Determine Announces 2nd Quarter Fiscal 2016 Financial Results

November 11, 2015 4:26 PM

SAN MATEO, CA -- (Marketwired) -- 11/11/15 -- Determine, Inc. - (NASDAQ: DTRM), a leading global provider of SaaS enterprise contract lifecycle management, strategic sourcing, supplier management, and procure-to-pay solutions, announced its Q2 FY2016 financial results.

Q2 FY2016 GAAP Financial Highlights:


(in thousands, except per share amounts)
----------------------------------------------------------------------------
    GAAP Financial
        Measures          Q2        Q1        Q2       Change      Change

                       FY 2016   FY 2016   FY 2015      Q/Q         Y/Y
----------------------------------------------------------------------------
Revenue - total        $ 6,765   $ 6,215   $ 5,203         8.9%       30.0%
----------------------------------------------------------------------------
Revenue - recurring    $ 5,413   $ 5,095   $ 4,038         6.2%       34.1%
----------------------------------------------------------------------------
Revenue - non-
 recurring             $ 1,352   $ 1,120   $ 1,165        20.7%       16.1%
----------------------------------------------------------------------------
Gross profit - total   $ 3,505   $ 3,308   $ 1,352         6.0%      159.3%
----------------------------------------------------------------------------
Gross profit -
 recurring             $ 3,656   $ 3,665   $ 2,534        (0.2%)      44.3%
----------------------------------------------------------------------------
Gross loss - non-
 recurring             $  (151)  $  (357)  $(1,182)      (57.6%)     (87.2%)
----------------------------------------------------------------------------
Gross margin - total      51.8%     53.2%     26.0%   (1.4 pts)   25.8 pts
----------------------------------------------------------------------------
Gross margin -
 recurring                67.5%     71.9%     62.8%   (4.4 pts)    4.7 pts
----------------------------------------------------------------------------
Gross margin - non
 recurring               (11.2%)   (31.9%)  (101.5%)  20.7 pts    90.3 pts
----------------------------------------------------------------------------
Net loss               $(3,425)  $(2,942)  $(2,690)       16.4%       27.3%
----------------------------------------------------------------------------
EPS                    $ (0.32)  $ (0.33)  $ (0.35)  $    0.01   $    0.03
----------------------------------------------------------------------------



(in thousands, except per share amounts)
------------------------------------------------------
    GAAP Financial
        Measures                 Six Months
                      --------------------------------
                                             Change
                       FY 2016   FY 2015      Y/Y
------------------------------------------------------
Revenue - total        $12,980   $ 8,965        44.8%
------------------------------------------------------
Revenue - recurring    $10,508   $ 6,732        56.1%
------------------------------------------------------
Revenue - non-
 recurring             $ 2,472   $ 2,233        10.7%
------------------------------------------------------
Gross profit - total   $ 6,811   $ 2,715       150.9%
------------------------------------------------------
Gross profit -
 recurring             $ 7,321   $ 4,289        70.7%
------------------------------------------------------
Gross loss - non-
 recurring             $  (509)  $(1,574)      (67.6%)
------------------------------------------------------
Gross margin - total      52.5%     30.3%   22.2 pts
------------------------------------------------------
Gross margin -
 recurring                69.7%     63.7%    6.0 pts
------------------------------------------------------
Gross margin - non
 recurring               (20.6%)   (70.5%)  49.9 pts
------------------------------------------------------
Net loss               $(6,368)  $(5,639)       12.9%
------------------------------------------------------
EPS                    $ (0.66)  $ (0.85)  $    0.19
------------------------------------------------------

Q2 FY2016 Non-GAAP Financial Highlights:


(in thousands, except per share amounts)
----------------------------------------------------------------------------
  Non-GAAP Financial
        Measures          Q2        Q1        Q2       Change      Change

                       FY 2016   FY 2016   FY 2015      Q/Q         Y/Y
----------------------------------------------------------------------------
Revenue - total        $ 6,843   $ 6,279   $ 6,167         9.0%       11.0%
----------------------------------------------------------------------------
Revenue - recurring    $ 5,463   $ 5,158   $ 4,756         5.9%       14.9%
----------------------------------------------------------------------------
Revenue - non-
 recurring             $ 1,380   $ 1,120   $ 1,411        23.2%       (2.2%)
----------------------------------------------------------------------------
Gross profit - total   $ 3,934   $ 3,609   $ 2,618         9.0%       50.3%
----------------------------------------------------------------------------
Gross profit -
 recurring             $ 3,963   $ 3,915   $ 3,430         1.2%       15.5%
----------------------------------------------------------------------------
Gross loss - non-
 recurring             $   (29)  $  (306)  $  (812)      (90.6%)     (96.5%)
----------------------------------------------------------------------------
Gross margin - total      57.5%     57.5%     42.5%    0.0 pts    15.0 pts
----------------------------------------------------------------------------
Gross margin -
 recurring                72.5%     75.9%     72.1%   (3.4 pts)    0.4 pts
----------------------------------------------------------------------------
Gross margin - non
 recurring                (2.1%)   (27.3%)   (57.6%)  25.2 pts    55.5 pts
----------------------------------------------------------------------------
Net loss               $(1,563)  $(1,518)  $(3,467)        3.0%      (54.9%)
----------------------------------------------------------------------------
EPS                    $ (0.15)  $ (0.17)  $ (0.44)  $    0.02   $    0.29
----------------------------------------------------------------------------
Billings               $ 6,836   $ 6,032   $ 7,123        13.3%       (4.0%)
----------------------------------------------------------------------------



(in thousands, except per share amounts)
------------------------------------------------------
  Non-GAAP Financial
        Measures                 Six Months
                      --------------------------------
                                             Change
                       FY 2016   FY 2015      Y/Y
------------------------------------------------------
Revenue - total        $13,121   $ 9,929        32.2%
------------------------------------------------------
Revenue - recurring    $10,621   $ 7,450        42.6%
------------------------------------------------------
Revenue - non-
 recurring             $ 2,500   $ 2,479         0.8%
------------------------------------------------------
Gross profit - total   $ 7,543   $ 4,117        83.2%
------------------------------------------------------
Gross profit -
 recurring             $ 7,878   $ 5,208        51.3%
------------------------------------------------------
Gross loss - non-
 recurring             $  (334)  $(1,091)      (69.3%)
------------------------------------------------------
Gross margin - total      57.5%     41.5%   16.0 pts
------------------------------------------------------
Gross margin -
 recurring                74.2%     69.9%    4.3 pts
------------------------------------------------------
Gross margin - non
 recurring               (13.4%)   (44.0%)  30.6 pts
------------------------------------------------------
Net loss               $(3,082)  $(5,606)      (45.0%)
------------------------------------------------------
EPS                    $ (0.32)  $ (0.85)  $    0.53
------------------------------------------------------
Billings               $12,867   $10,126        27.1%
------------------------------------------------------

"I'm pleased to report that with the b-pack transaction closing in early fiscal Q2 that we have achieved the main strategic objective we put in place 18 months ago, to become a full spectrum supplier management and enterprise contract lifecycle management provider. Today we are truly a new, combined company, under a new brand, Determine and are making great strides to fully harmonize the team and technologies to our customers' benefit," said Patrick Stakenas, President and CEO of Determine. "On the operations side, I'm very excited to share that this quarter we are seeing a significant pay-off with respect to the work we have been doing for the past year on the re-alignment of our non-recurring costs across all lines of business. Going forward I anticipate continued quarterly improvement as we align our services under our one platform strategy."

Q2 FY2016 Business Highlights:

November 11, 2015 Conference Call & Webcast

A conference call and webcast will be held today at 5:00 p.m. EST to review these results. Interested parties may participate via conference call and webcast:

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=117091

Replay Dial-in Info: Toll-Free: 1-877-870-5176 Toll/International: 1-858-384-5517

From: 11/11/15 @ 8:00 pm Eastern Time To: 11/25/15 @ 11:59 pm Eastern Time Replay Pin Number: 13624253

Related: http://www.determine.com/investors

Supporting Resources

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About Determine, Inc. Determine (NASDAQ: DTRM) is a global provider of SaaS enterprise contract lifecycle management, strategic sourcing, supplier management, and procure-to-pay solutions. As a recognized leader in the industry, Determine provides deep innovative capabilities in Enterprise Contract Lifecycle Management, eProcurement, eSourcing, Spend and Procurement Analysis, Supplier Information Management, Invoicing, and Catalog Management. Since 1996, Determine has helped global companies actively manage their contracts throughout the sales, procurement, and legal life cycle. Determine's enterprise contract lifecycle management, strategic sourcing, supplier management, and procure-to-pay software solutions drive critical operational business value that effectively accelerate revenue opportunities and minimize risk through compliance. A recognized leader in the industry, our patented technology assists customers across a myriad of industries -- including high-tech, telecommunications, manufacturing, healthcare, and financial services. Determine also provides a powerful configuration engine, which Global 1000 companies use to increase revenue by facilitating the right combination of products, services, and price. For more information, please visit: www.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. 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.

Bookings are 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.



                              Determine, Inc.
              Condensed Consolidated Statements of Operations
                  (In thousands, except per share amounts)
                                (Unaudited)

                                     Three Months Ended   Six Months Ended
                                     ------------------  ------------------
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2015      2014      2015      2014
                                     --------  --------  --------  --------

Revenues:
  Recurring revenues                 $  5,413  $  4,038  $ 10,508  $  6,732
  Non-recurring revenues                1,352     1,165     2,472     2,233
                                     --------  --------  --------  --------
    Total revenues                      6,765     5,203    12,980     8,965
                                     --------  --------  --------  --------

Cost of revenues:
  Cost of recurring revenues            1,757     1,504     3,187     2,443
  Cost of non-recurring revenues        1,504     2,347     2,981     3,806
                                     --------  --------  --------  --------
    Total cost of revenues              3,261     3,851     6,168     6,250
                                     --------  --------  --------  --------

Gross profit:
  Recurring gross profit                3,656     2,534     7,321     4,289
  Non-recurring (loss)                   (151)   (1,182)     (509)   (1,574)
                                     --------  --------  --------  --------
    Total gross profit                  3,505     1,352     6,811     2,715
                                     --------  --------  --------  --------

Operating expenses:
  Research and development                894       997     1,481     1,439
  Sales and marketing                   3,475     3,611     6,917     5,836
  General and administrative            1,757     2,211     3,592     3,636
  Acquisition related costs               537       145       774       363
                                     --------  --------  --------  --------
    Total operating expenses            6,663     6,964    12,764    11,274
                                     --------  --------  --------  --------

Loss from operations                   (3,158)   (5,612)   (5,953)   (8,559)

Interest and other income (expense),
 net                                     (251)      (28)     (399)      (29)
Net loss before Income Tax             (3,409)   (5,639)   (6,352)   (8,588)
                                     --------  --------  --------  --------

Benefit (provision) for income taxes      (20)    2,950       (20)    2,950
Net loss                             $ (3,429) $ (2,690) $ (6,372) $ (5,639)
                                     ========  ========  ========  ========

Net income attributed to non-
 controlling interest                       4         -         4         -
Net loss attributed to Determine,
 Inc                                   (3,425)   (2,690)   (6,368)   (5,639)
                                     ========  ========  ========  ========

Redeemable preferred stock accretion        -     2,744     1,000     2,744
                                     --------  --------  --------  --------
Net loss applicable to common
 stockholders                        $ (3,425) $ (5,434) $ (7,368) $ (8,383)
                                     ========  ========  ========  ========

Basic and diluted net loss per share $  (0.32) $  (0.35) $  (0.66) $  (0.85)
                                     ========  ========  ========  ========
GAAP to Non-GAAP Reconciliations:

Reconciliation of Total revenue:
  U.S. GAAP as reported              $  6,765  $  5,203  $ 12,980  $  8,965
  Adjustments:
  Deferred revenue adjustment              78       964       141       964
                                     --------  --------  --------  --------
As adjusted                          $  6,843  $  6,167  $ 13,121  $  9,929
                                     ========  ========  ========  ========

Reconciliation to non-GAAP net loss:
Net loss                             $ (3,425) $ (2,690) $ (6,368) $ (5,639)
Stock-based compensation expense          636       705     1,214     1,289
Deferred revenue adjustment                78       964       141       964
Acquisition related costs                 537       145       774       363
Amortization on Intangibles               482       349       831       349
Benefit for income taxes                    -    (2,950)        -    (2,950)
Severance costs                           129        10       326        18
                                     --------  --------  --------  --------
Non-GAAP net loss                    $ (1,563) $ (3,467) $ (3,082) $ (5,606)
                                     ========  ========  ========  ========

                                     --------  --------  --------  --------
Non-GAAP basic and diluted net loss
 per share                           $  (0.15) $  (0.44) $  (0.32) $  (0.85)
                                     ========  ========  ========  ========

Weighted average shares outstanding
 for basic and diluted net loss per
 share                                 10,594     7,795     9,694     6,617
                                     ========  ========  ========  ========



                              Determine, Inc.
          Condensed Consolidated Statements of Comprehensive Loss
                               (In thousands)
                                (Unaudited)

                                     Three Months Ended   Six Months Ended
                                     ------------------  ------------------
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2015      2014      2015      2014
                                     --------  --------  --------  --------

Net loss                             $ (3,425) $ (2,690) $ (6,368) $ (5,639)
Other comprehensive income (loss):
  Foreign currency translation
   adjustments                            (57)        -       (57)        0
                                     --------  --------  --------  --------
Other comprehensive income (loss)         (57)        -       (57)        0
                                     --------  --------  --------  --------
Comprehensive income (loss)          $ (3,482) $ (2,690) $ (6,425) $ (5,639)
                                     ========  ========  ========  ========



                               Determine, Inc.
                    Condensed Consolidated Balance Sheets
                               (In thousands)

                                                 September 30,   March 31,
                                                      2015          2015
                                                 ------------- -------------
                                                  (Unaudited)    (Audited)
ASSETS
Current assets
  Cash and cash equivalents                      $       7,978 $      13,178
  Accounts receivable                                    6,437         5,203
  Restricted cash                                           34            34
  Prepaid expenses and other current assets              1,479         1,647
                                                 ------------- -------------
    Total current assets                                15,928        20,062

Property and equipment, net                                187           290
Capitalized software                                     2,827         2,258
Goodwill                                                14,628         7,702
Other intangibles, net                                   9,130         6,453
Other assets                                             1,003           521
                                                 ------------- -------------
    Total assets                                 $      43,703 $      37,286
                                                 ============= =============

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
  Current liabilities
  Credit facility                                $       7,100 $       7,447
  Accounts payable                                       1,769         1,535
  Accrued payroll and related liabilities                2,489           910
  Other accrued liabilities                              2,069         1,877
  Deferred revenue                                       8,300         8,410
  COFACE loan                                              437             -
  Deferred tax liability                                 1,186             -
                                                 ------------- -------------
    Total current liabilities                           23,350        20,179
                                                 ------------- -------------
  Long-term deferred revenue                                19            22
  Convertible note, net of debt discount                 2,910         2,900
  Other long-term liabilities                              158           167
                                                 ------------- -------------
    Total liabilities                                   26,437        23,268
                                                 ------------- -------------

Redeemable convertible preferred stock                       -         4,895
Total Determine, Inc. stockholders' equity
 controlling interest                                   17,151         9,123
Non-controlling interest                                   115             -
                                                 ------------- -------------
Total stockholders' deficit                             17,266        14,018
                                                 ------------- -------------
    Total liabilities, redeemable convertible
     preferred stock and stockholders' equity    $      43,703 $      37,286
                                                 ============= =============



                              Determine, Inc.
              Condensed Consolidated Statements of Cash Flows
                               (In thousands)
                                 (Unudited)

                                                     Six Months Ended
                                               ----------------------------
                                               September 30,  September 30,
                                                    2015           2014
                                               -------------  -------------

Operating activities
Net loss                                       $      (6,372) $      (5,639)
Adjustments to reconcile net loss to net cash
 used in
operating activities:
Depreciation and Amortization                          1,168            589
Loss on disposition of property and equipment             14              -
Stock-based compensation expense                       1,213          1,289
Non-controlling interest                                   4              -
Changes in assets and liabilities:
  Accounts receivable (net)                              440          1,178
  Prepaid expenses and other current assets              273           (286)
  Other assets                                            54             97
  Accounts payable                                       (55)             5
  Accrued payroll and related liabilities                548           (462)
  Other accrued liabilities and long term
   liabilities                                          (505)            87
  Deferred tax liability                                   7         (2,989)
  Deferred revenue                                      (981)          (839)
                                               -------------  -------------
Net cash used in operating activities                 (4,192)        (6,970)

Investing activities
  Purchase of property and equipment                      (7)           (52)
  Capitalized Software                                  (809)        (1,040)
  Purchase of business, net of cash                     (402)        (5,003)
                                               -------------  -------------
Net cash used in investing activities                 (1,218)        (6,095)

Financing activities
  Proceeds from sale of common stock,
   preferred stock and warrants, net of
   issuance costs                                        310          7,078
  Employee taxes paid in exchange for
   restricted stock awards forefeited                    227              -
  Issuance of common stock under employee
   stock plan                                             87             93
  Credit facility borrowing, net                        (347)            51
  Credit facility payment                                  -           (655)
  Repayment of a loan                                    (25)          (277)
  Conversion of Preferred Stock to Common
   Stock                                                 (17)             -
  Repayment of minority shareholder                     (133)             -
  Issuance of debt, net of costs                         162              -
                                               -------------  -------------
Net cash provided by financing activities                264          6,290

  Effect of exchange rate changes on cash                (54)             -

Net decrease in cash and cash equivalents             (5,201)        (6,775)
Cash and cash equivalents at beginning of the
 period                                               13,178         16,907
                                               -------------  -------------
Cash and cash equivalents at end of the period $       7,977  $      10,132
                                               =============  =============



                               Determine, Inc.
                           Billings Reconciliation
                               (In thousands)
                                 (Unaudited)

                         Three Months Ended           Six Months Ended
                    --------------------------- ----------------------------
                    September 30, September 30, September 30,  September 30,
                         2015          2014          2015           2014
                    ------------- ------------- -------------  -------------

Total revenues      $       6,765 $       5,203 $      12,980  $       8,965
Deferred revenue:
End of period               8,319         6,909         8,319          6,909
Beginning of period         8,248         4,989         8,432          5,748
                    ------------- ------------- -------------  -------------
Change in deferred
 revenue                       71         1,920          (113)         1,161
                    ------------- ------------- -------------  -------------
Total billings
 (total revenues
 plus the change in
 deferred revenue)  $       6,836 $       7,123 $      12,867  $      10,126
                    ============= ============= =============  =============

Contacts

Investor Relations:

Budd Zukerman
+1.303.415.0200
bzuckerman@genesisselect.com

Media Relations:

Rose Lee
Determine
+1.650.532.1590
pr@determine.com

Source: Determine, Inc.

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