ps-20201105
false000172557900017255792020-11-052020-11-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 8-K
_______________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (date of earliest event reported)
November 5, 2020
_______________________________________
PLURALSIGHT, INC.
(Exact name of registrant as specified in its charter)
_______________________________________
Delaware001-3849882-3605465
(State or other jurisdiction of incorporation or organization)(Commission File Number)
(I.R.S. Employer Identification Number)

42 Future Way
Draper, Utah 84020
(Address of principal executive offices)

(801) 784-9007
(Registrant's telephone number, including area code)
 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.0001, par value per sharePSThe Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨



Item 2.02 Results of Operations and Financial Condition.

On November 5, 2020, Pluralsight, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information contained in Item 2.02 and Item 9.01 in this Form 8-K, including the accompanying Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filings, unless expressly incorporated by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
  
Exhibit No.Description of Exhibit
99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


1


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 Pluralsight, Inc.
   
Date:November 5, 2020/s/James Budge
  James Budge
  Chief Financial Officer

2
Document
Exhibit 99.1
Pluralsight Announces Third Quarter 2020 Results

Silicon Slopes, Utah - November 5, 2020 - Pluralsight, Inc. (NASDAQ: PS), the technology workforce development company, today announced financial results for the third quarter ended September 30, 2020.
“We’re proud of the progress we made in the quarter while still in the midst of the COVID-19 pandemic. We handily beat our revenue, earnings, and cash expectations in Q3 and have raised our annual expectations for each.” said Aaron Skonnard, co-founder and CEO of Pluralsight. “Q3 billings came in lighter than we expected, but we had strong participation and enthusiasm at our PS LIVE customer event in October. With the pipeline generated from PS LIVE and our new products and capabilities, we remain confident in our outlook.”
Third Quarter Financial Highlights
Billings - Q3 2020 billings were $100.0 million, an increase of 9% period over period. Q3 2020 billings from business customers were $88.6 million, an increase of 10% period over period.
Revenue - Q3 2020 revenue was $99.5 million, an increase of 20% period over period.
Gross margin - Q3 2020 gross margin was 79%, compared to 78% in Q3 2019. Q3 2020 non-GAAP gross margin was 81%, compared to 80% in Q3 2019.
Net loss per share - GAAP net loss per share for Q3 2020 was $0.24, compared to $0.32 in Q3 2019. Adjusted pro forma net loss per share for Q3 2020 was $0.00, compared to $0.08 in Q3 2019.
Cash flows - Cash used in operations was $2.4 million for Q3 2020, compared to $2.2 million in Q3 2019. Free cash flow was negative $14.9 million for Q3 2020, compared to negative $6.6 million in Q3 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.
Financial Outlook
The following forward-looking statements reflect Pluralsight's expectations as of November 5, 2020.
Full Year 2020 Guidance
Revenue is expected to be in the range of $387.0 million to $390.0 million.
Adjusted pro forma net loss per share is expected to be in the range of $0.12 to $0.14, assuming weighted-average shares outstanding of approximately 143.5 million.
Guidance for non-GAAP financial measures excludes 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, which



may be significant. 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.
Pluralsight’s guidance for the full year 2020 reflects its expectations for the periods after taking into account the impact of COVID-19. However, the crisis that this pandemic has created is very fluid, and the situation is constantly evolving. As such, Pluralsight’s actual results may differ materially from such guidance based on a variety of factors, including Pluralsight’s ability to execute its business during this crisis, the impact of the crisis on Pluralsight’s suppliers, customers and partners, governmental action taken in response to COVID-19, and other factors.
Conference Call Information
Pluralsight will host a conference call for analysts and investors to discuss its third quarter 2020 results and outlook for the full year 2020, today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time).
Date:November 5, 2020
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: 3430067
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 3430067.
About Pluralsight
Pluralsight is the leading technology skills and engineering management platform. Trusted by forward-thinking companies of every size in every industry, Pluralsight helps individuals and businesses transform with technology through its Skills and Flow products. Skills helps build technology skills at scale with expert-authored courses on today’s most important technologies, including cloud, artificial intelligence, machine learning, data science, and security, among others. Skills also offers analytics and Skill IQ and Role IQ assessments. Flow complements Skills by providing visibility and analytics into software development workflows to accelerate the delivery of products and services.
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 the quotations of management and statements regarding our future financial and operating performance, and our financial outlook for the full year 2020. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: our ability to attract and retain



customers; our ability to expand our course library and develop new platform features; the demand for, and market acceptance of our platform; competition; our ability to improve sales management and execution; our expectations of the potential impact the COVID-19 pandemic may have on our business; and other 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 Annual Report on Form 10-K/A filed with the SEC on March 2, 2020 and in our quarterly report on Form 10-Q filed with the SEC on November 5, 2020, 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, 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.
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.
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. 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 (used in) provided by 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,
 2020201920202019
Revenue$99,465 $82,620 $286,876 $228,099 
Cost of revenue(1)(2)
20,426 17,829 59,151 52,344 
Gross profit79,039 64,791 227,725 175,755 
Operating expenses(1)(2):
Sales and marketing57,206 55,797 177,380 150,014 
Technology and content29,345 27,847 89,003 72,937 
General and administrative20,366 20,844 66,733 63,610 
Total operating expenses106,917 104,488 333,116 286,561 
Loss from operations(27,878)(39,697)(105,391)(110,806)
Other income (expense):
Interest expense(7,409)(7,412)(21,799)(16,436)
Loss on debt extinguishment— (950)— (950)
Other income, net1,992 3,001 6,429 8,783 
Loss before income taxes(33,295)(45,058)(120,761)(119,409)
Income tax expense(476)(404)(253)(701)
Net loss$(33,771)$(45,462)$(121,014)$(120,110)
Less: Net loss attributable to non-controlling interests(6,410)(12,983)(28,405)(39,429)
Net loss attributable to Pluralsight, Inc.$(27,361)$(32,479)$(92,609)$(80,681)
Net loss per share, basic and diluted$(0.24)$(0.32)$(0.85)$(0.88)
Weighted-average shares of Class A common stock used in computing basic and diluted net loss per share
115,196 101,407 109,009 91,741 
(1) Includes equity-based compensation as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Cost of revenue$312 $138 $878 $355 
Sales and marketing10,908 8,739 31,308 22,967 
Technology and content6,361 6,666 19,581 15,513 
General and administrative6,633 9,114 24,450 28,822 
Total equity-based compensation$24,214 $24,657 $76,217 $67,657 
(2) Includes amortization of acquired intangible assets as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Cost of revenue$1,208 $1,209 $3,626 $2,436 
Sales and marketing50 50 150 79 
Technology and content122 176 459 529 
Total amortization of acquired intangible assets$1,380 $1,435 $4,235 $3,044 




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,
2020201920202019
Billings$100,022 $92,123 $279,334 $250,603 
Billings from business customers$88,599 $80,707 $246,766 $216,967 
% of billings from business customers89 %88 %88 %87 %

Non-GAAP Financial Measures
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Reconciliation of gross profit to non-GAAP gross profit:
Gross profit$79,039 $64,791 $227,725 $175,755 
Equity-based compensation312 138 878 355 
Amortization of acquired intangible assets1,208 1,209 3,626 2,436 
Employer payroll taxes on employee stock transactions10 42 18 
Non-GAAP gross profit
$80,569 $66,140 $232,271 $178,564 
Gross margin79 %78 %79 %77 %
Non-GAAP gross margin81 %80 %81 %78 %




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

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Reconciliation of operating expenses to non-GAAP operating expenses:
Sales and marketing$57,206 $55,797 $177,380 $150,014 
Less: Equity-based compensation(10,908)(8,739)(31,308)(22,967)
Less: Amortization of acquired intangible assets(50)(50)(150)(79)
Less: Employer payroll taxes on employee stock transactions(161)(71)(982)(1,212)
Non-GAAP sales and marketing
$46,087 $46,937 $144,940 $125,756 
Sales and marketing as a percentage of revenue58 %68 %62 %66 %
Non-GAAP sales and marketing as a percentage of revenue46 %57 %51 %55 %
Technology and content$29,345 $27,847 $89,003 $72,937 
Less: Equity-based compensation(6,361)(6,666)(19,581)(15,513)
Less: Amortization of acquired intangible assets(122)(176)(459)(529)
Less: Employer payroll taxes on employee stock transactions(192)(65)(1,044)(979)
Non-GAAP technology and content
$22,670 $20,940 $67,919 $55,916 
Technology and content as a percentage of revenue30 %34 %31 %32 %
Non-GAAP technology and content as a percentage of revenue23 %25 %24 %25 %
General and administrative$20,366 $20,844 $66,733 $63,610 
Less: Equity-based compensation(6,633)(9,114)(24,450)(28,822)
Less: Employer payroll taxes on employee stock transactions(182)(195)(852)(897)
Less: Secondary offering costs— — (1,260)(918)
Less: Acquisition-related costs(341)— (341)(835)
Non-GAAP general and administrative
$13,210 $11,535 $39,830 $32,138 
General and administrative as a percentage of revenue20 %25 %23 %28 %
Non-GAAP general and administrative as a percentage of revenue13 %14 %14 %14 %
Reconciliation of loss from operations to non-GAAP operating loss:
Loss from operations$(27,878)$(39,697)$(105,391)$(110,806)
Equity-based compensation24,214 24,657 76,217 67,657 
Amortization of acquired intangible assets1,380 1,435 4,235 3,044 
Employer payroll taxes on employee stock transactions545 333 2,920 3,106 
Secondary offering costs— — 1,260 918 
Acquisition-related costs341 — 341 835 
Non-GAAP operating loss
$(1,398)$(13,272)$(20,418)$(35,246)



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

 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Adjusted pro forma net loss per share
Numerator:
Net loss attributable to Pluralsight, Inc.$(27,361)$(32,479)$(92,609)$(80,681)
Net loss attributable to non-controlling interests
(6,410)(12,983)(28,405)(39,429)
Equity-based compensation24,214 24,657 76,217 67,657 
Amortization of acquired intangibles1,380 1,435 4,235 3,044 
Employer payroll taxes on employee stock transactions545 333 2,920 3,106 
Secondary offering costs— — 1,260 918 
Acquisition-related costs341 — 341 835 
Amortization of debt discount and issuance costs6,853 6,826 20,128 15,120 
Loss on debt extinguishment— 950 — 950 
Adjusted pro forma net loss$(438)$(11,261)$(15,913)$(28,480)
Denominator:
Weighted-average shares of Class A common stock outstanding
115,196 101,407 109,009 91,741 
Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock
28,932 36,791 33,437 44,834 
Adjusted pro forma weighted-average common shares outstanding, basic and diluted
144,128 138,198 142,446 136,575 
Adjusted pro forma net loss per share$— $(0.08)$(0.11)$(0.21)
Reconciliation of net cash (used in) provided by operating activities to free cash flow:
Net cash (used in) provided by operating activities$(2,352)$(2,175)$6,693 $(3,823)
Less: Purchases of property and equipment(10,706)(3,029)(31,226)(7,619)
Less: Purchases of content library(1,803)(1,381)(5,596)(3,822)
Free cash flow$(14,861)$(6,585)$(30,129)$(15,264)







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

September 30, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$100,882 $90,515 
Short-term investments304,077 332,234 
Accounts receivable, net76,492 101,576 
Deferred contract acquisition costs19,469 18,331 
Prepaid expenses and other current assets18,847 14,174 
Total current assets519,767 556,830 
Restricted cash and cash equivalents17,337 28,916 
Long-term investments114,623 105,805 
Property and equipment, net65,058 22,896 
Right-of-use assets61,719 15,804 
Content library, net11,880 8,958 
Intangible assets, net18,416 22,631 
Goodwill262,532 262,532 
Deferred contract acquisition costs, noncurrent8,317 5,982 
Other assets1,940 1,599 
Total assets$1,081,589 $1,031,953 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$7,041 $10,615 
Accrued expenses47,090 40,703 
Accrued author fees11,988 11,694 
Lease liabilities9,184 5,752 
Deferred revenue207,823 215,137 
Total current liabilities283,126 283,901 
Deferred revenue, noncurrent21,138 19,517 
Convertible senior notes, net490,355 470,228 
Lease liabilities, noncurrent75,393 11,167 
Other liabilities69 980 
Total liabilities870,081 785,793 
Stockholders' equity:
Preferred stock— — 
Class A common stock12 10 
Class B common stock
Class C common stock
Additional paid-in capital724,184 641,128 
Accumulated other comprehensive income1,166 225 
Accumulated deficit(550,990)(458,381)
Total stockholders’ equity attributable to Pluralsight, Inc.174,374 182,985 
Non-controlling interests37,134 63,175 
Total stockholders’ equity211,508 246,160 
Total liabilities and stockholders' equity$1,081,589 $1,031,953 




PLURALSIGHT, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Operating activities
Net loss$(33,771)$(45,462)$(121,014)$(120,110)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation of property and equipment2,998 2,417 8,866 6,996 
Amortization of acquired intangible assets1,380 1,435 4,235 3,044 
Amortization of course creation costs883 651 2,464 1,841 
Equity-based compensation24,214 24,657 76,217 67,657 
Amortization of deferred contract acquisition costs6,251 6,006 19,018 17,317 
Amortization of debt discount and issuance costs6,853 6,826 20,128 15,120 
Investment discount and premium amortization, net496 (1,065)68 (1,771)
Loss on debt extinguishment— 950 — 950 
Other(104)(478)589 (178)
Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable(14,581)(5,258)23,512 1,858 
Deferred contract acquisition costs(9,128)(7,238)(22,491)(18,668)
Prepaid expenses and other assets(4,026)535 (4,237)(3,509)
Right-of-use assets1,449 1,412 4,487 4,339 
Accounts payable1,480 (3,573)(3,126)(2,520)
Accrued expenses and other liabilities11,492 8,317 6,880 5,188 
Accrued author fees277 (7)293 1,292 
Lease liabilities(730)(1,758)(3,604)(5,130)
Deferred revenue2,215 9,458 (5,592)22,461 
Net cash (used in) provided by operating activities(2,352)(2,175)6,693 (3,823)
Investing activities
Purchases of property and equipment(10,706)(3,029)(31,226)(7,619)
Purchases of content library(1,803)(1,381)(5,596)(3,822)
Cash paid for acquisition, net of cash acquired— 100 — (163,771)
Purchases of investments(110,118)(212,573)(427,130)(529,653)
Proceeds from sales of investments— — — 4,967 
Proceeds from maturities of investments131,225 112,995 446,830 112,995 
Net cash provided by (used in) investing activities8,598 (103,888)(17,122)(586,903)
Financing activities
Proceeds from issuance of common stock from employee equity plans3,863 245 14,741 14,876 
Taxes paid related to net share settlement(1,732)— (5,605)— 
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)— (35,000)
Proceeds from terminations of capped calls related to repurchases of convertible senior notes— 1,284 — 1,284 
Net cash provided by (used in) financing activities2,131 (33,471)9,136 528,382 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents238 (130)81 (108)
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents8,615 (139,664)(1,212)(62,452)
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period109,604 288,283 119,431 211,071 
Cash, cash equivalents, and restricted cash and cash equivalents, end of period$118,219 $148,619 $118,219 $148,619 



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