ACTIVE Network Reports Third Quarter 2013 Financial Results

SAN DIEGO--(BUSINESS WIRE)--

ACTIVE Network ACTV, the leader in cloud-based activity and participant management™ solutions, today announced its financial results for the third quarter ended September 30, 2013.

Q3 2013 Financial Highlights:

(All comparisons are made to the third quarter of 2012)

• Total net revenue up 8% to $117.5 million.
• Technology revenue increased 9% and constituted 89%, or $104.4 million, of total net revenue.
• Net registration revenue increased 9% to $79.0 million; registrations grew 6% and revenue per registration was up 2%.
• Marketing services revenue constituted 11%, or $13.1 million, of total net revenue.
• Net loss was $5.3 million, compared to net loss of $6.0 million.
• Adjusted EBITDA, a non-GAAP financial measure, was $16.4 million.
• Excluding charges related to transaction costs associated with ACTIVE Network entering into a definitive agreement to be acquired by Vista Equity Partners and management changes, Adjusted EBITDA was $19.5 million, up 27%.

“I am very pleased with our third quarter results,” said Jon Belmonte, Interim CEO of ACTIVE Network. “During the quarter, we entered into a definitive agreement to be acquired by Vista Equity Partners, which we believe will be a very positive event for stockholders and will help position us to further capitalize on the market opportunity.”

Q3 2013 Key Business Highlights

• Marquee customer highlights included wins from Run or Dye, Kentucky Derby Festival Marathon, Monterey County Parks (CA), Arkansas State Parks, and Informatica World 2014 and 2015.
• ACTIVE Network launched a new version of ACTIVE RegOnline™, the Company's entry-level online event-management solution. The new ACTIVE RegOnline makes it easier for event planners from Small and Mid-sized Businesses (SMBs) and associations, to plan, promote, and manage events of all sizes.
• ACTIVE Network saw a 5% increase in summer camping across U.S. Federal parks, 30+ states, and regional and private partners. Through ReserveAmerica.com, ACTIVE Network provides consumers with the ability to search and reserve from more than 210,000 campsites.

Merger Agreement with Vista Equity Partners

On September 28, 2013, ACTIVE Network entered into a definitive agreement to be acquired by affiliates of Vista Equity Partners (“Vista”), a leading private equity firm focused on investments in software, data and technology-enabled businesses, in a transaction valued at approximately $1.05 billion. Pursuant to the agreement, Vista has commenced a tender offer to acquire all of the outstanding shares of ACTIVE Network's common stock for $14.50 per share, in cash, payable without interest and less any applicable withholding taxes. Any shares not tendered in the offer will be acquired in a second-step merger at the same cash price as paid in the tender offer. The transaction is expected to close before the end of the fourth quarter of 2013. Upon the completion of the transaction, ACTIVE Network will become a privately held company.

Conference Call Information

Due to the previously announced merger agreement with Vista, ACTIVE Network will not host a conference call in conjunction with today's release of its third quarter 2013 results and will not be updating prior financial guidance or providing financial guidance for future periods.

About ACTIVE Network

ACTIVE Network ACTV is on a mission to make the world a more active place. With deep expertise in activity and participant management™, 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 ~55,000 global business customers and driving ~90 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 and improve its operations, 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, the effects of the Company's recent management change, and the Company's ability to successfully consider and evaluate its strategic alternatives, 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. This press release also contains forward-looking statements with respect to the tender offer and related transactions, including the benefits expected from the acquisition and the expected timing of the completion of the transaction. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risks, including uncertainties regarding the timing of the closing of the transaction, uncertainties as to the number of the Company's stockholders who may tender their stock in the tender offer, the possibility that various closing conditions for the transaction may not be satisfied or waived, and general economic and business conditions. Factors that could cause actual results of the tender offer to differ materially include the following: the risk of failing to satisfy conditions to the transaction, the risk that Vista is unable to obtain adequate financing, the risk that the transaction will not close or that closing will be delayed, the risk that the Company's business will suffer due to uncertainty related to the transaction, the competitive environment in the Company's industry and competitive responses to the transaction. 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.

© 2013 The Active Network, Inc. All rights reserved. ACTIVE.com, ACTIVE Works and StarCite 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.

Notice to Investors

This press release is not a recommendation, an offer to purchase or a solicitation of an offer to sell shares of ACTIVE Network's common stock. The solicitation and the offer to purchase shares of ACTIVE Network's common stock described in this press release will be made only pursuant to the offer to purchase and related materials that Vista has filed on Schedule TO with the SEC. In addition, ACTIVE Network has filed its recommendation of the tender offer on Schedule 14D-9 with the SEC. Additionally, ACTIVE Network and Vista will file other relevant materials in connection with the proposed acquisition of ACTIVE Network by Vista pursuant to the terms of the merger agreement. INVESTORS AND STOCKHOLDERS OF ACTIVE NETWORK ARE ADVISED TO READ THE SCHEDULE TO (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SCHEDULE 14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BEFORE MAKING ANY DECISION WITH RESPECT TO THE TENDER OFFER, BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO.

Investors and stockholders may obtain free copies of the Schedule TO and Schedule 14D-9, as each may be amended or supplemented from time to time, and other documents filed by the parties (when available), at the SEC's web site at www.sec.gov or by contacting the investor relations department of ACTIVE Network at 10182 Telesis Court, San Diego, California 92121, by telephone at (858) 964-3834 or by email at PR@activenetwork.com.

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,
					2013						2012						2013						2012
Net Revenue:
Technology revenue					$	104,407					$	96,170					$	318,870					$	288,445
Marketing services revenue						13,128						13,049						37,036						36,776
Total net revenue						117,535						109,219						355,906						325,221
Cost of net revenue:
Cost of technology revenue						50,896						45,571						156,355						142,038
Cost of marketing services revenue						916						1,826						3,131						5,257
Total cost of net revenue						51,812						47,397						159,486						147,295
Gross profit						65,723						61,822						196,420						177,926
Operating expenses:
Sales and marketing						25,307						24,154						79,281						73,462
Research and development						20,703						20,624						63,375						62,954
General and administrative						20,441						15,862						61,980						49,309
Amortization of intangibles						3,956						5,492						12,396						16,780
Total operating expenses						70,407						66,132						217,032						202,505
Loss from operations						(4,684	)					(4,310	)					(20,612	)					(24,579	)
Interest income						13						23						44						73
Interest expense						(151	)					(239	)					(486	)					(480	)
Other income (expense), net						431						486						(592	)					1,363
Loss before provision for income taxes						(4,391	)					(4,040	)					(21,646	)					(23,623	)
Provision for income taxes						904						1,982						3,349						5,062
Net loss					$	(5,295	)				$	(6,022	)				$	(24,995	)				$	(28,685	)
Net loss per share:
Basic and diluted					$	(0.08	)				$	(0.10	)				$	(0.40	)				$	(0.49	)
Weighted-average shares:
Basic and diluted						62,757						59,444						61,718						58,259

THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
					September 30,						December 31,
					2013						2012
					(Unaudited)
Assets
Current assets:
Cash and cash equivalents					$	103,330					$	58,493
Restricted cash						308						1,145
Registration receivable						22,580						16,260
Accounts receivable, net						51,774						51,363
Inventories						3,918						4,809
Prepaid expenses and other current assets						10,548						8,922
Total current assets						192,458						140,992
Property and equipment, net						42,500						41,236
Software development costs, net						49,073						51,151
Goodwill						242,869						243,716
Intangible assets, net						46,564						62,806
Other long-term assets						2,600						2,569
Total assets					$	576,064					$	542,470
Liabilities and stockholders' equity
Current liabilities:
Accounts payable					$	3,107					$	8,174
Registration fees payable						88,125						61,272
Accrued expenses						51,669						38,865
Deferred revenue						69,715						66,846
Capital lease obligations, current portion						2,278						2,774
Other current liabilities						3,495						4,373
Total current liabilities						218,389						182,304
Capital lease obligations, net of current portion						1,088						2,462
Other long-term liabilities						5,690						6,192
Deferred tax liability						21,427						19,065
Total liabilities						246,594						210,023
Stockholders' equity:
Common stock						64						62
Treasury stock						(11,959	)					(11,959	)
Additional paid-in capital						676,592						653,694
Accumulated other comprehensive income						8,052						8,934
Accumulated deficit						(343,279	)					(318,284	)
Total stockholders' equity						329,470						332,447
Total liabilities and stockholders' equity					$	576,064					$	542,470

THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
					Nine Months Ended
					September 30,
					2013						2012
Operating activities
Net loss					$	(24,995	)				$	(28,685	)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization of property and equipment						30,311						23,995
Amortization of intangible assets						15,970						21,132
Stock-based compensation expense						19,086						11,992
Deferred tax liability						2,391						3,046
Other non-cash items						(935	)					(2,431	)
Change in operating assets and liabilities, net of effect of acquisitions:
Restricted cash						837						627
Registration receivable						(6,321	)					(4,274	)
Accounts receivable						(453	)					(2,483	)
Inventories						891						(1,831	)
Prepaid expenses and other assets						(1,680	)					(2,692	)
Accounts payable and accrued expenses						10,884						3,416
Registration fees payable						26,854						252
Deferred revenue						3,105						13,914
Other liabilities						(329	)					1,170
Net cash provided by operating activities						75,616						37,148
Investing activities
Purchases of property and equipment						(16,690	)					(12,665	)
Capitalized software development						(16,266	)					(17,194	)
Cash paid for acquisitions, net of cash acquired						-						(38,037	)
Net cash used in investing activities						(32,956	)					(67,896	)
Financing activities
Proceeds from issuance of common stock						5,444						9,247
Payments on capital lease obligations						(1,869	)					(3,552	)
Payments of employee tax witholdings from equity transactions						(1,896	)					-
Proceeds (repayment) of long-term debt						-						(5,000	)
Net cash provided by financing activities						1,679						695
Effect of exchange rates on cash						498						(147	)
Net increase (decrease) in cash and cash equivalents						44,837						(30,200	)
Cash and cash equivalents at beginning of period						58,493						108,699
Cash and cash equivalents at end of period					$	103,330					$	78,499

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,												%
						2013						2012						change					2013						2012						change
Net registration revenue						$	78,957					$	72,703					9	%				$	241,768					$	220,076					10	%
Registrations							26,840						25,207					6	%					74,716						71,466					5	%
Net registration revenue per registration						$	2.94					$	2.88					2	%				$	3.24					$	3.08					5	%
GAAP and Non-GAAP Gross Profit Margin:						Three Months Ended												% or					Nine Months Ended												% or
						September 30,												bps					September 30,												bps
						2013						2012						change					2013						2012						change
Total net revenue						$	117,535					$	109,219					8	%				$	355,906					$	325,221					9	%
GAAP gross profit						$	65,723					$	61,822					6	%				$	196,420					$	177,926					10	%
Add back: stock-based compensation							174						222											457						474
Add back: depreciation & amortization							10,166						8,060											29,766						23,728
Non-GAAP gross profit						$	76,063					$	70,104					9	%				$	226,643					$	202,128					12	%
Gross profit margin:
GAAP gross profit margin							55.9	%					56.6	%				(70) bps						55.2	%					54.7	%				50 bps
Non-GAAP gross profit margin							64.7	%					64.2	%				50 bps						63.7	%					62.2	%				150 bps
Stock-Based Compensation Expense:						Three Months Ended																	Nine Months Ended
						September 30,																	September 30,
						2013						2012											2013						2012
Cost of net revenue						$	174					$	222										$	457					$	474
Sales and marketing							1,242						1,007											2,833						2,709
Research and development							674						662											1,683						1,782
General and administrative							3,544						2,770											14,113						7,027
Total stock-based compensation (1)						$	5,634					$	4,661										$	19,086					$	11,992

(1)		Management change costs included $0.6 million in stock-based compensation in the three months ended September 30, 2013, and $6.3 million in stock-based compensation in the nine months ended September 30, 2013 associated with the May and July 3013 separation agreements for the company's former Executive Chairman and Chairman of the Board, Chief Executive Officer, and Chief Legal Officer.

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,
						2013						2012						2013						2012
Non-GAAP net income (loss):
GAAP net loss						$	(5,295	)				$	(6,022	)				$	(24,995	)				$	(28,685	)
Add back: stock-based compensation (1)							5,634						4,661						19,086						11,992
Add back: amortization of intangibles							5,137						6,900						15,970						21,132
Income tax effect							(3,770	)					(4,046	)					(12,270	)					(11,593	)
Non-GAAP net income (loss)						$	1,706					$	1,493					$	(2,209	)				$	(7,154	)
Add back: management change and deal costs (1)							3,100						-						4,800						-
Income tax effect							(1,085	)					-						(1,680	)					-
Non-GAAP net income (loss) excluding
management change and deal costs						$	3,721					$	1,493					$	911					$	(7,154	)
Weighted-average shares:
Basic							62,757						59,444						61,718						58,259
Diluted							67,941						64,708						65,666						58,259
Non-GAAP net income (loss) per share:
Basic						$	0.03					$	0.03					$	(0.04	)				$	(0.12	)
Diluted						$	0.03					$	0.02					$	(0.04	)				$	(0.12	)
Non-GAAP net income (loss) per share excluding
management change and deal costs:
Basic						$	0.06					$	0.03					$	0.01					$	(0.12	)
Diluted						$	0.05					$	0.02					$	0.01					$	(0.12	)
Adjusted EBITDA:						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2013						2012						2013						2012
Net loss						$	(5,295	)				$	(6,022	)				$	(24,995	)				$	(28,685	)
Add back: interest expense, net							138						216						442						407
Add back: provision for income taxes							904						1,982						3,349						5,062
Add back: depreciation and amortization							15,422						15,033						46,281						45,127
Add back: stock-based compensation (1)							5,634						4,661						19,086						11,992
Add back: other (income) expense, net							(431	)					(486	)					592						(1,363	)
Adjusted EBITDA						$	16,372					$	15,384					$	44,755					$	32,540
Add back: management change and deal costs (1)							3,100						-						4,800						-
Adjusted EBITDA excluding management change and deal costs						$	19,472					$	15,384					$	49,555					$	32,540

(1)		Management change costs included $0.6 million in stock-based compensation and $0.4 million in other costs in the three months ended September 30, 2013, and $6.3 million in stock-based compensation and $1.9 million in other costs in the nine months ended September 30, 2013 associated with the May and July 2013 separation agreements for the company's former Executive Chairman and Chairman of the Board, Chief Executive Officer, and Chief Legal Officer. Deal costs included $2.7 million for banking, accounting and legal costs in the three months ended September 30, 2013 and $2.9 million in the nine months ended September 30, 2013.