carg-8k_20201105.htm
false 0001494259 0001494259 2020-11-05 2020-11-05

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 5, 2020

 

CarGurus, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-38233

04-3843478

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

2 Canal Park, 4th Floor

Cambridge, Massachusetts 02141

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 354-0068

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock,
par value $0.001 per share

 

CARG

 

The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 2.02

Results of Operations and Financial Condition.

On November 5, 2020, CarGurus, Inc. (the “Company”) announced its financial results for the quarter ended September 30, 2020. The full text of the press release issued by the Company in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 and in the press release attached as Exhibit 99.1 hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

No.

  

Description

99.1

 

Press Release of CarGurus, Inc. dated November 5, 2020, reporting its financial results for the quarter ended September 30, 2020, furnished hereto.

104

 

Cover Page Interactive Data File (embedded with the Inline XBRL document).

 

1


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

CARGURUS, INC.

 

 

 

 

Date: November 5, 2020

 

By:

/s/ Jason Trevisan

 

 

 

Name: Jason Trevisan

 

 

 

Title: Chief Financial Officer and President, International

 

2

carg-ex991_6.htm

 

Exhibit 99.1

 

CarGurus Announces Third Quarter 2020 Results

Third Quarter Highlights:

 

Total revenue of $147.5 million, a decrease of (2%) year-over-year

 

GAAP operating income of $43.6 million; non-GAAP operating income of $55.1 million

 

GAAP net income of $32.6 million; non-GAAP net income of $41.9 million

 

Adjusted EBITDA of $57.0 million

CAMBRIDGE, MA:  November 5, 2020 — CarGurus, Inc. (Nasdaq: CARG), a leading global online automotive marketplace, today announced financial results for the third quarter ended September 30, 2020.

Despite the ongoing uncertainty amidst the COVID-19 pandemic, CarGurus generated strong results in the third quarter that continue to demonstrate our business’s flexibility and resilience,” said Langley Steinert, Founder and Chief Executive Officer of CarGurus. “Since March, our employees have navigated work-from-home environments and often challenging circumstances and I want to thank them for their tremendous effort.  As a result of their hard work, CarGurus’ financial performance was well above both our revenue and profit guidance for the quarter driven by improved dealer retention versus Q2, and continued efficiency of our marketing investments.”

Revenue

 

Total revenue was $147.5 million, a decrease of (2%) compared to $150.5 million in the third quarter of 2019.

 

Marketplace subscription revenue was $130.0 million, a decrease of (4%) compared to $135.5 million in the third quarter of 2019.

 

Advertising and other revenue was $17.5 million, an increase of 17% compared to $14.9 million in the third quarter of 2019.

Operating Income

 

GAAP operating income was $43.6 million, or 30% of total revenue, compared to $9.7 million, or 6% of total revenue, in the third quarter of 2019.

 

Non-GAAP operating income was $55.1 million, or 37% of total revenue, compared to $18.7 million, or 12% of total revenue, in the third quarter of 2019.

Net Income & Adjusted EBITDA

 

GAAP net income was $32.6 million, or $0.29 per fully diluted share during the third quarter ended September 30, 2020, compared to $10.4 million, or $0.09 per fully diluted share during the third quarter ended September 30, 2019.

 

Non-GAAP net income was $41.9 million, or $0.37 per fully diluted share during the third quarter ended September 30, 2020, compared to $15.6 million, or $0.14 per fully diluted share during the third quarter ended September 30, 2019.

 

Adjusted EBITDA, a non-GAAP metric, was $57.0 million for the third quarter ended September 30, 2020, compared to $20.6 million for the third quarter ended September 30, 2019.


Balance Sheet and Cash Flow

 

As of September 30, 2020, CarGurus had cash and cash equivalents of $245.9 million and no debt. There were no short-term investments at September 30, 2020.

 

CarGurus generated $73.9 million in cash from operations and $72.4 million in free cash flow, a non-GAAP metric, during the third quarter of 2020, compared to having generated $23.8 million in cash from operations and $21.1 million in free cash flow during the third quarter of 2019.

Third Quarter Business Metrics

 

U.S. revenue was $138.4 million in the third quarter of 2020, a decrease of (2%) compared to $141.6 million in the third quarter of 2019. U.S. marketplace subscription revenue was $121.8 million in the third quarter of 2020, a decrease of (5%) compared to $127.8 million in the third quarter of 2019. GAAP operating income in the U.S. was $46.5 million, an increase of 133% compared to $20.0 million in the third quarter of 2019.

 

International revenue was $9.1 million in the third quarter of 2020, an increase of 3% compared to $8.8 million in the third quarter of 2019. International marketplace subscription revenue was $8.1 million in the third quarter of 2020, an increase of 5% compared to $7.7 million in the third quarter of 2019. GAAP operating loss in International markets was ($2.9) million, a reduction in loss of 72% compared to a loss of ($10.3) million in the third quarter of 2019.

 

Total paying dealers were 30,162(1) at September 30, 2020, a decrease of (9%) compared to 33,086 at September 30, 2019(2). Of the total paying dealers at September 30, 2020, U.S. and International accounted for 23,659(1) and 6,503, respectively, compared to 26,163 and 6,923, respectively, at September 30, 2019(2).

 

Quarterly Average Revenue per Subscribing Dealer (“QARSD”) in the U.S. was $5,133 as of September 30, 2020, an increase of 68% compared to $3,047 as of June 30, 2020(3) and an increase of 6% compared to $4,825 as of June 30, 2020(3) on a non-GAAP, pro forma basis(4).

 

QARSD in International markets was $1,256 as of September 30, 2020, an increase of 95% compared to $643 as of June 30, 2020(3) and an increase of 22% compared to $1,029 as of June 30, 2020(3) on a non-GAAP, pro forma basis(4).

 

Website traffic and consumer engagement metrics for the third quarter of 2020 were as follows:

 

o

U.S. average monthly unique users were 38.7 million(5), an increase of 2% compared to 38.1 million in the third quarter of 2019. U.S. average monthly sessions were 94.3 million(6), a decrease of (9%) compared to 103.5 million in the third quarter of 2019.

 

o

International average monthly unique users were 7.8 million, a decrease of (24%) compared to 10.2 million in the third quarter of 2019. International average monthly sessions were 18.3 million, a decrease of (30%) compared to 26.2 million in the third quarter of 2019.

 

 

(1)

Includes paying dealers from the Autolist website

 

(2)

In our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC on August 6, 2020, we announced that we had modified our method for calculating paying dealers to align our data with an enterprise system upgrade (the “Internal System Upgrade”) and had replaced our Average Annual Revenue per Subscribing Dealer key metric with QARSD. As a result of the Internal System Upgrade, and to provide consistency in our year-to-year comparisons, we have recast our paying dealer calculation as of September 30, 2019 to reflect the updated calculation methodology.

 

(3)

As a result of the Internal System Upgrade, we are unable to provide QARSD as of September 30, 2019 because we are unable to provide the number of paying dealers for the end of the period prior to the quarter ended September 30, 2019, which is necessary to calculate the average number of paying dealers for the period, and therefore are unable to calculate QARSD as of September 30, 2019. Therefore, we have provided a comparison against QARSD as of June 30, 2020.

 

(4)

For the three months ended June 30, 2020, U.S. marketplace subscription revenue was $75.5 million and non-GAAP, pro forma U.S. marketplace subscription revenue, adjusted to include $44.0 million for fee reductions provided during the quarter, would have been approximately $119.5 million. For the three months ended June 30, 2020, International marketplace subscription revenue was $4.5 million and non-GAAP, pro forma International marketplace subscription revenue, adjusted to include $2.7 million for fee reductions provided during the quarter, would have been approximately $7.2 million. For the three months ended June 30, 2020, utilizing non-GAAP, pro forma marketplace subscription revenue for such quarter instead of GAAP marketplace subscription revenue, the U.S. QARSD would have been approximately $4,825, the International QARSD would have been approximately $1,029, and the Consolidated QARSD would have been approximately $3,989, all of which are non-GAAP measures.

 

(5)

Includes users from the Autolist website

 

(6)

Includes sessions from the Autolist website


Fourth Quarter and Full-Year 2020 Guidance

CarGurus anticipates total revenue, non-GAAP operating income, and non-GAAP earnings per share to be in the following ranges:

Fourth Quarter 2020:

 

Total revenue

$146.1 to $149.1 million

Non-GAAP operating income

$38.7 to $40.7 million

Non-GAAP EPS

$0.26 to $0.28

 

The fourth quarter 2020 non-GAAP earnings per share calculation assumes 114.2 million diluted weighted-average common shares outstanding.

Full-Year 2020:

 

Total revenue

$546 to $549 million

Non-GAAP operating income

$143.5 to $145.5 million

Non-GAAP EPS

$1.01 to $1.03

 

The full-year non-GAAP earnings per share calculation assumes 114.1 million diluted weighted-average common shares outstanding.

 

Guidance for the fourth quarter and full-year 2020 excludes the effects of significant COVID-19 resurgences, including the reintroduction of lockdowns and/or a slowed pace of recovery, that result in dealers and consumers materially changing their recent market behaviors or that cause us to enact measures to assist dealers, such as by offering billings relief. Guidance assumes that our pace of paid dealer acquisition, churn, and expansion activity for the remainder of the year will be in line with recent market behaviors. Guidance does not include any potential impact of foreign currency exchange gains or losses.

 

CarGurus has not reconciled its non-GAAP operating income guidance to GAAP operating income, or its non-GAAP EPS guidance to GAAP EPS, because stock-based compensation, amortization of intangible assets, acquisition-related expenses, and restructuring expenses, the reconciling items between such GAAP and non-GAAP financial measures, cannot be reasonably predicted due to, as applicable, the timing, amount, valuation and number of future employee equity awards, and the uncertainty relating to the timing, frequency and effect of acquisitions as well as restructuring and the significance of the resulting acquisition-related or restructuring expenses, and therefore cannot be determined without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this release, please see the reconciliations of GAAP financial measures to non-GAAP financial measures and the section titled “Non-GAAP Financial Measures and Other Business Metrics” below.

Conference Call and Webcast Information

CarGurus will host a conference call and live webcast to discuss its third quarter ended September 30, 2020 financial results and business outlook at 5:00 p.m. Eastern Time today, November 5, 2020. To access the conference call, dial (800) 909-7944 for callers in the U.S. or Canada, or (212) 231-2936 for international callers. The webcast will be available live on the Investors section of CarGurus’ website at https://investors.cargurus.com.

An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time today, November 5, 2020, until 11:59 p.m. Eastern Time on November 19, 2020, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 21971108. In addition, an archived webcast will be available on the Investors section of CarGurus’ website at https://investors.cargurus.com.


About CarGurus

Founded in 2006, CarGurus (Nasdaq: CARG) is a global, online automotive marketplace connecting buyers and sellers of new and used cars. The Company uses proprietary technology, search algorithms and data analytics to bring trust and transparency to the automotive search experience and help users find great deals from top-rated dealers. CarGurus is the most visited automotive shopping site in the U.S. (source: Comscore Media Metrix® Multi-Platform, Automotive – Information/Resources, Total Audience, Q3 2020, U.S. (Competitive set includes: CarGurus.com, Autotrader.com, Cars.com, TrueCar.com)). In addition to the United States, CarGurus operates online marketplaces under the CarGurus brand in Canada and the United Kingdom. In the United States and the United Kingdom, CarGurus also operates the Autolist and PistonHeads online marketplaces, respectively, as independent brands. To learn more about CarGurus, visit www.cargurus.com.  CarGurus® is a registered trademark of CarGurus, Inc.

© 2020 CarGurus, Inc., All Rights Reserved.

Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our future financial and business performance for the fourth quarter 2020 and full-year 2020, our business and strategy and the impact of the COVID-19 pandemic on our industry, business and financial results, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “guide,” “intend,” “likely,” “may,” “will” and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our growth and ability to grow our revenue, our relationships with dealers, competition in the markets in which we operate, market growth, our ability to innovate, our ability to realize benefits from our acquisitions and successfully implement the integration strategies in connection therewith, natural disasters, epidemics or pandemics, like COVID-19 that has negatively impacted our business, our ability to realize cost savings and achieve other benefits for our business from our expense reduction efforts, our ability to operate in compliance with applicable laws, as well as other risks and uncertainties as may be detailed from time to time in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other reports we file with the Securities and Exchange Commission. Moreover, we operate in very competitive and rapidly changing environments. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee that future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

 


Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

At

September 30,

2020

 

 

At

December 31,

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

245,941

 

 

$

59,920

 

Investments

 

 

 

 

 

111,692

 

Accounts receivable, net of allowance for doubtful accounts of $610

   and $240, respectively

 

 

16,322

 

 

 

22,124

 

Prepaid expenses and prepaid income taxes

 

 

7,325

 

 

 

10,452

 

Deferred contract costs

 

 

9,950

 

 

 

9,544

 

Other current assets

 

 

1,634

 

 

 

4,972

 

Restricted cash

 

 

250

 

 

 

250

 

Total current assets

 

 

281,422

 

 

 

218,954

 

Property and equipment, net

 

 

27,276

 

 

 

27,950

 

Intangible assets

 

 

10,262

 

 

 

3,920

 

Goodwill

 

 

28,357

 

 

 

15,207

 

Operating lease right-of-use assets

 

 

63,525

 

 

 

59,986

 

Restricted cash

 

 

10,627

 

 

 

10,553

 

Deferred tax assets

 

 

27,267

 

 

 

42,713

 

Deferred contract costs, net of current portion

 

 

8,501

 

 

 

10,514

 

Other non-current assets

 

 

3,314

 

 

 

3,826

 

Total assets

 

$

460,551

 

 

$

393,623

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

16,839

 

 

$

36,731

 

Accrued expenses, accrued income taxes and other current liabilities

 

 

17,878

 

 

 

18,262

 

Deferred revenue

 

 

9,678

 

 

 

9,984

 

Operating lease liabilities

 

 

11,472

 

 

 

8,781

 

Total current liabilities

 

 

55,867

 

 

 

73,758

 

Operating lease liabilities

 

 

62,016

 

 

 

60,818

 

Deferred tax liabilities

 

 

304

 

 

 

284

 

Other non–current liabilities

 

 

4,105

 

 

 

1,908

 

Total liabilities

 

 

122,292

 

 

 

136,768

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

      Preferred stock, $0.001 par value; 10,000,000 shares authorized;

         no shares issued and outstanding

 

 

 

 

 

 

Class A common stock, $0.001 par value per share; 500,000,000 shares

   authorized; 94,016,568 and 91,819,649 shares issued and outstanding

   at September 30, 2020 and December 31, 2019, respectively

 

 

94

 

 

 

92

 

Class B common stock, $0.001 par value per share; 100,000,000 shares

   authorized; 19,076,500 and 20,314,644 shares issued and outstanding

   at September 30, 2020 and December 31, 2019, respectively

 

 

19

 

 

 

20

 

Additional paid-in capital

 

 

233,246

 

 

 

205,234

 

Retained earnings

 

 

104,249

 

 

 

51,859

 

Accumulated other comprehensive income (loss)

 

 

651

 

 

 

(350

)

Total stockholders’ equity

 

 

338,259

 

 

 

256,855

 

Total liabilities and stockholders’ equity

 

$

460,551

 

 

$

393,623

 

 


Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

147,472

 

 

$

150,462

 

 

$

399,898

 

 

$

430,763

 

Cost of revenue(1)

 

 

9,762

 

 

 

9,392

 

 

 

31,252

 

 

 

25,740

 

Gross profit

 

 

137,710

 

 

 

141,070

 

 

 

368,646

 

 

 

405,023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

57,618

 

 

 

100,133

 

 

 

189,796

 

 

 

293,238

 

Product, technology, and development

 

 

20,758

 

 

 

17,745

 

 

 

65,729

 

 

 

51,063

 

General and administrative

 

 

14,279

 

 

 

12,322

 

 

 

44,297

 

 

 

36,622

 

Depreciation and amortization

 

 

1,488

 

 

 

1,166

 

 

 

4,529

 

 

 

3,413

 

Total operating expenses

 

 

94,143

 

 

 

131,366

 

 

 

304,351

 

 

 

384,336

 

Income from operations

 

 

43,567

 

 

 

9,704

 

 

 

64,295

 

 

 

20,687

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

174

 

 

 

759

 

 

 

1,053

 

 

 

2,247

 

Other income, net

 

 

31

 

 

 

251

 

 

 

354

 

 

 

1,258

 

Total other income, net

 

 

205

 

 

 

1,010

 

 

 

1,407

 

 

 

3,505

 

Income before income taxes

 

 

43,772

 

 

 

10,714

 

 

 

65,702

 

 

 

24,192

 

Provision for (benefit from) income taxes

 

 

11,209

 

 

 

330

 

 

 

13,312

 

 

 

(4,783

)

Net income

 

$

32,563

 

 

$

10,384

 

 

$

52,390

 

 

$

28,975

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.29

 

 

$

0.09

 

 

$

0.46

 

 

$

0.26

 

Diluted

 

$

0.29

 

 

$

0.09

 

 

$

0.46

 

 

$

0.26

 

Weighted-average number of shares of common

   stock used in computing net income per share

   attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

113,027,995

 

 

 

111,662,949

 

 

 

112,707,003

 

 

 

111,257,271

 

Diluted

 

 

113,966,863

 

 

 

113,364,775

 

 

 

113,732,616

 

 

 

113,389,695

 

(1) Includes depreciation and amortization expense for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019 of $944, $952, $4,250 and $2,246, respectively.

 

 

 


Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

32,563

 

 

$

10,384

 

 

$

52,390

 

 

$

28,975

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,432

 

 

 

2,118

 

 

 

8,779

 

 

 

5,659

 

Currency loss (gain) on foreign denominated transactions

 

 

59

 

 

 

(87

)

 

 

(32

)

 

 

(927

)

Deferred taxes

 

 

10,074

 

 

 

291

 

 

 

14,769

 

 

 

(5,025

)

Provision for doubtful accounts

 

 

84

 

 

 

327

 

 

 

1,742

 

 

 

695

 

Stock-based compensation expense

 

 

11,028

 

 

 

8,761

 

 

 

34,403

 

 

 

25,390

 

Amortization of deferred contract costs

 

 

2,954

 

 

 

2,163

 

 

 

8,595

 

 

 

5,797

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

301

 

 

 

(1,146

)

 

 

5,954

 

 

 

(4,984

)

Prepaid expenses, prepaid income taxes, and other assets

 

 

4,269

 

 

 

1,200

 

 

 

7,104

 

 

 

(871

)

Deferred contract costs

 

 

(2,848

)

 

 

(3,674

)

 

 

(6,922

)

 

 

(11,442

)

Accounts payable

 

 

6,169

 

 

 

4,708

 

 

 

(19,745

)

 

 

10,740

 

Accrued expenses, accrued income taxes, and other current liabilities

 

 

4,797

 

 

 

(738

)

 

 

(497

)

 

 

(2,047

)

Deferred revenue

 

 

1,475

 

 

 

(695

)

 

 

(313

)

 

 

(1,027

)

Lease obligations

 

 

(542

)

 

 

(2

)

 

 

356

 

 

 

(1,882

)

Other non-current liabilities

 

 

1,063

 

 

 

212

 

 

 

2,223

 

 

 

500

 

Net cash provided by operating activities

 

 

73,878

 

 

 

23,822

 

 

 

108,806

 

 

 

49,551

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(161

)

 

 

(2,181

)

 

 

(2,732

)

 

 

(10,765

)

Capitalization of website development costs

 

 

(1,350

)

 

 

(547

)

 

 

(3,045

)

 

 

(2,074

)

Cash paid for acquisition, net of cash acquired

 

 

(52

)

 

 

 

 

 

(21,056

)

 

 

(19,139

)

Investments in certificates of deposit

 

 

 

 

 

(38,281

)

 

 

 

 

 

(134,808

)

Maturities of certificates of deposit

 

 

43,000

 

 

 

22,800

 

 

 

111,692

 

 

 

122,800

 

Net cash provided by (used in) investing activities

 

 

41,437

 

 

 

(18,209

)

 

 

84,859

 

 

 

(43,986

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

66

 

 

 

368

 

 

 

995

 

 

 

1,456

 

Payment of finance lease obligations

 

 

(10

)

 

 

(9

)

 

 

(28

)

 

 

(21

)

Payment of withholding taxes and option costs on net share settlement of

   restricted stock units and stock options

 

 

(2,922

)

 

 

(4,192

)

 

 

(8,708

)

 

 

(12,783

)

Net cash used in financing activities

 

 

(2,866

)

 

 

(3,833

)

 

 

(7,741

)

 

 

(11,348

)

Impact of foreign currency on cash, cash equivalents, and restricted cash

 

 

147

 

 

 

(114

)

 

 

171

 

 

 

(97

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

112,596

 

 

 

1,666

 

 

 

186,095

 

 

 

(5,880

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

144,222

 

 

 

30,012

 

 

 

70,723

 

 

 

37,558

 

Cash, cash equivalents, and restricted cash at end of period

 

$

256,818

 

 

$

31,678

 

 

$

256,818

 

 

$

31,678

 

 

 


 

Unaudited Reconciliation of Marketplace Subscription Revenue

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

Marketplace Subscription Revenue:

 

2020

 

 

2019

 

 

2020(1)

 

 

2019

 

United States

 

$

121,814

 

 

$

127,807

 

 

$

330,295

 

 

$

365,180

 

International

 

 

8,139

 

 

 

7,735

 

 

 

21,477

 

 

 

20,301

 

Total

 

$

129,953

 

 

$

135,542

 

 

$

351,772

 

 

$

385,481

 

(1) For the nine months ended September 30, 2020, non-GAAP, pro forma U.S. marketplace subscription revenue, adjusted to include $44.0 million for fee reductions provided during the second quarter of 2020, would have been approximately $374.3 million and non-GAAP, pro forma International marketplace subscription revenue, adjusted to include $2.7 million for fee reductions provided during the second quarter of 2020, would have been approximately $24.2 million. The impact of fee reductions for each of the three months ended March 31, 2020 and September 30, 2020 were immaterial.

 

 

 

Unaudited Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and GAAP Operating Margin to Non-GAAP Operating Margin

(in thousands, except percentages)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019(1)

 

 

2020

 

 

2019(1)

 

GAAP operating income

 

$

43,567

 

 

$

9,704

 

 

$

64,295

 

 

$

20,687

 

Stock-based compensation expense

 

 

11,030

 

 

 

8,761

 

 

 

34,634

 

 

 

25,390

 

Amortization of intangible assets

 

 

495

 

 

 

167

 

 

 

1,412

 

 

 

486

 

Acquisition-related expenses

 

 

 

 

 

34

 

 

 

968

 

 

 

125

 

Restructuring expenses(2)

 

 

 

 

 

 

 

 

3,514

 

 

 

 

Non-GAAP operating income

 

$

55,092

 

 

$

18,666

 

 

$

104,823

 

 

$

46,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

30

%

 

 

6

%

 

 

16

%

 

 

5

%

Non-GAAP operating margin

 

 

37

%

 

 

12

%

 

 

26

%

 

 

11

%

(1) In December 2019, we revised our definition of Non-GAAP operating income to exclude the impact of acquisition-related expenses. This revised definition more accurately reflects management's view of our business and financial performance. Non-GAAP operating income for the three and nine months ended September 30, 2019 has been restated for comparison purposes.

 

(2) Excludes stock-based compensation expense of $753 for the nine months ended September 30, 2020 related to the expense reduction plan approved by our Board of Directors on April 13, 2020 to address the impact of the COVID-19 pandemic on our business (the “Expense Reduction Plan”), as the amount is already included within the stock-based compensation line item.

 


Unaudited Reconciliation of GAAP Net Income to Non-GAAP Net Income

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019(3)

 

 

2020

 

 

2019(3)

 

GAAP net income

 

$

32,563

 

 

$

10,384

 

 

$

52,390

 

 

$

28,975

 

Stock-based compensation expense, net of tax(1)

 

 

8,714

 

 

 

6,921

 

 

 

27,361

 

 

 

20,058

 

Change in tax provision from stock-based compensation expense(2)

 

 

175

 

 

 

(1,943

)

 

 

(311

)

 

 

(9,632

)

Amortization of intangible assets

 

 

495

 

 

 

167

 

 

 

1,412

 

 

 

486

 

Acquisition-related expenses

 

 

 

 

 

34

 

 

 

968

 

 

 

125

 

Restructuring expenses(4)

 

 

 

 

 

 

 

 

3,514

 

 

 

 

Non-GAAP net income

 

$

41,947

 

 

$

15,563

 

 

$

85,334

 

 

$

40,012

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.37

 

 

$

0.14

 

 

$

0.76

 

 

$

0.36

 

Diluted

 

$

0.37

 

 

$

0.14

 

 

$

0.75

 

 

$

0.35

 

Shares used in non-GAAP per share calculations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

113,028

 

 

 

111,663

 

 

 

112,707

 

 

 

111,257

 

Diluted

 

 

113,967

 

 

 

113,365

 

 

 

113,733

 

 

 

113,390

 

(1) The stock-based compensation amounts reflected in the table above are tax effected at the U.S. federal statutory tax rate of 21%.

 

(2) This adjustment reflects the tax effect of differences between tax deductions related to stock compensation and the corresponding financial statement expense.

 

(3) In December 2019, we revised our definition of Non-GAAP net income to exclude the impact of acquisition-related expenses. This revised definition more accurately reflects management's view of our business and financial performance. Non-GAAP net income for the three and nine months ended September 30, 2019 has been restated for comparison purposes.

 

(4) Excludes stock-based compensation expense of $753 for the nine months ended September 30, 2020 related to the Expense Reduction Plan, as the amount is already included within the stock-based compensation line item.

 

 

Unaudited Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit and GAAP Gross Profit Margin to Non-GAAP Gross Profit Margin

(in thousands, except percentages)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

147,472

 

 

$

150,462

 

 

$

399,898

 

 

$

430,763

 

Cost of revenue

 

 

9,762

 

 

 

9,392

 

 

 

31,252

 

 

 

25,740

 

Gross profit

 

 

137,710

 

 

 

141,070

 

 

 

368,646

 

 

 

405,023

 

Stock-based compensation expense included in Cost of revenue

 

 

57

 

 

 

92

 

 

 

241

 

 

 

268

 

Acquisition-related expenses included in Cost of revenue

 

 

 

 

 

 

 

 

22

 

 

 

 

Restructuring expenses included in Cost of revenue

 

 

 

 

 

 

 

 

1,051

 

 

 

 

Non-GAAP gross profit

 

$

137,767

 

 

$

141,162

 

 

$

369,960

 

 

$

405,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit margin

 

 

93

%

 

 

94

%

 

 

92

%

 

 

94

%

Non-GAAP gross profit margin

 

 

93

%

 

 

94

%

 

 

93

%

 

 

94

%

 


Unaudited Reconciliation of GAAP Expense to Non-GAAP Expense

(in thousands)

 

 

 

Three Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

 

GAAP expense

 

 

Stock-based

compensation

expense

 

 

Amortization of

intangible assets

 

 

Acquisition-related expenses

 

 

Restructuring expenses

 

 

Non-GAAP

expense

 

 

GAAP expense

 

 

Stock-based

compensation

expense

 

 

Amortization of

intangible assets

 

 

Acquisition-related expenses(3)

 

 

Restructuring expenses

 

 

Non-GAAP

expense

 

Cost of revenue

 

$

9,762

 

 

$

(57

)

 

$

 

 

$

 

 

$

 

 

$

9,705

 

 

$

9,392

 

 

$

(92

)

 

$

 

 

$

 

 

$

 

 

$

9,300

 

S&M

 

 

57,618

 

 

 

(2,450

)

 

 

 

 

 

 

 

 

 

 

 

55,168

 

 

 

100,133

 

 

 

(2,520

)

 

 

 

 

 

 

 

 

 

 

 

97,613

 

P,T&D(1)

 

 

20,758

 

 

 

(5,140

)

 

 

 

 

 

 

 

 

 

 

 

15,618

 

 

 

17,745

 

 

 

(3,938

)

 

 

 

 

 

 

 

 

 

 

 

13,807