Ellie Mae's fourth quarter and full year revenue increased over the corresponding prior periods following its acquisition of Velocify.
For the fourth quarter, Ellie Mae's revenue of $112.9 million was up 17% from $96.2 million for the same period in 2016.
This exceeded the midpoint of the company's guidance by approximately $5 million and "was driven by higher-than-expected revenue from Velocify, stronger loan volume and the continued adoption of services across our platform," Chief Financial Officer Matthew LaVay said during the earnings call.
In 2017, the company had revenue of $417 million, up 16% from $360.3 million in 2016.
Ellie Mae had fourth-quarter net income of $9.9 million, down from $14.5 million in the third quarter and $10.9 million one year prior. Net income for the full year was $52.9 million, up from $37.8 million in 2016.
Net income for 2017 was enhanced by an accounting change where the excess tax benefit generated upon the settlement or exercise of stock awards was no longer recognized as additional paid-in capital but was instead recognized as an income tax benefit. With this change, Ellie Mae recognized a benefit to 2017's net income of $15.9 million.
However, Ellie Mae projects it will lose between $8 million and $9 million in this year's first quarter on the additional implementation costs for switching to a new accounting standard on how revenue is recognized from customer contracts along with the amortization of intangible assets and integration costs related to the Velocify acquisition.
Ellie Mae added over 11,000 Encompass seat users in the fourth quarter and 42,000 for the full year, bringing the total to 242,505 contracted users, of which 76% were active users. For the full year 2018, it expects to add between 32,000 and 40,000 seats.
But the company will stop reporting this metric after 2018. "The right way to think about is an ongoing expansion of let's call it share, market share or loan volume probably following a similar pattern to what we've seen over the last couple of few years and that could fluctuate and an expansion of the revenue per loan again similar to what we've seen over the last few years," said LaVay.
"And if you just take both of those out, that's the way we're thinking about the business. And that's why we really shifted away from being focused on seat bookings."
Revenue per active user was $612, up from $590 in the third quarter and $587 in the fourth quarter of 2016.