZeroFox, Inc. and/or its
affiliates in the U.S. and other countries. Visit www.zerofox.com
for more information.
Conference Call and Webcast
Information
ZeroFox will host a conference call today,
December 5, 2023, at 8:00 a.m. to discuss its financial results. To
access this call via webcast, please use this link: ZeroFox F3Q24
Earnings Call. The live webcast and a webcast replay of the
conference call can be accessed from the investor relations page of
ZeroFox’s website at https://ir.zerofox.com.
Forward-Looking Statements
Certain statements in this press release are
“forward-looking statements” under the Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical fact, that address activities, events or
developments that we expect, believe or anticipate will or may
occur in the future, including statements related to our
anticipated financial results for our fourth quarter of fiscal year
2024 and fiscal year 2024, and prospects for growth opportunities
in external cybersecurity and our progress to achieving
profitability are forward-looking statements. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those anticipated by these
forward-looking statements. The inclusion of any statement in this
press release does not constitute an admission by ZeroFox or any
other person that the events or circumstances described in such
statement are material. These risks and uncertainties include, but
are not limited to, the following: our ability to recognize the
anticipated benefits of the business combination with IDX and of
the LookingGlass acquisition; defects, errors, or vulnerabilities
in the ZeroFox platform, the failure of the ZeroFox platform to
block malware or prevent a security breach, misuse of the ZeroFox
platform, or risks of product liability claims that would harm our
reputation and adversely impact our business, operating results,
and financial condition; if our enterprise platform offerings do
not interoperate with our customers’ network and security
infrastructure, or with third-party products, websites or services,
our results of operations may be harmed; we may not timely and
cost-effectively scale and adapt our existing technology to meet
our customers’ performance and other requirements; our ability to
introduce new products and solutions and features is dependent on
adequate research and development resources and our ability to
successfully complete acquisitions; our success depends, in part,
on the integrity and scalability of our systems and infrastructure;
we rely on third-party cloud providers to host and operate our
platform, and any disruption of or interference with our use of
these offerings may negatively affect our ability to maintain the
performance and reliability of our platform which could cause our
business to suffer; we rely on software and services from other
parties; we have a history of losses, and we may not be able to
achieve or sustain profitability in the future; if organizations do
not adopt cloud, and/or SaaS-delivered external cybersecurity
solutions that may be based on new and untested security concepts,
our ability to grow our business and our results of operations may
be adversely affected; we have experienced rapid growth in recent
periods, and if we do not manage our future growth, our business
and results of operations will be adversely affected; we face
intense competition and could lose market share to our competitors,
which could adversely affect our business, financial condition, and
results of operations; competitive pricing pressure may reduce
revenue, gross profits, and adversely affect our financial results;
adverse general and industry-specific economic and market
conditions and reductions in customer spending, in either the
private or public sector, including as a result of inflation and
geopolitical uncertainty such as the ongoing conflict between
Russia and Ukraine, and the Israel Hamas War, may reduce demand for
our platform or products and solutions, which could harm our
business, financial condition and results of operations; the
COVID-19 pandemic could adversely affect our business, operating
results, and financial condition; if we fail to adapt to rapid
technological change, evolving industry standards and changing
customer needs, requirements or preferences, our ability to remain
competitive could be impaired; one U.S. government customer
accounts for a substantial portion of our revenues; and we rely
heavily on the services of our senior management team.
Additional information concerning these, and
other risks, is described under the “Risk Factors” section of our
final prospectus filed with the Securities and Exchange Commission
(the “SEC”) pursuant to Rule 424(b) under the Securities Act of
1933 on September 26, 2023, in connection with our Post-effective
Amendment No. 1 to Form S-1 on Form S-3 Registration Statement, and
in other filings filed with the SEC. We expressly disclaim any
obligation to update any of these forward-looking statements,
except to the extent required by applicable law.
Use of Non-GAAP Financial Measures and
Key Business Measures
In addition to our results determined in
accordance with GAAP, we believe the following non-GAAP measures
and key business measures are useful in evaluating our operating
performance. We use the following non-GAAP financial information
and key business measures to evaluate our ongoing operations and
for internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, may be
helpful to investors because it provides consistency and
comparability with past financial performance by excluding certain
items that may not be indicative of our business, results of
operations or outlook. However, non-GAAP financial information is
presented for supplemental informational purposes only, has
limitations as an analytical tool, and should not be considered in
isolation or as a substitute for financial information presented in
accordance with GAAP.
Other companies, including companies in our
industry, may calculate similarly titled non-GAAP measures and key
business measures differently or may use other measures to evaluate
their performance, all of which could reduce the usefulness of our
non-GAAP financial measures and key business measures as tools for
comparison.
A reconciliation is provided below for each
non-GAAP financial measure to the most directly comparable
financial measure stated in accordance with GAAP. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measures and not rely on any
single financial measure to evaluate our business.
Non-GAAP Gross Profit and Non-GAAP Gross
Margin
We define non-GAAP gross profit and non-GAAP
gross margin as GAAP gross profit and GAAP gross margin,
respectively, excluding stock-based compensation expense and
amortization of acquired intangible assets.
Non-GAAP Subscription Gross Profit and
Non-GAAP Subscription Gross Margin
We define non-GAAP subscription gross profit and
non-GAAP subscription gross margin as GAAP subscription gross
profit and GAAP subscription gross margin, respectively, excluding
stock-based compensation expense and amortization of acquired
intangible assets.
Non-GAAP Services Gross Profit and
Non-GAAP Services Gross Margin
We define non-GAAP services gross profit and
non-GAAP services gross margin as GAAP services gross profit and
GAAP services gross margin, respectively, excluding stock-based
compensation expense and amortization of acquired intangible
assets.
Non-GAAP Research and Development
Expense, Non-GAAP Sales and Marketing Expense and Non-GAAP General
and Administrative Expense
We define these non-GAAP measures as their
respective GAAP measures, excluding stock-based compensation
expense, amortization of acquired intangible assets, costs incurred
for the August 2022 business combination, and purchase accounting
adjustments from the August 2022 business combination.
Non-GAAP Loss from
Operations
We define non-GAAP loss from operations as GAAP
loss from operations, excluding stock-based compensation expense,
amortization of acquired intangible assets, costs incurred for the
August 2022 business combination, purchase accounting adjustments
from the August 2022 business combination, and goodwill impairment
charge.
Annual Recurring Revenue
(ARR)
We define ARR as the annualized contract value
of all recurring revenue related to contracts in place as of the
reporting date assuming any contract is renewed on its existing
terms. We continue to include ARR from customers whose term has
expired within 90 days of the applicable measurement date for which
we are actively negotiating renewal.
Subscription Customers
We define a subscription customer as any entity
that has entered into a distinct subscription agreement for access
to the ZeroFox platform or services for which the term has not
ended or with which we are continuing to provide service and
negotiating a renewal contract that expired within 90 days of the
applicable measurement date. We do not consider our channel
partners as customers. We treat managed service security providers,
who may purchase our offerings on behalf of multiple companies, as
a single subscription customer.
ZEROFOX HOLDINGS, INC. Consolidated Statement of Operations
(Unaudited) |
|
(in thousands, except share and per share
data) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Subscription |
|
$ |
23,748 |
|
|
$ |
15,174 |
|
|
$ |
65,191 |
|
Services |
|
|
41,275 |
|
|
|
27,815 |
|
|
|
107,601 |
|
Total revenue |
|
|
65,023 |
|
|
|
42,989 |
|
|
|
172,792 |
|
Cost of revenue (1)(2) |
|
|
|
|
|
|
|
|
|
Subscription |
|
|
11,388 |
|
|
|
8,921 |
|
|
|
32,703 |
|
Services |
|
|
33,806 |
|
|
|
21,359 |
|
|
|
86,594 |
|
Total cost of revenue |
|
|
45,194 |
|
|
|
30,280 |
|
|
|
119,297 |
|
Gross profit |
|
|
19,829 |
|
|
|
12,709 |
|
|
|
53,495 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (1)(2) |
|
|
|
|
|
|
|
|
|
Research and development |
|
|
8,162 |
|
|
|
5,637 |
|
|
|
23,284 |
|
Sales and marketing |
|
|
18,234 |
|
|
|
16,747 |
|
|
|
53,724 |
|
General and administrative |
|
|
8,199 |
|
|
|
8,902 |
|
|
|
28,732 |
|
Goodwill impairment |
|
|
72,148 |
|
|
|
698,650 |
|
|
|
72,148 |
|
Total operating expenses |
|
|
106,743 |
|
|
|
729,936 |
|
|
|
177,888 |
|
Loss from operations |
|
|
(86,914 |
) |
|
|
(717,227 |
) |
|
|
(124,393 |
) |
Other (expense) income |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(3,917 |
) |
|
|
(4,428 |
) |
|
|
(11,217 |
) |
Change in fair value of purchase consideration liability |
|
|
2,439 |
|
|
— |
|
|
|
3,645 |
|
Change in fair value of warrant liability |
|
|
372 |
|
|
|
5,837 |
|
|
|
(512 |
) |
Change in fair value of sponsor earnout shares |
|
|
246 |
|
|
|
9,211 |
|
|
|
2,186 |
|
Total other expense |
|
|
(860 |
) |
|
|
10,620 |
|
|
|
(5,898 |
) |
Loss before income taxes |
|
|
(87,774 |
) |
|
|
(706,607 |
) |
|
|
(130,291 |
) |
Benefit from income taxes |
|
|
(1,082 |
) |
|
|
(2,449 |
) |
|
|
(8,784 |
) |
Net loss after tax |
|
$ |
(86,692 |
) |
|
$ |
(704,158 |
) |
|
$ |
(121,507 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders, basic and diluted |
|
$ |
(0.68 |
) |
|
$ |
(6.03 |
) |
|
$ |
(0.99 |
) |
Weighted-average shares used
in computation of net loss per share attributable to common
stockholders, basic and diluted |
|
|
126,586,116 |
|
|
|
116,853,297 |
|
|
|
122,662,666 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
(424 |
) |
|
|
(18 |
) |
|
|
(291 |
) |
Total other comprehensive
loss |
|
|
(424 |
) |
|
|
(18 |
) |
|
|
(291 |
) |
Total comprehensive loss |
|
$ |
(87,116 |
) |
|
$ |
(704,176 |
) |
|
$ |
(121,798 |
) |
|
|
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Consolidated Statement of Operations
(Unaudited) |
|
1 Includes stock-based compensation as
follows: |
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Cost of revenue - subscription |
|
$ |
59 |
|
|
$ |
8 |
|
|
$ |
138 |
|
Cost of
revenue - services |
|
|
37 |
|
|
|
1 |
|
|
|
79 |
|
Research
and development |
|
|
487 |
|
|
|
57 |
|
|
|
1,114 |
|
Sales
and marketing |
|
|
471 |
|
|
|
84 |
|
|
|
1,156 |
|
General
and administrative |
|
|
938 |
|
|
|
155 |
|
|
|
2,918 |
|
Total
stock-based compensation expense |
|
$ |
1,992 |
|
|
$ |
305 |
|
|
$ |
5,405 |
|
|
|
|
|
|
|
|
|
|
|
2 Includes amortization of acquired intangible
assets as follows: |
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Cost of revenue - subscription |
|
$ |
4,933 |
|
|
$ |
4,635 |
|
|
$ |
14,670 |
|
Sales
and marketing |
|
|
4,475 |
|
|
|
5,850 |
|
|
|
16,941 |
|
General
and administrative |
|
|
908 |
|
|
|
854 |
|
|
|
2,700 |
|
Total
amortization of acquired intangible assets |
|
$ |
10,316 |
|
|
$ |
11,339 |
|
|
$ |
34,311 |
|
|
|
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Consolidated Balance Sheet (Unaudited) |
|
(in thousands, except share data) |
|
October 31, 2023 |
|
|
January 31, 2023 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
29,864 |
|
|
$ |
47,549 |
|
Accounts receivable, net of allowance for doubtful accounts |
|
|
38,319 |
|
|
|
29,609 |
|
Deferred contract acquisition costs, current |
|
|
4,757 |
|
|
|
5,456 |
|
Prepaid expenses and other assets |
|
|
12,243 |
|
|
|
5,300 |
|
Total current assets |
|
|
85,183 |
|
|
|
87,914 |
|
|
|
|
|
|
|
|
Property and equipment, net of
accumulated depreciation |
|
|
1,923 |
|
|
|
671 |
|
Capitalized software, net of
accumulated amortization |
|
|
291 |
|
|
|
253 |
|
Deferred contract acquisition
costs, net of current portion |
|
|
3,759 |
|
|
|
7,751 |
|
Acquired intangible assets,
net of accumulated amortization |
|
|
246,033 |
|
|
|
262,444 |
|
Goodwill |
|
|
347,677 |
|
|
|
406,608 |
|
Operating lease right-of-use
assets |
|
|
4,031 |
|
|
|
720 |
|
Other assets |
|
|
1,454 |
|
|
|
550 |
|
Total assets |
|
$ |
690,351 |
|
|
$ |
766,911 |
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
858 |
|
|
$ |
3,099 |
|
Accrued compensation, accrued expenses, and other current
liabilities |
|
|
15,010 |
|
|
|
18,751 |
|
Current portion of long-term debt |
|
|
938 |
|
|
|
15,938 |
|
Deferred revenue, current |
|
|
77,643 |
|
|
|
47,977 |
|
Operating lease liabilities, current |
|
|
1,555 |
|
|
|
406 |
|
Total current liabilities |
|
|
96,004 |
|
|
|
86,171 |
|
|
|
|
|
|
|
|
Deferred revenue, net of
current portion |
|
|
9,960 |
|
|
|
5,981 |
|
Long-term debt, net of
deferred financing costs |
|
|
193,291 |
|
|
|
157,843 |
|
Purchase consideration
liability |
|
|
3,171 |
|
|
— |
|
Operating lease liabilities,
net of current portion |
|
|
2,561 |
|
|
|
427 |
|
Warrants |
|
|
383 |
|
|
|
2,581 |
|
Sponsor earnout shares |
|
|
259 |
|
|
|
2,445 |
|
Deferred tax liability |
|
|
6,978 |
|
|
|
22,592 |
|
Total liabilities |
|
|
312,607 |
|
|
|
278,040 |
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
Common stock, $0.0001 par value; 1,000,000,000 authorized shares;
124,544,300 and 118,190,135 shares issued and outstanding,
respectively |
|
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
|
1,254,308 |
|
|
|
1,243,637 |
|
Accumulated deficit |
|
|
(876,184 |
) |
|
|
(754,677 |
) |
Accumulated other comprehensive loss |
|
|
(392 |
) |
|
|
(101 |
) |
Total stockholders’ equity |
|
|
377,744 |
|
|
|
488,871 |
|
Total liabilities and
stockholders' equity |
|
$ |
690,351 |
|
|
$ |
766,911 |
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Consolidated Statement of Cash
Flows(Unaudited) |
|
|
|
|
(in thousands) |
|
Nine Months Ended October 31, 2023 |
|
|
|
|
|
Cash flows from operating
activities: |
|
|
|
Net loss |
|
$ |
(121,507 |
) |
Adjustments to reconcile net loss to net cash used in
operating activities: |
|
|
|
Goodwill impairment |
|
|
72,148 |
|
Depreciation and amortization |
|
|
980 |
|
Amortization of software development costs |
|
|
88 |
|
Amortization of acquired intangible assets |
|
|
34,311 |
|
Amortization of right-of-use assets |
|
|
1,272 |
|
Amortization of deferred debt issuance costs |
|
|
81 |
|
Stock-based compensation |
|
|
5,405 |
|
Provision for bad debts |
|
|
280 |
|
Gain on disposal of property and equipment |
|
|
(4 |
) |
Change in fair value of warrants |
|
|
512 |
|
Change in fair value of purchase consideration liability |
|
|
(3,645 |
) |
Change in fair value of sponsor earnout shares |
|
|
(2,186 |
) |
Deferred taxes |
|
|
(9,245 |
) |
Noncash interest expense |
|
|
10,540 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
|
(5,757 |
) |
Deferred contract acquisition costs |
|
|
(5,300 |
) |
Prepaid expenses and other assets |
|
|
(5,982 |
) |
Accounts payable, accrued compensation, accrued
expenses, and other current liabilities |
|
|
(8,830 |
) |
Deferred revenue |
|
|
22,795 |
|
Operating lease liabilities |
|
|
(1,505 |
) |
Net cash used in operating activities |
|
|
(15,549 |
) |
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Business acquisition - LookingGlass, net of cash acquired |
|
|
(7,892 |
) |
Purchases of property and equipment |
|
|
(600 |
) |
Capitalized software |
|
|
(126 |
) |
Net cash used in investing activities |
|
|
(8,618 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Exercise of stock options |
|
|
283 |
|
Proceeds from issuance of notes payable, net of issuance costs |
|
|
7,425 |
|
Repayment of debt |
|
|
(703 |
) |
Net cash provided by financing activities |
|
|
7,005 |
|
|
|
|
|
Foreign exchange translation
adjustment |
|
|
(211 |
) |
|
|
|
|
Net change in cash, cash
equivalents, and restricted cash |
|
|
(17,373 |
) |
Cash, cash equivalents, and
restricted cash at beginning of year |
|
|
47,649 |
|
Cash, cash equivalents, and
restricted cash at end of year |
|
$ |
30,276 |
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
Cash paid for interest |
|
$ |
1,453 |
|
Cash paid for income taxes |
|
|
1,866 |
|
|
|
|
|
Non-cash investing and
financing activities: |
|
|
|
Issuance of warrants along with issuance of debt |
|
$ |
126 |
|
Issuance of common stock to partially satisfy purchase
consideration liability |
|
|
2,647 |
|
Accrual of purchase consideration in connection with business
acquisition |
|
|
9,465 |
|
Convertible note issued in connection with business
acquisition |
|
|
3,333 |
|
Operating lease liabilities arising from obtaining right-of-use
assets |
|
|
3,895 |
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Consolidated Statement of Cash Flows
(Continued)(Unaudited) |
|
The following
table provides a reconciliation of cash, cash equivalents, and
restricted cash reported within the Condensed Consolidated Balance
Sheet that sum to the total of the same such amounts shown in the
Condensed Consolidated Statement of Cash Flows. |
|
|
October 31, 2023 |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
29,864 |
|
Restricted cash included in other assets |
|
|
412 |
|
Total cash, cash equivalents, and restricted cash shown in
thecondensed consolidated statements of cash flows |
|
$ |
30,276 |
|
|
ZEROFOX HOLDINGS, INC.Non-GAAP Financial Measures and
Reconciliation to GAAP Results(Unaudited) |
|
Non-GAAP Gross Profit
and Non-GAAP Gross Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Revenue |
|
$ |
65,023 |
|
|
$ |
42,989 |
|
|
$ |
172,792 |
|
Gross
profit |
|
|
19,829 |
|
|
|
12,709 |
|
|
|
53,495 |
|
Add:
Stock-based compensation expense |
|
|
96 |
|
|
|
9 |
|
|
|
217 |
|
Add:
Amortization of acquired intangible assets |
|
|
4,933 |
|
|
|
4,635 |
|
|
|
14,670 |
|
Non-GAAP
gross profit |
|
$ |
24,858 |
|
|
$ |
17,353 |
|
|
$ |
68,382 |
|
Gross
margin |
|
|
30 |
% |
|
|
30 |
% |
|
|
31 |
% |
Non-GAAP
gross margin |
|
|
38 |
% |
|
|
40 |
% |
|
|
40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Subscription Gross Profit and Non-GAAP Subscription Gross
Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Subscription revenue |
|
$ |
23,748 |
|
|
$ |
15,174 |
|
|
$ |
65,191 |
|
Subscription gross profit |
|
|
12,360 |
|
|
|
6,253 |
|
|
|
32,488 |
|
Add:
Stock-based compensation expense |
|
|
59 |
|
|
|
8 |
|
|
|
138 |
|
Add:
Amortization of acquired intangible assets |
|
|
4,933 |
|
|
|
4,635 |
|
|
|
14,670 |
|
Non-GAAP
subscription gross profit |
|
$ |
17,352 |
|
|
$ |
10,896 |
|
|
$ |
47,296 |
|
Subscription gross margin |
|
|
52 |
% |
|
|
41 |
% |
|
|
50 |
% |
Non-GAAP
subscription gross margin |
|
|
73 |
% |
|
|
72 |
% |
|
|
73 |
% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Services Gross Profit and Non-GAAP Services Gross
Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Services
revenue |
|
$ |
41,275 |
|
|
$ |
27,815 |
|
|
$ |
107,601 |
|
Services
gross profit |
|
|
7,469 |
|
|
|
6,456 |
|
|
|
21,007 |
|
Add:
Stock-based compensation expense |
|
|
37 |
|
|
|
1 |
|
|
|
79 |
|
Non-GAAP
services gross profit |
|
$ |
7,506 |
|
|
$ |
6,457 |
|
|
$ |
21,086 |
|
Services
gross margin |
|
|
18 |
% |
|
|
23 |
% |
|
|
20 |
% |
Non-GAAP
services gross margin |
|
|
18 |
% |
|
|
23 |
% |
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
ZEROFOX HOLDINGS, INC.Non-GAAP Financial Measures and
Reconciliation to GAAP Results (Unaudited) |
|
Non-GAAP Research and
Development Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Research and development expense |
|
$ |
8,162 |
|
|
$ |
5,637 |
|
|
$ |
23,284 |
|
Less: Stock-based compensation
expense |
|
|
487 |
|
|
|
57 |
|
|
|
1,114 |
|
Non-GAAP research and development
expense |
|
$ |
7,675 |
|
|
$ |
5,580 |
|
|
$ |
22,170 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Sales and
Marketing Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Sales and marketing expense |
|
$ |
18,234 |
|
|
$ |
16,747 |
|
|
$ |
53,724 |
|
Less: Stock-based compensation
expense |
|
|
471 |
|
|
|
84 |
|
|
|
1,156 |
|
Less: Amortization of acquired
intangible assets |
|
|
4,475 |
|
|
|
5,850 |
|
|
|
16,941 |
|
Less: Purchase accounting
adjustment from the August 2022 business combination |
|
— |
|
|
— |
|
|
|
(3,147 |
) |
Non-GAAP sales and marketing
expense |
|
$ |
13,288 |
|
|
$ |
10,813 |
|
|
$ |
38,774 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP General and
Administrative Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
General and administrative
expense |
|
$ |
8,199 |
|
|
$ |
8,902 |
|
|
$ |
28,732 |
|
Less: Stock-based compensation
expense |
|
|
938 |
|
|
|
155 |
|
|
|
2,918 |
|
Less: Amortization of acquired
intangible assets |
|
|
908 |
|
|
|
854 |
|
|
|
2,700 |
|
Less: Expenses related to the
August 2022 business combination |
|
— |
|
|
|
1,161 |
|
|
— |
|
Non-GAAP general and
administrative expense |
|
$ |
6,353 |
|
|
$ |
6,732 |
|
|
$ |
23,114 |
|
|
Non-GAAP
Loss from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended October 31, 2023 |
|
|
August 4, 2022 to October 31, 2022 |
|
|
Nine Months Ended October 31, 2023 |
|
Loss from operations |
|
$ |
(86,914 |
) |
|
$ |
(717,227 |
) |
|
$ |
(124,393 |
) |
Add: Stock-based compensation
expense |
|
|
1,992 |
|
|
|
305 |
|
|
|
5,405 |
|
Add: Amortization of acquired
intangible assets |
|
|
10,316 |
|
|
|
11,339 |
|
|
|
34,311 |
|
Add: Expenses related to the
August 2022 business combination |
|
— |
|
|
|
1,161 |
|
|
— |
|
Add: Purchase accounting
adjustment from the August 2022 business combination |
|
— |
|
|
— |
|
|
|
(3,147 |
) |
Add: Goodwill impairment |
|
|
72,148 |
|
|
|
698,650 |
|
|
|
72,148 |
|
Non-GAAP loss from
operations |
|
$ |
(2,458 |
) |
|
$ |
(5,772 |
) |
|
$ |
(15,676 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media InquiriesMaisie Guzi,
ZeroFoxpress@zerofox.com
Investor RelationsTodd Weller,
ZeroFoxinvestor@zerofox.com
ZeroFox (NASDAQ:ZFOX)
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