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Lyris Announces First Quarter Fiscal 2014 Financial Results

Lyris Announces First Quarter Fiscal 2014 Financial Results

89% of F1Q14 Revenue Was Recurring;

77% of F1Q14 Revenue From Subscriptions

EMERYVILLE, Calif., Nov. 7, 2013 (GLOBE NEWSWIRE) -- Lyris, Inc. (OTCBB:LYRI),
a leading global provider of digital marketing solutions, today announced
financial results for the first quarter of fiscal 2014 ended September 30,
2013.

Highlights

  *Fiscal first quarter revenues were $8.2 million, down 4.9% from $8.7
    million in the prior quarter and down 8.3% from $9.0 million in the same
    period last year.
  *Recurring revenue was 89% of total revenue in the fiscal first quarter
    compared to 90% of total revenues in the same period a year ago and 91% of
    revenues in the prior quarter.
  *Lyris HQ Software-as-a-Service (SaaS) revenues were 60% of total revenues
    in the fiscal first quarter compared to 60% in the same period a year ago
    and 61% of total revenues in the prior quarter.
  *Fiscal first quarter gross margin was 63% compared to 58% for the same
    period last year.
  *Fiscal first quarter loss from operations was $(0.4) million, compared to
    loss from operations of $(0.6) million in the same period last year.
  *Fiscal first quarter net loss was $(0.5) million, or $(0.05) per diluted
    share, compared to net loss of $0.8 million, or $(0.08) per share, in the
    same period last year.
  *Fiscal first quarter non-GAAP net income was $0.1 million, or $0.01 per
    diluted share, compared to a non-GAAP net loss of $(0.3) million, or
    $(0.04) per share, in the same period a year ago.
  *Fiscal first quarter adjusted EBITDA was $0.5 million, compared to
    adjusted EBITDA of $0.1 million in the same period a year ago.
  *At September 30, 2013, the Company had $1.9 million in cash. The Company
    also has $1.5 million available for drawdown on its $5 million loan
    facility with Silicon Valley Bank.

"Since I took the helm as CEO last month, I've instituted new process
improvements that focus on customer value and willaccelerate our sales,
marketing andservicedelivery efforts," stated John Philpin, president and
CEO of Lyris. "We have already drilled into sales execution and implemented a
metrics-driven approach to feed a predictable and healthy pipeline of
business. It is too earlyto state with confidence thatanuptick in overall
sales hastaken hold, but we are doubling down on our efforts to enable our
global teams with the tools and domain expertise required to succeed in our
space."

First Quarter Fiscal 2014 Financial Results

Total revenues of the first quarter of fiscal 2014 were $8.2 million, down
4.9% from $8.7 million in the prior quarter and down 8.3% from $9.0 million in
the same period last year. Total subscription revenues were $6.3 million, or
77% of total revenues, in the first quarter of fiscal 2014, compared to $7.1
million, or 79% of total revenues, in the same period in fiscal 2013. Lyris HQ
SaaS revenues were $5.3 million, or 60% of total revenues, in the first
quarter of fiscal 2014, down from $5.4 million, or 60% of total revenues, in
the same period a year ago.

Gross profit was $5.2 million, or 63% as a percentage of total revenues, in
the first quarter of fiscal 2014, compared to $5.2 million, or 58% of total
revenue, in the same period in fiscal 2013.

Loss from operations was $(0.4) million, compared to loss from operations of
$(0.6) million in the same period last year. Net loss was $(0.5) million, or
$(0.05) per diluted share, compared to net loss of $0.8 million, or $(0.08)
per share, in the same period last year.

Conference Call Information

Lyris will hold a conference call and webcast to discuss its financial results
and operating activities open to all interested parties at 4:30 p.m. Eastern
Time (1:30 p.m. Pacific Time), November 7, 2013.

The teleconference can be accessed by calling 888-438-5525, passcode 5329799.
Please dial in 10-15 minutes prior to the beginning of the call. The webcast
will be available on the Internet at www.lyris.com.

A replay of the call will be available through November 14, 2013, at
877-870-5176, passcode 5329799, and on the company's website at www.lyris.com.

About Lyris

Lyris, Inc. is a leading global provider of digital marketing solutions that
help companies engage with customers in more meaningful ways. Lyris products
and services empower marketers to design, automate, and optimize data-driven
interactive marketing campaigns that facilitate superior engagement, increase
conversions, and deliver measurable business value. Lyris' high-performance,
secure and flexible digital marketing platforms improve marketing efficiency
by providing automated digital message delivery, robust segmentation, and
real-time social, mobile and interaction analytics. The Lyris solutions
portfolio is comprised of both in-the-cloud and on-premises offerings, Lyris
HQ and Lyris ListManager - combined with customer-focused services and
support. More than 5,000 companies worldwide partner with Lyris to manage and
execute sophisticated digital marketing campaigns across email, social, Web,
and mobile channels.

www.lyris.com

Forward-Looking Statements

This press release includes forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995 (PSLRA), that reflect our
current views with respect to future events and financial performance, and
that are subject to many risks and uncertainties. These forward-looking
statements include material in quotations from management, including our
estimate of our addressable market. Statements that include word such as
"expects," "intends," "plan," "believe," "project," "estimate," "may,"
"should," "anticipate," "will" and similar statements identify many of our
forward-looking statements.

Many factors could cause actual results to differ materially from those
indicated in our forward-looking statements. For example, market acceptance of
our products, potential delays in product development, product offerings by
our competitors, and our ability to finance anticipated growth could affect
our future results. Other risk factors that could cause actual results to
differ significantly from our expectations are described in our annual and
quarterly reports filed with the Securities and Exchange Commission (available
at www.sec.gov). Unless otherwise required by law, we undertake no obligation
to publicly update or revise any forward-looking statements, whether as a
result of new information, future developments or otherwise.

If one or more of these risks or uncertainties materialize, or if our
underlying assumptions otherwise prove to be incorrect, our actual results may
vary materially from what we project. Any forward-looking statements you read
in this news release reflect our views as of the date of this press release
with respect to future events, and are subject to these and other risks,
uncertainties and assumptions relating to our operations, financial condition,
results of operations, growth strategy and liquidity. All subsequent written
and oral forward-looking statements attributable to us or individuals acting
on our behalf are expressly qualified in their entirety by this paragraph.

Non-GAAP Financial Measures

In this release we present certain non-GAAP financial measures. Generally, a
non-GAAP financial measure is a numerical measure of a company's performance,
financial position or cash flow that either excludes or includes amounts that
are not normally excluded or included in the most directly comparable measure
calculated and presented in accordance with United States generally accepted
accounting principles ("GAAP"). A reconciliation between non-GAAP and GAAP
measures can be found in the accompanying tables. Non-GAAP financial measures
should not be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP. These non-GAAP
financial measures do not reflect a comprehensive system of accounting and may
differ from non-GAAP financial measures with the same or similar captions that
are used by other companies.

We believe the calculation of non-GAAP net income (loss), calculated without
giving effect to acquisition-related amortization charges, stock-based
compensation expense and certain other amounts that we do not consider to be
related to our ongoing core operating performance, provides a basis to compare
our operating results across periods and against other companies in our
industry. We also believe that adjusted EBITDA, which we calculate as GAAP net
income (loss) less interest, taxes, depreciation, amortization, non-cash stock
compensation expense and certain other financial measures, is an indicator of
our cash flows. This measure is commonly used by our lenders to assess our
leverage capacity, debt service ability and liquidity. These non-GAAP measures
have been reconciled to the nearest GAAP measure, as required under SEC rules
and regulations, in tables attached to this release.


Lyris, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except for per share data)
                                                                   
                                                          Three Months Ended
                                                           September 30,
                                                          2013      2012
                                                                   
Revenues:                                                           
Subscription revenue                                       $6,343  $7,128
Support and maintenance revenue                            997      931
Professional services revenue                              594      670
Software revenue                                           297       243
Total revenues                                             8,231    8,972
Cost of revenues:                                                   
Subscription, software and other services                  2,637    3,574
Amortization of developed technology                       439      229
Total cost of revenues                                     3,076    3,803
Gross profit                                               5,155    5,169
Operating expenses:                                                 
Sales & marketing                                         2,832    2,275
General and administrative                                1,673    2,306
Research & development                                     1,038    1,161
Amortization of customer relationship and trade names      50       50
Total operating expenses                                   5,593    5,792
Loss from operations                                       (438)    (623)
Interest expense                                           (38)     (125)
Interest income                                            --       2
Other (expense) income, net                                (7)      29
Loss from operations before income taxes                   (483)    (717)
Income tax provision                                       10       79
Net loss                                                   (493)    (796)
Less: income attributable to noncontrolling interest       --      20
Net loss attributable to Lyris, Inc.                       $(493)  $(816)
Net loss per share                                                 
Basic and diluted                                          $(0.05) $(0.08)
Weighted average shares outstanding used in calculating             
net income per share:
Basic and diluted                                          9,568    9,441


Lyris, Inc.
Reconciliation of Net Income to Non-GAAP Net Income
(Unaudited)
(in thousands, except for per share data)
                                                         
                                      Three Months Ended
                                       September 30,
                                      2013                2012
                                                         
Net loss                               $(493)            $(796)
Stock-based compensation expense       115                206
Amortization of intangible assets      489                279
Other (income) expense, net            7                  (29)
                                                         
Non-GAAP net income (loss)             $118              $(340)
                                                         
Net income (loss) per share                               
Basic and diluted                     $0.01             $(0.04)
Shares used to compute net income per                     
share:
Basic and diluted                     9,568              9,441
                                                         
Non-GAAP net income excludes stock-based compensation expense, amortization of
intangiblesand certain other financial measures. Management believes that
non-GAAP net income providesuseful, supplemental information to management
and investors regarding the performance of thecompany's business operations.
Non-GAAP net income is not a measure determined in accordancewith United
States Generally Accepted Accounting Principles ("GAAP") and is thus
susceptible tovarying calculations. As presented, this measure may not be
comparable to similarly titled measuresthat other companies may disclose.
Non-GAAP net income should not be considered in isolation orconstrued as a
substitute for other measures of profitability prepared in accordance with
GAAP forpurposes of analyzing our financial performance or profitability.
Non-GAAP net income should beconsidered in addition to, and not as a
substitute or as superior measure to, net income, earningsper share or other
measures of financial performance prepared in accordance with GAAP.


Lyris, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(Unaudited, in thousands)
                                                          
                                       Three Months Ended
                                        September 30,
                                       2013                2012
Net loss                                $(493)            $(796)
Interest (income) / expense, net        38                 123
Income tax (benefit) / provision        10                 79
Depreciation                            369                251
Amortization                            489                279
                                                          
Total EBITDA                            413                (64)
                                                          
Stock-based compensation expense        115                206
Other (income) expense, net             7                  (29)
                                                          
Total Adjusted EBITDA                   $535              $113
                                                          
Adjusted EBITDA is calculated as earnings before net interest expense, taxes,
depreciation and amortization expense, stock-based compensation expense and
certain other financial measures. Adjusted EBITDA is commonly used by our
lenders to assess leverage capacity, debt service ability and liquidity, and
the company uses adjusted EBITDA to evaluate financial performance and to
award incentive compensation for certain employees, including our chief
executive officer. We believe that adjusted EBITDA also provides useful
measurements of liquidity and financial performance for our investors.


Lyris, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except for per share data)
                                                                  
                                                    September 30, June 30,
                                                    2013           2013
ASSETS                                                             
Current assets:                                                    
Cash and cash equivalents                            $1,898       $2,318
Accounts receivable, less allowances of $436 and    3,848         4,103
$510, respectively
Prepaid expenses and other current assets            788           722
Deferred income taxes                                954           942
Total current assets                                 7,488         8,085
Property and equipment, net                          9,499         9,354
Intangible assets, net                               4,967         5,014
Goodwill                                             9,791         9,791
Other long-term assets                               667           663
TOTAL ASSETS                                        $32,412      $32,907
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY                               
Current liabilities:                                               
Accounts payable and accrued expenses                $3,356       $3,458
Revolving line of credit                             2,265         2,260
Capital lease obligations - short-term               835           827
Income taxes payable                                 187           203
Deferred revenue                                     3,267         3,220
Total current liabilities                            9,910         9,968
Other long-term liabilities                          516           436
Capital lease obligations - long-term                318           504
TOTAL LIABILITIES                                  10,744        10,908
Commitments and contingencies                                      
Stockholders' equity:                                              
Redeemable convertible Series A preferred stock;
$0.01 par value per share, 2,000 shares authorized,  5,000         5,000
issued and outstanding, liquidation preferrence
$5,000 , as of September 30, 2013 and June 30, 2013
Common stock, $0.01 par value; 40,000 shares
authorized; 9,579 shares issued and outstanding      1,415         1,415
shares as of September 30, 2013 and June 30, 2013
Additional paid-in capital                           268,323       268,209
Accumulated deficit                                  (253,102)     (252,608)
Treasury stock, at cost 11 shares held as of         (56)          (56)
September 30, 2012 and June 30, 2013
Accumulated other comprehensive income               88            39
Total stockholders' equity                          16,668        16,999
Noncontrolling interest                              --           --
Total stockholders' equity                           16,668        16,999
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $32,412      $32,907

CONTACT: Investor Relations Contact:
         Rich McDonald
         Director, Investor Relations
         (610) 688-3305
         rmcdonald@lyris.com
 
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