SAN MATEO, Calif., Jan. 7, 2010 (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 third quarter of fiscal year 2010 ended November 30, 2009.
"Despite the unprecedented uncertainty in the economy in general and the retail and consumer products space in particular in 2009, our customers, which include some of the most successful retailers and consumer products companies in the world, continue to rely on DemandTec as a strategic partner to help them drive financial results and customer loyalty into their businesses," said Dan Fishback, President and Chief Executive Officer of DemandTec. "We are pleased that we were able to deliver revenue, non-GAAP operating income and non-GAAP earnings per share that exceeded our guidance for the quarter while continuing to make significant investments for future growth."
Financial Highlights
Revenue
* Revenue was $20.1 million in the third quarter of fiscal 2010,
a 6% increase from $19.0 million in the third quarter of fiscal
2009 and a 1% increase from $19.8 million in the second quarter
of fiscal 2010.
Gross Profit
* GAAP gross profit was $13.7 million in the third quarter of
fiscal 2010, compared to gross profit of $13.2 million in the
third quarter of fiscal 2009.
* Non-GAAP gross profit, which excludes stock-based compensation
expense and amortization of purchased intangibles, was $14.6
million in the third quarter of fiscal 2010, representing a
non-GAAP gross margin of 72.5%, compared to $13.7 million in
the third quarter of fiscal 2009, which represented a non-GAAP
gross margin of 72.1%.
GAAP Operating and Net Loss
* GAAP loss from operations was $2.7 million in the third quarter
of fiscal 2010, compared to a loss from operations of $1.3
million in the third quarter of fiscal 2009.
* GAAP net loss was $2.4 million, or ($0.08) per share in the
third quarter of fiscal 2010, compared to a GAAP net loss of
$808,000, or ($0.03) per share, in the third quarter of fiscal
2009.
Non-GAAP Operating and Net Income
* Non-GAAP operating income was $1.1 million in the third quarter
of fiscal 2010, which excludes $2.2 million in stock-based
compensation expense, $1.0 million in amortization of purchased
intangible assets and a $497,000 restructuring charge, compared
to non-GAAP operating income of $957,000 in the third quarter
of fiscal 2009.
* Non-GAAP net income was $1.4 million, or $0.04 per diluted
share, in the third quarter of fiscal 2010, compared to non-
GAAP net income of $1.5 million, or $0.05 per diluted share, in
the third quarter of fiscal 2009.
Balance Sheet
* Cash, cash equivalents and marketable securities at the end of
the third quarter of fiscal 2010 totaled $66.1 million,
compared to $76.4 million at the end of the second quarter of
fiscal 2010.
* The company used $10.5 million in cash flow from operations and
invested $752,000 in capital expenditures, resulting in $11.3
million of negative non-GAAP free cash flow in the third
quarter of fiscal 2010.
Conference Call Information
DemandTec will host a conference call today, January 7, 2010, 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 4191311 starting at approximately 8:00 p.m. ET on Thursday, January 7, 2010 and ending on Thursday, January 14, 2010. 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 a 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 2.8 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, 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 third quarter of fiscal year 2010 results, including an estimate of non-GAAP operating income and net earnings per share for the fourth quarter and full year fiscal 2010 that excludes stock-based compensation expenses, amortization of purchased intangible assets and restructuring 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.
Condensed Consolidated
Balance Sheets
(in thousands)
-----------------------
Nov. 30, Feb. 28,
2009 2009
---------- ----------
(unaudited)
Current assets:
Cash and cash equivalents 14,412 33,572
Marketable securities 32,592 46,426
Accounts receivable, net of allowances 14,173 11,000
Other current assets 3,649 4,230
---------- ----------
Total current assets 64,826 95,228
---------- ----------
Marketable securities, non-current 19,096 7,886
Property, equipment and leasehold
improvements, net 4,248 5,429
Intangible assets 5,228 8,405
Goodwill 16,662 16,492
Other assets 652 715
---------- ----------
Total assets $ 110,712 $ 134,155
========== ==========
Current liabilities:
Accounts payable and accrued expenses $ 12,868 $ 12,962
Deferred revenue 37,427 46,415
Notes payable, current 434 1,720
Merger consideration payable 1,000 12,343
---------- ----------
Total current liabilities 51,729 73,440
---------- ----------
Deferred revenue, non-current 1,162 2,400
Other long-term liabilities 953 1,666
Stockholders' equity:
Common stock 143,228 133,348
Accumulated other comprehensive income 285 682
Accumulated deficit (86,645) (77,381)
---------- ----------
Total stockholders' equity 56,868 56,649
---------- ----------
Total liabilities and stockholders' equity $ 110,712 $ 134,155
========== ==========
--------------------------------------
DemandTec, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except per share data)
(unaudited)
--------------------------------------
Three Months Ended Nine Months Ended
November 30, November 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenue $ 20,088 $ 18,989 $ 59,429 $ 55,675
Cost of revenue 6,361 5,834 19,365 17,335
-------- -------- -------- --------
Gross profit 13,727 13,155 40,064 38,340
-------- -------- -------- --------
Operating expenses:
Research and development 8,037 6,659 24,190 19,772
Sales and marketing 5,067 4,839 15,912 15,250
General and administrative 2,227 2,662 7,387 7,333
Restructuring charges 497 -- 775 --
Amortization of purchased
intangible assets 575 331 1,752 751
-------- -------- -------- --------
Total operating expenses 16,403 14,491 50,016 43,106
-------- -------- -------- --------
Loss from operations (2,676) (1,336) (9,952) (4,766)
Other income, net 112 437 548 1,357
-------- -------- -------- --------
Loss before provision for
income taxes (2,564) (899) (9,404) (3,409)
Provision (benefit) for
income taxes (167) (91) (140) 1
-------- -------- -------- --------
Net loss $ (2,397) $ (808) $ (9,264) $ (3,410)
======== ======== ======== ========
Net loss per share - basic
and diluted $ (0.08) $ (0.03) $ (0.32) $ (0.13)
======== ======== ======== ========
Weighted shares used in per
share calculation, basic
and diluted 28,914 27,681 28,534 27,192
--------------------------------------
DemandTec, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
--------------------------------------
Three Months Ended Nine Months Ended
November 30, November 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Operating activities:
Net loss $ (2,397) $ (808) $ (9,264) $ (3,410)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation 734 743 2,285 2,149
Stock-based compensation
expense 2,231 1,810 7,491 5,845
Amortization of purchased
intangible assets 1,041 483 3,149 1,208
Other (58) 47 (44) 179
Changes in operating assets
and liabilities:
Accounts receivable (9,658) (165) (3,263) 5,955
Other current assets (281) 432 379 142
Other assets (76) 1,101 (81) 221
Accounts payable and
accrued liabilities 1,622 159 2,108 3,372
Accrued compensation (611) (662) (1,683) 403
Deferred revenue (3,071) (9) (10,226) (5,274)
-------- -------- -------- --------
Net cash provided by (used in)
operating activities (10,524) 3,131 (9,149) 10,790
-------- -------- -------- --------
Investing activities:
Acquisition of Connect3 -- -- (12,544) --
Purchases of property,
equipment, and leasehold
improvements (752) (810) (1,233) (2,294)
Purchase of marketable
securities (24,606) (33,750) (52,996) (69,805)
Maturities of marketable
securities 15,620 14,500 55,620 45,220
Purchase of intangible assets -- (800) -- (1,000)
Change in restricted cash -- -- -- 200
-------- -------- -------- --------
Net cash used in investing
activities (9,738) (20,860) (11,153) (27,679)
-------- -------- -------- --------
Financing activities:
Proceeds from issuance of
common stock 994 723 2,381 2,319
Payments on notes payable -- -- (1,286) (8)
-------- -------- -------- --------
Net cash provided by financing
activities 994 723 1,095 2,311
-------- -------- -------- --------
Effect of exchange rate
changes on cash and cash
equivalents 11 (7) 47 (196)
-------- -------- -------- --------
Net decrease in cash and cash
equivalents (19,257) (17,013) (19,160) (14,774)
Cash and cash equivalents at
beginning of period 33,669 45,496 33,572 43,257
-------- -------- -------- --------
Cash and cash equivalents at
end of period $ 14,412 $ 28,483 $ 14,412 $ 28,483
======== ======== ======== ========
--------------------------------------
DemandTec, Inc.
Reconciliation of GAAP
to Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
--------------------------------------
Three Months Ended Nine Months Ended
November 30, November 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
GAAP cost of revenue $ 6,361 $ 5,834 $ 19,365 $ 17,335
Deduct:
Stock-based compensation (377) (389) (1,318) (1,243)
Amortization of purchased
intangible assets (466) (152) (1,397) (457)
-------- -------- -------- --------
Non-GAAP cost of revenue $ 5,518 $ 5,293 $ 16,650 $ 15,635
======== ======== ======== ========
GAAP gross profit $ 13,727 $ 13,155 $ 40,064 $ 38,340
Add back:
Stock-based compensation 377 389 1,318 1,243
Amortization of purchased
intangible assets 466 152 1,397 457
-------- -------- -------- --------
Non-GAAP gross profit $ 14,570 $ 13,696 $ 42,779 $ 40,040
======== ======== ======== ========
GAAP gross margin 68.3% 69.3% 67.4% 68.9%
Add back:
Stock-based compensation 1.9% 2.0% 2.2% 2.2%
Amortization of purchased
intangible assets 2.3% 0.8% 2.4% 0.8%
-------- -------- -------- --------
Non-GAAP gross margin 72.5% 72.1% 72.0% 71.9%
======== ======== ======== ========
GAAP research and development
expense $ 8,037 $ 6,659 $ 24,190 $ 19,772
Deduct stock-based
compensation (784) (509) (2,588) (1,681)
-------- -------- -------- --------
Non-GAAP research and
development expense $ 7,253 $ 6,150 $ 21,602 $ 18,091
======== ======== ======== ========
GAAP sales and marketing
expense $ 5,067 $ 4,839 $ 15,912 $ 15,250
Deduct stock-based
compensation (597) (488) (1,868) (1,699)
-------- -------- -------- --------
Non-GAAP sales and marketing
expense $ 4,470 $ 4,351 $ 14,044 $ 13,551
======== ======== ======== ========
GAAP general and
administrative expense $ 2,227 $ 2,662 $ 7,387 $ 7,333
Deduct stock-based
compensation (473) (424) (1,717) (1,222)
-------- -------- -------- --------
Non-GAAP general and
administrative expense $ 1,754 $ 2,238 $ 5,670 $ 6,111
======== ======== ======== ========
GAAP total operating expense $ 16,403 $ 14,491 $ 50,016 $ 43,106
Deduct:
Stock-based compensation (1,854) (1,421) (6,173) (4,602)
Restructuring charges (497) -- (775) --
Amortization of purchased
intangible assets (575) (331) (1,752) (751)
-------- -------- -------- --------
Non-GAAP total operating
expense $ 13,477 $ 12,739 $ 41,316 $ 37,753
======== ======== ======== ========
GAAP loss from operations $ (2,676) $ (1,336) $ (9,952) $ (4,766)
Add back stock-based
compensation, restructuring
charges and amortization of
purchased intangible assets 3,769 2,293 11,415 7,053
-------- -------- -------- --------
Non-GAAP income from
operations $ 1,093 $ 957 $ 1,463 $ 2,287
======== ======== ======== ========
GAAP net loss $ (2,397) $ (808) $ (9,264) $ (3,410)
Add back stock-based
compensation, restructuring
charges and amortization of
purchased intangible assets 3,769 2,293 11,415 7,053
-------- -------- -------- --------
Non-GAAP net income $ 1,372 $ 1,485 $ 2,151 $ 3,643
======== ======== ======== ========
GAAP net loss per share,
diluted $ (0.08) $ (0.03) $ (0.32) $ (0.13)
Non-GAAP net income per share,
diluted $ 0.04 $ 0.05 $ 0.07 $ 0.12
GAAP weighted shares
outstanding, diluted 28,914 27,681 28,534 27,192
Add back dilutive effect of
common stock equivalents on
non-GAAP net income basis 3,779 4,086 3,932 4,486
-------- -------- -------- --------
Non-GAAP weighted shares
outstanding, diluted 32,693 31,767 32,466 31,678
======== ======== ======== ========
GAAP cash flow from
operations $(10,524) $ 3,131 $ (9,149) $ 10,790
Deduct purchases of property,
equipment and leasehold
improvements (752) (810) (1,233) (2,294)
-------- -------- -------- --------
Non-GAAP free cash flow $(11,276) $ 2,321 $(10,382) $ 8,496
======== ======== ======== ========
Use of Non-GAAP Financial Measures
The accompanying press release dated January 7, 2010 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 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 the consolidation and relocation of our corporate headquarters, from our non-GAAP financial measures for the nine months ended November 30, 2009. 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.