Market Overview

Cutera Reports Second Quarter 2018 Financial Results

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Second Quarter Revenue of $42.6 Million, an Increase of 17% Year-over-Year
Rest of World System Revenue Grew 26% in the Second Quarter

BRISBANE, Calif., Aug. 07, 2018 (GLOBE NEWSWIRE) -- Cutera, Inc. (NASDAQ: CUTR) ("Cutera" or the "Company"), a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide, today reported financial results for the second quarter ending June 30, 2018.

Key financial and operational highlights for the second quarter 2018 include:

  • Revenue increased 17% to $42.6 million, with the United States and International reporting 16% and 19% growth over the year ago period, respectively;
    • Revenue growth continues to be driven by strong demand for the truSculpt® 3D, as well as, Juliet™ and Secret RF systems. truSculpt 3D revenue grew 29% from the year ago period.
    • Rest of World system revenue of $9.4 million grew 26% over the year ago period driven by multiple regions, including EMEA and a strong performance from Asia.
    • Products consumed in procedures using the truSculpt 3D, Juliet and Secret RF platforms, plus distributed skincare products, accounted for 6% of total revenue in the second quarter.  Recurring revenue, which includes these sales and Service revenue, accounted for 17% of total revenue in the first quarter.
  • Gross Margin of 53%, compared to 51% in the first quarter 2018, and 58% in the year ago period, reflects a combination of slightly lower average system pricing on our legacy products and growth in our distributor channel.  Distributor channel growth occurred in existing markets, as well as the expansion into new markets, such as China;
  • Operating expenses were 58% of revenue compared to 53% in the year ago period.  Non-GAAP* operating expenses were 51% of revenue compared to 50% in the year ago period, primarily reflecting $2.0 million in non-cash stock compensation in the current period vs. $1.1 million in the same period a year ago;
  • GAAP Net Loss was $1.6 million, or $0.11 per fully-diluted share while non-GAAP* net income was $1.8 million, or $0.12 per fully-diluted share;
  • On July 9, the Company appointed Mr. Jason Richey to the newly created position of Chief Operating Officer; and
  • On July 16, the Company launched truSculpt iD, its next generation body sculpting system.  

"Our overall second quarter performance reflected strong execution by our sales force, which drove truSculpt 3D revenue growth 29%, in front of the launch of our next generation system. The Company is very excited about the recent launch of truSculpt iD, a system we believe will enhance Cutera's status as a top player in the $850 million energy based device body shaping market," stated President and CEO, James Reinstein.  "In addition, the Company is attracting top talent, like Jason Richey, who recently joined Cutera as Chief Operating Officer, from LivaNova, PLC, a $5 billion global medical device manufacturer.  He will play an important role in scaling the Company to generate strong long-term shareholder value. Lastly, International revenue were strong in most regions, especially in Asia.  However, the mix of direct versus distributor revenue affected gross margins this quarter. We are reiterating our full year revenue guidance but lowering our full year gross margin guidance due to the previously reported operational improvements, which are taking longer to realize in the gross margin line. We fully expect to achieve our goals in operational efficiencies and will improve each sequential quarter this year. My enthusiasm for the Company's future remains at all-time highs due to continued sales execution, improvements in the international team and the R&D group delivering the next-generation truSculpt iD." 

Product Updates

On July 16, at the Company's general sales meeting in Chicago, Cutera launched its next generation version of the truSculpt system, truSculpt iD. This hands-free solution offers a significantly shorter procedure time while achieving consistently high clinical results (an average fat reduction of 24 percent.)  The Company will provide more details on its product pipeline, including this new offering and a general corporate update, at its analyst day on October 9, 2018.

Update to 2018 Financial Outlook

  • We reiterate our 2018 revenue guidance range of $178 to $181 million, an 18% - 20% increase over 2017;
  • We are adjusting full year gross margin expectations to be in the range of 53% to 54% of total revenue. This adjustment incorporates previously discussed infrastructure investments, the timing of realizing operational improvements, and the impact from second quarter's global sales mix, along with an expectation that gross margin will improve in the second half of 2018 compared to the first half of 2018;
  • GAAP operating expenses are expected to be in the range of 56% to 57% of 2018 revenue, due to additional non-cash stock-based compensation and the continued investment in the scalability of our operations; and
  • Non-GAAP* earnings per share is now expected to be in the range of $0.50 to $0.60, reflecting the adjustment in gross margin and operating expenses.

Conference Call

The conference call to discuss these results is scheduled to begin today at 1:30 p.m. PDT (4:30 p.m. EDT).  Participating in the call will be James Reinstein, President and Chief Executive Officer and Sandra Gardiner, Executive Vice President and Chief Financial Officer.  The call will be broadcast live over the Internet, hosted at the Investor Relations section of Cutera's website at http://www.cutera.com/, and will be archived online within one hour of its completion through August 31, 2018. In addition, you may call 1-877-705-6003 to listen to the live broadcast.

CONTACTS:

Cutera, Inc.
Matthew Scalo
Vice President, Investor Relations & Corporate Development
415-657-5500
mscalo@cutera.com

Investor Relations
John Mills
Partner, ICR, Inc.
646-277-1254
john.mills@icrinc.com

About Cutera, Inc.

Brisbane, California-based Cutera is a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide. Since 1998, Cutera has developed innovative, easy-to-use products that enable physicians and other qualified practitioners to offer safe and effective aesthetic treatments to their patients. For more information, call 1-888-4CUTERA or visit www.cutera.com.

*Use of Non-GAAP Financial Measures

In this press release, in order to supplement our condensed consolidated financial statements presented in accordance with Generally Accepted Accounting Principles, or GAAP, management has disclosed certain non-GAAP financial measures for the statement of operations and net income per diluted share, which exclude non-cash expenses for stock-based compensation, depreciation and amortization, as well as the net tax impact of excluding these items.  From time to time in the future, there may be other items that we may exclude if we believe that doing so is consistent with the goal of providing useful information to investors and management.  We have provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure.  We have not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential significant variability, limited visibility, unpredictability, or unique non-recurring nature of the excluded items.

Company management uses these measurements as aids in monitoring the Company's ongoing financial performance from quarter to quarter, and year to year, on a regular basis and for benchmarking against other medical technology companies. Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP financial measures should be considered along with, but not as alternatives to, the operating performance measure as prescribed by GAAP.  Non-GAAP financial measures for the statement of operations and net income per diluted share exclude the following:

Non-cash expenses for stock-based compensation. We have excluded the effect of stock-based compensation expenses in calculating our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We record non-cash compensation expense related to grants of options, performance and restricted stock. Depending upon the size, timing and the terms of the grants, the non-cash compensation expense may vary significantly but will recur in future periods.  We believe that excluding this item allows users of our financial statements to better review and assess both current and historical results of operations.  We also believe that excluding non-cash expenses for stock-based compensation better allows for comparisons to our peer companies; and

Depreciation and amortization. We have excluded depreciation and amortization expense in calculating our non-GAAP operating expenses and net income measures.  Depreciation and amortization are non-cash charges to current operations.  We continue to evaluate our business performance excluding non-cash charges and believe that excluding these items allows users of our financial statements to better review and assess both current and historical results of operations.

Safe Harbor Statement

Certain statements in this press release, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements include, but are not limited to, Cutera's plans, objectives, strategies, financial performance and outlook, product launches and performance, trends, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "seek," "guidance," "predict," "potential," "likely," "believe," "will," "should," "expect," "anticipate," "estimate," "plan," "intend," "forecast," "foresee" or variations of these terms and similar expressions, or the negative of these terms or similar expressions.  Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Cutera's actual results to differ materially from the statements contained herein. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this press release, including those described in the "Risk Factors" section of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, the Registration Statement on Form S-8 and other documents filed from time to time with the United States Securities and Exchange Commission by Cutera.

All information in this press release is as of the date of its release.  Accordingly, undue reliance should not be placed on forward-looking statements. Cutera undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Cutera's financial performance for the second quarter ended June 30, 2018, as discussed in this release, is preliminary and unaudited, and subject to adjustment.


CUTERA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
    June 30,    March 31,     June 30,
    2018    2018     2017(1)
Assets
                 
Current assets:                  
  Cash and cash equivalents   $ 18,432   $ 10,910   $ 18,679
  Marketable investments     10,573     13,062     32,270
  Restricted investments     -     -     2,290
    Cash, cash equivalents and marketable investments     29,005     23,972     53,239
                   
  Accounts receivable, net     22,122     19,862     18,191
  Inventories     30,138     30,979     16,913
  Other current assets and prepaid expenses     3,469     2,601     2,840
    Total current assets     84,734     77,414     91,183
                   
Property and equipment, net     2,632     2,214     1,867
Deferred tax asset, net of current portion     21,219     21,792     381
Goodwill
    1,339     1,339     1,339
Other long-term assets     5,807     5,367     381
      Total assets   $ 115,731   $ 108,126   $ 95,151
                   
Liabilities and Stockholders' Equity                  
Current liabilities:                  
  Accounts payable   $ 10,743   $ 8,206   $ 4,293
  Accrued liabilities     22,756     20,083     18,973
  Deferred revenue     9,288     8,847     8,901
    Total current liabilities     42,787     37,136     32,167
                   
Deferred revenue, net of current portion     2,519     2,168     1,982
Income tax liability     386     384     170
Other long-term liabilities     665     583     604
    Total liabilities     46,357     40,271     34,923
                   
Stockholders' equity     69,374     67,855     60,228
      Total liabilities and stockholders' equity   $ 115,731   $ 108,126   $ 95,151
                   

(1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.

 
CUTERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,   June 30,   June 30,
    2018
  2017(1)   2018
  2017(1)
                         
Net revenue   $ 42,553     $ 36,389     $ 76,678     $ 65,688  
Cost of revenue     20,176       15,343       36,967       29,121  
    Gross profit     22,377       21,046       39,711       36,567  
    Gross margin %     53 %     58 %     52 %     56 %
                             
Operating expenses:                        
  Sales and marketing     15,535       12,787       28,623       23,560  
  Research and development     4,095       2,981       7,651       5,926  
  General and administrative     4,902       3,548       10,341       6,764  
    Total operating expenses     24,532       19,316       46,615       36,250  
Income (loss) from operations     (2,155 )     1,730       (6,904 )     317  
Interest and other income (expense), net   (129 )     276       (31 )     549  
Income (loss) before income taxes     (2,284 )     2,006       (6,935 )     866  
Provision (benefit) for income taxes     (712 )     59       (3,331 )     (59 )
Net income (loss)   $ (1,572 )   $ 1,947     $ (3,604 )   $ 925  
                             
Net loss per share:                        
  Basic   $ (0.11 )   $ 0.14     $ (0.26 )   $ 0.07  
  Diluted   $ (0.11 )   $ 0.13     $ (0.26 )   $ 0.06  
                             
Weighted-average number of shares used in per share calculations:            
  Basic     13,709       13,935       13,649       13,888  
  Diluted     13,709       14,629       13,649       14,633  
                             
                             
(1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.


 
CUTERA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in thousands, except percentage data)
(unaudited)
 
        Three Months Ended   % Change   Six Months Ended   % Change
        Q2     Q2   Q2 '18 Vs   Q2     Q2   Q2 '18 Vs
        2018     2017(1)   Q2 '17   2018     2017(1)   Q2 '17
Revenue By Geography:                                    
    United States   $ 28,132     $ 24,239   +16%   $ 49,268     $ 40,783   +21%
    International     14,421       12,150   +19%     27,410       24,905   +10%
      Total Net Revenue   $ 42,553     $ 36,389   +17%   $ 76,678     $ 65,688   +17%
    International as a percentage of total revenue     34%       33%         36%       38%    
                                         
Revenue By Product Category:                                    
  Systems                                    
    - North America   $ 25,886     $ 22,626   +14%   $ 44,830     $ 37,086   +21%
    - Rest of World     9,405       7,489   +26%     17,700       16,021   +10%
      Total Systems     35,291       30,115   +17%     62,530       53,107   +18%
  Consumables     1,057       649   +63%     1,826       1,148   +59%
  Skincare     1,302       963   +35%     2,558       1,947   +31%
      Total Products     37,650       31,727   +19%     66,914       56,202   +19%
                                         
  Service     4,903       4,662   +5%     9,764       9,486   +3%
      Total Net Revenue   $ 42,553     $ 36,389   +17%   $ 76,678     $ 65,688   +17%
                                         
                                         
(1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
 
 
        Three Months Ended       Six Months Ended    
        Q2     Q2       Q2     Q2    
        2018     2017       2018     2017    
Pre-tax Stock-Based Compensation Expense:                                    
    Cost of revenue   $ 226     $ 147       $ 380     $ 276    
    Sales and marketing     715       401         1,203       821    
    Research and development     262       239         453       476    
    General and administrative     1,002       444         1,856       1053    
        $ 2,205     $ 1,231       $ 3,892     $ 2,626    
                                         


CUTERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
  Three Months Ended     Six Months Ended
  June 30,   June 30,     June 30,   June 30,
  2018
  2017(1)     2018
  2017(1)
Cash flows from operating activities:                        
Net income (loss) $ (1,572 )   $ 1,947       $ (3,604 )   $ 925  
Adjustments to reconcile net loss to net cash used in operating activities:                        
  Stock-based compensation   2,205       1,231         3,893       2,626  
  Depreciation of tangible assets   290       244         544       492  
  Amortization of contract acquisition costs   449       -         822       -  
  Change in deferred tax asset   (587 )     -         (3,324 )     -  
  Provision for doubtful accounts receivable   300       4         487       (3 )
  Other   137       2         (25 )     (42 )
Changes in assets and liabilities:                        
  Accounts receivable   (2,747 )     (336 )       (1,832 )     (1,641 )
  Inventories   841       (1,241 )       (1,356 )     (1,936 )
  Accounts payable   2,537       1,204         3,741       1,695  
  Accrued liabilities   2,402       4,191         (4,325 )     1,534  
  Deferred revenue   1,002       807         546       784  
  Other   (1,713 )     (378 )       (2,070 )     (544 )
    Net cash provided by (used in) operating activities   3,544       7,675         (6,503 )     3,890  
                         
Cash flows from investing activities:                        
Acquisition of property, equipment and software   (477 )     (141 )       (581 )     (210 )
Disposal of property and equipment   38       15         38       40  
Net change in marketable investments   2,500       2,385         11,154       5,703  
    Net cash provided by investing activities   2,061       2,259         10,611       5,533  
                         
Cash flows from financing activities:                        
Repurchases of common stock         (4,341 )             (7,041 )
Proceeds from exercise of stock options and employee stock purchase plan 2,405       2,120         3,038       3,871  
Taxes paid related to net share settlement of equity awards   (376 )     (383 )       (2,664 )     (1,167 )
Payments on capital lease obligations   (112 )     (94 )       (234 )     (182 )
    Net cash provided by (used in) financing activities   1,917       (2,698 )       140       (4,519 )
                         
Net increase in cash and cash equivalents   7,522       7,236         4,248       4,904  
Cash and cash equivalents at beginning of period   10,910       11,443         14,184       13,775  
Cash and cash equivalents at end of period $ 18,432     $ 18,679       $ 18,432     $ 18,679  
                         
                         
(1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.


 
CUTERA, INC.
RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TO  NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
         
    Three Months Ended June 30, 2018   Three Months Ended June 30, 2017
    GAAP   Adjustments*   Non-GAAP   GAAP(1)   Adjustments*   Non-GAAP
                             
Net revenue   $ 42,553     $ -       $ 42,553     $ 36,389     $ -       $ 36,389  
Cost of revenue     20,176       (302 ) (a)     19,874       15,343       (227 ) (a)     15,116  
    Gross profit     22,377       302         22,679       21,046       227         21,273  
    Gross margin %     53 %           53 %     58 %           58 %
                                 
Operating expenses:                            
  Sales and marketing     15,535       (1,316 ) (b)     14,219       12,787       (560 ) (b)     12,227  
  Research and development     4,095       (279 ) (c)     3,816       2,981       (244 ) (c)     2,737  
  General and administrative     4,902       (1,047 ) (d)     3,855       3,548       (444 ) (d)     3,104  
    Total operating expenses     24,532       (2,642 )       21,890       19,316       (1,248 )       18,068  
Income (loss) from operations      (2,155 )     2,944         789       1,730       1,475         3,205  
Interest and other income (expense), net     (129 )     -         (129 )     276       -         276  
Income (loss) before income taxes     (2,284 )     2,944         660       2,006       1,475         3,481  
Provision (benefit) for income taxes     (712 )     (397 ) (e)     (1,109 )     59       6   (e)     65  
Net income (loss)   $ (1,572 )   $ 3,341       $ 1,769     $ 1,947     $ 1,469       $ 3,416  
                             
Net income (loss) per share:                            
  Basic   $ (0.11 )         $ 0.13     $ 0.14           $ 0.25  
  Diluted   $ (0.11 )         $ 0.12     $ 0.13           $ 0.23  
                             
Weighted-average number of shares used in per share calculations:                            
  Basic     13,709             13,709       13,935             13,935  
  Diluted     13,709             14,311       14,629             14,629  
                                 
(1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
 
                                 
Operating expenses as a % of net revenue   GAAP         Non-GAAP   GAAP(1)         Non-GAAP
  Sales and marketing     36.5 %           33.4 %     35.1 %           33.6 %
  Research and development     9.6 %           9.0 %     8.2 %           7.5 %
  General and administrative     11.5 %           9.1 %     9.8 %           8.5 %
          57.7 %           51.4 %     53.1 %           49.7 %
                                 
                                 
* Fiscal second quarter of 2018 and 2017 Non-GAAP results exclude the effect of the below mentioned adjustments ($000s): 
a) Adjustment of $302 and $227 for 2018 and 2017, respectively, included non-cash expenses of $76 and $80 related to depreciation, and $226 and $147 of stock-based compensation.
b) Adjustment of $1,316 and $560 for 2018 and 2017, respectively, included non-cash expenses of $601 and $159 related to depreciation and amortization, and $715 and $401 of stock-based compensation.
c) Adjustment of $279 and $244 for 2018 and 2017, respectively, included non-cash expenses of $17 and $5 related to depreciation, and $262 and $239 of stock-based compensation.
d) Adjustment of $1,047 and $444 for 2018 and 2017, respectively, included non-cash expenses of $45 and $0 related to depreciation and $1,002 and $444 for stock-based compensation.
e) Adjustment of $(397) and $6 for 2018 and 2017, respectively, relates to the net impact of excluding the Non-GAAP adjustments from our tax provision.  The 2018 adjustment excludes a discrete tax benefit of $1.14M related to excess stock deduction activity in the quarter.
 


CUTERA, INC.
RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TO  NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
    Six Months Ended June 30, 2018   Six Months Ended June 30, 2017
    GAAP   Adjustments*   Non-GAAP   GAAP(1)   Adjustments*   Non-GAAP
                             
Net revenue   $ 76,678     $ -       $ 76,678     $ 65,688     $ -       $ 65,688  
Cost of revenue     36,967       (540 ) (a)     36,427       29,121       (424 ) (a)     28,697  
    Gross profit     39,711       540         40,251       36,567       424         36,991  
    Gross margin %     52 %           52 %     56 %           56 %
                                 
Operating expenses:                            
  Sales and marketing     28,623       (2,327 ) (b)     26,296       23,560       (1,154 ) (b)     22,406  
  Research and development     7,651       (485 ) (c)     7,166       5,926       (486 ) (c)     5,440  
  General and administrative     10,341       (1,906 ) (d)     8,435       6,764       (1,054 ) (d)     5,710  
    Total operating expenses     46,615       (4,718 )       41,897       36,250       (2,694 )       33,556  
Income (loss) from operations     (6,904 )     5,258         (1,646 )     317       3,118         3,435  
Interest and other income (expense), net     (31 )     -         (31 )     549       -         549  
Income (loss) before income taxes     (6,935 )     5,258         (1,677 )     866       3,118         3,984  
Provision (benefit) for income taxes     (3,331 )     169   (e)     (3,162 )     (59 )     12   (e)     (47 )
Net income (loss)   $ (3,604 )   $ 5,089       $ 1,485     $ 925     $ 3,106       $ 4,031  
                             
Net income (loss) per share:                            
  Basic   $ (0.26 )         $ 0.11     $ 0.07           $ 0.29  
  Diluted   $ (0.26 )         $ 0.10     $ 0.06           $ 0.28  
                             
Weighted-average number of shares used in per share calculations:                            
  Basic     13,649             13,649       13,888             13,888  
  Diluted     13,649             14,298       14,633             14,633  
                             
(1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
 
                             
Operating expenses as a % of net revenue   GAAP         Non-GAAP   GAAP(1)         Non-GAAP
  Sales and marketing     37.3 %           34.3 %     35.9 %           34.1 %
  Research and development     10.0 %           9.3 %     9.0 %           8.3 %
  General and administrative     13.5 %           11.0 %     10.3 %           8.7 %
      60.8 %           54.6 %     55.2 %           51.1 %
                             
                                 
* Year-to-date June 30, 2018 and 2017 Non-GAAP results exclude the effect of the below mentioned adjustments ($000s):
a) Adjustment of $540 and $424 for 2018 and 2017, respectively, included non-cash expenses of $160 and $148 related to depreciation, and $380 and $276 of stock-based compensation.
b) Adjustment of $2,327 and $1,154 for 2018 and 2017, respectively, included non-cash expenses of $1,124 and $333 related to depreciation and amortization, and $1,203 and $821 of stock-based compensation.
c) Adjustment of $485 and $486 for 2018 and 2017, respectively, included non-cash expenses of $32 and $10 related to depreciation, and $453 and $476 of stock-based compensation.
d) Adjustment of $1,906 and $1,054 for 2018 and 2017, respectively, included non-cash expenses of $50 and $1 related to depreciation and $1,856 and $1,053 for stock-based compensation.
e) Adjustment of $169 and $12 for 2018 and 2017, respectively, relates to the net impact of excluding the Non-GAAP adjustments from our tax provision.  The 2018 adjustment excludes a discrete tax benefit of $2.59M related to excess stock deduction activity.
 

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