Pluralsight Announces Fourth Quarter 2020 Results

February 10, 2021 8:00 AM EST

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SILICON SLOPES, Utah, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Pluralsight, Inc. (NASDAQ: PS), the technology workforce development company, today announced financial results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter Financial Highlights

  • Billings - Q4 2020 billings were $151.1 million, an increase of 18% period over period. Q4 2020 billings from business customers were $134.0 million, an increase of 18% period over period.
  • Revenue - Q4 2020 revenue was $105.0 million, an increase of 18% period over period.
  • Gross margin - Q4 2020 gross margin was 78%, compared to 79% in Q4 2019. Q4 2020 and Q4 2019 non-GAAP gross margin was 80%.
  • Net loss per share - GAAP net loss per share for Q4 2020 was $0.30, compared to $0.31 in Q4 2019. Adjusted pro forma net loss per share for Q4 2020 was $0.01, compared to $0.09 in Q4 2019.
  • Cash flows - Cash provided by operations was $2.4 million for Q4 2020, compared to cash used in operations of $7.9 million in Q4 2019. Free cash flow was negative $4.0 million for Q4 2020, compared to negative $13.0 million in Q4 2019.

Full Year 2020 Financial Highlights

  • Billings - 2020 billings were $430.4 million, an increase of 14% year over year. 2020 billings from business customers were $380.8 million, an increase of 15% year over year.
  • Revenue - 2020 revenue was $391.9 million, an increase of 24% year over year.
  • Gross margin - 2020 gross margin was 79%, compared to 77% in 2019. 2020 non-GAAP gross margin was 81%, compared to 79% in 2019.
  • Net loss per share - GAAP net loss per share for 2020 was $1.15, compared to $1.19 in 2019. Adjusted pro forma net loss per share for 2020 was $0.12, compared to $0.30 in 2019.
  • Cash flows - Cash provided by operations was $9.1 million for 2020, compared to cash used in operations of $11.7 million in 2019. Free cash flow was negative $34.2 million for 2020, compared to negative $28.2 million in 2019.

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.

About Pluralsight

Pluralsight is the leading technology workforce development company that helps companies and teams build better products by developing critical skills, improving processes and gaining insights through data, and providing strategic skills consulting. Trusted by forward-thinking companies of every size in every industry, Pluralsight helps individuals and businesses transform with technology. Pluralsight Skills helps enterprises build technology skills at scale with expert-authored courses on today’s most important technologies, including cloud, artificial intelligence and machine learning, data science, and security, among others. Skills also includes tools to align skill development with business objectives, virtual instructor-led training, hands-on labs, skill assessments and one-of-a-kind analytics. Flow complements Skills by providing engineering teams with actionable data and visibility into workflow patterns to accelerate the delivery of products and services. For more information about Pluralsight, visit pluralsight.com.

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

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 expenses, 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 expenses. We define non-GAAP operating expenses as operating expenses less equity-based compensation, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions, and, as applicable, other special items including acquisition-related costs.

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, and, as applicable, other special items including 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, amortization of debt discount and issuance costs, and, as applicable, other special items including acquisition-related costs. 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 provided by (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 December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Revenue$104,989  $88,811  $391,865  $316,910 
Cost of revenue(1)(2)23,401  19,009  82,552  71,353 
Gross profit81,588  69,802  309,313  245,557 
Operating expenses(1)(2):       
Sales and marketing60,785  57,071  238,165  207,085 
Technology and content29,782  29,965  118,785  102,902 
General and administrative28,918  21,950  95,651  85,560 
Total operating expenses119,485  108,986  452,601  395,547 
Loss from operations(37,897) (39,184) (143,288) (149,990)
Other income (expense):       
Interest expense(7,523) (7,129) (29,322) (23,565)
Loss on debt extinguishment      (950)
Other income, net1,982  2,966  8,411  11,749 
Loss before income taxes(43,438) (43,347) (164,199) (162,756)
Income tax benefit (expense)361  (122) 108  (823)
Net loss$(43,077) $(43,469) $(164,091) $(163,579)
Less: Net loss attributable to non-controlling interests(7,606) (11,492) (36,011) (50,921)
Net loss attributable to Pluralsight, Inc.$(35,471) $(31,977) $(128,080) $(112,658)
Net loss per share, basic and diluted$(0.30) $(0.31) $(1.15) $(1.19)
Weighted-average shares of Class A common stock used in computing basic and diluted net loss per share120,133  102,747  111,798  94,515 

(1) Includes equity-based compensation as follows:

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Cost of revenue$335 $193 $1,213 $548
Sales and marketing9,860 7,710 41,168 30,677
Technology and content6,641 5,917 26,222 21,430
General and administrative6,800 8,960 31,250 37,782
Total equity-based compensation$23,636 $22,780 $99,853 $90,437

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

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Cost of revenue$1,832 $1,209 $5,458 $3,645
Sales and marketing146 50 296 129
Technology and content121 176 580 705
Total amortization of acquired intangible assets$2,099 $1,435 $6,334 $4,479

PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures(dollars in thousands)(unaudited)

Key Business Metrics

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Billings$151,088  $128,448  $430,422  $379,051 
Billings from business customers$134,022  $113,176  $380,788  $330,143 
% of billings from business customers89% 88% 88% 87%

Non-GAAP Financial Measures

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Reconciliation of gross profit to non-GAAP gross profit:       
Gross profit$81,588  $69,802  $309,313  $245,557 
Equity-based compensation335  193  1,213  548 
Amortization of acquired intangible assets1,832  1,209  5,458  3,645 
Employer payroll taxes on employee stock transactions12  5  54  23 
Non-GAAP gross profit$83,767  $71,209  $316,038  $249,773 
Gross margin78% 79% 79% 77%
Non-GAAP gross margin80% 80% 81% 79%

PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures (cont.)(dollars in thousands)(unaudited)

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Reconciliation of operating expenses to non-GAAP operating expenses:       
Sales and marketing$60,785   $57,071   $238,165   $207,085  
Less: Equity-based compensation(9,860)  (7,710)  (41,168)  (30,677) 
Less: Amortization of acquired intangible assets(146)  (50)  (296)  (129) 
Less: Employer payroll taxes on employee stock transactions(169)  (81)  (1,151)  (1,293) 
Non-GAAP sales and marketing$50,610   $49,230   $195,550   $174,986  
Sales and marketing as a percentage of revenue58 % 64 % 61 % 65 %
Non-GAAP sales and marketing as a percentage of revenue48 % 55 % 50 % 55 %
        
Technology and content$29,782   $29,965   $118,785   $102,902  
Less: Equity-based compensation(6,641)  (5,917)  (26,222)  (21,430) 
Less: Amortization of acquired intangible assets(121)  (176)  (580)  (705) 
Less: Employer payroll taxes on employee stock transactions(121)  (94)  (1,165)  (1,073) 
Non-GAAP technology and content$22,899   $23,778   $90,818   $79,694  
Technology and content as a percentage of revenue28 % 34 % 30 % 32 %
Non-GAAP technology and content as a percentage of revenue22 % 27 % 23 % 25 %
        
General and administrative$28,918   $21,950   $95,651   $85,560  
Less: Equity-based compensation(6,800)  (8,960)  (31,250)  (37,782) 
Less: Employer payroll taxes on employee stock transactions(156)  (142)  (1,008)  (1,039) 
Less: Secondary offering costs      (1,260)  (918) 
Less: Acquisition-related costs(8,097)     (8,438)  (835) 
Non-GAAP general and administrative$13,865   $12,848   $53,695   $44,986  
General and administrative as a percentage of revenue28 % 25 % 24 % 27 %
Non-GAAP general and administrative as a percentage of revenue13 % 14 % 14 % 14 %
Reconciliation of loss from operations to non-GAAP operating loss:       
Loss from operations$(37,897)  $(39,184)  $(143,288)  $(149,990) 
Equity-based compensation23,636   22,780   99,853   90,437  
Amortization of acquired intangible assets2,099   1,435   6,334   4,479  
Employer payroll taxes on employee stock transactions458   322   3,378   3,428  
Secondary offering costs      1,260   918  
Acquisition-related costs8,097      8,438   835  
Non-GAAP operating loss$(3,607)  $(14,647)  $(24,025)  $(49,893) 

PLURALSIGHT, INC.

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

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Adjusted pro forma net loss per share       
Numerator:       
Net loss attributable to Pluralsight, Inc.$(35,471) $(31,977) $(128,080) $(112,658)
Net loss attributable to non-controlling interests(7,606) (11,492) (36,011) (50,921)
Equity-based compensation23,636  22,780  99,853  90,437 
Amortization of acquired intangibles2,099  1,435  6,334  4,479 
Employer payroll taxes on employee stock transactions458  322  3,378  3,428 
Secondary offering costs    1,260  918 
Acquisition-related costs8,097    8,438  835 
Amortization of debt discount and issuance costs6,949  6,571  27,077  21,691 
Loss on debt extinguishment      950 
Adjusted pro forma net loss$(1,838) $(12,361) $(17,751) $(40,841)
Denominator:       
Weighted-average shares of Class A common stock outstanding120,133  102,747  111,798  94,515 
Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock25,446  36,447  31,434  42,720 
Adjusted pro forma weighted-average common shares outstanding, basic and diluted145,579  139,194  143,232  137,235 
Adjusted pro forma net loss per share$(0.01) $(0.09) $(0.12) $(0.30)
        
Reconciliation of net cash provided by (used in) operating activities to free cash flow:       
Net cash provided by (used in) operating activities$2,397  $(7,906) $9,090  $(11,729)
Less: Purchases of property and equipment(1)(4,212) (3,562) (35,438) (11,181)
Less: Purchases of content library(2,213) (1,504) (7,809) (5,326)
Free cash flow$(4,028) $(12,972) $(34,157) $(28,236)

(1) Purchases of property and equipment includes cash paid for the construction of tenant improvements at our new headquarters in Utah of approximately $1.2 million and $24.1 million for the three months and year ended December 31, 2020, respectively.

PLURALSIGHT, INC.

Condensed Consolidated Balance Sheets(in thousands)(unaudited)

 December 31, 2020 December 31, 2019
    
Assets   
Current assets:   
Cash and cash equivalents$134,395  $90,515 
Short-term investments265,220  332,234 
Accounts receivable, net118,808  101,576 
Deferred contract acquisition costs22,910  18,331 
Prepaid expenses and other current assets25,033  14,174 
Total current assets566,366  556,830 
Restricted cash and cash equivalents17,546  28,916 
Long-term investments86,586  105,805 
Property and equipment, net64,518  22,896 
Right-of-use assets61,157  15,804 
Content library, net28,890  8,958 
Intangible assets, net18,488  22,631 
Goodwill293,863  262,532 
Deferred contract acquisition costs, noncurrent10,553  5,982 
Other assets3,166  1,599 
Total assets$1,151,133  $1,031,953 
Liabilities and stockholders' equity   
Current liabilities:   
Accounts payable$9,697  $10,615 
Accrued expenses57,884  40,703 
Accrued author fees12,111  11,694 
Lease liabilities10,350  5,752 
Deferred revenue252,423  215,137 
Total current liabilities342,465  283,901 
Deferred revenue, noncurrent23,863  19,517 
Convertible senior notes, net497,305  470,228 
Lease liabilities, noncurrent74,421  11,167 
Contingent consideration liabilities11,050   
Other liabilities259  980 
Total liabilities949,363  785,793 
Stockholders' equity:   
Preferred stock   
Class A common stock12  10 
Class B common stock1  2 
Class C common stock1  1 
Additional paid-in capital752,804  641,128 
Accumulated other comprehensive income975  225 
Accumulated deficit(586,461) (458,381)
Total stockholders’ equity attributable to Pluralsight, Inc.167,332  182,985 
Non-controlling interests34,438  63,175 
Total stockholders’ equity201,770  246,160 
Total liabilities and stockholders' equity$1,151,133  $1,031,953 

PLURALSIGHT, INC.

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

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
        
Operating activities       
Net loss$(43,077) $(43,469) $(164,091) $(163,579)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:       
Depreciation of property and equipment3,396  2,468  12,262  9,464 
Amortization of acquired intangible assets2,099  1,435  6,334  4,479 
Amortization of course creation costs963  702  3,427  2,543 
Equity-based compensation23,636  22,780  99,853  90,437 
Amortization of deferred contract acquisition costs6,876  6,270  25,894  23,587 
Amortization of debt discount and issuance costs6,949  6,571  27,077  21,691 
Investment discount and premium amortization, net702  (675) 770  (2,446)
Loss on debt extinguishment      950 
Other(807) 558  (218) 380 
Changes in assets and liabilities, net of acquired assets and liabilities:       
Accounts receivable(40,557) (39,132) (17,045) (37,274)
Deferred contract acquisition costs(12,553) (9,020) (35,044) (27,688)
Prepaid expenses and other assets(6,185) (2,154) (10,422) (5,663)
Right-of-use assets1,128  1,247  5,615  5,586 
Accounts payable1,969  5,203  (1,157) 2,683 
Accrued expenses and other liabilities11,023  699  17,903  5,887 
Accrued author fees124  400  417  1,692 
Lease liabilities59  (1,529) (3,545) (6,659)
Deferred revenue46,652  39,740  41,060  62,201 
Net cash provided by (used in) operating activities2,397  (7,906) 9,090  (11,729)
Investing activities       
Purchases of property and equipment(4,212) (3,562) (35,438) (11,181)
Purchases of content library(2,213) (1,504) (7,809) (5,326)
Cash paid for acquisition, net of cash acquired(37,512)   (37,512) (163,771)
Purchases of investments(64,148) (164,593) (491,278) (694,246)
Proceeds from sales of investments      4,967 
Proceeds from maturities of investments129,752  139,841  576,582  252,836 
Net cash provided by (used in) investing activities21,667  (29,818) 4,545  (616,721)
Financing activities       
Proceeds from issuance of common stock from employee equity plans11,677  9,952  26,418  24,828 
Taxes paid related to net share settlement(2,387) (1,574) (7,992) (1,574)
Proceeds from issuance of convertible senior notes, net of discount and issuance costs      616,654 
Purchase of capped calls related to issuance of convertible senior notes      (69,432)
Repurchases of convertible senior notes      (35,000)
Proceeds from terminations of capped calls related to repurchases of convertible senior notes      1,284 
Net cash provided by (used in) financing activities9,290  8,378  18,426  536,760 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents368  158  449  50 
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents33,722  (29,188) 32,510  (91,640)
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period118,219  148,619  119,431  211,071 
Cash, cash equivalents, and restricted cash and cash equivalents, end of period$151,941  $119,431  $151,941  $119,431 

Investor Relations Contact:Mark McReynoldsInvestor RelationsPluralsight801-784-9007ir@pluralsight.com

Media Contact:DJ Anderson Communications/PressPluralsight801-784-9007dj@pluralsight.com   

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Source: Pluralsight, Inc.


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