Ariba, Inc. (Nasdaq: ARBA), the leading provider of
collaborative business commerce solutions, today announced results
for the third quarter of fiscal year 2010 ended June 30.
Quarterly Financial and Operational Highlights:
- Total revenues of $93.2
million
- GAAP EPS of $0.05 and non-GAAP
EPS of $0.19 per fully-diluted share
- Subscription software revenue of
$44.0 million, up 16% year-over-year
- 12-month subscription software
backlog of $141.0 million, up 9% year-over-year
- Cash flow from operations of
$17.3 million, ending cash and investments of $239.2 million
- Number of on-demand deals up 9%
year-over-year
“As businesses return to growth mode, they are looking for
solutions that can help them reach the next level of productivity.
And as evidenced by our solid quarterly results, they continue to
rely on Ariba,” said Bob Calderoni, Chairman and CEO, Ariba.
“During the quarter, we strengthened our offerings with the launch
the Ariba® Commerce Cloud, a platform that enables companies to
drive more efficient and effective inter-enterprise commerce.”
Results for the Third Quarter of Fiscal Year 2010
Revenue:
Total revenues for the third quarter of fiscal year 2010 were
$93.2 million, as compared to $83.9 million for the third quarter
of fiscal year 2009. Subscription and maintenance revenues for the
current quarter were $60.8 million, as compared to $55.4 million
for the third quarter of fiscal year 2009. Within subscription and
maintenance revenues, subscription software revenue was $44.0
million for the current quarter, as compared to $37.9 million for
the third quarter of fiscal year 2009. Services and other revenues
for the current quarter were $32.5 million, as compared to $28.5
million for the third quarter of fiscal year 2009.
Earnings Per Share:
Net income for the third quarter of fiscal year 2010 was $4.3
million, or $0.05 per fully-diluted share as compared to $3.9
million or $0.05 per fully diluted share for the third quarter of
fiscal year 2009. Net income for the third quarter of fiscal year
2010 included charges of $1.0 million for amortization of
intangible assets and $11.5 million for stock-based compensation.
Excluding these items, non-GAAP net income for the quarter was
$16.8 million, or $0.19 per diluted share.
Balance Sheet and Cash:
Total cash, investments and restricted cash were $239.2 million
at June 30, 2010, up $16.3 million from March 31, 2010. Net cash
flow from operations for the three months ended June 30, 2010 was
$17.3 million, as compared to $20.0 million for the three months
ended June 30, 2009. Accounts receivable, on an average
days-sales-outstanding basis, were 20 days for the third quarter of
fiscal year 2010, as compared to 25 days for the third quarter of
fiscal year 2009, and down one day with the previous quarter. Total
deferred revenues were $114.6 million at June 30, 2010, down $10.8
million from March 31, 2010.
Customer Acquisition and Transactions for the
Quarter:
During the quarter, 237 companies of all sizes purchased Ariba
solutions to drive their spend management strategies, including:
AT&T Inc., ExxonMobil Corporation, Grupo Posadas, S.A. de C.V.,
Macquarie Group Limited, Live Nation, Inc., Saks Incorporated,
Spark Energy LP, State Farm Insurance Companies, and Under Armour,
Inc. and Zep, Inc. Ariba added 39 new customers in the third
quarter of fiscal year 2010 and closed 13 transactions over $1
million, including eight deals with a software component of greater
than $1 million. On-demand product deals totalled 187.
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 third 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: 353662.
About Ariba, Inc.
Ariba, Inc. is the leading provider of collaborative business
commerce solutions. Ariba combines industry-leading software as a
service (SaaS) technology to optimize the complete commerce
lifecycle with the world's largest web-based community to discover,
connect and collaborate with a global network of trading partners
and expert capabilities to augment internal resources and skills,
delivering everything needed to control costs, minimize risk,
improve profits and enhance cash flow and operations – all in a
cloud-based environment. Whether you’re buying, selling or managing
cash, you can do it more efficiently and effectively in the Ariba®
Commerce Cloud. Over 300,000 companies, including more than 80
percent of the Fortune 500, use Ariba’s solutions to drive more
efficient inter-enterprise commerce. Why not join them? For more
information on Ariba commerce solutions and the results they
deliver, visit www.ariba.com
Copyright © 1996 – 2010 Ariba, Inc.
Ariba, the Ariba logo, AribaLIVE, SupplyWatch, Ariba.com,
Ariba.com Network, Ariba Spend Management. Find it. Get it. Keep
it. and PO-Flip are registered trademarks of Ariba, Inc. Ariba
Procure-to-Pay, Ariba Buyer, Ariba eForms, Ariba PunchOut, Ariba
Services Procurement, Ariba Travel and Expense, Ariba
Procure-to-Order, Ariba Procurement Content, Ariba Sourcing, Ariba
Savings and Pipeline Tracking, Ariba Category Management, Ariba
Category Playbooks, Ariba StartSourcing, Ariba Spend Visibility,
Ariba Analysis, Ariba Data Enrichment, Ariba Contract Management,
Ariba Contract Compliance, Ariba Electronic Signatures, Ariba
StartContracts, Ariba Invoice Management, Ariba Payment Management,
Ariba Working Capital Management, Ariba Settlement, Ariba Supplier
Information and Performance Management, Ariba Supplier Information
Management, Ariba Discovery, Ariba Invoice Automation, Ariba PO
Automation, Ariba Express Content, Ariba Ready, and Ariba LIVE 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 impact of any
acquisitions or dispositions; 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, 2010.
Ariba, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited; in thousands) June
30, September 30, 2010 2009 ASSETS
Current assets: Cash and cash equivalents $ 167,728 $ 130,881
Short-term investments 18,922 12,169 Restricted cash 104 - Accounts
receivable, net 19,899 19,660 Prepaid expenses and other current
assets 8,651 11,235 Total current
assets 215,304 173,945 Property and equipment, net 16,425
14,418 Long-term investments 23,353 23,155 Restricted cash, less
current portion 29,137 29,241 Goodwill 406,507 406,507 Other
intangible assets, net 14,179 17,660 Other assets 3,582
3,245 Total assets $ 708,487 $ 668,171
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 10,474 $ 7,758 Accrued compensation
and related liabilities 26,333 29,010 Accrued liabilities 15,590
17,010 Restructuring obligations 17,148 17,964 Deferred revenue
107,504 101,172 Total current
liabilities 177,049 172,914 Deferred rent obligations 10,463
14,539 Restructuring obligations, less current portion 27,664
31,098 Deferred revenue, less current portion 7,076 9,288 Other
long-term liabilities 6,704 6,281 Total
liabilities 228,956 234,120
Stockholders' equity: Common stock 181 179 Additional paid-in
capital 5,222,220 5,189,566 Accumulated other comprehensive loss
(3,114 ) (3,688 ) Accumulated deficit (4,739,756 )
(4,752,006 ) Total stockholders' equity 479,531
434,051 Total liabilities and stockholders' equity $
708,487 $ 668,171 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, 2010
2009 2010 2009
Revenues: Subscription and maintenance $ 60,768 $ 55,411 $
177,897 $ 164,348 Services and other 32,481
28,463 88,153 90,306 Total
revenues 93,249 83,874 266,050
254,654 Cost of revenues: Subscription
and maintenance 13,045 12,158 38,358 35,638 Services and other
21,700 18,551 61,116 56,873 Amortization of acquired technology and
customer intangible assets 1,025 1,388
3,377 4,163 Total cost of revenues
35,770 32,097 102,851
96,674 Gross profit 57,479
51,777 163,199 157,980
Operating expenses: Sales and marketing 31,337 25,515 88,280 79,019
Research and development 11,622 10,787 34,112 32,142 General and
administrative 9,369 9,301 25,822 33,116 Litigation benefit - -
(7,000 ) - Insurance reimbursement - - - (7,527 ) Amortization of
other intangible assets - 210 104 630 Restructuring costs -
1,438 8,579 10,837
Total operating expenses 52,328 47,251
149,897 148,217 Income from
operations 5,151 4,526 13,302 9,763 Interest and other (expense)
income, net (454 ) (265 ) (59 ) (6,020
) Income before income taxes 4,697 4,261 13,243 3,743 Provision for
income taxes 423 367 993
1,158 Net income $ 4,274 $ 3,894
$ 12,250 $ 2,585 Net income per share - basic
$ 0.05 $ 0.05 $ 0.14 $ 0.03 Net income per share - diluted $ 0.05 $
0.05 $ 0.14 $ 0.03 Weighted average shares - basic 87,163 83,444
86,300 82,269 Weighted average shares - diluted 89,336 85,447
88,783 84,712 Ariba, Inc. and Subsidiaries Cash Flows
(Unaudited; in thousands) Three Months
Ended June 30, 2010 2009
Operating activities: Net income $ 4,274 $ 3,894 Adjustments to
reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts 263 493 Depreciation 2,007 1,932
Amortization of intangible assets 1,025 1,598 Stock-based
compensation 11,520 7,640 Restructuring costs - 1,438 Changes in
operating assets and liabilities: Accounts receivable (235 ) 399
Prepaid expense and other assets 4,123 (704 ) Accounts payable
2,452 619 Accrued compensation and related liabilities 6,263 3,739
Accrued liabilities 792 (460 ) Deferred revenue (10,915 ) 5,284
Restructuring obligations (4,293 ) (5,847 ) Net cash
provided by operating activities 17,276 20,025
Investing activities: Purchases of property and
equipment (2,042 ) (1,352 ) Purchases of investments, net of sales
1,188 (17,995 ) Allocation from restricted cash, net - 14
Net cash used in investing activities (854 )
(19,333 ) Financing activities: Proceeds from issuance of
common stock, net 164 162 Repurchase of common stock - (1,015 )
Net cash used in financing activities 164
(853 ) Effect of exchange rates on cash and
cash equivalents 64 (289 ) Net change in cash and cash
equivalents 16,650 (450 ) Cash and cash equivalents at
beginning of period 151,078 112,636 Cash and cash
equivalents at end of period $ 167,728 $ 112,186
Non-GAAP Financial Measures
The accompanying press release dated
July 29, 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 in the
United States of America (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-GAAPoperating results for the period indicated below:
Three Months Ended
Three Months Ended
June 30, 2010 June 30, 2009
Expense reconciliation:
GAAP revenue $ 93,249 $ 83,874 Less: GAAP net income 4,274
3,894 Total GAAP expenses 88,975 79,980
Amortization of intangible assets (1,025 ) (1,598 ) Stock-based
compensation (11,520 ) (7,640 ) Total non-GAAP
operating expenses $ 76,430 $ 70,742
Three Months Ended Three Months Ended June 30, 2010 June 30, 2009
Net
income reconciliation:
GAAP net income $ 4,274 $ 3,894 Amortization of intangible assets
1,025 1,598 Stock-based compensation 11,520
7,640 Non-GAAP net income $ 16,819 $ 13,132
Three Months Ended Three Months Ended June 30, 2010
June 30, 2009
Net
income per share reconciliation:
GAAP net income per share - basic $ 0.05 $ 0.05 Amortization of
intangible assets 0.01 0.02 Stock-based compensation 0.13
0.09 Non-GAAP net income per share - basic $
0.19 $ 0.16 Non-GAAP net income per share -
diluted $ 0.19 $ 0.15 Weighted average shares - basic 87,163
83,444 Weighted average shares - diluted 89,336 85,447
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-GAAPoperating results for the period indicated below:
Nine Months Ended Nine Months Ended June 30, 2010
June 30, 2009
Revenue reconciliation:
GAAP revenue $ 266,050 $ 254,654 Purchase accounting adjustment
- 355 Total non-GAAP revenues $ 266,050
$ 255,009 Nine Months Ended Nine Months
Ended June 30, 2010 June 30, 2009
Expense reconciliation:
GAAP revenue $ 266,050 $ 254,654 Less: GAAP net income
12,250 2,585 Total GAAP expenses 253,800
252,069 Amortization of intangible assets (3,481 ) (4,793 )
Stock-based compensation (36,272 ) (25,262 ) Tax accrual reversal
3,089 - Litigation benefit 7,000 - Restructuring costs (8,579 )
(10,837 ) Other-than-temporary decline in long-term investment
- (1,414 ) Total non-GAAP operating expenses $
215,557 $ 209,763 Nine Months Ended
Nine Months Ended June 30, 2010 June 30, 2009
Net
income reconciliation:
GAAP net income $ 12,250 $ 2,585 Purchase accounting adjustment -
355 Amortization of intangible assets 3,481 4,793 Stock-based
compensation 36,272 25,262 Tax accrual reversal (3,089 ) -
Litigation benefit (7,000 ) - Restructuring costs 8,579 10,837
Other-than-temporary decline in long-term investment -
1,414 Non-GAAP net income $ 50,493 $
45,246 Nine Months Ended Nine Months Ended
June 30, 2010 June 30, 2009
Net
income per share reconciliation:
GAAP net income per share - basic $ 0.14 $ 0.03 Purchase accounting
adjustment - 0.00 Amortization of intangible assets 0.04 0.06
Stock-based compensation 0.42 0.31 Tax accrual reversal (0.04 ) -
Litigation benefit (0.08 ) - Restructuring costs 0.10 0.13
Other-than-temporary decline in long-term investment -
0.02 Non-GAAP net income per share - basic $
0.59 $ 0.55 Non-GAAP net income per share -
diluted $ 0.57 $ 0.53 Weighted average shares - basic 86,300
82,269 Weighted average shares - diluted 88,783 84,712
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 costs, (iv) litigation benefit, (v) tax accrual
reversal and (vi) 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, 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 costs. We
recorded restructuring related to lease abandonment accruals and/or
severance and related benefits in the three months and nine months
ended June 31, 2009 and the nine months ended June 30, 2010. 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
costs helps investors compare our operating performance with that
of other companies. We recognize, however, that restructuring costs
will impact cash flows and that we and investors should carefully
consider the impact of these costs on future cash flows.
(5) Litigation benefit. We
received $7.0 million from Emptoris in relation to a patent
litigation judgment which we recorded as income in the nine months
ended June 30, 2010. We exclude this from our non-GAAP financial
measures because it is unrelated to our ongoing operations. We
believe excluding the litigation benefit helps investors compare
our operating performance with that of other companies. We
recognize, however, that the litigation benefit impacts cash flow
and that we and investors should carefully consider the impact of
this on cash flow.
(6) Release of tax reserve. We
released a tax reserve of approximately $3.1 million in the nine
months ended June 30, 2010. We exclude this from our non-GAAP
financial measures because it is unrelated to our ongoing
operations. We believe excluding the tax reserve release helps
investors compare our operating performance with that of other
companies.
(7) 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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