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Exa Reports First Quarter Fiscal 2014 Financial Results



Exa Reports First Quarter Fiscal 2014 Financial Results

  Revenue at High End of Guidance Range Increased 11%, or 14% on a Constant
                       Currency Basis, From a Year Ago

                     Profitability Metrics Above Guidance

BURLINGTON, Mass., June 4, 2013 (GLOBE NEWSWIRE) -- Exa^® Corporation
(Nasdaq:EXA), a global innovator of fluids simulation solutions for product
engineering, today announced financial results for the first quarter of fiscal
2014, which ended April 30, 2013.

"Revenue in the first quarter was at the high end of our guidance, increasing
11%, or 14% on a constant currency basis, from a year ago," said Stephen
Remondi, President and Chief Executive Officer of Exa. "With the return of
customer spending materializing, we are beginning to see the results of
investments that we made over the last several quarters in our field
organization. We are particularly encouraged by the strong growth of 40% we
saw in project revenue, which we regard as a leading indicator to future
licensing activity. "

"While certain vertical markets and geographies continue to face economic
challenges, overall we have seen an improvement in product development
activity among our customer base. With simulation solutions that can replace
the need for costly prototypes, we remain confident in our ability to see
sequential improvements in year-over-year top line growth as we progress
through the remainder of fiscal 2014."

First Quarter Fiscal 2014 Financial Highlights

Revenue

  * Total revenue for the first quarter of fiscal 2014, which ended April 30,
    2013, was $12.5 million, compared to $11.3 million in the comparable
    period in fiscal 2013. Revenue in the first quarter grew by 11%, or 14% on
    a constant currency basis, compared with the corresponding period in
    fiscal 2013.
  * License revenue was $10.7 million for the first quarter of fiscal 2014,
    compared to $10.0 million in the comparable period in fiscal 2013.
  * Project revenue was $1.8 million for the first quarter of fiscal 2014,
    compared to $1.3 million in the comparable period in fiscal 2013.

Profitability

  * Each profitability metric for which the company provides guidance was
    better than expectations. Decreases in year-over-year profitability
    comparisons were as expected, and primarily due to anticipated investments
    in long-term growth and public company costs.
  * GAAP loss from operations was ($0.5) million in the first quarter of
    fiscal 2014, compared to GAAP income from operations of $0.4 million in
    the comparable period in fiscal 2013.
  * Non-GAAP loss from operations was ($0.1) million in the first quarter of
    fiscal 2014, compared to non-GAAP income from operations of $0.7 million
    in the comparable period in fiscal 2013.
  * Adjusted EBITDA was $0.3 million in the first quarter of fiscal 2014,
    compared to $1.0 million in the comparable period in fiscal 2013.
  * GAAP net loss was ($0.5) million in the first quarter of fiscal 2014,
    compared to GAAP net income of $0.1 million for the comparable period in
    fiscal 2013. GAAP net loss per share was ($0.04), based on 13.3 million
    weighted average shares outstanding, compared to GAAP net income per share
    of $0.01 for the comparable period in fiscal 2013, based on 10.5 million
    diluted weighted average shares outstanding.
  * Non-GAAP net loss was ($0.3) million, or ($0.02) per diluted share in the
    first quarter of fiscal 2014, compared to net income of $0.3 million, or
    $0.03 per diluted share, in the first quarter of fiscal 2013.

Balance Sheet

  * The company had $47.9 million in cash and cash equivalents at April 30,
    2013, compared to $30.7 million at January 31, 2013. This seasonal first
    quarter increase is consistent with typical patterns of strong cash
    collections early in the year followed by the recognition of deferred
    revenue through the remainder of the year.
  * Subsequent to the end of the quarter, the company repaid all outstanding
    obligations under its term loan facility.

Business Outlook

Based on information available as of June 4, 2013, Exa is issuing guidance for
the second quarter and full year fiscal 2014 as indicated below. This guidance
includes a one-time other expense charge of $0.8 million in the second quarter
associated with the repayment of our term loan facility. Despite net costs
associated with our term loan repayment and an adverse foreign exchange impact
from fluctuations in the Japanese Yen, guidance for the full fiscal year is
unchanged from previously provided expectations.

Second Quarter Fiscal 2014:

  * Total revenue is expected to be in the range of $12.5 million to $13.5
    million.
  * GAAP net loss is expected to be in the range of ($0.9) million to ($0.6)
    million.
  * Non-GAAP net loss is expected to be in the range of ($0.7) million to
    ($0.4) million.
  * Adjusted EBITDA is expected to be in the range of $0.2 million to $0.9
    million.
  * Basic share count for the second quarter is estimated to be 13.3 million
    shares.
  * Diluted share count for the second quarter is estimated to be 14.6 million
    shares.

Full Year Fiscal 2014:

  * Total revenue is expected to be in the range of $55.0 million to $58.0
    million, consistent with prior guidance.
  * GAAP net (loss)/income is expected to be in the range of a loss of ($0.3)
    million to income of $0.5 million.
  * Non-GAAP net income is expected to be in the range of $0.7 million to $1.5
    million.
  * Adjusted EBITDA is expected to be in the range of $5.0 million to $6.5
    million.
  * Basic share count for the full year is estimated to be 13.5 million
    shares.
  * Diluted share count for the full year is estimated to be 14.8 million
    shares.

The above guidance assumes an exchange rate of 1.3 US dollars per Euro and
100.0 Japanese yen per US dollar for the balance of fiscal year 2014.

An explanation and reconciliation of historical and forward-looking non-GAAP
measures presented above, including revenue on a constant currency basis,
adjusted EBITDA, non-GAAP income (loss) from operations and non-GAAP net
income (loss), to the comparable GAAP measures is provided below and in the
attachments to this press release.

Conference Call Information

What:      Exa's first quarter fiscal 2014 financial results conference call
When:      Tuesday, June 4, 2013
Time:      5:00 p.m. ET
Webcast:   http://investor.exa.com (live and replay)
Live Call: (877) 878-2664, Domestic
           (970) 315-0423, International
Replay:    (855) 859-2056, Passcode 72306495, Domestic
           (404) 537-3406, Passcode 72306495, International

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are
presented on a GAAP basis, we disclose revenue on a constant currency basis,
non-GAAP income from operations, non-GAAP net income, non-GAAP net income per
diluted share and Adjusted EBITDA. These non-GAAP measures are not in
accordance with, or an alternative for, amounts determined in accordance with
generally accepted accounting principles in the United States. The GAAP
measure most comparable to revenue on a constant currency basis is GAAP
revenue. The GAAP measure most comparable to non-GAAP income from operations
is GAAP income from operations. The GAAP measure most comparable to Non-GAAP
net income and Adjusted EBITDA is GAAP net income. The GAAP measure most
comparable to Non-GAAP net income per diluted share is GAAP net income per
diluted share. A reconciliation of these non-GAAP financial measures to the
corresponding GAAP measure is included below.

We define revenue on a constant currency basis as GAAP revenue, adjusted to
reverse the impact of changes in the average exchange rates of currencies in
which our international operations generated revenue and incurred expenses.

We define Non-GAAP net income as net income, excluding the after tax impact of
stock-based compensation expense and the amortization of acquired intangibles.
We define EBITDA as net income, excluding depreciation and amortization,
interest expense, other income (expense), foreign exchange gain (loss) and
provision for income taxes, and we define Adjusted EBITDA as EBITDA, excluding
stock-based compensation expense.

Our management uses these non-GAAP measures when evaluating our operating
performance and for internal planning and forecasting purposes. We believe
that these measures help indicate underlying trends in our business, are
important in comparing current results with prior period results, and are
useful to investors and financial analysts in assessing our operating
performance. For example, our international operations generate revenue and
incur expenses that are denominated in foreign currencies. These amounts could
be materially affected by currency fluctuations. Our principal exposures are
to fluctuations in exchange rates for the United States dollar versus the
Euro, British pound, Japanese yen, Chinese yuan and Korean won. Changes in
currency exchange rates that are beyond our control can significantly affect
our consolidated results of operations. We believe that disclosure of our
revenue on a constant currency basis is useful as an indicator of demand for
our solutions independent of the influence of currency exchange fluctuations.
Management considers Adjusted EBITDA to be an important indicator of our
operational strength and the performance of our business and a good measure of
our historical operating trends. The non-GAAP financial information presented
here should be considered in conjunction with, and not as a substitute for, or
superior to, the financial information presented in accordance with GAAP and,
in particular, should not be considered a measure of our liquidity. There are
significant limitations associated with the use of non-GAAP financial
measures. Further, these measures may differ from the non-GAAP information,
even where similarly titled, used by other companies and therefore should not
be used to compare our performance to that of other companies. Investors
should carefully consider the attached reconciliation of these non-GAAP
financial measures to the comparable GAAP financial measures.

About Exa Corporation

Exa Corporation develops, sells and supports simulation software and services
to enhance product performance, reduce product development costs and improve
the efficiency of design and engineering processes. Exa's simulation solutions
enable their customers to gain crucial insight into design performance early
in the design cycle, thus reducing the likelihood of expensive redesigns and
late-stage engineering changes. As a result, Exa's customers realize
significant cost savings and fundamental improvements in their engineering
development process. Our products include, PowerFLOW^®, PowerDELTA^®,
PowerCLAY^®, PowerVIZ^®, PowerSPECTRUM^®, PowerACOUSTICS^®, PowerINSIGHT^®,
PowerCASE™, PowerCOOL^® and PowerTHERM^® along with professional engineering
consulting services. A partial customer list includes: AGCO, BMW, Ford,
Hyundai, Kenworth, MAN, Nissan, Peterbilt, Renault, Scania, Toyota,
Volkswagen, and Volvo Trucks.

Safe Harbor Statement

This press release, including the section entitled "Business Outlook,"
contains forward-looking statements describing our expectations concerning
future events and our future financial performance. These statements are only
predictions and may be inaccurate. Actual events or results may differ
materially. In evaluating these statements, you should specifically consider
various factors, including the risks outlined under "Risk Factors" in our
Annual Report on Form 10-K for the year ended January 31, 2013, and in our
other SEC filings. These factors may cause our actual results to differ
materially from those described in our forward-looking statements. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, our future results, levels of activity, performance or
achievements may differ from our expectations. Other than as required by law,
we do not undertake a responsibility to update any of the forward-looking
statements after the date of this press release, even though our situation may
change in the future.

 
EXA CORPORATION
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
                                                                    
                                                         April 30, January 31,
                                                         2013      2013
ASSETS                                                              
Current assets:                                                     
Cash and cash equivalents                                 $ 47,938  $ 30,716
Accounts receivable                                       4,310     27,840
Deferred tax assets                                       1,204     970
Prepaid expenses and other current assets                 1,928     1,938
Total current assets                                      55,380    61,464
Property and equipment, net                               5,900     6,176
Intangible assets, net                                    3,008     3,096
Deferred tax assets                                       12,527    12,274
Other assets                                              1,096     1,060
Total assets                                              $ 77,911  $ 84,070
                                                                    
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current liabilities:                                                
Accounts payable                                          $ 762     $ 1,743
Accrued expenses                                          4,829     7,284
Current portion of long-term debt, net of discount (1)    2,039     1,747
Current portion of deferred revenue                       24,499    26,013
Current maturities of capital lease obligations           2,091     2,051
Total current liabilities                                 34,220    38,838
Long-term debt, net of current portion and discount (1)   4,498     5,024
Deferred revenue                                          12        128
Capital lease obligations                                 2,301     2,818
Other long-term liabilities                               1,042     1,009
Deferred rent                                             1,336     1,482
Total liabilities                                         43,409    49,299
                                                                    
Commitments and contingencies                                       
                                                                    
Stockholders' equity :                                              
Preferred stock, $0.001 par value; 5,000,000 shares
authorized;                                               --        -- 
no shares issued and outstanding
Common stock, $0.001 par value; 195,000,000 authorized;
13,345,596 and 13,319,715 shares issued, respectively;    13        13
13,313,094 and 13,287,213 shares outstanding,
respectively
Additional paid-in capital                                84,060    83,786
Accumulated deficit                                       (49,553)  (49,012)
Treasury stock (32,502 common shares, at cost)           0         0
Accumulated other comprehensive loss                      (18)      (16)
Total stockholders' equity                                34,502    34,771
Total liabilities and stockholders' equity                $ 77,911  $ 84,070
                                                                    
(1) Includes amounts due to a related party, as follows:            
                                                         April 30, January 31,
                                                         2013      2013
Current portion of long-term debt                         $ 282     $ 274
Long-term debt, net of current portion                    $ 425     $ 499

 
 
EXA CORPORATION
Consolidated Statements of Operations and Statements of Comprehensive (Loss)
Income
(Unaudited)
(in thousands, except share and per share data)
                                                                  
                                                 Three Months Ended April 30,
                                                 2013            2012
                                                                  
Revenue:                                                          
License revenue                                   $ 10,692        $ 10,013
Project revenue                                   1,796           1,281
Total revenues                                    12,488          11,294
Operating expenses:                                               
Cost of revenues                                  3,671           3,223
Sales and marketing                               2,117           1,600
Research and development                          4,386           4,140
General and administrative                        2,771           1,958
Total operating expenses                          12,945          10,921
(Loss) income from operations                     (457)           373
Other expense, net:                                               
Foreign exchange gain                             37              -- 
Interest expense                                  (381)           (414)
Interest income                                   4               2
Other income, net                                 2               66
Total other expense, net                          (338)           (346)
(Loss) income before income taxes                 (795)           27
Benefit for income taxes                          254             35
Net (loss) income                                 $ (541)         $ 62
                                                                  
Net (loss) income per share:                                      
Basic                                             $ (0.04)        $ 0.12
Diluted                                           $ (0.04)        $ 0.01
Weighted average shares outstanding used in                       
computing net (loss) income per share:
Basic                                             13,296,098      497,124
Diluted                                           13,296,098      10,455,405
                                                                  
Comprehensive (loss) income:                                      
Net (loss) income                                 $ (541)         $ 62
Foreign currency translation adjustments          (2)             28
Comprehensive (loss) income                       $ (543)         $ 90

 
 
EXA CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                                                  
                                                  Three Months Ended April 30,
                                                  2013           2012
Cash flows provided by operating activities:                      
Net (loss) income                                  $ (541)        $ 62
Adjustments to reconcile net (loss) income to net  
cash provided by operating activities:
Depreciation and amortization                      496            409
Stock-based compensation expense                   245            241
Deferred rent expense                              (76)           (107)
Non-cash interest                                  122            124
Mark-to-market adjustment of preferred stock       --             (63)
warrant liability
Deferred income taxes                              (487)          55
Net change in operating assets and liabilities:                   
Accounts receivable                                23,706         14,905
Prepaid expenses and other current assets          (15)           20
Other assets                                       (36)           (460)
Accounts payable                                   (973)          (433)
Accrued expenses                                   (2,322)        (2,673)
Other liabilities                                  33             -- 
Deferred revenue                                   (1,618)        (3,665)
Net cash provided by operating activities          18,534         8,415
                                                                  
Cash flows used in investing activities:                          
Purchases of property and equipment                (336)          (39)
Net cash used in investing activities              (336)          (39)
                                                                  
Cash flows used in financing activities:                          
Net decrease in line of credit                     --             (7,000)
Proceeds from borrowings under long-term debt      --             3,500
Proceeds from stock option and warrant exercises   29             7
Payments of long-term debt                         (331)          (200)
Payments of capital lease obligations              (520)          (147)
Net cash used in financing activities              (822)          (3,840)
Effect of exchange rate changes on cash            (154)          (50)
Net increase in cash and cash equivalents          17,222         4,486
Cash and cash equivalents, beginning of period     30,716         11,468
Cash and cash equivalents, end of period           $ 47,938       $ 15,954
                                                                  
Supplemental cash flow disclosures:                               
Cash paid for interest                             $ 264         $ 233
Cash paid for income taxes                         $ 121          $ 551
Supplemental disclosure of non-cash investing and                 
financing activities:
Acquisition of equipment through capital leases    $ 43           $ 56

 
 
EXA CORPORATION
Reconciliation of historical Non-GAAP to GAAP measures
(Unaudited)
(in thousands, except per share data)
                                                              
Adjusted EBITDA:                                              
                                         Three Months Ended
                                         April 30,
                                         2013                2012
Net (loss) income                         $ (541)             $ 62
Add back:                                                     
Depreciation and amortization             496                 409
Interest expense, net                     377                 412
Other income, net                         (2)                 (66)
Foreign exchange gain                     (37)                -- 
Benefit for income taxes                  (254)               (35)
EBITDA                                    39                  782
Stock-based compensation expense          245                 241
Adjusted EBITDA                           $ 284               $ 1,023
                                                              
Non-GAAP operating (loss) income:                             
                                         Three Months Ended
                                         April 30,
                                         2013                2012
Operating (loss) income                   $ (457)             $ 373
Add back:                                                     
Stock-based compensation expense          245                 241
Amortization of acquired intangible       88                  97
assets
Non-GAAP operating (loss) income          $ (124)             $ 711
                                                              
Non-GAAP net (loss) income:                                   
                                         Three Months Ended
                                         April 30,
                                         2013                2012
Net (loss) income                         $ (541)             $ 62
Add back:                                                     
Stock-based compensation expense          245                 241
Amortization of acquired intangible       88                  97
assets
Income tax effect (1)                     (116)               (117)
Non-GAAP net (loss) income                $ (324)             $ 283
                                                              
Non-GAAP net (loss) income, per diluted                       
share:
                                         Three Months Ended
                                         April 30,
                                         2013                2012
Net (loss) income                         $ (0.04)            $ 0.01
Add back:                                                     
Stock-based compensation expense          0.02                0.02
Amortization of acquired intangible       0.01                0.01
assets
Income tax effect (1)                     (0.01)              (0.01)
Non-GAAP net (loss) income, per diluted   $ (0.02)            $ 0.03
share (2)(3):
                                                              
                                                              
(1) The tax effect of non-cash stock based compensation expense and non-cash
amortization of acquired intangibles is estimated using a blended rate
equivalent to our annual estimated United States federal tax rate and our
state tax rate, exclusive of our net federal benefit. This rate is based on
our estimated annual GAAP income tax rate forecast. Our estimated tax rate on
non-GAAP income is determined annually and may be adjusted during the year to
take into account events or trends that we believe materially impact the
estimated annual rate including, but not limited to, significant changes
resulting from tax legislation, revenues and expenses and other significant
events. Due to the differences in the tax treatment of items excluded from
non-GAAP earnings, as well as the methodology applied to our estimated annual
tax rates as described above, our estimated tax rate on non-GAAP income may
differ from our GAAP tax rate and from our actual tax liabilities.
(2) Share amounts utilized on a fully diluted basis were approximately 13.3
million and 10.5 million for the three months ended April 30, 2013 and 2012,
respectively.
(3) Due to rounding, totals may not equal the sum of line items in the table
above.

 
 
EXA CORPORATION
Reconciliation of forward looking Non-GAAP to GAAP measures
                                                            
EBITDA and Adjusted EBITDA:                                 
                                                            
(in millions)                      Three Months Ended      Year Ended
                                   July 31, 2013           January 31, 2014
Net (loss) income                  $ (0.9) - (0.6)         $ (0.3) - 0.5
Depreciation and amortization       0.5                     3.0
Interest expense, net               0.2                     0.7
Other expense, net                  0.8                     0.8
(Benefit) provision for income     (0.7) - (0.3)           (0.3) - 0.4
taxes
EBITDA                             (0.1) - 0.6             3.9 - 5.4
Stock-based compensation expense   0.3                     1.1
Adjusted EBITDA                    $ 0.2 - 0.9             $ 5.0 - 6.5
                                                            
                                                            
Non-GAAP net (loss) income:                                 
                                                            
(in millions)                      Three Months Ended      Year Ended
                                   July 31, 2013           January 31, 2014
Net (loss) income                  $ (0.9) - (0.6)         $ (0.3) - 0.5
Add back:                                                   
Stock-based compensation expense   0.3                     1.1
Non-cash amortization of acquired  0.1                     0.4
intangibles
Income tax effect (1)              (0.2)                   (0.5)
Non-GAAP net (loss) income         $ (0.7) - (0.4)         $ 0.7 - 1.5
                                                            
(1)  Non-GAAP financial information for the quarter is adjusted using a
blended tax rate equivalent to our annual estimated United States federal tax
rate and our state tax rate, exclusive of our net federal benefit. This rate
is based on our estimated annual GAAP income tax rate forecast. Our
estimated tax rate on non-GAAP income is determined annually and may be
adjusted during the year to take into account events or trends that we believe
materially impact the estimated annual rate including, but not limited to,
significant changes resulting from tax legislation, material changes in the
geographic mix of revenues and expenses and other significant events. Due to
the differences in the tax treatment of items excluded from non-GAAP earnings,
as well as the methodology applied to our estimated annual tax rates as
described above, our estimated tax rate on non-GAAP income may differ from our
GAAP tax rate and from our actual tax liabilities. 

CONTACT: Media Contact:
         Michelle Murray-Ross, Exa Corporation
         +1 (781) 564-0251
         michelle@exa.com
        
         Investor Relations Contact:
         Garo Toomajanian, ICR
         +1 (781) 564-0337
         investor@exa.com

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