RealPage Reports Q1 2012 Financial Results

-- 2012 Q1 Non-GAAP revenue increases 29.5% to $74.5 million

-- 2012 Q1 adjusted EBITDA increases 35.4% to $16.4 million

-- 2012 Q1 Non-GAAP earnings per share increases 42.9% to $0.10 per diluted share

CARROLLTON, Texas, May 3, 2012 /PRNewswire/ -- RealPage, Inc. (NASDAQ: RP), a leading provider of on-demand software and software-enabled services to the rental housing industry, today announced financial results for its first quarter ended March 31, 2012. 

(Logo:  https://photos.prnewswire.com/prnh/20110912/DA66533LOGO)

"RealPage has started the year strongly as evidenced by our solid first quarter financial performance," says Steve Winn, Chairman and CEO of RealPage.  "Non-GAAP total revenue performance was up 29% year over year and Adjusted EBITDA grew 35% over the same period.  Our growth in on demand units and revenue per unit resulted in an annual customer value of $286 million, an increase of 34% compared to the prior year quarter.  We believe this demonstrates our success in cross selling additional software solutions and services into our installed base and our ability to capture new units effectively across property managers and owners of all sizes."

First Quarter 2012 Financial Highlights

  • Non-GAAP total revenue was $74.5 million, an increase of 29.5% year-over-year;
  • Non-GAAP on demand revenue was $70.8 million, an increase of 33.7% year-over-year;
  • Adjusted EBITDA was $16.4 million, an increase of 35.4% year-over-year;
  • Non-GAAP net income was $7.6 million, or $0.10 per diluted share, a year-over-year increase of 47.8% and 42.9%, respectively;
  • GAAP net income was $1.7 million, or $0.02 per diluted share, compared to a GAAP net loss of $0.6 million, or $0.01 per diluted share, in the prior year quarter; and
  • Net cash provided by operating activities was $10.9 million, an increase of 17.7% year-over-year.

Financial Outlook

RealPage management expects to achieve the following results during its second quarter ended June 30, 2012:

  • Non-GAAP total revenue is expected to be in the range of $77.5 million to $79.0 million;
  • Adjusted EBITDA is expected to be in the range of $16.8 million to $17.3 million;
  • Non-GAAP net income is expected to be in the range of $7.9 million to $8.2 million, or $0.11 per diluted share;
  • Non-GAAP tax rate of approximately 40.0%; and
  • Weighted average shares outstanding of approximately 74.0 million.

RealPage management expects to achieve the following results during its calendar year ended December 31, 2012:

  • Non-GAAP total revenue is expected to be in the range of $321.5 million to $330.0 million;
  • Adjusted EBITDA is expected to be in the range of $71.9 million to $75.0 million;
  • Non-GAAP net income is expected to be in the range of $34.0 million to $36.0 million, or $0.46 to $0.49 per diluted share;
  • Non-GAAP tax rate of approximately 40.0%; and
  • Full year weighted average shares outstanding of approximately 74.1 million.

Please note that the above statements are forward looking and that Non-GAAP total revenue includes an adjustment for the effect of deferred revenue from acquired companies that is required to be written down for GAAP purposes under purchase accounting rules.  In addition, the above statements also include the impact of acquisitions and exclude any impact resulting from the Yardi Systems litigation.  Actual results may differ materially.  Please reference the information under the caption "Non-GAAP Financial Measures" as part of this press release.

Conference Call and Webcast

The Company will host a conference call today at 5:00 p.m. EDT to discuss its financial results.  Participants are encouraged to listen to the presentation via a live web broadcast at www.realpage.com on the Investor Relations section.  In addition, a live dial-in is available domestically at 866-743-9666 and internationally at 760-298-5103.  A replay will be available at 855-859-2056 or 404-537-3406, passcode 75552849, until May 13, 2012.

About RealPage

Located in Carrollton, Texas, a suburb of Dallas, RealPage provides on demand (also referred to as "Software-as-a-Service" or "SaaS") products and services to apartment communities and single family rentals across the United States. Its on demand product lines include OneSite® property management systems that automate the leasing, renting, management, and accounting of conventional, affordable, tax credit, student living, senior living and military housing properties; LeaseStar™ multichannel managed marketing that enables owners to originate, syndicate, manage and capture leads more effectively and at less overall cost; YieldStar® asset optimization systems that enable owners and managers to optimize rents to achieve the overall highest yield, or combination of rent and occupancy, at each property; Velocity™ billing and utility management services that increase collections and reduce delinquencies; LeasingDesk® risk mitigation systems that are designed to reduce a community's exposure to risk and liability; OpsTechnology® spend management systems that help owners manage and control operating expenses; and Compliance Depot™ vendor management and qualification services to assist a community in managing its compliance vendor program. Supporting this family of SaaS products is a suite of shared cloud services including electronic payments, document management, decision support and learning. RealPage's MyNewPlace® subsidiary is one of the largest lead generation apartment and home rental websites, offering apartment owners and managers qualified, prospective residents through subscription, pay-per-lead and LeaseMatch pay-per-lease programs. Through its Propertyware subsidiary, RealPage also provides software and services to single-family rentals and low density, centrally-managed multifamily housing. For more information, call 1-87-REALPAGE or visit 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 of operations, growth, expenditures, tax rates, outstanding shares and potential benefits of completed acquisitions. 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. 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. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the possibility that general economic conditions or uncertainty cause information technology spending, particularly in the rental housing industry, to be reduced or purchasing decisions to be delayed; (b) an increase in customer cancellations; (c) the inability to increase sales to existing customers and to attract new customers; (d) RealPage, Inc.'s failure to integrate acquired businesses and any future acquisitions successfully; (e) the timing and success of new product introductions by RealPage, Inc. or its competitors; (f) changes in RealPage, Inc.'s pricing policies or those of its competitors; (g) litigation; and (h) such other risk and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission ("SEC"), including RealPage's Annual Report on Form 10-K previously filed with the SEC on February 24, 2012. 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.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. These measures differ from GAAP in that they exclude amortization of intangible assets, stock-based compensation expenses, any impact related to the Yardi Systems litigation, acquisition-related deferred revenue adjustments, and acquisition related expenses (including any purchase accounting adjustments). Reconciliation tables comparing GAAP financial measures to non-GAAP financial measures are included at the end of this release.

We define Adjusted EBITDA as net (loss) income plus acquisition-related deferred revenue adjustment, depreciation and asset impairment, amortization of intangible assets, net interest expense, income tax expense (benefit), stock-based compensation expense, any impact related to the Yardi Systems litigation and acquisition-related expense.

We believe that the use of Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

  • Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with our peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and
  • it is useful to exclude certain non-cash charges, such as depreciation and asset impairment, amortization of intangible assets and stock-based compensation and non-core operational charges, such as acquisition-related expense and any impact related to the Yardi Systems litigation, from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be.

We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.

We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of liquidity or financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures and that they do not reflect changes in, or cash requirements for, our working capital. We compensate for the inherent limitations associated with using Adjusted EBITDA measures through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net (loss) income.


Condensed Consolidated Statements of Operations


For the Three Months Ended March 31, 2012 and 2011


(unaudited, in thousands, except per share data)














Three Months Ended






March 31,






2012


2011



Revenue:







On demand

$      70,718


$      52,937




On premise

1,416


1,645




Professional and other

2,283


2,966





Total revenue

74,417


57,548



Cost of revenue(1)

30,613


24,683



Gross profit

43,804


32,865



Operating expense:







Product development(1) 

11,313


10,316




Sales and marketing(1)

16,806


12,794




General and administrative(1)

12,303


9,776





Total operating expense

40,422


32,886



Operating income (loss) 

3,382


(21)



Interest expense and other, net

(636)


(1,166)



Income (loss) before income taxes

2,746


(1,187)



Income tax expense (benefit)

1,026


(539)



Net income (loss)

$        1,720


$          (648)











Net income (loss) per share 








Basic

$          0.02


$         (0.01)





Diluted

$          0.02


$         (0.01)



Weighted average shares used in






computing net income (loss) per share








Basic

70,590


66,800





Diluted

73,170


66,800



















(1)

Includes stock-based compensation                   

Three Months Ended




expense as follows:

March 31,






2012


2011





Cost of revenue

$           689


$           298





Product development

1,062


980





Sales and marketing

737


2,733





General and administrative

1,500


842






$        3,988


$        4,853







Condensed Consolidated Balance Sheets


At March 31, 2012 and December 31, 2011


(unaudited, in thousands, except share data)













March 31,


December 31,






2012


2011



Assets






Current assets:







Cash and cash equivalents

$

49,575


$

51,273




Restricted cash

22,557


19,098




Accounts receivable, less allowance for doubtful accounts








of $1,192 and $979 at March 31, 2012 and








December 31, 2011, respectively

42,648


43,883




Deferred tax asset, net of valuation allowance

225


272




Other current assets

10,069


10,232





Total current assets

125,074


124,758



Property, equipment and software, net

28,224


27,974



Goodwill

131,901


129,292



Identified intangible assets, net

110,507


112,308



Deferred tax asset, net of valuation allowance

2,008


2,539



Other assets

4,439


3,194





Total assets

$

402,153


$

400,065



Liabilities and stockholders' equity






Current liabilities:







Accounts payable

$

8,043


$

12,218




Accrued expenses and other current liabilities

29,029


25,816




Current portion of deferred revenue

55,075


57,325




Customer deposits held in restricted accounts

22,478


19,017





Total current liabilities

114,625


114,376



Deferred revenue

9,579


8,693



Revolving credit facility

45,000


50,312



Other long-term liabilities

3,649


3,803





Total liabilities

172,853


177,184



Stockholders' equity:







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







  authorized and zero shares March 31, 2012







  and December 31, 2011, respectively

-


-




Common stock, $0.001 par value per share: 125,000,000 shares







   authorized, 73,916,813 and  73,115,779  shares issued and







   73,433,527 and 72,701,571 shares outstanding at







   March 31, 2012 and December 31, 2011, respectively

74


73




Additional paid-in capital

322,712


316,964




Treasury stock, at cost: 483,286 and 414,208 shares at

(4,184)


(3,138)




  March 31, 2012 and December 31, 2011, respectively 







Accumulated deficit

(89,241)


(90,961)




Accumulated other comprehensive loss

(61)


(57)





Total stockholders' equity 

229,300


222,881





Total liabilities and stockholders' equity

$

402,153


$

400,065




Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2012 and 2011

(unaudited, in thousands)













Three Months Ended






March 31,






2012


2011


Cash flows from operating activities:






Net income (loss)

$        1,720


$          (648)



Adjustments to reconcile net income (loss) to net cash







provided by operating activities:







Depreciation and amortization

7,878


6,773




Deferred tax expense (benefit)

578


(778)




Stock-based compensation

3,988


4,853




Loss on disposal of assets

178


397




Acquisition-related contingent consideration

430


62




Changes in assets and liabilities, net of assets acquired








and liabilities assumed in business combinations:

(3,870)


(1,398)





Net cash provided by operating activities

10,902


9,261


Cash flows from investing activities:






Purchases of property, equipment and software

(3,560)


(1,954)



Acquisition of businesses, net of cash acquired

(4,303)


(184)



Intangible asset purchase

(75)


-





Net cash used by investing activities

(7,938)


(2,138)


Cash flows from financing activities:






Stock issuance costs from public offerings

$               -


$          (775)



Payments on and proceeds from debt, net

(5,373)


(2,961)



Issuance of common stock

1,761


3,044



Purchase of treasury stock

(1,046)


(186)





Net cash used by financing activities

(4,658)


(878)





Net (decrease) increase in cash and cash equivalents         

(1,694)


6,245





Effect of exchange rate on cash

(4)


(12)


Cash and cash equivalents:






Beginning of period

51,273


118,010



End of period

$      49,575


$    124,243




Reconciliation of GAAP to Non-GAAP Measures

For the Three Months Ended March 31, 2012 and 2011

(unaudited, in thousands)













Three Months Ended






March 31,






2012


2011










Revenue:

$      74,417


$      57,548



Acquisition-related deferred revenue adjustment

81


-


Non-GAAP revenue

$      74,498


$      57,548














Three Months Ended






March 31,






2012


2011


Adjusted gross profit:






Gross profit

$      43,804


$      32,865




Acquisition-related deferred revenue adjustment

81


-




Depreciation

1,585


1,490




Amortization of intangible assets

2,418


2,176




Stock-based compensation expense

689


298



Adjusted gross profit

$      48,577


$      36,829











Adjusted gross profit

65.2%


64.0%














Three Months Ended






March 31,






2012


2011


Adjusted EBITDA:






Net income (loss)

$        1,720


$          (648)




Acquisition-related deferred revenue adjustment

81


-




Depreciation, asset impairment and loss on disposal of asset 

3,227


3,124




Amortization of intangible assets

4,829


4,046




Interest expense, net

638


783




Income tax expense (benefit)

1,026


(539)




Litigation-related expense

360


320




Stock-based compensation expense

3,988


4,853




Acquisition-related expense

553


186



Adjusted EBITDA

$      16,422


$      12,125











Adjusted EBITDA margin

22.0%


21.1%














Three Months Ended






March 31,






2012


2011


Non-GAAP total product development:






Product Development

$      11,313


$      10,316




Less: Amortization of intangible assets

-


-




          Stock-based compensation expense

1,062


980



Non-GAAP total product development:

$      10,251


$        9,336











Non-GAAP total product development as % of non-GAAP revenue:

13.8%


16.2%




Reconciliation of GAAP to Non-GAAP Measures

For the Three Months Ended March 31, 2012 and 2011

(unaudited, in thousands)













Three Months Ended






March 31,






2012


2011


Non-GAAP total sales and marketing:






Sales and marketing

$      16,806


$      12,794




Less: Amortization of intangible assets

2,411


1,870




          Stock-based compensation expense

737


2,733



Non-GAAP total sales and marketing:

$      13,658


$        8,191











Non-GAAP total sales and marketing as % of non-GAAP revenue:

18.3%


14.2%














Three Months Ended






March 31,






2012


2011


Non-GAAP total general and administrative:






General and administrative 

$      12,303


$        9,776




Less: Acquisition-related expense

553


186




         Stock-based compensation expense

1,500


842




         Litigation related expense

360


320



Non-GAAP total general and administrative:

$        9,890


$        8,428











Non-GAAP total general and administrative as % of non-GAAP revenue:

13.3%


14.6%














Three Months Ended






March 31,






2012


2011


Non-GAAP total operating expenses:






Operating expenses

$      40,422


$      32,886




Less:  Amortization of intangible assets

2,411


1,870




          Acquisition-related expense


553


186




          Stock-based compensation expense

3,299


4,555




          Litigation related expense

360


320



Non-GAAP total operating expenses:

$      33,799


$      25,955











Non-GAAP total operating expenses as % of non-GAAP revenue:

45.4%


45.1%














Three Months Ended






March 31,






2012


2011


Non-GAAP operating income:






Operating income (loss)

$        3,382


$           (21)




Acquisition-related deferred revenue adjustment

81


-




Amortization of intangible assets

4,829


4,046




Stock-based compensation expense

3,988


4,853




Acquisition-related expense

553


186




Litigation related expense

360


320



Non-GAAP operating income

$      13,193


$        9,384











Non-GAAP operating margin

17.7%


16.3%




Reconciliation of GAAP to Non-GAAP Measures

For the Three Months Ended March 31, 2012 and 2011

(unaudited, in thousands, except per share data)













Three Months Ended






March 31,






2012


2011


Non-GAAP net income:






Net income (loss)

$        1,720


$          (648)




Acquisition-related deferred revenue adjustment

81


-




Amortization of intangible assets

4,829


4,046




Stock-based compensation expense

3,988


4,853




Acquisition-related expense

553


186




Litigation related expense

360


320




Loss on disposal of assets

178


397





Subtotal of tax deductible items

9,989


9,802












Tax impact of tax deductible items(1)

(3,996)


(3,921)




Tax expense resulting from applying effective tax rate(2)

(72)


(64)



Non-GAAP net income

$        7,641


$        5,169











Non-GAAP net income per share - diluted

$          0.10


$          0.07











Weighted average shares - diluted

73,170


66,800




Weighted average effect of dilutive securities

-


3,811



Non-GAAP weighted average shares - diluted

73,170


70,611










(1)

Reflects the removal of the tax benefit associated with the amortization of intangible assets, stock-based compensation expense, acquisition-related deferred revenue adjustment and

acquisition-related expense.







(2)

Represents adjusting to a normalized effective tax rate of 40%.

















Three Months Ended






March 31,






2012


2011


Annualized on demand revenue per average on demand unit:






On demand revenue

$      70,718


$      52,937




Acquisition-related deferred revenue adjustment

81


-



Non-GAAP on demand revenue

$      70,799


$      52,937











Ending on demand units

7,431


6,159



Average on demand units

7,366


6,113











Annualized on demand revenue per average on demand unit

$        38.45


$        34.64











Annual customer value of on demand revenue(1)

$    285,722


$    213,348



On demand customers

8,039


7,078










(1)

This metric represents management's estimate for the current annual run-rate value of on demand customer relationships.  This metric is calculated by multiplying ending on demand units times annualized on demand revenue per average non-GAAP on demand unit for the periods presented.


SOURCE RealPage, Inc.