Covisint Corporation Announces Second Quarter Fiscal 2014 Earnings Results

Covisint Corporation Announces Second Quarter Fiscal 2014 Earnings Results

  *Total revenue of $24.5 million up 19% year-over-year
  *Subscription revenue of $16.2 million up 19% year-over-year
  *Successfully completed initial public offering on September 26 for net
    proceeds of $68.4 million

DETROIT, Oct. 24, 2013 (GLOBE NEWSWIRE) -- Covisint Corporation (Nasdaq:COVS),
provider of a leading cloud engagement platform, today announced financial
results for the second quarter of its fiscal 2014 ended September 30, 2013.

"Following our successful initial public offering last month, Covisint is
reporting strong results for the second quarter of 2014. Q2 featured a 19%
increase in total revenue and 19% increase in subscription revenue," said
David McGuffie, President and CEO of Covisint. "Our revenue growth was driven
by both the acquisition of new customers and expansions at existing customers,
as we see continued demand for the Covisint platform to secure and enable new
external business initiatives."

Second Quarter 2014 Financial Highlights

Revenues: Revenues for the second quarter increased by 19% year-over-year to
$24.5 million. Revenue in the subscription and support segment increased 19%
year-over-year to $16.2 million. Revenue in the services segment increased 20%
year-over-year to $8.3 million.

Gross Profit: During the second quarter, GAAP gross profit increased by 10% to
$10.4 million compared to $9.4 million in the same quarter last year. GAAP
gross margin was 42% for the second quarter of 2014 compared to 46% in the
same quarter last year.

Non-GAAP gross profit for the second quarter of 2014 increased by 20% to $12.6
million compared to $10.6 million in the same quarter last year. Non-GAAP
gross margin was 52% for the second quarter of 2014 compared to 51% in the
same quarter last year. 

Earnings: In the second quarter, GAAP diluted earnings per share were $(0.42)
compared to $(0.08) in Q2 last year. Non-GAAP diluted EPS was $(0.08) compared
to $(0.15) in Q2 last year.

Second Quarter Fiscal 2014 Business Highlights

In Q2, Covisint:

  *released astudyconducted by Porter Research and sponsored by Covisint
    that revealed the deep and industry-wide changes dramatically
    impactinghealthcare. Thestudy, titledHealthcare Industry Reaches
    Tipping Point: CIOs Now Demand the Cloud for Shared Savings and
    Interoperability, noted the growing importance of and confidence in the
    cloud to healthcare's C-levels and care delivery professionals.
    
  *announced the pricing of its initial public offering, selling 7.36 million
    shares of its common stock, representing approximately 19.7% of its issued
    and outstanding shares.
    
  *announced that Kansas City-basedSaint Luke's Health Systemis now
    usingCovisintto help Saint Luke's achieve its patient-centered medical
    home (PCMH) designation. The cloud engagement platform fromCovisint is
    helping Saint Luke's improve care delivery by establishing key population
    metrics.
    
  *continued to introduce enhancements to its platform, including new
    self-administration tools, mobile alerting and experience extensions, and
    increased contextualization and personalization elements; additionally,
    the company is increasing its advanced analytics capabilities for Covisint
    healthcare, along with a new reporting engine and visualization tooling.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, Covisint monitors non-GAAP measures
of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income,
non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income
(loss) per diluted share and adjusted EBITDA. Each of these financial measures
excludes the impact of certain items and, therefore, has not been calculated
in accordance with GAAP. These non-GAAP financial measures exclude the impact
of stock award compensation expense; the amortization of intangible assets and
amounts incurred for capitalized internal software costs.

Covisint monitors these non-GAAP measures to evaluate its ongoing operational
performance and enhance an overall understanding of its past financial
performance. Covisint believes that these non-GAAP metrics help illustrate
underlying trends in its business that could otherwise be masked by the effect
of the income or expenses, as well as the related tax effects, that are
excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net
income (loss) per diluted share and adjusted EBITDA. Furthermore, Covisint
uses these measures to establish budgets and operational goals for managing
its business and evaluating its performance. Covisint also believes that these
non-GAAP measures provide additional tools for investors to use in comparing
its recurring core business operating results over multiple periods with other
companies in its industry.

The presentation of this non-GAAP financial information is not intended to be
considered in isolation or as a substitute for results prepared in accordance
with GAAP. A reconciliation of the non-GAAP financial measures discussed in
this press release to the most directly comparable GAAP financial measures is
included with the financial statements contained in this press release.
Management uses both GAAP and non-GAAP information in evaluating and operating
its business internally and as such has determined that it is important to
provide this information to investors.

Conference Call and Webcast Information

Covisint management will hold a conference call at 4:45 ET today to discuss
these results. The U.S. toll free dial-in for the conference call is
1.800.700.7860 and the international dial-in number is 1.612.332.0228. No
passcode is required. A live webcast of the conference call will also be
available on the investor relations page of the company's website at
investors.covisint.com. A conference callpresentationis also available on
the site.

For those unable to participate in the conference call, a replay will be
available after the conclusion of the earnings call on October 24, 2013,
through October 31, 2013. The U.S. toll-free replay dial-in number is
1.800.475.6701 and the international replay dial-in number is 1.320.365.3844.
The replay passcode is 305577.

About Covisint

Covisint provides a leading cloud engagement platform for creating and
enabling new mission-critical external business processes. Our solutions
enable organizations to connect, engage, and collaborate with the critical
external audiences that define their success--including customers, business
partners and suppliers. Covisint allows its clients to establish a secure,
reliable, integrated presence in the cloud, and it provides the kind of
engaging information experiences that people everywhere have come to expect.
Learn more at www.covisint.com.

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Forward-Looking Statements

This press release contains forward-looking statements, including statements
regarding Covisint's future financial performance, market growth, the demand
for Covisint's solutions, and general business conditions. Any forward-looking
statements contained in this press release are based upon Covisint's
historical performance and its current plans, estimates and expectations and
are not a representation that such plans, estimates, or expectations will be
achieved. These forward-looking statements represent Covisint's expectations
as of the date of this press release. Subsequent events may cause these
expectations to change, and Covisint disclaims any obligation to update the
forward-looking statements in the future. These forward-looking statements are
subject to known and unknown risks and uncertainties that may cause actual
results to differ materially. Important factors that could cause actual
results to differ materially from those in the forward-looking statements
include, but are not limited to, our ability to attract new customers; the
extent to which customers renew their contracts for our solutions; the
seasonality of our business; our ability to manage our growth; the continued
growth of the market for our solutions; competition from current competitors
and new market entrants; our ability to penetrate new vertical markets;
unpredictable macro-economic conditions; the loss of any of our key employees;
the length of the sales and implementation cycles for our solutions; increased
demands on our infrastructure and costs associated with operating as a public
company; failure to protect our intellectual property; changes in current tax
or accounting rules; and other risk and uncertainties. Further information on
potential factors that could affect actual results is included in Covisint's
reports filed with the SEC.

                                                                   
                                                                   
COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION
CONSDENSED AND CONSOLIDATED BALANCE SHEETS
(In Thousands)
                                                                   
                                                        AS OF SEPTEMBER 30,
                                                        2013        2012
ASSETS                                                            
CURRENT ASSETS:                                                   
Cash                                                   $1,067    $ --
Offering proceeds receivable                           68,448     --
Accounts receivable, net                               22,378     15,607
Deferred tax asset, net                                1,569      1,933
Other current assets                                   5,695      5,660
Total current assets                                   99,157     23,200
                                                                   
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION   2,906      2,613
AND AMORTIZATION
                                                                   
CAPITALIZED SOFTWARE AND OTHER INTANGIBLES ASSETS, NET 24,294     21,420
                                                                   
OTHER:                                                            
Goodwill                                               25,385     25,385
Deferred costs                                         8,469      11,165
Deferred tax asset, net                                146        --
Other assets                                           941        1,260
Total other assets                                     34,941     37,810
                                                                   
TOTAL ASSETS                                           $161,298  $85,043
                                                                   
LIABILITIES AND SHAREHOLDERS' EQUITY                              
                                                                   
CURRENT LIABILITIES:                                              
Accounts payable                                       $4,176    $2,080
Accrued commissions                                    1,727      1,369
Deferred revenue                                       15,982     16,184
Accrued expenses                                       2,828      2,777
Due to parent and affiliates                           10,904     --
Total current liabilities                              35,617     22,410
                                                                   
DEFERRED REVENUE                                       15,521     20,906
                                                                   
ACCRUED EXPENSES                                       17         192
                                                                   
DEFERRED TAX LIABILITY, NET                            2,982      4,717
Total liabilities                                      54,137     48,225
                                                                   
SHAREHOLDERS' EQUITY:                                             
Common stock                                           --         --
Parent company's net investment                        --         36,818
Additional paid-in capital                             127,849    --
Retained deficit                                       (20,705)   --
Accumulated other comprehensive loss                   17         --
Total shareholders' equity                             107,161    36,818
                                                                   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $161,298  $85,043

                                                                
                                                                
COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION
CONDENSED, COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
                                                                
                                THREE MONTHS ENDED     SIX MONTHS ENDED
                                 SEPTEMBER 30,          SEPTEMBER 30,
                                                                
                                2013        2012       2013        2012
REVENUE                          $24,525   $20,606  $48,626   $41,219
COST OF REVENUE                  14,126      11,171     27,436     21,849
GROSS PROFIT                     10,399      9,435      21,190     19,370
                                42%         46%                   
OPERATING EXPENSES:                                              
Research anddevelopment        3,244       244        5,829      418
Sales and marketing             10,787      6,482      18,126     11,994
Administrative and general      9,080       4,964      14,614     9,080
Total operating expenses        23,111     11,690     38,569     21,492
                                                                
INCOME (LOSS) BEFORE INCOME TAX  (12,712)   (2,255)   (17,379)   (2,122)
PROVISION
                                                                
INCOME TAX PROVISION             34          55         37         57
                                                                
NET INCOME (LOSS)                $ (12,746) $(2,310) $ (17,416) $(2,179)
                                                                
DILUTED EPS COMPUTATION                                          
Numerator:Net income            $ (12,746) $(2,310) $ (17,416) $(2,179)
Denominator:                                                     
Weighted-average common shares  30,403      30,003     30,204     30,003
outstanding
Dilutive effect of stock awards --        --       --        --
Total shares                    30,403     30,003    30,204     30,003
Diluted EPS                      $(0.42)   $(0.08)  $(0.58)   $(0.07)

                                                                
                                                                
COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION
NON-GAAP CONDENSED, COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
                                                                
                                  THREE MONTHS ENDED    SIX MONTHS ENDED
                                   SEPTEMBER 30,         SEPTEMBER 30,
                                                                
                                  2013       2012       2013       2012
REVENUE                            $24,525  $20,606  $48,626  $41,219
COST OF REVENUE                    11,876     10,026     23,533     19,633
GROSS PROFIT                       12,649     10,580     25,093    21,586
                                  52%        51%                  
OPERATING EXPENSES:                                              
Research anddevelopment          4,189      4,191      8,679      8,019
Sales and marketing               6,721      6,348      13,934     11,744
Administrative and general        4,073      4,599      9,200      8,397
Total operating expenses          14,983    15,138     31,813    28,160
                                                                
INCOME (LOSS) BEFORE INCOME TAX    (2,334)   (4,558)   (6,720)   (6,574)
PROVISION
                                                                
INCOME TAX PROVISION               34         55         37        57
                                                                
NET INCOME (LOSS)                  $(2,368) $(4,613) $(6,757) $(6,631)
                                                                
DILUTED EPS COMPUTATION                                          
Numerator:Net income              $(2,368) $(4,613) $(6,757) $(6,631)
Denominator:                                                     
Weighted-average common shares    30,403     30,003     30,204    30,003
outstanding
Dilutive effect of stock awards   --       --       --       --
Total shares                      30,403    30,003    30,204    30,003
Diluted EPS                        $(0.08)  $(0.15)  $(0.22)  $(0.22)

                                                                 
                                                                 
COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(In Thousands, Except Per Share Data)
                                                                 
                                                                 
                                      THREE MONTHS ENDED  SIX MONTHS ENDED
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                      2013      2012      2013      2012
Gross profit                           $10,399 $9,435  $21,190 $19,370
Gross margin                          42 %      46 %      44 %      47 %
Adjustments:                                                      
Stock compensation expense - cost of   593       1         598       1
revenue
% of total revenue                    2 %       -- %    1 %       -- %
Cost of revenue - amortization of      1,657     1,144     3,305     2,215
capitalized software
% of total revenue                    7 %     6 %     7 %     5 %
Adjusted gross profit                  $12,649 $10,580 $25,093 $21,586
Adjusted gross margin                 52 %    51 %    52 %    52 %
                                                                 

                                                                 
                                      THREE MONTHS ENDED  SIX MONTHS ENDED
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                      2013      2012      2013      2012
Cost of revenue                        14,126    11,171    27,436   21,849
Adjustments:                                                      
Stock compensation expense             593       1         598       1
Cost of revenue - amortization of      1,657     1,144     3,305     2,215
capitalized software
Cost of revenue, non-GAAP              11,876    10,026    23,533    19,633
                                                                 
                                      THREE MONTHS ENDED  SIX MONTHS ENDED
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                      2013      2012      2013      2012
Research anddevelopment               3,244     244       5,829    418
Adjustments:                                                      
Capitalized internal software costs    (1,396)   (3,947)   (3,348)   (7,601)
Stock compensation expense             451       0         498       --
Research anddevelopment, non-GAAP     4,189     4,191     8,679     8,019
                                                                 
                                      THREE MONTHS ENDED  THREE MONTHS ENDED
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                      2013      2012      2013      2012
Sales and marketing                    10,787    6,482     18,126   11,994
Adjustments:                                                      
Stock compensation expense             3,988     43        4,036    68
Amortization of customer relationship  78        91        156      182
agreements
Sales and marketing, non-GAAP          6,721     6,348     13,934    11,744
                                                                 
                                      THREE MONTHS ENDED  SIX MONTHS ENDED
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                      2013      2012      2013      2012
Administrative and general             9,080     4,964     14,614   9,080
Adjustments:                                                      
Stock compensation expense             4,988    343      5,374    640
Amortization of trademarks             19        22        40        43
Administrative and general, non-GAAP   4,073     4,599     9,200     8,397
                                                                 
                                      THREE MONTHS ENDED  SIX MONTHS ENDED
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                      2013      2012      2013      2012
Net income (loss)                      (12,746)  (2,310)   (17,416)  (2,179)
Adjustments:                                                      
Capitalized internal software costs    (1,396)   (3,947)   (3,348)   (7,601)
Stock compensation expense             10,020   387      10,506   709
Amortization of intangibles            1,754     1,257     3,501     2,440
Net income (loss), non-GAAP            (2,368)   (4,613)   (6,757)   (6,631)
                                                                 
                                      THREE MONTHS ENDED  SIX MONTHS ENDED
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                      2013      2012      2013      2012
Diluted EPS                            (0.42)    (0.08)    (0.58)    (0.07)
Adjustments:                                                      
Capitalized internal software costs    (0.05)    (0.13)    (0.11)    (0.25)
Stock compensation expense             0.33      0.01      0.35      0.02
Amortization of intangibles            0.06      0.04      0.12      0.08
Diluted EPS, non-GAAP                  (0.08)    (0.15)    (0.22)    (0.22)

                                                                  
                                                                  
COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION
CONSDENSED, COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
                                                                  
                                                  SIX MONTHS ENDED
                                                   SEPTEMBER 30,
                                                  2013             2012
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:                       
Net income (loss)                                 $(17,416)      $(2,179)
Adjustments to reconcile net income (loss) to cash provided by      
operations:
Depreciation and amortization                      4,203            3,040
Deferred income taxes                              34               (489)
Stock award compensation                           10,506           709
Other                                              --              60
Net change in assets and liabilities, net of effects from currency  
fluctuations:
Accounts receivable                               3,066            5,173
Other assets                                      1,246            1,656
Accounts payable and accrued expenses             (211)            (336)
Deferred revenue                                  (3,729)          (4,974)
Net cash provided by operating activities         (2,301)         2,660
                                                                  
CASH FLOWS USED IN INVESTING ACTIVITIES:                           
Purchase of:                                                      
Property and equipment                            (475)            (282)
Capitalized software                              (3,348)          (7,601)
Net cash used in investing activities             (3,823)         (7,883)
                                                                  
CASH FLOWS USED IN FINANCING ACTIVITIES:                           
Net investment from parent company                --              5,223
Cash payments from parent company                 43,127           --
Cash payments to parent company                   (36,334)         --
Initial public offering costs                     (608)            --
Net cash used in financing activities             6,185           5,223
                                                                  
EFFECT OF EXCHANGE RATE CHANGES ON CASH            40               --
                                                                  
NET CHANGE IN CASH AND CASH EQUIVALENTS            101             --
                                                                  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   966              --
                                                                  
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $1,067         $--

CONTACT: Media Contact
         Doug Kuiper, 313.227.2764
         Investor Relations Contact
         866.319.7659, investors@covisint.com

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