EX-99.1 2 elli-8kx2015x0930xex991.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

FOR IMMEDIATE RELEASE

ELLIE MAE REPORTS THIRD QUARTER 2015 RESULTS
Record Quarterly Seat Bookings of 11,900
Raises 2015 Revenue Guidance


PLEASANTON, CA - October 28, 2015 - Ellie Mae® (NYSE:ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry, today reported results for the third quarter ended September 30, 2015.

Third Quarter 2015 Highlights
•
Record revenue of $68.9 million, up 61% from $42.8 million in Q3 2014
•
Net income of $6.2 million, up 24% from $5.0 million in Q3 2014
•
Adjusted EBITDA of $20.3 million, up 45% from $14.0 million in Q3 2014
•
Revenue per average active Encompass user of $520, up 24% from $419 in Q3 2014

“Ellie Mae again delivered strong growth with third quarter financial results that exceeded expectations,” said Jonathan Corr, president and CEO of Ellie Mae.  “We grew revenue by 61% as we added more Encompass users, drove greater adoption of our services, and continued to see a sustained uptick in the purchase market. During the quarter our customers continued to grow their businesses and add more seats, which helped achieve another quarter of record seat bookings of 11,900. Our results are a testament to the strong value proposition we provide in helping lenders’ achieve loan quality, regulatory compliance and operating efficiency.”

Financial Results
Total revenue for the third quarter of 2015 was $68.9 million, compared to $42.8 million for the third quarter of 2014. Net income for the third quarter of 2015 was $6.2 million, or $0.20 per diluted share, compared to net income of $5.0 million, or $0.17 per diluted share, for the third quarter of 2014.

On a non-GAAP basis, adjusted net income for the third quarter of 2015 was $13.9 million, or $0.45 per diluted share, compared to $8.6 million, or $0.29 per diluted share, for the third quarter of 2014. Adjusted EBITDA for the third quarter of 2015 was $20.3 million, compared to $14.0 million for the third quarter of 2014.

Additional information about the non-GAAP financial measures presented in this release, including a reconciliation of the non-GAAP financial measures to their related GAAP financial measures, is set forth below under the section entitled “Use of Non-GAAP Financial Measures.”

Key Operating Metrics:
•
The total number of active Encompass users increased 30% year-over-year to 135,000;



•
The total number of active users of the SaaS version of Encompass increased 47% year-over-year to 116,000, or 86% of all active Encompass users; and
•
Revenue per average active Encompass user in the third quarter increased 24% year-over-year to $520.

Fourth Quarter and Full Year 2015 Financial Outlook
For the fourth quarter of 2015, we expect revenue to be in the range of $59.5 million to $60.5 million. Reflecting the normal seasonality in a purchase-centric market, increased investments, and expected purchase accounting impact for the Mortgage Returns acquisition that we announced on October 14, 2015, we are expecting a net loss of between $(3.8) million to $(3.3) million, or $(0.12) to $(0.10) per diluted share. Adjusted net income is expected to be in the range of $5.5 million to $6.3 million, or $0.18 to $0.20 per diluted share, and Adjusted EBITDA is expected to be in the range of $6.7 million to $7.9 million for the quarter.

For the full year 2015, we expect revenue to be in the range of $248.5 million to $249.5 million, up from the previously provided range of $237.5 million to $238.5 million. Net income is expected to be in the range of $13.2 million to $13.7 million, or $0.43 to $0.44 per diluted share, up from the previously provided range of $10.0 million to $11.5 million, or $0.32 to $0.37 per diluted share. Adjusted net income is expected to be in the range of $43.8 million to $44.6 million, or $1.43 to $1.44 per diluted share, up from the previously provided range of $39.4 million to $41.6 million, or $1.27 to $1.32 per diluted share. And Adjusted EBITDA is expected to be in the range of $64.0 million to $65.2 million, up from the previously provided range of $57.7 million to $61.6 million.

Use of Non-GAAP Financial Measures
Ellie Mae (the “Company”) provides investors with the non-GAAP financial measures of adjusted net income, adjusted EBITDA and free cash flow in addition to the traditional GAAP operating performance measure of net income as part of its overall assessment of its performance. Adjusted net income consists of net income plus amortization of intangible assets and stock-based compensation expense. EBITDA consists of net income plus depreciation, amortization of intangible assets, other income, net, and income tax provision. Adjusted EBITDA consists of EBITDA plus stock-based compensation expense. Free cash flow is calculated by subtracting cash paid for the acquisition of property and equipment (net of proceeds from sale 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 and depreciable lives of fixed assets, the 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 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 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 third quarter 2015 results today, October 28, 2015, via teleconference at 4:30 p.m. Eastern Time. To access the call, please dial 877-876-9175 or 785-424-1668 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 November 11, 2015 by dialing 888-203-1112 or 719-457-0820 and entering access code 105357.

About Ellie Mae
Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Mortgage lenders of all sizes use Ellie Mae’s Encompass® all-in-one mortgage management solution, Mavent Compliance Service and AllRegs research, reference and education resources to improve compliance, loan quality and efficiency across the entire mortgage lifecycle. Visit EllieMae.com or call 877.355.4362 to learn more.

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 projected revenue, net income (loss), adjusted EBITDA and adjusted net income for the fourth quarter and fiscal year 2015. 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 the volume of residential mortgage in the United States; changes in other macroeconomic factors affecting the residential real estate industry; changes in strategic planning decisions by management; our ability to manage growth and expenses as we continue to scale our business; reallocation of internal resources; changes in anticipated rates of existing customer conversions and SaaS seat additions, and new customer acquisitions; the possibility that economic benefits of future opportunities may never materialize, including unexpected variations in market growth and demand for the acquired products and technologies; delays and disruptions, including changing relationships with partners,



customers, employees or suppliers; the satisfactory performance, reliability and availability of our products and services; the amount of costs incurred in connection with 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, 2014 as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. 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, unless otherwise required by law.


IR Contacts:

Edgar Luce
Executive VP and CFO
Ellie Mae, Inc.
(925) 227-7079
IR@elliemae.com


or

Michelle Gable
Vice President, Investor Relations
Ellie Mae, Inc.
(925) 227-7108
michelle.gable@elliemae.com


# # #


©2015 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, DataTrac®, Ellie Mae Network™, Mavent®, Mortgage Returns®, Prospect Manager, Total Quality Loan, True CRM®, TQL and the Ellie Mae logo are 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.




Ellie Mae, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
 
September 30,
2015
 
December 31,
2014
 
(Unaudited)
 
(Audited)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
52,417

 
$
26,756

Short-term investments
57,933

 
49,352

Accounts receivable, net of allowances for doubtful accounts of $77 and $66 as of September 30, 2015 and December 31, 2014, respectively
28,924

 
20,403

Prepaid expenses and other current assets
16,419

 
16,021

Total current assets
155,693

 
112,532

Property and equipment, net
72,440

 
28,694

Long-term investments
48,930

 
58,679

Intangible assets, net
17,763

 
21,452

Deposits and other assets
6,183

 
3,425

Goodwill
65,338

 
65,338

Total assets
$
366,347

 
$
290,120

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
9,162

 
$
6,726

Accrued and other current liabilities
28,652

 
16,822

Acquisition holdback, net of discount
522

 
522

Deferred revenue
13,392

 
9,729

Total current liabilities
51,728

 
33,799

Leases payable, net of current portion
1,303

 
443

Other long-term liabilities
19,736

 
2,994

Total liabilities
72,767

 
37,236

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock, $0.0001 par value per share; 140,000,000 authorized shares, 29,796,381 and 28,907,147 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively
3

 
3

Additional paid-in capital
273,171

 
242,527

Accumulated other comprehensive income (loss)
62

 
(95
)
Retained earnings
20,344

 
10,449

Total stockholders’ equity
293,580

 
252,884

Total liabilities and stockholders’ equity
$
366,347

 
$
290,120




Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Revenues
$
68,939

 
$
42,798

 
$
189,070

 
$
114,960

Cost of revenues(1)
22,441

 
11,669

 
60,653

 
31,563

Gross profit
46,498

 
31,129

 
128,417

 
83,397

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing(1)
9,082

 
6,245

 
27,646

 
18,791

Research and development(1)
11,138

 
6,456

 
28,717

 
19,348

General and administrative(1)
16,658

 
9,556

 
43,109

 
28,100

Total operating expenses
36,878

 
22,257

 
99,472

 
66,239

Income from operations
9,620

 
8,872

 
28,945

 
17,158

Other income, net
154

 
134

 
439

 
343

Income before income taxes
9,774

 
9,006

 
29,384

 
17,501

Income tax provision
3,552

 
3,989

 
11,948

 
6,978

Net income
$
6,222

 
$
5,017

 
$
17,436

 
$
10,523

Net income per share of common stock:
 
 
 
 
 
 
 
Basic
$
0.21

 
$
0.18

 
$
0.60

 
$
0.38

Diluted
$
0.20

 
$
0.17

 
$
0.57

 
$
0.36

Weighted average common shares used in computing net income per share of common stock:
 
 
 
 
 
 
 
Basic
29,363,621

 
28,007,770

 
29,076,820

 
27,657,217

Diluted
31,005,651

 
29,661,211

 
30,773,353

 
29,332,162

 
 
 
 
 
 
 
 
Net income
$
6,222

 
$
5,017

 
$
17,436

 
$
10,523

Other comprehensive income, net of taxes:
 
 
 
 
 
 
 
Unrealized gain (loss) on investments
27

 
(75
)
 
157

 
(3
)
Comprehensive income
$
6,249

 
$
4,942

 
$
17,593

 
$
10,520

 
 
 
 
 
 
 
 
(1)Includes stock-based compensation expense of the following for the periods presented:
 
 
 
 
 
 
 
 
Cost of revenues
$
761

 
$
441

 
$
2,189

 
$
1,065

Sales and marketing
783

 
247

 
1,973

 
1,127

Research and development
1,438

 
1,038

 
3,961

 
2,610

General and administrative
3,538

 
1,326

 
9,481

 
5,738

 
$
6,520

 
$
3,052

 
$
17,604

 
$
10,540




Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
 
 
 
 
Nine Months Ended September 30,
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
17,436

 
$
10,523

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation
7,324

 
3,933

Provision for uncollectible accounts receivable
14

 
12

Amortization of intangible assets
3,689

 
1,575

Amortization of discount related to acquisition holdback
—

 
36

Stock-based compensation expense
17,604

 
10,540

Excess tax benefit from stock-based compensation
(3,828
)
 
(5,306
)
Deferred income taxes
9,977

 
(37
)
Loss on disposal of property and equipment
91

 
—

Amortization of investment premium
778

 
972

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(8,535
)
 
(5,856
)
Prepaid expenses and other current assets
(394
)
 
644

Deposits and other assets
(985
)
 
(632
)
Accounts payable
303

 
1,172

Accrued, other current and other liabilities
17,366

 
7,258

Deferred revenue
3,696

 
(54
)
Net cash provided by operating activities
64,536

 
24,780

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Acquisition of property and equipment
(20,677
)
 
(4,523
)
Acquisition of internal-use software
(20,706
)
 
(8,316
)
Proceeds from sale of property and equipment
58

 
—

Purchases of investments
(39,243
)
 
(49,662
)
Maturities of investments
39,790

 
42,965

Acquisitions, net of cash acquired
—

 
(6,500
)
Net cash used in investing activities
(40,778
)
 
(26,036
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Payment of capital lease obligations
(2,891
)
 
(987
)
Proceeds from issuance of common stock under employee stock plans
12,770

 
8,002

Payments for repurchase of common stock
(8,830
)
 
—

Tax payments related to shares withheld for vested restricted stock units
(2,974
)
 
(668
)
Excess tax benefit from stock-based compensation
3,828

 
5,306

Net cash provided by financing activities
1,903

 
11,653

NET INCREASE IN CASH AND CASH EQUIVALENTS
25,661

 
10,397

CASH AND CASH EQUIVALENTS, Beginning of period
26,756

 
33,462

CASH AND CASH EQUIVALENTS, End of period
$
52,417

 
$
43,859

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
101

 
$
41

Cash paid for income taxes
$
15

 
$
43




Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)
(UNAUDITED)
(in thousands)
 
 
 
 
 
Nine Months Ended September 30,
 
2015
 
2014
Supplemental disclosure of non-cash investing and financing activities:
 
 
 
Fixed asset purchases accrued but not paid
$
2,133

 
$
(220
)
Stock-based compensation capitalized to property and equipment
$
705

 
$
350

Acquisition of property and equipment under capital leases
$
6,998

 
$
1,269




Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income
$
6,222

 
$
5,017

 
$
17,436

 
$
10,523

Depreciation
3,014

 
1,495

 
7,324

 
3,933

Amortization of intangible assets
1,178

 
535

 
3,689

 
1,575

Other income, net
(154
)
 
(134
)
 
(439
)
 
(343
)
Income tax provision
3,552

 
3,989

 
11,948

 
6,978

EBITDA
13,812

 
10,902

 
39,958

 
22,666

 
 
 
 
 
 
 
 
Stock-based compensation expense
6,520

 
3,052

 
17,604

 
10,540

Adjusted EBITDA
$
20,332

 
$
13,954

 
$
57,562

 
$
33,206

 
 
 
 
 
 
 
 
Net income
$
6,222

 
$
5,017

 
$
17,436

 
$
10,523

Stock-based compensation expense
6,520

 
3,052

 
17,604

 
10,540

Amortization of intangible assets
1,178

 
535

 
3,689

 
1,575

Adjusted net income
$
13,920

 
$
8,604

 
$
38,729

 
$
22,638

 
 
 
 
 
 
 
 
Shares used to compute non-GAAP net income per share
 
 
 
 
 
 
 
Basic
29,363,621

 
28,007,770

 
29,076,820

 
27,657,217

Diluted
31,005,651

 
29,661,211

 
30,773,353

 
29,332,162

 
 
 
 
 
 
 
 
Adjusted net income per share
 
 
 
 
 
 
 
Basic
$
0.47

 
$
0.31

 
$
1.33

 
$
0.82

Diluted
$
0.45

 
$
0.29

 
$
1.26

 
$
0.77

 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
25,686

 
$
10,977

 
$
64,536

 
$
24,780

Acquisition of property and equipment and internal-use software, net
(10,906
)
 
(5,418
)
 
(41,325
)
 
(12,839
)
Free cash flow
$
14,780

 
$
5,559

 
$
23,211

 
$
11,941




Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
Fourth Quarter 2015 Projected Range
 
Fiscal 2015 Projected Range
Net income (loss)
$
(3,800
)
 
$
(3,300
)
 
$
13,200

 
$
13,700

 
 
 
 
 
 
 
 
Depreciation
3,700

 
3,800

 
11,000

 
11,100

Amortization of intangible assets
2,700

 
2,800

 
6,400

 
6,500

Income tax provision/other
(2,500
)
 
(2,200
)
 
9,200

 
9,500

EBITDA
100

 
1,100

 
39,800

 
40,800

 
 
 
 
 
 
 
 
Stock-based compensation expense
6,600

 
6,800

 
24,200

 
24,400

Adjusted EBITDA
$
6,700

 
$
7,900

 
$
64,000

 
$
65,200

 
 
 
 
 
 
 
 
Net income (loss)
$
(3,800
)
 
$
(3,300
)
 
$
13,200

 
$
13,700

Stock-based compensation expense
6,600

 
6,800

 
24,200

 
24,400

Amortization of intangible assets
2,700

 
2,800

 
6,400

 
6,500

Adjusted net income
$
5,500

 
$
6,300

 
$
43,800

 
$
44,600

 
 
 
 
 
 
 
 
Shares used to compute non-GAAP net income per share
 
 
 
 
 
 
 
Basic
29,500,000

 
30,000,000

 
29,000,000

 
29,500,000

Diluted
31,000,000

 
31,500,000

 
30,500,000

 
31,000,000

 
 
 
 
 
 
 
 
Projected net income (loss) per share
 
 
 
 
 
 
 
Basic
$
(0.13
)
 
$
(0.11
)
 
$
0.46

 
$
0.46

Diluted
$
(0.12
)
 
$
(0.10
)
 
$
0.43

 
$
0.44

 
 
 
 
 
 
 
 
Adjusted net income per share
 
 
 
 
 
 
 
Basic
$
0.19

 
$
0.21

 
$
1.51

 
$
1.51

Diluted
$
0.18

 
$
0.20

 
$
1.43

 
$
1.44