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Responsys Announces Fourth Quarter and Fiscal 2012 Results



Responsys Announces Fourth Quarter and Fiscal 2012 Results

  * Total fourth quarter revenue increases 20% to $44.7 million compared to a
    year ago
  * Delivers non-GAAP EPS of $0.07 in the fourth quarter of 2012
  * Announces 2013 annual revenue guidance of $188-$192 million
  * Announces first quarter 2013 revenue guidance of $43-45 million

SAN BRUNO, Calif., Feb. 20, 2013 (GLOBE NEWSWIRE) -- Responsys, Inc.
(Nasdaq:MKTG), a leading provider of email and cross-channel marketing
solutions, today announced financial results for the quarter ended December
31, 2012.

For the fourth quarter of 2012, total revenue increased 19.9% to $44.7
million, up from $37.2 million in the fourth quarter of 2011.

Subscription revenue for the fourth quarter of 2012 was $30.3 million, up
13.2% as compared to $26.7 million in the fourth quarter of 2011. Professional
services revenue was $14.4 million, up 37.2% as compared to $10.5 million in
the fourth quarter of 2011.

GAAP net income for the fourth quarters of 2012 and 2011 were both $2.0
million. Similarly, net income per share attributable to common stockholders
in the fourth quarters of 2012 and 2011 were both $0.04 per share on a diluted
basis.

"Our strong fourth quarter financial results reflect our success in helping
brands transform the way they interact and build relationships with their
customers across the digital channels," said Dan Springer, Chairman and Chief
Executive Officer of Responsys. "As digital marketers shift away from mass
marketing to creating individualized experiences for each customer, we're
poised to lead the market with the industry's only interaction management
platform that puts the customer first, not the campaign."

For the year ended December 31, 2012, total revenue increased 20.7% to $162.8
million, up from $134.9 million for the year ended December 31, 2011.

Subscription revenue for the year 2012 was $113.4 million, up 20.0% as
compared to $94.5 million in 2011. Professional services revenue for the year
was $49.5 million, up 22.3% as compared to $40.4 million in 2011.

GAAP net income for 2012 was $7.6 million. This compares to GAAP net income of
$8.0 million for 2011. Net income per share attributable to common
stockholders in 2012 was $0.14 per share on a diluted basis, as compared to
$0.12 in 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 fourth quarter of 2012 was $3.7 million, or $0.07
per diluted share as compared to $3.3 million, or $0.06 per share on a
non-GAAP diluted basis^1, for the fourth quarter of 2011.

Non-GAAP net income for the year ended December 31, 2012 was $11.6 million, or
$0.22 per diluted share as compared to $11.0 million, or $0.21 per share on a
non-GAAP diluted basis^1, for the year ended December 31, 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 February 20, 2013, Responsys is issuing
guidance for the first quarter of 2013 and fiscal 2013 as follows:

Fiscal 2013 revenue is expected to be in the range of $188-192 million.
Non-GAAP net income is expected to be approximately $0.16 to $0.18 per diluted
share.

Non-GAAP net income for the full year excludes an estimated $1.8 million in
amortization of acquired intangibles and an estimated $12.5 million in
stock-based compensation expense. Non-GAAP net income per diluted share is
based on weighted average diluted shares outstanding of 54 million.

For the first quarter of 2013, the Company expects revenue to be in the range
of $43-$45 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
$0.7 million in amortization of acquired intangibles and an estimated $2.9
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 first quarter and fiscal year 2013 assumes an
effective non-GAAP tax rate of 33% and 35%, respectively.

Conference Call Information for Today, Wednesday, February 20, 2013

Responsys will host a conference call to discuss the results at 1:30 p.m.
Pacific Time / 4:30 p.m. Eastern Time today. The conference call will be
hosted by Dan Springer, Chief Executive Officer, and Chris Paul, Chief
Financial Officer. To access the call from the U.S., please dial (877)
303-9139 or (760) 536-5195 from 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
February 23, 2013 by calling (855) 859-2056, or (404) 537-3406 from outside
the U.S., using conference ID 93575333. 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: Southwest Airlines,
LinkedIn, LEGO, Orbitz, United Airlines, Dollar Thrifty, Newegg, Qantas, Avis
Europe, Deutsche Lufthansa, UnitedHealthcare and American Family Mutual
Insurance Company. 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, which can affect customer satisfaction or result in
reduced revenues; 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; the level of hiring and
equity award activity, which will affect the level of stock-based compensation
expense; 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 twelve months ended December 31, 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.                                           
Consolidated Balance Sheets                               
(in thousands)                                            
                                              As of December 31,
                                              2012       2011
Assets                                                    
Current assets:                                           
Cash and cash equivalents                     $ 106,656   $ 73,456
Short-term investments                         –          21,300
Accounts receivable, net                       28,065     20,706
Deferred taxes – current                       5,997      5,393
Prepaid expenses and other current assets      2,803      3,599
Total current assets                           143,521    124,454
Property and equipment – net                   18,426     14,663
Goodwill                                       17,335     14,048
Intangible assets – net                        2,925      3,386
Deferred taxes – noncurrent                    4,100      5,748
Other assets                                   2,458      938
Total assets                                   $ 188,765  $ 163,237
                                                          
Liabilities and stockholders' equity                      
Current liabilities:                                      
Accounts payable                               $ 3,363   $ 1,739
Accrued compensation                           8,014      6,916
Other accrued liabilities                      4,432      2,914
Capital lease obligations – current            896        879
Deferred revenue – current                     8,072      7,387
Total current liabilities                      24,777     19,835
Capital lease obligations – noncurrent         228        1,154
Deferred taxes – noncurrent                    482        691
Deferred revenue – noncurrent                  407        323
Other long-term liabilities                    4,461      977
Total liabilities                              30,355     22,980
Commitments and contingencies                             
Stockholders' equity:                                     
Common stock                                   5          5
Additional paid-in capital                     165,423    155,428
Accumulated deficit                            (7,212)    (14,794)
Accumulated other comprehensive income (loss)  194        (382)
Total stockholders' equity                     158,410    140,257
Total liabilities and stockholders' equity    $ 188,765  $ 163,237

                                                                       
                                                                       
Responsys, Inc.                                                        
Consolidated Statements of Income                                      
(in thousands, except per share data)                                  
                                        Three Months Ended Year Ended
                                        December 31,       December 31,
                                        2012      2011     2012       2011
                                                                       
Revenue:                                                               
Subscription                            $ 30,250  $ 26,734  $ 113,363 $ 94,501
Professional services                    14,423    10,510   49,461     40,438
Total revenue                            44,673    37,244   162,824    134,939
                                                                       
Cost of revenue:                                                       
Subscription                             8,971     7,633    32,672     27,918
Professional services                    11,043    9,901    42,727     36,747
Total cost of revenue                    20,014    17,534   75,399     64,665
Gross profit                             24,659    19,710   87,425     70,274
                                                                       
Operating expenses:                                                    
Research and development                 3,504     3,557    15,224     13,544
Sales and marketing                      12,823    9,637    45,544     33,300
General and administrative               4,826     3,181    17,679     11,463
Gain on acquisition                      –         –        (2,233)    (2,220)
Total operating expenses                 21,153    16,375   76,214     56,087
Operating income                         3,506     3,335    11,211     14,187
Other income (expense), net              (126)     (70)     (285)      (268)
Income before income taxes               3,380     3,265    10,926     13,919
Provision for income taxes               (1,378)   (1,269)  (3,380)    (5,824)
Equity in net income (loss) of           –         (34)     36         (124)
unconsolidated affiliates
Net income                              $ 2,002   $ 1,962  $ 7,582    $ 7,971
                                                                       
Net income attributable to common                                      
stockholders:
Basic                                   $ 2,002   $ 1,962  $ 7,582    $ 5,019
Diluted                                 $ 2,002   $ 1,962  $ 7,582    $ 5,190
                                                                       
Net income per share attributable to                                   
common stockholders:
Basic                                   $ 0.04    $ 0.04   $ 0.16     $ 0.14
Diluted                                  $ 0.04   $ 0.04   $ 0.14     $ 0.12
                                                                       
Shares used in computation of net
income per share attributable to common                                
stockholders:
Basic                                    48,829    47,452   48,355     35,278
Diluted                                  53,170    53,424   53,087     41,734

                                                                     
                                                                     
Responsys, Inc.                                                      
Non-GAAP Financial Measures                                          
(in thousands, except per share                                      
data)
                                                                     
                                   Three Months Ended    Year Ended
                                   December 31,          December 31,
                                   2012       2011       2012       2011
Gross profit:                                                        
GAAP gross profit                                                    
Subscription                        $ 21,279   $ 19,101   $ 80,691   $ 66,583
Professional services               3,380      609        6,734      3,691
Total GAAP gross profit             24,659     19,710     87,425     70,274
Add back:                                                            
Stock-based compensation:                                            
Subscription                        185        121        662        381
Professional services               286        219        982        623
Total non-GAAP gross profit         $ 25,130   $ 20,050   $ 89,069   $ 71,278
                                                                     
Operating income:                                                    
GAAP operating income               $ 3,506    $ 3,335    $ 11,211    $ 14,187
Add back:                                                            
Amortization of intangible assets   787        569        2,693      2,325
Stock-based compensation            1,759      1,292      6,428      3,713
Deduct:                                                              
Gain on acquisition                 --         --         (2,233)    (2,220)
Total non-GAAP operating income     $ 6,052    $ 5,196    $ 18,099   $ 18,005
                                                                     
Income before income taxes:                                          
GAAP income before income taxes     $ 3,380    $ 3,265    $ 10,926   $ 13,919
Add back:                                                            
Amortization of intangible assets   787        569        2,693      2,325
Stock-based compensation            1,759      1,292      6,428      3,713
Deduct:                                                              
Gain on acquisition                 –          –          (2,233)    (2,220)
Total non-GAAP income before taxes  $ 5,926    $ 5,126    $ 17,814   $ 17,737
                                                                     
Provision for income taxes:                                          
GAAP provision for income taxes     $ (1,378)  $ (1,269)  $ (3,380)  $ (5,824)
Tax effect from:                                                     
Amortization of intangible assets   (238)      (178)      (822)      (723)
Stock-based compensation            (561)      (387)      (2,016)    (939)
Fair value adjustment for call and  --         --         --         --
put options related to Eservices
Gain on acquisition                 --         --         --         888
Total non-GAAP provision for        $ (2,177)  $ (1,834)  $ (6,218)  $ (6,598)
income taxes
                                                                     
Net income:                                                          
GAAP net income                     $ 2,002    $ 1,962    $ 7,582    $ 7,971
Add back:                                                            
Amortization of intangible assets   787        569        2,693      2,325
Stock-based compensation            1,759      1,292      6,428      3,713
Deduct:                                                              
Fair value adjustment for call and                                   
put options related to Eservices
Gain on acquisition                 –          –          (2,233)    (2,220)
Income tax effect of non-GAAP       (799)      (565)      (2,838)    (774)
items
Total non-GAAP net income           $ 3,749    $ 3,258    $ 11,632    $ 11,015
                                                                     
Non-GAAP net income per share^1:                                     
Basic                               $ 0.08     $ 0.07     $ 0.24     $ 0.25
Diluted                             $ 0.07     $ 0.06     $ 0.22     $ 0.21
                                                                     
Shares used in computing non-GAAP                                    
net income per share:
Basic shares:                                                        
Weighted-average shares used in
computing basic net income per      48,829     47,452     48,355     35,278
common share
Less: weighted-average preferred
shares outstanding due to           –          –          –          (20,574)
conversion upon IPO
Conversion of preferred shares      –          –          –          30,159
Weighted-average shares used in
calculating non-GAAP basic net      48,829     47,452     48,355     44,863
income per share
                                                                     
Diluted shares:                                                      
Weighted-average shares used
in computing diluted net income     53,170     53,424     53,087     41,734
per common share
Less: weighted-average preferred
shares outstanding due to           –          –          –          (20,574)
conversion upon IPO
Conversion of preferred shares      –          –          –          30,159
Weighted-average shares used in
calculating non-GAAP diluted net    53,170     53,424     53,087     51,319
income per share
                                                                     
                                                                     
Responsys, Inc.                                                      
Stock-Based Compensation Expense                                     
(in thousands)                                                       
                                   Three Months Ended    Year Ended
                                   December 31,          December 31,
                                   2012       2011       2012       2011
Cost of revenue                     $ 471      $ 340      $ 1,644    $ 1,004
Research and development            198        208        914        610
Sales and marketing                 508        317        1,785      861
General and administrative          582        427        2,085      1,238
Total                               $ 1,759    $ 1,292    $ 6,428    $ 3,713

                                                                      
                                                                      
Responsys, Inc.                                                       
Consolidated Cash Flow                                                
(in thousands)                                                        
                                                                      
                                                           Year Ended
                                                           December 31,
                                                           2012      2011
                                                                      
Cash flows from operating activities:                                 
Net income                                                 $ 7,582   $ 7,971
Adjustments to reconcile net income to net cash provided    --        
by operating activities:
Benefit (provision) for bad debts                           148       (79)
Depreciation and amortization                               10,884    9,669
Stock-based compensation                                    6,428     3,713
Gain on acquisition                                         (2,233)   (2,220)
Net change in call and put options                          --        -- 
Deferred taxes                                              365       4,375
Excess tax benefits from stock-based compensation           (1,880)   (1,387)
Equity in net (income) loss of unconsolidated affiliates    (36)      124
Other                                                       190       88
Changes in operating assets and liabilities - net of        --        
business acquired:
Accounts receivable                                         (7,236)   (491)
Prepaid expenses and other current assets                   835       (307)
Other assets                                                224       (668)
Accounts payable                                            1,520     (116)
Accrued compensation                                        917       2,874
Other accrued liabilities                                   3,245     1,069
Deferred revenue                                            684       (1,699)
Other long-term liabilities                                 1,978     84
Net cash provided by operating activities                   23,615    23,000
                                                                      
Cash flows from investing activities:                                 
Purchases of property and equipment                         (10,457)  (7,535)
Addition of capitalized software development costs          (1,366)   (439)
Business acquisition, net of cash received                  (614)     (6,101)
Purchase of short-term investments                          (4,007)   (24,131)
Redemption of short-term investments                        25,177    2,750
Purchase of equity interest                                 (1,772)   -- 
Investment in unconsolidated affiliate                      --        (381)
Net cash provided by (used in) investing activities         6,961     (35,837)
                                                                      
Cash flows from financing activities:                                 
Proceeds from issuance of common stock                      1,513     1,189
Proceeds from initial public offering                       --        72,182
Proceeds from early-exercised stock options                 3         153
Repurchase of common stock                                  --        -- 
Payments of offering costs                                  --        (1,674)
Principal payments on capital lease obligations             (879)     (752)
Excess tax benefits from stock-based compensation           1,880     1,387
Net cash provided by financing activities                   2,517     72,485
Effect of foreign exchange rate changes on cash and cash    107       (76)
equivalents
Net increase in cash and cash equivalents                   33,200    59,572
Cash and cash equivalents at beginning of period            73,456    13,884
Cash and cash equivalents at end of period                 $ 106,656 $ 73,456
                                                                      

CONTACT: Carla Cooper
         (Investor Relations)
         Responsys, Inc.
         (650) 452-1484
         ccooper@responsys.com

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