Concur Announces Record Revenue and Earnings for Fourth Quarter and Fiscal 2007

REDMOND, Wash., November 19th, 2007 -Concur (NASDAQ: CNQR), the world’s leading provider of on-demand Employee Spend Management services, today reported financial results for its fourth quarter and fiscal year ended September 30, 2007.

Concur reported total revenue for the fourth quarter of fiscal 2007 of $35.7 million, driven by subscription revenue which was up 37% from the year-ago quarter. Total revenue for the quarter was up 30% from the year-ago quarter and up 7% from the prior quarter. Fiscal 2007 fourth quarter net income was $4.1 million, or $0.10 per share, and exceeded company expectations. This compares to net income of $1.0 million, or $0.03 per share, in the year-ago quarter.

"The fourth quarter of fiscal 2007 was an exceptional quarter for the company and it capped a record fiscal year, as we met or exceeded our recently raised guidance for revenue, earnings and free cash flow," said Steve Singh, chairman and CEO of Concur. "Our business continues to accelerate as year- over-year growth in the fourth quarter exceeded year-over-year growth in the third quarter. New customer growth was significantly higher than expected as businesses look for ways to drive down operating costs."

Singh continued, "Last week we launched Concur® Travel & Expense with Smart Expense(TM), just one year after announcing our vision for delivering a seamless end-to-end solution. Look for us to continue to drive the innovation curve in the travel and expense management market focused on delivering a compelling end user experience and driving down the cost of doing business for our customers and their suppliers. With the completion of the Gelco acquisition and the integration of the two organizations ahead of our expectations and continued strong execution across the business, we are raising our revenue, earnings and cash flow guidance for fiscal 2008."

 

    Financial Highlights
    -- Total revenue was $35.7 million for the fourth quarter of fiscal 2007,
       up 30% compared to the year-ago quarter and up 7% sequentially.
    -- Total revenue was $129.1 million for fiscal 2007, up 33% year-over-
       year.
    -- Net income was $4.1 million, or $0.10 per share, for the fourth quarter
       of fiscal 2007, compared to $ 1.0 million, or $0.03 per share, for the
       year-ago quarter.
    -- Net income was $8.2 million, or $0.20 per share, for fiscal 2007 and
       included income tax expense of $ 5.3 million, compared to $ 34.2
       million, or $0.87 per share for fiscal 2006, which includes an income
       tax benefit of $27.5 million.  The company released reserves against
       its deferred tax assets in the third quarter of fiscal 2006 and began
       recording income tax expense in the fourth quarter of fiscal 2006.
    -- The effective tax rate for fiscal 2007 used to record income tax
       expense was reduced to 39% during the fourth quarter of fiscal 2007.
    -- Non-GAAP pretax income was $6.8 million, or $0.16 per share, for the
       fourth quarter of fiscal 2007, compared to $4.8 million, or $0.12 per
       share, for the year-ago quarter.  Please refer to "About Concur's
       Non-GAAP Financial Measures" below.
    -- Non-GAAP pretax income was $22.3 million, or $0.54 per share, for
       fiscal 2007, compared to $14.0 million, or $0.36 per share, for fiscal
       2006.
    -- Non-GAAP operating margin was 18% for the fourth quarter of fiscal
       2007, which was unchanged from the year-ago quarter, and down from 19%
       sequentially.
    -- Non-GAAP operating margin was 17% for fiscal 2007, up from 15% in
       fiscal 2006.  Please refer to "About Concur's Non-GAAP Financial
       Measures" below.
    -- Cash flows from operations were $ 7.0 million for the fourth quarter of
       fiscal 2007, up 187% from the year-ago quarter.
    -- Cash flows from operations were $ 32.2 million for fiscal 2007, up 183%
       year-over-year.  Net of capital expenditures of $12.5 million, free
       cash flow totaled $19.7 million.


    Recent Business Highlights
    -- Concur completed its acquisition of privately-held H-G Holdings, Inc.
       and its subsidiaries, including Gelco Information Network, Inc., the
       owner of Gelco Expense Management, ahead of our expectations, closing
       on October 1, 2007.
    -- Concur announced the offering of 5,405,000 shares of common stock in a
       registered public offering at a price to the public of $28.50 per
       share. Total net proceeds from this offering, together with funds drawn
       under an extension of its existing credit facility, were used to fund
       the consideration for the acquisition of privately-held H-G Holdings,
       Inc.
    -- Concur announced the general availability of Concur Travel & Expense,
       the industry-first innovation featuring Smart Expense that completely
       shatters the notion of the traditional expense report by enabling One
       Touch Business Travel(TM).
    -- Concur made powerful new Attendee Tracking capabilities -- which
       provide Concur® Expense clients with the transparency and
       accountability required to comply with recently enacted and pending
       state and federal regulations -- available at no additional cost. This
       industry first innovation provides companies -- specifically those
       within the pharmaceutical and financial services industries -- with the
       ability to track, monitor and report on the amount they spend on gifts,
       meals and gratuities for their clients.
    -- Through Concur® Connect -- a global program connecting suppliers from
       around the world to over $35 billion of spend driven by Concur's over
       6,000 clients -- Concur added Intercontinental Hotels Group (which
       includes InterContinental® Hotels & Resorts, Crowne Plaza® Hotels &

       Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®,
       Staybridge Suites®, Candlewood Suites® and Hotel Indigo®) to its
       growing list of direct connect and e-receipt vendors. This list also
       includes airlines like Air Canada, AirTran Airways, JetBlue Airways,
       Virgin Blue; hotels such as Hilton, Marriott and Starwood; car rental
       companies including Hertz, Avis/Budget and Enterprise; rail providers
       VIA Rail, SNCF, Rail1, Die Bahn and UK Rail; and OpenTable.com for
       restaurant reservations -- providing Concur clients with access to the
       industry's broadest selection of travel content.
    -- Notable clients such as Regal Entertainment Group, Safeway, Whirlpool
       Corporation and Royal Bank of Canada signed contracts for Concur
       services, contributing to more new client contracts being signed in the
       fourth quarter of fiscal 2007 than in any quarter in Concur's history.
    -- Concur opened an office in Prague, Czech Republic to establish a center
       of excellence for engineering, services and infrastructure and
       reinforce its commitment to European clients and partners.
    -- Concur hosted its annual International User Conference in Phoenix,
       Arizona, with over 1000 clients and partners in attendance.

Business Outlook

The following statements are based on our current expectations and we do not undertake any duty to update them. These statements are forward-looking and inherently uncertain. Actual results may differ materially as a result of the factors identified below, the factors identified in our public filings made with the Securities and Exchange Commission, or other factors. Please also refer to "About Concur's Non-GAAP Financial Measures" below for an explanation of our non-GAAP financial measures and a reconciliation of those measures to GAAP equivalents.

 

    -- Concur expects total revenue to be $46.0 million for the first quarter
       of fiscal 2008, and to be $200.0 million for fiscal 2008.
    -- Concur expects earnings per share for the first quarter of fiscal 2008
       to be $0.03 assuming an estimated effective tax rate of 39% and
       non-GAAP pre-tax earnings per share to be $0.13.
    -- Concur expects earnings per share for fiscal 2008 to be $0.15 assuming
       an estimated effective tax rate of 39% and non-GAAP pre-tax earnings
       per share to be $0.70.
    -- Concur expects the fiscal 2008 non-GAAP operating margin to be 18% for
       the year as a whole.
    -- Concur expects cash flows from operations in fiscal 2008 to be $42.0
       million, and capital expenditures of approximately $14.0 million.

About Concur

Concur is the world's leading provider of on-demand Employee Spend Management services. Concur enables organizations to globally control costs by automating the processes they use to manage employee spending. Concur's end- to-end solutions seamlessly unite online travel booking with automated expense reporting, streamline meeting management and optimize the process of managing vendor payments, employee check requests and direct reimbursements. Organizations of all sizes trust Concur to help them control spend before it occurs while eliminating paper and optimizing supplier relations. Concur's unified approach to managing employee spend delivers a 360° view into all employee expenses, helping companies globally enforce policies and monitor vendor compliance, while delivering unprecedented control and valuable insight. Concur's suite of on-demand services reach millions of employees across thousands of organizations around the world -- streamlining business processes, reducing operating costs, improving internal controls and providing enhanced visibility and actionable expense analysis. More information about Concur is available at http://www.concur.com.

All company or product names are trademarks and/or registered trademarks of their respective owners.

This press release contains forward-looking statements that are inherently uncertain. These forward-looking statements, such as the statements made by Mr. Singh, are based on Concur's current expectations and involve many risks and uncertainties that could cause actual results to differ materially from current expectations. Factors that could cause or contribute to actual results differing from current expectations include, but are not limited to: potential difficulties integrating the operations of H-G Holdings, Inc. with our operations; potential delays in market adoption and penetration of our subscription service offerings; potential difficulties associated with our deployment and support of our products and services; our ability to manage expected growth of our subscription service offerings; the scalability of the hosting infrastructure for our subscription service offerings; potential increases in the rate of attrition of customers of our subscription service offerings; the level of investment in information technology by our customers; the level of business travel that may reduce the use of our products and services or inhibit new sales of our products and services; potential difficulties associated with strategic relationships and with development of new products and services; risks associated with expansion into new geographic markets; the lengthy sales cycle for our products and services; and uncertain market acceptance of recently-introduced or future products and services.

Please refer to the company's public filings made with the Securities and Exchange Commission (http://www.sec.gov) for additional and more detailed information on risk factors that could cause actual results to differ materially from current expectations. Concur assumes no obligation to update the forward-looking information contained in this press release.

 


    Investor Contact:
    John Torrey, Concur, 425-497-5986, john.torrey@concur.com

    Press Contact:
    Stefanie Johansen, Weber Shandwick for Concur, 425-452-5468,
    sjohansen@webershandwick.com



                            Concur Technologies, Inc.
                                Income Statements
                      (in thousands, except per share data)
                                   (Unaudited)

                                            Three months
                                               ended           Year ended
                                            September 30,     September 30,
                                           2007     2006      2007     2006

    Revenues:
      Subscription                        $32,369  $23,711  $115,996  $80,501
      Consulting and other                  3,378    3,781    13,111   16,644
    Total revenues                         35,747   27,492   129,107   97,145

    Expenses:
      Cost of operations                   11,387   10,067    43,711   37,846
      Sales and marketing                   9,685    6,416    34,154   22,907
      Systems development and programming   4,479    3,388    15,866   12,445
      General and administrative            5,444    4,170    18,759   14,458
      Amortization of intangible assets       583      823     2,965    2,420
    Total expenses                         31,578   24,864   115,455   90,076

    Operating income                        4,169    2,628    13,652    7,069

    Other income (expense):
      Interest income                         263      147       897      512
      Interest expense                       (141)    (374)   (1,240)    (962)
      Other, net                              140      151       231       72
    Total other income (expense), net         262      (76)     (112)    (378)

    Income before income tax                4,431    2,552    13,540    6,691

    Income tax expense (benefit)              305    1,536     5,315  (27,465)

    Net income                            $ 4,126  $ 1,016   $ 8,225  $34,156

    Net income per share available to
     common stockholders:
      Basic                               $  0.11  $  0.03   $  0.22  $  0.97
      Diluted                                0.10     0.03      0.20     0.87

    Weighted average shares used in
     computing net income per share:
      Basic                                38,287   36,127    37,443   35,056
      Diluted                              42,004   39,878    41,033   39,150



                            Concur Technologies, Inc.
                                  Balance Sheets
                     (in thousands, except per share amounts)
                                   (Unaudited)

                                               September 30,     September 30,
                                                   2007                2006

    Assets

    Current assets:
      Cash and cash equivalents                  $168,835            $ 16,334
      Accounts receivable, net of
       allowance of $2,766 and $1,544              31,460              22,734
      Prepaid expenses                              1,797               1,368
      Current portion of deferred income
       taxes                                        2,657               2,759
      Other current assets                          8,448               5,883
    Total current assets                          213,197              49,078
    Property and equipment, net                    24,066              20,429
    Intangible assets, net                         10,604              13,570
    Goodwill                                       65,628              65,628
    Deferred income tax assets, net of
     current portion                               19,764              24,839
    Deposits and other long-term assets            12,223               7,775
    Total assets                                 $345,482            $181,319

    Liabilities and stockholders' equity

    Current liabilities:
      Accounts payable                           $  4,193            $  2,551
      Accrued compensation                         11,492               5,052
      Acquisition-related liabilities                 700               8,826
      Other accrued liabilities                     4,655               3,415
      Current portion of long-term debt               -                 3,312
      Current portion of deferred rent                399                 240
      Current portion of deferred revenues         21,560              15,974
    Total current liabilities                      42,999              39,370
    Long-term debt, net of current portion          5,369              13,520
    Deferred rent, net of current portion           2,428               2,827
    Deferred revenues, net of current portion      10,326               8,208
    Total liabilities                              61,122              63,925

    Commitments and contingencies

    Stockholders' equity:
      Convertible preferred stock, par
       value $0.001 per share                         -                   -
         Authorized shares: 5,000; No
          shares issued or outstanding
      Common stock, $0.001 par value                   44                  36
         Authorized shares: 60,000
         Shares issued and outstanding:
          43,699 and 36,142
         Issuable shares: 0 and 284
      Additional paid-in capital                  445,324             287,382
      Accumulated deficit                        (162,012)           (170,237)
      Accumulated other comprehensive
       income                                       1,004                 213
    Total stockholders' equity                    284,360             117,394
    Total liabilities and stockholders' equity   $345,482            $181,319



                             Concur Technologies, Inc
                               Cash Flow Statements
                                  (in thousands)
                                   (Unaudited)

                                         Three months ended     Year ended
                                            September 30,      September 30,
                                            2007     2006      2007     2006

    Operating activities:
    Net income                             $4,126   $1,016    $8,225  $34,156
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
      Amortization of intangible assets       583      823     2,965    2,420
      Depreciation                          2,564    1,640     9,048    5,316
      Provision for doubtful accounts
       receivable                             365      183     1,300    1,565
      Share-based compensation expense      1,761    1,413     5,752    4,859
      Deferred income taxes                   287    1,487     5,177  (27,598)
      Changes in operating assets and
       liabilities, net of effects from
       acquisition:
         Accounts receivable               (6,495)  (3,381)   (9,947)  (8,760)
         Prepaid expenses, deposits and
          other assets                     (2,525)    (163)   (6,572)  (4,090)
         Accounts payable                  (1,284)     607    (1,835)   1,101
         Accrued liabilities                5,499     (339)   10,383     (452)
         Deferred revenues                  2,154     (831)    7,680    2,840
    Net cash provided by operating
     activities                             7,035    2,455    32,176   11,357
    Investing activities:
      Purchases of property and equipment  (2,835)  (2,251)  (12,508)  (9,933)
      Decrease in restricted cash balances    -        500       -        500
      Payments for acquisition, net of
       cash acquired                         (475)     -      (8,225) (21,900)
    Net cash used in investing
     activities                            (3,310)  (1,751)  (20,733) (31,333)
    Financing activities:
      Net proceeds from stock-based award
       activity                               663      659     8,076    4,836
      Proceeds from issuance of common
       stock from employee stock purchase
       plan                                   190      214       806      819
      Net proceeds from issuance of
       common stock                       144,867      -     144,867      -
      Payments on repurchase of common
       stock                                  -     (2,451)   (1,853)  (2,451)
      Proceeds from borrowings                -        -      11,369   18,000
      Repayments on borrowings and
       capital leases                      (6,000)     (33)  (22,832)  (1,293)
    Net cash provided by (used in)
     financing activities                 139,720   (1,611)  140,433   19,911
      Effect of foreign currency exchange
       rate changes on cash and cash
       equivalents                            205      148       625      197
    Net increase (decrease) in cash and
     cash equivalents                     143,650     (759)  152,501      132
    Cash and cash equivalents at
     beginning of year                     25,185   17,093    16,334   16,202
    Cash and cash equivalents at end of
     year                                $168,835  $16,334  $168,835  $16,334



                          Concur Technologies, Inc.
            Reconciliation of GAAP to Non-GAAP Financial Measures
               (in thousands, except per share and margin data)
                                 (Unaudited)

                                       Three months ended       Year ended
                                          September 30,        September 30,
                                         2007      2006       2007      2006

        Operating income:
           Operating income             $4,169   $2,628     $13,652    $7,069
           Income from operations
            as a % of total revenue
            (Operating Margin)             12%      10%         11%        7%
           Add back:
             Effect of share-based
              compensation on
              operating income           1,761    1,413       5,752     4,859
             Effect of
              amortization of
              intangibles on
              operating income             583      823       2,965     2,420
           Non-GAAP operating income    $6,513   $4,864     $22,369   $14,348
             Non-GAAP operating income
              as a % of total revenue
              (Non-GAAP Operating
              Margin)                      18%      18%         17%       15%

        Net income to pretax income:
          Net income                    $4,126   $1,016      $8,225   $34,156
          Add back:
             Share-based compensation    1,761    1,413       5,752     4,859
             Amortization of intangibles   583      823       2,965     2,420
             Income tax expense (benefit)  305    1,536       5,315   (27,465)
          Non-GAAP pretax income        $6,775   $4,788     $22,257   $13,970

        Diluted income per share:
          Diluted income per share       $0.10    $0.03       $0.20     $0.87
          Add back:
             Effect of share-based
              compensation on income
              per share                   0.04     0.03        0.14      0.12
             Effect of amortization
              of intangibles on income
              per share                   0.01     0.02        0.07      0.07
             Income tax expense (benefit) 0.01     0.04        0.13     (0.70)
          Non-GAAP pretax diluted income
           per share                     $0.16    $0.12       $0.54     $0.36

        Shares used in calculation
         of basic and diluted
         non-GAAP income per share:
          Basic                         38,287   36,127      37,443    35,056
          Diluted                       42,004   39,878      41,033    39,150



    CONCUR TECHNOLOGIES, INC.
    About Concur's Non-GAAP Financial Measures

This release contains non-GAAP financial measures. The tables above reconcile the non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Concur's non-GAAP financial measures do not reflect a comprehensive system of accounting, and they differ from GAAP measures with similar names and from non-GAAP financial measures with the same or similar names that are used by other companies. We strongly urge investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this release, and our consolidated financial statements, including the notes thereto, and the other financial information contained in our periodic filings with the SEC and not to rely on any single financial measure to evaluate our business.

Concur believes that its non-GAAP financial measures provide meaningful supplemental information regarding Concur's operating results because they exclude amounts that Concur excludes as part of its monitoring of operating results and assessing the performance of the business. Concur believes that its non-GAAP financial measures also facilitate the comparison of results for current periods and business outlook for future periods with results of past periods. Concur presents the following non-GAAP financial measures in this release: non-GAAP operating income; non-GAAP operating margin; non-GAAP pre- tax income and non-GAAP pre-tax diluted income per share. Concur excludes the following items as noted from these non-GAAP financial measures:

 

    -- Share-based compensation expenses. Concur's non-GAAP financial measures
       exclude share-based compensation expenses, which consist of expenses
       for stock options and restricted stock units ("RSU") that it records
       under the provisions of Statement of Financial Accounting Standard No.
       123®. Concur excludes these expenses from its non-GAAP financial
       measures primarily because they are non-cash expenses that it does not
       consider part of ongoing operating results when assessing the
       performance of our business, and the exclusion of these expenses
       facilitates the comparison of results and business outlook for future
       periods with results for prior periods.
    -- Amortization of acquired intangible assets. In accordance with GAAP,
       operating expenses include amortization of software and other
       technology assets, other purchased intangible assets such as customer
       lists and covenants not to compete. Concur excludes these items from
       its non-GAAP financial measures because they are non-cash expenses that
       Concur does not consider part of ongoing operating results when
       assessing the performance of our business, and Concur believes that
       doing so facilitates comparisons to its historical operating results
       and to the results of other companies in our industry, which have their
       own unique acquisition histories.
    -- Income tax expense (benefit).  In accordance with GAAP, Concur began
       recording income tax expense in the fourth quarter of fiscal 2006.
       Concur excludes this expense from its non-GAAP financial measures
       primarily because it is largely a non-cash expense that Concur does not
       consider part of ongoing operating results when assessing the
       performance of its business, and the exclusion of this expense
       facilitates the comparison of business outlook for future periods with
       results for prior periods, which did not include income tax expense.


Except as noted below, Concur believes that all of the following considerations apply equally to each of the non-GAAP financial measures that we present:

 

    -- Concur's management uses non-GAAP operating income (including the
       derived non-GAAP operating margin), non-GAAP pre-tax income, and non-
       GAAP pre-tax diluted income per share in internal reports used by
       management in monitoring and making decisions regarding Concur's
       business. For example, these measures are used in monthly financial
       reports prepared for management, and in quarterly reports to Concur's
       Board of Directors. Concur also uses non-GAAP pre-tax diluted income
       per share as a measure to determine executive cash incentive
       compensation, along with GAAP measures, such as revenue.
    -- Because share-based compensation, amortization of acquired intangible
       assets are non-cash in nature and income tax expense is largely non-
       cash in nature, Concur believes that non-GAAP operating income, non-
       GAAP pre-tax income and non-GAAP pre-tax diluted income per share
       provide a more focused view of the operations of its business. In
       particular, share-based compensation amounts are difficult to forecast,
       because the magnitude of the charges depends upon the volume and timing
       of stock option and RSU grants -- which are unpredictable and can vary
       dramatically from period to period -- and external factors such as
       interest rates and the trading price and volatility of Concur's common
       stock. In addition, the income tax expense can vary significantly
       because losses in its foreign operations are not included in the
       calculation of the consolidated income tax expense as we have not yet
       released the reserves against the deferred tax assets for our foreign
       operations.  Excluding these amounts improves comparability of the
       performance of the business across periods.
    -- The principal limitation of Concur's non-GAAP financial measures is
       that they exclude significant expenses that are required by GAAP to be
       recorded. In addition, non-GAAP financial measures are subject to
       inherent limitations because they reflect the exercise of judgments by
       management about which charges are excluded from the non-GAAP financial
       measures.
    -- To mitigate this limitation, Concur presents its non-GAAP financial
       measures in connection with its GAAP results, and recommends that
       investors do not give undue weight to its non-GAAP financial measures.
       Concur notes that the dilutive effect of outstanding options is
       reflected in fully-diluted shares outstanding used in calculating both
       GAAP earnings per share and our non-GAAP pre-tax diluted income per
       share.

Concur's management believes that its non-GAAP financial measures provide useful information to investors because it allows investors to view the business through the eyes of management, facilitates comparison of its results across historical and future periods, and because its non-GAAP financial measures provide a special focus on the underlying operating performance of the business relative to expectations.

 

All company or product names are trademarks and/or registered trademarks of their respective owners.

Loading next article