RealPage Reports Q4 and Full Year 2012 Financial Results

RealPage Reports Q4 and Full Year 2012 Financial Results

  • 2012 Q4 Non-GAAP revenue increases 20.2% to $85.7 million

  • 2012 Q4 Non-GAAP on demand revenue increases 22.3% to $81.8 million

  • 2012 Q4 adjusted EBITDA increases 33.5% to $20.8 million

  • 2012 Q4 Non-GAAP earnings per share increases 40.0% to $0.14 per diluted share

CARROLLTON, Texas--(BUSINESS WIRE)-- RealPage, Inc. (NAS: RP) , a leading provider of on-demand software and software-enabled services to the rental housing industry, today announced financial results for its fourth quarter and year ended December 31, 2012.

"2012 was a solid year of financial performance," said Steve Winn, Chairman and CEO of Realpage. "It was also a year of investment, which helped us start to solidify our marketing solutions. 2013 will be a continuation of what we have done since we built this company: expand new units and cross-sell additional software and software-enabled services into our installed base."


Fourth Quarter 2012 Financial Highlights

  • Non-GAAP total revenue was $85.7 million, an increase of 20.2% year-over-year;

  • Non-GAAP on demand revenue was $81.8 million, an increase of 22.3% year-over-year;

  • Adjusted EBITDA was $20.8 million, an increase of 33.5% year-over-year;

  • Non-GAAP net income was $10.2 million, or $0.14 per diluted share, a year-over-year increase of 42.7% and 40.0%, respectively; and

  • GAAP net income was $3.7 million, or $0.05 per diluted share, compared to GAAP net income of $0.2 million, or $0.00 per diluted share, in the prior year quarter.

Full Year 2012 Financial Highlights

  • Non-GAAP total revenue was $322.3 million, an increase of 24.6% year-over-year;

  • Non-GAAP on demand revenue was $306.5 million, an increase of 27.6% year-over-year;

  • Adjusted EBITDA was $73.3 million, an increase of 29.9% year-over-year;

  • Non-GAAP net income was $34.9 million, or $0.47 per diluted share, a year-over-year increase of 37.1% and 30.6%, respectively; and

  • GAAP net income was $5.2 million, or $0.07 per diluted share, compared to a GAAP net loss of $1.2 million, or $0.02 per diluted share, in the prior year quarter.

Financial Outlook

RealPage management expects to achieve the following results during its first quarter ended March 31, 2013:

  • Non-GAAP total revenue is expected to be in the range of $88.0 million to $89.5 million;

  • Adjusted EBITDA is expected to be in the range of $20.0 million to $21.0 million;

  • Non-GAAP net income is expected to be in the range of $9.6 million to $10.2 million, or $0.13 to $0.14 per diluted share;

  • Non-GAAP tax rate of approximately 40.0%; and

  • Weighted average shares outstanding of approximately 75.6 million.

RealPage management expects to achieve the following results during its calendar year ended December 31, 2013:

  • Non-GAAP total revenue is expected to be in the range of $382.0 million to $390.0 million;

  • Adjusted EBITDA is expected to be in the range of $90.0 million to $93.0 million;

  • Non-GAAP net income is expected to be in the range of $43.9 million to $45.7 million, or $0.57 to $0.60 per diluted share;

  • Non-GAAP tax rate of approximately 40.0%; and

  • Full year weighted average shares outstanding of approximately 76.7 million.

Please note that the above statements are forward looking and that Non-GAAP total revenue includes an adjustment for the effect of deferred revenue from acquired companies that is required to be written down for GAAP purposes under purchase accounting rules. In addition, the above statements also include the impact of acquisitions and exclude any costs resulting from the Yardi litigation (including settlement costs and related insurance litigation). Actual results may differ materially. Please reference the information under the caption "Non-GAAP Financial Measures" as part of this press release.

Conference Call and Webcast

The Company will host a conference call today at 5:00 p.m. EDT to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast at www.realpage.com on the Investor Relations section. In addition, a live dial-in is available domestically at 866-743-9666 and internationally at 760-298-5103. A replay will be available at 855-859-2056 or 404-537-3406, passcode 10159496, until March 2, 2013.

About RealPage

Located in Carrollton, Texas, a suburb of Dallas, RealPage provides on demand (also referred to as "Software-as-a-Service" or "SaaS") products and services to apartment communities and single family rentals across the United States. Its on demand product lines include OneSite® property management systems that automate the leasing, renting, management, and accounting of conventional, affordable, tax credit, student living, senior living and military housing properties; LeaseStar™ multichannel managed marketing that enables owners to originate, syndicate, manage and capture leads more effectively and at less overall cost; YieldStar® asset optimization systems that enable owners and managers to optimize rents to achieve the overall highest yield, or combination of rent and occupancy, at each property; Velocity™ billing and utility management services that increase collections and reduce delinquencies; LeasingDesk® risk mitigation systems that are designed to reduce a community's exposure to risk and liability; OpsTechnology® spend management systems that help owners manage and control operating expenses; and Compliance Depot™ vendor management and qualification services to assist a community in managing its compliance vendor program. Supporting this family of SaaS products is a suite of shared cloud services including electronic payments, document management, decision support and learning. Through its Propertyware subsidiary, RealPage also provides software and services to single-family rentals and low density, centrally-managed multifamily housing. For more information, call 1-87-REALPAGE or visit www.realpage.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking" statements relating to RealPage, Inc.'s expected, possible or assumed future results of operations, growth, expenditures, tax rates, outstanding shares and expansion of new units and cross-selling of additional software and software-enabled services into RealPage's installed base. These forward-looking statements are based on 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. 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. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the possibility that general economic conditions or uncertainty cause information technology spending, particularly in the rental housing industry, to be reduced or purchasing decisions to be delayed; (b) an increase in customer cancellations; (c) the inability to increase sales to existing customers and to attract new customers; (d) RealPage, Inc.'s failure to integrate acquired businesses and any future acquisitions successfully; (e) the timing and success of new product introductions by RealPage, Inc. or its competitors; (f) changes in RealPage, Inc.'s pricing policies or those of its competitors; (g) litigation; (h) inability to complete the integration of our LeaseStar products and deliver enhanced functionality on a timely basis; or (i) the discovery of facts and circumstances currently not available to management; and such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by RealPage, including its Quarterly Report on Form 10-Q previously filed with the SEC on November 9, 2012, its Registration Statement on Form S-3ASR and related prospectus supplement previously filed with the SEC on September 13, 2012. All information provided in this release is as of the date hereof and RealPage undertakes no duty to update this information except as required by law.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. These measures differ from GAAP in that they exclude amortization of intangible assets, stock-based compensation expenses, any impact related to the Yardi litigation (including settlement costs and related insurance litigation), acquisition-related deferred revenue adjustments, and acquisition related expenses (including any purchase accounting adjustments). Reconciliation tables comparing GAAP financial measures to non-GAAP financial measures are included at the end of this release.

We define Adjusted EBITDA as net (loss) income plus acquisition-related deferred revenue adjustment, depreciation and asset impairment, amortization of intangible assets, net interest expense, income tax expense (benefit), stock-based compensation expense, any impact related to Yardi litigation (including settlement costs and related insurance litigation), and acquisition-related expense.

We believe that the use of Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

  • Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with our peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and

  • it is useful to exclude certain non-cash charges, such as depreciation and asset impairment, amortization of intangible assets and stock-based compensation and non-core operational charges, such as acquisition-related expense and any impact related to the Yardi litigation (including settlement costs and related insurance litigation), from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be.

We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.

We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of liquidity or financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures and that they do not reflect changes in, or cash requirements for, our working capital. We compensate for the inherent limitations associated with using Adjusted EBITDA measures through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net (loss) income.

Condensed Consolidated Statements of Operations

For the Three and Twelve Months Ended December 31, 2012 and 2011

(unaudited, in thousands, except per share data)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012

2011

2012

2011

Revenue:

On demand

$

81,771

$

66,695

$

306,400

$

239,436

On premise

1,313

1,536

5,216

6,581

Professional and other

2,640

2,910

10,556

11,962

Total revenue

85,724

71,141

322,172

257,979

Cost of revenue(1)

33,204

28,924

128,562

108,155

Gross profit

52,520

42,217

193,610

149,824

Operating expense:

Product development(1)

12,852

11,945

48,177

43,441

Sales and marketing(1)

19,806

18,762

76,992

63,775

General and administrative(1)

12,199

10,195

56,993

40,798

Total operating expense

44,857

40,902

182,162

148,014

Operating income (loss)

7,663

1,315

11,448

1,810

Interest expense and other, net

(426

)

(669

)

(2,046

)

(3,251

)

Income (loss) before income taxes

7,237

646

9,402

(1,441

)

Income tax expense (benefit)

3,515

405

4,219

(210

)

Net income (loss)

$

3,722

$

241

$

5,183

$

(1,231

)

Net income (loss) per share

Basic

$

0.05

$

0.00

$

0.07

$

(0.02

)

Diluted

$

0.05

$

0.00

$

0.07

$

(0.02

)

Weighted average shares used in computing net income (loss) per share

Basic

73,460

69,632

71,838

68,480

Diluted

74,960

72,287

74,002

68,480

(1)Includes stock-based compensation expense as follows:

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012

2011

2012

2011

Cost of revenue

$

718

$

586

$

2,806

$

1,655

Product development

1,211

1,251

4,391

4,594

Sales and marketing

368

3,224

4,790

12,017

General and administrative

1,564

1,327

6,191

4,352

$

3,861

$

6,388

$

18,178

$

22,618

Condensed Consolidated Balance Sheets

At December 31, 2012 and 2011

(unaudited, in thousands except share data)

December 31,
2012

December 31,
2011

Assets

Current assets:

Cash and cash equivalents

$

33,804

$

51,273

Restricted cash

35,202

19,098

Accounts receivable, less allowance for doubtful accounts of $1,087 and $979 at December 31, 2012 and 2011, respectively

51,937

43,883

Deferred tax asset

-

272

Other current assets

6,541

10,232

Total current assets

127,484

124,758

Property, equipment and software, net

32,487

27,974

Goodwill

134,025

129,292

Identified intangible assets, net

104,640

112,308

Deferred tax asset

-

2,539

Other assets

3,561

3,194

Total assets

$

402,197

$

400,065

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

9,805

$

12,218

Accrued expenses and other current liabilities

19,246

25,816

Current portion of deferred revenue

60,633

57,325

Deferred tax liability

2

-

Customer deposits held in restricted accounts

35,171

19,017

Total current liabilities

124,857

114,376

Deferred revenue

9,446

8,693

Deferred tax liability

10

-

Revolving credit facility

10,000

50,312

Other long-term liabilities

2,813

3,803

Total liabilities

147,126

177,184

Stockholders' equity:

Preferred stock, $0.001 par value, 10,000,000 shares authorized and zero shares issued and outstanding at December 31, 2012 and 2011, respectively

-

-

Common stock, $0.001 par value per share: 125,000,000 shares authorized, 77,012,925 and 73,115,779 shares issued and 75,826,615 and 72,701,571 shares outstanding at December 31, 2012 and 2011, respectively

77

73

Additional paid-in capital

347,203

316,964

Treasury stock, at cost: 1,186,310 and 414,208 shares at and December 31, 2012 and 2011, respectively

(6,323

)

(3,138

)

Accumulated deficit

(85,778

)

(90,961

)

Accumulated other comprehensive loss

(108

)

(57

)

Total stockholders' equity

255,071

222,881

Total liabilities and stockholders' equity

$

402,197

$

400,065

Condensed Consolidated Statements of Cash Flows

For the Three and Twelve Months Ended December 31, 2012 and 2011

(unaudited, in thousands)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012

2011

2012

2011

Cash flows from operating activities:

Net income (loss)

$

3,722

$

241

$

5,183

$

(1,231

)