EX-99.1 2 rvlv-ex99_1.htm EX-99.1 EX-99.1

 

Exhibit 99.1

img94756311_0.jpg 

 

Revolve Group Announces Third Quarter 2023 Financial Results

 

Los Angeles, CA – November 1, 2023 - Revolve Group, Inc. (NYSE: RVLV), the next-generation fashion retailer for Millennial and Generation Z consumers, today announced financial results for the third quarter ended September 30, 2023.


 

“We achieved a key 2023 objective of rebalancing our inventory as the spread between our year-over-year inventory and sales trends was favorable in the third quarter for the first time in more than two years,” said co-founder and co-CEO Mike Karanikolas. “This important accomplishment contributed to our strong and increased cash flows year-over-year, even in an environment where spending on discretionary products by our consumer demographic continues to be pressured.”

 

“A key highlight of the third quarter was surpassing 2.5 million active customers, an increase of 12% year-over-year, and over one million more active customers than the third quarter of 2019," said co-founder and co-CEO Michael Mente. "While average spend per active customer has decreased year-over-year in this very challenging environment, we view this as a temporary dynamic that will normalize as the environment improves. As we look ahead, our team is energized by the opportunity to drive improved results across a wide range of longer-term initiatives that leverage our core competencies of technology innovation, operating efficiency and brand building that have served us well for the past 20 years.”



Third
Quarter 2023 Financial Summary

 

 

Three Months Ended September 30,

 

 

2023

 

 

2022

 

 

YoY Change

 

 

(in thousands, except percentages)

Net sales

 

$

257,603

 

 

$

268,711

 

 

(4%)

Gross profit

 

$

133,232

 

 

$

142,382

 

 

(6%)

Gross margin

 

 

51.7

%

 

 

53.0

%

 

 

Net income

 

$

3,178

 

 

$

11,988

 

 

(73%)

Adjusted EBITDA (non-GAAP financial measure)

 

$

9,484

 

 

$

17,676

 

 

(46%)

Net cash provided by operating activities

 

$

12,486

 

 

$

10,006

 

 

25%

Free cash flow (non-GAAP financial measure)

 

$

11,492

 

 

$

8,618

 

 

33%

 

Operational Metrics

 

 

Three Months Ended September 30,

 

 

2023

 

 

2022

 

 

YoY Change

 

 

(in thousands, except average order value and percentages)

Active customers (trailing 12 months)

 

 

2,510

 

 

 

2,249

 

 

12%

Total orders placed

 

 

2,133

 

 

 

1,951

 

 

9%

Average order value

 

$

299

 

 

$

320

 

 

(7%)

 

Additional Third Quarter 2023 Metrics and Results Commentary

Trailing 12-month Active customers increased by 52,000 during the third quarter of 2023, growing to 2,510,000 as of September 30, 2023, an increase of 12% year-over-year.
Net sales were $257.6 million, a year-over-year decrease of 4%.

 


 

Gross profit was $133.2 million, a year-over-year decrease of 6%.
Gross margin was 51.7%, a year-over-year decrease of 127 basis points, primarily reflecting a lower mix of net sales at full price and a lower mix of owned brands as a percentage of Revolve segment net sales in the third quarter of 2023 as compared to the third quarter of 2022.
Operating expenses increased year over year, despite the year-over-year decline in net sales, due to a $6.6 million accrual for a pending legal matter included in general and administrative expenses and continued pressure on selling and distribution expenses and fulfillment expenses primarily due to a higher return rate year-over-year, partially offset by increased marketing efficiency in the third quarter of 2023.
Net income was $3.2 million, a year-over-year decrease of 73%, primarily due to the decline in net sales, reduction in gross profit year-over-year, continued pressure on certain operating expenses, and the $6.6 million accrual for a pending legal matter.
Adjusted EBITDA was $9.5 million, a year-over-year decrease of 46%.
Diluted earnings per share (EPS) was $0.04, a year-over-year decrease of 75% that was negatively impacted by the accrual for a pending legal matter of $6.6 million, or $0.07 per diluted share.

Additional Net Sales Commentary

REVOLVE segment net sales were $217.7 million, a year-over-year decrease of 2%.
FWRD segment net sales were $39.9 million, a year-over-year decrease of 14%.
Domestic net sales were $207.2 million, a year-over-year decrease of 5%.
International net sales were $50.4 million, a year-over-year decrease of 1%.

 

Cash Flow and Balance Sheet

Net cash provided by operating activities was $12.5 million in the third quarter and $47.2 million in the nine-month year-to-date period, a year-over-year increase of 25% and 37%, respectively.
Free cash flow was $11.5 million in the third quarter and $44.1 million in the nine-month year-to-date period, a year-over-year increase of 33% and 44%, respectively.
The company repurchased 907,219 shares of its Class A common stock during the third quarter of 2023, at an average cost of $13.87 per share. $87.4 million remained available under the company's $100 million stock repurchase program as of September 30, 2023.
Cash and cash equivalents as of September 30, 2023 were $266.9 million, an increase of $22.9 million, or 9%, from September 30, 2022 and a decrease of $2.4 million, or 1%, from $269.3 million as of June 30, 2023. Our balance sheet as of September 30, 2023 remains debt free.
Inventory as of September 30, 2023 was $202.9 million, a decrease of $10.5 million, or 5%, from $213.3 million as of September 30, 2022.

 

Additional trend information regarding Revolve Group's third quarter of 2023 financial results and operating metrics is available in the Q3 2023 Financial Highlights presentation available on our investor relations website: https://investors.revolve.com/events-and-presentations/default.aspx

 

 


 

Results Since the End of the Third Quarter of 2023

Net sales in October 2023 decreased by a low-single digit percentage year-over-year amidst ongoing uncertainty in the macroeconomic and geopolitical environment that we believe continues to pressure consumer spending on discretionary products.

2023 Business Outlook

Based on information available to us as of November 1, 2023, we are providing the following guidance for the full year ending December 31, 2023 and the fourth quarter ending December 31, 2023.

 

 

Updated FY 2023 Outlook

Prior FY 2023 Outlook

Gross margin

51.8% to 51.9%

52% to 52.5%

Fulfillment expenses

3.5% of net sales

3.3% of net sales

Selling and distribution expenses

18.7% of net sales

18.3% of net sales

Marketing expenses

16.2% to 16.3% of net sales

16% to 16.5% of net sales

General and administrative expenses

$121.5 million, including the $6.6 million accrual for a pending legal matter in Q3 2023

$115 million

Effective tax rate

24% to 26%

24% to 26%

 

 

 

 

Fourth Quarter 2023 Outlook

 

Gross margin

51.7% to 52.0%

 

Fulfillment expenses

3.6% of net sales

 

Selling and distribution expenses

19.0% of net sales

 

Marketing expenses

17.0% to 17.2% of net sales

 

General and administrative expenses

$29.6 million

 

 

Conference Call Information

Revolve Group management will host a call today at 4:30 pm ET / 1:30 pm PT to discuss today’s results in more detail. To participate, please dial (888) 330-2454 within the United States or (240) 789-2714 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 3102771. The conference call will also be accessible, live via audio broadcast, on the Investor Relations section of the Revolve Group website at investors.revolve.com. A replay of the conference call will be available online at investors.revolve.com. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing (800) 770-2030 within the United States or (647) 362-9199 outside the United States. The replay conference ID is 3102771.

 

Forward-Looking Statements

This press release contains ''forward-looking statements'' within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to our expectations regarding average spending per active customer, our financial performance for the fourth quarter and full year of 2023 and statements regarding macroeconomic conditions. Forward-looking statements include statements containing words such as "expect," "anticipate," "believe," "project," "will" and similar expressions intended to identify forward-looking statements. These forward-looking statements are based on our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to changing economic conditions and their impact on consumer demand and our business, operating results and financial condition; demand for our products; supply chain challenges; inflation; the war in Israel; Russia’s war against Ukraine; our fluctuating operating results; seasonality in our business; our ability to acquire products on reasonable terms; our e-commerce business model; our ability to attract customers in a cost effective manner; the strength of our brand; competition; fraud; system interruptions; our ability to fulfill orders; the impact of the COVID-19 pandemic and

 


 

other health crises on our business, operations and financial results; the effect of pending or threatened claims, lawsuits, government investigations, other legal or regulatory proceedings or commercial or contractual disputes; and other risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission, or SEC, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2022 and our subsequent Quarterly Reports on Form 10-Q, including for the quarter ended September 30, 2023, which we expect to file with the SEC on November 1, 2023. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

Use of Non-GAAP Financial Measures and Other Operating Metrics

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we reference in this press release and the accompanying tables the following non-GAAP financial measures: Adjusted EBITDA and free cash flow.

 

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

 

We use these non-GAAP financial measures to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and when planning, forecasting, and analyzing future periods.

 

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned “Reconciliation of Non-GAAP Financial Measures” included at the end of this release.

 

Definitions of our non-GAAP financial measures and other operating metrics are presented below.

 

 


 

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income before other (income) expense, net; taxes; and depreciation and amortization; adjusted to exclude the effects of equity-based compensation expense and certain non-routine items. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of equity-based compensation, excludes an item that we do not consider to be indicative of our core operating performance.

 

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment. We view free cash flow as an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital.



Active Customers

We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period. In any particular period, we determine our number of active customers by counting the total number of customers who have made at least one purchase in the preceding 12-month period, measured from the last date of such period. We view the number of active customers as a key indicator of our growth, the reach of our sites, the value proposition and consumer awareness of our brand, the continued use of our sites by our customers and their desire to purchase our products.

 

Total Orders Placed

We define total orders placed as the total number of orders placed by our customers, prior to product returns, across our platform in any given period. We view total orders placed as a key indicator of the velocity of our business and an indication of the desirability of our products and sites to our customers. Total orders placed, together with average order value, is an indicator of the net sales we expect to recognize in a given period.

 

Average Order Value

We define average order value as the sum of the total gross sales from our sites in a given period, prior to product returns, divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product assortment. Average order value varies depending on the site through which we sell merchandise, the mix of product categories sold, the number of units in each order, the percentage of sales at full price, and for sales at less than full price, the level of markdowns.


 

 

 


 

About Revolve Group, Inc.

Revolve Group, Inc. (NYSE: RVLV) is the next-generation fashion retailer for Millennial and Generation Z consumers. As a trusted premium lifestyle brand and a go-to online source for discovery and inspiration, we deliver an engaging customer experience from a vast yet curated offering of apparel, footwear, accessories, beauty and home products. Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers and more than 1,000 emerging, established and owned brands.



We were founded in 2003 by our co-CEOs, Michael Mente and Mike Karanikolas. We sell merchandise through two complementary segments, REVOLVE and FWRD, that leverage one platform. Through REVOLVE, we offer an assortment of premium apparel, footwear, accessories and beauty products from emerging, established and owned brands. Through FWRD, we offer an assortment of curated and elevated iconic and emerging luxury brands. For more information, visit www.revolve.com.

 

Contacts:

 

Investors:

 

Erik Randerson, CFA

562.677.9513

IR@revolve.com

 

Media:

 

Jennifer Walker

revolve@walkerdrawas.com



 

 

 

 


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net sales

 

$

257,603

 

 

$

268,711

 

 

$

810,941

 

 

$

842,263

 

Cost of sales

 

 

124,371

 

 

 

126,329

 

 

 

390,791

 

 

 

383,228

 

Gross profit

 

 

133,232

 

 

 

142,382

 

 

 

420,150

 

 

 

459,035

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Fulfillment

 

 

9,185

 

 

 

8,072

 

 

 

27,657

 

 

 

23,272

 

Selling and distribution

 

 

48,925

 

 

 

46,477

 

 

 

151,276

 

 

 

145,030

 

Marketing

 

 

39,581

 

 

 

44,584

 

 

 

129,421

 

 

 

141,755

 

General and administrative

 

 

35,217

 

 

 

28,498

 

 

 

91,861

 

 

 

86,497

 

Total operating expenses

 

 

132,908

 

 

 

127,631

 

 

 

400,215

 

 

 

396,554

 

Income from operations

 

 

324

 

 

 

14,751

 

 

 

19,935

 

 

 

62,481

 

Other income, net

 

 

(3,984

)

 

 

(1,440

)

 

 

(12,950

)

 

 

(3,769

)

Income before income taxes

 

 

4,308

 

 

 

16,191

 

 

 

32,885

 

 

 

66,250

 

Provision for income taxes

 

 

1,130

 

 

 

4,203

 

 

 

8,232

 

 

 

15,421

 

Net income

 

$

3,178

 

 

$

11,988

 

 

$

24,653

 

 

$

50,829

 

Earnings per share of Class A and Class B
   common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

$

0.16

 

 

$

0.34

 

 

$

0.69

 

Diluted

 

$

0.04

 

 

$

0.16

 

 

$

0.33

 

 

$

0.68

 

Weighted average number of shares of Class A and
   Class B common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

73,262

 

 

 

73,328

 

 

 

73,358

 

 

 

73,302

 

Diluted

 

 

73,716

 

 

 

74,354

 

 

 

74,058

 

 

 

74,598

 

 

 

 


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

266,899

 

 

$

234,724

 

Accounts receivable, net

 

 

12,614

 

 

 

5,421

 

Inventory

 

 

202,877

 

 

 

215,224

 

Income taxes receivable

 

 

7,555

 

 

 

2,974

 

Prepaid expenses and other current assets

 

 

63,578

 

 

 

59,874

 

Total current assets

 

 

553,523

 

 

 

518,217

 

Property and equipment (net of accumulated depreciation of $16,697 and $13,081 as of
   September 30, 2023 and December 31, 2022, respectively)

 

 

8,062

 

 

 

8,934

 

Right-of-use lease assets

 

 

38,041

 

 

 

22,964

 

Intangible assets, net

 

 

1,834

 

 

 

1,600

 

Goodwill

 

 

2,042

 

 

 

2,042

 

Other assets

 

 

1,241

 

 

 

807

 

Deferred income taxes

 

 

24,754

 

 

 

24,754

 

Total assets

 

$

629,497

 

 

$

579,318

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

44,479

 

 

$

50,789

 

Income taxes payable

 

 

1,435

 

 

 

229

 

Accrued expenses

 

 

42,639

 

 

 

38,266

 

Returns reserve

 

 

72,137

 

 

 

63,381

 

Current lease liabilities

 

 

6,249

 

 

 

5,844

 

Other current liabilities

 

 

30,465

 

 

 

22,577

 

Total current liabilities

 

 

197,404

 

 

 

181,086

 

Non-current lease liabilities

 

 

35,567

 

 

 

18,659

 

Total liabilities

 

 

232,971

 

 

 

199,745

 

Stockholders’ equity:

 

 

 

 

 

 

Class A common stock, $0.001 par value; 1,000,000,000 shares authorized as of
   September 30, 2023 and December 31, 2022; 39,979,289 and 40,766,510 shares
   issued and outstanding as of September 30, 2023 and December 31, 2022,
   respectively

 

 

40

 

 

 

41

 

Class B common stock, $0.001 par value; 125,000,000 shares authorized as of
   September 30, 2023 and December 31, 2022; 32,597,119 and 32,597,119 shares
   issued and outstanding as of September 30, 2023 and December 31, 2022,
   respectively

 

 

33

 

 

 

33

 

Additional paid-in capital

 

 

115,053

 

 

 

110,338

 

Retained earnings

 

 

281,400

 

 

 

269,161

 

Total stockholders’ equity

 

 

396,526

 

 

 

379,573

 

Total liabilities and stockholders’ equity

 

$

629,497

 

 

$

579,318

 

 

 

 


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

 

 

 

Net income

 

$

24,653

 

 

$

50,829

 

Adjustments to reconcile net income to net cash provided by operating
   activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

3,752

 

 

 

3,519

 

Equity-based compensation

 

 

4,229

 

 

 

4,410

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(7,193

)

 

 

(2,081

)

Inventories

 

 

12,347

 

 

 

(42,069

)

Income taxes receivable

 

 

(4,581

)

 

 

(758

)

Prepaid expenses and other current assets

 

 

(3,704

)

 

 

(16,989

)

Other assets

 

 

(434

)

 

 

(349

)

Accounts payable

 

 

(6,310

)

 

 

(1,156

)

Income taxes payable

 

 

1,206

 

 

 

439

 

Accrued expenses

 

 

4,373

 

 

 

10,592

 

Returns reserve

 

 

8,756

 

 

 

23,015

 

Right-of-use lease assets and current and non-current lease liabilities

 

 

2,236

 

 

 

825

 

Other current liabilities

 

 

7,888

 

 

 

4,224

 

Net cash provided by operating activities

 

 

47,218

 

 

 

34,451

 

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,114

)

 

 

(3,904

)

Net cash used in investing activities

 

 

(3,114

)

 

 

(3,904

)

Financing activities:

 

 

 

 

 

 

Proceeds from the exercise of stock options, net

 

 

486

 

 

 

496

 

Repurchases of Class A common stock

 

 

(12,584

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(12,098

)

 

 

496

 

Effect of exchange rate changes on cash and cash equivalents

 

 

169

 

 

 

(5,452

)

Net increase in cash and cash equivalents

 

 

32,175

 

 

 

25,591

 

Cash and cash equivalents, beginning of period

 

 

234,724

 

 

 

218,455

 

Cash and cash equivalents, end of period

 

$

266,899

 

 

$

244,046

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Income taxes, net of refund

 

$

11,580

 

 

$

15,909

 

Operating leases

 

$

5,649

 

 

$

4,033

 

Supplemental disclosure of non-cash activities:

 

 

 

 

 

 

Lease assets obtained in exchange for new operating lease liabilities

 

$

20,452

 

 

$

21,938

 

 

 

 


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands):

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

Net sales

 

2023

 

 

2022

 

 

2023

 

 

2022

 

REVOLVE

 

$

217,698

 

 

$

222,069

 

 

$

684,500

 

 

$

704,538

 

FWRD

 

 

39,905

 

 

 

46,642

 

 

 

126,441

 

 

 

137,725

 

Total

 

$

257,603

 

 

$

268,711

 

 

$

810,941

 

 

$

842,263

 

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

REVOLVE

 

$

119,003

 

 

$

123,622

 

 

$

370,474

 

 

$

398,140

 

FWRD

 

 

14,229

 

 

 

18,760

 

 

 

49,676

 

 

 

60,895

 

Total

 

$

133,232

 

 

$

142,382

 

 

$

420,150

 

 

$

459,035

 

 

The following table lists net sales by geographic area (in thousands):

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

United States

 

$

207,171

 

 

$

217,591

 

 

$

656,747

 

 

$

696,375

 

Rest of the world

 

 

50,432

 

 

 

51,120

 

 

 

154,194

 

 

 

145,888

 

Total

 

$

257,603

 

 

$

268,711

 

 

$

810,941

 

 

$

842,263

 

 

 

 


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

KEY OPERATING AND FINANCIAL METRICS

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(in thousands, except average order value and percentages)

 

Gross margin

 

 

51.7

%

 

 

53.0

%

 

 

51.8

%

 

 

54.5

%

Adjusted EBITDA

 

$

9,484

 

 

$

17,676

 

 

$

34,871

 

 

$

76,097

 

Free cash flow

 

$

11,492

 

 

$

8,618

 

 

$

44,104

 

 

$

30,547

 

Active customers

 

 

2,510

 

 

 

2,249

 

 

 

2,510

 

 

 

2,249

 

Total orders placed

 

 

2,133

 

 

 

1,951

 

 

 

6,679

 

 

 

6,350

 

Average order value

 

$

299

 

 

$

320

 

 

$

296

 

 

$

303

 

 

 

 


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

A reconciliation of non-GAAP Adjusted EBITDA to net income for the three and nine months ended September 30, 2023 and 2022 is as follows:

 

 

 

Three Months Ended September 30,

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Net income

 

$

3,178

 

 

$

11,988

 

 

$

24,653

 

 

$

50,829

 

Excluding:

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

(3,984

)

 

 

(1,440

)

 

 

(12,950

)

 

 

(3,769

)

Provision for income taxes

 

 

1,130

 

 

 

4,203

 

 

 

8,232

 

 

 

15,421

 

Depreciation and amortization

 

 

1,293

 

 

 

1,214

 

 

 

3,752

 

 

 

3,519

 

Equity-based compensation

 

 

1,228

 

 

 

1,524

 

 

 

4,229

 

 

 

4,410

 

Non-routine items(1)

 

 

6,639

 

 

 

187

 

 

 

6,955

 

 

 

5,687

 

Adjusted EBITDA

 

$

9,484

 

 

$

17,676

 

 

$

34,871

 

 

$

76,097

 

 

(1)

Non-routine items in the three and nine months ended September 30, 2023 and 2022 included an accrual for a pending legal matter and an accrual and a charge for a separate settled legal matter.

 

A reconciliation of non-GAAP free cash flow to net cash provided by operating activities for the three and nine months ended September 30, 2023 and 2022 is as follows:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Net cash provided by operating activities

 

$

12,486

 

 

$

10,006

 

 

$

47,218

 

 

$

34,451

 

Purchases of property and equipment

 

 

(994

)

 

$

(1,388

)

 

 

(3,114

)

 

 

(3,904

)

Free cash flow

 

$

11,492

 

 

$

8,618

 

 

$

44,104

 

 

$

30,547

 

Net cash used in investing activities

 

$

(994

)

 

$

(1,388

)

 

$

(3,114

)

 

$

(3,904

)

Net cash (used in) provided by financing activities

 

$

(12,508

)

 

$

128

 

 

$

(12,098

)

 

$

496