Delaware | 74-3016523 | |
(State or other jurisdiction of | (IRS Employer | |
incorporation) | Identification No.) |
Rackspace Hosting, Inc. | |||
Date: | February 17, 2015 | By: | /s/ Karl Pichler |
Karl Pichler | |||
Chief Financial Officer and Treasurer |
Exhibit No. | Description | |
EX-99.1 | Press Release of Rackspace Hosting, Inc., dated February 17, 2015, reporting financial results for the fourth quarter of 2014 and the year ended December 31, 2014. |
• | Rackspace Strengthens Data Tier Leadership With OnMetal™ Cloud Big Data. Rackspace announced the release of its OnMetal Cloud Big Data Platform, which allows customers to deploy bare metal instances of Apache™ Hadoop® with Spark™ in just three clicks. The new solution provides an efficient and elastic platform that delivers breakthrough speed for Hadoop and Spark, allowing data scientists to gather insights in minutes rather than hours or days. |
• | Rackspace Announced the Newest Release of its Rackspace Hybrid Cloud offering, RackConnect® v3. RackConnect v3 includes new security capabilities, increased scalability and an improved customer experience. |
• | Rackspace Announced Cloud Office Suite for Improved Business Collaboration Backed by Fanatical Support®. Rackspace announced it has created a new business unit -- Cloud Office at Rackspace -- to unify its portfolio of industry-leading Rackspace and Microsoft® business productivity and collaboration tools. The suite of solutions available includes hosted Microsoft Exchange and Rackspace Email, Microsoft Lync® and SharePoint® collaboration tools, and Jungle Disk® backup services, all backed by Fanatical Support. |
• | Rackspace Appointed Todd Cione as Chief Revenue Officer. In this new role, Cione oversees the operations of the Americas sales and global marketing organizations, while uniting the functions to work seamlessly and strengthen the company's go-to-market strategy. |
• | Rackspace Appointed Kevin Costello to Board of Directors. Kevin Costello is a veteran in the Software-as-a-Service (SaaS) industry, bringing more than 25 years of consulting and advisory experience. |
• | Rackspace Opened First Office for Latin America in Mexico City. The office will bring the managed cloud and Fanatical Support to its existing customer base of more than a thousand local customers and will support growth in its business in this region. |
Investor Relations: | Media Relations: |
Jessica Drought | Brandon Brunson |
210-312-4191 | 210-312-1357 |
ir@rackspace.com | brandon.brunson@rackspace.com |
Three Months Ended | Year Ended | |||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
(In thousands, except per share data) | December 31, 2013 | September 30, 2014 | December 31, 2014 | December 31, 2013 | December 31, 2014 | |||||||||||||||
Net revenue | $ | 408,103 | $ | 459,776 | $ | 472,422 | $ | 1,534,786 | $ | 1,794,357 | ||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of revenue | 133,821 | 142,954 | 153,912 | 492,493 | 582,334 | |||||||||||||||
Research and development | 24,849 | 30,718 | 31,385 | 90,213 | 117,006 | |||||||||||||||
Sales and marketing | 55,465 | 60,582 | 59,127 | 208,417 | 237,548 | |||||||||||||||
General and administrative | 79,128 | 86,702 | 82,780 | 297,520 | 322,056 | |||||||||||||||
Depreciation and amortization | 87,683 | 98,307 | 95,213 | 313,007 | 371,884 | |||||||||||||||
Total costs and expenses | 380,946 | 419,263 | 422,417 | 1,401,650 | 1,630,828 | |||||||||||||||
Income from operations | 27,157 | 40,513 | 50,005 | 133,136 | 163,529 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense | (656 | ) | (445 | ) | (444 | ) | (3,118 | ) | (1,913 | ) | ||||||||||
Interest and other income (expense) | 405 | (2,191 | ) | (257 | ) | 741 | (2,012 | ) | ||||||||||||
Total other income (expense) | (251 | ) | (2,636 | ) | (701 | ) | (2,377 | ) | (3,925 | ) | ||||||||||
Income before income taxes | 26,906 | 37,877 | 49,304 | 130,759 | 159,604 | |||||||||||||||
Income taxes | 6,108 | 12,137 | 12,388 | 44,022 | 49,051 | |||||||||||||||
Net income | $ | 20,798 | $ | 25,740 | $ | 36,916 | $ | 86,737 | $ | 110,553 | ||||||||||
Net income per share | ||||||||||||||||||||
Basic | $ | 0.15 | $ | 0.18 | $ | 0.26 | $ | 0.63 | $ | 0.78 | ||||||||||
Diluted | $ | 0.14 | $ | 0.18 | $ | 0.26 | $ | 0.61 | $ | 0.77 | ||||||||||
Weighted average number of shares outstanding | ||||||||||||||||||||
Basic | 139,875 | 142,978 | 141,776 | 138,577 | 141,971 | |||||||||||||||
Diluted | 144,024 | 144,895 | 144,526 | 143,011 | 144,498 |
(In thousands) | December 31, 2013 | December 31, 2014 | |||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 259,733 | $ | 213,505 | |||
Accounts receivable, net of allowance for doubtful accounts and customer credits of $3,891 as of December 31, 2013 and $5,334 as of December 31, 2014 | 123,898 | 156,455 | |||||
Deferred income taxes | 12,637 | 9,260 | |||||
Prepaid expenses | 30,782 | 33,628 | |||||
Other current assets | 11,918 | 8,895 | |||||
Total current assets | 438,968 | 421,743 | |||||
Property and equipment, net | 890,776 | 1,057,684 | |||||
Goodwill | 81,084 | 81,084 | |||||
Intangible assets, net | 23,880 | 16,592 | |||||
Other non-current assets | 57,089 | 47,181 | |||||
Total assets | $ | 1,491,797 | $ | 1,624,284 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 122,047 | $ | 137,295 | |||
Accrued compensation and benefits | 62,459 | 66,696 | |||||
Income and other taxes payable | 11,388 | 11,783 | |||||
Deferred revenue | 22,868 | 20,851 | |||||
Capital lease obligations | 37,885 | 14,969 | |||||
Debt | 1,861 | 25,124 | |||||
Total current liabilities | 258,508 | 276,718 | |||||
Non-current liabilities: | |||||||
Deferred revenue | 3,662 | 1,425 | |||||
Capital lease obligations | 25,048 | 8,946 | |||||
Finance lease obligations for assets under construction | — | 109,991 | |||||
Debt | 124 | — | |||||
Deferred income taxes | 69,729 | 71,228 | |||||
Deferred rent | 43,046 | 49,899 | |||||
Other liabilities | 36,268 | 32,283 | |||||
Total liabilities | 436,385 | 550,490 | |||||
Commitments and Contingencies | |||||||
Stockholders' equity: | |||||||
Common stock | 141 | 141 | |||||
Additional paid-in capital | 636,660 | 696,029 | |||||
Accumulated other comprehensive loss | (4,536 | ) | (20,685 | ) | |||
Retained earnings | 423,147 | 398,309 | |||||
Total stockholders’ equity | 1,055,412 | 1,073,794 | |||||
Total liabilities and stockholders’ equity | $ | 1,491,797 | $ | 1,624,284 |
Three Months Ended | Year Ended | ||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||
(in thousands) | December 31, 2013 | September 30, 2014 | December 31, 2014 | December 31, 2013 | December 31, 2014 | ||||||||||||||
Cash Flows From Operating Activities | |||||||||||||||||||
Net income | $ | 20,798 | $ | 25,740 | $ | 36,916 | $ | 86,737 | $ | 110,553 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 87,683 | 98,307 | 95,213 | 313,007 | 371,884 | ||||||||||||||
Deferred income taxes | (12,407 | ) | (11,046 | ) | 30,553 | (2,102 | ) | 413 | |||||||||||
Share-based compensation expense | 17,188 | 19,842 | 20,166 | 59,645 | 70,005 | ||||||||||||||
Excess tax benefits from share-based compensation arrangements | (16,156 | ) | (16,990 | ) | 10,838 | (33,539 | ) | (34,473 | ) | ||||||||||
Other operating activities | 755 | 2,381 | 2,435 | 5,490 | 8,242 | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | (10,344 | ) | (6,609 | ) | (25,952 | ) | (34,473 | ) | (41,681 | ) | |||||||||
Prepaid expenses and other current assets | 6,290 | (24,454 | ) | 16,083 | (12,270 | ) | (1,116 | ) | |||||||||||
Accounts payable, accrued expenses, and other current liabilities | 8,355 | 41,886 | (38,458 | ) | 35,303 | 55,424 | |||||||||||||
Deferred revenue | 4,176 | (1,431 | ) | 1,210 | 5,367 | (3,742 | ) | ||||||||||||
Deferred rent | 2,279 | 1,928 | 1,120 | 11,564 | 7,417 | ||||||||||||||
Other non-current assets and liabilities | 901 | (4,126 | ) | 762 | 9,331 | (416 | ) | ||||||||||||
Net cash provided by operating activities | 109,518 | 125,428 | 150,886 | 444,060 | 542,510 | ||||||||||||||
Cash Flows From Investing Activities | |||||||||||||||||||
Purchases of property and equipment | (126,723 | ) | (124,129 | ) | (107,209 | ) | (452,596 | ) | (430,335 | ) | |||||||||
Acquisitions, net of cash acquired | (3,727 | ) | — | — | (9,930 | ) | — | ||||||||||||
All other investing activities | 110 | 317 | 285 | (1,698 | ) | 2,230 | |||||||||||||
Net cash used in investing activities | (130,340 | ) | (123,812 | ) | (106,924 | ) | (464,224 | ) | (428,105 | ) | |||||||||
Cash Flows From Financing Activities | |||||||||||||||||||
Principal payments of capital leases | (14,652 | ) | (8,957 | ) | (7,133 | ) | (65,860 | ) | (39,635 | ) | |||||||||
Proceeds from debt | — | — | 25,000 | — | 25,000 | ||||||||||||||
Repayments of debt | (52 | ) | (967 | ) | (35 | ) | (1,915 | ) | (1,901 | ) | |||||||||
Payments for deferred acquisition obligations | (57 | ) | (55 | ) | (55 | ) | (1,353 | ) | (223 | ) | |||||||||
Receipt of Texas Enterprise Fund grant | — | — | — | — | 5,500 | ||||||||||||||
Repurchase of common stock | — | — | (200,000 | ) | — | (200,000 | ) | ||||||||||||
Shares of common stock withheld for employee taxes | — | — | — | — | (13,620 | ) | |||||||||||||
Proceeds from employee stock plans | 8,971 | 3,268 | 15,099 | 23,817 | 33,120 | ||||||||||||||
Excess tax benefits from share-based compensation arrangements | 16,156 | 16,990 | (10,838 | ) | 33,539 | 34,473 | |||||||||||||
Net cash provided by (used in) financing activities | 10,366 | 10,279 | (177,962 | ) | (11,772 | ) | (157,286 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 194 | (2,759 | ) | (1,975 | ) | (392 | ) | (3,347 | ) | ||||||||||
Increase (decrease) in cash and cash equivalents | (10,262 | ) | 9,136 | (135,975 | ) | (32,328 | ) | (46,228 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 269,995 | 340,344 | 349,480 | 292,061 | 259,733 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 259,733 | $ | 349,480 | $ | 213,505 | $ | 259,733 | $ | 213,505 | |||||||||
Supplemental Cash Flow Information | |||||||||||||||||||
Non-cash purchases of property and equipment (1) | $ | (4,116 | ) | $ | (6,706 | ) | $ | (2,580 | ) | $ | 19,493 | $ | 4,804 |
(1) | Non-cash purchases of property and equipment represents changes in amounts accrued for purchases under vendor financing and other deferred payment arrangements. |
Key Metrics - Quarter to Date (Unaudited) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
(Dollar amounts in thousands, except average monthly revenue per server) | December 31, 2013 | March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | ||||||||||||||
Growth | |||||||||||||||||||
Dedicated cloud, net revenue | $ | 291,265 | $ | 299,689 | $ | 310,647 | $ | 319,601 | $ | 324,729 | |||||||||
Public cloud, net revenue | $ | 116,838 | $ | 121,358 | $ | 130,465 | $ | 140,175 | $ | 147,693 | |||||||||
Net revenue | $ | 408,103 | $ | 421,047 | $ | 441,112 | $ | 459,776 | $ | 472,422 | |||||||||
Revenue growth (year over year) | 15.6 | % | 16.2 | % | 17.4 | % | 18.3 | % | 15.8 | % | |||||||||
Net upgrades (monthly average) | 1.1 | % | 0.9 | % | 1.5 | % | 1.4 | % | 1.2 | % | |||||||||
Churn (monthly average) | -0.7 | % | -0.6 | % | -0.7 | % | -0.6 | % | -0.5 | % | |||||||||
Growth in installed base (monthly average) (1) | 0.4 | % | 0.3 | % | 0.8 | % | 0.8 | % | 0.7 | % | |||||||||
Number of employees (Rackers) at period end | 5,651 | 5,743 | 5,798 | 5,939 | 5,936 | ||||||||||||||
Number of servers deployed at period end | 103,886 | 106,229 | 107,657 | 110,453 | 112,628 | ||||||||||||||
Average monthly revenue per server | $ | 1,322 | $ | 1,336 | $ | 1,375 | $ | 1,405 | $ | 1,412 | |||||||||
Profitability | |||||||||||||||||||
Income from operations | $ | 27,157 | $ | 39,124 | $ | 33,887 | $ | 40,513 | $ | 50,005 | |||||||||
Depreciation and amortization | $ | 87,683 | $ | 87,805 | $ | 90,559 | $ | 98,307 | $ | 95,213 | |||||||||
Share-based compensation expense: | |||||||||||||||||||
Cost of revenue | $ | 3,877 | $ | 3,791 | $ | 4,127 | $ | 4,175 | $ | 4,353 | |||||||||
Research and development | $ | 2,521 | $ | 2,780 | $ | 3,293 | $ | 3,399 | $ | 3,109 | |||||||||
Sales and marketing | $ | 1,766 | $ | 2,091 | $ | 2,062 | $ | 2,637 | $ | 2,783 | |||||||||
General and administrative | $ | 9,024 | $ | 4,070 | $ | 7,783 | $ | 9,631 | $ | 9,921 | |||||||||
Total share-based compensation expense | $ | 17,188 | $ | 12,732 | $ | 17,265 | $ | 19,842 | $ | 20,166 | |||||||||
Adjusted EBITDA (2) | $ | 132,028 | $ | 139,661 | $ | 141,711 | $ | 158,662 | $ | 165,384 | |||||||||
Adjusted EBITDA margin | 32.4 | % | 33.2 | % | 32.1 | % | 34.5 | % | 35.0 | % | |||||||||
Operating income margin | 6.7 | % | 9.3 | % | 7.7 | % | 8.8 | % | 10.6 | % | |||||||||
Income from operations | $ | 27,157 | $ | 39,124 | $ | 33,887 | $ | 40,513 | $ | 50,005 | |||||||||
Effective tax rate | 22.7 | % | 34.6 | % | 33.0 | % | 32.0 | % | 25.1 | % | |||||||||
Net operating profit after tax (NOPAT) (2) | $ | 20,992 | $ | 25,587 | $ | 22,704 | $ | 27,549 | $ | 37,454 | |||||||||
NOPAT margin | 5.1 | % | 6.1 | % | 5.1 | % | 6.0 | % | 7.9 | % | |||||||||
Capital efficiency and returns | |||||||||||||||||||
Interest bearing debt | $ | 64,918 | $ | 53,326 | $ | 41,747 | $ | 31,472 | $ | 49,039 | |||||||||
Stockholders' equity | $ | 1,055,412 | $ | 1,100,012 | $ | 1,171,197 | $ | 1,223,772 | $ | 1,073,794 | |||||||||
Less: Excess cash | $ | (210,761 | ) | $ | (263,309 | ) | $ | (287,411 | ) | $ | (294,307 | ) | $ | (156,814 | ) | ||||
Capital base | $ | 909,569 | $ | 890,029 | $ | 925,533 | $ | 960,937 | $ | 966,019 | |||||||||
Average capital base | $ | 873,749 | $ | 899,799 | $ | 907,781 | $ | 943,235 | $ | 963,478 | |||||||||
Capital turnover (annualized) | 1.87 | 1.87 | 1.94 | 1.95 | 1.96 | ||||||||||||||
Return on capital (annualized) (2) | 9.6 | % | 11.4 | % | 10.0 | % | 11.7 | % | 15.5 | % | |||||||||
Key Metrics - Quarter to Date (Unaudited) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
(Dollar amounts in thousands, except average monthly revenue per server) | December 31, 2013 | March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | ||||||||||||||
Capital expenditures | |||||||||||||||||||
Cash purchases of property and equipment | $ | 126,723 | $ | 84,953 | $ | 114,044 | $ | 124,129 | $ | 107,209 | |||||||||
Non-cash purchases of property and equipment (3) | $ | (4,116 | ) | $ | 15,741 | $ | (1,651 | ) | $ | (6,706 | ) | $ | (2,580 | ) | |||||
Total capital expenditures | $ | 122,607 | $ | 100,694 | $ | 112,393 | $ | 117,423 | $ | 104,629 | |||||||||
Customer gear | $ | 65,291 | $ | 60,688 | $ | 64,767 | $ | 78,677 | $ | 72,488 | |||||||||
Data center build outs | $ | 22,524 | $ | 10,963 | $ | 13,767 | $ | 14,825 | $ | 11,079 | |||||||||
Office build outs | $ | 14,860 | $ | 9,212 | $ | 6,857 | $ | 3,464 | $ | 1,633 | |||||||||
Capitalized software and other projects | $ | 19,932 | $ | 19,831 | $ | 27,002 | $ | 20,457 | $ | 19,429 | |||||||||
Total capital expenditures | $ | 122,607 | $ | 100,694 | $ | 112,393 | $ | 117,423 | $ | 104,629 | |||||||||
Infrastructure capacity and utilization | |||||||||||||||||||
Megawatts under contract at period end | 60.0 | 58.1 | 58.1 | 58.1 | 58.1 | ||||||||||||||
Megawatts available for use at period end | 46.9 | 45.3 | 45.4 | 45.4 | 49.7 | ||||||||||||||
Megawatts utilized at period end | 27.4 | 28.1 | 29.0 | 29.9 | 30.5 | ||||||||||||||
Annualized net revenue per average Megawatt of power utilized | $ | 60,015 | $ | 60,691 | $ | 61,802 | $ | 62,448 | $ | 62,572 |
(1) | Due to rounding, totals may not equal the sum of the line items in the table above. |
(2) | See discussion and reconciliation of our Non-GAAP financial measures to the most comparable GAAP measures. |
(3) | Non-cash purchases of property and equipment represents changes in amounts accrued for purchases under vendor financing and other deferred payment arrangements. |
Key Metrics - Year to Date (Unaudited) | |||||||
Year Ended December 31, | |||||||
(Dollar amounts in thousands, except average monthly revenue per server) | 2013 | 2014 | |||||
Growth | |||||||
Dedicated cloud, net revenue | $ | 1,119,636 | $ | 1,254,666 | |||
Public cloud, net revenue | $ | 415,150 | $ | 539,691 | |||
Net revenue | $ | 1,534,786 | $ | 1,794,357 | |||
Revenue growth (year over year) | 17.2 | % | 16.9 | % | |||
Net upgrades (monthly average) | 1.3 | % | 1.3 | % | |||
Churn (monthly average) | -0.8 | % | -0.6 | % | |||
Growth in installed base (monthly average) (1) | 0.5 | % | 0.7 | % | |||
Number of employees (Rackers) at period end | 5,651 | 5,936 | |||||
Number of servers deployed at period end | 103,886 | 112,628 | |||||
Average monthly revenue per server | $ | 1,307 | $ | 1,382 | |||
Profitability | |||||||
Income from operations | $ | 133,136 | $ | 163,529 | |||
Depreciation and amortization | $ | 313,007 | $ | 371,884 | |||
Share-based compensation expense: | |||||||
Cost of revenue | $ | 12,584 | $ | 16,446 | |||
Research and development | $ | 8,168 | $ | 12,581 | |||
Sales and marketing | $ | 7,317 | $ | 9,573 | |||
General and administrative | $ | 31,576 | $ | 31,405 | |||
Total share-based compensation expense | $ | 59,645 | $ | 70,005 | |||
Adjusted EBITDA (2) | $ | 505,788 | $ | 605,418 | |||
Adjusted EBITDA margin | 33.0 | % | 33.7 | % | |||
Operating income margin | 8.7 | % | 9.1 | % | |||
Income from operations | $ | 133,136 | $ | 163,529 | |||
Effective tax rate | 33.7 | % | 30.7 | % | |||
Net operating profit after tax (NOPAT) (2) | $ | 88,269 | $ | 113,326 | |||
NOPAT margin | 5.8 | % | 6.3 | % | |||
Capital efficiency and returns | |||||||
Interest bearing debt | $ | 64,918 | $ | 49,039 | |||
Stockholders' equity | $ | 1,055,412 | $ | 1,073,794 | |||
Less: Excess cash | $ | (210,761 | ) | $ | (156,814 | ) | |
Capital base | $ | 909,569 | $ | 966,019 | |||
Average capital base | $ | 804,173 | $ | 930,417 | |||
Capital turnover | 1.91 | 1.93 | |||||
Return on capital (2) | 11.0 | % | 12.2 | % | |||
Key Metrics - Year to Date (Unaudited) | |||||||
Year Ended December 31, | |||||||
(Dollar amounts in thousands, except average monthly revenue per server) | 2013 | 2014 | |||||
Capital expenditures | |||||||
Cash purchases of property and equipment | $ | 452,596 | $ | 430,335 | |||
Non-cash purchases of property and equipment (3) | $ | 19,493 | $ | 4,804 | |||
Total capital expenditures | $ | 472,089 | $ | 435,139 | |||
Customer gear | $ | 297,787 | $ | 276,620 | |||
Data center build outs | $ | 58,278 | $ | 50,634 | |||
Office build outs | $ | 31,103 | $ | 21,166 | |||
Capitalized software and other projects | $ | 84,921 | $ | 86,719 | |||
Total capital expenditures | $ | 472,089 | $ | 435,139 | |||
Infrastructure capacity and utilization | |||||||
Megawatts under contract at period end | 60.0 | 58.1 | |||||
Megawatts available for use at period end | 46.9 | 49.7 | |||||
Megawatts utilized at period end | 27.4 | 30.5 | |||||
Net revenue per average Megawatt of power utilized | $ | 59,442 | $ | 61,917 |
(1) | Due to rounding, totals may not equal the sum of the line items in the table above. |
(2) | See discussion and reconciliation of our Non-GAAP financial measures to the most comparable GAAP measures. |
(3) | Non-cash purchases of property and equipment represents changes in amounts accrued for purchases under vendor financing and other deferred payment arrangements. |
Three Months Ended | |||||||||||||||||||
(In thousands) | December 31, 2013 | March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | ||||||||||||||
Net revenue | $ | 408,103 | $ | 421,047 | $ | 441,112 | $ | 459,776 | $ | 472,422 | |||||||||
Costs and expenses: | |||||||||||||||||||
Cost of revenue | 133,821 | 140,417 | 145,051 | 142,954 | 153,912 | ||||||||||||||
Research and development | 24,849 | 25,192 | 29,711 | 30,718 | 31,385 | ||||||||||||||
Sales and marketing | 55,465 | 57,359 | 60,480 | 60,582 | 59,127 | ||||||||||||||
General and administrative | 79,128 | 71,150 | 81,424 | 86,702 | 82,780 | ||||||||||||||
Depreciation and amortization | 87,683 | 87,805 | 90,559 | 98,307 | 95,213 | ||||||||||||||
Total costs and expenses | 380,946 | 381,923 | 407,225 | 419,263 | 422,417 | ||||||||||||||
Income from operations | 27,157 | 39,124 | 33,887 | 40,513 | 50,005 | ||||||||||||||
Other income (expense): | |||||||||||||||||||
Interest expense | (656 | ) | (495 | ) | (529 | ) | (445 | ) | (444 | ) | |||||||||
Interest and other income (expense) | 405 | 265 | 171 | (2,191 | ) | (257 | ) | ||||||||||||
Total other income (expense) | (251 | ) | (230 | ) | (358 | ) | (2,636 | ) | (701 | ) | |||||||||
Income before income taxes | 26,906 | 38,894 | 33,529 | 37,877 | 49,304 | ||||||||||||||
Income taxes | 6,108 | 13,448 | 11,078 | 12,137 | 12,388 | ||||||||||||||
Net income | $ | 20,798 | $ | 25,446 | $ | 22,451 | $ | 25,740 | $ | 36,916 | |||||||||
Three Months Ended | |||||||||||||||||||
(Percent of net revenue) | December 31, 2013 | March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | ||||||||||||||
Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||
Cost of revenue | 32.8 | % | 33.3 | % | 32.9 | % | 31.1 | % | 32.6 | % | |||||||||
Research and development | 6.1 | % | 6.0 | % | 6.7 | % | 6.7 | % | 6.6 | % | |||||||||
Sales and marketing | 13.6 | % | 13.6 | % | 13.7 | % | 13.2 | % | 12.5 | % | |||||||||
General and administrative | 19.4 | % | 16.9 | % | 18.5 | % | 18.9 | % | 17.5 | % | |||||||||
Depreciation and amortization | 21.5 | % | 20.9 | % | 20.5 | % | 21.4 | % | 20.2 | % | |||||||||
Total costs and expenses | 93.3 | % | 90.7 | % | 92.3 | % | 91.2 | % | 89.4 | % | |||||||||
Income from operations | 6.7 | % | 9.3 | % | 7.7 | % | 8.8 | % | 10.6 | % | |||||||||
Other income (expense): | |||||||||||||||||||
Interest expense | (0.2 | )% | (0.1 | )% | (0.1 | )% | (0.1 | )% | (0.1 | )% | |||||||||
Interest and other income (expense) | 0.1 | % | 0.1 | % | 0.0 | % | (0.5 | )% | (0.1 | )% | |||||||||
Total other income (expense) | (0.1 | )% | (0.1 | )% | (0.1 | )% | (0.6 | )% | (0.1 | )% | |||||||||
Income before income taxes | 6.6 | % | 9.2 | % | 7.6 | % | 8.2 | % | 10.4 | % | |||||||||
Income taxes | 1.5 | % | 3.2 | % | 2.5 | % | 2.6 | % | 2.6 | % | |||||||||
Net income | 5.1 | % | 6.0 | % | 5.1 | % | 5.6 | % | 7.8 | % | |||||||||
Due to rounding, totals may not equal the sum of the line items in the table above. |
Three Months Ended | |||||||||||||||||||
(Dollars in thousands) | December 31, 2013 | March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | ||||||||||||||
Net revenue | $ | 408,103 | $ | 421,047 | $ | 441,112 | $ | 459,776 | $ | 472,422 | |||||||||
Income from operations | $ | 27,157 | $ | 39,124 | $ | 33,887 | $ | 40,513 | $ | 50,005 | |||||||||
Net income | $ | 20,798 | $ | 25,446 | $ | 22,451 | $ | 25,740 | $ | 36,916 | |||||||||
Plus: Income taxes | 6,108 | 13,448 | 11,078 | 12,137 | 12,388 | ||||||||||||||
Plus: Total other (income) expense | 251 | 230 | 358 | 2,636 | 701 | ||||||||||||||
Plus: Depreciation and amortization | 87,683 | 87,805 | 90,559 | 98,307 | 95,213 | ||||||||||||||
Plus: Share-based compensation expense | 17,188 | 12,732 | 17,265 | 19,842 | 20,166 | ||||||||||||||
Adjusted EBITDA | $ | 132,028 | $ | 139,661 | $ | 141,711 | $ | 158,662 | $ | 165,384 | |||||||||
Operating income margin | 6.7 | % | 9.3 | % | 7.7 | % | 8.8 | % | 10.6 | % | |||||||||
Adjusted EBITDA margin | 32.4 | % | 33.2 | % | 32.1 | % | 34.5 | % | 35.0 | % |
Year Ended December 31, | |||||||
(Dollars in thousands) | 2013 | 2014 | |||||
Net revenue | $ | 1,534,786 | $ | 1,794,357 | |||
Income from operations | $ | 133,136 | $ | 163,529 | |||
Net income | $ | 86,737 | $ | 110,553 | |||
Plus: Income taxes | 44,022 | 49,051 | |||||
Plus: Total other (income) expense | 2,377 | 3,925 | |||||
Plus: Depreciation and amortization | 313,007 | 371,884 | |||||
Plus: Share-based compensation expense | 59,645 | 70,005 | |||||
Adjusted EBITDA | $ | 505,788 | $ | 605,418 | |||
Operating income margin | 8.7 | % | 9.1 | % | |||
Adjusted EBITDA margin | 33.0 | % | 33.7 | % |
Three Months Ended | |||||||||||||||||||
(Dollars in thousands) | December 31, 2013 | March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | ||||||||||||||
Income from operations | $ | 27,157 | $ | 39,124 | $ | 33,887 | $ | 40,513 | $ | 50,005 | |||||||||
Effective tax rate | 22.7 | % | 34.6 | % | 33.0 | % | 32.0 | % | 25.1 | % | |||||||||
Net operating profit after tax (NOPAT) | $ | 20,992 | $ | 25,587 | $ | 22,704 | $ | 27,549 | $ | 37,454 | |||||||||
Net income | $ | 20,798 | $ | 25,446 | $ | 22,451 | $ | 25,740 | $ | 36,916 | |||||||||
Total assets at period end | $ | 1,491,797 | $ | 1,566,949 | $ | 1,647,975 | $ | 1,724,542 | $ | 1,624,284 | |||||||||
Less: Excess cash | (210,761 | ) | (263,309 | ) | (287,411 | ) | (294,307 | ) | (156,814 | ) | |||||||||
Less: Accounts payable and accrued expenses, accrued compensation and benefits, and income and other taxes payable | (195,894 | ) | (224,423 | ) | (231,563 | ) | (244,397 | ) | (215,774 | ) | |||||||||
Less: Deferred revenue (current and non-current) | (26,530 | ) | (24,485 | ) | (23,248 | ) | (21,437 | ) | (22,276 | ) | |||||||||
Less: Other non-current liabilities, deferred income taxes, deferred rent, and finance lease obligations for assets under construction | (149,043 | ) | (164,703 | ) | (180,220 | ) | (203,464 | ) | (263,401 | ) | |||||||||
Capital base | $ | 909,569 | $ | 890,029 | $ | 925,533 | $ | 960,937 | $ | 966,019 | |||||||||
Average total assets | $ | 1,471,783 | $ | 1,529,373 | $ | 1,607,462 | $ | 1,686,259 | $ | 1,674,413 | |||||||||
Average capital base | $ | 873,749 | $ | 899,799 | $ | 907,781 | $ | 943,235 | $ | 963,478 | |||||||||
Return on assets (annualized) | 5.7 | % | 6.7 | % | 5.6 | % | 6.1 | % | 8.8 | % | |||||||||
Return on capital (annualized) | 9.6 | % | 11.4 | % | 10.0 | % | 11.7 | % | 15.5 | % |
Year Ended December 31, | |||||||
(Dollars in thousands) | 2013 | 2014 | |||||
Income from operations | $ | 133,136 | $ | 163,529 | |||
Effective tax rate | 33.7 | % | 30.7 | % | |||
Net operating profit after tax (NOPAT) | $ | 88,269 | $ | 113,326 | |||
Net income | $ | 86,737 | $ | 110,553 | |||
Total assets at period end | $ | 1,491,797 | $ | 1,624,284 | |||
Less: Excess cash | (210,761 | ) | (156,814 | ) | |||
Less: Accounts payable and accrued expenses, accrued compensation and benefits, and income and other taxes payable | (195,894 | ) | (215,774 | ) | |||
Less: Deferred revenue (current and non-current) | (26,530 | ) | (22,276 | ) | |||
Less: Other non-current liabilities, deferred income taxes, deferred rent, and finance lease obligations for assets under construction | (149,043 | ) | (263,401 | ) | |||
Capital base | $ | 909,569 | $ | 966,019 | |||
Average total assets | $ | 1,393,079 | $ | 1,611,109 | |||
Average capital base | $ | 804,173 | $ | 930,417 | |||
Return on assets (Net income/Average total assets) | 6.2 | % | 6.9 | % | |||
Return on capital (NOPAT/Average capital base) | 11.0 | % | 12.2 | % |
Three Months Ended | Year Ended | ||||||||||||||
(In thousands) | December 31, 2013 | December 31, 2014 | December 31, 2013 | December 31, 2014 | |||||||||||
Adjusted EBITDA | $ | 132,028 | $ | 165,384 | $ | 505,788 | $ | 605,418 | |||||||
Non-cash deferred rent | 2,279 | 1,120 | 11,564 | 7,417 | |||||||||||
Total capital expenditures | (122,607 | ) | (104,629 | ) | (472,089 | ) | (435,139 | ) | |||||||
Cash payments for interest, net of interest received | (609 | ) | (331 | ) | (3,096 | ) | (1,643 | ) | |||||||
Cash payments for income taxes, net of refunds | (2,575 | ) | (6,700 | ) | (14,930 | ) | (13,518 | ) | |||||||
Adjusted free cash flow | $ | 8,516 | $ | 54,844 | $ | 27,237 | $ | 162,535 |
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