- FY2014 subscription revenue of $66.7 million, up 17% year-over-year
- FY2014 total revenue of $97.1 million, up 7% year-over-year
- Announces strategic initiatives to refocus and position business for growth
- Sam Inman named permanent CEO
DETROIT, May 22, 2014 (GLOBE NEWSWIRE) -- Covisint Corporation (Nasdaq: COVS ), provider of a leading cloud engagement platform , today announced financial results for the fourth quarter and full fiscal year ended March 31, 2014.
"Fiscal 2014 was a year of dramatic change for Covisint as we successfully completed our initial public offering and established Covisint as a public company," said Covisint CEO Sam Inman. "While we achieved subscription revenue growth of 17% year-over-year, we are disappointed with our overall performance. As we look forward to fiscal 2015, we are undertaking a series of strategic initiatives to refocus our business and reposition the company for success in fiscal year 2016 and beyond."
The company will focus on four key initiatives:
- The right leadership team and organization to achieve our objectives.
- Focus on becoming an enterprise-grade software company.
- Develop additional relationships with strategic partners to extend our market reach.
- Align cost to match revenue with profitability bias.
"Fiscal 2015 will be a transition year for Covisint," continued Inman. "We will make the necessary changes throughout every level of our organization to get back on track, and focus on our significant growth potential."
Fiscal Year 2014 Financial Results:
- Revenues: Subscription and support revenue increased 17% year-over-year to $66.7 million. Services revenue decreased 10% year-over-year to $30.4 million. Total revenues increased by 7% year-over-year to $97.1 million.
- Gross Profit: GAAP gross profit was $40.8 million. GAAP gross margin was 42%. Non-GAAP gross profit was $48.3 million. Non-GAAP gross margin was 50%.
- Earnings: GAAP diluted earnings per share were ($1.06) compared to ($0.19) last year. Non-GAAP diluted EPS was ($0.50) compared to ($0.41) in the prior year.
Fourth Quarter Fiscal 2014 Financial Results:
- Revenues: Subscription and support revenue increased 8% year-over-year to $17.0 million. Services revenue decreased 26% year-over-year to $7.4 million. Total revenues decreased by 5% year-over-year to $24.4 million.
- Gross Profit: GAAP gross profit was $9.1 million. GAAP gross margin was 37%. Non-GAAP gross profit was $11.0 million. Non-GAAP gross margin was 45%.
- Earnings: GAAP diluted earnings per share were ($0.27) compared to ($0.11) in the same quarter last year. Non-GAAP diluted EPS was ($0.17) compared to ($0.10) in the same quarter last year.
Fourth Quarter Fiscal 2014 Business Highlights
In the fourth quarter, Covisint:
- Announced that Covisint will secure and integrate the next-generation of automotive connectivity for Hyundai. The Covisint platform will help Hyundai Blue Link to enhance the "connected owner" experience by enabling Hyundai to offer the latest in vital vehicle information and applications.
- At the 2014 RSA Conference, Covisint Chief Security Officer, David Miller, detailed the best approach and new requirements for identity management of "connected things". His presentation led attendees to understand how deep the security and identity complexities are in a "connected things" world and how time-consuming it is for ease-of-use-driven consumers to set preferences as billions and billions of devices continue to come online.
- Announced at the Consumer Electronics Show (CES) that Covisint will make Google Glass integration a reality for Hyundai and Hyundai owners. With the Covisint platform, Hyundai is now able to quickly evaluate wearable technology to address customer needs while also enabling Hyundai owners to access important owner services, vehicle safety, service, infotainment and applications.
- Showcased the "Future of the Connected Owner" at the 2014 North American International Auto Show featuring demo of advanced, cloud-based connectivity by demonstrating the future car-buying experience for connected owners, including: 1) how connected devices impact the process; 2) how cars will "sell themselves" and adopt future owners' personalities; 3) how used cars will be securely "wiped clean" of the previous owner's info; and, among others, 4) how owners' preferences, settings and subscriptions will follow them, even when renting another car in a different city.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Covisint monitors non-GAAP measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and adjusted EBITDA. Each of these financial measures excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. These non-GAAP financial measures exclude the impact of stock award compensation expense, the amortization of intangible assets and amounts incurred for capitalized internal software costs.
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 income or expenses, as well as the related tax effects, that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and adjusted EBITDA. 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 with 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 4:45 ET today to discuss these results. The U.S. toll free dial-in for the conference call is 1-800-230-1059, and the international dial-in number is 1-612-332-0107. No passcode is required. A live webcast of the conference call will also be available on the investor relations page of 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 May 22, 2014, through May 29, 2014. The U.S. toll-free replay dial-in number is 1-800-475-6701 and the international replay dial-in number is 1-320-365-3844. The replay passcode is 325338.
Covisint
Covisint provides a leading cloud engagement platform for creating and enabling new mission-critical external business processes. Our solutions enable organizations to connect, engage, and collaborate with the critical external audiences that define their success -- including customers, business partners and suppliers. Covisint allows its clients to establish a secure, reliable, integrated presence in the cloud, and it provides the kind of engaging information experiences that people everywhere have come to expect. Learn more at www.covisint.com .
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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's 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 for our solutions; the seasonality of our business; our ability to manage our growth; the continued growth of the market for our solutions; competition from current competitors and new market entrants; our ability to penetrate new vertical markets; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure and costs associated with operating as a public company; failure to protect our intellectual property; changes in current tax or accounting rules; 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 AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION | ||
| CONDENSED AND CONSOLIDATED BALANCE SHEETS | ||
| (In Thousands) | ||
| (Unaudited) | ||
| March 31, 2014 | March 31, 2013 | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash | $ 49,536 | $ 966 |
| Accounts receivable, net | 21,838 | 25,386 |
| Deferred tax asset, net | 1,017 | 2,011 |
| Due from parent and affiliates | 2,813 | — |
| Other current assets | 5,983 | 5,517 |
| Total current assets | 81,187 | 33,880 |
| PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION | 4,751 | 2,654 |
| CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET | 23,040 | 24,447 |
| OTHER: | ||
| Goodwill | 25,385 | 25,385 |
| Deferred costs | 6,188 | 9,738 |
| Deferred tax asset, net | 131 | 146 |
| Other assets | 766 | 1,808 |
| Total other assets | 32,470 | 37,077 |
| TOTAL ASSETS | $ 141,448 | $ 98,058 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $ 3,893 | $ 2,440 |
| Accrued commissions | 1,640 | 1,982 |
| Deferred revenue | 16,606 | 16,989 |
| Accrued expenses | 3,752 | 2,921 |
| Due to parent and affiliates | — | 7,556 |
| Total current liabilities | 25,891 | 31,888 |
| DEFERRED REVENUE | 11,223 | 18,188 |
| ACCRUED EXPENSES | 56 | 271 |
| DEFERRED TAX LIABILITY, NET | 2,668 | 4,817 |
| Total liabilities | 39,838 | 55,164 |
| COMMITMENTS AND CONTINGENCIES | — | — |
| SHAREHOLDER'S EQUITY: | ||
| Common Stock | — | — |
| Additional paid-in capital | 140,569 | 46,186 |
| Retained deficit | (38,947) | (3,289) |
| Accumulated other comprehensive loss | (12) | (3) |
| Total shareholders' equity | 101,610 | 42,894 |
| TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | $ 141,448 | $ 98,058 |
| COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION | ||||
| CONDENSED, COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (In Thousands) Except Per Share Data | ||||
| (Unaudited) | ||||
| THREE MONTHS ENDED MARCH 31, | TWELVE MONTHS ENDED MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| REVENUE | $ 24,400 | $ 25,712 | $ 97,135 | $ 90,732 |
| COST OF REVENUE | 15,278 | 13,553 | 56,374 | 47,575 |
| GROSS PROFIT | 9,122 | 12,159 | 40,761 | 43,157 |
| 37% | 47% | 42% | 48% | |
| OPERATING EXPENSES: | ||||
| Research and development | 3,046 | 2,901 | 12,408 | 3,799 |
| Sales and marketing | 8,640 | 8,089 | 35,250 | 26,593 |
| General and administrative | 7,338 | 4,448 | 28,676 | 18,315 |
| Total operating expenses | 19,024 | 15,438 | 76,334 | 48,707 |
| LOSS BEFORE INCOME TAX PROVISION | (9,902) | (3,279) | (35,573) | (5,550) |
| INCOME TAX PROVISION | 26 | 10 | 85 | 98 |
| NET LOSS | $ (9,928) | $ (3,289) | $ (35,658) | $ (5,648) |
| DILUTED EPS COMPUTATION | ||||
| Numerator: Net loss | $ (9,928) | $ (3,289) | $ (35,658) | $ (5,648) |
| Denominator: | ||||
| Weighted-average common shares outstanding | 37,363 | 30,003 | 33,774 | 30,003 |
| Dilutive effect of stock awards | — | — | — | — |
| Total shares | 37,363 | 30,003 | 33,774 | 30,003 |
| Diluted EPS | $ (0.27) | $ (0.11) | $ (1.06) | $ (0.19) |
| COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION | ||||
| NON-GAAP CONDENSED, COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (In Thousands, Except Per Share Data) | ||||
| (Unaudited) | ||||
| THREE MONTHS ENDED MARCH 31, | TWELVE MONTHS ENDED MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| REVENUE | $ 24,400 | $ 25,712 | $ 97,135 | $ 90,732 |
| COST OF REVENUE | 13,447 | 12,089 | 48,792 | 42,619 |
| GROSS PROFIT | 10,953 | 13,623 | 48,343 | 48,113 |
| 45% | 53% | 50% | 53% | |
| OPERATING EXPENSES: | ||||
| Research and development | 4,311 | 4,632 | 17,381 | 17,377 |
| Sales and marketing | 8,122 | 7,767 | 29,348 | 25,878 |
| General and administrative | 4,877 | 4,146 | 18,306 | 16,967 |
| Total operating expenses | 17,310 | 16,545 | 65,035 | 60,222 |
| LOSS BEFORE INCOME TAX PROVISION | (6,537) | (2,922) | (16,692) | (12,109) |
| INCOME TAX PROVISION | 26 | 10 | 85 | 98 |
| NET LOSS | $ (6,383) | $ (2,932) | $ (16,777) | $ (12,207) |
| DILUTED EPS COMPUTATION | ||||
| Numerator: Net loss | $ (6,383) | $ (2,932) | $ (16,777) | $ (12,207) |
| Denominator: | ||||
| Weighted-average common shares outstanding | 37,363 | 30,003 | 33,774 | 30,003 |
| Dilutive effect of stock awards | — | — | — | — |
| Total shares | 37,363 | 30,003 | 33,774 | 30,003 |
| Diluted EPS | $ (0.17) | $ (0.10) | $ (0.50) | $ (0.41) |
| COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION | ||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||
| (In Thousands, Except Per Share Data) | ||||
| (Unaudited) | ||||
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||
| MARCH 31, | MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Gross profit | $ 9,122 | $ 12,159 | $ 40,761 | $ 43,157 |
| Gross profit % | 37% | 47% | 42% | 48% |
| Adjustments: | ||||
| Stock compensation expense—cost of revenue | 94 | 4 | 829 | 6 |
| % of total revenue | —% | —% | 1% | —% |
| Cost of revenue—amortization of capitalized software | 1,737 | 1,460 | 6,753 | 4,950 |
| % of total revenue | 7% | 6% | 7% | 5% |
| Adjusted gross profit | $ 10,953 | $ 13,623 | $ 48,343 | $ 48,113 |
| Adjusted gross profit % | 44% | 52% | 50% | 53% |
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||
| MARCH 31, | MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Cost of revenue | $ 15,278 | $ 13,553 | $ 56,374 | $ 47,575 |
| Adjustments: | ||||
| Stock compensation expense | 94 | 4 | 829 | 6 |
| Cost of revenue - amortization of capitalized software | 1,737 | 1,460 | 6,753 | 4,950 |
| Cost of revenue, non-GAAP | $ 13,447 | $ 12,089 | $ 48,792 | $ 42,619 |
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||
| MARCH 31, | MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Research and development | $ 3,046 | $ 2,901 | $ 12,408 | $ 3,799 |
| Adjustments: | ||||
| Capitalized internal software costs | (1,331) | (1,731) | (5,695) | (13,579) |
| Stock compensation expense | 66 | — | 722 | 1 |
| Research and development, non-GAAP | $ 4,311 | $ 4,632 | $ 17,381 | $ 17,377 |
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||
| MARCH 31, | MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Sales and marketing | $ 8,640 | $ 8,089 | $ 35,250 | $ 26,593 |
| Adjustments: | ||||
| Stock compensation expense | 441 | 240 | 5,594 | 360 |
| Amortization of customer relationship agreements | 77 | 82 | 308 | 355 |
| Sales and marketing, non-GAAP | $ 8,122 | $ 7,767 | $ 29,348 | $ 25,878 |
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||
| MARCH 31, | MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| General and administrative | $ 7,338 | $ 4,448 | $ 28,676 | $ 18,315 |
| Adjustments: | ||||
| Stock compensation expense | 2,461 | 280 | 10,330 | 1,262 |
| Amortization of trademarks | — | 22 | 40 | 86 |
| General and administrative, non-GAAP | $ 4,877 | $ 4,146 | $ 18,306 | $ 16,967 |
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||
| MARCH 31, | MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net income (loss) | $ (9,928) | $ (3,289) | $ (35,658) | $ (5,648) |
| Adjustments: | ||||
| Capitalized internal software costs | (1,331) | (1,731) | (5,695) | (13,579) |
| Stock compensation expense | 3,062 | 524 | 17,475 | 1,629 |
| Amortization of intangibles | 1,814 | 1,564 | 7,101 | 5,391 |
| Net loss, non-GAAP | $ (6,383) | $ (2,932) | $ (16,777) | $ (12,207) |
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||
| MARCH 31, | MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Diluted EPS | $ (0.27) | $ (0.11) | $ (1.06) | $ (0.19) |
| Adjustments: | ||||
| Capitalized internal software costs | (0.04) | (0.06) | (0.17) | (0.45) |
| Stock compensation expense | 0.08 | 0.02 | 0.52 | 0.05 |
| Amortization of intangibles | 0.05 | 0.05 | 0.21 | 0.18 |
| Diluted EPS, non-GAAP | $ (0.17) | $ (0.10) | $ (0.50) | $ (0.41) |
| COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATION | ||||
| CONDENSED, COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
| (In Thousands) | ||||
| (Unaudited) | ||||
| THREE MONTHS ENDED MARCH 31, | TWELVE MONTHS ENDED MARCH 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: | ||||
| Net loss | $ (9,928) | $ (3,289) | $ (35,658) | $ (5,648) |
| Adjustments to reconcile net income (loss) to cash provided by (used in) operations: | ||||
| Depreciation and amortization | 2,255 | 1,879 | 8,678 | 6,617 |
| Deferred income taxes | (39) | (522) | 4 | (613) |
| Stock award compensation | 3,062 | 524 | 17,475 | 1,629 |
| Other | — | 60 | ||
| Net change in assets and liabilities, net of effects from currency fluctuations: | ||||
| Accounts receivable | (2,846) | (5,353) | 3,618 | (4,676) |
| Other assets | 1,523 | 1,204 | 3,414 | 3,386 |
| Accounts payable and accrued expenses | 1,919 | 1,204 | 1,543 | 881 |
| Deferred revenue | (1,680) | (834) | (7,410) | (6,838) |
| Net cash provided by (used in) operating activities | $ (5,734) | $ (5,187) | $ (8,336) | $ (5,202) |
| CASH FLOWS USED IN INVESTING ACTIVITIES: | ||||
| Purchase of: | ||||
| Property and equipment | (1,605) | (310) | (3,541) | (946) |
| Capitalized software | (1,332) | (1,731) | (5,696) | (13,579) |
| Net cash used in investing activities | $ (2,937) | $ (2,041) | $ (9,237) | $ (14,525) |
| CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: | ||||
| Net investment from parent company | — | — | — | 12,881 |
| Cash payments from parent company | 12,538 | 29,135 | 65,746 | 29,135 |
| Cash payments to parent company | (9,061) | (20,597) | (67,003) | (20,597) |
| Proceeds from Initial Public Offering | 68,448 | — | ||
| Initial public offering costs | (15) | (332) | (1,412) | (714) |
| Net proceeds from exercise of stock awards | — | 332 | — | |
| Net cash provided by financing activities | $ 3,462 | $ 8,206 | $ 66,111 | $ 20,705 |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (25) | (12) | 32 | (12) |
| NET CHANGE IN CASH | (5,234) | 966 | 48,570 | 966 |
| CASH AT BEGINNING OF PERIOD | 54,770 | — | 966 | — |
| CASH AT END OF PERIOD | $ 49,536 | $ 966 | $ 49,536 | $ 966 |
Investor Relations Contact 866.319.7659 Media Contact Brad Schechter 313.961.5290 For Sales and Marketing Information Covisint Corporation, One Campus Martius, Suite 700, Detroit, MI 48226, 313-961-4100 http://www.covisint.com
