carg-8k_20190806.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): August 6, 2019

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 August 6, 2019, CarGurus, Inc. (the “Company”) announced its financial results for the quarter ended June 30, 2019. 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 August 6, 2019, reporting its financial results for the quarter ended June 30, 2019, 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: August 6, 2019

 

CARGURUS, INC.

 

 

 

 

 

/s/ Jason Trevisan

 

 

Name: Jason Trevisan

Title: Chief Financial Officer and Treasurer

 

carg-ex991_6.htm

 

Exhibit 99.1

 

CarGurus Announces Second Quarter 2019 Results

Second Quarter Highlights:

 

Total revenue of $145.0 million, an increase of 31% year-over-year

 

GAAP operating income of $3.5 million; non-GAAP operating income of $12.7 million

 

GAAP net income of $6.0 million; non-GAAP net income of $10.9 million

 

Adjusted EBITDA of $14.4 million

 

CAMBRIDGE, MA:  August 6, 2019 — CarGurus, Inc. (Nasdaq: CARG), a leading global automotive marketplace, today announced financial results for the second quarter ended June 30, 2019.

I’m pleased to share CarGurus had a strong second quarter. We maintained our leading U.S. audience of 37 million average unique monthly visitors and continued to deliver strong value to dealers, resulting in our fourth straight quarter of 20%-plus year-over-year U.S. AARSD growth,” said Langley Steinert, Founder and Chief Executive Officer of CarGurus. “We are digitizing more elements of the car shopping experience through a consumer financing partnership and with our peer-to-peer marketplace. We also delivered our best quarter ever of organic international net dealer adds and have begun commercializing our Italian marketplace, expanding our business’s global reach.”

 

Revenue

 

Total revenue was $145.0 million, an increase of 31% compared to $110.3 million in the second quarter of 2018.

 

Marketplace subscription revenue was $129.1 million, an increase of 32% compared to $97.7 million in the second quarter of 2018.

 

Advertising and other revenue was $15.9 million, an increase of 27% compared to $12.6 million in the second quarter of 2018.

 

Operating Income

     GAAP operating income was $3.5 million, or 2% of total revenue, compared to $4.0 million, or 4% of total revenue, in the second quarter of 2018.

     Non-GAAP operating income was $12.7 million, or 9% of total revenue, compared to $9.6 million, or 9% of total revenue, in the second quarter of 2018.

 

Net Income & Adjusted EBITDA

     GAAP net income was $6.0 million, or $0.05 per fully diluted share during the second quarter ended June 30, 2019, compared to $33.3 million, or $0.29 per fully diluted share during the second quarter ended June 30, 2018.


     Non-GAAP net income was $10.9 million, or $0.10 per fully diluted share during the second quarter ended June 30, 2019, compared to $8.9 million, or $0.08 per fully diluted share during the second quarter ended June 30, 2018.

     Adjusted EBITDA, a non-GAAP metric, was $14.4 million, compared to $10.8 million in the second quarter of 2018.

Balance Sheet and Cash Flow

     As of June 30, 2019, CarGurus had cash, cash equivalents, and short-term investments of $147.2 million and no debt.  

     The Company generated $16.0 million in cash from operations and $12.4 million in free cash flow, a non-GAAP metric, during the second quarter of 2019 compared to generating $17.5 million in cash from operations and $16.8 million in free cash flow during the second quarter of 2018.  

 

Second Quarter Business Metrics

     U.S. revenue was $137.0 million in the second quarter of 2019, an increase of 29% compared to $106.4 million in the second quarter of 2018. GAAP operating income in the U.S. was $14.1 million, an increase of 18% compared to $12.0 million in the second quarter of 2018.

     International revenue was $8.0 million in the second quarter of 2019, an increase of 104% compared to $3.9 million in the second quarter of 2018. GAAP operating loss in International markets was ($10.6) million, an increase of 31% compared to a loss of ($8.0) million in the second quarter of 2018.

     Total paying dealers were 34,267(1) at June 30, 2019, an increase of 14% compared to 29,969 at June 30, 2018. Of the total paying dealers at June 30, 2019, U.S. and International accounted for 28,431 and 5,836(1), respectively, compared to 26,871 and 3,098, respectively, at June 30, 2018.

     Average annual revenue per subscribing dealer (AARSD) in the U.S. was $16,188 as of June 30, 2019, an increase of 23% compared to $13,130 as of June 30, 2018.

     AARSD in International markets was $4,911(2) as of June 30, 2019, a decrease of 3% compared to $5,037 as of June 30, 2018.

     Website traffic and consumer engagement metrics for the second quarter of 2019 were as follows:

o    U.S. average monthly unique users were 36.9 million, an increase of 2% compared to 36.0 million in the second quarter of 2018. U.S. average monthly sessions were 101.4 million, an increase of 9% compared to 93.3 million in the second quarter of 2018.

o    International average monthly unique users were 9.8 million(3), an increase of 180% compared to 3.5 million in the second quarter of 2018. International average monthly sessions were 24.1 million(4), an increase of 202% compared to 8.0 million in the second quarter of 2018.

 

(1)

Includes paying dealers from the PistonHeads website.

 

(2)

Excludes AARSD from both the (i) PistonHeads website as it was acquired on January 8, 2019, and therefore, data for the trailing 12-month revenue calculation is not available and (ii) Italy website as it began earning marketplace subscription revenue during the three months ended June 30, 2019, and therefore, data for the trailing 12-month revenue calculation is not available.

 

(3)

Includes users from the PistonHeads website.

 

(4)

Includes sessions from the PistonHeads website.



Third Quarter and Full-Year 2019 Guidance

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

 

Third Quarter 2019:

 

Total revenue

$145.5 to $148.5 million

Non-GAAP operating income

$10.5 to $12.5 million

Non-GAAP EPS

$0.08 to $0.10

 

The third quarter 2019 non-GAAP earnings per share calculation assumes 113.9 million diluted weighted-average common shares outstanding.

 

Full-Year 2019:

 

Total revenue

$576.5 to $582.5 million

Non-GAAP operating income

$54.5 to $58.5 million

Non-GAAP EPS

$0.42 to $0.45

 

The full-year non-GAAP earnings per share calculation assumes 114.2 million diluted weighted-average common shares outstanding. Guidance for the third quarter and full-year 2019 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 and amortization of intangible assets, 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 occurrence of acquisitions 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 second quarter 2019 financial results and third quarter and full fiscal year 2019 financial guidance at 5:00 p.m. Eastern Time today, August 6, 2019. 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 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 August 6, 2019, until 11:59 p.m. Eastern Time on August 20, 2019, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13692068. 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


most visited automotive shopping site in the U.S. (source: Comscore Media Metrix® Multi-Platform, Automotive – Information/Resources, Total Audience, Q2 2019, 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 third quarter 2019 and full-year 2019, new product offerings and commercialization efforts in international markets, 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 realize benefits from our acquisition of PistonHeads and successfully implement the integration strategies in connection therewith, 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 August 6, 2019 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

June 30,

2019

 

 

At

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,842

 

 

$

34,887

 

Investments

 

 

119,327

 

 

 

122,800

 

Accounts receivable, net of allowance for doubtful accounts of $303

   and $479 at June 30, 2019 and December 31, 2018, respectively

 

 

17,081

 

 

 

13,614

 

Prepaid expenses and prepaid income taxes

 

 

7,968

 

 

 

10,144

 

Deferred contract costs

 

 

7,382

 

 

 

5,253

 

Other current assets

 

 

8,991

 

 

 

7,410

 

Restricted cash

 

 

250

 

 

 

750

 

Total current assets

 

 

188,841

 

 

 

194,858

 

Property and equipment, net

 

 

28,638

 

 

 

24,269

 

Intangible assets

 

 

4,320

 

 

 

 

Goodwill

 

 

15,446

 

 

 

 

Operating lease right-of-use assets

 

 

50,025

 

 

 

 

Restricted cash

 

 

1,920

 

 

 

1,921

 

Deferred tax assets

 

 

44,483

 

 

 

38,886

 

Deferred contract costs, net of current portion

 

 

9,257

 

 

 

7,252

 

Other long–term assets

 

 

3,231

 

 

 

1,104

 

Total assets

 

$

346,161

 

 

$

268,290

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

39,370

 

 

$

34,345

 

Accrued expenses, accrued income taxes and other current liabilities

 

 

14,805

 

 

 

18,654

 

Deferred revenue

 

 

8,479

 

 

 

8,811

 

Operating lease liabilities

 

 

7,738

 

 

 

1,693

 

Total current liabilities

 

 

70,392

 

 

 

63,503

 

Operating lease liability non-current

 

 

51,494

 

 

 

9,395

 

Deferred tax liabilities

 

 

281

 

 

 

 

Other non–current liabilities

 

 

1,608

 

 

 

1,281

 

Total liabilities

 

 

123,775

 

 

 

74,179

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

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

   authorized; 90,744,921 and 89,728,223 shares issued and outstanding

   at June 30, 2019 and December 31, 2018, respectively

 

 

91

 

 

 

90

 

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

   authorized; 20,702,084 and 20,702,084 shares issued and outstanding

   at June 30, 2019 and December 31, 2018, respectively

 

 

21

 

 

 

21

 

Additional paid-in capital

 

 

193,967

 

 

 

184,216

 

Retained earnings

 

 

28,304

 

 

 

9,713

 

Accumulated other comprehensive income

 

 

3

 

 

 

71

 

Total stockholders’ equity

 

 

222,386

 

 

 

194,111

 

Total liabilities and stockholders’ equity

 

$

346,161

 

 

$

268,290

 

 


Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

145,031

 

 

$

110,296

 

 

$

280,301

 

 

$

208,871

 

Cost of revenue(1)

 

 

8,628

 

 

 

5,959

 

 

 

16,348

 

 

 

11,528

 

Gross profit

 

 

136,403

 

 

 

104,337

 

 

 

263,953

 

 

 

197,343

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

101,789

 

 

 

78,395

 

 

 

193,105

 

 

 

147,240

 

Product, technology, and development

 

 

17,346

 

 

 

11,844

 

 

 

33,318

 

 

 

20,942

 

General and administrative

 

 

12,540

 

 

 

9,541

 

 

 

24,300

 

 

 

17,412

 

Depreciation and amortization

 

 

1,180

 

 

 

604

 

 

 

2,247

 

 

 

1,337

 

Total operating expenses

 

 

132,855

 

 

 

100,384

 

 

 

252,970

 

 

 

186,931

 

Income from operations

 

 

3,548

 

 

 

3,953

 

 

 

10,983

 

 

 

10,412

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

744

 

 

 

641

 

 

 

1,488

 

 

 

932

 

Other income, net

 

 

105

 

 

 

62

 

 

 

1,007

 

 

 

53

 

Total other income, net

 

 

849

 

 

 

703

 

 

 

2,495

 

 

 

985

 

Income before income taxes

 

 

4,397

 

 

 

4,656

 

 

 

13,478

 

 

 

11,397

 

Benefit from income taxes

 

 

(1,610

)

 

 

(28,687

)

 

 

(5,113

)

 

 

(27,441

)

Net income

 

$

6,007

 

 

$

33,343

 

 

$

18,591

 

 

$

38,838

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.05

 

 

$

0.31

 

 

$

0.17

 

 

$

0.36

 

Diluted

 

$

0.05

 

 

$

0.29

 

 

$

0.16

 

 

$

0.34

 

Weighted-average number of shares of common

stock used in computing net income per share

attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

111,299,345

 

 

 

108,500,802

 

 

 

111,051,070

 

 

 

107,726,105

 

Diluted

 

 

113,388,509

 

 

 

113,081,209

 

 

 

113,398,793

 

 

 

113,215,564

 

(1) Includes depreciation and amortization expense for the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018 of $734, $616, $1,294 and $1,120, respectively.

 

 


Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

6,007

 

 

$

33,343

 

 

$

18,591

 

 

$

38,838

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,914

 

 

 

1,220

 

 

 

3,541

 

 

 

2,457

 

Currency gain on foreign denominated transactions

 

 

(7

)

 

 

(72

)

 

 

(840

)

 

 

(19

)

Deferred taxes

 

 

(1,624

)

 

 

(25,783

)

 

 

(5,316

)

 

 

(27,100

)

Provision for doubtful accounts

 

 

353

 

 

 

345

 

 

 

368

 

 

 

722

 

Stock-based compensation expense

 

 

8,943

 

 

 

5,605

 

 

 

16,629

 

 

 

9,423

 

Amortization of deferred contract costs

 

 

1,804

 

 

 

788

 

 

 

3,634

 

 

 

1,301

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,319

)

 

 

440

 

 

 

(3,838

)

 

 

573

 

Prepaid expenses, prepaid income taxes, and other assets

 

 

(311

)

 

 

(3,805

)

 

 

(2,071

)

 

 

(4,312

)

Deferred contract costs

 

 

(3,392

)

 

 

(3,326

)

 

 

(7,768

)

 

 

(6,502

)

Accounts payable

 

 

2,807

 

 

 

6,689

 

 

 

6,032

 

 

 

7,338

 

Accrued expenses, accrued income taxes, and other current liabilities

 

 

2,700

 

 

 

1,660

 

 

 

(1,309

)

 

 

(1,991

)

Deferred revenue

 

 

(464

)

 

 

504

 

 

 

(332

)

 

 

3,315

 

Lease obligations

 

 

(500

)

 

 

(219

)

 

 

(1,880

)

 

 

(434

)

Other non-current liabilities

 

 

133

 

 

 

85

 

 

 

288

 

 

 

239

 

Net cash provided by operating activities

 

 

16,044

 

 

 

17,474

 

 

 

25,729

 

 

 

23,848

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,884

)

 

 

(547

)

 

 

(8,584

)

 

 

(981

)

Capitalization of website development costs

 

 

(716

)

 

 

(144

)

 

 

(1,527

)

 

 

(725

)

Cash paid for acquisition

 

 

 

 

 

 

 

 

(19,139

)

 

 

 

Investments in certificates of deposit

 

 

(70,827

)

 

 

(70,000

)

 

 

(96,527

)

 

 

(130,000

)

Maturities of certificates of deposit

 

 

60,000

 

 

 

40,000

 

 

 

100,000

 

 

 

70,000

 

Net cash used in investing activities

 

 

(14,427

)

 

 

(30,691

)

 

 

(25,777

)

 

 

(61,706

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

391

 

 

 

2,305

 

 

 

1,088

 

 

 

2,385

 

Financing cash flows from finance leases

 

 

(6

)

 

 

 

 

 

(12

)

 

 

 

Payment of initial public offering costs

 

 

 

 

 

 

 

 

 

 

 

(1,142

)

Payment of withholding taxes and option costs on net share settlement of restricted stock units and stock options

 

 

(4,637

)

 

 

(17,488

)

 

 

(8,591

)

 

 

(17,488

)

Net cash used in financing activities

 

 

(4,252

)

 

 

(15,183

)

 

 

(7,515

)

 

 

(16,245

)

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

 

 

40

 

 

 

(107

)

 

 

17

 

 

 

(83

)

Net decrease in cash, cash equivalents, and restricted cash

 

 

(2,595

)

 

 

(28,507

)

 

 

(7,546

)

 

 

(54,186

)

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

 

 

32,607

 

 

 

63,873

 

 

 

37,558

 

 

 

89,552

 

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

 

$

30,012

 

 

$

35,366

 

 

$

30,012

 

 

$

35,366

 

 


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

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

GAAP operating income

 

$

3,548

 

 

$

3,953

 

 

$

10,983

 

 

$

10,412

 

Stock-based compensation expense

 

 

8,943

 

 

 

5,605

 

 

 

16,629

 

 

 

9,423

 

Amortization of intangible assets

 

 

164

 

 

 

 

 

 

319

 

 

 

 

Non-GAAP operating income

 

$

12,655

 

 

$

9,558

 

 

$

27,931

 

 

$

19,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

2

%

 

 

4

%

 

 

4

%

 

 

5

%

Non-GAAP operating margin

 

 

9

%

 

 

9

%

 

 

10

%

 

 

9

%

 

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

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

GAAP net income

 

$

6,007

 

 

$

33,343

 

 

$

18,591

 

 

$

38,838

 

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

 

 

7,065

 

 

 

4,428

 

 

 

13,137

 

 

 

7,444

 

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

 

 

(2,366

)

 

 

(28,828

)

 

 

(7,689

)

 

 

(28,941

)

Amortization of intangible assets

 

 

164

 

 

 

 

 

 

319

 

 

 

 

Non-GAAP net income

 

$

10,870

 

 

$

8,943

 

 

$

24,358

 

 

$

17,341

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.10

 

 

$

0.08

 

 

$

0.22

 

 

$

0.16

 

Diluted

 

$

0.10

 

 

$

0.08

 

 

$

0.21

 

 

$

0.15

 

Shares used in non-GAAP per share calculations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

111,299

 

 

 

108,501

 

 

 

111,051

 

 

 

107,726

 

Diluted

 

 

113,389

 

 

 

113,081

 

 

 

113,399

 

 

 

113,216

 

(1) The stock-based compensation amounts reflected in the table above, for 2019 and 2018, 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.

 

 

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

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

145,031

 

 

$

110,296

 

 

$

280,301

 

 

$

208,871

 

Cost of revenue

 

 

8,628

 

 

 

5,959

 

 

 

16,348

 

 

 

11,528

 

Gross profit

 

 

136,403

 

 

 

104,337

 

 

 

263,953

 

 

 

197,343

 

Stock-based compensation expense included in Cost of revenue

 

 

95

 

 

 

92

 

 

 

176

 

 

 

181

 

Non-GAAP gross profit

 

$

136,498

 

 

$

104,429

 

 

$

264,129

 

 

$

197,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit margin

 

 

94

%

 

 

95

%

 

 

94

%

 

 

94

%

Non-GAAP gross profit margin

 

 

94

%

 

 

95

%

 

 

94

%

 

 

95

%

 

 

 


Unaudited Reconciliation of GAAP Expense to Non-GAAP Expense

(in thousands)

 

 

 

Three Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

 

GAAP expense

 

 

Stock-based

compensation

expense

 

 

Amortization of

intangible assets

 

 

Non-GAAP

expense

 

 

GAAP expense

 

 

Stock-based

compensation

expense

 

 

Amortization of

intangible assets

 

 

Non-GAAP

expense

 

Cost of revenue

 

$

8,628

 

 

$

(95

)

 

$

 

 

$

8,533

 

 

$

5,959

 

 

$

(92

)

 

$

 

 

$

5,867

 

S&M

 

 

101,789

 

 

 

(2,560

)

 

 

 

 

 

99,229

 

 

 

78,395

 

 

 

(1,536

)

 

 

 

 

 

76,859

 

P,T&D(1)

 

 

17,346

 

 

 

(3,997

)

 

 

 

 

 

13,349

 

 

 

11,844

 

 

 

(2,658

)

 

 

 

 

 

9,186

 

G&A

 

 

12,540

 

 

 

(2,291

)

 

 

 

 

 

10,249

 

 

 

9,541

 

 

 

(1,319

)

 

 

 

 

 

8,222

 

Depreciation & amortization

 

 

1,180

 

 

 

 

 

 

(164

)

 

 

1,016

 

 

 

604

 

 

 

 

 

 

 

 

 

604

 

Operating expenses(2)

 

$

132,855

 

 

$

(8,848

)

 

$

(164

)

 

$

123,843

 

 

$

100,384

 

 

$

(5,513

)

 

$

 

 

$

94,871

 

Total expenses

 

$

141,483

 

 

$

(8,943

)

 

$

(164

)

 

$

132,376

 

 

$

106,343

 

 

$

(5,605

)

 

$

 

 

$

100,738

 

(1) Product, Technology, & Development

 

(2) Operating expenses include S&M, P,T&D, G&A, and depreciation & amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

 

GAAP expense

 

 

Stock-based

compensation

expense

 

 

Amortization of

intangible assets

 

 

Non-GAAP

expense

 

 

GAAP expense

 

 

Stock-based

compensation

expense

 

 

Amortization of

intangible assets

 

 

Non-GAAP

expense

 

Cost of revenue

 

$

16,348

 

 

$

(176

)

 

$

 

 

$

16,172

 

 

$

11,528

 

 

$

(181

)

 

$

 

 

$

11,347

 

S&M

 

 

193,105

 

 

 

(4,872

)

 

 

 

 

 

188,233

 

 

 

147,240

 

 

 

(2,546

)

 

 

 

 

 

144,694