Daegis Reports Fiscal 2013 Second Quarter Financial Results

  Daegis Reports Fiscal 2013 Second Quarter Financial Results

                         *GAAP Net Income of $252,000
                    *Cash Flow from Operations of $687,000
  *Released Acumen Predictive Coding Solution

Business Wire

ROSEVILLE, Calif. -- November 29, 2012

Daegis Inc. (NASDAQ: DAEG), an eDiscovery and information management company,
today announced financial results for its fiscal 2013 second quarter ended
October 31, 2012.

Second quarter total revenue was $10.3 million, compared to $11.1 million in
the second quarter last year. Electronic discovery revenue was $4.0 million,
compared to $5.5 million in the comparable quarter last year. Total revenue
for the database, archive and migration business segment was $6.3 million,
compared to $5.5 million in the second quarter of fiscal 2012. Adjusted EBITDA
was $1.7 million or 17% of revenue, compared to $2.3 million or 21% of
revenue, in the comparable quarter last year (see reconciliation table below
regarding the presentation of Adjusted EBITDA and Non-GAAP net income).

Second quarter GAAP net income was $252,000 or $0.01 per share, compared to
net income of $795,000 or $0.05 per share in the second quarter of fiscal
2012. Non-GAAP net income was $978,000 or $0.07 per share, compared to $1.4
million or $0.10 per share in the same quarter last year (see reconciliation
table). The Company generated cash from operations of $687,000 during the
second quarter, compared to $2.1 million during the second quarter last year.

Cash and cash equivalents at October 31, 2012 were $4.0 million, compared to
$4.8 million reported at April 30, 2012. Total outstanding debt at October 31,
2012 was $18.6 million, a decrease of $2.7 million, compared to $21.3 million
at April 30, 2012.

For the six-month period of fiscal 2013, total revenue was $20.0 million,
compared to $22.6 million for the same period of the prior year. GAAP net
income was $409,000 or $0.01 per share, compared to GAAP net loss of $983,000
or $0.08 loss per share last year. Non-GAAP net income was $1.2 million or
$0.08 per share, compared to $2.2 million or $0.14 per share for the first six
months of last year. Adjusted EBITDA was $2.8 million, compared to $4.1
million in the same period last year. Cash generated from operations was $1.3
million, compared to $3.1 million in the comparable period last year.

Commenting on results, Chief Executive Officer Todd Wille said, “During the
first two quarters of the fiscal year, we rebuilt the eDiscovery executive
team, significantly enhanced our cloud-based eDiscovery Platform, and added
experienced sales professionals. We delivered a major new release of the
Daegis eDiscovery Platform with enhanced self-service usability and our
innovative technology assisted review solution known as Acumen. In addition,
we right sized our cost structure to deliver profitability as we implement our
plans to grow. We are extremely focused on execution and expect to see
improved results in the second half of the year. In our database, archive and
migration business segment, we saw stronger than anticipated performance with
14% growth quarter over quarter and 13% sequentially. We launched a major
release of our AXS-One archive product, achieved significant archive and
migration wins, and continued our trend of strong maintenance renewals.”

Investor Conference Call

Management will host a conference call today, November 29, 2012, at 2:00 p.m.
PT (5:00 p.m. ET) to review the second quarter 2013 financial results. The
call can be accessed by dialing (877) 941-1427 or (480) 629-9664 for
international callers and providing the company name. Participants are asked
to call the assigned number approximately 10 minutes before the conference
call begins. In addition, the conference call will be available over the
Internet at www.daegis.com. A replay of the call will be available
approximately two hours following the end of the call through 11:59 p.m. ET on
December 9, 2012 by dialing (800) 406-7325 or (303) 590-3030 for international
callers and using the following passcode: 4576354#.

About Daegis Inc.

Daegis delivers eDiscovery and information management solutions. Daegis’
eDiscovery Platform combines technology and on-demand services to deliver
end-to-end and cost-effective solutions for corporations and law firms. The
Company’s information management business delivers solutions for developing,
managing, modernizing, and archiving applications and business data. For
additional information, visit www.daegis.com.

Use of Non-GAAP Financial Information

To supplement the Company's unaudited condensed consolidated financial
statements presented in accordance with GAAP, Daegis uses certain Non-GAAP
measures of financial performance. The presentation of these Non-GAAP
financial measures is not intended to be considered in isolation from, as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP, and may be different from Non-GAAP
financial measures used by other companies. In addition, these Non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with the Company's results of operations as determined in
accordance with GAAP. For more information on these Non-GAAP financial
measures and the Company’s Adjusted EBITDA, including how these measures are
calculated, please see the tables in this release captioned "Reconciliation of
GAAP to Non-GAAP Net Income" which includes a reconciliation of the GAAP
results to Non-GAAP results as well as “Reconciliation of GAAP Operating
Income to Adjusted EBITDA.”

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of the Company. We wish to caution you that these statements
involve risks and uncertainties and actual events or results may differ
materially. When the words “believes,” “expects,” “plans,” “projects,”
“estimates” and similar expressions are used, they identify forward-looking
statements. These forward-looking statements are based on management’s current
beliefs and assumptions and information currently available to management and
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements. Examples of
forward-looking statements in the press release include the statements made by
Mr. Wille. Among the important factors which could cause actual results to
differ materially from those in the forward-looking statements are general
market and economic conditions, our ability to execute our business strategy
and integrate acquired businesses, the effectiveness of our sales team and
approach, our ability to target, analyze and forecast the revenue to be
derived from a client and the costs associated with providing services to that
client, the date during the course of a fiscal year that a new client is
acquired, the length of the integration cycle for new clients and the timing
of revenues and costs associated therewith, our client concentration given
that the Company is currently dependent on a few large client relationships,
potential competition in the marketplace, the ability to retain and attract
employees, market acceptance of our service programs and pricing options, our
ability to maintain our existing technology platform and to deploy new
technology, our ability to sign new clients and control expenses, the
possibility of the discontinuation of some client relationships, the financial
condition of our clients' business and other factors detailed in the Company's
filings with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise the information in this press release, whether
as a result of new information, future events, circumstances or otherwise.

(In thousands, except per share data)
                             Three Months Ended        Six Months Ended
                             October 31,               October 31,
                              2012       2011       2012       2011   
eDiscovery                   $ 4,043      $ 5,529      $ 8,116      $ 11,555
Database, archive, and        6,302      5,546      11,867     11,034 
Total revenues                10,345     11,075     19,983     22,589 
Operating Expenses:
Direct costs of eDiscovery     2,222        2,234        4,377        4,632
Direct costs of database,
archive, and migration         1,273        1,352        2,555        2,700
Product development            1,802        1,863        3,686        3,838
Selling, general and           4,146        4,428        9,179        9,376
Gain on sale of intangible    —          —          (1,000 )    —      
Total operating expenses      9,443      9,877      18,797     20,546 
Income from operations        902        1,198      1,186      2,043  
Other income (expense):
Loss on extinguishment of      —            —            —            (2,166 )
Gain (loss) from change in
fair value of common stock     (188   )     158          271          602
warrant liability
Interest expense               (400   )     (469   )     (842   )     (1,369 )
Other, net                    (16    )    (24    )    (108   )    26     
Total other income            (604   )    (335   )    (679   )    (2,907 )
Income (loss) before           298          863          507          (864   )
income taxes
Provision for income taxes    46         68         98         119    
Net income (loss)            $ 252       $ 795       $ 409       $ (983   )
Income (loss) per share:
Basic                        $ 0.01       $ 0.05       $ 0.01       $ (0.08  )
Diluted                      $ 0.01       $ 0.05       $ 0.01       $ (0.08  )
Weighted-average shares
used in computing income
(loss) per share:
Basic                          14,718       14,657       14,718       14,629
Diluted                        14,729       14,809       14,723       14,629

(In thousands)
                                             October 31,   April 30,
                                              2012        2012    
Current assets:
Cash and cash equivalents                    $ 4,037       $ 4,752
Accounts receivable, net                       8,956         10,968
Prepaid expenses and other current assets     1,327       1,805   
Total current assets                           14,320        17,525
Property and equipment, net                    2,438         2,827
Goodwill                                       11,706        11,706
Intangibles, net                               7,921         8,690
Other assets, net                             1,010       1,121   
Total assets                                 $ 37,395     $ 41,869  
Current liabilities:
Accounts payable                             $ 398         $ 450
Current portion of long term debt              1,190         2,945
Accrued compensation and related expenses      2,032         2,465
Common stock warrant liability                 298           569
Other accrued liabilities                      999           819
Deferred revenue                              6,602       8,412   
Total current liabilities                      11,519        15,660
Long term debt, net of current portion         17,364        18,306
Deferred tax liabilities                       841           734
Other long term liabilities                   1,165       1,148   
Total liabilities                             30,889      35,848  
Commitments and contingencies                  —             —
Stockholders’ equity:
Preferred Stock                                2             2
Common stock                                   15            15
Additional paid-in capital                     99,989        99,860
Accumulated other comprehensive income         289           341
Accumulated deficit                           (93,789 )    (94,197 )
Total stockholders’ equity                    6,506       6,021   
Total liabilities and stockholders’ equity   $ 37,395     $ 41,869  

(In thousands, except per share data)
                               Three Months Ended      Six Months Ended
                               October 31,             October 31,
                                2012      2011       2012       2011   
GAAP income from operations    $ 902      $ 1,198      $ 1,186      $ 2,043
Amortization of intangible       384        558          769          1,123
Stock based compensation         154        245          330          473
Depreciation                    277       279        555        509    
Total adjustments to GAAP       815       1,082      1,654      2,105  
income from operations
Adjusted EBITDA                $ 1,717    $ 2,280     $ 2,840     $ 4,148  
(In thousands, except per share data)
GAAP net income (loss)         $ 252      $ 795        $ 409        $ (983   )
Amortization of intangible       384        558          769          1,166
assets and warrant discount
Stock based compensation         154        245          330          473
Gain from change in fair
value of common stock            188        (158   )     (271   )     (602   )
warrant liability
Loss on extinguishment of       —         —          —          2,166  
Total adjustments to GAAP       726       645        828        3,203  
net loss
Non-GAAP net income            $ 978      $ 1,440     $ 1,237     $ 2,220  
Non-GAAP diluted earnings      $ 0.07     $ 0.10      $ 0.08      $ 0.14   
per share
Weighted average shares used
in computing earnings per
Diluted                          14,729     14,809       14,723       15,933


Deb Thornton, 916-218-4779
Press spacebar to pause and continue. Press esc to stop.