Ariba, Inc. (Nasdaq: ARBA), the leading provider of
collaborative business commerce solutions, today announced results
for the third quarter of fiscal year 2011 ended June 30, 2011.
Quarterly Financial and Operational Highlights from
Continuing Operations:
- Subscription software revenue of $76.4
million, up 74% year-over-year
- Network revenue of $37.2 million, up
249% year-over-year
- Total revenues of $121.9 million and
loss per share of $0.13 from continuing operations
- Non-GAAP EPS of $0.20 from continuing
operations
- Cash flow from continuing operations of
$22.4 million.
- Ending cash, cash equivalents,
investments and restricted cash of $266.6 million
“As evidenced by our growth and our strong quarterly results,
organizations of all sizes are leveraging our cloud-based solutions
to discover, connect and collaborate more efficiently and
effectively with their trading partners,” said Bob Calderoni,
Chairman and CEO, Ariba. “We continue to connect more buyers and
sellers around more commerce than any other business commerce
network on the planet.”
Results for the Third Quarter of Fiscal Year 2011
Revenue from Continuing Operations:
Total revenues for the third quarter of fiscal year 2011 from
continuing operations were $121.9 million, as compared to $83.0
million for the third quarter of fiscal year 2010. Subscription and
maintenance revenues for the third quarter of fiscal year 2011 were
$91.0 million, as compared to $60.8 million for the third quarter
of fiscal year 2010. Within subscription and maintenance revenues,
subscription software revenue was $76.4 million for the third
quarter of fiscal year 2011, as compared to $44.0 million for the
third quarter of fiscal year 2010. Services and other revenues for
the third quarter of fiscal year 2011 were $30.9 million, as
compared to $22.2 million for the third quarter of fiscal year
2010.
Earnings Per Share from Continuing Operations:
Loss from continuing operations for the third quarter of fiscal
year 2011 was $12.3 million, or $0.13 per share, as compared to net
income from continuing operations for the third quarter of fiscal
year 2010 of $3.7 million, or $0.04 per share. Net income from
continuing operations for the third quarter of fiscal year 2011
included expenses of $4.3 million for amortization of intangible
assets, $14.0 million for stock-based compensation and a
restructuring charge of $13.4 million. Excluding these items,
Non-GAAP net income from continuing operations was $19.4 million,
or $0.20 per share.
Balance Sheet and Cash:
Total cash, cash equivalents, investments and restricted cash
were $266.6 million at June 30, 2011, up $27.3 million from June
30, 2010 and up $14.3 million from March 31, 2011. Net cash flow
from continuing operations for the three months ended June 30, 2011
was $22.4 million, as compared to $15.9 million for the three
months ended June 30, 2010. Accounts receivable, on a
days-sales-outstanding basis, were 27 days for the third quarter of
fiscal 2011, as compared to 20 days for the third quarter of fiscal
2010, and 24 days with the previous quarter. Total deferred
revenues were $134.5 million at June 30, 2011, compared to $114.6
million at June 30, 2010 and $142.3 million at March 31, 2011.
Customer Acquisition and Transactions for the
Quarter:
During the quarter, 237 companies of all sizes across
geographies purchased Ariba solutions to manage their commerce
activities, including: Cox Enterprises, Entergy Corporation, First
American Financial Corp, Hyatt Hotels Corporation, International
Flavors and Fragrances, the University of Manitoba, Tyco, Inc. and
Astra-Zeneca. The company also added 50 new customers, and closed
14 transactions over $1 million including nine software deals over
$1 million, and 258 on-demand product deals.
Conference Call Information
Ariba will hold a conference call today at 5:00 p.m. ET to
discuss its results for the third quarter of fiscal 2011. To join
the call, please dial (877) 407-8031 in the United States and
Canada, or (201) 689-8031 if calling internationally. The
conference call will also be webcast live and can be accessed on
the investor relations section of the company’s website at
www.ariba.com or by logging in at www.vcall.com.
A replay of the conference can be accessed by calling (877)
660-6853 in the United States and Canada or (201) 612-7415
internationally and entering account number 286 and conference ID
number: 375212.
About Ariba, Inc.
Ariba, Inc. is the leading provider of collaborative business
commerce solutions. Ariba combines industry-leading technology with
the world's largest web-based trading community for business to
help companies discover, connect and collaborate with a global
network of partners – all in a cloud-based environment. Using the
Ariba® Commerce Cloud, businesses of all sizes can buy, sell and
manage cash more efficiently and effectively. Over 500,000
companies around the globe use the Ariba Commerce Cloud to simplify
inter-enterprise commerce and enhance results. Why not join them?
To get on the path to Better Commerce visit:
www.ariba.com/commercecloud/
Copyright © 1996 – 2011 Ariba, Inc.
Ariba, the Ariba logo, AribaLIVE, Ariba.com, Ariba.com Network,
Ariba Spend Management. Find it. Get it. Keep it. and PO-Flip are
registered trademarks of Ariba, Inc. Ariba Procure-to-Pay, Ariba
Buyer, Ariba eForms, Ariba PunchOut, Ariba Services Procurement,
Ariba Travel and Expense, Ariba Procure-to-Order, Ariba Procurement
Content, Ariba Sourcing, Ariba Savings and Pipeline Tracking, Ariba
Category Management, Ariba Category Playbooks, Ariba StartSourcing,
Ariba Spend Visibility, Ariba Analysis, Ariba Data Enrichment,
Ariba Contract Management, Ariba Contract Compliance, Ariba
Electronic Signatures, Ariba StartContracts, Ariba Invoice
Management, Ariba Payment Management, Ariba Working Capital
Management, Ariba Settlement, Ariba Supplier Information and
Performance Management, Ariba Supplier Information Management,
Ariba Discovery, Ariba Invoice Automation, Ariba PO Automation,
Ariba Express Content, Ariba Ready, and Ariba LIVE are trademarks
or service marks of Ariba, Inc. All other brand or product names
may be trademarks or registered trademarks of their respective
companies or organizations in the United States and/or other
countries.
Ariba Safe Harbor
Safe Harbor Statement under the Private Securities Litigation
Reform Act 1995: Information and announcements in this release
involve Ariba's expectations, beliefs, hopes, plans, intentions or
strategies regarding the future and are forward-looking statements
that involve risks and uncertainties. All forward-looking
statements included in this release are based upon information
available to Ariba as of the date of the release, and we assume no
obligation to update any such forward-looking statements. These
statements are not guarantees of future performance and actual
results could differ materially from our current expectations.
Factors that could cause or contribute to Ariba's operating and
financial results to differ materially from current expectations
include, but are not limited to: the impact of the credit crises on
Ariba’s results of operations and financial condition; delays in
development or shipment of new versions of Ariba's products and
services; lack of market acceptance of Ariba's existing or future
products or services; inability to continue to develop competitive
new products and services on a timely basis; introduction of new
products or services by major competitors; the impact of any
acquisitions and dispositions, including our recently completed
acquisition of the business of Quadrem International Holdings,
Ltd., such as difficulties with the integration process or the
realization of benefits of a transaction; the disruption or loss of
customer, business partner, supplier or employee relationships and
the level of costs and expenses incurred by Ariba as a result of
such transactions; the impact of our recent disposition of our
sourcing service and business process outsourcing business,
including the potential disruption of our ongoing business; the
ability to attract and retain qualified employees; long and
unpredictable sales cycles and the deferrals of anticipated orders;
declining economic conditions, including the impact of a recession;
inability to control costs; changes in the company's pricing or
compensation policies; significant fluctuations in our stock price;
the outcome of and costs associated with pending or potential
future regulatory or legal proceedings. Factors and risks
associated with its business, including a number of the factors and
risks described above, are discussed in Ariba's Form 10-Q filed
with the SEC on May 6, 2011. All forward-looking statements in this
press release and the related earnings call are based on
information available to Ariba as of the date hereof. Ariba assumes
no obligation to update these forward-looking statements. Any
future products, features or related specifications that may be
referenced in the release or in the related earnings call are for
information purposes only and are not commitments to deliver any
technology or enhancement. Ariba reserves the right to modify
future product plans at any time.
Ariba, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited; in thousands) June 30, September 30, 2011
2010 ASSETS Current assets: Cash and cash equivalents $ 188,222 $
182,393 Short-term investments 22,321 18,449 Restricted cash 150
104 Accounts receivable, net 37,972 21,781 Prepaid expenses and
other current assets 13,021 7,942 Total
current assets 261,686 230,669 Property and equipment, net
32,031 15,958 Long-term investments 26,659 22,283 Restricted cash,
less current portion 29,211 29,137 Goodwill 482,625 406,507 Other
intangible assets, net 65,938 13,154 Other assets 5,495
4,001 Total assets $ 903,645 $ 721,709
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 11,796 $ 11,190 Accrued
compensation and related liabilities 38,291 32,079 Accrued
liabilities 24,009 18,398 Restructuring obligations 23,191 17,188
Deferred revenue 124,226 97,005 Total
current liabilities 221,513 175,860 Deferred rent
obligations 4,263 9,880 Restructuring obligations, less current
portion 14,391 23,339 Deferred revenue, less current portion 10,256
7,285 Other long-term liabilities 26,012 6,391
Total liabilities 276,435 222,755
Stockholders' equity: Common stock 195 188 Additional
paid-in capital 5,334,039 5,236,265 Accumulated other comprehensive
loss (1,570 ) (1,879 ) Accumulated deficit (4,705,454 )
(4,735,620 ) Total stockholders' equity 627,210
498,954 Total liabilities and stockholders'
equity $ 903,645 $ 721,709 Ariba, Inc. and
Subsidiaries Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share data)
Three Months Ended Nine Months Ended June 30, June
30, 2011 2010 2011 2010 Revenues: Subscription and maintenance $
91,017 $ 60,768 $ 239,724 $ 177,897 Services and other
30,900 22,238 81,378
57,609 Total revenues 121,917 83,006
321,102 235,506 Cost of
revenues: Subscription and maintenance 19,507 13,045 51,477 38,358
Services and other 22,274 14,682 56,798 40,341 Amortization of
acquired technology and customer intangible assets 3,954
1,025 8,054 3,377
Total cost of revenues 45,735 28,752
116,329 82,076 Gross profit
76,182 54,254 204,773
153,430 Operating expenses: Sales and marketing
43,019 29,619 118,566 83,380 Research and development 16,661 11,622
44,157 34,112 General and administrative 13,708 8,684 38,859 23,767
Litigation benefit - - - (7,000 ) Amortization of other intangible
assets 331 - 573 104 Restructuring costs 13,396
- 10,704 8,579 Total
operating expenses 87,115 49,925
212,859 142,942 Operating (loss) income
(10,933 ) 4,329 (8,086 ) 10,488 Interest and other income
(expense), net 671 (294 ) 1,766
126 (Loss) income from continuing operations before
income taxes (10,262 ) 4,035 (6,320 ) 10,614 Provision for (benefit
from) income taxes 2,021 385
(930 ) 880 (Loss) income from continuing operations
(12,283 ) 3,650 (5,390 ) 9,734 Discontinued operations, net
of tax: Income (loss) from discontinued operations 349 624 (3,608 )
2,516 Gain on sale of discontinued operations -
- 39,164 - Total
discontinued operations 349 624
35,556 2,516 Net (loss) income $
(11,934 ) $ 4,274 $ 30,166 $ 12,250
Basic earnings per share: (Loss) income from continuing operations
$ (0.13 ) $ 0.04 $ (0.06 ) $ 0.11 Discontinued operations, net of
tax 0.00 0.01 0.39
0.03 Net (loss) income per basic common share $ (0.13 ) $
0.05 $ 0.33 $ 0.14 Diluted earnings per
share: Net (loss) income from continuing operations $ (0.13 ) $
0.04 $ (0.06 ) $ 0.11 Discontinued operations, net of tax
0.00 0.01 0.38 0.03
Net (loss) income per diluted common share $ (0.13 ) $ 0.05
$ 0.32 $ 0.14 Weighted average shares -
basic 93,101 87,163 91,193 86,300 Weighted average shares - diluted
93,101 89,336 94,697 88,783 Ariba, Inc. and Subsidiaries
Cash Flows (Unaudited; in thousands)
Three Months Ended Nine Months Ended June 30, June
30, 2011 2010 2011 2010 Operating activities: Net (loss) income $
(11,934 ) $ 4,274 $ 30,166 $ 12,250 Less income from discontinued
operations, net of tax (349 ) (624 ) (35,556 )
(2,516 ) (Loss) income from continuing operations (12,283 )
3,650 (5,390 ) 9,734 Adjustments to reconcile (loss) income from
continuing operations to net cash provided by operating activities:
Provision for doubtful accounts 200 263 472 576 Depreciation 2,806
2,007 7,434 5,857 Amortization of intangible assets 4,285 1,025
8,627 3,481 Stock-based compensation 13,999 11,140 41,044 35,066
Restructuring costs 13,396 - 10,704 8,579 Other-than temporary
impairment of long-term investments - - - 499 Changes in operating
assets and liabilities: Accounts receivable (1,952 ) (235 ) (3,248
) (815 ) Prepaid expense and other assets 1,146 4,123 (3,516 )
2,114 Accounts payable 763 2,452 (658 ) 2,800 Accrued compensation
and related liabilities 11,943 5,906 4,376 (2,738 ) Accrued
liabilities (28 ) 792 (8,684 ) (5,242 ) Deferred revenue (7,655 )
(10,915 ) 25,187 4,052 Restructuring obligations (4,210 )
(4,293 ) (12,485 ) (12,829 ) Net cash provided
by continuing operations 22,410 15,915 63,863 51,134 Net cash (used
in) provided by discontinued operations (2,787 )
1,361 (4,497 ) 3,052 Net cash provided
by operating activities 19,623 17,276
59,366 54,186 Investing
activities: Cash paid for acquisition, net of cash acquired (1,626
) - (64,288 ) - Proceeds from sale of discontinued operations 7,851
- 51,000 - Purchases of property and equipment (12,415 ) (2,042 )
(22,809 ) (7,864 ) Maturities of investments, net of purchases
(8,390 ) 1,188 (8,163 ) (5,948 ) Net
cash used in investing activities (14,580 ) (854 )
(44,260 ) (13,812 ) Financing activities:
Proceeds from issuance of common stock, net 627 164 4,035 2,248
Repurchase of common stock - - (12,802 ) (5,864 )
Net cash provided by (used in) financing activities
627 164 (8,767 ) (3,616 )
Effect of exchange rates on cash and cash equivalents (285 )
64 (510 ) 89 Net change in cash and cash equivalents 5,385
16,650 5,829 36,847 Cash and cash equivalents at beginning
of period 182,837 151,078 182,393 130,881
Cash and cash equivalents at end of period $ 188,222
$ 167,728 $ 188,222 $ 167,728
Non-GAAP Financial Measures
The following table reconciles financial measures prepared in
accordance with Generally Accepted Accounting Principles in the
United States of America (GAAP) to the most directly comparable
non-GAAP financial measures in the press release.
Non-GAAP financial measures should not be considered as a
substitute for, or superior to, GAAP financial measures, which
should be considered as the primary financial metrics for
evaluating our financial performance. Significantly, non-GAAP
financial measures are not based on a comprehensive set of
accounting rules or principles. Instead, they are based on
subjective determinations by management designed to supplement our
GAAP financial measures. They are subject to a number of important
limitations and should be considered only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
For example, our non-GAAP financial measures have the effect of
excluding income and expenses from our operating results that
should be properly considered under a system of accrual accounting.
In addition, our non-GAAP financial measures differ from GAAP
measures with the same names, may vary over time and may differ
from non-GAAP financial measures with the same or similar names
used by other companies. Accordingly, investors should exercise
caution when evaluating our non-GAAP financial measures.
Despite these limitations, we believe our non-GAAP financial
measures provide meaningful supplemental information about our
operating results, primarily because they exclude income and
expenses that we do not believe are indicative of the ongoing
operating performance of our business and our senior management.
Although these items should properly be considered in our GAAP
financial measures, we believe they should be excluded when
evaluating our current operating performance. The non-GAAP
financial measures disclosed in the accompanying press release are
used by our Board of Directors and senior management to evaluate
our current operating performance, are used in evaluating the
performance of our senior management, and are used in our budget
and planning processes. We believe that our non-GAAP financial
measures are helpful to investors by facilitating comparisons of
our current and prior operating results and by facilitating
comparisons of our operating results with those of other software
companies.
Ariba, Inc. and Subsidiaries Reconciliation of GAAP to
Non-GAAP Operating Results (Unaudited; in thousands, except per
share data) The following tables reconcile the
specific items excluded from GAAP in the calculation of non-GAAP
operating results for the period indicated below: Three
Months Ended Three Months Ended June 30, 2011 June 30, 2010
Expense
reconciliation:
GAAP revenue $ 121,917 $ 83,006 Less: GAAP net (loss) income
(11,934 ) 4,274 Total GAAP expenses 133,851 78,732
Amortization of intangible assets (4,285 ) (1,025 )
Stock-based compensation (13,999 ) (11,140 ) Restructuring costs
(13,396 ) - Discontinued operations 349 624
Total non-GAAP operating expenses $ 102,520 $ 67,191
Three Months Ended Three Months Ended June 30,
2011 June 30, 2010
Net (loss) income
reconciliation:
GAAP net (loss) income $ (11,934 ) $ 4,274 Amortization of
intangible assets 4,285 1,025 Stock-based compensation 13,999
11,140 Restructuring costs 13,396 - Discontinued operations
(349 ) (624 ) Non-GAAP income from continuing operations $
19,397 $ 15,815 Three Months Ended
Three Months Ended June 30, 2011 June 30, 2010
Net (loss) income
per share reconciliation:
GAAP net (loss) income per share - basic $ (0.13 ) $ 0.05
Amortization of intangible assets 0.05 0.01 Stock-based
compensation 0.15 0.13 Restructuring costs 0.14 0.00 Discontinued
operations 0.00 (0.01 ) Non-GAAP income from
continuing operations per share - basic $ 0.21 $ 0.18
Non-GAAP income from continuing operation per share -
diluted $ 0.20 $ 0.18 Weighted average shares - basic 93,101
87,163 Weighted average shares - diluted 96,721 89,336
Ariba, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP
Operating Results (Unaudited; in thousands, except per share data)
The following tables reconcile the specific items
excluded from GAAP in the calculation of non-GAAP operating results
for the period indicated below: Nine Months Ended Nine
Months Ended June 30, 2011 June 30, 2010
Expense
reconciliation:
GAAP revenue $ 321,102 $ 235,506 Less: GAAP net income
30,166 12,250 Total GAAP expenses 290,936
223,256 Amortization of intangible assets (8,627 ) (3,481 )
Stock-based compensation (41,044 ) (35,066 ) Tax accrual reversal
3,942 3,089 Litigation benefit - 7,000 Restructuring costs (10,704
) (8,579 ) Transaction costs (2,471 ) - Discontinued operations
35,556 2,516 Total non-GAAP operating
expenses $ 267,588 $ 188,735 Nine
Months Ended Nine Months Ended June 30, 2011 June 30, 2010
Net income
reconciliation:
GAAP net income $ 30,166 $ 12,250 Amortization of intangible assets
8,627 3,481 Stock-based compensation 41,044 35,066 Tax accrual
reversal (3,942 ) (3,089 ) Litigation benefit - (7,000 )
Restructuring costs 10,704 8,579 Transaction costs 2,471 -
Discontinued operations (35,556 ) (2,516 ) Non-GAAP
income from continuing operations $ 53,514 $ 46,771
Nine Months Ended Nine Months Ended June 30, 2011
June 30, 2010
Net income per share
reconciliation:
GAAP net income per share - basic $ 0.33 $ 0.14 Amortization of
intangible assets 0.09 0.04 Stock-based compensation 0.45 0.41 Tax
accrual reversal (0.04 ) (0.04 ) Litigation benefit 0.00 (0.08 )
Restructuring costs 0.12 0.10 Transaction costs 0.03 0.00
Discontinued operations (0.39 ) (0.03 ) Non-GAAP
income from continuing operations per share - basic $ 0.59 $
0.54 Non-GAAP income from continuing operation per
share - diluted $ 0.57 $ 0.53 Weighted average shares -
basic 91,193 86,300 Weighted average shares - diluted 94,697 88,783
Discussion of Specific Items Excluded From Non-GAAP Financial
Measures
Our non-GAAP financial measures generally exclude expenses or
benefits for (i) amortization of intangible assets related to
acquisitions, (ii) stock-based compensation, (iii) tax accrual
reversal, (iv) litigation benefit, (v) restructuring costs or
benefits, (vi) transaction related costs and (vii) discontinued
operations. We exclude these items because we believe they are not
closely related to the ongoing operating performance of our
business and the performance of our senior management and are
generally excluded from our budget and planning process. In
addition to these reasons, we believe our non-GAAP financial
measures are also helpful to investors by facilitating comparisons
of our operating results over different time periods and by
facilitating comparisons of our financial performance with that of
other companies. In addition, except for certain restructuring
costs or benefits, transaction related costs and litigation
benefit, these items are non-cash items that do not affect cash
flows.
(1) Amortization of acquired intangible assets. In accordance
with GAAP, we amortize intangible assets acquired in connection
with acquisitions over the estimated useful lives of the assets. We
exclude these amortization costs in our non-GAAP financial measures
because they (i) result from prior acquisitions, rather than the
ongoing operating performance of our business, and (ii) absent
additional acquisitions, are expected to decline over time as the
remaining carrying amounts of these assets are amortized. We
believe excluding these costs helps investors compare our financial
performance with that of other companies with different acquisition
histories. However, as with impairment charges, we recognize that
amortization costs provide a helpful measure of the financial
impact and performance of prior acquisitions and consider our
non-GAAP financial measures in conjunction with our GAAP financial
results that include amortization costs.
(2) Stock-based compensation expenses. We exclude stock-based
compensation expense associated with stock options and stock
granted to employees and non-executive directors in our non-GAAP
financial measures. While stock-based compensation is a significant
component of our expenses, we believe that investors wish to be
able to exclude the effects of stock-based compensation expense in
comparing our financial performance with that of other
companies.
(3) Tax accrual reversal. We released tax reserves in the nine
months ended June 30, 2011 and 2010. We exclude these from our
non-GAAP financial measures because they are unrelated to our
ongoing operations. We believe excluding the tax reserve releases
helps investors compare our operating performance with that of
other companies.
(4) Litigation benefit. We received $7.0 million from Emptoris
in relation to a patent litigation judgment which we recorded as
income in the nine months ended June 30, 2010. We exclude this from
our non-GAAP financial measures because it is unrelated to our
ongoing operations. We believe excluding the litigation benefit
helps investors compare our operating performance with that of
other companies. We recognize, however, that the litigation benefit
impacts cash flow and that we and investors should carefully
consider the impact of this on cash flow.
(5) Restructuring cost. We recorded a restructuring cost related
to lease abandonment accruals in the three months and nine months
ended June 30, 2011 and the nine months ended June 30, 2010, and a
restructuring cost related to accelerated depreciation in the three
months and nine months ended June 30, 2011. We exclude these from
our non-GAAP financial measures because they are unrelated to our
ongoing operations and are significantly impacted by factors
outside our control. We believe excluding restructuring costs helps
investors compare our operating performance with that of other
companies. We recognize, however, that restructuring costs will
impact cash flows and that we and investors should carefully
consider the impact of these costs on future cash flows.
(6) Transaction related costs. We recorded transaction related
costs in the nine months ended June 30, 2011. We exclude these from
our non-GAAP financial measures because they are unrelated to our
ongoing operations. We believe excluding the transaction related
costs helps investors compare our operating performance with that
of other companies. We recognize, however, that the transaction
related costs impact cash flow and that we and investors should
carefully consider the impact of this on cash flow.
(7) Discontinued operations. We exclude the results of
discontinued operations from our non-GAAP financial measures
because they are unrelated to our ongoing operations. We believe
excluding the results of discontinued operations helps investors
compare our operating performance with that of other companies. We
recognize, however, that the discontinued operations impact cash
flow and that we and investors should carefully consider the impact
of this on cash flow.
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