ELOQ Eloqua, Inc. (MM)

Eloqua, the marketing system of record for modern marketers, today announced financial results for the three and twelve month period ended December 31, 2012.

Financial Highlights for the Full Year Ended December 31, 2012

Total revenue for the full year was $95.8 million, an increase of 34% from $71.3 million in 2011. Subscription and Support revenue was $83.9 million, an increase of 33% from $63.2 million in 2011. Professional Services revenue was $11.9 million, an increase of 46% from $8.1 million in 2011.

GAAP operating loss for the full year of 2012 was $(10.8) million, compared to GAAP operating loss of $(5.1) million in 2011. GAAP net loss attributable to common stockholders was $(78.2) million or $(5.40) per basic and diluted share, based on 14.5 million weighted average shares outstanding. GAAP net loss attributable to common stockholders for 2012 includes $66.9 million of accretion of redeemable preferred stock expense. This compares to a GAAP net loss attributable to common stockholders of $(95.8) million or $(116.74) per basic and diluted share, based on 0.8 million weighted average shares outstanding for 2011. GAAP net loss attributable to common stockholders for 2011 includes $89.7 million of accretion of redeemable preferred stock expense.

Non-GAAP operating loss for the full year 2012 was $(7.3) million, compared to a non-GAAP operating loss of $(3.3) million for the full year 2011. Non-GAAP net loss for the full year 2012 was $(7.4) million or $(0.22) per basic and diluted share, based on 33.5 million pro forma weighted average shares outstanding, compared to a non-GAAP net loss of $(3.7) million for the full year 2011, or $(0.11), per basic and diluted share, based on 32.4 million pro forma weighted average shares outstanding.

A reconciliation of GAAP operating and net income to Non-GAAP operating and net income has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Cash and cash equivalents were $92.9 million as of December 31, 2012, compared to $85.5 million as of September 30, 2012. For the full year 2012, net cash used in operating activities was ($6.4) million, compared to net cash provided by operating activities of $2.7 million for the full year 2011. Free cash flow was $(11.1) million for the full year 2012, compared to free cash flow of $(0.2) million for the full year 2011.

Financial Highlights for the Fourth Quarter Ended December 31, 2012

Total revenue for the fourth quarter of 2012 was $27.0 million, an increase of 27% from $21.3 million in the fourth quarter of 2011. Subscription and Support revenue was $22.9 million, an increase of 28% from $17.9 million in the fourth quarter of 2011. Professional Services revenue was $4.1 million, an increase of 21% from $3.4 million in the fourth quarter of 2011.

GAAP operating loss for the fourth quarter of 2012 was $(3.8) million, compared to GAAP operating loss of $(1.1) million for the fourth quarter of 2011. GAAP net loss attributable to common stockholders was $(3.7) million or $(0.11) per basic and diluted share, based on 34.4 million weighted average shares outstanding. This compares to a GAAP net loss attributable to common stockholders of $(18.8) million or $(19.09) per basic and diluted share, based on 1.0 million weighted average shares outstanding, for the fourth quarter of 2011. GAAP net loss attributable to common stockholders for the fourth quarter of 2011 includes $17.4 million of accretion of redeemable preferred stock expense.

Non-GAAP operating loss for the fourth quarter of 2012 was $(2.6) million, compared to a non-GAAP operating loss of $(0.4) million for the fourth quarter of 2011. Non-GAAP net loss was $(2.6) million or $(0.07) per basic share and diluted, based on 34.4 million pro forma weighted average shares outstanding compared to non-GAAP net loss of $(0.6) million for the fourth quarter of 2011, or $(0.02) per basic and diluted share, based on 32.6 million pro forma weighted average shares outstanding.

Net cash used in operating activities was ($2.7) million for the fourth quarter of 2012, compared to net cash used in operating activities of ($1.0) million for the fourth quarter of 2011. Free cash flow was ($4.5) million for the fourth quarter of 2012, compared to free cash flow of ($1.6) million for the fourth quarter of 2011.

On December 20, 2012, Eloqua announced an agreement to be acquired by Oracle for $23.50 per share. A special meeting of the shareholders of Eloqua will be held on Friday, February 8, 2013, at 10:00 a.m., local time, at the offices of Goodwin Procter LLP, 901 New York Avenue, NW, Washington, DC 20001 to consider and vote on the proposed transaction.

Non-GAAP Financial Measures

Eloqua has provided in this release financial information that has not been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. This information includes non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share, pro forma weighted average shares outstanding and free cash flow. Non-GAAP operating loss is based on GAAP operating loss and excludes stock-based compensation expense; non-GAAP net loss is based on GAAP net loss and excludes accretion of dividends on redeemable preferred stock, stock-based compensation expense, change in fair value of warrants and income tax (benefit) expense; free cash flow is based on net cash (used in) provided by operating activities less purchases of property and equipment. Eloqua uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures in evaluating Eloqua's ongoing operational performance.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.

About Eloqua

Eloqua (NASDAQ: ELOQ) is the marketing system of record for modern marketers. The company's cloud software, professional services and education programs provide marketers with the technology and expertise needed to help marketing drive revenue. More than 100,000 global users from companies both large and small, rely on the marketing automation power of Eloqua to improve demand generation and lead management while driving more qualified leads. Eloqua's customers include AON, Dow Jones, ADP, Fidelity, Polycom, and National Instruments. The company is headquartered in Vienna, Virginia. For more information, visit www.eloqua.com, subscribe to the It's All About Revenue blog, call 866-327-8764, or email demand@eloqua.com.

  ELOQUA, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

      December 31, 2012 December 31, 2011 ASSETS Current assets: Cash and cash equivalents $ 92,914 $ 7,240 Accounts receivable, net of reserve of $615 and $725, respectively 30,802 18,228 Deferred commissions and other deferred costs 1,846 2,680 Deferred tax asset 572 781 Prepaid expense and other assets 3,100   4,153   Total current assets 129,234 33,082 Property and equipment, net of accumulated depreciation and amortization of $9,505 and 7,242, respectively 6,193 3,721 Deferred commissions and other deferred costs 526 902 Deferred tax asset 3,965   3,800   Total assets $ 139,918   $ 41,505     LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 3,846 $ 3,263 Accrued employee compensation and related costs 13,356 3,479 Accrued and other current liabilities 7,531 7,858 Deferred revenue, current portion 38,148 28,863 Current portion of long-term debt -   834   Total current liabilities 62,881 44,297 Long-term debt, net of current portion - 1,458 Non current deferred revenue and other liabilities 2,545   1,943   Total liabilities 65,426 47,698 Redeemable convertible preferred stock: Series A preferred stock, $0.0001 par value, 12,124,650 shares authorized, - 39,406 issued and outstanding at December 31, 2011 and no shares outstanding at December 31, 2012; liquidation preference of $39,406 at December 31, 2011 Series B preferred stock, $0.0001 par value, 17,678,926 shares authorized, - 57,456 issued and outstanding at December 31, 2011 and no shares outstanding at December 31, 2012; liquidation preference of $57,456 at December 31, 2011 Series C preferred stock, $0.0001 par value, 21,483,563 shares authorized, - 64,242 and 19,766,821 shares issued and outstanding at December 31, 2011 and no shares outstanding at December 31, 2012; liquidation preference of $64,242 at December 31, 2011     Total redeemable convertible preferred stock -   161,104   Stockholders' equity (deficit) Eloqua, Inc. stockholders' equity (deficit): Common stock, $0.0001 par value; 100,000,000 and 90,000,000 shares authorized, 35,525,498 and 1,063,368 shares issued and outstanding at December 31, 2012 and December 31, 2011 3 - Additional paid-in capital 319,070 - Accumulated deficit (244,581 ) (169,259 ) Total Eloqua, Inc. stockholders' equity (deficit) 74,492 (169,259 ) Noncontrolling interest -   1,962   Total stockholders' equity (deficit) 74,492   (167,297 ) Total liabilities, redeemable preferred stock and stockholders' equity $ 139,918   $ 41,505       ELOQUA, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)           Three months ended December 31, Twelve months ended December 31, 2012       2011   2012       2011     Revenue: Subscription and support $ 22,879 $ 17,925 $ 83,906 $ 63,222 Professional services 4,084   3,382   11,856   8,126   Total revenue 26,963   21,307   95,762   71,348   Cost of revenue: Subscription and support 4,806 3,191 15,758 12,330 Professional services 3,714   3,415   11,537   10,718   Total cost of revenue 8,520   6,606   27,295   23,048   Gross profit 18,443   14,701   68,467   48,300   Operating expenses: Research and development 3,821 3,207 13,664 11,679 Marketing and sales 11,288 8,071 40,708 29,481 General and administrative 7,109 4,485 21,419 12,208 Litigation settlement -   -   3,500   -   Total operating expenses 22,218   15,763   79,291   53,368   Loss from operations (3,775 ) (1,062 ) (10,824 ) (5,068 ) Other income (expense), net 34   (237 ) (288 ) (707 ) Loss before benefit (provision) for income taxes (3,741 ) (1,299 ) (11,112 ) (5,775 ) Benefit (provision) for income taxes 46   (102 ) (152 ) (378 ) Net loss (3,695 ) (1,401 ) (11,264 ) (6,153 ) Accretion of dividends on redeemable preferred stock -   (17,351 ) (66,920 ) (89,659 ) Net loss attributable to common stockholders $ (3,695 ) $ (18,752 ) $ (78,184 ) $ (95,812 )   Net loss per share attributable to common stockholders, basic and diluted $ (0.11 ) $ (19.09 ) $ (5.40 ) $ (116.74 ) Weighted average common shares outstanding, basic and diluted 34,375,057   982,471   14,490,578   820,734       ELOQUA, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)           Three months ended December 31, Twelve months ended December 31, 2012       2011   2012       2011   Cash flows from operating activities: Net loss $ (3,695 ) $ (1,401 ) $ (11,264 ) $ (6,153 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 739 506 2,263 1,872 Stock-based compensation expense 1,196 682 3,547 1,812 Foreign currency transaction gain (loss) 3 44 (41 ) 65 Deferred income taxes (87 ) 52 40 264 Loss on disposal of fixed assets - 173 - 173 Change in fair value of Series C warrants - 51 189 264 Change in operating assets and liabilities: Accounts receivable, net (10,876 ) (6,997 ) (12,574 ) (2,362 ) Prepaid expenses and other assets 494 (1,185 ) (464 ) (2,102 ) Deferred commissions and other deferred costs 176 1,005 1,210 (59 ) Accounts payable and accrued and other current liabilities 3,976 4,746 808 5,200 Deferred revenue 5,672 570 9,285 3,492 Noncurrent deferred revenue and other liabilities (254 ) 788   606   271   Net cash (used in) provided by operating activities (2,656 ) (966 ) (6,395 ) 2,737   Cash flows from investing activities: Purchases of property and equipment (1,869 ) (669 ) (4,735 ) (2,898 ) Net cash used in investing activities (1,869 ) (669 ) (4,735 ) (2,898 ) Cash flows from financing activities: Repayment of long-term debt - (208 ) (2,292 ) (208 ) Net IPO Proceeds - - 85,760 - Tax withholdings on stock options exercised 9,708 9,708 Principal payments under capital lease obligations - (152 ) - (321 ) Common stock issued 2,261   84   3,587   446   Net cash provided by (used in) financing activities 11,969   (276 ) 96,763   (83 ) Effect of exchange rate changes of cash and cash equivalents (3 ) (44 ) 41 (65 ) Net increase (decrease) in cash and cash equivalents 7,441 (1,955 ) 85,674 (309 ) Cash and cash equivalents at beginning of the period 85,473   9,195   7,240   7,549   Cash and cash equivalents at end of the period $ 92,914   $ 7,240   $ 92,914   $ 7,240       ELOQUA, INC. UNAUDITED SUMMARY OF STOCK-BASED COMPENSATION INCLUDED IN THE CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)           Three months ended December 31, Twelve months ended December 31, 2012     2011 2012     2011   Cost of revenue $ 203 $ 89 $ 573 $ 284 Sales and marketing 454 177 1,160 514 Research and development 134 91 439 313 General and administrative 405 325 1,375 701 Total Stock-Based Compensation Expense $ 1,196 $ 682 $ 3,547 $ 1,812     ELOQUA, INC. UNAUDITED NON-GAAP OPERATING LOSS, NON-GAAP NET LOSS, NON-GAAP NET LOSS PER SHARE AND FREE CASH FLOW RECONCILIATIONS TO GAAP (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)           Three months ended December 31, Twelve months ended December 31, 2012   2011   2012   2011     Reconciliation of Loss From Operations to Non-GAAP Operating Loss   Loss From Operations $ (3,775 ) $ (1,062 ) $ (10,824 ) $ (5,068 ) Adjustments to loss from operations: Stock-based compensation expense 1,196   682   3,547   1,812   Non-GAAP Operating Loss $ (2,579 ) $ (380 ) $ (7,277 ) $ (3,256 )         Reconciliation of Net Loss to Non-GAAP Net Loss Per Share   Net Loss $ (3,695 )

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(1,401 )

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(11,264 ) $ (6,153 ) Accretion of dividends on redeemable preferred stock -   (17,351 ) (66,920 ) (89,659 ) Net loss attributable to common stockholders (3,695 ) (18,752 ) (78,184 ) (95,812 ) Adjustments to net loss attributable to common stockholders: Accretion of dividends on redeemable preferred stock - 17,351 66,920 89,659 Stock-based compensation expense 1,196 682 3,547 1,812 Change in fair value of Series C warrants - 51 189 264 Income tax (benefit) expense (46 ) 102   152   378   Total adjustments to net loss from common stockholders 1,150   18,186   70,808   92,113   Non-GAAP Net Loss $ (2,545 ) $ (566 ) $ (7,376 ) $ (3,699 ) Pro forma weighted average common shares outstanding, basic and diluted** 34,375,057   32,588,175   33,478,768   32,426,411   Non-GAAP Net Loss Per Share $ (0.07 ) $ (0.02 ) $ (0.22 ) $ (0.11 )     ** The pro forma weighted average common shares outstanding reflects 1) the conversion of preferred stock into common stock 2) the conversion of exchangeable shares into common stock and 3) the 8.2 million shares of common stock issued upon the initial public offering completed on August 7, 2012 as if these shares were outstanding for all periods included in the calculation.   Reconciliation of Net Cash (Used In) Provided By Operating Activities to Free Cash Flow   Net Cash (Used In) Provided By Operating Activities $ (2,656 ) $ (966 ) $ (6,395 ) $ 2,737 Less: Purchases of property and equipment (1,869 ) (669 ) (4,735 ) (2,898 ) Free Cash Flow $ (4,525 ) $ (1,635 ) $ (11,130 ) $ (161 )