Exhibit 99.1
LifeLock Announces 2013 Fourth Quarter and Year-End Results
Record quarterly revenue of $102.3 million, up 30% year-over-year
Q4 cumulative ending members of approximately 3.0 million, up 21% year-over-year
Q4 monthly average revenue per member of $10.72, up 11% year-over-year
TEMPE, AZ (February 19, 2014) –LifeLock, Inc. (NYSE: LOCK), an industry leader in identity theft protection, today announced financial results for the fourth quarter and fiscal year ended December 31, 2013.
Fourth Quarter 2013 Financial Highlights:
| | • | | Revenue: Total revenue was $102.3 million for the fourth quarter of 2013, up 30% from $78.8 million for the fourth quarter of 2012. Consumer revenue was $94.1 million for the fourth quarter of 2013, up 33% from $70.8 million for the fourth quarter of 2012. Enterprise revenue was $8.2 million for the fourth quarter of 2013, compared to $8.0 million for the fourth quarter of 2012. |
| | • | | Net Income: Net income was $53.2 million for the fourth quarter of 2013, compared to net income of $4.1 million for the fourth quarter of 2012. Net income per diluted share was $0.54 for the fourth quarter of 2013 based on 97.7 million weighted-average shares outstanding, compared with net income per diluted share of $0.01 for the fourth quarter of 2012 based on 90.8 million weighted-average shares outstanding. Net income for the fourth quarter of 2013 included an income tax benefit of $39.2 million, or $0.40 per share, resulting from the release of the valuation allowance associated with our deferred tax assets. |
| | • | | Adjusted Net Income: Adjusted net income was $21.5 million for the fourth quarter of 2013, up from $8.9 million for the fourth quarter of 2012. Adjusted net income per diluted share was $0.22 for the fourth quarter of 2013 based on 97.7 million weighted-average shares outstanding, compared with $0.10 per diluted share for the fourth quarter of 2012 based on 92.2 million weighted-average shares outstanding. |
| | • | | Adjusted EBITDA: Adjusted EBITDA was $22.9 million for the fourth quarter of 2013, compared with $11.4 million for the fourth quarter of 2012. |
| | • | | Cash Flow: Cash flow from operations was $25.5 million for the fourth quarter of 2013, leading to free cash flow of $20.4 million after taking into consideration $5.2 million of capital expenditures. This compares with cash flow from operations of $7.7 million and free cash flow of $3.7 million, after taking into consideration $4.0 million of capital expenditures, for the fourth quarter of 2012. |
| | • | | Balance Sheet: Total cash and marketable securities at the end of the fourth quarter of 2013 was $172.6 million, up from $134.2 million at the end of the fourth quarter of 2012. |
“We closed out 2013 on a strong note, posting solid results on both the top and bottom line,” said Todd Davis, LifeLock’s Chairman and CEO. “The combination of our leading brand and unique technology continue to drive our results. Our ongoing business momentum, along with the launch of the LifeLock Wallet mobile application, positions LifeLock well as we begin 2014. We are proud to help over 3 million consumers live freely in a connected world.”
A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Fourth Quarter 2013 & Recent Business Highlights:
| | • | | Recorded the 35th consecutive quarter of sequential growth in revenue and cumulative ending members. |
| | • | | Added approximately 246,000 gross new members in the fourth quarter of 2013 and ended the quarter with approximately 3.0 million members. |
| | • | | Achieved a retention rate of 87.8% for the fourth quarter of 2013, compared with 87.1% for the fourth quarter of 2012. |
| | • | | Increased monthly average revenue per member to $10.72 for the fourth quarter of 2013 from $9.68 for the fourth quarter of 2012. |
| | • | | Acquired mobile wallet innovator Lemon, Inc. |
Fiscal Year 2013 Financial Highlights:
| | • | | Revenue: Total revenue was $369.7 million for 2013, up 34% from $276.4 million for 2012. Consumer revenue was $340.1 million for 2013, up 34% from $254.7 million for 2012. Enterprise revenue was $29.5 million for 2013, compared to $21.8 million in 2012. |
| | • | | Net Income: Net income was $52.5 million for 2013, up from $23.5 million for 2012. Net income per diluted share was $0.55 for 2013 based on 95.9 million weighted-average shares outstanding, compared with net income per diluted share of $0.09 for 2012 based on 62.2 million weighted-average shares outstanding. Net income for 2013 included an income tax benefit of $39.2 million, or $0.41 per share, resulting from the release of the valuation allowance associated with our deferred tax assets. |
| | • | | Adjusted Net Income: Adjusted net income was $36.9 million for 2013, up from $22.7 million for 2012. Adjusted net income per diluted share was $0.38 for 2013 based on 95.9 million weighted-average shares outstanding, compared with $0.31 per diluted share for 2012 based on 72.6 million weighted-average shares outstanding. |
| | • | | Adjusted EBITDA: Adjusted EBITDA was $42.2 million for 2013, up from $31.0 million for 2012. |
| | • | | Cash Flow: Cash flow from operations was $77.4 million for 2013, leading to free cash flow of $67.0 million after taking into consideration $10.4 million of capital expenditures. This compares with cash flow from operations of $48.4 million and free cash flow of $40.9 million, after taking into consideration $7.5 million of capital expenditures, for 2012. |
Guidance:
As of February 19, 2014, we are initiating guidance for our first quarter of 2014 as well as the full year 2014.
| | • | | First Quarter 2014 Guidance: Total revenue is expected to be in the range of $105.0 million to $106.0 million. Adjusted net loss per share is expected to be in the range of $(0.03) to $(0.02) based on approximately 92.0 million basic weighted-average shares outstanding. Adjusted EBITDA is expected to be in the range of $(2.0) million to $(1.0) million. |
| | • | | Full Year 2014 Guidance: Total revenue is expected to be in the range of $455.0 million to $465.0 million. Adjusted net income per share is expected to be in the range of $0.42 to $0.47 based on approximately 102.0 million fully diluted weighted-average shares outstanding and a cash tax rate of 5%. Adjusted EBITDA is expected to be in the range of $50.0 million to $55.0 million. Free cash flow is expected to be in the range of $75.0 million to $80.0 million. |
Conference Call Details:
| | • | | What: LifeLock fourth quarter and full year 2013 financial results. |
| | • | | When: Wednesday, February 19, 2014 at 2PM PT (5PM ET). |
| | • | | Dial in:To access the call in the United States, please dial (877) 407-3982, and for international callers dial (201) 493-6780. Callers may provide confirmation number 13574392 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining. |
| | • | | Webcast:http://investor.lifelock.com/ (live and replay) |
| | • | | Replay: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (877) 870-5176, and for international callers dial (858) 384-5517 and enter access code 13574392. |
About LifeLock
LifeLock, Inc. (NYSE:LOCK) is a leading provider of proactive identity theft protection services for consumers and fraud and risk solutions for enterprises. LifeLock’s threat detection, proactive identity alerts, and comprehensive remediation services provide peace of mind for consumers amid the growing threat of identity theft. The LifeLock mobile app helps consumers manage their identity and payment cards on the go and enables LifeLock members to receive alerts and services on their digital device. Leveraging unique data, science and patented technology from ID Analytics, Inc., a wholly-owned subsidiary, LifeLock offers identity theft protection that goes significantly beyond credit monitoring. As part of its commitment to help fight identity theft, LifeLock works to train law enforcement and partners with a variety of non-profit organizations to help consumers establish positive habits to combat this threat.
Forward-Looking Statements
This press release contains “forward-looking” statements, as that term is defined under the federal securities laws, including statements regarding our leading brand and unique technology, the launch of the LifeLock Wallet mobile application, our position heading into 2014, our outlook for 2014, and our expected total revenue, adjusted net income per share, adjusted EBITDA, and free cash flow for the first quarter of 2014 and for fiscal year 2014. These forward-looking statements are based on our current assumptions, expectations, and beliefs and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, risks associated with our ability to maintain profitability on an annual basis; our ability to protect our customers’ confidential information; our ability to maintain and enhance our brand recognition and reputation; the competitive nature of the industries in which we conduct our business; our ability to maintain access to data sources; our ability to retain our existing customers and attract new customers; our ability to improve our services and develop and introduce new services with broad appeal; our ability to maintain existing and secure new relationships with strategic partners; the effects of laws, regulations, and enforcement; the outcome of any litigation or regulatory proceeding; our ability to protect our intellectual property and not infringe on the intellectual property of others; and other “Risk Factors” set forth in our most recent filings with the Securities and Exchange Commission (the “SEC”).
Further information on these and other factors that could affect our financial results and the forward-looking statements in this press release is included in the filings we make with the SEC from time to time, including our Form 10-K for the year ended December 31, 2012, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Copies of these documents may be obtained by visiting our Investor Relations website athttp://investor.lifelock.com/ or the SEC’s website atwww.sec.gov.
We assume no obligation and do not intend to update these forward-looking statements, except as required by law.
Non-GAAP Financial Measures
Our reported results include certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted EBITDA, and free cash flow. We define adjusted net income as net income (loss) excluding amortization of acquired intangible assets, change in fair value of warrant liabilities, change in fair value of embedded derivatives, share-based compensation, acquisition related expenses, and income tax benefits and expenses resulting from changes in our deferred tax assets. We define adjusted net income per share as adjusted net income per share of stock assuming all preferred stock converted into common stock at the later of the start of the period or the date of issuance and excluding the impact of warrants to purchase Series E and Series E-2 preferred stock. We define adjusted EBITDA as net income (loss) excluding depreciation and amortization, interest expense, interest income, change in fair value of warrant liabilities, change in fair value of embedded derivative, other income (expense), income taxes, acquisition related expenses, and share-based compensation. We define free cash flow as net cash provided by (used in) operating activities less net cash used in investing activities for acquisitions of property and equipment.
We have included adjusted net income, adjusted net income per share, and adjusted EBITDA in this press release because they are key measures used by us to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted net
income and adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, adjusted EBITDA is a key financial measure used in determining management’s incentive compensation.
In the fourth quarter of 2013, we modified our calculation of adjusted EBITDA and adjusted net income to also exclude acquisition related expense. For comparative purposes, we also modified our calculation of adjusted our adjusted EBITDA and adjusted net income for 2012 to exclude the acquisition related expenses incurred during our acquisition of ID Analytics.
We have included free cash flow in this press release because it typically presents a more conservative measure of cash flow as purchases of property and equipment are necessary components of ongoing operations. We believe that this non-GAAP financial measure is useful in evaluating our business because free cash flow reflects the cash surplus available to fund the expansion of our business after payment of capital expenditures relating to the necessary components of ongoing operations. We also believe that the use of free cash flow provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Although adjusted net income, adjusted EBITDA, and free cash flow are frequently used by investors in their evaluations of companies, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered alongside other financial performance measures.
We have not reconciled adjusted net income per share guidance to net income per share guidance or adjusted EBITDA guidance to net income guidance because we do not provide guidance for share-based compensation expense, provision for income taxes, interest income, interest expense, change in fair value of warrant liabilities, change in fair value of embedded derivatives, other income and expenses, depreciation expense, amortization of intangible assets, acquisition expenses, or income tax (benefit) expense, which are reconciling items between net income (loss) and adjusted net income and net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of our control and/or cannot be reasonably predicted, we are unable to provide such guidance. Accordingly, reconciliation to net income (loss) is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the reconciliation tables included in this press release.
Media Contact:
Kelley Bonsall
Media@lifelock.com
415-767-7749
Investor Relations Contact:
Greg Kleiner
ICR for LifeLock
Investor.relations@lifelock.com
480-457-5000
LifeLock, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Revenue | | | | | | | | | | | | | | | | |
Consumer revenue | | $ | 94,068 | | | $ | 70,775 | | | $ | 340,121 | | | $ | 254,678 | |
Enterprise revenue | | | 8,237 | | | | 8,041 | | | | 29,537 | | | | 21,750 | |
| | | | | | | | | | | | | | | | |
Total revenue | | | 102,305 | | | | 78,816 | | | | 369,658 | | | | 276,428 | |
Cost of services | | | 26,284 | | | | 22,189 | | | | 100,249 | | | | 79,916 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 76,021 | | | | 56,627 | | | | 269,409 | | | | 196,512 | |
Expenses: | | | | | | | | | | | | | | | | |
Sales and marketing | | | 37,240 | | | | 31,558 | | | | 162,891 | | | | 122,989 | |
Technology and development | | | 10,819 | | | | 8,607 | | | | 40,947 | | | | 29,543 | |
General and administrative | | | 11,910 | | | | 8,795 | | | | 44,070 | | | | 24,629 | |
Amortization of acquired intangible assets | | | 2,011 | | | | 1,967 | | | | 7,909 | | | | 6,258 | |
| | | | | | | | | | | | | | | | |
Total expenses | | | 61,980 | | | | 50,927 | | | | 255,817 | | | | 183,419 | |
| | | | | | | | | | | | | | | | |
Income from operations | | | 14,041 | | | | 5,700 | | | | 13,592 | | | | 13,093 | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense | | | (125 | ) | | | (1,538 | ) | | | (353 | ) | | | (3,677 | ) |
Interest income | | | 49 | | | | 24 | | | | 124 | | | | 30 | |
Change in fair value of warrant liabilities | | | — | | | | — | | | | — | | | | 3,117 | |
Change in fair value of embedded derivative | | | — | | | | — | | | | — | | | | (2,785 | ) |
Other | | | (10 | ) | | | (2 | ) | | | (21 | ) | | | (5 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Total other income (expense) | | | (86 | ) | | | (1,516 | ) | | | (250 | ) | | | (3,320 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Income before provision for income taxes | | | 13,955 | | | | 4,184 | | | | 13,342 | | | | 9,773 | |
Income tax (benefit) expense | | | (39,251 | ) | | | 104 | | | | (39,109 | ) | | | (13,730 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Net income | | | 53,206 | | | | 4,080 | | | | 52,451 | | | | 23,503 | |
Accretion of convertible redeemable preferred stock | | | — | | | | (419 | ) | | | — | | | | (9,378 | ) |
Beneficial conversion feature on convertible redeemable preferred stock | | | — | | | | (2,452 | ) | | | — | | | | (2,452 | ) |
Net income allocable to convertible redeemable preferred stockholders | | | — | | | | (55 | ) | | | — | | | | (5,504 | ) |
| | | | | | | | | | | | | | | | |
Net income available to common stockholders | | $ | 53,206 | | | $ | 1,154 | | | $ | 52,451 | | | $ | 6,169 | |
| | | | | | | | | | | | | | | | |
Net income available per share to common stockholders: | | | | | | | | | | | | | | | | |
| | | | |
Basic | | $ | 0.58 | | | $ | 0.01 | | | $ | 0.59 | | | $ | 0.18 | |
Diluted | | $ | 0.54 | | | $ | 0.01 | | | $ | 0.55 | | | $ | 0.09 | |
Weighted-average common shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 90,997 | | | | 85,458 | | | | 88,636 | | | | 35,082 | |
Diluted | | | 97,681 | | | | 90,839 | | | | 95,946 | | | | 62,191 | |
LifeLock, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| | | | | | | | |
| | | December 31,
2013 | | | December 31,
2012 | |
| | | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 123,911 | | | $ | 134,197 | |
Marketable securities | | | 48,688 | | | | — | |
Trade and other receivables, net | | | 10,906 | | | | 7,560 | |
Deferred tax asset | | | 13,117 | | | | — | |
Prepaid expenses and other current assets | | | 6,961 | | | | 5,753 | |
| | | | | | | | |
| | |
Total current assets | | | 203,583 | | | | 147,510 | |
Property and equipment, net | | | 16,504 | | | | 9,701 | |
Goodwill | | | 156,120 | | | | 129,428 | |
Intangible assets, net | | | 47,213 | | | | 51,242 | |
Deferred tax asset – non current | | | 38,018 | | | | — | |
Other non-current assets | | | 1,812 | | | | 1,707 | |
| | | | | | | | |
| | |
Total assets | | $ | 463,250 | | | $ | 339,588 | |
| | | | | | | | |
| | |
Liabilities and stockholders’ equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 2,422 | | | $ | 1,151 | |
Accrued expenses and other liabilities | | | 34,926 | | | | 27,329 | |
Deferred revenue | | | 119,106 | | | | 90,877 | |
| | | | | | | | |
Total current liabilities | | | 156,454 | | | | 119,357 | |
Other non-current liabilities | | | 4,640 | | | | 265 | |
| | | | | | | | |
| | |
Total liabilities | | | 161,094 | | | | 119,622 | |
Commitments and contingencies | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock | | | 91 | | | | 87 | |
Additional paid-in capital | | | 469,636 | | | | 439,883 | |
Accumulated other comprehensive loss | | | (18 | ) | | | — | |
Accumulated deficit | | | (167,553 | ) | | | (220,004 | ) |
| | | | | | | | |
| | |
Total stockholders’ equity | | | 302,156 | | | | 219,966 | |
| | | | | | | | |
| | |
Total liabilities and stockholders’ equity | | $ | 463,250 | | | $ | 339,588 | |
| | | | | | | | |
LifeLock, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| | | | | | | | |
| | | Twelve Months Ended
December 31, | |
| | | 2013 | | | 2012 | |
Operating activities | | | | | | | | |
Net income | | $ | 52,451 | | | $ | 23,503 | |
Adjustment to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 12,796 | | | | 10,427 | |
Write-off of deferred financing costs from early payoff of debt | | | — | | | | 1,443 | |
Share-based compensation | | | 14,700 | | | | 6,758 | |
Provision for doubtful accounts | | | 231 | | | | 46 | |
Change in fair value of warrant liabilities | | | — | | | | (3,117 | ) |
Change in fair value of embedded derivative | | | — | | | | 2,785 | |
Deferred income tax benefit | | | (39,197 | ) | | | (14,185 | ) |
Other | | | 344 | | | | 5 | |
Change in operating assets and liabilities: | | | | | | | | |
Trade and other receivables | | | (3,127 | ) | | | (2,766 | ) |
Prepaid expenses and other current assets | | | (1,080 | ) | | | 1,334 | |
Other non-current assets | | | 328 | | | | (1,305 | ) |
Accounts payable | | | 518 | | | | (2,945 | ) |
Accrued expenses and other liabilities | | | 6,920 | | | | 5,913 | |
Deferred revenue | | | 28,115 | | | | 20,782 | |
Other non-current liabilities | | | 4,374 | | | | (255 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 77,373 | | | | 48,423 | |
| | |
Investing activities | | | | | | | | |
Acquisitions, net of cash acquired | | | (42,369 | ) | | | (157,430 | ) |
Acquisition of property and equipment | | | (10,417 | ) | | | (7,498 | ) |
Purchases of marketable securities | | | (50,775 | ) | | | — | |
Sales and maturities of marketable securities | | | 1,353 | | | | — | |
Decrease in restricted cash | | | — | | | | 1,748 | |
| | | | | | | | |
Net cash used in investing activities | | | (102,208 | ) | | | (163,180 | ) |
| | |
Financing activities | | | | | | | | |
Proceeds from: | | | | | | | | |
Term loan | | | — | | | | 68,000 | |
Initial public offering, net of offering costs | | | — | | | | 125,663 | |
Issuance of convertible redeemable preferred stock, net of offering costs | | | — | | | | 102,165 | |
Issuance of warrants | | | — | | | | 4,373 | |
Stock based compensation plans | | | 15,425 | | | | 298 | |
Payments for: | | | | | | | | |
Term loan | | | — | | | | (68,000 | ) |
Distribution to Series E-1 Preferred Stock Holders on IPO | | | — | | | | (10,719 | ) |
Employee tax withholding related to restricted stock units | | | (436 | ) | | | — | |
Debt issuance costs related to credit facilities | | | (440 | ) | | | (1,676 | ) |
| | | | | | | | |
Net cash provided by financing activities | | | 14,549 | | | | 220,104 | |
| | | | | | | | |
| | |
Net (decrease) increase in cash and cash equivalents | | | (10,286 | ) | | | 105,347 | |
Cash and cash equivalents at beginning of period | | | 134,197 | | | | 28,850 | |
| | | | | | | | |
| | |
Cash and cash equivalents at end of period | | $ | 123,911 | | | $ | 134,197 | |
| | | | | | | | |
Share-Based Compensation
(in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Cost of services | | $ | 320 | | | $ | 211 | | | $ | 942 | | | $ | 648 | |
Sales and marketing | | | 576 | | | | 341 | | | | 1,868 | | | | 1,053 | |
Technology and development | | | 1,364 | | | | 503 | | | | 3,757 | | | | 1,711 | |
General and administrative | | | 2,170 | | | | 1,709 | | | | 8,133 | | | | 3,346 | |
| | | | | | | | | | | | | | | | |
Total share-based compensation expense | | $ | 4,430 | | | $ | 2,764 | | | $ | 14,700 | | | $ | 6,758 | |
| | | | | | | | | | | | | | | | |
Key Financial and Operating Metrics
(in thousands except percentages and per member data)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Consumer revenue | | $ | 94,068 | | | $ | 70,775 | | | $ | 340,121 | | | $ | 254,678 | |
Enterprise revenue | | | 8,237 | | | | 8,041 | | | | 29,537 | | | | 21,750 | |
| | | | | | | | | | | | | | | | |
Total revenue | | $ | 102,305 | | | $ | 78,816 | | | $ | 369,658 | | | $ | 276,428 | |
Adjusted net income | | $ | 21,518 | | | $ | 8,936 | | | $ | 36,931 | | | $ | 22,720 | |
Adjusted EBITDA | | $ | 22,851 | | | $ | 11,404 | | | $ | 42,156 | | | $ | 30,996 | |
Free cash flow | | $ | 20,393 | | | $ | 3,710 | | | $ | 66,956 | | | $ | 40,925 | |
Cumulative ending members | | | 2,999 | | | | 2,480 | | | | 2,999 | | | | 2,480 | |
Gross new members | | | 246 | | | | 198 | | | | 944 | | | | 762 | |
Member retention rate | | | 87.8 | % | | | 87.1 | % | | | 87.8 | % | | | 87.1 | % |
Average cost of acquisition per member | | $ | 139 | | | $ | 142 | | | $ | 160 | | | $ | 150 | |
Monthly average revenue per member | | $ | 10.72 | | | $ | 9.68 | | | $ | 10.32 | | | $ | 9.28 | |
Enterprise transactions | | | 56,879 | | | | 64,265 | | | | 216,729 | | | | 227,039 | |
Reconciliation of GAAP to Adjusted Results
(in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Reconciliation of Gross Profit to Adjusted Gross Profit | | | | | | | | | |
Gross profit | | $ | 76,021 | | | $ | 56,627 | | | $ | 269,409 | | | $ | 196,512 | |
Share-based compensation | | | 320 | | | | 211 | | | | 942 | | | | 648 | |
| | | | | | | | | | | | | | | | |
Adjusted gross profit | | $ | 76,341 | | | $ | 56,838 | | | $ | 270,351 | | | $ | 197,160 | |
| | | | | | | | | | | | | | | | |
| | | | |
Reconciliation of Sales and Marketing Expenses to Adjusted Sales and Marketing Expenses | | | | | | | | | | | | | | | | |
Sales and marketing expenses | | $ | 37,240 | | | $ | 31,558 | | | $ | 162,891 | | | $ | 122,989 | |
Share-based compensation | | | (576 | ) | | | (341 | ) | | | (1,868 | ) | | | (1,053 | ) |
| | | | | | | | | | | | | | | | |
Adjusted sales and marketing expenses | | $ | 36,664 | | | $ | 31,217 | | | $ | 161,023 | | | $ | 121,936 | |
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Reconciliation of Technology and Development Expenses to Adjusted Technology and Development Expenses | | | | | | | | | | | | | | | | |
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Technology and development expenses | | $ | 10,819 | | | $ | 8,607 | | | $ | 40,947 | | | $ | 29,543 | |
Acquisition related expenses | | | (43 | ) | | | — | | | | (43 | ) | | | — | |
Share-based compensation | | | (1,364 | ) | | | (503 | ) | | | (3,757 | ) | | | (1,711 | ) |
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Adjusted technology and development expenses | | $ | 9,412 | | | $ | 8,104 | | | $ | 37,147 | | | $ | 27,832 | |
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Reconciliation of General and Administrative Expenses to Adjusted General and Administrative Expenses | | | | | | | | | | | | | | | | |
General and administrative expense | | $ | 11,910 | | | $ | 8,795 | | | $ | 44,070 | | | $ | 24,629 | |
Acquisition related expenses | | | (1,025 | ) | | | — | | | | (1,025 | ) | | | (718 | ) |
Share-based compensation | | | (2,170 | ) | | | (1,709 | ) | | | (8,133 | ) | | | (3,346 | ) |
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Adjusted general and administrative expense | | $ | 8,715 | | | $ | 7,086 | | | $ | 34,912 | | | $ | 20,565 | |
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Reconciliation of Income from Operations to Adjusted Income from Operations | | | | | | | | | | | | | | | | |
Income from operations | | $ | 14,041 | | | $ | 5,700 | | | $ | 13,592 | | | $ | 13,093 | |
Acquisition related expenses | | | 1,068 | | | | — | | | | 1,068 | | | | 718 | |
Share-based compensation | | | 4,430 | | | | 2,764 | | | | 14,700 | | | | 6,758 | |
Amortization of acquired intangible assets | | | 2,011 | | | | 1,967 | | | | 7,909 | | | | 6,258 | |
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Adjusted income from operations | | $ | 21,550 | | | $ | 10,431 | | | $ | 37,269 | | | $ | 26,827 | |
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Reconciliation of Net Income to Adjusted Net Income | | | | | | | | | | | | | | | | |
Net income | | $ | 53,206 | | | $ | 4,080 | | | $ | 52,451 | | | $ | 23,503 | |
Amortization of acquired intangible assets | | | 2,011 | | | | 1,967 | | | | 7,909 | | | | 6,258 | |
Share-based compensation | | | 4,430 | | | | 2,764 | | | | 14,700 | | | | 6,758 | |
Change in fair value of warrant liabilities | | | — | | | | — | | | | — | | | | (3,117 | ) |
Change in fair value of embedded derivative | | | — | | | | — | | | | — | | | | 2,785 | |
Acquisition expenses | | | 1,068 | | | | — | | | | 1,068 | | | | 718 | |
Deferred income tax benefit | | | (39,197 | ) | | | 125 | | | | (39,197 | ) | | | (14,185 | ) |
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Adjusted net income | | $ | 21,518 | | | $ | 8,936 | | | $ | 36,931 | | | $ | 22,720 | |
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| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Reconciliation of Diluted Shares to Adjusted Diluted Shares | | | | | | | | | | | | | | | | |
Diluted shares | | | 97,681 | | | | 90,839 | | | | 95,946 | | | | 62,191 | |
Assumed preferred stock conversion | | | — | | | | 1,335 | | | | — | | | | 8,770 | |
Dilutive securities excluded due to net loss available for distribution | | | — | | | | — | | | | — | | | | 3,586 | |
Other dilutive equity awards excluded | | | — | | | | — | | | | — | | | | (1,972 | ) |
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Adjusted diluted shares | | | 97,681 | | | | 92,174 | | | | 95,946 | | | | 72,575 | |
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Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share | | | | | | | | | | | | | | | | |
Net Income per share | | $ | 0.54 | | | $ | 0.01 | | | $ | 0.55 | | | $ | 0.09 | |
Net income attributable to participating securities | | | — | | | | 0.03 | | | | — | | | | 0.25 | |
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Adjustments to net income | | | (0.32 | ) | | | 0.06 | | | | (0.17 | ) | | | (0.02 | ) |
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Adjustments to diluted shares | | | — | | | | — | | | | — | | | | (0.01 | ) |
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Adjusted net income per share | | $ | 0.22 | | | $ | 0.10 | | | $ | 0.38 | | | $ | 0.31 | |
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Reconciliation of Net Income to Adjusted EBITDA | | | | | | | | | | | | | | | | |
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Net income (loss) | | $ | 53,206 | | | $ | 4,080 | | | $ | 52,451 | | | $ | 23,503 | |
Depreciation and amortization | | | 3,312 | | | | 2,940 | | | | 12,796 | | | | 10,427 | |
Share-based compensation | | | 4,430 | | | | 2,764 | | | | 14,700 | | | | 6,758 | |
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Interest expense | | | 125 | | | | 1,538 | | | | 353 | | | | 3,677 | |
Interest income | | | (49 | ) | | | (24 | ) | | | (124 | ) | | | (30 | ) |
Change in fair value of warrant liabilities | | | — | | | | — | | | | — | | | | (3,117 | ) |
Change in fair value of embedded derivatives | | | — | | | | — | | | | — | | | | 2,785 | |
Other expense | | | 10 | | | | 2 | | | | 21 | | | | 5 | |
Acquisition expenses | | | 1,068 | | | | — | | | | 1,068 | | | | 718 | |
Income tax (benefit) expense | | | (39,251 | ) | | | 104 | | | | (39,109 | ) | | | (13,730 | ) |
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Adjusted EBITDA | | $ | 22,851 | | | $ | 11,404 | | | $ | 42,156 | | | $ | 30,996 | |
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Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | $ | 25,546 | | | $ | 7,702 | | | $ | 77,373 | | | $ | 48,423 | |
Acquisitions of property and equipment | | | (5,153 | ) | | | (3,992 | ) | | | (10,417 | ) | | | (7,498 | ) |
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Free cash flow | | $ | 20,393 | | | $ | 3,710 | | | $ | 66,956 | | | $ | 40,925 | |
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