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Actua Announces Fourth Quarter and Full-Year 2016 Financial Results

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RADNOR, Pa., March 09, 2017 (GLOBE NEWSWIRE) -- Actua Corporation (NASDAQ:ACTA) ("Actua") today reported its results for the fourth quarter and year ended December 31, 2016.

2016 Highlights

  • Sold GovDelivery, resulting in proceeds to Actua of approximately $133 million and related gain of $124 million
  • Repurchased 5.6 million shares of Actua stock in 2016 for $73.7 million, including 4.6 million shares for approximately $64 million ($14.00 per share) through a modified "Dutch auction" tender offer
  • Completed three strategic tuck-in acquisitions, two at VelocityEHS and one at FolioDynamix, and expanded the capabilities of our businesses through significant technology enhancements

"The accelerating revenue and bookings growth we experienced in the second half of 2016 positions us for strong revenue growth in 2017," said Walter Buckley, CEO of Actua. "We believe that this revenue growth, coupled with ongoing improvement in operating leverage, will continue to drive long-term stockholder value."

Revenue was $29.3 million for the fourth quarter of 2016, up from $25.5 million for the fourth quarter of 2015.  Net income attributable to Actua for the fourth quarter of 2016 was $107.2 million, or $2.94 per diluted share, compared to net loss attributable to Actua of $(52.2) million, or $(1.40) per diluted share, for the comparable prior year quarter.  During the three months ended December 31, 2016, Actua's results were positively impacted by the gain associated with the GovDelivery sale of approximately $124 million.  Non-GAAP net loss for the fourth quarter of 2016 was $(2.2) million, or $(0.06) per diluted share, which was consistent with a non-GAAP net loss of $(2.2) million, or $(0.06) per diluted share, for the comparable prior year quarter.  Cash flow from operations was a source of $3.0 million for the fourth quarter of 2016, compared to a use of $(0.3) million for the fourth quarter of 2015.

Revenue was $109.3 million for the year ended December 31, 2016, up from $98.4 million for the prior year.  Net income attributable to Actua for the year ended December 31, 2016 was $70.1 million, or $1.91 per diluted share, compared to a net loss attributable to Actua of $(96.1) million, or $(2.59) per diluted share, for 2015.  Net income for the year ended December 31, 2016 was positively impacted by the GovDelivery gain referenced above.  Net loss for the year ended December 31, 2015 was negatively impacted by a $39.7 million non-cash goodwill impairment charge.  Non-GAAP net loss for the year ended December 31, 2016 was $(9.7) million, or $(0.26) per diluted share, compared to a non-GAAP net loss of $(7.2) million, or $(0.19) per diluted share, for 2015.  Cash flow from operations was a use of $(4.2) million for the year ended December 31, 2016, compared to a use of ($4.5) million for the year ended December 31, 2015.

2017 Guidance

Actua expects 2017 annual GAAP revenue in the range of between $125 million and $130 million, representing a range of between 14% and 19% growth from 2016.  Actua expects annual GAAP cash flow from operations in the range of between a use of $(2.0) million and a source of $2.0 million.  Non-GAAP net income (loss) per share is expected to be in the range of between $(0.10) and $(0.15) per diluted share for 2017, based on 32.5 million shares assumed diluted shares outstanding for 2017.

"Given the progress we made in 2016, and looking ahead to the coming year, share repurchases continue to be an important focus of our capital allocation strategy," said R. Kirk Morgan, CFO of Actua.  "From January 1 through March 8, 2017, we deployed an additional $7.0 million to repurchase over 500,000 shares and approximately $53.8 million remains available under our $189.8 million share repurchase program.  We expect to continue to opportunistically repurchase our shares through the remainder of 2017."

A reconciliation of the non-GAAP financial measures used above with the most comparable GAAP financial measures is included with the financial tables at the end of this release.

Please see Actua's website at www.actua.com for more information on Actua, its businesses and its fourth quarter 2016 results.

Actua will host a webcast at 10:00 a.m. ET today to discuss its financial results.  As part of the live webcast for this call, Actua will post a slide presentation to accompany the prepared remarks.  To access the webcast, go to www.actua.com/investors/events-presentations/ and click on the webcast link.  Please log on to the website approximately ten minutes prior to the call to register and download any necessary audio software.  The conference call is also accessible through listen-only mode by dialing 800.708.4540 or 847.619.6397.  The passcode is 44194744.

For those unable to participate in the conference call, a replay will be available from March 9, 2017 at 12:30 p.m. ET until March 16, 2017 at 11:59 p.m. ET.  To access the replay, dial 888.843.7419 or 630.652.3042.  The passcode is 44194744#.  The replay and slide presentation also can be accessed in the investor relations section of the Actua website at www.actua.com/investors/events-presentations/.

About Actua
Actua Corporation (NASDAQ:ACTA), the multi-vertical cloud company, brings the power of the cloud to vertical markets and processes.  Actua is pioneering the second wave of the SaaS revolution - the vertical wave - by growing cloud businesses that are transforming their markets.  With over 700 employees delivering unrivaled domain knowledge, agility and responsiveness to our customers, Actua's rapidly growing vertical cloud businesses are positioned to lead this wave.  For the latest information about Actua and its brands, please go to www.actua.com.

Safe Harbor Statement under Private Securities Litigation Reform Act of 1995

The statements contained in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements involve certain risks and uncertainties, including, but not limited to, risks associated with our ability to compete successfully in highly-competitive, rapidly-developing markets, the valuation of public and private cloud-based businesses by analysts, investors and other market participants, our ability to deploy capital effectively and on acceptable terms, the effect of economic conditions generally, capital spending by our customers, our ability to retain existing customer relationships and revenue streams and secure new ones, developments in the markets in which we operate and our ability to respond to those changes in a timely and effective manner, the availability, performance and security of our cloud-based technology, particularly in light of increased cybersecurity risks and concerns, our ability to retain key personnel, our ability to successfully integrate any acquired business, the impact of any potential acquisitions, dispositions, share repurchases or other strategic transactions, our ability to have continued access to capital and to manage capital resources effectively, and other risks and uncertainties detailed in Actua's filings with the U.S. Securities and Exchange Commission.  These and other factors may cause actual results to differ materially from those projected.

 Actua Corporation
 Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                       
          Three Months Ended
 December 31,
  Twelve Months Ended
December 31,
          2016   2015   2016   2015
                       
 Revenue       $ 29,324     $ 25,475     $ 109,301     $ 98,432  
                       
 Operating expenses                  
   Cost of revenue (a)     7,735     6,887     29,186     27,420  
   Sales and marketing (a)     9,946     8,921     40,807     35,832  
   General and administrative (a)     12,010     13,627     46,936     54,516  
   Research and development (a)     5,536     4,619     21,642     18,996  
   Amortization of intangibles     3,652     3,303     14,384     13,449  
   Impairment related and other     375     39,787     768     40,769  
    Total operating expenses     39,254     77,144     153,723     190,982  
   Operating income (loss)     (9,930 )   (51,669 )   (44,422 )   (92,550 )
                       
 Other income (expense):                  
   Other income (loss), net     131     204     2,857     1,741  
   Interest income     165     43     283     126  
   Interest expense     (3 )   (93 )   (96 )   (197 )
       
 Income (loss) before income taxes and discontinued operations   (9,637 )   (51,515 )   (41,378 )   (90,880 )
                       
 Income tax benefit (expense)     13,501     (89 )   13,210     (293 )
                       
 Income (loss) from continuing operations   3,864     (51,604 )   (28,168 )   (91,173 )
 Income (loss) from discontinued operations   102,019     (2,140 )   94,017     (9,172 )
 Net income (loss)     105,883     (53,744 )   65,849     (100,345 )
   Less: Net income (loss) attributable to the noncontrolling interests   (1,348 )   (1,593 )   (4,236 )   (4,265 )
 Net income (loss) attributable to Actua     $ 107,231     $ (52,151 )   $ 70,085     $ (96,080 )
                       
 Amounts attributable to Actua common shareholders:                
 Net income (loss) from continuing operations   $ 4,380     $ (50,170 )   $ (25,210 )   $ (87,560 )
 Net income (loss) from discontinued operations   102,851     (1,981 )   95,295     (8,520 )
 Net income (loss) attributable to Actua common shareholders   $ 107,231     $ (52,151 )   $ 70,085     $ (96,080 )
                       
 Basic net income (loss) per share:                  
 Income (loss) from continuing operations attributable to Actua common
 shareholders
    $ 0.12     $ (1.35 )   $ (0.69 )   $ (2.36 )
 Income (loss) from discontinued operations attributable to Actua common
 shareholders
    2.87     (0.05 )   2.60     (0.23 )
 Income (loss) attributable to Actua common shareholders     $ 2.99     $ (1.40 )   $ 1.91     $ (2.59 )
                       
Shares used in computation of basic net income (loss) per
common share attributable to Actua common shareholders
    35,865     37,190     36,672     37,080  
                       
 Diluted net income (loss) per share:                
 Income (loss) from continuing operations attributable to Actua common
 shareholders
  $ 0.12     $ (1.35 )   $ (0.69 )   $ (2.36 )
 Income (loss) from discontinued operations attributable to Actua common
 shareholders
  2.82     (0.05 )   2.60     (0.23 )
 Income (loss) attributable to Actua common shareholders   $ 2.94     $ (1.40 )   $ 1.91     $ (2.59 )
                       
Shares used in computation of diluted net income (loss) per common
share attributable to Actua common shareholders
  36,421     37,190     36,672     37,080  
                       
 (a) Includes equity-based compensation of:                
   Cost of revenue     $ 32     $ 36     $ 107     $ 140  
   Sales and marketing     82     98     315     330  
   General and administrative     2,370     5,287     13,174     25,009  
   Research and development     141     128     462     465  
          $ 2,625     $ 5,549     $ 14,058     $ 25,944  


 Actua Corporation
 Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                   
          December 31,    December 31,    
          2016   2015    
                   
 ASSETS              
   Cash and cash equivalents     $ 97,364     $ 72,457      
   Restricted cash     1,648     2,206      
   Accounts receivable, net     21,033     16,167      
   Prepaid expenses and other current assets     3,673     2,776      
   Assets of discontinued operations         29,129      
     Total current assets     123,718     122,735      
   Fixed assets, net     5,359     4,279      
   Goodwill     231,787     220,459      
   Intangible assets, net     73,406     80,443      
   Deferred tax assets     762     2,900      
   Cost method investments     17,250     18,146      
   Other assets, net     1,436     1,182      
     Total Assets     $ 453,718     $ 450,144      
                   
 LIABILITIES AND EQUITY              
   Short-term debt     $ 1,320     $ 1,320      
   Accounts payable     12,269     7,992      
   Accrued expenses     10,149     8,215      
   Accrued compensation and benefits     8,381     9,865      
   Deferred revenue     35,834     26,102      
   Liabilities of discontinued operations         24,391      
     Total current liabilities     67,953     77,885      
   Deferred tax liability         266      
   Deferred rent     4,165     106      
   Deferred revenue     990     2,038      
   Contingent consideration     7,444          
   Other liabilities     1,824     1,372      
     Total Liabilities     82,376     81,667      
   Redeemable noncontrolling interests     5,858     10,506      
   Total Equity     365,484     357,971      
     Total Liabilities, Redeemable noncontrolling interests and Equity     $ 453,718     $ 450,144      
                   


 Actua Corporation
 Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                       
          Three Months Ended
December 31,
  Twelve Months Ended
December 31,
          2016   2015   2016   2015
                       
Operating Activities - continuing operations                
Net income (loss)     $ 105,883     $ (53,744 )   $ 65,849     $ (100,345 )
(Income) loss from discontinued operations, including gain on sale, net of tax   (102,019 )   2,140     (94,017 )   9,172  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                
Depreciation and amortization     4,124     3,860     16,586     15,541  
Equity-based compensation     2,625     5,549     14,058     25,944  
Impairment related and other     (35 )   39,711     384     40,001  
Other (income) loss, net     (131 )   (204 )   (2,857 )   (1,741 )
Deferred income taxes     1,751     135     1,872     258  
Income tax (benefit) expense related to income from discontinued operations   (15,758 )       (15,758 )    
Contingent consideration   352     76     384     768  
Changes in operating assets and liabilities - net of acquisitions:                
Accounts receivable, net     (3,743 )   (7,862 )   (4,755 )   1,198  
Prepaid expenses and other assets     122     (130 )   (1,183 )   1,295  
Accounts payable     3,173     (343 )   4,150     (3,043 )
Accrued expenses     2,714     (7,076 )   1,846     (24 )
Accrued compensation and benefits     1,568     1,489     (1,405 )   2,683  
Deferred revenue     4,116     16,093     8,228     5,406  
Other liabilities     (1,766 )   (38 )   2,409     (1,582 )
Cash flows provided by (used in) operating activities   2,976     (344 )   (4,209 )   (4,469 )
                       
Investing Activities - continuing operations                
Capital expenditures, net     (345 )   (592 )   (2,601 )   (2,237 )
Change in restricted cash     30     (811 )   611     (1,062 )
Proceeds from sales/distributions of ownership interests   121,479         125,933     1,415  
Ownership acquisition, net of cash acquired   (2,916 )   (720 )   (8,043 )   (2,020 )
Cash flows provided by (used in) investing activities   118,248     (2,123 )   115,900     (3,904 )
                       
Financing Activities - continuing operations                
Acquisition of noncontrolling interest in subsidiary equity       (6,039 )   (5,578 )   (9,991 )
Payments on contingent consideration             (2,664 )   (1,870 )
Borrowings of short-term debt and note payable                 820  
Repayment of notes payable and capital lease obligations           (8 )   (24 )
Purchase of treasury stock     (64,732 )       (74,265 )   (1,702 )
Tax withholdings related to equity-based awards   (260 )   (352 )   (1,828 )   (4,279 )
Financing activities with discontinued operations, net   (755 )   1,570     (2,500 )   (2,301 )
Cash flows provided by (used in) financing activities   (65,747 )   (4,821 )   (86,843 )   (19,347 )
Effect of exchange rate on cash flows and cash equivalents     100     6     59     25  
Net increase (decrease) in cash and cash equivalents from continuing operations   55,577     (7,282 )   24,907     (27,695 )
Discontinued Operations:                  
Cash flows provided by (used in) operating activities   547     4,868     (5,681 )   3,758  
Cash flows provided by (used in) investing activities       37     (675 )   (4,863 )
Cash flows provided by (used in) financing activities   (734 )   (1,899 )   2,500     1,979  
Net increase (decrease) in cash and cash equivalents from discontinued operations   (187 )   3,006     (3,856 )   874  
Cash and cash equivalents at beginning of period - discontinued operations   187     849     3,856     2,982  
Less: cash and cash equivalents at end of period - discontinued operations       3,856         3,856  
Cash and cash equivalents at beginning of period   41,787     79,739     72,457     100,152  
Cash and cash equivalents at end of period   $ 97,364     $ 72,457     $ 97,364     $ 72,457  


Actua Corporation
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
                     
    2015 2016  
    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4  
GAAP net income (loss) attributable to Actua:   $ (14,765 ) $ (15,282 ) $ (13,882 ) $ (52,151 ) $ (14,331 ) $ (12,741 ) $ (10,074 ) $ 107,231    
  Add back:                    
  Share-based compensation   6,994   6,937   6,464   5,549   4,659   3,748   3,026   2,625    
  Amortization of intangibles   3,587   3,293   3,266   3,303   3,582   3,626   3,524   3,652    
  Impairment related and other costs   308   736   104   38,805   123   119   45   456    
  Transaction expenses   70   154   62     47   108   630   262    
  Other (income) loss, net   (1,493 ) 52   (96 ) (204 ) 90   15   (2,831 ) (131 )  
  Acquired businesses' deferred revenue   677   678   557   505   476   483   478   539    
  Impact of non-cash income tax (benefit) expense items   34           88   39   (13,981 )  
  Loss (income) from discontinued operations   2,389   2,312   2,331   2,140   2,081   2,079   3,842   (102,019 )  
  Impact of non-controlling interests (NCI) for discontinued operations   (146 ) (166 ) (181 ) (159 ) (110 ) (101 ) (235 ) (832 )  
  Non-GAAP net income (loss)   $ (2,345 ) $ (1,286 ) $ (1,375 ) $ (2,212 ) $ (3,383 ) $ (2,576 ) $ (1,556 ) $ (2,198 )  
                     
                     
GAAP net income (loss) per diluted share:   $ (0.40 ) $ (0.41 ) $ (0.37 ) $ (1.40 ) $ (0.38 ) $ (0.35 ) $ (0.27 ) $ 2.94    
  Add back:                    
  Share-based compensation   0.19   0.18   0.17   0.15   0.12   0.10   0.08   0.07    
  Amortization of intangibles   0.10   0.09   0.09   0.09   0.10   0.10   0.10   0.10    
  Impairment related and other costs   0.01   0.02     1.04     0.01     0.01    
  Transaction expenses     0.01           0.02   0.01    
  Other (income) loss, net   (0.04 )     (0.01 )     (0.08 )    
  Acquired businesses' deferred revenue   0.02   0.02   0.01   0.01   0.01   0.01   0.01   0.01    
  Impact of non-cash income tax benefit items                 (0.38 )  
  Loss (income) from discontinued operations   0.06   0.06   0.06   0.06   0.06   0.06   0.10   (2.80 )  
  Impact of non-controlling interests (NCI) for discontinued operations                 (0.02 )  
  Non-GAAP net income (loss) per diluted share   $ (0.06 ) $ (0.03 ) $ (0.04 ) $ (0.06 ) $ (0.09 ) $ (0.07 ) $ (0.04 ) $ (0.06 )  
                     
Shares used in calculation of GAAP net income (loss) per share
attributable to Actua:
                   
Basic   36,842   37,123   37,146   37,190   37,293   36,760   36,776   35,865    
Diluted   36,842   37,123   37,146   37,190   37,293   36,760   36,776   36,421    
                     
Shares used in calculation of non-GAAP net income (loss) per share
attributable to Actua:
                   
Basic   36,842   37,123   37,146   37,190   37,293   36,760   36,776   35,865    
Diluted   36,842   37,123   37,146   37,190   37,293   36,760   36,776   35,865    


Actua Corporation
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)
(In thousands, except per share data)
(Unaudited)
                         
      2015 2016    
      Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4    
GAAP Net income (loss) attributable to Actua:     $ (14,765 ) $ (15,282 ) $ (13,882 ) $ (52,151 ) $ (14,331 ) $ (12,741 ) $ (10,074 ) $ 107,231      
  Add back:                        
Share-based compensation     6,994   6,937   6,464   5,549   4,659   3,748   3,026   2,625      
Amortization of intangibles     3,587   3,293   3,266   3,303   3,582   3,626   3,524   3,652      
Impairment related and other costs     308   736   104   38,805   123   119   45   456      
Transaction expenses     70   154   62     47   209   630   262      
Other (income) loss, net     (1,493 ) 52   (96 ) (204 ) 90   15   (2,831 ) (131 )    
Acquired businesses' deferred revenue     677   678   557   505   476   483   478   539      
Impact of non-cash income tax (benefit) expense items     34           88   39   (13,981 )    
Loss (income) from discontinued operations     2,389   2,312   2,331   2,140   2,081   2,079   3,842   (102,019 )    
Impact of non-controlling interests (NCI) for discontinued operations     (146 ) (166 ) (181 ) (159 ) (110 ) (101 ) (235 ) (832 )    
Interest expense (income), net     17   (4 ) (2 ) 8   36   45   (4 ) (162 )    
Income tax expense (current/cash only)     141     59   (38 ) 24   146   (6 ) 480      
Depreciation     538   493   504   514   515   555   558   569      
Adjusted EBITDA     $ (1,649 ) $ (797 ) $ (814 ) $ (1,728 ) $ (2,808 ) $ (1,729 ) $ (1,008 ) $ (1,311 )    
                         
GAAP Cost of revenue     $ 6,859   $ 7,011   $ 6,663   $ 6,887   $ 6,722   $ 7,288   $ 7,441   $ 7,735      
Share-based compensation     23   $ 33   $ 48   $ 36   32   22   21   $ 32      
Adjusted Cost of revenue     $ 6,836   $ 6,978   $ 6,615   $ 6,851   $ 6,690   $ 7,266   $ 7,420   $ 7,703      
                         
GAAP Sales and marketing     $ 8,438   $ 8,922   $ 9,551   $ 8,921   $ 10,119   $ 10,461   $ 10,281   $ 9,946      
Share-based compensation     55   78   99   98   88   72   73   82      
Adjusted Sales and marketing     $ 8,383   $ 8,844   $ 9,452   $ 8,823   $ 10,031   $ 10,389   $ 10,208   $ 9,864      
                         
GAAP General and administrative     $ 13,953   $ 14,394   $ 12,542   $ 13,627   $ 12,326   $ 11,372   $ 11,228   $ 12,010      
Share-based compensation     6,896   6,667   6,159   5,287   4,425   3,552   2,827   2,370      
Adjusted General and administrative     $ 7,057   $ 7,727   $ 6,383   $ 8,340   $ 7,901   $ 7,820   $ 8,401   $ 9,640      
                         
GAAP Research and development     $ 4,464   $ 4,940   $ 4,973   $ 4,619   $ 5,307   $ 5,388   $ 5,411   $ 5,536      
Share-based compensation     45   134   158   128   114   102   105   141      
Adjusted Research and development     $ 4,419   $ 4,806   $ 4,815   $ 4,491   $ 5,193   $ 5,286   $ 5,306   $ 5,395      
                         

About Actua's Non-GAAP Financial Measures

This release contains non-GAAP financial measures.  The tables above reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.  Actua strongly urges investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this release.

Actua's management believes that its non-GAAP financial measures provide useful information to investors because they allow investors to view the business through the eyes of management and provide meaningful supplemental information regarding Actua's operating results, as they exclude amounts that Actua excludes as part of its monitoring of operating results and assessment of the performance of the business.

Actua presents the following non-GAAP financial measures in this release:  (1) non-GAAP net income (loss) (which term may be used interchangeably with adjusted net income (loss) by management during quarterly earnings presentations), (2) non-GAAP net income (loss) per diluted share (which term may be used interchangeably with adjusted net income (loss) per diluted share by management during quarterly earnings presentations), (3) Adjusted EBITDA, (4) Adjusted Cost of revenue, (5) Adjusted Sales and marketing, (6) Adjusted General and administrative and (7) Adjusted Research and development.  Actua excludes items from these non-GAAP financial measures as described below.

Non-GAAP net income (loss) excludes from GAAP net income (loss) the following items:

  • Share-based compensation.  Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua's results with results of other companies.

  • Amortization of intangibles.  Actua excludes amortization of acquired intangibles, which consists primarily of customer relationships and technology, because they are expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and Actua believes that doing so facilitates comparisons to its historical operating results and to the results of other companies.

  • Impairment related and other costs.  Actua excludes the effect of impairment related and other costs, which primarily include impairment charges, revaluation of contingent consideration, restructuring and severance fees, settlement costs and other one-time costs, because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua's operations.

  • Transaction expenses.  Actua excludes the effect of acquisition related expenses because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua's operations.

  • Other income (loss), net.  Actua excludes the effect of other income (loss), net, which primarily includes transaction-driven gains and losses, as well as certain foreign currency impacts, because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua's operations.

  • Acquired businesses' deferred revenue.  Actua includes acquired businesses' previously deferred revenues that are not recognized under GAAP because Actua considers them a part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on its operations.

  • Impact of non-cash income tax benefit items.  Actua excludes the impact of any non-cash income tax benefit items as Actua believes it is useful for investors to understand the effect of this item and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Income (loss) from discontinued operations.  Actua excludes the income (loss) from discontinued operations as Actua believes it is useful for investors to understand the effect of these items for all periods presented and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Impact of non-controlling interests (NCI) for discontinued operations.  Actua does not own 100% of the discontinued operations presented.  Therefore Actua excludes the impact of the NCI on discontinued operations as Actua believes it is useful for investors to understand the effect of this item for all periods presented as compared to what has historically been provided as Actua does not consider them a part of ongoing operating results when assessing the performance of its business.

Non-GAAP net income (loss) per diluted share is calculated as follows:

  • Non-GAAP net income (loss) (as defined above) is the numerator.

  • Shares used in calculation of non-GAAP net income (loss) per diluted share.  For periods where GAAP and non-GAAP net income (loss) are both losses, Actua uses the same number of shares used to calculate GAAP and non-GAAP net loss per share.  For periods where GAAP and non-GAAP net income (loss) are both income, Actua uses the same number of shares used to calculate GAAP and non-GAAP net income per diluted share.  For periods where GAAP net income (loss) is a loss but non-GAAP net income (loss) is income, Actua includes the impact of incremental dilutive securities for the period to determine non-GAAP net income per diluted share.  For periods where GAAP net income (loss) is income but non-GAAP net income (loss) is a loss, Actua excludes the impact of incremental dilutive securities for the period to determine non-GAAP net loss per diluted share.

Adjusted EBITDA excludes from GAAP net income (loss) the following items:

  • Share-based compensation.  Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua's results with results of other companies.

  • Amortization of intangibles.  Actua excludes amortization of acquired intangibles, which consists primarily of customer relationships and technology, because they are expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and Actua believes that doing so facilitates comparisons to its historical operating results and to the results of other companies.

  • Impairment related and other costs.  Actua excludes the effect of impairment related and other costs, which primarily include impairment charges, restructuring and severance fees, settlement costs and other one-time costs, because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua's operations.

  • Transaction expenses.  Actua excludes the effect of acquisition related expenses because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua's operations.

  • Other income (loss), net.  Actua excludes the effect of other income (loss), net, which primarily includes transaction-driven gains and losses and revaluation of contingent consideration, as well as certain foreign currency impacts because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua's operations.

  • Acquired businesses' deferred revenue.  Actua includes acquired businesses' previously deferred revenues that are not recognized under GAAP because Actua considers them a part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on its operations.

  • Impact of non-cash income tax benefit items.  Actua excludes the impact of any non-cash income tax benefit items as Actua believes it is useful for investors to understand the effect of this item and Actua does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Income (loss) from discontinued operations.  Actua excludes the income (loss) from discontinued operations as Actua believes it is useful for investors to understand the effect of these items for all periods presented and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Impact of non-controlling interests (NCI) for discontinued operations.  Actua does not own 100% of the discontinued operations presented.  Therefore Actua excludes the impact of the NCI on discontinued operations as Actua believes it is useful for investors to understand the effect of this item for all periods presented as compared to what has historically been provided as Actua does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Interest expense (income), net.  Actua excludes income and expense from interest as Actua believes it is useful for investors to understand the effect of these items for all periods presented and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Income tax expense (current/cash only).  Actua excludes the impact of any current, cash income tax expense as Actua believes it is useful for investors to understand the effect of this item and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Depreciation.  Actua excludes depreciation expense as Actua believes it is useful for investors to understand the effect of these items for all periods presented and does not consider them a part of ongoing operating results when assessing the performance of its business.

Adjusted Cost of revenue excludes from GAAP Cost of revenue operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the cost of revenue category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua's results with results of other companies.

Adjusted Sales and marketing excludes from GAAP Sales and marketing operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the sales and marketing category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua's results with results of other companies.

Adjusted General and administrative excludes from GAAP General and administrative operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the general and administrative category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua's results with results of other companies.

Adjusted Research and development excludes from GAAP Research and development operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the research and development category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua's results with results of other companies.

Actua believes that the following considerations apply to the non-GAAP financial measures that it presents:

  • Actua's management uses non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, adjusted EBITDA, adjusted cost of revenue, adjusted sales and marketing, adjusted general and administrative and adjusted research and development in internal reports used by management in monitoring and making decisions regarding Actua's business, including in monthly financial reports prepared for management and in periodic reports to Actua's Board of Directors.

  • An important limitation of Actua's non-GAAP financial measures is that they exclude expenses or cash flows, some of which may be significant, that are required by GAAP to be recorded.  In addition, non-GAAP financial measures are subject to inherent limitations because they reflect the exercise of judgments by management about which charges to exclude from the non-GAAP financial measures.

To mitigate the limitations associated with non-GAAP financial measures, Actua reconciles its non-GAAP financial measures to the nearest comparable GAAP financial measures and recommends that investors and potential investors do not give undue weight to its non-GAAP financial measures.

Investor inquiries:
Karen Greene
Actua
Investor Relations
610.727.6900
IR@actua.com

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