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CST: 19/08/2019 21:05:19   

Pluralsight Announces Second Quarter 2019 Results

19 Days ago

  • Second quarter revenue grew 42 percent period over period to $75.9 million

SILICON SLOPES, Utah, July 31, 2019 (GLOBE NEWSWIRE) -- Pluralsight, Inc. (NASDAQ: PS), the enterprise technology skills company, today announced financial results for the second quarter ended June 30, 2019.

“Our Q2 revenue and Non-GAAP EPS were both above guidance with revenue growing 42% and Non-GAAP EPS improving by 71%,” said Aaron Skonnard, co-founder and CEO of Pluralsight. “Our continued penetration with our top customers, our best in class net revenue retention and our early wins with GitPrime give us a strong base for continued success, and I’m excited about the insights and capabilities our platform and content provide to technology leaders.”

Second Quarter Financial Highlights

  • Billings - Q2 2019 billings were $80.6 million, an increase of 23% period over period. Q2 2019 billings from business customers were $69.1 million, an increase of 27% period over period.

  • Revenue - Q2 2019 revenue was $75.9 million, an increase of 42% period over period.

  • Gross margin - Q2 2019 gross margin was 77%, compared to 70% in Q2 2018. Q2 2019 non-GAAP gross margin was 78%, compared to 76% in Q2 2018.

  • Net loss per share - GAAP net loss per share for Q2 2019 was $0.30. Adjusted pro forma net loss per share for Q2 2019 was $0.06, compared to $0.21 in Q2 2018.

  • Cash flows - Cash used in operations was $7.2 million for Q2 2019, compared to cash used in operations of $5.8 million in Q2 2018. Free cash flow was negative $11.1 million for Q2 2019, compared to negative free cash flow of $9.2 million in Q2 2018.

For information regarding the non-GAAP financial measures discussed in this press release, please see the section titled “Non-GAAP Financial Measures.” Reconciliations between GAAP and non-GAAP financial measures are provided in the tables of this press release.

Financial Outlook

Pluralsight is providing the following financial guidance for the third quarter of 2019 and the full year 2019:

Third Quarter 2019 Guidance

  • Revenue is expected to be in the range of $79.5 million to $80 million.

  • Adjusted pro forma net loss per share is expected to be in the range of $0.15 to $0.13, assuming weighted-average shares outstanding of approximately 138 million.

Full Year 2019 Guidance

  • Revenue is expected to be in the range of $312 million to $318 million.

  • Adjusted pro forma net loss per share is expected to be in the range of $0.42 to $0.38,  assuming weighted-average shares outstanding of approximately 137 million.

Guidance for non-GAAP financial measures excludes equity-based compensation, amortization of acquired intangible assets, employer payroll taxes on employee stock transactions, secondary offering costs, acquisition-related costs, amortization of debt discount and issuance costs, and loss on debt extinguishment. Pluralsight has not reconciled its expectations as to adjusted pro forma net loss per share to their most directly comparable GAAP measures because certain items cannot be reasonably predicted. Accordingly, a reconciliation for expectations of adjusted pro forma net loss per share is not available without unreasonable effort.

Conference Call Information

Pluralsight will host a conference call for analysts and investors to discuss its second quarter 2019 results and outlook for its third and fourth quarters and full year 2019, today at 2:30 p.m. Mountain time (4:30 p.m. Eastern time).

Date: July 31, 2019
Time: 2:30 p.m. MT (4:30 p.m. ET)
Webcast: https://investors.pluralsight.com/
Dial-in number: (877) 350-6732 or (629) 228-0693, conference ID: 3377505

A live audio webcast of the conference call will also be accessible from the Pluralsight website at investors.pluralsight.com. A telephonic replay of the call will be available three hours after the call, will run for seven days, and may be accessed by dialing (855) 859-2056 or (404) 537-3406 and entering the passcode 3377505.

About Pluralsight

Pluralsight is an enterprise technology skills platform that delivers a unified, end-to-end learning experience for businesses across the globe. Through a subscription service, companies are empowered to move at the speed of technology, increasing proficiency, innovation and efficiency. Founded in 2004 and trusted by Fortune 500 companies, Pluralsight provides customers with on-demand access to a digital ecosystem of learning tools, including adaptive skill tests, directed learning paths, expert-authored courses, interactive labs and analytics. For more information, visit pluralsight.com.

Pluralsight and the Pluralsight logo are trademarks of Pluralsight, LLC in the United States and in jurisdictions throughout the world.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws that involve risks and uncertainties, including statements regarding our future financial and operating performance, including our financial outlook for the third quarter 2019, the full year 2019 and future periods. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: the pace of market adoption of cloud-based learning solutions; our ability to expand our course library and develop new platform features; our ability to successfully integrate GitPrime into our platform; competition; our ability to attract and retain customers; our ability to increase sales of subscriptions to our platform to customers; our ability to expand our sales and marketing capabilities and to improve sales management and execution; and general market, political, economic, and business conditions.

Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K/A filed with the SEC on June 27, 2019 and in our quarterly report on Form 10-Q filed with the SEC on July 31, 2019, which is available on our website at investors.pluralsight.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

Key Business Metrics

Billings. Billings represents total revenue plus the change in deferred revenue in the period, as presented in our condensed consolidated statements of cash flows, less the change in contract assets and unbilled accounts receivable in the period. Billings in any particular period represents amounts invoiced to customers and reflects subscription renewals and upsells to existing customers plus sales to new customers. We use billings to measure our ability to sell subscriptions to our platform to both new and existing customers. We use billings from business customers and our percentage of billings from business customers to measure and monitor our ability to sell subscriptions to our platform to business customers.

Non-GAAP Financial Measures

Pluralsight has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). Pluralsight uses the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, adjusted pro forma net loss, adjusted pro forma net loss per share, and free cash flow in analyzing its financial results and believes that the use of these metrics is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Pluralsight’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our historical non-GAAP financial measures to their most directly comparable GAAP measures have been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations.

Non-GAAP gross profit. We define non-GAAP gross profit as gross profit plus equity-based compensation, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions.

Non-GAAP gross margin. We define non-GAAP gross margin as non-GAAP gross profit divided by our revenue.

Non-GAAP operating loss. We define non-GAAP operating loss as loss from operations plus equity-based compensation, amortization of acquired intangible assets, employer payroll taxes on employee stock transactions, secondary offering costs, and acquisition-related costs.

Adjusted pro forma net loss and adjusted pro forma net loss per share. We define adjusted pro forma net loss as net loss attributable to Pluralsight, Inc. adjusted for the reallocation of loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc. and further adjusted for equity-based compensation, amortization of acquired intangible assets, employer payroll taxes on employee stock transactions, secondary offering costs, acquisition-related costs, amortization of debt discount and issuance costs, and loss on debt extinguishment. We define adjusted pro forma net loss per share as adjusted pro forma net loss divided by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc.

Free cash flow. We define free cash flow as cash used in operating activities less purchases of property and equipment and purchases of our content library.


PLURALSIGHT, INC.

Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

    Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
                 
Revenue   $ 75,862     $ 53,572     $ 145,479     $ 103,216  
Cost of revenue(1)(2)   17,801     15,933     34,511     30,819  
Gross profit   58,061     37,639     110,968     72,397  
Operating expenses(1)(2):                
Sales and marketing   49,994     41,857     94,125     71,324  
Technology and content   24,786     18,396     45,030     31,721  
General and administrative   20,601     26,002     42,774     37,294  
Total operating expenses   95,381     86,255     181,929     140,339  
Loss from operations   (37,320 )   (48,616 )   (70,961 )   (67,942 )
Other (expense) income:                
Interest expense   (7,697 )   (2,424 )   (9,721 )   (6,134 )
Loss on debt extinguishment       (4,085 )       (4,085 )
Other income (expense), net   4,040     48     5,654     35  
Loss before income taxes   (40,977 )   (55,077 )   (75,028 )   (78,126 )
Provision for income taxes   (143 )   (143 )   (297 )   (252 )
Net loss   $ (41,120 )   $ (55,220 )   $ (75,325 )   $ (78,378 )
Less: Net loss attributable to non-controlling interests   (11,740 )   (13,910 )   (26,690 )   (13,910 )
Net loss attributable to Pluralsight, Inc.   $ (29,380 )   $ (41,310 )   $ (48,635 )   $ (64,468 )
Less: Accretion of Series A redeemable convertible preferred units       (156,750 )       (176,275 )
Net loss attributable to common shares   $ (29,380 )   $ (198,060 )   $ (48,635 )   $ (240,743 )
Net loss per share, basic and diluted(3)   $ (0.30 )   $ (0.20 )   $ (0.56 )   $ (0.20 )
Weighted-average common shares used in computing basic and diluted net loss per share(3)   97,608     62,252     86,827     62,252  

(1) Includes equity-based compensation as follows:

    Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
                 
Cost of revenue   $ 133     $ 89     $ 217     $ 89  
Sales and marketing   7,952     7,356     14,228     7,895  
Technology and content   5,137     4,571     8,847     4,952  
General and administrative   9,510     16,963     19,708     19,416  
Total equity-based compensation   $ 22,732     $ 28,979     $ 43,000     $ 32,352  


(2) Includes amortization of acquired intangible assets as follows:

    Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
                 
Cost of revenue   $ 702     $ 2,961     $ 1,227     $ 5,923  
Sales and marketing   29     194     29     389  
Technology and content   176     177     353     353  
Total amortization of acquired intangible assets   $ 907     $ 3,332     $ 1,609     $ 6,665  

(3) Net loss per share, basic and diluted and weighted-average common shares used in computing basic and diluted net loss per share for the three and six months ended June 30, 2018 reflect only the activity for the portion of the period following following Pluralsight, Inc.'s initial public offering and the related reorganization transactions.


PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures
(dollars in thousands, except per share amounts)
(unaudited)

Key Business Metrics

    Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
                 
Billings   $ 80,552     $ 65,297     $ 158,480     $ 120,716  
Billings from business customers   $ 69,104     $ 54,623     $ 136,260     $ 99,875  
% of billings from business customers   86 %   84 %   86 %   83 %

Non-GAAP Financial Measures

    Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
                 
Reconciliation of gross profit to non-GAAP gross profit:                
Gross profit   $ 58,061     $ 37,639     $ 110,968     $ 72,397  
Equity-based compensation   133     89     217     89  
Amortization of acquired intangible assets   702     2,961     1,227     5,923  
Employer payroll taxes on employee stock transactions   13         16      
Non-GAAP gross profit   $ 58,909     $ 40,689     $ 112,428     $ 78,409  
Gross margin   77 %   70 %   76 %   70 %
Non-GAAP gross margin   78 %   76 %   77 %   76 %
Reconciliation of loss from operations to non-GAAP operating loss:                
Loss from operations   $ (37,320 )   $ (48,616 )   $ (70,961 )   $ (67,942 )
Equity-based compensation   22,732     28,979     43,000     32,352  
Amortization of acquired intangible assets   907     3,332     1,609     6,665  
Employer payroll taxes on employee stock transactions   1,329         2,773      
Secondary offering costs           918      
Acquisition-related costs   835         835      
Non-GAAP operating loss   $ (11,517 )   $ (16,305 )   $ (21,826 )   $ (28,925 )


    Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
                 
Adjusted pro forma net loss per share                
Numerator:                
GAAP net loss attributable to common shares   $ (29,380 )   $ (198,060 )   $ (48,635 )   $ (240,743 )
Accretion of Series A redeemable convertible preferred units       156,750         176,275  
Reallocation of net loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for Class A common stock   (11,740 )   (13,910 )   (26,690 )   (13,910 )
Equity-based compensation   22,732     28,979     43,000     32,352  
Amortization of acquired intangibles   907     3,332     1,609     6,665  
Employer payroll taxes on employee stock transactions   1,329         2,773      
Secondary offering costs           918      
Acquisition-related costs   835         835      
Amortization of debt discount and issuance costs   6,749     53     8,294     126  
Loss on debt extinguishment       4,085         4,085  
Adjusted pro forma net loss   $ (8,568 )   $ (18,771 )   $ (17,896 )   $ (35,150 )
Denominator:                
Weighted-average shares of Class A common stock outstanding   97,608     *   86,827     *
Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock   39,006     *   48,923     *
Adjusted pro forma weighted-average common shares outstanding, basic and diluted   136,614     89,006     135,750     68,819  
Adjusted pro forma net loss per share   $ (0.06 )   $ (0.21 )   $ (0.13 )   $ (0.51 )

(*) Weighted-average shares of Class A common stock and LLC Units of Pluralsight Holdings are not presented for the three and six months ended June 30, 2018 as these amounts are only presented on a GAAP basis for the portion of the period following Pluralsight, Inc.'s initial public offering and related reorganization transactions.

Reconciliation of net cash used in operating activities to free cash flow:                
Net cash used in operating activities   $ (7,181 )   $ (5,793 )   $ (1,641 )   $ (16,217 )
Less: Purchases of property and equipment   (2,457 )   (2,706 )   (4,590 )   (4,574 )
Less: Purchases of content library   (1,504 )   (735 )   (2,441 )   (1,504 )
Free cash flow   $ (11,142 )   $ (9,234 )   $ (8,672 )   $ (22,295 )


PLURALSIGHT, INC.

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

    June 30,
 2019
  December 31,
 2018
         
Assets        
Current assets:        
Cash and cash equivalents   $ 260,313     $ 194,306  
Short-term investments   276,818      
Accounts receivable, net   57,625     63,436  
Deferred contract acquisition costs, net   17,079      
Prepaid expenses and other current assets   13,115     8,323  
Total current assets   624,950     266,065  
Restricted cash   27,970     16,765  
Long-term investments   35,654      
Property and equipment, net   49,028     31,641  
Content library, net   7,510     7,050  
Intangible assets, net   25,483     1,759  
Goodwill   261,722     123,119  
Deferred contract acquisition costs, noncurrent, net   3,252      
Other assets   1,367     1,064  
Total assets   $ 1,036,936     $ 447,463  
Liabilities and stockholders' equity        
Current liabilities:        
Accounts payable   $ 8,608     $ 7,160  
Accrued expenses   29,332     32,047  
Accrued author fees   11,301     10,002  
Deferred revenue   172,310     157,695  
Total current liabilities   221,551     206,904  
Deferred revenue, noncurrent   13,748     14,886  
Convertible senior notes, net   487,915      
Facility financing obligations   31,668     15,777  
Other liabilities   1,948     1,303  
Total liabilities   756,830     238,870  
Stockholders' equity:        
Preferred stock        
Class A common stock   10     7  
Class B common stock   2     6  
Class C common stack   1     1  
Additional paid-in capital   599,558     456,899  
Accumulated other comprehensive income (loss)   237     (41 )
Accumulated deficit   (394,048 )   (355,446 )
Total stockholders’ equity attributable to Pluralsight, Inc.   205,760     101,426  
Non-controlling interests   74,346     107,167  
Total stockholders’ equity   280,106     208,593  
Total liabilities and stockholders' equity   $ 1,036,936     $ 447,463  


PLURALSIGHT, INC.

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

    Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
                 
Operating activities                
Net loss   $ (41,120 )   $ (55,220 )   $ (75,325 )   $ (78,378 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation of property and equipment   2,140     2,167     4,196     4,358  
Amortization of acquired intangible assets   907     3,332     1,609     6,665  
Amortization of course creation costs   611     483     1,190     930  
Equity-based compensation   22,732     28,979     43,000     32,352  
Amortization of deferred contract acquisition costs   5,444         11,311      
Amortization of debt discount and issuance costs   6,749     339     8,294     1,215  
Investment discount and premium amortization, net   (706 )       (706 )    
Provision for doubtful accounts   (5 )   136     22     358  
Deferred tax benefit   48     (64 )   21     (64 )
Debt extinguishment costs       4,180         4,180  
Other   232         257      
Changes in assets and liabilities, net of acquired assets and liabilities:                
Accounts receivable   (4,276 )   (5,467 )   7,116     1,335  
Deferred contract acquisition costs   (5,579 )       (11,430 )    
Prepaid expenses and other assets   (2,277 )   (1,892 )   (4,194 )   (3,858 )
Accounts payable   35     (2,651 )   1,070     (588 )
Accrued expenses and other liabilities   2,605     7,364     (2,374 )   (2,839 )
Accrued author fees   564     796     1,299     617  
Deferred revenue   4,715     11,725     13,003     17,500  
Net cash used in operating activities   (7,181 )   (5,793 )   (1,641 )   (16,217 )
Investing activities                
Purchases of property and equipment   (2,457 )   (2,706 )   (4,590 )   (4,574 )
Purchases of content library   (1,504 )   (735 )   (2,441 )   (1,504 )
Cash paid for acquisition, net of cash acquired   (163,871 )       (163,871 )    
Purchases of investments   (317,080 )       (317,080 )    
Proceeds from sales of investments   4,967         4,967      
Net cash used in investing activities   (479,945 )   (3,441 )   (483,015 )   (6,078 )
Financing activities                
Proceeds from issuance of convertible senior notes, net of discount and issuance costs   (1,009 )       616,654      
Purchase of capped calls related to issuance of convertible senior notes           (69,432 )    
Proceeds from issuance of common stock from employee equity plans   12,010         14,631      
Proceeds from initial public offering, net of underwriting discounts and commissions       332,080         332,080  
Payments of costs related to initial public offering       (1,186 )       (3,085 )
Borrowings of long-term debt               20,000  
Repayments of long-term debt       (137,710 )       (137,710 )
Payments of debt extinguishment costs       (2,162 )       (2,162 )
Payments of debt issuance costs               (450 )
Payments to settle equity appreciation rights       (325 )       (325 )
Taxes paid related to net share settlement       (78 )       (78 )
Other   (3 )   (4 )   (7 )   (8 )
Net cash provided by financing activities   10,998     190,615     561,846     208,262  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (4 )   (95 )   22     (86 )
Net increase in cash, cash equivalents, and restricted cash   (476,132 )   181,286     77,212     185,881  
Cash, cash equivalents, and restricted cash, beginning of period   764,415     33,072     211,071     28,477  
Cash, cash equivalents, and restricted cash, end of period   $ 288,283     $ 214,358     $ 288,283     $ 214,358  


Investor Relations Contact:
Mark McReynolds
Investor Relations
Pluralsight
801-784-9007
ir@pluralsight.com

Media Contact:
DJ Anderson
Communications/Press
Pluralsight
801-784-9007
dj@pluralsight.com 

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