Business Wire | Jul 30, 2020 04:06PM EDT

RealPage Reports Second Quarter 2020 Financial Results

Jul. 30, 2020

RICHARDSON, Texas--(BUSINESS WIRE)--Jul. 30, 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 second quarter ended June 30, 2020.

Second Quarter 2020 Financial Highlights

* GAAP total revenue of $285.6 million, an increase of 17% year-over-year; * Net income of $11.3 million, or $0.11 in net income per diluted share, a year-over-year decrease of 25% and 31%, respectively; * Adjusted EBITDA of $79.9 million, an increase of 17% year-over-year; and, * Non-GAAP net income of $47.4 million, or $0.49 in non-GAAP net income per diluted share, a year-over-year increase of 19% and 14%, respectively.

Comments on the News

"Second quarter financial performance was better than expected with total revenue growing 17% to $286 million, and Adjusted EBITDA growing 17% to nearly $80 million - both compared to last year. Numbers were exceptionally strong relative to our guidance because the impact of COVID-19 was not as impactful as we feared and there is surging demand for solutions that facilitate virtual leasing and living offered by RealPage," said Steve Winn, Chairman and CEO of RealPage.

"We are raising the mid-point of our full year revenue growth outlook by $10.0 million and our Adjusted EBITDA margin guidance by over 50 basis points," said Tom Ernst, CFO and Treasurer of RealPage. "Our investment in product development and sales and marketing will remain at elevated levels to capitalize on the changing dynamics of the way renters live and work in a post-COVID world. We believe these investments position us for sustained long term growth."

2020 Financial Outlook

RealPage management expects to achieve the following results during the third quarter ending September 30, 2020:

* GAAP total revenue is expected to be in the range of $288 million to $294 million; * GAAP net income per diluted share is expected to be in the range of $0.05 to $0.10; * Non-GAAP total revenue is expected to be in the range of $288 million to $294 million; * Adjusted EBITDA is expected to be in the range of $74 million to $78 million; * Non-GAAP net income per diluted share is expected to be in the range of $0.43 to $0.46; * Non-GAAP diluted weighted average shares outstanding are expected to be approximately 101.6 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 $1,134 million to $1,154 million; * GAAP net income per diluted share is expected to be in the range of $0.30 to $0.38; * Non-GAAP total revenue is expected to be in the range of $1,135 million to $1,155 million; * Adjusted EBITDA is expected to be in the range of $300 million to $308 million; * Non-GAAP net income per diluted share is expected to be in the range of $1.77 to $1.84; * Non-GAAP diluted weighted average shares outstanding are expected to be approximately 98.6 million.

Conference Call Information; Presentation Slides

The company will host a conference call at 5:00 p.m. EDT today to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast and to view the company's presentation slides at https://78449.themediaframe.com/dataconf/productusers/rlpg/mediaframe/39699/indexl.html. In addition, a live dial-in is available domestically at 877-407-9128 and internationally at 201-493-6752. A replay will be available at 877-660-6853 or 201-612-7415.

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 approximately 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 third quarter ending September 30, 2020 and calendar year ending December 31, 2020, the surging demand for solutions that facilitate virtual leasing and living offered by RealPage, the anticipated investment in product development and sales and marketing at elevated levels to capitalize on the changing dynamics of the way renters live and work in a post-COVID world, and our belief that these investments position us for sustained long term growth. 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. The company may be required to revise its results contained herein upon finalizing its review of 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 the recently completed acquisitions of 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) 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 May 8, 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 (benefit). 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) organizational realignment costs, (2) asset impairment and (gain) loss on disposal of assets, (3) acquisition-related expense, (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) organizational realignment costs, (2) asset impairment and (gain) loss on disposal of assets, (3) amortization of intangible assets, (4) acquisition-related expense, (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 (benefit), (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) June 30, December 31, 2020 2019

AssetsCurrent assets:Cash and cash equivalents $ 638,556 $ 197,154

Restricted cash 262,397 243,323

Accounts receivable, less allowances of $11,814 and 129,675 143,127 $10,271 at June 30, 2020 and December 31, 2019,respectivelyPrepaid expenses 28,613 24,539

Other current assets 28,354 27,387

Total current assets 1,087,595 635,530

Property, equipment, and software, net 169,222 163,282

Right-of-use assets 114,372 121,941

Goodwill 1,663,639 1,611,749

Intangible assets, net 348,620 372,996

Deferred tax assets, net 28,525 33,812

Other assets 28,473 30,507

$ $ Total assets 3,440,446 2,969,817

Liabilities and stockholders' equityCurrent liabilities:Accounts payable $ 40,700 $ 40,092

Accrued expenses and other current liabilities 98,624 89,038

Current portion of deferred revenue 132,796 134,148

Current portion of term loans 26,250 18,750

Convertible notes, net 311,638 -

Customer deposits held in restricted accounts 263,133 243,316

Total current liabilities 873,141 525,344

Deferred revenue 4,062 4,793

Revolving facility - 230,000

Term loans, net 560,571 575,313

Convertible notes, net 283,122 305,188

Lease liabilities, net of current portion 125,697 133,313

Other long-term liabilities 34,038 22,940

Total liabilities 1,880,631 1,796,891

Stockholders' equity:Common stock, $0.001 par value: 250,000,000 sharesauthorized, 102,206,190 and 96,100,296 shares issued 102 96 and 101,990,040 and 94,744,157 shares outstanding atJune 30, 2020 and December 31, 2019, respectivelyAdditional paid-in capital 1,561,672 1,222,356

Treasury stock, at cost: 216,150 and 1,356,139 shares (4,527 ) (39,483 )at June 30, 2020 and December 31, 2019, respectivelyRetained earnings (deficit) 8,695 (7,695 )

Accumulated other comprehensive loss (6,127 ) (2,348 )

Total stockholders' equity 1,559,815 1,172,926

$ $ Total liabilities and stockholders' equity 3,440,446 2,969,817



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

Revenue: $ $ $ $On demand 278,559 235,185 547,030 461,704

Professional and other 7,048 8,676 15,250 16,463

Total revenue 285,607 243,861 562,280 478,167

Cost of revenue^(1) 110,713 95,708 219,623 185,902

Amortization of product technologies 14,531 9,900 28,303 19,414

Gross profit 160,363 138,253 314,354 272,851

Operating expenses:Product development^(1) 31,433 28,151 62,981 58,048

Sales and marketing^(1) 49,424 49,120 104,081 93,943

General and administrative^(1) 42,399 28,310 82,927 56,453

Amortization of intangible assets 11,247 10,402 22,666 20,238

Total operating expenses 134,503 115,983 272,655 228,682

Operating income 25,860 22,270 41,699 44,169

Interest expense and other, net (12,692) (8,029) (25,427) (14,009)

Income before income taxes 13,168 14,241 16,272 30,160

Income tax expense (benefit) 1,867 (822) (634) 3,825

$ 11,301 $ $ 16,906 $ 26,335Net income 15,063

Net income per share attributable tocommon stockholders:Basic $ 0.12 $ 0.16 $ 0.18 $ 0.29

Diluted $ 0.11 $ 0.16 $ 0.17 $ 0.27

Weighted average common sharesoutstanding:Basic 95,752 91,914 94,203 91,703

Diluted 100,254 96,493 98,143 96,036

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

Cost of revenue $ 2,257 $ 1,447 $ 4,267 $ 2,778

Product development 1,629 2,016 3,566 4,496

Sales and marketing 2,296 6,383 8,184 11,733

General and administrative 6,149 6,019 12,515 11,771

$ 12,331 $ $ 28,532 $ 30,778 15,865



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

Cash flows from operatingactivities: $ $ $ $ Net income 11,301 15,063 16,906 26,335

Adjustments to reconcile net incometo net cash provided by operatingactivities:Depreciation and amortization 34,344 29,016 67,906 56,840

Amortization of debt discount and 4,936 3,279 8,410 6,513 issuance costsAmortization of right-of-use assets 3,380 2,920 6,983 5,925

Deferred taxes 1,759 1,686 (1,233 ) 4,236

Stock-based expense 12,331 15,865 28,532 30,778

Loss on disposal and impairment of - (17 ) 12 269 other long-lived assetsChange in fair value of equity - - - (2,600 )investmentAcquisition-related consideration (596 ) 294 (107 ) 699

Change in customer deposits 21,375 3,706 16,368 (46,546 )

Other changes in assets andliabilities, net of assets acquired 7,217 (2,427 ) 13,852 (9,072 )and liabilities assumed in businesscombinationsNet cash provided by operating 96,047 69,385 157,629 73,377 activities Cash flows from investingactivities:Purchases of property, equipment, (16,492 ) (12,593 ) (29,746 ) (23,466 )and softwareAcquisition of businesses, net of (38 ) (17,528 ) (59,500 ) (17,528 )cash and restricted cash acquiredPurchase of other investment - (1,750 ) - (1,750 )

Net cash used in investing (16,530 ) (31,871 ) (89,246 ) (42,744 )activities Cash flows from financingactivities:Payments on and proceeds from debt, 104,051 (4,034 ) 100,301 (8,067 )netPurchase of capped call instruments (39,365 ) - (39,365 ) -

Payments on finance lease (822 ) (1,358 ) (1,633 ) (2,127 )obligationsPayments of acquisition-related (2,347 ) (8,835 ) (2,392 ) (20,247 )considerationProceeds from public offering, net 334,402 - 334,402 - of underwriters' discount andoffering costsProceeds from exercise of stock 2,816 1,192 7,722 3,069 optionsPurchase of treasury stock related (2,750 ) (6,092 ) (6,243 ) (11,108 )to stock-based compensationOther financing activities, net (348 ) - (374 ) -

Net cash provided by (used in) 395,637 (19,127 ) 392,418 (38,480 )financing activitiesNet increase (decrease) in cash, 475,154 18,387 460,801 (7,847 )cash equivalents and restrictedcashEffect of exchange rate on cash 180 118 (325 ) 19

Cash, cash equivalents andrestricted cash:Beginning of period 425,619 356,425 440,477 382,758

$ $ $ $ End of period 900,953 374,930 900,953 374,930



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 Total RevenueSet 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 Six Months Ended June 30, June 30, 2020 2019 2020 2019

Revenue (GAAP) $ 285,607 $ 243,861 $ 562,280 $ 478,167

Acquisition-related deferred 425 157 825 381 revenueNon-GAAP Total Revenue $ 286,032 $ 244,018 $ 563,105 $ 478,548

Adjusted Gross ProfitSet 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 Six Months Ended June 30, June 30, 2020 2019 2020 2019

Gross profit (GAAP) $ 160,363 $ 138,253 $ 314,354 $ 272,851

Acquisition-related deferred 425 157 825 381 revenueDepreciation 3,830 4,017 7,610 7,688

Amortization of product 14,531 9,900 28,303 19,414 technologiesOrganizational realignment 255 - 453 -

Stock-based expense 2,257 1,447 4,267 2,778

Adjusted Gross Profit $ 181,661 $ 153,774 $ 355,812 $ 303,112

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 Six Months Ended June 30, June 30, 2020 2019 2020 2019

Net income (GAAP) $ 11,301 $ 15,063 $ 16,906 $ 26,335

Acquisition-related deferred 425 157 825 381 revenueDepreciation, asset 8,566 8,697 16,949 17,457 impairment, and loss ondisposal of assetsAmortization of product 25,778 20,302 50,969 39,652 technologies and intangibleassetsChange in fair value of - - - (2,600 )equity investmentAcquisition-related expense 3,137 376 6,861 405

Organizational realignment 1,220 - 2,431 -

Regulatory and legal matters 2,150 352 2,509 352

Stock-based expense 12,331 15,865 28,532 30,778

Interest expense, net 13,129 8,241 26,034 16,822

Income tax expense (benefit) 1,867 (822 ) (634 ) 3,825

Adjusted EBITDA $ 79,904 $ 68,231 $ 151,382 $ 133,407



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

Product development expense (GAAP) $ 31,433 $ 28,151 $ 62,981 $ 58,048

Less: Organizational realignment 465 - 698 -

Stock-based expense 1,629 2,016 3,566 4,496

Non-GAAP Product Development $ 29,339 $ 26,135 $ 58,717 $ 53,552Expense Non-GAAP Sales and MarketingExpenseSet 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 Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Sales and marketing expense (GAAP) $ 49,424 $ 49,120 $ 104,081 $ 93,943

Less: Organizational realignment 278 - 889 -

Stock-based expense 2,296 6,383 8,184 11,733

Non-GAAP Sales and Marketing $ 46,850 $ 42,737 $ 95,008 $ 82,210Expense Non-GAAP General andAdministrative ExpenseSet 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 Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

General and administrative expense $ 42,399 $ 28,310 $ 82,927 $ 56,453(GAAP)Less: Organizational realignment 222 - 391 -

Asset impairment and (gain) - (17 ) 12 269 loss on disposal of assets Acquisition-related expense 3,137 376 6,861 405

Regulatory and legal matters 2,150 352 2,509 352

Stock-based expense 6,149 6,019 12,515 11,771

Non-GAAP General and $ 30,741 $ 21,580 $ 60,639 $ 43,656Administrative Expense 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 Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Operating expense (GAAP) $ 134,503 $ 115,983 $ 272,655 $ 228,682

Less: Organizational realignment 965 - 1,978 -

Asset impairment and (gain) - (17 ) 12 269 loss on disposal of assets Amortization of intangible 11,247 10,402 22,666 20,238 assets Acquisition-related expense 3,137 376 6,861 405

Regulatory and legal matters 2,150 352 2,509 352

Stock-based expense 10,074 14,418 24,265 28,000

Non-GAAP Operating Expense $ 106,930 $ 90,452 $ 214,364 $ 179,418



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 Six Months Ended June 30, June 30, 2020 2019 2020 2019

Operating income $ 25,860 $ 22,270 $ 41,699 $ 44,169 (GAAP)Acquisition-related 425 157 825 381 deferred revenueAsset impairment and - (17 ) 12 269 (gain) loss ondisposal of assetsAmortization of 25,778 20,302 50,969 39,652 product technologiesand intangible assetsAcquisition-related 3,137 376 6,861 405 expenseOrganizational 1,220 - 2,431 - realignmentRegulatory and legal 2,150 352 2,509 352 mattersStock-based expense 12,331 15,865 28,532 30,778

Non-GAAP Operating $ 70,901 $ 59,305 $ 133,838 $ 116,006 Income 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 Six Months Ended June 30, June 30, 2020 2019 2020 2019

Net income (GAAP) $ 11,301 $ 15,063 $ 16,906 $ 26,335

Income tax expense 1,867 (822 ) (634 ) 3,825 (benefit)Income before income 13,168 14,241 16,272 30,160 taxes Acquisition-related 425 157 825 381 deferred revenueAsset impairment and - (17 ) 12 269 (gain) loss ondisposal of assetsAmortization of 25,778 20,302 50,969 39,652 product technologiesand intangible assetsChange in fair value - - - (2,600 )of equity investmentAcquisition-related 3,137 376 6,861 405 expenseOrganizational 1,220 - 2,431 - realignmentRegulatory and legal 2,150 352 2,509 352 mattersAmortization of 4,183 2,717 7,021 5,393 convertible notes'discountStock-based expense 12,331 15,865 28,532 30,778

Non-GAAP income 62,392 53,993 115,432 104,790 before income taxesAssumed rate for 24.0 % 26.0 % 24.0 % 26.0 %income tax expense(1)Assumed provision for 14,974 14,038 27,704 27,245 non-GAAP income taxexpenseNon-GAAP Net Income $ 47,418 $ 39,955 $ 87,728 $ 77,545

Net income per $ 0.11 $ 0.16 $ 0.17 $ 0.27 diluted shareNon-GAAP Net Income $ 0.49 $ 0.43 $ 0.92 $ 0.83 per Diluted Share Weighted average 95,752 91,914 94,203 91,703 outstanding shares -basicNon-GAAP AdjustedDiluted WeightedAverage SharesOutstanding:Weighted average 100,254 96,493 98,143 96,036 outstanding shares -dilutedDilution offset from (2,755 ) (2,528 ) (2,462 ) (2,368 )convertible notehedge transactionsNon-GAAP DilutedWeighted Average 97,499 93,965 95,681 93,668 Shares Outstanding ^(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 Six Months Ended June 30, June 30, 2020 2019 2020 2019

On demand revenue $ 278,559 $ 235,185 $ 547,030 $ 461,704 (GAAP)Acquisition-related 425 157 825 381 deferred revenueNon-GAAP On Demand $ 278,984 $ 235,342 $ 547,855 $ 462,085 Revenue

Ending 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 "Explanationof Non-GAAP Financial Measures" section. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Ending on demand units 18,880 16,505 18,880 16,505

Average on demand 18,844 16,453 18,743 16,382 units ACV $ 1,118,074 $ 942,436

RPU $ 59.22 $ 57.10

Non-GAAP Total RevenueGuidanceSet forth below is a presentation of the company's "Non-GAAP Total Revenue"guidance for the three months ending September 30, 2020, and the twelve monthsending December 31, 2020. Please reference the "Explanation of Non-GAAPFinancial Measures" section. Guidance Range for the Guidance Range for the Three Twelve Months Ending Months Ending September 30, 2020 December 31, 2020 Low ^(3) High ^(3) Low ^(3) High ^(3)Revenue (GAAP) $ 287,710 $ 293,710 $ 1,133,710 $ 1,153,710

Acquisition-related 290 290 1,290 1,290 deferred revenueNon-GAAP Total Revenue $ 288,000 $ 294,000 $ 1,135,000 $ 1,155,000

Non-GAAP Net IncomeGuidanceSet 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 months endingSeptember 30, 2020, and the 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 September 30, 2020 December 31, 2020 Low ^(3) High ^(3) Low ^(3) High ^(3)Non-GAAP Net Income:Net income (GAAP) $ 5,602 $ 9,982 $ 30,230 $ 38,908

Income tax expense 1,188 2,558 2,990 5,762

Income before income 6,790 12,540 33,220 44,670 taxes Acquisition-related 290 290 1,290 1,290 deferred revenueAsset impairment and - - 20 20 loss on disposal ofassetsAmortization of 25,300 24,900 101,480 100,680 product technologiesand intangible assetsAcquisition-related 1,540 1,440 9,920 9,620 expenseOrganizational 750 500 3,480 3,130 realignmentRegulatory and legal - - 2,510 2,510 mattersAmortization of 5,960 5,960 19,040 19,040 convertible notes'discountStock-based expense 16,260 15,860 58,770 57,970

Non-GAAP income before 56,890 61,490 229,730 238,930 income taxesExpected effective tax 24.0 % 24.0 % 24.0 % 24.0 %rate ^(1)Assumed provision for 13,654 14,758 55,135 57,343 income tax expenseNon-GAAP Net Income $ 43,236 $ 46,732 $ 174,595 $ 181,587

Net income per diluted $ 0.05 $ 0.10 $ 0.30 $ 0.38 shareNon-GAAP Net Income $ 0.43 $ 0.46 $ 1.77 $ 1.84 per Diluted Share Non-GAAP AdjustedDiluted WeightedAverage SharesOutstanding:Weighted average 104,703 104,703 101,448 101,448 outstanding shares -dilutedDilution offset from (3,151 ) (3,151 ) (2,843 ) (2,843 )convertible note hedgetransactionsNon-GAAP DilutedWeighted Average 101,552 101,552 98,605 98,605 Shares Outstanding ^(2)

Adjusted EBITDAGuidance

Set forth below is a presentation of the company's "Adjusted EBITDA" guidancefor the three months ending September 30, 2020, and the twelve months endingDecember 31, 2020. Please reference the "Explanation of Non-GAAP FinancialMeasures" section. Guidance Range for the Guidance Range for the Three Months Ending Twelve Months Ending September 30, 2020 December 31, 2020 Low ^(3) High ^(3) Low ^(3) High ^(3)Adjusted EBITDA:Net income (GAAP) $ 5,602 $ 9,982 $ 30,230 $ 38,908

Acquisition-related 290 290 1,290 1,290deferred revenueDepreciation, assetimpairment, and 8,970 8,770 35,130 34,730loss on disposal ofassetsAmortization ofproduct 25,300 24,900 101,480 100,680technologies andintangible assetsAcquisition-related 1,540 1,440 9,920 9,620expenseOrganizational 750 500 3,480 3,130realignmentRegulatory and - - 2,510 2,510legal mattersStock-based expense 16,260 15,860 58,770 57,970

Interest expense, 14,100 13,700 54,200 53,400netIncome tax expense 1,188 2,558 2,990 5,762

Adjusted EBITDA $ 74,000 $ 78,000 $ 300,000 $ 308,000

(1) For 2020 guidance purposes, the company uses a 24.0% tax rate to approximate the company's long-term effective corporate tax rate. Please reference the "Explanation of Non-GAAP Financial Measures" section. 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(2) 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. 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(3) statements. The company may be required to revise its results upon finalizing its review of quarterly and full year results, which could cause or contribute to such differences. All information 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-Looking Statements" above.

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CONTACT: RealPage, Inc. Investor Relations Rhett Butler, 972-820-3773 rhett.butler@realpage.com