Datawatch Announces Third Quarter Fiscal 2016 Financial Results
(Thomson Reuters ONE) -
Company Announces Review of Strategic Alternatives
BEDFORD, Mass., July 20, 2016 (GLOBE NEWSWIRE) -- Datawatch Corporation (NASDAQ-
CM:DWCH), a leading global provider of self-service data preparation and fast
data analytics solutions, today announced that total revenue for its third
quarter of fiscal 2016 ended June 30, 2016 was $7.4 million, flat with revenue
of $7.42 million in the second quarter of fiscal 2016, and down from total
revenue of $7.8 million in the third quarter of fiscal 2015. License revenue
for the third quarter of fiscal 2016 was $3.67 million, a 1% increase from the
$3.65 million recorded in the prior quarter this fiscal year, and an 11% decline
from the $4.12 million recorded in the same quarter a year ago, which was the
first quarter to reflect the company's move to subscription license sales.
Net loss for the third quarter of fiscal 2016 was ($5.37) million, or ($0.45)
per diluted share, compared to a net loss of ($4.12) million, or ($0.36) per
diluted share, for the year ago period. Included in the 2016 third quarter net
loss were charges of approximately $400,000 related to the contested election of
directors at the 2016 annual shareholders meeting in April 2016. Excluding the
effects of the non-cash amortization associated with the purchase of certain
intellectual property and other intangible assets, non-cash stock compensation
costs, and non-cash deferred tax valuation allowance the Company's non-GAAP net
loss for its third quarter of fiscal 2016 was ($2.90) million, or ($0.25) per
diluted share, compared to a non-GAAP net loss of ($2.06) million, or ($0.18)
per diluted share, for the third quarter of fiscal 2015.
"During the third fiscal quarter, we added 228 new customers for our market-
leading Monarch self-service data preparation solution," said Michael A.
Morrison, president and chief executive officer of Datawatch. "Since we first
released this next generation technology one year ago, nearly 600 new name and
upgraded heritage customers have adopted this re-invented Monarch self-service
data preparation solution. The heritage customers alone that have upgraded,
have produced nearly $3 million in incremental subscription license revenue for
the Company. Notably, in the fiscal third quarter, we completed a six-figure
Monarch upgrade transaction with one of the Big Four public accounting firms.
This longstanding customer of our heritage product was able to quickly develop a
compelling ROI for the added value of our next generation Monarch offering based
on its intuitiveness, ease-of-use and self-service capabilities, and upgraded
its existing 3,000 users, while also licensing several thousand additional
users. We believe that well over half of our existing heritage Monarch
customers are candidates to upgrade to the next generation Monarch self-service
data preparation offering, and we are aggressively promoting this opportunity to
our large customer base."
Mr. Morrison continued, "Our partner relationship with IBM achieved an important
milestone in mid-May when our Monarch self-service data preparation offering was
officially added to IBM's price list to complement both IBM Watson Analytics and
IBM Cognos Analytics, making it available to thousands of IBM sales people and
partners for resale. In the ensuing weeks, we have worked with IBM to develop a
very healthy pipeline of opportunities, and we are focused on continuing to grow
this pipeline of business and convert initial deals as quickly as possible. In
addition, we continue to make inroads in the Tableau partner ecosystem as the
cost-effective data preparation solution for Tableau's market-leading self-
service analytics. For example, in the Asia-Pacific region alone, we signed up
a half dozen new partners that are leading Tableau partners. Several of these
new partners selected Datawatch over competing data preparation solutions, due
to our tight integration with Tableau, ease-of-use, rich functionality and our
attractive price point, which is oftentimes less than half of competing
offerings while providing higher value capabilities."
Mr. Morrison added, "In the past quarter, we also appointed Ken Tacelli as
senior vice president, worldwide sales for Datawatch. Previously, Ken was a
Senior Vice President of Content Sales at Skillsoft. He also held a Senior Vice
President role at OpenText within the World Wide Enterprise Sales Division and
Vice President roles at CA Technologies, including North American Growth to
Market Sales, New Enterprise and Routes to Market. Ken has an impressive track
record in large and small companies alike, and we look forward to him being a
catalyst to drive revenue growth for our market-leading solutions."
Mr. Morrison concluded, "Lastly, we are very excited about the new enhancements
to Monarch and Panopticon products, which we anticipate becoming commercially
available later this calendar year. These enhancements will provide greater
scalability, broader accessibility and improved ease-of-use, which should all
drive customer demand. We are very pleased with the progress we have made with
our Monarch self-service data preparation solution in its first year on the
market, especially the 100s of new customers and the market and technology
validation we received from new partners such as IBM, Fiserv and Vertex."
James L. Eliason, chief financial officer, commented, "Our deferred license
revenue at the end of the third fiscal quarter grew more than 160% year-over-
year as we generated more than $1 million in license subscription bookings for
the first quarter ever, with gross bookings up approximately 40% or $327,000
sequentially and up more than $600,000 year-over-year. Recognized revenue in
the fiscal third quarter from our subscription license business was more than
$700,000, representing a $2.5 million annual run rate that continues to build
nicely. Our balance sheet remains strong, with $29 million in cash and
equivalents. While continuing to appropriately invest in key product
development initiatives, we remain disciplined around our use of capital and
expect that our Q4 expenses will be well below the expense level for the third
fiscal quarter."
Transition to Subscription Sales
In Q3 of fiscal 2015, Datawatch changed its pricing practice for Monarch,
transacting all small volume orders on a subscription basis only, rather than a
perpetual license basis. The total value over the life of the subscription is
recorded as bookings, but only the ratable portion of the annual subscription
fee earned in the quarter sold is treated as revenue in that quarter. The
balance is deferred and recorded as revenue over the life of the subscription.
This lowers current reported revenue, but builds deferred revenue that will be
recorded as revenue over the life of the subscription. Since subscription sales
include maintenance, current maintenance revenue will be similarly reduced.
Third Quarter Fiscal 2016 Business Highlights
* Datawatch closed business with all four of the Big Four public accounting
firms, as well as dozens of internal audit groups at commercial
organizations, further cementing its leading position as the self-service
data preparation solution of choice.
* Datawatch and Vertex, Inc. entered into a managed analytics OEM agreement
under which Vertex will use Datawatch's Monarch solution to acquire and
prepare data for customers of Vertex's integrated tax technology solutions.
* Aetna, whose single vision is to provide improved access to quality health
care services for all Americans, selected Datawatch as its self-service data
preparation solution to acquire, enrich and blend data for its Tableau self-
service analytics users.
* Fiserv, a global provider of technology solutions to the financial world,
including banks, credit unions, securities processing organizations and
insurance companies, entered into an agreement to resell Monarch for self-
service data preparation with Fiserv's matching and account reconciliation
solution.
* Pentagon Federal Credit Union, a longstanding heritage Monarch customer,
recognized the ROI from Datawatch's next generation self-service data
preparation solution and upgraded its existing heritage licenses of Monarch
for more than 100 users.
Third Quarter Fiscal 2016 Financial Highlights
* Cash and short-term investments were $28.8 million at June 30, 2016, down
from $33.02 million at December 31, 2015 and $36.32 million at June
30, 2015.
* Gross margin (excluding IP amortization expense) for the third quarter of
fiscal 2016 was 81%, a decrease from 84% for the third quarter of fiscal
2015.
* Days sales outstanding were 69 days at June 30, 2016, compared to 73 days at
June 30, 2015.
* There were 3 six-figure deals in the third quarter this fiscal year, down
from 10 in the third quarter of fiscal 2015.
* The average deal size in the third quarter of fiscal 2016 was $35,000, a
decrease from $56,000 in the third quarter of fiscal 2015.
* Deferred revenue reached $8.9 million at June 30, 2016, the highest in the
company's history, and a 22% increase from $7.3 million at June 30, 2015.
Review of Strategic Alternatives
The company also announced its Board of Directors has initiated a process to
explore and evaluate a broad range of strategic alternatives for the company to
enhance shareholder value. The Company strongly believes in its current
business strategy, but does not believe that its current share price accurately
reflects its business prospects and strong balance sheet.
Strategic alternatives to be considered may include the acquisition or
disposition of assets, joint ventures, the sale of the company, alternative
operating models or continuing with the current business plan, among other
potential alternatives. Canaccord Genuity is serving as financial advisor to
the company.
There can be no assurance that this strategic review process will result in the
completion of any transaction or other alternative. The Company has not set a
timetable for completion of the review process, and it does not intend to
comment further regarding the review process unless a specific transaction or
other alternative is approved by the Board of Directors, the review process is
concluded or it is otherwise determined that further disclosure is appropriate
or required by law.
Conference Call
Datawatch's third quarter of fiscal year 2016 earnings conference call will take
place on Thursday, July 21, 2016 at 8:30 a.m. Eastern Time. To access the
conference call, the toll-free dial in number is (877) 407-0782.
Internationally, the call may be accessed by dialing (201) 689-8567. The
conference call will be broadcast live on the Internet at:
http://www.investorcalendar.com/IC/CEPage.asp?ID=175106. It is recommended that
listeners register to participate and download any necessary audio software from
the website 15 minutes prior to the scheduled call. An archived replay of the
broadcast will be available for 90 days at the same location.
About Datawatch Corporation
Datawatch Corporation (NASDAQ-CM:DWCH) enables ordinary users to deliver
extraordinary results with all their data. Only Datawatch can unlock data from
the widest variety of sources and prepare it for use with visualization tools or
other business processes. When real-time visibility to rapidly changing data is
critical, Datawatch enables you to visualize streaming data for the most
demanding business environments such as capital markets. Organizations of every
size worldwide use Datawatch products including 93 of the Fortune 100. Datawatch
is headquartered in Bedford, Massachusetts with offices in New York, London,
Frankfurt, Stockholm, Singapore, and Manila, and with partners and customers in
more than 100 countries worldwide. See how Datawatch can help you by
downloading a free version at www.datawatch.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Any statements contained in this press release that do not describe historical
facts may constitute forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Any such statements, including
but not limited to those relating to results of operations, contained herein are
based on current expectations, but are subject to a number of risks and
uncertainties that may cause actual results to differ materially from
expectations. The factors that could cause actual future results to differ
materially from current expectations include the following: risks associated
with the continuing weak global economy; risks associated with fluctuations in
quarterly operating results due, among other factors, to the long sales cycle
with enterprise customers and the size and timing of large customer orders;
risks associated with acquisitions; the risk that our goodwill resulting from
acquisitions may become impaired and require a write-down; limitations on the
effectiveness of internal controls; rapid technological change; Datawatch's
dependence on the introduction of new products and product enhancements and
possible delays in those introductions; competition in the software industry
generally, and in the markets for next generation analytics in particular;
Datawatch's dependence on its principal products, proprietary software
technology and software licensed from third parties; Datawatch's concentration
of customers in the financial sector; risks associated with international sales
and operations; risks associated with indirect distribution channels and co-
marketing arrangements, many of which were only recently established; the
adequacy of Datawatch's sales returns reserve; risks associated with a
subscription sales model; Datawatch's dependence on its ability to hire and
retain skilled personnel; disruption or failure of Datawatch's technology
systems that may result from a natural disaster, cyber-attack, security breach
or other catastrophic event; risks related to actions by activist stockholders,
including the amount of related costs incurred by Datawatch and the disruption
caused to Datawatch's business activities by these actions; and uncertainty and
additional costs that may result from evolving regulation of corporate
governance and public disclosure. Further information on factors that could
cause actual results to differ from those anticipated is detailed in various
publicly-available documents, which include, but are not limited to, filings
made by Datawatch from time to time with the Securities and Exchange Commission,
including but not limited to, those appearing in the Company's Annual Report on
Form 10-K for the year ended September 30, 2015 and its subsequently filed Form
10-Q reports. Any forward-looking statements should be considered in light of
those factors.
Use of Non-GAAP Financial Information
We define non-GAAP net loss as U.S. Generally Accepted Accounting Principles
("GAAP") net loss plus goodwill and long-lived assets non-cash impairment
charges, non-cash amortization associated with the purchase of certain
intellectual property and other intangible assets, non-cash stock compensation
costs and Sweden non-cash deferred tax valuation allowance. We discuss non-GAAP
net loss in our quarterly earnings releases and certain other communications as
we believe non-GAAP net loss is an important measure that is not calculated
according to GAAP. We use non-GAAP net loss in internal forecasts and models
when establishing internal operating budgets, supplementing the financial
results and forecasts reported to our Board of Directors and evaluating short-
term and long-term operating trends in our operations. We believe that non-GAAP
net loss assists in providing an enhanced understanding of our underlying
operational measures to manage the business, to evaluate performance compared to
prior periods and the marketplace, and to establish operational goals. We
believe that these non-GAAP financial adjustments are useful to investors
because they allow investors to evaluate the effectiveness of the methodology
and information used by management in our financial and operational decision-
making.
Non-GAAP net loss is a non-GAAP financial measure and should not be considered
in isolation or as a substitute for financial information provided in accordance
with GAAP. This non-GAAP financial measure may not be computed in the same
manner as similarly titled measures used by other companies. We expect to
continue to incur expenses similar to the non-GAAP net loss financial
adjustments described above, and investors should not infer from our
presentation of this non-GAAP financial measure that these costs are unusual,
infrequent or non-recurring.
The table below entitled "Non-GAAP Disclosure - Reconciliation of Net Loss to
Non-GAAP Net Loss" reconciles the Company's GAAP net loss to the Company's non-
GAAP net loss.
© 2016 Datawatch Corporation. Datawatch and the Datawatch logo are trademarks or
registered trademarks of Datawatch Corporation in the United States and/or other
countries. All other names are trademarks or registered trademarks of their
respective companies.
Source: Datawatch
DATAWATCH CORPORATION
Condensed Consolidated Statements of Operations
Amounts in Thousands (except per share data)
(Unaudited)
Three Month Ended Nine Months Ended
June 30, June 30,
2016 2015 2016 2015
REVENUE:
Software $ 3,669 $ 4,117 $ 10,461 $ 11,203
licenses
Maintenance 3,335 3,311 10,417 10,016
Professional 372 348 977 980
services
Total revenue 7,376 7,776 21,855 22,199
COSTS AND
EXPENSES:
Cost of software 879 697 2,067 2,293
licenses
Cost of
maintenance and 499 557 1,707 2,519
services
Sales and 4,773 6,513 15,621 21,303
marketing
Engineering and
product 2,196 1,988 6,089 6,698
development
General and 2,593 2,204 7,453 6,779
administrative
Impairment of
goodwill and
long lived - - - 32,009
intangible
assets
Total costs and 10,940 11,959 32,937 71,601
expenses
LOSS FROM (3,564 ) (4,183 ) (11,082 ) (49,402 )
OPERATIONS
Other income (4 ) (36 ) (19 ) (38 )
(expense)
LOSS BEFORE INCOME (3,568 ) (4,219 ) (11,101 ) (49,440 )
TAXES
Income tax (1,806 ) 96 (1,599 ) 2,632
(expense) benefit
NET LOSS $ (5,374 ) $ (4,123 ) $ (12,700 ) $ (46,808 )
Net loss per share $ (0.45 ) $ (0.36 ) $ (1.08 ) $ (4.14 )
- Basic
Net loss per share $ (0.45 ) $ (0.36 ) $ (1.08 ) $ (4.14 )
- Diluted
Weighted Average
Shares Outstanding 11,815 11,448 11,717 11,307
- Basic
Weighted Average
Shares Outstanding 11,815 11,448 11,717 11,307
- Diluted
Non-GAAP Disclosure - Reconciliation of Net Loss to Net Loss Excluding the
Effects of Certain Items:
GAAP Net Loss $ (5,374 ) $ ) $ ) $ )
(4,123 (12,700 (46,808
Add-back
Impairment of - - - 32,009
Goodwill & Long-
Lived Assets
Add-back
Amortization of 533 572 1,673 2,013
Intangibles & IP
Add-back Share-
Based 145 1,486 2,169 4,025
Compensation
Add-back Swedish
Deferred Tax 1,794 - 1,794 -
Valuation
Allowance
Subtotal of 2,472 2,058 5,636
additions 38,047
Net (Loss) Income $ ) $ ) $ ) $ )
(non-GAAP) (2,902 (2,065 (7,064 (8,761
Net (loss) income $ (0.25 ) $ (0.18 ) $ (0.60 ) $ (0.77 )
per share - Basic
Net (loss) income
per share - $ (0.25 ) $ (0.18 ) $ (0.60 ) $ (0.77 )
Diluted
Weighted Average
Shares Outstanding 11,815 11,448 11,717 11,307
- Basic
Weighted Average
Shares Outstanding 11,815 11,448 11,717 11,307
- Diluted
DATAWATCH CORPORATION
Condensed Consolidated Balance Sheets
Amounts in Thousands
(Unaudited)
June 30, September
30,
2016 2015
Cash and cash equivalents $ 28,800 $ 35,162
Accounts receivable, net 5,846 7,081
Prepaid expenses and other current assets 1,962 2,013
Total current assets 36,608 44,256
Property and equipment, net 1,245 614
Intangible and other assets, net 10,509 14,061
$ 48,362 $ 58,931
Accounts payable and accrued expenses $ 3,723 $ 4,202
Deferred revenue - current portion 8,749 8,452
Deferred tax liability- current portion - 274
Total current liabilities 12,472 12,928
Other long-term liabilities 695 461
Total long-term liabilities 695 461
Total shareholders' equity 35,195 45,542
$ 48,362 $ 58,931
Investor Contact:
Datawatch Investor Relations
investor(at)datawatch.com
Phone: (978) 441-2200 ext. 8323
Media Contact:
Erin Hoesly
Datawatch Corporation
Erin_Hoesly(at)datawatch.com
Phone: (978) 441-2200 ext. 8322
Twitter: (at)datawatch
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Datawatch Corporation via GlobeNewswire
[HUG#2029778]
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Datum: 20.07.2016 - 22:15 Uhr
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