Pluralsight, Inc. (NASDAQ: PS), the enterprise technology skills
company, today announced financial results for the first quarter
ended March 31, 2019.
“Our Q1 financial results marked a great start
to 2019. Revenue and billings growth continue to be strong with
both up over 40% year over year. We continue to demonstrate the
efficiency in our model with our third consecutive quarter of
positive cash flow,” said Aaron Skonnard, co-founder and CEO of
Pluralsight. “Today, we are expanding our platform further to
provide even more value to technologists and tech leaders. We are
excited to announce our acquisition of GitPrime, the leading
developer productivity platform. We are thrilled about the
opportunity GitPrime brings to our customers. Combined with the
ability to learn and assess technology skills at scale, Pluralsight
and GitPrime provides the most complete and targeted platform for
technology leaders to successfully execute and deliver their
digital transformation strategies.”
First Quarter Financial
Highlights
- Billings - Q1 2019 billings were $77.9
million, an increase of 41% period over period. Q1 2019 billings
from business customers were $67.2 million, an increase of 48%
period over period.
- Revenue - Q1 2019 revenue was $69.6 million,
an increase of 40% period over period.
- Gross margin - Q1 2019 gross margin was 76%,
compared to 70% in Q1 2018. Q1 2019 non-GAAP gross margin was 77%,
compared to 76% in Q1 2018.
- Net loss per share - GAAP net loss per share
for Q1 2019 was $0.25. Adjusted pro forma net loss per share for Q1
2019 was $0.07, compared to $0.34 in Q1 2018.
- Cash flows - Cash provided by operations was
$5.5 million for Q1 2019, compared to cash used in operations of
$10.4 million in Q1 2018. Free cash flow was $2.5 million for Q1
2019, compared to negative free cash flow of $13.1 million in Q1
2018.
For information regarding the non-GAAP financial
measures discussed in this press release, please see the section
titled “Non-GAAP Financial Measures.” Reconciliations between GAAP
and non-GAAP financial measures are provided in the tables of this
press release.
Financial Outlook
Pluralsight is providing the following financial
guidance for the second quarter 2019, and the full year 2019, which
includes the anticipated results of the proposed GitPrime
acquisition:
Second Quarter 2019
guidance:
- Revenue is expected to be in the range of $73.5 million to $74
million.
- Adjusted pro forma net loss per share is expected to be in the
range of $0.15 to $0.13, assuming weighted-average shares
outstanding of approximately 137 million.
Full Year 2019 guidance:
- Revenue is expected to be in the range of $312 million to $318
million.
- Adjusted pro forma net loss per share is expected to be in the
range of $0.42 to $0.38, which includes investments related to the
proposed GitPrime acquisition, assuming weighted-average shares
outstanding of approximately 137 million.
Guidance for non-GAAP financial measures
excludes equity-based compensation, amortization of acquired
intangible assets, employer payroll taxes on employee stock
transactions, secondary offering costs, and amortization of debt
discount and issuance costs. Pluralsight has not reconciled its
expectations as to adjusted pro forma net loss per share to their
most directly comparable GAAP measures because certain items cannot
be reasonably predicted. Accordingly, a reconciliation for
expectations of adjusted pro forma net loss per share is not
available without unreasonable effort.
Conference Call Information
Pluralsight will host a conference call for
analysts and investors to discuss its first quarter 2019 results
and outlook for its second quarter and full year 2019, today at
2:30 p.m. Mountain time (4:30 p.m. Eastern time).
Date: |
May 1, 2019 |
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: 6096825 |
A live audio webcast of the conference call will
also be accessible from the Pluralsight website
at investors.pluralsight.com. A telephonic replay of the call
will be available three hours after the call, will run for seven
days, and may be accessed by dialing (855) 859-2056 or (404)
537-3406 and entering the passcode 6096825.
About Pluralsight
Pluralsight is an enterprise technology skills
platform that delivers a unified, end-to-end learning experience
for businesses across the globe. Through a subscription service,
companies are empowered to move at the speed of technology,
increasing proficiency, innovation and efficiency. Founded in 2004
and trusted by Fortune 500 companies, Pluralsight provides members
with on-demand access to a digital ecosystem of learning tools,
including adaptive skill tests, directed learning paths,
expert-authored courses, interactive labs and analytics. For more
information, visit pluralsight.com.
Pluralsight and the Pluralsight logo are
trademarks of Pluralsight, LLC in the United States and in
jurisdictions throughout the world.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of federal securities laws that
involve risks and uncertainties, including statements regarding our
future financial and operating performance, including our financial
outlook for the second quarter 2019, and the full year 2019. There
are a significant number of factors that could cause actual results
to differ materially from statements made in this press release,
including: the pace of market adoption of cloud-based learning
solutions; our ability to expand our course library and develop new
platform features; competition; our ability to attract and retain
customers; our ability to increase sales of subscriptions to our
platform to customers; our ability to expand our sales and
marketing capabilities; and general market, political, economic,
and business conditions.
Additional risks and uncertainties that could
affect our financial results are included under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in our Annual Report on Form
10-K filed with the SEC on February 21, 2019, which is available on
our website at investors.pluralsight.com and on the SEC’s website
at www.sec.gov. Additional information will also be set forth in
other filings that we make with the SEC from time to time. All
forward-looking statements in this press release are based on
information available to us as of the date hereof, and we do not
assume any obligation to update the forward-looking statements
provided to reflect events that occur or circumstances that exist
after the date on which they were made, except as required by
law.
Key Business Metrics
Billings. Billings represents total revenue plus
the change in deferred revenue in the period, as presented in our
condensed consolidated statements of cash flows, less the change in
contract assets and unbilled accounts receivable in the period.
Billings in any particular period represents amounts invoiced to
customers and reflects subscription renewals and upsells to
existing customers plus sales to new customers. We use billings to
measure our ability to sell subscriptions to our platform to both
new and existing customers. We use billings from business customers
and our percentage of billings from business customers to measure
and monitor our ability to sell subscriptions to our platform to
business customers.
Non-GAAP Financial Measures
Pluralsight has provided in this press release
financial information that has not been prepared in accordance with
generally accepted accounting principles in the United States
(GAAP). Pluralsight uses the non-GAAP financial measures of
non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
loss, adjusted pro forma net loss, adjusted pro forma net loss per
share, and free cash flow in analyzing its financial results and
believes that the use of these metrics is useful to investors as an
additional tool to evaluate ongoing operating results and trends
and in comparing Pluralsight’s financial results with other
companies in its industry, many of which present similar non-GAAP
financial measures.
The presentation of these non-GAAP financial
measures is not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with GAAP. A reconciliation of our
historical non-GAAP financial measures to their most directly
comparable GAAP measures have been provided in the financial
statement tables included in this press release, and investors are
encouraged to review these reconciliations.
Non-GAAP gross profit. We define non-GAAP gross
profit as gross profit plus equity-based compensation, amortization
of acquired intangible assets, and employer payroll taxes on
employee stock transactions.
Non-GAAP gross margin. We define non-GAAP gross
margin as non-GAAP gross profit divided by our revenue.
Non-GAAP operating loss. We define non-GAAP
operating loss as loss from operations plus equity-based
compensation, amortization of acquired intangible assets, employer
payroll taxes on employee stock transactions, and secondary
offering costs.
Adjusted pro forma net loss and adjusted pro
forma net loss per share. We define adjusted pro forma net loss as
net loss attributable to Pluralsight, Inc. adjusted for the
reallocation of loss attributable to non-controlling interests from
the assumed exchange of LLC Units of Pluralsight Holdings for
newly-issued shares of Class A common stock of Pluralsight, Inc.
and further adjusted for equity-based compensation, amortization of
acquired intangible assets, employer payroll taxes on employee
stock transactions, secondary offering costs, and amortization of
debt discount and issuance costs. We define adjusted pro forma net
loss per share as adjusted pro forma net loss divided by the
weighted-average shares of Class A common stock outstanding,
assuming the full exchange of all outstanding LLC Units of
Pluralsight Holdings for newly-issued shares of Class A common
stock of Pluralsight, Inc.
Free cash flow. We define free cash flow as cash
provided by (used in) operating activities less purchases of
property and equipment and purchases of our content library.
PLURALSIGHT, INC.
Condensed Consolidated Statements of
Operations(in thousands, except per share
amounts)(unaudited)
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Revenue |
|
$ |
69,617 |
|
|
$ |
49,644 |
|
Cost of
revenue(1)(2) |
|
16,705 |
|
|
14,886 |
|
Gross profit |
|
52,912 |
|
|
34,758 |
|
Operating
expenses(1)(2): |
|
|
|
|
Sales and
marketing |
|
44,050 |
|
|
29,467 |
|
Technology and content |
|
20,032 |
|
|
13,325 |
|
General
and administrative |
|
21,809 |
|
|
11,292 |
|
Total operating expenses |
|
85,891 |
|
|
54,084 |
|
Loss from operations |
|
(32,979 |
) |
|
(19,326 |
) |
Other (expense)
income: |
|
|
|
|
Interest
expense |
|
(2,024 |
) |
|
(3,710 |
) |
Other
income (expense), net |
|
1,614 |
|
|
(13 |
) |
Loss before income taxes |
|
(33,389 |
) |
|
(23,049 |
) |
Provision for income
taxes |
|
(154 |
) |
|
(109 |
) |
Net loss |
|
$ |
(33,543 |
) |
|
$ |
(23,158 |
) |
Less: Net loss
attributable to non-controlling interests |
|
(14,660 |
) |
|
— |
|
Net loss attributable to Pluralsight, Inc. |
|
$ |
(18,883 |
) |
|
$ |
(23,158 |
) |
Less: Accretion of
Series A redeemable convertible preferred units |
|
— |
|
|
(19,525 |
) |
Net loss attributable to common shares |
|
$ |
(18,883 |
) |
|
$ |
(42,683 |
) |
Net loss per share,
basic and diluted(3) |
|
$ |
(0.25 |
) |
|
|
Weighted-average common
shares used in computing basic and diluted net loss
per share(3) |
|
75,927 |
|
|
|
(1) Includes equity-based compensation as
follows:
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Cost of revenue |
|
$ |
79 |
|
|
$ |
— |
|
Sales and marketing |
|
6,195 |
|
|
539 |
|
Technology and
content |
|
3,498 |
|
|
381 |
|
General and
administrative |
|
9,834 |
|
|
2,453 |
|
Total
equity-based compensation |
|
$ |
19,606 |
|
|
$ |
3,373 |
|
(2) Includes amortization of acquired intangible
assets as follows:
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Cost of revenue |
|
$ |
525 |
|
|
$ |
2,962 |
|
Sales and marketing |
|
— |
|
|
195 |
|
Technology and
content |
|
177 |
|
|
176 |
|
Total
amortization of acquired intangible assets |
|
$ |
702 |
|
|
$ |
3,333 |
|
(3) Represents net loss per share of Class A common stock and
weighted-average shares of Class A common stock outstanding for the
periods following the reorganization transactions and Pluralsight,
Inc.'s initial public offering.
PLURALSIGHT, INC.
Key Business Metrics and Non-GAAP
Financial Measures(dollars in thousands)(unaudited)
Key Business Metrics
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Billings |
|
$ |
77,928 |
|
|
$ |
55,419 |
|
Billings
from business customers |
|
$ |
67,156 |
|
|
$ |
45,252 |
|
% of
billings from business customers |
|
86 |
% |
|
82 |
% |
Non-GAAP Financial Measures
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Reconciliation
of gross profit to non-GAAP gross profit: |
|
|
|
|
Gross profit |
|
$ |
52,912 |
|
|
$ |
34,758 |
|
Equity-based
compensation |
|
79 |
|
|
— |
|
Amortization of acquired
intangible assets |
|
525 |
|
|
2,962 |
|
Employer payroll taxes
on employee stock transactions |
|
3 |
|
|
— |
|
Non-GAAP
gross profit |
|
$ |
53,519 |
|
|
$ |
37,720 |
|
Gross margin |
|
76 |
% |
|
70 |
% |
Non-GAAP gross
margin |
|
77 |
% |
|
76 |
% |
Reconciliation
of loss from operations to non-GAAP operating loss: |
|
|
|
|
Loss from operations |
|
$ |
(32,979 |
) |
|
$ |
(19,326 |
) |
Equity-based
compensation |
|
19,606 |
|
|
3,373 |
|
Amortization of acquired
intangible assets |
|
702 |
|
|
3,333 |
|
Employer payroll taxes
on employee stock transactions |
|
1,444 |
|
|
— |
|
Secondary offering
costs |
|
918 |
|
|
— |
|
Non-GAAP
operating loss |
|
$ |
(10,309 |
) |
|
$ |
(12,620 |
) |
Adjusted pro forma
net loss per share |
|
|
|
|
Numerator: |
|
|
|
|
GAAP net loss
attributable to common shares |
|
$ |
(18,883 |
) |
|
$ |
(42,683 |
) |
Accretion of Series A
redeemable convertible preferred units |
|
— |
|
|
19,525 |
|
Reallocation of net loss
attributable to non-controlling interests from the
assumed exchange of LLC Units of Pluralsight Holdings for
Class A common stock |
|
(14,660 |
) |
|
— |
|
Equity-based
compensation |
|
19,606 |
|
|
3,373 |
|
Amortization of acquired
intangibles |
|
702 |
|
|
3,333 |
|
Employer payroll taxes
on employee stock transactions |
|
1,444 |
|
|
— |
|
Secondary offering
costs |
|
918 |
|
|
— |
|
Amortization of debt
discount and issuance costs |
|
1,545 |
|
|
73 |
|
Adjusted pro
forma net loss |
|
$ |
(9,328 |
) |
|
$ |
(16,379 |
) |
Denominator: |
|
|
|
|
Weighted-average shares of
Class A common stock outstanding |
|
75,927 |
|
|
— |
|
Weighted-average LLC Units
of Pluralsight Holdings that are convertible into Class
A common stock |
|
58,949 |
|
|
48,408 |
|
Adjusted pro
forma weighted-average common shares outstanding, basic and
diluted |
|
134,876 |
|
|
48,408 |
|
Adjusted pro forma net loss per share |
|
$ |
(0.07 |
) |
|
$ |
(0.34 |
) |
Reconciliation
of net cash provided by (used in) operating activities to free
cashflow: |
|
|
|
|
Net cash provided by
(used in) operating activities |
|
$ |
5,540 |
|
|
$ |
(10,424 |
) |
Less: Purchases of
property and equipment |
|
(2,133 |
) |
|
(1,868 |
) |
Less: Purchases of content
library |
|
(937 |
) |
|
(769 |
) |
Free cash
flow |
|
$ |
2,470 |
|
|
$ |
(13,061 |
) |
PLURALSIGHT, INC.
Condensed Consolidated Balance
Sheets(in thousands)(unaudited)
|
|
March 31,2019 |
|
December 31,2018 |
|
|
|
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
736,566 |
|
|
$ |
194,306 |
|
Accounts
receivable, net |
|
51,865 |
|
|
63,436 |
|
Deferred
contract acquisition costs, net |
|
16,863 |
|
|
— |
|
Prepaid
expenses and other current assets |
|
10,238 |
|
|
8,323 |
|
Total current assets |
|
815,532 |
|
|
266,065 |
|
Restricted cash |
|
27,849 |
|
|
16,765 |
|
Property and equipment,
net |
|
36,552 |
|
|
31,641 |
|
Content library,
net |
|
6,858 |
|
|
7,050 |
|
Intangible assets,
net |
|
1,582 |
|
|
1,759 |
|
Goodwill |
|
123,119 |
|
|
123,119 |
|
Deferred contract
acquisition costs, noncurrent, net |
|
3,333 |
|
|
— |
|
Other assets |
|
1,085 |
|
|
1,064 |
|
Total
assets |
|
$ |
1,015,910 |
|
|
$ |
447,463 |
|
Liabilities and
stockholders' equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
8,605 |
|
|
$ |
7,160 |
|
Accrued
expenses |
|
27,644 |
|
|
32,047 |
|
Accrued
author fees |
|
10,737 |
|
|
10,002 |
|
Deferred
revenue |
|
167,956 |
|
|
157,695 |
|
Total current liabilities |
|
214,942 |
|
|
206,904 |
|
Deferred revenue,
noncurrent |
|
12,339 |
|
|
14,886 |
|
Convertible senior
notes, net |
|
481,167 |
|
|
— |
|
Facility financing
obligations |
|
20,070 |
|
|
15,777 |
|
Other liabilities |
|
1,514 |
|
|
1,303 |
|
Total liabilities |
|
730,032 |
|
|
238,870 |
|
Stockholders'
equity: |
|
|
|
|
Preferred
stock |
|
— |
|
|
— |
|
Class A
common stock |
|
10 |
|
|
7 |
|
Class B
common stock |
|
3 |
|
|
6 |
|
Class C
common stock |
|
1 |
|
|
1 |
|
Additional paid-in capital |
|
560,493 |
|
|
452,576 |
|
Accumulated other comprehensive loss |
|
(31 |
) |
|
(41 |
) |
Accumulated deficit |
|
(359,973 |
) |
|
(351,123 |
) |
Total stockholders' equity attributable to Pluralsight,
Inc. |
|
200,503 |
|
|
101,426 |
|
Non-controlling interests |
|
85,375 |
|
|
107,167 |
|
Total stockholders' equity |
|
285,878 |
|
|
208,593 |
|
Total liabilities and stockholders' equity |
|
$ |
1,015,910 |
|
|
$ |
447,463 |
|
PLURALSIGHT, INC.
Condensed Consolidated Statements of Cash
Flows(in thousands)(unaudited)
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Operating activities |
|
|
|
|
Net loss |
|
$ |
(33,543 |
) |
|
$ |
(23,158 |
) |
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities: |
|
|
|
|
Depreciation of
property and equipment |
|
2,056 |
|
|
2,191 |
|
Amortization of
acquired intangible assets |
|
702 |
|
|
3,333 |
|
Amortization of course
creation costs |
|
579 |
|
|
447 |
|
Equity-based
compensation |
|
19,606 |
|
|
3,373 |
|
Amortization of
deferred contract acquisition costs |
|
5,867 |
|
|
— |
|
Amortization of debt
discount and issuance costs |
|
1,545 |
|
|
876 |
|
Provision for doubtful
accounts |
|
27 |
|
|
222 |
|
Deferred tax
benefit |
|
(27 |
) |
|
— |
|
Other |
|
25 |
|
|
— |
|
Changes in assets and
liabilities: |
|
|
|
|
Accounts
receivable |
|
11,392 |
|
|
6,802 |
|
Deferred
contract acquisition costs |
|
(5,851 |
) |
|
— |
|
Prepaid
expenses and other assets |
|
(1,917 |
) |
|
(1,966 |
) |
Accounts
payable |
|
1,035 |
|
|
2,063 |
|
Accrued
expenses and other liabilities |
|
(4,979 |
) |
|
(10,203 |
) |
Accrued author
fees |
|
735 |
|
|
(179 |
) |
Deferred
revenue |
|
8,288 |
|
|
5,775 |
|
Net
cash provided by (used in) operating activities |
|
5,540 |
|
|
(10,424 |
) |
Investing activities |
|
|
|
|
Purchases of property and
equipment |
|
(2,133 |
) |
|
(1,868 |
) |
Purchases of content library |
|
(937 |
) |
|
(769 |
) |
Net
cash used in investing activities |
|
(3,070 |
) |
|
(2,637 |
) |
Financing activities |
|
|
|
|
Proceeds from issuance of
convertible senior notes, net of discount andissuance costs |
|
617,663 |
|
|
— |
|
Purchase of capped calls related to
issuance of convertible senior notes |
|
(69,432 |
) |
|
— |
|
Proceeds from issuance of common
stock from employee equity plans |
|
2,621 |
|
|
— |
|
Borrowings of long-term debt |
|
— |
|
|
20,000 |
|
Payments of costs related to
initial public offering |
|
— |
|
|
(1,899 |
) |
Payments of debt issuance
costs |
|
— |
|
|
(450 |
) |
Other |
|
(4 |
) |
|
(4 |
) |
Net
cash provided by financing activities |
|
550,848 |
|
|
17,647 |
|
Effect of exchange rate changes on cash, cash
equivalents, and restricted cash |
|
26 |
|
|
9 |
|
Net increase in cash, cash equivalents, and
restricted cash |
|
553,344 |
|
|
4,595 |
|
Cash, cash equivalents, and restricted cash,
beginning of period |
|
211,071 |
|
|
28,477 |
|
Cash, cash equivalents, and restricted cash, end
of period |
|
$ |
764,415 |
|
|
$ |
33,072 |
|
Reconciliation of cash, cash equivalents
and restricted cash as shown in the statement of cash
flows: |
|
|
|
|
Cash and cash equivalents |
|
$ |
736,566 |
|
|
$ |
32,359 |
|
Restricted cash |
|
27,849 |
|
|
713 |
|
Total cash, cash equivalents, and
restricted cash |
|
$ |
764,415 |
|
|
$ |
33,072 |
|
Investor Relations Contact:Mark
McReynoldsInvestor
RelationsPluralsight801-784-9007ir@pluralsight.com
Media Contact:DJ
AndersonCommunications/PressPluralsight801-784-9007dj@pluralsight.com
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