Ellie Mae Reports Strong Second Quarter

*Ellie Mae Reports Strong Second Quarter*
**Increased Revenues Seen**

earnings***How are mortgage technology vendors fairing in today’s lending market? The real good ones are doing just that, real good. For example,Ellie Mae, a provider of on-demand, enterprise level automation solutions for the residential mortgage industry, reported results for the second quarter that ended on June 30, 2013 yesterday. They reported that revenue was up 45% as compared to a year ago and they have a record number od SaaS seats added, as well. Here’s what else they disclosed:

****Second Quarter Highlights Included:

****>> Revenue up 45% year over year to $34.3 million

****>> Adjusted net income up 30% year over year to $8.2 million

****>> Adjusted EBITDA up 60% year over year to $11.7 million

****>> $9.4 million of free cash flow generated

****>> 88,688 active Encompass360® users as of June 30, 2013, up 42% year over year

****“During the second quarter, we delivered strong top line growth driven by continued demand for our SaaS solutions,” said Sig Anderman, CEO of Ellie Mae. “Once again, we sold a record number of SaaS Encompass360 seats, with a particularly strong increase in new customers, while adding more users at current customers and upgrading existing licensed customers to our SaaS platform. We also experienced good momentum in increasing the number of new active SaaS users during the quarter, providing a solid foundation for future growth.

****“We are taking advantage of our higher than anticipated revenues to invest aggressively in initiatives that we believe will help us continue to grow our business and increase the competitive advantage of our products and services. During the second quarter we accelerated our investment in our sales and client services capabilities as well as in technology infrastructure to support our rapid user seat additions and overall business growth. This resulted in higher operating expenses for the second quarter,” continued Mr. Anderman.

****“We are pleased to again raise our full year revenue guidance, despite the current expectations for a decline in mortgage origination volumes for the second half of this year. Also for the full year 2013, we are maintaining our adjusted EBITDA guidance and increasing our adjusted net income guidance. As a result of increased hiring of talent to support the growth of our business and the performance share awards granted, stock-based compensation expense was higher in the second quarter of 2013, so we are revising downward our net income guidance for the full year,” Mr. Anderman concluded.

****Total revenue for the second quarter of 2013 increased 45% to $34.3 million, compared to $23.6 million for the second quarter of 2012. Net income for the second quarter of 2013 was $3.7 million, or $0.13 per diluted share, compared to net income of $5.0 million, or $0.21 per diluted share, for the second quarter of 2012. Diluted share count increased to 28.3 million at the end of the second quarter of 2013 from 23.3 million at the end of the second quarter of 2012, in large part due to the 3.5 million shares that the Company issued in its follow-on offering in July 2012.

****On a non-GAAP basis, adjusted net income for the second quarter of 2013 was $8.2 million, or $0.29 per diluted share, compared to $6.3 million, or $0.27 per diluted share, for the second quarter of 2012.  Adjusted EBITDA for the second quarter of 2013 was $11.7 million, compared to $7.3 million for the second quarter of 2012.

****Free cash flow of $9.4 million was generated for the second quarter of 2013.

****Total revenue for the six months ended June 30, 2013 increased 46% to $65.1 million compared to $44.5 million for the six months ended June 30, 2012. Net income for the six months ended June 30, 2013 was $7.6 million, or $0.27 per diluted share, compared to net income of $8.6 million, or $0.38 per diluted share, for the six months ended June 30, 2012.

****On a non-GAAP basis, adjusted net income for the six months ended June 30, 2013 was $15.8 million, or $0.56 per diluted share, compared to $10.9 million, or $0.47 per diluted share, for the six months ended June 30, 2012. Adjusted EBITDA for the six months ended June 30, 2013 was $21.7 million, compared to adjusted EBITDA of $12.7 million for the six months ended June 30, 2012.

****A reconciliation of the non-GAAP financial measures to their related GAAP financial measures is set forth below.

****Key Operating Metrics as of and for the Quarter Ended June 30, 2013:

****>> On-demand revenue increased 53% year over year to $31.1 million, comprising approximately 91% of total revenues for the quarter;

****>> The total number of active Encompass360 users increased 42% year over year to 88,688;

****>> Revenue per average active Encompass360 user increased 4% year over year to $398;

****>> At the end of the second quarter, the number of active users of the SaaS version of Encompass360 increased 74% year over year to 55,952, or 63% of all active Encompass360 users; and

****>> Total SaaS Encompass360 revenues increased 74% year over year to $18.6 million, representing 54% of total revenue for the quarter.

****Third Quarter and Fiscal Year 2013 Financial Outlook

****The July 2013 composite forecast of Fannie Mae, Freddie Mac and the Mortgage Bankers Association for 2013 mortgage origination volume is approximately $1.7 trillion, which represents a 13% decrease from estimated mortgage volume in 2012. These organizations publish monthly updates of their annual and quarterly forecasts. The July 2013 composite quarterly forecast for origination volume is as follows:

****Approximately 50% of Ellie Mae’s revenue is sensitive to fluctuations in mortgage volumes.For the third quarter of 2013, revenue is expected to be in the range of $34.0 million to $34.5 million. Net income is expected to be in the range of $3.9 million to $4.3 million, or $0.14 to $0.15 per diluted share. Adjusted net income is expected to be in the range of $8.1 million to $8.6 million, or $0.29 to $0.30 per diluted share. Adjusted EBITDA is expected to be in the range of $12.1 million to $12.9 million.

****For the full fiscal year 2013, revenue is expected to be in the range of $131.0 million to $132.5 million, up from the previously provided range of $130.0 million to $131.5 million. Net income is expected to be in the range of $14.0 million to $14.5 million, or $0.49 to $0.51 per diluted share, down from the previously provided range of $15.6 million to $16.2 million, or $0.55 to $0.57 per diluted share, due to higher stock-based compensation expense from the 2013 performance share awards and increased hiring of new talent to support the continuing growth of our business. Adjusted net income is expected to be in the range of $30.7 million to $31.5 million, or $1.08 to $1.11 per diluted share, up from the previously provided range of $30.2 million to $31.0 million, or $1.06 to $1.09 per diluted share. Adjusted EBITDA is expected to continue to be in the range of $44.2 million to $45.4 million.

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