Pluralsight, Inc. (NASDAQ:PS) Q3 2018 Earnings Conference Call Transcript

Oct 24, 2018 • 04:30 pm ET


Pluralsight, Inc. (NASDAQ:PS) Q3 2018 Earnings Conference Call Transcript


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Good day, ladies and gentlemen and welcome to the Q3 2018 Pluralsight Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Director of IR, Mark McReynolds. Sir, you may begin.

Mark McReynolds

Thank you, Imani. Good afternoon and welcome to Pluralsight's third quarter 2018 earnings conference call. With us today are, Aaron Skonnard, co-founder and CEO; and James Budge, CFO.

(Forward-Looking Cautionary Statement)

During this call, we may present both GAAP and non-GAAP financial measures, a reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, the press release is available on our web site at

And with that, I'll turn the call over to Aaron.

Aaron Skonnard

Thanks Mark. Good afternoon everyone and thanks for joining us for our Q3 earnings call. We continue to see strong momentum across our business in the third quarter and achieved our sixth consecutive quarter of greater than 50% growth in B2B billings. We continue to invest across our business, while demonstrating the inherent levers to profitability on our model. Gross operating and cash flow margins improved significantly year-over-year. Our teams continue to execute with strong focus and commitment to customer success, as demonstrated by our dollar based net retention rate reaching 127%. Our platform gives tech leaders unprecedented insights into the skill gaps across their organizations, and we provide the tool to close them, enabling enterprises to accelerate innovation. We have a lot of exciting accomplishments in Q3, let's start by looking at the numbers, James?

James Budge

Thanks Aaron. Before we dig into the numbers. I'd like to note that except for revenue, balance sheet amounts, cash flow from operations and billings, all financial amounts I discuss are non-GAAP and growth rates are compared to the prior year comparable periods unless otherwise stated.

New customer acquisition combined with strong expansion within our existing customers drove Q3 billings growth of 44% to $72.2 million and revenue growth of 42% to $61.6 million. Our B2B billings increased by 53% to $61.1 million, our sixth consecutive quarter of greater than 50% growth.

In addition, our B2C billings increased by 10% to $11.1 million, which is the highest growth rate we have seen in our B2C business this year. Our land and expand strategy continues to be successful as evidenced by the growing number of customers with larger deal sizes. For the trailing 12 months, the number of customers with annual billings greater than $100,000 increased by 79%. In Q3, our B2B business represented 85% of our total billings, up from 80% in Q3 last year, and our B2B dollar based net retention grew to 127%, up from 117% at the end of 2017.

Our gross margin was 77%, up from 75%, and we see a clear path to further improving gross margins. Our operating costs in dollars increased