Datawatch Announces Fiscal Second Quarter 2013 Financial Results

       Datawatch Announces Fiscal Second Quarter 2013 Financial Results

Seventh Consecutive Quarter of Year-Over-Year Growth

PR Newswire

CHELMSFORD, Mass., April 25, 2013

CHELMSFORD, Mass., April 25, 2013 /PRNewswire/ --Datawatch Corporation
(NASDAQ-CM: DWCH), the leading global provider of information optimization
solutions, today announced that total revenue for its second quarter ended
March 31, 2013 was $6.83 million, an increase of 4% from revenue of $6.55
million in the second quarter a year ago. License revenue for the second
quarter of fiscal 2013 was $4.30 million, an increase of 1% from the $4.27
million recorded in the comparable quarter a year ago. Net loss for the
second quarter of fiscal 2013 was $626,000, or ($0.10) per diluted share,
compared to net income of $160,000, or $0.02 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 second fiscal quarter of 2013 was $390,000, or $0.06 per diluted share,
compared to $354,000, or $0.05 per diluted share in the second fiscal quarter
of 2012.


"In the second quarter we continued to see proof that the strategic
initiatives and operational changes we put in place over the past year are
having a positive impact on our market credibility and our pipelines," said
Michael A. Morrison, President and Chief Executive Officer of Datawatch. "The
market acceptance of our industry changing Information Optimization solutions
coupled with the expanding marketing alliances has resulted in a steady growth
of larger enterprise-wide opportunities. While we are pleased to be engaged
in these types of opportunities, they are more complex and often have longer
sales cycles. However, looking forward, we are fully prepared to execute on
these opportunities and we anticipate a steady improvement in both close rates
and deal sizes throughout the remainder of the year."

Mr. Morrison added, "Of particular note is the level of activity we are seeing
in our partner recruitment and enablement initiatives. We added eighteen new
partners this quarter, once again expanding our domain and channel capacity
globally. Even more importantly, we began to see our partners make a
meaningful contribution to our pipeline and to the growth of our solutions
strategy. We executed coordinated marketing programs with several of our new
partners this past quarter, and these programs have yielded some very
interesting opportunities. We are encouraged by the progress we are making
here and believe our expanding partner ecosystem will be a catalyst for our
growth over the remainder of the year and well into the future."

Second Quarter Business Highlights

  oDatawatch expanded its partner channel by adding 18 new partners globally,
    including new partnerships with MarkLogic, the enterprise NoSQL platform
    for Big Data applications; BI Inform, a business intelligence service
    provider specializing in IBM Cognos solutions; John Daniels Associates, a
    performance management solution provider specializing in QlikTech and IBM
    Cognos solutions; ASTA Systems LTD, a Big Data service provider in Hong
    Kong; and PT Mitrasoft, an IT solution provider in Indonesia.
  oDatawatch replaced ASG DocuAnalyzer at three Fortune 100 companies, two
    major global financial institutions and one health insurance provider,
    resulting in three significant six-figure transactions.
  oDatawatch released Datawatch Data Pump 11.6, which features support for
    Hadoop and Hive to deliver Big Data support.
  oDatawatch launched the Datawatch Unstructured Data Connector for QlikView
    on the QlikTech QlikMarket, further solidifying the partnership announced
    in late 2012.

Second Quarter Financial Highlights

  oCash and short-term investments were $9.68 million at March 31, 2013, up
    8% from $8.94 million at December 31, 2012 and up 37% from $7.06 million
    at March 31, 2012.
  oGross margin for the second fiscal quarter of 2013 was 84.0%, compared to
    84.6% for the first fiscal quarter of 2013 and 79.5% for the second fiscal
    quarter of 2012.
  oDays sales outstanding were 57 days at March 31, 2013, compared to 61 days
    at December 31, 2012 and 61 days at March 31, 2012.
  oThere were 5 six-figure deals in the second fiscal quarter, as compared to
    4 six-figure deals in the second fiscal quarter of 2012.
  oThe average deal size in the second fiscal quarter was $86,000, as
    compared to $70,000 in the second fiscal quarter of 2012.

Subsequent to the conclusion of the second quarter of 2012, Datawatch
announced that James Eliason has joined the company as Chief Financial Officer
effective April 23, 2013.

"Datawatch continues to execute on the business model that was implemented
last year, with disciplined investment targeted to accelerate revenue growth
and strong cash management. In the fiscal second quarter of 2013, we added
nearly $800,000 to Datawatch's cash balances through this balanced approach.
We believe we are in a solid financial position as we enter the second half of
our fiscal 2013," said Mr. Morrison.

Investor Conference Call and Webcast
The senior management of Datawatch will host a conference call and webcast to
discuss the second quarter results this afternoon, Thursday, April 25, 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 and Form 10-Q
for the quarter ended December 31, 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    Six Months Ended
                                    March 31,           March 31,
                                    2013       2012       2013       2012
   Software licenses             $        $        $        $  
                                    4,297     4,274     8,627     8,483
   Maintenance                    2,300      1,861      4,633      3,577
   Professional services          234        412        392        758
    Total revenue        6,831      6,547      13,652     12,818
   Cost of software licenses     531        659        1,052      1,234
   Cost of maintenance and         565        684        1,095      1,352
   Sales and marketing            4,218      2,996      7,994      5,797
   Engineering and product         749        690        1,602      1,318
   General and administrative     1,246      1,213      2,437      2,180
    Total costs and       7,309      6,242      14,180     11,881
(LOSS) INCOME FROM OPERATIONS     (478)      305        (528)      937
Other expense                     (154)      (118)      (317)      (109)
(LOSS) INCOME BEFORE INCOME        (632)      187        (845)      828
Income tax (benefit) provision    (6)        27         3          65
NET (LOSS) INCOME                 $       $      $       $    
                                    (626)     160        (848)     763
Net (loss) income per share -      $       $       $       $   
Basic                              (0.10)     0.03      (0.13)     0.12
Net (loss) income per share -      $       $       $       $   
Diluted                            (0.10)     0.02      (0.13)     0.12
Weighted Average Shares            6,428      6,221      6,403      6,192
Outstanding - Basic
Weighted Average Shares            6,428      6,677      6,403      6,555
Outstanding - Diluted
Non-GAAP Disclosure - Reconciliation of Net (Loss) Income to Net Income
Excluding the Effects of Certain Items:
GAAP Net (Loss) Income            $      $      $      $    
                                    (626)       160     (848)       763
 Add-back Amortization of        431        9          862        9
Monarch IP
 Add-back Share-Based            585        185        1,162      333
Net income (non-GAAP)             $       $       $        $  
                                    390       354       1,176      1,105
Net income per share - Basic      $       $       $       $   
                                    0.06       0.06       0.18       0.18
Net income per share - Diluted    $       $       $       $   
                                    0.06       0.05       0.17       0.17
Weighted Average Shares            6,428      6,221      6,403      6,192
Outstanding - Basic
Weighted Average Shares            6,841      6,677      6,869      6,555
Outstanding - Diluted

Condensed Consolidated Balance Sheets
Amounts in Thousands
                                            March 31,       September 30,
                                            2013              2012
Cash and cash equivalents                 $     9,680   $     8,722
Accounts receivable, net                  4,142             4,391
Prepaid expenses and other current         988               591
 Total current assets            14,810            13,704
Property and equipment, net               288               281
Intangible and other assets, net          7,899             8,820
                                            $    22,997    $    22,805
Current portion of long-term debt         $      900  $      900
Accounts payable and accrued expenses     2,358             2,468
Deferred revenue - current portion        6,114             6,295
 Total current liabilities       9,372             9,663
Note payable                              3,062             2,983
Other long-term liabilities               441               465
 Total long-term liabilities     3,503             3,448
 Total shareholders' equity      10,122            9,694
                                            $    22,997    $    22,805

SOURCE Datawatch Corporation

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