Breaking News

Tweet TWEET

Ellie Mae Reports Third Quarter 2012 Results

  Ellie Mae Reports Third Quarter 2012 Results

                Revenue up 87% year over year to $27.5 million

            Adjusted EBITDA up 330% year over year to $9.8 million

Business Wire

PLEASANTON, Calif. -- October 31, 2012

Ellie Mae^® (NYSE: ELLI), a leading provider of on-demand, enterprise level
automation solutions for the residential mortgage industry, today reported
results for the third quarter and nine months ended September 30, 2012.

Total revenue for the third quarter of 2012 increased 87% to $27.5 million,
compared to $14.7 million in the third quarter of 2011. Net income for the
third quarter of 2012 was $6.8 million, or $0.25 per diluted share, compared
to net income of $2.7 million, or $0.12 per diluted share, in the third
quarter of 2011. Included in the GAAP net income for the third quarter 2012
was an income tax benefit of approximately $700 thousand, or $0.03 per diluted
share, resulting from the release of a tax valuation allowance relating to
deferred tax assets.

On a non-GAAP basis, adjusted net income for the third quarter of 2012 was
$9.5 million, or $0.35 per diluted share, compared to $2.0 million, or $0.09
per diluted share, in the third quarter of 2011. Adjusted EBITDA for the third
quarter of 2012 was $9.8 million, compared to $2.3 million for the third
quarter of 2011.

Total revenue for the nine months ended September 30, 2012 increased 96% to
$71.9 million compared to $36.7 million for the nine months ended September
30, 2011. Net income for the nine months ended September 30, 2012 was $15.5
million, or $0.63 per diluted share, compared to net income of $1.8 million,
or $0.09 per diluted share, for the nine months ended September 30, 2011. The
GAAP results for the nine months ended September 30, 2012 included an income
tax benefit of approximately $700 thousand, or $0.03 per diluted share,
resulting from the release of a tax valuation allowance relating to deferred
tax assets.

On a non-GAAP basis, adjusted net income for the nine months ended September
30, 2012 was $20.3 million, or $0.83 per diluted share, compared to $2.1
million, or $0.11 per diluted share, for the nine months ended September 30,
2011. Adjusted EBITDA for the nine months ended September 30, 2012 was $22.5
million, compared to adjusted EBITDA of $3.2 million for the nine months ended
September 30, 2011.

A reconciliation of the non-GAAP financial measures to their related GAAP
financial measures is set forth below.

Key Operating Metrics as of and for the quarter ended September 30, 2012:

  *On-demand revenue increased 92% year over year to $24.0 million,
    comprising approximately 88% of total revenues for the quarter;
  *The total number of users, both lender and broker, actively using the
    company’s Encompass^® enterprise solution (“active Encompass users”)
    increased 30% year over year to 67,201;
  *Revenue per average active Encompass user increased 45% year over year to
    $419;
  *As of the end of the third quarter, the number of users of the SaaS
    version of Encompass increased 67% year over year to 35,677, or 53% of all
    active Encompass users; and
  *Total SaaS Encompass revenues increased 163% year over year to $13.4
    million or 49% of total revenue for the quarter.

“We were pleased to deliver exceptional top and bottom line growth in the
third quarter,” said Sig Anderman, CEO of Ellie Mae. “Our business momentum
continued to be driven by the activation of SaaS Encompass users and
increasing revenue per user. And we continued to acquire new SaaS Encompass
users and upgrade our existing customers to the SaaS version of Encompass at a
solid pace. Also fueling our third quarter performance was the higher than
expected mortgage origination volume which accelerated our growth and
highlighted the upside leverage in our business model.”

“Customer response to our Encompass solution continues to be very positive.
Our end-to-end, comprehensive solution for mortgage lenders meets both the
functional as well as the regulatory compliance needs of our customers while
addressing key inefficiencies in the mortgage origination process. Our goal
remains to be the leader of automation infrastructure for the mortgage
industry.”

“Throughout the year we have made significant progress on building a strong
foundation to accommodate continued growth with investments in expanding our
data centers and our sales and implementation teams, and enhancing our product
offerings,” continued Mr. Anderman.

“Given our results to date and the revised forecasts for mortgage origination
volume for the remainder of 2012, we are raising our full year guidance to
reflect revenues of between $99.5 million and $100 million. Even in the face
of currently available blended forecasts projecting a 19% decline in industry
mortgage volume next year, we expect to grow our top line revenues by at least
25% in 2013,” Mr. Anderman concluded.

Fourth Quarter and Fiscal Year 2012 Financial Outlook

The October 2012 composite forecast of Fannie Mae, Freddie Mac and the
Mortgage Bankers Association for 2012 mortgage origination volume is
approximately $1.8 trillion, which represents a 24% increase from actual
mortgage volume in 2011 and a 23% increase from the July 2012 composite
forecast of $1.5 trillion. These organizations publish monthly updates of
their annual and quarterly forecasts. The October 2012 composite forecast for
the full year 2013 mortgage origination volume is approximately $1.5 trillion.
The October 2012 composite quarterly forecast for 2012 origination volume is
as follows:

                                      
  ($ in billions)   Q1     Q2     Q3     Q4     Annual
  2012              $392   $427   $527   $482   $1,828

We are providing financial guidance for the fourth quarter and updated
financial guidance for the full year based in part on these composite
quarterly forecasts.

For the fourth quarter of 2012, revenue is expected to be in the range of
$27.5 million to $28.0 million. Net income is expected to be in the range of
$1.5 million to $1.9 million, or $0.05 to $0.07 per diluted share. Adjusted
net income is expected to be in the range of $4.9 million to $5.4 million, or
$0.18 to $0.19 per diluted share. Adjusted EBITDA is expected to be in the
range of $6.2 million to $6.9 million.

For the full fiscal year 2012, revenue is expected to be in the range of $99.5
million to $100.0 million, up from the previously provided range of $90.0 to
$91.0 million. Net income is expected to be in the range of $17.0 million to
$17.4 million, or $0.68 to $0.70 per diluted share, up from the previously
provided range of $12.3 million to $13.1 million, or $0.49 to $0.52 per
diluted share. Adjusted net income is expected to be in the range of $25.2
million to $25.7 million, or $1.01 to $1.03 per diluted share, up from the
previously provided range of $17.1 million to $18.0 million, or $0.68 to $0.72
per diluted share. Adjusted EBITDA is expected to be in the range of $28.7
million to $29.4 million, up from the previously provided range of $21.6
million to $22.7 million.

Use of Non-GAAP Financial Measures

Ellie Mae provides investors with adjusted net income and adjusted EBITDA in
conjunction with traditional GAAP operating performance of net income as part
of its overall assessment of its performance. Adjusted net income consists of
net income plus amortization of acquired intangibles, non-cash, stock-based
compensation expense, acquisition costs and other acquisition-related
adjustments. EBITDA consists of net income plus depreciation and amortization,
interest income and expense and income tax expense. Adjusted EBITDA consists
of EBITDA plus non-cash, stock-based compensation expense and acquisition
costs. Ellie Mae uses adjusted net income and adjusted EBITDA as measures of
operating performance because they enable period to period comparisons by
excluding potential differences caused by variations in the age of book
depreciation of fixed assets and amortization of intangibles related to
acquisitions, and changes in interest expense and interest income that are
influenced by capital market conditions. The company also believes it is
useful to exclude non-cash, stock-based compensation expense from adjusted net
income and adjusted EBITDA because the amount of non-cash expense associated
with stock-based awards made at certain prices and points in time (a) do not
necessarily reflect how the company’s business is performing at any particular
time and (b) can vary significantly between periods due to the timing of new
stock-based awards. These non-GAAP measures are not measurements of the
company’s financial performance under GAAP and have limitations as analytical
tools. Accordingly, these non-GAAP financial measures should not be considered
a substitute for, or superior to, net income or operating income or other
financial measures calculated in accordance with generally accepted accounting
principles in the United States, or as an alternative to cash flows from
operating activities as a measure of the company’s profitability or liquidity.
The company cautions that other companies in Ellie Mae’s industry may
calculate adjusted net income and adjusted EBITDA differently than the company
does, further limiting their usefulness as a comparative measure. A
reconciliation of net income to adjusted net income and adjusted EBITDA is
included in the tables below.

Quarterly Conference Call

Ellie Mae will discuss its third quarter 2012 results today, October 31, 2012,
via teleconference at 5:00 p.m. Eastern Time. To access the call, please dial
877-941-2068 or 480-629-9712 at least five minutes prior to the 5:00 p.m.
Eastern Time start time. A live webcast of the call will be available on the
Investor Relations section of the Company’s website at http://ir.elliemae.com.
An audio replay of the call will be available through November 14, 2012 by
dialing 800-406-7325 or 303-590-3030 and entering access code 4569719.

About Ellie Mae

Ellie Mae, Inc. is a leading provider of on-demand automation solutions for
the mortgage industry. The Company offers an end-to-end solution,
deliveredusing a Software-as-a-Service model that serves as the core
operating system for mortgage originators and spans customer relationship
management, loan origination and business management. The Company also hosts
the Ellie Mae Network™ that allows Encompass users to electronically conduct
business transactions with the lenders and settlement service providers they
work with to process and fund loans. The Company's offerings include the
Encompass^®, Encompass360^® and DataTrac^® mortgage management software
systems.

Ellie Mae was founded in 1997 and is based in Pleasanton, California. To learn
more about Ellie Mae, visit www.EllieMae.com or call 877.355.4362.

© 2012 Ellie Mae, Inc. Ellie Mae^®, Encompass^®, Encompass360^®, DataTrac^®,
Ellie Mae Network™ and the Ellie Mae logoare registered trademarks or
trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other
company and product names may be trademarks or copyrights of theirrespective
owners.

Forward-Looking Statements

This press release contains forward-looking statements under the safe harbor
provisions under The Private Securities Litigation Reform Act of 1995. These
forward-looking statements include discussions regarding projected revenue,
net income, adjusted EBITDA and adjusted net income for the fourth quarter and
fiscal year 2012 and 2013 revenue growth. These statements involve known and
unknown risks, uncertainties and other factors which may cause Ellie Mae’s
results to be materially different than those expressed or implied in such
statements. Such differences may be based on factors such as changes in
strategic planning decisions by management, reallocation of internal
resources, changes in the volume of residential mortgage volume in the United
States, the risk that the anticipated benefits, growth prospects and synergies
expected from the Del Mar Datatrac acquisition may not be fully realized or
may take longer to realize than expected; the possibility that economic
benefits of future opportunities in an emerging industry may never
materialize, including unexpected variations in market growth and demand for
the acquired products and technologies; delays, disruptions, including
changing relationships with partners, customers, employees or suppliers; the
amount of costs incurred in connection with the supporting and integrating new
customers and partners; ongoing personnel and logistical challenges of
managing a larger organization; changes in other macroeconomic factors
affecting the residential real estate industry and other risk factors included
in documents that Ellie Mae has filed with the Securities and Exchange
Commission, including but not limited to its Annual Report on Form 10-K for
the year ended December 31, 2011, Quarterly Report on Form 10-Q for the
quarter ended June 30, 2012 and Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 15, 2012. Other unknown or
unpredictable factors also could have material adverse effects on Ellie Mae’s
future results. The forward-looking statements included in this press release
are made only as of the date hereof. Ellie Mae cannot guarantee future
results, levels of activity, performance or achievements. Accordingly, you
should not place undue reliance on these forward-looking statements. Finally,
Ellie Mae expressly disclaims any intent or obligation to update any
forward-looking statements to reflect subsequent events or circumstances.


ELLIE MAE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)
                                                           
                                                  September 30,   December 31,
                                                    2012          2011    
                                                                  
Assets
Current assets
    Cash and cash equivalents                     $  90,306       $  23,732
    Short-term investments                           3,558           1,933
    Accounts receivable, net of allowances for
    doubtful accounts of $99  and $47, as of         10,498          6,819
    September 30, 2012 and December 31, 2011,
    respectively
    Prepaid expenses and other                       4,568           1,381
    Deferred tax asset                               2,716           -
    Note receivable                                 1,000         1,000   
                    Total current assets             112,646         34,865
Property and equipment, net                          8,800           5,539
Deposits and other assets                            135             135
Note receivable                                      12              15
Other intangibles, net                               6,940           8,166
Goodwill                                            51,051        51,051  
                    Total assets                  $  179,584     $  99,771  
                                                                  
Liabilities and Stockholders' Equity
Current liabilities
    Accounts payable                              $  1,891        $  2,255
    Accrued and other current liabilities            7,497           4,931
    Acquisition holdback, net of discount            2,927           2,948
    Deferred revenue                                 4,526           4,548
    Deferred rent                                    242             212
    Leases payable                                  5             6       
                    Total current liabilities        17,088          14,900
Deferred revenue, net of current portion             35              62
Deferred rent, net of current portion                439             624
Acquisition holdback, net of current portion         1,898           4,725
and discount
Deferred tax liability                               2,062           -
Other long-term liabilities                          360             598
Leases payable, net of current portion              -             4       
                    Total liabilities               21,882        20,913  
                                                                  
Stockholders' equity:
    Common stock, $0.0001 par value per share;
    140,000,000 authorized shares, 25,511,199
    and 21,019,590 shares issued and                 3               2
    outstanding as of September 30, 2012 and
    December 31, 2011, respectively
    Additional paid-in capital                       179,385         116,012
    Accumulated deficit                             (21,686  )     (37,156 )
                    Total stockholders' equity      157,702       78,858  
                    Total liabilities and         $  179,584     $  99,771  
                    stockholders' equity
                                                                             

ELLIE MAE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share amounts)
                                                              
                      Three months ended September      Nine months ended September 30,
                      30,
                       2012           2011           2012           2011       
                                                                         
Revenues              $ 27,456         $ 14,673         $ 71,931         $ 36,740
Cost of revenues       6,049          4,045          16,589         10,920     
        Gross           21,407           10,628           55,342           25,820
        profit
Operating expenses:
    Sales and           4,347            3,047            12,579           7,995
    marketing
    Research and        4,756            3,452            13,188           8,862
    development
    General and        6,023          3,376          14,195         9,103      
    administrative
Total operating        15,126         9,875          39,962         25,960     
expenses
        Income
        (loss) from     6,281            753              15,380           (140       )
        operations
Other income           23             16             (15        )    95         
(expense), net
        Income
        (loss)
        before          6,304            769              15,365           (45        )
        income
        taxes
Income tax benefit     (525       )    (1,895     )    (105       )    (1,870     )
Net income            $ 6,829         $ 2,664         $ 15,470        $ 1,825      
                                                                         
Net income per
share of common
stock:
            Basic     $ 0.27          $ 0.13          $ 0.68          $ 0.13       
            Diluted   $ 0.25          $ 0.12          $ 0.63          $ 0.09       
                                                                         
Weighted average
common shares used
in computing net
income per share of
common stock:
            Basic      25,201,404     20,707,275     22,747,911     13,871,955 
            Diluted    27,408,711     21,966,326     24,483,578     20,170,075 
                                                                         

ELLIE MAE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
                                                     
                                               Nine months ended September 30,
                                                 2012            2011     
                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                 $  15,470         $  1,825
    Adjustments to reconcile net income to
    net cash provided by operating
    activities:
            Depreciation and amortization         2,257             1,385
            Provision for uncollectible           52                436
            accounts receivable
            Amortization of intangible            1,226             481
            assets
            Amortization of discount related      152               26
            to holdback
            Stock-based compensation              3,643             1,133
            Loss on sale of property and          20                -
            equipment
            Change in deferred taxes              (654     )        (1,654   )
            Excess tax benefit from exercise      (1,191   )        -
            of stock options
            Changes in operating assets and
            liabilities:
                      Accounts receivable         (3,731   )        (2,313   )
                      Prepaid expenses and        (2,933   )        (627     )
                      other
                      Deposits and other          -                 524
                      assets
                      Accounts payable            (805     )        911
                      Accrued and other           3,519             31
                      liabilities
                      Deferred revenue            (49      )        (127     )
                      Deferred rent              (155     )       (129     )
                            Net cash
                            provided by          16,821          1,902    
                            operating
                            activities
CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment         (5,744   )        (3,351   )
    Proceeds from sale of property and            10                -
    equipment
    Purchase of short-term investments            (5,406   )        (5,006   )
    Maturities of short-term investments          3,781             5,026
    Acquisition, net of cash acquired             -                 (18,188  )
    Payment of holdback from acquisition          (2,907   )        -
    Other investing activities, net              3               (16      )
                            Net cash used in
                            investing            (10,263  )       (21,535  )
                            activities
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock,       55,821            23,076
    net of issuance costs
    Payment of capital lease obligations          (5       )        (115     )
    Proceeds from issuance of common stock        3,009             551
    under employee stock plans
    Excess tax benefit from exercise of          1,191           -        
    stock options
                            Net cash
                            provided by          60,016          23,512   
                            financing
                            activities
NET INCREASE IN CASH AND CASH EQUIVALENTS         66,574            3,879
CASH AND CASH EQUIVALENTS, Beginning of          23,732          14,349   
period
CASH AND CASH EQUIVALENTS, End of period       $  90,306        $  18,228   
                                                                 
Supplemental disclosure of non-cash
investing and financing activities:
    Property and equipment purchases not yet   $  151            $  221
    paid
    Deferred offering costs not yet paid       $  290            $  -
    Conversion of preferred stock to common    $  -              $  82,670
    stock
                                                                             

ELLIE MAE, INC.
NON-GAAP RECONCILIATION
(UNAUDITED)
                                                               
                   Three Months Ended                Nine Months Ended
                   September 30,                     September 30,
                    2012           2011           2012           2011       
                   (in thousands, except share and per share amounts)
                                                                      
Net income         $ 6,829          $ 2,664          $ 15,470         $ 1,825
                                                                      
    Depreciation
    and              895              547              2,257            1,385
    amortization
    Amortization
    of               408              258              1,226            481
    intangible
    assets
    Other
    (expense)        (23        )     (16        )     15               (95        )
    income , net
    Income tax      (525       )    (1,895     )    (105       )    (1,870     )
    benefit
EBITDA               7,584            1,558            18,863           1,726
                                                                      
    Acquisition      -                351              -                351
    costs
    Non-cash,
    stock-based     2,248          376            3,643          1,133      
    compensation
    expenses
Adjusted EBITDA    $ 9,832         $ 2,285         $ 22,506        $ 3,210      
                                                                      
Net income         $ 6,829          $ 2,664          $ 15,470         $ 1,825
    Non-cash,
    stock-based      2,248            376              3,643            1,133
    compensation
    expenses
    Acquisition      -                351              -                351
    costs
    Amortization
    of               408              258              1,226            481
    intangible
    assets
    Acquisition
    related         -              (1,654     )    -              (1,654     )
    deferred tax
    assets
Adjusted net       $ 9,485         $ 1,995         $ 20,339        $ 2,136      
income
                                                                      
Shares used to
compute non-GAAP
net income per
share
    Basic            25,201,404       20,707,275       22,747,911       13,871,955
    Diluted          27,408,711       21,966,326       24,483,578       20,170,075
                                                                      
Adjust net
income per share
    Basic          $ 0.38           $ 0.10           $ 0.89           $ 0.15
    Diluted        $ 0.35           $ 0.09           $ 0.83           $ 0.11
                                                                                   

ELLIE MAE, INC.
NON-GAAP RECONCILIATION
(UNAUDITED)
  (in thousands, except share and per share amounts)
                                                              
                      Fourth Quarter 2012           Fiscal 2012 Projected Range
                      Projected Range
                                                                   
Net Income            $ 1,500        $ 1,900        $ 17,000       $ 17,400
                                                                   
    Depreciation
    and                 1,100          1,200          3,400          3,500
    amortization
    Amortization of
    intangible          400            400            1,600          1,600
    assets
    Income tax         200           300           100           200
    provision/other
EBITDA                  3,200          3,800          22,100         22,700
                                                                   
    Non-cash,
    stock-based        3,000         3,100         6,600         6,700
    compensation
    expenses
Adjusted EBITDA       $ 6,200        $ 6,900        $ 28,700       $ 29,400
                                                                   
Net Income            $ 1,500        $ 1,900        $ 17,000       $ 17,400
    Non-cash,
    stock-based         3,000          3,100          6,600          6,700
    compensation
    expenses
    Amortization of
    intangible         400           400           1,600         1,600
    assets
Adjusted net income   $ 4,900        $ 5,400        $ 25,200       $ 25,700
                                                                   
Shares used to
compute non-GAAP
net income per
share
    Diluted             27,800,000     27,800,000     25,000,000     25,000,000
                                                                   
Projected net
income per share
    Diluted           $ 0.05         $ 0.07         $ 0.68         $ 0.70
                                                                   
Adjusted net income
per share
    Diluted           $ 0.18         $ 0.19         $ 1.01         $ 1.03

Contact:

Ellie Mae, Inc.
Edgar Luce, +1-925-227-7079
Executive VP and CFO
IR@elliemae.com
or
The Blueshirt Group for Ellie Mae, Inc.
Lisa Laukkanen, +1-415-217-4967
lisa@blueshirtgroup.com