SILICON SLOPES, Utah, July 29, 2020 (GLOBE NEWSWIRE) -- Pluralsight, Inc. (NASDAQ: PS), the enterprise technology skills and engineering management platform, today announced financial results for the second quarter ended June 30, 2020.

"Our commitment to our customers and each other has never been stronger despite these extraordinary circumstances. I’m proud to see this commitment reflected in our financial performance for the quarter, and I’m confident that our platform will continue to help companies and individuals adapt to the changing remote work environments around the globe," said Aaron Skonnard, co-founder and CEO of Pluralsight. “This need, coupled with our commitment to our customers and our world-class, highly differentiated product offerings allowed us to excel in the current environment."

Second Quarter Financial Highlights

  • Billings - Q2 2020 billings were $89.0 million, an increase of 11% period over period. Q2 2020 billings from business customers were $77.7 million, an increase of 12% period over period.
  • Revenue - Q2 2020 revenue was $94.8 million, an increase of 25% period over period.
  • Gross margin - Q2 2020 gross margin was 79%, compared to 77% in Q2 2019. Q2 2020 non-GAAP gross margin was 81%, compared to 78% in Q2 2019.
  • Net loss per share - GAAP net loss per share for Q2 2020 was $0.28, compared to $0.30 in Q2 2019. Adjusted pro forma net loss per share for Q2 2020 was $0.02, compared to $0.06 in Q2 2019.
  • Cash flows - Cash used in operations was $9.3 million for Q2 2020, compared to $7.2 million in Q2 2019. Free cash flow was negative $18.0 million for Q2 2020, compared to negative $11.1 million in Q2 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 July 29, 2020.

Third Quarter 2020 Guidance

  • Revenue is expected to be in the range of $95.0 million to $96.0 million.
  • Adjusted pro forma net loss per share is expected to be in the range of $0.05 to $0.06, assuming weighted-average shares outstanding of approximately 144 million.

Full Year 2020 Guidance

  • Revenue is expected to be in the range of $375.0 million to $390.0 million.
  • Adjusted pro forma net loss per share is expected to be in the range of $0.19 to $0.27, 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 third quarter and 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 second quarter 2020 results and outlook for its third quarter and full year 2020, today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time).

Date:July 29, 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: 1883129

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 1883129.

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 third quarter and 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 July 29, 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 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 June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Revenue $94,765  $75,862  $187,411  $145,479 
Cost of revenue(1)(2) 19,717  17,803  38,725  34,515 
Gross profit 75,048  58,059  148,686  110,964 
Operating expenses(1)(2):        
Sales and marketing 57,759  50,046  120,174  94,217 
Technology and content 29,514  24,819  59,658  45,090 
General and administrative 22,996  20,575  46,367  42,766 
Total operating expenses 110,269  95,440  226,199  182,073 
Loss from operations (35,221) (37,381) (77,513) (71,109)
Other income (expense):        
Interest expense (7,241) (7,346) (14,390) (9,024)
Other income, net 2,267  4,106  4,437  5,782 
Loss before income taxes (40,195) (40,621) (87,466) (74,351)
Income tax benefit (expense) 465  (143) 223  (297)
Net loss $(39,730) $(40,764) $(87,243) $(74,648)
Less: Net loss attributable to non-controlling interests (9,801) (11,637) (21,995) (26,446)
Net loss attributable to Pluralsight, Inc. $(29,929) $(29,127) $(65,248) $(48,202)
Net loss per share, basic and diluted(3) $(0.28) $(0.30) $(0.62) $(0.56)
Weighted-average shares of Class A common stock used in computing basic and diluted net loss per share 107,153  97,608  105,899  86,827 

(1) Includes equity-based compensation as follows:

  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Cost of revenue $296  $133  $566  $217 
Sales and marketing 10,878  7,952  20,400  14,228 
Technology and content 6,884  5,137  13,220  8,847 
General and administrative 8,367  9,510  17,817  19,708 
Total equity-based compensation $26,425  $22,732  $52,003  $43,000 

(2) Includes amortization of acquired intangible assets as follows:

  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Cost of revenue $1,209  $702  $2,418  $1,227 
Sales and marketing 50  29  100  29 
Technology and content 161  176  337  353 
Total amortization of acquired intangible assets $1,420  $907  $2,855  $1,609 


PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)

Key Business Metrics

  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Billings $89,034  $80,552  $179,312  $158,480 
Billings from business customers $77,695  $69,104  $158,167  $136,260 
% of billings from business customers 87% 86% 88% 86%

Non-GAAP Financial Measures

  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Reconciliation of gross profit to non-GAAP gross profit:        
Gross profit $75,048  $58,059  $148,686  $110,964 
Equity-based compensation 296  133  566  217 
Amortization of acquired intangible assets 1,209  702  2,418  1,227 
Employer payroll taxes on employee stock transactions 15  13  32  16 
Non-GAAP gross profit $76,568  $58,907  $151,702  $112,424 
Gross margin 79% 77% 79% 76%
Non-GAAP gross margin 81% 78% 81% 77%


  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Reconciliation of operating expenses to non-GAAP operating expenses:        
Sales and marketing $57,759  $50,046  $120,174  $94,217 
Less: Equity-based compensation (10,878) (7,952) (20,400) (14,228)
Less: Amortization of acquired intangible assets (50) (29) (100) (29)
Less: Employer payroll taxes on employee stock transactions (329) (533) (821) (1,141)
Non-GAAP sales and marketing $46,502  $41,532  $98,853  $78,819 
Sales and marketing as a percentage of revenue 61% 66% 64% 65%
Non-GAAP sales and marketing as a percentage of revenue 49% 55% 53% 54%
         
Technology and content $29,514  $24,819  $59,658  $45,090 
Less: Equity-based compensation (6,884) (5,137) (13,220) (8,847)
Less: Amortization of acquired intangible assets (161) (176) (337) (353)
Less: Employer payroll taxes on employee stock transactions (381) (434) (852) (914)
Non-GAAP technology and content $22,088  $19,072  $45,249  $34,976 
Technology and content as a percentage of revenue 31% 33% 32% 31%
Non-GAAP technology and content as a percentage of revenue 23% 25% 24% 24%
         
General and administrative $22,996  $20,575  $46,367  $42,766 
Less: Equity-based compensation (8,367) (9,510) (17,817) (19,708)
Less: Employer payroll taxes on employee stock transactions (272) (349) (670) (702)
Less: Secondary offering costs (1,260)   (1,260) (918)
Less: Acquisition-related costs   (835)   (835)
Non-GAAP general and administrative $13,097  $9,881  $26,620  $20,603 
General and administrative as a percentage of revenue 24% 27% 25% 29%
Non-GAAP general and administrative as a percentage of revenue 14% 13% 14% 14%
Reconciliation of loss from operations to non-GAAP operating loss:        
Loss from operations $(35,221) $(37,381) $(77,513) $(71,109)
Equity-based compensation 26,425  22,732  52,003  43,000 
Amortization of acquired intangible assets 1,420  907  2,855  1,609 
Employer payroll taxes on employee stock transactions 997  1,329  2,375  2,773 
Secondary offering costs 1,260    1,260  918 
Acquisition-related costs   835    835 
Non-GAAP operating loss $(5,119) $(11,578) $(19,020) $(21,974)


  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Adjusted pro forma net loss per share        
Numerator:        
Net loss attributable to Pluralsight, Inc. $(29,929) $(29,127) $(65,248) $(48,202)
Net loss attributable to non-controlling interests (9,801) (11,637) (21,995) (26,446)
Equity-based compensation 26,425  22,732  52,003  43,000 
Amortization of acquired intangibles 1,420  907  2,855  1,609 
Employer payroll taxes on employee stock transactions 997  1,329  2,375  2,773 
Secondary offering costs 1,260    1,260  918 
Acquisition-related costs   835    835 
Amortization of debt discount and issuance costs 6,684  6,749  13,275  8,294 
Adjusted pro forma net loss $(2,944) $(8,212) $(15,475) $(17,219)
Denominator:        
Weighted-average shares of Class A common stock outstanding 107,153  97,608  105,899  86,827 
Weighted-average LLC Units of Pluralsight Holdings that are convertible into Class A common stock 35,276  39,006  35,702  48,923 
Adjusted pro forma weighted-average common shares outstanding, basic and diluted 142,429  136,614  141,601  135,750 
Adjusted pro forma net loss per share $(0.02) $(0.06) $(0.11) $(0.13)


Reconciliation of net cash (used in) provided by operating activities to free cash flow:        
Net cash (used in) provided by operating activities $(9,250) $(7,184) $9,045  $(1,648)
Less: Purchases of property and equipment (6,626) (2,457) (20,520) (4,590)
Less: Purchases of content library (2,113) (1,504) (3,793) (2,441)
Free cash flow $(17,989) $(11,145) $(15,268) $(8,679)


PLURALSIGHT, INC.

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

  June 30,
 2020
 December 31,
 2019
     
Assets    
Current assets:    
Cash and cash equivalents $87,982  $90,515 
Short-term investments 318,483  332,234 
Accounts receivable, net 61,578  101,576 
Deferred contract acquisition costs 17,745  18,331 
Prepaid expenses and other current assets 14,764  14,174 
Total current assets 500,552  556,830 
Restricted cash and cash equivalents 21,622  28,916 
Long-term investments 122,224  105,805 
Property and equipment, net 60,788  22,896 
Right-of-use assets 62,982  15,804 
Content library, net 11,017  8,958 
Intangible assets, net 19,787  22,631 
Goodwill 262,532  262,532 
Deferred contract acquisition costs, noncurrent 7,164  5,982 
Other assets 1,709  1,599 
Total assets $1,070,377  $1,031,953 
Liabilities and stockholders' equity    
Current liabilities:    
Accounts payable $5,985  $10,615 
Accrued expenses 38,950  40,703 
Accrued author fees 11,711  11,694 
Lease liabilities 7,752  5,752 
Deferred revenue 207,575  215,137 
Total current liabilities 271,973  283,901 
Deferred revenue, noncurrent 18,813  19,517 
Convertible senior notes, net 483,503  470,228 
Lease liabilities, noncurrent 76,340  11,167 
Other liabilities 70  980 
Total liabilities 850,699  785,793 
Stockholders' equity:    
Preferred stock    
Class A common stock 11  10 
Class B common stock 2  2 
Class C common stock 1  1 
Additional paid-in capital 693,768  641,128 
Accumulated other comprehensive income 1,154  225 
Accumulated deficit (523,629) (458,381)
Total stockholders’ equity attributable to Pluralsight, Inc. 171,307  182,985 
Non-controlling interests 48,371  63,175 
Total stockholders’ equity 219,678  246,160 
Total liabilities and stockholders' equity $1,070,377  $1,031,953 


PLURALSIGHT, INC.

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Operating activities        
Net loss $(39,730) $(40,764) $(87,243) $(74,648)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:        
Depreciation of property and equipment 3,225  2,332  5,868  4,579 
Amortization of acquired intangible assets 1,420  907  2,855  1,609 
Amortization of course creation costs 820  611  1,581  1,190 
Equity-based compensation 26,425  22,732  52,003  43,000 
Amortization of deferred contract acquisition costs 6,316  5,444  12,767  11,311 
Amortization of debt discount and issuance costs 6,684  6,749  13,275  8,294 
Investment discount and premium amortization, net (52) (706) (428) (706)
Other 32  275  693  300 
Changes in assets and liabilities, net of acquired assets and liabilities:        
Accounts receivable (1,107) (4,276) 38,093  7,116 
Deferred contract acquisition costs (7,492) (5,579) (13,363) (11,430)
Prepaid expenses and other assets (497) (2,243) (211) (4,044)
Right-of-use assets 1,548  1,643  3,038  2,927 
Accounts payable (2,139) 18  (4,606) 1,053 
Accrued expenses and other liabilities 1,719  2,030  (4,612) (3,129)
Accrued author fees 114  564  16  1,299 
Lease liabilities (949) (1,636) (2,874) (3,372)
Deferred revenue (5,587) 4,715  (7,807) 13,003 
Net cash (used in) provided by operating activities (9,250) (7,184) 9,045  (1,648)
Investing activities        
Purchases of property and equipment (6,626) (2,457) (20,520) (4,590)
Purchases of content library (2,113) (1,504) (3,793) (2,441)
Cash paid for acquisition, net of cash acquired   (163,871)   (163,871)
Purchases of investments (155,150) (317,080) (317,012) (317,080)
Proceeds from sales of investments   4,967    4,967 
Proceeds from maturities of investments 155,070    315,605   
Net cash used in investing activities (8,819) (479,945) (25,720) (483,015)
Financing activities        
Proceeds from issuance of common stock from employee equity plans 10,179  12,010  10,878  14,631 
Taxes paid related to net share settlement (1,523)   (3,873)  
Proceeds from issuance of convertible senior notes, net of discount and issuance costs   (1,009)   616,654 
Purchase of capped calls related to issuance of convertible senior notes       (69,432)
Net cash provided by financing activities 8,656  11,001  7,005  561,853 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents 110  (4) (157) 22 
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents (9,303) (476,132) (9,827) 77,212 
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period 118,907  764,415  119,431  211,071 
Cash, cash equivalents, and restricted cash and cash equivalents, end of period $109,604  $288,283  $109,604  $288,283 

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