Concur Reports Strong Results For Second Quarter Fiscal 2009

Year-over-year second quarter revenue grows 16% driving 82% earnings growth; company reaffirms fiscal 2009 earnings guidance

REDMOND, Wash., April 29 -- Concur (Nasdaq: CNQR), the world's leading provider of on-demand Employee Spend Management services, today reported financial results for its second quarter ended March 31, 2009.

Concur reported total revenue for the second quarter of fiscal 2009 of $62.0 million, driven by subscription revenue which was up 16% from the year-ago quarter. Total revenue for the quarter was also up 16% from the year-ago quarter and up 6% from the prior quarter. Fiscal 2009 second quarter net income was $6.7 million, or $0.13 per share, exceeding company expectations. This compares to net income of $3.7 million, or $0.08 per share, in the year-ago quarter.

"Despite a significant industry-wide decline in overall corporate travel spend, Concur grew second quarter revenue 16% year-over-year," said Steve Singh, chairman and CEO of Concur. "The company also grew second quarter earnings 82% year-over-year while continuing to increase investments in customer service, distribution and new services.”

Singh continued, “Customer growth was solid in the second quarter and we see continued strong demand for our services as we head into the third and fourth quarters. While we see some positive changes in key economic indicators, we remain cautious in the near term as we work through the lingering impact of a meaningful global economic contraction. We view our business model and strong balance sheet as strategic assets as we continue to drive greater efficiency into the $300 billion corporate travel supply chain.”

Financial Highlights

-- Total revenue was $62.0 million for the second quarter of fiscal 2009, up 16% compared to the year-ago quarter, and up 6% sequentially.

-- Net income was $6.7 million, or $0.13 per share, for the second quarter of fiscal 2009, compared to $3.7 million, or $0.08 per share, for the year-ago quarter.

-- Non-GAAP pretax income was $14.2 million, or $0.28 per share, for the second quarter of fiscal 2009, compared to $9.9 million, or $0.21 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 23% for the second quarter of fiscal 2009, up from 19% the year-ago quarter, and up from 21% sequentially.

-- Cash flows from operations were $23.7 million for the second quarter of fiscal 2009, up 33% from the year-ago quarter.

Recent Business Highlights

-- Concur announced the general availability of Concur® Mobile, the powerful innovation that allows mobile workers using their smartphones to easily change itineraries; book taxis, hotels or dining; capture expenses; and approve expense reports – all within policy while on the road.

-- Concur hosted over 850 attendees at its Global User Conference, the industry’s premier Employee Spend Management customer event, in San Diego, California.

-- Concur’s client base crossed the 9,000 client plateau, with over 50% of new clients signed in the second quarter of fiscal 2009 choosing 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 announced the continued expansion of the Concur® Connect program with a strategic investment in RideCharge, a leading provider of ground travel booking that lets business travelers electronically book, pay and get reimbursed for metropolitan taxi, sedan and shuttle transportation.

-- Concur announced the availability of new partner services for data integration and receipt scanning capabilities that extend and enhance the value of Concur solutions. These new solutions are offered by qualified third party companies with demonstrated expertise and experience in integrating their solutions with Concur's Employee Spend Management solutions.

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 earnings per share for the third quarter of fiscal 2009 to be $0.10, assuming an estimated effective tax rate of 36%, and non-GAAP pre-tax earnings per share to be $0.25.

-- 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  Six Months Ended
                                             March 31,          March 31,
                                          -------------     ---------------
                                           2009     2008      2009     2008
                                           ----     ----      ----     ----
    Revenues:
      Subscription                       $58,819  $50,832  $115,379  $97,375
      Consulting and other                 3,172    2,831     5,176    5,640
                                           -----    -----     -----    -----
    Total revenues                        61,991   53,663   120,555  103,015

    Expenses (1):
      Cost of operations                  18,938   17,827    36,812   33,810
      Sales and marketing                 17,770   13,935    35,332   27,092
      Systems development and
       programming                         6,187    5,872    12,379   11,813
      General and administrative           6,793    8,264    13,981   15,104
      Amortization of intangible assets    1,541    1,547     3,082    3,113
                                           -----    -----     -----    -----
    Total expenses                        51,229   47,445   101,586   90,932
                                          ------   ------   -------   ------

    Operating income                      10,762    6,218    18,969   12,083

    Other income (expense):
      Interest income                        322      180     1,468      430
      Interest expense                      (117)    (421)     (250)    (853)
      Other, net                            (422)      67      (567)     (59)
                                            ----       --      ----      ---
    Total other income (expense), net       (217)    (174)      651     (482)
                                            ----     ----       ---     ----

    Income before income tax              10,545    6,044    19,620   11,601

    Income tax expense                     3,796    2,340     7,062    4,515

                                          ------   ------   -------   ------
    Net income                            $6,749   $3,704   $12,558   $7,086
                                          ======   ======   =======   ======

    Net income per share available to
     common stockholders:
      Basic                                $0.14    $0.08     $0.26    $0.16
      Diluted                               0.13     0.08      0.24     0.15

    Weighted average shares used in
     computing net income per share:
      Basic                               48,430   43,686    48,624   43,762
      Diluted                             51,174   47,349    51,473   47,604

    (1) Includes share-based compensation
     as follows:
      Cost of operations                    $326     $438      $710     $684
      Sales and marketing                    844      913     1,847    1,296
      Systems development and programming    373      300       806      454
      General and administrative             598      659     1,281      924
                                             ---      ---     -----      ---
        Total share-based compensation    $2,141   $2,310    $4,644   $3,358
                                          ======   ======    ======   ======



                          Concur Technologies, Inc.
                               Balance Sheets
                  (In thousands, except per share amounts)
                                 (Unaudited)
                                                March 31,   September 30,
                                                  2009          2008
                                                  ----          ----
    Assets

    Current assets:
      Cash and cash equivalents                 $222,155       $267,725
      Restricted cash                              1,127          3,055
      Accounts receivable, net of
       allowance of $4,679 and $5,543             36,700         38,479
      Prepaid expenses                             3,881          3,160
      Deferred tax assets                         23,482         14,289
      Deferred costs and other current assets     13,216         14,104
                                                  ------         ------
    Total current assets                         300,561        340,812
    Property and equipment, net                   34,752         32,304
    Deferred costs and other long-term assets     21,319         16,067
    Intangible assets, net                        36,026         39,108
    Deferred tax assets                           31,759         47,257
    Goodwill                                     165,471        165,471
                                                 -------        -------
    Total assets                                $589,888       $641,019
                                                ========       ========

    Liabilities and stockholders' equity

    Current liabilities:
      Accounts payable                            $6,828         $4,198
      Customer funding liabilities                21,739         22,470
      Accrued compensation                         7,499         18,308
      Acquisition-related liabilities              2,096          2,036
      Other accrued and current liabilities        7,514          8,442
      Long-term debt, current portion              1,018          1,505
      Deferred revenues, current portion          31,432         29,572
                                                  ------         ------
    Total current liabilities                     78,126         86,531
    Long-term debt                                   962          1,328
    Deferred rent                                  1,854          2,126
    Deferred revenues                             12,918         12,511
    Non-current tax liabilities                    4,313          3,985
                                                   -----          -----
    Total liabilities                             98,173        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        49             50
        Authorized shares: 60,000
         Shares issued and outstanding:
         48,507 and 50,286
      Additional paid-in capital                 626,404        679,526
      Accumulated deficit                       (132,270)      (144,828)
      Accumulated other
       comprehensive loss                         (2,468)          (210)
                                                  ------           ----
    Total stockholders' equity                   491,715        534,538
                                                 -------        -------
    Total liabilities and stockholders' equity  $589,888       $641,019
                                                ========       ========



                           Concur Technologies, Inc.
                              Cash Flow Statements
                                 (In thousands)
                                  (Unaudited)

                                        Three Months         Six Months
                                            Ended              Ended
                                          March 31,           March 31,
                                        ------------     -----------------
                                         2009     2008      2009      2008
                                         ----     ----      ----      ----
    Operating activities:
    Net income                         $6,749   $3,704   $12,558    $7,086
    Adjustments to reconcile net
     income to net cash provided by
     operating activities:
      Amortization of intangible
       assets                           1,541    1,547     3,082     3,113
      Depreciation                      4,104    3,727     8,140     7,398
      Allowance for uncollectible
       accounts receivable               (383)     473      (863)    1,732
      Share-based compensation expense  2,141    2,310     4,644     3,358
      Deferred income taxes             3,360    2,105     6,029     4,134
      Changes in operating assets and
       liabilities, net of effects
       from acquisition:
        Accounts receivable             3,236     (106)    2,371      (636)
        Prepaid expenses and other
         assets                        (1,820)      77    (3,026)   (1,502)
        Accounts payable                1,977      306     2,670      (444)
        Accrued liabilities             2,488     (643)  (10,391)   (8,396)
        Deferred revenues                 353    4,331     2,300     5,933
                                          ---    -----     -----     -----
    Net cash provided by operating
     activities                        23,746   17,831    27,514    21,776
                                       ------   ------    ------    ------
    Investing activities:
      Decrease (increase) in
       restricted cash balances, net
       of change in customer
       funding liabilities              2,306    1,980     1,199      (728)
      Investments in unconsolidated
       affiliate                       (4,020)       -    (4,020)        -
      Purchases of property and
       equipment                       (4,943)  (3,194)  (10,545)   (5,674)
      Payments for acquisition, net
       of cash acquired                  (144)    (904)     (158) (161,850)
                                         ----     ----      ----  --------
    Net cash used in investing
     activities                        (6,801)  (2,118)  (13,524) (168,252)
                                       ------   ------   -------  --------
    Financing activities:
      Payments for issuance of
       common stock                    (2,829)       -    (2,829)        -
      Net (payments) proceeds from
       share-based award activity        (909)     646       927     3,025
      Proceeds from employee stock
       purchase plan activity               -      355       350       583
      Payments on repurchase of
       common stock                         -  (30,888)  (54,773)  (30,888)
      Net proceeds from borrowings          -    7,812         -    23,210
      Repayments on borrowings and
       capital leases                    (430)    (408)     (852)     (831)
                                         ----     ----      ----      ----
    Net cash used in financing
     activities                        (4,168) (22,483)  (57,177)   (4,901)
                                       ------  -------   -------    ------
      Effect of foreign currency
       exchange rate changes on cash
       and cash equivalents              (280)     252    (2,383)       12
                                         ----      ---    ------        --
    Net increase (decrease) in cash
     and cash equivalents              12,497   (6,518)  (45,570) (151,365)
    Cash and cash equivalents at
     beginning of period              209,658   23,988   267,725   168,835
                                      -------   ------   -------   -------
    Cash and cash equivalents at
     end of period                   $222,155  $17,470  $222,155   $17,470
                                     ========  =======  ========   =======



                             Concur Technologies, Inc.
              Reconciliation of GAAP to Non-GAAP Financial Measures
                 (In thousands, except per share and margin data)
                                    (Unaudited)
                                             Three Months       Six Months
                                                 Ended            Ended
                                               March 31,         March 31,
                                             ------------    ----------------
                                             2009     2008     2009     2008
                                             ----     ----     ----     ----
    Operating income:
      Operating income                     $10,762   $6,218  $18,969  $12,083
      Income from operations as
       a % of total revenue
       (Operating Margin)                       17%      12%      16%      12%
      Add back:
        Share-based compensation expense     2,141    2,310    4,644    3,358
        Amortization of intangible assets    1,541    1,547    3,082    3,113
                                             -----    -----    -----    -----
      Non-GAAP operating income            $14,444  $10,075  $26,695  $18,554
                                           =======  =======  =======  =======
        Non-GAAP operating income as a %
         of total revenue (Non-GAAP
         Operating Margin)                      23%      19%      22%      18%

    Net income:
      Net income                            $6,749   $3,704  $12,558   $7,086
      Add back:
        Share-based compensation expense     2,141    2,310    4,644    3,358
        Amortization of intangible
         assets                              1,541    1,547    3,082    3,113
        Income tax expense                   3,796    2,340    7,062    4,515
                                             -----    -----    -----    -----
      Non-GAAP pre-tax income              $14,227   $9,901  $27,346  $18,072
                                           =======   ======  =======  =======

    Diluted net income per share:
      Diluted net income per share           $0.13    $0.08    $0.24    $0.15
      Add back:
        Share-based compensation expense      0.04     0.05     0.09     0.07
        Amortization of intangible
         assets                               0.03     0.03     0.06     0.07
        Income tax expense                    0.08     0.05     0.14     0.10
      Non-GAAP pre-tax diluted
                                             -----    -----    -----    -----
       income per share                      $0.28    $0.21    $0.53    $0.39
                                             =====    =====    =====    =====

    Shares used in calculation of
     diluted non-GAAP income per
     share:                                 51,174   47,349   51,473   47,604



 

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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