The following table provides a reconciliation of Adjusted EBITDA and Modified Adjusted EBITDA to net income, the most comparable GAAP financial measure (in thousands): | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended
March 31, | |||||||||||
2019 | 2018 | ||||||||||
Net income | $ | 13,019 | $ | 24,684 | |||||||
Income tax expense | 4,088 | 2,346 | |||||||||
Stock-based compensation expense | 1,212 | 216 | |||||||||
Interest expense | 270 | 16 | |||||||||
Interest income and other(1) | 201 | (1,255 | ) | ||||||||
Depreciation and amortization | 5,194 | 3,543 | |||||||||
Adjusted EBITDA | $ | 23,984 | $ | 29,550 | |||||||
Acquisition related deferred revenue (2) | $ | 2,250 | $ | - | |||||||
Modified Adjusted EBITDA | $ | 26,234 | $ | 29,550 | |||||||
(1 | ) | Includes an impairment charge for royalty contracts resulting in $0.2 million and $0.9 million of expense for the three months ended March 31, 2019 and 2018, respectively. Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the three months ended March 31, 2018. | |||||||||
(2 | ) | Represents revenue not recognized under GAAP due to acquisition accounting adjustment associated with the accounting for deferred revenue in significant business combinations. | |||||||||
The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure (in thousands): | |||||||||
(Unaudited) | |||||||||
Three Months Ended
March 31, | |||||||||
2019 | 2018 | ||||||||
Net cash provided by operating activities | $ | 25,315 | $ | 26,689 | |||||
Capital expenditures | (4,583 | ) | (1,684 | ) | |||||
Free cash flow | $ | 20,732 | $ | 25,005 | |||||