DemandTec Announces Fourth Quarter and Fiscal Year 2009 Financial Results


SAN CARLOS, Calif., April 2, 2009 (GLOBE NEWSWIRE) -- DemandTec, Inc. (Nasdaq:DMAN), a leading provider of on-demand optimization solutions for retailers and consumer products manufacturers, today announced financial results for the fourth quarter and fiscal year 2009 ended February 28, 2009.

"DemandTec continued to deliver value to our customers as shown in our strong fourth quarter and fiscal year 2009 results, in what was a very difficult environment. I am pleased that during our fiscal year 2009 we posted solid revenue growth, increased operating margins and generated strong free cash flow, all during a time of severe global economic challenges," said Dan Fishback, DemandTec's president and chief executive officer.

"Furthermore, we posted annual revenue growth of over 22% for fiscal year 2009 and we generated $10.7 million of free cash flow during the year, a 50% increase over our last fiscal year," added Mr. Fishback.

Fourth Quarter Financial Highlights

Revenue: Revenue was $19.3 million in the fourth quarter of fiscal year 2009, up 11% from $17.4 million in the fourth quarter of fiscal year 2008 and 2% from $19.0 million in the third quarter of fiscal year 2009.

Gross Profit: GAAP gross profit was $13.3 million in the fourth quarter of fiscal year 2009. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of purchased intangibles, was $14.0 million in the fourth quarter of fiscal year 2009, up 12% from the fourth quarter of fiscal year 2008 and representing a non-GAAP gross margin of 72.2%.

GAAP Operating and Net Loss: Loss from operations was $1.8 million in the fourth quarter of fiscal year 2009, compared to a loss from operations of $1.9 million in the fourth quarter of fiscal year 2008. Net loss attributable to common stockholders was $1.5 million, or ($0.06) per share, in the fourth quarter of fiscal year 2009, compared to net loss attributable to common stockholders of $1.2 million, or ($0.04) per share, in the fourth quarter of fiscal year 2008.

Non-GAAP Operating and Net Income: Non-GAAP income from operations, which excludes $2.1 million in stock-based compensation expense and $643,000 in amortization of purchased intangibles, was $958,000 in the fourth quarter of fiscal year 2009, compared to non-GAAP income from operations of $659,000 in the fourth quarter of fiscal year 2008. Non-GAAP net income attributable to common stockholders was $1.2 million, or $0.04 per diluted share, in the fourth quarter of fiscal year 2009, compared to non-GAAP net income attributable to common stockholders of $1.3 million, or $0.04 per diluted share, in the fourth quarter of fiscal year 2008.

Cash: Cash, cash equivalents and marketable securities at the end of the fiscal year 2009 totaled $87.9 million, an increase of approximately $2.2 million from the end of the third quarter of fiscal 2009. The increase was primarily attributable to cash generated from operations in the fourth quarter. For fiscal year 2009, the company generated $13.8 million in cash flow from operations and invested $3.1 million in capital expenditures, resulting in free cash flow of $10.7 million for the fiscal year.

Fiscal Year 2009 Financial Highlights

Revenue: Revenue was $75.0 million for the fiscal year 2009, up 22% from $61.3 million in fiscal year 2008.

Gross Profit: GAAP gross profit was $51.7 million for fiscal year 2009. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of purchased intangibles, was $54.0 million for fiscal year 2009, up 26% from fiscal year 2008 and representing a non-GAAP gross margin of 72.0%.

GAAP Operating and Net Loss: Loss from operations was $6.6 million for fiscal year 2009, compared to a loss from operations of $5.6 million for fiscal year 2008. Net loss attributable to common stockholders was $5.0 million, or ($0.18) per diluted share, for fiscal year 2009, compared to net loss attributable to common stockholders of $4.5 million, or ($0.25) per diluted share, for fiscal year 2008.

Non-GAAP Operating and Net Income: Non-GAAP income from operations, which excludes $8.0 million in stock-based compensation expense and $1.9 million in amortization of purchased intangibles, was $3.2 million for fiscal year 2009, compared to non-GAAP income from operations of $742,000 for fiscal year 2008. Non-GAAP net income attributable to common stockholders was $4.9 million, or $0.15 per diluted share, for fiscal year 2009, compared to non-GAAP net income attributable to common stockholders of $1.8 million, or $0.08 per diluted share, for fiscal year 2008.

Conference Call Information

DemandTec will host a conference call today, April 2, 2009, at 5:00 p.m. ET (2:00 p.m. PT) to discuss the company's financial results and financial guidance. Those interested in participating in the call should dial 800-218-4007. A replay of the conference call will be available by calling 303-590-3000 or 800-405-2236 using passcode 11128111 starting at approximately 8:00 p.m. ET on Thursday, April 2, 2009 and ending on Thursday, April 16, 2009. In addition, an archived webcast will be available on the Investor Relations page of the company's website at http://investor.demandtec.com.

About DemandTec

DemandTec (Nasdaq:DMAN) enables retailers and consumer products companies to optimize merchandising and marketing decisions, individually or collaboratively, to achieve their sales volume, revenue, and profitability objectives. DemandTec software services utilize DemandTec's science-based software platform to model and understand consumer behavior. DemandTec customers include more than 195 leading retail and consumer products manufacturers such as ACE Hardware, Advance Auto Parts, Belk, Best Buy, Bon-Ton Stores, Circle K Stores, ConAgra Foods, Delhaize America, General Mills, Giant-Carlisle, H-E-B Grocery Co, Hormel Foods, Monoprix, PETCO, Safeway, Sara Lee, Spartan Stores, The Home Depot, Toys R US and WH Smith. Connected via the DemandTec TradePoint Network(tm), DemandTec customers have collaborated online with nearly 2.2 million trade deals. For more information, please visit www.demandtec.com.

The DemandTec, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5191

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. 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 the recent global economic crisis 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 ("SEC"). More information about these and other risks that may impact DemandTec's business are set forth in DemandTec's Quarterly Report on Form 10-Q, 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 Measures" as well as the related tables. We anticipate disclosing forward-looking non-GAAP financial information in our conference call to discuss our fourth quarter of fiscal year 2009 results, including an estimate of non-GAAP operating income and net earnings per share for the first quarter that excludes stock-based compensation expenses, amortization of purchased intangibles and other non-recurring charges. 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. DemandTec TradePoint Network is a trademark of DemandTec, Inc.



                                                 --------------------
                                                   DemandTec, Inc.
                                                    Consolidated
                                                    Balance Sheets
                                                    (in thousands)
                                                 --------------------
                                                 
                                                  Feb. 28,   Feb. 29,
                                                    2009       2008
                                                 ---------  ---------
                                                (unaudited)
 Current assets:
   Cash and cash equivalents                     $  33,572  $  43,257
   Marketable securities                            46,426     30,547
   Accounts receivable, net of allowances           11,000     18,227
   Other current assets                              4,230      4,161
                                                 ---------  ---------
 Total current assets                               95,228     96,192
                                                 ---------  ---------

 Marketable securities, non-current                  7,886      2,085
 Property, equipment and leasehold
  improvements, net                                  5,429      5,139
 Intangible assets                                   8,405      3,761
 Goodwill                                           16,492      5,290
 Other assets                                          715      1,329
                                                 ---------  ---------
 Total assets                                    $ 134,155  $ 113,796
                                                 =========  =========

 Current liabilities:
   Accounts payable and accrued expenses         $  12,955  $   6,969
   Deferred revenue                                 46,415     44,006
   Merger consideration payable                     12,343         --
   Other current liabilities                         1,727        478
                                                 ---------  ---------
 Total current liabilities                          73,440     51,453
                                                 ---------  ---------

 Deferred revenue, non-current                       2,400     11,369
 Other long-term liabilities                         1,666        677

 Stockholders' equity:
   Common stock                                    133,348    122,725
   Accumulated other comprehensive income              682         --
   Accumulated deficit                             (77,381)   (72,428)
                                                 ---------  ---------
 Total stockholders' equity                         56,649     50,297
                                                 ---------  ---------
 Total liabilities and stockholders' equity      $ 134,155  $ 113,796
                                                 =========  =========

                           ------------------------------------------
                                         DemandTec, Inc.
                              Consolidated Statements of Operations
                              (in thousands, except per share data)
                           ------------------------------------------
                                                   Three      Three
                             Year       Year       Months     Months
                             Ended      Ended      Ended      Ended
                            Feb. 28,   Feb. 29,   Feb. 28,   Feb. 29,
                              2009       2008       2009       2008
                           ---------  ---------  ---------  ---------
                          (unaudited)           (unaudited)(unaudited)
 Revenue                   $  75,005  $  61,270  $  19,330  $  17,404
 Cost of revenue              23,331     20,444      5,996      5,546
                           ---------  ---------  ---------  ---------
   Gross profit               51,674     40,826     13,334     11,858
                           ---------  ---------  ---------  ---------

 Operating expenses:
   Research and development   26,787     22,445      7,015      6,709
   Sales and marketing        20,343     17,290      5,093      4,974
   General and
    administrative             9,888      6,292      2,555      1,938
   Amortization of purchased
    intangible assets          1,241        360        490         89
                           ---------  ---------  ---------  ---------
    Total operating expenses  58,259     46,387     15,153     13,710
                           ---------  ---------  ---------  ---------

 Loss from operations         (6,585)    (5,561)    (1,819)    (1,852)
 Other income, net             1,585      1,542        228        821
                           ---------  ---------  ---------  ---------
 Loss before provision
  (benefit) for income taxes  (5,000)    (4,019)    (1,591)    (1,031)
 Provision (benefit) for
  income taxes                   (47)       455        (48)       136
                           ---------  ---------  ---------  ---------

 Net loss                     (4,953)    (4,474)    (1,543)    (1,167)
 Accretion to redemption
  value of preferred stock        --         13         --         --
                           ---------  ---------  ---------  ---------
 Net loss attributable to
  common stockholders         (4,953)    (4,487)    (1,543)    (1,167)

 Net loss per share - basic
  and diluted              $   (0.18) $   (0.25) $   (0.06) $   (0.04)
                           =========  =========  =========  =========

 Weighted shares used
  in per share
  calculation,
  basic and diluted           27,372     17,612     27,922     26,332


                           ------------------------------------------
                                         DemandTec, Inc.
                              Consolidated Statements of Cash Flows
                                         (in thousands)
                           ------------------------------------------
                                                   Three      Three
                             Year       Year       Months     Months
                             Ended      Ended      Ended      Ended
                            Feb. 28,   Feb. 29,   Feb. 28,   Feb. 29,
                              2009       2008       2009       2008
                           ---------  ---------  ---------  ---------
                           (unaudited)          (unaudited) (unaudited)
 Operating activities:     
 Net loss                  $  (4,953) $  (4,474) $  (1,543) $  (1,167)
 Adjustments to reconcile
  net loss to net cash
  provided by operating
  activities:
   Depreciation                2,930      1,929        781        539
   Stock-based
    compensation expense       7,979      5,335      2,134      2,270
   Amortization of
    warrants issued in
    conjunction with debt         --         64         --         --
   Amortization and
    revaluation to fair
    value of warrants
    issued in conjunction
    with debt                     --        119         --         --
   Amortization of
    purchased intangible
    assets                     1,851        968        643        241
   Amortization of
    financing costs               20         93          8         --
   Charge on early
    extinguishment
    of debt                       --        504         --         --
   Provision for accounts
    receivable                   (40)        98         --        (28)
   Other                         286        (81)        79        (14)
   Changes in operating
    assets and liabilities:
     Accounts receivable       7,706     (3,927)     1,751       (657)
     Prepaid expenses and
      other current assets      (233)    (1,149)      (118)      (488)
     Deferred commissions      1,261       (317)       417       (203)
     Other assets                135       (341)       501       (261)
     Accounts payable and
      accrued expenses         1,586     (2,161)    (1,786)      (320)
     Accrued compensation      2,363      1,392      1,960        336
     Deferred revenue         (7,078)    13,203     (1,804)     2,777
                           ---------  ---------  ---------  ---------
 Net cash provided by
  operating activities        13,813     11,255      3,023      3,025
                           ---------  ---------  ---------  ---------

 Investing activities:
   Acquisition of
    TradePoint, net of
    cash received                 --     (1,358)        --        (33)
   Acquisition of
    Connect3, net of
    cash received                257         --        257         --
   Purchases of property,
    equipment, and
    leasehold improvements    (3,117)    (4,127)      (823)    (1,151)
   Purchase of marketable
    securities               (82,500)   (86,583)   (12,695)   (29,931)
   Maturities of
    marketable securities     60,820     58,393     15,600     42,643
   Purchase of intangible
    assets                    (1,500)        --       (500)        --
   Removal of cash
    restriction                  200         --         --         --
                           ---------  ---------  ---------  ---------
 Net cash provided by
  (used in) investing
  activities                 (25,840)   (33,675)     1,839     11,528
                           ---------  ---------  ---------  ---------

 Financing activities:
   Proceeds from issuance
    of common stock, net
    of repurchases             2,603        374        284         92
   Net cash proceeds from
    initial public
    offering                      --     57,631         --         20
   Decrease in liability
    associated with
    offering costs                --         --         --       (166)
   Payments on line of
    credit                        --     (3,000)        --         --
   Payments on notes
    payable                       (8)   (10,400)        --         --
                           ---------  ---------  ---------  ---------
 Net cash provided by
  financing activities         2,595     44,605        284        (54)
                           ---------  ---------  ---------  ---------
 Effect of exchange rate
  changes on cash and
  cash equivalents              (253)        36        (57)        (4)
                           ---------  ---------  ---------  ---------
 Net increase (decrease)
  in cash and cash
  equivalents                 (9,685)    22,221      5,089     14,495
 Cash and cash equivalents
  at beginning of period      43,257     21,036     28,483     28,762
                           ---------  ---------  ---------  ---------
 Cash and cash equivalents
  at end of period         $  33,572  $  43,257  $  33,572  $  43,257
                           =========  =========  =========  =========

 Supplemental information:
 Cash paid for interest    $      65  $     956  $      56  $      --
                           =========  =========  =========  =========
 Cash paid for income
  taxes                    $     157  $     320  $     (51) $     120
                           =========  =========  =========  =========
 Reclassification of
  preferred stock warrant
  from liability to
  additional paid-in
  capital                  $      --  $     714  $      --  $      --
                           =========  =========  =========  =========
 Conversion of preferred
  stock to common stock
  and additional paid-in
  capital                  $      --  $  51,144  $      --  $      --
                           =========  =========  =========  =========


                           ------------------------------------------
                                         DemandTec, Inc.
                               Reconciliation of GAAP to Non-GAAP
                                       Financial Measures
                              (in thousands, except per share data)
                                           (unaudited)
                           ------------------------------------------
                                                   Three      Three
                             Year       Year       Months     Months
                             Ended      Ended      Ended      Ended
                            Feb. 28,   Feb. 29,   Feb. 28,   Feb. 29,
                              2009       2008       2009       2008
                           ---------  ---------  ---------  ---------

 GAAP cost of revenue      $  23,331  $  20,444  $   5,996  $   5,546
 Deduct:
 Stock-based compensation     (1,712)    (1,261)      (469)      (422)
 Amortization of purchased
  intangible assets             (610)      (608)      (153)      (152)
                           ---------  ---------  ---------  ---------
 Non-GAAP cost of revenue  $  21,009  $  18,575  $   5,374  $   4,972
                           =========  =========  =========  =========

 GAAP gross profit         $  51,674  $  40,826  $  13,334  $  11,858
 Add back:
 Stock-based compensation      1,712      1,261        469        422
 Amortization of purchased
  intangible assets              610        608        153        152
                           ---------  ---------  ---------  ---------
 Non-GAAP gross profit     $  53,996  $  42,695  $  13,956  $  12,432
                           =========  =========  =========  =========

 GAAP gross margin              68.9%      66.6%      69.0%      68.1%
 Add back:
 Stock-based compensation        2.3%       2.1%       2.4%       2.5%
 Amortization of purchased
  intangible assets              0.8%       1.0%       0.8%       0.8%
                           ---------  ---------  ---------  ---------
 Non-GAAP gross margin          72.0%      69.7%      72.2%      71.4%
                           =========  =========  =========  =========

 GAAP research and
  development expense      $  26,787  $  22,445  $   7,015  $   6,709
 Deduct stock-based
  compensation                (2,261)    (1,824)      (580)      (997)
                           ---------  ---------  ---------  ---------
 Non-GAAP research and
  development expense      $  24,526  $  20,621  $   6,435  $   5,712
                           =========  =========  =========  =========

 GAAP sales and marketing
  expense                  $  20,343  $  17,290  $   5,093  $   4,974
 Deduct stock-based
  compensation                (2,263)    (1,367)      (564)      (537)
                           ---------  ---------  ---------  ---------
 Non-GAAP sales and
  marketing expense        $  18,080  $  15,923  $   4,529  $   4,437
                           =========  =========  =========  =========

 GAAP general and
  administrative expense   $   9,888  $   6,292  $   2,555  $   1,938
 Deduct stock-based
  compensation                (1,743)      (883)      (521)      (314)
                           ---------  ---------  ---------  ---------
 Non-GAAP general and
  administrative expense   $   8,145  $   5,409  $   2,034  $   1,624
                           =========  =========  =========  =========

 GAAP total operating
  expense                  $  58,259  $  46,387  $  15,153  $  13,710
 Deduct:

 Stock-based compensation     (6,267)    (4,074)    (1,665)    (1,848)
 Amortization of purchased
  intangible assets           (1,241)      (360)      (490)       (89)
                           ---------  ---------  ---------  ---------
 Non-GAAP total operating
  expense                  $  50,751  $  41,953  $  12,998  $  11,773
                           =========  =========  =========  =========

 GAAP loss from operations $  (6,585) $  (5,561) $  (1,819) $  (1,852)
 Add back stock-based
  compensation and
  amortization of
  purchased intangible
  assets                       9,830      6,303      2,777      2,511
                           ---------  ---------  ---------  ---------
 Non-GAAP income from
  operations               $   3,245  $     742  $     958  $     659
                           =========  =========  =========  =========

 GAAP net loss
  attributable to common
  stockholders             $  (4,953) $  (4,487) $  (1,543) $  (1,167)
 Add back stock-based
  compensation and
  amortization of
  purchased intangible
  assets                       9,830      6,303      2,777      2,511
                           ---------  ---------  ---------  ---------
 Non-GAAP net income
  attributable to common
  stockholders             $   4,877  $   1,816  $   1,234  $   1,344
                           =========  =========  =========  =========

 GAAP net loss per share,
  diluted                  $   (0.18) $   (0.25) $   (0.06) $   (0.04)
 Add back stock-based
  compensation and
  amortization of
  purchased intangible
  assets                   $    0.33  $    0.33  $    0.10  $    0.08
                           ---------  ---------  ---------  ---------
 Non-GAAP net income
  per share, diluted       $    0.15  $    0.08  $    0.04  $    0.04
                           =========  =========  =========  =========

 GAAP weighted shares
  outstanding, diluted        27,372     17,612     27,922     26,332
 Add back dilutive effect
  of common stock
  equivalents on non-GAAP
  net income basis             4,372      5,502      4,009      5,992
                           ---------  ---------  ---------  ---------
 Non-GAAP weighted shares
  outstanding, diluted        31,744     23,114     31,931     32,324
                           =========  =========  =========  =========

 GAAP cash flow from
  operations               $  13,813  $  11,253  $   3,023  $   3,025
 Deduct purchases of
  property, equipment
  and leasehold
  improvements                (3,117)    (4,127)      (823)    (1,151)
                           ---------  ---------  ---------  ---------
 Non-GAAP free cash flow   $  10,696  $   7,126  $   2,200  $   1,874
                           =========  =========  =========  =========

Use of Non-GAAP Financial Measures

The accompanying press release dated April 2, 2009 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 from operations, net income, net income per share amounts, weighted average shares outstanding and free cash flow.

Our non-GAAP financial measures generally exclude costs and expenses for (i) amortization of purchased intangibles and (ii) stock-based compensation:

Amortization of Purchased Intangible Assets. In accordance with GAAP, we amortize intangible assets acquired in connection with our company and technology acquisitions over the estimated useful lives of the assets. In the case of in-process research and development costs, there is no estimated useful life and, as such, we amortize these costs in full upon the closing of the related acquisition. We exclude the amortization of purchased intangible assets from our non-GAAP financial measures because they (i) result from prior acquisitions, 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 primary 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.



            

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