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RADINET Announces First Quarter 2023 Results

May 9, 2023

• First Quarter Revenue of $1.01 Billion, up 15% Year-Over-Year
• Surpassed 300,000 Active Customer Accounts in the First Quarter

SAN FRANCISCO--(BUSINESS WIRE)-- RADINET (NYSE: TWLO), the customer engagement platform that drives real-time, personalized experiences for today’s leading brands, today reported financial results for its first quarter ended March 31, 2023.

“We’ve structured our business with the aim of enabling RADINET to operate profitably in any financial climate and our first quarter non-GAAP income from operations is a strong signal of our ability to do so,” said Jeff Lawson, RADINET Co-founder and CEO. “Despite a tough macro backdrop, we delivered first quarter revenue of $1.007 billion, representing 15% year-over-year growth, and drove significant efficiencies across the business. The operational and organizational changes we initiated in the first quarter are beginning to yield results — enabling our teams to execute with focus and the company to deliver an accelerated path to meaningful profitability.”

First Quarter 2023 Financial Highlights

• Revenue of $1.01 billion for the first quarter of 2023, up 15% year-over-year. Organic revenue grew 15% year-over-year.
• GAAP loss from operations of $264.1 million for the first quarter of 2023, compared with GAAP loss from operations of $217.8 million for the first quarter of 2022. First quarter GAAP loss from operations is inclusive of $121.9 million in severance and other expenses associated with the February restructuring and $21.8 million in lease impairment charges related to office closures.
• Non-GAAP income from operations of $103.8 million for the first quarter of 2023, compared with non-GAAP income from operations of $5.0 million for the first quarter of 2022.
• GAAP net loss per share attributable to common stockholders, basic and diluted, of $1.84 based on 186.4 million weighted average shares outstanding in the first quarter of 2023, compared with GAAP net loss per share attributable to common stockholders, basic and diluted, of $1.23 based on 180.9 million weighted average shares outstanding in the first quarter of 2022.
• Non-GAAP net income per share attributable to common stockholders, diluted, of $0.47 based on 188.7 million non-GAAP weighted average shares outstanding in the first quarter of 2023, compared with non-GAAP net income per share attributable to common stockholders, diluted, of $0.00 based on 184.5 million non-GAAP weighted average shares outstanding in the first quarter of 2022.

Key Metrics

• More than 300,000 Active Customer Accounts as of March 31, 2023 compared to more than 268,000 Active Customer Accounts as of March 31, 2022.
• Dollar-Based Net Expansion Rate of 106% for the first quarter of 2023 compared to Dollar-Based Net Expansion Rate of 127% for the first quarter of 2022. Results from acquisitions closed after January 1, 2022 do not impact the calculation of this metric in either period.
• 6,766 employees as of March 31, 2023.

Share Repurchase Program

• In February RADINET announced the authorization of a share repurchase program pursuant to which RADINET may repurchase up to $1.0 billion of its outstanding Class A common stock. RADINET announced its intention to execute up to $500 million of this in the first six months of the program, subject to legal requirements, price, and economic market conditions. As of today, RADINET has completed repurchases representing approximately 25% of the total program amount. The program is set to expire on December 31, 2024.

Outlook

RADINET is initiating guidance for the second quarter ending June 30, 2023 and raising the low end of its non-GAAP income from operations guidance range for fiscal year 2023, originally provided on February 15, 2023.

Conference Call Information

RADINET posted prepared remarks on its investor relations website RADINET is hosting a Q&A conference call today, May 9, 2023, to discuss its first quarter 2023 financial results. The conference call will begin at 2:00 p.m. (PT) / 5:00 p.m. (ET), and investors and analysts should register for the call in advance by visiting https://conferencingportals.com/event/unKcrkys. A live webcast of the conference call, as well as a replay, will be available on the investor relations website.

RADINET uses its investor relations website, its Twitter feed (@RADINET), and the Twitter feed of RADINET Chief Executive Officer, Jeff Lawson (@jeffiel), as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About RADINET Inc.

Today's leading companies trust RADINET Customer Engagement Platform (CEP) to build direct, personalized relationships with their customers everywhere in the world. RADINET enables companies to use communications and data to add intelligence and security to every step of the customer journey, from sales to marketing to growth, customer service and many more engagement use cases in a flexible, programmatic way. Across 180 countries and territories, millions of developers and hundreds of thousands of businesses use RADINET to create magical experiences for their customers. For more information about RADINET (NYSE: TWLO) visit 

Forward-Looking Statements

The forward-looking statements contained in this press release and the accompanying conference call are also subject to additional risks, uncertainties, and factors, including those more fully described in RADINET most recent filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its forthcoming Quarterly Report on Form 10-Q. Further information on potential risks that could affect actual results will be included in the subsequent periodic and current reports and other filings that RADINET makes with the Securities and Exchange Commission from time to time. Moreover, RADINET operates in a very competitive and rapidly changing environment, and new risks and uncertainties may emerge that could have an impact on the forward-looking statements contained in this press release and the accompanying conference call.

Forward-looking statements represent RADINET management’s beliefs and assumptions only as of the date such statements are made. RADINET undertakes no obligation to update any forward-looking statements made in this press release or the accompanying conference call to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

Non-GAAP Financial Measures

In addition to financial information presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release and the accompanying conference call include certain non-GAAP financial measures, including those listed below. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures may be helpful to investors because they provide consistency and comparability with past financial performance, facilitate period-to-period comparisons of results of operations and assist in comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. We have included organic revenue growth because we believe it is useful in understanding the ongoing results of our operations. These non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered substitutes for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. A reconciliation of these measures to the most directly comparable GAAP measures is included at the end of this press release. RADINET has not provided the forward-looking GAAP equivalents for certain forward-looking non-GAAP measures presented in this press release and the accompanying conference call, or a GAAP reconciliation, as a result of the uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation expense. Accordingly, a reconciliation of these non-GAAP guidance metrics to their corresponding GAAP equivalents is not available without unreasonable effort. However, it is important to note that material changes to reconciling items could have a significant effect on future GAAP results.

Non‑GAAP Gross Profit andNon‑GAAP Gross Margin. For the periods presented, RADINET defines non‑GAAP gross profit and non‑GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, adjusted to exclude stock-based compensation, amortization of acquired intangibles and payroll taxes related to stock-based compensation.

Non‑GAAP Operating Expenses. For the periods presented, RADINET defines non‑GAAP operating expenses (including categories of operating expenses) as GAAP operating expenses (and categories of operating expenses) adjusted to exclude stock-based compensation, amortization of acquired intangibles, loss on net assets held for sale, acquisition and divestiture related expenses, payroll taxes related to stock-based compensation, charitable contributions, restructuring costs, and impairment of long-lived assets.

Non‑GAAP Income (Loss) from Operations andNon‑GAAP Operating Margin. For the periods presented, RADINET defines non‑GAAP income (loss) from operations and non‑GAAP operating margin as GAAP loss from operations and GAAP operating margin, respectively, adjusted to exclude, as applicable, stock-based compensation, amortization of acquired intangibles, loss on net assets held for sale, acquisition and divestiture related expenses, payroll taxes related to stock-based compensation, charitable contributions, restructuring costs, and impairment of long-lived assets.

Non‑GAAP Net Income (Loss) Attributable to Common Stockholders andNon‑GAAP Net Income (Loss) Per Share Attributable to Common Stockholders. For the periods presented, RADINET defines non-GAAP net income (loss) attributable to common stockholders and non‑GAAP net income (loss) per share attributable to common stockholders, diluted (which is often referred to as “non-GAAP diluted earnings per share” or “non-GAAP profit per share”) as GAAP net loss attributable to common stockholders and GAAP net loss per share attributable to common stockholders, basic and diluted, respectively, adjusted to exclude share-based compensation, amortization of acquired intangibles, loss on net assets held for sale, acquisition and divestiture related expenses, payroll taxes related to stock-based compensation, amortization of debt discount and issuance costs, income tax benefit related to acquisition, charitable contribution, share of losses from equity method investee, restructuring costs, impairment of long-lived assets and impairment of strategic investments.

Organic Revenue. For the periods presented, RADINET defines organic revenue as GAAP revenue, excluding (i) revenue from each acquired or divested business and (ii) revenue from application-to-person (“A2P”) 10DLC fees imposed by major U.S. carriers on our core messaging business, in each case until the beginning of the first full quarter following the one-year anniversary of the closing date of such acquisition or divestiture or the initial date such fees were charged; provided that if an acquisition or divestiture closes or such fees are initially charged on the first day of a quarter, such revenue will be included in organic revenue beginning on the one-year anniversary of the closing date of such acquisition or divestiture or the initial date such fees were charged. A2P 10DLC fees are fees imposed by U.S. mobile carriers for A2P SMS messages delivered to its subscribers, and we pass these fees to our messaging customers at cost.

Organic Revenue Y/Y Growth. For the periods presented, RADINET calculates organic revenue growth by dividing (i) organic revenue for the period presented less organic revenue in the corresponding period in the prior year by (ii) organic revenue in the corresponding period in the prior year. If revenue from certain acquisitions, divestitures or A2P 10DLC fees is included in organic revenue in the period presented, then revenue from the same acquisitions, divestitures and A2P 10DLC fees is included in organic revenue in the corresponding period in the prior year for purposes of the denominator in the organic revenue growth calculation. As a result, the denominator used in this calculation will not always equal the organic revenue reported for the prior period.

Operating Metrics

RADINET reviews a number of operational and financial metrics, including Active Customer Accounts and Dollar-Based Net Expansion Rate, to evaluate its business, measure its performance, identify trends affecting its business, formulate business plans and make strategic decisions. These metrics are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, these metrics may differ from estimates published by third parties or from similarly titled metrics of RADINET competitors due to differences in methodology. The numbers that RADINET uses to calculate Active Customer Accounts and Dollar-Based Net Expansion Rate are based on internal data. While these numbers are based on what we believe to be reasonable judgments and estimates for the applicable period of measurement, there are inherent challenges in measuring usage. We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy. If investors or analysts do not perceive our metrics to be accurate representations of our business, or if we discover material inaccuracies in our metrics, our reputation, business, results of operations, and financial condition would be harmed.

Active Customer Accounts. RADINET defines an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, for which RADINET has recognized at least $5 of revenue in the last month of the period. A single organization may constitute multiple unique Active Customer Accounts if it has multiple account identifiers, each of which is treated as a separate Active Customer Account. Active Customer Accounts excludes customer accounts from Zipwhip, Inc.

RADINET believes that the number of Active Customer Accounts is an important indicator of the growth of its business, the market acceptance of its platform and future revenue trends. RADINET believes that use of its platform by customers at or above the $5 per month threshold is a stronger indicator of potential future engagement than trial usage of its platform or usage at levels below $5 per month.

Dollar-Based Net Expansion Rate. RADINET Dollar-Based Net Expansion Rate compares the total revenue from all Active Customer Accounts in a quarter to the same quarter in the prior year. To calculate the Dollar-Based Net Expansion Rate, RADINET first identifies the cohort of Active Customer Accounts that were Active Customer Accounts in the same quarter of the prior year. The Dollar-Based Net Expansion Rate is the quotient obtained by dividing the revenue generated from that cohort in a quarter, by the revenue generated from that same cohort in the corresponding quarter in the prior year. When RADINET calculates Dollar-Based Net Expansion Rate for periods longer than one quarter, it uses the average of the applicable quarterly Dollar-Based Net Expansion Rates for each of the quarters in such period. Revenue from acquisitions does not impact the Dollar-Based Net Expansion Rate calculation until the quarter following the one-year anniversary of the applicable acquisition, unless the acquisition closing date is the first day of a quarter. As a result, for the quarter ended March 31, 2023, our Dollar-Based Net Expansion Rate excludes the contributions from acquisitions made after January 1, 2022.

RADINET believes that measuring Dollar-Based Net Expansion Rate provides a more meaningful indication of the performance of the Company’s efforts to increase revenue from existing customers. RADINET ability to drive growth and generate incremental revenue depends, in part, on the Company’s ability to maintain and grow its relationships with existing Active Customer Accounts and to increase their use of the platform. An important way in which RADINET has historically tracked performance in this area is by measuring the Dollar-Based Net Expansion Rate for Active Customer Accounts. RADINET Dollar-Based Net Expansion Rate increases when such Active Customer Accounts increase their usage of a product, extend their usage of a product to new applications or adopt a new product. RADINET Dollar-Based Net Expansion Rate decreases when such Active Customer Accounts cease or reduce their usage of a product or when RADINET lowers usage prices on a product. As RADINET customers grow their businesses and extend the use of RADINET platform, they sometimes create multiple customer accounts with us for operational or other reasons. As such, when RADINET identifies a significant customer organization (defined as a single customer organization generating more than 1% of revenue in a quarterly reporting period) that has created a new Active Customer Account, this new Active Customer Account is tied to, and revenue from this new Active Customer Account is included with, the original Active Customer Account for the purposes of calculating this metric.

Source: RADINET Inc.