Responsys Announces First Quarter 2013 Results

Responsys Announces First Quarter 2013 Results    *Achieves first quarter revenue increase of 27% to $48.5 million compared     to first quarter of 2012   *Delivers non-GAAP diluted EPS of $0.07 in the first quarter of 2013   *Raises 2013 annual revenue guidance from $188-$192 million to $190-$193     million   *Establishes second quarter 2013 revenue guidance of $45.5-46.5 million   *Introduces Responsys Interact Preference, enabling a cross-channel view of     customer preferences  SAN BRUNO, Calif., May 6, 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 March 31, 2013.  For the first quarter of 2013, total revenue increased 27% to $48.5 million, up from $38.1 million in the first quarter of 2012.  Subscription revenue for the first quarter of 2013 was $33.6 million, up 23% compared with $27.2 million in the first quarter of 2012. Professional services revenue was $14.9 million, up 38% compared with $10.8 million in the first quarter of 2012.  GAAP net income for the first quarter of 2013 was $1.5 million compared with $2.1 million in the first quarter of 2012. GAAP net income per share for the first quarter of 2013 was $0.03 compared with $0.04 in the first quarter of 2012.  Non-GAAP net income for the first quarter of 2013 was $3.7 million, or $0.07 per diluted share as compared with $3.5 million, or $0.07 per diluted share, for the first quarter of 2012.  "Our outperformance in the first quarter demonstrates the value that customers place on our differentiated solutions, and we are confident that our growth will continue to be driven by the success of our customers," said Dan Springer, Chairman and CEO. "The strong volumes of digital messages sent by our customers and the higher than anticipated demand for our professional services from new and existing clients were the key revenue drivers this quarter. We believe our ongoing investment in innovation has allowed us to pioneer market-leading products that provide our customers with competitive advantages.  "During the first quarter, we introduced enhancements to the Responsys Interact Suite, including Responsys Interact Preference, a new offering that provides marketers with a unified, cross-channel view of customer preferences and permissions," continued Mr. Springer. "Our new product introductions and investments in our premium platform are focused on enabling our customers to generate the highest return for their customized digital marketing programs. We have a track record of anticipating emerging trends, and we intimately understand the needs of marketers. We believe we are well-positioned to deliver strong financial results throughout the rest of 2013 and beyond."  Business Outlook  Based on information available as of May 6, 2013, Responsys is issuing guidance for the second quarter of 2013 and revising fiscal 2013 guidance as follows:  For the second quarter of 2013, the Company expects revenue to be in the range of $45.5-$46.5 million. Non-GAAP net income is expected to be approximately $0.02 per diluted share. Expected 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.  Responsys is increasing its outlook for fiscal 2013 revenue from a range of $188-$192 million to a range of $190-193 million. The Company is revising its expectation for fiscal 2013 non-GAAP net income from approximately $0.16 to $0.18 per diluted share to approximately $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 $12.2 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on weighted average diluted shares outstanding of 54 million.  Non-GAAP net income outlook for the fiscal year 2013 assumes an effective non-GAAP tax rate of 35%.  Conference Call Information for Today, Monday, May 6, 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) 548-9590 or (720) 545-0037 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 May 9, 2013 by calling (855) 859-2056, or (404) 537-3406 from outside the U.S., using conference ID 50898189. 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, including those regarding the Company's future prospects, 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 was derived by dividing by the corresponding non-GAAP basic and non-GAAP diluted weighted-average shares outstanding.  Responsys, Inc. Consolidated Balance Sheets (in thousands)                                           As of March 31, As of December 31,                                           2013            2012 Assets                                                     Current assets:                                            Cash and cash equivalents                  $106,263      $106,656 Accounts receivable, net                   33,508          28,065 Deferred taxes – current                   5,997           5,997 Prepaid expenses and other current assets  5,405           2,803 Total current assets                       151,173         143,521 Property and equipment – net               23,494          18,426 Goodwill                                   17,298          17,335 Intangible assets – net                    2,188           2,925 Deferred taxes – noncurrent                2,744           4,100 Other assets                               2,713           2,458 Total assets                               $199,610      $188,765                                                           Liabilities and stockholders' equity                       Current liabilities:                                       Accounts payable                           $6,082        $3,363 Accrued compensation                       7,797           8,014 Other accrued liabilities                  6,987           4,432 Capital lease obligations – current        901             896 Deferred revenue – current                 9,301           8,072 Total current liabilities                  31,068          24,777 Capital lease obligations – noncurrent     –               228 Deferred revenue – noncurrent              364             407 Contingent liability                       1,513           1,561 Deferred rent                              2,823           2,145 Deferred taxes – noncurrent                399             482 Other long-term liabilities                758             755 Total liabilities                          36,925          30,355 Commitments and contingencies                              Stockholders' equity:                                      Common stock                               5               5 Additional paid-in capital                 168,328         165,423 Accumulated deficit                        (5,696)        (7,212) Accumulated other comprehensive income     48              194 Total stockholders' equity                 162,685         158,410 Total liabilities and stockholders' equity $199,610      $188,765    Responsys, Inc. Consolidated Statements of Income (in thousands, except per share data)                                                  Three Months Ended March 31,                                                  2013           2012                                                                 Revenue:                                                         Subscription                                      $33,552      $27,205 Professional services                             14,949         10,849 Total revenue                                     48,501         38,054                                                                 Cost of revenue:                                                 Subscription                                      9,088          7,445 Professional services                             12,492         9,920 Total cost of revenue                             21,580         17,365 Gross profit                                      26,921         20,689                                                                 Operating expenses:                                              Research and development                          4,140          3,802 Sales and marketing                               13,833         9,061 General and administrative                        5,725          4,171 Total operating expenses                          23,698         17,034 Operating income                                  3,223          3,655                                                                 Other income (expense), net:                                     Interest income                                   28             27 Interest expense                                  (25)          (92) Other income (expense), net                       (336)         17 Total other expense, net                          $(333)       $(48) Income before income taxes                        2,890          3,607 Provision for income taxes                        (1,374)       (1,535) Equity in net income of unconsolidated affiliates $ –          $25 Net income                                        $1,516       $2,097                                                                 Net income per share:                                            Basic                                             $0.03        $0.04 Diluted                                           $0.03        $0.04                                                                 Shares used in computation of net income per                     share: Basic                                             49,053         47,809 Diluted                                           53,457         53,218    Responsys, Inc. Non-GAAP Financial Measures (in thousands, except per share data)                                                                                                                  Three Months Ended March 31,                                                  2013           2012 Gross profit:                                                    GAAP gross profit                                                Subscription                                      $24,464      $19,760 Professional services                             2,457          929 Total GAAP gross profit                           26,921         20,689 Add back:                                                        Stock-based compensation:                                        Subscription                                      284            149 Professional services                             393            205 Total non-GAAP gross profit                       $27,598      $21,043                                                                 Operating income:                                                GAAP operating income                             $3,223       $3,655 Add back:                                                        Amortization of intangible assets                 690            590 Stock-based compensation                          2,593          1,398 Total non-GAAP operating income                   $6,506       $5,643                                                                 Income before income taxes:                                      GAAP income before income taxes                   $2,890       $3,607 Add back:                                                        Amortization of intangible assets                 690            590 Stock-based compensation                          2,593          1,398 Total non-GAAP income before taxes                $6,173       $5,595                                                                 Provision for income taxes:                                      GAAP provision for income taxes                   $(1,374)     $(1,535) Tax effect from:                                                 Amortization of intangible assets                 (199)         (184) Stock-based compensation                          (861)         (423) Total non-GAAP provision for income taxes         $(2,434)     $(2,142)                                                                 Net income:                                                      GAAP net income                                   $1,516       $2,097 Add back:                                                        Amortization of intangible assets                 690            590 Stock-based compensation                          2,593          1,398 Income tax effect of non-GAAP items               (1,060)       (607) Total non-GAAP net income                         $3,739       $3,478                                                                 Non-GAAP net income per share ^1:                                Basic                                             $0.08        $0.07 Diluted                                           $0.07        $0.07                                                                 Shares used in computing non-GAAP net income per                 share: Basic shares:                                                    Weighted-average shares outstanding used in       49,053         47,809 computing non-GAAP basic net income per share                                                                 Diluted shares:                                                  Weighted-average shares outstanding used in       53,457         53,218 calculating non-GAAP diluted net income per share    Responsys, Inc. Stock-Based Compensation Expense (in thousands)                           Three Months Ended March 31,                           2013           2012 Cost of revenue            $677         $354 Research and development   214            238 Sales and marketing        848            362 General and administrative 854            444 Total                      $2,593       $1,398    Responsys, Inc. Consolidated Cash Flow (in thousands)                                                                                                                  Three Months Ended March 31,                                                  2013           2012                                                                 Cash flows from operating activities:                            Net income                                        $1,516       $2,097 Adjustments to reconcile net income to net cash                  provided by operating activities: Benefit (provision) for bad debts                 118            84 Depreciation and amortization                     3,081          2,457 Stock-based compensation                          2,593          1,398 Deferred taxes                                    1,316          602 Excess tax benefits from stock-based compensation 36             (639) Equity in net (income) loss of unconsolidated     -              (25) affiliates Other                                             5              92 Changes in operating assets and liabilities - net                of business acquired: Accounts receivable                               (5,563)       (460) Prepaid expenses and other current assets         (2,621)       (260) Other assets                                      (262)         (95) Accounts payable                                  1,877          451 Accrued compensation                              (173)         (1,596) Other accrued liabilities                         676            1,088 Deferred revenue                                  1,189          454 Other long-term liabilities                       635            45 Net cash provided by operating activities         4,423          5,693                                                                 Cash flows from investing activities:                            Purchases of property and equipment               (3,640)       (1,936) Addition of capitalized software development      (1,063)       - costs Purchase of short-term investments                -              (4,007) Redemption of short-term investments              -              8,661 Purchase of equity interest                       -              (1,772) Net cash provided by (used in) investing          (4,703)       946 activities                                                                 Cash flows from financing activities:                            Proceeds from issuance of common stock            290            332 Proceeds from early-exercised stock options       -              (4) Principal payments on capital lease obligations   (222)         (219) Excess tax benefits from stock-based compensation (36)          639 Net cash provided by (used in) financing          32             748 activities Effect of foreign exchange rate changes on cash   (146)         146 and cash equivalents Net increase in cash and cash equivalents         (394)         7,533 Cash and cash equivalents at beginning of period  106,656        73,456 Cash and cash equivalents at end of period        $106,262     $80,989                                                                  CONTACT: Carla Cooper          Responsys, Inc.          650.452.1484          ccooper@responsys.com  Responsys, Inc. logo