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Responsys Announces Third Quarter 2012 Results



Responsys Announces Third Quarter 2012 Results

SAN BRUNO, Calif., Nov. 5, 2012 (GLOBE NEWSWIRE) -- Responsys, Inc.
(Nasdaq:MKTG), a leading provider of email and cross-channel marketing
solutions, today announced financial results for the quarter ended September
30, 2012.

For the third quarter of 2012, total revenue increased 19.6% to $40.5 million,
up from $33.9 million in the third quarter of 2011.

Subscription revenue for the third quarter of 2012 was $28.5 million, up 19.4%
as compared to $23.8 million in the third quarter of 2011. Professional
services revenue was $12.1 million, up 20.3% as compared to $10.1 million in
the third quarter of 2011.

GAAP net income for the third quarter of 2012 was $3.5 million compared to
$1.4 million for the third quarter of 2011. Net income per share attributable
to common stockholders in the third quarter of 2012 was $0.07 per share on a
diluted basis, as compared to $0.03 in the third quarter of 2011. GAAP net
income for the third quarter of 2012 includes a $2.2 million gain on the
acquisition of Responsys Denmark.

"We had a strong quarter for new business wins and delivered EPS at the top
end of the range, underscoring the positive results we are seeing from our
increased investment in sales and marketing. We believe these results and
increasing traction in emerging channels bode well for our continued progress
in 2013," said CEO Dan Springer. 

For the nine months ended September 30, 2012, total revenue increased 20.9% to
$118.2 million, up from $97.7 million in the nine months ended September 30,
2011.

Subscription revenue for the first nine months of 2012 was $83.1 million, up
22.6% as compared to $67.8 million in the first nine months of 2011.
Professional services revenue for the first nine months was $35.0 million, up
17.1% as compared to $29.9 million in the first nine months of 2011.

GAAP net income for the first nine months of 2012 was $5.6 million. This
compares to GAAP net income of $6.0 million for the first nine months of
2011. Net income per share attributable to common stockholders in the first
nine months of 2012 was $0.10 per share on a diluted basis, as compared to
$0.09 in the first nine months of 2011. Both periods included a $2.2 million
gain from acquisitions.

In addition to using GAAP results in evaluating Responsys' business,
management believes it is useful to also measure results using non-GAAP net
income, which is net income excluding stock-based compensation expense,
amortization of acquired intangible assets, gain on acquisitions, and related
income tax effects, as applicable.

Non-GAAP net income for the third quarter of 2012 was $3.0 million, or $0.06
per diluted share as compared to $2.6 million, or $0.05 per share on a
non-GAAP diluted basis^1, for the third quarter of 2011. 

Non-GAAP net income for the nine months ended September 30, 2012 was $7.9
million, or $0.15 per diluted share as compared to $7.8 million, or $0.15 per
share on a non-GAAP diluted basis^1, for the nine months ended September 30,
2011. 

A reconciliation of the comparable GAAP to non-GAAP financial measures used in
this release is included in the attached tables.

Business Outlook

Based on information available as of November 5, 2012, Responsys is issuing
guidance for the fourth quarter of 2012 and fiscal 2012 as follows:

Fiscal 2012 revenue is expected to be in the range of $160-161 million.
Non-GAAP net income is expected to be approximately $0.20 per diluted share.

Non-GAAP net income for the full year excludes an estimated $2.7 million in
amortization of acquired intangibles and $6.5 million in stock-based
compensation expense. Non-GAAP net income per diluted share is based on
weighted average diluted shares outstanding of 53.4 million.

For the fourth quarter of 2012, the Company expects revenue to be in the range
of $42-$43 million. Non-GAAP net income is expected to be approximately $0.05
per diluted share. Non-GAAP net income for the quarter excludes an estimated
$0.8 million in amortization of acquired intangibles and $1.8 million in
stock-based compensation expense. Non-GAAP net income per diluted share is
based on estimated weighted average diluted shares outstanding of 53.6
million.

Non-GAAP net income for the fourth quarter and fiscal year 2012 assumes an
effective non-GAAP tax rate of 40%.

Conference Call Information for Today, Monday, November 5, 2012

Responsys will host a conference call to discuss the results today at 1:30
p.m. Pacific Time / 4:30 p.m. Eastern Time. To access the call from the U.S.,
please dial (877) 303-9139 or (760) 536-5195 outside the U.S. A live webcast
of the call will also be available at
http://investors.responsys.com/events.cfm under the Events and Presentations
menu. An audio replay will be available until November 8, 2012 by calling
(855) 859-2056 or (404) 537-3406 outside the U.S., using conference ID
52052805. The replay will also be available on our website at
http://investors.responsys.com.

About Responsys

Responsys is a leading provider of email and cross-channel marketing solutions
that enable companies to engage in relationship marketing across the
interactive channels customers are embracing today -- email, mobile, social,
the web and display. With Responsys solutions, marketers can create, execute,
and automate highly dynamic campaigns and lifecycle marketing programs that
are designed to grow revenue, increase marketing efficiency, and strengthen
customer loyalty. Responsys' New School Marketing vision, flexible on-demand
application suite, and customer success-focused services aim to deliver high
ROI, increased levels of automation and fast time-to-value. Founded in 1998,
Responsys is headquartered in San Bruno, California and has offices throughout
the world. Responsys serves world-class brands such as: American Family Mutual
Insurance Company, Avis Europe, Deutsche Lufthansa, Dollar Thrifty, LEGO,
LinkedIn, Newegg, Orbitz, Qantas, Southwest Airlines, UnitedHealthcare, and
United Airlines. For more information about Responsys, visit responsys.com.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures including non-GAAP net
income, and non-GAAP net income per share on a diluted basis^1. Non-GAAP net
income and non-GAAP net income per share on a diluted basis^1, exclude the
amortization of acquired intangible assets, stock-based compensation expense,
gain on the acquisitions, and related tax effects. The Company believes that
these non-GAAP measures of financial results provide useful information to
management and investors regarding certain financial and business trends
relating to the Company's financial condition and results of operations. The
Company's management uses these non-GAAP measures to compare the Company's
performance to that of prior periods and uses these measures in financial
reports prepared for management and the Company's board of directors. The
Company believes that the use of these non-GAAP financial measures provides an
additional tool for investors to use in evaluating ongoing operating results
and trends and in comparing the Company's financial measures with other
software-as-a-service companies, many of which present similar non-GAAP
financial measures to investors.

The Company does not consider these non-GAAP measures in isolation or as an
alternative to financial measures determined in accordance with GAAP. The
principal limitation of these non-GAAP financial measures is that they exclude
significant elements that are required by GAAP to be recorded in the Company's
financial statements. In addition, they are subject to inherent limitations as
they reflect the exercise of judgments by management in determining these
non-GAAP financial measures. In order to compensate for these limitations,
management of the Company presents its non-GAAP financial measures in
connection with its GAAP results. The Company urges investors to review the
reconciliation of its non-GAAP financial measures to the comparable GAAP
financial measures, which is included in this press release, and not to rely
on any single financial measure to evaluate the Company's business.

Forward Looking Statements

The financial projections under Business Outlook, and other forward-looking
statements included in this release, reflect management's best judgment based
on factors currently known and involve risks and uncertainties; our actual
results may differ materially from those discussed here. These risks and
uncertainties include: our ability to acquire and retain customers; whether
customers purchase additional functionality and increase their usage; pricing
pressures and competitive factors; the uncertain impact of overall global
economic conditions, including on customers, prospective customers and
partners, renewal rates and length of sales cycles; the fact that the market
for cross-channel marketing solutions, particularly in emerging channels, is
at an early stage of development and may not develop as rapidly as we
anticipate; outages or security breaches; our ability to develop, and market
acceptance of, new products and services; the impact of any discovered product
defects; our ability to manage our growth, both domestically and
internationally; our ability to successfully expand our sales force and its
effectiveness; our ability to maintain profitability; and other risks detailed
from time to time in our SEC reports including, but not limited to, our most
recent annual report on Form 10-K and most recent quarterly report on Form
10-Q. The Company disclaims any intention or obligation to publicly update or
revise any forward-looking statements including any guidance, whether as a
result of events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

_____________________

^1 Non-GAAP net income per share attributable to common stockholders was
derived by dividing by the corresponding non-GAAP basic and non-GAAP diluted
weighted-average shares outstanding. Non-GAAP weighted-average shares
outstanding for the nine months ended September 30, 2011 was computed to give
effect to the conversion of the Series A, Series B, Series C, Series D, and
Series E convertible preferred stock using the as-if converted method into
common shares as though the conversion had occurred as of the beginning of the
period.  

Responsys, Inc.                                              
Condensed Consolidated Balance Sheets                        
(Unaudited; in thousands)                                    
                                                             
                                            As of September As of December 31,
                                            30,
                                             2012           2011 
Assets                                                       
Current assets:                                              
Cash and cash equivalents                    $100,180        $73,456
Short-term investments                       700             21,300
Accounts receivable, net of allowances of
$125 and $82 as of September 30, 2012 and    25,809          20,706
December 31, 2011, respectively
Deferred taxes – current                     5,445           5,393
Prepaid expenses and other current assets    3,594           3,599
Total current assets                         135,728         124,454
Property and equipment – net                 18,182          14,663
Goodwill                                     17,260          14,048
Intangible assets – net                      3,661           3,386
Deferred taxes – noncurrent                  5,285           5,748
Other assets                                 2,495           938
Total assets                                 $182,611        $163,237
                                                             
                                                             
Liabilities and stockholders' equity                         
Current liabilities:                                         
Accounts payable                             $2,935          $1,739
Accrued compensation                         6,246           6,916
Other accrued liabilities                    4,727           2,914
Capital lease obligations - current          892             879
Deferred revenue - current                   7,733           7,387
Total current liabilities                    22,533          19,835
Capital lease obligations – noncurrent       453             1,154
Deferred taxes – noncurrent                  678             691
Deferred revenue – noncurrent                362             323
Other long-term liabilities                  4,614           977
Total liabilities                            $28,640         $22,980
Commitments and contingencies (Note 9)                       
Stockholders' equity:                                        
Convertible preferred stock, $.0001 par value, 5,000 shares authorized as of
September 30, 2012 and December 31, 2011, respectively; no shares issued and
outstanding as of September 30, 2012 and December 31, 2011, respectively
 Common stock, $.0001 par value; 250,000
shares authorized as of September 30, 2012
and December 31, 2011, respectively; 48,642  5               5
and 47,632 shares issued and outstanding at
September 30, 2012 and December 31, 2011,
respectively 
Additional paid-in capital                   163,098         155,428
Accumulated deficit                          (9,214)         (14,794)
Accumulated other comprehensive gain (loss)  82              (382)
Total stockholders' equity                   153,971         140,257
Total liabilities and stockholders' equity   $182,611        $163,237

                                                                       
Responsys, Inc.                                                        
Condensed Consolidated Statements of Income                            
(Unaudited; in thousands, except per share data)                       
                                       Three Months Ended    Nine Months Ended
                                       September 30,         September 30,
                                       2012        2011      2012     2011
                                                                       
Revenue:                                                               
Subscription                            $28,450     $23,834   $83,113  $67,767
Professional services                   12,098      10,056    35,038   29,928
Total revenue                           40,548      33,890    118,151  97,695
                                                                       
Cost of revenue:                                                       
Subscription                            8,225       7,239     23,701   20,285
Professional services                   11,141      9,196     31,684   26,846
Total cost of revenue                   19,366      16,435    55,385   47,131
Gross profit                            21,182      17,455    62,766   50,564
                                                                       
Operating expenses:                                                    
Research and development                3,981       3,540     11,720   9,987
Sales and marketing                     11,089      7,786     32,721   23,663
General and administrative              4,254       3,226     12,853   8,282
Gain on acquisition                     (2,233)     –         (2,233)  (2,220)
Total operating expenses                17,091      14,552    55,061   39,712
Operating income                        4,091       2,903     7,705    10,852
Other income (expense), net             106         (252)     (159)    (198)
Income before income taxes              4,197       2,651     7,546    10,654
Provision for income taxes              (729)       (1,192)   (2,002)  (4,555)
Equity in net income (loss) of          –           (52)      36       (90)
unconsolidated affiliates
Net income                              $3,468      $1,407    $5,580   $6,009
                                                                       
Net income attributable to common stockholders:                        
Basic                                   $3,468      $1,407    $5,580   $3,133
Diluted                                 $3,468      $1,407    $5,580   $3,302
                                                                       
Net income per share attributable to common                            
stockholders:
Basic                                   $0.07       $0.03     $0.12    $0.10
Diluted                                 $0.07       $0.03     $0.10    $0.09
                                                                       
Shares used in computation of net income per share                     
attributable to common stockholders:
Basic                                   48,556      47,054    48,187   31,175
Diluted                                 53,349      53,641    53,152   37,880

                                                                      
Responsys, Inc.                                                       
Non-GAAP Financial Measures                                           
(Unaudited; in thousands, except per share data)                      
                                                                      
                                       Three Months Ended  Nine Months Ended
                                       September 30,       September 30,
                                       2012      2011      2012      2011
Gross profit:                                                         
GAAP gross profit                                                     
Subscription                            $20,225   $16,595   $59,412   $47,482
Professional services                   957       860       3,354     3,082
Total GAAP gross profit                 21,182    17,455    62,766    50,564
Add back:                                                             
Stock-based compensation:                                             
Subscription                            176       122       477       260
Professional services                   266       172       696       404
Total non-GAAP gross profit             $21,624   $17,749   $63,939   $51,228
                                                                      
Operating income:                                                     
GAAP operating income                   $4,091    $2,903    $7,705    $10,852
Add back:                                                             
Amortization of intangible assets       746       584       1,906     1,756
Stock-based compensation                1,840     1,119     4,669     2,421
Deduct:                                                               
Gain on acquisition                     (2,233)   --        (2,233)   (2,220)
Total non-GAAP operating income         $4,444    $4,606    $12,047   $12,809
                                                                      
Income before income taxes:                                           
GAAP income before income taxes         $4,197    $2,651    $7,546    $10,654
Add back:                                                             
Amortization of intangible assets       746       584       1,906     1,756
Stock-based compensation                1,840     1,119     4,669     2,421
Deduct:                                                               
Gain on acquisition                     (2,233)   –         (2,233)   (2,220)
Total non-GAAP income before taxes      $4,550    $4,354    $11,888   $12,611
                                                                      
Provision for income taxes:                                           
GAAP provision for income taxes         $(729)    $(1,192)  $(2,002)  $(4,555)
Tax effect from:                                                      
Amortization of intangible assets       (222)     (182)     (584)     (546)
Stock-based compensation                (587)     (309)     (1,465)   (553)
Gain on acquisition                     --        --        --        888
Total non-GAAP provision for income     $(1,538)  $(1,683)  $(4,051)  $(4,766)
taxes
                                                                      
Net income:                                                           
GAAP net income                         $3,468    $1,407    $5,580    $6,009
Add back:                                                             
Amortization of intangible assets       746       584       1,906     1,756
Stock-based compensation                1,840     1,119     4,669     2,421
Deduct:                                                               
Gain on acquisition                     (2,233)   –         (2,233)   (2,220)
Income tax effect of non-GAAP items     (809)     (491)     (2,049)   (210)
Total non-GAAP net income               $3,012    $2,619    $7,873    $7,756
                                                                      
Non-GAAP net income per share:                                        
Basic                                   $0.06     $0.06     $0.16     $0.18
Diluted                                 $0.06     $0.05     $0.15     $0.15
                                                                      
Shares used in computing non-GAAP net income per                      
share:
Basic shares:                                                         
Weighted-average common shares used in
computing basic net income per common   48,556    47,054    48,187    31,175
share
Less: weighted-average preferred
shares outstanding due to conversion    –         –         –         (17,344)
upon IPO
Conversion of preferred shares          –         –         –         30,159
Weighted-average shares outstanding
used in calculating non-GAAP basic net  48,556    47,054    48,187    43,990
income per share
                                                                      
Diluted shares:                                                       
Weighted-average shares outstanding
used in calculating non-GAAP diluted    53,349    53,641    53,152    37,880
net income per common share
Less: weighted-average preferred
shares outstanding due to conversion    –         –         –         (17,344)
upon IPO
Conversion of preferred shares          –         –         –         30,159
Weighted-average shares outstanding
used in calculating non-GAAP diluted    53,349    53,641    53,152    50,695
net income per share
                                                                      
                                                                      
Responsys, Inc.                                                       
Stock-Based Compensation Expense                                      
(Unaudited; in thousands)                                             
                                       Three Months Ended  Nine Months Ended
                                       September 30,       September 30,
                                       2012      2011      2012      2011
Cost of revenue                         $442      $294      $1,173    $664
Research and development                282       195       716       402
Sales and marketing                     527       257       1,277     544
General and administrative              589       373       1,503     811
Total                                   $1,840    $1,119    $4,669    $2,421

                                                
Responsys, Inc.                                 
Condensed Consolidated Statement of Cash Flows  
(unaudited; in thousands)                       
                                               Nine Months Ended September 30,
                                               2012            2011
                                                                
Cash flows from operating activities:                           
Net income                                      $5,580          $6,009
Adjustments to reconcile net income to net cash provided by     
operating activities:
Provision for bad debts                         62              (80)
Depreciation and amortization                   7,829           7,021
Stock-based compensation                        4,669           2,421
Gain on acquisition                             (2,233)         (2,220)
Deferred tax assets                             (70)            3,538
Excess tax benefits from stock-based            (1,702)         (51)
compensation
Equity in net (income) loss of unconsolidated   (36)            90
affiliates
Other                                           164             2
Changes in operating assets and liabilities -                   
net of business acquired:
Accounts receivable                             (4,900)         2,341
Prepaid expenses and other current assets       52              (108)
Other assets                                    188             (18)
Accounts payable                                763             378
Accrued compensation                            (862)           (74)
Other accrued liabilities                       3,129           350
Deferred revenue                                303             (2,649)
Other long-term liabilities                     2,132           (58)
Net cash provided by operating activities       15,068          16,892
                                                                
Cash flows from investing activities:                           
Purchases of property and equipment             (8,563)         (5,583)
Addition of capitalized software development    (160)           (439)
costs
Business acquisition, net of cash received      (614)           (6,101)
Purchase of short-term investments              (4,007)         (13,722)
Redemption of short-term investments            24,477          -- 
Purchase of equity interest                     (1,772)         -- 
Investment in unconsolidated affiliate          --              (381)
Net cash provided by (used in) investing        9,361           (26,226)
activities
                                                                
Cash flows from financing activities:                           
Proceeds from issuance of common stock          1,148           588
Proceeds from initial public offering           --              72,182
Proceeds from (repurchases of) early-exercised  3               157
stock options
Payments of offering costs                      --              (1,674)
Principal payments on capital lease             (658)           (471)
obligations
Excess tax benefits from stock-based            1,702           51
compensation
Net cash provided by financing activities       2,195           70,833
Effect of foreign exchange rate changes on      100             13
cash and cash equivalents
Net increase in cash and cash equivalents       26,724          61,512
Cash and cash equivalents at beginning of       73,456          13,884
period
Cash and cash equivalents at end of period      $100,180        $75,396
                                                                
Noncash financing and investing activities:                     
Issuance of common stock in connection with    $ --             $1,189
business acquisition
Purchase of property and equipment under       $ --             $2,398
capital lease
Purchase of property and equipment on account   $1,235          $426
Supplemental disclosure of cash flow                            
information:
Cash paid during the period for interest        $162            $57
Cash paid during the period for taxes           $196            $755

CONTACT: Carolyn Love
         (Public Relations)
         Responsys, Inc.
         (415) 867-2301
         clove@responsys.com
        
         Carla Cooper
         (Investor Relations)
         Responsys, Inc.
         (650) 452-1484
         ccooper@responsys.com

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