| [November 03, 2005] |
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Stellent Reports Record Quarterly Revenues of $30.1 Million; Company Profitable on a GAAP Basis; Generates Strong Year-over-Year Growth in Universal Content Management License Revenues
EDEN PRAIRIE, Minn. --(Business Wire)-- Nov. 3, 2005 -- Stellent, Inc. (Nasdaq:STEL), a global provider of content management solutions, announced today financial results for the second quarter ended Sept. 30, 2005.
Second quarter fiscal 2006 revenues were $30.1 million, an increase of 8% over the $28.0 million reported for the same period last year. Revenues for the six-month period ended Sept. 30, 2005 were $58.7 million, a 16% increase over revenues of $50.6 million for the comparable period of fiscal 2005.
On a Generally Accepted Accounting Principles (GAAP) basis, net income for the quarter ended Sept. 30, 2005 was $0.6 million, or $0.02 per share on a basic and diluted share basis, compared with net income of $0.8 million, or $0.03 per share on a basic and diluted share basis, for the quarter ended Sept. 30, 2004. GAAP net income for the six months ended Sept. 30, 2005 was $1.6 million, or $0.06 per share on a basic and diluted share basis, compared with a net loss of $(3.1) million, or $(0.12) per share on a basic and diluted share basis, for the same period of fiscal 2005.
Non-GAAP net income was $2.2 million, or $0.08 per share on a basic and diluted share basis, for the quarter ended Sept. 30, 2005, compared with non-GAAP net income of $1.6 million, or $0.06 per share on a basic and diluted share basis, for the quarter ended Sept. 30, 2004. Non-GAAP net income for the six months ended Sept. 30, 2005 was $3.9 million, or $0.14 per share on a basic and diluted share basis, compared with net income of $1.7 million, or $0.07 per share on a basic and diluted share basis, for the same period of fiscal 2005.
Stellent believes the non-GAAP results better reflect its operating performance as they exclude the effects of non-cash or non-recurring charges primarily related to expenses such as acquisition-related sales, marketing and other costs; amortization of acquired intangible assets and unearned compensation; and restructuring or reorganization charges.
"We are pleased to have met or exceeded our second quarter financial targets, including achieving record quarterly revenues of $30.1 million and maintaining profitability on both a GAAP and non-GAAP basis," said Robert Olson, president and chief executive officer for Stellent. "At the same time, we produced positive cash flow from operations, ending the quarter with a cash and marketable securities balance of approximately $70 million, up from $68.2 million last quarter.
"Stellent(R) Universal Content Management(TM) license revenue in particular showed strong, organic growth during the quarter, with 49 percent of this revenue generated from new customers. Specifically, we posted year-over-year Universal Content Management license revenue growth of 51 percent globally and 74 percent in North America, which substantially countered a decrease in year-over-year total license revenue attributable to one large OEM transaction that occurred in the September 2004 quarter. The strong growth in second quarter Universal Content Management license revenues was primarily driven by compliance and multi-site management initiatives. Universal Content Management services revenue also showed solid growth within the quarter.
"We secured 57 new customers during the second quarter -- our strongest new customer adoption rate in more than two years -- including Universal Content Management customers Trend Micro, Samsung Electronics, the U.S. Department of Homeland Security, the U.S. Army, Rite Aid, Moody's Japan and American Express Incentive Services. A number of existing customers continued to expand their Stellent Universal Content Management implementations, including the Bureau of Land Management, Memorial Sloan-Kettering, UMB Financial, Bell Canada, Los Angeles Times, Wendy's International, Argonne National Laboratory, O'Reilly Automotive, U.S. Department of Commerce and Regis Corp. Also during the second quarter, our Content Components Division signed or renewed contracts with companies such as KPMG, Canon, Ricoh, Kroll Ontrack, Postini and IronPort Systems.
"We solidified Stellent's leadership position in our top three target markets -- financial compliance, multi-site Web content management and enterprise content management (ECM) via a unified architecture -- through significant product enhancements, receiving strong commendations from leading industry analysts. For example, we released version 7.5 of Stellent Site Studio, the multi-site Web content management component of Stellent Universal Content Management, during the second quarter. This new version enhances the experience of all users involved in multi-site management -- information technology staff, Web developers, site designers, content contributors and content consumers -- offering expanded Web site lifecycle management capabilities and more robust, flexible in-context contribution.
"On the compliance front, we expanded our retention management capabilities to allow users to apply disposition and retention rules to any content item, not just records. And, we were recently named in the 'visionary' quadrant in Gartner, Inc.'s 'Magic Quadrant for Financial Compliance Process Management Software, 2005'(1) report, which was published Oct. 24, 2005. This recognition reaffirms our position as one of the top pure-play content management vendors providing financial compliance solutions.
"Similarly, we recently received multiple industry accolades for our unified ECM product suite. We were named 'the strongest pure-play ECM suite offering' by Forrester in its Oct. 7, 2005 report, 'The Forrester Wave(TM): Enterprise Content Management Suites, Q3 2005,'(2) and KMWorld also named Stellent Universal Content Management 7.5 a 'Trend-Setting Product of 2005,' recognizing the system for its superior usability, flexibility and adoption, and low total cost of ownership. These rave reviews come on the heels of our second consecutive 'Best of Show Award' for the 'Best Enterprise Content Management Suite,' which we won at the AIIM 2005 Conference and Exposition earlier this year.
"We believe our mounting success in these key areas, as well as the markets for our OEM transformation technology, will help drive our ability to grow profitably, and increase market share and shareholder value during fiscal 2006."
Other Recent Highlights
Customers
-- 4,557 customers -- comprised of 3,414 corporate content management customers; 506 OEM customers; and 637 corporate customers for desktop viewing and conversion technology -- have selected Stellent solutions to power their content-centric business applications.
Corporate news
-- Software Magazine named Stellent one of the world's largest software providers for the seventh consecutive year.
-- Stellent was recognized on Supply & Demand Chain Executive's annual list of the top supply and demand chain vendors, the Supply & Demand Chain Executive 100.
-- Stellent was selected to Manufacturing Business Technology's 2005 Global 100, an annual list of the world's top information technology (IT) providers to the manufacturing industry.
Products
-- Stellent announced at ARMA 2005, the leading records management conference, new retention management capabilities for Stellent Universal Content Management 7.5. These capabilities leverage the industry-leading Stellent Records Management system, a Department of Defense (DoD) 5015.2 Chapter 2- and Chapter 4-certified solution. Stellent's retention policy engine has been extended to cover general content, and to allow usage analytics and other factors to drive the content retention and disposition process.
-- Stellent released version 7.5 of Stellent Site Studio, the multi-site Web content management component of the enterprise-scalable Stellent Universal Content Management system. The new version offers expanded site lifecycle management capabilities and more robust, flexible in-context contribution.
-- KMWorld named Stellent Universal Content Management 7.5 a "Trend-Setting Product of 2005," a distinction that recognizes trend-setting products for their superior usability, flexibility and adoption, and low total cost of ownership.
-- Stellent received a 2005 WebAward from the Web Marketing Association for the Stellent Universal Content Management implementation at the Susan G. Komen Breast Cancer Foundation, the nation's largest private funder of breast cancer research.
-- Stellent announced expanded functionality for the Stellent Imaging and Business Process Management (BPM) product suite, which increases the system's manageability and performance, and enhances information lifecycle management and usability.
-- Stellent announced support for the recently released Sun StorEdge(TM) 5310 Compliance Archiving System, which couples the Sun StorEdge 5310 NAS Appliance with Sun StorEdge Compliance Archiving Software to provide compliance-enabling features for authenticity, integrity, ready access and security.
Partners
-- Stellent signed three new reseller partners during its second quarter: Pomeroy IT Solutions of Hebron, Ky.; Telemach International, Inc. of Doylestown, Pa.; and Tushaus Computer Services, Inc. of Milwaukee, Wis.
Conference call
Stellent will host a conference call and Webcast for investors on Thursday, Nov. 3, 2005 at 4:00 p.m. Central Time. Callers in the United States can dial 1-877-282-0523, and international callers can dial 1-303-542-7976. Access to the live Webcast will be available via the investor relations area of Stellent's Web site (www.stellent.com) on the day of the event. Investors unable to participate in the live conference call and Webcast may access a replay of the event via the investor relations area of Stellent's Web site.
Industry analyst reports
(1)(a) Gartner "Magic Quadrant for Financial Compliance Process Management Software, 2005," F. Caldwell, et al, Oct. 24, 2005. www.stellent.com/gartnerfcpmmq
(2) Forrester "Enterprise Content Management Suites Scorecard Summary: Stellent" and "The Forrester Wave: Enterprise Content Management Suites, Q3 2005," Forrester Research, Inc., October 2005. www.stellent.com/forresterecmwave
About Stellent, Inc.
Stellent, Inc. (www.stellent.com) is a global provider of content management software solutions that drive rapid success for customers by enabling fast implementations and generating quick, broad user adoption. With Stellent Universal Content Management, customers can easily deploy multiple line-of-business applications -- such as public Web sites, secure intranets and extranets, compliance processes, and marketing brand management -- and also scale the technology to support multi-site management and enterprise-wide content management needs.
More than 4,500 customers worldwide -- including Procter & Gamble, Merrill Lynch, Los Angeles County, The Home Depot, British Red Cross, ING, Vodafone, Georgia Pacific, Bayer Corp., Coca-Cola FEMSA, Emerson Process Management and Genzyme Corp. -- have selected Stellent solutions to power their content-centric business applications. Stellent is headquartered in Eden Prairie, Minn. and maintains offices throughout the United States, Europe, Asia-Pacific and Latin America.
Any forward-looking statements in this release, including, without limitation, statements regarding growing profitability and increasing market share and shareholder value, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties including, without limitation, risks of intellectual property litigation, risks in technology development and commercialization, risks in product development and market acceptance of and demand for the Company's products, risks of downturns in economic conditions generally and in the enterprise content management and unstructured information management markets specifically, risks associated with competition and competitive pricing pressures, risks associated with foreign sales and higher customer concentration and other risks detailed in the Company's filings with the Securities and Exchange Commission.
Stellent and the Stellent logo are registered trademarks or trademarks of Stellent, Inc. in the USA and other countries. Outside In and Quick View Plus are registered trademarks of Stellent Chicago, Inc. in the USA and other countries. All other trade names are the property of their respective owner.
(a) The Magic Quadrant is copyrighted 2005 by Gartner, Inc. and reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. -0- *T STELLENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended September 30, September 30, 2005 2004 2005 2004 -------- ------- -------- ------- Revenues: Product licenses................$ 13,321 $14,775 $ 27,049 $26,454 Services........................ 6,938 5,042 12,098 9,400 Post contract support........... 9,888 8,139 19,561 14,762 -------- ------- -------- ------- Total revenues................... 30,147 27,956 58,708 50,616 -------- ------- -------- ------- Cost of revenues: Product licenses................ 815 1,068 1,975 2,360 Services........................ 6,484 5,431 11,509 9,610 Post contract support........... 1,956 1,179 3,806 2,297 Amortization of capitalized software from acquisitions..... 443 643 859 1,106 -------- ------- -------- ------- Total cost of revenues........... 9,698 8,321 18,149 15,373 -------- ------- -------- ------- Gross profit..................... 20,449 19,635 40,559 35,243 -------- ------- -------- ------- Operating expenses: Sales and marketing............. 11,712 10,931 23,148 20,720 General and administrative...... 2,812 3,057 5,982 5,581 Research and development........ 4,895 4,867 9,551 8,665 Acquisition-related sales, marketing and other costs...... -- -- -- 886 Amortization of acquired intangible assets and unearned compensation................... 210 175 374 354 Restructuring charges........... 648 -- 665 2,461 -------- ------- -------- ------- Total operating expenses......... 20,277 19,030 39,720 38,667 -------- ------- -------- ------- Income (loss) from operations.... 172 605 839 (3,424) Other: Interest income, net............ 478 149 893 343 -------- ------- -------- ------- Net income (loss) before income taxes........................... 650 754 1,732 (3,081) Provision for income taxes....... 93 -- 93 -- -------- ------- -------- ------- Net income (loss)................$ 557 $ 754 $ 1,639 $(3,081) ======== ======= ======== ======= Net income (loss) per common share Basic...........................$ 0.02 $ 0.03 $ 0.06 $ (0.12) ======== ======= ======== ======= Diluted.........................$ 0.02 $ 0.03 $ 0.06 $ (0.12) ======== ======= ======== ======= Weighted average common shares outstanding Basic........................... 28,101 26,720 27,815 25,300 ======== ======= ======== ======= Diluted......................... 29,264 27,776 28,848 25,300 ======== ======= ======== ======= STELLENT, INC. IMPACT OF NON-GAAP ADJUSTMENTS ON REPORTED NET INCOME (LOSS) (In thousands, except per share amounts) (Unaudited) Three Months Ended September 30, 2005 As reported Adjustments Non-GAAP ------------------------------------- Revenues: Product licenses............... $ 13,321 $ -- $ 13,321 Services....................... 6,938 -- 6,938 Post contract support.......... 9,888 -- 9,888 ---------- ---------- --------- Total revenues.................. 30,147 -- 30,147 ---------- ---------- --------- Cost of revenues: Product licenses............... 815 -- 815 Services....................... 6,484 -- 6,484 Post contract support.......... 1,956 -- 1,956 Amortization of capitalized software from acquisitions... 443 (1) (443) -- ---------- ---------- --------- Total cost of revenues.......... 9,698 (443) 9,255 ---------- ---------- --------- Gross profit.................... 20,449 443 20,892 ---------- ---------- --------- Operating expenses: Sales and marketing............ 11,712 (2) (380) 11,332 General and administrative..... 2,812 -- 2,812 Research and development....... 4,895 -- 4,895 Amortization of acquired intangible assets and unearned compensation.................. 210 (3) (210) -- Restructuring charges.......... 648 (2) (648) -- ---------- ---------- --------- Total operating expenses........ 20,277 (1,238) 19,039 ---------- ---------- --------- Income from operations.......... 172 1,681 1,853 Other: Interest income, net........... 478 -- 478 ---------- ---------- --------- Net income before income taxes.. 650 1,681 2,331 Provision for income taxes...... 93 -- 93 ---------- ---------- --------- Net income...................... $ 557 $ 1,681 $ 2,238 ========== ========== ========= Net income per common share Basic.......................... $ 0.02 $ 0.06 $ 0.08 ========== ========== ========= Diluted........................ $ 0.02 $ 0.06 $ 0.08 ========== ========== ========= Weighted average common shares outstanding Basic.......................... 28,101 28,101 28,101 ========== ========== ========= Diluted........................ 29,264 29,264 29,264 ========== ========== ========= Three Months Ended September 30, 2004 As reported Adjustments Non-GAAP ------------------------------------- Revenues: Product licenses............... $ 14,775 $ -- $ 14,775 Services....................... 5,042 -- 5,042 Post contract support.......... 8,139 -- 8,139 ---------- ---------- --------- Total revenues.................. 27,956 -- 27,956 ---------- ---------- --------- Cost of revenues: Product licenses............... 1,068 -- 1,068 Services....................... 5,431 -- 5,431 Post contract support.......... 1,179 -- 1,179 Amortization of capitalized software from acquisitions... 643 (1) (643) -- ---------- ---------- --------- Total cost of revenues.......... 8,321 (643) 7,678 ---------- ---------- --------- Gross profit.................... 19,635 643 20,278 ---------- ---------- --------- Operating expenses: Sales and marketing............ 10,931 -- 10,931 General and administrative..... 3,057 -- 3,057 Research and development....... 4,867 -- 4,867 Amortization of acquired intangible assets and unearned compensation.................. 175 (3) (175) -- Restructuring charges.......... -- -- -- ---------- ---------- --------- Total operating expenses........ 19,030 (175) 18,855 ---------- ---------- --------- Income from operations.......... 605 818 1,423 Other: Interest income, net........... 149 -- 149 ---------- ---------- --------- Net income before income taxes.. 754 818 1,572 Provision for income taxes...... -- -- -- ---------- ---------- --------- Net income...................... $ 754 $ 818 $ 1,572 ========== ========== ========= Net income per common share Basic.......................... $ 0.03 $ 0.03 $ 0.06 ========== ========== ========= Diluted........................ $ 0.03 $ 0.03 $ 0.06 ========== ========== ========= Weighted average common shares outstanding Basic.......................... 26,720 26,720 26,720 ========== ========== ========= Diluted........................ 27,776 27,776 27,776 ========== ========== ========= 1) Represents non-cash amortization expense associated with the acquisition of developed technology. 2) Represents a restructuring or severance charge associated with a reorganization and a change in estimate associated with a prior restructuring charge. 3) Represents non-cash amortization expense associated with acquired intangible assets and non-cash stock compensation expense associated with the acquisition of Optika. This supplemental non-GAAP financial information is presented for informational purposes only and is not a substitute for the historical financial information presented in accordance with accounting principles generally accepted in the United States. Non-GAAP net income per share is computed using the weighted average number of shares of common stock outstanding. The Company has included the effect of options and warrants for common stock as calculated using the treasury stock method, when dilutive. STELLENT, INC. IMPACT OF NON-GAAP ADJUSTMENTS ON REPORTED NET INCOME (LOSS) (In thousands, except per share amounts) (Unaudited) Six Months Ended September 30, 2005 As reported Adjustments Non-GAAP ------------------------------------- Revenues: Product licenses............... $ 27,049 $ -- $ 27,049 Services....................... 12,098 -- 12,098 Post contract support.......... 19,561 -- 19,561 ---------- ---------- --------- Total revenues.................. 58,708 -- 58,708 ---------- ---------- --------- Cost of revenues: Product licenses............... 1,975 -- 1,975 Services....................... 11,509 -- 11,509 Post contract support.......... 3,806 -- 3,806 Amortization of capitalized software from acquisitions... 859 (1) (859) -- ---------- ---------- --------- Total cost of revenues.......... 18,149 (859) 17,290 ---------- ---------- --------- Gross profit.................... 40,559 859 41,418 ---------- ---------- --------- Operating expenses: Sales and marketing............ 23,148 (2) (380) 22,768 General and administrative..... 5,982 -- 5,982 Research and development....... 9,551 -- 9,551 Acquisition-related sales, marketing and other costs..... -- -- -- Amortization of acquired intangible assets and unearned compensation.................. 374 (4) (374) -- Restructuring charges.......... 665 (2) (665) -- ---------- ---------- --------- Total operating expenses........ 39,720 (1,419) 38,301 ---------- ---------- --------- Income (loss) from operations... 839 2,278 3,117 Other: Interest income, net........... 893 -- 893 ---------- ---------- --------- Net income (loss) before income taxes.......................... 1,732 2,278 4,010 Provision for income taxes...... 93 -- 93 ---------- ---------- --------- Net income (loss)............... $ 1,639 $ 2,278 $ 3,917 ========== ========== ========= Net income (loss) per common share Basic.......................... $ 0.06 $ 0.08 $ 0.14 ========== ========== ========= Diluted........................ $ 0.06 $ 0.08 $ 0.14 ========== ========== ========= Weighted average common shares outstanding Basic.......................... 27,815 27,815 27,815 ========== ========== ========= Diluted........................ 28,848 28,848 28,848 ========== ========== ========= Six Months Ended September 30, 2004 As reported Adjustments Non-GAAP ------------------------------------- Revenues: Product licenses............... $ 26,454 $ -- $ 26,454 Services....................... 9,400 -- 9,400 Post contract support.......... 14,762 -- 14,762 ---------- ---------- --------- Total revenues.................. 50,616 -- 50,616 ---------- ---------- --------- Cost of revenues: Product licenses............... 2,360 -- 2,360 Services....................... 9,610 -- 9,610 Post contract support.......... 2,297 -- 2,297 Amortization of capitalized software from acquisitions... 1,106 (1) (1,106) -- ---------- ---------- --------- Total cost of revenues.......... 15,373 (1,106) 14,267 ---------- ---------- --------- Gross profit.................... 35,243 1,106 36,349 ---------- ---------- --------- Operating expenses: Sales and marketing............ 20,720 -- 20,720 General and administrative..... 5,581 -- 5,581 Research and development....... 8,665 -- 8,665 Acquisition-related sales, marketing and other costs..... 886 (3) (886) -- Amortization of acquired intangible assets and unearned compensation.................. 354 (4) (354) -- Restructuring charges.......... 2,461 (5) (2,461) -- ---------- ---------- --------- Total operating expenses........ 38,667 (3,701) 34,966 ---------- ---------- --------- Income (loss) from operations... (3,424) 4,807 1,383 Other: Interest income, net........... 343 -- 343 ---------- ---------- --------- Net income (loss) before income taxes.......................... (3,081) 4,807 1,726 Provision for income taxes...... -- -- -- ---------- ---------- --------- Net income (loss)............... $ (3,081) $ 4,807 $ 1,726 ========== ========== ========= Net income (loss) per common share Basic.......................... $ (0.12) $ 0.19 $ 0.07 ========== ========== ========= Diluted........................ $ (0.12) $ 0.18 $ 0.07 ========== ========== ========= Weighted average common shares outstanding Basic.......................... 25,300 25,300 25,300 ========== ========== ========= Diluted........................ 25,300 26,406 26,406 ========== ========== ========= 1) Represents non-cash amortization expense associated with the acquisition of developed technology. 2) Represents a restructuring or severance charge associated with a reorganization and a change in estimate associated with a prior restructuring charge. 3) Represents acquisition-related sales, marketing and other costs associated with the acquisition of Optika. 4) Represents non-cash amortization expense associated with acquired intangible assets and non-cash stock compensation expense associated with the acquisition of Optika. 5) Represents a restructuring charge associated with the acquisition of Optika. This supplemental non-GAAP financial information is presented for informational purposes only and is not a substitute for the historical financial information presented in accordance with accounting principles generally accepted in the United States. Non-GAAP net income per share is computed using the weighted average number of shares of common stock outstanding. The Company has included the effect of options and warrants for common stock as calculated using the treasury stock method, when dilutive. STELLENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 30, March 31, 2005 2005 -------------- -------------- ASSETS Current assets: Cash, cash equivalents and short-term marketable securities................ $ 61,142 $ 66,636 Accounts receivable, net.............. 29,757 30,063 Prepaid royalties..................... 706 965 Prepaid expenses and notes............ 4,556 3,884 ------------- ------------- Total current assets.................... 96,161 101,548 Long-term marketable securities......... 8,767 6,114 Property and equipment, net............. 7,155 4,333 Prepaid royalties, net of current....... 793 1,044 Goodwill................................ 74,395 67,640 Other intangible assets, net............ 5,116 5,615 Other................................... 936 1,358 ------------- ------------- Total assets............................ $ 193,323 $ 187,652 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable...................... $ 1,374 $ 3,867 Deferred revenue...................... 18,931 19,854 Commissions payable................... 2,571 2,419 Accrued expenses and other............ 10,751 7,867 Current installments of obligations under capital lease.................. 176 170 ------------- ------------- Total current liabilities............... 33,803 34,177 Deferred revenue, net of current portion.............................. 975 946 Obligations under capital leases, net of current portion................... 373 -- -------------- ------------- Total liabilities....................... 35,151 35,123 Shareholders' equity.................... Common stock.......................... 283 275 Additional paid-in capital............ 247,395 243,013 Unearned compensation................. (232) (469) Accumulated deficit................... (89,617) (91,256) Accumulated other comprehensive income 343 966 ------------- ------------- Total shareholders' equity............... 158,172 152,529 ------------- ------------- Total liabilities and shareholders' equity................................. $ 193,323 $ 187,652 ============= ============= *T
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