Benefitfocus, Inc.
Feb 23, 2016

Benefitfocus Announces Fourth Quarter and Full Year 2015 Financial Results

Total revenue of $54.3 million grew 35% year-over-year
Employer revenue of $30.4 million grew 56% year-over-year

CHARLESTON, S.C., Feb. 23, 2016 (GLOBE NEWSWIRE) --  Benefitfocus, Inc. (NASDAQ:BNFT), a leading cloud-based enterprise benefits management platform provider, today announced its fourth quarter and full year 2015 financial results.

"The fourth quarter was a tremendous finish to a great year, as revenue and profitability exceeded the high-end of our guidance," said Shawn Jenkins, Chief Executive Officer of Benefitfocus.  "Driven by strong demand for our platform, our revenue growth accelerated to 35% year-over-year for both the fourth quarter and full year.  In addition, once again, our software revenue retention rate was over 95%."

Jenkins added, "We delivered on a number of exciting objectives in 2015, including new solutions for our large employers, a growing partnership channel, and an improved customer experience  through our 'customers at the heart' initiative.  As we look ahead to 2016, we believe we're well positioned to strengthen our platform, expand our customer base and extend our position as the leading cloud-based benefits management platform."  

Fourth Quarter 2015 Financial Highlights

Revenue

Non-GAAP Net Loss and Adjusted EBITDA

Balance Sheet

Full Year 2015 Financial Highlights

Revenue

Non-GAAP Net Loss and Adjusted EBITDA

Fourth Quarter and Recent Business Highlights

Business Outlook

Based on information available as of February 23, 2016, Benefitfocus is providing guidance for the first quarter and full year 2016 as indicated below.

First Quarter 2016:

Full Year 2016:

Conference Call Details:

In conjunction with this announcement, Benefitfocus will host a conference call today, February 23, 2016, at 5:00 p.m. Eastern Time to discuss the company's financial results. To access this call, dial (855) 233-6991 (domestic) or (317) 586-4497 (international) with conference ID 34463706. A live webcast, as well as the replay, of the conference call will be available on the Investor Relations page of the company's website at http://investor.benefitfocus.com/. A replay of this conference call can also be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) through March 1, 2016.

About Benefitfocus

Benefitfocus (NASDAQ:BNFT) provides a leading cloud-based benefits management platform that simplifies how organizations and individuals shop for, enroll in, manage and exchange benefits. Every day leading employers, insurance companies and millions of consumers rely on our platform to manage, scale and exchange benefits data seamlessly. In an increasingly complex benefits landscape, we bring order to chaos so our clients and their employees have access to better information, make better decisions and lead better lives. Learn more at www.benefitfocus.com, LinkedIn and Twitter.

Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures in this release, including non-GAAP gross profit, operating loss, net loss, net loss per common share, adjusted EBITDA, and free cash flow. Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. 

Non-GAAP gross profit, operating loss, net loss and net loss per share exclude stock-based compensation expenses, amortization of acquisition-related intangible assets and offering costs expensed.  We define adjusted EBITDA as net loss before net interest, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and expense related to the impairment of goodwill and intangible assets. We define free cash flow as cash from operations plus purchases of property and equipment. Please note that other companies might define their non-GAAP financial measures differently than we do.

Management presents  these non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company's future earnings discussions and, therefore, their inclusion should provide consistency in the company's financial reporting.

Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release, including in the accompanying tables.

Safe Harbor Statement

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: our continuing losses and need to achieve profitability; fluctuations in our financial results; general economic risks;  the immature and volatile market for our products and services; the need to innovate and provide useful products and services; risks related to changing healthcare and other applicable regulations; our ability to compete effectively; our ability to maintain our culture and recruit and retain qualified personnel; privacy, security and other risks associated with our business; and the other risk factors set forth from time to time in our SEC filings,  copies of which are available free of charge within the Investor Relations section of the Benefitfocus website at http://investor.benefitfocus.com/sec.cfm or upon request from our Investor Relations Department. Benefitfocus assumes no obligation and does not intend to update these forward-looking statements, except as required by law.


Benefitfocus, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
         
  Three Months Ended Year Ended
  December 31, December 31,
   2015    2014    2015    2014  
Revenue $  54,340  $  40,187  $  185,143  $  137,420 
Cost of revenue (1)(2)    30,483     23,852     102,851     87,470 
Gross profit    23,857     16,335     82,292     49,950 
Operating expenses:(1)(2)        
Sales and marketing    13,092     11,308     58,589     48,467 
Research and development    14,244     11,110     52,250     41,729 
General and administrative    7,146     5,823     25,727     18,657 
Total operating expenses    34,482     28,241     136,566     108,853 
Loss from operations    (10,625)    (11,906)    (54,274)    (58,903)
Other income (expense):        
Interest income    58     13     188     77 
Interest expense on building lease financing obligations    (1,721)    (1,574)    (7,092)    (3,624)
Interest expense on other borrowings    (192)    (206)    (877)    (682)
Other expense    (7)    (11)    (4)    (22)
Total other expense, net    (1,862)    (1,778)    (7,785)    (4,251)
Loss before income taxes     (12,487)    (13,684)    (62,059)    (63,154)
Income tax expense       5     25     25 
Net loss $  (12,487) $  (13,689) $  (62,084) $  (63,179)
Comprehensive loss $  (12,487) $  (13,689) $  (62,084) $  (63,179)
         
Net loss per common share:        
Basic and diluted $  (0.43) $  (0.54) $  (2.19) $  (2.51)
Weighted-average common shares outstanding:        
Basic and diluted    29,120,171     25,569,203     28,344,680     25,207,099 
         
(1) Stock-based compensation included in above line items:        
Cost of revenue $  729  $  367  $  1,950  $  986 
Sales and marketing    1,115     519     2,861     1,395 
Research and development    647     425     2,399     1,376 
General and administrative    332     733     3,244     1,831 
         
(2) Amortization of acquired intangible assets included in
  above line items:
        
Cost of revenue $  49  $  59  $  218  $  234 
Sales and marketing    6     7     25     27 
Research and development    8     9     35     37 
General and administrative    2     1     8     7 

 

Benefitfocus, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
      
  As of December 31, 
   2015   2014  
Assets     
Current assets:     
Cash and cash equivalents $  48,074  $  51,074  
Marketable securities    40,448     5,135  
Accounts receivable, net     27,616     21,311  
Accounts receivable, related party    2,082     
Prepaid expenses and other current assets    5,725     4,242  
Total current assets     123,945     81,762  
Property and equipment, net    55,037     54,021  
Intangible assets, net    665     951  
Goodwill     1,634     1,634  
Other non-current assets    838     1,650  
Total assets $  182,119  $  140,018  
Liabilities and stockholders' deficit     
Current liabilities:     
Accounts payable $  7,953  $  5,589  
Accrued expenses    10,449     9,171  
Accrued compensation and benefits    20,684     17,374  
Deferred revenue, current portion    37,858     20,384  
Revolving line of credit, current portion    25,000     
Financing and capital lease obligations, current portion    3,648     4,197  
Total current liabilities    105,592     56,715  
Deferred revenue, net of current portion    55,671     74,126  
Revolving line of credit, net of current portion    5,246     17,657  
Financing and capital lease obligations, net of current portion    31,183     32,240  
Other non-current liabilities    2,436     2,103  
Total liabilities    200,128     182,841  
Commitments and contingencies     
Stockholders' deficit:     
Preferred stock, par value $0.001, 5,000,000 shares authorized,
  no shares issued and outstanding at December 31, 2015
  and 2014
    -      -   
Common stock, par value $0.001, 50,000,000 shares authorized,
  29,194,332 and 25,608,937 shares issued and outstanding
  at December 31, 2015 and 2014, respectively
    29     26  
Additional paid-in capital    310,304     223,409  
Accumulated deficit    (328,342)    (266,258) 
Total stockholders' deficit    (18,009)    (42,823) 
Total liabilities and stockholders' deficit $  182,119  $  140,018  
      


Benefitfocus, Inc.
Consolidated Statements of Cash Flows
(in thousands)
  Year Ended December 31,
   2015    2014    2013  
Cash flows from operating activities            
Net loss $  (62,084) $  (63,179) $  (30,361)
Adjustments to reconcile net loss to net cash and cash equivalents (used in) provided by operating activities:            
Depreciation and amortization  11,664   9,493   8,172 
Stock-based compensation expense  10,454   5,588   1,202 
Change in fair value and accretion of warrant       744     892 
Interest accrual on financing obligation    7,092     3,624     1,768 
Change in fair value of contingent consideration          (17)
Provision for doubtful accounts     22        (32)
Loss on disposal or impairment of property and equipment    18     25     65 
Changes in operating assets and liabilities:            
Accounts receivable, net  (7,800)  2,357   (10,264)
Accrued interest on short-term investments    205     162    
Prepaid expenses and other current assets    (1,328)    833     (1,440)
Other non-current assets    1,380     824    
Accounts payable    3,418     (199)    2,625 
Accrued expenses    2,961     2,469     904 
Accrued compensation and benefits    3,310     3,192     4,521 
Deferred revenue  (1,189)  14,288   22,701 
Other non-current liabilities  332   901   331 
Net cash and cash equivalents (used in) provided by operating activities  (31,545)  (18,878)  1,067 
Cash flows from investing activities            
Purchases of short-term investments held to maturity  (68,185)  (12,959)  (13,168)
Proceeds from maturity of short-term investments held to maturity  32,667   20,830    
Purchases of property and equipment  (14,727)  (9,824)  (8,918)
Proceeds from sale of property and equipment          9 
Net cash and cash equivalents used in investing activities  (50,245)  (1,953)  (22,077)
Cash flows from financing activities            
Proceeds from initial public offering, net of issuance costs        70,064 
Draws on revolving line of credit  57,492   14,000   10,757 
Payments on revolving line of credit  (44,903)  (2,100)  (5,000)
Proceeds from notes payable borrowing          1,465 
Repayment of notes payable          (7,447)
Proceeds from exercises of stock options    4,229     2,817     699 
Proceeds from issuance of common stock and warrant, net of issuance costs (Excluding IPO)    74,538        68 
Payments of deferred financing costs and debt issuance costs    (566)      
Remittance of taxes upon vesting of restricted stock units    (2,116)    (226)   
Payments of contingent consideration          (311)
Payments on financing and capital lease obligations    (9,884)    (8,231)    (3,343)
Net cash and cash equivalents provided by financing activities  78,790   6,260   66,952 
Net (decrease) increase in cash and cash equivalents  (3,000)  (14,571)  45,942 
Cash and cash equivalents, beginning of year  51,074   65,645   19,703 
Cash and cash equivalents, end of year $  48,074  $  51,074  $  65,645 
             
Supplemental disclosure of non-cash investing and financing activities            
Property and equipment purchases in accounts payable and accrued expenses $  1,489  $  4,226  $  524 
Property and equipment purchased with financing and capital lease obligations $914  $21,739  $5,440 
Post contract support purchased with financing obligations $  272  $  754  $  3,872 
Allocation of proceeds to deferred revenue from issuance of common stock based on relative selling price $  207  $  -  $  - 
Supplemental disclosure of cash flow information            
Income taxes paid $  18  $  38  $  169 
Interest paid $  6,525  $  2,449  $  2,146 
             

 

Benefitfocus, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(unaudited, in thousands, except share and per share data)
         
  Three Months Ended
December 31,
 Year Ended
December 31,
   2015   2014   2015   2014 
Reconciliation from Gross Profit to Non-GAAP Gross Profit:        
Gross profit $  23,857  $  16,335  $  82,292  $  49,950 
Amortization of acquired intangible assets    49     59     218     234 
Stock-based compensation expense    729     367     1,950     986 
Total net adjustments    778     426     2,168     1,220 
Non-GAAP gross profit $  24,635  $  16,761  $  84,460  $  51,170 
         
Reconciliation from Operating Loss to Non-GAAP Operating Loss:        
Operating loss $  (10,625) $  (11,906) $  (54,274) $  (58,903)
Amortization of acquired intangible assets    65     76     286     305 
Stock-based compensation expense    2,823     2,044     10,454     5,588 
Offering costs expensed    77        560     708 
Total net adjustments    2,965     2,120     11,300     6,601 
Non-GAAP operating loss $  (7,660) $  (9,786) $  (42,974) $  (52,302)
         
Reconciliation from Net Loss to Adjusted EBITDA:        
Net loss $  (12,487) $  (13,689) $  (62,084) $  (63,179)
Depreciation    2,311     1,774     8,791     6,931 
Amortization of software development costs    602     43     2,587     2,257 
Amortization of acquired intangible assets    65     76     286     305 
Interest income    (58)    (13)    (188)    (77)
Interest expense on building lease financing obligations    1,721     1,574     7,092     3,624 
Interest expense on other borrowings    192     206     877     682 
Income tax expense       5     25     25 
Stock-based compensation expense    2,823     2,044     10,454     5,588 
Total net adjustments    7,656     5,709     29,924     19,335 
Adjusted EBITDA $  (4,831) $  (7,980) $  (32,160) $  (43,844)
         
Reconciliation from Net Loss to Non-GAAP Net Loss:        
Net loss $  (12,487) $  (13,689) $  (62,084) $  (63,179)
Amortization of acquired intangible assets    65     76     286     305 
Stock-based compensation expense    2,823     2,044     10,454     5,588 
Offering costs expensed    77        560     708 
Total net adjustments    2,965     2,120     11,300     6,601 
Non-GAAP net loss $  (9,522) $  (11,569) $  (50,784) $  (56,578)
         
Calculation of Non-GAAP Earnings Per Share:        
Non-GAAP net loss $  (9,522) $  (11,569) $  (50,784) $  (56,578)
         
Weighted average shares outstanding - basic and diluted    29,120,171     25,569,203     28,344,680     25,207,099 
Shares used in computing non-GAAP net loss per share - basic and diluted    29,120,171     25,569,203     28,344,680     25,207,099 
Non-GAAP net loss per common share - basic and diluted $  (0.33) $  (0.45) $  (1.79) $  (2.24)


Benefitfocus, Inc.
843-284-1052 ext. 3527
pr@benefitfocus.com 

Investor Relations:
Michael Bauer
843-284-1052 ext. 6654
michael.bauer@benefitfocus.com