Ariba, Inc. (Nasdaq: ARBA), the world’s business commerce
network, today announced results for the second quarter of fiscal
year 2012 ended March 31, 2012.
Quarterly Financial and Operational Highlights from
Continuing Operations:
- Subscription revenue of $89.2 million,
up 32% year-over-year
- Network revenue of $45.4 million, up
59% year-over-year
- Total revenue of $131.5 million, up 21%
year-over-year
- Earnings of $0.02 per share from
continuing operations; non-GAAP EPS of $0.25 from continuing
operations, up 34% year-over-year
“As evidenced by our strong quarterly results, Ariba continues
to perform at a high level,” said Bob Calderoni, Chairman and CEO,
Ariba. “We are executing our strategy, bringing to market new
innovations and strategic partnerships that will make it even
easier for buyers and sellers to connect and collaborate more
efficiently. The combination of these factors is strengthening
Ariba’s position as the leader of the Networked Enterprise.”
Results for the Second Quarter of Fiscal Year 2012
Revenue from Continuing Operations:
Total revenues from continuing operations were $131.5 million
for the second quarter of fiscal year 2012, an increase of 21%
compared to $108.8 million for the second quarter of fiscal year
2011. Subscription and maintenance revenues for the second quarter
of fiscal year 2012 were $102.1 million, an increase of 23%
compared to $82.8 million for the second quarter of fiscal year
2011. Within subscription and maintenance revenues, subscription
software revenue was $89.2 million for the second quarter of fiscal
year 2012, an increase of 32% compared to $67.6 million for the
second quarter of fiscal year 2011. Services and other revenues for
the second quarter of fiscal year 2012 were $29.4 million, an
increase of 13% compared to $25.9 million for the second quarter of
fiscal year 2011.
Operating Income from Continuing Operations:
Operating income from continuing operations for the second
quarter of fiscal year 2012 was $4.2 million, an increase of $5.3
million compared to an operating loss from continuing operations of
$1.1 million for the second quarter of fiscal year 2011. Operating
income from continuing operations for the second quarter of fiscal
year 2012 included expenses of $4.8 million for amortization of
intangible assets and $18.0 million for stock-based compensation.
Excluding these items, non-GAAP operating income for the second
quarter of fiscal year 2012 was $27.0 million, representing a 20.5%
non-GAAP operating margin and an increase of 48% compared to $18.2
million of non-GAAP operating income for the second quarter of
fiscal year 2011. Non-GAAP operating income for the second quarter
of fiscal year 2011 excluded expenses of $3.3 million for
amortization of intangible assets, $14.2 million for stock-based
compensation, restructuring costs of $0.2 million, and transaction
costs of $1.5 million.
Earnings Per Share from Continuing Operations:
Income from continuing operations for the second quarter of
fiscal year 2012 was $1.8 million, or $0.02 per share, an increase
compared to a net loss from continuing operations of $1.6 million,
or $0.02 per share, for the second quarter of fiscal year 2011.
Non-GAAP net income from continuing operations was $24.6 million,
or $0.25 per share, an increase of 34% compared to $0.19 per share
for the second quarter of fiscal year 2011.
Balance Sheet and Cash Flow
Total cash, cash equivalents, investments and restricted cash
were $262.1 million at March 31, 2012, an increase of $39.5 million
compared to $222.6 million at December 31, 2011. The company
generated net cash flow from continuing operations of $38.7 million
for the three months ended March 31, 2012. Total deferred revenue
was $142.6 million at March 31, 2012, compared to $142.3 million at
March 31, 2011 and $129.1 million at December 31, 2011.
Conference Call Information
Ariba will hold a conference call today at 5:00 p.m. ET to
discuss its results for the second quarter of fiscal year 2012. To
join the call, please dial 877-407-8031 in the United States and
Canada, or 201-689-8031 internationally. The conference call will
also 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 can be accessed 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: 392221.
About Ariba, Inc.
Ariba, Inc. is the world’s business commerce network. Ariba
combines industry-leading cloud-based applications with the world's
largest web-based trading community to help companies discover and
collaborate with a global network of partners. Using the Ariba®
Network, businesses of all sizes can connect to their trading
partners anywhere, at any time from any application or device to
buy, sell and manage their cash more efficiently and effectively
than ever before. Join them at: www.ariba.com
Copyright © 1996 – 2012 Ariba, Inc.
Ariba, the Ariba logo, AribaLIVE, 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, including difficulties with the integration process
or the realization of benefits of a transaction; the impact of our
disposition, including the potential disruption of our ongoing
business; the ability to attract and retain qualified employees;
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 and dispositions,
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 7, 2012.
Ariba, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited; in thousands) March 31, September 30,
2012 2011 ASSETS Current assets: Cash and cash equivalents $
173,422 $ 196,399 Short-term investments 22,972 28,319 Restricted
cash 29,267 196 Accounts receivable, net 36,312 32,256 Prepaid
expenses and other current assets 17,946
16,191 Total current assets 279,919 273,361 Property
and equipment, net 33,756 32,806 Long-term investments 36,135
26,581 Restricted cash, less current portion 270 29,174 Goodwill
520,427 482,825 Other intangible assets, net 62,829 61,653 Other
assets 7,140 6,741 Total assets $
940,476 $ 913,141 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 12,345
$ 8,873 Accrued compensation and related liabilities 35,695 45,169
Accrued liabilities 24,910 24,293 Restructuring obligations 20,510
23,461 Deferred revenue 135,119 114,505
Total current liabilities 228,579 216,301 Restructuring
obligations, less current portion - 8,346 Deferred revenue, less
current portion 7,450 9,181 Contingent liability for acquisition
23,811 23,486 Other long-term liabilities 6,798
7,873 Total liabilities 266,638
265,187 Stockholders' equity: Common stock 200 199
Additional paid-in capital 5,378,104 5,353,514 Accumulated other
comprehensive loss (4,597 ) (3,396 ) Accumulated deficit
(4,699,869 ) (4,702,363 ) Total stockholders' equity
673,838 647,954 Total liabilities and
stockholders' equity $ 940,476 $ 913,141
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, 2012 2011 2012 2011 Revenues: Subscription and
maintenance $ 102,105 $ 82,849 $ 199,272 $ 148,707 Services and
other 29,365 25,916 57,852
50,478 Total revenues 131,470
108,765 257,124 199,185
Cost of revenues: Subscription and maintenance 20,857 17,680
42,897 31,970 Services and other 23,780 19,217 45,814 34,524
Amortization of acquired technology and customer intangible assets
4,353 3,075 8,616
4,100 Total cost of revenues 48,990
39,972 97,327 70,594 Gross
profit 82,480 68,793 159,797
128,591 Operating expenses: Sales and
marketing 45,153 39,831 90,580 75,547 Research and development
17,712 15,004 34,284 27,496 General and administrative 15,007
14,541 29,337 25,151 Amortization of other intangible assets 398
242 781 242 Restructuring costs (benefit) -
231 - (2,692 ) Total operating expenses
78,270 69,849 154,982
125,744 Operating income (loss) 4,210 (1,056 )
4,815 2,847 Interest and other (expense) income, net (620 )
326 (86 ) 1,095 Income (loss)
from continuing operations before income taxes 3,590 (730 ) 4,729
3,942 Provision for (benefit from) income taxes 1,750
861 3,607 (2,951 ) Income (loss)
from continuing operations 1,840 (1,591 ) 1,122 6,893
Discontinued operations, net of tax: Income (loss) from
discontinued operations 511 1,147 1,372 (3,957 ) Gain on sale of
discontinued operations - 445 -
39,164 Total discontinued operations
511 1,592 1,372 35,207
Net income $ 2,351 $ 1 $ 2,494 $
42,100 Basic earnings per share: Income (loss) from
continuing operations $ 0.02 $ (0.02 ) $ 0.01 $ 0.08 Discontinued
operations, net of tax 0.00 0.02
0.01 0.39 Net income per basic common share $
0.02 $ 0.00 $ 0.02 $ 0.47
Diluted earnings per share: Income (loss) from continuing
operations $ 0.02 $ (0.02 ) $ 0.01 $ 0.07 Discontinued operations,
net of tax 0.00 0.02 0.01
0.38 Net income per diluted common share $ 0.02
$ 0.00 $ 0.02 $ 0.45 Weighted
average shares - basic 95,640 91,846 95,089 90,239 Weighted average
shares - diluted 98,463 91,846 98,290 93,686 Ariba, Inc. and
Subsidiaries Cash Flows (Unaudited; in thousands)
Three Months Ended Six Months Ended
March 31, March 31, 2012 2011 2012 2011 Operating activities: Net
income $ 2,351 $ 1 $ 2,494 $ 42,100 Less income from discontinued
operations, net of tax (511 ) (1,592 ) (1,372
) (35,207 ) Income (loss) from continuing operations 1,840
(1,591 ) 1,122 6,893 Adjustments to reconcile income from
continuing operations to net cash provided by operating activities:
Provision for doubtful accounts 402 107 382 272 Depreciation 3,207
2,554 6,286 4,628 Amortization of intangible assets 4,751 3,317
9,397 4,342 Stock-based compensation 18,030 14,211 36,296 27,045
Restructuring costs (benefit) - 231 - (2,692 ) Changes in operating
assets and liabilities: Accounts receivable 92 653 (2,327 ) (1,296
) Prepaid expense and other assets (1,587 ) (4,010 ) (1,216 )
(4,662 ) Accounts payable (1,353 ) (1,512 ) 1,356 (1,421 ) Accrued
compensation and related liabilities 7,102 6,128 (9,994 ) (7,567 )
Accrued liabilities (1,670 ) (2,121 ) (2,469 ) (8,656 ) Deferred
revenue 13,573 11,925 18,368 32,842 Restructuring obligations
(5,669 ) (4,015 ) (11,297 ) (8,275 )
Net cash provided by continuing operations 38,718 25,877 45,904
41,453 Net cash (used in) provided by discontinued operations
(132 ) (589 ) 981 (1,710 ) Net
cash provided by operating activities 38,586
25,288 46,885 39,743
Investing activities: Cash paid for acquisition, net of cash
acquired - (62,662 ) (47,728 ) (62,662 ) Proceeds from sale of
discontinued operations - 4,149 - 43,149 Purchases of property and
equipment (3,738 ) (8,279 ) (6,617 ) (10,394 ) Purchases of
investments, net of maturities (3,161 ) (232 )
(4,250 ) 227 Net cash used in investing activities
(6,899 ) (67,024 ) (58,595 ) (29,680 )
Financing activities: Proceeds from issuance of common
stock, net 4,104 2,977 5,035 3,408 Repurchase of common stock
- - (16,740 ) (12,802 )
Net cash provided by (used in) financing activities 4,104
2,977 (11,705 ) (9,394 )
Effect of exchange rates on cash and cash equivalents 610 (158 )
438 (225 ) Net change in cash and cash equivalents 36,401
(38,917 ) (22,977 ) 444 Cash and cash equivalents at
beginning of period 137,021 221,754 196,399 182,393
Cash and cash equivalents at end of period $ 173,422
$ 182,837 $ 173,422 $ 182,837
Non-GAAP Financial Measures
The following table reconciles financial measures prepared in
accordance with Generally Accepted Accounting Principles in the
United States of America (GAAP) to the most directly comparable
non-GAAP financial measures in the press release.
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 income 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 income 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, 2012 March 31, 2011
Expense
reconciliation:
GAAP revenue $ 131,470 $ 108,765 Less: GAAP net income 2,351
1 Total GAAP expenses 129,119 108,764
Amortization of intangible assets (4,751 ) (3,317 ) Stock-based
compensation (18,030 ) (14,211 ) Restructuring costs - (231 )
Transaction costs - (1,481 ) Discontinued operations 511
1,592 Total non-GAAP operating expenses $
106,849 $ 91,116 Three Months Ended
Three Months Ended March 31, 2012 March 31, 2011
Net income
reconciliation:
GAAP net income $ 2,351 $ 1 Amortization of intangible assets 4,751
3,317 Stock-based compensation 18,030 14,211 Restructuring costs -
231 Transaction costs - 1,481 Discontinued operations (511 )
(1,592 ) Non-GAAP income from continuing operations $ 24,621
$ 17,649 Three Months Ended Three
Months Ended March 31, 2012 March 31, 2011
Net income per share
reconciliation:
GAAP net income per share - basic $ 0.02 $ 0.00 Amortization of
intangible assets 0.05 0.04 Stock-based compensation 0.19 0.15
Restructuring costs 0.00 0.00 Transaction costs 0.00 0.02
Discontinued operations 0.00 (0.02 ) Non-GAAP
income from continuing operations per share - basic $ 0.26 $
0.19
Non-GAAP income from continuing operations
per share - diluted
$ 0.25 $ 0.19 Weighted average shares - basic 95,640 91,846
Weighted average shares - diluted 98,463 94,798 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, 2012 March 31, 2011
Expense
reconciliation:
GAAP revenue $ 257,124 $ 199,185 Less: GAAP net income 2,494
42,100 Total GAAP expenses 254,630 157,085
Amortization of intangible assets (9,397 ) (4,342 )
Stock-based compensation (36,296 ) (27,045 ) Tax accrual reversal -
3,942 Restructuring benefit - 2,692 Transaction costs - (2,471 )
Discontinued operations 1,372 35,207
Total non-GAAP operating expenses $ 210,309 $ 165,068
Six Months Ended Six Months Ended March 31, 2012
March 31, 2011
Net income
reconciliation:
GAAP net income $ 2,494 $ 42,100 Amortization of intangible assets
9,397 4,342 Stock-based compensation 36,296 27,045 Tax accrual
reversal - (3,942 ) Restructuring benefit - (2,692 ) Transaction
costs - 2,471 Discontinued operations (1,372 )
(35,207 ) Non-GAAP income from continuing operations $ 46,815
$ 34,117 Six Months Ended Six Months
Ended March 31, 2012 March 31, 2011
Net income per share
reconciliation:
GAAP net income per share - basic $ 0.02 $ 0.47 Amortization of
intangible assets 0.10 0.05 Stock-based compensation 0.38 0.30 Tax
accrual reversal 0.00 (0.05 ) Restructuring benefit 0.00 (0.03 )
Transaction costs 0.00 0.03 Discontinued operations (0.01 )
(0.39 ) Non-GAAP income from continuing operations per share
- basic $ 0.49 $ 0.38
Non-GAAP income from continuing operations
per share - diluted
$ 0.48 $ 0.36 Weighted average shares - basic 95,089 90,239
Weighted average shares - diluted 98,290 93,686
Discussion of Specific Items Excluded From Non-GAAP Financial
Measures
Our non-GAAP financial measures generally exclude expenses or
benefits for (i) amortization of intangible assets related to
acquisitions, (ii) stock-based compensation, (iii) tax accrual
reversal, (iv) restructuring costs or benefits, (v) transaction
related costs and (vi) discontinued operations. 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
certain restructuring costs or benefits, transaction related costs
and discontinued operations, these items are non-cash items that do
not affect cash flows.
(1) 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.
(2) Stock-based compensation expenses. We
exclude stock-based compensation expense associated with stock
granted to employees and non-employee 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.
(3) Tax accrual reversal. We released tax
reserves in the six months ended March 31, 2011. We exclude these
from our non-GAAP financial measures because they are unrelated to
our ongoing operations. We believe excluding the tax reserve
releases helps investors compare our operating performance with
that of other companies.
(4) Restructuring cost (benefit). We recorded
a restructuring benefit related to lease abandonment accruals in
the six months ended March 31, 2011 and a restructuring cost
related to asset impairment in the three months ended March 31,
2011. We exclude these from our non-GAAP financial measures because
they are unrelated to our ongoing operations and are significantly
impacted by factors outside our control. We believe excluding
restructuring costs (benefits) helps investors compare our
operating performance with that of other companies. We recognize,
however, that restructuring costs (benefits) will impact cash flows
and that we and investors should carefully consider the impact of
these costs on future cash flows.
(5) Transaction related costs. We recorded
transaction related costs in the three and six months ended March
31, 2011. We exclude these from our non-GAAP financial measures
because they are unrelated to our ongoing operations. We believe
excluding the transaction related costs helps investors compare our
operating performance with that of other companies. We recognize,
however, that the transaction related costs impact cash flow and
that we and investors should carefully consider the impact of this
on cash flow.
(6) Discontinued operations. We exclude the
results of discontinued operations from our non-GAAP financial
measures because they are unrelated to our ongoing operations. We
believe excluding the results of discontinued operations helps
investors compare our operating performance with that of other
companies. We recognize, however, that the discontinued operations
impact cash flow and that we and investors should carefully
consider the impact of this on cash flow.
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