Concur Technologies Announces 23% Quarter over Quarter Growth in New Annual Recurring Revenue

REDMOND, Wash., July 28, 2004 - Concur Technologies, Inc. (NASDAQ: CNQR), the world's leading provider of Corporate Expense Management solutions, today reported financial results for its third quarter ended June 30, 2004.

Concur reported net income for the third quarter of fiscal 2004 of $0.7 million, or $0.02 per share, which was at the high end of the range expected by the company. This compares to net income of $0.2 million, or $0.01 per share, for the second quarter of fiscal 2004, and net income of $0.4 million, or $0.01 per share, for the third quarter of fiscal 2003. Excluding the non-cash amortization of intangible assets recorded in the third quarter of fiscal 2004, pro forma net income for the quarter was $0.9 million, or $0.03 per share. Fiscal 2004 third quarter revenues were $14.5 million, compared to $13.2 million for the second quarter of fiscal 2004, and to $14.2 million for the third quarter of fiscal 2003.

"The broad appeal of Concur's subscription service model is the catalyst behind our growth and our positive business outlook. Once again, we have raised our expectations for Annual Recurring Revenue in fiscal 2004. Quarterly subscription revenues topped $10 million for the first time in our company's history, and grew 21% year over year. Just as importantly, our guidance model affords transparency to investors. Investors can approximate subscription revenue for the September 2004 quarter, the December 2004 quarter and the March 2005 quarter," said Steve Singh, chairman and CEO of Concur Technologies.

Singh continued, "Total quarterly revenue, EPS, cash flow from operations, deferred revenue and subscription revenue were all up quarter over quarter and year over year. Our strong financial performance continues to be driven by the rapid return on investment and predictable cost structure our services afford our customers."

Financial Highlights

  • Subscription revenue was $10.4 million for the third quarter of fiscal 2004 or 72% of total revenue, compared with $9.7 million for the second quarter of fiscal 2004 or 73% of total revenue, and compared with $8.5 million or 60% of total revenue for the third quarter of fiscal 2003.
  • Annual recurring revenue generated during the third quarter of fiscal 2004 was $3.7 million, compared with $3.0 million for the second quarter of fiscal 2004, and compared with $1.5 million for the third quarter of fiscal 2003. Annual recurring revenue is the one-year value of new and incremental subscription contracts signed in the applicable quarter.
  • Cash flows provided by operations were $1.7 million for the third quarter of fiscal 2004, compared with $1.2 million for the second quarter of fiscal 2004, and compared with cash flows used in operations of ($0.7) million for the third quarter of fiscal 2003.
  • Cash and cash equivalents were $23.9 million at the end of the third quarter of fiscal 2004, compared with $23.1 million at the end of the second quarter of fiscal 2004, and compared with $19.4 million at the end of the third quarter of fiscal 2003.
  • Gross margin was 59% for the third quarter of fiscal 2004 compared with 60% for the second quarter of fiscal 2004, and compared with 61% for the third quarter of fiscal 2003.
  • Operating margin was 4% for the third quarter of fiscal 2004 compared with 1% for the second quarter of fiscal 2004, and compared with 2% for the third quarter of fiscal 2003.

Business Highlights

  • Concur signed contracts with new and existing customers, including Anadarko Petroleum, Booz Allen Hamilton, Campus Crusade for Christ, Claas Omaha LLC, FBL Financial Group Inc., Interpublic Group of Companies Inc., Polycom Inc., Regis Corporation, RMC Industries Corporation, Tennant Company, Universal Orlando, and USI Holdings Corporation.
  • Concur announced the availability of Concur Analysis Service. Concur Analysis Service puts an extensive range of reporting capabilities at the fingertips of business decision makers, providing dynamic views into expense data, real-time spending analysis, and the ability to create and publish a variety of reports on-the-fly. As a fully integrated component within Concur Expense Service, Concur Analysis Service requires no additional investment in infrastructure or software.
  • Concur continued to see strong contributions from partners including Accenture, ADP, Microsoft Business Solutions, and USBank. Consistent with past performance from ADP in the June quarter, Concur experienced exceptional results from that channel specifically. In addition, Concur's relationship with Accenture continued to build momentum based on the signing of a customer agreement with a Global 100 financial institution.

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.

  • Concur expects total revenues to be between $15.0 and $16.0 million for the fourth quarter of fiscal 2004, and between $56.0 million and $57.0 million for fiscal 2004.
  • Concur expects its gross margin to be between 56% and 60% for the fourth quarter of fiscal 2004, and between 58% and 60% for the fiscal year.
  • Concur expects its operating margin to be between 0% and 9% for the fourth quarter of fiscal 2004, and between 2% and 5% for the fiscal year.
  • Concur expects earnings per share of between $0.00 and $0.04 for the fourth quarter of fiscal 2004, and between $0.04 and $0.08 for the fiscal year. Excluding the non-cash amortization of intangible assets expected to be recorded in fiscal 2004, pro forma earnings per share is expected to be between $0.07 and $0.11 for the fiscal year.
  • Concur expects annual recurring revenues generated during fiscal 2004 to be between $12.0 million and $14.0 million.
  • Concur expects earnings per share of between $0.25 and $0.40 for fiscal 2005. Excluding the non-cash amortization of intangible assets expected to be recorded in fiscal 2005, pro forma earnings per share is expected to be between $0.28 and $0.43 for the year.

 

 

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

All company or product names are trademarks and/or registered trademarks of their respective owner. This press release contains forward-looking statements that are inherently uncertain. These forward-looking statements, such as the statements made by Mr. Singh and the statements in the Business Outlook section, 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 delays in market adoption of our subscription service offerings; potential increases in the rate of attrition of customers of our subscription service offerings; the current general economic environment, including 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, which makes the prediction of future operating results difficult; 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 Adair, Concur Technologies, Inc., 425-497-6439, johna@concur.com

Press Contact:
Robert Nachbar, Barokas Public Relations, 206-344-3140, robert@barokas.com

 

CONCUR TECHNOLOGIES, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

  Three months ended   Nine months ended
  June 30,   June 30,

2004
2003
 
2004
2003
Revenues:
Subscription $10,365 $8,546   $29,239 $24,727
Consulting 2,985 3,085   8,212 11,300
License 1,107 2,543   3,639 6,553

Total revenues

14,457

14,174

 

41,090

42,580

Expenses:
Cost of operations 5,922 5,536   16,704 17,733
Sales and marketing 3,663 3,654   10,495 11,081
Research and development 2,177 2,627   6,661 8,008
General and administrative 1,814 1,750   5,145 5,078
Amortization of intangible asset 285 285   855 855

Total expenses

13,861

13,852
 
39,860

42,755
 
Income (loss) from operations 596 322
 
1,230 (175)
 
Other income, net 58 77   227 132
 
Net income (loss)
$654

$399

 

$1,457

$(43)

Net income (loss) per share
Basic $0.02 $0.01   $0.04 $(0.00)
Diluted $0.02 $0.01   $0.04 $(0.00)

Weighted shares outstanding
Basic 32,753 31,433   32,488 30,998
Diluted 36,892 35,630   36,816 30,998

Pro Forma Results
Pro forma net income, which excludes amortization of intangible asset $939 $684   $2,312 $812
           
Pro forma net income per share, which excludes amortization of intangible asset          
Basic $0.03 $0.02   $0.07 $0.03
Diluted $0.03 $0.02   $0.06 $0.02
           
Shares used in calculation of basic and diluted pro forma net income per share          
Basic 32,753 31,433   32,488 30,998
Diluted 36,892 35,630   36,816 34,600
 
The pro forma results presented above are for informational purposes only and are not prepared in accordance with accounting principles generally accepted in the United States. This pro forma information presents our operating results after excluding the non-cash amortization expense of the intangible asset relating to our acquisition of Captura Software, Inc., which totaled $0.3 million and $0.9 million in the three and nine month periods presented, respectively.

 

CONCUR TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited)

 


June 30,
2004

  September 30,
2003

ASSETS
 

Current assets

Cash and cash equivalents $23,950   $21,607
Accounts receivable, net 9,467   7,862
Prepaid expenses and other current assets 3,093   2,663
Total current assets
36,510
 
32,132
Property and equipment, net 4,205   1,331
Restricted cash 550   550
Intangible assets 7,219   8,074
Other assets 2,003
  886
Total assets $50,487
  $42,973

LIABILITIES & STOCKHOLDERS' EQUITY
 
Current liabilities
Accounts payable and accrued liabilities $4,976   $4,478
Current portion of long-term obligations 440   768
Current portion of deferred revenues 11,363   9,905
Total current liabilities
16,779
 
15,151
Long-term obligations, net of current 65   199
Long-term deferred revenues, net of current 4,349
  2,015
Total liabilities 21,193
  17,365

Stockholders' equity
Common stock, $0.001 par value:
Authorized - 60,000; issued and outstanding - 32,851 and 32,142
239,554   237,402
Accumulated other comprehensive income 77   -
Accumulated deficit (210,337)
  (211,794)
Total stockholders' equity 29,294
  25,608
Total liabilities and stockholders' equity $50,487
  $42,973

 

CONCUR TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

 

  Three months ended   Nine months ended
  June 30,   June 30,

2004
2003
 
2004
2003
Operating activities
Net income (loss) $654 $399   $1,457 $(43)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Amortization of intangible asset 285 285   855 855
Depreciation 535 601   1,344 2,372
Provision for allowance for accounts receivable 7 53   431 253
Changes in operating assets and liabilities:      
Accounts receivable (1,372) (1,479)   (2,019) 829
Prepaid expenses, deposits, and other assets (785) (75)   (1,534) (605)
Accounts payable 40 46   325 (988)
Accrued liabilities 43 59   94 (805)
Deferred revenues 2,264
(588)
  3,771
1,594
Net cash provided by (used in) operating activities 1,671 (699)   4,724 3,462
 

Investing activities
Purchases of property and equipment (1,608) (277)   (4,209) (734)
Maturities of marketable securities - 1,024   - 2,024
Acquisition of Captura Software Inc., net of cash acquired - (41)   - (551)
Net cash (used in) provided by investing activities (1,608) 706   (4,209) 739
 

Financing activities
Proceeds from issuance of common stock from exercise of stock options 343 2,113   1,397 2,451
Proceeds from issuance of common stock from Employee Stock Purchase Plan 755 249   755 249
Proceeds from borrowings - -   289 915
Payments on borrowings and capital leases (235) (381)   (724) (1,508)
Increase in restricted cash balances -
-
  -
(700)
Net cash provided by financing activities 863 1,981   1,717 1,407
           
Effect of foreign currency exchange rates on cash and cash equivalents (29) -   111 -
           
Net increase in cash and cash equilvalents 897 1,988   2,343 5,608
Cash and cash equivalents at beginning of period 23,053
17,366
  21,607
13,746

Cash and cash equivalents at end of period
$23,950 $19,354   $23,950 $19,354

 

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

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