Benefitfocus, Inc.
Aug 3, 2017

Benefitfocus Announces Second Quarter 2017 Financial Results

Total revenue of $63.3 million in the second quarter grew 9% year-over-year and 13% year-to-date versus the first half of 2016

CHARLESTON, S.C., Aug. 03, 2017 (GLOBE NEWSWIRE) -- Benefitfocus, Inc. (NASDAQ:BNFT), a leading provider of cloud-based benefits management software, today announced its second quarter 2017 financial results.

"Benefitfocus outperformed our second quarter revenue and profitability targets," said Shawn Jenkins, Co-Founder and Chief Executive Officer of Benefitfocus. "When we look at the combination of demand for our platform, strong revenue retention and profitability improvement, we continue to see a strengthening of our company."

Jenkins added, "We continue to enhance our best-in-class platform, which we believe will position Benefitfocus to deliver accelerating revenue growth and margin expansion that will generate long-term shareholder value."

Second Quarter 2017 Financial Highlights

Revenue

Net Loss

Non-GAAP Net Loss and Adjusted EBITDA

See important disclosures about non-GAAP measures, and a reconciliation of them to GAAP, below.

Balance Sheet

Second Quarter and Recent Business Highlights

Business Outlook

Based on information available as of August 3, 2017, Benefitfocus is providing guidance for the third quarter and full year 2017 as indicated below.

Third Quarter 2017:

Full Year 2017:

See important disclosures about non-GAAP measures, and a reconciliation of them to GAAP, below.

Conference Call Details:

In conjunction with this announcement, Benefitfocus will host a conference call today, August 3, 2017, at 5:00 p.m. Eastern Time to discuss the company's financial results. To access this call, dial (877) 407-9039 (domestic) or (201) 689-8470 (international). 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/. After the conference call, a replay will be available until August 10, 2017, and can be accessed by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) with passcode 13664967.

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 the consumers they serve 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 income (loss), net loss, net loss per common share and adjusted EBITDA. 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 income (loss), net loss and net loss per share exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, offering costs expensed, if any, and beginning in the second quarter of 2017, costs not core to our business, if any.  The exclusion of costs not core to our business from these non-GAAP financial measures had a minimal impact on such measures for the three and six months ended June 30, 2017 and no material impact on such measures in prior periods. We define adjusted EBITDA as net loss before net interest, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense , expense related to the impairment of goodwill and intangible assets, and costs not core to our business.  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; risks related to changing healthcare and other applicable regulations; our ability to maintain our culture and recruit and retain qualified personnel; general economic risks;  the immature and volatile market for our products and services; the need to innovate and provide useful products and services; our ability to compete effectively; 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. 
Unaudited Consolidated Statements of Operations and Comprehensive Loss 
(in thousands, except share and per share data) 
  
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2017  2016  2017  2016 
Revenue $63,348  $57,874  $127,519  $112,666 
Cost of revenue (1)(2)  28,828   29,750   60,429   59,047 
Gross profit  34,520   28,124   67,090   53,619 
Operating expenses:(1)(2)                
Sales and marketing  17,646   14,761   34,923   28,335 
Research and development  12,473   14,180   24,654   29,195 
General and administrative  5,877   8,274   13,634   16,669 
Total operating expenses  35,996   37,215   73,211   74,199 
Loss from operations  (1,476)  (9,091)  (6,121)  (20,580)
Other income (expense):                
Interest income  47   36   74   92 
Interest expense on building lease financing obligations  (1,861)  (1,710)  (3,721)  (3,426)
Interest expense on other borrowings  (1,210)  (231)  (2,272)  (429)
Other expense  (1)  (3)  (149)  (3)
Total other expense, net  (3,025)  (1,908)  (6,068)  (3,766)
Loss before income taxes  (4,501)  (10,999)  (12,189)  (24,346)
Income tax expense  5   5   5   10 
Net loss $(4,506) $(11,004) $(12,194) $(24,356)
Comprehensive loss $(4,506) $(11,004) $(12,194) $(24,356)
                 
Net loss per common share:                
Basic and diluted $(0.14) $(0.37) $(0.40) $(0.83)
Weighted-average common shares outstanding:                
Basic and diluted  31,076,995   29,459,341   30,868,888   29,336,270 
                 
                 
(1) Stock-based compensation included in above line items:                
Cost of revenue $459  $770  $1,121  $1,318 
Sales and marketing  924   838   2,256   1,470 
Research and development  739   1,059   1,457   2,527 
General and administrative  740   1,783   2,416   3,868 
                 
(2) Amortization of acquired intangible assets included in above line items:                
Cost of revenue $35  $38  $71  $74 
Sales and marketing  13   10   26   20 
Research and development  12   13   24   28 
General and administrative  5   4   8   7 

 

Benefitfocus, Inc.  
Unaudited Consolidated Balance Sheets  
(in thousands, except share and per share data)  
  
  As of  As of 
  June 30,  December 31, 
  2017  2016 
Assets        
Current assets:        
Cash and cash equivalents $59,395  $56,853 
Marketable securities     2,007 
Accounts receivable, net  26,952   28,340 
Accounts receivable, related party, net  907   4,626 
Prepaid expenses and other current assets  6,247   4,449 
Total current assets  93,501   96,275 
Property and equipment, net  76,410   80,518 
Intangible assets, net  279   408 
Goodwill  1,634   1,634 
Other non-current assets  1,216   1,575 
Total assets $173,040  $180,410 
Liabilities and stockholders' deficit        
Current liabilities:        
Accounts payable $5,146  $5,829 
Accrued expenses  8,490   10,867 
Accrued compensation and benefits  14,678   17,347 
Deferred revenue, current portion  32,307   35,426 
Revolving line of credit, current portion  20,000   20,000 
Financing and capital lease obligations, current portion  3,232   2,604 
Total current liabilities  83,853   92,073 
Deferred revenue, net of current portion  32,791   40,412 
Revolving line of credit, net of current portion  32,246   20,246 
Financing and capital lease obligations, net of current portion  56,654   57,934 
Other non-current liabilities  2,590   3,056 
Total liabilities  208,134   213,721 
Commitments and contingencies        
Stockholders' deficit:        
Preferred stock, par value $0.001, 5,000,000 shares authorized,        
no shares issued and outstanding at June 30, 2017       
and December 31, 2016  —    — 
Common stock, par value $0.001, 50,000,000 shares authorized,        
31,134,394 and 30,429,014 shares issued and outstanding       
at June 30, 2017 and December 31, 2016, respectively  31    30 
Additional paid-in capital  345,860   335,059 
Accumulated deficit  (380,985)  (368,400)
Total stockholders' deficit  (35,094)  (33,311)
Total liabilities and stockholders' deficit $173,040  $180,410 
         

 

Benefitfocus, Inc.
 
Unaudited Consolidated Statements of Cash Flows
 
(in thousands)
 
  Six Months Ended 
  June 30, 
  2017  2016 
Cash flows from operating activities        
Net loss $(12,194) $(24,356)
Adjustments to reconcile net loss to net cash and cash        
equivalents used in operating activities:        
Depreciation and amortization  7,945   6,310 
Stock-based compensation expense  7,250   9,183 
Interest accrual on financing obligation  3,747   3,426 
Loss on disposal or impairment of property and equipment  149   7 
Provision for doubtful accounts  61   (22)
Changes in operating assets and liabilities:        
Accounts receivable, net  5,047   (1,582)
Accrued interest on short-term investments  7   158 
Prepaid expenses and other current assets  (1,798)  (72)
Other non-current assets  359   291 
Accounts payable  (1,288)  (1,279)
Accrued expenses  (1,805)  741 
Accrued compensation and benefits  (2,669)  (3,196)
Deferred revenue  (10,740)  (9,932)
Other non-current liabilities  (467)  87 
Net cash and cash equivalents used in operating activities  (6,396)  (20,236)
Cash flows from investing activities        
Purchases of short-term investments held to maturity     (2,004)
Proceeds from maturity of short-term investments held to maturity  2,000   31,225 
Purchases of property and equipment  (3,825)  (4,964)
Net cash and cash equivalents (used in) provided by investing activities  (1,825)  24,257 
Cash flows from financing activities        
Draws on revolving line of credit  53,000   34,000 
Payments on revolving line of credit  (41,000)  (25,000)
Proceeds from exercises of stock options and ESPP  3,161   1,593 
Remittance of taxes upon vesting of restricted stock units     (202)
Payments on financing and capital lease obligations  (4,398)  (5,557)
Net cash and cash equivalents provided by financing activities  10,763   4,834 
Net increase in cash and cash equivalents  2,542   8,855 
Cash and cash equivalents, beginning of period  56,853   48,074 
Cash and cash equivalents, end of period $59,395  $56,929 
         
Supplemental disclosure of non-cash investing and financing activities        
Property and equipment purchases in accounts payable and accrued expenses $732  $1,397 
Property and equipment purchased with financing and capital lease obligations $  $2,099 
Post contract support purchased with financing obligations $  $1,182 
         


Benefitfocus, Inc. 
Unaudited Reconciliation of GAAP to Non-GAAP Measures 
(in thousands, except share and per share data) 
  
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2017  2016  2017  2016 
Reconciliation from Gross Profit to Non-GAAP Gross Profit:                
Gross profit $34,520  $28,124  $67,090  $53,619 
Amortization of acquired intangible assets  35   38   71   74 
Stock-based compensation expense  459   770   1,121   1,318 
Total net adjustments  494   808   1,192   1,392 
Non-GAAP gross profit $35,014  $28,932  $68,282  $55,011 
                 
Reconciliation from Operating Loss to Non-GAAP Operating Income (Loss):                
Operating loss $(1,476) $(9,091) $(6,121) $(20,580)
Amortization of acquired intangible assets  65   65   129   129 
Stock-based compensation expense  2,862   4,450   7,250   9,183 
Costs not core to our business  121      121    
Total net adjustments  3,048   4,515   7,500   9,312 
Non-GAAP operating income (loss) $1,572  $(4,576) $1,379  $(11,268)
                 
Reconciliation from Net Loss to Adjusted EBITDA:                
Net loss $(4,506) $(11,004) $(12,194) $(24,356)
Depreciation  3,081   2,509   6,192   4,862 
Amortization of software development costs  794   693   1,624   1,319 
Amortization of acquired intangible assets  65   65   129   129 
Interest income  (47)  (36)  (74)  (92)
Interest expense on building lease financing obligations  1,861   1,710   3,721   3,426 
Interest expense on other borrowings  1,210   231   2,272   429 
Income tax expense  5   5   5   10 
Stock-based compensation expense  2,862   4,450   7,250   9,183 
Costs not core to our business  121      121    
Total net adjustments  9,952   9,627   21,240   19,266 
Adjusted EBITDA $5,446  $(1,377) $9,046  $(5,090)
                 
Reconciliation from Net Loss to Non-GAAP Net Loss:                
Net loss $(4,506) $(11,004) $(12,194) $(24,356)
Amortization of acquired intangible assets  65   65   129   129 
Stock-based compensation expense  2,862   4,450   7,250   9,183 
Costs not core to our business  121      121    
Total net adjustments  3,048   4,515   7,500   9,312 
Non-GAAP net loss $(1,458) $(6,489) $(4,694) $(15,044)
                 
Calculation of Non-GAAP Earnings Per Share:                
Non-GAAP net loss $(1,458) $(6,489) $(4,694) $(15,044)
                 
Weighted average shares outstanding - basic and diluted  31,076,995   29,459,341   30,868,888   29,336,270 
Shares used in computing non-GAAP net loss per share - basic and diluted  31,076,995   29,459,341   30,868,888   29,336,270 
Non-GAAP net loss per common share - basic and diluted $(0.05) $(0.22) $(0.15) $(0.51)

 

Benefitfocus, Inc. 
Unaudited Reconciliation of GAAP to Non-GAAP Guidance Ranges 
(in millions, except per share data) 
  
  Third Quarter 2017  Full Year 2017 
  Range  Range 
  Low  High  Low  High 
Reconciliation from Net Loss Guidance to Adjusted EBITDA Guidance:                
Net loss - Guidance range $(10.5) $(9.5) $(29.0) $(26.0)
Depreciation and amortization  3.7   3.7   15.3   15.3 
Interest income            
Interest expense  2.4   2.4   9.6   9.6 
Income tax expense            
Stock-based compensation expense  5.0   5.0   17.4   17.4 
Costs not core to business  0.4   0.4   0.7   0.7 
Total net adjustments  11.5   11.5   43.0   43.0 
Adjusted EBITDA - Guidance range $1.0  $2.0  $14.0  $17.0 
                 
Reconciliation from Net Loss Guidance to Non-GAAP Net Loss Guidance:                
Net loss - Guidance range $(10.5) $(9.5) $(29.0) $(26.0)
Amortization of acquired intangible assets  0.1   0.1   0.4   0.4 
Stock-based compensation expense  5.0   5.0   17.4   17.4 
Costs not core to business  0.4   0.4   0.7   0.7 
Total net adjustments  5.5   5.5   18.5   18.5 
Non-GAAP net loss - Guidance range $(5.0) $(4.0) $(10.5) $(7.5)
                 
Calculation of Non-GAAP Earnings Per Share Guidance:                
Non-GAAP net loss - Guidance range $(5.0) $(4.0) $(10.5) $(7.5)
                 
Weighted average shares outstanding - basic and diluted  31.2   31.2   31.0   31.0 
Shares used in computing non-GAAP net loss per share - basic and diluted  31.2   31.2   31.0   31.0 
Non-GAAP net loss per common share - basic and diluted $(0.16) $(0.13) $(0.34) $(0.24)


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

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