Concur Technologies Exceeds Revenue and Earnings Expectations for First Quarter Fiscal Year 2006

REDMOND, Wash., January 25, 2006 - Concur Technologies, Inc. (NASDAQ: CNQR), the world's leading provider of on-demand business services that automate Corporate Expense Management (CEM), today reported financial results for its first quarter ended December 31, 2005.

Concur reported revenue for the first quarter of fiscal 2006 of $19.3 million, which was driven by 26% year-over-year growth in subscription revenue. Total revenue for the quarter was up 18% from the year-ago quarter. Fiscal 2006 first quarter net income was $0.6 million, or $0.02 per share, which was $0.04 per share higher than the company expected. This compares to net income of $0.5 million, or $0.01 per share, in the year-ago quarter.

"Our business and market momentum continues to be strong as revenue and earnings were once again ahead of our expectations," said Steve Singh, chairman and chief executive officer. "As we chart our course for the next several years, our objective is to drive even faster growth. To that end, we expect to continue to invest against our core initiatives around distribution, service and operational excellence, and new services. With the acquisition of Outtask, we have expanded our on-demand CEM suite to include Cliqbook, the market leading online corporate travel management service. Moving forward, we expect to deliver additional services as we continue to set the pace of innovation in the CEM market."

Singh continued, "Fiscal 2006 marks an inflection point for our company. We expect to deliver non-GAAP operating margin of 14% for the fiscal year, making Concur one of the most profitable on-demand application companies. With the expansion of our on-demand CEM suite, we expect our average top line growth rate to increase to a minimum of 25% and revenue to be between $120 million and $125 million for fiscal 2007."

Financial Highlights

  • Total revenue was $19.3 million for the first quarter of fiscal 2006, up 18% compared to the year-ago quarter and down 2% sequentially.

  • Subscription revenue of $15.2 million for the first quarter of fiscal 2006 grew 26% from the year-ago quarter and 5% sequentially.

  • Net income was $0.6 million, or $0.02 per share, for the first quarter of fiscal 2006, up 27% compared to the year-ago quarter and down 70% sequentially.

  • Non-GAAP net income, which excludes share-based compensation expense, intangible amortization expense, and, for fiscal 2005, terminated acquisition costs, was $1.7 million, up 61% compared to the year-ago quarter and down 28% sequentially.

  • Deferred revenue was $22.1 million for the first quarter of fiscal 2006, up 20% compared to the year-ago quarter and up 8% sequentially.

  • Cash flows from operations were $1.5 million for the first quarter of fiscal 2006, up 7% from the year-ago quarter and down 34% sequentially.

  • Operating margin was 3% for the first quarter of fiscal 2006, equal to the year-ago quarter and down 8% sequentially.

  • Non-GAAP operating margin, which excludes share-based compensation expense, intangible amortization expense, and, for fiscal 2005, terminated acquisition costs, was 9% for the first quarter of fiscal 2006, up 3% from the year ago quarter, and down 3% sequentially.

Recent Business Highlights

  • Concur acquired privately held Outtask, Inc., provider of the market leading Cliqbook online corporate travel management service. The acquisition is expected to be accretive to earnings in fiscal 2006.

  • Concur signed contracts with new and existing customers, including Allen & Overy LLP, BASF South East Asia Pte. Ltd., Bechtel Corporation, DaimlerChrysler Australia/Pacific Pty. Ltd., EnPro Industries, Inc., Gunderson LLC, Kennecott Land Company, National Research Corporation, Oxfam, Ryan's Restaurant Group, Inc. and Yamaha Music Australia Pty. Ltd.

  • Concur launched Cognos ReportNet™ to Concur Expense Service customers as an on-demand service, providing Concur customers with direct access to the world's first on-demand report authoring service designed specifically to help companies manage and reduce corporate expenses.

  • Concur was selected by Red Herring magazine as one of the inaugural Red Herring Small Cap 100. The Red Herring Small Cap 100 are selected for their innovative technology and smart business models that nurture growth and profitability.

  • Concur successfully expanded its SAS70 Type II certification. Concur is committed to stringent security and control standards and is both SAS70 Type II certified and BS7799 compliant.

  • Concur successfully achieved compliance with Section 404 of the Sarbanes-Oxley Act of 2002 for the fiscal year ending September 30, 2005.

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, or other factors.

  • Concur expects total revenue to be $22.5 million for the second quarter of fiscal 2006, $94.0 million for fiscal 2006, and to be between $120.0 million to $125.0 million for fiscal 2007.

  • Concur expects earnings per share for the second quarter of fiscal 2006 and fiscal 2006 to be as follows:

    • For periods after September 30, 2005, Concur provides non-GAAP net income and non-GAAP operating margin that exclude both amortization of intangible assets and charges for share-based payments pursuant to Statement of Financial Accounting Standard No. 123(R), Accounting For Share-Based Payments. FAS 123(R) requires companies to expense the fair value of grants made under stock option plans over the vesting period of the options.

    • Concur expects non-GAAP earnings per share to be between $0.04 and $0.06 for the second quarter of fiscal 2006 and to be $0.34 for fiscal 2006.

      • Non-GAAP earnings per share for the second quarter and for fiscal 2006 excludes non-cash expenses of ($0.02) and ($0.06) per share for the amortization of intangible assets, and ($0.03) and ($0.12) per share from the adoption of FAS 123(R), respectively.

    • Concur expects GAAP earnings per share to be between a loss of ($0.01) and $0.01 for the second quarter of fiscal 2006 and $0.16 for fiscal 2006.

  • Concur expects GAAP operating margin to be 8% for fiscal 2006 and non-GAAP operating margin to be 14% for fiscal 2006.

  • Concur expects fiscal 2007 non-GAAP earnings per share to grow by 35% over 2006 non-GAAP earnings per share.

# # #

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 service offerings; potential difficulties associated with our deployment and support of our products and services; our ability to manage expected growth of our service offerings, including those integrating the Outtask online travel management service; retention and expansion of customers; continued use and adoption of on-demand services; the scalability of the hosting infrastructure for our integrated service offerings; changes in the level of business travel that may reduce the use of our products and services or inhibit new sales of our integrated products and services; potential difficulties associated with strategic relationships and with development of new products and services, including those incorporating Outtask offerings; uncertain market acceptance of our combined products and services or future products and services; the overall level of customer demand for corporate expense management products and services; uncertainty with respect to new laws, regulations, and standards, notably those adopted in connection with the Sarbanes-Oxley Act of 2002; unanticipated changes in the valuation of our deferred tax assets and liabilities or by changes in tax laws or their interpretation; and fluctuations with respect to the reporting of compensation cost relating to share-based payment transactions.

Please refer to the company's public filings made with the Securities and Exchange Commission (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,
                                                     2005             2004
        Revenues:
          Subscription                             $15,169           $12,061
          Consulting & Other                         4,098             4,220
        Total revenues                              19,267            16,281

        Expenses:
          Cost of operations                         8,254             6,690
          Sales and marketing                        4,755             4,162
          Systems development and programming        2,223             2,349
          General and administrative                 3,105             2,375
          Amortization of intangible asset             285               285
        Total operating expenses                    18,622            15,861

        Income from operations                         645               420
          Other income, net                             63                89
        Income before income taxes                     708               509
          Provision for income taxes                    60                --
        Net income                                    $648              $509

        Net income per share
        Basic                                        $0.02             $0.02
        Diluted                                      $0.02             $0.01

        Weighted shares outstanding
        Basic                                       33,301            33,126
        Diluted                                     36,505            36,889

        Non-GAAP Results  (See Note 1)

          Non-GAAP operating income                 $1,731              $990
          Non-GAAP operating margin                      9%                6%
          Non-GAAP net income                       $1,734            $1,079

          Non-GAAP net income per share
            Basic                                    $0.05             $0.03
            Diluted                                  $0.05             $0.03

          Shares used in calculation of basic
          and diluted non-GAAP net income
          per share
            Basic                                   33,301            33,126
            Diluted                                 36,505            36,890

     Note 1:  The non-GAAP results for the periods presented above are for
     informational purposes only and are not prepared in accordance with
     accounting principles generally accepted in the United States. This
     non-GAAP information presents our  operating results after excluding $285
     thousand in costs related to the acquisition of another company that
     Concur evaluated and chose not to pursue, all recorded in the first
     quarter of fiscal 2005; non-cash amortization expense of the intangible
     asset relating to our acquisition of Captura Software, Inc., which
     totaled $285 thousand in each of the three month periods presented; and
     non-cash share-based compensation expense for unvested stock options
     totaling $801 thousand recognized in the first quarter of fiscal 2006.


    CONCUR TECHNOLOGIES, INC.
    Condensed Consolidated Balance Sheets
    (in thousands, except per share data)
    (Unaudited)
                                                Dec 31, 2005      Sep 30, 2005
    ASSETS
    Current assets
      Cash and cash equivalents                     $16,022          $16,202
      Accounts receivable, net                       13,712           12,374
      Prepaid expenses                                1,866            1,386
      Other current assets                            4,285            3,527
    Total current assets                             35,885           33,489

      Property and equipment, net                    16,268           15,022
      Restricted cash                                   500              500
      Intangible assets, net of amortization          1,805            2,090
      Goodwill relating to acquisition                3,704            3,704
      Other assets                                    6,016            5,846
    Total assets                                    $64,178          $60,651

    LIABILITIES & STOCKHOLDERS' EQUITY

    Current liabilities
      Accounts payable and accrued liabilities       $6,070          $6,216
      Current portion of long-term obligations          159             145
      Current portion of deferred revenues           14,796          13,297
    Total current liabilities                        21,025          19,658

      Long-term obligations, net of current           3,025           3,050
      Long-term deferred revenues, net of current     7,313           7,251
    Total liabilities                                31,363          29,959

    Stockholders' equity
      Common stock and additional paid-in
       capital, $0.001 par value:
        Authorized - 60,000;  Issued and
         outstanding - 33,359 and 33,216 at
         December 31, 2005 and September 30, 2005
         respectively                               236,647        235,058
      Accumulated other comprehensive income            (87)            27
      Accumulated deficit                          (203,745)      (204,393)
    Total stockholders' equity                       32,815         30,692
    Total liabilities and stockholders' equity      $64,178        $60,651


    CONCUR TECHNOLOGIES, INC
    Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
                                                         Three months ended
                                                             December 31,
                                                        2005            2004
    Operating activities
    Net income                                           $648           $509
    Adjustments to reconcile net income to
     net cash provided by operating activities:
    Amortization of intangible asset                      285            285
    Depreciation                                        1,086            586
    Provision for allowance for accounts receivable       624            (35)
    Share-based compensation                              801             --
    Changes in operating assets and liabilities:
      Accounts receivable                              (2,006)           306
      Prepaid expenses, deposits, and other assets     (1,401)        (1,079)
        Accounts payable                                1,080           (518)
        Accrued liabilities                            (1,218)          (429)
        Deferred revenues                               1,570          1,750
    Net cash provided by operating activities           1,469          1,375


    Investing activities
    Purchases of property and equipment                (2,311)        (1,638)
    Net cash (used in) investing activities            (2,311)        (1,638)


    Financing activities
    Proceeds from issuance of common stock from
     exercise of stock options                            543            175
    Proceeds from issuance of common stock from
     employee stock purchase plan                         201            779
    Payments on borrowings and capital leases              --           (205)
    Net cash provided by financing activities             744            749

    Effect of foreign currency exchange rates on
     cash and cash equivalents                            (82)           174

    Net increase/(decrease) in cash and
     cash equivalents                                    (180)           660

    Cash and cash equivalents at beginning of period   16,202         23,735
    Cash and cash equivalents at end of period        $16,022        $24,395


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

 

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