Exhibit 99.1
Ellie Mae Reports Third Quarter 2011 Results
| | • | | Record quarterly revenue of $14.7 million, up 23% year over year |
| | • | | Active lender users increase for the fifth consecutive quarter to 43,183 |
| | • | | Active SaaS lender users increase to 20,349, up 78% year over year |
November 2, 2011, PLEASANTON, CA — Ellie Mae®(NYSE Amex: ELLI), the provider of software and automation solutions for mortgage bankers, community banks, credit unions and other mortgage lenders, today reported results for the third quarter and nine months ended September 30, 2011.
Total revenue for the third quarter of 2011 increased 23% to $14.7 million, compared to $11.9 million in the third quarter of 2010. Software Solutions revenue increased 30% to $11.8 million, compared to $9.1 million in the third quarter of 2010. Network revenue was $2.8 million, compared to $2.8 million in the third quarter of 2010.
Net income for the third quarter of 2011 was $1.0 million, or $0.05 per diluted share, compared to net income of $1.8 million, or $0.10 per diluted share, in the third quarter of 2010. Included in the results for the third quarter of 2011 was $0.4 million of one-time expenses related to the acquisition of Del Mar Datatrac.
Included in net income and adjusted net income for the third quarter and nine months ended September 30, 2011, was a one-time tax benefit of $266,000 which resulted from a refund of prior years’ R&D tax credits.
On a non-GAAP basis, adjusted net income for the third quarter of 2011 was $2.0 million, or $0.09 per diluted share, compared to adjusted net income of $2.2 million, or $0.13 per diluted share, in the third quarter of 2010. Adjusted EBITDA for the third quarter of 2011 was $2.3 million compared to adjusted EBITDA of $2.5 million for the third quarter of 2010.
Total revenue for the nine months ended September 30, 2011 increased 20% to $36.7 million, compared to $30.6 million for the nine months ended September 30, 2010. Software Solutions revenue for the nine months ended September 30, 2011 increased 24% to $29.5 million, compared to $23.8 million for the nine months ended September 30, 2010. Network revenue for the nine months ended September 30, 2011 increased 8% to $7.3 million, compared to $6.8 million for the nine months ended September 30, 2010.
Net income for the nine months ended September 30, 2011 was $0.2 million, or $0.01 per diluted share, compared to net loss of $(1.1) million, or $(0.33) per diluted share (($0.07) per pro forma diluted share including the conversion of 11.8 million shares of convertible preferred stock in connection with the IPO), for the nine months ended September 30, 2010.
On a non-GAAP basis, adjusted net income for the nine months ended September 30, 2011 was $2.1 million, or $0.11 per diluted share, compared to adjusted net income of $0.7 million, or $0.04 per diluted share, for the nine months ended September 30, 2010. Adjusted EBITDA for the nine months ended September 30, 2011 was $3.2 million, compared to adjusted EBITDA of $1.9 million for the nine months ended September 30, 2010.
A reconciliation of the non-GAAP financial measures to their related GAAP financial measures is set forth below.
Key Operating Metrics as of and for the quarter ended September 30, 2011, excluding the Del Mar Datatrac acquisition:
| | • | | The number of lender users actively using the company’s Encompass enterprise solution (“active lender users”) increased 10% year over year to 43,183; |
| | • | | Of all active lender users, 20,349 or 47%, were using the SaaS version of Encompass, an increase of 78% year over year; |
| | • | | Of all active SaaS lender users, 16,196, or 80%, subscribed to the company’s bundled success-based-pricing model (SBP), representing a 139% increase year over year; |
| | • | | 4,050 SaaS SBP users were sold, or booked, during the quarter, including 1,910 new users and 2,140 conversions of existing licensed Encompass users to the SBP model; |
| | • | | Lender Encompass revenue for the third quarter of 2011 increased 27% to $12.1 million as compared to the third quarter of 2010; and |
| | • | | Average revenue per active lender user in the third quarter of 2011 increased 12% over the comparable period in 2010 to $286. |
“We continued to deliver strong financial performance in the third quarter, with record quarterly revenue and solid growth in our user base,” stated Sig Anderman, President and CEO of Ellie Mae. “Our results are particularly notable in light of the continued decline in mortgage origination volume and the overall macroeconomic challenges.
“During the quarter, we also strengthened our position as an industry-leading provider of automated solutions for the residential mortgage industry by completing the acquisition of Del Mar Datatrac, which we expect will accelerate our growth by significantly expanding our lender customer base. The acquisition was completed in mid-August, and we are pleased with its early success. Several Datatrac customers have already signed agreements to migrate to the Encompass success-based-pricing model. Integration is progressing as planned and the new integrated product offerings are on track, the first of which we expect to introduce in the first quarter of 2012.
“We believe our performance validates our strategy and demonstrates the attraction of our comprehensive solutions to lenders who need to meet the increasing regulatory challenges and demands for quality and efficiency. Our continued execution gives us confidence in achieving our revenue guidance for 2011,” concluded Mr. Anderman.
2011 Financial Outlook
The company reaffirmed its 2011 consolidated revenue outlook in the range of $51 to $53 million. Factoring in the increase in amortization from the Datatrac acquisition, net income for 2011 is expected to be in the range of $0.1 million to $1.1 million, or $0.01 to $0.05 per diluted share. Adjusted net income is expected to be in the range of $2.6 million to $3.6 million, or $0.12 to $0.17 per diluted share. Adjusted EBITDA is expected to be in the range of $3.8 million to $5.3 million.
| 1 | All share and per share information referenced throughout this release and in the accompanying financial tables has been adjusted to reflect the 1-for-3 reverse stock split of the Company’s common stock that occurred on April 14, 2011. |
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Use of Non-GAAP Financial Measures
Ellie Mae provides investors with adjusted net income (loss) and adjusted EBITDA in conjunction with traditional GAAP operating performance of net income (loss) as part of its overall assessment of its performance. Adjusted net income (loss) consists of net income (loss) plus amortization of acquired intangibles, non-cash, stock-based compensation expense and acquisition costs. EBITDA consists of net income (loss) plus depreciation and amortization, interest income and expense and income tax expense. Adjusted EBITDA consists of EBITDA plus non-cash, stock-based compensation expense and acquisition costs. Ellie Mae uses adjusted net income (loss) and adjusted EBITDA as measures of operating performance because they enable period to period comparisons by excluding potential differences caused by variations in the age of book depreciation of fixed assets and amortization of intangibles related to acquisitions, and changes in interest expense and interest income that are influenced by capital market conditions. The company also believes it is useful to exclude non-cash, stock-based compensation expense from adjusted net income (loss) and adjusted EBITDA because the amount of non-cash expense associated with stock-based awards made at certain prices and points in time (a) do not necessarily reflect how the company’s business is performing at any particular time and (b) can vary significantly between periods due to the timing of new stock-based awards. These non-GAAP measures are not measurements of the company’s financial performance under GAAP and have limitations as analytical tools. Accordingly, these non-GAAP financial measures should not be considered a substitute for, or superior to, net income (loss) or operating income (loss) or other financial measures calculated in accordance with generally accepted accounting principles in the United States, or as an alternative to cash flows from operating activities as a measure of the company’s profitability or liquidity. The company cautions that other companies in Ellie Mae’s industry may calculate adjusted net income (loss) and adjusted EBITDA differently than the company does, further limiting their usefulness as a comparative measure. A reconciliation of net income (loss) to adjusted net income (loss) and adjusted EBITDA is included in the tables below.
Quarterly Conference Call
Ellie Mae will discuss its quarterly results today via teleconference at 5:00 p.m. Eastern Time. To access the call, please dial 888-846-5003 or 480-629-9856 at least five minutes prior to the 5:00 p.m. Eastern Time start time. A live webcast of the call will be available on the Investor Relations section of the company’s website atwww.EllieMae.com. An audio replay of the call will be available through November 12, 2011 by dialing 800-406-7325 or 303-590-3030 and entering access code 4481366.
About Ellie Mae
Ellie Mae (NYSE Amex: ELLI) provides automation solutions for the mortgage industry. The company’s offerings include the Encompass® and Encompass360® mortgage management software solutions. Ellie Mae also hosts the Ellie Mae Network™, an integral component of Encompass that allows mortgage professionals to conduct electronic business transactions with the lenders and settlement service providers they work with to process and fund loans. Ellie Mae was founded in 1997 and is based in Pleasanton, California. To learn more about Ellie Mae, visit www.EllieMae.com or call 877.355.4362.
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© 2011 Ellie Mae, Inc. Ellie Mae®, Encompass®, Encompass360® and Ellie Mae Network™ are registered trademarks or trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.
Forward-Looking Statements
This press release contains forward-looking statements under the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements include discussions regarding projected revenue, net income, adjusted EBITDA and adjusted net income for the full year 2011. These statements involve known and unknown risks, uncertainties and other factors which may cause the company’s results to be materially different than those expressed or implied in such statements. Such differences may be based on factors such as changes in strategic planning decisions by management, reallocation of internal resources, changes in the volume of residential mortgage volume in the United States, the risk that the anticipated benefits, growth prospects and synergies expected from the Del Mar Datatrac acquisition may not be fully realized or may take longer to realize than expected; the possibility that economic benefits of future opportunities in an emerging industry may never materialize, including unexpected variations in market growth and demand for the acquired products and technologies; delays, disruptions, costs and challenges associated with integrating Del Mar Datatrac into the company’s existing business, including changing relationships with partners, customers, employees or suppliers; the amount of costs incurred in connection with the supporting and integrating new customers and partners; ongoing personnel and logistical challenges of managing a larger organization; our ability to retain and motivate key employees from Del Mar Datatrac, changes in other macroeconomic factors affecting the residential real estate industry and other risk factors included in documents that Ellie Mae has filed with the Securities and Exchange Commission, including but not limited to the final prospectus relating to its initial public offering. Other unknown or unpredictable factors also could have material adverse effects on Ellie Mae’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Ellie Mae cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Ellie Mae expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.
Investor Relations Contacts:
Edgar Luce
Executive VP and CFO
Ellie Mae, Inc.
IR@elliemae.com
+1-925-227-7079
or
Lisa Laukkanen
The Blueshirt Group for Ellie Mae, Inc.
lisa@blueshirtgroup.com
+1-415-217-4967
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ELLIE MAE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| | | | | | | | |
| | | September 30,
2011 | | | December 31,
2010 | |
| | | (in thousands, except share and per share amounts) | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 18,228 | | | $ | 14,349 | |
Short-term investments | | | 2,536 | | | | 2,556 | |
Accounts receivable, net of allowances for doubtful accounts of $131 and $48, as of September 30, 2011 and December 31, 2010, respectively | | | 6,581 | | | | 4,243 | |
Prepaid expenses and other | | | 1,358 | | | | 665 | |
Note Receivable | | | 1,000 | | | | — | |
Deferred offering costs | | | — | | | | 4,667 | |
| | | | | | | | |
Total current assets | | | 29,703 | | | | 26,480 | |
Property and equipment, net | | | 5,201 | | | | 2,710 | |
Deposits and other assets | | | 139 | | | | 632 | |
Note receivable | | | 16 | | | | 1,000 | |
Other intangibles, net | | | 8,581 | | | | 613 | |
Goodwill | | | 49,488 | | | | 31,521 | |
| | | | | | | | |
Total assets | | $ | 93,128 | | | $ | 62,956 | |
| | | | | | | | |
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 2,144 | | | $ | 3,756 | |
Accrued and other current liabilities | | | 3,852 | | | | 3,442 | |
Acquisition holdback, net of discounts | | | 2,794 | | | | — | |
Deferred revenue | | | 4,000 | | | | 3,188 | |
Deferred rent | | | 208 | | | | 192 | |
Leases payable | | | 6 | | | | 114 | |
| | | | | | | | |
Total current liabilities | | | 13,004 | | | | 10,692 | |
Deferred revenue, net of current portion | | | 162 | | | | 137 | |
Deferred rent, net of current portion | | | 678 | | | | 813 | |
Acquisition holdback, net of current portion and discounts | | | 4,825 | | | | — | |
Other long term liabilities | | | 360 | | | | 467 | |
Leases payable, net of current portion | | | 5 | | | | — | |
| | | | | | | | |
Total liabilities | | | 19,034 | | | | 12,109 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
Redeemable convertible preferred stock, $0.0001 par value per share; | | | | | | | | |
10,000,000 and 14,323,714 authorized shares, 0 and 11,770,472 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively | | | — | | | | 82,672 | |
Stockholders’ equity (deficit): | | | | | | | | |
Common stock, $0.0001 par value per share; | | | | | | | | |
140,000,000 and 21,666,666 authorized shares, 20,741,101 and 3,629,662 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively | | | 2 | | | | — | |
Additional paid-in capital | | | 114,697 | | | | 8,951 | |
Accumulated deficit | | | (40,605 | ) | | | (40,776 | ) |
| | | | | | | | |
Total stockholders’ equity (deficit) | | | 74,094 | | | | (31,825 | ) |
| | | | | | | | |
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) | | $ | 93,128 | | | $ | 62,956 | |
| | | | | | | | |
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ELLIE MAE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| | | | | | | | | | | | | | | | |
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | (in thousands, except share and per share amounts) | |
Revenues | | $ | 14,673 | | | $ | 11,924 | | | $ | 36,740 | | | $ | 30,566 | |
Cost of revenues | | | 4,045 | | | | 3,146 | | | | 10,920 | | | | 9,308 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 10,628 | | | | 8,778 | | | | 25,820 | | | | 21,258 | |
Operating expenses | | | | | | | | | | | | | | | | |
Sales and marketing | | | 3,047 | | | | 2,411 | | | | 7,995 | | | | 7,070 | |
Research and development | | | 3,452 | | | | 2,566 | | | | 8,862 | | | | 7,825 | |
General and administrative | | | 3,376 | | | | 2,040 | | | | 9,103 | | | | 7,553 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 9,875 | | | | 7,017 | | | | 25,960 | | | | 22,448 | |
| | | | | | | | | | | | | | | | |
Income (loss) from operations | | | 753 | | | | 1,761 | | | | (140 | ) | | | (1,190 | ) |
Other income, net | | | 16 | | | | 31 | | | | 95 | | | | 92 | |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 769 | | | | 1,792 | | | | (45 | ) | | | (1,098 | ) |
Income tax provision | | | (241 | ) | | | 12 | | | | (216 | ) | | | 28 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 1,010 | | | $ | 1,780 | | | $ | 171 | | | $ | (1,126 | ) |
| | | | | | | | | | | | | | | | |
Net income (loss) per share of common stock: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.05 | | | $ | 0.50 | | | $ | 0.01 | | | $ | (0.33 | ) |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.05 | | | $ | 0.10 | | | $ | 0.01 | | | $ | (0.33 | ) |
| | | | | | | | | | | | | | | | |
Weighted average common shares used in computing net income (loss) per share of common stock: | | | | | | | | | | | | | | | | |
Basic | | | 20,707,275 | | | | 3,588,189 | | | | 13,871,955 | | | | 3,463,627 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 21,966,326 | | | | 17,195,458 | | | | 20,170,075 | | | | 3,463,627 | |
| | | | | | | | | | | | | | | | |
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ELLIE MAE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | | | | | | |
| | | Nine months ended September 30, | |
| | | 2011 | | | 2010 | |
| | | (in thousands) | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
Net income (loss) | | $ | 171 | | | $ | (1,126 | ) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | | |
Depreciation and amortization | | | 1,385 | | | | 1,268 | |
Provision for uncollectible accounts receivable | | | 436 | | | | 322 | |
Amortization of intangible assets | | | 481 | | | | 278 | |
Amortization of discount related to holdback | | | 26 | | | | — | |
Stock-based compensation | | | 1,133 | | | | 1,502 | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (2,313 | ) | | | (2,261 | ) |
Prepaid expenses and other | | | (627 | ) | | | (41 | ) |
Deposits and other assets | | | 524 | | | | 5 | |
Accounts payable | | | 911 | | | | 166 | |
Accrued and other liabilities | | | 31 | | | | 346 | |
Deferred revenue | | | (127 | ) | | | (652 | ) |
Deferred rent | | | (129 | ) | | | (482 | ) |
| | | | | | | | |
Net cash provided by (used in) operating activities | | | 1,902 | | | | (675 | ) |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
Acquisition of property and equipment | | | (3,351 | ) | | | (1,265 | ) |
Purchase of short-term investments | | | (5,006 | ) | | | (5,129 | ) |
Acquisitions, net of cash acquired | | | (18,188 | ) | | | — | |
Sale of short-term investments | | | 5,026 | | | | 6,622 | |
Issuance of note receivable | | | (16 | ) | | | — | |
| | | | | | | | |
Net cash (used in) provided by investing activities | | | (21,535 | ) | | | 228 | |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Proceeds from initial public offering net of commission | | | 27,900 | | | | — | |
Offering costs paid during the period | | | (4,824 | ) | | | (1,106 | ) |
Payment of capital lease obligations | | | (115 | ) | | | (293 | ) |
Proceeds from issuance of common stock | | | 551 | | | | 830 | |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 23,512 | | | | (569 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 3,879 | | | | (1,016 | ) |
CASH AND CASH EQUIVALENTS, Beginning of period | | | 14,349 | | | | 11,491 | |
| | | | | | | | |
CASH AND CASH EQUIVALENTS, End of period | | $ | 18,228 | | | $ | 10,475 | |
| | | | | | | | |
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ELLIE MAE, INC.
NON-GAAP RECONCILIATION
(UNAUDITED)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | (in thousands, except share and per share amounts) | |
Net income (loss) | | $ | 1,010 | | | $ | 1,780 | | | $ | 171 | | | $ | (1,126 | ) |
Depreciation and amortization | | | 547 | | | | 363 | | | | 1,385 | | | | 1,268 | |
Amortization of intangible assets | | | 258 | | | | 93 | | | | 481 | | | | 278 | |
Other income, net | | | (16 | ) | | | (31 | ) | | | (95 | ) | | | (92 | ) |
Income tax provision | | | (241 | ) | | | 12 | | | | (216 | ) | | | 28 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | 1,558 | | | | 2,217 | | | | 1,726 | | | | 356 | |
Non-cash, stock-based compensation expenses | | | 376 | | | | 308 | | | | 1,133 | | | | 1,502 | |
Acquisition costs | | | 351 | | | | — | | | | 351 | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 2,285 | | | $ | 2,525 | | | $ | 3,210 | | | $ | 1,858 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 1,010 | | | $ | 1,780 | | | $ | 171 | | | $ | (1,126 | ) |
Non-cash, stock-based compensation expenses | | | 376 | | | | 308 | | | | 1,133 | | | | 1,502 | |
Amortization of Intangible assets | | | 258 | | | | 93 | | | | 481 | | | | 278 | |
Acquisition costs | | | 351 | | | | — | | | | 351 | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted net income (loss) | | $ | 1,995 | | | $ | 2,181 | | | $ | 2,136 | | | $ | 654 | |
| | | | | | | | | | | | | | | | |
Shares used to compute non-GAAP net income (loss) per share | | | | | | | | | | | | | | | | |
Basic | | | 20,707,275 | | | | 3,588,189 | | | | 13,871,955 | | | | 3,463,627 | |
Diluted | | | 21,966,326 | | | | 17,195,458 | | | | 20,170,075 | | | | 17,086,032 | |
Adjusted net income (loss) per share | | | | | | | | | | | | | | | | |
Basic | | $ | 0.10 | | | $ | 0.61 | | | $ | 0.15 | | | $ | 0.19 | |
Diluted | | $ | 0.09 | | | $ | 0.13 | | | $ | 0.11 | | | $ | 0.04 | |
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ELLIE MAE, INC.
NON-GAAP RECONCILIATION
(UNAUDITED)
| | | | | | | | |
| | | Fiscal 2011 Projected Range | |
| | | (in thousands, except share and per share amounts) | |
Net Income | | $ | 125 | | | $ | 1,125 | |
Depreciation and amortization | | | 1,600 | | | | 1,600 | |
Amortization of intangible assets | | | 700 | | | | 700 | |
Other income, net | | | (139 | ) | | | (139 | ) |
Income tax provision | | | (200 | ) | | | 300 | |
| | | | | | | | |
EBITDA | | | 2,086 | | | | 3,586 | |
Acquisition costs | | | 351 | | | | 351 | |
Non-cash, stock-based compensation expenses | | | 1,400 | | | | 1,400 | |
| | | | | | | | |
Adjusted EBITDA | | $ | 3,837 | | | $ | 5,337 | |
| | | | | | | | |
Net income | | $ | 125 | | | $ | 1,125 | |
Acquisition costs | | | 351 | | | | 351 | |
Non-cash, stock-based compensation expenses | | | 1,400 | | | | 1,400 | |
Amortization of Intangible assets | | | 700 | | | | 700 | |
| | | | | | | | |
Adjusted net income | | $ | 2,576 | | | $ | 3,576 | |
| | | | | | | | |
Shares used to compute non-GAAP net income per share | | | | | | | | |
Basic | | | 15,426,000 | | | | 15,426,000 | |
Diluted | | | 20,781,000 | | | | 20,781,000 | |
Projected net income per share | | | | | | | | |
Basic | | $ | 0.01 | | | $ | 0.07 | |
Diluted | | $ | 0.01 | | | $ | 0.05 | |
Adjusted net income per share | | | | | | | | |
Basic | | $ | 0.17 | | | $ | 0.23 | |
Diluted | | $ | 0.12 | | | $ | 0.17 | |
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