Concur Technologies Exceeds Revenue and Earnings Expectations for 3rd Quarter Fiscal 2006 Driven by 62% Growth in Subscriptions

REDMOND, Wash., July 26, 2006 - Concur Technologies, Inc. (NASDAQ: CNQR), the world's leading provider of on-demand business services that automate Corporate Expense Management (CEM), today reported financial results for its third quarter ended June 30, 2006.

Concur reported revenue for the third quarter of fiscal 2006 of $26.9 million, which was driven by 62% year-over-year growth in subscription revenue. Total revenue for the quarter was up 44% from the year-ago quarter. Fiscal 2006 third quarter net income, which includes amortization of intangible assets, share-based compensation, and the release of reserves against deferred tax assets, was $31.6 million, or $0.79 per share. Excluding the benefit of the release of reserves against deferred tax assets, fiscal 2006 third quarter net income was $2.4 million, or $0.06 per share, and was $0.01 per share higher than the company expected. This compares to net income of $1.7 million, or $0.05 per share, in the year-ago quarter.

"Total revenue, subscription revenue, earnings and free cash flow reached record levels as the company continues to see strong demand for its services. We are raising our revenue guidance for the year and, excluding the impact of becoming book-tax effective, our earnings expectations for the year are exactly the same as discussed last quarter," said Steve Singh, chairman and chief executive officer.

Singh continued, "Concur is redefining travel and expense management by offering our customers one seamless end-to-end service that combines online travel booking and expense reporting - delivering both an unparalleled user experience and robust analytics to drive better decision making. By enabling companies to compare booking and itinerary data to actual expense data, Concur is providing customers with greater visibility into employee business travel expenses and helping them drive even more costs out of their businesses."

Financial Highlights

  • Total revenue was $26.9 million for the third quarter of fiscal 2006, up 44% compared to the year-ago quarter and up 14% sequentially.
  • Subscription revenue of $22.4 million for the third quarter of fiscal 2006 grew 62% from the year-ago quarter and 16% sequentially.
  • Net income was $31.6 million, or $0.79 per share, for the third quarter of fiscal 2006, up $0.74 compared to the year-ago quarter and up $0.77 sequentially. Excluding the benefit of the release of reserves against deferred tax assets of $0.73 per share, fiscal 2006 third quarter net income was $0.06 per share, and was $0.01 per share higher than the company expected.
  • Non-GAAP net income, which excludes share-based compensation expense, intangible amortization expense, and the benefit associated with the release of reserves against deferred tax assets, was $4.6 million, up 130% compared to the year-ago quarter and up 71% sequentially.
  • Non-GAAP earnings per share for the third quarter of fiscal 2006 totaled $0.12, up $0.06 compared to the year-ago quarter, and up $0.05 sequentially.
  • A reduction to the provision for income taxes from the release of reserves against deferred tax assets was recognized in the quarter totaling $29.1 million, or $0.73 per share.
  • Deferred revenue was $25.0 million for the third quarter of fiscal 2006, up 26% compared to the year-ago quarter and up 3% sequentially.
  • Cash flow from operations was $4.8 million for the third quarter of fiscal 2006, down 18% from the year-ago quarter and up 78% sequentially.
  • Operating margin was 10% for the third quarter of fiscal 2006, up 1 percentage point from the year-ago quarter and up 5 percentage points sequentially.
  • Non-GAAP operating margin, which excludes share-based compensation expense and intangible amortization expense, was 18% for the third quarter of fiscal 2006, up 7 percentage points from the year ago quarter, and up 5 percentage points sequentially.

Recent Business Highlights

  • Concur signed contracts with new and existing customers, including Combest, Inc., Dole Food Company, Inc., Emergin, Inc., Freightliner LLC, Mitsubishi UFJ Securities International plc, The Nature Conservancy, Oshkosh Truck Corporation, Royal Caribbean Cruises Ltd., Safety-Kleen Systems, Inc., Stein Mart, Webasto Product NA and Willis North America, Inc.
  • Concur announced at the National Business Travel Association's (NBTA) International Conference and Exposition the debut of a seamless combination of Cliqbook® Travel and Concur® Expense Service to help customers further streamline the Corporate Expense Management process.
  • Concur announced that Cliqbook Travel customers now have access to content from Park N' Fly Network™ and Virgin Blue Airlines, along with innovative new hotel booking features.
  • Concur was selected by BusinessWeek Magazine to its "100 Hot Growth Companies" list.
  • Concur was selected by Fortune Small Business Magazine to its "America's 100 Fastest Growing Small Companies" list.
  • Concur was selected by Business 2.0 Magazine to its "100 Fastest-Growing Tech Companies" list.
  • Concur was selected by Fortune Magazine to its "Global Outsourcing 100" list.
  • Concur was selected by the Seattle Times to its "Northwest 100" list.

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. Our current expectations now include the impact of an estimated effective tax rate for all periods presented.

 

  • Concur reaffirms its fiscal 2006 and 2007 earnings expectations, and is updating its financial measures to reflect becoming tax effective on both a GAAP and Non-GAAP basis.
  • Concur expects total revenue to be $26.0 million for the fourth quarter of fiscal 2006, $96.0 million for fiscal 2006, and to be between $120.0 million and $125.0 million for fiscal 2007.
  • Concur expects earnings per share for the fourth quarter of fiscal 2006 to be $0.03 including an estimated effective tax rate of 49% and non-GAAP earnings per share to be $0.07 including an estimated effective tax rate of 34%. Excluding the impact of the estimated effective taxes, Concur expects earnings per share for the fourth quarter of fiscal 2006 to be $0.06 and non-GAAP earnings per share to be $0.11.
  • Concur expects earnings per share for fiscal 2006 to be $0.86 per share including the benefit of the release of reserves against deferred tax assets of $0.73 per share and the estimated effective tax expense on fiscal 2006 fourth quarter earnings of $0.03 per share.
  • Concur expects the fiscal 2007 operating margin to grow by 100 basis points over fiscal 2006.

About Concur Technologies, Inc.
Concur Technologies, Inc. (NASDAQ: CNQR) is the world's leading provider of on-demand business services that automate Corporate Expense Management (CEM). Concur's integrated suite of on-demand CEM services enables organizations of all sizes to automate and control spending - driving the costs out of the corporate travel booking and expense reporting processes while providing enhanced visibility and actionable expense analysis. Concur's services reach millions of employees across thousands of organizations around the world - streamlining business processes, reducing operating costs and improving internal controls - while empowering companies to apply greater insight into their spending patterns. More information about Concur is available at www.concur.com.

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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 and penetration of our service offerings; potential difficulties associated with our deployment and support of our products and services; our ability to manage expected growth of our service offerings, including those integrating the Outtask online travel management service; retention and expansion of customers; continued use and adoption of on-demand services; the scalability of the hosting infrastructure for our integrated service offerings; changes in the level of business travel that may reduce the use of our products and services or inhibit new sales of our integrated products and services; potential difficulties associated with strategic relationships and with development of new products and services, including those incorporating Outtask offerings; uncertain market acceptance of our combined products and services or future products and services; the overall level of customer demand for corporate expense management products and services; uncertainty with respect to new laws, regulations, and standards, notably those adopted in connection with the Sarbanes-Oxley Act of 2002; unanticipated changes in the valuation of our deferred tax assets and liabilities or by changes in tax laws or their interpretation; and fluctuations with respect to the reporting of compensation cost relating to share-based payment transactions.

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.

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