Record First Quarter Revenue of $45.9 million,
up 47% year-over-year
UserTesting, Inc. (NYSE: USER), a leader in video-based human
insight, today announced financial results for the first quarter
ended March 31, 2022.
“We posted strong first quarter results including record total
revenue growing 47% year-over-year,” said Andy MacMillan, CEO of
UserTesting. “The demand for video-based human insights continues
to be strong. We see a large opportunity for every company who
delivers a customer experience to leverage human insights.”
First Quarter 2022 Financial Highlights:
- Revenue: Total revenue was $45.9 million, up 47%
year-over-year. Subscription revenue was $43.2 million, up 51%
year-over-year. Excluding an accounting adjustment relating to
sales tax that resulted in a $1.3 million increase in subscription
revenue in the first quarter, total revenue would have been $44.6
million, up 43% year-over-year and subscription revenue would have
been $41.9 million, up 46% year-over-year.
- Operating Loss and Margin: GAAP operating loss was
$(15.0) million, or (33)% of total revenue, compared to $(12.2)
million, or (39)% of total revenue, in the same period last year.
Non-GAAP operating loss was $(8.9) million, or (19)% of total
revenue, compared to $(11.1) million, or (35)% of total revenue, in
the same period last year.
- Net Loss: GAAP net loss was $(15.2) million, or $(0.11)
per share, compared to $(12.4) million, or $(0.69) per share, in
the same period last year. Non-GAAP net loss was $(9.0) million, or
$(0.06) per share, compared to $(11.3) million, or $(0.62) per
share, in the same period last year.
- Cash Flow: Net cash used in operations was $(15.5)
million, compared to $(10.8) million in the same period last year.
Free cash flow was $(15.8) million, compared to $(11.3) million in
the same period last year.
- Cash and Cash Equivalents: Cash and cash equivalents
were $163.0 million as of March 31, 2022.
Recent Highlights:
- Recent new wins and growth deals included British Airways
Corporation, Canada Post, DocuSign, FullStory, HP, Parkland Fuel,
ServiceNow, Volvo Cars, and WM.
- UserTesting named a leader by G2 in six categories, earned a
Silver Stevie Award for Sales and Customer Service, and named an
Atlanta Journal-Constitution Top Workplace.
- UserTesting and FORTUNE Brand Studio surveyed 200 global CEOs
to understand the role customer empathy plays in overall business
success. 79% stated customer empathy fuels financial
performance.
- Introduced new product templates that help companies better
understand human interactions with connected devices and the
Internet of Things (IoT).
- Published the ninth annual 2022 CX Industry Report revealing a
strong global demand for human insight to drive customer empathy
and understanding.
- UserTesting named Jeff Solomon as first Country Manager for
UserTesting Canada.
Financial Outlook:
For the second quarter ending June 30, 2022, UserTesting
currently expects:
- Total revenue between $46.5 million and $47.5 million.
- Non-GAAP operating margin between (30.0%) and (32.0%).
- Non-GAAP net loss per share of $(0.10) assuming 143.5 million
weighted-average shares outstanding(1).
For the full year ending December 31, 2022, UserTesting
currently expects:
- Total revenue between $197.0 million and $201.0 million.
- Non-GAAP operating margin between (27.0%) and (29.0%).
- Non-GAAP net loss per share between $(0.37) and $(0.39)
assuming 145.0 million weighted-average shares outstanding(1).
____________
(1) Includes the impact of (i) the issuance of shares of common
stock by UserTesting in its initial public offering, and (ii) the
conversion of all then outstanding shares of convertible preferred
stock into shares of common stock in connection with the initial
public offering, in the weighted-average shares calculation
weighted from the date of the initial public offering.
The guidance provided above are forward-looking statements and
actual results may differ materially. Refer to the “Forward-Looking
Statements” section below for information on the factors that could
cause our actual results to differ materially from these
forward-looking statements.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
loss, non-GAAP operating loss margin, non-GAAP net loss, non-GAAP
net loss per share, free cash flow and free cash flow margin are
non-GAAP financial measures. Additional information on
UserTesting’s reported results, including a reconciliation of the
non-GAAP financial measures to their most comparable GAAP measures,
is included in the financial tables below. Our definition for each
non-GAAP measure used is provided below, however a limitation of
non-GAAP financial measures is that they do not have uniform
definitions. Accordingly, our definitions for non-GAAP measures
used will likely differ from similarly titled non-GAAP measures
used by other companies thereby limiting comparability. In
addition, the utility of free cash flow as a measure of our
liquidity is limited as it does not represent the total increase or
decrease in our cash and cash equivalents balance for a given
period.
With regards to the non-GAAP guidance provided above, a
reconciliation of non-GAAP guidance measures to corresponding GAAP
measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty of expenses that may be
incurred in the future, although it is important to note that these
factors could be material to UserTesting’s results computed in
accordance with GAAP.
A supplemental financial presentation and other information can
be accessed through UserTesting’s investor relations website at
https://ir.usertesting.com.
Lock-Up Release
Pursuant to the terms of the lock-up agreements entered into by
the UserTesting’s directors, executive officers and its
stockholders with the underwriters of the UserTesting’s initial
public offering, any remaining securities subject to lock-up
restrictions under such agreements will have such restrictions end
immediately prior to the opening of trading on May 6, 2022.
The transfer agent and registrar for the UserTesting’s common
stock is the American Stock Transfer & Trust Company, LLC.
UserTesting Conference Call
UserTesting will host a conference call today on May 4, 2022 to
review its first quarter 2022 financial results and to discuss its
financial outlook. The call is scheduled to begin at 1:30pm Pacific
Time (4:30pm Eastern Time). Investors are invited to join the
webcast by visiting https://ir.usertesting.com/news-events. The
webcast will be available live, and a replay will be available
following the completion of the live broadcast for approximately 90
days.
About UserTesting
UserTesting (NYSE: USER) has fundamentally changed the way
organizations get insights from customers with fast, opt-in
feedback and experience capture technology. The UserTesting® Human
Insight Platform taps into our global network of real people and
generates video-based recorded experiences, so anyone in an
organization can directly ask questions, hear what users say, see
what they mean, and understand what it’s actually like to be a
customer. Unlike approaches that track user behavior then try to
infer what that behavior means, UserTesting reduces guesswork and
brings customer experience data to life with human insight.
UserTesting has approximately 2,500 customers, including more than
half of the world’s top 100 most valuable brands according to
Forbes. UserTesting is headquartered in San Francisco, California.
To learn more, visit www.usertesting.com.
Forward-Looking Statements
This press release by UserTesting, Inc. (“UserTesting,” the
“Company,” “we,” “us,” or similar terms) contains forward-looking
statements. These statements may relate to, but are not limited to,
our financial outlook for the second quarter and full year 2022,
expectations of future operating results or financial performance,
market size and growth opportunities, plans for future operations,
competitive position, technological capabilities, and strategic
relationships, as well as assumptions relating to the foregoing.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. In
some cases, you can identify forward-looking statements by
terminology such as “believe,” “may,” “will,” “potentially,”
“estimate,” “continue,” “anticipate,” “intend,” “could,” “would,”
“project,” “target,” “plan,” “expect,” and similar expressions. You
should not put undue reliance on any forward-looking statements.
There are a significant number of factors that could cause our
actual results, performance, or achievement to differ materially
and adversely from the statements made in this press release,
including: intense competition in our market; our ability to
attract new customers and renew and expand sales to existing
customers; our ability to effectively introduce enhancements to our
platform, including new products, services, features, and
functionality, that achieve market acceptance or keep pace with
technological developments; quarterly fluctuations in operating
results; our ability to maintain data privacy and data security;
our limited operating history under our current business and
pricing models; our ability to effectively manage growth; and other
general market, political, economic, and business conditions,
including those related to the continuing impact of COVID-19. For
more information regarding the risks and uncertainties that could
cause actual results, performance, or achievement to differ
materially and adversely from those expressed or implied in these
forward-looking statements, as well as risks relating to our
business in general, we refer you to the “Risk Factors” section of
our Securities and Exchange Commission (the “SEC”) filings,
including our Annual Report on Form 10-K for the year ended
December 31, 2021 filed on March 4, 2022, our Quarterly Report on
Form 10-Q to be filed for the quarter ended March 31, 2022, and
other filings and reports that we may file from time to time with
the SEC, copies of which are available on our website at
https://ir.usertesting.com and on the SEC’s website at www.sec.gov.
You should not rely on these forward-looking statements, as actual
outcomes and results may differ materially from those contemplated
by these forward-looking statements as a result of such risks and
uncertainties. All forward-looking statements in this press release
are based on information available to us as of the date hereof, and
we do not assume any obligation to update the forward-looking
statements provided to reflect events that occur or circumstances
that exist after the date of this press release or to reflect new
information or the occurrence of unexpected events, except as
required by law. We may not actually achieve the plans, intentions,
or expectations disclosed in our forward-looking statements, and
you should not place undue reliance on our forward-looking
statements.
Non-GAAP Financial Measures
To supplement our financial results, which are prepared and
presented in accordance with GAAP, we use certain non-GAAP
financial measures, as described below, to understand and evaluate
our core performance. These non-GAAP measures, which may be
different than similarly-titled measures used by other companies,
are presented to enhance investors’ overall understanding of our
financial performance and should not be considered a substitute
for, or superior to, the financial information prepared and
presented in accordance with GAAP.
We believe that these non-GAAP financial measures provide useful
information about our financial performance, enhance the overall
understanding of our past performance and future prospects, and
allow for greater transparency with respect to important metrics
used by our management for financial and operational decision-
making. We are presenting these non-GAAP measures to assist
investors in seeing our financial performance using a management
view, and because we believe that these measures provide an
additional tool for investors to use in comparing our core
financial performance over multiple periods with other companies in
our industry. You should consider non-GAAP results alongside other
financial performance measures and results presented in accordance
with GAAP. In addition, in evaluating non-GAAP results, you should
be aware that in the future we will incur expenses such as those
that are the subject of adjustments in deriving non-GAAP results
and you should not infer from our non-GAAP results that our future
results will not be affected by these expenses or any unusual or
non-recurring items.
Non-GAAP gross profit, non-GAAP operating loss, non-GAAP net
loss, non-GAAP net loss per share: We define these non-GAAP
financial measures as the respective GAAP measures, excluding
stock-based compensation expenses, amortization of acquired
intangible assets, reversals of prior sales and use tax accruals
and related penalties and interest, and the tax impact of the
non-GAAP adjustments. We believe it is useful to exclude these
expenses in order to better understand the long-term performance of
our core business and to facilitate comparison of our results to
those of peer companies and over multiple periods.
Non-GAAP gross margin and non-GAAP operating loss margin:
Non-GAAP gross margin is calculated as non-GAAP gross profit
divided by total revenue. Non-GAAP operating loss margin is
calculated as non-GAAP operating loss divided by total revenue. We
use these non-GAAP financial measures in conjunction with
traditional GAAP measures to evaluate our financial
performance.
Free cash flow and free cash flow margin: We define free cash
flow as net cash used in operating activities less cash used for
purchases of property and equipment and capitalized internal-used
software. Free cash flow margin is calculated as free cash flow
divided by total revenue. We believe that these non-GAAP financial
measures are useful indicators of liquidity that provides
information to management and investors, even if negative, about
the amount of cash generated (or used) in our operations that,
after investments in property and equipment, can be used for
strategic opportunities and strengthening our balance sheet.
Non-GAAP Supplemental Financial Information
Calculated Billings: We define calculated billings, a non-GAAP
financial measure, as total revenue plus the change in contract
liabilities from the beginning to the end of the period. We
typically invoice our customers annually in advance, and to a
lesser extent quarterly in advance, for subscriptions to our
platform. Calculated billings in any particular period reflect
amounts invoiced to customers.
UserTesting, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except per
share amounts)
(unaudited)
Three Months Ended March
31,
2022
2021
Revenue
Subscription
$
43,213
$
28,682
Professional services
2,639
2,508
Total revenue
45,852
31,190
Cost of revenue
Subscription
7,617
6,617
Professional services
2,182
2,085
Total cost of revenue
9,799
8,702
Gross profit
36,053
22,488
Operating expenses:
Sales and marketing
30,069
18,593
Research and development
11,080
9,769
General and administrative
9,945
6,351
Total operating expenses
51,094
34,713
Loss from operations
(15,041
)
(12,225
)
Interest income, net
12
40
Other expense, net
(80
)
(152
)
Loss before provision for income taxes
(15,109
)
(12,337
)
Provision for income taxes
94
109
Net loss
$
(15,203
)
$
(12,446
)
Net loss per share attributable to common
stockholders, basic and diluted(1)
$
(0.11
)
$
(0.69
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted(1)
142,487
18,088
(1)
Includes the impact of (i) the issuance of
shares of common stock by UserTesting in its initial public
offering, and (ii) the conversion of all then outstanding shares of
convertible preferred stock into shares of common stock in
connection with the initial public offering, in the
weighted-average shares calculation weighted from the date of the
initial public offering.
Stock-based Compensation Expense
The following table summarizes total stock-based compensation
expense included in cost of revenue and operating expenses (in
thousands):
Three Months Ended March
31,
2022
2021
Cost of revenue:
Subscription
$
125
$
8
Professional services
184
36
Operating expenses:
Sales and marketing
2,664
300
Research and development
1,306
161
General and administrative
2,998
403
$
7,277
$
908
Amortization of Intangible Assets
The following table summarizes total amortization of acquired
intangible assets included in cost of revenue and operating
expenses (in thousands):
Three Months Ended March
31,
2022
2021
Cost of revenue:
Subscription
$
21
$
162
Operating expenses:
Sales and marketing
—
48
Research and development
43
41
$
64
$
251
UserTesting, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
March 31, 2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
163,018
$
178,430
Accounts receivable, net
46,167
47,973
Costs capitalized to obtain revenue
contracts, current
8,380
8,116
Prepaid expenses and other current
assets
11,202
6,045
Total current assets
228,767
240,564
Property and equipment, net
3,167
3,257
Operating lease right-of-use assets,
net
15,117
16,401
Intangible assets, net
576
640
Goodwill
8,785
8,785
Costs capitalized to obtain revenue
contracts, non-current
13,012
12,941
Other long-term assets
873
540
Total assets
$
270,297
$
283,128
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
2,154
$
1,544
Contract liabilities
94,720
90,952
Operating lease liabilities, current
5,315
5,271
Accrued expenses and other current
liabilities
13,286
21,799
Total current liabilities
115,475
119,566
Operating lease liabilities,
non-current
11,658
12,996
Other long-term liabilities
887
887
Total liabilities
128,020
133,449
Stockholders’ equity:
Preferred stock
—
—
Common stock and capital in excess of par
value
360,682
352,881
Accumulated deficit
(218,405
)
(203,202
)
Total stockholders’ equity
142,277
149,679
Total liabilities and stockholders’
equity
$
270,297
$
283,128
UserTesting, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March
31,
2022
2021
Cash flows from operating
activities:
Net loss
$
(15,203
)
$
(12,446
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
365
373
Stock-based compensation expense
7,277
908
Provision for allowance for doubtful
accounts
120
31
Amortization of costs capitalized to
obtain revenue contracts
2,183
1,393
Changes in operating assets and
liabilities:
Accounts receivable
1,686
261
Costs capitalized to obtain revenue
contracts
(2,518
)
(2,471
)
Prepaid expenses and other assets
(5,490
)
(2,524
)
Accounts payable
609
578
Accrued liabilities
(8,382
)
(2,580
)
Contract liabilities
3,768
5,027
Other liabilities
76
615
Net cash used in operating activities
(15,509
)
(10,835
)
Cash flows from investing
activities:
Purchase of property and equipment
(325
)
(436
)
Purchase of intangible assets
—
(150
)
Net cash used in investing activities
(325
)
(586
)
Cash flows from financing
activities:
Payment of offering costs
(102
)
(1,088
)
Payment of deferred purchase
consideration
—
(1,766
)
Proceeds from issuance of common stock
upon exercise of stock options
524
479
Net cash provided by (used in) financing
activities
422
(2,375
)
Net decrease in cash and cash
equivalents
(15,412
)
(13,796
)
Cash and cash equivalents, beginning of
period
178,430
96,972
Cash and cash equivalents, end of
period
$
163,018
$
83,176
UserTesting, Inc.
Reconciliation of GAAP to
Non-GAAP Gross Profit and Gross Margin
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
2022
Three Months Ended March 31,
2021
Subscription
Professional
Services
Total
Subscription
Professional
Services
Total
GAAP gross profit
$
35,596
$
457
$
36,053
$
22,065
$
423
$
22,488
GAAP gross margin
82
%
17
%
79
%
77
%
17
%
72
%
Adjustments:
Stock-based compensation expense
125
184
309
8
36
44
Amortization of intangible assets
21
—
21
162
—
162
Non-GAAP gross profit
$
35,742
$
641
$
36,383
$
22,235
$
459
$
22,694
Non-GAAP gross margin
83
%
24
%
79
%
78
%
18
%
73
%
UserTesting, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
2022
Sales and Marketing
Research and
Development
General and
Administrative
Total Operating
Expenses
GAAP expenses
$
30,069
$
11,080
$
9,945
$
51,094
Adjustments:
Stock-based compensation expense
(2,664
)
(1,306
)
(2,998
)
(6,968
)
Amortization of intangible assets
—
(43
)
—
(43
)
Reversal of sales and use tax accruals,
penalties and interest
—
—
1,157
1,157
Non-GAAP expenses
$
27,405
$
9,731
$
8,104
$
45,240
Non-GAAP expenses as a % of revenue
60
%
21
%
18
%
99
%
Three Months Ended March 31,
2021
Sales and Marketing
Research and
Development
General and
Administrative
Total Operating
Expenses
GAAP expenses
$
18,593
$
9,769
$
6,351
$
34,713
Adjustments:
Stock-based compensation expense
(300
)
(161
)
(403
)
(864
)
Amortization of intangible assets
(48
)
(41
)
—
(89
)
Non-GAAP expenses
$
18,245
$
9,567
$
5,948
$
33,760
Non-GAAP expenses as a % of revenue
58
%
31
%
19
%
108
%
UserTesting, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Loss and Operating Loss Margin
(dollars in thousands)
(unaudited)
Three Months Ended March
31,
2022
2021
GAAP operating loss
$
(15,041
)
$
(12,225
)
GAAP operating loss margin
(33
)%
(39
)%
Adjustments:
Stock-based compensation expense
7,277
908
Amortization of intangible assets
64
251
Reversal of sales and use tax accruals,
penalties and interest
(1,157
)
—
Non-GAAP operating loss
$
(8,857
)
$
(11,066
)
Non-GAAP operating loss margin
(19
)%
(35
)%
UserTesting, Inc.
Reconciliation of GAAP to
Non-GAAP Net Loss and Net Loss Per Share
(in thousands, except per
share amounts)
(unaudited)
Three Months Ended March
31,
2022
2021
GAAP net loss
$
(15,203
)
$
(12,446
)
Adjustments:
Stock-based compensation expense
7,277
908
Amortization of intangible assets
64
251
Reversal of sales and use tax accruals,
penalties and interest
(1,157
)
—
Non-GAAP net loss
$
(9,019
)
$
(11,287
)
GAAP net loss per share, basic and
diluted
$
(0.11
)
$
(0.69
)
Adjustments to GAAP net loss per
share:
Stock-based compensation expense
0.06
0.06
Amortization of intangible assets
—
0.01
Reversal of sales and use tax accruals,
penalties and interest
(0.01
)
—
Non-GAAP net loss per share, basic and
diluted
$
(0.06
)
$
(0.62
)
Weighted-average shares used in computing
non-GAAP net loss per share, basic and diluted
142,487
18,088
UserTesting, Inc.
Non-GAAP Free Cash Flow
Reconciliation
(dollars in thousands)
(unaudited)
Three Months Ended March
31,
2022
2021
GAAP net cash used in operating
activities
$
(15,509
)
$
(10,835
)
Add: Purchases of property and
equipment
(325
)
(436
)
Non-GAAP free cash flow
$
(15,834
)
$
(11,271
)
Non-GAAP free cash flow margin
(35
)%
(36
)%
UserTesting, Inc.
Non-GAAP Supplemental
Financial Information
(dollars in thousands)
(unaudited)
Three Months Ended March
31,
2022
2021
Revenue
$
45,852
$
31,190
Increase in contract liabilities
3,768
5,027
Calculated billings
$
49,620
$
36,217
Year-over-year calculated billings growth
rate
37
%
38
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504005322/en/
Investor Relations Contact: Erica Mannion and Michael
Funari Sapphire Investor Relations, LLC ir@usertesting.com
617-542-6180
Media Contact: UserTesting, Inc. Chris Halcon
chalcon@usertesting.com 415-699-0553
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