Higher One Holdings, Inc. Reports Fourth Quarter and Full Year 2012 Financial Results
Higher One Holdings, Inc. Reports Fourth Quarter and Full Year 2012 Financial Results
FY'12 Revenue and EPS within revised guidance range
Maintained 100% OneDisburse client retention for 9thconsecutive quarter
Higher One now serves over 1,300 campuses representing more than 10.9 million students
NEW HAVEN, Conn.--(BUSINESS WIRE)-- Higher One Holdings, Inc. (NYS: ONE) ("Higher One") today announced financial results for the fourth quarter of 2012. The company reported revenue of $49.8 million, up 19% from $41.7 million in the fourth quarter of 2011. Excluding the impact from the customer credit plan in the fourth quarter of 2011, revenue growth for the fourth quarter of 2012 would have been 7%. Full year 2012 revenue came in at the high end of guidance at $197.7 million, up 12% from $176.3 million in 2011. Excluding the impact from the customer credit plan, revenue growth for 2012 would have been 9%. The year-over-year revenue growth was primarily attributable to an increase in the number of higher education institutions that have contracted for the company's services and the inclusion of the recently acquired Campus Labs in the results.
Mark Volchek, Chief Executive Officer, said, "Higher One continues to be highly focused on reducing the cost of education by improving administrative efficiencies, providing financial literacy and low-cost financial services to college students, and improving graduation rates through better data collection and analysis. We made significant progress in 2012 bolstering our capabilities in all three of those areas. Despite the fact that the macro environment has put pressure on our financial results in the near-term, we are making investments in the business that positions us well for long-term growth."
Higher One reported GAAP net income of $36.9 million for 2012, and non-GAAP adjusted net income, which excludes certain non-recurring or non-cash items, of $38.8 million. During the quarter, we recorded a benefit of $7.6 million due to a reduction in the estimated amount to be paid under the earn-out related to the Campus Labs acquisition. GAAP diluted EPS was $0.65 for the year. Non-GAAP adjusted diluted EPS was $0.68 for 2012, at the high end of the company's previously disclosed guidance range. Non-GAAP adjusted EBITDA came in at $68.3 million for 2012.
Higher One also reported GAAP net income of $12.1 million for the fourth quarter of 2012, and non-GAAP adjusted net income, which excludes certain non-recurring or non-cash items, of $9.2 million. GAAP diluted EPS was $0.22 in the quarter. Non-GAAP adjusted diluted EPS was $0.17. In the fourth quarter of 2012, non-GAAP adjusted EBITDA was $16.4 million.
The number of OneAccounts at the end of the fourth quarter of 2012 totaled 2.0 million, essentially flat from the end of the fourth quarter of 2011. A change in the protocols of closing low-balance, inactive accounts that was implemented in the second quarter of 2012 impacted the year-over-year growth in the number of OneAccounts.
Total enrollment at higher education clients that have purchased the OneDisburse® service increased to 4.6 million, up 11% from 4.2 million at the end of the fourth quarter of 2011. Total enrollment at higher education clients that have signed up for at least one of our OneDisburse, CASHNet®, or Campus Labs® modules now totals 10.9 million.
Cash, cash equivalents, and liquid investments totaled $13.3 million as of December 31, 2012. Higher One continued with its previously announced share repurchase program, utilizing $78.1 million to repurchase approximately 7.6 million shares in the fourth quarter. The company substantially completed the remainder of its $100 million share repurchase authorization in the first quarter of 2013.
Higher One released its full-year 2013 revenue and GAAP diluted EPS guidance of $210.0 - $220.0 million and $0.47 - $0.55, respectively. The company also gave full-year 2013 non-GAAP adjusted diluted EPS guidance of $0.62 - $0.70.
Quarterly Conference Call Information
Higher One will host a conference call at 5 p.m. ET today to discuss fourth quarter results. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures can be accessed through Higher One's investor relations website at http://www.ir.higherone.com/. In addition, an archive of the webcast will be available for 90 days through the same link.
About Higher One Holdings
Higher One Holdings, Inc. (NYS: ONE) is a leading company focused on creating cost-saving efficiencies for higher education institutions and providing high-value services to students. Higher One offers a wide array of technological services on campus, ranging from streamlining the institution's performance analytics and financial aid refund processes to offering students innovative banking services, tuition payment plans, and the basics of financial management. Higher One works closely with colleges and universities to allocate resources more efficiently in order to provide a higher quality of service and education to students.
Founded in 2000 on a college campus by college students, Higher One now serves more than half of the higher education market, providing its services to over 1,300 campuses and 10.9 million students at distinguished public and private institutions nationwide. More information about Higher One can be found at www.ir.higherone.com.
Forward-Looking Statements
This press release includes forward-looking statements, as defined by the Securities and Exchange Commission ("SEC"). Management's projections and expectations are subject to a number of risks and uncertainties that could cause actual performance to differ materially from that predicted or implied. These statements speak only as of the date they are made, and the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. Information about the factors that could affect future performance can be found in our recent SEC filings.
Use of Non-GAAP Financial Measures
This release includes certain metrics presented on a non-GAAP basis, including non-GAAP adjusted EBITDA, non-GAAP adjusted net income, and non-GAAP adjusted EPS. We believe that these non-GAAP measures, which exclude amortization of intangibles, stock-based compensation, and certain non-recurring or non-cash impacts to our results, all net of taxes, provide useful information regarding normalized trends relating to the company's financial condition and results of operations. Reconciliations of these non-GAAP measures to their closest comparable GAAP measure are included in this press release.
Higher One Holdings, Inc. | |||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||||
(in thousands of dollars, except share and per share amounts) | |||||||||||||||||
Three Months | Year | ||||||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||||
2011 | 2012 | 2011 | 2012 | ||||||||||||||
Revenue: | |||||||||||||||||
Account revenue | $ | 37,089 | $ | 37,912 | $ | 142,589 | $ | 150,715 | |||||||||
Payment transaction revenue | 4,745 | 5,325 | 18,733 | 23,168 | |||||||||||||
Higher education institution revenue | 3,918 | 6,419 | 16,614 | 21,016 | |||||||||||||
Other revenue | 706 | 143 | 3,112 | 2,821 | |||||||||||||
Revenue before customer credit plan | 46,458 | 49,799 | 181,048 | 197,720 | |||||||||||||
Less customer credit plan | (4,728) | - | (4,728) | - | |||||||||||||
Revenue | 41,730 | 49,799 | 176,320 | 197,720 | |||||||||||||
Cost of revenue | 17,074 | 19,977 | 67,560 | 80,280 | |||||||||||||
Gross margin | 24,656 | 29,822 | 108,760 | 117,440 | |||||||||||||
Operating expenses: | |||||||||||||||||
General and administrative | 9,513 | 12,116 | 37,715 | 46,321 | |||||||||||||
Product development | 427 | 1,850 | 3,265 | 5,221 | |||||||||||||
Sales and marketing | 3,402 | 3,289 | 20,265 | 12,284 | |||||||||||||
Merger and acquisition related | - | (6,870) | - | (5,828) | |||||||||||||
Total operating expenses | 13,342 | 10,385 | 61,245 | 57,998 | |||||||||||||
Income from operations | 11,314 | 19,437 | 47,515 | 59,442 | |||||||||||||
Interest income | 17 | 22 | 68 | 109 | |||||||||||||
Interest expense | (70) | (565) | (266) | (967) | |||||||||||||
Other income | - | 78 | 1,500 | 310 | |||||||||||||
Net income before income taxes | 11,261 | 18,972 | 48,817 | 58,894 | |||||||||||||
Income tax expense | 3,632 | 6,860 | 16,924 | 22,024 | |||||||||||||
Net income | $ | 7,629 | $ | 12,112 | $ | 31,893 | $ | 36,870 | |||||||||
Net income available to common stockholders: | |||||||||||||||||
Basic | $ | 7,629 | $ | 12,112 | $ | 31,893 | $ | 36,870 | |||||||||
Diluted | $ | 7,629 | $ | 12,112 | $ | 31,893 | $ | 36,870 | |||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 55,060,419 | 50,998,605 | 55,210,972 | 53,877,879 | |||||||||||||
Diluted | 59,134,013 | 54,056,539 | 59,553,678 | 56,728,807 | |||||||||||||
Net income available to common stockholders per common share: | |||||||||||||||||
Basic | $ | 0.14 | $ | 0.24 | $ | 0.58 | $ | 0.68 | |||||||||
Diluted | $ | 0.13 | $ | 0.22 | $ | 0.54 | $ | 0.65 | |||||||||
Higher One Holdings, Inc. | ||||||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||||||
(in thousands of dollars, except share and per share amounts) | ||||||||||
December 31, | December 31, | |||||||||
2011 | 2012 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 39,085 | $ | 13,031 | ||||||
Investments in marketable securities and certificate of deposit | 15,743 | 247 | ||||||||
Accounts receivable | 3,672 | 4,860 | ||||||||
Income receivable | 5,961 | 7,466 | ||||||||
Deferred tax assets | 33 | 37 | ||||||||
Income tax receivable | 12,671 | 1,593 | ||||||||
Prepaid expenses and other current assets | 6,774 | 9,297 | ||||||||
Restricted cash | - | 2,000 | ||||||||
Total current assets | 83,939 | 38,531 | ||||||||
Deferred costs | 3,776 | 4,665 | ||||||||
Fixed assets, net | 46,088 | 52,686 | ||||||||
Intangible assets, net | 16,787 | 38,143 | ||||||||
Goodwill | 15,830 | 47,000 | ||||||||
Loan receivable related to New Markets Tax Credit financing | 7,633 | 7,633 | ||||||||
Other assets | 712 | 740 | ||||||||
Restricted cash | 1,250 | 1,500 | ||||||||
Total assets | $ | 176,015 | $ | 190,898 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 3,118 | $ | 3,756 | ||||||
Accrued expenses | 26,414 | 12,526 | ||||||||
Contingent consideration, current portion | - | 2,230 | ||||||||
Deferred tax liabilities | - | 356 | ||||||||
Deferred revenue | 9,690 | 16,027 | ||||||||
Total current liabilities | 39,222 | 34,895 | ||||||||
Deferred revenue and other non-current liabilities | 2,173 | 2,517 | ||||||||
Debt | - | 80,000 | ||||||||
Contingent consideration, non-current portion | - | 3,520 | ||||||||
Loan payable and deferred contribution related to New Markets Tax Credit financing | 9,801 | 9,490 | ||||||||
Deferred tax liabilities | 1,233 | 2,764 | ||||||||
Total liabilities | 52,429 | 133,186 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders' equity: | ||||||||||
Common stock, $.001 par value; 200,000,000 shares authorized; 57,675,806 shares issued and 56,615,683 shares outstanding at December 31, 2011; 58,045,404 shares issued and 46,660,781 shares outstanding at December 31, 2012 | 58 | 59 | ||||||||
Additional paid-in capital | 161,268 | 174,218 | ||||||||
Treasury stock, 1,060,123 and 11,384,623 shares at December 31, 2011 and December 31, 2012, respectively | (16,208 | ) | (131,903 | ) | ||||||
Retained earnings (accumulated deficit), net of 2008 stock tender transaction of $93,933 | (21,532 | ) | 15,338 | |||||||
Total stockholders' equity | 123,586 | 57,712 | ||||||||
Total liabilities and stockholders' equity | $ | 176,015 | $ | 190,898 | ||||||
Higher One Holdings, Inc. | |||||||||
Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||
(in thousands of dollars) | |||||||||
Year ended | |||||||||
December 31, | |||||||||
2011 | 2012 | ||||||||
Cash flows from operating activities | |||||||||
Net income | $ | 31,893 | $ | 36,870 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 7,021 | 10,250 | |||||||
Amortization of deferred finance costs | 76 | 213 | |||||||
Stock-based customer acquisition expense | 10,493 | - | |||||||
