Concur Technologies Announces First Quarter Revenue Up 52% Year-Over-Year

REDMOND, Wash., January 31, 2007 -

Concur Technologies, Inc. (NASDAQ: CNQR), the world's leading provider of on-demand Corporate Expense Management services today reported financial results for its first quarter ended December 31, 2006.

Concur reported total revenue for the first quarter of fiscal 2007 of $29.2 million, driven by subscription revenue which was up 68% from the year-ago quarter. Total revenue for the quarter was up 52% from the year-ago quarter and up 6% sequentially. Fiscal 2007 first quarter net income, which includes a provision for income taxes of $1.4 million, was $1.0 million, or $0.02 per share, and was above company expectations. This compares to net income of $0.6 million, or $0.02 per share, in the year-ago quarter, which did not require a full provision for income taxes.

"We started fiscal 2007 with an exceptional quarter, as we exceeded our revenue, gross margin, operating margin and earnings targets. Even as we invested across the business to drive better than 50% top line growth, we were able to grow operating margin by 74%," said Steve Singh, chairman and CEO of Concur Technologies. "New customer growth continued to be strong across the breadth of our services and we are pleased with the demand environment. In particular, customers continue to embrace the value proposition and end user benefits of our end-to-end travel and expense service."

Singh continued, "As we look ahead, we remain focused on aggressively growing top line revenue while maintaining our operating leverage. To support this objective, we will continue to invest in expanding our distribution and market reach while delivering new services and innovations that not only set the standard in the travel and expense market, but also raise our market-leading standard for high quality on-demand services."

Financial Highlights

  • Total revenue was $29.2 million for the first quarter of fiscal 2007, up 52% compared to the year-ago quarter and up 6% sequentially.
  • Net income was $1.0 million, or $0.02 per share for the first quarter of fiscal 2007 and included a provision for income taxes of $1.4 million, compared to $0.6 million, or $0.02 per share for the year-ago quarter which did not require a full provision for income taxes. The company released reserves against its deferred tax assets in the third quarter of fiscal 2006 and began recording a provision for income taxes in the fourth quarter of fiscal 2006.
  • Deferred revenue was $26.5 million for the first quarter of fiscal 2007, up 20% compared to the year-ago quarter and up 9% sequentially.
  • Cash flows from operations were $5.5 million for the first quarter of fiscal 2007, up 276% from the year-ago quarter.
  • Non-GAAP operating margin was 16% for the first quarter of fiscal 2007, up from 9% for the year-ago quarter and down 2% sequentially. Please refer to "About Concur's Non-GAAP Financial Measures" below.

Recent Business Highlights

  • Concur signed contracts with new and existing customers, including Atmel Corporation, Brown Brothers Harriman & Co., Cadence Design Systems, Inc., Choice Hotels International, Dresdner Kleinwort, HarbourVest Partners LLC, Highmark, Inc., IKON Office Solutions, Inc., NDS Ltd, Overland Solutions, Inc., Replidyne, Inc. and Virtual Radiologic Corporation.
  • Concur successfully completed its largest on-demand service deployment, with over 180,000 employees of a leading global financial institution now generating over 1.5 million transactions per year.
  • Concur was once again recognized among the top 10 software on-demand providers in terms of global revenue in 2005 by IDC, whose report, Worldwide Software on Demand 2005 Vendor Analysis (IDC #204790, December 2006), found that the top 10 companies listed represented 51% of the on-demand landscape".
  • Concur was selected to the S&P Small Cap 600, an index consisting of 600 domestic stocks chosen for market size, liquidity, profitable growth and industry group representation.
  • Concur executives Steve Singh and Thomas DePasquale were both named to the 25 Most Influential Executives of 2006 list by the editors of Business Travel News, who each year list the 25 decision makers they perceived as having exerted the greatest influence over the business travel industry in the previous year.
  • Concur's Board of Directors approved a new share repurchase program authorizing the repurchase of up to two million shares of its currently outstanding common stock over the next two years.

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 ("SEC"), 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 accounting principles generally accepted in the United States ("GAAP") equivalents.

  • Concur expects total revenue to be $29.5 million for the second quarter of fiscal 2007, and to be between $121 million and $125 million for fiscal 2007.
  • Concur expects earnings per share for the second quarter of fiscal 2007 to be $0.02 assuming an estimated effective tax rate of 60% and non-GAAP pre-tax earnings per share to be $0.10.
  • Concur expects earnings per share for fiscal 2007 to be $0.10 assuming an estimated effective tax rate of 60% and non-GAAP pre-tax earnings per share to be $0.46.
  • Concur expects the fiscal 2007 non-GAAP operating margin to be between 15% and 16% for the year as a whole.

About Concur Technologies, Inc.

Concur Technologies, Inc. is the world's leading provider of on-demand Corporate Expense Management services. Concur's end-to-end corporate travel and expense management service seamlessly unites online travel booking with automated expense reporting, controlling spend before it occurs while streamlining travel procurement and employee reimbursement. Concur's services also automate the process of managing vendor payments and employee check requests, eliminating paper, optimizing supplier relations and providing enhanced visibility. By providing a 360° view into all employee travel and procurement expenses, Concur's robust services help companies enforce policies and monitor vendor compliance, delivering unprecedented control and valuable insight. Concur's suite of on-demand services reach millions of employees across thousands of organizations around the world - streamlining business processes, reducing operating costs, improving internal controls and providing enhanced visibility and actionable expense analysis. 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 subscription service offerings; potential difficulties associated with our deployment and support of our products and services; our ability to manage expected growth of our subscription service offerings; the scalability of the hosting infrastructure for our subscription service offerings; potential increases in the rate of attrition of customers of our subscription service offerings; the level of investment in information technology by our customers; the level of business travel that may reduce the use of our products and services or inhibit new sales of our products and services; potential difficulties associated with strategic relationships and with development of new products and services; risks associated with expansion into new geographic markets; the lengthy sales cycle for our products and services; and uncertain market acceptance of recently-introduced or future products and services.

Please refer to the company's public filings made with the SEC (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.

    Investor Contact:
    John Adair, Concur Technologies, Inc., 425-497-6439, johna@concur.com

    Press Contact:
    Jeff Pecor, Barokas Public Relations, 206-264-8220, jeff@barokas.com


                          Concur Technologies, Inc.
                    Consolidated Statements of Operations
                    (in thousands, except per share data)
                                 (Unaudited)

                                                       Three Months Ended
                                                          December 31,
                                                       2006           2005
    Revenues:
      Subscription                                   $25,493        $15,169
      Consulting and other                             3,747          4,098
    Total revenues                                    29,240         19,267

    Expenses:
      Cost of operations                              10,377          8,254
      Sales and marketing                              7,031          4,755
      Systems development and programming              3,882          2,223
      General and administrative                       4,607          3,105
      Amortization of intangible assets                  823            285
    Total expenses                                    26,720         18,622

    Operating income                                   2,520            645

    Other income (expense):
      Interest income                                    182            106
      Interest expense                                  (367)            (1)
      Other, net                                          29            (42)
    Total other income (expense), net                   (156)            63

    Income before income tax                           2,364            708

    Provision for income tax                           1,371             60

    Net income                                          $993           $648

    Net income per share available to
     common stockholders:
      Basic                                            $0.03          $0.02
      Diluted                                           0.02           0.02

    Weighted average shares used in
     computing net income per share:
      Basic                                           36,481         33,301
      Diluted                                         40,182         36,505

    Non-GAAP Results (See About Concur's
     Non-GAAP Financial Measures):
      Non-GAAP operating income                       $4,571         $1,731
      Non-GAAP operating margin                          16%             9%
      Non-GAAP pretax income                          $4,415         $1,794

      Non-GAAP pretax income per share
        Basic                                          $0.12          $0.05
        Diluted                                         0.11           0.05

      Shares used in calculation of basic and
       diluted Non-GAAP net income per share
        Basic                                         36,481         33,301
        Diluted                                       40,182         36,505


                            Concur Technologies, Inc.
                           Consolidated Balance Sheets
                (in thousands, except share and per share amounts)

                                                   December 31,  September 30,
                                                      2006           2006
                                                   (Unaudited)
    Assets

    Current assets:
      Cash and cash equivalents                      $19,670        $16,334
      Accounts receivable, net of
       allowance of $1,789 and $1,544                 22,806         22,734
      Prepaid expenses                                 1,025          1,368
      Deferred income taxes, net                       2,766          2,759
      Other current assets                             6,185          5,883

    Total current assets                              52,452         49,078
    Property and equipment, net                       20,971         20,429
    Intangible assets, net of amortization            12,746         13,570
    Goodwill                                          65,628         65,628
    Deferred income tax assets, net                   23,570         24,839
    Deposits and other long-term assets                8,523          7,775
    Total assets                                    $183,890       $181,319

    Liabilities and stockholders' equity

    Current liabilities:
      Accounts payable                                $2,735         $2,551
      Accrued compensation                             2,950          5,052
      Acquisition related liabilities                  8,753          8,826
      Other accrued liabilities                        3,223          3,415
      Current portion of long-term debt                3,395          3,312
      Current portion of deferred rent                   288            240
      Current portion of deferred revenues            17,644         15,974
    Total current liabilities                         38,988         39,370
    Long-term obligations, net of current portion     12,820         13,520
    Long-term deferred rent, net of current portion    2,741          2,827
    Long-term deferred revenues, net
     of current portion                                8,818          8,208
    Total liabilities                                 63,367         63,925

    Commitments and contingencies

    Stockholders' equity:
      Convertible preferred stock, par value
       $0.001 per share                                   --             --
         Authorized shares: 5,000; No shares
          issued or outstanding
      Common stock, $0.001 par value                      36             36
         Authorized shares: 60,000
         Shares issued and outstanding:
          36,234 and 36,142
         Issuable shares: 284 and 284
      Additional paid-in capital                     289,296        287,382
      Accumulated deficit                           (169,244)      (170,237)
      Accumulated other comprehensive income             435            213
    Total stockholders' equity                       120,523        117,394
    Total liabilities and stockholders' equity      $183,890       $181,319


                             Concur Technologies, Inc
                      Consolidated Statements of Cash Flows
                                  (in thousands)
                                   (Unaudited)

                                                         Three months ended
                                                            December 31,
                                                        2006           2005

    Operating activities:
    Net income                                          $993           $648
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Amortization of intangible assets                  823            285
      Depreciation                                     1,932          1,086
      Provision for allowance for accounts receivable    293            624
      Share-based compensation expense                 1,228            801
      Deferred income taxes                            1,263
      Changes in operating assets and liabilities,
       net of effects from acquisition:
        Accounts receivable                             (338)        (2,006)
        Prepaid expenses, deposits and other assets     (683)        (1,401)
        Accounts payable                                 176          1,080
        Accrued liabilities                           (2,432)        (1,218)
        Deferred revenue                               2,270          1,570
    Net cash provided by operating activities          5,525          1,469
    Investing activities:
      Purchases of property and equipment             (2,464)        (2,311)
    Net cash used in investing activities             (2,464)        (2,311)
    Financing activities:
      Proceeds from issuance of common stock
       from exercise of stock options                    478            543
      Proceeds from issuance of common stock
       from employee stock purchase plan                 187            201
      Repayments on borrowing                           (617)            --
    Net cash provided by financing activities             48            744
      Effect of foreign currency exchange rate
       changes on cash and cash equivalents              227            (82)
    Net increase (decrease) in cash and
     cash equivalents                                  3,336           (180)
    Cash and cash equivalents at beginning of period  16,334         16,202
    Cash and cash equivalents at end of period       $19,670        $16,022


                            Concur Technologies, Inc.
     Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
                 (in thousands, except per share and margin data)
                                   (Unaudited)

                                                        Three months ended
                                                           December 31,
                                                       2006           2005

    Non-GAAP operating income reconciliation:
      Operating income                                $2,520           $645
      Income from operations as a % of total
       revenue (Operating Margin)                        9%             3%
      Add back:
         Effect of share-based compensation
          on operating income                          1,228            801
         Effect of amortization of intangibles
          on operating income                            823            285
      Non-GAAP operating income                       $4,571         $1,731
        Non-GAAP operating income as a % of total
         revenue (Non-GAAP Operating Margin)             16%             9%

    Non-GAAP net income reconciliation:
      Net income                                        $993           $648
     Add back:
         Share-based compensation                      1,228            801
         Amortization of intangibles                     823            285
         Provision for income taxes                    1,371             60
         Non-GAAP pretax income                       $4,415         $1,794

    Non-GAAP diluted income per share reconciliation:
      Diluted income per share                         $0.02          $0.02
      Add back:
         Effect of share-based compensation
          on income per share                           0.03           0.02
         Effect of amortization of intangibles
          on income per share                           0.02           0.01
         Provision for income taxes                     0.04             --
      Non-GAAP pretax diluted income per share         $0.11          $0.05

    Shares used in calculation of basic and
     diluted non-GAAP income per share:
      Basic                                           36,481         33,301
      Diluted                                         40,182         36,505


    CONCUR TECHNOLOGIES, INC.
    About Concur's Non-GAAP Financial Measures

This release contains non-GAAP financial measures. The tables above reconcile the non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Concur's non-GAAP financial measures do not reflect a comprehensive system of accounting, and they differ from GAAP measures with similar names and from non-GAAP financial measures with the same or similar names that are used by other companies. We strongly urge investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this release, and our consolidated financial statements, including the notes thereto, and the other financial information contained in our periodic filings with the SEC and not to rely on any single financial measure to evaluate our business.

Concur believes that its non-GAAP financial measures provide meaningful supplemental information regarding Concur's operating results because they exclude amounts that Concur excludes as part of its monitoring of operating results and assessing the performance of the business. Concur believes that its non-GAAP financial measures also facilitate the comparison of results for current periods and business outlook for future periods with results of past periods. Concur presents the following non-GAAP financial measures in this release: non-GAAP operating income; non-GAAP operating margin; non-GAAP net income; and non-GAAP pre-tax earnings per share. Concur excludes the following items as noted from these non-GAAP financial measures:

  • Share-based compensation expenses. Concur's non-GAAP financial measures exclude share-based compensation expenses, which consist of expenses for stock options that it began recording under SFAS 123(R) in the first quarter of fiscal 2006. Concur excludes these expenses from its non-GAAP financial measures primarily because they are non-cash expenses that we do not consider part of ongoing operating results when assessing the performance of our business, and the exclusion of these expenses facilitates the comparison of results for fiscal 2006 and business outlook for future periods with results for prior periods, which did not include share-based compensation expenses.

  • Amortization of acquired intangible assets. In accordance with GAAP, operating expenses include amortization of software and other technology assets, other purchased intangible assets such as customer lists and covenants not to compete. Concur excludes these items from its non-GAAP financial measures because they are non-cash expenses that Concur does not consider part of ongoing operating results when assessing the performance of our business, and Concur believes that doing so facilitates comparisons to its historical operating results and to the results of other companies in our industry, which have their own unique acquisition histories.

  • Provision for income taxes. In accordance with GAAP, Concur began recording a provision for income taxes in the fourth quarter of fiscal 2006. Concur excludes this expense from its non-GAAP financial measures primarily because it is largely a non-cash expense that Concur does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of this expense facilitates the comparison of business outlook for future periods with results for prior periods, which did not include a provision for income taxes.

Except as noted below, Concur believes that all of the following considerations apply equally to each of the non-GAAP financial measures that we present:

  • Concur's management uses non-GAAP operating income (including the derived non-GAAP operating margin), non-GAAP net income, non-GAAP earnings per share and non-GAAP pre-tax earnings per share in internal reports used by management in monitoring and making decisions regarding Concur's business. For example, these measures are used in monthly financial reports prepared for management, and in quarterly reports to Concur's Board of Directors. Concur also uses non-GAAP earnings per share and non-GAAP pre-tax earnings per share as measures that determines executive cash incentive compensation, along with GAAP measures, such as revenue.

  • Because share-based compensation, amortization of acquired intangible assets are non-cash in nature and the provision for income taxes is largely non-cash in nature, Concur believes that non-GAAP operating income, non-GAAP net income, non-GAAP earnings per share and non-GAAP pre-tax earnings per share provide a more focused view of the operations of its business. In particular, share-based compensation amounts are difficult to forecast, because the magnitude of the charges depends upon the volume and timing of stock option grants - which are unpredictable and can vary dramatically from period to period - and external factors such as interest rates and the trading price and volatility of the company's common stock. In addition, the provision for income taxes can vary significantly because losses in its foreign operations are not included in the calculation of the consolidated provision for income taxes as we have not yet released the reserves against the deferred tax assets for our foreign operations. Excluding these amounts improves comparability of the performance of the business across periods.

  • The principal limitation of Concur's non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded. In addition, non-GAAP financial measures are subject to inherent limitations because they reflect the exercise of judgments by management about which charges are excluded from the non-GAAP financial measures.

  • To mitigate this limitation, Concur presents its non-GAAP financial measures in connection with its GAAP results, and recommends that investors do not give undue weight to its non-GAAP financial measures. Concur notes that the dilutive effect of outstanding options is reflected in fully-diluted shares outstanding used in calculating both GAAP earnings per share and our non-GAAP earnings per share.

Concur's management believes that its non-GAAP financial measures provide useful information to investors because it allows investors to view the business through the eyes of management, facilitates comparison of its results across historical and future periods, and because its non-GAAP financial measures provide a special focus on the underlying operating performance of the business relative to expectations.

All company or product names are trademarks and/or registered trademarks of their respective owners.

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