Determine Announces 1st Quarter Fiscal Year 2017 Financial Results

August 10, 2016 4:10 PM

CARMEL, IN -- (Marketwired) -- 08/10/16 -- Determine, Inc. (NASDAQ: DTRM), a leading global provider of SaaS enterprise Source to Pay and Enterprise Contract Lifecycle Management, including cloud-based strategic sourcing, supplier management, contract management and procure-to-pay solutions, announced financial results for its first quarter ended June 30, 2016.

Q1 FY2017 GAAP Financial Highlights:


(in thousands, except per share amounts)
----------------------------------------------------------------------------
    GAAP Financial       Q1        Q4       Q1       Change       Change
       Measures       FY 2017   FY 2016  FY 2016       Q/Q          Y/Y
----------------------------------------------------------------------------
Revenue - total       $ 6,492   $ 6,680  $ 6,215         (2.8%)        4.5%
----------------------------------------------------------------------------
Revenue - recurring   $ 5,068   $ 4,981  $ 5,095          1.7%        -0.5%
----------------------------------------------------------------------------
Revenue - non-
 recurring            $ 1,424   $ 1,699  $ 1,120        (16.2%)       27.2%
----------------------------------------------------------------------------
Gross profit - total  $ 3,385   $ 3,296  $ 3,308          2.7%         2.3%
----------------------------------------------------------------------------
Gross profit -
 recurring            $ 3,462   $ 3,137  $ 3,665         10.4%        -5.6%
----------------------------------------------------------------------------
Gross profit/ (loss)
 - non-recurring      $   (77)  $   159  $  (357)      (148.2%)      -78.5%
----------------------------------------------------------------------------
Gross margin - total     52.1%     49.3%    53.2%     2.8 pts     (1.1 pts)
----------------------------------------------------------------------------
Gross margin -
 recurring               68.3%     63.0%    71.9%     5.3 pts     (3.6 pts)
----------------------------------------------------------------------------
Gross margin - non
 recurring               (5.4%)     9.4%   (31.9%)  (14.9 pts)    26.5 pts
----------------------------------------------------------------------------
Net loss              $(2,342)  $(4,810) $(2,942)       (51.3%)      (20.4%)
----------------------------------------------------------------------------
EPS                   $ (0.21)  $ (0.42) $ (0.32)  $     0.22   $     0.12
----------------------------------------------------------------------------

Q1 FY2017 Non-GAAP Financial Highlights:


(in thousands, except per share amounts)
----------------------------------------------------------------------------
  Non-GAAP Financial      Q1        Q4       Q1       Change      Change
        Measures       FY 2017   FY 2016  FY 2016      Q/Q          Y/Y
----------------------------------------------------------------------------
Revenue - total        $ 6,500   $ 6,696  $ 6,277        (2.9%)        3.5%
----------------------------------------------------------------------------
Revenue - recurring    $ 5,076   $ 4,997  $ 5,157         1.6%        (1.6%)
----------------------------------------------------------------------------
Revenue - non-
 recurring             $ 1,424   $ 1,699  $ 1,120       (16.2%)       27.1%
----------------------------------------------------------------------------
Gross profit - total   $ 3,710   $ 3,660  $ 3,609         1.4%         2.8%
----------------------------------------------------------------------------
Gross profit -
 recurring             $ 3,737   $ 3,419  $ 3,915         9.3%        (4.5%)
----------------------------------------------------------------------------
Gross profit/( loss) -
 non-recurring         $   (27)  $   241  $  (306)     (111.1%)      (91.3%)
----------------------------------------------------------------------------
Gross margin - total      57.1%     54.7%    57.5%    2.4 pts     (0.4 pts)
----------------------------------------------------------------------------
Gross margin -
 recurring                73.6%     68.4%    75.9%    5.2 pts     (2.3 pts)
----------------------------------------------------------------------------
Gross margin - non
 recurring                (1.9%)    14.1%   (27.3%) (16.0 pts)    25.4 pts
----------------------------------------------------------------------------
Net loss               $(1,284)  $(2,245) $(1,715)      (42.8%)      (25.1%)
----------------------------------------------------------------------------
EPS                    $ (0.11)  $ (0.20) $ (0.19)       0.09   $     0.07
----------------------------------------------------------------------------
Billings               $ 6,280   $ 8,027  $ 6,031       (21.8%)        4.1%
----------------------------------------------------------------------------

"Coming out of this quarter, our momentum is strong as we are on track to release our integrated Source to Pay and Enterprise Contract Lifecycle Management unified suite offering on the Determine Cloud Platform. Market analysts, customers and prospects alike continue to share their enthusiasm for our new combined offering," said Patrick Stakenas, President and CEO of Determine. "As expected, our new ARR bookings were a bit lighter than in prior quarters, which we believe is a temporary change reflecting our pivot to the new platform. Our sales pipeline continues to build in a promising manner as prospects and current customers begin to become educated about the new integrated offering. From an operational perspective, we saw the meaningful results from the expense actions taken in the last quarter to manage and streamline the business, and we are committed to continue to efficiently drive the business towards profitability. As we continue to deliver through this critical product inflection point, I am optimistic about our upcoming quarter."

Q1 FY2017 Business Highlights:

Conference Call and Webcast; Wednesday, August 10, 2016 at 5:00 PM Eastern 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=120646

Replay Dial-in Information: Toll-Free: 1-877-870-5176 Toll/International: 1-858-384-5517 From: 08/10/16 @ 8:00 pm Eastern Time To: 08/17/16 @ 11:59 pm Eastern Time Replay Pin Number: 13642532 Related: http://investor.determine.com

Supporting Resources Determine blog Determine on LinkedIn Determine on Twitter Determine guides & misc. resources

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 revenue is due to the impact of revaluing the deferred revenue balances acquired from primarily b-pack as required by GAAP purchase accounting.

The difference between GAAP and non-GAAP gross profit is the difference in GAAP versus non-GAAP revenues as well as 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.

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.

About Determine, Inc.

Determine, Inc. (NASDAQ: DTRM) is a leading global provider of SaaS Source to Pay and Enterprise Contract Lifecycle Management (ECLM) solutions. Our visionary technologies allow our customers to effectively manage the full scope of Source to Pay and ECLM using our Determine Cloud Platform. Our Source to Pay software suite includes strategic sourcing, supplier management, contract management and procure-to-pay applications.

The Determine Cloud Platform gives procurement, finance and legal professionals the ability to deliver profound insights through analysis of their supplier relationships and contractual requirements. Our customers leverage the Determine Cloud Platform to discover previously unseen supplier and spend data; make more informed and smarter business decisions; drive new revenue; control costs; improve workflow efficiencies; and mitigate risk.

Our customers benefit from the Determine Cloud Platform's robust suite of integrated applications. Whether they start with a full-suite implementation or choose to implement just one application and build over time, each additional application allows for the automatic sharing of data already in place on the Determine Cloud Platform.

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


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

                                                        Three Months Ended
                                                       --------------------
                                                             June 30,
                                                       --------------------
                                                          2016       2015
                                                       ---------  ---------

Revenues:
  Recurring revenues                                   $   5,068  $   5,095
  Non-recurring revenues                                   1,424      1,120
                                                       ---------  ---------
    Total revenues                                         6,492      6,215
                                                       ---------  ---------

Cost of revenues:
  Cost of recurring revenues                               1,606      1,430
  Cost of non-recurring revenues                           1,501      1,477
                                                       ---------  ---------
    Total cost of revenues                                 3,107      2,907
                                                       ---------  ---------

Gross profit:
  Recurring gross profit                                   3,462      3,665
  Non-recurring profit/(loss)                                (77)      (357)
                                                       ---------  ---------
    Total gross profit                                     3,385      3,308
                                                       ---------  ---------

Operating expenses:
  Research and development                                   947        588
  Sales and marketing                                      2,803      3,442
  General and administrative                               1,756      1,835
  Acquisition related costs                                    -        237
                                                       ---------  ---------
    Total operating expenses                               5,506      6,102
                                                       ---------  ---------

Loss from operations                                      (2,121)    (2,794)

Interest and other income (expense), net                    (291)      (148)
Net loss before income tax                                (2,412)    (2,942)
                                                       ---------  ---------

Benefit from income taxes                                     70          -
Net loss                                                  (2,342)    (2,942)
                                                       =========  =========

Net income attributed to non-controlling interest             (0)         -
Net loss attributable to Determine, Inc                   (2,342)         -
                                                       =========  =========

Redeemable preferred stock accretion                           -      1,000
                                                       ---------  ---------
Net loss attributable to common stockholders              (2,342)    (3,942)
                                                       =========  =========

Basic and diluted net loss per share                       (0.21)     (0.32)
                                                       =========  =========
GAAP to Non-GAAP Reconciliations:

Reconciliation of Total revenue:
  U.S. GAAP as reported                                $   6,492  $   6,215
  Adjustments:
  Deferred revenue adjustment                                  8         62
                                                       ---------  ---------
Non-GAAP Revenue                                       $   6,500  $   6,277
                                                       =========  =========

Reconciliation to non-GAAP net loss:
Net loss                                               $  (2,342) $  (2,942)
Stock-based compensation expense                             528        578
Deferred revenue adjustment                                    8         63
Acquisition related costs                                      -        237
Amortization on intangibles                                  535        349
Benefit from income taxes                                    (13)         -
                                                       ---------  ---------
Non-GAAP net loss                                      $  (1,284) $  (1,715)
                                                       =========  =========

                                                       ---------  ---------
Non-GAAP basic and diluted net loss per share          $   (0.11) $   (0.19)
                                                       =========  =========

Weighted average shares outstanding for basic and
 diluted net loss per share                               11,413      9,182
                                                       =========  =========



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

                                                       Three Months Ended
                                                    ------------------------
                                                            June 30,
                                                    ------------------------
                                                        2016         2015
                                                    -----------  -----------

Net loss                                            $    (2,342) $         -
Other comprehensive income (loss):
  Foreign currency translation adjustments                  (26)           -
                                                    -----------  -----------
Other comprehensive income (loss)                           (26)           -
                                                    -----------  -----------
Comprehensive income (loss)                         $    (2,368) $         -
                                                    ===========  ===========



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

                                                       June 30    March 31,
                                                         2016        2016
                                                     ----------- -----------
                                                     (Unaudited)  (Audited)
ASSETS
Current assets
  Cash and cash equivalents                          $     9,651 $     9,418
  Accounts receivable                                      6,185       7,031
  Restricted cash                                             34          34
  Prepaid expenses and other current assets                1,488       1,551
                                                     ----------- -----------
    Total current assets                                  17,358      18,034

Property and equipment, net                                  130         136
Capitalized software                                       1,827       1,699
Goodwill                                                  14,490      14,490
Other intangibles, net                                     7,479       8,011
Other assets                                               1,947       1,843
                                                     ----------- -----------
    Total assets                                     $    43,231 $    44,213
                                                     =========== ===========


LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities
  Credit facility                                    $     5,961 $     7,100
  Accounts payable                                         1,286       1,973
  Accrued payroll and related liabilities                  1,858       1,655
  Other accrued liabilities                                2,336       2,396
  Deferred revenue                                        10,097      10,299
  COFACE loan                                                349         407
  Deferred tax liability                                      24          14
  Accrued restructuring                                        -         403
                                                     ----------- -----------
    Total current liabilities                             21,911      24,247
                                                     ----------- -----------
  Long-term deferred revenue                                  57          67
  Convertible note, net of debt discount                   5,425       5,420
  Other long-term liabilities                              6,403       3,282
  Deferred tax liability non current                         210         290
                                                     ----------- -----------
    Total liabilities                                     34,006      33,306
                                                     ----------- -----------

Redeemable convertible preferred stock                         -           -
Total Determine, Inc. stockholders' equity
 controlling interest                                      9,112      10,794
Non-controlling interest                                     113         113
                                                     ----------- -----------
Total stockholders' equity                                 9,225      10,907
                                                     ----------- -----------
    Total liabilities, redeemable convertible
     preferred stock and stockholders' equity        $    43,231 $    44,213
                                                     =========== ===========


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

                                                        Three Months Ended
                                                       --------------------
                                                        June 30,   June 30,
                                                          2016       2015
                                                       ---------  ---------

Operating activities
Net loss                                               $  (2,342) $  (2,942)
Adjustments to reconcile net loss to net cash used in
 operating activities:
  Depreciation and amortization                              571        517
  Loss on disposition of property and equipment                -         17
  Accrued restructuring costs                               (403)         -
  Stock-based compensation expense                           528        578
  Deferred tax liability                                     (80)         -
Changes in assets and liabilities:
  Accounts receivable (net)                                  840        341
  Prepaid expenses and other current assets                   63         87
  Other assets                                              (104)        27
  Accounts payable                                          (687)        58
  Accrued payroll and related liabilities                    203        103
  Other accrued liabilities and other long-term
   liabilities                                               (22)      (171)
  Deferred revenue                                          (212)      (187)
                                                       ---------  ---------
Net cash used in operating activities                     (1,645)    (1,572)

Investing activities
  Purchase of property and equipment                         (22)         -
  Capitalized software                                      (128)      (355)
                                                       ---------  ---------
Net cash used in investing activities                       (150)      (355)

Financing activities
  Proceeds from sale of common stock, preferred stock
   and warrants, net of issuance costs                         -        310
  Employee taxes paid in exchange for restricted stock
   awards forefeited                                          68        227
  Issuance of common stock under employee stock plan           4          -
  Issuance of common stock under legal settlement             35          -
  Credit facility payment                                 (1,139)      (590)
  Repayment of loan                                          (58)         -
  Conversion of preferred stock to common stock                -        (17)
  Repayment of minority shareholder                            -          -
  Issuance of convertible note, net of costs               3,144         81
  Issuance of cost associated with promissory note             -
                                                       ---------  ---------
Net cash provided by financing activities                  2,054         11

  Effect of exchange rate changes on cash                    (26)         -

Net increase (decrease) in cash and cash equivalents         233     (1,916)
Cash and cash equivalents at beginning of the period       9,418     13,178
                                                       ---------  ---------
Cash and cash equivalents at end of the period         $   9,651  $  11,262
                                                       =========  =========



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

                                                      Three Months Ended
                                                   ------------------------
                                                     June 30,     June 30,
                                                       2016         2015
                                                   -----------  -----------

Total revenues                                     $     6,492  $     6,215
Deferred revenue:
End of period                                           10,154        8,248
Beginning of period                                     10,366        8,432
                                                   -----------  -----------
Change in deferred revenue                                (212)        (184)
                                                   -----------  -----------
Total billings (total revenues plus the change in
 deferred revenue)                                 $     6,280  $     6,031
                                                   ===========  ===========


Contact

Media Relations

Rose Lee
Determine, Inc.
+1.877.806.1932
+1.650.532.1590

pr@determine.com

Source: Determine, Inc.

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