RealPage, Inc. (RP) Warns on Q2

RealPage, Inc. (NASDAQ: RP), a leading provider of on-demand property management solutions, today announced preliminary Non-GAAP total revenue and Adjusted EBITDA results for the second quarter ended June 30, 2014.

Revised Financial Outlook

RealPage expects the following results for the second quarter ended June 30, 2014:

Non-GAAP total revenue of $93.8 million to $94.8 million; and
Adjusted EBITDA of $11.5 million to $12.5 million.

(Street sees Q2 revenue of $107.19 million).

The primary factor that impacted second quarter financial performance was lower than expected revenue from products and services related to leasing activity. These products include organic lead-generation tools, screening and the contact center. For the three months ended June 30, 2014, these solutions represented approximately 30% of Non-GAAP total revenue. The company believes owners are spending less in marketing and advertising due to low vacancy and resident turnover rates. Against this back drop, during the second quarter of 2014, the company took actions that resulted in lower revenue per transaction, primarily in the contact center, while increasing market share.

In addition, revenue related to the company’s renter’s insurance solutions declined significantly. A component of the company’s renter’s insurance revenue is dependent on the sharing of its underwriting partner’s profit. The company believes higher than expected average cost per claim led to lower revenue from its profit sharing arrangement, but expects this trend to be temporary as renter’s insurance claims have been stable historically.

“We believe lower than expected revenue driven by weakness in leasing velocity and marketing products was primarily responsible for our revenue and profit miss,” said Steve Winn, Chairman and CEO of RealPage. “We intend to stay the course on our sales expansion investments and complete the rollout of the richest product development backlog in our history. During our second quarter conference call, we will provide additional details of our action plan, our progress with respect to new product introductions, sales force expansion and pricing actions taken to expand market share going forward.”

“As we address the factors that impacted our revenue performance, we will also discuss certain actions underway to restructure or eliminate cost that we expect will enable margin expansion over the long-term,” said W. Bryan Hill, CFO and Treasurer of RealPage.

Please note that the above statements are forward looking and that Non-GAAP total revenue includes an adjustment for the effect of acquisition-related and other deferred revenue. In addition, the above statements also include the impact of acquisitions. Actual results may differ materially. Please reference the information under the caption "Non-GAAP Financial Measures."

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