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Form 8-K Demandware Inc For: May 07

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May 7, 2015 7:01 AM EDT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2015

DEMANDWARE, INC.

(Exact Name of Registrant as Specified in Charter)


Delaware

001-35450

20-0982939

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

5 Wall Street

Burlington, MA

01803

(Address of Principal Executive Offices) (Zip Code)


Registrant’s telephone number, including area code: (888) 553-9216

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.

Results of Operations and Financial Condition.

On May 7, 2015, Demandware, Inc. announced its financial results for the quarter ended March 31, 2015.  The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01.

Financial Statements and Exhibits.

(d)       Exhibits:

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1 Press Release dated May 7, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


DEMANDWARE, INC.

 
Date: May 7, 2015 By:

/s/ Timothy M. Adams

Timothy M. Adams

Executive Vice President and

Chief Financial Officer

EXHIBIT INDEX


Exhibit No.   Description
99.1

Press Release dated May 7, 2015

Exhibit 99.1

Demandware Announces First Quarter 2015 Financial Results

45 Percent Increase in Subscription Revenue

BURLINGTON, Mass.--(BUSINESS WIRE)--May 7, 2015--Demandware®, Inc. (NYSE: DWRE), the industry-leading provider of enterprise cloud commerce solutions, today announced strong financial results for its first quarter ended March 31, 2015.

First Quarter Highlights

  • Subscription revenue for the first quarter was $43.2 million, a 45% year over year increase from $29.9 million in the first quarter of 2014
  • Live customers reached 279 at March 31, 2015, an increase of 30% from 215 at March 31, 2014
  • Live sites increased to 1,241 at March 31, 2015, an increase of 42% from 872 at March 31, 2014
  • Completed acquisition of Tomax, an enterprise cloud software company that provides an integrated solution for retail point-of-sale (POS) and store operations

“2015 is off to a strong start,” stated Tom Ebling, Chief Executive Officer, Demandware. “We were thrilled with our new customer acquisition and our continued momentum with enterprise retailers. We continued to execute our strategy to drive transformational change into commerce through innovative cloud technology. With our acquisition of Tomax, we are poised to deliver the industry’s first enterprise class unified commerce platform in the cloud. Our strong start in the first quarter positions us well to deliver sustainable long term growth.”

  • Demandware signed significant new customers during the quarter including Acne Studios, Christopher & Banks, Cleveland Golf, Diramode (Pimkie), Hotel Chocolat, Kase World Wide, Kendo Holdings, N.V. Perricone, Nautilus, Traeger Pellet Grills, Scholastic and Williamson-Dickie.
  • Leading retailers such as Animal, Bossini Clothing, IC Group, Neal’s Yard, Norbreeze, Serena & Lily, and Torqeedo launched initial sites on the Demandware Commerce Cloud.
  • Existing customers like Harman, Lands’ End, Panasonic, Samsonite, Scotch & Soda, Skullcandy, World Kitchen, and Wolverine Worldwide expanded their operations launching additional commerce sites for new geographies or for new brands.

“During the first quarter, we continued to invest in growth and innovation,” stated Tim Adams, Demandware Chief Financial Officer. “We expanded our operations deeper into Europe and Asia. Our R&D team also made considerable progress on their key initiatives – extending our platform deeper into the store, delivering our intelligence solutions and enriching our core commerce capabilities. As we move through 2015, we remain focused on scaling our organization to support the fast pace of our growth.”

Demandware’s GAAP net loss for the first quarter of 2015 was $5.2 million, or $(0.15) per basic and diluted share, as compared to a GAAP net loss of $8.4 million, or $(0.24) per basic and diluted share for the first quarter of 2014. Non-GAAP net income for the first quarter of 2015 was $5.8 million, or $0.16 per basic share and $0.15 per diluted share, as compared to non-GAAP net loss of $1.8 million, or $(0.05) per basic and diluted share. (1)

At March 31, 2015, we had $189.7 million in cash, cash equivalents and short term investments on the balance sheet, as compared to $243.7 million at December 31, 2014.

(1) Non-GAAP gross margin, non-GAAP subscription gross margin, non-GAAP net income (loss) and non-GAAP net income (loss) per share excludes expenses related to stock-based compensation, contingent compensation expense related to acquisitions and amortization of intangible assets related to acquisitions.

Quarterly Conference Call

To access the call at 8:30 a.m. today, please dial (866) 700-6067 in the U.S. or +1 (617) 213-8834 internationally. The Passcode for the call is: 46900448. A live webcast of the call will also be available on the investor relations section of the company’s website. An audio replay will be available for one week following the conclusion of the call through May 14, 2015. The replay number is (888) 286-8010 in the U.S. or +1 (617) 801-6888 internationally. The Passcode for the replay is: 36753116. The replay will also be available as a webcast on Demandware’s Investor Relations website.

About Demandware

Demandware, the category defining leader of enterprise cloud commerce solutions, empowers the world’s leading retailers to continuously innovate in our complex, consumer-driven world. Demandware’s open cloud platform provides unique benefits including seamless innovation, the LINK ecosystem of integrated best-of-breed partners, and community insight to optimize customer experiences. These advantages enable Demandware customers to lead their markets and grow faster. For more information, visit www.demandware.com, call +1-888-553-9216 or email [email protected].

Forward-looking Statements

This release contains forward-looking statements, including statements regarding Demandware's future financial performance, market growth, the demand for Demandware's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Demandware's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Demandware's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Demandware disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts for our solution; the seasonality of our business; our ability to manage our growth; the variance of our business from quarter to quarter; the continued growth of the market for digital commerce software; the timing and success of solutions offered by our competitors; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure and costs associated with operating as a public company; failure to protect our intellectual property; changes in current tax or accounting rules; and other risks and uncertainties. Further information on potential factors that could affect actual results is included in Demandware’s latest Annual Report on Form 10-K filed with the SEC.

Non-GAAP Financial Measures

Demandware has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP gross margin, non-GAAP subscription gross margin, non-GAAP operating loss, non-GAAP net income (loss) and non-GAAP net income (loss) per share. Demandware uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Demandware’s ongoing operational performance. Demandware believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with other companies in Demandware's industry, many of which present similar non-GAAP financial measures to investors to help investors better understand the ongoing operating performance of the business. Non-GAAP gross margin, non-GAAP subscription gross margin, non-GAAP operating loss, non-GAAP net income (loss) and non-GAAP net income (loss) per share exclude amortization expenses related to stock-based compensation, contingent compensation expense related to acquisitions and amortization of intangible assets related to our acquisitions. Stock-based compensation is often difficult to predict and often excluded by other companies to help investors understand the operational performance of their business. Non-GAAP financial measures that the Company uses may differ from measures that other companies may use. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.

 
Demandware, Inc.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
     
March 31, 2015   December 31, 2014
ASSETS
 
Current assets:
Cash and cash equivalents $ 109,300 $ 158,827
Short-term investments 80,420 84,880
Accounts receivable, net of allowance for doubtful accounts 39,827 42,441
Prepaid expenses and other current assets   11,491     8,564  
Total current assets 241,038 294,712
 
Property and equipment, net 21,154 14,028
Intangible assets, net 25,515 10,266
Goodwill 60,034 24,379
Other assets   2,341     1,785  
Total assets $ 350,082   $ 345,170  
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 3,111 $ 3,581
Accrued expenses 18,389 24,871
Deferred revenue 28,173 22,799
Other current liabilities   1,834     282  
Total current liabilities   51,507     51,533  
 
Long-term liabilities:
Deferred revenue 12,213 12,168
Other long-term liabilities   2,407     1,424  
Total liabilities   66,127     65,125  
 
Redeemable noncontrolling interest 775 823
 
Stockholders' equity:
Common stock 355 353
Additional paid-in capital 401,413 391,896
Treasury stock, at cost (137 ) (137 )
Accumulated other comprehensive loss (691 ) (352 )
Accumulated deficit   (117,760 )   (112,538 )
Total stockholders' equity   283,180     279,222  
Total liabilities, redeemable noncontrolling interest and stockholders' equity $ 350,082   $ 345,170  
 
 
Demandware, Inc.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)
     
Three Months Ended
March 31,

2015

2014

Revenue:
Subscription $ 43,248 $ 29,905
Services and other   7,028     2,669  
Total revenue   50,276     32,574  
 
Cost of revenue:
Subscription 8,873 5,434
Services and other   6,170     3,474  
Total cost of revenue   15,043     8,908  
 
Gross profit 35,233 23,666
 
Operating expenses:
Sales and marketing 21,309 16,483
Research and development 13,683 6,971
General and administrative   11,404     8,312  
Total operating expenses   46,396     31,766  
 
Loss from operations   (11,163 )   (8,100 )
 
Other income:
Interest income 99 66
Interest expense - (53 )
Other income (expense)   189     (11 )
 
Other income, net   288     2  
Loss before income taxes (10,875 ) (8,098 )
Income tax (benefit) provision   (5,595 )   265  
 
Net loss $ (5,280 ) $ (8,363 )
Net loss attributable to noncontrolling interest   (58 )   -  
Net loss attributable to Demandware $ (5,222 ) $ (8,363 )
 
Net loss per share attributable to Demandware, basic and dilutive $ (0.15 ) $ (0.24 )
 
Weighted average common shares outstanding, basic and dilutive   35,360     34,412  
 
 
Demandware, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
     
Three Months Ended
March 31,

2015

2014

 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,280 ) $ (8,363 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 2,738 1,298
Consulting expense settled with a restricted stock unit award 286 -
Bad debt expense 397 269
Stock-based compensation 7,056 5,667
Deferred income taxes (5,807 ) -
Amortization of premium on marketable securities 101 130
Other non-cash reconciling items 95 (21 )
Changes in operating assets and liabilities:
Accounts receivable 11,662 5,405
Prepaid expenses and other current assets (1,736 ) (5,847 )
Other long term assets and liabilities 1,509 (3,351 )
Accounts payable (693 ) (450 )
Accrued expenses (9,213 ) (1,518 )
Deferred revenue   831     556  
Net cash provided by (used in) operating activities   1,946     (6,225 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (6,809 ) (6,385 )
Purchase of marketable securities (24,569 ) (36,903 )
Acquisition, net of cash acquired (54,733 ) (12,136 )
Sale and maturity of marketable securities   33,192     17,225  
Net cash used in investing activities   (52,919 )   (38,199 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 2,177 3,348
Payments of equipment notes - (610 )
Payments of software financing agreement   -     (766 )
Net cash provided by financing activities   2,177     1,972  
 
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS   (731 )   7  
 
DECREASE IN CASH AND CASH EQUIVALENTS (49,527 ) (42,445 )
CASH AND CASH EQUIVALENTS — Beginning of period   158,827     242,425  
CASH AND CASH EQUIVALENTS — End of period $ 109,300   $ 199,980  
 
 
Demandware, Inc.
Stock Based Compensation Expense
(unaudited, in thousands)
     
Three Months Ended
March 31,

2015

2014

 
Cost of subscription revenue $ 223 $ 133
Cost of services revenue 627 393
Sales and marketing 2,267 1,493
Research and development 1,867 1,536
General and administration   2,072   2,112
$ 7,056 $ 5,667
 
Demandware, Inc.
Contingent Compensation Expense Related to Acquisitions
(unaudited, in thousands)
 
Three Months Ended
March 31,

2015

2014

 
Sales and marketing $ 1,044 $ 326
Research and development   1,727   326
 
$ 2,771 $ 652
 
Demandware, Inc.
Amortization Expense Related to Acquired Intangible Assets
(unaudited, in thousands)
 
Three Months Ended
March 31,

2015

2014

 
Cost of subscription revenue $ 1,052 $ 174
Sales and marketing   99   37
$ 1,151 $ 211
 
 
Demandware, Inc.
Reconcilation of Non-GAAP Financial Measures to Comparable GAAP Measures
(unaudited; in thousands, except per share data)
     
Three Months Ended
March 31,

2015

2014

Reconciliation between GAAP operating loss and non-GAAP operating loss:
GAAP operating loss $ (11,163 ) $ (8,100 )
Add back:
Stock-based compensation 7,056 5,667
Contingent compensation expense related to acquisitions 2,771 652
Amortization expense related to acquired intangible assets   1,151     211  
Non-GAAP operating loss   (185 )   (1,570 )
 
Numerator:
Reconciliation between GAAP net (loss) attributable to Demandware and non-GAAP net income (loss):
GAAP net (loss) attributable to Demandware $ (5,222 ) $ (8,363 )
Add back:
Stock-based compensation 7,056 5,667
Contingent compensation expense related to acquisitions 2,771 652
Amortization expense related to acquired intangible assets   1,151     211  
Non-GAAP net income (loss)   5,756     (1,833 )
 
Denominator:
Reconciliation between GAAP and non-GAAP weighted average shares used in computing diluted non-GAAP net income per common share:
GAAP weighted average common shares outstanding, basic 35,360 34,412
Add back:
Effect of dilutive securities (1)   2,079     -  
Non-GAAP weighted average common shares outstanding, dilutive   37,439     34,412  
 
Non-GAAP net income (loss) per share, basic: $ 0.16   $ (0.05 )
Non-GAAP net income (loss) per share, diluted: $ 0.15   $ (0.05 )
 
(1) These securities are anti-dilutive on a GAAP basis as a result of the Company's net loss, but are considered dilutive on a non-GAAP basis in periods where the Company has reported positive non-GAAP earnings.
 
 
Reconciliation between GAAP subscription gross margin and non-GAAP subscription gross margin:
Subscription revenue $ 43,248 $ 29,905
Cost of subscription revenue   8,873     5,434  
Subscription gross profit   34,375     24,471  
Add back:
Stock-based compensation allocated to cost of subscription revenue 223 133
Amortization expense related to acquired intangible assets allocated to cost of subscription revenue   1,052     174  
Non-GAAP Subscription Gross Profit   35,650     24,778  
Non-GAAP Subscription Gross Margin 82 % 83 %
 
Reconciliation between GAAP total gross margin and non-GAAP total gross margin:
Total revenue $ 50,276 $ 32,574
Total cost of revenue   15,043     8,908  
Gross profit   35,233     23,666  
Add back:
Stock-based compensation allocated to cost of revenue 850 526
Amortization expense related to acquired intangible assets allocated to cost of revenue   1,052     174  
Non-GAAP Total Gross Profit   37,135     24,366  
Non-GAAP Total Gross Margin 74 % 75 %
 

CONTACT:
Investor Relations Contact:
Erica Smith
Vice President, Investor Relations, Demandware
Office: 781-425-1222
Email: [email protected]


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