Exa Reports First Quarter Fiscal 2015 Financial Results

Exa Reports First Quarter Fiscal 2015 Financial Results

  Reports 10% Year-over-Year Revenue Growth and Increases Full Year Revenue
                                   Guidance

             Appoints Richard Gilbody as Chief Financial Officer

BURLINGTON, Mass., May 29, 2014 (GLOBE NEWSWIRE) -- Exa^® Corporation
(Nasdaq:EXA), a global innovator of fluids simulation solutions for product
engineering, today announced financial results for the first quarter of fiscal
2015, which ended April 30, 2014. Separately, the Company also announced that
it has appointed Richard Gilbody as Chief Financial Officer, effective June 1,
2014.

"Revenue for the first quarter was $13.8 million, an increase of 10% from a
year ago. This was at the lower end of our guidance, as a few customers
delayed projects at the end of the quarter," said Stephen Remondi, President
and Chief Executive Officer of Exa. "These delays do not diminish our outlook
for project revenue for the year. More importantly, we have converted a number
of customers from project-based activity to license subscriptions. These
significant transitions are expected to improve our license revenue growth
rates to double-digits for the balance of the year and give us confidence to
raise the lower end of our prior full year revenue expectations. As we
progress through fiscal 2015, we expect investments that we have been making
in sales and technology to further strengthen our market position and
contribute to healthy growth for the remainder of the year."

Remondi added, "Additionally, we are pleased to have Rick Gilbody joining our
executive team and believe that with his deep experience with public companies
in their growth stage, he will be able to make valuable contributions in
helping our business continue to scale."

First Quarter Fiscal 2015 Financial Highlights

Revenue

  *Total revenue for the first quarter of fiscal 2015 was $13.8 million, an
    increase of 10% compared to $12.5 million in the comparable period in
    fiscal 2014. On a constant currency basis, total revenue also increased
    10% when compared with the corresponding period in fiscal 2014.
  *License revenue was $11.7 million for the first quarter of fiscal 2015,
    compared to $10.7 million in the comparable period in fiscal 2014,
    representing an increase of 9%, or 8% on a constant currency basis.
  *Project revenue was $2.1 million for the first quarter of fiscal 2015, an
    increase of 17%, or 18% on a constant currency basis, compared to $1.8
    million in the first quarter of fiscal 2014.

Profitability

  *GAAP loss from operations was $(1.6) million in the first quarter of
    fiscal 2015, compared to GAAP loss from operations of $(0.5) million in
    the comparable period in fiscal 2014.
  *Non-GAAP loss from operations was $(1.2) million in the first quarter of
    fiscal 2015, compared to non-GAAP loss from operations of $(0.1) million
    in the comparable period in fiscal 2014.
  *Adjusted EBITDA was $(0.6) million in the first quarter of fiscal 2015,
    compared to adjusted EBITDA of $0.3 million in the comparable period in
    fiscal 2014.
  *GAAP net loss was $(17.2) million in the first quarter of fiscal 2015,
    compared to a GAAP net loss of $(0.5) million for the comparable period in
    fiscal 2014. GAAP net loss per share was $(1.28), based on 13.5 million
    diluted weighted average shares outstanding, compared to GAAP net loss per
    share of $(0.04) for the comparable period in fiscal 2014, based on 13.3
    million diluted weighted average shares outstanding.
  *Non-GAAP net loss was $(16.9) million, or $(1.25) per diluted share in the
    first quarter of fiscal 2015, compared to a non-GAAP net loss of $(0.3)
    million, or $(0.02) per diluted share, in the comparable period in fiscal
    2014.
  *Included in GAAP net loss and non-GAAP net loss for the first quarter is a
    $14.5 million non-cash charge to record a valuation allowance against net
    deferred tax assets in the United States, as well as a $0.7 million
    non-cash write-off of state deferred tax assets associated with a
    cumulative change in ownership for tax purposes.

Balance Sheet

  *The company had $32.6 million in cash and cash equivalents as of April 30,
    2014, compared to $28.8 million as of January 31, 2014.

Business Outlook

Based on information available as of May 29, 2014, Exa is providing second
quarter and fiscal 2015 guidance as indicated below.

Second Quarter Fiscal 2015:

  *Total revenue is expected to be in the range of $14.2 million to $14.8
    million.
  *Adjusted EBITDA is expected to be in the range of $(0.2) million to $0.3
    million.
  *GAAP net loss is expected to be in the range of $(0.8) million to $(0.5)
    million.
  *Non-GAAP net loss is expected to be in the range of $(0.5) million to
    $(0.2) million.
  *Basic share count for the second quarter is estimated to be 13.8 million
    shares.
  *Diluted share count for the second quarter is estimated to be 14.8 million
    shares.

Full Year Fiscal 2015:

  *Total revenue is expected to be in the range of $61.0 million to $63.0
    million, an increase from prior guidance of $60.5 million to $63.0
    million.
  *Adjusted EBITDA is expected to be in the range of $2.6 million to $3.2
    million.
  *GAAP net loss is expected to be in the range of $(16.7) million to $(16.4)
    million, including non-cash tax charges of $15.2 million in the first
    quarter.
  *Non-GAAP net loss is expected to be in the range of $(15.3) million to
    $(14.9) million, including non-cash tax charges of $15.2 million in the
    first quarter.
  *Basic share count for the full year is estimated to be 13.7 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 1.37 US dollars per Euro and
103.0 Japanese yen per US dollar for fiscal year 2015.

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 first quarter fiscal 2015 financial results conference call
When:      Thursday, May 29, 2014
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 46896935, Domestic
          (404) 537-3406, Passcode 46896935, 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 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: 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, 2014 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)
                                                                 
                                                        April 30, January 31,
                                                        2014      2014
ASSETS                                                            
Current assets:                                                   
Cash and cash equivalents                                $32,592 $28,753
Accounts receivable                                      13,862   27,245
Deferred tax assets                                      256      2,213
Prepaid expenses and other current assets                2,453    2,108
Total current assets                                     49,163   60,319
Property and equipment, net                              7,043    7,356
Intangible assets, net                                   2,658    2,745
Deferred tax assets                                      41       13,306
Other assets                                             1,168    1,123
Total assets                                             $60,073 $84,849
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                              
Current liabilities:                                              
Accounts payable                                         $904    $1,684
Accrued expenses                                         6,432    10,285
Current portion of deferred revenue                      28,164   30,594
Current maturities of capital lease obligations          2,082    2,426
Total current liabilities                                37,582   44,989
Deferred revenue                                         14       273
Capital lease obligations                                2,184    2,695
Other long-term liabilities                              540      528
Deferred rent                                            715      831
Total liabilities                                        41,035   49,316
                                                                 
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; 30,000,000 shares
authorized; 13,778,697 and 13,388,712 shares issued,     14       13
respectively; 13,746,195 and 13,356,210 shares
outstanding, respectively
Additional paid-in capital                               85,884   85,201
Accumulated deficit                                      (66,941) (49,721)
Treasury stock (32,502 common shares, at cost)           --      --
Accumulated other comprehensive income                   81       40
Total stockholders' equity                               19,038   35,533
Total liabilities and stockholders' equity               $60,073 $84,849
                                                                 
                                                                 

EXA CORPORATION
Consolidated Statements of Operations and Statements of Comprehensive Loss
(Unaudited)
(in thousands, except share and per share data)
                                                               
                                                               
                                                 Three Months Ended April 30,
                                                 2014           2013
                                                               
Revenue:                                                        
License revenue                                   $11,660      $10,692
Project revenue                                   2,110         1,796
Total revenues                                    13,770        12,488
Operating expenses (1):                                         
Cost of revenues                                  4,596         3,671
Sales and marketing                               2,567         2,117
Research and development                          5,102         4,386
General and administrative (2)                    3,122         2,771
Total operating expenses                          15,387        12,945
Loss from operations                              (1,617)       (457)
Other expense, net:                                             
Foreign exchange (loss) gain                      (44)          37
Interest expense                                  (83)          (381)
Interest income                                   4             4
Other income, net                                 --           2
Total other expense, net                          (123)         (338)
Loss before income taxes                          (1,740)       (795)
(Provision) benefit for income taxes              (15,480)      254
Net loss                                        $(17,220)    $(541)
                                                               
Net loss per share:                                             
Basic                                             $(1.28)      $(0.04)
Diluted                                           $(1.28)      $(0.04)
                                                               
Weighted average shares outstanding used in                     
computing net loss per share:
Basic                                             13,499,919    13,296,098
Diluted                                           13,499,919    13,296,098
                                                               
                                                               
Comprehensive loss:                                             
Net loss                                          $(17,220)    $(541)
Foreign currency translation adjustments          41            (2)
Comprehensive loss                                $(17,179)    $(543)
                                                               
(1) Includes stock-based compensation expense as follows:
                                                               
                                                 Three Months Ended April 30,
                                                 2014           2013
                                                               
Cost of revenues                                  $38          $31
Sales and marketing                               75            50
Research and development                          156           77
General and administrative                        101           87
Total                                             $370         $245
                                                               
(2) Includes amortization expense related to intangible assets as follows:
                                                               
                                                 Three Months Ended April 30,
                                                 2014           2013
                                                               
General and administrative                        $87          $88
                                                               
                                                               

EXA CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                                                
                                                 Three Months Ended April 30,
                                                 2014            2013
Cash flows provided by operating activities:                     
Net loss                                          $(17,220)     $(541)
Adjustments to reconcile net loss to net cash                    
provided by operating activities:
Depreciation and amortization                     663            496
Stock-based compensation expense                  370            245
Deferred rent expense                             (114)          (76)
Non-cash interest                                 --            122
Deferred income taxes                             15,222         (487)
Net change in operating assets and liabilities:                  
Accounts receivable                               13,352         23,706
Prepaid expenses and other current assets         (346)          (15)
Other assets                                      (45)           (36)
Accounts payable                                  (782)          (973)
Accrued expenses                                  (3,742)        (2,322)
Other liabilities                                 12             33
Deferred revenue                                  (2,695)        (1,618)
Net cash provided by operating activities         4,675          18,534
                                                                
Cash flows used in investing activities:                         
Purchases of property and equipment               (366)          (336)
Net cash used in investing activities             (366)          (336)
                                                                
Cash flows used in financing activities:                         
Proceeds from stock option exercises              314            29
Payments of long-term debt                        --            (331)
Payments of capital lease obligations             (855)          (520)
Net cash used in financing activities             (541)          (822)
                                                                
Effect of exchange rate changes on cash           71             (154)
                                                                
Net increase in cash and cash equivalents         3,839          17,222
                                                                
Cash and cash equivalents, beginning of period    28,753         30,716
Cash and cash equivalents, end of period          $32,592       $47,938
                                                                
Supplemental cash flow disclosures:                              
Cash paid for interest                            $83           $264
Cash paid for income taxes                        $171          $121
Supplemental disclosure of non-cash investing and                
financing activities:
Acquisition of equipment through capital leases   $--          $43
                                                                
                                                                

EXA CORPORATION
Reconciliation of historical Non-GAAP to GAAP measures
(Unaudited)
(in thousands, except per share data)
                                                       
Adjusted EBITDA:                                        
                                            Three Months Ended
                                            April 30,
                                            2014        2013
                                                       
Net loss                                     $(17,220) $(541)
Add back:                                               
Depreciation and amortization                663        496
Interest expense, net                        79         377
Other income, net                            --        (2)
Foreign exchange loss (gain)                 44         (37)
Provision (benefit) for income taxes         15,480     (254)
EBITDA                                       (954)      39
Stock-based compensation expense             370        245
                                                       
Adjusted EBITDA                              $(584)    $284
                                                       
Non-GAAP operating loss:                                
                                            Three Months Ended
                                            April 30,
                                            2014        2013
                                                       
Operating loss                               $(1,617)  $(457)
Add back:                                               
Stock-based compensation expense             370        245
Amortization of acquired intangible assets   87         88
                                                       
Non-GAAP operating loss                      $(1,160)  $(124)
                                                       
Non-GAAP net loss:                                      
                                            Three Months Ended
                                            April 30,
                                            2014        2013
                                                       
Net loss                                     $(17,220) $(541)
Add back:                                               
Stock-based compensation expense             370        245
Amortization of acquired intangible assets   87         88
Income tax effect (1)                        (160)      (116)
                                                       
Non-GAAP net loss                            $(16,923) $(324)
                                                       
Non-GAAP net loss, per diluted share:                   
                                            Three Months Ended
                                            April 30,
                                            2014        2013
                                                       
Net loss, per diluted share (2)              $(1.28)   $(0.04)
Add back:                                               
Stock-based compensation expense             0.03       0.02
Amortization of acquired intangible assets   0.01       0.01
Income tax effect (1)                        (0.01)     (0.01)
                                                       
Non-GAAP netloss, per diluted share (2)(3): $(1.25)   $(0.02)
                                                       

(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 13.5
million and 13.3 million for the three months ended April 30, 2014 and 2013,
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        Year Ended
(in millions)                       Ended July 31, 2014 January 31, 2015
                                                       
Net loss                             $ (0.8) - (0.5)     $ (16.7) - (16.4)
Add back:                                              
Depreciation and amortization        0.7                3.0
Interest expense, net                0.1                0.4
(Benefit) provision for income taxes (0.6) - (0.4)       14.1 - 14.4
EBITDA                               (0.6) - (1.0)       0.8 - 1.4
Stock-based compensation expense     0.4                1.8
Adjusted EBITDA                      $ (0.2) - 0.3       $2.6 - 3.2
                                                       
                                                       
Non-GAAP net loss:                                      
                                    Three Months        Year Ended
(in millions)                       Ended July 31, 2014 January 31, 2015
                                                       
Net loss                             $ (0.8) - (0.5)     $ (16.7) - (16.4)
Add back:                                              
Stock-based compensation expense     0.4                 1.8
Amortization of acquired intangibles 0.1                 0.4
Income tax effect (1)                (0.2)               (0.8) - (0.7)
Non-GAAP net loss                    $ (0.5) - (0.2)     $ (15.3) - (14.9)
                                                       

(1) Non-GAAP financial information for the quarter is adjusted using a
blended tax rate equivalent to our annual estimated United States federal tax
rateand 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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