RealPage Reports First Quarter Revenue Growth of 19% Year-over-Year

May 04, 2017

RealPage Reports First Quarter Revenue Growth of 19% Year-over-Year
  • First Quarter Pre-Tax Income Grows 76% Year-over-Year
  • Full Year Revenue and Profit Expectations Increased, Excluding Proposed Acquisition of Lease Rent Options

RICHARDSON, Texas--(BUSINESS WIRE)-- RealPage, Inc. (NASDAQ:RP), a leading global provider of software and data analytics to the real estate industry, today announced financial results for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Highlights

  • Total revenue of $152.9 million, an increase of 19% year-over-year;
  • Net income of $8.2 million, or $0.10 in net income per diluted share, a year-over-year increase of 174% and 150%, respectively;
  • Non-GAAP total revenue of $153.6 million, an increase of 20% year-over-year;
  • Adjusted EBITDA of $37.1 million, an increase of 35% year-over-year and 270 basis points of Adjusted EBITDA margin expansion; and
  • Non-GAAP net income of $17.6 million, or $0.22 in non-GAAP net income per diluted share, a year-over-year increase of 38% and 29%, respectively.

Comments on the News

“First quarter non-GAAP total revenue growth of 20% reflects strong client adoption of our differentiated platform," said Steve Winn, Chairman and CEO of RealPage. "Importantly, our Asset Optimization product family revenue growth continues to accelerate and our recent acquisition of Axiometrics performed above our expectations. These results provide us with confidence that our strategy is appropriately focused, delivering actionable intelligence to our clients from our data in order to improve operational returns as well as helping underwrite the placement and harvesting of capital.”

“Our first quarter results are a continuation of the steady progress we’ve made towards our 2020 objective of $1 billion of revenue and 30% adjusted EBITDA margin," said Bryan Hill, CFO and Treasurer of RealPage. “Revenue growth, margin expansion and cash flow generation for the quarter exceeded our expectations and are ahead of the pace needed to reach our 2020 goals.”

The company also announced that its board of directors has authorized the company to purchase up to $50 million of its outstanding shares of common stock over the next twelve months. “The Board's decision to continue our stock repurchase program reflects continued support of our capital allocation strategy which deploys capital across internal investments, acquisitions and share repurchases based on the most compelling risk-adjusted returns for our shareholders,” said Mr. Hill.

2017 Financial Outlook

The company is removing LRO® (Lease Rent Options) from its outlook until the closing date can be determined. The LRO acquisition is subject to standard closing conditions, including the completion of the Hart-Scott-Rodino antitrust review process. Previous full-year guidance issued with first quarter 2017 financial results assumed an LRO closing date of April 1, 2017 and included non-GAAP total revenue of $30.0 million, adjusted EBITDA of $8.3 million and non-GAAP net income per diluted share of $0.01.

Excluding the effects of the LRO transaction, RealPage management expects to achieve the following results during its second quarter ended June 30, 2017:

  • GAAP total revenue is expected to be in the range of $158.1 million to $160.1 million;
  • GAAP net income per diluted share is expected to be in the range of $0.06 to $0.07;
  • Non-GAAP total revenue is expected to be in the range of $159.0 million to $161.0 million;
  • Adjusted EBITDA is expected to be in the range of $38.3 million to $39.3 million;
  • Non-GAAP net income per diluted share is expected to be in the range of $0.22 to $0.23;
  • Weighted average shares outstanding are expected to be approximately 82.1 million.

Excluding the effects of the LRO transaction, RealPage management expects to achieve the following results during its calendar year ended December 31, 2017:

  • GAAP total revenue is expected to be in the range of $640.2 million to $649.2 million;
  • GAAP net income per diluted share is expected to be in the range of $0.31 to $0.35;
  • Non-GAAP total revenue is expected to be in the range of $643.0 million to $652.0 million;
  • Adjusted EBITDA is expected to be in the range of $156.0 million to $160.0 million;
  • Non-GAAP net income per diluted share is expected to be in the range of $0.88 to $0.92;
  • Weighted average shares outstanding are expected to be approximately 82.5 million.

Conference Call Information; Presentation Slides

The company will host a conference call at 5:00 p.m. ET today to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast and view the earnings presentation at www.realpage.com on the Investor Relations section. In addition, a live dial-in is available domestically at 866-807-9684 and internationally at 412-317-5415. A replay will be available at 877-344-7529 or 412-317-0088, passcode 10106550, until May 11, 2017.

About RealPage

RealPage is a leading global provider of software and data analytics to the real estate industry. Clients use our platform to improve operating performance and increase capital returns. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves over 11,200 clients worldwide from offices in North America, Europe and Asia. For more information about the company, visit https://www.realpage.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking” statements relating to RealPage, Inc.’s expected, possible or assumed future results, the financial impact and timing of the proposed LRO acquisition and RealPage’s long-term revenue and adjusted EBITDA margin goals. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “expects,” “believes,” “plans,” or similar expressions and the negatives of those terms. Those forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The company may be required to revise its results upon finalizing its review of quarterly and full year results, which could cause or contribute to such differences. Additional factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the possibility that general economic conditions, including leasing velocity or uncertainty, could cause information technology spending, particularly in the rental housing industry, to be reduced or purchasing decisions to be delayed; (b) an increase in insurance claims; (c) an increase in customer cancellations; (d) the inability to increase sales to existing customers and to attract new customers; (e) RealPage’s failure to integrate acquired businesses and any future acquisitions successfully or to achieve expected synergies, including the timing and completion of the proposed acquisition of LRO; (f) the timing and success of new product introductions by RealPage or its competitors; (g) changes in RealPage’s pricing policies or those of its competitors; (h) legal or regulatory proceedings; (i) the inability to achieve revenue growth or to enable margin expansion; and (j) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission (“SEC”) by RealPage Inc., including its Annual Report on Form 10-K previously filed with the SEC on March 1, 2017. All information provided in this release is as of the date hereof and RealPage Inc. undertakes no duty to update this information except as required by law.

Explanation of Non-GAAP Financial Measures

The company reports its financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, the company believes that, in order to properly understand its short-term and long-term financial, operational and strategic trends, it may be helpful for investors to exclude certain non-cash or non-recurring items when used as a supplement to financial performance measures in accordance with GAAP. These non-cash or non-recurring items result from facts and circumstances that vary in both frequency and impact on continuing operations. The company also uses results of operations excluding such items to evaluate the operating performance of RealPage and compare it against prior periods, make operating decisions, determine executive compensation, and serve as a basis for long-term strategic planning. These non-GAAP financial measures provide the company with additional means to understand and evaluate the operating results and trends in its ongoing business by eliminating certain non-cash expenses and other items that RealPage believes might otherwise make comparisons of its ongoing business with prior periods more difficult, obscure trends in ongoing operations, reduce management’s ability to make useful forecasts, or obscure the ability to evaluate the effectiveness of certain business strategies and management incentive structures. In addition, the company also believes that investors and financial analysts find this information to be helpful in analyzing the company’s financial and operational performance and comparing this performance to the company’s peers and competitors.

The company defines “Non-GAAP Total Revenue” as total revenue plus acquisition-related and other deferred revenue adjustments. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules and revenue deferred due to a lack of historical experience determining the settlement of the contractual obligation in order to appropriately measure the underlying performance of its business operations in the period of activity and associated expense. Further, the company believes this measure is useful to investors as a way to evaluate the company’s ongoing performance because it provides a more accurate depiction of on demand revenue arising from our strategic acquisitions.

The company defines “Adjusted Gross Profit” as gross profit, plus (1) acquisition-related and other deferred revenue adjustments, (2) depreciation, (3) amortization of intangible assets, (4) headquarters relocation costs, and (5) stock-based expense; and the company defines “Adjusted Gross Margin” as Adjusted Gross Profit as a percentage of Non-GAAP Total Revenue. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Adjusted EBITDA” as net income (loss), plus (1) acquisition-related and other deferred revenue adjustments, (2) depreciation, asset impairment, and the loss on disposal of assets, (3) amortization of intangible assets, (4) acquisition-related expense (income), (5) interest expense, net, (6) income tax expense (benefit), (7) litigation-related expense, (8) headquarters relocation costs, and (9) stock-based expense; and the company defines “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage Non-GAAP Total Revenue. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Non-GAAP Product Development Expense” as product development expense, excluding (1) asset impairment and loss on disposal of assets, (2) headquarters relocation costs, and (3) stock-based expense; and the company defines “Non-GAAP Product Development Margin” as Non-GAAP Product Development Expense as a percentage of Non-GAAP Total Revenue. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to product innovation.

The company defines “Non-GAAP Sales and Marketing Expense” as sales and marketing expense, excluding (1) amortization of intangible assets, (2) headquarters relocation costs, and (3) stock-based expense; and the company defines “Non-GAAP Sales and Marketing Margin” as Non-GAAP Sales and Marketing Expense as a percentage of Non-GAAP Total Revenue. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to its sales and marketing strategies.

The company defines “Non-GAAP General and Administrative Expense” as general and administrative expense, excluding (1) asset impairment and loss on disposal of assets, (2) acquisition-related expense (income), (3) litigation-related expense, (4) headquarters relocation costs, and (5) stock-based expense; and the company defines “Non-GAAP General and Administrative Margin” as Non-GAAP General and Administrative Expense as a percentage of Non-GAAP Total Revenue. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s underlying expense structure to support corporate activities and processes.

The company defines “Non-GAAP Operating Expense” as operating expense, excluding (1) asset impairment and loss on disposal of assets, (2) acquisition-related expense (income), (3) litigation-related expense, (4) headquarters relocation costs, and (5) stock-based expense; and the company defines “Non-GAAP Operating Expense Margin” as Non-GAAP Operating Expense as a percentage of Non-GAAP Total Revenue. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s underlying expense structure to support ongoing operations.

The company defines “Non-GAAP Operating Income” as operating income (loss), plus (1) acquisition-related and other deferred revenue, (2) asset impairment and loss on disposal of assets, (3) amortization of intangible assets, (4) acquisition-related expense (income), (5) litigation-related expense, (6) headquarters relocation costs, and (7) stock-based expense; and the company defines “Non-GAAP Operating Margin” as Non-GAAP Operating Income as a percentage of Non-GAAP Total Revenue. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Non-GAAP Net Income” as net income (loss), plus (1) income tax expense, (2) acquisition-related and other deferred revenue, (3) asset impairment and loss on disposal of assets, (4) amortization of intangible assets, (5) acquisition-related expense (income), (6) litigation-related expense, (7) headquarters relocation costs, (8) stock-based expense, and (9) provision for income tax expense based on an assumed rate in order to approximate the company’s long-term effective corporate tax rate; and the company defines “Non-GAAP Net Income per Diluted Share” as Non-GAAP Net Income divided by weighted average diluted shares outstanding. The company believes that investors and financial analysts find these non-GAAP financial measures to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Non-GAAP On Demand Revenue” as total revenue plus acquisition-related and other deferred revenue adjustments. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules and revenue deferred due to a lack of historical experience determining the settlement of the contractual obligation in order to appropriately measure the underlying performance of the company’s business operations in the period of activity and associated expense. Further, the company believes that investors and financial analysts find this measure to be useful in evaluating the company’s ongoing performance because it provides a more accurate depiction of on demand revenue arising from our strategic acquisitions.

The company defines “Ending On Demand Units” as the number of rental housing units managed by our customers with one or more of our on demand software solutions at the end of the period. We use ending on demand units to measure the success of our strategy of increasing the number of rental housing units managed with our on demand software solutions. Property unit counts are provided to us by our customers as new sales orders are processed. Property unit counts may be adjusted periodically as information related to our customers’ properties is updated or supplemented, which could result in adjustments to the number of units previously reported.

The company defines “RPU,” or Revenue Per Unit, as Non-GAAP On Demand Revenue divided by average on demand units for the same period, including pro forma adjustments for significant acquisitions and dispositions during the period. For interim periods, the calculation is performed on an annualized basis. The company calculates average on demand units as the average of the beginning and ending on demand units for each quarter in the period presented. The company monitors this metric to measure its success in increasing the number of on demand software solutions utilized by its customers to manage their rental housing units, its overall revenue and profitability.

The company defines “ACV,” or Annual Client Value, as RPU multiplied by Ending On Demand Units. The company monitors this metric to measure its success in increasing the number of on demand units and the amount of software solutions utilized by its customers to manage their rental housing units. In addition, the company believes ACV provides a useful proxy for the annual run-rate value of on demand customer relationships.

The company excludes or adjusts each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to each excluded item:

  • Non-GAAP tax rate – The company uses a 40.0% tax rate in order to approximate the Company’s long-term effective corporate tax rate. The GAAP tax rate includes certain tax items which may include, but are not limited to: income tax expenses or benefits that are not related to ongoing business operations in the current year; unusual or infrequently occurring items; tax adjustments associated with fluctuations in foreign currency re-measurement; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and liabilities; and changes in tax law. We believe excluding these items assists investors and analysts in understanding the tax provision and the effective tax rate related to ongoing operations.
  • Acquisition-related and other deferred revenue – These items are included to reflect deferred revenue written down for GAAP purposes under purchase accounting rules and revenue deferred due to a lack of historical experience determining the settlement of the contractual obligation in order to appropriately measure the underlying performance of the company’s business operations in the period of activity and associated expense.
  • Asset impairment and loss on disposal of assets – These items comprise gains (losses) on the disposal and impairment of long-lived assets, which are not reflective of the company’s ongoing operations. We believe exclusion of these items facilitates a more accurate comparison of the company’s results of operations between periods.
  • Depreciation of long-lived assets - Long-lived assets are depreciated over their estimated useful lives in a manner reflecting the pattern in which the economic benefit is consumed. Management is limited in its ability to change or influence these charges after the asset has been acquired and placed in service. We do not believe that depreciation expense accurately reflects the performance of the Company’s ongoing operations for the period in which the charges are incurred, and are therefore not considered by management in making operating decisions.
  • Amortization of intangible assets – These items are amortized over their estimated useful lives and generally cannot be changed or influenced by the company after acquisition. Accordingly, these items are not considered by the company in making operating decisions. The company does not believe such charges accurately reflect the performance of its ongoing operations for the period in which such charges are incurred.
  • Acquisition-related expense (income) – These items consist of direct costs incurred in our business acquisition transactions and the impact of changes in the fair value of acquisition-related contingent consideration obligations. We believe exclusion of these items facilitates a more accurate comparison of the results of the company’s ongoing operations across periods and eliminates volatility related to changes in the fair value of acquisition-related contingent consideration obligations.
  • Litigation-related expense – This item relates to the company's litigation with Yardi Systems, Inc., including related insurance litigation and settlement costs. This significant and non-recurring litigation and related ancillary matters were resolved in the second quarter of 2014. The company believes that the costs incurred related to this litigation are not reflective of its ongoing operations.
  • Headquarters relocation costs – These items consist of duplicative rent and other expenses related to the relocation of our corporate headquarters and data center. These costs are not reflective of the company’s ongoing operations due to their non-recurring nature.
  • Stock-based expense – This item is excluded because these are non-cash expenditures that the company does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expenditure is partially outside of its control because it is based on factors such as stock price, volatility, and interest rates, which may be unrelated to the company’s performance during the period in which the expenses are incurred.
 
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(Unaudited)
 
 

March 31,

 

December
31,

20172016
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 59,516 $ 104,886
Restricted cash 96,430 83,654

Accounts receivable, less allowance for doubtful accounts of $2,372 and
$2,468 at March 31, 2017 and December 31, 2016, respectively

88,052 92,367
Prepaid expenses 13,033 10,836
Other current assets   4,654     5,712  
Total current assets 261,685 297,455
Property, equipment, and software, net 138,379 130,428
Goodwill 312,837 259,938
Identified intangible assets, net 94,381 74,976
Deferred tax assets, net 59,195 15,665
Other assets   10,430     9,636  
Total assets $ 876,907   $ 788,098  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 28,742 $ 21,421
Accrued expenses and other current liabilities 42,460 50,464
Current portion of deferred revenue 98,270 89,583
Current portion of term loan 3,125 5,469
Customer deposits held in restricted accounts   96,313     83,590  
Total current liabilities 268,910 250,527
Deferred revenue 6,173 6,308
Term loan, net 117,746 116,657
Other long-term liabilities   32,739     29,843  
Total liabilities 425,568 403,335
Stockholders’ equity:

Common stock, $0.001 par value: 125,000,000 shares authorized, 86,567,236 and
86,062,191 shares issued and 82,867,780 and 81,087,353 shares outstanding at
March 31, 2017 and December 31, 2016, respectively

86 86
Additional paid-in capital 552,412 534,348

Treasury stock, at cost: 3,699,456 and 4,974,838 shares at March 31, 2017 and
December 31, 2016, respectively

(33,934 ) (30,358 )
Accumulated deficit (67,228 ) (119,260 )
Accumulated other comprehensive income (loss)   3     (53 )
Total stockholders’ equity   451,339     384,763  
Total liabilities and stockholders’ equity $ 876,907   $ 788,098  
 
     
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended
March 31,
20172016
Revenue:
On demand $ 146,213 $ 123,411
On premise 675 772
Professional and other   6,031     4,200  
Total revenue 152,919 128,383
Cost of revenue(1)   63,042     54,748  
Gross profit   89,877     73,635  
Operating expenses:
Product development(1) 20,387 17,272
Sales and marketing(1) 35,147 32,199
General and administrative(1)   24,251     18,346  
Total operating expenses   79,785     67,817  
Operating income 10,092 5,818
Interest expense and other, net   (1,086 )   (708 )
Income before income taxes   9,006     5,110  
Income tax expense   811     2,114  
Net income $ 8,195   $ 2,996  
 
Net income per share attributable to common stockholders:
Basic $ 0.10 $ 0.04
Diluted $ 0.10 $ 0.04

Weighted average shares used in computing net income per share
attributable to common stockholders:

Basic 78,263 76,656
Diluted 81,386 77,147
         
 
(1) Includes stock-based expense as follows:
Three Months Ended
March 31,
20172016
Cost of revenue $ 853 $ 751
Product development 1,879 1,449
Sales and marketing 3,128 2,974
General and administrative   4,232     3,217  
$ 10,092   $ 8,391  
 
     
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Three Months Ended
March 31,
20172016
Cash flows from operating activities:
Net income $ 8,195 $ 2,996

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

Depreciation and amortization 14,440 12,607
Deferred taxes 243 1,539
Stock-based expense 10,092 8,391
Excess tax benefit from stock-based compensation (27 )
Loss on disposal and impairment of other long-lived assets 24
Acquisition-related consideration 121 (126 )

Changes in assets and liabilities, net of assets acquired and liabilities
assumed in business combinations

  1,092     3,589  
Net cash provided by operating activities   34,207     28,969  
 
Cash flows from investing activities:
Purchases of property, equipment, and software (9,925 ) (10,217 )
Acquisition of businesses, net of cash acquired   (66,103 )   (59,152 )
Net cash used in investing activities   (76,028 )   (69,369 )
 
Cash flows from financing activities:
Payments on and proceeds from debt, net (1,389 ) 84,144
Payments of acquisition-related consideration (6,461 ) (2,361 )
Issuance of common stock 7,927 2,482
Excess tax benefit from stock-based compensation 27
Purchase of treasury stock related to stock-based compensation (3,576 ) (1,262 )
Purchase of treasury stock under share repurchase program       (16,138 )
Net cash (used in) provided by financing activities   (3,499 )   66,892  
Net (decrease) increase in cash and cash equivalents (45,320 ) 26,492
Effect of exchange rate on cash (50 ) 96
 
Cash and cash equivalents:
Beginning of period   104,886     30,911  
End of period $ 59,516   $ 57,499  
 
  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
COMPARABLE GAAP MEASURES
(Unaudited, in thousands, except per share amounts)
 
The following is a reconciliation of the non-GAAP financial measures used by RealPage to describe its financial results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). An explanation of these measures is also included under the heading “Explanation of Non-GAAP Financial Measures.”

 

While the company believes that these non-GAAP financial measures provide useful supplemental information to investors regarding the underlying performance of our business operations, investors are reminded to consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition, it should be noted that these non-GAAP financial measures may be different from non-GAAP measures used by other companies, and the company may utilize other measures to illustrate performance in the future. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP.

 

Non-GAAP Total Revenue

Set forth below is a presentation of the company’s “Non-GAAP total revenue.” Please reference the “Explanation of Non-GAAP Financial Measures” section.
 
          Three Months Ended
March 31,
2017   2016
Revenue (GAAP) $ 152,919 $ 128,383
Acquisition-related and other deferred revenue   705   (343 )
Non-GAAP total revenue $ 153,624 $ 128,040  
 
 

Adjusted Gross Margin

Set forth below is a presentation of the company’s "Adjusted gross profit" and "Adjusted gross margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
        Three Months Ended
March 31,
2017   2016
Gross profit (GAAP) $ 89,877 $ 73,635
Acquisition-related and other deferred revenue 705 (343 )
Depreciation 2,883 2,692
Amortization of intangible assets 3,689 4,165
Headquarters relocation costs 584
Stock-based expense   853     751  
Adjusted gross profit $ 98,007     81,484  
 
Adjusted gross margin 63.8 % 63.6 %
 
 

Adjusted EBITDA

Set forth below is a presentation of the company’s "Adjusted EBITDA" and "Adjusted EBITDA margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
      Three Months Ended
March 31,
2017   2016
Net income (GAAP) $ 8,195 $ 2,996
Acquisition-related and other deferred revenue 705 (343 )
Depreciation, asset impairment, and loss on disposal of assets 6,675 5,496
Amortization of intangible assets 7,789 7,111
Acquisition-related expense (income) 1,691 (57 )
Interest expense, net 1,120 719
Income tax expense 811 2,114
Headquarters relocation costs 1,025
Stock-based expense   10,092     8,391  
Adjusted EBITDA $ 37,078   $ 27,452  
 
Adjusted EBITDA margin 24.1 % 21.4 %
 
 

Non-GAAP Product Development Expense

Set forth below is a presentation of the company’s "Non-GAAP product development expense" and "Non-GAAP product development margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
        Three Months Ended
March 31,
2017   2016
Product development expense (GAAP) $ 20,387 $ 17,272
Less: Headquarters relocation costs 154
Stock-based expense   1,879     1,449  
Non-GAAP product development expense $ 18,508   $ 15,669  
 
Non-GAAP product development margin 12.0 % 12.2 %
 
 

Non-GAAP Sales and Marketing Expense

Set forth below is a presentation of the company’s "Non-GAAP sales and marketing expense" and "Non-GAAP sales and marketing margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
        Three Months Ended
March 31,
2017   2016
Sales and marketing expense (GAAP) $ 35,147 $ 32,199
Less: Amortization of intangible assets 4,100 2,946
Headquarters relocation costs 170
Stock-based expense   3,128     2,974  
Non-GAAP sales and marketing expense $ 27,919   $ 26,109  
 
Non-GAAP sales and marketing margin 18.2 % 20.4 %
 
 

Non-GAAP General and Administrative Expense

Set forth below is a presentation of the company’s "Non-GAAP general and administrative expense" and "Non-GAAP general and administrative margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
        Three Months Ended
March 31,
2017   2016
General and administrative expense (GAAP) $ 24,251 $ 18,346
Less: Loss on disposal of assets 24
Acquisition-related expense (income) 1,691 (57 )
Headquarters relocation costs 117
Stock-based expense   4,232     3,217  
Non-GAAP general and administrative expense $ 18,304   $ 15,069  
 
Non-GAAP general and administrative margin 11.9 % 11.8 %
 
 

Non-GAAP Operating Expense

Set forth below is a presentation of the company’s "Non-GAAP operating expense" and "Non-GAAP operating expense margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
        Three Months Ended
March 31,
2017   2016
Operating expense (GAAP) $ 79,785 $ 67,817
Less: Loss on disposal of assets 24
Amortization of intangible assets 4,100 2,946
Acquisition-related expense (income) 1,691 (57 )
Headquarters relocation costs 441
Stock-based expense   9,239     7,640  
Non-GAAP operating expense $ 64,731   $ 56,847  
 
Non-GAAP operating expense margin 42.1 % 44.4 %
 
 

Non-GAAP Operating Income

Set forth below is a presentation of the company’s "Non-GAAP operating income" and "Non-GAAP operating margin." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
        Three Months Ended
March 31,
2017   2016
Operating income (GAAP) $ 10,092 $ 5,818
Acquisition-related and other deferred revenue 705 (343 )
Loss on disposal of assets 24
Amortization of intangible assets 7,789 7,111
Acquisition-related expense (income) 1,691 (57 )
Headquarters relocation costs 1,025
Stock-based expense   10,092     8,391  
Non-GAAP operating income $ 30,393   $ 21,945  
 
Non-GAAP operating margin 19.8 % 17.1 %
 
 

Non-GAAP Net Income

Set forth below is a presentation of the company’s "Non-GAAP net income" and "Non-GAAP net income per diluted share." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
      Three Months Ended
March 31,
2017   2016
Net income (GAAP) $ 8,195 $ 2,996
Income tax expense   811     2,114  
Income before income taxes 9,006 5,110
 
Acquisition-related and other deferred revenue 705 (343 )
Loss on disposal of assets 24
Amortization of intangible assets 7,789 7,111
Acquisition-related expense (income) 1,691 (57 )
Headquarters relocation costs 1,025
Stock-based expense   10,092     8,391  
Non-GAAP income before income taxes 29,307 21,237
Assumed rate for income tax expense (1) 40.0 % 40.0 %
Assumed provision for non-GAAP income tax expense   11,723     8,495  
Non-GAAP net income $ 17,584   $ 12,742  
 
Net income per diluted share $ 0.10 $ 0.04
Non-GAAP net income per diluted share $ 0.22 $ 0.17
 
Weighted average outstanding shares - basic (3) 78,263 76,656
Weighted average outstanding shares - diluted (3) 81,386 77,147
 
 

Non-GAAP On Demand Revenue, Ending On Demand Units, RPU and ACV

Set forth below is a presentation of the company’s "Non-GAAP on demand revenue," "Ending on demand units," "RPU," and "ACV." Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
      Three Months Ended
March 31,
2017   2016
On demand revenue (GAAP) $ 146,213 $ 123,411
Acquisition-related and other deferred revenue   705   (343 )
Non-GAAP on demand revenue 146,918 123,068
 
Ending on demand units 11,112 10,999
Average on demand units   11,050   10,783  
RPU $

53.65

$ 48.10  
 
ACV $

596,159

$ 529,052
 
 

Non-GAAP Total Revenue Guidance

Set forth below is a presentation of the company’s "Non-GAAP total revenue" guidance for the three months ending June 30, 2017, and the twelve months ending December 31, 2017. Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
       

Guidance Range for the
Three Months Ending

 

Guidance Range for the
Twelve Months Ending

June 30, 2017December 31, 2017
Low (2)   High (2)Low (2)   High (2)
Revenue (GAAP) $ 158,050 $ 160,050 $ 640,190 $ 649,190
Acquisition-related and other deferred revenue   950   950   2,810   2,810
Non-GAAP total revenue $ 159,000 $ 161,000 $ 643,000 $ 652,000
 
       

Non-GAAP Net Income Guidance

Set forth below is a presentation of the company’s "Non-GAAP net income" and "Non-GAAP net income per diluted share" guidance for the three months ending June 30, 2017, and the twelve months ending December 31, 2017. Please reference the "Explanation of Non-GAAP Financial Measures" section.
 

Guidance Range for the
Three Months Ending

Guidance Range for the
Twelve Months Ending

June 30, 2017December 31, 2017
Low (2)High (2)Low (2)High (2)
Non-GAAP net income:
Net income (GAAP) $ 4,550 $ 5,630 $ 25,275 $ 28,815
Income tax expense   3,030     3,750     12,190     14,550  
Income before income taxes 7,580 9,380 37,465 43,365
 
 
Acquisition-related and other deferred revenue 950 950 2,810 2,810
Asset impairment and loss on disposal of assets - - 25 25
Amortization of intangible assets 8,300 8,200 32,400 32,100
Acquisition-related expense 900 800 2,800 2,500
Stock-based expense   12,000     11,500     46,000     45,000  
Non-GAAP income before income taxes 29,730 30,830 121,500 125,800
Expected effective tax rate (4) 40.0 % 40.0 % 40.0 % 40.0 %
Assumed provision for income tax expense   11,892     12,332     48,600     50,320  
Non-GAAP net income $ 17,838   $ 18,498   $ 72,900   $ 75,480  
 
Net income per diluted share $ 0.06 $ 0.07 $ 0.31 $ 0.35
Non-GAAP net income per diluted share $ 0.22 $ 0.23 $ 0.88 $ 0.92
 
Weighted average outstanding shares - diluted (3) 82,100 82,100 82,450 82,450
 
       

Adjusted EBITDA Guidance

Set forth below is a presentation of the company’s "Adjusted EBITDA" guidance for the three months ending June 30, 2017, and the twelve months ending December 31, 2017. Please reference the "Explanation of Non-GAAP Financial Measures" section.
 

Guidance Range for the
Three Months Ending

Guidance Range for the
Twelve Months Ending

June 30, 2017December 31, 2017
Low (2)High (2)Low (2)High (2)
Adjusted EBITDA:
Net income (GAAP) $ 4,550 $ 5,630 $ 25,275 $ 28,815
Acquisition-related and other deferred revenue 950 950 2,810 2,810
Depreciation, asset impairment, and loss on disposal of assets 7,450 7,350 30,025 29,725
Amortization of intangible assets 8,300 8,200 32,400 32,100
Acquisition-related expense 900 800 2,800 2,500
Interest expense, net 1,120 1,120 4,500 4,500
Income tax expense 3,030 3,750 12,190 14,550
Stock-based expense   12,000   11,500   46,000   45,000
Adjusted EBITDA $ 38,300 $ 39,300 $ 156,000 $ 160,000
 
       
   
(1) We use a non-GAAP tax rate of 40.0% in order to approximate the Company's long-term effective corporate tax rate. Please reference the "Explanation of Non-GAAP Financial Measures" section.
 
(2) Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The company may be required to revise its results upon finalizing its review of quarterly and full year results, which could cause or contribute to such differences. All information provided in this release is as of the date hereof and RealPage, Inc. undertakes no duty to update this information except as required by law. See additional discussion under "Cautionary Statement Regarding Forward-Looking Statements" above.
 
(3) For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.
 
(4) This rate represents our expected effective GAAP tax rate for the year ending December 31, 2017.
 

RealPage, Inc.
Investor Relations
Rhett Butler, 972-820-3773
rhett.butler@realpage.com

Source: RealPage, Inc.

Investor Contact

Rhett Butler, Investor Relations
Phone: (972) 820-3773
Email: ir@realpage.com

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