Market Overview

Determine Announces First Quarter Fiscal 2019 Financial Results

Share:

CARMEL, Ind., Aug. 09, 2018 (GLOBE NEWSWIRE) -- Determine, Inc. (NASDAQ:DTRM), a pioneering leader in global Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) Cloud Platform solutions, announced financial results for its first quarter ended June 30th, 2018.

Q1 FY2019 GAAP Financial Highlights:

  • GAAP Revenue was $6.0 million in Q1 FY2019, compared to $6.8 million in Q4 FY18, representing a 10.9% decrease quarter-over-quarter, and compared to $7.0 million in Q1 FY2018 GAAP revenue, representing a 13.6% decrease year-over-year.
  • GAAP gross profit percentage was 43.5% in Q1 FY2019, compared to 49.4% in Q4 FY2018, representing a 5.9 point decrease quarter-over-quarter, and compared to 52.7% in Q1 FY2018, representing a 9.2 point decrease year-over-year.
  • Deferred revenues decreased to $9.3 million in Q1 FY2019 from $9.6 million in Q4 FY2018.
  • GAAP net loss was $4.1 million or $0.27 per share in Q1 FY2019, compared to $2.8 million or $0.19 per share in Q4 FY2018, representing an additional loss of $0.08 per share quarter-over-quarter; in Q1 FY2018 the GAAP net loss was $2.1 million or $0.17 per share.
           
 (in thousands, except per share amounts)    
GAAP Financial Measures     Q1 Q4 Q1 Change Change
FY 2019 FY 2018 FY 2018  Q/Q   Y/Y
Revenue - total $ 6,040   $ 6,776   $ 6,988     (10.9 %)   (13.6 %)
Revenue - recurring $ 5,251   $ 5,467   $ 5,300     (4.0 %)   (0.9 %)
Revenue - non-recurring $ 789   $ 1,309   $ 1,688     (39.7 %)   (53.3 %)
Gross profit - total $ 2,627   $ 3,344   $ 3,685     (21.4 %)   (28.7 %)
Gross profit - recurring $ 3,145   $ 3,378   $ 3,514     (6.9 %)   (10.5 %)
Gross (loss)/profit - non-recurring $ (518 ) $ (34 ) $ 171     1423.5 %   402.9 %
Gross margin - total   43.5 %   49.4 %   52.7 %   (5.9  pts)   (9.2  pts)
Gross margin - recurring   59.9 %   61.8 %   66.3 %   (1.9  pts)   (6.4  pts)
Gross margin - non recurring   (65.7 %)   (2.6 %)   10.1 %   (63.1  pts)   (75.8  pts)
Net loss $ (4,069 ) $ (2,822 ) $ (2,110 )   44.2 %   92.8 %
EPS $ (0.27 ) $ (0.19 ) $ (0.17 ) $ (0.08 ) $ (0.10 )
           

Q1 FY2019 Non-GAAP Financial Highlights:

  • Non-GAAP revenue was $6.0 million in Q1 FY2019, compared to $6.8 million in Q4 FY2018, representing a 10.9% decrease quarter-over-quarter, and compared to $7.0 million in Q1 FY2018, representing a 13.6% decrease year-over-year.
  • Non-GAAP gross profit percentage was 48.5% in Q1 FY2019, compared to 53.5% in Q4 FY2018, representing a 5.0% decrease quarter-over-quarter, and 57.3% in Q1 FY2018, representing a 8.8% decrease year-over-year.
  • Non-GAAP net loss was $2.9 million or $0.20 per share in Q1 FY2019, compared to a net loss of $1.7 million or $0.12 per share in Q4 FY2018, representing a $0.08 additional loss per share quarter-over-quarter. Q1 FY2018 had a non-GAAP net loss of $1.0 million or $0.08 per share, representing a $0.12 additional loss per share year-over-year.
  • Billings decreased 15.2% to $5.7 million in Q1 FY2019 from $6.8 million in Q1 FY2018.  Billings, a non-GAAP measure, are defined as revenue plus the change in deferred revenues.
  • Non-GAAP EBITDA was a $2.0 million loss in Q1 FY2019, compared to a loss of $0.2 million in Q1 FY2018, representing a decrease of $1.8 million year-over-year.
           
 (in thousands, except per share amounts)      
Non-GAAP Financial Measures  Q1 Q4 Q1 Change Change
 FY 2019  FY 2018  FY 2018  Q/Q  Y/Y
Revenue - total $ 6,040   $ 6,776   $ 6,988     (10.9 %)   (13.6 %)
Revenue - recurring $ 5,251   $ 5,467   $ 5,300     (4.0 %)   (0.9 %)
Revenue - non-recurring $ 789   $ 1,309   $ 1,688     (39.7 %)   (53.3 %)
Gross profit - total $ 2,929   $ 3,626   $ 4,003     (19.2 %)   (26.8 %)
Gross profit - recurring $ 3,434   $ 3,646   $ 3,813     (5.8 %)   (9.9 %)
Gross (loss)/profit - non-recurring $ (505 ) $ (20 ) $ 190     2425.0 %   (365.8 %)
Gross margin - total   48.5 %   53.5 %   57.3 %   (5.0  pts)   (8.8  pts)
Gross margin - recurring   65.4 %   66.7 %   71.9 %   (1.3  pts)   (6.5  pts)
Gross margin - non recurring   (64.0 %)   (1.5 %)   11.3 %   (62.4  pts)   (75.3  pts)
Net loss $ (2,944 ) $ (1,726 ) $ (952 )   70.6 %   209.2 %
EPS $ (0.20 ) $ (0.12 ) $ (0.08 ) $ (0.08 ) $ (0.12 )
Billings $ 5,743   $ 5,991   $ 6,772     (4.1 %)   (15.2 %)
           

"Our first quarter has been aggressively focused on further executing on our customer advocacy strategy, expanding and leveraging our partnership alliances, and pursuing our ideal target customer profile to fill our lead pipeline. The many customers across industries who brought their success stories to our Washington, DC and London User Group events were excited to share their Determine experiences and best practices, as well as test drive the advanced innovations on the Determine Cloud Platform and preview the new Determine CLM Salesforce App on Salesforce.com. Many of those customers are part of the growing roster of companies migrating to our source-to-pay and contract management cloud platform in order to expand their relationship with us and accelerate their business initiatives. Our partnerships through the DetermineAlliance Partner Program are also expanding and increasing in importance; we have built a robust pipeline of late-stage opportunities in just the past 120 days. Our pipeline has never been stronger or growing at a faster clip in both the US and Europe.  Now we look forward to converting those highly-qualified opportunities into customer relationships that deliver meaningful recurring revenue growth in the coming quarters. We are very pleased to have an additional $2.0 million in borrowing capacity which has already been secured during the first part of Q2 FY2019. We plan to access such capital, as needed, to assist in optimizing our channel mix and growing our pipeline. Our continued aim is to deliver the Determine message to prospects who are looking to derive bottom-line value from best in class Source-to-Pay or Enterprise Contract Management solutions."

Patrick Stakenas, President and CEO and Director, Determine, Inc.

Determine Business Highlights:

Conference Call and Webcast: Thursday, August 9, 2018 at 5:00 PM (Eastern Time)

Participant Conference Call Numbers:
  Toll-Free: 1-877-407-0789
  Toll/International: 1-201-689-8562
Participant Webcast Link: http://public.viavid.com/index.php?id=130716
Replay Dial-in Information:
  Toll-Free: 1-844-512-2921
  Toll/International: 1-412-317-6671
  From:  08/09/18 @ 8:00 pm Eastern Time
  To:  08/16/18 @ 11:59 pm Eastern Time
  Replay Pin Number: 13681976
   
Related: http://investor.determine.com
   

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including non-GAAP revenue, non-GAAP gross profit, non-GAAP net income and non-GAAP earnings per share, which we believe are helpful in understanding our past financial performance and future results. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "GAAP to Non-GAAP Reconciliations". Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The difference between GAAP and non-GAAP gross profit is the elimination of the amortization of acquisition related intangibles, stock based compensation and severance expense from the costs of revenue. Non-GAAP net loss excludes the non-GAAP gross profit items as well as acquisition related costs.

Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods; as such, we believe it is useful for investors to understand the effects of these items on our total operations. Further, please note that our non-GAAP revenue is intended to reflect the full amount of revenues that would have been otherwise recorded by the acquired entities of Iasta and b-pack, while our non-GAAP gross profit also excludes the amortization of intangibles that occurred due to the acquisition of the entities of Iasta and b-pack.

Annualized Bookings is an operating measure not derived from the company's revenues or any other amounts presented in accordance with GAAP in the company's statement of income, balance sheet or statement of cash flows or other equivalent statements.

Forward-looking Statements

Certain statements in this release and elsewhere by Determine are forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding business outlook, assessment of market conditions, anticipated financial and operating results, strategies, product and channel development, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance or achievements of the company or industry results, to differ materially from those expressed, or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward-looking statements include, but are not limited to fluctuations in demand for Determine's products and services, risks of losing key personnel or customers, protection of the company's intellectual property and government policies and regulations, including, but not limited to those affecting the company's industry. Determine undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Additional risk factors concerning the company can be found in the company's most recent Form 10-K as filed by the company with the Securities and Exchange Commission.

Supporting Resources

Determine blog

Determine on LinkedIn

Determine on Twitter

Determine Resources

About Determine, Inc.

Determine, Inc. (NASDAQ:DTRM) is a leading global provider of SaaS Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) solutions. The Determine Cloud Platform provides procurement, legal and finance professionals analytics of their supplier, contract and financial performance. Our technologies empower customers to drive new revenue, identify savings, improve compliance and mitigate risk.

The Determine Cloud Platform seamlessly integrates with major ERP or third-party systems such as SAP, Oracle, Sage, QAD and Microsoft. Modular solutions can be configured to add more as needed to provide additional value beyond spend management. Our unified master database and business process approach empower users at every level to make more informed and smarter decisions.

For more information, please visit: www.determine.com.

Contact

Media Relations:
Mike Mitchell
Determine, Inc.
+1.650.532.1590
pr@determine.com

 
Determine, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited)
      Three Months Ended
      June 30, 2018   June 30, 2017
           
Revenues:      
  Recurring revenues $ 5,251     $ 5,300  
  Non-recurring revenues   789     $ 1,688  
    Total revenues   6,040       6,988  
           
Cost of revenues:      
  Cost of recurring revenues   2,106       1,786  
  Cost of non-recurring revenues   1,307       1,517  
    Total cost of revenues   3,413       3,303  
           
Gross profit (loss):      
  Recurring gross profit   3,145       3,514  
  Non-recurring (loss) profit   (518 )     171  
    Total gross profit   2,627       3,685  
           
Operating expenses:      
  Research and development   1,176       1,066  
  Sales and marketing   3,091       2,496  
  General and administrative   2,005       2,072  
    Total operating expenses   6,272       5,634  
           
Loss from operations   (3,645 )     (1,949 )
           
Other expense, net   (336 )     (178 )
Net loss before income tax   (3,981 )     (2,127 )
           
(Provision for) benefit from income taxes   (88 )     17  
Net loss $ (4,069 )   $ (2,110 )
           
Basic and diluted net loss per share $ (0.27 )   $ (0.17 )
           
           
Determine, Inc.
GAAP to Non-GAAP Reconciliations
(In thousands)
(Unaudited)
      Three Months Ended
      June 30, 2018   June 30, 2017
Reconciliation of total revenue:      
  U.S. GAAP as reported $ 6,040     $ 6,988  
Non-GAAP revenue $ 6,040     $ 6,988  
           
Reconciliation of gross profit:      
  U.S. GAAP as reported $ 2,627     $ 3,685  
  Adjustments:      
  Amortization of acquisition   252       252  
  Stock based compensation   42       28  
  Severance   8       38  
Non-GAAP gross profit $ 2,929     $ 4,003  
           
Reconciliation to non-GAAP net loss:      
Net loss $ (4,069 )   $ (2,110 )
Stock-based compensation expense   543       586  
Amortization on intangibles   537       531  
Severance costs   45       41  
Non-GAAP net loss $ (2,944 )   $ (952 )
           
Non-GAAP basic and diluted net loss per share $ (0.20 )   $ (0.08 )
           
           
Weighted-average shares of common stock used in computing basic and diluted net loss per share attributable to common shareholders   15,077       12,249  
           
           
Determine, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands)
(Unaudited)
           
      Three Months Ended
      June 30, 2018   June 30, 2017
Statements of comprehensive loss:      
  Consolidated net loss $ (4,069 )   $ (2,110 )
  Foreign currency translation adjustments, net   (397 )     311  
  Other comprehensive loss   -       (114 )
Comprehensive loss $ (4,466 )   $ (1,913 )
           
           
Determine, Inc.
 Condensed Consolidated Balance Sheets
(In thousands)
           
      June 30,   March 31,
      2018   2018
      (Unaudited)   (Audited)
ASSETS
     
Current assets      
  Cash and cash equivalents $ 6,156     $ 9,928  
  Accounts receivable, net of allowance for doubtful accounts   6,278       6,605  
  Restricted cash   26       28  
  Prepaid expenses and other current assets   1,544       1,542  
    Total current assets   14,004       18,103  
           
  Property and equipment, net   121       90  
  Capitalized software development costs, net   3,320       2,994  
  Goodwill   15,052       15,458  
  Other intangibles, net   3,361       3,952  
  Other assets   1,589       1,467  
    Total assets $ 37,447     $ 42,064  
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities      
  Credit facility $ 10,973     $ 12,128  
  Accounts payable   2,479       2,371  
  Accrued payroll and related liabilities   2,062       1,986  
  Other accrued liabilities   2,313       2,239  
  Deferred revenue   9,247       9,487  
  Income tax payable   50       48  
    Total current liabilities   27,124       28,259  
           
  Long-term deferred revenue   27       84  
  Convertible note, net of debt discount   7,696       7,475  
  Other long-term liabilities   1,582       1,306  
    Total liabilities   36,429       37,124  
           
  Total stockholders' equity   1,018       4,940  
    Total liabilities and stockholders' equity $ 37,447     $ 42,064  
           
           
Determine, Inc.
 Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
           
      Three Months Ended
      June 30, 2018   June 30, 2017
           
Operating activities      
Net loss $ (4,069 )   $ (2,110 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:      
           
  Depreciation and amortization   1,049       971  
  Stock-based compensation expense   543       586  
  Interest expense paid in kind as convertible note debt   221       219  
  Income tax expense (benefit)   88       (17 )
  Unrealized currency translation losses (gains)   176       (252 )
  Changes in assets and liabilities:      
    Accounts receivable, net   327       354  
    Prepaid expenses and other current assets   (2 )     103  
    Other assets   (233 )     228  
    Accounts payable   108       (482 )
    Accrued payroll and related liabilities   76       243  
    Other accrued liabilities and other long-term liabilities   350       413  
    Deferred revenue   (297 )     (216 )
Net cash (used in) provided by operating activities   (1,663 )     40  
           
Investing activities      
  Purchase of property and equipment   (44 )     (7 )
  Capitalized software development costs, net   (818 )     (569 )
Net cash used in investing activities   (862 )     (576 )
           
Financing activities      
  Credit facility borrowing   10,828       -  
  Credit facility payment   (11,983 )     -  
  Proceeds from issuance of stock, net of issuance costs   -       4,909  
  Net employee withholding taxes paid in connection to issuance of restricted stock   (6 )     (24 )
  Repayment of loan   -       (44 )
  Proceeds from exercise of stock options   -       1  
Net cash (used in) provided by financing activities   (1,161 )     4,842  
           
  Effect of exchange rate changes on cash   (88 )     (87 )
           
Net (decrease) increase in cash and cash equivalents   (3,774 )     4,219  
Cash and cash equivalents at beginning of the period   9,956       9,463  
Cash and cash equivalents at end of the period $ 6,182     $ 13,682  
           
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:      
Cash and cash equivalents $ 6,156     $ 13,656  
Restricted cash   26       26  
Total cash, cash equivalents and restricted cash $ 6,182     $ 13,682  
           
           
Determine, Inc.
Billings Reconciliation
(In thousands)
(Unaudited)
           
      Three Months Ended
      June 30, 2018   June 30, 2017
           
Total revenues $ 6,040     $ 6,988  
Deferred revenue:      
End of period   9,274       9,864  
Beginning of period   9,571       10,080  
Change in deferred revenue   (297 )     (216 )
Total billings (total revenues plus the change in deferred revenue) $ 5,743     $ 6,772  
           
           
Determine, Inc.
Non-GAAP EBITDA Reconciliation
(In thousands)
(unaudited)
           
      Three Months Ended
      June 30, 2018   June 30, 2017
Reconciliation to non-GAAP EBITDA net loss:      
Non-GAAP net loss $ (2,944 )   $ (952 )
Interest   335       439  
Depreciation   505       348  
Income tax expense (benefit)   88       (17 )
Non-GAAP EBITDA net loss $ (2,016 )   $ (182 )
           

Primary Logo

View Comments and Join the Discussion!