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TheStreet Open House

Financial Engines Reports Fourth Quarter And Full Year 2012 Financial Results

Our investment advisory and management services are provided through our subsidiary, Financial Engines Advisors L.L.C., a federally registered investment adviser. References in this press release to “Financial Engines,” “our company,” “the Company,” “we,” “us” and “our” refer to Financial Engines, Inc. and its consolidated subsidiaries during the periods presented unless the context requires otherwise.

           
 

Financial Tables

 

FINANCIAL ENGINES, INC. AND SUBSIDIARIES

 

Unaudited Consolidated Balance Sheets

 
December 31,
2011 2012
Assets (In thousands, except per share data)
Current assets:
Cash and cash equivalents $ 145,002 $ 181,231
Accounts receivable, net of allowances of $67 in 2011 and $102 in 2012 30,495 44,627
Prepaid expenses 3,008 3,093
Deferred tax assets 13,155 15,293
Other current assets   3,498     3,647  
Total current assets 195,158 247,891
Property and equipment, net 3,926 13,366
Internal use software, net 10,723 10,339
Long-term deferred tax assets 31,424 20,639
Direct response advertising, net 8,851 10,236
Other assets   4,361     4,362  
Total assets $ 254,443   $ 306,833  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 9,740 $ 15,008
Accrued compensation 13,262 12,279
Deferred revenue 9,691 7,831
Other current liabilities   124     260  
Total current liabilities 32,817 35,378
Long-term deferred revenue 1,533 1,166
Long-term deferred rent 459 6,653
Other liabilities   74     250  
Total liabilities   34,883     43,447  
Contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value - 10,000
authorized as of December 31, 2011 and 2012;
None issued or outstanding as of December 31, 2011 and 2012 - -
Common stock, $0.0001 par value - 500,000
authorized as of December 31, 2011 and 2012;
45,784 and 47,915 shares issued and outstanding
at December 31, 2011 and 2012, respectively 5 5
Additional paid-in capital 298,196 323,448
Accumulated deficit   (78,641 )   (60,067 )
Total stockholders’ equity   219,560     263,386  
Total liabilities and stockholders’ equity $ 254,443   $ 306,833  
 
 

FINANCIAL ENGINES, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income

                 
Three Months Ended Year Ended

December 31,

December 31,

2011     2012 2011 2012
(In thousands, except per share data)
Revenue:
Professional management $ 31,509 $ 43,233 $ 108,215 $ 150,872
Platform 8,833 7,609 32,891 32,373
Other   532   537   2,979   2,577
Total revenue   40,874   51,379   144,085   185,822
 
Costs and expenses:
Cost of revenue (exclusive of amortization of internal use software) 12,906 18,602 49,717 70,025
Research and development 5,538 6,767 21,182 25,483
Sales and marketing 8,398 10,046 30,710 39,206
General and administrative 3,663 4,266 13,518 15,537
Amortization of internal use software   1,647   1,565   5,923   6,125
Total costs and expenses   32,152   41,246   121,050   156,376
Income from operations 8,722 10,133 23,035 29,446
Interest income 8 4 10 3
Other income   -   100   -   100
Income before income taxes 8,730 10,237 23,045 29,549
Income tax expense   2,958   3,776   7,900   10,975
Net and comprehensive income   5,772   6,461   15,145   18,574
Net income per share attributable
to holders of common stock
Basic $ 0.13 $ 0.14 $ 0.34 $ 0.40
Diluted $ 0.12 $ 0.13 $ 0.31 $ 0.37
Shares used to compute net income per share
attributable to holders of common stock
Basic 45,596 47,552 44,783 46,741
Diluted 49,550 50,761 49,407 50,211
 
 

FINANCIAL ENGINES, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

             
2010 2011 2012
(In thousands)
Cash flows from operating activities:
Net income $ 63,575 $ 15,145 $ 18,574
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,816 2,191 3,084
Amortization of internal use software 3,703 5,577 5,726
Stock-based compensation 7,659 5,823 10,372
Amortization of deferred sales commissions 1,155 1,423 1,932
Amortization and impairment of direct response advertising 1,185 2,734 5,149
Provision for doubtful accounts 191 152 311
Loss on fixed asset disposal 7 - 20
Excess tax benefit associated with stock-based compensation (456 ) (1,023 ) (1,962 )
Changes in operating assets and liabilities:
Accounts receivable (6,158 ) (6,704 ) (14,444 )
Prepaid expenses (842 ) (206 ) (85 )
Deferred tax assets (51,144 ) 6,566 8,648
Direct response advertising (4,330 ) (6,953 ) (6,515 )
Other assets (2,665 ) (3,026 ) (2,631 )
Accounts payable 1,319 3,333 6,844
Accrued compensation 6,506 (2,345 ) (983 )
Deferred revenue 110 2,274 (2,228 )
Deferred rent (26 ) 167 6,270
Other liabilities   (25 )   35     4  
Net cash provided by operating activities   21,580     25,163     38,086  
Cash flows from investing activities:
Purchase of property and equipment (2,361 ) (2,922 ) (11,903 )
Capitalization of internal use software (5,860 ) (5,224 ) (5,389 )
Restricted cash   (950 )   (360 )   550  
Net cash used in investing activities   (9,171 )   (8,506 )   (16,742 )
Cash flows from financing activities:
Payments on term loan payable (8,056 ) - -
Payments on capital lease obligations (2 ) - (22 )
Net share settlements for stock-based awards minimum tax withholdings (921 ) (1,718 ) (699 )
Excess tax benefit associated with stock-based compensation 456 1,023 1,962
Proceeds from issuance of common stock, net of offering costs   90,338     14,103     13,644  
Net cash provided by financing activities   81,815     13,408     14,885  
Net increase in cash and cash equivalents 94,224 30,065 36,229
Cash and cash equivalents, beginning of year   20,713     114,937     145,002  
Cash and cash equivalents, end of year $ 114,937   $ 145,002   $ 181,231  
Supplemental cash flows information:
Income taxes paid, net of refunds $ 1,154 $ (194 ) $ 194
Interest paid $ 184 $ 6 $ 12
Non-cash operating, investing and financing activities:
Stock dividend $ 5,480 $ - $ -
Purchase of property and equipment under capital lease $ - $ - $ 255
Capitalized stock-based compensation for internal use software $ 439 $ 293 $ 353
Capitalized stock-based compensation for direct response advertising $ 60 $ 44 $ 64
 
 

FINANCIAL ENGINES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Operating Results
 
The table below sets forth a reconciliation of net income to non-GAAP Adjusted EBITDA based on our historical results:
 
     

Three Months Ended

December 31,

   

Year Ended

December 31,

Non-GAAP Adjusted EBITDA 2011   2012 2011   2012
(In thousands, unaudited)
 
Net income $ 5,772 $ 6,461 $ 15,145 $ 18,574
Interest expense (income) (8 ) (4 ) (10 ) (3 )
Income tax expense 2,958 3,776 7,900 10,975
Depreciation 583 1,009 2,191 3,084
Amortization of internal use software 1,550 1,463 5,577 5,726
Amortization and impairment of direct response advertising 865 1,454 2,734 5,149
Amortization of deferred sales commissions 417 468 1,423 1,932
Stock-based compensation   1,901     2,872     5,823     10,372  
Non-GAAP Adjusted EBITDA $ 14,038   $ 17,499   $ 40,783   $ 55,809  
 
 
 

The table below sets forth a reconciliation of net income to non-GAAP Adjusted Net Income and non-GAAP Adjusted Earnings Per Share based on our historical results:

         

Three Months Ended

December 31,

Year Ended

December 31,

Non-GAAP Adjusted Net Income 2011   2012 2011   2012

 

(In thousands, except per share data, unaudited)

 
Net income $ 5,772 $ 6,461 $ 15,145 $ 18,574
Stock-based compensation, net of tax (1) 1,175 1,775 3,598 6,410
Income tax benefit from release of valuation allowance   (160 )   -   (160 )   -
Non-GAAP Adjusted Net Income $ 6,787   $ 8,236 $ 18,583   $ 24,984
 
Non-GAAP Adjusted Earnings Per Share $ 0.14 $ 0.16 $ 0.38 $ 0.50
 
Shares of common stock outstanding 45,596 47,552 44,820 46,741
Dilutive restricted stock and stock options   3,954     3,209   4,587     3,470
Non-GAAP adjusted common shares outstanding   49,550     50,761   49,407     50,211
 
(1)   For the calculation of non-GAAP Adjusted Net Income, an estimated statutory tax rate of 38.2% has been applied to non-cash stock-based compensation for all periods presented.
 
__________________________

i Please see “About Non-GAAP Financial Measures” for definitions of the terms Adjusted Net Income, Adjusted Earnings Per Share, and Adjusted EBITDA.

ii Operating metrics include both advised and subadvised relationships.

iii Information regarding enrollment rates and the component AUC can be found in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Securities and Exchange Commission (“SEC”) filings, including the Form 10-K for the year ended December 31, 2011 and the Form 10-K to be filed for the year ended December 31, 201

 




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