Year-over-year third quarter revenue grows 13% driving 63% earnings growth
REDMOND, Wash., Aug. 5, 2009 -- Concur (Nasdaq: CNQR), the world's leading provider of on-demand Employee Spend Management services, today reported financial results for its third quarter ended June 30, 2009.
Concur reported total revenue for the third quarter of fiscal 2009 of $62.2 million, driven by subscription revenue which was up 14% from the year-ago quarter. Total revenue for the quarter was up 13% from the year-ago quarter. Fiscal 2009 third quarter net income was $7.2 million, or $0.14 per share, exceeding company expectations. This compares to net income of $4.5 million, or $0.09 per share, in the year-ago quarter.
"We are very pleased with our fiscal third quarter performance, as subscription revenue grew four percent quarter-over-quarter and non-GAAP EPS grew 14% quarter-over-quarter,” said Steve Singh, chairman and CEO of Concur. “New customer growth in the quarter was among the strongest in our history and we see a solid demand environment for our services as we head into the fourth quarter of fiscal 2009.”
Singh continued, “Against the backdrop of an environment that is beginning to stabilize, our ongoing ability to execute well, and the large-scale opportunity in front of us, we are beginning to reaccelerate our investments across the business while we continue to execute on our core objectives of expanding distribution, driving innovation in our industry, and setting the bar for service excellence. For example, we recently announced our acquisition of Etap-On-Line, which expands our presence in the European market and underscores our ongoing commitment to providing both global and local leadership to the travel and expense industry.”
Financial Highlights
-- Total revenue was $62.2 million for the third quarter of fiscal 2009, up 13% compared to the year-ago quarter, and up 0.4% sequentially. Total subscription revenue was $60.9 million for the third quarter of fiscal 2009, up 14% compared to the year-ago quarter, and up 4% sequentially.
-- Net income was $7.2 million, or $0.14 per share, for the third quarter of fiscal 2009, compared to $4.5 million, or $0.09 per share, for the year-ago quarter.
-- Non-GAAP pretax income was $16.5 million, or $0.32 per share, for the third quarter of fiscal 2009, compared to $11.3 million, or $0.24 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 26% for the third quarter of fiscal 2009, up from 21% the year-ago quarter.
-- Cash flows from operations were $18.1 million for the third quarter of fiscal 2009, down 7% from the year-ago quarter.
Recent Business Highlights
-- Concur announced the acquisition of Etap-On-Line, a leading European provider of business travel and expense management solutions based in Paris, France. Concur expects the acquisition, which closed on August 1, 2009, to be accretive to fiscal 2010 non-GAAP earnings.
-- Concur released Concur® Mobile for general availability. This innovative companion for business travelers extends the power of Concur® Travel & Expense by allowing 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’s market-leading corporate booking technology is the first to support the TSA’s new Secure Flight Program requirements, making it easy for corporate travel managers to be in compliance.
-- Concur announced that Concur clients can now access car rental inventory from Sixt AG, a leading European car rental company and global provider of high-quality mobility services, and make reservations via a direct connect between Sixt AG and Concur’s online corporate travel booking services.
-- Concur announced a new partner service in conjunction with Ireland-based Tax Back International (TBI) to help Concur clients reclaim foreign value-added tax (VAT) costs.
-- Concur announced that Concur chairman and CEO Steve Singh was recognized by Business Travel News (BTN) as one the “Top of the Top 25s” leaders in the business travel industry.
-- Concur ranked 5th on Seattle Business Magazine’s list of 100 Best Companies To Work For.
-- Concur was placed 12th on the Northwest 100, The Seattle Times' annual ranking of the region's best-performing public companies.
-- CIOZone.com named Concur as one of the 50 Fastest-Growing Software Companies.
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 fourth quarter of fiscal 2009 to be $0.11, assuming an estimated effective tax rate of 36%, and non-GAAP pre-tax earnings per share to be $0.27.
-- Concur expects earnings per share for fiscal 2009 to be $0.49, assuming an estimated effective tax rate of 36%, and non-GAAP pre-tax earnings per share to be $1.12.
-- Concur expects the fiscal 2009 non-GAAP operating margin to be 22% or more for the year as a whole.
-- Concur expects cash flows from operations in fiscal 2009 to be between $64 million and $66 million, and capital expenditures of approximately $19 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 acquisition of Etap-On-Line; 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 Nine Months
Ended Ended
June 30, June 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues:
Subscription $60,915 $53,240 $176,294 $150,615
Consulting and other 1,311 1,689 6,487 7,329
----- ----- ----- -----
Total revenues 62,226 54,929 182,781 157,944
Expenses (1):
Cost of operations 19,130 17,176 55,942 50,986
Sales and marketing 17,998 15,451 53,330 42,543
Systems development and
programming 5,822 5,349 18,201 17,162
General and administrative 6,839 7,937 20,820 23,041
Amortization of intangible
assets 1,542 1,542 4,624 4,655
----- ----- ----- -----
Total expenses 51,331 47,455 152,917 138,387
------ ------ ------- -------
Operating income 10,895 7,474 29,864 19,557
Other income (expense):
Interest income 372 154 1,840 584
Interest expense (123) (349) (373) (1,202)
Other, net 175 (111) (392) (170)
--- ---- ---- ----
Total other income (expense),
net 424 (306) 1,075 (788)
--- ---- ----- ----
Income before income tax 11,319 7,168 30,939 18,769
Income tax expense 4,076 2,712 11,138 7,227
------ ------ ------- -------
Net income $7,243 $4,456 $19,801 $11,542
====== ====== ======= =======
Net income per share available
to common stockholders:
Basic $0.15 $0.10 $0.41 $0.27
Diluted 0.14 0.09 0.38 0.24
Weighted average shares used in
computing net income per share:
Basic 48,560 43,136 48,603 43,554
Diluted 51,608 46,969 51,528 47,393
--------------------------------
(1) Includes share-based
compensation as follows:
Cost of operations $551 $487 $1,261 $1,171
Sales and marketing 1,762 1,044 3,609 2,340
Systems development and
programming 481 303 1,287 757
General and administrative 824 769 2,105 1,693
--- --- ----- -----
Total share-based
compensation $3,618 $2,603 $8,262 $5,961
====== ====== ====== ======
Concur Technologies, Inc.
Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
June 30, September 30,
2009 2008
---- ----
Assets
Current assets:
Cash and cash equivalents $128,955 $267,725
Short-term investments 114,570 -
Restricted cash 2,481 3,055
Accounts receivable, net of allowance of
$4,166 and $5,543 38,086 38,479
Prepaid expenses 3,131 3,160
Deferred tax assets 26,405 14,289
Deferred costs and other current assets 14,011 14,104
------ ------
Total current assets 327,639 340,812
Property and equipment, net 34,536 32,304
Investments 17,057 -
Deferred costs and other long-term assets 18,454 16,067
Intangible assets, net 34,485 39,108
Deferred tax assets 25,643 47,257
Goodwill 165,471 165,471
------- -------
Total assets $623,285 $641,019
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $3,326 $4,198
Customer funding liabilities 42,760 22,470
Accrued compensation 10,035 18,308
Acquisition-related liabilities 92 2,036
Other accrued and current liabilities 8,069 8,442
Long-term debt, current portion 1,240 1,505
Deferred revenues, current portion 32,546 29,572
------ ------
Total current liabilities 98,068 86,531
Long-term debt 491 1,328
Deferred rent 1,743 2,126
Deferred revenues 13,232 12,511
Non-current tax liabilities 4,594 3,985
----- -----
Total liabilities 118,128 106,481
------- -------
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:
48,633 and 50,286
Additional paid-in capital 631,930 679,526
Accumulated deficit (125,027) (144,828)
Accumulated other comprehensive loss (1,795) (210)
------ ----
Total stockholders' equity 505,157 534,538
------- -------
Total liabilities and stockholders' equity $623,285 $641,019
======== ========
Concur Technologies, Inc.
Cash Flow Statements
(In thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
June 30, June 30,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Operating activities:
Net income $7,243 $4,456 $19,801 $11,542
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization of intangible
assets 1,542 1,542 4,624 4,655
Depreciation 4,143 3,793 12,283 11,191
Allowance for uncollectible
accounts receivable (513) 108 (1,376) 1,840
Share-based compensation expense 3,618 2,603 8,262 5,961
Deferred income taxes 3,500 2,505 9,529 6,639
Changes in operating assets and
liabilities, net of effects from
acquisition:
Accounts receivable (710) 1,602 1,661 966
Prepaid expenses and other
assets (1,202) (1,153) (4,228) (2,655)
Accounts payable (3,521) (78) (851) (522)
Accrued liabilities 2,543 2,025 (7,848) (6,371)
Deferred revenues 1,414 1,967 3,714 7,900
----- ----- ----- -----
Net cash provided by operating
activities 18,057 19,370 45,571 41,146
------ ------ ------ ------
Investing activities:
Purchases of investments (127,582) - (127,582) -
Increase in customer funding
liabilities, net of changes in
restricted cash 19,656 2,193 20,855 1,465
Investments in unconsolidated
affiliate (25) - (4,045) -
Purchases of property and
equipment (3,803) (4,057) (14,348) (9,731)
Payments for acquisition, net
of cash acquired (1,706) (1,292) (1,864) (163,142)
------ ------ ------ --------
Net cash used in investing
activities (113,460) (3,156) (126,984) (171,408)
-------- ------ -------- --------
Financing activities:
Payments for issuance of common
stock - - (2,829) -
Net proceeds from share-based
award activity 1,262 2,584 2,189 5,609
Proceeds from employee stock
purchase plan activity 539 263 889 846
Payments on repurchase of
common stock - (12,875) (54,773) (43,763)
Net (payments) proceeds from
borrowings - (4,021) - 19,189
Repayments on borrowings and
capital leases (249) (416) (1,101) (1,247)
---- ---- ------ ------
Net cash provided by (used in)
financing activities 1,552 (14,465) (55,625) (19,366)
----- ------- ------- -------
Effect of foreign currency
exchange rate changes on cash
and cash equivalents 651 687 (1,732) 699
--- --- ------ ---
Net (decrease) increase in cash
and cash equivalents (93,200) 2,436 (138,770) (148,929)
Cash and cash equivalents at
beginning of period 222,155 17,470 267,725 168,835
------- ------ ------- -------
Cash and cash equivalents at end
of period $128,955 $19,906 $128,955 $19,906
======== ======= ======== =======
Concur Technologies, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share and margin data)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
Operating income:
Operating income $10,895 $7,474 $29,864 $19,557
Income from operations as a
% of total revenue
(Operating Margin) 18% 14% 16% 12%
Add back:
Share-based compensation
expense 3,618 2,603 8,262 5,961
Amortization of intangible
assets 1,542 1,542 4,624 4,655
----- ----- ----- -----
Non-GAAP operating income $16,055 $11,619 $42,750 $30,173
======= ======= ======= =======
Non-GAAP operating income
as a % of total revenue
(Non-GAAP Operating
Margin) 26% 21% 23% 19%
Net income:
Net income $7,243 $4,456 $19,801 $11,542
Add back:
Share-based compensation
expense 3,618 2,603 8,262 5,961
Amortization of intangible
assets 1,542 1,542 4,624 4,655
Income tax expense 4,076 2,712 11,138 7,227
----- ----- ------ -----
Non-GAAP pre-tax income $16,479 $11,313 $43,825 $29,385
======= ======= ======= =======
Diluted net income per share:
Diluted net income per share $0.14 $0.09 $0.38 $0.24
Add back:
Share-based compensation
expense 0.07 0.06 0.16 0.13
Amortization of intangible
assets 0.03 0.04 0.09 0.10
Income tax expense 0.08 0.05 0.22 0.15
---- ---- ---- ----
Non-GAAP pre-tax diluted
income per share $0.32 $0.24 $0.85 $0.62
===== ===== ===== =====
Shares used in calculation of
diluted non-GAAP income per
share: 51,608 46,969 51,528 47,393
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.
