FORM 8-K |
CURRENT REPORT |
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
April 27, 2016 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 and zip code) (480) 682-5100 (Registrant’s telephone number, including area code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit | |
Number | Exhibits |
LIFELOCK, INC. | |||
Date: | April 27, 2016 | By: | /s/ Chris Power |
Chris Power | |||
Chief Financial Officer |
• | Revenue: Total revenue was $159.3 million for the first quarter of 2016, up 18% from $134.4 million for the first quarter of 2015. Consumer revenue was $151.9 million for the first quarter of 2016, up 19% from $128.2 million for the first quarter of 2015. Enterprise revenue was $7.3 million for the first quarter of 2016, up 18% from $6.2 million for the first quarter of 2015. |
• | Net Loss: Net loss was $11.7 million for the first quarter of 2016, compared with net loss of $9.2 million for the first quarter of 2015. Net loss per diluted share was $0.12 for the first quarter of 2016 based on 94.7 million weighted-average shares outstanding, compared with net loss per diluted share of $0.10 for the first quarter of 2015 based on 94.0 million weighted-average shares outstanding. |
• | Adjusted Net Loss*: Adjusted net loss was $5.5 million for the first quarter of 2016, compared with adjusted net loss of $5.2 million for the first quarter of 2015. Adjusted net loss per diluted share was $0.06 for the first quarter of 2016 based on 94.7 million weighted-average shares outstanding, compared with adjusted net loss per diluted share of $0.06 for the first quarter of 2015 based on 94.0 million weighted-average shares outstanding. |
• | Adjusted EBITDA*: Adjusted EBITDA was $(3.0) million for the first quarter of 2016, compared with $(3.0) million for the first quarter of 2015. |
• | Cash Flow: Cash flow from operations was $10.9 million for the first quarter of 2016, leading to free cash flow* of $10.6 million after taking into consideration $4.8 million of capital expenditures and $2.0 million of payments for expenses incurred in connection with the FTC litigation. This compares with cash flow from operations of $20.5 million and free cash flow of $17.7 million, after taking into consideration $2.8 million of capital expenditures for the first quarter of 2015. |
• | Balance Sheet: Total cash and marketable securities at the end of the first quarter of 2016 was $201.8 million, down from $246.7 million at the end of the fourth quarter of 2015, primarily as a result of the $51.9 million paid in the purchase of Company stock in connection with the previously announced $100 million share repurchase plan. |
* | 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". |
• | Appointed Doug Jeffries as Chief Administrative Officer. Mr. Jeffries will succeed Chris Power as the Chief Financial Officer following the release of the second quarter of fiscal 2016 financial results. |
• | Recorded the 44th consecutive quarter of sequential growth in revenue and cumulative ending members. |
• | Added approximately 345,000 gross new members in the first quarter of 2016 and ended the quarter with approximately 4.3 million members. |
• | Increased monthly average revenue per member to $11.90 for the first quarter of 2016 from $11.38 for the first quarter of 2015. |
• | Acquired 4.4 million shares for $51.9 million in connection with the previously announced $100 million share repurchase program. |
• | Second Quarter 2016 Guidance: Total revenue is expected to be in the range of $162 million to $164 million. Adjusted net income per diluted share is expected to be in the range of $0.03 to $0.04 based on approximately 98 million fully diluted weighted-average shares outstanding. Adjusted EBITDA is expected to be in the range of $5 million to $6 million. We will continue to migrate credit services for all premium members to a new data platform during the second quarter of 2016. With the continued migration, certain costs will be incurred in the second quarter of 2016 that in the past were recognized throughout the year. As a result, we will be incurring approximately $6 million of expense in the second quarter of 2016 which previously would have been incurred throughout the remainder of 2016. In future years, this will be an annual recurring event and will result in elevated cost of services during the second quarter and comparatively lower levels in the other quarters. |
• | Full Year 2016 Guidance: Total revenue is expected to be in the range of $662 million to $670 million. Adjusted net income per diluted share is expected to be in the range of $0.73 to $0.77 based on approximately 99 million fully diluted weighted-average shares outstanding and a cash tax rate of 3%. Adjusted EBITDA is expected to be in the range of $84 million to $88 million. Free cash flow is expected to be in the range of $93 million to $98 million. |
• | What: LifeLock first quarter 2016 financial results. |
• | When: Wednesday, April 27, 2016 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 13634083 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 13634083. |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenue: | |||||||
Consumer revenue | $ | 151,930 | $ | 128,201 | |||
Enterprise revenue | 7,339 | 6,207 | |||||
Total revenue | 159,269 | 134,408 | |||||
Cost of services | 39,986 | 34,556 | |||||
Gross profit | 119,283 | 99,852 | |||||
Costs and expenses: | |||||||
Sales and marketing | 90,444 | 77,079 | |||||
Technology and development | 21,222 | 16,866 | |||||
General and administrative | 24,222 | 18,955 | |||||
Amortization of acquired intangible assets | 3,042 | 2,084 | |||||
Total costs and expenses | 138,930 | 114,984 | |||||
Loss from operations | (19,647 | ) | (15,132 | ) | |||
Other income (expense): | |||||||
Interest expense | (111 | ) | (89 | ) | |||
Interest income | 299 | 117 | |||||
Other | (5 | ) | (80 | ) | |||
Total other income (expense) | 183 | (52 | ) | ||||
Loss before provision for income taxes | (19,464 | ) | (15,184 | ) | |||
Income tax benefit | (7,795 | ) | (6,026 | ) | |||
Net loss | $ | (11,669 | ) | $ | (9,158 | ) | |
Net loss attributable per share to common stockholders: | |||||||
Basic and diluted | $ | (0.12 | ) | $ | (0.10 | ) | |
Weighted-average common shares outstanding: | |||||||
Basic and diluted | 94,749 | 94,033 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 44,907 | $ | 50,239 | |||
Marketable securities | 156,878 | 196,474 | |||||
Trade and other receivables, net | 13,005 | 13,974 | |||||
Prepaid expenses and other current assets | 13,663 | 12,303 | |||||
Total current assets | 228,453 | 272,990 | |||||
Property and equipment, net | 31,531 | 30,485 | |||||
Goodwill | 172,087 | 172,087 | |||||
Intangible assets, net | 27,132 | 30,174 | |||||
Deferred tax assets, net - non-current | 85,157 | 77,363 | |||||
Other non-current assets | 9,639 | 9,710 | |||||
Total assets | $ | 553,999 | $ | 592,809 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 11,212 | $ | 24,747 | |||
Accrued expenses and other liabilities | 84,593 | 76,226 | |||||
Deferred revenue | 185,605 | 166,403 | |||||
Total current liabilities | 281,410 | 267,376 | |||||
Other non-current liabilities | 7,613 | 7,367 | |||||
Total liabilities | 289,023 | 274,743 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Common stock | 98 | 96 | |||||
Treasury stock | (38,048 | ) | — | ||||
Additional paid-in capital | 528,742 | 532,388 | |||||
Accumulated other comprehensive loss | (91 | ) | (361 | ) | |||
Accumulated deficit | (225,725 | ) | (214,057 | ) | |||
Total stockholders' equity | 264,976 | 318,066 | |||||
Total liabilities and stockholders' equity | $ | 553,999 | $ | 592,809 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Operating activities | |||||||
Net loss | $ | (11,669 | ) | $ | (9,158 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 5,778 | 4,295 | |||||
Share-based compensation | 8,652 | 5,370 | |||||
Provision for doubtful accounts | 197 | 52 | |||||
Amortization of premiums on marketable securities | 635 | 670 | |||||
Deferred income tax benefit | (7,795 | ) | (6,026 | ) | |||
Other | 46 | 82 | |||||
Change in operating assets and liabilities: | |||||||
Trade and other receivables | 467 | (295 | ) | ||||
Prepaid expenses and other current assets | (1,360 | ) | (4,319 | ) | |||
Other non-current assets | 27 | (44 | ) | ||||
Accounts payable | (12,293 | ) | 2,563 | ||||
Accrued expenses and other liabilities | 8,731 | 4,556 | |||||
Deferred revenue | 19,203 | 22,777 | |||||
Other non-current liabilities | 246 | 7 | |||||
Net cash provided by operating activities | 10,865 | 20,530 | |||||
Investing activities | |||||||
Acquisition of property and equipment, including capitalization of internal use software | (4,830 | ) | (2,816 | ) | |||
Purchases of marketable securities | (25,521 | ) | (39,379 | ) | |||
Sale and maturities of marketable securities | 65,071 | 33,438 | |||||
Net cash provided by (used in) investing activities | 34,720 | (8,757 | ) | ||||
Financing activities | |||||||
Proceeds from share-based compensation plans | 1,956 | 1,773 | |||||
Purchases of Company stock | (51,923 | ) | — | ||||
Payments for employee tax withholdings related to restricted stock units and awards | (950 | ) | (230 | ) | |||
Net cash provided by (used in) financing activities | (50,917 | ) | 1,543 | ||||
Net increase (decrease) in cash and cash equivalents | (5,332 | ) | 13,316 | ||||
Cash and cash equivalents at beginning of period | 50,239 | 146,569 | |||||
Cash and cash equivalents at end of period | $ | 44,907 | $ | 159,885 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Costs of services | $ | 497 | $ | 372 | |||
Sales and marketing | 1,618 | 932 | |||||
Technology and development | 2,793 | 1,709 | |||||
General and administrative | 3,744 | 2,357 | |||||
Total share-based compensation expense | $ | 8,652 | $ | 5,370 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenue: | |||||||
Consumer revenue | $ | 151,930 | $ | 128,201 | |||
Enterprise revenue | 7,339 | 6,207 | |||||
Total revenue | $ | 159,269 | $ | 134,408 | |||
Adjusted net loss | $ | (5,508 | ) | $ | (5,230 | ) | |
Adjusted EBITDA | $ | (2,955 | ) | $ | (2,967 | ) | |
Free cash flow | $ | 10,576 | $ | 17,714 | |||
Cumulative ending members | 4,323 | 3,888 | |||||
Gross new members | 345 | 421 | |||||
Member retention rate | 85.8 | % | 87.8 | % | |||
Average cost of acquisition per member | $ | 252 | $ | 176 | |||
Monthly average revenue per member | $ | 11.90 | $ | 11.38 | |||
Enterprise transactions | 76,080 | 61,535 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Reconciliation of Gross Profit to Adjusted Gross Profit | |||||||
Gross profit | $ | 119,283 | $ | 99,852 | |||
Share-based compensation | 497 | 372 | |||||
Adjusted gross profit | $ | 119,780 | $ | 100,224 | |||
Reconciliation of Sales and Marketing Expenses to Adjusted Sales and Marketing Expenses | |||||||
Sales and marketing expenses | $ | 90,444 | $ | 77,079 | |||
Share-based compensation | (1,618 | ) | (932 | ) | |||
Adjusted sales and marketing expenses | $ | 88,826 | $ | 76,147 | |||
Reconciliation of Technology and Development Expenses to Adjusted Technology and Development Expenses | |||||||
Technology and development expenses | $ | 21,222 | $ | 16,866 | |||
Share-based compensation | (2,793 | ) | (1,709 | ) | |||
Adjusted technology and development expenses | $ | 18,429 | $ | 15,157 | |||
Reconciliation of General and Administrative Expenses to Adjusted General and Administrative Expenses | |||||||
General and administrative expenses | $ | 24,222 | $ | 18,955 | |||
Share-based compensation | (3,744 | ) | (2,357 | ) | |||
Legal reserves and settlements | — | (2,500 | ) | ||||
Expenses related to the FTC litigation | (2,262 | ) | — | ||||
Adjusted general and administrative expenses | $ | 18,216 | $ | 14,098 | |||
Reconciliation of Loss from Operations to Adjusted Loss from Operations | |||||||
Loss from operations | $ | (19,647 | ) | $ | (15,132 | ) | |
Share-based compensation | 8,652 | 5,370 | |||||
Amortization of acquired intangible assets | 3,042 | 2,084 | |||||
Legal reserves and settlements | — | 2,500 | |||||
Expenses related to the FTC litigation | 2,262 | — | |||||
Adjusted loss from operations | $ | (5,691 | ) | $ | (5,178 | ) | |
Reconciliation of Net Loss to Adjusted Net Loss | |||||||
Net loss | $ | (11,669 | ) | $ | (9,158 | ) | |
Amortization of acquired intangible assets | 3,042 | 2,084 | |||||
Share-based compensation | 8,652 | 5,370 | |||||
Deferred income tax benefit | (7,795 | ) | (6,026 | ) | |||
Legal reserves and settlements | — | 2,500 | |||||
Expenses related to the FTC litigation | 2,262 | — | |||||
Adjusted net loss | $ | (5,508 | ) | $ | (5,230 | ) |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Reconciliation of Net Loss per Diluted Share to Adjusted Net Loss per Diluted Share | |||||||
Net loss per diluted share | $ | (0.12 | ) | $ | (0.10 | ) | |
Adjustments to net loss | 0.06 | 0.04 | |||||
Adjusted net loss per diluted share | $ | (0.06 | ) | $ | (0.06 | ) | |
Reconciliation of Net Loss to Adjusted EBITDA | |||||||
Net loss | $ | (11,669 | ) | $ | (9,158 | ) | |
Depreciation and amortization | 5,778 | 4,295 | |||||
Share-based compensation | 8,652 | 5,370 | |||||
Interest expense | 111 | 89 | |||||
Interest income | (299 | ) | (117 | ) | |||
Other | 5 | 80 | |||||
Income tax benefit | (7,795 | ) | (6,026 | ) | |||
Legal reserves and settlements | — | 2,500 | |||||
Expenses related to the FTC litigation | 2,262 | — | |||||
Adjusted EBITDA | $ | (2,955 | ) | $ | (2,967 | ) | |
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | |||||||
Net cash provided by operating activities | $ | 10,865 | $ | 20,530 | |||
Acquisitions of property and equipment | (4,830 | ) | (2,816 | ) | |||
Legal settlements | 2,500 | — | |||||
Expenses related to the FTC litigation | 2,041 | — | |||||
Free cash flow | $ | 10,576 | $ | 17,714 |