Concur Exceeds Guidance For Revenue and Earnings in First Quarter of Fiscal 2009

Strong client demand and growth – despite worsening economic climate – drives continued revenue and operating margin expansion

REDMOND, Wash., Feb. 4 -- Concur (Nasdaq: CNQR), the world's leading provider of on-demand Employee Spend Management services, today reported financial results for its first quarter ended December 31, 2008.

Concur reported total revenue for the first quarter of fiscal 2009 of $58.6 million, driven by subscription revenue which was up 22% from the year-ago quarter. Total revenue for the quarter was up 19% from the year-ago quarter and up 2% from the prior quarter. Fiscal 2009 first quarter net income was $5.8 million, or $0.11 per share, exceeding company expectations. This compares to net income of $3.4 million, or $0.07 per share, in the year-ago quarter.

"Revenue, earnings and cash flow for the first quarter of fiscal 2009 all exceeded our expectations," said Steve Singh, chairman and CEO of Concur. "New client additions were up more than 50% year-over-year with more than 50% of new customers choosing Concur® Travel & Expense to help them quickly cut costs and improve operational efficiencies in the face of challenging economic conditions.”

Singh continued, “Heading into the second quarter of fiscal 2009, we see a strong demand environment for our services and we expect to see the first customer additions as a result of our partnership with American Express. Driven by the challenging economic environment and eroding macro trends, we continue to see downward pressure on our near-term growth rates. However, our long-term growth rate, which is driven by new customer growth, continues unabated. The financial strength and flexibility afforded by our business model and balance sheet are strategic assets as we head into the next chapter of this economic downturn. We remain committed to investing aggressively in product innovation, service excellence and distribution capacity to extend our leadership position and our commitment to grow revenue and earnings is unwavering.”

Financial Highlights

-- Total revenue was $58.6 million for the first quarter of fiscal 2009, up 19% compared to the year-ago quarter, and up 2% sequentially.

-- Net income was $5.8 million, or $0.11 per share, for the first quarter of fiscal 2009, compared to $3.4 million, or $0.07 per share, for the year-ago quarter.

-- Non-GAAP pretax income was $13.1 million, or $0.25 per share, for the first quarter of fiscal 2009, compared to $8.2 million, or $0.17 per share, for the year-ago quarter. Please refer to "About Concur's Non-GAAP Financial Measures" below for an explanation of our non-GAAP financial measures used in this press release.

-- Non-GAAP operating margin was 21% for the first quarter of fiscal 2009, up from 17% the year-ago quarter, and up from 20% sequentially.

-- Cash flows from operations were $3.8 million for the first quarter of fiscal 2009, down 4% from the year-ago quarter.

-- During the first quarter of fiscal 2009, Concur repurchased 2.0 million shares of its common stock under its stock repurchase program. As of February 4, 2009, Concur’s stock repurchase program allows for a maximum of up to 2.1 million additional shares of stock to be repurchased.

Recent Business Highlights

-- Concur announced the general availability of Concur Premium Services, a unique selection of value-added services and on-site client training that delivers tailored solutions to support complex business requirements.

-- Notable clients such as Allianz Global Investors of America LLC, Avocent Corporation, Cargotec Solutions LLC, CompTIA, Evergreen Packaging, Inc., Harley-Davidson Europe Ltd., Lowry Computer Products, Inc., Merkle, Inc., North American Energy Services Company, Onboard, Ontario Lottery & Gaming Corporation, Plexus Corp., Sisters of Mercy Health System, Thomas Weisel Partners Group, Inc., Tokyo Electron Europe and Trident Seafoods signed contracts for Concur services in the first quarter of fiscal 2009.

-- Over 50% of new clients signed in the first quarter of fiscal 2009 chose Concur® Travel & Expense, Concur’s market-leading end-to-end solution and the only on-demand service that seamlessly combines online travel booking with automated expense reporting.

-- Concur was selected for the Gold Award in the category of The Best Technology Provider at London’s Buying Business Travel awards.

-- Concur announced that several independent organizations recognized the Company for its success during fiscal 2008, including: Fortune Magazine’s 100 Fastest-growing Companies; Business Travel News listing of Concur® Cliqbook Travel as the No.1 preferred online booking tool based on a recent survey of corporate travel buyers; The Beat, naming Concur the most admired corporate travel technology provider; and Washington CEO magazine selecting Concur as one of the 100 best companies to work for.

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 grow by approximately 6% for the second quarter of fiscal 2009, as compared to total revenue for the first quarter of fiscal 2009. Due to the current uncertainty in global economic conditions, Concur does not consider it appropriate to provide revenue guidance for the full fiscal year 2009.

-- Concur expects earnings per share for the second quarter of fiscal 2009 to be $0.08, assuming an estimated effective tax rate of 36%, and non-GAAP pre-tax earnings per share to be $0.22.

-- Concur expects earnings per share for fiscal 2009 to be $0.48, assuming an estimated effective tax rate of 36%, and non-GAAP pre-tax earnings per share to be $1.11.

-- Concur expects the fiscal 2009 non-GAAP operating margin to be 20% or more for the year as a whole.

-- Concur expects cash flows from operations in fiscal 2009 to be between $64 million and $68 million, and capital expenditures of approximately $21 million.

About Concur

Concur is the world’s leading provider of on-demand Employee Spend Management services. Trusted by thousands of organizations to reach millions of employees, Concur’s award-winning solutions streamline business travel and expense reporting, and improve invoice processing – delivering rapid ROI by helping companies increase efficiency, control employee spend and drive down operational costs. Learn more at 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: adverse economic or market conditions, such as the current economic downturn, which may cause customers and prospects to delay or reduce purchases of our products and services, cause customers to reduce business travel and correspondingly reduce the use of our products and services, reduce the ability of customers, channel partners, vendors and suppliers to fulfill their obligations to us, increase volatility of our stock price and foreign exchange rates, and otherwise adversely affect our operations and financial performance; potential difficulties associated with our realization of the benefits related to our business relationship with American Express; 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 at 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.

 



                            Concur Technologies, Inc.
                                Income Statements
                      (In thousands, except per share data)
                                   (Unaudited)
                                                       Three Months Ended
                                                           December 31,
                                                      2008               2007

    Revenues:
      Subscription                                 $56,560            $46,543
      Consulting and other                           2,004              2,809
    Total revenues                                  58,564             49,352

    Expenses (1):
      Cost of operations                            17,874             15,983
      Sales and marketing                           17,562             13,157
      Systems development and
       programming                                   6,192              5,941
      General and administrative                     7,188              6,840
      Amortization of intangible assets              1,541              1,566
    Total expenses                                  50,357             43,487

    Operating income                                 8,207              5,865

    Other income (expense):
      Interest income                                1,146                250
      Interest expense                                (133)              (432)
      Other, net                                      (145)              (126)
    Total other income (expense), net                  868               (308)

    Income before income tax                         9,075              5,557

    Income tax expense                               3,266              2,175

    Net income                                      $5,809             $3,382

    Net income per share available to
     common stockholders:
      Basic                                          $0.12              $0.08
      Diluted                                         0.11               0.07

    Weighted average shares used in
     computing net income per share:
      Basic                                         48,814             43,838
      Diluted                                       51,760             47,822

    (1) Includes share-based compensation
         as follows:
      Cost of operations                              $384               $246
      Sales and marketing                            1,003                383
      Systems development and
       programming                                     433                154
      General and administrative                       683                265
        Total share-based compensation              $2,503             $1,048



                            Concur Technologies, Inc.
                                 Balance Sheets
                    (In thousands, except per share amounts)
                                   (Unaudited)
                                                December 31,     September 30,
                                                    2008              2008

    Assets

    Current assets:
      Cash and cash equivalents                   $209,658          $267,725
      Restricted cash                                  804             3,055
      Accounts receivable, net of
       allowance of $5,062 and $5,543               39,640            38,479
      Prepaid expenses                               3,475             3,160
      Deferred tax assets                           22,655            14,289
      Deferred costs and other current
       assets                                       12,304            14,104
    Total current assets                           288,536           340,812
    Property and equipment, net                     33,896            32,304
    Deferred costs and other long-term
     assets                                         16,744            16,067
    Intangible assets, net                          37,567            39,108
    Deferred tax assets                             35,626            47,257
    Goodwill                                       165,471           165,471
    Total assets                                  $577,840          $641,019

    Liabilities and stockholders' equity

    Current liabilities:
      Accounts payable                              $4,852            $4,198
      Customer funding liabilities                  19,112            22,470
      Accrued compensation                           4,947            18,308
      Acquisition-related liabilities                2,090             2,036
      Other accrued and current
       liabilities                                  10,440             8,442
      Long-term debt, current portion                1,355             1,505
      Deferred revenues, current portion            30,983            29,572
    Total current liabilities                       73,779            86,531
    Long-term debt                                   1,055             1,328
    Deferred rent                                    1,991             2,126
    Deferred revenues                               13,018            12,511
    Non-current tax liabilities                      3,985             3,985
    Total liabilities                               93,828           106,481

    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 per
       share                                            48                50
         Authorized shares: 60,000
         Shares issued and outstanding:
          48,309 and 50,286
      Additional paid-in capital                   625,153           679,526
      Accumulated deficit                         (139,019)         (144,828)
      Accumulated other comprehensive
       loss                                         (2,170)             (210)
    Total stockholders' equity                     484,012           534,538
    Total liabilities and stockholders'
     equity                                       $577,840          $641,019



                            Concur Technologies, Inc.
                              Cash Flow Statements
                                 (In thousands)
                                   (Unaudited)
                                                      Three Months Ended
                                                           December 31,
                                                      2008              2007

    Operating activities:
    Net income                                      $5,809            $3,382
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
      Amortization of intangible assets              1,541             1,566
      Depreciation                                   4,036             3,671
      Allowance for uncollectible accounts
       receivable                                     (480)            1,259
      Share-based compensation expense               2,503             1,048
      Deferred income taxes                          2,669             2,029
      Changes in operating assets and
       liabilities, net of effects from
       acquisition:
        Accounts receivable                           (865)             (530)
        Prepaid expenses and other assets           (1,206)           (1,579)
        Accounts payable                               693              (750)
        Accrued liabilities                        (12,879)           (7,753)
        Deferred revenues                            1,947             1,602
    Net cash provided by operating
     activities                                      3,768             3,945
    Investing activities:
      Decrease (increase) in restricted
       cash balances                                 2,086              (231)
      Decrease in customer funding
       liabilities                                  (3,193)           (2,477)
      Purchases of property and equipment           (5,602)           (2,480)
      Payments for acquisition, net of
       cash acquired                                   (14)         (160,946)
    Net cash used in investing activities           (6,723)         (166,134)
    Financing activities:
      Net proceeds from share-based award
       activity                                      1,836             2,379
      Proceeds from employee stock
       purchase plan activity                          350               228
      Payments on repurchase of common
       stock                                       (54,773)                -
      Net proceeds from borrowings                       -            15,398
      Repayments on borrowings and capital
       leases                                         (422)             (423)
    Net cash (used in) provided by
     financing activities                          (53,009)           17,582
      Effect of foreign currency exchange
       rate changes on cash and cash
       equivalents                                  (2,103)             (240)
    Net decrease in cash and cash
     equivalents                                   (58,067)         (144,847)
    Cash and cash equivalents at
     beginning of period                           267,725           168,835
    Cash and cash equivalents at end of
     period                                       $209,658           $23,988



                          Concur Technologies, Inc.
            Reconciliation of GAAP to Non-GAAP Financial Measures
               (In thousands, except per share and margin data)
                                 (Unaudited)
                                                      Three Months Ended
                                                          December 31,
                                                     2008             2007

    Operating income:
      Operating income                             $8,207           $5,865
      Income from operations as a % of
       total revenue (Operating Margin)                14%              12%
      Add back:
        Share-based compensation expense            2,503            1,048
        Amortization of intangible assets           1,541            1,566
      Non-GAAP operating income                   $12,251           $8,479
        Non-GAAP operating income as a % of
         total revenue (Non-GAAP Operating Margin)     21%              17%

    Net income:
      Net income                                   $5,809           $3,382
      Add back:
        Share-based compensation expense            2,503            1,048
        Amortization of intangible assets           1,541            1,566
        Income tax expense                          3,266            2,175
      Non-GAAP pre-tax income                     $13,119           $8,171

    Diluted net income per share:
      Diluted net income per share                  $0.11            $0.07
      Add back:
        Share-based compensation expense             0.05             0.02
        Amortization of intangible assets            0.03             0.03
        Income tax expense                           0.06             0.05
      Non-GAAP pre-tax diluted income per share     $0.25            $0.17

    Shares used in calculation of diluted
     non-GAAP income per share:                    51,760           47,822



 

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 Securities and Exchange Commission and not to rely on any single financial measure to evaluate our business.

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. Further, 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. In addition, Concur believes that its non-GAAP financial measures facilitate the comparison of results for current periods and the business outlook for future periods with results of past periods because the measures provide a special focus on the underlying operating performance of the business relative to expectations.

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. Concur’s non-GAAP financial measures exclude share-based compensation, 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(R). 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 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. 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 our 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 intangible assets and income tax expense are 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 expense 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. 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 stock options is reflected in fully-diluted shares outstanding used in calculating both GAAP net income per share and our non-GAAP pre-tax diluted income per share.

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