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

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