Carbonite announces Q32012 financials, growing but still losing money

October 29, 2012 at 10:03 pm Leave a comment

Online backup provider Carbonite (NASDAQ: CARB) announces its financial result for the third quarter of their 2012 fiscal year, and most indications were quite positive.

Storage Newsletter provided a nice summary of the results, the highlights of which are:

  • Bookings for the third quarter of 2012 were $24.3 million, an increase of 19% from $20.5 million in the third quarter of 2011.
  • Revenue for the third quarter of 2012 was $21.6 million, an increase of 35% from $15.9 million in the third quarter of 2011.
  • Gross margin for the third quarter of 2012 was 66.6%, compared to 61.6% in the third quarter of 2011.
  • Net loss for the third quarter of 2012 was ($3.4) million, compared to ($7.4) million in the third quarter of 2011.

Our thoughts:

The improvements all make sense and our part of the natural progression of the recurring revenue model (i.e. since bookings are in advance, revenue will continue to grow and since costs of storage tend to decline with scale, their margin improvement is expected).  It seems like the should be profitable at this point, so the lag in generating earnings is likely due to high marketing costs, high G&A, and/or customer service.

The most confusing element is their churn report (“Quarterly retention rate was in the 96% to 97% range, consistent with prior quarters since 2009.”).  Carbonite reports churn on a quarterly basis, which makes it harder to discern what is really happening there.

Question to our audience — does anyone know if other SaaS companies that report churn on a quarterly basis?

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