Sumo Logic Announces First Quarter Fiscal 2023 Financial Results

·14 min read
Sumo Logic, Inc.
Sumo Logic, Inc.

First quarter revenue grew 25% year-over-year to $67.9 million
First quarter ARR grew 27% year-over-year to $273.3 million

REDWOOD CITY, Calif., May 26, 2022 (GLOBE NEWSWIRE) -- Sumo Logic (NASDAQ: SUMO), the SaaS analytics platform to enable reliable and secure cloud-native applications, today announced financial results for the first quarter of its fiscal 2023 ended April 30, 2022.

“We started our fiscal year strong as we delivered 25% revenue growth in the first quarter. Escalating security threats are driving a healthy demand environment, and we remain well positioned with a unified platform that delivers both observability and security,” said Ramin Sayar, President and CEO of Sumo Logic. "The go-to-market changes we are making are underway, and customers are continuing to recognize the value of our differentiated SaaS analytics platform that ensures their applications are reliable and secure.”

First Quarter Fiscal 2023 Financial Highlights

  • Revenue was $67.9 million, an increase of 25% year-over-year

  • Annual Recurring Revenue ("ARR") was $273.3 million, an increase of 27% year-over-year

  • GAAP gross margin was 64%; non-GAAP gross margin was 70%

  • GAAP operating loss was $34.8 million; GAAP operating margin was (51)%

  • Non-GAAP operating loss was $15.4 million; non-GAAP operating margin was (23)%

  • GAAP net loss was $34.8 million or $0.30 per share

  • Non-GAAP net loss was $15.3 million or $0.13 per share

  • Net cash used in operating activities was $1.4 million; free cash flow was $(2.0) million

  • Cash and cash equivalents and marketable securities were $358.9 million as of April 30, 2022

Recent Highlights

  • Released the OpenTelemetry Distro Collector which is designed to simplify and democratize the collection of logs, metrics, traces, and metadata from modern cloud applications, and establishes OpenTelemetry as its future standard to collect all machine data.

  • Released the Sensu Integration Catalog which is a self-service marketplace featuring over 40 turn-key integrations.

  • Announced support for the AWS for Games initiative for Amazon Web Services to accelerate digital gaming at scale.

  • Appointed Tej Redkar as Chief Product Officer, Sophie Kitson as Chief Human Resources Officer, and John D. Harkey, Jr. to our Board of Directors.

Financial Outlook

For the second quarter of fiscal 2023, Sumo Logic expects:

  • Total revenue between $71.0 million and $72.0 million, representing 21% to 22% growth year over year

  • Non-GAAP operating margin of (24)% to (23)%

  • Non-GAAP net loss per share of $0.15 on approximately 116.0 million weighted average shares outstanding

For the full fiscal year 2023, Sumo Logic expects:

  • Total revenue between $289.0 million and $292.0 million, representing 19% to 21% growth year over year

  • Non-GAAP operating margin of (25)% to (24)%

  • Non-GAAP net loss per share of $0.64 to $0.62 on approximately 116.5 million weighted average shares outstanding

These statements are forward-looking and actual results may differ materially. Please refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Guidance for non-GAAP financial measures excludes stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related expenses, and expenses related to a cooperation agreement. We have not provided the most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking non-GAAP operating loss and non-GAAP net loss per share is not available without unreasonable effort. Refer to Non-GAAP Financial Measures below.

Conference Call Details

The company will host a conference call and live webcast on Thursday, May 26, 2022, at 1:30 p.m. Pacific time (4:30 p.m. Eastern time). The news release with the financial results will be accessible on Sumo Logic’s investor relations website at investor.sumologic.com prior to the conference call. To access the conference call, dial (877) 407-0784 from the United States or (201) 689-8560 internationally and reference the company name and conference title. Following the completion of the call, a replay will be available for approximately two weeks. The replay can be accessed by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally and using the recording passcode 13729960. A live webcast and replay of the conference call can also be accessed from the Sumo Logic Investor Relations website at investor.sumologic.com.

Supplemental Financial and Other Information

Supplemental financial and other information can be accessed through Sumo Logic’s investor relations website at investor.sumologic.com. Sumo Logic uses the investor relations section on its website as the means of complying with its disclosure obligations under Regulation FD. Accordingly, we recommend that investors should monitor Sumo Logic’s investor relations website in addition to following Sumo Logic’s press releases, SEC filings and social media.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance. We use the following non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes, 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 that non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. The non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. 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 to rely on any single financial measure to evaluate our business, which it includes in press releases announcing quarterly financial results, including this press release.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, and non-GAAP net loss per share: We define these non-GAAP financial measures as their respective GAAP measures, excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related expenses, and expenses related to a cooperation agreement. We use these non-GAAP financial 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.

Free cash flows: We define free cash flow as cash used in operating activities less purchases of property and equipment and capitalized internal-use software costs. We believe free cash flow is a useful indicator of liquidity that provides our management, board of directors, and investors with information about our future ability to generate or use cash to enhance the strength of our balance sheet and further invest in our business and pursue potential strategic initiatives.

Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results.

Forward-Looking Statements

This press release contains express and implied forward-looking statements including but not limited to, statements regarding our GAAP and non-GAAP guidance for the second fiscal quarter and full fiscal year 2023, the expected benefits of hiring new executives and expectations regarding the benefits of our offerings, our growth strategy and investments, our market opportunity, the potential impact of the macro environment, and our ability to achieve success. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to our ability to realize the anticipated benefits from our acquisitions, our ability to achieve and maintain future profitability, our ability to attract new customers and retain and sell additional functionality and services to our existing customers, our ability to sustain and manage our growth, our ability to successfully add new features and functionality to our platform, our ability to compete effectively in an increasingly competitive market, and general market, political, economic, and business conditions, including the impact of COVID-19, and other risks detailed in our Annual Report on Form 10-K for the year ended January 31, 2022, filed with the Securities and Exchange Commission (SEC) on March 14, 2022, and other filings and reports that we may file from time to time with the SEC. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended April 30, 2022 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein.

Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent our views as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We anticipate that subsequent events and developments could cause our views to change. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Sumo Logic

Sumo Logic, Inc. (NASDAQ: SUMO), empowers the people who power modern, digital business. Through its SaaS analytics platform, Sumo Logic enables customers to deliver reliable and secure cloud-native applications. The Sumo Logic Continuous Intelligence Platform™ helps practitioners and developers ensure application reliability, secure and protect against modern security threats, and gain insights into their cloud infrastructures. Customers around the world rely on Sumo Logic to get powerful real-time analytics and insights across observability and security solutions for their cloud-native applications. For more information, visit www.sumologic.com.

For more information, please contact:

Investor Relations Contact
Bryan Liberator
IR@sumologic.com

Media Contact
Carmen Harris
charris@sumologic.com


Sumo Logic, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

 

Three Months Ended April 30,

 

 

2022

 

 

 

2021

 

Revenue

$

67,855

 

 

$

54,219

 

Cost of revenue

 

24,145

 

 

 

15,395

 

Gross profit

 

43,710

 

 

 

38,824

 

Operating expenses:

 

 

 

Research and development

 

26,253

 

 

 

20,443

 

Sales and marketing

 

35,290

 

 

 

30,278

 

General and administrative

 

16,996

 

 

 

14,573

 

Total operating expenses

 

78,539

 

 

 

65,294

 

Loss from operations

 

(34,829

)

 

 

(26,470

)

Interest and other income (expense), net

 

631

 

 

 

(16

)

Interest expense

 

(29

)

 

 

(86

)

Loss before provision for income taxes

 

(34,227

)

 

 

(26,572

)

Provision for income taxes

 

523

 

 

 

342

 

Net loss

$

(34,750

)

 

$

(26,914

)

 

 

 

 

Net loss per share, basic and diluted

$

(0.30

)

 

$

(0.26

)

 

 

 

 

Weighted-average shares used to compute net loss per share, basic and diluted

 

114,324

 

 

 

104,033

 


Sumo Logic, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 

April 30,
2022

 

January 31,
2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

79,737

 

 

$

79,986

 

Marketable securities, current

 

228,406

 

 

 

210,645

 

Accounts receivable, net

 

48,690

 

 

 

49,451

 

Prepaid expenses

 

9,823

 

 

 

9,792

 

Deferred sales commissions, current

 

17,524

 

 

 

17,110

 

Other current assets

 

2,837

 

 

 

2,865

 

Total current assets

 

387,017

 

 

 

369,849

 

Marketable securities, noncurrent

 

50,777

 

 

 

65,866

 

Property and equipment, net

 

4,944

 

 

 

4,960

 

Operating lease right-of-use assets

 

5,041

 

 

 

6,110

 

Goodwill

 

93,603

 

 

 

94,967

 

Acquired intangible assets, net

 

21,881

 

 

 

26,221

 

Deferred sales commissions, noncurrent

 

31,579

 

 

 

32,689

 

Other assets

 

1,106

 

 

 

1,469

 

Total assets

$

595,948

 

 

$

602,131

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,920

 

 

$

7,755

 

Accrued expenses and other current liabilities

 

24,966

 

 

 

25,425

 

Operating lease liabilities, current

 

4,614

 

 

 

4,619

 

Deferred revenue, current

 

142,583

 

 

 

131,329

 

Total current liabilities

 

182,083

 

 

 

169,128

 

Operating lease liabilities, noncurrent

 

1,157

 

 

 

2,346

 

Deferred revenue, noncurrent

 

6,141

 

 

 

5,944

 

Other liabilities

 

5,570

 

 

 

5,744

 

Total liabilities

 

194,951

 

 

 

183,162

 

Stockholders’ equity:

 

 

 

Common stock

 

12

 

 

 

11

 

Additional paid-in-capital

 

964,761

 

 

 

944,447

 

Accumulated other comprehensive loss

 

(7,870

)

 

 

(4,333

)

Accumulated deficit

 

(555,906

)

 

 

(521,156

)

Total stockholders’ equity

 

400,997

 

 

 

418,969

 

Total liabilities and stockholders’ equity

$

595,948

 

 

$

602,131

 


Sumo Logic, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)

 

Three Months Ended April 30,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities

 

 

 

Net loss

$

(34,750

)

 

$

(26,914

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

4,283

 

 

 

2,044

 

Amortization of deferred sales commissions

 

4,631

 

 

 

3,401

 

Amortization (accretion) of marketable securities purchased at a premium (discount)

 

790

 

 

 

566

 

Stock-based compensation, net of amounts capitalized

 

13,277

 

 

 

12,133

 

Non-cash operating lease cost

 

1,055

 

 

 

1,062

 

Other

 

(162

)

 

 

23

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable

 

757

 

 

 

837

 

Prepaid expenses

 

(37

)

 

 

592

 

Other assets

 

180

 

 

 

1,144

 

Deferred sales commissions

 

(3,934

)

 

 

(5,658

)

Accounts payable

 

2,181

 

 

 

1,383

 

Accrued expenses and other current liabilities

 

(164

)

 

 

(1,295

)

Deferred revenue

 

11,451

 

 

 

9,177

 

Operating lease liabilities

 

(1,156

)

 

 

(1,134

)

Other liabilities

 

166

 

 

 

(80

)

Net cash used in operating activities

 

(1,432

)

 

 

(2,719

)

Cash flows from investing activities

 

 

 

Purchases of marketable securities

 

(51,683

)

 

 

(267,548

)

Maturities of marketable securities

 

41,022

 

 

 

1,558

 

Sales of marketable securities

 

5,920

 

 

 

 

Purchases of property and equipment

 

(371

)

 

 

(247

)

Capitalized internal-use software costs

 

(187

)

 

 

 

Net cash used in investing activities

 

(5,299

)

 

 

(266,237

)

Cash flows from financing activities

 

 

 

Payments of deferred offering costs

 

 

 

 

(93

)

Proceeds from exercise of common stock options

 

6,954

 

 

 

8,019

 

Net cash provided by financing activities

 

6,954

 

 

 

7,926

 

Effect of exchange rate changes on cash and cash equivalents

 

(472

)

 

 

(9

)

Change in cash and cash equivalents and restricted cash

 

(249

)

 

 

(261,039

)

Cash and cash equivalents and restricted cash:

 

 

 

Beginning of period

 

80,286

 

 

 

404,440

 

End of period

$

80,037

 

 

$

143,401

 


Sumo Logic, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data and percentages)
(unaudited)

 

Three Months Ended April 30,

 

 

2022

 

 

 

2021

 

Reconciliation of gross profit and gross margin

 

 

 

GAAP gross profit

$

43,710

 

 

$

38,824

 

Add: Stock-based compensation and related employer payroll taxes

 

316

 

 

 

173

 

Add: Amortization of acquired intangible assets

 

3,559

 

 

 

1,537

 

Add: Acquisition-related expenses

 

81

 

 

 

 

Non-GAAP gross profit

$

47,666

 

 

$

40,534

 

GAAP gross margin

 

64

%

 

 

72

%

Non-GAAP gross margin

 

70

%

 

 

75

%

 

 

 

 

Reconciliation of operating expenses

 

 

 

GAAP research and development

$

26,253

 

 

$

20,443

 

Less: Stock-based compensation and related employer payroll taxes

 

(6,554

)

 

 

(4,858

)

Less: Acquisition-related expenses

 

(292

)

 

 

 

Non-GAAP research and development

$

19,407

 

 

$

15,585

 

 

 

 

 

GAAP sales and marketing

$

35,290

 

 

$

30,278

 

Less: Stock-based compensation and related employer payroll taxes

 

(2,917

)

 

 

(3,722

)

Less: Amortization of acquired intangible assets

 

(150

)

 

 

 

Less: Acquisition-related expenses

 

(101

)

 

 

 

Non-GAAP sales and marketing

$

32,122

 

 

$

26,556

 

 

 

 

 

GAAP general and administrative

$

16,996

 

 

$

14,573

 

Less: Stock-based compensation and related employer payroll taxes

 

(3,759

)

 

 

(4,188

)

Less: Acquisition-related expenses

 

 

 

 

(1,216

)

Less: Expenses related to a cooperation agreement

 

(1,720

)

 

 

 

Non-GAAP general and administrative

$

11,517

 

 

$

9,169

 

 

 

 

 

Reconciliation of operating loss and operating margin

 

 

 

GAAP loss from operation

$

(34,829

)

 

$

(26,470

)

Add: Stock-based compensation and related employer payroll taxes

 

13,546

 

 

 

12,941

 

Add: Amortization of acquired intangible assets

 

3,709

 

 

 

1,537

 

Add: Acquisition-related expenses

 

474

 

 

 

1,216

 

Add: Expenses related to a cooperation agreement

 

1,720

 

 

 

 

Non-GAAP operating loss

$

(15,380

)

 

$

(10,776

)

GAAP operating margin

(51

)%

 

(49

)%

Non-GAAP operating margin

(23

)%

 

(20

)%

 

 

 

 

Reconciliation of net loss

 

 

 

GAAP net loss

$

(34,750

)

 

$

(26,914

)

Add: Stock-based compensation and related employer payroll taxes

 

13,546

 

 

 

12,941

 

Add: Amortization of acquired intangible assets

 

3,709

 

 

 

1,537

 

Add: Acquisition-related expenses

 

474

 

 

 

1,216

 

Add: Expenses related to a cooperation agreement

 

1,720

 

 

 

 

Non-GAAP net loss

$

(15,301

)

 

$

(11,220

)

GAAP net loss per share

$

(0.30

)

 

$

(0.26

)

Non-GAAP net loss per share

$

(0.13

)

 

$

(0.11

)

Weighted average shares outstanding, basic and diluted

 

114,324

 

 

 

104,033

 


Sumo Logic, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (Continued)
(in thousands)
(unaudited)

 

Three Months Ended April 30,

 

 

2022

 

 

 

2021

 

Reconciliation of cash used in operating activities to free cash flow

 

 

 

GAAP cash used in operating activities

$

(1,432

)

 

$

(2,719

)

Less: Purchases of property and equipment

 

(371

)

 

 

(247

)

Less: Capitalized internal-use software costs

 

(187

)

 

 

 

Free cash flow

$

(1,990

)

 

$

(2,966

)


Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting