Ariba, Inc. (Nasdaq:ARBA), the leading spend management
solutions provider, today announced results for the second quarter
of fiscal year 2009 ended March 31.
Quarterly Financial and Operational Highlights:
- Total revenues of $84.7
million
- GAAP EPS of ($0.06) and non-GAAP
EPS of $0.15
- Subscription software revenue of
$36.4 million, up 27% year-over-year
- 12-month subscription software
backlog of $128.3 million, up 27% year-over-year
- Cash flow from operations of
$16.3 million, ending cash and equivalents of $160 million
�Ariba continued to perform well despite the challenging
environment,� said Bob Calderoni, Chairman and CEO, Ariba. �I
believe this is a testament to the breadth and depth of our spend
management solutions, which enable companies to reduce their
operating costs and effectively manage working capital. I am also
pleased with the operational discipline that Ariba demonstrated
this quarter. Although we face increased operating risk as a result
of the economic downturn, we remain on track to achieve our
financial targets for this fiscal year.�
Results for the Second Quarter of Fiscal Year 2009
Revenue:
Total revenues for the second quarter of fiscal year 2009 were
$84.7 million, as compared to $80.5 million for the second quarter
of fiscal year 2008. Subscription and maintenance revenues for the
current quarter were $54.9 million, as compared to $46.8 million
for the second quarter of fiscal year 2008. Within subscription and
maintenance revenues, subscription software revenue was $36.4
million for the current quarter, as compared to $28.6 million for
the second quarter of fiscal year 2008. Services and other revenues
for the current quarter were $29.8 million, as compared to $33.7
million for the second quarter of fiscal year 2008.
Earnings Per Share:
Net loss for the second quarter of fiscal year 2009 was $4.7
million, or $0.06 per share, as compared to a net loss for the
second quarter of fiscal year 2008 of $12.4 million, or $0.16 per
share. Net loss for the second quarter of fiscal year 2009 included
charges of $1.6 million for amortization of intangible assets, $8.1
million for stock-based compensation, $6.8 million for a real
estate restructuring charge related to the Company�s Sunnyvale
campus lease and a $0.8 million charge for severance and
termination benefit costs. Excluding these items, Non-GAAP net
income for the current quarter was $12.7 million, or $0.15 per
diluted share including absorption of a $4.3 million asset
impairment charge related to an internal IT project.
Balance Sheet and Cash:
Total cash, cash equivalents, long-term investments and
restricted cash were $159.7 million at March 31, 2009, up $16.7
million from December 31, 2008. Net cash flow from operations for
the three months ended March 31, 2009 was $16.3 million, as
compared to $1.5 million for the three months ended March 31, 2008.
Accounts receivable, on an average days-sales-outstanding basis,
were 26 days for the second quarter of fiscal year 2009, as
compared to 33 days for the second quarter of fiscal year 2008, and
down three days from the previous quarter. Total deferred revenues
were $111.2 million at March 31, 2009, up $6.7 million from
December 31, 2008.
Customer Acquisition and Transactions for the
Quarter:
During the quarter, 216 companies of all sizes purchased Ariba
solutions to drive their spend management strategies, including:
Alaska Housing Finance Corp., Aviva, Carlsberg AS, CVS Corporation,
Dick�s Sporting Goods, Inc., Ecolab, Inc., JPMorgan Chase &
Co., National Grid plc, Science Applications International
Corporation, SGS Societe Generale De Surveillance S. A., and Tata
Motors Limited . Ariba also added 39 new customers and closed 11
transactions over $1 million, including five software deals.
On-demand product deals totaled 141.
Conference Call Information
Ariba will hold a conference call today at 2:00 p.m. PT / 5:00
p.m. ET to discuss its results for the second quarter of fiscal
year 2009. To join the call, please dial (877) 407-8031 in the
United States and Canada, or (201) 689-8031 if calling
internationally. The conference call also will be webcast live, and
can be accessed on the investor relations section of the company�s
website at www.ariba.com or by logging in at www.vcall.com.
A replay of the conference call will be available for two weeks
by calling (877) 660-6853 in the United States and Canada or (201)
612-7415 internationally and entering account number: 286 and
conference ID number:319182.
About Ariba, Inc.
Ariba, Inc. is the leading provider of on-demand spend
management solutions. Our mission is to transform the way companies
of all sizes, across all industries, and geographies operate by
delivering software, service, and network solutions that enable
them to holistically source, contract, procure, pay, manage, and
analyze their spend and supplier relationships. Delivered on
demand, our enterprise-class offerings empower companies to achieve
greater control of their spend and drive continuous improvements in
financial and supply chain performance. More than 1,000 companies,
including more than half of the companies on the Fortune 500, use
Ariba solutions to manage their spend from sourcing and orders
through invoicing and payment. For more information, visit
www.ariba.com
Copyright � 1996 � 2009 Ariba, Inc.
Ariba, the Ariba logo, AribaLIVE, SupplyWatch, Ariba.com,
Ariba.com Network and Ariba Spend Management. Find it. Get it. Keep
it. are registered trademarks of Ariba, Inc. Ariba Spend
Management, Ariba. This is Spend Management, Ariba Solutions
Delivery, Ariba Analysis, Ariba Buyer, Ariba Category Management,
Ariba Category Procurement, Ariba Contract Compliance, Ariba
Contracts, Ariba Contract Management, Ariba Contract Workbench,
Ariba Data Enrichment, Ariba eForms, Ariba Invoice, Ariba Payment,
Ariba Sourcing, Ariba Spend Visibility, Ariba Travel and Expense,
Ariba Procure-to-Pay, Ariba Workforce, Ariba Supplier Network,
Ariba Supplier Connectivity, Ariba Supplier Performance Management,
Ariba Content Procurement, Ariba PunchOut, Ariba QuickSource,
PO-Flip, Ariba Spend Management Knowledge Base, Ariba Ready, Ariba
Supply Lines, Ariba Supply Manager, Ariba LIVE, It�s Time for Spend
Management and Supplier Lifecycle Management are trademarks or
service marks of Ariba, Inc. All other brand or product names may
be trademarks or registered trademarks of their respective
companies or organizations in the United States and/or other
countries.
Ariba Safe Harbor
Safe Harbor Statement under the Private Securities Litigation
Reform Act 1995: Information and announcements in this release
involve Ariba's expectations, beliefs, hopes, plans, intentions or
strategies regarding the future and are forward-looking statements
that involve risks and uncertainties. All forward-looking
statements included in this release are based upon information
available to Ariba as of the date of the release, and we assume no
obligation to update any such forward-looking statements. These
statements are not guarantees of future performance and actual
results could differ materially from our current expectations.
Factors that could cause or contribute to Ariba's operating and
financial results to differ materially from current expectations
include, but are not limited to: the impact of the credit crises
and economic downturn on Ariba�s results of operations and
financial condition; delays in development or shipment of new
versions of Ariba's products and services; lack of market
acceptance of Ariba's existing or future products or services;
inability to continue to develop competitive new products and
services on a timely basis; introduction of new products or
services by major competitors; the ability to attract and retain
qualified employees; difficulties in assimilating acquired
companies, long and unpredictable sales cycles and the deferrals of
anticipated orders; declining economic conditions, including the
impact of a recession; inability to control costs; changes in the
company's pricing or compensation policies; significant
fluctuations in our stock price; the outcome of and costs
associated with pending or potential future regulatory or legal
proceedings; the impact of our acquisitions, including the
disruption or loss of customer, business partner, supplier or
employee relationships; and the level of costs and expenses
incurred by Ariba as a result of such transactions. Factors and
risks associated with its business, including a number of the
factors and risks described above, are discussed in Ariba's Form
10-Q filed with the SEC on February 6, 2009.
Ariba, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited; in thousands) � � March 31, September 30, 2009 2008
ASSETS Current assets: Cash and cash equivalents $ 112,636 $ 86,804
Accounts receivable, net 23,488 28,968 Prepaid expenses and other
current assets � 11,290 � � 7,859 � Total current assets 147,414
123,631 � Property and equipment, net 15,054 19,773 Long-term
investments 17,787 20,525 Restricted cash, less current portion
29,255 29,641 Goodwill 406,507 406,507 Other intangible assets, net
20,770 23,965 Other assets � 3,048 � � 3,419 � Total assets $
639,835 � $ 627,461 � � LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 7,012 $ 12,202 Accrued
compensation and related liabilities 17,889 21,480 Accrued
liabilities 16,354 15,677 Restructuring obligations 18,178 19,925
Deferred revenue � 105,273 � � 95,519 � Total current liabilities
164,706 164,803 � Deferred rent obligations 16,362 18,174
Restructuring obligations, less current portion 40,323 41,121
Deferred revenue, less current portion 5,927 6,396 Other long-term
liabilities � 6,098 � � 5,949 � Total liabilities � 233,416 � �
236,443 � � Stockholders' equity: Common stock 175 174 Additional
paid-in capital 5,172,576 5,154,137 Accumulated other comprehensive
loss (4,824 ) (3,094 ) Accumulated deficit � (4,761,508 ) �
(4,760,199 ) Total stockholders' equity � 406,419 � � 391,018 �
Total liabilities and stockholders' equity $ 639,835 � $ 627,461 �
� Ariba, Inc. and Subsidiaries Condensed Consolidated Statements of
Operations (Unaudited; in thousands, except per share data) � � � �
Three Months Ended
Six Months Ended
March 31, March 31, 2009 2008 2009 2008 Revenues: Subscription and
maintenance $ 54,856 $ 46,798 $ 108,937 $ 86,824 Services and other
� 29,837 � � 33,740 � � 61,843 � � 70,688 � Total revenues � 84,693
� � 80,538 � � 170,780 � � 157,512 � � Cost of revenues:
Subscription and maintenance 11,832 10,454 23,480 19,322 Services
and other 18,524 24,029 38,322 48,635 Amortization of acquired
technology and customer intangible assets � 1,387 � � 4,685 � �
2,775 � � 8,194 � Total cost of revenues � 31,743 � � 39,168 � �
64,577 � � 76,151 � Gross profit � 52,950 � � 41,370 � � 106,203 �
� 81,361 � � Operating expenses: Sales and marketing 25,927 29,432
53,504 54,544 Research and development 10,451 13,944 21,355 27,261
General and administrative 12,212 11,806 23,815 25,308 Other income
- Softbank - - - (566 ) Insurance reimbursement - - (7,527 ) -
Amortization of other intangible assets 210 210 420 319
Restructuring and integration costs 7,698 690 9,399 4,528
Litigation provision � - � � - � � - � � 5,900 � Total operating
expenses � 56,498 � � 56,082 � � 100,966 � � 117,294 � � (Loss)
income from operations (3,548 ) (14,712 ) 5,237 (35,933 ) Interest
and other (expense) income, net � (739 ) � 2,863 � � (5,755 ) �
6,207 � Loss before income taxes (4,287 ) (11,849 ) (518 ) (29,726
) Provision for income taxes � 449 � � 549 � � 791 � � 992 � � Net
loss $ (4,736 ) $ (12,398 ) $ (1,309 ) $ (30,718 ) �
Net loss per share - basic and
diluted
$ (0.06 ) $ (0.16 ) $ (0.02 ) $ (0.41 ) Weighted average shares -
basic and diluted 82,416 77,648 81,681 75,426 � Ariba, Inc. and
Subsidiaries Cash Flows (Unaudited; in thousands) � � � Three
Months Ended March 31, 2009 2008 Operating activities: Net loss $
(4,736 ) $
�(12,398
) Adjustments to reconcile net loss to net cash provided by
operating activities: Provision for doubtful accounts 759 15
Depreciation 1,899 1,955 Amortization of intangible assets 1,597
4,895
Impairment of property and
equipment
4,277 - Stock-based compensation 8,096 11,489 Restructuring charge
7,698 690 Changes in operating assets and liabilities: Accounts
receivable 1,776 (1,093 ) Prepaid expense and other assets (4,328 )
3,913 Accounts payable (2,820 ) (971 ) Accrued compensation and
related liabilities 2,099 3,194 Accrued liabilities (438 ) (11,535
) Deferred revenue 6,659 7,652 Restructuring obligations (6,238 )
(6,327 ) � � Net cash provided by operating activities � 16,300 � �
1,479 � � Investing activities: Cash paid for acquisitions, net of
cash acquired - (921 ) Purchases of property and equipment (1,150 )
(1,776 ) Sales of investments, net of purchases (11 ) 35,131
Allocation from restricted cash, net 386 96 � � Net cash (used in)
provided by investing activities � (775 ) � 32,530 � � Financing
activities: Proceeds from issuance of common stock, net 2,147 2,186
Repurchase of common stock (696 ) (992 ) � � Net cash provided by
financing activities � 1,451 � � 1,194 � � Effect of exchange rates
on cash and cash equivalents 115 178 � Net change in cash and cash
equivalents 17,091 35,381 � Cash and cash equivalents at beginning
of period 95,545 37,148 � � Cash and cash equivalents at end of
period $ 112,636 � $ 72,529 � �
Non-GAAP Financial Measures
The accompanying press release dated April 30, 2009 contains
non-GAAP financial measures. The following table reconciles the
non-GAAP financial measures in the press release to the most
directly comparable financial measures prepared in accordance with
Generally Accepted Accounting Principles (GAAP). These non-GAAP
financial measures include non-GAAP revenues, non-GAAP cost of
revenues, gross profit, operating expenses, income (loss) from
operations, net income (loss) and net income (loss) per share
amounts.
Non-GAAP financial measures should not be considered as a
substitute for, or superior to, GAAP financial measures, which
should be considered as the primary financial metrics for
evaluating our financial performance. Significantly, non-GAAP
financial measures are not based on a comprehensive set of
accounting rules or principles. Instead, they are based on
subjective determinations by management designed to supplement our
GAAP financial measures. They are subject to a number of important
limitations and should be considered only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
For example, our non-GAAP financial measures have the effect of
excluding a purchase accounting adjustment, costs and expenses from
our operating results that should be properly considered under a
system of accrual accounting. In addition, our non-GAAP financial
measures differ from GAAP measures with the same names, may vary
over time and may differ from non-GAAP financial measures with the
same or similar names used by other companies. Accordingly,
investors should exercise caution when evaluating our non-GAAP
financial measures.
Despite these limitations, we believe our non-GAAP financial
measures provide meaningful supplemental information about our
operating results, primarily because they exclude a purchase
accounting adjustment and costs and expenses that we do not believe
are indicative of the ongoing operating performance of our business
and our senior management. Although these items should properly be
considered in our GAAP financial measures, we believe they should
be excluded when evaluating our current operating performance. The
non-GAAP financial measures disclosed in the accompanying press
release are used by our Board of Directors and senior management to
evaluate our current operating performance, are used in evaluating
the performance of our senior management, and are used in our
budget and planning processes. We believe that our non-GAAP
financial measures are helpful to investors by facilitating
comparisons of our current and prior operating results and by
facilitating comparisons of our operating results with those of
other software companies.
Ariba, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP
Operating Results (Unaudited; in thousands, except per share data)
� � � The following tables reconcile the specific items excluded
from GAAP in the calculation of non-GAAP operating results for the
period indicated below: � Three Months Ended Three Months Ended
March 31, 2009 March 31, 2008
Revenue reconciliation:
GAAP revenue $ 84,693 $ 80,538 Purchase accounting adjustment � - �
� 2,260 � Total non-GAAP revenues $ 84,693 � $ 82,798 � � �
Three Months Ended
Three Months Ended
March 31, 2009 March 31, 2008
Expense reconciliation:
GAAP revenue $ 84,693 $ 80,538 Plus: GAAP net loss � (4,736 ) �
(12,398 ) Total GAAP expenses 89,429 92,936 � Amortization of
intangible assets (1,597 ) (4,895 ) Stock-based compensation (8,096
) (11,489 ) Restructuring and integration � (7,698 ) � (690 ) Total
non-GAAP operating expenses $ 72,038 � $ 75,862 � � �
Three Months Ended
Three Months Ended
March 31, 2009
March 31, 2008
Net income (loss) reconciliation: GAAP
net loss $ (4,736 ) $ (12,398 ) Purchase accounting adjustment -
2,260 Amortization of intangible assets 1,597 4,895 Stock-based
compensation 8,096 11,489 Restructuring and integration � 7,698 � �
690 � Non-GAAP net income $ 12,655 � $ 6,936 � � � Three Months
Ended Three Months Ended March 31, 2009 March 31, 2008
Net
income (loss) per share reconciliation: GAAP net loss per
share - basic $ (0.06 ) $ (0.16 ) Purchase accounting adjustment -
0.03 Amortization of intangible assets 0.02 0.06 Stock-based
compensation 0.10 0.15 Restructuring and integration � 0.09 � �
0.01 � Non-GAAP net income per share - basic $ 0.15 � $ 0.09 � �
Non-GAAP net income per share - diluted $ 0.15 $ 0.09 � Weighted
average shares - basic 82,416 77,648 Weighted average shares -
diluted 84,645 81,394 � Ariba, Inc. and Subsidiaries Reconciliation
of GAAP to Non-GAAP Operating Results (Unaudited; in thousands,
except per share data) � � � The following tables reconcile the
specific items excluded from GAAP in the calculation of non-GAAP
operating results for the period indicated below: �
Six Months Ended
Six Months Ended
March 31, 2009 March 31, 2008
Revenue reconciliation:
GAAP revenue $ 170,780 $ 157,512 Purchase accounting adjustment �
355 � � 2,663 � Total non-GAAP revenues $ 171,135 � $ 160,175 � � �
Six Months Ended
Six Months Ended
March 31, 2009 March 31, 2008
Expense reconciliation:
GAAP revenue $ 170,780 $ 157,512 Plus: GAAP net loss � (1,309 ) �
(30,718 ) Total GAAP expenses 172,089 188,230 � Amortization of
intangible assets (3,195 ) (8,513 ) Stock-based compensation
(17,622 ) (21,318 ) Restructuring and integration (9,399 ) (4,528 )
Litigation provision - (5,900 ) Other-than-temporary impairment of
long-term investment � (1,414 ) � - � Total non-GAAP operating
expenses $ 140,459 � $ 147,971 � � �
Six Months Ended
Six Months Ended
March 31, 2009 March 31, 2008
Net (loss) income
reconciliation: GAAP net loss $ (1,309 ) $ (30,718 )
Purchase accounting adjustment 355 2,663 Amortization of intangible
assets 3,195 8,513 Stock-based compensation 17,622 21,318
Restructuring and integration 9,399 4,528 Litigation provision -
5,900 Other-than-temporary impairment of long-term investment �
1,414 � � - � Non-GAAP net income $ 30,676 � $ 12,204 � � �
Six Months Ended
Six Months Ended
March 31, 2009
March 31, 2008
Net (loss) income per share reconciliation: GAAP net
loss per share - basic $ (0.02 ) $ (0.41 ) Purchase accounting
adjustment 0.00 0.04 Amortization of intangible assets 0.04 0.11
Stock-based compensation 0.22 0.28 Restructuring and integration
0.12 0.06 Litigation provision - 0.08 Other-than-temporary
impairment of long-term investment � 0.02 � � - � Non-GAAP net
income per share - basic $ 0.38 � $ 0.16 � � Non-GAAP net income
per share - diluted $ 0.36 $ 0.15 � Weighted average shares - basic
81,681 75,426 Weighted average shares - diluted 84,344 80,116
Discussion of Specific Items Excluded From Non-GAAP Financial
Measures
Our non-GAAP financial measures include a purchase accounting
adjustment related to deferred revenues and generally exclude costs
and expenses for (i) amortization of intangible assets related to
acquisitions, (ii) stock-based compensation, (iii) restructuring
and integration, (iv) litigation provision and (v)
other-than-temporary impairment of long-term investments. We
exclude these items because we believe they are not closely related
to the ongoing operating performance of our business and the
performance of our senior management and are generally excluded
from our budget and planning process. In addition to these reasons,
we believe our non-GAAP financial measures are also helpful to
investors by facilitating comparisons of our operating results over
different time periods and by facilitating comparisons of our
financial performance with that of other companies. In addition,
except for costs and expenses related to restructuring and
integration, these items are non-cash items that do not affect cash
flows.
(1) Purchase accounting adjustment �
deferred revenue. As announced on December 17, 2007, Ariba acquired
Procuri, Inc. In accordance with the fair value provisions of EITF
01-3, Accounting in a Business Combination for Deferred Revenue of
an Acquiree, acquired deferred revenue of approximately $4.5
million was recorded on the opening balance sheet, which was
approximately $5.9 million lower than the historical carrying
value. Although this purchase accounting requirement has no impact
on the Company's business or cash flow, it adversely impacts the
Company's reported GAAP revenue primarily for the first twelve
months post- acquisition. In order to provide investors with
financial information that facilitates comparison of both
historical and future results, the Company has provided non-GAAP
financial measures which exclude the impact of the purchase
accounting adjustment. The Company believes that this non-GAAP
financial adjustment is useful to investors because it allows
investors to (a) evaluate the effectiveness of the methodology and
information used by management in its financial and operational
decision-making and (b) compare past and future reports of
financial results of the Company as the revenue reduction related
to acquired deferred revenue will not recur when related
subscription terms are renewed in future periods.
(2) Amortization of Acquired Intangible
Assets. In accordance with GAAP, we amortize intangible assets
acquired in connection with acquisitions over the estimated useful
lives of the assets. We exclude these amortization costs in our
non-GAAP financial measures because they (i) result from prior
acquisitions, rather than the ongoing operating performance of our
business, and (ii) absent additional acquisitions, are expected to
decline over time as the remaining carrying amounts of these assets
are amortized. We believe excluding these costs helps investors
compare our financial performance with that of other companies with
different acquisition histories. However, as with impairment
charges, we recognize that amortization costs provide a helpful
measure of the financial impact and performance of prior
acquisitions and consider our non-GAAP financial measures in
conjunction with our GAAP financial results that include
amortization costs.
(3) Stock-Based Compensation Expenses. We
exclude stock-based compensation expense associated with stock
options and stock granted to employees and non-executive directors
in our non-GAAP financial measures. While stock-based compensation
is a significant component of our expenses, we believe that
investors wish to be able to exclude the effects of stock-based
compensation expense in comparing our financial performance with
that of other companies.
(4) Restructuring and integration. We
recorded restructuring related to lease abandonment accruals and
severance and related benefits in the three and six months ended
March 31, 2009 and 2008. We exclude this from our non-GAAP
financial measures because it is unrelated to our ongoing
operations and is significantly impacted by factors outside our
control. We believe excluding restructuring and integration helps
investors compare our operating performance with that of other
companies. We recognize, however, that restructuring and
integration will impact cash flows and that we and investors should
carefully consider the impact of these costs on future cash
flows.
(5) Litigation provision. We recorded a
litigation provision related to a patent infringement matter in the
six months ended March 31, 2008. We exclude this from our non-GAAP
financial measures because it is unrelated to our ongoing
operations. We believe excluding the litigation provision helps
investors compare our operating performance with that of other
companies. We recognize, however, that the litigation provision
will impact cash flows and that we and investors should carefully
consider the impact of these costs on future cash flows.
(6) Other-than-temporary impairment of
long-term investments. We recorded an other-than temporary
impairment of a long-term investment in the six months ended March
31, 2009. We exclude this from our non-GAAP financial measures
because it is unrelated to our ongoing operations. We believe
excluding the other-than-temporary impairment helps investors
compare our operating performance with that of other companies. We
recognize, however, that the other-than-temporary impairment may
impact cash flows and that we and investors should carefully
consider the impact of these costs on future cash flows.
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