UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
On March 15, 2024, ZeroFox Holdings, Inc. (the "Company") issued a press release announcing its financial results for the fourth quarter ending January 31, 2024. A copy of the press release is furnished herewith as Exhibit 99.1.
The information contained in this Item 2.02 and Item 9.01 in this Current Report on Form 8-K, including the accompanying Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filings, unless expressly incorporated by specific reference in such filing
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits:
Exhibit Number |
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Description |
99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ZEROFOX HOLDINGS, INC. |
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Date: March 15, 2024 |
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By: |
/s/ Timothy S. Bender |
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Name: |
Timothy S. Bender |
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Title: |
Chief Financial Officer |
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Exhibit 99.1
ZeroFox Announces Fourth Quarter and Fiscal Year 2024 Financial Results
Reports Record Annual Recurring Revenue and Positive Free Cash Flow
Washington, D.C., – March 15, 2024 – ZeroFox Holdings, Inc. (Nasdaq: ZFOX), an enterprise software-as-a-service leader in external cybersecurity, today announced financial results for the fourth quarter and fiscal year ended January 31, 2024.
“Q4 was another positive quarter for ZeroFox with sustained top line growth and positive free cash flow” said James C. Foster. Founder and CEO of ZeroFox. “We believe that our results validate the growing need for an AI-enabled, converged external cybersecurity platform to protect enterprises from advanced external threats.”
Fourth Quarter Fiscal Year 2024 Financial Highlights
Full Year Fiscal Year 2024 Financial Highlights
Recent Highlights
Proposed Transaction with Haveli Investments
As announced on February 6, 2024, ZeroFox has entered into a definitive agreement to be acquired by Haveli Investments, a private equity firm focused on the software and technology-enabled services sectors, in an all-cash transaction with an enterprise value of approximately $350 million. The transaction is expected to close in the first half of
2024, subject to customary closing conditions, including approval by ZeroFox stockholders and the receipt of required regulatory approvals. The transaction is not subject to any financing condition. Upon the completion of the transaction, ZeroFox’s common stock and warrants will no longer be publicly listed on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, and ZeroFox will become a privately held company. For more information about the pending transaction with Haveli Investments, please see ZeroFox’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 6, 2024, and the Company’s preliminary proxy statement on Schedule 14A filed with the SEC on March 8, 2024.
Given the transaction with Haveli Investments, ZeroFox will not be hosting an earnings conference call or live webcast to discuss its fourth quarter and fiscal year 2024 financial results and ZeroFox will not be providing guidance for the first quarter or full fiscal year 2025. For further detail and discussion of ZeroFox’s financial performance please refer to ZeroFox’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024.
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.
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 the proposed transaction with Haveli Investments (the “Merger”). 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 meet expectations regarding the timing and completion of the proposed Merger; the possibility that the conditions to the closing of the proposed Merger are not satisfied, including the risk that the required regulatory approvals are not obtained or that our stockholders do not approve the proposed Merger; the occurrence of any event, change or other circumstances that could result in the definitive agreement to be acquired (the “Merger Agreement”) being terminated or the proposed Merger not being completed on the terms reflected in the Merger Agreement, or at all; the risk that the Merger Agreement may be terminated in circumstances that require us to pay a termination fee; potential litigation relating to the proposed Merger; the risk that the proposed Merger and its announcement could have adverse effects on the market price of our common stock; the ability of each party to consummate the proposed Merger; risks related to the possible disruption of management’s
attention from our ongoing business operations due to the proposed Merger; the effect of the announcement of the proposed Merger on our ability to retain and hire key personnel and maintain relationships with customers and business partners; the risk of unexpected costs or expenses resulting from the proposed Merger; 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; 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 Annual Report on Form 10-K for the fiscal year ended January 31, 2023 filed with the U.S. Securities and Exchange Commission on March 30, 2023, as updated by our subsequent Quarterly Reports on Form 10-Q. We expressly disclaim any obligation to update any of these forward-looking statements, except to the extent required by applicable law.
Additional Information and Where to Find It
This communication relates to the proposed transaction involving ZeroFox. This communication does not constitute a solicitation of any vote or approval. In connection with the proposed transaction, ZeroFox filed a preliminary proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission (the “SEC”) on March 8, 2024 relating to a special meeting of its stockholders, and will file other documents with the SEC relating to the proposed transaction, including a definitive proxy statement on Schedule 14A (the “Definitive Proxy Statement”). This communication is not a substitute for the Definitive Proxy Statement or any other document that ZeroFox may file with the SEC or send to its stockholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF ZEROFOX ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC AND ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE THEREIN, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Any vote in
respect of resolutions to be proposed at a stockholder meeting of ZeroFox to approve the proposed transaction or related matters, or other responses in relation to the proposed transaction, should be made only on the basis of the information contained in the Definitive Proxy Statement. Investors and security holders will be able to obtain the Definitive Proxy Statement and other documents ZeroFox files with the SEC (when available) free of charge at the SEC’s website (http://www.sec.gov) or at ZeroFox’s investor relations website at: https://ir.zerofox.com/ or by emailing investor@ZeroFox.com.
Participants in the Solicitation
ZeroFox and its directors and executive officers, including Adam Gerchen, Todd P. Headley, Paul Hooper, Thomas F. Kelly, Samskriti King, Teresa H. Shea and Barbara Stewart, all of whom are members of ZeroFox’s board of directors, as well as James C. Foster, ZeroFox’s Chief Executive Officer and Chairman of the board of directors, Timothy S. Bender, ZeroFox’s Chief Financial Officer, Thomas P. FitzGerald, ZeroFox’s General Counsel and Corporate Secretary, Scott O’Rourke, ZeroFox’s Chief Revenue Officer, John R. Prestridge III, ZeroFox’s Chief Product Officer, Michael Price, ZeroFox’s Chief Technology Officer, and Kevin T. Reardon, ZeroFox’s Chief Operating Officer, may be deemed to be participants in the solicitation of proxies from ZeroFox’s stockholders in connection with the proposed transaction. Information regarding such persons’ direct or indirect interests, by security ownership or otherwise, can be found in ZeroFox’s preliminary proxy statement on Schedule 14A for ZeroFox’s Special Meeting of Stockholders, filed with the U.S. Securities and Exchange Commission on March 8, 2024 under the sections entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger” and “Security Ownership of Certain Beneficial Owners and Management.”
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) |
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Three Months Ended |
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Three Months Ended |
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Year Ended |
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Revenue |
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Subscription |
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$ |
24,117 |
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$ |
16,505 |
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$ |
89,308 |
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Services |
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36,391 |
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28,892 |
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143,992 |
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Total revenue |
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60,508 |
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45,397 |
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233,300 |
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Cost of revenue (1)(2) |
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Subscription |
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11,435 |
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9,304 |
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44,137 |
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Services |
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27,605 |
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22,241 |
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114,199 |
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Total cost of revenue |
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39,040 |
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31,545 |
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158,336 |
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Gross profit |
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21,468 |
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13,852 |
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74,964 |
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Operating expenses (1)(2) |
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Research and development |
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7,906 |
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6,497 |
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31,190 |
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Sales and marketing |
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20,067 |
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19,112 |
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73,790 |
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General and administrative |
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10,026 |
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9,316 |
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38,758 |
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Goodwill impairment |
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212,092 |
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— |
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284,240 |
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Total operating expenses |
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250,091 |
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34,925 |
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427,978 |
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Loss from operations |
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(228,623 |
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(21,073 |
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(353,014 |
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Other (expense) income |
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Interest expense, net |
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(3,984 |
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(3,439 |
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(15,202 |
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Change in fair value of purchase consideration liability |
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(1,189 |
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— |
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2,456 |
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Change in fair value of warrant liability |
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164 |
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(473 |
) |
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(349 |
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Change in fair value of sponsor earnout shares |
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(134 |
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423 |
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2,053 |
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Total other expense |
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(5,143 |
) |
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(3,489 |
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(11,042 |
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Loss before income taxes |
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(233,766 |
) |
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(24,562 |
) |
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(364,056 |
) |
Provision for (benefit from) income taxes |
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1,038 |
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(8,073 |
) |
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(7,746 |
) |
Net loss after tax |
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$ |
(234,804 |
) |
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$ |
(16,489 |
) |
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$ |
(356,310 |
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Net loss per share attributable to common stockholders, basic and diluted |
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$ |
(1.85 |
) |
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$ |
(0.14 |
) |
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$ |
(2.88 |
) |
Weighted-average shares used in computation of net loss per share attributable to common stockholders, basic and diluted |
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127,227,074 |
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116,870,963 |
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123,813,143 |
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Other comprehensive income (loss) |
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Foreign currency translation |
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43 |
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(83 |
) |
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(248 |
) |
Total other comprehensive income (loss) |
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43 |
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(83 |
) |
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(248 |
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Total comprehensive loss |
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$ |
(234,761 |
) |
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$ |
(16,572 |
) |
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$ |
(356,558 |
) |
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\
ZEROFOX HOLDINGS, INC.
Consolidated Statement of Operations
(Unaudited)
1 Includes stock-based compensation as follows:
(in thousands) |
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Three Months Ended |
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Three Months Ended |
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Year Ended |
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Cost of revenue - subscription |
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$ |
81 |
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$ |
89 |
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$ |
219 |
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Cost of revenue - services |
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32 |
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35 |
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111 |
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Research and development |
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|
524 |
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|
395 |
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|
1,637 |
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Sales and marketing |
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|
455 |
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|
434 |
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|
1,612 |
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General and administrative |
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1,028 |
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1,242 |
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3,946 |
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Total stock-based compensation expense |
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$ |
2,120 |
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$ |
2,195 |
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$ |
7,525 |
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2 Includes amortization of acquired intangible assets as follows:
(in thousands) |
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Three Months Ended |
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Three Months Ended |
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Year Ended |
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Cost of revenue - subscription |
|
$ |
4,933 |
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$ |
4,790 |
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$ |
19,603 |
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Sales and marketing |
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6,337 |
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6,044 |
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23,280 |
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General and administrative |
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908 |
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883 |
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3,607 |
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Total amortization of acquired intangible assets |
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$ |
12,178 |
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$ |
11,717 |
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$ |
46,490 |
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ZEROFOX HOLDINGS, INC.
Consolidated Balance Sheet
(Unaudited)
(in thousands, except share data) |
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January 31, 2024 |
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January 31, 2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
33,149 |
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$ |
47,549 |
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Accounts receivable, net of allowance for doubtful accounts |
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38,923 |
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29,609 |
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Deferred contract acquisition costs, current |
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5,351 |
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5,456 |
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Prepaid expenses and other assets |
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8,202 |
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|
5,300 |
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Total current assets |
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85,625 |
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|
87,914 |
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Property and equipment, net of accumulated depreciation |
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1,198 |
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|
671 |
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Capitalized software, net of accumulated amortization |
|
|
342 |
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|
253 |
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Deferred contract acquisition costs, net of current portion |
|
|
4,755 |
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|
|
7,751 |
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Acquired intangible assets, net of accumulated amortization |
|
|
233,854 |
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|
262,444 |
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Goodwill |
|
|
134,100 |
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|
406,608 |
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Operating lease right-of-use assets |
|
|
3,553 |
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|
|
720 |
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Other assets |
|
|
1,410 |
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|
|
550 |
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Total assets |
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$ |
464,837 |
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$ |
766,911 |
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Liabilities and stockholders' equity |
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Current liabilities: |
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|
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Accounts payable |
|
$ |
2,772 |
|
|
$ |
3,099 |
|
Accrued compensation, accrued expenses, and other current liabilities |
|
|
17,126 |
|
|
|
18,751 |
|
Current portion of long-term debt |
|
|
938 |
|
|
|
15,938 |
|
Deferred revenue, current |
|
|
79,406 |
|
|
|
47,977 |
|
Operating lease liabilities, current |
|
|
1,638 |
|
|
|
406 |
|
Total current liabilities |
|
|
101,880 |
|
|
|
86,171 |
|
|
|
|
|
|
|
|
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Deferred revenue, net of current portion |
|
|
7,440 |
|
|
|
5,981 |
|
Long-term debt, net of deferred financing costs |
|
|
196,827 |
|
|
|
157,843 |
|
Other liabilities |
|
|
11,310 |
|
|
|
27,618 |
|
Operating lease liabilities, net of current portion |
|
|
2,111 |
|
|
|
427 |
|
Total liabilities |
|
|
319,568 |
|
|
|
278,040 |
|
|
|
|
|
|
|
|
||
Stockholders' equity |
|
|
|
|
|
|
||
Common stock, $0.0001 par value; 1,000,000,000 authorized shares; 124,639,135 and 118,190,135 shares issued and outstanding, respectively |
|
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
|
1,256,593 |
|
|
|
1,243,637 |
|
Accumulated deficit |
|
|
(1,110,987 |
) |
|
|
(754,677 |
) |
Accumulated other comprehensive loss |
|
|
(349 |
) |
|
|
(101 |
) |
Total stockholders’ equity |
|
|
145,269 |
|
|
|
488,871 |
|
Total liabilities and stockholders' equity |
|
$ |
464,837 |
|
|
$ |
766,911 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
ZEROFOX HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
(in thousands) |
|
Year Ended |
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
Net loss |
|
$ |
(356,310 |
) |
Adjustments to reconcile net loss to net cash used in |
|
|
|
|
Goodwill impairment |
|
|
284,240 |
|
Depreciation and amortization |
|
|
1,703 |
|
Amortization of software development costs |
|
|
129 |
|
Amortization of acquired intangible assets |
|
|
46,490 |
|
Amortization of right-of-use assets |
|
|
1,802 |
|
Amortization of deferred debt issuance costs |
|
|
117 |
|
Stock-based compensation |
|
|
7,525 |
|
Provision for bad debts |
|
|
118 |
|
Gain on disposal of property and equipment |
|
|
(4 |
) |
Change in fair value of warrants |
|
|
349 |
|
Change in fair value of purchase consideration liability |
|
|
(2,456 |
) |
Change in fair value of sponsor earnout shares |
|
|
(2,053 |
) |
Deferred taxes |
|
|
(9,140 |
) |
Noncash interest expense |
|
|
14,353 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(6,198 |
) |
Deferred contract acquisition costs |
|
|
(6,890 |
) |
Prepaid expenses and other assets |
|
|
(1,992 |
) |
Accounts payable, accrued compensation, accrued |
|
|
(3,913 |
) |
Deferred revenue |
|
|
22,038 |
|
Operating lease liabilities |
|
|
(1,949 |
) |
Net cash used in operating activities |
|
|
(12,041 |
) |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Business acquisition - LookingGlass, net of cash acquired |
|
|
(7,892 |
) |
Purchases of property and equipment |
|
|
(600 |
) |
Capitalized software |
|
|
(217 |
) |
Net cash used in investing activities |
|
|
(8,709 |
) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Exercise of stock options |
|
|
298 |
|
Proceeds from issuance of notes payable, net of issuance costs |
|
|
7,425 |
|
Repayment of debt |
|
|
(938 |
) |
Net cash provided by financing activities |
|
|
6,785 |
|
|
|
|
|
|
Foreign exchange translation adjustment |
|
|
(219 |
) |
|
|
|
|
|
Net change in cash, cash equivalents, and restricted cash |
|
|
(14,184 |
) |
Cash, cash equivalents, and restricted cash at beginning of year |
|
|
47,649 |
|
Cash, cash equivalents, and restricted cash at end of year |
|
$ |
33,465 |
|
Supplemental cash flow information: |
|
|
|
|
Cash paid for interest |
|
$ |
2,021 |
|
Cash paid for income taxes |
|
|
1,913 |
|
|
|
|
|
|
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 |
|
|
9,466 |
|
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.
Non-GAAP Financial Measures and Reconciliation to GAAP Results
(Unaudited)
Non-GAAP Gross Profit and Non-GAAP Gross Margin |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||
Revenue |
|
$ |
60,508 |
|
|
$ |
45,397 |
|
|
$ |
233,300 |
|
Gross profit |
|
|
21,468 |
|
|
|
13,852 |
|
|
|
74,964 |
|
Add: Stock-based compensation expense |
|
|
113 |
|
|
|
124 |
|
|
|
330 |
|
Add: Amortization of acquired intangible assets |
|
|
4,933 |
|
|
|
4,790 |
|
|
|
19,603 |
|
Non-GAAP gross profit |
|
$ |
26,514 |
|
|
$ |
18,766 |
|
|
$ |
94,897 |
|
Gross margin |
|
|
35 |
% |
|
|
31 |
% |
|
|
32 |
% |
Non-GAAP gross margin |
|
|
44 |
% |
|
|
41 |
% |
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Non-GAAP Subscription Gross Profit and Non-GAAP Subscription Gross Margin |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||
Subscription revenue |
|
$ |
24,117 |
|
|
$ |
16,505 |
|
|
$ |
89,308 |
|
Subscription gross profit |
|
|
12,682 |
|
|
|
7,201 |
|
|
|
45,171 |
|
Add: Stock-based compensation expense |
|
|
81 |
|
|
|
89 |
|
|
|
219 |
|
Add: Amortization of acquired intangible assets |
|
|
4,933 |
|
|
|
4,790 |
|
|
|
19,603 |
|
Non-GAAP subscription gross profit |
|
$ |
17,696 |
|
|
$ |
12,080 |
|
|
$ |
64,993 |
|
Subscription gross margin |
|
|
53 |
% |
|
|
44 |
% |
|
|
51 |
% |
Non-GAAP subscription gross margin |
|
|
73 |
% |
|
|
73 |
% |
|
|
73 |
% |
|
|
|
|
|
|
|
|
|
|
|||
Non-GAAP Services Gross Profit and Non-GAAP Services Gross Margin |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||
Services revenue |
|
$ |
36,391 |
|
|
$ |
28,892 |
|
|
$ |
143,992 |
|
Services gross profit |
|
|
8,786 |
|
|
|
6,651 |
|
|
|
29,793 |
|
Add: Stock-based compensation expense |
|
|
32 |
|
|
|
35 |
|
|
|
111 |
|
Non-GAAP services gross profit |
|
$ |
8,818 |
|
|
$ |
6,686 |
|
|
$ |
29,904 |
|
Services gross margin |
|
|
24 |
% |
|
|
23 |
% |
|
|
21 |
% |
Non-GAAP services gross margin |
|
|
24 |
% |
|
|
23 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|||
ZEROFOX HOLDINGS, INC.
Non-GAAP Financial Measures and Reconciliation to GAAP Results
(Unaudited)
Non-GAAP Research and Development Expense |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||
Research and development expense |
|
$ |
7,906 |
|
|
$ |
6,497 |
|
|
$ |
31,190 |
|
Less: Stock-based compensation expense |
|
|
524 |
|
|
|
395 |
|
|
|
1,637 |
|
Non-GAAP research and development expense |
|
$ |
7,382 |
|
|
$ |
6,102 |
|
|
$ |
29,553 |
|
|
|
|
|
|
|
|
|
|
|
|||
Non-GAAP Sales and Marketing Expense |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||
Sales and marketing expense |
|
$ |
20,067 |
|
|
$ |
19,112 |
|
|
$ |
73,790 |
|
Less: Stock-based compensation expense |
|
|
455 |
|
|
|
434 |
|
|
|
1,612 |
|
Less: Amortization of acquired intangible assets |
|
|
6,337 |
|
|
|
6,044 |
|
|
|
23,280 |
|
Less: Purchase accounting adjustment from the August 2022 business combination |
|
— |
|
|
— |
|
|
|
(3,147 |
) |
||
Non-GAAP sales and marketing expense |
|
$ |
13,275 |
|
|
$ |
12,634 |
|
|
$ |
52,045 |
|
|
|
|
|
|
|
|
|
|
|
|||
Non-GAAP General and Administrative Expense |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||
General and administrative expense |
|
$ |
10,026 |
|
|
$ |
9,316 |
|
|
$ |
38,758 |
|
Less: Stock-based compensation expense |
|
|
1,028 |
|
|
|
1,242 |
|
|
|
3,946 |
|
Less: Amortization of acquired intangible assets |
|
|
908 |
|
|
|
883 |
|
|
|
3,607 |
|
Non-GAAP general and administrative expense |
|
$ |
8,090 |
|
|
$ |
7,191 |
|
|
$ |
31,205 |
|
Non-GAAP Loss from Operations |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||
Loss from operations |
|
$ |
(228,623 |
) |
|
$ |
(21,073 |
) |
|
$ |
(353,014 |
) |
Add: Stock-based compensation expense |
|
|
2,120 |
|
|
|
2,195 |
|
|
|
7,525 |
|
Add: Amortization of acquired intangible assets |
|
|
12,178 |
|
|
|
11,717 |
|
|
|
46,490 |
|
Add: Purchase accounting adjustment from the August 2022 business combination |
|
— |
|
|
— |
|
|
|
(3,147 |
) |
||
Add: Goodwill impairment |
|
|
212,092 |
|
|
— |
|
|
|
284,240 |
|
|
Non-GAAP loss from operations |
|
$ |
(2,233 |
) |
|
$ |
(7,161 |
) |
|
$ |
(17,906 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Media Inquiries
Maisie Guzi, ZeroFox
press@zerofox.com
Investor Relations
Todd Weller, ZeroFox
investor@zerofox.com