Second Quarter 2015 Results · 2015-08-06 · Second Quarter 2015 Results ... The statements...

© 2015 Actua Corporation / All Rights Reserved / 1

Second Quarter 2015 Results


Forward-Looking Statements

The statements contained in this press release that are not historical facts are forward-looking statements within the

meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain

risks and uncertainties, including, but not limited to, risks associated with our ability to compete successfully in

highly-competitive rapidly-developing markets, the effect of economic conditions generally, capital spending by our

customers, our ability to retain existing customer relationships and secure new ones, developments in the markets

in which we operate and our ability to respond to those changes in a timely and effective manner, the availability,

performance and security of our cloud-based technology, particularly in light of increased cybersecurity risks and

concerns, our ability to retain key personnel, our ability to deploy capital effectively and on acceptable terms, our

ability to successfully integrate any acquired business, the impact of any potential acquisitions, dispositions or other

strategic transactions, our ability to have continued access to capital and to manage capital resources effectively,

and other risks and uncertainties detailed in Actua's filings with the U.S. Securities and Exchange Commission.

Those and other factors may cause actual results to differ materially from those projected.


Non-GAAP Financial Measures

Non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, adjusted EBITDA, adjusted cost of revenue, adjusted sales

and marketing, adjusted general and administrative and adjusted research and development are non-GAAP financial measures and have

no standardized measurement prescribed by GAAP. When referring to non-GAAP financial measures, the term “adjusted” is used

interchangeably with the term “non-GAAP” by Actua’s management, and the two have identical definitions. Non-GAAP net income (loss) is

GAAP net income (loss) attributable to Actua, including acquired businesses’ deferred revenue and excluding share-based compensation,

amortization of intangibles, impairment-related and other costs, transaction expenses, other (income) loss, net, equity loss, current non-

cash income tax benefit on discrete item and loss (income) from discontinued operations. Non-GAAP net income (loss) per diluted share is

non-GAAP net income (loss) divided by (1) GAAP shares, including the any impact of incremental dilutive securities (in the case of income)

or (2) GAAP shares, excluding any impact of incremental dilutive securities (in the case of loss). Adjusted EBITDA is GAAP net income

(loss) attributable to Actua, including acquired businesses’ deferred revenue and excluding share-based compensation, amortization of

intangibles, impairment-related and other costs, transaction expenses, other (income) loss, net, equity loss, current non-cash income tax

benefit on discrete item, loss (income) from discontinued operations, interest expense (income), net, current, cash income tax expense and

depreciation expense. Adjusted cost of revenue is cost of revenue operating expenses, excluding share-based compensation. Adjusted

sales and marketing is sales and marketing operating expenses, excluding share-based compensation. Adjusted general and

administrative is general and administrative operating expenses, excluding share-based compensation. Adjusted research and

development is research and development operating expenses, excluding share-based compensation. Actua's consolidated businesses

are BOLT, FolioDynamix, GovDelivery and MSDSonline as of June 30, 2015. Please note the following:

• FolioDynamix became a consolidated business on November 3, 2014 and, therefore, will be included in Actua’s consolidated results

beginning on November 1, 2014. The results of FolioDynamix for the first two days of November 2014 are insignificant for

consolidation purposes.

• Channel Intelligence, Investor Force and Procurian were sold in Q1, Q1 and Q4 2013, respectively, and are presented as

discontinued operations under GAAP. Receipt of respective escrow releases occurred throughout 2014 and is presented within our

non-GAAP measures as “Loss (income) from discontinued operations.”

Actua's management believes these non-GAAP financial measures provide useful information to investors and potential investors that

enables them to view Actua’s business in a similar manner as Actua's management and provide meaningful supplemental information

regarding Actua’s operating results as they exclude amounts that Actua excludes as part of its monitoring of operating results and

assessment of the performance of its business.


Meeting Agenda

DirectionWalter Buckley, CEO

Financial OverviewKirk Morgan, CFO

Question & Answer Session


Q2 2015 Highlights

• Achieved 21% organic revenue growth as a result of:

– New contract signings

– Expanded customer relationships across all businesses

• Generated $1 million of operating cash flow, reflecting the leverage

across our platform


**

Digital communications and marketing platform that enables

public sector organizations to effectively reach citizens and

drive action

Important metrics:*

• Annual Revenue Growth: 24% in Q2 2015 compared to Q2 2014

• New Signings: Closed 48 deals in Q2 2015, reporting strongest Q2

ever in terms of number of deals closed; new signings included a

large state lottery program, two state enterprise contracts and a

number of strategic federal agencies

• Total Customers: Serving 1,000+ federal, state, local and UK

government agencies reaching over 90 million citizen subscribers

• Pipeline: 38% pipeline growth since Q1 2015, including 17 federal

program opportunities; up 30% overall in terms of dollar value

• TAM: > $1 billion

• Competitive Moat: Subscriber base creates network effect,

significantly expanding reach and audience for each customer

• Operating cash flow positive for 2015

• Annual subscription revenue model

* As of 6/30/15 unless otherwise noted

Actua’s Platforms


Provides a multi-channel, multi-carrier software

platform that enables insurance distributors to retain

and grow revenue through a comprehensive insurance

solution

Important metrics:*


• New Signings: Signed a third top 10 carrier platform customer, which will

launch in Q4 and begin generating revenue in Q1 2016; also saw continued

roll-out and broader utilization of the platform with all three of our largest

customers

• Total Customers: Insurance carriers (67, of which six are carrier

distribution partners), independent agents (2,100), alternative distribution

partners (4)

• Pipeline: Entered the quarter with nine large mid-to-late stage deals, signed

one during the quarter and added three new opportunities, brining the total

to 11; all prior opportunities referenced in the pipeline remain, with some in

the final contract stages

• TAM: Multi-billion $$

• Added an additional $100 million of premiums on the platform, bringing the

total premiums to $1.1 billion at quarter-end

• Competitive Moat: Platform is integrated into 67 of the largest insurance

carriers and has over 3,500 carrier connections which creates the largest

source of insurance flow for direct carriers, agents, agencies and alternative

insurance distributors

• Operating cash flow negative for 2015

• Multi-year/multi-million dollar contracts


Actua’s Platforms


Actua’s Platforms

Enables the delivery of client-centric, innovative, scalable,

wealth management solutions through secure, cloud-based,

fully integrated, advisory products and solutions

Important Metrics:*


• New Signings: Signed seven new customers in Q2, three of which are large

seven-figure deals, and four of which are mid-to-large sized, six-figure contracts

• Total Customers: More than 200 banks, brokerage firms and large RIAs

• Pipeline: Continues to build well ahead of sales growth, in terms of quantity

and velocity through pipeline; seeing strong interest from banking, broker

dealer and RIA markets

• TAM: Multi-billion $$

• Competitive Moat: Comprehensive, client-centric technology platform with

integrated proprietary advisory products


• Multi-year/multi-million dollar contracts

• More than 97,000 advisors and users

• $4.3 billion in regulatory assets under management

*As of 6/30/15 unless otherwise noted


Environmental, Health and Safety compliance platform

that enables organizations to meet stringent and costly

OSHA requirements

Important Metrics:*


• New Signings: Added 647 new customers in Q2 2015

• Total Customers: Close to 11,000 companies; protecting more than

8 million employees in U.S. and Canada

• Pipeline: Growth is slightly ahead of revenue growth and is skewed

towards large platform customers (customers with access to the full

platform of products)

• TAM: > $3 billion

• Competitive Moat: Database of over 8 million material safety data

sheets is the only comprehensive web-based library that ensures

100% compliance for companies and continues to expand as new

customers come onto the platform


• 3-year subscription revenue model


Actua’s Platforms


Meeting Agenda

DirectionWalter Buckley, CEO

Financial OverviewKirk Morgan, CFO

Question & Answer Session


Consolidated Income Statements

(In thousands, except per share data)

2015 2014 2015 2014

Revenue 33,536$ 19,029$ 64,128$ 37,451$

Operating Expenses

Cost of revenue (a) 9,783 5,519 19,515 10,418

Sales and marketing (a) 12,163 9,585 23,399 18,116

General and administrative (a) 15,966 12,915 31,402 22,924

Research and development (a) 7,373 3,547 14,466 6,800

Amortization of intangibles 3,706 2,293 7,722 4,594

Impairment related and other 166 836 340 836

Total operating expenses 49,157 34,695 96,844 63,688

Operating income (loss) (15,621) (15,666) (32,716) (26,237)

Other income (expense):

Other income (loss), net (425) 637 940 937

Interest income 35 146 54 232

Interest expense (31) (1,080) (68) (1,591)

Income (loss) before income taxes, equity loss and discontinued operations (16,042) (15,963) (31,790) (26,659)

Income tax benefit (expense) (1) 599 (178) 505

Equity loss - (320) - (632)

Income (loss) from continuing operations (16,043) (15,684) (31,968) (26,786)

Income (loss) from discontinued operations - 1,315 - 1,363

Net income (loss) (16,043) (14,369) (31,968) (25,423)

Less: Net income (loss) attributable to the noncontrolling interest (761) (1,475) (1,921) (2,379)

Net income (loss) attributable to Actua (15,282)$ (12,894)$ (30,047)$ (23,044)$

Amounts attributable to Actua common shareholders:

Net income (loss) from continuing operations (15,282)$ (14,209)$ (30,047)$ (24,407)$

Net income (loss) from discontinued operations - 1,315 - 1,363

Net income (loss) attributable to Actua common shareholders (15,282)$ (12,894)$ (30,047)$ (23,044)$

Basic and diluted net income (loss) per share:

Income (loss) from continuing operations attributable to Actua common shareholders (0.41)$ (0.38)$ (0.81)$ (0.66)$

Income (loss) from discontinued operations attributable to Actua common shareholders - 0.03 - 0.04

Income (loss) attributable to Actua common shareholders (0.41)$ (0.35)$ (0.81)$ (0.62)$

Diluted net income (loss) per share:

Income (loss) from continuing operations attributable to Actua common shareholders (0.41)$ (0.38)$ (0.81)$ (0.66)$

Income (loss) from discontinued operations attributable to Actua common shareholders - 0.03 - 0.04

Income (loss) attributable to Actua common shareholders (0.41)$ (0.35)$ (0.81)$ (0.62)$

37,123 37,313 36,983 37,205

37,123 37,313 36,983 37,205

(a) Includes equity-based compensation of:

Cost of revenue 29$ 20$ 55$ 39$

Sales and marketing 79 42 137 83

General and administrative 6,887 6,648 13,980 10,294

Research and development 126 29 171 199

7,121$ 6,739$ 14,343$ 10,615$

Shares used in computation of basic net income (loss) per common share attributable to Actua

Shares used in computation of basic and diluted net income (loss) per common

share attributable to Actua common shareholders

Three Months Ended June 30, Six Months Ended June 30,


Consolidated Balance Sheets

(In thousands)

June 30, December 31,

2015 2014

ASSETS

Cash and cash equivalents 84,622$ 103,134$

Restricted cash 1,064 1,132

Accounts receivable, net 22,120 23,134

Deferred tax asset 182 182

Prepaid expenses and other current assets 4,596 3,979

Total current assets 112,584 131,561

Fixed assets, net 9,385 7,947

Goodwill and Intangibles, net 360,035 367,082

Cost and equity method investments 18,146 17,672

Deferred tax asset 2,900 2,998

Other assets, net 1,792 1,652

Total Assets 504,842$ 528,912$

LIABILITIES AND EQUITY

Current maturities of other long-term debt 1,320$ 500$

Accounts payable 11,092 12,595

Accrued expenses 5,988 8,306

Accrued compensation and benefits 8,845 9,241

Deferred revenue 37,878 33,238

Total current liabilities 65,123 63,880

Long-term debt - -

Deferred revenue 1,401 1,256

Deferred tax liability 266 266

Other liabilities 5,459 4,408

Total Liabilities 72,249 69,810

Redeemable noncontrolling interest 7,081 6,221

Total Equity 425,512 452,881

Total Liabilities, Redeemable noncontrolling interest and Equity 504,842$ 528,912$


Consolidated Statements of Cash Flows

(In thousands)

2015 2014 2015 2014

Operating Activities - continuing operations

Net income (loss) (16,043)$ (14,369)$ (31,968)$ (25,423)$

(Income) loss from discontinued operations, including gain on sale, net of tax - (1,315) - (1,363)

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

Depreciation and amortization 4,829 3,073 10,069 6,196

Equity-based compensation 7,121 6,739 14,343 10,615

Impairment related and other 166 - 340 836

Other (income) loss 425 (637) (940) (937)

Equity loss - 320 - 632

Deferred tax asset 89 (800) 76 (800)

Changes in assets and liabilities, net of effect of acquisitions:

Accounts receivable, net 1,676 2,496 1,014 (1,306)

Prepaid expenses and other assets (121) 207 (757) 229

Accounts payable (952) 1,886 (1,503) 1,928

Accrued expenses (415) (178) 474 (1,273)

Accrued compensation and benefits 1,634 1,008 (396) (2,587)

Deferred revenue 2,030 (269) 4,785 2,761

Other liabilities 555 (321) 1,051 (385)

Cash flows provided by (used in) operating activities 994 (2,160) (3,412) (10,877)

Investing Activities - continuing operations

Capital expenditures, net (1,579) (1,695) (3,919) (2,303)

Change in restricted cash (72) 114 68 (50)

Proceeds from sales/distributions of ownership interests - 2,744 1,415 3,037

Ownership acquisitions, net of cash acquired (700) (198) (1,957) (198)

Cash flows provided by (used in) investing activities (2,351) 965 (4,393) 486

Financing Activities - continuing operations

Acquisition of noncontrolling interest in subsidiary equity - - (3,952) -

Contingent consideration payments (1,870) - (1,870) -

Borrowings of long-term debt - - 820 -

Repayments of long-term debt and capital lease obligations - (8,544) (24) (12,032)

Purchase of treasury stock - - (1,704) -

Tax withholdings related to equity-based awards (364) (530) (3,858) (2,735)

Cash received for stock options exercised (73) - (8) -

Cash flows provided by (used in) financing activities (2,307) (9,074) (10,596) (14,767)

Effect of exchange rate on cash 6 - (111) -

Discontinued Operations:

Cash flows provided by (used in) operating activities - - - 48

Cash flows provided by (used in) investing activities - - - -

Cash flows provided by (used in) financing activities - - - -

Net increase(decrease) in cash and cash equivalents from discontinued operations - - - 48

Net increase (decrease) in cash and cash equivalents (3,658) (10,269) (18,512) (25,110)

Cash and cash equivalents at beginning of period 88,280 319,815 103,134 334,656

Cash and cash equivalents at end of period 84,622$ 309,546$ 84,622$ 309,546$

Three Months Ended June 30, Six Months Ended June 30,


Demonstrated Quarterly Growth

$12.0$13.5

$16.1$17.7

$18.4 $19.0

$20.8

$26.6

$30.6

$33.5

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014

Re

ve

nu

e (

Mil

lio

ns

)

2015


Quarterly Non-GAAP Net Income/Share

-$0.14

-$0.10

-$0.08-$0.09

-$0.10

-$0.12 -$0.12

-$0.03

-$0.10

-$0.07

-$15.00

-$10.00

-$5.00

$0.00

$5.00

$10.00

$15.00

-$0.20

-$0.15

-$0.10

-$0.05

$0.00

$0.05

$0.10

$0.15

$0.20

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Series1 Series2

2013 2014

No

n-G

AA

P N

et

Inc

om

e/S

ha

re

Op

era

tin

g C

as

h F

low

2015

Non-GAAP Net Income/Share Operating Cash Flow


2013

Financial Profile

Gross Margins %

Sales and Marketing %

General and Administrative %

%s determined excluding stock-based compensation and deferred revenue adjustments from purchase accounting

Q2 2015

72%

45%

32%

17%

2014

71%

35%

27%

21%

Retention Rates %

Recurring Revenue %

97%

87% 87%

97%+

71%

46%

41%

15%

87%

95%

Research and Development %


$20.0

$50.0

$80.0

$110.0

$140.0

2013 Actual 2014 Actual 2015 Guidance

Revenue Growth

2015 Guidance

Range:

$133.0M - $138.0M

Fig

ure

s s

how

n in

mill

ions


Non-GAAP Net Income (Loss)/Share

($0.50)

($0.40)

($0.30)

($0.20)

2013 Actual 2014 Actual

2015 Guidance Range:

$(0.36) - $(0.40)

2015 Guidance


Cash Flow From Operations

($20.0)

($15.0)

($10.0)

($5.0)

$0.0

2013 Actual 2014 Actual

2015 Guidance Range:

$(5.0)M - $(9.0)M

2015 Guidance

Fig

ure

s s

how

n in

mill

ions


Second Quarter 2015 Results

Second Quarter 2015 Results · 2015-08-06 · Second Quarter 2015 Results ... The statements...

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