Ellie Mae Reports First Quarter 2016 Results

Record Revenue Up 36% to $73.6 Million Raises 2016 Guidance

PLEASANTON, Calif. – April 28, 2016Ellie Mae® (NYSE:ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry, today reported results for the first quarter ended March 31, 2016.

First Quarter 2016 Highlights
  • Record revenue of $73.6 million, up 36% from $54.2 million in Q1 2015
  • Adjusted EBITDA of $15.6 million, up 7% from $14.6 million in Q1 2015
  • Net income of $2.5 million, compared to $3.6 million in Q1 2015
  • 15,000 Encompass seats booked
  • Revenue per average active Encompass® user of $522, up 10% from $474 in Q1 2015

“We had a great start to the year with continued momentum across our business,” said Jonathan Corr, president and CEO of Ellie Mae. “In addition to growing revenue by 36% in the face of a 10% decline in origination volume, we continued to see robust adoption throughout the lender community. Seat bookings for Encompass were an impressive 15,000 in the first quarter. In March, we welcomed more than 2,200 industry professionals to our largest ever Ellie Mae user conference, Experience, where we introduced three new solutions in the areas of compliance, CRM and mobile, continuing our focus on innovation to help customers grow their businesses. With this strong foundation, we are raising our 2016 guidance.”

Financial Results

Total revenue for the first quarter of 2016 was $73.6 million, compared to $54.2 million for the first quarter of 2015. Net income for the first quarter of 2016 was $2.5 million, or $0.08 per diluted share, compared to net income of $3.6 million, or $0.12 per diluted share, for the first quarter of 2015.

On a non-GAAP basis, adjusted net income for the first quarter of 2016 was $10.7 million, or $0.34 per diluted share, compared to $9.9 million, or $0.33 per diluted share, for the first quarter of 2015. Adjusted EBITDA for the first quarter of 2016 was $15.6 million, compared to $14.6 million for the first quarter of 2015.

Additional information about the non-GAAP financial measures presented in this release, including a reconciliation of the non-GAAP financial measures to their related GAAP financial measures, is set forth below under the section entitled “Use of Non-GAAP Financial Measures.”

Key Operating Metrics:
  • The total number of active Encompass users increased 22% year-over-year to 144,533;
  • Contracted revenue increased 44% year-over-year to $46.0 million; and
  • Revenue per average active Encompass user in the first quarter increased 10% year-over-year to $522.
Second Quarter and Full Year 2016 Financial Outlook

For the second quarter of 2016, our revenue is expected to be in the range of $84.0 million to $86.0 million. Net income is expected to be $7.5 million to $8.0 million, or $0.24 to $0.25 per diluted share. Adjusted net income is expected to be in the range of $16.6 million to $17.6 million, or $0.53 to $0.56 per diluted share. Adjusted EBITDA is expected to be in the range of $25.5 million to $27.0 million.

For the full year 2016, revenue is expected to be in the range of $325.0 million to $329.0 million, up from the previously provided range of $317.0 million to $321.0 million. Net income is expected to be $23.5 million to $25.5 million, or $0.74 to $0.80 per diluted share, up from the previously provided range of $22.2 million to $24.2 million, or $0.71 to $0.76 per diluted share. Adjusted net income is expected to be in the range of $58.4 million to $61.4 million, or $1.84 to $1.92 per diluted share, up from the previously provided range of $56.1 million to $59.1 million, or $1.79 to $1.86 per diluted share. Adjusted EBITDA is expected to be in the range of $93.0 million to $97.5 million, up from the previously provided range of $90.0 million to $94.5 million.

Quarterly Conference Call

Ellie Mae will discuss its first quarter 2016 results today, April 28, 2016, via teleconference at 4:30 p.m. Eastern Time. To access the call, please dial 877-876-9176 or 785-424-1667 at least five minutes prior to the 4:30 p.m. Eastern Time start time. A live webcast of the call will be available on the Investor Relations section of the Company’s website at http://ir.elliemae.com. An audio replay of the call will be available through May 12, 2016 by dialing 888-203-1112 or 719-457-0820 and entering access code 8415904.

Use of Non-GAAP Financial Measures

Ellie Mae (the “Company”) provides investors with the non-GAAP financial measures of adjusted net income, adjusted EBITDA, and free cash flow in addition to the traditional GAAP operating performance measure of net income as part of its overall assessment of its performance. Adjusted net income consists of net income plus amortization of intangible assets and stock-based compensation expense. EBITDA consists of net income plus depreciation, amortization of intangible assets, and income tax provision, less other income, net. Adjusted EBITDA consists of EBITDA plus stock-based compensation expense. Free cash flow consists of net cash provided by (used in) operating activities less acquisition of property and equipment and internal-use software, net. Ellie Mae uses adjusted net income and adjusted EBITDA as measures of operating performance because they enable period to period comparisons by excluding potential differences caused by variations in the age and depreciable lives of fixed assets, the amortization of intangibles related to acquisitions, loss on impairment of intangible assets, and changes in interest expense and interest income that are influenced by capital market conditions. The Company also believes it is useful to exclude stock-based compensation expense from adjusted net income and adjusted EBITDA because the amount of non-cash expense associated with stock-based awards made at certain prices and points in time (a) do not necessarily reflect how the company’s business is performing at any particular time and (b) can vary significantly between periods due to the timing of new stock-based awards. These non-GAAP measures are not measurements of the Company’s financial performance under GAAP and have limitations as analytical tools. Accordingly, these non-GAAP financial measures should not be considered a substitute for, or superior to, net income or operating income or other financial measures calculated in accordance with GAAP. The Company cautions that other companies in Ellie Mae’s industry may calculate adjusted net income, EBITDA, adjusted EBITDA, and free cash flow differently than the Company does, further limiting their usefulness as a comparative measure. A reconciliation of net income to adjusted net income, EBITDA, adjusted EBITDA, and operating cash flow to free cash flow are included in the tables below.

Disclosure Information

Ellie Mae uses the investor relations section on its website as means of complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Ellie Mae’s investor relations website in addition to following Ellie Mae’s press releases, SEC filings, and public conference calls and webcasts.

About Ellie Mae

Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Mortgage lenders of all sizes use Ellie Mae’s Encompass® all-in-one mortgage management solution, Mavent Compliance Service, and AllRegs research, reference and education resources to improve compliance, loan quality and efficiency across the entire mortgage lifecycle. Visit EllieMae.com or call (877) 355-4362 to learn more.

Forward-Looking Statements

This press release contains forward-looking statements under the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements include projected revenue, net income (loss), adjusted EBITDA, and adjusted net income for the second quarter and fiscal year 2016. These statements involve known and unknown risks, uncertainties, and other factors which may cause Ellie Mae’s results to be materially different than those expressed or implied in such statements. Such differences may be based on factors such as changes in the volume of residential mortgages in the United States; changes in other macroeconomic factors affecting the residential real estate industry; changes in strategic planning decisions by management; our ability to manage growth and expenses as we continue to scale our business; reallocation of internal resources; costs incurred and delays in developing new products; changes in anticipated rates of SaaS seat additions, and new customer acquisitions; the possibility that economic benefits of future opportunities may never materialize, including unexpected variations in market growth and demand for the acquired products and technologies; delays and disruptions, including changing relationships with partners, customers, employees or suppliers; the satisfactory performance, reliability and availability of our products and services; the amount of costs incurred in connection with supporting and integrating new customers and partners; ongoing personnel and logistical challenges of managing a larger organization; changes in other macroeconomic factors affecting the residential real estate industry and other risk factors included in documents that Ellie Mae has filed with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2015 as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on Ellie Mae’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Ellie Mae cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Ellie Mae expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances, unless otherwise required by law.

IR CONTACT

Alex Hughes
VP of Investor Relations
Ellie Mae, Inc.
(925) 227-7079
IR@elliemae.com

Lisa Laukkanen
The Blueshirt Group for Ellie Mae, Inc.
(415) 217-4967
lisa@blueshirtgroup.com

PRESS CONTACT

Erica Harvill
Ellie Mae, Inc.
(925) 227-5913
Erica.harvill@elliemae.com

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© 2016 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, DataTrac®, Ellie Mae Network, Mavent®, Mortgage Returns®, Prospect Manager®, Total Quality Loan®, True CRM®, TQL® and the Ellie Mae logo are trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

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