Exa Reports Second Quarter Fiscal 2014 Financial Results

Exa Reports Second Quarter Fiscal 2014 Financial Results

Revenue Increases 7%, or 10% on a Constant Currency Basis, From a Year Ago

BURLINGTON, Mass., Sept. 4, 2013 (GLOBE NEWSWIRE) -- Exa^® Corporation
(Nasdaq:EXA), a global innovator of fluids simulation solutions for product
engineering, today announced financial results for the second quarter of
fiscal 2014, which ended July 31, 2013.

"The return to customer spending that we started to see at the beginning of
the year continued in the second quarter," said Stephen Remondi, President and
Chief Executive Officer of Exa. "This was most apparent in second quarter
project revenue, which increased 23% from a year ago. We continue to see
strong momentum from customers in the passenger car market, though this is
being more than offset by continued delays at customers in the truck and
off-highway markets who are impacted by softer macro trends. We believe the
investments that we are making in our long-term growth are having a positive
impact on our business, but with a mixed customer environment we are tempering
our growth expectations over the near-term. As such we are moderating our full
year revenue expectations, though we continue to anticipate double-digit
revenue growth for the full year fiscal 2014, as compared to fiscal 2013."

"Over the longer-term," Remondi added, "we expect our recent release of
PowerFLOW 5.0 to open new opportunities enabling complex simulations for the
aerospace industry and offer significant accuracy improvements for thermal
analysis and new acoustic simulation capabilities. We believe investments we
have made in both operations and product development better position us to
further penetrate the market as customers continue replacing costly and
time-consuming physical prototyping with our differentiated simulation
technology in the years ahead."

Second Quarter Fiscal 2014 Financial Highlights

Revenue

  *Total revenue for the second quarter of fiscal 2014, which ended July 31,
    2013, was $12.7 million, an increase of 7% compared to $11.8 million in
    the comparable period in fiscal 2013. Revenue in the second quarter grew
    by 10% on a constant currency basis, compared with the corresponding
    period in fiscal 2013.
  *License revenue was $10.7 million for the second quarter of fiscal 2014,
    compared to $10.2 million in the comparable period in fiscal 2013.
  *Project revenue was $2.0 million for the second quarter of fiscal 2014,
    compared to $1.6 million in the comparable period in fiscal 2013.

Profitability

  *GAAP loss from operations was ($0.2) million in the second quarter of
    fiscal 2014, compared to GAAP income from operations of $0.9 million in
    the comparable period in fiscal 2013.
  *Non-GAAP income from operations was $0.2 million in the second quarter of
    fiscal 2014, compared to non-GAAP income from operations of $1.2 million
    in the comparable period in fiscal 2013.
  *Adjusted EBITDA was $0.6 million in the second quarter of fiscal 2014,
    compared to $1.5 million in the comparable period in fiscal 2013.
  *GAAP net loss was ($0.8) million in the second quarter of fiscal 2014,
    compared to GAAP net income of $0.9 million for the comparable period in
    fiscal 2013. GAAP net loss per share was ($0.06), based on 13.3 million
    weighted average shares outstanding, compared to GAAP net income per share
    of $0.07 for the comparable period in fiscal 2013, based on 11.8 million
    diluted weighted average shares outstanding.
  *Non-GAAP net loss was ($0.6) million, or ($0.04) per diluted share in the
    second quarter of fiscal 2014, compared to non-GAAP net income of $1.1
    million, or $0.09 per diluted share, in the second quarter of fiscal 2013.
  *Decreases in year-over-year profitability comparisons were as expected,
    and primarily due to anticipated investments in long-term growth and
    public company costs.

Balance Sheet

  *The company had $33.0 million in cash and cash equivalents at July 31,
    2013, compared to $47.9 million at April 30, 2013.
  *During the second quarter, the company repaid all outstanding obligations
    under its term loan facility. This included a total of $7.4 million to
    cover all outstanding obligations including principal, interest, deferred
    origination fees and prepayment penalties. The company also incurred a
    GAAP expense of approximately $0.8 million in the second quarter to cover
    the prepayment penalty and the write-off of our unamortized debt discount.

Business Outlook

Based on information available as of September 4, 2013, Exa is issuing
guidance for the third quarter and full year fiscal 2014 as indicated below.

Third Quarter Fiscal 2014:

  *Total revenue is expected to be in the range of $13.6 million to $14.3
    million.
  *GAAP net income is expected to be in the range of $0.1 million to $0.5
    million.
  *Non-GAAP net income is expected to be in the range of $0.4 million to $0.8
    million.
  *Adjusted EBITDA is expected to be in the range of $1.1 million to $1.8
    million.
  *Basic share count for the third quarter is estimated to be 13.3 million
    shares.
  *Diluted share count for the third quarter is estimated to be 14.6 million
    shares.

Full Year Fiscal 2014:

  *Total revenue is expected to be in the range of $53.0 million to $55.5
    million.
  *GAAP net (loss)/income is expected to be in the range of a loss of ($0.9)
    million to income of $0.3 million.
  *Non-GAAP net income is expected to be in the range of breakeven to $1.2
    million.
  *Adjusted EBITDA is expected to be in the range of $3.4 million to $5.6
    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 1.32 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 second quarter fiscal 2014 financial results conference call
When:      Wednesday, September 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 31432170, Domestic
          (404) 537-3406, Passcode 31432170, 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
non-cash, stock-based compensation expense and the amortization of acquired
intangibles. We define EBITDA as net income, excluding depreciation and
amortization, interest expense, loss on extinguishment of debt, other income
(expense), foreign exchange gain (loss) and provision for income taxes, and we
define Adjusted EBITDA as EBITDA, excluding non-cash, 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 Form 10-Q
for the quarter-ended April 30, 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)
                                                                 
                                                        July 31,  January 31,
                                                        2013      2013
ASSETS                                                            
Current assets:                                                   
Cash and cash equivalents                                $32,958 $30,716
Accounts receivable                                      4,994    27,840
Deferred tax assets                                      1,461    970
Prepaid expenses and other current assets                1,627    1,938
Total current assets                                     41,040   61,464
Property and equipment, net                              5,721    6,176
Intangible assets, net                                   2,921    3,096
Deferred tax assets                                      13,041   12,274
Other assets                                             1,113    1,060
Total assets                                             $63,836 $84,070
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current liabilities:                                              
Accounts payable                                         $970    $1,743
Accrued expenses                                         5,003    7,284
Current portion of long-term debt, net of discount (1)   --      1,747
Current portion of deferred revenue                      17,881   26,013
Current maturities of capital lease obligations          1,967    2,051
Total current liabilities                                25,821   38,838
Long-term debt, net of current portion and discount (1)  --      5,024
Deferred revenue                                         44       128
Capital lease obligations                                1,920    2,818
Other long-term liabilities                              846      1,009
Deferred rent                                            1,130    1,482
Total liabilities                                        29,761   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;
13,370,743and 13,319,715 shares issued, respectively;   13       13
13,338,241 and13,287,213 shares outstanding,
respectively
Additional paid-in capital                               84,417   83,786
Accumulated deficit                                      (50,351) (49,012)
Treasury stock (32,502 common shares, at cost)           0         0
Accumulated other comprehensive loss                     (4)      (16)
Total stockholders' equity                              34,075   34,771
Total liabilities and stockholders' equity              $63,836 $84,070
                                                                 
(1) Includes amounts due to a related party, as follows:          
                                                        July 31,  January 31,
                                                        2013      2013
                                                                 
Current portion of long-term debt                        $--    $274
Long-term debt, net of current portion                   $--    $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 July 31, Six Months Ended July 31,
                        2013          2012          2013         2012
                                                              
Revenue:                                                       
License revenue         $10,719     $10,215     $21,411    $20,228
Project revenue         1,985        1,618        3,781       2,899
                                                              
Total revenues           12,704       11,833       25,192      23,127
Operating expenses:                                            
Cost of revenues        3,833        3,112        7,504       6,335
Sales and marketing     2,179        1,709        4,296       3,309
Research and            4,450        4,157        8,836       8,297
development
General and             2,426        1,968        5,197       3,926
administrative
                                                              
Total operating expenses 12,888       10,946       25,833      21,867
                                                              
(Loss) income from       (184)        887          (641)       1,260
operations
Other (expense) income,                                        
net:
Foreign exchange (loss) (93)         326          (56)        326
gain
Interest expense        (176)        (409)        (557)       (823)
Interest income         5            --          9           2
Loss on extinguishment  (755)        --          (755)       --
of debt
Other income, net       3            445          5           511
                                                              
Total other (expense)    (1,016)      362          (1,354)     16
income, net
                                                              
(Loss) income before     (1,200)      1,249        (1,995)     1,276
income taxes
Benefit (provision) for  402          (367)        656         (332)
income taxes
                                                              
Net (loss) income      $(798)      $882        $(1,339)   $944
                                                              
Net (loss) income per                                          
share:
Basic                   $(0.06)     $0.20       $(0.10)    $0.37
Diluted                 $(0.06)     $0.07       $(0.10)    $0.08
                                                              
Weighted average shares
outstanding usedin                                            
computing net (loss)
income per share:
Basic                   13,318,443    4,518,279    13,307,456   2,529,796
Diluted                 13,318,443    11,776,321   13,307,456   11,123,120
                                                              
                                                              
Comprehensive (loss)                                           
income:
Net (loss) income        $(798)      $882        $(1,339)   $944
Foreign currency         14           (25)         12          3
translation adjustments
Comprehensive (loss)     $(784)      $857        $(1,327)   $947
income
                                                              
                                                              
(1) Includes stock-based compensation expense as follows:
                                                              
                        Three Months Ended July 31, Six Months Ended July 31,
                        2013          2012          2013         2012
                                                              
Cost of revenues        $33         $27         $64        $54
Sales and marketing     52           48           102         94
Research and            77           76           154         157
development
General and             89           83           176         170
administrative
                                                              
Total                   $251        $234        $496       $475
                                                              
(2) Includes amortization expense related to intangible assets as follows:
                                                              
                        Three Months Ended July 31, Six Months Ended July 31,
                        2013          2012          2013         2012
                                                              
General and             $87         $97         $175       $194
administrative
                                                              

EXA CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                                                 
                                                    Six Months Ended July 31,
                                                    2013          2012
Cash flows provided by operating activities:                      
Net (loss) income                                    $(1,339)    $944
Adjustments to reconcile net (loss) income to net                 
cash provided by operating activities:
Depreciation and amortization                       1,039         832
Stock-based compensation expense                    496           475
Deferred rent expense                               (283)         (94)
Non-cash interest                                   162           249
Loss on extinguishment of debt, non-cash portion    465           --
Mark-to-market adjustment of preferred stock        --          (228)
warrant liability
Mark-to-market adjustment of equity participation   --          (276)
right
Deferred income taxes                               (1,258)       39
Net change in operating assets and liabilities:                   
Accounts receivable                                 22,978        15,195
Prepaid expenses and other current assets           280           (167)
Other assets                                        (53)          2,263
Accounts payable                                    (769)         (1,166)
Accrued expenses                                    (2,151)       (4,334)
Other liabilities                                   51            4
Deferred revenue                                    (8,169)       (12,091)
Net cash provided by operating activities            11,449        1,645
                                                                 
Cash flows used in investing activities:                          
Purchases of property and equipment                 (598)         (226)
Net cash used in investing activities                (598)         (226)
                                                                 
Cash flows (used in) provided by 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    135           11
Payments of long-term debt                          (7,365)       (504)
Payments of capital lease obligations               (1,025)       (410)
Proceeds from initial public offering, net of       --          34,641
$4,174 issuance costs
Payment of previously accrued debt issuance costs   (213)        --
Net cash (used in) provided by financing activities  (8,468)       30,238
                                                                 
Effect of exchange rate changes on cash             (141)         126
                                                                 
Net increase in cash and cash equivalents            2,242         31,783
                                                                 
Cash and cash equivalents, beginning of period       30,716       11,468
Cash and cash equivalents, end of period             $32,958     $43,251
                                                                 
Supplemental cash flow disclosures:                               
Cash paid for interest                              $462        $494
Cash paid for income taxes                          $266        $566
Supplemental disclosure of non-cash investing and                 
financing activities:
Acquisition of equipment through capital leases     $43         $146
Conversion of preferred stock into common stock     --          32,685
Conversion of preferred stock warrants into common  $--        $1,324
stock warrants
                                                                 

EXA CORPORATION
Reconciliation of historical Non-GAAP to GAAP measures
(Unaudited)
(in thousands, except per share data)
                                                                  
Adjusted EBITDA:                                                   
                                       Three Months Ended Six Months Ended
                                       July 31,           July 31,
                                       2013      2012     2013       2012
                                                                  
Net (loss) income                       $(798)  $882   $(1,339) $944
Add back:                                                         
Depreciation and amortization           543      423     1,039     832
Interest expense, net                   171      409     548       821
Loss on extinguishment of debt          755      --     755       --
Other income, net                       (3)      (445)   (5)       (511)
Foreign exchange gain (loss)            93       (326)   56        (326)
(Benefit) provision for income taxes    (402)    367     (656)     332
EBITDA                                  359      1,310   398       2,092
Stock-based compensation expense        251      234     496       475
Adjusted EBITDA                         $610    $1,544 $894     $2,567
                                                                  
Non-GAAP operating income:                                         
                                       Three Months Ended Six Months Ended
                                       July 31,           July 31,
                                       2013      2012     2013       2012
                                                                  
Operating (loss) income                 $(184)  $887   $(641)   $1,260
Add back:                                                         
Stock-based compensation expense        251      234     496       475
Amortization of acquired intangible     87       97      175       194
assets
Non-GAAP operating income               $154    $1,218 $30      $1,929
                                                                  
Non-GAAP net (loss) income:                                        
                                       Three Months Ended Six Months Ended
                                       July 31,           July 31,
                                       2013      2012     2013       2012
                                                                  
Net (loss) income                       $(798)  $882   $(1,339) $944
Add back:                                                         
Stock-based compensation expense        251      234     496       475
Amortization of acquired intangible     87       97      175       194
assets
Income tax effect (1)                   (117)    (115)   (233)     (232)
Non-GAAP net (loss) income              $(577)  $1,098 $(901)   $1,381
                                                                  
Non-GAAP net (loss) income, per diluted                            
share:
                                       Three Months Ended Six Months Ended
                                       July 31,           July 31,
                                       2013      2012     2013       2012
                                                                  
Net (loss) income, per diluted share    $(0.06) $0.07  $(0.10)  $0.08
(2)
Add back:                                                         
Stock-based compensation expense        0.02     0.02    0.04      0.04
Amortization of acquired intangible     0.01     0.01    0.01      0.02
assets
Income tax effect (1)                   (0.01)   (0.01)  (0.02)    (0.02)
Non-GAAP net (loss) income, per diluted $(0.04) $0.09  $(0.07)  $0.12
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 for both the three and six months ended July 31, 2013, respectively.
Share amounts utilized on a fully diluted bases were approximately 11.8
million and 11.1 million for the three and six months ended July 31, 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:                            
                                                      
                                    Three Months Ended Year Ended
(in millions)                       October 31, 2013  January 31, 2014
Net income (loss)                    $0.1 - 0.5         $(0.9) - 0.3
Add back:                                             
Depreciation and amortization        0.5               2.2
Interest expense, net                0.1               0.7
Other expense, net                   --               0.8
Provision (benefit) for income taxes 0.1 - 0.4          (0.4) - 0.6
EBITDA                               0.8 - 1.5          2.4 - 4.6
Stock-based compensation expense     0.3                1.0
Adjusted EBITDA                      $1.1 - 1.8         $3.4 - 5.6
                                                      
                                                      
Non-GAAP net (loss) income:                            
                                                      
                                    Three Months Ended Year Ended
(in millions)                       October 31, 2013  January 31, 2014
Net income (loss)                    $0.1 - 0.5         $(0.9) - 0.3
Add back:                                             
Stock-based compensation expense     0.3                1.0
Amortization of acquired intangibles 0.1                0.4
Income tax effect (1)                (0.1)              (0.5)
Non-GAAP net (loss) income           $0.4 - 0.8         $0.0 - 1.2
                                                      

(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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