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HealthEquity Reports Third Quarter Ended October 31, 2023 Financial Results
来源: Nasdaq GlobeNewswire / 05 12月 2023 16:01:00 America/New_York
Highlights of the third quarter include:
- Revenue of $249.2 million, an increase of 15% compared to $216.1 million in Q3 FY23.
- Net income of $14.7 million, compared to net loss of $1.6 million in Q3 FY23, with non-GAAP net income of $52.2 million, an increase of 61% compared to $32.4 million in Q3 FY23.
- Net income per diluted share of $0.17, compared to net loss per diluted share of $0.02 in Q3 FY23, with non-GAAP net income per diluted share of $0.60, compared to $0.38 in Q3 FY23.
- Adjusted EBITDA of $95.6 million, an increase of 30% compared to $73.4 million in Q3 FY23.
- 8.3 million HSAs, an increase of 8% compared to Q3 FY23.
- Total HSA Assets of $22.6 billion, an increase of 12% compared to Q3 FY23.
- 15.3 million Total Accounts, including both HSAs and complementary CDBs, an increase of 5% compared to Q3 FY23.
- The Company agreed to acquire the BenefitWallet HSA portfolio.
DRAPER, Utah, Dec. 05, 2023 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ: HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") custodian, today announced financial results for its third quarter ended October 31, 2023.
"Team Purple delivered another quarter of year-over-year double-digit revenue growth plus margin expansion," said Jon Kessler, President and CEO of HealthEquity. "Our outlook reflects our ability to sustain that trend by remaining focused, together with our partners and clients, on the needs of the healthcare consumer."
Third quarter financial results
Revenue for the third quarter ended October 31, 2023 was $249.2 million, an increase of 15% compared to $216.1 million for the third quarter ended October 31, 2022. Revenue this quarter included: service revenue of $107.5 million, custodial revenue of $106.6 million, and interchange revenue of $35.1 million.
HealthEquity reported net income of $14.7 million, or $0.17 per diluted share, and non-GAAP net income of $52.2 million, or $0.60 per diluted share, for the third quarter ended October 31, 2023. The Company reported a net loss of $1.6 million, or $0.02 per diluted share, and non-GAAP net income of $32.4 million, or $0.38 per diluted share, for the third quarter ended October 31, 2022.
Adjusted EBITDA was $95.6 million for the third quarter ended October 31, 2023, an increase of 30% compared to the third quarter ended October 31, 2022. Adjusted EBITDA was 38% of revenue, compared to 34% for the third quarter ended October 31, 2022.
Account and asset metrics
HSAs as of October 31, 2023 were 8.3 million, an increase of 8% year over year, including 592,000 HSAs with investments, an increase of 12% year over year. Total Accounts as of October 31, 2023 were 15.3 million, including 7.0 million other consumer-directed benefits ("CDBs").
Total HSA Assets as of October 31, 2023 were $22.6 billion, an increase of 12% year over year. Total HSA Assets included $14.0 billion of HSA cash and $8.6 billion of HSA investments. Client-held funds, which are deposits held on behalf of our Clients to facilitate administration of our CDBs, and from which we generate custodial revenue, were $0.8 billion as of October 31, 2023.
BenefitWallet HSA portfolio acquisition
On September 18, 2023, we signed an agreement to acquire the BenefitWallet HSA portfolio from Conduent Business Services, LLC, which portfolio consists of approximately $2.8 billion of HSA Assets held in approximately 665,000 customer accounts, in exchange for a purchase price of approximately $425 million and up to $20 million in transfer-related expenses. The acquisition is expected to close in multiple tranches during the first half of fiscal 2025, subject to the satisfaction of certain customary closing conditions.
Business outlook
For the fiscal year ending January 31, 2024, management expects revenue of $985 million to $995 million. Its outlook for net income is between $34 million and $39 million, resulting in net income of $0.39 to $0.45 per diluted share. Its outlook for non-GAAP net income, calculated using the method described below, is between $181 million and $188 million, resulting in non-GAAP net income per diluted share of $2.08 to $2.16 (based on an estimated 87 million diluted weighted-average shares outstanding). Management expects Adjusted EBITDA of $350 million to $360 million.
For the fiscal year ending January 31, 2025, management expects revenue of approximately $1.140 billion to $1.160 billion and Adjusted EBITDA of approximately 38-39% of revenue. These amounts assume an average annualized yield on HSA cash of approximately 3.00%.
See “Non-GAAP financial information” below for definitions of our Adjusted EBITDA and non-GAAP net income. A reconciliation of the non-GAAP financial measures used throughout this release (other than with respect to our Adjusted EBITDA outlook for the fiscal year ending January 31, 2025) to the most comparable GAAP financial measures is included with the financial tables at the end of this release. A reconciliation of our Adjusted EBITDA outlook for the fiscal year ending January 31, 2025 to net income, its most directly comparable GAAP measure, is not included, because our net income outlook for this future period is not available without unreasonable efforts as we are unable to predict the ultimate outcome of certain significant items excluded from this non-GAAP measure (such as depreciation and amortization, stock-based compensation expense, and income tax provision).
Conference call
HealthEquity management will host a conference call at 4:30 pm (Eastern Time) on Tuesday, December 5, 2023 to discuss the fiscal 2024 third quarter financial results. The conference call will be accessible by dialing 1-833-630-1956, or 1-412-317-1837 for international callers, and referencing conference ID "HealthEquity, Inc. call." A live audio webcast of the call will be available on the investor relations section of our website at http://ir.healthequity.com.
Non-GAAP financial information
To supplement our financial information presented on a GAAP basis, we disclose non-GAAP financial measures, including Adjusted EBITDA, non-GAAP net income, and non-GAAP net income per diluted share.
- Adjusted EBITDA is adjusted earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, amortization of incremental costs to obtain a contract, costs associated with unused office space, and certain other non-operating items.
- Non-GAAP net income is calculated by adding back to GAAP net income (loss) before income taxes the following items: amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, costs associated with unused office space, and losses on extinguishment of debt, and subtracting a non-GAAP tax provision using a normalized non-GAAP tax rate.
- Non-GAAP net income per diluted share is calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.
Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company cautions investors that non-GAAP financial information, by its nature, departs from GAAP; accordingly, its use can make it difficult to compare current results with results from other reporting periods and with the results of other companies. In addition, while amortization of acquired intangible assets is being excluded from non-GAAP net income, the revenue generated from those acquired intangible assets is not excluded. Whenever we use these non-GAAP financial measures, we provide a reconciliation of the applicable non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed in the tables below.
About HealthEquity
HealthEquity and its subsidiaries administer HSAs and other consumer-directed benefits for our more than 15 million accounts in partnership with employers, benefits advisors, and health and retirement plan providers who share our mission to connect health and wealth and value our culture of remarkable “Purple” service. For more information, visit www.healthequity.com.
Forward-looking statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our industry, business strategy, plans, goals and expectations concerning our markets and market position, product expansion, future operations, expenses and other results of operations, revenue, margins, profitability, acquisition synergies, future efficiencies, tax rates, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “aims,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to be correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, risks related to the following:
- our acquisition of the BenefitWallet HSA portfolio may not be consummated, and if consummated, we may not realize the expected benefits;
- our dependence on the continued availability and benefits of tax-advantaged HSAs and other CDBs;
- our ability to adequately place and safeguard our custodial assets, or the failure of any of our depository or insurance company partners;
- the impact from a decline in interest rate levels on our financial results;
- our ability to realize the anticipated financial and other benefits from combining the operations of recent and future acquisitions with our business successfully;
- our ability to compete effectively in a rapidly evolving healthcare and benefits administration industry;
- our ability to successfully identify, acquire and integrate additional portfolio purchases or acquisition targets;
- the significant competition we face and may face in the future, including from those with greater resources than us;
- the impact of societal and economic changes arising out of the COVID-19 pandemic on the Company, our operations and our financial results;
- our reliance on the availability and performance of our technology and communications systems;
- potential future cybersecurity breaches of our technology and communications systems and other data interruptions, including resulting costs and liabilities, reputational damage and loss of business;
- the current uncertain healthcare environment, including changes in healthcare programs and expenditures and related regulations;
- our ability to comply with current and future privacy, healthcare, tax, ERISA, investment adviser and other laws applicable to our business;
- our reliance on partners and third-party vendors for distribution and important services;
- our ability to develop and implement updated features for our technology and communications systems; and
- our reliance on our management team and key team members.
For a detailed discussion of these and other risk factors, please refer to the risks detailed in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the fiscal year ended January 31, 2023 and subsequent periodic and current reports. Past performance is not necessarily indicative of future results. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Investor Relations Contact
Richard Putnam
801-727-1000
rputnam@healthequity.comHealthEquity, Inc. and subsidiaries
Condensed consolidated balance sheets(in thousands, except par value) October 31, 2023 January 31, 2023 (unaudited) Assets Current assets Cash and cash equivalents $ 334,061 $ 254,266 Accounts receivable, net of allowance for doubtful accounts of $4,876 and $4,989 as of October 31, 2023 and January 31, 2023, respectively 96,181 96,835 Other current assets 44,166 31,792 Total current assets 474,408 382,893 Property and equipment, net 7,660 12,862 Operating lease right-of-use assets 50,329 56,461 Intangible assets, net 860,514 936,359 Goodwill 1,648,145 1,648,145 Other assets 52,446 52,180 Total assets $ 3,093,502 $ 3,088,900 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 13,419 $ 13,899 Accrued compensation 31,208 45,835 Accrued liabilities 41,840 43,668 Current portion of long-term debt — 17,500 Operating lease liabilities 9,769 10,159 Total current liabilities 96,236 131,061 Long-term liabilities Long-term debt, net of issuance costs 874,270 907,838 Operating lease liabilities, non-current 50,580 58,988 Other long-term liabilities 17,711 12,708 Deferred tax liability 66,737 82,665 Total long-term liabilities 1,009,298 1,062,199 Total liabilities 1,105,534 1,193,260 Commitments and contingencies Stockholders’ equity Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of October 31, 2023 and January 31, 2023, respectively — — Common stock, $0.0001 par value, 900,000 shares authorized, 85,800 and 84,758 shares issued and outstanding as of October 31, 2023 and January 31, 2023, respectively 9 8 Additional paid-in capital 1,808,695 1,745,716 Accumulated earnings 179,264 149,916 Total stockholders’ equity 1,987,968 1,895,640 Total liabilities and stockholders’ equity $ 3,093,502 $ 3,088,900 HealthEquity, Inc. and subsidiaries
Condensed consolidated statements of operations and comprehensive income (loss) (unaudited)Three months ended October 31, Nine months ended October 31, (in thousands, except per share data) 2023 2022 2023 2022 Revenue Service revenue $ 107,512 $ 108,580 $ 318,343 $ 315,962 Custodial revenue 106,575 74,642 299,933 199,606 Interchange revenue 35,132 32,864 118,924 112,339 Total revenue 249,219 216,086 737,200 627,907 Cost of revenue Service costs 75,347 76,493 232,445 232,281 Custodial costs 9,177 6,812 27,310 20,543 Interchange costs 6,287 5,923 20,281 19,240 Total cost of revenue 90,811 89,228 280,036 272,064 Gross profit 158,408 126,858 457,164 355,843 Operating expenses Sales and marketing 19,656 17,245 58,714 49,648 Technology and development 55,614 48,890 163,573 140,653 General and administrative 26,379 25,131 78,363 74,795 Amortization of acquired intangible assets 23,213 23,541 69,545 71,420 Merger integration 2,655 6,509 8,157 23,486 Total operating expenses 127,517 121,316 378,352 360,002 Income (loss) from operations 30,891 5,542 78,812 (4,159 ) Other expense Interest expense (13,545 ) (12,165 ) (41,814 ) (34,119 ) Other income, net 3,741 443 8,325 174 Total other expense (9,804 ) (11,722 ) (33,489 ) (33,945 ) Income (loss) before income taxes 21,087 (6,180 ) 45,323 (38,104 ) Income tax provision (benefit) 6,414 (4,539 ) 15,975 (12,170 ) Net income (loss) and comprehensive income (loss) $ 14,673 $ (1,641 ) $ 29,348 $ (25,934 ) Net income (loss) per share: Basic $ 0.17 $ (0.02 ) $ 0.34 $ (0.31 ) Diluted $ 0.17 $ (0.02 ) $ 0.34 $ (0.31 ) Weighted-average number of shares used in computing net income (loss) per share: Basic 85,697 84,572 85,424 84,349 Diluted 87,122 84,572 86,707 84,349 HealthEquity, Inc. and subsidiaries
Condensed consolidated statements of cash flows (unaudited)Nine months ended October 31, (in thousands) 2023 2022 Cash flows from operating activities: Net income (loss) $ 29,348 $ (25,934 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 115,167 120,726 Stock-based compensation 59,939 50,310 Amortization of debt discount and issuance costs 2,150 2,454 Loss on extinguishment of debt 1,157 — Other non-cash items — 269 Deferred taxes (15,928 ) (10,565 ) Changes in operating assets and liabilities: Accounts receivable, net 654 (451 ) Other assets (12,820 ) 6,809 Operating lease right-of-use assets 8,241 6,169 Accrued compensation (14,829 ) (11,630 ) Accounts payable, accrued liabilities, and other current liabilities (2,363 ) (33,170 ) Operating lease liabilities, non-current (9,966 ) (5,401 ) Other long-term liabilities 5,003 (4,427 ) Net cash provided by operating activities 165,753 95,159 Cash flows from investing activities: Purchases of software and capitalized software development costs (30,413 ) (35,306 ) Purchases of property and equipment (1,134 ) (2,971 ) Acquisitions of HSA portfolios (3,257 ) (70,574 ) Net cash used in investing activities (34,804 ) (108,851 ) Cash flows from financing activities: Principal payments on long-term debt (54,375 ) (6,562 ) Settlement of client-held funds obligation, net (183 ) (1,579 ) Proceeds from exercise of common stock options 3,404 6,616 Net cash used in financing activities (51,154 ) (1,525 ) Increase (decrease) in cash and cash equivalents 79,795 (15,217 ) Beginning cash and cash equivalents 254,266 225,414 Ending cash and cash equivalents $ 334,061 $ 210,197 HealthEquity, Inc. and subsidiaries
Condensed consolidated statements of cash flows (unaudited) (continued)Nine months ended October 31, (in thousands) 2023 2022 Supplemental cash flow data: Interest expense paid in cash $ 44,194 $ 36,268 Income tax payments, net 24,777 775 Supplemental disclosures of non-cash investing and financing activities: Purchases of software and capitalized software development costs included in accounts payable, accrued liabilities, or accrued compensation 2,882 4,099 Purchases of property and equipment included in accounts payable or accrued liabilities 98 297 Exercise of common stock options receivable 19 21 Increase in goodwill due to measurement period adjustments, net — 77 Stock-based compensation expense (unaudited)
Total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) is as follows:
Three months ended October 31, Nine months ended October 31, (in thousands) 2023 2022 2023 2022 Cost of revenue $ 4,673 $ 3,662 $ 13,222 $ 10,667 Sales and marketing 3,506 2,569 9,763 7,136 Technology and development 5,923 4,045 15,098 10,388 General and administrative 7,560 7,894 21,856 22,119 Total stock-based compensation expense $ 21,662 $ 18,170 $ 59,939 $ 50,310 Total Accounts (unaudited)
(in thousands, except percentages) October 31, 2023 October 31, 2022 % Change January 31, 2023 HSAs 8,295 7,650 8% 7,984 New HSAs from sales - Quarter-to-date 163 170 (4)% 445 New HSAs from sales - Year-to-date 453 526 (14)% 971 New HSAs from acquisitions - Year-to-date — 90 (100)% 90 HSAs with investments 592 529 12% 541 CDBs 6,984 6,849 2% 6,933 Total Accounts 15,279 14,499 5% 14,917 Average Total Accounts - Quarter-to-date 15,167 14,523 4% 14,677 Average Total Accounts - Year-to-date 15,034 14,482 4% 14,531 HSA Assets (unaudited)
(in millions, except percentages) October 31, 2023 October 31, 2022 % Change January 31, 2023 HSA cash $ 13,971 $ 13,096 7% $ 14,199 HSA investments 8,597 7,108 21% 7,947 Total HSA Assets 22,568 20,204 12% 22,146 Average daily HSA cash - Quarter-to-date 13,977 12,973 8% 13,375 Average daily HSA cash - Year-to-date 14,024 12,941 8% 13,049 Client-held funds (unaudited)
(in millions, except percentages) October 31, 2023 October 31, 2022 % Change January 31, 2023 Client-held funds $ 761 $ 759 0 % $ 901 Average daily Client-held funds - Quarter-to-date 794 794 0 % 809 Average daily Client-held funds - Year-to-date 862 832 4 % 827 Reconciliation of net income (loss) to Adjusted EBITDA (unaudited)
Three months ended October 31, Nine months ended October 31, (in thousands) 2023 2022 2023 2022 Net income (loss) $ 14,673 $ (1,641 ) $ 29,348 $ (25,934 ) Interest income (3,713 ) (443 ) (7,795 ) (584 ) Interest expense 13,545 12,165 41,814 34,119 Income tax provision (benefit) 6,414 (4,539 ) 15,975 (12,170 ) Depreciation and amortization 14,567 16,959 45,622 49,306 Amortization of acquired intangible assets 23,213 23,541 69,545 71,420 Stock-based compensation expense 21,662 18,170 59,939 50,310 Merger integration expenses 2,655 6,509 8,157 23,486 Acquisition costs — — — 53 Amortization of incremental costs to obtain a contract 1,379 1,114 4,033 3,256 Costs associated with unused office space 950 1,181 3,252 3,788 Other 301 345 454 1,690 Adjusted EBITDA $ 95,646 $ 73,361 $ 270,344 $ 198,740 Reconciliation of net income outlook to Adjusted EBITDA outlook (unaudited)
Outlook for the year ending (in millions) January 31, 2024 Net income $34 - 39 Interest income (12) Interest expense 55 Income tax provision 19 - 24 Depreciation and amortization 60 Amortization of acquired intangible assets 93 Stock-based compensation expense 78 Merger integration expenses 13 Amortization of incremental costs to obtain a contract 5 Costs associated with unused office space 4 Other expense 1 Adjusted EBITDA $350 - 360 Reconciliation of net income (loss) to non-GAAP net income (unaudited)
Three months ended October 31, Nine months ended October 31, (in thousands, except per share data) 2023 2022 2023 2022 Net income (loss) $ 14,673 $ (1,641 ) $ 29,348 $ (25,934 ) Income tax provision (benefit) 6,414 (4,539 ) 15,975 (12,170 ) Income (loss) before income taxes - GAAP 21,087 (6,180 ) 45,323 (38,104 ) Non-GAAP adjustments: Amortization of acquired intangible assets 23,213 23,541 69,545 71,420 Stock-based compensation expense 21,662 18,170 59,939 50,310 Merger integration expenses 2,655 6,509 8,157 23,486 Acquisition costs — — — 53 Costs associated with unused office space 950 1,181 3,252 3,788 Loss on extinguishment of debt — — 1,157 — Total adjustments to income (loss) before income taxes - GAAP 48,480 49,401 142,050 149,057 Income before income taxes - Non-GAAP 69,567 43,221 187,373 110,953 Income tax provision - Non-GAAP (1) 17,391 10,805 46,843 27,738 Non-GAAP net income 52,176 32,416 140,530 83,215 Diluted weighted-average shares 87,122 84,572 86,707 84,349 Non-GAAP net income per diluted share $ 0.60 $ 0.38 $ 1.62 $ 0.99 (1) The Company utilizes a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations. The normalized non-GAAP tax rate applied to each period presented was 25%. The Company may adjust its non-GAAP tax rate as additional information becomes available and in conjunction with any other significant events occurring that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.
Reconciliation of net income outlook to non-GAAP net income outlook (unaudited)
Outlook for the year ending (in millions, except per share data) January 31, 2024 Net income $34 - 39 Income tax provision 19 - 24 Income before income taxes - GAAP 53 - 63 Non-GAAP adjustments: Amortization of acquired intangible assets 93 Stock-based compensation expense 78 Merger integration expenses 13 Costs associated with unused office space 4 Total adjustments to income before income taxes - GAAP 188 Income before income taxes - Non-GAAP 241 - 251 Income tax provision - Non-GAAP (1) 60 - 63 Non-GAAP net income $181 - 188 Diluted weighted-average shares 87 Non-GAAP net income per diluted share (2) $2.08 - 2.16 (1) The Company utilizes a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations. The normalized non-GAAP tax rate applied to each period presented was 25%. The Company may adjust its non-GAAP tax rate as additional information becomes available and in conjunction with any other significant events occurring that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.
(2) Non-GAAP net income per diluted share may not calculate due to rounding of non-GAAP net income and diluted weighted-average shares.
Certain terms
Term Definition HSA A financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis. CDB Consumer-directed benefits offered by employers, including flexible spending and health reimbursement arrangements (“FSAs” and “HRAs”), Consolidated Omnibus Budget Reconciliation Act (“COBRA”) administration, commuter and other benefits. HSA member Consumers with HSAs that we serve. Total HSA Assets HSA members’ custodial cash assets held by our federally insured depository partners and our insurance company partners. Total HSA Assets also includes HSA members' investments in mutual funds through our custodial investment fund partner. Client Our employer clients. Total Accounts The sum of HSAs and CDBs on our platforms. Client-held funds Deposits held on behalf of our Clients to facilitate administration of our CDBs. Network Partner Our health plan partners, benefits administrators, and retirement plan recordkeepers. Adjusted EBITDA Adjusted earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, amortization of incremental costs to obtain a contract, costs associated with unused office space, and certain other non-operating items. Non-GAAP net income Calculated by adding back to GAAP net income (loss) before income taxes the following items: amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, costs associated with unused office space, and losses on extinguishment of debt, and subtracting a non-GAAP tax provision using a normalized non-GAAP tax rate. Non-GAAP net income per diluted share Calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.