ACTV The Active Network, Inc.

• Third Quarter Revenue of $117.5 Million
• Third Quarter Adjusted EBITDA of $16.4 Million

ACTIVE Network (NYSE:ACTV), the leader in cloud-based activity and participant management™ solutions, today announced its financial results for the third quarter ended September 30, 2013.

Q3 2013 Financial Highlights:

(All comparisons are made to the third quarter of 2012)

• Total net revenue up 8% to $117.5 million.
• Technology revenue increased 9% and constituted 89%, or $104.4 million, of total net revenue.
• Net registration revenue increased 9% to $79.0 million; registrations grew 6% and revenue per registration was up 2%.
• Marketing services revenue constituted 11%, or $13.1 million, of total net revenue.
• Net loss was $5.3 million, compared to net loss of $6.0 million.
• Adjusted EBITDA, a non-GAAP financial measure, was $16.4 million.
• Excluding charges related to transaction costs associated with ACTIVE Network entering into a definitive agreement to be acquired by Vista Equity Partners and management changes, Adjusted EBITDA was $19.5 million, up 27%.

“I am very pleased with our third quarter results,” said Jon Belmonte, Interim CEO of ACTIVE Network. “During the quarter, we entered into a definitive agreement to be acquired by Vista Equity Partners, which we believe will be a very positive event for stockholders and will help position us to further capitalize on the market opportunity.”

Q3 2013 Key Business Highlights

• Marquee customer highlights included wins from Run or Dye, Kentucky Derby Festival Marathon, Monterey County Parks (CA), Arkansas State Parks, and Informatica World 2014 and 2015.
• ACTIVE Network launched a new version of ACTIVE RegOnline™, the Company's entry-level online event-management solution. The new ACTIVE RegOnline makes it easier for event planners from Small and Mid-sized Businesses (SMBs) and associations, to plan, promote, and manage events of all sizes.
• ACTIVE Network saw a 5% increase in summer camping across U.S. Federal parks, 30+ states, and regional and private partners. Through ReserveAmerica.com, ACTIVE Network provides consumers with the ability to search and reserve from more than 210,000 campsites.

Merger Agreement with Vista Equity Partners

On September 28, 2013, ACTIVE Network entered into a definitive agreement to be acquired by affiliates of Vista Equity Partners (“Vista”), a leading private equity firm focused on investments in software, data and technology-enabled businesses, in a transaction valued at approximately $1.05 billion. Pursuant to the agreement, Vista has commenced a tender offer to acquire all of the outstanding shares of ACTIVE Network’s common stock for $14.50 per share, in cash, payable without interest and less any applicable withholding taxes. Any shares not tendered in the offer will be acquired in a second-step merger at the same cash price as paid in the tender offer. The transaction is expected to close before the end of the fourth quarter of 2013. Upon the completion of the transaction, ACTIVE Network will become a privately held company.

Conference Call Information

Due to the previously announced merger agreement with Vista, ACTIVE Network will not host a conference call in conjunction with today's release of its third quarter 2013 results and will not be updating prior financial guidance or providing financial guidance for future periods.

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 organizations transform and grow their businesses. We do this through technology solutions that power the world’s activities, as well as online destinations such as ACTIVE.com® that connect people with the things they love to do. Serving ~55,000 global business customers and driving ~90 million transactions annually, we help organizations 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 and improve its operations, 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, the effects of the Company’s recent management change, and the Company’s ability to successfully consider and evaluate its strategic alternatives, 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. This press release also contains forward-looking statements with respect to the tender offer and related transactions, including the benefits expected from the acquisition and the expected timing of the completion of the transaction. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risks, including uncertainties regarding the timing of the closing of the transaction, uncertainties as to the number of the Company’s stockholders who may tender their stock in the tender offer, the possibility that various closing conditions for the transaction may not be satisfied or waived, and general economic and business conditions. Factors that could cause actual results of the tender offer to differ materially include the following: the risk of failing to satisfy conditions to the transaction, the risk that Vista is unable to obtain adequate financing, the risk that the transaction will not close or that closing will be delayed, the risk that the Company’s business will suffer due to uncertainty related to the transaction, the competitive environment in the Company’s industry and competitive responses to the transaction. 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.

© 2013 The Active Network, Inc. All rights reserved. ACTIVE.com, ACTIVE Works 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.

Notice to Investors

This press release is not a recommendation, an offer to purchase or a solicitation of an offer to sell shares of ACTIVE Network’s common stock. The solicitation and the offer to purchase shares of ACTIVE Network’s common stock described in this press release will be made only pursuant to the offer to purchase and related materials that Vista has filed on Schedule TO with the SEC. In addition, ACTIVE Network has filed its recommendation of the tender offer on Schedule 14D-9 with the SEC. Additionally, ACTIVE Network and Vista will file other relevant materials in connection with the proposed acquisition of ACTIVE Network by Vista pursuant to the terms of the merger agreement. INVESTORS AND STOCKHOLDERS OF ACTIVE NETWORK ARE ADVISED TO READ THE SCHEDULE TO (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SCHEDULE 14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BEFORE MAKING ANY DECISION WITH RESPECT TO THE TENDER OFFER, BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO.

Investors and stockholders may obtain free copies of the Schedule TO and Schedule 14D-9, as each may be amended or supplemented from time to time, and other documents filed by the parties (when available), at the SEC’s web site at www.sec.gov or by contacting the investor relations department of ACTIVE Network at 10182 Telesis Court, San Diego, California 92121, by telephone at (858) 964-3834 or by email at PR@activenetwork.com.

  THE ACTIVE NETWORK, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)           Three Months Ended       Nine Months Ended September 30, September 30, 2013       2012 2013       2012 Net Revenue: Technology revenue $ 104,407 $ 96,170 $ 318,870 $ 288,445 Marketing services revenue   13,128     13,049     37,036     36,776   Total net revenue 117,535 109,219 355,906 325,221   Cost of net revenue: Cost of technology revenue 50,896 45,571 156,355 142,038 Cost of marketing services revenue   916     1,826     3,131     5,257   Total cost of net revenue   51,812     47,397     159,486     147,295     Gross profit 65,723 61,822 196,420 177,926   Operating expenses: Sales and marketing 25,307 24,154 79,281 73,462 Research and development 20,703 20,624 63,375 62,954 General and administrative 20,441 15,862 61,980 49,309 Amortization of intangibles   3,956     5,492     12,396     16,780   Total operating expenses   70,407     66,132     217,032     202,505     Loss from operations (4,684 ) (4,310 ) (20,612 ) (24,579 )   Interest income 13 23 44 73 Interest expense (151 ) (239 ) (486 ) (480 ) Other income (expense), net   431     486     (592 )   1,363   Loss before provision for income taxes (4,391 ) (4,040 ) (21,646 ) (23,623 ) Provision for income taxes   904     1,982     3,349     5,062     Net loss $ (5,295 ) $ (6,022 ) $ (24,995 ) $ (28,685 )   Net loss per share: Basic and diluted $ (0.08 ) $ (0.10 ) $ (0.40 ) $ (0.49 )   Weighted-average shares: Basic and diluted   62,757     59,444     61,718     58,259       THE ACTIVE NETWORK, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)           September 30,     December 31, 2013 2012 (Unaudited) Assets Current assets: Cash and cash equivalents $ 103,330 $ 58,493 Restricted cash 308 1,145 Registration receivable 22,580 16,260 Accounts receivable, net 51,774 51,363 Inventories 3,918 4,809 Prepaid expenses and other current assets   10,548     8,922   Total current assets 192,458 140,992   Property and equipment, net 42,500 41,236 Software development costs, net 49,073 51,151 Goodwill 242,869 243,716 Intangible assets, net 46,564 62,806 Other long-term assets   2,600     2,569   Total assets $ 576,064   $ 542,470     Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 3,107 $ 8,174 Registration fees payable 88,125 61,272 Accrued expenses 51,669 38,865 Deferred revenue 69,715 66,846 Capital lease obligations, current portion 2,278 2,774 Other current liabilities   3,495     4,373   Total current liabilities 218,389 182,304   Capital lease obligations, net of current portion 1,088 2,462 Other long-term liabilities 5,690 6,192 Deferred tax liability   21,427     19,065   Total liabilities 246,594 210,023   Stockholders’ equity: Common stock 64 62 Treasury stock (11,959 ) (11,959 ) Additional paid-in capital 676,592 653,694 Accumulated other comprehensive income 8,052 8,934 Accumulated deficit   (343,279 )   (318,284 ) Total stockholders’ equity   329,470     332,447   Total liabilities and stockholders’ equity $ 576,064   $ 542,470       THE ACTIVE NETWORK, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)           Nine Months Ended September 30, 2013       2012 Operating activities Net loss $ (24,995 ) $ (28,685 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization of property and equipment 30,311 23,995 Amortization of intangible assets 15,970 21,132 Stock-based compensation expense 19,086 11,992 Deferred tax liability 2,391 3,046 Other non-cash items (935 ) (2,431 ) Change in operating assets and liabilities, net of effect of acquisitions: Restricted cash 837 627 Registration receivable (6,321 ) (4,274 ) Accounts receivable (453 ) (2,483 ) Inventories 891 (1,831 ) Prepaid expenses and other assets (1,680 ) (2,692 ) Accounts payable and accrued expenses 10,884 3,416 Registration fees payable 26,854 252 Deferred revenue 3,105 13,914 Other liabilities   (329 )   1,170   Net cash provided by operating activities 75,616 37,148 Investing activities Purchases of property and equipment (16,690 ) (12,665 ) Capitalized software development (16,266 ) (17,194 ) Cash paid for acquisitions, net of cash acquired   -     (38,037 ) Net cash used in investing activities (32,956 ) (67,896 ) Financing activities Proceeds from issuance of common stock 5,444 9,247 Payments on capital lease obligations (1,869 ) (3,552 ) Payments of employee tax witholdings from equity transactions (1,896 ) - Proceeds (repayment) of long-term debt   -     (5,000 ) Net cash provided by financing activities 1,679 695 Effect of exchange rates on cash   498     (147 ) Net increase (decrease) in cash and cash equivalents 44,837 (30,200 ) Cash and cash equivalents at beginning of period   58,493     108,699   Cash and cash equivalents at end of period $ 103,330   $ 78,499       THE ACTIVE NETWORK, INC. SUPPLEMENTARY DATA (In thousands, except revenue per registration) (Unaudited)     Operational Data:           Three Months Ended             Nine Months Ended       September 30, % September 30, % 2013       2012 change 2013       2012 change Net registration revenue $ 78,957 $ 72,703 9 % $ 241,768 $ 220,076 10 % Registrations 26,840 25,207 6 % 74,716 71,466 5 % Net registration revenue per registration $ 2.94 $ 2.88 2 % $ 3.24 $ 3.08 5 %     GAAP and Non-GAAP Gross Profit Margin: Three Months Ended % or Nine Months Ended % or September 30, bps September 30, bps 2013 2012 change 2013 2012 change Total net revenue $ 117,535 $ 109,219 8 % $ 355,906 $ 325,221 9 %   GAAP gross profit $ 65,723 $ 61,822 6 % $ 196,420 $ 177,926 10 % Add back: stock-based compensation 174 222 457 474 Add back: depreciation & amortization   10,166     8,060     29,766     23,728   Non-GAAP gross profit $ 76,063 $ 70,104 9 % $ 226,643 $ 202,128 12 %   Gross profit margin: GAAP gross profit margin 55.9 % 56.6 % (70) bps 55.2 % 54.7 % 50 bps Non-GAAP gross profit margin 64.7 % 64.2 % 50 bps 63.7 % 62.2 % 150 bps     Stock-Based Compensation Expense: Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 Cost of net revenue $ 174 $ 222 $ 457 $ 474 Sales and marketing 1,242 1,007 2,833 2,709 Research and development 674 662 1,683 1,782 General and administrative   3,544     2,770     14,113     7,027   Total stock-based compensation (1) $ 5,634   $ 4,661   $ 19,086   $ 11,992  

 

(1)   Management change costs included $0.6 million in stock-based compensation in the three months ended September 30, 2013, and $6.3 million in stock-based compensation in the nine months ended September 30, 2013 associated with the May and July 3013 separation agreements for the company's former Executive Chairman and Chairman of the Board, Chief Executive Officer, and Chief Legal Officer.     THE ACTIVE NETWORK, INC. RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except per share data) (Unaudited)   Non-GAAP Earnings:           Three Months Ended       Nine Months Ended September 30, September 30, 2013       2012 2013       2012 Non-GAAP net income (loss): GAAP net loss $ (5,295 ) $ (6,022 ) $ (24,995 ) $ (28,685 ) Add back: stock-based compensation (1) 5,634 4,661 19,086 11,992 Add back: amortization of intangibles 5,137 6,900 15,970 21,132 Income tax effect   (3,770 )   (4,046 )   (12,270 )   (11,593 ) Non-GAAP net income (loss) $ 1,706   $ 1,493   $ (2,209 ) $ (7,154 ) Add back: management change and deal costs (1) 3,100 - 4,800 - Income tax effect   (1,085 )   -     (1,680 )   -   Non-GAAP net income (loss) excluding management change and deal costs $ 3,721   $ 1,493   $ 911   $ (7,154 )   Weighted-average shares: Basic   62,757     59,444     61,718     58,259   Diluted   67,941     64,708     65,666     58,259     Non-GAAP net income (loss) per share: Basic $ 0.03   $ 0.03   $ (0.04 ) $ (0.12 ) Diluted $ 0.03   $ 0.02   $ (0.04 ) $ (0.12 )   Non-GAAP net income (loss) per share excluding management change and deal costs: Basic $ 0.06   $ 0.03   $ 0.01   $ (0.12 ) Diluted $ 0.05   $ 0.02   $ 0.01   $ (0.12 )       Adjusted EBITDA: Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 Net loss $ (5,295 ) $ (6,022 ) $ (24,995 ) $ (28,685 ) Add back: interest expense, net 138 216 442 407 Add back: provision for income taxes 904 1,982 3,349 5,062 Add back: depreciation and amortization 15,422 15,033 46,281 45,127 Add back: stock-based compensation (1) 5,634 4,661 19,086 11,992 Add back: other (income) expense, net   (431 )   (486 )   592     (1,363 ) Adjusted EBITDA $ 16,372   $ 15,384   $ 44,755   $ 32,540   Add back: management change and deal costs (1)   3,100     -     4,800     -   Adjusted EBITDA excluding management change and deal costs $ 19,472   $ 15,384   $ 49,555   $ 32,540  

 

(1)   Management change costs included $0.6 million in stock-based compensation and $0.4 million in other costs in the three months ended September 30, 2013, and $6.3 million in stock-based compensation and $1.9 million in other costs in the nine months ended September 30, 2013 associated with the May and July 2013 separation agreements for the company's former Executive Chairman and Chairman of the Board, Chief Executive Officer, and Chief Legal Officer. Deal costs included $2.7 million for banking, accounting and legal costs in the three months ended September 30, 2013 and $2.9 million in the nine months ended September 30, 2013.  

Media:ACTIVE NetworkKristin Carroll, 1-858-964-3834PR@ACTIVEnetwork.comorInvestors:The Blueshirt GroupBrinlea Johnson, 1-212-331-8424Brinlea@blueshirtrgroup.comorThe Blueshirt GroupAllise Furlani, 212-331-8433allise@blueshirtgroup.com