RealPage (RP) 8-K RealPage Reports Full Year and Q4 2013 Financial Results

Exhibit 99.1

RealPage Reports Full Year and Q4 2013 Financial Results

• 2013 Non-GAAP revenue increases 17.8% to $379.7 million
• 2013 adjusted EBITDA increases 23.1% to $90.3 million
• 2013 cash flow from operations increases 18.5% to $69.2 million
• 2013 Non-GAAP earnings per share increases 25.5% to $0.59 per diluted share

CARROLLTON, Texas--(BUSINESS WIRE)--February 24, 2014--RealPage, Inc. (NASDAQ:RP), a leading provider of on-demand software and software-enabled services to the rental housing industry, today announced financial results for its fourth quarter and year ended December 31, 2013.

“2013 was a solid year for RealPage,” said Steve Winn, Chairman and CEO of RealPage. “Non-GAAP total revenue growth was 18% compared to last year and profitability levels expanded 100 basis points. While fourth quarter revenue performance was below our expectations, we are taking steps to re-accelerate our revenue growth for 2014 and beyond.”

Fourth Quarter 2013 Financial Highlights

• Non-GAAP total revenue was $96.4 million, an increase of 12.5% year-over-year, while GAAP total revenue was $95.5 million, an increase of 11.4% year-over-year;
• Non-GAAP on demand revenue was $93.0 million, an increase of 13.7% year-over-year, while GAAP on demand revenue was $92.1 million, an increase of 12.6% year-over-year;
• Adjusted EBITDA was $24.8 million, an increase of 19.2% year-over-year;
• Non-GAAP net income was $12.4 million, or $0.16 per diluted share, a year-over-year increase of 21.2% and 14.3%, respectively; and
• GAAP net income was $2.2 million, or $0.03 per diluted share, compared to GAAP net income of $3.7 million, or $0.05 per diluted share, in the prior year quarter.

Full Year 2013 Financial Highlights

• Non-GAAP total revenue was $379.7 million, an increase of 17.8% year-over-year, while GAAP total revenue was $377.0 million, an increase of 17.0% year-over-year;
• Non-GAAP on demand revenue was $365.0 million, an increase of 19.1% year-over-year, while GAAP on demand revenue was $362.3 million, an increase of 18.2% year-over-year;
• Adjusted EBITDA was $90.3 million, an increase of 23.1% year-over-year;
• Non-GAAP net income was $44.9 million, or $0.59 per diluted share, a year-over-year increase of 28.5% and 25.5%, respectively; and
• GAAP net income was $20.7 million, or $0.27 per diluted share, compared to GAAP net income of $5.2 million, or $0.07 per diluted share, in the prior year quarter.

Financial Outlook

RealPage management expects to achieve the following results during its first quarter ended March 31, 2014:

• Non-GAAP total revenue is expected to be in the range of $101.0 million to $102.0 million;
• Adjusted EBITDA is expected to be in the range of $24.0 million to $24.5 million;
• Non-GAAP net income is expected to be in the range of $11.8 million to $12.1 million, or $0.15 to $0.16 per diluted share;
• Non-GAAP tax rate of approximately 40.0%; and
• Weighted average shares outstanding of approximately 77.5 million.

RealPage management expects to achieve the following results during its calendar year ended December 31, 2014:

• Non-GAAP total revenue is expected to be in the range of $440.0 million to $450.0 million;
• Adjusted EBITDA is expected to be in the range of $105.0 million to $110.0 million;
• Non-GAAP net income is expected to be in the range of $51.1 million to $54.1 million, or $0.65 to $0.69 per diluted share;
• Non-GAAP tax rate of approximately 40.0%; and
• Full year weighted average shares outstanding of approximately 78.2 million.

Please note that the above statements are forward looking and that Non-GAAP total revenue includes an adjustment for the effect of acquisition-related and other deferred revenue. In addition, the above statements also include the impact of acquisitions and exclude any costs resulting from the Yardi litigation (including settlement costs and related insurance litigation). Actual results may differ materially. Please reference the information under the caption "Non-GAAP Financial Measures" as well as reconciliation tables of GAAP financial measures to non-GAAP financial measures as set forth in this press release.

Conference Call and Webcast

The Company will host a conference call today at 5:00 p.m. EDT to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast at www.realpage.com on the Investor Relations section. In addition, a live dial-in is available domestically at 866-743-9666 and internationally at 760-298-5103. A replay will be available at 855-859-2056 or 404-537-3406, passcode 54561034, until March 2, 2014.

About RealPage

Located in Carrollton, Texas, a suburb of Dallas, RealPage provides on demand (also referred to as “Software-as-a-Service” or “SaaS”) products and services to apartment communities and single family rentals across the United States. Its on demand product lines include Asset Optimization Solutions for driving increased revenue and NOI, Enterprise Solutions to manage all aspects of property management and accounting and Digital Marketing Solutions to improve the quantity and quality of lead origination at lower advertising cost. RealPage supports all asset classes with special adaptations of it system to include convention, affordable, tax credit, student living, military housing senior assisted living, commercial and HOA/Condos. RealPage also support single family rentals, both long term rentals as well as short term vacation rentals.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking" statements relating to RealPage, Inc.'s expected, possible or assumed future results of operations, growth, expenditures, tax rates, and outstanding shares. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “expects,” “believes,” “plans,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the possibility that general economic conditions or uncertainty cause information technology spending, particularly in the rental housing industry, to be reduced or purchasing decisions to be delayed; (b) an increase in customer cancellations; (c) the inability to increase sales to existing customers and to attract new customers; (d) RealPage, Inc.'s failure to integrate acquired businesses and any future acquisitions successfully; (e) the timing and success of new product introductions by RealPage, Inc. or its competitors; (f) changes in RealPage, Inc.'s pricing policies or those of its competitors; (g) litigation; (h) inability to complete the integration of our LeaseStar products and deliver enhanced functionality on a timely basis and (i) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by RealPage, including its Annual Report on Form 10-K previously filed with the SEC on February 27, 2013 and Form 10-Q filed with the SEC on November 12, 2013. All information provided in this release is as of the date hereof and RealPage undertakes no duty to update this information except as required by law.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. These measures differ from GAAP in that they include acquisition-related and other deferred revenue and exclude amortization of intangible assets, stock-based compensation expenses, any impact related to the Yardi litigation (including settlement costs and related insurance litigation), and acquisition related expenses (including any purchase accounting adjustments) and include income taxes at a sustainable effective rate, which excludes the reversal of valuation allowances due to expected or realization of deferred tax assets. Reconciliation tables comparing GAAP financial measures to non-GAAP financial measures are included at the end of this release.

We define Adjusted EBITDA as net (loss) income plus acquisition-related and other deferred revenue adjustment, depreciation and asset impairment, amortization of intangible assets, net interest expense, income tax expense (benefit), stock-based compensation expense, any impact related to Yardi litigation (including settlement costs and related insurance litigation), and acquisition-related expenses.

We believe that the use of Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

• Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with our peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results;
• it is useful to exclude certain non-cash charges, such as depreciation and asset impairment, amortization of intangible assets and stock-based compensation and non-core operational charges, such as acquisition-related expenses and any impact related to the Yardi litigation (including settlement costs and related insurance litigation), from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be; and
• it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules and revenue deferred due to a lack of historical experience determining the settlement of the contractual obligation in order to appropriately measure the underlying performance of our business operations in the period of activity and associated expense.

We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.

We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of liquidity or financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures and that they do not reflect changes in, or cash requirements for, our working capital. We compensate for the inherent limitations associated with using Adjusted EBITDA measures through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net (loss) income.

Condensed Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2013 and 2012
(unaudited, in thousands, except per share data)
			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2013			2012			2013			2012
Revenue:
	On demand		$	92,081		$	81,771		$	362,312		$	306,400
	On premise			892			1,313			3,691			5,216
	Professional and other			2,546			2,640			11,019			10,556
		Total revenue		95,519			85,724			377,022			322,172
Cost of revenue(1)				37,506			33,204			148,321			128,562
Gross profit				58,013			52,520			228,701			193,610
Operating expense:
	Product development(1)			13,641			12,852			50,638			48,177
	Sales and marketing(1)			23,902			19,806			95,894			76,992
	General and administrative(1)			15,730			12,199			60,610			56,993
		Total operating expense		53,273			44,857			207,142			182,162
Operating income				4,740			7,663			21,559			11,448
Interest expense and other income, net				(156	)		(426	)		(1,077	)		(2,046	)
Income before income taxes				4,584			7,237			20,482			9,402
Income tax expense				2,406			3,515			(210	)		4,219
Net income			$	2,178		$	3,722		$	20,692		$	5,183
Net income per share
		Basic	$	0.03		$	0.05		$	0.28		$	0.07
		Diluted	$	0.03		$	0.05		$	0.27		$	0.07
Weighted average shares used in computing net income per share
		Basic		76,035			73,460			74,962			71,838
		Diluted		77,108			74,960			76,187			74,002
(1)	Includes stock-based compensation expense as follows:		Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2013			2012			2013			2012
		Cost of revenue	$	900		$	718			3,111		$	2,806
		Product development		1,665			1,211			4,788			4,391
		Sales and marketing		3,102			368			10,993			4,790
		General and administrative		2,988			1,564			10,805			6,191
			$	8,655		$	3,861		$	29,697		$	18,178

Condensed Consolidated Balance Sheets
At December 31, 2013 and December 31, 2012
(unaudited, in thousands except share data)
			December 31,			December 31,
			2013			2012
Assets
Current assets:
	Cash and cash equivalents		$	34,502		$	33,804
	Restricted cash			71,941			35,202
	Accounts receivable, less allowance for doubtful accounts of $914 and $1,087 at December 31, 2013 and December 31, 2012, respectively			66,635			51,937
	Deferred tax asset, net			3,284			-
	Other current assets			7,453			6,541
		Total current assets		183,815			127,484
Property, equipment and software, net				54,775			32,487
Goodwill				152,422			134,025
Identified intangible assets, net				108,815			104,640
Other assets				3,386			3,561
		Total assets	$	503,213		$	402,197
Liabilities and stockholders' equity
Current liabilities:
	Accounts payable		$	11,978		$	9,805
	Accrued expenses and other current liabilities			23,122			19,246
	Current portion of deferred revenue			66,085			60,633
	Deferred tax liability, net			-			2
	Customer deposits held in restricted accounts			71,910			35,171
		Total current liabilities		173,095			124,857
Deferred revenue				5,671			9,446
Deferred tax liability, net				1,379			10
Revolving credit facility				-			10,000
Other long-term liabilities				8,564			2,813
		Total liabilities		188,709			147,126
Stockholders' equity:
	Preferred stock, $0.001 par value, 10,000,000 shares authorized and zero shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively			-			-
	Common stock, $0.001 par value per share: 125,000,000 shares authorized, 80,511,791 and 77,012,925 shares issued and 78,433,626 and 75,826,615 shares outstanding at December 31, 2013 and December 31, 2012, respectively			81			77
	Additional paid-in capital			390,854			347,203
	Treasury stock, at cost: 2,078,165 and 1,186,310 shares at and December 31, 2013 and December 31, 2012, respectively			(11,183	)		(6,323	)
	Accumulated deficit			(65,086	)		(85,778	)
	Accumulated other comprehensive loss			(162	)		(108	)
		Total stockholders' equity		314,504			255,071
		Total liabilities and stockholders' equity	$	503,213		$	402,197

Condensed Consolidated Statements of Cash Flows
For the Three and Twelve Months Ended December 31, 2013 and 2012
(unaudited, in thousands)
				Three Months Ended						Twelve Months Ended
				December 31,						December 31,
				2013			2012			2013			2012
Cash flows from operating activities:
	Net income			$	2,178		$	3,722		$	20,692		$	5,183
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization			8,922			8,787			31,745			32,469
		Deferred tax expense (benefit)			2,370			2,698			(2,503	)		2,624
		Stock-based compensation			8,655			3,861			29,697			18,178
		Loss on disposal of assets			4			181			314			568
		Acquisition-related contingent consideration			(16	)		(300	)		1,284			(722	)
		Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:			(4,513	)		(1,692	)		(12,020	)		112
			Net cash provided by operating activities		17,600			17,257			69,209			58,412
Cash flows from investing activities:
	Purchases of property, equipment and software, net				(10,762	)		(3,173	)		(32,952	)		(18,774	)
	Acquisition of businesses, net of cash acquired				(17,887	)		(2,693	)		(28,229	)		(10,627	)
	Intangible asset additions				(327	)		(150	)		(927	)		(3,375	)
			Net cash used by investing activities		(28,976	)		(6,016	)		(62,108	)		(32,776	)
Cash flows from financing activities:
	Payments on and proceeds from debt, net				(137	)		(15,000	)		(10,548	)		(40,377	)
	Payments of deferred acquisition-related consideration				(4	)		-			(1,549	)		(11,557	)
	Issuance of common stock				3,754			2,191			10,608			12,065
	Purchase of treasury stock				(1,697	)		(797	)		(4,860	)		(3,185	)
			Net cash provided by (used in) financing activities		1,916			(13,606	)		(6,349	)		(43,054	)
			Net increase (decrease) in cash and cash equivalents		(9,460	)		(2,365	)		752			(17,418	)
			Effect of exchange rate on cash		(18	)		(51	)		(54	)		(51	)
Cash and cash equivalents:
	Beginning of period				43,980			36,220			33,804			51,273
	End of period			$	34,502		$	33,804		$	34,502		$	33,804

Reconciliation of GAAP to Non-GAAP Measures
For the Three and Twelve Months Ended December 31, 2013 and 2012
(unaudited, in thousands)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2013			2012			2013			2012
Non-GAAP revenue:
Revenue (GAAP)	$	95,519		$	85,724		$	377,022		$	322,172
Acquisition-related and other deferred revenue		922			3			2,717			89
Non-GAAP revenue	$	96,441		$	85,727		$	379,739		$	322,261
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2013			2012			2013			2012
Adjusted gross profit:
Gross profit (GAAP)	$	58,013		$	52,520		$	228,701		$	193,610
Acquisition-related and other deferred revenue		922			3			2,717			89
Depreciation		1,800			1,598			6,567			6,515
Amortization of intangible assets		2,062			2,560			7,713			9,560
Stock-based compensation expense		900			718			3,111			2,806
Adjusted gross profit	$	63,697		$	57,399		$	248,809		$	212,580
Adjusted gross profit margin		66.0	%		67.0	%		65.5	%		66.0	%
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2013			2012			2013			2012
Adjusted EBITDA:
Net income (GAAP)	$	2,178		$	3,722		$	20,692		$	5,183
Acquisition-related and other deferred revenue		922			3			2,717			89
Depreciation, asset impairment and loss on disposal of asset		3,925			3,521			14,411			13,539
Amortization of intangible assets		5,001			5,447			17,648			19,498
Interest expense, net		228			426			1,427			2,160
Income tax expense (benefit)		2,406			3,515			(210	)		4,219
Litigation-related expense		330			399			661			10,158
Stock-based compensation expense		8,655			3,861			29,697			18,178
Acquisition related expense		1,156			(94	)		3,269			(350	)
Stock registration costs		-			7			-			675
Adjusted EBITDA	$	24,801		$	20,807		$	90,312		$	73,349
Adjusted EBITDA margin		25.7	%		24.3	%		23.8	%		22.8	%
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2013			2012			2013			2012
Non-GAAP total product development:
Product development (GAAP)	$	13,641		$	12,852		$	50,638		$	48,177
Less: Amortization of intangible assets		2			-			3			-
Stock-based compensation expense		1,665			1,211			4,788			4,391
Non-GAAP total product development:	$	11,974		$	11,641		$	45,847		$	43,786
Non-GAAP total product development as % of non-GAAP revenue:		12.4	%		13.6	%		12.1	%		13.6	%

Reconciliation of GAAP to Non-GAAP Measures
For the Three and Twelve Months Ended December 31, 2013 and 2012
(unaudited, in thousands)
			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2013			2012			2013			2012
Non-GAAP total sales and marketing:
	Sales and marketing (GAAP)		$	23,902		$	19,806		$	95,894		$	76,992
		Less: Amortization of intangible assets		2,939			2,887			9,935			9,938
		Stock-based compensation expense		3,102			368			10,993			4,790
	Non-GAAP total sales and marketing:		$	17,861		$	16,551		$	74,966		$	62,264
	Non-GAAP total sales and marketing as % of non-GAAP revenue:			18.5	%		19.3	%		19.7	%		19.3	%
			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2013			2012			2013			2012
Non-GAAP total general and administrative:
	General and administrative (GAAP)		$	15,730		$	12,199		$	60,610		$	56,993
		Less: Acquisition related expense		1,156			(94	)		3,269			(350	)
		Stock-based compensation expense		2,988			1,564			10,805			6,191
		Litigation related expense		330			399			661			10,158
		Stock registration costs		-			7			-			675
	Non-GAAP total general and administrative:		$	11,256		$	10,323		$	45,875		$	40,319
	Non-GAAP total general and administrative as % of non-GAAP revenue:			11.7	%		12.0	%		12.1	%		12.5	%
			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2013			2012			2013			2012
Non-GAAP total operating expense:
	Operating expense (GAAP)		$	53,273		$	44,857		$	207,142		$	182,162
		Less: Amortization of intangible assets		2,939			2,887			9,935			9,938
		Acquisition related expense		1,156			(94	)		3,269			(350	)
		Stock-based compensation expense		7,755			3,143			26,586			15,372
		Litigation related expense		330			399			661			10,158
		Stock registration costs		-			7			-			675
	Non-GAAP total operating expense:		$	41,093		$	38,515		$	166,691		$	146,369
	Non-GAAP total operating expense as % of non-GAAP revenue:			42.6	%		44.9	%		43.9	%		45.4	%
			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
			2013			2012			2013			2012
Non-GAAP operating income:
	Operating income (GAAP)		$	4,740		$	7,663		$	21,559		$	11,448
		Acquisition-related and other deferred revenue		922			3			2,717			89
		Amortization of intangible assets		5,001			5,447			17,648			19,498
		Stock-based compensation expense		8,655			3,861			29,697			18,178
		Acquisition related expense		1,156			(94	)		3,269			(350	)
		Litigation related expense		330			399			661			10,158
		Stock registration costs		-			7			-			675
	Non-GAAP operating income		$	20,804		$	17,286		$	75,551		$	59,696
	Non-GAAP operating margin			21.6	%		20.2	%		19.9	%		18.5	%

Reconciliation of GAAP to Non-GAAP Measures
For the Three and Twelve Months Ended December 31, 2013 and 2012
(unaudited, in thousands, except per share data)
				Three Months Ended						Twelve Months Ended
				December 31,						December 31,
				2013			2012			2013			2012
Non-GAAP net income:
	Net income (GAAP)			$	2,178		$	3,722		$	20,692		$	5,183
		Acquisition-related and other deferred revenue			922			3			2,717			89
		Amortization of intangible assets			5,001			5,447			17,648			19,498
		Stock-based compensation expense			8,655			3,861			29,697			18,178
		Acquisition related expense			1,156			(94	)		3,269			(350	)
		Litigation related expense			330			399			661			10,158
		Loss on disposal of assets			4			181			314			568
		Stock registration costs			-			7			-			675
			Subtotal of tax deductible items		16,068			9,804			54,306			48,816
		Tax impact of tax deductible items(1)			(6,427	)		(3,922	)		(21,722	)		(19,526	)
		Tax expense resulting from applying effective tax rate(2)			572			620			(8,403	)		458
	Non-GAAP net income			$	12,391		$	10,224		$	44,873		$	34,931
	Non-GAAP net income per share - diluted			$	0.16		$	0.14		$	0.59		$	0.47
	Weighted average shares - diluted				77,108			74,960			76,187			74,002
		Weighted average effect of dilutive securities			-			-			-			-
	Non-GAAP weighted average shares - diluted				77,108			74,960			76,187			74,002
(1)	Reflects the removal of the tax benefit associated with the amortization of intangible assets, stock-based compensation expense, Acquisition related deferred revenue adjustment and Acquisition related expense.
(2)	Represents adjusting to a normalized effective tax rate of 40%.
				Three Months Ended						Twelve Months Ended
				December 31,						December 31,
				2013			2012			2013			2012
Annualized Non-GAAP on demand revenue per average on demand unit:
	On demand revenue (GAAP)			$	92,081		$	81,771		$	362,312		$	306,400
		Acquisition-related and other deferred revenue			922			3			2,717			89
	Non-GAAP on demand revenue			$	93,003		$	81,774		$	365,029		$	306,489
	Ending on demand units				9,022			8,113			9,022			8,113
	Average on demand units				8,876			7,968			8,615			7,625
	Annualized Non-GAAP on demand revenue per average on demand unit			$	41.91		$	41.05		$	56.50		$	40.20
	Annual customer value of on demand revenue(1)			$	378,131		$	333,039
(1)	This metric represents management's estimate for the current annual run-rate value of on demand customer relationships. This metric is calculated by multiplying ending on demand units times annualized Non-GAAP on demand revenue per average on demand unit for the periods presented.

CONTACT:
RealPage, Inc.
Rhett Butler, 972-820-3773
rhett.butler@realpage.com