Ariba, Inc. (Nasdaq: ARBA), the leading spend management
solutions provider, today announced results for the third quarter
of fiscal year 2009 ended June 30.
Quarterly Financial and Operational Highlights:
- Total revenues of $83.9
million
- GAAP EPS of $0.05 and non-GAAP
EPS of $0.17
- Subscription software revenue of
$37.9 million, up 25% year-over-year
- 12-month subscription software
backlog of $128.6 million, up 20% year-over-year
- Cash flow from operations of
$20.0 million, ending cash and investments of $177.2 million
“Despite a continued weak macroeconomic environment, Ariba
posted another solid quarter,” said Bob Calderoni, Chairman and
CEO, Ariba. “Our spend management strategy has proven to be
effective even in these challenging times, and our business model
is generating excellent earnings and cash flow.”
Results for the Third Quarter of Fiscal Year 2009
Revenue:
Total revenues for the third quarter of fiscal year 2009 were
$83.9 million, as compared to $85.0 million for the third quarter
of fiscal year 2008. Subscription and maintenance revenues for the
current quarter were $55.4 million, as compared to $49.3 million
for the third quarter of fiscal year 2008. Within subscription and
maintenance revenues, subscription software revenue was $37.9
million for the current quarter, as compared to $30.3 million for
the third quarter of fiscal year 2008. Services and other revenues
for the current quarter were $28.5 million, as compared to $35.7
million for the third quarter of fiscal year 2008.
Earnings Per Share:
Net income for the third quarter of fiscal year 2009 was $3.9
million, or $0.05 per share, as compared to a net loss for the
third quarter of fiscal year 2008 of $4.3 million, or $0.05 per
share. Net income for the third quarter of fiscal year 2009
included charges of $1.6 million for amortization of intangible
assets, $7.6 million for stock-based compensation, and a $1.4
million charge for severance and termination benefit costs.
Excluding these items, Non-GAAP net income for the current quarter
was $14.6 million, or $0.17 per diluted share, as compared to
non-GAAP net income for the third quarter of fiscal year 2008 of
$10.9 million, or $0.13 per share.
Balance Sheet and Cash:
Total cash, investments and restricted cash were $177.2 million
at June 30, 2009, up $17.5 million from March 31, 2009. Net cash
flow from operations for the three months ended June 30, 2009 was
$20.0 million, as compared to $8.7 million for the three months
ended June 30, 2008. Accounts receivable, on an average
days-sales-outstanding basis, were 25 days for the third quarter of
fiscal year 2009, as compared to 31 days for the third quarter of
fiscal year 2008, and down one day from the previous quarter. Total
deferred revenues were $116.3 million at June 30, 2009, up $5.1
million from March 31, 2009.
Customer Acquisition and Transactions for the
Quarter:
During the quarter, 226 companies of all sizes purchased Ariba
solutions to drive their spend management strategies, including:
Apria Healthcare, Commonwealth Bank of Australia, Credit Suisse
Group, Dollar Tree Stores, Inc., Hewlett-Packard Company, Kohls,
Inc., KONE Corporation, Morgan Stanley, Nestle S.A., Novo Nordisk,
Republic Services, Inc., The PNC Financial Services Group, and
Telefonica, S.A. Ariba added 39 new customers in the third quarter
and closed 12 transactions over $1 million, including four software
deals. On-demand product deals totalled 171.
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 third 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.
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:327389.
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 technology, 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 100, 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 related 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 May 6, 2009.
Ariba, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited; in thousands) June 30, September 30,
2009 2008 ASSETS Current assets: Cash
and cash equivalents $ 112,186 $ 86,804 Short-term investments
16,746 - Accounts receivable, net 22,596 28,968 Prepaid expenses
and other current assets 11,775 7,859
Total current assets 163,303 123,631 Property and equipment,
net 14,474 19,773 Long-term investments 19,036 20,525 Restricted
cash, less current portion 29,241 29,641 Goodwill 406,507 406,507
Other intangible assets, net 19,172 23,965 Other assets
3,210 3,419 Total assets $ 654,943 $
627,461 LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 7,529 $ 12,202 Accrued compensation
and related liabilities 21,111 21,480 Accrued liabilities 16,153
15,677 Restructuring obligations 18,147 19,925 Deferred revenue
107,461 95,519 Total current
liabilities 170,401 164,803 Deferred rent obligations 15,476
18,174 Restructuring obligations, less current portion 35,945
41,121 Deferred revenue, less current portion 8,842 6,396 Other
long-term liabilities 6,322 5,949 Total
liabilities 236,986 236,443
Stockholders' equity: Common stock 177 174 Additional paid-in
capital 5,179,361 5,154,137 Accumulated other comprehensive loss
(3,967 ) (3,094 ) Accumulated deficit (4,757,614 )
(4,760,199 ) Total stockholders' equity 417,957
391,018 Total liabilities and stockholders' equity $
654,943 $ 627,461 Ariba, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited; in
thousands, except per share data) Three
Months Ended Nine Months Ended June 30, June 30, 2009
2008 2009 2008 Revenues:
Subscription and maintenance $ 55,411 $ 49,278 $ 164,348 $ 136,102
Services and other 28,463 35,738
90,306 106,426 Total revenues 83,874
85,016 254,654 242,528
Cost of revenues: Subscription and maintenance 12,158
10,101 35,638 29,423 Services and other 18,551 23,689 56,873 72,324
Amortization of acquired technology and customer intangible assets
1,388 4,675 4,163
12,869 Total cost of revenues 32,097
38,465 96,674 114,616 Gross
profit 51,777 46,551 157,980
127,912 Operating expenses: Sales and
marketing 25,515 28,682 79,019 83,226 Research and development
10,787 13,617 32,142 40,878 General and administrative 9,301 11,702
33,116 37,010 Other income - Softbank - - - (566 ) Insurance
reimbursement - - (7,527 ) - Amortization of other intangible
assets 210 210 630 529 Restructuring and integration costs
(benefit) 1,438 (694 ) 10,837 3,834 Litigation provision -
- - 5,900 Total
operating expenses 47,251 53,517
148,217 170,811 Income (loss) from
operations 4,526 (6,966 ) 9,763 (42,899 ) Interest and other
(expense) income, net (265 ) 2,353
(6,020 ) 8,560 Income (loss) before income taxes
4,261 (4,613 ) 3,743 (34,339 ) Provision for income taxes
367 (326 ) 1,158 666
Net income (loss) $ 3,894 $ (4,287 ) $ 2,585 $
(35,005 )
Net income (loss) per share -
basic
$ 0.05 $ (0.05 ) $ 0.03 $ (0.46 )
Net income (loss) per share -
diluted
$ 0.05 $ (0.05 ) $ 0.03 $ (0.46 ) Weighted average shares - basic
83,444 78,585 82,269 76,479 Weighted average shares - diluted
85,447 78,585 84,712 76,479 Ariba, Inc. and Subsidiaries Cash Flows
(Unaudited; in thousands) Three Months Ended June 30,
2009 2008 Operating activities: Net
income (loss) $ 3,894 $ (4,286 ) Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Provision for doubtful accounts 493 167 Depreciation 1,932 2,022
Amortization of intangible assets 1,598 4,885 Stock-based
compensation 7,640 9,552 Restructuring and integration costs
(benefit) 1,438 (694 ) Changes in operating assets and liabilities:
Accounts receivable 399 1,007 Prepaid expense and other assets (704
) 83 Accounts payable 619 1,296 Accrued compensation and related
liabilities 3,739 (1,768 ) Accrued liabilities (460 ) (2,039 )
Deferred revenue 5,284 5,166 Restructuring obligations (5,847 )
(6,670 ) Net cash provided by operating activities
20,025 8,721 Investing
activities: Cash paid for acquisitions, net of cash acquired - (163
) Purchases of property and equipment (1,352 ) (2,512 ) Purchases
of investments, net of sales (17,995 ) 1,758 Allocation from
restricted cash, net 14 (53 ) Net cash used in
investing activities (19,333 ) (970 )
Financing activities: Proceeds from issuance of common stock, net
162 836 Repurchase of common stock (1,015 ) (1,883 )
Net cash used in financing activities (853 ) (1,047 )
Effect of exchange rates on cash and cash equivalents (289 )
(690 ) Net change in cash and cash equivalents (450 ) 6,014
Cash and cash equivalents at beginning of period 112,636
72,529 Cash and cash equivalents at end of period $
112,186 $ 78,543
Non-GAAP Financial Measures
The accompanying press release dated July 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 June 30, 2009 June 30, 2008
Revenue reconciliation:
GAAP revenue $ 83,874 $ 85,016 Purchase accounting adjustment
- 1,440 Total non-GAAP revenues $
83,874 $ 86,456 Three Months Ended
Three Months Ended June 30, 2009 June 30, 2008
Expense reconciliation:
GAAP revenue $ 83,874 $ 85,016 Less: GAAP net income (loss)
3,894 (4,287 ) Total GAAP expenses 79,980 89,303
Amortization of intangible assets (1,598 ) (4,885 )
Stock-based compensation (7,640 ) (9,552 ) Restructuring and
integration (1,438 ) 694 Total non-GAAP
operating expenses $ 69,304 $ 75,560
Three Months Ended Three Months Ended June 30, 2009 June 30, 2008
Net
income (loss) reconciliation:
GAAP net income (loss) $ 3,894 $ (4,287 ) Purchase accounting
adjustment - 1,440 Amortization of intangible assets 1,598 4,885
Stock-based compensation 7,640 9,552 Restructuring and integration
1,438 (694 ) Non-GAAP net income $ 14,570
$ 10,896 Three Months Ended Three
Months Ended June 30, 2009 June 30, 2008
Net
income (loss) per share reconciliation:
GAAP net income (loss) per share - basic $ 0.05 $ (0.05 ) Purchase
accounting adjustment - 0.02 Amortization of intangible assets 0.02
0.06 Stock-based compensation 0.09 0.12 Restructuring and
integration 0.02 (0.01 ) Non-GAAP net income
per share - basic $ 0.17 $ 0.14 Non-GAAP net
income per share - diluted $ 0.17 $ 0.13 Weighted average
shares - basic 83,444 78,585 Weighted average shares - diluted
85,447 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: Nine
Months Ended Nine Months Ended June 30, 2009 June 30, 2008
Revenue reconciliation:
GAAP revenue $ 254,654 $ 242,528 Purchase accounting adjustment
355 4,103 Total non-GAAP revenues $
255,009 $ 246,631 Nine Months Ended
Nine Months Ended June 30, 2009 June 30, 2008
Expense reconciliation:
GAAP revenue $ 254,654 $ 242,528 Less: GAAP net income (loss)
2,585 (35,005 ) Total GAAP expenses 252,069
277,533 Amortization of intangible assets (4,793 ) (13,398 )
Stock-based compensation (25,262 ) (30,870 ) Restructuring and
integration (10,837 ) (3,834 ) Litigation provision - (5,900 )
Other-than-temporary impairment of long-term investment
(1,414 ) - Total non-GAAP operating expenses $
209,763 $ 223,531 Nine Months Ended
Nine Months Ended June 30, 2009 June 30, 2008
Net
income (loss) reconciliation:
GAAP net income (loss) $ 2,585 $ (35,005 ) Purchase accounting
adjustment 355 4,103 Amortization of intangible assets 4,793 13,398
Stock-based compensation 25,262 30,870 Restructuring and
integration 10,837 3,834 Litigation provision - 5,900
Other-than-temporary impairment of long-term investment
1,414 - Non-GAAP net income $ 45,246 $
23,100 Nine Months Ended Nine Months Ended
June 30, 2009 June 30, 2008
Net
(loss) income per share reconciliation:
GAAP net loss per share - basic $ 0.03 $ (0.46 ) Purchase
accounting adjustment 0.00 0.05 Amortization of intangible assets
0.06 0.18 Stock-based compensation 0.31 0.40 Restructuring and
integration 0.13 0.05 Litigation provision - 0.08
Other-than-temporary impairment of long-term investment 0.02
- Non-GAAP net income per share - basic $ 0.55
$ 0.30 Non-GAAP net income per share - diluted
$ 0.53 $ 0.28 Weighted average shares - basic 82,269 76,479
Weighted average shares - diluted 84,712 81,332
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/(or) severance and related benefits in the three and nine
months ended June 30, 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
nine months ended June 30, 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 nine months ended June
30, 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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