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ACTIVE Network Reports Second Quarter 2012 Results

  • Record Second Quarter Revenue Increases 23% Year-Over-Year to $121.6 Million
  • Year-to-Date Revenue Up 26% Over the Prior Year Period to $216.0 Million
  • Number of Registrations Increases 14% Year-Over-Year to 28.0 Million

SAN DIEGO, CALIF. – August 2, 2012 – ACTIVE Network (NYSE: ACTV), the leader in cloud-based activity and participant management™ solutions, today announced its financial results for the second quarter of 2012.

Q2 2012 Financial Highlights:

(All comparisons are made to the second quarter of 2011

  • Total net revenue was $121.6 million, up 23% from $99.0 million.
  • Technology revenue constituted 89%, or $108.2 million of total net revenue, up 26% from $85.6 million.
  • Net registration revenue was $83.9, up 20% - including registration growth of 14% and revenue per registration growth of 5%.
  • Marketing services revenue constituted 11%, or $13.4 million of total net revenue.
  • Net loss was $2.3 million compared to a net income of $5.5 million.
  • Adjusted EBITDA, a non-GAAP financial measure, was $20.2 million. Excluding the impact of business combination accounting rules related to deferred revenue, Adjusted EBITDA was $23.8 million.

"We delivered a strong second quarter with record revenue of $121.6 million, up 23% over the prior year period,” said Dave Alberga, CEO of ACTIVE Network. “During the quarter, we achieved an important technology milestone by launching the first Hunting and Fishing permitting application built on the ACTIVE Works® platform. Our customer base continues to expand, adding key customers such as Aetna, MacWorld, and Edinburgh University Sports Union. We remain focused on strengthening our position as the leading cloud-based provider of activity and participant management solutions and continue to increase penetration in the underdeveloped activities market.”

“We are excited to see positive trends in our key metrics this quarter as registrations, one of our main drivers, accelerated 14% and revenue per registration grew 5% from the prior year period," explained Scott Mendel, CFO of ACTIVE Network. “We experienced growth across all verticals and continued to benefit from a high degree of predictability in our model and strong renewal rates of over 95%.”

Q2 2012 Key Business Highlights

  • The Company launched an impressive suite of Business Solutions mobile applications for professional meetings and events planners, attendees and suppliers.
  • Aetna and ACTIVE Network partnered to help members become more physically active through Aetna Everactive℠, a new social community that brings together virtual health and fitness resources with opportunities to participate in real-life local events.
  • In June, ACTIVE Network launched MeetMobile, an innovative swim app, at the national qualifying swim trials in Omaha. MeetMobile transforms the swim meet experience by giving swimmers, coaches and fans real-time, paperless access to heat sheets and event results at their fingertips. Adoption of the app has been strong with over 110,000 downloads to date and over 3 million user sessions.

Business Outlook

For the third quarter of 2012, ACTIVE Network is targeting total revenue to be in the range of $108 million to $111 million, up 22% at the midpoint compared to the same period in the prior year. Registrations are expected to grow approximately 13% to 15% and revenue per registration growth of approximately 2% to 4% compared to the same period in the prior year. The Company expects Adjusted EBITDA in the range of $14 million to $16 million. Excluding the impact of business combination accounting rules, Adjusted EBITDA is expected to be in the range of $16 million to $18 million. The Company expects a net loss of $8 million to $4 million.

For the full year of 2012, ACTIVE Network is tightening its initial guidance range. Total revenue is expected to be in the range of $425 million to $430 million, up 27% at the midpoint compared to the prior year. Adjusted EBITDA is expected to be in the range of $46 million to $48 million. Excluding the impact of business combination accounting rules, Adjusted EBITDA is expected to be in the range of $58.5 million to $60.5 million. The Company expects net loss in the range of $38 million to $31 million.

Conference Call Information

ACTIVE Network will host a conference call to discuss second quarter 2012 results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The conference call dial-in number is (866) 202-0886 for domestic participants and (617) 213-8841 for international participants. A live webcast of the conference call will also be available and can be accessed within the investor relations section of the ACTIVE Network corporate website at: http://investors.ACTIVEnetwork.com.

A replay of the call will be available starting at 7:30 p.m. Eastern Time (4:30 p.m. Pacific Time) on August 2, 2012 through 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on August 7, 2012. To listen to the replay, dial (888) 286-8010 or (617) 801-6888 outside of the United States and use the passcode 58040522. The replay will also be available via webcast at: http://investors.ACTIVEnetwork.com.

About ACTIVE Network

ACTIVE Network (NYSE: ACTV) is on a mission to make the world a more active place. With deep expertise in activity and participant management™, our ACTIVE Works® cloud technology helps organisers transform and grow their businesses. We do this through technology solutions that power the world’s activities and through online destinations such as ACTIVE.com® that connect people with the things they love to do. Serving over 50,000 global business customers and driving over 80 million transactions annually, we help organisers get participants, manage their events and build communities. ACTIVE Network is headquartered in San Diego, California and has over 30 offices worldwide. Learn more at ACTIVEnetwork.com or ACTIVE.com and engage with us on Twitter @ACTIVEnetwork, @ACTIVE and on Facebook.

Note With Respect to Non-GAAP Financial Measures

In addition to using GAAP financial results, the Company's management measures and reports non-GAAP financial measures, including Adjusted EBITDA, Non-GAAP net income (loss) and Non-GAAP net income (loss) per share. The most directly comparable GAAP financial results for these non-GAAP financial measures are Net income (loss), Net income (loss) and Net income (loss) per share, respectively. Management uses these non-GAAP financial measures to evaluate the Company's performance and operations. Management also uses these non-GAAP financial measures for business planning, to evaluate acquisition opportunities and as a measurement to create incentives and to compensate the Company's management team. In addition, management believes the exclusion or inclusion of certain amounts in calculating these non-GAAP financial measures can provide a useful measure to investors for period-to-period comparisons. These non-GAAP financial measures, however, should be used in addition to, and in conjunction with, the Company's financial results presented in accordance with GAAP. The Company strongly encourages investors to review its financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare the Company's results with other companies' non-GAAP financial measures having the same or similar names. Please see Reconciliation of GAAP to Non-GAAP Results below for a reconciliation of our GAAP to non-GAAP financial measures.

Forward-Looking Statements

The Active Network, Inc. cautions you that the statements included in this press release that are not a description of historical facts are forward-looking statements within the meaning of the federal securities laws. Any such statements are subject to substantial risks and uncertainties, including the Company's ability to generate revenue and control expenses in order to achieve and maintain profitability, the Company's ability to maintain an adequate rate of growth, including growing its registrations and revenue from registrations, and the Company's ability to successfully manage its acquisitions and investments in businesses, applications and technologies, as well as the other risks detailed from time to time in the reports it files with the Securities and Exchange Commission. As a result of these risks and uncertainties, the Company's actual results may differ materially from those expressed in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement and the Company undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof.

THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Net Revenue:
Technology revenue $ 108,155 $ 85,553 $ 192,275 $ 148,661
Marketing services revenue 13,409 13,452 23,727 23,056
Total net revenue 121,564 99,005 216,002 171,717
Cost of net revenue:
Cost of technology revenue 50,812 38,707 96,467 71,695
Cost of marketing services revenue 2,115 1,480 3,431 2,642
Total cost of net revenue 52,927 40,187 99,898 74,337
Gross profit 68,637 58,818 116,104 97,380
Operating expenses:
Sales and marketing 24,284 18,914 49,308 35,854
Research and development 21,121 16,377 42,330 32,553
General and administrative 16,903 12,308 33,447 22,896
Amortization of intangibles 5,596 3,718 11,288 7,421

Total operating expenses

67,904 51,317 136,373 98,724
(Loss) income from operations 733 7,501 (20,269 ) (1,344 )
Interest income 25 29 50 59
Interest expense (90 ) (1,406 ) (241 ) (2,690 )
Other income (expense), net (524 ) 193 877 142
(Loss) income before provision for income taxes 144 6,317 (19,583 ) (3,833 )
Provision for income taxes 2,469 788 3,080 1,580
Net (loss) income (2,325 ) 5,529 (22,663 ) (5,413 )
Accretion of redeemable convertible preferred stock - (4,400 ) - (11,810 )
Net (loss) income attributable to common stockholders $ (2,325 ) $ 1,129 $ (22,663 ) $ (17,223 )
Net (loss) income per share attributable to common stockholders:
Basic $ (0.04 ) $ 0.04 $ (0.39 ) $ (0.96 )
Diluted $ (0.04 ) $ 0.03 $ (0.39 ) $ (0.96 )
Weighted-average shares used to compute net (loss) income
per share attributable to common stockholders:
Basic 58,322 27,269 57,655 17,943
Diluted 58,322 36,877 57,655 17,943
THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2012 2011
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 107,806 $ 108,699
Restricted cash 875 1,502
Accounts receivable, net 80,926 66,469
Inventories 3,973 1,662
Prepaid expenses and other current assets 7,249 6,179
Total current assets 200,829 184,511
Property and equipment, net 33,690 33,830
Software development costs, net 48,105 45,093
Goodwill 243,089 243,320
Intangible assets, net 76,026 90,340
Other long-term assets 2,322 2,133
Total assets $ 604,061 $ 599,227
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 6,903 $ 8,516
Registration fees payable 112,349 72,405
Accrued expenses 39,078 41,106
Deferred revenue 67,886 54,919
Current portion of long-term debt 10,000 5,000
Capital lease obligations, current portion 1,431 3,317
Other current liabilities 2,976 42,613
Total current liabilities 240,623 227,876
Capital lease obligations, net of current portion 801 1,652
Other long-term liabilities 5,915 6,147
Deferred tax liability 18,700 16,913
Total liabilities 266,039 252,588
Stockholders’ equity:
Common stock 61 58
Treasury stock (11,959 ) (11,959 )
Additional paid-in capital 639,955 625,875
Accumulated other comprehensive income 7,886 7,923
Accumulated deficit (297,921 ) (275,258 )
Total stockholders’ equity 338,022 346,639
Total liabilities and stockholders’ equity $ 604,061 $ 599,227
THE ACTIVE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2012 2011
Operating activities
Net loss $ (22,663 ) $ (5,413 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 30,094 21,508
Stock-based compensation expense 7,331 2,812
Deferred tax liability 1,799 1,570
Other non-cash items (931 ) 1,217
Change in operating assets and liabilities, net of effect of acquisitions:
Restricted cash 627 -
Accounts receivable (14,690 ) (21,797 )
Inventories (2,311 ) (1,810 )
Prepaid expenses and other assets (1,318 ) (3,498 )
Accounts payable and accrued expenses (3,201 ) 782
Registration fees payable 39,944 58,899
Income taxes payable 249 -
Deferred revenue 13,105 11,461
Deferred rent 184 661
Net cash provided by operating activities 48,219 66,392
Investing activities
Purchases of property and equipment (9,343 ) (5,326 )
Capitalized software development (10,996 ) (9,481 )
Cash (paid) received for acquisitions, net of cash acquired (38,037 ) 520
Payment of contingent consideration - (625 )
Net cash used in investing activities (58,376 ) (14,912 )
Financing activities

Proceeds from issuance of common stock and repurchase of unvested common stock

6,850 2,747
Payments on capital lease obligations (2,737 ) (1,233 )
Proceeds from (repayments of) long-term debt 5,000 (41,628 )
Net proceeds from initial public offering - 114,700
Net cash provided by financing activities 9,113 74,586
Effect of exchange rates on cash 151 -
Net (decrease) increase in cash and cash equivalents (893 ) 126,066
Cash and cash equivalents at beginning of period 108,699 31,441
Cash and cash equivalents at end of period $ 107,806 $ 157,507

THE ACTIVE NETWORK, INC.

SUPPLEMENTARY DATA

(In thousands, except revenue per registration)

(Unaudited)

Operational Data: Three Months Ended Six Months Ended
June 30, % June 30, %
2012 2011 change 2012 2011 change
Net registration revenue $ 83,854 $ 69,741 20 % $ 147,373 $ 121,174 22 %
Registrations 28,036 24,597 14 % 46,259 39,456 17 %
Net registration revenue per registration $ 2.99 $ 2.84 5 % $ 3.19 $ 3.07 4 %
Gross Profit Margin: Three Months Ended % or Six Months Ended % or
June 30, bps June 30, bps
2012 2011 change 2012 2011 change
Total net revenue $ 121,564 $ 99,005 23 % $ 216,002 $ 171,717 26 %
Add: impact of business combination
accounting rules 3,652 252 8,268 585
Non-GAAP total net revenue $ 125,216 $ 99,257 26 % $ 224,270 $ 172,302 30 %
GAAP gross profit $ 68,637 $ 58,818 17 % $ 116,104 $ 97,380 19 %
Add back: stock-based compensation 192 39 252 55
Add back: depreciation & amortization 7,950 5,544 15,668 10,899
Add: impact of business combination
accounting rules 3,652 252 8,268 585
Non-GAAP gross profit $ 80,431 $ 64,653 24 % $ 140,292 $ 108,919 29 %
Gross profit margin:
GAAP gross profit margin 56.5 % 59.4 % (290) bps 53.8 % 56.7 % (290) bps
Non-GAAP gross profit margin 64.2 % 65.1 % (90) bps 62.6 % 63.2 % (60) bps
Stock-Based Compensation Expense: Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Cost of net revenue $ 192 $ 39 $ 252 $ 55
Sales and marketing 1,006 576 1,702 763
Research and development 668 203 1,120 321
General and administrative 2,436 1,250 4,257 1,673
Total stock-based compensation $ 4,302 $ 2,068 $ 7,331 $ 2,812
THE ACTIVE NETWORK, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share data)
(Unaudited)
Non-GAAP Earnings: Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Non-GAAP net (loss) income:
GAAP net (loss) income $ (2,325 ) $ 5,529 $ (22,663 ) $ (5,413 )
Add back: stock-based compensation 4,302 2,068 7,331 2,812
Add back: amortization of intangibles 7,074 5,151 14,231 10,247
Add: impact of business combination accounting rules 3,652 252 8,268 585
Income tax effect (5,260 ) (2,615 ) (10,441 ) (4,775 )
Non-GAAP net (loss) income $ 7,443 $ 10,385 $ (3,274 ) $ 3,456
Non-GAAP shares:
GAAP shares - basic 58,322 27,269 57,655 17,943
Add: preferred stock conversion - 20,551 - 27,552
Non-GAAP shares - basic 58,322 47,820 57,655 45,495
GAAP shares - diluted 58,322 36,877 57,655 17,943
Add: preferred stock and other securities conversion 6,640 20,551 - 36,754
Non-GAAP shares - diluted 64,962 57,428 57,655 54,697
Non-GAAP net (loss) income per share:
Basic $ 0.13 $ 0.22 $ (0.06 ) $ 0.08
Diluted $ 0.11 $ 0.18 $ (0.06 ) $ 0.06
Adjusted EBITDA: Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Net (loss) income $ (2,325 ) $ 5,529 $ (22,663 ) $ (5,413 )
Add back: interest expense, net 65 1,377 191 2,631
Add back: provision for income taxes 2,469 788 3,080 1,580
Add back: depreciation and amortization 15,118 10,837 30,094 21,508
Add back: stock-based compensation 4,302 2,068 7,331 2,812
Add back: other (income) expense, net 524 (193 ) (877 ) (142 )
Adjusted EBITDA $ 20,153 $ 20,406 $ 17,156 $ 22,976
Add: impact of business combination accounting rules 3,652 252 8,268 585

Adjusted EBITDA excluding the impact of business combination accounting rules

$ 23,805 $ 20,658 $ 25,424 $ 23,561

THE ACTIVE NETWORK, INC.

FUTURE PERFORMANCE - 3RD QUARTER AND FULL YEAR 2012 OUTLOOK

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(In thousands)

Estimated Estimated
3rd Quarter 2012 Full Year 2012
Low End High End Low End High End
Net loss $ (8,000 ) $ (4,000 ) $ (38,000 ) $ (31,000 )
Interest, taxes and other 1,000 1,000 4,000 3,000
Depreciation and amortization 16,000 15,000 62,000 60,000
Stock-based compensation 5,000 4,000 18,000 16,000
Adjusted EBITDA $ 14,000 $ 16,000 $ 46,000 $ 48,000
Add: impact of business combination accounting rules 2,000 2,000 12,500 12,500

Adjusted EBITDA excluding the impact of business combination accounting rules

$ 16,000 $ 18,000 $ 58,500 $ 60,500

###

© 2012 The Active Network, Inc. All rights reserved. Active.com, ActiveWorks and StarCite are registered trademarks of The Active Network, Inc. Active Network is a trademark of The Active Network, Inc. All other trademarks are the property of their respective owners.

Media Contact:

Mona Klausing, Active Network
Mona.Klausing@ActiveNetwork.com
1-858-964-3813

Investor Contact:

Brinlea Johnson, The Blueshirt Group
Brinlea@BlueshirtGroup.com
1-212-331-8424

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