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RightNow Technologies Announces Fourth Quarter and Full Year 2009 Financial ResultsBOZEMAN, Mont. --(Business Wire)-- RightNow® Technologies, Inc. (NASDAQ: RNOW) today announced results for the fourth quarter and year ended December 31, 2009. Total revenue in the fourth quarter of 2009 was $41.6 million, compared to $36.1 million in the fourth quarter of 2008. Recurring revenue in the fourth quarter of 2009 increased 22% to $32.2 million from $26.5 million in the fourth quarter of 2008. Net income in the fourth quarter of 2009 was $2.6 million, or $0.08 per share, compared to net income of $692,000, or $0.02 per share, in the fourth quarter of 2008. Non-GAAP net income in the fourth quarter of 2009, which excludes stock-based compensation charges of $1.7 million, and a non-recurring litigation settlement gain of $1.0 million, was $3.3 million, or $0.10 per share, compared to non-GAAP net income of $2.0 million, or $0.06 per share, in the fourth quarter of 2008. Revenue for the year ended December 31, 2009 was $152.7 million, compared to $140.4 million for the year ended December 31, 2008, reflecting 9% growth in revenue. Recurring revenue in the year ended December 31, 2009 increased 13% to $115.3 million from $102.3 million in the year ended December 31, 2008. Net income for the twelve months ended December 31, 2009 was $5.9 million, or $0.18 per share, compared to a net loss of $(7.3) million, or $(0.22) per share, for the comparable period in 2008. Non-GAAP net income for the twelve months ended December 31, 2009, which excludes stock-based compensation charges of $7.8 million, and a non-recurring litigation settlement gain of $1.0 million, was $12.7 million, or $0.39 per share, compared to non-GAAP net loss of $(1.3) million, or $(0.04) per share, for the comparable period in 2008. New, renewed and expanded customer relationships during the fourth quarter of 2009 included Alltel (News - Alert), 3M, eHarmony, Jacuzzi Brands, MySpace, Rakuten, Social Security Administration, U.S. Government Printing Office, theTrainline.com, and Virgin Atlantic Airways. "2009 was a year of strong product innovation and financial results for RightNow," stated Greg Gianforte (News - Alert), CEO and Founder. "We head into 2010 with confidence driven by the launch of RightNow CX, the customer experience suite, which we believe uniquely addresses the three primary customer engagement points - web, contact center, and social. With a track record of success in helping our clients deliver exceptional customer experiences, we believe we have substantial opportunity to create new relationships and expand our solution footprint with our existing customers." "Once again, we are pleased to report revenue and earnings above guidance as a result of recurring revenue growth," said Jeff Davison, CFO. "During the fourth quarter recurring revenue grew $5.7 million, or 22% over the fourth quarter of 2008, and grew 8% sequentially over the third quarter of 2009. We are also pleased to deliver operating margin improvement of 1,000 basis points over 2008, and non-GAAP 2009 earnings per share of $0.39, which was above our guidance." Guidance For the full year 2010, the Company expects revenue in the range of approximately $175 to $180 million, with recurring revenue growth expected to be approximately 20%. For the full year 2010, the Company expects income from operations in the range of approximately $6.5 to $9.5 million. Non-GAAP income from operations, which excludes stock-based compensation, is expected to be in the range of approximately $15 to $18 million. Interest and other income, net for the full year 2010 is expected to be approximately $1 million. The Company expects that its full year 2010 effective tax rate will increase to approximately 38% to 40%, or approximately $2.8 to $4.3 million. The increase in tax rate guidance is a direct result of the Company's 2009 financial performance and earnings expectations for 2010. Not reflected in the guidance, is the possibility that during 2010 the Company may recognize a tax benefit as a result of the removal of some or all of the valuation allowance on its deferred tax assets dependent on the Company's financial performance within 2010. Net income per share for the full year 2010 is expected to be in the range of approximately $0.14 to $0.20. Non-GAAP net income per share, which excludes stock-based compensation, is expected to be in the range of approximately $0.39 to $0.45. For the first quarter of 2010, revenue is expected to be in the range of approximately $42 to $42.5 million. First quarter net income per share is expected to be in the range of approximately $0.00 to $0.02. First quarter non-GAAP net income per share, which excludes stock-based compensation, is expected to be in the range of approximately $0.06 to $0.08. Quarterly Conference Call RightNow Technologies (News - Alert) will discuss its quarterly results today via teleconference at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time.) To access the call, please dial (888) 500-6973, or outside the U.S. (719) 325-2370, at least five minutes prior to the 2:30 p.m. MT start time. A live webcast of the call will also be available at http://investor.rightnow.com/index.cfm under the Investor Webcasts menu. An audio replay will be available between 5:30 p.m. MT February 3, 2010 and 9:59 p.m. MT February 17, 2010 by calling (888) 203-1112 or (719) 457-0820, with passcode 2157034. The replay will also be available on our website at http://investor.rightnow.com. About RightNow Technologies RightNow is helping rid the world of bad experiences one consumer interaction at a time, seven million times a day. RightNow CX, the customer experience suite, helps organizations deliver exceptional customer experiences across the web, social networks and contact centers, all delivered via the cloud. With more than eight billion customer interactions delivered, RightNow is the customer experience fabric for nearly 2,000 organizations around the globe. To learn more about RightNow, go to www.rightnow.com. RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of The NASDAQ Stock Market LLC. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management's future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. The risks and uncertainties referred to above include, but are not limited to, risks associated with general economic conditions; fluctuations in foreign currency exchange; our business model; our ability to develop or acquire, and gain market acceptance for, new products in a cost-effective and timely manner; fluctuations in our earnings as a result of potential changes to our valuation allowance(s) on our deferred tax assets; the success of our efforts to integrate HiveLive's people and processes, following our recent acquisition of that company; the risk of asset impairment associated with the acquisition of HiveLive; the gain or loss of key customers; competitive pressures; our ability to expand or contract operations and to grow profitability; fluctuations in our earnings as a result of the impact of stock-based compensation expense; interruptions or delays in our hosting operations; breaches of our security measures; our ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; our ability to manage and expand our partner relationships; any unanticipated ambiguities in fair value accounting standards; and our ability to expand, retain and motivate our employees. Further information on potential factors that could affect our financial results is included in our most recent Annual Report on Form 10-K and quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason. FRNOW RightNow Technologies, Inc. Consolidated Balance Sheets (In thousands) (Unaudited) December 31, December 31, 2009 2008 Assets Cash and cash equivalents $ 41,546 $ 51,405 Short-term investments 54,977 34,412 Accounts receivable 31,850 36,770 Term receivables, current 2,417 5,752 Allowance for doubtful accounts (1,914 ) (2,277 ) Net receivables 32,353 40,245 Deferred commissions 6,394 5,381 Prepaid and other current assets 2,434 2,150 Total current assets 137,704 133,593 Long-term investments -- 4,963 Property and equipment, net 10,122 10,141 Term receivables, non-current 1,105 3,547 Intangible assets, net 11,141 6,399 Deferred commissions, non-current 3,461 2,840 Other 902 854 Total Assets $ 164,435 $ 162,337 Liabilities and Stockholders' Equity Accounts payable $ 5,427 $ 5,058 Commissions and bonuses payable 6,271 5,665 Other accrued liabilities 11,146 11,165 Current portion of long-term debt 22 46 Current portion of deferred revenue 74,446 77,584 Total current liabilities 97,312 99,518 Long-term debt, less current portion -- 22 Deferred revenue, net of current portion 26,881 35,614 Stockholders' equity: Common stock 34 34 Additional paid-in capital 112,439 102,662 Treasury stock, at cost (15,007 ) (13,209 ) Accumulated other comprehensive income 1,125 1,916 Accumulated deficit (58,349 ) (64,220 ) Total stockholders' equity 40,242 27,183 Total Liabilities and Stockholders' Equity $ 164,435 $ 162,337 RightNow Technologies, Inc. Consolidated Operating Statements (In thousands, except per share amounts) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Revenue: Software, hosting and support $ 32,172 $ 26,491 $ 115,395 $ 102,576 Professional services 9,407 9,588 37,292 37,859 Total revenue 41,579 36,079 152,687 140,435 Cost of revenue: Software, hosting and support 5,813 5,014 20,948 20,397 Professional services 6,891 7,212 26,610 30,440 Total cost of revenue 12,704 12,226 47,558 50,837 Gross profit 28,875 23,853 105,129 89,598 Operating expenses: Sales and marketing 17,705 16,294 64,751 67,628 Research and development 5,314 4,628 20,221 18,292 General and administrative 4,130 2,994 15,801 13,615 Total operating expenses 27,149 23,916 100,773 99,535 Income (loss) from operations 1,726 (63) 4,356 (9,937) Interest and other income, net 1,000 687 2,094 2,696 Income (loss) before income taxes 2,726 624 6,450 (7,241) Benefit (provision) for income taxes (119) 68 (579) (42) Net income (loss) $ 2,607 $ 692 $ 5,871 $ (7,283) Net income (loss) per share: Basic $ 0.08 $ 0.02 $ 0.18 $ (0.22) Diluted $ 0.08 $ 0.02 $ 0.18 $ (0.22) Shares used in the computation: Basic 31,815 32,692 31,752 33,362 Diluted 33,047 33,204 32,336 33,362 Supplemental information of stock-based compensation expense included in: Cost of software, hosting and support $ 102 $ 80 $ 460 $ 323 Cost of professional services 132 162 612 638 Sales and marketing 694 583 3,029 2,454 Research and development 254 240 1,178 969 General and administrative 500 265 2,507 1,641 Total stock-based compensation $ 1,682 $ 1,330 $ 7,786 $ 6,025 RightNow Technologies, Inc. Consolidated Statements of Cash Flow (In thousands) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Operating activities: Net income (loss) $ 2,607 $ 692 $ 5,871 $ (7,283) Non-cash adjustments: Depreciation and amortization 2,081 1,905 7,491 7,771 Stock-based compensation 1,682 1,330 7,786 6,025 Provision for losses on accounts receivable 40 33 157 212 Changes in operating accounts: Receivables 524 (7,878) 11,255 4,774 Prepaid expenses 526 553 (209) (101) Deferred commissions (1,140) (1,453) (1,282) (3,623) Accounts payable 805 (166) 238 895 Commissions and bonuses payable 1,392 1,545 451 930 Other accrued liabilities (839) (554) (424) 462 Deferred revenue (2,880) 7,168 (14,916) 4,169 Other (576) 635 (321) 493 Cash provided by operating activities 4,222 3,810 16,097 14,724 Investing activities: Net change in short-term investments 5,558 12,435 (15,833) 13,431 Acquisition of property and equipment (1,918) (1,427) (5,591) (5,771) Intangible asset additions (410) -- (654) -- Business acquisitions -- -- (5,906) -- Other 6 4 14 (21) Cash provided (used) by investing activities 3,236 11,012 (27,970) 7,639 Financing activities: Proceeds from issuance of common stock 1,352 130 1,748 1,396 Excess tax benefit of stock options exercised 11 (135) 243 (135) Common stock repurchased -- (13,209) (1,798) (13,209) Payments on long-term debt (12) (10) (46) (43) Cash provided (used) by financing activities 1,351 (13,224) 147 (11,991) Effect of foreign exchange rates on cash and cash equivalents 349 (1,338) 1,867 (2,648) Increase (decrease) in cash and cash equivalents 9,158 260 (9,859) 7,724 Cash and cash equivalents at beginning of period 32,388 51,145 51,405 43,681 Cash and cash equivalents at end of period $ 41,546 $ 51,405 $ 41,546 $ 51,405 RightNow Technologies, Inc. Reconciliation of Non-GAAP Measurements (Amounts in thousands, except per share amounts) (Unaudited) Earnings Per Share Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Net income (loss) as reported $ 2,607 $ 692 $ 5,871 $ (7,283) Add stock-based compensation 1,682 1,330 7,786 6,025 Less non-recurring litigation settlement gain (1,000) -- (1,000) -- Net income (loss) Non-GAAP $ 3,289 $ 2,022 $ 12,657 $ (1,258) Net income (loss) per share, as reported (basic and diluted) $ 0.08 $ 0.02 $ 0.18 $ (0.22) Net income (loss) per share, Non-GAAP (basic) $ 0.10 $ 0.06 $ 0.40 $ (0.04) Net income (loss) per share, Non-GAAP (diluted) $ 0.10 $ 0.06 $ 0.39 $ (0.04) Shares outstanding (basic), as reported 31,815 32,692 31,752 33,362 Shares outstanding (diluted), as reported 33,047 33,204 32,336 33,362 Forward-Looking Guidance Reconciliation GAAP Guidance Non-GAAP Guidance From To Adjustment From To First Quarter ending March 31, 2010 Net income $ 50 $ 650 $ 1,950 [a] $ 2,000 $ 2,600 Net income (loss) per share $ 0.00 $ 0.02 $ 0.06 $ 0.08 Shares (diluted) 33,800 33,800 33,800 33,800 Year ending December 31, 2010 Income from operations $ 6,500 $ 9,500 $ 8,500 [a] $ 15,000 $ 18,000 Net income $ 4,600 $ 6,900 8,500 [a] $ 13,100 $ 15,400 Net income per share $ 0.14 $ 0.20 $ 0.39 $ 0.45 Shares (diluted) 34,000 34,000 34,000 34,000 Note: For further details related to forward-looking guidance please refer to the Guidance section provided earlier in this release. [a] Estimated stock-based compensation expense to be recorded for the periods indicated in accordance with FASB Accounting Standards Codification, Topic 718, Compensation-Stock Compensation, which is effective for periods beginning January 1, 2006. About Non-GAAP Financial Measures Non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share are supplemental measures of our performance that are not required by, or presented in accordance with GAAP. These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for income from operations, net income (loss) and net income (loss) per share or any other performance measure determined in accordance with GAAP. We present non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share because we consider each to be an important supplemental measure of our performance. Management uses these non-GAAP financial measures to make operational decisions, evaluate the Company's performance, prepare forecasts and determine compensation. Further, management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance when planning, forecasting and analyzing future periods. Our stock-based compensation expenses are expected to vary depending on the number of new grants issued, changes in our stock price, stock market volatility, expected option lives and risk-free rates of return, all of which are difficult to estimate. During the fourth quarter of 2009, KANA Software, Inc. (KANA) paid us $1,000,000 pursuant to the terms of a General Release and Settlement Agreement. We recorded this as a non-recurring gain in other income. Management believes this is a non-recurring item that is not indicative of our ongoing operations. For further discussion related to the settlement please refer to our Form 10-Q filed on November 6, 2009 and our upcoming Form 10-K for 2009. In calculating non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share, management excludes stock-based compensation expenses and has excluded the KANA settlement gain to facilitate its review of the comparability of the Company's operating performance on a period-to-period basis because such expenses and gain are not, in management's view, related to the Company's ongoing operating performance. Management uses this view of its operating performance for purposes of comparison with its business plan and individual operating budgets and resource allocation. Management further believes that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision making. We believe that the use of non-GAAP income from operations, net income (loss) and net income (loss) per share also facilitate a comparison of RightNow's underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results. Also, management excluded the KANA settlement gain because it is non-recurring and therefore is not helpful when comparing with our historical, current, or future operating performance. Calculating non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share have limitations as an analytical tool, and readers should not consider these measures in isolation or as substitutes for GAAP income from operations, GAAP net income (loss) and GAAP net income (loss) per share. In the future, we expect to incur additional stock-based compensation expenses and the exclusion of these expenses in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, which include: Other companies inside and outside of our industry may calculate non-GAAP net income (loss) and net income (loss) per share differently than we do, limiting their usefulness as a comparative tool; and The Company's income tax expense or benefit will be ultimately based on its GAAP taxable income and actual tax rates in effect, which may differ significantly from the effective tax rate used in our non-GAAP financial measures. In addition, the adjustments to our GAAP financial measures reflect the exclusion of stock-based compensation expenses that are recurring and will be reflected in the Company's financial results for the foreseeable future. The Company compensates for these limitations by providing specific information regarding the GAAP amount excluded from the non-GAAP financial measures. The Company further compensates for the limitations of our use of non-GAAP financial measures by presenting comparable GAAP measures more prominently. The Company evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial measures. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP income from operations, net income (loss) and net income (loss) per share. For more information, see the consolidated operating statements and reconciliation of non-GAAP measurements contained in this press release. |
