ServiceSource Reports First Quarter 2013 Financial Results
ServiceSource Reports First Quarter 2013 Financial Results
SAN FRANCISCO--(BUSINESS WIRE)-- ServiceSource® (NAS: SREV) , the global leader in recurring revenue management, today announced its financial results for the first quarter ended March 31, 2013.
Revenue: $61.1 million dollars
Adjusted EBITDA: loss of $0.5 million dollars
Record amount of cash and cash equivalents totaling $117.7 million dollars
Four new Renew OnDemand subscription deals signed
Successful Spring 2013 release of Renew OnDemand with enhanced analytics
"With several new Renew OnDemand subscriptions, we are excited by the strong momentum this gives us to start the year," said Mike Smerklo, ServiceSource's Chairman and Chief Executive Officer. "We remain focused on the evolution of our business to lead with our world-class SaaS solution, purpose-built for recurring revenue, and we will continue to invest appropriately to capture this new growth opportunity."
Revenue for the first quarter of fiscal 2013 was $61.1 million, a 6% increase over the $57.6 million delivered in the same period of 2012.
Adjusted EBITDA in the quarter, which excludes stock-based compensation, was a loss of $0.5 million, compared with $3.4 million for the same period last year.
GAAP net loss in the quarter was $10.5 million, or $0.14 per share, compared with a net loss of $1.3 million, or $0.02 per share for the same period last year.
Non-GAAP net loss in the quarter was $1.5 million, or $0.02 per share, compared with a net income of approximately $1.0 million, or $0.01 per diluted share for the same period last year.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release.
Quarterly Conference Call
ServiceSource will discuss its quarterly results and provide second quarter financial guidance today via teleconference at 1:30 p.m. Pacific Time. To access the call within the U.S., please dial (877) 293-5486, or outside the U.S. (914) 495-8592, at least five minutes prior to the start time. A live webcast of the call will also be available at http://ir.servicesource.com/events.cfm under the Events & Presentations menu. A replay of the webcast will also be available on the Company's website at http://ir.servicesource.com.
About ServiceSource International, Inc.
ServiceSource is the global leader in recurring revenue management. The world's most successful companies rely on us to maximize subscription, maintenance and support revenue, improve customer retention and increase business predictability and insight. ServiceSource delivers results with Renew OnDemand, the world's only cloud application built specifically to manage and grow recurring revenue, which can be combined with our industry-leading services.
With over a decade of experience focused exclusively in growing recurring revenue, our services and applications are based on proven best practices and global benchmarks. The company is headquartered in San Francisco, and has over $8 billion under management for customers in more than 150 countries and 40 languages.
ServiceSource, Renew OnDemand and any ServiceSource product or service names or logos above are trademarks of ServiceSource International, Inc. All other trademarks used herein belong to their respective owners.
For more information on ServiceSource, visit http://www.servicesource.com. To connect with ServiceSource, visit us on Twitter, LinkedIn and YouTube.
ServiceSource International, Inc. | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(In thousands, except per share amounts) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2013 | 2012 | |||||||
Net revenue | $ | 61,121 | $ | 57,574 | ||||
Cost of revenue (1) | 38,498 | 32,576 | ||||||
Gross profit | 22,623 | 24,998 | ||||||
Operating expenses | ||||||||
Sales and marketing (1) | 14,808 | 13,477 | ||||||
Research and development (1) | 6,248 | 4,581 | ||||||
General and administrative (1) | 11,222 | 10,075 | ||||||
Total operating expenses | 32,278 | 28,133 | ||||||
Loss from operations | (9,655 | ) | (3,135 | ) | ||||
Other expense, net | (107 | ) | (91 | ) | ||||
Loss before income taxes | (9,762 | ) | (3,226 | ) | ||||
Income tax provision (benefit) | 693 | (1,950 | ) | |||||
Net loss | $ | (10,455 | ) | $ | (1,276 | ) | ||
Net loss per common share: | ||||||||
Basic | (0.14 | ) | $ | (0.02 | ) | |||
Diluted | $ | (0.14 | ) | $ | (0.02 | ) | ||
Weighted-average shares used in computing net | ||||||||
loss per common share: | ||||||||
Basic | 75,610 | 73,212 | ||||||
Diluted | 75,610 | 73,212 | ||||||
(1) Includes stock-based compensation expense as follows: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2013 | 2012 | |||||||
Cost of revenue | $ | 732 | $ | 572 | ||||
Sales and marketing | 2,534 | 1,674 | ||||||
Research and development | 486 | 363 | ||||||
General and administrative | 2,169 | 1,638 | ||||||
Total stock-based compensation | $ | 5,921 | $ | 4,247 | ||||
ServiceSource International, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
March 31, | December 31, | |||||||
2013 | 2012 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 67,947 | $ | 76,568 | ||||
Short-term investments | 49,755 | 32,874 | ||||||
Accounts receivable, net | 59,039 | 65,238 | ||||||
Current portion of deferred income taxes | 177 | 389 | ||||||
Prepaid expenses and other | 5,089 | 5,178 | ||||||
Total current assets | 182,007 | 180,247 | ||||||
Property and equipment, net | 32,342 | 34,513 | ||||||
Deferred income taxes, net of current portion | 2,069 | 2,321 | ||||||
Other assets, net | 735 | 1,057 | ||||||
Goodwill | 6,334 | 6,334 | ||||||
Total assets | $ | 223,487 | $ | 224,472 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | 5,319 | $ | 3,293 | |||||
Accrued taxes | 269 | 1,056 | ||||||
Accrued compensation and benefits | 14,677 | 15,738 | ||||||
Other accrued liabilities | 11,074 | 10,403 | ||||||
Current portion of capital lease obligations | 325 | 326 | ||||||
Total current liabilities | 31,664 | 30,816 | ||||||
Long-term liabilities | 5,548 | 6,729 | ||||||
Total liabilities | 37,212 | 37,545 | ||||||
Stockholders' equity: | ||||||||
Common stock | 8 | 8 | ||||||
Treasury stock | (441 | ) | (441 | ) | ||||
Additional paid-in capital | 220,357 | 210,650 | ||||||
Accumulated deficit | (33,853 | ) | (23,398 | ) | ||||
Accumulated other comprehensive income | 204 | 108 | ||||||
Total stockholders' equity | 186,275 | 186,927 | ||||||
Total liabilities and stockholders' equity | $ | 223,487 | $ | 224,472 | ||||
ServiceSource International, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2013 | 2012 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (10,455 | ) | $ | (1,276 | ) | ||
Adjustments to reconcile net loss to net cash | ||||||||
provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 3,206 | 2,268 | ||||||
Loss on disposal of fixed assets | 29 | 28 | ||||||
Provision for doubtful accounts | (67 | ) | - | |||||
Amortization of deferred financing costs | 12 | 27 | ||||||
Accretion on premium on short-term investments | 174 | 154 | ||||||
Deferred income taxes | 461 | (873 | ) | |||||
Stock-based compensation | 5,921 | 4,247 | ||||||
Income tax charge from stock-based compensation | 181 | 362 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 5,863 | (5,084 | ) | |||||
Prepaid expenses and other | 415 | (2,407 | ) | |||||
Accounts payable | 2,077 | (1,257 | ) | |||||
Accrued taxes | (779 | ) | 490 | |||||
Accrued compensation and benefits | (890 | ) | (6,783 | ) | ||||
Other accrued liabilities | (268 | ) | 3,780 | |||||
Net cash provided by (used in) operating activities | 5,880 | (6,324 | ) | |||||
Cash flows used in investing activities | ||||||||
Acquisition of property and equipment | (1,232 | ) | (6,631 | ) | ||||
Purchases of short-term investments | (18,034 | ) | (8,390 | ) | ||||
Sales of short-term investments | 508 | 1,430 | ||||||
Maturities of short-term investments | 500 | 4,890 | ||||||
Net cash used in investing activities | (18,258 | ) | (8,701 | ) | ||||
Cash flows from financing activities | ||||||||
Repayments of capital leases | (80 | ) | (80 | ) | ||||
Proceeds from common stock issuances | 3,741 | 5,821 | ||||||
Income tax charge from stock-based compensation | (181 | ) | (362 | ) | ||||
Net cash provided by financing activities | 3,480 | 5,379 | ||||||
Net decrease in cash and cash equivalents | (8,898 | ) | (9,646 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 277 | (232 | ) | |||||
Cash and cash equivalents at beginning of period | 76,568 | 65,983 | ||||||
Cash and cash equivalents at end of period | $ | 67,947 | $ | 56,105 | ||||
Use of Non-GAAP Financial Measures
To supplement its financial statements presented in accordance with generally accepted accounting principles, or GAAP, ServiceSource also provides investors with non-GAAP gross profit, net income, net income per share and Adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the closest GAAP financial measure is presented in the financial tables below under the heading, "GAAP to Non-GAAP Reconciliation."
ServiceSource believes that the non-GAAP financial information provided in this release can assist investors in understanding and assessing its on-going core operations and prospects for the future and provides an additional tool for investors to use in comparing ServiceSource's financial results with other companies in the industry, many of which present similar non-GAAP financial measures to investors.
Non-GAAP gross profit consists of gross profit plus stock based compensation and amortization of internally-developed software.
Non-GAAP net income consists of net income (loss) plus stock-based compensation, amortization of internally-developed software and applying an income tax rate of 40% reflecting our estimated tax expense on our core operations. Stock-based compensation expense is expected to vary depending on the number of new grants issued, changes in the company's stock price, stock market volatility, expected option lives and risk-free rates of return, all of which are difficult to estimate.
EBITDA consists of net income (loss) plus depreciation and amortization, interest expense, other expenses, net, and income tax expense. Adjusted EBITDA consists of EBITDA plus non-cash, stock-based compensation expense. ServiceSource uses Adjusted EBITDA as a measure of operating performance because it assists the company in comparing performance on a consistent basis, as it removes from the operating results the impact of the company's capital structure.
These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States.
ServiceSource International, Inc. | ||||||||
Reconciliation of Net Loss to Adjusted EBITDA | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2013 | 2012 | |||||||
Net loss | $ | (10,455 | ) | $ | (1,276 | ) | ||
Income tax provision (benefit) | 693 | (1,950 | ) | |||||
Other expense, net | 107 | 91 | ||||||
Depreciation | 3,206 | 2,268 | ||||||
EBITDA | (6,449 | ) | (867 | ) | ||||
Stock-based compensation | 5,921 | 4,247 | ||||||
Adjusted EBITDA | $ | (528 | ) | $ | 3,380 | |||
