Ellie Mae® (NYSE Amex:ELLI), a leading provider of on-demand,
enterprise level automated solutions for the residential mortgage
industry, today reported results for the fourth quarter and fiscal
year ended December 31, 2011.
Total revenue for the fourth quarter of 2011 increased 48% to
$18.8 million, compared to $12.7 million in the fourth quarter of
2010. Net income for the fourth quarter of 2011 was $1.8 million,
or $0.08 per diluted share, compared to net income of $1.9 million,
or $0.11 per diluted share, in the fourth quarter of 2010.
On a non-GAAP basis, adjusted net income for the fourth quarter
of 2011 was $2.8 million, or $0.13 per diluted share, compared to
$2.6 million, or $0.15 per diluted share, in the fourth quarter of
2010. Adjusted EBITDA for the fourth quarter of 2011 was $3.4
million, compared to $3.1 million for the fourth quarter of
2010.
Total revenue for the full year 2011 increased 28% to $55.5
million, compared to $43.2 million in 2010. Net income for the full
year 2011 was $3.6 million, or $0.18 per diluted share, compared to
$0.8 million, or $0.05 per diluted share, in 2010. Our 2011 net
income includes a tax benefit of $1.6 million due to a change in
our tax valuation allowance resulting from the acquisition of Del
Mar Datatrac in August 2011. Excluding the impact of this tax
benefit, 2011 net income and earnings per share would have been
$2.0 million and $0.10 per diluted share, respectively.
On a non-GAAP basis, adjusted net income for the full year 2011
was $4.9 million, or $0.24 per diluted share, compared to $3.2
million, or $0.19 per diluted share, in 2010. Adjusted EBITDA in
2011 was $6.6 million, compared to $4.9 million in 2010.
A reconciliation of the non-GAAP financial measures to their
related GAAP financial measures is set forth below.
Key Operating Metrics as of and for the quarter ended
December 31, 2011, excluding the Del Mar Datatrac acquisition
(other than Datatrac customers who converted to Encompass during
the quarter):
- The number of lender users actively
using the company’s Encompass enterprise solution (“active lender
users”) increased 17% year over year to 46,238;
- Of all active lender users, 23,319 or
50%, were using the SaaS version of Encompass, an increase of 74%
year over year;
- 5,540 SaaS success-based pricing (SBP)
seat licenses were sold, or booked, during the quarter, including
1,690 new seat licenses and 3,850 conversions of existing licensed
Encompass and Datatrac users to the SBP model;
- Lender Encompass revenue increased 44%
year over year to $15.3 million;
- Average revenue per active lender user
increased 26% year over year to $337;
- Software Solutions revenue increased
58% to $15.9 million, compared to $10.1 million in the fourth
quarter of 2010; and
- Network revenue was $2.8 million,
compared to $2.6 million in the fourth quarter of 2010.
“Our strong fourth quarter results capped a tremendous year for
Ellie Mae,” stated Sig Anderman, President and CEO of Ellie Mae.
"We grew quarterly revenue by nearly 50% year over year, despite a
20% decline in mortgage originations nationwide. Our fourth quarter
results also benefited from an uptick in mortgage volumes during
the quarter, demonstrating the upside leverage in our business
model.”
“Our 2011 financial performance reflects strong momentum for our
on-demand offerings, which accounted for 86% of total 2011 revenue.
Growth continued to be fueled by our popular success-based pricing
solution, with over 18,000 SBP seat licenses sold during the year,
an increase of 57% from 2010. The number of active SBP users
doubled in 2011, to over 19,000. This SaaS, end-to-end solution is
increasingly resonating with lenders, as it enables them to
streamline and automate the mortgage origination process and
address the proliferating regulatory challenges and investor
demands for quality and efficiency. By offering this comprehensive
suite of services “on demand,” with an attractive pricing and risk
proposition, it enables our customers to focus on the business of
originating loans, rather than technology infrastructure, with
Ellie Mae as their aligned technology partner.”
“Our integration of Datatrac, which we acquired in August 2011,
is proceeding as planned. The Ellie Mae and Datatrac teams are now
fully integrated, and we introduced the first Encompass front-end
solution for Datatrac customers ahead of schedule,” continued Mr.
Anderman.
“As we enter 2012, we are excited about the prospects for
continued adoption of our on-demand solutions in the marketplace,
and believe we are well positioned for growth even in the face of
the expected decline in 2012 mortgage origination volume. To
accommodate our anticipated growth into 2013 and beyond, we are
planning to spend an additional $4 million this year to enhance our
technology and administrative infrastructure. These expenses are
reflected in the profit guidance we are providing,” concluded Mr.
Anderman.
First Quarter and Fiscal Year 2012 Financial Outlook
The composite forecast of Fannie Mae, Freddie Mac and the
Mortgage Bankers Association for 2012 mortgage origination volume
is $1 trillion, representing a 20% decrease from 2011. These
organizations publish monthly updates of their annual and quarterly
forecasts. The current composite quarterly forecast for 2011
origination volume is as follows: Q1 – $297 billion; Q2 – $283
billion; Q3 – $244 billion; Q4 – $211 billion. We are providing
financial guidance based in part on those forecasts.
For the first quarter of 2012, revenue is expected to be in the
range of $17.9 to $18.3 million. Net income for the first quarter
is expected to be in the range of $1.9 million to $2.4 million, or
$0.09 to $0.11 per diluted share. Adjusted net income is expected
to be in the range of $2.8 million to $3.3 million, or $0.13 to
$0.15 per diluted share. Adjusted EBITDA is expected to be in the
range of $3.2 million to $3.7 million.
For fiscal 2012, revenue is expected to be in the range of $68.0
to $70.0 million. Net income for 2012 is expected to be in the
range of $2.4 million to $3.8 million, or $0.11 to $0.17 per
diluted share. Adjusted net income is expected to be in the range
of $6.0 million to $7.5 million, or $0.27 to $0.34 per diluted
share. Adjusted EBITDA is expected to be in the range of $8.5
million to $10.5 million.
All share and per share information referenced throughout this
release and in the accompanying financial tables has been adjusted
to reflect the 1-for-3 reverse stock split of the Company's
common stock that occurred on April 14, 2011.
Use of Non-GAAP Financial Measures
Ellie Mae provides investors with adjusted net income and
adjusted EBITDA in conjunction with traditional GAAP operating
performance of net income as part of its overall assessment of its
performance. Adjusted net income consists of net income plus
amortization of acquired intangibles, non-cash, stock-based
compensation expense, acquisition costs and other
acquisition-related adjustments. EBITDA consists of net income plus
depreciation and amortization, interest income and expense and
income tax expense. Adjusted EBITDA consists of EBITDA plus
non-cash, stock-based compensation expense and acquisition costs.
Ellie Mae uses adjusted net income and adjusted EBITDA as measures
of operating performance because they enable period to period
comparisons by excluding potential differences caused by variations
in the age of book depreciation of fixed assets and amortization of
intangibles related to acquisitions, and changes in interest
expense and interest income that are influenced by capital market
conditions. The company also believes it is useful to exclude
non-cash, stock-based compensation expense from adjusted net income
and adjusted EBITDA because the amount of non-cash expense
associated with stock-based awards made at certain prices and
points in time (a) do not necessarily reflect how the company’s
business is performing at any particular time and (b) can vary
significantly between periods due to the timing of new stock-based
awards. These non-GAAP measures are not measurements of the
company’s financial performance under GAAP and have limitations as
analytical tools. Accordingly, these non-GAAP financial measures
should not be considered a substitute for, or superior to, net
income or operating income or other financial measures calculated
in accordance with generally accepted accounting principles in the
United States, or as an alternative to cash flows from operating
activities as a measure of the company’s profitability or
liquidity. The company cautions that other companies in Ellie Mae’s
industry may calculate adjusted net income and adjusted EBITDA
differently than the company does, further limiting their
usefulness as a comparative measure. A reconciliation of net income
to adjusted net income and adjusted EBITDA is included in the
tables below.
Quarterly Conference Call
Ellie Mae will discuss its fourth quarter and fiscal year 2011
results today via teleconference at 5:00 p.m. Eastern Time. To
access the call, please dial 877-941-4774 or 480-629-9760 at least
five minutes prior to the 5:00 p.m. Eastern Time start time. A live
webcast of the call will be available on the Investor Relations
section of the company’s website at www.EllieMae.com. An audio
replay of the call will be available through March 8, 2012 by
dialing 800-406-7325 or 303-590-3030 and entering access code
4511544.
About Ellie Mae
Ellie Mae, Inc. is a leading provider of on-demand automation
solutions for the mortgage industry. The Company offers an
end-to-end solution, delivered using a Software-as-a Service
model, that serves as the core operating system for mortgage
originators and spans customer relationship management, loan
origination and business management. The Company also hosts the
Ellie Mae Network™ that allows mortgage professionals to conduct
electronic business transactions with the lenders and settlement
service providers they work with to process and fund loans. The
Company's offerings include the Encompass®, Encompass360® and
DataTrac® mortgage management software systems.
Ellie Mae was founded in 1997 and is based in Pleasanton,
California. To learn more about Ellie Mae, visit www.EllieMae.com
or call 877.355.4362.
© 2012 Ellie Mae, Inc. Ellie Mae®, Encompass®, Encompass360®,
DataTrac®, Ellie Mae Network™ and the Ellie Mae
logo are registered trademarks or trademarks of Ellie Mae,
Inc. or its subsidiaries. All rights reserved. Other company and
product names may be trademarks or copyrights of
their respective owners
Forward-Looking Statements
This press release contains forward-looking statements under the
safe harbor provisions under The Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
discussions regarding projected revenue, net income, adjusted
EBITDA and adjusted net income for the first quarter and fiscal
year 2012. These statements involve known and unknown risks,
uncertainties and other factors which may cause the company’s
results to be materially different than those expressed or implied
in such statements. Such differences may be based on factors such
as changes in strategic planning decisions by management,
reallocation of internal resources, changes in the volume of
residential mortgage volume in the United States, the risk that the
anticipated benefits, growth prospects and synergies expected from
the Del Mar Datatrac acquisition may not be fully realized or may
take longer to realize than expected; the possibility that economic
benefits of future opportunities in an emerging industry may never
materialize, including unexpected variations in market growth and
demand for the acquired products and technologies; delays,
disruptions, costs and challenges associated with integrating Del
Mar Datatrac into the company’s existing business, including
changing relationships with partners, customers, employees or
suppliers; the amount of costs incurred in connection with the
supporting and integrating new customers and partners; ongoing
personnel and logistical challenges of managing a larger
organization; our ability to retain and motivate key employees from
Del Mar Datatrac, changes in other macroeconomic factors affecting
the residential real estate industry and other risk factors
included in documents that Ellie Mae has filed with the Securities
and Exchange Commission, including but not limited to the final
prospectus relating to its initial public offering. Other unknown
or unpredictable factors also could have material adverse effects
on Ellie Mae’s future results. The forward-looking statements
included in this press release are made only as of the date hereof.
Ellie Mae cannot guarantee future results, levels of activity,
performance or achievements. Accordingly, you should not place
undue reliance on these forward-looking statements. Finally, Ellie
Mae expressly disclaims any intent or obligation to update any
forward-looking statements to reflect subsequent events or
circumstances.
ELLIE MAE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31, 2011 2010
(unaudited)
(1)
Assets Current assets Cash and cash equivalents $
23,732 $ 14,349 Short-term investments 1,933 2,556
Accounts receivable, net of allowances for
doubtful accounts of $47 and $48, as of December 31, 2011 and
December 31, 2010, respectively
6,819 4,243 Prepaid expenses and other 1,381 665 Note receivable
1,000 0 Deferred offering costs 0 4,667
Total current assets 34,865 26,480 Property and equipment, net
5,539 2,710 Deposits and other assets 135 632 Note receivable 15
1,000 Other intangibles, net 8,166 613 Goodwill 51,051
31,521 Total assets $ 99,771 $ 62,956
Liabilities, Redeemable Convertible Preferred Stock
and Stockholders' Equity (Deficit) Current liabilities Accounts
payable $ 2,255 $ 3,756 Accrued and other current liabilities 4,931
3,442 Acquisition holdback, net of discounts 2,948 0 Deferred
revenue 4,548 3,188 Deferred rent 212 192 Leases payable 6
114 Total current liabilities 14,900 10,692
Deferred revenue, net of current portion 62 137 Deferred rent, net
of current portion 624 813 Acquisition holdback, net of current
portion and discounts 4,725 0 Other long-term liabilities 598 467
Leases payable, net of current portion 4 0
Total liabilities 20,913 12,109
Commitments and contingencies
Redeemable convertible preferred stock,
$0.0001 par value per share; 10,000,000 and 14,323,714 authorized
shares, 0 and 11,770,472 shares issued and outstanding as of
December 31, 2011 and December 31, 2010, respectively
0 82,672 Stockholders' equity (deficit):
Common stock, $0.0001 par value per share;
140,000,000 and 21,666,666 authorized shares, 21,019,590 and
3,629,662 shares issued and outstanding as of December 31, 2011 and
December 31, 2010, respectively
2 0 Additional paid-in capital 116,012 8,951 Accumulated deficit
(37,156 ) (40,776 ) Total stockholders' equity
(deficit) 78,858 (31,825 ) Total liabilities,
redeemable convertible preferred stock and stockholders' equity
(deficit) $ 99,771 $ 62,956 (1) Derived from
audited financial statements.
ELLIE MAE, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
share and per share amounts)
Three months ended December 31, Year ended December
31, 2011 2010 2011 2010
(unaudited) (unaudited)
(1)
Revenues $ 18,754 $ 12,668 $ 55,494 $ 43,234 Cost of
revenues 4,864 3,197 15,784
12,505 Gross profit 13,890 9,471 39,710 30,729 Operating
expenses Sales and marketing 4,131 2,485 12,126 9,555 Research and
development 4,113 2,643 12,975 10,468 General and administrative
3,797 2,270 12,900 9,823
Total operating expenses 12,041 7,398
38,001 29,846 Income from operations 1,849 2,073
1,709 883 Other income (expense), net (19 ) 27
76 119 Income before income taxes 1,830 2,100 1,785
1,002 Income tax provision (benefit) 35 197
(1,835 ) 225 Net income $ 1,795 $ 1,903 $
3,620 $ 777 Net income per share of common stock: Basic $
0.09 $ 0.53 $ 0.23 $ 0.22 Diluted $ 0.08 $
0.11 $ 0.18 $ 0.05
Weighted average common shares used in
computing net income per share of common stock:
Basic 20,828,571 3,590,994 15,618,053
3,495,731 Diluted 22,039,426
17,291,143 20,649,451 17,146,735 (1)
Derived from audited financial statements.
ELLIE MAE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) Year ended December 31,
2011 2010 (unaudited)
(1)
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,620 $
777
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,964 1,611 Provision for
uncollectible accounts receivable 469 366 Amortization of
intangible assets 896 370 Amortization of discount related to
holdback 80 0 Stock-based compensation 1,680 2,068
Deferred income taxes
(1,654 ) 0 Changes in operating assets and liabilities: Accounts
receivable (2,584 ) (1,890 ) Prepaid expenses and other (650 ) 233
Deposits and other assets 621 5 Accounts payable 479 23 Accrued and
other liabilities 1,309 338 Deferred revenue 321 (79 ) Deferred
rent (179 ) (525 )
Net cash provided by operating
activities 6,372 3,297 CASH FLOWS
FROM INVESTING ACTIVITIES: Acquisition of property and equipment
(3,688 ) (1,436 ) Purchase of short-term investments (6,228 )
(7,252 ) Acquisitions, net of cash acquired (18,188 ) 0 Sale of
short-term investments 6,851 9,416 Issuance of note receivable
(15 ) 0
Net cash (used in) provided by
investing activities (21,268 ) 728 CASH
FLOWS FROM FINANCING ACTIVITIES: Proceeds from initial public
offering net of commission 27,900 0 Offering costs paid during the
period (4,824 ) (1,621 ) Payment of capital lease obligations (116
) (392 ) Proceeds from issuance of common stock 1,310 832 Excess
tax benefit from exercise of stock options 9
14
Net cash provided by (used in) financing
activities 24,279 (1,167 ) NET INCREASE IN
CASH AND CASH EQUIVALENTS 9,383 2,858 CASH AND CASH EQUIVALENTS,
Beginning of period 14,349 11,491 CASH
AND CASH EQUIVALENTS, End of period $ 23,732 $ 14,349
(1) Derived from audited financial
statements.
ELLIE MAE, INC. NON-GAAP RECONCILIATION
(unaudited) (in thousands, except share and per share
amounts) Three months
ended December 31, Year ended December 31,
2011 2010 2011
2010 Net income $
1,795 $ 1,903 $ 3,620 $
777 Depreciation and amortization 579 343 1,964 1,611
Amortization of intangible assets 415 92 896 370 Other income
(expense), net 19 (27 ) (76 ) (119 ) Income tax provision (benefit)
35 197 (1,835 )
(1)
225 EBITDA 2,843 2,508 4,569 2,864 Non-cash,
stock-based compensation expenses 547 566 1,680 2,068 Acquisition
costs 0 0 351 0
Adjusted EBITDA $ 3,390 $ 3,074
$ 6,600 $ 4,932
Net income $ 1,795 $ 1,903 $ 3,620 $ 777 Non-cash,
stock-based compensation expenses 547 566 1,680 2,068 Non-cash,
deferred income tax adjustment 0 0 (1,654 )
(1)
0 Amortization of intangible assets 415 92 896 370 Acquisition
costs 0 0 351 0
Adjusted net income $ 2,757 $
2,561 $ 4,893 $
3,215 Shares used to compute non-GAAP net
income per share Basic 20,828,571 3,590,994 15,618,053 3,495,731
Diluted 22,039,426 17,291,143 20,649,451 17,146,735 Adjust
net income per share Basic $ 0.13 $ 0.71 $ 0.31 $ 0.92 Diluted $
0.13 $ 0.15 $ 0.24 $ 0.19
(1)
Income tax benefit of $1,835 in 2011 includes a non-cash, deferred
income tax adjustment of $1,654 resulting from the acquisition of
Del Mar Datatrac.
ELLIE MAE, INC. NON-GAAP
RECONCILIATION (unaudited) (in thousands, except
share and per share amounts)
First quarter 2012 projected range Fiscal 2012 projected
range Net income $ 1,900 $
2,400 $
2,400
$ 3,800 Depreciation and amortization 400 400
2,500 2,700 Amortization of intangible assets 400 400 1,600 1,600
Income tax provision 0 0 0 300 EBITDA
2,700 3,200
6,500
8,400 Non-cash, stock-based compensation expenses 500
500
2,000
2,100
Adjusted EBITDA
$ 3,200 $ 3,700 $ 8,500
$ 10,500 Net income
$ 1,900 $ 2,400 $
2,400
$ 3,800 Non-cash, stock-based compensation expenses
500 500
2,000
2,100 Amortization of Intangible assets 400 400
1,600 1,600
Adjusted net income $
2,800
$
3,300
$ 6,000 $ 7,500 Shares used to
compute non-GAAP net income per share Diluted 22,100,000 22,100,000
22,300,000 22,300,000 Projected net income per share Diluted
$ 0.09 $ 0.11 $
0.11
$ 0.17 Adjusted net income per share Diluted $ 0.13 $ 0.15 $
0.27 $ 0.34
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