Press Release

Pluralsight Announces Fourth Quarter and Year End 2020 Results

February 10, 2021

SILICON SLOPES, Utah, Feb. 10, 2021 (GLOBE NEWSWIRE) -- 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,
  2020   2019   2020   2019
               
Revenue $ 104,989     $ 88,811     $ 391,865     $ 316,910  
Cost of revenue(1)(2) 23,401     19,009     82,552     71,353  
Gross profit 81,588     69,802     309,313     245,557  
Operating expenses(1)(2):              
Sales and marketing 60,785     57,071     238,165     207,085  
Technology and content 29,782     29,965     118,785     102,902  
General and administrative 28,918     21,950     95,651     85,560  
Total operating expenses 119,485     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, net 1,982     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,
  2020   2019   2020   2019
               
Cost of revenue $ 335   $ 193   $ 1,213   $ 548
Sales and marketing 9,860   7,710   41,168   30,677
Technology and content 6,641   5,917   26,222   21,430
General and administrative 6,800   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,
  2020   2019   2020   2019
               
Cost of revenue $ 1,832   $ 1,209   $ 5,458   $ 3,645
Sales and marketing 146   50   296   129
Technology and content 121   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,
  2020   2019   2020   2019
               
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 customers 89 %   88 %   88 %   87 %

Non-GAAP Financial Measures

  Three Months Ended December 31,   Year Ended December 31,
  2020   2019   2020   2019
               
Reconciliation of gross profit to non-GAAP gross profit:              
Gross profit $ 81,588     $ 69,802     $ 309,313     $ 245,557  
Equity-based compensation 335     193     1,213     548  
Amortization of acquired intangible assets 1,832     1,209     5,458     3,645  
Employer payroll taxes on employee stock transactions 12     5     54     23  
Non-GAAP gross profit $ 83,767     $ 71,209     $ 316,038     $ 249,773  
Gross margin 78 %   79 %   79 %   77 %
Non-GAAP gross margin 80 %   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,
  2020   2019   2020   2019
               
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 revenue 58   %   64   %   61   %   65   %
Non-GAAP sales and marketing as a percentage of revenue 48   %   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 revenue 28   %   34   %   30   %   32   %
Non-GAAP technology and content as a percentage of revenue 22   %   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 revenue 28   %   25   %   24   %   27   %
Non-GAAP general and administrative as a percentage of revenue 13   %   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 compensation 23,636       22,780       99,853       90,437    
Amortization of acquired intangible assets 2,099       1,435       6,334       4,479    
Employer payroll taxes on employee stock transactions 458       322       3,378       3,428    
Secondary offering costs             1,260       918    
Acquisition-related costs 8,097             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,
  2020   2019   2020   2019
               
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 compensation 23,636     22,780     99,853     90,437  
Amortization of acquired intangibles 2,099     1,435     6,334     4,479  
Employer payroll taxes on employee stock transactions 458     322     3,378     3,428  
Secondary offering costs         1,260     918  
Acquisition-related costs 8,097         8,438     835  
Amortization of debt discount and issuance costs 6,949     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, 2020   December 31, 2019
       
Assets      
Current assets:      
Cash and cash equivalents $ 134,395     $ 90,515  
Short-term investments 265,220     332,234  
Accounts receivable, net 118,808     101,576  
Deferred contract acquisition costs 22,910     18,331  
Prepaid expenses and other current assets 25,033     14,174  
Total current assets 566,366     556,830  
Restricted cash and cash equivalents 17,546     28,916  
Long-term investments 86,586     105,805  
Property and equipment, net 64,518     22,896  
Right-of-use assets 61,157     15,804  
Content library, net 28,890     8,958  
Intangible assets, net 18,488     22,631  
Goodwill 293,863     262,532  
Deferred contract acquisition costs, noncurrent 10,553     5,982  
Other assets 3,166     1,599  
Total assets $ 1,151,133     $ 1,031,953  
Liabilities and stockholders' equity      
Current liabilities:      
Accounts payable $ 9,697     $ 10,615  
Accrued expenses 57,884     40,703  
Accrued author fees 12,111     11,694  
Lease liabilities 10,350     5,752  
Deferred revenue 252,423     215,137  
Total current liabilities 342,465     283,901  
Deferred revenue, noncurrent 23,863     19,517  
Convertible senior notes, net 497,305     470,228  
Lease liabilities, noncurrent 74,421     11,167  
Contingent consideration liabilities 11,050      
Other liabilities 259     980  
Total liabilities 949,363     785,793  
Stockholders' equity:      
Preferred stock      
Class A common stock 12     10  
Class B common stock 1     2  
Class C common stock 1     1  
Additional paid-in capital 752,804     641,128  
Accumulated other comprehensive income 975     225  
Accumulated deficit (586,461 )   (458,381 )
Total stockholders’ equity attributable to Pluralsight, Inc. 167,332     182,985  
Non-controlling interests 34,438     63,175  
Total stockholders’ equity 201,770     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,
  2020   2019   2020   2019
               
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 equipment 3,396     2,468     12,262     9,464  
Amortization of acquired intangible assets 2,099     1,435     6,334     4,479  
Amortization of course creation costs 963     702     3,427     2,543  
Equity-based compensation 23,636     22,780     99,853     90,437  
Amortization of deferred contract acquisition costs 6,876     6,270     25,894     23,587  
Amortization of debt discount and issuance costs 6,949     6,571     27,077     21,691  
Investment discount and premium amortization, net 702     (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 assets 1,128     1,247     5,615     5,586  
Accounts payable 1,969     5,203     (1,157 )   2,683  
Accrued expenses and other liabilities 11,023     699     17,903     5,887  
Accrued author fees 124     400     417     1,692  
Lease liabilities 59     (1,529 )   (3,545 )   (6,659 )
Deferred revenue 46,652     39,740     41,060     62,201  
Net cash provided by (used in) operating activities 2,397     (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 investments 129,752     139,841     576,582     252,836  
Net cash provided by (used in) investing activities 21,667     (29,818 )   4,545     (616,721 )
Financing activities              
Proceeds from issuance of common stock from employee equity plans 11,677     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 activities 9,290     8,378     18,426     536,760  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents 368     158     449     50  
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents 33,722     (29,188 )   32,510     (91,640 )
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period 118,219     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   

 

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Source: Pluralsight, Inc.