Exhibit 99.1

RealPage Reports Third Quarter 2019 Financial Results

RICHARDSON, Texas--(BUSINESS WIRE)--November 6, 2019--RealPage, Inc. (NASDAQ:RP), a leading global provider of software and data analytics to the real estate industry, today announced financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights

GAAP total revenue of $255.2 million, an increase of 13% year-over-year;
Net income of $11.7 million, or $0.12 in net income per diluted share, a year-over-year increase of 29% and 33%, respectively;
Adjusted EBITDA of $72.1 million, an increase of 22% year-over-year; and
Non-GAAP net income of $42.6 million, or $0.45 in non-GAAP net income per diluted share, a year-over-year increase of 20% and 18%, respectively.

Comments on the News

“Strong financial results for the quarter continue to be driven by our focus on innovation and simplification,” said Steve Winn, Chairman and CEO of RealPage. “Today’s announcement of our agreement to acquire Buildium represents an expanded investment in the SMB market segment, which includes smaller multifamily (under 5,000 units), single-family, Associations (HOA and Condo) and commercial real estate owners and operators. This market segment currently generates $306 million of revenue for RealPage but is far less penetrated than the corporate and enterprise market segments. We believe by coupling “click-on” value-added services from RealPage and Propertyware to Buildium, we can reach much deeper into the market segment and accelerate organic revenue growth.”

“Third quarter financial performance was strong as total revenue grew 13% and adjusted EBITDA grew 22%,” said Tom Ernst, CFO and Treasurer of RealPage. “Buildium brings a best-in-class platform that enables us to offer comprehensive solutions to a greater portion of the 50 million unit SMB market segment. In 2020, we plan to direct cross and upsell revenue synergy growth to fund product innovation and accelerate go-to-market plans.”

2019 Financial Outlook

RealPage management expects to achieve the following results during the fourth quarter ending December 31, 2019:

GAAP total revenue is expected to be in the range of $250 million to $252 million;
GAAP net income per diluted share is expected to be in the range of $0.13 to $0.16;
Non-GAAP total revenue is expected to be in the range of $250 million to $252 million;
Adjusted EBITDA is expected to be in the range of $74 million to $76 million;
Non-GAAP net income per diluted share is expected to be in the range of $0.47 to $0.49;
Non-GAAP diluted weighted average shares outstanding are expected to be approximately 94.6 million.

RealPage management expects to achieve the following results during the calendar year ending December 31, 2019:

GAAP total revenue is expected to be in the range of $983 million to $985 million;
GAAP net income per diluted share is expected to be in the range of $0.52 to $0.55;
Non-GAAP total revenue is expected to be in the range of $984 million to $986 million;
Adjusted EBITDA is expected to be in the range of $280 million to $282 million;
Non-GAAP net income per diluted share is expected to be in the range of $1.74 to $1.76;
Non-GAAP diluted weighted average shares outstanding are expected to be approximately 94.3 million.

Conference Call Information; Presentation Slides

The Company will host a conference call at 5 p.m. EST the same day to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast at https://78449.themediaframe.com/dataconf/productusers/rlpg/mediaframe/31595/indexl.html. In addition, a live dial-in is available domestically at 877-407-9128 and internationally at 201-493-6752. A replay will be available at 877-660-6853 or 201-612-7415.

About RealPage

RealPage provides a technology platform that enables real estate owners and managers to change how people experience and use rental space. Clients use the platform to gain transparency in asset performance, leverage data insights and monetize space to create incremental yields. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves 16.8 million units worldwide (before the acquisition of Buildium) from offices in North America, Europe and Asia. For more information about RealPage, please visit https://www.RealPage.com/.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking” statements relating to RealPage, Inc.’s strategy, goals, future focus areas, and expected, possible or assumed future results, including its financial outlook for the fourth quarter and calendar year ending December 31, 2019; its belief that by coupling “click-on” value-added services from RealPage and Propertyware to Buildium, it can reach much deeper into the market segment and accelerate organic revenue growth; and its plan in 2020 to direct cross and upsell revenue synergy growth to fund product innovation and accelerate go-to-market plans. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “expects,” “believes,” “plans,” or similar expressions and the negatives of those terms. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The Company may be required to revise its results contained herein upon finalizing its review of quarterly and full-year results and completion of the annual audit, which could cause or contribute to such differences. Additional factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the possibility that general economic conditions, including leasing velocity or uncertainty, could cause information technology spending, particularly in the rental housing industry, to be reduced or purchasing decisions to be delayed; (b) an increase in insurance claims; (c) an increase in client cancellations; (d) the inability to increase sales to existing clients and to attract new clients; (e) RealPage’s failure to integrate recent or future acquired businesses successfully or to achieve expected synergies, including the transaction with Buildium; (f) the timing and success of new product introductions by RealPage or its competitors; (g) changes in RealPage’s pricing policies or those of its competitors; (h) legal or regulatory proceedings; (i) the inability to achieve revenue growth or to enable margin expansion; (j) changes in RealPage’s estimates with respect to its long-term corporate tax rate or any other impact from the Tax Cuts and Jobs Act; and (k) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission (“SEC”) by RealPage, including its Annual Report on Form 10-K previously filed with the SEC on February 27, 2019 (as amended on November 5, 2019) and its Quarterly Report on Form 10-Q previously filed with the SEC on August 9, 2019 (as amended on November 5, 2019). All information provided in this release is as of the date hereof and RealPage undertakes no duty to update this information except as required by law.

Explanation of Non-GAAP Financial Measures

The company reports its financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, the company believes that, in order to properly understand its short-term and long-term financial, operational and strategic trends, it may be helpful for investors to exclude certain non-cash or non-recurring items when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in both frequency and impact on continuing operations. The company also uses results of operations excluding such items to evaluate the operating performance of RealPage and compare it against prior periods, make operating decisions, determine executive compensation, and serve as a basis for long-term strategic planning. These non-GAAP financial measures provide the company with additional means to understand and evaluate the operating results and trends in its ongoing business by eliminating certain non-cash expenses and other items that RealPage believes might otherwise make comparisons of its ongoing business with prior periods more difficult, obscure trends in ongoing operations, reduce management’s ability to make useful forecasts, or obscure the ability to evaluate the effectiveness of certain business strategies and management incentive structures. In addition, the company also believes that investors and financial analysts find this information to be helpful in analyzing the company’s financial and operational performance and comparing this performance to the company’s peers and competitors.

The company defines “Non-GAAP Total Revenue” as total revenue plus acquisition-related deferred revenue. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules in order to appropriately measure the underlying performance of its business operations in the period of activity and associated expense. Further, the company believes this measure is useful to investors as a way to evaluate the company’s ongoing performance because it provides a more accurate depiction of on demand revenue arising from our strategic acquisitions.

The company defines “Adjusted Gross Profit” as gross profit, plus (1) acquisition-related deferred revenue, (2) depreciation, (3) amortization of product technologies, (4) organizational realignment costs and (5) stock-based expense. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Adjusted EBITDA” as net income, plus (1) acquisition-related deferred revenue, (2) depreciation, asset impairment, and the loss on disposal of assets, (3) amortization of product technologies and intangible assets, (4) change in fair value of equity investment, (5) acquisition-related expense, (6) organizational realignment costs, (7) regulatory and legal matters, (8) stock-based expense, (9) interest expense, net, and (10) income tax expense. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Non-GAAP Product Development Expense” as product development expense, excluding organizational realignment costs and stock-based expense. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to product innovation.

The company defines “Non-GAAP Sales and Marketing Expense” as sales and marketing expense, excluding organizational realignment costs and stock-based expense. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to its sales and marketing strategies.

The company defines “Non-GAAP General and Administrative Expense” as general and administrative expense, excluding (1) asset impairment and (gain) loss on disposal of assets, (2) acquisition-related expense, (3) organizational realignment costs, (4) regulatory and legal matters, and (5) stock-based expense. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s underlying expense structure to support corporate activities and processes.

The company defines “Non-GAAP Operating Expense” as operating expense, excluding (1) asset impairment and (gain) loss on disposal of assets, (2) amortization of intangible assets, (3) acquisition-related expense, (4) organizational realignment costs, (5) regulatory and legal matters, and (6) stock-based expense. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s underlying expense structure to support ongoing operations.

The company defines “Non-GAAP Operating Income” as operating income, plus (1) acquisition-related deferred revenue, (2) asset impairment and (gain) loss on disposal of assets, (3) amortization of product technologies and intangible assets, (4) acquisition-related expense, (5) organizational realignment costs, (6) regulatory and legal matters, and (7) stock-based expense. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Non-GAAP Net Income” as net income, plus (1) income tax expense, (2) acquisition-related deferred revenue, (3) asset impairment and (gain) loss on disposal of assets, (4) amortization of product technologies and intangible assets, (5) change in fair value of equity investment, (6) acquisition-related expense, (7) organizational realignment costs, (8) regulatory and legal matters, (9) amortization of convertible note discount, and (10) stock-based expense, less (10) provision for income tax expense based on an assumed rate in order to approximate the company’s long-term effective corporate tax rate.

The company defines “Non-GAAP Net Income per Diluted Share” as Non-GAAP Net Income divided by Non-GAAP Diluted Weighted Average 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 Diluted Weighted Average Shares Outstanding" as diluted weighted average shares outstanding excluding the impact of shares that are issuable upon conversions of our convertible notes. It is the current intent of the company to settle conversions of the convertible notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of our common stock. We exclude these shares that are issuable upon conversions of our convertible notes because we expect that the dilution from such shares will be offset by the convertible note hedge transactions entered into in May 2017 in connection with the issuance of the convertible notes.

The company defines “Non-GAAP On Demand Revenue” as total on demand revenue plus acquisition-related deferred revenue. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules in order to appropriately measure the underlying performance of the company’s business operations in the period of activity and associated expense. Further, the company believes that investors and financial analysts find this measure to be useful in evaluating the company’s ongoing performance because it provides a more accurate depiction of on demand revenue arising from our strategic acquisitions.

The company defines “Ending On Demand Units” as the number of rental housing units managed by our clients with one or more of our on demand software solutions at the end of the period. We use ending on demand units to measure the success of our strategy of increasing the number of rental housing units managed with our on demand software solutions. Property unit counts are provided to us by our customers as new sales orders are processed. Property unit counts may be adjusted periodically as information related to our clients’ properties is updated or supplemented, which could result in adjustments to the number of units previously reported.

The company defines “Average On Demand Units” as the average of the beginning and ending on demand units for each quarter in the period presented. The company’s management monitors this metric to measure its success in increasing the number of on demand software solutions utilized by our clients to manage their rental housing units, our overall revenue, and profitability.

The company defines “ACV,” or Annual Client Value, as management’s estimate of the annual value of the company’s on demand revenue contracts at a point in time. The company’s management monitors this metric to measure its success in increasing the number of on demand units, and the amount of software solutions utilized by its clients to manage their rental housing units.

The company defines “RPU,” or Revenue Per Unit, as ACV divided by ending on demand units. The company monitors this metric to measure its success in increasing the penetration of on demand software solutions utilized by its clients to manage their rental housing units.

The company excludes or adjusts each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to each excluded item:

Non-GAAP tax rate – The GAAP tax rate includes certain tax items which may include, but are not limited to: income tax expenses or benefits that are not related to ongoing business operations in the current year; unusual or infrequently occurring items; benefits from stock compensation deductions for tax purposes that exceed the stock compensation expense recognized for GAAP; tax adjustments associated with fluctuations in foreign currency re-measurement; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and liabilities; and changes in tax law. In 2018 and 2019, the company uses a Non-GAAP tax rate of approximately 26% to approximate the company’s long-term effective corporate tax rate. We believe excluding these items assists investors and analysts in understanding the tax provision and the effective tax rate related to ongoing operations.
Acquisition-related deferred revenue – These items are included to reflect deferred revenue written down for GAAP purposes under purchase accounting in order to appropriately measure the underlying performance of the company’s business operations in the period of activity and associated expense.
Asset impairment and (gain) loss on disposal of assets – These items comprise gains and/or losses on the disposal and impairment of long-lived assets, and impairment of indefinite-lived intangible assets, which are not reflective of the company’s ongoing operations. We believe exclusion of these items facilitates a more accurate comparison of the company’s results of operations between periods.
Depreciation of long-lived assets – Long-lived assets are depreciated over their estimated useful lives in a manner reflecting the pattern in which the economic benefit is consumed. Management is limited in its ability to change or influence these charges after the asset has been acquired and placed in service. We do not believe that depreciation expense accurately reflects the performance of our ongoing operations for the period in which the charges are incurred, and are therefore not considered by management in making operating decisions.
Amortization of product technologies and intangible assets – These items are amortized over their estimated useful lives and generally cannot be changed or influenced by the company after initial capitalization. Accordingly, these items are not considered by the company in making operating decisions. The company does not believe such charges accurately reflect the performance of its ongoing operations for the period in which such charges are incurred.
Change in fair value of equity investment – This represents changes in fair value of our equity investment based on observable price changes in orderly transactions for an identical or similar investment of the same issuer. We believe exclusion of these items facilitates a more accurate comparison of our results of operations between periods as these items are not reflective of our ongoing operations.
Acquisition-related expense – These items consist of direct costs incurred in our business acquisition transactions and expenses related to integration activities, and the impact of changes in the fair value of acquisition-related contingent consideration obligations. Examples of these direct costs include transaction fees, due diligence costs, acquisition retention bonuses and severance, and third-party consultants to assist with integration. We believe exclusion of these items facilitates a more accurate comparison of the results of the company’s ongoing operations across periods and eliminates volatility related to changes in the fair value of acquisition-related contingent consideration obligations.
Amortization of the convertible note discount – This item consists of non-cash interest expense related to the amortization of the discount recognized on the convertible notes issued in May 2017. Management excludes this item, as it is not indicative of the company’s ongoing operating performance.
Organizational realignment – These items consist of direct costs associated with the alignment of our business strategies. In connection with these actions, we recognize costs related to termination benefits, exit costs associated with closure of facilities, certain asset impairments, cancellation of certain contracts, and other professional and consulting fees associated with these initiatives. We believe exclusion of these items facilitates a more accurate comparison of our ongoing results of operations between periods.
Regulatory and legal matters – These items are comprised of certain regulatory and similar costs and certain legal settlement costs, such as costs related to the company’s Hart-Scott-Rodino Antitrust Improvements Act review process incurred in connection with our acquisitions or the settlement of certain legal matters. These items are excluded as they are irregular in timing and scope, and may not be indicative of our past and future performance. We believe exclusion of these items facilitates a more accurate comparison of the company’s results of operations between periods.
Stock-based expense – This item is excluded because these are non-cash expenditures that the company does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expenditure is partially outside of its control because it is based on factors such as stock price, volatility, and interest rates, which may be unrelated to the company’s performance during the period in which the expenses are incurred.


Consolidated Balance Sheets
(in thousands, except share and per share data)


	September 30,			December 31,
	2019			2018
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	270,154		$	228,159
Restricted cash		158,865			154,599
Accounts receivable, less allowances of $8,552 and $8,850 at September 30, 2019 and December 31, 2018, respectively		131,392			123,596
Prepaid expenses		21,304			19,214
Other current assets		17,699			15,185
Total current assets		599,414			540,753
Property, equipment, and software, net		159,605			153,528
Right-of-use assets		106,942			-
Goodwill		1,104,006			1,053,119
Intangible assets, net		260,680			287,378
Deferred tax assets, net		35,482			42,602
Other assets		25,781			20,393
Total assets	$	2,291,910		$	2,097,773

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	35,677		$	25,312
Accrued expenses and other current liabilities		79,598			95,482
Current portion of deferred revenue		123,062			120,704
Current portion of term loans		7,500			16,133
Convertible notes, net		302,032			-
Customer deposits held in restricted accounts		158,870			154,601
Total current liabilities		706,739			412,232
Deferred revenue		4,861			4,902
Term loans, net		291,064			287,582
Convertible notes, net		-			292,843
Lease liabilities, net of current portion		120,527			-
Other long-term liabilities		19,407			37,190
Total liabilities		1,142,598			1,034,749
Stockholders’ equity:
Common stock, $0.001 par value: 250,000,000 shares authorized, 96,252,041 and 95,991,162 shares issued and 94,944,850 and 93,650,127 shares outstanding at September 30, 2019 and December 31, 2018, respectively		96			96
Additional paid-in capital		1,209,299			1,187,683
Treasury stock, at cost: 1,307,191 and 2,341,035 shares at September 30, 2019 and December 31, 2018, respectively		(36,224	)		(65,470	)
Accumulated deficit		(21,371	)		(58,793	)
Accumulated other comprehensive loss		(2,488	)		(492	)
Total stockholders’ equity		1,149,312			1,063,024
Total liabilities and stockholders’ equity	$	2,291,910		$	2,097,773


Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Revenue:
On demand	$	245,637		$	215,413		$	707,341		$	615,658
Professional and other		9,565			9,540			26,028			26,848
Total revenue		255,202			224,953			733,369			642,506
Cost of revenue⁽¹⁾		98,783			85,540			284,685			240,319
Amortization of product technologies		10,315			8,946			29,729			26,368
Gross profit		146,104			130,467			418,955			375,819
Operating expenses:
Product development⁽¹⁾		27,866			28,942			85,914			88,753
Sales and marketing⁽¹⁾		51,906			43,179			145,849			121,523
General and administrative⁽¹⁾		31,249			30,036			87,702			85,570
Amortization of intangible assets		10,444			9,738			30,682			26,323
Total operating expenses		121,465			111,895			350,147			322,169
Operating income		24,639			18,572			68,808			53,650
Interest expense and other, net		(8,764	)		(8,816	)		(22,773	)		(25,004	)
Income before income taxes		15,875			9,756			46,035			28,646
Income tax expense		4,171			683			7,996			193
Net income	$	11,704		$	9,073		$	38,039		$	28,453

Net income per share attributable to common stockholders:
Basic	$	0.13		$	0.10		$	0.41		$	0.33
Diluted	$	0.12		$	0.09		$	0.39		$	0.31
Weighted average common shares outstanding:
Basic		92,239			91,222			91,884			85,874
Diluted		97,114			96,590			96,392			90,451


⁽¹⁾Includes stock-based expense as follows:
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Cost of revenue	$	1,425		$	1,146		$	4,203		$	3,149
Product development		1,948			2,520			6,444			7,328
Sales and marketing		6,358			4,242			18,091			12,253
General and administrative		6,767			5,571			18,538			14,762
	$	16,498		$	13,479		$	47,276		$	37,492


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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Cash flows from operating activities:
Net income	$	11,704		$	9,073		$	38,039		$	28,453
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29,266			25,629			86,106			74,018
Amortization of debt discount and issuance costs		3,676			3,151			10,189			9,272
Amortization of right-of-use assets		2,759			-			8,684			-
Deferred taxes		3,795			253			8,031			(2,720	)
Stock-based expense		16,498			13,479			47,276			37,492
Loss on disposal and impairment of other long-lived assets		(10	)		2,341			259			3,439
Change in fair value of equity investment		-			-			(2,600	)		-
Acquisition-related consideration		394			(318	)		1,093			806
Change in customer deposits		45,512			(11,503	)		(1,034	)		(6,361	)
Other changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations		(826	)		(9,363	)		(9,898	)		(9,437	)
Net cash provided by operating activities		112,768			32,742			186,145			134,962

Cash flows from investing activities:
Purchases of property, equipment, and software		(15,045	)		(14,794	)		(38,511	)		(37,287	)
Acquisition of businesses, net of cash and restricted cash acquired		(32,531	)		(92,999	)		(50,059	)		(230,474	)
Purchase of other investment		-			-			(1,750	)		(1,800	)
Net cash used in investing activities		(47,576	)		(107,793	)		(90,320	)		(269,561	)

Cash flows from financing activities:
Payments on and proceeds from debt, net		(235	)		(4,030	)		(8,302	)		(61,218	)
Payments on finance lease obligations		(752	)		(8	)		(2,879	)		(219	)
Payments of acquisition-related consideration		(6,096	)		(20,739	)		(26,343	)		(28,110	)
Proceeds from public offering, net of underwriters’ discount and offering costs		-			(5	)		-			441,794
Proceeds from exercise of stock options		1,385			2,214			4,454			9,953
Purchase of treasury stock related to stock-based compensation		(5,663	)		(7,362	)		(16,771	)		(22,122	)
Net cash (used in) provided by financing activities		(11,361	)		(29,930	)		(49,841	)		340,078
Net increase (decrease) in cash, cash equivalents and restricted cash		53,831			(104,981	)		45,984			205,479
Effect of exchange rate on cash		258			80			277			(33	)

Cash, cash equivalents and restricted cash:
Beginning of period		374,930			475,692			382,758			165,345
End of period	$	429,019		$	370,791		$	429,019		$	370,791

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

The following is a reconciliation of the non-GAAP financial 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				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Revenue (GAAP)	$	255,202	$	224,953	$	733,369	$	642,506
Acquisition-related deferred revenue		38		418		419		834
Non-GAAP Total Revenue	$	255,240	$	225,371	$	733,788	$	643,340


Adjusted Gross Profit
Set forth below is a presentation of the company’s “Adjusted Gross Profit.” Please reference the “Explanation of Non-GAAP Financial Measures” section.
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Gross profit (GAAP)	$	146,104	$	130,467	$	418,955	$	375,819
Acquisition-related deferred revenue		38		418		419		834
Depreciation		4,007		2,991		11,695		9,024
Amortization of product technologies		10,315		8,946		29,729		26,368
Organizational realignment		125		-		125		-
Stock-based expense		1,425		1,146		4,203		3,149
Adjusted Gross Profit	$	162,014	$	143,968	$	465,126	$	415,194


Adjusted EBITDA
Set forth below is a presentation of the company’s "Adjusted EBITDA." Please reference the "Explanation of Non-GAAP Financial Measures" section.
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019			2018
Net income (GAAP)	$	11,704	$	9,073	$	38,039		$	28,453
Acquisition-related deferred revenue		38		418		419			834
Depreciation, asset impairment, and loss on disposal of assets		8,498		9,286		25,955			24,766
Amortization of product technologies and intangible assets		20,759		18,684		60,411			52,691
Change in fair value of equity investment		-		-		(2,600	)		-
Acquisition-related expense		755		519		1,160			2,694
Organizational realignment		684		-		684			-
Regulatory and legal matters		215		78		567			78
Stock-based expense		16,498		13,479		47,276			37,492
Interest expense, net		8,791		6,874		25,613			23,179
Income tax expense		4,171		683		7,996			193
Adjusted EBITDA	$	72,113	$	59,094	$	205,520		$	170,380


Non-GAAP Product Development Expense
Set forth below is a presentation of the company’s "Non-GAAP Product Development Expense." Please reference the "Explanation of Non-GAAP Financial Measures" section.
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2019		2018		2019		2018
Product development expense (GAAP)		$	27,866	$	28,942	$	85,914	$	88,753
Less:	Organizational realignment		316		-		316		-
	Stock-based expense		1,948		2,520		6,444		7,328
Non-GAAP Product Development Expense		$	25,602	$	26,422	$	79,154	$	81,425


Non-GAAP Sales and Marketing Expense
Set forth below is a presentation of the company’s "Non-GAAP Sales and Marketing Expense." Please reference the "Explanation of Non-GAAP Financial Measures" section.
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2019		2018		2019		2018
Sales and marketing expense (GAAP)		$	51,906	$	43,179	$	145,849	$	121,523
Less:	Organizational realignment		108		-		108		-
	Stock-based expense		6,358		4,242		18,091		12,253
Non-GAAP Sales and Marketing Expense		$	45,440	$	38,937	$	127,650	$	109,270


Non-GAAP General and Administrative Expense
Set forth below is a presentation of the company’s "Non-GAAP General and Administrative Expense." Please reference the "Explanation of Non-GAAP Financial Measures" section.
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2019			2018		2019		2018
General and administrative expense (GAAP)		$	31,249		$	30,036	$	87,702	$	85,570
Less:	Asset impairment and (gain) loss on disposal of assets		(10	)		341		259		1,439
	Acquisition-related expense		755			519		1,160		2,694
	Organizational realignment		135			-		135		-
	Regulatory and legal matters		215			78		567		78
	Stock-based expense		6,767			5,571		18,538		14,762
Non-GAAP General and Administrative Expense		$	23,387		$	23,527	$	67,043	$	66,597


Non-GAAP Operating Expense
Set forth below is a presentation of the company’s "Non-GAAP Operating Expense." Please reference the "Explanation of Non-GAAP Financial Measures" section.
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2019			2018		2019		2018
Operating expense (GAAP)		$	121,465		$	111,895	$	350,147	$	322,169
Less:	Asset impairment and (gain) loss on disposal of assets		(10	)		341		259		1,439
	Amortization of intangible assets		10,444			9,738		30,682		26,323
	Acquisition-related expense		755			519		1,160		2,694
	Organizational realignment		559			-		559		-
	Regulatory and legal matters		215			78		567		78
	Stock-based expense		15,073			12,333		43,073		34,343
Non-GAAP Operating Expense		$	94,429		$	88,886	$	273,847	$	257,292


Non-GAAP Operating Income
Set forth below is a presentation of the company’s "Non-GAAP Operating Income." Please reference the "Explanation of Non-GAAP Financial Measures" section.
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2018		2019		2018
Operating income (GAAP)	$	24,639		$	18,572	$	68,808	$	53,650
Acquisition-related deferred revenue		38			418		419		834
Asset impairment and (gain) loss on disposal of assets		(10	)		341		259		1,439
Amortization of product technologies and intangible assets		20,759			18,684		60,411		52,691
Acquisition-related expense		755			519		1,160		2,694
Organizational realignment		684			-		684		-
Regulatory and legal matters		215			78		567		78
Stock-based expense		16,498			13,479		47,276		37,492
Non-GAAP Operating Income	$	63,578		$	52,091	$	179,584	$	148,878


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						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net income (GAAP)	$	11,704		$	9,073		$	38,039		$	28,453
Income tax expense		4,171			683			7,996			193
Income before income taxes		15,875			9,756			46,035			28,646

Acquisition-related deferred revenue		38			418			419			834
Asset impairment and (gain) loss on disposal of assets		(10	)		2,341			259			3,439
Amortization of product technologies and intangible assets		20,759			18,684			60,411			52,691
Change in fair value of equity investment		-			-			(2,600	)		-
Acquisition-related expense		755			519			1,160			2,694
Organizational realignment		684			-			684			-
Regulatory and legal matters		215			78			567			78
Amortization of convertible note discount		2,756			2,599			8,149			7,685
Stock-based expense		16,498			13,479			47,276			37,492
Non-GAAP income before income taxes		57,570			47,874			162,360			133,559
Assumed rate for income tax expense (1)		26.0	%		26.0	%		26.0	%		26.0	%
Assumed provision for non-GAAP income tax expense		14,968			12,447			42,214			34,725
Non-GAAP net income	$	42,602		$	35,427		$	120,146		$	98,834

Weighted average outstanding shares - diluted	$	0.12		$	0.09		$	0.39		$	0.31
Non-GAAP Net Income per Diluted Share	$	0.45		$	0.38		$	1.28		$	1.12

Weighted average outstanding shares - basic		92,239			91,222			91,884			85,874
Non-GAAP adjusted diluted weighted average shares outstanding:
Weighted average outstanding shares - diluted		97,114			96,590			96,392			90,451
Dilution offset from convertible note hedge transactions		(2,716	)		(2,440	)		(2,485	)		(1,963	)
Non-GAAP diluted weighted average shares outstanding ⁽²⁾		94,398			94,150			93,907			88,488


Non-GAAP On Demand Revenue
Set forth below is a presentation of the company’s "Non-GAAP On Demand Revenue." Please reference the "Explanation of Non-GAAP Financial Measures" section.
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
On demand revenue (GAAP)	$	245,637	$	215,413	$	707,341	$	615,658
Acquisition-related deferred revenue		38		418		419		834
Non-GAAP On Demand Revenue	$	245,675	$	215,831	$	707,760	$	616,492

Ending On Demand Units, Average On Demand Units, ACV, and RPU
Set forth below is a presentation of the company’s "Ending On Demand Units," "Average On Demand Units," "ACV," and "RPU." Please reference the "Explanation of Non-GAAP Financial Measures" section.
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Ending on demand units		16,779			16,073			16,779			16,073
Average on demand units		16,642			15,802			16,468			14,414

ACV	$	990,800		$	886,747
RPU	$	59.05		$	55.17

Non-GAAP Total Revenue Guidance
Set forth below is a presentation of the company’s "Non-GAAP Total Revenue" guidance for the three and twelve months ending December 31, 2019. Please reference the "Explanation of Non-GAAP Financial Measures" section.

	Guidance Range for the Three Months Ending						Guidance Range for the Twelve Months Ending
	December 31, 2019						December 31, 2019
	Low ⁽³⁾			High ⁽³⁾			Low ⁽³⁾			High ⁽³⁾
Revenue (GAAP)	$	249,891		$	251,891		$	983,260		$	985,260
Acquisition-related deferred revenue		21			21			440			440
Non-GAAP Total Revenue	$	249,912		$	251,912		$	983,700		$	985,700

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 and twelve months ending December 31, 2019. Please reference the "Explanation of Non-GAAP Financial Measures" section.
	Guidance Range for the Three Months Ending						Guidance Range for the Twelve Months Ending
	December 31, 2019						December 31, 2019
	Low ⁽³⁾			High ⁽³⁾			Low ⁽³⁾			High ⁽³⁾
Non-GAAP net income:
Net income (GAAP)	$	12,746		$	15,165		$	50,785		$	53,204
Income tax expense		2,908			3,789			10,905			11,786
Income before income taxes		15,654			18,954			61,690			64,990

Acquisition-related deferred revenue		21			21			440			440
Asset impairment and loss on disposal of assets		(1	)		(1	)		260			260
Amortization of product technologies and intangible assets		20,089			19,889			80,500			80,300
Change in fair value of equity investment		-			-			(2,600	)		(2,600	)
Acquisition-related expense		3,600			3,300			4,760			4,460
Organizational realignment		766			666			1,450			1,350
Regulatory and legal matters		433			333			1,000			900
Amortization of convertible note discount		2,801			2,801			10,950			10,950
Stock-based expense		16,225			16,025			63,500			63,300
Non-GAAP income before income taxes		59,588			61,988			221,950			224,350
Expected effective tax rate ⁽¹⁾		26.0	%		26.0	%		26.0	%		26.0	%
Assumed provision for income tax expense		15,493			16,117			57,707			58,331
Non-GAAP Net Income	$	44,095		$	45,871		$	164,243		$	166,019

Net income per diluted share	$	0.13		$	0.16		$	0.52		$	0.55
Non-GAAP net income per diluted share	$	0.47		$	0.49		$	1.74		$	1.76

Non-GAAP adjusted diluted weighted average shares outstanding:
Weighted average outstanding shares - diluted		97,320			97,320			96,860			96,860
Dilution offset from convertible note hedge transactions		(2,750	)		(2,750	)		(2,550	)		(2,550	)
Non-GAAP diluted weighted average shares outstanding ⁽²⁾		94,570			94,570			94,310			94,310

Adjusted EBITDA Guidance
Set forth below is a presentation of the company’s "Adjusted EBITDA" guidance for the three and twelve months ending December 31, 2019. Please reference the "Explanation of Non-GAAP Financial Measures" section.
			Guidance Range for the Three Months Ending				Guidance Range for the Twelve Months Ending
			December 31, 2019				December 31, 2019
			Low ⁽³⁾		High ⁽³⁾		Low ⁽³⁾			High ⁽³⁾
Adjusted EBITDA:
Net income (GAAP)			$	12,746	$	15,165	$	50,785		$	53,204
Acquisition-related deferred revenue				21		21		440			440
Depreciation, asset impairment, and loss on disposal of assets				8,805		8,605		34,760			34,560
Amortization of product technologies and intangible assets				20,089		19,889		80,500			80,300
Change in fair value of equity investment				-		-		(2,600	)		(2,600	)
Acquisition-related income				3,600		3,300		4,760			4,460
Organizational realignment				766		666		1,450			1,350
Regulatory and legal matters				433		333		1,000			900
Stock-based expense				16,225		16,025		63,500			63,300
Interest expense, net				8,387		8,187		34,000			33,800
Income tax expense				2,908		3,789		10,905			11,786
Adjusted EBITDA			$	73,980	$	75,980	$	279,500		$	281,500


(1	)	A 26.0% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate. Please reference the “Explanation of Non-GAAP Financial Measures” section.

(2	)	It is the current intent of the Company to settle conversions of the Convertible Notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of our common stock. We exclude these shares that are issuable upon conversions of our convertible notes because we expect that the dilution from such shares will be offset by the convertible note hedge transactions entered into in May 2017 in connection with the issuance of the convertible notes.

(3	)	Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The company may be required to revise its results upon finalizing its review of quarterly and full year results, which could cause or contribute to such differences. All information provided in this release is as of the date hereof and RealPage, Inc. undertakes no duty to update this information except as required by law. See additional discussion under "Cautionary Statement Regarding Forward-Looking Statements" above.

Contacts

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