Delicious
Digg
Facebook
LinkedIn
Twitter
"Our team executed well during the second quarter, which contributed to revenue and profitability that exceeded the high-end of our guidance," stated
Revenue for the second quarter of fiscal 2012 was
Adjusted EBITDA, which excludes stock-based compensation, for the second quarter of 2012 was
Non-GAAP net income for the second quarter of 2012, which excludes stock-based compensation, a deferred tax valuation charge, and the amortization of internally-developed software, was
"I'm pleased at the discipline shown in the fiscal management of our business, driving a significant decrease in our DSOs to 77 days. This was a primary contributor to over
GAAP net loss for the second quarter of 2012 was
Recent Business Highlights
Business Outlook
The Company provided the following commentary on its expected business outlook:
Quarterly Conference Call
About
For more information on
Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the availability of our Avalon platform and its expected impact on the industry,
The following tables reconcile (i) the business outlook net income (loss) to adjusted EBITDA; (ii) the business outlook net income (loss) to non-GAAP net income (loss); and (iii) the business outlook net income (loss) per share to non-GAAP diluted earnings per share for the second quarter and full fiscal year.
ServiceSource International, Inc.
Business Outlook
Reconciliation of Net Income (Loss) to Adjusted EBITDA
($ in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
September 30, 2012 December 31, 2012
--------------------- ---------------------
GAAP Net income (loss) range $ (8,500) -- $ (7,500) $(48,500) -- $(46,500)
Income tax (benefit) / expense 100 31,700
Interest & other expense, net 250 800
Depreciation & Amortization 2,750 10,500
--------------------- ---------------------
EBITDA range (5,400) -- $ (4,400) (5,500) -- $ (3,500)
Stock-based compensation 5,900 21,500
--------------------- ---------------------
Adjusted EBITDA Range $ 500 -- $ 1,500 $ 16,000 -- $ 18,000
===================== =====================
GAAP to Non-GAAP
Reconciliation
GAAP net income (loss) range $ (8,500) -- $ (7,500) $(48,500) -- $(46,500)
Non-GAAP adjustments:
Stock-based compensation 5,900 21,500
Amortization of internally-
developed software 900 3,200
Income tax effect on non-GAAP
adjustments and impact of
normalizing the effective
income tax rate 400 28,000
--------------------- ---------------------
Non-GAAP net income $ (1,300) -- $ (300) $ 4,200 -- $ 6,200
===================== =====================
GAAP diluted net income (loss)
per share $ (0.11) -- $ (0.10) $ (0.58) -- $ (0.56)
Non-GAAP adjustments:
Stock-based compensation 0.08 0.26
Amortization of internally-
developed software 0.01 0.04
Income tax effect on non-GAAP
adjustments and impact of
normalizing the effective
income tax rate 0.01 0.34
--------------------- ---------------------
Non-GAAP diluted net income
per share $ (0.02) -- $ (0.00) $ 0.05 -- $ 0.07
===================== =====================
Shares used in calculating
diluted net income per share
on a non-GAAP basis 74,000 83,000
-------- --------
ServiceSource International, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
Net revenue $ 59,694 $ 48,512 $117,268 $ 94,634
Cost of revenue (1) 33,882 28,229 66,458 54,365
-------- -------- -------- --------
Gross profit 25,812 20,283 50,810 40,269
-------- -------- -------- --------
Operating expenses
Sales and marketing (1) 14,169 11,415 27,646 22,520
Research and development (1) 4,298 3,390 8,879 6,103
General and administrative (1) 10,564 7,870 20,639 15,723
-------- -------- -------- --------
Total operating expenses 29,031 22,675 57,164 44,346
-------- -------- -------- --------
Loss from operations (3,219) (2,392) (6,354) (4,077)
Interest expense (70) (51) (117) (384)
Other expense, net (263) (384) (307) (909)
-------- -------- -------- --------
Loss before income taxes (3,552) (2,827) (6,778) (5,370)
Income tax provision (benefit) 33,217 (1,694) 31,267 (21,653)
-------- -------- -------- --------
Net income (loss) $(36,769) $ (1,133) $(38,045) $ 16,283
======== ======== ======== ========
Net income (loss) per common share:
Basic $ (0.50) $ (0.02) $ (0.52) $ 0.26
======== ======== ======== ========
Diluted $ (0.50) $ (0.02) $ (0.52) $ 0.24
======== ======== ======== ========
Weighted-average shares used in
computing net income
(loss) per common share:
Basic 74,172 67,607 73,654 62,714
======== ======== ======== ========
Diluted 74,172 67,607 73,654 69,205
======== ======== ======== ========
(1) Includes stock-based
compensation expense as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
Cost of revenue $ 715 $ 447 $ 1,287 $ 816
Sales and marketing 1,982 949 3,656 1,870
Research and development 530 269 893 537
General and administrative 2,133 1,023 3,771 1,913
-------- -------- -------- --------
Total stock-based compensation $ 5,360 $ 2,688 $ 9,607 $ 5,136
-------- -------- -------- --------
ServiceSource International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2012 2011
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 65,586 $ 65,983
Short-term investments 48,611 42,882
Accounts receivable, net 51,391 54,095
Current portion of deferred income taxes 203 3,526
Prepaid expenses and other 8,404 7,945
------------- -------------
Total current assets 174,195 174,431
Property and equipment, net 33,661 26,840
Deferred income taxes, net of current portion 1,341 30,238
Other assets, net 1,167 1,118
Goodwill 6,334 6,334
------------- -------------
Total assets $ 216,698 $ 238,961
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 7,525 $ 8,617
Accrued taxes 3,368 4,008
Accrued compensation and benefits 14,751 18,665
Other accrued liabilities 8,180 7,639
Current portion of capital lease obligations 725 706
------------- -------------
Total current liabilities 34,549 39,635
Long-term obligations 6,094 2,310
------------- -------------
Total liabilities 40,643 41,945
------------- -------------
Stockholders' equity:
Common stock 7 7
Treasury stock (441) (441)
Additional paid-in capital 194,925 177,796
Retained earnings (accumulated deficit) (18,627) 19,416
Accumulated other comprehensive income 191 238
------------- -------------
Total stockholders' equity 176,055 197,016
------------- -------------
Total liabilities and stockholders' equity $ 216,698 $ 238,961
============= =============
ServiceSource International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
----------------------------
2012 2011
------------- -------------
Cash flows from operating activities
Net income (loss) $ (38,045) $ 16,283
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 4,577 4,488
Loss (gain) on disposal of fixed assets (1) 46
Amortization of deferred financing costs 123 298
Accretion on premium on short-term
investments 445 14
Deferred income taxes 32,220 (22,715)
Stock-based compensation 9,607 5,136
Income tax deficiency from stock based
compensation 362 -
Changes in operating assets and liabilities:
Accounts receivable 2,586 4,122
Advances to customers - 18
Prepaid expenses and other (811) (1,958)
Accounts payable (877) 1,107
Accrued taxes (618) 1,321
Accrued compensation and benefits (3,904) 3,404
Accrued payables to customers - (30,644) *
Other accrued liabilities 4,145 1,128
------------- -------------
Net cash provided by (used in) operating
activities 9,809 (17,952)
------------- -------------
Cash flows from investing activities
Acquisition of property and equipment (11,244) (6,288)
Purchases of short-term investments, net (24,186) (42,273)
Sales of marketable securities 6,210 -
Maturities of marketable securities 11,820 -
------------- -------------
Net cash used in investing activities (17,400) (48,561)
------------- -------------
Cash flows from financing activities
Net proceeds from issuance of common stock
in initial public offering - 88,015
Proceeds from revolving credit facility - 23,424
Repayment of revolving credit facility - (23,424)
Repayments of long-term debt and capital
leases (155) (15,582)
Payments of deferred debt issuance costs - (200)
Proceeds from common stock issuances 7,818 2,247
Income tax deficiency from stock based
compensation (362) -
------------- -------------
Net cash provided by financing activities 7,301 74,480
------------- -------------
Net increase (decrease) in cash and cash
equivalents (290) 7,967
Effect of exchange rate changes on cash and
cash equivalents (107) 752
Cash and cash equivalents at beginning of
period 65,983 22,652
------------- -------------
Cash and cash equivalents at end of period $ 65,586 $ 31,371
============= =============
* Activity in 2011 resulted from $18.1 million in payments to Oracle/Sun and
the related settlement of accrued payables owed to Oracle/Sun and amounts
owed to the Company by Oracle/Sun.
Use of Non-GAAP Financial Measures
To supplement its financial statements presented in accordance with generally accepted accounting principles, or GAAP,
Non-GAAP net income per share consists of net income (loss) plus stock-based compensation, amortization of internally-developed software and applying an annual income tax rate of 40% reflecting our estimated tax expense on our core operations. Accordingly, our non-GAAP calculation of net income has excluded a one-time, non-cash income tax charge of
EBITDA consists of net income (loss) plus depreciation and amortization, interest expense, other expenses, net, and income tax expense and a deduction for income tax benefit. Adjusted EBITDA consists of EBITDA plus non-cash, stock-based compensation expense.
These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA:
ServiceSource International, Inc.
Reconciliation of net loss to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
Net income (loss) $ (36,769) $ (1,133) $ (38,045) $ 16,283
Income tax provision
(benefit) 33,217 (1,694) 31,267 (21,653)
Interest expense 70 51 117 384
Other expense, net 263 384 307 909
Depreciation 2,309 2,543 4,577 4,488
---------- ---------- ---------- ----------
EBITDA (910) 151 (1,777) 411
Stock-based compensation 5,360 2,688 9,607 5,136
---------- ---------- ---------- ----------
Adjusted EBITDA $ 4,450 $ 2,839 $ 7,830 $ 5,547
========== ========== ========== ==========
ServiceSource International, Inc.
GAAP To Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
Gross Profit
GAAP gross profit $ 25,812 $ 20,283 $ 50,810 $ 40,269
Non-GAAP adjustments:
Stock-based compensation (A) 715 447 1,287 816
Amortization of internally-
developed software (B) 318 463 458 807
-------- -------- -------- --------
Non-GAAP gross profit $ 26,845 $ 21,193 $ 52,555 $ 41,892
-------- -------- -------- --------
Gross Profit %
GAAP gross profit 43% 42% 43% 43%
Non-GAAP adjustments:
Stock-based compensation (A) 1% 1% 1% 1%
Amortization of internally-
developed software (B) 1% 1% 1% 1%
-------- -------- -------- --------
Non-GAAP gross profit 45% 44% 45% 45%
======== ======== ======== ========
Operating expenses
GAAP operating expenses $ 29,031 $ 22,675 $ 57,164 $ 44,346
Stock-based compensation (A) (4,645) (2,241) (8,320) (4,320)
Amortization of internally-
developed software (B) (317) (715) (812) (1,133)
-------- -------- -------- --------
Non-GAAP operating expenses $ 24,069 $ 19,719 $ 48,032 $ 38,893
-------- -------- -------- --------
Net Income (Loss)
GAAP net income (loss) $(36,769) $ (1,133) $(38,045) $ 16,283
Non-GAAP adjustments:
Stock-based compensation (A) 5,360 2,688 9,607 5,136
Amortization of internally-
developed software (B) 635 1,178 1,270 1,940
Non-recurring income tax
items (C) 33,072 - 33,072 (21,417)
Income tax effect on non-
GAAP adjustments and
impact of normalizing the
effective income tax rate
(D) (832) (2,111) (3,445) (919)
-------- -------- -------- --------
Non-GAAP net income $ 1,466 $ 622 $ 2,459 $ 1,023
======== ======== ======== ========
Diluted Net Income (Loss) Per
Share
GAAP diluted net income
(loss) per share $ (0.50) $ (0.02) $ (0.52) $ 0.24
Non-GAAP adjustments:
Stock-based compensation (A) 0.07 0.04 0.13 0.07
Amortization of internally-
developed software (B) 0.01 0.02 0.02 0.03
Non-recurring income tax
items (C) 0.45 - 0.45 (0.31)
Income tax effect on non-
GAAP adjustments and
impact of normalizing the
effective income tax rate
(D) (0.01) (0.03) (0.05) (0.01)
-------- -------- -------- --------
Non-GAAP diluted net income
per share $ 0.02 $ 0.01 $ 0.03 $ 0.01
======== ======== ======== ========
Certain totals do not add due
to rounding
Shares used in calculating
diluted net income per share
on a non-GAAP basis 79,245 75,476 79,197 69,275
-------- -------- -------- --------
Footnotes to GAAP to Non-GAAP Reconciliation
(A) Stock-based compensation. Included in our GAAP presentation of cost of revenue and operating expenses, stock-based compensation consists of expenses for stock options and awards and purchase rights under our stock purchase plan. We exclude stock-based compensation expense from our non-GAAP measures because some investors may view it as not reflective of our core operating performance as it is a non-cash expense.
(B) Amortization of internally-developed software. Included in our GAAP presentation of cost of revenue and operating expenses, amortization of internally-developed software reflects non-cash expense for certain software purchases and software developed or obtained for internal use. We exclude these expenses from our non-GAAP measures because we believe they are not indicative of our core operating performance.
(C) One-time tax items. We elected to be treated as a corporation under Subchapter C of Chapter 1 of the United States Internal Revenue Code, effective
(D) Income tax effect on non-GAAP adjustments and impact of normalizing the effective income tax rate. This adjusts the provision for income taxes to reflect the effect of the non-GAAP items A, B and C noted above on our non-GAAP net income and adjusts the income tax rate to a normalized effective tax rate of 40%.
ServiceSource International, Inc.
Revenue by Segment
(In thousands)
(unaudited)
Three Months Ended June 30,
--------------------------------------------------
2012 2011
------------------------ ------------------------
% of % of
$ Revenue $ Revenue
------------ ----------- ------------ -----------
NALA $ 36,961 62% $ 28,686 59%
EMEA 15,518 26% 14,254 29%
APJ 7,215 12% 5,572 12%
------------ ----------- ------------ -----------
$ 59,694 100% $ 48,512 100%
============ =========== ============ ===========
Six Months Ended June 30,
--------------------------------------------------
2012 2011
------------------------ ------------------------
% of % of
$ Revenue $ Revenue
------------ ----------- ------------ -----------
NALA $ 73,073 62% $ 56,431 60%
EMEA 31,266 27% 29,247 31%
APJ 12,929 11% 8,956 9%
------------ ----------- ------------ -----------
$ 117,268 100% $ 94,634 100%
============ =========== ============ ===========
Source:
News Provided by Acquire Media
Mixx
Yahoo! Buzz