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Actua Announces Second Quarter 2017 Financial Results

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RADNOR, Pa., Aug. 09, 2017 (GLOBE NEWSWIRE) -- Actua Corporation (NASDAQ:ACTA) ("Actua") today reported its results for the second quarter ended June 30, 2017.

"We are pleased with the results we achieved in the second quarter," said Walter Buckley, CEO of Actua. "Our performance in the first half of 2017 was in line with our expectations.  We are well-positioned to continue building shareholder value by driving profitable growth at our businesses."

Revenue was $31.2 million for the second quarter of 2017, up from $26.9 million for the second quarter of 2016.  Net loss attributable to Actua for the second quarter of 2017 was $(6.9) million, or $(0.22) per diluted share, compared to a net loss attributable to Actua of $(12.7) million, or $(0.35) per diluted share, for the comparable prior year quarter.  Non-GAAP net loss for the second quarter of 2017 was $(0.4) million, or $(0.01) per diluted share, as compared to a non-GAAP net loss of $(2.6) million, or $(0.07) per diluted share, for the comparable prior year quarter.  Cash flows from operations was a source of $0.1 million for the second quarter of 2017, compared to a use of $(2.7) million for the second quarter of 2016.

Revenue was $61.7 million for the first half of 2017, up from $52.0 million for the first half of 2016.  Net loss attributable to Actua for the first half of 2017 was $(16.5) million, or $(0.52) per diluted share, compared to a net loss attributable to Actua of $(27.1) million, or $(0.73) per diluted share, for the first half of 2016.  Non-GAAP net loss for the first half of 2017 was $(2.2) million, or $(0.07) per diluted share, compared to a non-GAAP net loss of $(6.0) million, or $(0.16) per diluted share, for the first half of 2016. Cash flows from operations for the first half of 2017 was $(3.0) million, compared to $(6.6) million for the first half of 2016.

During the three months ended June 30, 2017, Actua deployed $13.6 million to repurchase approximately 970,000 shares.  Since July 1, 2017, Actua has deployed an additional $5.3 million to repurchase approximately 380,000 shares, resulting in year-to-date share repurchase totals of $30.3 million and approximately 2,175,000 shares.

2017 Guidance

Actua continues to expect 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 continues to expect  2017 annual GAAP cash flow from operations in the range of between a use of $(2.0) million and a source of $2.0 million.  Actua continues to expect 2017 annual non-GAAP net income (loss) per share to be in the range of between $(0.10) and $(0.15) per diluted share.

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 second quarter 2017 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 45230970.

For those unable to participate in the conference call, a replay will be available from August 9, 2017 at 12:30 p.m. ET until August 16, 2017 at 11:59 p.m. ET.  To access the replay, dial 888.843.7419 or 630.652.3042.  The passcode is 45230970#.  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 approximately 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
June 30,
  Six Months Ended
June 30,
 
        2017   2016   2017   2016  
                       
Revenue     $ 31,189     $ 26,854     $ 61,696     $ 52,040    
                       
Operating expenses                  
  Cost of revenue (a)   7,884     7,288     15,678     14,010    
  Sales and marketing (a)   9,763     10,461     19,670     20,580    
  General and administrative (a)   11,786     11,372     24,718     23,698    
  Research and development (a)   6,911     5,388     13,644     10,695    
  Amortization of intangible assets   4,333     3,626     7,996     7,208    
  Impairment related and other   310     117     670     348    
  Total operating expenses   40,987     38,252     82,376     76,539    
  Operating income (loss)   (9,798 )   (11,398 )   (20,680 )   (24,499 )  
                       
Other income (expense):                  
  Other income (loss), net   2,558     (15 )   3,425     (105 )  
  Interest income   142     39     297     87    
  Interest expense   (44 )   (33 )   (71 )   (66 )  
                       
Income (loss) before income taxes and noncontrolling interests (7,142 )   (11,407 )   (17,029 )   (24,583 )  
                       
Income tax benefit (expense)   (184 )   (72 )   (449 )   (198 )  
                       
Income (loss) from continuing operations (7,326 )   (11,479 )   (17,478 )   (24,781 )  
Income (loss) from discontinued operations, net of tax     (2,079 )       (4,160 )  
Net income (loss)   (7,326 )   (13,558 )   (17,478 )   (28,941 )  
  Less: Net income (loss) attributable to the noncontrolling interests (463 )   (817 )   (945 )   (1,869 )  
Net income (loss) attributable to Actua   $ (6,863 )   $ (12,741 )   $ (16,533 )   $ (27,072 )  
                       
 Amounts attributable to Actua common shareholders:                
Net income (loss) from continuing operations $ (6,863 )   $ (10,763 )   $ (16,533 )   $ (23,123 )  
Net income (loss) from discontinued operations     (1,978 )       (3,949 )  
Net income (loss) attributable to Actua common shareholders $ (6,863 )   $ (12,741 )   $ (16,533 )   $ (27,072 )  
                       
 Basic and diluted net income (loss) per share:                  
Income (loss) from continuing operations attributable to Actua common shareholders   $ (0.22 )   $ (0.30 )   $ (0.52 )   $ (0.62 )  
Income (loss) from discontinued operations attributable to Actua common shareholders       (0.05 )       (0.11 )  
Income (loss) attributable to Actua common shareholders   $ (0.22 )   $ (0.35 )   $ (0.52 )   $ (0.73 )  
                       
Shares used in computation of basic and diluted net income (loss) per common share attributable to Actua common shareholders   31,267     36,760     31,687     37,027    
                       
                 
(a) Includes equity-based compensation of:                
  Cost of revenue   $ 35     $ 22     $ 137     $ 54    
  Sales and marketing   100     72     192     160    
  General and administrative   3,552     3,554     7,041     7,977    
  Research and development   165     102     247     216    
        $ 3,852     $ 3,750     $ 7,617     $ 8,407    


 Actua Corporation
 Condensed Consolidated Balance Sheets
(In thousands)
 
          (Unaudited)        
          June 30,    December 31,    
          2017   2016    
                   
 ASSETS              
  Cash and cash equivalents     $ 68,903     $ 97,364      
  Restricted cash     1,435     1,648      
  Accounts receivable, net     20,031     21,033      
  Prepaid expenses and other current assets     3,256     3,673      
    Total current assets     93,625     123,718      
  Fixed assets, net     4,884     5,359      
  Goodwill     231,424     231,787      
  Intangible assets, net     64,962     73,406      
  Deferred tax asset     737     762      
  Cost method businesses     17,473     17,250      
  Other assets, net     1,534     1,436      
    Total Assets     $ 414,639     $ 453,718      
                   
 LIABILITIES AND EQUITY              
  Short-term debt     $ 1,320     $ 1,320      
  Accounts payable     12,582     12,269      
  Accrued expenses     9,533     10,149      
  Accrued compensation and benefits     5,948     8,381      
  Deferred revenue     37,603     35,834      
    Total current liabilities     66,986     67,953      
  Deferred rent     4,166     4,165      
  Deferred revenue     933     990      
  Contingent consideration     8,065     7,444      
  Other liabilities     1,532     1,824      
    Total Liabilities     81,682     82,376      
  Redeemable noncontrolling interests     5,927     5,858      
  Total Equity     327,030     365,484      
    Total Liabilities, Redeemable noncontrolling interests and Equity     $ 414,639     $ 453,718      
                   


 Actua Corporation  
 Consolidated Statements of Cash Flows  
(In thousands)  
(Unaudited)  
    Three Months Ended
June 30,
  Six Months Ended
June 30,
 
    2017   2016   2017   2016  
OPERATING ACTIVITIES - Continuing Operations                  
Net income (loss)   $ (7,326 )   $ (13,558 )   $ (17,478 )   $ (28,941 )  
Income (loss) from discontinued operations, net of tax       2,079         4,160    
Adjustments to reconcile net loss to cash used in operating activities:                  
Depreciation and amortization   4,925     4,230     9,172     8,331    
Equity-based compensation   3,852     3,750     7,617     8,407    
Impairment related and other   310     179     312     394    
Other (income) loss, net   (2,558 )   15     (3,425 )   105    
Deferred tax asset   (35 )   57     25     52    
Contingent consideration       16     358     32    
Changes in operating assets and liabilities - net of acquisitions:                  
Accounts receivable, net   1,167     (331 )   971     (1,091 )  
Prepaid expenses and other assets   150     (1,220 )   281     (1,857 )  
Accounts payable   (995 )   32     364     (2 )  
Accrued expenses   (950 )   (1,699 )   (473 )   (639 )  
Accrued compensation and benefits   193     583     (2,510 )   (4,039 )  
Deferred revenue   1,322     1,510     1,639     4,633    
Other liabilities   27     1,673     163     3,840    
Cash flows provided by (used in) operating activities   82     (2,684 )   (2,984 )   (6,615 )  
INVESTING ACTIVITIES - Continuing Operations                  
Capital expenditures   (582 )   (702 )   (765 )   (1,636 )  
Change in restricted cash   211     699     301     551    
Proceeds from sales/distribution of ownership interests   2,694         3,652     46    
Ownership acquisition, net of cash acquired   (265 )   (72 )   (515 )   (2,222 )  
Cash flows provided by (used in) investing activities   2,058     (75 )   2,673     (3,261 )  
FINANCING ACTIVITIES - Continuing Operations                  
Acquisition of noncontrolling interests in subsidiary equity           (112 )   (5,578 )  
Payments of contingent consideration       (1,464 )       (1,464 )  
Repayment of capital lease obligations           (8 )      
Purchase of treasury stock   (13,629 )   (5,485 )   (25,088 )   (9,533 )  
Tax withholdings related to equity-based awards   (10 )   (7 )   (2,896 )   (1,536 )  
Financing activities with discontinued operations, net       496         (2,004 )  
Cash flows provided by (used in) financing activities   (13,639 )   (6,460 )   (28,104 )   (20,115 )  
Effect of exchange rate on cash and cash equivalents   (34 )   (38 )   (46 )   (112 )  
Net increase (decrease) in cash and cash equivalents from continuing operations   (11,533 )   (9,257 )   (28,461 )   (30,103 )  
Discontinued Operations                  
Cash flows provided by (used in) operating activities       4,211         (4,923 )  
Cash flows provided by (used in) investing activities       (368 )       (447 )  
Cash flows provided by (used in) financing activities       (4,654 )       2,384    
Net increase (decrease) in cash and cash equivalents from discontinued operations       (811 )       (2,986 )  
Cash and cash equivalents at beginning of period - discontinued operations       1,681         3,856    
Less: cash and cash equivalents at end of period - discontinued operations       870         870    
Cash and cash equivalents at beginning of period   80,436     51,611     97,364     72,457    
Cash and cash equivalents at end of period   $ 68,903     $ 42,354     $ 68,903     $ 42,354    


Actua Corporation
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
               
  2016 2017  
  Q1 Q2 Q3 Q4 Q1 Q2  
GAAP net income (loss) attributable to Actua: $ (14,331 ) $ (12,741 ) $ (10,074 ) $ 107,231   $ (9,670 ) $ (6,863 )  
Add back:              
Share-based compensation 4,657   3,750   3,026   2,625   3,765   3,852    
Amortization of intangibles 3,582   3,626   3,524   3,652   3,663   4,333    
Impairment related and other costs 125   119   45   456   628   312    
Transaction expenses 47   106   630   262   189   88    
Other (income) loss, net 90   15   (2,831 ) (131 ) (867 ) (2,558 )  
Acquired businesses' deferred revenue 476   483   478   539   471   469    
Impact of non-cash income tax (benefit) expense items   88   39   (13,981 ) 19   7    
Loss (income) from discontinued operations 2,081   2,079   3,842   (102,019 )      
Impact of non-controlling interests (NCI) for discontinued operations (110 ) (101 ) (235 ) (832 )      
  Non-GAAP net income (loss) $ (3,383 ) $ (2,576 ) $ (1,556 ) $ (2,198 ) $ (1,802 ) $ (360 )  
               
               
GAAP net income (loss) per diluted share: $ (0.38 ) $ (0.35 ) $ (0.27 ) $ 2.94   $ (0.30 ) $ (0.22 )  
Add back:              
Share-based compensation 0.12   0.10   0.08   0.07   0.12   0.13    
Amortization of intangibles 0.10   0.10   0.10   0.10   0.11   0.14    
Impairment related and other costs   0.01     0.01   0.02   0.01    
Transaction expenses     0.02   0.01   0.01      
Other (income) loss, net     (0.08 )   (0.03 ) (0.08 )  
Acquired businesses' deferred revenue 0.01   0.01   0.01   0.01   0.01   0.01    
Impact of non-cash income tax (benefit) expense items       (0.38 )      
Loss (income) from discontinued operations 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 $ (0.09 ) $ (0.07 ) $ (0.04 ) $ (0.06 ) $ (0.06 ) $ (0.01 )  
               
Shares used in calculation of GAAP net income (loss) per share attributable to Actua:              
Basic 37,293   36,760   36,776   35,865   32,113   31,267    
Diluted 37,293   36,760   36,776   36,421   32,113   31,267    
               
Shares used in calculation of non-GAAP net income (loss) per share attributable to Actua:              
Basic 37,293   36,760   36,776   35,865   32,113   31,267    
Diluted 37,293   36,760   36,776   35,865   32,113   31,267    


Actua Corporation
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)
(In thousands, except per share data)
(Unaudited)
               
  2016 2017  
  Q1 Q2 Q3 Q4 Q1 Q2  
GAAP net income (loss) attributable to Actua: $ (14,331 ) $ (12,741 ) $ (10,074 ) $ 107,231   $ (9,670 ) $ (6,863 )  
Add back:              
Share-based compensation 4,657   3,750   3,026   2,625   3,765   3,852    
Amortization of intangibles 3,582   3,626   3,524   3,652   3,663   4,333    
Impairment related and other costs 125   119   45   456   628   312    
Transaction expenses 47   106   630   262   189   88    
Other (income) loss, net 90   15   (2,831 ) (131 ) (867 ) (2,558 )  
Acquired businesses' deferred revenue 476   483   478   539   471   469    
Impact of non-cash income tax (benefit) expense items   88   39   (13,981 ) 19   7    
Loss (income) from discontinued operations 2,081   2,079   3,842   (102,019 )      
Impact of non-controlling interests (NCI) for discontinued operations (110 ) (101 ) (235 ) (832 )      
Interest expense (income), net (15 ) 45   (4 ) (162 ) (128 ) (98 )  
Income tax expense (current/cash only) 24   146   (6 ) 480   246   176    
Depreciation 515   555   558   569   578   592    
Adjusted EBITDA $ (2,859 ) $ (1,830 ) $ (1,008 ) $ (1,311 ) $ (1,106 ) $ 310    
               
GAAP Cost of revenue $ 6,722   $ 7,288   $ 7,441   $ 7,735   $ 7,794   $ 7,884    
Share-based compensation 32   22   21   32   102   35    
Adjusted Cost of revenue $ 6,690   $ 7,266   $ 7,420   $ 7,703   $ 7,692   $ 7,849    
               
GAAP Sales and marketing $ 10,119   $ 10,461   $ 10,281   $ 9,946   $ 9,907   $ 9,763    
Share-based compensation 88   72   73   82   92   100    
Adjusted Sales and marketing $ 10,031   $ 10,389   $ 10,208   $ 9,864   $ 9,815   $ 9,663    
               
GAAP General and administrative $ 12,326   $ 11,372   $ 11,228   $ 12,010   $ 12,932   $ 11,786    
Share-based compensation 4,423   3,554   2,827   2,370   3,489   3,552    
Adjusted General and administrative $ 7,903   $ 7,818   $ 8,401   $ 9,640   $ 9,443   $ 8,234    
               
GAAP Research and development $ 5,307   $ 5,388   $ 5,411   $ 5,536   $ 6,733   $ 6,911    
Share-based compensation 114   102   105   141   82   165    
Adjusted Research and development $ 5,193   $ 5,286   $ 5,306   $ 5,395   $ 6,651   $ 6,746    
               

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 the following items from GAAP net income (loss):

  • 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.

  • Loss (income) from discontinued operations.  Actua excludes the loss (income) 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 did 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 the following items from GAAP net income (loss):

  • 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.

  • Loss (income) from discontinued operations.  Actua excludes the loss (income) 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 did 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 the following item from GAAP Cost of revenue operating expenses:

  • 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 the following item from GAAP Sales and marketing operating expenses:

  • 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 the following item from GAAP General and administrative operating expenses:

  • 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 the following item from GAAP Research and development operating expenses:

  • 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 include acquired business deferred revenues and exclude expenses, 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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