Lyris Announces Third Quarter Fiscal 2014 Financial Results

Lyris Announces Third Quarter Fiscal 2014 Financial Results  91% of F3Q14 Revenue Was Recurring; 79% of F3Q14 Revenue From Subscriptions  EMERYVILLE, Calif., May 7, 2014 (GLOBE NEWSWIRE) -- Lyris, Inc. (OTCBB:LYRI), a leading global provider of digital marketing solutions, today announced financial results for the third quarter of fiscal 2014 ended March 31, 2014.  Highlights    *Fiscal third quarter revenues were $7.6 million, down 6.8% from $8.1     million in the prior quarter and down 14.7% from $8.9 million in the same     period last year.   *Recurring revenue was 91% of total revenue in the fiscal third quarter     compared to 90% of total revenues in the same period a year ago and 90% of     revenues in the prior quarter.   *Lyris HQ Software-as-a-Service (SaaS) revenues were 62% of total revenues     in the fiscal third quarter compared to 61% in the same period a year ago     and 60% of total revenues in the prior quarter.   *Fiscal third quarter gross margin was 64% compared to 61% for the same     period last year.   *Fiscal third quarter loss from operations was $(0.04) million, compared to     loss from operations of $(0.3) million in the same period last year.   *Fiscal third quarter net income was $0.02 million, or $0.00 per diluted     share, compared to net loss of $(0.6) million, or $(0.06) per share, in     the same period last year.   *Fiscal third quarter non-GAAP net income was $0.6 million, or $0.05 per     diluted share, compared to a non-GAAP net income of $0.4 million, or $0.04     per share, in the same period a year ago.   *Fiscal third quarter adjusted EBITDA was $0.9 million, compared to     adjusted EBITDA of $0.9 million in the same period a year ago.   *At March 31, 2014, the Company had $1.5 million in cash. The Company also     had $1.5 million available for drawdown on its $5 million loan facility     with Silicon Valley Bank.  "In the fiscal third quarter, we continued to see the momentum that began with the start of calendar 2014, and we managed our business responsibly to maintain our journey to growth and profitability," stated John Philpin, president and CEO of Lyris. "As we look to the coming months, we are very excited about the opportunities we see ahead of us as we continue to enhance and evolve our regional business strategies to better target customers around the globe. We are adding—and we will continue to add—new sales people, particularly in the U.S., and we now have the engineering and professional services infrastructure in place to further innovate on our core service offerings."  Third Quarter Fiscal 2014 Financial Results  Total revenues of the third quarter of fiscal 2014 were $7.6 million, down 6.8% from $8.1 million in the prior quarter and down 14.7% from $8.9 million in the same period last year. Total subscription revenues were $6.0 million, or 79% of total revenues, in the third quarter of fiscal 2014, compared to $7.0 million, or 79% of total revenues, in the same period in fiscal 2013. Lyris HQ SaaS revenues were $4.7 million, or 62% of total revenues, in the third quarter of fiscal 2014, down from $5.4 million, or 61% of total revenues, in the same period a year ago.  Gross profit was $4.9 million, or 64% as a percentage of total revenues, in the third quarter of fiscal 2014, compared to $5.5 million, or 61% of total revenue, in the same period in fiscal 2013.  Loss from operations was $(0.04) million in the third quarter of fiscal 2014, compared to loss from operations of $(0.3) million in the same period last year. Net income was $0.02 million, or $0.00 per diluted share, compared to net loss of $(0.6) million, or $(0.06) 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), May 7, 2014.  The teleconference can be accessed by calling 888-438-5448, passcode 5935935. 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 May 14, 2014, at 877-870-5176, passcode 5935935, and on the company's website at www.lyris.com.  About Lyris  Lyris is a global provider of digital marketing solutions that help companies engage with customers in 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 applications improve marketing efficiency by providing automated digital message delivery, robust segmentation, and real-time social, mobile, and interaction analytics. The Lyris solutions portfolio is uniquely comprised of both in-the-cloud and on-premises solutions – Lyris HQ and Lyris List Manager – combined with customer-focused services and support, and delivered on a powerful integration platform that connects data and marketing workflows across the enterprise. 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 words 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                                                             March 31,                                                            2014     2013                                                                     Revenues:                                                            Subscription revenue                                        $5,960 $7,031 Support and maintenance revenue                             959      984 Professional services revenue                               510     589 Software revenue                                            160      289 Total revenues                                              7,589   8,893 Cost of revenues:                                                    Subscription, software and other services                   2,292   2,898 Amortization of developed technology                        427     534 Total cost of revenues                                      2,719   3,432 Gross profit                                                4,870   5,461 Operating expenses:                                                  Sales & marketing                                          2,453   2,653 General and administrative                                 1,393   2,119 Research & development                                      1,019   911 Amortization of customer relationship and trade names       50      50 Total operating expenses                                    4,915   5,733 Loss from operations                                        (45)    (272) Interest expense                                            (39)    (32) Interest income                                             --      -- Other income (expense), net                                 29      (289) Loss from operations before income taxes                    (55)    (593) Income tax (provision) benefit                              71      25 Net income (loss)                                          16      (568) Net income (loss) per share basic and diluted               $0.00  $(0.06) Weighted average shares outstanding used in calculating net          income (loss) per share: Basic                                                       9,568   9,618 Diluted                                                     11,568  9,618   Lyris, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except for per share data)                                                                                                                               Nine Months Ended                                                            March 31,                                                           2014      2013                                                                     Revenues:                                                            Subscription revenue                                       $18,572 $21,498 Support and maintenance revenue                            2,987    2,913 Professional services revenue                              1,688    1,845 Software revenue                                           720       1,275 Total revenues                                             23,967   27,531 Cost of revenues:                                                    Subscription, software and other services                  7,386    9,570 Amortization of developed technology                       1,305    1,207 Total cost of revenues                                     8,691    10,777 Gross profit                                               15,276   16,754 Operating expenses:                                                  Sales & marketing                                         7,694    7,423 General and administrative                                4,489    6,365 Research & development                                     2,893    2,908 Amortization of customer relationship and trade names      151      151 Total operating expenses                                   15,227   16,847 Income (loss) from operations                              49       (93) Interest expense                                           (116)    (180) Interest income                                            --       3 Other income (expense), net                                43       (253) Loss from operations before income taxes                   (24)     (523) Income tax (provision) benefit                             25       (99) Net income (loss)                                          $1      $(622) Less: income attributable to noncontrolling interest       --      29 Net income (loss) attributable to Lyris, Inc.              $1      $(651) Net income (loss) per share basic and diluted              $0.00   $(0.07) Weighted average shares outstanding used in calculating              net income (loss) per share: Basic                                                      9,568    9,568 Diluted                                                    11,568   9,568   Lyris, Inc. Reconciliation of Net Income to Non-GAAP Net Income (Unaudited) (in thousands, except for per share data)                                                                                                    Three Months Ended                                          March 31,                                         2014               2013 Net loss                                 $16              $(568) Stock-based compensation expense         100               133 Amortization of intangible assets        477               584 Other (income) expense, net              (29)              289 Non-GAAP net income                      $564             $438 Non-GAAP net income per share:                             Basic                                   $0.06            $0.05 Diluted                                  $0.05            $0.04 Shares used to compute Non-GAAP net                         income per share: Basic                                    9,568             9,618 Diluted                                  11,568            11,568                                                            Non-GAAP net income excludes stock-based compensation expense, amortization of intangibles and certain other financial measures. Management believes that non-GAAP net income provides useful, supplemental information to management and investors regarding the performance of the company's business operations. Non-GAAP net income is not a measure determined in accordance with United States Generally Accepted Accounting Principles ("GAAP") and is thus susceptible to varying calculations. As presented, this measure may not be comparable to similarly titled measures that other companies may disclose. Non-GAAP net income should not be considered in isolation or construed as a substitute for other measures of profitability prepared in accordance with GAAP for purposes of analyzing our financial performance or profitability. Non-GAAP net income should be considered in addition to, and not as a substitute or as superior measure to, net income, earnings per share or other measures of financial performance prepared in accordance with GAAP.   Lyris, Inc. Reconciliation of Net Income to Non-GAAP Net Income (Unaudited) (in thousands, except for per share data)                                                                                                     Nine Months Ended                                          March 31,                                         2014                2013 Net loss                                 $1                $(622) Stock-based compensation expense         256                675 Amortization of intangible assets        1,456              1,358 Other (income) expense, net              (43)               253 Non-GAAP net income                     $1,670            $1,664 Non-GAAP net income per share                               Basic                                   $0.17             $0.17 Diluted                                  $0.14             $0.14 Shares used to compute Non-GAAP net                          income per share Basic                                    9,568              9,568 Diluted                                  11,568             11,568                                                             Non-GAAP net income excludes stock-based compensation expense, amortization of intangibles and certain other financial measures. Management believes that non-GAAP net income provides useful, supplemental information to management and investors regarding the performance of the company's business operations. Non-GAAP net income is not a measure determined in accordance with United States Generally Accepted Accounting Principles ("GAAP") and is thus susceptible to varying calculations. As presented, this measure may not be comparable to similarly titled measures that other companies may disclose. Non-GAAP net income should not be considered in isolation or construed as a substitute for other measures of profitability prepared in accordance with GAAP for purposes of analyzing our financial performance or profitability. Non-GAAP net income should be considered in addition to, and not as a substitute or as superior measure to, net income, earnings per 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                                          March 31,                                         2014              2013 Net income                              $16             $(568) Interest (income) / expense, net         39               32 Income tax (benefit) / provision         (71)             (25) Depreciation and amortization            827              991                                                           Total EBITDA                             811              430                                                           Stock-based compensation expense         100              133 Other (income) expense, net              (29)             289                                                           Total Adjusted EBITDA                    $882            $852                                                           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, includingour chief executive officer. We believe that adjusted EBITDA also provides useful measurementsof liquidity and financial performance for our investors.   Lyris, Inc. Reconciliation of Net Income to Adjusted EBITDA (Unaudited, in thousands)                                                                                                     Nine Months Ended                                          March 31,                                         2014                2013 Net income (loss)                        $1                $(622) Interest (income) / expense, net         116                177 Income tax (benefit) / provision         (25)               99 Depreciation and amortization            2,541              2,430                                                             Total EBITDA                             2,633              2,084                                                             Stock-based compensation expense         256                675 Other (income) expense, net              (43)               253                                                             Total Adjusted EBITDA                    $2,846            $3,012                                                             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)                                                                                                                            March 31, June 30,                                                         2014       2013 ASSETS                                                              Current assets:                                                     Cash and cash equivalents                                $1,536   $2,318 Accounts receivable, less allowances of$342 and $510,   3,901     4,103 respectively Prepaid expenses and other current assets                674       722 Deferred income taxes                                    988       942 Total current assets                                     7,099     8,085 Property and equipment, net                              1,652     2,376 Capitalized software, net                                7,773     6,978 Intangible assets, net                                   4,867     5,014 Goodwill                                                 9,791     9,791 Other long-term assets                                   681       663 TOTAL ASSETS                                             $31,863  $32,907                                                                    LIABILITIES AND STOCKHOLDERS' EQUITY                                Current liabilities:                                                Accounts payable and accrued expenses                    $2,730   $3,458 Revolving line of credit                                 2,340     2,260 Capital lease obligations - short-term                   602       827 Income taxes payable                                     149       203 Deferred revenue                                         3,177     3,220 Total current liabilities                                8,998     9,968 Other long-term liabilities                              459       436 Capital lease obligations - long-term                    235       504 TOTAL LIABILITIES                                       9,692     10,908 Commitments and contingencies                                      Redeemable Series A convertible preferred stock; $0.01 par value per share, 2,000 shares authorized, issued and 5,000     5,000 outstanding, liquidation preference $5,000 Stockholders' equity:                                               Common stock, $0.15 par value; 40,000 shares authorized; 1,415     1,415 9,579 issued and outstanding Additional paid-in capital                               268,464   268,209 Accumulated deficit                                      (252,608) (252,608) Treasury stock, at cost 11 shares held                  (56)      (56) Accumulated other comprehensive income                   (44)      39 Total stockholders' equity                               17,171    16,999 TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED      $31,863  $32,907 STOCK AND STOCKHOLDERS' EQUITY  CONTACT: Lyris, Inc.                   Investor Relations Contact:          Rich McDonald          Director, Investor Relations          (610) 688-3305          rmcdonald@lyris.com  
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