ELLI-8K-2013-04-30

0001122388-13-000022.txt : 20130430 0001122388-13-000022.hdr.sgml : 20130430 20130430161835 ACCESSION NUMBER: 0001122388-13-000022 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130430 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20130430 DATE AS OF CHANGE: 20130430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELLIE MAE INC CENTRAL INDEX KEY: 0001122388 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35140 FILM NUMBER: 13797741 BUSINESS ADDRESS: STREET 1: 4155 HOPYARD ROAD, SUITE 200 CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 925-227-2082 MAIL ADDRESS: STREET 1: 4155 HOPYARD ROAD, SUITE 200 CITY: PLEASANTON STATE: CA ZIP: 94588 8-K 1 elli-8kx2013x04x30.htm 8-K ELLI-8K-2013-04-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 30, 2013

ELLIE MAE, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)




001-35140		94-3288780
(Commission File Number)		(IRS Employer Identification Number)

4155 Hopyard Road, Suite 200

Pleasanton, California 94588

(Address of principal executive offices, including Zip Code)

Registrant's telephone number, including area code: (925) 227-7000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

The information in Item 2.02 of this Form 8-K and Exhibit 99.1, attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended, if such subsequent filing specifically references the information furnished pursuant to Item 2.02 (including Exhibit 99.1) of this Report.

On April 30, 2013, Ellie Mae, Inc. (“Ellie Mae”) announced its financial position and results of operations as of and for its first quarter ended March 31, 2013 in a press release that is attached hereto as Exhibit 99.1.

To supplement Ellie Mae's financial results presented on a U.S. GAAP basis, Ellie Mae's press release contains non-GAAP financial information, including adjusted net income, adjusted EBITDA and free cash flow. Ellie Mae believes that this non-GAAP presentation makes it easier for investors to compare current and historical periods' operating results and that it assists investors in comparing Ellie Mae's performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

Item 9.01 Financial Statements and Exhibits.


(d)	Exhibits.




Exhibit No.			Description

99.1			Press Release dated April 30, 2013.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




Date: April 30, 2013		Ellie Mae, Inc.

		By: /s/ Edgar A. Luce
		Edgar A. Luce
		Executive Vice President, Finance and Administration and Chief Financial Officer

EXHIBIT INDEX




Exhibit No.			Description

99.1			Press Release dated April 30, 2013.

EX-99.1 2 elli-8kx2013x04x30xex991.htm EXHIBIT ELLI-8K-2013-04-30-Ex99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Ellie Mae Reports FIRST Quarter 2013 Results

Revenue up 48% from prior year

Revenue guidance raised for 2013

PLEASANTON, CA - April 30, 2013 - Ellie Mae^®(NYSE: ELLI), a leading provider of on-demand, enterprise level automation solutions for the residential mortgage industry, today reported results for the first quarter ended March 31, 2013.

First Quarter Highlights


•	Revenue up 48% year over year to $30.9 million


•	Adjusted EBITDA up 87% year over year to $10.0 million


•	$7.9 million of free cash flow generated


•	Record 80,710 active Encompass360^® users as of March 31, 2013

“We had a great start to the year with strong financial and operating performance in the first quarter,” said Sig Anderman, CEO of Ellie Mae. “Through solid execution we delivered robust growth in both revenue and profits while generating significant free cash flow. We sold a record number of SaaS Encompass360 seats, with continued strong progress in adding new customers, increasing users from existing customers, and upgrading existing customers to our SaaS platform. We also had a record increase in the number of new active SaaS users during the quarter, which we believe will provide a solid foundation for continued growth in 2013 and beyond.”

“Setting a new user growth record this quarter on the heels of record growth last year speaks to the tremendous appeal of our on-demand platform,” continued Mr. Anderman. “Encompass360 is a compelling, end-to-end value proposition for lenders that automates and streamlines the mortgage origination process, assures regulatory compliance and helps reduce IT and other operational costs. With the heightened concerns lenders have about quality, regulatory compliance and efficiency; our innovative on-demand technology solutions provide us the opportunity for continued growth well into the future.”

“With the business momentum we experienced in the first quarter, we are pleased to raise our full year revenue guidance, even in the face of current expectations for a decline in 2013 mortgage origination volumes. We are maintaining our bottom line guidance for the full year, enabling us to incrementally increase our investment in growth initiatives and further enhance our compliance capabilities with a goal of extending our leadership position,” Mr. Anderman concluded.

Exhibit 99.1

First Quarter 2013

Total revenue for the first quarter of 2013 increased 48% to $30.9 million, compared to $20.9 million in the first quarter of 2012. Net income for the first quarter of 2013 was $3.9 million, or $0.14 per diluted share, compared to net income of $3.6 million, or $0.16 per diluted share, in the first quarter of 2012.

On a non-GAAP basis, adjusted net income for the first quarter of 2013 was $7.6 million, or $0.27 per diluted share, compared to $4.6 million, or $0.20 per diluted share, in the first quarter of 2012. Adjusted EBITDA for the first quarter of 2013 was $10.0 million, compared to $5.4 million for the first quarter of 2012.

A reconciliation of the non-GAAP financial measures to their related GAAP financial measures is set forth below.

Key Operating Metrics as of and for the Quarter Ended March 31, 2013:


•	On-demand revenue increased 55% year over year to $27.6 million, comprising approximately 89% of total revenues for the quarter;


•	The total number of users actively using the Company's Encompass360 enterprise solution (“active Encompass360 users”) increased 37% year over year to 80,710;


•	Revenue per average active Encompass360 user increased 7% year over year to $394;


•	At the end of the first quarter, the number of users of the SaaS version of Encompass360 increased 65% year over year to 48,121, or 60% of all active Encompass360 users; and


•	Total SaaS Encompass360 revenues increased 97% year over year to $16.5 million or 53% of total revenue for the quarter.

Second Quarter and Fiscal Year 2013 Financial Outlook

The April 2013 composite forecast of Fannie Mae, Freddie Mac and the Mortgage Bankers Association for 2013 mortgage origination volume is approximately $1.6 trillion, which represents a 14% decrease from estimated mortgage volume in 2012. These organizations publish monthly updates of their annual and quarterly forecasts. The April 2013 composite quarterly forecast for origination volume is as follows:



($ in billions)	Q1		Q2		Q3		Q4		Annual
2013	$	482	$	488	$	363	$	302	$	1,635

Approximately 50% of our revenue is sensitive to fluctuations in mortgage volumes and we are therefore providing financial guidance for the second quarter and full fiscal year 2013 based in part on these composite quarterly forecasts.

Exhibit 99.1

For the second quarter of 2013, revenue is expected to be in the range of $33.5 million to $34.0 million. Net income is expected to be in the range of $4.0 million to $4.4 million, or $0.14 to $0.16 per diluted share. Adjusted net income is expected to be in the range of $7.7 million to $8.2 million, or $0.27 to $0.29 per diluted share. Adjusted EBITDA is expected to be in the range of $11.4 million to $12.5 million.

For the full fiscal year 2013, revenue is expected to be in the range of $130.0 million to $131.5 million, up from the previously provided range of $127.5 million to $129.0 million. Net income is expected to continue to be in the range of $15.6 million to $16.2 million, or $0.55 to $0.57 per diluted share. Adjusted net income is expected to continue to be in the range of $30.2 million to $31.0 million, or $1.06 to $1.09 per diluted share. Adjusted EBITDA is expected to continue to be in the range of $44.2 million to $45.4 million.

Use of Non-GAAP Financial Measures

Ellie Mae provides investors with adjusted net income, adjusted EBITDA and free cash flow in conjunction with traditional GAAP operating performance of net income as part of its overall assessment of its performance. Adjusted net income consists of net income plus amortization of acquired intangibles, non-cash, stock-based compensation expense, acquisition costs and other acquisition-related adjustments. EBITDA consists of net income plus depreciation and amortization, interest income and expense and income tax provision (benefit). Adjusted EBITDA consists of EBITDA plus non-cash, stock-based compensation expense and acquisition costs. Free cash flow is calculated by subtracting cash paid for the acquisition of property and equipment from net cash provided by operating activities. Ellie Mae uses adjusted net income and adjusted EBITDA as measures of operating performance because they enable period to period comparisons by excluding potential differences caused by variations in the age of book depreciation of fixed assets and amortization of intangibles related to acquisitions, and changes in interest expense and interest income that are influenced by capital market conditions. The Company also believes it is useful to exclude non-cash, stock-based compensation expense from adjusted net income and adjusted EBITDA because the amount of non-cash expense associated with stock-based awards made at certain prices and points in time (a) do not necessarily reflect how the company's business is performing at any particular time and (b) can vary significantly between periods due to the timing of new stock-based awards. Ellie Mae uses free cash flow as a complementary measure to its entire consolidated statements of cash flows since purchases of property and equipment are a necessary component of ongoing operations. These non-GAAP measures are not measurements of the Company's financial performance under GAAP and have limitations as analytical tools. Accordingly, these non-GAAP financial measures should not be considered a substitute for, or superior to, net income or operating income or other financial measures calculated in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of the Company's profitability or liquidity. The Company cautions that other companies in

Exhibit 99.1

Ellie Mae's industry may calculate adjusted net income and adjusted EBITDA differently than the company does, further limiting their usefulness as a comparative measure. A reconciliation of net income to adjusted net income and adjusted EBITDA is included in the tables below.

Quarterly Conference Call

Ellie Mae will discuss its first quarter 2013 results today, April 30, 2013, via teleconference at 4:30 p.m. Eastern Time. To access the call, please dial 877-941-1427 or 480-629-9664 at least five minutes prior to the 4:30 p.m. Eastern Time start time. A live webcast of the call will be available on the Investor Relations section of the Company's website at http://ir.elliemae.com. An audio replay of the call will be available through May 14, 2013 by dialing 800-406-7325 or 303-590-3030 and entering access code 4611661.

About Ellie Mae

Ellie Mae, Inc. is a leading provider of on-demand automation solutions for the mortgage industry. The Company offers an end-to-end solution, delivered using a Software-as-a-Service model that serves as the core operating system for mortgage originators and spans customer relationship management, loan origination and business management. The Company also hosts the Ellie Mae Network™ that allows Encompass360 users to electronically conduct business transactions with the lenders and settlement service providers they work with to process and fund loans. The Company's offerings include the Encompass^®, Encompass360^® and DataTrac^® mortgage management software systems.

Ellie Mae was founded in 1997 and is based in Pleasanton, California. To learn more about Ellie Mae, visit www.EllieMae.com or call 877.355.4362.

© 2013 Ellie Mae, Inc. Ellie Mae^®, Encompass^®, Encompass360^®, DataTrac^®, Ellie Mae Network™ and the Ellie Mae logo are registered trademarks or trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

Forward-Looking Statements

This press release contains forward-looking statements under the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements include discussions regarding growth opportunities, projected revenue, net income, adjusted EBITDA and adjusted net income for the second quarter and fiscal year 2013, as well as discussions regarding potential increases in investment in growth initiatives and further enhancement of the Company's capabilities. These statements involve known and unknown risks, uncertainties and other factors which may cause Ellie Mae's results to be materially different than those expressed or implied in such statements. Such differences may be based on factors such as changes in strategic planning decisions by management; reallocation of internal resources; changes in the volume of residential mortgage volume in the United States; changes in anticipated rates of existing customer conversions and new customer acquisitions; the risk that the anticipated benefits, growth prospects and synergies

Exhibit 99.1

expected from the Del Mar Datatrac acquisition may not be fully realized or may take longer to realize than expected; the possibility that economic benefits of future opportunities in an emerging industry may never materialize, including unexpected variations in market growth and demand for the acquired products and technologies; delays, disruptions, including changing relationships with partners, customers, employees or suppliers; the amount of costs incurred in connection with the supporting and integrating new customers and partners; ongoing personnel and logistical challenges of managing a larger organization; changes in other macroeconomic factors affecting the residential real estate industry and other risk factors included in documents that Ellie Mae has filed with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2012 and Current Reports on Form 8-K. Other unknown or unpredictable factors also could have material adverse effects on Ellie Mae's future results. The forward-looking statements included in this press release are made only as of the date hereof. Ellie Mae cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Ellie Mae expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.

IR Contact:

Edgar Luce

Executive VP and CFO

Ellie Mae, Inc.

IR@elliemae.com

+1-925-227-7079

Lisa Laukkanen

The Blueshirt Group for Ellie Mae, Inc.

lisa@blueshirtgroup.com

+1-415-217-4967

# # #

Exhibit 99.1



Ellie Mae, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)

	March 31, 2013			December 31, 2012
Assets
Current assets
Cash and cash equivalents	$	25,916		$	44,114
Short-term investments	34,584			16,243
Accounts receivable, net of allowances for doubtful accounts of $58 and $74 as of March 31, 2013 and December 31, 2012, respectively	9,663			9,753
Prepaid expenses and other current assets	3,397			2,956
Deferred tax assets	652			645
Note receivable	1,000			1,000
Total current assets	75,212			74,711
Property and equipment, net	10,327			9,494
Long-term investments	52,666			43,728
Other intangible assets, net	6,170			6,531
Goodwill	51,051			51,051
Deposits and other assets	501			100
Total assets	$	195,927		$	185,615
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	2,825		$	2,039
Accrued and other current liabilities	5,608			5,777
Income taxes payable	1,255			15
Acquisition holdback, net of discount	2,969			2,948
Deferred revenue	4,503			4,896
Deferred rent	263			252
Total current liabilities	17,423			15,927
Acquisition holdback, net of current portion and discount	1,925			1,911
Other long-term liabilities	891			915
Total liabilities	20,239			18,753

Stockholders' equity:
Common stock, 0.0001 par value per share; 140,000,000 authorized shares, 26,281,531 and 26,058,533 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively	3			3
Additional paid-in capital	189,624			184,616
Accumulated other comprehensive loss	(160		)	(65		)
Accumulated deficit	(13,779		)	(17,692		)
Total stockholders' equity	175,688			166,862
Total liabilities and stockholders' equity	$	195,927		$	185,615

Exhibit 99.1



Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share amounts)

	Three months ended March 31,
	2013			2012
Revenues	$	30,855		$	20,906
Cost of revenues	7,611			5,257
Gross profit	23,244			15,649
Operating expenses:
Sales and marketing	4,903			4,000
Research and development	5,548			4,133
General and administrative	7,586			3,676
Total operating expenses	18,037			11,809
Income from operations	5,207			3,840
Other income (expense), net	121			(20		)
Income before income taxes	5,328			3,820
Income tax provision	1,415			178
Net income	$	3,913		$	3,642
Net income per share of common stock:
Basic	$	0.15		$	0.17
Diluted	$	0.14		$	0.16
Weighted average common shares used in computing net income per share of common stock:
Basic	26,166,290			21,404,789
Diluted	27,962,156			22,513,854

Net income	$	3,913		$	3,642
Other comprehensive loss, net of taxes
Unrealized losses on investments	(95		)	—
Comprehensive income	$	3,818		$	3,642

Exhibit 99.1



Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

	Three months ended March 31,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,913		$	3,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	1,095			611
Provision (recovery) for uncollectible accounts receivable	(12		)	36
Amortization of other intangible assets	361			409
Amortization of discount related to acquisition holdback	35			54
Stock-based compensation	3,373			517
Excess tax benefit from exercise of stock options	(249		)	(55		)
Deferred income taxes	(287		)	—
Amortization of investment premium	319			—
Changes in operating assets and liabilities:
Accounts receivable	102			(493		)
Prepaid expenses and other current assets	(493		)	56
Deposits and other assets	(251		)	—
Accounts payable	671			(380		)
Income taxes payable	1,240			—
Accrued and other current liabilities	(155		)	(1,160		)
Deferred revenue	(382		)	76
Deferred rent	(60		)	(50		)
Net cash provided by operating activities	9,220			3,263
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(1,349		)	(828		)
Purchase of investments	(31,683		)	(1,112		)
Maturities of investments	3,996			951
Net cash used in investing activities	(29,036		)	(989		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital lease obligations	(2		)	(1		)
Proceeds from issuance of common stock under stock incentive plans	1,371			1,447
Excess tax benefit from exercise of stock options	249			55
Net cash provided by financing activities	1,618			1,501
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(18,198		)	3,775
CASH AND CASH EQUIVALENTS, Beginning of period	44,114			23,732
CASH AND CASH EQUIVALENTS, End of period	$	25,916		$	27,507
Supplemental disclosure of cash flow information:
Cash paid for interest	$	28		$	—
Cash paid for income taxes	$	64		$	105
Supplemental disclosure of non-cash investing and financing activities:
Fixed asset purchases not yet paid	$	381		$	11
Fixed assets acquired under capital lease	$	317		$	—

Exhibit 99.1



Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)

	Three months ended March 31,
	2013			2012
Net income	$	3,913		$	3,642
Depreciation	1,095			611
Amortization of intangible assets	361			409
Other (income) expense, net	(121		)	20
Income tax provision	1,415			178
EBITDA	6,663			4,860

Non-cash, stock-based compensation expenses	3,373			517
Adjusted EBITDA	$	10,036		$	5,377

Net income	$	3,913		$	3,642
Non-cash, stock-based compensation expenses	3,373			517
Amortization of intangible assets	361			409
Adjusted net income	$	7,647		$	4,568

Shares used to compute non-GAAP net income per share
Basic	26,166,290			21,404,789
Diluted	27,962,156			22,513,854

Adjusted net income per share
Basic	$	0.29		$	0.21
Diluted	$	0.27		$	0.20

Net cash provided by operating activities	$	9,220		$	3,263
Acquisition of property and equipment	(1,349		)	(828		)
Free cash flow	$	7,871		$	2,435

Exhibit 99.1



Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)

	Second Quarter 2013 Projected Range				Fiscal 2013 Projected Range
Net Income	$	4,000	$	4,400	$	15,600	$	16,200

Depreciation	1,200		1,300		4,600		4,800
Amortization of intangible assets	400		400		1,400		1,400
Income tax provision/other	2,500		3,000		9,400		9,600
EBITDA	8,100		9,100		31,000		32,000

Non-cash, stock-based compensation expenses	3,300		3,400		13,200		13,400
Adjusted EBITDA	$	11,400	$	12,500	$	44,200	$	45,400

Net Income	$	4,000	$	4,400	$	15,600	$	16,200
Non-cash, stock-based compensation expenses	3,300		3,400		13,200		13,400
Amortization of intangible assets	400		400		1,400		1,400
Adjusted net income	$	7,700	$	8,200	$	30,200	$	31,000

Shares used to compute non-GAAP net income per share
Diluted	28,100,000		28,100,000		28,400,000		28,400,000

Projected net income per share
Diluted	$	0.14	$	0.16	$	0.55	$	0.57

Adjusted net income per share
Diluted	$	0.27	$	0.29	$	1.06	$	1.09

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