8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 8, 2021

 

 

Duck Creek Technologies, Inc.

(Exact Name of the Registrant as Specified in Charter)

 

 

 

Delaware   333-240050   84-3723837

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

22 Boston Wharf Rd., Floor 10   Boston   Massachusetts    02210
(Street Address)   (City)   (State)    (Zip Code)

Registrant’s telephone number, including area code (949) 214-1000

Not Applicable

(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)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

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:

 

Trading

symbol(s)

 

Name of exchange

on which registered

Common Stock, $0.01 par value   DCT   NASDAQ Global Select Market

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 July 8, 2021, Duck Creek Technologies, Inc. (the “Company”) announced its financial results for the quarter ended May 31, 2021. The press release also includes forward-looking statements about the Company’s outlook. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in Item 2.02 of this Form 8-K (including Exhibit 99.1 attached 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, except as expressly provided by specific reference in such a filing.

The Company is making reference to non-GAAP financial information in both the press release and its earnings call. Reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures are contained in the press release attached as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.   

Description

99.1    Press release dated July 8, 2021


SIGNATURE

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.

 

  DUCK CREEK TECHNOLOGIES, INC.
By:  

/s/ Vincent Chippari

  Name:   Vincent Chippari
  Title:   Chief Financial Officer

Date: July 8, 2021

EX-99.1

Exhibit 99.1

Duck Creek Technologies Announces Third Quarter Fiscal 2021 Financial Results

 

   

Third Quarter Fiscal 2021 Subscription revenue grew 56% year-over-year

 

   

SaaS Annual Recurring Revenue grew 64% year-over-year

BOSTON, MA Jul. 8, 2021 (GLOBE NEWSWIRE) — Duck Creek Technologies (NASDAQ: DCT), a provider of SaaS-delivered enterprise software to the property & casualty (“P&C”) insurance industry, today announced its financial results for the three and nine months ended May 31, 2021.

“Duck Creek continued to perform at a high level in the third quarter, highlighted by 56% subscription revenue growth,” said Michael Jackowski, Duck Creek’s Chief Executive Officer. “We signed several important wins with new and existing customers, including a substantial expansion with a Tier 1 carrier that is deploying Duck Creek OnDemand to additional lines of business.”

Mr. Jackowski added, “Our growing roster of successful Duck Creek OnDemand deployments is a clear demonstration that the P&C insurance industry is recognizing that our SaaS core systems platform can provide greater flexibility, faster innovation and a better customer experience than legacy systems. We remain at the early stages of this transformation and believe Duck Creek is well positioned to benefit for years to come.”

Third Quarter 2021 Financial Highlights

Revenue

 

   

Total revenue for the third quarter of fiscal year 2021 was $67.9 million, an increase of 26% from the comparable period in fiscal year 2020. Subscription revenue was $33.6 million, an increase of 56%; services revenue was $25.6 million, an increase of 6%; license revenue was $2.5 million, an increase of 15%; and maintenance revenue was $6.3 million, an increase of 4%.

 

   

SaaS annual recurring revenue, or SaaS ARR, was $124.1 million as of May 31, 2021, an increase of 64% from the comparable period in fiscal year 2020.

Profitability

 

   

GAAP loss from operations was $0.5 million for the third quarter of fiscal year 2021, compared with a GAAP loss from operations of $1.4 million for the comparable period in fiscal year 2020.

 

   

Non-GAAP income from operations was $4.8 million for the third quarter of fiscal year 2021, compared with non-GAAP income from operations of $2.9 million for the comparable period in fiscal year 2020.

 

   

GAAP net loss was $0.4 million for the third quarter of fiscal year 2021, compared with GAAP net loss of $2.0 million for the comparable period in fiscal year 2020.

 

   

Non-GAAP net income was $4.0 million for the third quarter of fiscal year 2021, compared with non-GAAP net income of $1.9 million for the comparable period in fiscal year 2020.

 

   

GAAP net loss per share was $0.00, based on basic weighted average shares outstanding of approximately 131.6 million shares as of May 31, 2021. Non-GAAP net income per share was $0.03 based on fully diluted weighted average shares outstanding of approximately 135.2 million shares as of May 31, 2021.

 

   

Adjusted EBITDA was $5.5 million for the third quarter of fiscal 2021, compared with adjusted EBITDA of $3.8 million for the comparable period in fiscal year 2020.

Liquidity

 

   

As of May 31, 2021, Duck Creek had $115.6 million in cash and cash equivalents, $256.0 million in short term investments and no debt. The Company had $6.9 million in cash provided by operating activities and had free cash flow of $6.6 million during the third quarter of fiscal year 2021, compared with $18.2 million in cash provided by operating activities and free cash flow of $16.8 million in the comparable period in fiscal year 2020.

The information presented above includes non-GAAP financial measures such as “non-GAAP income from operations,” “adjusted EBITDA,” “non-GAAP net income,” “non-GAAP net income per share,” and “free cash flow.” Refer to “Non-GAAP Financial Measures and Other Metrics” for a discussion of these measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure.


Business Outlook

Duck Creek is issuing the following outlook for the fourth quarter of fiscal 2021 and full year of fiscal 2021 based on current expectations as of July 8, 2021:

 

     Fourth Quarter Fiscal 2021    Full Year Fiscal 2021

Revenue

   $68.5 million to $69.5 million    $258.0 million to $259.0 million

Subscription Revenue

   $32.0 million to $32.5 million    $124.0 million to $124.5 million

Adjusted EBITDA

   $3.5 million to $4.5 million    $15.6 million to $16.6 million

Conference Call Information

Duck Creek Technologies will host a conference call today, July 8, 2021, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results and business outlook. A live webcast of the call will be available on the “Investor Relations” page of the Company’s website at https://ir.duckcreek.com/. To access the call by phone, dial 1-833-570-1119 (domestic) or 1-914-987-7066 (international). A replay of this conference call will be available for a limited time at 1-855-859-2056 (domestic) or 1-404-537-3406 (international) using conference ID 5077088. A replay of the webcast will also be available for a limited time at https://ir.duckcreek.com/.

About Duck Creek Technologies

Duck Creek Technologies is a leading provider of core system solutions to the P&C and General insurance industry. By accessing Duck Creek OnDemand, the company’s enterprise Software-as-a-Service solution, insurance carriers are able to navigate uncertainty and capture market opportunities faster than their competitors. Duck Creek’s functionally-rich solutions are available on a standalone basis or as a full suite, and all are available via Duck Creek OnDemand.

Forward Looking Statements

This press release includes certain disclosures which contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements because they contain words such as “expect,” “believe,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “forecast,” “outlook” and variations of these terms or the negative of these terms and similar expressions. Forward-looking statements, including statements regarding Duck Creek’s expected outlook for fourth quarter fiscal 2021 and full year fiscal 2021, are based on Duck Creek’s current expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements will be set forth in Duck Creek’s most recent Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on November 3, 2020 and any subsequent public filings. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the impact of pandemics, including the on-going COVID-19 pandemic, on U.S. and global economies, Duck Creek’s business and results and financial condition, its employees, demand for its products, sales and implementation cycles, and the health of its customers’ and partners’ businesses; Duck Creek’s history of losses; changes in Duck Creek’s product revenue mix as it continues to focus on sales of its SaaS solutions, which will cause fluctuations in its results of operations and cash flows between periods; Duck Creek’s reliance on orders and renewals from a relatively small number of customers for a substantial portion of its revenue, and the substantial negotiating leverage customers have in renewing and expanding their contracts for Duck Creek’s solutions; the success of Duck Creek’s growth strategy focused on SaaS solutions and its ability to develop or sell its solutions into new markets or further penetrate existing markets; Duck Creek’s ability to manage its expanding operations; intense competition in Duck Creek’s market; third parties may assert Duck Creek is infringing or violating their intellectual property rights; U.S. and global market and economic conditions, particularly adverse in the insurance industry; additional complexity, burdens and volatility in connection with Duck Creek’s international sales and operations; the length and variability of Duck Creek’s sales and implementation cycles; data breaches, unauthorized access to customer data or other disruptions of Duck Creek’s solutions; the significant influence of Duck Creek’s largest shareholders on its management, business plans, and policies and any conflicts of interests therewith; and Duck Creek’s continued reliance on “controlled company” exemptions under the corporate governance standards of Nasdaq during the applicable phase-in periods.

Any forward-looking statement in this release speaks only as of the date of this release. Duck Creek undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws.

Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.


Non-GAAP Financial Measures and Other Metrics

This press release contains the following non-GAAP financial measures: non-GAAP gross margin, non-GAAP income from operations, adjusted EBITDA, non-GAAP net income, non-GAAP net income per share, and free cash flow. Adjusted EBITDA excludes provision for income taxes, other (income) expense, interest expense, net, depreciation of property and equipment, amortization of intangible assets, share-based compensation expense, and change in fair value of contingent earnout liability. Non-GAAP income from operations excludes share-based compensation expense, amortization of intangible assets and change in fair value of contingent earnout liability. Non-GAAP gross margin excludes share-based compensation expense, amortization of intangible assets, and amortization of capitalized internal-use software. Non-GAAP net income excludes share-based compensation expense, amortization of intangible assets and change in fair value of contingent earnout liability and the tax effect of such adjustments. Free cash flow consists of net cash provided by operating activities less cash used for purchases of property and equipment and capitalized internal-use software. See below for a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

Other metrics include SaaS ARR and SaaS Net Dollar Retention, which are calculated for all SaaS continuing software services, excluding the subscription revenue related to one legacy contract for a service no longer offered separately by the Company. SaaS ARR is calculated by annualizing recurring revenue recorded in the last month of the measurement period. SaaS Net Dollar Retention is a rate calculated by annualizing recurring revenue recorded in the last month of the measurement period for those customers in place throughout the entire measurement period. We divide the result by annualized recurring revenue from the month that is one year prior to the end of the measurement period, for all customers in place at the beginning of the measurement period.

The Company believes that these non-GAAP financial measures and other metrics provide useful information to management and investors regarding certain financial and business trends relating to Duck Creek’s financial condition and results of operations. The Company’s management uses these non-GAAP financial measures and other metrics to manage its business, make planning decisions, evaluate its performance and allocate resources. The Company believes that the use of these non-GAAP financial measures and other metrics help investors and analysts in comparing its results across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, including net income and cash flows from operating activities.

These non-GAAP financial measures are not universally consistent calculations, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than the Company does or may not calculate them at all. Additionally, these non-GAAP financial measures are not measurements of financial performance or liquidity under GAAP. In order to facilitate a clear understanding of its consolidated historical operating results, readers should examine the Company’s non-GAAP financial measures in conjunction with its historical GAAP financial information.

To the extent that the Company provides guidance on a non-GAAP basis, it does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for the charges reflected in the Company’s reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

Investor Contact:

Brian Denyeau

ICR

646-277-1251

Brian.denyeau@icrinc.com

Media Contact:

Paul Rechichi

Racepoint Global

617 624 3295

prechichi@racepointglobal.com

Sam A. Shay

Duck Creek Technologies

857 201 5784

sam.shay@duckcreek.com


Duck Creek Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited, in thousands except share and per share amounts)

 

     May 31,     August 31,  
     2021     2020  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 115,637     $ 389,878  

Short-term investments

     256,028       —    

Accounts receivable, net

     37,177       29,149  

Unbilled revenue

     22,491       18,121  

Prepaid expenses and other current assets

     11,838       12,186  
  

 

 

   

 

 

 

Total current assets

     443,171       449,334  

Property and equipment, net

     16,008       18,113  

Operating lease assets

     15,498       18,171  

Goodwill

     272,455       272,455  

Intangible assets, net

     69,425       81,687  

Deferred tax assets

     2,226       1,550  

Unbilled revenue, net of current portion

     2,576       3,487  

Other assets

     16,679       16,303  
  

 

 

   

 

 

 

Total assets

   $ 838,038     $ 861,100  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 1,693     $ 1,802  

Accrued liabilities

     42,485       58,202  

Contingent earnout liability

     4,878       3,701  

Lease liability

     3,007       3,611  

Deferred revenue

     28,743       30,397  
  

 

 

   

 

 

 

Total current liabilities

     80,806       97,713  

Contingent earnout liability, net of current portion

     —         3,391  

Lease liability, net of current portion

     18,342       21,739  

Deferred revenue, net of current portion

     4       379  

Other long-term liabilities

     4,285       4,121  
  

 

 

   

 

 

 

Total liabilities

     103,437       127,343  
  

 

 

   

 

 

 

Commitments and contingencies (Note 13)

    

Stockholders’ equity

    

Common stock, 134,217,410 shares issued and 131,660,379 shares outstanding at May 31, 2021, 133,269,301 shares issued and 130,713,745 shares outstanding at August 31, 2020, 300,000,000 shares authorized at May 31, 2021 and August 31, 2020, par value $0.01 per share

     1,342       1,333  

Preferred stock, 0 shares outstanding, 50,000,000 shares authorized at May 31, 2021 and August 31, 2020, par value $0.01 per share

     —         —    

Treasury stock, common shares at cost; 2,557,031 shares at May 31, 2021 and 2,555,556 shares at August 31, 2020

     (64,745     (64,688

Accumulated deficit

     (35,706     (24,334

Accumulated other comprehensive income

     79       —    

Additional paid in capital

     833,631       821,446  
  

 

 

   

 

 

 

Total stockholders’ equity

     734,601       733,757  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 838,038     $ 861,100  
  

 

 

   

 

 

 


Duck Creek Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited, in thousands except share and per share amounts)

 

                                                                                                                           
     For the Three Months  Ended
May 31,
    For the Nine Months Ended
May 31,
 
     2021     2020     2021     2020  

Revenue:

        

Subscription

   $ 33,552     $ 21,555     $ 92,069     $ 59,368  

License

     2,474       2,160       7,412       5,431  

Maintenance and support

     6,329       6,064       18,404       17,791  

Professional services

     25,583       24,174       71,611       70,760  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     67,938       53,953       189,496       153,350  

Cost of revenue1:

        

Subscription

     12,045       8,721       33,540       24,871  

License

     535       506       1,369       1,347  

Maintenance and support

     855       710       2,556       2,475  

Professional services

     14,315       13,459       42,857       38,839  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     27,750       23,396       80,322       67,532  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     40,188       30,557       109,174       85,818  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses1:

        

Research and development

     12,255       10,197       36,040       29,424  

Sales and marketing

     13,628       11,723       40,390       33,539  

General and administrative

     15,238       10,184       44,273       29,916  

Change in fair value of contingent consideration

     (389     (190     (291     21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     40,732       31,914       120,412       92,900  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (544     (1,357     (11,238     (7,082

Other income (expense), net

     546       (316     1,009       (96

Interest expense, net

     (6     (60     (87     (386
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (4     (1,732     (10,316     (7,564

Provision for income taxes

     353       267       1,056       889  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (357   $ (1,999   $ (11,372   $ (8,453
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share information2

        

Net loss per share of common stock, basic and diluted

   $ 0.00     $ —       $ (0.08   $ —    

Weighted average shares of common stock, basic and diluted

     131,613,003       —         130,992,672       —    

(1) Amounts include share-based compensation expense as disclosed in the following table:

 

                                                                                                                           
     Three Months Ended
May  31,
     Nine Months Ended
May  31,
 
     2021      2020      2021      2020  

Cost of subscription revenue

   $ 90      $ —        $ 302      $ 10  

Cost of maintenance and support revenue

     7        1        22        3  

Cost of services revenue

     253        36        2,003        103  

Research and development

     285        97        1,505        285  

Sales and marketing

     199        93        2,493        257  

General and administrative

     863        253        2,980        747  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total share-based compensation expense

   $ 1,697      $ 480      $ 9,305      $ 1,404  
  

 

 

    

 

 

    

 

 

    

 

 

 

(2) Prior to Duck Creek’s initial public offering in August 2020, there were no shares of common stock outstanding, and the membership structure of Duck Creek Technologies consisted of limited partnership units. Accordingly, comparable period net loss per share has not been presented because it would not be meaningful to the users of the Company’s consolidated financial statements.


Duck Creek Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

     For the Three Months Ended
May 31,
    For the Nine Months Ended
May 31,
 
     2021     2020     2021     2020  

Operating activities:

        

Net loss

   $ (357   $ (1,999   $ (11,372   $ (8,453

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

        

Depreciation of property and equipment

     790       828       2,377       2,350  

Amortization of capitalized software

     510       154       1,506       205  

Amortization of intangible assets

     4,087       4,268       12,262       12,803  

Amortization of deferred financing fees

     28       67       85       106  

Share-based compensation expense

     1,697       480       9,305       1,404  

Loss on change in fair value of contingent earnout liability

     (389     (190     (291     21  

Bad debt expense

     654       137       664       65  

Deferred taxes

     (161     (169     (676     (146

Other non-cash items

     (37     —         (37     —    

Changes in operating assets and liabilities

        

Accounts receivable

     (3,093     1,823       (8,693     (4,301

Unbilled revenue

     (100     2,756       (3,459     (1,182

Prepaid expenses and other current assets

     3,373       1,697       262       96  

Other assets

     303       (465     (376     (4,101

Accounts payable

     387       (472     895       (304

Accrued liabilities

     4,269       7,983       (6,402     9,323  

Deferred revenue

     (1,706     (50     (2,029     214  

Operating leases

     565       1,514       (1,328     199  

Cash settlement of vested phantom stock

     (2,171     —         (9,075     —    

Other long-term liabilities

     (1,774     (166     164       (52
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     6,875       18,196       (16,218     8,247  
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities:

        

Purchase of short-term investments

     —         —         (287,912     —    

Maturities of short-term investments

     32,000       —         32,000       —    

Capitalized internal-use software

     (114     (885     (864     (2,440

Purchase of property and equipment

     (162     (470     (834     (3,164
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     31,724       (1,355     (257,610     (5,604
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities:

        

Proceeds from follow-on offering, net of issuance costs

     —         —         3,452       —    

Payment of deferred IPO costs

     —         —         (3,650     —    

Payment of deferred Class E offering costs

     —         —         (192     (2,552

Proceeds from issuance of Class E Units, net of issuance costs

     —         (2,780     —         212,888  

Payment on redemption of Class A and Class B Units

     —         —         —         (198,000

Purchase of treasury stock

     —         —         (57     —    

Proceeds from stock option exercises

     964       —         1,957       —    

Payments of contingent earnout liability

     —         (374     (1,923     (3,555

Proceeds from revolving credit facility

     —         —         —         5,000  

Payments on revolving credit facility

     —         —         —         (9,000

Payment of deferred financing costs

     —         (480     —         (228
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     964       (3,634     (413     4,553  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     39,563       13,207       (274,241     7,196  

Cash and cash equivalents – beginning of period

     76,074       5,988       389,878       11,999  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents – end of period

   $ 115,637     $ 19,195     $ 115,637     $ 19,195  
  

 

 

   

 

 

   

 

 

   

 

 

 


Duck Creek Technologies, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited)

 

                                                                           
     Three Months Ended
May 31,
     Nine Months Ended
May 31,
 
($ in thousands)    2021      2020      2021      2020  

GAAP Gross Margin

   $ 40,188      $ 30,557      $ 109,174      $ 85,818  

Share-based compensation expense

     350        39        2,327        116  

Amortization of intangible assets

     1,186        1,187        3,559        3,559  

Amortization of capitalized internal-use software

     510        154        1,506        205  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP Gross Margin

   $ 42,234      $ 31,937      $ 116,566      $ 89,698  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

                                                                       
     Three Months Ended
May  31,
    Nine Months Ended
May 31,
 
($ in thousands)    2021     2020     2021     2020  

GAAP Loss from Operations

   $ (544   $ (1,357   $ (11,238   $ (7,082

Share-based compensation expense

     1,697       480       9,305       1,404  

Amortization of intangible assets

     3,994       3,994       11,982       11,982  

Change in fair value of contingent earnout liability

     (389     (190     (291     21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income from Operations

   $ 4,758     $ 2,927     $ 9,758     $ 6,325  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

                                                           
     Three Months Ended
May  31,
    Nine Months Ended
May 31,
 
($ in thousands)    2021     2020     2021     2020  

GAAP Net Loss

   $ (357   $ (1,999   $ (11,372   $ (8,453

Provision for income taxes

     353       267       1,056       889  

Other (income) expense

     (546     316       (1,009     96  

Interest expense, net

     6       60       87       386  

Depreciation of property and equipment

     790       828       2,377       2,350  

Amortization of intangible assets

     3,994       3,994       11,982       11,982  

Share-based compensation expense

     1,697       480       9,305       1,404  

Change in fair value of contingent earnout liability

     (389     (190     (291     21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 5,548     $ 3,756     $ 12,135     $ 8,675  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA as a percent of total revenue

     8     7     6     6

 

     Three Months Ended
May 31,
    Nine Months Ended
May 31,
 
($ in thousands)    2021     Per Share      2020     2021     Per Share     2020  

GAAP Net Loss (1)

   $ (357   $ —        $ (1,999   $ (11,372   $ (0.08   $ (8,453

Add: GAAP tax provision

     353          267       1,056         889  
  

 

 

      

 

 

   

 

 

     

 

 

 

GAAP pre-tax loss

     (4        (1,732     (10,316       (7,564
  

 

 

      

 

 

   

 

 

     

 

 

 

Share-based compensation expense

     1,697          480       9,305         1,404  

Amortization of intangible assets

     3,994          3,994       11,982         11,982  

Change in fair value of contingent earnout liability

     (389        (190     (291       21  
  

 

 

      

 

 

   

 

 

     

 

 

 

Non-GAAP pre-tax income

     5,298          2,552       10,680         5,843  
  

 

 

      

 

 

   

 

 

     

 

 

 

Non-GAAP tax provision applied at a 24% tax rate (2)

     1,272          612       2,563         1,402  
  

 

 

      

 

 

   

 

 

     

 

 

 

Non-GAAP Net Income (1)

   $ 4,026     $ 0.03      $ 1,940     $ 8,117     $ 0.06     $ 4,441  
  

 

 

      

 

 

   

 

 

     

 

 

 

Shares used in computing Non-GAAP income per share

amounts:(1)

             

GAAP weighted-average shares - basic and diluted

     131,613,003            130,992,672      

Non-GAAP dilutive shares excluded from GAAP

loss per share calculation

     3,575,928            3,575,928      
  

 

 

        

 

 

     

Non-GAAP weighted-average shares - diluted

     135,188,931            134,568,600      


(1)

Prior to Duck Creek’s initial public offering in August 2020, there were no shares of common stock outstanding, and the membership structure of Duck Creek Technologies consisted of limited partnership units. Accordingly, comparable period net loss per share has not been presented because it would not be meaningful to the users of the Company’s consolidated financial statements.

 

(2)

Our GAAP tax provision is primarily related to state taxes and income taxes in profitable foreign jurisdictions. We maintain a full valuation allowance against our deferred tax assets in the U.S. For purposes of determining our Non-GAAP Net Income, we have applied a tax rate of 24% which represents our estimated effective tax rate once we are profitable on a GAAP basis.

 

     Three Months Ended
May 31,
    Nine Months Ended
May 31,
 
($ in thousands)    2021     2020     2021     2020  

Net cash provided by (used in) operating activities

   $ 6,875     $ 18,196     $ (16,218   $ 8,247  

Purchases of property and equipment

     (162     (470     (834     (3,164

Capitalized internal-use software

     (114     (885     (864     (2,440
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 6,599     $ 16,841     $ (17,916   $ 2,643