Ariba, Inc. (Nasdaq:ARBA), the leading spend management
solutions provider, today announced results for the first quarter
of fiscal year 2010 ended December 31.
Quarterly Financial and Operational Highlights:
- Total revenues of $85.7
million
- GAAP EPS of $0.03 and non-GAAP
EPS of $0.19 per fully-diluted share
- Subscription software revenue of
$41.2 million, up 15% year-over-year
- 12-month subscription software
backlog of $139 million, up 10% year-over-year
- Cash flow from operations of
$10.5 million, ending cash and investments of $199.5 million
- On-demand deals up 76%
year-over-year
“As evidenced by our strong first quarter results, Ariba is
delivering solutions that meet customer demands for fast results,
low risk and more variable cost structures,” said Bob Calderoni,
Chairman and CEO, Ariba. “Customers are increasingly turning to
Ariba for their business needs and our solutions are helping to
drive their recovery.”
Results for the First Quarter of Fiscal Year 2010
Revenue:
Total revenues for the first quarter of fiscal year 2010 were
$85.7 million, as compared to $86.1 million for the first quarter
of fiscal year 2009. Subscription and maintenance revenues for the
quarter were $58.4 million, as compared to $54.1 million for the
first quarter of fiscal year 2009. Within subscription and
maintenance revenues, subscription software revenue was $41.2
million for the first quarter of fiscal year 2010, as compared to
$35.9 million for the first quarter of fiscal year 2009. Services
and other revenues were $27.3 million, as compared to $32.0 million
for the first quarter of fiscal year 2009.
Earnings Per Share:
Net income for the first quarter of fiscal year 2010 was $2.2
million, or $0.03 per fully-diluted share as compared to net income
for the first quarter of fiscal year 2009 of $3.4 million, or $0.04
per fully-diluted share. Net income for the first quarter of fiscal
year 2010 included charges of $1.4 million for amortization of
intangible assets and $13.5 million for stock-based compensation.
Excluding these items, Non-GAAP net income for the quarter was
$17.2 million, or $0.19 per diluted share.
Balance Sheet and Cash:
Total cash, investments and restricted cash were $199.5 million
at December 31, 2009, up $4.1 million from September 30, 2009. Net
cash flow from operations for the three months ended December 31,
2009 was $10.5 million, as compared to $10.8 million for the three
months ended December 31, 2008. Accounts receivable, on an average
days-sales-outstanding basis, were 21 days for the first quarter of
fiscal year 2010, as compared to 29 days for the first quarter of
fiscal year 2009, and down two days from the previous quarter.
Total deferred revenues were $119.5 million at December 31, 2009,
up $9.0 million from September 30, 2009.
Customer Acquisition and Transactions for the
Quarter:
During the quarter, 248 companies of all sizes purchased Ariba
solutions, including: Avon Products, Inc., Brocade Communications
Systems, Inc., Coach, Inc., ConocoPhillips Company, Pfizer Inc.,
PTT Public Limited Company, The Royal Bank of Scotland Group plc,
Sempra Energy and Tyco International Ltd. Ariba added 30 new
customers in the first quarter of fiscal year 2010 and closed 11
transactions over $1 million, including six deals with a software
component of greater than $1 million. On-demand product deals
totalled 192.
Conference Call Information
Ariba will hold a conference call today at 5:00 p.m. ET / 2:00
p.m. PT to discuss its results for the first quarter of fiscal year
2010. 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: 341721.
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 – 2010 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 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-K filed with the SEC on November 25, 2009.
Ariba, Inc. and Subsidiaries Condensed Consolidated
Balance Sheets (Unaudited; in thousands)
December 31,2009
September 30,2009 ASSETS Current assets: Cash and cash equivalents
$ 127,333 $ 130,881 Short-term investments 16,813 12,169 Accounts
receivable, net 19,666 19,660 Prepaid expenses and other current
assets 12,084 11,235 Total current
assets 175,896 173,945 Property and equipment, net 13,965
14,418 Long-term investments 26,118 23,155 Restricted cash, less
current portion 29,241 29,241 Goodwill 406,507 406,507 Other
intangible assets, net 16,229 17,660 Other assets 3,199
3,245 Total assets $ 671,155 $ 668,171
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 7,802 $ 7,758 Accrued compensation
and related liabilities 16,273 29,010 Accrued liabilities 18,168
17,010 Restructuring obligations 16,921 17,964 Deferred revenue
111,315 101,172 Total current
liabilities 170,479 172,914 Deferred rent obligations 13,560
14,539 Restructuring obligations, less current portion 27,815
31,098 Deferred revenue, less current portion 8,177 9,288 Other
long-term liabilities 5,985 6,281 Total
liabilities 226,016 234,120
Stockholders' equity: Common stock 179 179 Additional paid-in
capital 5,198,060 5,189,566 Accumulated other comprehensive loss
(3,319 ) (3,688 ) Accumulated deficit (4,749,781 )
(4,752,006 ) Total stockholders' equity 445,139
434,051 Total liabilities and stockholders' equity $
671,155 $ 668,171 Ariba, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited; in
thousands, except per share data)
Three Months EndedDecember 31,
2009 2008 Revenues:
Subscription and maintenance
$ 58,373 $ 54,081 Services and other 27,298 32,006
Total revenues 85,671 86,087
Cost of revenues: Subscription and maintenance 12,674 11,648
Services and other 19,462 19,798 Amortization of acquired
technology and customer intangible assets 1,327 1,388
Total cost of revenues 33,463 32,834
Gross profit 52,208 53,253 Operating
expenses: Sales and marketing 28,302 27,577 Research and
development 11,146 10,904 General and administrative 10,697 11,603
Insurance reimbursement - (7,527 ) Amortization of other intangible
assets 104 210 Restructuring and integration costs -
1,701 Total operating expenses 50,249 44,468
Income from operations 1,959 8,785 Interest and other
income (expense), net 321 (5,016 ) Income before
income taxes 2,280 3,769 Provision for income taxes 55
342 Net income $ 2,225 $ 3,427
Net income loss per share - basic $ 0.03 $ 0.04 Net income loss per
share - diluted $ 0.03 $ 0.04 Weighted average shares - basic
85,161 80,947 Weighted average shares - diluted 88,262 84,044
Ariba, Inc. and Subsidiaries Cash Flows (Unaudited; in
thousands) Three Months EndedDecember 31, 2009 2008
Operating activities: Net income $ 2,225 $ 3,427 Adjustments to
reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts 46 131 Depreciation 1,839 1,946
Amortization of intangible assets 1,431 1,598
Other-than-temporary impairment of
long-term investments
499 1,414 Stock-based compensation 13,523 9,526 Restructuring costs
- 1,701 Changes in operating assets and liabilities: Accounts
receivable (52 ) 2,814 Prepaid expense and other assets (889 )
1,307 Accounts payable 79 (2,483 ) Accrued compensation and related
liabilities (12,815 ) (6,711 ) Accrued liabilities (85 ) (755 )
Deferred revenue 9,030 2,626 Restructuring obligations (4,326 )
(5,706 ) Net cash provided by operating activities
10,505 10,835 Investing
activities: Purchases of property and equipment (1,386 ) (2,253 )
Purchases of investments, net of sales (7,631 ) 726
Net cash used in investing
activities
(9,017 ) (1,527 ) Financing activities:
Proceeds from issuance of common stock, net 27 45 Repurchase of
common stock (5,056 ) (678 ) Net cash used in
financing activities (5,029 ) (633 ) Effect of
exchange rates on cash and cash equivalents (7 ) 66 Net
change in cash and cash equivalents (3,548 ) 8,741 Cash and
cash equivalents at beginning of period 130,881 86,804
Cash and cash equivalents at end of period $ 127,333
$ 95,545
Non-GAAP Financial Measures
The accompanying press release dated January 28, 2010 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 from operations,
net income and net income 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 EndedDecember 31,
2009
Three Months EndedDecember 31,
2008
Revenue reconciliation:
GAAP revenue $ 85,671 $ 86,087 Purchase accounting adjustment
- 355 Total non-GAAP revenues $ 85,671
$ 86,442 Three Months EndedDecember 31,
2009 Three Months EndedDecember 31, 2008
Expense reconciliation:
GAAP revenue $ 85,671 $ 86,087 Less: GAAP net income 2,225
3,427 Total GAAP expenses 83,446 82,660
Amortization of intangible assets (1,431 ) (1,598 ) Stock-based
compensation (13,523 ) (9,526 ) Restructuring and integration -
(1,701 ) Other-than-temporary decline in long-term investment
- (1,414 ) Total non-GAAP operating expenses $
68,492 $ 68,421 Three Months
EndedDecember 31, 2009 Three Months EndedDecember 31, 2008
Net
income reconciliation:
GAAP net income $ 2,225 $ 3,427 Purchase accounting adjustment -
355 Amortization of intangible assets 1,431 1,598 Stock-based
compensation 13,523 9,526 Restructuring and integration - 1,701
Other-than-temporary decline in long-term investment -
1,414 Non-GAAP net income $ 17,179 $
18,021 Three Months EndedDecember 31, 2009
Three Months EndedDecember 31, 2008
Net
income per share reconciliation:
GAAP net income per share - basic $ 0.03 $ 0.04 Purchase accounting
adjustment - 0.00 Amortization of intangible assets 0.02 0.02
Stock-based compensation 0.16 0.12 Restructuring and integration -
0.02
Other-than-temporary decline in
long-term investment
- 0.02 Non-GAAP net income per share -
basic $ 0.20 $ 0.22 Non-GAAP net income per
share - diluted $ 0.19 $ 0.21 Weighted average shares -
basic 85,161 80,947 Weighted average shares - diluted 88,262 84,044
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 and (iv) 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 months ended
December 31, 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) Other-than-temporary impairment of
long-term investments. We recorded an other-than temporary
impairment of a long-term investment in the three months ended
December 31, 2008. 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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