First Quarter Revenue Up 68% to $54.2 Million

Raises 2015 Revenue Guidance

PLEASANTON, Calif.--(BUSINESS WIRE)-- Ellie Mae® (NYSE: ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry, today reported results for the first quarter ended March 31, 2015.

First Quarter 2015 Highlights

• Record revenue of $54.2 million, up 68% from $32.2 million in Q1 2014
• Net income of $3.6 million, up from $0.8 million in Q1 of 2014
• Adjusted EBITDA of $14.6 million, up 141% from $6.0 million in Q1 2014
• Revenue per average active Encompass user of $474, up 38% from $343 in Q1 2014

“We had a great start to the year with an outstanding first quarter,” said Jonathan Corr, president and CEO of Ellie Mae. “In addition to another highly successful Encompass user experience, the quarter ended with financial results that exceeded our revenue, net income and adjusted EBITDA objectives. Our clients closed more loans than expected due to origination volumes that were above initial industry forecasts, but our customers also outpaced the mortgage industry as a whole. On top of this, our active user base increased by nearly ten thousand seats and we continued to drive customer adoption across our product portfolio. Combined, these factors helped grow average revenue per user by 38%. Our results demonstrate the leverage in our business model when expectations are exceeded across multiple fronts.”

Financial Results

Total revenue for the first quarter of 2015 was $54.2 million, compared to $32.2 million for the first quarter of 2014. Net income for the first quarter of 2015 was $3.6 million, or $0.12 per diluted share, compared to net income of $0.8 million, or $0.03 per diluted share, for the first quarter of 2014. Diluted share count for the first quarter of 2015 was 30.4 million, as compared to 29.1 million during the first quarter of 2014.

On a non-GAAP basis, adjusted net income for the first quarter of 2015 was $9.9 million, or $0.33 per diluted share, compared to $4.6 million, or $0.16 per diluted share, for the first quarter of 2014. Adjusted EBITDA for the first quarter of 2015 was $14.6 million, compared to $6.0 million for the first quarter of 2014.

Additional information about the non-GAAP financial measures presented in this release, including a reconciliation of the non-GAAP financial measures to their related GAAP financial measures, is set forth below under the section entitled “Use of Non-GAAP Financial Measures.”

Key Operating Metrics:

• The total number of active Encompass users increased 25% year-over-year to 119,000;
• The total number of active users of the SaaS version of Encompass increased 40% year-over-year to 95,000, or 80% of all active Encompass users;
• Total SaaS Encompass revenue in the first quarter increased 64% year-over-year to $32.5 million, representing 60% of total revenue for the first quarter of 2015; and
• Revenue per average active Encompass user in the first quarter increased 38% year-over-year to $474.

Second Quarter and Full Year 2015 Financial Outlook

For the second quarter of 2015, we expect revenue to be in the range of $59.0 million to $60.0 million. Net income is expected to be in the range of $1.0 million to $1.5 million, or $0.03 to $0.05 per diluted share. Adjusted net income is expected to be in the range of $8.6 million to $9.3 million, or $0.28 to $0.30 per diluted share. Adjusted EBITDA is expected to be in the range of $12.1 million to $13.3 million for the quarter.

For the full year 2015, revenue is expected to be in the range of $223.0 million to $226.0 million, up from the previously-provided range of $203.0 million to $206.0 million. Net income is expected to be in the range of $4.0 million to $5.0 million, or $0.13 to $0.16 per diluted share, up from the previously provided range of $0.5 million to $1.5 million, or $0.02 to $0.05 per diluted share. Adjusted net income is expected to be in the range of $34.4 million to $36.1 million, or $1.09 to $1.13 per diluted share, up from the previously provided range of $27.1 million to $29.0 million, or $0.86 to $0.91 per diluted share. Adjusted EBITDA is expected to be in the range of $48.6 million to $51.3 million, up from the previously provided range of $37.8 million to $40.8 million.

Use of Non-GAAP Financial Measures

Ellie Mae (the “Company”) provides investors with the non-GAAP financial measures of adjusted net income, adjusted EBITDA and free cash flow in addition to the traditional GAAP operating performance measure of net income as part of its overall assessment of its performance. Adjusted net income consists of net income plus amortization of intangible assets and stock-based compensation expense. EBITDA consists of net income plus depreciation, amortization of intangible assets, other income, net and income tax provision. Adjusted EBITDA consists of EBITDA plus stock-based compensation expense. Free cash flow is calculated by subtracting cash paid for the acquisition of property and equipment from net cash provided by operating activities. Ellie Mae uses adjusted net income and adjusted EBITDA as measures of operating performance because they enable period to period comparisons by excluding potential differences caused by variations in the age and depreciable lives of fixed assets, the amortization of intangibles related to acquisitions, and changes in interest expense and interest income that are influenced by capital market conditions. The Company also believes it is useful to exclude stock-based compensation expense from adjusted net income and adjusted EBITDA because the amount of non-cash expense associated with stock-based awards made at certain prices and points in time (a) do not necessarily reflect how the company’s business is performing at any particular time and (b) can vary significantly between periods due to the timing of new stock-based awards. Ellie Mae uses free cash flow as a complementary measure to its entire consolidated statements of cash flows since purchases of property and equipment are a necessary component of ongoing operations. These non-GAAP measures are not measurements of the Company’s financial performance under GAAP and have limitations as analytical tools. Accordingly, these non-GAAP financial measures should not be considered a substitute for, or superior to, net income or operating income or other financial measures calculated in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of the Company’s profitability or liquidity. The Company cautions that other companies in Ellie Mae’s industry may calculate adjusted net income and adjusted EBITDA differently than the Company does, further limiting their usefulness as a comparative measure. A reconciliation of net income to adjusted net income and adjusted EBITDA is included in the tables below.

Quarterly Conference Call

Ellie Mae will discuss its first quarter 2015 results today, April 30, 2015, via teleconference at 4:30 p.m. Eastern Time. To access the call, please dial 888-542-1101 or 719-325-2302 at least five minutes prior to the 4:30 p.m. Eastern Time start time. A live webcast of the call will be available on the Investor Relations section of the Company’s website at http://ir.elliemae.com. An audio replay of the call will be available through May 14, 2015 by dialing 888-203-1112 or 719-457-0820 and entering access code 5180850.

About Ellie Mae

Ellie Mae (NYSE: ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Ellie Mae’s Encompass® all-in-one mortgage management solution provides one system of record that allows banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency. Visit EllieMae.com or call 877.355.4362 to learn more.

©2015 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, DataTrac®, Ellie Mae Network™, Total Quality Loan™, TQL™ and the Ellie Mae logo are trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

Forward-Looking Statements

This press release contains forward-looking statements under the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements include projected revenue, net income, adjusted EBITDA and adjusted net income for the second quarter and fiscal year 2015. These statements involve known and unknown risks, uncertainties and other factors which may cause Ellie Mae’s results to be materially different than those expressed or implied in such statements. Such differences may be based on factors such as changes in the volume of residential mortgage volume in the United States; changes in other macroeconomic factors affecting the residential real estate industry; changes in strategic planning decisions by management; our ability to manage growth and expenses as we continue to scale our business; reallocation of internal resources; changes in anticipated rates of existing customer conversions and SaaS seat additions, and new customer acquisitions; the possibility that economic benefits of future opportunities may never materialize, including unexpected variations in market growth and demand for the acquired products and technologies; delays and disruptions, including changing relationships with partners, customers, employees or suppliers; the satisfactory performance, reliability and availability of our products and services; the amount of costs incurred in connection with supporting and integrating new customers and partners; ongoing personnel and logistical challenges of managing a larger organization; changes in other macroeconomic factors affecting the residential real estate industry and other risk factors included in documents that Ellie Mae has filed with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2014. Other unknown or unpredictable factors also could have material adverse effects on Ellie Mae’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Ellie Mae cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Ellie Mae expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.

Ellie Mae, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)
		March 31,			December 31,
		2015			2014
Assets
Current assets:
Cash and cash equivalents		$	25,353		$	26,756
Short-term investments			48,724			49,352
Accounts receivable, net of allowances for doubtful accounts of $102 and $66 as of March 31, 2015 and December 31, 2014, respectively			25,553			20,403
Prepaid expenses and other current assets			13,014			16,021
Total current assets			112,644			112,532
Property and equipment, net			50,851			28,694
Long-term investments			59,354			58,679
Intangible assets, net			20,120			21,452
Goodwill			65,338			65,338
Deposits and other assets			3,425			3,425
Total assets		$	311,732		$	290,120
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	8,811		$	6,726
Accrued and other current liabilities			16,953			16,822
Acquisition holdback, net of discount			522			522
Deferred revenue			12,486			9,729
Total current liabilities			38,772			33,799
Leases payable, net of current portion			2,241			443
Other long-term liabilities			3,729			2,994
Total liabilities			44,742			37,236
Stockholders’ equity:
Common stock, $0.0001 par value per share; 140,000,000 authorized shares, 29,274,686 and 28,907,147 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively			3			3
Additional paid-in capital			254,984			242,527
Accumulated other comprehensive income (loss)			76			(95	)
Retained earnings			11,927			10,449
Total stockholders’ equity			266,990			252,884
Total liabilities and stockholders’ equity		$	311,732		$	290,120

Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share amounts)
		Three Months ended
		March 31,
		2015			2014
Revenues		$	54,189		$	32,178
Cost of revenues			17,350			9,318
Gross profit			36,839			22,860
Operating expenses:
Sales and marketing			9,760			6,095
Research and development			8,297			6,815
General and administrative			12,302			8,993
Total operating expenses			30,359			21,903
Income from operations			6,480			957
Other income, net			132			100
Income before income taxes			6,612			1,057
Income tax provision			3,028			275
Net income		$	3,584		$	782
Net income per share of common stock:
Basic		$	0.12		$	0.03
Diluted		$	0.12		$	0.03
Weighted average common shares used in computing net income per share of common stock:
Basic			28,768,144			27,339,394
Diluted			30,442,163			29,070,130
Net income		$	3,584		$	782
Other comprehensive income, net of taxes:
Unrealized gain (loss) on investments			171			(3	)
Comprehensive income		$	3,755		$	779

Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
		Three Months ended
		March 31,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	3,584			$	782
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			1,767				1,275
Provision for uncollectible accounts receivable			38				64
Amortization of intangible assets			1,332				505
Amortization of discount related to acquisition holdback			—				14
Stock-based compensation expense			5,007				3,310
Excess tax benefit from stock-based compensation			(2,906	)			(373	)
Amortization of investment premium			275				352
Changes in operating assets and liabilities:
Accounts receivable			(5,188	)			(1,747	)
Prepaid expenses and other current assets			3,007				(648	)
Deposits and other assets			—				76
Accounts payable			379				(562	)
Accrued, other current and other liabilities			846				(902	)
Deferred revenue			2,805				(23	)
Net cash provided by operating activities			10,946				2,123
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment			(16,015	)			(2,548	)
Purchases of investments			(15,816	)			(21,346	)
Maturities of investments			15,665				16,750
Acquisitions, net of cash acquired			—				(4,500	)
Net cash used in investing activities			(16,166	)			(11,644	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital lease obligations			(1,320	)			(464	)
Proceeds from issuance of common stock under employee stock plans			5,071				2,613
Payments for repurchase of common stock			(2,520	)			—
Tax payments related to shares withheld for vested restricted stock units			(320	)			(40	)
Excess tax benefit from stock-based compensation			2,906				373
Net cash provided by financing activities			3,817				2,482
NET DECREASE IN CASH AND CASH EQUIVALENTS			(1,403	)			(7,039	)
CASH AND CASH EQUIVALENTS, Beginning of period			26,756				33,462
CASH AND CASH EQUIVALENTS, End of period		$	25,353			$	26,423
Supplemental disclosure of cash flow information:
Cash paid for interest		$	33			$	24
Cash paid for income taxes		$	50			$	18
Supplemental disclosure of non-cash investing and financing activities:
Fixed asset purchases not yet paid		$	2,628			$	1,069
Stock-based compensation capitalized to property and equipment		$	207			$	54
Acquisition of property and equipment under capital leases		$	5,996			$	1,195

Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
		Three Months ended
		March 31,
		2015				2014
Net income		$	3,584			$	782
Depreciation			1,767				1,275
Amortization of intangible assets			1,332				505
Other income, net			(132	)			(100	)
Income tax provision			3,028				275
EBITDA			9,579				2,737
Stock-based compensation expense			5,007				3,310
Adjusted EBITDA		$	14,586			$	6,047
Net income		$	3,584			$	782
Stock-based compensation expense			5,007				3,310
Amortization of intangible assets			1,332				505
Adjusted net income		$	9,923			$	4,597
Shares used to compute non-GAAP net income per share
Basic			28,768,144				27,339,394
Diluted			30,442,163				29,070,130
Adjusted net income per share
Basic		$	0.34			$	0.17
Diluted		$	0.33			$	0.16
Net cash provided by operating activities		$	10,946			$	2,123
Acquisition of property and equipment			(16,015	)			(2,548	)
Free cash flow		$	(5,069	)		$	(425	)

Ellie Mae, Inc.
NON-GAAP RECONCILIATION
(UNAUDITED)
(in thousands, except share and per share amounts)
		Second Quarter 2015 Projected Range									Fiscal 2015 Projected Range
Net income		$ 1,000			$ 1,500						$ 4,000			$ 5,000
Depreciation		2,800			3,000						11,500			12,000
Amortization of intangible assets		1,200			1,300						4,900			5,100
Income tax provision/other		700			1,000						2,700			3,200
EBITDA		5,700			6,800						23,100			25,300
Stock-based compensation expense		6,400			6,500						25,500			26,000
Adjusted EBITDA		$ 12,100			$ 13,300						$ 48,600			$ 51,300
Net income		$ 1,000			$ 1,500						$ 4,000			$ 5,000
Stock-based compensation expense		6,400			6,500						25,500			26,000
Amortization of intangible assets		1,200			1,300						4,900			5,100
Adjusted net income		$ 8,600			$ 9,300						$ 34,400			$ 36,100
Shares used to compute non-GAAP net income per share
Basic		29,000,000			29,500,000						29,500,000			30,000,000
Diluted		31,000,000			31,500,000						31,500,000			32,000,000
Projected net income per share
Basic		$ 0.03			$ 0.05						$ 0.14			$ 0.17
Diluted		$ 0.03			$ 0.05						$ 0.13			$ 0.16
Adjusted net income per share
Basic		$ 0.30			$ 0.32						$ 1.17			$ 1.20
Diluted		$ 0.28			$ 0.30						$ 1.09			$ 1.13

Ellie Mae, Inc.

Edgar Luce, 925-227-7079

Executive VP and CFO

[email protected]

or

Michelle Gable, 925-227-7108

Vice President, Investor Relations

[email protected]

Source: Ellie Mae, Inc.

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