SAN CARLOS, Calif., Oct. 2, 2008 (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 second quarter of fiscal year 2009 ended August 31, 2008.
"Our financial performance for our second quarter of fiscal year 2009 is a result of our continued execution against our three point growth strategy of adding new retailers to our customer base, renewing and expanding our relationships with existing retail customers, and selling incremental solutions into our consumer product customer base," said Dan Fishback, president and chief executive officer of DemandTec. "Our revenue and non-GAAP operating profitability were above the high end of our guidance, and we were able to continue to generate positive cash flow."
Second Quarter Financial Highlights
Revenue: Revenue was $18.6 million in the second quarter of fiscal 2009, a 27% increase from $14.7 million in the second quarter of fiscal 2008 and a 3% increase from $18.1 million in the first quarter of fiscal 2009.
Gross Profit: GAAP gross profit was $12.8 million in the second quarter of fiscal 2009. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of intangibles, was $13.4 million in the second quarter of fiscal 2009, an increase of 34% from the second quarter of fiscal 2008 and representing a non-GAAP gross margin of 71.9%.
GAAP Operating and Net Loss: Loss from operations was $1.9 million in the second quarter of fiscal 2009, compared to a loss from operations of $644,000 in the second quarter of fiscal 2008. Net loss was $1.6 million, or ($0.06) per share, in the second quarter of fiscal 2009, compared to net loss of $1.1 million, or ($0.10) per share, in the second quarter of fiscal 2008.
Non-GAAP Operating and Net Income/Loss: Non-GAAP income from operations, which excludes $2.2 million in stock-based compensation expense and $484,000 in amortization of intangibles, was $839,000 in the second quarter of fiscal 2009, compared to non-GAAP operating income of $204,000 in the second quarter of fiscal 2008. Non-GAAP net income was $1.2 million, or $0.04 per diluted share, in the second quarter of fiscal 2009, compared to a non-GAAP net loss of $262,000, or ($0.02) per diluted share, in the second quarter of fiscal 2008.
Cash: Cash, cash equivalents and marketable securities at the end of the second quarter of fiscal 2009 totaled $83.5 million, an increase of approximately $3.0 million from the end of the first quarter of fiscal 2009. The increase in cash, cash equivalents and marketable securities was primarily attributable to cash generated from operations. For this first six months of the fiscal year 2009 ended August 31, 2008, the company generated $7.7 million in cash flow from operations and invested $1.5 million in capital expenditures, resulting in free cash flow of $6.2 million.
Conference Call Information
DemandTec will host a conference call today, October 2, 2008, at 5:00 p.m. ET (2:00 p.m. PT) to discuss the company's financial results and financial guidance. To access this call, dial (719) 325-4810. A replay of this conference call will be available through October 9, 2008, at (719) 457-0820 using passcode 8439342. 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 (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 140 leading retail and consumer products manufacturers such as Advance Auto Parts, Best Buy, Circle K Stores, ConAgra Foods, Delhaize America, Dr Pepper Snapple Group, Giant-Carlisle, H-E-B Grocery Co., General Mills, Hormel Foods, Monoprix, Safeway and Sara Lee. Connected via the DemandTec TradePoint Network(tm), DemandTec customers have collaborated online on more than 1.75 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 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 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 Information" as well as the related tables. We anticipate disclosing forward-looking non-GAAP financial information in our conference call to discuss our second quarter of fiscal year 2009 results, including an estimate of non-GAAP operating income and net earnings per share for the third 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. DemandTec TradePoint Network is a trademark of DemandTec Inc.
--------------------
DemandTec, Inc.
Consolidated
Balance Sheets
(in thousands)
--------------------
August 31, Feb. 29,
2008 2008
--------- ---------
(unaudited)
Current assets:
Cash and cash equivalents $ 45,496 $ 43,257
Marketable securities 30,802 30,547
Accounts receivable, net of allowances 12,175 18,227
Other current assets 4,542 4,161
--------- ---------
Total current assets 93,015 96,192
--------- ---------
Marketable securities, non-current 7,164 2,085
Property, equipment and leasehold
improvements, net 5,211 5,139
Other assets 10,459 10,380
--------- ---------
Total assets $ 115,849 $ 113,796
========= =========
Current liabilities:
Accounts payable and accrued expenses $ 11,141 $ 6,969
Deferred revenue 45,171 44,006
Other current liabilities 456 478
--------- ---------
Total current liabilities 56,768 51,453
--------- ---------
Deferred revenue, non-current 4,939 11,369
Other long-term liabilities 544 677
Stockholders' equity:
Common stock 128,379 122,725
Accumulated other comprehensive income 249 --
Accumulated deficit (75,030) (72,428)
--------- ---------
Total stockholders' equity 53,598 50,297
--------- ---------
Total liabilities and stockholders' equity $ 115,849 $ 113,796
========= =========
----------------------------------
DemandTec, Inc.
Consolidated Statements
of Operations
(in thousands, except per
share data)
(unaudited)
----------------------------------
Three Months Six Months
Ended Ended
August 31, August 31,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
Revenue $18,632 $14,673 $36,686 $27,921
Cost of revenue 5,846 5,015 11,501 9,338
------- ------- ------- -------
Gross profit 12,786 9,658 25,185 18,583
------- ------- ------- -------
Operating expenses:
Research and development 6,610 5,066 13,113 10,138
Sales and marketing 5,239 3,876 10,411 7,619
General and administrative 2,497 1,269 4,671 2,398
Amortization of acquired
intangible assets 331 91 420 182
------- ------- ------- -------
Total operating expenses 14,677 10,302 28,615 20,337
------- ------- ------- -------
Loss from operations (1,891) (644) (3,430) (1,754)
Other income (expense), net 335 (339) 920 (461)
------- ------- ------- -------
Loss before provision
for income taxes (1,556) (983) (2,510) (2,215)
Provision for income taxes 12 127 92 138
------- ------- ------- -------
Net loss (1,568) (1,110) (2,602) (2,353)
======= ======= ======= =======
Net loss per share - basic and
diluted $ (0.06) $ (0.10) $ (0.10) $ (0.26)
======= ======= ======= =======
Weighted shares used in per
share calculation, basic
and diluted 27,204 11,443 26,951 8,974
--------------------------------------
DemandTec, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
--------------------------------------
Three Months Ended Six Months Ended
August 31, August 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Operating activities:
Net loss $ (1,568) $ (1,110) $ (2,602) $ (2,353)
Adjustments to reconcile net
loss to net cash provided
by operating activities:
Depreciation 736 484 1,408 855
Stock-based compensation
expense 2,246 605 4,035 1,001
Amortization and revaluation
to fair value of warrants
issued in conjunction
with debt -- 66 -- 183
Amortization of acquired
intangible assets 484 243 725 486
Amortization of financing
costs 5 43 8 96
Charge on early
extinguishment of debt -- 504 -- 504
Other 165 113 123 109
Changes in operating assets
and liabilities:
Accounts receivable 175 (691) 6,121 1,027
Prepaid expenses and
other current assets (282) (668) (212) (575)
Deferred commissions 263 (12) 436 (413)
Deferred offering costs 508
Other assets (1,411) -- (1,396) (30)
Accounts payable
and accrued expenses 2,088 283 3,213 (1,495)
Accrued compensation 1,643 1,418 1,064 888
Deferred revenue (1,283) 672 (5,265) 5,391
-------- -------- -------- --------
Net cash provided by
operating activities 3,261 2,458 7,658 5,674
-------- -------- -------- --------
Investing activities:
Purchases of property,
equipment, and leasehold
improvements (401) (859) (1,484) (2,297)
Purchase of marketable
securities (17,040) (52,743) (36,054) (54,193)
Maturities of marketable
securities 13,400 2,307 30,720 4,100
Purchase of intangible assets (200) -- (200) --
Removal of cash restriction -- -- 200 --
-------- -------- -------- --------
Net cash provided by (used in)
investing activities (4,241) (51,295) (6,818) (52,390)
-------- -------- -------- --------
Financing activities:
Proceeds from issuance of
common stock, net of
repurchases 557 103 1,596 142
Net cash proceeds from
initial public offering -- 57,702 -- 57,629
Increase in liability
associated with
offering costs -- 1,957 -- 2,030
Payments on line of credit -- (3,000) -- (3,000)
Payments on notes payable -- (10,400) (8) (10,400)
-------- -------- -------- --------
Net cash provided by
financing activities 557 46,362 1,588 46,401
-------- -------- -------- --------
Effect of exchange rate
changes on cash and cash
equivalents (199) (59) (189) (44)
-------- -------- -------- --------
Net increase (decrease) in
cash and cash equivalents (622) (2,534) 2,239 (359)
Cash and cash equivalents
at beginning of period 46,118 23,211 43,257 21,036
-------- -------- -------- --------
Cash and cash equivalents
at end of period $ 45,496 $ 20,677 $ 45,496 $ 20,677
======== ======== ======== ========
Supplemental information:
Cash paid for interest $ -- $ 654 $ -- $ 956
======== ======== ======== ========
Cash paid for income taxes $ 13 $ 119 $ 177 $ 125
======== ======== ======== ========
Accretion to redemption value
of preferred stock $ -- $ (8) $ -- $ --
======== ======== ======== ========
Deferred offering costs $ -- $ (1,334) $ -- $ --
======== ======== ======== ========
Reclassification of preferred
stock warrant from liability
to additional paid-in capital $ -- $ 712 $ -- $ 712
======== ======== ======== ========
Conversion of preferred stock
to common stock and
additional paid-in capital $ -- $ -- $ -- $ 51,144
======== ======== ======== ========
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DemandTec, Inc.
Reconciliation of GAAP to Non-GAAP
Financial Measures
(in thousands, except per
share data)
(unaudited)
----------------------------------
Three Months Six Months
Ended Ended
August 31, August 31,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
GAAP cost of revenue $ 5,846 $ 5,015 $11,501 $ 9,338
Deduct:
Stock-based compensation (465) (201) (854) (300)
Amortization of purchased
intangible assets (153) (152) (305) (304)
------- ------- ------- -------
Non-GAAP cost of revenue $ 5,228 $ 4,662 $10,342 $ 8,734
======= ======= ======= =======
GAAP gross profit $12,786 $ 9,658 $25,185 $18,583
Add back:
Stock-based compensation 465 201 854 300
Amortization of purchased
intangible assets 153 152 305 304
------- ------- ------- -------
Non-GAAP gross profit $13,404 $10,011 $26,344 $19,187
======= ======= ======= =======
GAAP gross margin 68.6% 65.8% 68.7% 66.6%
Add back:
Stock-based compensation 2.5% 1.4% 2.3% 1.0%
Amortization of purchased
intangible assets 0.8% 1.0% 0.8% 1.1%
------- ------- ------- -------
Non-GAAP gross margin 71.9% 68.2% 71.8% 68.7%
======= ======= ======= =======
GAAP research and
development expense $ 6,610 $ 5,066 $13,113 $10,138
Deduct stock-based compensation (580) (176) (1,172) (247)
------- ------- ------- -------
Non-GAAP research and
development expense $ 6,030 $ 4,890 $11,941 $ 9,891
======= ======= ======= =======
GAAP sales and marketing expense $ 5,239 $ 3,876 $10,411 $ 7,619
Deduct stock-based compensation (771) (136) (1,211) (225)
------- ------- ------- -------
Non-GAAP sales and
marketing expense $ 4,468 $ 3,740 $ 9,200 $ 7,394
======= ======= ======= =======
GAAP general and
administrative expense $ 2,497 $ 1,269 $ 4,671 $ 2,398
Deduct stock-based compensation (430) (92) (798) (229)
------- ------- ------- -------
Non-GAAP general and
administrative expense $ 2,067 $ 1,177 $ 3,873 $ 2,169
======= ======= ======= =======
GAAP total operating expense $14,677 $10,302 $28,615 $20,337
Deduct:
Stock-based compensation (1,781) (404) (3,181) (701)
Amortization of purchased
intangible assets (331) (91) (420) (182)
------- ------- ------- -------
Non-GAAP total operating expense $12,565 $ 9,807 $25,014 $19,454
======= ======= ======= =======
GAAP loss from operations $(1,891) $ (644) $(3,430) $(1,754)
Add back stock-based compensation
and amortization of purchased
intangible assets 2,730 848 4,760 1,487
------- ------- ------- -------
Non-GAAP income (loss)
from operations $ 839 $ 204 $ 1,330 $ (267)
======= ======= ======= =======
GAAP net loss $(1,568) $(1,110) $(2,602) $(2,353)
Add back stock-based compensation
and amortization of purchased
intangible assets 2,730 848 4,760 1,487
------- ------- ------- -------
Non-GAAP net income (loss) $ 1,162 $ (262) $ 2,158 $ (866)
======= ======= ======= =======
GAAP net loss per share, diluted $ (0.06) $ (0.10) $ (0.10) $ (0.26)
Non-GAAP net income (loss)
per share, diluted $ 0.04 $ (0.02) $ 0.07 $ (0.10)
GAAP weighted shares outstanding,
diluted 27,204 11,443 26,951 8,974
Add back dilutive effect
of common stock equivalents
on non-GAAP net income basis 4,709 -- 4,680 --
------- ------- ------- -------
Non-GAAP weighted shares
outstanding, diluted 31,913 11,443 31,631 8,974
======= ======= ======= =======
GAAP cash flow from operations $ 3,261 $ 2,458 $ 7,658 $ 5,674
Deduct purchases of property,
equipment and leasehold
improvements (401) (859) (1,484) (2,297)
------- ------- ------- -------
Non-GAAP free cash flow $ 2,860 $ 1,599 $ 6,174 $ 3,377
======= ======= ======= =======
Use of Non-GAAP Financial Measures
The accompanying press release dated October 2, 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), net income (loss) 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 intangible assets related to our acquisition of TradePoint Solutions, Inc. and our acquisition of rights to assortment optimization technology 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 Solutions, Inc. and our acquisition of rights to assortment optimization technology, over the estimated useful lives of the assets. We exclude these amortization costs in 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 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.