SOURCE: Taleo

April 28, 2010 16:01 ET

Taleo Announces Record-Setting First Quarter Results

DUBLIN, CA--(Marketwire - April 28, 2010) -  Taleo Corporation (NASDAQ: TLEO)

  • Record application revenue of $47.6 million
  • Record total revenue of $55.0 million
  • Closes largest Performance Management contract to date
  • Taleo Business Edition grows new customer wins by 43% quarter-over-quarter

Taleo Corporation (NASDAQ: TLEO), the leading provider of on-demand talent management solutions, today announced its financial results for the quarter ended March 31, 2010.

"This quarter was a testament to a theme we are seeing across our customers' businesses: talent equals growth," said Michael Gregoire, Chairman and Chief Executive Officer of Taleo. "As businesses move from cost-cutting to growth, they want insight to find and align the right people with the right initiatives. Customers and prospects alike are embracing Taleo's talent management solutions to provide that insight and drive their growth strategies."

First quarter highlights included:

  • Revenues of $55.0 million, an increase of 14.5% year-over-year.
  • Application revenue of $47.6 million, an increase of 15.4% year-over-year.
  • Net income of $0.8 million, or $0.02 per fully diluted share.
  • Non-GAAP net income of $6.9 million, or $0.16 per fully diluted share, an increase of 22.0% year-over-year.
  • Cash flow from operations of $11.4 million.
  • Signed 260 new customers, including 19 new Taleo Enterprise customers and a record 241 new Taleo Business Edition customers.
  • Closed 5 large enterprise deals with annual contract values in excess of $250,000.
  • Closed largest contract in Taleo's history for Talent Management suite, through a contract with Hewitt Associates. The contract expands an existing Taleo Recruiting relationship to include Taleo Performance Management.
  • Closed acquisition of Worldwide Compensation, Inc. on January 1, 2010, adding compensation management to suite of unified talent management solutions.

First quarter customer momentum included:

  • New enterprise customers included: Board of Regents of the University System of Georgia, Brady Corporation, CareFusion 303, Inc., Cincinnati Children's Hospital Medical Center, DAL Global Services -- a Delta Airlines company, HealthSouth Corporation, Kwik Trip, Lance, Inc., Outback Steakhouse, RS Components, UNC Healthcare System, United Supermarkets L.L.C., and the University of Otago.
  • Existing enterprise customers also chose Taleo to build out their suite of Talent Management solutions including: RTI International and National Heritage Academies, which have added Taleo Performance Management, and CDW, which completed its suite with Taleo Compensation this quarter.
  • New small and medium-sized customers (companies with up to 5,000 employees) included: Bubba Gump, Grand Sierra Resort and Casino, Konica Minolta Systems Lab, NASDAQ, New Look Retailers, Paddy Power and Specialized Bikes. New Talent Management suite customers in this segment include: Capital Care Medical Group, HW Lochner, Jefferson Regional Medical Center, McNeil Technologies, and Teknika HBA.

Taleo delivered the following financial results for the first quarter of 2010:

Revenue: Total revenue for the first quarter was $55.0 million, an increase of 14.5% on a year-over-year basis. Application revenue for the first quarter was $47.6 million, an increase of 15.4% on a year-over-year basis.

Net Income (Loss) and Net Income (Loss) Per Share to Common Stockholders: Net income was $0.8 million for the first quarter, compared to a net loss of $(2.1) million for the same period last year. Net income for the first quarter of 2010 includes $3.1 million in amortization expense related to acquisitions, and $3.2 million in stock-based compensation expense. Net income per fully diluted share was $0.02 for the first quarter, based on 40.3 million fully diluted weighted average shares outstanding, compared to a net loss per share of $(0.07) for the same period last year, based on 30.3 million weighted average shares outstanding.

Non-GAAP Net Income and Non-GAAP Net Income Per Share: Non-GAAP net income was $6.9 million for the first quarter, compared to non-GAAP net income of $5.6 million for the same period last year. Non-GAAP net income includes amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Worldwide Compensation and Vurv acquisitions, and excludes costs associated with our 2009 restatement-related revenue review, acquisition related transaction costs, stock-based compensation expense, amortization of acquired intangibles, and the gain on remeasurement of a previously held interest in Worldwide Compensation. Non-GAAP net income per fully diluted share was $0.16 for the first quarter based on 42.4 million fully diluted weighted average shares outstanding, compared to non-GAAP net income per fully diluted share of $0.18 for the same period last year based on 31.2 million fully diluted weighted average shares outstanding.

Conference Call Details

The company will issue a pre-recorded webcast regarding the quarter at 1:30 pm PT (4:30 pm ET), which will be available on the Investor Relations section of www.taleo.com. The company will then host a live Q&A call at 2:00 pm PT (5:00 pm ET), with Michael Gregoire, Chairman and Chief Executive Officer, and Katy Murray, Chief Financial Officer. This call will also be available via webcast on the Investor Relations section of www.taleo.com.

About Taleo

Taleo (NASDAQ: TLEO) is the leader in on-demand unified talent management solutions that empower organizations of all sizes to better understand and engage their best talent for improved business performance. More than 4,500 organizations use Taleo for talent acquisition, performance and compensation management, including 49 of the Fortune 100 and over 3,800 small and medium sized businesses across 200 countries and territories. Known for its strong configurability and usability, Taleo runs on a world-class infrastructure and offers 99.9% availability. Taleo's Talent Grid harnesses the resources of the Taleo community of customers, candidates, and partners to power the talent needs of companies around the world. www.taleo.com

Forward-looking Statements

This release contains forward-looking statements, including statements regarding Taleo's future financial performance, market growth, the demand for and benefits from the use of Taleo's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Taleo'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 Taleo's expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Taleo 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. Further information on potential factors that could affect actual results is included in Part I, Item 1A of Taleo's Annual Report on Form 10K, as filed with the SEC on March 11, 2010, and in other reports filed by Taleo with the SEC.

Non-GAAP Financial Measures

Taleo has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP net income and non-GAAP net income per share. Taleo 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 Taleo's ongoing operational performance. Taleo 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 Taleo's industry, many of which present similar non-GAAP financial measures to investors. The non-GAAP measures include amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Worldwide Compensation and Vurv acquisitions, and exclude costs associated with our 2009 restatement-related revenue review, acquisition related transaction costs, stock-based compensation expense, amortization of acquired intangibles, and the gain on remeasurement of a previously held interest in Worldwide Compensation. 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.

A historical reconciliation of GAAP to non-GAAP financial measures for past periods can be located on the investor relations section of www.taleo.com.

   
   
Taleo Corporation  
Condensed Consolidated Statements of Operations  
(All amounts in thousands except per share data)  
(Unaudited)  
             
    Three Months Ended  
    March 31,  
    2010     2009  
Revenue:                
  Application   $ 47,564     $ 41,204  
  Consulting     7,482       6,879  
    Total revenue     55,046       48,083  
                 
Cost of revenue (note 1):                
  Application     10,362       8,925  
  Amortization of acquired intangibles     951       760  
    Total cost of application revenue     11,313       9,685  
  Consulting     6,485       6,273  
    Total cost of revenue     17,798       15,958  
                 
Gross profit     37,248       32,125  
                 
Operating expenses (note 1):                
  Sales and marketing     14,937       13,097  
  Sales - amortization of acquired intangibles     2,123       2,812  
  Research and development     10,054       8,537  
  General and administrative     10,298       9,627  
    Total operating expenses     37,412       34,073  
                 
Loss from operations     (164 )     (1,948 )
                 
Other income / (expense):                
  Interest income     127       141  
  Interest expense     (34 )     (41 )
  Gain on remeasurement of previously held interest in Worldwide Compensation, Inc.     885       -  
    Total other income     978       100  
                 
Income / (loss) before provision for / benefit from income tax     814       (1,848 )
                 
  Provision for / (benefit from) income taxes     (4 )     237  
                 
Income / (loss) attributable to Class A common stockholders   $ 818     $ (2,085 )
                 
Income / (loss) per share attributable to Class A common stockholders - basic   $ 0.02     $ (0.07 )
Income / (loss) per share attributable to Class A common stockholders - diluted   $ 0.02     $ (0.07 )
                 
Weighted average Class A common shares - basic     39,156       30,262  
Weighted average Class A common shares - diluted     40,338       30,262  
                 
                 
NOTES                
                 
1.  Includes stock-based compensation expense                
      Application cost of revenue   $ 176     $ 122  
      Consulting cost of revenue     362       222  
      Cost of revenue subtotal     538       344  
                 
      Sales and marketing operating expense     884       513  
      Research and development operating expense     464       264  
      General and administrative operating expense     1,291       1,148  
      Operating expense subtotal     2,639        1,925  
                 
  Total stock-based compensation expense   $ 3,177     $ 2,269  
                   
 
 
Taleo Corporation  
Condensed Consolidated Statements of Operations (Continued)  
(All amounts in thousands except per share data)  
             
Reconciliation of GAAP net income / (loss) and non-GAAP net income:            
 
    Three Months Ended  
    March 31,  
    2010     2009  
                 
GAAP net income / (loss) reported above   $ 818     $ (2,085 )
Add back:                
                 
Revenue                
  Non-GAAP application revenue     153       513  
  Non-GAAP service revenue     -       13  
    Total Non-GAAP revenue     153       526  
                 
Expenses                
  Revenue review     -       1,354  
  Acquisition related transaction costs     539       -  
  Stock-based compensation expense     3,177       2,269  
  Amortization of acquired intangibles     3,074       3,572  
      6,790       7,195  
                 
Other income                
  Gain on remeasurement of previously held interest in Worldwide Compensation, Inc.     (885 )     -  
                 
Non-GAAP net income   $ 6,876     $ 5,636  
                 
Non-GAAP net income per share                
  Basic   $ 0.18     $ 0.19  
  Diluted   $ 0.16     $ 0.18  
                 
                 
Reconciliation of basic and fully diluted share count:                
Basic     39,156       30,262  
Add: Weighted Average - options and unreleased restricted stock     3,242       478  
    Weighted Average - Vurv escrow shares     -       478  
Diluted     42,398       31,218  
                 
   
   
Taleo Corporation  
Condensed Consolidated Balance Sheets  
(All amounts in thousands)  
(Unaudited)  
   
        March 31,     December 31,  
        2010     2009  
ASSETS                
  Current assets:                
    Cash and cash equivalents   $ 236,701     $ 244,229  
    Restricted cash     409       409  
    Accounts receivable, net     42,017       43,928  
    Prepaid expenses and other current assets     12,136       10,126  
    Investment credits receivable     6,403       5,499  
    Total current assets     297,666       304,191  
                     
  Property and equipment, net     28,752       23,510  
  Restricted cash     210       210  
  Goodwill     102,650       91,027  
  Other intangibles, net     32,270       30,544  
  Other assets     5,771       6,895  
  Total assets   $ 467,319     $ 456,377  
                     
                     
LIABILITIES AND STOCKHOLDERS' EQUITY                
  Current liabilities:                
    Accounts payable and accrued liabilities   $ 27,375     $ 23,592  
    Deferred revenue - application services and customer deposits     60,971       60,140  
    Deferred revenue - consulting services     17,194       17,523  
    Capital lease obligation, short-term     267       412  
    Total current liabilities     105,807       101,667  
                     
  Long-term deferred revenue - application services and customer deposits     929       201  
  Long-term deferred revenue - consulting services     13,391       13,220  
  Other liabilities     3,691       3,973  
  Capital lease obligation, long-term     85       107  
  Total liabilities     123,903       119,168  
                     
  Stockholders' equity:                
    Capital stock     1       1  
    Additional paid-in capital     419,645       414,106  
    Accumulated deficit     (76,211 )     (77,029 )
    Treasury stock     (2,945 )     (2,471 )
    Accumulated other comprehensive income     2,926       2,602  
    Total stockholders' equity     343,416       337,209  
  Total liabilities and stockholders' equity   $ 467,319     $ 456,377  
   
   
   
Taleo Corporation  
Condensed Consolidated Statements of Cash Flows  
(All amounts in thousands)  
(Unaudited)  
   
    Three Months Ended  
    March 31,  
    2010     2009  
                 
Cash flows from operating activities:                
  Net income / (loss)   $ 818     $ (2,085 )
  Adjustments to reconcile net income / (loss) to net cash provided by operating activities:                
    Depreciation and amortization     6,321       6,662  
    Loss disposal of fixed assets     58       -  
    Amortization of tenant inducements     (44 )     (38 )
    Tenant inducements from landlord     114       -  
    Stock-based compensation expense     3,177       2,269  
    Excess tax benefit from stock options     (16 )     -  
    Director fees settled with stock     60       64  
    Gain on remeasurement of previously held interest in Worldwide Compensation, Inc.     (885 )     -  
    Bad debt expense / (reversal)     (93 )     400  
    Changes in working capital accounts, net of effect of acquisition:                
      Accounts receivable     2,360       4,112  
      Prepaid expenses and other assets     (2,186 )     (279 )
      Investment credit receivable     (714 )     1,095  
      Accounts payable and accrued liabilities     2,001       (651 )
      Deferred revenue and customer deposits     438       1,848  
        Net cash provided by operating activities     11,409       13,397  
Cash flows from investing activities:                
  Purchases of property and equipment     (6,482 )     (2,162 )
  Acquisition of business, net of cash acquired     (13,381 )     -  
        Net cash used in investing activities     (19,863 )     (2,162 )
Cash flows from financing activities:                
  Principal payments on loan and capital lease obligations     (414 )     (325 )
  Payments for expenses associated with 2009 equity offering     (678 )     -  
  Excess tax benefit from stock options     16       -  
  Treasury stock acquired to settle employee withholding liability     (474 )     (118 )
  Proceeds from stock options exercised and ESPP shares     2,307       176  
        Net cash provided by / (used in) financing activities     757       (267 )
Effect of exchange rate changes on cash and cash equivalents     169       (105 )
Increase / (decrease) in cash and cash equivalents     (7,528 )     10,863  
Cash and cash equivalents:                
  Beginning of period     244,229       49,462  
  End of period   $ 236,701     $ 60,325  
                 
Supplemental cash flow disclosures:                
  Cash paid for interest   $ 7     $ 23  
  Cash paid for income taxes   $ 866     $ 201  
Supplemental disclosure of non-cash financing and investing activities:                
    Property and equipment purchases included in accounts payable and accrued liabilities   $ 4,325     $ 1,633  
    Accrued stock offering cost   $ 3     $ -  
                     

Contact Information