Ellie Mae's 1Q18 results beat estimates despite net income drop

Ellie Mae's first-quarter net income of a little over $2 million was lower than last year's due to one-time expenses, but continuing operations numbers exceeded analysts' expectations.

While the company's net income was down from almost $10 million last year, which was in line with guidance in the previous quarter's earnings, when adjusted for one-time costs on a per-share basis, its $0.34 in EPS ($0.06 unadjusted) beat expectations by $0.25, according to Seeking Alpha. And the nearly $118 million in revenue Ellie Mae produced during the quarter beat expectations by more than $9 million.

"Ellie Mae is off to a strong start with first quarter financial results exceeding expectations and the number of closed loans on our platform increasing 7% year-over-year despite lower industry volumes,” said President and CEO Jonathan Corr in a press release. "The increasing popularity of Encompass throughout the industry was evidenced by our March user conference, Ellie Mae Experience, which grew to over 3,000 attendees. At the conference, we unveiled our vision for a True Digital Mortgage that supports the entire loan lifecycle."

Recent developments at Ellie Mae may not change the outlook for the company during 2018 much but do suggest a stronger outlook for next year, according to a report by equity analysts at William Blair.

The company's switch to Accounting Standards Codification 606, a new standard for revenue recognition that public companies needed to adopt this year, "is not expected to have an impact on full-year results for 2018," William Blair equity analysts Stephen Sheldon and Josh Lamers said in the report.

However, the analysts have "more confidence in 2019" because by then the company will have made more progress bringing large contracts like TD Bank's on board, and finished processing charges associated with the Velocify acquisition.