RealPage, Inc. (NASDAQ: RP), a leading global provider of
software and data analytics to the real estate industry, today
announced financial results for the fourth quarter and full year
ended December 31, 2020.
Fourth Quarter 2020 Financial Highlights
- GAAP total revenue of $298.1 million, an increase of 17%
year-over-year;
- Net income of $13.1 million, or $0.12 in net income per diluted
share, a year-over-year decrease of 35% and 43%, respectively;
- Adjusted EBITDA of $84.9 million, an increase of 12%
year-over-year; and,
- Non-GAAP net income of $51.4 million, or $0.50 in non-GAAP net
income per diluted share, a year-over-year increase of 14% and 4%,
respectively.
Full Year 2020 Financial Highlights
- GAAP total revenue of $1.2 billion, an increase of 17%
year-over-year;
- Net income of $46.3 million, or $0.46 in net income per diluted
share, a year-over-year decrease of 20% and 23%, respectively;
- Adjusted EBITDA of $322.5 million, an increase of 14%
year-over-year; and,
- Non-GAAP net income of $191.3 million, or $1.94 in non-GAAP net
income per diluted share, a year-over-year increase of 16% and 10%,
respectively.
Comments on the News
“In the fourth quarter, we continued to execute on our long-term
strategy, and delivered another quarter of strong financial
results. This performance continues to demonstrate the industry’s
need for digital solutions and the capabilities of the superior
products RealPage has built over the last two decades,” said Steve
Winn, Chairman and CEO of RealPage.
“During the fourth quarter, as our customers continued their
shift to a work-from-home model, RealPage was there with immediate
solutions that were easy to implement and provided real-time
returns on investment,” Winn continued. “In addition, at
quarter-end, we closed the acquisition of WhiteSky Communications,
a move that completed the CommunityConnect trifecta of smart
building offerings and positions us to enter the surging market for
multifamily bulk Wi-Fi services.”
Thoma Bravo Transaction
On December 21, 2020, the Company announced that it entered into
a definitive agreement to be acquired by Thoma Bravo, a leading
private equity investment firm focused on the software and
technology-enabled services sector, in an all-cash transaction that
values RealPage at approximately $10.2 billion, including net debt.
Subject to the terms, conditions and certain exceptions set forth
in the merger agreement, RealPage stockholders will receive $88.75
per share in cash, less any applicable withholding taxes, upon
completion of the transaction. On February 3, 2021, the 45-day
“go-shop” period expired pursuant to the Company’s previously
announced definitive merger agreement with Thoma Bravo. During the
“go-shop” period, RealPage and its advisors actively solicited
alternative acquisition proposals from third parties. As of
expiration of the “go-shop” period, no party had submitted an
alternative proposal to acquire RealPage.
The transaction is expected to be completed in the second
calendar quarter of 2021. On February 4, 2021, the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act expired. The transaction remains subject to receipt of
stockholder approval, remaining regulatory approvals and
satisfaction of other customary closing conditions. RealPage has
scheduled a special meeting of stockholders for March 8, 2021 for
RealPage stockholders to vote on the proposed transaction. Please
refer to the definitive proxy statement dated February 5, 2021 for
additional details regarding the transaction and the stockholder
meeting.
As a result of the Thoma Bravo proposed transaction, the Company
will not host an earnings conference call or provide financial
guidance.
About RealPage
RealPage provides a technology platform that enables real estate
owners and managers to change how people experience and use rental
space. Clients use the platform to gain transparency in asset
performance, leverage data insights and monetize space to create
incremental yields. Founded in 1998 and headquartered in
Richardson, Texas, RealPage currently serves over 19 million units
worldwide from offices in North America, Europe and Asia. For more
information about RealPage, please visit
https://www.RealPage.com.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains “forward-looking statements,” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbor
created by such sections and other applicable laws. Such
forward-looking statements include statements relating to
RealPage’s strategy, goals, future focus areas and the value of the
proposed transaction to RealPage stockholders. These
forward-looking statements are based on RealPage management's
beliefs and assumptions and on information currently available to
management. Forward-looking statements include all statements that
are not historical facts and may be identified by terms such as
“expects,” “believes,” ”plans,” or similar expressions and the
negatives of those terms. These forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may
cause actual results, performance or achievements to be materially
different from any future results, performance or achievements,
expressed or implied by the forward-looking statements, including
the uncertainty associated with the potential impacts of the
COVID-19 pandemic on RealPage’s business, financial condition, and
results of operations. Additional factors that could cause or
contribute to such differences include, but are not limited to, the
following: (a) risks related to the satisfaction of the conditions
to closing the proposed transaction (including the failure to
obtain necessary regulatory approvals and the requisite approval of
the stockholders) in the anticipated timeframe or at all; (b) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement; (c) risks
related to disruption of management's attention from RealPage’s
ongoing business operations due to the proposed transaction; (d)
disruption from the proposed transaction making it difficult to
maintain business and operational relationships, including
retaining and hiring key personnel and maintaining relationships
with RealPage’s customers, vendors and others with whom it does
business; (e) significant transaction costs; (f) litigation and/or
regulatory actions related to the proposed transaction; (g) the
possibility that general economic conditions, including leasing
velocity or other uncertainty, and conditions and uncertainty
caused by the COVID-19 pandemic, could cause information technology
spending, particularly in the rental housing industry, to be
reduced or purchasing decisions to be delayed; (h) an increase in
insurance claims; (i) an increase in client cancellations; (j) the
inability to increase sales to existing clients and to attract new
clients; (k) RealPage’s failure to integrate recent or future
acquired businesses successfully or to achieve expected synergies,
including recently completed acquisitions of WhiteSky
Communications, Chirp, Stratis, Modern Message, Buildium, Investor
Management Services, Simple Bills, Hipercept, and Lease Term
Solutions; (l) the timing and success of new product introductions
by RealPage or its competitors; (m) changes in RealPage’s pricing
policies or those of its competitors; (n) developments with respect
to legal or regulatory proceedings; (o) the inability to achieve
revenue growth or to enable margin expansion; (p) changes in
RealPage’s estimates with respect to its long-term corporate tax
rate or any other impact from the Tax Cuts and Jobs Act; and (q)
such other risks and uncertainties described more fully in
documents filed with or furnished to the Securities and Exchange
Commission (the “SEC”) by RealPage, including its Annual Report on
Form 10-K previously filed with the SEC on March 2, 2020 and its
Quarterly Report on Form 10-Q previously filed with the SEC on
November 6, 2020. All information provided in this communication is
as of the date hereof and RealPage undertakes no duty to update
this information except as required by law.
Additional Information and Where to Find It
In connection with the proposed transaction between RealPage and
Thoma Bravo, RealPage filed with the SEC a definitive Proxy
Statement (the “Proxy Statement”) on February 5, 2021. RealPage
commenced mailing the Proxy Statement to its stockholders on or
about February 5, 2021. REALPAGE URGES YOU TO READ THE PROXY
STATEMENT AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH
THE SEC CAREFULLY AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT REALPAGE, THOMA BRAVO, THE
PROPOSED TRANSACTION AND RELATED MATTERS. You may obtain a free
copy of the Proxy Statement and other related documents filed by
RealPage with the SEC at the website maintained by the SEC at
www.sec.gov. You also may obtain a free copy of the Proxy Statement
and other documents filed by RealPage with the SEC by accessing the
Investor Relations section of RealPage’s website at
investor.realpage.com or by contacting RealPage’s Investor
Relations at IR@realpage.com or calling (972) 810-8138.
Participants in the Solicitation
RealPage and certain of its directors, executive officers and
employees may be considered to be participants in the solicitation
of proxies from RealPage’s stockholders in connection with the
proposed transaction. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the
solicitation of the stockholders of RealPage in connection with the
proposed transaction, including a description of their respective
direct or indirect interests, by security holdings or otherwise is
included in the Proxy Statement filed with the SEC. You may also
find additional information about RealPage’s directors and
executive officers in RealPage’s proxy statement for its 2020
Annual Meeting of Stockholders, which was filed with the SEC on
April 29, 2020 and in subsequently filed Current Reports on Form
8-K and Quarterly Reports on Form 10-Q. You can obtain free copies
of these documents from RealPage using the contact information
above.
Explanation of Non-GAAP Financial Measures
The company reports its financial results in accordance with
accounting principles generally accepted in the United States of
America, or GAAP. However, the company believes that, in order to
properly understand its short-term and long-term financial,
operational and strategic trends, it may be helpful for investors
to exclude certain non-cash or non-recurring items when used as a
supplement to financial performance measures in accordance with
GAAP. These items result from facts and circumstances that vary in
both frequency and impact on continuing operations. The company
also uses results of operations excluding such items to evaluate
the operating performance of RealPage and compare it against prior
periods, make operating decisions, determine executive
compensation, and serve as a basis for long-term strategic
planning. These non-GAAP financial measures provide the company
with additional means to understand and evaluate the operating
results and trends in its ongoing business by eliminating certain
non-cash expenses and other items that RealPage believes might
otherwise make comparisons of its ongoing business with prior
periods more difficult, obscure trends in ongoing operations,
reduce management’s ability to make useful forecasts, or obscure
the ability to evaluate the effectiveness of certain business
strategies and management incentive structures. In addition, the
company also believes that investors and financial analysts find
this information to be helpful in analyzing the company’s financial
and operational performance and comparing this performance to the
company’s peers and competitors.
The company defines “Non-GAAP Total Revenue” as total revenue
plus acquisition-related deferred revenue. The company believes it
is useful to include deferred revenue written down for GAAP
purposes under purchase accounting rules in order to appropriately
measure the underlying performance of its business operations in
the period of activity and associated expense. Further, the company
believes this measure is useful to investors as a way to evaluate
the company’s ongoing performance because it provides a more
accurate depiction of revenue arising from our strategic
acquisitions.
The company defines “Adjusted Gross Profit” as gross profit,
plus (1) acquisition-related deferred revenue, (2) depreciation,
(3) amortization of product technologies, (4) impairment of product
technologies, (5) organizational realignment costs and (6)
stock-based expense. The company believes that investors and
financial analysts find this non-GAAP financial measure to be
useful in analyzing the company’s financial and operational
performance, comparing this performance to the company’s peers and
competitors, and understanding the company’s ability to generate
income from ongoing business operations.
The company defines “Adjusted EBITDA” as net income, plus (1)
acquisition-related deferred revenue, (2) depreciation, asset
impairment, and loss on disposal of assets, (3) amortization of
product technologies and intangible assets, (4) change in fair
value of equity investment, (5) acquisition-related expense, (6)
organizational realignment costs, (7) regulatory and legal matters,
(8) stock-based expense, (9) interest expense, net, and (10) income
tax expense (benefit). The company believes that investors and
financial analysts find this non-GAAP financial measure to be
useful in analyzing the company’s financial and operational
performance, comparing this performance to the company’s peers and
competitors, and understanding the company’s ability to generate
income from ongoing business operations.
The company defines “Non-GAAP Product Development Expense” as
product development expense, excluding organizational realignment
costs and stock-based expense. The company believes that investors
and financial analysts find this non-GAAP financial measure to be
useful in analyzing the company’s financial and operational
performance, comparing this performance to the company’s peers and
competitors, and understanding the company’s ongoing expenditures
related to product innovation.
The company defines “Non-GAAP Sales and Marketing Expense” as
sales and marketing expense, excluding (1) asset impairment, (2)
organizational realignment costs, and (3) stock-based expense. The
company believes that investors and financial analysts find this
non-GAAP financial measure to be useful in analyzing the company’s
financial and operational performance, comparing this performance
to the company’s peers and competitors, and understanding the
company’s ongoing expenditures related to its sales and marketing
strategies.
The company defines “Non-GAAP General and Administrative
Expense” as general and administrative expense, excluding (1) asset
impairment and loss on disposal of assets, (2) acquisition-related
expense, (3) organizational realignment costs, (4) regulatory and
legal matters, and (5) stock-based expense. The company believes
that investors and financial analysts find this non-GAAP financial
measure to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the
company’s peers and competitors, and understanding the company’s
underlying expense structure to support corporate activities and
processes.
The company defines “Non-GAAP Operating Expense” as operating
expense, excluding (1) asset impairment and loss on disposal of
assets, (2) amortization of intangible assets, (3)
acquisition-related expense, (4) organizational realignment costs,
(5) regulatory and legal matters, and (6) stock-based expense. The
company believes that investors and financial analysts find this
non-GAAP financial measure to be useful in analyzing the company’s
financial and operational performance, comparing this performance
to the company’s peers and competitors, and understanding the
company’s underlying expense structure to support ongoing
operations.
The company defines “Non-GAAP Operating Income” as operating
income, plus (1) acquisition-related deferred revenue, (2) asset
impairment and loss on disposal of assets, (3) amortization of
product technologies and intangible assets, (4) acquisition-related
expense, (5) organizational realignment costs, (6) regulatory and
legal matters, and (7) stock-based expense. The company believes
that investors and financial analysts find this non-GAAP financial
measure to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the
company’s peers and competitors, and understanding the company’s
ability to generate income from ongoing business operations.
The company defines “Non-GAAP Net Income” as net income, plus
(1) income tax expense (benefit), (2) acquisition-related deferred
revenue, (3) asset impairment and loss on disposal of assets, (4)
amortization of product technologies and intangible assets, (5)
change in fair value of equity investment, (6) acquisition-related
expense, (7) organizational realignment costs, (8) regulatory and
legal matters, (9) amortization of convertible notes’ discount, and
(10) stock-based expense, less (11) provision for income tax
expense based on an assumed rate in order to approximate the
company’s long-term effective corporate tax rate.
The company defines “Non-GAAP Net Income per Diluted Share” as
Non-GAAP Net Income divided by Non-GAAP Diluted Weighted Average
Shares Outstanding. The company believes that investors and
financial analysts find this non-GAAP financial measure to be
useful in analyzing the company’s financial and operational
performance, comparing this performance to the company’s peers and
competitors, and understanding the company’s ability to generate
income from ongoing business operations.
The company defines "Non-GAAP Diluted Weighted Average Shares
Outstanding" as diluted weighted average shares outstanding
excluding the impact of shares that are issuable upon conversions
of our convertible notes. It is the current intent of the company
to settle conversions of the convertible notes through combination
settlement, which involves repayment of the principal portion in
cash and any excess of the conversion value over the principal
amount in shares of our common stock. We exclude these shares that
are issuable upon conversions of our convertible notes because we
expect that the dilution from such shares will be offset by the
convertible note hedge transactions and capped call transactions
entered into in May 2017 and May 2020, respectively, in connection
with the issuance of the convertible notes.
The company defines “Non-GAAP On Demand Revenue” as total on
demand revenue plus acquisition-related deferred revenue. The
company believes it is useful to include deferred revenue written
down for GAAP purposes under purchase accounting rules in order to
appropriately measure the underlying performance of the company’s
business operations in the period of activity and associated
expense. Further, the company believes that investors and financial
analysts find this measure to be useful in evaluating the company’s
ongoing performance because it provides a more accurate depiction
of on demand revenue arising from our strategic acquisitions.
The company defines “Ending On Demand Units” as the number of
units managed by our clients with one or more of our on demand
software solutions at the end of the period. We use ending on
demand units to measure the success of our strategy of increasing
the number of units managed with our on demand software solutions.
Property unit counts are provided to us by our customers as new
sales orders are processed. Property unit counts may be adjusted
periodically as information related to our clients’ properties is
updated or supplemented, which could result in adjustments to the
number of units previously reported.
The company defines “Average On Demand Units” as the average of
the beginning and ending on demand units for each quarter in the
period presented. The company’s management monitors this metric to
measure its success in increasing the number of on demand software
solutions utilized by our clients to manage their units, our
overall revenue, and profitability.
The company defines “ACV,” or Annual Client Value, as
management’s estimate of the annual value of the company’s on
demand revenue contracts at a point in time. The company’s
management monitors this metric to measure its success in
increasing the number of on demand units, and the amount of
software solutions utilized by its clients to manage their
units.
The company defines “RPU,” or Revenue Per Unit, as ACV divided
by ending on demand units. The company monitors this metric to
measure its success in increasing the penetration of on demand
software solutions utilized by its clients to manage their
units.
The company excludes or adjusts each of the items identified
below from the applicable non-GAAP financial measure referenced
above for the reasons set forth with respect to each excluded
item:
- Non-GAAP tax rate – The GAAP tax rate includes certain
tax items which may include, but are not limited to: income tax
expenses or benefits that are not related to ongoing business
operations in the current year; unusual or infrequently occurring
items; benefits from stock compensation deductions for tax purposes
that exceed the stock compensation expense recognized for GAAP; tax
adjustments associated with fluctuations in foreign currency
re-measurement; certain changes in estimates of tax matters related
to prior fiscal years; certain changes in the realizability of
deferred tax assets and liabilities; and changes in tax law. The
non-GAAP tax rate excludes the tax effect of these items. We
believe excluding these items assists investors and analysts in
understanding the tax provision and the effective tax rate related
to non-GAAP operations. In 2019, the company used a non-GAAP tax
rate of approximately 26% to approximate the company’s long-term
effective corporate tax rate. During 2019, the company availed
itself of research and development tax credits for both federal and
state and other state tax credits that will impact its long-term
effective tax rate in future periods. For 2020, the company uses a
non-GAAP tax rate of 24% to more align with the expected impact of
the credits and other anticipated impacts of US tax reform as rules
are clarified by the US Treasury and foreign jurisdictional changes
that impact the company’s tax portfolio globally. This non-GAAP tax
rate will be reviewed annually to determine whether it remains
appropriate in consideration of the company’s operating
environment, changes in tax legislation, jurisdictional mix of
earnings, and other factors deemed appropriate and necessary.
- Acquisition-related deferred revenue – This item is
included to reflect deferred revenue written down for GAAP purposes
under purchase accounting in order to appropriately measure the
underlying performance of the company’s business operations in the
period of activity and associated expense.
- Asset impairment and loss on disposal of assets – This
item comprises gains and losses on the disposal and impairment of
long-lived assets, and impairment of intangible assets, which are
not reflective of the company’s ongoing operations. We believe
exclusion of this item facilitates a more accurate comparison of
the company’s results of operations between periods.
- Depreciation of long-lived assets – Long-lived assets
are depreciated over their estimated useful lives in a manner
reflecting the pattern in which the economic benefit is consumed.
Management is limited in its ability to change or influence these
charges after the asset has been acquired and placed in service. We
do not believe that depreciation expense accurately reflects the
performance of our ongoing operations for the period in which the
charges are incurred, and is therefore not considered by management
in making operating decisions.
- Amortization of product technologies and intangible
assets – Intangible assets are amortized over their estimated
useful lives and generally cannot be changed or influenced by the
company after initial capitalization. Accordingly, this item is not
considered by the company in making operating decisions. The
company does not believe such charges accurately reflect the
performance of its ongoing operations for the period in which such
charges are incurred.
- Change in fair value of equity investment – This item
represents changes in fair value of our equity investment based on
observable price changes in orderly transactions for an identical
or similar investment of the same issuer. We believe exclusion of
this item facilitates a more accurate comparison of our results of
operations between periods as this item is not reflective of our
ongoing operations.
- Acquisition-related expense – This item consists of
direct costs incurred in our business acquisition transactions and
expenses related to integration activities, costs associated with
our pending acquisition by Thoma Bravo, and the impact of changes
in the fair value of acquisition-related contingent consideration
obligations. Examples of these direct costs include transaction
fees, due diligence costs, acquisition retention bonuses and
severance, and third-party consultants to assist with integration.
We believe exclusion of this item facilitates a more accurate
comparison of the results of the company’s ongoing operations
across periods and eliminates volatility related to changes in the
fair value of acquisition-related contingent consideration
obligations.
- Organizational realignment – This item consists of
direct costs associated with the alignment of our business
strategies. In connection with these actions, we recognize costs
related to termination benefits, exit costs associated with closure
of facilities, certain asset impairments, cancellation of certain
contracts, and other professional and consulting fees associated
with these initiatives. We believe exclusion of this item
facilitates a more accurate comparison of our ongoing results of
operations between periods.
- Regulatory and legal matters – This item is comprised of
certain regulatory and similar costs and certain legal settlement
costs, such as costs related to the company’s Hart-Scott-Rodino
Antitrust Improvements Act review process incurred in connection
with our acquisitions or the settlement of certain legal matters.
These costs are excluded as they are irregular in timing and scope,
and may not be indicative of our past and future performance. We
believe exclusion of this item facilitates a more accurate
comparison of the company’s results of operations between
periods.
- Amortization of convertible notes’ discount – This item
consists of non-cash interest expense related to the amortization
of the discount recognized on the convertible notes issued in May
2017 and May 2020. Management excludes this item, as it is not
indicative of the company’s ongoing operating performance.
- Stock-based expense – This item is excluded because
these are non-cash expenditures that the company does not consider
part of ongoing operating results when assessing the performance of
our business, and also because the total amount of the expenditure
is partially outside of its control because it is based on factors
such as stock price, volatility, and interest rates, which may be
unrelated to the company’s performance during the period in which
the expenses are incurred.
Consolidated Balance Sheets (in thousands, except
per share and share amounts) (unaudited)
December 31,
December 31,
2020
2019
Assets Current assets: Cash and cash equivalents
$
594,734
$
197,154
Restricted cash
227,522
243,323
Accounts receivable, less allowances of $14,272 and $10,271 at
December 31, 2020 and 2019, respectively
145,681
143,127
Prepaid expenses
29,576
24,539
Other current assets
29,559
27,387
Total current assets
1,027,072
635,530
Property, equipment, and software, net
181,211
163,282
Right-of-use assets
110,637
121,941
Goodwill
1,771,035
1,611,749
Intangible assets, net
344,879
372,996
Deferred tax assets, net
23,471
33,812
Other assets
29,710
30,507
Total assets
$
3,488,015
$
2,969,817
Liabilities and stockholders’ equity Current
liabilities: Accounts payable
$
44,034
$
40,092
Accrued expenses and other current liabilities
116,530
89,038
Current portion of deferred revenue
143,956
134,148
Current portion of term loans
30,000
18,750
Convertible notes, net
318,281
-
Customer deposits held in restricted accounts
227,373
243,316
Total current liabilities
880,174
525,344
Deferred revenue
4,227
4,793
Revolving facility
-
230,000
Term loans, net
545,830
575,313
Convertible notes, net
288,283
305,188
Lease liabilities, net of current portion
121,127
133,313
Other long-term liabilities
33,031
22,940
Total liabilities
1,872,672
1,796,891
Stockholders’ equity: Common stock, $0.001 par value: 250,000,000
shares authorized, 102,694,840 and 96,100,296 shares issued and
102,134,949 and 94,744,157 shares outstanding at December 31, 2020
and 2019, respectively
103
96
Additional paid-in capital
1,603,610
1,222,356
Treasury stock, at cost: 559,891 and 1,356,139 shares at December
31, 2020 and 2019, respectively
(22,070
)
(39,483
)
Retained earnings (deficit)
38,103
(7,695
)
Accumulated other comprehensive loss
(4,403
)
(2,348
)
Total stockholders’ equity
1,615,343
1,172,926
Total liabilities and stockholders’ equity
$
3,488,015
$
2,969,817
Consolidated Statements of Operations (in
thousands, except per share amounts) (unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Revenue: On demand
$
288,569
$
246,235
$
1,125,838
$
953,576
Professional and other
9,486
8,532
32,646
34,560
Total revenue
298,055
254,767
1,158,484
988,136
Cost of revenue(1)
111,845
101,027
442,965
385,712
Amortization of product technologies
15,774
10,732
58,313
40,461
Gross profit
170,436
143,008
657,206
561,963
Operating expenses: Product development(1)
36,614
26,308
133,661
112,222
Sales and marketing(1)
58,837
48,113
218,481
193,962
General and administrative(1)
36,772
35,354
157,608
123,056
Amortization of intangible assets
10,817
9,621
44,689
40,303
Total operating expenses
143,040
119,396
554,439
469,543
Operating income
27,396
23,612
102,767
92,420
Interest expense and other, net
(12,728
)
(9,089
)
(51,460
)
(31,862
)
Income before income taxes
14,668
14,523
51,307
60,558
Income tax expense (benefit)
1,601
(5,646
)
4,993
2,350
Net income
$
13,067
$
20,169
$
46,314
$
58,208
Net income per share attributable to common
stockholders: Basic
$
0.13
$
0.22
$
0.48
$
0.63
Diluted
$
0.12
$
0.21
$
0.46
$
0.60
Weighted average common shares outstanding: Basic
99,566
92,412
96,841
92,017
Diluted
104,780
95,824
101,365
96,282
(1) Includes stock-based expense as follows:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Cost of revenue
$
1,916
$
1,401
$
7,937
$
5,604
Product development
2,757
1,715
9,216
8,159
Sales and marketing
7,066
5,887
20,908
23,978
General and administrative
3,186
6,284
21,213
24,822
$
14,925
$
15,287
$
59,274
$
62,563
Condensed Consolidated Statements of Cash Flows
(in thousands) (unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Cash flows from operating activities: Net income
$
13,067
$
20,169
$
46,314
$
58,208
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
36,226
28,846
138,779
114,952
Amortization of debt discount and issuance costs
6,440
3,511
20,760
13,700
Amortization of right-of-use assets
3,303
2,749
13,572
11,433
Deferred taxes
531
(5,755
)
3,446
2,276
Stock-based expense
14,925
15,287
59,274
62,563
Asset impairment and loss on disposal of assets
1,028
2,277
1,040
2,536
Change in fair value of equity investment
-
-
-
(2,600
)
Acquisition-related consideration
(5,103
)
(87
)
(5,889
)
1,006
Change in customer deposits
(5,182
)
83,665
(19,393
)
82,631
Other changes in assets and liabilities, net of assets acquired and
liabilities assumed in business combinations
3,207
(19,834
)
18,600
(29,732
)
Net cash provided by operating activities
68,442
130,828
276,503
316,973
Cash flows from investing activities: Purchases of
property, equipment, and software
(15,274
)
(12,989
)
(63,585
)
(51,500
)
Acquisition of businesses, net of cash and restricted cash acquired
(58,895
)
(615,785
)
(188,591
)
(665,844
)
Purchase of other investments
-
-
-
(1,750
)
Net cash used in investing activities
(74,169
)
(628,774
)
(252,176
)
(719,094
)
Cash flows from financing activities: Payments on and
proceeds from debt, net
(7,550
)
525,930
88,715
517,628
Purchase of capped call instruments
-
-
(39,365
)
-
Payments on finance lease obligations
(861
)
(772
)
(3,325
)
(3,651
)
Payments of acquisition-related consideration
(5,084
)
(4,098
)
(17,344
)
(30,441
)
Proceeds from public offering, net of underwriters’ discount and
offering costs
-
-
334,126
-
Proceeds from exercise of stock options
6,552
1,379
14,575
5,833
Purchase of treasury stock related to stock-based compensation
(8,328
)
(4,096
)
(18,844
)
(20,867
)
Purchase of treasury stock under share repurchase program
-
(8,491
)
-
(8,491
)
Other financing activities, net
(446
)
-
(1,261
)
-
Net cash (used in) provided by financing activities
(15,717
)
509,852
357,277
460,011
Net (decrease) increase in cash and cash equivalents
(21,444
)
11,906
381,604
57,890
Effect of exchange rate on cash
231
(448
)
175
(171
)
Cash, cash equivalents and restricted cash: Beginning
of period
843,469
429,019
440,477
382,758
End of period
$
822,256
$
440,477
$
822,256
$
440,477
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
COMPARABLE GAAP MEASURES (unaudited, in thousands, except
per share amounts) The following is a reconciliation of
the non-GAAP financial measures used by RealPage to describe its
financial results determined in accordance with accounting
principles generally accepted in the United States of America
("GAAP"). An explanation of these measures is also included under
the heading “Explanation of Non-GAAP Financial Measures.”While the
company believes that these non-GAAP financial measures provide
useful supplemental information to investors regarding the
underlying performance of our business operations, investors are
reminded to consider these non-GAAP measures in addition to, and
not as a substitute for, financial performance measures prepared in
accordance with GAAP. In addition, it should be noted that these
non-GAAP financial measures may be different from non-GAAP measures
used by other companies, and the company may utilize other measures
to illustrate performance in the future. Non-GAAP measures have
limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP.
Non-GAAP Total Revenue Set forth below is a
presentation of the company’s “Non-GAAP Total Revenue.” Please
reference the “Explanation of Non-GAAP Financial Measures” section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Revenue (GAAP)
$
298,055
$
254,767
$
1,158,484
$
988,136
Acquisition-related deferred revenue
289
449
1,502
868
Non-GAAP Total Revenue
$
298,344
$
255,216
$
1,159,986
$
989,004
Adjusted Gross Profit
Set forth below is a presentation of the company’s “Adjusted Gross
Profit.” Please reference the “Explanation of Non-GAAP Financial
Measures” section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Gross profit (GAAP)
170,436
143,008
657,206
561,963
Acquisition-related deferred revenue
289
449
1,502
868
Depreciation
4,155
3,970
15,768
15,665
Amortization of product technologies
15,774
10,732
58,313
40,461
Impairment of product technologies
-
1,618
-
1,618
Organizational realignment
-
16
453
141
Stock-based expense
1,916
1,401
7,937
5,604
Adjusted Gross Profit
192,570
161,194
741,179
626,320
Adjusted EBITDA Set
forth below is a presentation of the company’s "Adjusted EBITDA."
Please reference the "Explanation of Non-GAAP Financial Measures"
section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Net income (GAAP)
$
13,067
$
20,169
$
46,314
$
58,208
Acquisition-related deferred revenue
289
449
1,502
868
Depreciation, asset impairment, and loss on disposal of assets
10,663
10,769
36,817
36,724
Amortization of product technologies and intangible assets
26,591
20,353
103,002
80,764
Change in fair value of equity investment
-
-
-
(2,600
)
Acquisition-related expense
1,185
3,594
9,728
4,754
Organizational realignment
-
849
2,431
1,533
Regulatory and legal matters
3,460
898
5,969
1,465
Stock-based expense
14,925
15,287
59,274
62,563
Interest expense, net
13,145
9,443
52,446
35,056
Income tax expense (benefit)
1,601
(5,646
)
4,993
2,350
Adjusted EBITDA
$
84,926
$
76,165
$
322,476
$
281,685
Non-GAAP Product Development
Expense Set forth below is a presentation of the
company’s "Non-GAAP Product Development Expense." Please reference
the "Explanation of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Product development expense (GAAP)
$
36,614
$
26,308
$
133,661
$
112,222
Less: Organizational realignment
-
84
698
400
Stock-based expense
2,757
1,715
9,216
8,159
Non-GAAP Product Development Expense
$
33,857
$
24,509
$
123,747
$
103,663
Non-GAAP Sales and Marketing
Expense Set forth below is a presentation of the
company’s "Non-GAAP Sales and Marketing Expense." Please reference
the "Explanation of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Sales and marketing expense (GAAP)
$
58,837
$
48,113
$
218,481
$
193,962
Less: Asset impairment
1,028
363
1,028
363
Organizational realignment
-
62
889
170
Stock-based expense
7,066
5,887
20,908
23,978
Non-GAAP Sales and Marketing Expense
$
50,743
$
41,801
$
195,656
$
169,451
Non-GAAP General and Administrative
Expense Set forth below is a presentation of the
company’s "Non-GAAP General and Administrative Expense." Please
reference the "Explanation of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
General and administrative (GAAP)
$
36,772
$
35,354
$
157,608
$
123,056
Less: Asset impairment and loss on disposal of assets
-
296
12
555
Acquisition-related expense
1,185
3,594
9,728
4,754
Organizational realignment
-
687
391
822
Regulatory and legal matters
3,460
898
5,969
1,465
Stock-based expense
3,186
6,284
21,213
24,822
Non-GAAP General and Administrative Expense
$
28,941
$
23,595
$
120,295
$
90,638
Non-GAAP Operating
Expense Set forth below is a presentation of the
company’s "Non-GAAP Operating Expense." Please reference the
"Explanation of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Operating expense (GAAP)
$
143,040
$
119,396
$
554,439
$
469,543
Less: Asset impairment and loss on disposal of assets
1,028
659
1,040
918
Amortization of intangible assets
10,817
9,621
44,689
40,303
Acquisition-related expense
1,185
3,594
9,728
4,754
Organizational realignment
-
833
1,978
1,392
Regulatory and legal matters
3,460
898
5,969
1,465
Stock-based expense
13,009
13,886
51,337
56,959
Non-GAAP Operating Expense
$
113,541
$
89,905
$
439,698
$
363,752
Non-GAAP Operating
Income Set forth below is a presentation of the
company’s "Non-GAAP Operating Income." Please reference the
"Explanation of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Operating income (GAAP)
$
27,396
$
23,612
$
102,767
$
92,420
Acquisition-related deferred revenue
289
449
1,502
868
Asset impairment and loss on disposal of assets
1,028
2,277
1,040
2,536
Amortization of product technologies and intangible assets
26,591
20,353
103,002
80,764
Acquisition-related expense
1,185
3,594
9,728
4,754
Organizational realignment
-
849
2,431
1,533
Regulatory and legal matters
3,460
898
5,969
1,465
Stock-based expense
14,925
15,287
59,274
62,563
Non-GAAP Operating Income
$
74,874
$
67,319
$
285,713
$
246,903
Non-GAAP Net Income Set
forth below is a presentation of the company’s "Non-GAAP Net
Income" and "Non-GAAP Net Income per Diluted Share." Please
reference the "Explanation of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Net income (GAAP)
$
13,067
$
20,169
$
46,314
$
58,208
Income tax expense (benefit)
1,601
(5,646
)
4,993
2,350
Income before income taxes
14,668
14,523
51,307
60,558
Acquisition-related deferred revenue
289
449
1,502
868
Asset impairment and loss on disposal of assets
1,028
2,277
1,040
2,536
Amortization of product technologies and intangible assets
26,591
20,353
103,002
80,764
Change in fair value of equity investment
-
-
-
(2,600
)
Acquisition-related expense
1,185
3,594
9,728
4,754
Organizational realignment
-
849
2,431
1,533
Regulatory and legal matters
3,460
898
5,969
1,465
Amortization of convertible notes' discount
5,507
2,797
17,497
10,946
Stock-based expense
14,925
15,287
59,274
62,563
Non-GAAP income before income taxes
67,653
61,027
251,750
223,387
Assumed rate for income tax expense (1)
24.0
%
26.0
%
24.0
%
26.0
%
Assumed provision for non-GAAP income tax expense
16,236
15,867
60,420
58,080
Non-GAAP Net Income
$
51,417
$
45,160
$
191,330
$
165,307
Net income per diluted share
$
0.12
$
0.21
$
0.46
$
0.60
Non-GAAP Net Income per Diluted Share
$
0.50
$
0.48
$
1.94
$
1.76
Weighted average outstanding shares - basic
99,566
92,412
96,841
92,017
Non-GAAP adjusted diluted weighted average shares outstanding:
Weighted average outstanding shares - diluted
104,780
95,824
101,365
96,282
Dilution offset from convertible note hedge transactions
(2,962
)
(2,172
)
(2,633
)
(2,406
)
Non-GAAP Diluted Weighted Average Shares Outstanding (2)
101,818
93,652
98,732
93,876
Non-GAAP On Demand
Revenue Set forth below is a presentation of the
company’s "Non-GAAP On Demand Revenue." Please reference the
"Explanation of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
On demand revenue (GAAP)
$
288,569
$
246,235
$
1,125,838
$
953,576
Acquisition-related deferred revenue
289
449
1,502
868
Non-GAAP On Demand Revenue
$
288,858
$
246,684
$
1,127,340
$
954,444
Ending On Demand Units, Average On
Demand Units, ACV, and RPU Set forth below is a
presentation of the company’s "Ending On Demand Units," "Average On
Demand Units," "ACV," and "RPU." Please reference the "Explanation
of Non-GAAP Financial Measures" section.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Ending On Demand Units
19,709
18,475
19,709
18,475
Average On Demand Units
19,605
17,627
19,070
16,758
ACV
$
1,161,648
$
1,039,588
RPU
$
58.94
$
56.27
(1)
For 2020 purposes, the company uses a 24.0% tax rate to approximate
the company's long-term effective corporate tax rate. Please
reference the “Explanation of Non-GAAP Financial Measures” section.
(2)
It is the current intent of the company to settle conversions of
the convertible notes through combination settlement, which
involves repayment of the principal portion in cash and any excess
of the conversion value over the principal amount in shares of our
common stock. We exclude these shares that are issuable upon
conversions of our convertible notes because we expect that the
dilution from such shares will be offset by the convertible note
hedge transactions and capped call transactions entered into in May
2017 and May 2020, respectively, in connection with the issuance of
the convertible notes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210210005970/en/
RealPage Investor Relations Steve Calk 972-810-8138
IR@realpage.com
RealPage (NASDAQ:RP)
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