DETROIT, Aug. 04, 2016 (GLOBE NEWSWIRE) -- Covisint Corporation (Nasdaq:COVS), the leading Cloud Platform for building Identity and Internet of Things (IoT) applications, today announced financial results for the first quarter of fiscal 2017, which ended June 30, 2016.
"Our core priority this fiscal year is to drive subscription revenue sales growth, while aggressively managing our cash position through strong expense management. We are encouraged by the early progress in our refined direct sales strategy, and we continue to increase our resources in the automotive market,” said Covisint Chairman and CEO, Sam Inman.
Inman continued, “Large organizations are beginning to see the benefit of transforming their business in the digital economy, and there is no place where that is more evident than in the moves being made by the global automotive industry.”
First Quarter Fiscal 2017 Financial Highlights
Revenue
- Total revenue was $17.4 million, a decrease of 6% compared to $18.5 million in the prior year period.
- Subscription revenue was $14.6 million, a decrease of 7% compared to $15.7 million in the prior year period.
- Services revenue was $2.8 million, an increase of 1% compared to the prior year period.
Profitability
- GAAP gross margin was 53%, compared to 61% in the prior fiscal quarter and 47% in the prior year period.
- Non-GAAP gross margin was 58%, compared to 65% in the prior fiscal quarter and 52% in the prior year period.
- GAAP net loss was $5.0 million or ($0.12) per diluted share, compared to net loss of $6.6 million or ($0.17) per diluted share in the prior year.
- Non-GAAP net loss was $4.4 million or ($0.11) per diluted share, compared to net loss of $4.9 million or ($0.13) per diluted share in the prior year.
Balance Sheet
- The Company had $41.8 million in cash and cash equivalents at June 30, 2016, compared with $39.7 million at March 31, 2016.
First Quarter Fiscal 2017 Business Highlights
- Included in Forrester Research, Vendor Landscape: Identity Management Solutions for the Internet of Things, published May 2016.
- Presented at Future Connected Cars USA, Director of Automotive, Tim Evavold, spoke on “Ride Sharing and Multimodal Transportation in Connected Environments”, and Chief Security Officer, David Miller, spoke on “Cybersecurity, Wearables, Devices and the Connected Vehicle”.
- Presented at European Identity & Cloud Conference 2016, Chief Security Officer, David Miller, spoke on “Orchestrating Identities Across People, Systems and Things”, and “IoT and Blockchain – Predictions and Recommendations”.
- Showcased the Covisint Cloud Platform at TU-Automotive Detroit 2016 on June 8-9, 2016. Leveraging 15-years of automotive experience to securely connect the growing vehicle ecosystem, the Covisint Cloud Platform unlocks the value of connected vehicles, improves the customer experience and increases visibility across dealer networks.
- Presented keynote session at TU-Automotive Detroit 2016, Chief Security Officer, David Miller, detailed “Orchestrating Identities Across People, Systems and Things”, as well as Director of Automotive, Tim Evavold, sat on two panel sessions highlighting “Urban Mobility-as-a-Service” and “Connected Car Meets Connected Home”.
- Featured in Gartner Research, Magic Quadrant for Identity and Access Management as a Service, Worldwide, published June 2016.
- Featured in 451 Research, Covisint’s Automotive Drive Pops the Hood to Multiple Trusted IoT Stakeholders, Impact Report, published June 2016.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), Covisint monitors non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Each of these financial measures excludes the impact of certain items (the impact of stock award compensation expense, the amortization and impairment of intangible assets and amounts incurred for capitalized internal software costs) and, therefore, has not been calculated in accordance with GAAP.
Covisint monitors these non-GAAP measures to evaluate its ongoing operational performance and enhance an overall understanding of its past financial performance. Covisint believes that these non-GAAP metrics help illustrate underlying trends in its business that could otherwise be masked by the effect of the expenses that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Furthermore, Covisint uses these measures to establish budgets and operational goals for managing its business and evaluating its performance. Covisint also believes that these non-GAAP measures provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods against other companies in its industry.
The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors.
Conference Call and Webcast Information
Covisint management will hold a conference call at 5:00 p.m. (Eastern time) today to discuss these results. The U.S. toll free dial-in for the conference call is 1-877-407-4018, and the international dial-in number is 1-201-689-8471. No passcode is required. A live webcast of the conference call will also be available on the company's website at investors.covisint.com.
For those unable to participate in the conference call, a replay will be available after the conclusion of the earnings call on August 4, 2016, through August 11, 2016. The U.S. toll-free replay dial-in number is 1-877-870-5176 and the international replay dial-in number is 1-858-384-5517. The replay passcode is 13640954.
About Covisint Corporation
Covisint is the leading Cloud Platform for building Identity and Internet of Things (IoT) applications. Our Cloud Platform technology facilitates the rapid development of identification, authorization and connection of complex networks of people, processes, systems and things.
Covisint's Platform supports customers in their endeavors to securely identify, authenticate and connect users, devices, applications and information. It supports 3,000 organizations who connect more than 212,000 business partners and customers that support $4 billion in ecommerce transactions annually. Learn more at http://www.covisint.com/.
Forward-looking Statements
This press release contains forward-looking statements, including statements regarding Covisint's future financial performance, market growth, the demand for Covisint's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Covisint's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Covisint's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Covisint disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts; the extent we are able to maintain pricing with our customers at renewal; the continued growth of the market for our solutions; the success of our channel partner and certified partner strategies; competition from current competitors and new market entrants; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales for our solutions; and other risk and uncertainties. Further information on potential factors that could affect actual results is included in Covisint's reports filed with the SEC.
| COVISINT CORPORATION | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In Thousands) | ||||||||
| (Unaudited) | ||||||||
| June 30, 2016 | March 31, 2016 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 41,759 | $ | 39,681 | ||||
| Accounts receivable, net | 8,876 | 12,836 | ||||||
| Prepaid expenses | 2,549 | 2,167 | ||||||
| Other current assets | 1,110 | 1,603 | ||||||
| Total current assets | 54,294 | 56,287 | ||||||
| PROPERTY AND EQUIPMENT, NET | 7,079 | 7,847 | ||||||
| CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET | 11,330 | 11,486 | ||||||
| OTHER: | ||||||||
| Goodwill | 25,385 | 25,385 | ||||||
| Deferred costs | 485 | 580 | ||||||
| Deferred tax asset, net | 163 | 171 | ||||||
| Other assets | 243 | 289 | ||||||
| Total other assets | 26,276 | 26,425 | ||||||
| TOTAL ASSETS | $ | 98,979 | $ | 102,045 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 5,157 | $ | 5,061 | ||||
| Accrued commissions | 1,026 | 1,071 | ||||||
| Deferred revenue | 19,467 | 15,952 | ||||||
| Accrued expenses | 2,228 | 2,377 | ||||||
| Total current liabilities | 27,878 | 24,461 | ||||||
| DEFERRED REVENUE | 1,607 | 3,595 | ||||||
| ACCRUED LIABILITIES | 2,402 | 2,327 | ||||||
| DEFERRED TAX LIABILITY, NET | 349 | 353 | ||||||
| Total liabilities | 32,236 | 30,736 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDER’S EQUITY: | ||||||||
| Common Stock | — | — | ||||||
| Additional paid-in capital | 162,529 | 161,997 | ||||||
| Retained deficit | (95,530 | ) | (90,527 | ) | ||||
| Accumulated other comprehensive loss | (256 | ) | (161 | ) | ||||
| Total shareholders' equity | 66,743 | 71,309 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | $ | 98,979 | $ | 102,045 | ||||
| COVISINT CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (In Thousands, Except Per Share Data) | ||||||||
| (Unaudited) | ||||||||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| REVENUE | $ | 17,445 | $ | 18,482 | ||||
| COST OF REVENUE | 8,220 | 9,777 | ||||||
| GROSS PROFIT | 9,225 | 8,705 | ||||||
| 53 | % | 47 | % | |||||
| OPERATING EXPENSES: | ||||||||
| Research and development | 3,776 | 3,663 | ||||||
| Sales and marketing | 7,210 | 7,476 | ||||||
| General and administrative | 3,208 | 4,087 | ||||||
| Total operating expenses | 14,194 | 15,226 | ||||||
| OPERATING LOSS | (4,969 | ) | (6,521 | ) | ||||
| Other income | 16 | 2 | ||||||
| LOSS BEFORE INCOME TAX PROVISION | (4,953 | ) | (6,519 | ) | ||||
| INCOME TAX PROVISION | 50 | 67 | ||||||
| NET LOSS | ($ | 5,003 | ) | ($ | 6,586 | ) | ||
| DILUTED EPS COMPUTATION | ||||||||
| Numerator: Net loss | ($ | 5,003 | ) | ($ | 6,586 | ) | ||
| Denominator: | ||||||||
| Weighted-average common shares outstanding | 40,500 | 39,059 | ||||||
| Dilutive effect of stock awards | — | — | ||||||
| Total shares | 40,500 | 39,059 | ||||||
| Diluted EPS | ($ | 0.12 | ) | ($ | 0.17 | ) | ||
| COVISINT CORPORATION | ||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||
| (In Thousands, Except Per Share Data) | ||||||||
| (Unaudited) | ||||||||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| Gross profit | $ | 9,225 | $ | 8,705 | ||||
| Gross profit % | 53 | % | 47 | % | ||||
| Adjustments: | ||||||||
| Stock compensation expense—cost of revenue | 5 | 30 | ||||||
| % of total revenue | — | % | — | % | ||||
| Cost of revenue—amortization of capitalized software | 844 | 904 | ||||||
| % of total revenue | 5 | % | 5 | % | ||||
| Adjusted gross profit | $ | 10,074 | $ | 9,639 | ||||
| Adjusted gross profit % | 58 | % | 52 | % | ||||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| Cost of revenue | $ | 8,220 | $ | 9,777 | ||||
| Adjustments: | ||||||||
| Stock compensation expense | 5 | 30 | ||||||
| Cost of revenue - amortization of capitalized software | 844 | 904 | ||||||
| Cost of revenue, non-GAAP | $ | 7,371 | $ | 8,843 | ||||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| Research and development | $ | 3,776 | $ | 3,663 | ||||
| Adjustments: | ||||||||
| Capitalized internal software costs | (688 | ) | (400 | ) | ||||
| Stock compensation expense | 4 | 26 | ||||||
| Research and development, non-GAAP | $ | 4,460 | $ | 4,037 | ||||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| Sales and marketing | $ | 7,210 | $ | 7,476 | ||||
| Adjustments: | ||||||||
| Stock compensation expense | 49 | 109 | ||||||
| Amortization of customer relationship agreements | — | — | ||||||
| Sales and marketing, non-GAAP | $ | 7,161 | $ | 7,367 | ||||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| General and administrative | $ | 3,208 | $ | 4,087 | ||||
| Adjustments: | ||||||||
| Stock compensation expense | 433 | 984 | ||||||
| Amortization of trademarks | — | — | ||||||
| General and administrative, non-GAAP | $ | 2,775 | $ | 3,103 | ||||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| Net loss | ($ | 5,003 | ) | ($ | 6,586 | ) | ||
| Adjustments: | ||||||||
| Capitalized internal software costs | (688 | ) | (400 | ) | ||||
| Stock compensation expense | 491 | 1,149 | ||||||
| Amortization of capitalized software and other intangibles | 844 | 904 | ||||||
| Net loss, non-GAAP | ($ | 4,356 | ) | ($ | 4,933 | ) | ||
| THREE MONTHS ENDED JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| Diluted EPS | ($ | 0.12 | ) | ($ | 0.17 | ) | ||
| Adjustments: | ||||||||
| Capitalized internal software costs | (0.02 | ) | (0.01 | ) | ||||
| Stock compensation expense | 0.01 | 0.03 | ||||||
| Amortization of capitalized software and other intangibles | 0.02 | 0.02 | ||||||
| Diluted EPS, non-GAAP | ($ | 0.11 | ) | ($ | 0.13 | ) | ||
| COVISINT CORPORATION | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In Thousands) | |||||||
| (Unaudited) | |||||||
| THREE MONTHS ENDED JUNE 30, | |||||||
| 2016 | 2015 | ||||||
| CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: | |||||||
| Net loss | ($ | 5,003 | ) | ($ | 6,586 | ) | |
| Adjustments to reconcile net loss to cash provided by (used in) operations: | |||||||
| Depreciation and amortization | 1,642 | 1,738 | |||||
| Deferred income taxes | 13 | 67 | |||||
| Stock award compensation | 491 | 1,149 | |||||
| Other | — | 32 | |||||
| Net change in assets and liabilities: | |||||||
| Accounts receivable | 3,931 | 2,542 | |||||
| Other assets | 244 | 2,004 | |||||
| Accounts payable and accrued expenses (1) | 47 | (3,280 | ) | ||||
| Deferred revenue | 1,551 | 2,429 | |||||
| Net cash provided by operating activities | 2,916 | 95 | |||||
| CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: | |||||||
| Purchase of: | |||||||
| Property and equipment (1) | (25 | ) | (2,874 | ) | |||
| Capitalized software | (688 | ) | (401 | ) | |||
| Net cash used in investing activities | (713 | ) | (3,275 | ) | |||
| CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: | |||||||
| Vendor financing repayments | (127 | ) | — | ||||
| Net proceeds from exercise of stock awards | 45 | 247 | |||||
| Net cash provided by (used in) financing activities | (82 | ) | 247 | ||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (43 | ) | 43 | ||||
| NET CHANGE IN CASH | 2,078 | (2,890 | ) | ||||
| CASH AT BEGINNING OF PERIOD | 39,681 | 50,077 | |||||
| CASH AT END OF PERIOD | $ | 41,759 | $ | 47,187 | |||
- Accounts payable and accrued expenses in the balance sheet as of June 30, 2015 includes $0.5 million associated with purchases of property and equipment, which are non-cash acquisitions of fixed assets as of June 30, 2015.