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8-K - 8-K - Pluralsight, Inc.psq318-8k.htm
Exhibit 99.1

Pluralsight Announces Third Quarter 2018 Results

Billings grew 44 percent period over period to $72.2 million in Q3 2018
Revenue grew 42 percent period over period to $61.6 million in Q3 2018

Silicon Slopes, Utah  October 24, 2018 — Pluralsight (Nasdaq: PS), the enterprise technology learning company, today announced financial results for the third quarter ended September 30, 2018.
“We achieved our sixth consecutive quarter of greater than 50% growth in B2B billings, while demonstrating the inherent levers to profitability in our model,” said Aaron Skonnard, co-founder and CEO of Pluralsight. “Our platform gives tech leaders unprecedented insights into the skill gaps across their organizations, and we provide the tools to close them, enabling enterprises to accelerate innovation.”
Financial Highlights for the Third Quarter 2018
Billings - Q3 2018 billings were $72.2 million, an increase of 44% period over period. Q3 2018 billings from business customers were $61.1 million, an increase of 53% period over period.
Revenue - Q3 2018 revenue was $61.6 million, an increase of 42% period over period.
Gross margin - Q3 2018 gross margin was 75%, compared to 71% in Q3 2017. Q3 2018 non-GAAP gross margin was 77%, compared to 75% in Q3 2017.
Net loss per share - GAAP net loss per share for Q3 2018 was $0.23. Adjusted pro forma net loss per share for Q3 2018 was $0.10, compared to $0.39 in Q3 2017.
Cash flows - Cash provided by operations was $1.9 million for Q3 2018, compared to cash used in operations of $6.9 million in Q3 2017. Free cash flow improved by $7.9 million in Q3 2018 compared to Q3 2017.

For information regarding the non-GAAP financial measures discussed in this press release, please see the section titled “Non-GAAP Financial Measures.” Reconciliations between GAAP and non-GAAP financial measures are provided in the tables of this press release.
Financial Outlook
Pluralsight is providing the following financial guidance for the fourth quarter 2018, and the full years 2018 and 2019:
Fourth Quarter 2018 guidance:
Revenue is expected to be in the range of $65 million to $66 million.



Adjusted pro forma net loss per share is expected to be in the range of $0.10 to $0.09, assuming weighted-average shares outstanding of approximately 133.0 million.
Full Year 2018 guidance:
Revenue is expected to be in the range of $230 million to $231 million.
Adjusted pro forma net loss per share is expected to be in the range of $0.63 to $0.60, assuming weighted-average shares outstanding of approximately 100.5 million.
Full Year 2019 guidance:
Revenue is expected to be in the range of $295 million to $310 million.
Adjusted pro forma net loss per share is expected to be in the range of $0.34 to $0.26, assuming weighted-average shares outstanding of approximately 138.5 million.
Guidance for non-GAAP financial measures excludes equity-based compensation, amortization of acquired intangible assets, and loss on debt extinguishment. Pluralsight has not reconciled its expectations as to adjusted pro forma net loss per share to their most directly comparable GAAP measures because certain items cannot be reasonably predicted. Accordingly, a reconciliation for expectations of adjusted pro forma net loss per share is not available without unreasonable effort.
Conference Call Information
Pluralsight will host a conference call for analysts and investors to discuss its third quarter 2018 results and outlook for its fourth quarter 2018, and the full years 2018 and 2019, today at 2:30 p.m., Mountain time (4:30 p.m. Eastern time).
Date:
Wednesday, October 24
Time:
2:30 p.m. MT (4:30 p.m. ET)
Webcast:
https://investors.pluralsight.com/
Dial-in number:
(877) 350-6732 or (629) 228-0693, conference ID: 1166607
A live audio webcast of the conference call will also be accessible from the Pluralsight website at investors.pluralsight.com. A telephonic replay of the call will be available three hours after the call, will run for seven days, and may be accessed by dialing (855) 859-2056 or (404) 537-3406 and entering the passcode 1166607.
About Pluralsight
Pluralsight is an enterprise technology learning platform that delivers a unified, end-to-end learning experience for businesses across the globe. Through its subscription service, companies are empowered to move at the speed of technology, increasing proficiency, innovation and efficiency. Founded in 2004, brought online in 2011, and trusted by Fortune 500 companies, Pluralsight provides subscribers with on-demand access to a digital ecosystem of learning tools, including adaptive skill tests, directed learning paths, expert-authored courses, interactive labs and live mentoring.
Pluralsight and the Pluralsight logo are trademarks of Pluralsight, LLC in the United States and in jurisdictions throughout the world.



Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws that involve risks and uncertainties, including statements regarding our future financial and operating performance, including our financial outlook for the fourth quarter 2018, and the full years 2018 and 2019. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: the pace of market adoption of cloud-based learning solutions; our ability to expand our course library and develop new platform features; competition; our ability to attract and retain customers; our ability to increase sales of subscriptions to our platform to customers; our ability to expand our sales and marketing capabilities; and general market, political, economic, and business conditions.
Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our final prospectus filed with the SEC on May 17, 2018 (File No. 333-224301), which is available on our website at investors.pluralsight.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Key Business Metrics
Billings. Billings represents total revenue plus the change in deferred revenue in the period, as presented in our condensed consolidated statements of cash flows. Billings in any particular period represents amounts invoiced to customers and reflects subscription renewals and upsells to existing customers plus sales to new customers. We use billings to measure our ability to sell subscriptions to our platform to both existing and new customers. We use billings from business customers and our percentage of billings from business customers to measure and monitor our ability to sell subscriptions to our platform to business customers.
Non-GAAP Financial Measures
Pluralsight has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). Pluralsight uses the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, adjusted pro forma net loss, adjusted pro forma net loss per share and free cash flow in analyzing its financial results and believes that the use of these metrics is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Pluralsight’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures.
The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our historical non-GAAP financial measures to their most directly comparable GAAP measures have been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations.



Non-GAAP gross profit. We define non-GAAP gross profit as gross profit plus equity-based compensation and amortization related to acquired intangible assets.
Non-GAAP gross margin. We define non-GAAP gross margin as non-GAAP gross profit divided by our revenue.
Non-GAAP operating loss. We define non-GAAP operating loss as loss from operations plus equity-based compensation and amortization of acquired intangible assets.
Adjusted pro forma net loss and adjusted pro forma net loss per share. We define adjusted pro forma net loss as net loss attributable to Pluralsight, Inc. adjusted for the reallocation of loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc. and further adjusted for equity-based compensation, amortization of acquired intangible assets, and loss on debt extinguishment. We define adjusted pro forma net loss per share as adjusted pro forma net loss divided by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc.
Free cash flow. We define free cash flow as cash provided by (used in) operating activities less purchases of property and equipment and purchases of our content library.




PLURALSIGHT, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Revenue
 
$
61,553

 
$
43,286

 
$
164,769

 
$
119,416

Cost of revenue(1)(2)
 
15,331

 
12,582

 
46,107

 
35,678

Gross profit
 
46,222

 
30,704

 
118,662

 
83,738

Operating expenses(1)(2):
 
 
 
 
 
 
 
 
Sales and marketing
 
41,392

 
29,410

 
109,792

 
70,254

Technology and content
 
17,227

 
12,448

 
47,045

 
33,979

General and administrative
 
17,398

 
19,094

 
48,138

 
34,773

Total operating expenses
 
76,017

 
60,952

 
204,975

 
139,006

Loss from operations
 
(29,795
)
 
(30,248
)
 
(86,313
)
 
(55,268
)
Other (expense) income:
 
 
 
 
 
 
 
 
Interest expense
 
(342
)
 
(3,252
)
 
(6,476
)
 
(8,376
)
Loss on debt extinguishment
 

 

 
(4,085
)
 
(1,882
)
Other income, net
 
654

 
55

 
689

 
124

Loss before income taxes
 
(29,483
)
 
(33,445
)
 
(96,185
)
 
(65,402
)
Provision for income taxes
 
(254
)
 
(90
)
 
(506
)
 
(216
)
Net loss
 
$
(29,737
)
 
$
(33,535
)
 
$
(96,691
)
 
$
(65,618
)
Less: Net loss attributable to non-controlling interests
 
(15,578
)
 

 
(28,284
)
 

Net loss attributable to Pluralsight, Inc.
 
$
(14,159
)
 
$
(33,535
)
 
$
(68,407
)
 
$
(65,618
)
Less: Accretion of Series A redeemable convertible preferred units
 

 
(34,375
)
 
(176,275
)
 
(57,200
)
Net loss attributable to common shares
 
$
(14,159
)
 
$
(67,910
)
 
$
(244,682
)
 
$
(122,818
)
Net loss per share, basic and diluted(3)
 
$
(0.23
)
 


 
$
(0.41
)
 


Weighted-average common shares used in computing basic and diluted net loss per share(3)
 
62,472

 


 
62,400

 



(1) Includes equity-based compensation expense as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Cost of revenue
 
$
40

 
$
5

 
$
86

 
$
15

Sales and marketing
 
4,372

 
631

 
9,343

 
2,010

Technology and content
 
2,790

 
499

 
5,839

 
1,489

General and administrative
 
8,842

 
11,762

 
21,704

 
15,474

Total equity-based compensation
 
$
16,044

 
$
12,897

 
$
36,972

 
$
18,988







PLURALSIGHT, INC.
Condensed Consolidated Statements of Operations (cont.)
(in thousands)
(unaudited)

(2) Includes amortization of acquired intangible assets as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Cost of revenue
 
$
880

 
$
1,642

 
$
6,803

 
$
4,926

Sales and marketing
 

 
161

 
389

 
483

Technology and content
 
176

 
176

 
529

 
528

General and administrative
 

 
27

 

 
81

Total amortization of acquired intangible assets
 
$
1,056

 
$
2,006

 
$
7,721

 
$
6,018


(3) Represents net loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the periods following the reorganization transactions and Pluralsight, Inc.'s initial public offering.
























PLURALSIGHT, INC.
Key Business Metrics and Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)


Key Business Metrics
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Billings
 
$
72,243

 
$
50,005

 
$
192,959

 
$
134,917

Billings from business customers
 
$
61,143

 
$
39,920

 
$
161,018

 
$
105,092

% of billings from business customers
 
85
%
 
80
%
 
83
%
 
78
%

Non-GAAP Financial Measures
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Reconciliation of gross profit to non-GAAP gross profit:
 
 
 
 
 
 
 
 
Gross profit
 
$
46,222

 
$
30,704

 
$
118,662

 
$
83,738

Equity-based compensation
 
40

 
5

 
86

 
15

Amortization of acquired intangible assets
 
880

 
1,642

 
6,803

 
4,926

Non-GAAP gross profit
 
$
47,142

 
$
32,351

 
$
125,551

 
$
88,679

Gross margin
 
75
%
 
71
%
 
72
%
 
70
%
Non-GAAP gross margin
 
77
%
 
75
%
 
76
%
 
74
%
 
 
 
 
 
 
 
 
 
Reconciliation of loss from operations to non-GAAP operating loss:
 
 
 
 
 
 
 
 
Loss from operations
 
$
(29,795
)
 
$
(30,248
)
 
$
(86,313
)
 
$
(55,268
)
Equity-based compensation
 
16,044

 
12,897

 
36,972

 
18,988

Amortization of acquired intangible assets
 
1,056

 
2,006

 
7,721

 
6,018

Non-GAAP operating loss
 
$
(12,695
)
 
$
(15,345
)
 
$
(41,620
)
 
$
(30,262
)




















PLURALSIGHT, INC.
Key Business Metrics and Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Adjusted pro forma net loss per share
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
GAAP net loss attributable to common shares
 
$
(14,159
)
 
$
(67,910
)
 
$
(244,682
)
 
$
(122,818
)
Accretion of Series A redeemable convertible preferred units
 

 
34,375

 
176,275

 
57,200

Reallocation of net loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for Class A common stock
 
(15,578
)
 

 
(28,284
)
 

Equity-based compensation
 
16,044

 
12,897

 
36,972

 
18,988

Amortization of acquired intangibles
 
1,056

 
2,006

 
7,721

 
6,018

Loss on debt extinguishment
 

 

 
4,085

 
1,882

Adjusted pro forma net loss
 
$
(12,637
)
 
$
(18,632
)
 
$
(47,913
)
 
$
(38,730
)
Denominator:
 
 
 
 
 
 
 
 
Weighted-average shares of Class A common stock outstanding
 
62,472

 

 
31,314

 

Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock
 
68,734

 
47,922

 
58,529

 
47,831

Adjusted pro forma weighted-average common shares outstanding, basic and diluted
 
131,206

 
47,922

 
89,843

 
47,831

 
 
 
 
 
 
 
 
 
Adjusted pro forma net loss per share
 
$
(0.10
)
 
$
(0.39
)
 
$
(0.53
)
 
$
(0.81
)

Reconciliation of net cash provided by (used in) operating activities to free cash flow:
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
 
$
1,934

 
$
(6,866
)
 
$
(14,283
)
 
$
(10,816
)
Less: Purchases of property and equipment
 
(2,002
)
 
(1,434
)
 
(6,576
)
 
(4,459
)
Less: Purchases of content library
 
(841
)
 
(540
)
 
(2,345
)
 
(1,769
)
Free cash flow
 
$
(909
)
 
$
(8,840
)
 
$
(23,204
)
 
$
(17,044
)















PLURALSIGHT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 
 
September 30, 2018
 
December 31, 2017
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
208,626

 
$
28,267

Accounts receivable, net
 
47,801

 
38,229

Prepaid expenses and other current assets
 
8,037

 
5,125

Total current assets
 
264,464

 
71,621

Property and equipment, net
 
22,503

 
22,457

Content library, net
 
7,547

 
13,441

Intangible assets, net
 
1,935

 
2,854

Goodwill
 
123,119

 
123,119

Other assets
 
2,080

 
2,928

Total assets
 
$
421,648

 
$
236,420

Liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
6,834

 
$
6,029

Accrued expenses
 
31,415

 
26,514

Accrued author fees
 
9,331

 
7,879

Deferred revenue
 
130,555

 
103,107

Total current liabilities
 
178,135

 
143,529

Deferred revenue, net of current portion
 
8,649

 
8,194

Long-term debt
 

 
116,037

Facility financing obligation
 
7,500

 
7,513

Other liabilities
 
1,090

 
458

Total liabilities
 
195,374

 
275,731

Redeemable convertible preferred units
 

 
405,766

Stockholders' equity/members’ deficit:
 
 
 
 
Preferred stock
 

 

Class A common stock
 
6

 

Class B common stock
 
6

 

Class C common stock
 
1

 

Additional paid-in capital
 
443,182

 

Members’ capital
 

 

Accumulated other comprehensive (loss) income
 
(34
)
 
25

Accumulated deficit
 
(335,863
)
 
(445,102
)
Total stockholders' equity attributable to Pluralsight, Inc./members' deficit
 
107,298

 
(445,077
)
Non-controlling interests
 
118,976

 

Total stockholders' equity/members' deficit
 
226,274

 
(445,077
)
Total liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit
 
$
421,648

 
$
236,420








PLURALSIGHT, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Operating activities
 
 
 
 
 
 
 
 
Net loss
 
$
(29,737
)
 
$
(33,535
)
 
$
(96,691
)
 
$
(65,618
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
Depreciation of property and equipment
 
1,973

 
1,741

 
6,331

 
4,367

Amortization of acquired intangible assets
 
1,056

 
2,006

 
7,721

 
6,018

Amortization of course creation costs
 
507

 
379

 
1,437

 
1,050

Equity-based compensation
 
16,044

 
12,897

 
36,972

 
18,988

Provision for doubtful accounts
 
135

 
172

 
493

 
360

Amortization of debt discount and debt issuance costs
 

 
768

 
1,215

 
1,074

Debt extinguishment costs
 
17

 

 
4,197

 
931

Deferred tax benefit
 
(34
)
 

 
(98
)
 

Changes in assets and liabilities:
 
 
 
 
 
 
 
 
Accounts receivable
 
(11,687
)
 
(4,553
)
 
(10,352
)
 
(2,720
)
Prepaid expenses and other assets
 
868

 
11

 
(2,990
)
 
(3,204
)
Accounts payable
 
1,516

 
1,060

 
928

 
2,388

Accrued expenses and other liabilities
 
9,751

 
5,080

 
6,912

 
8,721

Accrued author fees
 
835

 
389

 
1,452

 
1,328

Deferred revenue
 
10,690

 
6,719

 
28,190

 
15,501

Net cash provided by (used in) operating activities
 
1,934

 
(6,866
)
 
(14,283
)
 
(10,816
)
Investing activities
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
(2,002
)
 
(1,434
)
 
(6,576
)
 
(4,459
)
Purchases of content library
 
(841
)
 
(540
)
 
(2,345
)
 
(1,769
)
Net cash used in investing activities
 
(2,843
)
 
(1,974
)
 
(8,921
)
 
(6,228
)
Financing activities
 
 
 
 
 
 
 
 
Proceeds from initial public offering, net of underwriting discounts and commissions
 

 

 
332,080

 

Payments of costs related to initial public offering
 
(3,998
)
 
(175
)
 
(7,083
)
 
(175
)
Borrowings of long-term debt
 

 

 
20,000

 
115,000

Repayments of long-term debt
 

 

 
(137,710
)
 
(85,000
)
Payments of debt extinguishment costs
 
(17
)
 

 
(2,179
)
 

Payments of debt issuance costs
 

 
(28
)
 
(450
)
 
(837
)
Payments to settle equity appreciation rights
 

 

 
(325
)
 

Taxes paid related to net share settlement
 

 

 
(78
)
 

Proceeds from the issuance of common units
 

 
3,114

 

 
3,136

Redemption of incentive units
 

 
(2,801
)
 

 
(2,801
)
Payments of facility financing obligation
 
(5
)
 
(4
)
 
(13
)
 
(12
)
Net cash (used in) provided by financing activities
 
(4,020
)
 
106

 
204,242

 
29,311

Effect of exchange rate change on cash, cash equivalents, and restricted cash
 
(50
)
 
14

 
(136
)
 
38

Net (decrease) increase in cash, cash equivalents, and restricted cash
 
(4,979
)
 
(8,720
)
 
180,902

 
12,305

Cash, cash equivalents, and restricted cash, beginning of period
 
214,358

 
40,422

 
28,477

 
19,397

Cash, cash equivalents, and restricted cash, end of period
 
$
209,379

 
$
31,702

 
$
209,379

 
$
31,702

 
 
 
 
 
 
 
 
 
Reconciliation of cash, cash equivalents, and restricted cash:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
208,626

 
$
31,492

 
$
208,626

 
$
31,492

Restricted cash included in other assets
 
753

 
210

 
753

 
210

Total cash, cash equivalents, and restricted cash
 
$
209,379

 
$
31,702

 
$
209,379

 
$
31,702




Investor Relations Contact:
Mark McReynolds
Investor Relations
Pluralsight
801-784-9007
mark-mcreynolds@pluralsight.com

Media Contact:
DJ Anderson
Communications/Press
Pluralsight
801-784-9007
dj@pluralsight.com