Market Overview

ACTIVE Network Reports Third Quarter 2012 Financial Results

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SAN DIEGO--(BUSINESS WIRE)--

ACTIVE Network (NYSE: ACTV), the leader in cloud-based Activity and Participant Management™ (APM) solutions, today announced its financial results for the third quarter ended September 30, 2012.

Q3 2012 Financial Highlights:

(All comparisons are made to the third quarter of 2011)

  • Total net revenue up 22% to $109.2 million.
  • Technology revenue increased 26% and constituted 88%, or $96.2 million, of total net revenue.
  • Net registration revenue increased 19% to $72.7 million with the number of registrations up 7% and the revenue per registration up 11%.
  • Marketing services revenue constituted 12%, or $13.0 million, of total net revenue.
  • Net loss was $6.0 million compared to a net loss of $1.4 million.
  • Adjusted EBITDA, a non-GAAP financial measure, was $15.4 million. Excluding the impact of business combination accounting rules related to deferred revenue, Adjusted EBITDA was $18.0 million, up 40%.

"We delivered strong third quarter results and continued to make progress expanding our customer base, driving innovation in our horizontal ActiveWorks® platform and penetrating new markets,” said Matt Landa, CEO of ACTIVE Network. “We added a number of new high profile customers, including NYSE Euronext, the Philadelphia Zoo, and The PGA of America. Additionally, we expanded our presence in the Outdoors market with the addition of Saskatchewan and Puerto Rico, who have agreed to implement our ActiveWorks platform to automate their respective hunting and fishing permitting operations.”

ACTIVE Network Executive Chairman, Dave Alberga, stated, “Looking ahead, we believe the organizational changes we recently implemented will help leverage the exceptional talent we have at ACTIVE, expand our capabilities and drive long-term growth. Our team will be laser focused on product innovation and sales execution.”

Q3 2012 Key Business Highlights

  • The NYSE EURONEXT selected ACTIVE to manage its corporate events with its leading event management solution.
  • ACTIVE entered into a partnership with The PGA of America to create a new online registration system for the PGA's nationwide “Get Golf Ready” campaign, which will allow PGA Professionals to promote their golf camps, tournaments and clinics via PGA.com and ACTIVE.com.
  • The Company announced that the Philadelphia Zoo has chosen its resorts and attractions technology solution to power its Zoo operations—from ticketing and point of sale to food and beverage sales.

Financial Outlook

Fourth Quarter 2012 - For the fourth quarter of 2012, ACTIVE Network expects total revenue to be in the range of $93 million to $97 million. Registrations are expected to grow approximately 5% to 10% and revenue per registration is expected to grow approximately 8% to 10% compared to the same period in the prior year. The Company expects Adjusted EBITDA in the range of $5 million to $7 million. Excluding the impact of business combination accounting rules, Adjusted EBITDA is expected to be in the range of $6.6 million to $8.6 million. The Company expects a net loss of $18 million to $13 million.

Full Year 2012 - For full year 2012, ACTIVE Network expects total revenue to be in the range of $418 million to $422 million. Registrations are expected to grow approximately 11% to 13% and revenue per registration is expected to grow approximately 6% to 8% compared to last year. The Company expects Adjusted EBITDA in the range of $37.5 million to $39.5 million. Excluding the impact of business combination accounting rules, Adjusted EBITDA is expected to be in the range of $50 million to $52 million. The Company expects a net loss of $47 million to $42 million.

Full Year 2013 - ACTIVE Network also introduced initial financial guidance for full year 2013. Total revenue is expected to be in the range of $470 million to $480 million and Adjusted EBITDA is expected to be in the range of $50 million to $54 million. The Company expects a net loss of $38 million to $31 million.

“We delivered strong third quarter revenue growth of 22%, gross margins expanded 110 basis points to 56.6% and Adjusted EBITDA came in at $15.4 million,” said Scott Mendel, CFO of ACTIVE Network. “Based on our year-to-date financial results and assumptions for the balance of the year, we believe it is appropriate to provide our 2013 forecast for revenue and Adjusted EBITDA at this time. Our outlook assumes overall growth rates of 12% to 14%, which is comparable to our expectations for 2012.”

Conference Call Information

ACTIVE Network will host a conference call to discuss third quarter 2012 results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The conference call dial-in number is (866) 788-0546 for domestic participants and (857) 350-1684 for international participants. A live webcast of the conference call will also be available and can be accessed within the investor relations section of the ACTIVE Network corporate website at: http://investors.ACTIVEnetwork.com.

A replay of the call will be available starting at 7:00 p.m. Eastern Time (4:00 p.m. Pacific Time) on November 1, 2012 through 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on November 8, 2012. To listen to the replay, dial (888) 286-8010 or (617) 801-6888 outside of the United States and use the passcode 83008684. The replay will also be available via webcast at: http://investors.activenetwork.com/.

About ACTIVE Network

ACTIVE Network (NYSE: ACTV) is on a mission to make the world a more active place. With deep expertise in Activity and Participant Management™ (APM), our ACTIVE Works® cloud technology helps organizations transform and grow their businesses. We do this through technology solutions that power the world's activities, as well as online destinations such as ACTIVE.com® that connect people with the things they love to do. Serving over 50,000 global business customers and driving over 80 million transactions annually, we help organizations get participants, manage their events and build communities. ACTIVE Network is headquartered in San Diego, California and has over 30 offices worldwide. Learn more at ACTIVEnetwork.com or ACTIVE.com and engage with us on Twitter @ACTIVEnetwork, @ACTIVE and on Facebook.

Note With Respect to Non-GAAP Financial Measures

In addition to using GAAP financial results, the Company's management measures and reports non-GAAP financial measures, including Adjusted EBITDA, Non-GAAP net income (loss) and Non-GAAP net income (loss) per share. The most directly comparable GAAP financial results for these non-GAAP financial measures are Net income (loss), Net income (loss) and Net income (loss) per share, respectively. Management uses these non-GAAP financial measures to evaluate the Company's performance and operations. Management also uses these non-GAAP financial measures for business planning, to evaluate acquisition opportunities and as a measurement to create incentives and to compensate the Company's management team. In addition, management believes the exclusion or inclusion of certain amounts in calculating these non-GAAP financial measures can provide a useful measure to investors for period-to-period comparisons. These non-GAAP financial measures, however, should be used in addition to, and in conjunction with, the Company's financial results presented in accordance with GAAP. The Company strongly encourages investors to review its financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare the Company's results with other companies' non-GAAP financial measures having the same or similar names. Please see Reconciliation of GAAP to Non-GAAP Results below for a reconciliation of our GAAP to non-GAAP financial measures.

Forward-Looking Statements

The Active Network, Inc. cautions you that the statements included in this press release that are not a description of historical facts are forward-looking statements within the meaning of the federal securities laws. Any such statements are subject to substantial risks and uncertainties, including the Company's ability to generate revenue and control expenses in order to achieve and maintain profitability, the Company's ability to maintain an adequate rate of growth, including growing its registrations and revenue from registrations, and the Company's ability to successfully manage its acquisitions and investments in businesses, applications and technologies, as well as the other risks detailed from time to time in the reports it files with the Securities and Exchange Commission. As a result of these risks and uncertainties, the Company's actual results may differ materially from those expressed in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement and the Company undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof.

© 2012 The Active Network, Inc. All rights reserved. ACTIVE.com and ActiveWorks are registered trademarks of The Active Network, Inc. ACTIVE Network is a trademark of The Active Network, Inc. All other trademarks are the property of their respective owners.

THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)


     
Three Months Ended Nine Months Ended
September 30, September 30,
  2012     2011     2012     2011  
Net Revenue:
Technology revenue $ 96,170 $ 76,341 $ 288,445 $ 225,002
Marketing services revenue   13,049     13,287     36,776     36,343  
Total net revenue 109,219 89,628 325,221 261,345
 
Cost of net revenue:
Cost of technology revenue 45,571 38,291 142,038 109,986
Cost of marketing services revenue   1,826     1,599     5,257     4,241  
Total cost of net revenue   47,397     39,890     147,295     114,227  
 
Gross profit 61,822 49,738 177,926 147,118
 
Operating expenses:
Sales and marketing 24,154 17,116 73,462 52,970
Research and development 20,624 17,628 62,954 50,181
General and administrative 15,862 11,737 49,309 34,633
Amortization of intangibles   5,492     3,669     16,780     11,090  
Total operating expenses   66,132     50,150     202,505     148,874  
 
Loss from operations (4,310 ) (412 ) (24,579 ) (1,756 )
 
Interest income 23 32 73 91
Interest expense (239 ) (109 ) (480 ) (2,799 )
Other income (expense), net   486     (33 )   1,363     109  
Loss before provision for income taxes (4,040 ) (522 ) (23,623 ) (4,355 )
Provision for income taxes   1,982     910     5,062     2,490  
Net loss (6,022 ) (1,432 ) (28,685 ) (6,845 )
Accretion of redeemable convertible preferred stock   -     -     -     (11,810 )
Net loss attributable to common stockholders $ (6,022 ) $ (1,432 ) $ (28,685 ) $ (18,655 )
 
Net loss per share attributable to common stockholders:
Basic and diluted $ (0.10 ) $ (0.03 ) $ (0.49 ) $ (0.62 )
 
Weighted-average shares used to compute net loss
per share attributable to common stockholders:
Basic and diluted   59,444     53,701     58,259     29,993  
THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

 
September 30, December 31,
  2012     2011  
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 78,499 $ 108,699
Restricted cash 875 1,502
Accounts receivable, net 73,806 66,469
Inventories 3,493 1,662
Prepaid expenses and other current assets   8,653     6,179  
Total current assets 165,326 184,511
 
Property and equipment, net 35,042 33,830
Software development costs, net 50,464 45,093
Goodwill 244,108 243,320
Intangible assets, net 69,648 90,340
Other long-term assets   2,310     2,133  
Total assets $ 566,898   $ 599,227  
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 8,063 $ 8,516
Registration fees payable 72,657 72,405
Accrued expenses 43,766 41,106
Deferred revenue 68,965 54,919
Current portion of long-term debt 5,000
Capital lease obligations, current portion 1,723 3,317
Other current liabilities   4,017     42,613  
Total current liabilities 199,191 227,876
 
Capital lease obligations, net of current portion 1,028 1,652
Other long-term liabilities 6,149 6,147
Deferred tax liability   20,047     16,913  
Total liabilities 226,415 252,588
 
Stockholders' equity:
Common stock 62 58
Treasury stock (11,959 ) (11,959 )
Additional paid-in capital 646,954 625,875
Accumulated other comprehensive income 9,369 7,923
Accumulated deficit   (303,943 )   (275,258 )
Total stockholders' equity   340,483     346,639  
Total liabilities and stockholders' equity $ 566,898   $ 599,227  
THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


 
Nine Months Ended
September 30,
  2012     2011  
Operating activities
Net loss $ (28,685 ) $ (6,845 )
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization of property and equipment 23,995 17,344
Amortization of intangible assets 21,132 15,310
Stock-based compensation expense 11,992 4,782
Deferred tax liability 3,046 1,824
Other non-cash items (2,431 ) 380
Change in operating assets and liabilities, net of effect of acquisitions:
Restricted cash 627 -
Accounts receivable (6,757 ) (27,223 )
Inventories (1,831 ) (1,102 )
Prepaid expenses and other assets (2,692 ) (396 )
Accounts payable and accrued expenses 3,416 2,925
Registration fees payable 252 35,505
Deferred revenue 13,914 18,089
Other liabilities   1,170     3,146  
Net cash provided by operating activities 37,148 63,739
Investing activities
Purchases of property and equipment (12,665 ) (8,991 )
Capitalized software development (17,194 ) (13,898 )
Cash paid for acquisitions, net of cash acquired (38,037 ) (4,082 )
Payment of contingent consideration   -     (625 )
Net cash used in investing activities (67,896 ) (27,596 )
Financing activities
Proceeds from issuance of common stock and repurchase of unvested common stock
9,247 3,059
Payments on capital lease obligations (3,552 ) (2,207 )
Proceeds from long-term debt 5,000 -
Repayment of long-term debt (10,000 ) (41,628 )
Net proceeds from initial public offering   -     112,566  
Net cash provided by financing activities 695 71,790
Effect of exchange rates on cash   (147 )   (351 )
Net (decrease) increase in cash and cash equivalents (30,200 ) 107,582
Cash and cash equivalents at beginning of period   108,699     31,441  
Cash and cash equivalents at end of period $ 78,499   $ 139,023  
THE ACTIVE NETWORK, INC.
SUPPLEMENTARY DATA
(In thousands, except revenue per registration)
(Unaudited)


           
 
Operational Data: Three Months Ended Nine Months Ended
September 30, % September 30, %
  2012     2011   change   2012     2011   change
Net registration revenue $ 72,703 $ 60,893 19 % $ 220,076 $ 182,067 21 %
Registrations 25,207 23,513 7 % 71,466 62,969 13 %
Net registration revenue per registration $ 2.88 $ 2.59 11 % $ 3.08 $ 2.89 7 %
 
 
GAAP and Non-GAAP Gross Profit Margin: Three Months Ended % or Nine Months Ended % or
September 30, bps September 30, bps
  2012     2011   change   2012     2011   change
Total net revenue $ 109,219 $ 89,628 22 % $ 325,221 $ 261,345 24 %
Add: impact of business combination accounting rules
  2,593     183     10,861     768  
Non-GAAP total net revenue $ 111,812 $ 89,811 24 % $ 336,082 $ 262,113 28 %
 
GAAP gross profit $ 61,822 $ 49,738 24 % $ 177,926 $ 147,118 21 %
Add back: stock-based compensation 222 52 474 107
Add back: depreciation & amortization 8,060 5,897 23,728 16,796
Add: impact of business combination accounting rules
  2,593     183     10,861     768  
Non-GAAP gross profit $ 72,697 $ 55,870 30 % $ 212,989 $ 164,789 29 %
 
Gross profit margin:
GAAP gross profit margin 56.6 % 55.5 % 110 bps 54.7 % 56.3 % (160) bps
Non-GAAP gross profit margin 65.0 % 62.2 % 280 bps 63.4 % 62.9 % 50 bps
 
 
Stock-Based Compensation Expense: Three Months Ended Nine Months Ended
September 30, September 30,
  2012     2011     2012     2011  
Cost of net revenue $ 222 $ 52 $ 474 $ 107
Sales and marketing 1,007 277 2,709 1,040
Research and development 662 315 1,782 636
General and administrative   2,770     1,326     7,027     2,999  
Total stock-based compensation $ 4,661   $ 1,970   $ 11,992   $ 4,782  
THE ACTIVE NETWORK, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share data)
(Unaudited)


       
 
Non-GAAP Earnings: Three Months Ended Nine Months Ended
September 30, September 30,
  2012     2011     2012     2011  
Non-GAAP net (loss) income:
GAAP net loss $ (6,022 ) $ (1,432 ) $ (28,685 ) $ (6,845 )
Add back: stock-based compensation 4,661 1,970 11,992 4,782
Add back: amortization of intangibles 6,900 5,063 21,132 15,310
Add: impact of business combination accounting rules 2,593 183 10,861 768
Income tax effect   (4,954 )   (2,526 )   (15,395 )   (7,301 )
Non-GAAP net (loss) income $ 3,178   $ 3,258   $ (95 ) $ 6,714  
 
Non-GAAP shares:
GAAP shares - basic 59,444 53,701 58,259 29,993
Add: preferred stock conversion   -     -     -     18,267  
Non-GAAP shares - basic   59,444     53,701     58,259     48,260  
 
GAAP shares - diluted 59,444 53,701 58,259 29,993
Add: preferred stock and other securities conversion   5,264     9,124     6,526     27,433  
Non-GAAP shares - diluted   64,708     62,825     64,785     57,426  
 
Non-GAAP net income per share:
Basic $ 0.05   $ 0.06   $ 0.00   $ 0.14  
Diluted $ 0.05   $ 0.05   $ 0.00   $ 0.12  
 
 
Adjusted EBITDA: Three Months Ended Nine Months Ended
September 30, September 30,
  2012     2011     2012     2011  
Net loss $ (6,022 ) $ (1,432 ) $ (28,685 ) $ (6,845 )
Add back: interest expense, net 216 77 407 2,708
Add back: provision for income taxes 1,982 910 5,062 2,490
Add back: depreciation and amortization 15,033 11,146 45,127 32,654
Add back: stock-based compensation 4,661 1,970 11,992 4,782
Add back: other (income) expense, net   (486 )   33     (1,363 )   (109 )
Adjusted EBITDA $ 15,384   $ 12,704   $ 32,540   $ 35,680  
Add: impact of business combination accounting rules   2,593     183     10,861     768  
Adjusted EBITDA excluding the impact of business combination accounting rules
$ 17,977   $ 12,887   $ 43,401   $ 36,448  
THE ACTIVE NETWORK, INC.
FUTURE PERFORMANCE - 2012 AND 2013 OUTLOOK
(In thousands, except per share data)

         
 
Estimated Estimated
4th Quarter 2012 Full Year 2012
Low End High End Low End High End
4th Quarter and Full Year 2012 Outlook
Reconciliation of GAAP to Non-GAAP Results:
Net loss $ (18,000 ) $ (13,000 ) $ (46,700 ) $ (41,700 )
Interest, taxes and other 2,000 1,000 6,100 5,100
Depreciation and amortization 16,000 15,000 61,100 60,100
Stock-based compensation   5,000     4,000     17,000     16,000  
Adjusted EBITDA $ 5,000   $ 7,000   $ 37,500   $ 39,500  
Add: impact of business combination accounting rules   1,600     1,600     12,500     12,500  
Adjusted EBITDA excluding the impact of
business combination accounting rules $ 6,600   $ 8,600   $ 50,000   $ 52,000  
 
Net Loss Per Share:
Net loss $ (18,000 ) $ (13,000 ) $ (46,700 ) $ (41,700 )
Weighted average shares - basic and diluted 60,700 61,000 58,800 59,000
Net loss per share - basic and diluted $ (0.30 ) $ (0.21 ) $ (0.79 ) $ (0.71 )
 
 
 
Estimated
Full Year 2013
Low End High End
Full Year 2013 Outlook
Reconciliation of GAAP to Non-GAAP Results:
Net loss $ (38,000 ) $ (31,000 )
Interest, taxes and other 6,000 5,000
Depreciation and amortization 60,000 59,000
Stock-based compensation   22,000     21,000  
Adjusted EBITDA $ 50,000   $ 54,000  
 
Net Loss Per Share:
Net loss $ (38,000 ) $ (31,000 )
Weighted average shares - basic and diluted 64,000 65,000
Net loss per share - basic and diluted $ (0.59 ) $ (0.48 )

Media:
ACTIVE Network
Mona Klausing, 858-964-3813
Mona.Klausing@ACTIVENetwork.com
or
Investor:
The Blueshirt Group
Christine Greany, 858-523-1732
christine@blueshirtrgroup.com







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