carg-8k_20181107.htm

 

 

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 7, 2018

 

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

________________________________________________________________________________
(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))

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 2.02Results of Operations and Financial Condition.

On November 7, 2018, CarGurus, Inc. (the “Company”) announced its financial results for the quarter ended September 30, 2018. 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 Current Report on Form 8-K, including the information set forth under this Item 2.02 and 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 9.01Financial Statements and Exhibits.

(d) Exhibits.

 

 

 

 

Exhibit

No.

  

Description

99.1

 

Press Release of CarGurus, Inc. dated November 7, 2018, reporting its financial results for the quarter ended September 30, 2018, furnished hereto.

 

 

 

 



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 hereunto duly authorized.

 

 

 

 

 

 Date: November 7, 2018

 

CARGURUS, INC.

 

 

 

 

 

/s/ Jason Trevisan

 

 

Name: Jason Trevisan

Title: Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

carg-ex991_6.htm

 

Exhibit 99.1

 

CarGurus Announces Third Quarter 2018 Results

Third Quarter Highlights:

 

Total revenue of $119.0 million, an increase of 43% year-over-year

 

GAAP operating income of $3.6 million; non-GAAP operating income of $9.2 million

 

GAAP net income of $12.1 million; non-GAAP net income of $9.5 million

 

Adjusted EBITDA of $10.5 million

CAMBRIDGE, MA:  November 7, 2018 — CarGurus, Inc. (Nasdaq: CARG), a leading global automotive marketplace, today announced financial results for the third quarter ended September 30, 2018.

“We delivered strong growth in the third quarter, as we exceeded our guidance across both revenue and profitability,” said Langley Steinert, Founder and Chief Executive Officer of CarGurus. “Our commitment to building our brand over the last year has yielded accelerated growth in our U.S. audience, and our international audience continues to make strides, creating a strong value proposition for our paying dealers.”

Revenue

 

Total revenue was $119.0 million, an increase of 43% compared to $83.0 million in the third quarter of 2017.

 

Marketplace subscription revenue was $105.8 million, an increase of 43% compared to $73.9 million in the third quarter of 2017.

 

Advertising and other revenue was $13.2 million, an increase of 46% compared to $9.1 million in the third quarter of 2017.

Operating Income

 

GAAP operating income was $3.6 million, or 3% of total revenue, compared to $2.9 million, or 3% of total revenue, in the third quarter of 2017.

 

Non-GAAP operating income was $9.2 million, or 8% of total revenue, compared to $2.9 million, or 4% of total revenue, in the third quarter of 2017.

Net Income & Adjusted EBITDA

 

GAAP net income was $12.1 million, or $0.11 per share based on 113.6 million weighted-average diluted shares outstanding during the third quarter ended September 30, 2018, as compared to net income of $2.4 million, or $0.02 per share based on 46.6 million weighted-average diluted shares outstanding during the third quarter ended September 30, 2017.

 

Non-GAAP net income was $9.5 million, or $0.08 per share based on 113.6 million weighted-average diluted shares outstanding during the third quarter ended September 30, 2018, compared to $2.2 million, or $0.02 per share based on 107.1 million weighted-average diluted shares outstanding during the third quarter ended September 30, 2017.

 

Adjusted EBITDA, a non-GAAP metric, was $10.5 million, compared to $4.0 million in the third quarter of 2017.


 

Balance Sheet and Cash Flow

 

As of September 30, 2018, CarGurus had cash, cash equivalents, and short-term investments of $147.6 million and no debt.  

 

The Company generated $10.8 million in cash from operations and $9.6 million in free cash flow, which is a non-GAAP metric, during the third quarter of 2018 compared to generating $8.5 million in cash from operations and $5.6 million in free cash flow during the third quarter of 2017.  

 

Third Quarter Business Metrics

 

U.S. revenue was $114.6 million in the third quarter of 2018, an increase of 43% compared to $80.4 million in the third quarter of 2017. GAAP operating income in the U.S. was $12.4 million, an increase of 33% compared to $9.3 million in the third quarter of 2017.

 

International revenue was $4.4 million in the third quarter of 2018, an increase of 71% compared to $2.6 million in the third quarter of 2017. GAAP operating loss in International markets was ($8.8) million, an increase of 36% compared to a loss of ($6.5) million in the third quarter of 2017.

 

Total paying dealers were 30,593 at September 30, 2018, an increase of 15% compared to 26,553 at September 30, 2017.  Of the total paying dealers at September 30, 2018, U.S. and International accounted for 27,128 and 3,465, respectively, compared to 24,313 and 2,240, respectively, at September 30, 2017.

 

Average annual revenue per subscribing dealer (AARSD) in the U.S. was $13,993 as of September 30, 2018, an increase of 21% compared to $11,526 as of September 30, 2017.

 

AARSD in International markets was $4,820 as of September 30, 2018, an increase of 2% compared to $4,711 as of September 30, 2017.

 

Website traffic and consumer engagement metrics for the third quarter of 2018 grew as follows:

 

o

U.S. average monthly unique users were 37.0 million, an increase of 43% compared to 26.0 million in the third quarter of 2017. U.S. average monthly sessions were 100.5 million, an increase of 49% compared to 67.4 million in the third quarter of 2017.

 

o

International average monthly unique users were 4.4 million, an increase of 70% compared to 2.6 million in the third quarter of 2017. International average monthly sessions were 10.4 million, an increase of 88% compared to 5.5 million in the third quarter of 2017.

 

 

Fourth Quarter and Full-Year 2018 Guidance

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

Fourth Quarter 2018:

 

Total revenue

$121 to $122 million

Non-GAAP operating income

$8 to $9 million

Non-GAAP EPS

$0.06 to $0.07

 

The fourth quarter 2018 non-GAAP earnings per share calculation assumes 114.1 million diluted weighted-average common shares outstanding.


 

Full-Year 2018:

 

Total revenue

$449 to $450 million

Non-GAAP operating income

$32 to $33 million

Non-GAAP EPS

$0.26 to $0.27

 

The full-year non-GAAP earnings per share calculation assumes 113.5 million diluted weighted-average common shares outstanding.  Guidance for the fourth quarter and full-year 2018 does not include any potential impact of foreign 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, the reconciling item between such GAAP and non-GAAP financial measures, cannot be reasonably predicted due to timing, amount, valuation and number of future employee awards and therefore is not available 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 2018 financial results and fourth quarter and full fiscal year 2018 financial guidance at 5:00 p.m. Eastern Time today, November 7, 2018. To access the conference call, dial (877) 451-6152 for the U.S. or Canada, or (201) 389-0879 for international callers. The webcast will be available live on the Investors section of the Company's 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 on November 7, 2018, until 11:59 p.m. Eastern Time on November 21, 2018, by dialing (844) 512-2921 for the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13684279. In addition, an archived webcast will be available on the Investors section of the Company's 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 largest automotive shopping site in the U.S. by unique monthly visitors (source: Comscore Media Metrix® Multi-Platform, Automotive – Information/Resources, Total Audience, Q3 2018, U.S. (Competitive set includes: CarGurus.com, Autotrader.com, Cars.com, TrueCar.com)).  In addition to the United States, CarGurus operates online marketplaces in Canada, the United Kingdom, Germany, Italy, and Spain. To learn more about CarGurus, visit www.cargurus.com.  CarGurus® is a registered trademark of CarGurus, Inc.

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 2018 and full-year 2018, attractiveness of our product offerings and platform, the value proposition of our products and our market awareness, 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 rapid growth and ability to sustain our revenue growth rate, our relationships with dealers, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our ability to expand effectively into new markets, our ability to operate in compliance with applicable laws as well as other risks and uncertainties set forth in the “Risk Factors” section of our Quarterly Report on Form 10-Q, filed on November 7, 2018 with the Securities and Exchange Commission (SEC), and subsequent reports that we file with the SEC.  Moreover, we operate in a very competitive and rapidly changing environment. 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 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,

2018

 

 

At

December 31,

2017

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

77,642

 

 

$

87,709

 

Investments

 

70,000

 

 

 

50,000

 

Accounts receivable, net of allowance for doubtful accounts of $520

   and $494, respectively

 

12,565

 

 

 

12,577

 

Prepaid expenses and prepaid income taxes

 

8,227

 

 

 

5,313

 

Other current assets

 

7,201

 

 

 

1,605

 

Total current assets

 

175,635

 

 

 

157,204

 

Property and equipment, net

 

17,632

 

 

 

16,563

 

Restricted cash

 

3,656

 

 

 

1,843

 

Deferred tax assets

 

36,985

 

 

 

825

 

Other long–term assets

 

136

 

 

 

159

 

Total assets

$

234,044

 

 

$

176,594

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

34,046

 

 

$

23,908

 

Accrued expenses, accrued income taxes and other current liabilities

 

12,372

 

 

 

13,588

 

Deferred revenue

 

7,685

 

 

 

4,305

 

Deferred rent

 

1,326

 

 

 

1,165

 

Total current liabilities

 

55,429

 

 

 

42,966

 

Deferred rent, net of current portion

 

6,943

 

 

 

5,648

 

Other non–current liabilities

 

1,244

 

 

 

955

 

Total liabilities

 

63,616

 

 

 

49,569

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

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

   authorized; 89,261,069 and 77,884,754 shares issued and outstanding

   at September 30, 2018 and December 31, 2017, respectively

 

89

 

 

 

78

 

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

   authorized; 20,702,084 and 28,226,104 shares issued and outstanding

   at September 30, 2018 and December 31, 2017, respectively

 

21

 

 

 

28

 

Additional paid-in capital

 

181,630

 

 

 

185,190

 

Accumulated deficit

 

(11,448

)

 

 

(58,499

)

Accumulated other comprehensive income

 

136

 

 

 

228

 

Total stockholders’ equity

 

170,428

 

 

 

127,025

 

Total liabilities and stockholders’ equity

$

234,044

 

 

$

176,594

 

 


Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue

 

$

119,042

 

 

$

82,989

 

 

$

328,068

 

 

$

226,264

 

Cost of revenue(1)

 

 

6,412

 

 

 

4,720

 

 

 

17,940

 

 

 

12,367

 

Gross profit

 

 

112,630

 

 

 

78,269

 

 

 

310,128

 

 

 

213,897

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

84,867

 

 

 

63,891

 

 

 

237,308

 

 

 

168,495

 

Product, technology, and development

 

 

12,771

 

 

 

5,796

 

 

 

33,713

 

 

 

14,153

 

General and administrative

 

 

10,630

 

 

 

5,006

 

 

 

28,042

 

 

 

14,098

 

Depreciation and amortization

 

 

727

 

 

 

713

 

 

 

2,064

 

 

 

1,909

 

Total operating expenses

 

 

108,995

 

 

 

75,406

 

 

 

301,127

 

 

 

198,655

 

Income from operations

 

 

3,635

 

 

 

2,863

 

 

 

9,001

 

 

 

15,242

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

639

 

 

 

211

 

 

 

1,571

 

 

 

566

 

Other (expense) income

 

 

(38

)

 

 

(105

)

 

 

15

 

 

 

(243

)

Total other income, net

 

 

601

 

 

 

106

 

 

 

1,586

 

 

 

323

 

Income before income taxes

 

 

4,236

 

 

 

2,969

 

 

 

10,587

 

 

 

15,565

 

(Benefit from) provision for income taxes

 

 

(7,899

)

 

 

590

 

 

 

(36,464

)

 

 

4,633

 

Net income

 

$

12,135

 

 

$

2,379

 

 

$

47,051

 

 

$

10,932

 

Reconciliation of net income to net income

   attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,135

 

 

$

2,379

 

 

$

47,051

 

 

$

10,932

 

Net income attributable to participating securities

 

 

 

 

 

(1,401

)

 

 

 

 

 

(6,446

)

Net income attributable to common stockholders — basic

 

$

12,135

 

 

$

978

 

 

$

47,051

 

 

$

4,486

 

Net income

 

$

12,135

 

 

$

2,379

 

 

$

47,051

 

 

$

10,932

 

Net income attributable to participating securities

 

 

 

 

 

(1,345

)

 

 

 

 

 

(6,198

)

Net income attributable to common stockholders — diluted

 

$

12,135

 

 

$

1,034

 

 

$

47,051

 

 

$

4,734

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

 

$

0.02

 

 

$

0.43

 

 

$

0.11

 

Diluted

 

$

0.11

 

 

$

0.02

 

 

$

0.42

 

 

$

0.10

 

Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

109,628,692

 

 

 

42,262,035

 

 

 

108,367,270

 

 

 

42,168,904

 

Diluted

 

 

113,601,415

 

 

 

46,567,173

 

 

 

113,351,150

 

 

 

46,310,630

 

(1) Includes depreciation and amortization expense for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 of $581, $370, $1,701 and $761, respectively.

 

 

 

 

 

 

 

 

 

 


Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,135

 

 

$

2,379

 

 

$

47,051

 

 

$

10,932

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,308

 

 

 

1,083

 

 

 

3,765

 

 

 

2,670

 

Unrealized currency (gain) loss on foreign denominated transactions

 

 

(37

)

 

 

(32

)

 

 

(56

)

 

 

96

 

Deferred taxes

 

 

(7,938

)

 

 

(1,073

)

 

 

(36,162

)

 

 

(663

)

Provision for doubtful accounts

 

 

524

 

 

 

164

 

 

 

1,246

 

 

 

544

 

Stock-based compensation expense

 

 

5,528

 

 

 

74

 

 

 

14,951

 

 

 

224

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,658

)

 

 

(1,293

)

 

 

(1,240

)

 

 

(4,013

)

Prepaid expenses, prepaid income taxes, and other assets

 

 

(4,336

)

 

 

2,033

 

 

 

(8,648

)

 

 

1,143

 

Accounts payable

 

 

4,124

 

 

 

5,209

 

 

 

11,462

 

 

 

6,409

 

Accrued expenses, accrued income taxes, and other current liabilities

 

 

(973

)

 

 

199

 

 

 

(2,964

)

 

 

(585

)

Deferred revenue

 

 

66

 

 

 

14

 

 

 

3,381

 

 

 

1,265

 

Deferred rent

 

 

1,900

 

 

 

(406

)

 

 

1,466

 

 

 

262

 

Other non-current liabilities

 

 

108

 

 

 

101

 

 

 

347

 

 

 

258

 

Net cash provided by operating activities

 

 

10,751

 

 

 

8,452

 

 

 

34,599

 

 

 

18,542

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(892

)

 

 

(2,271

)

 

 

(1,873

)

 

 

(4,247

)

Capitalization of website development costs

 

 

(253

)

 

 

(540

)

 

 

(978

)

 

 

(1,487

)

Investments in certificates of deposit

 

 

 

 

 

(20,000

)

 

 

(130,000

)

 

 

(50,000

)

Maturities of certificates of deposit

 

 

40,000

 

 

 

8,000

 

 

 

110,000

 

 

 

34,774

 

Net cash provided by (used in) investing activities

 

 

38,855

 

 

 

(14,811

)

 

 

(22,851

)

 

 

(20,960

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

676

 

 

 

120

 

 

 

3,061

 

 

 

288

 

Payment of initial public offering costs

 

 

 

 

 

(1,823

)

 

 

(1,142

)

 

 

(2,128

)

Payment of withholding taxes on net share settlements of equity awards

 

 

(4,379

)

 

 

 

 

 

(21,867

)

 

 

 

Net cash used in financing activities

 

 

(3,703

)

 

 

(1,703

)

 

 

(19,948

)

 

 

(1,840

)

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

 

 

29

 

 

 

128

 

 

 

(54

)

 

 

157

 

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

 

 

45,932

 

 

 

(7,934

)

 

 

(8,254

)

 

 

(4,101

)

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

 

 

35,366

 

 

 

35,353

 

 

 

89,552

 

 

 

31,520

 

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

 

$

81,298

 

 

$

27,419

 

 

$

81,298

 

 

$

27,419

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

40

 

 

$

3,573

 

 

$

2,320

 

 

$

4,220

 

Cash paid for interest

 

$

5

 

 

$

5

 

 

$

15

 

 

$

17

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid purchases of property and equipment

 

$

2,201

 

 

$

739

 

 

$

2,201

 

 

$

739

 

Capitalized stock-based compensation expense in website development costs

 

$

89

 

 

$

 

 

$

299

 

 

$

 

Unpaid deferred initial public offering costs

 

$

 

 

$

465

 

 

$

 

 

$

2,014

 


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,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

GAAP operating income

 

$

3,635

 

 

$

2,863

 

 

$

9,001

 

 

$

15,242

 

Stock-based compensation expense

 

 

5,528

 

 

 

74

 

 

 

14,951

 

 

 

224

 

Non-GAAP operating income

 

$

9,163

 

 

$

2,937

 

 

$

23,952

 

 

$

15,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

3

%

 

 

3

%

 

 

3

%

 

 

7

%

Non-GAAP operating margin

 

 

8

%

 

 

4

%

 

 

7

%

 

 

7

%

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,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

GAAP net income

 

$

12,135

 

 

$

2,379

 

 

$

47,051

 

 

$

10,932

 

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

 

 

4,367

 

 

 

48

 

 

 

11,811

 

 

 

146

 

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

 

 

(6,970

)

 

 

(267

)

 

 

(35,912

)

 

 

(640

)

Non-GAAP net income

 

$

9,532

 

 

$

2,160

 

 

$

22,950

 

 

$

10,438

 

Non-GAAP net income attributable to common stockholders

 

$

9,532

 

 

$

2,160

 

 

$

22,950

 

 

$

10,438

 

Non-GAAP net income attributable to common stockholders per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

 

$

0.02

 

 

$

0.21

 

 

$

0.10

 

Diluted

 

$

0.08

 

 

$

0.02

 

 

$

0.20

 

 

$

0.10

 

  Weighted-average number of shares of common stock

   used in computing non-GAAP net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Basic Shares

 

 

109,629

 

 

 

42,262

 

 

 

108,367

 

 

 

42,169

 

Preferred Shares assuming conversion

 

 

 

 

 

60,565

 

 

 

 

 

 

60,565

 

Total Non-GAAP Basic Shares

 

 

109,629

 

 

 

102,827

 

 

 

108,367

 

 

 

102,734

 

GAAP Diluted Shares

 

 

113,601

 

 

 

46,567

 

 

 

113,351

 

 

 

46,311

 

Preferred Shares assuming conversion

 

 

 

 

 

60,565

 

 

 

 

 

 

60,565

 

Total Non-GAAP Diluted Shares

 

 

113,601

 

 

 

107,132

 

 

 

113,351

 

 

 

106,875

 

(1) The stock-based compensation amounts reflected in the table above, for 2018 and 2017, are tax effected at the U.S. federal statutory tax rates of 21% and 35%, respectively.

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 


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,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue

 

$

119,042

 

 

$

82,989

 

 

$

328,068

 

 

$

226,264

 

Cost of revenue

 

 

6,412

 

 

 

4,720

 

 

 

17,940

 

 

 

12,367

 

Gross profit

 

 

112,630

 

 

 

78,269

 

 

 

310,128

 

 

 

213,897

 

Stock-based compensation expense included in Cost of revenue

 

 

83

 

 

 

6

 

 

 

264

 

 

 

16

 

Non-GAAP gross profit

 

$

112,713

 

 

$

78,275

 

 

$

310,392

 

 

$

213,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit margin

 

 

95

%

 

 

94

%

 

 

95

%

 

 

95

%

Non-GAAP gross profit margin

 

 

95

%

 

 

94

%

 

 

95

%

 

 

95

%

 

 


Unaudited Reconciliation of GAAP Expense to Non-GAAP Expense and GAAP Expense as a Percentage of Revenue to Non-GAAP Expense as a Percentage of Revenue

(in thousands, except percentages)

 

 

 

Three Months Ended

September 30,

 

 

 

2018

 

 

2017

 

 

 

GAAP expense

 

 

Stock-based compensation expense

 

 

Non-GAAP expense

 

 

GAAP expense as a percentage of revenue

 

 

Non-GAAP expense as a percentage of revenue

 

 

GAAP expense

 

 

Stock-based compensation expense

 

 

Non-GAAP expense

 

 

GAAP expense as a percentage of revenue

 

 

Non-GAAP expense as a percentage of revenue

 

Cost of revenue

 

$

6,412

 

 

$

(83

)

 

$

6,329

 

 

 

5

%

 

 

5

%

 

$

4,720

 

 

$

(6

)

 

$

4,714

 

 

 

6

%

 

 

6

%

S&M

 

 

84,867

 

 

 

(1,216

)

 

 

83,651

 

 

 

71

%

 

 

70

%

 

 

63,891

 

 

 

(35

)

 

 

63,856

 

 

 

77

%

 

 

77

%

P,T&D(1)

 

 

12,771

 

 

 

(2,584

)

 

 

10,187

 

 

 

11

%

 

 

9

%

 

 

5,796

 

 

 

(24

)

 

 

5,772

 

 

 

7

%

 

 

7

%

G&A

 

 

10,630

 

 

 

(1,645

)

 

 

8,985

 

 

 

9

%

 

 

7

%

 

 

5,006

 

 

 

(9

)

 

 

4,997

 

 

 

6

%

 

 

6

%

Depreciation & amortization

 

 

727

 

 

 

 

 

 

727

 

 

 

1

%

 

 

1

%

 

 

713

 

 

 

 

 

 

713

 

 

 

1

%

 

 

1

%

Operating expenses(2)

 

$

108,995

 

 

$

(5,445

)

 

$

103,550

 

 

 

92

%