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 $2.2million 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 email@example.com Carla Cooper (Investor Relations) Responsys, Inc. (650) 452-1484 firstname.lastname@example.org Responsys, Inc. logo
Responsys Announces Third Quarter 2012 Results
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