|
|
|
|
|
|
Delaware
|
|
82-3605465
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
Large accelerated filer
|
|
☐
|
|
|
|
Accelerated filer
|
|
☐
|
Non-accelerated filer
|
|
ý
|
|
|
|
Smaller reporting company
|
|
☐
|
|
|
|
|
|
|
Emerging growth company
|
|
ý
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
PART I. FINANCIAL INFORMATION
|
||
|
|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II. OTHER INFORMATION
|
||
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 6.
|
||
|
|
|
•
|
our ability to attract new customers and retain and expand our relationships with existing customers;
|
•
|
our ability to expand our course library and develop new platform features;
|
•
|
our future financial performance, including trends in billings, revenue, costs of revenue, gross margin, operating expenses, and free cash flow;
|
•
|
the demand for, and market acceptance of, our platform or for cloud-based technology learning solutions in general;
|
•
|
our ability to compete successfully in competitive markets;
|
•
|
our ability to respond to rapid technological changes;
|
•
|
our expectations and management of future growth;
|
•
|
our ability to enter new markets and manage our expansion efforts, particularly internationally;
|
•
|
our ability to attract and retain key employees and qualified technical and sales personnel;
|
•
|
our ability to effectively and efficiently protect our brand;
|
•
|
our ability to timely scale and adapt our infrastructure;
|
•
|
our ability to maintain, protect, and enhance our intellectual property and not infringe upon others’ intellectual property;
|
•
|
our ability to successfully identify, acquire, and integrate companies and assets; and
|
•
|
the amount and timing of any payments we make under the fourth amended and restated limited liability company agreement of Pluralsight Holdings, or the Fourth LLC Agreement, and our Tax Receivable Agreement, or TRA, with the members of Pluralsight Holdings.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
208,626
|
|
|
$
|
28,267
|
|
Accounts receivable, net of allowances of $2,332 and $1,552 as of September 30, 2018 and December 31, 2017, respectively
|
|
47,801
|
|
|
38,229
|
|
||
Prepaid expenses and other current assets
|
|
8,037
|
|
|
5,125
|
|
||
Total current assets
|
|
264,464
|
|
|
71,621
|
|
||
Property and equipment, net
|
|
22,503
|
|
|
22,457
|
|
||
Content library, net
|
|
7,547
|
|
|
13,441
|
|
||
Intangible assets, net
|
|
1,935
|
|
|
2,854
|
|
||
Goodwill
|
|
123,119
|
|
|
123,119
|
|
||
Other assets
|
|
2,080
|
|
|
2,928
|
|
||
Total assets
|
|
$
|
421,648
|
|
|
$
|
236,420
|
|
Liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
6,834
|
|
|
$
|
6,029
|
|
Accrued expenses
|
|
31,415
|
|
|
26,514
|
|
||
Accrued author fees
|
|
9,331
|
|
|
7,879
|
|
||
Deferred revenue
|
|
130,555
|
|
|
103,107
|
|
||
Total current liabilities
|
|
178,135
|
|
|
143,529
|
|
||
Deferred revenue, net of current portion
|
|
8,649
|
|
|
8,194
|
|
||
Long-term debt
|
|
—
|
|
|
116,037
|
|
||
Facility financing obligation
|
|
7,500
|
|
|
7,513
|
|
||
Other liabilities
|
|
1,090
|
|
|
458
|
|
||
Total liabilities
|
|
195,374
|
|
|
275,731
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
||||
Redeemable convertible preferred units:
|
|
|
|
|
||||
Redeemable convertible preferred units, no par value; 48,447,880 units authorized, issued and outstanding as of December 31, 2017
|
|
—
|
|
|
405,766
|
|
||
Stockholders' equity/members’ deficit:
|
|
|
|
|
||||
Preferred stock, $0.0001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding as of September 30, 2018
|
|
—
|
|
|
—
|
|
||
Class A common stock, $0.0001 par value per share, 1,000,000,000 shares authorized, 62,310,270 shares issued and outstanding as of September 30, 2018; 1,000 shares authorized, issued and outstanding as of December 31, 2017
|
|
6
|
|
|
—
|
|
||
Class B common stock, $0.0001 par value per share, 200,000,000 shares authorized, 58,566,789 shares issued and outstanding as of September 30, 2018
|
|
6
|
|
|
—
|
|
||
Class C common stock, $0.0001 par value per share, 50,000,000 shares authorized, 14,198,311 shares issued and outstanding as of September 30, 2018
|
|
1
|
|
|
—
|
|
||
Additional paid-in capital
|
|
443,182
|
|
|
—
|
|
||
Members’ capital
|
|
—
|
|
|
—
|
|
||
Accumulated other comprehensive (loss) income
|
|
(34
|
)
|
|
25
|
|
||
Accumulated deficit
|
|
(335,863
|
)
|
|
(445,102
|
)
|
||
Total stockholders' equity attributable to Pluralsight, Inc./members' deficit
|
|
107,298
|
|
|
(445,077
|
)
|
||
Non-controlling interests
|
|
118,976
|
|
|
—
|
|
||
Total stockholders' equity/members' deficit
|
|
226,274
|
|
|
(445,077
|
)
|
||
Total liabilities, redeemable convertible preferred units, and stockholders' equity/members’ deficit
|
|
$
|
421,648
|
|
|
$
|
236,420
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
|
$
|
61,553
|
|
|
$
|
43,286
|
|
|
$
|
164,769
|
|
|
$
|
119,416
|
|
Cost of revenue
|
|
15,331
|
|
|
12,582
|
|
|
46,107
|
|
|
35,678
|
|
||||
Gross profit
|
|
46,222
|
|
|
30,704
|
|
|
118,662
|
|
|
83,738
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
41,392
|
|
|
29,410
|
|
|
109,792
|
|
|
70,254
|
|
||||
Technology and content
|
|
17,227
|
|
|
12,448
|
|
|
47,045
|
|
|
33,979
|
|
||||
General and administrative
|
|
17,398
|
|
|
19,094
|
|
|
48,138
|
|
|
34,773
|
|
||||
Total operating expenses
|
|
76,017
|
|
|
60,952
|
|
|
204,975
|
|
|
139,006
|
|
||||
Loss from operations
|
|
(29,795
|
)
|
|
(30,248
|
)
|
|
(86,313
|
)
|
|
(55,268
|
)
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
(342
|
)
|
|
(3,252
|
)
|
|
(6,476
|
)
|
|
(8,376
|
)
|
||||
Loss on debt extinguishment
|
|
—
|
|
|
—
|
|
|
(4,085
|
)
|
|
(1,882
|
)
|
||||
Other income, net
|
|
654
|
|
|
55
|
|
|
689
|
|
|
124
|
|
||||
Loss before income taxes
|
|
(29,483
|
)
|
|
(33,445
|
)
|
|
(96,185
|
)
|
|
(65,402
|
)
|
||||
Provision for income taxes
|
|
(254
|
)
|
|
(90
|
)
|
|
(506
|
)
|
|
(216
|
)
|
||||
Net loss
|
|
$
|
(29,737
|
)
|
|
$
|
(33,535
|
)
|
|
$
|
(96,691
|
)
|
|
$
|
(65,618
|
)
|
Less: Net loss attributable to non-controlling interests
|
|
(15,578
|
)
|
|
—
|
|
|
(28,284
|
)
|
|
—
|
|
||||
Net loss attributable to Pluralsight, Inc.
|
|
$
|
(14,159
|
)
|
|
$
|
(33,535
|
)
|
|
$
|
(68,407
|
)
|
|
$
|
(65,618
|
)
|
Less: Accretion of Series A redeemable convertible preferred units
|
|
—
|
|
|
(34,375
|
)
|
|
(176,275
|
)
|
|
(57,200
|
)
|
||||
Net loss attributable to common shares
|
|
$
|
(14,159
|
)
|
|
$
|
(67,910
|
)
|
|
$
|
(244,682
|
)
|
|
$
|
(122,818
|
)
|
Net loss per share, basic and diluted
(1)
|
|
$
|
(0.23
|
)
|
|
|
|
|
$
|
(0.41
|
)
|
|
|
|
||
Weighted-average common shares used in computing basic and diluted net loss per share
(1)
|
|
62,472
|
|
|
|
|
|
62,400
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(1) Represents net loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the periods following the Reorganization Transactions (as defined below) and Pluralsight, Inc.'s initial public offering described in Note 1—Organization and Description of Business. See Note 13—Net Loss Per Share for additional details.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
|
$
|
(29,737
|
)
|
|
$
|
(33,535
|
)
|
|
$
|
(96,691
|
)
|
|
$
|
(65,618
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation (losses) gains, net
|
|
(39
|
)
|
|
5
|
|
|
(97
|
)
|
|
23
|
|
||||
Comprehensive loss
|
|
$
|
(29,776
|
)
|
|
$
|
(33,530
|
)
|
|
$
|
(96,788
|
)
|
|
$
|
(65,595
|
)
|
Less: Comprehensive loss attributable to non-controlling interests
|
|
(15,599
|
)
|
|
—
|
|
|
(28,326
|
)
|
|
—
|
|
||||
Comprehensive loss attributable to Pluralsight, Inc.
|
|
$
|
(14,177
|
)
|
|
$
|
(33,530
|
)
|
|
$
|
(68,462
|
)
|
|
$
|
(65,595
|
)
|
|
|
Redeemable
Convertible
Preferred Units
|
|
|
Members’ Capital
|
|
Class A Common Stock
|
|
Class B Common Stock
|
|
Class C Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated Other Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Non-Controlling Interests
|
|
Total
|
|||||||||||||||||||||||||||||||||||
|
|
Units
|
|
Amount
|
|
|
Units
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||||||||||||||
Balance at December 31, 2017
|
|
48,447,880
|
|
|
$
|
405,766
|
|
|
|
48,407,645
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
(445,102
|
)
|
|
$
|
—
|
|
|
$
|
(445,077
|
)
|
Activity prior to the Reorganization Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Issuance of warrants to purchase shares of Class A common units
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
984
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
984
|
|
||||||||||
Equity-based compensation
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
13,155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,155
|
|
||||||||||
Accretion of Series A redeemable convertible preferred units
|
|
—
|
|
|
176,275
|
|
|
|
—
|
|
|
(14,139
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(162,136
|
)
|
|
—
|
|
|
(176,275
|
)
|
||||||||||
Foreign currency translation losses, net
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
||||||||||
Net loss
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,660
|
)
|
|
—
|
|
|
(42,660
|
)
|
||||||||||
Effect of the Reorganization Transactions and initial public offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Effect of the Reorganization Transactions
|
|
(48,447,880
|
)
|
|
(582,041
|
)
|
|
|
(48,407,645
|
)
|
|
—
|
|
|
39,110,660
|
|
|
4
|
|
|
58,111,572
|
|
|
6
|
|
|
14,048,138
|
|
|
1
|
|
|
581,952
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
581,963
|
|
||||||||||
Initial public offering, net of offering costs
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
23,805,000
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324,704
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324,706
|
|
||||||||||
Allocation of equity to non-controlling interests
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(474,007
|
)
|
|
(4
|
)
|
|
339,782
|
|
|
134,229
|
|
|
—
|
|
||||||||||
Activity subsequent to the Reorganization Transactions and initial public offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Effect of the rescission transactions
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(605,390
|
)
|
|
—
|
|
|
455,217
|
|
|
—
|
|
|
150,173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Settlement of equity appreciation rights
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(325
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(325
|
)
|
||||||||||
Equity-based compensation
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,931
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,931
|
|
||||||||||
Adjustments to non-controlling interests
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,073
|
)
|
|
—
|
|
|
—
|
|
|
13,073
|
|
|
—
|
|
||||||||||
Foreign currency translation losses, net
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
(42
|
)
|
|
(79
|
)
|
||||||||||
Net loss
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,747
|
)
|
|
(28,284
|
)
|
|
(54,031
|
)
|
|||||||||||
Balance at September 30, 2018
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
62,310,270
|
|
|
$
|
6
|
|
|
58,566,789
|
|
|
$
|
6
|
|
|
14,198,311
|
|
|
$
|
1
|
|
|
$
|
443,182
|
|
|
$
|
(34
|
)
|
|
$
|
(335,863
|
)
|
|
$
|
118,976
|
|
|
$
|
226,274
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Operating activities
|
|
|
|
|
||||
Net loss
|
|
$
|
(96,691
|
)
|
|
$
|
(65,618
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation of property and equipment
|
|
6,331
|
|
|
4,367
|
|
||
Amortization of acquired intangible assets
|
|
7,721
|
|
|
6,018
|
|
||
Amortization of course creation costs
|
|
1,437
|
|
|
1,050
|
|
||
Equity-based compensation
|
|
36,972
|
|
|
18,988
|
|
||
Provision for doubtful accounts
|
|
493
|
|
|
360
|
|
||
Amortization of debt discount and debt issuance costs
|
|
1,215
|
|
|
1,074
|
|
||
Debt extinguishment costs
|
|
4,197
|
|
|
931
|
|
||
Deferred tax benefit
|
|
(98
|
)
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(10,352
|
)
|
|
(2,720
|
)
|
||
Prepaid expenses and other assets
|
|
(2,990
|
)
|
|
(3,204
|
)
|
||
Accounts payable
|
|
928
|
|
|
2,388
|
|
||
Accrued expenses and other liabilities
|
|
6,912
|
|
|
8,721
|
|
||
Accrued author fees
|
|
1,452
|
|
|
1,328
|
|
||
Deferred revenue
|
|
28,190
|
|
|
15,501
|
|
||
Net cash used in operating activities
|
|
(14,283
|
)
|
|
(10,816
|
)
|
||
Investing activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(6,576
|
)
|
|
(4,459
|
)
|
||
Purchases of content library
|
|
(2,345
|
)
|
|
(1,769
|
)
|
||
Net cash used in investing activities
|
|
(8,921
|
)
|
|
(6,228
|
)
|
||
Financing activities
|
|
|
|
|
||||
Proceeds from initial public offering, net of underwriting discounts and commissions
|
|
332,080
|
|
|
—
|
|
||
Payments of costs related to initial public offering
|
|
(7,083
|
)
|
|
(175
|
)
|
||
Borrowings of long-term debt
|
|
20,000
|
|
|
115,000
|
|
||
Repayments of long-term debt
|
|
(137,710
|
)
|
|
(85,000
|
)
|
||
Payments of debt extinguishment costs
|
|
(2,179
|
)
|
|
—
|
|
||
Payments of debt issuance costs
|
|
(450
|
)
|
|
(837
|
)
|
||
Payments to settle equity appreciation rights
|
|
(325
|
)
|
|
—
|
|
||
Taxes paid related to net share settlement
|
|
(78
|
)
|
|
—
|
|
||
Proceeds from the issuance of common units
|
|
—
|
|
|
3,136
|
|
||
Redemption of incentive units
|
|
—
|
|
|
(2,801
|
)
|
||
Payments of facility financing obligation
|
|
(13
|
)
|
|
(12
|
)
|
||
Net cash provided by financing activities
|
|
204,242
|
|
|
29,311
|
|
||
Effect of exchange rate change on cash, cash equivalents, and restricted cash
|
|
(136
|
)
|
|
38
|
|
||
Net increase in cash, cash equivalents, and restricted cash
|
|
180,902
|
|
|
12,305
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
28,477
|
|
|
19,397
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
|
$
|
209,379
|
|
|
$
|
31,702
|
|
Supplemental cash flow disclosure:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
4,271
|
|
|
$
|
4,702
|
|
Cash paid for income taxes, net
|
|
$
|
338
|
|
|
$
|
284
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
||||
Conversion of redeemable convertible preferred units
|
|
$
|
582,041
|
|
|
$
|
—
|
|
Redeemable convertible preferred unit accretion
|
|
$
|
176,275
|
|
|
$
|
57,200
|
|
Unpaid capital expenditures
|
|
$
|
252
|
|
|
$
|
84
|
|
Offering costs, accrued but not yet paid
|
|
$
|
607
|
|
|
$
|
113
|
|
Equity-based compensation capitalized as internal-use software
|
|
$
|
114
|
|
|
$
|
—
|
|
Issuance of warrants to purchase shares of Class A common stock
|
|
$
|
984
|
|
|
$
|
—
|
|
Reconciliation of cash, cash equivalents, and restricted cash:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
208,626
|
|
|
$
|
31,492
|
|
Restricted cash included in other assets
|
|
753
|
|
|
210
|
|
||
Total cash, cash equivalents, and restricted cash
|
|
$
|
209,379
|
|
|
$
|
31,702
|
|
•
|
The amended and restated limited liability company agreement of Pluralsight Holdings (“LLC Agreement”) was amended and restated to, among other things: (i) appoint Pluralsight, Inc. as its sole managing member and (ii) effectuate the conversion of all outstanding redeemable convertible preferred limited liability company units, incentive units, and Class B incentive units into a single class of common units. See Note 9—Stockholders' Equity for additional details.
|
•
|
Certain members of Pluralsight Holdings that were corporations merged with and into Pluralsight, Inc. and certain members of Pluralsight Holdings contributed certain of their LLC Units to Pluralsight, Inc., in each case in exchange for shares of Class A common stock.
|
•
|
The certificate of incorporation of Pluralsight, Inc. was amended and restated to authorize
three
classes of common stock, Class A common stock, Class B common stock, Class C common stock, and one class of preferred stock. Class B and Class C common stock were issued on a
one
-for-one basis to the members of Pluralsight Holdings who retained LLC Units (“Continuing Members”). Class B and Class C common stock have voting rights but no economic rights. See Note 9—Stockholders' Equity for additional details.
|
•
|
Fair Value of Common Stock:
Prior to the IPO, the fair value of the common units underlying equity awards was determined considering numerous objective and subjective factors and required judgment to determine the fair value as of each grant date. Subsequent to the IPO, the Company determines the fair value of common stock as of each grant date using the market closing price of Pluralsight, Inc.'s Class A common stock on the date of grant.
|
•
|
Risk-free Interest Rate:
The risk-free interest rate is derived from the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term of the options.
|
•
|
Expected Term:
The expected term is estimated using the simplified method due to a lack of historical exercise activity for the Company. The simplified method calculates the expected term as the mid-point between the vesting date and the contractual expiration date of the award. For the ESPP, the Company uses the period from the beginning of the offering period to the end of each purchase period.
|
•
|
Volatility:
The price volatility factor is based on the historical volatilities of comparable companies as the Company does not have sufficient trading history for its common stock. To determine comparable companies, the Company considers public enterprise cloud-based application providers and selects those that are similar in size, stage of life cycle, and financial leverage. The Company will continue to use this process until a sufficient amount of historical information regarding volatility becomes available, or until circumstances change such that the identified companies are no longer relevant, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.
|
•
|
Dividend Yield:
The Company has not and does not expect to pay dividends for the foreseeable future.
|
|
|
September 30, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
201,264
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
201,264
|
|
|
|
December 31, 2017
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
25,146
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,146
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Prepaid expenses
|
|
$
|
7,503
|
|
|
$
|
4,586
|
|
Other current assets
|
|
534
|
|
|
539
|
|
||
Prepaid expenses and other current assets
|
|
$
|
8,037
|
|
|
$
|
5,125
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Accrued compensation
|
|
$
|
22,545
|
|
|
$
|
18,568
|
|
Accrued income and other taxes payable
|
|
4,891
|
|
|
3,492
|
|
||
Accrued other current liabilities
|
|
3,979
|
|
|
4,454
|
|
||
Accrued expenses
|
|
$
|
31,415
|
|
|
$
|
26,514
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Computer equipment
|
|
$
|
8,951
|
|
|
$
|
7,482
|
|
Software
|
|
2,026
|
|
|
1,982
|
|
||
Capitalized internal-use software costs
|
|
12,370
|
|
|
8,631
|
|
||
Furniture and fixtures
|
|
5,364
|
|
|
5,234
|
|
||
Buildings
|
|
11,251
|
|
|
11,251
|
|
||
Leasehold improvements
|
|
1,481
|
|
|
1,324
|
|
||
Construction in progress
|
|
882
|
|
|
587
|
|
||
Total property and equipment
|
|
42,325
|
|
|
36,491
|
|
||
Less: Accumulated depreciation
|
|
(19,822
|
)
|
|
(14,034
|
)
|
||
Property and equipment, net
|
|
$
|
22,503
|
|
|
$
|
22,457
|
|
|
|
September 30, 2018
|
||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
Content library:
|
|
|
|
|
|
|
||||||
Acquired content library
|
|
$
|
32,835
|
|
|
$
|
31,446
|
|
|
$
|
1,389
|
|
Course creation costs
|
|
12,986
|
|
|
6,828
|
|
|
6,158
|
|
|||
Total
|
|
$
|
45,821
|
|
|
$
|
38,274
|
|
|
$
|
7,547
|
|
Intangible assets:
|
|
|
|
|
|
|
||||||
Technology
|
|
$
|
4,500
|
|
|
$
|
2,610
|
|
|
$
|
1,890
|
|
Trademarks
|
|
162
|
|
|
162
|
|
|
—
|
|
|||
Noncompetition agreements
|
|
390
|
|
|
390
|
|
|
—
|
|
|||
Customer relationships
|
|
2,750
|
|
|
2,750
|
|
|
—
|
|
|||
Database
|
|
40
|
|
|
40
|
|
|
—
|
|
|||
Domain names
|
|
45
|
|
|
—
|
|
|
45
|
|
|||
Total
|
|
$
|
7,887
|
|
|
$
|
5,952
|
|
|
$
|
1,935
|
|
|
|
December 31, 2017
|
||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
Content library:
|
|
|
|
|
|
|
||||||
Acquired content library
|
|
$
|
32,835
|
|
|
$
|
24,643
|
|
|
$
|
8,192
|
|
Course creation costs
|
|
10,640
|
|
|
5,391
|
|
|
5,249
|
|
|||
Total
|
|
$
|
43,475
|
|
|
$
|
30,034
|
|
|
$
|
13,441
|
|
Intangible assets:
|
|
|
|
|
|
|
||||||
Technology
|
|
$
|
4,500
|
|
|
$
|
2,080
|
|
|
$
|
2,420
|
|
Trademarks
|
|
1,162
|
|
|
773
|
|
|
389
|
|
|||
Noncompetition agreements
|
|
390
|
|
|
390
|
|
|
—
|
|
|||
Customer relationships
|
|
2,750
|
|
|
2,750
|
|
|
—
|
|
|||
Database
|
|
40
|
|
|
40
|
|
|
—
|
|
|||
Domain names
|
|
45
|
|
|
—
|
|
|
45
|
|
|||
Total
|
|
$
|
8,887
|
|
|
$
|
6,033
|
|
|
$
|
2,854
|
|
|
December 31, 2017
|
||
Principal borrowings outstanding
|
$
|
116,620
|
|
Less: Debt issuance costs, net of amortization
|
(583
|
)
|
|
Net carrying amount
|
$
|
116,037
|
|
Years Ending December 31,
|
|
||
2018 (remaining three months)
|
$
|
1,668
|
|
2019
|
5,804
|
|
|
2020
|
7,466
|
|
|
2021
|
9,879
|
|
|
2022
|
9,871
|
|
|
Thereafter
|
109,185
|
|
|
Total future minimum lease payments
|
$
|
143,873
|
|
•
|
48,407,645
common units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted on a
one
-for-one basis into LLC Units.
|
•
|
48,447,880
redeemable convertible preferred units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted on a
one
-for-one basis into LLC Units.
|
•
|
15,783,689
incentive units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted into
12,667,778
LLC Units after giving effect to the threshold price and catch-up price per unit.
|
•
|
3,000,000
Class B incentive units of Pluralsight Holdings outstanding prior to the Reorganization Transactions were converted into
1,747,067
LLC Units after giving effect to the threshold price and catch-up price per unit.
|
|
|
September 30, 2018
|
||||
|
|
Units
|
|
Ownership %
|
||
Pluralsight, Inc.'s ownership of LLC Units
|
|
62,310,270
|
|
|
47.4
|
%
|
LLC Units owned by the Continuing Members
(1)
|
|
69,092,179
|
|
|
52.6
|
%
|
|
|
131,402,449
|
|
|
100.0
|
%
|
(1) Excludes 3,672,921 LLC Units still subject to time-based vesting requirements.
|
|
|
Unvested Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
Unvested Class A common shares outstanding following the Reorganization Transactions
|
|
605,390
|
|
|
$
|
6.55
|
|
Vested
|
|
(237,530
|
)
|
|
8.40
|
|
|
Effect of the Rescission Transactions
|
|
(367,860
|
)
|
|
5.35
|
|
|
Unvested Class A common shares outstanding—September 30, 2018
|
|
—
|
|
|
$
|
—
|
|
|
|
Unvested Units
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
Unvested LLC Units outstanding following the Reorganization Transactions
|
|
3,942,674
|
|
|
$
|
7.73
|
|
Vested
|
|
(637,613
|
)
|
|
7.74
|
|
|
Effect of the Rescission Transactions
|
|
367,860
|
|
|
5.35
|
|
|
Unvested LLC Units outstanding—September 30, 2018
|
|
3,672,921
|
|
|
$
|
7.49
|
|
|
|
Stock Options Outstanding
|
|
Weighted-
Average
Exercise Price
|
|
Weighted-
Average
Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in millions)
|
|||||
Balance as of December 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Granted
|
|
5,236,155
|
|
|
15.00
|
|
|
|
|
|
|||
Forfeited or cancelled
|
|
(3,979
|
)
|
|
15.00
|
|
|
|
|
|
|||
Balance as of September 30, 2018
|
|
5,232,176
|
|
|
$
|
15.00
|
|
|
9.6
|
|
$
|
88.9
|
|
Dividend yield
|
|
None
|
Volatility
|
|
55.0%
|
Risk-free interest rate
|
|
2.97%
|
Expected term (years)
|
|
5.63
|
|
|
Number of RSUs or Units
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
RSUs of Pluralsight, Inc.
|
|
|
|
|
|||
Balance at December 31, 2017
|
|
2,178,450
|
|
|
$
|
7.06
|
|
Granted
|
|
3,464,817
|
|
|
11.93
|
|
|
Forfeited or cancelled
|
|
(244,500
|
)
|
|
7.62
|
|
|
Balance at September 30, 2018
|
|
5,398,767
|
|
|
$
|
10.16
|
|
Restricted Share Units of Pluralsight Holdings:
|
|
|
|
|
|||
Balance at December 31, 2017 and September 30, 2018
|
|
3,000,000
|
|
|
$
|
8.24
|
|
Dividend yield
|
|
None
|
Volatility
|
|
55.0%
|
Risk-free interest rate
|
|
2.05%—2.50%
|
Expected term (years)
|
|
0.5—2.0
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of revenue
|
|
$
|
40
|
|
|
$
|
5
|
|
|
$
|
86
|
|
|
$
|
15
|
|
Sales and marketing
|
|
4,372
|
|
|
631
|
|
|
9,343
|
|
|
2,010
|
|
||||
Technology and content
|
|
2,790
|
|
|
499
|
|
|
5,839
|
|
|
1,489
|
|
||||
General and administrative
|
|
8,842
|
|
|
11,762
|
|
|
21,704
|
|
|
15,474
|
|
||||
Total equity-based compensation
|
|
$
|
16,044
|
|
|
$
|
12,897
|
|
|
$
|
36,972
|
|
|
$
|
18,988
|
|
|
|
Three Months Ended September 30, 2018
|
|
May 16, 2018 through September 30, 2018
|
||||
|
|
|||||||
Numerator:
|
|
|
|
|
||||
Net loss
|
|
$
|
(29,737
|
)
|
|
$
|
(54,031
|
)
|
Less: Net loss attributable to non-controlling interests
|
|
(15,578
|
)
|
|
(28,284
|
)
|
||
Net loss attributable to Pluralsight, Inc.
|
|
$
|
(14,159
|
)
|
|
$
|
(25,747
|
)
|
Denominator:
|
|
|
|
|
||||
Weighted-average common shares outstanding
|
|
62,876
|
|
|
62,867
|
|
||
Less: Weighted-average common shares subject to time-based vesting
|
|
(404
|
)
|
|
(467
|
)
|
||
Weighted-average common shares outstanding, basic and diluted
|
|
62,472
|
|
|
62,400
|
|
||
Net loss per share, basic and diluted
|
|
$
|
(0.23
|
)
|
|
$
|
(0.41
|
)
|
|
|
As of September 30, 2018
|
|
LLC Units held by Continuing Members
|
|
72,765
|
|
Stock options
|
|
5,232
|
|
RSUs of Pluralsight, Inc.
|
|
5,399
|
|
Restricted Share Units of Pluralsight Holdings
|
|
3,000
|
|
Shares issuable under ESPP
|
|
2,824
|
|
Warrants to purchase Class A common shares
|
|
424
|
|
Total
|
|
89,644
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
United States
|
$
|
39,368
|
|
|
$
|
28,543
|
|
|
$
|
104,901
|
|
|
$
|
77,263
|
|
United Kingdom
|
6,375
|
|
|
4,570
|
|
|
17,463
|
|
|
13,023
|
|
||||
Other foreign locations
|
15,810
|
|
|
10,173
|
|
|
42,405
|
|
|
29,130
|
|
||||
Total revenue
|
$
|
61,553
|
|
|
$
|
43,286
|
|
|
$
|
164,769
|
|
|
$
|
119,416
|
|
Percentage of revenue generated outside of the United States
|
36
|
%
|
|
34
|
%
|
|
36
|
%
|
|
35
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(dollars in thousands)
|
||||||||||||||
Billings
|
|
$
|
72,243
|
|
|
$
|
50,005
|
|
|
$
|
192,959
|
|
|
$
|
134,917
|
|
Billings from business customers
|
|
$
|
61,143
|
|
|
$
|
39,920
|
|
|
$
|
161,018
|
|
|
$
|
105,092
|
|
% of billings from business customers
|
|
85
|
%
|
|
80
|
%
|
|
83
|
%
|
|
78
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Revenue
|
|
$
|
61,553
|
|
|
$
|
43,286
|
|
|
$
|
164,769
|
|
|
$
|
119,416
|
|
Cost of revenue
(1)(2)
|
|
15,331
|
|
|
12,582
|
|
|
46,107
|
|
|
35,678
|
|
||||
Gross profit
|
|
46,222
|
|
|
30,704
|
|
|
118,662
|
|
|
83,738
|
|
||||
Operating expenses
(1)(2)
:
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
41,392
|
|
|
29,410
|
|
|
109,792
|
|
|
70,254
|
|
||||
Technology and content
|
|
17,227
|
|
|
12,448
|
|
|
47,045
|
|
|
33,979
|
|
||||
General and administrative
|
|
17,398
|
|
|
19,094
|
|
|
48,138
|
|
|
34,773
|
|
||||
Total operating expenses
|
|
76,017
|
|
|
60,952
|
|
|
204,975
|
|
|
139,006
|
|
||||
Loss from operations
|
|
(29,795
|
)
|
|
(30,248
|
)
|
|
(86,313
|
)
|
|
(55,268
|
)
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
(342
|
)
|
|
(3,252
|
)
|
|
(6,476
|
)
|
|
(8,376
|
)
|
||||
Loss on debt extinguishment
|
|
—
|
|
|
—
|
|
|
(4,085
|
)
|
|
(1,882
|
)
|
||||
Other income, net
|
|
654
|
|
|
55
|
|
|
689
|
|
|
124
|
|
||||
Loss before income taxes
|
|
(29,483
|
)
|
|
(33,445
|
)
|
|
(96,185
|
)
|
|
(65,402
|
)
|
||||
Provision for income taxes
|
|
(254
|
)
|
|
(90
|
)
|
|
(506
|
)
|
|
(216
|
)
|
||||
Net loss
|
|
$
|
(29,737
|
)
|
|
$
|
(33,535
|
)
|
|
$
|
(96,691
|
)
|
|
$
|
(65,618
|
)
|
(1)
|
Includes equity-based compensation expense as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cost of revenue
|
|
$
|
40
|
|
|
$
|
5
|
|
|
$
|
86
|
|
|
$
|
15
|
|
Sales and marketing
|
|
4,372
|
|
|
631
|
|
|
9,343
|
|
|
2,010
|
|
||||
Technology and content
|
|
2,790
|
|
|
499
|
|
|
5,839
|
|
|
1,489
|
|
||||
General and administrative
|
|
8,842
|
|
|
11,762
|
|
|
21,704
|
|
|
15,474
|
|
||||
Total equity-based compensation
|
|
$
|
16,044
|
|
|
$
|
12,897
|
|
|
$
|
36,972
|
|
|
$
|
18,988
|
|
(2)
|
Includes amortization of acquired intangible assets as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cost of revenue
|
|
$
|
880
|
|
|
$
|
1,642
|
|
|
$
|
6,803
|
|
|
$
|
4,926
|
|
Sales and marketing
|
|
—
|
|
|
161
|
|
|
389
|
|
|
483
|
|
||||
Technology and content
|
|
176
|
|
|
176
|
|
|
529
|
|
|
528
|
|
||||
General and administrative
|
|
—
|
|
|
27
|
|
|
—
|
|
|
81
|
|
||||
Total amortization of acquired intangible assets
|
|
$
|
1,056
|
|
|
$
|
2,006
|
|
|
$
|
7,721
|
|
|
$
|
6,018
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
25
|
|
|
29
|
|
|
28
|
|
|
30
|
|
Gross profit
|
|
75
|
|
|
71
|
|
|
72
|
|
|
70
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
||||
Sales and marketing
|
|
67
|
|
|
68
|
|
|
67
|
|
|
59
|
|
Technology and content
|
|
28
|
|
|
29
|
|
|
29
|
|
|
28
|
|
General and administrative
|
|
28
|
|
|
44
|
|
|
29
|
|
|
29
|
|
Total operating expenses
|
|
123
|
|
|
141
|
|
|
125
|
|
|
116
|
|
Loss from operations
|
|
(48
|
)
|
|
(70
|
)
|
|
(53
|
)
|
|
(46
|
)
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
|
(1
|
)
|
|
(8
|
)
|
|
(4
|
)
|
|
(7
|
)
|
Loss on debt extinguishment
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
Other income, net
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Loss before income taxes
|
|
(48
|
)
|
|
(78
|
)
|
|
(59
|
)
|
|
(55
|
)
|
Provision for income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
|
|
(48
|
)%
|
|
(78
|
)%
|
|
(59
|
)%
|
|
(55
|
)%
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Revenue
|
|
$
|
61,553
|
|
|
$
|
43,286
|
|
|
$
|
18,267
|
|
|
42
|
%
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Cost of revenue
|
|
$
|
15,331
|
|
|
$
|
12,582
|
|
|
$
|
2,749
|
|
|
22
|
%
|
Gross profit
|
|
46,222
|
|
|
30,704
|
|
|
15,518
|
|
|
51
|
%
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Sales and marketing
|
|
$
|
41,392
|
|
|
$
|
29,410
|
|
|
$
|
11,982
|
|
|
41
|
%
|
Technology and content
|
|
17,227
|
|
|
12,448
|
|
|
4,779
|
|
|
38
|
%
|
|||
General and administrative
|
|
17,398
|
|
|
19,094
|
|
|
(1,696
|
)
|
|
(9
|
)%
|
|||
Total operating expenses
|
|
$
|
76,017
|
|
|
$
|
60,952
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Interest expense
|
|
$
|
(342
|
)
|
|
$
|
(3,252
|
)
|
|
$
|
2,910
|
|
|
(89
|
)%
|
Other income, net
|
|
654
|
|
|
55
|
|
|
599
|
|
|
1,089
|
%
|
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Cost of revenue
|
|
$
|
46,107
|
|
|
$
|
35,678
|
|
|
$
|
10,429
|
|
|
29
|
%
|
Gross profit
|
|
118,662
|
|
|
83,738
|
|
|
34,924
|
|
|
42
|
%
|
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Sales and marketing
|
|
$
|
109,792
|
|
|
$
|
70,254
|
|
|
$
|
39,538
|
|
|
56
|
%
|
Technology and content
|
|
47,045
|
|
|
33,979
|
|
|
13,066
|
|
|
38
|
%
|
|||
General and administrative
|
|
48,138
|
|
|
34,773
|
|
|
13,365
|
|
|
38
|
%
|
|||
Total operating expenses
|
|
$
|
204,975
|
|
|
$
|
139,006
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Interest expense
|
|
$
|
(6,476
|
)
|
|
$
|
(8,376
|
)
|
|
$
|
1,900
|
|
|
(23
|
)%
|
Loss on debt extinguishment
|
|
(4,085
|
)
|
|
(1,882
|
)
|
|
(2,203
|
)
|
|
117
|
%
|
|||
Other income, net
|
|
689
|
|
|
124
|
|
|
565
|
|
|
456
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(dollars in thousands)
|
||||||||||||||
Non-GAAP gross profit
|
|
$
|
47,142
|
|
|
$
|
32,351
|
|
|
$
|
125,551
|
|
|
$
|
88,679
|
|
Non-GAAP gross margin
|
|
77
|
%
|
|
75
|
%
|
|
76
|
%
|
|
74
|
%
|
||||
Non-GAAP operating loss
|
|
$
|
(12,695
|
)
|
|
$
|
(15,345
|
)
|
|
$
|
(41,620
|
)
|
|
$
|
(30,262
|
)
|
Free cash flow
|
|
$
|
(909
|
)
|
|
$
|
(8,840
|
)
|
|
$
|
(23,204
|
)
|
|
$
|
(17,044
|
)
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(dollars in thousands)
|
||||||||||||||
Gross profit
|
|
$
|
46,222
|
|
|
$
|
30,704
|
|
|
$
|
118,662
|
|
|
$
|
83,738
|
|
Equity-based compensation
|
|
40
|
|
|
5
|
|
|
86
|
|
|
15
|
|
||||
Amortization of acquired intangible assets
|
|
880
|
|
|
1,642
|
|
|
6,803
|
|
|
4,926
|
|
||||
Non-GAAP gross profit
|
|
$
|
47,142
|
|
|
$
|
32,351
|
|
|
$
|
125,551
|
|
|
$
|
88,679
|
|
Gross margin
|
|
75
|
%
|
|
71
|
%
|
|
72
|
%
|
|
70
|
%
|
||||
Non-GAAP gross margin
|
|
77
|
%
|
|
75
|
%
|
|
76
|
%
|
|
74
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Loss from operations
|
|
$
|
(29,795
|
)
|
|
$
|
(30,248
|
)
|
|
$
|
(86,313
|
)
|
|
$
|
(55,268
|
)
|
Equity-based compensation
|
|
16,044
|
|
|
12,897
|
|
|
36,972
|
|
|
18,988
|
|
||||
Amortization of acquired intangible assets
|
|
1,056
|
|
|
2,006
|
|
|
7,721
|
|
|
6,018
|
|
||||
Non-GAAP operating loss
|
|
$
|
(12,695
|
)
|
|
$
|
(15,345
|
)
|
|
$
|
(41,620
|
)
|
|
$
|
(30,262
|
)
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Net cash provided by (used in) operating activities
|
|
$
|
1,934
|
|
|
$
|
(6,866
|
)
|
|
$
|
(14,283
|
)
|
|
$
|
(10,816
|
)
|
Less: Purchases of property and equipment
|
|
(2,002
|
)
|
|
(1,434
|
)
|
|
(6,576
|
)
|
|
(4,459
|
)
|
||||
Less: Purchases of content library
|
|
(841
|
)
|
|
(540
|
)
|
|
(2,345
|
)
|
|
(1,769
|
)
|
||||
Free cash flow
|
|
$
|
(909
|
)
|
|
$
|
(8,840
|
)
|
|
$
|
(23,204
|
)
|
|
$
|
(17,044
|
)
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Net cash used in operating activities
|
|
$
|
(14,283
|
)
|
|
$
|
(10,816
|
)
|
Net cash used in investing activities
|
|
(8,921
|
)
|
|
(6,228
|
)
|
||
Net cash provided by financing activities
|
|
204,242
|
|
|
29,311
|
|
||
Effect of exchange rate change on cash, cash equivalents, and restricted cash
|
|
(136
|
)
|
|
38
|
|
||
Net increase in cash, cash equivalents, and restricted cash
|
|
$
|
180,902
|
|
|
$
|
12,305
|
|
|
|
|
|
Incorporated by Reference
|
|
Filed or Furnished Herewith
|
||||||
Exhibit
Number
|
|
Description
|
|
Form
|
|
File No.
|
|
Exhibit Number
|
|
Filing Date
with SEC
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.2*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
PLURALSIGHT
,
INC
.
|
|
|
|
|
|
By:
|
/s/ Aaron Skonnard
|
October 24, 2018
|
|
Aaron Skonnard
Chief Executive Officer
|
|
PLURALSIGHT
,
INC
.
|
|
|
|
|
|
By:
|
/s/ James Budge
|
October 24, 2018
|
|
James Budge
Chief Financial Officer
|
LANDLORD:
|
HIGHLINE OFFICE 1, L.C.
|
TENANT:
|
PLURALSIGHT, LLC
|
1.
|
“
Landlord
”:
Highline Office 1, L.C.
, a Utah limited liability company.
|
2.
|
“
Tenant
”:
Pluralsight, LLC
, a Nevada limited liability company.
|
3.
|
“
Gross Square Feet
”: the area determined in accordance with the standards set forth in Gross Areas of a Building: Standard Methods of Measurement (ANSI/BOMA Z65.3-[2017]), excluding structured parking or ground-level canopies (the “
Measurement Standard
”). The terms “GSF” and “gross square foot” shall have corollary meanings.
|
4.
|
“Leased Premises”: The to-be constructed Building depicted on Exhibit “B” attached hereto. For reference only, it is anticipated that the Leased Premises will contain approximately 348,251 Gross Square Feet of space.
|
5.
|
“Parking”: a minimum of 1,650 parking stalls, but no more than 1,815 parking stalls, subject to modification as provided in Sections 20.2, 20.3 and Section 20.6 of this Lease, which shall be exclusive subject to Section 20.6 hereof.
|
6.
|
“Term”: One hundred eighty (180) full calendar months, plus the partial calendar month, if any, occurring after the Rent Commencement Date if the Rent Commencement Date occurs other than on the first day of a calendar month, and including the Extension Periods (defined below) exercised pursuant to the Extension Option (defined below).
|
7.
|
“Commencement Date”: See Section 2.1.
|
8.
|
“Rent Commencement Date”: See Section 2.2.
|
9.
|
“Tenant Improvement Allowance”: the amount determined in accordance with the terms of the Work Letter (as defined below).
|
10.
|
“Basic Annual Rent”: Initially, an amount equal to the Cost of Construction (as defined below) multiplied by 8.75%, subject to adjustment as provided in Section 3.1 below and subject to annual increases at the Escalation Rate.
|
11.
|
“Escalation Rate”: On each anniversary of the Rent Commencement Date two percent (2%) per year on a cumulative basis.
|
12.
|
“Estimated Costs”: See Section 4.1.
|
13.
|
“Tenant’s Proportionate Share”: See Section 4.1.
|
14.
|
“Landlord’s address for notice”:
|
15.
|
“Tenant’s address for notice (if other than the Leased Premises)”:
|
16.
|
“Broker(s)”: Tenant’s Broker: Chris Falk of Newmark Grubb ACRES
|
I.
|
LEASED PREMISES
|
II.
|
TERM
|
III.
|
BASIC RENTAL PAYMENTS
|
IV.
|
ADDITIONAL RENT
|
V.
|
CREDIT ENHANCEMENT.
|
VI.
|
USE
|
VII.
|
UTILITIES AND SERVICE
|
VIII.
|
MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS
|
IX.
|
ASSIGNMENT
|
XI.
|
INSURANCE
|
XII.
|
DESTRUCTION
|
XIII.
|
CONDEMNATION
|
XIV.
|
LANDLORD’S RIGHTS TO CURE
|
XV.
|
FINANCING; SUBORDINATION
|
XVI.
|
EVENTS OF DEFAULT; REMEDIES
|
XVII.
|
PROVISIONS APPLICABLE AT TERMINATION OF LEASE
|
XVIII.
|
ATTORNEYS’ FEES
|
XIX.
|
ESTOPPEL CERTIFICATE
|
XX.
|
COMMON AREAS
|
XXI.
|
SIGNS, AWNINGS, AND CANOPIES
|
XXII.
|
MISCELLANEOUS PROVISIONS
|
LANDLORD:
|
HIGHLINE OFFICE 1, L.C., a Utah limited liability company, by its Manager
|
||
|
|
|
|
|
|
KC GARDNER COMPANY, L.C.,
a Utah limited liability company
|
|
|
|
|
|
|
|
By:
|
/s/ Christian Gardner
|
|
|
Name:
|
Christian Gardner
|
|
|
Its:
|
Manager
|
|
|
|
|
TENANT:
|
PLURALSIGHT, LLC, a Nevada limited liability company
|
||
|
|
|
|
|
By:
|
/s/ James Budge
|
|
|
Its:
|
Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pluralsight, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
c.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: October 24, 2018
|
|
|
|
|
/s/ Aaron Skonnard
|
|
|
|
|
|
|
Aaron Skonnard
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
(
Principal Executive Officer
)
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pluralsight, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
c.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: October 24, 2018
|
|
|
|
|
/s/ James Budge
|
|
|
|
|
|
|
James Budge
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
(
Principal Financial and Accounting Officer
)
|
|
|
1.
|
the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: October 24, 2018
|
|
|
|
|
/s/ Aaron Skonnard
|
|
|
|
|
|
|
Aaron Skonnard
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
(
Principal Executive Officer
)
|
|
|
1.
|
the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: October 24, 2018
|
|
|
|
|
/s/ James Budge
|
|
|
|
|
|
|
James Budge
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
(
Principal Financial and Accounting Officer
)
|
|