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8-K - FORM 8-K - Higher One Holdings, Inc. | d8k.htm |
EX-99.2 - POWERPOINT SLIDES, HIGHER ONE HOLDINGS, INC. Q4 '10 EARNINGS RESULTS - Higher One Holdings, Inc. | dex992.htm |
Exhibit 99.1
Higher One Holdings, Inc. Reports Fourth Quarter and Full Year 2010 Financial Results
| Full Year 2010 revenue increased 87% from 2009 to $145.0 million |
| Fourth quarter revenue increased 53% year-over-year to $39.8 million |
| 1.6 million OneAccounts at the end of the fourth quarter, up 61% from a year ago |
New Haven, CT, February 15, 2011 Technology and payments services provider Higher One Holdings, Inc. (NYSE: ONE) (Higher One) today announced revenue for the fourth quarter 2010 of $39.8 million, up 53% from $26.1 million in the fourth quarter of 2009. For the full year, Higher One posted revenue of $145.0 million, up 87% from the $77.6 million generated in 2009. Revenue growth for both the fourth quarter and the full year 2010 was primarily attributable to an increase in the number of students choosing to use the OneAccount and the addition of the results of Higher One Payments, Inc. (the Informed Decisions Corporation acquisition), which was acquired in the fourth quarter of 2009.
Higher One is committed to reducing higher education expense by helping schools eliminate unnecessary costs and realize process efficiencies, explained Dean Hatton, President and CEO of Higher One. We reduce waste, delays, and errors in the refund distribution process, give students choice on how they receive their financial aid refunds, and provide them with valuable banking services and financial education. With OneDisburse, its free for students to receive their financial aid refunds, and the OneAccount has all the functionality of a checking account. Our strong growth is a result of the value both schools and students find in our cost-saving, efficiency-enhancing products and services.
Higher One also reported fourth quarter GAAP net income of $8.5 million, and non-GAAP adjusted net income, which excludes certain one-time costs, stock-based compensation, stock-based and other customer acquisition expense, and amortization of intangible assets, of $10.0 million. GAAP diluted EPS was $0.14 in the quarter, up from $0.09 in the fourth quarter of 2009. Non-GAAP adjusted diluted EPS was $0.17 in the fourth quarter, up from $0.11 a year ago. In the fourth quarter of 2010, non-GAAP adjusted EBITDA was $16.8 million, up 63% from $10.3 million in the same period last year.
Full year 2010 GAAP net income came in at $25.1 million, and non-GAAP adjusted net income, which excludes certain one-time costs, stock-based compensation, stock-based and other customer acquisition expense, and amortization of intangible assets, was $34.4 million. GAAP diluted EPS was $0.44 for 2010, up from $0.27 in 2009. 2010 non-GAAP adjusted diluted EPS was $0.60, up from $0.34 a year ago. For full year 2010, non-GAAP adjusted EBITDA was $59.5 million, up 95% from $30.5 million in 2009.
The number of OneAccounts at the end of 2010 totaled 1.6 million, up 61% from approximately 1.0 million at the end of 2009. Total enrollment at higher education clients who have purchased the OneDisburse product increased to 3.3 million, an increase of more than 961,000 from 2.3 million at the end of 2009. Total enrollment at higher education clients who have purchased the CASHNet suite of payment products increased to 2.5 million, up more than 488,000 from 2.0 million at the end of the prior year.
Operating cash flow in the quarter was $13.0 million, up 41% from $9.2 million in the fourth quarter of 2009. The company generated $40.1 million in operating cash flow for the full year 2010, up 94% from
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$20.7 million in 2009. Cash, cash equivalents, and liquid investments totaled $49.2 million at December 31, 2010.
Higher One issued revenue guidance for the first quarter of 2011 of $51.0 $53.0 million. The company updated full year 2011 revenue guidance to $180.0 $188.0 million. The company issued GAAP diluted EPS guidance for the first quarter and full-year 2011 of $0.14 $0.20 and $0.39 $0.56, respectively. Noting that GAAP diluted EPS is subject to material and unpredictable impacts from certain M&A-related customer acquisition expenses, the company issued first quarter and full-year 2011 non-GAAP adjusted diluted EPS guidance of $0.23 $0.25 and $0.68 $0.74, respectively. The company believes that the non-GAAP adjusted diluted EPS measure, which excludes certain one-time costs, stock-based compensation, stock-based and other customer acquisition expense, and amortization of intangible assets, all adjusted for taxes, provides a useful view of more predictable and normalized business trends.
Quarterly Conference Call Information
Higher One will host a conference call at 5 p.m. EST today to discuss fourth quarter results. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures can be accessed through Higher Ones investor relations website at http://ir.higherone.com/. In addition, an archive of the webcast will be available for 90 days through the same link.
About Higher One
Founded in 2000, Higher One is a leading company focused on helping higher education institution business offices manage operations and provide enhanced service to students. Through a full array of services from refunds, payments, electronic billing, payment plans and more, Higher One works closely with colleges and universities to ensure students receive financial aid refunds quickly, can pay tuition and bills online, make on-campus and community purchases, and learn the basics of financial management. Higher One provides its services to more than 5.3 million students at distinguished public and private higher education institutions nationwide. More information about Higher One can be found at http://higherone.com.
Forward-Looking Statements
This press release includes forward-looking statements, as defined by the Securities and Exchange Commission. Managements projections and expectations are subject to a number of risks and uncertainties that could cause actual performance to differ materially from that predicted or implied. These statements speak only as of the date they are made, and the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced
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and/or completed after the date hereof. Information about the factors that could affect future performance can be found in our recent SEC filings available on our website at http://ir.higherone.com.
Use of Non-GAAP Financial Measures
This release includes certain metrics presented on a non-GAAP basis, including non-GAAP adjusted EBITDA, non-GAAP adjusted net income, and non-GAAP adjusted EPS. We believe that these non-GAAP measures, which exclude amortization of intangibles, stock based compensation, and certain non-recurring or non-cash impacts to our results, all net of taxes, provide useful information regarding normalized trends relating to the companys financial condition and results of operations. Reconciliations of these non-GAAP measures to their closest comparable GAAP measure are included in this press release.
Contacts
Investor Relations: | Ken Goff, 203-776-7776 x4462, kgoff@higherone.com | |
Media Relations: |
Lisa Giangiulio, 212-642-7782, lisa.giangiulio@edelman.com |
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Higher One Holdings, Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands of dollars, except share and per share amounts)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Revenue: |
||||||||||||||||
Account revenue |
$ | 21,999 | $ | 31,821 | $ | 68,529 | $ | 113,516 | ||||||||
Payment transaction revenue |
1,655 | 3,731 | 1,688 | 15,742 | ||||||||||||
Higher education institution revenue |
1,917 | 3,594 | 5,135 | 12,543 | ||||||||||||
Other revenue |
505 | 637 | 2,254 | 3,168 | ||||||||||||
Total revenue |
26,076 | 39,783 | 77,606 | 144,969 | ||||||||||||
Cost of revenue |
9,273 | 14,517 | 26,529 | 51,845 | ||||||||||||
Gross margin |
16,803 | 25,266 | 51,077 | 93,124 | ||||||||||||
Operating expenses: |
||||||||||||||||
General and administrative |
6,167 | 8,520 | 18,143 | 32,381 | ||||||||||||
Product development |
617 | 787 | 2,287 | 3,311 | ||||||||||||
Sales and marketing |
2,097 | 2,409 | 7,966 | 16,185 | ||||||||||||
Total operating expenses |
8,881 | 11,716 | 28,396 | 51,877 | ||||||||||||
Income from operations |
7,922 | 13,550 | 22,681 | 41,247 | ||||||||||||
Interest income |
(2 | ) | (16 | ) | (4 | ) | (29 | ) | ||||||||
Interest expense |
164 | 169 | 558 | 729 | ||||||||||||
Other income |
(17 | ) | | (17 | ) | | ||||||||||
Net income before income taxes |
7,777 | 13,397 | 22,144 | 40,547 | ||||||||||||
Income tax expense |
2,810 | 4,861 | 7,925 | 15,488 | ||||||||||||
Net income |
4,967 | 8,536 | 14,219 | 25,059 | ||||||||||||
Net income available to common stockholders: |
||||||||||||||||
Basic |
$ | 977 | $ | 8,536 | $ | 2,742 | $ | 16,149 | ||||||||
Participating securities |
3,990 | | 11,477 | 8,910 | ||||||||||||
Diluted |
$ | 4,967 | $ | 8,536 | $ | 14,219 | $ | 25,059 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
9,651,822 | 54,240,386 | 9,298,131 | 33,395,310 | ||||||||||||
Diluted |
53,821,423 | 59,360,619 | 53,150,890 | 57,302,843 | ||||||||||||
Net income available to common stockholders per common share: |
||||||||||||||||
Basic |
$ | 0.10 | $ | 0.16 | $ | 0.29 | $ | 0.48 | ||||||||
Diluted |
$ | 0.09 | $ | 0.14 | $ | 0.27 | $ | 0.44 |
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Higher One Holdings, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands of dollars, except share and per share amounts)
December 31, 2009 |
December 31, 2010 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
3,339 | 34,484 | ||||||
Investments |
| 14,697 | ||||||
Accounts receivable |
2,359 | 2,622 | ||||||
Income receivable |
3,337 | 3,719 | ||||||
Deferred tax asset |
477 | 48 | ||||||
Prepaid expenses and other current assets |
2,501 | 6,981 | ||||||
Restricted cash |
| 8,250 | ||||||
Total current assets |
12,013 | 70,801 | ||||||
Deferred costs |
5,332 | 3,782 | ||||||
Fixed assets, net |
4,221 | 9,919 | ||||||
Intangible assets |
21,526 | 18,456 | ||||||
Goodwill |
15,058 | 15,830 | ||||||
Other assets |
545 | 653 | ||||||
Total assets |
58,695 | 119,441 | ||||||
Liabilities and Stockholders (Deficit) Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
2,800 | 3,063 | ||||||
Accrued expenses |
8,695 | 11,786 | ||||||
Capital lease obligations |
7 | | ||||||
Current portion of line of credit |
18,000 | | ||||||
Acquisition payable |
9,640 | 8,250 | ||||||
Deferred revenue |
5,258 | 7,974 | ||||||
Total current liabilities |
44,400 | 31,073 | ||||||
Deferred revenue |
1,428 | 2,051 | ||||||
Deferred tax liability |
5,761 | 2,926 | ||||||
Total liabilities |
51,589 | 36,050 | ||||||
Stockholders equity: |
||||||||
Convertible preferred stock, $.001 par value; 20,000,000 shares authorized; 12,975,169 shares issued and outstanding at December 31, 2009; no shares issued or outstanding, at December 31, 2010 (liquidation preference of $54,148 for 2009) |
80,954 | | ||||||
Common stock, $.001 par value; 200,000,000 shares authorized; 12,276,765 and 56,109,234 shares issued and outstanding at December 31, 2009 and 2010, respectively; |
12 | 56 | ||||||
Additional paid-in capital |
4,624 | 136,760 | ||||||
Accumulated deficit, net of 2008 $93,933 of stock tender transaction |
(78,484 | ) | (53,425 | ) | ||||
Total stockholders equity |
7,106 | 83,391 | ||||||
Total liabilities and stockholders equity |
58,695 | 119,441 | ||||||
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Higher One Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands of dollars)
Twelve Months Ended December 31, |
||||||||
2009 | 2010 | |||||||
Cash flows from operating activities |
||||||||
Net income |
14,219 | 25,059 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
2,969 | 7,292 | ||||||
Amortization of deferred finance costs |
113 | 204 | ||||||
Non-cash interest expense |
40 | 360 | ||||||
Stock-based customer acquisition expense |
2,385 | 7,274 | ||||||
Stock-based compensation |
1,387 | 2,913 | ||||||
Loss on disposal of fixed assets |
| 24 | ||||||
Preferred stock warrant fair value adjustment |
| | ||||||
Deferred income tax expense (benefit) |
(836 | ) | (3,166 | ) | ||||
Changes in operating assets and liabilities, net of effects of acquisition: |
||||||||
Accounts receivable |
27 | (263 | ) | |||||
Income receivable |
219 | (382 | ) | |||||
Deferred costs |
(1,917 | ) | (988 | ) | ||||
Prepaid expenses and other current assets |
(811 | ) | (2,610 | ) | ||||
Deferred income tax provision |
110 | | ||||||
Other assets |
(330 | ) | (125 | ) | ||||
Accounts payable |
665 | 263 | ||||||
Accrued expenses |
2,109 | 862 | ||||||
Deferred revenue |
307 | 3,339 | ||||||
Net cash provided by operating activities |
20,656 | 40,056 | ||||||
Cash flows from investing activities |
||||||||
Investment securities, available for sale: |
||||||||
Purchases |
| (20,777 | ) | |||||
Proceeds from sales and maturities |
| 6,080 | ||||||
Purchases of fixed assets, net of disposals and $347,000 of construction payables as of December 31, 2010 |
(2,188 | ) | (7,059 | ) | ||||
Acquisition of Informed Decisions Corporation, net of cash acquired |
(16,543 | ) | | |||||
Payment of acquisition payable |
| (1,750 | ) | |||||
Payment to escrow agent |
| (8,250 | ) | |||||
Purchase of intangibles |
| | ||||||
Net cash used in investing activities |
(18,731 | ) | (31,756 | ) | ||||
Cash flows from financing activities |
||||||||
Repayment of capital lease obligations |
(27 | ) | (7 | ) | ||||
Proceeds from line of credit |
20,250 | 4,000 | ||||||
Repayments of line of credit |
(21,150 | ) | (22,000 | ) | ||||
Proceeds from issuance of common and preferred stock, net of issuance costs |
495 | 37,209 | ||||||
Purchase of tendered stock, options and warrants |
| | ||||||
Tax benefit from disqualifying dispositions related to options |
148 | 2,811 | ||||||
Proceeds from exercise of stock options |
210 | 1,019 | ||||||
Payment of deferred financing costs |
| (187 | ) | |||||
Proceeds from exercise of non-tendered warrants |
| | ||||||
Net cash provided by financing activities |
(74 | ) | 22,845 | |||||
Net change in cash and cash equivalents |
1,851 | 31,145 | ||||||
Cash and cash equivalents at beginning of year |
1,488 | 3,339 | ||||||
Cash and cash equivalents at end of year |
3,339 | 34,484 | ||||||
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Higher One Holdings, Inc.
Unaudited Supplemental Operating Data
(in thousands)
Three Months Ended | ||||||||||||||||||||
Dec 31, | March 31, | June 30, | Sept 30, | Dec 31, | ||||||||||||||||
2009 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
OneDisburse SSE (1) |
2,320 | 2,684 | 2,795 | 3,217 | 3,281 | |||||||||||||||
y/y growth |
| 46 | % | 35 | % | 48 | % | 41 | % | |||||||||||
CASHNet Suite SSE (2) |
1,971 | 2,193 | 2,315 | 2,450 | 2,460 | |||||||||||||||
y/y growth |
| 43 | % | 40 | % | 39 | % | 25 | % | |||||||||||
Ending OneAccounts (3) |
1,004 | 1,207 | 1,235 | 1,538 | 1,618 | |||||||||||||||
y/y growth |
| 84 | % | 82 | % | 66 | % | 61 | % |
(1) | OneDisburse SSE is recorded each quarter as the total student enrollment at all schools that are contracted at quarter-end for our OneDisburse product, as of the date the contract is signed (using the most up-to-date IPEDS data at that point in time). |
(2) | CASHNet SSE is recorded each quarter as the total student enrollment at all schools that are contracted at quarter-end for at least one of our CASHNet Payment Suite products, as of the date the contract is signed (using the most up-to-date IPEDS data at that point in time). |
(3) | Ending OneAccounts is defined as the number of open accounts with a non-zero balance at the end of a given period |
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Higher One Holdings, Inc.
Unaudited Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA
(in thousands)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Net income |
$ | 4,967 | $ | 8,537 | $ | 14,219 | $ | 25,059 | ||||||||
Interest income |
(2 | ) | (16 | ) | (4 | ) | (29 | ) | ||||||||
Interest expense |
164 | 169 | 558 | 729 | ||||||||||||
Income tax expense |
2,810 | 4,860 | 7,925 | 15,488 | ||||||||||||
Depreciation and amortization |
1,082 | 1,971 | 2,969 | 7,292 | ||||||||||||
EBITDA |
9,021 | 15,521 | 25,667 | 48,539 | ||||||||||||
Other Income |
(17 | ) | | (17 | ) | | ||||||||||
Stock-based and other customer acquisition expense |
490 | 565 | 2,385 | 8,013 | ||||||||||||
Stock-based compensation expense |
424 | 729 | 1,387 | 2,913 | ||||||||||||
Milestone bonus |
419 | | 1,094 | | ||||||||||||
Adjusted EBITDA |
$ | 10,337 | $ | 16,815 | $ | 30,516 | $ | 59,465 | ||||||||
Revenues |
$ | 26,076 | $ | 39,783 | $ | 77,606 | $ | 144,969 | ||||||||
Net Income Margin |
19.0 | % | 21.5 | % | 18.3 | % | 17.3 | % | ||||||||
Adjusted EBITDA Margin |
39.6 | % | 42.3 | % | 39.3 | % | 41.0 | % |
Unaudited Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Adjusted Net Income and
Adjusted Diluted EPS
(in thousands, except per share amounts)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Net income |
$ | 4,967 | $ | 8,537 | $ | 14,219 | $ | 25,059 | ||||||||
Stock-based and other customer acquisition expense |
490 | 565 | 2,385 | 8,013 | ||||||||||||
Stock-based compensation expense - ISO |
206 | 378 | 610 | 1,526 | ||||||||||||
Stock-based compensation expense - NQO |
218 | 351 | 777 | 1,387 | ||||||||||||
Milestone bonus expense |
419 | | 1,094 | | ||||||||||||
Amortization of intangibles |
405 | 767 | 710 | 3,070 | ||||||||||||
Amortization of finance costs |
36 | 51 | 113 | 204 | ||||||||||||
Total pre-tax adjustments |
1,774 | 2,112 | 5,689 | 14,200 | ||||||||||||
Tax rate |
35.9 | % | 35.7 | % | 35.9 | % | 38.2 | % | ||||||||
Tax adjustment |
(563 | ) | (618 | ) | (1,823 | ) | (4,841 | ) | ||||||||
Adjusted net income |
$ | 6,178 | $ | 10,031 | $ | 18,085 | $ | 34,418 | ||||||||
Diluted average weighted shares outstanding |
53,821 | 59,361 | 53,151 | 57,303 | ||||||||||||
Diluted EPS |
$ | 0.09 | $ | 0.14 | $ | 0.27 | $ | 0.44 | ||||||||
Adjusted Diluted EPS |
$ | 0.11 | $ | 0.17 | $ | 0.34 | $ | 0.60 | ||||||||
Revenues |
$ | 26,076 | $ | 39,783 | $ | 77,606 | $ | 144,969 | ||||||||
Net Income Margin |
19.0 | % | 21.5 | % | 18.3 | % | 17.3 | % | ||||||||
Adjusted Net Income Margin |
23.7 | % | 25.2 | % | 23.3 | % | 23.7 | % |
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Higher One Holdings, Inc.
Business Outlook
Three Months Ending March 31, 2011 | ||||
GAAP | Non-GAAP (a) | |||
Revenues (in millions) |
$51.0 - $53.0 | $51.0 - $53.0 | ||
Diluted EPS |
$0.14 - $0.20 | $0.23 - $0.25 |
(a) | Estimated Non-GAAP amounts above for the three months ending March 31, 2010 reflect the estimated quarterly adjustments that exclude (i) expenses related to the one-time ATM fleet upgrade of approximately $100,000, (ii) the amortization of intangibles and finance costs of approximately $800,000, (iii) stock-based compensation expense of approximately $1.0 million, and (iv) stock-based and other customer acquisition expense of approximately $2.0 million to $8.0 million. |
Stock-based and other customer acquisition expense primarily relates to our acquisition of EduCard in 2008, in connection with which we issued restricted stock, and IDC in 2009. We calculate the stock-based and other customer acquisition expense based on the undergraduate enrollment at higher education clients acquired relating to the acquisition, and the market value of our common stock at the time the client is acquired. It is difficult to predict with any degree of certainty either the number of new higher education clients we will acquire, the timing of future customer acquisitions, or the market value of our common stock at any time, resulting in a wide range of expected expense.
Twelve Months Ending December 31, 2011 | ||||
GAAP | Non-GAAP (b) | |||
Revenues (in millions) |
$180.0 - $188.0 | $180.0 - $188.0 | ||
Diluted EPS |
$0.39 - $0.56 | $0.68 - $0.74 |
(b) | Estimated Non-GAAP amounts above for the twelve months ending December 31, 2011 reflect the estimated annual adjustments, that exclude the amortization of (i) expenses related to the one-time ATM fleet upgrade of approximately $1.0 million, (ii) intangibles and finance costs of approximately $3.0 million, (iii) stock-based compensation expense of approximately $4.0 million, and (iv) stock-based and other customer acquisition expense of approximately $8.0 million to $22.0 million. |
Stock-based and other customer acquisition expense primarily relates to our acquisition of EduCard in 2008, in connection with which we issued restricted stock, and IDC in 2009. We calculate the stock-based and other customer acquisition expense based on the undergraduate enrollment at higher education clients acquired relating to the acquisition, and the market value of our common stock at the time the client is acquired. It is difficult to predict with any degree of certainty either the number of new higher education clients we will acquire, the timing of future customer acquisitions, or the market value of our common stock at any time, resulting in a wide range of expected expense.
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