Delaware | 001-38711 | 81-0753267 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description | |
Press release issued by SolarWinds Corporation dated February 7, 2019. |
SOLARWINDS CORPORATION | |||
Dated: | February 7, 2019 | By: | /s/ Kevin B. Thompson |
Kevin B. Thompson | |||
President and Chief Executive Officer | |||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
(in thousands, except per share data and percentages) | |||||||||||||||||||||
GAAP Results | |||||||||||||||||||||
Total revenue | $ | 221,181 | $ | 198,339 | 11.5 | % | $ | 833,089 | $ | 728,017 | 14.4 | % | |||||||||
Total recurring revenue | 174,941 | 154,521 | 13.2 | % | 668,529 | 571,384 | 17.0 | % | |||||||||||||
Net loss | (14,743 | ) | (39,761 | ) | (62.9 | )% | (102,066 | ) | (83,866 | ) | 21.7 | % | |||||||||
Diluted earnings (loss) per share | $ | 2.60 | $ | (1.09 | ) | (338.5 | )% | $ | 2.56 | $ | (3.50 | ) | (173.1 | )% | |||||||
Non-GAAP Results(1) | |||||||||||||||||||||
Non-GAAP total revenue | $ | 221,608 | $ | 199,769 | 10.9 | % | $ | 836,805 | $ | 740,998 | 12.9 | % | |||||||||
Non-GAAP total recurring revenue | 175,368 | 155,951 | 12.5 | % | 672,245 | 584,362 | 15.0 | % | |||||||||||||
Adjusted EBITDA | 111,855 | 100,067 | 11.8 | % | 407,511 | 361,871 | 12.6 | % | |||||||||||||
Non-GAAP diluted earnings per share, pro forma(2) | $ | 0.19 | $ | 0.02 | 850.0 | % | $ | 0.60 | $ | 0.42 | 42.9 | % |
(1) | For a reconciliation of our GAAP to non-GAAP results, please see tables below. |
(2) | For an explanation of the pro forma calculation, please see "Reconciliation of GAAP to Non-GAAP Weighted-Average Outstanding Diluted Common Shares" below. |
• | SolarWinds introduced SolarWinds APM (Application Performance Monitor) to deliver application support for IT Operations and DevOps teams. SolarWinds APM extends the application monitoring capabilities of SolarWinds Server & Application Monitor (SAM) to provide in-depth, code-level monitoring of custom applications. The new solution is designed to deliver deeper performance insights and distributed transaction tracing capabilities across applications hosted in or across on-premise, hybrid IT, and cloud environments. |
• | SolarWinds released Database Performance Analyzer v12.0, a powerful database and query performance monitoring, analysis, and tuning tool built for many of today’s popular databases. The latest enhancements are designed to help database professionals quickly identify and pinpoint the root cause of slow database queries, and easily optimize database tables to help ensure the speed of business-critical applications that rely on them. |
• | SolarWinds also expanded its RMM capabilities for managed service providers (MSPs) with enhanced Network Device Monitoring based on technology from SolarWinds NPM. Network Device Monitoring is built to give MSPs the visibility they need to monitor customer switches, printers, routers, and firewalls—in addition to servers and workstations—from a single pane of glass. With greater visibility into the complete network, MSPs can proactively maintain network devices by getting information on hardware health, performance, and utilization. |
• | Total revenue in the range of $921 to $936 million, representing growth over 2018 non-GAAP revenue of 10% to 12% or 11% to 13% on a constant currency basis assuming the same average foreign currency exchange rates as those in 2018. |
• | Adjusted EBITDA in the range of $448 to $456 million, representing approximately 48.7% of total revenue. |
• | Non-GAAP diluted earnings per share of $0.78 to $0.80. |
• | Weighted average outstanding diluted shares of approximately 311.5 million. |
• | Total revenue in the range of $215 to $218 million, representing growth over the first quarter of 2018 non-GAAP revenue of 8% to 10% or 11% to 12% on a constant currency basis assuming the same average foreign currency exchange rates as those in the first quarter of 2018. |
• | Adjusted EBITDA in the range of $101 to $103 million, representing approximately 47% of total revenue. |
• | Non-GAAP diluted earnings per share of $0.16 to $0.18. |
• | Weighted average outstanding diluted shares of approximately 309.8 million. |
• | License and Recurring Revenue. We expect that adoption of the new standard will result in changes to the classification and timing of our revenue recognition. Under the new guidance, the requirement to establish VSOE to recognize license revenue separately from the other elements is eliminated. This change is expected to impact the allocation of the transaction price and timing of our revenue recognition between deliverables, or performance obligations, within an arrangement. In addition, we will recognize time-based license revenue upon the transfer of the license and the associated maintenance revenue over the contract period under the new standard instead of recognizing both the license and maintenance revenue ratably over the contract period. We expect the overall adoption impact to total revenue to be immaterial, though we do expect some changes to the timing and classification between license and recurring revenue. Additionally, some historical deferred revenue, primarily from arrangements involving time-based licenses, will never be recognized as revenue and instead will be a cumulative effect adjustment within accumulated deficit. We expect a reduction of approximately $2.8 million to the deferred revenue balance as a cumulative effect adjustment as of January 1, 2019. |
• | Contract Acquisition Costs. We expense all sales commissions as incurred under current guidance. The new guidance requires the deferral and amortization of certain incremental costs incurred to obtain a contract. This guidance will require us to capitalize and amortize certain sales commission costs over the remaining contractual term or over an expected period of benefit, which we have determined to be approximately six years. As part of the transition to the new guidance, we expect to recognize a contract asset of approximately $5.2 million as of January 1, 2019 as a cumulative effect adjustment. |
• | Other Items. The impact of the adoption of the new standard on income taxes will result in an increase of deferred income tax liabilities of approximately $1.7 million as of January 1, 2019. We do not expect that the adoption of this standard will impact our operating cash flows. |
• | Amortization of Acquired Intangible Assets. We provide non-GAAP information that excludes expenses related to purchased intangible assets associated with our acquisitions. We believe that eliminating this expense from our non-GAAP measures is useful to investors, because the amortization of acquired intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses. |
• | Stock-Based Compensation Expense. We provide non-GAAP information that excludes expenses related to stock-based compensation. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. Because of these unique characteristics of stock-based compensation, management excludes these expenses when analyzing the organization’s business performance. |
• | Acquisition and Sponsor Related Costs. We exclude certain expense items resulting from our take private transaction in early 2016 and other acquisitions, such as legal, accounting and advisory fees, changes in fair value of contingent consideration, costs related to integrating the acquired businesses, deferred compensation, severance and retention expense. We consider these adjustments, to some extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, acquisitions result in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations. We believe that providing these non-GAAP measures that exclude acquisition and Sponsor related costs, allows users of our financial statements to better review and understand the historical and current results of our continuing operations, and also facilitates comparisons to our historical results and results of less acquisitive peer companies, both with and without such adjustments. |
• | Restructuring Charges and Other. We provide non-GAAP information that excludes restructuring charges such as severance and the estimated costs of exiting and terminating facility lease commitments, as they relate to our corporate restructuring and exit activities. These restructuring charges are inconsistent in amount and are significantly impacted |
Investors: | Media: | ||
Dave Hafner Phone: 385.374.7059 ir@solarwinds.com | Tiffany Nels Phone: 512.682.9535 pr@solarwinds.com |
December 31, | December 31, | ||||||
2018 | 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 382,620 | $ | 277,716 | |||
Accounts receivable, net of allowances of $3,196 and $2,065 as of December 31, 2018 and December 31, 2017, respectively | 100,528 | 85,133 | |||||
Income tax receivable | 893 | 1,713 | |||||
Prepaid and other current assets | 16,267 | 24,331 | |||||
Total current assets | 500,308 | 388,893 | |||||
Property and equipment, net | 35,864 | 34,209 | |||||
Deferred taxes | 6,873 | 4,425 | |||||
Goodwill | 3,683,961 | 3,695,640 | |||||
Intangible assets, net | 956,261 | 1,194,499 | |||||
Other assets, net | 11,382 | 9,398 | |||||
Total assets | $ | 5,194,649 | $ | 5,327,064 | |||
Liabilities, redeemable convertible common stock and stockholders’ equity (deficit) | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 9,742 | $ | 9,657 | |||
Accrued liabilities and other | 52,055 | 39,593 | |||||
Accrued interest payable | 290 | 11,632 | |||||
Income taxes payable | 15,682 | 9,049 | |||||
Current portion of deferred revenue | 273,106 | 241,513 | |||||
Current debt obligation | 19,900 | 16,950 | |||||
Total current liabilities | 370,775 | 328,394 | |||||
Long-term liabilities: | |||||||
Deferred revenue, net of current portion | 23,026 | 20,278 | |||||
Non-current deferred taxes | 147,144 | 167,523 | |||||
Other long-term liabilities | 133,532 | 148,121 | |||||
Long-term debt, net of current portion | 1,904,072 | 2,245,622 | |||||
Total liabilities | 2,578,549 | 2,909,938 | |||||
Commitments and contingencies | |||||||
Redeemable convertible Class A common stock, $0.001 par value: no shares authorized, issued or outstanding at December 31, 2018; 5,755,000 shares authorized and 2,661,030 shares issued and outstanding as of December 31, 2017 | — | 3,146,887 | |||||
Stockholders’ equity (deficit): | |||||||
Common stock, $0.001 par value: 1,000,000,000 shares authorized and 304,942,415 shares issued and outstanding as of December 31, 2018; 233,000,000 shares authorized and 100,734,056 shares issued and outstanding as of December 31, 2017 | 305 | 101 | |||||
Preferred stock, $0.001 par value: 50,000,000 shares authorized and no shares issued and outstanding as of December 31, 2018; no shares authorized, issued and outstanding as of December 31, 2017 | — | — | |||||
Additional paid-in capital | 3,011,080 | — | |||||
Accumulated other comprehensive income | 17,043 | 75,294 | |||||
Accumulated deficit | (412,328 | ) | (805,156 | ) | |||
Total stockholders’ equity (deficit) | 2,616,100 | (729,761 | ) | ||||
Total liabilities, redeemable convertible common stock and stockholders’ equity (deficit) | $ | 5,194,649 | $ | 5,327,064 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue: | |||||||||||||||
Subscription | $ | 69,587 | $ | 58,352 | $ | 265,591 | $ | 213,754 | |||||||
Maintenance | 105,354 | 96,169 | 402,938 | 357,630 | |||||||||||
Total recurring revenue | 174,941 | 154,521 | 668,529 | 571,384 | |||||||||||
License | 46,240 | 43,818 | 164,560 | 156,633 | |||||||||||
Total revenue | 221,181 | 198,339 | 833,089 | 728,017 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of recurring revenue | 18,127 | 15,819 | 70,744 | 60,698 | |||||||||||
Amortization of acquired technologies | 43,870 | 43,252 | 175,991 | 171,033 | |||||||||||
Total cost of revenue | 61,997 | 59,071 | 246,735 | 231,731 | |||||||||||
Gross profit | 159,184 | 139,268 | 586,354 | 496,286 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 61,446 | 53,561 | 227,468 | 205,631 | |||||||||||
Research and development | 24,472 | 23,204 | 96,272 | 86,618 | |||||||||||
General and administrative | 20,792 | 16,438 | 80,641 | 67,303 | |||||||||||
Amortization of acquired intangibles | 16,500 | 17,170 | 66,788 | 67,080 | |||||||||||
Total operating expenses | 123,210 | 110,373 | 471,169 | 426,632 | |||||||||||
Operating income | 35,974 | 28,895 | 115,185 | 69,654 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (29,905 | ) | (42,768 | ) | (142,008 | ) | (169,786 | ) | |||||||
Other income (expense), net | (20,411 | ) | 8,979 | (94,887 | ) | 38,664 | |||||||||
Total other income (expense) | (50,316 | ) | (33,789 | ) | (236,895 | ) | (131,122 | ) | |||||||
Loss before income taxes | (14,342 | ) | (4,894 | ) | (121,710 | ) | (61,468 | ) | |||||||
Income tax expense (benefit) | 401 | 34,867 | (19,644 | ) | 22,398 | ||||||||||
Net loss | $ | (14,743 | ) | $ | (39,761 | ) | $ | (102,066 | ) | $ | (83,866 | ) | |||
Net income (loss) available to common stockholders (1) | $ | 668,426 | $ | (109,563 | ) | $ | 364,635 | $ | (351,873 | ) | |||||
Net income (loss) per share: | |||||||||||||||
Basic earnings (loss) per share | $ | 2.63 | $ | (1.09 | ) | $ | 2.60 | $ | (3.50 | ) | |||||
Diluted earnings (loss) per share | $ | 2.60 | $ | (1.09 | ) | $ | 2.56 | $ | (3.50 | ) | |||||
Weighted-average shares used to compute net income (loss) per share: | |||||||||||||||
Shares used in computation of basic earnings (loss) per share | 254,209 | 100,737 | 140,301 | 100,433 | |||||||||||
Shares used in computation of diluted earnings (loss) per share | 256,711 | 100,737 | 142,541 | 100,433 |
(1) | Net income (loss) available to common stockholders is calculated as follows: |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss | $ | (14,743 | ) | $ | (39,761 | ) | $ | (102,066 | ) | $ | (83,866 | ) | |||
Accretion of dividends on Class A common stock | (14,928 | ) | (69,802 | ) | (231,549 | ) | (268,007 | ) | |||||||
Gain on conversion of Class A common stock | 711,247 | — | 711,247 | — | |||||||||||
Earnings allocated to unvested restricted stock | (13,150 | ) | — | (12,997 | ) | — | |||||||||
Net income (loss) available to common stockholders | $ | 668,426 | $ | (109,563 | ) | $ | 364,635 | $ | (351,873 | ) |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except margin data) | |||||||||||||||
Revenue: | |||||||||||||||
GAAP subscription revenue | $ | 69,587 | $ | 58,352 | $ | 265,591 | $ | 213,754 | |||||||
Impact of purchase accounting | 50 | 296 | 1,166 | 1,464 | |||||||||||
Non-GAAP subscription revenue | 69,637 | 58,648 | 266,757 | 215,218 | |||||||||||
GAAP maintenance revenue | 105,354 | 96,169 | 402,938 | 357,630 | |||||||||||
Impact of purchase accounting | 377 | 1,134 | 2,550 | 11,514 | |||||||||||
Non-GAAP maintenance revenue | 105,731 | 97,303 | 405,488 | 369,144 | |||||||||||
GAAP total recurring revenue | 174,941 | 154,521 | 668,529 | 571,384 | |||||||||||
Impact of purchase accounting | 427 | 1,430 | 3,716 | 12,978 | |||||||||||
Non-GAAP total recurring revenue | 175,368 | 155,951 | 672,245 | 584,362 | |||||||||||
GAAP license revenue | 46,240 | 43,818 | 164,560 | 156,633 | |||||||||||
Impact of purchase accounting | — | — | — | 3 | |||||||||||
Non-GAAP license revenue | 46,240 | 43,818 | 164,560 | 156,636 | |||||||||||
Total GAAP revenue | $ | 221,181 | $ | 198,339 | $ | 833,089 | $ | 728,017 | |||||||
Impact of purchase accounting | $ | 427 | $ | 1,430 | $ | 3,716 | $ | 12,981 | |||||||
Total non-GAAP revenue | $ | 221,608 | $ | 199,769 | $ | 836,805 | $ | 740,998 | |||||||
GAAP cost of revenue | $ | 61,997 | $ | 59,071 | $ | 246,735 | $ | 231,731 | |||||||
Stock-based compensation expense | (272 | ) | (1 | ) | (279 | ) | (4 | ) | |||||||
Amortization of acquired technologies | (43,870 | ) | (43,252 | ) | (175,991 | ) | (171,033 | ) | |||||||
Acquisition and Sponsor related costs | (101 | ) | (92 | ) | (336 | ) | (371 | ) | |||||||
Restructuring costs and other | — | (12 | ) | — | (12 | ) | |||||||||
Non-GAAP cost of revenue | $ | 17,754 | $ | 15,714 | $ | 70,129 | $ | 60,311 | |||||||
GAAP gross profit | $ | 159,184 | $ | 139,268 | $ | 586,354 | $ | 496,286 | |||||||
Impact of purchase accounting | 427 | 1,430 | 3,716 | 12,981 | |||||||||||
Stock-based compensation expense | 272 | 1 | 279 | 4 | |||||||||||
Amortization of acquired technologies | 43,870 | 43,252 | 175,991 | 171,033 | |||||||||||
Acquisition and Sponsor related costs | 101 | 92 | 336 | 371 | |||||||||||
Restructuring costs and other | — | 12 | — | 12 | |||||||||||
Non-GAAP gross profit | $ | 203,854 | $ | 184,055 | $ | 766,676 | $ | 680,687 | |||||||
GAAP gross margin | 72.0 | % | 70.2 | % | 70.4 | % | 68.2 | % | |||||||
Non-GAAP gross margin | 92.0 | % | 92.1 | % | 91.6 | % | 91.9 | % | |||||||
GAAP sales and marketing expense | $ | 61,446 | $ | 53,561 | $ | 227,468 | $ | 205,631 | |||||||
Stock-based compensation expense | (2,061 | ) | (18 | ) | (2,295 | ) | (44 | ) | |||||||
Acquisition and Sponsor related costs | (1,132 | ) | (925 | ) | (3,250 | ) | (3,836 | ) | |||||||
Restructuring costs and other | (193 | ) | (3 | ) | (238 | ) | (170 | ) | |||||||
Non-GAAP sales and marketing expense | $ | 58,060 | $ | 52,615 | $ | 221,685 | $ | 201,581 | |||||||
GAAP research and development expense | $ | 24,472 | $ | 23,204 | $ | 96,272 | $ | 86,618 | |||||||
Stock-based compensation expense | (1,282 | ) | (7 | ) | (1,330 | ) | (21 | ) | |||||||
Acquisition and Sponsor related costs | (547 | ) | (857 | ) | (2,527 | ) | (3,951 | ) | |||||||
Restructuring costs and other | — | (117 | ) | (201 | ) | (262 | ) | ||||||||
Non-GAAP research and development expense | $ | 22,643 | $ | 22,223 | $ | 92,214 | $ | 82,384 | |||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except margin data) | |||||||||||||||
GAAP general and administrative expense | $ | 20,792 | $ | 16,438 | $ | 80,641 | $ | 67,303 | |||||||
Stock-based compensation expense | (1,886 | ) | (5 | ) | (1,929 | ) | (11 | ) | |||||||
Acquisition and Sponsor related costs | (2,260 | ) | (3,543 | ) | (14,288 | ) | (15,422 | ) | |||||||
Restructuring costs and other | (1,312 | ) | (82 | ) | (2,560 | ) | (2,414 | ) | |||||||
Non-GAAP general and administrative expense | $ | 15,334 | $ | 12,808 | $ | 61,864 | $ | 49,456 | |||||||
GAAP operating expenses | $ | 123,210 | $ | 110,373 | $ | 471,169 | $ | 426,632 | |||||||
Stock-based compensation expense | (5,229 | ) | (30 | ) | (5,554 | ) | (76 | ) | |||||||
Amortization of acquired intangibles | (16,500 | ) | (17,170 | ) | (66,788 | ) | (67,080 | ) | |||||||
Acquisition and Sponsor related costs | (3,939 | ) | (5,325 | ) | (20,065 | ) | (23,209 | ) | |||||||
Restructuring costs and other | (1,505 | ) | (202 | ) | (2,999 | ) | (2,846 | ) | |||||||
Non-GAAP operating expenses | $ | 96,037 | $ | 87,646 | $ | 375,763 | $ | 333,421 | |||||||
GAAP operating income | $ | 35,974 | $ | 28,895 | $ | 115,185 | $ | 69,654 | |||||||
Impact of purchase accounting | 427 | 1,430 | 3,716 | 12,981 | |||||||||||
Stock-based compensation expense | 5,501 | 31 | 5,833 | 80 | |||||||||||
Amortization of acquired technologies | 43,870 | 43,252 | 175,991 | 171,033 | |||||||||||
Amortization of acquired intangibles | 16,500 | 17,170 | 66,788 | 67,080 | |||||||||||
Acquisition and Sponsor related costs | 4,040 | 5,417 | 20,401 | 23,580 | |||||||||||
Restructuring costs and other | 1,505 | 214 | 2,999 | 2,858 | |||||||||||
Non-GAAP operating income | $ | 107,817 | $ | 96,409 | $ | 390,913 | $ | 347,266 | |||||||
GAAP operating margin | 16.3 | % | 14.6 | % | 13.8 | % | 9.6 | % | |||||||
Non-GAAP operating margin | 48.7 | % | 48.3 | % | 46.7 | % | 46.9 | % | |||||||
GAAP net loss | $ | (14,743 | ) | $ | (39,761 | ) | $ | (102,066 | ) | $ | (83,866 | ) | |||
Impact of purchase accounting | 427 | 1,430 | 3,716 | 12,981 | |||||||||||
Stock-based compensation expense | 5,501 | 31 | 5,833 | 80 | |||||||||||
Amortization of acquired technologies | 43,870 | 43,252 | 175,991 | 171,033 | |||||||||||
Amortization of acquired intangibles | 16,500 | 17,170 | 66,788 | 67,080 | |||||||||||
Acquisition and Sponsor related costs | 4,040 | 5,417 | 20,401 | 23,580 | |||||||||||
Restructuring costs and other | 1,505 | 214 | 2,999 | 2,858 | |||||||||||
Loss on extinguishment of debt | 19,547 | — | 80,137 | 18,559 | |||||||||||
Other (gain) loss | — | (3,009 | ) | — | (3,009 | ) | |||||||||
Tax benefits associated with above adjustments | (18,966 | ) | (17,216 | ) | (69,713 | ) | (80,908 | ) | |||||||
Non-GAAP net income | $ | 57,681 | $ | 7,528 | $ | 184,086 | $ | 128,388 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except per share information) | |||||||||||||||
GAAP weighted-average shares used in computing diluted earnings (loss) per share available to common shareholders | 256,711 | 100,737 | 142,541 | 100,433 | |||||||||||
Pro forma dilutive shares: | |||||||||||||||
Weighted-average pro forma adjustment to reflect conversion of redeemed convertible Class A Common Stock and shares issued for accrued dividends(1) | 44,453 | 177,812 | 144,198 | 177,812 | |||||||||||
Shares issued at offering(2) | 6,250 | 25,000 | 20,274 | 25,000 | |||||||||||
Non-GAAP weighted-average shares used in computing diluted earnings (loss) per share, pro forma(3) | 307,414 | 303,549 | 307,013 | 303,245 | |||||||||||
GAAP diluted earnings (loss) per share | $ | 2.60 | $ | (1.09 | ) | $ | 2.56 | $ | (3.50 | ) | |||||
Non-GAAP diluted earnings per share, pro forma | $ | 0.19 | $ | 0.02 | $ | 0.60 | $ | 0.42 |
(1) | Adjustment to give effect to the conversion of 2,661,015 shares of Class A Common Stock that were outstanding immediately prior to the closing of the initial public offering into 140,053,370 shares of common stock and the conversion of $717.4 million of accrued and unpaid dividends on the Class A Common Stock into 37,758,109 shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A Common Stock, divided by $19.00 per share, as if the shares had been issued at the beginning of the period. |
(2) | Adjustment to give effect to 25.0 million shares issued in connection with the initial public offering retroactively applied as if the shares had been issued at the beginning of each period. |
(3) | Does not give effect to anti-dilutive incentive stock awards including 7.3 million of equity awards issued in connection with the initial public offering in October 2018. |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Net loss | $ | (14,743 | ) | $ | (39,761 | ) | $ | (102,066 | ) | $ | (83,866 | ) | |||
Amortization and depreciation | 64,459 | 63,790 | 258,362 | 250,876 | |||||||||||
Income tax expense (benefit) | 401 | 34,867 | (19,644 | ) | 22,398 | ||||||||||
Interest expense, net | 29,905 | 42,768 | 142,008 | 169,786 | |||||||||||
Impact of purchase accounting on total revenue | 427 | 1,430 | 3,716 | 12,981 | |||||||||||
Unrealized foreign currency (gains) losses(1) | 663 | (8,817 | ) | 14,367 | (56,368 | ) | |||||||||
Acquisition and Sponsor related costs | 4,040 | 5,417 | 20,401 | 23,580 | |||||||||||
Debt related costs(2) | 19,697 | 128 | 81,535 | 19,546 | |||||||||||
Stock-based compensation expense | 5,501 | 31 | 5,833 | 80 | |||||||||||
Restructuring costs and other | 1,505 | 214 | 2,999 | 2,858 | |||||||||||
Adjusted EBITDA | $ | 111,855 | $ | 100,067 | $ | 407,511 | $ | 361,871 | |||||||
Adjusted EBITDA margin | 50.5 | % | 50.1 | % | 48.7 | % | 48.8 | % |
(1) | Unrealized foreign currency (gains) losses primarily relate to the remeasurement of our intercompany loans and to a lesser extent, unrealized foreign currency (gains) losses on selected assets and liabilities. |
(2) | Debt related costs include fees related to our credit agreements, debt refinancing costs and the related write-off of debt issuance costs. |
Full Year 2019 | |||||||||||||
Low | High | Low(2) | High(2) | ||||||||||
(in millions, except year-over-year percentages) | |||||||||||||
Total revenue | $ | 921 | $ | 936 | 10.0 | % | 12.0 | % | |||||
Estimated foreign currency impact | 9 | 9 | 1.0 | 1.0 | |||||||||
Non-GAAP total revenue on a constant currency basis(1) | $ | 930 | $ | 945 | 11.0 | % | 13.0 | % |
Q1 2019 | |||||||||||||
Low | High | Low(2) | High(2) | ||||||||||
(in millions, except year-over-year percentages) | |||||||||||||
Total revenue | $ | 215 | $ | 218 | 8.0 | % | 10.0 | % | |||||
Estimated foreign currency impact | 5 | 5 | 3.0 | 2.0 | |||||||||
Non-GAAP total revenue on a constant currency basis(1) | $ | 220 | $ | 223 | 11.0 | % | 12.0 | % |
Full Year 2019(2) | Q1 2019(2) | ||||
Non-GAAP subscription revenue growth | 19.0 | % | 12.5 | % | |
Estimated foreign currency impact | 1.0 | % | 3.5 | % | |
Non-GAAP subscription revenue growth on a constant currency basis(1) | 20.0 | % | 16.0 | % | |
Non-GAAP license and maintenance revenue growth | 7.0 | % | 7.5 | % | |
Estimated foreign currency impact | 1.0 | % | 1.5 | % | |
Non-GAAP license and maintenance revenue growth on a constant currency basis(1) | 8.0 | % | 9.0 | % |
(1) | Non-GAAP revenue on a constant currency basis is calculated using the average foreign currency exchange rates in the comparable prior year periods and applying those rates to the estimated foreign-denominated revenue in the corresponding periods rather than the forecasted foreign currency exchange rates for the future periods. |
(2) | Revenue growth rates are calculated using non-GAAP revenue from the comparable prior period. |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Net cash provided by operating activities | $ | 88,060 | $ | 96,794 | $ | 254,142 | $ | 232,693 | |||||||
Capital expenditures(1) | (3,756 | ) | (2,882 | ) | (18,632 | ) | (12,380 | ) | |||||||
Cash paid for interest, net and other debt related items | 28,477 | 37,911 | 143,071 | 151,305 | |||||||||||
Cash paid for acquisition and sponsor related costs, restructuring costs and other one time items | 4,788 | 9,309 | 24,387 | 30,089 | |||||||||||
One time tax refund | — | (35,500 | ) | — | (35,500 | ) | |||||||||
Unlevered free cash flow (excluding forfeited tax shield) | 117,569 | 105,632 | 402,968 | 366,207 | |||||||||||
Forfeited tax shield related to interest payments(2) | (6,479 | ) | (14,024 | ) | (32,162 | ) | (54,429 | ) | |||||||
Unlevered free cash flow | $ | 111,090 | $ | 91,608 | $ | 370,806 | $ | 311,778 |
(1) | Includes purchases of property and equipment and purchases of intangible assets. |
(2) | Forfeited tax shield related to interest payments assumes a statutory rate of 22.5% for the three and twelve months ended December 31, 2018 and 37.0% for the three and twelve months ended December 31, 2017. |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cash flows from operating activities | |||||||||||||||
Net loss | $ | (14,743 | ) | $ | (39,761 | ) | $ | (102,066 | ) | $ | (83,866 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 64,459 | 63,790 | 258,362 | 250,876 | |||||||||||
Provision for doubtful accounts | 507 | 349 | 2,498 | 2,489 | |||||||||||
Stock-based compensation expense | 5,501 | 31 | 5,833 | 80 | |||||||||||
Amortization of debt issuance costs | 2,403 | 4,633 | 11,675 | 18,859 | |||||||||||
Loss on extinguishment of debt | 19,547 | — | 80,137 | 18,559 | |||||||||||
Deferred taxes | (8,016 | ) | (81,746 | ) | (22,101 | ) | (101,522 | ) | |||||||
(Gain) loss on foreign currency exchange rates | 663 | (5,227 | ) | 13,410 | (54,875 | ) | |||||||||
Other non-cash expenses (benefits) | 1,992 | (7,206 | ) | 3,443 | (3,754 | ) | |||||||||
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | |||||||||||||||
Accounts receivable | (4,047 | ) | (6,509 | ) | (18,010 | ) | (2,358 | ) | |||||||
Income taxes receivable | 838 | 33,535 | 707 | 35,005 | |||||||||||
Prepaid and other current assets | (2,566 | ) | 1,687 | (4,497 | ) | 6,184 | |||||||||
Accounts payable | 3,930 | 3,423 | (28 | ) | 293 | ||||||||||
Accrued liabilities and other | 31 | 1,239 | 9,776 | (7,544 | ) | ||||||||||
Accrued interest payable | (826 | ) | 354 | (11,342 | ) | 609 | |||||||||
Income taxes payable | 5,439 | 118,826 | (10,673 | ) | 119,594 | ||||||||||
Deferred revenue | 13,216 | 9,794 | 35,507 | 34,043 | |||||||||||
Other long-term liabilities | (268 | ) | (418 | ) | 1,511 | 21 | |||||||||
Net cash provided by operating activities | 88,060 | 96,794 | 254,142 | 232,693 | |||||||||||
Cash flows from investing activities | |||||||||||||||
Maturities of investments | — | — | — | 2,000 | |||||||||||
Purchases of property and equipment | (3,151 | ) | (1,254 | ) | (15,945 | ) | (7,594 | ) | |||||||
Purchases of intangible assets | (605 | ) | (1,628 | ) | (2,687 | ) | (4,786 | ) | |||||||
Acquisitions, net of cash acquired | — | — | (60,578 | ) | (23,999 | ) | |||||||||
Proceeds from sale of cost method investment and other | 502 | — | 11,217 | — | |||||||||||
Net cash used in investing activities | (3,254 | ) | (2,882 | ) | (67,993 | ) | (34,379 | ) | |||||||
Cash flows from financing activities | |||||||||||||||
Proceeds from issuance of common stock and incentive restricted stock | 357,188 | 205 | 358,911 | 313 | |||||||||||
Repurchase of common stock and incentive restricted stock | (10 | ) | (556 | ) | (578 | ) | (930 | ) | |||||||
Exercise of stock options | 3 | 1 | 16 | 1 | |||||||||||
Premium paid on debt extinguishment | (14,175 | ) | — | (36,900 | ) | — | |||||||||
Proceeds from credit agreement | — | — | 626,950 | 3,500 | |||||||||||
Repayments of borrowings from credit agreement | (319,975 | ) | (4,236 | ) | (1,014,900 | ) | (36,950 | ) | |||||||
Payment of debt issuance costs | — | — | (5,561 | ) | (1,288 | ) | |||||||||
Payment for offering costs | (1,468 | ) | — | (3,662 | ) | — | |||||||||
Net cash provided by (used in) financing activities | 21,563 | (4,586 | ) | (75,724 | ) | (35,354 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,082 | ) | 5,071 | (5,521 | ) | 13,113 | |||||||||
Net increase in cash and cash equivalents | 104,287 | 94,397 | 104,904 | 176,073 | |||||||||||
Cash and cash equivalents | |||||||||||||||
Beginning of period | 278,333 | 183,319 | 277,716 | 101,643 | |||||||||||
End of period | $ | 382,620 | $ | 277,716 | $ | 382,620 | $ | 277,716 | |||||||
Supplemental disclosure of cash flow information | |||||||||||||||
Cash paid for interest | $ | 28,796 | $ | 37,903 | $ | 142,944 | $ | 147,106 | |||||||
Cash paid (received) for income taxes | $ | 905 | $ | (35,810 | ) | $ | 8,950 | $ | (32,069 | ) |
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