PASADENA, Calif., May 14, 2007 (PRIME NEWSWIRE) -- Guidance Software, Inc. (Nasdaq:GUID), The World Leader in Digital Investigations(tm), today announced record revenue results for the quarter ended March 31, 2007.
In the first quarter of 2007, revenue was $17.6 million, an increase of $6.4 million, or 58%, from the first quarter of 2006. GAAP net loss in the first quarter of 2007 was $1.9 million, or $0.08 per share, compared to GAAP net loss of $0.5 million, or $0.02 per share, in the first quarter of 2006.
First quarter of 2007 GAAP results included $0.9 million (5.0% of revenue) of non-cash share-based compensation charges as compared to $0.1 million (0.5% of revenue) in the first quarter of 2006. While we believe that reporting on GAAP is in the best interest of shareholders, our non-GAAP results for the first quarter of 2007, excluding the effects of share-based compensation, were a net loss of $1.0 million, or $0.04 per share. This compares to a non-GAAP net loss of $0.4 million, or $0.02 per share in the first quarter of 2006.
"Historically, our revenues have dipped as a result of seasonality in the first quarter compared to the preceding fourth quarter," said John Colbert, Chief Executive Officer of Guidance Software. "We are pleased to report, however, for the first time our first quarter revenues this year were higher than the preceding fourth quarter. We saw stronger revenue growth than expected, driven by an increase in Enterprise Edition platform and eDiscovery suite sales."
Other notable achievements in the first quarter included:
-- We opened a new full-service eDiscovery Center in San Francisco
enabling Guidance Software to provide a complete, end-to-end,
electronic discovery solution to its customers in the eDiscovery
market.
-- We were awarded a patent for our latest digital investigative
feature, known as "Automatic Reconnect and Reacquisition in a
Computer Investigation System."
-- We were pleased to read an independent third party product review
of EnCase Enterprise v6 appearing in the February 28 edition of
Network Computing. In that article they wrote "...new features
plus great speed for examining machines over the network make
EnCase practically untouchable by current competitors."
Key metrics for the first quarter were:
-- Gross Margins (GAAP)
Q1:07 Q1:06 FY:06 Q4:06
Overall GM 70.1% 72.4% 71.2% 69.2%
Product GM 92.6% 92.3% 92.5% 92.0%
Service GM 39.9% 47.5% 41.5% 35.0%
Gross margins increased in Quarter 1 as compared to the preceding
quarter as a result of reduced costs associated with the release
of EnCase v6. Year-over-year gross margins declined as a result
of increased share-based compensation and investments in our
professional services division and facilities.
-- Operating expenses for the first quarter were $14.5 million (82.6%
of revenue, including $0.7 million of share-based compensation.)
The increase in operating expenses on a year-over-year basis was
largely the result of expansion in head count and related office
facilities in the areas of sales, development, and administrative.
These groups experienced faster than average growth in an effort
to quickly capitalize on the significant market opportunity we have
before us as well as a result of expanding our infrastructure to
operate as a public company.
The $1.8 million and 14.2% increase in operating expenses as
compared to Quarter 4 of 2006 was largely the result of an increase
in share-based compensation of $0.3 million and increased expenses
of $0.6 million as a result of late 2006 and early 2007 sales force
compensation and training costs. In addition, we incurred
increased professional audit, tax and legal services as a result of
our year end public reporting requirements of $0.5 million.
-- Cash and investments were $33.6 million at March 31, 2007 versus
$32.7 million on December 31, 2006.
-- Deferred revenue as of March 31, 2007 was $22.9 million compared to
$20.2 million as of December 31, 2006, a 13.1% increase.
"We are delivering on our growth strategy and believe we are well positioned to realize our objectives," said Frank J. Sansone, Guidance Software's Chief Financial Officer.
Conference Call Information:
The Company will host a conference call today at 2:00 p.m. Pacific, 5:00 p.m. Eastern to discuss its quarterly results. Participants should call (800) 810-0924 (North America) or (913) 981-4900 (International). Attendees should dial in at least 10 minutes prior to the conference call.
A web cast and replay of the call may also be found on the Internet through Guidance Software's Investor Relations web site at http://investors.guidancesoftware.com. A replay of the call will be available by calling (719) 457-0820, pass code 8164654, available from 8:00 p.m. eastern, May 14, through midnight May 20.
Forward Looking Statements:
This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from current expectations. There can be no assurance that demand for the company's products will continue at current or greater levels, or that the company will continue to grow revenues, or be profitable. There are also risks that the company's pursuit of providing network security and eDiscovery technology might not be successful, or that if successful, it will not materially enhance the company's financial performance; that the company could fail to retain key employees; that changes in customer requirements and other general economic and political uncertainties could impact the company's relationship with its customers; and that delays in product development, competitive pressures or technical difficulties could impact timely delivery of next-generation products; and other risks and uncertainties that are described from time to time in Guidance Software's periodic reports and registration statements filed with the Securities and Exchange Commission. The company specifically disclaims any responsibility for updating these forward-looking statements.
About Guidance Software:
Guidance Software is recognized worldwide as the industry leader in digital investigative solutions. Its EnCase(r) platform provides the foundation for government, corporate and law enforcement organizations to conduct thorough and effective computer investigations of any kind, such as intellectual property theft, incident response, compliance auditing and responding to eDiscovery requests -- all while maintaining the forensic integrity of the data. There are more than 20,000 licensed users of the technology, and thousands of investigators and corporate security personnel attend Guidance Software's forensic methodology training annually. Validated by numerous courts worldwide, EnCase software is also frequently honored with top security awards and recognition from eWEEK, SC Magazine and Network Computing, as well as the Socha-Gelbmann survey.
Guidance Software, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
March 31,
2006 2007
-------- --------
Revenues:
Product revenue $ 6,203 $ 10,088
Services and maintenance revenue 4,968 7,508
-------- --------
Total revenues 11,171 17,596
-------- --------
Cost of revenues:
Cost of product revenue 477 745
Cost of services and maintenance
revenue 2,608 4,513
-------- --------
Total cost of revenues 3,085 5,258
-------- --------
Gross profit 8,086 12,338
-------- --------
Operating expenses:
Selling and marketing 5,108 8,692
Research and development 1,451 2,048
General and administrative 1,711 3,090
Depreciation 360 699
-------- --------
Total operating expenses 8,631 14,529
-------- --------
Operating loss (545) (2,191)
-------- --------
Other income 51 360
Tax provision 16 25
-------- --------
Net loss $ (510) $ (1,856)
======== ========
Net loss per share $ (0.02) $ (0.08)
======== ========
Shares used in per share calculation -
diluted 20,417 22,289
======== ========
Share based compensation expense was
allocated as follows:
Cost of product revenue -- 23
Cost of service and maintenance revenue 11 164
Selling and marketing 20 243
Research and development 4 131
General and administrative 27 327
-------- --------
Total share-based compensation expense 62 888
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Supplemental Financial Data (See Note)
--------------------------------------
Non-GAAP net loss excluding share-based
compensation expense $ (448) $ (968)
Non-GAAP net loss per share excluding
share-based compensation expense $ (0.02) $ (0.04)
Guidance Software, Inc.
Note to Unaudited Condensed Consolidated Statements of Operations
This press release and its attachments include the non-GAAP financial
measures of operating loss before share-based compensation expense and
non-GAAP loss per share, which are reconciled to loss from operations
and net loss per share, respectively, which we believe are the most
comparable GAAP measures. We use these non-GAAP financial measures for
internal managerial purposes, when publicly providing our business
outlook, and to facilitate period-to-period comparisons. We describe
limitations specific to each non-GAAP financial measure below.
Management generally compensates for limitations in the use of
non-GAAP financial measures by relying on comparable GAAP financial
measures and providing investors with a reconciliation of the non-GAAP
financial measures only in addition to and in conjunction with results
presented in accordance with GAAP. We believe that these non-GAAP
financial measures reflect an additional way of viewing aspects of our
operations that, when viewed with our GAAP results, provide a more
complete understanding of factors and trends affecting our business.
These non-GAAP measures should be considered as a supplement to, and
not as a substitute for, or superior to, loss from operations and net
loss per share calculated in accordance with GAAP.
Non-GAAP net loss is defined as net loss excluding share-based
compensation. Effective January 1, 2006, we adopted Statement of
Financial Accounting Standard No. 123 (revised 2004), "Share-Based
Payment" ("SFAS") and therefore record share-based compensation
expense under the fair value method for all periods presented. We
consider non-GAAP net income and non-GAAP net loss per share to be
profitability measures which facilitate the forecasting of our
operating results for future periods and allow for the comparison of
our results to historical periods. A limitation of non-GAAP net loss
and non-GAAP net loss per share is that they do not include all of the
costs associated with our workforce. Management compensates for this
limitation by also relying on the comparable GAAP financial measures
of net income and net loss per share, both of which include the
expense and related tax effects of the item excluded from non-GAAP net
loss and non-GAAP net loss per share.
Guidance Software, Inc.
Reconciliation of GAAP Net Loss and GAAP Net Loss
Per Share to Non-GAAP Net Loss and Non-GAAP Net Loss Per Share
(in thousands, except per share amounts)
Three Months Ended
March 31,
2006 2007
-------- --------
GAAP Net loss $ (510) $ (1,856)
======== ========
Share-based compensation expense as measured
using the fair value method under
SFAS 123R 62 888
======== ========
Non-GAAP Net loss excluding share-based
compensation expense $ (448) $ (968)
======== ========
GAAP Net loss per share - diluted $ (0.02) $ (0.08)
======== ========
Non-GAAP Net loss per share excluding
share-based compensation expense per
share - diluted $ (0.02) $ (0.04)
======== ========
Shares used in per share calculations -
diluted 20,417 22,289
======== ========
Guidance Software, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
December 31, March 31,
2006 2007
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 8,041 $ 8,875
Marketable debt securities 24,694 24,693
Trade receivables, net 17,513 16,395
Prepaid expenses, inventory and other
current assets 2,064 2,623
-------- --------
Total current assets 52,312 52,586
Property and equipment, net 6,526 8,825
Other assets 507 511
-------- --------
Total assets $ 59,345 $ 61,922
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,494 $ 5,041
Accrued expenses 3,974 4,437
Capital leases 942 757
Deferred revenues 18,123 20,447
-------- --------
Total current liabilities 28,533 30,682
-------- --------
Long-term liabilities:
Rent incentives 1,537 2,196
Capital leases 488 580
Deferred revenues 2,098 2,465
-------- --------
Total long-term liabilities 4,123 5,241
Stockholders' equity
Common stock 22 22
Additional paid-in capital 36,330 37,617
Accumulated other comprehensive income (17) (8)
Accumulated deficit (9,646) (11,632)
-------- --------
Total stockholders' equity 26,689 25,999
-------- --------
Total liabilities and stockholders'
equity $ 59,345 $ 61,922
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