MIME 2017 Annual Report

36 However, this non-GAAP measure should not be considered in isolation or as a substitute for our financial results prepared in accordance with U.S. GAAP. For example, revenue constant currency growth rates, by their nature, exclude the impact of foreign exchange, which may have a material impact on U.S. GAAP revenue. Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and therefore other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. (4) We calculate our revenue retention rate by annualizing revenue on a constant currency basis recorded on the last day of the measurement period for only those customers in place throughout the entire measurement period. We include add-on, or upsell, revenue from additional employees and services purchased by existing customers. We divide the result by revenue on a constant currency basis on the first day of the measurement period for all customers in place at the beginning of the measurement period. The measurement period is based on the trailing twelve months. The revenue on a constant currency basis is based on the average exchange rates in effect during the respective period. (5) Reflects the customer count on the last day of the period rounded to the nearest hundred customers. (6) Adjusted EBITDA is a non-GAAP financial measure that we define as net (loss) income, adjusted to exclude: depreciation, amortization, disposals and impairments of long-lived assets, share-based compensation expense, restructuring expense, interest income and interest expense, provision for income taxes and foreign exchange (expense) income and includes rent paid in the period related to locations that are accounted for as build-to-suit facilities. We believe that Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with our peer companies, many of which use a similar non-GAAP financial measure to supplement their GAAP results. We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies, to communicate with our board of directors concerning our financial performance, and for establishing incentive compensation metrics for executives and other senior employees. We do not place undue reliance on Adjusted EBITDA as a measure of operating performance. This non-GAAP measure should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using a non-GAAP financial measure, including that other companies may calculate this measure differently than we do, that it does not reflect our capital expenditures or future requirements for capital expenditures and that it does not reflect changes in, or cash requirements for, our working capital. The following table presents a reconciliation of net (loss) income to Adjusted EBITDA: Year Ended March 31, 2018 2017 2016 2015 2014 (in thousands) Reconciliation of Adjusted EBITDA: Net (loss) income $ (12,386) $ (5,441) $ (3,244) $ 285 $ (16,890) Depreciation, amortization and disposals of long-lived assets 19,141 11,881 10,527 11,028 8,958 Rent expense related to build-to-suit facilities (785) — — — — Interest (income) expense, net (712) (242) 616 641 456 Provision for income taxes 2,705 2,202 865 152 19 Share-based compensation expense 11,734 10,294 7,886 5,426 1,232 Impairments of long-lived assets 1,712 — — — — Restructuring 832 — — 1,203 — Foreign exchange expense (income) 3,511 (6,892) (811) (4,508) 5,055 Adjusted EBITDA $ 25,752 $ 11,802 $ 15,839 $ 14,227 $ (1,170)