|
|
|
|
|
|
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;
|
•
|
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;
|
•
|
our use of net proceeds from our convertible note offering in March 2019; and
|
•
|
our ability to satisfy our obligations under the convertible senior notes.
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
736,566
|
|
|
$
|
194,306
|
|
Accounts receivable, net of allowances of $2,713 and $2,501 as of March 31, 2019 and December 31, 2018, respectively
|
|
51,865
|
|
|
63,436
|
|
||
Deferred contract acquisition costs, net
|
|
16,863
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
|
10,238
|
|
|
8,323
|
|
||
Total current assets
|
|
815,532
|
|
|
266,065
|
|
||
Restricted cash
|
|
27,849
|
|
|
16,765
|
|
||
Property and equipment, net
|
|
36,552
|
|
|
31,641
|
|
||
Content library, net
|
|
6,858
|
|
|
7,050
|
|
||
Intangible assets, net
|
|
1,582
|
|
|
1,759
|
|
||
Goodwill
|
|
123,119
|
|
|
123,119
|
|
||
Deferred contract acquisition costs, noncurrent, net
|
|
3,333
|
|
|
—
|
|
||
Other assets
|
|
1,085
|
|
|
1,064
|
|
||
Total assets
|
|
$
|
1,015,910
|
|
|
$
|
447,463
|
|
Liabilities and stockholders' equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
8,605
|
|
|
$
|
7,160
|
|
Accrued expenses
|
|
27,644
|
|
|
32,047
|
|
||
Accrued author fees
|
|
10,737
|
|
|
10,002
|
|
||
Deferred revenue
|
|
167,956
|
|
|
157,695
|
|
||
Total current liabilities
|
|
214,942
|
|
|
206,904
|
|
||
Deferred revenue, noncurrent
|
|
12,339
|
|
|
14,886
|
|
||
Convertible senior notes, net
|
|
481,167
|
|
|
—
|
|
||
Facility financing obligations
|
|
20,070
|
|
|
15,777
|
|
||
Other liabilities
|
|
1,514
|
|
|
1,303
|
|
||
Total liabilities
|
|
730,032
|
|
|
238,870
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
||||
Preferred stock, $0.0001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding as of March 31, 2019 and December 31, 2018
|
|
—
|
|
|
—
|
|
||
Class A common stock, $0.0001 par value per share, 1,000,000,000 shares authorized, 95,096,979 shares issued and outstanding as of March 31, 2019; 65,191,907 shares issued and outstanding as of December 31, 2018
|
|
10
|
|
|
7
|
|
||
Class B common stock, $0.0001 par value per share, 200,000,000 shares authorized, 29,071,789 shares issued and outstanding as of March 31, 2019; 57,490,881 shares issued and outstanding as of December 31, 2018
|
|
3
|
|
|
6
|
|
||
Class C common stock, $0.0001 par value per share, 50,000,000 shares authorized, 14,162,311 shares issued and outstanding as of March 31, 2019; 14,586,173 shares issued and outstanding as of December 31, 2018
|
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
|
560,493
|
|
|
452,576
|
|
||
Accumulated other comprehensive loss
|
|
(31
|
)
|
|
(41
|
)
|
||
Accumulated deficit
|
|
(359,973
|
)
|
|
(351,123
|
)
|
||
Total stockholders’ equity attributable to Pluralsight, Inc.
|
|
200,503
|
|
|
101,426
|
|
||
Non-controlling interests
|
|
85,375
|
|
|
107,167
|
|
||
Total stockholders’ equity
|
|
285,878
|
|
|
208,593
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
1,015,910
|
|
|
$
|
447,463
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Revenue
|
|
$
|
69,617
|
|
|
$
|
49,644
|
|
Cost of revenue
|
|
16,705
|
|
|
14,886
|
|
||
Gross profit
|
|
52,912
|
|
|
34,758
|
|
||
Operating expenses:
|
|
|
|
|
||||
Sales and marketing
|
|
44,050
|
|
|
29,467
|
|
||
Technology and content
|
|
20,032
|
|
|
13,325
|
|
||
General and administrative
|
|
21,809
|
|
|
11,292
|
|
||
Total operating expenses
|
|
85,891
|
|
|
54,084
|
|
||
Loss from operations
|
|
(32,979
|
)
|
|
(19,326
|
)
|
||
Other (expense) income:
|
|
|
|
|
||||
Interest expense
|
|
(2,024
|
)
|
|
(3,710
|
)
|
||
Other income (expense), net
|
|
1,614
|
|
|
(13
|
)
|
||
Loss before income taxes
|
|
(33,389
|
)
|
|
(23,049
|
)
|
||
Provision for income taxes
|
|
(154
|
)
|
|
(109
|
)
|
||
Net loss
|
|
$
|
(33,543
|
)
|
|
$
|
(23,158
|
)
|
Less: Net loss attributable to non-controlling interests
|
|
(14,660
|
)
|
|
—
|
|
||
Net loss attributable to Pluralsight, Inc.
|
|
$
|
(18,883
|
)
|
|
$
|
(23,158
|
)
|
Less: Accretion of Series A redeemable convertible preferred units
|
|
—
|
|
|
(19,525
|
)
|
||
Net loss attributable to common shares
|
|
$
|
(18,883
|
)
|
|
$
|
(42,683
|
)
|
Net loss per share, basic and diluted
(1)
|
|
$
|
(0.25
|
)
|
|
|
||
Weighted-average common shares used in computing basic and diluted net loss per share
(1)
|
|
75,927
|
|
|
|
(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 14—Net Loss Per Share for additional details.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Net loss
|
|
$
|
(33,543
|
)
|
|
$
|
(23,158
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
||||
Foreign currency translation gains, net
|
|
18
|
|
|
5
|
|
||
Comprehensive loss
|
|
$
|
(33,525
|
)
|
|
$
|
(23,153
|
)
|
Less: Comprehensive loss attributable to non-controlling interests
|
|
(14,652
|
)
|
|
—
|
|
||
Comprehensive loss attributable to Pluralsight, Inc.
|
|
$
|
(18,873
|
)
|
|
$
|
(23,153
|
)
|
|
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, 2018
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
65,191,907
|
|
|
$
|
7
|
|
|
57,490,881
|
|
|
$
|
6
|
|
|
14,586,173
|
|
|
$
|
1
|
|
|
$
|
452,576
|
|
|
$
|
(41
|
)
|
|
$
|
(351,123
|
)
|
|
$
|
107,167
|
|
|
$
|
208,593
|
|
Impact of the adoption of ASC 606
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,033
|
|
|
10,601
|
|
|
20,634
|
|
||||||||||
Effect of exchanges of LLC Units
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
28,949,710
|
|
|
3
|
|
|
(28,419,092
|
)
|
|
(3
|
)
|
|
(530,618
|
)
|
|
—
|
|
|
49,495
|
|
|
—
|
|
|
—
|
|
|
(49,495
|
)
|
|
—
|
|
||||||||||
Vesting of restricted stock units
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
787,982
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106,756
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Exercise of common stock options
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
167,380
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,621
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,621
|
|
||||||||||
Equity component of convertible senior notes, net of issuance costs
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137,033
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137,033
|
|
||||||||||
Purchase of capped calls related to issuance of convertible senior notes
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,432
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,432
|
)
|
||||||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,954
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,954
|
|
||||||||||
Adjustments to non-controlling interests
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,754
|
)
|
|
—
|
|
|
—
|
|
|
31,754
|
|
|
—
|
|
||||||||||
Foreign currency translation gains
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
8
|
|
|
18
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,883
|
)
|
|
(14,660
|
)
|
|
(33,543
|
)
|
||||||||||
Balance at March 31, 2019
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
95,096,979
|
|
|
$
|
10
|
|
|
29,071,789
|
|
|
$
|
3
|
|
|
14,162,311
|
|
|
$
|
1
|
|
|
$
|
560,493
|
|
|
$
|
(31
|
)
|
|
$
|
(359,973
|
)
|
|
$
|
85,375
|
|
|
$
|
285,878
|
|
|
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
|
)
|
Issuance of warrants to purchase shares of Class A common stock
|
—
|
|
|
—
|
|
|
|
—
|
|
|
984
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
984
|
|
||||||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
3,373
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,373
|
|
||||||||||
Accretion of Series A redeemable convertible preferred units
|
—
|
|
|
19,525
|
|
|
|
—
|
|
|
(4,357
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,168
|
)
|
|
—
|
|
|
(19,525
|
)
|
||||||||||
Foreign currency translation gains
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,158
|
)
|
|
—
|
|
|
(23,158
|
)
|
||||||||||
Balance at March 31, 2018
|
48,447,880
|
|
|
$
|
425,291
|
|
|
|
48,407,645
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
(483,428
|
)
|
|
$
|
—
|
|
|
$
|
(483,398
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Operating activities
|
|
|
|
|
||||
Net loss
|
|
$
|
(33,543
|
)
|
|
$
|
(23,158
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
||||
Depreciation of property and equipment
|
|
2,056
|
|
|
2,191
|
|
||
Amortization of acquired intangible assets
|
|
702
|
|
|
3,333
|
|
||
Amortization of course creation costs
|
|
579
|
|
|
447
|
|
||
Equity-based compensation
|
|
19,606
|
|
|
3,373
|
|
||
Amortization of deferred contract acquisition costs
|
|
5,867
|
|
|
—
|
|
||
Amortization of debt discount and issuance costs
|
|
1,545
|
|
|
876
|
|
||
Provision for doubtful accounts
|
|
27
|
|
|
222
|
|
||
Deferred tax benefit
|
|
(27
|
)
|
|
—
|
|
||
Other
|
|
25
|
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
11,392
|
|
|
6,802
|
|
||
Deferred contract acquisition costs
|
|
(5,851
|
)
|
|
—
|
|
||
Prepaid expenses and other assets
|
|
(1,917
|
)
|
|
(1,966
|
)
|
||
Accounts payable
|
|
1,035
|
|
|
2,063
|
|
||
Accrued expenses and other liabilities
|
|
(4,979
|
)
|
|
(10,203
|
)
|
||
Accrued author fees
|
|
735
|
|
|
(179
|
)
|
||
Deferred revenue
|
|
8,288
|
|
|
5,775
|
|
||
Net cash provided by (used in) operating activities
|
|
5,540
|
|
|
(10,424
|
)
|
||
Investing activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(2,133
|
)
|
|
(1,868
|
)
|
||
Purchases of content library
|
|
(937
|
)
|
|
(769
|
)
|
||
Net cash used in investing activities
|
|
(3,070
|
)
|
|
(2,637
|
)
|
||
Financing activities
|
|
|
|
|
||||
Proceeds from issuance of convertible senior notes, net of discount and issuance costs
|
|
617,663
|
|
|
—
|
|
||
Purchase of capped calls related to issuance of convertible senior notes
|
|
(69,432
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock from employee equity plans
|
|
2,621
|
|
|
—
|
|
||
Borrowings of long-term debt
|
|
—
|
|
|
20,000
|
|
||
Payments of costs related to initial public offering
|
|
—
|
|
|
(1,899
|
)
|
||
Payments of debt issuance costs
|
|
—
|
|
|
(450
|
)
|
||
Other
|
|
(4
|
)
|
|
(4
|
)
|
||
Net cash provided by financing activities
|
|
550,848
|
|
|
17,647
|
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
26
|
|
|
9
|
|
||
Net increase in cash, cash equivalents, and restricted cash
|
|
553,344
|
|
|
4,595
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
211,071
|
|
|
28,477
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
|
$
|
764,415
|
|
|
$
|
33,072
|
|
Supplemental cash flow disclosure:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
—
|
|
|
$
|
2,472
|
|
Cash paid for income taxes, net
|
|
$
|
116
|
|
|
$
|
84
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
||||
Property acquired under build-to-suit agreements
|
|
$
|
4,297
|
|
|
$
|
—
|
|
Debt and equity issuance costs, accrued but not yet paid
|
|
$
|
1,008
|
|
|
$
|
1,506
|
|
Unpaid capital expenditures
|
|
$
|
870
|
|
|
$
|
433
|
|
Equity-based compensation capitalized as internal-use software
|
|
$
|
348
|
|
|
$
|
—
|
|
Redeemable convertible preferred unit accretion
|
|
$
|
—
|
|
|
$
|
19,525
|
|
Issuance of warrants to purchase shares of Class A common stock
|
|
$
|
—
|
|
|
$
|
984
|
|
Reconciliation of cash, cash equivalents and restricted cash as shown in the statement of cash flows:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
736,566
|
|
|
$
|
32,359
|
|
Restricted cash
|
|
27,849
|
|
|
713
|
|
||
Total cash, cash equivalents, and restricted cash
|
|
$
|
764,415
|
|
|
$
|
33,072
|
|
•
|
The 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 of Pluralsight Holdings into a single class of common units. See Note 10—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 10—Stockholders' Equity for additional details.
|
•
|
Identification of the contract, or contracts, with a customer
|
•
|
Identification of the performance obligations in a contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, performance obligations are satisfied
|
|
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||||||
|
|
December 31, 2018
|
|
Revenue Recognition
|
|
Incremental Costs of Obtaining a Contract
|
|
January 1, 2019
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
|
$
|
63,436
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
63,469
|
|
Deferred contract acquisition costs, net
|
|
—
|
|
|
—
|
|
|
16,461
|
|
|
16,461
|
|
||||
Deferred contract acquisition costs, noncurrent, net
|
|
—
|
|
|
—
|
|
|
3,751
|
|
|
3,751
|
|
||||
Deferred revenue
|
|
157,695
|
|
|
(389
|
)
|
|
—
|
|
|
157,306
|
|
||||
Deferred revenue, noncurrent
|
|
14,886
|
|
|
—
|
|
|
—
|
|
|
14,886
|
|
||||
Accumulated deficit
|
|
(351,123
|
)
|
|
205
|
|
|
9,828
|
|
|
(341,090
|
)
|
||||
Non-controlling interests
|
|
107,167
|
|
|
217
|
|
|
10,384
|
|
|
117,768
|
|
|
|
March 31, 2019
|
||||||||||
|
|
As Reported
|
|
Balance without Adoption of
ASC 606
|
|
Effect of Adoption Increase/(Decrease)
|
||||||
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
$
|
51,865
|
|
|
$
|
51,855
|
|
|
$
|
10
|
|
Deferred contract acquisition costs, net
|
|
16,863
|
|
|
—
|
|
|
16,863
|
|
|||
Deferred contract acquisition costs, noncurrent, net
|
|
3,333
|
|
|
—
|
|
|
3,333
|
|
|||
Deferred revenue
|
|
167,956
|
|
|
168,649
|
|
|
(693
|
)
|
|||
Deferred revenue, noncurrent
|
|
12,339
|
|
|
12,339
|
|
|
—
|
|
|||
Accumulated deficit
|
|
(359,973
|
)
|
|
(380,872
|
)
|
|
20,899
|
|
|
|
Three Month Ended March 31, 2019
|
||||||||||
|
|
As Reported
|
|
Balance without Adoption of
ASC 606
|
|
Effect of Adoption Increase/(Decrease)
|
||||||
|
|
|
|
|
|
|
||||||
Revenue
|
|
$
|
69,617
|
|
|
$
|
69,336
|
|
|
$
|
281
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Sales and marketing
|
|
44,050
|
|
|
44,034
|
|
|
16
|
|
|||
Loss from operations
|
|
(32,979
|
)
|
|
(33,244
|
)
|
|
265
|
|
|||
Net loss
|
|
(33,543
|
)
|
|
(33,808
|
)
|
|
265
|
|
|||
Less: Net loss attributable to non-controlling interests
|
|
(14,660
|
)
|
|
(14,776
|
)
|
|
116
|
|
|||
Net loss attributable to Pluralsight, Inc.
|
|
(18,883
|
)
|
|
(19,032
|
)
|
|
149
|
|
|||
Net loss per share, basic and diluted
|
|
$
|
(0.25
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
—
|
|
Weighted-average common shares used in computing basic and diluted net loss per share
|
|
75,927
|
|
|
75,927
|
|
|
—
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
|
As Reported
|
|
Balance without Adoption of
ASC 606
|
|
Effect of Adoption Increase/(Decrease)
|
||||||
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(33,543
|
)
|
|
$
|
(33,808
|
)
|
|
$
|
265
|
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Amortization of deferred contract acquisition costs
|
|
5,867
|
|
|
—
|
|
|
5,867
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
11,392
|
|
|
11,369
|
|
|
23
|
|
|||
Deferred contract acquisition costs
|
|
(5,851
|
)
|
|
—
|
|
|
(5,851
|
)
|
|||
Deferred revenue
|
|
8,288
|
|
|
8,592
|
|
|
(304
|
)
|
|||
Cash provided by operating activities
|
|
5,540
|
|
|
5,540
|
|
|
—
|
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
||||||
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
43,581
|
|
|
63
|
%
|
|
$
|
31,578
|
|
|
64
|
%
|
Europe, Middle East and Africa
(1)
|
|
18,986
|
|
|
27
|
%
|
|
13,525
|
|
|
27
|
%
|
||
Other foreign locations
|
|
7,050
|
|
|
10
|
%
|
|
4,541
|
|
|
9
|
%
|
||
Total revenue
|
|
$
|
69,617
|
|
|
100
|
%
|
|
$
|
49,644
|
|
|
100
|
%
|
(1)
|
Revenue from the United Kingdom represented
11%
of revenue for the three months ended March 31, 2019 and 2018. No other foreign country accounted for 10% or more of revenue during the three months ended March 31, 2019 and 2018.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Business customers
|
|
$
|
58,567
|
|
|
$
|
38,878
|
|
Individual customers
|
|
11,050
|
|
|
10,766
|
|
||
Total revenue
|
|
$
|
69,617
|
|
|
$
|
49,644
|
|
Balance as of January 1, 2019
|
$
|
20,212
|
|
Capitalization of contract acquisition costs
|
5,851
|
|
|
Amortization of deferred contract acquisition costs
|
(5,867
|
)
|
|
Balance as of March 31, 2019
|
$
|
20,196
|
|
|
|
As of March 31, 2019
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
726,399
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
726,399
|
|
|
|
As of December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
185,405
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
185,405
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Prepaid expenses
|
|
$
|
9,921
|
|
|
$
|
7,931
|
|
Other current assets
|
|
317
|
|
|
392
|
|
||
Prepaid expenses and other current assets
|
|
$
|
10,238
|
|
|
$
|
8,323
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Accrued compensation
|
|
$
|
14,959
|
|
|
$
|
22,285
|
|
Accrued income and other taxes payable
|
|
5,487
|
|
|
5,408
|
|
||
Accrued other current liabilities
|
|
7,198
|
|
|
4,354
|
|
||
Accrued expenses
|
|
$
|
27,644
|
|
|
$
|
32,047
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Computer equipment
|
|
$
|
9,720
|
|
|
$
|
9,369
|
|
Software
|
|
2,031
|
|
|
2,031
|
|
||
Capitalized internal-use software costs
|
|
16,043
|
|
|
13,880
|
|
||
Furniture and fixtures
|
|
5,574
|
|
|
5,478
|
|
||
Buildings
|
|
11,251
|
|
|
11,251
|
|
||
Leasehold improvements
|
|
1,490
|
|
|
1,490
|
|
||
Construction in progress
|
|
1,731
|
|
|
1,671
|
|
||
Build-to-suit lease asset under construction
|
|
12,578
|
|
|
8,281
|
|
||
Total property and equipment
|
|
60,418
|
|
|
53,451
|
|
||
Less: Accumulated depreciation
|
|
(23,866
|
)
|
|
(21,810
|
)
|
||
Property and equipment, net
|
|
$
|
36,552
|
|
|
$
|
31,641
|
|
|
|
As of March 31, 2019
|
||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
|
|
|
|
|
|
|
||||||
Content library:
|
|
|
|
|
|
|
||||||
Acquired content library
|
|
$
|
32,835
|
|
|
$
|
32,754
|
|
|
$
|
81
|
|
Course creation costs
|
|
14,303
|
|
|
7,526
|
|
|
6,777
|
|
|||
Total
|
|
$
|
47,138
|
|
|
$
|
40,280
|
|
|
$
|
6,858
|
|
Intangible assets:
|
|
|
|
|
|
|
||||||
Technology
|
|
$
|
4,500
|
|
|
$
|
2,963
|
|
|
$
|
1,537
|
|
Trademarks
|
|
162
|
|
|
162
|
|
|
—
|
|
|||
Noncompetition agreements
|
|
390
|
|
|
390
|
|
|
—
|
|
|||
Customer relationships
|
|
2,750
|
|
|
2,750
|
|
|
—
|
|
|||
Database
|
|
40
|
|
|
40
|
|
|
—
|
|
|||
Domain names
|
|
45
|
|
|
—
|
|
|
45
|
|
|||
Total
|
|
$
|
7,887
|
|
|
$
|
6,305
|
|
|
$
|
1,582
|
|
|
|
As of December 31, 2018
|
||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
|
|
|
|
|
|
|
||||||
Content library:
|
|
|
|
|
|
|
||||||
Acquired content library
|
|
$
|
32,835
|
|
|
$
|
32,229
|
|
|
$
|
606
|
|
Course creation costs
|
|
13,552
|
|
|
7,108
|
|
|
6,444
|
|
|||
Total
|
|
$
|
46,387
|
|
|
$
|
39,337
|
|
|
$
|
7,050
|
|
Intangible assets:
|
|
|
|
|
|
|
||||||
Technology
|
|
$
|
4,500
|
|
|
$
|
2,786
|
|
|
$
|
1,714
|
|
Trademarks
|
|
162
|
|
|
162
|
|
|
—
|
|
|||
Noncompetition agreements
|
|
390
|
|
|
390
|
|
|
—
|
|
|||
Customer relationships
|
|
2,750
|
|
|
2,750
|
|
|
—
|
|
|||
Database
|
|
40
|
|
|
40
|
|
|
—
|
|
|||
Domain names
|
|
45
|
|
|
—
|
|
|
45
|
|
|||
Total
|
|
$
|
7,887
|
|
|
$
|
6,128
|
|
|
$
|
1,759
|
|
•
|
During any calendar quarter commencing after the calendar quarter ending on June 30, 2019 (and only during such calendar quarter), if the last reported sale price of the Company's Class A common stock for at least
20
trading days (whether or not consecutive) during a period of
30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to
130%
of the conversion price on each applicable trading day;
|
•
|
During the
five
business day period after any
five
consecutive trading day period (the “measurement period”) in which the trading price as defined in the Indenture per
$1,000
principal amount of Notes for each trading day of the measurement period was less than
98%
of the product of the last reported sale price of the Company's Class A common stock and the conversion rate on each such trading day; or
|
•
|
Upon the occurrence of specified corporate events described in the Indenture.
|
|
|
March 31, 2019
|
||
Principal
|
|
$
|
633,500
|
|
Less: Unamortized debt discount
|
|
(139,362
|
)
|
|
Less: Unamortized issuance costs
|
|
(12,971
|
)
|
|
Net carrying amount
|
|
$
|
481,167
|
|
|
|
March 31, 2019
|
||
Proceeds allocated to the conversion option (debt discount)
|
|
$
|
140,776
|
|
Less: Issuance costs
|
|
(3,743
|
)
|
|
Net carrying amount
|
|
$
|
137,033
|
|
|
|
Three Months Ended March 31, 2019
|
||
Contractual interest expense
|
|
$
|
132
|
|
Amortization of debt issuance costs and discount
|
|
1,545
|
|
|
Total
|
|
$
|
1,677
|
|
Year Ended December 31,
|
|
|
||
|
|
|
||
2019 (remaining nine months)
|
4,128
|
|
||
2020
|
7,489
|
|
||
2021
|
9,881
|
|
||
2022
|
9,871
|
|
||
2023
|
9,861
|
|
||
Thereafter
|
99,324
|
|
||
Less: Sublease rental income
|
(173
|
)
|
||
Total future minimum lease payments
|
$
|
140,381
|
|
•
|
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.
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
||||||||
|
|
Units
|
|
Ownership %
|
|
Units
|
|
Ownership %
|
||||
Pluralsight, Inc.'s ownership of LLC Units
|
|
95,096,979
|
|
|
70.1
|
%
|
|
65,191,907
|
|
|
48.6
|
%
|
LLC Units owned by the Continuing Members
(1)
|
|
40,492,749
|
|
|
29.9
|
%
|
|
68,881,732
|
|
|
51.4
|
%
|
|
|
135,589,728
|
|
|
100.0
|
%
|
|
134,073,639
|
|
|
100.0
|
%
|
(1) Excludes 2,741,351 and 3,195,322 LLC Units still subject to time-based vesting requirements as of March 31, 2019 and December 31, 2018, respectively
|
|
|
Unvested Units
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
Unvested LLC Units outstanding—December 31, 2018
|
|
3,195,322
|
|
|
$
|
7.63
|
|
Vested
|
|
(453,971
|
)
|
|
6.75
|
|
|
Unvested LLC Units outstanding—March 31, 2019
|
|
2,741,351
|
|
|
$
|
7.77
|
|
|
|
Stock Options Outstanding
|
|
Weighted-
Average
Exercise Price
|
|
Weighted-
Average
Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in millions)
|
|||||
Balance as of December 31, 2018
|
|
5,143,712
|
|
|
$
|
15.00
|
|
|
|
|
|
||
Exercised
|
|
(174,753
|
)
|
|
15.00
|
|
|
|
|
|
|||
Forfeited or cancelled
|
|
(39,249
|
)
|
|
15.00
|
|
|
|
|
|
|||
Outstanding as of March 31, 2019
|
|
4,929,710
|
|
|
$
|
15.00
|
|
|
9.1
|
|
$
|
82.5
|
|
Vested and exercisable—March 31, 2019
|
|
1,049,810
|
|
|
$
|
15.00
|
|
|
9.1
|
|
$
|
17.6
|
|
|
|
Number of RSUs or Units
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
RSUs of Pluralsight, Inc.
|
|
|
|
|
|||
Balance at December 31, 2018
|
|
4,801,536
|
|
|
$
|
11.11
|
|
Granted
|
|
4,102,071
|
|
|
31.87
|
|
|
Forfeited or cancelled
|
|
(237,882
|
)
|
|
14.34
|
|
|
Vested
|
|
(699,865
|
)
|
|
9.83
|
|
|
Balance at March 31, 2019
|
|
7,965,860
|
|
|
$
|
21.82
|
|
Restricted Share Units of Pluralsight Holdings:
|
|
|
|
|
|||
Balance at December 31, 2018
|
|
2,062,500
|
|
|
$
|
8.24
|
|
Vested
|
|
(187,500
|
)
|
|
8.24
|
|
|
Balance at March 31, 2019
|
|
1,875,000
|
|
|
$
|
8.24
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Cost of revenue
|
|
$
|
79
|
|
|
$
|
—
|
|
Sales and marketing
|
|
6,195
|
|
|
539
|
|
||
Technology and content
|
|
3,498
|
|
|
381
|
|
||
General and administrative
|
|
9,834
|
|
|
2,453
|
|
||
Total equity-based compensation
|
|
$
|
19,606
|
|
|
$
|
3,373
|
|
|
|
Three Months Ended March 31, 2019
|
||
|
|
|||
Numerator:
|
|
|
||
Net loss
|
|
$
|
(33,543
|
)
|
Less: Net loss attributable to non-controlling interests
|
|
(14,660
|
)
|
|
Net loss attributable to Pluralsight, Inc.
|
|
$
|
(18,883
|
)
|
Denominator:
|
|
|
||
Weighted-average common shares outstanding, basic and diluted
|
|
75,927
|
|
|
Net loss per share:
|
|
|
||
Net loss per share, basic and diluted
|
|
$
|
(0.25
|
)
|
|
|
As of March 31, 2019
|
|
LLC Units held by Continuing Members
|
|
43,234
|
|
Stock options
|
|
4,930
|
|
RSUs of Pluralsight, Inc.
|
|
7,966
|
|
Restricted Share Units of Pluralsight Holdings
|
|
1,875
|
|
Purchase rights committed under the ESPP
|
|
1,949
|
|
Total
|
|
59,954
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(dollars in thousands)
|
||||||
Billings
|
|
$
|
77,928
|
|
|
$
|
55,419
|
|
Billings from business customers
|
|
$
|
67,156
|
|
|
$
|
45,252
|
|
% of billings from business customers
|
|
86
|
%
|
|
82
|
%
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Revenue
|
|
$
|
69,617
|
|
|
$
|
49,644
|
|
Cost of revenue
(1)(2)
|
|
16,705
|
|
|
14,886
|
|
||
Gross profit
|
|
52,912
|
|
|
34,758
|
|
||
Operating expenses
(1)(2)
:
|
|
|
|
|
||||
Sales and marketing
|
|
44,050
|
|
|
29,467
|
|
||
Technology and content
|
|
20,032
|
|
|
13,325
|
|
||
General and administrative
|
|
21,809
|
|
|
11,292
|
|
||
Total operating expenses
|
|
85,891
|
|
|
54,084
|
|
||
Loss from operations
|
|
(32,979
|
)
|
|
(19,326
|
)
|
||
Other (expense) income:
|
|
|
|
|
||||
Interest expense
|
|
(2,024
|
)
|
|
(3,710
|
)
|
||
Other income (expense), net
|
|
1,614
|
|
|
(13
|
)
|
||
Loss before income taxes
|
|
(33,389
|
)
|
|
(23,049
|
)
|
||
Provision for income taxes
|
|
(154
|
)
|
|
(109
|
)
|
||
Net loss
|
|
$
|
(33,543
|
)
|
|
$
|
(23,158
|
)
|
(1)
|
Includes equity-based compensation as follows:
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Cost of revenue
|
|
$
|
79
|
|
|
$
|
—
|
|
Sales and marketing
|
|
6,195
|
|
|
539
|
|
||
Technology and content
|
|
3,498
|
|
|
381
|
|
||
General and administrative
|
|
9,834
|
|
|
2,453
|
|
||
Total equity-based compensation
|
|
$
|
19,606
|
|
|
$
|
3,373
|
|
(2)
|
Includes amortization of acquired intangible assets as follows:
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Cost of revenue
|
|
$
|
525
|
|
|
$
|
2,962
|
|
Sales and marketing
|
|
—
|
|
|
195
|
|
||
Technology and content
|
|
177
|
|
|
176
|
|
||
Total amortization of acquired intangible assets
|
|
$
|
702
|
|
|
$
|
3,333
|
|
|
|
Three Months Ended March 31,
|
||||
|
|
2019
|
|
2018
|
||
|
|
|
|
|
||
Revenue
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
24
|
|
|
30
|
|
Gross profit
|
|
76
|
|
|
70
|
|
Operating expenses:
|
|
|
|
|
||
Sales and marketing
|
|
63
|
|
|
59
|
|
Technology and content
|
|
29
|
|
|
27
|
|
General and administrative
|
|
31
|
|
|
23
|
|
Total operating expenses
|
|
123
|
|
|
109
|
|
Loss from operations
|
|
(47
|
)
|
|
(39
|
)
|
Other (expense) income:
|
|
|
|
|
||
Interest expense
|
|
(3
|
)
|
|
(7
|
)
|
Other income (expense), net
|
|
2
|
|
|
—
|
|
Loss before income taxes
|
|
(48
|
)
|
|
(46
|
)
|
Provision for income taxes
|
|
—
|
|
|
—
|
|
Net loss
|
|
(48
|
)%
|
|
(46
|
)%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Revenue
|
|
$
|
69,617
|
|
|
$
|
49,644
|
|
|
$
|
19,973
|
|
|
40
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Cost of revenue
|
|
$
|
16,705
|
|
|
$
|
14,886
|
|
|
$
|
1,819
|
|
|
12
|
%
|
Gross profit
|
|
52,912
|
|
|
34,758
|
|
|
18,154
|
|
|
52
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Sales and marketing
|
|
$
|
44,050
|
|
|
$
|
29,467
|
|
|
$
|
14,583
|
|
|
49
|
%
|
Technology and content
|
|
20,032
|
|
|
13,325
|
|
|
6,707
|
|
|
50
|
%
|
|||
General and administrative
|
|
21,809
|
|
|
11,292
|
|
|
10,517
|
|
|
93
|
%
|
|||
Total operating expenses
|
|
$
|
85,891
|
|
|
$
|
54,084
|
|
|
$
|
31,807
|
|
|
59
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Interest expense
|
|
$
|
(2,024
|
)
|
|
$
|
(3,710
|
)
|
|
$
|
1,686
|
|
|
(45
|
)%
|
Other income (expense), net
|
|
1,614
|
|
|
(13
|
)
|
|
1,627
|
|
|
NM
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(dollars in thousands)
|
||||||
Non-GAAP gross profit
|
|
$
|
53,519
|
|
|
$
|
37,720
|
|
Non-GAAP gross margin
|
|
77
|
%
|
|
76
|
%
|
||
Non-GAAP operating loss
|
|
$
|
(10,309
|
)
|
|
$
|
(12,620
|
)
|
Free cash flow
|
|
$
|
2,470
|
|
|
$
|
(13,061
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(dollars in thousands)
|
||||||
Gross profit
|
|
$
|
52,912
|
|
|
$
|
34,758
|
|
Equity-based compensation
|
|
79
|
|
|
—
|
|
||
Amortization of acquired intangible assets
|
|
525
|
|
|
2,962
|
|
||
Employer payroll taxes on employee stock transactions
|
|
3
|
|
|
—
|
|
||
Non-GAAP gross profit
|
|
$
|
53,519
|
|
|
$
|
37,720
|
|
Gross margin
|
|
76
|
%
|
|
70
|
%
|
||
Non-GAAP gross margin
|
|
77
|
%
|
|
76
|
%
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Loss from operations
|
|
$
|
(32,979
|
)
|
|
$
|
(19,326
|
)
|
Equity-based compensation
|
|
19,606
|
|
|
3,373
|
|
||
Amortization of acquired intangible assets
|
|
702
|
|
|
3,333
|
|
||
Employer payroll taxes on employee stock transactions
|
|
1,444
|
|
|
—
|
|
||
Secondary offering costs
|
|
918
|
|
|
—
|
|
||
Non-GAAP operating loss
|
|
$
|
(10,309
|
)
|
|
$
|
(12,620
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Net cash provided by (used in) operating activities
|
|
$
|
5,540
|
|
|
$
|
(10,424
|
)
|
Less: Purchases of property and equipment
|
|
(2,133
|
)
|
|
(1,868
|
)
|
||
Less: Purchases of content library
|
|
(937
|
)
|
|
(769
|
)
|
||
Free cash flow
|
|
$
|
2,470
|
|
|
$
|
(13,061
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Net cash provided by (used in) operating activities
|
|
$
|
5,540
|
|
|
$
|
(10,424
|
)
|
Net cash used in investing activities
|
|
(3,070
|
)
|
|
(2,637
|
)
|
||
Net cash provided by financing activities
|
|
550,848
|
|
|
17,647
|
|
||
Effect of exchange rate change on cash, cash equivalents, and restricted cash
|
|
26
|
|
|
9
|
|
||
Net increase in cash, cash equivalents, and restricted cash
|
|
$
|
553,344
|
|
|
$
|
4,595
|
|
|
|
|
|
Incorporated by Reference
|
|
Filed or Furnished Herewith
|
||||||
Exhibit
Number
|
|
Description
|
|
Form
|
|
File No.
|
|
Exhibit Number
|
|
Filing Date
with SEC
|
|
|
3.1
|
|
|
S-1
|
|
333-230057
|
|
3.3
|
|
3/4/2019
|
|
|
|
4.1
|
|
|
8-K
|
|
001-38498
|
|
4.1
|
|
3/11/2019
|
|
|
|
4.2
|
|
|
8-K
|
|
001-38498
|
|
4.1
|
|
3/11/2019
|
|
|
|
10.1
|
|
|
8-K
|
|
001-38498
|
|
10.1
|
|
3/7/2019
|
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.3
|
|
|
8-K
|
|
001-38498
|
|
2.1
|
|
5/1/2019
|
|
|
|
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
|
May 1, 2019
|
|
Aaron Skonnard
Chief Executive Officer
|
|
PLURALSIGHT
,
INC
.
|
|
|
|
|
|
By:
|
/s/ James Budge
|
May 1, 2019
|
|
James Budge
Chief Financial Officer
|
To:
|
Pluralsight, Inc.
182 North Union Avenue
Farmington, Utah 84025
|
From:
|
[
Dealer’s name
]
|
Re:
|
[Base][Additional] Capped Call Transaction
|
Ref. No:
|
[__________] If applicable.
|
Date:
|
[___________], 2019
|
Trade Date:
|
[_________], 2019
|
Effective Date:
|
The closing date of [the initial issuance of] Include for confirmation relating to the base convert offering. the Convertible Securities [issued pursuant to the Initial Purchasers’ option under the Purchase Agreement (as defined below) exercised on the date hereof] Include for confirmation relating to the greenshoe convert offering, if any..
|
Option Style:
|
“Modified American”, as described under “Procedures for Exercise” below.
|
Option Type:
|
Call
|
Seller:
|
Dealer
|
Buyer:
|
Counterparty
|
Shares:
|
Class A Common Stock of Counterparty, par value USD$0.0001 (Ticker Symbol: “PS”).
|
Number of Options:
|
[The number of Base Convertible Securities in denominations of USD1,000 principal amount issued by Counterparty on the closing date for the initial issuance of the Convertible Securities.] Include for the base capped call.[The number of Optional Convertible Securities in denominations of USD1,000 principal amount purchased by the Initial Purchasers (as defined in the Purchase Agreement), at their option pursuant to Section 2 of the Purchase Agreement (as defined below).] Include for the additional capped call. For the avoidance of doubt, the Number of Options shall be reduced by each exercise of Options hereunder. In no event shall the Number of Options be less than zero. For the base capped call, the total should be equal to the number of Convertible Securities in principal amount of $1,000 initially issued on the closing date for the Convertible Securities (excluding any Convertible Securities sold pursuant to the option). For the additional capped call, the total should be equal to the number of additional Convertible Securities in principal amount of $1,000 purchased by the Initial Purchasers (as defined in the Purchase Agreement) at their option pursuant to Section 2 of the Purchase Agreement.
|
Applicable Percentage:
|
[__]%
|
Option Entitlement:
|
A number equal to the product of the Applicable Percentage and [____] To be the initial Conversion Rate..
|
Number of Shares:
|
As of any date, the product of (i) the Number of Options, and (ii) the Option Entitlement.
|
Conversion Rate:
|
As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date.
|
Strike Price:
|
$[___] To be the initial Conversion Price.
|
Cap Price:
|
$[___].
|
Premium:
|
USD [_____]Dealer and Counterparty hereby agree that notwithstanding anything to the contrary herein or in the Agreement, following the payment of the Premium, in the event that (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement that is within the Counterparty’s control) occurs or is designated with respect to any Transaction and, as a result, Counterparty owes to Dealer the amount calculated under Section 6(d) and Section 6(e) or otherwise under the Agreement (calculated as if the Transactions terminated on such Early Termination Date were the sole Transactions under the Agreement) or (b) Counterparty owes to Dealer, pursuant to Sections 12.2, 12.3, 12.6, 12.7, 12.8 or 12.9 of the Equity Definitions or otherwise under the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero.
|
Premium Payment Date:
|
The Effective Date
|
Exchange:
|
The NASDAQ Global Select Market
|
Related Exchange:
|
All Exchanges; provided that Section 1.26 of the Equity Definitions shall be amended to add the words “United States” before the word “exchange” in the tenth line of such Section.
|
Procedures for Exercise:
|
|
Exercise Dates:
|
Each Conversion Date
|
Conversion Date:
|
[Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, excluding Convertible Securities (i) that are Excluded Convertible Securities for which the provisions of Section 8(b) of this Confirmation shall apply or (ii)(A) with respect to which Counterparty has made an “Exchange Election” pursuant to Section 14.12 of the Indenture and (B) that have been accepted by the designated financial institution pursuant to Section 14.12 of the Indenture (such Convertible Securities, other than those excluded as set forth above, the “
Relevant Convertible Securities
” for such Conversion Date).] Include for base capped call confirmation only.
[Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture (excluding Convertible Securities (i) that are Excluded Convertible Securities for which the provisions of Section 8(b) of this Confirmation shall apply or (ii)(A) with respect to which Counterparty has made an “Exchange Election” pursuant to Section 14.12 of the Indenture and (B) that have been accepted by the designated financial institution pursuant to Section 14.12 of the Indenture) but are not “Relevant Convertible Securities” under, and as defined in, the confirmation between the parties hereto regarding the Base Convertible Capped Call Transaction dated [___], 2019 (Transaction Ref. No. [___]) (the “
Base
Convertible
Capped Call Transaction Confirmation
”) (such Convertible Securities, the “
Relevant Convertible Securities
” for such Conversion Date). For the purposes of determining whether any Convertible Securities will be Relevant Convertible Securities hereunder or under the Base Convertible Capped Call Transaction Confirmation, Convertible Securities that are converted pursuant to the Indenture shall be allocated first to the Base Convertible Capped Call Transaction Confirmation until all Options thereunder are exercised or terminated.] Include for additional capped call confirmation only.
|
Required Exercise on Conversion Dates:
|
On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD1,000 principal amount shall be automatically exercised.
|
Excluded Convertible Securities:
|
[Convertible Securities surrendered for conversion (in accordance with the terms of the Indenture) on any date prior to the Free Convertibility Date.] Include for base capped call confirmation only. [Convertible Securities surrendered for conversion on any date prior to the Free Convertibility Date that are not “Excluded Convertible Securities” under, and as defined in, the Base Convertible Capped Call Transaction Confirmation. For purposes of determining whether any Convertible Securities will be Excluded Convertible Securities hereunder or under the Base Convertible Capped Call Transaction Confirmation, Convertible Securities that are converted prior to such date shall be allocated first to the Base Convertible Capped Call Transaction Confirmation until all Options thereunder are exercised or terminated.] Include for additional capped call confirmation only.
|
Free Convertibility Date:
|
December 1, 2023
|
Expiration Date:
|
The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
|
Automatic Exercise:
|
As provided above under “Required Exercise on Conversion Dates”.
|
Exercise Notice Deadline:
|
The second Exchange Business Day immediately preceding the “Maturity Date” (as defined in the Indenture).
|
Notice of Exercise:
|
Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options hereunder unless Counterparty notifies Dealer in writing prior to 4:00 PM, New York City time, on the Exercise Notice Deadline in respect of the aggregate number of Options being exercised hereunder[;
provided
that any “Notice of Exercise” delivered to Dealer pursuant to the Base Convertible Capped Call Transaction Confirmation shall deemed to be a Notice of Exercise pursuant to this Confirmation and the terms of such Notice of Exercise shall apply,
mutatis mutandis
, to this Confirmation] Include for additional capped call confirmation only..Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently extinguished, and late notice shall not cure such failure;
provided
that notwithstanding the foregoing, such notice (and the related exercise of Options) in connection with any conversion of Relevant Convertible Securities during the period starting on and including the Free Convertibility Date and ending on and including the second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “
Final Conversion Period
”) shall be effective if given after the Exercise Notice Deadline, but prior to 4:00 PM New York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline, in which event the Calculation Agent shall have the right to adjust in a commercially reasonable manner the Delivery Obligation as appropriate to reflect the additional commercially reasonable costs (including, but not limited to, hedging mismatches and market losses) and expenses reasonably incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
|
Notice of Convertible Security Settlement Method:
|
Counterparty shall notify Dealer in writing before 4:00 P.M. (New York City time) on the Free Convertibility Date (the “
Final Settlement Method Election Date
”) of the irrevocable election by the Counterparty,
in accordance with Section 14.02(a)(iii) of the Indenture, of the settlement method and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture) applicable to Relevant Convertible Securities with a Conversion Date occurring on or after the Final Settlement Method Election Date. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of combination settlement with a “Specified Dollar Amount” (as defined in the Indenture) of USD1,000 for all conversions occurring on or after the Final Settlement Method Election Date. Counterparty agrees that, to the extent it provides such a notice, it shall settle any Relevant Convertible Securities with a Conversion Date on or after the Final Settlement Method Election Date in the same manner as provided in the Notice of Convertible Security Settlement Method it provides hereunder.
|
Dealer’s Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:
|
To be provided by Dealer.
|
Settlement Terms:
|
|
Settlement Date:
|
In respect of an Exercise Date occurring on a Conversion Date on or after the Free Convertibility Date, the settlement date for the cash and/or Shares (if any) to be delivered in respect of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.01(a)(ii) of the Indenture;
provided
that the Settlement Date will not be prior to the Exchange Business Day immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 4:00 PM, New York City time.
|
Delivery Obligation:
|
In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of an Exercise Date occurring on a Conversion Date on or after the Free Convertibility Date, Dealer will deliver to Counterparty, on the related Settlement Date, a number of Shares and/or amount of cash in USD for the Relevant Convertible Securities equal to (a) the Applicable Percentage
multiplied by
(b) the aggregate number of Shares, if any, that Counterparty would be obligated to deliver to the holder(s) of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(a)(iv) of the Indenture and/or the aggregate amount of cash, if any, in excess of USD1,000 per Convertible Security (in denominations of USD1,000) that Counterparty would be obligated to deliver to holder(s) pursuant to Section 14.02(a)(iv) of the Indenture (except that such aggregate number of Shares shall be determined without taking into consideration any rounding pursuant to Section 14.02(j)of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, resulting from such rounding, if Counterparty had elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method in the manner specified below, as determined by the Calculation Agent in a commercially reasonable fashion by reference to such Sections of the Indenture (this clause (b), the “
Convertible Obligation
”);
provided
that (i) if the Convertible Obligation exceeds the Capped Convertible Obligation, then the Delivery Obligation shall be the Applicable Percentage
multiplied by
the Capped Convertible Obligation; (ii) if, in respect of any Exercise Date, (x)(I) the number of Shares included in the Delivery Obligation multiplied by the Share Obligation Value Price plus (II) the amount of cash included in the Delivery Obligation, would otherwise exceed (y) the product of the Applicable Percentage and the relevant Net Convertible Share Obligation Value, such number of Shares and such amount of cash shall be proportionately reduced to the extent necessary to eliminate such excess; (iii) the Convertible Obligation (and, for the avoidance of doubt, the Capped Convertible Obligation) shall be determined (A) excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a result of any “make-whole fundamental change” adjustments to the Conversion Rate pursuant to Section 14.03 or 14.04(h) of the Indenture and (B) without regard to the election, if any, by Counterparty to adjust the Conversion Rate (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible Securities that the Counterparty is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and (iv) if such exercise relates to the conversion of Relevant Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the “make-whole fundamental change” adjustment to the Conversion Rate set forth in Section 14.03 of the Indenture, then, notwithstanding the foregoing clause (iii), the Convertible Obligation shall include such additional Shares and/or cash (as determined by the Calculation Agent by reference to such Section of the Indenture), except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation per Option (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the date the consideration is deliverable to the “Holder” of such Relevant Convertible Security pursuant to the Indenture) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if Section 14.03 of the Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(c) of this Confirmation), it being understood that the cap described in this clause (iv) is in addition to, and cumulative with, clauses (i), (ii) and (iii) of this proviso. Notwithstanding the foregoing, and in addition to the caps described in clauses (i), (ii), (iii) and (iv) of the proviso above, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the value of the Convertible Obligation
multiplied by
the Applicable Percentage (with the Convertible Obligation determined based on the actual settlement method elected by Counterparty with respect to such Relevant Convertible Securities instead of the Convertible Security Settlement Method and with the value of any Shares included in either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the Share Obligation Value Price on the date the consideration is deliverable to the “Holder” of such Relevant Convertible Security pursuant to the Indenture).
|
Capped Convertible Obligation:
|
In respect of an Exercise Date occurring on a Conversion Date, the Convertible Obligation that would apply if the “Daily VWAP” for each “Trading Day” in the “Observation Period” (each as defined in the Indenture) or, if applicable, the assumed “Observation Period” specified in clause (ii) of “Convertible Security Settlement Method” below, were the lesser of (x) the Cap Price and (y) the actual “Daily VWAP” for such “Trading Day” (each as defined in the Indenture).
|
Net Convertible Share Obligation Value:
|
With respect to Relevant Convertible Securities as to a Conversion Date, (i) the Total Convertible Share Obligation Value of such Relevant Convertible Securities for such Conversion Date
minus
(ii) the aggregate principal amount of such Relevant Convertible Securities for such Conversion Date.
|
Total Convertible Share Obligation Value:
|
With respect to Relevant Convertible Securities with respect to a Conversion Date, (i) (A)the number of Shares equal to the aggregate number of Shares that Counterparty is obligated to deliver to the holder(s) of Relevant Convertible Securities for such Conversion Date pursuant to the Indenture multiplied by (B) the Share Obligation Value Price plus (ii) an amount of cash equal to the aggregate amount of cash that Counterparty is obligated to deliver to the holder(s) of Relevant Convertible Securities for such Conversion Date pursuant to the Indenture (including, for the avoidance of doubt, any cash payable by Counterparty in lieu of fractional Shares); provided that the Total Convertible Share Obligation Value shall be determined excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a direct or indirect result of any adjustments to the Conversion Rate pursuant to an adjustment pursuant to Section 14.04(h) of the Indenture.
|
Share Obligation Value Price:
|
The opening price as displayed under the heading “Op” on Bloomberg page “PS.N <Equity>” (or its equivalent successor if such page is not available) on the applicable Settlement Date or other date of delivery.
|
Convertible Security Settlement Method:
|
For any Relevant Convertible Securities, if Counterparty has notified Dealer in the related Notice of Exercise (or in the Notice of Convertible Security Settlement Method, as the case may be) that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 14.02(a)(iii) of the Indenture (a “
Cash Election
”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD1,000, the Convertible Security Settlement Method shall be the settlement method actually so specified in such notice as being elected by Counterparty in respect of such Relevant Convertible Securities; provided that, if no such notice is sent with respect to such settlement method, the Convertible Security Settlement Method shall assume Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in the Indenture) of USD1,000 per Relevant Convertible Security.
|
Notice of Delivery Obligation:
|
No later than the Exchange Business Day immediately following the last day of the relevant “Observation Period,” as defined in the Indenture, Counterparty shall give Dealer notice of the aggregate number of Shares and/or cash comprising the Convertible Obligations for all Relevant Convertible Securities (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise or Notice of Convertible Security Settlement Method or Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any way).
|
Other Applicable Provisions:
|
To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Restricted Certificated Shares:
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Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered to Counterparty hereunder in certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
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Adjustments:
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Method of Adjustment:
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Calculation Agent Adjustment. Notwithstanding Section 11.2 of the Equity Definitions, upon the occurrence of any event or condition set forth in Sections 14.04(a), (b), (c), (d) or (e) or Section 14.05 of the Indenture that the Calculation Agent determines would result in an adjustment under the Indenture by reference to such Sections thereof (any such event or condition, an “
Adjustment Event
”), the Calculation Agent shall make a corresponding adjustment to any one or more of the Strike Price, Number of Options, Option Entitlement and any other terms relevant to the exercise, settlement or payment of the Transaction, subject to “Discretionary Adjustments” below. Immediately upon the occurrence of any Adjustment Event, Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall immediately notify the Calculation Agent in writing of the results and details of such adjustments.
In addition, Dealer may make a corresponding adjustment to the terms relevant to the exercise, settlement or payments of the Transaction (but without duplication of any adjustment pursuant to the foregoing paragraph) upon the occurrence of any event or condition that Dealer determines would result in an adjustment under Section 14.05 of the Indenture in respect of the Convertible Security Settlement Method.
For the avoidance of doubt, Dealer shall not have any payment or delivery obligation hereunder in respect of, and no adjustment shall be made to the terms of the Transaction on account of, (x) any distribution of cash, property or securities by Counterparty to the holders of Convertible Securities (upon conversion or otherwise) or (y) any other transaction in which holders of Convertible Securities are entitled to participate, in each case, in lieu of an adjustment under the Indenture in respect of an Adjustment Event (including, without limitation, under the fourth sentence of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture).
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Discretionary Adjustments:
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Notwithstanding anything to the contrary herein or in the Equity Definitions, if the Calculation Agent in good faith disagrees with any adjustment under the Indenture that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 of the Indenture or pursuant to Section 14.07 of the Indenture or any supplemental indenture entered into thereunder (a “
Merger Supplemental Indenture
”) or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, and any other variable relevant to the exercise, settlement or payment of or under the Transaction in a commercially reasonable manner.
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Extraordinary Events:
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Merger Events:
|
Notwithstanding Section 12.1(b) of the Equity Definitions, except for purposes of “Announcement Event” and “Adjustments to Cap Price” below, a “Merger Event” means the occurrence of any event or condition set forth in Section 14.07 of the Indenture.
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Tender Offer:
|
Section 12.1(d) of the Equity Definitions is hereby amended by replacing the phrase “greater than 10% and less than 100% of the outstanding voting shares of the Issuer” in the third and fourth line thereof with “(a) greater than 15% and less than 100% of the outstanding Shares of the Issuer in the event that such offer, solicitation, proposal or other event is being made by any entity or person other than the Issuer or any subsidiary thereof or (b) greater than 20% and less than 100% of the outstanding Shares of the Issuer in the event that such offer, solicitation, proposal or other event is being made by the Issuer or any subsidiary thereof”.
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Consequences of Merger Events and Tender Offer:
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Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a Merger Event that the Calculation Agent determines by reference to Section 14.07 of the Indenture would result in an adjustment under the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement or payment of the Transaction, subject to “Discretionary Adjustments” above;
provided
that such adjustment shall be made without regard to any “make-whole fundamental change” adjustment to the Conversion Rate pursuant to Section 14.03 or 14.04(h) of the Indenture and the election, if any, by Counterparty to adjust the Conversion Rate; and
provided further
that if, with respect to a Merger Event, (A) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares of an entity or person that is not a corporation organized under the laws of the United States, any State thereof or the District of Columbia, or (B) the Counterparty to the Transaction following such Merger Event will not be a corporation or will not be the Issuer following such Merger Event, in either case, Dealer may elect in its sole discretion that Cancellation and Payment (Calculation Agent Determination) shall apply.
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Consequences of Announcement Events:
|
Modified Calculation Agent Adjustment as set forth in Section 12.3(d) of the Equity Definitions;
provided
that, in respect of an Announcement Event, (x) references to “Tender Offer” shall be replaced by references to “Announcement Event” and references to “Tender Offer Date” shall be replaced by references to “date of such Announcement Event”, (y) the phrase “exercise, settlement, payment or any other terms of the Transaction (including, without limitation, the spread)” shall be replaced with the phrase “Cap Price (
provided
that in no event shall the Cap Price be less than the Strike Price)” and the words “whether within a commercially reasonable period of time prior to or after the Announcement Event (as determined by the Calculation Agent)” shall be inserted prior to the word “which” in the seventh line, and (z) for the avoidance of doubt, the Calculation Agent shall, in good faith and a commercially reasonable manner, determine whether the relevant Announcement Event has had a material economic effect on the Transaction and, if so, shall adjust the Cap Price accordingly to take into account such economic effect on one or more occasions on or after the date of the Announcement Event up to, and including, the Expiration Date, any Early Termination Date and/or any other date of cancellation, it being understood that any adjustment in respect of an Announcement Event shall take into account any earlier adjustment relating to the same Announcement Event and shall not be duplicative with any other adjustment or cancellation valuation made pursuant to this Confirmation, the Equity Definitions or the Agreement;
provided
that in no event shall the Cap Price be adjusted to be less than the Strike Price. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable; provided further that upon the Calculation Agent making an adjustment, determined in a commercially reasonable manner, to the Cap Price upon any Announcement Event, then the Calculation Agent shall make an adjustment to the Cap Price upon any announcement regarding the same event that gave rise to the original Announcement Event, including without limitation, regarding the abandonment of any such event, to the extent necessary to reflect the economic effect of such subsequent announcement on the Transaction (provided that in no event shall the Cap Price be less than the Strike Price).
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Determining Party:
|
For all applicable Extraordinary Events, Dealer; all calculations and determinations made by the Determining Party shall be made in good faith and in a commercially reasonable manner;
provided
that, upon receipt of written request from Counterparty, the Determining Party shall promptly provide Counterparty with a written explanation describing in reasonable detail any calculation, adjustment or determination made by it (including any quotations, market data or information from internal or external sources used in making such calculation, adjustment or determination, as the case may be, but without disclosing Determining Party’s proprietary models or other information that may be proprietary or subject to contractual, legal or regulatory obligations to not disclose such information), and shall use commercially reasonable efforts to provide such written explanation within five (5) Exchange Business Days from the receipt of such request.
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Non-Reliance:
|
Applicable
|
Agreements and Acknowledgments Regarding Hedging Activities:
|
Applicable
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Hedging Adjustment:
|
For the avoidance of doubt, whenever the Dealer, Determining Party or Calculation Agent is permitted to make an adjustment pursuant to the terms of this Confirmation or the Equity Definitions to take into account the effect of an event, the Calculation Agent or Determining Party or Dealer, as the case may be, shall make such adjustment by reference to the effect of such event on Dealer assuming that Dealer maintains a commercially reasonable hedge position.
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Additional Acknowledgments:
|
Applicable
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Share Termination Alternative:
|
If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment.
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Share Termination Delivery Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
|
The value of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider a variety of factors, including the market price of the Share Termination Delivery Units and/or the purchase price paid in connection with the commercially reasonable purchase of Share Termination Delivery Property.
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Share Termination Delivery Unit:
|
One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.
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Failure to Deliver:
|
Applicable
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Other Applicable Provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.
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1.
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The Counterparty has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware.
|
2.
|
The Confirmation has been duly authorized, executed and delivered by the Counterparty.
|
3.
|
The execution and delivery by the Counterparty of the Confirmation, and the undertaking by the Counterparty of its obligations under the Confirmation and the consummation of the transactions therein contemplated do not violate, will not result in any violation by the Counterparty of its Certificate of Incorporation or its Bylaws.
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4.
|
The execution and delivery by the Counterparty of the Confirmation, and the undertaking by the Counterparty of its obligations under the Confirmation and the consummation of the transactions therein contemplated, will not constitutes a violation of, or a default under, any material agreement of the Counterparty.
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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: May 1, 2019
|
|
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|
|
/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: May 1, 2019
|
|
|
|
|
/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 March 31, 2019 (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: May 1, 2019
|
|
|
|
|
/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 March 31, 2019 (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: May 1, 2019
|
|
|
|
|
/s/ James Budge
|
|
|
|
|
|
|
James Budge
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
(
Principal Financial and Accounting Officer
)
|
|