GlobeNewswire Inc | Feb 10, 2021 08:00AM EST

February 10, 2021

SILICON SLOPES, Utah, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Pluralsight, Inc. (NASDAQ: PS), the technology workforce development company, today announced financial results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter Financial Highlights

-- Billings - Q4 2020 billings were $151.1 million, an increase of 18% period over period. Q4 2020 billings from business customers were $134.0 million, an increase of 18% period over period. -- Revenue - Q4 2020 revenue was $105.0 million, an increase of 18% period over period. -- Gross margin - Q4 2020 gross margin was 78%, compared to 79% in Q4 2019. Q4 2020 and Q4 2019 non-GAAP gross margin was 80%. -- Net loss per share - GAAP net loss per share for Q4 2020 was $0.30, compared to $0.31 in Q4 2019. Adjusted pro forma net loss per share for Q4 2020 was $0.01, compared to $0.09 in Q4 2019. -- Cash flows - Cash provided by operations was $2.4 million for Q4 2020, compared to cash used in operations of $7.9 million in Q4 2019. Free cash flow was negative $4.0 million for Q4 2020, compared to negative $13.0 million in Q4 2019.

Full Year 2020 Financial Highlights

-- Billings - 2020 billings were $430.4 million, an increase of 14% year over year. 2020 billings from business customers were $380.8 million, an increase of 15% year over year. -- Revenue - 2020 revenue was $391.9 million, an increase of 24% year over year. -- Gross margin - 2020 gross margin was 79%, compared to 77% in 2019. 2020 non-GAAP gross margin was 81%, compared to 79% in 2019. -- Net loss per share - GAAP net loss per share for 2020 was $1.15, compared to $1.19 in 2019. Adjusted pro forma net loss per share for 2020 was $0.12, compared to $0.30 in 2019. -- Cash flows - Cash provided by operations was $9.1 million for 2020, compared to cash used in operations of $11.7 million in 2019. Free cash flow was negative $34.2 million for 2020, compared to negative $28.2 million in 2019.

For information regarding the non-GAAP financial measures discussed in this press release, please see the section titled Non-GAAP Financial Measures. Reconciliations between GAAP and non-GAAP financial measures are provided in the tables of this press release.

About Pluralsight

Pluralsight is the leading technology workforce development company that helps companies and teams build better products by developing critical skills, improving processes and gaining insights through data, and providing strategic skills consulting. Trusted by forward-thinking companies of every size in every industry, Pluralsight helps individuals and businesses transform with technology. Pluralsight Skills helps enterprises build technology skills at scale with expert-authored courses on todays most important technologies, including cloud, artificial intelligence and machine learning, data science, and security, among others. Skills also includes tools to align skill development with business objectives, virtual instructor-led training, hands-on labs, skill assessments and one-of-a-kind analytics. Flow complements Skills by providing engineering teams with actionable data and visibility into workflow patterns to accelerate the delivery of products and services. For more information about Pluralsight, visit pluralsight.com.

Pluralsight and the Pluralsight logo are trademarks of Pluralsight, LLC in the United States and in jurisdictions throughout the world.

Key Business Metrics

Billings. Billings represents total revenue plus the change in deferred revenue in the period, as presented in our condensed consolidated statements of cash flows, less the change in contract assets and unbilled accounts receivable in the period. Billings in any particular period represents amounts invoiced to customers and reflects subscription renewals and upsells to existing customers plus sales to new customers. We use billings to measure our ability to sell subscriptions to our platform to both new and existing customers. We use billings from business customers and our percentage of billings from business customers to measure and monitor our ability to sell subscriptions to our platform to business customers.

Non-GAAP Financial Measures

Pluralsight has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). Pluralsight uses the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating loss, adjusted pro forma net loss, adjusted pro forma net loss per share, and free cash flow in analyzing its financial results and believes that the use of these metrics is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Pluralsights financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our historical non-GAAP financial measures to their most directly comparable GAAP measures have been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations.

Non-GAAP gross profit. We define non-GAAP gross profit as gross profit plus equity-based compensation, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions.

Non-GAAP gross margin. We define non-GAAP gross margin as non-GAAP gross profit divided by our revenue.

Non-GAAP operating expenses. We define non-GAAP operating expenses as operating expenses less equity-based compensation, amortization of acquired intangible assets, and employer payroll taxes on employee stock transactions, and, as applicable, other special items including acquisition-related costs.

Non-GAAP operating loss. We define non-GAAP operating loss as loss from operations plus equity-based compensation, amortization of acquired intangible assets, employer payroll taxes on employee stock transactions, and, as applicable, other special items including acquisition-related costs.

Adjusted pro forma net loss and adjusted pro forma net loss per share. We define adjusted pro forma net loss as net loss attributable to Pluralsight, Inc. adjusted for the reallocation of loss attributable to non-controlling interests from the assumed exchange of LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc. and further adjusted for equity-based compensation, amortization of acquired intangible assets, employer payroll taxes on employee stock transactions, amortization of debt discount and issuance costs, and, as applicable, other special items including acquisition-related costs. We define adjusted pro forma net loss per share as adjusted pro forma net loss divided by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Units of Pluralsight Holdings for newly-issued shares of Class A common stock of Pluralsight, Inc.

Free cash flow. We define free cash flow as cash provided by (used in) operating activities less purchases of property and equipment and purchases of our content library.

PLURALSIGHT, INC.

Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(unaudited)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Revenue $ 104,989 $ 88,811 $ 391,865 $ 316,910 Cost of revenue^(1)(2) 23,401 19,009 82,552 71,353 Gross profit 81,588 69,802 309,313 245,557 Operating expenses^(1) (2):Sales and marketing 60,785 57,071 238,165 207,085 Technology and content 29,782 29,965 118,785 102,902 General and 28,918 21,950 95,651 85,560 administrativeTotal operating 119,485 108,986 452,601 395,547 expensesLoss from operations (37,897 ) (39,184 ) (143,288 ) (149,990 )Other income (expense): Interest expense (7,523 ) (7,129 ) (29,322 ) (23,565 )Loss on debt ? ? ? (950 )extinguishmentOther income, net 1,982 2,966 8,411 11,749 Loss before income (43,438 ) (43,347 ) (164,199 ) (162,756 )taxesIncome tax benefit 361 (122 ) 108 (823 )(expense)Net loss $ (43,077 ) $ (43,469 ) $ (164,091 ) $ (163,579 )Less: Net lossattributable to (7,606 ) (11,492 ) (36,011 ) (50,921 )non-controllinginterestsNet loss attributable $ (35,471 ) $ (31,977 ) $ (128,080 ) $ (112,658 )to Pluralsight, Inc.Net loss per share, $ (0.30 ) $ (0.31 ) $ (1.15 ) $ (1.19 )basic and dilutedWeighted-average sharesof Class A common stockused in computing basic 120,133 102,747 111,798 94,515 and diluted net lossper share

(1) Includes equity-based compensation as follows:

Three Months Ended December Year Ended December 31, 31, 2020 2019 2020 2019 Cost of revenue $ 335 $ 193 $ 1,213 $ 548Sales and marketing 9,860 7,710 41,168 30,677Technology and content 6,641 5,917 26,222 21,430General and administrative 6,800 8,960 31,250 37,782Total equity-based $ 23,636 $ 22,780 $ 99,853 $ 90,437compensation

(2) Includes amortization of acquired intangible assets as follows:

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Cost of revenue $ 1,832 $ 1,209 $ 5,458 $ 3,645Sales and marketing 146 50 296 129Technology and content 121 176 580 705Total amortization of acquired $ 2,099 $ 1,435 $ 6,334 $ 4,479intangible assets

PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures(dollars in thousands)(unaudited)

Key Business Metrics

Three Months Ended December Year Ended December 31, 31, 2020 2019 2020 2019 Billings $ 151,088 $ 128,448 $ 430,422 $ 379,051 Billings from $ 134,022 $ 113,176 $ 380,788 $ 330,143 business customers% of billings from 89 % 88 % 88 % 87 %business customers

Non-GAAP Financial Measures

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Reconciliation ofgross profit to non-GAAP grossprofit:Gross profit $ 81,588 $ 69,802 $ 309,313 $ 245,557 Equity-based 335 193 1,213 548 compensationAmortization ofacquired intangible 1,832 1,209 5,458 3,645 assetsEmployer payrolltaxes on employee 12 5 54 23 stock transactionsNon-GAAP gross $ 83,767 $ 71,209 $ 316,038 $ 249,773 profitGross margin 78 % 79 % 79 % 77 %Non-GAAP gross 80 % 80 % 81 % 79 %margin

PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures (cont.)(dollars in thousands)(unaudited)

Three Months Ended December Year Ended December 31, 31, 2020 2019 2020 2019 Reconciliation ofoperating expenses to non-GAAPoperating expenses:Sales and marketing $ 60,785 $ 57,071 $ 238,165 $ 207,085 Less: Equity-based (9,860 ) (7,710 ) (41,168 ) (30,677 ) compensationLess: Amortizationof acquired (146 ) (50 ) (296 ) (129 ) intangible assetsLess: Employerpayroll taxes on (169 ) (81 ) (1,151 ) (1,293 ) employee stocktransactionsNon-GAAP sales and $ 50,610 $ 49,230 $ 195,550 $ 174,986 marketingSales and marketingas a percentage of 58 % 64 % 61 % 65 %revenueNon-GAAP sales andmarketing as a 48 % 55 % 50 % 55 %percentage ofrevenue Technology and $ 29,782 $ 29,965 $ 118,785 $ 102,902 contentLess: Equity-based (6,641 ) (5,917 ) (26,222 ) (21,430 ) compensationLess: Amortizationof acquired (121 ) (176 ) (580 ) (705 ) intangible assetsLess: Employerpayroll taxes on (121 ) (94 ) (1,165 ) (1,073 ) employee stocktransactionsNon-GAAP technology $ 22,899 $ 23,778 $ 90,818 $ 79,694 and contentTechnology andcontent as a 28 % 34 % 30 % 32 %percentage ofrevenueNon-GAAP technologyand content as a 22 % 27 % 23 % 25 %percentage ofrevenue General and $ 28,918 $ 21,950 $ 95,651 $ 85,560 administrativeLess: Equity-based (6,800 ) (8,960 ) (31,250 ) (37,782 ) compensationLess: Employerpayroll taxes on (156 ) (142 ) (1,008 ) (1,039 ) employee stocktransactionsLess: Secondary ? ? (1,260 ) (918 ) offering costsLess:Acquisition-related (8,097 ) ? (8,438 ) (835 ) costsNon-GAAP general $ 13,865 $ 12,848 $ 53,695 $ 44,986 and administrativeGeneral andadministrative as a 28 % 25 % 24 % 27 %percentage ofrevenueNon-GAAP generaland administrative 13 % 14 % 14 % 14 %as a percentage ofrevenueReconciliation ofloss fromoperations to non-GAAP operatingloss:Loss from $ (37,897 ) $ (39,184 ) $ (143,288 ) $ (149,990 ) operationsEquity-based 23,636 22,780 99,853 90,437 compensationAmortization ofacquired intangible 2,099 1,435 6,334 4,479 assetsEmployer payrolltaxes on employee 458 322 3,378 3,428 stock transactionsSecondary offering ? ? 1,260 918 costsAcquisition-related 8,097 ? 8,438 835 costsNon-GAAP operating $ (3,607 ) $ (14,647 ) $ (24,025 ) $ (49,893 ) loss

PLURALSIGHT, INC.

Key Business Metrics and Non-GAAP Financial Measures (cont.)(in thousands, except per share amounts)(unaudited)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Adjusted pro forma net loss per shareNumerator: Net loss attributable $ (35,471 ) $ (31,977 ) $ (128,080 ) $ (112,658 )to Pluralsight, Inc.Net loss attributableto non-controlling (7,606 ) (11,492 ) (36,011 ) (50,921 )interestsEquity-based 23,636 22,780 99,853 90,437 compensationAmortization of 2,099 1,435 6,334 4,479 acquired intangiblesEmployer payroll taxeson employee stock 458 322 3,378 3,428 transactionsSecondary offering ? ? 1,260 918 costsAcquisition-related 8,097 ? 8,438 835 costsAmortization of debtdiscount and issuance 6,949 6,571 27,077 21,691 costsLoss on debt ? ? ? 950 extinguishmentAdjusted pro forma net $ (1,838 ) $ (12,361 ) $ (17,751 ) $ (40,841 )lossDenominator: Weighted-average sharesof Class A common stock 120,133 102,747 111,798 94,515 outstandingWeighted-average LLCUnits of PluralsightHoldings that are 25,446 36,447 31,434 42,720 convertible into ClassA common stockAdjusted pro formaweighted-average common 145,579 139,194 143,232 137,235 shares outstanding,basic and dilutedAdjusted pro forma net $ (0.01 ) $ (0.09 ) $ (0.12 ) $ (0.30 )loss per share Reconciliation of netcash provided by (usedin) operating activities to free cashflow:Net cash provided by(used in) operating $ 2,397 $ (7,906 ) $ 9,090 $ (11,729 )activitiesLess: Purchases ofproperty and equipment^ (4,212 ) (3,562 ) (35,438 ) (11,181 )(1)Less: Purchases of (2,213 ) (1,504 ) (7,809 ) (5,326 )content libraryFree cash flow $ (4,028 ) $ (12,972 ) $ (34,157 ) $ (28,236 )

(1) Purchases of property and equipment includes cash paid for the construction of tenant improvements at our new headquarters in Utah of approximately $1.2 million and $24.1 million for the three months and year ended December 31, 2020, respectively.

PLURALSIGHT, INC.

Condensed Consolidated Balance Sheets(in thousands)(unaudited)

December 31, December 31, 2020 2019 Assets Current assets: Cash and cash equivalents $ 134,395 $ 90,515 Short-term investments 265,220 332,234 Accounts receivable, net 118,808 101,576 Deferred contract acquisition costs 22,910 18,331 Prepaid expenses and other current assets 25,033 14,174 Total current assets 566,366 556,830 Restricted cash and cash equivalents 17,546 28,916 Long-term investments 86,586 105,805 Property and equipment, net 64,518 22,896 Right-of-use assets 61,157 15,804 Content library, net 28,890 8,958 Intangible assets, net 18,488 22,631 Goodwill 293,863 262,532 Deferred contract acquisition costs, noncurrent 10,553 5,982 Other assets 3,166 1,599 Total assets $ 1,151,133 $ 1,031,953 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 9,697 $ 10,615 Accrued expenses 57,884 40,703 Accrued author fees 12,111 11,694 Lease liabilities 10,350 5,752 Deferred revenue 252,423 215,137 Total current liabilities 342,465 283,901 Deferred revenue, noncurrent 23,863 19,517 Convertible senior notes, net 497,305 470,228 Lease liabilities, noncurrent 74,421 11,167 Contingent consideration liabilities 11,050 ? Other liabilities 259 980 Total liabilities 949,363 785,793 Stockholders' equity: Preferred stock ? ? Class A common stock 12 10 Class B common stock 1 2 Class C common stock 1 1 Additional paid-in capital 752,804 641,128 Accumulated other comprehensive income 975 225 Accumulated deficit (586,461 ) (458,381 )Total stockholders? equity attributable to 167,332 182,985 Pluralsight, Inc.Non-controlling interests 34,438 63,175 Total stockholders? equity 201,770 246,160 Total liabilities and stockholders' equity $ 1,151,133 $ 1,031,953

PLURALSIGHT, INC.

Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Operating activities Net loss $ (43,077 ) $ (43,469 ) $ (164,091 ) $ (163,579 )Adjustments toreconcile net loss tonet cash provided by (used in) operatingactivities:Depreciation of 3,396 2,468 12,262 9,464 property and equipmentAmortization ofacquired intangible 2,099 1,435 6,334 4,479 assetsAmortization of course 963 702 3,427 2,543 creation costsEquity-based 23,636 22,780 99,853 90,437 compensationAmortization ofdeferred contract 6,876 6,270 25,894 23,587 acquisition costsAmortization of debtdiscount and issuance 6,949 6,571 27,077 21,691 costsInvestment discount andpremium amortization, 702 (675 ) 770 (2,446 )netLoss on debt ? ? ? 950 extinguishmentOther (807 ) 558 (218 ) 380 Changes in assets andliabilities, net of acquired assets andliabilities:Accounts receivable (40,557 ) (39,132 ) (17,045 ) (37,274 )Deferred contract (12,553 ) (9,020 ) (35,044 ) (27,688 )acquisition costsPrepaid expenses and (6,185 ) (2,154 ) (10,422 ) (5,663 )other assetsRight-of-use assets 1,128 1,247 5,615 5,586 Accounts payable 1,969 5,203 (1,157 ) 2,683 Accrued expenses and 11,023 699 17,903 5,887 other liabilitiesAccrued author fees 124 400 417 1,692 Lease liabilities 59 (1,529 ) (3,545 ) (6,659 )Deferred revenue 46,652 39,740 41,060 62,201 Net cash provided by(used in) operating 2,397 (7,906 ) 9,090 (11,729 )activitiesInvesting activities Purchases of property (4,212 ) (3,562 ) (35,438 ) (11,181 )and equipmentPurchases of content (2,213 ) (1,504 ) (7,809 ) (5,326 )libraryCash paid foracquisition, net of (37,512 ) ? (37,512 ) (163,771 )cash acquiredPurchases of (64,148 ) (164,593 ) (491,278 ) (694,246 )investmentsProceeds from sales of ? ? ? 4,967 investmentsProceeds frommaturities of 129,752 139,841 576,582 252,836 investmentsNet cash provided by(used in) investing 21,667 (29,818 ) 4,545 (616,721 )activitiesFinancing activities Proceeds from issuanceof common stock from 11,677 9,952 26,418 24,828 employee equity plansTaxes paid related to (2,387 ) (1,574 ) (7,992 ) (1,574 )net share settlementProceeds from issuanceof convertible senior ? ? ? 616,654 notes, net of discountand issuance costsPurchase of cappedcalls related to ? ? ? (69,432 )issuance of convertiblesenior notesRepurchases ofconvertible senior ? ? ? (35,000 )notesProceeds fromterminations of cappedcalls related to ? ? ? 1,284 repurchases ofconvertible seniornotesNet cash provided by(used in) financing 9,290 8,378 18,426 536,760 activitiesEffect of exchange ratechanges on cash, cashequivalents, and 368 158 449 50 restricted cash andcash equivalentsNet increase (decrease)in cash, cashequivalents, and 33,722 (29,188 ) 32,510 (91,640 )restricted cash andcash equivalentsCash, cash equivalents,and restricted cash and 118,219 148,619 119,431 211,071 cash equivalents,beginning of periodCash, cash equivalents,and restricted cash and $ 151,941 $ 119,431 $ 151,941 $ 119,431 cash equivalents, endof period

Investor Relations Contact:Mark McReynoldsInvestor RelationsPluralsight801-784-9007ir@pluralsight.com

Media Contact:DJ Anderson Communications/PressPluralsight801-784-9007dj@pluralsight.com