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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Report” or “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Report include, but are not limited to, statements about:
•our ability to attract new customers;
•our ability to retain existing customers;
•our ability to upsell and cross-sell within our existing customer base;
•possible harm caused by customers terminating or failing to renew their subscription contracts;
•possible harm caused by customers terminating or failing to renew their maintenance contracts;
•possible harm caused by significant disruption of service or loss of unauthorized access to users’ data;
•our ability to prevent serious errors or defects in our products and services;
•our expectations and management of future growth;
•our ability to transition our customers to subscription-based offerings;
•the demand for our platform or data management solutions in general;
•the possible harm caused by the COVID-19 pandemic and its impact on our business, our employees, and our customers;
•our ability to compete successfully in competitive markets;
•our ability to respond to rapid technological changes;
•our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, and operating expenses;
•our ability to protect our brand;
•the demand for cloud-based solutions;
•our ability to attract and retain key personnel and highly qualified personnel;
•our ability to effectively train and incentivize our sales force;
•our ability to successfully execute our go-to-market strategy;
•our ability to manage our international expansion;
•our ability to build and maintain relationships with strategy partners;
•our ability to maintain, protect, and enhance our intellectual property;
•our ability to achieve or maintain profitability;
•our ability to manage our outstanding indebtedness;
•our ability to successfully identify, acquire, and integrate companies and assets;
•our ability to offer high-quality customer support; and
•the increased expenses associated with being a public company.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Report.
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You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Report to reflect events or circumstances after the date of this Report or to reflect new information or the occurrence of unanticipated 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. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
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PART I
ITEM 1. BUSINESS
Overview
Data is foundational to how digital enterprises run their businesses and make strategic decisions, including creating new offerings, serving their customers and driving operational efficiency. We have pioneered a new category of software, the Intelligent Data Management Cloud, or IDMC. Our AI-powered IDMC platform delivers best-of-breed solutions that enables enterprises to create a single source of truth for their data, allowing them to create compelling 360-degree customer experiences, automate data operations across enterprise-wide business processes like supply chain management, financial planning and operations, and provide governed and secure data access to their employees. It also enables our customers to pursue holistic data-driven digital strategies by accelerating workload migrations to the cloud, thus, enabling all the advantages of cloud analytics.
As enterprises embrace data to modernize their business, data fragmentation has proliferated across a myriad of systems, including cloud and on-premises data warehouses, data lakes, databases and applications. This fragmentation is compounded by the increasing number of data consumers who require access to data from these heterogeneous data systems to perform their jobs. Legacy approaches to data management were simply not built to address the growing complexity and scale of the digital enterprise.
To address these challenges, we have pioneered a new way for businesses to accurately track where their data resides, understand what relationships exist across their different data repositories, and understand who is accessing the data and how it is being used—all at enterprise scale. Our cloud-native platform leverages over 50,000 metadata-aware connections that continuously scan our customers’ data to create rich and highly contextualized metadata to create and manage a metadata system of record that acts as a single source of truth about their data. This allows our AI engine, CLAIRE, to help customers access better data faster, make contextual recommendations about data relationships, uncover novel insights about their business and automate previously manual tasks. As more customers adopt our platform, CLAIRE continuously analyzes new transactions, configurations, rules, and decisions and uses this increased intelligence to drive further automation and deliver better insights to our customers, which in turn we believe will continue to accelerate the adoption of our platform.
Our platform also consists of a wide range of interoperable data management products, including data integration, API and application integration, data quality, master data management, customer and business 360 applications, data catalog, data marketplace, and governance and privacy. These products leverage our platform’s shared services and can be consumed from our SaaS-based cloud offering, which is run on AWS, Microsoft Azure, and Google Cloud Platform, and can also be deployed as a self-managed service in our customers’ cloud, hybrid, or on-premises environments. The growth and adoption of our cloud platform has led to the number of cloud transactions on our platform, which is a measure of data processed, increasing from 0.2 trillion per month in 2015, to 16.9 trillion per month in 2020 and to 27.8 trillion per month as of December 31, 2021. Our cloud ARR as of December 31, 2021 was $317.0 million, compared to $226.6 million as of December 31, 2020, representing year-over-year growth of 40%.
As of December 31, 2021, we had approximately 5,700 active customers in over 100 countries and territories worldwide, including 9 of the Fortune 10, 84 of the Fortune 100 and 923 of the Global 2000. As our customers generate more data, they typically increase their usage of our platform by adding new use cases, adopting more products, or adding more users. Our ability to expand within our customer base has been demonstrated by our subscription net retention rate, which was 114% and 114% as of December 31, 2021 and December 31, 2020, respectively.
We are a strategic partner to our customers in their modernization and digital transformation initiatives, which we believe is reflected by the number of customers that spend more than $1 million in subscription ARR with us, which were 153, 104, and 66 as of December 31, 2021, 2020, and 2019, respectively. We believe this is a direct
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result of our relentless focus on customer satisfaction. We have an overall customer rating of 4.4 out of 5 in the 2022 Gartner® Peer Insights ‘Voice of Customer’: Data Integration Tools report.1
We go to market through a combination of our global direct sales team and a network of strategic partners. Our strategic partners, including cloud hyperscalers, cloud data platforms, global system integrators, and value-added resellers, help extend our sales presence and accelerate the adoption of our platform. We collaborate with cloud hyperscalers and cloud data platforms to help our shared customers accelerate their migration to the cloud and modernize their data and analytics strategies.
For the years ended December 31, 2021, 2020 and 2019, revenue was $1,444.1 million, $1,323.1 million and $1,306.5 million, respectively, representing year-over-year growth of 9% and 1%. Total ARR, which consists of subscription ARR plus maintenance ARR, was $1,360 million, $1,160 million and $1,021 million, at December 31, 2021, 2020 and 2019, respectively, representing year-over-year growth of 17% and 14%, respectively. Subscription ARR was $802.3 million, $607.2 million and $445.8 million, as of December 31, 2021, 2020 and 2019, respectively, representing year-over-year growth of 32% and 36%, respectively. For the years ended December 31, 2021, 2020 and 2019, net loss was $99.9 million, $167.9 million and $183.2 million, respectively, and Adjusted EBITDA was $377.4 million, $399.6 million and $334.8 million, respectively. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measure” for a description of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States (GAAP).
Industry Overview: The Data-Driven Digital Enterprise
We believe data is the most valuable competitive asset today as companies increasingly pursue digital transformation initiatives to modernize their businesses. Enormous amounts of data are being generated by people, applications, and devices worldwide. Enterprises are seeking to connect data across their various applications, systems, and IT environments in order to become data-driven businesses. Understanding and connecting these data assets as well as migrating workloads to the cloud, enables superior insights across the business organization, better service of customers, automation of supply chains, and the democratization of secure, governed data access for all employees.