SurveyMonkey Announces Third Quarter 2020 Financial Results

11/5/2020, 1:30 PM (Source: GlobeNewswire)

Reports record revenue, 53% year-over-year growth in enterprise sales revenue

Launches its integrated customer experience offering, the GetFeedback platform

SAN MATEO, Calif., Nov. 05, 2020 (GLOBE NEWSWIRE) -- SurveyMonkey (Nasdaq: SVMK), a leader in agile software solutions for customer experience, market research, and survey feedback, today reported third quarter financial results for the period ended September 30, 2020.

“With 20% year-over-year revenue growth, nearly 450 sequential new enterprise customers, and more than $16 million in free cash flow, SurveyMonkey posted another strong quarter in Q3,” said Zander Lurie, chief executive officer of SurveyMonkey. “We continued our move up-market as organizations like Calendly, Calm, Gainsight, GAF Materials, McDonald’s Japan, NerdWallet, and Trustmark chose our powerful, agile software to turn feedback into action. Our launch of the GetFeedback platform positions us to be a force in customer experience, a market that is hungry for a cost-efficient solution as organizations increasingly prioritize customer feedback on their digital transformation journey.”

Q3 2020 Key Results

  • Total revenue was $95.4 million, an increase of 20% year-over-year.
  • Enterprise sales revenue was $27.4 million, an increase of 53% year-over-year. Enterprise sales revenue accounted for approximately 29% of total revenue, up from approximately 23% in Q3 2019. We ended the quarter with approximately 7,700 enterprise sales customers, up 25% from approximately 6,100 in Q3 2019.
  • Self-serve revenue was $68.0 million, an increase of 11% year-over-year.
  • Deferred revenue was $165.1 million, an increase of 24% year-over-year. Remaining performance obligations (RPO) were $183.3 million, an increase of 20% year-over-year.
  • Paying users totaled approximately 803,000, an increase of approximately 90,000, or 13% from more than 713,000 in Q3 2019, and an increase of approximately 22,000 paying users from Q2 2020. Approximately 87% of our paying users were on annual plans, up from 82% a year ago.
  • Average revenue per user was $478, up approximately 7% from $448 in Q3 2019.
  • GAAP operating margin was negative 23.7% and non-GAAP operating margin was 2.2%.
  • GAAP net loss was $26.1 million and GAAP basic and diluted net loss per share was $0.19. Non-GAAP net loss was $1.3 million and non-GAAP basic and diluted net loss per share was approximately $0.01.
  • Net cash provided by operating activities was $17.9 million and free cash flow was $16.2 million for 18.7% and 17.0% margin, respectively.
  • Cash and cash equivalents totaled $206.3 million and total debt was $214.1 million for net debt of $7.8 million as of September 30, 2020.

Q3 2020 Company Highlights

  • Launched the GetFeedback platform, SurveyMonkey’s easy-to-deploy, cost-efficient customer experience (CX) solution that helps organizations set up their CX program within days to quickly understand and act on customer insights. Combining the power of the GetFeedback and Usabilla solutions acquired by SurveyMonkey in 2019, the unified platform offers customers a cohesive user experience to manage programs across any digital channel. The latest features include an AI-powered analytics layer and the ability to unify data and customer attributes, CX program automation, and integration with customers’ existing systems of record like Salesforce, Microsoft, Slack, and Jira.

  • Hosted its inaugural CX Impact Summit for organizations and leaders focused on customer experience. The well-attended virtual event featured the launch of the GetFeedback platform, over 25 speakers from Salesforce, Box, PagerDuty, Snap Inc., InVision, CustomerThink, and other CX-minded companies, and 15 virtual sessions across three tracks.

  • Announced plans to launch a robust integration between GetFeedback and Salesforce Commerce Cloud to deepen the platform’s connection with Salesforce solutions and strengthen the link between feedback and action for joint customers.

  • Formed a launch partnership with Zoom to expand its integration and improve the virtual feedback experience.

  • Announced its latest app release for Microsoft Teams to help organizations use in-the-moment feedback to improve employee experience through new diversity, equity, and inclusion survey templates, shared analytics, private and expanded surveys, and enhanced security.

  • Launched Contributor Seats as part of SurveyMonkey Team plans to help distributed workforces collaborate more effectively by providing more flexibility on who can create and own surveys, or leverage survey results to make key decisions.

  • Launched the SurveyMonkey Technology Ecosystem Program (STEP), an expanded partner platform that will allow companies to build, launch, and scale their SurveyMonkey integrations with developer resources and go-to-market opportunities.

  • Launched its Tableau Election Data Hub and Exclusive Polling Partnership with Axios to provide broad access to public opinion data driving one of the most-watched elections of our lifetimes.

  • Became a Charter Member of The Board Challenge, a new initiative to help improve the representation of Black directors in corporate U.S. boardrooms.

  • Released its latest Mobility Confidence Index Study with J.D. Power, which revealed a slight decrease in attitudes toward autonomous and electric vehicles in late 2020 compared to earlier this year.

  • Published research on the current state of customer experience, which indicated that companies with no formal CX program had the lowest rate of financial growth (33%), while organizations with established (50%) and advanced (62%) CX programs were much more likely to experience growth, according to respondents. The company published an additional study, Adapting in Times of Crisis 2020, that highlights curiosity and agility as the top characteristics needed for companies to successfully navigate the pandemic.

SurveyMonkey posted a shareholder letter with its complete third quarter 2020 financial results and management commentary on its investor relations website at investor.surveymonkey.com.

Financial Outlook

For the fourth quarter of 2020, SurveyMonkey currently expects the following:

Q4 2020
Revenue$99 million - $101 million19% YoY growth at mid-point
Non-GAAP operating margin2% to 4%

The Company expects basic and diluted weighted average shares outstanding to be approximately 143 million for the fourth quarter of 2020. For a detailed explanation of the Company’s non-GAAP measures, please refer to the appendix section of this press release.

Conference Call Information

SurveyMonkey senior management will host a conference call today to discuss the Company’s Q3 2020 financial results. This call is scheduled to begin at 5:30 am PT / 8:30 am ET and can be accessed by dialing (833) 900-1542 or (236) 712-2281 (ID: 4928444). An archived webcast of the conference call will be accessible on SurveyMonkey’s Investor Relations page, investor.surveymonkey.com. A telephonic replay of the conference call will be available until Thursday, November 12, 2020, and can be accessed by dialing (800) 585-8367 or (416) 621-4642 and entering the passcode 4928444#.

About SurveyMonkey

SurveyMonkey is a leader in agile software solutions for customer experience, market research, and survey feedback. The company’s platform empowers over 17 million active users to analyze and act on feedback from employees, customers, website and app users, and market research respondents. SurveyMonkey’s products, enterprise solutions, and integrations enable more than 335,000 organizations to deliver better customer experiences, increase employee retention​, and unlock growth and innovation. Ultimately, SurveyMonkey's vision is to raise the bar for human experiences by amplifying individual voices.

Investor Relations Contact:
Gary J. Fuges, CFA
investors@surveymonkey.com

Media Contact:
Sandra Gharib
pr@surveymonkey.com

Source: SVMK Inc.

SVMK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands) September 30, 2020  December 31, 2019 
Assets        
Current assets:        
Cash and cash equivalents $206,334  $131,035 
Accounts receivable, net  20,434   17,795 
Deferred commissions, current  4,630   3,078 
Prepaid expenses and other current assets  8,673   9,382 
Total current assets  240,071   161,290 
Property and equipment, net  22,510   35,072 
Operating lease right-of-use assets  58,496   63,904 
Capitalized internal-use software, net  29,802   33,156 
Acquisition intangible assets, net  23,697   33,150 
Goodwill  465,602   462,927 
Deferred commissions, non-current  8,464   5,384 
Other assets  8,781   9,376 
Total assets $857,423  $804,259 
Liabilities and stockholders equity        
Current liabilities:        
Accounts payable $5,752  $2,677 
Accrued expenses and other current liabilities  15,715   16,077 
Accrued compensation  25,693   24,031 
Deferred revenue, current  164,282   139,990 
Operating lease liabilities, current  8,091   8,381 
Debt, current  1,900   1,900 
Total current liabilities  221,433   193,056 
Deferred revenue, non-current  776   1,015 
Deferred tax liabilities  5,480   4,870 
Debt, non-current  212,191   213,616 
Operating lease liabilities, non-current  76,340   82,668 
Other non-current liabilities  9,402   7,050 
Total liabilities  525,622   502,275 
Commitments and contingencies        
Stockholders’ equity:        
Preferred stock      
Common stock  1   1 
Additional paid-in capital  806,002   705,143 
Accumulated other comprehensive income (loss)  1,807   (444)
Accumulated deficit  (476,009)  (402,716)
Total stockholders’ equity  331,801   301,984 
Total liabilities and stockholders’ equity $857,423  $804,259 

SVMK INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands, except per share amounts) 2020  2019  2020  2019 
Revenue $95,429  $79,317  $274,635  $223,097 
Cost of revenue (1)(2)  21,899   19,626   62,852   56,203 
Gross profit  73,530   59,691   211,783   166,894 
Operating expenses:                
Research and development (1)  30,068   22,718   83,196   65,931 
Sales and marketing (1)(2)  43,875   30,926   128,544   86,665 
General and administrative (1)  22,181   20,992   65,452   61,294 
Restructuring           (66)
Total operating expenses  96,124   74,636   277,192   213,824 
Loss from operations  (22,594)  (14,945)  (65,409)  (46,930)
Interest expense  2,379   3,572   7,887   10,878 
Other non-operating income, net  (143)  (887)  (1,277)  (3,441)
Loss before income taxes  (24,830)  (17,630)  (72,019)  (54,367)
Provision for (benefit from) income taxes  1,289   (1,320)  1,274   (1,802)
Net loss $(26,119) $(16,310) $(73,293) $(52,565)
Net loss per share, basic and diluted $(0.19) $(0.12) $(0.53) $(0.40)
Weighted-average shares used in computing basic and diluted net loss per share  141,034   133,417   138,907   130,434 

(1)Includes stock-based compensation, net of amounts capitalized as follows:

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands) 2020  2019  2020  2019 
Cost of revenue $1,222  $718  $3,229  $2,805 
Research and development  8,322   5,468   22,275   15,863 
Sales and marketing  5,912   2,918   15,096   8,714 
General and administrative  6,150   5,678   17,979   17,665 
Stock-based compensation, net of amounts capitalized $21,606  $14,782  $58,579  $45,047 

(2)Includes amortization of acquisition intangible assets as follows:

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands) 2020  2019  2020  2019 
Cost of revenue $1,800  $1,557  $5,813  $3,448 
Sales and marketing  1,270   964   3,983   2,267 
Amortization of acquisition intangible assets $3,070  $2,521  $9,796  $5,715 

SVMK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

  Nine Months Ended September 30, 
(in thousands) 2020  2019 
Cash flows from operating activities        
Net loss $(73,293) $(52,565)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization  36,328   32,468 
Non-cash leases expense  9,958   9,185 
Stock-based compensation expense, net of amounts capitalized  58,579   45,047 
Deferred income taxes  608   (1,866)
Provision for doubtful accounts  1,156   309 
Gain on sale of a private company investment  (1,001)  (1,001)
Other  1,834   143 
Changes in assets and liabilities:        
Accounts receivable  (3,929)  (1,382)
Prepaid expenses and other assets  (6,900)  (2,908)
Accounts payable and accrued liabilities  5,851   5,955 
Accrued compensation  1,689   (1,401)
Deferred revenue  24,242   23,486 
Operating lease liabilities  (11,135)  (10,237)
Net cash provided by operating activities  43,987   45,233 
Cash flows from investing activities        
Acquisitions, net of cash acquired     (114,603)
Purchases of property and equipment  (772)  (2,026)
Capitalized internal-use software  (7,051)  (9,593)
Proceeds from sale of a private company investment and other  1,095   1,001 
Net cash used in investing activities  (6,728)  (125,221)
Cash flows from financing activities        
Proceeds from stock option exercises  37,301   41,846 
Proceeds from employee stock purchase plan  3,082   2,662 
Repayment of debt  (1,650)  (1,650)
Net cash provided by financing activities  38,733   42,858 
Effect of exchange rate changes on cash  (957)  (435)
Net increase (decrease) in cash, cash equivalents and restricted cash  75,035   (37,565)
Cash, cash equivalents and restricted cash at beginning of period  131,683   154,371 
Cash, cash equivalents and restricted cash at end of period $206,718  $116,806 
Supplemental cash flow data:        
Interest paid for term debt $7,386  $10,391 
Income taxes paid $709  $756 
Non-cash investing and financing transactions:        
Fair value of common stock issued as acquisition consideration $  $36,204 
Stock compensation included in capitalized software costs $1,692  $2,889 
Lease liabilities arising from obtaining right-of-use assets, net $  $7,548 
Derecognized financing obligation related to building due to adoption of ASC 842 $  $92,009 
Derecognized building due to adoption of ASC 842 $  $71,781 

SVMK INC.

SUPPLEMENTAL DISAGGREGATED REVENUE DATA (unaudited)

Quarterly Disaggregated Revenue

  Three Months Ended 
(in thousands) Sep. 30, 2020 Jun. 30, 2020 Mar. 30, 2020 Dec. 31, 2019 Sep. 30, 2019 Jun. 30, 2019 Mar. 30, 2019 
Self-serve revenue $68,001 $65,398 $63,107 $62,948 $61,348 $60,071 $57,619 
Enterprise revenue  27,428  25,543  25,158  21,376  17,969  15,068  11,022 
Revenue $95,429 $90,941 $88,265 $84,324 $79,317 $75,139 $68,641 

Annual Disaggregated Revenue

  Year Ended December 31, 
(in thousands) 2019  2018 
Self-serve revenue $241,986  $220,822 
Enterprise revenue  65,435   33,502 
Revenue $307,421  $254,324 

Self-serve revenues are generated from products purchased independently through our website.
Enterprise revenues are generated from products sold to organizations through our sales team.

SVMK INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) (1)

Reconciliation of GAAP to Non-GAAP (Loss) Income from Operations

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands, except percentages) 2020  2019  2020  2019 
GAAP Loss from operations $(22,594) $(14,945) $(65,409) $(46,930)
GAAP Operating margin  (24)%  (19)%  (24)%  (21)%
Stock-based compensation, net  21,606   14,782   58,579   45,047 
Amortization of acquisition intangible assets  3,070   2,521   9,796   5,715 
Restructuring           (66)
Non-GAAP Income from operations $2,082  $2,358  $2,966  $3,766 
Non-GAAP Operating margin  2%  3%  1%  2%

Reconciliation of GAAP to Non-GAAP Loss and Loss per diluted share

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands, except per share amounts) 2020  2019  2020  2019 
GAAP Net loss $(26,119) $(16,310) $(73,293) $(52,565)
GAAP Net loss per diluted share $(0.19) $(0.12) $(0.53) $(0.40)
Weighted-average shares used to compute GAAP net loss per diluted share  141,034   133,417   138,907   130,434 
                 
Stock-based compensation, net  21,606   14,782   58,579   45,047 
Amortization of acquisition intangible assets  3,070   2,521   9,796   5,715 
Restructuring           (66)
Gain on sale of a private company investment        (1,001)  (1,001)
Income tax effect on Non-GAAP adjustments (2)  97   (1,029)  72   (1,219)
                 
Non-GAAP Net loss $(1,346) $(36) $(5,847) $(4,089)
Non-GAAP Net loss per diluted share $(0.01) $  $(0.04) $(0.03)
Weighted-average shares used to compute Non-GAAP net loss per diluted share  141,034   133,417   138,907   130,434 

(1)  Please see Appendix A for explanation of non-GAAP measures used.
(2)  Due to the full valuation allowance on our US deferred tax assets, there were no tax effects associated with the Non-GAAP adjustments for stock-based compensation, net, restructuring and gain on sale of a private company investment. Non-GAAP adjustments pertain to the income tax effects of amortization of acquisition-related intangible assets.

SVMK INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) (1)

Calculation of Free Cash Flow

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands) 2020  2019  2020  2019 
Net cash provided by operating activities $17,892  $23,521  $43,987  $45,233 
Purchases of property and equipment     (691)  (772)  (2,026)
Capitalized internal-use software  (1,679)  (3,066)  (7,051)  (9,593)
Free cash flow $16,213  $19,764  $36,164  $33,614 

Supplemental GAAP and Non-GAAP Information

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands, except percentages) 2020  2019  2020  2019 
GAAP Gross profit $73,530  $59,691  $211,783  $166,894 
GAAP Gross margin  77%  75%  77%  75%
Stock-based compensation, net  1,222   718   3,229   2,805 
Amortization of acquisition intangible assets  1,800   1,557   5,813   3,448 
Non-GAAP Gross profit $76,552  $61,966  $220,825  $173,147 
Non-GAAP Gross margin  80%  78%  80%  78%
                 
GAAP Research and development $30,068  $22,718  $83,196  $65,931 
GAAP Research and development margin  32%  29%  30%  30%
Stock-based compensation, net  8,322   5,468   22,275   15,863 
Non-GAAP Research and development $21,746  $17,250  $60,921  $50,068 
Non-GAAP Research and development margin  23%  22%  22%  22%
                 
GAAP Sales and marketing $43,875  $30,926  $128,544  $86,665 
GAAP Sales and marketing margin  46%  39%  47%  39%
Stock-based compensation, net  5,912   2,918   15,096   8,714 
Amortization of acquisition intangible assets  1,270   964   3,983   2,267 
Non-GAAP Sales and marketing $36,693  $27,044  $109,465  $75,684 
Non-GAAP Sales and marketing margin  38%  34%  40%  34%
                 
GAAP General and administrative $22,181  $20,992  $65,452  $61,294 
GAAP General and administrative margin  23%  26%  24%  27%
Stock-based compensation, net  6,150   5,678   17,979   17,665 
Non-GAAP General and administrative $16,031  $15,314  $47,473  $43,629 
Non-GAAP General and administrative margin  17%  19%  17%  20%

(1)  Please see Appendix A for explanation of non-GAAP measures used.

APPENDIX A

SVMK INC.
EXPLANATION OF NON-GAAP MEASURES

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP (“GAAP”), we use the following Non-GAAP financial measures: Non-GAAP (loss) income from operations, Non-GAAP operating margin, Non-GAAP net loss, Non-GAAP net loss per diluted share, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP research and development, Non-GAAP research and development margin, Non-GAAP sales and marketing, Non-GAAP sales and marketing margin, Non-GAAP general and administrative, Non-GAAP general and administrative margin, and free cash flow. Our definition for each Non-GAAP measure used is provided below, however a limitation of Non-GAAP financial measures are that they do not have uniform definitions. Accordingly, our definitions for Non-GAAP measures used will likely differ from similarly titled Non-GAAP measures used by other companies thereby limiting comparability.

With regards to the Non-GAAP guidance provided above, a reconciliation to the corresponding GAAP amounts are not provided as the quantification of certain items excluded from each respective Non-GAAP measure, which may be significant, cannot be reasonably calculated or predicted at this time without unreasonable efforts. For example, the Non-GAAP adjustment for stock-based compensation expense, net, requires additional inputs such as number of shares granted and market price that are not currently ascertainable.

Non-GAAP (loss) income from operations, Non-GAAP operating margin: We define Non-GAAP (loss) income from operations as GAAP loss from operations excluding stock-based compensation, net, amortization of acquisition intangible assets and restructuring. Non-GAAP operating margin is defined as Non-GAAP (loss) income from operations divided by revenue.

Non-GAAP net loss, Non-GAAP net loss per diluted share: We define Non-GAAP net loss as GAAP net loss excluding stock-based compensation, net, amortization of acquisition intangible assets, restructuring, gain on sale of a private company investment, and including the income tax effect on Non-GAAP adjustments. Non-GAAP net loss per diluted share is defined as Non-GAAP net loss divided by the weighted-average shares outstanding.

Non-GAAP gross profit, Non-GAAP gross margin: We define Non-GAAP gross profit as GAAP gross profit excluding stock-based compensation, net and amortization of acquisition intangible assets. Non-GAAP gross margin is defined as Non-GAAP gross profit divided by revenue.

Non-GAAP research and development, Non-GAAP research and development margin: We define Non-GAAP research and development as GAAP research and development excluding stock-based compensation, net. Non-GAAP research and development margin is defined as Non-GAAP research and development divided by revenue.

Non-GAAP sales and marketing, Non-GAAP sales and marketing margin: We define Non-GAAP sales and marketing as GAAP sales and marketing excluding stock-based compensation, net and amortization of acquisition intangible assets. Non-GAAP sales and marketing margin is defined as Non-GAAP sales and marketing divided by revenue.

Non-GAAP general and administrative, Non-GAAP general and administrative margin: We define Non-GAAP general and administrative as GAAP general and administrative excluding stock-based compensation, net. Non-GAAP general and administrative margin is defined as Non-GAAP general and administrative divided by revenue.

We use these Non-GAAP measures to compare and evaluate our operating results across periods in order to manage our business, for purposes of determining executive and senior management incentive compensation, and for budgeting and developing our strategic operating plans. We believe that these Non-GAAP measures provide useful information about our operating results, enhance the overall understanding of our past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by our management in evaluating our financial performance and for operational decision making, but they are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

We have excluded the effect of the following items from the aforementioned Non-GAAP measures because they are non-cash and/or are non-recurring in nature and because we believe that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. We further believe this measure is useful to investors in that it allows for greater transparency to certain line items in our financial statements and facilitates comparisons to historical operating results and comparisons to peer operating results. A description of the Non-GAAP adjustments for the above measures is as follows:

  • Stock-based compensation, net: We incur stock based-compensation expense on a GAAP basis resulting from equity awards granted to our employees. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
  • Amortization of intangible assets: We incur amortization expense on intangible assets on a GAAP basis resulting from prior acquisitions. Amortization of acquired intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of any acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of acquired intangible assets will recur in future periods.
  • Restructuring: Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. We expect that restructuring costs will generally diminish over time with respect to past acquisitions and/or strategic initiatives. However, we may incur these expenses in future periods in connection with any new acquisitions and/or strategic initiatives.
  • Gain on sale of a private company investment: Gain on sale of a private company investment was recognized on a GAAP basis resulting from the sale of certain corporate assets. We expect that such transactions will be infrequent in occurrence and are therefore excluded from our Non-GAAP results as they do not otherwise relate to our core business operations.

For more information on the Non-GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP Data” section of this press release. The accompanying tables provide details on the GAAP financial measures that are most directly comparable to the Non-GAAP financial measures and the related reconciliations between those financial measures.

Free cash flow: We define free cash flow as GAAP net cash provided by operating activities less purchases of property and equipment and capitalized internal-use software. We consider free cash flow to be an important measure because it measures our liquidity after deducting capital expenditures for purchases of property and equipment and capitalized software development costs, which we believe provides a more accurate view of our cash generation and cash available to grow our business. We expect to generate positive free cash flow over the long term. Free cash flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities. Some of the limitations of free cash flow are that free cash flow does not reflect our future contractual commitments and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

Safe Harbor Statement

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking statements about our financial outlook, outstanding shares, products, including our investments in products, technology and other key strategic areas. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

The risks and uncertainties referred to above include - but are not limited to - risks related to the COVID-19 coronavirus pandemic; our ability to retain and upgrade customers; our revenue growth rate; our brand; our marketing strategies; our self-serve business model; the length of our sales cycles; the growth and development of our salesforce; security measures; expectations regarding our ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that our products and services are accessible at all times; competition; our debt; revenue recognition; our ability to manage our growth; our culture and talent; our data centers; privacy, security and data transfer concerns, as well as changes in regulations, which could impact our ability to serve our customers or curtail our monetization efforts; litigation and regulatory issues; expectations regarding the return on our strategic investments; execution of our plans and strategies, including with respect to mobile products and features and expansion into new areas and businesses; our international operations; intellectual property; the application of U.S. and international tax laws on our tax structure and any changes to such tax laws; acquisitions we have made or may make in the future; the price volatility of our common stock; and general economic conditions.

Further information on these and other factors that could affect our financial results are included in documents filed with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the Quarterly Report on Form 10-Q that will be filed for the quarter ended September 30, 2020, which should be read in conjunction with these financial results. These documents are or will be available on the SEC Filings section of our Investor Relations website page at investor.surveymonkey.com. All information provided in this release and in the attachments is as of November [5], 2020, and we undertake no obligation to update this information.

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