[November 07, 2012] |
|
LifeLock Announces Third Quarter 2012 Results
TEMPE, Ariz. --(Business Wire)--
LifeLock, Inc. (NYSE: LOCK), an industry leader in identity theft
protection, today announced financial results for the third quarter
ended September 30, 2012.
Third Quarter 2012 Financial Highlights:
-
Revenue: Total revenue was $72.1 million for the third quarter
of 2012, up 44% from $50.0 million for the third quarter of 2011.
Consumer revenue was $65.6 million for the third quarter of 2012, up
31% from $50.0 million for the third quarter of 2011. Enterprise
revenue was $6.5 million for the third quarter of 2012.
-
Income from Operations: Income from operations was $6.2 million
for the third quarter of 2012, up from a loss from operations of $0.5
million for the third quarter of 2011.
-
Net Income: Net income was $7.9 million for the third quarter
of 2012, up from a net loss of $0.5 million for the third quarter of
2011. Net loss per diluted share was $0.16 for the third quarter of
2012 based on 19.5 million weighted-average shares outstanding,
compared with a net loss of $0.33 per diluted share based on 18.8
million weighted-average shares outstanding for the third quarter of
2011.
-
Non-GAAP Adjusted Net Income: Non-GAAP adjusted net income was
$8.9 million for the third quarter of 2012, up from $0.3 million for
the third quarter of 2011. Non-GAAP adjusted net income per diluted
share was $0.12 for the third quarter of 2012 based on 71.5 million
weighted-average shares outstanding, compared with $0.01 per diluted
share based on 53.3 million weighted-average shares outstanding for
the third quarter of 2011.
-
Adjusted EBITDA: Adjusted EBITDA was $10.9 million for the
third quarter of 2012, up from $1.2 million in the third quarter of
2011.
-
Cash Flow: Cash flow from operations was $17.6 million for the
third quarter of 2012, leading to free cash flow of $16.2 million
after taking into consideration $1.4 million of capital expenditures.
This compares with cash flow from operations of $6.4 million and free
cash flow of $6.2 million after taking into consideration $0.2 million
of capital expenditures in the third quarter of 2011.
-
Balance Sheet: Cash and cash equivalents at the end of the
third quarter of 2012 was $76.7 million, compared with $21.6 million
at the end of the third quarter of 2011.
"We were very pleased with our financial results for the third quarter
as we continued to execute at a high level", said Todd Davis, LifeLock's
Chairman and CEO. "We saw continued improvement in our operating metrics
with a growing member base, improving annual retention rates, and the
strong performance of our LifeLock Ultimate product continuing to drive
our revenue per member higher. We continue to gain share while
transforming the identity theft protection market from reactive
solutions to our proactive identity theft protection solutions. Market
awareness of the growing risk of identity theft and fraud continues to
increase and we are benefitting from the combination of our industry
leading product offering and brand recognition."
Mr. Davis added, "The completion of our IPO early in the fourth quarter
provides us with increased financial resources and market awareness,
which further strengthen our ability to execute our growth strategy and
capitalize on a growing multi-billion dollar opportunity for proactive
identity theft solutions."
Third Quarter 2012 Business Highlights:
-
Recorded the 30th consecutive quarter of sequential growth in revenue
and cumulative ending members.
-
Appointed Hilary Schneider as President of LifeLock. Most recently the
EVP of Americas for Yahoo!, Hilary brings with her over 20 years of
experience in leadership roles in global technology organizations.
-
Added approximately 187,000 gross new members in the third quarter of
2012 and ended the quarter with approximately 2.4 million members.
-
Improved retention rate to 85.9% for the third quarter of 2012
compared with 82.6% in the third quarter of 2011.
-
Increased monthly average revenue per member to $9.39 for the third
quarter of 2012 from $8.68 for the third quarter of 2011.
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."
Guidance:
As of November 7, 2012, LifeLock is initiating guidance for its fourth
quarter of 2012 as well as the full year 2012.
-
Fourth Quarter 2012 Guidance: Total revenue is expected to be
in the range of $73 million to $74 million. Non-GAAP adjusted net
income per share is expected to be in the range of $0.06 to $0.07
based on approximately 97 million weighted-average shares outstanding.
Adjusted EBITDA is expected to be in the range of $9 million to $10
million.
-
Full Year 2012 Guidance: Total revenue is expected to be in the
range of $270.5 million to $271.5 million. Non-GAAP adjusted net
income per share is expected to be in the range of $0.26 to $0.27
based on approximately 74 million weighted-average shares outstanding.
Adjusted EBITDA is expected to be in the range of $28 million to $29
million. Free cash flow expected to be in the range of $38 million to
$40 million.
Conference Call Details:
-
What: LifeLock financial results for the third quarter of 2012.
-
When: Wednesday, November 7, 2012 at 2PM PT (5PM ET).
-
Dial in: To access the call in the United States, please dial
(866) 730-5769, and for international callers dial (857) 350-1593.
Callers may provide confirmation number 60366425 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 (888) 286-8010, and for
international callers dial (617) 801-6888 and enter access code
40405867.
About LifeLock
LifeLock,
Inc. (NYSE:LOCK) is a leading provider of proactive identity theft
protection services for consumers and identity risk assessment and fraud
protection services for enterprises. Since 2005, LifeLock has been
relentlessly protecting identities by providing consumers with the tools
and confidence they need to help protect themselves from identity theft
and manage their credit. In October 2012, Javelin Strategy & Research
named LifeLock Ultimate™ a "Best in Class Overall" identity theft
protection solution and also named it "Best in Detection". In March
2012, LifeLock further demonstrated its commitment to combating identity
fraud with the purchase of ID
Analytics, Inc., a leader in enterprise identity risk management
that provides visibility into identity risk and credit worthiness. ID
Analytics, Inc. currently operates as a wholly owned subsidiary of
LifeLock, Inc.
Forward-Looking Statements
This press release contains "forward-looking" statements, as that term
is defined under the federal securities laws, including statements
regarding LifeLock's market share, the identity theft protection
industry, market awareness of the growing risk of identity theft and
fraud, LifeLock's ability to benefit from its differentiated offering
and brand recognition, and LifeLock's expected total revenue, non-GAAP
adjusted net income and non-GAAP adjusted net income per share, adjusted
EBITDA, and free cash flow. These forward-looking statements are based
on LifeLock's current assumptions, expectations, and beliefs and are
subject to substantial risks, uncertainties, assumptions, and changes in
circumstances that may cause LifeLock's 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 LifeLock's ability to achieve or
maintain profitability on an annual basis; LifeLock's ability to protect
its customers' confidential information; LifeLock's ability to maintain
and enhance its brand recognition and reputation; the competitive nature
of the industries in which LifeLock conducts its business; LifeLock's
ability to maintain access to data sources; LifeLock's ability to retain
its existing customers and attract new customers; LifeLock's ability to
improve its services and develop and introduce new services with broad
appeal; LifeLock's 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;
LifeLock's ability to protect its intellectual property and not infringe
on the intellectual property of others; and other "Risk Factors" set
forth in LifeLock's most recent filings with the Securities and Exchange
Commission.
Further information on these and other factors that could affect
LifeLock's financial results and the forward-looking statement in this
press release is included under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" in LifeLock's prospectus included in its Registration
Statement on Form S-1, as amended, copies of which may be obtained by
visiting LifeLock's Investor Relations website at http://investor.lifelock.com/
or the SEC's website at www.sec.gov.
LifeLock, Inc. assumes no obligation and does not intend to update these
forward-looking statements, except as required by law.
Non-GAAP Financial Measures
LifeLock's reported results include certain non-GAAP financial measures,
including adjusted EBITDA, non-GAAP adjusted net income, non-GAAP
adjusted net income per share, and free cash flow. Adjusted EBITDA is
defined as net income (loss) adjusted for 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 tax (benefit) expense, and share-based compensation.
Non-GAAP adjusted net income is defined as net income (loss) adjusted
for amortization, change in fair value of warrant liabilities, change in
fair value of embedded derivatives, income tax benefit resulting from
acquisitions, and share-based compensation. Non-GAAP adjusted net income
per share is defined as Non-GAAP adjusted net income per share of stock
assuming all preferred stock converted at the later of the start of the
period or date of issuance and excluding the impact of warrants to
acquire Series E and Series E-2 preferred stock. Free cash flow is
defined as net cash provided by (used in) operating activities less
capital expenditures, which consist of purchases of property, equipment,
and software.
LifeLock has included adjusted EBITDA, non-GAAP adjusted net income, and
non-GAAP adjusted net income per share in this press release because
they are key measures used by LifeLock's management and board of
directors to understand and evaluate its core operating performance and
trends, to prepare and approve its annual budget, and to develop short-
and long-term operational plans. In particular, the exclusion of certain
expenses in calculating adjusted EBITDA and non-GAAP adjusted net income
can provide a useful measure for period-to-period comparisons of
LifeLock's core business. Additionally, adjusted EBITDA is a key
financial measure used in determining management's incentive
compensation.
LifeLock has 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. LifeLock believes that this non-GAAP financial measure is
useful in evaluating its business because free cash flow reflects the
cash surplus available to fund the expansion of its business after
payment of capital expenditures relating to the necessary components of
ongoing operations. LifeLock also believes that the use of free cash
flow provides consistency and comparability with its 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 EBITDA, non-GAAP adjusted net income, 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.
LifeLock has not reconciled adjusted EBITDA guidance to net income
guidance or non-GAAP adjusted net income per share guidance to net
income per share guidance because it does 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 or amortization of intangible assets, which are
reconciling items between net income (loss) and adjusted EBITDA and net
income (loss) and non-GAAP adjusted net income (loss). As items that
impact net income (loss) are out of LifeLock's control and/or cannot be
reasonably predicted, LifeLock is 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.
|
|
|
|
|
|
|
|
|
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Supplemental Financial Information
LifeLock, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Nine Months
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
Consumer revenue
|
|
$
|
65,579
|
|
|
$
|
49,998
|
|
|
$
|
183,903
|
|
|
$
|
140,994
|
|
Enterprise revenue
|
|
|
6,538
|
|
|
|
-
|
|
|
|
13,709
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
72,117
|
|
|
|
49,998
|
|
|
|
197,612
|
|
|
|
140,994
|
|
Cost of Services
|
|
|
19,762
|
|
|
|
15,339
|
|
|
|
57,727
|
|
|
|
46,479
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
52,355
|
|
|
|
34,659
|
|
|
|
139,885
|
|
|
|
94,515
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
29,926
|
|
|
|
26,443
|
|
|
|
91,431
|
|
|
|
70,192
|
|
Technology and development
|
|
|
7,943
|
|
|
|
4,357
|
|
|
|
20,936
|
|
|
|
13,367
|
|
General and administrative
|
|
|
6,297
|
|
|
|
4,343
|
|
|
|
15,834
|
|
|
|
13,113
|
|
Amortization of acquired intangible assets
|
|
|
1,966
|
|
|
|
-
|
|
|
|
4,291
|
|
|
|
-
|
|
|
|
|
46,132
|
|
|
|
35,143
|
|
|
|
132,492
|
|
|
|
96,672
|
|
Income (loss) from operations
|
|
|
6,223
|
|
|
|
(484
|
)
|
|
|
7,393
|
|
|
|
(2,157
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(854
|
)
|
|
|
(17
|
)
|
|
|
(2,139
|
)
|
|
|
(215
|
)
|
Change in fair value of warrant liabilities
|
|
|
6,058
|
|
|
|
-
|
|
|
|
3,117
|
|
|
|
(4,124
|
)
|
Change in fair value of embedded derivative
|
|
|
(3,499
|
)
|
|
|
-
|
|
|
|
(2,785
|
)
|
|
|
-
|
|
Interest income
|
|
|
4
|
|
|
|
-
|
|
|
|
6
|
|
|
|
7
|
|
Other
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
1,708
|
|
|
|
(17
|
)
|
|
|
(1,804
|
)
|
|
|
(4,332
|
)
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for income taxes
|
|
|
7,931
|
|
|
|
(501
|
)
|
|
|
5,589
|
|
|
|
(6,489
|
)
|
Income tax (benefit) expense
|
|
|
63
|
|
|
|
14
|
|
|
|
(13,834
|
)
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
7,868
|
|
|
|
(515
|
)
|
|
|
19,423
|
|
|
|
(6,585
|
)
|
Accretion of convertible redeemable preferred stock
|
|
|
(4,207
|
)
|
|
|
(5,644
|
)
|
|
|
(8,959
|
)
|
|
|
(16,004
|
)
|
Net income allocable to convertible redeemable preferred
|
|
|
|
|
|
|
|
|
stockholders
|
|
|
(2,550
|
)
|
|
|
-
|
|
|
|
(7,067
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net income available (loss attributable) to common
|
|
|
|
|
|
|
|
|
stockholders
|
|
$
|
1,111
|
|
|
$
|
(6,159
|
)
|
|
$
|
3,397
|
|
|
$
|
(22,589
|
)
|
|
|
|
|
|
|
|
|
|
Net income available (loss attributable) per share to
|
|
|
|
|
|
|
|
|
common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.06
|
|
|
$
|
(0.33
|
)
|
|
$
|
0.17
|
|
|
$
|
(1.21
|
)
|
Diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
0.07
|
|
|
$
|
(1.21
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,501
|
|
|
|
18,825
|
|
|
|
19,469
|
|
|
|
18,658
|
|
Diluted
|
|
|
19,501
|
|
|
|
18,825
|
|
|
|
52,993
|
|
|
|
18,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
LifeLock, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2012
|
|
|
|
2011
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
76,662
|
|
|
$
|
28,850
|
|
Restricted cash
|
|
|
-
|
|
|
|
398
|
|
Trade and other receivables, net
|
|
|
7,193
|
|
|
|
1,446
|
|
Prepaid expenses and other current assets
|
|
|
7,131
|
|
|
|
5,637
|
|
|
|
|
|
|
Total current assets
|
|
|
90,986
|
|
|
|
36,331
|
|
Property and equipment, net
|
|
|
7,267
|
|
|
|
4,049
|
|
Goodwill
|
|
|
129,553
|
|
|
|
-
|
|
Intangible assets, net
|
|
|
53,208
|
|
|
|
-
|
|
Other non-current assets
|
|
|
3,096
|
|
|
|
1,680
|
|
|
|
|
|
|
Total assets
|
|
$
|
284,110
|
|
|
$
|
42,060
|
|
|
|
|
|
|
Liabilities, convertible redeemable preferred stock and
stockholders' deficit
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
9,918
|
|
|
$
|
4,084
|
|
Accrued expenses and other liabilities
|
|
|
23,386
|
|
|
|
18,300
|
|
Preferred stock embedded derivative
|
|
|
10,719
|
|
|
|
-
|
|
Deferred revenue
|
|
|
89,483
|
|
|
|
70,020
|
|
Current portion of long-term debt
|
|
|
17,000
|
|
|
|
-
|
|
Total current liabilities
|
|
|
150,506
|
|
|
|
92,404
|
|
Long-term debt, net of current portion
|
|
|
45,560
|
|
|
|
-
|
|
Other non-current liabilities
|
|
|
306
|
|
|
|
521
|
|
Preferred stock warrant liabilities
|
|
|
19,451
|
|
|
|
18,195
|
|
|
|
|
|
|
Total liabilities
|
|
|
215,823
|
|
|
|
111,120
|
|
Commitments and contingencies
|
|
|
|
|
Convertible redeemable preferred stock:
|
|
|
267,874
|
|
|
|
145,207
|
|
|
|
|
|
|
Stockholders' deficit:
|
|
|
|
|
Common stock
|
|
|
20
|
|
|
|
19
|
|
Additional paid-in capital
|
|
|
21,606
|
|
|
|
17,391
|
|
Accumulated deficit
|
|
|
(221,213
|
)
|
|
|
(231,677
|
)
|
|
|
|
|
|
Total stockholders' deficit
|
|
|
(199,587
|
)
|
|
|
(214,267
|
)
|
|
|
|
|
|
Total liabilities, convertible redeemable preferred stock and
stockholders' deficit
|
$
|
284,110
|
|
|
$
|
42,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LifeLock, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
|
|
|
|
|
For the Nine Months
|
|
|
Ended September 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
Operating activities
|
|
|
|
|
Net income (loss)
|
|
$
|
19,423
|
|
|
$
|
(6,585
|
)
|
Adjustment to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
7,487
|
|
|
|
2,736
|
|
Share-based compensation
|
|
|
3,994
|
|
|
|
2,362
|
|
Loss on disposal of assets
|
|
|
3
|
|
|
|
-
|
|
Provision for doubtful accounts
|
|
|
(10
|
)
|
|
|
(72
|
)
|
Change in fair value of warrant liabilities
|
|
|
(3,117
|
)
|
|
|
4,124
|
|
Change in fair value of embedded derivative
|
|
|
2,785
|
|
|
|
-
|
|
Deferred income tax (benefit) expense
|
|
|
(13,834
|
)
|
|
|
96
|
|
Change in operating assets and liabilities:
|
|
|
|
|
Trade and other receivables
|
|
|
(2,344
|
)
|
|
|
47
|
|
Prepaid expenses and other current assets
|
|
|
2,039
|
|
|
|
(1,571
|
)
|
Accounts payable
|
|
|
5,822
|
|
|
|
(490
|
)
|
Accrued expenses and other liabilities
|
|
|
959
|
|
|
|
2,478
|
|
Other non-current assets
|
|
|
(1,184
|
)
|
|
|
(165
|
)
|
Deferred revenue
|
|
|
19,388
|
|
|
|
15,624
|
|
Other non-current liabilities
|
|
|
(690
|
)
|
|
|
(343
|
)
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
40,721
|
|
|
|
18,241
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Acquisition of ID Analytics, net of cash acquired
|
|
|
(157,430
|
)
|
|
|
-
|
|
Acquisition of property and equipment
|
|
|
(3,506
|
)
|
|
|
(1,474
|
)
|
Decrease in restricted cash
|
|
|
1,748
|
|
|
|
250
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(159,188
|
)
|
|
|
(1,224
|
)
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Proceeds from:
|
|
|
|
|
Long-term debt
|
|
|
68,000
|
|
|
|
-
|
|
Issuance of warrants
|
|
|
4,372
|
|
|
|
-
|
|
Issuance of convertible redeemable preferred stock, net of offering
costs
|
|
|
102,165
|
|
|
|
-
|
|
Stock option exercises
|
|
|
222
|
|
|
|
222
|
|
Payments for:
|
|
|
|
|
Term loan
|
|
|
(5,440
|
)
|
|
|
-
|
|
Revolving line of credit
|
|
|
-
|
|
|
|
(13,010
|
)
|
Obligations under capital lease
|
|
|
-
|
|
|
|
(115
|
)
|
Initial public offering costs
|
|
|
(1,530
|
)
|
|
|
-
|
|
Debt issuance costs
|
|
|
(1,510
|
)
|
|
|
(132
|
)
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
166,279
|
|
|
|
(13,035
|
)
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
47,812
|
|
|
|
3,982
|
|
Cash and cash equivalents at beginning of period
|
|
|
28,850
|
|
|
|
17,581
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
76,662
|
|
|
$
|
21,563
|
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
Interest
|
|
$
|
1,650
|
|
|
$
|
306
|
|
Income taxes
|
|
|
109
|
|
|
|
90
|
|
Supplemental information for non-cash financing activities:
|
|
|
|
|
Convertible redeemable preferred stock issued as part of purchase
price for ID Analytics
|
|
|
11,542
|
|
|
|
-
|
|
Preferred stock embedded derivative issued as part of purchase price
for ID Analytics
|
|
|
7,934
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Based Compensation
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
Cost of services
|
|
$
|
186
|
|
$
|
73
|
|
$
|
437
|
|
$
|
234
|
Sales and marketing
|
|
|
299
|
|
|
140
|
|
|
712
|
|
|
448
|
Technology and development
|
|
|
498
|
|
|
190
|
|
|
1,208
|
|
|
560
|
General and administrative
|
|
|
648
|
|
|
379
|
|
|
1,637
|
|
|
1,120
|
|
|
|
|
|
|
|
|
|
Total cost related to share-based
|
|
|
|
|
|
|
|
|
compensation expense
|
|
$
|
1,631
|
|
$
|
782
|
|
$
|
3,994
|
|
$
|
2,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Financial Metrics
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
Consumer revenue
|
|
$
|
65,579
|
|
$
|
49,998
|
|
$
|
183,903
|
|
$
|
140,994
|
|
Enterprise revenue
|
|
|
6,538
|
|
|
-
|
|
|
13,709
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
72,117
|
|
|
49,998
|
|
|
197,612
|
|
|
140,994
|
|
Adjusted net income
|
|
|
8,906
|
|
|
267
|
|
|
13,066
|
|
|
(99
|
)
|
Adjusted EBITDA
|
|
|
10,938
|
|
|
1,204
|
|
|
18,874
|
|
|
2,941
|
|
Free cash flow
|
|
|
16,196
|
|
|
6,179
|
|
|
37,215
|
|
|
16,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Operating Metrics
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
(in thousands, except percentages and per member data)
|
Cumulative ending members
|
|
|
2,376
|
|
|
|
1,970
|
|
|
|
2,376
|
|
|
|
1,970
|
|
Gross new members
|
|
|
187
|
|
|
|
172
|
|
|
|
564
|
|
|
|
498
|
|
Member retention rate
|
|
|
85.9
|
%
|
|
|
82.6
|
%
|
|
|
85.9
|
%
|
|
|
82.6
|
%
|
Average cost of acquisition per member
|
|
$
|
147
|
|
|
$
|
153
|
|
|
$
|
153
|
|
|
$
|
142
|
|
Monthly average revenue per member
|
|
$
|
9.39
|
|
|
$
|
8.68
|
|
|
$
|
9.18
|
|
|
$
|
8.43
|
|
Enterprise transactions
|
|
|
57,295
|
|
|
|
46,958
|
|
|
|
162,774
|
|
|
|
127,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted Net Income
(Loss)
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Nine Months
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
(in thousands)
|
Net income (loss)
|
|
$
|
7,868
|
|
|
$
|
(515
|
)
|
|
$
|
19,423
|
|
|
$
|
(6,585
|
)
|
Amortization of acquired intangible assets
|
|
|
1,966
|
|
|
|
-
|
|
|
|
4,291
|
|
|
|
-
|
|
Change in fair value of warrant liabilities
|
|
|
(6,058
|
)
|
|
|
-
|
|
|
|
(3,117
|
)
|
|
|
4,124
|
|
Change in fair value of embedded derivative
|
|
|
3,499
|
|
|
|
-
|
|
|
|
2,785
|
|
|
|
-
|
|
Tax benefit from acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,310
|
)
|
|
|
-
|
|
Share-based compensation
|
|
|
1,631
|
|
|
|
782
|
|
|
|
3,994
|
|
|
|
2,362
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss)
|
|
$
|
8,906
|
|
|
$
|
267
|
|
|
$
|
13,066
|
|
|
$
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income available (loss attributable) per share to
|
|
|
|
|
|
|
|
|
common stockholders:
|
|
|
|
|
|
|
|
|
Non GAAP Basic
|
|
$
|
0.14
|
|
|
$
|
0.01
|
|
|
$
|
0.22
|
|
|
$
|
(0.00
|
)
|
Non GAAP Diluted
|
|
$
|
0.12
|
|
|
$
|
0.01
|
|
|
$
|
0.20
|
|
|
$
|
(0.00
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
Non GAAP Basic
|
|
|
64,100
|
|
|
|
48,064
|
|
|
|
59,976
|
|
|
|
47,898
|
|
Non GAAP Diluted
|
|
|
71,494
|
|
|
|
53,277
|
|
|
|
66,397
|
|
|
|
47,898
|
|
Reconciliation of Diluted Shares to Non-GAAP Diluted Shares
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Nine Months
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
2012
|
|
|
2011
|
|
2012
|
|
|
2011
|
Diluted Shares
|
|
19,501
|
|
|
18,825
|
|
52,993
|
|
|
18,658
|
Assumed preferred stock conversion
|
|
44,599
|
|
|
29,240
|
|
13,404
|
|
|
29,240
|
Dilutive securities excluded due to net loss
|
|
10,837
|
|
|
5,212
|
|
2,526
|
|
|
-
|
Other dilutive equity awards excluded
|
|
(3,443
|
)
|
|
-
|
|
(2,526
|
)
|
|
-
|
|
|
71,494
|
|
|
53,277
|
|
66,397
|
|
|
47,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Diluted EPS to Non-GAAP Diluted EPS
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Nine Months
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings (loss) per share
|
|
(0.16
|
)
|
|
(0.33
|
)
|
|
0.07
|
|
|
(1.21
|
)
|
Net income attributable to participating securities
|
|
-
|
|
|
-
|
|
|
0.09
|
|
|
-
|
|
Non-GAAP adjustments to net income
|
|
0.01
|
|
|
0.01
|
|
|
(0.10
|
)
|
|
0.14
|
|
Non-GAAP adjustments to diluted shares
|
|
0.27
|
|
|
0.33
|
|
|
0.14
|
|
|
1.07
|
|
|
|
0.12
|
|
|
0.01
|
|
|
0.20
|
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted EBITDA
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Nine Months
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
(in thousands)
|
Net income (loss)
|
|
$
|
7,868
|
|
|
$
|
(515
|
)
|
|
$
|
19,423
|
|
|
$
|
(6,585
|
)
|
Depreciation and amortization
|
|
|
3,084
|
|
|
|
906
|
|
|
|
7,487
|
|
|
|
2,736
|
|
Interest expense
|
|
|
854
|
|
|
|
17
|
|
|
|
2,139
|
|
|
|
215
|
|
Interest income
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
(7
|
)
|
Change in fair value of warrant liabilities
|
|
|
(6,058
|
)
|
|
|
-
|
|
|
|
(3,117
|
)
|
|
|
4,124
|
|
Change in fair value of embedded derivative
|
|
|
3,499
|
|
|
|
-
|
|
|
|
2,785
|
|
|
|
-
|
|
Other
|
|
|
1
|
|
|
|
-
|
|
|
|
3
|
|
|
|
-
|
|
Income tax (benefit) expense
|
|
|
63
|
|
|
|
14
|
|
|
|
(13,834
|
)
|
|
|
96
|
|
Share-based compensation
|
|
|
1,631
|
|
|
|
782
|
|
|
|
3,994
|
|
|
|
2,362
|
|
Adjusted EBITDA
|
|
$
|
10,938
|
|
|
$
|
1,204
|
|
|
$
|
18,874
|
|
|
$
|
2,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Nine Months
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
(in thousands)
|
Net cash provided by operating activities
|
|
$
|
17,622
|
|
|
$
|
6,419
|
|
|
$
|
40,721
|
|
|
$
|
18,241
|
|
Acquisitions of property and equipment
|
|
|
(1,426
|
)
|
|
|
(240
|
)
|
|
|
(3,506
|
)
|
|
|
(1,474
|
)
|
Free cash flow
|
|
$
|
16,196
|
|
|
$
|
6,179
|
|
|
$
|
37,215
|
|
|
$
|
16,767
|
|
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