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8-K - FORM 8-K - LIFELOCK, INC.d679827d8k.htm

Exhibit 99.1

LifeLock Announces 2013 Fourth Quarter and Year-End Results

Record quarterly revenue of $102.3 million, up 30% year-over-year

Q4 cumulative ending members of approximately 3.0 million, up 21% year-over-year

Q4 monthly average revenue per member of $10.72, up 11% year-over-year

TEMPE, AZ (February 19, 2014)LifeLock, Inc. (NYSE: LOCK), an industry leader in identity theft protection, today announced financial results for the fourth quarter and fiscal year ended December 31, 2013.

Fourth Quarter 2013 Financial Highlights:

 

    Revenue: Total revenue was $102.3 million for the fourth quarter of 2013, up 30% from $78.8 million for the fourth quarter of 2012. Consumer revenue was $94.1 million for the fourth quarter of 2013, up 33% from $70.8 million for the fourth quarter of 2012. Enterprise revenue was $8.2 million for the fourth quarter of 2013, compared to $8.0 million for the fourth quarter of 2012.

 

    Net Income: Net income was $53.2 million for the fourth quarter of 2013, compared to net income of $4.1 million for the fourth quarter of 2012. Net income per diluted share was $0.54 for the fourth quarter of 2013 based on 97.7 million weighted-average shares outstanding, compared with net income per diluted share of $0.01 for the fourth quarter of 2012 based on 90.8 million weighted-average shares outstanding. Net income for the fourth quarter of 2013 included an income tax benefit of $39.2 million, or $0.40 per share, resulting from the release of the valuation allowance associated with our deferred tax assets.

 

    Adjusted Net Income: Adjusted net income was $21.5 million for the fourth quarter of 2013, up from $8.9 million for the fourth quarter of 2012. Adjusted net income per diluted share was $0.22 for the fourth quarter of 2013 based on 97.7 million weighted-average shares outstanding, compared with $0.10 per diluted share for the fourth quarter of 2012 based on 92.2 million weighted-average shares outstanding.

 

    Adjusted EBITDA: Adjusted EBITDA was $22.9 million for the fourth quarter of 2013, compared with $11.4 million for the fourth quarter of 2012.

 

    Cash Flow: Cash flow from operations was $25.5 million for the fourth quarter of 2013, leading to free cash flow of $20.4 million after taking into consideration $5.2 million of capital expenditures. This compares with cash flow from operations of $7.7 million and free cash flow of $3.7 million, after taking into consideration $4.0 million of capital expenditures, for the fourth quarter of 2012.

 

    Balance Sheet: Total cash and marketable securities at the end of the fourth quarter of 2013 was $172.6 million, up from $134.2 million at the end of the fourth quarter of 2012.

“We closed out 2013 on a strong note, posting solid results on both the top and bottom line,” said Todd Davis, LifeLock’s Chairman and CEO. “The combination of our leading brand and unique technology continue to drive our results. Our ongoing business momentum, along with the launch of the LifeLock Wallet mobile application, positions LifeLock well as we begin 2014. We are proud to help over 3 million consumers live freely in a connected world.”


A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Fourth Quarter 2013 & Recent Business Highlights:

 

    Recorded the 35th consecutive quarter of sequential growth in revenue and cumulative ending members.

 

    Added approximately 246,000 gross new members in the fourth quarter of 2013 and ended the quarter with approximately 3.0 million members.

 

    Achieved a retention rate of 87.8% for the fourth quarter of 2013, compared with 87.1% for the fourth quarter of 2012.

 

    Increased monthly average revenue per member to $10.72 for the fourth quarter of 2013 from $9.68 for the fourth quarter of 2012.

 

    Acquired mobile wallet innovator Lemon, Inc.

Fiscal Year 2013 Financial Highlights:

 

    Revenue: Total revenue was $369.7 million for 2013, up 34% from $276.4 million for 2012. Consumer revenue was $340.1 million for 2013, up 34% from $254.7 million for 2012. Enterprise revenue was $29.5 million for 2013, compared to $21.8 million in 2012.

 

    Net Income: Net income was $52.5 million for 2013, up from $23.5 million for 2012. Net income per diluted share was $0.55 for 2013 based on 95.9 million weighted-average shares outstanding, compared with net income per diluted share of $0.09 for 2012 based on 62.2 million weighted-average shares outstanding. Net income for 2013 included an income tax benefit of $39.2 million, or $0.41 per share, resulting from the release of the valuation allowance associated with our deferred tax assets.

 

    Adjusted Net Income: Adjusted net income was $36.9 million for 2013, up from $22.7 million for 2012. Adjusted net income per diluted share was $0.38 for 2013 based on 95.9 million weighted-average shares outstanding, compared with $0.31 per diluted share for 2012 based on 72.6 million weighted-average shares outstanding.

 

    Adjusted EBITDA: Adjusted EBITDA was $42.2 million for 2013, up from $31.0 million for 2012.

 

    Cash Flow: Cash flow from operations was $77.4 million for 2013, leading to free cash flow of $67.0 million after taking into consideration $10.4 million of capital expenditures. This compares with cash flow from operations of $48.4 million and free cash flow of $40.9 million, after taking into consideration $7.5 million of capital expenditures, for 2012.


Guidance:

As of February 19, 2014, we are initiating guidance for our first quarter of 2014 as well as the full year 2014.

 

    First Quarter 2014 Guidance: Total revenue is expected to be in the range of $105.0 million to $106.0 million. Adjusted net loss per share is expected to be in the range of $(0.03) to $(0.02) based on approximately 92.0 million basic weighted-average shares outstanding. Adjusted EBITDA is expected to be in the range of $(2.0) million to $(1.0) million.

 

    Full Year 2014 Guidance: Total revenue is expected to be in the range of $455.0 million to $465.0 million. Adjusted net income per share is expected to be in the range of $0.42 to $0.47 based on approximately 102.0 million fully diluted weighted-average shares outstanding and a cash tax rate of 5%. Adjusted EBITDA is expected to be in the range of $50.0 million to $55.0 million. Free cash flow is expected to be in the range of $75.0 million to $80.0 million.

Conference Call Details:

 

    What: LifeLock fourth quarter and full year 2013 financial results.

 

    When: Wednesday, February 19, 2014 at 2PM PT (5PM ET).

 

    Dial in: To access the call in the United States, please dial (877) 407-3982, and for international callers dial (201) 493-6780. Callers may provide confirmation number 13574392 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.

 

    Webcast: http://investor.lifelock.com/ (live and replay)

 

    Replay: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (877) 870-5176, and for international callers dial (858) 384-5517 and enter access code 13574392.

About LifeLock

LifeLock, Inc. (NYSE:LOCK) is a leading provider of proactive identity theft protection services for consumers and fraud and risk solutions for enterprises. LifeLock’s threat detection, proactive identity alerts, and comprehensive remediation services provide peace of mind for consumers amid the growing threat of identity theft. The LifeLock mobile app helps consumers manage their identity and payment cards on the go and enables LifeLock members to receive alerts and services on their digital device. Leveraging unique data, science and patented technology from ID Analytics, Inc., a wholly-owned subsidiary, LifeLock offers identity theft protection that goes significantly beyond credit monitoring. As part of its commitment to help fight identity theft, LifeLock works to train law enforcement and partners with a variety of non-profit organizations to help consumers establish positive habits to combat this threat.

Forward-Looking Statements

This press release contains “forward-looking” statements, as that term is defined under the federal securities laws, including statements regarding our leading brand and unique technology, the launch of the LifeLock Wallet mobile application, our position heading into 2014, our outlook for 2014, and our expected total revenue, adjusted net income per share, adjusted EBITDA, and free cash flow for the first quarter of 2014 and for fiscal year 2014. These forward-looking statements are based on our current assumptions, expectations, and beliefs and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement.


The risks and uncertainties referred to above include, but are not limited to, risks associated with our ability to maintain profitability on an annual basis; our ability to protect our customers’ confidential information; our ability to maintain and enhance our brand recognition and reputation; the competitive nature of the industries in which we conduct our business; our ability to maintain access to data sources; our ability to retain our existing customers and attract new customers; our ability to improve our services and develop and introduce new services with broad appeal; our ability to maintain existing and secure new relationships with strategic partners; the effects of laws, regulations, and enforcement; the outcome of any litigation or regulatory proceeding; our ability to protect our intellectual property and not infringe on the intellectual property of others; and other “Risk Factors” set forth in our most recent filings with the Securities and Exchange Commission (the “SEC”).

Further information on these and other factors that could affect our financial results and the forward-looking statements in this press release is included in the filings we make with the SEC from time to time, including our Form 10-K for the year ended December 31, 2012, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Copies of these documents may be obtained by visiting our Investor Relations website at http://investor.lifelock.com/ or the SEC’s website at www.sec.gov.

We assume no obligation and do not intend to update these forward-looking statements, except as required by law.

Non-GAAP Financial Measures

Our reported results include certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted EBITDA, and free cash flow. We define adjusted net income as net income (loss) excluding amortization of acquired intangible assets, change in fair value of warrant liabilities, change in fair value of embedded derivatives, share-based compensation, acquisition related expenses, and income tax benefits and expenses resulting from changes in our deferred tax assets. We define adjusted net income per share as adjusted net income per share of stock assuming all preferred stock converted into common stock at the later of the start of the period or the date of issuance and excluding the impact of warrants to purchase Series E and Series E-2 preferred stock. We define adjusted EBITDA as net income (loss) excluding depreciation and amortization, interest expense, interest income, change in fair value of warrant liabilities, change in fair value of embedded derivative, other income (expense), income taxes, acquisition related expenses, and share-based compensation. We define free cash flow as net cash provided by (used in) operating activities less net cash used in investing activities for acquisitions of property and equipment.

We have included adjusted net income, adjusted net income per share, and adjusted EBITDA in this press release because they are key measures used by us to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted net


income and adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, adjusted EBITDA is a key financial measure used in determining management’s incentive compensation.

In the fourth quarter of 2013, we modified our calculation of adjusted EBITDA and adjusted net income to also exclude acquisition related expense. For comparative purposes, we also modified our calculation of adjusted our adjusted EBITDA and adjusted net income for 2012 to exclude the acquisition related expenses incurred during our acquisition of ID Analytics.

We have included free cash flow in this press release because it typically presents a more conservative measure of cash flow as purchases of property and equipment are necessary components of ongoing operations. We believe that this non-GAAP financial measure is useful in evaluating our business because free cash flow reflects the cash surplus available to fund the expansion of our business after payment of capital expenditures relating to the necessary components of ongoing operations. We also believe that the use of free cash flow provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Although adjusted net income, adjusted EBITDA, and free cash flow are frequently used by investors in their evaluations of companies, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered alongside other financial performance measures.

We have not reconciled adjusted net income per share guidance to net income per share guidance or adjusted EBITDA guidance to net income guidance because we do not provide guidance for share-based compensation expense, provision for income taxes, interest income, interest expense, change in fair value of warrant liabilities, change in fair value of embedded derivatives, other income and expenses, depreciation expense, amortization of intangible assets, acquisition expenses, or income tax (benefit) expense, which are reconciling items between net income (loss) and adjusted net income and net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of our control and/or cannot be reasonably predicted, we are unable to provide such guidance. Accordingly, reconciliation to net income (loss) is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the reconciliation tables included in this press release.

Media Contact:

Kelley Bonsall

Media@lifelock.com

415-767-7749


Investor Relations Contact:

Greg Kleiner

ICR for LifeLock

Investor.relations@lifelock.com

480-457-5000


LifeLock, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2013     2012     2013     2012  

Revenue

        

Consumer revenue

   $ 94,068      $ 70,775      $ 340,121      $ 254,678   

Enterprise revenue

     8,237        8,041        29,537        21,750   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     102,305        78,816        369,658        276,428   

Cost of services

     26,284        22,189        100,249        79,916   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     76,021        56,627        269,409        196,512   

Expenses:

        

Sales and marketing

     37,240        31,558        162,891        122,989   

Technology and development

     10,819        8,607        40,947        29,543   

General and administrative

     11,910        8,795        44,070        24,629   

Amortization of acquired intangible assets

     2,011        1,967        7,909        6,258   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     61,980        50,927        255,817        183,419   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     14,041        5,700        13,592        13,093   

Other income (expense):

        

Interest expense

     (125     (1,538     (353     (3,677

Interest income

     49        24        124        30   

Change in fair value of warrant liabilities

     —          —          —          3,117   

Change in fair value of embedded derivative

     —          —          —          (2,785

Other

     (10     (2     (21     (5
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     (86     (1,516     (250     (3,320
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

     13,955        4,184        13,342        9,773   

Income tax (benefit) expense

     (39,251     104        (39,109     (13,730
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     53,206        4,080        52,451        23,503   

Accretion of convertible redeemable preferred stock

     —          (419     —          (9,378

Beneficial conversion feature on convertible redeemable preferred stock

     —          (2,452     —          (2,452

Net income allocable to convertible redeemable preferred stockholders

     —          (55     —          (5,504
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

   $ 53,206      $ 1,154      $ 52,451      $ 6,169   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available per share to common stockholders:

        

Basic

   $ 0.58      $ 0.01      $ 0.59      $ 0.18   

Diluted

   $ 0.54      $ 0.01      $ 0.55      $ 0.09   

Weighted-average common shares outstanding:

        

Basic

     90,997        85,458        88,636        35,082   

Diluted

     97,681        90,839        95,946        62,191   


LifeLock, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

     December 31,
2013
    December 31,
2012
 
      

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 123,911      $ 134,197   

Marketable securities

     48,688        —     

Trade and other receivables, net

     10,906        7,560   

Deferred tax asset

     13,117        —     

Prepaid expenses and other current assets

     6,961        5,753   
  

 

 

   

 

 

 

Total current assets

     203,583        147,510   

Property and equipment, net

     16,504        9,701   

Goodwill

     156,120        129,428   

Intangible assets, net

     47,213        51,242   

Deferred tax asset – non current

     38,018        —     

Other non-current assets

     1,812        1,707   
  

 

 

   

 

 

 

Total assets

   $ 463,250      $ 339,588   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 2,422      $ 1,151   

Accrued expenses and other liabilities

     34,926        27,329   

Deferred revenue

     119,106        90,877   
  

 

 

   

 

 

 

Total current liabilities

     156,454        119,357   

Other non-current liabilities

     4,640        265   
  

 

 

   

 

 

 

Total liabilities

     161,094        119,622   

Commitments and contingencies

    

Stockholders’ equity:

    

Common stock

     91        87   

Additional paid-in capital

     469,636        439,883   

Accumulated other comprehensive loss

     (18     —     

Accumulated deficit

     (167,553     (220,004
  

 

 

   

 

 

 

Total stockholders’ equity

     302,156        219,966   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 463,250      $ 339,588   
  

 

 

   

 

 

 


LifeLock, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

     Twelve Months Ended
December 31,
 
     2013     2012  

Operating activities

    

Net income

   $ 52,451      $ 23,503   

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

    

Depreciation and amortization

     12,796        10,427   

Write-off of deferred financing costs from early payoff of debt

     —          1,443   

Share-based compensation

     14,700        6,758   

Provision for doubtful accounts

     231        46   

Change in fair value of warrant liabilities

     —          (3,117

Change in fair value of embedded derivative

     —          2,785   

Deferred income tax benefit

     (39,197     (14,185

Other

     344        5   

Change in operating assets and liabilities:

    

Trade and other receivables

     (3,127     (2,766

Prepaid expenses and other current assets

     (1,080     1,334   

Other non-current assets

     328        (1,305

Accounts payable

     518        (2,945

Accrued expenses and other liabilities

     6,920        5,913   

Deferred revenue

     28,115        20,782   

Other non-current liabilities

     4,374        (255
  

 

 

   

 

 

 

Net cash provided by operating activities

     77,373        48,423   

Investing activities

    

Acquisitions, net of cash acquired

     (42,369     (157,430

Acquisition of property and equipment

     (10,417     (7,498

Purchases of marketable securities

     (50,775     —     

Sales and maturities of marketable securities

     1,353        —     

Decrease in restricted cash

     —          1,748   
  

 

 

   

 

 

 

Net cash used in investing activities

     (102,208     (163,180

Financing activities

    

Proceeds from:

    

Term loan

     —          68,000   

Initial public offering, net of offering costs

     —          125,663   

Issuance of convertible redeemable preferred stock, net of offering costs

     —          102,165   

Issuance of warrants

     —          4,373   

Stock based compensation plans

     15,425        298   

Payments for:

    

Term loan

     —          (68,000

Distribution to Series E-1 Preferred Stock Holders on IPO

     —          (10,719

Employee tax withholding related to restricted stock units

     (436     —     

Debt issuance costs related to credit facilities

     (440     (1,676
  

 

 

   

 

 

 

Net cash provided by financing activities

     14,549        220,104   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (10,286     105,347   

Cash and cash equivalents at beginning of period

     134,197        28,850   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 123,911      $ 134,197   
  

 

 

   

 

 

 


Share-Based Compensation

(in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2013      2012      2013      2012  

Cost of services

   $ 320       $ 211       $ 942       $ 648   

Sales and marketing

     576         341         1,868         1,053   

Technology and development

     1,364         503         3,757         1,711   

General and administrative

     2,170         1,709         8,133         3,346   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total share-based compensation expense

   $ 4,430       $ 2,764       $ 14,700       $ 6,758   
  

 

 

    

 

 

    

 

 

    

 

 

 

Key Financial and Operating Metrics

(in thousands except percentages and per member data)

(Unaudited)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2013     2012     2013     2012  

Consumer revenue

   $ 94,068      $ 70,775      $ 340,121      $ 254,678   

Enterprise revenue

     8,237        8,041        29,537        21,750   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

   $ 102,305      $ 78,816      $ 369,658      $ 276,428   

Adjusted net income

   $ 21,518      $ 8,936      $ 36,931      $ 22,720   

Adjusted EBITDA

   $ 22,851      $ 11,404      $ 42,156      $ 30,996   

Free cash flow

   $ 20,393      $ 3,710      $ 66,956      $ 40,925   

Cumulative ending members

     2,999        2,480        2,999        2,480   

Gross new members

     246        198        944        762   

Member retention rate

     87.8     87.1     87.8     87.1

Average cost of acquisition per member

   $ 139      $ 142      $ 160      $ 150   

Monthly average revenue per member

   $ 10.72      $ 9.68      $ 10.32      $ 9.28   

Enterprise transactions

     56,879        64,265        216,729        227,039   


Reconciliation of GAAP to Adjusted Results

(in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2013     2012     2013     2012  

Reconciliation of Gross Profit to Adjusted Gross Profit

  

   

Gross profit

   $ 76,021      $ 56,627      $ 269,409      $ 196,512   

Share-based compensation

     320        211        942        648   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted gross profit

   $ 76,341      $ 56,838      $ 270,351      $ 197,160   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Sales and Marketing Expenses to Adjusted Sales and Marketing Expenses

        

Sales and marketing expenses

   $ 37,240      $ 31,558      $ 162,891      $ 122,989   

Share-based compensation

     (576     (341     (1,868     (1,053
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted sales and marketing expenses

   $ 36,664      $ 31,217      $ 161,023      $ 121,936   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Technology and Development Expenses to Adjusted Technology and Development Expenses

        

Technology and development expenses

   $ 10,819      $ 8,607      $ 40,947      $ 29,543   

Acquisition related expenses

     (43     —          (43     —     

Share-based compensation

     (1,364     (503     (3,757     (1,711
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted technology and development expenses

   $ 9,412      $ 8,104      $ 37,147      $ 27,832   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of General and Administrative Expenses to Adjusted General and Administrative Expenses

        

General and administrative expense

   $ 11,910      $ 8,795      $ 44,070      $ 24,629   

Acquisition related expenses

     (1,025     —          (1,025     (718

Share-based compensation

     (2,170     (1,709     (8,133     (3,346
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted general and administrative expense

   $ 8,715      $ 7,086      $ 34,912      $ 20,565   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Income from Operations to Adjusted Income from Operations

        

Income from operations

   $ 14,041      $ 5,700      $ 13,592      $ 13,093   

Acquisition related expenses

     1,068        —          1,068        718   

Share-based compensation

     4,430        2,764        14,700        6,758   

Amortization of acquired intangible assets

     2,011        1,967        7,909        6,258   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income from operations

   $ 21,550      $ 10,431      $ 37,269      $ 26,827   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Income to Adjusted Net Income

        

Net income

   $ 53,206      $ 4,080      $ 52,451      $ 23,503   

Amortization of acquired intangible assets

     2,011        1,967        7,909        6,258   

Share-based compensation

     4,430        2,764        14,700        6,758   

Change in fair value of warrant liabilities

     —          —          —          (3,117

Change in fair value of embedded derivative

     —          —          —          2,785   

Acquisition expenses

     1,068        —          1,068        718   

Deferred income tax benefit

     (39,197     125        (39,197     (14,185
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 21,518      $ 8,936      $ 36,931      $ 22,720   
  

 

 

   

 

 

   

 

 

   

 

 

 


     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2013     2012     2013     2012  

Reconciliation of Diluted Shares to Adjusted Diluted Shares

        

Diluted shares

     97,681        90,839        95,946        62,191   

Assumed preferred stock conversion

     —          1,335        —          8,770   

Dilutive securities excluded due to net loss available for distribution

     —          —          —          3,586   

Other dilutive equity awards excluded

     —          —          —          (1,972
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted shares

     97,681        92,174        95,946        72,575   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share

        

Net Income per share

   $ 0.54      $ 0.01      $ 0.55      $ 0.09   

Net income attributable to participating securities

     —          0.03        —          0.25   

Adjustments to net income

     (0.32     0.06        (0.17     (0.02

Adjustments to diluted shares

     —          —          —          (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per share

   $ 0.22      $ 0.10      $ 0.38      $ 0.31   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Income to Adjusted EBITDA

        

Net income (loss)

   $ 53,206      $ 4,080      $ 52,451      $ 23,503   

Depreciation and amortization

     3,312        2,940        12,796        10,427   

Share-based compensation

     4,430        2,764        14,700        6,758   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

     125        1,538        353        3,677   

Interest income

     (49     (24     (124     (30

Change in fair value of warrant liabilities

     —          —          —          (3,117

Change in fair value of embedded derivatives

     —          —          —          2,785   

Other expense

     10        2        21        5   

Acquisition expenses

     1,068        —          1,068        718   

Income tax (benefit) expense

     (39,251     104        (39,109     (13,730
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 22,851      $ 11,404      $ 42,156      $ 30,996   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

        

Net cash provided by operating activities

   $ 25,546      $ 7,702      $ 77,373      $ 48,423   

Acquisitions of property and equipment

     (5,153     (3,992     (10,417     (7,498
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 20,393      $ 3,710      $ 66,956      $ 40,925