Ellie Mae Profit Drops Almost 80% on Origination Falloff
Ellie Mae in Pleasanton, Calif., reported first-quarter net income of $800,000 million, down a staggering 79.5% from $3.9 million a year ago.
Despite continuous growth in software-as-a-service customers that contributed to a 4% year-over-year increase in revenue to $32.2 million, Ellie Mae's quarterly results tumbled primarily due to declines in the volume of mortgage originations.
The quarter's revenue and profits could have been worse, according to CEO Sig Anderman, especially since "following the outage we experienced on March 31, we incurred forensic and consulting fees." Performance continues to be driven by "a robust sales pipeline" as residential mortgage lenders embrace Ellie Mae's on-demand software Encompass "to meet the ever increasing needs for regulatory compliance and operational efficiency," Anderman said in a press release.
The number of active SaaS Encompass users increased 40% from a year ago to more than 67,400, while active Encompass users increased 18% to nearly 95,000 as of March 31. The total number of SaaS contract users increased 44% year-over-year to over 99,000. Contracted revenue—a measure of future customer and revenue growth—increased to 70% of total revenue, or $22.5 million in the first quarter, up from 51% or $15.8 million a year ago.
Revenue per average active Encompass user, however, decreased 13% year over year to $343, reflecting both the drop in mortgage volume and the increase in new active users during the past three quarters.
The company said quarterly results were also affected by investments in the resources necessary to enhance its software and services as it expands market share, which led to reduced gross profit and increased operating expenses.