| 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 | |||||
