RealPage, Inc. (NASDAQ:RP), a leading global provider of software and
data analytics to the real estate industry, today announced financial
results for the first quarter ended March 31, 2019.
First Quarter 2019 Financial Highlights
-
GAAP total revenue of $234.3 million, an increase of 16%
year-over-year; -
Net income of $11.3 million, or $0.12 in net income per diluted share,
a year-over-year increase of 3% and decrease of 8%, respectively; -
Adjusted EBITDA of $65.2 million, an increase of 20% year-over-year;
and -
Non-GAAP net income of $37.6 million, or $0.40 in non-GAAP net income
per diluted share, a year-over-year increase of 21% and 8%,
respectively.
Comments on the News
“Solid first quarter financial performance was driven by demand for our
strategic platform,” said Steve Winn, Chairman and CEO of RealPage.
“During 2019, we will continue to leverage the power of our platform to
turn data into action. Our innovations in 2019 such as our recently
launched AI Screening and Go Direct Marketing Suite, enable our clients
to take actions that significantly increase their revenue, reduce their
cost and optimize their risk.”
“First quarter financial performance was strong as total revenue grew
16%, while adjusted EBITDA grew 20%,” said Tom Ernst, CFO and Treasurer
of RealPage. “A primary focus for RealPage during 2019 will be
optimizing Yes-To-Success, which begins the moment that a client gives
us the verbal green light, to the ongoing use of our platform post
implementation. To accomplish this, we are increasing our process
transparency and structures to drive efficiency, reduce friction points
and unlock value creation more quickly.”
2019 Financial Outlook
RealPage management expects to achieve the following results during the
second quarter ending June 30, 2019:
-
GAAP total revenue is expected to be in the range of $241.9 million to
$243.9 million; -
GAAP net income per diluted share is expected to be in the range of
$0.10 to $0.12; -
Non-GAAP total revenue is expected to be in the range of $242.0
million to $244.0 million; -
Adjusted EBITDA is expected to be in the range of $67.0 million to
$69.0 million; -
Non-GAAP net income per diluted share is expected to be in the range
of $0.42 to $0.44; -
Non-GAAP diluted weighted average shares outstanding are expected to
be approximately 94.0 million.
RealPage management expects to achieve the following results during the
calendar year ending December 31, 2019:
-
GAAP total revenue is expected to be in the range of $982 million to
$1 billion; -
GAAP net income per diluted share is expected to be in the range of
$0.48 to $0.56; -
Non-GAAP total revenue is expected to be in the range of $982 million
to $1 billion; -
Adjusted EBITDA is expected to be in the range of $276 million to $285
million; -
Non-GAAP net income per diluted share is expected to be in the range
of $1.71 to $1.79; -
Non-GAAP diluted weighted average shares outstanding are expected to
be approximately 94.8 million.
Conference Call Information; Presentation Slides
The Company will host a conference call at 5:00 p.m. EDT today to
discuss its financial results. Participants are encouraged to listen to
the presentation via a live web broadcast and view presentation slides
at https://78449.themediaframe.com/dataconf/productusers/rlpg/mediaframe/30246/indexl.html.
In addition, a live dial-in is available domestically at 877-407-9128
and internationally at 201-493-6752. A replay will be available at
877-660-6853 or 201-612-7415.
About RealPage
RealPage is a leading global provider of software and data analytics to
the real estate industry. Clients use our platform to improve operating
performance and increase capital returns. Founded in 1998 and
headquartered in Richardson, Texas, RealPage currently serves over
12,100 clients worldwide from offices in North America, Europe and Asia.
For more information about the company, visit https://www.realpage.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains “forward-looking” statements relating to
RealPage, Inc.’s strategy, goals, future focus areas, and expected,
possible or assumed future results, including its financial outlook for
the second quarter and calendar year ending December 31, 2019, that we
will continue to leverage the power of our platform to turn data into
action, innovations in 2019 that will enable clients to take actions to
significantly increase their revenue, reduce their cost and optimize
their risk, such as our AI Screening and the GoDirect Marketing Suite,
and our focus on optimizing Yes-To-Success and increasing process
transparency and structures to drive efficiency, reduce friction points
and unlock value creation more quickly. 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. These 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. The Company may be required
to revise its results contained herein upon finalizing its review of
quarterly and full-year results and completion of the annual audit,
which could cause or contribute to such differences. Additional factors
that could cause or contribute to such differences include, but are not
limited to, the following: (a) the possibility that general economic
conditions, including leasing velocity or uncertainty, could cause
information technology spending, particularly in the rental housing
industry, to be reduced or purchasing decisions to be delayed; (b) an
increase in insurance claims; (c) an increase in client cancellations;
(d) the inability to increase sales to existing clients and to attract
new clients; (e) RealPage’s failure to integrate recent or future
acquired businesses successfully or to achieve expected synergies; (f)
the timing and success of new product introductions by RealPage or its
competitors; (g) changes in RealPage’s pricing policies or those of its
competitors; (h) legal or regulatory proceedings; (i) the inability to
achieve revenue growth or to enable margin expansion; (j) changes in
RealPage’s estimates with respect to its long-term corporate tax rate or
any other impact from the Tax Cuts and Jobs Act; and (k) 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, 2019. 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.
Explanation of Non-GAAP Financial Measures
The company reports its financial results in accordance with accounting
principles generally accepted in the United States of America, or GAAP.
However, the company believes that, in order to properly understand its
short-term and long-term financial, operational and strategic trends, it
may be helpful for investors to exclude certain non-cash or
non-recurring items when used as a supplement to financial performance
measures in accordance with GAAP. These non-cash or non-recurring items
result from facts and circumstances that vary in both frequency and
impact on continuing operations. The company also uses results of
operations excluding such items to evaluate the operating performance of
RealPage and compare it against prior periods, make operating decisions,
determine executive compensation, and serve as a basis for long-term
strategic planning. These non-GAAP financial measures provide the
company with additional means to understand and evaluate the operating
results and trends in its ongoing business by eliminating certain
non-cash expenses and other items that RealPage believes might otherwise
make comparisons of its ongoing business with prior periods more
difficult, obscure trends in ongoing operations, reduce management’s
ability to make useful forecasts, or obscure the ability to evaluate the
effectiveness of certain business strategies and management incentive
structures. In addition, the company also believes that investors and
financial analysts find this information to be helpful in analyzing the
company’s financial and operational performance and comparing this
performance to the company’s peers and competitors.
The company defines “Non-GAAP Total Revenue” as total revenue plus
acquisition-related deferred revenue. The company believes it is useful
to include deferred revenue written down for GAAP purposes under
purchase accounting rules in order to appropriately measure the
underlying performance of its business operations in the period of
activity and associated expense. Further, the company believes this
measure is useful to investors as a way to evaluate the company’s
ongoing performance because it provides a more accurate depiction of on
demand revenue arising from our strategic acquisitions.
The company defines “Adjusted Gross Profit” as gross profit, plus (1)
acquisition-related deferred revenue, (2) depreciation, (3) amortization
of product technologies, and (4) stock-based expense. The company
believes that investors and financial analysts find these non-GAAP
financial measures to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the company’s
peers and competitors, and understanding the company’s ability to
generate income from ongoing business operations.
The company defines “Adjusted EBITDA” as net income (loss), plus (1)
acquisition-related deferred revenue, (2) depreciation, asset
impairment, and the loss on disposal of assets, (3) amortization of
product technologies and intangible assets, (4) change in fair value of
equity investment, (5) acquisition-related expense, (6) interest
expense, net, (7) income tax expense (benefit), and (8) stock-based
expense. The company believes that investors and financial analysts find
these non-GAAP financial measures to be useful in analyzing the
company’s financial and operational performance, comparing this
performance to the company’s peers and competitors, and understanding
the company’s ability to generate income from ongoing business
operations.
The company defines “Non-GAAP Product Development Expense” as product
development expense, excluding stock-based expense. The company believes
that investors and financial analysts find these non-GAAP financial
measures to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the company’s
peers and competitors, and understanding the company’s ongoing
expenditures related to product innovation.
The company defines “Non-GAAP Sales and Marketing Expense” as sales and
marketing expense, excluding stock-based expense. The company believes
that investors and financial analysts find these non-GAAP financial
measures to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the company’s
peers and competitors, and understanding the company’s ongoing
expenditures related to its sales and marketing strategies.
The company defines “Non-GAAP General and Administrative Expense” as
general and administrative expense, excluding (1) asset impairment and
loss on disposal of assets, (2) acquisition-related expense, and (3)
stock-based expense. The company believes that investors and financial
analysts find these non-GAAP financial measures to be useful in
analyzing the company’s financial and operational performance, comparing
this performance to the company’s peers and competitors, and
understanding the company’s underlying expense structure to support
corporate activities and processes.
The company defines “Non-GAAP Operating Expense” as operating expense,
excluding (1) asset impairment and loss on disposal of assets, (2)
amortization of intangible assets, (3) acquisition-related expense, and
(4) stock-based expense. The company believes that investors and
financial analysts find these non-GAAP financial measures to be useful
in analyzing the company’s financial and operational performance,
comparing this performance to the company’s peers and competitors, and
understanding the company’s underlying expense structure to support
ongoing operations.
The company defines “Non-GAAP Operating Income” as operating income,
plus (1) acquisition-related deferred revenue, (2) asset impairment and
loss on disposal of assets, (3) amortization of product technologies and
intangible assets, (4) acquisition-related expense, and (5) stock-based
expense. The company believes that investors and financial analysts find
these non-GAAP financial measures to be useful in analyzing the
company’s financial and operational performance, comparing this
performance to the company’s peers and competitors, and understanding
the company’s ability to generate income from ongoing business
operations.
The company defines “Non-GAAP Net Income” as net income, plus (1) income
tax (benefit) expense, (2) acquisition-related deferred revenue, (3)
asset impairment and loss on disposal of assets, (4) amortization of
product technologies and intangible assets, (5) change in fair value of
equity investment, (6) acquisition-related expense, (8) amortization of
convertible note discount, and (9) stock-based expense, less (10)
provision for income tax expense based on an assumed rate in order to
approximate the company’s long-term effective corporate tax rate.
The company defines “Non-GAAP Net Income per Diluted Share” as Non-GAAP
Net Income divided by Non-GAAP Weighted Average Diluted Shares
Outstanding. The company believes that investors and financial analysts
find these non-GAAP financial measures to be useful in analyzing the
company’s financial and operational performance, comparing this
performance to the company’s peers and competitors, and understanding
the company’s ability to generate income from ongoing business
operations.
The company defines “Non-GAAP Weighted Average Diluted Shares
Outstanding” as weighted average diluted shares outstanding excluding
the impact of shares that are issuable upon conversions of our
convertible notes. It is the current intent of the company to settle
conversions of the convertible notes through combination settlement,
which involves repayment of the principal portion in cash and any excess
of the conversion value over the principal amount in shares of our
common stock. We exclude these shares that are issuable upon conversions
of our convertible notes because we expect that the dilution from such
shares will be offset by the convertible note hedge transactions entered
into in May 2017 in connection with the issuance of the convertible
notes.
The company defines “Non-GAAP On Demand Revenue” as total on demand
revenue plus acquisition-related deferred revenue. The company believes
it is useful to include deferred revenue written down for GAAP purposes
under purchase accounting rules in order to appropriately measure the
underlying performance of the company’s business operations in the
period of activity and associated expense. Further, the company believes
that investors and financial analysts find this measure to be useful in
evaluating the company’s ongoing performance because it provides a more
accurate depiction of on demand revenue arising from our strategic
acquisitions.
The company defines “Ending On Demand Units” as the number of rental
housing units managed by our clients with one or more of our on demand
software solutions at the end of the period. We use ending on demand
units to measure the success of our strategy of increasing the number of
rental housing units managed with our on demand software solutions.
Property unit counts are provided to us by our customers as new sales
orders are processed. Property unit counts may be adjusted periodically
as information related to our clients’ properties is updated or
supplemented, which could result in adjustments to the number of units
previously reported.
The company defines “Average On Demand Units” as the average of the
beginning and ending on demand units for each quarter in the period
presented. The company’s management monitors this metric to measure its
success in increasing the number of on demand software solutions
utilized by our clients to manage their rental housing units, our
overall revenue, and profitability.
The company defines “ACV,” or Annual Client Value, as management’s
estimate of the annual value of the company’s on demand revenue
contracts at a point in time. The company’s management monitors this
metric to measure its success in increasing the number of on demand
units, and the amount of software solutions utilized by its clients to
manage their rental housing units.
The company defines “RPU,” or Revenue Per Unit, as ACV divided by ending
on demand units. The company monitors this metric to measure its success
in increasing the penetration of on demand software solutions utilized
by its clients to manage their rental housing units.
The company excludes or adjusts each of the items identified below from
the applicable non-GAAP financial measure referenced above for the
reasons set forth with respect to each excluded item:
-
Non-GAAP tax rate – The GAAP tax rate includes certain
tax items which may include, but are not limited to: income tax
expenses or benefits that are not related to ongoing business
operations in the current year; unusual or infrequently occurring
items; benefits from stock compensation deductions for tax purposes
that exceed the stock compensation expense recognized for GAAP; tax
adjustments associated with fluctuations in foreign currency
re-measurement; certain changes in estimates of tax matters related to
prior fiscal years; certain changes in the realizability of deferred
tax assets and liabilities; and changes in tax law. In 2018 and for
2019 guidance purposes, the company uses a Non-GAAP tax rate of 26% to
approximate the company’s long-term effective corporate tax rate. We
believe excluding these items assists investors and analysts in
understanding the tax provision and the effective tax rate related to
ongoing operations. -
Acquisition-related deferred revenue – These items are
included to reflect deferred revenue written down for GAAP purposes
under purchase accounting rules in order to appropriately measure the
underlying performance of the company’s business operations in the
period of activity and associated expense. -
Asset impairment and loss on disposal of assets – These
items comprise gains (losses) on the disposal and impairment of
long-lived assets and impairment of indefinite-lived intangible
assets, which are not reflective of the company’s ongoing operations.
We believe exclusion of these items facilitates a more accurate
comparison of the company’s results of operations between periods. -
Depreciation of long-lived assets – Long-lived assets
are depreciated over their estimated useful lives in a manner
reflecting the pattern in which the economic benefit is consumed.
Management is limited in its ability to change or influence these
charges after the asset has been acquired and placed in service. We do
not believe that depreciation expense accurately reflects the
performance of our ongoing operations for the period in which the
charges are incurred, and are therefore not considered by management
in making operating decisions. -
Amortization of product technologies and intangible assets –
These items are amortized over their estimated useful lives and
generally cannot be changed or influenced by the company after initial
capitalization. Accordingly, these items are not considered by the
company in making operating decisions. The company does not believe
such charges accurately reflect the performance of its ongoing
operations for the period in which such charges are incurred. -
Change in fair value of equity investment – This
represents changes in fair value of our equity investment based on
observable price changes in orderly transactions for an identical or
similar investment of the same issuer. We believe exclusion of these
items facilitates a more accurate comparison of our results of
operations between periods as these items are not reflective of our
ongoing operations. -
Acquisition-related (income) expense – These items
consist of direct costs incurred in our business acquisition
transactions and the impact of changes in the fair value of
acquisition-related contingent consideration obligations. We believe
exclusion of these items facilitates a more accurate comparison of the
results of the company’s ongoing operations across periods and
eliminates volatility related to changes in the fair value of
acquisition-related contingent consideration obligations. -
Amortization of the convertible note discount – This
item consists of non-cash interest expense related to the amortization
of the discount recognized on the convertible notes issued in May
2017. Management excludes this item as it is not indicative of the
company’s ongoing operating performance. -
Stock-based expense – This item is excluded because
these are non-cash expenditures that the company does not consider
part of ongoing operating results when assessing the performance of
our business, and also because the total amount of the expenditure is
partially outside of its control because it is based on factors such
as stock price, volatility, and interest rates, which may be unrelated
to the company’s performance during the period in which the expenses
are incurred.
| Consolidated Balance Sheets | ||||||||
| (in thousands, except share and per share data) | ||||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 252,657 | $ | 228,159 | ||||
| Restricted cash | 103,768 | 154,599 | ||||||
|
Accounts receivable, less allowances of $7,943 and $8,850 at March |
125,068 | 123,596 | ||||||
|
Prepaid expenses |
19,702 | 19,214 | ||||||
| Other current assets | 11,383 | 15,185 | ||||||
| Total current assets | 512,578 | 540,753 | ||||||
| Property, equipment, and software, net | 153,956 | 153,528 | ||||||
| Right-of-use assets | 91,023 | – | ||||||
| Goodwill | 1,052,725 | 1,053,119 | ||||||
| Intangible assets, net | 271,642 | 287,378 | ||||||
| Deferred tax assets, net | 40,295 | 42,602 | ||||||
| Other assets | 22,197 | 20,393 | ||||||
| Total assets | $ | 2,144,416 | $ | 2,097,773 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 29,756 | $ | 25,312 | ||||
| Accrued expenses and other current liabilities | 85,956 | 95,482 | ||||||
| Current portion of deferred revenue | 121,536 | 120,704 | ||||||
| Current portion of term loans | 16,133 | 16,133 | ||||||
| Convertible notes, net | 295,862 | – | ||||||
| Customer deposits held in restricted accounts | 103,763 | 154,601 | ||||||
| Total current liabilities | 653,006 | 412,232 | ||||||
| Deferred revenue | 4,160 | 4,902 | ||||||
| Term loans, net | 283,659 | 287,582 | ||||||
| Convertible notes, net | – | 292,843 | ||||||
| Lease liabilities, net of current portion | 105,795 | – | ||||||
| Other long-term liabilities | 12,421 | 37,190 | ||||||
| Total liabilities | 1,059,041 | 1,034,749 | ||||||
| Stockholders’ equity: | ||||||||
|
Common stock, $0.001 par value: 250,000,000 shares authorized, |
96 | 96 | ||||||
| Additional paid-in capital | 1,167,950 | 1,187,683 | ||||||
|
Treasury stock, at cost: 1,264,934 and 2,341,035 shares at March 31, 2019 and December 31, 2018, respectively |
(33,753 | ) | (65,470 | ) | ||||
| Accumulated deficit | (47,546 | ) | (58,793 | ) | ||||
| Accumulated other comprehensive loss | (1,372 | ) | (492 | ) | ||||
| Total stockholders’ equity | 1,085,375 | 1,063,024 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,144,416 | $ | 2,097,773 | ||||
| Consolidated Statements of Operations | ||||||||
| (in thousands, except per share data) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenue: | ||||||||
| On demand | $ | 226,519 | $ | 193,300 | ||||
| Professional and other | 7,787 | 8,001 | ||||||
| Total revenue | 234,306 | 201,301 | ||||||
| Cost of revenue(1) | 90,194 | 72,837 | ||||||
| Amortization of product technologies | 9,514 | 8,295 | ||||||
| Gross profit | 134,598 | 120,169 | ||||||
| Operating expenses: | ||||||||
| Product development(1) | 29,897 | 29,040 | ||||||
| Sales and marketing(1) | 44,823 | 37,680 | ||||||
| General and administrative(1) | 28,143 | 27,090 | ||||||
| Amortization of intangible assets | 9,836 | 8,089 | ||||||
| Total operating expenses | 112,699 | 101,899 | ||||||
| Operating income | 21,899 | 18,270 | ||||||
| Interest expense and other, net | (5,980 | ) | (7,670 | ) | ||||
| Income before income taxes | 15,919 | 10,600 | ||||||
| Income tax expense (benefit) | 4,647 | (301 | ) | |||||
| Net income | $ | 11,272 | $ | 10,901 | ||||
|
Net income per share attributable to common stockholders: |
||||||||
| Basic | $ | 0.12 | $ | 0.13 | ||||
| Diluted | $ | 0.12 | $ | 0.13 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 91,490 | 81,166 | ||||||
| Diluted | 95,561 | 84,817 | ||||||
| (1) Includes stock-based expense as follows: | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Cost of revenue | $ | 1,331 | $ | 835 | ||||
| Product development | 2,480 | 2,163 | ||||||
| Sales and marketing | 5,350 | 3,541 | ||||||
| General and administrative | 5,752 | 3,779 | ||||||
| $ | 14,913 | $ | 10,318 | |||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
|
(unaudited) |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 11,272 | $ | 10,901 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 27,824 | 23,260 | ||||||
| Amortization of debt discount and issuance costs | 3,234 | 3,012 | ||||||
| Amortization of right-of-use assets | 3,005 | – | ||||||
| Deferred taxes | 2,550 | (1,154 | ) | |||||
| Stock-based expense | 14,913 | 10,318 | ||||||
| Loss on disposal and impairment of other long-lived assets | 286 | 942 | ||||||
| Change in fair value of equity investment | (2,600 | ) | – | |||||
| Acquisition-related consideration | 405 | 402 | ||||||
| Change in customer deposits | (50,252 | ) | 16,277 | |||||
|
Other changes in assets and liabilities, net of assets acquired |
(6,645 | ) | 6,813 | |||||
| Net cash provided by operating activities | 3,992 | 70,771 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, equipment, and software | (10,873 | ) | (12,660 | ) | ||||
| Purchase of other investment | – | (1,800 | ) | |||||
| Net cash used in investing activities | (10,873 | ) | (14,460 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on and proceeds from debt, net | (4,033 | ) | (3,103 | ) | ||||
| Payments on finance lease obligations | (769 | ) | (114 | ) | ||||
| Payments of acquisition-related consideration | (11,412 | ) | (776 | ) | ||||
| Proceeds from exercise of stock options | 1,877 | 5,038 | ||||||
| Purchase of treasury stock related to stock-based compensation | (5,016 | ) | (8,450 | ) | ||||
| Net cash used in financing activities | (19,353 | ) | (7,405 | ) | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (26,234 | ) | 48,906 | |||||
| Effect of exchange rate on cash | (99 | ) | (127 | ) | ||||
| Cash, cash equivalents and restricted cash: | ||||||||
| Beginning of period | 382,758 | 165,345 | ||||||
| End of period | $ | 356,425 | $ | 214,124 | ||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO | ||||||||||
| COMPARABLE GAAP MEASURES | ||||||||||
| (unaudited, in thousands, except per share data) | ||||||||||
|
The following is a reconciliation of the non-GAAP financial
While the company believes that these non-GAAP financial measures |
||||||||||
|
Non-GAAP Total Revenue |
||||||||||
|
Set forth below is a presentation of the company’s “Non-GAAP Total |
||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Revenue (GAAP) | $ | 234,306 | $ | 201,301 | ||||||
|
Acquisition-related deferred revenue |
224 | 313 | ||||||||
| Non-GAAP Total Revenue | $ | 234,530 | $ | 201,614 | ||||||
|
Adjusted Gross Profit |
||||||||||
|
Set forth below is a presentation of the company’s “Adjusted Gross |
||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Gross profit (GAAP) | $ | 134,598 | $ | 120,169 | ||||||
|
Acquisition-related deferred revenue |
224 | 313 | ||||||||
| Depreciation | 3,671 | 2,934 | ||||||||
| Amortization of product technologies | 9,514 | 8,295 | ||||||||
| Stock-based expense | 1,331 | 835 | ||||||||
| Adjusted Gross Profit | $ | 149,338 | $ | 132,546 | ||||||
|
Adjusted EBITDA |
||||||||||
|
Set forth below is a presentation of the company’s “Adjusted |
||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Net income (GAAP) | $ | 11,272 | $ | 10,901 | ||||||
|
Acquisition-related deferred revenue |
224 | 313 | ||||||||
| Depreciation, asset impairment, and loss on disposal of assets | 8,760 | 7,818 | ||||||||
| Amortization of product technologies and intangible assets | 19,350 | 16,384 | ||||||||
| Change in fair value of equity investment | (2,600 | ) | – | |||||||
| Acquisition-related expense | 29 | 1,007 | ||||||||
| Interest expense, net | 8,581 | 7,721 | ||||||||
| Income tax expense (benefit) | 4,647 | (301 | ) | |||||||
| Stock-based expense | 14,913 | 10,318 | ||||||||
| Adjusted EBITDA | $ | 65,176 | $ | 54,161 | ||||||
|
Non-GAAP Product Development Expense |
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|
Set forth below is a presentation of the company’s “Non-GAAP |
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| Three Months Ended | |||||||
| March 31, | |||||||
| 2019 | 2018 | ||||||
| Product development expense (GAAP) | $ | 29,897 | $ | 29,040 | |||
|
Less: Stock-based expense |
2,480 | 2,163 | |||||
| Non-GAAP Product Development Expense | $ | 27,417 | $ | 26,877 | |||
|
Non-GAAP Sales and Marketing Expense |
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Set forth below is a presentation of the company’s “Non-GAAP Sales |
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| Three Months Ended | |||||||
| March 31, | |||||||
| 2019 | 2018 | ||||||
| Sales and marketing expense (GAAP) | $ | 44,823 | $ | 37,680 | |||
|
Less: Stock-based expense |
5,350 | 3,541 | |||||
| Non-GAAP Sales and Marketing Expense | $ | 39,473 | $ | 34,139 | |||
|
Non-GAAP General and Administrative |
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|
Set forth below is a presentation of the company’s “Non-GAAP |
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| Three Months Ended | |||||||
| March 31, | |||||||
| 2019 | 2018 | ||||||
| General and administrative expense (GAAP) | $ | 28,143 | $ | 27,090 | |||
|
Less: Asset impairment and loss on disposal of assets |
286 | 942 | |||||
| Acquisition-related expense | 29 | 1,007 | |||||
| Stock-based expense | 5,752 | 3,779 | |||||
| Non-GAAP General and Administrative Expense | $ | 22,076 | $ | 21,362 | |||
|
Non-GAAP Operating Expense |
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|
Set forth below is a presentation of the company’s “Non-GAAP |
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| Three Months Ended | |||||||
| March 31, | |||||||
| 2019 | 2018 | ||||||
| Operating expense (GAAP) | $ | 112,699 | $ | 101,899 | |||
|
Less: Asset impairment and loss on disposal of assets |
286 | 942 | |||||
| Amortization of intangible assets | 9,836 | 8,089 | |||||
| Acquisition-related expense | 29 | 1,007 | |||||
| Stock-based expense | 13,582 | 9,483 | |||||
| Non-GAAP Operating Expense | $ | 88,966 | $ | 82,378 | |||
|
Non-GAAP Operating Income |
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|
Set forth below is a presentation of the company’s “Non-GAAP |
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| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating income (GAAP) | $ | 21,899 | $ | 18,270 | ||||
|
Acquisition-related deferred revenue |
224 | 313 | ||||||
| Asset impairment and loss on disposal of assets | 286 | 942 | ||||||
| Amortization of product technologies and intangible assets | 19,350 | 16,384 | ||||||
| Acquisition-related expense | 29 | 1,007 | ||||||
| Stock-based expense | 14,913 | 10,318 | ||||||
| Non-GAAP Operating Income | $ | 56,701 | $ | 47,234 | ||||
|
Non-GAAP Net Income |
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|
Set forth below is a presentation of the company’s “Non-GAAP Net |
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| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net income (GAAP) | $ | 11,272 | $ | 10,901 | ||||
| Income tax expense (benefit) | 4,647 | (301 | ) | |||||
| Income before income taxes | 15,919 | 10,600 | ||||||
|
Acquisition-related deferred revenue |
224 | 313 | ||||||
| Asset impairment and loss on disposal of assets | 286 | 942 | ||||||
| Amortization of product technologies and intangible assets | 19,350 | 16,384 | ||||||
| Change in fair value of equity investment | (2,600 | ) | – | |||||
| Acquisition-related expense | 29 | 1,007 | ||||||
| Amortization of convertible note discount | 2,676 | 2,524 | ||||||
| Stock-based expense | 14,913 | 10,318 | ||||||
| Non-GAAP income before income taxes | 50,797 | 42,088 | ||||||
| Assumed rate for income tax expense (1) | 26.0 | % | 26.0 | % | ||||
| Assumed provision for non-GAAP income tax expense | 13,207 | 10,943 | ||||||
| Non-GAAP Net Income | $ | 37,590 | $ | 31,145 | ||||
| Net income per diluted share | $ | 0.12 | $ | 0.13 | ||||
| Non-GAAP net income per diluted share | $ | 0.40 | $ | 0.37 | ||||
| Weighted average outstanding shares – basic | 91,490 | 81,166 | ||||||
| Non-GAAP adjusted diluted weighted average shares outstanding: | ||||||||
| Weighted average outstanding shares – diluted | 95,561 | 84,817 | ||||||
| Dilution offset from convertible note hedge transactions | (2,207 | ) | (1,319 | ) | ||||
| Non-GAAP diluted weighted average shares outstanding (2) | 93,354 | 83,498 | ||||||
|
Non-GAAP On Demand Revenue |
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|
Set forth below is a presentation of the company’s “Non-GAAP On |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| On demand revenue (GAAP) | $ | 226,519 | $ | 193,300 | ||||
|
Acquisition-related deferred revenue |
224 | 313 | ||||||
| Non-GAAP On Demand Revenue | $ | 226,743 | $ | 193,613 | ||||
|
Ending On Demand Units, Average On Demand |
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|
Set forth below is a presentation of the company’s “Ending On Demand Units,” “Average On Demand Units,” “ACV,” and “RPU.” Please reference the “Explanation of Non-GAAP Financial Measures” section. |
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| Three Months Ended | ||||||||||||||||||
| March 31, | ||||||||||||||||||
| 2019 | 2018 | |||||||||||||||||
| Ending on demand units | 16,401 | 13,173 | ||||||||||||||||
| Average on demand units | 16,310 | 13,088 | ||||||||||||||||
| ACV | $ | 912,060 | $ | 779,446 | ||||||||||||||
| RPU | $ | 55.61 | $ | 59.17 | ||||||||||||||
|
Non-GAAP Total Revenue Guidance |
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|
Set forth below is a presentation of the company’s “Non-GAAP Total Revenue” guidance for the three months ending June 30, 2019, and the twelve months ending December 31, 2019. Please reference the “Explanation of Non-GAAP Financial Measures” section. |
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Guidance Range for the |
Guidance Range for the |
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| June 30, 2019 | December 31, 2019 | |||||||||||||||||
| Low (3) | High (3) | Low (3) | High (3) | |||||||||||||||
| Revenue (GAAP) | $ | 241,865 | $ | 243,865 | $ | 981,580 | $ | 999,580 | ||||||||||
|
Acquisition-related deferred revenue |
135 | 135 | 420 | 420 | ||||||||||||||
| Non-GAAP Total Revenue | $ | 242,000 | $ | 244,000 | $ | 982,000 | $ | 1,000,000 | ||||||||||
|
Non-GAAP Net Income Guidance |
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|
Set forth below is a presentation of the company’s “Non-GAAP Net Income” and “Non-GAAP Net Income per Diluted Share” guidance for the three months ending June 30, 2019, and the twelve months ending December 31, 2019. Please reference the “Explanation of Non-GAAP Financial Measures” section. |
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|
Guidance Range for the |
Guidance Range for the |
|||||||||||||||||
| June 30, 2019 | December 31, 2019 | |||||||||||||||||
| Low (3) | High (3) | Low (3) | High (3) | |||||||||||||||
| Non-GAAP Net Income: | ||||||||||||||||||
| Net income (GAAP) | $ | 9,385 | $ | 11,565 | $ | 46,210 | $ | 54,370 | ||||||||||
| Income tax expense | 3,130 | 3,850 | 18,870 | 22,210 | ||||||||||||||
| Income before income taxes | 12,515 | 15,415 | 65,080 | 76,580 | ||||||||||||||
|
Acquisition-related deferred revenue |
135 | 135 | 420 | 420 | ||||||||||||||
| Asset impairment and loss on disposal of assets | – | – | 300 | 300 | ||||||||||||||
| Amortization of product technologies and intangible assets | 20,150 | 19,950 | 79,300 | 78,700 | ||||||||||||||
| Change in fair value of equity investment | – | – | (2,600 | ) | (2,600 | ) | ||||||||||||
| Acquisition-related expense | 250 | 150 | 300 | 200 | ||||||||||||||
| Amortization of convertible note discount | 2,720 | 2,720 | 10,960 | 10,960 | ||||||||||||||
| Stock-based expense | 17,100 | 16,900 | 64,800 | 64,200 | ||||||||||||||
| Non-GAAP income before income taxes | 52,870 | 55,270 | 218,560 | 228,760 | ||||||||||||||
| Expected effective tax rate (1) | 26.0 | % | 26.0 | % | 26.0 | % | 26.0 | % | ||||||||||
| Assumed provision for income tax expense | 13,746 | 14,370 | 56,826 | 59,478 | ||||||||||||||
| Non-GAAP Net Income | $ | 39,124 | $ | 40,900 | $ | 161,734 | $ | 169,282 | ||||||||||
| Net income per diluted share | $ | 0.10 | $ | 0.12 | $ | 0.48 | $ | 0.56 | ||||||||||
| Non-GAAP net income per diluted share | $ | 0.42 | $ | 0.44 | $ | 1.71 | $ | 1.79 | ||||||||||
| Non-GAAP adjusted diluted weighted average shares outstanding: | ||||||||||||||||||
| Weighted average outstanding shares – diluted | 96,495 | 96,495 | 97,220 | 97,220 | ||||||||||||||
| Dilution offset from convertible note hedge transactions | (2,475 | ) | (2,475 | ) | (2,470 | ) | (2,470 | ) | ||||||||||
| Non-GAAP diluted weighted average shares outstanding (2) | 94,020 | 94,020 | 94,750 | 94,750 | ||||||||||||||
|
Adjusted EBITDA Guidance |
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|
Set forth below is a presentation of the company’s “Adjusted EBITDA” guidance for the three months ending June 30, 2019, and the twelve months ending December 31, 2019. Please reference the “Explanation of Non-GAAP Financial Measures” section. |
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|
Guidance Range for the |
Guidance Range for the |
|||||||||||||||
| June 30, 2019 | December 31, 2019 | |||||||||||||||
| Low (3) | High (3) | Low (3) | High (3) | |||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Net income (GAAP) | $ | 9,385 | $ | 11,565 | $ | 46,210 | $ | 54,370 | ||||||||
|
Acquisition-related deferred revenue |
135 | 135 | 420 | 420 | ||||||||||||
| Depreciation, asset impairment, and loss on disposal of assets | 8,800 | 8,600 | 35,600 | 35,000 | ||||||||||||
| Amortization of product technologies and intangible assets | 20,150 | 19,950 | 79,300 | 78,700 | ||||||||||||
| Change in fair value of equity investment | – | – | (2,600 | ) | (2,600 | ) | ||||||||||
| Acquisition-related expense | 250 | 150 | 300 | 200 | ||||||||||||
| Interest expense, net | 8,050 | 7,850 | 33,100 | 32,500 | ||||||||||||
| Income tax expense | 3,130 | 3,850 | 18,870 | 22,210 | ||||||||||||
| Stock-based expense | 17,100 | 16,900 | 64,800 | 64,200 | ||||||||||||
| Adjusted EBITDA | $ | 67,000 | $ | 69,000 | $ | 276,000 | $ | 285,000 | ||||||||
| (1) |
A 26.0% tax rate is assumed in order to approximate the Company’s long-term effective corporate tax rate. Please reference the “Explanation of Non-GAAP Financial Measures” section. |
|
| (2) |
It is the current intent of the Company to settle conversions of the Convertible Notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of our common stock. We exclude these shares that are issuable upon conversions of our convertible notes because we expect that the dilution from such shares will be offset by the convertible note hedge transactions entered into in May 2017 in connection with the issuance of the convertible notes. |
|
| (3) |
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. The company may be required to revise its results upon finalizing its review of quarterly and full year results, which could cause or contribute to such differences. All information provided in this release is as of the date hereof and RealPage, Inc. undertakes no duty to update this information except as required by law. See additional discussion under “Cautionary Statement Regarding Forward-Looking Statements” above. |
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