RICHARDSON, Texas--(BUSINESS WIRE)--February 27, 2017--RealPage, Inc. (NASDAQ:RP), a leading global provider of software and data analytics to the real estate industry, today announced financial results for the fourth quarter and year ended December 31, 2016.

“Today we announced exceptional 2016 financial performance and our agreement to acquire Lease Rent Options (LRO^®)” said Steve Winn, Chairman and CEO of RealPage. “The acquisition of LRO adds over 1.5 million units to our revenue management platform expanding our repository of real-time lease transaction data used to calibrate our pricing and forecasting models. This acquisition, coupled with our recent acquisition of Axiometrics, positions RealPage as a core catalyst for increased operational yields and improved harvesting and placement of capital within the $3.0 trillion apartment industry in the U.S. We believe precision asset optimization tools are used in less than 10% of the U.S. rental housing industry and are virtually non-existent internationally.”

“Our 2016 performance and recent acquisitions are significant steps towards achieving our 2020 objective of $1 billion of revenue and 30% adjusted EBITDA margin,” said Bryan Hill, CFO and Treasurer of RealPage. “Full year financial performance was strong, with total revenue growth of 22% and adjusted EBITDA margin expansion of 260 basis points. Our diligent focus on efficiency gains across the business resulted in one of the highest adjusted EBITDA margins in company history during the fourth quarter. This execution provides us confidence as we begin to integrate and realize synergies from the recent acquisitions as well as execute against our adjusted EBITDA margin expansion objective of 200 basis points per year.”

The company recently announced its agreement to acquire LRO and related assets from the Rainmaker Group for $300 million. This acquisition remains subject to certain standard conditions, and is expected to close during the second quarter of 2017. For the year ended December 31, 2016, the LRO business possessed revenue and EBITDA of $35.6 million and $10 million, respectively. Integration work is expected to be completed in 2018 and RealPage expects to achieve incremental revenue and expense synergies that will be accretive to its long term revenue growth objective and adjusted EBITDA margin expansion. For more details regarding the acquisition of LRO, please reference the company’s press release dated February 27, 2017.

RealPage management expects to achieve the following results during its first quarter ended March 31, 2017:

RealPage management expects to achieve the following results during its calendar year ended December 31, 2017:

The Company will host a conference call at 5 p.m. EST today to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast as well as download the Investor Presentation at www.realpage.com on the Investor Relations section. In addition, a live dial-in is available domestically at 866-807-9684 and internationally at 412-317-5415. A replay will be available at 877-344-7529 or 412-317-0088, passcode 10102086, until March 6, 2017.

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 11,000 clients worldwide from offices in North America, Europe and Asia. For more information about the company, visit https://www.realpage.com.

This press release contains “forward-looking” statements relating to RealPage, Inc.’s financial outlook, expected, possible or assumed future results and RealPage’s long-term revenue and adjusted EBITDA margin goals. 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. Those 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. 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 customer cancellations; (d) the inability to increase sales to existing customers and to attract new customers; (e) RealPage, Inc.’s failure to integrate LRO or other acquired businesses and any future acquisitions successfully or to achieve expected synergies; (f) the timing and success of new product introductions by RealPage, Inc. or its competitors; (g) changes in RealPage, Inc.’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; and (j) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission (“SEC”) by RealPage Inc., including its Quarterly Report on Form 10-Q previously filed with the SEC on November 8, 2016. 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.

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 and other deferred revenue adjustments. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules and revenue deferred due to a lack of historical experience determining the settlement of the contractual obligation in order to appropriately measure the underlying performance of 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 and other deferred revenue adjustments, (2) depreciation, (3) amortization of intangible assets, (4) headquarters relocation costs, and (5) stock-based expense; and the company defines “Adjusted Gross Margin” as Adjusted Gross Profit as a percentage of Non-GAAP Total Revenue. 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 and other deferred revenue adjustments, (2) depreciation, asset impairment, and the loss on disposal of assets, (3) amortization of intangible assets, (4) acquisition-related expense (income), (5) interest expense, net, (6) income tax expense (benefit), (7) litigation-related expense, (8) headquarters relocation costs, and (9) stock-based expense; and the company defines “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage Non-GAAP Total Revenue. 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 (1) asset impairment and loss on disposal of assets, (2) headquarters relocation costs, and (3) stock-based expense; and the company defines “Non-GAAP Product Development Margin” as Non-GAAP Product Development Expense as a percentage of Non-GAAP Total Revenue. 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 (1) amortization of intangible assets, (2) headquarters relocation costs, and (3) stock-based expense; and the company defines “Non-GAAP Sales and Marketing Margin” as Non-GAAP Sales and Marketing Expense as a percentage of Non-GAAP Total Revenue. 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 (income), (3) litigation-related expense, (4) headquarters relocation costs, and (5) stock-based expense; and the company defines “Non-GAAP General and Administrative Margin” as Non-GAAP General and Administrative Expense as a percentage of Non-GAAP Total Revenue. 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) acquisition-related expense (income), (3) litigation-related expense, (4) headquarters relocation costs, and (5) stock-based expense; and the company defines “Non-GAAP Operating Expense Margin” as Non-GAAP Operating Expense as a percentage of Non-GAAP Total Revenue. 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 (loss), plus (1) acquisition-related and other deferred revenue, (2) asset impairment and loss on disposal of assets, (3) amortization of intangible assets, (4) acquisition-related expense (income), (5) litigation-related expense, (6) headquarters relocation costs, and (7) stock-based expense; and the company defines “Non-GAAP Operating Margin” as Non-GAAP Operating Income as a percentage of Non-GAAP Total Revenue. 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 (loss), plus (1) income tax expense, (2) acquisition-related and other deferred revenue, (3) asset impairment and loss on disposal of assets, (4) amortization of intangible assets, (5) acquisition-related expense (income), (6) litigation-related expense, (7) headquarters relocation costs, (8) stock-based expense, and (9) provision for income tax expense based on an assumed rate in order to approximate the company’s long-term effective corporate tax rate; and the company defines “Non-GAAP Net Income per Diluted Share” as Non-GAAP Net Income divided by 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 On Demand Revenue” as total revenue plus acquisition-related and other deferred revenue adjustments. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules and revenue deferred due to a lack of historical experience determining the settlement of the contractual obligation in order to appropriately measure the underlying performance of 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 customers 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 customers’ properties is updated or supplemented, which could result in adjustments to the number of units previously reported.

The company defines “RPU,” or Revenue Per Unit, as Non-GAAP On Demand Revenue divided by average on demand units for the same period, including pro forma adjustments for significant acquisitions and dispositions during the period. For interim periods, the calculation is performed on an annualized basis. The company calculates average on demand units as the average of the beginning and ending on demand units for each quarter in the period presented. The company monitors this metric to measure its success in increasing the number of on demand software solutions utilized by its customers to manage their rental housing units, its overall revenue and profitability.

The company defines “ACV,” or Annual Client Value, as RPU multiplied by Ending On Demand Units. The company monitors this metric to measure its success in increasing the number of on demand units and the amount of software solutions utilized by its customers to manage their rental housing units. In addition, the company believes ACV provides a useful proxy for the annual run-rate value of on demand customer relationships.

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:


Condensed Consolidated Balance Sheets
(in thousands, except share amounts)


	December 31,
		2016			2015
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	104,886		$	30,911
Restricted cash		83,654			85,461
Accounts receivable, less allowance for doubtful accounts of $2,468 and $2,318 at December 31, 2016 and 2015, respectively		92,367			74,192
Prepaid expenses		10,836			8,294
Other current assets		5,712			23,085
Total current assets		297,455			221,943
Property, equipment, and software, net		130,428			82,198
Goodwill		259,938			220,097
Identified intangible assets, net		74,976			81,280
Deferred tax assets, net		15,665			12,051
Other assets		9,636			5,632
Total assets	$	788,098		$	623,201

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	21,421		$	17,448
Accrued expenses and other current liabilities		50,464			28,294
Current portion of deferred revenue		89,583			84,200
Current portion of term loan, net		5,469			—
Client deposits held in restricted accounts		83,590			85,405
Total current liabilities		250,527			215,347
Deferred revenue		6,308			6,979
Revolving line of credit		—			40,000
Term loan, net		116,657			—
Other long-term liabilities		29,843			34,423
Total liabilities		403,335			296,749
Stockholders’ equity:
Preferred stock, $0.001 par value: 10,000,000 shares authorized and zero shares issued and outstanding at December 31, 2016 and 2015, respectively		—			—
Common stock, $0.001 par value: 125,000,000 shares authorized, 86,062,191 and 82,919,033 shares issued and 81,087,353 and 78,793,670 shares outstanding at December 31, 2016 and 2015, respectively		86			83
Additional paid-in capital		534,348			471,668
Treasury stock, at cost: 4,974,838 and 4,125,363 shares at December 31, 2016 and 2015, respectively		(30,358	)		(24,338	)
Accumulated deficit		(119,260	)		(120,415	)
Accumulated other comprehensive loss		(53	)		(546	)
Total stockholders’ equity		384,763			326,452
Total liabilities and stockholders’ equity	$	788,098		$	623,201


Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Revenue:
On demand	$	141,627		$	117,090		$	542,531		$	450,962
On premise		695			669			2,836			2,970
Professional and other		6,749			3,941			22,761			14,588
Total revenue		149,071			121,700			568,128			468,520
Cost of revenue⁽¹⁾		61,364			50,818			242,301			198,613
Gross profit		87,707			70,882			325,827			269,907
Operating expense:
Product development⁽¹⁾		18,714			15,880			73,607			68,799
Sales and marketing⁽¹⁾		34,025			30,410			135,213			123,108
General and administrative⁽¹⁾		23,058			17,017			85,013			68,814
Impairment of identified intangible assets		—			—			750			20,801
Total operating expense		75,797			63,307			294,583			281,522
Operating income (loss)		11,910			7,575			31,244			(11,615	)
Interest expense and other, net		(912	)		(401	)		(3,758	)		(1,449	)
Income (loss) before income taxes		10,998			7,174			27,486			(13,064	)
Income tax expense (benefit)		3,637			3,274			10,836			(3,846	)
Net income (loss)	$	7,361		$	3,900		$	16,650		$	(9,218	)

Net income (loss) per share attributable to common stockholders:
Basic	$	0.09		$	0.05		$	0.22		$	(0.12	)
Diluted	$	0.09		$	0.05		$	0.21		$	(0.12	)
Weighted average shares used in computing net income (loss) per share attributable to common stockholders:
Basic		77,566			76,445			76,854			76,689
Diluted		79,116			77,055			77,843			76,689


⁽¹⁾ Includes stock-based expense as follows:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Cost of revenue	$	804		$	779		$	3,310		$	4,046
Product development		1,825			1,535			7,071			8,585
Sales and marketing		3,185			2,246			11,364			12,996
General and administrative		3,655			2,896			15,107			12,495
	$	9,469		$	7,456		$	36,852		$	38,122


Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Cash flows from operating activities:
Net income (loss)	$	7,361		$	3,900		$	16,650		$	(9,218	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		13,960			12,104			54,834			45,891
Deferred taxes		2,962			3,608			8,386			(5,219	)
Stock-based expense		9,469			7,456			36,852			38,122
Excess tax benefit from stock-based compensation		(5,998	)		(1,325	)		(5,998	)		(357	)
Loss on disposal and impairment of other long-lived assets		248			102			1,247			23,871
Acquisition-related consideration		(378	)		(250	)		(877	)		(3,268	)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations		3,468			1,903			25,122			6,190
Net cash provided by operating activities		31,092			27,498			136,216			96,012

Cash flows from investing activities:
Purchases of property, equipment, and software		(14,236	)		(14,600	)		(75,241	)		(33,384	)
Proceeds from disposal of property, equipment, and software		4,500			—			4,500			305
Acquisition of businesses, net of cash acquired		—			168			(71,400	)		(45,282	)
Purchase of cost-method investment		—			—			(3,000	)		—
Net cash used in investing activities		(9,736	)		(14,432	)		(145,141	)		(78,361	)

Cash flows from financing activities:
Payments on and proceeds from debt, net		(781	)		(4,145	)		81,403			19,418
Payments of acquisition-related consideration		(808	)		(1,576	)		(5,684	)		(3,685	)
Issuance of common stock		12,351			9,215			28,490			12,115
Excess tax benefit from stock-based compensation		5,998			1,325			5,998			357
Purchase of treasury stock related to stock-based compensation		(2,241	)		(842	)		(6,020	)		(6,461	)
Purchase of treasury stock under share repurchase program		—			(4,628	)		(21,244	)		(35,083	)
Net cash provided by (used in) financing activities		14,519			(651	)		82,943			(13,339	)
Net increase in cash and cash equivalents		35,875			12,415			74,018			4,312
Effect of exchange rate on cash		(79	)		(70	)		(43	)		(337	)

Cash and cash equivalents:
Beginning of period		69,090			18,566			30,911			26,936
End of period	$	104,886		$	30,911		$	104,886		$	30,911

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
COMPARABLE GAAP MEASURES
(Unaudited, in thousands, except per share amounts)

The following is a reconciliation of the non-GAAP financial measures used by RealPage to describe its financial results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). An explanation of these measures is also included under the heading “Explanation of Non-GAAP Financial Measures.” While the company believes that these non-GAAP financial measures provide useful supplemental information to investors regarding the underlying performance of our business operations, investors are reminded to consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition, it should be noted that these non-GAAP financial measures may be different from non-GAAP measures used by other companies, and the company may utilize other measures to illustrate performance in the future. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP.


Non-GAAP Total Revenue
Set forth below is a presentation of the company’s “Non-GAAP total revenue.” Please reference the “Explanation of Non-GAAP Financial Measures” section.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Revenue (GAAP)	$	149,071		$	121,700		$	568,128		$	468,520
Acquisition-related and other deferred revenue		(187	)		(545	)		(949	)		(2,157	)
Non-GAAP total revenue	$	148,884		$	121,155		$	567,179		$	466,363


Adjusted Gross Margin
Set forth below is a presentation of the company’s "Adjusted gross profit" and "Adjusted gross margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Gross profit (GAAP)	$	87,707		$	70,882		$	325,827		$	269,907
Acquisition-related and other deferred revenue		(187	)		(545	)		(949	)		(2,157	)
Depreciation		2,825			2,533			11,405			9,802
Amortization of intangible assets		4,159			4,071			16,761			14,213
Headquarters relocation costs		—			—			2,023			—
Stock-based expense		804			779			3,310			4,046
Adjusted gross profit	$	95,308		$	77,720		$	358,377		$	295,811

Adjusted gross margin		64.0	%		64.1	%		63.2	%		63.4	%


Adjusted EBITDA
Set forth below is a presentation of the company’s "Adjusted EBITDA" and "Adjusted EBITDA margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Net income (loss) (GAAP)	$	7,361		$	3,900		$	16,650		$	(9,218	)
Acquisition-related and other deferred revenue		(187	)		(545	)		(949	)		(2,157	)
Depreciation, asset impairment, and loss on disposal of assets		6,635			5,415			25,813			44,385
Amortization of intangible assets		7,573			6,791			30,268			25,377
Acquisition-related expense (income)		695			(188	)		363			(1,841	)
Interest expense, net		937			401			3,825			1,367
Income tax expense (benefit)		3,637			3,274			10,836			(3,846	)
Litigation-related expense		—			—			—			2
Headquarters relocation costs		—			—			3,552			—
Stock-based expense		9,469			7,456			36,852			38,122
Adjusted EBITDA	$	36,120		$	26,504		$	127,210		$	92,191

Adjusted EBITDA margin		24.3	%		21.9	%		22.4	%		19.8	%


Non-GAAP Product Development Expense
Set forth below is a presentation of the company’s "Non-GAAP product development expense" and "Non-GAAP product development margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
			2016			2015			2016			2015
Product development expense (GAAP)		$	18,714		$	15,880		$	73,607		$	68,799
Less:	Asset impairment and loss on disposal of assets		—			85			—			1,418
	Headquarters relocation costs		—			—			541			—
	Stock-based expense		1,825			1,535			7,071			8,585
Non-GAAP product development expense		$	16,889		$	14,260		$	65,995		$	58,796

Non-GAAP product development margin			11.3	%		11.8	%		11.6	%		12.6	%


Non-GAAP Sales and Marketing Expense
Set forth below is a presentation of the company’s "Non-GAAP sales and marketing expense" and "Non-GAAP sales and marketing margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
			2016			2015			2016			2015
Sales and marketing expense (GAAP)		$	34,025		$	30,410		$	135,213		$	123,108
Less:	Amortization of intangible assets		3,414			2,720			13,507			11,164
	Headquarters relocation costs		—			—			574			—
	Stock-based expense		3,185			2,246			11,364			12,996
Non-GAAP sales and marketing expense		$	27,426		$	25,444		$	109,768		$	98,948

Non-GAAP sales and marketing margin			18.4	%		21.0	%		19.4	%		21.2	%


Non-GAAP General and Administrative Expense
Set forth below is a presentation of the company’s "Non-GAAP general and administrative expense" and "Non-GAAP general and administrative margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
			2016			2015			2016			2015
General and administrative expense (GAAP)		$	23,058		$	17,017		$	85,013		$	68,814
Less:	Asset impairment and loss on disposal of assets		248			17			497			1,652
	Acquisition-related expense (income)		695			(188	)		363			(1,841	)
	Litigation-related expense		—			—			—			2
	Headquarters relocation costs		—			—			414			—
	Stock-based expense		3,655			2,896			15,107			12,495
Non-GAAP general and administrative expense		$	18,460		$	14,292		$	68,632		$	56,506

Non-GAAP general and administrative margin			12.4	%		11.8	%		12.1	%		12.1	%


Non-GAAP Operating Expense
Set forth below is a presentation of the company’s "Non-GAAP operating expense" and "Non-GAAP operating expense margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
			2016			2015			2016			2015
Operating expense (GAAP)		$	75,797		$	63,307		$	294,583		$	281,522
Less:	Asset impairment and loss on disposal of assets		248			102			1,247			23,871
	Amortization of intangible assets		3,414			2,720			13,507			11,164
	Acquisition-related expense (income)		695			(188	)		363			(1,841	)
	Litigation-related expense		—			—			—			2
	Headquarters relocation costs		—			—			1,529			—
	Stock-based expense		8,665			6,677			33,542			34,076
Non-GAAP operating expense		$	62,775		$	53,996		$	244,395		$	214,250

Non-GAAP operating expense margin			42.2	%		44.6	%		43.1	%		45.9	%


Non-GAAP Operating Income
Set forth below is a presentation of the company’s "Non-GAAP operating income" and "Non-GAAP operating margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Operating income (loss) (GAAP)	$	11,910		$	7,575		$	31,244		$	(11,615	)
Acquisition-related and other deferred revenue		(187	)		(545	)		(949	)		(2,157	)
Asset impairment and loss on disposal of assets		248			102			1,247			23,871
Amortization of intangible assets		7,573			6,791			30,268			25,377
Acquisition-related expense (income)		695			(188	)		363			(1,841	)
Litigation-related expense		—			—			—			2
Headquarters relocation costs		—			—			3,552			—
Stock-based expense		9,469			7,456			36,852			38,122
Non-GAAP operating income	$	29,708		$	21,191		$	102,577		$	71,759

Non-GAAP operating margin		20.0	%		17.5	%		18.1	%		15.4	%


Non-GAAP Net Income
Set forth below is a presentation of the company’s "Non-GAAP net income" and "Non-GAAP net income per diluted share." Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
Net income (loss) (GAAP)	$	7,361		$	3,900		$	16,650		$	(9,218	)
Income tax expense (benefit)		3,637			3,274			10,836			(3,846	)
Income (loss) before income taxes		10,998			7,174			27,486			(13,064	)

Acquisition-related and other deferred revenue		(187	)		(545	)		(949	)		(2,157	)
Asset impairment and loss on disposal of assets		248			102			1,247			23,871
Amortization of intangible assets		7,573			6,791			30,268			25,377
Acquisition-related expense (income)		695			(188	)		363			(1,841	)
Litigation-related expense		—			—			—			2
Headquarters relocation costs		—			—			3,552			—
Stock-based expense		9,469			7,456			36,852			38,122
Non-GAAP income before income taxes		28,796			20,790			98,819			70,310
Assumed rate for income tax expense⁽¹⁾		40.0	%		40.0	%		40.0	%		40.0	%
Assumed provision for non-GAAP income tax expense		11,518			8,316			39,528			28,124
Non-GAAP net income	$	17,278		$	12,474		$	59,291		$	42,186

Net income (loss) per share - diluted	$	0.09		$	0.05		$	0.21		$	(0.12	)
Non-GAAP net income per diluted share	$	0.22		$	0.16		$	0.76		$	0.55

Weighted average outstanding shares - basic ⁽³⁾		77,566			76,445			76,854			76,689
Weighted average outstanding shares - diluted ⁽³⁾		79,116			77,055			77,843			77,300


Non-GAAP On Demand Revenue, Ending On Demand Units, RPU and ACV
Set forth below is a presentation of the company’s "Non-GAAP on demand revenue," "Ending on demand units," "RPU," and "ACV." Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2016			2015			2016			2015
On demand revenue (GAAP)	$	141,627		$	117,090		$	542,531		$	450,962
Acquisition-related and other deferred revenue		(187	)		(545	)		(949	)		(2,157	)
Non-GAAP on demand revenue		141,440			116,545			541,582			448,805

Ending on demand units		10,989			10,568			10,989			10,568
Average on demand units		11,120			10,487			11,042			10,118

RPU	$	51.53		$	44.45		$	50.67		$	44.36

ACV	$	566,263		$	469,748


Non-GAAP Total Revenue Guidance
Set forth below is a presentation of the company’s "Non-GAAP total revenue" guidance for the three months ending March 31, 2017, and the twelve months ending December 31, 2017. Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Guidance Range for the Three Months Ending				Guidance Range for the Twelve Months Ending
	March 31, 2017				December 31, 2017
	Low ⁽²⁾		High ⁽²⁾		Low ⁽²⁾		High ⁽²⁾
Revenue (GAAP)	$	150,440	$	152,440	$	666,330	$	676,330
Acquisition-related and other deferred revenue		860		860		3,670		3,670
Non-GAAP total revenue	$	151,300	$	153,300	$	670,000	$	680,000


Non-GAAP Net Income Guidance
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 March 31, 2017, and the twelve months ending December 31, 2017. Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Guidance Range for the Three Months Ending						Guidance Range for the Twelve Months Ending
	March 31, 2017						December 31, 2017
	Low ⁽²⁾			High ⁽²⁾			Low ⁽²⁾			High ⁽²⁾
Non-GAAP net income:
Net income (GAAP)	$	3,380		$	4,570		$	19,980		$	25,010
Income tax expense		2,360			3,170			13,900			17,370
Income before income taxes		5,740			7,740			33,880			42,380

Acquisition-related and other deferred revenue		860			860			3,670			3,670
Amortization of intangible assets		7,800			7,700			35,650			35,250
Acquisition-related income		3,800			3,200			4,400			3,500
Stock-based expense		9,300			9,200			41,900			41,500
Non-GAAP income before income taxes		27,500			28,700			119,500			126,300
Expected effective tax rate ⁽⁴⁾		40.0	%		40.0	%		40.0	%		40.0	%
Assumed provision for income tax expense		11,000			11,480			47,800			50,520
Non-GAAP net income	$	16,500		$	17,220		$	71,700		$	75,780

Net income per diluted share	$	0.04		$	0.06		$	0.25		$	0.31
Non-GAAP net income per diluted share	$	0.21		$	0.22		$	0.89		$	0.94

Weighted average outstanding shares - diluted ⁽³⁾		80,000			80,000			81,000			81,000


Adjusted EBITDA Guidance
Set forth below is a presentation of the company’s "Adjusted EBITDA" guidance for the three months ending March 31, 2017, and the twelve months ending December 31, 2017. Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Guidance Range for the Three Months Ending				Guidance Range for the Twelve Months Ending
	March 31, 2017				December 31, 2017
	Low ⁽²⁾		High ⁽²⁾		Low ⁽²⁾		High ⁽²⁾
Adjusted EBITDA:
Net income (GAAP)	$	3,380	$	4,570	$	19,980	$	25,010
Acquisition-related and other deferred revenue		860		860		3,670		3,670
Depreciation, asset impairment, and loss on disposal of assets		6,900		6,800		30,950		30,550
Amortization of intangible assets		7,800		7,700		35,650		35,250
Acquisition-related income		3,800		3,200		4,400		3,500
Interest expense, net		1,100		1,000		11,550		11,150
Income tax expense		2,360		3,170		13,900		17,370
Stock-based expense		9,300		9,200		41,900		41,500
Adjusted EBITDA	$	35,500	$	36,500	$	162,000	$	168,000


⁽¹⁾		We use a non-GAAP tax rate of 40.0% in order to approximate the Company's long-term effective corporate tax rate. Please reference the "Explanation of Non-GAAP Financial Measures" section.

⁽²⁾		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.

⁽³⁾		For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.

⁽⁴⁾		This rate represents our expected effective GAAP tax rate for the year ending December 31, 2017.

CONTACT:
RealPage, Inc.
Investor Relations
Rhett Butler, 972-820-3773
rhett.butler@realpage.com