REDMOND, Wash., May 2, 2007 - Concur Technologies, Inc. (NASDAQ: CNQR), the world's leading provider of on-demand Employee Spend Management services today reported financial results for its second quarter ended March 31, 2007.
Concur reported total revenue for the second quarter of fiscal 2007 of $30.9 million, driven by subscription revenue which was up 45% from the year-ago quarter. Total revenue for the quarter was up 31% from the year-ago quarter and up 6% sequentially. Fiscal 2007 second quarter net income, which includes a provision for income taxes of $1.9 million, was $1.3 million, or $0.03 per share, and was above company expectations. This compares to net income of $0.9 million, or $0.02 per share, in the year-ago quarter, which did not require a full provision for income taxes.
"Our extraordinary fiscal 2007 second quarter results were driven by strong growth in new customers, enthusiastic client adoption of our end-to-end travel and expense management services and solid execution across the business," said Steve Singh, chairman and CEO of Concur Technologies. "Cash flows from operations are up over 300% compared to the year-ago quarter, even as we continue to invest in the business and launch innovative new services like Concur® Vendor Payment to address additional areas of Employee Spend Management."
Singh continued, "As a result of our continued strong performance and robust demand from our clients, we are raising our revenue, earnings and cash flow guidance for the year. In addition, we expect to accelerate investments across the business with a focus on increasing our distribution capacity, and delivering new services and innovations that leverage our market-leading on-demand Employee Spend Management platform."
- Total revenue was $30.9 million for the second quarter of fiscal 2007, up 31% compared to the year-ago quarter and up 6% sequentially.
- Net income was $1.3 million, or $0.03 per share, for the second quarter of fiscal 2007 and included a provision for income taxes of $1.9 million, compared to $0.9 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.
- Non-GAAP pretax income was $5.1 million, or $0.12 per share, for the second quarter of fiscal 2007, compared to $2.8 million, or $0.07 per share, for the year-ago quarter. Please refer to "About Concur's Non-GAAP Financial Measures" below.
- Non-GAAP operating margin was 17% for the second quarter of fiscal 2007, up from 13% for the year-ago quarter and up from 16% sequentially.
- Cash flows from operations were $10.8 million for the second quarter of fiscal 2007, up 303% from the year-ago quarter.
- Deferred revenue was $27.8 million for the second quarter of fiscal 2007, up 15% compared to the year-ago quarter and up 5% sequentially.
- Concur repurchased 114,347 shares of its outstanding common stock under the share repurchase program authorized by Concur's Board of Directors in the first quarter of 2007.
Recent Business Highlights
- Concur announced the availability of Concur Vendor Payment. Several clients, including La Quinta, have adopted this on-demand service to help them eliminate the time and cost associated with processing vendor invoices and employee check requests. This new service - which is seamlessly interwoven into Concur's on-demand service platform - was specifically designed from the ground up to address a market opportunity that's estimated to be comparable in size to the expense management market.
- Concur signed contracts with new and existing customers, including Fortent Ltd., IMPAC Medical Systems, Inc., Input/Output, Inc., La Quinta, Land O'Lakes, MAG Capital, Maritz Travel Company, Novellus Systems Inc., SirsiDynix, The University of Colorado and USA Hockey.
- Concur's Cliqbook® Travel was selected as the online booking tool by a Fortune 20 company to help manage their travel program around the world.
- Concur launched Direct Reimbursement, to facilitate quick and efficient payments to employees, suppliers and credit card companies through Concur services.
- Concur continued to expand the industry's largest selection of supplier content by announcing the only Direct Connect to Air Canada. This latest addition to Concur's growing list of Direct Connect suppliers enables corporate customers who use Cliqbook Travel to have full access to all of Air Canada's faring, inventory and Flight Pass products.
- Concur entered into a partnership with Citigroup to offer all Citi clients around the world access to Concur's industry-leading travel and expense management solutions.
- Concur was named for the second straight year by the International Association of Outsourcing Professionals (IAOP) as one of the World's 100 Best Outsourcing Service Providers, placing 46th on the IAOP's 2007 Leaders list.
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 $31.6 million for the third quarter of fiscal 2007, and to be between $123 million and $125 million for fiscal 2007.
- Concur expects earnings per share for the third 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 $0.11.
- Concur expects earnings per share for fiscal 2007 to be $0.11 assuming an estimated effective tax rate of 60% and non-GAAP pre-tax earnings per share to be $0.48.
- Concur expects the fiscal 2007 non-GAAP operating margin to be 16% for the year as a whole.
About Concur Technologies, Inc.
Concur Technologies, Inc. is the world's leading provider of on-demand Employee Spend Management services. Concur enables organizations to globally control costs by automating the processes they use to manage employee spending. Concur's end-to-end solutions seamlessly unite online travel booking with automated expense reporting, streamline meeting management and optimize the process of managing vendor payments, employee check requests and direct reimbursements. Organizations of all sizes trust Concur to help them control spend before it occurs while eliminating paper and optimizing supplier relations. Concur's unified approach to managing employee spend delivers a 360° view into all employee expenses, helping companies globally enforce policies and monitor vendor compliance, while 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.
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.
Concur Technologies, Inc. Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Three months ended Six months March 31, March 31, 2007 2006 2007 2006 Revenues: Subscription $27,901 $19,236 $53,394 $34,405 Consulting and other 2,949 4,277 6,696 8,375 Total revenues 30,850 23,513 60,090 42,780 Expenses: Cost of operations 10,910 9,372 21,287 17,626 Sales and marketing 8,058 5,669 15,089 10,424 Systems development and programming 3,739 3,041 7,621 5,264 General and administrative 4,090 3,638 8,697 6,743 Amortization of intangible assets 785 606 1,608 891 Total expenses 27,582 22,326 54,302 40,948 Operating income 3,268 1,187 5,788 1,832 Other income (expense): Interest income 213 130 395 235 Interest expense (346) (218) (713) (219) Other, net 65 (106) 94 (148) Total other expense, net (68) (194) (224) (132) Income before income tax 3,200 993 5,564 1,700 Provision for income tax 1,855 60 3,226 120 Net income $1,345 $933 $2,338 $1,580 Net income per share available to common stockholders: Basic $0.04 $0.03 $0.06 $0.05 Diluted 0.03 0.02 0.06 0.04 Weighted average shares used in computing net income per share: Basic 37,090 34,889 36,782 34,086 Diluted 40,521 39,399 40,341 38,401 Concur Technologies, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) March 31, September 30, 2007 2006 (Unaudited) Assets Current assets: Cash and cash equivalents $22,452 $16,334 Accounts receivable, net of allowance of $2,248 and $1,544 21,749 22,734 Prepaid expenses 1,766 1,368 Deferred income taxes, net 2,710 2,759 Other current assets 6,754 5,883 Total current assets 55,431 49,078 Property and equipment, net 23,386 20,429 Intangible assets, net of amortization 11,961 13,570 Goodwill 65,628 65,628 Deferred income tax assets, net 21,738 24,839 Deposits and other long-term assets 8,975 7,775 Total assets $187,119 $181,319 Liabilities and stockholders' equity Current liabilities: Accounts payable $4,059 $2,551 Accrued compensation 5,770 5,052 Acquisition-related liabilities 883 8,826 Other accrued liabilities 3,596 3,415 Current portion of long-term debt 3,500 3,312 Current portion of deferred rent 347 240 Current portion of deferred revenues 19,457 15,974 Total current liabilities 37,612 39,370 Long-term debt, net of current portion 12,120 13,520 Deferred rent, net of current portion 2,643 2,827 Deferred revenues, net of current portion 8,360 8,208 Total liabilities 60,735 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 38 36 Authorized shares: 60,000 Shares issued and outstanding: 37,715 and 36,142 Issuable shares: 0 and 284 Additional paid-in capital 293,802 287,382 Accumulated deficit (167,899) (170,237) Accumulated other comprehensive income 443 213 Total stockholders' equity 126,384 117,394 Total liabilities and stockholders' equity $187,119 $181,319 Concur Technologies, Inc Consolidated Statements of Cash Flows (in thousands) (Unaudited) Three months ended Six months ended March 31, March 31, 2007 2006 2007 2006 Operating activities: Net income $1,345 $933 $2,338 $1,580 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets 785 606 1,608 891 Depreciation 2,141 1,232 4,073 2,318 Provision for allowance for accounts receivable 493 366 786 989 Share-based compensation expense 1,069 1,171 2,297 1,972 Deferred income taxes 1,887 - 3,150 - Changes in operating assets and liabilities, net of effects from acquisition: Accounts receivable 569 (3,200) 231 (5,205) Prepaid expenses, deposits and other assets (1,745) (1,203) (2,429) (2,603) Accounts payable (145) 1,082 31 2,162 Accrued liabilities 3,031 385 599 (833) Deferred revenues 1,355 1,306 3,625 2,876 Net cash provided by operating activities 10,785 2,678 16,309 4,147 Investing activities: Purchases of property and equipment (3,075) (2,600) (5,539) (4,911) Payments for acquisition, net of cash acquired (7,750) (22,508) (7,750) (22,508) Net cash used in investing activities (10,825) (25,108) (13,289) (27,419) Financing activities: Proceeds from borrowings - 18,000 - 18,000 Proceeds from issuance of common stock from exercise of stock options 5,033 2,165 5,511 2,707 Proceeds from issuance of common stock from employee stock purchase plan 231 212 419 414 Payments on repurchase of common stock (1,853) - (1,853) - Repayments on borrowing (595) (629) (1,212) (629) Net cash provided by financing activities 2,816 19,748 2,865 20,492 Effect of foreign currency exchange rate changes on cash and cash equivalents 6 - 233 (82) Net increase (decrease) in cash and cash equivalents 2,782 (2,682) 6,118 (2,862) Cash and cash equivalents at beginning of period 19,670 16,022 16,334 16,202 Cash and cash equivalents at end of period $22,452 $13,340 $22,452 $13,340 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 Six months ended March 31, March 31, 2007 2006 2007 2006 Non-GAAP operating income reconciliation: Operating income $3,268 $1,187 $5,788 $1,832 Income from operations as a % of total revenue (Operating Margin) 11% 5% 10% 4% Add back: Effect of share-based compensation on operating income 1,069 1,171 2,297 1,972 Effect of amortization of intangibles on operating income 785 606 1,608 891 Non-GAAP operating income $5,122 $2,964 $9,693 $4,695 Non-GAAP operating income as a % of total revenue (Non-GAAP Operating Margin) 17% 13% 16% 11% Non-GAAP net income reconciliation: Net income $1,345 $933 $2,338 $1,580 Add back: Share-based compensation 1,069 1,171 2,297 1,972 Amortization of intangibles 785 606 1,608 891 Provision for income taxes 1,855 60 3,226 120 Non-GAAP pretax income $5,054 $2,770 $9,469 $4,563 Non-GAAP diluted income per share reconciliation: Diluted income per share $0.03 $0.02 $0.06 $0.04 Add back: Effect of share-based compensation on income per share 0.03 0.03 0.05 0.05 Effect of amortization of intangibles on income per share 0.02 0.02 0.04 0.02 Provision for income taxes 0.04 - 0.08 - Non-GAAP pretax diluted income per share $0.12 $0.07 $0.23 $0.11 Shares used in calculation of basic and diluted non-GAAP income per share: Basic 37,090 34,889 36,782 34,086 Diluted 40,521 39,399 40,341 38,401 CONCUR TECHNOLOGIES, INC. About Concur's Non-GAAP Financial Measures (Continued)
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 and restricted stock units ("RSU") that it records under the provisions of SFAS 123(R). Concur excludes these expenses from its non-GAAP financial measures primarily because they are non-cash expenses that it does 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 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 and RSU 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.