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Ellie Mae Reports Fourth Quarter and Full Year 2015 Results

February 11, 2016 at 4:05 PM EST

Record Quarterly Seat Bookings of 16,200

Fiscal Year 2015 Revenue Up 57% to $253.9 Million

PLEASANTON, Calif.--(BUSINESS WIRE)--Feb. 11, 2016-- Ellie Mae® (NYSE:ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry, today reported results for the fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Highlights

  • Revenue of $64.9 million, up 39% from $46.6 million in Q4 2014
  • Adjusted EBITDA of $17.1 million, up 34% from $12.8 million in Q4 2014
  • Net income of $4.8 million, compared to $4.3 million in Q4 2014
  • Record 16,200 SaaS Encompass® seats booked

Full Year 2015 Highlights

  • Record revenue of $253.9 million, up 57% from $161.5 million in 2014
  • Adjusted EBITDA of $74.7 million, up 62% from $46.0 million in 2014
  • Net income of $22.3 million, compared to $14.8 million in 2014
  • 49,500 SaaS Encompass seats booked, up 35% in 2015
  • 136,167 active Encompass users, up 25% at the end of 2015
  • Revenue per average active Encompass user of $1,996, up 24% in 2015

“Our better than expected fourth quarter performance capped an outstanding year for Ellie Mae,” said Jonathan Corr, president and CEO of Ellie Mae. “Fourth quarter year-over-year revenue growth of 39% was driven by the continued ramp of Encompass users and adoption of our services. Total seat bookings reached an all-time high of 16,200 during the quarter and included a record 8,700 new customer seats, demonstrating our ongoing business momentum and the value of our offerings. Even with the record number of seats we booked in 2015, our new business pipeline remains very robust.”

“We have built a powerful all-in-one mortgage management platform and network that provides one system of record for lenders to originate and fund mortgages, is deeply integrated with a broad array of vendors, investors and agencies, and allows lenders to achieve loan quality, regulatory compliance and operating efficiency. Building on our successes, as we enter 2016 we plan to continue to drive growth by adding new users, introducing new services, and driving continued adoption of all our services.”

Financial Results

Total revenue for the fourth quarter of 2015 was $64.9 million, compared to $46.6 million for the fourth quarter of 2014. Net income for the fourth quarter of 2015 was $4.8 million, or $0.16 per diluted share, compared to net income of $4.3 million, or $0.14 per diluted share, for the fourth quarter of 2014.

On a non-GAAP basis, adjusted net income for the fourth quarter of 2015 was $13.5 million, or $0.44 per diluted share, compared to $11.5 million, or $0.38 per diluted share, for the fourth quarter of 2014. Adjusted EBITDA for the fourth quarter of 2015 was $17.1 million, compared to $12.8 million for the fourth quarter of 2014.

Total revenue for 2015 was $253.9 million compared to $161.5 million for 2014. Net income for 2015 was $22.3 million, or $0.72 per diluted share, compared to net income of $14.8 million, or $0.50 per diluted share, for 2014.

On a non-GAAP basis, adjusted net income for 2015 was $52.2 million, or $1.69 per diluted share, compared to $34.1 million, or $1.15 per diluted share, for 2014. Adjusted EBITDA for 2015 was $74.7 million, compared to adjusted EBITDA of $46.0 million for 2014.

Additional information about the non-GAAP financial measures presented in this release, including a reconciliation of the non-GAAP financial measures to their related GAAP financial measures, is set forth below under the section entitled “Use of Non-GAAP Financial Measures.”

Key Operating Metrics:

  • The total number of active Encompass users increased 25% year-over-year to 136,167;
  • The total number of active users of the SaaS version of Encompass increased 43% year-over-year to 121,406, or 89% of all active Encompass users; and
  • Revenue per average active Encompass user in the fourth quarter increased 10% year-over-year to $475.

First Quarter and Full Year 2016 Financial Outlook

For the first quarter of 2016, our revenue is expected to be in the range of $67.5 million to $68.5 million. Net income is expected to be $1.0 million to $1.5 million, or $0.03 to $0.05 per diluted share. Adjusted net income is expected to be in the range of $8.9 million to $9.7 million, or $0.29 to $0.31 per diluted share. Adjusted EBITDA is expected to be in the range of $14.0 million to $15.1 million.

For the full year 2016, revenue is expected to be in the range of $317.0 million to $321.0 million. Net income is expected to be $22.2 million to $24.2 million, or $0.71 to $0.76 per diluted share. Adjusted net income is expected to be in the range of $56.1 million to $59.1 million, or $1.79 to $1.86 per diluted share. Adjusted EBITDA is expected to be in the range of $90.0 million to $94.5 million.

Quarterly Conference Call

Ellie Mae will discuss its fourth quarter and full year 2015 results today, February 11, 2016, via teleconference at 4:30 p.m. Eastern Time. To access the call, please dial 877-876-9177 or 785-424-1666 at least five minutes prior to the 4:30 p.m. Eastern Time start time. A live webcast of the call will be available on the Investor Relations section of the Company’s website at http://ir.elliemae.com. An audio replay of the call will be available through February 25, 2016 by dialing 888-203-1112 or 719-457-0820 and entering access code 9605419.

Use of Non-GAAP Financial Measures

Ellie Mae (the “Company”) provides investors with the non-GAAP financial measures of adjusted net income, adjusted EBITDA, and free cash flow in addition to the traditional GAAP operating performance measure of net income as part of its overall assessment of its performance. Adjusted net income consists of net income plus amortization of intangible assets, impairment loss on intangible assets, and stock-based compensation expense. EBITDA consists of net income plus depreciation, amortization of intangible assets, impairment loss on intangible assets, and income tax provision, less other income, net and income tax benefit. Adjusted EBITDA consists of EBITDA plus stock-based compensation expense. Free cash flow consists of net cash provided by operating activities less acquisition of property and equipment and internal-use software, net. Ellie Mae uses adjusted net income and adjusted EBITDA as measures of operating performance because they enable period to period comparisons by excluding potential differences caused by variations in the age and depreciable lives of fixed assets, the amortization of intangibles related to acquisitions, loss on impairment of intangible assets, and changes in interest expense and interest income that are influenced by capital market conditions. The Company also believes it is useful to exclude stock-based compensation expense from adjusted net income and adjusted EBITDA because the amount of non-cash expense associated with stock-based awards made at certain prices and points in time (a) do not necessarily reflect how the company’s business is performing at any particular time and (b) can vary significantly between periods due to the timing of new stock-based awards. These non-GAAP measures are not measurements of the Company’s financial performance under GAAP and have limitations as analytical tools. Accordingly, these non-GAAP financial measures should not be considered a substitute for, or superior to, net income or operating income or other financial measures calculated in accordance with GAAP. The Company cautions that other companies in Ellie Mae’s industry may calculate adjusted net income, EBITDA, and adjusted EBITDA differently than the Company does, further limiting their usefulness as a comparative measure. A reconciliation of net income to adjusted net income and adjusted EBITDA is included in the tables below.

Disclosure Information

Ellie Mae uses the investor relations section on its website as means of complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Ellie Mae’s investor relations website in addition to following Ellie Mae’s press releases, SEC filings, and public conference calls and webcasts.

About Ellie Mae

Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Mortgage lenders of all sizes use Ellie Mae’s Encompass® all-in-one mortgage management solution, Mavent Compliance Service, and AllRegs research, reference and education resources to improve compliance, loan quality, and efficiency across the entire mortgage lifecycle. Visit EllieMae.com or call 877.355.4362 to learn more.

Forward-Looking Statements

This press release contains forward-looking statements under the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements include projected revenue, net income (loss), adjusted EBITDA, and adjusted net income for the first quarter and fiscal year 2016. These statements involve known and unknown risks, uncertainties, and other factors which may cause Ellie Mae’s results to be materially different than those expressed or implied in such statements. Such differences may be based on factors such as changes in the volume of residential mortgages in the United States; changes in other macroeconomic factors affecting the residential real estate industry; changes in strategic planning decisions by management; our ability to manage growth and expenses as we continue to scale our business; reallocation of internal resources; costs incurred and delays in developing new products; changes in anticipated rates of existing customer conversions and SaaS seat additions, and new customer acquisitions; the possibility that economic benefits of future opportunities may never materialize, including unexpected variations in market growth and demand for the acquired products and technologies; delays and disruptions, including changing relationships with partners, customers, employees or suppliers; the satisfactory performance, reliability and availability of our products and services; the amount of costs incurred in connection with supporting and integrating new customers and partners; ongoing personnel and logistical challenges of managing a larger organization; changes in other macroeconomic factors affecting the residential real estate industry and other risk factors included in documents that Ellie Mae has filed with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2014 as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on Ellie Mae’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Ellie Mae cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Ellie Mae expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances, unless otherwise required by law.

© 2016 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, DataTrac®, Ellie Mae Network™, Mavent®, Mortgage Returns®, Prospect Manager, Total Quality Loan™, True CRM®, TQL™ and the Ellie Mae logo are trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

               
Ellie Mae, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)
               
               
        December 31,     December 31,
        2015     2014
Assets              
Current assets:              
Cash and cash equivalents       $ 34,396       $ 26,756  
Short-term investments         48,975         49,352  
Accounts receivable, net of allowances for doubtful accounts of $124 and $66 as of December 31, 2015 and December 31, 2014, respectively         28,568         20,403  
Prepaid expenses and other current assets         9,874         16,021  
Total current assets         121,813         112,532  
Property and equipment, net         81,360         28,694  
Long-term investments         55,473         58,679  
Intangible assets, net         22,810         21,452  
Deposits and other assets         8,888         3,425  
Goodwill         74,547         65,338  
Total assets       $ 364,891       $ 290,120  
Liabilities and Stockholders’ Equity              
Current liabilities:              
Accounts payable       $ 9,911       $ 6,726  
Accrued and other current liabilities         37,307         16,822  
Acquisition holdback, net of discount                 522  
Deferred revenue         15,864         9,729  
Total current liabilities         63,082         33,799  
Leases payable, net of current portion         685         443  
Other long-term liabilities         10,273         2,994  
Total liabilities         74,040         37,236  
               
Stockholders’ equity:              
Common stock, $0.0001 par value per share; 140,000,000 authorized shares, 29,566,511 and 28,907,147 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively         3         3  
Additional paid-in capital         285,342         242,527  
Accumulated other comprehensive loss         (257 )       (95 )
Retained earnings         5,763         10,449  
Total stockholders’ equity         290,851         252,884  
Total liabilities and stockholders’ equity       $ 364,891       $ 290,120  
                       
 
Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share amounts)
                           
                           
        Quarter ended December 31,     Year ended December 31,
        2015     2014     2015     2014
Revenues       $ 64,867       $ 46,577       $ 253,937       $ 161,537  
Cost of revenues(1)         23,555         14,720         84,208         46,283  
Gross profit         41,312         31,857         169,729         115,254  
Operating expenses:                          
Sales and marketing(1)         10,562         7,753         38,208         26,544  
Research and development(1)         11,734         8,880         40,451         28,228  
General and administrative(1)         14,103         11,261         57,212         39,361  
Total operating expenses         36,399         27,894         135,871         94,133  
Income from operations         4,913         3,963         33,858         21,121  
Other income, net         180         145         619         488  
Income before income taxes         5,093         4,108         34,477         21,609  
Income tax provision (benefit)         271         (192 )       12,219         6,786  
Net income       $ 4,822       $ 4,300       $ 22,258       $ 14,823  
Net income per share of common stock:                          
Basic       $ 0.16       $ 0.15       $ 0.76       $ 0.53  
Diluted       $ 0.16       $ 0.14       $ 0.72       $ 0.50  
Weighted average common shares used in computing net income per share of common stock:        
Basic         29,483,605         28,457,087         29,179,352         27,858,828  
Diluted         30,959,344         30,068,225         30,842,584         29,593,873  
                           
Net income       $ 4,822       $ 4,300       $ 22,258       $ 14,823  
Other comprehensive income, net of taxes:                          
Unrealized loss on investments         (319 )       (58 )       (162 )       (61 )
Comprehensive income       $ 4,503       $ 4,242       $ 22,096       $ 14,762  
                           
(1) Includes stock-based compensation expense of the following for the periods presented:
                           
Cost of revenues       $ 1,029       $ 514       $ 3,218       $ 1,579  
Sales and marketing         779         435         2,752         1,562  
Research and development         1,470         1,062         5,431         3,672  
General and administrative         3,359         1,997         12,840         7,735  
        $ 6,637       $ 4,008       $ 24,241       $ 14,548  
                                           
               
Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
               
               
        Year ended December 31,
        2015     2014
CASH FLOWS FROM OPERATING ACTIVITIES:              
Net income       $ 22,258       $ 14,823  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation         10,842         5,605  
Provision for uncollectible accounts receivable         31         1  
Amortization of intangible assets         5,180         2,779  
Impairment loss on intangible assets         562         1,968  
Amortization of discount related to acquisition holdback                 36  
Legal settlement         (522 )        
Stock-based compensation expense         24,241         14,548  
Excess tax benefit from exercise of stock options         (11,387 )       (5,852 )

Loss on sale of property and equipment

        97         693  
Deferred income taxes         2,823         395  
Amortization of investment premium         1,033         1,280  
Changes in operating assets and liabilities:              
Accounts receivable         (7,974 )       (8,380 )
Prepaid expenses and other current assets         1,381         (4,867 )
Deposits and other assets         (1,985 )       (1,146 )
Accounts payable        

290

        2,675  
Accrued, other current and other liabilities         34,511         13,436  
Deferred revenue         5,849         2,604  

Net cash provided by operating activities

       

87,230

        40,598  
CASH FLOWS FROM INVESTING ACTIVITIES:              
Acquisition of property and equipment        

(24,768

)       (6,813 )
Acquisition of internal-use software        

(27,608

)       (13,021 )
Proceeds from sale of property and equipment         58          
Purchases of investments         (60,816 )       (64,748 )
Maturities of investments         63,204         57,986  
Acquisitions, net of cash acquired         (16,419 )       (34,641 )

Net cash used in investing activities

       

(66,349

)       (61,237 )
CASH FLOWS FROM FINANCING ACTIVITIES:              
Payment of capital lease obligations         (3,745 )       (1,178 )
Proceeds from issuance of common stock under employee stock plans         14,199         10,161  
Payments for repurchase of common stock         (31,530 )        
Tax payments related to shares withheld for vested restricted stock units         (3,552 )       (902 )
Excess tax benefit from stock-based compensation         11,387         5,852  

Net cash provided by (used in) financing activities

        (13,241 )       13,933  
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         7,640         (6,706 )
CASH AND CASH EQUIVALENTS, Beginning of period         26,756         33,462  
CASH AND CASH EQUIVALENTS, End of period       $ 34,396       $ 26,756  
Supplemental disclosure of cash flow information:              
Cash paid for interest       $ 133       $ 40  
Cash paid for income taxes       $ 104       $ 126  
Supplemental disclosure of non-cash investing and financing activities:              
Fixed asset purchases accrued but not paid       $ 3,662       $ 921  
Stock-based compensation capitalized to property and equipment       $ 1,126       $ 534  
Acquisition of property and equipment under capital leases       $ 6,998       $ 1,269  
                       
                           
Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
                           
                           
        Quarter ended December 31,     Year ended December 31,
        2015     2014     2015     2014
Net income       $ 4,822       $ 4,300       $ 22,258       $ 14,823  
Depreciation         3,518         1,672         10,842         5,605  
Amortization of intangible assets         1,491         1,204         5,180         2,779  
Other income, net         (180 )       (145 )       (619 )       (488 )
Impairment loss on intangible assets         562         1,968         562         1,968  
Income tax provision (benefit)         271         (192 )       12,219         6,786  
EBITDA         10,484         8,807         50,442         31,473  
                           
Stock-based compensation expense         6,637         4,008         24,241         14,548  
Adjusted EBITDA       $ 17,121       $ 12,815       $ 74,683       $ 46,021  
                           
Net income       $ 4,822       $ 4,300       $ 22,258       $ 14,823  
Stock-based compensation expense         6,637         4,008         24,241         14,548  
Impairment loss on intangible assets         562         1,968         562         1,968  
Amortization of intangible assets         1,491         1,204         5,180         2,779  
Adjusted net income       $ 13,512       $ 11,480       $ 52,241       $ 34,118  
                           
Shares used to compute non-GAAP net income per share                          
Basic         29,483,605         28,457,087         29,179,352         27,858,828  
Diluted         30,959,344         30,068,225         30,842,584         29,593,873  
                           
Adjusted net income per share                          
Basic       $ 0.46       $ 0.40       $ 1.79       $ 1.22  
Diluted       $ 0.44       $ 0.38       $ 1.69       $ 1.15  
                           
Net cash provided by operating activities       $

22,694

      $ 15,818       $

87,230

      $ 40,598  
Acquisition of property and equipment and internal-use software, net        

(10,993

)       (6,995 )      

(52,318

)       (19,834 )
Free cash flow       $

11,701

      $ 8,823       $ 34,912       $ 20,764  
                                           
                           
Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
                           
                           
        First Quarter 2016 Projected Range   Fiscal 2016 Projected Range
Net income       $ 1,000     $ 1,500     $ 22,200     $ 24,200
                           
Depreciation         4,800       4,800       21,000       21,800
Amortization of intangible assets         1,500       1,500       5,800       6,100
Income tax provision/other         300       600       12,900       13,600
EBITDA         7,600       8,400       61,900       65,700
                           
Stock-based compensation expense         6,400       6,700       28,100       28,800
Adjusted EBITDA       $ 14,000     $ 15,100     $ 90,000     $ 94,500
                           
Net income       $ 1,000     $ 1,500     $ 22,200     $ 24,200
Stock-based compensation expense         6,400       6,700       28,100       28,800
Amortization of intangible assets         1,500       1,500       5,800       6,100
Adjusted net income       $ 8,900     $ 9,700     $ 56,100     $ 59,100
                           
Shares used to compute non-GAAP net income per share                          
Basic         29,500,000       29,500,000       29,600,000       30,100,000
Diluted         31,200,000       31,200,000       31,300,000       31,800,000
                           
Projected net income per share                          
Basic       $ 0.03     $ 0.05     $ 0.75     $ 0.80
Diluted       $ 0.03     $ 0.05     $ 0.71     $ 0.76
                           
Adjusted net income per share                          
Basic       $ 0.30     $ 0.33     $ 1.90     $ 1.96
Diluted       $ 0.29     $ 0.31     $ 1.79     $ 1.86

 

Source: Ellie Mae, Inc.

IR Contacts:
Ellie Mae, Inc.
Edgar Luce, 925-227-7079
Executive VP and CFO
IR@elliemae.com
or
The Blueshirt Group for Ellie Mae, Inc.
Lisa Laukkanen, 415-217-4967
lisa@blueshirtgroup.com