Delaware | 82-3605465 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||
Non-accelerated filer | ý | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ | ||||
Emerging growth company | ý |
Page | ||
PART I. FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
• | our ability to attract new customers and retain and expand our relationships with existing customers; |
• | our ability to expand our course library and develop new platform features; |
• | our future financial performance, including trends in billings, revenue, costs of revenue, gross margin, operating expenses, and free cash flow; |
• | the demand for, and market acceptance of, our platform or for cloud-based technology learning solutions in general; |
• | our ability to compete successfully in competitive markets; |
• | our ability to respond to rapid technological changes; |
• | our expectations and management of future growth; |
• | our ability to enter new markets and manage our expansion efforts, particularly internationally; |
• | our ability to attract and retain key employees and qualified technical and sales personnel; |
• | our ability to effectively and efficiently protect our brand; |
• | our ability to timely scale and adapt our infrastructure; |
• | our ability to maintain, protect, and enhance our intellectual property and not infringe upon others’ intellectual property; |
• | our ability to successfully identify, acquire, and integrate companies and assets; and |
• | the amount and timing of any payments we make under the fourth amended and restated limited liability company agreement of Pluralsight Holdings, or the Fourth LLC Agreement, and our Tax Receivable Agreement, or TRA, with the members of Pluralsight Holdings. |
June 30, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 213,645 | $ | 28,267 | ||||
Accounts receivable, net of allowances of $2,178 and $1,552 as of June 30, 2018 and December 31, 2017, respectively | 36,268 | 38,229 | ||||||
Prepaid expenses and other current assets | 8,907 | 5,125 | ||||||
Total current assets | 258,820 | 71,621 | ||||||
Property and equipment, net | 22,683 | 22,457 | ||||||
Content library, net | 8,093 | 13,441 | ||||||
Intangible assets, net | 2,111 | 2,854 | ||||||
Goodwill | 123,119 | 123,119 | ||||||
Other assets | 1,396 | 2,928 | ||||||
Total assets | $ | 416,222 | $ | 236,420 | ||||
Liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,836 | $ | 6,029 | ||||
Accrued expenses | 24,208 | 26,514 | ||||||
Accrued author fees | 8,496 | 7,879 | ||||||
Deferred revenue | 121,978 | 103,107 | ||||||
Total current liabilities | 161,518 | 143,529 | ||||||
Deferred revenue, net of current portion | 6,555 | 8,194 | ||||||
Long-term debt | — | 116,037 | ||||||
Facility financing obligation | 7,505 | 7,513 | ||||||
Other liabilities | 779 | 458 | ||||||
Total liabilities | 176,357 | 275,731 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Redeemable convertible preferred units: | ||||||||
Redeemable convertible preferred units, no par value; 48,447,880 units authorized, issued and outstanding as of December 31, 2017 | — | 405,766 | ||||||
Stockholders' equity/members’ deficit: | ||||||||
Preferred stock, $0.0001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding as of June 30, 2018 | — | — | ||||||
Class A common stock, $0.0001 par value per share, 1,000,000,000 shares authorized, 62,915,660 shares issued and outstanding as of June 30, 2018; 1,000 shares authorized, issued and outstanding as of December 31, 2017 | 6 | — | ||||||
Class B common stock, $0.0001 par value per share, 200,000,000 shares authorized, 58,111,572 shares issued and outstanding as of June 30, 2018 | 6 | — | ||||||
Class C common stock, $0.0001 par value per share, 50,000,000 shares authorized, 14,048,138 shares issued and outstanding as of June 30, 2018 | 1 | — | ||||||
Additional paid-in capital | 436,177 | — | ||||||
Members’ capital | — | — | ||||||
Accumulated other comprehensive (loss) income | (16 | ) | 25 | |||||
Accumulated deficit | (321,704 | ) | (445,102 | ) | ||||
Total stockholders' equity attributable to Pluralsight, Inc./members' deficit | 114,470 | (445,077 | ) | |||||
Non-controlling interests | 125,395 | — | ||||||
Total stockholders' equity/members' deficit | 239,865 | (445,077 | ) | |||||
Total liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit | $ | 416,222 | $ | 236,420 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue | $ | 53,572 | $ | 38,891 | $ | 103,216 | $ | 76,130 | ||||||||
Cost of revenue | 15,890 | 11,887 | 30,776 | 23,096 | ||||||||||||
Gross profit | 37,682 | 27,004 | 72,440 | 53,034 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 38,933 | 23,018 | 68,400 | 40,844 | ||||||||||||
Technology and content | 16,493 | 11,326 | 29,818 | 21,531 | ||||||||||||
General and administrative | 19,448 | 9,412 | 30,740 | 15,679 | ||||||||||||
Total operating expenses | 74,874 | 43,756 | 128,958 | 78,054 | ||||||||||||
Loss from operations | (37,192 | ) | (16,752 | ) | (56,518 | ) | (25,020 | ) | ||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (2,424 | ) | (3,597 | ) | (6,134 | ) | (5,124 | ) | ||||||||
Loss on debt extinguishment | (4,085 | ) | (1,882 | ) | (4,085 | ) | (1,882 | ) | ||||||||
Other income, net | 48 | 21 | 35 | 69 | ||||||||||||
Loss before income taxes | (43,653 | ) | (22,210 | ) | (66,702 | ) | (31,957 | ) | ||||||||
Provision for income taxes | (143 | ) | (68 | ) | (252 | ) | (126 | ) | ||||||||
Net loss | $ | (43,796 | ) | $ | (22,278 | ) | $ | (66,954 | ) | $ | (32,083 | ) | ||||
Less: Net loss attributable to non-controlling interests | (12,706 | ) | — | (12,706 | ) | — | ||||||||||
Net loss attributable to Pluralsight, Inc. | $ | (31,090 | ) | $ | (22,278 | ) | $ | (54,248 | ) | $ | (32,083 | ) | ||||
Less: Accretion of Series A redeemable convertible preferred units | (156,750 | ) | (21,175 | ) | (176,275 | ) | (22,825 | ) | ||||||||
Net loss attributable to common shares | $ | (187,840 | ) | $ | (43,453 | ) | $ | (230,523 | ) | $ | (54,908 | ) | ||||
Net loss per share, basic and diluted(1) | $ | (0.19 | ) | $ | (0.19 | ) | ||||||||||
Weighted-average common shares used in computing basic and diluted net loss per share(1) | 62,252 | 62,252 | ||||||||||||||
(1) Represents net loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period from May 16, 2018 through June 30, 2018, the period following the reorganization transactions and Pluralsight, Inc.'s initial public offering described in Note 1—Organization and Description of Business. See Note 13—Net Loss Per Share for additional details. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net loss | $ | (43,796 | ) | $ | (22,278 | ) | $ | (66,954 | ) | $ | (32,083 | ) | ||||
Other comprehensive (loss) income: | ||||||||||||||||
Foreign currency translation (losses) gains, net | (63 | ) | 9 | (58 | ) | 18 | ||||||||||
Comprehensive loss | $ | (43,859 | ) | $ | (22,269 | ) | $ | (67,012 | ) | $ | (32,065 | ) | ||||
Less: Comprehensive loss attributable to non-controlling interests | (12,727 | ) | — | (12,727 | ) | — | ||||||||||
Comprehensive loss attributable to Pluralsight, Inc. | $ | (31,132 | ) | $ | (22,269 | ) | $ | (54,285 | ) | $ | (32,065 | ) |
Redeemable Convertible Preferred Units | Members’ Capital | Class A Common Stock | Class B Common Stock | Class C Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Non-Controlling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Units | Amount | Units | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | 48,447,880 | $ | 405,766 | 48,407,645 | $ | — | — | $ | — | — | $ | — | — | $ | — | $ | — | $ | 25 | $ | (445,102 | ) | $ | — | $ | (445,077 | ) | |||||||||||||||||||||||||||||
Activity prior to the reorganization transactions: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants to purchase shares of Class A common units | — | — | — | 984 | — | — | — | — | — | — | — | — | — | — | 984 | |||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | 13,155 | — | — | — | — | — | — | — | — | — | — | 13,155 | |||||||||||||||||||||||||||||||||||||||||
Accretion of Series A redeemable convertible preferred units | — | 176,275 | — | (14,139 | ) | — | — | — | — | — | — | — | — | (162,136 | ) | — | (176,275 | ) | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation losses, net | — | — | — | — | — | — | — | — | — | — | — | (18 | ) | — | — | (18 | ) | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | — | — | (42,660 | ) | — | (42,660 | ) | |||||||||||||||||||||||||||||||||||||||
Effect of the reorganization transactions and initial public offering: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of the reorganization transactions | (48,447,880 | ) | (582,041 | ) | (48,407,645 | ) | — | 39,110,660 | 4 | 58,111,572 | 6 | 14,048,138 | 1 | 581,952 | — | — | — | 581,963 | ||||||||||||||||||||||||||||||||||||||
Initial public offering, net of offering costs | — | — | — | — | 23,805,000 | 2 | — | — | — | — | 324,677 | — | — | — | 324,679 | |||||||||||||||||||||||||||||||||||||||||
Allocation of equity to non-controlling interests | — | — | — | — | — | — | — | — | — | — | (474,007 | ) | (4 | ) | 339,782 | 134,229 | — | |||||||||||||||||||||||||||||||||||||||
Activity subsequent to the reorganization transactions and initial public offering: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of equity appreciation rights | — | — | — | — | — | — | — | — | — | — | (325 | ) | — | — | — | (325 | ) | |||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | — | — | — | — | 7,773 | — | — | — | 7,773 | |||||||||||||||||||||||||||||||||||||||||
Adjustments to non-controlling interests | — | — | — | — | — | — | — | — | — | — | (3,893 | ) | — | — | 3,893 | — | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation losses, net | — | — | — | — | — | — | — | — | — | — | — | (19 | ) | — | (21 | ) | (40 | ) | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | — | (11,588 | ) | (12,706 | ) | (24,294 | ) | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2018 | — | $ | — | — | $ | — | 62,915,660 | $ | 6 | 58,111,572 | $ | 6 | 14,048,138 | $ | 1 | $ | 436,177 | $ | (16 | ) | $ | (321,704 | ) | $ | 125,395 | $ | 239,865 |
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Operating activities | ||||||||
Net loss | $ | (66,954 | ) | $ | (32,083 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation of property and equipment | 4,358 | 2,626 | ||||||
Amortization of acquired intangible assets | 6,665 | 4,012 | ||||||
Amortization of course creation costs | 930 | 671 | ||||||
Equity-based compensation | 20,928 | 6,091 | ||||||
Provision for doubtful accounts | 358 | 188 | ||||||
Amortization of debt discount and debt issuance costs | 1,215 | 306 | ||||||
Debt extinguishment costs | 4,180 | 931 | ||||||
Deferred tax benefit | (64 | ) | — | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 1,335 | 1,833 | ||||||
Prepaid expenses and other assets | (3,858 | ) | (3,215 | ) | ||||
Accounts payable | (588 | ) | 1,328 | |||||
Accrued expenses and other liabilities | (2,839 | ) | 3,641 | |||||
Accrued author fees | 617 | 939 | ||||||
Deferred revenue | 17,500 | 8,782 | ||||||
Net cash used in operating activities | (16,217 | ) | (3,950 | ) | ||||
Investing activities | ||||||||
Purchases of property and equipment | (4,574 | ) | (3,025 | ) | ||||
Purchases of content library | (1,504 | ) | (1,229 | ) | ||||
Net cash used in investing activities | (6,078 | ) | (4,254 | ) | ||||
Financing activities | ||||||||
Proceeds from initial public offering, net of underwriting discounts and commissions | 332,080 | — | ||||||
Payments of costs related to initial public offering | (3,085 | ) | — | |||||
Borrowings of long-term debt | 20,000 | 115,000 | ||||||
Repayments of long-term debt | (137,710 | ) | (85,000 | ) | ||||
Payments of debt extinguishment costs | (2,162 | ) | — | |||||
Payments of debt issuance costs | (450 | ) | (809 | ) | ||||
Payments to settle equity appreciation rights | (325 | ) | — | |||||
Taxes paid related to net share settlement | (78 | ) | — | |||||
Proceeds from the issuance of common units | — | 22 | ||||||
Payments of facility financing obligation | (8 | ) | (8 | ) | ||||
Net cash provided by financing activities | 208,262 | 29,205 | ||||||
Effect of exchange rate change on cash, cash equivalents, and restricted cash | (86 | ) | 24 | |||||
Net increase in cash, cash equivalents, and restricted cash | 185,881 | 21,025 | ||||||
Cash, cash equivalents, and restricted cash, beginning of period | 28,477 | 19,397 | ||||||
Cash, cash equivalents, and restricted cash, end of period | $ | 214,358 | $ | 40,422 | ||||
Supplemental cash flow disclosure: | ||||||||
Cash paid for interest | $ | 4,271 | $ | 2,572 | ||||
Cash paid for income taxes, net | $ | 172 | $ | 142 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Conversion of redeemable convertible preferred units | $ | 582,041 | $ | — | ||||
Redeemable convertible preferred unit accretion | $ | 176,275 | $ | 22,825 | ||||
Unpaid capital expenditures | $ | 568 | $ | 196 | ||||
Costs related to initial public offering, accrued but not yet paid | $ | 4,009 | $ | — | ||||
Issuance of warrants to purchase shares of Class A common stock | $ | 984 | $ | — | ||||
Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||
Cash and cash equivalents | $ | 213,645 | $ | 40,212 | ||||
Restricted cash included in other assets | 713 | 210 | ||||||
Total cash, cash equivalents, and restricted cash | $ | 214,358 | $ | 40,422 |
• | The amended and restated limited liability company agreement of Pluralsight Holdings ("LLC Agreement") was amended and restated to, among other things: (i) appoint Pluralsight, Inc. as its sole managing member and (ii) effectuate the conversion of all outstanding redeemable convertible preferred limited liability company units, incentive units, and Class B incentive units into a single class of common units. See Note 9—Stockholders' Equity for additional details. |
• | Certain members of Pluralsight Holdings that were corporations merged with and into Pluralsight, Inc. and certain members of Pluralsight Holdings contributed certain of their LLC Units to Pluralsight, Inc., in each case in exchange for shares of Class A common stock. |
• | The certificate of incorporation of Pluralsight, Inc. was amended and restated to authorize three classes of common stock, Class A common stock, Class B common stock, Class C common stock, and one class of preferred stock. Class B and Class C common stock were issued on a one-for-one basis to the members of Pluralsight Holdings who retained LLC Units ("Continuing Members"). Class B and Class C common stock have voting rights but no economic rights. See Note 9—Stockholders' Equity for additional details. |
• | Fair Value of Common Stock: Prior to the IPO, the fair value of the common units underlying equity awards was determined considering numerous objective and subjective factors and required judgment to determine the fair value as of each grant date. Subsequent to the IPO, the Company determines the fair value of common stock as of each grant date using the market closing price of Pluralsight, Inc.'s Class A common stock on the date of grant. |
• | Risk-free Interest Rate: The risk-free interest rate is derived from the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term of the options. |
• | Expected Term: The expected term is estimated using the simplified method due to a lack of historical exercise activity for the Company. The simplified method calculates the expected term as the mid-point between the vesting date and the contractual expiration date of the award. For the ESPP, the Company uses the period from the beginning of the offering period to the end of each purchase period. |
• | Volatility: The price volatility factor is based on the historical volatilities of comparable companies as the Company does not have sufficient trading history for its common stock. To determine comparable companies, the Company considers public enterprise cloud-based application providers and selects those that are similar in size, stage of life cycle, and financial leverage. The Company will continue to use this process until a sufficient amount of historical information regarding volatility becomes available, or until circumstances change such that the identified companies are no longer relevant, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. |
• | Dividend Yield: The Company has not and does not expect to pay dividends for the foreseeable future. |
June 30, 2018 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds | $ | 206,996 | $ | — | $ | — | $ | 206,996 |
December 31, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds | $ | 25,146 | $ | — | $ | — | $ | 25,146 |
June 30, 2018 | December 31, 2017 | |||||||
Prepaid expenses | $ | 8,694 | $ | 4,586 | ||||
Other current assets | 213 | 539 | ||||||
Prepaid expenses and other current assets | $ | 8,907 | $ | 5,125 |
June 30, 2018 | December 31, 2017 | |||||||
Accrued compensation | $ | 12,976 | $ | 18,568 | ||||
Accrued income and other taxes payable | 4,139 | 3,492 | ||||||
Accrued other current liabilities | 7,093 | 4,454 | ||||||
Accrued expenses | $ | 24,208 | $ | 26,514 |
June 30, 2018 | December 31, 2017 | |||||||
Computer equipment | $ | 8,789 | $ | 7,482 | ||||
Software | 2,026 | 1,982 | ||||||
Capitalized internal-use software costs | 11,016 | 8,631 | ||||||
Furniture and fixtures | 5,452 | 5,234 | ||||||
Buildings | 11,251 | 11,251 | ||||||
Leasehold improvements | 1,941 | 1,324 | ||||||
Construction in progress | 594 | 587 | ||||||
Total property and equipment | 41,069 | 36,491 | ||||||
Less: Accumulated depreciation | (18,386 | ) | (14,034 | ) | ||||
Property and equipment, net | $ | 22,683 | $ | 22,457 |
June 30, 2018 | ||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Content library: | ||||||||||||
Acquired content library | $ | 32,835 | $ | 30,566 | $ | 2,269 | ||||||
Course creation costs | 12,145 | 6,321 | 5,824 | |||||||||
Total | $ | 44,980 | $ | 36,887 | $ | 8,093 | ||||||
Intangible assets: | ||||||||||||
Technology | $ | 4,500 | $ | 2,434 | $ | 2,066 | ||||||
Trademarks | 162 | 162 | — | |||||||||
Noncompetition agreements | 390 | 390 | — | |||||||||
Customer relationships | 2,750 | 2,750 | — | |||||||||
Database | 40 | 40 | — | |||||||||
Domain names | 45 | — | 45 | |||||||||
Total | $ | 7,887 | $ | 5,776 | $ | 2,111 |
December 31, 2017 | ||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Content library: | ||||||||||||
Acquired content library | $ | 32,835 | $ | 24,643 | $ | 8,192 | ||||||
Course creation costs | 10,640 | 5,391 | 5,249 | |||||||||
Total | $ | 43,475 | $ | 30,034 | $ | 13,441 | ||||||
Intangible assets: | ||||||||||||
Technology | $ | 4,500 | $ | 2,080 | $ | 2,420 | ||||||
Trademarks | 1,162 | 773 | 389 | |||||||||
Noncompetition agreements | 390 | 390 | — | |||||||||
Customer relationships | 2,750 | 2,750 | — | |||||||||
Database | 40 | 40 | — | |||||||||
Domain names | 45 | — | 45 | |||||||||
Total | $ | 8,887 | $ | 6,033 | $ | 2,854 |
December 31, 2017 | |||
Principal borrowings outstanding | $ | 116,620 | |
Less: Debt issuance costs, net of amortization | (583 | ) | |
Net carrying amount | $ | 116,037 |
Years Ending December 31, | |||
2018 (remaining six months) | $ | 2,672 | |
2019 | 4,885 | ||
2020 | 2,867 | ||
2021 | 1,912 | ||
2022 | 1,745 | ||
Thereafter | 2,370 | ||
Total future minimum lease payments | $ | 16,451 |
June 30, 2018 | ||||||
Units | Ownership % | |||||
Pluralsight, Inc.'s ownership of LLC Units(1) | 62,326,654 | 47.7 | % | |||
LLC Units owned by the Continuing Members(2) | 68,275,082 | 52.3 | % | |||
130,601,736 | 100.0 | % |
(1) Excludes 589,006 LLC Units still subject to time-based vesting requirements. | |
(2) Excludes 3,884,628 LLC Units still subject to time-based vesting requirements. |
Unvested Shares | Weighted- Average Grant Date Fair Value | ||||||
Unvested Class A common shares outstanding following the Reorganization Transactions | 605,390 | $ | 6.55 | ||||
Vested | (16,384 | ) | 4.96 | ||||
Unvested Class A common shares outstanding—June 30, 2018 | 589,006 | $ | 6.59 |
Unvested Units | Weighted- Average Grant Date Fair Value | ||||||
Unvested LLC Units outstanding following the Reorganization Transactions | 3,942,674 | $ | 7.73 | ||||
Vested | (58,046 | ) | 5.37 | ||||
Unvested LLC Units outstanding—June 30, 2018 | 3,884,628 | $ | 7.77 |
Stock Options Outstanding | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | ||||||||||
Balance as of December 31, 2017 | — | ||||||||||||
Granted | 5,236,155 | $ | 15.00 | ||||||||||
Forfeited or cancelled | (3,979 | ) | 15.00 | ||||||||||
Balance as of June 30, 2018 | 5,232,176 | $ | 15.00 | 9.9 | $ | 49.4 |
Dividend yield | None | |
Volatility | 55.0% | |
Risk-free interest rate | 2.97% | |
Expected term (years) | 5.63 |
Number of RSUs | Weighted-Average Grant Date Fair Value | ||||||
RSUs of Pluralsight, Inc. | |||||||
Balance at December 31, 2017 | 2,178,450 | $ | 7.06 | ||||
Granted | 3,059,010 | 10.22 | |||||
Forfeited or cancelled | (167,675 | ) | 7.28 | ||||
Balance at June 30, 2018 | 5,069,785 | $ | 8.96 | ||||
RSUs of Pluralsight Holdings | |||||||
Balance at December 31, 2017 and June 30, 2018 | 3,000,000 | $ | 8.24 |
Dividend yield | None | |
Volatility | 55.0% | |
Risk-free interest rate | 2.05%—2.50% | |
Expected term (years) | 0.5—2.0 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Cost of revenue | $ | 46 | $ | 5 | $ | 46 | $ | 10 | ||||||||
Sales and marketing | 4,432 | 715 | 4,971 | 1,379 | ||||||||||||
Technology and content | 2,668 | 526 | 3,049 | 990 | ||||||||||||
General and administrative | 10,409 | 3,133 | 12,862 | 3,712 | ||||||||||||
Total equity-based compensation | $ | 17,555 | $ | 4,379 | $ | 20,928 | $ | 6,091 |
May 16, 2018 through June 30, 2018 | ||||
Numerator: | ||||
Net Loss | $ | (24,294 | ) | |
Less: Net loss attributable to non-controlling interests | (12,706 | ) | ||
Net loss attributable to Pluralsight, Inc. | $ | (11,588 | ) | |
Denominator: | ||||
Weighted-average common shares outstanding | 62,847 | |||
Less: Weighted-average common shares subject to time-based vesting | (595 | ) | ||
Weighted-average common shares outstanding, basic and diluted | 62,252 | |||
Net loss per share, basic and diluted | $ | (0.19 | ) |
As of June 30, 2018 | |||
LLC Units held by Continuing Members | 72,160 | ||
Stock options | 5,232 | ||
RSUs of Pluralsight, Inc. | 5,070 | ||
RSUs of Pluralsight Holdings | 3,000 | ||
Shares issuable under ESPP | 2,877 | ||
Unvested Class A common shares | 589 | ||
Warrants to purchase Class A common shares | 424 | ||
Total | 89,352 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
United States | $ | 33,955 | $ | 25,109 | $ | 65,533 | $ | 48,720 | |||||||
United Kingdom | 5,756 | 4,254 | 11,088 | 8,453 | |||||||||||
Other foreign locations | 13,861 | 9,528 | 26,595 | 18,957 | |||||||||||
Total revenue | $ | 53,572 | $ | 38,891 | $ | 103,216 | $ | 76,130 | |||||||
Percentage of revenue generated outside of the United States | 37 | % | 35 | % | 37 | % | 36 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Billings | $ | 65,297 | $ | 46,029 | $ | 120,716 | $ | 84,912 | ||||||||
Billings from business customers | $ | 54,623 | $ | 35,845 | $ | 99,875 | $ | 65,172 | ||||||||
% of billings from business customers | 84 | % | 78 | % | 83 | % | 77 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Revenue | $ | 53,572 | $ | 38,891 | $ | 103,216 | $ | 76,130 | ||||||||
Cost of revenue(1)(2) | 15,890 | 11,887 | 30,776 | 23,096 | ||||||||||||
Gross profit | 37,682 | 27,004 | 72,440 | 53,034 | ||||||||||||
Operating expenses(1)(2): | ||||||||||||||||
Sales and marketing | 38,933 | 23,018 | 68,400 | 40,844 | ||||||||||||
Technology and content | 16,493 | 11,326 | 29,818 | 21,531 | ||||||||||||
General and administrative | 19,448 | 9,412 | 30,740 | 15,679 | ||||||||||||
Total operating expenses | 74,874 | 43,756 | 128,958 | 78,054 | ||||||||||||
Loss from operations | (37,192 | ) | (16,752 | ) | (56,518 | ) | (25,020 | ) | ||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (2,424 | ) | (3,597 | ) | (6,134 | ) | (5,124 | ) | ||||||||
Loss on debt extinguishment | (4,085 | ) | (1,882 | ) | (4,085 | ) | (1,882 | ) | ||||||||
Other income, net | 48 | 21 | 35 | 69 | ||||||||||||
Loss before income taxes | (43,653 | ) | (22,210 | ) | (66,702 | ) | (31,957 | ) | ||||||||
Provision for income taxes | (143 | ) | (68 | ) | (252 | ) | (126 | ) | ||||||||
Net loss | $ | (43,796 | ) | $ | (22,278 | ) | $ | (66,954 | ) | $ | (32,083 | ) |
(1) | Includes equity-based compensation expense as follows: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Cost of revenue | $ | 46 | $ | 5 | $ | 46 | $ | 10 | ||||||||
Sales and marketing | 4,432 | 715 | 4,971 | 1,379 | ||||||||||||
Technology and content | 2,668 | 526 | 3,049 | 990 | ||||||||||||
General and administrative | 10,409 | 3,133 | 12,862 | 3,712 | ||||||||||||
Total equity-based compensation | $ | 17,555 | $ | 4,379 | $ | 20,928 | $ | 6,091 |
(2) | Includes amortization of acquired intangible assets as follows: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Cost of revenue | $ | 2,961 | $ | 1,642 | $ | 5,923 | $ | 3,284 | ||||||||
Sales and marketing | 194 | 161 | 389 | 322 | ||||||||||||
Technology and content | 177 | 176 | 353 | 352 | ||||||||||||
General and administrative | — | 27 | — | 54 | ||||||||||||
Total amortization of acquired intangible assets | $ | 3,332 | $ | 2,006 | $ | 6,665 | $ | 4,012 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||
Cost of revenue | 30 | 31 | 30 | 30 | ||||||||
Gross profit | 70 | 69 | 70 | 70 | ||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 73 | 59 | 66 | 54 | ||||||||
Technology and content | 31 | 29 | 29 | 28 | ||||||||
General and administrative | 36 | 24 | 30 | 21 | ||||||||
Total operating expenses | 140 | 112 | 125 | 103 | ||||||||
Loss from operations | (70 | ) | (43 | ) | (55 | ) | (33 | ) | ||||
Other (expense) income: | ||||||||||||
Interest expense | (5 | ) | (9 | ) | (6 | ) | (7 | ) | ||||
Loss on debt extinguishment | (8 | ) | (5 | ) | (4 | ) | (2 | ) | ||||
Other income, net | — | — | — | — | ||||||||
Loss before income taxes | (83 | ) | (57 | ) | (65 | ) | (42 | ) | ||||
Provision for income taxes | — | — | — | — | ||||||||
Net loss | (83 | )% | (57 | )% | (65 | )% | (42 | )% |
Three Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Revenue | $ | 53,572 | $ | 38,891 | $ | 14,681 | 38 | % |
Three Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Cost of revenue | $ | 15,890 | $ | 11,887 | $ | 4,003 | 34 | % | |||||||
Gross profit | 37,682 | 27,004 | 10,678 | 40 | % |
Three Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Sales and marketing | $ | 38,933 | $ | 23,018 | $ | 15,915 | 69 | % | |||||||
Technology and content | 16,493 | 11,326 | 5,167 | 46 | % | ||||||||||
General and administrative | 19,448 | 9,412 | 10,036 | 107 | % | ||||||||||
Total operating expenses | $ | 74,874 | $ | 43,756 |
Three Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Interest expense | $ | (2,424 | ) | $ | (3,597 | ) | $ | 1,173 | (33 | )% | |||||
Loss on debt extinguishment | (4,085 | ) | (1,882 | ) | (2,203 | ) | 117 | % | |||||||
Other income, net | 48 | 21 | 27 | 129 | % |
Six Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Revenue | $ | 103,216 | $ | 76,130 | $ | 27,086 | 36 | % |
Six Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Cost of revenue | $ | 30,776 | $ | 23,096 | $ | 7,680 | 33 | % | |||||||
Gross profit | 72,440 | 53,034 | 19,406 | 37 | % |
Six Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Sales and marketing | $ | 68,400 | $ | 40,844 | $ | 27,556 | 67 | % | |||||||
Technology and content | 29,818 | 21,531 | 8,287 | 38 | % | ||||||||||
General and administrative | 30,740 | 15,679 | 15,061 | 96 | % | ||||||||||
Total operating expenses | $ | 128,958 | $ | 78,054 |
Six Months Ended June 30, | Change | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Interest expense | $ | (6,134 | ) | $ | (5,124 | ) | $ | (1,010 | ) | 20 | % | ||||
Loss on debt extinguishment | (4,085 | ) | (1,882 | ) | (2,203 | ) | 117 | % | |||||||
Other income, net | 35 | 69 | (34 | ) | (49 | )% |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Non-GAAP gross profit | $ | 40,689 | $ | 28,651 | $ | 78,409 | $ | 56,328 | ||||||||
Non-GAAP gross margin | 76 | % | 74 | % | 76 | % | 74 | % | ||||||||
Non-GAAP operating loss | $ | (16,305 | ) | $ | (10,367 | ) | $ | (28,925 | ) | $ | (14,917 | ) | ||||
Free cash flow | $ | (9,234 | ) | $ | (10,967 | ) | $ | (22,295 | ) | $ | (8,204 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Gross profit | $ | 37,682 | $ | 27,004 | $ | 72,440 | $ | 53,034 | ||||||||
Equity-based compensation | 46 | 5 | 46 | 10 | ||||||||||||
Amortization of acquired intangible assets | 2,961 | 1,642 | 5,923 | 3,284 | ||||||||||||
Non-GAAP gross profit | $ | 40,689 | $ | 28,651 | $ | 78,409 | $ | 56,328 | ||||||||
Gross margin | 70 | % | 69 | % | 70 | % | 70 | % | ||||||||
Non-GAAP gross margin | 76 | % | 74 | % | 76 | % | 74 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Loss from operations | $ | (37,192 | ) | $ | (16,752 | ) | $ | (56,518 | ) | $ | (25,020 | ) | ||||
Equity-based compensation | 17,555 | 4,379 | 20,928 | 6,091 | ||||||||||||
Amortization of acquired intangible assets | 3,332 | 2,006 | 6,665 | 4,012 | ||||||||||||
Non-GAAP operating loss | $ | (16,305 | ) | $ | (10,367 | ) | $ | (28,925 | ) | $ | (14,917 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Net cash used in operating activities | $ | (5,793 | ) | $ | (8,904 | ) | $ | (16,217 | ) | $ | (3,950 | ) | ||||
Less: Purchases of property and equipment | (2,706 | ) | (1,457 | ) | (4,574 | ) | (3,025 | ) | ||||||||
Less: Purchases of content library | (735 | ) | (606 | ) | (1,504 | ) | (1,229 | ) | ||||||||
Free cash flow | $ | (9,234 | ) | $ | (10,967 | ) | $ | (22,295 | ) | $ | (8,204 | ) |
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Net cash used in operating activities | $ | (16,217 | ) | $ | (3,950 | ) | ||
Net cash used in investing activities | (6,078 | ) | (4,254 | ) | ||||
Net cash provided by financing activities | 208,262 | 29,205 | ||||||
Effect of exchange rate change on cash, cash equivalents, and restricted cash | (86 | ) | 24 | |||||
Net increase in cash, cash equivalents, and restricted cash | $ | 185,881 | $ | 21,025 |
Incorporated by Reference | Filed or Furnished Herewith | |||||||||||
Exhibit Number | Description | Form | File No. | Exhibit Number | Filing Date with SEC | |||||||
3.1 | X | |||||||||||
3.2 | X | |||||||||||
4.1 | S-1/A | 333-224301 | 4.1 | May 7, 2018 | ||||||||
10.1 | X | |||||||||||
10.2 | X | |||||||||||
10.3 | X | |||||||||||
31.1 | X | |||||||||||
31.2 | X | |||||||||||
32.1* | X | |||||||||||
32.2* | X | |||||||||||
101.INS | XBRL Instance Document | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X |
PLURALSIGHT, INC. | ||
By: | /s/ Aaron Skonnard | |
August 1, 2018 | Aaron Skonnard Chief Executive Officer |
PLURALSIGHT, INC. | ||
By: | /s/ James Budge | |
August 1, 2018 | James Budge Chief Financial Officer |
Page | ||||||||||||||||||||
ARTICLE I - CORPORATE OFFICES | 1 | |||||||||||||||||||
1.1 | REGISTERED OFFICE | 1 | ||||||||||||||||||
1.2 | OTHER OFFICES | 1 | ||||||||||||||||||
ARTICLE II - MEETINGS OF STOCKHOLDERS | 1 | |||||||||||||||||||
2.1 | PLACE OF MEETINGS | 1 | ||||||||||||||||||
2.2 | ANNUAL MEETING | 1 | ||||||||||||||||||
2.3 | SPECIAL MEETING | 1 | ||||||||||||||||||
2.4 | ADVANCE NOTICE PROCEDURES | 1 | ||||||||||||||||||
2.5 | NOTICE OF STOCKHOLDERS’ MEETINGS | 5 | ||||||||||||||||||
2.6 | QUORUM | 5 | ||||||||||||||||||
2.7 | ADJOURNED MEETING; NOTICE | 5 | ||||||||||||||||||
2.8 | CONDUCT OF BUSINESS | 5 | ||||||||||||||||||
2.9 | VOTING | 6 | ||||||||||||||||||
2.10 | STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING | 6 | ||||||||||||||||||
2.11 | RECORD DATES | 6 | ||||||||||||||||||
2.12 | PROXIES | 7 | ||||||||||||||||||
2.13 | LIST OF STOCKHOLDERS ENTITLED TO VOTE | 7 | ||||||||||||||||||
2.14 | INSPECTORS OF ELECTION | 7 | ||||||||||||||||||
ARTICLE III - DIRECTORS | 7 | |||||||||||||||||||
3.1 | POWERS | 8 | ||||||||||||||||||
3.2 | NUMBER OF DIRECTORS | 8 | ||||||||||||||||||
3.3 | ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS | 8 | ||||||||||||||||||
3.4 | RESIGNATION AND VACANCIES | 8 | ||||||||||||||||||
3.5 | PLACE OF MEETINGS; MEETINGS BY TELEPHONE | 8 | ||||||||||||||||||
3.6 | REGULAR MEETINGS | 8 | ||||||||||||||||||
3.7 | SPECIAL MEETINGS; NOTICE | 9 |
3.8 | QUORUM; VOTING | 9 | ||||||||||||||||||
3.9 | BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING | 9 | ||||||||||||||||||
3.10 | FEES AND COMPENSATION OF DIRECTORS | 10 | ||||||||||||||||||
3.11 | REMOVAL OF DIRECTORS | 10 | ||||||||||||||||||
ARTICLE IV - COMMITTEES | 10 | |||||||||||||||||||
4.1 | COMMITTEES OF DIRECTORS | 10 | ||||||||||||||||||
4.2 | COMMITTEE MINUTES | 10 | ||||||||||||||||||
4.3 | MEETINGS AND ACTION OF COMMITTEES | 10 | ||||||||||||||||||
4.4 | SUBCOMMITTEES | 11 | ||||||||||||||||||
ARTICLE V - OFFICERS | 11 | |||||||||||||||||||
5.1 | OFFICERS | 11 | ||||||||||||||||||
5.2 | APPOINTMENT OF OFFICERS | 12 | ||||||||||||||||||
5.3 | SUBORDINATE OFFICERS | 12 | ||||||||||||||||||
5.4 | REMOVAL AND RESIGNATION OF OFFICERS | 12 | ||||||||||||||||||
5.5 | VACANCIES IN OFFICES | 12 | ||||||||||||||||||
5.6 | REPRESENTATION OF SECURITIES OF OTHER ENTITIES | 12 | ||||||||||||||||||
5.7 | AUTHORITY AND DUTIES OF OFFICERS | 12 | ||||||||||||||||||
ARTICLE VI - STOCK | 12 | |||||||||||||||||||
6.1 | STOCK CERTIFICATES; PARTLY PAID SHARES | 12 | ||||||||||||||||||
6.2 | SPECIAL DESIGNATION ON CERTIFICATES | 13 | ||||||||||||||||||
6.3 | LOST CERTIFICATES | 13 | ||||||||||||||||||
6.4 | DIVIDENDS | 13 | ||||||||||||||||||
6.5 | TRANSFER OF STOCK | 14 | ||||||||||||||||||
6.6 | STOCK TRANSFER AGREEMENTS | 14 | ||||||||||||||||||
6.7 | REGISTERED STOCKHOLDERS | 14 | ||||||||||||||||||
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER | 14 | |||||||||||||||||||
7.1 | NOTICE OF STOCKHOLDERS’ MEETINGS | 14 | ||||||||||||||||||
7.2 | NOTICE BY ELECTRONIC TRANSMISSION | 14 | ||||||||||||||||||
7.3 | NOTICE TO STOCKHOLDERS SHARING AN ADDRESS | 15 | ||||||||||||||||||
7.4 | NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL | 15 | ||||||||||||||||||
7.5 | WAIVER OF NOTICE | 15 | ||||||||||||||||||
ARTICLE VIII - INDEMNIFICATION | 15 | |||||||||||||||||||
8.1 | INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS | 15 | ||||||||||||||||||
8.2 | INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION | 16 | ||||||||||||||||||
8.3 | SUCCESSFUL DEFENSE | 16 | ||||||||||||||||||
8.4 | INDEMNIFICATION OF OTHERS | 16 | ||||||||||||||||||
8.5 | ADVANCE PAYMENT OF EXPENSES | 16 |
8.6 | LIMITATION ON INDEMNIFICATION | 17 | ||||||||||||||||||
8.7 | DETERMINATION; CLAIM | 17 | ||||||||||||||||||
8.8 | NON-EXCLUSIVITY OF RIGHTS | 17 | ||||||||||||||||||
8.9 | INSURANCE | 18 | ||||||||||||||||||
8.10 | SURVIVAL | 18 | ||||||||||||||||||
8.11 | EFFECT OF REPEAL OR MODIFICATION | 18 | ||||||||||||||||||
8.12 | CERTAIN DEFINITIONS | 18 | ||||||||||||||||||
ARTICLE IX - GENERAL MATTERS | 18 | |||||||||||||||||||
9.1 | EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS | 18 | ||||||||||||||||||
9.2 | FISCAL YEAR | 19 | ||||||||||||||||||
9.3 | SEAL | 19 | ||||||||||||||||||
9.4 | CONSTRUCTION; DEFINITIONS | 19 | ||||||||||||||||||
ARTICLE X - AMENDMENTS | 19 | |||||||||||||||||||
ARTICLE XI - EXCLUSIVE FORUM | 19 |
Page | ||||
Article I. Definitions | ||||
Section 1.1 Definitions | ||||
Section 1.2 Rules of Construction | ||||
Article II. Determination of Realized Tax Benefit | ||||
Section 2.1 Basis Adjustments; the LLC 754 Election | ||||
Section 2.2 Basis Schedules | ||||
Section 2.3 Tax Benefit Schedules | ||||
Section 2.4 Procedures; Amendments | ||||
Article III. Tax Benefit Payments | ||||
Section 3.1 Timing and Amount of Tax Benefit Payments | ||||
Section 3.2 No Duplicative Payments | ||||
Section 3.3 Pro-Ration of Payments as Between the Members | ||||
Section 3.4 Optional Estimated Tax Benefit Payment Procedure |
Section 3.5 Changes; Reserves; Suspension of Payments | ||||
Article IV. TERMINATION | ||||
Section 4.1 Early Termination of Agreement; Breach of Agreement | ||||
Section 4.2 Early Termination Notice | ||||
Section 4.3 Payment Upon Early Termination | ||||
Article V. Subordination and Late Payments | ||||
Section 5.1 Subordination | ||||
Section 5.2 Late Payments by the Corporation | ||||
Article VI. Tax Matters; Consistency; Cooperation | ||||
Section 6.1 Participation in the Corporation’s and the LLC’s Tax Matters | ||||
Section 6.2 Consistency | ||||
Section 6.3 Cooperation | ||||
Article VII. Miscellaneous | ||||
Section 7.1 Notices | ||||
Section 7.2 Counterparts | ||||
Section 7.3 Entire Agreement; No Third Party Beneficiaries | ||||
Section 7.4 Governing Law | ||||
Section 7.5 Severability | ||||
Section 7.6 Right of First Refusal; Assignments; Amendments; Successors; No Waiver | ||||
Section 7.7 Titles and Subtitles | ||||
Section 7.8 Resolution of Disputes | ||||
Section 7.9 Reconciliation | ||||
Section 7.10 Withholding | ||||
Section 7.11 Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets | ||||
Section 7.12 Arm’s Length Transactions | ||||
Section 7.13 Confidentiality | ||||
Section 7.14 Change in Law | ||||
Section 7.15 Interest Rate Limitation | ||||
Section 7.16 Independent Nature of Rights and Obligations | ||||
Section 7.17 LLC Agreement | ||||
Section 7.18 Representative |
1. | Joinder to the Tax Receivable Agreement. Upon the execution of this Joinder by the undersigned and delivery hereof to the Corporation, the undersigned hereby is and hereafter will be a Member under the Tax Receivable Agreement and a Party thereto, with all the rights, privileges and responsibilities of a Member thereunder. The undersigned hereby agrees that it shall comply with and be fully bound by the terms of the Tax Receivable Agreement as if it had been a signatory thereto as of the date thereof. |
2. | Incorporation by Reference. All terms and conditions of the Tax Receivable Agreement are hereby incorporated by reference in this Joinder as if set forth herein in full. |
3. | Address. All notices under the Tax Receivable Agreement to the undersigned shall be direct to: |
Page | |||||||||
ARTICLE I. DEFINITIONS | |||||||||
ARTICLE II. ORGANIZATIONAL MATTERS | |||||||||
Section 2.01 | Formation of Company | ||||||||
Section 2.02 | This Agreement | ||||||||
Section 2.03 | Name | ||||||||
Section 2.04 | Purpose | ||||||||
Section 2.05 | Principal Office; Registered Office | ||||||||
Section 2.06 | Term | ||||||||
Section 2.07 | No State-Law Partnership | ||||||||
ARTICLE III. MEMBERS; UNITS; CAPITALIZATION | |||||||||
Section 3.01 | Members | ||||||||
Section 3.02 | Units | ||||||||
Section 3.03 | Recapitalization; the Corporation’s Capital Contribution; the Corporation’s Purchase of Common Units; Member Distribution | ||||||||
Section 3.04 | Authorization and Issuance of Additional Units | ||||||||
Section 3.05 | Repurchase, Redemption or Forfeiture of shares of Class A Common Stock | ||||||||
Section 3.06 | Certificates Representing Units; Lost, Stolen or Destroyed Certificates; Registration and Transfer of Units | ||||||||
Section 3.07 | Negative Capital Accounts | ||||||||
Section 3.08 | No Withdrawal | ||||||||
Section 3.09 | Loans From Members | ||||||||
Section 3.10 | Corporate Stock Option Plans and Equity Plans | ||||||||
Section 3.11 | Dividend Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan or Other Plan | ||||||||
ARTICLE IV. DISTRIBUTIONS | |||||||||
Section 4.01 | Distributions | ||||||||
ARTICLE V. CAPITAL ACCOUNTS; ALLOCATIONS; TAX MATTERS | |||||||||
Section 5.01 | Capital Accounts | ||||||||
Section 5.02 | Allocations | ||||||||
Section 5.03 | Regulatory Allocations | ||||||||
Section 5.04 | Final Allocations | ||||||||
Section 5.05 | Tax Allocations | ||||||||
Section 5.06 | Indemnification and Reimbursement for Payments on Behalf of a Member | ||||||||
ARTICLE VI. MANAGEMENT | |||||||||
Section 6.01 | Authority of Manager | ||||||||
Section 6.02 | Actions of the Manager |
Section 6.03 | Resignation; No Removal | ||||||||
Section 6.04 | Vacancies | ||||||||
Section 6.05 | Transactions Between Company and Manager | ||||||||
Section 6.06 | Reimbursement for Expenses | ||||||||
Section 6.07 | Delegation of Authority | ||||||||
Section 6.08 | Limitation of Liability of Manager | ||||||||
Section 6.09 | Investment Company Act | ||||||||
Section 6.10 | Outside Activities of the Manager | ||||||||
ARTICLE VII. RIGHTS AND OBLIGATIONS OF MEMBERS AND MANAGER | |||||||||
Section 7.01 | Limitation of Liability and Duties of Members | ||||||||
Section 7.02 | Lack of Authority | ||||||||
Section 7.03 | No Right of Partition | ||||||||
Section 7.04 | Indemnification | ||||||||
Section 7.05 | Members Right to Act | ||||||||
Section 7.06 | Inspection Rights | ||||||||
ARTICLE VIII. BOOKS, RECORDS, ACCOUNTING AND REPORTS, AFFIRMATIVE COVENANTS | |||||||||
Section 8.01 | Records and Accounting | ||||||||
Section 8.02 | Fiscal Year | ||||||||
ARTICLE IX. TAX MATTERS | |||||||||
Section 9.01 | Preparation of Tax Returns | ||||||||
Section 9.02 | Tax Elections | ||||||||
Section 9.03 | Composite Returns | ||||||||
Section 9.04 | Foreign Filings | ||||||||
Section 9.05 | Tax Controversies | ||||||||
ARTICLE X. RESTRICTIONS ON TRANSFER OF UNITS; PUBCO OFFER | |||||||||
Section 10.01 | Transfers by Members | ||||||||
Section 10.02 | Permitted Transfers | ||||||||
Section 10.03 | Restricted Units Legend | ||||||||
Section 10.04 | Transfer | ||||||||
Section 10.05 | Assignee’s Rights | ||||||||
Section 10.06 | Assignor’s Rights and Obligations | ||||||||
Section 10.07 | Overriding Provisions | ||||||||
Section 10.08 | Spousal Consent | ||||||||
Section 10.09 | Tender Offers and Other Events with respect to the Corporation | ||||||||
ARTICLE XI. REDEMPTION AND EXCHANGE RIGHTS | |||||||||
Section 11.01 | Redemption Right of a Member | ||||||||
Section 11.02 | Election and Contribution of the Corporation | ||||||||
Section 11.03 | Exchange Right of the Corporation | ||||||||
Section 11.04 | Reservation of shares of Class A Common Stock; Listing; Certificate of the Corporation |
Section 11.05 | Effect of Exercise of Redemption or Exchange Right | ||||||||
Section 11.06 | Tax Treatment | ||||||||
ARTICLE XII. ADMISSION OF MEMBERS | |||||||||
Section 12.01 | Substituted Members | ||||||||
Section 12.02 | Additional Members | ||||||||
ARTICLE XIII. RESIGNATION; TERMINATION OF RIGHTS | |||||||||
Section 13.01 | Resignation of Members | ||||||||
ARTICLE XIV. DISSOLUTION AND LIQUIDATION | |||||||||
Section 14.01 | Dissolution | ||||||||
Section 14.02 | Winding up and Termination | ||||||||
Section 14.03 | Deferment; Distribution in Kind | ||||||||
Section 14.04 | Cancellation of Certificate | ||||||||
Section 14.05 | Reasonable Time for Winding Up | ||||||||
Section 14.06 | Return of Capital | ||||||||
ARTICLE XV. VALUATION | |||||||||
Section 15.01 | Determination | ||||||||
Section 15.02 | Dispute Resolution | ||||||||
ARTICLE XVI. GENERAL PROVISIONS | |||||||||
Section 16.01 | Power of Attorney | ||||||||
Section 16.02 | Confidentiality | ||||||||
Section 16.03 | Amendments | ||||||||
Section 16.04 | Title to Company Assets | ||||||||
Section 16.05 | Addresses and Notices | ||||||||
Section 16.06 | Binding Effect; Intended Beneficiaries | ||||||||
Section 16.07 | Creditors | ||||||||
Section 16.08 | Waiver | ||||||||
Section 16.09 | Counterparts | ||||||||
Section 16.10 | Applicable Law | ||||||||
Section 16.11 | Severability | ||||||||
Section 16.12 | Further Action | ||||||||
Section 16.13 | Delivery by Electronic Transmission | ||||||||
Section 16.14 | Right of Offset | ||||||||
Section 16.15 | Entire Agreement | ||||||||
Section 16.16 | Remedies | ||||||||
Section 16.17 | Descriptive Headings; Interpretation | ||||||||
Section 16.18 | Approval of Agreement | ||||||||
Schedules | |||||||||
Schedule 1 | – Schedule of Pre-IPO Members | ||||||||
Schedule 2 | – Schedule of Members | ||||||||
Exhibits | |||||||||
Exhibit A | – Form of Joinder Agreement | ||||||||
Exhibit B-1 | – Form of Agreement and Consent of Spouse | ||||||||
Exhibit B-2 | – Form of Spouse’s Confirmation of Separate Property |
Attn: | Aaron Skonnard and Matthew Forkner |
Attn: | Rezwan Pavri, Esq. |
By: | ICONIQ Strategic Partners TT GP, Ltd., its General Partner |
Section 1. Definitions | ||
Section 2. Required Registration | ||
Section 3. Piggyback Registration | ||
Section 4. Registrations on Form S-3 | ||
Section 5. Preparation and Filing | ||
Section 6. Expenses | ||
Section 7. Indemnification | ||
Section 8. Underwriting Agreement | ||
Section 9. Information by Holder | ||
Section 10. Delay of Registration | ||
Section 11. Exchange Act Compliance | ||
Section 12. No Conflict of Rights; Future Rights | ||
Section 13. Termination | ||
Section 14. Benefits of Agreement; Third Party Beneficiaries | ||
Section 15. Assignment | ||
Section 16. Entire Agreement | ||
Section 17. Notices | ||
Section 18. Modifications; Amendments; Waivers | ||
Section 19. Counterparts; Facsimile Signatures | ||
Section 20. Headings | ||
Section 21. Governing Law | ||
Section 22. Waiver of Jury Trial; Consent to Jurisdiction | ||
Section 23. Severability | ||
Section 24. Acknowledgement |
Attn: | Rezwan Pavri, Esq. and Allison B. Spinner, Esq. |
By: | Insight Venture Associates VII, L.P., its General Partner |
By: | Insight Venture Associates VII, Ltd., its General Partner |
By: | Insight Venture Associates VII, L.P., its General Partner |
By: | Insight Venture Associates VII, Ltd., its General Partner |
By: | Insight Venture Associates Coinvestment II, L.P., its General Partner |
By: | Insight Holdings Group, LLC, its General Partner |
By: | Insight Venture Associates Coinvestment II, L.P., its General Partner |
By: | Insight Holdings Group, LLC, its General Partner |
1. | I have reviewed this Quarterly Report on Form 10-Q of Pluralsight, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 1, 2018 | /s/ Aaron Skonnard | |||||
Aaron Skonnard | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Pluralsight, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 1, 2018 | /s/ James Budge | |||||
James Budge | ||||||
Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) |
1. | the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 1, 2018 | /s/ Aaron Skonnard | |||||
Aaron Skonnard | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
1. | the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 1, 2018 | /s/ James Budge | |||||
James Budge | ||||||
Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 31, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Pluralsight, Inc. | |
Entity Central Index Key | 0001725579 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 62,915,660 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 58,111,572 | |
Class C Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 14,048,138 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Revenue | $ 53,572 | $ 38,891 | $ 103,216 | $ 76,130 |
Cost of revenue | 15,890 | 11,887 | 30,776 | 23,096 |
Gross profit | 37,682 | 27,004 | 72,440 | 53,034 |
Operating expenses: | ||||
Sales and marketing | 38,933 | 23,018 | 68,400 | 40,844 |
Technology and content | 16,493 | 11,326 | 29,818 | 21,531 |
General and administrative | 19,448 | 9,412 | 30,740 | 15,679 |
Total operating expenses | 74,874 | 43,756 | 128,958 | 78,054 |
Loss from operations | (37,192) | (16,752) | (56,518) | (25,020) |
Other (expense) income: | ||||
Interest expense | (2,424) | (3,597) | (6,134) | (5,124) |
Loss on debt extinguishment | (4,085) | (1,882) | (4,085) | (1,882) |
Other income, net | 48 | 21 | 35 | 69 |
Loss before income taxes | (43,653) | (22,210) | (66,702) | (31,957) |
Provision for income taxes | (143) | (68) | (252) | (126) |
Net loss | (43,796) | (22,278) | (66,954) | (32,083) |
Less: Net loss attributable to non-controlling interests | (12,706) | 0 | (12,706) | 0 |
Net loss attributable to Pluralsight, Inc. | (31,090) | (22,278) | (54,248) | (32,083) |
Less: Accretion of Series A redeemable convertible preferred units | (156,750) | (21,175) | (176,275) | (22,825) |
Net loss attributable to common shares | $ (187,840) | $ (43,453) | $ (230,523) | $ (54,908) |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (43,796) | $ (22,278) | $ (66,954) | $ (32,083) |
Other comprehensive (loss) income: | ||||
Foreign currency translation (losses) gains, net | (63) | 9 | (58) | 18 |
Comprehensive loss | (43,859) | (22,269) | (67,012) | (32,065) |
Less: Comprehensive loss attributable to non-controlling interests | (12,727) | 0 | (12,727) | 0 |
Comprehensive loss attributable to Pluralsight, Inc. | $ (31,132) | $ (22,269) | $ (54,285) | $ (32,065) |
Condensed Consolidated Statements of Redeemable Convertible Preferred Units, Members’ Deficit and Stockholders' Equity - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands |
Total |
Members’ Capital |
Common Stock
Class A Common Stock
|
Common Stock
Class B Common Stock
|
Common Stock
Class C Common Stock
|
Additional Paid-In Capital |
Accumulated Other Comprehensive Income (Loss) |
Accumulated Deficit |
Non-Controlling Interests |
---|---|---|---|---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2017 | 48,447,880 | ||||||||
Beginning balance at Dec. 31, 2017 | $ 405,766 | ||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Accretion of Series A redeemable convertible preferred units | $ 176,275 | ||||||||
Ending balance (in shares) at Jun. 30, 2018 | 0 | ||||||||
Ending balance at Jun. 30, 2018 | $ 0 | ||||||||
Beginning balance (in shares) at Dec. 31, 2017 | 48,407,645 | 0 | 0 | 0 | |||||
Beginning balance at Dec. 31, 2017 | (445,077) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 25 | $ (445,102) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Foreign currency translation losses, net | (58) | ||||||||
Ending balance (in shares) at Jun. 30, 2018 | 0 | 62,915,660 | 58,111,572 | 14,048,138 | |||||
Ending balance at Jun. 30, 2018 | $ 239,865 | $ 0 | $ 6 | $ 6 | $ 1 | $ 436,177 | $ (16) | $ (321,704) | $ 125,395 |
Organization and Description of Business |
6 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Organization and Description of Business | Organization and Description of Business Pluralsight, Inc. was incorporated as a Delaware corporation on December 4, 2017 as a holding company for the purpose of facilitating an initial public offering (“IPO”) and other related transactions in order to carry on the business of Pluralsight Holdings, LLC ("Pluralsight Holdings") and its subsidiaries (together with Pluralsight, Inc., the “Company” or "Pluralsight"). Pluralsight Holdings is a limited liability company (“LLC”) and was organized on August 29, 2014 in the state of Delaware and is the parent company of Pluralsight, LLC, and its directly and indirectly wholly-owned subsidiaries. Pluralsight, LLC was organized on June 17, 2004 in the state of Nevada. Pluralsight operates a cloud-based technology learning platform that provides a broad range of tools for businesses and individuals, including skill assessments, a curated library of courses, learning paths, and business analytics. As the sole managing member of Pluralsight Holdings, Pluralsight, Inc. operates and controls all the business operations and affairs of Pluralsight. Initial Public Offering In May 2018, Pluralsight, Inc. completed an IPO, in which it sold 23,805,000 shares of Class A common stock at a public offering price of $15.00 per share for net proceeds of $332.1 million, after deducting underwriters' discounts and commissions, which Pluralsight, Inc. used to purchase newly-issued common limited liability company units ("LLC Units") from Pluralsight Holdings. As of June 30, 2018, the Company has reclassified $7.4 million of offering costs into stockholders’ equity as a reduction of the net proceeds received from the IPO. Reorganization Transactions In connection with the IPO, the Company completed the following transactions ("Reorganization Transactions"):
As the sole managing member of Pluralsight Holdings, Pluralsight, Inc. has the sole voting interest in Pluralsight Holdings and controls all of the business operations, affairs, and management of Pluralsight Holdings. Accordingly, Pluralsight, Inc. consolidates the financial results of Pluralsight Holdings and reports the non-controlling interests of the Continuing Members' LLC Units on its consolidated financial statements. As of June 30, 2018, Pluralsight, Inc. owned 47.7% of Pluralsight Holdings and the Continuing Members owned the remaining 52.3% of Pluralsight Holdings. As the Reorganization Transactions are considered transactions between entities under common control, the financial statements for periods prior to the IPO and Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. Prior to the Reorganization Transactions, Pluralsight, Inc. had no operations. |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements |
6 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | Summary of Significant Accounting Policies and Recent Accounting Pronouncements Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and the applicable regulations of the U.S. Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2017 included in the prospectus dated May 16, 2018 (File No. 333-224301), as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended ("Prospectus"). These unaudited condensed consolidated financial statements include the accounts of Pluralsight, Inc. and its directly and indirectly wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. As discussed in Note 1—Organization and Description of Business, Pluralsight, Inc. consolidates the financial results of Pluralsight Holdings as a Variable Interest Entity ("VIE"). The Company periodically evaluates entities for consolidation either through ownership of a majority voting interest, or through means other than a voting interest, in accordance with the VIE accounting model. A VIE is an entity in which the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity's economic performance or the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support. Interim Unaudited Condensed Consolidated Financial Statements The accompanying interim condensed consolidated balance sheet as of June 30, 2018, the interim condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017, the interim condensed consolidated statements of redeemable convertible preferred units, members' deficit, and stockholders' equity for the six months ended June 30, 2018, and the interim condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017 are unaudited. The condensed consolidated balance sheet as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The interim unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company's financial position, its operations and cash flows for the periods presented. The historical results are not necessarily indicative of future results, and the results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year or any other period. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to the determination of fair value of equity awards, the fair value of warrants to purchase common units, useful lives of property and equipment, content library and intangible assets, provisions for doubtful accounts receivable and deferred revenue, accounting for business combinations, impairment of long-lived and intangible assets, including goodwill, and certain accrued expenses, including author fees. These estimates and assumptions are based on the Company’s historical results and management’s future expectations. Actual results could differ from those estimates. Significant Accounting Policies The Company’s significant accounting policies are discussed in "Note 1—Description of Business and Summary of Significant Accounting Policies” in the Prospectus. There have been no significant changes to these policies that have had a material impact on the Company's unaudited condensed consolidated financial statements and related notes during the three and six months ended June 30, 2018, except as noted below. Deferred Offering Costs Deferred offering costs are capitalized and consist of legal, accounting, printing, and other costs that are directly attributable to the IPO. As of December 31, 2017, the balance of deferred offering costs was $2.0 million and included in other assets in the condensed consolidated balance sheets. As of June 30, 2018, the Company reclassified $7.4 million of offering costs into stockholders’ equity as a reduction of the net proceeds received from the IPO. Advertising Costs Advertising costs are expensed as incurred. The Company recorded advertising costs of $3.2 million and $3.8 million for the three months ended June 30, 2018 and 2017, respectively, and $5.8 million and $6.9 million for the six months ended June 30, 2018 and 2017, respectively. Equity-Based Compensation In connection with the IPO, the Company granted Class A common stock options to certain employees. Equity-based compensation expense for Class A common stock options granted to employees is recognized based on the fair value of the awards granted, determined using the Black-Scholes option pricing model. Equity-based compensation expense is recognized as expense on a straight-line basis over the requisite service period. Equity-based compensation expense related to purchase rights issued under the 2018 Employee Stock Purchase Plan ("ESPP") is based on the Black-Scholes option pricing model fair value of the estimated number of awards as of the beginning of the offering period. Equity-based compensation expense is recognized following the straight-line attribution method over the offering period. The Black-Scholes option pricing model is affected by the share price and a number of assumptions, including the award’s expected life, risk-free interest rate, the expected volatility of the underlying stock, and expected dividends. The assumptions used in the Black Scholes pricing model are estimated as follows:
Non-Controlling Interests The non-controlling interests balance represents the economic interests of LLC Units of Pluralsight Holdings held by Continuing Members, based on the portion of LLC Units owned by Continuing Members. Income or loss is attributed to the non-controlling interests based on the weighted-average LLC Units outstanding during the period, excluding LLC Units that are subject to time-based vesting requirements. As of June 30, 2018, the non-controlling interests owned 52.3% of the vested LLC Units outstanding. The non-controlling interests' ownership percentage can fluctuate over time as LLC Units vest and as Continuing Members elect to exchange LLC Units for Class A common stock of Pluralsight, Inc. Net Loss Per Share Basic net loss per share is computed by dividing net loss attributable to Pluralsight, Inc. for the period following the Reorganization Transactions by the weighted-average number of shares of Class A common shares outstanding during the same period after giving effect to weighted-average shares of Class A common stock that remain subject to time-based vesting requirements. Diluted net loss per share is computed giving effect to all potential weighted-average dilutive shares for the period following the Reorganization Transactions including LLC Units held by Continuing Members that are convertible into Class A common stock, stock options, restricted stock units ("RSUs"), warrants to purchase Class A common stock, and shares issuable under the ESPP for the period after the Reorganization Transactions. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method or if-converted method, as applicable. Recent Accounting Pronouncements Under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company meets the definition of an emerging growth company. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the Company is no longer an emerging growth company or until the Company affirmatively and irrevocably opts out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Recently Adopted Accounting Pronouncements In August 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update clarifies how certain cash flows should be classified with the objective of reducing the existing diversity in practice. This update is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. Among other provisions, the ASU requires that cash payments for certain debt prepayment or debt extinguishment costs be classified as cash outflows for financing activities. The Company early adopted the standard during the second quarter of 2018. As a result of the adoption, the Company recorded $2.2 million in payments of debt extinguishment costs within financing activities on the condensed consolidated statements of cash flows for the six months ended June 30, 2018. The retrospective adoption had no material effect on any prior periods. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This update clarifies that transfers between cash and restricted cash are not part of the entity’s operating, investing, and financing activities, and details of those transfers are not reported as cash flow activities in the statements of cash flows. For public business entities, this update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, this update is effective for annual periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption for all entities is permitted. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company early adopted this standard during the year ended December 31, 2017, and retroactively adjusted the consolidated statements of cash flows for all periods presented. The retrospective adoption had no material effect on any prior periods. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in the ASU. The ASU is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. During the first quarter of 2018, the Company adopted the ASU prospectively. The adoption of the ASU had no material effect on the unaudited condensed consolidated financial statements. Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. For public business entities that are SEC filers, the ASU is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For public business entities that are not SEC filers, the ASU is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. For all other entities, the ASU is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. The guidance will apply to the Company’s reporting requirements in performing goodwill impairment testing; however, the Company does not anticipate the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new guidance is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The impact to the Company’s unaudited condensed consolidated financial statements will depend on the facts and circumstances of any specific future transactions. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. For public business entities, the ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. For all other entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. As the Company has elected to use the extended transition period available to emerging growth companies, the Company does not anticipate adopting the standard until the fiscal year ended December 31, 2020. The Company is currently evaluating the potential changes from this ASU to its future financial reporting and disclosures. As part of its preliminary assessment, the Company expects to record right-of-use assets and lease liabilities for its operating leases as a result of adopting the standard. While the Company continues to assess all potential impacts under the new standard, including the areas described above, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the adoption of the new standard on its consolidated financial statements at this time. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40), which will supersede nearly all existing revenue recognition guidance. The core principle behind ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. To achieve this core principle, the ASU provides a model, which involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction prices to the performance obligations in the contract, and recognizing revenue when (or as) the entity satisfies the performance obligations. The standard also provides guidance on the recognition of costs related to obtaining customer contracts. The ASU permits adoption either by using a full retrospective approach, in which all comparative periods are presented in accordance with the new standard, or a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. For public business entities, the standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted for annual periods beginning after December 15, 2016. As the Company has elected to use the extend transition period available to emerging growth companies, the Company anticipates adopting the standard for the fiscal year ending December 31, 2019. The Company is currently evaluating adoption methods. The Company is evaluating the impact of the adoption of the new standard on its accounting policies, processes, and system requirements. The Company has assigned internal resources to assist in the evaluation. Furthermore, the Company has made and will continue to make investments in systems to enable timely and accurate reporting under the new standard. While the Company continues to assess all potential impacts under the new standard, there is potential the standard could have an impact on the timing of recognition of revenue and contract acquisition costs. Under the current revenue recognition guidance, the Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the delivery of future services. Under the new standard, the concept of contingent revenue no longer exists. Depending on the outcome of the Company’s evaluation, the timing of when revenue is recognized could change for multi-year subscription agreements. As part of its preliminary evaluation, the Company has also considered the impact of the standard’s requirements with respect to the capitalization and amortization of incremental costs of obtaining a contract. Under the Company’s current accounting policy, incremental costs of obtaining a contract are expensed as incurred. The new standard requires the capitalization of all incremental costs that are incurred to obtain a contract with a customer that would not have been incurred if the contract had not been obtained, provided the Company expects to recover those costs. As a result of this standard, the Company expects to capitalize incremental contract costs. The period over which these costs are expected to be recognized is still being evaluated by the Company. While the Company continues to assess all potential impacts under the new standard, including the areas described above, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the adoption of the new standard on its unaudited condensed consolidated financial statements at this time. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company measures and records certain financial assets at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds. The following three levels of inputs are used to measure the fair value of financial instruments: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. The fair value of the Company’s financial instruments were as follows (in thousands):
Fair Value of Other Financial Instruments The carrying amounts of the Company’s accounts receivable, accounts payable, accrued expenses, and other liabilities approximate their fair values due to the short maturities of these assets and liabilities. |
Balance Sheet Components |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components | Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands):
Accrued Expenses Accrued expenses consisted of the following (in thousands):
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Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment, net consisted of the following (in thousands):
Depreciation expense totaled $2.2 million and $1.3 million for the three months ended June 30, 2018 and 2017, respectively, and $4.4 million and $2.6 million for the six months ended June 30, 2018 and 2017, respectively. In September 2017, the Company committed to a plan to expand operations in Utah and, as a result, consolidate certain offices of subsidiaries of the Company. In connection with the plan, the Company disposed of certain furniture, leasehold improvements, and computer equipment at the respective office cease-use dates. Accordingly, the useful lives of assets with a net book value of $1.8 million were shortened. The revised useful lives resulted in an increase in depreciation expense of $0.2 million and $0.5 million during the three and six months ended June 30, 2018, respectively. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Intangible assets, net are summarized as follows (in thousands):
Intangible assets are amortized using the straight-line method over the estimated useful lives. Amortization expense of acquired intangible assets was $3.3 million and $2.0 million for the three months ended June 30, 2018, and 2017, respectively, and $6.7 million and $4.0 million for the six months ended June 30, 2018 and 2017, respectively. Amortization expense of course creation costs was $0.5 million and $0.4 million for the three months ended June 30, 2018, and 2017, respectively, and $0.9 million and $0.7 million for the six months ended June 30, 2018 and 2017, respectively. In December 2017, the Company committed to a plan to retire the website of an acquired subsidiary in order to provide a more unified user experience on the Pluralsight platform. Accordingly, the estimated useful lives of certain content library and trademark assets were adjusted. The revised useful lives resulted in an increase in amortization expense of $1.5 million and $3.0 million during the three and six months ended June 30, 2018, respectively. The fully-amortized assets were disposed of in June 2018. |
Credit Facilities |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||
Credit Facilities | Credit Facilities Silicon Valley Bank Credit Agreement On November 17, 2014, the Company entered into the amended and restated credit agreement (“Second Amended and Restated Credit Agreement”) with a lending syndicate, which was led by Silicon Valley Bank. The agreement provided for a total term loan of $100.0 million and a revolving line of credit of up to $10.0 million, which was used to finance the acquisitions of Code School LLC and Smarterer, Inc. Under the terms of the Second Amended and Restated Credit Agreement, the Company was required to maintain compliance with certain negative and affirmative covenants, including financial covenants and covenants relating to the incurrence of other indebtedness, the occurrence of a material adverse change, the maintenance of depository accounts, the disposition of assets, mergers, acquisitions, investments, the granting of liens, and the payment of dividends. On March 1, 2017, the Company entered into a waiver and amendment to the Second Amended and Restated Credit Agreement with its lenders, which provided a waiver on certain events of default that occurred in fiscal quarter ended September 30, 2016, for failure to comply with the consolidated total leverage ratio covenant. The Second Amended and Restated Credit Agreement was secured with a lien against substantially all of the assets of the Company. The outstanding borrowings under the Second Amended and Restated Credit Agreement of $82.5 million were repaid in full in June 2017. The repayment of the borrowings resulted in a loss on extinguishment of $1.9 million. Guggenheim Credit Agreement In June 2017, the Company entered into a long-term debt facility with Guggenheim Corporate Funding, LLC pursuant to a credit agreement (“Guggenheim Credit Agreement”), consisting of a term loan facility of $115.0 million and a revolving credit facility of $5.0 million from Guggenheim Corporate Funding, LLC. Upon signing the Guggenheim Credit Agreement, the Company borrowed the $115.0 million term loan capacity available and used the majority of the proceeds to repay the full outstanding borrowings of $82.5 million under the Second Amended and Restated Credit Agreement with Silicon Valley Bank. In February 2018, the Company amended the Guggenheim Credit Agreement and increased its term loan facility and its borrowings thereunder by an additional $20.0 million. In connection with the amendment, the Company issued warrants to the lenders to purchase 424,242 shares of Class A common stock at an exercise price of $8.25 per share. See Note 9—Stockholders' Equity for additional details. The warrants were measured at the estimated fair value of $1.0 million on the date of issuance and were recorded as debt issuance costs. Under the terms of the Guggenheim Credit Agreement, the Company was required to maintain compliance with certain negative and affirmative covenants, including financial covenants and covenants relating to the incurrence of other indebtedness, the occurrence of a material adverse change, the disposition of assets, mergers, acquisitions and investments, the granting of liens, and the payment of dividends. In addition, on a quarterly basis, the Company was required to maintain a maximum ratio of indebtedness to total recurring revenue for the most recent trailing twelve-month period ranging from 0.55 to 1 to 0.65 to 1. The Company was also required to maintain $10.0 million in liquidity, including amounts available under revolving loan commitments as of the last day of any calendar month. The Guggenheim Credit Agreement was secured with a lien against substantially all of the assets of the Company. Interest accrued under the credit agreement at an adjusted LIBOR rate plus 8.50%. Adjusted LIBOR was defined as greater LIBOR rate in effect for each interest period divided by 1 minus the Statutory Reserves (if any) for such Eurodollar borrowing for such interest period, and with respect to the term loan only, a minimum LIBOR floor of 1.00%. Under these borrowings, the Company elected to pay 2.50% of the interest due on each interest payment date in-kind rather than in cash. A portion of the net proceeds from the IPO were used to repay the outstanding principal balance of $137.7 million and extinguish the Guggenheim Credit Agreement in May 2018. The Company incurred a loss on debt extinguishment of $4.1 million in connection with the repayment. The Company’s debt consisted of the following (in thousands):
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Commitments and Contingencies |
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Commitments and Contingencies | Commitments and Contingencies Letters of Credit As of June 30, 2018 and December 31, 2017, the Company had a total of $0.7 million and $0.2 million, respectively, in letters of credit outstanding. These outstanding letters of credit were issued for purposes of securing the Company’s obligations under facility leases. The letters of credit are collateralized by a portion of the Company’s cash, which is reflected as restricted cash and classified within other assets on the condensed consolidated balance sheets. Lease Commitments The Company is committed under certain operating leases with third parties for office space. These leases expire at various times through 2024. The Company recognizes rent expense on a straight-line basis over the lease period. Payments made under the Company’s lease for its corporate headquarters in Farmington, Utah are not recorded as rent expense in the condensed consolidated statements of operations. These payments are effectively recorded as repayments of the financing obligation and interest expense in the condensed consolidated statements of operations as the Company did not qualify for sale-leaseback accounting upon completion of the facilities build out and is considered to be the owner of the buildings for accounting purposes. At June 30, 2018, future minimum lease payments, including lease payments for the Company’s facilities in Farmington, Utah, were as follows (in thousands):
Rent expense under operating leases was $1.1 million and $0.4 million for the three months ended June 30, 2018 and 2017, respectively, and $2.2 million and $0.8 million for the six months ended June 30, 2018 and 2017, respectively. Other Commitments The Company has also entered into certain non-cancellable agreements primarily related to cloud infrastructure and software subscriptions in the ordinary course of business. There have been no material changes in the Company's commitments and contingencies, as disclosed in the Prospectus. Legal Proceedings The Company is involved in legal proceedings from time to time arising in the normal course of business. Management believes that the outcome of these proceedings will not have a material impact on the Company’s financial position, results of operations, or liquidity. Warranties and Indemnification The performance of the Company’s cloud-based technology learning platform is typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable. The Company’s contractual arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any material liabilities related to such obligations in the accompanying consolidated financial statements. The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. |
Stockholders' Equity |
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Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Amendment and Restatement of Certificate of Incorporation In connection with the Reorganization Transactions, the certificate of incorporation of Pluralsight, Inc. was amended and restated to, among other things, provide for the (i) authorization of 1,000,000,000 shares of Class A common stock with a par value of $0.0001 per share; (ii) authorization of 200,000,000 shares of Class B common stock with a par value of $0.0001 per share; (iii) authorization of 50,000,000 shares of Class C common stock with a par value of $0.0001 per share; (iv) authorization of 100,000,000 shares of undesignated preferred stock that may be issued from time to time; and (v) establishment of a classified board of directors, divided into three classes, each of whose members will serve for staggered three-year terms. Holders of Class A and Class B common stock are entitled to one vote per share and holders of Class C common stock are entitled to ten votes per share. Except as otherwise required by applicable law, holders of Class A common stock, Class B common stock, and Class C common stock vote together as a single class on all matters on which stockholders generally are entitled to vote. Holders of Class B and Class C common stock are not entitled to receive dividends and will not be entitled to receive any distributions upon the liquidation, dissolution or winding up of the Company. Shares of Class B and Class C common stock may only be issued to the extent necessary to maintain the one-to-one ratio between the number of LLC Units held by the Continuing Members and the number of Class B or Class C common shares held by the Continuing Members. Shares of Class B and Class C common stock are transferable only together with an equal number of LLC Units. Subject to certain limitations and exceptions, Continuing Members may exchange or redeem LLC Units and shares of Class B or Class C common stock, as applicable, for, at the option of Pluralsight, Inc., cash or shares of Class A common stock, on a one-for-one basis. Pluralsight, Inc. must at all times maintain a ratio of one LLC Unit for each share of Class A common stock issued, and Pluralsight Holdings must at all times maintain a one-to-one ratio between the number of shares of Class B or Class C common stock owned by the Continuing Members and the number of LLC Units owned by the Continuing Members. Recapitalization of Pluralsight Holdings In connection with the Reorganization Transactions and the amendment and restatement of the LLC Agreement, all membership interests in Pluralsight Holdings were converted into a single-class of common LLC Units and certain holders of LLC Units elected to exchange LLC Units for Class A common stock of Pluralsight, Inc. The following is a summary of the shares converted or exchanged in connection with the Reorganization Transactions: •48,407,645 common units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted on a one-for-one basis into LLC Units. •48,447,880 redeemable convertible preferred units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted on a one-for-one basis into LLC Units. •15,783,689 incentive units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted into 12,667,778 LLC Units after giving effect to the threshold price and catch-up price per unit. •3,000,000 Class B incentive units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted into 1,747,067 LLC Units after giving effect to the threshold price and catch-up price per unit. In connection with the recapitalization, a total of 39,110,660 LLC Units were exchanged for shares of Class A common stock of Pluralsight, Inc. In addition, the Company issued 58,111,572 shares of Class B common stock and 14,048,138 shares of Class C common stock to the Continuing Members on a one-for-one basis to the corresponding LLC Units held by the Continuing Members. The amended and restated LLC Agreement requires that Pluralsight Holdings at all times maintain (i) a one-to-one ratio between the number of outstanding shares of Class A common stock of Pluralsight, Inc. and the number of LLC Units and (ii) a one-to-one ratio between the number of shares of Class B or Class C common stock owned by the Continuing Members and the number of LLC Units held by the Continuing Members. Redeemable Convertible Preferred Units Conversion As described in Note 1—Organization and Description of Business, in connection with the Reorganization Transactions, the LLC Agreement of Pluralsight Holdings was amended and restated to, among other things, effectuate the conversion of 48,447,880 redeemable convertible preferred units into LLC Units of Pluralsight Holdings. Prior to the Reorganization Transactions, Series A redeemable convertible preferred units were redeemable at the option of the holder at an amount equal to the greater of the original issuance price or the aggregate fair value of the Series A redeemable convertible preferred units. Accordingly, prior to the Reorganization Transactions, the Series A redeemable convertible preferred units were accreted to the fair value on the date of conversion of the IPO price of $15.00 per share, or $412.5 million. As the redeemable convertible preferred units were converted into common LLC Units of Pluralsight Holdings, and are no longer redeemable at the option of the holder, the Company reclassified the carrying value of the redeemable convertible preferred units of $582.0 million on the date of the Reorganization Transactions to stockholders' equity. Initial Public Offering As described in Note 1—Organization and Description of Business, in May 2018, Pluralsight, Inc. completed an IPO of 23,805,000 shares of Class A common stock at a public offering price of $15.00 per share. Pluralsight, Inc. received proceeds of $332.1 million, net of underwriting discounts and commissions, which Pluralsight, Inc. used to purchase newly-issued LLC Units of Pluralsight Holdings at a price per unit equal to the IPO price per share. Warrants to Purchase Shares of Class A Common Stock In connection with the first amendment of the Guggenheim Credit Agreement, the Company issued warrants to the lenders to purchase 424,242 shares of Class A common stock of Pluralsight, Inc. at an exercise price of $8.25 per share. See Note 7—Credit Facilities for additional details. The warrants are fully vested and exercisable, in whole or in part, prior to their expiration. The warrants will expire at the earlier of (i) the acquisition of the Company by another entity or (ii) six months after the effectiveness of the IPO. The warrants were measured at the fair value on the date of issuance, which was determined to be $1.0 million using a Black-Scholes option pricing model and a probability-weighted expected return methodology. As the warrants are exercisable for shares of the Company’s Class A common stock, the Company recorded the warrants within stockholders’ equity. |
Non-Controlling Interests |
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Controlling Interests | Non-Controlling Interests In connection with the Reorganization Transactions, Pluralsight, Inc. became the sole managing member of Pluralsight Holdings and as a result consolidates the results of operations of Pluralsight Holdings. The non-controlling interests balance represents the LLC Units held by Continuing Members, based on the portion of LLC Units owned by Continuing Members. Following the Reorganization Transactions, the total adjustments to the non-controlling interests were $3.8 million and were primarily related to equity-based compensation and the settlement of equity-based awards. Income or loss is attributed to the non-controlling interests based on the weighted-average ownership percentages of LLC Units outstanding during the period, excluding LLC Units that are subject to time-based vesting requirements. As of June 30, 2018, the non-controlling interests of Pluralsight Holdings owned 52.3% of the outstanding LLC Units, with the remaining 47.7% owned by Pluralsight, Inc. The ownership of the LLC Units is summarized as follows:
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Equity-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation | Equity-Based Compensation Incentive Unit Plan Certain employees and directors were granted incentive units in Pluralsight Holdings, pursuant to the Incentive Unit Plan ("2013 Plan"). In connection with the Reorganization Transactions, all outstanding incentive units were converted into LLC Units of Pluralsight Holdings and certain holders of incentive units elected to exchange LLC Units for shares of Class A common stock of Pluralsight, Inc. Shares of Class A common stock and LLC Units issued as a result of the exchange or conversion of unvested incentive units remain subject to the same time-based vesting requirements that existed prior to the Reorganization Transactions. In connection with the IPO, the 2013 Plan was terminated. The shares of unvested Class A common stock following the exchange of unvested incentive units are summarized as follows:
The shares of unvested LLC Units following the conversion of unvested incentive units are summarized as follows:
The Company evaluated the conversion and exchange of incentive units as part of the Reorganization Transactions and concluded the conversion and exchange was not a modification of the original incentive units. Accordingly, the Company will continue to recognize equity-based compensation using the grant date fair value as measured on the original grant date of the incentive units. As of June 30, 2018, total unrecognized equity-based compensation related to all unvested Class A common shares and unvested LLC Units was $28.3 million, which is expected to be recognized over a weighted-average period of 2.6 years. The total fair value of Class A common shares and LLC Units vested during the period from the date of the Reorganization Transactions to June 30, 2018 was $1.6 million. If a forfeiture of an unvested LLC Unit occurs, the associated shares of Class B common stock or Class C common stock, as applicable, are also forfeited. Equity Incentive Plans In June 2017, Pluralsight Holdings adopted the 2017 Equity Incentive Plan ("2017 Plan") and issued RSUs to employees. In May 2018, Pluralsight, Inc. adopted the 2018 Equity Incentive Plan ("2018 Plan"). The 2018 Plan provides for the grant of nonstatutory stock options, restricted stock, RSUs, stock appreciation rights, performance units, and performance shares to employees, directors, and consultants of the Company. A total of 22,149,995 shares of Class A common stock are reserved for issuance under the 2018 Plan. The number of shares available for issuance under the 2018 Plan also includes an annual increase on the first day of each fiscal year beginning in 2019, equal to the lesser of: (i) 14,900,000 shares, (ii) 5.0% of the outstanding shares of capital stock as of the last day of the immediately preceding fiscal year, or (iii) a lower number of shares determined by the 2018 Plan's administrator. In connection with the IPO, the 2017 Plan was terminated. At the time the 2017 Plan was terminated, a total of 4,508,835 RSUs granted under the 2017 Plan remained outstanding. With the establishment of the 2018 Plan, the Company no longer grants equity-based awards under the 2017 Plan and any shares that expire, terminate, are forfeited or repurchased by the Company, or are withheld by the Company to cover tax withholding obligations, under the 2017 Plan, will automatically be transferred to the 2018 Plan up to 4,508,835 shares. Stock Options In connection with the IPO, the Company granted to employees stock options under the 2018 Plan to purchase shares of Class A common stock at an exercise price equal to the IPO price of $15.00 per share. The stock options will vest ratably in equal six-month periods over a period of two years from the IPO date. The following table summarizes the stock option activity for the six months ended June 30, 2018:
As of June 30, 2018, no options were vested or exercisable. The total unrecognized equity-based compensation related to the stock options was $39.0 million, which is expected to be recognized over a weighted-average period of 1.9 years. The grant date fair value of the stock options was determined using the Black Scholes model with the following assumptions:
RSUs The Company has granted RSUs to employees under the 2018 Plan and previously under the 2017 Plan. RSUs represent the right to receive shares of Pluralsight Inc.’s Class A common stock at a specified future date. RSUs under the 2017 Plan are generally subject to both a service condition and a liquidity condition. RSUs under the 2018 Plan are generally subject to a service condition. The service condition is generally satisfied over four years, whereby 25% of the share units satisfy this condition on the first anniversary of the grant date and then ratably on a quarterly basis thereafter through the end of the vesting period. The liquidity condition is satisfied upon the occurrence of a qualifying event, which is defined as a change of control transaction or upon expiration of a lock-up period following the IPO. Prior to the IPO, the Company had not recorded any equity-based compensation expense associated with the RSUs as the liquidity condition was not deemed probable. Following the completion of the IPO, the Company recorded a cumulative adjustment to equity-based compensation expense totaling $7.8 million. The remaining unrecognized equity-based compensation expense related to RSUs will be recognized over the remaining requisite service period, using the straight-line attribution method. Under the 2017 Plan, all RSUs granted were initially RSUs of Pluralsight Holdings. In connection with the IPO, all RSUs were converted into RSUs of Pluralsight, Inc., except for Class B RSUs, which remain RSUs of Pluralsight Holdings, and represent the right to receive LLC Units and corresponding shares of Class C common stock of Pluralsight, Inc. upon vesting. The activity for RSUs for the six months ended June 30, 2018 was as follows:
As of June 30, 2018, unrecognized compensation cost related to the RSUs, including RSUs of Pluralsight Holdings, was $59.6 million, which is expected to be recognized over a weighted-average period of 3.2 years. Employee Stock Purchase Plan In May 2018, Pluralsight Inc.'s board of directors adopted the ESPP. A total of 2,970,000 shares of Class A common stock were initially reserved for issuance under the ESPP. The number of shares of Class A common stock available for issuance under the ESPP will be increased on the first day of each fiscal year beginning in 2019 equal to the lesser of: (i) 2,970,000 shares of Class A common stock, (ii) 1.5% of the outstanding shares of all classes of common stock of the Company on the last day of the immediately preceding fiscal year, or (iii) an amount determined by the plan administrator. The ESPP generally provides for consecutive overlapping 24-month offering periods comprised of four six-month purchase periods. The offering periods are scheduled to start on the first trading day on or after May 31 and November 30 of each year. The first offering period commenced on the IPO date and is scheduled to end on the first trading day on or after May 31, 2020. The ESPP permits participants to elect to purchase shares of Class A common stock through fixed contributions from eligible compensation paid during each purchase period during an offering period, provided that this fixed contribution amount will not exceed 75.0% of the eligible compensation a participant receives during a purchase period or $12,500 (increased to $25,000 for purposes of the first purchase period under the ESPP). A participant may purchase a maximum of 5,000 shares during each purchase period. Amounts deducted and accumulated by the participant will be used to purchase shares of Class A common stock at the end of each purchase period. The purchase price of the shares will be 85% of the lower of the fair market value of Class A common stock on the first trading day of each offering period or on the purchase date, except for the first offering period, during which the purchase price of the shares will be 85% of the lower of (i) the IPO price or (ii) the fair market value of common stock on the purchase date. If the fair market value of the common stock on any purchase date within an offering period is lower than the stock price as of the beginning of the offering period, the offering period will immediately reset after the purchase of shares on such purchase date and participants will automatically be re-enrolled in a new offering period. Participants may end their participation at any time during an offering period and will be paid their accrued contributions that have not yet been used to purchase shares of common stock. Participation ends automatically upon termination of employment. The initial offering period began on the IPO date. As of June 30, 2018, a total of 2,876,788 shares were issuable to employees based on contribution elections made under the ESPP and no shares had yet been purchased. As of June 30, 2018, total unrecognized equity-based compensation was $15.6 million, which is expected to be recognized over a weighted-average period of 1.9 years. The fair value of the purchase right for the ESPP is estimated on the date of grant using the Black-Scholes model with the following assumptions:
Equity Appreciation Rights In connection with the IPO, the Company elected to settle all vested equity appreciation rights ("EARs") for a cash payment of $0.3 million. The EARs vest upon satisfaction of both time and a liquidity condition, which was satisfied upon completion of the IPO. The remaining unvested EARs were cancelled on the date of the IPO. Prior to the IPO, the vesting of EARs was not probable and no equity-based compensation related to the EARs had been recognized. The Company recognized $0.1 million in compensation cost on the date of the IPO measured using the grant date fair value of the award using a Black-Scholes model. Equity-Based Compensation Expense Equity-based compensation expense was classified as follows in the accompanying condensed consolidated statements of operations (in thousands):
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Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes As a result of the Reorganization Transactions, Pluralsight, Inc. became the sole managing member of Pluralsight Holdings, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Pluralsight Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Pluralsight Holdings is passed through to and included in the taxable income or loss of its members, including Pluralsight, Inc. following the Reorganization Transactions, on a pro rata basis. Pluralsight, Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income of Pluralsight Holdings following the Reorganization Transactions. The Company is also subject to taxes in foreign jurisdictions. The tax provision for interim periods is determined using an estimate of the Company's annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of its annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The quarterly tax provision, and estimate of the Company's annual effective tax rate, are subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how the Company conducts business, and tax law developments. For the three months ended June 30, 2018 and 2017 the Company's estimated effective tax rate was (0.5)% and (0.3)%, respectively. For the six months ended June 30, 2018 and 2017, the Company's estimated effective tax rate was (0.5)% and (0.4)%, respectively. The variations between the Company's estimated effective tax rate and the U.S. statutory rate are primarily due to the portion of the Company's earnings (or loss) attributable to non-controlling interests following the Reorganization Transactions and the full domestic valuation allowance. The Company is subject to income tax in the U.S. as well as other tax jurisdictions in which the Company operates. The provision for income taxes consists primarily of income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business. The Company's U.S. operations have resulted in losses, and as such, the Company maintains a full valuation allowance against its U.S. deferred tax assets, including the deferred tax assets acquired in connection with the Reorganization Transactions as described below. While the Company believes its current valuation allowance is appropriate, the Company assesses the need for an adjustment to the valuation allowance on a quarterly basis. The assessment is based on estimates of future sources of taxable income for the jurisdictions in which the Company operates and the periods over which deferred tax assets will be realizable. In the event the Company determines that it will be able to realize all or part of its net deferred tax assets in the future, all or part of the valuation allowance will be reversed in the period in which the Company makes such determination. The release of all or part of the valuation allowance against deferred tax assets may cause greater volatility in the effective tax rate in the periods in which it is reversed. Tax Receivable Agreement and Reorganization Transactions In connection with the Reorganization Transactions, certain members of Pluralsight Holdings ("Former Members") exchanged LLC Units for shares of Class A common stock of Pluralsight, Inc. As a result of this exchange, the Company acquired certain tax attributes held by the Former Members. Additionally, the Company could obtain future increases in its tax basis of the assets of Pluralsight Holdings when LLC Units are redeemed or exchanged by the Continuing Members. This increase in tax basis may have the effect of reducing the amounts paid in the future to various tax authorities. The increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. On the date of the IPO, the Company entered into a Tax Receivable Agreement ("TRA") with Continuing Members that provides for a payment to the Continuing Members of 85% of the amount of tax benefits, if any, that Pluralsight, Inc. realizes, or is deemed to realize as a result of redemptions or exchanges of LLC Units. The Company maintains a full valuation allowance against deferred tax assets related to the tax attributes generated as a result of redemptions of LLC Units or exchanges described above until it is determined that the benefits are more-likely-than-not to be realized. As of June 30, 2018, no members of the TRA had exchanged LLC Units for Class A common shares and therefore the Company had not recorded any liabilities under the TRA. Tax Reform Legislation On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was enacted in the United States resulting in a reduction of the corporate income tax rate to 21%. In addition, the Tax Act limits the deductibility of interest expense, implements a modified territorial tax system, and imposes a one-time repatriation tax on deemed repatriated untaxed earnings and profits of U.S.-owned foreign subsidiaries ("Toll Charge"). In the fourth quarter of 2017, the Company recorded a provisional Toll Charge and remeasured its deferred tax assets and liabilities to reflect the lower corporate income tax rate. The amounts were computed based on information available to the Company; however, there is still uncertainty as to the application of the Tax Act. As of June, 30, 2018, the Company had not yet completed its analysis of the effects of the Tax Act, including the Toll Charge computation. The analysis is expected to be completed within one year of the enactment date of the Tax Act. Because the Company has recorded a full valuation allowance in the United States, changes to the reported impact of the Tax Act based on additional guidance or further analysis are not expected to materially affect the effective tax rate in future periods. No adjustments to the provisional amounts recorded in the fourth quarter of 2017 had been made as of June 30, 2018. As a result of the Toll Charge, all previously unremitted earnings have now been subject to federal tax in the United States; however, the Company plans to, and has the ability to, indefinitely reinvest such earnings in their respective foreign jurisdictions; therefore, no additional tax liability such as state or withholding tax has been provided for on such earnings. The Company continues to analyze the effects of new taxes due on certain foreign income, such as GILTI (global intangible low-taxed income), BEAT (base-erosion anti-abuse tax), FDII (foreign-derived intangible income) and limitations on interest expense deductions (if certain conditions apply) that became effective starting January 1, 2018, and other provisions of the Tax Act. The Company has delayed finalizing its GILTI policy election under SAB 118 until it has the necessary information available to analyze and make an informed policy decision. Because the Company is still evaluating the GILTI provisions and the future taxable income that is subject to GILTI, the Company has included GILTI related to current-year operations only in its estimated annual effective tax rate for the three and six months ended June 30, 2018 and has not provided additional GILTI on deferred items. |
Net Loss Per Share |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share The following table presents the calculation of basic and diluted net loss per share for the periods following the Reorganization Transactions (in thousands, except per share amounts):
During the period from May 16, 2018 through June 30, 2018, the Company incurred net losses and, therefore, the effect of the Company’s potentially dilutive securities were not included in the calculation of diluted loss per share as the effect would be anti-dilutive. The following table contains share/unit totals with a potentially dilutive impact (in thousands):
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Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Information | Geographic Information The Company operates in a single operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision makers, who in the Company’s case are the Chief Executive Officer and Chief Financial Officer, in deciding how to allocate resources and assess performance. The chief operating decision makers evaluate the Company’s financial information and resources and assess the performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information can be found in the unaudited condensed consolidated financial statements. Revenue by geographic region, based on the physical location of the customer, was as follows (dollars in thousands):
With the exception of the United Kingdom, no other foreign country accounted for 10% or more of revenue during the three months ended June 30, 2018 and 2017, and the six months ended June 30, 2018 and 2017. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In July 2018, the Company entered into a new non-cancellable operating lease agreement to rent office space in Dublin, Ireland for a period of one year. Total minimum lease payments under the lease agreement are approximately $1.3 million. |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies) |
6 Months Ended | ||||
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Jun. 30, 2018 | |||||
Accounting Policies [Abstract] | |||||
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and the applicable regulations of the U.S. Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2017 included in the prospectus dated May 16, 2018 (File No. 333-224301), as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended ("Prospectus"). |
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Consolidation | These unaudited condensed consolidated financial statements include the accounts of Pluralsight, Inc. and its directly and indirectly wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. As discussed in Note 1—Organization and Description of Business, Pluralsight, Inc. consolidates the financial results of Pluralsight Holdings as a Variable Interest Entity ("VIE"). The Company periodically evaluates entities for consolidation either through ownership of a majority voting interest, or through means other than a voting interest, in accordance with the VIE accounting model. A VIE is an entity in which the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity's economic performance or the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support. |
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Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to the determination of fair value of equity awards, the fair value of warrants to purchase common units, useful lives of property and equipment, content library and intangible assets, provisions for doubtful accounts receivable and deferred revenue, accounting for business combinations, impairment of long-lived and intangible assets, including goodwill, and certain accrued expenses, including author fees. These estimates and assumptions are based on the Company’s historical results and management’s future expectations. Actual results could differ from those estimates. |
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Deferred Offering Costs | Deferred offering costs are capitalized and consist of legal, accounting, printing, and other costs that are directly attributable to the IPO. |
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Advertising Costs | Advertising costs are expensed as incurred. |
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Equity-Based Compensation | In connection with the IPO, the Company granted Class A common stock options to certain employees. Equity-based compensation expense for Class A common stock options granted to employees is recognized based on the fair value of the awards granted, determined using the Black-Scholes option pricing model. Equity-based compensation expense is recognized as expense on a straight-line basis over the requisite service period. Equity-based compensation expense related to purchase rights issued under the 2018 Employee Stock Purchase Plan ("ESPP") is based on the Black-Scholes option pricing model fair value of the estimated number of awards as of the beginning of the offering period. Equity-based compensation expense is recognized following the straight-line attribution method over the offering period. The Black-Scholes option pricing model is affected by the share price and a number of assumptions, including the award’s expected life, risk-free interest rate, the expected volatility of the underlying stock, and expected dividends. The assumptions used in the Black Scholes pricing model are estimated as follows:
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Non-Controlling Interests | The non-controlling interests balance represents the economic interests of LLC Units of Pluralsight Holdings held by Continuing Members, based on the portion of LLC Units owned by Continuing Members. Income or loss is attributed to the non-controlling interests based on the weighted-average LLC Units outstanding during the period, excluding LLC Units that are subject to time-based vesting requirements. As of June 30, 2018, the non-controlling interests owned 52.3% of the vested LLC Units outstanding. The non-controlling interests' ownership percentage can fluctuate over time as LLC Units vest and as Continuing Members elect to exchange LLC Units for Class A common stock of Pluralsight, Inc. |
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Net Loss Per Share/Unit | Basic net loss per share is computed by dividing net loss attributable to Pluralsight, Inc. for the period following the Reorganization Transactions by the weighted-average number of shares of Class A common shares outstanding during the same period after giving effect to weighted-average shares of Class A common stock that remain subject to time-based vesting requirements. Diluted net loss per share is computed giving effect to all potential weighted-average dilutive shares for the period following the Reorganization Transactions including LLC Units held by Continuing Members that are convertible into Class A common stock, stock options, restricted stock units ("RSUs"), warrants to purchase Class A common stock, and shares issuable under the ESPP for the period after the Reorganization Transactions. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method or if-converted method, as applicable. |
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Recent Accounting Pronouncements | Under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company meets the definition of an emerging growth company. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the Company is no longer an emerging growth company or until the Company affirmatively and irrevocably opts out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Recently Adopted Accounting Pronouncements In August 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update clarifies how certain cash flows should be classified with the objective of reducing the existing diversity in practice. This update is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. Among other provisions, the ASU requires that cash payments for certain debt prepayment or debt extinguishment costs be classified as cash outflows for financing activities. The Company early adopted the standard during the second quarter of 2018. As a result of the adoption, the Company recorded $2.2 million in payments of debt extinguishment costs within financing activities on the condensed consolidated statements of cash flows for the six months ended June 30, 2018. The retrospective adoption had no material effect on any prior periods. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This update clarifies that transfers between cash and restricted cash are not part of the entity’s operating, investing, and financing activities, and details of those transfers are not reported as cash flow activities in the statements of cash flows. For public business entities, this update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, this update is effective for annual periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption for all entities is permitted. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company early adopted this standard during the year ended December 31, 2017, and retroactively adjusted the consolidated statements of cash flows for all periods presented. The retrospective adoption had no material effect on any prior periods. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in the ASU. The ASU is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. During the first quarter of 2018, the Company adopted the ASU prospectively. The adoption of the ASU had no material effect on the unaudited condensed consolidated financial statements. Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. For public business entities that are SEC filers, the ASU is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For public business entities that are not SEC filers, the ASU is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. For all other entities, the ASU is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. The guidance will apply to the Company’s reporting requirements in performing goodwill impairment testing; however, the Company does not anticipate the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new guidance is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The impact to the Company’s unaudited condensed consolidated financial statements will depend on the facts and circumstances of any specific future transactions. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. For public business entities, the ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. For all other entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. As the Company has elected to use the extended transition period available to emerging growth companies, the Company does not anticipate adopting the standard until the fiscal year ended December 31, 2020. The Company is currently evaluating the potential changes from this ASU to its future financial reporting and disclosures. As part of its preliminary assessment, the Company expects to record right-of-use assets and lease liabilities for its operating leases as a result of adopting the standard. While the Company continues to assess all potential impacts under the new standard, including the areas described above, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the adoption of the new standard on its consolidated financial statements at this time. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40), which will supersede nearly all existing revenue recognition guidance. The core principle behind ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. To achieve this core principle, the ASU provides a model, which involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction prices to the performance obligations in the contract, and recognizing revenue when (or as) the entity satisfies the performance obligations. The standard also provides guidance on the recognition of costs related to obtaining customer contracts. The ASU permits adoption either by using a full retrospective approach, in which all comparative periods are presented in accordance with the new standard, or a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. For public business entities, the standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted for annual periods beginning after December 15, 2016. As the Company has elected to use the extend transition period available to emerging growth companies, the Company anticipates adopting the standard for the fiscal year ending December 31, 2019. The Company is currently evaluating adoption methods. The Company is evaluating the impact of the adoption of the new standard on its accounting policies, processes, and system requirements. The Company has assigned internal resources to assist in the evaluation. Furthermore, the Company has made and will continue to make investments in systems to enable timely and accurate reporting under the new standard. While the Company continues to assess all potential impacts under the new standard, there is potential the standard could have an impact on the timing of recognition of revenue and contract acquisition costs. Under the current revenue recognition guidance, the Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the delivery of future services. Under the new standard, the concept of contingent revenue no longer exists. Depending on the outcome of the Company’s evaluation, the timing of when revenue is recognized could change for multi-year subscription agreements. As part of its preliminary evaluation, the Company has also considered the impact of the standard’s requirements with respect to the capitalization and amortization of incremental costs of obtaining a contract. Under the Company’s current accounting policy, incremental costs of obtaining a contract are expensed as incurred. The new standard requires the capitalization of all incremental costs that are incurred to obtain a contract with a customer that would not have been incurred if the contract had not been obtained, provided the Company expects to recover those costs. As a result of this standard, the Company expects to capitalize incremental contract costs. The period over which these costs are expected to be recognized is still being evaluated by the Company. While the Company continues to assess all potential impacts under the new standard, including the areas described above, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the adoption of the new standard on its unaudited condensed consolidated financial statements at this time. |
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Fair Value Measurements | The Company measures and records certain financial assets at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. |
Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair value of the Company’s financial instruments were as follows (in thousands):
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Balance Sheet Components (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands):
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Schedule of Accrued Expenses | Accrued expenses consisted of the following (in thousands):
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Property and Equipment (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment, net consisted of the following (in thousands):
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Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Intangible assets, net are summarized as follows (in thousands):
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Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net are summarized as follows (in thousands):
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Credit Facilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||
Schedule of Debt | The Company’s debt consisted of the following (in thousands):
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | At June 30, 2018, future minimum lease payments, including lease payments for the Company’s facilities in Farmington, Utah, were as follows (in thousands):
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Non-Controlling Interests (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ownership of the LLC Units | The ownership of the LLC Units is summarized as follows:
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Equity-Based Compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Performance Shares Award Activity | The shares of unvested Class A common stock following the exchange of unvested incentive units are summarized as follows:
The shares of unvested LLC Units following the conversion of unvested incentive units are summarized as follows:
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Share-based Compensation, Stock Options, Activity | The following table summarizes the stock option activity for the six months ended June 30, 2018:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of the purchase right for the ESPP is estimated on the date of grant using the Black-Scholes model with the following assumptions:
The grant date fair value of the stock options was determined using the Black Scholes model with the following assumptions:
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Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The activity for RSUs for the six months ended June 30, 2018 was as follows:
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Equity-based compensation expense was classified as follows in the accompanying condensed consolidated statements of operations (in thousands):
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Net Loss Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted net loss per share for the periods following the Reorganization Transactions (in thousands, except per share amounts):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table contains share/unit totals with a potentially dilutive impact (in thousands):
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Geographic Information (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Geographic Areas | Revenue by geographic region, based on the physical location of the customer, was as follows (dollars in thousands):
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Organization and Description of Business (Details) $ / shares in Units, $ in Millions |
6 Months Ended | |
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May 16, 2018
USD ($)
$ / shares
shares
|
Jun. 30, 2018
USD ($)
class
|
|
Subsidiary, Sale of Stock [Line Items] | ||
Payments of costs related to initial public offering | $ 7.4 | |
Number of classes of stock | class | 3 | |
IPO | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of shares sold (in shares) | shares | 23,805,000 | |
Stock price (in dollars per share) | $ / shares | $ 15 | |
Proceeds from sale of stock, net | $ 332.1 | |
Payments of costs related to initial public offering | $ 7.4 | |
LLC Units Converted Into Class B And Class C Common Stock | ||
Subsidiary, Sale of Stock [Line Items] | ||
Conversion ratio | 1 | 1 |
Pluralsight Holdings | ||
Subsidiary, Sale of Stock [Line Items] | ||
Ownership interest | 100.00% | |
Pluralsight Holdings | Continuing Members | ||
Subsidiary, Sale of Stock [Line Items] | ||
Ownership interest | 52.30% | |
Pluralsight Holdings | Pluralsight, Inc. | ||
Subsidiary, Sale of Stock [Line Items] | ||
Ownership interest | 47.70% |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Deferred offering costs | $ 2,000 | ||||
Offering costs reclassified into stockholders' equity | $ 7,400 | ||||
Advertising costs | $ 3,200 | $ 3,800 | $ 5,800 | $ 6,900 | |
Redeemable convertible preferred units, shares outstanding (in shares) | 0 | 0 | 48,447,880 | ||
Units outstanding (in shares) | 0 | ||||
Payments of debt extinguishment costs | $ 2,162 | $ 0 | |||
Pluralsight Holdings | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Ownership interest | 100.00% | ||||
Units outstanding (in shares) | 130,601,736 | 130,601,736 | |||
Pluralsight Holdings | Continuing Members | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Ownership interest | 52.30% | ||||
Units outstanding (in shares) | 68,275,082 | 68,275,082 |
Fair Value Measurements (Details) - Money market funds - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 206,996 | $ 25,146 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 206,996 | 25,146 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 0 | $ 0 |
Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid expenses | $ 8,694 | $ 4,586 |
Other current assets | 213 | 539 |
Prepaid expenses and other current assets | $ 8,907 | $ 5,125 |
Balance Sheet Components - Accrued Expenses (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued compensation | $ 12,976 | $ 18,568 |
Accrued income and other taxes payable | 4,139 | 3,492 |
Accrued other current liabilities | 7,093 | 4,454 |
Accrued expenses | $ 24,208 | $ 26,514 |
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Sep. 30, 2017 |
|
Property, Plant and Equipment [Abstract] | |||||
Depreciation of property and equipment | $ 2,200 | $ 1,300 | $ 4,358 | $ 2,626 | |
Net book value of assets with shortened useful life | $ 1,800 | ||||
Increase in depreciation expense | $ 200 | $ 500 |
Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Increase in amortization expense | $ 1.5 | $ 3.0 | ||
Course creation costs | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of acquired intangible assets | 0.5 | $ 0.4 | 0.9 | $ 0.7 |
Other Intangible Assets | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of acquired intangible assets | $ 3.3 | $ 2.0 | $ 6.7 | $ 4.0 |
Credit Facilities - Schedule of Debt (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Principal borrowings outstanding | $ 116,620 |
Less: Debt issuance costs, net of amortization | (583) |
Net carrying amount | $ 116,037 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | |||||
Letters of credit outstanding | $ 0.7 | $ 0.7 | $ 0.2 | ||
Rent expense under operating leases | $ 1.1 | $ 0.4 | $ 2.2 | $ 0.8 |
Commitments and Contingencies - Schedule of Future Minimum Operating Lease Payments (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 (remaining six months) | $ 2,672 |
2019 | 4,885 |
2020 | 2,867 |
2021 | 1,912 |
2022 | 1,745 |
Thereafter | 2,370 |
Total future minimum lease payments | $ 16,451 |
Stockholders' Equity - Redeemable Convertible Preferred Units Conversion (Details) $ / shares in Units, $ in Millions |
May 16, 2018
USD ($)
$ / shares
shares
|
---|---|
Temporary Equity [Line Items] | |
Fair value of redeemable convertible preferred units | $ 412.5 |
Amount reclassified to stockholders' equity | $ 582.0 |
IPO | |
Temporary Equity [Line Items] | |
Stock price (in dollars per share) | $ / shares | $ 15 |
Redeemable Convertible Preferred Units Converted Into LLC Units | |
Temporary Equity [Line Items] | |
Shares converted (in shares) | shares | 48,447,880 |
Stockholders' Equity - Initial Public Offering (Details) - IPO $ / shares in Units, $ in Millions |
May 16, 2018
USD ($)
$ / shares
shares
|
---|---|
Subsidiary, Sale of Stock [Line Items] | |
Stock price (in dollars per share) | $ / shares | $ 15 |
Number of shares sold (in shares) | shares | 23,805,000 |
Proceeds from sale of stock, net | $ | $ 332.1 |
Stockholders' Equity - Warrants to Purchase Class A Common Stock (Details) - Class A Common Stock Warrants - February 2018 Guggenheim Amendment $ / shares in Units, $ in Millions |
Feb. 28, 2018
USD ($)
$ / shares
shares
|
---|---|
Class of Warrant or Right [Line Items] | |
Number of shares purchased from warrants (in shares) | shares | 424,242 |
Exercise price of warrants (in dollars per share) | $ / shares | $ 8.25 |
Fair value of warrants | $ | $ 1.0 |
Equity-Based Compensation - Schedule of Stock Options Activity (Details) $ / shares in Units, $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
$ / shares
shares
| |
Stock Options Outstanding | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 5,236,155 |
Forfeited or cancelled (in shares) | shares | (3,979) |
Ending balance (in shares) | shares | 5,232,176 |
Weighted- Average Exercise Price | |
Beginning balance (in dollars per share) | $ / shares | |
Granted (in dollars per share) | $ / shares | 15.00 |
Forfeited or cancelled (in dollars per share) | $ / shares | 15.00 |
Ending balance (in dollars per share) | $ / shares | $ 15.00 |
Stock Option Activity, Additional Disclosures | |
Weighted- Average Remaining Contractual Term (in years) | 9 years 10 months 24 days |
Aggregate Intrinsic Value (in millions) | $ | $ 49.4 |
Equity-Based Compensation - Schedule of Fair Value Assumptions (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Employee Stock Purchase Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 0.00% |
Volatility | 55.00% |
Risk-free interest rate, minimum | 2.05% |
Risk-free interest rate, maximum | 2.50% |
Employee Stock Purchase Plan | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 6 months |
Employee Stock Purchase Plan | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 2 years |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 0.00% |
Volatility | 55.00% |
Risk-free interest rate | 2.97% |
Expected term (years) | 5 years 7 months 17 days |
Income Taxes (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | (0.50%) | (0.30%) | (0.50%) | (0.40%) |
Net Loss Per Share - Calculation of Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
2 Months Ended | 3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
||||
Numerator: | ||||||||
Net loss | $ (24,294) | $ (43,796) | $ (22,278) | $ (66,954) | $ (32,083) | |||
Less: Net loss attributable to non-controlling interests | (12,706) | (12,706) | 0 | (12,706) | 0 | |||
Net loss attributable to Pluralsight, Inc. | $ (11,588) | $ (31,090) | $ (22,278) | $ (54,248) | $ (32,083) | |||
Denominator: | ||||||||
Weighted-average common shares./units outstanding (in shares) | 62,847 | |||||||
Less: weighted-average common shares/units subject to time-based vesting (in shares) | (595) | |||||||
Weighted average common units used in computing basic and diluted net loss per unit (in shares) | [1] | 62,252 | ||||||
Net loss per unit, basic and diluted (in dollars per share) | [1] | $ (0.19) | ||||||
|
Geographic Information - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Geographic Information - Revenue by Geographic Location (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 53,572 | $ 38,891 | $ 103,216 | $ 76,130 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 33,955 | 25,109 | 65,533 | 48,720 |
United Kingdom | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 5,756 | 4,254 | 11,088 | 8,453 |
Other foreign locations | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 13,861 | $ 9,528 | $ 26,595 | $ 18,957 |
Revenue | Geographic Concentration Risk | Non-US | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of revenue generated outside of the United States | 37.00% | 35.00% | 37.00% | 36.00% |
Subsequent Events (Details) - USD ($) $ in Thousands |
Jul. 31, 2018 |
Jun. 30, 2018 |
---|---|---|
Subsequent Event [Line Items] | ||
Total future minimum lease payments | $ 16,451 | |
Dublin, Ireland Office Space, 2018 | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Operating lease period | 1 year | |
Total future minimum lease payments | $ 1,300 |
Label | Element | Value |
---|---|---|
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest | us-gaap_NetIncomeLossIncludingPortionAttributableToNonredeemableNoncontrollingInterest | $ (42,660,000) |
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest | us-gaap_NetIncomeLossIncludingPortionAttributableToNonredeemableNoncontrollingInterest | $ (24,294,000) |
Temporary Equity, Elimination as Part of Reorganization, Shares | ps_TemporaryEquityEliminationasPartofReorganizationShares | 48,447,880 |
Adjustments To Additional Paid In Capital, Settlement Of Equity Appreciation Rights | ps_AdjustmentsToAdditionalPaidInCapitalSettlementOfEquityAppreciationRights | $ 325,000 |
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 13,155,000 |
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 7,773,000 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 324,679,000 |
Adjustments to Additional Paid in Capital, Warrant Issued | us-gaap_AdjustmentsToAdditionalPaidInCapitalWarrantIssued | 984,000 |
Preferred Stock, Accretion of Redemption Discount | us-gaap_PreferredStockAccretionOfRedemptionDiscount | 176,275,000 |
Temporary Equity, Elimination as Part of Reorganization | us-gaap_TemporaryEquityEliminationAsPartofReorganization | 582,041,000 |
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments | 581,963,000 |
Temporary Equity, Accretion to Redemption Value | us-gaap_TemporaryEquityAccretionToRedemptionValue | 176,275,000 |
Retained Earnings [Member] | ||
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest | us-gaap_NetIncomeLossIncludingPortionAttributableToNonredeemableNoncontrollingInterest | (42,660,000) |
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest | us-gaap_NetIncomeLossIncludingPortionAttributableToNonredeemableNoncontrollingInterest | (11,588,000) |
Preferred Stock, Accretion of Redemption Discount | us-gaap_PreferredStockAccretionOfRedemptionDiscount | 162,136,000 |
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | us-gaap_NoncontrollingInterestIncreaseFromSaleOfParentEquityInterest | 339,782,000 |
Additional Paid-in Capital [Member] | ||
Adjustments To Additional Paid In Capital, Settlement Of Equity Appreciation Rights | ps_AdjustmentsToAdditionalPaidInCapitalSettlementOfEquityAppreciationRights | 325,000 |
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 7,773,000 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 324,677,000 |
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments | 581,952,000 |
Noncontrolling Interest, Increase From Reorganization | ps_NoncontrollingInterestIncreaseFromReorganization | (3,893,000) |
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | us-gaap_NoncontrollingInterestIncreaseFromSaleOfParentEquityInterest | (474,007,000) |
Member Units [Member] | ||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 13,155,000 |
Adjustments to Additional Paid in Capital, Warrant Issued | us-gaap_AdjustmentsToAdditionalPaidInCapitalWarrantIssued | 984,000 |
Preferred Stock, Accretion of Redemption Discount | us-gaap_PreferredStockAccretionOfRedemptionDiscount | $ 14,139,000 |
Stock Issued During Period, Shares, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities | (48,407,645) |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | ||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | us-gaap_OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax | $ (18,000) |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | us-gaap_OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax | (19,000) |
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | us-gaap_NoncontrollingInterestIncreaseFromSaleOfParentEquityInterest | (4,000) |
Noncontrolling Interest [Member] | ||
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest | us-gaap_NetIncomeLossIncludingPortionAttributableToNonredeemableNoncontrollingInterest | (12,706,000) |
Noncontrolling Interest, Increase From Reorganization | ps_NoncontrollingInterestIncreaseFromReorganization | 3,893,000 |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | us-gaap_OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax | (21,000) |
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | us-gaap_NoncontrollingInterestIncreaseFromSaleOfParentEquityInterest | 134,229,000 |
Common Class C [Member] | Common Stock [Member] | ||
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments | $ 1,000 |
Stock Issued During Period, Shares, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities | 14,048,138 |
Common Class A [Member] | Common Stock [Member] | ||
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 2,000 |
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments | $ 4,000 |
Stock Issued During Period, Shares, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities | 39,110,660 |
Stock Issued During Period, Shares, New Issues | us-gaap_StockIssuedDuringPeriodSharesNewIssues | 23,805,000 |
Common Class B [Member] | Common Stock [Member] | ||
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments | $ 6,000 |
Stock Issued During Period, Shares, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities | 58,111,572 |
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