SAN CARLOS, Calif., Oct. 4, 2007 (PRIME NEWSWIRE) -- DemandTec, Inc. (Nasdaq:DMAN), a leading provider of on-demand consumer demand management applications that enable retailers and consumer products companies to optimize prices, promotions, and other strategic decisions, today announced financial results for the second quarter of fiscal 2008 ended August 31, 2007.
"We were very pleased that we completed our initial public offering in August, which was a significant milestone for DemandTec and the consumer demand management market. The company continued its strong performance in the second quarter, which was highlighted by record revenue and by non-GAAP operating profitability, both of which were better than our plan entering the quarter," said Dan Fishback, President and Chief Executive Officer of DemandTec. Fishback added, "DemandTec has established a leadership position with a number of the largest retailers in the world, and we look to leverage this position in order to continue increasing our presence with consumer products manufacturers. With strong second quarter results, we are pleased about our fundamental outlook."
Second Quarter Financial Highlights
Revenue: Revenue was $14.7 million in the second quarter of fiscal 2008, up 40% from $10.4 million in the second quarter of fiscal 2007 and 11% from $13.2 million in the first quarter of fiscal 2008.
Gross Profit: GAAP gross profit was $9.7 million in the second quarter of fiscal 2008. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of intangibles, was $10.0 million in the second quarter of fiscal 2008, up 36% from the second quarter of fiscal 2007 and representing a non-GAAP gross margin of 68%.
GAAP Operating and Net Income/Loss: Loss from operations was $644,000 in the second quarter of fiscal 2008, compared to income from operations of $193,000 in the second quarter of fiscal 2007. Net loss attributable to common stockholders was $1.1 million, or ($0.10) per diluted share, in the second quarter of fiscal 2008, compared to net income attributable to common stockholders of $110,000, or $0.01 per diluted share, in the second quarter of fiscal 2007.
Non-GAAP Operating and Net Income/Loss: Non-GAAP income from operations, which excludes $605,000 in stock-based compensation expense and $243,000 in amortization of intangibles, was $204,000 in the second quarter of fiscal 2008, compared to $227,000 in the second quarter of fiscal 2007. Non-GAAP net loss attributable to common stockholders was $262,000, or ($0.02) per diluted share, in the second quarter of fiscal 2008, compared to non-GAAP net income attributable to common stockholders of $144,000, or $0.01 per diluted share, in the second quarter of fiscal 2007.
Cash: Cash and marketable securities at the end of the quarter were $75.2 million, an increase of approximately $48 million from the end of the first quarter of fiscal 2008. The increase was driven primarily by $59.7 million in net proceeds from the company's initial public offering, less approximately $13 million of cash used to retire the company's term debt and line of credit outstanding prior to the completion of the offering, combined with positive cash flow from operations of $2.5 million. For the six months ended August 31, 2007, the company generated $5.7 million in cash flow from operations and invested $2.3 million in capital expenditures, resulting in free cash flow of $3.4 million.
Mark Culhane, Chief Financial Officer of DemandTec, stated, "Given the early stage of the consumer demand management market, revenue growth and market share are among the company's top strategic priorities. However, we are also highly focused on driving profitability and cash flow, which is evidenced by the company's strong cash from operations on a year-to-date basis."
Conference Call Information
DemandTec will host a conference call today, October 4, 2007, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss the Company's financial results and financial guidance. To access this call, dial 303-262-2140 with passcode 11097357. A replay of this conference call will be available through October 11, 2007, at 303-590-3000. The replay passcode is 11097357#. A live webcast of this conference call will be available on the "Investor Relations" page of the Company's Web site, (www.demandtec.com) and a replay will be archived on the Web site as well.
About DemandTec
DemandTec's suite of on-demand applications empowers retailers and consumer products companies to optimize pricing, promotion, and other strategic decisions in order to achieve their revenue, profitability and sales volume objectives. DemandTec customers include leading retailers such as Advance Auto Parts, Best Buy, Circle K Stores, Delhaize America, Giant-Carlisle, H-E-B Grocery Co., Monoprix and Safeway, as well as more than 100 consumer products companies. For more information, please visit www.demandtec.com.
Forward-Looking Statements
This press release contains forward-looking statements regarding DemandTec's expectations, hopes, plans, intentions or strategies, including statements about the company's future financial performance, financial condition or results of operations, statements as to the plans of management for future operations, and statements as to management's beliefs regarding the company's target markets. We may, in some cases, use words such as "believes," "expects," "anticipates," "plans," "estimates," and similar expressions to identify these forward-looking statements. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties include changes in our pricing policies or those of our competitors, fluctuations in demand for our software, our ability to develop and implement in a timely manner new software and enhancements that meet customer requirements, any significant changes in the competitive dynamics of our market, including new entrants or substantial discounting of products, general economic conditions in the retail and consumer products markets, and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact DemandTec's business are set forth in DemandTec's final prospectus dated August 8, 2007 filed with the SEC, as well as subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Any future products, features or related specifications that may be referenced in this release are for information purposes only and are not commitments to deliver any technology or enhancement. DemandTec reserves the right to modify future product plans at any time.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons why management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled "Use of Non-GAAP Financial Information" as well as the related tables. We anticipate disclosing forward-looking non-GAAP financial information in our conference call to discuss our second quarter results, including an estimate of non-GAAP operating income and net earnings per share for the third quarter and full year of fiscal 2008 that excludes stock-based compensation expenses and amortization of purchased intangible assets. We cannot readily estimate our expected stock-based compensation expenses for these future periods as they depend upon such factors as our future stock price for purposes of computation.
A copy of this press release can be found on the investor relations page of DemandTec's website at www.demandtec.com.
DemandTec and the DemandTec logo registered trademarks of DemandTec, Inc. All other trademarks used or mentioned herein are the property of their respective owners.
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DemandTec, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
--------------------------------------
Three Months Six Months
Ended August 31, Ended August 31,
-------- -------- -------- --------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue $14,673 $10,447 $27,921 $20,513
Cost of revenue 5,015 3,102 9,338 6,422
-------- -------- -------- --------
Gross Profit 9,658 7,345 18,583 14,091
-------- -------- -------- --------
Operating expenses:
Research & Development 5,066 3,582 10,138 6,811
Sales & Marketing 3,876 2,898 7,619 5,739
General & Administrative 1,269 672 2,398 1,205
Amortization of acquired
intangible assets 91 -- 182 --
-------- -------- -------- --------
Total operating expenses 10,302 7,152 20,337 13,755
-------- -------- -------- --------
Income (loss) from operations (644) 193 (1,754) 336
Other income (expense), net (334) (79) (448) 43
-------- -------- -------- --------
Income (loss) before
provision (benefit) for
income taxes (978) 114 (2,202) 379
Provision (benefit) for
income taxes 127 (4) 138 (14)
-------- -------- -------- --------
Net income (loss) (1,105) 118 (2,340) 393
Accretion to redemption value
of preferred stock 5 8 13 16
-------- -------- -------- --------
Net income (loss) attributable
to common stockholders $(1,110) $ 110 $(2,353) $ 377
======== ======== ======== ========
Net income (loss) per
share - basic $ (0.10) $ 0.02 $ (0.26) $ 0.07
Net income (loss) per
share - diluted $ (0.10) $ 0.01 $ (0.26) $ 0.02
Weighted shares used in per
share calculation:
Basic 11,443 5,117 8,974 5,057
Weighted average
convertible preferred
shares -- 13,503 -- 13,501
Weighted average
stock options and warrants
and unvested common shares
subject to repurchase -- 2,846 -- 2,885
-------- -------- -------- --------
Diluted 11,443 21,466 8,974 21,443
======== ======== ======== ========
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DemandTec, Inc.
Consolidated Balance Sheets
(in thousands)
---------------------------
August 31, February 28,
2007 2007
(unaudited)
----------- -----------
Current assets:
Cash, cash equivalents and
marketable securities $ 75,212 $ 25,478
Accounts receivable 13,264 14,338
Prepaid expenses and other
current assets 3,800 3,202
----------- -----------
Total current assets 92,276 43,018
----------- -----------
Property, equipment and leasehold
improvements, net 4,383 2,941
Goodwill 5,290 5,290
Acquired intangible assets 4,244 4,729
Other assets 713 817
----------- -----------
Total assets 106,906 56,795
=========== ===========
Current liabilities:
Accounts payable and accrued
expenses 9,181 7,796
Deferred revenue, current 33,436 31,143
Debt, current 1,800 3,385
Other current liabilities 123 760
----------- -----------
Total current liabilities 44,540 43,084
----------- -----------
Deferred revenue, non-current 14,127 11,029
Debt, non-current -- 11,678
Other long-term liabilities 506 591
Total redeemable convertible
preferred stock -- 49,073
Stockholders' equity (deficit):
Convertible preferred stock -- 2,071
Common stock 118,027 7,210
Accumulated deficit (70,294) (67,941)
----------- -----------
Total stockholders' equity (deficit) 47,733 (58,660)
----------- -----------
Total liabilities, redeemable convertible
preferred stock and stockholders' equity
(deficit) $ 106,906 $ 56,795
=========== ===========
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DemandTec, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
------------------------------------------------------
Three Months Ended Six Months Ended
August 31, August 31,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
GAAP cost of revenue $ 5,015 $ 3,102 $ 9,338 $ 6,422
Deduct:
Stock-based compensation (201) (5) (300) (8)
Amortization of purchased
intangible assets (152) -- (304) --
-------- -------- -------- --------
Non-GAAP cost of revenue $ 4,662 $ 3,097 $ 8,734 $ 6,414
======== ======== ======== ========
GAAP gross profit $ 9,658 $ 7,345 $ 18,583 $ 14,091
Add back:
Stock-based compensation 201 5 300 8
Amortization of purchased
intangible assets 152 -- 304 --
-------- -------- -------- --------
Non-GAAP gross profit $ 10,011 $ 7,350 $ 19,187 $ 14,099
======== ======== ======== ========
GAAP gross margin 65.8% 70.3% 66.6% 68.7%
Add back:
Stock-based compensation 1.4% 0.1% 1.0% 0.0%
Amortization of purchased
intangible assets 1.0% 0.0% 1.1% 0.0%
-------- -------- -------- --------
Non-GAAP gross margin 68.2% 70.4% 68.7% 68.7%
======== ======== ======== ========
GAAP research & development
expense $ 5,066 $ 3,582 $ 10,138 $ 6,811
Deduct stock-based
compensation (176) (7) (247) (11)
-------- -------- -------- --------
Non-GAAP research &
development expense $ 4,890 $ 3,575 $ 9,891 $ 6,800
======== ======== ======== ========
GAAP sales & marketing
expense $ 3,876 $ 2,898 $ 7,619 $ 5,739
Deduct stock-based
compensation (136) (14) (225) (18)
-------- -------- -------- --------
Non-GAAP sales & marketing
expense $ 3,740 $ 2,884 $ 7,394 $ 5,721
======== ======== ======== ========
GAAP general &
administrative expense $ 1,269 $ 672 $ 2,398 $ 1,205
Deduct stock-based
compensation (92) (8) (229) (10)
-------- -------- -------- --------
Non-GAAP general &
administrative expense $ 1,177 $ 664 $ 2,169 $ 1,195
======== ======== ======== ========
GAAP total operating
expense $ 10,302 $ 7,152 $ 20,337 $ 13,755
Deduct:
Stock-based compensation (404) (29) (701) (39)
Amortization of purchased
intangible assets (91) -- (182) --
-------- -------- -------- --------
Non-GAAP total operating
expense $ 9,807 $ 7,123 $ 19,454 $ 13,716
======== ======== ======== ========
GAAP income (loss) from
operations $ (644) $ 193 $ (1,754) $ 336
Add back stock-based
compensation and
amortization of purchased
intangible assets 848 34 1,487 47
-------- -------- -------- --------
Non-GAAP income (loss)
from operations $ 204 $ 227 $ (267) $ 383
======== ======== ======== ========
GAAP net income (loss)
attributable to common
stockholders $ (1,110) $ 110 $ (2,353) $ 377
Add back stock-based
compensation and
amortization of purchased
intangible assets 848 34 1,487 47
-------- -------- -------- --------
Non-GAAP net income (loss)
attributable to common
stockholders $ (262) $ 144 $ (866) $ 424
======== ======== ======== ========
GAAP net income (loss) per
share, diluted $ (0.10) $ 0.01 $ (0.26) $ 0.02
Add back stock-based
compensation and
amortization of purchased
intangible assets $0.08 $ 0.00 $ 0.16 $ 0.00
-------- -------- -------- --------
Non-GAAP net income (loss)
per share, diluted $ (0.02) $ 0.01 $ (0.10) $ 0.02
======== ======== ======== ========
GAAP cash flow from
operations $ 2,457 $ 1,681 $ 5,674 $ (3,780)
Deduct purchases of
property and equipment (859) (562) (2,297) (1,096)
-------- -------- -------- --------
Non-GAAP free cash flow $ 1,598 $ 1,119 $ 3,377 $ (4,876)
======== ======== ======== ========
Use of Non-GAAP Financial Measures
The accompanying press release dated October 4, 2007 contains non-GAAP financial measures. The above 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 measures include non-GAAP cost of revenue, gross profit, gross margin, operating expenses, income (loss) from operations, net income (loss), and net income (loss) per share amounts.
Our non-GAAP financial measures generally exclude costs and expenses for (i) amortization of purchased intangible assets related to our acquisition of TradePoint, Inc. and (ii) stock-based compensation:
Amortization of Purchased Intangible Assets. In accordance with GAAP, we amortize intangible assets acquired in connection with our acquisition of TradePoint, Inc. over the estimated useful lives of the assets. We exclude these amortization costs in our non-GAAP financial measures because they (i) result from a prior acquisition, 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, 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.
Stock-Based Compensation Expenses. We exclude stock-based compensation expense associated with equity incentives granted to employees, non-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 may wish to exclude the effects of stock-based compensation expense in comparing our financial performance with that of other companies.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, GAAP financial measures, which should be considered as the primarily 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. 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.