REDWOOD SHORES, Calif.—(BUSINESS WIRE)—Saba (NASDAQ: SABA), the premier provider of people management software
and services, today reported financial results for its first fiscal
quarter ended August 31, 2009.
First Quarter Results
Fiscal first quarter revenue was $25.8 million, up 2%, compared to $25.3
million in the same period of the prior year.
License and OnDemand revenues from sales of the company’s unified people
management solutions during the quarter were $11.0 million, an increase
of 39% from the first quarter of the prior fiscal year. Reflecting the
favorable mix of increased product revenues and lower professional
services revenue, gross margin improved to 65% in the first quarter of
fiscal 2010. In the quarter, recurring revenues, license updates and
product support revenue and OnDemand revenue, accounted for over 54% of
the company’s total revenues.
GAAP net earnings for the first quarter increased to $1.0 million, or
$0.03 per share on a fully diluted basis, from a net loss of $2.2
million, or $0.08 per share, for the same period of the prior year. On a
non-GAAP basis, net income for the first quarter improved to $2.2
million, or $0.07 per share on a fully diluted basis, compared to
breakeven for the same period of the prior year.
Non-GAAP results are computed by adjusting GAAP results to exclude the
impact of certain items, including (i) non-cash amortization of
intangibles, (ii) non-cash charges related to share-based compensation
expenses, (iii) costs incurred related to potential strategic
transactions that are no longer under consideration, and (iv)
restructuring costs. A reconciliation of GAAP to non-GAAP results is
included in the financial statements accompanying this press release.
During the quarter, Saba repurchased approximately 4.7% of its
outstanding shares of common stock. After the repurchase of
approximately 1,384,920 shares for $4.9 million, Saba ended the quarter
with a cash balance of $21.6 million.
“Our strong first quarter results provide a good start to the fiscal
year as we continue to invest in our growth strategies and extend our
leadership position,” said Bobby Yazdani, Chairman and CEO of Saba.
“Sales of our unified people management suite to both new and existing
customers reflect Saba’s growing momentum.”
First Quarter Highlights
During the first quarter, Saba added new customers and expanded existing
relationships with a number of organizations worldwide, including
American Red Cross, Amplifon USA, Briggs and Stratton Corporation, Cisco
Systems, Inc., Deloitte & Touche, Internal Revenue Service, Kraft Foods
Inc., Sephora USA and United States Department of the Army.
Saba Centra was positioned in the Visionaries Quadrant of the 2009
Gartner Magic Quadrant for Web Conferencing. Designed to meet the needs
of the enterprise, Saba Centra is an industry-leading Web conferencing
and collaboration solution that enables employees, customers, and
partners to learn, interact, and exchange knowledge online. Saba Centra
is used by some of the world’s leading organizations like Deloitte, IBM,
and the U.S. Army to facilitate high-impact Web conferencing,
collaboration, and learning across their organizations.
Saba announced a groundbreaking learning management system (LMS)
exchange as a limited-time offer for qualified SumTotal customers.
Available now, this offer is designed to provide an option for SumTotal
customers to take advantage of Saba’s award-winning people management
solutions at attractive prices.
During the quarter, Saba announced the availability of Saba Centra 7.6
SP2 and Saba Publisher 9.0. As organizations continue to look at ways to
reduce training and meeting costs, Saba Centra 7.6 SP2 helps create an
optimal online experience — regardless of time, location or platform —
to drive increased adoption, connect people with expertise and improve
organizational productivity. Saba Publisher provides content authors
with new features that enable rapid content creation and extend the
reach of media-rich content to mobile devices — including animated and
interactive capabilities, expanded language support, and features to
enable publishing to the iPhone and iPod Touch.
Subsequent to the end of the quarter, Saba announced that Andrew Salzman
joined the company as Chief Marketing Officer and that William Klein and
William MacGowan were appointed to Saba’s Board of Directors.
Business Outlook
The following statements are based on current expectations as of the
date of this release. These statements are forward-looking, and actual
results may differ materially. Saba does not undertake to update these
forward-looking statements in any way or for any reason.
For fiscal 2010, ending May 31, 2010, Saba is increasing prior guidance
and now anticipates GAAP net earnings per share to range from $0.07 to
$0.11 on a fully diluted basis and non-GAAP net earnings per share to
range from $0.26 to $0.30 on a fully diluted basis.
The fiscal year 2010 non-GAAP outlook excludes non-cash amortization of
intangibles and charges related to stock-based compensation expenses.
Conference Call
Saba will host a teleconference Thursday, September 24, commencing at
2:00 p.m. Pacific Time, to discuss the fourth quarter and fiscal year
2009 financial results. All interested parties may listen by dialing
800.230.1096 or +1.612.332.0107, access code 115023, or by tuning into
the webcast at http://investor.saba.com.
A replay of the call is scheduled to be available by calling
800.475.6701 or +1.320.365.3844 and entering code 115023, after 5:30
p.m. Pacific Time on September 24, 2009 through 11:59 p.m. Pacific Time
on October 22, 2009.
Safe Harbor
This press release contains forward-looking statements within the
meaning of the federal securities laws, including, without limitation:
statements regarding Saba’s business outlook, including anticipated GAAP
and non-GAAP net earnings per share and statements regarding Saba’s
continuing investments in growth and growing momentum. 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 and partnerships, ability of Saba to release
new products on schedule, 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” in Form 10-K for the fiscal year
ended May 31, 2009 and similar disclosures in subsequent reports filed
with the SEC. 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.
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. These measures are 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
Founded in 1997, Saba (NASDAQ: SABA) is the premier global provider of
strategic human capital management (HCM) software and services. Saba’s
people management solutions are used by more than 1,300 organizations
and over 17 million end users worldwide. Saba’s solutions increase
organizational performance by aligning workforce goals with
organizational strategy; developing, managing and rewarding their
people; and improving collaboration.
Saba product offerings address all aspects of strategic HCM and are
available both on-premise and OnDemand (www.saba.com/products).
To ensure long-term customer success, our global services capabilities
and partnerships provide strategic consulting, comprehensive
implementation services, and ongoing worldwide support.
Saba end customers include Alcatel-Lucent; Bank of Tokyo-Mitsubishi Ufj
Ltd; BMW Of North America LLC; Caterpillar Inc.; Cemex Central; Cisco
Systems; Daimlerchrysler; Dell Inc.; Deloitte & Touche Tohmatsu;
Electronic Data Systems, an HP company; EMC Corporation; Federal Express
Corp.; Insurance Australia Group Ltd.; Kaiser Permanente; Lockheed
Martin Corporation; Medtronic; National Australia Bank; Novartis
Corporation; Petrobras Energia SA; Procter & Gamble Inc.; Renault S.A;
Royal Bank of Scotland; Scotiabank; Singapore Ministry of Finance;
Sprint; Standard Chartered Bank; Stanford University; Swedbank; Tata
Consultancy Services Limited; Wyndham Worldwide Corp.; Weyerhaeuser Co
Limited; Underwriters Laboratories; the United States Department of the
Army; U.S. Department of Health & Human Services; U.S. Department of
Treasury/Internal Revenue Service; and U.S. Department of Navy (CNET).
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.
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Saba Software, Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31,
|
|
May 31,
|
|
|
|
|
|
2009
|
|
|
|
2009
|
|
|
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
21,588
|
|
|
$
|
25,978
|
|
|
Restricted cash
|
|
|
100
|
|
|
|
100
|
|
|
Accounts receivable, net
|
|
|
18,634
|
|
|
|
20,010
|
|
|
Prepaid expenses and other current assets
|
|
|
2,494
|
|
|
|
2,245
|
|
|
|
Total current assets
|
|
|
42,816
|
|
|
|
48,333
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
4,319
|
|
|
|
4,754
|
|
|
Goodwill
|
|
|
36,095
|
|
|
|
36,095
|
|
|
Purchased intangible assets, net
|
|
|
7,814
|
|
|
|
8,743
|
|
|
Restricted cash
|
|
|
260
|
|
|
|
260
|
|
|
Other assets
|
|
|
1,480
|
|
|
|
1,538
|
|
|
|
Total assets
|
|
$
|
92,784
|
|
|
$
|
99,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,727
|
|
|
$
|
2,620
|
|
|
Accrued compensation and related expenses
|
|
|
6,036
|
|
|
|
5,867
|
|
|
Accrued expenses
|
|
|
3,126
|
|
|
|
3,137
|
|
|
Deferred revenue
|
|
|
28,136
|
|
|
|
32,611
|
|
|
Current portion of debt and lease obligations
|
|
|
530
|
|
|
|
630
|
|
|
|
Total current liabilities
|
|
|
41,555
|
|
|
|
44,865
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
2,716
|
|
|
|
2,728
|
|
|
Other long-term liabilities
|
|
|
1,376
|
|
|
|
1,354
|
|
|
Accrued rent
|
|
|
2,110
|
|
|
|
2,211
|
|
|
|
Total liabilities
|
|
|
47,757
|
|
|
|
51,158
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
|
28
|
|
|
|
30
|
|
|
Additional paid-in capital
|
|
|
253,592
|
|
|
|
258,128
|
|
|
Treasury stock
|
|
|
(232
|
)
|
|
|
(232
|
)
|
|
Accumulated deficit
|
|
|
(208,210
|
)
|
|
|
(209,230
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(151
|
)
|
|
|
(131
|
)
|
|
|
Total stockholders' equity
|
|
|
45,027
|
|
|
|
48,565
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
92,784
|
|
|
$
|
99,723
|
|
|
Saba Software, Inc.
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Condensed Consolidated Statements of Operations
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
August 31,
|
|
August 31,
|
|
|
|
|
2009
|
|
|
|
2008
|
|
|
|
|
|
|
|
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Revenues:
|
|
|
|
|
|
License
|
|
$
|
5,712
|
|
|
$
|
2,958
|
|
|
License updates and product support
|
|
|
8,756
|
|
|
|
8,641
|
|
|
OnDemand
|
|
|
5,245
|
|
|
|
4,918
|
|
|
Professional services
|
|
|
6,098
|
|
|
|
8,783
|
|
|
Total revenues
|
|
|
25,811
|
|
|
|
25,300
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
Cost of license
|
|
|
210
|
|
|
|
213
|
|
|
Cost of license updates and product support
|
|
|
2,037
|
|
|
|
2,208
|
|
|
Cost of OnDemand
|
|
|
2,008
|
|
|
|
2,426
|
|
|
Cost of professional services
|
|
|
4,552
|
|
|
|
5,916
|
|
|
Amortization of acquired developed technology
|
|
|
295
|
|
|
|
295
|
|
|
Total cost of revenues
|
|
|
9,102
|
|
|
|
11,058
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
16,709
|
|
|
|
14,242
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
|
4,222
|
|
|
|
4,286
|
|
|
Sales and marketing
|
|
|
6,788
|
|
|
|
7,107
|
|
|
General and administrative
|
|
|
3,843
|
|
|
|
4,365
|
|
|
Restructurings
|
|
|
(37
|
)
|
|
|
(24
|
)
|
|
Amortization of purchased intangible assets
|
|
|
634
|
|
|
|
634
|
|
|
Total operating expenses
|
|
|
15,450
|
|
|
|
16,368
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
1,259
|
|
|
|
(2,126
|
)
|
|
Interest income (expense) and other, net
|
|
|
(25
|
)
|
|
|
71
|
|
|
Income (loss) before provision for income taxes
|
|
|
1,234
|
|
|
|
(2,055
|
)
|
|
Provision for income taxes
|
|
|
214
|
|
|
|
159
|
|
|
Net income (loss)
|
|
$
|
1,020
|
|
|
$
|
(2,214
|
)
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per share
|
|
$
|
0.03
|
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
Shares used in computing net income (loss) per share:
|
|
|
|
Basic
|
|
|
29,220
|
|
|
|
29,151
|
|
|
Diluted
|
|
|
29,833
|
|
|
|
29,151
|
|
|
Reconciliation of Non-GAAP Financial Measures
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
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The following table reflects Saba's non-GAAP results reconciled to
GAAP results as included in this release.
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
August 31,
|
|
August 31,
|
|
|
|
|
2009
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
$
|
1,020
|
|
|
$
|
(2,214
|
)
|
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
Share-based compensation expense
|
|
|
264
|
|
|
|
590
|
|
|
Amortization of acquired developed technology and purchased
intangible assets
|
|
|
929
|
|
|
|
929
|
|
|
Non-operating costs
|
|
|
-
|
|
|
|
672
|
|
|
Restructurings
|
|
|
(37
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss)
|
|
$
|
2,176
|
|
|
$
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) per share
|
|
$
|
0.03
|
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
Share-based compensation expense
|
|
|
0.01
|
|
|
|
0.02
|
|
|
Amortization of acquired developed technology and purchased
intangible assets
|
|
|
0.03
|
|
|
|
0.03
|
|
|
Non-operating costs
|
|
|
0.00
|
|
|
|
0.02
|
|
|
Restructurings
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per share
|
|
$
|
0.07
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
Shares used in computing net income (loss) per share:
|
|
|
|
|
|
Basic
|
|
|
29,220
|
|
|
|
29,151
|
|
|
Diluted
|
|
|
29,833
|
|
|
|
29,151
|
|
|
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:
|
|
|
|
Share-based Compensation Expense
|
|
The company’s non-GAAP financial measures exclude share-based
compensation expenses, which consist of expenses for grants of stock
options, awards of restricted stock units 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.
|
|
|
|
Non-Operating Costs
|
|
During the fourth quarter of fiscal year 2008 and the first quarter
of fiscal year 2009, the company incurred non-operating costs
primarily related to legal and accounting fees associated with the
evaluation of strategic transactions. These costs relate to events
which, in the company’s view, are not incurred in the ordinary
course of operations. These costs include the legal and accounting
fees as well as other costs incurred in connection with the
evaluation of strategic transactions. The company’s management
excludes these costs when evaluating its ongoing performance and/or
predicting its earning trends, and therefore excludes these costs
when presenting non-GAAP financial measures. During the fourth
quarter of fiscal year 2009, the company decided to indefinitely
delay the implementation of Oracle R12 release and wrote off all
capitalized costs.
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|
|
|
Restructurings
|
|
During the third quarter of fiscal year 2009, the company
implemented a restructuring program to reduce headcount by
approximately 5%. During the first quarter of fiscal year 2010, the
company adjusted its estimates related to severance costs. The
adjustment is classified as restructuring 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.
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Contact:
Bill Slater, Chief Financial Officer, +1-650-581-2500
Source: Saba Software, Inc.
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.
