Financial Engines (NASDAQ:FNGN), America’s largest independent
investment advisori, today reported financial results for its
fourth quarter and full year ended December 31, 2017.
Financial results for the fourth quarter of 2017 compared to
the fourth quarter of 2016:ii
- Revenue increased 11% to $125.7 million
for the fourth quarter of 2017 from $113.2 million for the fourth
quarter of 2016.
- Professional management revenue
increased 14% to $118.8 million for the fourth quarter of 2017 from
$104.4 million for the fourth quarter of 2016.
- Net income decreased 31% to $6.3
million for the fourth quarter of 2017 from $9.0 million for the
fourth quarter of 2016.
- Diluted earnings per share decreased
29% to $0.10 per share for the fourth quarter of 2017 from $0.14
per share for the fourth quarter of 2016.
- Non-GAAP adjusted EBITDAii increased
26% to $45.8 million for the fourth quarter of 2017 from $36.2
million for the fourth quarter of 2016.
- Non-GAAP adjusted net incomeii
increased 30% to $24.3 million for the fourth quarter of 2017 from
$18.6 million for the fourth quarter of 2016.
- Non-GAAP adjusted earnings per shareii
increased 31% to $0.38 for the fourth quarter of 2017 from $0.29
for the fourth quarter of 2016.
Financial results for the full year of 2017 compared to the
full year of 2016: ii
- Revenue increased 13% to $480.5 million
for 2017 from $423.9 million for 2016.
- Professional management revenue
increased 17% to $450.3 million for 2017 from $385.9 million for
2016.
- Net income increased 63% to $46.7
million for 2017 compared to $28.6 million for 2016.
- Diluted earnings per share increased
57% to $0.72 per share for 2017 from $0.46 per share for 2016.
- Non-GAAP adjusted EBITDAii increased
20% to $160.8 million for 2017 from $134.3 million for 2016.
- Non-GAAP adjusted net incomeii
increased 28% to $89.3 million for 2017 from $70.0 million for
2016.
- Non-GAAP adjusted earnings per shareii
increased 22% to $1.38 for 2017 from $1.13 for 2016.
Key operating metrics as of December 31, 2017:iii
- Assets under contract (“AUC”) were
$1.22 trillion.
- Assets under management (“AUM”) were
$169.4 billion.
- Professional management clients were
approximately 1,058,000.
- The asset enrollment rate across all
employer plans was 12.8%iv.
“In 2017, we remained focused on what sets Financial Engines
apart – our commitment to delivering high-quality, independent
financial advice to hard working Americans that have been
historically underserved by the financial services industry,” said
Larry Raffone, president and chief executive officer of Financial
Engines. “Building off our successes last year, we are excited
about the strategic opportunity in 2018 and beyond to broaden and
elevate our offering for our clients consistent with our long-term
strategy to become the financial advisor of choice in both the
workplace and retail channels.”
Review of Financial Results for the Fourth Quarter of
2017
Revenue increased 11% to $125.7 million for the fourth quarter
of 2017 from $113.2 million for the fourth quarter of 2016. The
increase in revenue was driven primarily by growth in professional
management revenue, which increased 14% to $118.8 million for the
fourth quarter of 2017 from $104.4 million for the fourth quarter
of 2016.
Costs and expenses increased 4% to $101.2 million for the fourth
quarter of 2017 from $97.4 million for the fourth quarter of 2016.
This was due primarily to an increase in employee-related costs,
including expenses due to restructuring activities and increases in
wages due to headcount growth and compensation increases. There was
also an increase in fees paid to plan providers for data
connectivity due to growth in professional management revenue.
These increases were partially offset by a decrease in consulting
and professional services expenses.
As a percentage of revenue, cost of revenue remained constant at
44% for the fourth quarters of 2016 and 2017.
Income from operations increased 55% to $24.5 million for the
fourth quarter of 2017 compared to $15.8 million for the fourth
quarter of 2016. As a percentage of revenue, income from operations
was 20% for the fourth quarters of 2017 compared to 14% for the
fourth quarter of 2016.
The Company’s effective tax rate for the fourth quarter of 2017
was 75%, which includes an impact of $7.6 million associated with
the recently-enacted 2017 Tax Act, compared to an effective tax
rate of 42% in the fourth quarter of 2016.
Net income was $6.3 million, or $0.10 per diluted share, for the
fourth quarter of 2017 compared to net income of $9.0 million, or
$0.14 per diluted share, for the fourth quarter of 2016. On a
non-GAAP basis, adjusted net incomeii was $24.3 million and
adjusted earnings per shareii were $0.38 for the fourth quarter of
2017 compared to adjusted net income of $18.6 million and adjusted
earnings per share of $0.29 for the fourth quarter of 2016.
“We ended 2017 with $169.4 billion in assets under management,
driven by the addition of $20.5 billion in gross AUM from new
clients, an increase of 15% year over year,” said Craig
Foster, chief financial officer of Financial Engines. “Our
accelerating asset flows, solid financial results, and expanding
margins in 2017 reflects our focus and commitment to effectively
balance near-term profitability while investing in our long-term
growth.”
Assets Under Contract and Assets Under Management
Workplace AUC increased 16% year-over-year to $1.22 trillion as
of December 31, 2017 from $1.05 trillion as of December 31, 2016,
due primarily to market performance, new employers making the
Company’s services available and contributions, partially offset by
cancellations and withdrawals.
AUM increased by 23% year-over-year to $169.4 billion as of
December 31, 2017, from $138.0 billion as of December 31, 2016. The
increase in AUM was driven primarily by new assets from new and
existing clients, and market performance, partially offset by
cancellations and withdrawals.
Q1'17 Q2'17 Q3'17
Q4'17 (In billions) AUM, beginning of
period $ 138.0 $ 144.4 $ 151.8 $ 160.2 New assets - new
clients(1) 3.4 5.3 5.4 6.4 New assets - existing clients(2) 2.4 2.4
2.5 2.5 Asset cancellations - voluntary(3) (2.1 ) (1.6 ) (1.6 )
(2.1 ) Asset cancellations - involuntary(4) (2.7 ) (3.3 ) (1.9 )
(3.3 ) Assets withdrawn - existing clients(5) (0.2 )
(0.1 ) (0.2 ) (0.2 ) Net new assets 0.8
2.7 4.2 3.3 Market movement and other(6) 5.6
4.7 4.2 5.9
AUM, end of period $
144.4 $ 151.8 $ 160.2 $
169.4 (1) New assets from new
clients represents the aggregate amount of new AUM, measured at or
near the end of the quarter, from new clients who enrolled in its
professional management service. (2) New assets from existing
clients represents the aggregate amount of new AUM within the
quarter from existing clients who originally enrolled in its
professional management service during a prior period, including
employee and employer contributions of $2.3 billion for the current
period. Employer and employee contributions are estimated each
quarter from annual contribution rates based on data received from
plan providers or plan sponsors. (3) Voluntary cancellations
represent the aggregate amount of assets, measured at or near the
start of the quarter, for clients who have voluntarily terminated
their professional management service relationship within the
period. (4) Involuntary cancellations represent the aggregate
amount of defined contribution assets, measured at or near the
start of the quarter, for clients whose professional management
service relationship was terminated within the period for reasons
other than a voluntary termination. (5) Assets withdrawn represents
the amount of voluntary withdrawals from IRA and taxable accounts
by existing clients. (6) Market movement and other represents
factors affecting AUM including estimated market movement, plan
administrative and investment advisory fees, client loans, hardship
and other defined contribution account withdrawals, and timing
differences for the data feeds for clients enrolled in our
professional management service throughout the period.
For further information on the AUM data above, please refer to
the Company’s Form 10-K to be filed for the period ended December
31, 2017.
Aggregate Investment Style Exposure for Portfolios Under
Management
As of December 31, 2017, the approximate aggregate investment
style exposure of the portfolios we managed was as follows:
Domestic Equity 46 %
International Equity 29 % Bonds 23 % Cash and uncategorized
assets(1) 2 %
Total 100 %
(1) Uncategorized
assets may include CDs, options, warrants and other vehicles not
currently categorized.
Quarterly Dividend
On February 14, 2018, Financial Engines’ Board of Directors
declared a regular quarterly cash dividend of $0.08 per share of
the Company’s common stock. The cash dividend will be paid on April
5, 2018 to stockholders of record as of the close of business on
March 22, 2018.
Stock Repurchase Program
On October 24, 2017, Financial Engines’ Board of Directors
approved a twelve-month stock repurchase program under which the
Company may purchase up to $60 million of its common stock. During
the fourth quarter, the Company purchased 399,638 shares for $10.8
million on the open market. Any stock repurchases may be made at
times and in such amounts as management deems appropriate. The
timing and amount of stock repurchased, if any, will depend on a
variety of factors including stock price, market conditions,
corporate and regulatory requirements, and any additional
constraints related to material inside information the Company may
possess. The repurchase is funded by available working capital. The
weighted average shares repurchased have been deducted from the
shares outstanding for the calculation of EPS and Non-GAAP Adjusted
EPS.
Outlook
Financial Engines’ growth strategy includes increasing
professional management usage within the workplace, providing more
holistic financial services to individual investors and workplace
participants, and expanding the number of plan sponsors.
Based on the closing level of financial markets on February 16,
2018 and under typical market conditions, the Company estimates
that 2018 revenue will be in the range of $510 million and $530
million, GAAP 2018 net income will be in the range of $75 million
to $85 million, and 2018 non-GAAP adjusted EBITDA will be in the
range of $166 million to $180 million.
Please refer to the tables included in this release that
reconcile GAAP net income to non-GAAP adjusted EBITDA, non-GAAP
adjusted net income and non-GAAP adjusted earnings per share.
Conference Call
The Company will host a conference call to discuss its fourth
quarter and full year 2017 financial results as well as its 2018
outlook on Thursday, February 22, 2018 at 5:00 p.m. ET. The live
webcast and presentation can be accessed from the Company's
investor relations website at www.financialengines.com. The
conference call can also be accessed live over the phone by dialing
(888) 348-6435, or (412) 902-4238 for international callers. A
replay will be available beginning approximately one hour after the
call and can be accessed from the Company’s investor relations
website, or by dialing (844) 512-2921, or (412) 317-6671 for
international callers; the conference ID is 10116847. The
conference call replay will be available until March 1, 2018.
About Non-GAAP Financial Measures
This press release and its attachments include certain non-GAAP
supplemental performance measures. The presentation of this
financial information is not intended to be considered in isolation
or as a substitute for the financial information prepared and
presented in accordance with U.S. generally accepted accounting
principles (GAAP). These non-GAAP measures include non-GAAP
adjusted EBITDA, non-GAAP adjusted net income, and non-GAAP
adjusted earnings per share. Adjusted EBITDA represents net income
before net interest expense (income), income tax expense (benefit),
depreciation, amortization of intangible assets, including internal
use software, amortization and impairment of direct response
advertising, amortization of deferred sales commissions, non-cash
stock-based compensation expense, as well as expenses related to
the closing and integration of acquisitions, severance and benefits
expenses related to restructuring activities, and losses incurred
on acquisitions, if applicable for the period. Adjusted net income
represents net income before non-cash stock-based compensation
expense, amortization of intangible assets related to assets
acquired, including customer relationships, trade names and
trademarks, expenses related to the closing and integration of
acquisitions, severance and benefits expenses related to
restructuring activities, and losses incurred on acquisitions, if
applicable for the period, partially offset by the estimated tax
impact of these items, and certain other items such as the income
tax benefit from the release of valuation allowances, income tax
impacts from non-deductible transaction expenses related to
acquisitions, and the accounting effects of the recently-enacted
tax reform, if applicable for the period. Adjusted earnings per
share is defined as adjusted net income divided by the weighted
average of dilutive common share equivalents outstanding. Further
information regarding the non-GAAP performance measures included in
this press release, including a reconciliation of non-GAAP
financial measures to the most directly comparable GAAP measures,
is contained in the financial tables and will be contained in the
Company’s Form 10-K to be filed for the year ended December 31,
2017.
To supplement the Company’s consolidated financial statements
presented on a GAAP basis, management believes that these non-GAAP
measures provide its Board of Directors, management and investors
with additional information and greater transparency with respect
to our performance and decision-making. We feel these performance
measures provide investors and others with a better understanding
and ability to evaluate our operating results and future prospects
and provides the same performance measurement information as
utilized by management. These adjustments to the Company’s GAAP
results are made with the intent of providing both management and
investors a more complete understanding of the Company’s underlying
operational results, trends and performance.
Our management uses non-GAAP adjusted EBITDA, adjusted net
income and adjusted earnings per share as measures of operating
performance, for planning purposes, including the preparation of
annual budgets, to allocate resources to enhance the financial
performance of our business, to evaluate the effectiveness of our
business strategies and in communications with our Board of
Directors concerning our financial performance. In addition,
management currently uses non-GAAP measures in determining cash
incentive compensation.
About Financial Engines
With roots in Silicon Valley, Financial
Engines is the nation’s largest independent investment
advisor. We believe that all Americans – not just the wealthy –
should have access to high-quality, unbiased financial help and our
client’s best interests should always come first. Today, more than
700 of the nation’s most respected employers trust Financial
Engines to offer professional financial help to more than nine
million employees nationwide.
For more information, visit www.financialengines.com.
©1998-2017 Financial Engines, Inc. All rights reserved.
Financial Engines® is a registered trademark of Financial Engines,
Inc. All advisory services provided by Financial Engines
Advisors L.L.C. Financial Engines does not guarantee
future results.
Forward-Looking Statements
This press release and its attachments contain forward-looking
statements that involve risks and uncertainties. These
forward-looking statements may be identified by terms such as “plan
to,” “designed to,” “allow,” “will,” “can,” “expect,” “estimates,”
“believes,” “intends,” “may,” “continues,” “to be” or the negative
of these terms, and similar expressions intended to identify
forward-looking statements. These forward-looking statements
include, but are not limited to, statements regarding: our
strategic opportunity to broaden and elevate our offerings
consistent with our long-term strategy; our focus on balancing
near-term profitability while investing in long-term growth; our
stock repurchase program; Financial Engines’ expected financial
performance and outlook, including reconciliation information
related thereto and factors which may impact our outlook; the
benefits and anticipated uses of our non-GAAP financial measures,
and the anticipated amount, duration, methods, timing and other
aspects of our stock repurchase program. These statements involve
known and unknown risks, uncertainties and other factors which may
cause actual results, performance or achievements to differ
materially from those expressed or implied by such forward-looking
statements, and reported results should not be considered as an
indication of future performance. These risks and uncertainties
include, but are not limited to risks related to our reliance on
fees earned on the value of assets we manage for a substantial
portion of our revenue, the impact of the financial markets on our
revenue and earnings, unanticipated delays in rollouts of our
services, our ability to increase enrollment, our ability to
correctly identify and invest appropriately in growth
opportunities, our ability to introduce new services and accurately
estimate the impact of any future services on our business, the
risk that the anticipated benefits of our investments in these
services or in growth opportunities may not outweigh the resources
and costs associated with these investments or the liabilities
associated with the operation of these services, our relationships
with plan providers and plan sponsors, the fees we can charge for
our professional management service, our reliance on accurate and
timely data from plan providers and plan sponsors, system failures,
errors or unsatisfactory performance of our services, our
reputation, our ability to protect the confidentiality of plan
provider, plan sponsor and plan participant data and other privacy
concerns, acquisition activity involving plan providers or plan
sponsors, our ability to compete, industry trends and pricing
pressures; changes in our pricing policies or those of our
competitors; our regulatory environment, and risks associated with
our fiduciary obligations. In addition, any negative impact on our
operating results and financial condition as a result of the
foregoing or other risks, including any unforeseen need for capital
which may require us to divert funds we may have otherwise used for
the stock repurchase program, may in turn negatively impact our
ability to administer the repurchase of our common stock. More
information regarding these and other risks, uncertainties and
factors is contained in the Company’s Form 10-K for the year ended
December 31, 2016, as filed with the SEC, and in other reports
filed by the Company with the SEC from time to time, including the
Company’s 10-K filed to be filed for the year ended December 31,
2017. You are cautioned not to unduly rely on these forward-looking
statements, which speak only as of the date of this press release.
All information in this press release and its attachments is as of
the date stated or February 22, 2018 and unless required by law,
Financial Engines undertakes no obligation to publicly revise any
forward-looking statement to reflect circumstances or events after
the date of this press release or to report the occurrence of
unanticipated events.
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.
_______________
i For independence methodology and
ranking, see InvestmentNews RIA Data Center.
(http://data.investmentnews.com/ria/).
ii Please see “About Non-GAAP Financial Measures” for definitions
of the terms Adjusted Net Income, Adjusted Earnings Per Share, and
Adjusted EBITDA. iii Operating metrics include both advised and
subadvised relationships. iv 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, 2016 and the Form 10-K to be filed for the year
ended December 31, 2017.
Financial Tables
FINANCIAL ENGINES, INC. AND
SUBSIDIARIES
Unaudited Consolidated Balance
Sheets
December 31, 2016 2017 (In
thousands, except per share data) Assets Current assets:
Cash and cash equivalents $ 134,246 $ 224,543
Accounts receivable, net of allowances of
$206 and $172 as of
December 31, 2016 and 2017,
respectively
103,256 116,116 Prepaid expenses 7,370 9,159 Other current assets
3,468 4,501 Total current assets 248,340 354,319
Property and equipment, net 24,532 25,880 Intangible assets, net
205,751 198,045 Goodwill 312,020 312,020 Long-term deferred tax
assets 40,504 28,801 Direct response advertising, net 5,849 4,653
Other assets 3,140 2,184 Total assets $ 840,136 $
925,902
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable $ 36,780 $ 29,993 Accrued
compensation 27,667 28,519 Deferred revenue 4,701 4,204 Dividend
payable 4,350 4,411 Other current liabilities 4,343
2,457 Total current liabilities 77,841 69,584 Long-term deferred
rent 12,269 10,720 Long-term tax liabilities 2,207 - Other
liabilities 488 459 Total liabilities 92,805
80,763 Stockholders’ equity: Preferred stock, $0.0001
par value — 10,000 authorized as of
December 31, 2016 and 2017; None issued or
outstanding as of
December 31, 2016 and 2017
— — Common stock, $0.0001 par value — 500,000 authorized as of
December 31, 2016 and 2017; 63,476 and
64,725 shares issued and
62,199 and 63,049 shares outstanding at
December 31, 2016 and 2017,
respectively
6 6 Additional paid-in capital 782,079 838,461 Treasury stock, at
cost (1,277 shares and 1,677 as of December 31, 2016 and 2017,
respectively)
(47,637 ) (58,437 ) Retained Earnings 12,883 65,109
Total stockholders’ equity 747,331 845,139 Total
liabilities and stockholders’ equity $ 840,136 $ 925,902
FINANCIAL ENGINES, INC. AND
SUBSIDIARIES
Unaudited Consolidated Statements of
Income
Three Months Ended Year Ended December
31, December 31, 2016 2017
2016 2017 (In thousands, except per share
data) Revenue: Professional management $ 104,426 $ 118,832 $
385,944 $ 450,320 Platform 7,060 6,352 28,366 26,558 Other
1,736 506 9,627 3,628 Total revenue
113,222 125,690 423,937 480,506 Costs and
expenses: Cost of revenue 49,908 54,860 186,009 212,924 Research
and development 10,150 11,560 37,983 44,018 Sales and marketing
22,176 20,451 84,068 80,888 General and administrative 10,899 9,995
46,497 39,696 Amortization of intangible assets,
including internal use software
4,271 4,345 15,408 17,028 Loss on reacquired franchisee rights
- - 4,092 - Total costs and expenses
97,404 101,211 374,057 394,554 Income
from operations 15,818 24,479 49,880 85,952 Interest income, net 43
553 176 1,167 Other expense, net (139 ) (307 )
(784 ) (508 ) Income before income taxes 15,722 24,725
49,272 86,611 Income tax expense 6,681 18,461
20,712 39,951 Net and comprehensive income $ 9,041 $ 6,264 $
28,560 $ 46,660 Dividends declared per share of common stock $ 0.07
$ 0.07 $ 0.28 $ 0.28 Net income per share attributable to holders
of
common stock
Basic $ 0.15 $ 0.10 $ 0.47 $ 0.74 Diluted $ 0.14 $ 0.10 $ 0.46 $
0.72 Shares used to compute net income per share
attributable to holders of common
stock
Basic 62,024 63,173 60,962 62,952 Diluted 63,437 64,437 62,103
64,605
FINANCIAL ENGINES, INC. AND
SUBSIDIARIES
Unaudited Consolidated Statements of
Cash Flows
2015 2016 2017 (In thousands)
Cash flows from operating activities: Net income $ 31,617 $ 28,560
$ 46,660 Adjustments to reconcile net income to net cash provided
by operating
activities:
Depreciation and amortization 6,092 8,946 8,505 Amortization of
intangible assets 4,566 14,964 16,462 Stock-based compensation
26,028 33,689 36,425 Amortization of deferred sales commissions
1,717 1,560 1,052 Amortization and impairment of direct response
advertising 5,359 4,702 3,592 Amortization of discount on
short-term investments (359 ) (5 ) - Provision for doubtful
accounts 938 746 678 Write off of notes receivable - 290 - Deferred
tax assets (9,196 ) (1,116 ) 36,731 Loss on fixed asset disposal 14
281 405 Loss (gain) on sale of short-term investments (9 ) 18 -
Changes in operating assets and liabilities: Accounts receivable
(6,225 ) (15,250 ) (13,539 ) Prepaid expenses (723 ) (1,369 )
(1,872 ) Direct response advertising (4,338 ) (3,388 ) (2,429 )
Other assets 1,773 (1,455 ) (2,290 ) Accounts payable 30,856 18,827
(7,958 ) Accrued compensation 6,998 4,369 852 Deferred revenue 391
(1,768 ) (557 ) Deferred rent 814 1,130 (833 ) Other liabilities
- (526 ) (20 ) Net cash provided by operating
activities $ 96,313 $ 93,205 $ 121,864 Cash flows from investing
activities: Purchase of property and equipment (6,094 ) (7,037 )
(8,657 ) Capitalization of internal use software (5,049 ) (6,904 )
(8,328 ) Purchases of short-term investments (159,555 ) - -
Maturities of short-term investments 180,000 - - Sale of short-term
investments 119,872 39,923 - Cash paid for acquisitions, net of
cash acquired - (274,569 ) - Net cash provided
(used in) by investing activities $ 129,174 $ (248,587 ) $ (16,985
) Cash flows from financing activities: Payments on capital lease
obligations (112 ) (106 ) (136 ) Payments related to business
combinations - (2,189 ) (2,845 ) Net share settlements for
stock-based awards minimum tax withholdings (3,514 ) (3,336 )
(5,638 ) Repurchase of common stock (38,455 ) - (10,800 ) Proceeds
from issuance of common stock 9,201 6,625 22,424 Cash dividend
payments (13,955 ) (16,582 ) (17,587 ) Net
cash used in financing activities $ (46,835 ) $ (15,588 ) $ (14,582
) Net increase (decrease) in cash and cash equivalents 178,652
(170,970 ) 90,297 Cash and cash equivalents, beginning of year
126,564 305,216 134,246 Cash and cash
equivalents, end of year $ 305,216 $ 134,246 $ 224,543 Supplemental
cash flows information: Income taxes paid, net of refunds $ 1,584 $
3,336 $ 7,832 Interest paid $ 13 $ 13 $ 65 Non-cash operating,
investing and financing activities: Issuance of common stock
related to acquisition $ - $ 267,018 $ - Unpaid purchases of
property and equipment $ 574 $ 173 $ 1,365 Purchase of property and
equipment with non-cash tenant improvement
allowance
$ - $ 1,952 $ 187 Purchase of property and equipment under capital
lease $ 216 $ - $ 243 Capitalized stock-based compensation for
internal use software $ 515 $ 766 $ 994 Capitalized stock-based
compensation for direct response advertising $ 97 $ 79 $ 56
Dividends declared but not yet paid $ 3,615 $ 4,350 $ 4,411
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 Year Ended
December 31, December 31,
Non-GAAP adjusted
EBITDA
2016 2017 2016 2017
(In thousands, unaudited) GAAP net income $ 9,041 $ 6,264 $
28,560 $ 46,660 Interest income, net (43 ) (553 ) (176 ) (1,167 )
Income tax expense 6,681 18,461 20,712 39,951 Depreciation and
amortization 2,276 2,193 8,946 8,505 Amortization of intangible
assets (excluding
internal use software)
2,810 2,795 10,111 11,183 Amortization of internal use software
1,335 1,394 4,853 5,279 Amortization and impairment of direct
response advertising
1,155 764 4,702 3,592 Amortization of deferred sales commissions
316 247 1,560 1,052 Non-GAAP EBITDA
23,571 31,565 79,268 115,055
Stock-based compensation 9,382 9,808 33,689 36,425
Acquisition-related expenses 3,281 770 17,239 5,647 Restructuring
expenses - 3,635 - 3,635 Loss on reacquired franchisee rights
- - 4,092 - Non-GAAP adjusted EBITDA $
36,234 $ 45,778 $ 134,288 $ 160,762
The table below sets forth a reconciliation of net income to
non-GAAP adjusted net income based on our historical results:
Three Months Ended Year Ended
December 31, December 31,
Non-GAAP adjusted
net income
2016 2017 2016 2017
(In thousands, unaudited) GAAP net income $ 9,041 $ 6,264 $
28,560 $ 46,660 Stock-based compensation expense 9,382 9,808 33,689
36,425 Amortization of intangible assets
(excluding internal use software)
2,810 2,795 10,111 11,183 Acquisition-related expenses 3,281 770
17,239 5,647 Restructuring expenses - 3,635 - 3,635 Loss on
reacquired franchisee rights - - 4,092 - Income tax expense from
non-
deductible transaction expenses(1)
- - 1,162 - 2017 Tax Act impacts - 7,641 - 7,641 Release of
valuation allowance - (162 ) - (162 ) Tax effect of adjustments(2)
(5,911 ) (6,497 ) (24,880 ) (21,732 )
Non-GAAP adjusted net income $ 18,603 $ 24,254 $ 69,973 $ 89,297
(1) This amount represents estimated
additional income tax expense incurred in the period for
non-deductible transaction expenses related to acquisition
activity. (2) An estimated statutory tax rate of 38.2% has been
applied to eliminate the tax-effect for all periods presented.
The table below sets forth a reconciliation of GAAP diluted
earnings per share to non-GAAP adjusted earnings per share based on
our historical results:
Three Months Ended Year Ended
December 31, December 31,
Non-GAAP adjusted
earnings per share
2016 2017 2016 2017
(In thousands, except per share data, unaudited) GAAP
diluted earnings per share $ 0.14 $ 0.10 $ 0.46 $ 0.72 Stock-based
compensation expense 0.15 0.15 0.54 0.56 Amortization of intangible
assets
(excluding internal use software)
0.04 0.04 0.16 0.17 Acquisition-related expenses 0.05 0.01 0.28
0.09 Restructuring expenses - 0.06 - 0.06 Loss on reacquired
franchisee rights - - 0.07 - Income tax expense from non-deductible
transaction expenses(1)
- - 0.02 - 2017 Tax Act impacts - 0.12 - 0.12 Release of valuation
allowance - - - - Tax effect of adjustments(2) (0.09 )
(0.10 ) (0.40 ) (0.34 ) Non-GAAP adjusted
earnings per share $ 0.29 $ 0.38 $ 1.13 $ 1.38 Shares of
common stock outstanding 62,024 63,173 60,962 62,952 Dilutive stock
options, RSUs and PSUs 1,413 1,264 1,141
1,653 Non-GAAP adjusted common shares
outstanding
63,437 64,437 62,103 64,605
(1) This amount represents estimated
additional income tax expense incurred in the period for
non-deductible transaction expenses related to acquisition
activity. (2) An estimated statutory tax rate of 38.2% has been
applied to eliminate the tax-effect for all periods presented.
The table below sets forth a reconciliation of our 2018 outlook
for GAAP net income to our 2018 outlook for non-GAAP adjusted
EBITDA:
Outlook for Fiscal 2018
as of February 16, 2018
Non-GAAP adjusted EBITDA outlook Low
High (In millions, unaudited) GAAP net income outlook
$ 75 $ 85 Estimated interest income, net(1) (2 ) (2 ) Estimated
income tax expense(1) 25 29 Estimated depreciation and
amortization(1) 9 9 Estimated amortization of intangible assets
(excluding internal use software)(1) 11 11 Estimated amortization
of internal use software(1) 7 7 Estimated amortization of deferred
sales commissions(1) 1 1 Non-GAAP EBITDA 126
140 Estimated stock-based compensation(1) 40
40 Non-GAAP adjusted EBITDA outlook $ 166 $ 180
(1) The estimated items are provided solely for the
purpose of reconciling our 2018 outlook for GAAP net income to our
2018 outlook for non-GAAP adjusted EBITDA and are not intended and
should not be construed as part of the Company’s outlook for 2018,
which outlook is limited to revenue, net income and non-GAAP
adjusted EBITDA. These items are subject to a number of variables
which make them inherently difficult to estimate accurately. In
addition, actual amounts for such items have historically varied
and may continue to vary significantly from period to period. Any
variances in these estimates may in turn have a significant impact
on our 2018 outlook and future GAAP results.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180222006162/en/
Financial EnginesAmy Conley,
617-556-2305aconley@financialengines.comorDon Duffy,
408-498-6040ir@financialengines.com
Financial Engines, Inc. (delisted) (NASDAQ:FNGN)
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