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Actua Announces Third Quarter 2016 Financial Results

RADNOR, Pa., Nov. 03, 2016 (GLOBE NEWSWIRE) -- Actua Corporation (Nasdaq:ACTA) (“Actua”) today reported its results for the third quarter ended September 30, 2016.

Highlights

  • Closed the sale of GovDelivery to an investor group led by Vista Equity Partners, resulting in proceeds to Actua of approximately $133 million.
  • Expanded Actua’s existing share repurchase program from $150 million to $189.8 million, increasing  Actua’s current availability from $85.2 million to $125 million.
  • Expects to commence a modified “Dutch auction” tender offer for up to $80 million of its common stock at a price per share not less than $12.00 and not greater than $14.00 on or about November 7, 2016.  The tender offer would remain open for at least 20 business days.  For details regarding the tender offer, please see the information on the tender offer located in the Investors section of the Actua website at www.actua.com.
  • Announced FolioDynamix’s acquisition of Summit Advisor Solutions (SAS), a Dallas-based firm focused on providing advisory services to the independent RIA market.

“The GovDelivery transaction demonstrates the value Actua brings in building successful SaaS businesses and unlocking that value for stockholders,” said Walter Buckley, CEO of Actua.  “With approximately $170 million of cash following the GovDelivery sale, we will continue to drive stockholder value by building our remaining businesses and repurchasing shares.”

Because GovDelivery is presented as a discontinued operation as of September 30, 2016, GovDelivery’s results are excluded from our continuing operations for all periods presented.

Revenue was $27.9 million for the third quarter of 2016, up from $24.9 million for the third quarter of 2015.  Net loss attributable to Actua for the third quarter of 2016 was $(10.1) million, or $(0.27) per diluted share, compared to net loss attributable to Actua of $(13.9) million, or $(0.37) per diluted share, for the third quarter of 2015.  Non-GAAP net loss for the third quarter of 2016 was $(1.6) million, or $(0.04) per diluted share, compared to a non-GAAP net loss of $(1.4) million, or $(0.04) per diluted share, for the comparable prior year quarter.  Cash flows from operations for the third quarter of 2016 was $(0.6) million, compared to $(1.2) million for the comparable prior year quarter.  Non-GAAP cash flows from operations for the third quarter of 2016 was $0.2 million, compared to $(1.2) million for the comparable prior year quarter.

Fourth Quarter 2016 Guidance

For the fourth quarter of 2016, Actua expects revenue in the range of $28.5 million to $29.5 million, non-GAAP net loss per share in the range of between $(0.06) and $(0.08) per diluted share and non-GAAP cash flow from operations of between $1.5 million and $2.5 million.

A reconciliation of the non-GAAP financial measures used above with the most comparable GAAP financial measures is included with the financial tables at the end of this release.

Please see Actua’s website at www.actua.com for more information on Actua, its businesses and its third quarter 2016 results.

Actua will host a webcast at 10:00 a.m. ET today to discuss its financial results.  As part of the live webcast for this call, Actua will post a slide presentation to accompany the prepared remarks.  To access the webcast, go to www.actua.com/investors/events-presentations/ and click on the webcast link.  Please log on to the website approximately ten minutes prior to the call to register and download any necessary audio software.  The conference call is also accessible through listen-only mode by dialing 800.708.4540 or 847.619.6397.  The passcode is 43551013.

For those unable to participate in the conference call, a replay will be available from November 3, 2016 at 12:30 p.m. ET until November 10, 2016 at 11:59 p.m. ET.  To access the replay, dial 888.843.7419 or 630.652.3042.  The passcode is 43551013#.  The replay and slide presentation also can be accessed in the investor relations section of the Actua website at www.actua.com/investors/events-presentations/

About Actua
Actua Corporation (Nasdaq:ACTA), the multi-vertical cloud company, brings the power of the cloud to vertical markets and processes.  Actua is pioneering the second wave of the SaaS revolution - the vertical wave - by growing cloud businesses that are transforming their markets.  With over 700 employees delivering unrivaled domain knowledge, agility and responsiveness to our customers, Actua’s rapidly growing vertical cloud businesses are positioned to lead this wave.  For the latest information about Actua and its brands, please go to www.actua.com.

Safe Harbor Statement under Private Securities Litigation Reform Act of 1995

The statements contained in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements involve certain risks and uncertainties, including, but not limited to, risks associated with our ability to compete successfully in highly-competitive, rapidly-developing markets, the valuation of public and private cloud-based businesses by analysts, investors and other market participants, our ability to deploy capital effectively and on acceptable terms, the effect of economic conditions generally, capital spending by our customers, our ability to retain existing customer relationships and revenue streams and secure new ones, developments in the markets in which we operate and our ability to respond to those changes in a timely and effective manner, the availability, performance and security of our cloud-based technology, particularly in light of increased cybersecurity risks and concerns, our ability to retain key personnel, our ability to successfully integrate any acquired business, the impact of any potential acquisitions, dispositions, share repurchases or other strategic transactions, our ability to have continued access to capital and to manage capital resources effectively, and other risks and uncertainties detailed in Actua's filings with the U.S. Securities and Exchange Commission. These and other factors may cause actual results to differ materially from those projected.

 Actua Corporation
 Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
            
     Three Months Ended
 September 30,
 Nine Months Ended
 September 30,
     2016 2015 2016 2015
            
Revenue   $27,937  $24,917  $79,977  $72,957 
            
Operating Expenses         
 Cost of revenue (a)  7,441  6,663  21,451  20,533 
 Sales and marketing (a)  10,281  9,551  30,861  26,911 
 General and administrative (a)  11,228  12,542  34,926  40,889 
 Research and development (a)  5,411  4,973  16,106  14,377 
 Amortization of intangible assets  3,524  3,266  10,732  10,146 
 Impairment related and other  45  285  393  982 
 Total operating expenses  37,930  37,280  114,469  113,838 
 Operating income (loss)  (9,993) (12,363) (34,492) (40,881)
            
Other income (expense):         
 Other income (loss), net  2,831  96  2,726  1,537 
 Interest income  31  30  118  83 
 Interest expense  (27) (36) (93) (104)
            
Loss (income) before income taxes and noncontrolling interests (7,158) (12,273) (31,741) (39,365)
            
Income tax (expense) benefit  (93) (29) (291) (204)
            
(Loss) income from continuing operations  (7,251) (12,302) (32,032) (39,569)
            
(Loss) income from discontinued operations, net of tax  (3,842) (2,331) (8,002) (7,032)
            
Net income (loss)  (11,093) (14,633) (40,034) (46,601)
 Less: Net income (loss) attributable to the noncontrolling interests (1,019) (751) (2,888) (2,672)
Net income (loss) attributable to Actua Corporation  $(10,074) $(13,882) $(37,146) $(43,929)
            
            
Amounts attributable to Actua Corporation:         
Net (loss) income from continuing operations  $(6,467) $(11,732) $(29,590) $(37,390)
Net (loss) income from discontinued operations  (3,607) (2,150) (7,556) (6,539)
Net (loss) income  $(10,074) $(13,882) $(37,146) $(43,929)
            
Basic and diluted net income (loss) per share:        
Loss from continuing operations $(0.17) $(0.31) $(0.80) $(1.01)
Loss from discontinued operations (0.10) (0.06) (0.21) (0.18)
Income (loss) attributable to Actua common shareholders $(0.27) $(0.37) $(1.01) $(1.19)
            
Shares used in computation of basic and diluted net income (loss) per common share attributable to Actua common shareholders 36,776  37,146  36,943  37,038 
            
(a) Includes equity-based compensation of:        
 Cost of revenue  $21  $48  $75  $104 
 Sales and marketing  73  99  233  232 
 General and administrative  2,827  6,159  10,804  19,722 
 Research and development  105  158  321  337 
     $3,026  $6,464  $11,433  $20,395 


 Actua Corporation
 Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
          
          
     September 30,  December 31,  
     2016 2015  
          
ASSETS       
 Cash and cash equivalents  $41,787  $72,457   
 Restricted cash  1,699  2,206   
 Accounts receivable, net  17,031  16,167   
 Prepaid expenses and other current assets  4,001  2,776   
 Assets of discontinued operations  33,609  29,129   
  Total current assets  98,127  122,735   
 Fixed assets, net  5,580  4,279   
 Goodwill  222,694  220,459   
 Intangible assets, net  73,195  80,443   
 Cost method businesses  17,249  18,146   
 Deferred tax asset  2,779  2,900   
 Other assets, net  1,158  1,182   
  Total Assets  $420,782  $450,144   
          
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY    
 Short-term debt  $1,320  $1,320   
 Accounts payable  9,174  7,992   
 Accrued expenses  7,332  8,215   
 Accrued compensation and benefits  6,907  9,865   
 Deferred revenue  30,899  26,102   
 Liabilities of discontinued operations  31,691  24,391   
  Total current liabilities  87,323  77,885   
 Deferred tax liability  266  266   
 Deferred revenue  1,215  2,038   
 Other liabilities  5,351  1,478   
  Total Liabilities  94,155  81,667   
 Redeemable noncontrolling interest  9,362  10,506   
 Total Equity  317,265  357,971   
  Total Liabilities, Redeemable noncontrolling interest and Equity  $420,782  $450,144   
          


ACTUA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
  Three Months Ended
September 30,
 Nine Months Ended
 September 30,
  2016 2015 2016 2015
OPERATING ACTIVITIES - Continuing Operations        
Net income (loss) $(11,093) $(14,633) $(40,034) $(46,601)
(Income) loss from discontinued operations, net of tax 3,842  2,331  8,002  7,032 
Adjustments to reconcile net loss to cash provided by (used in) operating activities:        
Depreciation and amortization 4,131  3,770  12,462  11,681 
Equity-based compensation 3,026  6,464  11,433  20,395 
Impairment related and other 25  89  419  290 
Other (income) loss, net (2,831) (96) (2,726) (1,537)
Deferred tax asset 69  47  121  123 
Contingent consideration   196  32  692 
Changes in operating assets and liabilities - net of acquisitions:        
Accounts receivable, net 79  (1,431) (1,012) 9,060 
Prepaid expenses and other assets 552  (583) (1,305) 1,425 
Accounts payable 978  1,742  977  (2,700)
Accrued expenses (226) 196  (1,000) 7,052 
Accrued compensation and benefits 1,066  1,286  (2,973) 1,194 
Deferred revenue (521) (388) 4,112  (10,687)
Other liabilities 335  (238) 4,175  (1,544)
Cash flows provided by (used in) operating activities (568) (1,248) (7,317) (4,125)
INVESTING ACTIVITIES - Continuing Operations        
Capital expenditures (620) (187) (2,256) (1,645)
Change in restricted cash 30  (319) 581  (251)
Proceeds from sales/distribution of ownership interests 4,408    4,454  1,415 
Ownership acquisition, net of cash acquired (2,905) (43) (5,127) (1,300)
Cash flows provided by (used in) investing activities 913  (549) (2,348) (1,781)
FINANCING ACTIVITIES        
Acquisition of noncontrolling interest in subsidiary equity     (5,446) (3,952)
Payments of contingent consideration (1,200)   (2,664) (1,870)
Borrowings of short-term debt       820 
Repayment of capital lease obligations (8)   (8) (24)
Purchase of treasury stock     (9,533) (1,704)
Tax withholdings related to equity-based awards (32) (67) (1,568) (3,925)
Financing activities with discontinued operations, net 259  (371) (1,745) (3,871)
Cash flows provided by (used in) financing activities (981) (438) (20,964) (14,526)
Effect of exchange rate on cash and cash equivalents 71  3  (41) 19 
Net increase (decrease) in cash and cash equivalents from continuing operations (565) (2,232) (30,670) (20,413)
Discontinued Operations        
Cash flows used in operating activities (1,305) (449) (6,228) (1,111)
Cash flows used in investing activities (228) (1,739) (675) (4,900)
Cash flows provided by financing activities 850  386  3,234  3,878 
Net increase (decrease) in cash and cash equivalents from discontinued operations (683) (1,802) (3,669) (2,133)
Cash and cash equivalents at beginning of period - discontinued operations 870  2,651  3,856  2,982 
Less: cash and cash equivalents at end of period - discontinued operations 187  849  187  849 
Cash and cash equivalents at beginning of period - continuing operations 42,352  81,971  72,457  100,152 
Cash and cash equivalents at end of period - continuing operations $41,787  $79,739  $41,787  $79,739 


Actua Corporation
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
             
   20152016   
   Q1Q2Q3Q4Q1Q2Q3   
GAAP net income (loss) attributable to Actua:  $(14,765)$(15,282)$(13,882)$(52,151)$(14,331)$(12,741)$(10,074)   
Add back:            
Share-based compensation  6,994 6,912 6,464 $5,549 4,661 3,750 3,026    
Amortization of intangibles  3,587 3,293 3,266 3,303 3,582 3,626 3,524    
Impairment related and other costs  453 603 89 38,964 231 117 45    
Transaction expenses  70 154 62  47 209 630    
Other (income) loss, net  (1,493)376 100 (205)90 15 (2,831)   
Acquired businesses' deferred revenue  677 678 557 505 476 483 478    
Impact of non-cash income tax benefit items  34     88 39    
Loss (income) from discontinued operations  2,244 2,146 2,150 1,981 1,971 1,978 3,842    
Impact of non-controlling interest (NCI) for discontinued operations  (146)(166)(181)(159)(110)(101)(235)   
  Non-GAAP net income (loss)  $(2,345)$(1,286)$(1,375)$(2,213)$(3,383)$(2,576)$(1,556)   
             
             
GAAP net income (loss) per diluted share:  $(0.40)$(0.41)$(0.37)$(1.40)$(0.38)$(0.35)$(0.27)   
Add back:            
 Share-based compensation  0.19 0.18 0.17 0.15 0.12 0.10 0.08    
 Amortization of intangibles  0.10 0.09 0.09 0.09 0.10 0.10 0.10    
 Impairment related and other costs  0.01 0.020  1.05 0.01 0.01     
 Transaction expenses   0.004    0.01 0.02    
 Other (income) loss, net  (0.04)0.010  (0.01)  (0.08)   
 Acquired businesses' deferred revenue  0.02 0.020 0.01 0.01 0.01 0.01 0.01    
 Impact of non-cash income tax benefit items            
 Loss (income) from discontinued operations  0.06 0.059 0.06 0.05 0.05 0.05 0.10    
 Impact of non-controlling interest (NCI) for discontinued operations            
  Non-GAAP net income (loss) per diluted share  $(0.06)$(0.03)$(0.04)$(0.06)$(0.09)$(0.07)$(0.04)   
             
Shares used in calculation of GAAP net income (loss) per share attributable to Actua:            
Basic  36,842 37,123 37,146 37,190 37,293 36,760 36,776    
Diluted  36,842 37,123 37,146 37,190 37,293 36,760 36,776    
             
Shares used in calculation of non-GAAP net income (loss) per share attributable to Actua:            
Basic  36,842 37,123 37,146 37,190 37,293 36,760 36,776    
Diluted  36,842 37,123 37,146 37,190 37,293 36,760 36,776    


Actua Corporation
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)
(In thousands, except per share data)
(Unaudited)
            
   20152016  
   Q1Q2Q3Q4Q1Q2Q3  
GAAP net income (loss) attributable to Actua:  $(14,765)$(15,282)$(13,882)$(52,151)$(14,331)$(12,741)$(10,074)  
 Add back:           
  Share-based compensation  6,994 6,912 6,464 $5,549 4,661 3,750 3,026   
  Amortization of intangibles  3,587 3,293 3,266 3,303 3,582 3,626 3,524   
  Impairment related and other costs  453 603 89 38,964 231 117 45   
  Transaction expenses  70 154 62  47 209 630   
  Other (income) loss, net  (1,493)376 100 (205)90 15 (2,831)  
  Acquired businesses' deferred revenue  677 678 557 505 476 483 478   
  Impact of non-cash income tax benefit items  34     88 39   
  Loss (income) from discontinued operations  2,244 2,146 2,150 1,981 1,971 1,978 3,842   
  Impact of non-controlling interest (NCI) for discontinued operations  (146)(166)(181)(159)(110)(101)(235)  
  Interest expense (income), net  17 (4)(2)8 36 45 (4)  
  Income tax expense (current/cash only)  141  59 (38)24 146 (6)  
  Depreciation  538 493 504 514 515 604 739   
Adjusted EBITDA  $(1,649)$(797)$(814)$(1,729)$(2,808)$(1,781)$(827)  
            
GAAP Cost of revenue  $6,859 $7,011 $6,663 $6,887 $6,722 $7,288 $7,288   
Share-based compensation  23 $33 $48 $34 32 22 21   
 Adjusted Cost of revenue  $6,836 $6,978 $6,615 $6,853 $6,690 $7,266 $7,267   
            
GAAP Sales and marketing  $8,438 $8,922 $9,551 $8,921 $10,119 $10,461 $10,461   
Share-based compensation  55 78 99 65 88 72 73   
 Adjusted Sales and marketing  $8,383 $8,844 $9,452 $8,856 $10,031 $10,389 $10,388   
            
GAAP General and administrative  $13,953 $14,394 $12,542 $13,627 $12,326 $11,372 $11,372   
Share-based compensation  6,896 6,667 6,159 5,336 4,427 3,548 2,829   
 Adjusted General and administrative  $7,057 $7,727 $6,383 $8,291 $7,899 $7,824 $8,543   
            
GAAP Research and development  $4,464 $4,940 $4,973 $4,619 $5,307 $5,388 $5,388   
Share-based compensation  45 134 158 114 114 102 105   
 Adjusted Research and development  $4,419 $4,806 $4,815 $4,505 $5,193 $5,286 $5,283   
            
 GAAP Cash flows provided by (used in) operating activities  $(1,609)$(1,268)$(1,248)$(344)$(4,109)$(2,640)$(568)  
  Impairment related and other costs   94  68 170 938 800   
  Transaction expenses  81 99 6 49  232    
 Adjusted Cash flows provided by (used in) operating activities  $(1,528)$(1,075)$(1,242)$(227)$(3,939)$(1,470)$232   
            

About Actua’s Non-GAAP Financial Measures

This release contains non-GAAP financial measures.  The tables above reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.  Actua strongly urges investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release.

Actua’s management believes that its non-GAAP financial measures provide useful information to investors because they allow investors to view the business through the eyes of management and provide meaningful supplemental information regarding Actua’s operating results, as they exclude amounts that Actua excludes as part of its monitoring of operating results and assessment of the performance of the business.

Actua presents the following non-GAAP financial measures in this press release:  (1) non-GAAP net income (loss) (which term may be used interchangeably with adjusted net income (loss) by management during quarterly earnings presentations), (2) non-GAAP net income (loss) per diluted share (which term may be used interchangeably with adjusted net income (loss) per diluted share by management during quarterly earnings presentations), (3) Adjusted EBITDA, (4) Adjusted Cost of revenue, (5) Adjusted Sales and marketing, (6) Adjusted General and administrative, (7) Adjusted Research and development and (8) non-GAAP cash flows from operations.  Actua excludes items from these non-GAAP financial measures as described below.

Non-GAAP net income (loss) excludes from GAAP net income (loss) the following items:

  • Share-based compensation.  Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua’s results with results of other companies.
     
  • Amortization of intangibles.  Actua excludes amortization of acquired intangibles, which consists primarily of customer relationships and technology, because they are expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and Actua believes that doing so facilitates comparisons to its historical operating results and to the results of other companies.

  • Impairment related and other costs.  Actua excludes the effect of impairment related and other costs, which primarily include impairment charges, revaluation of contingent consideration, restructuring and severance fees, settlement costs and other one-time costs, because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s operations.

  • Transaction expenses.  Actua excludes the effect of acquisition related expenses because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s operations.

  • Other income (loss), net.  Actua excludes the effect of other income (loss), net, which primarily includes transaction-driven gains and losses, as well as certain foreign currency impacts, because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s operations.

  • Acquired businesses’ deferred revenue.  Actua includes acquired businesses’ previously deferred revenues that are not recognized under GAAP because Actua considers them a part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on its operations.

  • Impact of non-cash income tax benefit items.  Actua excludes the impact of any non-cash income tax benefit items as Actua believes it is useful for investors to understand the effect of this item and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • (Loss) income from discontinued operations.  Actua excludes the income (loss) from discontinued operations as Actua believes it is useful for investors to understand the effect of these items for all periods presented as Actua does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Impact of non-controlling interest (NCI) for discontinued operations.  Actua does not own 100% of the discontinued operations presented.  Therefore, Actua excludes the impact of the NCI for discontinued operations as Actua believes it is useful for investors to understand the effect of this item for all periods presented as compared to what has historically been provided as Actua does not consider it a part of ongoing operating results when assessing the performance of its business.

Non-GAAP net income (loss) per diluted share is calculated as follows:

  • Non-GAAP net income (loss) (as defined above) is the numerator.

  • Shares used in calculation of non-GAAP net income (loss) per diluted share.  For periods where GAAP and non-GAAP net income (loss) are both losses, Actua uses the same number of shares used to calculate GAAP and non-GAAP net loss per share.  For periods where GAAP and non-GAAP net income (loss) are both income, Actua uses the same number of shares used to calculate GAAP and non-GAAP net income per diluted share.  For periods where GAAP net income (loss) is a loss but non-GAAP net income (loss) is income, Actua includes the impact of incremental dilutive securities for the period to determine non-GAAP net income per diluted share.  For periods where GAAP net income (loss) is income but non-GAAP net income (loss) is a loss, Actua excludes the impact of incremental dilutive securities for the period to determine non-GAAP net loss per diluted share.

Adjusted EBITDA excludes from GAAP net income (loss) the following items:

  • Share-based compensation.  Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua’s results with results of other companies.

  • Amortization of intangibles.  Actua excludes amortization of acquired intangibles, which consists primarily of customer relationships and technology, because they are expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and Actua believes that doing so facilitates comparisons to its historical operating results and to the results of other companies.

  • Impairment related and other costs.  Actua excludes the effect of impairment related and other costs, which primarily include impairment charges, revaluation of contingent consideration, restructuring and severance fees, settlement costs and other one-time costs, because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s operations.

  • Transaction expenses.  Actua excludes the effect of acquisition related expenses because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s operations.

  • Other income (loss), net.  Actua excludes the effect of other income (loss), net, which primarily includes transaction-driven gains and losses and revaluation of contingent consideration, as well as certain foreign currency impacts because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s operations.

  • Acquired businesses’ deferred revenue.  Actua includes acquired businesses’ previously deferred revenues that are not recognized under GAAP because Actua considers them a part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on its operations.

  • Impact of non-cash income tax benefit items.  Actua excludes the impact of any non-cash income tax benefit items as Actua believes it is useful for investors to understand the effect of this item and Actua does not consider them a part of ongoing operating results when assessing the performance of its business.

  • (Loss) income from discontinued operations.  Actua excludes the income (loss) from discontinued operations as Actua believes it is useful for investors to understand the effect of these items for all periods presented as Actua does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Impact of non-controlling interest (NCI) for discontinued operations.  Actua does not own 100% of the discontinued operations presented.  Therefore, Actua excludes the impact of the NCI for discontinued operations as Actua believes it is useful for investors to understand the effect of this item for all periods presented as compared to what has historically been provided as Actua does not consider it a part of ongoing operating results when assessing the performance of its business.

  • Interest expense (income), net.  Actua excludes income and expense from interest as Actua believes it is useful for investors to understand the effect of these items for all periods presented and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Income tax expense (current/cash only).  Actua excludes the impact of any current, cash income tax expense as Actua believes it is useful for investors to understand the effect of this item and does not consider them a part of ongoing operating results when assessing the performance of its business.

  • Depreciation.  Actua excludes depreciation expense as Actua believes it is useful for investors to understand the effect of these items for all periods presented and does not consider them a part of ongoing operating results when assessing the performance of its business.

Adjusted Cost of revenue excludes from GAAP Cost of revenue operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the cost of revenue category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua’s results with results of other companies.

Adjusted Sales and marketing excludes from GAAP Sales and marketing operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the sales and marketing category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua’s results with results of other companies.

Adjusted General and administrative excludes from GAAP General and administrative operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the general and administrative category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua’s results with results of other companies.

Adjusted Research and development excludes from GAAP Research and development operating expenses the following item:

  • Share-based compensation. Actua excludes share-based compensation expenses and other expenses associated with equity granted to employees and non-employee directors in the research and development category on Actua's statements of operations primarily because they are non-cash expenses that Actua does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of Actua’s results with results of other companies.

Adjusted Cash flows from operations excludes from GAAP Cash flows from operations the cash impact of the following items:

  • Impairment related and other costs.  Actua excludes the cash effect of impairment related and other costs, which primarily include severance payments, contingent consideration payments, payments associated with restructuring costs, settlement costs and other one-time costs, because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s cash flows.

  • Transaction expenses.  Actua excludes the cash effect of acquisition related expenses because Actua does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on Actua’s cash flows.

Actua believes that the following considerations apply to the non-GAAP financial measures that it presents:

  • Actua’s management uses non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, adjusted EBITDA, adjusted cost of revenue, adjusted sales and marketing, adjusted general and administrative, adjusted research and development and non-GAAP cash flows from operations in internal reports used by management in monitoring and making decisions regarding Actua’s business, including in monthly financial reports prepared for management and in periodic reports to Actua’s Board of Directors.

  • An important limitation of Actua’s non-GAAP financial measures is that they exclude expenses or cash flows, some of which may be significant, that are required by GAAP to be recorded.  In addition, non-GAAP financial measures are subject to inherent limitations because they reflect the exercise of judgments by management about which charges to exclude in the non-GAAP financial measures.

To mitigate the limitations associated with non-GAAP financial measures, Actua reconciles its non-GAAP financial measures to the nearest comparable GAAP financial measures and recommends that investors and potential investors do not give undue weight to its non-GAAP financial measures.

Actua is providing the following historical GAAP revenues, as reported to provide information as to what our GAAP revenues are excluding the revenues of GovDelivery, as they are now presented net within  discontinued operations, in those respective periods in the table below.

Actua Corporation
Reconciliation of GAAP Revenue, as reported to GAAP Revenue (excluding GovDelivery)
(In thousands)
(Unaudited)
         
  20152016
 Q1Q2Q3Q4Q1Q2Q3
GAAP Revenue, as reported: $30,592 $33,536 $34,140 $35,153 $34,610 $36,709  N/A 
  GovDelivery revenue (a) 7,859 8,229 9,223 9,678 9,424 9,855  N/A 
GAAP Revenue (excluding GovDelivery): $22,733 $25,307 $24,917 $25,475 $25,186 $26,854 $27,937 
         
(a) GovDelivery is treated as a discontinued operations in this Q3 2016 earnings release and will be treated as a discontinued operations when we file our Form 10-Q for the quarter ended September 30, 2016

 

Investor inquiries:
Karen Greene
Actua
Investor Relations
610.727.6900
IR@actua.com

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