Recorded the 45th consecutive quarter of
sequential growth in revenue and cumulative ending members
Cumulative ending members of approximately 4.4
million, up 9% year-over-year
Completed previously announced $100 million
share buyback program
LifeLock, Inc. (NYSE: LOCK), an industry leader in identity
theft protection, today announced financial results for the second
quarter ended June 30, 2016.
Second Quarter 2016 Financial Highlights:
- Revenue: Total revenue was
$164.4 million for the second quarter of 2016, up 13% from $145.0
million for the second quarter of 2015. Consumer revenue was $156.7
million for the second quarter of 2016, up 13% from $138.3 million
for the second quarter of 2015. Enterprise revenue was $7.8 million
for the second quarter of 2016, up 17% from $6.6 million for the
second quarter of 2015.
- Net Income (Loss): Net loss was
$7.6 million for the second quarter of 2016, compared with net
income of $0.5 million for the second quarter of 2015. Net loss per
diluted share was $0.08 for the second quarter of 2016 based on
92.4 million weighted-average shares outstanding, compared with net
income per diluted share of $0.01 for the second quarter of 2015
based on 100.3 million weighted-average shares outstanding.
- Adjusted Net Income*: Adjusted
net income was $6.3 million for the second quarter of 2016,
compared with adjusted net income of $10.0 million for the second
quarter of 2015. Adjusted net income per diluted share was $0.07
for the second quarter of 2016 based on 96.0 million
weighted-average shares outstanding, compared with adjusted net
income per diluted share of $0.10 for the second quarter of 2015
based on 100.3 million weighted-average shares outstanding.
- Adjusted EBITDA*: Adjusted
EBITDA was $9.2 million for the second quarter of 2016, compared
with $12.5 million for the second quarter of 2015. We incurred
approximately $6 million of expense in the second quarter of 2016
as a result of the migration to our new data platform, which
previously would have been incurred throughout the remainder of
2016.
- Cash Flow: Cash flow from
operations was $9.8 million for the second quarter of 2016, leading
to free cash flow* of $7.6 million after taking into consideration
$4.5 million of capital expenditures and $2.3 million of payments
for expenses incurred in connection with the FTC litigation. This
compares with cash flow from operations of $34.4 million and free
cash flow of $32.2 million, after taking into consideration $2.2
million of capital expenditures for the second quarter of
2015.
- Balance Sheet: Total cash and
marketable securities at the end of the second quarter of 2016 was
$155.9 million, down from $201.8 million at the end of the first
quarter of 2016 primarily attributable to $48.1 million paid in
connection with the repurchase of common shares pursuant to our
second accelerated share repurchase program.
* 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".
Chief Executive Officer and President Hilary Schneider said, “We
are pleased with our revenue and profits results, which exceeded
our guidance in the quarter, driven by strong new member
acquisition, solid retention, increased adoption of premium
products and continued growth of our ID Analytics business."
“We are focused on capitalizing on the opportunities in the
growing employee benefits channel and fostering performance in our
co-marketing channel. We added to our leadership team in each of
these areas as we pursue a strategic focus on larger opportunities.
Our ability to meaningfully differentiate our products through our
technology platform, our superior brand awareness and our
outstanding service to our members provide a strong foundation
for increasing shareholder value,” said Schneider.
Second Quarter 2016 & Recent Business Highlights:
- Recorded the 45th consecutive quarter
of sequential growth in revenue and cumulative ending members.
- Added approximately 304,000 gross new
members in the second quarter of 2016 and ended the quarter with
approximately 4.4 million members.
- Increased monthly average revenue per
member to $11.97 for the second quarter of 2016 from $11.68 for the
second quarter of 2015.
- Acquired 3.2 million shares for $48
million through an accelerated share purchase program, completing
the previously announced $100 million share repurchase
program.
- Announced promotion of Scott Carter to
Executive Vice President of Enterprise and Chief Executive Officer
of ID Analytics.
- Announced "Stolen Funds Replacement", a
service enhancement that provides reimbursement for funds stolen
due to identity theft up to the limit of the member's plan.
- Expect to complete previously announced
Chief Financial Officer transition effective upon filing of our
Form 10-Q for the second quarter 2016.
Guidance:
As of August 2, 2016, we are initiating guidance for our
third quarter of 2016 as well as updating guidance for the full
year 2016.
- Third Quarter 2016 Guidance:
Total revenue is expected to be in the range of $167 million to
$169 million. Adjusted net income per diluted share is expected to
be in the range of $0.34 to $0.35 based on approximately 95 million
fully diluted weighted-average shares outstanding. Adjusted EBITDA
is expected to be in the range of $35 million to $36 million.
- Full Year 2016 Guidance: Total
revenue is expected to be in the range of $662 million to $670
million. Adjusted net income per diluted share is expected to be in
the range of $0.74 to $0.78 based on approximately 98 million fully
diluted weighted-average shares outstanding and a cash tax rate of
3%. Adjusted EBITDA is expected to be in the range of $84 million
to $88 million. Free cash flow is expected to be in the range of
$83 million to $88 million.
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,
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 predicted with
reasonable certainty, we are unable to provide such guidance.
Accordingly, reconciliation of these non-GAAP measures to net
income (loss) is not available without unreasonable effort. For a
reconciliation of these historical non-GAAP financial measures to
net income (loss), which provides information about the historical
significance of the reconciling items, see the reconciliation
tables included in this press release.
Conference Call Details:
- What: LifeLock second quarter
2016 financial results.
- When: Tuesday, August 2,
2016 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 13638809 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 13638809.
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, business performance expectations,
succession plan, adjusted net income per diluted share, adjusted
EBITDA for the third quarter of 2016 and for fiscal year 2016, and
free cash flow for fiscal 2016. 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; regulatory
compliance; 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, 2015,
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 three and six months ended
June 30, 2016, we have also excluded from adjusted net income,
adjusted net income per diluted share and adjusted EBITDA expenses
related to the FTC litigation. We believe that the exclusion of
certain items of income and expense from net income (loss) in
calculating adjusted net income, adjusted net income per diluted
share and adjusted EBITDA is useful because the amount of such
income or expense may not directly correlate to the underlying
operational performance of our business and/or such income and
expense can vary significantly between periods.
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. For the three and six
months ended June 30, 2016, we have added back to net cash
provided by operating activities cash paid for expenses and legal
settlements related to the FTC litigation.
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. For the three and six months
ended June 30, 2016, we have added back legal settlements and
expenses related to the FTC litigation because the amount of such
cash flow may not directly correlate to the underlying operational
performance of our business and can vary significantly between
periods. 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. However, free cash flow does not necessarily
represent funds available for discretionary use and is not
necessarily a measure of our ability to fund our cash
requirements.
Although adjusted net income, adjusted net income per diluted
share, 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.
For a reconciliation of these historical non-GAAP financial
measures to net income (loss), which provides information about the
historical significance of the reconciling items, 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,
2016 2015 2016 2015
Revenue: Consumer revenue $ 156,659 $ 138,329 $ 308,589 $ 266,530
Enterprise revenue 7,784 6,628 15,123 12,835
Total revenue 164,443 144,957 323,712 279,365 Cost of
services 43,642 34,926 83,628 69,482
Gross profit 120,801 110,031 240,084 209,883 Costs and expenses:
Sales and marketing 82,372 69,541 172,076 146,620 Technology and
development 19,908 16,666 41,130 33,532 General and administrative
27,596 20,876 51,818 39,831 Amortization of acquired intangible
assets 3,320 2,083 6,362 4,167 Total
costs and expenses 133,196 109,166 271,386
224,150 Income (loss) from operations (12,395 ) 865 (31,302
) (14,267 ) Other income (expense): Interest expense (181 ) (87 )
(292 ) (176 ) Interest income 304 162 603 279 Other (124 ) (103 )
(129 ) (183 ) Total other income (expense) (1 ) (28 ) 182
(80 ) Income (loss) before provision for income taxes (12,396 ) 837
(31,120 ) (14,347 ) Income tax (benefit) expense (4,830 ) 317
(12,328 ) (5,709 ) Net income (loss) $ (7,566 ) $ 520
$ (18,792 ) $ (8,638 ) Net income available (loss attributable) per
share to common stockholders: Basic $ (0.08 ) $ 0.01 $ (0.20 ) $
(0.09 ) Diluted $ (0.08 ) $ 0.01 $ (0.20 ) $ (0.09 )
Weighted-average common shares outstanding: Basic 92,385 94,592
93,567 94,314 Diluted 92,385 100,289 93,567 94,314
LifeLock, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(Unaudited)
June 30, December 31, 2016 2015
Assets Current assets: Cash and cash equivalents $ 29,672 $
50,239 Marketable securities 126,265 196,474 Trade and other
receivables, net 16,295 13,974 Prepaid expenses and other current
assets 12,977 12,303 Total current assets 185,209
272,990 Property and equipment, net 43,882 30,485 Goodwill 172,087
172,087 Intangible assets, net 23,811 30,174 Deferred tax assets,
net - non-current 89,691 77,363 Other non-current assets 14,119
9,710 Total assets $ 528,799 $ 592,809
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 7,672 $ 24,747 Accrued expenses and other
liabilities 85,712 76,226 Deferred revenue 196,776 166,403
Total current liabilities 290,160 267,376 Other non-current
liabilities 18,172 7,367 Total liabilities 308,332
274,743 Commitments and contingencies Stockholders' equity: Common
stock 99 96 Treasury stock (79,824 ) — Additional paid-in capital
533,069 532,388 Accumulated other comprehensive loss (30 ) (361 )
Accumulated deficit (232,847 ) (214,057 ) Total stockholders'
equity 220,467 318,066 Total liabilities and
stockholders' equity $ 528,799 $ 592,809
LifeLock, Inc.
Condensed Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June 30, 2016
2015 Operating activities Net loss $ (18,792 ) $
(8,638 ) Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation and amortization 12,025 8,860
Share-based compensation 16,897 12,424 Provision for doubtful
accounts 309 45 Amortization of premiums on marketable securities
1,161 1,498 Deferred income tax benefit (12,328 ) (5,709 ) Other
213 82 Change in operating assets and liabilities: Trade and other
receivables (2,818 ) (2,655 ) Prepaid expenses and other current
assets (673 ) (653 ) Other non-current assets (280 ) 304 Accounts
payable (15,629 ) 7,229 Accrued expenses and other liabilities
10,117 7,284 Deferred revenue 30,374 34,450 Other non-current
liabilities 58 376 Net cash provided by operating
activities 20,634 54,897
Investing activities Acquisition of
property and equipment, including capitalization of internal use
software (9,337 ) (4,973 ) Purchases of marketable securities
(38,400 ) (115,274 ) Sale and maturities of marketable securities
107,986 72,345 Premiums paid for company-owned life insurance
policies (4,337 ) (4,337 ) Net cash provided by (used in) investing
activities 55,912 (52,239 )
Financing activities Proceeds
from share-based compensation plans 5,469 8,032 Purchases of
Company stock (100,000 ) — Payments for employee tax withholdings
related to restricted stock units and awards (2,582 ) (1,230 ) Net
cash provided by (used in) financing activities (97,113 ) 6,802
Net increase (decrease) in cash and cash equivalents (20,567
) 9,460 Cash and cash equivalents at beginning of period 50,239
146,569 Cash and cash equivalents at end of period $
29,672 $ 156,029
Share-Based Compensation
(in thousands)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2016 2015 2016 2015 Costs
of services $ 462 $ 465 $ 959 $ 837 Sales and marketing 1,503 1,215
3,121 2,147 Technology and development 2,526 2,003 5,319 3,712
General and administrative 3,754 3,371 7,498
5,728 Total share-based compensation expense $ 8,245 $ 7,054
$ 16,897 $ 12,424
Key Financial and Operating
Metrics
(in thousands except percentages and
per member data)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2016 2015 2016 2015
Revenue: Consumer revenue $ 156,659 $ 138,329 $ 308,589 $ 266,530
Enterprise revenue 7,784 6,628
15,123
12,835 Total revenue $ 164,443 $ 144,957 $ 323,712 $
279,365 Adjusted net income $ 6,279 $ 9,974 $ 1,511 $ 4,744
Adjusted EBITDA $ 9,207 $ 12,484 $ 6,992 $ 9,517 Free cash flow $
7,594 $ 32,210 $ 18,170 $ 49,924 Cumulative ending members 4,383
4,011 4,383 4,011 Gross new members 304 317 649 738 Member
retention rate 85.6 % 87.1 % 85.6 % 87.1 % Average cost of
acquisition per member $ 260 $ 210 $ 254 $ 191 Monthly average
revenue per member $ 11.97 $ 11.68 $ 11.94 $ 11.55 Enterprise
transactions 93,184 72,509 169,264 134,044
Reconciliation of GAAP to Adjusted
Results
(in thousands, except per share
amounts)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2016 2015 2016 2015
Reconciliation of Gross Profit to Adjusted Gross Profit
Gross profit $ 120,801 $ 110,031 $ 240,084 $ 209,883 Share-based
compensation 462 465 959 837 Adjusted
gross profit $ 121,263 $ 110,496 $ 241,043 $
210,720
Reconciliation of Sales and Marketing
Expenses to Adjusted Sales and Marketing Expenses
Sales and marketing expenses $ 82,372 $ 69,541 $ 172,076 $ 146,620
Share-based compensation (1,503 ) (1,215 ) (3,121 ) (2,147 )
Adjusted sales and marketing expenses $ 80,869 $ 68,326
$ 168,955 $ 144,473
Reconciliation of Technology and
Development Expenses to Adjusted Technology and Development
Expenses
Technology and development expenses $ 19,908 $ 16,666 $ 41,130 $
33,532 Share-based compensation (2,526 ) (2,003 ) (5,319 ) (3,712 )
Adjusted technology and development expenses $ 17,382 $
14,663 $ 35,811 $ 29,820
Reconciliation of General and
Administrative Expenses to Adjusted General and
Administrative Expenses
General and administrative expenses $ 27,596 $ 20,876 $ 51,818 $
39,831 Share-based compensation (3,754 ) (3,371 ) (7,498 ) (5,728 )
Legal reserves and settlements (6,000 ) — (6,000 ) (2,500 )
Expenses related to the FTC litigation (1,110 ) — (3,372 ) —
Adjusted general and administrative expenses $ 16,732
$ 17,505 $ 34,948 $ 31,603
Reconciliation of Income (Loss) from
Operations to Adjusted Income from Operations
Income (loss) from operations $ (12,395 ) $ 865 $ (31,302 ) $
(14,267 ) Share-based compensation 8,245 7,054 16,897 12,424
Amortization of acquired intangible assets 3,320 2,083 6,362 4,167
Legal reserves and settlements 6,000 — 6,000 2,500 Expenses related
to the FTC litigation 1,110 — 3,372 —
Adjusted income from operations $ 6,280 $ 10,002 $
1,329 $ 4,824
Reconciliation of Net Income (Loss)
to Adjusted Net Income Net income (loss) $ (7,566 ) $ 520 $
(18,792 ) $ (8,638 ) Amortization of acquired intangible assets
3,320 2,083 6,362 4,167 Share-based compensation 8,245 7,054 16,897
12,424 Deferred income tax (benefit) expense (4,830 ) 317 (12,328 )
(5,709 ) Legal reserves and settlements 6,000 — 6,000 2,500
Expenses related to the FTC litigation 1,110 — 3,372
— Adjusted net income $ 6,279 $ 9,974 $
1,511 $ 4,744
Three Months EndedJune
30,
Six Months EndedJune 30,
2016 2015 2016 2015
Reconciliation of Diluted Shares to Adjusted Diluted Shares
Diluted shares 92,385 100,289 93,567 94,314 Dilutive securities
excluded due to net loss 3,608 — 3,726 5,508
Adjusted diluted shares 95,993 100,289 97,293
99,822
Reconciliation of Net Income (Loss) per
Diluted Share to Adjusted Net Income per Diluted
Share
Net income (loss) per diluted share $ (0.08 ) $ 0.01 $ (0.20 ) $
(0.09 ) Adjustments to net income (loss) 0.15 0.09 0.21 0.14
Adjustments to diluted shares — — 0.01 —
Adjusted net income per diluted share $ 0.07 $ 0.10
$ 0.02 $ 0.05
Reconciliation of Net Income
(Loss) to Adjusted EBITDA Net income (loss) $ (7,566 ) $ 520 $
(18,792 ) $ (8,638 ) Depreciation and amortization 6,247 4,565
12,025 8,860 Share-based compensation 8,245 7,054 16,897 12,424
Interest expense 181 87 292 176 Interest income (304 ) (162 ) (603
) (279 ) Other 124 103 129 183 Income tax (benefit) expense (4,830
) 317 (12,328 ) (5,709 ) Legal reserves and settlements 6,000 —
6,000 2,500 Expenses related to the FTC litigation 1,110 —
3,372 — Adjusted EBITDA $ 9,207 $
12,484 $ 6,992 $ 9,517
Reconciliation of Net Cash Provided by
Operating Activities to Free Cash Flow
Net cash provided by operating activities $ 9,769 $ 34,367 $ 20,634
$ 54,897 Acquisitions of property and equipment (4,507 ) (2,157 )
(9,337 ) (4,973 ) Legal settlements — — 2,500 — Expenses related to
the FTC litigation 2,332 — 4,373 — Free
cash flow $ 7,594 $ 32,210 $ 18,170 $ 49,924
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160802006878/en/
LifeLock, Inc.Media Contact:Debra Jack,
415-767-7788Media@lifelock.comorInvestor Relations
Contact:Jamison Manwaring, 480-457-5000VP, Investor
RelationsInvestor.relations@lifelock.com
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