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Covisint Corporation Announces First Quarter Fiscal 2015 Earnings Results(GlobeNewswire Via Acquire Media NewsEdge) Total revenue of $21.6 millionSubscription revenue of $15.5 millionProvides update on progress of strategic initiatives to refocus and position business for growthDETROIT, July 29, 2014 (GLOBE NEWSWIRE) -- Covisint Corporation (Nasdaq:COVS), provider of a leading cloud engagement platform, today announced financial results for the first quarter of its fiscal 2015 ended June 30, 2014. "We are off to a solid start to Fiscal 2015, which includes our subscription business getting back on track and performing in line with expectations," said Covisint CEO Sam Inman. "We have made strong progress transitioning from a services and software company – to a true enterprise software company and we believe our platform is instrumental in transforming the way enterprises connect with their business partners, suppliers and customers. I am confident that the steps we are taking provide a strong foundation for our future success." First Quarter 2015 Financial Highlights Revenues: Subscription and support revenue was $15.5 million, a decline of 3% year-over-year. Services revenue was $6.1 million, a decline of 26% year-over-year. Total revenues were $21.6 million, a decline of 10% year-over-year.Gross Profit: GAAP gross profit was $6.3 million. GAAP gross margin was 29%. Non-GAAP gross profit was $8.5 million. Non-GAAP gross margin was 39%. Earnings: GAAP diluted net loss per share was ($0.32) compared to ($0.16) in the same quarter last year. Non-GAAP diluted net loss per share was ($0.23) compared to ($0.15) in the same quarter last year.First Quarter Fiscal 2015 Business Highlights In the first quarter, Covisint: Announced Covisint's Certified Service Partner Program. During the quarter Covisint announced partnerships with CitiusTech, Lochbridge and Perficient – the program will provide certified training and increased technical support on the Covisint platform to enable these partners to develop on our platform. Was recognized by Gartner, Inc. as a Leader in its first ever "Magic Quadrant for Identity Access Management as a Service (IDaaS)," published June 2, 2014. The Magic Quadrant positions vendors on their ability to execute and completeness of vision. With this recognition, Covisint has now been positioned in the three Magic Quadrants of the three key pillars for enterprise digital transformation - security, integration and presentation. Was the keynote speaker and participant on two panel discussions on the future of automotive connectivity at Telematics Detroit 2014, the world's largest forum dedicated to the future of connected auto mobility. Covisint also made available at the show a whitepaper titled "Creating a Frictionless Ownership Experience for the Connected Consumer". Announced that Covisint was named a "major player" by independent analyst firm IDC in the report: IDC MarketScape: Worldwide Federated Identity Management and Single Sign-On 2014 Vendor Assessment (IDC #247097, March 2014).Use of Non-GAAP Financial Measures In addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), Covisint monitors non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and adjusted EBITDA. Each of these financial measures excludes the impact of certain items (the impact of stock award compensation expense, the amortization of intangible assets and amounts incurred for capitalized internal software costs) and, therefore, has not been calculated in accordance with GAAP. Covisint monitors these non-GAAP measures to evaluate its ongoing operational performance and enhance an overall understanding of its past financial performance. Covisint believes that these non-GAAP metrics help illustrate underlying trends in its business that could otherwise be masked by the effect of the income or expenses, as well as the related tax effects, that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and adjusted EBITDA. Furthermore, Covisint uses these measures to establish budgets and operational goals for managing its business and evaluating its performance. Covisint also believes that these non-GAAP measures provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods against other companies in its industry. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors. Conference Call and Webcast Information Covisint management will hold a conference call at 4:45 ET today to discuss these results. The U.S. toll free dial-in for the conference call is 1-877-407-4018, and the international dial-in number is 1-201-689-8471. No passcode is required. A live webcast of the conference call will also be available on the company's website at investors.covisint.com. For those unable to participate in the conference call, a replay will be available after the conclusion of the earnings call on July 29, 2014, through August 5, 2014. The U.S. toll-free replay dial-in number is 1-877-870-5176 and the international replay dial-in number is 1-858-384-5517. The replay passcode is 13586814. Covisint Covisint provides a leading cloud engagement platform for creating and enabling new mission-critical external business processes. Our solutions enable organizations to connect, engage, and collaborate with the critical external audiences that define their success--including customers, business partners and suppliers. Covisint allows its clients to establish a secure, reliable, integrated presence in the cloud, and it provides the kind of engaging information experiences that people everywhere have come to expect. Learn more at www.covisint.com. Follow us: Covisint on Twitter Covisint on LinkedIn Covisint on FacebookForward-Looking Statements This press release contains forward-looking statements, including statements regarding Covisint's future financial performance, market growth, the demand for Covisint's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Covisint's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Covisint's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Covisint's disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts for our solutions; the extent we are able to maintain pricing with our customers at renewal; the seasonality of our business; our ability to manage our growth; the continued growth of the market for our solutions; the success of our channel partner and certified partner strategies; competition from current competitors and new market entrants; our ability to penetrate new vertical markets; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure and costs associated with operating as a public company; failure to protect our intellectual property; changes in current tax or accounting rules; and other risk and uncertainties. Further information on potential factors that could affect actual results is included in Covisint's reports filed with the SEC. COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATIONCONDENSED AND CONSOLIDATED BALANCE SHEETS(In Thousands)(Unaudited) June 30, 2014March 31, 2014ASSETS CURRENT ASSETS: Cash $43,129 $49,536 Accounts receivable, net 18,732 21,838 Deferred tax asset, net 677 1,017 Due from parent and affiliates 4,136 2,813 Other current assets 6,599 5,983 Total current assets 73,273 81,187 PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION 4,940 4,751 CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET 22,047 23,040 OTHER: Goodwill 25,385 25,385 Deferred costs 5,198 6,188 Deferred tax asset, net 127 131 Other assets 754 766 Total other assets 31,464 32,470 TOTAL ASSETS $131,724 $141,448LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $3,963 $3,893 Accrued commissions 1,245 1,640 Deferred revenue 14,806 16,606 Accrued expenses 3,649 3,752 Total current liabilities 23,663 25,891 DEFERRED REVENUE 9,119 11,223 ACCRUED EXPENSES 56 56 DEFERRED TAX LIABILITY, NET 2,421 2,668 Total liabilities 35,259 39,838 COMMITMENTS AND CONTINGENCIES — — SHAREHOLDER'S EQUITY: Common Stock — — Additional paid-in capital 147,533 140,569 Retained deficit (51,063) (38,947) Accumulated other comprehensive loss (5) (12) Total shareholders' equity 96,465 101,610 TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $131,724 $141,448 COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATIONCONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands) Except Per Share Data(Unaudited) THREE MONTHS ENDED JUNE 30, 20142013 REVENUE $21,587 $24,101 COST OF REVENUE 15,266 13,310 GROSS PROFIT 6,321 10,791 OPERATING EXPENSES: Research and development 3,116 2,585 Sales and marketing 9,772 7,339 General and administrative 5,546 5,534 Total operating expenses 18,434 15,458 OPERATING LOSS (12,113) (4,667) Other income 22 — LOSS BEFORE INCOME TAX PROVISION (12,091) (4,667) INCOME TAX PROVISION 25 3 NET LOSS ($12,116) ($4,670) DILUTED EPS COMPUTATION Numerator: Net loss ($12,116) ($4,670) Denominator: Weighted-average common shares outstanding 37,499 30,003 Dilutive effect of stock awards — Total shares 37,499 30,003 Diluted EPS ($0.32) ($0.16) COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATIONNON-GAAP CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands, Except Per Share Data)(Unaudited) THREE MONTHS ENDED JUNE 30, 20142013 REVENUE $21,587 $24,101 COST OF REVENUE 13,108 11,657 GROSS PROFIT 8,479 12,444 OPERATING EXPENSES: Research and development 3,840 4,490 Sales and marketing 9,027 7,215 General and administrative 4,114 5,125 Total operating expenses 16,981 16,830 OPERATING LOSS (8,502) (4,386) Other income 22 — LOSS BEFORE INCOME TAX PROVISION (8,480) (4,386) INCOME TAX PROVISION 25 3 NET LOSS ($8,505) ($4,389) DILUTED EPS COMPUTATION Numerator: Net loss ($8,505) ($4,389) Denominator: Weighted-average common shares outstanding 37,499 30,003 Dilutive effect of stock awards Total shares 37,499 30,003 Diluted EPS ($0.23) ($0.15) COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP(In Thousands, Except Per Share Data)(Unaudited) THREE MONTHS ENDED JUNE 30, 20142013 Gross profit $6,321 $10,791 Gross profit % 29% 45%Adjustments: Stock compensation expense—cost of revenue 515 5 % of total revenue 2% —% Cost of revenue—amortization of capitalized software 1,643 1,648 % of total revenue 8% 7% Adjusted gross profit $8,479 $12,444 Adjusted gross profit % 39% 52% THREE MONTHS ENDED JUNE 30, 20142013 Cost of revenue $15,266 $13,310Adjustments: Stock compensation expense 515 5 Cost of revenue - amortization of capitalized software 1,643 1,648 Cost of revenue, non-GAAP $13,108 $11,657 THREE MONTHS ENDED JUNE 30, 20142013 Research and development $3,116 $2,585Adjustments: Capitalized internal software costs (790) (1,952) Stock compensation expense 66 47 Research and development, non-GAAP $3,840 $4,490 THREE MONTHS ENDED JUNE 30, 20142013 Sales and marketing $9,772 $7,339Adjustments: Stock compensation expense 605 47 Amortization of customer relationship agreements 140 77 Sales and marketing, non-GAAP $9,027 $7,215 THREE MONTHS ENDED JUNE 30, 20142013 General and administrative $5,546 $5,534Adjustments: Stock compensation expense 1,432 387 Amortization of trademarks — 22 General and administrative, non-GAAP $4,114 $5,125 THREE MONTHS ENDED JUNE 30, 20142013 Net loss ($12,116) ($4,670)Adjustments: Capitalized internal software costs (790) (1,952) Stock compensation expense 2,618 486 Amortization of capitalized software and other intangibles 1,783 1,747 Net loss, non-GAAP ($8,505) ($4,389) THREE MONTHS ENDED JUNE 30, 20142013 Diluted EPS ($0.32) ($0.16)Adjustments: Capitalized internal software costs (0.02) (0.07) Stock compensation expense 0.06 0.02 Amortization of capitalized software and other intangibles 0.05 0.06 Diluted EPS, non-GAAP ($0.23) ($0.15) COVISINT CORPORATION AND THE COVISINT OPERATIONS OF COMPUWARE CORPORATIONCONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands)(Unaudited) THREE MONTHS ENDED JUNE 30, 20142013 CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net loss ($12,116) ($4,670) Adjustments to reconcile net loss to cash provided by (used in) operations: Depreciation and amortization 2,343 2,092 Deferred income taxes (53) 4 Stock award compensation 2,619 486 Net change in assets and liabilities, net of effects from currency fluctuations: Accounts receivable 3,108 2,538 Other assets 458 618 Accounts payable and accrued expenses (438) (1,078) Deferred revenue (3,898) (275) Net cash provided by (used in) operating activities ($7,977) ($285) CASH FLOWS USED IN INVESTING ACTIVITIES: Purchase of: Property and equipment (820) (171) Capitalized software (790) (1,952) Net cash used in investing activities ($1,610) ($2,123) CASH FLOWS PROVIDED BY FINANCING ACTIVITES: Cash payments from parent company 8,775 26,224 Cash payments to parent company (5,787) (23,103) Initial public offering costs — (299) Net proceeds from exercise of stock awards 196 — Net cash provided by financing activities $3,184 $2,822 EFFECT OF EXCHANGE RATE CHANGES ON CASH (4) 8 NET CHANGE IN CASH (6,407) 422 CASH AT BEGINNING OF PERIOD 49,536 966 CASH AT END OF PERIOD $43,129 $1,388 CONTACT: Investor Relations Contact 866.319.7659 [email protected] Media Contact Brad Schechter 313.961.5290 [email protected] For Sales and Marketing Information Covisint Corporation, One Campus Martius, Suite 700, Detroit, MI 48226, 313-961-4100 http://www.covisint.com Source: Covisint 2014 GlobeNewswire, Inc. |