Form 8-K Paycom Software, Inc. For: Feb 06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 6, 2018
Paycom Software, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36393 | 80-0957485 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 7501 W. Memorial Road, Oklahoma City, Oklahoma | 73142 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (405) 722-6900
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
On February 6, 2018, Paycom Software, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2017. As previously announced, the Company announced that it will hold a conference call at 5:00 PM Eastern Time, on Tuesday, February 6, 2018, to discuss its financial results. A copy of the press release is furnished hereto as Exhibit 99.1 and is incorporated herein by reference.
The information furnished pursuant to Item 2.02 (including Exhibit 99.1 hereto), shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 7.01 | Regulation FD Disclosure |
During the aforementioned conference call, the Company plans to discuss its January 1, 2018 adoption of, and transition to, ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). To supplement this discussion, the Company has prepared a presentation setting forth information regarding the impact of ASC 606 on the Company’s financial results for the years ended December 31, 2016 and 2017 and each quarter within the year ended December 31, 2017. In addition to referencing the presentation during the conference call, the Company may use this presentation, or portions thereof, in one or more subsequent meetings with investors and analysts. The presentation is also currently available online at investors.paycom.com. A copy of the presentation is furnished hereto as Exhibit 99.2 and is incorporated herein by reference.
The information furnished pursuant to Item 7.01 (including Exhibit 99.2 hereto), shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description of Exhibit | |
| 99.1 | Press release, dated February 6, 2018, issued by Paycom Software, Inc. (furnished pursuant to Item 2.02). | |
| 99.2 | ASC 606 Transition Presentation (furnished pursuant to Item 7.01). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PAYCOM SOFTWARE, INC. | ||||||
| Date: February 6, 2018 | By: | /s/ Craig E. Boelte | ||||
| Name: | Craig E. Boelte | |||||
| Title: | Chief Financial Officer | |||||
Exhibit 99.1
Paycom Software, Inc. Reports Fourth Quarter and Year-End 2017 Results
Fourth Quarter Revenues of $114.0 million, up 30% from comparable prior year period
Fourth Quarter GAAP Net Income of $12.9 million, or $0.22 per diluted share, up 49% from comparable prior year period
Fourth Quarter Adjusted EBITDA of $31.8 million, up 54% from comparable prior year period
Fourth Quarter non-GAAP Net Income of $16.8 million, or $0.29 per diluted share
Full Year 2017 Revenues of $433.0 million, up 32% from comparable prior year period
Full Year 2017 GAAP Net Income of $66.8 million, or $1.13 per diluted share, up 52% from comparable prior year period
Full Year 2017 Adjusted EBITDA of $137.0 million, up 45% from comparable prior year period
Full Year 2017 non-GAAP Net Income of $76.7 million, or $1.30 per diluted share
OKLAHOMA CITY – (BUSINESS WIRE) – Paycom Software, Inc. (“Paycom”) (NYSE: PAYC), a leading provider of comprehensive, cloud-based human capital management software, today announced its financial results for the quarter and full year ended December 31, 2017.
“I’m proud of our accomplishments in 2017 as we achieved our goals and achieved 32% revenue growth for the year,” said Paycom’s founder and CEO, Chad Richison. “Our profitable business model also allowed us to continue to return value to our stockholders, as we repurchased over 1.2 million shares in 2017.”
Financial Highlights for the Fourth Quarter of 2017
Total Revenues of $114.0 million represented a 30% increase compared to total revenues of $87.8 million in the same period last year. Recurring revenues of $111.7 million increased 29% from the comparable prior year period, and constituted 98% of total revenues.
GAAP Net Income was $12.9 million, or $0.22 per diluted share, compared to GAAP net income of $8.6 million, or $0.15 per diluted share, in the same period last year.
Adjusted EBITDA1 was $31.8 million, compared to $20.7 million in the same period last year.
Non-GAAP Net Income1 was $16.8 million, or $0.29 per diluted share, compared to $10.8 million, or $0.18 per diluted share, in the same period last year.
Cash and Cash Equivalents were $46.1 million as of December 31, 2017.
Total Debt was $35.3 million as of December 31, 2017.
Financial Highlights for the Full Year 2017
Total Revenues of $433.0 million represented a 32% increase compared to total revenues of $329.1 million in the same period last year. Recurring revenues of $425.4 million increased 31% from the comparable prior year period, and constituted 98% of total revenues.
GAAP Net Income was $66.8 million, or $1.13 per diluted share, compared to GAAP net income of $43.8 million, or $0.74 per diluted share, in the same period last year.
Adjusted EBITDA1 was $137.0 million, compared to $94.5 million in the same period last year.
Non-GAAP Net Income1 was $76.7 million, or $1.30 per diluted share, compared to $51.6 million, or $0.87 per diluted share, in the same period last year.
| 1 | Adjusted EBITDA and non-GAAP net income are non-GAAP financial measures. Please see the discussion below under the heading “Use of Non-GAAP Financial Information” and the reconciliations at the end of this release for additional information concerning these non-GAAP financial measures. |
Financial Outlook
Paycom provides the following expected financial guidance for the quarter ending March 31, 2018 and the year ending December 31, 2018. Please note that this guidance reflects the January 1, 2018 adoption of ASU No. 2014-09, Topic 606:
Quarter Ending March 31, 2018
Total Revenues in the range of $150 million to $152 million.
Adjusted EBITDA in the range of $74 million to $76 million.
Year Ending December 31, 2018
Total Revenues in the range of $541 million to $543 million.
Adjusted EBITDA in the range of $213 million to $215 million.
We have not reconciled the Adjusted EBITDA ranges for the quarter ending March 31, 2018 or the year ending December 31, 2018 to net income because applicable information for future periods, on which this reconciliation would be based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, interest expense, taxes, non-cash stock-based compensation expense, change in fair value of our interest rate swap and other items. Accordingly, a reconciliation of these Adjusted EBITDA ranges to net income is not available at this time without unreasonable effort.
Use of Non-GAAP Financial Information
To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we consider and have included certain non-GAAP financial measures in this press release, including Adjusted EBITDA and non-GAAP net income. Management uses Adjusted EBITDA and non-GAAP net income as supplemental measures to review and assess the performance of our core business operations and for planning purposes. We define (i) Adjusted EBITDA as net income plus interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any), loss on early repayment of debt, and the change in fair value of our interest rate swap and (ii) non-GAAP net income as net income plus non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any), loss on early repayment of debt and the change in fair value of our interest rate swap, all of which are adjusted for the effect of income taxes. Adjusted EBITDA and non-GAAP net income are metrics that provide investors with greater transparency to the information used by management in its financial and operational decision-making. We believe these metrics are useful to investors because they facilitate comparisons of our core business operations across periods on a consistent basis, as well as comparisons with the results of peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP. In addition, Adjusted EBITDA is a measure that provides useful information to management about the amount of cash available for reinvestment in our business, repurchasing common stock and other purposes. Management believes that the non-GAAP measures presented in this press release, when viewed in combination with our results prepared in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our business and performance.
Adjusted EBITDA and non-GAAP net income are not measures of financial performance under GAAP and should not be considered a substitute for net income, which we consider to be the most directly comparable GAAP measure. Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and when assessing our operating performance, you should not consider Adjusted EBITDA or non-GAAP net income in isolation, or as a substitute for net income or other consolidated statements of income data prepared in accordance with GAAP. Adjusted EBITDA and non-GAAP net income may not be comparable to similar titled measures of other companies and other companies may not calculate such measures in the same manner as we do.
Conference Call Details:
In conjunction with this announcement, Paycom will host a conference call today, Feb. 6, 2018, at 5:00 p.m. Eastern time to discuss its financial results. To access this call, dial (866) 362-4443 (domestic) or (412) 317-5229 (international) and announce Paycom as the conference name to the operator. A live webcast as well as the replay of the conference call will be available on the Investor Relations page of Paycom’s website at investors.paycom.com. A replay of this conference call can also be accessed by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) until Feb. 13, 2018. The replay passcode is 10115660.
About Paycom
As a leader in payroll and HR technology, Oklahoma City-based Paycom redefines the human capital management industry by allowing companies to effectively navigate a rapidly changing business environment. Its cloud-based software solution is based on a core system of record maintained in a single database for all human capital management functions, providing the functionality that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Paycom has the ability to serve businesses of all sizes and in every industry. As one of the leading human capital management providers, Paycom serves clients in all 50 states from offices across the country.
Forward-Looking Statements
Certain statements in this press release are, and certain statements on the related teleconference call may be, forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are any statements that refer to Paycom’s estimated or anticipated results, other non-historical facts or future events and include, but are not limited to, statements regarding our business strategy; anticipated future operating results and operating expenses, cash flows, capital resources, dividends and liquidity; trends, opportunities and risks affecting our business, industry and
financial results; future expansion or growth plans and potential for future growth; our ability to attract new clients to purchase our solution; our ability to retain clients and induce them to purchase additional applications; our ability to accurately forecast future revenues and appropriately plan our expenses; market acceptance of our solution and applications; our expectations regarding future revenues generated by certain applications; the impact of future regulatory, judicial, or legislative changes; how certain factors affecting our performance correlate to improvement or deterioration in the labor market; our plan to open additional sales offices and our ability to effectively execute such plan; the sufficiency of our existing cash and cash equivalents to meet our working capital and capital expenditure needs over the next 12 months; our ability to expand our corporate headquarters within an expected timeframe; our plans regarding our capital expenditures and investment activity as our business grows, including with respect to research and development; the expected impact of the Tax Cuts and Jobs Act of 2017 and our expected income tax rate for future periods; our plans to purchase shares of our common stock through a stock repurchase plan; and the impact on our consolidated financial statements of new accounting pronouncements. In addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as “anticipate,” “believe,” “could,” “expect,” “may,” “might,” “plan,” “possible,” “potential,” “project,” “should,” “would,” and similar expressions or the negative of such terms or other comparable terminology. These forward-looking statements speak only as of the date hereof and are subject to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of the factors discussed in our filings with the Securities and Exchange Commission, including but not limited to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2016. We do not undertake any obligation to update or revise the forward-looking statements to reflect events or circumstances that exist after the date on which such statements were made, except to the extent required by law.
Paycom Software, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
(unaudited)
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 46,077 | $ | 60,158 | ||||
| Accounts receivable |
1,576 | 1,339 | ||||||
| Prepaid expenses |
4,982 | 4,475 | ||||||
| Inventory |
979 | 675 | ||||||
| Income tax receivable |
7,047 | 692 | ||||||
|
|
|
|
|
|||||
| Current assets before funds held for clients |
60,661 | 67,339 | ||||||
| Funds held for clients |
1,089,201 | 858,244 | ||||||
|
|
|
|
|
|||||
| Total current assets |
1,149,862 | 925,583 | ||||||
| Property and equipment, net |
147,705 | 96,848 | ||||||
| Deposits and other assets |
1,456 | 1,215 | ||||||
| Goodwill |
51,889 | 51,889 | ||||||
| Intangible assets, net |
958 | 1,871 | ||||||
| Deferred income tax assets, net |
3,294 | 1,207 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,355,164 | $ | 1,078,613 | ||||
|
|
|
|
|
|||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 6,490 | $ | 3,737 | ||||
| Accrued commissions and bonuses |
9,585 | 8,003 | ||||||
| Accrued payroll and vacation |
7,015 | 4,769 | ||||||
| Deferred revenue |
6,982 | 5,230 | ||||||
| Current portion of long-term debt |
888 | 1,113 | ||||||
| Accrued expenses and other current liabilities |
19,991 | 17,798 | ||||||
|
|
|
|
|
|||||
| Current liabilities before client funds obligation |
50,951 | 40,650 | ||||||
| Client funds obligation |
1,089,201 | 858,244 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
1,140,152 | 898,894 | ||||||
|
|
|
|
|
|||||
| Long-term derivative liability |
554 | — | ||||||
| Long-term deferred revenue |
44,642 | 34,481 | ||||||
| Net long-term debt, less current portion |
34,414 | 28,711 | ||||||
|
|
|
|
|
|||||
| Total long-term liabilities |
79,610 | 63,192 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock, $0.01 par value (100,000,000 shares authorized, 60,149,411 and 58,453,283 shares issued at December 31, 2017 and 2016, respectively; 57,788,573 and 57,331,022 shares outstanding at December 31, 2017 and 2016, respectively) |
601 | 585 | ||||||
| Additional paid in capital |
137,234 | 95,452 | ||||||
| Retained earnings |
137,255 | 70,448 | ||||||
| Treasury stock, at cost (2,360,838 and 1,122,261 shares at December 31, 2017 and 2016, respectively) |
(139,688 | ) | (49,958 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
135,402 | 116,527 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 1,355,164 | $ | 1,078,613 | ||||
|
|
|
|
|
|||||
Paycom Software, Inc.
Consolidated Statements of Income
(in thousands, except per share and share amounts)
(unaudited)
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Revenues |
||||||||||||||||||
| Recurring |
$ | 111,661 | $ | 86,295 | $ | 425,424 | $ | 323,548 | ||||||||||
| Implementation and other |
2,364 | 1,515 | 7,623 | 5,593 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenues |
114,025 | 87,810 | 433,047 | 329,141 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Cost of revenues |
||||||||||||||||||
| Operating expenses |
16,419 | 13,777 | 62,438 | 48,268 | ||||||||||||||
| Depreciation and amortization |
2,761 | 1,705 | 9,590 | 5,798 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total cost of revenues |
19,180 | 15,482 | 72,028 | 54,066 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Administrative expenses |
||||||||||||||||||
| Sales and marketing |
44,052 | 36,556 | 150,512 | 119,258 | ||||||||||||||
| Research and development |
7,426 | 6,672 | 30,430 | 20,966 | ||||||||||||||
| General and administrative |
21,197 | 14,163 | 91,647 | 69,046 | ||||||||||||||
| Depreciation and amortization |
2,736 | 2,256 | 9,805 | 7,834 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total administrative expenses |
75,411 | 59,647 | 282,394 | 217,104 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating expenses |
94,591 | 75,129 | 354,422 | 271,170 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income |
19,434 | 12,681 | 78,625 | 57,971 | ||||||||||||||
| Interest expense |
(153 | ) | (303 | ) | (911 | ) | (1,036 | ) | ||||||||||
| Other income, net |
(1,429 | ) | 371 | (1,067 | ) | 308 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Income before income taxes |
17,852 | 12,749 | 76,647 | 57,243 | ||||||||||||||
| Provision for income taxes |
4,947 | 4,116 | 9,840 | 13,403 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income |
$ | 12,905 | $ | 8,633 | $ | 66,807 | $ | 43,840 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Earnings per share, basic |
$ | 0.22 | $ | 0.15 | $ | 1.15 | $ | 0.76 | ||||||||||
| Earnings per share, diluted |
$ | 0.22 | $ | 0.15 | $ | 1.13 | $ | 0.74 | ||||||||||
| Weighted average shares outstanding: |
||||||||||||||||||
| Basic |
58,100,141 | 57,652,531 | 57,839,155 | 57,550,204 | ||||||||||||||
| Diluted |
58,850,271 | 58,882,996 | 58,790,019 | 58,968,099 | ||||||||||||||
Paycom Software, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Year ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 66,807 | $ | 43,840 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
19,395 | 13,632 | ||||||
| (Gain)/loss on disposition of property and equipment |
21 | (64 | ) | |||||
| Amortization of debt discount and debt issuance costs |
117 | 124 | ||||||
| Stock-based compensation expense |
38,542 | 22,471 | ||||||
| Loss on early repayment of debt |
923 | — | ||||||
| Cash paid for derivative settlement |
(24 | ) | — | |||||
| Loss on derivative |
673 | — | ||||||
| Deferred income taxes, net |
(2,087 | ) | (1,848 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(237 | ) | 1,015 | |||||
| Prepaid expenses |
(507 | ) | (944 | ) | ||||
| Inventory |
462 | 418 | ||||||
| Deposits and other assets |
(241 | ) | 71 | |||||
| Accounts payable |
79 | (1,571 | ) | |||||
| Income taxes, net |
(6,355 | ) | 6,051 | |||||
| Accrued commissions and bonuses |
1,582 | (684 | ) | |||||
| Accrued payroll and vacation |
2,246 | 1,871 | ||||||
| Deferred revenue |
11,913 | 10,675 | ||||||
| Accrued expenses and other current liabilities |
(2,709 | ) | 3,896 | |||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
130,600 | 98,953 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Net change in funds held for clients |
(230,957 | ) | (161,541 | ) | ||||
| Purchases of property and equipment |
(59,389 | ) | (43,805 | ) | ||||
| Proceeds from sale of property and equipment |
— | 295 | ||||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(290,346 | ) | (205,051 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of long-term debt |
40,940 | 5,000 | ||||||
| Repurchases of common stock |
(56,880 | ) | (35,561 | ) | ||||
| Withholding taxes paid related to net share settlements |
(32,850 | ) | (14,396 | ) | ||||
| Principal payments on long-term debt |
(35,335 | ) | (964 | ) | ||||
| Net change in client funds obligation |
230,957 | 161,541 | ||||||
| Debt extinguishment costs |
(823 | ) | — | |||||
| Payment of debt issuance costs |
(344 | ) | (78 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by financing activities |
145,665 | 115,542 | ||||||
|
|
|
|
|
|||||
| Net change in cash and cash equivalents |
(14,081 | ) | 9,444 | |||||
| Cash and cash equivalents |
||||||||
| Beginning of year |
60,158 | 50,714 | ||||||
|
|
|
|
|
|||||
| End of year |
$ | 46,077 | $ | 60,158 | ||||
|
|
|
|
|
|||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid for interest, net of amounts capitalized |
$ | 791 | $ | 938 | ||||
| Cash paid for income taxes |
$ | 18,332 | $ | 9,323 | ||||
| Noncash investing and financing activities: |
||||||||
| Purchases of property and equipment, accrued but not paid |
$ | 6,686 | $ | 4,651 | ||||
| Stock-based compensation for capitalized software |
$ | 3,285 | $ | 1,784 | ||||
Paycom Software, Inc.
Reconciliations of GAAP to non-GAAP Financial Measures
(in thousands, except share and per share amounts)
(unaudited)
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Net income to Adjusted EBITDA: |
||||||||||||||||||
| Net income |
$ | 12,905 | $ | 8,633 | $ | 66,807 | $ | 43,840 | ||||||||||
| Interest expense |
153 | 303 | 911 | 1,036 | ||||||||||||||
| Provision for income taxes |
4,947 | 4,116 | 9,840 | 13,403 | ||||||||||||||
| Depreciation and amortization expense |
5,497 | 3,961 | 19,395 | 13,632 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| EBITDA |
23,502 | 17,013 | 96,953 | 71,911 | ||||||||||||||
| Non-cash stock-based compensation expense |
6,759 | 3,689 | 38,513 | 22,546 | ||||||||||||||
| Loss on early repayment of debt |
923 | — | 923 | — | ||||||||||||||
| Change in fair value of interest rate swap |
649 | — | 649 | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted EBITDA |
$ | 31,833 | $ | 20,702 | $ | 137,038 | $ | 94,457 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenues |
$ | 114,025 | $ | 87,810 | $ | 433,047 | $ | 329,141 | ||||||||||
| Adjusted EBITDA as a % of revenues |
27.9 | % | 23.6 | % | 31.6 | % | 28.7 | % | ||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Net income to non-GAAP net income |
||||||||||||||||||
| Net income |
$ | 12,905 | $ | 8,633 | $ | 66,807 | $ | 43,840 | ||||||||||
| Non-cash stock-based compensation expense |
6,759 | 3,689 | 38,513 | 22,546 | ||||||||||||||
| Loss on early repayment of debt |
923 | — | 923 | — | ||||||||||||||
| Change in fair value of interest rate swap |
649 | — | 649 | — | ||||||||||||||
| Income tax effect on non-GAAP adjustments |
(4,458 | ) | (1,556 | ) | (30,233 | ) | (14,790 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP net income |
$ | 16,778 | $ | 10,766 | $ | 76,659 | $ | 51,596 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Earnings per share, basic |
$ | 0.22 | $ | 0.15 | $ | 1.15 | $ | 0.76 | ||||||||||
| Earnings per share, diluted |
$ | 0.22 | $ | 0.15 | $ | 1.13 | $ | 0.74 | ||||||||||
| Non-GAAP net income per share, basic |
$ | 0.29 | $ | 0.19 | $ | 1.33 | $ | 0.90 | ||||||||||
| Non-GAAP net income per share, diluted |
$ | 0.29 | $ | 0.18 | $ | 1.30 | $ | 0.87 | ||||||||||
| Weighted average shares outstanding: |
||||||||||||||||||
| Basic |
58,100,141 | 57,652,531 | 57,839,155 | 57,550,204 | ||||||||||||||
| Diluted |
58,850,271 | 58,882,996 | 58,790,019 | 58,968,099 | ||||||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Earnings per share to non-GAAP net income per share, basic: |
||||||||||||||||||
| Earnings per share, basic |
$ | 0.22 | $ | 0.15 | $ | 1.15 | $ | 0.76 | ||||||||||
| Non-cash stock-based compensation expense |
0.12 | 0.06 | 0.67 | 0.39 | ||||||||||||||
| Loss on early repayment of debt |
0.02 | — | 0.02 | — | ||||||||||||||
| Change in fair value of interest rate swap |
0.01 | — | 0.01 | — | ||||||||||||||
| Income tax effect on non-GAAP adjustments |
(0.08 | ) | (0.02 | ) | (0.52 | ) | (0.25 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP net income per share, basic |
$ | 0.29 | $ | 0.19 | $ | 1.33 | $ | 0.90 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Earnings per share to non-GAAP net income per share, diluted: |
||||||||||||||||||
| Earnings per share, diluted |
$ | 0.22 | $ | 0.15 | $ | 1.13 | $ | 0.74 | ||||||||||
| Non-cash stock-based compensation expense |
0.12 | 0.06 | 0.66 | 0.38 | ||||||||||||||
| Loss on early repayment of debt |
0.02 | — | 0.02 | — | ||||||||||||||
| Change in fair value of interest rate swap |
0.01 | — | 0.01 | — | ||||||||||||||
| Income tax effect on non-GAAP adjustments |
(0.08 | ) | (0.03 | ) | (0.52 | ) | (0.25 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP net income per share, diluted |
$ | 0.29 | $ | 0.18 | $ | 1.30 | $ | 0.87 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Adjusted gross profit: |
||||||||||||||||||
| Total revenues |
$ | 114,025 | $ | 87,810 | $ | 433,047 | $ | 329,141 | ||||||||||
| Less: Total cost of revenues |
(19,180 | ) | (15,482 | ) | (72,028 | ) | (54,066 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total gross profit |
94,845 | 72,328 | 361,019 | 275,075 | ||||||||||||||
| Plus: Non-cash stock-based compensation expense |
751 | 492 | 3,950 | 2,217 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total adjusted gross profit |
95,596 | 72,820 | 364,969 | 277,292 | ||||||||||||||
| Total gross profit % |
83.2 | % | 82.4 | % | 83.4 | % | 83.6 | % | ||||||||||
| Total adjusted gross profit % |
83.8 | % | 82.9 | % | 84.3 | % | 84.2 | % | ||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Adjusted sales and marketing expenses: |
||||||||||||||||||
| Sales and marketing expenses |
$ | 44,052 | $ | 36,556 | $ | 150,512 | $ | 119,258 | ||||||||||
| Less: Non-cash stock-based compensation expense |
(1,575 | ) | (933 | ) | (6,086 | ) | (3,656 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total adjusted sales and marketing expenses |
$ | 42,477 | $ | 35,623 | $ | 144,426 | $ | 115,602 | ||||||||||
| Total revenues |
$ | 114,025 | $ | 87,810 | $ | 433,047 | $ | 329,141 | ||||||||||
| Total adjusted sales and marketing expenses as a % of revenues |
37.3 | % | 40.6 | % | 33.4 | % | 35.1 | % | ||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Adjusted administrative expenses: |
||||||||||||||||||
| Total administrative expenses |
$ | 75,411 | $ | 59,647 | $ | 282,394 | $ | 217,104 | ||||||||||
| Less: Non-cash stock-based compensation expense |
(6,008 | ) | (3,197 | ) | (34,563 | ) | (20,329 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total adjusted administrative expenses |
$ | 69,403 | $ | 56,450 | $ | 247,831 | $ | 196,775 | ||||||||||
| Total revenues |
$ | 114,025 | $ | 87,810 | $ | 433,047 | $ | 329,141 | ||||||||||
| Total adjusted administrative expenses as a % of revenues |
60.9 | % | 64.3 | % | 57.2 | % | 59.8 | % | ||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Adjusted research and development expenses: |
||||||||||||||||||
| Research and development expenses |
$ | 7,426 | $ | 6,672 | $ | 30,430 | $ | 20,966 | ||||||||||
| Less: Non-cash stock-based compensation expense |
(398 | ) | (160 | ) | (1,912 | ) | (836 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total adjusted research and development expenses |
$ | 7,028 | $ | 6,512 | $ | 28,518 | $ | 20,130 | ||||||||||
| Total revenues |
$ | 114,025 | $ | 87,810 | $ | 433,047 | $ | 329,141 | ||||||||||
| Total adjusted research and development expenses as a % of revenues |
6.2 | % | 7.4 | % | 6.6 | % | 6.1 | % | ||||||||||
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Total research and development costs: |
||||||||||||||||||
| Capitalized research and development costs |
$ | 4,773 | $ | 2,212 | $ | 15,821 | $ | 8,817 | ||||||||||
| Research and development expenses |
7,426 | 6,672 | 30,430 | 20,966 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total research and development costs |
$ | 12,199 | $ | 8,884 | $ | 46,251 | $ | 29,783 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenues |
$ | 114,025 | $ | 87,810 | $ | 433,047 | $ | 329,141 | ||||||||||
| Total research and development costs as a % of total revenues |
10.7 | % | 10.1 | % | 10.7 | % | 9.0 | % | ||||||||||
| Total adjusted research and development costs: |
||||||||||||||||||
| Total research and development costs |
$ | 12,199 | $ | 8,884 | $ | 46,251 | $ | 29,783 | ||||||||||
| Less: Capitalized non-cash stock-based compensation |
(706 | ) | (350 | ) | (3,285 | ) | (1,784 | ) | ||||||||||
| Less: Non-cash stock-based compensation expense |
(398 | ) | (160 | ) | (1,912 | ) | (836 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total adjusted research and development costs |
$ | 11,095 | $ | 8,374 | $ | 41,054 | $ | 27,163 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenues |
$ | 114,025 | $ | 87,810 | $ | 433,047 | $ | 329,141 | ||||||||||
| Total adjusted research and development costs as a % of total revenues |
9.7 | % | 9.5 | % | 9.5 | % | 8.3 | % | ||||||||||
Paycom Software, Inc.
Breakout of Non-Cash Stock-Based Compensation Expense
(in thousands)
(unaudited)
| Three months ended | Year ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
| Stock-based compensation expense: |
||||||||||||||||||
| Operating expenses |
$ | 751 | $ | 492 | $ | 3,950 | $ | 2,217 | ||||||||||
| Sales and marketing |
1,575 | 933 | 6,086 | 3,656 | ||||||||||||||
| Research and development |
398 | 160 | 1,912 | 836 | ||||||||||||||
| General and administrative |
4,035 | 2,104 | 26,565 | 15,837 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total non-cash stock-based compensation expense |
$ | 6,759 | $ | 3,689 | $ | 38,513 | $ | 22,546 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
Contacts
Paycom Software, Inc.
Media Contact:
Kathy Oden-Hall, 800-580-4505
CMO
or
Investor Relations Contact:
David Niederman, 855-603-1620
Source: Paycom Software, Inc.
ASC 606 Transition Exhibit 99.2
To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we consider and have included certain non-GAAP financial measures in this presentation, including Adjusted EBITDA and non-GAAP net income. Management uses Adjusted EBITDA and non-GAAP net income as supplemental measures to review and assess the performance of our core business operations and for planning purposes. We define (i) Adjusted EBITDA as net income plus interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, loss on early repayment of debt, certain transaction expenses that are not core to our operations and the change in fair value of our interest rate swap and (ii) non-GAAP net income as net income plus non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations, loss on early repayment of debt and the change in the value of our interest rate swap, all of which are adjusted for the effect of income taxes. Adjusted EBITDA and non-GAAP net income are metrics that provide investors with greater transparency to the information used by management in its financial and operational decision-making. We believe these metrics are useful to investors because they facilitate comparisons of our core business operations across periods on a consistent basis, as well as comparisons with the results of peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP. In addition, Adjusted EBITDA is a measure that provides useful information to management about the amount of cash available for reinvestment in our business, repurchasing common stock and other purposes. Management believes that the non-GAAP measures presented in this presentation, when viewed in combination with our results prepared in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our business and performance. Adjusted EBITDA and non-GAAP net income are not measures of financial performance under GAAP and should not be considered a substitute for net income, which we consider to be the most directly comparable GAAP measure. Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and when assessing our operating performance, you should not consider Adjusted EBITDA or non-GAAP net income in isolation, or as a substitute for net income or other consolidated statements of income data prepared in accordance with GAAP. Adjusted EBITDA and non-GAAP net income may not be comparable to similar titled measures of other companies and other companies may not calculate such measures in the same manner as we do. Use of Non-GAAP Financial Information
Table of Contents I. Summary 4 II. Financial Impact of ASC 606 Transition 6 III. Recast Financial Statements and Non-GAAP Reconciliations 15
Summary
Adoption Highlights Full retrospective adoption 2016 and 2017 historical financial statements recast to reflect adoption of new standard Cumulative catch-up adjustment to equity at 1/1/16 of $103.4M Financial impact No impact to revenues Continue current practice of recognizing implementation fees over estimated client life Primary impact on deferral of certain costs to obtain and fulfill contracts Costs capitalized and recognized ratably over the estimated client life Results in a decrease in Sales & Marketing and General & Administrative expenses Impact on other metrics No impact on cash flows Increase in basic and diluted EPS Increase in EBITDA and Adjusted EBITDA
Financial Impact of ASC 606 Transition
Financial Impact (Unaudited) Revenues
Financial Impact (Unaudited) Operating expenses
Financial Impact (Unaudited) Non-cash stock-based compensation expense
Financial Impact (Unaudited) Selected balance sheets
2016 and 2017 Financial Measure Impact Adjusted EBITDA (in millions)
2017 Quarterly Financial Measure Impact Adjusted EBITDA (in millions)
2016 and 2017 Financial Measure Impact Non-GAAP Net Income (in millions)
2017 Quarterly Financial Measure Impact Non-GAAP Net Income (in millions)
Recast Financial Statements and Non-GAAP Reconciliations
2016 and 2017 Balance Sheets (Unaudited) December 31, December 31, December 31, December 31, December 31, December 31, 2017 2017 2017 2016 2016 2016 In thousands ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact Assets Current assets: Cash and cash equivalents 46,077 $ 46,077 $ - $ 60,158 $ 60,158 $ - $ Accounts receivable 1,576 1,576 - 1,339 1,339 - Prepaid expenses 4,982 4,982 - 4,475 4,475 - Inventory 979 979 - 675 675 - Income tax receivable 7,047 7,047 - 692 692 - Deferred contract costs - 26,403 26,403 - 19,248 19,248 Current assets before funds held for clients 60,661 87,064 26,403 67,339 86,587 19,248 Funds held for clients 1,089,201 1,089,201 - 858,244 858,244 - Total current assets 1,149,862 1,176,265 26,403 925,583 944,831 19,248 Property and equipment, net 147,705 147,705 - 96,848 96,848 - Deposits and other assets 1,456 1,456 - 1,215 1,215 - Goodwill 51,889 51,889 - 51,889 51,889 - Intangible assets, net 958 958 - 1,871 1,871 - Deferred income tax assets, net 3,294 - (3,294) 1,207 - (1,207) Long-term deferred contract costs - 171,865 171,865 - 127,935 127,935 Total assets 1,355,164 $ 1,550,138 $ 194,974 $ 1,078,613 $ 1,224,589 $ 145,976 $ Liabilities and Stockholders' Equity Current liabilities: Accounts payable 6,490 $ 6,490 $ - $ 3,737 $ 3,737 $ - $ Accrued commissions and bonuses 9,585 9,585 - 8,003 8,003 - Accrued payroll and vacation 7,015 7,015 - 4,769 4,769 - Deferred revenue 6,982 6,982 - 5,230 5,230 - Current portion of long-term debt 888 888 - 1,113 1,113 - Accrued expenses and other current liabilities 19,991 19,991 - 17,798 17,798 - Current liabilities before client funds obligation 50,951 50,951 - 40,650 40,650 - Client funds obligation 1,089,201 1,089,201 - 858,244 858,244 - Total current liabilities 1,140,152 1,140,152 - 898,894 898,894 - Deferred income tax liabilities, net - 49,129 49,129 - 56,809 56,809 Long-term derivative liability 554 554 - - - - Long-term deferred revenue 44,642 44,642 - 34,481 34,481 - Net long-term debt, less current portion 34,414 34,414 - 28,711 28,711 - Total long-term liabilities 79,610 128,739 49,129 63,192 120,001 56,809 Stockholders' equity: Common stock 601 601 - 585 585 - Additional paid-in capital 137,234 161,809 24,575 95,452 120,027 24,575 Retained earnings 137,255 258,525 121,270 70,448 135,040 64,592 Treasury stock (139,688) (139,688) - (49,958) (49,958) - Total stockholders' equity 135,402 281,247 145,845 116,527 205,694 89,167 Total liabilities and stockholders' equity 1,355,164 $ 1,550,138 $ 194,974 $ 1,078,613 $ 1,224,589 $ 145,976 $
2016 and 2017 Income Statements (Unaudited) 2017 2017 2017 2016 2016 2016 In thousands, except per share data ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact Revenues Recurring 425,424 $ 425,424 $ - $ 323,548 $ 323,548 $ - $ Implementation and other 7,623 7,623 - 5,593 5,593 - Total revenues 433,047 433,047 - 329,141 329,141 - Cost of revenues Operating expenses 62,438 62,438 - 48,268 48,268 - Depreciation and amortization 9,590 9,590 - 5,798 5,798 - Total cost of revenues 72,028 72,028 - 54,066 54,066 - Administrative expenses Sales and marketing 150,512 110,846 (39,666) 119,258 85,361 (33,897) Research and development 30,430 30,430 - 20,966 20,966 - General and administrative 91,647 80,228 (11,419) 69,046 59,174 (9,872) Depreciation and amortization 9,805 9,805 - 7,834 7,834 - Total administrative expenses 282,394 231,309 (51,085) 217,104 173,335 (43,769) Total operating expenses 354,422 303,337 (51,085) 271,170 227,401 (43,769) Operating income 78,625 129,710 51,085 57,971 101,740 43,769 Interest expense (911) (911) - (1,036) (1,036) - Other income, net (1,067) (1,067) - 308 308 - Income before income taxes 76,647 127,732 51,085 57,243 101,012 43,769 Provision for income taxes 9,840 4,246 (5,594) 13,403 30,591 17,188 Net income 66,807 $ 123,486 $ 56,679 $ 43,840 $ 70,421 $ 26,581 $ Earnings per share, basic 1.15 $ 2.13 $ 0.98 $ 0.76 $ 1.21 $ 0.45 $ Earnings per share, diluted 1.13 $ 2.10 $ 0.97 $ 0.74 $ 1.19 $ 0.45 $ Weighted average shares outstanding: Basic 57,839,155 57,839,155 - 57,550,204 57,550,204 - Diluted 58,790,019 58,790,019 - 58,968,099 58,968,099 - Year Ended December 31 Year Ended December 31
2017 Quarterly Income Statements (Unaudited) 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 In thousands, except per share data ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact Revenues Recurring 117,914 $ 117,914 $ - $ 96,351 $ 96,351 $ - $ 99,498 $ 99,498 $ - $ 111,661 $ 111,661 $ - $ Implementation and other 1,594 1,594 - 1,876 1,876 - 1,789 1,789 - 2,364 2,364 - Total revenues 119,508 119,508 - 98,227 98,227 - 101,287 101,287 - 114,025 114,025 - Cost of revenues Operating expenses 15,086 15,086 - 15,609 15,609 - 15,324 15,324 - 16,419 16,419 - Depreciation and amortization 2,060 2,060 - 2,267 2,267 - 2,502 2,502 - 2,761 2,761 - Total cost of revenues 17,146 17,146 - 17,876 17,876 - 17,826 17,826 - 19,180 19,180 - Administrative expenses Sales and marketing 36,848 25,579 (11,269) 34,070 27,430 (6,640) 35,542 27,732 (7,810) 44,052 30,105 (13,947) Research and development 6,797 6,797 - 8,095 8,095 - 8,112 8,112 - 7,426 7,426 - General and administrative 17,826 15,250 (2,576) 26,657 23,594 (3,063) 25,967 23,207 (2,760) 21,197 18,177 (3,020) Depreciation and amortization 2,226 2,226 - 2,440 2,440 - 2,403 2,403 - 2,736 2,736 - Total administrative expenses 63,697 49,852 (13,845) 71,262 61,559 (9,703) 72,024 61,454 (10,570) 75,411 58,444 (16,967) Total operating expenses 80,843 66,998 (13,845) 89,138 79,435 (9,703) 89,850 79,280 (10,570) 94,591 77,624 (16,967) Operating income 38,665 52,510 13,845 9,089 18,792 9,703 11,437 22,007 10,570 19,434 36,401 16,967 Interest expense (257) (257) - (281) (281) - (220) (220) - (153) (153) - Other income, net 95 95 - 149 149 - 118 118 - (1,429) (1,429) - Income before income taxes 38,503 52,348 13,845 8,957 18,660 9,703 11,335 21,905 10,570 17,852 34,819 16,967 Provision for income taxes 12,889 18,654 5,765 (5,264) (1,356) 3,908 (2,732) 995 3,727 4,947 (14,047) (18,994) Net income 25,614 $ 33,694 $ 8,080 $ 14,221 $ 20,016 $ 5,795 $ 14,067 $ 20,910 $ 6,843 $ 12,905 $ 48,866 $ 35,961 $ Earnings per share, basic 0.44 $ 0.58 $ 0.14 $ 0.24 $ 0.34 $ 0.10 $ 0.24 $ 0.36 $ 0.12 $ 0.22 $ 0.84 $ 0.62 $ Earnings per share, diluted 0.43 $ 0.57 $ 0.14 $ 0.24 $ 0.34 $ 0.10 $ 0.24 $ 0.35 $ 0.11 $ 0.22 $ 0.83 $ 0.61 $ Weighted average shares outstanding: Basic 57,307,187 57,307,187 - 57,898,914 57,898,914 - 58,003,222 58,003,222 - 58,100,141 58,100,141 - Diluted 58,525,980 58,525,980 - 58,816,442 58,816,442 - 58,873,502 58,873,502 - 58,850,271 58,850,271 - Three Months Ended December 31, Three Months Ended March 31, Three Months Ended June 30, Three Months Ended September 30,
2016 and 2017 Adjusted EBITDA (Unaudited) 2016 2016 2016 In thousands ASC 605 ASC 606 Impact Net income to Adjusted EBITDA: Net income 43,840 $ 70,421 $ 26,581 $ Interest expense 1,036 1,036 - Provision for income taxes 13,403 30,591 17,188 Depreciation and amortization 13,632 13,632 - EBITDA 71,911 115,680 43,769 Non-cash stock-based compensation expense 22,546 20,796 (1,750) Loss on early repayment of debt - - - Change in fair value of interest rate swap - - - Adjusted EBITDA 94,457 $ 136,476 $ 42,019 $ Total Revenues 329,141 $ 329,141 329,141 Adjusted EBITDA as a % of revenues 29% 41% 13% 2017 2017 2017 ASC 605 ASC 606 Impact Net income to Adjusted EBITDA: Net income 66,807 $ 123,486 $ 56,679 $ Interest expense 911 911 - Provision for income taxes 9,840 4,246 (5,594) Depreciation and amortization 19,395 19,395 - EBITDA 96,953 148,038 51,085 Non-cash stock-based compensation expense 38,513 36,047 (2,466) Loss on early repayment of debt 923 923 - Change in fair value of interest rate swap 649 649 - Adjusted EBITDA 137,038 $ 185,657 $ 48,619 $ Total Revenues 433,047 $ 433,047 433,047 Adjusted EBITDA as a % of revenues 32% 43% 11% Year ended December 31, Year ended December 31,
2017 Quarterly Adjusted EBITDA (Unaudited) 2017 2017 2017 2017 2017 2017 In thousands ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact Net income to Adjusted EBITDA: Net income 25,614 $ 33,694 $ 8,080 $ 14,221 $ 20,016 $ 5,795 $ Interest expense 257 257 - 281 281 - Provision for income taxes 12,889 18,654 5,765 (5,264) (1,356) 3,908 Depreciation and amortization 4,286 4,286 - 4,707 4,707 - EBITDA 43,046 56,891 13,845 13,945 23,648 9,703 Non-cash stock-based compensation expense 3,688 3,406 (282) 13,839 12,903 (936) Loss on early repayment of debt - - - - - - Change in fair value of interest rate swap - - - - - - Adjusted EBITDA 46,734 $ 60,297 $ 13,563 $ 27,784 $ 36,551 $ 8,767 $ Total Revenues 119,508 $ 119,508 119,508 98,227 $ 98,227 98,227 Adjusted EBITDA as a % of revenues 39% 50% 11% 28% 37% 9% 2017 2017 2017 2017 2017 2017 ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact Net income to Adjusted EBITDA: Net income 14,067 $ 20,910 $ 6,843 $ 12,905 $ 48,866 $ 35,961 $ Interest expense 220 220 - 153 153 - Provision for income taxes (2,732) 995 3,727 4,947 (14,047) (18,994) Depreciation and amortization 4,905 4,905 - 5,497 5,497 - EBITDA 16,460 27,030 10,570 23,502 40,469 16,967 Non-cash stock-based compensation expense 14,227 13,351 (876) 6,759 6,387 (372) Loss on early repayment of debt - - - 923 923 - Change in fair value of interest rate swap - - - 649 649 - Adjusted EBITDA 30,687 $ 40,381 $ 9,694 $ 31,833 $ 48,428 $ 16,595 $ Total Revenues 101,287 $ 101,287 101,287 114,025 $ 114,025 114,025 Adjusted EBITDA as a % of revenues 30% 40% 10% 28% 42% 15% Three Months Ended March 31, Three Months Ended June 30, Three Months Ended September 30, Three Months Ended December 31,
2016 and 2017 Non-GAAP Net Income (Unaudited) 2016 2016 2016 In thousands, except per share data ASC 605 ASC 606 Impact Net income to non-GAAP net income: Net income 43,840 $ 70,421 $ 26,581 $ Non-cash stock-based compensation expense 22,546 20,796 (1,750) Loss on early repayment of debt - - - Change in fair value of interest rate swap - - - Income tax effect on non-GAAP adjustment (14,790) (14,125) 665 Non-GAAP net income 51,596 $ 77,092 $ 25,496 $ Weighted average shares outstanding: Basic 57,550,204 57,550,204 - Diluted 58,968,099 58,968,099 - Earnings per share basic 0.76 $ 1.21 $ 0.45 $ Earnings per share diluted 0.74 $ 1.19 $ 0.45 $ Non-GAAP net income per share, basic 0.90 $ 1.34 $ 0.44 $ Non-GAAP net income per share, diluted 0.87 $ 1.31 $ 0.43 $ 2017 2017 2017 ASC 605 ASC 606 Impact Net income to non-GAAP net income: Net income 66,807 $ 123,486 $ 56,679 $ Non-cash stock-based compensation expense 38,513 36,047 (2,466) Loss on early repayment of debt 923 923 - Change in fair value of interest rate swap 649 649 - Income tax effect on non-GAAP adjustment (30,233) (28,795) 1,438 Non-GAAP net income 76,659 $ 132,310 $ 55,651 $ Weighted average shares outstanding: Basic 57,839,155 57,839,155 - Diluted 58,790,019 58,790,019 - Earnings per share basic 1.15 $ 2.13 $ 0.98 $ Earnings per share diluted 1.13 $ 2.10 $ 0.97 $ Non-GAAP net income per share, basic 1.33 $ 2.29 $ 0.96 $ Non-GAAP net income per share, diluted 1.30 $ 2.25 $ 0.95 $ Year ended December 31, Year ended December 31,
2017 Quarterly Non-GAAP Net Income (Unaudited) 2017 2017 2017 2017 2017 2017 In thousands, except per share data ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact Net income to non-GAAP net income: Net income 25,614 $ 33,694 $ 8,080 $ 14,221 $ 20,016 $ 5,795 $ Non-cash stock-based compensation expense 3,688 3,406 (282) 13,839 12,903 (936) Loss on early repayment of debt - - - - - - Change in fair value of interest rate swap - - - - - - Income tax effect on non-GAAP adjustment (1,596) (1,625) (29) (12,883) (12,434) 449 Non-GAAP net income 27,706 $ 35,475 $ 7,769 $ 15,177 $ 20,485 $ 5,308 $ Weighted average shares outstanding: Basic 57,307,187 57,307,187 - 57,898,914 57,898,914 - Diluted 58,525,980 58,525,980 - 58,816,442 58,816,442 - Earnings per share basic 0.44 $ 0.58 $ 0.14 $ 0.24 $ 0.34 $ 0.10 $ Earnings per share diluted 0.43 $ 0.57 $ 0.14 $ 0.24 $ 0.34 $ 0.10 $ Non-GAAP net income per share, basic 0.48 $ 0.62 $ 0.14 $ 0.26 $ 0.35 $ 0.09 $ Non-GAAP net income per share, diluted 0.47 $ 0.61 $ 0.13 $ 0.26 $ 0.35 $ 0.09 $ 2017 2017 2017 2017 2017 2017 ASC 605 ASC 606 Impact ASC 605 ASC 606 Impact Net income to non-GAAP net income: Net income 14,067 $ 20,910 $ 6,843 $ 12,905 $ 48,866 $ 35,961 $ Non-cash stock-based compensation expense 14,227 13,351 (876) 6,759 6,387 (372) Loss on early repayment of debt - - - 923 923 - Change in fair value of interest rate swap - - - 649 649 - Income tax effect on non-GAAP adjustment (11,296) (11,081) 215 (4,458) (3,655) 803 Non-GAAP net income 16,998 $ 23,180 $ 6,182 $ 16,778 $ 53,170 $ 36,392 $ Weighted average shares outstanding: Basic 58,003,222 58,003,222 - 58,100,141 58,100,141 - Diluted 58,873,502 58,873,502 - 58,850,271 58,850,271 - Earnings per share basic 0.24 $ 0.36 $ 0.12 $ 0.22 $ 0.84 $ 0.62 $ Earnings per share diluted 0.24 $ 0.35 $ 0.11 $ 0.22 $ 0.83 $ 0.61 $ Non-GAAP net income per share, basic 0.29 $ 0.40 $ 0.11 $ 0.29 $ 0.92 $ 0.63 $ Non-GAAP net income per share, diluted 0.29 $ 0.39 $ 0.11 $ 0.29 $ 0.90 $ 0.62 $ Three Months Ended March 31, Three Months Ended June 30, Three Months Ended September 30, Three Months Ended December 31,