Model N Announces Second Quarter Fiscal 2013 Financial Results

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Model N Announces Second Quarter Fiscal 2013 Financial Results

Q2 revenues of $24.6 million, a 21% year-over-year increase

Raised over $100 million in growth capital through IPO listing on the New York Stock Exchange


REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Model N, Inc., (NYS: MODN) , the leader in Revenue Management solutions for the life science and technology industries, today announced financial results for the second quarter of fiscal 2013, which ended March 31, 2013.

"We are pleased with our second quarter results, which exceeded our expectations on both revenue and profitability," said Zack Rinat, Founder, Chairman, and Chief Executive Officer at Model N. "We are still in the early stages of a major new market opportunity as companies adopt modern software solutions to address their Revenue Management challenges, replacing outdated custom solutions and manual business processes along the way. Model N has emerged as the market leader as a result of our comprehensive Revenue Management platform, vertical focus and demonstrated history of delivering business value."

"We are pleased to have completed our IPO in March. The increased market awareness and financial resources from this event will help us to execute the company's growth plans and capitalize on our growing, multi-billion dollar market opportunity," added Rinat.

Second Quarter Fiscal 2013 Financial Highlights:

  • Total Revenues: Total revenues were $24.6 million, a year-over-year increase of 21% compared to $20.2 million for the second quarter of fiscal 2012.
  • Gross Profit: Gross profit was $13.0 million, compared to $9.6 million for the second quarter of fiscal 2012. Non-GAAP gross profit was $13.3 million compared to $11.1 million for the second quarter of fiscal 2012.
  • Income (Loss) from operations: GAAP loss from operations was $1.0 million, compared to $3.7 million for the second quarter of fiscal 2012. Non-GAAP income from operations was slightly above breakeven, compared to a loss from operations of $0.8 million for the second quarter of fiscal 2012.
  • Net loss: GAAP net loss was $1.9 million, compared to $4.2 million for the second quarter of fiscal 2012. GAAP net loss per share was $0.19 based upon weighted average shares outstanding of 10.1 million, as compared to $0.54 for the second quarter of fiscal 2012 based upon weighted average shares outstanding of 7.7 million.
  • Non-GAAP net loss: Non-GAAP net loss was $0.2 million, as compared to $1.1 million for the second quarter of fiscal 2012. Non-GAAP net loss per share was $0.01 based upon weighted average shares outstanding of 16.4 million, as compared to $0.07 for the second quarter of fiscal 2012 based upon weighted average shares outstanding of 15.0 million.
  • Adjusted EBITDA: Adjusted EBITDA was $0.5 million, compared to ($0.4) million for the second quarter of fiscal 2012.

Use of Non-GAAP Financial Measures

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures, including the reasons management uses each measure, is also included below under the heading "Non-GAAP Financial Measures."

Quarterly Results Conference Call
Model N will host a conference call today at 2:00 PM Pacific Time (5:00 PM Eastern Time) to review the company's financial results for the second quarter of fiscal 2013, which ended March 31, 2013. To access the call, please dial (888) 503-8169 in the U.S. or (719) 325-2454 internationally. Passcode is 4807849. A live webcast of the conference will be accessible from Model N's website at: http://investor.modeln.com. Following the completion of the call through 11:59 p.m. ET on May 14, 2013, a recording will be available for replay at: http://investor.modeln.com and a telephone replay will be available by dialing (877) 870-5176 in the U.S. or (858) 384-5517 internationally with recording access code 4807849.

About Model N

Model N is the leader in Revenue Management solutions. Model N helps our customers dramatically improve pricing and contracting, rebates and incentives, and sales and marketing performance analysis to increase their revenue. Model N drives improved pricing, margin, and revenue performance for our customers through a powerful combination of best practices, highly configurable software applications, comprehensive services, and actionable analytics. Model N leverages its deep industry expertise to support the unique business needs of Life Sciences and Technology manufacturers in more than 50 countries. Global Customers include: Allergan, Amgen, Atmel, Boston Scientific, Bristol-Myers Squibb, Dell, Johnson & Johnson, Linear Technology, Merck, Marvell, Maxim, Micron, Nokia, Novartis, Novo Nordisk, ON Semiconductor, STMicroelectronics, and Watson Pharmaceuticals. Learn more at: http://www.modeln.com. Model N is traded on the New York Stock Exchange under the symbol MODN.

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding Model N's growth plans. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending and resulting variability in customer orders from quarter to quarter; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our competitors; (iv) our ability to manage our growth effectively; and (v) acceptance of our applications and services by customers. Further information on risks that could affect Model N's results is included in our filings with the Securities and Exchange Commission, including our final prospectus, our quarterly report on Form 10-Q for the quarter ended March 31, 2013, and current reports on Form 8-K that we may file from time to time. Should any of these risks or uncertainties materialize, actual results could differ materially from expectations. Model N assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Non-GAAP Financial Measures
We have provided in this release financial information that has not been prepared in accordance with accounting standards generally accepted in the United States of America ("GAAP"). We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures below. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Our reported results include certain non-GAAP financial measures, including non-GAAP operating income (loss), non-GAAP net income (loss), weighted-average shares outstanding, non-GAAP net income (loss) per share, and adjusted EBITDA. Non-GAAP operating income (loss) and non-GAAP net income (loss) exclude expenses related to stock-based compensation expense, LeapFrogRX compensation charges, amortization of intangible assets, and changes in fair value of preferred stock warrant liability as they are often excluded by other companies to help investors understand the operational performance of their business and, in the case of stock-based compensation, can be difficult to predict. In addition, stock-based compensation expense varies from period to period and company to company due to such things as differing valuation methodologies and changes in stock price. Adjusted EBITDA is defined as net income (loss), adjusted for LeapFrogRX compensation charges, depreciation and amortization, stock-based compensation expense, interest and other expense, net, and provision for income taxes. Reconciliation tables are provided in this press release.

Model N Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
   March 31,   September 30,
20132012
Assets
Current assets:
Cash and cash equivalents$109,024$15,768
Short-term investments63

-

Accounts receivable, net of allowances of $98 and $55 as of March 31, 2013 and September 30, 2012, respectively

15,10112,468
Deferred cost of implementation services, current portion1,1161,077
Prepaid expenses1,6212,246
Other current assets 327  552 
Total current assets127,25232,111
Property and equipment, net5,9664,590
Goodwill1,5091,509
Other intangible assets, net1,0831,248
Other assets 711  1,140 
Total assets$136,521 $40,598 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$539$196
Accrued employee compensation8,0457,650
Accrued liabilities

4,670

4,432
Deferred revenue, current portion

28,118

29,362
Capital lease obligations, current portion519555
Loan obligations, current portion 2,500  2,500 
Total current liabilities

44,391

44,695
Long-term liabilities:
Deferred revenue, net of current portion

2,398

2,289
Capital lease obligations, net of current portion87349
Loan obligations, net of current portion1,3972,627
Other long-term liabilities 688  1,125 
Total long-term liabilities 

4,570

  6,390 
Total liabilities 

48,961

  51,085 
Convertible preferred stock:-41,776
Stockholders' equity:
Common stock31
Preferred stock--
Additional paid-in capital

152,099

9,045
Accumulated other comprehensive loss(144)(120)
Accumulated deficit (64,398) (61,189)
Total equity 

87,560

  (52,263)
Total liabilities, convertible preferred stock and stockholders' equity$136,521 $40,598 
 
 
Model N Inc.
Condensed Consolidated Statements of Operations
(dollars and shares in thousands, except per share amounts)
(unaudited)
   Three months ended  Six months ended
March 31,  March 31, March 31,  March 31,
2013201220132012
Revenue:
License and implementation$14,481$11,659$26,943$23,024
SaaS and maintenance 10,078  8,581  19,957  15,273 
Total revenue24,55920,24046,90038,297
Cost of revenue:
License and implementation6,8005,51512,36010,543
SaaS and maintenance 4,781  5,168  9,304  7,664 
Total cost of revenue 11,581  10,683  21,664  18,207 
Gross profit 12,978  9,557  25,236  20,090 
Operating expenses:
Research and development4,4834,8178,6028,990
Sales and marketing5,7705,70511,1069,686
General and administrative 3,758  2,773  7,635  5,166 
Total operating expenses 14,011  13,295  27,343  23,842 
Operating loss(1,033)(3,738)(2,107)(3,752)
Interest expense, net115170241354
Other expense, net 660  179  712  585 
Loss before income taxes(1,808)(4,087)(3,060)(4,691)
Provision for income taxes 88  68  149  139 

Net loss attributable to Model N Inc. common stockholders

 (1,896) (4,155) (3,209) (4,830)

Net loss per share attributable to Model N Inc. common stockholders

$(0.19)$(0.54)$(0.35)$(0.63)

Weighted average number of shares used in computing net loss per common share

 10,137  7,731  9,071  7,677 
 
 
Model N Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
   Three months ended  Six months ended
March 31,March 31,
2013  20122013  2012
Cash flows from operating activities:
Net loss$(1,896)$(4,155)$(3,209)$(4,830)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization495391937704
Amortization of other intangible assets846816568
Stock-based compensation9421,0861,4991,594
Amortization of debt discount Read Full Story

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