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F5 Reports Inducement Grants under NASDAQ Listing Rule 5635(c)(4)

F5 Reports Inducement Grants under NASDAQ Listing Rule 5635(c)(4)

SEATTLE–(BUSINESS WIRE)–
F5, Inc. (NASDAQ: FFIV) announced today that on May 1, 2023, the company issued a total of 47,904 restricted stock units (“RSUs”) to 25 employees who joined F5 as a result of the acquisition of Lilac Cloud, Inc., completed on February 1, 2023. The RSUs were granted as inducements to employment in accordance with NASDAQ Listing Rule 5635(c)(4). The RSUs vest 25% on February 1, 2024 with the remaining 75% vesting quarterly through February 1, 2027, subject to the employee’s continued service relationship with the company. The grants will be subject to the terms and conditions of the F5, Inc. Lilac Acquisition Equity Incentive Plan.

About F5

F5 is a multi-cloud application services and security company committed to bringing a better digital world to life. F5 partners with the world’s largest, most advanced organizations to secure and optimize apps and APIs anywhere—on premises, in the cloud, or at the edge. F5 enables organizations to provide exceptional, secure digital experiences for their customers and continuously stay ahead of threats. For more information, go to f5.com. (NASDAQ: FFIV)

You can also follow @F5 on Twitter or visit us on LinkedIn and Facebook for more information about F5, its partners, and technologies. F5 and Lilac are trademarks, service marks, or tradenames of F5, Inc., in the U.S. and other countries. All other product and company names herein may be trademarks of their respective owners.

Source: F5, Inc.

Rob Gruening

Sr. Director, Corporate Communications

(206) 272-6208

[email protected]

Suzanne DuLong

VP, Investor Relations

(206) 272-7049

[email protected]

KEYWORDS: Washington United States North America

INDUSTRY KEYWORDS: Data Management Security Apps/Applications Technology Software Internet

MEDIA:

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Freshworks Reports First Quarter 2023 Results

  • First quarter revenue grew 20% year-over-year, 23% adjusting for constant currency
  • Generated the first quarter of non-GAAP operating profit as a public company with $3.9 million
  • Improved business efficiency with $9.1 million of free cash flow in the quarter
  • Raising full-year 2023 financial outlook midpoint for non-GAAP operating profit to $5 million

SAN MATEO, Calif., May 02, 2023 (GLOBE NEWSWIRE) — Freshworks Inc. (NASDAQ: FRSH), a leading software company empowering businesses to delight their customers and employees, today announced financial results for its first quarter ended March 31, 2023.

“Freshworks had a strong quarter of execution in Q1,” said Girish Mathrubootham, CEO and Founder of Freshworks. “We exceeded our financial estimates for revenue growth and delivered our first quarter of non-GAAP operating profit as a public company. More companies are taking advantage of the opportunity to buy software that is designed to scale to meet their IT and customer needs.”

First
Quarter
2023
Financial Summary Results

  • Revenue: Total revenue was $137.7 million, representing growth of 20% compared to the first quarter of 2022, and 23% adjusting for constant currency.
  • GAAP (Loss) from Operations: GAAP (loss) from operations was $(48.1) million, compared to $(47.1) million in the first quarter of 2022.
  • Non-GAAP Income (Loss) from Operations: Non-GAAP income from operations was $3.9 million, compared to loss of $(0.6) million in the first quarter of 2022.
  • GAAP Net (Loss) Per Share: GAAP basic and diluted net (loss) per share was $(0.15) based on 290.1 million weighted-average shares outstanding, compared to $(0.18) based on 278.2 million weighted-average shares outstanding in the first quarter of 2022.
  • Non-GAAP Net Income (Loss) Per Share: Non-GAAP basic and diluted net income per share was $0.03 based on 294.5 million weighted-average shares outstanding, compared to net loss per share of $(0.01) based on 278.2 million weighted-average shares outstanding in the first quarter of 2022.
  • Net Cash Provided by Operating Activities: Net cash provided by operating activities was $11.5 million, compared to $1.4 million in the first quarter of 2022.
  • Free Cash Flow: Free cash flow was $9.1 million, compared to $(1.4) million in the first quarter of 2022.
  • Cash, Cash Equivalents and Marketable Securities: Cash, cash equivalents, and marketable securities were $1.15 billion as of March 31, 2023.

A description of non-GAAP financial measures is contained in the section titled “Explanation of Non-GAAP Financial Measures” below and a reconciliation of GAAP to non-GAAP financial measures is contained in the tables below.

First
Quarter Key Metrics and Recent Business Highlights

  • Number of customers contributing more than $5,000 in ARR was 18,441, an increase of 18% year-over-year and 19% adjusting for constant currency.
  • Net dollar retention rate was 107% (108% adjusting for constant currency), compared to 108% in the fourth quarter of 2022 and 115% in the first quarter of 2022. Constant currency net dollar retention rate was 110% in the fourth quarter of 2022 and 116% in the first quarter of 2022.
  • Welcomed more customers to the Freshworks community including: Fila, Johnsonville, Los Angeles Dodgers, Smyths Toys, Sonata Software, and The City of Escondido.
  • Named Pradeep Rathinam as the company’s Chief Revenue Officer.
  • Welcomed new leaders including Siddhartha Agarwal as Senior Vice President of Product Strategy & Operations; Shafiq Amarsi as Senior Vice President of GTM Strategy and Operations; Doug Farber as Senior Vice President of Global Channels and Alliances; Murali Krishnan as Senior Vice President of Customer Experience; and Sandie Overtveld as Senior Vice President of Sales in APJ and MEA.
  • Announced upcoming GPT-based conversational enhancements to Freshworks’ natively-built AI powered assistant, Freddy.

Financial Outlook

We are providing estimates for the second quarter and full year 2023 based on current market conditions and expectations. The revenue growth rates are adjusted for constant currency to provide better visibility into the underlying business trends. We emphasize that these estimates are subject to various important cautionary factors referenced in the section entitled “Forward-Looking Statements” below.

For the second quarter and full year 2023, we currently expect the following results:

($ in millions, except per share data) Second Quarter 2023 Full Year 2023
Revenue(1) $140.0 – $142.5 $580.0 – $592.5
Year-over-year growth 15% – 17% 16% – 19%
Adjusting for constant currency(2) 16% – 18% 17% – 19%
     
Non-GAAP income (loss) from operations(1) ($2.0) – $0.0 $2.0 – $8.0
     
Non-GAAP net income per share(3) $0.00 – $0.02 $0.08 – $0.12


(1) Revenue and non-GAAP income (loss) from operations are based on exchange rates as of April 28, 2023 for currencies other than USD.

(2) Revenue growth rates adjusted for constant currency are based on average exchange rates in effect during the comparison period for currencies other than USD. See the section entitled “Explanation of non-GAAP Financial Measures” and the table entitled “Reconciliation of Selected GAAP Measures to non‑GAAP Measures” for a reconciliation of GAAP to non‑GAAP measures for the historical periods provided in this release.

(3) Non-GAAP net income per share was estimated assuming 291.9 million and 298.2 million weighted-average shares outstanding for the second quarter and full year 2023, respectively.

These statements are forward-looking and actual results may differ materially. Refer to the “Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

We have not reconciled our estimates for non-GAAP financial measures to GAAP due to the uncertainty and potential variability of expenses that may be incurred in the future. Accordingly, a reconciliation is not available without unreasonable effort. We have provided a reconciliation of other GAAP to non-GAAP financial measures in the financial statement tables for our first quarter and full year 2023 non-GAAP results included in this press release.

Webcast and Conference Call Information

We will host a conference call for investors on May 2, 2023 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the company’s financial results and business highlights. Investors are invited to listen to a live audio webcast of the conference call by visiting the investor relations website at ir.freshworks.com. A replay of the audio webcast will be available shortly after the call on the Freshworks Investor Relations website and will be available for twelve months thereafter.

Explanation of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures, including revenue adjusted for constant currency, non-GAAP gross profit, non-GAAP gross margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss per share, non-GAAP net loss attributable to common stockholders, and free cash flow.This press release and the accompanying tables also contain certain non-GAAP metrics, including annual recurring revenue, net dollar retention rates, revenue growth rates, and related presentation thereof adjusted for constant currency.

We adjust revenue and related growth rates for constant currency to provide a framework for assessing business performance excluding the effect of foreign currency rate fluctuations. To present this information, current period results for currencies other than USD are converted into USD at the average exchange rates in effect during the comparison period (for Q1 2022, the average exchange rates in effect for our major currencies were 1 USD to 1.12 EUR and 1 USD to 1.34 GBP), rather than the actual average exchange rates in effect during the current period (for Q1 2023, the average exchange rates in effect for our major currencies were 1 USD to 1.07 EUR and 1 USD to 1.21 GBP).

We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures provide investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results.We believe these non-GAAP measures are useful in evaluating our operating performance compared to that of other companies in our industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.

Investors, however, are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures.

We exclude the following items from one or more of our non-GAAP financial measures, including the related income tax effect of these adjustments:

  • Stock-based compensation expense. We exclude stock-based compensation, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this expense provides meaningful supplemental information regarding operational performance. In particular, stock-based compensation expense is not comparable across companies given the variety of valuation methodologies and assumptions.
  • Employer payroll taxes on employee stock transactions. We exclude the amount of employer payroll taxes on equity awards from certain of our non-GAAP financial measures because they are dependent on our stock price at the time of vesting or exercise and other factors that are beyond our control and do not believe these expenses have a direct correlation to the operation of our business.
  • Amortization of acquired intangibles. We exclude amortization of acquired intangibles, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of acquired intangibles are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions, and the allocation of purchase price. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business.

We define free cash flow as net cash provided by operating activities, less purchases of property and equipment and capitalized internal-use software. We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core operations after purchases of property and equipment. Free cash flow is a measure to determine, among other things, cash available for strategic initiatives, including further investments in our business and potential acquisitions of businesses.

Operating Metrics

Number of Customers Contributing More Than $5,000 in ARR. We define ARR as the sum total of the revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions or cancellations in their subscriptions. We define our total customers contributing more than $5,000 in ARR as of a particular date as the number of business entities or individuals, represented by a unique domain or a unique email address, with one or more paid subscriptions to one or more of our products that contributed more than $5,000 in ARR.

Net Dollar Retention Rate. To calculate net dollar retention rate as of a given date, we first determine Entering ARR, which is ARR from the population of our customers as of 12 months prior to the end of the reporting period. We then calculate the Ending ARR from the same set of customers as of the end of the reporting period. We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate. Ending ARR includes upsells, cross-sells, and renewals during the measurement period and is net of any contraction or attrition over this period.

We also adjust the above operating metrics, growth rates of customers contributing more than $5,000 in ARR and related presentation thereof for constant currency to provide a framework for assessing our business performance excluding the effects of foreign currency rates fluctuations. To present this information, the Ending ARR of the current period in currencies other than USD is converted into USD at the exchange rates in effect at the end of the comparison period (for Q1 2022, the period end exchange rates in effect for our major currencies were 1 USD to 1.11 EUR and 1 USD to 1.31 GBP), rather than the actual exchange rates in effect at the end of the current period (for Q1 2023, the period end exchange rates in effect for our major currencies were 1 USD to 1.09 EUR and 1 USD to 1.24 GBP).

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, our GAAP and non-GAAP estimates for the second quarter and full year 2023, our financial outlook, the value of our products to customers, the results of our focus on product innovation efforts and the usefulness of the measures by which we evaluate our business, among other things. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, including our financial outlook and macroeconomic uncertainties, management’s beliefs and certain assumptions made by the company, all of which are subject to change. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, “future,” “believe,” “expect,” “may,” “will,” “intend” “estimate,” “continue,” “anticipate,” “could,” “would,” “projects,” “plans,” “targets” or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, many of which involve factors or circumstances that are beyond our control, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include our ability to achieve our long-term plans and key initiatives; our ability to sustain or manage any future growth effectively; our ability to attract and retain customers or expand sales to existing customers; delays in product development or deployments or the success of such products; the failure to deliver competitive service offerings and lack of market acceptance of any offerings delivered; the impact to the economy, our customers and our business due to global economic conditions, including market volatility, foreign exchange rates, and impact of inflation; the timeframes for and severity of the impact of any weakened global economic conditions on our customers’ purchasing and renewal decisions, which may extend the length of our sales cycles or adversely affect our industry; our history of net losses and ability to achieve or sustain profitability, as well as the other potential factors described under “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022 and other documents of Freshworks Inc. on file with the Securities and Exchange Commission from time to time (available at www.sec.gov), including our Quarterly Report on Form 10-Q that will be filed for the quarter ended March 31, 2023.

We caution you not to place undue reliance on forward-looking statements, which speak only as of the date hereof and are based on information available to us at the time the statements are made and/or management’s good faith belief as of that time with respect to future events. We assume no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release, except as required by law.

About Freshworks Inc.

Freshworks Inc., (NASDAQ: FRSH) makes business software people love to use. Purpose-built for IT, customer support, and sales and marketing teams, our products empower the people who power business. Freshworks is fast to onboard, priced affordably, built to delight, yet powerful enough to deliver critical business outcomes. Headquartered in San Mateo, California, Freshworks operates around the world to serve more than 60,000 customers including Allbirds, Blue Nile, Bridgestone, Databricks, Klarna, NHS, OfficeMax, and PhonePe. For the freshest company news visit www.freshworks.com and follow us on Facebook, LinkedIn and Twitter.

Investor Relations Contact:

Joon Huh
[email protected]
650-988-5699

Media Relations Contact:

Jayne Gonzalez
[email protected]
408-348-1087

© 2023 Freshworks Inc. All Rights Reserved. Freshworks and its associated logo is a trademark of Freshworks Inc. All other company, brand and product names may be trademarks or registered trademarks of their respective companies. Nothing in this press release should be construed to the contrary, or as an approval, endorsement or sponsorship by any third parties of Freshworks Inc. or any aspect of this press release.



FRESHWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


(unaudited)

    Three Months Ended

March 31,
      2023       2022  
Revenue   $ 137,692     $ 114,637  
Cost of revenue(1)     25,236       22,395  
Gross profit     112,456       92,242  
Operating expense:        
Research and development(1)     32,857       30,717  
Sales and marketing(1)     86,810       71,466  
General and administrative(1)     40,896       37,183  
Total operating expenses     160,563       139,366  
Loss from operations     (48,107 )     (47,124 )
Interest and other income, net     9,479       602  
Loss before income taxes     (38,628 )     (46,522 )
Provision for income taxes     4,036       2,537  
Net loss     (42,664 )     (49,059 )
Net loss per share – basic and diluted   $ (0.15 )   $ (0.18 )
Weighted average shares used in computing net loss per share – basic and diluted     290,133       278,186  

(1) Includes stock-based compensation expense as follows (in thousands):

    Three Months Ended

March 31,
      2023       2022  
Cost of revenue   $ 1,696     $ 1,526  
Research and development     8,979       8,309  
Sales and marketing     15,756       12,536  
General and administrative     24,263       24,254  
Total stock-based compensation expense, net of amounts capitalized   $ 50,694     $ 46,625  

FRESHWORKS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)

    March 31,

2023 		  December 31, 2022
    (unaudited)    
Assets        
Current assets:        
Cash and cash equivalents   $ 344,487     $ 304,083  
Marketable securities     806,122       843,405  
Accounts receivable, net     72,807       70,470  
Deferred contract acquisition costs     20,761       20,139  
Prepaid expenses and other current assets     46,487       38,913  
Total current assets     1,290,664       1,277,010  
Property and equipment, net     24,214       24,139  
Operating lease right-of-use assets     31,175       33,024  
Deferred contract acquisition costs, noncurrent     18,865       19,536  
Goodwill     6,181       6,181  
Deferred tax assets     8,645       8,689  
Other assets     11,098       11,637  
Total assets   $ 1,390,842     $ 1,380,216  
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable   $ 4,415     $ 5,908  
Accrued liabilities     58,327       59,008  
Deferred revenue     220,550       205,626  
Income tax payable     2,177       1,150  
Total current liabilities     285,469       271,692  
Operating lease liabilities, non-current     26,183       28,174  
Other liabilities     28,748       28,532  
Total liabilities     340,400       328,398  
Stockholders’ equity:        
Common stock     3       3  
Additional paid-in capital     4,600,688       4,562,319  
Accumulated other comprehensive loss     (4,512 )     (7,431 )
Accumulated deficit     (3,545,737 )     (3,503,073 )
Total stockholders’ equity     1,050,442       1,051,818  
Total liabilities and stockholders’ equity   $ 1,390,842     $ 1,380,216  

FRESHWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


(unaudited)

    Three Months Ended

March 31,
      2023       2022  
Cash Flows from Operating Activities:        
Net loss   $ (42,664 )   $ (49,059 )
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization     3,112       2,973  
Amortization of deferred contract acquisition costs     5,617       4,275  
Non-cash lease expense     1,850       1,404  
Stock-based compensation     50,694       46,625  
Premium (discount) amortization on marketable securities     (3,520 )     766  
Change in fair value of equity securities     (15 )     (85 )
Deferred income taxes     113       309  
Other     85       754  
Changes in operating assets and liabilities:        
Accounts receivable     (2,490 )     3,160  
Deferred contract acquisition costs     (5,568 )     (5,600 )
Prepaid expenses and other assets     (7,248 )     (8,685 )
Accounts payable     (1,494 )     (2,059 )
Accrued and other liabilities     (392 )     (4,972 )
Deferred revenue     14,924       14,239  
Operating lease liabilities     (1,500 )     (2,690 )
Net cash provided by operating activities     11,504       1,355  
Cash Flows from Investing Activities:        
Purchases of property and equipment     (383 )     (1,397 )
Proceeds from sale of property and equipment     24       17  
Capitalized internal-use software     (2,025 )     (1,344 )
Purchases of marketable securities     (217,754 )     (151,408 )
Sales of marketable securities     —       58,736  
Maturities and redemptions of marketable securities     261,474       69,750  
Net cash provided by (used in) investing activities     41,336       (25,646 )
Cash Flows from Financing Activities:        
Proceeds from exercise of stock options     6       28  
Payment of withholding taxes on net share settlement of equity awards     (12,434 )     (119,948 )
Payment of deferred offering costs     —       (109 )
Net cash used in financing activities     (12,428 )     (120,029 )
Net increase (decrease) in cash, cash equivalents and restricted cash     40,412       (144,320 )
Cash, cash equivalents and restricted cash, beginning of period     304,158       747,864  
Cash, cash equivalents and restricted cash, end of period   $ 344,570     $ 603,544  

FRESHWORKS INC.

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(in thousands, except percentages and per share data)


(unaudited)

    Three Months Ended

March 31, 		   
      2023       2022     Growth Rates
Revenue            
GAAP revenue   $ 137,692     $ 114,637     20 %
Effects of foreign currency rate fluctuations     3,488          
Revenue adjusted for constant currency   $ 141,180         23 %

FRESHWORKS INC.

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(in thousands, except percentages and per share data)


(unaudited)

    Three Months Ended

March 31,
      2023       2022  
Reconciliation of gross profit and gross margin:        
GAAP gross profit   $ 112,456     $ 92,242  
Non-GAAP adjustments:        
Stock-based compensation expense     1,696       1,526  
Employer payroll taxes on employee stock transactions     43       (55 )
Amortization of acquired intangibles     158       525  
Non-GAAP gross profit   $ 114,353     $ 94,238  
GAAP gross margin     81.7 %     80.5 %
Non-GAAP gross margin     83.0 %     82.2 %
         
Reconciliation of operating expenses:        
GAAP research and development   $ 32,857     $ 30,717  
Non-GAAP adjustments:        
Stock-based compensation expense     (8,979 )     (8,309 )
Employer payroll taxes on employee stock transactions     (97 )     178  
Non-GAAP research and development   $ 23,781     $ 22,586  
GAAP research and development as percentage of revenue     23.9 %     26.8 %
Non-GAAP research and development as percentage of revenue     17.3 %     19.7 %
         
GAAP sales and marketing   $ 86,810     $ 71,466  
Non-GAAP adjustments:        
Stock-based compensation expense     (15,756 )     (12,536 )
Employer payroll taxes on employee stock transactions     (596 )     488  
Amortization of acquired intangibles     (99 )     (99 )
Non-GAAP sales and marketing   $ 70,359     $ 59,319  
GAAP sales and marketing as percentage of revenue     63.0 %     62.3 %
Non-GAAP sales and marketing as percentage of revenue     51.1 %     51.7 %
         
GAAP general and administrative   $ 40,896     $ 37,183  
Non-GAAP adjustments:        
Stock-based compensation expense     (24,263 )     (24,254 )
Employer payroll taxes on employee stock transactions     (305 )     (29 )
Non-GAAP general and administrative   $ 16,328     $ 12,900  
         
GAAP general and administrative as percentage of revenue     29.7 %     32.4 %
Non-GAAP general and administrative as percentage of revenue     11.9 %     11.3 %
         
Reconciliation of operating loss and operating margin:        
GAAP loss from operations   $ (48,107 )   $ (47,124 )
Non-GAAP adjustments:        
Stock-based compensation expense     50,694       46,625  
Employer payroll taxes on employee stock transactions     1,041       (692 )
Amortization of acquired intangibles     257       624  
Non-GAAP income (loss) from operations   $ 3,885     $ (567 )
GAAP operating margin     (34.9 )%     (41.1 )%
Non-GAAP operating margin     2.8 %     (0.5 )%
         
Reconciliation of net loss attributable to common stockholders:        
GAAP net loss attributable to common stockholders – basic and diluted   $ (42,664 )   $ (49,059 )
Non-GAAP adjustments:        
Stock-based compensation expense     50,694       46,625  
Employer payroll taxes on employee stock transactions     1,041       (692 )
Amortization of acquired intangibles     257       624  
Income tax adjustments     653       381  
Non-GAAP net income (loss) attributable to common stockholders – basic and diluted   $ 9,981     $ (2,121 )
         
Reconciliation of net loss per share – basic and diluted:        
GAAP net loss per share – basic and diluted   $ (0.15 )   $ (0.18 )
Non-GAAP adjustments:        
Stock-based compensation expense     0.18       0.17  
Employer payroll taxes on employee stock transactions     —       —  
Amortization of acquired intangibles     —       —  
Income tax adjustments     —       —  
Non-GAAP net income (loss) per share – basic   $ 0.03     $ (0.01 )
Non-GAAP net income (loss) per share – diluted   $ 0.03     $ (0.01 )
Weighted-average shares used in computing GAAP net loss per share – basic     290,133       278,186  
Weighted-average shares used in computing non-GAAP net income (loss) per share – diluted (1)     294,467       278,186  
         
Computation of free cash flow:        
Net cash provided by provided by operating activities   $ 11,504     $ 1,355  
Less:        
Purchases of property and equipment     (383 )     (1,397 )
Capitalized internal-use software     (2,025 )     (1,344 )
Free cash flow   $ 9,096     $ (1,386 )
Net cash provided by (used in) investing activities   $ 41,336     $ (25,646 )
Net cash used in financing activities   $ (12,428 )   $ (120,029 )

(1) Diluted net income (loss) per share attributable to common stockholders is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result. The Company considers its stock options and RSUs as potential common stock equivalents but excluded them from the computation of GAAP diluted net loss per share attributable to common stockholders, as their effect was antidilutive. For the three months ended March 31, 2023, potentially dilutive shares of 4.3 million shares were included in the weighted average shares used in computing non-GAAP net income per share.



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CCC Intelligent Solutions Holdings Inc. Announces First Quarter 2023 Financial Results

CCC Intelligent Solutions Holdings Inc. Announces First Quarter 2023 Financial Results

CHICAGO–(BUSINESS WIRE)–
CCC Intelligent Solutions Holdings Inc. (“CCC” or the “Company”) (NASDAQ: CCCS), a leading SaaS platform for the P&C insurance economy, today announced its financial results for the three months ended March 31, 2023.

“CCC delivered strong first quarter results, highlighted by 10% year-over-year revenue growth and 39% adjusted EBITDA margin. We believe our solid start to 2023 reflects our durable business model, ongoing innovation, and continued adoption of CCC solutions that help our clients address a growing number of the business challenges facing the P&C insurance economy,” said Githesh Ramamurthy, Chairman & CEO of CCC.

“We believe there is a great opportunity to use our industry-leading platform, focus on innovation, and multi-sided network to develop and implement new digital solutions for our clients,” continued Ramamurthy. “We remain confident in our ability to deliver on our strategic and financial objectives while helping our customers and investing in future solutions.”

First Quarter 2023 Financial Highlights

Revenue

 

•

 

Total revenue was $204.9 million for the first quarter of 2023, compared to $186.8 million for the first quarter of 2022.

Profitability

 

•

 

GAAP gross profit was $147.8 million, representing a gross margin of 72%, for the first quarter of 2023, compared with $137.4 million, representing a gross margin of 74%, for the first quarter of 2022. Adjusted gross profit was $156.6 million, representing an adjusted gross margin of 76%, for the first quarter of 2023, compared with $145.1 million, representing an adjusted gross margin of 78%, for the first quarter of 2022.

 

•

 

GAAP operating income was $13.3 million for the first quarter of 2023, compared with GAAP operating income of $12.7 million for the first quarter of 2022. Adjusted operating income was $70.3 million for the first quarter of 2023, compared with adjusted operating income of $66.8 million for the first quarter of 2022.

 

•

 

GAAP net income was $2.2 million for the first quarter of 2023, compared with GAAP net income of $12.0 million for the first quarter of 2022. Adjusted net income was $46.5 million for the first quarter of 2023, compared with $48.9 million for the first quarter of 2022.

 

•

 

Adjusted EBITDA was $79.5 million for the first quarter of 2023, compared with adjusted EBITDA of $73.7 million for the first quarter of 2022. Adjusted EBITDA grew 8% in the first quarter of 2023 compared with the first quarter of 2022.

Liquidity

 

•

 

CCC had $338.4 million in cash and cash equivalents and $790.0 million of total debt on March 31, 2023. The Company generated $33.1 million in cash from operating activities and had free cash flow of $18.5 million during the first quarter of 2023, compared with $46.9 million generated in cash from operating activities and $32.6 million in free cash flow in the first quarter of 2022.

The information presented above includes non-GAAP financial measures such as “adjusted EBITDA,” “adjusted net income,” “adjusted operating income,” “adjusted gross profit,” “adjusted gross profit margin,” and “free cash flow.” Refer to “Non-GAAP Financial Measures” for a discussion of these measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

1st Quarter and Recent Business Highlights

 

•

 

The total number of claims processed through CCC® Estimate-STP continues to increase. Estimate-STP is CCC’s AI-based system that can pre-populate a complete repair estimate on a qualified claim in seconds. In March of 2023, the annualized run rate value of auto claims processed through Estimate-STP was over $1 billion, which is more than 10 times CCC’s run rate value in March of 2022. With the current run rate value still representing less than 1% of CCC’s current annual Automobile Physical Damage claim volume, the growth potential of this product remains very strong.

 

 

•

 

The growing adoption of CCC® Diagnostics is helping to improve consistency and transparency around the administration, reporting, and verification of diagnostic services between repairers and insurers. As a result, CCC is experiencing growth in both its network of repair facilities using the solution and the volume of scanned vehicles being verified. In the first quarter of 2023, about 3,800 repair facilities ran a scan through one of CCC’s diagnostic services partners. This was more than twice the number of repair facilities running scans in the first quarter of 2022. Additionally in the first quarter of 2023, over 500,000 scanned vehicles were verified via the CCC network – more than double the volume being scanned in the first quarter of 2022.

 

•

 

In March, the Business Intelligence Group awarded CCC two 2023 Artificial Intelligence Excellence Awards. The 2023 Artificial Intelligence Excellence Awards recognize organizations, products, and people applying AI to solve real business challenges. The first award recognized Estimate-STP as a top innovation in the “product” category. The second award recognized CCC’s NXT Lab innovation hub as a center of excellence in the “organization” category for its work across internal teams (including data science, R&D, engineering, support, and design) to develop and test next-generation AI solutions for the industry.

 

Business Outlook

Based on information as of today, May 2, 2023, the Company is issuing the following financial guidance:

 

 

 

Second Quarter Fiscal 2023

 

 

Full Year Fiscal 2023

 

Revenue

 

$

207.5 million to $209.5 million

 

 

$

844 million to $850 million

 

Adjusted EBITDA

 

$

76.5 million to $78.5 million

 

 

$

332 million to $338 million

 

Conference Call Information

CCC will host a conference call today, May 2, 2023, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results and financial guidance. A live webcast of this conference call will be available on the “Investor Relations” page of the Company’s website at https://ir.cccis.com, and a replay will be archived on the website as well.

About CCC Intelligent Solutions

CCC Intelligent Solutions Inc., a subsidiary of CCC Intelligent Solutions Holdings Inc. (NASDAQ: CCCS), is a leading SaaS platform for the multi-trillion-dollar P&C insurance economy powering operations for insurers, repairers, automakers, part suppliers, lenders, and more. CCC cloud technology connects more than 30,000 businesses digitizing mission-critical workflows, commerce, and customer experiences. A trusted leader in AI, IoT, customer experience, network and workflow management, CCC delivers innovations that keep people’s lives moving forward when it matters most. Learn more about CCC at www.cccis.com.

Forward Looking Statements

This press release contains forward-looking statements that are based on beliefs and assumptions and on information currently available. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements in this press release include, but are not limited to, future events, goals, plans and projections regarding the Company’s financial position, results of operations, market position, product development and business strategy. Such differences may be material. We cannot assure you that the forward-looking statements in this press release will prove to be accurate. These forward looking statements are subject to a number of risks and uncertainties, including, among others, our revenues, the concentration of our customers and the ability to retain our current customers; our ability to negotiate with our customers on favorable terms; our ability to maintain and grow our brand and reputation cost-effectively; the execution of our growth strategy; our projected financial information, growth rate and market opportunity; the health of our industry, claim volumes, and market conditions; changes in the insurance and automotive collision industries, including the adoption of new technologies; global economic conditions and geopolitical events; competition in our market and our ability to retain and grow market share; our ability to develop, introduce and market new enhanced versions of our solutions and products; our sales and implementation cycles; the ability of our research and development efforts to create significant new revenue streams; changes in applicable laws or regulations; changes in international economic, political, social and governmental conditions and policies, including corruption risks in China and other countries; currency fluctuations; our reliance on third-party data, technology and intellectual property; our ability to protect our intellectual property; our ability to keep our data and information systems secure from data security breaches; our ability to acquire or invest in companies or pursue business partnerships; our ability to raise financing in the future and improve our capital structure; our success in retaining or recruiting, or changes required in, our officers, key employees or directors; our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; our ability to expand or maintain our existing customer base; our ability to service our indebtedness; and other risks and uncertainties, including those included under the header “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”), which can be obtained, without charge, at the SEC’s website (www.sec.gov), and in our other filings with the SEC. The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

Non-GAAP Financial Measures

This press release includes certain financial measures not presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”), including, but not limited to, “adjusted EBITDA,” “adjusted net income,” “adjusted operating income,” “adjusted gross profit,” “adjusted gross profit margin,” “adjusted operating expenses,” and “free cash flow” in each case presented on a non-GAAP basis, and certain ratios and other metrics derived therefrom. These non-GAAP financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing the Company’s financial results. Therefore, these measures should not be considered in isolation or as an alternative to other measures of profitability, liquidity or performance under GAAP. You should be aware that the Company’s calculation of these non-GAAP measures may not be comparable to similarly-titled measures used by other companies.

The Company believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in and in comparing the Company’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. Please refer to the reconciliations of these measures below to what the Company believes are the most directly comparable measures evaluated in accordance with GAAP.

This press release also includes certain projections of non-GAAP financial measures. Due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from these projected measures, together with some of the excluded information not being ascertainable or accessible, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures without unreasonable effort. Consequently, no disclosure of estimated comparable GAAP measures is included and no reconciliation of the forward-looking non-GAAP financial measures is included for these projections.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
 

March 31,

December 31,

2023

2022

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

338,354

 

$

323,788

 

Accounts receivable—Net of allowances of $6,866 and $5,339 as of March 31, 2023 and

December 31, 2022, respectively

 

92,268

 

 

98,353

 

Income taxes receivable

 

2,316

 

 

4,015

 

Deferred contract costs

 

17,339

 

 

16,556

 

Other current assets

 

34,766

 

 

36,358

 

Total current assets

 

485,043

 

 

479,070

 

SOFTWARE, EQUIPMENT, AND PROPERTY—Net

 

150,496

 

 

146,443

 

OPERATING LEASE ASSETS

 

32,349

 

 

32,874

 

INTANGIBLE ASSETS—Net

 

1,094,068

 

 

1,118,819

 

GOODWILL

 

1,495,129

 

 

1,495,129

 

DEFERRED FINANCING FEES, REVOLVER—Net

 

2,132

 

 

2,286

 

DEFERRED CONTRACT COSTS

 

20,212

 

 

20,161

 

EQUITY METHOD INVESTMENT

 

10,228

 

 

10,228

 

OTHER ASSETS

 

51,768

 

 

45,911

 

TOTAL

$

3,341,425

 

$

3,350,921

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

15,795

 

$

27,599

 

Accrued expenses

 

45,972

 

 

71,445

 

Income taxes payable

 

5,001

 

 

922

 

Current portion of long-term debt

 

8,000

 

 

8,000

 

Current portion of long-term licensing agreement—Net

 

2,921

 

 

2,876

 

Operating lease liabilities

 

6,815

 

 

5,484

 

Deferred revenues

 

40,272

 

 

35,239

 

Total current liabilities

 

124,776

 

 

151,565

 

LONG-TERM DEBT—Net

 

772,461

 

 

774,132

 

DEFERRED INCOME TAXES—Net

 

234,935

 

 

241,698

 

LONG-TERM LICENSING AGREEMENT—Net

 

30,005

 

 

30,752

 

OPERATING LEASE LIABILITIES

 

53,329

 

 

54,245

 

WARRANT LIABILITIES

 

35,210

 

 

36,405

 

OTHER LIABILITIES

 

1,975

 

 

2,658

 

Total liabilities

 

1,252,691

 

 

1,291,455

 

COMMITMENTS AND CONTINGENCIES (Notes 18 and 19)

MEZZANINE EQUITY:

Redeemable non-controlling interest

 

14,179

 

 

14,179

 

STOCKHOLDERS’ EQUITY:

Preferred stock—$0.0001 par; 100,000,000 shares authorized; no shares issued or outstanding

 

—

 

 

—

 

Common stock—$0.0001 par; 5,000,000,000 shares authorized; 627,683,715 and

622,072,905 shares issued and outstanding at March 31, 2023 and December 31,

2022, respectively

 

63

 

 

62

 

Additional paid-in capital

 

2,781,104

 

 

2,754,055

 

Accumulated deficit

 

(705,762

)

 

(707,946

)

Accumulated other comprehensive loss

 

(850

)

 

(884

)

Total stockholders’ equity

 

2,074,555

 

 

2,045,287

 

TOTAL

$

3,341,425

 

$

3,350,921

 

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share data)

(Unaudited)

For the Three Months Ended

March 31,

2023

2022

REVENUES

$

204,919

 

$

186,823

 

COST OF REVENUES

Cost of revenues, exclusive of amortization of acquired technologies

 

50,447

 

 

42,701

 

Amortization of acquired technologies

 

6,685

 

 

6,695

 

Total cost of revenues

 

57,132

 

 

49,396

 

GROSS PROFIT

 

147,787

 

 

137,427

 

OPERATING EXPENSES:

Research and development

 

40,996

 

 

35,681

 

Selling and marketing

 

33,531

 

 

26,802

 

General and administrative

 

41,865

 

 

44,207

 

Amortization of intangible assets

 

18,066

 

 

18,080

 

Total operating expenses

 

134,458

 

 

124,770

 

OPERATING INCOME

 

13,329

 

 

12,657

 

INTEREST EXPENSE

 

(13,832

)

 

(7,341

)

INTEREST INCOME

 

3,259

 

 

—

 

CHANGE IN FAIR VALUE OF DERIVATIVE INSTRUMENTS

 

(2,604

)

 

—

 

CHANGE IN FAIR VALUE OF WARRANT LIABILITIES

 

1,195

 

 

2,136

 

GAIN ON SALE OF COST METHOD INVESTMENT

 

—

 

 

3,578

 

OTHER INCOME—Net

 

54

 

 

82

 

PRETAX INCOME

 

1,401

 

 

11,112

 

INCOME TAX BENEFIT

 

783

 

 

863

 

NET INCOME INCLUDING NON-CONTROLLING

INTEREST

 

2,184

 

 

11,975

 

Less: net income attributable to non-controlling interest

 

—

 

 

—

 

NET INCOME ATTRIBUTABLE TO CCC INTELLIGENT

SOLUTIONS HOLDINGS INC.

$

2,184

 

$

11,975

 

Net income per share attributable to common stockholders:

Basic

$

0.00

 

$

0.02

 

Diluted

$

0.00

 

$

0.02

 

Weighted-average shares used in computing net income per share

attributable to common stockholders:

Basic

 

616,217,176

 

 

603,104,839

 

Diluted

 

646,380,961

 

 

641,028,410

 

COMPREHENSIVE INCOME:

Net income including non-controlling interest

 

2,184

 

 

11,975

 

Other comprehensive income—Foreign currency translation

adjustment

 

34

 

 

9

 

COMPREHENSIVE INCOME INCLUDING

NON-CONTROLLING INTEREST

 

2,218

 

 

11,984

 

Less: comprehensive income attributable to non-controlling

interest

 

—

 

 

—

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO CCC

INTELLIGENT SOLUTIONS HOLDINGS INC.

$

2,218

 

$

11,984

 

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
 

For the Three Months Ended

March 31,

2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

2,184

 

$

11,975

 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of software, equipment, and property

 

9,206

 

 

6,807

 

Amortization of intangible assets

 

24,751

 

 

24,775

 

Deferred income taxes

 

(6,763

)

 

(21,223

)

Stock-based compensation

 

29,234

 

 

23,644

 

Amortization of deferred financing fees

 

427

 

 

474

 

Amortization of discount on debt

 

56

 

 

65

 

Change in fair value of derivative instruments

 

2,604

 

 

—

 

Change in fair value of warrant liabilities

 

(1,195

)

 

(2,136

)

Non-cash lease expense

 

942

 

 

1,228

 

Loss on disposal of software, equipment and property

 

—

 

 

795

 

Gain on sale of cost method investment

 

—

 

 

(3,578

)

Other

 

58

 

 

26

 

Changes in:

Accounts receivable—Net

 

6,084

 

 

2,043

 

Deferred contract costs

 

(783

)

 

(576

)

Other current assets

 

1,726

 

 

2,187

 

Deferred contract costs—Non-current

 

(51

)

 

814

 

Other assets

 

(8,519

)

 

(10,805

)

Operating lease assets

 

(417

)

 

1,316

 

Income taxes

 

5,778

 

 

20,370

 

Accounts payable

 

(11,897

)

 

4,825

 

Accrued expenses

 

(25,690

)

 

(16,460

)

Operating lease liabilities

 

415

 

 

(1,986

)

Deferred revenues

 

5,033

 

 

2,353

 

Other liabilities

 

(105

)

 

(68

)

Net cash provided by operating activities

 

33,078

 

 

46,865

 

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of software, equipment, and property

 

(14,534

)

 

(14,280

)

Acquisition of Safekeep, Inc., net of cash acquired

 

—

 

 

(32,227

)

Proceeds from sale of cost method investment

 

—

 

 

3,892

 

Net cash used in investing activities

 

(14,534

)

 

(42,615

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

 

8,109

 

 

10,691

 

Proceeds from employee stock purchase plan

 

1,326

 

 

—

 

Payments for employee taxes withheld upon vesting of equity awards

 

(11,449

)

 

—

 

Principal payments on long-term debt

 

(2,000

)

 

(2,000

)

Net cash (used in) provided by financing activities

 

(4,014

)

 

8,691

 

NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

36

 

 

12

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

14,566

 

 

12,953

 

CASH AND CASH EQUIVALENTS:

Beginning of period

 

323,788

 

 

182,544

 

End of period

$

338,354

 

$

195,497

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

Noncash purchases of software, equipment, and property

$

626

 

$

—

 

Contingent consideration related to business acquisition

$

—

 

$

200

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest

$

13,446

 

$

6,783

 

Cash paid for income taxes—Net

$

202

 

$

45

 

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF GROSS PROFIT TO ADJUSTED GROSS PROFIT

(In thousands, except profit margin percentage data)

(Unaudited)
 

Three Months Ended March 31,

(amounts in thousands, except percentages)

2023

2022

Gross Profit

$

147,787

 

$

137,427

 

Amortization of acquired technologies

 

6,685

 

 

6,695

 

Stock-based compensation and related employer payroll tax

 

2,116

 

 

933

 

Adjusted Gross Profit

$

156,588

 

$

145,055

 

Gross Profit Margin

 

72

%

 

74

%

Adjusted Gross Profit Margin

 

76

%

 

78

%

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES

(In thousands)

(Unaudited)

Three Months Ended March 31,

(dollar amounts in thousands)

2023

2022

Operating expenses

$

134,458

 

$

124,770

 

Amortization of intangible assets

 

(18,066

)

 

(18,080

)

Stock-based compensation expense and related employer payroll tax

 

(29,094

)

 

(23,723

)

Plaintiff litigation costs

 

(986

)

 

—

 

M&A and integration costs

 

—

 

 

(1,407

)

Lease overlap costs

 

—

 

 

(1,338

)

Lease abandonment

 

—

 

 

(1,222

)

Business Combination transaction and related costs

 

—

 

 

(732

)

Net costs related to divestiture

 

—

 

 

(60

)

Adjusted operating expenses

$

86,312

 

$

78,208

 

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED OPERATING INCOME

(In thousands)

(Unaudited)

Three Months Ended March 31,

(dollar amounts in thousands)

2023

2022

Operating income

$

13,329

$

12,657

Amortization of intangible assets

 

18,066

 

18,080

Amortization of acquired technologies—Cost of revenue

 

6,685

 

6,695

Stock-based compensation expense and related employer payroll tax

 

31,210

 

24,656

Plaintiff litigation costs

 

986

 

—

M&A and integration costs

 

—

 

1,407

Lease overlap costs

 

—

 

1,338

Lease abandonment

 

—

 

1,222

Business Combination transaction and related costs

 

—

 

732

Net costs related to divestiture

 

—

 

60

Adjusted operating income

$

70,276

$

66,847

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

(In thousands, except for EBITDA margin percentage data)

(Unaudited)
 

Three Months Ended

March 31,

(dollar amounts in thousands)

2023

2022

Net income

$

2,184

 

$

11,975

 

Interest expense

 

13,832

 

 

7,341

 

Interest income

 

(3,259

)

 

—

 

Income tax benefit

 

(783

)

 

(863

)

Amortization of intangible assets

 

18,066

 

 

18,080

 

Amortization of acquired technologies—Cost of revenue

 

6,685

 

 

6,695

 

Depreciation and amortization of software, equipment and property

 

2,227

 

 

2,962

 

Depreciation and amortization of software, equipment and property—Cost of revenue

 

6,979

 

 

3,845

 

EBITDA

 

45,931

 

 

50,035

 

Stock-based compensation expense and related employer payroll tax

 

31,210

 

 

24,656

 

Change in fair value of derivative instruments

 

2,604

 

 

—

 

Plaintiff litigation costs

 

986

 

 

—

 

Change in fair value of warrant liabilities

 

(1,195

)

 

(2,136

)

M&A and integration costs

 

—

 

 

1,407

 

Lease overlap costs

 

—

 

 

1,338

 

Lease abandonment

 

—

 

 

1,222

 

Business Combination transaction and related costs

 

—

 

 

732

 

Net costs related to divestiture

 

—

 

 

60

 

Gain on sale of cost method investment

 

—

 

 

(3,578

)

Adjusted EBITDA

$

79,536

 

$

73,736

 

Adjusted EBITDA Margin

 

39

%

 

39

%

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME

(In thousands, except share and per share data)

(Unaudited)

Three Months Ended

March 31,

(dollar amounts in thousands)

2023

2022

Net income

$

2,184

 

$

11,975

 

Amortization of intangible assets

 

18,066

 

 

18,080

 

Amortization of acquired technologies—Cost of revenue

 

6,685

 

 

6,695

 

Stock-based compensation expense and related employer payroll tax

 

31,210

 

 

24,656

 

Change in fair value of derivative instruments

 

2,604

 

 

—

 

Plaintiff litigation costs

 

986

 

 

—

 

Change in fair value of warrant liabilities

 

(1,195

)

 

(2,136

)

M&A and integration costs

 

—

 

 

1,407

 

Lease overlap costs

 

—

 

 

1,338

 

Lease abandonment

 

—

 

 

1,222

 

Business Combination transaction and related costs

 

—

 

 

732

 

Net costs related to divestiture

 

—

 

 

60

 

Gain on sale of cost method investment

 

—

 

 

(3,578

)

Tax effect of adjustments

 

(14,046

)

 

(11,577

)

Adjusted net income

$

46,494

 

$

48,874

 

Adjusted net income per share attributable to common stockholders:

Basic

$

0.08

 

$

0.08

 

Diluted

$

0.07

 

$

0.08

 

Weighted average shares outstanding:

Basic

 

616,217,176

 

 

603,104,839

 

Diluted

 

646,380,961

 

 

641,028,410

 

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF NET CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW

(In thousands)

(Unaudited)
 

Three Months Ended March 31,

(dollar amounts in thousands)

2023

2022

Net cash provided by operating activities

$

33,078

 

$

46,865

 

Less: Purchases of software, equipment, and property

 

(14,534

)

 

(14,280

)

Free Cash Flow

$

18,544

 

$

32,585

 

 

Investor:

Bill Warmington

VP, Investor Relations, CCC Intelligent Solutions Inc.

312-229-2355

[email protected]

Media:

Michelle Hellyar

Senior Director, Public Relations, CCC Intelligent Solutions Inc.

[email protected]

KEYWORDS: Illinois United States North America

INDUSTRY KEYWORDS: Professional Services Apps/Applications Technology Insurance Mobile/Wireless Software Internet

MEDIA:

Posted on

Hillstream BioPharma Announces Closing of Public Offering of Common Stock

BRIDGEWATER, N.J., May 02, 2023 (GLOBE NEWSWIRE) —  Hillstream BioPharma, Inc. (Nasdaq: HILS) (“Hillstream” or the “Company”), a biotechnology company developing therapeutic candidates targeting drug resistant and devastating cancers using ferroptosis, an emerging new anti-cancer mechanism resulting in iron-mediated cell death, and immuno-oncology targeted novel biologics, today announced the closing of its previously announced public offering of common stock. Hillstream sold 5,300,000 shares of its common stock at a public offering price of $0.50 per share for gross proceeds of $2,650,000 before deducting underwriting discounts and offering expenses. In addition, the Company has granted the underwriters a 45-day option to purchase up to an additional 795,000 shares of common stock to cover over-allotments, if any, at the public offering price, less the underwriting discount.

The Company intends to use the net proceeds from the offering for the advancement of its lead drug candidate HSB-1216, the development of other product candidates in the Company’s pipeline and general corporate purposes and working capital.

ThinkEquity acted as sole book-running manager for the offering.

The offering was made pursuant to an effective shelf registration statement that has been filed with the U.S. Securities and Exchange Commission (the “SEC”). The final prospectus supplement relating to the offering was filed with the SEC and is available on the SEC’s website at http://www.sec.gov. Copies of the final prospectus supplement and the accompanying prospectus relating to the offering may be obtained from ThinkEquity, 17 State Street, 41st Floor, New York, NY 10004.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

About Hillstream

Hillstream BioPharma, Inc. is a biotechnology company developing a focused portfolio of therapeutic candidates targeting drug resistant and devastating cancers. The Company anticipates submitting an investigational new drug application and plans to initiate a clinical study in the second half of 2023 with HSB-1216, which targets ferroptosis, an emerging new anti-cancer mechanism, resulting in iron mediated cell death of drug resistant cancers. The Company’s emerging immuno-oncology pipeline is led by HSB-3215, a novel anti-HER2 monoclonal antibody targeting unique epitopes with a novel mechanism of action. The erbB/HER family of cell surface proteins include well-known and validated drug targets including HER2 and HER3 found in multiple solid tumors, including breast, lung, GYN, endocrinological and CNS. For more information, please visit: www.hillstreambio.com.

Forward-Looking Statements

This press release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan” or the negative of these terms and similar expressions intended to identify forward-looking statements. These statements include statements related to the intended use of proceeds. Hillstream cautions readers that forward-looking statements are based on management’s expectations and assumptions as of the date of this press release and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to, risks related to prevailing market conditions, the impact of general economic, industry or political conditions in the United States, and risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC, as may be amended or supplemented from time to time by other reports the Company files with the SEC. Forward-looking statements reflect the Company’s analysis only on their stated date, and Hillstream undertakes no obligation to update or revise these statements except as may be required by law.

Investor Relations:

Email: [email protected]
Website: www.hillstreambio.com



Posted on

Rocky Brands, Inc. Announces First Quarter 2023 Results

Rocky Brands, Inc. Announces First Quarter 2023 Results

NELSONVILLE, Ohio–(BUSINESS WIRE)–
Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its first quarter ended March 31, 2023.

First Quarter 2023 Overview

  • Net sales decreased 33.9% to $110.4 million

    • Wholesale segment sales decreased 40.2%

    • Retail segment revenue increased 3.1%

  • Gross margin increased 200 basis points to 39.6%

  • Operating income was $4.2 million, or $4.9 million on an adjusted basis

  • Net loss was $0.4 million, or $(0.05) per diluted share

  • Inventories decreased 22.5% year-over-year

  • Total debt at March 31, 2023 was down 17.9% compared with March 31, 2022

“Consumer demand for our brands remains healthy and our gross margins are up significantly year-over-year despite some industry headwinds that are pressuring our top-line,” said Jason Brooks, Chairman, President and Chief Executive Officer. “We experienced positive sell-through with many of our key accounts during the first quarter. Unfortunately, our Wholesale performance didn’t translate into increased sell-in as many of our retail partners are in the process of working down elevated inventory levels and have recently adopted a more cautious approach to reorders due to the current economic backdrop.”

Brooks continued, “In response to more challenging market conditions, we are taking actions to reduce expenses and protect profitability. We also generated over $2 million in annualized interest expense savings by utilizing the proceeds from our sale of the Servus brand in March to pay down more than $17 million on our senior term loan and credit facility. While the year has started slower than expected, we are confident that the strength of our brand portfolio has the Company positioned to accelerate growth once the operating environment improves.”

First Quarter 2023 Review

First quarter net sales decreased 33.9% to $110.4 million compared with $167.0 million in the first quarter of 2022. Wholesale sales for the first quarter decreased 40.2% to $80.1 million compared to $134.0 million for the same period in 2022. Retail sales for the first quarter increased 3.1% to $29.5 million compared to $28.6 million for the same period last year. Contract Manufacturing sales, which include contract military sales and private label programs, were $0.9 million in the first quarter of 2023 compared to $4.4 million in the prior year period. The decrease in Contract Manufacturing sales was due to the expiration of certain contracts with the U.S. Military.

Gross margin in the first quarter of 2023 was $43.8 million, or 39.6% of net sales, compared to $62.8 million, or 37.6% of net sales, for the same period last year. The increase in gross margin as a percentage of net sales was due to the realization of pricing actions taken in 2022, as well as decreases in in-bound logistics costs. We experienced an increased mix of Retail segment sales which carry higher gross margins than the Wholesale and Contract Manufacturing segments.

Operating expenses were $39.6 million, or 35.9% of net sales, for the first quarter of 2023 compared to $49.6 million, or 29.7% of net sales, for the same period a year ago. Excluding $0.8 million of acquisition-related amortization in the first quarter of 2023 and $1.0 million in acquisition-related amortization and integration expenses in the first quarter of 2022, adjusted operating expenses were $38.8 million in the current year period and $48.6 million in the year ago period. The decrease in operating expenses was driven primarily by a decrease in variable expenses associated with lower sales and improved distribution center efficiencies compared with the year ago period. As a percentage of net sales, adjusted operating expenses were 35.2% in the first quarter of 2023 compared with 29.1% in the year ago period.

Income from operations for the first quarter of 2023 was $4.2 million, or 3.8% of net sales compared to $13.2 million or 7.9% of net sales for the same period a year ago. Adjusted operating income for the first quarter of 2023 was $4.9 million, or 4.5% of net sales compared to adjusted operating income of $14.2 million, or 8.5% of net sales a year ago.

Interest expense for the first quarter of 2023 was $6.1 million compared with $3.9 million a year ago. The increase reflected increased interest rates on interest payments on the senior term loan and credit facility.

The Company reported a first quarter net loss of $0.4 million, or $(0.05) per diluted share compared to net income of $7.3 million, or $0.99 per diluted share in the first quarter of 2022. Adjusted net loss for the first quarter of 2023 was $0.8 million, or $(0.12) per diluted share, compared to adjusted net income of $8.2 million, or $1.10 per diluted share in the year ago period.

Recent Developments

In April 2022, Rocky Brands received a three-year contract to produce “Hot Weather” combat boots for the U.S. Military with a total value of $45.0 million. The Company expects to begin fulfilling orders in the fourth quarter of 2023.

Balance Sheet Review

Cash and cash equivalents were $4.9 million at March 31, 2023 compared to $15.0 million on the same date a year ago.

Total debt at March 31, 2023 was $219.8 million consisting of $95.8 million senior term loan and $126.6 million of borrowings under the Company’s senior secured asset-backed credit facility. During the first quarter of 2023, the Company paid down $20.5 million of its senior term loan. Compared with March 31, 2022 and December 31, 2022, total debt at March 31, 2023 was down 17.9% and 14.4%, respectively.

Inventories at March 31, 2023 were $224.1 million, down 22.5% compared to $289.2 million on the same date a year ago and down 4.8% compared with $235.4 million at December 31, 2022.

Conference Call Information

The Company’s conference call to review first quarter 2023 results will be broadcast live over the internet today, Tuesday, May 2, 2023 at 4:30 pm Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 704-4453 (domestic) or (201) 389-0920 (international). The conference call will also be available to interested parties through a live webcast at www.rockybrands.com. Please visit the website and select the “Investors” link at least 15 minutes prior to the start of the call to register and download any necessary software.

About Rocky Brands, Inc.

Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names. Brands in the portfolio include Rocky®, Georgia Boot®, Durango®, Lehigh®, The Original Muck Boot Company®, XTRATUF®, and Ranger®. More information can be found at RockyBrands.com.

Safe Harbor Language

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding intent, beliefs, expectations, projections, forecasts, and plans of the Company and its management and include statements in this press release regarding management’s confidence in the strength of the Company’s brand profile (Paragraph 3), and the Company’s position to accelerate growth once the operating environment improves (Paragraph 3). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Company’s business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2022 (filed March 10, 2023). One or more of these factors have affected historical results, and could in the future affect the Company’s businesses and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation or warranty by the Company or any other person that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)
 

 

March 31,

 

December 31,

 

March 31,

 

2023

 

2022

 

2022

ASSETS:

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

4,946

$

5,719

$

14,950

Trade receivables – net

 

73,650

 

94,953

 

123,387

Contract receivables

 

–

 

–

 

268

Other receivables

 

2,235

 

908

 

260

Inventories – net

 

224,124

 

235,400

 

289,230

Income tax receivable

 

–

 

–

 

2,338

Prepaid expenses

 

5,619

 

4,067

 

5,875

Total current assets

 

310,574

 

341,047

 

436,308

LEASED ASSETS

 

10,153

 

11,014

 

10,696

PROPERTY, PLANT & EQUIPMENT – net

 

54,666

 

57,359

 

60,958

GOODWILL

 

47,844

 

50,246

 

50,246

IDENTIFIED INTANGIBLES – net

 

114,716

 

121,782

 

125,528

OTHER ASSETS

 

1,028

 

942

 

938

TOTAL ASSETS

$

538,981

$

582,390

$

684,674

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY:

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

66,783

$

69,686

$

156,890

Contract liabilities

 

–

 

–

 

268

Current Portion of Long-Term Debt

 

2,823

 

3,250

 

3,250

Accrued expenses:

 

 

 

Salaries and wages

 

1,816

 

1,253

 

3,715

Taxes – other

 

857

 

1,325

 

2,054

Accrued freight

 

2,098

 

2,413

 

1,735

Commissions

 

706

 

1,934

 

1,689

Accrued duty

 

6,642

 

6,764

 

18,873

Accrued interest

 

2,311

 

2,822

 

–

Income tax payable

 

1,052

 

1,172

 

–

Other

 

5,902

 

5,675

 

8,014

Total current liabilities

 

90,990

 

96,294

 

196,488

LONG-TERM DEBT

 

216,973

 

253,646

 

264,486

LONG-TERM TAXES PAYABLE

 

169

 

169

 

169

LONG-TERM LEASE

 

7,501

 

8,216

 

8,200

DEFERRED INCOME TAXES

 

8,006

 

8,006

 

10,293

DEFERRED LIABILITIES

 

1,053

 

586

 

584

TOTAL LIABILITIES

 

324,692

 

366,917

 

480,220

SHAREHOLDERS’ EQUITY:

 

 

 

Common stock, no par value;

 

 

 

25,000,000 shares authorized; issued and outstanding March 31, 2023 – 7,346,650; December 31, 2022 – 7,339,011; March 31, 2022 – 7,311,059

 

70,107

 

69,752

 

68,454

Retained earnings

 

144,182

 

145,721

 

136,000

Total shareholders’ equity

 

214,289

 

215,473

 

204,454

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

538,981

$

582,390

$

684,674

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except share amounts)

(Unaudited)
 

 

Three Months Ended

 

March 31,

 

2023

 

2022

NET SALES

$

110,445

 

$

167,025

 

COST OF GOODS SOLD

 

66,686

 

 

104,198

 

GROSS MARGIN

 

43,759

 

 

62,827

 

 

 

 

OPERATING EXPENSES

 

39,604

 

 

49,630

 

 

 

 

INCOME FROM OPERATIONS

 

4,155

 

 

13,197

 

 

 

 

INTEREST EXPENSE AND OTHER INCOME – net

 

(4,664

)

 

(3,907

)

 

 

 

(LOSS) INCOME BEFORE INCOME TAX EXPENSE

 

(509

)

 

9,290

 

 

 

 

INCOME TAX (BENEFIT) EXPENSE

 

(111

)

 

1,951

 

 

 

 

NET (LOSS) INCOME

$

(398

)

$

7,339

 

 

 

 

(LOSS) INCOME PER SHARE

 

 

Basic

$

(0.05

)

$

1.00

 

Diluted

$

(0.05

)

$

0.99

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

Basic

 

7,346

 

 

7,306

 

Diluted

 

7,346

 

 

7,410

 

Rocky Brands, Inc. and Subsidiaries

Reconciliation of GAAP Measures to Non-GAAP Measures

(In thousands, except share amounts)

(Unaudited)
 

 

Three Months Ended

 

March 31,

 

2023

 

2022

 

 

 

OPERATING EXPENSES

 

 

OPERATING EXPENSES, AS REPORTED

$

39,604

 

$

49,630

 

LESS: ACQUISITION-RELATED AMORTIZATION

 

(764

)

 

(782

)

LESS: ACQUISITION-RELATED INTEGRATION EXPENSES

 

–

 

 

(265

)

ADJUSTED OPERATING EXPENSES

$

38,840

 

$

48,583

 

 

 

 

ADJUSTED OPERATING INCOME

$

4,919

 

$

14,244

 

 

 

 

INTEREST EXPENSE AND OTHER INCOME – net

 

 

INTEREST EXPENSE AND OTHER INCOME, AS REPORTED

$

(4,664

)

$

(3,907

)

LESS: GAIN ON SALE OF BUSINESS

 

(1,341

)

 

–

 

ADJUSTED INTEREST EXPENSE AND OTHER INCOME – net

 

(6,005

)

 

(3,907

)

 

 

 

NET (LOSS) INCOME

 

 

NET (LOSS) INCOME, AS REPORTED

$

(398

)

$

7,339

 

TOTAL NON-GAAP ADJUSTMENTS

 

(577

)

 

1,047

 

TAX IMPACT OF ADJUSTMENTS

 

126

 

 

(236

)

ADJUSTED NET (LOSS) INCOME

$

(849

)

$

8,150

 

 

 

 

NET (LOSS) INCOME PER SHARE, AS REPORTED

 

 

BASIC

$

(0.05

)

$

1.00

 

DILUTED

$

(0.05

)

$

0.99

 

 

 

 

ADJUSTED NET (LOSS) INCOME PER SHARE

 

 

BASIC

$

(0.12

)

$

1.12

 

DILUTED

$

(0.12

)

$

1.10

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

BASIC

 

7,346

 

 

7,306

 

DILUTED

 

7,346

 

 

7,410

 

Use of Non-GAAP Financial Measures

In addition to GAAP financial measures, we present the following non-GAAP financial measures: “non-GAAP adjusted operating expenses,” “non-GAAP adjusted operating income,” “non-GAAP adjusted interest and other income,” “non-GAAP adjusted net (loss) income,” and “non-GAAP adjusted net (loss) income per share.” Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in our consolidated financial statements in the periods presented. We believe that these non-GAAP measures are useful to management and investors and other users of our consolidated financial statements as an additional tool for evaluating operating performance. We believe they also provide a useful baseline for analyzing trends in our operations.

Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. See “Reconciliation of GAAP Measures to Non-GAAP Measures” accompanying this press release.

Non-GAAP adjustment or measure

Definition

Usefulness to management and investors

Acquisition-related amortization

Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as brands and customer relationships acquired in connection with the acquisition of the performance and lifestyle footwear business of Honeywell International Inc. Charges related to the amortization of these intangibles are recorded in operating expenses in our GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years.

We excluded amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the valuation of our acquisition. These adjustments facilitate a useful evaluation of our current operating performance and comparison to past operating performance and provide investors with additional means to evaluate cost and expense trends.

Acquisition-related integration expenses

Acquisition-related integration expenses are expenses including investment banking fees, legal fees, transaction fees, integration costs and consulting fees tied to the acquisition of the performance and lifestyle footwear business of Honeywell International Inc.

We exclude acquisition-related expenses for purposes of calculating certain non-GAAP measures because the charges do not accurately reflect our current operating performance and comparisons to past operating results and provide investors with additional means to evaluate cost trends.

Gain on Sale of Business

Gain on Sale of Business relates to the sale of the brand Servus. This includes the disposal of non-financial assets and corresponding expenses relating to the sale of the brand along with assets held at our Rock Island manufacturing facility.

We exclude the disposition of non-financial assets and related expenses for purposes of calculating certain non-GAAP measures because the gain does not accurately reflect our current operating performance and comparisons to past operating results and provide investors with additional means to evaluate cost trends.

 

Company Contact:

Tom Robertson

Chief Operating Officer

(740) 753-9100

Investor Relations:

Brendon Frey

ICR, Inc.

(203) 682-8200

KEYWORDS: Ohio United States North America

INDUSTRY KEYWORDS: Footwear Fashion Retail Department Stores Manufacturing Specialty Textiles

MEDIA:

Posted on

Huron Announces First Quarter 2023 Financial Results and Affirms 2023 Guidance

Huron Announces First Quarter 2023 Financial Results and Affirms 2023 Guidance

FIRST QUARTER 2023 FINANCIAL HIGHLIGHTS

  • Total revenues increased $57.8 million, or 22.2%, to $317.9 million in Q1 2023 from $260.0 million in Q1 2022.

  • Revenues within the Digital capability increased 28.5% to $140.7 million in Q1 2023, compared to $109.5 million in Q1 2022.

  • Net income was $13.4 million in Q1 2023, compared to $26.9 million in Q1 2022. Results for Q1 2022 included a non-recurring, unrealized gain of $19.8 million, net of tax, related to the company’s investment in a hospital-at-home company.

  • Adjusted EBITDA(6), a non-GAAP measure, increased $7.4 million, or 33.4%, to $29.5 million in Q1 2023 from $22.1 million in Q1 2022.

  • Diluted earnings per share was $0.68 in Q1 2023, compared to $1.27 in Q1 2022 which included the non-recurring, unrealized gain related to the company’s investment in a hospital-at-home company.

  • Adjusted diluted earnings per share(6), a non-GAAP measure, increased $0.38, or 77.6%, to $0.87 in Q1 2023 from $0.49 in Q1 2022.

  • Huron returned $44.3 million to shareholders by repurchasing 0.6 million shares of the company’s common stock in Q1 2023.

  • Huron affirms its previous earnings guidance range for full year 2023, including revenue expectations in a range of $1.22 billion to $1.28 billion.

OTHER HIGHLIGHTS

  • Huron amended its credit facility to include ESG-related measures that align the company’s financing and people-focused goals.

  • Huron introduced its 2023 Investor Presentation, which provides insight into the company and its commitment to achieving its strategic and financial objectives.

CHICAGO–(BUSINESS WIRE)–
Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the first quarter ended March 31, 2023.

“Our first quarter results reflect our steady progress toward achieving the medium-term financial objectives we set forth in 2022 for double-digit revenue growth, expanded adjusted EBITDA margins, and accelerated adjusted EPS growth,” said Mark Hussey, chief executive officer and president of Huron. “Driven by strong growth across all three operating segments and in our Digital capability, revenues grew 22% over the prior year quarter, reflecting continued demand across our portfolio of end markets. Consistent with our goal to expand our profitability, adjusted EBITDA margins increased 80 basis points over the prior year quarter.”

“Our clients face significant strategic, financial and operational challenges in their markets, exacerbated by an increasingly uncertain macro environment. We believe these challenges will continue to drive solid demand for our business as we further innovate and build upon our deep, collaborative relationships with our clients,” added Hussey.

FIRST QUARTER 2023 RESULTS

Revenues increased $57.8 million, or 22.2%, to $317.9 million for the first quarter of 2023, compared to $260.0 million for the first quarter of 2022. This revenue growth was highlighted by 28.5% growth from the Digital capability in the aggregate across all segments and growth in the Healthcare and Education segments’ Consulting and Managed Services capability of 21.5% and 20.5%, respectively, during the first quarter of 2023, compared to the same prior year period, which reflects the company’s focus on accelerating growth in the healthcare and education industries.

Net income was $13.4 million for the first quarter of 2023, compared to $26.9 million for the same quarter last year. Diluted earnings per share was $0.68 for the first quarter of 2023, compared to $1.27 for the first quarter of 2022. Results for the first quarter of 2022 included a non-recurring, unrealized gain of $19.8 million, net of tax, related to the increase in fair value of the company’s investment in a hospital-at-home company.

First quarter 2023 earnings before interest, taxes, depreciation and amortization (“EBITDA”)(6) was $26.7 million, compared to $47.4 million in the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Three Months Ended

March 31,

 

 

2023

 

 

 

2022

 

Amortization of intangible assets

$

2,231

 

 

$

2,860

 

Restructuring charges

$

2,284

 

 

$

1,555

 

Other losses

$

435

 

 

$

12

 

Transaction-related expenses

$

—

 

 

$

50

 

Unrealized gain on preferred stock investment

$

—

 

 

$

(26,964

)

Tax effect of adjustments

$

(1,312

)

 

$

5,959

 

Foreign currency transaction losses, net

$

80

 

 

$

19

 

Adjusted EBITDA(6) increased $7.4 million, or 33.4%, to $29.5 million, or 9.3% of revenues, in the first quarter of 2023, compared to $22.1 million, or 8.5% of revenues, in the same quarter last year. Adjusted net income(6) increased $6.7 million, or 65.2%, to $17.1 million, or $0.87 per diluted share, for the first quarter of 2023, compared to $10.3 million, or $0.49 per diluted share, for the same quarter in 2022.

The number of revenue-generating professionals(1) increased 24.6% to 5,013 as of March 31, 2023 from 4,023 as of March 31, 2022. The utilization rate(5) of the company’s Consulting capability increased to 76.3% during the first quarter 2023, compared to 71.4% during the same period last year. The utilization rate(5) for the company’s Digital capability decreased to 71.0% during the first quarter 2023, compared to 72.4% during the same period last year.

Additionally, in the first quarter of 2023, Huron repurchased 632,894 shares of the company’s common stock for $44.3 million.

OPERATING INDUSTRIES

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The company’s first quarter 2023 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (47%); Education (33%); and Commercial (20%). Financial results by operating industry are included in the attached schedules and in Huron’s forthcoming Quarterly Report on Form 10-Q filing for the quarter ended March 31, 2023.

OUTLOOK FOR 2023

Based on currently available information, the company is affirming guidance for full year 2023 revenues before reimbursable expenses in a range of $1.22 billion to $1.28 billion. The company also anticipates adjusted EBITDA as a percentage of revenues in a range of 12.0% to 12.5% and non-GAAP adjusted diluted earnings per share in a range of $3.75 to $4.25.

FIRST QUARTER 2023 WEBCAST

The company will host a webcast to discuss its financial results today, May 2, 2023, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron’s website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

USE OF NON-GAAP FINANCIAL MEASURES(6)

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company’s comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company’s ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company’s control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. Learn more at www.huronconsultinggroup.com.

Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “goals,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company’s current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: failure to achieve expected utilization rates, billing rates, and the necessary number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “Item 1A. Risk Factors” in Huron’s Annual Report on Form 10-K for the year ended December 31, 2022 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)
 

 

Three Months Ended

March 31,

 

 

2023

 

 

 

2022

 

Revenues and reimbursable expenses:

 

 

 

Revenues

$

317,895

 

 

$

260,049

 

Reimbursable expenses

 

8,490

 

 

 

4,726

 

Total revenues and reimbursable expenses

 

326,385

 

 

 

264,775

 

Operating expenses:

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

228,383

 

 

 

187,247

 

Reimbursable expenses

 

8,624

 

 

 

4,756

 

Selling, general and administrative expenses

 

62,289

 

 

 

48,395

 

Restructuring charges

 

2,284

 

 

 

1,555

 

Depreciation and amortization

 

6,374

 

 

 

6,864

 

Total operating expenses

 

307,954

 

 

 

248,817

 

Operating income

 

18,431

 

 

 

15,958

 

Other income (expense), net:

 

 

 

Interest expense, net of interest income

 

(4,303

)

 

 

(2,196

)

Other income, net

 

1,719

 

 

 

24,365

 

Total other income (expense), net

 

(2,584

)

 

 

22,169

 

Income before taxes

 

15,847

 

 

 

38,127

 

Income tax expense

 

2,428

 

 

 

11,275

 

Net income

$

13,419

 

 

$

26,852

 

Earnings per share:

 

 

 

Net income per basic share

$

0.70

 

 

$

1.29

 

Net income per diluted share

$

0.68

 

 

$

1.27

 

Weighted average shares used in calculating earnings per share:

 

 

 

Basic

 

19,119

 

 

 

20,850

 

Diluted

 

19,699

 

 

 

21,167

 

Comprehensive income (loss):

 

 

 

Net income

$

13,419

 

 

$

26,852

 

Foreign currency translation adjustments, net of tax

 

52

 

 

 

(43

)

Unrealized gain (loss) on investment, net of tax

 

3,873

 

 

 

(2,661

)

Unrealized gain (loss) on cash flow hedging instruments, net of tax

 

(2,329

)

 

 

4,325

 

Other comprehensive income

 

1,596

 

 

 

1,621

 

Comprehensive income

$

15,015

 

 

$

28,473

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)
 

 

March 31,

2023

 

December 31,

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

12,026

 

 

$

11,834

 

Receivables from clients, net

 

147,037

 

 

 

147,852

 

Unbilled services, net

 

173,454

 

 

 

141,781

 

Income tax receivable

 

275

 

 

 

960

 

Prepaid expenses and other current assets

 

28,718

 

 

 

26,057

 

Total current assets

 

361,510

 

 

 

328,484

 

Property and equipment, net

 

24,179

 

 

 

26,107

 

Deferred income taxes, net

 

1,410

 

 

 

1,554

 

Long-term investments

 

96,473

 

 

 

91,194

 

Operating lease right-of-use assets

 

28,692

 

 

 

30,304

 

Other non-current assets

 

80,154

 

 

 

73,039

 

Intangible assets, net

 

21,161

 

 

 

23,392

 

Goodwill

 

624,966

 

 

 

624,966

 

Total assets

$

1,238,545

 

 

$

1,199,040

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,556

 

 

$

14,254

 

Accrued expenses and other current liabilities

 

28,938

 

 

 

27,268

 

Accrued payroll and related benefits

 

78,354

 

 

 

171,723

 

Current maturities of operating lease liabilities

 

10,825

 

 

 

10,530

 

Deferred revenues

 

20,542

 

 

 

21,909

 

Total current liabilities

 

148,215

 

 

 

245,684

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

38,404

 

 

 

33,614

 

Long-term debt

 

447,000

 

 

 

290,000

 

Operating lease liabilities, net of current portion

 

43,393

 

 

 

45,556

 

Deferred income taxes, net

 

32,564

 

 

 

32,146

 

Total non-current liabilities

 

561,361

 

 

 

401,316

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 22,047,299 and 22,507,159 shares issued, respectively

 

220

 

 

 

223

 

Treasury stock, at cost, 2,842,144 and 2,711,712 shares, respectively

 

(141,353

)

 

 

(137,556

)

Additional paid-in capital

 

284,420

 

 

 

318,706

 

Retained earnings

 

365,967

 

 

 

352,548

 

Accumulated other comprehensive income

 

19,715

 

 

 

18,119

 

Total stockholders’ equity

 

528,969

 

 

 

552,040

 

Total liabilities and stockholders’ equity

$

1,238,545

 

 

$

1,199,040

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
 

 

Three Months Ended

March 31,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income

$

13,419

 

 

$

26,852

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

Depreciation and amortization

 

6,407

 

 

 

6,864

 

Non-cash lease expense

 

1,644

 

 

 

1,640

 

Lease-related impairment charge

 

1,870

 

 

 

—

 

Share-based compensation

 

11,562

 

 

 

7,935

 

Amortization of debt discount and issuance costs

 

191

 

 

 

198

 

Allowances for doubtful accounts

 

3

 

 

 

28

 

Deferred income taxes

 

—

 

 

 

7,129

 

(Gain) loss on sale of property and equipment, excluding transaction costs

 

1

 

 

 

(1,067

)

Change in fair value of contingent consideration liabilities

 

435

 

 

 

12

 

Change in fair value of preferred stock investment

 

—

 

 

 

(26,964

)

Changes in operating assets and liabilities, net of acquisitions and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

 

827

 

 

 

5,791

 

(Increase) decrease in unbilled services, net

 

(31,669

)

 

 

(35,239

)

(Increase) decrease in current income tax receivable / payable, net

 

1,487

 

 

 

3,266

 

(Increase) decrease in other assets

 

(5,205

)

 

 

1,361

 

Increase (decrease) in accounts payable and other liabilities

 

(1,881

)

 

 

(7,044

)

Increase (decrease) in accrued payroll and related benefits

 

(89,843

)

 

 

(70,689

)

Increase (decrease) in deferred revenues

 

(1,349

)

 

 

828

 

Net cash used in operating activities

 

(92,101

)

 

 

(79,099

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(1,956

)

 

 

(3,924

)

Investment in life insurance policies

 

(1,833

)

 

 

—

 

Purchases of businesses

 

38

 

 

 

(2,289

)

Capitalization of internally developed software costs

 

(6,575

)

 

 

(2,060

)

Proceeds from note receivable

 

154

 

 

 

—

 

Proceeds from sale of property and equipment

 

—

 

 

 

4,750

 

Divestiture of business

 

—

 

 

 

207

 

Net cash used in investing activities

 

(10,172

)

 

 

(3,316

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

627

 

 

 

648

 

Shares redeemed for employee tax withholdings

 

(9,529

)

 

 

(6,884

)

Share repurchases

 

(45,133

)

 

 

(24,097

)

Proceeds from bank borrowings

 

201,000

 

 

 

150,000

 

Repayments of bank borrowings

 

(44,000

)

 

 

(47,780

)

Payments for debt issuance costs

 

(16

)

 

 

—

 

Deferred payments on business acquisition

 

(500

)

 

 

(500

)

Net cash provided by financing activities

 

102,449

 

 

 

71,387

 

Effect of exchange rate changes on cash

 

16

 

 

 

(5

)

Net increase (decrease) in cash and cash equivalents

 

192

 

 

 

(11,033

)

Cash and cash equivalents at beginning of the period

 

11,834

 

 

 

20,781

 

Cash and cash equivalents at end of the period

$

12,026

 

 

$

9,748

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)
 

 

 

Three Months Ended

March 31,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

 

2023

 

 

 

2022

 

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

149,049

 

 

$

121,876

 

 

22.3

%

Operating income

 

$

32,255

 

 

$

28,032

 

 

15.1

%

Segment operating margin

 

 

21.6

%

 

 

23.0

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

104,147

 

 

$

80,662

 

 

29.1

%

Operating income

 

$

23,165

 

 

$

14,306

 

 

61.9

%

Segment operating margin

 

 

22.2

%

 

 

17.7

%

 

 

Commercial:

 

 

 

 

 

 

Revenues

 

$

64,699

 

 

$

57,511

 

 

12.5

%

Operating income

 

$

14,067

 

 

$

12,214

 

 

15.2

%

Segment operating margin

 

 

21.7

%

 

 

21.2

%

 

 

Total Huron:

 

 

 

 

 

 

Revenues

 

$

317,895

 

 

$

260,049

 

 

22.2

%

Reimbursable expenses

 

 

8,490

 

 

 

4,726

 

 

79.6

%

Total revenues and reimbursable expenses

 

$

326,385

 

 

$

264,775

 

 

23.3

%

 

 

 

 

 

 

 

Segment operating income

 

$

69,487

 

 

$

54,552

 

 

27.4

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

 

46,340

 

 

 

33,548

 

 

38.1

%

Depreciation and amortization

 

 

4,716

 

 

 

5,046

 

 

(6.5

) %

Total operating income

 

 

18,431

 

 

 

15,958

 

 

15.5

%

Other income (expense), net

 

 

(2,584

)

 

 

22,169

 

 

(111.7

) %

Income before taxes

 

$

15,847

 

 

$

38,127

 

 

(58.4

) %

Other Operating Data:

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end) (1):

 

 

 

 

 

 

Healthcare

 

 

1,985

 

 

 

1,647

 

 

20.5

%

Education

 

 

1,633

 

 

 

1,231

 

 

32.7

%

Commercial (2)

 

 

1,395

 

 

 

1,145

 

 

21.8

%

Total

 

 

5,013

 

 

 

4,023

 

 

24.6

%

Revenue by capability:

 

 

 

 

 

 

Consulting and Managed Services (3)

 

$

177,194

 

 

$

150,584

 

 

17.7

%

Digital

 

 

140,701

 

 

 

109,465

 

 

28.5

%

Total

 

$

317,895

 

 

$

260,049

 

 

22.2

%

Number of revenue-generating professionals by capability (at period end)(1):

 

 

 

 

 

 

Consulting and Managed Services (4)

 

 

2,360

 

 

 

2,003

 

 

17.8

%

Digital

 

 

2,653

 

 

 

2,020

 

 

31.3

%

Total

 

 

5,013

 

 

 

4,023

 

 

24.6

%

Utilization rate by capability (5):

 

 

 

 

 

 

Consulting

 

 

76.3

%

 

 

71.4

%

 

 

Digital

 

 

71.0

%

 

 

72.4

%

 

 

(1)

Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the Culture and Organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare Managed Services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients.

 

(2)

The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education.

 

(3)

Managed Services capability revenues within our Healthcare segment was $19.8 million and $13.8 million for the three months ended March 31, 2023 and 2022, respectively.

 

 

Managed Services capability revenues within our Education segment was $4.6 million and $3.4 million for the three months ended March 31, 2023 and 2022, respectively.

 

(4)

The number of Managed Services revenue-generating professionals within our Healthcare segment as of March 31, 2023 and 2022 was 726 and 543, respectively.

 

 

The number of Managed Services revenue-generating professionals within our Education segment as of March 31, 2023 and 2022 was 101 and 92, respectively.

 

(5)

Utilization rate is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We have not presented utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME

TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (6)

(In thousands)

(Unaudited)
 

 

Three Months Ended

March 31,

 

 

2023

 

 

 

2022

 

Revenues

$

317,895

 

 

$

260,049

 

Net income

$

13,419

 

 

$

26,852

 

Add back:

 

 

 

Income tax expense

 

2,428

 

 

 

11,275

 

Interest expense, net of interest income

 

4,303

 

 

 

2,196

 

Depreciation and amortization

 

6,553

 

 

 

7,122

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (6)

 

26,703

 

 

 

47,445

 

Add back:

 

 

 

Restructuring charges

 

2,284

 

 

 

1,555

 

Other losses

 

435

 

 

 

12

 

Transaction-related expenses

 

—

 

 

 

50

 

Unrealized gain on preferred stock investment

 

—

 

 

 

(26,964

)

Foreign currency transaction losses, net

 

80

 

 

 

19

 

Adjusted EBITDA (6)

$

29,502

 

 

$

22,117

 

Adjusted EBITDA as a percentage of revenues (6)

 

9.3

%

 

 

8.5

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (6)

(In thousands, except per share amounts)

(Unaudited)
 

 

Three Months Ended

March 31,

 

 

2023

 

 

 

2022

 

Net income

$

13,419

 

 

$

26,852

 

Weighted average shares – diluted

 

19,699

 

 

 

21,167

 

Diluted earnings per share

$

0.68

 

 

$

1.27

 

Add back:

 

 

 

Amortization of intangible assets

 

2,231

 

 

 

2,860

 

Restructuring charges

 

2,284

 

 

 

1,555

 

Other losses

 

435

 

 

 

12

 

Transaction-related expenses

 

—

 

 

 

50

 

Unrealized gain on preferred stock investment

 

—

 

 

 

(26,964

)

Tax effect of adjustments

 

(1,312

)

 

 

5,959

 

Total adjustments, net of tax

 

3,638

 

 

 

(16,528

)

Adjusted net income (6)

$

17,057

 

 

$

10,324

 

Adjusted weighted average shares – diluted

 

19,699

 

 

 

21,167

 

Adjusted diluted earnings per share (6)

$

0.87

 

 

$

0.49

 

(6)

In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company’s comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company’s ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company’s business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

 

MEDIA CONTACT

Allie Bovis

[email protected]

INVESTOR CONTACT

John D. Kelly

[email protected]

KEYWORDS: Illinois United States North America

INDUSTRY KEYWORDS: Professional Services Communications Data Analytics Fintech Consulting Accounting Public Relations/Investor Relations

MEDIA:

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Posted on

Sprout Social and Twitter Announce Continued Strategic Partnership

CHICAGO, May 02, 2023 (GLOBE NEWSWIRE) — Sprout Social, Inc. (“Sprout Social”, the “Company”) (Nasdaq: SPT), an industry-leading provider of social media management software, and Twitter, one of the world’s most strategically valuable social networking services, today announced a continued strategic partnership. Through this partnership, Sprout customers will be able to execute a holistic social strategy at scale, including comprehensive listening, analytics and reporting capabilities.

With more than 500 million monthly active users and billions of tweets sent per week, Twitter offers robust, real-time data, insights and engagement opportunities for brands. This partnership empowers Sprout customers to not only harness the power of Twitter, they can use it to develop more informed, customer-centric strategies.

“Global consumers continue to validate Twitter as one of the most valuable channels for businesses to find the voice of culture, to foster authentic relationships with customers and to provide real time engagement and customer care,” said Justyn Howard, Sprout Social’s CEO and Co-Founder. “We are excited to extend our partnership with the new team at Twitter to help unlock exciting new ways for our customers to realize the full potential and value of Twitter.”

“Twitter is ushering in a new phase of growth and we’re excited to partner closely with Sprout to maximize the value of our ecosystem,” said Chris Park, Twitter’s Lead for Data Revenue & Partnerships. “We are doubling down on our commitment to innovation in Twitter’s overall product suite and API enhancements that we believe will super charge Twitter’s long term growth.”

About Sprout Social


Sprout Social
 is a global leader in social media management and analytics software. Sprout’s unified platform puts powerful social data into the hands of more than 30,000 brands so they can make strategic decisions that drive business growth and innovation. With a full suite of social media management solutions, Sprout offers comprehensive publishing and engagement functionality, customer care, connected workflows and AI-powered business intelligence. Sprout’s award-winning software operates across all major social media networks and digital platforms. For more information about Sprout Social (NASDAQ: SPT), visit sproutsocial.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “can,” “continue,” “ensure,” “estimate,” “expect,” “explore,” “intend,” “long-term model,” “may,” “might” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These statements may relate to our market size and growth strategy, our product, integration, customer and partners capabilities, our plans and objectives for future operations, growth, initiatives or strategies. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. These assumptions, uncertainties and risks include that, among others: we may encounter changes to Twitter’s policies, procedures, pricing and terms and conditions related to the Twitter Official Partner Program generally, or our partnership in particular, or changes to the level of API access or support Twitter provides to its partners, any of which may have an adverse impact on our business; our rapid growth and limited history with key features of our platform makes it difficult to evaluate our prospects and future results; we may not be able to sustain our revenue and customer growth rate in the future; our business would be harmed by any significant interruptions, delays or outages in services from our platform, our API providers, or certain social media platforms; if we are unable to attract potential customers through unpaid channels, convert this traffic to free trials or convert free trials to paid subscriptions, our business and results of operations may be adversely affected; the effects and duration of the ongoing COVID-19 pandemic are unpredictable and may materially affect our customers and how we operate our business, and the duration and extent to which the pandemic continues to threaten our future results of operations; unstable market and economic conditions, such as recession risks, effects of inflation, labor shortages, supply chain issues, higher interest rates and geopolitical impacts of Russia’s invasion of Ukraine, could adversely impact our business and that of our existing and prospective customers, which may result in reduced demand for our products; any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business; and changing regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and harm our brand. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 22, 2023, as well as any other future quarterly and current reports that we file with the SEC. Moreover, you should interpret many of the risks identified in those reports as being heightened as a result of the current instability in market and economic conditions. Forward-looking statements speak only as of the date the statements are made and are based on information available to Sprout Social at the time those statements are made and/or management’s good faith belief as of that time with respect to future events. Sprout Social assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Availability of Information on Sprout Social’s Website and Social Media Profiles

Investors and others should note that Sprout Social routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the Sprout Social Investors website. We also intend to use the social media profiles listed below as a means of disclosing information about us to our customers, investors and the public. While not all of the information that the Company posts to the Sprout Social Investors website or to social media profiles is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in Sprout Social to review the information that it shares at the Investors link located at the bottom of the page on www.sproutsocial.com and to regularly follow our social media profiles. Users may automatically receive email alerts and other information about Sprout Social when enrolling an email address by visiting “Email Alerts” in the “Shareholder Services” section of Sprout Social’s Investor website at https://investors.sproutsocial.com/.

Social Media Profiles:

www.twitter.com/SproutSocial
www.twitter.com/SproutSocialIR
www.facebook.com/SproutSocialInc
www.linkedin.com/company/sprout-social-inc-/
www.instagram.com/sproutsocial



Contact

Media:
Kaitlyn Gronek
Email: [email protected]
Phone: (773) 904-9674

Investors:
Jason Rechel
Twitter: @SproutSocialIR
Email: [email protected]
Phone: (312) 528-9166

Posted on

NerdWallet Reports First Quarter 2023 Results

NerdWallet Reports First Quarter 2023 Results

Revenue of $169.6 million, Up 31% Year-Over-Year

FINANCIAL HIGHLIGHTS

  • Revenue of $169.6 million

  • GAAP net income of $1.7 million and $0.02 income per diluted share

  • Adjusted EBITDA of $20.9 million

  • Board of Directors approved a share repurchase plan with $20 million authorization and no expiration date

SAN FRANCISCO–(BUSINESS WIRE)–NerdWallet, Inc. (Nasdaq: NRDS), a platform that provides financial guidance to consumers and small and mid-sized businesses (SMBs), today reported financial results for its first quarter ended March 31, 2023.

“We delivered solid financial results in Q1 during a volatile economic climate,” said Tim Chen, Co-Founder and CEO of NerdWallet. “We focused on executing against our growth pillars to deliver value to consumers, expanding our financial guidance across verticals and acquisition channels, and investing in consumer experiences to drive continued growth in Registrations and Engagement. At this time of heightened uncertainty, we plan to operate with a long-term orientation, investing in areas with both immediate and future payoffs, while applying additional scrutiny to increase our near-term flexibility.”

“We’re pleased to announce a strong start to 2023, delivering revenue of $170 million, up 31% year-over-year,” said Lauren StClair, CFO of NerdWallet. “As we anticipate macro pressures ahead, NerdWallet continues to operate with efficiency and relentless improvement. We strive to operate a sustainable and profitable business, and our focus remains on delivering long-term value.”

FIRST QUARTER 2023 HIGHLIGHTS

  • Credit cards revenue of $61.3 million grew 36% year-over-year, reflecting growing brand awareness and increased consumer intent combined with our deep alignment with partners to deliver quality matches.

  • Loans revenue of $22.0 million was down 36% year-over-year, primarily due to decreases in mortgages and student loans driven by increasing interest rates and continuing macroeconomic headwinds, partially offset by growth in personal loans.

  • Other verticals revenue of $86.3 million was up 74% year-over-year, driven by strong growth in banking, insurance and SMB products.

  • We had 23 million average Monthly Unique Users (MUUs), which was up 7% year-over-year. We saw strong engagement in areas such as banking and travel products, and are also incorporating our acquisition of OTB in July 2022. Partially offsetting growth were declines from a continued challenging macroeconomic environment in both mortgages and investing.

     

SUMMARY FINANCIAL RESULTS

 

 

Quarter Ended

 

%

Change

 

Quarter Ended

 

%

Change

 

 

Mar 31,

 

Mar 31,

 

 

Dec 31,

 

(in millions, except per share amounts)

 

 

2023

 

 

 

2022

 

 

YoY

 

 

2022

 

QoQ

Revenue

 

$

169.6

 

 

$

129.1

 

 

31

%

 

$

142.0

 

19

%

Credit cards(1)

 

 

61.3

 

 

 

45.2

 

 

36

%

 

 

53.1

 

15

%

Loans(2)

 

 

22.0

 

 

 

34.3

 

 

(36

%)

 

 

22.4

 

(2

%)

Other verticals(3)

 

 

86.3

 

 

 

49.6

 

 

74

%

 

 

66.5

 

30

%

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

(0.8

)

 

$

(9.1

)

 

(91

%)

 

$

7.9

 

(110

%)

Net income (loss)

 

$

1.7

 

 

$

(10.5

)

 

NM

 

 

$

8.9

 

(81

%)

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

(0.16

)

 

NM

 

 

$

0.12

 

(83

%)

Diluted

 

$

0.02

 

 

$

(0.16

)

 

NM

 

 

$

0.12

 

(83

%)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP financial measure(4)

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

20.9

 

 

$

8.9

 

 

134

%

 

$

31.0

 

(32

%)

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

100.8

 

 

$

161.6

 

 

(38

%)

 

$

83.9

 

20

%

Average monthly unique users(5)

 

 

23

 

 

 

22

 

 

7

%

 

 

20

 

19

%

______________

(1)

Credit cards revenue consists of revenue from consumer credit cards.

(2)

Loans revenue includes revenue from personal loans, mortgages, student loans and auto loans.

(3)

Other verticals revenue includes revenue from other product sources, including SMB products, banking, insurance, investing and NerdWallet UK.

(4)

Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Financial Measure” for more information.

(5)

We define a Monthly Unique User as a unique user with at least one session in a given month as determined by unique device identifiers.

QUARTERLY CONFERENCE CALL

A conference call to discuss NerdWallet’s first quarter 2023 financial results will be webcast live today, May 2, 2023 at 1:30 PM Pacific Time (PT). The live webcast is open to the public and will be available on NerdWallet’s investor relations website at https://investors.nerdwallet.com. Following completion of the call, a recorded replay of the webcast will be available on NerdWallet’s investor relations website.

SHAREHOLDER LETTER

A shareholder letter providing additional information and analysis can be found at NerdWallet’s investor relations website at https://investors.nerdwallet.com.

SHARE REPURCHASE PLAN

NerdWallet’s Board of Directors approved a share repurchase plan with authorization to purchase up to $20 million of the Company’s Class A common stock. Subject to market conditions and other factors, the repurchase plan is intended to make opportunistic repurchases of NerdWallet’s Class A common stock to reduce its outstanding share count. Repurchases under the plan may be made in the open market, in privately negotiated transactions or otherwise in accordance with applicable securities laws and other restrictions. The amount and timing of repurchases will be determined at management’s discretion and depend on a variety of factors, including business, economic and market conditions, regulatory requirements, prevailing stock prices and other considerations. The share repurchase plan has no time limit and may be modified, suspended or terminated at any time, and does not obligate the Company to acquire any particular amount of Class A Common Stock. The Company expects to fund repurchases with existing cash and cash equivalents.

ABOUT NERDWALLET

NerdWallet (Nasdaq: NRDS) is on a mission to provide clarity for all of life’s financial decisions. As a personal finance website and app, NerdWallet provides consumers with trustworthy and knowledgeable financial information so they can make smart money moves. From finding the best credit card to buying a house, NerdWallet is there to help consumers make financial decisions with confidence. Consumers have free access to our expert content and comparison shopping marketplaces, plus a data-driven app, which helps them stay on top of their finances and save time and money, giving them the freedom to do more. NerdWallet is available for consumers in the U.S., UK, Canada and Australia.

“NerdWallet” is a trademark of NerdWallet, Inc. All rights reserved. Other names and trademarks used herein may be trademarks of their respective owners.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited
 

 

 

Three Months Ended

March 31,

 

% Change

(in millions, except per share amounts)

 

 

2023

 

 

 

2022

 

 

Revenue

 

$

169.6

 

 

$

129.1

 

 

31

%

Costs and Expenses:

 

 

 

 

 

 

Cost of revenue

 

 

13.8

 

 

 

7.7

 

 

78

%

Research and development

 

 

19.5

 

 

 

17.4

 

 

12

%

Sales and marketing

 

 

121.7

 

 

 

96.1

 

 

27

%

General and administrative

 

 

15.4

 

 

 

13.1

 

 

19

%

Change in fair value of contingent consideration related to earnouts

 

 

—

 

 

 

3.9

 

 

(100

%)

Total costs and expenses

 

 

170.4

 

 

 

138.2

 

 

23

%

Loss From Operations

 

 

(0.8

)

 

 

(9.1

)

 

(91

%)

Other income (expense), net:

 

 

 

 

 

 

Interest income

 

 

1.0

 

 

 

—

 

 

NM

 

Interest expense

 

 

(0.2

)

 

 

(0.2

)

 

15

%

Other losses, net

 

 

(0.1

)

 

 

—

 

 

NM

 

Total other income (expense), net

 

 

0.7

 

 

 

(0.2

)

 

NM

 

Loss before income taxes

 

 

(0.1

)

 

 

(9.3

)

 

(99

%)

Income tax provision (benefit)

 

 

(1.8

)

 

 

1.2

 

 

NM

 

Net Income (Loss)

 

$

1.7

 

 

$

(10.5

)

 

NM

 

 

 

 

 

 

 

 

Net Income (Loss) Per Share Attributable to Common Stockholders

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

(0.16

)

 

NM

 

Diluted

 

$

0.02

 

 

$

(0.16

)

 

NM

 

 

 

 

 

 

 

 

Weighted-Average Shares Used in Computing Net Income (Loss) Per Share Attributable to Common Stockholders

 

 

 

 

 

 

Basic

 

 

75.8

 

 

 

66.9

 

 

 

Diluted

 

 

79.7

 

 

 

66.9

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited
 

(in millions)

 

March 31,

2023

 

December 31,

2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

100.8

 

$

83.9

Accounts receivable—net

 

 

97.5

 

 

87.0

Prepaid expenses and other current assets

 

 

20.5

 

 

18.3

Total current assets

 

 

218.8

 

 

189.2

Property, equipment and software—net

 

 

50.8

 

 

49.1

Goodwill

 

 

111.4

 

 

111.2

Intangible assets—net

 

 

59.5

 

 

64.1

Right-of-use assets

 

 

10.6

 

 

11.3

Other assets

 

 

1.0

 

 

0.8

Total Assets

 

$

452.1

 

$

425.7

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

12.0

 

$

3.6

Accrued expenses and other current liabilities

 

 

37.1

 

 

37.9

Contingent consideration—current

 

 

30.9

 

 

30.9

Total current liabilities

 

 

80.0

 

 

72.4

Other liabilities—noncurrent

 

 

10.3

 

 

11.6

Total liabilities

 

 

90.3

 

 

84.0

Commitments and contingencies

 

 

 

 

Stockholders’ equity

 

 

361.8

 

 

341.7

Total Liabilities and Stockholders’ Equity

 

$

452.1

 

$

425.7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited
 

 

 

Three Months Ended

March 31,

(in millions)

 

 

2023

 

 

 

2022

 

Operating Activities:

 

 

 

 

Net income (loss)

 

$

1.7

 

 

$

(10.5

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

11.7

 

 

 

7.2

 

Stock-based compensation

 

 

8.6

 

 

 

6.5

 

Change in fair value of contingent consideration related to earnouts

 

 

—

 

 

 

3.9

 

Deferred taxes

 

 

(0.1

)

 

 

(0.7

)

Non-cash lease costs

 

 

0.7

 

 

 

0.7

 

Other, net

 

 

1.4

 

 

 

0.2

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(11.8

)

 

 

(15.2

)

Prepaid expenses and other assets

 

 

(2.6

)

 

 

(1.6

)

Accounts payable

 

 

8.6

 

 

 

1.3

 

Accrued expenses and other current liabilities

 

 

(0.8

)

 

 

9.7

 

Operating lease liabilities

 

 

(0.7

)

 

 

(0.3

)

Other liabilities

 

 

(0.3

)

 

 

0.4

 

Net cash provided by operating activities

 

 

16.4

 

 

 

1.6

 

Investing Activities:

 

 

 

 

Capitalized software development costs

 

 

(7.3

)

 

 

(6.6

)

Purchase of property and equipment

 

 

(0.3

)

 

 

(1.9

)

Net cash used in investing activities

 

 

(7.6

)

 

 

(8.5

)

Financing Activities:

 

 

 

 

Proceeds from line of credit

 

 

7.5

 

 

 

—

 

Payments on line of credit

 

 

(7.5

)

 

 

—

 

Proceeds from exercise of stock options

 

 

8.4

 

 

 

0.7

 

Tax payments related to net-share settlements on restricted stock units

 

 

(0.3

)

 

 

—

 

Net cash provided by financing activities

 

 

8.1

 

 

 

0.7

 

Net increase (decrease) in cash and cash equivalents

 

 

16.9

 

 

 

(6.2

)

Cash and Cash Equivalents:

 

 

 

 

Beginning of period

 

 

83.9

 

 

 

167.8

 

End of period

 

$

100.8

 

 

$

161.6

 

NON-GAAP FINANCIAL MEASURE

Adjusted EBITDA

We use Adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance.

We define Adjusted EBITDA as net income (loss) from continuing operations adjusted to exclude depreciation and amortization, interest income (expense), net, provision (benefit) for income taxes, and further exclude (1) losses (gains) on disposals of assets, (2) change in fair value of contingent consideration related to earnouts, (3) deferred compensation related to earnouts, (4) stock-based compensation, and (5) acquisition-related costs.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount is not driven by core operating results and renders comparisons with prior periods less meaningful.

We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results and in comparing operating results across periods. Moreover, Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting. However, the use of this non-GAAP measure has certain limitations because it does not reflect all items of income and expense that affect our operations. Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following:

  • Adjusted EBITDA does not reflect interest income (expense) and other gains (losses), net, which include unrealized and realized gains and losses on foreign currency exchange, as well as certain nonrecurring gains (losses);

  • Adjusted EBITDA excludes certain recurring, non-cash charges, such as depreciation of property and equipment, amortization of intangible assets, and (losses) gains on disposals of assets. Although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash requirements for such replacements or for new capital expenditure requirements;

  • Adjusted EBITDA excludes stock-based compensation, including for acquisition-related inducement awards, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; and

  • Adjusted EBITDA excludes acquisition-related costs, including acquisition-related retention compensation under compensatory retention agreements with certain key employees, acquisition-related transaction expenses, contingent consideration fair value adjustments related to earnouts, and deferred compensation related to earnouts.

In addition, Adjusted EBITDA as we define it may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other GAAP results.

We compensate for these limitations by reconciling Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure, as follows:

 

 

Three Months Ended

March 31,

 

% Change

(in millions)

 

 

2023

 

 

 

2022

 

 

Net income (loss)

 

$

1.7

 

 

$

(10.5

)

 

NM

 

Depreciation and amortization

 

 

11.7

 

 

 

7.2

 

 

64

%

Stock-based compensation

 

 

8.6

 

 

 

6.5

 

 

32

%

Acquisition-related retention

 

 

1.4

 

 

 

—

 

 

NM

 

Deferred compensation related to earnouts

 

 

—

 

 

 

0.4

 

 

(100

%)

Change in fair value of contingent consideration related to earnouts

 

 

—

 

 

 

3.9

 

 

(100

%)

Interest (income) expense, net

 

 

(0.8

)

 

 

0.2

 

 

NM

 

Other losses, net

 

 

0.1

 

 

 

—

 

 

NM

 

Income tax provision (benefit)

 

 

(1.8

)

 

 

1.2

 

 

NM

 

Adjusted EBITDA

 

$

20.9

 

 

$

8.9

 

 

134

%

 

 

 

 

 

 

 

Net income (loss) margin

 

 

1

%

 

 

(8

%)

 

 

Adjusted EBITDA margin1

 

 

12

%

 

 

7

%

 

 

______________

(1)

Represents Adjusted EBITDA as a percentage of revenue.

FINANCIAL OUTLOOK

We are providing guidance for the second quarter of 2023:

  • Revenue is expected in the range of $134 – $141 million, 10% year-over-year growth rate at midpoint

  • Adjusted EBITDA is expected in the range of $17 – $19 million

Despite what we believe to be near-term macro headwinds in areas such as credit cards and insurance, which may pressure our revenue growth compared to Q1 2023 levels, we are focused on delivering profitability to ensure investment flexibility and drive sustainable growth across credit cycles. There will be variability in our quarterly margins, but we expect year-over-year increase in our 2023 annual Adjusted EBITDA margin.

NerdWallet has not provided a quantitative reconciliation of forecasted GAAP net income (loss) to forecasted total Adjusted EBITDA within this communication because the Company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to: income taxes which are directly impacted by unpredictable fluctuations in the market price of the Company’s capital stock; depreciation and amortization expense from acquisitions; impairments of assets; gains or losses on extinguishment of debt and acquisition-related costs. These items, which could materially affect the computation of forward-looking GAAP net income (loss), are inherently uncertain and depend on various factors, many of which are outside of NerdWallet’s control. For more information regarding the non-GAAP financial measure discussed in this communication, please see “Non-GAAP Financial Measure” above.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release are forward-looking statements, including, but not limited to, the statements in the section titled “Financial Outlook.” In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

  • the effect of macroeconomic developments, including but not limited to, inflation, rising interest rates, tightening credit markets and general macroeconomic uncertainty on our business results of operations, financial condition and stock price;

  • our expectations regarding our future financial and operating performance, including total revenue, cost of revenue, Adjusted EBITDA and MUUs;

  • our ability to grow traffic and engagement on our platform;

  • our expected returns on marketing investments and brand campaigns;

  • our expectations about consumer demand for the products on our platform;

  • our ability to convert users into Registered Users and improve repeat user rates;

  • our ability to convert consumers into matches with financial services partners;

  • our ability to grow within existing and new verticals;

  • our ability to expand geographically;

  • our ability to maintain and expand our relationships with our existing financial services partners and to identify new financial services partners;

  • our ability to build efficient and scalable technical capabilities to deliver personalized guidance and nudge users;

  • our ability to maintain and enhance our brand awareness and consumer trust;

  • our ability to generate high quality, engaging consumer resources;

  • our ability to adapt to the evolving financial interests of consumers;

  • our ability to compete with existing and new competitors in existing and new market verticals;

  • our ability to maintain the security and availability of our platform;

  • our ability to maintain, protect and enhance our intellectual property;

  • our ability to identify, attract and retain highly skilled, diverse personnel;

  • our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business;

  • the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs;

  • our ability to effectively manage our growth and expand our infrastructure and maintain our corporate culture;

  • our ability to successfully identify, manage, and integrate any existing and potential acquisitions;

  • our ability to achieve expected synergies, accretive value and other benefits from completed acquisitions; and

  • our share repurchase plan, including expectations regarding the amount, timing and manner of repurchases made under the plan.

You should not rely on forward-looking statements as predictions or guarantees of future events. We have based the forward-looking statements contained in this press release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. These forward-looking statements are subject to risks, uncertainties and other factors that may cause actual results or outcomes to be materially different from any future results expressed or implied by these forward-looking statements, including those factors described in filings we make with the SEC from time to time.

The forward-looking statements made in this press release speak only as of the date hereof. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

Investor Relations:

Caitlin MacNamee

[email protected]

Media Relations:

Maitri Jani

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Professional Services Data Management Technology Software Finance Consulting Digital Cash Management/Digital Assets

MEDIA:

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The Container Store Group, Inc. Announces Fourth Quarter and Full Fiscal 2022 Earnings Conference Call

The Container Store Group, Inc. Announces Fourth Quarter and Full Fiscal 2022 Earnings Conference Call

DALLAS–(BUSINESS WIRE)–
The Container Store Group, Inc. (NYSE: TCS) today announced that its fourth quarter and full fiscal 2022 financial results will be released after market close on Tuesday, May 16, 2023. The Company will host a conference call at 4:30 p.m. Eastern Time to discuss the financial results. This call will include both live, prepared remarks as well as a Q&A session.

Investors and analysts interested in participating in the call are invited to dial 877-407-3982 (international callers please dial 201-493-6780) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.containerstore.com.

A taped replay of the conference call will be available within three hours of the conclusion of the call and can be accessed both online and by dialing 844-512-2921 (international callers please dial 412-317-6671). The pin number to access the telephone replay is 13737023. The replay will be available until June 16, 2023.

About The Container Store

The Container Store Group, Inc. (NYSE: TCS) is the nation’s leading specialty retailer of organizing solutions, custom spaces, and in-home services – a concept they originated in 1978. Today, with locations nationwide, the retailer offers more than 10,000 products designed to transform lives through the power of organization.

Visit www.containerstore.com for more information about products, store locations, services offered and real-life inspiration.

Follow The Container Store on Facebook, Twitter, Instagram, TikTok, YouTube, Pinterest and LinkedIn.

Investors:


ICR, Inc.

Farah Soi/Caitlin Churchill

203-682-8200

[email protected]

[email protected]

or

Media:

The Container Store Group, Inc.

Katelyn Clinton, 972-538-6491

[email protected]

KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: Office Products Home Goods Other Retail Retail Specialty

MEDIA:

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Talkspace Announces First Quarter 2023 Results

B2B payor sessions grew 90% year-over-year

1Q 2023 Operating expenses of $25.8 million, down 29% year-over-year

1Q 2023 Net loss of $8.8 million; Narrowed Adjusted EBITDA1 loss to $6.4 million, down 28% sequentially

Raises FY 2023 Revenue and Adjusted EBITDA guidance, now expects to reach break-even by 1Q 2024

NEW YORK, May 02, 2023 (GLOBE NEWSWIRE) —  Talkspace, Inc. (NASDAQ: TALK), today reported first quarter 2023 financial results.

    Three Months  
Period Ended March 31, 2023 (Unaudited)   Results     Variance from Prior
Year % 		 
(In thousands unless otherwise noted)            
Number of B2B eligible lives at period end (in millions)2     98       28 %
Number of completed B2B sessions     171.7       90 %
Number of B2C active members at period end     15.1       (32 )%
             
Total revenue   $ 33,336       11 %
Gross profit   $ 16,748       11 %
Gross margin %     50.2%     0.4 pts
Operating expenses   $ 25,787       (29 )%
Net loss   $ (8,758 )     57 %
Adjusted EBITDA1   $ (6,430 )     65 %
Cash and cash equivalents at period end   $ 125,083       (32 )%
                 


(1)  Adjusted EBITDA is a non-GAAP financial measure. For a definition of the measure and a reconciliation to the most directly comparable GAAP measure, see “Reconciliation of Non-GAAP Results to GAAP Results.”


(2)  Does not include ~14M lives added after March 31st, 2023; Total covered lives were 112M as of May 2nd, 2023.

Dr. Jon Cohen, CEO of Talkspace, said, “We continue to experience strong momentum in our payor business, as we expand our relationship with commercial partners and further activate our member base. We further increased the size and efficiency of our clinical network, as we continue to build a holistic suite of products to provide high-quality care to a broad range of customers. We believe we have a tremendous opportunity in front of us, and we remain confident in our ability to deliver profitable growth.”

Jennifer Fulk, CFO of Talkspace said, “Our revenue growth accelerated significantly in the first quarter, with the business-to-business (“B2B”) categories contributing 70% of revenue in the period. We continued our work to optimize our cost structure to drive operating leverage, narrowing our losses while growing revenue as we advance toward our goal of reaching break-even profitability.”

First Quarter 2023 Key Performance Metrics

  • Revenue increased 11% over the prior-year period to $33.3 million, driven by a 71% increase in the B2B revenue categories year-over-year, partially offset by a 40% year-over-year consumer revenue decline.
  • Gross profit increased 11% over the prior-year period to $16.7 million, and gross margin expanded to 50.2% year-over-year, driven by higher network productivity.
  • Operating expenses were $25.8 million, down 29% year-over-year, driven by a reduction across all our operating cost categories.
  • Net Loss was $(8.8) million, an improvement from $(20.4) million in the first quarter of 2022, primarily driven by lower operating expenses and an increase in revenues.

Financial Outlook

The following guidance is based on current market conditions and expectations and what the Company knows today.

For the Fiscal Year 2023, Talkspace expects:

  • Revenue to be in the range of $130 million to $135 million, improved from $125 million to $135 million
  • Adjusted EBITDA loss to be in the range of $(21) million to $(24) million, improved from $(28) million to $(32) million

The Company now expects to reach break-even Adjusted EBITDA by the end of the first quarter of 2024, one quarter earlier than initially guided, with a cash balance of over $95 million.

Conference Call, Presentation Slides, and Webcast Details

The conference call will be available via audio webcast at investors.talkspace.com and can also accessed by dialing (888) 330-2391 for U.S. participants, or +1 (240) 789-2702 for international participants, and referencing participant code 2348878. A replay will be available shortly after the call’s completion and remain available for approximately 90 days.

About Talkspace

Talkspace (Nasdaq: TALK) is a leading virtual behavioral healthcare company committed to helping people lead healthier, happier lives through access to high-quality mental healthcare. At Talkspace, we believe that mental healthcare is core to overall healthcare and should be available to everyone.

Talkspace pioneered the ability to text with a licensed therapist from anywhere and now offers a comprehensive suite of mental health services from self-guided products to individual and couples therapy, in addition to psychiatric treatment and medication management. With Talkspace’s core psychotherapy offering, members are matched with one of thousands of licensed providers across all 50 states and can choose from a variety of subscription plans including live video, text or audio chat sessions and/or asynchronous text messaging.

All care offered at Talkspace is delivered through an easy-to-use, fully-encrypted web and mobile platform that meets HIPAA, federal, and state regulatory requirements. Talkspace covers approximately 112 million lives as of May 2, 2023, through our partnerships with employers, health plans, and paid benefits programs.

For more information, visit www.talkspace.com.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking, including statements regarding our financial condition, anticipated financial performance, achieving profitability, business strategy and plans, market opportunity and expansion and objectives of our management for future operations. These forward-looking statements generally are identified by the words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast”, “future”, “intend,” “may,” “might”, “opportunity”, “plan,” “possible”, “potential,” “predict,” “project,” “should,” “strategy”, “strive”, “target,” “will,” or “would”, the negative of these words or other similar terms or expressions. The absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many important factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to factors and the other risks and uncertainties described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 10, 2023, and our other documents filed from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise unless required to do so under applicable law. We do not give any assurance that we will achieve our expectations.

Contacts

‍For Investors:
Sloane & Co.
Neal Nagarajan
(301) 273-5662
[email protected]

For Media:
SKDK
John Kim
(310) 997-5963
[email protected]

 
Talkspace, Inc.

Condensed Consolidated Statements of Operations

Unaudited
 
    Three Months Ended
March 31, 		       
    2023     2022 (1)     % Change  
(in thousands, except percentages, share and per share data)                  
Revenue:                  
Payor revenue   $ 14,811     $ 8,110       82.6  
DTE revenue     8,676       5,661       53.3  
Total B2B revenue     23,487       13,771       70.6  
Consumer revenue     9,849       16,379       (39.9 )
Total revenue     33,336       30,150       10.6  
Cost of revenues     16,588       15,129       9.6  
Gross profit     16,748       15,021       11.5  
Operating expenses:                  
Research and development, net     5,353       5,035       6.3  
Clinical operations, net     1,601       1,776       (9.9 )
Sales and marketing     13,469       21,408       (37.1 )
General and administrative     5,364       8,010       (33.0 )
Total operating expenses     25,787       36,229       (28.8 )
Operating loss     (9,039 )     (21,208 )     57.4  
Financial income, net     (424 )     (869 )     (51.2 )
Loss before taxes on income     (8,615 )     (20,339 )     57.6  
Taxes on income     143       21       581.0  
Net loss   $ (8,758 )   $ (20,360 )     57.0  
Net loss per share:                  
Basic and Diluted   $ (0.05 )   $ (0.13 )     61.5  
Weighted average number of common shares:                
Basic and Diluted     161,797,781       154,083,443        
                       

(1)  For the three months ended March 31, 2022, payor revenue has been reclassified to include post-session member revenue related to MBH which was previously included within consumer revenue.

 
Talkspace, Inc.

Condensed Consolidated Balance Sheets
 
    March 31, 2023     December 31, 2022  
(in thousands)   (Unaudited)        
ASSETS            
CURRENT ASSETS:            
Cash and cash equivalents   $ 125,083     $ 138,545  
Accounts receivable     12,460       9,640  
Other current assets     3,813       4,372  
Total current assets     141,356       152,557  
Property and equipment, net     563       677  
Intangible assets, net     2,343       2,529  
Other assets     518       491  
Total assets   $ 144,780     $ 156,254  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
CURRENT LIABILITIES:            
Accounts payable   $ 7,674     $ 6,461  
Deferred revenues     4,123       4,355  
Accrued expenses and other current liabilities     9,800       16,502  
Total current liabilities     21,597       27,318  
Warrant liabilities     1,128       939  
Other liabilities     418       461  
Total liabilities     23,143       28,718  
Commitments and contingencies            
STOCKHOLDERS’ EQUITY:            
Common stock     16       16  
Additional paid-in capital     381,581       378,722  
Accumulated deficit     (259,960 )     (251,202 )
Total stockholders’ equity     121,637       127,536  
Total liabilities and stockholders’ equity   $ 144,780     $ 156,254  
                 

Talkspace, Inc.

Condensed Consolidated Statements of Cash Flows

Unaudited
 
    Three Months Ended
March 31, 		 
    2023     2022  
(in thousands)            

Cash flows from operating activities:
 		           
Net loss   $ (8,758 )   $ (20,360 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Depreciation and amortization     306       429  
Stock-based compensation     2,303       2,368  
Remeasurement of warrant liabilities     189       (875 )
Increase in accounts receivable     (2,820 )     (800 )
Decrease in other current assets     559       4,923  
Increase in accounts payable     1,213       2,061  
Decrease in deferred revenues     (232 )     (1,160 )
Decrease in accrued expenses and other current liabilities     (6,702 )     (1,837 )
(Decrease) increase in other long-term liabilities     (95 )     105  
Net cash used in operating activities     (14,037 )     (15,146 )

Cash flows from investing activities:
 		           
Purchase of property and equipment     (9 )     (88 )
Proceeds from sale of property and equipment     28       —  
Net cash provided by (used in) investing activities     19       (88 )

Cash flows from financing activities:
 		           
Proceeds from exercise of stock options     621       2,063  
Payments for employee taxes withheld related to vested stock-based awards     (65 )     (558 )
Net cash provided by financing activities     556       1,505  
Net decrease in cash and cash equivalents     (13,462 )     (13,729 )
Cash and cash equivalents at the beginning of the period     138,545       198,256  
Cash and cash equivalents at the end of the period   $ 125,083     $ 184,527  
                 

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we believe adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating performance, and our management uses it as a key performance measure to assess our operating performance. Because adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes and in evaluating acquisition opportunities. We also use adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial measure, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. We believe that the use of adjusted EBITDA is helpful to our investors as it is a metric used by management in assessing the health of our business and our operating performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

Some of the limitations of adjusted EBITDA include (i) adjusted EBITDA does not necessarily reflect capital commitments to be paid in the future and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these requirements. In evaluating adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments described herein. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. Our adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure. Adjusted EBITDA should not be considered as an alternative to loss before income taxes, net loss, loss per share, or any other performance measures derived in accordance with U.S. GAAP. When evaluating our performance, you should consider adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.

A reconciliation is provided below for adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review our financial statements prepared in accordance with GAAP and the reconciliation of our non-GAAP financial measure to its most directly comparable GAAP financial measure, and not to rely on any single financial measure to evaluate our business. We do not provide a forward-looking reconciliation Adjusted EBITDA guidance as the amount and significance of the reconciling items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These reconciling items could be meaningful.

Adjusted EBITDA

We calculate adjusted EBITDA as net loss adjusted to exclude (i) depreciation and amortization, (ii) interest and other expenses (income), net, (iii) tax benefit and expense, and (iv) stock-based compensation expense.

 
Talkspace, Inc.

Reconciliation of Non-GAAP Results to GAAP Results

Unaudited
 
    Three Months Ended
March 31, 		 
    2023     2022  
(in thousands)            
Net loss   $ (8,758 )   $ (20,360 )
Add:            
Depreciation and amortization     306       429  
Financial income, net (1)     (424 )     (869 )
Taxes on income     143       21  
Stock-based compensation     2,303       2,368  
Adjusted EBITDA   $ (6,430 )   $ (18,411 )
                 

(1)  For the three months ended March 31, 2023, financial income, net, primarily consisted of $0.6 million of interest income from our money market accounts offset by $0.2 million in losses resulting from the remeasurement of warrant liabilities. For the three months ended March 31, 2022, financial income net, primarily consisted of $0.9 million in gains resulting from the remeasurement of warrant liabilities.