RealPage Reports Q1 2011 Financial Results

 
  2011 Q1 revenue increases 39.1% to $57.5 million
 
  2011 Q1 Adjusted EBITDA increases 67.7% to $12.1 million
 
  Acquires Compliance Depot, a leading provider of vendor risk management and compliance solutions to the multifamily housing industry 

CARROLLTON, Texas, May 5, 2011 (GLOBE NEWSWIRE) -- 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, 2011.

Steve Winn, chairman and CEO of RealPage, said, "We executed well in the first quarter, reporting strong growth in both revenue and operating profitability compared to the first quarter of 2010. We also completed the acquisition of Compliance Depot, a leading provider of vendor risk management and compliance solutions to the multifamily housing industry. The acquisition expands our vendor network significantly, allowing us to broaden our integrated platform of software-enabled valued-added services and realize additional revenue streams."

First Quarter 2011 Financial Highlights

 
  Total revenue was $57.5 million, an increase of 39.1% year-over-year;
 
  On demand revenue was $52.9 million, an increase of 42.3% year-over-year;
 
  Adjusted EBITDA was $12.1 million, an increase of 67.7% year-over-year;
 
  Non-GAAP net income was $5.2 million, or $0.07 per diluted share, a year-over-year increase of 160.2% and 75.0%, respectively;
 
  GAAP net loss attributable to common stockholders was $0.6 million, or $0.01 per diluted share, a year-over-year decrease of 52.1% and 80.0%, respectively; and
 
  Net cash provided by operating activities was $9.3 million, an increase of 28.7% year-over-year.

Financial Outlook

RealPage management expects to achieve the following results during its second quarter ended June 30, 2011:

 
  Total revenue is expected to be in the range of $61.0 million to $62.0 million;
 
  Adjusted EBITDA is expected to be in the range of $13.2 million to $13.7 million;
 
  Non-GAAP net income is expected to be in the range of $5.5 million to $5.8 million, or $0.08 per diluted share;
 
  Tax rate of approximately 40.0%; and
 
  Weighted average shares outstanding of approximately 72.3 million.

RealPage management expects to achieve the following results during its calendar year ended December 31, 2011:

 
  Total revenue is expected to be in the range of $254.0 million to $259.0 million;
 
  Adjusted EBITDA is expected to be in the range of $56.5 million to $60.0 million;
 
  Non-GAAP net income is expected to be in the range of $24.5 million to $26.6 million, or $0.34 to $0.36 per diluted share;
 
  Tax rate of approximately 40.0%; and
 
  Full year weighted average shares outstanding of approximately 72.8 million.

The above statements are forward looking and include the impact of Compliance Depot as well as exclude any potential costs 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 800-642-1687 or 706-645-9291, passcode 62938196, until May 15, 2011.

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 six on-demand product lines include OneSite® property management systems that automate the leasing, renting, management, and accounting of conventional, affordable, tax credit, student living, and military housing properties; Level One® and CrossFire® that enable 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; and OpsTechnology® spend management systems that help owners manage and control operating expenses. Supporting this family of SaaS products is a suite of shared cloud services including electronic payments, document management, decision support and learning. 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.

The RealPage, Inc. logo is available at https://www.globenewswire.com/newsroom/prs/?pkgid=8531

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, tax rates, shares outstanding, capital expenditures, potential growth, litigation and plans to expand market share as well as market performance, opportunities and developments. 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) litigation; (e) RealPage, Inc.'s failure to integrate acquired businesses, including Domin-8, Level One and Compliance Depot, and any future acquisitions successfully; (f) the timing and success of new product introductions by RealPage, Inc. or its competitors; (g) changes in RealPage, Inc.'s pricing policies or those of its competitors; and (h) such other risks 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 filed with SEC on February 28, 2011. 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: non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and non-GAAP operating income. These measures differ from GAAP in that they exclude amortization of intangible assets, stock-based compensation expenses and acquisition related expenses (including any purchase accounting adjustments). We define Adjusted EBITDA as net (loss) income plus depreciation and asset impairment, amortization of intangible assets, net interest expense, income tax expense (benefit), stock-based compensation expense, costs 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 costs 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.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this press release are included at the end of this release.

Condensed Consolidated Statements of Operations
                                          For the Three Months Ended March 31, 2011 and 2010
                                            (unaudited, in thousands, except per share data)
                                                                                         
                                                                         Three Months Ended
                                                                                  March 31,
                                                                 2011                  2010
                                        Revenue:                                          
                                       On demand              $52,937              $37,207
                                      On premise                1,645                1,868
                          Professional and other                2,966                2,303
                                   Total revenue               57,548               41,378
                              Cost of revenue(1)               24,683               17,858
                                    Gross profit               32,865               23,520
                              Operating expense:                                          
                          Product development(1)               10,316                8,315
                          Sales and marketing(1)               12,794                7,540
                   General and administrative(1)                9,776                6,522
                         Total operating expense               32,886               22,377
                         Operating (loss) income                 (21)                1,143
                 Interest expense and other, net              (1,166)              (1,464)
                    Net loss before income taxes              (1,187)                (321)
                              Income tax benefit                (539)                (118)
                                        Net loss             $ (648)             $ (203)
                                                                                         
                          Net loss attributable to common stockholders                     
                                           Basic             $ (648)            $ (1,353)
                                         Diluted             $ (648)            $ (1,353)
                                      Net loss per share attributable to common stockholders
                                           Basic            $ (0.01)            $ (0.05)
                                         Diluted            $ (0.01)            $ (0.05)
Weighted average shares used in computing net loss per share attributable to common stockholders
                                           Basic               66,800               25,759
                                         Diluted               66,800               25,759
                                                                                           
                                                                                         
           (1) Includes stock-based compensation                          Three Months Ended
                             expense as follows:                                   March 31,
                                                                 2011                  2010
                                 Cost of revenue               $ 298               $ 123
                             Product development                  980                  507
                             Sales and marketing                2,733                  164
                      General and administrative                  842                  300
                                                            $ 4,853             $ 1,094
Condensed Consolidated Balance Sheets
                                                                                                                                                                                                                                At March 31, 2011 and December 31, 2010
                                                                                                                                                                                                                                              (unaudited, in thousands)
                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                            March 31,     December 31,
                                                                                                                                                                                                                                                 2011             2010
                                                                                                                                                                                                                                 Assets                              
                                                                                                                                                                                                                        Current assets:                              
                                                                                                                                                                                                              Cash and cash equivalents      $124,243      $ 118,010
                                                                                                                                                                                                                        Restricted cash        15,090          15,346
                                                                                                Accounts receivable, less allowance for doubtful accounts of $974 and $1,370 at 
    March 31, 2011 and December 31, 2010, respectively        29,550          29,577
                                                                                                                                                                                         Deferred tax asset, net of valuation allowance         1,539           1,529
                                                                                                                                                                                                                   Other current assets         6,713           6,060
                                                                                                                                                                                                                   Total current assets       177,135         170,522
                                                                                                                                                                                                  Property, equipment and software, net        23,048          24,515
                                                                                                                                                                                                                               Goodwill        73,947          73,885
                                                                                                                                                                                                      Identified intangible assets, net        50,771          54,361
                                                                                                                                                                                         Deferred tax asset, net of valuation allowance        18,090          17,322
                                                                                                                                                                                                                           Other assets         2,833           2,187
                                                                                                                                                                                                                           Total assets      $345,824      $ 342,792
                                                                                                                                                                                                   Liabilities and stockholders' equity                              
                                                                                                                                                                                                                   Current liabilities:                              
                                                                                                                                                                                                                       Accounts payable      $ 5,179        $ 4,787
                                                                                                                                                                                         Accrued expenses and other current liabilities        14,321          15,436
                                                                                                                                                                                                    Current portion of deferred revenue        47,710          47,717
                                                                                                                                                                                                      Current portion of long-term debt        10,781          10,781
                                                                                                                                                                                          Customer deposits held in restricted accounts        15,014          15,253
                                                                                                                                                                                                              Total current liabilities        93,005          93,974
                                                                                                                                                                                                                       Deferred revenue         8,311           7,947
                                                                                                                                                                                                   Long-term debt, less current portion        52,563          55,258
                                                                                                                                                                                                            Other long-term liabilities        12,310          13,029
                                                                                                                                                                                                                      Total liabilities       166,189         170,208
                                                                                                                                                                                                                  Stockholders' equity:                              
                                                                                 Preferred stock, $0.001 par value, 10,000,000 shares authorized and zero shares 
    outstanding at March 31, 2011 and December 31, 2010, respectively            --              --
     Common stock, $0.001 par value per share: 125,000,000 shares authorized, 
    69,742,139 and 68,703,366 shares issued and 69,520,051 and 68,490,277 shares 
    outstanding at March 31, 2011 and December 31, 2010, respectively            70              69
                                                                                                                                                                                                             Additional paid-in capital       271,115         263,219
                                                                                                                       Treasury stock, at cost: 222,088 and 213,089 shares at March 31, 2011 and December 31, 2010, 
    respectively        (1,144)           (958)
                                                                                                                                                                                                                    Accumulated deficit      (90,378)        (89,730)
                                                                                                                                                                                                   Accumulated other comprehensive loss          (28)            (16)
                                                                                                                                                                                                           Total stockholders' equity        179,635         172,584
                                                                                                                                                                                             Total liabilities and stockholders' equity      $345,824      $ 342,792
Condensed Consolidated Statements of Cash Flows
                                                                                              For the Three Months Ended March 31, 2011 and 2010
                                                                                                                       (unaudited, in thousands)
                                                                                                                                             
                                                                                                                             Three Months Ended
                                                                                                                                      March 31,
                                                                                                                            2011           2010
                                                                           Cash flows from operating activities:                              
                                                                                                        Net loss        $ (648)      $ (203)
                                 Adjustments to reconcile net loss to net cash provided by operating activities:                              
                                                                                   Depreciation and amortization           6,773         4,670
                                                                                            Deferred tax benefit           (778)         (102)
                                                                                        Stock-based compensation           4,853         1,094
                                                                           Excess tax benefit from stock options              --            --
                                                                                          Loss on sale of assets             397            --
                                                                                            Impairment of assets              --            --
                                                                    Acquisition-related contingent consideration              62            --
     Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:         (1,398)         1,739
                                                                       Net cash provided by operating activities           9,261         7,198
                                                                           Cash flows from investing activities:                              
                                                                           Purchases of property, equipment, net         (1,954)       (2,917)
                                                                 Acquisition of businesses, net of cash acquired           (184)      (13,048)
                                                                           Net cash used by investing activities         (2,138)      (15,965)
                                                                           Cash flows from financing activities:                              
                                                                      Stock issuance costs from public offerings        $ (775)         $ --
                                                                           Proceeds from (payments on) debt, net         (2,961)         7,195
                                                                                        Preferred stock dividend              --            --
                                                                                        Issuance of common stock           3,044           160
                                                                           Excess tax benefit from stock options              --            --
                                                                                      Purchase of treasury stock           (186)           (4)
                                                                Net cash provided (used) by financing activities           (878)         7,351
                                                            Net increase (decrease) in cash and cash equivalents           6,245       (1,416)
                                                                                 Effect of exchange rate on cash            (12)            27
                                                                                      Cash and cash equivalents:                              
                                                                                             Beginning of period         118,010         4,427
                                                                                                   End of period      $ 124,243       $ 3,038
Reconciliation of GAAP to Non-GAAP Measures
                                             For the Three Months Ended March 31, 2011 and 2010
                                                                      (unaudited, in thousands)
                                                                            Three Months Ended
                                                                                     March 31,
                                                                          2011            2010
                                         Adjusted Gross Profit:                              
                                                   Gross profit      $ 32,865      $ 23,520
                                                   Depreciation          1,490          1,272
                              Amortization of intangible assets          2,176          1,465
                               Stock-based compensation expense            298            123
                                          Adjusted gross profit      $ 36,829      $ 26,380
                                                                                            
                                          Adjusted gross margin           64.0%           63.8%
                                                                                            
                                                                            Three Months Ended
                                                                                     March 31,
                                                                          2011            2010
                                               Adjusted EBITDA:                              
                                                       Net loss       $ (648)       $ (203)
                        Depreciation and loss on sale of assets          3,124          2,456
                              Amortization of intangible assets          4,046          2,214
                                          Interest expense, net            783          1,464
                                             Income tax benefit          (539)          (118)
                                     Litigation-related expense            320             --
                               Stock-based compensation expense          4,853          1,094
                                    Acquisition-related expense            186            324
                                                Adjusted EBITDA      $ 12,125       $ 7,231
                                                                                            
                                         Adjusted EBITDA Margin           21.1%           17.5%
                                                                                            
                                                                            Three Months Ended
                                                                                     March 31,
                                                                          2011            2010
                            Non-GAAP Total Product Development:                              
                                                      Expenses:      $ 10,316       $ 8,315
                        Less: Amortization of intangible assets             --             --
                               Stock-based compensation expense            980            507
                            Non-GAAP Total Product Development:       $ 9,336       $ 7,808
                                                                                            
            Non-GAAP Total Product Development as % of Revenue:           16.2%           18.9%
                                                                                            
                                                                            Three Months Ended
                                                                                     March 31,
                                                                          2011            2010
                            Non-GAAP Total Sales and Marketing:                              
                                                      Expenses:      $ 12,794       $ 7,540
                        Less: Amortization of intangible assets          1,870            749
                               Stock-based compensation expense          2,733            164
                            Non-GAAP Total Sales and Marketing:       $ 8,191       $ 6,627
                                                                                            
            Non-GAAP Total Sales and Marketing as % of Revenue:           14.2%           16.0%
                                                                                            
                                                                            Three Months Ended
                                                                                     March 31,
                                                                          2011            2010
                     Non-GAAP Total General and Administrative:                              
                                            Operating Expenses:       $ 9,776       $ 6,522
                              Less: Acquisition-related expense            186            324
                               Stock-based compensation expense            842            300
                                     Litigation-related expense            320             --
                     Non-GAAP Total General and Administrative:       $ 8,428       $ 5,898
                                                                                            
     Non-GAAP Total General and Administrative as % of Revenue:           14.6%           14.3%
Reconciliation of GAAP to Non-GAAP Measures
                                                                                                                                                                  For the Three Months Ended March 31, 2011 and 2010
                                                                                                                                                                    (unaudited, in thousands, except per share data)
                                                                                                                                                                                                                 
                                                                                                                                                                                                 Three Months Ended
                                                                                                                                                                                                          March 31,
                                                                                                                                                           2011                                                2010
                                                                          Non-GAAP Total Operating Expenses:                                                                                                      
                                                                                         Operating Expenses:                                          $ 32,886                                          $ 22,377
                                                                    Less: Amortization of intangible assets                                              1,870                                                749
                                                                                 Acquisition-related expense                                                186                                                324
                                                                            Stock-based compensation expense                                              4,555                                                971
                                                                                  Litigation-related expense                                                320                                                 --
                                                                          Non-GAAP Total Operating Expenses:                                          $ 25,955                                          $ 20,333
                                                                                                                                                                                                                 
                                                          Non-GAAP Total Operating Expenses as % of Revenue:                                               45.1%                                               49.1%
                                                                                                                                                                                                                 
                                                                                                                                                                                                 Three Months Ended
                                                                                                                                                                                                          March 31,
                                                                                                                                                           2011                                                2010
                                                                                  Non-GAAP Operating Income:                                                                                                      
                                                                                     Operating (loss) income                                            $ (21)                                           $ 1,143
                                                                           Amortization of intangible assets                                              4,046                                              2,214
                                                                            Stock-based compensation expense                                              4,853                                              1,094
                                                                                 Acquisition-related expense                                                186                                                324
                                                                                  Litigation-related expense                                                320                                                 --
                                                                                   Non-GAAP operating income                                           $ 9,384                                           $ 4,775
                                                                                                                                                                                                                 
                                                                                   Non-GAAP operating margin                                               16.3%                                               11.5%
                                                                                                                                                                                                                 
                                                                                                                                                                                                 Three Months Ended
                                                                                                                                                                                                          March 31,
                                                                                                                                                           2011                                                2010
                                                                                        Non-GAAP Net Income:                                                                                                      
                                                                                                    Net loss                                           $ (648)                                           $ (203)
                                                                           Amortization of intangible assets                                              4,046                                              2,214
                                                                            Stock-based compensation expense                                              4,853                                              1,094
                                                                                 Acquisition-related expense                                                186                                                324
                                                                                  Litigation-related expense                                                320                                                 --
                                                                                      Loss on sale of assets                                                397                                                 --
                                                                            Subtotal of tax deductible items                                              9,802                                              3,632
                                                                                                                                                                                                                 
                                                                       Tax impact of tax deductible items(1)                                            (3,921)                                            (1,453)
                                                   Tax expense resulting from applying effective tax rate(2)                                               (64)                                                 10
                                                                                         Non-GAAP net income                                           $ 5,169                                           $ 1,986
                                                                                                                                                                                                                 
                                                                     Non-GAAP net income per share - diluted                                            $ 0.07                                            $ 0.04
                                                                                                                                                                                                                 
                                                                           Weighted average shares - diluted                                             66,800                                             25,759
                                                     Conversion of redeemable convertible preferred stock(3)                                                 --                                             29,044
                                                              Weighted average effect of dilutive securities                                              3,811                                              1,121
                                                                  Non-GAAP weighted average shares - diluted                                             70,611                                             55,924
                                                                                                                                                                                                                   
(1) Reflects the removal of the tax benefit associated with the amortization of intangible assets, stock-based compensation expense, litigation-related expense, loss on sale of assets and acquisition-related expense.
                                         (2) Represents adjusting to a normalized effective tax rate of 40%.                                                                                                      
                                            (3) Represents common shares from the conversion of redeemable convertible preferred shares as if the shares were converted as of the beginning of the indicated period.
CONTACT:  Investor Relations
          Rhett Butler
          972-820-3773
          rhett.butler@realpage.com
          
          Media
          Randy Hargrove
          972-820-3076
          randy.hargrove@realpage.com

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Source: RealPage, Inc.