SAN CARLOS, Calif., April 3, 2008 (PRIME NEWSWIRE) -- DemandTec, Inc. (Nasdaq:DMAN), a leading provider of on-demand merchandising and marketing software services for retailers and consumer products companies, today announced financial results for the fourth quarter and full fiscal year 2008 ended February 29, 2008.
"During the fourth quarter and full fiscal year 2008, we delivered financial results that met or exceeded our guidance and, even more importantly, we continued to make progress against our three point growth strategy -- winning new retailers, expanding our relationships with existing retailers and consumer products (CP) companies, and leveraging our strong presence with retailers to create and expand our relationships with their CP trading partners," said Dan Fishback, President and Chief Executive Officer of DemandTec.
Fishback added, "From a long-term perspective, we are optimistic about DemandTec's opportunity based on the strategic nature of the market we are serving, combined with our proven value proposition, expanding global presence, strong competitive position and SaaS business model that is based on recurring revenue. We plan to continue investing in our business during fiscal 2009 to solidify and extend our market leadership position, much as our industry leading customers seek to gain a strategic advantage during more challenging macroeconomic times. At the same time, we remain focused on cash flow generation for our stockholders."
Fourth Quarter Financial Highlights
Revenue: Revenue was $17.4 million in the fourth quarter of fiscal 2008, up 42% from $12.3 million in the fourth quarter of fiscal 2007 and 9% from $15.9 million in the third quarter of fiscal 2008.
Gross Profit: GAAP gross profit was $11.9 million in the fourth quarter of fiscal 2008. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of intangibles, was $12.4 million in the fourth quarter of fiscal 2008, up 57% from the fourth quarter of fiscal 2007 and representing a non-GAAP gross margin of 71.4%.
GAAP Operating and Net Loss: Loss from operations was $1.9 million in the fourth quarter of fiscal 2008, compared to a loss from operations of $1.3 million in the fourth quarter of fiscal 2007. Net loss attributable to common stockholders was $1.2 million, or ($0.04) per share, in the fourth quarter of fiscal 2008, compared to net loss attributable to common stockholders of $1.6 million, or ($0.24) per share, in the fourth quarter of fiscal 2007.
Non-GAAP Operating and Net Income/Loss: Non-GAAP income from operations, which excludes $2.3 million in stock-based compensation expense and $241,000 in amortization of intangibles, was $659,000 in the fourth quarter of fiscal 2008, compared to a non-GAAP operating loss of $792,000 in the fourth quarter of fiscal 2007. Non-GAAP net income attributable to common stockholders was $1.3 million, or $0.04 per diluted share, in the fourth quarter of fiscal 2008, compared to a non-GAAP net loss attributable to common stockholders of $1.1 million, or ($0.17) per diluted share, in the fourth quarter of fiscal 2007.
Cash: Cash, cash equivalents and marketable securities at the end of the fiscal year totaled $75.9 million, an increase of approximately $1.8 million from the end of the third quarter of fiscal 2008. The increase in cash, cash equivalents and marketable securities was primarily attributable to cash generated from operations in the fourth quarter. For the full fiscal year 2008, the company generated $11.2 million in cash flow from operations and invested $4.1 million in capital expenditures, resulting in free cash flow of $7.1 million for the fiscal year.
Full Fiscal Year 2008 Financial Highlights
Revenue: Revenue was $61.3 million for the full fiscal year 2008, up 41% from $43.5 million in fiscal year 2007.
Gross Profit: GAAP gross profit was $40.8 million for the full fiscal year 2008. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of intangibles, was $42.7 million for the full fiscal year 2008, up 45% from fiscal year 2007 and representing a non-GAAP gross margin of 69.7%.
GAAP Operating and Net Loss: Loss from operations was $5.6 million for the full fiscal year 2008, compared to a loss from operations of $984,000 for the full fiscal year 2007. Net loss attributable to common stockholders was $4.5 million, or ($0.25) per diluted share, for fiscal year 2008, compared to net loss attributable to common stockholders of $1.5 million, or ($0.28) per diluted share, for fiscal year 2007.
Non-GAAP Operating and Net Income/Loss: Non-GAAP income from operations, which excludes $5.3 million in stock-based compensation expense and $968,000 in amortization of intangibles, was $742,000 for the full fiscal year 2008, compared to a non-GAAP operating loss of $330,000 for fiscal year 2007. Non-GAAP net income attributable to common stockholders was $1.8 million, or $0.08 per diluted share, for fiscal year 2008, compared to a non-GAAP net loss attributable to common stockholders of $894,000, or ($0.16) per diluted share, for fiscal 2007.
Mark Culhane, Chief Financial Officer of DemandTec, stated, "During fiscal 2008, DemandTec delivered revenue growth of over 40%, while the growth in our cash flow evidenced the scalability potential inherent in our business model. In particular, cash flow from operations grew 115% year-over-year and represented 18% of revenue, while free cash flow grew 146% year-over-year and represented 12% of revenue."
Conference Call Information
DemandTec will host a conference call today, April 3, 2008, at 5:00 p.m. EDT (2:00 p.m. PDT) to discuss the Company's financial results and financial guidance. To access this call, dial 303-262-2131 with passcode 11110289. A replay of this conference call will be available through April 10, 2008, at 800-405-2236. The replay passcode is 11110289#. A live webcast of this conference call will be available on the "Investor Relations" page of the Company's Web site (www.demandtec.com) and a replay will be archived on the Web site as well.
About DemandTec
DemandTec's on-demand merchandising and marketing software services empower retailers and consumer products companies to optimize strategic decisions and collaborate in order to achieve their revenue, profitability and sales volume objectives. DemandTec (Nasdaq:DMAN) has managed more than one million trade promotion deals between retailers and their manufacturer partners. DemandTec customers include leading retailers such as Advance Auto Parts, Best Buy, Circle K Stores, Delhaize America, Giant-Carlisle, H-E-B Grocery Co., Monoprix and Safeway, as well as more than 100 consumer products companies. For more information, please visit www.demandtec.com.
Forward-Looking Statements
This press release contains forward-looking statements regarding DemandTec's expectations, hopes, plans, intentions or strategies, including statements about the company's future financial performance, financial condition or results of operations, statements as to the plans of management for future operations, and statements as to management's beliefs regarding the company's target markets. We may, in some cases, use words such as "believes," "expects," "anticipates," "plans," "estimates," and similar expressions to identify these forward-looking statements. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties include changes in our pricing policies or those of our competitors, fluctuations in demand for our software, our ability to develop and implement in a timely manner new software and enhancements that meet customer requirements, any significant changes in the competitive dynamics of our market, including new entrants or substantial discounting of products, general economic conditions in the retail and consumer products markets, the impact of a recession or other adverse economic conditions, and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact DemandTec's business are set forth in DemandTec's final prospectus dated August 8, 2007 filed with the SEC, as well as subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Any future products, features or related specifications that may be referenced in this release are for information purposes only and are not commitments to deliver any technology or enhancement. DemandTec reserves the right to modify future product plans at any time.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons why management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled "Use of Non-GAAP Financial Information" as well as the related tables. We anticipate disclosing forward-looking non-GAAP financial information in our conference call to discuss our fourth quarter and full fiscal year 2008 results, including an estimate of non-GAAP operating income and net earnings per share for the first quarter and full year fiscal 2009 that excludes stock-based compensation expenses and amortization of purchased intangible assets. We cannot readily estimate our expected stock-based compensation expenses for these future periods as they depend upon such factors as our future stock price for purposes of computation.
A copy of this press release can be found on the investor relations page of DemandTec's website at www.demandtec.com.
DemandTec and the DemandTec logo are registered trademarks of DemandTec, Inc. All other trademarks used or mentioned herein are the property of their respective owners.
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DemandTec, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
--------------------------------------
Three Three
Year Year Months Months
Ended Ended Ended Ended
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
2008 2007 2008 2007
-------- -------- -------- --------
Revenue $ 61,270 $ 43,485 $ 17,404 $ 12,299
Cost of revenue 20,444 14,230 5,546 4,534
-------- -------- -------- --------
Gross profit 40,826 29,255 11,858 7,765
-------- -------- -------- --------
Operating expenses:
Research and development 22,445 15,340 6,709 4,743
Sales and marketing 17,290 12,108 4,974 3,440
General and administrative 6,292 2,673 1,938 749
Amortization of acquired
intangible assets 360 118 89 88
-------- -------- -------- --------
Total operating expenses 46,387 30,239 13,710 9,020
-------- -------- -------- --------
Loss from operations (5,561) (984) (1,852) (1,255)
Other income (expense), net 1,542 (480) 821 (292)
-------- -------- -------- --------
Loss before provision for
income taxes (4,019) (1,464) (1,031) (1,547)
Provision for income taxes 455 52 136 48
-------- -------- -------- --------
Net loss (4,474) (1,516) (1,167) (1,595)
Accretion to redemption value
of preferred stock 13 32 -- 8
-------- -------- -------- --------
Net loss attributable to
common stockholders $ (4,487) $ (1,548) $ (1,167) $ (1,603)
======== ======== ======== ========
Net loss per share - basic
and diluted $ (0.25) $ (0.28) $ (0.04) $ (0.24)
======== ======== ======== ========
Weighted shares used in per
share calculation:
Basic and diluted 17,612 5,531 26,332 6,679
-------- -------- -------- --------
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DemandTec, Inc.
Consolidated Balance Sheets
(in thousands)
--------------------------
February 29, February 28,
2008 2007
------------ ------------
Current assets:
Cash and cash equivalents $ 43,257 $ 21,036
Short-term marketable securities 30,547 4,442
Accounts receivable, net of allowances 18,227 14,338
Prepaid expenses and other current assets 3,979 3,202
------------ ------------
Total current assets 96,010 43,018
------------ ------------
Marketable securities, noncurrent 2,085
Property, equipment and leasehold
improvements, net 5,139 2,941
Goodwill 5,290 5,290
Acquired intangible assets 3,761 4,729
Other assets 1,329 817
------------ ------------
Total assets $ 113,614 $ 56,795
============ ============
Current liabilities:
Accounts payable and accrued expenses $ 6,969 $ 7,796
Deferred revenue, current 44,006 31,143
Debt, current 442 3,385
Other current liabilities 36 760
------------ ------------
Total current liabilities 51,453 43,084
------------ ------------
Deferred revenue, non-current 11,369 11,029
Debt, non-current -- 11,678
Other long-term liabilities 495 591
Total redeemable convertible preferred
stock -- 49,073
Stockholders' equity (deficit):
Convertible preferred stock -- 2,071
Common stock 122,725 7,210
Accumulated deficit (72,428) (67,941)
------------ ------------
Total stockholders' equity (deficit) 50,297 (58,660)
------------ ------------
Total liabilities, redeemable convertible
preferred stock and stockholders'
equity (deficit) $ 113,614 $ 56,795
============ ============
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DemandTec, Inc.
Consolidated Statements of Cash Flows
(in thousands)
--------------------------------------
Three Three
Year Year Months Months
Ended Ended Ended Ended
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
2008 2007 2008 2007
-------- -------- -------- --------
Operating activities:
Net loss ($4,474) ($1,516) ($1,167) ($1,595)
Adjustments to reconcile net
income to net cash
Depreciation 1,929 1,060 539 328
Stock-based compensation
expense 5,335 333 2,270 223
Amortization of warrants
issued in conjunction with
debt 64 99 -- 38
Revaluation of warrants to
fair value 119 206 -- 149
Amortization of acquired
intangible assets 968 321 241 240
Amortization of financing
costs 93 125 -- 48
Acceleration of interest
amortization upon early
extinguishment of debt 504 -- -- --
Provision for accounts
receivable 98 31 (28) 15
Other (134) (64) (14) (6)
Changes in operating assets
and liabilities:
Accounts receivable (3,927) (11,099) (657) (6,116)
Prepaid expenses and other
current assets (1,149) (187) (488) (72)
Deferred commissions (317) (1,135) (203) (1,576)
Other assets (290) (113) (261) 138
Accounts payable and accrued
expenses (2,161) 515 (320) 1,133
Accrued compensation 1,392 700 336 543
Deferred revenue 13,203 15,954 2,777 11,635
-------- -------- -------- --------
Net cash provided by operating
activities 11,253 5,230 3,025 5,125
-------- -------- -------- --------
Investing activities:
Purchases of property,
equipment, and leasehold
improvements (4,127) (2,336) (1,151) (894)
Purchase of marketable
securities (86,583) (6,200) (29,931) (1,100)
Maturities of marketable
securities 58,393 4,241 42,643 799
Acquisition of TradePoint,
net of cash received (1,358) (3,649) (33) 55
-------- -------- -------- --------
Net cash provided by (used in)
investing activities (33,675) (7,944) 11,528 (1,140)
-------- -------- -------- --------
Financing activities:
Proceeds from issuance of
common stock, net of
repurchases, excluding
initial public offering 376 633 92 112
Proceeds from the issuance of
convertible preferred stock -- 65 -- --
Net cash proceeds from initial
public offering 57,631 -- 20 --
Decrease in liability
associated with offering
costs -- -- (166) --
Proceeds from advances on
line of credit -- 3,000 -- --
Payments on line of credit (3,000) (2,303) -- (85)
Proceeds from issuance of
notes payable -- 10,000 -- --
Payment of term loan balloon
interest (400) -- -- --
Payments of notes payable (10,000) -- -- --
-------- -------- -------- --------
Net cash provided by (used in)
financing activities 44,607 11,395 (54) 27
-------- -------- -------- --------
Effect of exchange rate changes
on cash and cash equivalents 36 67 (4) (5)
-------- -------- -------- --------
Net increase in cash and cash
equivalents 22,221 8,748 14,495 4,007
Cash and cash equivalents at
beginning of period 21,036 12,288 28,762 17,029
-------- -------- ------------------
Cash and cash equivalents at
end of period $43,257 $21,036 $43,257 $21,036
======== ======== ==================
Supplemental information:
Cash paid for interest $956 $780 $0 $257
======== ======== ======== ========
Cash paid for income taxes $320 $21 $120 $6
======== ======== ======== ========
Common stock issued in
connection with acquisition
of TradePoint $0 $4,085 $0 $4,085
======== ======== ======== ========
Reclassification of deferred
stock warrant from liability
to additional paid-in capital $712 $0 $0 $0
======== ======== ======== ========
Issuance of warrants for common
stock $0 $171 $0 $0
======== ======== ======== ========
Issuance of warrants for
preferred stock $0 $172 $0 $0
======== ======== ======== ========
Deferred financing costs on
note payable $0 $400 $0 $0
======== ======== ======== ========
Note payable to former
TradePoint stockholders $0 $1,800 $0 $1,800
======== ======== ======== ========
Accretion to redemption value
of preferred stock $13 $32 $0 $8
======== ======== ======== ========
Conversion of preferred stock
to common stock and
additional paid-in capital $51,144 $0 $0 $0
-------- -------- -------- --------
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DemandTec, Inc.
Reconciliation of GAAP to Non-GAAP
Financial Measures
(in thousands, except per share data)
-------------------------------------------
Three Three
Months Months
Year Ended Year Ended Ended Ended
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
2008 2007 2008 2007
-------- -------- -------- --------
GAAP cost of revenue $ 20,444 $ 14,230 $ 5,546 $ 4,534
Deduct:
Stock-based compensation (1,261) (41) (422) (20)
Amortization of purchased
intangible assets (608) (203) (152) (152)
-------- -------- -------- --------
Non-GAAP cost of revenue $ 18,575 $ 13,986 $ 4,972 $ 4,362
======== ======== ======== ========
GAAP gross profit $ 40,826 $ 29,255 $ 11,858 $ 7,765
Add back:
Stock-based compensation 1,261 41 422 20
Amortization of purchased
intangible assets 608 203 152 152
-------- -------- -------- --------
Non-GAAP gross profit $ 42,695 $ 29,499 $ 12,432 $ 7,937
======== ======== ======== ========
GAAP gross margin 66.6% 67.3% 68.1% 63.1%
Add back:
Stock-based compensation 2.1% 0.1% 2.5% 0.2%
Amortization of purchased
intangible assets 1.0% 0.4% 0.8% 1.2%
-------- -------- -------- --------
Non-GAAP gross margin 69.7% 67.8% 71.4% 64.5%
======== ======== ======== ========
GAAP research &
development expense $ 22,445 $ 15,340 $ 6,709 $ 4,743
Deduct stock-based
compensation (1,824) (62) (997) (38)
-------- -------- -------- --------
Non-GAAP research &
development expense $ 20,621 $ 15,278 $ 5,712 $ 4,705
======== ======== ======== ========
GAAP sales & marketing
expense $ 17,290 $ 12,108 $ 4,974 $ 3,440
Deduct stock-based
compensation (1,367) (74) (537) (38)
-------- -------- -------- --------
Non-GAAP sales & marketing
expense $ 15,923 $ 12,034 $ 4,437 $ 3,402
======== ======== ======== ========
GAAP general &
administrative
expense $ 6,292 $ 2,673 $ 1,938 $ 749
Deduct stock-based
compensation (883) (156) (314) (127)
-------- -------- -------- --------
Non-GAAP general &
administrative expense $ 5,409 $ 2,517 $ 1,624 $ 622
======== ======== ======== ========
GAAP total operating
expense $ 46,387 $ 30,239 $ 13,710 $ 9,020
Deduct:
Stock-based compensation (4,074) (292) (1,848) (203)
Amortization of purchased
intangible assets (360) (118) (89) (88)
-------- -------- -------- --------
Non-GAAP total operating
expense $ 41,953 $ 29,829 $ 11,773 $ 8,729
======== ======== ======== ========
GAAP loss from operations $ (5,561) $ (984) $ (1,852) $ (1,255)
Add back stock-based
compensation and
amortization of purchased
intangible assets 6,303 654 2,511 463
-------- -------- -------- --------
Non-GAAP income (loss)
from operations $ 742 $ (330) $ 659 $ (792)
======== ======== ======== ========
GAAP net loss attributable
to common stockholders $ (4,487) $ (1,548) $ (1,167) $ (1,603)
Add back stock-based
compensation and
amortization of purchased
intangible assets 6,303 654 2,511 463
-------- -------- -------- --------
Non-GAAP net income (loss)
attributable to common
stockholders $ 1,816 $ (894) $ 1,344 $ (1,140)
======== ======== ======== ========
GAAP net loss per share,
diluted $ (0.25) $ (0.28) $ (0.04) $ (0.24)
Add back stock-based
compensation and
amortization of purchased
intangible assets $ 0.33 $ 0.12 $ 0.08 $ 0.07
-------- -------- -------- --------
Non-GAAP net income (loss)
per share, diluted $ 0.08 $ (0.16) $ 0.04 $ (0.17)
======== ======== ======== ========
GAAP cash flow from
operations $ 11,253 $ 5,230 $ 3,025 $ 5,125
Deduct purchases of
property, equipment and
leasehold improvements (4,127) (2,336) (1,151) (894)
-------- -------- -------- --------
Non-GAAP free cash flow $ 7,126 $ 2,894 $ 1,874 $ 4,231
======== ======== ======== ========
Use of Non-GAAP Financial Measures
The accompanying press release dated April 3, 2008 contains non-GAAP financial measures. The above table reconciles the non-GAAP financial measures in the press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP measures include non-GAAP cost of revenue, gross profit, gross margin, operating expenses, income (loss) from operations, net income (loss) attributable to common stockholders, and net income (loss) per share amounts.
Our non-GAAP financial measures generally exclude costs and expenses for (i) amortization of purchased intangible assets related to our acquisition of TradePoint, Inc. and (ii) stock-based compensation:
Amortization of Purchased Intangible Assets. In accordance with GAAP, we amortize intangible assets acquired in connection with our acquisition of TradePoint, Inc. over the estimated useful lives of the assets. We exclude these amortization costs in our non-GAAP financial measures because they (i) result from a prior acquisition, rather than the ongoing operating performance of our business, and (ii) absent additional acquisitions, are expected to decline over time as the remaining carrying amounts of these assets are amortized. We believe excluding these costs helps investors compare our financial performance with that of other companies with different acquisition histories. However, we recognize that amortization costs provide a helpful measure of the financial impact and performance of prior acquisitions and consider our non-GAAP financial measures in conjunction with our GAAP financial results that include amortization costs.
Stock-Based Compensation Expenses. We exclude stock-based compensation expense associated with equity incentives granted to employees, non-employees and non-executive directors in our non-GAAP financial measures. While stock-based compensation is a significant component of our expenses, we believe that investors may wish to exclude the effects of stock-based compensation expense in comparing our financial performance with that of other companies.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, GAAP financial measures, which should be considered as the primarily financial metrics for evaluating our financial performance. Significantly, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. Instead, they are based on subjective determinations by management designed to supplement our GAAP financial measures. They are subject to a number of important limitations and should be considered only in conjunction with our consolidated financial statements prepared in accordance with GAAP. In addition, our non-GAAP financial measures differ from GAAP measures with the same names, may vary over time and may differ from non-GAAP financial measures with the same or similar names used by other companies. Accordingly, investors should exercise caution when evaluating our non-GAAP financial measures.