Q2 cumulative ending members of approximately
4.0 million, up 18% year-over-year
Record quarterly revenue of $145.0 million, up
25% year-over-year
Recorded the 41st consecutive quarter of
sequential growth in revenue and cumulative ending members
LifeLock, Inc. (NYSE: LOCK), an industry leader in identity
theft protection, today announced financial results for the second
quarter ended June 30, 2015.
Second Quarter 2015 Financial Highlights:
- Revenue: Total revenue was
$145.0 million for the second quarter of 2015, up 25% from $115.7
million for the second quarter of 2014. Consumer revenue was $138.3
million for the second quarter of 2015, up 27% from $109.3 million
for the second quarter of 2014. Enterprise revenue was $6.6 million
for the second quarter of 2015, up 4.0% from $6.4 million for the
second quarter of 2014.
- Net Income: Net income was $0.5
million for the second quarter of 2015, compared with a net loss of
$1.5 million for the second quarter of 2014. Net income per diluted
share was $0.01 for the second quarter of 2015 based on 100.3
million weighted-average shares outstanding, compared with a net
loss per diluted share of $0.02 for the second quarter of 2014
based on 92.5 million weighted-average shares outstanding.
- Adjusted Net Income*: Adjusted
net income was $10.0 million for the second quarter of 2015,
compared with an adjusted net income of $4.6 million for the second
quarter of 2014. Adjusted net income per diluted share was $0.10
for the second quarter of 2015 based on 100.3 million
weighted-average shares outstanding, compared with an adjusted net
income per diluted share of $0.05 for the second quarter of 2014
based on 98.1 million weighted-average shares outstanding.
- Adjusted EBITDA*: Adjusted
EBITDA was $12.5 million for the second quarter of 2015, compared
with $6.7 million for the second quarter of 2014.
- Cash Flow: Cash flow from
operations was $34.4 million for the second quarter of 2015,
leading to free cash flow* of $32.2 million after taking into
consideration $2.2 million of capital expenditures. This compares
with cash flow from operations of $27.7 million and free cash flow
of $24.0 million, after taking into consideration $3.7 million of
capital expenditures, for the second quarter of 2014.
- Balance Sheet: Total cash and
marketable securities at the end of the second quarter of 2015 was
$326.0 million, up from $293.4 million at the end of the first
quarter of 2015.
“During the second quarter, we continued to see strong demand
for our highly differentiated offerings as LifeLock works
tirelessly to protect our members from identity theft. We crossed
the four million member milestone during the quarter which is a
result of our proven track record of protecting our members, our
focus on delivering value to our customers, the power of our brand,
as well as the ongoing severity of the breach environment, ” said
Todd Davis, LifeLock’s Chairman and CEO.
* A reconciliation of GAAP to non-GAAP financial measures has
been provided in the financial statement tables included in this
press release. An explanation of these measures is also included
below under the heading “Non-GAAP Financial Measures.”
Second Quarter 2015 & Recent Business Highlights:
- Recorded the 41st consecutive quarter
of sequential growth in revenue and cumulative ending members.
- Added approximately 317,000 gross new
members in the second quarter of 2015 and ended the quarter with
approximately 4.0 million members.
- Achieved a retention rate of 87.1% for
the second quarter of 2015, which was the eleventh consecutive
quarter LifeLock's retention rate has been above 87%.
- Increased monthly average revenue per
member to $11.68 for the second quarter of 2015 from $10.99 for the
second quarter of 2014.
- Appointed Jaynie Miller Studenmund to
our Board of Directors, as Chair of the Compensation Committee and
as a member of the Audit Committee.
- Welcomed Neil Daswani as our new Chief
Information Security Officer.
"While we are still early in the process, our updated guidance
assumes that the publicity from the lawsuit with the FTC will cause
an increase in attrition and headwind to our new member acquisition
on a short-term basis. Irrespective, we continue to expect the
company to generate strong revenue growth and meaningful cash flow
and profitability during the third quarter and full year, and we
remain confident in our long-term growth prospects," said Chris
Power, Chief Financial Officer of LifeLock.
Guidance:
As of July 29, 2015, we are initiating guidance for our
third quarter of 2015 as well for the full year 2015.
- Third Quarter 2015 Guidance:
Total revenue is expected to be in the range of $147 million to
$149 million. Adjusted net income per share is expected to be in
the range of $0.25 to $0.26 based on approximately 101 million
fully diluted weighted-average shares outstanding. Adjusted EBITDA
is expected to be in the range of $27 million to $28 million.
- Full Year 2015 Guidance: Total
revenue is expected to be in the range of $577 million to $582
million. Adjusted net income per diluted share is expected to be in
the range of $0.58 to $0.61 based on approximately 101 million
fully diluted weighted-average shares outstanding and a cash tax
rate of 5%. Adjusted EBITDA is expected to be in the range of $70
million to $73 million. Free cash flow is expected to be in the
range of $100 million to $105 million.
- Our third quarter 2015 and full year
2015 guidance for adjusted net income per share and adjusted EBITDA
and our full year 2015 guidance for free cash flow excludes the
impact of the expenses for the FTC and related litigation.
Conference Call Details:
- What: LifeLock second quarter
2015 financial results.
- When: Wednesday, July 29,
2015 at 2PM PT (5PM ET).
- Dial in: To access the call in
the United States, please dial (877) 407-3982, and for
international callers dial (201) 493-6780. Callers may provide
confirmation number 13614096 to access the call more quickly, and
are encouraged to dial into the call 10 to 15 minutes prior to the
start to prevent any delay in joining.
- Webcast:
http://investor.lifelock.com/ (live and replay)
- Replay: A replay of the call
will be available via telephone for seven days, beginning two hours
after the call. To listen to the telephone replay in the United
States, please dial (877) 870-5176, and for international callers
dial (858) 384-5517 and enter access code 13614096.
About LifeLock
LifeLock, Inc. (NYSE:LOCK) is a
leading provider of proactive identity theft protection services
for consumers and consumer risk management services for
enterprises. LifeLock’s threat detection, proactive identity
alerts, and comprehensive remediation services help provide peace
of mind for consumers amid the growing threat of identity theft.
Leveraging unique data, science and patented technology from ID
Analytics, LLC., a wholly owned subsidiary, LifeLock offers
identity theft protection that goes significantly beyond credit
monitoring. As part of its commitment to help fight identity theft,
LifeLock works to train law enforcement and partners with a variety
of non-profit organizations to help consumers establish positive
habits to combat this threat.
Forward-Looking Statements
This press release contains “forward-looking” statements, as
that term is defined under the federal securities laws, including
statements regarding our expected total revenue, profitability,
long-term growth prospects, adjusted net income per diluted share,
adjusted EBITDA, and free cash flow for the third quarter of 2015
and for fiscal year 2015. These forward-looking statements are
based on our current assumptions, expectations, and beliefs and are
subject to substantial risks, uncertainties, assumptions, and
changes in circumstances that may cause our actual results,
performance, or achievements to differ materially from those
expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are
not limited to, risks associated with our ability to maintain
profitability on an annual basis; our ability to protect our
customers’ confidential information; our ability to maintain and
enhance our brand recognition and reputation; the competitive
nature of the industries in which we conduct our business; our
ability to retain our existing customers and attract new customers;
our ability to improve our services and develop and introduce new
services with broad appeal; our ability to maintain existing and
secure new relationships with strategic partners; the outcome of
the FTC litigation; and other “Risk Factors” set forth in our most
recent SEC filings.
Further information on these and other factors that could affect
our financial results and the forward-looking statements in this
press release is included in our SEC filings, including our Annual
Report on Form 10-K for the year ended December 31, 2014,
particularly under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and our Forms 10-Q. Copies of these documents are
available on our Investor Relations website at
http://investor.lifelock.com/ or the SEC's website at
www.sec.gov.
We assume no obligation and do not intend to update these
forward-looking statements, except as required by law.
Non-GAAP Financial Measures
Our reported results include certain non-GAAP financial
measures, including adjusted net income, adjusted net income per
diluted share, adjusted EBITDA, and free cash flow. We calculate
adjusted net income as net income (loss) excluding amortization of
acquired intangible assets, share-based compensation, income tax
benefits and expenses resulting from changes in our deferred tax
assets, and acquisition related expenses. We calculate adjusted net
income per diluted share by dividing our adjusted net income by the
weighted-average diluted shares outstanding. We calculate adjusted
EBITDA as net income (loss) excluding depreciation and
amortization, share-based compensation, interest expense, interest
income, other income (expense), income tax (benefit) expense, and
acquisition related expenses. For the six-month period ended
June 30, 2015, we have also excluded from adjusted net income
and adjusted EBITDA the impact of the legal reserve for a possible
settlement with a class action lawsuit. We define free cash flow as
net cash provided by operating activities less net cash used in
investing activities for acquisitions of property and
equipment.
We have included adjusted net income, adjusted net income per
diluted share, and adjusted EBITDA in this press release because
they are key measures used by us to understand and evaluate our
core operating performance and trends, to prepare and approve our
annual budget, and to develop short- and long-term operational
plans. In particular, the exclusion of certain expenses in
calculating adjusted net income and adjusted EBITDA can provide a
useful measure for period-to-period comparisons of our core
business. Additionally, adjusted EBITDA is a key financial measure
used in determining management’s incentive compensation.
We have included free cash flow in this press release because we
believe it typically presents a more conservative measure of cash
flow as purchases of property and equipment are necessary
components of ongoing operations. We believe that this non-GAAP
financial measure is useful in evaluating our business because free
cash flow reflects the cash surplus available to fund the expansion
of our business after payment of capital expenditures relating to
the necessary components of ongoing operations. We also believe
that the use of free cash flow provides consistency and
comparability with our past financial performance, facilitates
period-to-period comparisons of operations, and also facilitates
comparisons with other companies, many of which use similar
non-GAAP financial measures to supplement their GAAP results.
Going forward we will also exclude the expenses for the FTC and
related litigation from our adjusted net income per share, adjusted
EBITDA and free cash flow.
Although adjusted net income, adjusted EBITDA, and free cash
flow are frequently used by investors in their evaluations of
companies, these non-GAAP financial measures have limitations as
analytical tools and should not be considered in isolation or as a
substitute for financial information presented in accordance with
GAAP. Because of these limitations, these non-GAAP financial
measures should be considered alongside other financial performance
measures.
We have not reconciled adjusted net income per diluted share
guidance to net income (loss) per diluted share guidance or
adjusted EBITDA guidance to net income (loss) guidance because we
do not provide guidance for share-based compensation expense,
provision for income taxes, interest income, interest expense,
change in fair value of warrant liabilities, change in fair value
of embedded derivatives, other income and expenses, depreciation
expense, amortization of intangible assets, acquisition expenses,
legal reserves and settlements, or income tax (benefit) expense,
which are reconciling items between net income (loss) and adjusted
net income and net income (loss) and adjusted EBITDA. As items that
impact net income (loss) are out of our control and/or cannot be
reasonably predicted, we are unable to provide such guidance.
Accordingly, reconciliation to net income (loss) is not available
without unreasonable effort. For a reconciliation of historical
non-GAAP financial measures to the nearest comparable GAAP
measures, see the reconciliation tables included in this press
release.
LifeLock, Inc.
Condensed Consolidated Statements of
Operations
(in thousands, except per share
amounts)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015
2014 Revenue: Consumer revenue $ 138,329 $ 109,338 $ 266,530
$ 210,333 Enterprise revenue 6,628 6,375 12,835
12,966 Total revenue 144,957 115,713 279,365 223,299
Cost of services 34,926 29,391 69,482 59,348
Gross profit 110,031 86,322 209,883 163,951 Costs and
expenses: Sales and marketing 69,541 58,353 146,620 114,892
Technology and development 16,666 12,926 33,532 25,655 General and
administrative 20,876 15,373 39,831 28,708 Amortization of acquired
intangible assets 2,083 2,231 4,167 4,462
Total costs and expenses 109,166 88,883
224,150 173,717 Income (loss) from operations 865
(2,561 ) (14,267 ) (9,766 ) Other income (expense): Interest
expense (87 ) (88 ) (176 ) (175 ) Interest income 162 56 279 116
Other (103 ) (6 ) (183 ) (17 ) Total other expense (28 ) (38 ) (80
) (76 ) Income (loss) before provision for income taxes 837 (2,599
) (14,347 ) (9,842 ) Income tax (benefit) expense 317 (1,101
) (5,709 ) (4,049 ) Net income (loss) $ 520 $ (1,498 ) $
(8,638 ) $ (5,793 ) Net income available (loss attributable) per
share to common stockholders: Basic $ 0.01 $ (0.02 ) $ (0.09 ) $
(0.06 ) Diluted $ 0.01 $ (0.02 ) $ (0.09 ) $ (0.06 )
Weighted-average common shares outstanding: Basic 94,592 92,471
94,314 92,189 Diluted 100,289 92,471 94,314 92,189
LifeLock, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(Unaudited)
June 30, December 31, 2015 2014
Assets Current assets: Cash and cash equivalents $ 156,029 $
146,569 Marketable securities 169,923 127,305 Trade and other
receivables, net 11,362 10,220 Deferred tax assets, net 26,952
21,243 Prepaid expenses and other current assets 8,494 7,841
Total current assets 372,760 313,178 Property and equipment,
net 24,128 24,204 Goodwill 159,342 159,342 Intangible assets, net
34,148 38,315 Deferred tax assets, net - non-current 22,494 22,494
Other non-current assets 9,815 5,783 Total assets $
622,687 $ 563,316
Liabilities and stockholders'
equity Current liabilities: Accounts payable $ 18,881 $ 11,543
Accrued expenses and other liabilities 73,924 67,025 Deferred
revenue 179,656 145,206 Total current liabilities
272,461 223,774 Other non-current liabilities 7,082 6,706
Total liabilities 279,543 230,480 Commitments and
contingencies Stockholders' equity: Common stock 95 94 Additional
paid-in capital 514,934 495,912 Accumulated other comprehensive
loss (194 ) (116 ) Accumulated deficit (171,691 ) (163,054 ) Total
stockholders' equity 343,144 332,836 Total
liabilities and stockholders' equity $ 622,687 $ 563,316
LifeLock, Inc.
Condensed Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June 30, 2015
2014 Operating activities Net loss $ (8,638 ) $
(5,793 ) Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation and amortization 8,860 8,165
Share-based compensation 12,424 8,927 Provision for doubtful
accounts 45 300 Amortization of premiums on marketable securities
1,498 732 Deferred income tax benefit (5,709 ) (4,050 ) Other 82 2
Change in operating assets and liabilities: Trade and other
receivables (2,655 ) (2,189 ) Prepaid expenses and other current
assets (653 ) (1,465 ) Other non-current assets 304 505 Accounts
payable 7,229 2,052 Accrued expenses and other liabilities 7,284
7,828 Deferred revenue 34,450 29,711 Other non-current liabilities
376 1,288 Net cash provided by operating activities
54,897 46,013
Investing activities Acquisition of property
and equipment (4,973 ) (7,662 ) Purchases of marketable securities
(115,274 ) (19,662 ) Sale and maturities of marketable securities
72,345 18,990 Premiums paid for company-owned life insurance
policies (4,337 ) — Net cash used in investing activities
(52,239 ) (8,334 )
Financing activities Proceeds from
share-based compensation plans 8,032 5,501 Payments for employee
tax withholdings related to restricted stock units and awards
(1,230 ) (441 ) Net cash provided by financing activities 6,802
5,060 Net increase in cash and cash equivalents 9,460
42,739 Cash and cash equivalents at beginning of period 146,569
123,911 Cash and cash equivalents at end of period $
156,029 $ 166,650
Share-Based Compensation
(in thousands)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015
2014 Costs of services $ 465 $ 344 $ 837 $ 577 Sales and
marketing 1,215 888 2,147 1,474 Technology and development 2,003
1,344 3,712 2,898 General and administrative 3,371 2,350
5,728 3,978 Total share-based compensation expense $
7,054 $ 4,926 $ 12,424 $ 8,927
Key Financial and Operating
Metrics
(in thousands except percentages and
per member data)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015
2014 Revenue: Consumer revenue $ 138,329 $ 109,338 $ 266,530
$ 210,333 Enterprise revenue 6,628 6,375 12,835
12,966 Total revenue $ 144,957 $ 115,713 $ 279,365 $
223,299 Adjusted net income $ 9,974 $ 4,560 $ 4,744 $ 3,546
Adjusted EBITDA $ 12,484 $ 6,669 $ 9,517 $ 7,326 Free cash flow $
32,210 $ 23,962 $ 49,924 $ 38,351 Cumulative ending members 4,011
3,388 4,011 3,388 Gross new members 317 304 738 648 Member
retention rate 87.1 % 87.2 % 87.1 % 87.2 % Average cost of
acquisition per member $ 210 $ 182 $ 191 $ 168 Monthly average
revenue per member $ 11.68 $ 10.99 $ 11.55 $ 10.90 Enterprise
transactions 72,509 54,547 134,044 107,256
Reconciliation of GAAP to Adjusted
Results
(in thousands, except per share
amounts)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015
2014 Reconciliation of Gross Profit to
Adjusted Gross Profit Gross profit $ 110,031 $ 86,322 $ 209,883
$ 163,951 Share-based compensation 465 344 837
577 Adjusted gross profit $ 110,496 $ 86,666 $
210,720 $ 164,528
Reconciliation of Sales and
Marketing Expenses to Adjusted Sales and Marketing Expenses
Sales and marketing expenses $ 69,541 $ 58,353 $ 146,620 $ 114,892
Share-based compensation (1,215 ) (888 ) (2,147 ) (1,474 ) Adjusted
sales and marketing expenses $ 68,326 $ 57,465 $
144,473 $ 113,418
Reconciliation of Technology and
Development Expenses to Adjusted Technology and Development
Expenses Technology and development expenses $ 16,666 $ 12,926
$ 33,532 $ 25,655 Share-based compensation (2,003 ) (1,344 ) (3,712
) (2,898 ) Adjusted technology and development expenses $ 14,663
$ 11,582 $ 29,820 $ 22,757
Reconciliation of General and Administrative Expenses to
Adjusted General and Administrative Expenses General and
administrative expenses $ 20,876 $ 15,373 $ 39,831 $ 28,708
Share-based compensation (3,371 ) (2,350 ) (5,728 ) (3,978 ) Legal
reserves and settlements — — (2,500 ) —
Adjusted general and administrative expenses $ 17,505 $
13,023 $ 31,603 $ 24,730
Reconciliation of
Income (Loss) from Operations to Adjusted Income from
Operations Income (loss) from operations $ 865 $ (2,561 ) $
(14,267 ) $ (9,766 ) Share-based compensation 7,054 4,926 12,424
8,927 Amortization of acquired intangible assets 2,083 2,231 4,167
4,462 Legal reserves and settlements — — 2,500
— Adjusted income from operations $ 10,002 $ 4,596
$ 4,824 $ 3,623
Reconciliation of Net
Income (Loss) to Adjusted Net Income Net income (loss) $ 520 $
(1,498 ) $ (8,638 ) $ (5,793 ) Amortization of acquired intangible
assets 2,083 2,231 4,167 4,462 Share-based compensation 7,054 4,926
12,424 8,927 Deferred income tax (benefit) expense 317 (1,099 )
(5,709 ) (4,050 ) Legal reserves and settlements — —
2,500 — Adjusted net income $ 9,974 $ 4,560
$ 4,744 $ 3,546
Three Months EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015
2014 Reconciliation of Diluted Shares to Adjusted
Diluted Shares Diluted shares 100,289 92,471 94,314 92,189
Dilutive securities excluded due to net loss — 5,608
5,508 6,735 Adjusted diluted shares 100,289
98,079 99,822 98,924
Reconciliation of Net
Income (Loss) per Diluted Share to Adjusted Net Income per Diluted
Share Net income (loss) per diluted share $ 0.01 $ (0.02 ) $
(0.09 ) $ (0.06 ) Adjustments to net income (loss) 0.09 0.07
0.14 0.10 Adjusted net income per diluted
share $ 0.10 $ 0.05 $ 0.05 $ 0.04
Reconciliation of Net Income (Loss) to Adjusted EBITDA Net
income (loss) $ 520 $ (1,498 ) $ (8,638 ) $ (5,793 ) Depreciation
and amortization 4,565 4,304 8,860 8,165 Share-based compensation
7,054 4,926 12,424 8,927 Interest expense 87 88 176 175 Interest
income (162 ) (56 ) (279 ) (116 ) Other 103 6 183 17 Income tax
(benefit) expense 317 (1,101 ) (5,709 ) (4,049 ) Legal reserves and
settlements — — 2,500 — Adjusted EBITDA
$ 12,484 $ 6,669 $ 9,517 $ 7,326
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow Net cash provided by operating activities $
34,367 $ 27,697 $ 54,897 $ 46,013 Acquisitions of property and
equipment (2,157 ) (3,735 ) (4,973 ) (7,662 ) Free cash flow $
32,210 $ 23,962 $ 49,924 $ 38,351
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729006540/en/
Media Contact:LifeLockBecca Youngs,
415-767-7752Media@lifelock.comorInvestor Relations
Contact:ICR for LifeLockStaci Mortenson,
480-457-5000Investor.relations@lifelock.com
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