Daegis Inc. Reports Fiscal 2013 Fourth Quarter and Full Year Financial Results

  Daegis Inc. Reports Fiscal 2013 Fourth Quarter and Full Year Financial
  Results

Business Wire

ROSEVILLE, Calif. -- June 25, 2013

Daegis (NASDAQ: DAEG), an eDiscovery and information management company, today
announced financial results for its fiscal 2013 fourth quarter and full-year
ended April 30, 2013.

Fourth Quarter Fiscal 2013 Financial and Business Highlights

  *Fourth quarter total revenue of $9.8 million, a decrease of 0.4%
    year-over-year
  *Fourth quarter GAAP net income of $188,000 or $0.01 per share, compared to
    a GAAP net loss of $15.7 million or $1.08 loss per share last year
  *Fourth quarter Adjusted EBITDA of $1.5 million, compared to $331,000 last
    year ^(1)
  *Non-GAAP net income of $610,000 or $0.04 per share, compared to a Non-GAAP
    net loss of $403,000, or $0.03 loss per share last year ^(1)
  *Company announced new e-discovery partner program for resellers and OEM
    partners
  *Company launched new trade-up program to migrate NearPoint archive
    customers to the AXS-One archive
  *Gupta Technologies signed an alliance partnership with Fujitsu for the
    Composer migration software offerings

Full-Year Fiscal 2013 Financial and Business Highlights

  *Full-year total revenue of $40.2 million, a decrease of 7.5% from the
    prior year
  *Full- year GAAP net income of $532,000, compared to a loss of $16.7
    million last year
  *Full-year Adjusted EBITDA of $5.6 million, compared to $6.1 million last
    year ^(1)
  *Full-year Non-GAAP net income of $2.3 million, a decrease compared to $2.6
    million in the prior year ^(1)
  *Cash and cash equivalents at April 30, 2013 totaled $5.5 million, an
    increase of $700,000 compared to the April 30, 2012 ending cash balance
  *Total outstanding debt was $17.7 million at April 30, 2013, a decrease of
    $3.6 million from April 30, 2012
  *Daegis eDiscovery, AXS-One and Gupta Technologies businesses each released
    major new versions of software

“Our AXS-One Archive business had a strong fourth quarter and year as a result
of expansion with current customers as well as signing net new business. Our
Gupta and Composer Technologies businesses had a solid year with new product
releases and continued strong customer satisfaction. In the eDiscovery
business, we continued to execute on our SaaS strategy and gained traction
with our managed document review service. Additionally, we’re beginning to see
the tangible results of aligning our cost structure with our current and
expected revenue plans,” said Tim Bacci, CEO of Daegis. “While we’re not where
we’d like to be from a revenue standpoint, we have the foundational elements
in place and will be executing on our e-discovery and archiving integration
strategy over the next several quarters to take advantage of the growth
opportunities ahead of us.”

Mr. Bacci added, “As we evaluate the business and optimize our cost structure
to accelerate on strategies where we see the most opportunity, we have decided
to open an office in Dallas, Texas and relocate the Company’s headquarters
there. Texas is a strong territory for our businesses and we view this move as
an opportunity to increase the Company’s operational efficiencies and access
an additional talent pool, as needed.”

Fourth Quarter Fiscal 2013 Financial Summary

$ In Millions, except per            Q4             Q4               % or $
share and % data                  FY2013      FY2012       
                                                                     Change
Total Revenue                     $ 9.8      $ 9.8         (0.4 %)
Total eDiscovery Revenue          $ 4.1      $ 4.3         (4.5 %)
Total Database, Archive, and      $ 5.7      $ 5.5         2.7  %
Migration Revenue
GAAP Net Income (Loss)            $ 0.2       ($15.7 )    $ 15.9 
GAAP Net Income (Loss) Per        $ 0.01      ($1.08 )    $ 1.09 
Share - Diluted
Adjusted EBITDA^(1)               $ 1.5      $ 0.3        $ 1.2  
Adjusted EBITDA Margin^(1)         16   %     3      %     13   %
Non-GAAP Net Income (Loss) ^      $ 0.6       ($0.4  )    $ 1.0  
(1)
Non-GAAP Net Income (Loss) Per    $ 0.04      ($0.03 )    $ 0.07 
Share - Diluted^(1)
                                                           

Full Year Fiscal 2013 Financial Results Summary

                                                                   
$ In Millions, except per
share and % data                FY2013      FY2012        % or $

                                                                   Change
Total Revenue                   $ 40.2     $ 43.5        (7.5   %)
GAAP Net Income (Loss)          $ 0.5       ($16.7 )    $ 17.2   
GAAP Net Income (Loss) Per      $ 0.01      ($1.16 )    $ 1.17   
Share - Diluted
Adjusted EBITDA^(1)             $ 5.6      $ 6.1         (8.9   %)
Adjusted EBITDA Margin^(1)       14   %     14     %     0      %
Non-GAAP Net Income^(1)         $ 2.3      $ 2.6         (10.8  %)
Non-GAAP Net Income Per         $ 0.14     $ 0.16        ($0.02 )
Share – Diluted^(1)
Cash and cash equivalents       $ 5.5      $ 4.8        $ 0.7    
^(2)
Long Term Debt ^(2)             $ 17.7     $ 21.3        ($3.6  )

^(1) See reconciliation table below regarding the presentation of Adjusted
EBITDA and Non-GAAP net income.

^(2) Results as of April 30, 2013 and 2012.

Investor Conference Call

Management will host a conference call today, June 25, 2013, at 2:00 p.m. PT
(5:00 p.m. ET) to review the fourth quarter and full year fiscal 2013
financial results. The call can be accessed by dialing (877) 941-1427 or (480)
629-9664 for international callers.Additionally, the conference call will be
broadcast live on Daegis’ website at www.daegisinc.com. A replay of the call
will be available through July 5, 2013 by dialing (800) 406-7325 or (303)
590-3030 for international callers and using the following passcode: 4623464#.

About Daegis Inc.

Daegis Inc. (NASDAQ: DAEG) is an eDiscovery and information management
company, delivering eDiscovery, archiving software, data management tools, and
migration solutions. The Daegis eDiscovery division delivers market-leading
eDiscovery software throughDaegis Edge, an end-to-end platform to manage the
entire litigation lifecycle,and Acumen, our revolutionary predictive coding
software.OurAXS-Onearchiving software helps corporations to preserve and
manage electronic information for legal discovery and regulatory compliance.
OurGupta TechnologiesandComposer Technologiesbusinesses serve customers
around the globe with development tools, databases and application migration
software. Visit our websites to learn more.

Use of Non-GAAP Financial Information

To supplement the Company's unaudited condensed consolidated financial
statements presented in accordance with GAAP, Daegis uses certain Non-GAAP
measures of financial performance. The presentation of these Non-GAAP
financial measures is not intended to be considered in isolation from, as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP, and may be different from Non-GAAP
financial measures used by other companies. In addition, these Non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with the Company's results of operations as determined in
accordance with GAAP. For more information on these Non-GAAP financial
measures including how they are calculated, please see the tables in this
release captioned “Reconciliation of GAAP to Non-GAAP Net Income” and
“Reconciliation of GAAP Operating Income to Adjusted EBITDA” which includes a
reconciliation of the GAAP results to Non-GAAP and Adjusted EBITDA results.

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of the Company. We wish to caution you that these statements
involve risks and uncertainties and actual events or results may differ
materially. When the words “believes,” “expects,” “plans,” “projects,”
“estimates” and similar expressions are used, they identify forward-looking
statements. These forward-looking statements are based on management’s current
beliefs and assumptions and information currently available to management and
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements. Examples of
forward-looking statements in the press release include the statements made by
Mr. Bacci. Among the important factors which could cause actual results to
differ materially from those in the forward-looking statements are general
market and economic conditions, our ability to execute our business strategy
and integrate acquired businesses, the effectiveness of our sales team and
approach, our ability to target, analyze and forecast the revenue to be
derived from a client and the costs associated with providing services to that
client, the date during the course of a fiscal year that a new client is
acquired, the length of the integration cycle for new clients and the timing
of revenues and costs associated therewith, our client concentration given
that the Company is currently dependent on a few large client relationships,
potential competition in the marketplace, the ability to retain and attract
employees, market acceptance of our service programs and pricing options, our
ability to maintain our existing technology platform and to deploy new
technology, our ability to sign new clients and control expenses, the
possibility of the discontinuation of some client relationships, the financial
condition of our clients' business and other factors detailed in the Company's
filings with the Securities and Exchange Commission.

                                                            
DAEGIS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                                   
                                                 April 30,         April 30,
                                                  2013            2012    
ASSETS
Current assets:
Cash and cash equivalents                        $ 5,459           $ 4,752
Accounts receivable, net                           10,594            10,968
Prepaid expenses and other current assets          1,203             1,805
Assets held for sale                              926             —       
Total current assets                               18,182            17,525
                                                                   
Property and equipment, net                        1,934             2,827
Goodwill                                           11,706            11,706
Intangibles, net                                   7,152             8,690
Other assets, net                                 733             1,121   
Total assets                                     $ 39,707         $ 41,869  
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                   
Current liabilities:
Accounts payable                                 $ 243             $ 450
Current portion of long term debt                  2,519             2,945
Accrued compensation and related expenses          2,697             2,465
Common stock warrant liability                     204               569
Other accrued liabilities                          863               819
Deferred revenue                                   8,449             8,412
Liabilities held for sale                         526             —       
Total current liabilities                          15,501            15,660
                                                                   
Long term debt, net of current portion             15,170            18,306
Deferred tax liabilities                           923               734
Other long term liabilities                       1,429           1,148   
Total liabilities                                 33,023          35,848  
                                                                   
Commitments and contingencies                      —                 —
                                                                   
Stockholders’ equity:
Preferred stock                                    2                 2
Common stock                                       15                15
Additional paid-in capital                         100,053           99,860
Accumulated other comprehensive income             280               341
Accumulated deficit                               (93,666 )        (94,197 )
Total stockholders’ equity                        6,684           6,021   
Total liabilities and stockholders’ equity       $ 39,707         $ 41,869  

                                                            
DAEGIS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                       
                       Three Months Ended               Twelve Months Ended
                       April 30,                        April 30,
                        2013         2012            2013         2012    
                                                                       
Revenues:
eDiscovery             $ 4,074        $ 4,267           $ 16,281       $ 19,981
Database,
archive, and            5,696        5,544           23,912       23,488  
migration
Total revenues          9,770        9,811           40,193       43,469  
                                                                       
Operating
expenses:
Direct costs of
eDiscovery               1,318          2,279             7,374          9,402
revenue
Direct costs of
database,
archive, and             1,483          1,443             5,432          5,398
migration
revenue
Product                  2,067          1,992             7,478          7,661
development
Selling, general
and                      4,140          4,756             18,594         19,020
administrative
Sale of
intangible trade         —              —                 (1,000 )       —
name
Impairment of
goodwill and            —            15,047          —            15,047  
intangible
assets
Total operating         9,008        25,517          37,878       56,528  
expenses
Income (loss)           762          (15,706 )        2,315        (13,059 )
from operations
                                                                       
Other income
(expense):
Loss on
extinguishment           —              —                 —              (2,166  )
of debt
Gain from change
in fair value of
common stock             62             418               365            1,054
warrant
liability
Interest expense         (383   )       (438    )         (1,632 )       (2,270  )
Other, net              (145   )      (2      )        (234   )      (68     )
Total other             (466   )      (22     )        (1,501 )      (3,450  )
income (expense)
                                                                       
Income (loss)
before income            296            (15,728 )         814            (16,509 )
taxes
Provision for           108          4               282          153     
income taxes
Net income             $ 188         $ (15,732 )       $ 532         $ (16,662 )
(loss)
                                                                       
Income (loss)
per share:
Basic                  $ 0.01         $ (1.08   )       $ 0.01         $ (1.16   )
Diluted                $ 0.01         $ (1.08   )       $ 0.01         $ (1.16   )
                                                                       
Weighted-average
shares used in
computing income
(loss) per
share:
Basic                    14,718         14,718            14,718         14,672
Diluted                  14,736         14,718            14,728         14,672

                                                        
DAEGIS INC.
RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA
(In thousands, except per share data)
                                                                   
                         Three Months Ended            Twelve Months Ended
                         April 30,                     April 30,
                          2013       2012            2013       2012    
                                                                   
                                                                   
GAAP income (loss)       $ 762       $ (15,706 )       $ 2,315     $ (13,059 )
from operations
                                                                   
Amortization of            384         483               1,538       2,115
intangible assets
Stock based
compensation               100         217               593         921
expenses
Depreciation               281         290               1,123       1,086
Impairment of
goodwill and              —          15,047          —          15,047  
intangible assets
Total adjustments
to GAAP income            765        16,037          3,254      19,169  
(loss) from
operations
                                                                   
Adjusted EBITDA          $ 1,527     $ 331            $ 5,569     $ 6,110   

                                                            
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
                                                                         
GAAP net             $ 188            $ (15,732 )         $ 532          $ (16,662 )
income (loss)
                                                                         
Amortization
of intangible
assets and             384              483                 1,538          2,158
warrant
discount
Stock based
compensation           100              217                 593            921
expenses
Gain from
change in fair
value of               (62    )         (418    )           (365   )       (1,054  )
common stock
warrant
liability
Loss on
extinguishment         —                —                   —              2,166
of debt
Impairment of
goodwill and          —              15,047            —            15,047  
intangible
assets
Total
adjustments to        422            15,329            1,766        19,238  
GAAP net
income (loss)
                                                                         
Non-GAAP net         $ 610           $ (403    )         $ 2,298       $ 2,576   
income (loss)
                                                                         
Non-GAAP
diluted income       $ 0.04          $ (0.03   )         $ 0.14        $ 0.16    
(loss) per
share
                                                                         
Weighted
average shares
used in
computing
income (loss)
per share:
Dilutive               16,403           14,718              16,395         16,131

Contact:

Daegis Investor Relations
Deb Thornton, 916-218-4779
dthornton@daegis.com
 
Press spacebar to pause and continue. Press esc to stop.