SOURCE: Determine, Inc.

Determine, Inc.

November 10, 2016 16:10 ET

Determine Announces 2nd Quarter Fiscal Year 2017 Financial Results

CARMEL, IN--(Marketwired - Nov 10, 2016) - November 10, 2016 - 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 second fiscal quarter ended September 30, 2016.

Q2 FY2017 GAAP Financial Highlights:

  • GAAP revenue was $6.6 million in Q2 FY2017, compared to $6.8 million in Q2 FY2016, representing a 2.7% decrease year-over-year, and compared to $6.5 million in Q1 FY2017 GAAP revenue, representing a 1.4% quarter-over-quarter increase.
  • GAAP gross profit percentage decreased to 47.7% in Q2 FY2017, compared to 51.8% in Q2 FY2016, representing a year-over-year decrease of 4.1 percentage points, and compared to 52.1% in Q1 FY2017.
  • Deferred revenues increased 12.3% to $9.3 million in Q2 FY2017 from $8.3 million in Q2 FY2016.
  • GAAP net loss was $3.2 million or ($0.28) per share in Q2 FY2017, compared to $3.4 million or ($0.32) per share in Q2 FY2016, representing a $0.04 improvement per share year-over-year; in Q1 FY2017 the GAAP net loss was $2.3 million or ($0.21) per share. 
                                                   
(in thousands, except per share amounts)                                
GAAP Financial Measures     Q2     Q1     Q2     Change     Change     Six Months  
FY 2017     FY 2017     FY 2016     Q/Q     Y/Y     FY 2017'     FY 2016'     Change Y/Y  
Revenue - total     $ 6,584     $ 6,492     $ 6,765       1.4 %     -2.7 %     13,076       12,980       0.7 %
Revenue - recurring     $ 5,145     $ 5,068     $ 5,413       1.5 %     -4.9 %     10,213       10,508       (2.8 %)
Revenue - non-recurring     $ 1,439     $ 1,424     $ 1,352       1.1 %     6.5 %     2,863       2,472       15.8 %
Gross profit - total     $ 3,138     $ 3,385     $ 3,505       -7.3 %     -10.5 %     6,523       6,811       (4.2 %)
Gross profit - recurring     $ 3,442     $ 3,462     $ 3,656       -0.6 %     -5.9 %     6,903       7,321       (5.7 %)
Gross profit/ (loss) - non-recurring     $ (304 )   $ (77 )   $ (151 )     -295.7 %     -101.2 %     (381 )     (510 )     25.4 %
Gross margin - total       47.7 %     52.1 %     51.8 %     (4.6 pts )     (4.1 pts )     49.9 %     52.5 %     (2.6 pts )
Gross margin - recurring       66.9 %     68.3 %     67.5 %     (1.6 pts )     (0.7 pts )     67.6 %     69.7 %     (2.1 pts )
Gross margin - non recurring       (21.1 %)     (5.4 %)     (11.2 %)     (15.7 pts )     (9.9 pts )     -13.3 %     -20.6 %     7.3 pts  
Net loss     $ (3,207 )   $ (2,342 )   $ (3,425 )     (36.9 %)     6.4 %   $ (5,550 )   $ (6,368 )     12.9 %
EPS     $ (0.28 )   $ (0.21 )   $ (0.32 )   $ (0.07 )   $ 0.04     $ (0.48 )   $ (0.66 )   $ 0.17  
                                                                   

Q2 FY2017 Non-GAAP Financial Highlights:

  • Non-GAAP revenue was $6.6 million in Q2 FY2017, compared to $6.8 million in Q2 FY2016, representing a 3.8% decrease year-over-year, and compared to $6.5 million in Q1 FY2017, representing a 1.3% quarter-over-quarter increase.
  • Non-GAAP gross profit percentage was 52.5% in Q2 FY2017, compared to 57.5% in Q2 FY2016, representing a 5.0 percentage point decrease, and compared to 57.1% in Q1 FY2017.
  • Non-GAAP net loss was $2.0 million or ($0.17) per share in Q2 FY2017, compared to $1.6 million or ($0.15) per share in Q2 FY2016, representing an additional ($0.02) loss per share year-over-year, compared to $1.3 million or ($0.11) per share in Q1 FY2017, representing an additional loss of ($0.06) per share quarter-over-quarter.
  • Billings decreased 15.6% to $5.8 million in Q2 FY2017 from $6.8 million in Q2 FY2016. Billings, a non-GAAP measure, are defined as revenues plus the change in deferred revenues. 
                                                 
(in thousands, except per share amounts)                                      
Non-GAAP Financial Measures   Q2     Q1     Q2     Change     Change     Six Months  
FY 2017     FY 2017     FY 2016     Q/Q     Y/Y     FY 2017'     FY 2016'     Change Y/Y  
Revenue - total   $ 6,584     $ 6,500     $ 6,843       1.3 %     (3.8 %)     13,084       13,121       (0.3 %)
Revenue - recurring   $ 5,145     $ 5,076     $ 5,463       1.4 %     (5.8 %)     10,221       10,621       (3.8 %)
Revenue - non-recurring   $ 1,439     $ 1,424     $ 1,380       1.1 %     4.3 %     2,863       2,500       14.6 %
Gross profit - total   $ 3,460     $ 3,710     $ 3,934       (6.7 %)     (12.0 %)     7,170       7,542       (4.9 %)
Gross profit - recurring   $ 3,710     $ 3,737     $ 3,962       (0.7 %)     (6.4 %)     7,447       7,877       (5.5 %)
Gross profit/(loss) - non-recurring   $ (250 )   $ (27 )   $ (28 )     (837.9 %)     (780.3 %)     (277 )     (335 )     17.5 %
Gross margin - total     52.5 %     57.1 %     57.5 %     (4.6 pts )     (5.0 pts )     54.8 %     57.5 %     (2.7 pts )
Gross margin - recurring     72.1 %     73.6 %     72.5 %     (1.5 pts )     (0.4 pts )     72.9 %     74.2 %     (1.3 pts )
Gross margin - non recurring     (17.4 %)     (1.9 %)     (2.1 %)     (15.5 pts )     (15.3 pts )     -9.7 %     -13.4 %     3.7 pts  
Net loss   $ (1,959 )   $ (1,284 )   $ (1,563 )     (52.6 %)     (25.3 %)   $ (3,243 )   $ (3,082 )     (5.2 %)
EPS   $ (0.17 )   $ (0.11 )   $ (0.15 )   $ (0.06 )   $ (0.02 )   $ (0.28 )   $ (0.32 )   $ 0.04  
Billings   $ 5,770     $ 6,280     $ 6,836       (8.1 %)     (15.6 %)   $ 12,050     $ 12,867       (6.4 %)
                                                                 

"This quarter we are pleased by both our quarter-over-quarter revenue growth as well as the market's building excitement for our new, disruptive Determine Cloud Platform offering," said Patrick Stakenas, President and CEO of Determine. "We have redeployed assets internally to fund accelerated platform development, while continuing to drive business efficiencies by aggressively managing expenses. We exited this transition quarter with annualized bookings results in line with expectations and are optimistically looking ahead. The sales pipeline strength, as well as customer and market analyst enthusiasm for the Determine Cloud Platform, puts us in a strong position to accelerate sales in the coming quarters."

Q2 FY2017 Business Highlights:

  • Determine Unveils the "Future of Source to Pay and Enterprise Contract Lifecycle Management" with our Determine Cloud Platform: During Q2 FY2017, Determine introduced our new Determine Cloud Platform features including a modernized Google-like User Interface (UI) and User Experience (UX), multi-level workflows, improved Apple and Android mobile apps, and self-service contract management. The new features provide an advanced, intuitive workflow and ease of use for our end users to improve collaboration and effective time management across their overall organization.

  • Determine's Contract Lifecycle Management Ranked as a Strong Performer by Forrester Research, Inc.: In Q2 FY2017, The Forrester Wave™: Contract Life-Cycle Management, Q3 2016, "The 14 CLM Vendors That Matter Most and How They Stack Up," announced that Determine's Contract Management solution ranked as a strong performer, especially in contract approval. The latest Determine Cloud Platform contract management solution adds more robust capabilities, including an intuitive UI/UX, unified master data and self-service templates.

  • New Customer and Customer Expansions: During Q2 FY2017, the company engaged numerous new customer accounts in the US and Europe across its Determine SaaS suite of Source to Pay and Enterprise Contract Lifecycle Management solutions. The company added and expanded customers in key verticals including: car rental, financial, healthcare, hospitality, medical equipment, industrial services, industrial machinery and equipment, manufacturing and retail.

  • Annualized Bookings: Consistent with expectations during the transition period, in Q2 FY2017, the sales team delivered approximately $750,000 in annualized bookings.

  • Thought Leadership: In Q2 FY2017, Determine continued to provide meaningful educational resources to inform our customers and prospects on the ever-changing Source to Pay and Enterprise Contract Lifecycle Management landscape. The company held a well-attended webinar addressing "What Procurement Organizations Need Most - Flexibility and Agility" presented by Joanna Martinez, former CPO, Cushman & Wakefield, Vishal Patel, Director, Solutions Marketing, Tradeshift and Constantine LImberakis, VP Product Marketing, Determine. The company discussed the procurement organization's role in enabling enterprises to be more responsive, adaptable and agile in today's uncertain and competitive environment. In addition to the webinar, the company published a sponsored white paper with Ardent Partners on The Rise of Analytics for Procurement and many blogs topics from third party risk management to legal's view on EU-US data protection.

Conference Call and Webcast: Thursday, November 10, 2016 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=121489

Replay Dial-in Information:

Toll-Free: 1-844-512-2921

Toll/International: 1-412-317-6671

From: 11/10/16 @ 8:00 pm Eastern Time

To: 11/17/16 @ 11:59 pm Eastern Time

Replay Pin Number: 13647597

Related: http://investor.determine.com

Supporting Resources

Determine blog

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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.

Annualized 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.

"Annualized bookings" means the annualized recurring contracted revenue from a new customer or a cross-sell or upsell to an existing customer.

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     Six Months Ended  
    September 30     September 30  
    2016     2015     2016     2015  
                                 
Revenues:                                
  Recurring revenues   $ 5,145       5,413     $ 10,213     $ 10,508  
  Non-recurring revenues     1,439       1,352       2,863       2,472  
    Total revenues     6,584       6,765       13,076       12,980  
                                 
Cost of revenues:                                
  Cost of recurring revenues     1,703       1,757       3,308       3,187  
  Cost of non-recurring revenues     1,743       1,503       3,244       2,982  
    Total cost of revenues     3,446       3,260       6,552       6,169  
                                 
Gross profit:                                
  Recurring gross profit     3,442       3,656       6,905       7,321  
  Non-recurring profit loss     (304 )     (151 )     (381 )     (510 )
    Total gross profit     3,138       3,505       6,524       6,811  
                                 
Operating expenses:                                
  Research and development     1,056       894       2,002       1,481  
  Sales and marketing     2,767       3,439       5,570       6,881  
  General and administrative     1,912       1,793       3,671       3,628  
  Acquisition related costs     -       537       -       774  
    Total operating expenses     5,735       6,663       11,243       12,764  
                                 
Loss from operations     (2,597 )     (3,158 )     (4,719 )     (5,953 )
                                 
Interest and other (expense), net     (637 )     (251 )     (927 )     (399 )
Net loss before income tax     (3,234 )     (3,409 )     (5,646 )     (6,352 )
                                 
Benefit (Provision) from income taxes     39       (20 )     108       (20 )
Net loss     (3,195 )     (3,429 )     (5,538 )     (6,372 )
                                 
Net income (loss) attributed to non-controlling interest     (12 )     4       (12 )     4  
Net loss attributable to Determine, Inc.     (3,207 )     (3,425 )     (5,550 )     (6,368 )
                                 
Redeemable preferred stock accretion     -       -       -       1,000  
Net loss attributable to common stockholders   $ (3,207 )   $ (3,425 )   $ (5,550 )   $ (7,368 )
                                 
Basic and diluted net loss per share   $ (0.28 )   $ (0.32 )   $ (0.48 )   $ (0.66 )
                                 
                                 
                         
Determine, Inc.  
GAAP to Non-GAAP Reconciliations  
(In thousands)  
(Unaudited)  
                                 
Reconciliation of total revenue:                                
  U.S. GAAP as reported   $ 6,584     $ 6,765     $ 13,076     $ 12,980  
  Adjustments:                                
  Deferred revenue adjustment     -       78       8       141  
Non-GAAP Revenue   $ 6,584     $ 6,843     $ 13,084     $ 13,121  
                                 
Reconciliation to non-GAAP net loss:                                
Net loss   $ (3,207 )   $ (3,425 )   $ (5,550 )   $ (6,368 )
Stock-based compensation expense     707       636       1,236       1,214  
Deferred revenue adjustment     -       78       8       141  
Acquisition related costs     -       537       -       774  
Amortization on intangibles     533       482       1,068       831  
Benefit from income taxes     -       -       (13 )     -  
Severance costs     7       129       7       326  
Impairment of software devlopment costs     -       -       -       -  
Non-GAAP net loss   $ (1,959 )   $ (1,563 )   $ (3,243 )   $ (3,082 )
                                 
Non-GAAP basic and diluted net loss per share   $ (0.17 )   $ (0.15 )   $ (0.28 )   $ (0.32 )
                                 
Weighted average shares outstanding for basic and diluted net loss per share    
11,508
     
10,594
     
11,466
     
9,694
 
                                 
                                 
                         
  Determine, Inc.    
  Condensed Consolidated Statements of Comprehensive Loss    
  (In thousands)    
  (Unaudited)    
             
    Three Months Ended     Six Months Ended  
    September 30     September 30  
    2016     2015     2016     2015  
                                 
Net loss   $ (3,195 )   $ (3,429 )   $ (5,538 )   $ (6,372 )
Other comprehensive income (loss) net:                                
  Foreign currency translation adjustments     13       (57 )     (13 )     (57 )
  Non-controlling interest     (12 )     4       (12 )     4  
Other comprehensive income (loss)     1       (53 )     (25 )     (53 )
Comprehensive (loss)   $ (3,194 )   $ (3,482 )   $ (5,563 )   $ (6,425 )
                                 
                                 
         
Determine, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
         
         
         
    September 30,   March 31,
    2016   2016
    (Unaudited)   (Audited)
ASSETS            
Current assets            
  Cash and cash equivalents   $ 8,026   $ 9,418
  Accounts receivable, net     5,970     7,031
  Restricted cash     34     34
  Prepaid expenses and other current assets     1,340     1,551
    Total current assets     15,370     18,034
             
Property and equipment, net     111     136
Capitalized software, net     1,946     1,699
Goodwill     14,490     14,490
Other intangibles, net     6,944     8,011
Other assets     1,797     1,843
    Total assets   $ 40,658   $ 44,213
             
             
LIABILITIES AND EQUITY            
Current liabilities            
  Credit facility   $ 10,861   $ 9,000
  Accounts payable     1,799     1,973
  Accrued payroll and related liabilities     1,677     1,655
  Other accrued liabilities     2,377     2,396
  Deferred revenue     9,300     10,299
  Income tax payable     43     14
  COFACE loan     294     407
  Accrued restructuring     -     403
    Total current liabilities     26,351     26,147
  Long-term deferred revenue     40     67
  Convertible note, net of debt discount     5,432     5,420
  Other long-term liabilities     1,579     1,382
  Deferred tax liability non current     154     290
    Total liabilities     33,556     33,306
             
Total Determine, Inc. stockholders' equity controlling interest     6,977     10,794
Non-controlling interest     125     113
Total equity     7,102     10,907
    Total liabilities and equity   $ 40,658   $ 44,213
             
             
Determine, Inc.  
Condensed Consolidated Statements of Cash Flows  
(In thousands)  
(Unudited)  
             
             
    Six Months Ended  
    September 30,     September 30,  
    2016     2015  
                 
Operating activities                
Net loss   $ (5,550 )   $ (6,372 )
Adjustments to reconcile net loss to net cash used in                
operating activities:                
  Depreciation and amortization     1,656       1,168  
  Loss on disposition of property and equipment     -       14  
  Impairment of capitalized software     -       -  
  Stock-based compensation expense     1,237       1,213  
  Deferred tax liability     (136 )     431  
  Non-controlling interest     12       4  
Changes in assets and liabilities:                
  Accounts receivable, net     1,051       440  
  Prepaid expenses and other current assets     211       273  
  Other assets     122       54  
  Accounts payable     (174 )     (55 )
  Accrued restructuring costs     (403 )     -  
  Accrued payroll and related liabilities     22       548  
  Other accrued liabilities and other long-term liabilities     -       (505 )
  Deferred revenue     (1,026 )     (981 )
Net cash used in operating activities     (2,978 )     (3,768 )
                 
Investing activities                
  Purchase of property and equipment     (28 )     (7 )
  Capitalized software     (762 )     (809 )
  Purchase of business, net of cash     -       (826 )
  Minority shareholder payment     -       (133 )
Net cash used in investing activities     (790 )     (1,775 )
                 
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     86       227  
  Issuance of common stock under employee stock plan     80       87  
  Issuance of common stock for legal settlement     35       -  
  Credit facility borrowing     3,000       -  
  Credit facility payment     (1,139 )     (347 )
  Repayment of loan     (113 )     (25 )
  Conversion of preferred stock to common stock     -       (17 )
  Issuance of debt, net of costs     287       162  
Net cash provided by financing activities     2,236       397  
                 
  Effect of exchange rate changes on cash     140       (54 )
                 
Net increase (decrease) in cash and cash equivalents     (1,392 )     (5,200 )
Cash and cash equivalents at beginning of the period     9,418       13,178  
Cash and cash equivalents at end of the period   $ 8,026     $ 7,978  
                 
                 
   
Determine, Inc.  
Billings Reconciliation  
(In thousands)  
(Unaudited)  
                       
                       
    Three Months Ended   Six Months Ended  
    September 30,     September 30,   September 30,     September 30,  
    2016     2015   2016     2015  
                               
Total revenues   $ 6,584     $ 6,765   $ 13,076     $ 12,980  
Deferred revenue:                              
End of period     9,340       8,319     9,340       8,319  
Beginning of period     10,154       8,248     10,366       8,432  
Change in deferred revenue     (814 )     71     (1,026 )     (113 )
Total billings (total revenues plus the change in deferred revenue)   $ 5,770     $ 6,836   $ 12,050     $ 12,867  
                               
                               

Contact Information

  • Contact
    Media Relations
    Rose Lee
    Determine, Inc.
    +1.877.806.1932
    +1.650.532.1590

    pr@determine.com