Pluralsight, Inc. (NASDAQ:PS) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 04:30 pm ET


Pluralsight, Inc. (NASDAQ:PS) Q4 2018 Earnings Conference Call Transcript


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James Budge

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 Q4 billings growth of 42% to $100.6 million and revenue growth of 42% to $67.3 million. Our B2B billings increased by 51% to $87.1 million, our seventh consecutive quarter of 50% growth.

For the full year, total billings were $293.6 million, up 43%. 2018 revenue was $232 million, up 39%. B2B billings for the full year increased by 52% to $248.2 million. Our land and expand strategy continues to be successful as evidenced by the growing number of customers with larger deal size. We now have 275 customers with annual billings of over $100,000, a 76% increase year-over-year. In addition to our deal sizes increasing, our total B2B user count increased to over 810, 000 at the end of 2018. B2B customers now represent approximately 85% of our total billing. And as Aaron mentioned, our B2B dollar-based net retention grew to 128% as of the end of 2018, up from 117%.

Our Q4 gross margin was 77%, up from 75%, and our full year 2018 gross margin was 76%, up from 74%. We see a clear path to further improving gross margins to over 80%. Our operating expenses in dollars increased year-over-year as planned but decreased as a percentage of revenue. Total operating expenses increased only 12% in Q4 compared to our total billings increase of over 40%, demonstrating another quarter of increasing leverage in our model and a clear path towards sustained profitability. Non-GAAP net loss per share in Q4 was $0.09, a significant improvement over our net loss per share in Q4 last year of $0.53. We saw a significant improvement in operating cash flow at positive $8.4 million in Q4 compared to negative $1.3 million last year. And free cash flow was positive at $5.2 million in the quarter compared to negative $3.4 million last year.

Our improving earnings per share and cash flows are strong indicators of the operational efficiencies we are leveraging in our business as we grow. We closed the quarter with total cash of $211.1 million and our on-balance sheet backlog as expressed by our deferred revenue was $172.6 million at the end of the year, up 55%.

Turning now to guidance. For Q1 2019, we expect revenue to be in the range of $68 million to $68.5 million, an increase of 38% over Q1 2018 at the midpoint of the range. We expect Q1 non-GAAP net loss per share to be in the range of $0.08 to $0.09 assuming weighted average shares outstanding of approximately 135 million. For the full year 2019, we are increasing our expected revenue range to between $306 million and $314 million, an increase of 34% over 2018 at the midpoint of