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Responsys Announces Second Quarter 2013 Results



Responsys Announces Second Quarter 2013 Results

  o Achieves 25% growth in revenue to $49.5 million for the second quarter of
    2013
  o Delivers non-GAAP diluted EPS of $0.02 in the second quarter of 2013
  o Raises 2013 annual revenue guidance from $190-$193 million to $195-$198
    million
  o Establishes third quarter 2013 revenue guidance of $47.0-$48.5 million
  o Gartner recognizes Responsys as a visionary leader

SAN BRUNO, Calif., Aug. 5, 2013 (GLOBE NEWSWIRE) -- Responsys, Inc.
(Nasdaq:MKTG), a marketing cloud software and services leader, today announced
results for the second quarter ended June 30, 2013.

For the second quarter of 2013, total revenue increased 25% to $49.5 million,
up from $39.5 million in the second quarter of 2012.

Subscription revenue for the second quarter of 2013 was $34.3 million, up 25%
compared with $27.5 million in the second quarter of 2012. Professional
services revenue was $15.2 million, up 25% compared with $12.1 million in the
second quarter of 2012.

GAAP net loss for the second quarter of 2013 was $1.6 million compared with
break-even in the second quarter of 2012. GAAP net loss per share for the
second quarter of 2013 was $0.03 compared with $0.00 in the second quarter of
2012.

For the six months ended June 30, 2013, revenue increased 26.2% to $98.0
million, up from $77.6 million in the six months ended June 30, 2012.

Subscription revenue for the first half of 2013 was $67.9 million up 24.1% as
compared to $54.7 million in the first half of 2012. Professional services
revenue was $30.1 million, up 31.3% as compared to $22.9 million in the first
half of 2012.

GAAP net loss for the first half of 2013 was $0.1 million. This compares to
GAAP net income of $2.1 million for the first half of 2012. Net income per
share in the first half of 2013 was $0.00 per share, as compared to net income
per share of $0.04 in the first half of 2012.

In addition to using GAAP results in evaluating Responsys' business,
management believes it is useful to also measure results using non-GAAP net
income, which is net income (loss) excluding stock-based compensation expense,
amortization of acquired intangible assets, and related income tax effects, as
applicable.

Non-GAAP net income for the second quarter of 2013 was $1.1 million, or $0.02
per diluted share as compared with $1.4 million, or $0.03 per diluted share,
for the second quarter of 2012.

Non-GAAP net income for the six months ended June 30, 2013 and 2012 was $4.9
million, or $0.09 per diluted share.

"Responsys' strong second quarter performance is further recognition that the
Company is a leader in orchestrating individualized experiences across digital
channels, and at massive scale," said CEO Dan Springer. "Our continued
investment in product innovation has allowed us to stay at the cutting edge of
the industry, maintain a clear, competitive advantage for our customers, and
increase the rate of return for their individualized digital marketing
programs. We appreciate Gartner recognizing Responsys as a visionary leader in
its 2013 Magic Quadrant for CRM Multichannel Campaign Management.

"We have a track record of anticipating emerging digital marketing trends, and
our increased investment in sales and marketing is introducing Responsys to
new customers and expanding relationships with existing ones," continued Mr.
Springer. "We believe our investment strategy to expand the customer service
organization and build our leading platform, the Responsys Marketing Cloud,
will further extend our leadership position, support revenue generation and
deliver enhanced value to stockholders."

Business Outlook

Based on information available as of August 5, 2013, Responsys is issuing
guidance for the third quarter of 2013 and revising fiscal 2013 guidance as
follows:

For the third quarter of 2013, the Company expects revenue to be in the range
of $47.0-$48.5 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 $0.2 million in amortization of acquired intangibles and an
estimated $3.8 million in stock-based compensation expense. Non-GAAP net
income per diluted share is based on estimated weighted average diluted shares
outstanding of 55.1 million.

Responsys is increasing its outlook for fiscal 2013 revenue from a range of
$190-193 million to a range of $195-$198 million as a result of increased
traction with new customers, as well as strong usage from existing customers.
The Company is revising its expectation for fiscal 2013 non-GAAP net income
from approximately $0.18 per diluted share to approximately $0.15 per diluted
share to reflect the increased investment in sales and marketing to continue
to support the revenue growth and take advantage of significant market
opportunities.

Non-GAAP net income for the full year excludes an estimated $1.8 million in
amortization of acquired intangibles and an estimated $14.3 million in
stock-based compensation expense. Non-GAAP net income per diluted share is
based on weighted average diluted shares outstanding of 54.8 million.

Non-GAAP net income outlook for the fiscal year 2013 assumes an effective
non-GAAP tax rate of 34%.

Conference Call Information for Today, Monday, August 5, 2013

Responsys will host a conference call to discuss the results today at 1:30
p.m. Pacific Time / 4:30 p.m. Eastern Time. 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 August 8, 2013 by
calling (855) 859-2056 or (404) 537-3406 from outside the U.S., using
conference ID 21366925. The replay will also be available on our website at
http://investors.responsys.com.

About Responsys

Responsys (Nasdaq:MKTG) is a leading marketing cloud software and services
company. Our mission is to enable the smartest marketing in the digital world.
The most respected brands across the globe use the Responsys Interact
Marketing Cloud to manage their digital relationships and deliver the right
marketing to their customers across email, mobile, social, display and the
web. Our customers gain competitive advantage through the automation,
individualization, and coordination of cross-channel marketing interactions at
massive scale. Founded in 1998, Responsys is headquartered in San Bruno,
California and has offices throughout the world. For more information 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 cloud
based 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, cloud based 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; our
ability to utilize personnel and resources efficiently; 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 June 30, As of December 31,
                                             2013           2012
Assets                                                       
Current assets:                                              
Cash and cash equivalents                     $ 106,555      $ 106,656
Accounts receivable, net                      29,743         28,065
Deferred taxes – current                      5,997          5,997
Prepaid expenses and other current assets     4,667          2,803
Total current assets                          146,962        143,521
Property and equipment – net                  24,366         18,426
Goodwill                                      15,737         17,335
Intangible assets – net                       1,968          2,925
Deferred taxes – noncurrent                   5,531          4,100
Other assets                                  4,251          2,458
Total assets                                  $ 198,815      $ 188,765
                                                             
Liabilities and stockholders' equity                         
Current liabilities:                                         
Accounts payable                              $ 4,244        $ 3,363
Accrued compensation                          9,756          8,014
Other accrued liabilities                     4,108          4,432
Capital lease obligations – current           677            896
Deferred revenue – current                    8,246          8,072
Total current liabilities                     27,031         24,777
Capital lease obligations – noncurrent        –              228
Deferred revenue – noncurrent                 410            407
Contingent liability                          1,537          1,561
Deferred rent                                 3,189          2,145
Deferred taxes – noncurrent                   361            482
Other long-term liabilities                   895            755
Total liabilities                             33,423         30,355
Commitments and contingencies                                
Stockholders' equity:                                        
Common stock                                  5              5
Additional paid-in capital                    174,627        165,423
Accumulated deficit                           (7,310)        (7,212)
Accumulated other comprehensive income        (1,930)        194
(loss)
Total stockholders' equity                    165,392        158,410
Total liabilities and stockholders' equity    $ 198,815      $ 188,765
                                                             
                                                             

Responsys, Inc.
Consolidated Statements of Income (Loss)
(in thousands, except per share data)
                             Three Months Ended June Six Months Ended June 30,
                             30,
                             2013         2012       2013         2012
                                                                   
Revenue:                                                           
Subscription                  $ 34,303     $ 27,458   $ 67,855     $ 54,663
Professional services         15,165       12,091     30,114       22,940
Total revenue                 49,468       39,549     97,969       77,603
                                                                   
Cost of revenue:                                                   
Subscription                  9,514        8,031      18,602       15,476
Professional services         13,618       10,623     26,110       20,543
Total cost of revenue         23,132       18,654     44,712       36,019
Gross profit                  26,336       20,895     53,257       41,584
                                                                   
Operating expenses:                                                
Research and development      4,837        3,937      8,977        7,739
Sales and marketing           18,662       12,571     32,495       21,632
General and administrative    6,192        4,428      11,917       8,599
Total operating expenses      29,691       20,936     53,389       37,970
Operating income (loss)       (3,355)      (41)       (132)        3,614
                                                                   
Other income (expense), net:                                       
Interest income               23           22         51           49
Interest expense              (32)         (89)       (57)         (181)
Other income (expense), net   (84)         (150)      (420)        (133)
Total other expense, net      $ (93)       $ (217)    $ (426)      $ (265)
Income (loss) before income   (3,448)      (258)      (558)        3,349
taxes
Benefit (provision) for       1,834        262        460          (1,273)
income taxes
Equity in net income of       $ –          $ 11      $  –          $ 36
unconsolidated affiliates
Net income (loss)             $ (1,614)    $ 15       $ (98)       $ 2,112
                                                                   
Net income (loss) per share:                                       
Basic                         $ (0.03)     $ 0.00     $ (0.00)     $ 0.04
Diluted                       $ (0.03)     $ 0.00     $ (0.00)     $ 0.04
                                                                   
Shares used in computation
of net income (loss) per                                           
share:
Basic                         49,473       48,193     49,264       48,001
Diluted                       49,473       53,359     49,264       53,437
                                                                   
                                                                   

Responsys, Inc.
Non-GAAP Financial Measures
(in thousands, except per share data)
                                                                    
                               Three Months Ended June Six Months Ended June
                               30,                     30,
                               2013         2012       2013        2012
Gross profit:                                                       
GAAP gross profit                                                   
Subscription                    $ 24,789      $ 19,427   $ 49,253    $ 39,177
Professional services           1,547        1,468      4,004       2,397
Total GAAP gross profit         26,336       20,895     53,257      41,574
Add back:                                                           
Stock-based compensation:                                           
Subscription                    368          153        652         301
Professional services           471          224        864         430
Total non-GAAP gross profit      $ 27,175     $ 21,272   $ 54,773    $ 42,305
                                                                    
Operating income:                                                   
GAAP operating income (loss)    $ (3,355)     $ (41)     $ (132)     $ 3,614
Add back:                                                           
Amortization of intangible      682          569        1,371       1,160
assets
Stock-based compensation        3,406        1,431      5,999       2,829
Total non-GAAP operating         $ 733        $ 1,959    $ 7,238     $ 7,603
income
                                                                    
Income before income taxes:                                         
GAAP income (loss) before        $ (3,448)    $ (258)    $ (558)     $ 3,349
income taxes
Add back:                                                           
Amortization of intangible      682          569        1,371       1,160
assets
Stock-based compensation        3,406        1,431      5,999       2,829
Total non-GAAP income before     $ 640        $ 1,742    $ 6,812     $ 7,338
taxes
                                                                    
Benefit (provision) for income                                      
taxes:
GAAP benefit (provision) for     $ 1,834      $ 262      $ 460       $ (1,273)
income taxes
Tax effect from:                                                    
Amortization of intangible      (197)        (177)      (395)       (362)
assets
Stock-based compensation        (1,131)      (435)      (1,992)     (857)
Total non-GAAP benefit
(provision) for income (loss)    $ 506        $ (350)    $ (1,927)   $ (2,492)
taxes
                                                                    
Net income:                                                         
GAAP net income (loss)           $ (1,614)    $ 15       $ (98)      $ 2,112
Add back:                                                           
Amortization of intangible      682          569        1,371       1,160
assets
Stock-based compensation        3,406        1,431      5,999       2,829
Income tax effect of non-GAAP   (1,328)      (612)      (2,387)     (1,219)
items
Total non-GAAP net income        $ 1,146      $ 1,403    $ 4,885     $ 4,882
                                                                    
Non-GAAP net income per share                                       
^1:
Basic                            $ 0.02       $ 0.03     $ 0.10      $ 0.10
Diluted                          $ 0.02       $ 0.03     $ 0.09      $ 0.09
                                                                    
Shares used in computing                                            
non-GAAP net income per share:
Basic shares:                                                       
Weighted-average shares
outstanding used in computing   49,473       48,193     49,264      48,001
non-GAAP basic net income per
share
                                                                    
Diluted shares:                                                     
Weighted-average shares
outstanding used in             54,329       53,359     54,003      53,437
calculating non-GAAP diluted
net income per share
                                                                    

                                                                    
Responsys, Inc.
Stock-Based Compensation Expense
(in thousands)
                          Three Months Ended June 30, Six Months Ended June
                                                      30,
                          2013          2012          2013         2012
Cost of revenue            $ 839         $ 377         $ 1,516      $ 731
Research and development   412           196           626          434
Sales and marketing        1,155         388           2,003        750
General and                1,000         470           1,854        914
administrative
Total                      $ 3,406       $ 1,431       $ 5,999      $ 2,829
                                                                    

                                                                    
Responsys, Inc.
Consolidated Cash Flow
(in thousands)
                                                                    
                                                     Six Months Ended June 30,
                                                     2013          2012
                                                                    
Cash flows from operating activities:                               
Net income (loss)                                     $ (98)        $ 2,112
Adjustments to reconcile net income (loss) to net                   
cash provided by operating activities:
Provision for bad debts                               231           65
Depreciation and amortization                         6,370         4,986
Stock-based compensation                              5,999         2,829
Deferred taxes                                        (1,563)       (329)
Tax benefit from stock-based compensation             1,062         -- 
Excess tax benefits from stock-based                  17            (1,326)
compensation
Equity in net income of unconsolidated                --            (36)
affiliates
Other                                                 5             163
Changes in operating assets and liabilities -                       
net of business acquired:
Accounts receivable                                   (2,291)       (3,000)
Prepaid expenses and other current assets             (1,906)       (2,599)
Other assets                                          (314)         100
Accounts payable                                      338           2,494
Accrued compensation                                  1,891         (753)
Other accrued liabilities                             31            3,080
Deferred revenue                                      250           (116)
Other long-term liabilities                           1,178         2,331
Net cash provided by operating activities             11,200        10,001
                                                                    
Cash flows from investing activities:                               
Purchases of property and equipment                   (8,515)       (4,543)
Addition of capitalized software development          (2,083)       -- 
costs
Patent-related rights                                 (600)         -- 
Purchase of short-term investments                    --            (4,007)
Redemption of short-term investments                  --            22,477
Purchase of equity interest                           (1,500)       (1,772)
Net cash (used in) provided by investing              (12,698)      12,155
activities
                                                                    
Cash flows from financing activities:                               
Proceeds from issuance of common stock                2,108         891
Proceeds from early-exercised stock options           --            2
Principal payments on capital lease obligations       (447)         (439)
Excess tax benefits from stock-based                  (17)          1,326
compensation
Net cash provided by financing activities             1,644         1,780
Effect of foreign exchange rate changes on cash and   (247)         45
cash equivalents
Net increase (decrease) in cash and cash              (101)         23,981
equivalents
Cash and cash equivalents at beginning of             106,656       73,456
period
Cash and cash equivalents at end of period            $ 106,555     $ 97,437
                                                                    

CONTACT: Carla Cooper (Investor Relations)
         Responsys, Inc.
         (650) 452-1484
         ccooper@responsys.com

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