UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 30, 2014
Date of report (Date of earliest event reported)
LifeLock, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-35671 | 56-2508977 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
60 East Rio Salado Parkway
Suite 400
Tempe, Arizona 85281
(Address of Principal Executive Offices) (Zip Code)
(480) 682-5100
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On July 30, 2014, LifeLock, Inc. (“LifeLock”) issued a press release announcing its financial results for the second quarter ended June 30, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished on this Current Report on Form 8-K, including the exhibits attached, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
The text included with this Current Report on Form 8-K is available on LifeLock’s website located at www.lifelock.com, although LifeLock reserves the right to discontinue that availability at any time.
| Item 9.01. | Financial Statements and Exhibits. |
| (a) | Financial Statements of Business Acquired. |
| Not applicable. |
| (b) | Pro Forma Financial Information. |
| Not applicable. |
| (c) | Shell Company Transactions. |
| Not applicable. |
| (d) | Exhibits. |
| Exhibit |
Exhibits | |
| 99.1 | Press Release, dated July 30, 2014, entitled “LifeLock Announces 2014 Second Quarter Results.” | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LIFELOCK, INC. | ||||||
| Date: July 30, 2014 | By: | /s/ Todd Davis | ||||
| Todd Davis | ||||||
| Chairman and Chief Executive Officer | ||||||
EXHIBIT INDEX
| 99.1 | Press Release, dated July 30, 2014, entitled “LifeLock Announces 2014 Second Quarter Results.” | |
Exhibit 99.1
LifeLock Announces 2014 Second Quarter Results
Record quarterly revenue of $115.7 million, up 29% year-over-year
Q2 cumulative ending members of approximately 3.39 million, up 23% year-over-year
Q2 monthly average revenue per member of $10.99, up 8% year-over-year
TEMPE, AZ (July 30, 2014) – LifeLock, Inc. (NYSE: LOCK), an industry leader in identity theft protection, today announced financial results for the second quarter ended June 30, 2014.
Second Quarter 2014 Financial Highlights:
| • | Revenue: Total revenue was $115.7 million for the second quarter of 2014, up 29% from $89.5 million for the second quarter of 2013. Consumer revenue was $109.3 million for the second quarter of 2014, up 32% from $82.6 million for the second quarter of 2013. Enterprise revenue was $6.4 million for the second quarter of 2014, compared with $6.9 million for the second quarter of 2013. |
| • | Net Loss: Net loss was $2.8 million for the second quarter of 2014, compared with net loss of $2.1 million for the second quarter of 2013. Net loss per diluted share was $0.03 for the second quarter of 2014 based on 92.5 million weighted-average shares outstanding, compared with net loss per diluted share of $0.02 for the second quarter of 2013 based on 87.5 million weighted-average shares outstanding. |
| • | Adjusted Net Income: Adjusted net income was $4.6 million for the second quarter of 2014, compared with an adjusted net income of $3.2 million for the second quarter of 2013. Adjusted net income per diluted share was $0.05 for the second quarter of 2014 based on 97.9 million weighted-average shares outstanding, compared with an adjusted net income of $0.03 per diluted share for the second quarter of 2013 based on 94.9 million weighted-average shares outstanding. |
| • | Adjusted EBITDA: Adjusted EBITDA was $6.7 million for the second quarter of 2014, compared with $4.6 million for the second quarter of 2013. |
| • | Cash Flow: Cash flow from operations was $27.7 million for the second quarter of 2014, leading to free cash flow of $24.0 million after taking into consideration $3.7 million of capital expenditures. This compares with cash flow from operations of $20.8 million and free cash flow of $18.4 million, after taking into consideration $2.4 million of capital expenditures, for the second quarter of 2013. |
| • | Balance Sheet: Total cash and marketable securities at the end of the second quarter of 2014 was $216.0 million, up from $191.2 million at the end of the first quarter of 2014. |
“Our business performed strongly again in the second quarter,” said Todd Davis, LifeLock’s Chairman and CEO. “In addition, we launched a significant expansion of our product portfolio that we believe will provide additional value for our members, further differentiating our products in the market and expanding our lead versus our competitors in the legacy credit monitoring space.”
A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Second Quarter 2014 & Recent Business Highlights:
| • | Launched the next evolution in our service suite with the release of LifeLock Standard, LifeLock Advantage, and LifeLock Ultimate Plus. With our LifeLock Ultimate Plus offering, LifeLock is now the only identity theft company that can monitor across its network to provide alerts across a more complete cross-section of consumers’ financial lives including credit cards, checking, savings, and investment accounts. |
| • | Recorded the 37th consecutive quarter of sequential growth in revenue and cumulative ending members. |
| • | Added approximately 304,000 gross new members in the second quarter of 2014 and ended the quarter with approximately 3.39 million members. |
| • | Achieved a retention rate of 87.2% for the second quarter of 2014, compared with 87.4% for the second quarter of 2013. |
| • | Increased monthly average revenue per member to $10.99 for the second quarter of 2014 from $10.18 for the second quarter of 2013. |
Guidance:
As of July 30, 2014, we are initiating guidance for our third quarter of 2014 as well as updating our guidance for the full year 2014.
| • | Third Quarter 2014 Guidance: Total revenue is expected to be in the range of $119 million to $121 million. Adjusted net income per share is expected to be in the range of $0.14 to $0.15 based on approximately 100 million fully diluted weighted-average shares outstanding. Adjusted EBITDA is expected to be in the range of $16 million to $17 million. |
| • | Full Year 2014 Guidance: Total revenue is expected to be in the range of $466 million to $471 million. Adjusted net income per share is expected to be in the range of $0.44 to $0.48 based on approximately 99 million fully diluted weighted-average shares outstanding and a cash tax rate of 5%. Adjusted EBITDA is expected to be in the range of $52 million to $56 million. Free cash flow is expected to be in the range of $80 million to $84 million. |
Conference Call Details:
| • | What: LifeLock second quarter 2014 financial results. |
| • | When: Wednesday, July 30, 2014 at 2PM PT (5PM ET). |
| • | Dial in: To access the call in the United States, please dial (877) 407-3982, and for international callers dial (201) 493-6780. Callers may provide confirmation number 13586017 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining. |
| • | Webcast: http://investor.lifelock.com/ (live and replay) |
| • | Replay: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the United States, please dial (877) 870-5176, and for international callers dial (858) 384-5517 and enter access code 13586017. |
About LifeLock
LifeLock, Inc. (NYSE:LOCK) is a leading provider of proactive identity theft protection services for consumers and fraud and risk solutions for enterprises. LifeLock’s threat detection, proactive identity alerts, and comprehensive remediation services help provide some peace of mind for consumers amid the growing threat of identity theft. Leveraging unique data, science and patented technology from ID Analytics, Inc., a wholly owned subsidiary, LifeLock offers identity theft protection that goes significantly beyond credit monitoring. As part of its commitment to help fight identity theft, LifeLock works to train law enforcement and partners with a variety of non-profit organizations to help consumers establish positive habits to combat this threat.
Forward-Looking Statements
This press release contains “forward-looking” statements, as that term is defined under the federal securities laws, including statements regarding the expansion of our product portfolio, and our expected total revenue, adjusted net income per share, adjusted EBITDA, and free cash flow for the third quarter of 2014 and for fiscal year 2014. These forward-looking statements are based on our current assumptions, expectations, and beliefs and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, risks associated with our ability to maintain profitability on an annual basis; our ability to protect our customers’ confidential information; our ability to maintain and enhance our brand recognition and reputation; the competitive nature of the industries in which we conduct our business; our ability to maintain access to data sources; our ability to retain our existing customers and attract new customers; our ability to improve our services and develop and introduce new services with broad appeal; our ability to maintain existing and secure new relationships with strategic partners; the effects of laws, regulations, and enforcement; the outcome of any litigation or regulatory proceeding; our ability to protect our intellectual property and not infringe on the intellectual property of others; and other “Risk Factors” set forth in our most recent filings with the Securities and Exchange Commission (the “SEC”).
Further information on these and other factors that could affect our financial results and the forward-looking statements in this press release is included in the filings we make with the SEC from time to time, including our Form 10-K for the year ended December 31, 2013, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Copies of these documents may be obtained by visiting our Investor Relations website at http://investor.lifelock.com/ or the SEC’s website at www.sec.gov.
We assume no obligation and do not intend to update these forward-looking statements, except as required by law.
Non-GAAP Financial Measures
Our reported results include certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted EBITDA, and free cash flow. We calculate adjusted net income as net income (loss) excluding amortization of acquired intangible assets, share-based compensation, income tax benefits and expenses resulting from changes in our deferred tax assets, and acquisition related expenses. Historically, in calculating adjusted net income, we also excluded changes in fair value of warrant liabilities and changes in fair value of embedded derivatives in the periods in which those items occurred. We do not currently have any warrant liabilities or embedded derivatives. Accordingly, we will only include those items of income and expense in our reconciliation of adjusted net income for period-over-period comparisons. We calculate adjusted net income per share by dividing our adjusted net income by the weighted-average diluted shares outstanding. We calculate adjusted EBITDA as net income (loss) excluding depreciation and amortization, share-based compensation, interest expense, interest income, other income (expense), income tax (benefit) expense, and acquisition related expenses. Historically, in calculating adjusted EBITDA, we also excluded changes in fair value of warrant liabilities and changes in fair value of embedded derivatives in the periods in which those items occurred. We do not currently have any warrant liabilities or embedded derivatives. Accordingly, we will only include those items of income and expense in our reconciliation of adjusted EBITDA for period-over-period comparisons. We define free cash flow as net cash provided by (used in) operating activities less net cash used in investing activities for acquisitions of property and equipment.
We have included adjusted net income, adjusted net income per share, and adjusted EBITDA in this press release because they are key measures used by us to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted net income and adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, adjusted EBITDA is a key financial measure used in determining management’s incentive compensation.
We have included free cash flow in this press release because we believe it typically presents a more conservative measure of cash flow as purchases of property and equipment are necessary components of ongoing operations. We believe that this non-GAAP financial measure is useful in evaluating our business because free cash flow reflects the cash surplus available to fund the expansion of our business after payment of capital expenditures relating to the necessary components of ongoing operations. We also believe that the use of free cash flow provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Although adjusted net income, adjusted EBITDA, and free cash flow are frequently used by investors in their evaluations of companies, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered alongside other financial performance measures.
We have not reconciled adjusted net income per share guidance to net income per share guidance or adjusted EBITDA guidance to net income guidance because we do not provide guidance for share-based compensation expense, provision for income taxes, interest income, interest expense, change in fair value of warrant liabilities, change in fair value of embedded derivatives, other income and expenses, depreciation expense, amortization of intangible assets, acquisition expenses, or income tax (benefit) expense, which are reconciling items between net income (loss) and adjusted net income and net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of our control and/or cannot be reasonably predicted, we are unable to provide such guidance. Accordingly, reconciliation to net income (loss) is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the reconciliation tables included in this press release.
Media Contact:
Kelley Bonsall
Media@lifelock.com
415-767-7749
Investor Relations Contact:
Greg Kleiner
ICR for LifeLock
Investor.relations@lifelock.com
480-457-5000
LifeLock, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue |
||||||||||||||||
| Consumer revenue |
$ | 109,338 | $ | 82,574 | $ | 210,333 | $ | 157,667 | ||||||||
| Enterprise revenue |
6,375 | 6,946 | 12,966 | 13,947 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue |
115,713 | 89,520 | 223,299 | 171,614 | ||||||||||||
| Cost of services |
29,536 | 25,227 | 59,603 | 49,031 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
86,177 | 64,293 | 163,696 | 122,583 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Sales and marketing |
58,774 | 43,248 | 115,621 | 85,041 | ||||||||||||
| Technology and development |
13,524 | 10,370 | 26,672 | 19,394 | ||||||||||||
| General and administrative |
16,329 | 10,900 | 30,301 | 20,323 | ||||||||||||
| Amortization of acquired intangible assets |
2,231 | 1,966 | 4,462 | 3,932 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total costs and expenses |
90,858 | 66,484 | 177,056 | 128,690 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(4,681 | ) | (2,191 | ) | (13,360 | ) | (6,107 | ) | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense |
(88 | ) | (79 | ) | (175 | ) | (146 | ) | ||||||||
| Interest income |
56 | 26 | 116 | 46 | ||||||||||||
| Other |
(6 | ) | — | (17 | ) | (4 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other expense |
(38 | ) | (53 | ) | (76 | ) | (104 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss before provision for income taxes |
(4,719 | ) | (2,244 | ) | (13,436 | ) | (6,211 | ) | ||||||||
| Income tax benefit |
(1,919 | ) | (179 | ) | (5,467 | ) | (29 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss |
$ | (2,800 | ) | $ | (2,065 | ) | $ | (7,969 | ) | $ | (6,182 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss per share: |
||||||||||||||||
| Basic |
$ | (0.03 | ) | $ | (0.02 | ) | $ | (0.09 | ) | $ | (0.07 | ) | ||||
| Diluted |
$ | (0.03 | ) | $ | (0.02 | ) | $ | (0.09 | ) | $ | (0.07 | ) | ||||
| Weighted-average common shares outstanding used in computing net loss per share: |
||||||||||||||||
| Basic |
92,471 | 87,533 | 92,189 | 87,089 | ||||||||||||
| Diluted |
92,471 | 87,533 | 92,189 | 87,089 | ||||||||||||
LifeLock, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| June 30, 2014 |
December 31, 2013 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 166,650 | $ | 123,911 | ||||
| Marketable securities |
49,385 | 48,688 | ||||||
| Trade and other receivables, net |
12,087 | 10,906 | ||||||
| Deferred tax asset, net |
18,585 | 13,117 | ||||||
| Prepaid expenses and other current assets |
8,426 | 6,961 | ||||||
|
|
|
|
|
|||||
| Total current assets |
255,133 | 203,583 | ||||||
| Property and equipment, net |
20,604 | 16,504 | ||||||
| Goodwill |
159,342 | 159,342 | ||||||
| Intangible assets, net |
42,751 | 47,213 | ||||||
| Deferred tax asset, net – non-current |
34,796 | 34,796 | ||||||
| Other non-current assets |
1,307 | 1,812 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 513,933 | $ | 463,250 | ||||
|
|
|
|
|
|||||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 4,748 | $ | 2,422 | ||||
| Accrued expenses and other liabilities |
42,638 | 34,926 | ||||||
| Deferred revenue |
148,817 | 119,106 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
196,203 | 156,454 | ||||||
| Other non-current liabilities |
5,927 | 4,640 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
202,130 | 161,094 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock |
92 | 91 | ||||||
| Additional paid-in capital |
487,240 | 469,636 | ||||||
| Accumulated other comprehensive loss |
(6 | ) | (18 | ) | ||||
| Accumulated deficit |
(175,523 | ) | (167,553 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
311,803 | 302,156 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 513,933 | $ | 463,250 | ||||
|
|
|
|
|
|||||
LifeLock, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| Six Months Ended June 30, |
||||||||
| 2014 | 2013 | |||||||
| Operating activities |
||||||||
| Net loss |
$ | (7,969 | ) | $ | (6,182 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
8,165 | 6,360 | ||||||
| Share-based compensation |
12,521 | 6,261 | ||||||
| Provision for doubtful accounts |
300 | 95 | ||||||
| Amortization of premium on marketable securities |
732 | — | ||||||
| Deferred income tax benefit |
(5,468 | ) | (212 | ) | ||||
| Other |
2 | 4 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Trade and other receivables |
(2,189 | ) | (3,244 | ) | ||||
| Prepaid expenses and other current assets |
(1,465 | ) | (470 | ) | ||||
| Other non-current assets |
505 | 432 | ||||||
| Accounts payable |
2,052 | (134 | ) | |||||
| Accrued expenses and other liabilities |
7,828 | 3,179 | ||||||
| Deferred revenue |
29,711 | 25,089 | ||||||
| Other non-current liabilities |
1,288 | 2,408 | ||||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
46,013 | 33,586 | ||||||
| Investing activities |
||||||||
| Acquisition of property and equipment |
(7,662 | ) | (3,652 | ) | ||||
| Purchases of marketable securities |
(19,662 | ) | — | |||||
| Maturities of marketable securities |
18,990 | — | ||||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(8,334 | ) | (3,652 | ) | ||||
| Financing activities |
||||||||
| Proceeds from share-based compensation plans |
5,501 | 5,753 | ||||||
| Payments for employee tax withholdings related to restricted stock |
(441 | ) | — | |||||
| Payments for debt issuance costs |
— | (440 | ) | |||||
|
|
|
|
|
|||||
| Net cash provided by financing activities |
5,060 | 5,313 | ||||||
|
|
|
|
|
|||||
| Net increase in cash and cash equivalents |
42,739 | 35,247 | ||||||
| Cash and cash equivalents at beginning of period |
123,911 | 134,197 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at end of period |
$ | 166,650 | $ | 169,444 | ||||
|
|
|
|
|
|||||
Share-Based Compensation
(in thousands)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Cost of services |
$ | 489 | $ | 206 | $ | 832 | $ | 412 | ||||||||
| Sales and marketing |
1,309 | 386 | 2,203 | 719 | ||||||||||||
| Technology and development |
1,942 | 824 | 3,915 | 1,339 | ||||||||||||
| General and administrative |
3,306 | 2,121 | 5,571 | 3,791 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total share-based compensation |
$ | 7,046 | $ | 3,537 | $ | 12,521 | $ | 6,261 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Key Financial and Operating Metrics
(in thousands except percentages and per member data)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue |
||||||||||||||||
| Consumer revenue |
$ | 109,338 | $ | 82,574 | $ | 210,333 | $ | 157,667 | ||||||||
| Enterprise revenue |
6,375 | 6,946 | 12,966 | 13,947 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue |
$ | 115,713 | $ | 89,520 | $ | 223,299 | $ | 171,614 | ||||||||
| Adjusted net income |
$ | 4,560 | $ | 3,226 | $ | 3,546 | $ | 3,799 | ||||||||
| Adjusted EBITDA |
$ | 6,669 | $ | 4,635 | $ | 7,326 | $ | 6,514 | ||||||||
| Free cash flow |
$ | 23,962 | $ | 18,424 | $ | 38,351 | $ | 29,934 | ||||||||
| Cumulative ending members |
3,388 | 2,760 | 3,388 | 2,760 | ||||||||||||
| Gross new members |
304 | 230 | 648 | 480 | ||||||||||||
| Member retention rate |
87.2 | % | 87.4 | % | 87.2 | % | 87.4 | % | ||||||||
| Average cost of acquisition per member |
$ | 183 | $ | 175 | $ | 169 | $ | 165 | ||||||||
| Monthly average revenue per member |
$ | 10.99 | $ | 10.18 | $ | 10.90 | $ | 10.00 | ||||||||
| Enterprise transactions |
54,547 | 48,325 | 107,256 | 106,808 | ||||||||||||
Reconciliation of GAAP to Adjusted Results
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Reconciliation of Gross Profit to Adjusted Gross Profit |
||||||||||||||||
| Gross profit |
$ | 86,177 | $ | 64,293 | $ | 163,696 | $ | 122,583 | ||||||||
| Share-based compensation |
489 | 206 | 832 | 412 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted gross profit |
$ | 86,666 | $ | 64,499 | $ | 164,528 | $ | 122,995 | ||||||||
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|
|
|
|
|||||||||
| Reconciliation of Sales and Marketing Expenses to Adjusted Sales and Marketing Expenses |
||||||||||||||||
| Sales and marketing expenses |
$ | 58,774 | $ | 43,248 | $ | 115,621 | $ | 85,041 | ||||||||
| Share-based compensation |
(1,309 | ) | (386 | ) | (2,203 | ) | (719 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted sales and marketing expenses |
$ | 57,465 | $ | 42,862 | $ | 113,418 | $ | 84,322 | ||||||||
|
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|
|
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|
|
|||||||||
| Reconciliation of Technology and Development Expenses to Adjusted Technology and Development Expenses |
||||||||||||||||
| Technology and development expenses |
$ | 13,524 | $ | 10,370 | $ | 26,672 | $ | 19,394 | ||||||||
| Share-based compensation |
(1,942 | ) | (824 | ) | (3,915 | ) | (1,339 | ) | ||||||||
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| Adjusted technology and development expenses |
$ | 11,582 | $ | 9,546 | $ | 22,757 | $ | 18,055 | ||||||||
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| Reconciliation of General and Administrative Expenses to Adjusted General and Administrative Expenses |
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| General and administrative expenses |
$ | 16,329 | $ | 10,900 | $ | 30,301 | $ | 20,323 | ||||||||
| Share-based compensation |
(3,306 | ) | (2,121 | ) | (5,571 | ) | (3,791 | ) | ||||||||
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| Adjusted general and administrative expenses |
$ | 13,023 | $ | 8,779 | $ | 24,730 | $ | 16,532 | ||||||||
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| Reconciliation of Loss from Operations to Adjusted Income from Operations |
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| Loss from operations |
$ | (4,681 | ) | $ | (2,191 | ) | $ | (13,360 | ) | $ | (6,107 | ) | ||||
| Share-based compensation |
7,046 | 3,537 | 12,521 | 6,261 | ||||||||||||
| Amortization of acquired intangible assets |
2,231 | 1,966 | 4,462 | 3,932 | ||||||||||||
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| Adjusted income from operations |
$ | 4,596 | $ | 3,312 | $ | 3,623 | $ | 4,086 | ||||||||
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| Reconciliation of Net Loss to Adjusted Net Income |
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| Net loss |
$ | (2,800 | ) | $ | (2,065 | ) | $ | (7,969 | ) | $ | (6,182 | ) | ||||
| Amortization of acquired intangible assets |
2,231 | 1,966 | 4,462 | 3,932 | ||||||||||||
| Deferred income tax benefit |
(1,917 | ) | (212 | ) | (5,468 | ) | (212 | ) | ||||||||
| Share-based compensation |
7,046 | 3,537 | 12,521 | 6,261 | ||||||||||||
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| Adjusted net income |
$ | 4,560 | $ | 3,226 | $ | 3,546 | $ | 3,799 | ||||||||
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| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Reconciliation of Diluted Shares to Adjusted Diluted Shares |
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| Diluted shares |
92,471 | 87,533 | 92,189 | 87,089 | ||||||||||||
| Dilutive securities excluded due to net loss available for distribution |
5,471 | 7,341 | 6,318 | 7,633 | ||||||||||||
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| Adjusted diluted shares |
97,942 | 94,874 | 98,507 | 94,722 | ||||||||||||
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| Reconciliation of Net Loss per Diluted Share to Adjusted Net Income per Diluted Share |
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| Net loss per diluted share |
$ | (0.03 | ) | $ | (0.02 | ) | $ | (0.09 | ) | $ | (0.07 | ) | ||||
| Adjustments to net loss |
0.08 | 0.06 | 0.13 | 0.12 | ||||||||||||
| Adjustments to diluted shares |
— | (0.01 | ) | — | (0.01 | ) | ||||||||||
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| Adjusted net income per diluted share |
$ | 0.05 | $ | 0.03 | $ | 0.04 | $ | 0.04 | ||||||||
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| Reconciliation of Net Loss to Adjusted EBITDA |
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| Net loss |
$ | (2,800 | ) | $ | (2,065 | ) | $ | (7,969 | ) | $ | (6,182 | ) | ||||
| Depreciation and amortization |
4,304 | 3,289 | 8,165 | 6,360 | ||||||||||||
| Interest expense |
88 | 79 | 175 | 146 | ||||||||||||
| Interest income |
(56 | ) | (26 | ) | (116 | ) | (46 | ) | ||||||||
| Other expense |
6 | — | 17 | 4 | ||||||||||||
| Income tax benefit |
(1,919 | ) | (179 | ) | (5,467 | ) | (29 | ) | ||||||||
| Share-based compensation |
7,046 | 3,537 | 12,521 | 6,261 | ||||||||||||
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| Adjusted EBITDA |
$ | 6,669 | $ | 4,635 | $ | 7,326 | $ | 6,514 | ||||||||
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| Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow |
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| Net cash provided by operating activities |
$ | 27,697 | $ | 20,791 | $ | 46,013 | $ | 33,586 | ||||||||
| Acquisitions of property and equipment |
(3,735 | ) | (2,367 | ) | (7,662 | ) | (3,652 | ) | ||||||||
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| Free cash flow |
$ | 23,962 | $ | 18,424 | $ | 38,351 | $ | 29,934 | ||||||||
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