Why Carbonite Stock Got Crushed Today

What happened

Shares of Carbonite (NASDAQ:CARB) have gotten crushed today, down by 19% as of 1:04 p.m. EST, after the company reported fourth-quarter earnings results. The cloud-based data backup specialist also said it would acquire Webroot.

So what

Revenue in the fourth quarter rose 25% to $77 million, with bookings increasing 31% to $78.8 million. That led to non-GAAP net income of $16.2 million, or $0.45 per share. Analysts were expecting Carbonite to generate $79.9 million in revenue and post an adjusted profit of $0.42 per share. Adjusted EBITDA was $20.8 million, and adjusted free cash flow was $17.1 million.

Illustration of many computers connected to the cloud

Image source: Getty Images.

“We delivered on our strategic priorities in 2018,” CEO Mohamad Ali said in a statement. “We significantly strengthened our product platform and introduced one of the most complete Software-as-a-Service data protection portfolios in the market; we did this while successfully continuing our acquisition integration work and driving meaningful improvements in profitability. In 2019 we plan to build upon these efforts, further expanding our data protection platform and delivering a broader set of solutions to our customers, while we invest aggressively in our distribution channels with a focus on driving continued growth and profitability.”

Now what

Carbonite is acquiring Webroot in an all-cash deal for $618.5 million, which Carbonite will fund with cash on hand, as well as taking on debt. Webroot is a cybersecurity company, and Carbonite is trying to expand into cybersecurity to complement its data backup and recovery services. The acquisition is expected to be immediately accretive to earnings and cash flow once it closes, which is expected in the first quarter. Investors appear skeptical about the deal.

In terms of guidance, Carbonite expects revenue of $76.5 million to $77.5 million in the first quarter, with adjusted EBITDA of $20 million to $21.5 million. For the full 2019 year, Carbonite’s forecast (which includes nine months of contribution from Webroot) calls for sales of $468 million to $482 million, with adjusted EBITDA of $129 million to $134 million.

Leave a Reply

Your email address will not be published. Required fields are marked *