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 firstname.lastname@example.org
Ellie Mae Reports Third Quarter 2012 Results
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