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RealPage Reports Q4 and Full Year 2011 Financial Results
Feb 16, 2012 (03:02 PM EST)


-- 2011 Q4 Non-GAAP revenue increases 31.9% to $71.3 million

-- 2011 Q4 adjusted EBITDA increases 41.4% to $15.6 million

-- 2011 Q4 Non-GAAP earnings per share increases 42.9% to $0.10 per diluted share

CARROLLTON, Texas, Feb. 16, 2012 /PRNewswire/ -- RealPage, Inc. (Nasdaq: 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, 2011.  

(Logo: http://photos.prnewswire.com/prnh/20110912/DA66533LOGO)

Steve Winn, Chairman and CEO of RealPage, said, "2011 was another great year for RealPage. We invested in acquisitions important to our go forward strategy, continued investments in our sales force, increased market share through the addition of 1.2 million new rental housing units using one or more of our on demand solutions, and increased our annual customer value 32%.  Compared to 2010, these accomplishments culminated in Non-GAAP revenue growth of 37%, Adjusted EBITDA growth near 60% and cash flow from operations growing near 78%.  I am proud of our execution and financial performance."

Fourth Quarter 2011 Financial Highlights

  • Non-GAAP total revenue was $71.3 million, an increase of 31.9% year-over-year;
  • Non-GAAP on demand revenue was $66.9 million, an increase of 35.7% year-over-year;
  • Adjusted EBITDA was $15.6 million, an increase of 41.4% year-over-year;
  • Non-GAAP net income was $7.2 million, or $0.10 per diluted share, a year-over-year increase of 58.2% and 42.9%, respectively;
  • GAAP net income attributable to common stockholders was $0.2 million, or $0.00 per diluted share, a year-over-year increase of 229.6% and 0.0%, respectively; and
  • Net cash provided by operating activities was $19.5 million, an increase of 50.8% year-over-year.

Full Year 2011 Financial Highlights

  • Non-GAAP total revenue was $258.7 million, an increase of 37.4% year-over-year;
  • Non-GAAP on demand revenue was $240.1 million, an increase of 41.5% year-over-year;
  • Adjusted EBITDA was $56.5 million, an increase of 59.9% year-over-year;
  • Non-GAAP net income was $25.5 million, or $0.36 per diluted share, a year-over-year increase of 112.7% and 80.0%, respectively;
  • GAAP net loss attributable to common stockholders was $1.2 million, or $0.02 per diluted share, a year-over-year decrease of 57.2% and 71.4%, respectively; and
  • Net cash provided by operating activities was $49.2 million, an increase of 77.8% year-over-year.

Financial Outlook

RealPage management expects to achieve the following results during its first quarter ended March 31, 2012:

  • Non-GAAP total revenue is expected to be in the range of $73.0 million to $74.0 million;
  • Adjusted EBITDA is expected to be in the range of $16.0 million to $16.5 million;
  • Non-GAAP net income is expected to be in the range of $7.4 million to $7.7 million, or $0.10 per diluted share;
  • Tax rate of approximately 40.0%; and
  • Weighted average shares outstanding of approximately 73.8 million.

RealPage management expects to achieve the following results during its calendar year ended December 31, 2012:

  • Non-GAAP total revenue is expected to be in the range of $320.0 million to $330.0 million;
  • Adjusted EBITDA is expected to be in the range of $71.5 million to $75.0 million;
  • Non-GAAP net income is expected to be in the range of $33.9 million to $36.0 million, or $0.46 to $0.49 per diluted share;
  • Tax rate of approximately 40.0%;
  • Full year weighted average shares outstanding of approximately 74.1 million; and
  • Capital expenditures of $15.0 million to $17.0 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 impact resulting from the Yardi Systems 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. EST 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 51564376, until February 25, 2012.

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. RealPage's MyNewPlace® subsidiary is one of the largest lead generation apartment and home rental websites, offering apartment owners and managers qualified, prospective residents through subscription, pay-per-lead and LeaseMatch pay-per-lease programs. 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 potential benefits of completed acquisitions. 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; and (h) such other risk and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission ("SEC"), including RealPage's Form 10-Q previously filed with the SEC on November 8, 2011. All information provided in this release is as of the date hereof and RealPage, Inc. 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 Systems 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 the Yardi Systems 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 Systems 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.


Consolidated Statements of Operations


For the Three and Twelve Months Ended December 31, 2011 and 2010


(unaudited, in thousands, except per share data)
















Three Months Ended


Twelve Months Ended





December 31,


December 31,





2011


2010


2011


2010


Revenue:










On demand

$ 66,695


$ 49,285


$ 239,436


$ 169,678



On premise

1,536


2,126


6,581


8,545



Professional and other

2,910


2,648


11,962


10,051




Total revenue

71,141


54,059


257,979


188,274


Cost of revenue(1)

27,639


22,449


105,717


79,044


Gross profit

43,502


31,610


152,262


109,230


Operating expense:










Product development(1)

12,478


10,491


44,561


36,922



Sales and marketing(1)

18,931


11,900


63,923


37,693



General and administrative(1)

10,778


8,098


41,968


28,328




Total operating expense

42,187


30,489


150,452


102,943


Operating income

1,315


1,121


1,810


6,287


Interest expense and other, net

(669)


(752)


(3,251)


(5,501)


Net income (loss) before income taxes

646


369


(1,441)


786


Income tax expense (benefit)

405


555


(210)


719


Net income (loss)

$      241


$    (186)


$   (1,231)


$          67













Net income (loss) attributable to common









stockholders











Basic

$      241


$    (186)


$   (1,231)


$   (2,877)




Diluted

$      241


$    (186)


$   (1,231)


$   (2,877)


Net loss per share attributable









to common stockholders











Basic

$     0.00


$     0.00


$     (0.02)


$     (0.07)




Diluted

$     0.00


$     0.00


$     (0.02)


$     (0.07)


Weighted average shares used in









computing net loss per share









attributable to common stockholders











Basic

69,632


63,059


68,480


39,737




Diluted

72,287


63,059


68,480


39,737
























(1)

Includes stock-based compensation

Three Months Ended


Twelve Months Ended



expense as follows:

December 31,


December 31,





2011


2010


2011


2010




Cost of revenue

$      586


$      226


$     1,655


$        633




Product development

1,251


904


4,594


2,568




Sales and marketing

3,224


1,952


12,017


2,493




General and administrative

1,327


513


4,352


1,646





$   6,388


$   3,595


$   22,618


$     7,340




Consolidated Balance Sheets


At December 31, 2011 and 2010


(unaudited, in thousands except share data)












December 31,


December 31,





2011


2010


Assets





Current assets:






Cash and cash equivalents 

$          51,273


$        118,010



Restricted cash 

19,098


15,346



Accounts receivable, less allowance for doubtful accounts of $979 and $1,370 at







December 31, 2011 and 2010, respectively

43,883


29,577



Deferred tax asset, net of valuation allowance

272


1,529



Other current assets 

10,232


6,060




Total current assets

124,758


170,522


Property, equipment and software, net

27,974


24,515


Goodwill

129,292


73,885


Identified intangible assets, net

112,308


54,361


Deferred tax asset, net of valuation allowance

2,539


17,322


Other assets

3,194


2,187




Total assets

$        400,065


$        342,792


Liabilities and stockholders' equity





Current liabilities:






Accounts payable

$          12,218


$            4,787



Accrued expenses and other current liabilities

25,816


15,436



Current portion of deferred revenue 

57,325


47,717



Current portion of long-term debt

-


10,781



Customer deposits held in restricted accounts 

19,017


15,253




Total current liabilities

114,376


93,974


Deferred revenue  

8,693


7,947


Long-term debt, less current portion 

50,312


55,258


Other long-term liabilities 

3,803


13,029




Total liabilities

177,184


170,208


Stockholders' equity:






Preferred stock, $0.001 par value, 10,000,000 shares authorized and zero shares






 December 31, 2011 and 2010, respectively

-


-



Common stock, $0.001 par value per share: 125,000,000 shares authorized,






 73,115,779 and  68,703,366 shares issued and 72,701,571 and 68,490,277 shares






 outstanding at December 31, 2011 and 2010, respectively

73


69



Additional paid-in capital

316,964


263,219



Treasury stock, at cost: 414,208 and 213,089 shares at  December 31, 2011

(3,138)


(958)



 and 2010, respectively






Accumulated deficit

(90,961)


(89,730)



Accumulated other comprehensive loss

(57)


(16)




Total stockholders' equity

222,881


172,584




Total liabilities and stockholders' equity

$        400,065


$        342,792




Condensed Consolidated Statements of Cash Flows


For the Three and Twelve Months Ended December 31, 2011 and 2010


(unaudited, in thousands)


















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Cash flows from operating activities:










Net income (loss)

$                  241


$      (186)


$   (1,231)


$          67



Adjustments to reconcile net income (loss) to net cash











provided by operating activities:











Depreciation and amortization

7,689


6,100


29,147


20,956




Deferred tax expense (benefit)

1,954


77


524


(85)




Stock-based compensation

6,388


3,595


22,618


7,340




Excess tax benefit from stock options

161


(161)


161


(161)




Loss on sale of assets

-


-


398


57




Impairment of assets

-


33


-


33




Acquisition-related contingent consideration

(512)


(31)


(410)


8




Changes in assets and liabilities, net of assets acquired












and liabilities assumed in business combinations:

3,606


3,522


(1,981)


(525)

















Net cash provided by operating activities

19,527


12,949


49,226


27,690


Cash flows from investing activities:










Purchases of property, equipment and software

(5,365)


(4,751)


(16,147)


(12,178)



Acquisition of businesses, net of cash acquired

(3,414)


(54,710)


(91,231)


(71,941)



Intangible asset purchase

(1,850)


-


(1,850)


-





Net cash used by investing activities

(10,629)


(59,461)


(109,228)


(84,119)


Cash flows from financing activities:










Stock issuance costs from public offerings

$                       -


$   98,258


$      (775)


$ 155,946



(Payments on) and proceeds from debt, net 

(7,728)


24,967


(16,252)


12,204



Preferred stock dividend

-


-


-


(666)



Issuance of common stock

4,175


1,739


12,674


2,403



Excess tax benefit from stock options

(161)


161


(161)


161



Purchase of treasury stock

(1,397)


-


(2,180)


(20)





Net cash (used) provided by financing activities

(5,111)


125,125


(6,694)


170,028





Net decrease (increase) in cash and cash equivalents

3,787


78,613


(66,696)


113,599





Effect of exchange rate on cash

(5)


3


(41)


(16)


Cash and cash equivalents:










Beginning of period

47,491


39,394


118,010


4,427



End of period

$             51,273


$ 118,010


$  51,273


$ 118,010
















Reconciliation of GAAP to Non-GAAP Measures


For the Three and Twelve Months Ended December 31, 2011 and 2010


(unaudited, in thousands)

















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010













Revenue:

$   71,141


$   54,059


$ 257,979


$ 188,274



Acquisition-related deferred revenue adjustment

186


-


706


-


Non-GAAP revenue

$   71,327


$   54,059


$ 258,685


$ 188,274

















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Adjusted Gross Profit:










Gross profit

$   43,502


$   31,610


$ 152,262


$ 109,230




Acquisition-related deferred revenue adjustment

186


-


706


-




Depreciation

1,615


1,408


6,052


5,355




Amortization of intangible assets

2,272


2,047


9,002


7,012




Stock-based compensation expense

586


226


1,655


633



Adjusted gross profit

$   48,161


$   35,291


$ 169,677


$ 122,230














Adjusted gross profit

67.5%


65.3%


65.6%


64.9%

















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Adjusted EBITDA:










Net income (loss)

$        241


$      (186)


$   (1,231)


$          67




Acquisition-related deferred revenue adjustment

186


-


706


-




Depreciation, asset impairment and loss on sale of asset

2,969


2,714


11,539


10,371




Amortization of intangible assets

4,720


3,419


18,006


10,675




Interest expense, net

669


751


2,868


5,510




Income tax expense (benefit)

405


555


(210)


719




Litigation-related expense

337


-


1,298


-




Stock-based compensation expense

6,388


3,595


22,618


7,340




Acquisition-related (income) expense

(334)


168


865


621



Adjusted EBITDA

$   15,581


$   11,016


$   56,459


$   35,303














Adjusted EBITDA Margin

21.8%


20.4%


21.8%


18.8%

















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Non-GAAP Total Product Development:










Product Development

$   12,478


$   10,491


$   44,561


$   36,922




Less: Amortization of intangible assets

-


-


-


-




         Stock-based compensation expense

1,251


904


4,594


2,568



Non-GAAP Total Product Development:

$   11,227


$     9,587


$   39,967


$   34,354














Non-GAAP Total Product Development as % of Revenue:

15.7%


17.7%


15.5%


18.2%




Reconciliation of GAAP to Non-GAAP Measures


For the Three and Twelve Months Ended December 31, 2011 and 2010


(unaudited, in thousands)


















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Non-GAAP Total Sales and Marketing:










Sales and Marketing

$   18,931


$   11,900


$   63,923


$   37,693




Less: Amortization of intangible assets

2,448


1,372


9,004


3,663




         Stock-based compensation expense

3,224


1,952


12,017


2,493



Non-GAAP Total Sales and Marketing:

$   13,259


$     8,576


$   42,902


$   31,537















Non-GAAP Total Sales and Marketing as % of Revenue:

18.6%


15.9%


16.6%


16.8%


















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Non-GAAP Total General and Administrative:










General and Administrative

$   10,778


$     8,098


$   41,968


$   28,328




Less: Acquisition-related (income) expense

(334)


168


865


621




        Stock-based compensation expense

1,327


513


4,352


1,646




        Litigation related expense

337


-


1,298


-



Non-GAAP Total General and Administrative:

$     9,448


$     7,417


$   35,453


$   26,061















Non-GAAP Total General and Administrative as % of Revenue:

13.2%


13.7%


13.7%


13.8%


















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Non-GAAP Total Operating Expenses:










Operating Expenses

$   42,187


$   30,489


$ 150,452


$ 102,943




Less:  Amortization of intangible assets

2,448


1,372


9,004


3,663




         Acquisition-related (income) expense


(334)


168


865


621




         Stock-based compensation expense

5,802


3,369


20,963


6,707




         Litigation related expense

337


-


1,298


-



Non-GAAP Total Operating Expenses:

$   33,934


$   25,580


$ 118,322


$   91,952















Non-GAAP Total Operating Expenses as % of Revenue:

47.6%


47.3%


45.7%


48.8%


















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Non-GAAP Operating Income:










Operating income

$     1,315


$     1,121


$     1,810


$     6,287




Acquisition-related deferred revenue adjustment

186


-


706


-




Amortization of intangible assets

4,720


3,419


18,006


10,675




Stock-based compensation expense

6,388


3,595


22,618


7,340




Acquisition-related (income) expense

(334)


168


865


621




Litigation related expense

337


-


1,298


-



Non-GAAP operating income

$   12,612


$     8,303


$   45,303


$   24,923















Non-GAAP operating margin

17.7%


15.4%


17.5%


13.2%




Reconciliation of GAAP to Non-GAAP Measures


For the Three and Twelve Months Ended December 31, 2011 and 2010


(unaudited, in thousands, except per share data)


















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Non-GAAP Net Income:










Net income (loss)

$        241


$      (186)


$   (1,231)


$          67




Acquisition-related deferred revenue adjustment

186


-


706


-




Amortization of intangible assets

4,720


3,419


18,006


10,675




Stock-based compensation expense

6,388


3,595


22,618


7,340




Accelerated interest expense related to preferred notes payable

-


-


-


530




Acquisition-related (income) expense

(334)


168


865


621




Litigation related expense

337


-


1,298


-




Loss on sale of assets

-


-


398


-





Subtotal of tax deductible items

11,297


7,182


43,891


19,166
















Tax impact of tax deductible items(1)

(4,519)


(2,873)


(17,556)


(7,666)




Tax expense resulting from applying effective tax rate(2)

147


407


366


405



Non-GAAP net income

$     7,166


$     4,530


$   25,470


$   11,972















Non-GAAP net income per share - diluted

$       0.10


$       0.07


$       0.36


$       0.20















Weighted average shares - diluted

72,287


63,059


68,480


39,737




Conversion of redeemable convertible preferred stock(3)

-


-


-


18,221




Weighted average effect of dilutive securities

-


4,602


3,181


2,863



Non-GAAP weighted average shares - diluted

72,287


67,661


71,661


60,821


(1) Reflects the removal of the tax benefit associated with the amortization of intangible assets, stock-based compensation expense, acquisition-related deferred revenue adjustment and acquisition-related expense.

(2) Represents adjusting to a normalized effective tax rate of 40%.  

(3) Represents common shares from the conversion of redeemable convertible preferred shares as if the shares were converted as of the beginning of the indicated period.  



















Three Months Ended


Twelve Months Ended






December 31,


December 31,






2011


2010


2011


2010


Annualized on demand revenue per average on demand unit:










On demand revenue

$   66,695


$   49,285


$ 239,436


$ 169,678




Acquisition-related deferred revenue adjustment

186


-


706


-



Non-GAAP on demand revenue

$   66,881


$   49,285


$ 240,142


$ 169,678















Ending on demand units

7,302


6,066


7,302


6,066



Average on demand units

7,188


5,817


6,574


5,249















Annualized on demand revenue per average on demand unit

$     37.22


$     33.89


$     36.53


$     32.33















Annual value of on demand revenue(1)

$ 271,780


$ 205,577






(1) This metric represents management's estimate for the current annual run-rate value of on demand customer relationships.  This metric is calculated by multiplying ending on demand units times annualized on demand revenue per average on demand unit for the periods presented.




SOURCE RealPage, Inc.