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SuccessFactors Announces Third Quarter Fiscal 2009 Results
"Execution is the number one imperative in business today," said Lars Dalgaard, chief executive officer for SuccessFactors. "As businesses emerge from the economic downturn and plan for 2010 and beyond, they must move forward with new strategies to execute on their growth and profitability plans. Based on a third party study, SuccessFactors customers experienced faster communication of strategy, an acceleration of 1 week on average with a high of 8 weeks. Also, their time spent on strategic priorities increased by 5.5% on average with a high of 40%, their project completion rate increased by 13.8% on average with a high of 67%, and their performance improved by 2.8% on average with a high of 5.4%. All of this drives real dollar ROI and ROE (Return on Execution)."
"Our new category of Business Execution Software will help determine which companies will be first out of the gate - who will be the losers and who will be the winners."
SuccessFactors' results for the third quarter fiscal year 2009:
- Q3 FY09 Revenue: For the quarter ended September 30, 2009, revenue was $38.7 million, compared to $29.7 million in the quarter ended September 30, 2008, an increase of approximately 30% year-over-year and an increase of 5% sequentially from Q209.
- Q3 FY09 Gross Margin: For the quarter ended September 30, 2009, non-GAAP gross margin was 78%, compared to 67% a year ago. Non-GAAP gross margin excludes the effect of approximately $290,000 in stock-based compensation for the quarter ended September 30, 2009.
- Q3 FY09 Operating Margin: For the quarter ended September 30, 2009, non-GAAP operating margin was 1%, compared to negative 61% for the quarter ended September 30, 2008. Non-GAAP operating margin excludes the effect of approximately $2.6 million and $2.2 million in stock-based compensation for the quarter ended September 30, 2009 and 2008, respectively.
- Q3 FY09 Total Deferred Revenue: Total deferred revenue as of September 30, 2009 was $161.0 million, up approximately 7% sequentially from $149.8 million and up approximately 18% year-over-year from $136.1 million.
- Q3 FY09 Cash Flow Generated from Operations: For the quarter ended September 30, 2009, cash flow generated from operating activities was $3.6 million, compared to the ($2.3) million use in the quarter ended September 30, 2008.
- Q3 FY09 Net Income (Loss) per Common Share: On a GAAP basis, for the quarter ended September 30, 2009, the net loss per common share, basic and diluted, was $(0.03). The non-GAAP net income (loss) per common share, basic and diluted, was $0.01, which excludes approximately $2.6 million in stock-based compensation expense, compared to $0.00 in Q209 which excludes $2.4 million of stock-based compensation and $(0.33) in Q308 which excludes $2.2 million of stock-based compensation. GAAP and non-GAAP net loss per common share calculations for the third quarter of 2009 are based on 57.3 million weighted average shares.
Additional Third Quarter Fiscal 2009 Highlights:
- SuccessFactors unveils Business Execution Software (BizX). The September launch of Business Execution (BizX) Software accelerated interest from both new and existing customers. Strong quarterly results were also driven by an increase in large deals and average deal sizes, continued strength across international markets, and increased sales to existing customers.
- SuccessFactors details Business Execution Product Road Map and launches first Strategy Deployment Solution. This offering helps executives set overall business objectives, align them throughout the organization and gain visibility into how people and lines of business are executing against that strategy. The Strategy Deployment Solution includes: Metrics Navigator, SuccessIndicators, Objective Alignment Spotlight, Objective Cascading, Employee Search and Collaboration Tools, Business Execution Survey, and Business Execution Services.
- SuccessFactors presented at the 2009 World Business Forum to a sold-out session to discuss "Why Execution is the Difference Between Success and 'Game Over.'"
- SuccessFactors launched BizX Recruiting Management at HR Tech as the first and only application that brings together external data and internal success metrics to enable companies to hire the right people, at the right time, for the right jobs, and accelerate top line and bottom line growth. Siemens AG will be the first SuccessFactors customer to roll out the newest release to its 420,000 users - one of the largest SaaS implementations globally, across 80 countries in 20 languages.
- SuccessFactors appoints industry leader Peter Prestele to run Europe, Middle East, and Africa (EMEA) sales. Prestele comes to SuccessFactors with more than 15 years of software industry experience, with recent executive roles at Hewlett-Packard as area vice president of software group Germany, at Mercury Interactive as managing director central and Eastern Europe, and at IBM Europe as vice president EMEA WebSphere BI.
- SuccessFactors appoints Vicki Bernholz Chief People Officer. Bernholz joins SuccessFactors from Gap Inc. where she was Vice President Human Resource Operations and managed human resources tools and processes for over 100,000 employees in 3,000+ retail stores worldwide. With more than twenty years of human resources experience, Bernholz has experienced strong growth from the front lines when she held business and human resources positions at the early stages of Blockbuster Video, Boston Market, Wild Oats Markets and Waldo's Dollar Mart de Mexico (Mexico's largest dollar store chain). While at Gap, Bernholz leveraged her background as an MBA and CPA and led several large scale projects for all stores to manage employee satisfaction, define career paths and build bench strength, all while improving operational efficiency, one of which resulted in over $50 million in savings.
- SuccessFactors hosts the 2009 APAC SuccessConnect Customer Conference, the company's Asia Pacific user conference, in Melbourne, Australia. Co-founder and chief technology officer, Aaron Au, delivered the keynote address "Focused On Linking Business Strategy to Execution." The Executive Summit brought together hundreds of attendees and SuccessFactors' customers across all industries in the region.
- SuccessFactors with Tanaiste, Ireland's Deputy Prime Minister, announces SuccessFactors' new EMEA Multilingual Business and Sales Centre located in Dublin.
- SuccessFactors announces the availability of SuccessFactors Express, the instant, easy-to-use Performance Management solution to help small, emerging, high-growth companies to instantly create a performance review process, as well as track progress against critical company goals to ensure success of their small business. Ceridian is reselling SuccessFactors Express as Ceridian Performance Management Express.
Guidance:
SuccessFactors is providing guidance for its fourth quarter and full fiscal year 2009, as of October 27th, 2009.
- Q4 FY09: Revenue for the company's fourth fiscal quarter is projected to be in the range of approximately $39.3 million to $39.7 million. Non-GAAP net income per common share, basic and diluted, is expected to be approximately breakeven. Non-GAAP net loss per common share estimates exclude the effects of estimated stock-based compensation expense and assume an average weighted share count of approximately 67.9 million shares.
- Full Year 2009: The company is raising guidance for full fiscal 2009 revenue from approximately $147.0 million to $148.0 million, or 32% annual growth from fiscal year 2008, to approximately $150.1 million to $150.6 million, or approximately 35% annual growth from fiscal year 2008. The company now expects the non-GAAP net loss per common share for fiscal 2009 to be approximately ($0.04); previous guidance had been in the range of ($0.06) to ($0.07). Non-GAAP net loss per common share estimates exclude the effects of estimated stock-based compensation expense and assume an average weighted share count of approximately 59.6 million shares.
Q309 Financial Results Conference Call:
SuccessFactors will host a conference call at 2:00 p.m. (PDT) / 5:00 p.m. (EDT) to discuss the third quarter financial results with the investment community. A live web broadcast of the event will be available on SuccessFactors' Investor Relations website at http://www.successfactors.com/investor. A live domestic dial-in is available at (866) 923-9739 or (706) 634-0915 internationally. A domestic replay will be available at (800) 642-1687 or (706) 645-9291 internationally, passcode 35847207, and available via webcast replay until November 6th, 2009.
Use of Non-GAAP Financial Information:
SuccessFactors provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand SuccessFactors' past financial performance and future results, SuccessFactors has supplemented its financial results that it provides in accordance with GAAP, with non-GAAP financial measures. The method SuccessFactors uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies. The non-GAAP measures used by SuccessFactors in this press release exclude the impact of stock-based compensation expense recorded under SFAS123R. SuccessFactors' reference to these non-GAAP financial results should be considered in addition to results that are prepared under current accounting standards but should not be considered as a substitute for, or superior to, the financial results that are presented as consistent with GAAP. SuccessFactors' management uses the supplemental non-GAAP financial measures internally to understand, manage and evaluate SuccessFactors' business and make operating decisions. These non-GAAP financial measures are among the factors SuccessFactors' management uses in planning for and forecasting future periods. Reconciliation to the nearest GAAP financial measures of the non-GAAP financial measures is included in this press release.
About SuccessFactors, Inc.
SuccessFactors is the global leader in Business Execution Software. The SuccessFactors Business Execution Suite improves business alignment and people performance to drive breakthrough results for companies of all sizes. More than 5 million users and 2,800 companies leverage SuccessFactors every day. To learn more, visit: www.successfactors.com.
Execution Is The Difference(TM)
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"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are SuccessFactors' current expectations and beliefs.
These forward-looking statements include statements about expected revenue and non-GAAP net loss per common share for the fourth fiscal quarter of 2009 and the full fiscal year 2009. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: our ability to continue to experience high customer renewal rates; whether customers renew their agreements for additional modules or users; levels of new customers; pricing pressures; the uncertain impact of the overall global economic slowdown, including on our customers, prospective customers and partners, renewal rates and length of sales cycles; the fact that our market and the business execution market is at an early stage of development, and it may not develop as rapidly as we anticipate; competitive factors; outages or security breaches; our ability to develop, and market acceptance of, new services; our ability to continue to sell our services outside the HR area; our ability to manage our growth; our ability to successfully expand our sales force and its effectiveness; whether our resellers and other partners will be successful in marketing our products; our ability to continue to manage expenses; the impact of unforeseen expenses; and general economic conditions worldwide. If any such risks or uncertainties materialize or if any of the assumptions proves incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.
Further information on these and other factors that could affect our financial results is included in the section entitled "Risk Factors" in our Annual Report on Form 10-K for 2008 and in our most recent report on Form 10-Q and in other filings we make with the Securities and Exchange Commission from time to time.
These documents are or will be available in the SEC Filings section of the Investor Relations section of our website at www.successfactors.com/investor. Information on our website is not part of this release.
SuccessFactors, Inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
"SuccessFactors," the SuccessFactors logo, and "Execution Is The Difference" are trademarks of SuccessFactors, Inc., San Mateo, California. Other names used may be trademarks of their respective owners.
SuccessFactors, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
As of As of
September 30, December 31,
2009 2008
---- ----
(unaudited) (1)
Assets:
Current assets:
Cash and cash equivalents $41,038 $69,859
Marketable securities 70,894 32,505
Accounts receivable, net of
allowance for doubtful accounts 42,862 44,446
Deferred commissions 5,401 5,721
Prepaid expenses and other
current assets 6,994 3,224
----- -----
Total current assets 167,189 155,755
Restricted cash 1,051 1,248
Property and equipment, net 5,517 6,933
Deferred commissions, net of
current portion 7,052 6,292
Other assets 521 198
--- ---
Total assets $181,330 $170,426
======== ========
Liabilities and stockholders' deficit:
Current liabilities:
Accounts payable $209 $1,960
Accrued expenses and other
current liabilities 6,632 8,777
Accrued employee compensation 14,120 12,159
Deferred revenue 142,990 128,940
Current portion of capital lease
obligations 29 37
-- --
Total current liabilities 163,980 151,873
Capital lease obligations,
net of current portion - 19
Deferred revenue, net of current
portion 18,026 20,858
Long-term taxes payable 1,411 855
Other long-term liabilities 498 2,197
--- -----
Total liabilities 183,915 175,802
Stockholders' deficit:
Common stock 58 56
Additional paid-in capital 213,550 200,907
Accumulated other
comprehensive income 47 (74)
Accumulated deficit (216,240) (206,265)
-------- --------
Total stockholders' deficit (2,585) (5,376)
Total liabilities and
stockholders' deficit $181,330 $170,426
======== ========
(1) The condensed consolidated balance sheet as of December 31, 2008 has
been derived from the audited financial statements as of that date, but
does not include all of the information and footnotes required by
accounting principles generally accepted in the United States for
complete financial statements.
SuccessFactors, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenue $38,685 $29,712 $110,845 $78,887
Cost of revenue (1) 8,831 10,187 25,267 28,767
----- ------ ------ ------
Gross profit 29,854 19,525 85,578 50,120
------ ------ ------ ------
Operating expenses: (1)
Sales and marketing 19,573 25,251 59,125 70,121
Research and development 6,343 6,516 17,967 17,975
General and administrative 6,016 6,863 18,542 19,905
Gain on settlement of
litigation, net - 1,283 - 2,161
--- ----- --- -----
Total operating expenses 31,932 39,913 95,634 110,162
------ ------ ------ -------
Loss from operations (2,078) (20,388) (10,056) (60,042)
Interest income (expense)
and other, net 210 256 823 1,625
--- --- --- -----
Loss before provision for
income taxes (1,868) (20,132) (9,233) (58,417)
Provision for income taxes (104) (256) (742) (556)
---- ---- ---- ----
Net loss $(1,972) $(20,388) $(9,975) $(58,973)
======= ======== ======= ========
Net loss per common share,
basic and diluted $(0.03) $(0.37) $(0.18) $(1.11)
====== ====== ====== ======
Shares used in computing net
loss per common share, basic
and diluted 57,292 55,433 56,791 53,135
====== ====== ====== ======
(1) Amounts include stock-based compensation expenses as follows:
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Cost of revenue $291 $283 $989 $692
Sales and marketing 1,143 1,021 3,233 2,707
Research and development 312 311 904 790
General and administrative 815 543 2,293 1,718
SuccessFactors, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Cash flow from operating
activities:
Net loss $(1,972) $(20,388) $(9,975) $(58,973)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 955 1,181 2,915 2,677
Loss (gain) on
retirement/
impairment of fixed
asset 2 (64) (63) (64)
Amortization of deferred
commissions 1,785 1,746 5,399 4,913
Stock-based compensation
expense 2,561 2,158 7,419 5,907
Changes in assets and
liabilities:
Accounts receivable (6,864) (7,100) 1,584 1,493
Deferred commissions (3,375) (1,987) (5,837) (5,015)
Prepaid expenses and
other current assets (2,587) 854 (3,771) (1,887)
Other assets (220) (16) (324) 20
Accounts payable (444) 3,768 (1,751) 794
Accrued expenses and
other current
liabilities 443 1,035 (2,135) 2,677
Accrued employee
compensation 1,880 3,226 1,961 (1,004)
Long-term taxes payable 249 855 555 855
Other liabilities (28) (21) 8 (144)
Deferred revenue 11,193 12,423 11,219 35,047
------ ------ ------ ------
Net cash provided by
(used in) operating
activities 3,578 (2,330) 7,204 (12,704)
----- ------ ----- -------
Cash flow from investing
activities:
Restricted cash 173 (521) 197 (460)
Capital expenditures (1,176) (1,595) (1,524) (4,200)
Proceeds from sale of
assets - - 88 -
Purchases of available-
for-sale securities (34,330) (41,678) (112,957) (75,042)
Proceeds from
maturities of
available-for-sale
securities 34,185 998 73,989 15,501
Proceeds from sales of
available-for-sale
securities - 7,983 546 7,983
--- ----- --- -----
Net cash used in
investing activities (1,148) (34,813) (39,661) (56,218)
------ ------- ------- -------
Cash flow from financing
activities:
Proceeds from exercise of
stock options, net 1,469 548 3,518 1,208
Proceeds from early
exercise of stock
options, net - 162 - 162
Proceeds from initial
public offering, net of
offering costs - - - (545)
Proceeds from follow-
on offering, net of
offering costs - (258) - 27,430
Principal payments on
capital lease
obligations (9) (8) (27) (25)
--- --- --- ---
Net cash provided by
financing activities 1,460 444 3,491 28,230
----- --- ----- ------
Effect of exchange rate
changes on cash and cash
equivalents 83 (133) 145 (90)
--- ---- --- ---
Net increase
(decrease) in cash
and cash equivalents 3,973 (36,832) (28,821) (40,782)
Cash and cash
equivalents at
beginning of period 37,065 78,324 69,859 82,274
------ ------ ------ ------
Cash and cash
equivalents at end of
period $41,038 $41,492 $41,038 $41,492
======= ======= ======= =======
SuccessFactors, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(unaudited, in thousands, except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
-------- ---- ---- ---- ----
Bookings
reconciliation:
----------------
Revenue $38,685 $29,712 $110,845 $78,887
------- ------- -------- -------
Ending total
deferred revenue 161,016 136,057 161,016 136,057
Less: Beginning
total deferred
revenue 149,824 123,634 149,798 101,010
------- ------- ------- -------
Change in total
deferred revenue 11,192 12,423 11,218 35,047
------ ------ ------ ------
------- ------- -------- --------
Bookings (revenue
plus change in
total deferred
revenue) $49,877 $42,135 $122,063 $113,934
======= ======= ======== ========
--------
Net loss and
net loss per
share
reconciliations:
-----------------
GAAP net loss $(1,972) $(20,388) $(9,975) $(58,973)
(a) Stock-based
compensation as
measured under
SFAS123R 2,561 2,158 7,419 5,907
----- ----- ----- -----
Non-GAAP net
income (loss)
excluding
stock-based
compensation
expense and
other items $589 $(18,230) $(2,556) $(53,066)
==== ======== ======= ========
GAAP net loss
per common
share - basic
and diluted $(0.03) $(0.37) $(0.18) $(1.11)
====== ====== ====== ======
Non-GAAP net
income (loss)
per common
share
(excluding
stock-based
compensation
expense) -
basic and
diluted $0.01 $(0.33) $(0.05) $(1.00)
===== ====== ====== ======
GAAP shares
used in
computing net
loss per
common share,
basic and
diluted 57,292 55,433 56,791 53,135
====== ====== ====== ======
--------
Total
spend
reconciliation:
----------------
GAAP total
cost of
revenue and
operating
expenses $40,763 $50,100 $120,901 $138,929
(a) Stock-based
compensation as
measured under
SFAS123R 2,561 2,158 7,419 5,907
----- ----- ----- -----
Non-GAAP total
cost of revenue
and operating
expenses (total
spend) $38,202 $47,942 $113,482 $133,022
======= ======= ======== ========
--------
Gross profit
and gross
margin
reconciliations:
-----------------
GAAP gross profit $29,854 $19,525 $85,578 $50,120
(b) Stock-based
compensation in
cost of revenue
as measured
under SFAS123R 291 283 989 692
--- --- --- ---
Non-GAAP gross
profit $30,145 $19,808 $86,567 $50,812
======= ======= ======= =======
GAAP gross margin
percentage 77% 66% 77% 64%
== == == ==
Non-GAAP gross
margin percentage 78% 67% 78% 64%
== == == ==
--------
Cost of revenue
reconciliation:
----------------
GAAP cost of
revenue $8,831 $10,187 $25,267 $28,767
(b) Stock-based
compensation in
cost of revenue
as measured
under SFAS123R 291 283 989 692
--- --- --- ---
Non-GAAP cost of
revenue $8,540 $9,904 $24,278 $28,075
====== ====== ======= =======
--------
Total
operating
expenses
reconciliation:
----------------
GAAP operating
expenses $31,932 $39,913 $95,634 $110,162
(c) Stock-based
compensation in
operating
expenses as
measured under
SFAS123R 2,270 1,875 6,430 5,215
----- ----- ----- -----
Non-GAAP operating
expenses $29,662 $38,038 $89,204 $104,947
======= ======= ======= ========
--------
Total sales
and
marketing
reconciliation:
----------------
GAAP sales and
marketing $19,573 $25,251 $59,125 $70,121
(d) Stock-based
compensation in
sales and
marketing as
measured under
SFAS123R 1,143 1,021 3,233 2,707
----- ----- ----- -----
Non-GAAP sales and
marketing $18,430 $24,230 $55,892 $67,414
======= ======= ======= =======
--------
Total research
and
development
reconciliation:
----------------
GAAP research and
development $6,343 $6,516 $17,967 $17,975
(e) Stock-based
compensation in
research and
development as
measured under
SFAS123R 312 311 904 790
--- --- --- ---
Non-GAAP research
and development $6,031 $6,205 $17,063 $17,185
====== ====== ======= =======
--------
Total general
and
administrative
reconciliation:
----------------
GAAP general and
administrative
expenses $6,016 $6,863 $18,542 $19,905
(f) Stock-based
compensation in
general and
administrative as
measured under
SFAS123R 815 543 2,293 1,718
--- --- ----- -----
Non-GAAP general
and
administrative $5,201 $6,320 $16,249 $18,187
====== ====== ======= =======
--------
Operating
margin
reconciliation:
----------------
GAAP loss from
operations $(2,078) $(20,388) $(10,056) $(60,042)
(b) Stock-based
compensation in
cost of revenue
as measured
under SFAS123R 291 283 989 692
(d) Stock-based
compensation in
sales and
marketing as
measured under
SFAS123R 1,143 1,021 3,233 2,707
(e) Stock-based
compensation in
research and
development as
measured under
SFAS123R 312 311 904 790
(f) Stock-based
compensation in
general and
administrative as
measured under
SFAS123R 815 543 2,293 1,718
--- --- ----- -----
Non-GAAP income
(loss) from
operations less
SFAS123R $483 $(18,230) $(2,637) $(54,135)
==== ======== ======= ========
Revenue $38,685 $29,712 $110,845 $78,887
------- ------- -------- -------
Non-GAAP operating
margin percentage 1% (61%) (2%) (69%)
== === === ===
CONTACT:
Dominic Paschel
SuccessFactors, Inc.
Public & Investor Relations
415-262-4641
dpaschel@successfactors.com
SOURCE SuccessFactors, Inc.
http://www.successfactors.com
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