Second Quarter 2015 Results · 2015-08-06 · Second Quarter 2015 Results ... The statements...
Transcript of Second Quarter 2015 Results · 2015-08-06 · Second Quarter 2015 Results ... The statements...
© 2015 Actua Corporation / All Rights Reserved / 1
Second Quarter 2015 Results
© 2015 Actua Corporation / All Rights Reserved / 2
Forward-Looking Statements
The statements contained in this press release that are not historical facts are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain
risks and uncertainties, including, but not limited to, risks associated with our ability to compete successfully in
highly-competitive rapidly-developing markets, the effect of economic conditions generally, capital spending by our
customers, our ability to retain existing customer relationships and secure new ones, developments in the markets
in which we operate and our ability to respond to those changes in a timely and effective manner, the availability,
performance and security of our cloud-based technology, particularly in light of increased cybersecurity risks and
concerns, our ability to retain key personnel, our ability to deploy capital effectively and on acceptable terms, our
ability to successfully integrate any acquired business, the impact of any potential acquisitions, dispositions or other
strategic transactions, our ability to have continued access to capital and to manage capital resources effectively,
and other risks and uncertainties detailed in Actua's filings with the U.S. Securities and Exchange Commission.
Those and other factors may cause actual results to differ materially from those projected.
© 2015 Actua Corporation / All Rights Reserved / 3
Non-GAAP Financial Measures
Non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, adjusted EBITDA, adjusted cost of revenue, adjusted sales
and marketing, adjusted general and administrative and adjusted research and development are non-GAAP financial measures and have
no standardized measurement prescribed by GAAP. When referring to non-GAAP financial measures, the term “adjusted” is used
interchangeably with the term “non-GAAP” by Actua’s management, and the two have identical definitions. Non-GAAP net income (loss) is
GAAP net income (loss) attributable to Actua, including acquired businesses’ deferred revenue and excluding share-based compensation,
amortization of intangibles, impairment-related and other costs, transaction expenses, other (income) loss, net, equity loss, current non-
cash income tax benefit on discrete item and loss (income) from discontinued operations. Non-GAAP net income (loss) per diluted share is
non-GAAP net income (loss) divided by (1) GAAP shares, including the any impact of incremental dilutive securities (in the case of income)
or (2) GAAP shares, excluding any impact of incremental dilutive securities (in the case of loss). Adjusted EBITDA is GAAP net income
(loss) attributable to Actua, including acquired businesses’ deferred revenue and excluding share-based compensation, amortization of
intangibles, impairment-related and other costs, transaction expenses, other (income) loss, net, equity loss, current non-cash income tax
benefit on discrete item, loss (income) from discontinued operations, interest expense (income), net, current, cash income tax expense and
depreciation expense. Adjusted cost of revenue is cost of revenue operating expenses, excluding share-based compensation. Adjusted
sales and marketing is sales and marketing operating expenses, excluding share-based compensation. Adjusted general and
administrative is general and administrative operating expenses, excluding share-based compensation. Adjusted research and
development is research and development operating expenses, excluding share-based compensation. Actua's consolidated businesses
are BOLT, FolioDynamix, GovDelivery and MSDSonline as of June 30, 2015. Please note the following:
• FolioDynamix became a consolidated business on November 3, 2014 and, therefore, will be included in Actua’s consolidated results
beginning on November 1, 2014. The results of FolioDynamix for the first two days of November 2014 are insignificant for
consolidation purposes.
• Channel Intelligence, Investor Force and Procurian were sold in Q1, Q1 and Q4 2013, respectively, and are presented as
discontinued operations under GAAP. Receipt of respective escrow releases occurred throughout 2014 and is presented within our
non-GAAP measures as “Loss (income) from discontinued operations.”
Actua's management believes these non-GAAP financial measures provide useful information to investors and potential investors that
enables them to view Actua’s business in a similar manner as Actua's management and provide meaningful supplemental information
regarding Actua’s operating results as they exclude amounts that Actua excludes as part of its monitoring of operating results and
assessment of the performance of its business.
© 2015 Actua Corporation / All Rights Reserved / 4
Meeting Agenda
DirectionWalter Buckley, CEO
Financial OverviewKirk Morgan, CFO
Question & Answer Session
© 2015 Actua Corporation / All Rights Reserved / 5
Q2 2015 Highlights
• Achieved 21% organic revenue growth as a result of:
– New contract signings
– Expanded customer relationships across all businesses
• Generated $1 million of operating cash flow, reflecting the leverage
across our platform
© 2015 Actua Corporation / All Rights Reserved / 6
**
Digital communications and marketing platform that enables
public sector organizations to effectively reach citizens and
drive action
Important metrics:*
• Annual Revenue Growth: 24% in Q2 2015 compared to Q2 2014
• New Signings: Closed 48 deals in Q2 2015, reporting strongest Q2
ever in terms of number of deals closed; new signings included a
large state lottery program, two state enterprise contracts and a
number of strategic federal agencies
• Total Customers: Serving 1,000+ federal, state, local and UK
government agencies reaching over 90 million citizen subscribers
• Pipeline: 38% pipeline growth since Q1 2015, including 17 federal
program opportunities; up 30% overall in terms of dollar value
• TAM: > $1 billion
• Competitive Moat: Subscriber base creates network effect,
significantly expanding reach and audience for each customer
• Operating cash flow positive for 2015
• Annual subscription revenue model
* As of 6/30/15 unless otherwise noted
Actua’s Platforms
© 2015 Actua Corporation / All Rights Reserved / 7
Provides a multi-channel, multi-carrier software
platform that enables insurance distributors to retain
and grow revenue through a comprehensive insurance
solution
Important metrics:*
• Annual Revenue Growth: 27% in Q2 2015 compared to Q2 2014
• New Signings: Signed a third top 10 carrier platform customer, which will
launch in Q4 and begin generating revenue in Q1 2016; also saw continued
roll-out and broader utilization of the platform with all three of our largest
customers
• Total Customers: Insurance carriers (67, of which six are carrier
distribution partners), independent agents (2,100), alternative distribution
partners (4)
• Pipeline: Entered the quarter with nine large mid-to-late stage deals, signed
one during the quarter and added three new opportunities, brining the total
to 11; all prior opportunities referenced in the pipeline remain, with some in
the final contract stages
• TAM: Multi-billion $$
• Added an additional $100 million of premiums on the platform, bringing the
total premiums to $1.1 billion at quarter-end
• Competitive Moat: Platform is integrated into 67 of the largest insurance
carriers and has over 3,500 carrier connections which creates the largest
source of insurance flow for direct carriers, agents, agencies and alternative
insurance distributors
• Operating cash flow negative for 2015
• Multi-year/multi-million dollar contracts
* As of 6/30/15 unless otherwise noted
Actua’s Platforms
© 2015 Actua Corporation / All Rights Reserved / 8
Actua’s Platforms
Enables the delivery of client-centric, innovative, scalable,
wealth management solutions through secure, cloud-based,
fully integrated, advisory products and solutions
Important Metrics:*
• Annual Revenue Growth: 19% in Q2 2015 compared to Q2 2014
• New Signings: Signed seven new customers in Q2, three of which are large
seven-figure deals, and four of which are mid-to-large sized, six-figure contracts
• Total Customers: More than 200 banks, brokerage firms and large RIAs
• Pipeline: Continues to build well ahead of sales growth, in terms of quantity
and velocity through pipeline; seeing strong interest from banking, broker
dealer and RIA markets
• TAM: Multi-billion $$
• Competitive Moat: Comprehensive, client-centric technology platform with
integrated proprietary advisory products
• Operating cash flow positive for 2015
• Multi-year/multi-million dollar contracts
• More than 97,000 advisors and users
• $4.3 billion in regulatory assets under management
*As of 6/30/15 unless otherwise noted
© 2015 Actua Corporation / All Rights Reserved / 9
Environmental, Health and Safety compliance platform
that enables organizations to meet stringent and costly
OSHA requirements
Important Metrics:*
• Annual Revenue Growth: 42% in Q2 2015 compared to Q2 2014
• New Signings: Added 647 new customers in Q2 2015
• Total Customers: Close to 11,000 companies; protecting more than
8 million employees in U.S. and Canada
• Pipeline: Growth is slightly ahead of revenue growth and is skewed
towards large platform customers (customers with access to the full
platform of products)
• TAM: > $3 billion
• Competitive Moat: Database of over 8 million material safety data
sheets is the only comprehensive web-based library that ensures
100% compliance for companies and continues to expand as new
customers come onto the platform
• Operating cash flow positive for 2015
• 3-year subscription revenue model
* As of 6/30/15 unless otherwise noted
Actua’s Platforms
© 2015 Actua Corporation / All Rights Reserved / 10
Meeting Agenda
DirectionWalter Buckley, CEO
Financial OverviewKirk Morgan, CFO
Question & Answer Session
© 2015 Actua Corporation / All Rights Reserved / 11
Consolidated Income Statements
(In thousands, except per share data)
2015 2014 2015 2014
Revenue 33,536$ 19,029$ 64,128$ 37,451$
Operating Expenses
Cost of revenue (a) 9,783 5,519 19,515 10,418
Sales and marketing (a) 12,163 9,585 23,399 18,116
General and administrative (a) 15,966 12,915 31,402 22,924
Research and development (a) 7,373 3,547 14,466 6,800
Amortization of intangibles 3,706 2,293 7,722 4,594
Impairment related and other 166 836 340 836
Total operating expenses 49,157 34,695 96,844 63,688
Operating income (loss) (15,621) (15,666) (32,716) (26,237)
Other income (expense):
Other income (loss), net (425) 637 940 937
Interest income 35 146 54 232
Interest expense (31) (1,080) (68) (1,591)
Income (loss) before income taxes, equity loss and discontinued operations (16,042) (15,963) (31,790) (26,659)
Income tax benefit (expense) (1) 599 (178) 505
Equity loss - (320) - (632)
Income (loss) from continuing operations (16,043) (15,684) (31,968) (26,786)
Income (loss) from discontinued operations - 1,315 - 1,363
Net income (loss) (16,043) (14,369) (31,968) (25,423)
Less: Net income (loss) attributable to the noncontrolling interest (761) (1,475) (1,921) (2,379)
Net income (loss) attributable to Actua (15,282)$ (12,894)$ (30,047)$ (23,044)$
Amounts attributable to Actua common shareholders:
Net income (loss) from continuing operations (15,282)$ (14,209)$ (30,047)$ (24,407)$
Net income (loss) from discontinued operations - 1,315 - 1,363
Net income (loss) attributable to Actua common shareholders (15,282)$ (12,894)$ (30,047)$ (23,044)$
Basic and diluted net income (loss) per share:
Income (loss) from continuing operations attributable to Actua common shareholders (0.41)$ (0.38)$ (0.81)$ (0.66)$
Income (loss) from discontinued operations attributable to Actua common shareholders - 0.03 - 0.04
Income (loss) attributable to Actua common shareholders (0.41)$ (0.35)$ (0.81)$ (0.62)$
Diluted net income (loss) per share:
Income (loss) from continuing operations attributable to Actua common shareholders (0.41)$ (0.38)$ (0.81)$ (0.66)$
Income (loss) from discontinued operations attributable to Actua common shareholders - 0.03 - 0.04
Income (loss) attributable to Actua common shareholders (0.41)$ (0.35)$ (0.81)$ (0.62)$
37,123 37,313 36,983 37,205
37,123 37,313 36,983 37,205
(a) Includes equity-based compensation of:
Cost of revenue 29$ 20$ 55$ 39$
Sales and marketing 79 42 137 83
General and administrative 6,887 6,648 13,980 10,294
Research and development 126 29 171 199
7,121$ 6,739$ 14,343$ 10,615$
Shares used in computation of basic net income (loss) per common share attributable to Actua
Shares used in computation of basic and diluted net income (loss) per common
share attributable to Actua common shareholders
Three Months Ended June 30, Six Months Ended June 30,
© 2015 Actua Corporation / All Rights Reserved / 12
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2015 2014
ASSETS
Cash and cash equivalents 84,622$ 103,134$
Restricted cash 1,064 1,132
Accounts receivable, net 22,120 23,134
Deferred tax asset 182 182
Prepaid expenses and other current assets 4,596 3,979
Total current assets 112,584 131,561
Fixed assets, net 9,385 7,947
Goodwill and Intangibles, net 360,035 367,082
Cost and equity method investments 18,146 17,672
Deferred tax asset 2,900 2,998
Other assets, net 1,792 1,652
Total Assets 504,842$ 528,912$
LIABILITIES AND EQUITY
Current maturities of other long-term debt 1,320$ 500$
Accounts payable 11,092 12,595
Accrued expenses 5,988 8,306
Accrued compensation and benefits 8,845 9,241
Deferred revenue 37,878 33,238
Total current liabilities 65,123 63,880
Long-term debt - -
Deferred revenue 1,401 1,256
Deferred tax liability 266 266
Other liabilities 5,459 4,408
Total Liabilities 72,249 69,810
Redeemable noncontrolling interest 7,081 6,221
Total Equity 425,512 452,881
Total Liabilities, Redeemable noncontrolling interest and Equity 504,842$ 528,912$
© 2015 Actua Corporation / All Rights Reserved / 13
Consolidated Statements of Cash Flows
(In thousands)
2015 2014 2015 2014
Operating Activities - continuing operations
Net income (loss) (16,043)$ (14,369)$ (31,968)$ (25,423)$
(Income) loss from discontinued operations, including gain on sale, net of tax - (1,315) - (1,363)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 4,829 3,073 10,069 6,196
Equity-based compensation 7,121 6,739 14,343 10,615
Impairment related and other 166 - 340 836
Other (income) loss 425 (637) (940) (937)
Equity loss - 320 - 632
Deferred tax asset 89 (800) 76 (800)
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable, net 1,676 2,496 1,014 (1,306)
Prepaid expenses and other assets (121) 207 (757) 229
Accounts payable (952) 1,886 (1,503) 1,928
Accrued expenses (415) (178) 474 (1,273)
Accrued compensation and benefits 1,634 1,008 (396) (2,587)
Deferred revenue 2,030 (269) 4,785 2,761
Other liabilities 555 (321) 1,051 (385)
Cash flows provided by (used in) operating activities 994 (2,160) (3,412) (10,877)
Investing Activities - continuing operations
Capital expenditures, net (1,579) (1,695) (3,919) (2,303)
Change in restricted cash (72) 114 68 (50)
Proceeds from sales/distributions of ownership interests - 2,744 1,415 3,037
Ownership acquisitions, net of cash acquired (700) (198) (1,957) (198)
Cash flows provided by (used in) investing activities (2,351) 965 (4,393) 486
Financing Activities - continuing operations
Acquisition of noncontrolling interest in subsidiary equity - - (3,952) -
Contingent consideration payments (1,870) - (1,870) -
Borrowings of long-term debt - - 820 -
Repayments of long-term debt and capital lease obligations - (8,544) (24) (12,032)
Purchase of treasury stock - - (1,704) -
Tax withholdings related to equity-based awards (364) (530) (3,858) (2,735)
Cash received for stock options exercised (73) - (8) -
Cash flows provided by (used in) financing activities (2,307) (9,074) (10,596) (14,767)
Effect of exchange rate on cash 6 - (111) -
Discontinued Operations:
Cash flows provided by (used in) operating activities - - - 48
Cash flows provided by (used in) investing activities - - - -
Cash flows provided by (used in) financing activities - - - -
Net increase(decrease) in cash and cash equivalents from discontinued operations - - - 48
Net increase (decrease) in cash and cash equivalents (3,658) (10,269) (18,512) (25,110)
Cash and cash equivalents at beginning of period 88,280 319,815 103,134 334,656
Cash and cash equivalents at end of period 84,622$ 309,546$ 84,622$ 309,546$
Three Months Ended June 30, Six Months Ended June 30,
© 2015 Actua Corporation / All Rights Reserved / 14
Demonstrated Quarterly Growth
$12.0$13.5
$16.1$17.7
$18.4 $19.0
$20.8
$26.6
$30.6
$33.5
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2013 2014
Re
ve
nu
e (
Mil
lio
ns
)
2015
© 2015 Actua Corporation / All Rights Reserved / 15
Quarterly Non-GAAP Net Income/Share
-$0.14
-$0.10
-$0.08-$0.09
-$0.10
-$0.12 -$0.12
-$0.03
-$0.10
-$0.07
-$15.00
-$10.00
-$5.00
$0.00
$5.00
$10.00
$15.00
-$0.20
-$0.15
-$0.10
-$0.05
$0.00
$0.05
$0.10
$0.15
$0.20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Series1 Series2
2013 2014
No
n-G
AA
P N
et
Inc
om
e/S
ha
re
Op
era
tin
g C
as
h F
low
2015
Non-GAAP Net Income/Share Operating Cash Flow
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2013
Financial Profile
Gross Margins %
Sales and Marketing %
General and Administrative %
%s determined excluding stock-based compensation and deferred revenue adjustments from purchase accounting
Q2 2015
72%
45%
32%
17%
2014
71%
35%
27%
21%
Retention Rates %
Recurring Revenue %
97%
87% 87%
97%+
71%
46%
41%
15%
87%
95%
Research and Development %
© 2015 Actua Corporation / All Rights Reserved / 17
$20.0
$50.0
$80.0
$110.0
$140.0
2013 Actual 2014 Actual 2015 Guidance
Revenue Growth
2015 Guidance
Range:
$133.0M - $138.0M
Fig
ure
s s
how
n in
mill
ions
© 2015 Actua Corporation / All Rights Reserved / 18
Non-GAAP Net Income (Loss)/Share
($0.50)
($0.40)
($0.30)
($0.20)
2013 Actual 2014 Actual
2015 Guidance Range:
$(0.36) - $(0.40)
2015 Guidance
© 2015 Actua Corporation / All Rights Reserved / 19
Cash Flow From Operations
($20.0)
($15.0)
($10.0)
($5.0)
$0.0
2013 Actual 2014 Actual
2015 Guidance Range:
$(5.0)M - $(9.0)M
2015 Guidance
Fig
ure
s s
how
n in
mill
ions
© 2015 Actua Corporation / All Rights Reserved / 20
Second Quarter 2015 Results