SOURCE: Determine, Inc.

Determine, Inc.

June 16, 2016 16:30 ET

Determine Announces 4th Quarter and Fiscal Year 2016 Financial Results

Disruptive New Cloud Platform Designed to Position Business for Success in Fiscal 2017

CARMEL, IN--(Marketwired - Jun 16, 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 fourth quarter and fiscal year ended March 31, 2016.

FY2016 GAAP Financial Highlights:

  • GAAP revenue was $26.8 million in FY2016, compared to $20.9 million in FY2015, representing a 28% increase in year-over-year growth.

  • GAAP gross profit percentage increased to 52% in FY2016, compared to 41% in FY2015, an increase of 11 percentage points.

  • Deferred revenues increased 23% to $10.4 million in FY2016 from $8.4 million in FY2015.

(in thousands, except per share amounts)                           

                     
GAAP Financial Measures   Q4   Q3   Q4   Change   Change   Twelve Months  
    FY 2016   FY 2016   FY 2015   Q/Q   Y/Y   FY 2016   FY 2015   Change Y/Y
Revenue - total   $ 6,680   $ 7,100   $ 5,929     (5.9%)     13%   $ 26,760   $ 20,877     28.2%
Revenue - recurring   $ 4,981   $ 5,354   $ 4,812     (7.0%)     4%   $ 20,843   $ 16,207     28.6%
Revenue - non-recurring   $ 1,699   $ 1,746   $ 1,117     (2.7%)     52%   $ 5,917   $ 4,670     26.7%
Gross profit - total   $ 3,296   $ 3,682   $ 2,959     (10.5%)     11%   $ 13,791   $ 8,574     60.8%
Gross profit - recurring   $ 3,137   $ 3,538   $ 3,520     (11.3%)     (0.11)   $ 13,997   $ 11,178     25.2%
Gross profit/ (loss) - non-recurring   $ 159   $ 144   $ (561)     10.7%     nm   $ (206)   $ (2,604)     (92.1%)
Gross margin - total     49.3%     51.9%     49.9%     (2.6 pts)     (0.6 pts)     51.5%     41.1%     10.4 pts
Gross margin - recurring     63.0%     66.1%     73.2%     (3.1 pts)     (10.2 pts)     67.2%     69.0%     (1.8 pts)
Gross margin - non recurring     9.4%     8.2%     (50.2%)     1.2 pts     59.6 pts     (3.5%)     (55.8%)     52.3 pts
Net loss   $ (4,810)   $ (2,845)   $ (4,266)     69.1%     12.8%   $ (14,028)   $ (13,746)     2.1%
EPS   $ (0.42)   $ (0.25)   $ (0.53)   $ (0.17)   $ 0.11   $ (1.34)   $ (1.89)   $ 0.55
                                                 

FY2016 Non-GAAP Financial Highlights:

  • Total annual new ARR bookings were $4.9 million in FY2016, compared to $3.1 million in FY2015, representing a 55% year-over-year increase.

  • Non-GAAP revenue increased 21% to $27.0 million in FY2016 from $22.3 million in FY2015. The difference between GAAP and Non-GAAP revenue is due to the Iasta and b-pack purchase accounting deferred revenue adjustment.

  • Non-GAAP gross profit percentage increased to 57% in FY2016 from 49% in FY2015, an increase of 8 percentage points. The difference between GAAP and Non-GAAP gross profit is due to the Iasta and b-pack purchase accounting deferred revenue adjustment and the amortization of intangibles.

  • Billings increased 22% to $28.7 million in FY2016 from $23.6 million in FY2015. 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   Q4   Q3   Q4   Change   Change  Twelve Months    
FY 2016   FY 2016   FY 2015   Q/Q   Y/Y   FY 2016   FY 2015   Change Y/Y
Revenue - total   $ 6,696   $ 7,187   $ 6,085   (6.8%)     10.0%   $ 27,005   $ 22,328     20.9%
Revenue - recurring   $ 4,997   $ 5,400   $ 4,960   (7.5%)     0.7%   $ 21,018   $ 17,397     20.8%
Revenue - non-recurring   $ 1,699   $ 1,787   $ 1,125   (4.9%)     51.1%   $ 5,987   $ 4,932     21.4%
Gross profit - total   $ 3,660   $ 4,135   $ 3,367   (11.5%)     8.7%   $ 15,337   $ 10,996     39.5%
Gross profit - recurring   $ 3,419   $ 3,859   $ 3,848   (11.4%)     (11.1%)   $ 15,156   $ 12,929     17.2%
Gross profit/(loss) - non-recurring   $ 241   $ 276   $ (481)   (12.9%)     nm   $ 181   $ (1,933)     nm
Gross margin - total     54.7%     57.5%     55.3%   (2.8 pts)     (0.7 pts)     56.8%     49.2%     7.6 pts
Gross margin - recurring     68.4%     71.5%     77.6%   (3.1 pts)     (9.2 pts)     72.1%     74.3%     (2.2 pts)
Gross margin - non recurring     14.1%     15.5%     (42.7%)   (1.4 pts)     56.9 pts     3.0%     (39.2%)     42.2 pts
Net loss   $ (2,245)   $ (1,503)   $ (1,775)   49.4%     26.5%   $ (6,828)   $ (9,513)     (28.2%)
EPS   $ (0.20)   $ (0.13)   $ (0.22)   (0.07)   $ 0.02   $ (0.65)   $ (1.31)   $ 0.66
Billings   $ 8,027   $ 7,800   $ 6,227   2.9%     28.9%   $ 28,694   $ 23,560     21.8%
                                               

"I am very pleased with our performance on multiple levels both for the quarter and for the fiscal year overall," said Patrick Stakenas, President and CEO of Determine. "We had another strong new bookings quarter in the fourth quarter of fiscal 2016 with the team delivering $1.2M in new ARR, which nicely rounded out our fiscal year's performance. Delivery of our unified Source to Pay, and Enterprise Contract Lifecycle Management solution, called the Determine Cloud Platform, is progressing very well and on schedule with our product roadmap. The Determine Cloud Platform has received positive reviews from customers, prospects and industry analysts. On the financial side, in the fourth quarter, we took the necessary actions to materially reduce expenses, which will solidly position the business for financial success in the coming quarters. I'm very excited as our team transforms the company with the launch of our new disruptive suite of technology, in combination with embracing the necessary financial discipline, we are well poised for great things to come in fiscal 2017."

FY2016 Business Highlights:

  • Q1: Moving the Organization Forward: The company promoted Patrick Stakenas to President, CEO and a Director. Mr. Stakenas joined the Company as Chief Strategy Officer at the beginning of 2014, from Gartner, after driving ForceLogix Technologies through its IPO and sale to CallidusCloud.

  • Q1: Industry Recognition and Awards of Company Executives:  Patrick Stakenas, President and CEO, and Constantine Limberakis, Director Product Marketing, were among the 2015 recipients of the Pros to Know Awards presented by Supply & Demand Executive magazine. In addition, Supply & Demand Executive magazine named the following clients "Practitioner Pros to Know" as exceptional corporate executives: Joanna Martinez from Cushman & Wakefield, Lou Galczynski from Endo, James Gavin McCarthy from Equifax, Jason East from YP.

  • Q2: Announced completion of the b-pack acquisition: On July 31, 2015, the company completed the acquisition of b-pack, a pioneer and global leader in the delivery of enterprise procure-to-pay solutions, whose focus was on providing rich, end-to-end procurement capabilities, including: eProcurement, Purchase-to-Pay, Asset Management, Budget Management, Invoice Management and Expense Management. b-pack is a recognized Gartner 'visionary' in the 2015 Magic Quadrant for Procure-to-Pay Suites for Indirect Procurement and serves global customers across many business sectors including such leading companies as Sony Music, Yves Saint Laurent/Gucci, Aon, Telehouse, BNP Paribas, Buccaneer Energy and United Drug. For the past 15 years, b-pack has empowered finance and procurement enterprise professionals with flexible, innovative and critical risk mitigation solutions.

  • Q3: Rebranded the business as Determine, Inc.: On October 19, 2015, the company launched a global rebranding effort in the marketplace from the floor of NASDAQ to formally combine the three legacy industry leaders and brands: Selectica, Iasta and b-pack under one new company - Determine,Inc. (www.determine.com) -- and one brand. Over the last three years as the company has executed its strategic plan, it has evolved significantly from a predominantly contract lifecycle management solutions provider to a leading Source to Pay with an Enterprise Contract Lifecycle management suite. A new brand was essential to encapsulate the new business vision. Determine integrated its acclaimed "visionary" Gartner Magic Quadrant contract management, procurement and Source to Pay solutions and four collective decades of business acumen onto one platform, one brand and one customer promise: Vision. Insight. Control.

  • Q4: Determine, Inc. selected as a CIOReview 20 most promising Enterprise Contract Management Solution providers: Our Determine Contract Management solution was recognized by CIOReview 20 Most Promising Enterprise Contract Management Providers 2015 in their latest rankings. Enterprise Contract Management systems have emerged as a scalable alternative for enterprises to leverage cloud solutions to streamline and monitor their contract lifecycle management processes. A panel comprising of CEOs, CIOs, VCs, analysts and CIOReview editorial board compiled top contract management solution providers. CIOReview looked at the vendor's capability to provide cost-effective and flexible solutions that add value to the contract management services landscape.

  • New Customer Expansions: In Q4 FY2016, the company engaged numerous new customer accounts in the US and Europe across its suite of Source to Pay and Enterprise Contract Lifecycle Management solutions. The company added new customers in key verticals including: airline, agricultural production, consumer goods, pharmaceutical, scientific research, manufacturing, retail and financial.

Conference Call and Webcast; Thursday, June 16, 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=119780

Replay Dial-in Information:

Toll-Free: 1-877-870-5176

Toll/International: 1-858-384-5517

From: 06/16/16 @ 8:00 pm Eastern Time

To: 06/23/16 @ 11:59 pm Eastern Time

Replay Pin Number: 13638155

Related: http://investor.determine.com

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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     Twelve Months Ended  
    March 31,     March 31,  
    2016     2015     2016     2015  
                                 
Revenues:                                
  Recurring revenues   $ 4,981     $ 4,812     $ 20,843     $ 16,207  
  Non-recurring revenues     1,699       1,117       5,917       4,670  
    Total revenues     6,680       5,929       26,760       20,877  
                                 
Cost of revenues:                                
  Cost of recurring revenues     1,844       1,292       6,846       5,029  
  Cost of non-recurring revenues     1,540       1,678       6,123       7,274  
    Total cost of revenues     3,384       2,970       12,969       12,303  
                                 
Gross profit:                                
  Recurring gross profit     3,137       3,520       13,997       11,178  
  Non-recurring profit/(loss)     159       (561 )     (206 )     (2,604 )
    Total gross profit     3,296       2,959       13,791       8,574  
                                 
Operating expenses:                                
  Research and development     892       801       3,525       3,366  
  Sales and marketing     2,971       3,489       13,095       12,647  
  General and administrative     2,544       1,432       7,835       7,073  
  Acquisition related costs     -       1,033       912       1,715  
  Restructuring costs     451       -       451       -  
  Severance costs     56       19       477       57  
  Impairment of software development costs     1,368       340       1,368       340  
    Total operating expenses     8,283       7,115       27,664       25,198  
                                 
Loss from operations     (4,987 )     (4,155 )     (13,873 )     (16,624 )
                                 
Interest and other income (expense), net     (156 )     (111 )     (700 )     (72 )
Net loss before income tax     (5,143 )     (4,266 )     (14,573 )     (16,696 )
                                 
Benefit from income taxes     333       -       545       2,950  
Net loss     (4,810 )     (4,266 )   $ (14,028 )   $ (13,746 )
                                 
Net income attributed to non-controlling interest     2       -       7       -  
Net loss attributable to Determine, Inc.     (4,808 )     (4,266 )     (14,021 )     (13,746 )
                                 
Redeemable preferred stock accretion     -       1,046       1,000       3,691  
Net loss attributable to common stockholders     (4,808 )     (5,312 )   $ (15,021 )   $ (17,437 )
                                 
Basic and diluted net loss per share     (0.42 )     (0.53 )   $ (1.34 )   $ (1.89 )
GAAP to Non-GAAP Reconciliations:                                
                                 
Reconciliation of Total revenue:                                
  U.S. GAAP as reported   $ 6,680     $ 5,929     $ 26,760     $ 20,877  
  Adjustments:                                
  Deferred revenue adjustment     16       156       245       1,451  
Non-GAAP Revenue   $ 6,696     $ 6,085     $ 27,005     $ 22,328  
                                 
Reconciliation to non-GAAP net loss:                                
Net loss   $ (4,808 )   $ (4,266 )   $ (14,021 )   $ (13,746 )
Stock-based compensation expense     518       585       2,389       2,538  
Deferred revenue adjustment     16       156       245       1,451  
Acquisition related costs     -       1,033       912       1,715  
Amortization on intangibles     561       349       1,935       1,047  
Benefit from income taxes     (424 )     -       (636 )     (2,950 )
Restructuring costs     468       -       468       -  
Severance costs     56       28       512       92  
Impairment of software development costs     1,368       340       1,368       340  
Non-GAAP net loss   $ (2,245 )   $ (1,775 )   $ (6,828 )   $ (9,513 )
                                 
Non-GAAP basic and diluted net loss per share   $ (0.20 )   $ (0.22 )   $ (0.65 )   $ (1.31 )
                                 
Weighted average shares outstanding for basic and diluted net loss per share     11,321       7,983       10,482       7,277  
                                 
                                 
                                 
 Determine, Inc.   
 Condensed Consolidated Statements of Comprehensive Loss   
 (In thousands)   
 (Unaudited)   
             
    Three Months Ended     Twelve Months Ended  
    March 31,     March 31,  
    2016     2015     2016     2015  
                                 
Net loss   $ (4,808 )   $ (4,266 )   $ (14,021 )   $ (13,746 )
Other comprehensive income (loss):                                
  Foreign currency translation adjustments     (72 )     -       (140 )     -  
Other comprehensive income (loss)     (72 )     -       (140 )     -  
Comprehensive income (loss)   $ (4,880 )   $ (4,266 )   $ (14,161 )   $ (13,746 )
                                 
                                 
                                 
Determine, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
         
    March 31,   March 31,
    2016   2015
    (Unaudited)   (Audited)
ASSETS            
Current assets            
  Cash and cash equivalents   $ 9,418   $ 13,178
  Accounts receivable     7,031     5,203
  Restricted cash     34     34
  Prepaid expenses and other current assets     1,551     1,647
    Total current assets     18,034     20,062
             
  Property and equipment, net     136     290
  Capitalized software     1,699     2,258
  Goodwill     14,490     7,702
  Other intangibles, net     8,011     6,453
  Other assets     1,843     521
    Total assets   $ 44,213   $ 37,286
             
             
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities            
  Credit facility   $ 7,100   $ 7,447
  Accounts payable     1,973     1,535
  Accrued payroll and related liabilities     1,655     910
  Other accrued liabilities     2,396     1,877
  Deferred revenue     10,299     8,410
  COFACE loan     407     -
  Deferred tax liability     14     -
  Accrued restructuring     403     -
    Total current liabilities     24,247     20,179
  Long-term deferred revenue     67     22
  Convertible note, net of debt discount     5,420     2,900
  Other long-term liabilities     3,282     167
  Deferred tax liability non current     290     -
    Total liabilities     33,306     23,268
             
Redeemable convertible preferred stock     -     4,895
Total Determine, Inc. stockholders' equity controlling interest     10,794     9,123
Non-controlling interest     113     -
Total stockholders' equity     10,907     14,018
    Total liabilities, redeemable convertible preferred stock and stockholders' equity   $ 44,213   $ 37,286
             
             
             
Determine, Inc.  
Condensed Consolidated Statements of Cash Flows  
(In thousands)  
(Unudited)  
             
             
    Twelve Months Ended  
    March 31,     March 31,  
    2016     2015  
                 
Operating activities                
Net loss   $ (14,028 )   $ (13,746 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     2,680       1,530  
Loss on disposition of property and equipment     (12 )     -  
Impairment of capitalized software     1,368       340  
Stock-based compensation expense     2,389       2,538  
Non-controlling interest     7       -  
Changes in assets and liabilities:                
  Accounts receivable (net)     (154 )     421  
  Restricted cash     -       (34 )
  Prepaid expenses and other current assets     200       (505 )
  Other assets     (1,061 )     (2 )
  Accounts payable     149       (195 )
  Accrued restructuring     403       -  
  Accrued payroll and related liabilities     (202 )     (421 )
  Other accrued liabilities and long term liabilities     1,265       158  
  Deferred tax liability     (46 )     (2,989 )
  Deferred revenue     1,066       1,270  
Net cash used in operating activities     (5,977 )     (11,635 )
                 
Investing activities                
  Purchase of property and equipment     (6 )     (51 )
  Capitalized software     (1,383 )     (1,962 )
  Purchase of business, net of cash     (826 )     (4,451 )
Net cash used in investing activities     (2,215 )     (6,464 )
                 
Financing activities                
  Proceeds from sale of common stock, preferred stock and warrants, net of issuance costs     310       12,319  
  Employee taxes paid in exchange for restricted stock awards forefeited     (175 )     (578 )
  Issuance of common stock under employee stock plan     171       213  
  Credit facility borrowing, net     (347 )     498  
  Credit facility payment     -       (655 )
  Repayment of a loan     (47 )     (277 )
  Conversion of preferred stock to common stock     (17 )     -  
  Repayment of minority shareholder     (133 )     -  
  Issuance of convertible note, net     4,784       3,000  
  Issuance of cost associated with promissory note     -       (150 )
Net cash provided by financing activities     4,546       14,370  
                 
  Effect of exchange rate changes on cash     (115 )     -  
                 
Net decrease in cash and cash equivalents     (3,760 )     (3,729 )
Cash and cash equivalents at beginning of the period     13,178       16,907  
Cash and cash equivalents at end of the period   $ 9,418     $ 13,178  
                 
                 
         
Determine, Inc.    
Billings Reconciliation    
(In thousands)    
(Unaudited)    
                 
                 
    Three Months Ended   Twelve Months Ended
    March 31,   March 31,   March 31,   March 31,
    2016   2015   2016   2015
                         
Total revenues   $ 6,680   $ 5,929   $ 26,760   $ 20,877
Deferred revenue:                        
End of period     10,366     8,432     10,366     8,432
Beginning of period     9,019     8,134     8,432     5,749
Change in deferred revenue     1,347     298     1,934     2,683
Total billings (total revenues plus the change in deferred revenue)   $ 8,027   $ 6,227   $ 28,694   $ 23,560
                         
                         

Contact Information

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    Rose Lee
    Determine, Inc.
    +1.877.806.1932
    +1.650.532.1590

    pr@determine.com