Saba Announces Fourth Quarter and Fiscal Year 2007 Results
Fiscal Year 2007 GAAP Revenues Grow 40% from Prior Year
REDWOOD SHORES, Calif.--July 12, 2007--Saba
(NASDAQ:SABA), the premier provider of human capital management (HCM)
solutions, today reported financial results for its fourth quarter and
fiscal year 2007 ended May 31, 2007.
Fourth Quarter Results
Total GAAP revenues in the fourth quarter of fiscal 2007 were
$25.6 million, representing an 11% increase compared to $23.0 million
in the same quarter last year. License revenue in the fourth quarter
of fiscal 2007 was $5.0 million, representing an 18% decrease compared
to $6.1 million in the same quarter last year and OnDemand revenue in
the fourth quarter of fiscal 2007 was $4.3 million, representing a 43%
increase compared to $3.0 million in the same quarter last year. Net
loss was $3.1 million, or $0.11 per share, in the fourth quarter of
fiscal 2007 compared to a net loss of $3.5 million, or $0.12 per
share, in the same quarter last year. Net loss in the fourth quarter
of fiscal 2007 includes the impact of one-time charges of $462,000 for
restructuring and other organizational changes.
On a non-GAAP basis, net loss in the fourth quarter of fiscal 2007
was $1.4 million, or $0.05 per share, compared to non-GAAP net income
of $1.1 million, or $0.04 per share on a basic and diluted basis, in
the fourth quarter of fiscal 2006.
Deferred revenue at May 31, 2007 was $29.5 million, a 22% increase
from $24.1 million in the same quarter of the prior year.
Total revenues and earnings per share in the fourth quarter were
affected by a continued business model shift resulting in greater than
expected OnDemand bookings relative to license bookings and by
contractual contingencies included in three sizeable license
transactions signed during the quarter that precluded revenue
recognition on those licenses. In addition, a significant transaction
won in the quarter resulted in an initial services engagement without
any accompanying license fees.
Fiscal Year 2007 Results
For the year ended May 31, 2007, Saba posted $99.9 million in
total revenues, representing a 40% increase compared to $71.1 million
in the prior fiscal year. Net loss on a GAAP basis was $8.0 million,
or $0.28 per share, compared to a net loss of $6.9 million, or $0.33
per share, in the prior fiscal year. On a non-GAAP basis, total
revenues in fiscal year 2007 were $104.3 million, representing an
increase of 36%, compared to $76.4 million in fiscal year 2006. On a
non-GAAP basis, net income was $2.1 million, or $0.07 per share on a
basic and diluted basis, compared to net income of $1.4 million, or
$0.07 per share on a basic and diluted basis.
"With increasing interest for our OnDemand offerings, our business
continues to transform towards a more recurring-based, ratable model,"
said Bobby Yazdani, Chairman and CEO of Saba. "In the fourth quarter,
we had record total bookings, representing a 28% increase over total
bookings in the fourth quarter last year. We added 27 new customers in
the fourth quarter of fiscal 2007, up from 14 new customers in the
fourth quarter of fiscal 2006 and for the full fiscal year we added 90
new customers compared to 44 last year."
Non-GAAP results are computed by adjusting GAAP results to exclude
the amortization of acquisition-related intangibles, stock-based
compensation expenses, the fiscal 2006 restructuring charge and
related reversal in the third quarter of fiscal 2007, and the
write-down of acquired deferred revenue to fair value. A
reconciliation of GAAP to non-GAAP results is included in the
financial statements accompanying this press release.
Key Customer Wins and Significant Developments in the Fourth
Quarter
During the fourth quarter, Saba signed new customer contracts and
expanded existing relationships with a number of organizations
worldwide, including:
Catholic Healthcare West, YUM Brands, US Department of Health and
Human Services, Overture, Greek Ministry of Internal Affairs, Turkish
Air Force Academy, Singapore Ministry of Finance, KonicaMinolta,
CEMEX, Companhai Vale do Rio Doce (CVRD), AMP, and Ricoh Australia.
In addition, during the fourth quarter Saba announced two new
strategic relationships. Saba announced that Hitachi Ltd., a leading
global electronics company, will utilize the Saba Enterprise Suite as
the HCM platform for its outsourced HR offering to the Japanese
market. Saba also announced that it teamed with HCL Technologies, one
of India's leading global IT services companies, to align marketing
efforts to provide coordinated software and IT services to mutual
customers in several vertical markets including media and
entertainment, healthcare, financial services, retail, high technology
and manufacturing.
Also in the fourth quarter, Saba received a "Positive" rating from
Gartner, Inc., in the Employee Performance Management Software 2007
MarketScope Report. Saba considers the "Positive" rating as another
indication of Saba's continuing momentum in providing broad people
management solutions, including performance and succession management.
Conference Call
Saba will host a conference call on its fourth quarter and fiscal
year 2007 results at 2:00 p.m. Pacific Time. The call will be
available via Web cast at http://investor.saba.com or by dialing
+1-612-332-0637.
A replay of the call is scheduled to be available by calling
+1-320-365-3844 and entering code 874375, after 5:30 p.m. Pacific Time
on July 12, 2007 through 11:59 p.m. Pacific Time on July 26, 2007.
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the federal securities laws, including, without limitation:
statements regarding Saba's business outlook and Saba's continuing
momentum in providing broad people management solutions. Saba's actual
results could differ materially from those expressed in any
forward-looking statements. Risks and uncertainties Saba faces that
could cause results to differ materially include risks associated
with: dependence on growth of the markets for Saba's products,
dependence on acceptance of Saba's products by customers and channel
partners, the success of Saba's alliances, fluctuation in customer
spending, any changes in the length of Saba's sales cycle, new product
offerings or pricing changes introduced by our competitors,
technological changes that could make our products less attractive to
customers or require a new product development investments, dependence
on new product introductions and enhancements in order to meet the
changing needs of our customers and markets, and potential software
defects. Readers should also refer to the section entitled "Risk
Factors" on pages 11 through 21 of Saba's Annual Report on Form 10-K
for the fiscal year ended May 31, 2006 and similar disclosures in
subsequent Saba periodic SEC reports. The forward-looking statements
and risks stated in this press release are based on information
available to Saba today. Saba assumes no obligation to update them.
Legal Notice Regarding Non-GAAP Financial Information
Saba has provided its non-GAAP revenue, net income and net income
per share data in this press release as additional information for
investors. This measure is not in accordance with, or an alternative
to, generally accepted accounting principles ("GAAP"), is intended to
supplement GAAP financial information, and may be different from
non-GAAP measures used by other companies. Saba believes that the
presentation of non-GAAP financial measures provides useful
information to investors regarding its results of operations. Saba
believes it also provides an alternative method of assessing Saba's
operating results that Saba believes is focused on its core on-going
operations and may allow investors to perform additional meaningful
period-to-period comparisons of its operating results. In addition,
Saba's management team uses these measures for reviewing its financial
results, and for budget and planning purposes.
About Saba
Saba (NASDAQ:SABA) is the premier Human Capital Management (HCM)
software and services provider, using a people-centric approach to
increase productivity and performance. As a trusted partner, Saba
enables the Aligned Enterprise(TM) for over 1,100 customers in 150
countries by providing an integrated people management system to
continuously align goals, develop people, improve collaboration and
increase visibility into organizational performance.
Saba customers include ABN AMRO, Alcatel, Bank of Tokyo-Mitsubishi
UFJ, BMW, CEMEX, Cisco Systems, DaimlerChrysler, Dell, Deloitte Touche
Tohmatsu, EDS, EMC Corporation, FedEx Kinko's, Insurance Australia
Group, Lockheed Martin, Medtronic, National Australia Bank, Novartis,
Petrobras, Procter & Gamble, Scotiabank, Sprint, Standard Chartered
Bank, Stanford University, Swedbank, Wyndham International,
Weyerhaeuser, Underwriters Laboratories, and the U.S. Army and U.S.
Navy.
Headquartered in Redwood Shores, California, Saba has offices on
five continents. For more information, please visit www.saba.com or
call +1-877-SABA-101 or +1-650-779-2791.
SABA, the Saba logo, Centra and the marks relating to Saba
products and services referenced herein are either trademarks or
registered trademarks of Saba Software, Inc. or its affiliates. All
other trademarks are the property of their respective owners.
Saba Software, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Twelve months ended
May 31, May 31,
------------------- -------------------
2007 2006 (A) 2007 2006 (A)
--------- --------- --------- ---------
Revenues:
License $ 5,035 $ 6,124 $ 22,621 $ 20,528
License updates and product
support 8,376 6,864 31,344 21,033
OnDemand 4,333 3,039 15,924 6,245
Professional services 7,882 7,013 29,978 23,341
--------- --------- --------- ---------
Total revenues 25,626 23,040 99,867 71,147
--------- --------- --------- ---------
Cost of revenues:
Cost of license 213 199 1,196 733
Cost of license updates and
product support 2,298 1,819 8,558 4,790
Cost of OnDemand 1,402 1,058 5,025 2,500
Cost of professional
services 5,520 4,934 20,982 16,795
Amortization of acquired
developed technology 295 295 1,178 393
--------- --------- --------- ---------
Total cost of revenues 9,728 8,305 36,939 25,211
--------- --------- --------- ---------
Gross profit 15,898 14,735 62,928 45,936
Operating expenses:
Research and development 4,373 5,146 17,052 14,392
Sales and marketing 10,442 9,348 38,317 27,356
General and administrative 3,540 2,358 12,548 7,854
Restructurings - 655 (211) 655
In-process research and
development - - - 760
Amortization of purchased
intangible assets 634 634 2,538 1,298
--------- --------- --------- ---------
Total operating expenses 18,989 18,141 70,244 52,315
--------- --------- --------- ---------
Loss from operations (3,091) (3,406) (7,316) (6,379)
Interest expense and other,
net (118) 95 (317) (267)
--------- --------- --------- ---------
Loss before provision for
income taxes (3,209) (3,311) (7,633) (6,646)
Provision for income taxes 71 (185) (341) (285)
--------- --------- --------- ---------
Net loss $ (3,138) $ (3,496) $ (7,974) $ (6,931)
========= ========= ========= =========
Basic and diluted net loss per
share $ (0.11) $ (0.12) $ (0.28) $ (0.33)
========= ========= ========= =========
Shares used in computing basic
and diluted net loss per share 28,778 28,059 28,541 20,898
========= ========= ========= =========
(A) Certain reclassifications have been made to prior year amounts in
order to conform to the current year presentation.
Saba Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
May 31, May 31,
2007 2006 (A)
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 18,088 $ 23,029
Restricted cash 500 500
Accounts receivable, net 20,905 18,334
Prepaid expenses and other current assets 2,767 2,709
----------- -----------
Total current assets 42,260 44,572
Property and equipment, net 3,669 2,172
Goodwill (B) 38,293 38,164
Purchased intangible assets, net 16,414 20,449
Other assets 977 1,018
----------- -----------
Total assets $ 101,613 $ 106,375
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,772 $ 8,782
Accrued compensation and related expenses 5,746 4,714
Accrued expenses 5,949 7,810
Deferred revenue 27,886 23,571
Current portion of debt and lease
obligations 2,664 2,330
----------- -----------
Total current liabilities 47,017 47,207
Deferred revenue 1,598 526
Accrued rent 2,769 2,833
Debt and lease obligations, less current
portion 2,328 3,962
----------- -----------
Total liabilities 53,712 54,528
Stockholders' equity:
Common stock 29 29
Additional paid-in capital 251,408 247,716
Treasury stock (232) (232)
Accumulated deficit (203,333) (195,359)
Accumulated other comprehensive loss 29 (307)
----------- -----------
Total stockholders' equity 47,901 51,847
----------- -----------
Total liabilities and stockholders'
equity $ 101,613 $ 106,375
=========== ===========
(A) Certain reclassifications have been made to prior year amounts in
order to conform to the current year presentation.
(B) Goodwill includes an allocation of the purchase price for Centra
Software, Inc. to acquired assets and assumed liabilities, and
is subject to change.
Saba Software, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
The following table reflects Saba's non-GAAP results reconciled to
GAAP results as included in this release.
Three months ended Twelve months ended
May 31, May 31,
------------------ -------------------
2007 2006 2007 2006
--------- -------- ---------- --------
GAAP net loss $ (3,138) $(3,496) $ (7,974) $(6,931)
Plus:
Fair value adjustment to
deferred revenue 43 2,908 4,074 5,080
Stock-based compensation
expense 645 - 2,202 -
Amortization of acquired
developed technology and
purchased intangible
assets 1,008 1,015 4,036 2,624
Facilities restructuring
charges - 655 (211) 655
--------- -------- ---------- --------
Non-GAAP net income $ (1,442) $ 1,082 $ 2,128 $ 1,428
========= ======== ========== ========
Net income (loss) per share
GAAP net loss per share $ (0.11) $ (0.12) $ (0.28) $ (0.33)
Plus:
Fair value adjustment to
deferred revenue 0.00 0.10 0.14 0.24
Stock-based compensation
expense 0.02 - 0.08 -
Amortization of acquired
developed technology and
purchased intangible
assets 0.04 0.04 0.14 0.13
Facilities restructuring
charges - 0.02 (0.01) 0.03
--------- -------- ---------- --------
Non-GAAP net income per share $ (0.05) $ 0.04 $ 0.07 $ 0.07
========= ======== ========== ========
Weighted average shares used to
compute net income (loss) per
share:
Basic 28,778 28,059 28,541 20,898
========= ======== ========== ========
Diluted 28,778 29,598 29,699 21,931
========= ======== ========== ========
Non-GAAP Financial Information:
To supplement the company's condensed consolidated financial
statements presented on a GAAP basis, Saba uses non-GAAP financial
measures. These measures are the result of adjustments made to
exclude certain charges and expenses for which the company believes
that the disclosure of such non-GAAP financial measures is
appropriate to enhance an overall understanding of its historical
financial performance. The company believes that the inclusion of
these non-GAAP financial measures provides consistency and
comparability with its historical financial results. In addition, the
presentation allows investors to see how management views the
operating performance of the company. This non-GAAP information is
subject to material limitations and is not intended to be used in
isolation or as a substitute for results prepared in accordance with
U.S. generally accepted accounting principles.
The adjustments and the basis for their exclusion are as follows:
Fair Value Adjustment to Deferred Revenue
----------------------------------------------------------------------
The company includes revenue associated with the Centra Software, Inc.
and THINQ Learning Solutions, Inc. deferred revenue that was excluded
as a result of purchase accounting adjustments to fair value, as
required by GAAP, as management believes that it is reflective of
ongoing operating results. However, license revenue related to THINQ
Learning Solutions, Inc. was excluded from the Non-GAAP measures as
the deferred license revenue at the time of acquisition was not
indicative of the Company's ongoing operating results.
Stock-based Compensation Expense
----------------------------------------------------------------------
The company's non-GAAP financial measures exclude share-based
compensation expenses, which consist of expenses for the issuance of
stock options and purchases of common stock under its Employee Stock
Purchase Plan, which Saba began recording under SFAS 123(R) in the
first quarter of fiscal 2007. The Company excludes share-based
compensation expenses from our non-GAAP financial measures because
the company believes that the information is not a meaningful
indicator of the Company's operating performance. Weighted average
dilutive shares is computed using the method required by SFAS 123(R)
for both GAAP and non-GAAP diluted net income per share.
Amortization of Acquired Developed Technology and Purchased Intangible
Assets
----------------------------------------------------------------------
As a result of various acquisitions of companies and technologies, the
company has incurred charges for amortization of acquired developed
technology and purchased intangible assets and amortization of
acquired backlog that resulted in a reduction of revenue. Management
excludes these items from our non-GAAP financial measures when
evaluating its operating performance because it believes that it
provides for better comparability between periods and provides
results that are more reflective of the operating performance of the
business. Additionally, management believes that excluding these
items facilitates comparisons to the results of other companies in
our industry, which have their own unique acquisition histories.
Facilities Restructuring Charges
----------------------------------------------------------------------
During fiscal 2006, the company implemented a restructuring program to
consolidate excess facilities totalling $655,000. In the third
quarter of Fiscal 2007, the company reduced its restructuring reserve
by $211,000 as a result of an amendment to its lease agreement. The
adjustment is classified as general and administrative expense in the
statement of operations. Management excludes these items from our
non-GAAP financial measures when evaluating its operating performance
because it believes that it provides for better comparability between
periods and provides results that are more reflective of the
operating performance of the business.
CONTACT: Saba
Mike Martini, Chief Financial Officer, +1-650-581-2500
|
|
