Pluralsight, Inc. - FORM 8-K - EX-99.1 - February 10, 2021

Attached files

file filename
8-K - 8-K - Pluralsight, Inc.ps-20210210.htm
Exhibit 99.1
Pluralsight Announces Fourth Quarter 2020 Results

Silicon Slopes, Utah - February 10, 2021 - Pluralsight, Inc. (NASDAQ: PS), the technology workforce development company, today announced financial results for the fourth quarter and year ended December 31, 2020.
Fourth Quarter Financial Highlights
•Billings - Q4 2020 billings were $151.1 million, an increase of 18% period over period. Q4 2020 billings from business customers were $134.0 million, an increase of 18% period over period.
•Revenue - Q4 2020 revenue was $105.0 million, an increase of 18% period over period.
•Gross margin - Q4 2020 gross margin was 78%, compared to 79% in Q4 2019. Q4 2020 and Q4 2019 non-GAAP gross margin was 80%.
•Net loss per share - GAAP net loss per share for Q4 2020 was $0.30, compared to $0.31 in Q4 2019. Adjusted pro forma net loss per share for Q4 2020 was $0.01, compared to $0.09 in Q4 2019.
•Cash flows - Cash provided by operations was $2.4 million for Q4 2020, compared to cash used in operations of $7.9 million in Q4 2019. Free cash flow was negative $4.0 million for Q4 2020, compared to negative $13.0 million in Q4 2019.
Full Year 2020 Financial Highlights
•Billings - 2020 billings were $430.4 million, an increase of 14% year over year. 2020 billings from business customers were $380.8 million, an increase of 15% year over year.
•Revenue - 2020 revenue was $391.9 million, an increase of 24% year over year.
•Gross margin - 2020 gross margin was 79%, compared to 77% in 2019. 2020 non-GAAP gross margin was 81%, compared to 79% in 2019.
•Net loss per share - GAAP net loss per share for 2020 was $1.15, compared to $1.19 in 2019. Adjusted pro forma net loss per share for 2020 was $0.12, compared to $0.30 in 2019.
•Cash flows - Cash provided by operations was $9.1 million for 2020, compared to cash used in operations of $11.7 million in 2019. Free cash flow was negative $34.2 million for 2020, compared to negative $28.2 million in 2019.
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.
About Pluralsight
Pluralsight is the leading technology workforce development company that helps companies and teams build better products by developing critical skills, improving processes and gaining insights through data, and providing strategic skills consulting. Trusted by forward-thinking


companies of every size in every industry, Pluralsight helps individuals and businesses transform with technology. Pluralsight Skills helps enterprises build technology skills at scale with expert-authored courses on today’s most important technologies, including cloud, artificial intelligence and machine learning, data science, and security, among others. Skills also includes tools to align skill development with business objectives, virtual instructor-led training, hands-on labs, skill assessments and one-of-a-kind analytics. Flow complements Skills by providing engineering teams with actionable data and visibility into workflow patterns to accelerate the delivery of products and services. For more information about Pluralsight, visit pluralsight.com.
Pluralsight and the Pluralsight logo are trademarks of Pluralsight, LLC in the United States and in jurisdictions throughout the world.
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, less the change in contract assets and unbilled accounts receivable in the period. 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 new and existing 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 expenses, 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, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions.
Non-GAAP gross margin. We define non-GAAP gross margin as non-GAAP gross profit divided by our revenue.
Non-GAAP operating expenses. We define non-GAAP operating expenses as operating expenses less equity-based compensation, amortization of acquired intangible assets, and employer payroll


taxes on employee stock transactions, and, as applicable, other special items including acquisition-related costs.
Non-GAAP operating loss. We define non-GAAP operating loss as loss from operations plus equity-based compensation, amortization of acquired intangible assets, employer payroll taxes on employee stock transactions, and, as applicable, other special items including acquisition-related costs.
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, employer payroll taxes on employee stock transactions, amortization of debt discount and issuance costs, and, as applicable, other special items including acquisition-related costs. 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 December 31,Year Ended December 31,
 2020201920202019
Revenue$104,989 $88,811 $391,865 $316,910 
Cost of revenue(1)(2)
23,401 19,009 82,552 71,353 
Gross profit81,588 69,802 309,313 245,557 
Operating expenses(1)(2):
Sales and marketing60,785 57,071 238,165 207,085 
Technology and content29,782 29,965 118,785 102,902 
General and administrative28,918 21,950 95,651 85,560 
Total operating expenses119,485 108,986 452,601 395,547 
Loss from operations(37,897)(39,184)(143,288)(149,990)
Other income (expense):
Interest expense(7,523)(7,129)(29,322)(23,565)
Loss on debt extinguishment— — — (950)
Other income, net1,982 2,966 8,411 11,749 
Loss before income taxes(43,438)(43,347)(164,199)(162,756)
Income tax benefit (expense)361 (122)108 (823)
Net loss$(43,077)$(43,469)$(164,091)$(163,579)
Less: Net loss attributable to non-controlling interests(7,606)(11,492)(36,011)(50,921)
Net loss attributable to Pluralsight, Inc.$(35,471)$(31,977)$(128,080)$(112,658)
Net loss per share, basic and diluted$(0.30)$(0.31)$(1.15)$(1.19)
Weighted-average shares of Class A common stock used in computing basic and diluted net loss per share
120,133 102,747 111,798 94,515 
(1) Includes equity-based compensation as follows:
Three Months Ended December 31,Year Ended December 31,
2020201920202019
Cost of revenue$335 $193 $1,213 $548 
Sales and marketing9,860 7,710 41,168 30,677 
Technology and content6,641 5,917 26,222 21,430 
General and administrative6,800 8,960 31,250 37,782 
Total equity-based compensation$23,636 $22,780 $99,853 $90,437 
(2) Includes amortization of acquired intangible assets as follows:
Three Months Ended December 31,Year Ended December 31,
2020201920202019
Cost of revenue$1,832 $1,209 $5,458 $3,645 
Sales and marketing146 50 296 129 
Technology and content121 176 580 705 
Total amortization of acquired intangible assets$2,099 $1,435 $6,334 $4,479 



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

Key Business Metrics
Three Months Ended December 31,Year Ended December 31,
2020201920202019
Billings$151,088 $128,448 $430,422 $379,051 
Billings from business customers$134,022 $113,176 $380,788 $330,143 
% of billings from business customers89 %88 %88 %87 %

Non-GAAP Financial Measures
Three Months Ended December 31,Year Ended December 31,
2020201920202019
Reconciliation of gross profit to non-GAAP gross profit:
Gross profit$81,588 $69,802 $309,313 $245,557 
Equity-based compensation335 193 1,213 548 
Amortization of acquired intangible assets1,832 1,209 5,458 3,645 
Employer payroll taxes on employee stock transactions12 5 54 23 
Non-GAAP gross profit
$83,767 $71,209 $316,038 $249,773 
Gross margin78 %79 %79 %77 %
Non-GAAP gross margin80 %80 %81 %79 %



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

Three Months Ended December 31,Year Ended December 31,
2020201920202019
Reconciliation of operating expenses to non-GAAP operating expenses:
Sales and marketing$60,785 $57,071 $238,165 $207,085 
Less: Equity-based compensation(9,860)(7,710)(41,168)(30,677)
Less: Amortization of acquired intangible assets(146)(50)(296)(129)
Less: Employer payroll taxes on employee stock transactions(169)(81)(1,151)(1,293)
Non-GAAP sales and marketing
$50,610 $49,230 $195,550 $174,986 
Sales and marketing as a percentage of revenue58 %64 %61 %65 %
Non-GAAP sales and marketing as a percentage of revenue48 %55 %50 %55 %
Technology and content$29,782 $29,965 $118,785 $102,902 
Less: Equity-based compensation(6,641)(5,917)(26,222)(21,430)
Less: Amortization of acquired intangible assets(121)(176)(580)(705)
Less: Employer payroll taxes on employee stock transactions(121)(94)(1,165)(1,073)
Non-GAAP technology and content
$22,899 $23,778 $90,818 $79,694 
Technology and content as a percentage of revenue28 %34 %30 %32 %
Non-GAAP technology and content as a percentage of revenue22 %27 %23 %25 %
General and administrative$28,918 $21,950 $95,651 $85,560 
Less: Equity-based compensation(6,800)(8,960)(31,250)(37,782)
Less: Employer payroll taxes on employee stock transactions(156)(142)(1,008)(1,039)
Less: Secondary offering costs— — (1,260)(918)
Less: Acquisition-related costs(8,097)— (8,438)(835)
Non-GAAP general and administrative
$13,865 $12,848 $53,695 $44,986 
General and administrative as a percentage of revenue28 %25 %24 %27 %
Non-GAAP general and administrative as a percentage of revenue13 %14 %14 %14 %
Reconciliation of loss from operations to non-GAAP operating loss:
Loss from operations$(37,897)$(39,184)$(143,288)$(149,990)
Equity-based compensation23,636 22,780 99,853 90,437 
Amortization of acquired intangible assets2,099 1,435 6,334 4,479 
Employer payroll taxes on employee stock transactions458 322 3,378 3,428 
Secondary offering costs— — 1,260 918 
Acquisition-related costs8,097 — 8,438 835 
Non-GAAP operating loss
$(3,607)$(14,647)$(24,025)$(49,893)


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

 Three Months Ended December 31,Year Ended December 31,
 2020201920202019
Adjusted pro forma net loss per share
Numerator:
Net loss attributable to Pluralsight, Inc.$(35,471)$(31,977)$(128,080)$(112,658)
Net loss attributable to non-controlling interests
(7,606)(11,492)(36,011)(50,921)
Equity-based compensation23,636 22,780 99,853 90,437 
Amortization of acquired intangibles2,099 1,435 6,334 4,479 
Employer payroll taxes on employee stock transactions458 322 3,378 3,428 
Secondary offering costs— — 1,260 918 
Acquisition-related costs8,097 — 8,438 835 
Amortization of debt discount and issuance costs6,949 6,571 27,077 21,691 
Loss on debt extinguishment— — — 950 
Adjusted pro forma net loss$(1,838)$(12,361)$(17,751)$(40,841)
Denominator:
Weighted-average shares of Class A common stock outstanding
120,133 102,747 111,798 94,515 
Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock
25,446 36,447 31,434 42,720 
Adjusted pro forma weighted-average common shares outstanding, basic and diluted
145,579 139,194 143,232 137,235 
Adjusted pro forma net loss per share$(0.01)$(0.09)$(0.12)$(0.30)
Reconciliation of net cash provided by (used in) operating activities to free cash flow:
Net cash provided by (used in) operating activities$2,397 $(7,906)$9,090 $(11,729)
Less: Purchases of property and equipment(1)
(4,212)(3,562)(35,438)(11,181)
Less: Purchases of content library(2,213)(1,504)(7,809)(5,326)
Free cash flow$(4,028)$(12,972)$(34,157)$(28,236)
(1) Purchases of property and equipment includes cash paid for the construction of tenant improvements at our new headquarters in Utah of approximately $1.2 million and $24.1 million for the three months and year ended December 31, 2020, respectively.





PLURALSIGHT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$134,395 $90,515 
Short-term investments265,220 332,234 
Accounts receivable, net118,808 101,576 
Deferred contract acquisition costs22,910 18,331 
Prepaid expenses and other current assets25,033 14,174 
Total current assets566,366 556,830 
Restricted cash and cash equivalents17,546 28,916 
Long-term investments86,586 105,805 
Property and equipment, net64,518 22,896 
Right-of-use assets61,157 15,804 
Content library, net28,890 8,958 
Intangible assets, net18,488 22,631 
Goodwill293,863 262,532 
Deferred contract acquisition costs, noncurrent10,553 5,982 
Other assets3,166 1,599 
Total assets$1,151,133 $1,031,953 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$9,697 $10,615 
Accrued expenses57,884 40,703 
Accrued author fees12,111 11,694 
Lease liabilities10,350 5,752 
Deferred revenue252,423 215,137 
Total current liabilities342,465 283,901 
Deferred revenue, noncurrent23,863 19,517 
Convertible senior notes, net497,305 470,228 
Lease liabilities, noncurrent74,421 11,167 
Contingent consideration liabilities11,050 — 
Other liabilities259 980 
Total liabilities949,363 785,793 
Stockholders' equity:
Preferred stock— — 
Class A common stock12 10 
Class B common stock1 2 
Class C common stock1 1 
Additional paid-in capital752,804 641,128 
Accumulated other comprehensive income975 225 
Accumulated deficit(586,461)(458,381)
Total stockholders’ equity attributable to Pluralsight, Inc.167,332 182,985 
Non-controlling interests34,438 63,175 
Total stockholders’ equity201,770 246,160 
Total liabilities and stockholders' equity$1,151,133 $1,031,953 



PLURALSIGHT, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended December 31,Year Ended December 31,
2020201920202019
Operating activities
Net loss$(43,077)$(43,469)$(164,091)$(163,579)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment3,396 2,468 12,262 9,464 
Amortization of acquired intangible assets2,099 1,435 6,334 4,479 
Amortization of course creation costs963 702 3,427 2,543 
Equity-based compensation23,636 22,780 99,853 90,437 
Amortization of deferred contract acquisition costs6,876 6,270 25,894 23,587 
Amortization of debt discount and issuance costs6,949 6,571 27,077 21,691 
Investment discount and premium amortization, net702 (675)770 (2,446)
Loss on debt extinguishment— — — 950 
Other(807)558 (218)380 
Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable(40,557)(39,132)(17,045)(37,274)
Deferred contract acquisition costs(12,553)(9,020)(35,044)(27,688)
Prepaid expenses and other assets(6,185)(2,154)(10,422)(5,663)
Right-of-use assets1,128 1,247 5,615 5,586 
Accounts payable1,969 5,203 (1,157)2,683 
Accrued expenses and other liabilities11,023 699 17,903 5,887 
Accrued author fees124 400 417 1,692 
Lease liabilities59 (1,529)(3,545)(6,659)
Deferred revenue46,652 39,740 41,060 62,201 
Net cash provided by (used in) operating activities2,397 (7,906)9,090 (11,729)
Investing activities
Purchases of property and equipment(4,212)(3,562)(35,438)(11,181)
Purchases of content library(2,213)(1,504)(7,809)(5,326)
Cash paid for acquisition, net of cash acquired(37,512)— (37,512)(163,771)
Purchases of investments(64,148)(164,593)(491,278)(694,246)
Proceeds from sales of investments— — — 4,967 
Proceeds from maturities of investments129,752 139,841 576,582 252,836 
Net cash provided by (used in) investing activities21,667 (29,818)4,545 (616,721)
Financing activities
Proceeds from issuance of common stock from employee equity plans11,677 9,952 26,418 24,828 
Taxes paid related to net share settlement(2,387)(1,574)(7,992)(1,574)
Proceeds from issuance of convertible senior notes, net of discount and issuance costs— — — 616,654 
Purchase of capped calls related to issuance of convertible senior notes— — — (69,432)
Repurchases of convertible senior notes— — — (35,000)
Proceeds from terminations of capped calls related to repurchases of convertible senior notes— — — 1,284 
Net cash provided by (used in) financing activities9,290 8,378 18,426 536,760 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents368 158 449 50 
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents33,722 (29,188)32,510 (91,640)
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period118,219 148,619 119,431 211,071 
Cash, cash equivalents, and restricted cash and cash equivalents, end of period$151,941 $119,431 $151,941 $119,431 


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

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


Pluralsight, Inc. Reports