Attached files
| file | filename |
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| 8-K - HIGHER ONE HOLDINGS INC 8-K AUG 7, 2012 - Higher One Holdings, Inc. | form8-k.htm |
| EX-99.1 - EXHIBIT 99.1 - Higher One Holdings, Inc. | ex99_1.htm |
EXHIBIT 99.2
Higher One Holdings, Inc.
Q2’12 Earnings Results
Q2’12 Earnings Results
August 7, 2012
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
2
Forward-Looking Statements
This presentation includes forward-looking statements, as defined by the Securities and Exchange
Commission. Management’s 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
presentation or to reflect the occurrence of any unanticipated events. The forward-looking statements in
this presentation do not include the potential impact of any acquisitions or divestitures that may be
announced 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/.
Commission. Management’s 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
presentation or to reflect the occurrence of any unanticipated events. The forward-looking statements in
this presentation do not include the potential impact of any acquisitions or divestitures that may be
announced 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/.
This presentation includes certain metrics presented on a non-GAAP basis, including non-GAAP adjusted
EBITDA, non-GAAP adjusted EBITDA margin, non-GAAP adjusted net income, non-GAAP adjusted diluted
EPS, and non-GAAP Free Cash Flow. 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
company’s financial condition and results of operations. Reconciliations of these non-GAAP measures to
their closest comparable GAAP measure are included in the appendix of this presentation.
EBITDA, non-GAAP adjusted EBITDA margin, non-GAAP adjusted net income, non-GAAP adjusted diluted
EPS, and non-GAAP Free Cash Flow. 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
company’s financial condition and results of operations. Reconciliations of these non-GAAP measures to
their closest comparable GAAP measure are included in the appendix of this presentation.
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
3
Q2’12 Highlights
• Revenue up 11%:
o Continuation of trends from Q1
o Impact to summer session disbursements due to
changes to Pell Grants
changes to Pell Grants
• 100% OneDisburse client retention in the quarter
• Announced asset acquisition of Campus Labs
• $100 million share repurchase program authorized
• Optimistic about back half of year:
o Flex/Premier
o New school launches
o SmartPay and MPP+
o Cost-control initiatives
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
4
Campus Labs aims to be the centralized hub of all meaningful data and
performance analytics in higher education.
performance analytics in higher education.
• Helps schools improve student success:
o More efficient data collection/aggregation
o Better use of data to efficiently allocate resources
• Why this makes sense:
o Better diversifies our revenue streams
o Deepen our relationships with schools
o Cross-sell opportunities
o Improves our data analytics capabilities
Campus Labs Acquisition - Rationale
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
5
• Serves >500 campuses, >5.8 million SSE
o Brings Higher One SSE total to >10.5 million
• Purchase price:
o ~$38 million in cash
o Additional 150,000 warrants granted
o Earn-out potential based on ’13 revenue growth
• ~$10 million annual revenue run-rate
o Expect annual growth of >30%
o New school signings, plus increasing # of modules at
existing clients to drive growth
existing clients to drive growth
Campus Labs Acquisition - Financial Impact
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
6
Continued growth in major revenue streams
As a % of total
revenue
revenue
Account
(in $ thousands)
Payment Trxn
(in $ thousands)
Higher Ed. Institution
(in $ thousands)
Other
(in $ thousands)
79%
77%
9%
11%
11%
10%
2%
2%
+8%
+35%
+8%
+21%
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
7
Revenue
(in $ millions)
Continued revenue growth in difficult environment
27.8
38.6
39.8
51.4
35.1
48.1
46.5
**
**
57.8
38.9
*Calculation of organic revenue growth is included in the appendix of this presentation
**Excluding $4.7 million impact of credit project, Q4’11 gross margin would have been 63.2%
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
8
GAAP Net Income
Net Income
(in $ millions)
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
9
Adj. EBITDA impacted by margin decline
*Calculation of Adj. EBITDA and Adj. EBITDA Margin is included in the appendix of this presentation
Adj. EBITDA*
(in $ millions)
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
10
GAAP Diluted EPS
GAAP Diluted EPS
(in $)
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
11
Adj. EPS growth impacted by lower margins
*Calculation of Adj. EPS and Adj. Net Income Margin is included in the appendix of this presentation
Adjusted Diluted EPS
(in $)
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
12
Operating Cash Flow
Operating Cash Flow
(in $ millions)
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
13
FCF impacted by NWC timing, CapEx
*Calculation of Free Cash Flow is included in the appendix of this presentation
Free Cash Flow
(in $ millions)
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
14
Strong signings despite challenging environment
*SSE stands for Signed School Enrollment, and is recorded each quarter as the total student enrollment at all schools that are contracted at
quarter-end for either our OneDisburse or at least one of our CASHNet® payment suite of products, as of the date the contract is signed (using
the most up-to-date IPEDS data at that point in time).
quarter-end for either our OneDisburse or at least one of our CASHNet® payment suite of products, as of the date the contract is signed (using
the most up-to-date IPEDS data at that point in time).
OneDisburse SSE*
CASHNet Suite SSE*
+22%
+13%
(in thousands)
(in thousands)
16% client
overlap
overlap
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
15
Net OneAccount growth driven by newer launches
OneAccount Growth
+10%
(in thousands)
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
16
Spending wisely to grow and scale the business
• Non-recurring overlap costs
related to IT infrastructure
projects, bank partner transition
costs, and some Corp Dev costs
impacted G&A in Q2
related to IT infrastructure
projects, bank partner transition
costs, and some Corp Dev costs
impacted G&A in Q2
• Professional fees higher in quarter
• Continue to invest in projects to
increase product development
flexibility, grow revenue, and
manage costs
increase product development
flexibility, grow revenue, and
manage costs
• Increased marketing expenses from
consumer branding initiatives and
broad launch of Premier and Flex
consumer branding initiatives and
broad launch of Premier and Flex
• Earn-out resulting in stock-based and
other M&A related expense expired in
2011
other M&A related expense expired in
2011
G&A
(as a % of rev)
PD
(as a % of rev )
Adj. S&M*
(as a % of rev)
19.1%
*The Adjusted Sales and Marketing Expense graph shows both total Sales & Marketing as a percent of revenue as well as Sales & Marketing as a percent of revenue
excluding stock-based and other acquisition expense, which is related to the vesting of certain shares issued in connection with the acquisition of EduCard and CASHNET.
Stock-based and other acquisition expense is recognized in the quarter as a function of sales and average share price.
excluding stock-based and other acquisition expense, which is related to the vesting of certain shares issued in connection with the acquisition of EduCard and CASHNET.
Stock-based and other acquisition expense is recognized in the quarter as a function of sales and average share price.
Stock-based and
other M&A
related expense
other M&A
related expense
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
17
Capital allocation creating value for shareholders
• Fully liquid assets total $36.6M
• ($10.9M) in FCF
• Capital spending on IT infrastructure
project, building project
project, building project
• Timing considerations impacting Net
Working Capital
Working Capital
• ($5.9) million on repurchasing 400,000
shares at an average price of $14.76 in
Q2
shares at an average price of $14.76 in
Q2
• Since start of buyback program, 2.6
million shares repurchased at an average
price of $15.17/share
million shares repurchased at an average
price of $15.17/share
• New $100 million share repurchase
authorization
authorization
• Plan to increase and extend line of
credit
credit
• Cash outlay for Campus Labs acquisition
in Q3
in Q3
*Other primarily includes restricted cash deposits with bank partners, partially offset by proceeds and tax benefits from options exercises
Cash & Investment Balance/Flows
(in millions)
FCF/Other Movements
$55.6
FCF
Cash and cash equivalents
Investments in available for sale securities
$36.6
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
18
GAAP Guidance
FY’12
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
19
Non-GAAP Guidance
*Calculation of Adjusted Diluted EPS is included in the appendix of this presentation
FY’12
• Launching materially more schools for fall ’12 than fall ‘11
• Potential upside from Flex/Premier uptake, SmartPay and MPP+
adoption
adoption
• Cost controls to benefit margin in back half of ‘12
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
20
Q2’12 Summary
• 100% OneDisburse client retention in the quarter
• Announced asset acquisition of Campus Labs
• $100 million share repurchase program
authorized
authorized
• Optimistic about back half of year:
o Flex/Premier
o New school launches
o SmartPay and MPP+
o Cost-control initiatives
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
21
Q & A
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
22
Appendix
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
23
Calculation of Organic Gross Revenue*
*Organic revenue calculation excludes the entire revenue impact from the current and prior year quarter for all acquisitions made within 15
months of a given quarter’s end
months of a given quarter’s end
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
24
Calculation of Free Cash Flow
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
25
Calculation of Adjusted EBITDA
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
26
Calculation of Adjusted Diluted EPS
®
©2012 Higher One Holdings, Inc. Higher One and CASHNet are registered trademarks
of Higher One, Inc. All other marks are owned by their respective owners.
of Higher One, Inc. All other marks are owned by their respective owners.
27
Reconciliation of GAAP to non-GAAP Guidance