SAN CARLOS, Calif., July 1, 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 first quarter of fiscal year 2010 ended May 31, 2009.
"We are pleased that our revenue and non-GAAP operating results met or exceeded our guidance for the quarter, despite the continued level of uncertainty in the economy," said Dan Fishback, president and chief executive officer of DemandTec. "The integration of our recent acquisition of Connect3 Systems is progressing well and we remain focused on making our customers successful in this challenging business environment."
"During our first quarter, DemandTec unveiled its nextGEN solutions that combine category, brand and shopper insights to provide a rich understanding of shopper behavior, and the ability to leverage those insights to make better business decisions for retailers and consumer products manufacturers to better achieve their corporate goals," added Fishback.
First Quarter Financial Highlights
Revenue: Revenue was $19.5 million in the first quarter of fiscal 2010, an 8% increase from $18.1 million in the first quarter of fiscal 2009 and a 1% increase from $19.3 million in the fourth quarter of fiscal 2009.
Gross Profit: GAAP gross profit was $12.8 million in the first quarter of fiscal 2010, compared to a gross profit of $12.4 million in the first quarter of fiscal 2009. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of purchased intangibles, was $13.7 million in the first quarter of fiscal 2010, an increase of 6% from the first quarter of fiscal 2009 and representing a non-GAAP gross margin of 70.2%.
GAAP Operating and Net Loss: Loss from operations was $4.0 million in the first quarter of fiscal 2010, compared to a loss from operations of $1.5 million in the first quarter of fiscal 2009. Net loss was $3.7 million, or ($0.13) per share in the first quarter of fiscal 2010, compared to a net loss of $1.0 million, or ($0.04) per share, in the first quarter of fiscal 2009.
Non-GAAP Operating and Net Income/Loss: Non-GAAP loss from operations, which excludes $2.4 million in stock-based compensation expense, $1.1 million in amortization of purchased intangible assets and a $278,000 restructuring charge, was $236,000 in the first quarter of fiscal 2010, compared to non-GAAP operating income of $491,000 in the first quarter of fiscal 2009. Non-GAAP net income was $29,000, or $0.00 per diluted share, in the first quarter of fiscal 2010, compared to non-GAAP net income of $996,000, or $0.03 per diluted share, in the first quarter of fiscal 2009.
Cash: Cash, cash equivalents and marketable securities at the end of the first quarter of fiscal 2010 totaled $75.3 million, a decrease of approximately $12.6 million from the end of the fourth quarter of fiscal 2009. The decrease in cash, cash equivalents and marketable securities was primarily attributable to a payment in early March 2009 in connection with our purchase of Connect3 Systems, Inc. in February 2009. For the first quarter of fiscal year 2010, the company used $614,000 cash in operations and invested $242,000 in capital expenditures, resulting in a negative free cash flow of $856,000.
Conference Call Information
DemandTec will host a conference call today, July 1, 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 866-225-8754. A replay of the conference call will be available by calling 303-590-3030 using passcode 4087009 starting at approximately 8:00 p.m. ET on Wednesday, July 1, 2009 and ending on Wednesday, July 8, 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 retailers and consumer products manufacturers such as Best Buy, ConAgra Foods, Delhaize America, General Mills, Giant-Carlisle, H-E-B Grocery Co., Hormel Foods, Monoprix, PETCO, Safeway, Sara Lee, The Home Depot, and WH Smith. Connected via the DemandTec TradePoint Network(TM), DemandTec customers have collaborated online with nearly 2.3 million trade deals. 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 market's interest in DemandTec's solutions. 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 Annual Report on Form 10-K, 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 first quarter of fiscal year 2010 results, including an estimate of non-GAAP operating income and net earnings per share for the second quarter 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. DemandTec TradePoint Network is a trademark of DemandTec, Inc.
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DemandTec, Inc.
Consolidated Balance Sheets
(in thousands)
---------------------------
(unaudited)
May 31, February 28,
2009 2009
------------ ------------
Current assets:
Cash and cash equivalents $ 28,458 $ 33,572
Marketable securities 39,962 46,426
Accounts receivable, net of allowances 4,196 11,000
Other current assets 4,012 4,230
------------ ------------
Total current assets 76,628 95,228
------------ ------------
Marketable securities, non-current 6,840 7,886
Property, equipment and leasehold
improvements, net 4,904 5,429
Intangible assets 7,262 8,405
Goodwill 16,662 16,492
Other assets 445 715
------------ ------------
Total assets $ 112,741 $ 134,155
============ ============
Current liabilities:
Accounts payable and accrued expenses $ 12,236 $ 12,962
Deferred revenue 40,018 46,415
Notes payable, current 432 1,720
Merger consideration payable 1,000 12,343
------------ ------------
Total current liabilities 53,686 73,440
------------ ------------
Deferred revenue, non-current 1,444 2,400
Other long-term liabilities 1,661 1,666
Stockholders' equity:
Common stock 136,615 133,348
Accumulated other comprehensive income 438 682
Accumulated deficit (81,103) (77,381)
------------ ------------
Total stockholders' equity 55,950 56,649
------------ ------------
Total liabilities and stockholders'
equity $ 112,741 $ 134,155
============ ============
-----------------------
DemandTec, Inc.
Consolidated Statements
of Operations
(in thousands, except
per share data)
(unaudited)
-----------------------
Three Three
Months Months
Ended Ended
May 31, May 31,
2009 2008
---------- ----------
Revenue $ 19,545 $ 18,054
Cost of revenue 6,704 5,655
---------- -----------
Gross profit 12,841 12,399
---------- ----------
Operating expenses:
Research and development 8,156 6,503
Sales and marketing 5,431 5,172
General and administrative 2,374 2,174
Restructuring charges 278 --
Amortization of purchased intangible assets 589 89
---------- ----------
Total operating expenses 16,828 13,938
---------- ----------
Loss from operations (3,987) (1,539)
Other income, net 284 585
---------- ----------
Loss before provision for income taxes (3,703) (954)
Provision for income taxes 19 80
---------- ----------
Net loss (3,722) (1,034)
========== ==========
Net loss per share - basic and diluted $ (0.13) $ (0.04)
========== ==========
Weighted shares used in per share calculation,
basic and diluted 28,157 26,609
-------------------------
DemandTec, Inc.
Consolidated Statements
of Cash Flows
(in thousands)
(unaudited)
-------------------------
Three Three
Months Months
Ended Ended
May 31, May 31,
2009 2008
----------- -----------
Operating activities:
Net loss $ (3,722) $ (1,034)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation 768 672
Stock-based compensation expense 2,418 1,789
Amortization of purchased intangible
assets 1,055 241
Provision for accounts receivable -- (30)
Other (13) (9)
Changes in operating assets and
liabilities:
Accounts receivable 6,740 5,946
Other current assets (48) (67)
Other assets 270 325
Accounts payable and accrued expenses 1,269 1,125
Accrued compensation (1,998) (579)
Deferred revenue (7,353) (3,982)
----------- -----------
Net cash provided by (used in) operating
activities (614) 4,397
----------- -----------
Investing activities:
Acquisition of Connect3 (11,343) --
Purchases of property, equipment, and
leasehold improvements (242) (1,083)
Purchase of marketable securities (18,989) (19,014)
Maturities of marketable securities 26,500 17,320
Change in restricted cash -- 200
----------- -----------
Net cash used in investing activities (4,074) (2,577)
----------- -----------
Financing activities:
Proceeds from issuance of common stock, net
of repurchases 845 1,039
Payments on notes payable (1,288) (8)
----------- -----------
Net cash provided by (used in) financing
activities (443) 1,031
----------- -----------
Effect of exchange rate changes on cash and
cash equivalents 17 10
----------- -----------
Net increase (decrease) in cash and cash
equivalents (5,114) 2,861
Cash and cash equivalents at beginning of
period 33,572 43,257
----------- -----------
Cash and cash equivalents at end of period $ 28,458 $ 46,118
=========== ===========
-----------------------
DemandTec, Inc.
Reconciliation of GAAP
to Non-GAAP Financial
Measures
(in thousands, except
per share data)
(unaudited)
-----------------------
Three Three
Months Months
Ended Ended
May 31, May 31,
2009 2008
---------- ----------
GAAP cost of revenue $ 6,704 $ 5,655
Deduct:
Stock-based compensation (418) (389)
Amortization of purchased intangible assets (466) (152)
---------- ----------
Non-GAAP cost of revenue $ 5,820 $ 5,114
========== ==========
GAAP gross profit $ 12,841 $ 12,399
Add back:
Stock-based compensation 418 389
Amortization of purchased intangible assets 466 152
---------- ----------
Non-GAAP gross profit $ 13,725 $ 12,940
========== ==========
GAAP gross margin 65.7% 68.7%
Add back:
Stock-based compensation 2.1% 2.2%
Amortization of purchased intangible assets 2.4% 0.8%
---------- ----------
Non-GAAP gross margin 70.2% 71.7%
========== ==========
GAAP research and development expense $ 8,156 $ 6,503
Deduct stock-based compensation (856) (592)
---------- ----------
Non-GAAP research and development expense $ 7,300 $ 5,911
========== ==========
GAAP sales and marketing expense $ 5,431 $ 5,172
Deduct stock-based compensation (619) (440)
---------- ----------
Non-GAAP sales and marketing expense $ 4,812 $ 4,732
========== ==========
GAAP general and administrative expense $ 2,374 $ 2,174
Deduct stock-based compensation (525) (368)
---------- ----------
Non-GAAP general and administrative expense $ 1,849 $ 1,806
========== ==========
GAAP total operating expense $ 16,828 $ 13,938
Deduct:
Stock-based compensation (2,000) (1,400)
Restructuring charges (278) --
Amortization of purchased intangible assets (589) (89)
---------- ----------
Non-GAAP total operating expense $ 13,961 $ 12,449
========== ==========
GAAP loss from operations $ (3,987) $ (1,539)
Add back stock-based compensation,
restructuring charges, and amortization of
purchased intangible assets 3,751 2,030
---------- ----------
Non-GAAP income (loss) from operations $ (236) $ 491
========== ==========
GAAP net loss $ (3,722) $ (1,034)
Add back stock-based compensation,
restructuring charges and amortization of
purchased intangible assets 3,751 2,030
---------- ----------
Non-GAAP net income $ 29 $ 996
========== ==========
GAAP net loss per share, diluted $ (0.13) $ (0.04)
Non-GAAP net income per share, diluted $ 0.00 $ 0.03
GAAP weighted shares outstanding, diluted 28,157 26,609
Add back dilutive effect of common stock
equivalents on non-GAAP net income basis 4,022 4,710
---------- ----------
Non-GAAP weighted shares outstanding, diluted 32,179 31,319
========== ==========
GAAP cash flow from operations $ (614) $ 4,397
Deduct purchases of property, equipment and
leasehold improvements (242) (1,083)
---------- ----------
Non-GAAP free cash flow $ (856) $ 3,314
========== ==========
Use of Non-GAAP Financial Measures
The accompanying press release dated July 1, 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 (loss) from operations, net income, net income per share amounts, weighted average shares outstanding and free cash flow.
Our non-GAAP financial measures exclude costs and expenses for (i) amortization of purchased intangibles, (ii) stock-based compensation, and (iii) restructuring charges.
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. 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.
Restructuring Charges. We have excluded restructuring charges associated with a reduction in our workforce as a result of synergies gained through our acquisition of Connect3 Systems, Inc., and with an office closure, from our non-GAAP financial measures for the first quarter of fiscal 2010. We have excluded expenses associated with these actions because they are non-recurring and because we believe investors may wish to exclude the effects of these actions in evaluating our financial performance for the quarter.
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.