carg-8k_20210211.htm
false 0001494259 0001494259 2021-02-11 2021-02-11

 

 

 

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): February 11, 2021

 

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 February 11, 2021, CarGurus, Inc. (the “Company”) announced its financial results for the quarter and year ended December 31, 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 February 11, 2021, reporting its financial results for the quarter and year ended December 31, 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: February 11, 2021

 

By:

/s/ Scot Fredo

 

 

 

Name: Scot Fredo

 

 

 

Title: Chief Financial Officer

 

2

carg-ex991_6.htm

 

Exhibit 99.1

 

CarGurus Announces Fourth Quarter 2020 and Full-Year 2020 Results

Fourth Quarter Highlights:

 

Total revenue of $151.6 million, a decrease of (4%) year-over-year

 

GAAP operating income of $33.5 million; non-GAAP operating income of $46.7 million

 

GAAP net income of $25.2 million; non-GAAP net income of $36.5 million

 

Adjusted EBITDA of $48.6 million

Full-Year 2020 Highlights:

 

Total revenue of $551.5 million, a decrease of (6%) year-over-year

 

GAAP operating income of $97.8 million; non-GAAP operating income of $151.5 million

 

GAAP net income of $77.6 million; non-GAAP net income of $121.8 million

 

Adjusted EBITDA of $160.8 million

CAMBRIDGE, MA:  February 11, 2021 — CarGurus, Inc. (Nasdaq: CARG), a leading global online automotive marketplace, today announced financial results for the fourth quarter and full-year ended December 31, 2020.

“I’m pleased to share that CarGurus generated strong results in the fourth quarter, and throughout 2020, despite the ongoing uncertainty amidst the COVID-19 pandemic. Our performance demonstrates the durability of our market leadership position and the flexibility and resilience of our business model,” said Jason Trevisan, Chief Executive Officer of CarGurus. “We are excited about the momentum we have exiting 2020, especially in the U.S. where we saw quarter-over-quarter growth in net paying dealer additions. With most forecasts for 2021indicating improved year-over-year car sales, we believe dealers’ marketing spend will continue trending up – eventually returning to pre-COVID levels – and we remain confident that our advantaged ROI for dealers and our engaged, ready-to-buy audience will make us an attractive option for dealers at such time. Additionally, we have completed the acquisition of a 51% interest in CarOffer last month, and I want to publicly welcome the CarOffer team to the CarGurus family. We are thrilled to have the combined teams of CarGurus and CarOffer drive our success in digital wholesale.”

Revenue

Fourth Quarter 2020:

 

Total revenue was $151.6 million, a decrease of (4%) compared to $158.2 million in the fourth quarter of 2019.

 

Marketplace subscription revenue was $133.2 million, a decrease of (5%) compared to $140.6 million in the fourth quarter of 2019.

 

Advertising and other revenue was $18.4 million, an increase of 4% compared to $17.6 million in the fourth quarter of 2019.

Full-Year 2020:

 

Total revenue was $551.5 million, a decrease of (6%) compared to $588.9 million in 2019.


 

 

Marketplace subscription revenue was $485.0 million, a decrease of (8%) compared to $526.0 million in 2019.

 

Advertising and other revenue was $66.5 million, an increase of 6% compared to $62.9 million in 2019.

Operating Income

Fourth Quarter 2020:

 

GAAP operating income was $33.5 million, or 22% of total revenue, compared to $13.6 million, or 9% of total revenue, in the fourth quarter of 2019.

 

Non-GAAP operating income was $46.7 million, or 31% of total revenue, compared to $23.1 million, or 15% of total revenue, in the fourth quarter of 2019.

Full-Year 2020:

 

GAAP operating income was $97.8 million, or 18% of total revenue, compared to $34.3 million, or 6% of total revenue, in 2019.

 

Non-GAAP operating income was $151.5 million, or 27% of total revenue, compared to $69.8 million, or 12% of total revenue, in 2019.

Net Income & Adjusted EBITDA

Fourth Quarter 2020:

 

GAAP net income was $25.2 million, or $0.22 per fully diluted share during the quarter ended December 31, 2020, compared to $13.2 million, or $0.12 per fully diluted share during the quarter ended December 31, 2019.

 

Non-GAAP net income was $36.5 million, or $0.32 per fully diluted share during the quarter ended December 31, 2020, compared to $19.3 million, or $0.17 per fully diluted share during the quarter ended December 31, 2019.

 

Adjusted EBITDA, a non-GAAP metric, was $48.6 million for the quarter ended December 31, 2020, compared to $25.1 million for the quarter ended December 31, 2019.

Full-Year 2020:

 

GAAP net income was $77.6 million, or $0.68 per fully diluted share during 2020, compared to $42.1 million, or $0.37 per fully diluted share, during 2019.

 

Non-GAAP net income was $121.8 million, or $1.07 per fully diluted share during 2020, compared to $59.3 million, or $0.52 per fully diluted share, during 2019.

 

Adjusted EBITDA, a non-GAAP metric, was $160.8 million in 2020 compared to $77.0 million in 2019.

Balance Sheet and Cash Flow

 

As of December 31, 2020, CarGurus had cash, cash equivalents and short-term investments of $290.3 million and no debt.

 

CarGurus generated $47.9 million in cash from operations and $46.2 million in free cash flow, a non-GAAP metric, during the fourth quarter of 2020, compared to having generated $20.6 million in cash from operations and $19.2 million in free cash flow during the fourth quarter of 2019. For the full-year 2020, CarGurus generated $156.7 million in cash from operations and $149.2 million in free cash flow compared to having generated $70.1 million in cash from operations and $55.9 million in free cash flow in 2019.


Fourth Quarter Business Metrics

 

U.S. revenue was $143.7 million in the fourth quarter of 2020, a decrease of (3%) compared to $148.0 million in the fourth quarter of 2019. U.S. marketplace subscription revenue was $126.2 million in the fourth quarter of 2020, a decrease of (4%) compared to $131.6 million in the fourth quarter of 2019. GAAP operating income in the U.S. was $38.8 million, an increase of 73% compared to $22.4 million in the fourth quarter of 2019.

 

International revenue was $7.9 million in the fourth quarter of 2020, a decrease of (23%) compared to $10.2 million in the fourth quarter of 2019. International marketplace subscription revenue was $7.0 million in the fourth quarter of 2020, a decrease of (22%) compared to $9.0 million in the fourth quarter of 2019. GAAP operating loss in International markets was ($5.3) million, a reduction in loss of 39% compared to a loss of ($8.8) million in the fourth quarter of 2019.

 

Total paying dealers were 30,631(1) at December 31, 2020, a decrease of (9%) compared to 33,618 at December 31, 2019(2). Of the total paying dealers at December 31, 2020, U.S. and International accounted for 23,934(1) and 6,697, respectively, compared to 26,289 and 7,329, respectively, at December 31, 2019(2).

 

Quarterly Average Revenue per Subscribing Dealer (“QARSD”) in the U.S. was $5,304 as of December 31, 2020, an increase of 6% compared to $5,016 as of December 31, 2019.

 

QARSD in International markets was $1,060 as of December 31, 2020, a decrease of (16%) compared to $1,265 as of December 31, 2019.

 

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

 

o

U.S. average monthly unique users were 33.8 million(3), a decrease of (1%) compared to 34.2 million in the fourth quarter of 2019. U.S. average monthly sessions were 82.3 million(4), a decrease of (10%) compared to 91.2 million in the fourth quarter of 2019.

 

o

International average monthly unique users were 7.1 million, a decrease of (29%) compared to 10.0 million in the fourth quarter of 2019. International average monthly sessions were 16.3 million, a decrease of (32%) compared to 23.8 million in the fourth 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 December 31, 2019 to reflect the updated calculation methodology.

 

(3)

Includes users from the Autolist website

 

(4)

Includes sessions from the Autolist website

 


 

 

First Quarter 2021 Guidance

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

First Quarter 2021:

 

Total revenue

$156.0 to $160.0 million

Non-GAAP operating income

$33.5 to $36.5 million

Non-GAAP EPS

$0.21 to $0.23

 

The first quarter 2021 non-GAAP earnings per share calculation assumes 124 million diluted weighted-average common shares outstanding.

 

Guidance for the first quarter 2021 includes the impact of known customer billings relief for such period, but 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 continue to implement or otherwise enact additional measures to assist dealers, such as offering further fee reductions or waivers. The assumptions that are built into guidance for our pace of paid dealer acquisition, churn, and expansion activity for the relevant period are based off of 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 and restructurings 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 fourth quarter and full fiscal year 2020 financial results and business outlook at 5:00 p.m. Eastern Time today, February 11, 2021. To access the conference call, dial (877) 451-6152 for callers in the U.S. or Canada, or (201) 389-0879 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, February 11, 2021, until 11:59 p.m. Eastern Time on February 25, 2021, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13714720. 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, Q4 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. CarGurus also holds a majority stake in CarOffer, an instant trade digital wholesale platform based in Plano, Texas. To learn more about CarGurus, visit www.cargurus.com.  

CarGurus® is a registered trademark of CarGurus, Inc. All product names, trademarks and registered trademarks are property of their respective owners.

© 2021 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 first quarter 2021, our belief that the presentation of non-GAAP financial measures and other business metrics is helpful to our investors, our expectation that the combined teams of CarGurus and CarOffer will drive our success in digital wholesale, our expectations for dealers’ marketing spend and our value proposition for dealers, 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 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 December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

190,299

 

 

$

59,920

 

Investments

 

 

100,000

 

 

 

111,692

 

Accounts receivable, net of allowance for doubtful accounts of $616 and

   $240, respectively

 

 

18,235

 

 

 

22,124

 

Prepaid expenses, prepaid income taxes and other current assets

 

 

12,385

 

 

 

15,424

 

Deferred contract costs

 

 

10,807

 

 

 

9,544

 

Restricted cash

 

 

250

 

 

 

250

 

Total current assets

 

 

331,976

 

 

 

218,954

 

Property and equipment, net

 

 

27,483

 

 

 

27,950

 

Intangible assets, net

 

 

10,862

 

 

 

3,920

 

Goodwill

 

 

29,129

 

 

 

15,207

 

Operating lease right-of-use assets

 

 

60,835

 

 

 

59,986

 

Restricted cash

 

 

10,377

 

 

 

10,553

 

Deferred tax assets

 

 

19,774

 

 

 

42,713

 

Deferred contract costs, net of current portion

 

 

9,189

 

 

 

10,514

 

Other non-current assets

 

 

2,673

 

 

 

3,826

 

Total assets

 

$

502,298

 

 

$

393,623

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

21,563

 

 

$

36,731

 

Accrued expenses, accrued income taxes and other current liabilities

 

 

24,751

 

 

 

18,262

 

Deferred revenue

 

 

9,137

 

 

 

9,984

 

Operating lease liabilities

 

 

11,085

 

 

 

8,781

 

Total current liabilities

 

 

66,536

 

 

 

73,758

 

Operating lease liabilities

 

 

58,810

 

 

 

60,818

 

Deferred tax liabilities

 

 

291

 

 

 

284

 

Other non–current liabilities

 

 

3,075

 

 

 

1,908

 

Total liabilities

 

 

128,712

 

 

 

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; 500,000,000 shares authorized;

   94,310,309 and 91,819,649 shares issued and outstanding at

   December 31, 2020 and 2019, respectively

 

 

94

 

 

 

92

 

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

   19,076,500 and 20,314,644 shares issued and outstanding at

   December 31, 2020 and 2019, respectively

 

 

19

 

 

 

20

 

Additional paid–in capital

 

 

242,181

 

 

 

205,234

 

Retained earnings

 

 

129,412

 

 

 

51,859

 

Accumulated other comprehensive income (loss)

 

 

1,880

 

 

 

(350

)

Total stockholders’ equity

 

 

373,586

 

 

 

256,855

 

Total liabilities and stockholders’ equity

 

$

502,298

 

 

$

393,623

 

 


Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

151,553

 

 

$

158,153

 

 

$

551,451

 

 

$

588,916

 

Cost of revenue(1)

 

 

11,454

 

 

 

10,560

 

 

 

42,706

 

 

 

36,300

 

Gross profit

 

 

140,099

 

 

 

147,593

 

 

 

508,745

 

 

 

552,616

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

67,183

 

 

 

100,606

 

 

 

256,979

 

 

 

393,844

 

Product, technology, and development

 

 

19,997

 

 

 

18,399

 

 

 

85,726

 

 

 

69,462

 

General and administrative

 

 

17,869

 

 

 

13,812

 

 

 

62,166

 

 

 

50,434

 

Depreciation and amortization

 

 

1,589

 

 

 

1,141

 

 

 

6,118

 

 

 

4,554

 

Total operating expenses

 

 

106,638

 

 

 

133,958

 

 

 

410,989

 

 

 

518,294

 

Income from operations

 

 

33,461

 

 

 

13,635

 

 

 

97,756

 

 

 

34,322

 

Other (expense) income, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

22

 

 

 

737

 

 

 

1,075

 

 

 

2,984

 

Other (expense) income, net

 

 

(75

)

 

 

141

 

 

 

279

 

 

 

1,399

 

Total other (expense) income, net

 

 

(53

)

 

 

878

 

 

 

1,354

 

 

 

4,383

 

Income before income taxes

 

 

33,408

 

 

 

14,513

 

 

 

99,110

 

 

 

38,705

 

Provision for (benefit from) income taxes

 

 

8,245

 

 

 

1,342

 

 

 

21,557

 

 

 

(3,441

)

Net income

 

$

25,163

 

 

$

13,171

 

 

$

77,553

 

 

$

42,146

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.22

 

 

$

0.12

 

 

$

0.69

 

 

$

0.38

 

Diluted

 

$

0.22

 

 

$

0.12

 

 

$

0.68

 

 

$

0.37

 

Weighted–average number of shares of common

   stock used in computing net income per share

   attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

113,386,809

 

 

 

112,023,661

 

 

 

112,854,524

 

 

 

111,450,443

 

Diluted

 

 

114,291,136

 

 

 

113,552,018

 

 

 

113,849,815

 

 

 

113,431,850

 

(1) Includes depreciation, amortization and impairment expense for the three months ended December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 of $974, $1,017, $5,224 and $3,263, respectively.

 

 

 


Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

25,163

 

 

$

13,171

 

 

$

77,553

 

 

$

42,146

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,563

 

 

 

2,158

 

 

 

11,342

 

 

 

7,817

 

Currency loss (gain) on foreign denominated transactions

 

 

55

 

 

 

237

 

 

 

23

 

 

 

(690

)

Deferred taxes

 

 

7,466

 

 

 

1,291

 

 

 

22,235

 

 

 

(3,734

)

Provision for doubtful accounts

 

 

188

 

 

 

396

 

 

 

1,930

 

 

 

1,091

 

Stock–based compensation expense

 

 

10,687

 

 

 

8,911

 

 

 

45,090

 

 

 

34,301

 

Amortization of deferred contract costs

 

 

3,010

 

 

 

2,619

 

 

 

11,605

 

 

 

8,416

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(2,065

)

 

 

(4,624

)

 

 

3,889

 

 

 

(9,608

)

Prepaid expenses, prepaid income taxes, and other assets

 

 

(3,620

)

 

 

493

 

 

 

3,484

 

 

 

(378

)

Deferred contracts costs

 

 

(4,456

)

 

 

(4,537

)

 

 

(11,378

)

 

 

(15,979

)

Accounts payable

 

 

4,668

 

 

 

(6,472

)

 

 

(15,077

)

 

 

4,268

 

Accrued expenses, accrued income taxes and other liabilities

 

 

5,724

 

 

 

4,307

 

 

 

7,450

 

 

 

2,760

 

Deferred revenue

 

 

(548

)

 

 

2,201

 

 

 

(861

)

 

 

1,174

 

Lease obligations

 

 

(898

)

 

 

414

 

 

 

(542

)

 

 

(1,468

)

Net cash provided by operating activities

 

 

47,937

 

 

 

20,565

 

 

 

156,743

 

 

 

70,116

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(220

)

 

 

(440

)

 

 

(2,952

)

 

 

(11,205

)

Capitalization of website development costs

 

 

(1,534

)

 

 

(947

)

 

 

(4,579

)

 

 

(3,021

)

Cash paid for acquisitions, net of cash acquired

 

 

 

 

 

 

 

 

(21,056

)

 

 

(19,139

)

Investments in certificates of deposit

 

 

(100,000

)

 

 

(43,000

)

 

 

(100,000

)

 

 

(177,808

)

Maturities of certificates of deposit

 

 

 

 

 

66,116

 

 

 

111,692

 

 

 

188,916

 

Net cash (used in) provided by investing activities

 

 

(101,754

)

 

 

21,729

 

 

 

(16,895

)

 

 

(22,257

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

141

 

 

 

351

 

 

 

1,136

 

 

 

1,807

 

Financing cash flows from finance leases

 

 

(9

)

 

 

(9

)

 

 

(37

)

 

 

(30

)

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

   restricted stock units and stock options

 

 

(2,476

)

 

 

(3,687

)

 

 

(11,184

)

 

 

(16,470

)

Net cash used in financing activities

 

 

(2,344

)

 

 

(3,345

)

 

 

(10,085

)

 

 

(14,693

)

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

 

 

269

 

 

 

96

 

 

 

440

 

 

 

(1

)

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

 

 

(55,892

)

 

 

39,045

 

 

 

130,203

 

 

 

33,165

 

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

 

 

256,818

 

 

 

31,678

 

 

 

70,723

 

 

 

37,558

 

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

 

$

200,926

 

 

$

70,723

 

 

$

200,926

 

 

$

70,723

 

 

 


 

 

Unaudited Reconciliation of Marketplace Subscription Revenue

(in thousands)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

Marketplace Subscription Revenue:

 

2020

 

 

2019

 

 

2020(1)

 

 

2019

 

United States

 

$

126,210

 

 

$

131,550

 

 

$

456,505

 

 

$

496,730

 

International

 

 

6,996

 

 

 

9,012

 

 

 

28,473

 

 

 

29,313

 

Total

 

$

133,206

 

 

$

140,562

 

 

$

484,978

 

 

$

526,043

 

(1) For the year ended December 31, 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 $500.5 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 $31.2 million. The impact of fee reductions for each of the three months ended March 31, 2020, September 30, 2020 and December 31, 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

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

GAAP operating income

 

$

33,461

 

 

$

13,635

 

 

$

97,756

 

 

$

34,322

 

Stock-based compensation expense

 

 

10,687

 

 

 

8,911

 

 

 

45,321

 

 

 

34,301

 

Amortization of intangible assets

 

 

581

 

 

 

163

 

 

 

1,993

 

 

 

649

 

Acquisition-related expenses

 

 

1,938

 

 

 

424

 

 

 

2,906

 

 

 

549

 

Restructuring expenses(1)

 

 

 

 

 

 

 

 

3,514

 

 

 

 

Non-GAAP operating income

 

$

46,667

 

 

$

23,133

 

 

$

151,490

 

 

$

69,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

22

%

 

 

9

%

 

 

18

%

 

 

6

%

Non-GAAP operating margin

 

 

31

%

 

 

15

%

 

 

27

%

 

 

12

%

(1) Excludes stock-based compensation expense of $753 for the year ended December 31, 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

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

GAAP net income

 

$

25,163

 

 

$

13,171

 

 

$

77,553

 

 

$

42,146

 

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

 

 

8,443

 

 

 

7,040

 

 

 

35,804

 

 

 

27,098

 

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

 

 

350

 

 

 

(1,483

)

 

 

39

 

 

 

(11,115

)

Amortization of intangible assets

 

 

581

 

 

 

163

 

 

 

1,993

 

 

 

649

 

Acquisition-related expenses

 

 

1,938

 

 

 

424

 

 

 

2,906

 

 

 

549

 

Restructuring expenses(3)

 

 

 

 

 

 

 

 

3,514

 

 

 

 

Non-GAAP net income

 

$

36,475

 

 

$

19,315

 

 

$

121,809

 

 

$

59,327

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

 

$

0.17

 

 

$

1.08

 

 

$

0.53

 

Diluted

 

$

0.32

 

 

$

0.17

 

 

$

1.07

 

 

$

0.52

 

Shares used in Non-GAAP per share calculations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

113,387

 

 

 

112,024

 

 

 

112,855

 

 

 

111,450

 

Diluted

 

 

114,291

 

 

 

113,552

 

 

 

113,850

 

 

 

113,432

 

(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-based compensation and the corresponding financial statement expense.

 

(3)  Excludes stock-based compensation expense of $753 for the year ended December 31, 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

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

151,553

 

 

$

158,153

 

 

$

551,451

 

 

$

588,916

 

Cost of revenue

 

 

11,454

 

 

 

10,560

 

 

 

42,706

 

 

 

36,300

 

Gross profit

 

 

140,099

 

 

 

147,593

 

 

 

508,745

 

 

 

552,616

 

Stock-based compensation expense included in Cost of revenue

 

 

52

 

 

 

86

 

 

 

293

 

 

 

354

 

Acquisition-related expenses included in Cost of revenue

 

 

 

 

 

 

 

 

22

 

 

 

 

Restructuring expenses included in Cost of revenue

 

 

 

 

 

 

 

 

1,051

 

 

 

 

Non-GAAP gross profit

 

$

140,151

 

 

$

147,679

 

 

$

510,111

 

 

$

552,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit margin

 

 

92

%

 

 

93

%

 

 

92

%

 

 

94

%

Non-GAAP gross profit margin

 

 

92

%

 

 

93

%

 

 

93

%

 

 

94

%

 


 

Unaudited Reconciliation of GAAP Expense to Non-GAAP Expense

(in thousands)

 

 

 

Three Months Ended

December 31,

 

 

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

 

 

Restructuring expenses

 

 

Non-GAAP expense

 

 

Cost of revenue

 

$

11,454

 

 

$

(52

)

 

$

 

 

$

 

 

$

 

 

$

11,402

 

 

 

$

10,560

 

 

$

(86

)

 

$

 

 

$

 

 

$

 

 

$

10,474

 

 

S&M

 

 

67,183

 

 

 

(2,358

)

 

 

 

 

 

 

 

 

 

 

 

64,825

 

 

 

 

100,606

 

 

 

(2,597

)

 

 

 

 

 

 

 

 

 

 

 

98,009

 

 

P,T&D(1)

 

 

19,997

 

 

 

(4,880

)

 

 

 

 

 

 

 

 

 

 

 

15,117

 

 

 

 

18,399

 

 

 

(4,041

)