Pluralsight Announces Fourth Quarter and Year End 2018 Results
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Pluralsight Announces Fourth Quarter and Year End 2018 Results

SILICON SLOPES, Utah, Feb. 13, 2019 (GLOBE NEWSWIRE) -- Pluralsight, the enterprise technology skills company, today announced financial results for the fourth quarter and full year ended December 31, 2018.

“Pluralsight’s fourth quarter capped off a milestone year for the company, highlighted by strong customer additions and 42% revenue growth. We achieved our seventh consecutive quarter of greater than 50% growth in B2B billings, while continuing to demonstrate the inherent levers to profitability in our model,” said Aaron Skonnard, co-founder and CEO of Pluralsight.

Fourth Quarter Financial Highlights

Full Year 2018 Financial Highlights

For information regarding the non-GAAP financial measures discussed in this press release, please see the section titled “Non-GAAP Financial Measures.” Reconciliations between GAAP and non-GAAP financial measures are provided in the tables of this press release.

Financial Outlook

Pluralsight is providing the following financial guidance for the first quarter 2019, and the full year 2019:

First Quarter 2019 guidance:

Full Year 2019 guidance:

Guidance for non-GAAP financial measures excludes equity-based compensation, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions. Pluralsight has not reconciled its expectations as to adjusted pro forma net loss per share to their most directly comparable GAAP measures because certain items cannot be reasonably predicted. Accordingly, a reconciliation for expectations of adjusted pro forma net loss per share is not available without unreasonable effort.

Conference Call Information

Pluralsight will host a conference call for analysts and investors to discuss its fourth quarter and full year 2018 results and outlook for its first quarter and full year 2019, today at 2:30 p.m., Mountain time (4:30 p.m. Eastern time).

Date:February 13, 2019
Time:2:30 p.m. MT (4:30 p.m. ET)
Webcast:https://investors.pluralsight.com/
Dial-in number:(877) 350-6732 or (629) 228-0693, conference ID: 8291428
  

A live audio webcast of the conference call will also be accessible from the Pluralsight website at investors.pluralsight.com. A telephonic replay of the call will be available three hours after the call, will run for seven days, and may be accessed by dialing (855) 859-2056 or (404) 537-3406 and entering the passcode 8291428.

About Pluralsight

Pluralsight is an enterprise technology skills platform that delivers a unified, end-to-end learning experience for businesses across the globe. Through a subscription service, companies are empowered to move at the speed of technology, increasing proficiency, innovation and efficiency. Founded in 2004 and trusted by Fortune 500 companies, Pluralsight provides members with on-demand access to a digital ecosystem of learning tools, including adaptive skill tests, directed learning paths, expert-authored courses, interactive labs and analytics.  For more information, visit pluralsight.com.

Pluralsight and the Pluralsight logo are trademarks of Pluralsight, LLC in the United States and in jurisdictions throughout the world.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws that involve risks and uncertainties, including statements regarding our future financial and operating performance, including our financial outlook for the first quarter 2019, and the full year 2019. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: the pace of market adoption of cloud-based learning solutions; our ability to expand our course library and develop new platform features; competition; our ability to attract and retain customers; our ability to increase sales of subscriptions to our platform to customers; our ability to expand our sales and marketing capabilities; and general market, political, economic, and business conditions.

Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our final prospectus filed with the SEC on May 17, 2018 (File No. 333-224301), which is available on our website at investors.pluralsight.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

Key Business Metrics

Billings. Billings represents total revenue plus the change in deferred revenue in the period, as presented in our condensed consolidated statements of cash flows. Billings in any particular period represents amounts invoiced to customers and reflects subscription renewals and upsells to existing customers plus sales to new customers. We use billings to measure our ability to sell subscriptions to our platform to both existing and new customers. We use billings from business customers and our percentage of billings from business customers to measure and monitor our ability to sell subscriptions to our platform to business customers.

Non-GAAP Financial Measures

Pluralsight has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). Pluralsight uses the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, adjusted pro forma net loss, adjusted pro forma net loss per share, and free cash flow in analyzing its financial results and believes that the use of these metrics is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Pluralsight’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our historical non-GAAP financial measures to their most directly comparable GAAP measures have been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations.

Non-GAAP gross profit. We define non-GAAP gross profit as gross profit plus equity-based compensation, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions.

Non-GAAP gross margin. We define non-GAAP gross margin as non-GAAP gross profit divided by our revenue.

Non-GAAP operating loss. We define non-GAAP operating loss as loss from operations plus equity-based compensation, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions.

Adjusted pro forma net loss and adjusted pro forma net loss per share. We define adjusted pro forma net loss as net loss attributable to Pluralsight, Inc. adjusted for the reallocation of loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc. and further adjusted for equity-based compensation, amortization of acquired intangible assets, employer payroll taxes on employee stock transactions, and loss on debt extinguishment. We define adjusted pro forma net loss per share as adjusted pro forma net loss divided by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc.

Free cash flow. We define free cash flow as cash provided by (used in) operating activities less purchases of property and equipment and purchases of our content library.

PLURALSIGHT, INC.

Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

  Three Months Ended
December 31,		 Year Ended
December 31,
  2018 2017 2018 2017
Revenue $67,260  $47,408  $232,029  $166,824 
Cost of revenue(1)(2) 16,443  14,150  62,550  49,828 
Gross profit 50,817  33,258  169,479  116,996 
Operating expenses(1)(2):        
Sales and marketing 43,851  33,224  153,643  103,478 
Technology and content 18,953  15,314  65,998  49,293 
General and administrative 20,213  12,198  68,351  46,971 
Total operating expenses 83,017  60,736  287,992  199,742 
Loss from operations (32,200) (27,478) (118,513) (82,746)
Other (expense) income:        
Interest expense (350) (3,289) (6,826) (11,665)
Loss on debt extinguishment —  —  (4,085) (1,882)
Other income (expense), net 815  (43) 1,504  81 
Loss before income taxes (31,735) (30,810) (127,920) (96,212)
Provision for income taxes (158) (108) (664) (324)
Net loss $(31,893) $(30,918) $(128,584) $(96,536)
Less: Net loss attributable to non-controlling interests (16,633) —  (44,917) — 
Net loss attributable to Pluralsight, Inc. $(15,260) $(30,918) $(83,667) $(96,536)
Less: Accretion of Series A redeemable convertible preferred units —  (6,600) (176,275) (63,800)
Net loss attributable to common shares $(15,260) $(37,518) $(259,942) $(160,336)
Net loss per share, basic and diluted(3) $(0.24)   $(0.65)  
Weighted-average common shares used in computing basic and diluted net loss per share(3) 63,494    62,840   
           

(1) Includes equity-based compensation expense as follows:

  Three Months Ended
December 31,		 Year Ended
December 31,
  2018 2017 2018 2017
Cost of revenue $54  $5  $140  $20 
Sales and marketing 4,987  614  14,330  2,624 
Technology and content 2,908  477  8,747  1,966 
General and administrative 9,382  1,697  31,086  17,171 
Total equity-based compensation $17,331  $2,793  $54,303  $21,781 
                 

(2) Includes amortization of acquired intangible assets as follows:

  Three Months Ended
December 31,		 Year Ended
December 31,
  2018 2017 2018 2017
Cost of revenue $783  $2,082  $7,586  $7,008 
Sales and marketing —  238  389  721 
Technology and content 177  178  706  706 
General and administrative —  10  —  91 
Total amortization of acquired intangible assets $960  $2,508  $8,681  $8,526 
                 

(3) Represents net loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the periods following the reorganization transactions and Pluralsight, Inc.'s initial public offering.

PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)

Key Business Metrics

  Three Months Ended
December 31,		 Year Ended
December 31,
  2018 2017 2018 2017
Billings $100,624  $70,890  $293,583  $205,807 
Billings from business customers $87,141  $57,873  $248,159  $162,965 
% of billings from business customers 87% 82% 85% 79%
             

Non-GAAP Financial Measures

  Three Months Ended
December 31,		 Year Ended
December 31,
  2018 2017 2018 2017
Reconciliation of gross profit to non-GAAP gross profit:        
Gross profit $50,817  $33,258  $169,479  $116,996 
Equity-based compensation 54  5  140  20 
Amortization of acquired intangible assets 783  2,082  7,586  7,008 
Employer payroll taxes on employee stock transactions 16  —  16  — 
Non-GAAP gross profit $51,670  $35,345  $177,221  $124,024 
Gross margin 76% 70% 73% 70%
Non-GAAP gross margin 77% 75% 76% 74%
         
Reconciliation of loss from operations to non-GAAP operating loss:        
Loss from operations $(32,200) $(27,478) $(118,513) $(82,746)
Equity-based compensation 17,331  2,793  54,303  21,781 
Amortization of acquired intangible assets 960  2,508  8,681  8,526 
Employer payroll taxes on employee stock transactions 1,180  —  1,180  — 
Non-GAAP operating loss $(12,729) $(22,177) $(54,349) $(52,439)


Adjusted pro forma net loss per share        
Numerator:        
GAAP net loss attributable to common shares $(15,260) $(37,518) $(259,942) $(160,336)
Accretion of Series A redeemable convertible preferred units —  6,600  176,275  63,800 
Reallocation of net loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for Class A common stock (16,633) —  (44,917) — 
Equity-based compensation 17,331  2,793  54,303  21,781 
Amortization of acquired intangibles 960  2,508  8,681  8,526 
Employer payroll taxes on employee stock transactions 1,180  —  1,180  — 
Loss on debt extinguishment —  —  4,085  1,882 
Adjusted pro forma net loss $(12,422) $(25,617) $(60,335) $(64,347)
Denominator:        
Weighted-average shares of Class A common stock outstanding 63,494  —  39,426  — 
Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock 69,211  48,329  61,221  47,957 
Adjusted pro forma weighted-average common shares outstanding, basic and diluted 132,705  48,329  100,647  47,957 
         
Adjusted pro forma net loss per share $(0.09) $(0.53) $(0.60) $(1.34)


Reconciliation of net cash provided by (used in) operating activities to free cash flow:        
Net cash provided by (used in) operating activities $8,387  $(1,323) $(5,896) $(12,139)
Less: Purchases of property and equipment (2,220) (1,492) (8,796) (5,951)
Less: Purchases of content library (995) (613) (3,340) (2,382)
Free cash flow $5,172  $(3,428) $(18,032) $(20,472)
                 

PLURALSIGHT, INC.

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

  December 31,
  2018 2017
Assets    
Current assets:    
Cash and cash equivalents $194,306  $28,267 
Accounts receivable, net 63,436  38,229 
Prepaid expenses and other current assets 8,323  5,125 
Total current assets 266,065  71,621 
Property and equipment, net 31,641  22,457 
Content library, net 7,050  13,441 
Intangible assets, net 1,759  2,854 
Goodwill 123,119  123,119 
Restricted cash 16,765  210 
Other assets 1,064  2,718 
Total assets $447,463  $236,420 
Liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit    
Current liabilities:    
Accounts payable $7,160  $6,029 
Accrued expenses 32,047  26,514 
Accrued author fees 10,002  7,879 
Deferred revenue 157,695  103,107 
Total current liabilities 206,904  143,529 
Deferred revenue, net of current portion 14,886  8,194 
Long-term debt —  116,037 
Facility financing obligations 15,777  7,513 
Other liabilities 1,303  458 
Total liabilities 238,870  275,731 
Redeemable convertible preferred units —  405,766 
Stockholders' equity/members’ deficit:    
Preferred stock —  — 
Class A common stock 7  — 
Class B common stock 6  — 
Class C common stock 1  — 
Additional paid-in capital 452,576  — 
Accumulated other comprehensive (loss) income (41) 25 
Accumulated deficit (351,123) (445,102)
Total stockholders' equity attributable to Pluralsight, Inc./members' deficit 101,426  (445,077)
Non-controlling interests 107,167  — 
Total stockholders' equity/members' deficit 208,593  (445,077)
Total liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit $447,463  $236,420 
         

PLURALSIGHT, INC.

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

  Three Months Ended
December 31,		 Year Ended
December 31,
  2018 2017 2018 2017
Operating activities        
Net loss $(31,893) $(30,918) $(128,584) $(96,536)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
Depreciation of property and equipment 1,987  2,308  8,318  6,675 
Amortization of acquired intangible assets 960  2,508  8,681  8,526 
Amortization of course creation costs 556  412  1,993  1,462 
Equity-based compensation 17,331  2,793  54,303  21,781 
Provision for doubtful accounts 182  119  675  479 
Amortization of debt discount and debt issuance costs —  773  1,215  1,847 
Debt extinguishment costs —  —  4,197  931 
Deferred tax benefit (146) (83) (244) (83)
Other 153  63  153  63 
Changes in assets and liabilities:        
Accounts receivable (15,804) (13,403) (26,156) (16,123)
Prepaid expenses and other assets (492) 408  (3,482) (2,796)
Accounts payable 457  173  1,385  2,561 
Accrued expenses and other liabilities 1,061  9,239  7,973  17,960 
Accrued author fees 671  803  2,123  2,131 
Deferred revenue 33,364  23,482  61,554  38,983 
Net cash provided by (used in) operating activities 8,387  (1,323) (5,896) (12,139)
Investing activities        
Purchases of property and equipment (2,220) (1,492) (8,796) (5,951)
Purchases of content library (995) (613) (3,340) (2,382)
Net cash used in investing activities (3,215) (2,105) (12,136) (8,333)
Financing activities        
Proceeds from initial public offering, net of underwriting discounts and commissions —  —  332,080  — 
Payments of costs related to initial public offering —  (132) (7,083) (307)
Taxes paid related to net share settlement (16,827) —  (16,905) — 
Proceeds from issuance of common stock from employee equity plans 13,378  —  13,378  — 
Borrowings of long-term debt —  —  20,000  115,000 
Repayments of long-term debt —  —  (137,710) (85,000)
Payments of debt extinguishment costs —  —  (2,179) — 
Payments of debt issuance costs —  (17) (450) (854)
Payments to settle equity appreciation rights —  —  (325) — 
Proceeds from the issuance of common units, net of issuance costs —  1,263  —  4,399 
Redemption of incentive units —  (923) —  (3,724)
Other (4) (4) (17) (16)
Net cash (used in) provided by financing activities (3,453) 187  200,789  29,498 
Effect of exchange rate change on cash, cash equivalents, and restricted cash (27) 16  (163) 54 
Net increase (decrease) in cash, cash equivalents, and restricted cash 1,692  (3,225) 182,594  9,080 
Cash, cash equivalents, and restricted cash, beginning of period 209,379  31,702  28,477  19,397 
Cash, cash equivalents, and restricted cash, end of period $211,071  $28,477  $211,071  $28,477 
Reconciliation of cash, cash equivalents, and restricted cash:        
Cash and cash equivalents $194,306  $28,267  $194,306  $28,267 
Restricted cash 16,765  210  16,765  210 
Total cash, cash equivalents, and restricted cash $211,071  $28,477  $211,071  $28,477 
                 

Investor Relations Contact:
Mark McReynolds
Investor Relations
Pluralsight
801-784-9007
ir@pluralsight.com

Media Contact:

DJ Anderson
Communications/Press
Pluralsight
801-784-9007
dj@pluralsight.com

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