Model N Announces Third Quarter Fiscal 2013 Financial Results

Model N Announces Third Quarter Fiscal 2013 Financial Results

Q3 revenues of $27.2 million, a 20% year-over-year increase

Q3 non-GAAP income from operations of $3.7 million


REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Model N, Inc., (NYS: MODN) , a leading revenue management solutions provider to the life science and technology industries, today announced financial results for the third quarter of fiscal 2013, which ended June 30, 2013.

"We exceeded our guidance on both revenue and profitability for the third quarter of Fiscal 2013," said Zack Rinat, Founder, Chairman, and Chief Executive Officer at Model N. "Our products are delivering significant value for our customers across the life sciences and technology verticals as we continue to pioneer the Revenue Management market. We are committed to continue investing in our products, sales, and marketing to enable Model N to scale globally and to capitalize on our growing pipeline and large market opportunity."

Third Quarter Fiscal 2013 Financial Highlights:

  • Total Revenues: Total revenues were $27.2 million, a year-over-year increase of 20% compared to $22.8 million for the third quarter of fiscal 2012.
  • Gross Profit: Gross profit was $14.9 million, compared to $11.4 million for the third quarter of fiscal 2012. Non-GAAP gross profit was $15.5 million compared to $12.9 million for the third quarter of fiscal 2012.
  • Income (Loss) from operations: GAAP income from operations was $1.7 million, compared to a loss from operations of $1.0 million for the third quarter of fiscal 2012. Non-GAAP income from operations was $3.7 million compared to $1.6 million for the third quarter of fiscal 2012.
  • Net income (loss): GAAP net income was $1.5 million, compared to a net loss of $1.2 million for the third quarter of fiscal 2012. GAAP diluted net income per share was $0.06 based upon weighted average shares outstanding of 26.1 million, as compared to a net loss per share of $0.16 for the third quarter of fiscal 2012 based upon weighted average shares outstanding of 7.9 million.
  • Non-GAAP net income: Non-GAAP net income was $3.6 million, as compared to $1.3 million for the third quarter of fiscal 2012. Non-GAAP diluted net income per share was $0.14 based upon weighted average shares outstanding of 26.1 million, as compared to $0.07 for the third quarter of fiscal 2012 based upon weighted average shares outstanding of 18.2 million.
  • Adjusted EBITDA: Adjusted EBITDA was $4.2 million, compared to $2.0 million for the third 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 third quarter of fiscal 2013, which ended June 30, 2013. To access the call, please dial (877) 705-6003 in the U.S. or (201) 493-6725 internationally. Passcode is 417636. 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 August 15, 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 417636.

About Model N

Model N is the leader in Revenue Management solutions. Model N helps its customers maximize their revenue and reduce revenue compliance risk by managing every dollar that impacts their top line encompassing contracting, pricing, incentives, and rebates. Model N leverages its deep industry expertise to support the unique business needs of Life Sciences and Technology companies in more than 50 countries. Global Customers include: Actavis, Allergan, Amgen, Atmel, Boston Scientific, Bristol-Myers Squibb, Dell, Johnson & Johnson, Linear Technology, Merck, Marvell, Maxim, Micron, Nokia, Novartis, Novo Nordisk, ON Semiconductor, and STMicroelectronics. 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 growing pipeline. 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 June 30, 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 (income) expenses, 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)
 
June 30,September 30,
20132012
Assets
Current assets:
Cash and cash equivalents$105,078$15,768
Short-term investments59-
Accounts receivable, net20,14612,468
Deferred cost of implementation services, current portion1,1211,077
Prepaid expenses2,1242,246
Other current assets 138  552 
Total current assets128,66632,111
Property and equipment, net6,9134,590
Goodwill1,5091,509
Intangible assets, net1,0011,248
Other assets 686  1,140 
Total assets$138,775 $40,598 
Liabilities, Convertible Preferred Stock and stockholders' equity (deficit)
Current liabilities:
Accounts payable$2,282$196
Accrued employee compensation10,4197,650
Accrued liabilities3,5234,432
Deferred revenue, current portion25,85429,362
Capital lease obligations, current portion433555
Loan obligations, current portion -  2,500 
Total current liabilities42,51144,695
Long-term liabilities:
Deferred revenue, net of current portion4,3412,289
Capital lease obligations, net of current portion29349
Loan obligations, net of current portion-2,627
Other long-term liabilities 684  1,125 
Total long-term liabilities 5,054  6,390 
Total liabilities 47,565  51,085 
 
Convertible preferred stock:-41,776
Stockholders' equity (deficit):
Common stock31
Preferred stock--
Additional paid-in capital154,3129,045
Accumulated other comprehensive loss(242)(120)
Accumulated deficit (62,863) (61,189)
Total shareholders' equity (deficit) 91,210  (52,263)
Total liabilities, convertible preferred stock and stockholders' equity (deficit)$138,775 $40,598 
 
 

 

       
 
Model N Inc.
Condensed Consolidated Statements of Operations
(dollars and shares in thousands, except per share amounts)
(unaudited)
 
Three months endedNine months ended
June 30,June 30,June 30,June 30,
2013201220132012
Revenues:
License and implementation$16,419$13,191$43,362$36,215
SaaS and maintenance 10,828  9,582  30,785  24,855 
Total revenues27,24722,77374,14761,070
Cost of revenues:
License and implementation7,5275,71219,88716,255
SaaS and maintenance 4,865  5,616  14,169  13,280 
Total cost of revenues 12,392  11,328  34,056  29,535 
Gross profit 14,855  11,445  40,091  31,535 
Operating expenses:
Research and development4,0634,49112,66513,481
Sales and marketing5,2565,35616,36215,042
General and administrative 3,883  2,618  11,518  7,784 
Total operating expenses 13,202  12,465  40,545  36,307 
Income (loss) from operations1,653(1,020)(454)(4,772)
Interest expense, net85160326514
Other (income) expenses, net (48) (36) 664  549 
Income (loss) before income taxes1,616(1,144)(1,444)(5,835)
Provision for income taxes 81  92  230  231 
Net income (loss) attributable to common stockholders 1,535  (1,236) (1,674) (6,066)
Net income (loss) per share attributable to common stockholders:
Basic$0.07 $(0.16)$(0.12)$(0.78)
Diluted$0.06 $(0.16)$(0.12)$(0.78)

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

Basic 22,798  7,912  13,647  7,754 
Diluted 26,072  7,912  13,647  7,754 
 
 

 

       
 
Model N Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
 
Three months endedNine months ended
June 30,June 30,
2013201220132012
Cash flows from operating activities:
Net income (loss)$1,535$(1,236)$(1,674)$(6,066)

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

Depreciation
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