Datawatch Announces Fiscal First Quarter 2013 Financial Results

       Datawatch Announces Fiscal First Quarter 2013 Financial Results

New Positioning and Expansion of Partner Ecosystem Pave the Way for Continued

PR Newswire

CHELMSFORD, Mass., Jan. 22, 2013

CHELMSFORD, Mass., Jan. 22, 2013 /PRNewswire/ --Datawatch Corporation
(NASDAQ-CM: DWCH), the leading global provider of information optimization
solutions, today announced that total revenue for its first quarter ended
December 31, 2012 was $6.82 million, an increase of 9% from revenue of $6.27
million in the first quarter a year ago. License revenue for the first
quarter of fiscal 2013 was $4.33 million, an increase of 3% from the $4.21
million recorded in the comparable quarter a year ago. Net loss for the first
quarter of fiscal 2013 was $222,000, or ($0.03) per diluted share, compared to
net income of $603,000, or $0.09 per diluted share, for the year ago period.
Excluding the effects of the non-cash amortization associated with the
purchase of the Monarch intellectual property in March 2012 as well as
non-cash stock compensation costs, the Company's non–GAAP net income for its
first fiscal quarter of 2013 was $786,000, or $0.11 per diluted share,
compared to $751,000, or $0.12 per diluted share in the first fiscal quarter
of 2012.

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Michael A. Morrison, president and CEO of Datawatch, said, "The first quarter
of fiscal 2013 represented a significant pivot point for Datawatch. During
the quarter, we re-introduced ourselves to the market with a clear and
compelling message, more strategic positioning and a new brand. We delivered
an aggressive training and enablement program for our worldwide sales
organization and our global alliance partners around this new messaging and
positioning. The early results from this important shift in messaging and
positioning are promising. As a result of our new approach, the opportunities
we are pursuing are much more strategic to the enterprise. The relative size
of these opportunities is bigger and the contacts with whom we are working
within these enterprises are higher level. We have already secured several
key new name customers pursuing this strategy, and this bodes well for our
continued success in implementing our plans to build upon Datawatch's
strengths for the long-term."

Mr. Morrison continued, "Our new messaging and positioning are also having a
positive effect on our market awareness, as competitors, industry analysts,
financial analysts and organizations of all sizes are beginning to recognize
the value that can be achieved with Datawatch's Information Optimization
solutions. I am confident that the steps that we have taken thus far, along
with our plans for the remainder of this fiscal year, make Datawatch more
enterprise-ready from a sales, product and services perspective as we seek to
showcase the importance of variety in Big Data and Business Intelligence
applications. Finally, our first fiscal quarter of 2013 also produced solid
results as we executed on our newly launched partnership strategy, with the
addition of 13 new partners to our global ecosystem. These partners
strengthen our domain expertise, increase our geographic coverage and enhance
our ability to meet the complex needs of enterprise customers."

First Quarter Business Highlights

  oDatawatch entered into a master reseller agreement with Koncerndata in
    Sweden to represent Datawatch's Information Optimization solutions
    throughout the Nordic region. Koncerndata, which will operate as
    Datawatch Nordics, has a long track record of success selling business
    analytic software solutions into the Nordic market, including as Hyperion
    Nordics, representing Hyperion Solutions (which was acquired by Oracle)
    and as Outlooksoft Nordics, representing Outlooksoft Corporation (which
    was acquired by SAP).
  oDatawatch entered into business alliances with 13 new partners, including
    Panorama Software, a global leader in Business Intelligence 3.0 solutions;
    Xerox in Canada; Reddot in Russia; Comesio in Austria; 2Quadrant in Czech,
    Slovakia and Hungary; Sky Solutions in North America; and Tricor in Japan.
  oThe Methodist Hospital System in Houston, Texas bought Datawatch's denial
    management analytics solution for dashboard views of 835 EDI healthcare
    remittance data to assist in the revenue cycle management process.
    Datawatch's denial management analytics solution provides out-of-the-box
    dashboards to analyze denied claims, denied claims by reason code,
    inpatient vs. outpatient claims history and more.
  oDatawatch released Datawatch Enterprise Server 11.5, which introduces
    Monarch Power Client for seamless connectivity and interaction with
    Datawatch Enterprise Server and which supports Japanese and simplified
    Chinese character sets. With this new release, organizations throughout
    the world will be able to leverage existing investments in Monarch to
    enable self-service delivery and consumption of models, reports and
    analysis over the Web.

First Quarter Financial Highlights

  oCash and short-term investments were $8.94 million at December 31, 2012,
    up 2% from $8.72 million at September 30, 2012 and down 7% from $9.65
    million at December 31, 2011. In March 2012, the company used $3.04
    million in cash to partially fund the purchase of the Monarch intellectual
    property, and since that time used another $600,000 to partially pay down
    its $1.5 million working capital loan with Silicon Valley Bank.
  oGross margin for the first fiscal quarter of 2013 was 84.6%, compared to
    82.8% for the fourth fiscal quarter of 2012 and 80.2% for the first fiscal
    quarter of 2012.
  oDays sales outstanding were 61 days at December 31, 2012, compared to 70
    days at September 30, 2012 and 52 days at December 31, 2011.
  oThere were 5 six-figure deals in the first fiscal quarter of 2013, the
    same number as in the first fiscal quarter of 2012.
  oThe average deal size in the first fiscal quarter of 2013 was $49,000, as
    compared to $87,000 in the first fiscal quarter of 2012. The average deal
    size in the first fiscal quarter of 2012 was positively impacted by a
    seven-figure license transaction in that quarter.

"We enter the second fiscal quarter of 2013 with our sales teams and partners
effectively utilizing our new messaging and positioning, increased market
awareness and credibility, and a strong and growing pipeline of activity for
our Information Optimization solutions. As a result, we are confident that we
will see a re-acceleration of revenue growth in the next nine months of fiscal
2013 from the rate we saw in the first fiscal quarter of 2013," stated Mr.

Investor Conference Call and Webcast

The senior management of Datawatch will host a conference call and webcast to
discuss the first quarter results this afternoon, Tuesday, January 22, 2013 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: 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.

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

Safe Harbor Statement under the Private Securities Litigation Reform Act of
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, 2012. Any
forward-looking statements should be considered in light of those factors.

Investor Contact:
Datawatch Investor Relations
Phone: (978) 441-2200 ext. 8323

Media Contact:
Sarah Bernardi
Datawatch Corporation
Phone: (978) 441-2200 ext. 8387
Twitter: @datawatch

© 2013 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.

Condensed Consolidated Statements of Operations
Amounts in Thousands (except per share data)
                                                 Three Months Ended
                                                 December 31,
                                                 2012            2011
     Software licenses                        $   4,330    $    4,208
     Maintenance                               2,333           1,717
     Professional services                     158             346
      Total revenue                   6,821           6,271
     Cost of software licenses                521             575
     Cost of maintenance and services          530             668
     Sales and marketing                       3,776           2,801
     Engineering and product development       853             628
     General and administrative                1,191           967
      Total costs and expenses        6,871           5,639
(LOSS) INCOME FROM OPERATIONS                  (50)            632
Other (expense) income                        (163)           9
(LOSS) INCOME BEFORE INCOME TAXES              (213)           641
Income tax provision                          9               38
NET (LOSS) INCOME                              $    (222)  $     603
Net (loss) income per share - Basic            $    (0.03)  $    0.10
Net (loss) income per share - Diluted          $    (0.03)  $    0.09
Weighted Average Shares Outstanding - Basic    6,378           6,164
Weighted Average Shares Outstanding - Diluted  6,378           6,359
Non-GAAP Disclosure - Reconciliation of Net Income to Net Income Excluding
 Effects of Certain Items:
GAAP Net (Loss) Income                         $    (222)  $     603
 Add-back Amortization of Monarch IP        431             -
 Add-back Share-Based Compensation          577             148
Net income (non-GAAP)                          $     786   $     751
Net income per share - Basic                   $    0.12   $    0.12
Net income per share - Diluted                 $    0.11   $    0.12
Weighted Average Shares Outstanding - Basic    6,378           6,164
Weighted Average Shares Outstanding - Diluted  6,888           6,359

Condensed Consolidated Balance Sheets
Amounts in Thousands
                                           December 31,    September 30,
                                           2012              2012
Cash and cash equivalents                $     8,937   $     8,722
Accounts receivable, net                 4,300             4,391
Prepaid expenses and other current        863               591
 Total current assets           14,100            13,704
Property and equipment, net              264               281
Intangible and other assets, net         8,314             8,820
                                           $    22,678    $    22,805
Current portion of long-term debt        $      900  $       900
Accounts payable and accrued expenses    2,163             2,468
Deferred revenue - current portion       5,983             6,295
 Total current liabilities      9,046             9,663
Note payable                             3,022             2,983
Other long-term liabilities              453               466
 Total long-term liabilities    3,475             3,449
 Total shareholders' equity     10,157            9,693
                                           $    22,678    $    22,805

SOURCE Datawatch Corporation

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