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Determine Announces Second Quarter Fiscal 2019 Financial Results

November 13, 2018 4:15 PM

Determine Cloud Platform Technology Continues to Attract New Customers in US and Europe and Increase Customer Migration and Expansion

CARMEL, Ind., Nov. 13, 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 second quarter ended September 30th, 2018. Q2 FY2019 GAAP Financial Highlights:

(in thousands, except per share amounts)
GAAP Financial Measures Q2Q1Q2ChangeChange
FY 2019FY 2019FY 2018 Q/Q Y/Y
Revenue - total$ 5,734 $ 6,040 $ 6,888 (5.1%) (16.8%)
Revenue - recurring$ 5,044 $ 5,251 $ 5,545 (3.9%) (9.0%)
Revenue - non-recurring$ 690 $ 789 $ 1,343 (12.5%) (48.6%)
Gross profit - total$ 2,759 $ 2,627 $ 3,432 5.0% (19.6%)
Gross profit - recurring$ 3,115 $ 3,145 $ 3,371 (1.0%) (7.6%)
Gross (loss)/profit - non-recurring$ (356)$ (518)$ 61 (31.3%) (683.6%)
Gross margin - total 48.1% 43.5% 49.8%4.6 pts (1.7 pts)
Gross margin - recurring 61.8% 59.9% 60.8%1.9 pts 1.0 pts
Gross margin - non recurring (51.6%) (65.7%) 4.5%14.1 pts (56.1 pts)
Net loss$ (3,583)$ (4,069)$ (2,671) (11.9%) 34.1%
EPS$ (0.24)$ (0.27)$ (0.18)$ 0.03 $ (0.06)

Q2 FY2019 Non-GAAP Financial Highlights:

(in thousands, except per share amounts)
Non-GAAP Financial Measures Q2Q1Q2ChangeChange
FY 2019 FY 2019 FY 2018 Q/Q Y/Y
Revenue - total$ 5,734 $ 6,040 $ 6,888 (5.1%) (16.8%)
Revenue - recurring$ 5,044 $ 5,251 $ 5,545 (3.9%) (9.0%)
Revenue - non-recurring$ 690 $ 789 $ 1,343 (12.5%) (48.6%)
Gross profit - total$ 3,030 $ 2,929 $ 3,784 3.5% (19.9%)
Gross profit - recurring$ 3,372 $ 3,434 $ 3,675 (1.8%) (8.2%)
Gross (loss)/profit - non-recurring$ (342)$ (505)$ 109 32.3% (413.8%)
Gross margin - total 52.8% 48.5% 54.9%4.4 pts (2.1 pts)
Gross margin - recurring 66.9% 65.4% 66.3%1.5 pts 0.6 pts
Gross margin - non recurring (49.6%) (64.0%) 8.1%14.4 pts (57.7 pts)
Net loss$ (2,557)$ (2,944)$ (1,506) 13.2% (69.8%)
EPS$ (0.20)$ (0.20)$ (0.10)$ - $ (0.10)
Billings$ 4,468 $ 5,743 $ 5,991 (22.2%) (25.4%)

“Helping companies - and entire industries - work smarter and more efficiently is the guiding principle on which Determine was founded. We are now aggressively expanding the application of those two concepts across the company as we position for increased success, most notably in our customer acquisition and management teams.

Recently, Determine announced that Gérard Dahan has taken over leadership of worldwide marketing, sales and customer management as Determine’s newly named Global Chief Revenue and Marketing Officer. This is one part of our diligence in reshaping and streamlining our ecosystem of stakeholders, roles, responsibilities, KPIs and compensation. While it’s still early in the process, the entire company is rallying around the new Sales, Marketing and Customer Management structure to support its success.

In terms of fiscal efficiency, Determine has been vigorously eliminating costs, including over $2 million in annual expenses across the board since mid-year. The company will continue to make additional cost management adjustments opportunistically.

We are continuing to efficiently and effectively deliver the Determine message to prospects and customers who seek to derive bottom-line value from our best-in-class modular Source-to-Pay and Enterprise Contract Management Solutions.”

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

Determine Business Highlights:

Conference Call and Webcast: Tuesday, November 13, 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=132114

Replay Dial-in Information:

Toll-Free: 1-844-512-2921

Toll/International: 1-412-317-6671

From: 11/13/18 at 8:00 pm Eastern Time

To: 11/20/18 at 11:59 pm Eastern Time

Replay Pin Number: 13684754

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: 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 Six Months Ended
9/30/2018 9/30/2017 9/30/2018 9/30/2017
Revenues:
Recurring revenues$ 5,044 $ 5,545 $ 10,295 $ 10,845
Non-recurring revenues 690 1,343 1,479 3,031
Total revenues 5,734 6,888 11,774 13,876
Cost of revenues:
Cost of recurring revenues 1,929 2,174 4,035 3,960
Cost of non-recurring revenues 1,046 1,282 2,353 2,799
Total cost of revenues 2,975 3,456 6,388 6,759
Gross profit:
Recurring gross profit 3,115 3,371 6,260 6,885
Non-recurring gross (loss) profit (356) 61 (874) 232
Total gross profit 2,759 3,432 5,386 7,117
Operating expenses:
Research and development 1,195 1,008 2,371 2,074
Sales and marketing 2,491 2,694 5,582 5,190
General and administrative 2,225 1,805 4,230 3,877
Total operating expenses 5,911 5,507 12,183 11,141
Loss from operations (3,152) (2,075) (6,797) (4,024)
Other expense, net (419) (568) (755) (746)
Net loss before income tax (3,571) (2,643) (7,552) (4,770)
Provision for benefit from income taxes (12) (28) (100) (11)
Net loss $ (3,583) $ (2,671) $ (7,652) $ (4,781)
Basic and diluted net loss per share$ (0.24) $ (0.18) $ (0.50) $ (0.35)
Determine, Inc.
GAAP to Non-GAAP Reconciliations
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
9/30/2018 9/30/2017 9/30/2018 9/30/2017
Reconciliation of total revenue:
U.S. GAAP as reported$ 5,734 $ 6,888 $ 11,774 $ 13,876
Non-GAAP revenue$ 5,734 $ 6,888 $ 11,774 $ 13,876
Reconciliation of gross profit:
U.S. GAAP as reported$ 2,759 $ 3,432 $ 5,386 $ 7,117
Adjustments:
Amortizaton of acquisition 250 260 503 511
Stock based compensation 17 92 58 121
Severance 4 - 12 38
Non-GAAP gross profit$ 3,030 $ 3,784 $ 5,959 $ 7,787
Reconciliation to non-GAAP net loss:
Net loss $ (3,583) $ (2,671) $ (7,652) $ (4,781)
Stock-based compensation expense 534 621 1,071 1,206
Amortization on intangibles 457 542 1,000 1,074
Severance costs 35 2 80 43
Non-GAAP net loss$ (2,557) $ (1,506) $ (5,501) $ (2,458)
Non-GAAP basic and diluted net loss per share$ (0.20) $ (0.10) $ (0.36) $ (0.18)
Weighted-average shares of common stock used in computing basicand diluted net loss per share attributable to common shareholders
15,101 14,784 15,154 13,545
Determine, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
2018 2017 2018 2017
Statements of comprehensive loss:
Consolidated net loss$ (3,583) $ (2,671) $ (7,652) $ (4,781)
Foreign currency translation adjustments, net (60) 460 (457) 771
Other comprehensive income - 103 - (11)
Comprehensive loss $ (3,643) $ (2,108) $ (8,109) $ (4,021)
Determine, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, March 31,
2018 2018
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents$ 7,532 $ 9,928
Accounts receivable, net of allowance for doubtful accounts 3,880 6,605
Restricted cash 26 28
Prepaid expenses and other current assets 2,185 1,542
Total current assets 13,623 18,103
Property and equipment, net 120 90
Capitalized software development costs, net 3,343 2,994
Goodwill 15,026 15,458
Other intangibles, net 2,824 3,952
Other assets 1,646 1,467
Total assets$ 36,582 $ 42,064
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Credit facility$ 13,805 $ 12,128
Accounts payable 2,453 2,371
Accrued payroll and related liabilities 1,950 1,986
Other accrued liabilities 2,749 2,239
Deferred revenue 7,957 9,487
Income tax payable 52 48
Total current liabilities 28,966 28,259
Long-term deferred revenue 51 84
Convertible note, net of debt discount 7,922 7,475
Other long-term liabilities 1,739 1,306
Total liabilities 38,678 37,124
Total stockholders' equity (deficit) (2,096) 4,940
Total liabilities and stockholders' equity (deficit)$ 36,582 $ 42,064
Determine, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
September 30, 2018 September 30, 2017
Operating activities
Net loss $ (7,652) $ (4,781)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 2,142 1,993
Stock-based compensation expense 1,000 1,206
Interest expense paid in kind as convertible note debt 447 394
Income tax expense (benefit) 101 13
Unrealized currency translation losses (gains) 199 (357)
Changes in assets and liabilities:
Accounts receivable, net 1,952 438
Prepaid expenses and other current assets 128 (51)
Other assets 60 571
Accounts payable 82 (272)
Accrued payroll and related liabilities (36) 220
Other accrued liabilities and other long-term liabilities 584 187
Deferred revenue (1,563) (1,113)
Net cash used in operating activities (2,556) (1,552)
Investing activities
Purchase of property and equipment (58) (17)
Capitalized software development costs, net (1,379) (1,162)
Net cash used in investing activities (1,437) (1,179)
Financing activities
Credit facility borrowing 21,822 17,002
Credit facility payment (20,156) (16,893)
Proceeds from issuance of stock, net of issuance costs - 4,909
Issuance of stock under employee stock purchase plan 72 73
Net employee withholding taxes paid in connection to issuance of restricted stock (7) (41)
Repayment of loan - (97)
Proceeds from exercise of stock options - 1
Net cash provided by financing activities 1,731 4,954
Effect of exchange rate changes on cash (136) 102
Net (decrease) increase in cash, cash equivalents and restricted cash (2,398) 2,325
Cash, cash equivalents and restricted cash at beginning of the period 9,956 9,463
Cash, cash equivalents and restricted cash at end of the period$ 7,558 $ 11,788
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents$ 7,532 $ 9,429
Restricted cash 26 34
Total cash, cash equivalents and restricted cash$ 7,558 $ 9,463
Determine, Inc.
Billings Reconciliation
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
9/30/2018 9/30/2017 9/30/2018 9/30/2017
Total revenues$ 5,734 $ 6,888 $ 11,774 $ 13,876
Deferred revenue:
End of period 8,008 8,967 8,008 8,967
Beginning of period 9,274 9,864 9,571 10,080
Change in deferred revenue (1,266) (897) (1,563) (1,113)
Total billings (total revenues plus the change in deferred revenue)$ 4,468 $ 5,991 $ 10,211 $ 12,763
Determine, Inc.
Non-GAAP EBITDA Reconciliation
(In thousands)
(unaudited)
Three Months Ended Six Months Ended
9/30/2018 9/30/2017 9/30/2018 9/30/2017
Reconciliation to non-GAAP EBITDA net loss:
Non-GAAP net loss$ (2,557) $ (1,506) $ (5,501) $ (2,458)
Interest 459 453 794 893
Depreciation 538 424 1,043 771
Income tax expense (benefit) 11 27 100 10
Non-GAAP EBITDA net loss$ (1,549) $ (602) $ (3,564) $ (784)

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Source: Determine, Inc.

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