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Determine Announces First Quarter Fiscal 2019 Financial Results

August 9, 2018 4:15 PM

CARMEL, Ind., Aug. 09, 2018 (GLOBE NEWSWIRE) -- Determine, Inc. (NASDAQ: DTRM), a pioneering leader in global Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) Cloud Platform solutions, announced financial results for its first quarter ended June 30th, 2018.

Q1 FY2019 GAAP Financial Highlights:

(in thousands, except per share amounts)
GAAP Financial Measures Q1Q4Q1ChangeChange
FY 2019FY 2018FY 2018 Q/Q Y/Y
Revenue - total$6,040 $6,776 $6,988 (10.9%) (13.6%)
Revenue - recurring$5,251 $5,467 $5,300 (4.0%) (0.9%)
Revenue - non-recurring$789 $1,309 $1,688 (39.7%) (53.3%)
Gross profit - total$2,627 $3,344 $3,685 (21.4%) (28.7%)
Gross profit - recurring$3,145 $3,378 $3,514 (6.9%) (10.5%)
Gross (loss)/profit - non-recurring$(518)$(34)$171 1423.5% 402.9%
Gross margin - total 43.5% 49.4% 52.7% (5.9 pts) (9.2 pts)
Gross margin - recurring 59.9% 61.8% 66.3% (1.9 pts) (6.4 pts)
Gross margin - non recurring (65.7%) (2.6%) 10.1% (63.1 pts) (75.8 pts)
Net loss$(4,069)$(2,822)$(2,110) 44.2% 92.8%
EPS$(0.27)$(0.19)$(0.17)$(0.08)$(0.10)

Q1 FY2019 Non-GAAP Financial Highlights:

(in thousands, except per share amounts)
Non-GAAP Financial Measures Q1Q4Q1ChangeChange
FY 2019 FY 2018 FY 2018 Q/Q Y/Y
Revenue - total$6,040 $6,776 $6,988 (10.9%) (13.6%)
Revenue - recurring$5,251 $5,467 $5,300 (4.0%) (0.9%)
Revenue - non-recurring$789 $1,309 $1,688 (39.7%) (53.3%)
Gross profit - total$2,929 $3,626 $4,003 (19.2%) (26.8%)
Gross profit - recurring$3,434 $3,646 $3,813 (5.8%) (9.9%)
Gross (loss)/profit - non-recurring$(505)$(20)$190 2425.0% (365.8%)
Gross margin - total 48.5% 53.5% 57.3% (5.0 pts) (8.8 pts)
Gross margin - recurring 65.4% 66.7% 71.9% (1.3 pts) (6.5 pts)
Gross margin - non recurring (64.0%) (1.5%) 11.3% (62.4 pts) (75.3 pts)
Net loss$(2,944)$(1,726)$(952) 70.6% 209.2%
EPS$(0.20)$(0.12)$(0.08)$(0.08)$(0.12)
Billings$5,743 $5,991 $6,772 (4.1%) (15.2%)

“Our first quarter has been aggressively focused on further executing on our customer advocacy strategy, expanding and leveraging our partnership alliances, and pursuing our ideal target customer profile to fill our lead pipeline. The many customers across industries who brought their success stories to our Washington, DC and London User Group events were excited to share their Determine experiences and best practices, as well as test drive the advanced innovations on the Determine Cloud Platform and preview the new Determine CLM Salesforce App on Salesforce.com. Many of those customers are part of the growing roster of companies migrating to our source-to-pay and contract management cloud platform in order to expand their relationship with us and accelerate their business initiatives. Our partnerships through the DetermineAlliance Partner Program are also expanding and increasing in importance; we have built a robust pipeline of late-stage opportunities in just the past 120 days. Our pipeline has never been stronger or growing at a faster clip in both the US and Europe. Now we look forward to converting those highly-qualified opportunities into customer relationships that deliver meaningful recurring revenue growth in the coming quarters. We are very pleased to have an additional $2.0 million in borrowing capacity which has already been secured during the first part of Q2 FY2019. We plan to access such capital, as needed, to assist in optimizing our channel mix and growing our pipeline. Our continued aim is to deliver the Determine message to prospects who are looking to derive bottom-line value from best in class Source-to-Pay or Enterprise Contract Management solutions.”

— Patrick Stakenas, President and CEO and Director, Determine, Inc.

Determine Business Highlights:

Conference Call and Webcast: Thursday, August 9, 2018 at 5:00 PM (Eastern Time)

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=130716
Replay Dial-in Information:
Toll-Free: 1-844-512-2921
Toll/International: 1-412-317-6671
From: 08/09/18 @ 8:00 pm Eastern Time
To: 08/16/18 @ 11:59 pm Eastern Time
Replay Pin Number: 13681976
Related: http://investor.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.

The difference between GAAP and non-GAAP gross profit is 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.

Annualized Bookings is 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.

Supporting Resources

Determine blog

Determine on LinkedIn

Determine on Twitter

Determine Resources

About Determine, Inc.

Determine, Inc. (NASDAQ: DTRM) is a leading global provider of SaaS Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) solutions. The Determine Cloud Platform provides procurement, legal and finance professionals analytics of their supplier, contract and financial performance. Our technologies empower customers to drive new revenue, identify savings, improve compliance and mitigate risk.

The Determine Cloud Platform seamlessly integrates with major ERP or third-party systems such as SAP, Oracle, Sage, QAD and Microsoft. Modular solutions can be configured to add more as needed to provide additional value beyond spend management. Our unified master database and business process approach empower users at every level to make more informed and smarter decisions.

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

Contact

Media Relations:Mike MitchellDetermine, Inc.+1.650.532.1590[email protected]

Determine, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30, 2018 June 30, 2017
Revenues:
Recurring revenues$5,251 $5,300
Non-recurring revenues 789 $1,688
Total revenues 6,040 6,988
Cost of revenues:
Cost of recurring revenues 2,106 1,786
Cost of non-recurring revenues 1,307 1,517
Total cost of revenues 3,413 3,303
Gross profit (loss):
Recurring gross profit 3,145 3,514
Non-recurring (loss) profit (518) 171
Total gross profit 2,627 3,685
Operating expenses:
Research and development 1,176 1,066
Sales and marketing 3,091 2,496
General and administrative 2,005 2,072
Total operating expenses 6,272 5,634
Loss from operations (3,645) (1,949)
Other expense, net (336) (178)
Net loss before income tax (3,981) (2,127)
(Provision for) benefit from income taxes (88) 17
Net loss$(4,069) $(2,110)
Basic and diluted net loss per share$(0.27) $(0.17)
Determine, Inc.
GAAP to Non-GAAP Reconciliations
(In thousands)
(Unaudited)
Three Months Ended
June 30, 2018 June 30, 2017
Reconciliation of total revenue:
U.S. GAAP as reported$6,040 $6,988
Non-GAAP revenue$6,040 $6,988
Reconciliation of gross profit:
U.S. GAAP as reported$2,627 $3,685
Adjustments:
Amortization of acquisition 252 252
Stock based compensation 42 28
Severance 8 38
Non-GAAP gross profit$2,929 $4,003
Reconciliation to non-GAAP net loss:
Net loss$(4,069) $(2,110)
Stock-based compensation expense 543 586
Amortization on intangibles 537 531
Severance costs 45 41
Non-GAAP net loss$(2,944) $(952)
Non-GAAP basic and diluted net loss per share$(0.20) $(0.08)
Weighted-average shares of common stock used in computing basic and diluted net loss per share attributable to common shareholders 15,077 12,249
Determine, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands)
(Unaudited)
Three Months Ended
June 30, 2018 June 30, 2017
Statements of comprehensive loss:
Consolidated net loss$(4,069) $(2,110)
Foreign currency translation adjustments, net (397) 311
Other comprehensive loss - (114)
Comprehensive loss$(4,466) $(1,913)
Determine, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, March 31,
2018 2018
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents$6,156 $9,928
Accounts receivable, net of allowance for doubtful accounts 6,278 6,605
Restricted cash 26 28
Prepaid expenses and other current assets 1,544 1,542
Total current assets 14,004 18,103
Property and equipment, net 121 90
Capitalized software development costs, net 3,320 2,994
Goodwill 15,052 15,458
Other intangibles, net 3,361 3,952
Other assets 1,589 1,467
Total assets$37,447 $42,064
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Credit facility$10,973 $12,128
Accounts payable 2,479 2,371
Accrued payroll and related liabilities 2,062 1,986
Other accrued liabilities 2,313 2,239
Deferred revenue 9,247 9,487
Income tax payable 50 48
Total current liabilities 27,124 28,259
Long-term deferred revenue 27 84
Convertible note, net of debt discount 7,696 7,475
Other long-term liabilities 1,582 1,306
Total liabilities 36,429 37,124
Total stockholders' equity 1,018 4,940
Total liabilities and stockholders' equity$37,447 $42,064
Determine, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
June 30, 2018 June 30, 2017
Operating activities
Net loss$(4,069) $(2,110)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 1,049 971
Stock-based compensation expense 543 586
Interest expense paid in kind as convertible note debt 221 219
Income tax expense (benefit) 88 (17)
Unrealized currency translation losses (gains) 176 (252)
Changes in assets and liabilities:
Accounts receivable, net 327 354
Prepaid expenses and other current assets (2) 103
Other assets (233) 228
Accounts payable 108 (482)
Accrued payroll and related liabilities 76 243
Other accrued liabilities and other long-term liabilities 350 413
Deferred revenue (297) (216)
Net cash (used in) provided by operating activities (1,663) 40
Investing activities
Purchase of property and equipment (44) (7)
Capitalized software development costs, net (818) (569)
Net cash used in investing activities (862) (576)
Financing activities
Credit facility borrowing 10,828 -
Credit facility payment (11,983) -
Proceeds from issuance of stock, net of issuance costs - 4,909
Net employee withholding taxes paid in connection to issuance of restricted stock (6) (24)
Repayment of loan - (44)
Proceeds from exercise of stock options - 1
Net cash (used in) provided by financing activities (1,161) 4,842
Effect of exchange rate changes on cash (88) (87)
Net (decrease) increase in cash and cash equivalents (3,774) 4,219
Cash and cash equivalents at beginning of the period 9,956 9,463
Cash and cash equivalents at end of the period$6,182 $13,682
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents$6,156 $13,656
Restricted cash 26 26
Total cash, cash equivalents and restricted cash$6,182 $13,682
Determine, Inc.
Billings Reconciliation
(In thousands)
(Unaudited)
Three Months Ended
June 30, 2018 June 30, 2017
Total revenues$6,040 $6,988
Deferred revenue:
End of period 9,274 9,864
Beginning of period 9,571 10,080
Change in deferred revenue (297) (216)
Total billings (total revenues plus the change in deferred revenue)$5,743 $6,772
Determine, Inc.
Non-GAAP EBITDA Reconciliation
(In thousands)
(unaudited)
Three Months Ended
June 30, 2018 June 30, 2017
Reconciliation to non-GAAP EBITDA net loss:
Non-GAAP net loss$(2,944) $(952)
Interest 335 439
Depreciation 505 348
Income tax expense (benefit) 88 (17)
Non-GAAP EBITDA net loss$(2,016) $(182)

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Source: Determine, Inc.

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