RealPage Reports Q2 2012 Financial Results

- 2012 Q2 Non-GAAP revenue increases 27.3% to $78.8 million

- 2012 Q2 adjusted EBITDA increases 26.3% to $17.4 million

- 2012 Q2 Non-GAAP earnings per share increases 22.2% to $0.11 per diluted share

- 2012 Q2 cash flow from operations increases 113.9% to $21.3 million

CARROLLTON, Texas, Aug. 2, 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 second quarter ended June 30, 2012. 

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

"During the second quarter we continued to grow our recurring revenue base," said Steve Winn, Chairman and CEO of RealPage.  "Annual customer value was $302 million at the end of the second quarter, growing 29% compared to the same period last year.  We continue to grow our ACV across operators of all sizes and believe our total ACV opportunity is wide open.  In addition, cash flow from operations grew significantly compared to last year, underscoring the strong cash flow characteristics inherent in our financial model."

Second Quarter 2012 Financial Highlights

  • Non-GAAP total revenue was $78.8 million, an increase of 27.3% year-over-year;
  • Non-GAAP on demand revenue was $74.9 million, an increase of 30.8% year-over-year;
  • Adjusted EBITDA was $17.4 million, an increase of 26.3% year-over-year;
  • Non-GAAP net income was $8.2 million, or $0.11 per diluted share, a year-over-year increase of 32.6% and 22.2%, respectively;
  • GAAP net loss was $2.4 million, or $0.03 per diluted share, compared to GAAP net income of $0.3 million, or $0.00 per diluted share, in the prior year quarter; and
  • Net cash provided by operating activities was $21.3 million, an increase of 113.9% year-over-year.

Financial Outlook

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

  • Non-GAAP total revenue is expected to be in the range of $83.0 million to $85.0 million;
  • Adjusted EBITDA is expected to be in the range of $18.5 million to $19.0 million;
  • Non-GAAP net income is expected to be in the range of $8.7 million to $9.0 million, or $0.12 per diluted share;
  • Non-GAAP tax rate of approximately 40.0%; and
  • Weighted average shares outstanding of approximately 74.3 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 $324.0 million to $330.0 million;
  • Adjusted EBITDA is expected to be in the range of $72.5 million to $75.0 million;
  • Non-GAAP net income is expected to be in the range of $34.4 million to $36.0 million, or $0.47 to $0.49 per diluted share;
  • Non-GAAP tax rate of approximately 40.0%; and
  • Full year weighted average shares outstanding of approximately 73.9 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 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 855-859-2056 or 404-537-3406, passcode 15665560, until Aug. 12, 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.  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; (h) the discovery of facts and circumstances currently not available to management; and such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by RealPage, including its Quarterly Report on Form 10-Q previously filed with SEC on May 7, 2012. All information provided in this release is as of the date hereof and RealPage 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 and Six Months Ended June 30, 2012 and 2011

(unaudited, in thousands, except per share data)














Three Months Ended


Six Months Ended




June 30, 


June 30, 




2012


2011


2012


2011

Revenue:









On demand

$  74,938


$   57,039


$  145,656


$   109,976


On premise

1,261


1,628


2,677


3,273


Professional and other

2,593


2,968


4,876


5,934



Total revenue

78,792


61,635


153,209


119,183

Cost of revenue(1)

31,848


25,810


62,461


50,493

Gross profit

46,944


35,825


90,748


68,690

Operating expense:









Product development(1)

11,738


10,537


23,051


20,853


Sales and marketing(1)

18,588


14,510


35,394


27,304


General and administrative(1)

19,946


9,574


32,249


19,350



Total operating expense

50,272


34,621


90,694


67,507

Operating income (loss) 

(3,328)


1,204


54


1,183

Interest expense and other, net

(577)


(732)


(1,213)


(1,898)

Income (loss) before income taxes

(3,905)


472


(1,159)


(715)

Income tax expense (benefit)

(1,533)


190


(507)


(349)

Net income (loss)

$   (2,372)


$       282


$       (652)


$        (366)











Net income (loss) per share 










Basic

$    (0.03)


$      0.00


$      (0.01)


$       (0.01)



Diluted

$    (0.03)


$      0.00


$      (0.01)


$       (0.01)

Weighted average shares used in








computing net income (loss) per share










Basic

71,102


68,673


70,846


67,741



Diluted

71,102


72,012


70,846


67,741





















(1)

Includes stock-based compensation

Three Months Ended


Six Months Ended


expense as follows:

June 30, 


June 30, 




2012


2011


2012


2011



Cost of revenue

$      750


$       312


$     1,439


$         610



Product development

1,002


1,105


2,064


2,085



Sales and marketing

1,032


2,627


1,769


5,360



General and administrative

1,532


925


3,032


1,767




$    4,316


$    4,969


$     8,304


$      9,822

 

Condensed Consolidated Balance Sheets

At June 30, 2012 and December 31, 2011

(unaudited, in thousands except share data)











June 30, 


December 31,





2012


2011


Assets





Current assets:






Cash and cash equivalents

$        45,837


$         51,273



Restricted cash

24,170


19,098



Accounts receivable, less allowance for doubtful accounts of $990 and $979 at







June 30, 2012 and December 31, 2011, respectively

43,750


43,883



Deferred tax asset, net of valuation allowance

387


272



Other current assets

10,919


10,232




Total current assets

125,063


124,758


Property, equipment and software, net

31,453


27,974


Goodwill

130,540


129,292


Identified intangible assets, net

106,123


112,308


Deferred tax asset, net of valuation allowance

4,641


2,539


Other assets

3,973


3,194




Total assets

$      401,793


$       400,065


Liabilities and stockholders' equity





Current liabilities:






Accounts payable

$        11,655


$         12,218



Accrued expenses and other current liabilities

28,903


25,816



Current portion of deferred revenue

56,989


57,325



Customer deposits held in restricted accounts

24,133


19,017




Total current liabilities

121,680


114,376


Deferred revenue

9,534


8,693


Revolving credit facility

35,000


50,312


Other long-term liabilities

3,672


3,803




Total liabilities

169,886


177,184


Stockholders' equity:






Preferred stock, $0.001 par value, 10,000,000 shares authorized and zero shares issued and outstanding at






  June 30, 2012 and December 31, 2011, respectively

-


-



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






74,436,163 and  73,115,779  shares issued and 73,658,956 and 72,701,571 shares 






  outstanding at June 30, 2012 and December 31, 2011, respectively

74


73



Additional paid-in capital

328,270


316,964



Treasury stock, at cost: 777,207 and 414,208 shares at June 30, 2012

(4,762)


(3,138)



  and December 31, 2011, respectively 






Accumulated deficit

(91,613)


(90,961)



Accumulated other comprehensive loss

(62)


(57)




Total stockholders' equity 

231,907


222,881




Total liabilities and stockholders' equity

$      401,793


$       400,065


Condensed Consolidated Statements of Cash Flows

For the Three and Six Months Ended June 30, 2012 and 2011

(unaudited, in thousands)
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Cash flows from operating activities:









Net income (loss)

$    (2,372)


$      282


$     (652)


$     (366)


Adjustments to reconcile net income (loss) to net cash










provided by operating activities:










Depreciation and amortization

7,859


7,243


15,737


14,016



Deferred tax expense (benefit)

(1,434)


11


(856)


(767)



Stock-based compensation

4,316


4,969


8,304


9,822



Loss on disposal of assets

201


(2)


379


395



Acquisition-related contingent consideration

(248)


43


182


105



Changes in assets and liabilities, net of assets acquired











and liabilities assumed in business combinations:

12,982


(2,586)


9,112


(3,984)















Net cash provided by operating activities

21,304


9,960


32,206


19,221

Cash flows from investing activities:









Purchases of property, equipment and software, net

(6,345)


(3,688)


(9,905)


(5,642)


Acquisition of businesses, net of cash acquired

(9,206)


(19,847)


(13,509)


(20,031)


Intangible asset additions

(150)


-


(225)


-




Net cash used by investing activities

(15,701)


(23,535)


(23,639)


(25,673)

Cash flows from financing activities:









Stock issuance costs from public offerings

$            -


$           -


$          -


$     (775)


Payments on and proceeds from debt, net

(10,004)


(2,781)


(15,377)


(5,742)


Issuance of common stock

1,242


4,393


3,003


7,437


Purchase of treasury stock

(578)


(287)


(1,624)


(473)




Net cash (used) provided by financing activities

(9,340)


1,325


(13,998)


447




Net (decrease) increase in cash and cash equivalents

(3,737)


(12,250)


(5,431)


(6,005)




Effect of exchange rate on cash

(1)


(8)


(5)


(20)

Cash and cash equivalents:









Beginning of period

49,575


124,243


51,273


118,010


End of period

$    45,837


$111,985


$ 45,837


$111,985

 

Reconciliation of GAAP to Non-GAAP Measures

For the Three and Six Months Ended June 30, 2012 and 2011

(unaudited, in thousands)
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011












Revenue:

$     78,792


$    61,635


$  153,209


$   119,183


Acquisition-related deferred revenue adjustment

2


244


83


244

Non-GAAP revenue

$     78,794


$    61,879


$  153,292


$   119,427
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Adjusted gross profit:









Gross profit

$     46,944


$    35,825


$    90,748


$    68,690



Acquisition-related deferred revenue adjustment

2


244


83


244



Depreciation

1,625


1,519


3,210


3,009



Amortization of intangible assets

2,363


2,231


4,781


4,407



Stock-based compensation expense

750


312


1,439


610


Adjusted gross profit

$     51,684


$    40,131


$  100,261


$    76,960













Adjusted gross profit margin

65.6%


64.9%


65.4%


64.4%
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Adjusted EBITDA:









Net income (loss)

$      (2,372)


$         282


$       (652)


$        (366)



Acquisition-related deferred revenue adjustment

2


244


83


244



Depreciation, asset impairment and loss on disposal of asset 

3,375


2,750


6,602


5,874



Amortization of intangible assets

4,685


4,491


9,514


8,537



Interest expense, net

578


732


1,216


1,515



Income tax expense (benefit)

(1,533)


190


(507)


(349)



Litigation-related expense

8,539


36


8,899


356



Stock-based compensation expense

4,316


4,969


8,304


9,822



Acquisition-related (income) expense

(237)


44


316


230


Adjusted EBITDA

$     17,353


$    13,738


$    33,775


$    25,863













Adjusted EBITDA margin

22.0%


22.2%


22.0%


21.7%
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Non-GAAP total product development:









Product development

$     11,738


$    10,537


$    23,051


$    20,853



Less: Amortization of intangible assets

-


-


-


-



          Stock-based

          compensation

          expense

1,002


1,105


2,064


2,085


Non-GAAP total product development:

$     10,736


$      9,432


$    20,987


$    18,768













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

13.6%


15.2%


13.7%


15.7%

 

Reconciliation of GAAP to Non-GAAP Measures

For the Three and Six Months Ended June 30, 2012 and 2011

(unaudited, in thousands)
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Non-GAAP total sales and marketing:









Sales and marketing

$     18,588


$    14,510


$    35,394


$    27,304



Less: Amortization of intangible assets

2,323


2,260


4,734


4,130



          Stock-based

          compensation

          expense

1,032


2,627


1,769


5,360


Non-GAAP total sales and marketing:

$     15,233


$      9,623


$    28,891


$    17,814













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

19.3%


15.6%


18.8%


14.9%
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Non-GAAP total general and administrative:









General and administrative 

$     19,946


$      9,574


$    32,249


$    19,350



Less: Acquisition-related (income) expense

(237)


44


316


230



         Stock-based

         compensation

         expense

1,532


925


3,032


1,767



         Litigation related

         expense

8,539


36


8,899


356


Non-GAAP total general and administrative:

$     10,112


$      8,569


$    20,002


$    16,997













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

12.8%


13.8%


13.0%


14.2%
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Non-GAAP total operating expense:









Operating expense

$     50,272


$    34,621


$    90,694


$    67,507



Less:  Amortization of intangible assets

2,323


2,260


4,734


4,130



           Acquisition-

           related (income)

           expense  

(237)


44


316


230



          Stock-based

          compensation

          expense

3,566


4,657


6,865


9,212



          Litigation related

          expense

8,539


36


8,899


356


Non-GAAP total operating expense:

$     36,081


$    27,624


$    69,880


$    53,579













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

45.8%


44.6%


45.6%


44.9%
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Non-GAAP operating income:









Operating income (loss)

$      (3,328)


$      1,204


$          54


$      1,183



Acquisition-related deferred revenue adjustment

2


244


83


244



Amortization of intangible assets

4,685


4,491


9,514


8,537



Stock-based compensation expense

4,316


4,969


8,304


9,822



Acquisition-related (income) expense

(237)


44


316


230



Litigation related expense

8,539


36


8,899


356


Non-GAAP operating income

$     13,977


$    10,988


$    27,170


$    20,372













Non-GAAP operating margin

17.7%


17.8%


17.7%


17.1%

Reconciliation of GAAP to Non-GAAP Measures

For the Three and Six Months Ended June 30, 2012 and 2011

(unaudited, in thousands, except per share data)
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Non-GAAP net income:









Net income (loss)

$      (2,372)


$         282


$       (652)


$        (366)



Acquisition-related deferred revenue adjustment

2


244


83


244



Amortization of intangible assets

4,685


4,491


9,514


8,537



Stock-based compensation expense

4,316


4,969


8,304


9,822



Acquisition-related (income) expense

(237)


44


316


230



Litigation related expense

8,539


36


8,899


356



Loss on disposal of assets

201


-


379


395




Subtotal of tax deductible items

17,506


9,784


27,495


19,584














Tax impact of tax deductible items(1)

(7,002)


(3,914)


(10,998)


(7,834)



Tax expense resulting from applying effective tax rate(2)

29


1


(43)


(63)


Non-GAAP net income

$       8,161


$      6,153


$    15,802


$    11,321













Non-GAAP net income per share - diluted

$         0.11


$        0.09


$       0.22


$        0.16













Weighted average shares - diluted

71,102


72,012


70,846


67,741



Weighted average effect of dilutive securities

2,237


-


2,456


3,542


Non-GAAP weighted average shares - diluted

73,339


72,012


73,302


71,283












(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 (income)expense. 

(2)

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
















Three Months Ended


Six Months Ended





June 30, 


June 30, 





2012


2011


2012


2011

Annualized Non-GAAP on demand revenue per average on demand unit:









On demand revenue

$     74,938


$    57,039


$  145,656


$   109,976



Acquisition-related deferred revenue adjustment

2


244


83


244


Non-GAAP on demand revenue

$     74,940


$    57,283


$  145,739


$   110,220













Ending on demand units

7,537


6,381


7,537


6,381


Average on demand units

7,484


6,270


7,425


6,191













Annualized Non-GAAP on demand revenue per average on demand unit

$       40.05


$      36.54


$      39.26


$      35.61













Annual customer value of on demand revenue(1)

$   301,857


$  233,162
















(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 Non-GAAP on demand revenue per average on demand unit for the periods presented.

 

 

SOURCE RealPage, Inc.