Delaware (State or other jurisdiction of incorporation or organization) | 001-38498 (Commission File Number) | 82-3605465 (I.R.S. Employer Identification Number) |
182 North Union Avenue Farmington, Utah 84025 | ||
(Address of principal executive offices and zip code) | ||
(801) 784-9007 | ||
(Registrant's telephone number, including area code) | ||
___________________________________ |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description of Exhibit |
99.1 |
Pluralsight, Inc. | ||
October 24, 2018 | /s/ | James Budge |
James Budge | ||
Chief Financial Officer |
• | Billings grew 44 percent period over period to $72.2 million in Q3 2018 |
• | Revenue grew 42 percent period over period to $61.6 million in Q3 2018 |
• | Billings - Q3 2018 billings were $72.2 million, an increase of 44% period over period. Q3 2018 billings from business customers were $61.1 million, an increase of 53% period over period. |
• | Revenue - Q3 2018 revenue was $61.6 million, an increase of 42% period over period. |
• | Gross margin - Q3 2018 gross margin was 75%, compared to 71% in Q3 2017. Q3 2018 non-GAAP gross margin was 77%, compared to 75% in Q3 2017. |
• | Net loss per share - GAAP net loss per share for Q3 2018 was $0.23. Adjusted pro forma net loss per share for Q3 2018 was $0.10, compared to $0.39 in Q3 2017. |
• | Cash flows - Cash provided by operations was $1.9 million for Q3 2018, compared to cash used in operations of $6.9 million in Q3 2017. Free cash flow improved by $7.9 million in Q3 2018 compared to Q3 2017. |
• | Revenue is expected to be in the range of $65 million to $66 million. |
• | Adjusted pro forma net loss per share is expected to be in the range of $0.10 to $0.09, assuming weighted-average shares outstanding of approximately 133.0 million. |
• | Revenue is expected to be in the range of $230 million to $231 million. |
• | Adjusted pro forma net loss per share is expected to be in the range of $0.63 to $0.60, assuming weighted-average shares outstanding of approximately 100.5 million. |
• | Revenue is expected to be in the range of $295 million to $310 million. |
• | Adjusted pro forma net loss per share is expected to be in the range of $0.34 to $0.26, assuming weighted-average shares outstanding of approximately 138.5 million. |
Date: | Wednesday, October 24 |
Time: | 2:30 p.m. MT (4:30 p.m. ET) |
Webcast: | https://investors.pluralsight.com/ |
Dial-in number: | (877) 350-6732 or (629) 228-0693, conference ID: 1166607 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue | $ | 61,553 | $ | 43,286 | $ | 164,769 | $ | 119,416 | ||||||||
Cost of revenue(1)(2) | 15,331 | 12,582 | 46,107 | 35,678 | ||||||||||||
Gross profit | 46,222 | 30,704 | 118,662 | 83,738 | ||||||||||||
Operating expenses(1)(2): | ||||||||||||||||
Sales and marketing | 41,392 | 29,410 | 109,792 | 70,254 | ||||||||||||
Technology and content | 17,227 | 12,448 | 47,045 | 33,979 | ||||||||||||
General and administrative | 17,398 | 19,094 | 48,138 | 34,773 | ||||||||||||
Total operating expenses | 76,017 | 60,952 | 204,975 | 139,006 | ||||||||||||
Loss from operations | (29,795 | ) | (30,248 | ) | (86,313 | ) | (55,268 | ) | ||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (342 | ) | (3,252 | ) | (6,476 | ) | (8,376 | ) | ||||||||
Loss on debt extinguishment | — | — | (4,085 | ) | (1,882 | ) | ||||||||||
Other income, net | 654 | 55 | 689 | 124 | ||||||||||||
Loss before income taxes | (29,483 | ) | (33,445 | ) | (96,185 | ) | (65,402 | ) | ||||||||
Provision for income taxes | (254 | ) | (90 | ) | (506 | ) | (216 | ) | ||||||||
Net loss | $ | (29,737 | ) | $ | (33,535 | ) | $ | (96,691 | ) | $ | (65,618 | ) | ||||
Less: Net loss attributable to non-controlling interests | (15,578 | ) | — | (28,284 | ) | — | ||||||||||
Net loss attributable to Pluralsight, Inc. | $ | (14,159 | ) | $ | (33,535 | ) | $ | (68,407 | ) | $ | (65,618 | ) | ||||
Less: Accretion of Series A redeemable convertible preferred units | — | (34,375 | ) | (176,275 | ) | (57,200 | ) | |||||||||
Net loss attributable to common shares | $ | (14,159 | ) | $ | (67,910 | ) | $ | (244,682 | ) | $ | (122,818 | ) | ||||
Net loss per share, basic and diluted(3) | $ | (0.23 | ) | $ | (0.41 | ) | ||||||||||
Weighted-average common shares used in computing basic and diluted net loss per share(3) | 62,472 | 62,400 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Cost of revenue | $ | 40 | $ | 5 | $ | 86 | $ | 15 | ||||||||
Sales and marketing | 4,372 | 631 | 9,343 | 2,010 | ||||||||||||
Technology and content | 2,790 | 499 | 5,839 | 1,489 | ||||||||||||
General and administrative | 8,842 | 11,762 | 21,704 | 15,474 | ||||||||||||
Total equity-based compensation | $ | 16,044 | $ | 12,897 | $ | 36,972 | $ | 18,988 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Cost of revenue | $ | 880 | $ | 1,642 | $ | 6,803 | $ | 4,926 | ||||||||
Sales and marketing | — | 161 | 389 | 483 | ||||||||||||
Technology and content | 176 | 176 | 529 | 528 | ||||||||||||
General and administrative | — | 27 | — | 81 | ||||||||||||
Total amortization of acquired intangible assets | $ | 1,056 | $ | 2,006 | $ | 7,721 | $ | 6,018 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Billings | $ | 72,243 | $ | 50,005 | $ | 192,959 | $ | 134,917 | ||||||||
Billings from business customers | $ | 61,143 | $ | 39,920 | $ | 161,018 | $ | 105,092 | ||||||||
% of billings from business customers | 85 | % | 80 | % | 83 | % | 78 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Reconciliation of gross profit to non-GAAP gross profit: | ||||||||||||||||
Gross profit | $ | 46,222 | $ | 30,704 | $ | 118,662 | $ | 83,738 | ||||||||
Equity-based compensation | 40 | 5 | 86 | 15 | ||||||||||||
Amortization of acquired intangible assets | 880 | 1,642 | 6,803 | 4,926 | ||||||||||||
Non-GAAP gross profit | $ | 47,142 | $ | 32,351 | $ | 125,551 | $ | 88,679 | ||||||||
Gross margin | 75 | % | 71 | % | 72 | % | 70 | % | ||||||||
Non-GAAP gross margin | 77 | % | 75 | % | 76 | % | 74 | % | ||||||||
Reconciliation of loss from operations to non-GAAP operating loss: | ||||||||||||||||
Loss from operations | $ | (29,795 | ) | $ | (30,248 | ) | $ | (86,313 | ) | $ | (55,268 | ) | ||||
Equity-based compensation | 16,044 | 12,897 | 36,972 | 18,988 | ||||||||||||
Amortization of acquired intangible assets | 1,056 | 2,006 | 7,721 | 6,018 | ||||||||||||
Non-GAAP operating loss | $ | (12,695 | ) | $ | (15,345 | ) | $ | (41,620 | ) | $ | (30,262 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Adjusted pro forma net loss per share | ||||||||||||||||
Numerator: | ||||||||||||||||
GAAP net loss attributable to common shares | $ | (14,159 | ) | $ | (67,910 | ) | $ | (244,682 | ) | $ | (122,818 | ) | ||||
Accretion of Series A redeemable convertible preferred units | — | 34,375 | 176,275 | 57,200 | ||||||||||||
Reallocation of net loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for Class A common stock | (15,578 | ) | — | (28,284 | ) | — | ||||||||||
Equity-based compensation | 16,044 | 12,897 | 36,972 | 18,988 | ||||||||||||
Amortization of acquired intangibles | 1,056 | 2,006 | 7,721 | 6,018 | ||||||||||||
Loss on debt extinguishment | — | — | 4,085 | 1,882 | ||||||||||||
Adjusted pro forma net loss | $ | (12,637 | ) | $ | (18,632 | ) | $ | (47,913 | ) | $ | (38,730 | ) | ||||
Denominator: | ||||||||||||||||
Weighted-average shares of Class A common stock outstanding | 62,472 | — | 31,314 | — | ||||||||||||
Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock | 68,734 | 47,922 | 58,529 | 47,831 | ||||||||||||
Adjusted pro forma weighted-average common shares outstanding, basic and diluted | 131,206 | 47,922 | 89,843 | 47,831 | ||||||||||||
Adjusted pro forma net loss per share | $ | (0.10 | ) | $ | (0.39 | ) | $ | (0.53 | ) | $ | (0.81 | ) |
Reconciliation of net cash provided by (used in) operating activities to free cash flow: | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | 1,934 | $ | (6,866 | ) | $ | (14,283 | ) | $ | (10,816 | ) | |||||
Less: Purchases of property and equipment | (2,002 | ) | (1,434 | ) | (6,576 | ) | (4,459 | ) | ||||||||
Less: Purchases of content library | (841 | ) | (540 | ) | (2,345 | ) | (1,769 | ) | ||||||||
Free cash flow | $ | (909 | ) | $ | (8,840 | ) | $ | (23,204 | ) | $ | (17,044 | ) |
September 30, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 208,626 | $ | 28,267 | ||||
Accounts receivable, net | 47,801 | 38,229 | ||||||
Prepaid expenses and other current assets | 8,037 | 5,125 | ||||||
Total current assets | 264,464 | 71,621 | ||||||
Property and equipment, net | 22,503 | 22,457 | ||||||
Content library, net | 7,547 | 13,441 | ||||||
Intangible assets, net | 1,935 | 2,854 | ||||||
Goodwill | 123,119 | 123,119 | ||||||
Other assets | 2,080 | 2,928 | ||||||
Total assets | $ | 421,648 | $ | 236,420 | ||||
Liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,834 | $ | 6,029 | ||||
Accrued expenses | 31,415 | 26,514 | ||||||
Accrued author fees | 9,331 | 7,879 | ||||||
Deferred revenue | 130,555 | 103,107 | ||||||
Total current liabilities | 178,135 | 143,529 | ||||||
Deferred revenue, net of current portion | 8,649 | 8,194 | ||||||
Long-term debt | — | 116,037 | ||||||
Facility financing obligation | 7,500 | 7,513 | ||||||
Other liabilities | 1,090 | 458 | ||||||
Total liabilities | 195,374 | 275,731 | ||||||
Redeemable convertible preferred units | — | 405,766 | ||||||
Stockholders' equity/members’ deficit: | ||||||||
Preferred stock | — | — | ||||||
Class A common stock | 6 | — | ||||||
Class B common stock | 6 | — | ||||||
Class C common stock | 1 | — | ||||||
Additional paid-in capital | 443,182 | — | ||||||
Members’ capital | — | — | ||||||
Accumulated other comprehensive (loss) income | (34 | ) | 25 | |||||
Accumulated deficit | (335,863 | ) | (445,102 | ) | ||||
Total stockholders' equity attributable to Pluralsight, Inc./members' deficit | 107,298 | (445,077 | ) | |||||
Non-controlling interests | 118,976 | — | ||||||
Total stockholders' equity/members' deficit | 226,274 | (445,077 | ) | |||||
Total liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit | $ | 421,648 | $ | 236,420 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Operating activities | ||||||||||||||||
Net loss | $ | (29,737 | ) | $ | (33,535 | ) | $ | (96,691 | ) | $ | (65,618 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation of property and equipment | 1,973 | 1,741 | 6,331 | 4,367 | ||||||||||||
Amortization of acquired intangible assets | 1,056 | 2,006 | 7,721 | 6,018 | ||||||||||||
Amortization of course creation costs | 507 | 379 | 1,437 | 1,050 | ||||||||||||
Equity-based compensation | 16,044 | 12,897 | 36,972 | 18,988 | ||||||||||||
Provision for doubtful accounts | 135 | 172 | 493 | 360 | ||||||||||||
Amortization of debt discount and debt issuance costs | — | 768 | 1,215 | 1,074 | ||||||||||||
Debt extinguishment costs | 17 | — | 4,197 | 931 | ||||||||||||
Deferred tax benefit | (34 | ) | — | (98 | ) | — | ||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Accounts receivable | (11,687 | ) | (4,553 | ) | (10,352 | ) | (2,720 | ) | ||||||||
Prepaid expenses and other assets | 868 | 11 | (2,990 | ) | (3,204 | ) | ||||||||||
Accounts payable | 1,516 | 1,060 | 928 | 2,388 | ||||||||||||
Accrued expenses and other liabilities | 9,751 | 5,080 | 6,912 | 8,721 | ||||||||||||
Accrued author fees | 835 | 389 | 1,452 | 1,328 | ||||||||||||
Deferred revenue | 10,690 | 6,719 | 28,190 | 15,501 | ||||||||||||
Net cash provided by (used in) operating activities | 1,934 | (6,866 | ) | (14,283 | ) | (10,816 | ) | |||||||||
Investing activities | ||||||||||||||||
Purchases of property and equipment | (2,002 | ) | (1,434 | ) | (6,576 | ) | (4,459 | ) | ||||||||
Purchases of content library | (841 | ) | (540 | ) | (2,345 | ) | (1,769 | ) | ||||||||
Net cash used in investing activities | (2,843 | ) | (1,974 | ) | (8,921 | ) | (6,228 | ) | ||||||||
Financing activities | ||||||||||||||||
Proceeds from initial public offering, net of underwriting discounts and commissions | — | — | 332,080 | — | ||||||||||||
Payments of costs related to initial public offering | (3,998 | ) | (175 | ) | (7,083 | ) | (175 | ) | ||||||||
Borrowings of long-term debt | — | — | 20,000 | 115,000 | ||||||||||||
Repayments of long-term debt | — | — | (137,710 | ) | (85,000 | ) | ||||||||||
Payments of debt extinguishment costs | (17 | ) | — | (2,179 | ) | — | ||||||||||
Payments of debt issuance costs | — | (28 | ) | (450 | ) | (837 | ) | |||||||||
Payments to settle equity appreciation rights | — | — | (325 | ) | — | |||||||||||
Taxes paid related to net share settlement | — | — | (78 | ) | — | |||||||||||
Proceeds from the issuance of common units | — | 3,114 | — | 3,136 | ||||||||||||
Redemption of incentive units | — | (2,801 | ) | — | (2,801 | ) | ||||||||||
Payments of facility financing obligation | (5 | ) | (4 | ) | (13 | ) | (12 | ) | ||||||||
Net cash (used in) provided by financing activities | (4,020 | ) | 106 | 204,242 | 29,311 | |||||||||||
Effect of exchange rate change on cash, cash equivalents, and restricted cash | (50 | ) | 14 | (136 | ) | 38 | ||||||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (4,979 | ) | (8,720 | ) | 180,902 | 12,305 | ||||||||||
Cash, cash equivalents, and restricted cash, beginning of period | 214,358 | 40,422 | 28,477 | 19,397 | ||||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | 209,379 | $ | 31,702 | $ | 209,379 | $ | 31,702 | ||||||||
Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||||||||||
Cash and cash equivalents | $ | 208,626 | $ | 31,492 | $ | 208,626 | $ | 31,492 | ||||||||
Restricted cash included in other assets | 753 | 210 | 753 | 210 | ||||||||||||
Total cash, cash equivalents, and restricted cash | $ | 209,379 | $ | 31,702 | $ | 209,379 | $ | 31,702 |