001-34819 | 95-4766827 | |
(Commission File Number) | (IRS Employer Identification No.) | |
3465 East Foothill Blvd. Pasadena, CA 91107 | (626) 765-2000 | |
(Address of Principal Executive Offices) | (Registrant's Telephone Number, Including Area Code) |
GREEN DOT CORPORATION | |||
By: | /s/ John C. Ricci | ||
John C. Ricci | |||
General Counsel and Secretary |
• | Total operating revenues on a generally accepted accounting principles (GAAP) basis increased 43% to $227.2 million for the first quarter of 2015 from $159.3 million for the first quarter of 2014 |
• | GAAP net income increased 167% to $40.8 million for the first quarter of 2015 from $15.3 million for the first quarter of 2014 |
• | GAAP basic and diluted earnings per common share were $0.77 and $0.76, respectively, for the first quarter of 2015 versus $0.34 and $0.33, representing growth of 126% and 130% respectively, over the first quarter of 2014 |
1 | Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to non-GAAP net income, diluted earnings per share to non-GAAP diluted earnings per share and net income to adjusted EBITDA, respectively, are provided in the tables immediately following the consolidated financial statements of cash flows. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below. |
• | Non-GAAP total operating revenues1 increased 43% to $230.9 million for the first quarter of 2015 from $161.7 million for the first quarter of 2014 |
• | Non-GAAP net income1 increased 138% to $45.9 million for the first quarter of 2015 from $19.3 million for the first quarter of 2014 |
• | Non-GAAP diluted earnings per share1 increased 105% to $0.86 for the first quarter of 2015 versus $0.42 for the first quarter of 2014 |
• | Adjusted EBITDA1 increased 120% to $83.0 million, or 36% of non-GAAP total operating revenues1 for the first quarter of 2015 from $37.7 million, or 23% of non-GAAP total operating revenues1 for the first quarter of 2014 |
1 | Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to non-GAAP net income, diluted earnings per share to non-GAAP diluted earnings per share and net income to adjusted EBITDA, respectively, are provided in the tables immediately following the consolidated financial statements of cash flows. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below. |
2015 | 2014 | |||||||||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||
(In millions) | ||||||||||||||||
Number of cash transfers | 10.09 | 12.49 | 12.49 | 12.55 | 12.60 | |||||||||||
Number of tax refunds processed | 8.52 | — | — | — | — | |||||||||||
Number of active cards at quarter end | 5.38 | 4.72 | 4.63 | 4.72 | 4.74 | |||||||||||
Gross dollar volume | $ | 6,350 | $ | 5,138 | $ | 4,634 | $ | 4,668 | $ | 5,335 | ||||||
Purchase volume | $ | 4,684 | $ | 3,547 | $ | 3,363 | $ | 3,420 | $ | 3,885 |
Range | |||||||
Low | High | ||||||
(In millions) | |||||||
Adjusted EBITDA | $ | 150 | $ | 170 | |||
Depreciation and amortization* | (43 | ) | (43 | ) | |||
Net interest income | — | — | |||||
Non-GAAP pre-tax income | $ | 107 | $ | 127 | |||
Tax impact** | (39 | ) | (46 | ) | |||
Non-GAAP net income | $ | 68 | $ | 81 | |||
Non-GAAP diluted weighted-average shares issued and outstanding** | 55 | 55 | |||||
Non-GAAP earnings per share | $ | 1.24 | $ | 1.47 |
* | Excludes the impact of amortization of acquired intangible assets |
** | Assumes an effective tax rate of 36.5% |
2 | Reconciliations of forward-looking guidance for these non-GAAP financial measures to their respective, most directly comparable projected GAAP financial measures are provided in the tables immediately following the reconciliation of Net Income to Adjusted EBITDA. |
March 31, 2015 | December 31, 2014 | ||||||
(Unaudited) | |||||||
(In thousands, except par value) | |||||||
Assets | |||||||
Current assets: | |||||||
Unrestricted cash and cash equivalents | $ | 878,244 | $ | 724,158 | |||
Federal funds sold | 480 | 480 | |||||
Restricted cash | 4,841 | 2,015 | |||||
Investment securities available-for-sale, at fair value | 30,482 | 46,650 | |||||
Settlement assets | 45,904 | 148,694 | |||||
Accounts receivable, net | 38,154 | 48,904 | |||||
Prepaid expenses and other assets | 26,326 | 23,992 | |||||
Income tax receivable | — | 16,290 | |||||
Total current assets | 1,024,431 | 1,011,183 | |||||
Restricted cash | 2,182 | 2,152 | |||||
Investment securities, available-for-sale, at fair value | 89,801 | 73,781 | |||||
Accounts receivable, net | 15 | 13 | |||||
Loans to bank customers, net of allowance for loan losses of $340 and $444 as of March 31, 2015 and December 31, 2014, respectively | 6,815 | 6,550 | |||||
Prepaid expenses and other assets | 11,865 | 11,883 | |||||
Property and equipment, net | 79,809 | 77,284 | |||||
Deferred expenses | 11,526 | 17,326 | |||||
Net deferred tax assets | 2,648 | 6,268 | |||||
Goodwill and intangible assets | 494,457 | 417,200 | |||||
Total assets | $ | 1,723,549 | $ | 1,623,640 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 24,793 | $ | 36,444 | |||
Deposits | 644,273 | 565,401 | |||||
Obligations to customers | 70,797 | 98,052 | |||||
Settlement obligations | 4,288 | 4,484 | |||||
Amounts due to card issuing banks for overdrawn accounts | 2,393 | 1,224 | |||||
Other accrued liabilities | 74,678 | 79,137 | |||||
Deferred revenue | 18,825 | 24,418 | |||||
Note payable | 22,500 | 22,500 | |||||
Income tax payable | 7,819 | — | |||||
Net deferred tax liabilities | 3,357 | 3,995 | |||||
Total current liabilities | 873,723 | 835,655 | |||||
Other accrued liabilities | 40,369 | 31,295 | |||||
Deferred revenue | 175 | 200 | |||||
Note payable | 121,875 | 127,500 | |||||
Total liabilities | 1,036,142 | 994,650 | |||||
Stockholders’ equity: | |||||||
Convertible Series A preferred stock, $0.001 par value (as converted): 10 shares authorized as of March 31, 2015 and December 31, 2014; 2 and 2 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | 2 | 2 | |||||
Class A common stock, $0.001 par value: 100,000 shares authorized as of March 31, 2015 and December 31, 2014; 51,699 and 51,146 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | 52 | 51 | |||||
Additional paid-in capital | 400,814 | 383,296 | |||||
Retained earnings | 286,506 | 245,693 | |||||
Accumulated other comprehensive income (loss) | 33 | (52 | ) | ||||
Total stockholders’ equity | 687,407 | 628,990 | |||||
Total liabilities and stockholders’ equity | $ | 1,723,549 | $ | 1,623,640 |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
(In thousands, except per share data) | |||||||
Operating revenues: | |||||||
Card revenues and other fees | $ | 87,224 | $ | 68,167 | |||
Processing and settlement service revenues | 87,121 | 46,276 | |||||
Interchange revenues | 54,726 | 47,214 | |||||
Stock-based retailer incentive compensation | (1,906 | ) | (2,388 | ) | |||
Total operating revenues | 227,165 | 159,269 | |||||
Operating expenses: | |||||||
Sales and marketing expenses | 61,279 | 60,243 | |||||
Compensation and benefits expenses | 41,354 | 26,963 | |||||
Processing expenses | 30,600 | 22,079 | |||||
Other general and administrative expenses | 28,036 | 26,324 | |||||
Total operating expenses | 161,269 | 135,609 | |||||
Operating income | 65,896 | 23,660 | |||||
Interest income | 1,378 | 977 | |||||
Interest expense | (1,496 | ) | (16 | ) | |||
Income before income taxes | 65,778 | 24,621 | |||||
Income tax expense | 24,965 | 9,316 | |||||
Net income | 40,813 | 15,305 | |||||
Income attributable to preferred stock | (1,165 | ) | (2,282 | ) | |||
Net income allocated to common stockholders | $ | 39,648 | $ | 13,023 | |||
Basic earnings per common share: | $ | 0.77 | $ | 0.34 | |||
Diluted earnings per common share: | $ | 0.76 | $ | 0.33 | |||
Basic weighted-average common shares issued and outstanding: | 51,448 | 37,462 | |||||
Diluted weighted-average common shares issued and outstanding: | 51,938 | 38,769 |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
(In thousands) | |||||||
Operating activities | |||||||
Net income | $ | 40,813 | $ | 15,305 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization of property and equipment | 9,375 | 7,664 | |||||
Amortization of intangible assets | 5,325 | — | |||||
Provision for uncollectible overdrawn accounts | 15,192 | 8,490 | |||||
Employee stock-based compensation | 5,213 | 3,972 | |||||
Stock-based retailer incentive compensation | 1,906 | 2,388 | |||||
Amortization of premium on available-for-sale investment securities | 235 | 313 | |||||
Net realized loss (gain) on investment securities | 2 | (29 | ) | ||||
Recovery for uncollectible trade receivables | (5 | ) | (9 | ) | |||
Change in fair value of contingent consideration | (7,616 | ) | — | ||||
Amortization of deferred financing costs | 384 | — | |||||
Deferred income tax expense | (21 | ) | — | ||||
Excess tax benefits from exercise of options | (24 | ) | (525 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (2,308 | ) | 15,668 | ||||
Prepaid expenses and other assets | (31 | ) | (3,835 | ) | |||
Deferred expenses | 5,800 | 3,548 | |||||
Accounts payable and other accrued liabilities | (9,579 | ) | (6,348 | ) | |||
Amounts due to card issuing banks for overdrawn accounts | 1,169 | (49,760 | ) | ||||
Deferred revenue | (5,618 | ) | (6,179 | ) | |||
Income tax receivable | 24,115 | 9,166 | |||||
Net cash provided by (used in) operating activities | 84,327 | (171 | ) | ||||
Investing activities | |||||||
Purchases of available-for-sale investment securities | (34,631 | ) | (44,548 | ) | |||
Proceeds from maturities of available-for-sale securities | 21,972 | 47,445 | |||||
Proceeds from sales of available-for-sale securities | 12,733 | 35,411 | |||||
(Increase) decrease in restricted cash | (1,429 | ) | 683 | ||||
Payments for acquisition of property and equipment | (14,144 | ) | (10,512 | ) | |||
Net principal (increase) decrease in loans | (265 | ) | 336 | ||||
Acquisition, net of cash acquired | (65,209 | ) | — | ||||
Net cash (used in) provided by investing activities | (80,973 | ) | 28,815 | ||||
Financing activities | |||||||
Repayments of borrowings from note payable | (5,625 | ) | — | ||||
Borrowings on revolving line of credit | 30,001 | — | |||||
Repayments on revolving line of credit | (30,001 | ) | — | ||||
Proceeds from exercise of options | 117 | 1,626 | |||||
Excess tax benefits from exercise of options | 24 | 525 | |||||
Net increase in deposits | 78,872 | 306,769 | |||||
Net increase (decrease) in obligations to customers | 77,344 | (13,346 | ) | ||||
Net cash provided by financing activities | 150,732 | 295,574 | |||||
Net increase in unrestricted cash, cash equivalents, and federal funds sold | 154,086 | 324,218 | |||||
Unrestricted cash, cash equivalents, and federal funds sold, beginning of year | 724,638 | 423,621 | |||||
Unrestricted cash, cash equivalents, and federal funds sold, end of period | $ | 878,724 | $ | 747,839 | |||
Cash paid for interest | $ | 1,112 | $ | 16 | |||
Cash paid for income taxes | $ | 779 | $ | 219 |
Three Months Ended March 31, 2015 | |||||||||||||||
Account Services | Processing and Settlement Services | All Other/General Corporate | Total | ||||||||||||
(In thousands) | |||||||||||||||
Operating revenues | $ | 147,859 | $ | 90,176 | $ | (10,870 | ) | $ | 227,165 | ||||||
Operating expenses | 118,153 | 36,858 | 6,258 | 161,269 | |||||||||||
Operating income | $ | 29,706 | $ | 53,318 | $ | (17,128 | ) | $ | 65,896 |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
(In thousands) | |||||||
Total operating revenues | $ | 227,165 | $ | 159,269 | |||
Stock-based retailer incentive compensation (2)(4) | 1,906 | 2,388 | |||||
Contra-revenue advertising costs (3)(4) | 1,816 | — | |||||
Non-GAAP total operating revenues | $ | 230,887 | $ | 161,657 |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
(In thousands, except per share data) | |||||||
Net income | $ | 40,813 | $ | 15,305 | |||
Employee stock-based compensation expense, net of tax (5) | 3,235 | 2,469 | |||||
Stock-based retailer incentive compensation, net of tax (2) | 1,183 | 1,484 | |||||
Amortization of acquired intangibles, net of tax (6) | 3,304 | — | |||||
Change in fair value of contingent consideration, net of tax (6) | (4,726 | ) | — | ||||
Other charges, net of tax (7) | 1,655 | — | |||||
Transaction costs, net of tax (6) | 175 | — | |||||
Amortization of deferred financing costs, net of tax (7) | 238 | — | |||||
Non-GAAP net income | $ | 45,877 | $ | 19,258 | |||
Diluted earnings per share* | |||||||
GAAP | $ | 0.76 | $ | 0.33 | |||
Non-GAAP | $ | 0.86 | $ | 0.42 | |||
Diluted weighted-average shares issued and outstanding | |||||||
GAAP | 51,938 | 38,769 | |||||
Non-GAAP | 53,558 | 45,976 |
* | Reconciliations between GAAP and non-GAAP diluted weighted-average shares issued and outstanding are provided in the next table. |
Three Months Ended March 31, | |||||
2015 | 2014 | ||||
(In thousands) | |||||
Diluted weighted-average shares issued and outstanding | 51,938 | 38,769 | |||
Assumed conversion of weighted-average shares of preferred stock | 1,515 | 6,660 | |||
Weighted-average shares subject to repurchase | 105 | 547 | |||
Non-GAAP diluted weighted-average shares issued and outstanding | 53,558 | 45,976 |
Three Months Ended March 31, | |||||
2015 | 2014 | ||||
(In thousands) | |||||
Stock outstanding as of March 31: | |||||
Class A common stock | 51,699 | 39,387 | |||
Preferred stock (on an as-converted basis) | 1,515 | 5,368 | |||
Total stock outstanding as of March 31: | 53,214 | 44,755 | |||
Weighting adjustment | (146 | ) | (86 | ) | |
Dilutive potential shares: | |||||
Stock options | 281 | 1,059 | |||
Restricted stock units | 193 | 233 | |||
Employee stock purchase plan | 16 | 15 | |||
Non-GAAP diluted weighted-average shares issued and outstanding | 53,558 | 45,976 |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
(In thousands) | |||||||
Net income | $ | 40,813 | $ | 15,305 | |||
Net interest income (4) | 118 | (961 | ) | ||||
Income tax expense | 24,965 | 9,316 | |||||
Depreciation of property and equipment (4) | 9,375 | 7,632 | |||||
Employee stock-based compensation expense (4)(5) | 5,213 | 3,972 | |||||
Stock-based retailer incentive compensation (2)(4) | 1,906 | 2,388 | |||||
Amortization of acquired intangibles (4)(6) | 5,325 | 32 | |||||
Change in fair value of contingent consideration (4)(6) | (7,616 | ) | — | ||||
Other charges (4)(7) | 2,667 | — | |||||
Transaction costs (4)(6) | 282 | — | |||||
Adjusted EBITDA | $ | 83,048 | $ | 37,684 | |||
Non-GAAP total operating revenues | $ | 230,887 | $ | 161,657 | |||
Adjusted EBITDA/non-GAAP total operating revenues (adjusted EBITDA margin) | 36.0 | % | 23.3 | % |
FY 2015 | |||||||||||
Range | |||||||||||
Q2 2015 | Low | High | |||||||||
(In millions) | |||||||||||
Total operating revenues | $ | 162 | $ | 714 | $ | 734 | |||||
Stock-based retailer incentive compensation (2)* | 1 | 3 | 3 | ||||||||
Contra-revenue advertising costs (3) | $ | 2 | $ | 3 | $ | 3 | |||||
Non-GAAP total operating revenues | $ | 165 | $ | 720 | $ | 740 |
* | Assumes the Company's right to repurchase lapses on 36,810 shares per month during 2015 of the Company's Class A common stock at $15.92 per share, our market price on the last trading day of the first quarter of 2015. A $1.00 change in the Company's Class A common stock price represents an annual change of $441,720 in stock-based retailer incentive compensation. |
FY 2015 | |||||||||||
Range | |||||||||||
Q2 2015 | Low | High | |||||||||
(In millions) | |||||||||||
Net income | $ | 6 | $ | 40 | $ | 53 | |||||
Adjustments (8) | 27 | 110 | 117 | ||||||||
Adjusted EBITDA | $ | 33 | $ | 150 | $ | 170 | |||||
Non-GAAP total operating revenues | $ | 165 | $ | 740 | $ | 720 | |||||
Adjusted EBITDA / Non-GAAP total operating revenues (Adjusted EBITDA margin) | 20 | % | 20 | % | 24 | % |
FY 2015 | |||||||||||
Range | |||||||||||
Q2 2015 | Low | High | |||||||||
(In millions, except per share data) | |||||||||||
Net income | $ | 6 | $ | 40 | $ | 53 | |||||
Adjustments (8) | 7 | 28 | 28 | ||||||||
Non-GAAP net income | $ | 13 | $ | 68 | $ | 81 | |||||
Diluted earnings per share* | |||||||||||
GAAP | $ | 0.11 | $ | 0.75 | $ | 0.99 | |||||
Non-GAAP | $ | 0.23 | $ | 1.24 | $ | 1.47 | |||||
Diluted weighted-average shares issued and outstanding | |||||||||||
GAAP | 53 | 53 | 53 | ||||||||
Non-GAAP | 54 | 55 | 55 |
* | Reconciliations between GAAP and non-GAAP diluted weighted-average shares issued and outstanding are provided in the next table. |
FY 2015 | ||||||||
Range | ||||||||
Q2 2015 | Low | High | ||||||
(In millions) | ||||||||
Diluted weighted-average shares issued and outstanding | ||||||||
Assumed conversion of weighted-average shares of preferred stock | 53 | 53 | 53 | |||||
Weighted-average shares subject to repurchase | 1 | 2 | 2 | |||||
Non-GAAP diluted weighted-average shares issued and outstanding | 54 | 55 | 55 |
(1) | To supplement the Company’s consolidated financial statements presented in accordance with GAAP, the Company uses measures of operating results that are adjusted to exclude various, primarily non-cash, expenses and charges. These financial measures are not calculated or presented in accordance with GAAP and should not be considered as alternatives to or substitutes for operating revenues, operating income, net income or any other measure of financial performance calculated and presented in accordance with GAAP. These financial measures may not be comparable to similarly-titled measures of other organizations because other organizations may not calculate their measures in the same manner as we do. These financial measures are adjusted to eliminate the impact of items that the Company does not consider indicative of its core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate. |
▪ | stock-based retailer incentive compensation is a non-cash GAAP accounting charge that is an offset to the Company’s actual revenues from operations as the Company has historically calculated them. This charge results from the monthly lapsing of the Company’s right to repurchase a portion of the 2,208,552 shares it issued to its largest distributor, Walmart, in May 2010. By adding back this charge to the Company’s GAAP 2010 and future total operating revenues, investors can make direct comparisons of the Company’s revenues from operations prior to and after May 2010 and thus more easily perceive trends in the Company’s core operations. Further, because the monthly charge is based on the then-current fair market value of the shares as to which the Company’s repurchase right lapses, adding back this charge eliminates fluctuations in the Company’s operating revenues caused by variations in its stock price and thus provides insight on the operating revenues directly associated with those core operations; |
▪ | the Company records employee stock-based compensation from period to period, and recorded employee stock-based compensation expenses of approximately $5.2 million and $4.0 million for the three months ended March 31, 2015 and 2014, respectively. By comparing the Company’s adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share in different historical periods, investors can evaluate the Company’s operating results without the additional variations caused by employee stock-based compensation expense, which may not be comparable from period to period due to changes in the fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers) and is not a key measure of the Company’s operations; |
▪ | adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as interest expense, income tax expense, depreciation and amortization, employee stock-based compensation expense, stock-based retailer incentive compensation expense, contingent consideration, other charges and transaction costs, that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; and |
▪ | securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies. |
▪ | as measures of operating performance, because they exclude the impact of items not directly resulting from the Company’s core operations; |
▪ | for planning purposes, including the preparation of the Company’s annual operating budget; |
▪ | to allocate resources to enhance the financial performance of the Company’s business; |
▪ | to evaluate the effectiveness of the Company’s business strategies; and |
▪ | in communications with the Company’s board of directors concerning the Company’s financial performance. |
▪ | that these measures do not reflect the Company’s capital expenditures or future requirements for capital expenditures or other contractual commitments; |
▪ | that these measures do not reflect changes in, or cash requirements for, the Company’s working capital needs; |
▪ | that these measures do not reflect interest expense or interest income; |
▪ | that these measures do not reflect cash requirements for income taxes; |
▪ | that, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and these measures do not reflect any cash requirements for these replacements; and |
▪ | that other companies in the Company’s industry may calculate these measures differently than the Company does, limiting their usefulness as comparative measures. |
(2) | This expense consists of the recorded fair value of the shares of Class A common stock for which the Company’s right to repurchase has lapsed pursuant to the terms of the May 2010 agreement under which they were issued to Wal-Mart Stores, Inc., a contra-revenue component of the Company’s total operating revenues. Prior to the three months ended June 30, 2010, the Company did not record stock-based retailer incentive compensation expense. The Company will, however, continue to incur this expense through May 2015. In future periods, the Company does not expect this expense will be comparable from period to period due to changes in the fair value of its Class A common stock. The Company does not believe these non-cash expenses are reflective of ongoing operating results. |
(3) | This expense consists of certain co-op advertising costs recognized as contra-revenue under GAAP. The Company believes the substance of the costs incurred are a result of advertising and is not reflective of ongoing total operating revenues. The Company believes that excluding co-op advertising costs from total operating revenues facilitates the comparison of our financial results to the Company's historical operating results. Prior to the three months ended March 31, 2015, the Company did not have any co-op advertising costs recorded as contra-revenue. |
(4) | The Company does not include any income tax impact of the associated non-GAAP adjustment to non-GAAP total operating revenues or adjusted EBITDA, as the case may be, because each of these non-GAAP financial measures is provided before income tax expense. |
(5) | This expense consists primarily of expenses for employee stock options and restricted stock units. Employee stock-based compensation expense is not comparable from period to period due to changes in the fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers) and is not a key measure of the Company’s operations. The Company excludes employee stock-based compensation expense from its non-GAAP financial measures primarily because it consists of non-cash expenses that the Company does not believe are reflective of ongoing operating results. Further, the Company believes that it is useful to investors to understand the impact of employee stock-based compensation to its results of operations. |
(6) | The Company excludes certain income and expenses that are the result of acquisitions. These acquisition related adjustments include the amortization of acquired intangible assets, changes in the fair value of contingent consideration, settlements of contingencies established at time of acquisition and other acquisition related charges, such as integration charges and professional and legal fees, which result in the Company recording expenses or fair value adjustments in its GAAP financial statements. The Company analyzes the performance of its operations without regard to these adjustments. In determining whether any acquisition related adjustment is appropriate, the Company takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. |
(7) | The Company excludes certain income and expenses that are not reflective of ongoing operating results. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in the Company's GAAP financial statements, the Company excludes them in it's non-GAAP financial measures because the Company believes these items may limit the comparability of ongoing operations with prior and future periods. These adjustments include amortization attributable to deferred financing costs and other charges related to gain or loss contingencies. In determining whether any such adjustments is appropriate, the Company takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. |
(8) | These amounts represent estimated adjustments for net interest income, income taxes, depreciation and amortization, employee stock-based compensation expense, stock-based retailer incentive compensation expense, contingent consideration, other income and expenses and transaction costs. Employee stock-based compensation expense and stock-based retailer incentive compensation expense include assumptions about the future fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers). |