Datawatch Reports Fiscal Fourth Quarter 2012 Results, Announces New Brand And Positioning To Support Growth In Fiscal 2013

Datawatch Reports Fiscal Fourth Quarter 2012 Results, Announces New Brand And
                 Positioning To Support Growth In Fiscal 2013

Full Year Revenue Up 45% and License Revenue Rises 70% as Company Closes Out a
Successful Fiscal Year 2012

PR Newswire

CHELMSFORD, Mass., Nov. 27, 2012

CHELMSFORD, Mass., Nov. 27, 2012 /PRNewswire/ --Datawatch Corporation
(NASDAQ-CM: DWCH), the leading global provider of information optimization
solutions, today announced that total revenue for its fourth quarter ended
September 30, 2012 was $6.02 million, an increase of 24% from revenue of $4.84
million in the fourth quarter a year ago. License revenue for the fourth
quarter of fiscal 2012 was $3.62 million, a 29% increase over the $2.80
million recorded in the comparable quarter a year ago. Net loss for the
fourth quarter of fiscal 2012 was $277,000, or ($0.04) per diluted share,
compared to net income of $201,000, or $0.03 per diluted share, for the year
ago period. Datawatch continues to engage in larger enterprise opportunities
and in the fourth quarter of fiscal 2012 closed another seven-figure license
transaction with a worldwide information technology company. Due to the
structure of the transaction, the license revenue associated with this deal
was not recognized in the fourth quarter of 2012, but instead will be
recognized ratably over the 12 months of fiscal year 2013. The increase in
deferred revenue on Datawatch's balance sheet as of September 30, 2012 is
largely related to this significant transaction. 

(Logo: http://photos.prnewswire.com/prnh/20121015/NE92833LOGO )

Total revenue for fiscal year 2012 was $26.01 million, a 45% increase from
revenue of $17.89 million in fiscal year 2011. License revenue for 2012 was
$16.80 million, a 70% increase compared to $9.86 million in 2011. Net income
for 2012 was $1,034,000 or $0.15 per diluted share, as compared to net income
of $132,000 or $0.02 per diluted share, for 2011. Excluding the effects of
the non-cash amortization associated with the acquisition of the intellectual
property underlying the Monarch software in March 2012, as well as non-cash
stock compensation costs and severance expenses, the Company's non–GAAP net
income for the fourth quarter of 2012 was $526,000, or $0.08 per diluted
share, as compared to non-GAAP net income of $319,000, or $0.05 per diluted
share, for the fourth quarter of 2011. The Company's non-GAAP net income for
fiscal year 2012 was $3,019,000, or $0.45 per diluted share, as compared to
non-GAAP net income of $1,037,000, or $0.17 per diluted share, for fiscal year
2011.

"Datawatch closed a very productive fiscal 2012 and is entering fiscal 2013
with strong momentum. With increased sales capacity, key additions to the
executive management team and a new and powerful cloud-based complement to our
award-winning technology portfolio, we are better positioned than ever to
capture the growing demand among companies of all sizes for information
optimization solutions," said Michael A. Morrison, president and CEO of
Datawatch. "Datawatch is setting new standards for reporting and analytics,
especially in the area of Big Data applications where harnessing a greater
variety of data is as important as the volume and velocity of data in
understanding the complete 360 degree view of the business. We continue to
benefit from these Big Data market dynamics that increasingly recognize the
analytic value of all types of information - structured, semi-structured and
unstructured – and that this information often comes from both inside and
outside an organization. Our newly revitalized messaging and branding are
already enhancing our market awareness and providing us with access to new
opportunities arising from these market dynamics. We expect that our focus on
expanding global alliances, selling domain-specific applications of our
information optimization solutions and increased efforts to promote brand
awareness with industry analysts and financial analysts will all serve to
build our momentum and drive accelerated performance for Datawatch in fiscal
2013."

Fourth Quarter Business Highlights

  oDatawatch entered into an agreement with Unisys Belgium to extend
    Datawatch's information optimization solutions in support of an
    outsourcing arrangement between Unisys Belgium and one of Belgium's
    largest banking and insurance companies. The Datawatch solution is being
    used to archive, manage, share and retrieve hundreds of millions of
    documents and Big Data artifacts for use by employees throughout the
    organization.
  oDatawatch entered into new business partnerships in Japan, Korea, Thailand
    and the Philippines with several premier resellers and implementation
    partners, including Xlsoft, Synetcom, Brainchild, WorkCentric and Tricor
    that greatly expand Datawatch's channels in the Asia Pacific region.
    Datawatch also added automotive leader Audi Japan as a customer to deliver
    a key performance indicator dashboard application to senior management and
    stakeholders throughout Japan.
  oDatawatch announced the appointment of three new executives to drive
    company growth and enhance market visibility: Ben Plummer, Chief
    Marketing Officer and Senior Vice President of Strategic Alliances; Jon
    Pilkington, Vice President of Products; and Mike Carroll, Vice President
    of Worldwide Sales Support.
  oDatawatch launched its new Information Optimization messaging focused on
    the company's ability to provide data variety to Big Data, business
    intelligence and business process improvement applications and introduced
    new branding to support this messaging through the launch of a newly
    designed website, updated sales materials, improved product positioning
    and redesigned collateral.

Fourth Quarter Financial Highlights

  oCash and short-term investments were $8.72 million at September 30, 2012,
    up 11% from $7.84 million at June 30, 2012 and up 4% from $8.38 million a
    year ago. In Q2 of FY12, the company used $3.04 million in cash to
    partially fund the purchase of the Monarch intellectual property.
  oGross margin for the fourth quarter of 2012 was 82.8%, compared to 83.6%
    for the third quarter of 2012.
  oDays sales outstanding were 70 days at September 30, 2012, compared to 65
    days at June 30, 2012 and 59 days at September 30, 2011.
  oDeferred revenue was $6.30 million as of September 30, 2012, a 65%
    increase over deferred revenue of $3.82 million as of September 30, 2011,
    with the increase in large part reflecting the seven-figure license
    transaction signed in the fourth quarter of 2012 that will be recognized
    ratably over the course of fiscal year 2013.

"During our fiscal fourth quarter, we generated approximately $1.5 million in
cash, and we used a portion of that cash to pay down $600,000 of our $1.5
million working capital loan with Silicon Valley Bank. We continue to invest
in the growth of our business in a disciplined manner, and this has positioned
us to enter fiscal 2013 with a strong foundation upon which to further build
out our product platform and sales organization in order to achieve our 2013
objectives," stated Mr. Morrison.

Investor Conference Call and Webcast
The senior management of Datawatch will host a conference call and webcast to
discuss the fourth quarter results this afternoon, Tuesday, November 27, 2012
at 4:30 pm ET. To access the call, please dial 1-877-407-0782.
Internationally, the call may be accessed by dialing 1-201-689-8567. The
conference call will be broadcast live on the Internet at:
http://www.investorcalendar.com/IC/CEPage.asp?ID=169892. It is recommended
that listeners register to participate and download any necessary audio
software from the website 15 minutes prior to the scheduled call. The webcast
will be available as a replay starting one hour after the call is completed at
the same location.

ABOUT DATAWATCH CORPORATION
Datawatch Corporation (NASDAQ-CM: DWCH) is a leader in providing information
optimization products and solutions that allow organizations to deliver the
greatest data variety possible into their big data and analytic applications.
Datawatch provides organizations the ability to integrate structured,
unstructured, and semi-structured sources like reports, PDF files, and EDI
streams into these applications to provide a 360 degree perspective of the
issues and opportunities that exist in their businesses. More than 40,000
organizations worldwide use Datawatch's products and services, including 99 of
the Fortune 100, and businesses of every type can benefit from the power and
flexibility of Datawatch's industry leading solutions. Datawatch is
headquartered in Chelmsford, Massachusetts with offices in London, Munich,
Singapore, Sydney and Manila, and with partners and customers in more than 100
countries worldwide. For more information, visit www.datawatch.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995
Any statements contained in this press release that do not describe historical
facts may constitute forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Any such statements,
including but not limited to those relating to results of operations,
contained herein are based on current expectations, but are subject to a
number of risks and uncertainties that may cause actual results to differ
materially from expectations. The factors that could cause actual future
results to differ materially from current expectations include the following:
risks associated with the continuing weak global economy; risks associated
with fluctuations in quarterly operating results due, among other factors, to
the size and timing of large customer orders; the volatility of Datawatch's
stock price; limitations on the effectiveness of internal controls; rapid
technological change; Datawatch's dependence on the introduction of new
products and possible delays in those introductions; competition in the
software industry generally, and in the markets for information optimization
in particular; Datawatch's dependence on its principal products, proprietary
software technology and software licensed from third parties; risks associated
with international sales; risks associated with indirect distribution
channels; the adequacy of Datawatch's sales returns reserve; risks associated
with a subscription sales model; risks associated with acquisitions, including
the recent acquisition of intellectual property from Math Strategies;
Datawatch's dependence on its ability to hire and retain skilled personnel;
disruption or failure of Datawatch's technology systems that may result from a
natural disaster, cyber-attack or other catastrophic event; and uncertainty
and additional costs that may result from evolving regulation of corporate
governance and public disclosure. Further information on factors that could
cause actual results to differ from those anticipated is detailed in various
publicly-available documents, which include, but are not limited to, filings
made by Datawatch from time to time with the Securities and Exchange
Commission, including but not limited to, those appearing in the Company's
Annual Report on Form 10-K for the year ended September 30, 2011 and Form 10-Q
for the quarters ended December 31, 2011, March 31, 2012 and June 30, 2012.
Any forward-looking statements should be considered in light of those factors.

Investor Contact:
Datawatch Investor Relations
investor@datawatch.com
Phone: (978) 441-2200 ext. 8323

Media Contact:
Kellee McGolpin
Datawatch Corporation
Kellee_McGolpin@datawatch.com
Phone: (978) 441-2200 ext. 8238
Twitter: @datawatch

© 2012 Datawatch Corporation. Datawatch, Monarch and their respective logos
are trademarks or registered trademarks of Datawatch Corporation in the United
States and/or other countries. All other names are trademarks or registered
trademarks of their respective companies.

Use of Non-GAAP Financial Information

To supplement our financial results presented in accordance with Generally
Accepted Accounting Principles (GAAP), this press release and the accompanying
tables contain certain non-GAAP financial measures that we believe are helpful
in understanding our past financial performance and future results. Our
non-GAAP financial measures are not meant to be considered in isolation or as
a substitute for comparable GAAP measures and should be read in conjunction
with our consolidated financial statements prepared in accordance with GAAP.
Our management regularly uses our supplemental non-GAAP financial measures
internally to understand and manage our business and make operating decisions.
Our non-GAAP financial measures include adjustments based on the following
items, as well as the related income tax effects and adjustments to the
valuation allowance:

Amortization of purchased software: We have excluded the effect of
amortization of the Monarch software and related intellectual property that we
acquired from Math Strategies on March 30, 2012 from our non-GAAP operating
expenses and net income measures. Amortization of this purchased software
resulted from a material transaction that is not likely to occur in the
foreseeable future. Investors should note that the use of the purchased
software will contribute to future period revenues. Amortization of the
purchased software will recur in future periods.

Share-based compensation expenses: We have excluded the effect of share-based
compensation expenses from our non-GAAP operating expenses and net income
measures. Although share-based compensation is a key incentive offered to our
employees, we continue to evaluate our business performance excluding
share-based compensation expenses. Share-based compensation expenses will
recur in future periods.

Restructuring:We incurred significant expenses with the restructuring of our
sales and marketing operations in fiscal 2011 and other restructuring actions
taken in fiscal 2012, principally related to selected headcount reductions. We
believe it is useful for investors to understand the effects of these items on
our total operating expenses and net income.



DATAWATCH CORPORATION
Condensed Consolidated Statements of Operations
Amounts in Thousands (except per share data)
(Unaudited)
                                  Three Months Ended      Twelve Months Ended
                                  September 30,         September 30,
                                  2012         2011       2012       2011
REVENUE:
   Software licenses           $        $      $       $    
                                  3,618        2,795      16,800     9,858
   Maintenance                  2,219        1,649      7,902      6,219
   Professional services        178          394        1,304      1,808
    Total revenue      6,015        4,838      26,006     17,885
COSTS AND EXPENSES:
   Cost of software licenses   526          576        2,270      2,237
   Cost of maintenance and       511          595        2,530      2,537
   services
   Sales and marketing          3,222        2,049      12,263     6,268
   Engineering and product       742          619        2,790      2,502
   development
   General and administrative   1,141        838        4,610      4,274
    Total costs and     6,142        4,677      24,463     17,818
   expenses
INCOME (LOSS) FROM OPERATIONS   (127)        161        1,543      67
Other income (expense)          (174)        42         (459)      100
INCOME (LOSS) BEFORE INCOME      (301)        203        1,084      167
TAXES
Income tax provision (benefit)  (24)         2          50         35
NET INCOME (LOSS)               $       $      $      $    
                                  (277)          201    1,034        132
Net Income (loss) per share -    $        $      $      $    
Basic                            (0.04)       0.03     0.17     0.02
Net Income (loss) per share -    $        $      $      $    
Diluted                          (0.04)       0.03     0.15     0.02
Weighted Average Shares          6,334        6,161      6,252      6,039
Outstanding - Basic
Weighted Average Shares          6,334        6,341      6,730      6,235
Outstanding - Diluted
Non-GAAP Disclosure - Reconciliation of GAAP Net Income to Net Income
Excluding the Effects of Certain Items:
Net Income                      $        $      $      $    
                                  (277)        201     1,034       132
 Add-back Amortization of    431          -          871        -
Monarch IP
 Add-back Share-Based        319          118        879        264
Compensation
 Add-back Restructuring      53           -          235        641
Severance Charges
Net income (non-GAAP)           $       $      $      $    
                                  526          319     3,019      1,037
Non-GAAP net income per share -  $       $      $      $    
Basic                            0.08          0.05      0.48      0.17
Non-GAAP net income per share -  $       $      $      $    
Diluted                          0.08          0.05      0.45      0.17
Weighted Average Shares          6,334        6,161      6,252      6,039
Outstanding - Basic
Weighted Average Shares          6,858        6,341      6,730      6,235
Outstanding - Diluted



DATAWATCH CORPORATION
Condensed Consolidated Balance Sheets
Amounts in Thousands
(Unaudited)
                                          September 30,  September 30,
                                          2012             2011
Cash and cash equivalents               $     8,722  $     8,384
Accounts receivable, net                4,391            2,966
Prepaid expenses and other current       591              577
assets
 Total current assets          13,704           11,927
Property and equipment, net             281              270
Intangible and other assets, net        8,820            937
                                          $    22,805   $    13,134
Current portion of long-term debt       $      900  $         -
Accounts payable and accrued expenses   2,468            2,681
Deferred revenue - current portion      6,295            3,823
 Total current liabilities     9,663            6,504
Note payable                            2,983            -
Other long-term liabilities             466              288
 Total long-term liabilities   3,449            288
 Total shareholders' equity    9,693            6,342
                                          $    22,805   $    13,134





SOURCE Datawatch Corporation

Website: http://www.datawatch.com
 
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