ONXS Onyx Software (MM)

Onyx(R) Software Corporation (Nasdaq:ONXS) today announced financial results for the 2006 first quarter ended March 31, 2006, and filed the quarterly report on Form 10-Q with the Securities and Exchange Commission (SEC). "We posted total revenue that met the guidance we provided on February 14th and the loss per share was better than we had previously expected," said Janice P. Anderson, chair and chief executive officer of Onyx Software. "On April 7, 2006, we announced that we had retained Piper Jaffray & Co. as our financial advisor to assist our board of directors in reviewing strategic opportunities to enhance shareholder value. That process is ongoing and the company expects to provide a formal update on this process when appropriate." Total revenue in the first quarter of 2006 was $12.0 million, compared with $14.1 million in the first quarter last year. Sequentially, total revenue in the fourth quarter of 2005 was $15.4 million. License revenue in the first quarter of 2006 was $2.0 million, compared with $3.9 million in the first quarter last year. License revenue in the fourth quarter of 2005 was $4.7 million. For the first quarter of 2006, the company reported net loss of $2.2 million, or a loss of $0.12 per share, compared with net loss of $600,000, or a loss of $0.04 per share, in the same period last year. For the first time, the 2006 first quarter results include stock-based compensation expense, which totaled $494,000. For the first quarter of 2006, non-GAAP operating loss, which excludes stock-based compensation and amortization of acquired technology, was $1.4 million. For the first quarter of 2005, non-GAAP operating loss, which excluded amortization of intangibles, stock-based compensation expense, restructuring and severance, was $257,000. Onyx believes that supplementary disclosure regarding non-GAAP operating results assists in comparing current operating results with those of past periods. A reconciliation of non-GAAP operating loss to GAAP operating loss is included with the financial tables that follow this release. Use of non-GAAP results should not be considered a substitute for Onyx's GAAP financial results. On March 31, 2006, Onyx had cash and cash equivalents of $18.8 million compared with $21.6 million on December 31, 2005. The company will not host an investor call to discuss the results. Investors may access the first quarter Form 10-Q on the Investor Relations section of the Onyx Web site at www.onyx.com. About Onyx Software Onyx Software Corporation (Nasdaq:ONXS) is a worldwide leader in customer management and process software for enterprise-caliber customers. Onyx provides flexible solutions that enable organizations to automate, manage, and evolve their customer processes quickly and cost-effectively for strategic advantage. By providing an integrated suite of customer process automation applications encompassing customer management, process management, and analytics capabilities, Onyx enables enterprises to reduce costs, increase productivity and grow revenue. Major companies are aligning their customer-facing departments and managing their customer processes with Onyx software -- companies such as Amway Corporation, Delta Dental, Mellon Financial Corporation, The Regence Group and State Street Corporation. More information can be found at 888-ASK-ONYX, info@onyx.com or http://www.onyx.com. Forward-Looking Statement This press release contains forward-looking statements, including statements about the potential benefits of our products and services, our expectations for future financial performance and growth, and the outcome of our ongoing evaluation of our strategic alternatives. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. The words "believe," "expect," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Factors that could affect Onyx's actual results include, but are not limited to, the success of our ongoing marketing programs, our ability to generate sufficient sales pipeline, our sales effectiveness, our ability to control expenses, our ability to retain customers on our maintenance and product support program, the expansion of our partner network and the ability of these partners to effectively sell our products and the "Important Factors That May Affect Our Business, Our Results of Operations and Our Stock Price" described in our annual report on form 10-K for the period ended December 31, 2005. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Onyx undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Onyx is a registered trademark of Onyx Software Corporation in the United States and other countries. Other product or service names mentioned herein are the trademarks of their respective owners. -0- *T Onyx Software Corporation Condensed Consolidated Statements of Operations (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended March 31, 2006 2005 ------- ------- Revenue License $ 2,014 $ 3,861 Service 9,996 10,196 ------- ------- Total revenue 12,010 14,057 Costs of revenue Cost of license 278 437 Amortization of acquired technology 256 256 Cost of service 4,109 4,207 ------- ------- Total cost of revenue 4,643 4,900 Gross margin 7,367 9,157 Operating Expenses Sales and marketing 3,971 4,416 Research and development 3,149 2,477 General and administrative 2,445 2,777 ------- ------- Total operating expenses 9,565 9,670 ------- ------- Operating loss (2,198) (513) Other income (expense), net 38 (203) ------- ------- Loss before income taxes (2,160) (716) Income tax provision (benefit) 14 (19) Minority interest in consolidated subsidiary - (78) ------- ------- Net loss $(2,174) $ (619) ======= ======= Basic and diluted net loss per share $ (0.12) $ (0.04) ======= ======= Shares used in computation of basic and diluted net loss per share 18,215 14,618 ======= ======= Onyx Software Corporation Supplemental Non-GAAP Information: (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended March 31, 2006 2005 ------- ------- Operating loss $(2,198) $ (513) Adjustments to reconcile operating loss in the financial statements to non-GAAP operating loss: Amortization of acquired technology 256 256 Stock Based Compensation 494 ------- -------- Non-GAAP operating loss $(1,448) $ (257) ======= ======= Net Loss $(2,174) $ (619) Adjustments to reconcile net loss in the financial statements to non-GAAP net income loss: Amortization of acquired technology 256 256 Change in fair value of outstanding warrants - (2) Stock Based Compensation 494 - ------- ------- Non-GAAP net loss $(1,424) $ (365) ======= ======= Non-GAAP basic and diluted net loss per share $ (0.08) $ (0.03) ======= ======= Shares used in computation of basic and diluted net loss per share 18,215 14,618 ======= ======= Onyx Software Corporation Condensed Consolidated Balance Sheets (In Thousands) (Unaudited) March 31, Dec. 31, 2006 2005 --------- --------- Assets Current Assets: Cash and cash equivalents $ 18,812 $ 21,574 Accounts receivable, net 7,740 11,533 Prepaid expenses and other current assets 2,048 2,015 --------- --------- Total current assets 28,600 35,122 Property and equipment, net 2,442 2,709 Purchased technology, net 2,816 3,071 Goodwill, net 9,310 9,204 Other assets 561 556 --------- --------- Total Assets $ 43,729 $ 50,662 ========= ========= Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $ 1,649 $ 2,054 Salary and benefits payable 1,012 1,760 Accrued liabilities 2,665 3,118 Income taxes payable 43 87 Current portion of restructuring-related liabilities 9 208 Current portion of term loan 167 167 Deferred revenue 11,177 15,211 --------- --------- Total current liabilities 16,722 22,605 Long-term deferred revenue 969 1,032 Long-term purchased technology obligation 921 908 Long-term deferred rent 628 639 Term loan 14 56 Long-term restructuring-related liabilities 170 - Shareholders' Equity Common stock 155,384 154,277 Accumulated deficit (132,152) (129,978) Accumulated other comprehensive income 1,073 1,123 --------- --------- Total shareholders' equity 24,305 25,422 --------- --------- Total Liabilities and Shareholders' Equity $ 43,729 $ 50,662 ========= ========= *T