CARROLLTON, Texas--(BUSINESS WIRE)--RealPage, Inc. (NASDAQ:RP), a leading provider of on-demand software and software-enabled services to the rental housing industry, today announced financial results for its third quarter ended September 30, 2013.
“We are pleased with third quarter results,” said Steve Winn, Chairman and CEO of RealPage. “Across the board revenue traction for our solutions resulted in solid total revenue growth. The revenue performance, combined with our focus on expense discipline, resulted in strong growth in earnings and cash flow.”
Third Quarter 2013 Financial Highlights
- Non-GAAP total revenue was $99.9 million, an increase of 20.0% year-over-year, while GAAP total revenue was $98.1 million, an increase of 17.8% year-over-year;
- Non-GAAP on demand revenue was $95.9 million, an increase of 21.4% year-over-year, while GAAP on demand revenue was $94.1 million, an increase of 19.1% year-over-year;
- Adjusted EBITDA was $23.7 million, an increase of 26.5% year-over-year;
- Non-GAAP net income was $12.1 million, or $0.16 per diluted share, a year-over-year increase of 35.7% and 33.3%, respectively; and
- GAAP net income was $12.9 million, or $0.17 per diluted share, compared to GAAP net income of $2.1 million, or $0.03 per diluted share, in the prior year quarter.
Financial Outlook
RealPage management expects to achieve the following results during its fourth quarter ended December 31, 2013:
- Non-GAAP total revenue is expected to be in the range of $102.7 million to $104.2 million;
- Adjusted EBITDA is expected to be in the range of $25.0 million to $26.0 million;
- Non-GAAP net income is expected to be in the range of $12.5 million to $13.1 million, or $0.16 to $0.17 per diluted share;
- Non-GAAP tax rate of approximately 40.0%; and
- Weighted average shares outstanding of approximately 77.4 million.
RealPage management expects to achieve the following results during its calendar year ended December 31, 2013:
- Non-GAAP total revenue is expected to be in the range of $386.0 million to $387.5 million;
- Adjusted EBITDA is expected to be in the range of $90.5 million to $91.5 million;
- Non-GAAP net income is expected to be in the range of $45.0 million to $45.6 million, or $0.59 to $0.60 per diluted share;
- Non-GAAP tax rate of approximately 40.0%; and
- Full year weighted average shares outstanding of approximately 76.1 million.
Please note that the above statements are forward looking and that Non-GAAP total revenue includes an adjustment for the effect of acquisition-related and other deferred revenue. In addition, the above statements also include the impact of acquisitions and exclude any costs resulting from the Yardi litigation (including settlement costs and related insurance litigation). Actual results may differ materially. Please reference the information under the caption "Non-GAAP Financial Measures" as well as reconciliation tables of GAAP financial measures to non-GAAP financial measures as set forth in this press release.
Conference Call and Webcast
The Company will host a conference call today at 5:00 p.m. EST to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast at www.realpage.com on the Investor Relations section. In addition, a live dial-in is available domestically at 866-743-9666 and internationally at 760-298-5103. A replay will be available at 855-859-2056 or 404-537-3406, passcode 96398984, until November 13, 2013.
About RealPage
Located in Carrollton, Texas, a suburb of Dallas, RealPage provides on demand (also referred to as "Software-as-a-Service" or "SaaS") products and services to apartment communities and single family rentals across the United States. Its on demand product lines include OneSite® property management systems that automate the leasing, renting, management, and accounting of conventional, affordable, tax credit, student living, senior living and military housing properties; LeaseStar™ multichannel managed marketing that enables owners to originate, syndicate, manage and capture leads more effectively and at less overall cost; YieldStar® asset optimization systems that enable owners and managers to optimize rents to achieve the overall highest yield, or combination of rent and occupancy, at each property; Velocity™ billing and utility management services that increase collections and reduce delinquencies; LeasingDesk® risk mitigation systems that are designed to reduce a community's exposure to risk and liability; OpsTechnology® spend management systems that help owners manage and control operating expenses; and Compliance Depot™ vendor management and qualification services to assist a community in managing its compliance vendor program. Supporting this family of SaaS products is a suite of shared cloud services including electronic payments, document management, decision support and learning. Through its Propertyware subsidiary, RealPage also provides software and services to single-family rentals and low density, centrally-managed multifamily housing. For more information, call 1-87-REALPAGE or visit www.realpage.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking" statements relating to RealPage, Inc.'s expected, possible or assumed future results of operations, growth, expenditures, tax rates, and outstanding shares. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “expects,” “believes,” “plans,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the possibility that general economic conditions or uncertainty cause information technology spending, particularly in the rental housing industry, to be reduced or purchasing decisions to be delayed; (b) an increase in customer cancellations; (c) the inability to increase sales to existing customers and to attract new customers; (d) RealPage, Inc.'s failure to integrate acquired businesses and any future acquisitions successfully; (e) the timing and success of new product introductions by RealPage, Inc. or its competitors; (f) changes in RealPage, Inc.'s pricing policies or those of its competitors; (g) litigation; (h) inability to complete the integration of our LeaseStar products and deliver enhanced functionality on a timely basis and (i) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by RealPage, including its Annual Report on Form 10-K previously filed with the SEC on February 27, 2013 and Form 10-Q filed with the SEC on August 6, 2013. All information provided in this release is as of the date hereof and RealPage undertakes no duty to update this information except as required by law.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. These measures differ from GAAP in that they include acquisition-related and other deferred revenue and exclude amortization of intangible assets, stock-based compensation expenses, any impact related to the Yardi litigation (including settlement costs and related insurance litigation), and acquisition related expenses (including any purchase accounting adjustments) and include income taxes at a sustainable effective rate, which excludes the reversal of valuation allowances due to expected or realization of deferred tax assets. Reconciliation tables comparing GAAP financial measures to non-GAAP financial measures are included at the end of this release.
We define Adjusted EBITDA as net (loss) income plus acquisition-related and other deferred revenue adjustment, depreciation and asset impairment, amortization of intangible assets, net interest expense, income tax expense (benefit), stock-based compensation expense, any impact related to Yardi litigation (including settlement costs and related insurance litigation), and acquisition-related expenses.
We believe that the use of Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. 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 similar non-GAAP financial measures to supplement their GAAP results;
- it is useful to exclude certain non-cash charges, such as depreciation and asset impairment, amortization of intangible assets and stock-based compensation and non-core operational charges, such as acquisition-related expenses and any impact related to the Yardi litigation (including settlement costs and related insurance litigation), from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be; and
- it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules and revenue deferred due to a lack of historical experience determining the settlement of the contractual obligation in order to appropriately measure the underlying performance of our business operations in the period of activity and associated expense.
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 and to communicate with our board of directors concerning our financial performance.
We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of liquidity or financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures and that they do not reflect changes in, or cash requirements for, our working capital. We compensate for the inherent limitations associated with using Adjusted EBITDA measures through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net (loss) income.
| Condensed Consolidated Statements of Operations | ||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2013 and 2012 | ||||||||||||||||||
| (unaudited, in thousands, except per share data) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||
| Revenue: | ||||||||||||||||||
| On demand | $ | 94,084 | $ | 78,973 | $ | 270,231 | $ | 224,629 | ||||||||||
| On premise | 838 | 1,226 | 2,799 | 3,903 | ||||||||||||||
| Professional and other | 3,149 | 3,040 | 8,473 | 7,916 | ||||||||||||||
| Total revenue | 98,071 | 83,239 | 281,503 | 236,448 | ||||||||||||||
| Cost of revenue(1) | 38,111 | 32,897 | 110,815 | 95,358 | ||||||||||||||
| Gross profit | 59,960 | 50,342 | 170,688 | 141,090 | ||||||||||||||
| Operating expense: | ||||||||||||||||||
| Product development(1) | 13,232 | 12,274 | 36,997 | 35,325 | ||||||||||||||
| Sales and marketing(1) | 25,166 | 21,792 | 71,992 | 57,186 | ||||||||||||||
| General and administrative(1) | 15,554 | 12,545 | 44,880 | 44,794 | ||||||||||||||
| Total operating expense | 53,952 | 46,611 | 153,869 | 137,305 | ||||||||||||||
| Operating income | 6,008 | 3,731 | 16,819 | 3,785 | ||||||||||||||
| Interest expense and other income, net | (236 | ) | (407 | ) | (921 | ) | (1,620 | ) | ||||||||||
| Income before income taxes | 5,772 | 3,324 | 15,898 | 2,165 | ||||||||||||||
| Income tax expense | (7,114 | ) | 1,211 | (2,616 | ) | 704 | ||||||||||||
| Net income | $ | 12,886 | $ | 2,113 | $ | 18,514 | $ | 1,461 | ||||||||||
| Net income per share | ||||||||||||||||||
| Basic | $ | 0.17 | $ | 0.03 | $ | 0.25 | $ | 0.02 | ||||||||||
| Diluted | $ | 0.17 | $ | 0.03 | $ | 0.24 | $ | 0.02 | ||||||||||
| Weighted average shares used in | ||||||||||||||||||
| computing net income per share | ||||||||||||||||||
| Basic | 75,234 | 72,178 | 74,597 | 71,293 | ||||||||||||||
| Diluted | 76,347 | 74,282 | 75,900 | 73,689 | ||||||||||||||
| (1)Includes stock-based compensation | Three Months Ended | Nine Months Ended | ||||||||||||||||
| expense as follows: | September 30, | September 30, | ||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||
| Cost of revenue |
$ |
785 | $ | 649 |
$ |
2,211 | $ | 2,088 | ||||||||||
| Product development | 1,271 | 1,116 | 3,123 | 3,180 | ||||||||||||||
| Sales and marketing | 2,686 | 2,653 | 7,891 | 4,422 | ||||||||||||||
| General and administrative | 2,994 | 1,595 | 7,817 | 4,627 | ||||||||||||||
|
$ |
7,736 | $ | 6,013 | $ | 21,042 | $ | 14,317 | |||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| At September 30, 2013 and December 31, 2012 | ||||||||||
| (unaudited, in thousands except share data) | ||||||||||
| September 30, | December 31, | |||||||||
| 2013 | 2012 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 43,980 | $ | 33,804 | ||||||
| Restricted cash | 44,450 |
|
35,202 | |||||||
| Accounts receivable, less allowance for doubtful accounts of $1,003 and $1,087 at | ||||||||||
| September 30, 2013 and December 31, 2012, respectively | 58,430 | 51,937 | ||||||||
| Deferred tax asset, net |
8,724 |
- | ||||||||
| Other current assets | 8,320 | 6,541 | ||||||||
| Total current assets |
163,904 |
127,484 | ||||||||
| Property, equipment and software, net | 48,191 | 32,487 | ||||||||
| Goodwill | 139,025 | 134,025 | ||||||||
| Identified intangible assets, net | 102,104 | 104,640 | ||||||||
| Other assets | 3,530 | 3,561 | ||||||||
| Total assets | $ |
456,754 |
$ | 402,197 | ||||||
| Liabilities and stockholders' equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 14,136 | $ | 9,805 | ||||||
| Accrued expenses and other current liabilities | 19,491 | 19,246 | ||||||||
| Current portion of deferred revenue | 61,341 | 60,633 | ||||||||
| Deferred tax liability, net | - | 2 | ||||||||
| Customer deposits held in restricted accounts | 44,420 | 35,171 | ||||||||
| Total current liabilities | 139,388 | 124,857 | ||||||||
| Deferred revenue | 6,544 | 9,446 | ||||||||
| Deferred tax liability, net |
3,956 |
10 | ||||||||
| Revolving credit facility | - | 10,000 | ||||||||
| Other long-term liabilities | 5,234 | 2,813 | ||||||||
| Total liabilities |
155,122 |
147,126 | ||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock, $0.001 par value, 10,000,000 shares authorized and zero shares | ||||||||||
| issued and outstanding at September 30, 2013 and December 31, 2012, respectively | - | - | ||||||||
| Common stock, $0.001 par value per share: 125,000,000 shares authorized, | ||||||||||
| 79,594,887 and 77,012,925 shares issued and 77,746,287 and 75,826,615 shares | ||||||||||
| outstanding at September 30, 2013 and December 31, 2012, respectively | 80 | 77 | ||||||||
| Additional paid-in capital | 378,446 | 347,203 | ||||||||
| Treasury stock, at cost: 1,848,600 and 1,186,310 shares at | ||||||||||
| and September 30, 2013 and December 31, 2012, respectively | (9,486 | ) | (6,323 | ) | ||||||
| Accumulated deficit | (67,264 | ) | (85,778 | ) | ||||||
| Accumulated other comprehensive loss | (144 | ) | (108 | ) | ||||||
| Total stockholders' equity | 301,632 | 255,071 | ||||||||
| Total liabilities and stockholders' equity | $ |
456,754 |
$ | 402,197 | ||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2013 and 2012 | ||||||||||||||||||||
| (unaudited, in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income | $ | 12,886 | $ | 2,113 | $ | 18,514 | $ | 1,461 | ||||||||||||
| Adjustments to reconcile net income (loss) to net cash | ||||||||||||||||||||
| provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | 7,605 | 7,945 | 22,823 | 23,682 | ||||||||||||||||
| Deferred tax expense (benefit) | (7,920 | ) | 782 | (4,874 | ) | (74 | ) | |||||||||||||
| Stock-based compensation | 7,736 | 6,013 | 21,042 | 14,317 | ||||||||||||||||
| Loss on disposal of assets | 37 | 8 | 310 | 387 | ||||||||||||||||
| Acquisition-related contingent consideration | (145 | ) | (604 | ) | 1,300 | (422 | ) | |||||||||||||
| Changes in assets and liabilities, net of assets acquired | ||||||||||||||||||||
| and liabilities assumed in business combinations: | (3,173 | ) | (7,308 | ) | (7,506 | ) | 1,804 | |||||||||||||
| Net cash provided by operating activities | 17,026 | 8,949 | 51,609 | 41,155 | ||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Purchases of property, equipment and software, net | (8,797 | ) | (8,696 | ) | (22,190 | ) | (18,601 | ) | ||||||||||||
| Acquisition of businesses, net of cash acquired | (146 | ) | (5,244 | ) | (10,342 | ) | (9,723 | ) | ||||||||||||
| Intangible asset additions | - | - | (600 | ) | (225 | ) | ||||||||||||||
| Net cash used by investing activities | (8,943 | ) | (13,940 | ) | (33,132 | ) | (28,549 | ) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Payments on and proceeds from debt, net | (138 | ) | (10,000 | ) | (10,411 | ) | (25,377 | ) | ||||||||||||
| Payments of deferred acquisition-related consideration | (1,059 | ) | (738 | ) | (1,545 | ) | (9,768 | ) | ||||||||||||
| Issuance of common stock | 3,861 | 6,871 | 6,854 | 9,874 | ||||||||||||||||
| Purchase of treasury stock | (1,098 | ) | (764 | ) | (3,163 | ) | (2,388 | ) | ||||||||||||
| Net cash provided by (used in) financing activities | 1,566 | (4,631 | ) | (8,265 | ) | (27,659 | ) | |||||||||||||
| Net increase (decrease) in cash and cash equivalents | 9,649 | (9,622 | ) | 10,212 | (15,053 | ) | ||||||||||||||
| Effect of exchange rate on cash | 12 | 5 | (36 | ) | - | |||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||
| Beginning of period | 34,319 | 45,837 | 33,804 | 51,273 | ||||||||||||||||
| End of period | $ | 43,980 | $ | 36,220 | $ | 43,980 | $ | 36,220 | ||||||||||||
| Reconciliation of GAAP to Non-GAAP Measures | ||||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2013 and 2012 | ||||||||||||||||||||
| (unaudited, in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Non-GAAP revenue: | ||||||||||||||||||||
| Revenue (GAAP) | $ | 98,071 | $ | 83,239 | $ | 281,503 | $ | 236,448 | ||||||||||||
| Acquisition-related and other deferred revenue | 1,793 | 3 | 1,795 | 86 | ||||||||||||||||
| Non-GAAP revenue | $ | 99,864 | $ | 83,242 | $ | 283,298 | $ | 236,534 | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Adjusted gross profit: | ||||||||||||||||||||
| Gross profit (GAAP) | $ | 59,960 | $ | 50,342 | $ | 170,688 | $ | 141,090 | ||||||||||||
| Acquisition-related and other deferred revenue | 1,793 | 3 | 1,795 | 86 | ||||||||||||||||
| Depreciation | 1,480 | 1,707 | 4,767 | 4,917 | ||||||||||||||||
| Amortization of intangible assets | 1,656 | 2,219 | 5,651 | 7,000 | ||||||||||||||||
| Stock-based compensation expense | 785 | 649 | 2,211 | 2,088 | ||||||||||||||||
| Adjusted gross profit | $ | 65,674 | $ | 54,920 | $ | 185,112 | $ | 155,181 | ||||||||||||
| Adjusted gross profit margin | 65.8 | % | 66.0 | % | 65.3 | % | 65.6 | % | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Adjusted EBITDA: | ||||||||||||||||||||
| Net income (GAAP) | $ | 12,886 | $ | 2,113 | $ | 18,514 | $ | 1,461 | ||||||||||||
| Acquisition-related and other deferred revenue | 1,793 | 3 | 1,795 | 86 | ||||||||||||||||
| Depreciation, asset impairment and loss on disposal of asset | 3,400 | 3,416 | 10,486 | 10,018 | ||||||||||||||||
| Amortization of intangible assets | 4,242 | 4,537 | 12,647 | 14,051 | ||||||||||||||||
| Interest expense, net | 236 | 518 | 1,199 | 1,734 | ||||||||||||||||
| Income tax expense (benefit) | (7,114 | ) | 1,211 | (2,616 | ) | 704 | ||||||||||||||
| Litigation-related expense | 278 | 860 | 331 | 9,759 | ||||||||||||||||
| Stock-based compensation expense | 7,736 | 6,013 | 21,042 | 14,317 | ||||||||||||||||
| Acquisition related expense | 288 | (572 | ) | 2,113 | (256 | ) | ||||||||||||||
| Stock registration costs | - | 668 | - | 668 | ||||||||||||||||
| Adjusted EBITDA | $ | 23,745 | $ | 18,767 | $ | 65,511 | $ | 52,542 | ||||||||||||
| Adjusted EBITDA margin | 23.8 | % | 22.5 | % | 23.1 | % | 22.2 | % | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Non-GAAP total product development: | ||||||||||||||||||||
| Product development (GAAP) | $ | 13,232 | $ | 12,274 | $ | 36,997 | $ | 35,325 | ||||||||||||
| Less: Amortization of intangible assets | - | - | 1 | - | ||||||||||||||||
| Stock-based compensation expense | 1,271 | 1,116 | 3,123 | 3,180 | ||||||||||||||||
| Non-GAAP total product development: | $ | 11,961 | $ | 11,158 | $ | 33,873 | $ | 32,145 | ||||||||||||
| Non-GAAP total product development as % of non-GAAP revenue: | 12.0 | % | 13.4 | % | 12.0 | % | 13.6 | % | ||||||||||||
| Reconciliation of GAAP to Non-GAAP Measures | ||||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2013 and 2012 | ||||||||||||||||||||
| (unaudited, in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Non-GAAP total sales and marketing: | ||||||||||||||||||||
| Sales and marketing (GAAP) | $ | 25,166 | $ | 21,792 | $ | 71,992 | $ | 57,186 | ||||||||||||
| Less: Amortization of intangible assets | 2,586 | 2,317 | 6,996 | 7,051 | ||||||||||||||||
| Stock-based compensation expense | 2,686 | 2,653 | 7,891 | 4,422 | ||||||||||||||||
| Non-GAAP total sales and marketing: | $ | 19,894 | $ | 16,822 | $ | 57,105 | $ | 45,713 | ||||||||||||
| Non-GAAP total sales and marketing as % of non-GAAP revenue: | 19.9 | % | 20.2 | % | 20.2 | % | 19.3 | % | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Non-GAAP total general and administrative: | ||||||||||||||||||||
| General and administrative (GAAP) | $ | 15,554 | $ | 12,545 | $ | 44,880 | $ | 44,794 | ||||||||||||
| Less: Acquisition related expense | 288 | (572 | ) | 2,113 | (256 | ) | ||||||||||||||
| Stock-based compensation expense | 2,994 | 1,595 | 7,817 | 4,627 | ||||||||||||||||
| Litigation related expense | 278 | 860 | 331 | 9,759 | ||||||||||||||||
| Stock registration costs | - | 668 | - | 668 | ||||||||||||||||
| Non-GAAP total general and administrative: | $ | 11,994 | $ | 9,994 | $ | 34,619 | $ | 29,996 | ||||||||||||
| Non-GAAP total general and administrative as % of non-GAAP revenue: | 12.0 | % | 12.0 | % | 12.2 | % | 12.7 | % | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Non-GAAP total operating expense: | ||||||||||||||||||||
| Operating expense (GAAP) | $ | 53,952 | $ | 46,611 | $ | 153,869 | $ | 137,305 | ||||||||||||
| Less: Amortization of intangible assets | 2,586 | 2,317 | 6,996 | 7,051 | ||||||||||||||||
|
Acquisition related expense |
288 | (572 | ) | 2,113 | (256 | ) | ||||||||||||||
| Stock-based compensation expense | 6,951 | 5,364 | 18,831 | 12,229 | ||||||||||||||||
| Litigation related expense | 278 | 860 | 331 | 9,759 | ||||||||||||||||
| Stock registration costs | - | 668 | - | 668 | ||||||||||||||||
| Non-GAAP total operating expense: | $ | 43,849 | $ | 37,974 | $ | 125,598 | $ | 107,854 | ||||||||||||
| Non-GAAP total operating expense as % of non-GAAP revenue: | 43.9 | % | 45.6 | % | 44.3 | % | 45.6 | % | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Non-GAAP operating income: | ||||||||||||||||||||
| Operating income (GAAP) | $ | 6,008 | $ | 3,731 | $ | 16,819 | $ | 3,785 | ||||||||||||
| Acquisition-related and other deferred revenue | 1,793 | 3 | 1,795 | 86 | ||||||||||||||||
| Amortization of intangible assets | 4,242 | 4,537 | 12,647 | 14,051 | ||||||||||||||||
| Stock-based compensation expense | 7,736 | 6,013 | 21,042 | 14,317 | ||||||||||||||||
| Acquisition related expense | 288 | (572 | ) | 2,113 | (256 | ) | ||||||||||||||
| Litigation related expense | 278 | 860 | 331 | 9,759 | ||||||||||||||||
| Stock registration costs | - | 668 | - | 668 | ||||||||||||||||
| Non-GAAP operating income | $ | 20,345 | $ | 15,240 | $ | 54,747 | $ | 42,410 | ||||||||||||
| Non-GAAP operating margin | 20.4 | % | 18.3 | % | 19.3 | % | 17.9 | % | ||||||||||||
| Reconciliation of GAAP to Non-GAAP Measures | ||||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2013 and 2012 | ||||||||||||||||||||
| (unaudited, in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Non-GAAP net income: | ||||||||||||||||||||
| Net income (GAAP) | $ | 12,886 | $ | 2,113 | $ | 18,514 | $ | 1,461 | ||||||||||||
| Acquisition-related and other deferred revenue | 1,793 | 3 | 1,795 | 86 | ||||||||||||||||
| Amortization of intangible assets | 4,242 | 4,537 | 12,647 | 14,051 | ||||||||||||||||
| Stock-based compensation expense | 7,736 | 6,013 | 21,042 | 14,317 | ||||||||||||||||
| Acquisition related expense | 288 | (572 | ) | 2,113 | (256 | ) | ||||||||||||||
| Litigation related expense | 278 | 860 | 331 | 9,759 | ||||||||||||||||
| Loss on disposal of assets | 37 | 8 | 310 | 387 | ||||||||||||||||
| Stock registration costs | - | 668 | - | 668 | ||||||||||||||||
| Subtotal of tax deductible items | 14,374 | 11,517 | 38,238 | 39,012 | ||||||||||||||||
| Tax impact of tax deductible items(1) | (5,750 | ) | (4,607 | ) | (15,295 | ) | (15,605 | ) | ||||||||||||
| Tax expense resulting from applying effective tax rate(2) | (9,423 | ) | (119 | ) | (8,975 | ) | (162 | ) | ||||||||||||
| Non-GAAP net income | $ | 12,087 | $ | 8,904 | $ | 32,482 | $ | 24,706 | ||||||||||||
| Non-GAAP net income per share - diluted | $ | 0.16 | $ | 0.12 | $ | 0.43 | $ | 0.34 | ||||||||||||
| Weighted average shares - diluted | 76,347 | 74,282 | 75,900 | 73,689 | ||||||||||||||||
| Weighted average effect of dilutive securities | - | - | - | - | ||||||||||||||||
| Non-GAAP weighted average shares - diluted | 76,347 | 74,282 | 75,900 | 73,689 | ||||||||||||||||
|
(1) Reflects the removal of the tax benefit associated with the amortization of intangible assets, stock-based compensation expense, Acquisition related deferred revenue adjustment and Acquisition related expense. |
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| (2) Represents adjusting to a normalized effective tax rate of 40%. | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
| Annualized Non-GAAP on demand revenue per average on demand unit: | ||||||||||||||||||||
| On demand revenue (GAAP) | $ | 94,084 | $ | 78,973 | $ | 270,231 | $ | 224,629 | ||||||||||||
| Acquisition-related and other deferred revenue | 1,793 | 3 | 1,795 | 86 | ||||||||||||||||
| Non-GAAP on demand revenue | $ | 95,877 | $ | 78,976 | $ | 272,026 | $ | 224,715 | ||||||||||||
| Ending on demand units | 8,730 | 7,823 | 8,730 | 7,823 | ||||||||||||||||
| Average on demand units | 8,673 | 7,680 | 8,527 | 7,510 | ||||||||||||||||
| Annualized Non-GAAP on demand revenue per average on demand unit | $ | 44.22 | $ | 41.13 | $ | 42.53 | $ | 39.90 | ||||||||||||
| Annual customer value of on demand revenue(1) | $ | 386,039 | $ | 321,760 | ||||||||||||||||
| (1) This metric represents management's estimate for the current annual run-rate value of on demand customer relationships. This metric is calculated by multiplying ending on demand units times annualized Non-GAAP on demand revenue per average on demand unit for the periods presented. | ||||||||||||||||||||