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Ellie Mae Reports Second Quarter 2015 Results

July 30, 2015 at 4:06 PM EDT

Record Quarterly Revenue of $65.9 Million

Record Quarterly Seat Bookings of 11,800

Raises 2015 Revenue Guidance

PLEASANTON, Calif.--(BUSINESS WIRE)--Jul. 30, 2015-- 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 second quarter ended June 30, 2015.

Second Quarter 2015 Highlights

  • Record revenue of $65.9 million, up 65% from $40.0 million in Q2 2014
  • Net income of $7.6 million, up 62% from $4.7 million in Q2 2014
  • Adjusted EBITDA of $22.7 million, up 72% from $13.2 million in Q2 2014
  • Revenue per average active Encompass user of $526, up 28% from $410 in Q2 2014

“Ellie Mae had a very strong second quarter with financial results that exceeded expectations and record seat bookings of 11,800,” said Jonathan Corr, president and CEO of Ellie Mae. “With a healthy pick up in the purchase market, our customers continued to grow their businesses and close more loans during the quarter. The increased productivity of our customer base and continued adoption across our product portfolio drove a 28% year-over-year increase in average revenue per user. Our highly differentiated approach to meeting lenders’ needs for loan quality, regulatory compliance and operating efficiency has resulted in growth that outpaced the overall mortgage origination market as we continued to capture market share.”

Financial Results

Total revenue for the second quarter of 2015 was $65.9 million, compared to $40.0 million for the second quarter of 2014. Net income for the second quarter of 2015 was $7.6 million, or $0.25 per diluted share, compared to net income of $4.7 million, or $0.16 per diluted share, for the second quarter of 2014.

On a non-GAAP basis, adjusted net income for the second quarter of 2015 was $14.9 million, or $0.48 per diluted share, compared to $9.4 million, or $0.32 per diluted share, for the second quarter of 2014. Adjusted EBITDA for the second quarter of 2015 was $22.7 million, compared to $13.2 million for the second quarter of 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 28% year-over-year to 127,000;
  • The total number of active users of the SaaS version of Encompass increased 47% year-over-year to 106,000, or 84% of all active Encompass users;
  • Total On-Demand revenue in the second quarter increased 70% year-over-year to $64.8 million, representing 98% of total revenue for the second quarter of 2015; and
  • Revenue per average active Encompass user in the second quarter increased 28% year-over-year to $526.

Third Quarter and Full Year 2015 Financial Outlook

For the third quarter of 2015, we expect revenue to be in the range of $61.0 million to $62.0 million. Net income is expected to be in the range of $1.8 million to $2.5 million, or $0.06 to $0.08 per diluted share. Adjusted net income is expected to be in the range of $9.8 million to $10.8 million, or $0.31 to $0.34 per diluted share. Adjusted EBITDA is expected to be in the range of $14.6 million to $16.3 million for the quarter.

For the full year 2015, revenue is expected to be in the range of $237.5 million to $238.5 million, up from the previously provided range of $223.0 million to $226.0 million. Net income is expected to be in the range of $10.0 million to $11.5 million, or $0.32 to $0.37 per diluted share, up from the previously provided range of $4.0 million to $5.0 million, or $0.13 to $0.16 per diluted share. Adjusted net income is expected to be in the range of $39.4 million to $41.6 million, or $1.27 to $1.32 per diluted share, up from the previously provided range of $34.4 million to $36.1 million, or $1.09 to $1.13 per diluted share. Adjusted EBITDA is expected to be in the range of $57.7 million to $61.6 million, up from the previously provided range of $48.6 million to $51.3 million.

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 and stock-based compensation expense. EBITDA consists of net income plus depreciation, amortization of intangible assets, other income, net and income tax provision. Adjusted EBITDA consists of EBITDA plus stock-based compensation expense. Free cash flow is calculated by subtracting cash paid for the acquisition of property and equipment from net cash provided by operating activities. 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, 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. Ellie Mae uses free cash flow as a complementary measure to its entire consolidated statements of cash flows since purchases of property and equipment are a necessary component of ongoing operations. 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, or as an alternative to cash flows from operating activities as a measure of the Company’s profitability or liquidity. The Company cautions that other companies in Ellie Mae’s industry may calculate adjusted net income 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.

Quarterly Conference Call

Ellie Mae will discuss its second quarter 2015 results today, July 30, 2015, via teleconference at 4:30 p.m. Eastern Time. To access the call, please dial 888-812-8534 or 913-312-0379 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 August 13, 2015 by dialing 888-203-1112 or 719-457-0820 and entering access code 2271372.

About Ellie Mae

Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Ellie Mae’s Encompass® all-in-one mortgage management solution provides one system of record that allows banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency. 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, adjusted EBITDA and adjusted net income for the second quarter and fiscal year 2015. 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 mortgage volume 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; 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.

©2015 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, DataTrac®, Ellie Mae Network™, Total Quality Loan™, 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)
               
        June 30,     December 31,
        2015     2014
Assets              
Current assets:              
Cash and cash equivalents       $ 34,918     $ 26,756  
Short-term investments         57,116       49,352  
Accounts receivable, net of allowances for doubtful accounts of $58 and $66 as of June 30, 2015 and December 31, 2014, respectively         29,168       20,403  
Prepaid expenses and other current assets         11,433       16,021  
Total current assets         132,635       112,532  
Property and equipment, net         62,962       28,694  
Long-term investments         50,119       58,679  
Intangible assets, net         18,941       21,452  
Goodwill         65,338       65,338  
Deposits and other assets         8,319       3,425  
Total assets       $ 338,314     $ 290,120  
Liabilities and Stockholders’ Equity              
Current liabilities:              
Accounts payable       $ 6,508     $ 6,726  
Accrued and other current liabilities         24,640       16,822  
Acquisition holdback, net of discount         522       522  
Deferred revenue         14,289       9,729  
Total current liabilities         45,959       33,799  
Leases payable, net of current portion         2,146       443  
Other long-term liabilities         13,369       2,994  
Total liabilities         61,474       37,236  
               
Stockholders’ equity:              
Common stock, $0.0001 par value per share; 140,000,000 authorized shares, 29,566,184 and 28,907,147 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively         3       3  
Additional paid-in capital         262,680       242,527  
Accumulated other comprehensive income (loss)         35       (95 )
Retained earnings         14,122       10,449  
Total stockholders’ equity         276,840       252,884  
Total liabilities and stockholders’ equity       $ 338,314     $ 290,120  
                     
                           
Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share amounts)
                           
        Three Months ended June 30,     Six Months ended June 30,
        2015     2014     2015     2014
Revenues       $ 65,942       $ 39,984     $ 120,131     $ 72,162
Cost of revenues         20,862         10,576       38,212       19,894
Gross profit         45,080         29,408       81,919       52,268
Operating expenses:                          
Sales and marketing         8,804         6,451       18,564       12,546
Research and development         9,282         6,077       17,579       12,892
General and administrative         14,149         9,551       26,451       18,544
Total operating expenses         32,235         22,079       62,594       43,982
Income from operations         12,845         7,329       19,325       8,286
Other income, net         153         109       285       209
Income before income taxes         12,998         7,438       19,610       8,495
Income tax provision         5,368         2,714       8,396       2,989
Net income       $ 7,630       $ 4,724     $ 11,214     $ 5,506
Net income per share of common stock:                          
Basic       $ 0.26       $ 0.17     $ 0.39     $ 0.20
Diluted       $ 0.25       $ 0.16     $ 0.37     $ 0.19
Weighted average common shares used in computing net income per share of common stock:                          
Basic         29,092,149         27,617,142       28,931,042       27,479,035
Diluted         30,807,417         29,288,928       30,643,071       29,192,867
                           
Net income       $ 7,630       $ 4,724     $ 11,214     $ 5,506
Other comprehensive income, net of taxes:                          
Unrealized gain (loss) on investments         (41 )       75       130       72
Comprehensive income       $ 7,589       $ 4,799     $ 11,344     $ 5,578
                           
               
Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
               
        Six Months ended June 30,
        2015     2014
CASH FLOWS FROM OPERATING ACTIVITIES:              
Net income       $ 11,214       $ 5,506  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation         4,310         2,438  
Provision for uncollectible accounts receivable         (6 )       58  
Amortization of intangible assets         2,511         1,040  
Amortization of discount related to acquisition holdback                 29  
Stock-based compensation expense         11,084         7,488  
Excess tax benefit from stock-based compensation         (3,852 )       (2,256 )
Loss on disposal of property and equipment         90          
Amortization of investment premium         530         669  
Deferred income taxes         6,433          
Changes in operating assets and liabilities:              
Accounts receivable         (8,759 )       (4,815 )
Prepaid expenses and other current assets         4,592         1,401  
Deposits and other assets         (762 )       (342 )
Accounts payable         (984 )       374  
Accrued, other current and other liabilities         7,821         2,394  
Deferred revenue         4,628         (181 )
Net cash provided by operating activities         38,850         13,803  
CASH FLOWS FROM INVESTING ACTIVITIES:              
Acquisition of property and equipment         (17,196 )       (1,322 )
Acquisition of internal-use software         (13,260 )       (6,099 )
Proceeds from sale of property and equipment         37          
Purchases of investments         (28,306 )       (38,867 )
Maturities of investments         28,703         32,466  
Acquisitions, net of cash acquired                 (4,500 )
Net cash used in investing activities         (30,022 )       (18,322 )
CASH FLOWS FROM FINANCING ACTIVITIES:              
Payment of capital lease obligations         (1,730 )       (735 )
Proceeds from issuance of common stock under employee stock plans         8,579         4,038  
Payments for repurchase of common stock         (8,830 )        
Tax payments related to shares withheld for vested restricted stock units         (2,537 )       (501 )
Excess tax benefit from stock-based compensation         3,852         2,256  
Net cash provided by (used in) financing activities         (666 )       5,058  
NET INCREASE IN CASH AND CASH EQUIVALENTS         8,162         539  
CASH AND CASH EQUIVALENTS, Beginning of period         26,756         33,462  
CASH AND CASH EQUIVALENTS, End of period       $ 34,918       $ 34,001  
Supplemental disclosure of cash flow information:              
Cash paid for interest       $ 69       $ 39  
Cash paid for income taxes       $ 511       $ 18  
Supplemental disclosure of non-cash investing and financing activities:              
Fixed asset purchases not yet paid       $ 1,687       $ 404  
Stock-based compensation capitalized to property and equipment       $ 464       $ 210  
Acquisition of property and equipment under capital leases       $ 7,020       $ 1,195  
                       
                           
Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
                           
        Three Months ended June 30,     Six Months ended June 30,
        2015     2014     2015     2014
Net income       $ 7,630       $ 4,724       $ 11,214       $ 5,506  
Depreciation         2,543         1,163         4,310         2,438  
Amortization of intangible assets         1,179         535         2,511         1,040  
Other income, net         (63 )       (109 )       (195 )       (209 )
Income tax provision         5,368         2,714         8,396         2,989  
EBITDA         16,657         9,027         26,236         11,764  
                           
Stock-based compensation expense         6,077         4,178         11,084         7,488  
Adjusted EBITDA       $ 22,734       $ 13,205       $ 37,320       $ 19,252  
                           
Net income       $ 7,630       $ 4,724       $ 11,214       $ 5,506  
Stock-based compensation expense         6,077         4,178         11,084         7,488  
Amortization of intangible assets         1,179         535         2,511         1,040  
Adjusted net income       $ 14,886       $ 9,437       $ 24,809       $ 14,034  
                           
Shares used to compute non-GAAP net income per share                          
Basic         29,092,149         27,617,142         28,931,042         27,479,035  
Diluted         30,807,417         29,288,928         30,643,071         29,192,867  
                           
Adjusted net income per share                          
Basic       $ 0.51       $ 0.34       $ 0.86       $ 0.51  
Diluted       $ 0.48       $ 0.32       $ 0.81       $ 0.48  
                           
Net cash provided by operating activities       $ 27,904       $ 11,680       $ 38,850       $ 13,803  
Acquisition of property and equipment         (14,441 )       (4,873 )       (30,456 )       (7,421 )
Free cash flow       $ 13,463       $ 6,807       $ 8,394       $ 6,382  
                           
                           
Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
                           
        Third Quarter 2015 Projected Range     Fiscal 2015 Projected Range
Net income       $ 1,800     $ 2,500     $ 10,000     $ 11,500
                           
Depreciation         2,800       3,000       10,700       11,300
Amortization of intangible assets         1,200       1,300       4,900       5,100
Income tax provision/other         2,000       2,500       7,600       8,700
EBITDA         7,800       9,300       33,200       36,600
                           
Stock-based compensation expense         6,800       7,000       24,500       25,000
Adjusted EBITDA       $ 14,600     $ 16,300     $ 57,700     $ 61,600
                           
Net income       $ 1,800     $ 2,500     $ 10,000     $ 11,500
Stock-based compensation expense         6,800       7,000       24,500       25,000
Amortization of intangible assets         1,200       1,300       4,900       5,100
Adjusted net income       $ 9,800     $ 10,800     $ 39,400     $ 41,600
                           
Shares used to compute non-GAAP net income per share                          
Basic         29,000,000       30,000,000       29,000,000       29,500,000
Diluted         31,500,000       32,000,000       31,000,000       31,500,000
                           
Projected net income per share                          
Basic       $ 0.06     $ 0.08     $ 0.34     $ 0.39
Diluted       $ 0.06     $ 0.08     $ 0.32     $ 0.37
                           
Adjusted net income per share                          
Basic       $ 0.34     $ 0.36     $ 1.36     $ 1.41
Diluted       $ 0.31     $ 0.34     $ 1.27     $ 1.32
                           

 

Source: Ellie Mae, Inc.

Ellie Mae, Inc.
Edgar Luce, 925-227-7079
Executive VP and CFO
IR@elliemae.com
or
Michelle Gable, 925-227-7108
Vice President, Investor Relations
michelle.gable@elliemae.com