Business Wire | Nov 5, 2020 04:10PM EST

RealPage Reports Third Quarter 2020 Financial Results

Nov. 05, 2020

RICHARDSON, Texas--(BUSINESS WIRE)--Nov. 05, 2020--RealPage, Inc. (NASDAQ: RP), a leading global provider of software and data analytics to the real estate industry, today announced financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial Highlights

* GAAP total revenue of $298.1 million, an increase of 17% year-over-year; * Net income of $16.3 million, or $0.16 in net income per diluted share, a year-over-year increase of 40% and 33%, respectively; * Adjusted EBITDA of $86.2 million, an increase of 19% year-over-year; and, * Non-GAAP net income of $52.2 million, or $0.52 in non-GAAP net income per diluted share, a year-over-year increase of 22% and 16%, respectively.

Comments on the News

"In the third quarter, we continued to exceed expectations and delivered the strongest quarter in RealPage history. We believe our continued performance underscores the strength of our model and the importance of the solutions we are providing to customers. We achieved this performance despite significant uncertainty in many sectors of the economy - further evidence that technology transformation remains a top priority for owners and operators throughout the country," said Steve Winn, Chairman and CEO of RealPage.

"During the third quarter, we sharpened our focus on disciplined investment while proactively helping our customers respond to a historic transition to a work-from-home model. More than ever, RealPage customers recognize the need for digital transformation to meet these challenges. As a result, we are raising the mid-point of our full-year revenue outlook by $11 million and our Adjusted EBITDA margin guidance by 100 basis points," said Brian Shelton, Chief Financial Officer and Treasurer of RealPage. "As we prepare for 2021, we will continue to focus on top-line growth and operating discipline, both of which will position us for sustained success."

2020 Financial Outlook

RealPage management expects to achieve the following results during the fourth quarter ending December 31, 2020:

* GAAP total revenue is expected to be in the range of $292 million to $296 million; * GAAP net income per diluted share is expected to be in the range of $0.10 to $0.14; * Non-GAAP total revenue is expected to be in the range of $292 million to $296 million; * Adjusted EBITDA is expected to be in the range of $78 million to $82 million; * Non-GAAP net income per diluted share is expected to be in the range of $0.46 to $0.50; * Non-GAAP diluted weighted average shares outstanding are expected to be approximately 101.0 million.

RealPage management expects to achieve the following results during the calendar year ending December 31, 2020:

* GAAP total revenue is expected to be in the range of $1,152 million to $1,156 million; * GAAP net income per diluted share is expected to be in the range of $0.44 to $0.48; * Non-GAAP total revenue is expected to be in the range of $1,154 million to $1,158 million; * Adjusted EBITDA is expected to be in the range of $316 million to $320 million; * Non-GAAP net income per diluted share is expected to be in the range of $1.90 to $1.94; * Non-GAAP diluted weighted average shares outstanding are expected to be approximately 98.2 million.

Conference Call Information

The company will host a conference call at 5:00 p.m. ET today to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast at https://www.webcaster4.com/Webcast/Page/2558/38337. In addition, a live dial-in will be available domestically at 844-369-8770 and internationally at 862-298-0840. A replay will be available at 877-481-4010 or 919-882-2331, using passcode 38337, and on the RealPage investor relations website.

About RealPage

RealPage provides a technology platform that enables real estate owners and managers to change how people experience and use rental space. Clients use the platform to gain transparency in asset performance, leverage data insights and monetize space to create incremental yields. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves over 19 million units worldwide from offices in North America, Europe and Asia. For more information about RealPage, please visit https://www.RealPage.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking" statements relating to RealPage, Inc.'s strategy, goals, future focus areas, and expected, possible or assumed future results, including its financial outlook for the fourth quarter and calendar year ending December 31, 2020, the strength of our model and the importance of the solutions we are providing to customers, significant uncertainty in many sectors of the economy, that technology transformation remains a top priority for owners and operators throughout the country, the historic transition to a work-from-home model, that customers recognize the need for digital transformation to meet these challenges, and that our focus on top-line growth and operating discipline position us for sustained success. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as "expects," "believes," "plans," or similar expressions and the negatives of those terms. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements, expressed or implied by the forward-looking statements, including the uncertainty associated with the potential impacts of the COVID-19 pandemic on our business, financial condition, and results of operations. We may be required to revise the results contained herein upon finalizing our review of our quarterly and full-year results and completion of the annual audit, which could cause or contribute to such differences. Additional factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the possibility that general economic conditions, including leasing velocity or other uncertainty, and conditions and uncertainty caused by the COVID-19 pandemic, could cause information technology spending, particularly in the rental housing industry, to be reduced or purchasing decisions to be delayed; (b) an increase in insurance claims; (c) an increase in client cancellations; (d) the inability to increase sales to existing clients and to attract new clients; (e) RealPage's failure to integrate recent or future acquired businesses successfully or to achieve expected synergies, including recently completed acquisitions of Chirp, Stratis, Modern Message, Buildium, Investor Management Services, Simple Bills, Hipercept, and Lease Term Solutions; (f) the timing and success of new product introductions by RealPage or its competitors; (g) changes in RealPage's pricing policies or those of its competitors; (h) developments with respect to legal or regulatory proceedings; (i) the inability to achieve revenue growth or to enable margin expansion; (j) changes in RealPage's estimates with respect to its long-term corporate tax rate or any other impact from the Tax Cuts and Jobs Act; and (k) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by RealPage, including its Annual Report on Form 10-K previously filed with the SEC on March 2, 2020 and its Quarterly Report on Form 10-Q previously filed with the SEC on August 4, 2020. All information provided in this release is as of the date hereof and RealPage undertakes no duty to update this information except as required by law.

Explanation of Non-GAAP Financial Measures

The company reports its financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, the company believes that, in order to properly understand its short-term and long-term financial, operational and strategic trends, it may be helpful for investors to exclude certain non-cash or non-recurring items when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in both frequency and impact on continuing operations. The company also uses results of operations excluding such items to evaluate the operating performance of RealPage and compare it against prior periods, make operating decisions, determine executive compensation, and serve as a basis for long-term strategic planning. These non-GAAP financial measures provide the company with additional means to understand and evaluate the operating results and trends in its ongoing business by eliminating certain non-cash expenses and other items that RealPage believes might otherwise make comparisons of its ongoing business with prior periods more difficult, obscure trends in ongoing operations, reduce management's ability to make useful forecasts, or obscure the ability to evaluate the effectiveness of certain business strategies and management incentive structures. In addition, the company also believes that investors and financial analysts find this information to be helpful in analyzing the company's financial and operational performance and comparing this performance to the company's peers and competitors.

The company defines "Non-GAAP Total Revenue" as total revenue plus acquisition-related deferred revenue. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules in order to appropriately measure the underlying performance of its business operations in the period of activity and associated expense. Further, the company believes this measure is useful to investors as a way to evaluate the company's ongoing performance because it provides a more accurate depiction of revenue arising from our strategic acquisitions.

The company defines "Adjusted Gross Profit" as gross profit, plus (1) acquisition-related deferred revenue, (2) depreciation, (3) amortization of product technologies, (4) organizational realignment costs and (5) stock-based expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's ability to generate income from ongoing business operations.

The company defines "Adjusted EBITDA" as net income, plus (1) acquisition-related deferred revenue, (2) depreciation, asset impairment, and loss on disposal of assets, (3) amortization of product technologies and intangible assets, (4) change in fair value of equity investment, (5) acquisition-related expense, (6) organizational realignment costs, (7) regulatory and legal matters, (8) stock-based expense, (9) interest expense, net, and (10) income tax expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's ability to generate income from ongoing business operations.

The company defines "Non-GAAP Product Development Expense" as product development expense, excluding organizational realignment costs and stock-based expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's ongoing expenditures related to product innovation.

The company defines "Non-GAAP Sales and Marketing Expense" as sales and marketing expense, excluding organizational realignment costs and stock-based expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's ongoing expenditures related to its sales and marketing strategies.

The company defines "Non-GAAP General and Administrative Expense" as general and administrative expense, excluding (1) asset impairment and (gain) loss on disposal of assets, (2) acquisition-related expense, (3) organizational realignment costs, (4) regulatory and legal matters, and (5) stock-based expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's underlying expense structure to support corporate activities and processes.

The company defines "Non-GAAP Operating Expense" as operating expense, excluding (1) asset impairment and (gain) loss on disposal of assets, (2) amortization of intangible assets, (3) acquisition-related expense, (4) organizational realignment costs, (5) regulatory and legal matters, and (6) stock-based expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's underlying expense structure to support ongoing operations.

The company defines "Non-GAAP Operating Income" as operating income, plus (1) acquisition-related deferred revenue, (2) asset impairment and (gain) loss on disposal of assets, (3) amortization of product technologies and intangible assets, (4) acquisition-related expense, (5) organizational realignment costs, (6) regulatory and legal matters, and (7) stock-based expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's ability to generate income from ongoing business operations.

The company defines "Non-GAAP Net Income" as net income, plus (1) income tax expense, (2) acquisition-related deferred revenue, (3) asset impairment and (gain) loss on disposal of assets, (4) amortization of product technologies and intangible assets, (5) change in fair value of equity investment, (6) acquisition-related expense, (7) organizational realignment costs, (8) regulatory and legal matters, (9) amortization of convertible notes' discount, and (10) stock-based expense, less (11) provision for income tax expense based on an assumed rate in order to approximate the company's long-term effective corporate tax rate.

The company defines "Non-GAAP Net Income per Diluted Share" as Non-GAAP Net Income divided by Non-GAAP Diluted Weighted Average Shares Outstanding. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company's financial and operational performance, comparing this performance to the company's peers and competitors, and understanding the company's ability to generate income from ongoing business operations.

The company defines "Non-GAAP Diluted Weighted Average Shares Outstanding" as diluted weighted average shares outstanding excluding the impact of shares that are issuable upon conversions of our convertible notes. It is the current intent of the company to settle conversions of the convertible notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of our common stock. We exclude these shares that are issuable upon conversions of our convertible notes because we expect that the dilution from such shares will be offset by the convertible note hedge transactions and capped call transactions entered into in May 2017 and May 2020, respectively, in connection with the issuance of the convertible notes.

The company defines "Non-GAAP On Demand Revenue" as total on demand revenue plus acquisition-related deferred revenue. The company believes it is useful to include deferred revenue written down for GAAP purposes under purchase accounting rules in order to appropriately measure the underlying performance of the company's business operations in the period of activity and associated expense. Further, the company believes that investors and financial analysts find this measure to be useful in evaluating the company's ongoing performance because it provides a more accurate depiction of on demand revenue arising from our strategic acquisitions.

The company defines "Ending On Demand Units" as the number of rental housing units managed by our clients with one or more of our on demand software solutions at the end of the period. We use ending on demand units to measure the success of our strategy of increasing the number of rental housing units managed with our on demand software solutions. Property unit counts are provided to us by our customers as new sales orders are processed. Property unit counts may be adjusted periodically as information related to our clients' properties is updated or supplemented, which could result in adjustments to the number of units previously reported.

The company defines "Average On Demand Units" as the average of the beginning and ending on demand units for each quarter in the period presented. The company's management monitors this metric to measure its success in increasing the number of on demand software solutions utilized by our clients to manage their rental housing units, our overall revenue, and profitability.

The company defines "ACV," or Annual Client Value, as management's estimate of the annual value of the company's on demand revenue contracts at a point in time. The company's management monitors this metric to measure its success in increasing the number of on demand units, and the amount of software solutions utilized by its clients to manage their rental housing units.

The company defines "RPU," or Revenue Per Unit, as ACV divided by ending on demand units. The company monitors this metric to measure its success in increasing the penetration of on demand software solutions utilized by its clients to manage their rental housing units.

The company excludes or adjusts each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to each excluded item:

* Non-GAAP tax rate - The GAAP tax rate includes certain tax items which may include, but are not limited to: income tax expenses or benefits that are not related to ongoing business operations in the current year; unusual or infrequently occurring items; benefits from stock compensation deductions for tax purposes that exceed the stock compensation expense recognized for GAAP; tax adjustments associated with fluctuations in foreign currency re-measurement; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and liabilities; and changes in tax law. The non-GAAP tax rate excludes the tax effect of these items. We believe excluding these items assists investors and analysts in understanding the tax provision and the effective tax rate related to non-GAAP operations. In 2019, the company used a non-GAAP tax rate of approximately 26% to approximate the company's long-term effective corporate tax rate. During 2019, the company availed itself of research and development tax credits for both federal and state and other state tax credits that will impact its long-term effective tax rate in future periods. For 2020 guidance purposes, the company uses a non-GAAP tax rate of 24% to more align with the expected impact of the credits and other anticipated impacts of US tax reform as rules are clarified by the US Treasury and foreign jurisdictional changes that impact the company's tax portfolio globally. This non-GAAP tax rate will be reviewed annually to determine whether it remains appropriate in consideration of the company's operating environment, changes in tax legislation, jurisdictional mix of earnings, and other factors deemed appropriate and necessary.

* Acquisition-related deferred revenue - This item is included to reflect deferred revenue written down for GAAP purposes under purchase accounting in order to appropriately measure the underlying performance of the company's business operations in the period of activity and associated expense. * Asset impairment and (gain) loss on disposal of assets - This item comprises gains and losses on the disposal and impairment of long-lived assets, and impairment of intangible assets, which are not reflective of the company's ongoing operations. We believe exclusion of this item facilitates a more accurate comparison of the company's results of operations between periods. * Depreciation of long-lived assets - Long-lived assets are depreciated over their estimated useful lives in a manner reflecting the pattern in which the economic benefit is consumed. Management is limited in its ability to change or influence these charges after the asset has been acquired and placed in service. We do not believe that depreciation expense accurately reflects the performance of our ongoing operations for the period in which the charges are incurred, and is therefore not considered by management in making operating decisions. * Amortization of product technologies and intangible assets - Intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by the company after initial capitalization. Accordingly, this item is not considered by the company in making operating decisions. The company does not believe such charges accurately reflect the performance of its ongoing operations for the period in which such charges are incurred. * Change in fair value of equity investment - This item represents changes in fair value of our equity investment based on observable price changes in orderly transactions for an identical or similar investment of the same issuer. We believe exclusion of this item facilitates a more accurate comparison of our results of operations between periods as this item is not reflective of our ongoing operations. * Acquisition-related expense - This item consists of direct costs incurred in our business acquisition transactions and expenses related to integration activities, and the impact of changes in the fair value of acquisition-related contingent consideration obligations. Examples of these direct costs include transaction fees, due diligence costs, acquisition retention bonuses and severance, and third-party consultants to assist with integration. We believe exclusion of this item facilitates a more accurate comparison of the results of the company's ongoing operations across periods and eliminates volatility related to changes in the fair value of acquisition-related contingent consideration obligations. * Organizational realignment - This item consists of direct costs associated with the alignment of our business strategies. In connection with these actions, we recognize costs related to termination benefits, exit costs associated with closure of facilities, certain asset impairments, cancellation of certain contracts, and other professional and consulting fees associated with these initiatives. We believe exclusion of this item facilitates a more accurate comparison of our ongoing results of operations between periods. * Regulatory and legal matters - This item is comprised of certain regulatory and similar costs and certain legal settlement costs, such as costs related to the company's Hart-Scott-Rodino Antitrust Improvements Act review process incurred in connection with our acquisitions or the settlement of certain legal matters. These costs are excluded as they are irregular in timing and scope, and may not be indicative of our past and future performance. We believe exclusion of this item facilitates a more accurate comparison of the company's results of operations between periods. * Amortization of convertible notes' discount - This item consists of non-cash interest expense related to the amortization of the discount recognized on the convertible notes issued in May 2017 and May 2020. Management excludes this item, as it is not indicative of the company's ongoing operating performance. * Stock-based expense - This item is excluded because these are non-cash expenditures that the company does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expenditure is partially outside of its control because it is based on factors such as stock price, volatility, and interest rates, which may be unrelated to the company's performance during the period in which the expenses are incurred.

Condensed Consolidated Balance Sheets(in thousands, except per share and share amounts)(unaudited) September December 30, 31, 2020 2019

AssetsCurrent assets:Cash and cash equivalents $ 612,118 $ 197,154

Restricted cash 231,351 243,323

Accounts receivable, less allowances of $12,186 and$10,271 at September 30, 130,118 143,127

2020 and December 31, 2019, respectively

Prepaid expenses 34,802 24,539

Other current assets 32,187 27,387

Total current assets 1,040,576 635,530

Property, equipment, and software, net 176,994 163,282

Right-of-use assets 113,557 121,941

Goodwill 1,725,872 1,611,749

Intangible assets, net 350,400 372,996

Deferred tax assets, net 21,925 33,812

Other assets 27,550 30,507

$ $Total assets 3,456,874 2,969,817

Liabilities and stockholders' equityCurrent liabilities:Accounts payable $ 40,935 $ 40,092

Accrued expenses and other current liabilities 106,659 89,038

Current portion of deferred revenue 134,003 134,148

Current portion of term loans 30,000 18,750

Convertible notes, net 314,935 -

Customer deposits held in restricted accounts 232,554 243,316

Total current liabilities 859,086 525,344

Deferred revenue 4,724 4,793

Revolving facility - 230,000

Term loans, net 553,201 575,313

Convertible notes, net 285,462 305,188

Lease liabilities, net of current portion 124,452 133,313

Other long-term liabilities 41,835 22,940

Total liabilities 1,868,760 1,796,891

Stockholders' equity:Common stock, $0.001 par value: 250,000,000 shares authorized, 102,260,247

and 96,100,296 shares issued and 101,923,802 and 94,744,157 shares

outstanding at September 30, 2020 and December 31, 2019, 102 96respectively

Additional paid-in capital 1,578,661 1,222,356

Treasury stock, at cost: 336,445 and 1,356,139 shares atSeptember 30, 2020 (10,468) (39,483)

and December 31, 2019, respectively

Retained earnings (deficit) 25,036 (7,695)

Accumulated other comprehensive loss (5,217) (2,348)

Total stockholders' equity 1,588,114 1,172,926

$ $Total liabilities and stockholders' equity 3,456,874 2,969,817

Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(unaudited) Three Months Nine Months Ended Ended September 30, September 30, 2020 2019 2020 2019

Revenue: $ $ $ $On demand 290,239 245,637 837,269 707,341

Professional and other 7,910 9,565 23,160 26,028

Total revenue 298,149 255,202 860,429 733,369

Cost of revenue^(1) 111,497 98,783 331,120 284,685

Amortization of product technologies 14,236 10,315 42,539 29,729

Gross profit 172,416 146,104 486,770 418,955

Operating expenses:Product development^(1) 34,066 27,866 97,047 85,914

Sales and marketing^(1) 55,563 51,906 159,644 145,849

General and administrative^(1) 37,909 31,249 120,836 87,702

Amortization of intangible assets 11,206 10,444 33,872 30,682

Total operating expenses 138,744 121,465 411,399 350,147

Operating income 33,672 24,639 75,371 68,808

Interest expense and other, net (13,305) (8,764) (38,732) (22,773)

Income before income taxes 20,367 15,875 36,639 46,035

Income tax expense 4,026 4,171 3,392 7,996

$ 16,341 $ $ 33,247 $ 38,039Net income 11,704

Net income per share attributable tocommon stockholders:Basic $ 0.16 $ 0.13 $ 0.35 $ 0.41

Diluted $ 0.16 $ 0.12 $ 0.33 $ 0.39

Weighted average common sharesoutstanding:Basic 99,334 92,239 95,926 91,884

Diluted 103,385 97,114 99,898 96,392

^(1) Includes stock-based expense asfollows: Three Months Nine Months Ended Ended September 30, September 30, 2020 2019 2020 2019

Cost of revenue $ 1,754 $ 1,425 $ 6,021 $ 4,203

Product development 2,893 1,948 6,459 6,444

Sales and marketing 5,658 6,358 13,842 18,091

General and administrative 5,512 6,767 18,027 18,538

$ 15,817 $ $ 44,349 $ 47,276 16,498

Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Cash flows from operating activities:Net income $ 16,341 $ 11,704 $ 33,247 $ 38,039

Adjustments to reconcile net income tonet cash provided by operating activities:

Depreciation and amortization 34,647 29,266 102,553 86,106

Amortization of debt discount and 5,910 3,676 14,320 10,189issuance costsAmortization of right-of-use assets 3,286 2,759 10,269 8,684

Deferred taxes 4,148 3,795 2,915 8,031

Stock-based expense 15,817 16,498 44,349 47,276

Loss on disposal and impairment of - (10) 12 259other long-lived assetsChange in fair value of equity - - - (2,600)investmentAcquisition-related consideration (679) 394 (786) 1,093

Change in customer deposits (30,579) 45,512 (14,211) (1,034)

Other changes in assets andliabilities, net of assets acquiredand 1,541 (826) 15,393 (9,898)

liabilities assumed in businesscombinations

Net cash provided by operating 50,432 112,768 208,061 186,145activities Cash flows from investing activities:Purchases of property, equipment, and (18,565) (15,045) (48,311) (38,511)softwareAcquisition of businesses, net of cash (70,196) (32,531) (129,696) (50,059)and restricted cash acquiredPurchase of other investment - - - (1,750)

Net cash used in investing activities (88,761) (47,576) (178,007) (90,320)

Cash flows from financing activities:Payments on and proceeds from debt, (4,036) (235) 96,265 (8,302)netPurchase of capped call instruments - - (39,365) -

Payments on finance lease obligations (831) (752) (2,464) (2,879)

Payments of acquisition-related (9,868) (6,096) (12,260) (26,343)considerationProceeds from public offering, net ofunderwriters' discount and (276) - 334,126 -

offering costs

Proceeds from exercise of stock 301 1,385 8,023 4,454optionsPurchase of treasury stock related to (4,273) (5,663) (10,516) (16,771)stock-based compensationOther financing activities, net (441) - (815) -

Net cash (used in) provided by (19,424) (11,361) 372,994 (49,841)financing activitiesNet (decrease) increase in cash, cashequivalents and restricted (57,753) 53,831 403,048 45,984

cash

Effect of exchange rate on cash 269 258 (56) 277

Cash, cash equivalents and restrictedcash:Beginning of period 900,953 374,930 440,477 382,758

$ $ $ 843,469 $End of period 843,469 429,019 429,019

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TOCOMPARABLE GAAP MEASURES(unaudited, in thousands, except per share amounts) The following is a reconciliation of the non-GAAP financial measures used byRealPage to describe its financial results determined in accordance withaccounting principles generally accepted in the United States of America("GAAP"). An explanation of these measures is also included under the heading"Explanation of Non-GAAP Financial Measures."

While the company believes that these non-GAAP financial measures provideuseful supplemental information to investors regarding the underlyingperformance of our business operations, investors are reminded to considerthese non-GAAP measures in addition to, and not as a substitute for, financialperformance measures prepared in accordance with GAAP. In addition, it shouldbe noted that these non-GAAP financial measures may be different from non-GAAPmeasures used by other companies, and the company may utilize other measures toillustrate performance in the future. Non-GAAP measures have limitations inthat they do not reflect all of the amounts associated with our results ofoperations as determined in accordance with GAAP. Non-GAAP TotalRevenueSet forth below is a presentation of the company's "Non-GAAP Total Revenue."Please reference the "Explanation of Non-GAAP Financial Measures" section. Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Revenue (GAAP) $ 298,149 $ 255,202 $ 860,429 $ 733,369

Acquisition-related 388 38 1,213 419deferred revenueNon-GAAP Total $ 298,537 $ 255,240 $ 861,642 $ 733,788Revenue Adjusted GrossProfitSet forth below is a presentation of the company's "Adjusted Gross Profit."Please reference the "Explanation of Non-GAAP Financial Measures" section. Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Gross profit (GAAP) $ 172,416 $ 146,104 $ 486,770 $ 418,955

Acquisition-related 388 38 1,213 419deferred revenueDepreciation 4,003 4,007 11,613 11,695

Amortization of 14,236 10,315 42,539 29,729producttechnologiesOrganizational - 125 453 125realignmentStock-based expense 1,754 1,425 6,021 4,203

Adjusted Gross $ 192,797 162,014 548,609 465,126Profit Adjusted EBITDASet forth below is a presentation of the company's "Adjusted EBITDA." Pleasereference the "Explanation of Non-GAAP Financial Measures" section. Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Net income (GAAP) $ 16,341 $ 11,704 $ 33,247 $ 38,039

Acquisition-related 388 38 1,213 419deferred revenueDepreciation, assetimpairment, and 9,205 8,498 26,154 25,955loss on disposal ofassetsAmortization ofproduct 25,442 20,759 76,411 60,411technologies andintangible assetsChange in fair - - - (2,600)value of equityinvestmentAcquisition-related 1,682 755 8,543 1,160expenseOrganizational - 684 2,431 684realignmentRegulatory and - 215 2,509 567legal mattersStock-based expense 15,817 16,498 44,349 47,276

Interest expense, 13,267 8,791 39,301 25,613netIncome tax expense 4,026 4,171 3,392 7,996

Adjusted EBITDA $ 86,168 $ 72,113 $ 237,550 $ 205,520

Non-GAAP Product Development ExpenseSet forth below is a presentation of the company's "Non-GAAP ProductDevelopment Expense." Please reference the "Explanation of Non-GAAP FinancialMeasures" section. Three Months Nine Months Ended Ended September 30, September 30, 2020 2019 2020 2019

$ $ $ $Product development expense (GAAP) 34,066 27,866 97,047 85,914

Less: Organizational realignment - 316 698 316

Stock-based expense 2,893 1,948 6,459 6,444

$ $ $ $Non-GAAP Product Development Expense 31,173 25,602 89,890 79,154

Non-GAAP Sales and Marketing ExpenseSet forth below is a presentation of the company's "Non-GAAP Sales andMarketing Expense." Please reference the "Explanation of Non-GAAP FinancialMeasures" section. Three Months Nine Months Ended Ended September 30, September 30, 2020 2019 2020 2019

$ $ $ $Sales and marketing expense (GAAP) 55,563 51,906 159,644 145,849

Less: Organizational realignment - 108 889 108

Stock-based expense 5,658 6,358 13,842 18,091

$ $ $ $Non-GAAP Sales and Marketing Expense 49,905 45,440 144,913 127,650

Non-GAAP General and AdministrativeExpenseSet forth below is a presentation of the company's "Non-GAAP General andAdministrative Expense." Please reference the "Explanation of Non-GAAPFinancial Measures" section. Three Months Nine Months Ended Ended September 30, September 30, 2020 2019 2020 2019

$ $ $ $General and administrative expense (GAAP) 37,909 31,249 120,836 87,702

Less: Asset impairment and (gain) loss on - (10) 12 259 disposal of assets Acquisition-related expense 1,682 755 8,543 1,160

Organizational realignment - 135 391 135

Regulatory and legal matters - 215 2,509 567

Stock-based expense 5,512 6,767 18,027 18,538

Non-GAAP General and Administrative $ $ $ $Expense 30,715 23,387 91,354 67,043

Non-GAAP Operating ExpenseSet forth below is a presentation of the company's "Non-GAAP OperatingExpense." Please reference the "Explanation of Non-GAAP Financial Measures"section. Three Months Nine Months Ended Ended September 30, September 30, 2020 2019 2020 2019

$ $ $ $Operating expense (GAAP) 138,744 121,465 411,399 350,147

Less: Asset impairment and (gain) loss on - (10) 12 259 disposal of assets Amortization of intangible assets 11,206 10,444 33,872 30,682

Acquisition-related expense 1,682 755 8,543 1,160

Organizational realignment - 559 1,978 559

Regulatory and legal matters - 215 2,509 567

Stock-based expense 14,063 15,073 38,328 43,073

$ $ $ $Non-GAAP Operating Expense 111,793 94,429 326,157 273,847

Non-GAAP OperatingIncomeSet forth below is a presentation of the company's "Non-GAAP OperatingIncome." Please reference the "Explanation of Non-GAAP Financial Measures"section. Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Operating income (GAAP) $ 33,672 $ 24,639 $ 75,371 $ 68,808

Acquisition-related 388 38 1,213 419deferred revenueAsset impairment and - (10) 12 259(gain) loss on disposalof assetsAmortization of product 25,442 20,759 76,411 60,411technologies andintangible assetsAcquisition-related 1,682 755 8,543 1,160expenseOrganizational - 684 2,431 684realignmentRegulatory and legal - 215 2,509 567mattersStock-based expense 15,817 16,498 44,349 47,276

Non-GAAP Operating $ 77,001 $ 63,578 $ 210,839 $ 179,584Income Non-GAAP Net IncomeSet forth below is a presentation of the company's "Non-GAAP Net Income" and"Non-GAAP Net Income per Diluted Share." Please reference the "Explanation ofNon-GAAP Financial Measures" section. Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Net income (GAAP) $ 16,341 $ 11,704 $ 33,247 $ 38,039

Income tax expense 4,026 4,171 3,392 7,996

Income before income 20,367 15,875 36,639 46,035taxes Acquisition-related 388 38 1,213 419deferred revenueAsset impairment and - (10) 12 259(gain) loss on disposalof assetsAmortization of product 25,442 20,759 76,411 60,411technologies andintangible assetsChange in fair value of - - - (2,600)equity investmentAcquisition-related 1,682 755 8,543 1,160expenseOrganizational - 684 2,431 684realignmentRegulatory and legal - 215 2,509 567mattersAmortization of 4,969 2,756 11,990 8,149convertible notes'discountStock-based expense 15,817 16,498 44,349 47,276

Non-GAAP income before 68,665 57,570 184,097 162,360income taxesAssumed rate for income 24.0% 26.0% 24.0% 26.0%tax expense (1)Assumed provision for 16,480 14,968 44,183 42,214non-GAAP income taxexpenseNon-GAAP Net Income $ 52,185 $ 42,602 $ 139,914 $ 120,146

Net income per diluted $ 0.16 $ 0.12 $ 0.33 $ 0.39shareNon-GAAP Net Income per $ 0.52 $ 0.45 $ 1.44 $ 1.28Diluted Share Weighted average 99,334 92,239 95,926 91,884outstanding shares -basicNon-GAAP AdjustedDiluted WeightedAverage SharesOutstanding:Weighted average 103,385 97,114 99,898 96,392outstanding shares -dilutedDilution offset from (2,643) (2,716) (2,523) (2,485)convertible note hedgetransactionsNon-GAAP Diluted 100,742 94,398 97,375 93,907Weighted Average SharesOutstanding ^(2) Non-GAAP On DemandRevenueSet forth below is a presentation of the company's "Non-GAAP On DemandRevenue." Please reference the "Explanation of Non-GAAP Financial Measures"section. Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

On demand revenue $ 290,239 $ 245,637 $ 837,269 $ 707,341(GAAP)Acquisition-related 388 38 1,213 419deferred revenueNon-GAAP On Demand $ 290,627 $ 245,675 $ 838,482 $ 707,760RevenueEnding On Demand Units, Average On Demand Units, ACV, and RPUSet forth below is a presentation of the company's "Ending On Demand Units,""Average On Demand Units," "ACV," and "RPU." Please reference the"Explanation of Non-GAAP Financial Measures" section. Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Ending on demand 19,502 16,779 19,502 16,779unitsAverage on demand 19,191 16,642 18,892 16,468units ACV $ 1,176,751 $ 990,800

RPU $ 60.34 $ 59.05

Non-GAAP Total Revenue GuidanceSet forth below is a presentation of the company's "Non-GAAP Total Revenue"guidance for the three and twelve months ending December 31, 2020. Pleasereference the "Explanation of Non-GAAP Financial Measures" section. Guidance Range for the Guidance Range for the Three Twelve

Months Ending Months Ending

December 31, 2020 December 31, 2020 Low ^(3) High ^(3) Low ^(3) High ^(3)Revenue (GAAP) $ 291,915 $ 295,915 $ 1,152,344 $ 1,156,344

Acquisition-related 443 443 1,656 1,656deferred revenueNon-GAAP Total $ 292,358 $ 296,358 $ 1,154,000 $ 1,158,000Revenue Non-GAAP Net IncomeGuidance

Set forth below is a presentation of the company's "Non-GAAP Net Income" and"Non-GAAP Net Income per Diluted Share" guidance for the three and twelvemonths ending December 31, 2020. Please reference the "Explanation ofNon-GAAP Financial Measures" section. Guidance Range for the Guidance Range for the Three Twelve

Months Ending Months Ending

December 31, 2020 December 31, 2020 Low ^(3) High ^(3) Low ^(3) High ^(3)Non-GAAP NetIncome:Net income (GAAP) $ 10,605 $ 14,925 $ 43,852 $ 48,172

Income tax expense 2,362 3,742 5,754 7,134

Income before 12,967 18,667 49,606 55,306income taxes Acquisition-related 443 443 1,656 1,656deferred revenueAsset impairment - - 12 12and loss ondisposal of assetsAmortization ofproduct 26,440 25,940 102,851 102,351technologies andintangible assetsAcquisition-related 1,521 1,321 10,064 9,864expenseOrganizational - - 2,431 2,431realignmentRegulatory and - - 2,509 2,509legal mattersAmortization of 5,507 5,507 17,497 17,497convertible notes'discountStock-based expense 14,348 13,948 58,697 58,297

Non-GAAP Income 61,226 65,826 245,323 249,923before income taxesExpected effective 24.0% 24.0% 24.0% 24.0%tax rate ^(1)Assumed provision 14,694 15,798 58,878 59,982for income taxexpenseNon-GAAP Net Income $ 46,532 $ 50,028 $ 186,445 $ 189,941

Net income per $ 0.10 $ 0.14 $ 0.44 $ 0.48diluted shareNon-GAAP Net Income $ 0.46 $ 0.50 $ 1.90 $ 1.94per Diluted Share Non-GAAP AdjustedDiluted WeightedAverage SharesOutstanding:Weighted average 103,777 103,777 100,731 100,731outstanding shares- dilutedDilution offsetfrom convertible (2,748) (2,748) (2,579) (2,579)note hedgetransactionsNon-GAAP DilutedWeighted Average 101,029 101,029 98,152 98,152Shares Outstanding^(2)Adjusted EBITDA GuidanceSet forth below is a presentation of the company's "Adjusted EBITDA" guidancefor the three and twelve months ending December 31, 2020. Please reference the"Explanation of Non-GAAP Financial Measures" section. Guidance Range for the Guidance Range for the Three Months Ending Twelve Months Ending December 31, 2020 December 31, 2020 Low ^(3) High ^(3) Low ^(3) High ^(3)Adjusted EBITDA:Net income (GAAP) $ 10,605 $ 14,925 $ 43,852 $ 48,172

Acquisition-related 443 443 1,656 1,656deferred revenueDepreciation, assetimpairment, and 9,300 9,100 35,454 35,254loss on disposal ofassetsAmortization ofproduct 26,440 25,940 102,851 102,351technologies andintangible assetsAcquisition-related 1,521 1,321 10,064 9,864expenseOrganizational - - 2,431 2,431realignmentRegulatory and - - 2,509 2,509legal mattersStock-based expense 14,348 13,948 58,697 58,297

Interest expense, 13,431 13,031 52,732 52,332netIncome tax 2,362 3,742 5,754 7,134(benefit) expenseAdjusted EBITDA $ 78,450 $ 82,450 $ 316,000 $ 320,000

(1) For 2020 guidance purposes, the company uses a 24.0% tax rate toapproximate the company's long-term effective corporate tax rate. Pleasereference the "Explanation of Non-GAAP Financial Measures" section.

(2) It is the current intent of the company to settle conversions of theconvertible notes through combination settlement, which involves repayment ofthe principal portion in cash and any excess of the conversion value over theprincipal amount in shares of our common stock. We exclude these shares thatare issuable upon conversions of our convertible notes because we expect thatthe dilution from such shares will be offset by the convertible note hedgetransactions and capped call transactions entered into in May 2017 and May2020, respectively, in connection with the issuance of the convertible notes.

(3) Forward-looking statements involve known and unknown risks, uncertaintiesand other factors that may cause actual results, performance or achievements tobe materially different from any future results, performance or achievementsexpressed or implied by the forward-looking statements. The company may berequired to revise its results upon finalizing its review of quarterly and fullyear results, which could cause or contribute to such differences. Allinformation provided in this release is as of the date hereof and RealPage,Inc. undertakes no duty to update this information except as required by law.See additional discussion under "Cautionary Statement Regarding Forward-LookingStatements" above.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201105006189/en/

CONTACT: RealPage Investor Relations Steve Calk 972-810-8138 IR@realpage.com