Investor Presentation - Schedule - Investor Relations | Pluralsight
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Schedule
12:00 – 12:30 Welcome and CEO Update
Aaron Skonnard
12:30 – 1:00 CXO Platform Overview & Demo
Nate Walkingshaw
Investor
1:00 – 1:10
Presentation
Break
1:15 – 1:45 July 2020 CFO Financial Overview
James Budge
1:45 – 2:30 Q&A
Aaron Skonnard, James Budge, Nate Walkingshaw
1
Safe Harbor Statement
2
Pluralsight Overview
Cloud-based technology skills platform closing the global technology skills gap
Helping enterprises adapt and thrive in the digital age
Enabling technologists to keep pace with change
Addressing $42 billion market opportunity(1)
88% OF TTM BILLINGS (2)
$400M TTM BILLINGS (2) ~1.43M BUSINESS USERS(2)
FROM BUSINESS CUSTOMERS
1. Calculated by taking the number of global technical team members based on a study by Evans Data Corporation (2018) multiplied by our average billings per user as of December 31, 2019. $31B of
TAM for Pluralsight Skills, $11B of TAM for Pluralsight Flow.
2. As of June 30, 2020 3Businesses Face a Massive Technology Skills Gap
Pace of Technological Change
87% of Tech Executives
Cite the challenge of finding skilled tech
“Software Developers Must Redevelop Skills Every 12-18 Months”
(1) talent(2)
700,000 unfilled tech jobs in the US(3)
3,700,000 tech job postings during 2018(3)
2x median tech wage is double the median
national wage (3)
Pace of Learning
Past Present
1. Deloitte Global Human Capital Trends
2. Source: The State of US Tech Hiring – Robert Half Q1/Q2 2019
3. Source: ACT – CompTIA – Cyberstates 2019
4Existing Solutions Fall Short on Delivering for Today’s Tech Professional
CLASSROOM
FREE Online Training
Static corporate mandated
Unreliable content with no courses; mostly broad content
measurement of mastery focus rather than laser focus on
Not scalable,
tech skills
personalized or measurable
5Large and Expanding Addressable Market
Today’s TAM Analyst Estimated Market
$42Bn
102MM Global
Technical Team Members(1)
Global corporate training shifting toward
>$300Bn
Penetration
technology training by 2025
Global eLearning Market Size(2)
1. Source: Evans Data Corporation, Technical Team Total Addressable Market for Morgan Stanley (January 2018) (an estimate for 2017). $31B of TAM for Pluralsight Skills, $11B of TAM for
Pluralsight Flow.
2. Source: Global Market Insights, Global eLearning Market Size worth over $300bn by 2025 (https://www.gminsights.com/pressrelease/elearning-market). 6Evolution of Pluralsight
7Skill IQ Role IQ
Assess skills in under Discover the skills gaps holding
10 minutes and 20 questions team members back and fill them fast
Projects Paths & Channels
Apply learned skills to Align learning to key
real-world scenarios business objectives
Interactive Courses Business Analytics
Practice with hands-on coding See the skills that exist in the
challenges and guided feedback organization and measure progress
As of March 31, 2018
8UNPRECEDENTED VISIBILITY INTO SKILLS AND PRODUCTIVITY
SKILLS + FLOW
MEASURE SKILLS IDENTIFY GAPS
With Skill and Role IQ tech With real-time visibility into the
leaders have unprecedented efficiency and performance of
insights into the skill gaps across developers, leaders can quickly
their orgs, our platform provides identity bottlenecks and manage
leaders the tools to close them
SKILLS + FLOW team performance through data-
Holistic and targeted centered discussion
platform enabling tech
leaders to successfully
execute and deliver their
digital transformation DEVELOP SKILLS
APPLY SKILLS strategies
Flow offers a view of every Technology teams can upskill
developer code commit; leaders get efficiently with our platform;
a clear and unbiased perspective of allows leaders to future-proof
the application of skills in real-time their companies, avoid disruption
and advance innovation
9Why Customers Choose Pluralsight
INTEGRATED Skill assessments, course library, learning paths and analytics
PERSONALIZED High quality content tailored to individual needs
Faster product development
COST EFFECTIVE (1) ROI of 295% over 3 years Higher employee retention
Streamlined new hire onboarding
SCALABLE Ability to access anytime, anywhere, from almost any device
FOR PROFESSIONALS Continuous training of technology skills for professionals
EXPANDING CAPABILITIES Developer Productivity, Interactive Courses and Projects
CUSTOMER NPS OF 62 (2)
1. Forrester, The Total Economic Impact of Pluralsight: Cost Savings and Business Benefits Enabled by Pluralsight (A Forrester Total Economic Impact Study Commissioned by Pluralsight) (October 2017). Data references are only with respect to
customers in the study.
2. Average for the trailing twelve months ended 6/30/2020. 10Efficient Strategy to Attract and Convert Long-Term Customers
ADOPTION FUNNEL
Free Assessments (2)
PARTNERS
DIGITAL MARKETING/SELF-SERVICE
Individual Paid
Significant Majority Work at a Company
Focused on New Business Customers
Business Expanding Usage and Upsell
Broad Distribution
(2)
PARTNERS
88%
1. For the twelve months ended June 30, 2020
2. Partners provide both lead generation and direct billing relationships
11Our Customers Represent All Industries Across the Globe
70% of the 2020 Fortune 500(1) ~18,000 B2B Customers(1) Users in over 180 countries(1)
Financial Services Internet Technology Healthcare / Pharma
Media & Entertainment Consumer Goods / Retail Transportation & Logistics Government Contractors
Manufacturing Energy Insurance Professional Services
1. As of June 30, 2020
12Significant Growth and Upside Opportunities
EXPAND
GEOGRAPHICALLY
GROW ENTERPRISE
CUSTOMER BASE
EXPAND WITHIN EXISTING
• Expand sales teams in
CUSTOMERS Europe and Asia-Pacific
EXPAND OFFERING
• Expand sales force
• Expand use cases
• Expand course library • Expand deployments
• Add features
• Add product tiers
13Financial Highlights
Significant Scale Projecting $375 – $390M in revenue for FY 2020
Retention &
Growing importance within existing customers driving 118%dollar-based net retention rate (1)
Expansion
Operating Leverage 81% Q2 2020 non-GAAP gross margin with demonstrated leverage from author fee structure (2)
Investing for the Investment in Pluralsight Flow and related go to market enhances product and sales outlook,
Long Term expediting our path to our target model
Exited Q2’20 with $550M+ in total Cash and Investments
Cash & Cash Flow History of positive cash flow (2004 through 2015 and Q3-Q4 2018, Q1 2019, Q1 2020)
$9M in Operating Cash Flow in 1H 2020, and neutral Free Cash in 1H 2020 (excl. cash spent on new campus)
1. Please refer to appendix for definition of dollar-based net retention rate
2. For the three-month period ended June 30, 2020 14Billings and Revenue Growth
Billings(1-3) Revenue(1-3)
US$M US$M
Total YoY Growth (%): 21% Total YoY Growth (%):
43% 29% 39% 37% 31%
B2B Billings 52% 33% 24% $359
YoY Growth (%): $400
$379
$317
$294
$232
$206
88% $167
79%
2017 2018 2019 TTM 2017 2018 2019 TTM
Individuals Business Customers
1. Business customer subscription terms typically range from 1 – 3 years
2. Individual customer subscription terms typically range from 1 month - 1 year
3. Substantial majority of business customers billed annually in advance 15Demonstrated Strong Retention
Dollar-Based Net Retention Rate(1)
118%
109%
FY 2016 TTM
1. Please refer to appendix for definition of dollar-based net retention rate
16Non-GAAP Gross Profit
Non-GAAP Gross Profit (1)
US$M
79% 81%
Non-GAAP Gross 74% 76%
$289
Margin (%):
$250
$177
$124
2017 2018 2019 TTM
1. See appendix for a reconciliation of GAAP Gross Profit to non-GAAP Gross Profit
17Increasing Volume of Large Deals
B2B Accounts with > $100K, > $500K, and > $1M in Annual Billings
$1M+ Customers 54% CAGR
$500K+ Customers
$100K+ Customers
80% CAGR
118% CAGR
2017 2018 2019 Q2'20
182020 Guidance
Revenue, EPS (1)
FY’18 - Actual FY’19 - Actual FY’20 - Guidance
Revenue $232M $317M $375 - $390M
Non-GAAP EPS ($0.60)(2) ($0.30)(2) ($0.27) – ($0.19)(2)
Cash Flow Positive in Q4 2020
1. 2020 guidance is forward-looking, is subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management and are based
upon assumptions with respect to future decisions, which are subject to change. Actual results will vary, and those variations may be material. For discussion of some of the important factors that could cause these variations, please
consult the “Risk Factors” section of the Annual Report on Form 10-K. Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved, and the Company undertakes no duty to
update its goals.
2. Pluralsight has not reconciled its expectations as to adjusted pro forma net loss per share to their most directly comparable GAAP measures because certain items cannot be reasonably predicted. Accordingly, a reconciliation for
expectations for adjusted pro forma net loss per share is not available without unreasonable effort.
19Target Model
Non-GAAP Metrics (1)
% of Revenue
TARGET MODEL
FY’17 FY’18 FY’19 Q2’20
Based on Rev of $1B (2)
GROSS MARGIN 74% 76% 79% 81% ~80%
TECHNOLOGY &
28% 24% 25% 23% ~15%
CONTENT
SALES & MARKETING 60% 60% 55% 49% ~35%
GENERAL &
18% 16% 14% 14% ~8%
ADMINISTRATIVE
OPERATING MARGIN (31%) (23%) (16%) (5%) ~22%
1. Each of the measures presented in this table are non-GAAP measures. See the appendix for a reconciliation of each measure to the most directly comparable GAAP measure. The Company has not provided a reconciliation of the
forward-looking information presented in the Target Model because material items that impact that reconciliation are not reasonably estimable at this time.
2. Target model is forward-looking, is subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based
upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please
consult the “Risk Factors” section of the Annual Report on Form 10-K. Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved and the Company undertakes no duty to update
its goals.
20Investment Highlights
24% TTM YoY business billings growth with 88% billings from business customers (1)
Sales & marketing investment supported by 118% retention rate(1)
Non-GAAP gross margin of 81% in Q2 2020(2)
Addressing $42 billion market opportunity(3)
History of positive cash flows and $550M+ of cash and investments
1. TTM As of June 30, 2020. Please refer to appendix for definition of dollar-based net retention rate
2. For the three-month period ended March 31, 2020. See appendix for a reconciliation of GAAP Gross Profit to non-GAAP Gross Profit
3. Calculated by taking the number of global technical team members based on a study by Evans Data Corporation (2018) multiplied by our average billings per user as of December 31, 2018. $31B of
TAM for Pluralsight Skills, $11B of TAM for Pluralsight Flow.
21Appendix
22GAAP to Non-GAAP Reconciliation
$ Thousands 2020 Q2 2019 Q2 2018 Q2 2020 2019
TTM TTM TTM Q2 Q2
GAAP Gross Profit 283,279 207,981 136,359 75,048 58,059
Equity-Based Compensation 897 333 99 296 133
Employer Payroll Taxes on Employee Stock Transactions 39 32 - 15 13
Amortization of Acquired Intangibles 4,836 2,890 9,647 1,209 702
Non-GAAP Gross Profit 289,051 211,236 146,105 76,568 58,907
Non-GAAP Gross Profit Margin (%) 81% 77% 75% 81% 78%
GAAP Operating Loss (156,394) (139,869) (125,668) (35,221) (37,381)
Equity-Based Compensation 99,440 83,140 48,042 26,425 22,732
Employer Payroll Taxes on Employee Stock Transactions 3,030 3,953 - 997 1,329
Amortization of Acquired Intangibles 5,725 3,625 11,179 1,420 907
Secondary Offering Costs 1,260 918 - 1,260 -
Acquisition Related Costs - 835 - - 835
Non-GAAP Operating Profit / (Loss) (46,939) (47,398) (66,447) (5,119) (11,578)
Non-GAAP Operating Profit / (Loss) Margin (%) (13%) (17%) (34%) (5%) (15%)
23GAAP to Non-GAAP Reconciliation (Cont’d)
$ Thousands 2020 Q2 2019 Q2 2018 Q2 2020 2019
TTM TTM TTM Q2 Q2
GAAP Sales and Marketing Expense 233,042 181,302 133,958 57,759 50,046
Equity-Based Compensation 36,849 25,429 9,140 10,878 7,952
Employer Payroll Taxes on Employee Stock Transactions 973 1,559 - 329 533
Amortization of Acquired Intangibles 200 29 788 50 29
Non-GAAP Sales and Marketing Expense 195,020 154,285 124,030 46,502 41,532
Non-GAAP Sales and Marketing Expense as a % of Revenue 54% 56% 64% 49% 55%
GAAP Technology and Content Expense 117,470 82,658 59,483 29,514 24,819
Equity-Based Compensation 25,803 15,933 5,928 6,884 5,137
Employer Payroll Taxes on Employee Stock Transactions 1,011 1,260 - 381 434
Amortization of Acquired Intangibles 689 706 707 161 176
Non-GAAP Technology and Content Expense 89,967 64,759 52,848 22,088 19,072
Non-GAAP Technology and Content Expense as a % of Revenue 25% 24% 27% 23% 25%
GAAP General and Administrative Expense 89,161 83,890 68,586 22,996 20,575
Equity-Based Compensation 35,891 41,445 32,875 8,367 9,510
Employer Payroll Taxes on Employee Stock Transactions 1,007 1,102 - 272 349
Amortization of Acquired Intangibles - - 37 - -
Secondary Offering Costs 1,260 918 - 1,260 -
Acquisition Related Costs - 835 - - 835
Non-GAAP General and Administrative Expense 51,003 39,590 35,674 13,097 9,881
Non-GAAP General and Administrative Expense as a % of Revenue 14% 14% 18% 14% 13%
Total Non-GAAP Operating Expense 335,990 258,634 212,552 81,687 70,485
Non-GAAP Operating Expense as a % of Revenue 94% 94% 110% 86% 93%
24GAAP to Non-GAAP Reconciliation (Cont’d)
$ Thousands 2020 Q2 2019 Q2 2018 Q2 2020 2019
TTM TTM TTM Q2 Q2
Net cash provided by (used in) operating activities (1,036) 8,673 (24,406) (9,250) (7,184)
Less: purchases of property and equipment (27,111) (8,812) (7,500) (6,626) (2,457)
Less: purchases of content library (6,678) (4,277) (2,657) (2,113) (1,504)
Free Cash Flow (34,825) (4,416) (34,563) (17,989) (11,145)
Free Cash Flow Margin (%) (10%) (2%) (18%) (19%) (15%)
DEFINITION
Dollar-based net retention rate
To calculate our dollar-based net retention rate, we first calculate the subscription revenue in one quarter from a cohort of customers that were customers at the beginning of the same quarter in the prior fiscal year, or cohort
customers. We repeat this calculation for each quarter in the trailing four-quarter period. The numerator for dollar-based net retention rate is the sum of subscription revenue from cohort customers for the four most recent
quarters, or numerator period, and the denominator is the sum of subscription revenue from cohort customers for the four quarters preceding the numerator period. Dollar-based net retention rate is the quotient obtained by
dividing the numerator by the denominator.
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