MuleSoft Announces Financial Results for the Fourth Quarter and Fiscal Year 2017

Fourth Quarter Total Revenue of $88.7 Million, Up 60% Year-over-Year

Fiscal 2017 Total Revenue of $296.5 Million, Up 58% Year-over-Year

Company Sets Target of $1 Billion in Total Revenue in 2021

San Francisco – February 15, 2018 – MuleSoft, Inc. (NYSE: MULE), provider of the leading platform for building application networks, today announced financial results for its fourth quarter and fiscal year 2017, ended December 31, 2017.

“Robust market demand and strong sales execution enabled us to deliver fourth quarter and fiscal 2017 revenue well ahead of expectations,” said Greg Schott, chairman and CEO of MuleSoft. “We are excited about MuleSoft’s growth opportunity and expect to reach $1 billion in total revenue in 2021. Our disruptive platform is addressing one of the largest areas of enterprise IT spend, and we’re confident in our long-term strategy to become the de facto application network platform for our customers to become more agile and to transform their businesses.”

Fourth Quarter 2017 Financial Highlights:

• Revenue: Total revenue was $88.7 million in Q4 2017, an increase of 60% year-over-year. Subscription and support revenue was $70.6 million, an increase of 57% year-over-year. Professional services and other revenue was $18.1 million, an increase of 75% year-over-year.

• Gross margin: GAAP gross margin was 71.2% in Q4 2017, compared to 72.7% in the year ago period. Non-GAAP gross margin was 72.9% in Q4 2017, compared to 73.2% in the year-ago period. On a non-GAAP basis, gross margin for subscription and support and professional services revenue each increased year-over-year; however, total gross margin decreased due to the higher mix of services revenue, which has a lower gross margin than subscription and support.

• Operating loss: GAAP operating loss was $25.5 million in Q4 2017, compared to a GAAP operating loss of $12.8 million in the year-ago period. Non-GAAP operating loss in Q4 2017 was $16.0 million, compared to a non-GAAP operating loss of $10.6 million in the year-ago period. Non-GAAP sales and marketing expense as a percentage of revenue improved to 59% compared to 62% a year ago, despite higher commissions as a result of strong sales activity in the quarter.

• Net loss per share: GAAP net loss per share attributable to common stockholders was $0.19 based on 130.4 million weighted-average shares outstanding in Q4 2017, compared to GAAP net loss per share attributable to common stockholders of $0.52 based on 25.4 million weighted-average shares outstanding in Q4 2016.

Non-GAAP net loss per share attributable to common stockholders was $0.12 based on 130.4 million non-GAAP weighted-average shares outstanding in Q4 2017, compared to non‑GAAP net loss per share attributable to common stockholders of $0.10 based on 112.6 million non-GAAP weighted-average shares outstanding in Q4 2016.

• Deferred revenue: Total deferred revenue was $211.4 million at the end of Q4 2017, an increase of 56% year-over-year. Short-term deferred revenue was $202.0 million at the end of Q4 2017, an increase of 55% year-over-year.

• Cash: Cash provided by (used in) operating activities was $8.9 million in Q4 2017, compared to ($8.6) million in the year-ago period. Free cash flow, which is a non-GAAP measure that reflects cash from operating activities less cash used for capital expenditures, was $7.6 million for Q4 2017, compared to ($10.9) million in the year-ago period.

Cash, cash equivalents, and investments totaled $347.3 million at the end of Q4 2017.

Fiscal Year 2017 Financial Highlights:

• Revenue: Total revenue was $296.5 million in FY 2017, an increase of 58% year-over-year. Subscription and support revenue was $238.0 million, an increase of 56% year-over-year. Professional services and other revenue was $58.5 million, an increase of 68% year-over-year.

• Gross margin: GAAP gross margin was 72.6% in FY 2017, compared to 73.9% in the year-ago period. Non‑GAAP gross margin was 74.1% in FY 2017, compared to 74.4% in the year-ago period. On a non-GAAP basis, gross margin for both subscription and support and professional services revenue increased year-over-year; however, total gross margin decreased due to the higher mix of services revenue, which has a lower gross margin than subscription and support.

• Operating loss: GAAP operating loss was $79.8 million in FY 2017, compared to a GAAP operating loss of $48.4 million in the year-ago period. Non-GAAP operating loss in FY 2017 was $51.7 million, compared to a non-GAAP operating loss of $31.9 million in the year-ago period.

• Net loss per share: GAAP net loss per share attributable to common stockholders was $0.75 based on 106.7 million weighted-average shares outstanding in FY 2017, compared to GAAP net loss per share attributable to common stockholders of $2.73 based on 21.6 million weighted-average shares outstanding in FY 2016.

Non-GAAP net loss per share attributable to common stockholders was $0.41 based on 125.8 million non-GAAP weighted-average shares outstanding in FY 2017, compared to non-GAAP net loss per share attributable to common stockholders of $0.30 based on 110.9 million non-GAAP weighted-average shares outstanding in FY 2016.

• Cash: Cash provided by (used in) operating activities was $2.0 million in FY 2017, compared to ($2.4) million in the year-ago period. Free cash flow, which is a non-GAAP measure that reflects cash from operating activities less cash used for capital expenditures, was ($2.9) million in FY 2017, compared to ($6.9) million in the year-ago period.

Other Fourth Quarter 2017 and Fiscal Year 2017 Highlights:

• Appointment of Two New Board Members: MuleSoft appointed Yvonne Wassenaar and Marcus Ryu to its board of directors. Wassenaar and Ryu bring a combined 40 years of technology leadership experience to MuleSoft. Wassenaar is currently the CEO of Airware, a leading enterprise drone analytics company. Ryu is the CEO and co-founder of Guidewire Software, a leading provider of software to the global property-casualty industry.

• Forty-five customers with over $1.0 million in annual contract value: Executing successfully on its land-and-expand strategy and delivering value to customers, MuleSoft ended 2017 with 45 customers with over $1.0 million in annual contract value, up from 30 at year-end 2016.

• Top Place to Work in Multiple Geographies: MuleSoft was ranked the #1 Top Workplace for mid-sized companies by the Bay Area News Group, owner of the San Jose Mercury News. It is the fifth consecutive year that MuleSoft has been named a top employer on the list. In addition, MuleSoft was named one of the Best Places to Work for a third time by the San Francisco Business Times and Silicon Valley Business Journal. Additionally, MuleSoft received accolades for being a top place to work in Australia, Argentina, and the United Kingdom.

Financial Outlook:

MuleSoft is providing guidance for its first quarter ending March 31, 2018 as follows:

• Total revenue between $87 million and $90 million

• Non-GAAP operating loss between $10 million and $13 million

• Non-GAAP net loss per share of approximately $0.07 and $0.09

• Weighted-average shares outstanding of approximately 131 million

The company is also providing guidance for the fiscal year ending December 31, 2018 as follows:

• Total revenue between $405 million and $415 million

• Non-GAAP operating loss between $35 million and $40 million

• Non-GAAP net loss per share between $0.26 and $0.30

• Non-GAAP weighted-average shares outstanding of approximately 133 million

All forward-looking non-GAAP measures exclude estimates for stock-based compensation (“SBC”) expenses. We do not provide reconciliations of our forward-looking non-GAAP financial measures to the corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections with respect to SBC expenses, which are excluded from these non-GAAP measures. SBC expenses are impacted by future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to change. The actual amounts of the excluded SBC expenses will have a significant impact on our GAAP operating loss and GAAP net income (loss) per share. Accordingly, reconciliations of our forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available.

Conference Call Information:

MuleSoft will host a conference call at 2 p.m. Pacific Time (5 p.m. Eastern Time) today, February 15, 2018, to discuss its financial results. A live webcast of the call will be available on the MuleSoft website at investors.mulesoft.com. A live dial-in will be available at (844) 340-9044 for domestic participants and at (412) 858-5204 for international participants.

For more information regarding Outlook and the forward-looking statements contained in the release, please visit our Investor Relations page: https://investors.mulesoft.com/news/2018/02-15-2018-212617465

About MuleSoft

MuleSoft’s mission is to help organizations change and innovate faster by making it easy to connect the world’s applications, data and devices. With its API-led approach to connectivity, MuleSoft’s market-leading Anypoint Platform™ is enabling over 1,200 organizations in approximately 60 countries to build application networks. For more information, visit https://www.mulesoft.com.

MuleSoft is a registered trademark of MuleSoft, Inc. All other marks are those of respective owners.