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Anaplan Announces Third Quarter Fiscal Year 2021 Financial Results

11/24/2020
  • Third Quarter Subscription Revenue up 31% Year-Over-Year
  • Remaining Performance Obligation of $740 million, up 25% Year-Over-Year
  • Dollar-Based Net Expansion of 113%

SAN FRANCISCO--(BUSINESS WIRE)-- Anaplan, Inc. (NYSE:PLAN), provider of a cloud-native platform for orchestrating business performance, today announced financial results for its third quarter ended October 31, 2020.

“We delivered a strong quarter as companies prioritize investments towards initiatives that drive incremental business value,” said Frank Calderoni, chief executive officer of Anaplan. “By using our Connected Planning platform, our customers stay ahead of their competition with the ability to adjust and adapt quickly to an everchanging environment.”

Third Quarter Fiscal 2021 Financial Results

  • Total revenue was $114.9 million, an increase of 28% year-over-year. Subscription revenue was $104.7 million, an increase of 31% year-over-year.
  • GAAP operating loss was $35.9 million or 31.2% of total revenue, compared to $32.5 million in the third quarter of fiscal 2020 or 36.4% of total revenue. Non-GAAP operating loss was $6.1 million, or 5.3% of total revenue, compared to $8.8 million in the third quarter of fiscal 2020, or 9.9% of total revenue.
  • GAAP loss per share was $0.26, flat compared to the third quarter of fiscal 2020. Non-GAAP loss per share was $0.05, compared to $0.08 in the third quarter of fiscal 2020.
  • Cash and Cash Equivalents were $296.8 million as of October 31, 2020.

Financial Outlook

The company is providing the following guidance for its fourth quarter fiscal 2021:

  • Total revenue is expected to be between $118.5 and $119.5 million.
  • Non-GAAP operating margin is expected to be between negative 10.5% and 11.5%.
  • As a baseline for fourth quarter, we expect billings to be in the range of $152 million to $153 million.

The company is raising its previous guidance provided on August 26, 2020 for its full year fiscal 2021:

  • Total revenue is expected to be between $444 and $445 million (was between $437 and $439 million).
  • Non-GAAP operating margin is expected to be between negative 9% and 10% (was between negative 11% and 12%).

The guidance provided above are forward-looking statements and actual results may differ materially. Refer to the “Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

The section titled “Non-GAAP Financial Measures” below contains a description of the non-GAAP financial measures used in this press release, definitions of our operating metrics and a reconciliation of GAAP and non-GAAP financial measures is contained in the tables below. A reconciliation of non-GAAP measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, costs and expenses, including the impact of stock-based compensation, which is dependent on factors such as future stock price and volume of equity awards granted in the future, that may be incurred in the future and therefore, cannot be reasonably predicted. The effect of these excluded items may be significant.

Recent Highlights

  • Anaplan and Google Cloud announced a new go-to-market partnership to offer the Anaplan platform on Google Cloud.
  • Anaplan introduced new intelligence capabilities for predictive forecasting and scenario planning using PlanIQ with Amazon Forecast.
  • Anaplan announced a multi-year deal to support Shell with digital transformation.
  • Anaplan Ranked Among Fastest Growing Companies on Deloitte’s 2020 Technology Fast 500 list.
  • Anaplan was recognized as a Leader in Gartner’s 2020 Magic Quadrant for Financial Planning & Analysis Solutions.
  • Anaplan was recognized as the 2020 Gartner Peer Insights Customers’ Choice for Sales Performance Management.

Webcast and Conference Call Information

Event: Anaplan Third Quarter Fiscal Year 2021 (Q3 FY21) Earnings Conference Call
When: Tuesday, November 24, 2020
Time: 5:30 a.m. PT / 8:30 a.m. ET
Live Call: Please see online registration
Replay: (855) 859-2056 or (404) 537-3406 with passcode 2554059
Live Webcast:https://investors.anaplan.com or with replay available for 12 months

Upcoming Investor Events

Anaplan management will be participating in the following investor conferences:

Wells Fargo Securities Virtual TMT Summit
Tuesday, December 1, 2020
10:20am PT/1:20pm ET

Barclays Global Technology, Media and Telecommunications Conference
Wednesday, December 9, 2020
12:00pm PT/3:00pm ET

Interested parties can listen to the live audio webcast of Anaplan’s presentations available on Anaplan’s Investor Center website at https://investors.anaplan.com. A replay of the presentations will be available on the website following the completion of the event.

About Anaplan

Anaplan, Inc. (NYSE: PLAN) is a cloud-native enterprise SaaS company helping global enterprises orchestrate business performance. Leaders across industries rely on our platform—powered by our proprietary Hyperblock® technology—to connect teams, systems, and insights from across their organizations to continuously adapt to change, transform how they operate, and reinvent value creation. Based in San Francisco, Anaplan has over 20 offices globally, 175 partners and over 1,500 customers worldwide. To learn more, visit anaplan.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended, including all statements other than statements of historical fact contained in this press release and includes, without limitation, statements about the company’s expectations regarding the impact of the COVID-19 pandemic and resulting global economic uncertainty, the quotations from management, statements regarding market demand, market opportunity, competitive position including of the company’s solutions compared to the offerings of competitors, use of the company’s solutions and the results of such use, statements about the company’s plans, strategies and prospects, statements about offerings, solutions, services and functionality, statements regarding growth and momentum, the financial outlook and guidance, which may include expected GAAP and non-GAAP financial and other results, for the company’s fourth fiscal quarter ending January 31, 2021 and for the full fiscal year ending January 31, 2021 and the underlying assumptions, and statements about events and trends including events and trends that we believe may affect our financial condition, results of operations, short- and long-term business operations and objectives, and financial needs. These statements identify prospective information and may include words such as “expects,” “intends,” “continue,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “should,” “may,” “will,” or the negative version of these words, variations of these words and comparable terminology. These forward-looking statements are based on information available to the company as of the date of this press release and are based on management’s current views and assumptions. These forward-looking statements are conditioned upon and also involve a number of known and unknown risks, uncertainties, and other factors that could cause actual results, performance or events to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the company’s control and may pose a risk to the company’s operating and financial condition. Such risks and uncertainties include, but are not limited to: the ongoing COVID-19 pandemic, and resulting global economic downturn, has impacted how we, our customers, and our partners are operating, and could result in a material adverse effect on our business, financial condition, operating results and cash flows; we have a limited history of operating at our current scale and under our current strategy, which makes it difficult to predict our future operating results, and we may not achieve our expected operating results in the future; our recent revenue growth rates may not be indicative of our future growth; we have a history of net losses, we anticipate increasing our operating expenses in the future, and we do not expect to be profitable for the near future; our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business; we have experienced rapid growth and expect to continue to strategically invest in our growth in the future, and if we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service, or adequately address competitive challenges and our business, financial condition and results of operations may be adversely affected; because we derive substantially all of our revenue from a single software platform, failure of Connected Planning solutions and digital transformation in general and our platform in particular to satisfy customer demands or to achieve increased market acceptance would adversely affect our business, results of operations, financial condition, and growth prospects; if we are unable to attract new customers, both domestically and internationally, the growth of our revenue will be adversely affected and our business may be harmed; our business depends substantially on our customers renewing their subscriptions and expanding their use of our platform and if we fail to achieve renewals and expansions or our customers renew or expand their subscriptions on less favorable terms, our business and operating results will be adversely affected; failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our service; our growth depends in part on the success of our strategic relationships with third parties and their continued performance and uncertain economic conditions including those caused by the COVID-19 pandemic may disrupt the operations and performance of such third parties and ultimately adversely impact our financial results; our success depends upon training our customers to effectively utilize our platform and providing high-quality support services and if we fail to provide effective education, training or support to our customers, then our results of operations, financial condition and growth prospects may be adversely affected; our ability to achieve growth in revenue will depend substantially on our partners being able to utilize highly skilled and trained users of our platform to provide professional services, promote the adoption of our platform and drive revenue generation activities and if we fail to effectively educate, train and provide continuing guidance to a sufficient number of qualified users of our platform for utilization with our partners, our results of operations, financial condition and growth prospects may be adversely affected; if we fail to continue to enhance our platform, satisfy the cloud infrastructure priorities of our clients or adapt to rapid technological change, our ability to remain competitive could be impaired; if we experience a security incident affecting our platform or internal networks, systems or data, or are perceived to have experienced such a security incident, our platform may be perceived as not being secure, our reputation may be harmed, customers may reduce the use of or stop using our platform, we may incur significant liabilities, and our business could be materially adversely affected; real or perceived errors, failures, bugs, service outages, or disruptions in our platform could adversely affect our reputation and harm our business; we depend on the experience and expertise of our senior management team and certain key employees, and our inability to retain these executive officers and key employees or recruit them in a timely manner, could harm our business, operating results, and financial condition; the markets in which we participate are intensely competitive, and if we do not compete effectively, our business and operating results could be adversely affected; we collect, process and store personal information and furthermore, our platform could be used by customers to do the same, and evolving domestic and international privacy and security laws, regulations and other obligations could result in additional costs and liabilities to us or inhibit sales of our platform. Furthermore, the additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may amplify many of these risks. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this press release is contained in the company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including its quarterly report on Form 10-Q filed with the SEC on September 4, 2020, and other documents the company may file with or furnish to the SEC from time to time such as annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. These forward-looking statements should not be relied upon as representing the company’s views as of any subsequent date and the company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made. The information contained in, or that can be accessed through, Anaplan’s website and social media channels are not part of this press release.

Preliminary Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands, except per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue:
Subscription revenue

$

104,707

 

$

79,695

 

$

295,648

 

$

218,378

 

Professional services revenue

 

10,168

 

 

9,715

 

 

29,582

 

 

31,402

 

Total revenue

 

114,875

 

 

89,410

 

 

325,230

 

 

249,780

 

Cost of revenue:
Cost of subscription revenue (1)

 

19,187

 

 

13,108

 

 

50,520

 

 

36,406

 

Cost of professional services revenue (1)

 

10,188

 

 

9,376

 

 

29,037

 

 

30,162

 

Total cost of revenue

 

29,375

 

 

22,484

 

 

79,557

 

 

66,568

 

Gross profit

 

85,500

 

 

66,926

 

 

245,673

 

 

183,212

 

Operating expenses:
Research and development (1)

 

24,629

 

 

16,462

 

 

72,986

 

 

47,963

 

Sales and marketing (1)

 

73,893

 

 

60,644

 

 

218,481

 

 

180,931

 

General and administrative (1)

 

22,851

 

 

22,344

 

 

66,514

 

 

65,158

 

Total operating expenses

 

121,373

 

 

99,450

 

 

357,981

 

 

294,052

 

Loss from operations

 

(35,873

)

 

(32,524

)

 

(112,308

)

 

(110,840

)

Interest income (expense), net

 

(208

)

 

1,180

 

 

119

 

 

3,770

 

Other income (expense), net

 

(291

)

 

(2,398

)

 

3,385

 

 

(2,096

)

Loss before income taxes

 

(36,372

)

 

(33,742

)

 

(108,804

)

 

(109,166

)

Provision for income taxes

 

(420

)

 

(959

)

 

(3,114

)

 

(3,368

)

Net loss

$

(36,792

)

$

(34,701

)

$

(111,918

)

$

(112,534

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.26

)

$

(0.26

)

$

(0.81

)

$

(0.88

)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

 

140,603

 

 

132,352

 

 

138,448

 

 

128,286

 

 
 
(1) Includes stock-based compensation expense as follows:
Cost of subscription revenue

$

953

 

$

689

 

$

2,537

 

$

1,817

 

Cost of professional services revenue

 

506

 

 

539

 

 

1,706

 

 

1,577

 

Research and development

 

5,235

 

 

2,790

 

 

13,261

 

 

7,120

 

Sales and marketing

 

12,570

 

 

8,927

 

 

33,814

 

 

23,728

 

General and administrative

 

7,696

 

 

7,948

 

 

23,114

 

 

23,072

 

Total stock-based compensation expense

$

26,960

 

$

20,893

 

$

74,432

 

$

57,314

 

Preliminary Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
As of
October 31, January 31,

 

2020

 

 

2020

 

ASSETS
Current assets:
Cash and cash equivalents

$

296,801

 

$

309,894

 

Accounts receivable, net

 

127,905

 

 

109,217

 

Deferred commissions, current portion

 

32,393

 

 

25,990

 

Prepaid expenses and other current assets

 

18,742

 

 

17,814

 

Total current assets

 

475,841

 

 

462,915

 

Property and equipment, net

 

52,610

 

 

48,639

 

Deferred commissions, net of current portion

 

71,545

 

 

57,947

 

Goodwill

 

32,379

 

 

32,379

 

Operating lease right-of-use asset

 

35,362

 

 

37,875

 

Other noncurrent assets

 

10,370

 

 

10,052

 

TOTAL ASSETS

$

678,107

 

$

649,807

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

5,970

 

$

5,331

 

Accrued expenses

 

90,044

 

 

79,024

 

Deferred revenue, current portion

 

239,642

 

 

216,059

 

Operating lease liabilities, current portion

 

7,506

 

 

7,278

 

Total current liabilities

 

343,162

 

 

307,692

 

Deferred revenue, net of current portion

 

5,389

 

 

4,149

 

Operating lease liabilities, net of current portion

 

31,899

 

 

34,017

 

Other noncurrent liabilities

 

20,596

 

 

12,268

 

TOTAL LIABILITIES

 

401,046

 

 

358,126

 

 
Stockholders' equity:
Common stock

 

14

 

 

13

 

Accumulated other comprehensive loss

 

(6,000

)

 

(4,326

)

Additional paid-in capital

 

887,976

 

 

788,447

 

Accumulated deficit

 

(604,929

)

 

(492,453

)

TOTAL STOCKHOLDERS' EQUITY

 

277,061

 

 

291,681

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

678,107

 

$

649,807

 

Preliminary Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Nine Months Ended October 31,

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss

$

(111,918

)

$

(112,534

)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization

 

18,934

 

 

14,355

 

Amortization of deferred commissions

 

24,418

 

 

14,053

 

Stock-based compensation

 

74,432

 

 

57,314

 

Reduction of operating lease right-of-use assets and accretion of operating lease liabilities

 

7,642

 

 

7,840

 

Foreign currency remeasurement losses (gains)

 

(3,178

)

 

444

 

Other non-cash items

 

2,609

 

 

962

 

Changes in operating assets and liabilities:
Accounts receivable

 

(22,012

)

 

(5,307

)

Prepaid expenses and other current assets

 

1,290

 

 

1,795

 

Other noncurrent assets

 

(1,376

)

 

(170

)

Deferred commissions

 

(43,439

)

 

(36,134

)

Accounts payable and accrued expenses

 

10,271

 

 

16,039

 

Deferred revenue

 

26,831

 

 

39,375

 

Payments for operating lease liabilities, net

 

(6,907

)

 

(7,595

)

Other noncurrent liabilities

 

7,468

 

 

(3,271

)

Net cash used in operating activities

 

(14,935

)

 

(12,834

)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment

 

(5,243

)

 

(2,455

)

Capitalized internal-use software

 

(7,666

)

 

(8,021

)

Business combinations, net of acquired cash

 

-

 

 

(29,192

)

Net cash used in investing activities

 

(12,909

)

 

(39,668

)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options

 

12,575

 

 

18,862

 

Proceeds from repayment of promissory notes

 

-

 

 

11,526

 

Proceeds from employee stock purchase plan

 

9,481

 

 

9,088

 

Principal payments on capital lease obligations

 

(6,160

)

 

(3,777

)

Net cash provided by financing activities

 

15,896

 

 

35,699

 

Effect of exchange rate changes on cash and cash equivalents

 

1,005

 

 

780

 

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

(10,943

)

 

(16,023

)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - Beginning of period

 

309,894

 

 

326,863

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - End of period

$

298,951

 

$

310,840

 

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages and per share amounts)
(Unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands, except percentages and per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 
Revenue

$

114,875

 

$

89,410

 

$

325,230

 

$

249,780

 

 
GAAP operating loss

$

(35,873

)

$

(32,524

)

$

(112,308

)

$

(110,840

)

Stock-based compensation

 

26,960

 

 

20,893

 

 

74,432

 

 

57,314

 

Employer payroll tax expense related to employee stock plans

 

1,622

 

 

1,303

 

 

4,982

 

 

6,432

 

Business combination and other related cost

 

880

 

 

1,390

 

 

2,835

 

 

1,390

 

Amortization of acquired intangibles

 

335

 

 

112

 

 

1,005

 

 

147

 

Non-GAAP operating loss

$

(6,076

)

$

(8,826

)

$

(29,054

)

$

(45,557

)

GAAP operating margin %

 

-31.2

%

 

-36.4

%

 

-34.5

%

 

-44.4

%

Stock-based compensation %

 

23.5

%

 

23.4

%

 

22.9

%

 

22.9

%

Employer payroll tax expense related to employee stock plans %

 

1.4

%

 

1.4

%

 

1.5

%

 

2.6

%

Business combination and other related cost %

 

0.7

%

 

1.6

%

 

0.9

%

 

0.6

%

Amortization of acquired intangibles %

 

0.3

%

 

0.1

%

 

0.3

%

 

0.1

%

Non-GAAP operating margin %

 

-5.3

%

 

-9.9

%

 

-8.9

%

 

-18.2

%

 
GAAP net loss

$

(36,792

)

$

(34,701

)

$

(111,918

)

$

(112,534

)

Stock-based compensation

 

26,960

 

 

20,893

 

 

74,432

 

 

57,314

 

Employer payroll tax expense related to employee stock plans

 

1,622

 

 

1,303

 

 

4,982

 

 

6,432

 

Business combination and other related cost

 

880

 

 

1,390

 

 

2,835

 

 

1,390

 

Amortization of acquired intangibles

 

335

 

 

112

 

 

1,005

 

 

147

 

Non-GAAP tax adjustments

 

-

 

 

-

 

 

1,250

 

 

-

 

Non-GAAP net loss

$

(6,995

)

$

(11,003

)

$

(27,414

)

$

(47,251

)

 
GAAP net loss per share, basic and diluted

$

(0.26

)

$

(0.26

)

$

(0.81

)

$

(0.88

)

Stock-based compensation

 

0.19

 

 

0.16

 

 

0.54

 

 

0.45

 

Employer payroll tax expense related to employee stock plans

 

0.01

 

 

0.01

 

 

0.03

 

 

0.05

 

Business combination and other related cost

 

0.01

 

 

0.01

 

 

0.02

 

 

0.01

 

Amortization of acquired intangibles

 

-

 

 

-

 

 

0.01

 

 

-

 

Non-GAAP tax adjustments

 

-

 

 

-

 

 

0.01

 

 

-

 

Non-GAAP net loss per share

$

(0.05

)

$

(0.08

)

$

(0.20

)

$

(0.37

)

 
Shares used to compute GAAP net loss per share attributable to common stockholders, basic and diluted

 

140,603

 

 

132,352

 

 

138,448

 

 

128,286

 

Shares used to compute Non-GAAP net loss per share

 

140,603

 

 

132,352

 

 

138,448

 

 

128,286

 

 
GAAP net cash provided by (used in) operating activities

$

(6,479

)

$

(16,029

)

$

(14,935

)

$

(12,834

)

Purchase of property and equipment

 

(247

)

 

(852

)

 

(5,243

)

 

(2,455

)

Capitalized internal-use software

 

(2,286

)

 

(2,970

)

 

(7,666

)

 

(8,021

)

Non-GAAP free cash flow

$

(9,012

)

$

(19,851

)

$

(27,844

)

$

(23,310

)

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures, including non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and free cash flow. The non-GAAP financial information is presented for supplemental informational purposes only, and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. The non-GAAP measures presented here may be different from similarly-titled non-GAAP measures used by other companies.

We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures, when viewed collectively with the GAAP measures, may be helpful to investors because they provide consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results.

There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. The definitions of our non-GAAP measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may utilize metrics that are not similar to ours. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. Please see the reconciliation tables in this release for the reconciliation of GAAP and non-GAAP results.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate stock-based compensation expense using a variety of valuation methodologies and subjective assumptions.

Employer payroll tax expense related to employee stock plans. We exclude employer payroll tax expense related to employee stock plans, which is a cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, this expense is tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of exercise or vesting, which may vary from period to period independent of the operating performance of our business.

Amortization of acquired intangible assets. We exclude amortization of acquired intangible assets, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of intangible assets are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business.

Business combinations and related cost. We exclude transaction, integration, and retention expenses that are directly related to business combinations from certain of our non-GAAP financial measures because we believe that excluding these items provides meaningful supplemental information regarding operational performance.

Non-GAAP tax adjustments. We exclude discrete tax expenses associated with non-recurring intercompany transactions because we believe that excluding these items facilitate a comparison of the non-GAAP tax provision in the current and prior periods.

Free cash flow. Our management reviews cash flows generated from operations after taking into consideration capital expenditures such as purchase of property and equipment and internal-use software as these expenditures are considered to be a necessary component of ongoing operations. We define non-GAAP free cash flow as net cash provided by (used in) operating activities, reduced by purchase of property and equipment and capitalization of internal-use software.

Operating Metrics

Annual recurring revenue (ARR) is calculated as subscription revenue already booked and in backlog that will be recorded over the next 12 months, assuming any contract expiring in those 12 months is renewed and continues on its existing terms and at its prevailing rate of utilization.

Dollar-based Net Expansion Rate is calculated as the ARR at the end of a period for the base set of customers from which we had ARR in the year prior to the calculation, divided by the ARR one year prior to the date of calculation for that same customer base.

Investor Contact:
Edelita Tichepco
investors@anaplan.com

Media Contact:
Caitlin Tridle
press@anaplan.com

Source: Anaplan, Inc.

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