Tax accounting change aids 77% rise in Ellie Mae 2Q net income
Ellie Mae had second-quarter net income of $18.8 million, a 77% increase over the $10.6 million in the same period last year largely due to a tax accounting change.
Revenue at the Pleasanton, Calif.-based company was up 16% year-over-year to $104.1 million.
Its second-quarter net income was aided by changes to the accounting treatment for tax purposes of stock awards paid to employees. As a result of this change, which became effective on Jan. 1, Ellie Mae recorded an additional $7.3 million of net income.
But lower-than-expected closed loan volume being processed through its Encompass loan origination system affected the company's outlook for the rest of the year.
"Some of our customers experienced closed loan volume lower than we expected in the second quarter as they dealt with declining refi volume, while the tight housing inventory held back purchase volume," said President and CEO Jonathan Corr in a press release. "We also saw some enterprise customers, which comprise an increasing portion of our customer base, take longer to ramp on our platform than planned."
"These factors led to a lower closed loan volume than expected, so we are resetting assumptions for the year as the market completes this transition. Beyond this year, we expect the market to normalize and for our business to resume stronger growth," he continued.
Ellie Mae cut its full-year revenue projections to between $400 million and $405 million from $433 million and $440 million. Net income for the year is expected to be in the $40 million to $42 million range versus an earlier forecast of between $50 million and $55 million.