SOURCE: Selectica

Selectica

November 07, 2013 16:38 ET

Selectica Announces Financial Results for the Second Quarter of Fiscal 2014

SAN MATEO, CA--(Marketwired - Nov 7, 2013) - Selectica, Inc. (NASDAQ: SLTC), provider of software that accelerates sales cycles and streamlines contract processes, today announced financial results for its fiscal second quarter ended September 30, 2013.

Selectica Chairman and CEO Michael Brodsky said, "The weak second quarter results prompted the company to initiate a significant reorganization of the senior management. We recruited a team of highly experienced professionals with a track record of successful collaboration. During the quarter the team initiated a review of many of the company's key business tactics and processes, with a special focus on an assessing the company's delivery organization. After careful analysis, we determined that our success in the implementation function of the business required greater focus to maintain the satisfaction of our existing top-tier, multinational customer base. As a result of the special focus on the delivery infrastructure, we proactively decelerated sales activity for a temporary period, which is now complete."

"I am pleased with the disciplined approach we have taken toward the business, and early indications from key customers is that significant progress in the quality of implementation of our product is being made," added Brodsky. "The new team is firmly in place and I look forward to positive results as we focus on delivering on our growing pipeline of new prospects for our industry-leading CPQ and contract management solutions and our best-in-class service."

Financial Results:

Selectica delivered the following financial results for the first quarter of fiscal 2014:

  • Recurring revenue: Recurring revenue was essentially unchanged from Q2 FY 2013 to Q2 FY 2014 at $3.0 million and declined from $3.2 million in Q1 FY 2014
  • Operating Expenses: Operating expenses were $3.5 million in Q2 FY 2014 compared to $3.8 million in Q2 FY 2013 and $4.7 million in Q1 FY 2014. The decrease primarily relates to the capitalization of certain research and development expenses in Q2 FY 2014, and the reversal of certain stock compensation charges related to terminated employees in Q2 FY 2014 and certain bad debt expenses incurred in Q1 FY 2014.
  • Billings: Billings for Q2 FY2014 were $3.3 million, compared to $3.8 million in Q2 FY 2013 and $3.3M in Q1 FY 2014.
  • Deferred revenue: As of Q2 FY2014, the company had deferred revenue of $6.1 million, a 5% year-over-year increase from Q2 FY2013, when deferred revenue was $5.8 million. As of Q1 FY2014, deferred revenue was $6.8 million.
  • Warrant Amendment: The company entered into an Amendment to the Series A Warrants to Purchase Common Stock issued in connection with the company's private placement equity financing that closed in May 2013 - the Amendment reduced the exercise price of the Warrants from $8.75 to $7.75 and removed the anti-dilution adjustment and Black Scholes cash settlement provisions to ensure the Warrants are indexed to the Company's equity and not classified as debt instruments.

Complete financial results for Q2 FY2014 can be found in the attached financial tables.

Business highlights

Business highlights from Q2 FY2014 include:

  • Launch of Selectica HTML 5 Client: Customers now have the flexibility to log into a customized Selectica CPQ web application from other systems. This brings Selectica CPQ access to customers regardless of their ERP or CRM system.
  • Selectica CPQ Mobile: With Selectica CPQ Mobile, sales reps are empowered to create and configure quotes in the field with ease, further shortening sales cycles. Customers can leverage our powerful constraint engine from a user-friendly iPad interface. The Salesforce integrated application also provides convenient access to recent quotes in a customized dashboard home page, as well as ability to view quotes and Opportunities in online or offline mode.
  • Key Senior Staff Additions: Selectica expanded its Executive Management team in Q2 2014, enabling Selectica to accelerate building our market momentum, while ensuring we are delivering on our customer-first strategy. Members joining the team include Jeffrey Grosman as COO, Eric Faulkner as CIO, Rose Lee as SVP of Customer Experience and Amalia Rosen as VP of Marketing and Business Analytics.
  • Dreamforce: Selectica's CPQ Mobile has been selected for Salesforce.com's Mobile App Showcase at Dreamforce '13, November 18th through November 21st, 2013. During Dreamforce, attendees are invited to visit the Selectica booth and demo Selectica's new mobile application, which empowers users to create and configure quotes in the field, maximizing deal value and increasing sales representative productivity.

About Selectica, Inc.
Selectica, Inc. (NASDAQ: SLTC) develops innovative software that the world's most successful companies rely on to improve the effectiveness of their sales and contracting processes. Our guided selling, sales configuration, and contract lifecycle management solutions support the Global 2000 and growing mid-size firms in closing billions of dollars' worth of business each year. Our patented technology, delivered through the cloud, makes it easy for customers in industries like high-tech, telecommunications, manufacturing, healthcare, financial services, and government contracting to overcome product and channel complexity, increase deal value, and accelerate time to revenue.

For more information:

Non-GAAP financial measures
Selectica provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand the company's past financial performance and future results, the company is providing non-GAAP financial measures to supplement the financial results that it provides in accordance with GAAP. The method the company uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies.

Forward-looking statements
Certain statements in this release and elsewhere by Selectica 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, 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 the on-going global recession; fluctuations in demand for Selectica's products and services; government policies and regulations, including, but not limited to those affecting the company's industry; and risks related to the company's past stock granting policies and related restatement of financial statements. Selectica 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 supplemented in the company's most recent Form 10-Q, each as filed by the company with the Securities and Exchange Commission.

   
   
SELECTICA, INC.  
Condensed Consolidated Statements of Operations  
(In thousands, except per share amounts)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
 
 
 
 
September 30,
2013
 
 
 
 
September 30,
2012
 
 
 
 
September 30,
2013
 
 
 
 
September 30,
2012
 
 
                         
Revenues:                                
  Recurring revenues   $ 3,020     $ 2,960     $ 6,186     $ 5,596  
  Non-recurring revenues     908       1,695       2,114       3,235  
    Total revenues     3,928       4,655       8,300       8,831  
                                 
Cost of revenues:                                
  Cost of recurring revenues     694       407       1,366       738  
  Cost of non-recurring revenues     1,256       1,347       2,492       2,574  
    Total cost of revenues     1,950       1,754       3,858       3,312  
                                 
Gross profit:                                
  Recurring gross profit     2,326       2,553       4,820       4,858  
  Non-recurring gross profit     (348 )     348       (378 )     661  
    Total gross profit     1,978       2,901       4,442       5,519  
                                 
Operating expenses:                                
  Research and development     450       861       1,553       1,792  
  Sales and marketing     2,129       1,726       4,202       3,245  
  General and administrative     733       698       2,288       1,568  
  Restructuring costs     227       -       227       -  
  Fees related to comprehensive settlement agreement     -       500       -       500  
    Total operating expenses     3,539       3,785       8,270       7,105  
Loss from operations     (1,561 )     (884 )     (3,828 )     (1,586 )
                                 
Decrease in fair value of warrant liability     1,121       -       982       -  
Interest and other income (expense), net     (26 )     (5 )     (41 )     (12 )
Net loss     (466 )     (889 )     (2,887 )     (1,598 )
Series C redeemable preferred stock accretion     1,144       -       1,621       -  
Net loss applicable to common stockholders   $ (1,610 )   $ (889 )   $ (4,508 )   $ (1,598 )
                                 
Basic and diluted net loss per common share applicable to common stockholders    $ (0.45 )   $ (0.32 )   $ (1.35 )   $ (0.57 )
                                 
Reconciliation to non-GAAP net loss:                                
Net loss   $ (466 )   $ (889 )   $ (2,887 )   $ (1,598 )
Decrease in fair value of warrant liability     (1,121 )     -       (982 )     -  
Stock-based compensation expense     (30 )     153       455       361  
Restructuring costs     227       -       227       -  
Fees related to comprehensive settlement agreement     -       500       -       500  
Non-GAAP net loss   $ (1,390 )   $ (236 )   $ (3,187 )   $ (737 )
                                 
Non-GAAP basic and diluted net loss per share   $ (0.39 )   $ (0.08 )   $ (0.95 )   $ (0.26 )
                                 
Weighted average shares outstanding for basic and diluted net loss per share applicable to common stockholders      3,591       2,818       3,343       2,815  
                                 
                                 
 
 
SELECTICA, INC.
Condensed Consolidated Balance Sheets
(In thousands)
         
         
    September 30,   March 31,
    2013   2013
    (unaudited)    
ASSETS            
Current assets            
  Cash and cash equivalents   $ 11,800   $ 12,098
  Accounts receivable, net     3,447     3,455
  Prepaid expenses and other current assets     889     853
    Total current assets     16,136     16,406
             
Property and equipment, net     350     407
Capitalized software     382     -
Other assets     78     39
    Total assets   $ 16,946   $ 16,852
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities            
  Credit facility   $ 5,994   $ 6,000
  Accounts payable     1,058     1,010
  Accrued payroll and related liabilities     547     982
  Accrued restructuring costs     154     232
  Other accrued liabilities     93     163
  Deferred revenue     5,114     6,153
    Total current liabilities     12,960     14,540
  Long-term deferred revenue     1,019     1,772
  Other long-term liabilities     20     20
    Total liabilities     13,999     16,332
             
Stockholders' equity     2,947     520
    Total liabilities and stockholders' equity   $ 16,946   $ 16,852
             
             
   
   
SELECTICA, INC.  
Condensed Consolidated Statements of Cash Flows  
(In thousands)  
(Unaudited)  
             
             
    Six Months Ended  
    September 30,     September 30,  
    2013     2012  
                 
Operating activities                
Net loss   $ (2,887 )   $ (1,598 )
Adjustments to reconcile net loss to net cash used in operating activities:                
                 
Depreciation     99       101  
Loss on disposition of property and equipment     23       -  
Stock-based compensation expense     455       361  
Decrease in warrant liability     (982 )     -  
Changes in assets and liabilities:                
  Accounts receivable (net)     8       (1,236 )
  Prepaid expenses and other current assets     (36 )     19  
  Other assets     (39 )     -  
  Accounts payable     46       481  
  Restructuring liability     (78 )     -  
  Accrued payroll and related liabilities     (435 )     (1,031 )
  Other accrued liabilities and long term liabilities     (70 )     (9 )
  Deferred revenue     (1,792 )     (946 )
Net cash used in operating activities     (5,688 )     (3,858 )
                 
Investing activities                
  Purchase of property and equipment     (65 )     (107 )
  Capitalized software     (382 )     -  
  Proceeds from maturities of short-term investments     -       199  
Net cash (used in) provided by investing activities     (447 )     92  
                 
Financing activities                
  Credit facility borrowings, net     (6 )     -  
  Employee taxes paid in exchange for stock awards forfeited     (201 )     (59 )
  Issuance of common stock under employee stock plan     207       -  
  Proceeds from sale of common stock, preferred stock and warrants, net of issuance costs     5,837       -  
Net cash provided by (used in) financing activities     5,837       (59 )
                 
Net decrease in cash and cash equivalents     (298 )     (3,825 )
Cash and cash equivalents at beginning of the period     12,098       15,877  
Cash and cash equivalents at end of the period   $ 11,800     $ 12,052  
                 
                 
                 
   
   
SELECTICA, INC.  
Billings Reconciliation  
(In thousands)  
(Unaudited)  
                         
                         
    Three Months Ended     Six Months Ended  
    September 30, 2013     September 30, 2012     September 30, 2013     September 30, 2012  
                                 
Total revenues   $ 3,928     $ 4,655     $ 8,300     $ 8,831  
Deferred revenue:                                
End of period     6,133       5,775       6,133       5,775  
Beginning of period     6,806       6,664       7,925       6,721  
Change in deferred revenue     (673 )     (889 )     (1,792 )     (946 )
Total billings (total revenues plus the change in deferred revenue)   $ 3,255     $ 3,766     $ 6,508     $ 7,885