SOURCE: Taleo

May 05, 2011 16:03 ET

Taleo Announces Record Quarterly Revenues of $71.5 Million, up 30% Year-Over-Year; Subscription Revenue Growth of 23% to $58.4 Million

Record Quarterly Non-GAAP Revenue of $74.3 million, up 35% Year-Over-Year; Non-GAAP Subscription Revenue of $60.1 Million, up 26% Year-Over-Year; Current Deferred Revenue Rose to a Record $105.0 million, up 34% Year-Over-Year; Added Over 240 New Customers With 8 Transactions of $250,000 or Greater

DUBLIN, CA--(Marketwire - May 5, 2011) - Taleo Corporation (NASDAQ: TLEO), the leading provider of on-demand Talent Management solutions, today announced record-setting results for its fiscal first quarter 2011.

"Our results consistently demonstrate what our customers already know -- we're redefining the talent management market and how businesses leverage their largest asset, their people," said Michael Gregoire, Taleo's Chairman and CEO. "Our momentum is based on a keen understanding of our customers -- from the small, emerging business to the global corporation. We're innovating, executing and, where necessary, acquiring to make sure we have the broadest, most comprehensive platform in the market. Our undisputed leadership in talent management and the rapid growth of our customer base are testaments to the success of our strategy."

Taleo delivered the following results for the first quarter 2011:

First Quarter Revenue: Total revenue for the first quarter was $71.5 million, an increase of 30% on a year-over-year basis. Subscription revenue for the first quarter was $58.4 million, an increase of 23% on a year-over-year basis. Professional services revenue for the first quarter was $13.1 million, an increase of 75% on a year-over-year basis.

Total first quarter non-GAAP revenue was $74.3 million, an increase of 35% on a year-over-year basis. Non-GAAP subscription revenue for the first quarter was $60.1 million, an increase of 26% on a year-over-year basis. Non-GAAP professional services revenues for the first quarter was $14.2 million, an increase of 90% on a year-over-year basis.

First Quarter Earnings / (Loss) per Share: First quarter net loss per share was $(0.05), compared to net income per fully diluted share of $0.02 a year ago.

Non-GAAP net income per fully diluted share was $0.23, compared to non-GAAP net income per fully diluted share of $0.16 a year ago.

An explanation of the non-GAAP measures used in this press release is included in the section below titled "Non-GAAP Financial Measures" and a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.

Customers: In the first quarter, over 240 new businesses chose Taleo's Talent Management solutions for recruiting, performance, learning and/or compensation management, including: Caterpillar, Inc., Phillips International, IDEX Laboratories, Fairmont Raffles Hotels, Motorola Mobility and Bentley Systems, Inc. A first quarter record 8 new contracts were of $250,000 or larger in first year subscription revenue, underscoring the market interest in larger, global deployments and in multiple component suite solutions.

Cash: Cash generated from operations for the first quarter was $15.6 million, up 36% year-over year. Total cash and cash equivalents finished the quarter at $145.8 million, a decrease of $90.9 million from the prior year, which includes approximately $135.5 million in net outflow from the company's acquisitions of Learn.com and Cytiva.

Quarterly Conference Call

Taleo will host a conference call to discuss its first quarter 2011 results at 1:30 p.m. Pacific Time today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company's Investor Relations Web site at http://www.taleo.com/ir. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight PT on May 10, 2011 at http://ir.taleo.com/events.cfm, or via dial-in at 800-642-1687 or 706-645-9291. The pass code for the replay is 55412677.

About Taleo

Taleo's (NASDAQ: TLEO) cloud-based talent management platform unites products and an ecosystem to drive business performance through talent intelligence. Approximately 5,000 customers use Taleo for talent acquisition, performance and compensation management, including 47 of the Fortune 100. Further, Taleo's Talent Grid cloud community harnesses the expertise of Taleo customers, more than 200 million candidates to date, and 140 partners and industry experts.

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 February 28, 2011, 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 accounting principles generally accepted in the United States of America, or GAAP. This information includes non-GAAP revenue and non-GAAP earnings 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 Learn.com acquisitions, and exclude costs associated with acquisition-related transaction costs, stock-based compensation expense, amortization of acquisition-related intangibles, the gain on re-measurement of a previously held interest in Worldwide Compensation, and income taxes associated with certain non-GAAP adjustments. First quarter loss per share calculations are based on 40.6 million basic weighted average shares outstanding, while first quarter non-GAAP EPS calculations are based on 43.8 million fully diluted weighted average shares outstanding. The fully diluted weighted average shares outstanding used to compute non-GAAP earnings per share have been calculated without giving consideration to the treasury stock method.

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,
                                                --------------------------
                                                    2011          2010
                                                ------------  ------------
Revenue:
     Subscription and support                   $     58,390  $     47,564
     Professional services                            13,107         7,482
                                                ------------  ------------
        Total revenue                                 71,497        55,046
                                                ------------  ------------
Cost of revenue (Note 1):
     Subscription and support                         12,547        10,362
     Amortization of acquisition-related
      intangibles                                      1,499           951
                                                ------------  ------------
        Total cost of subscription and support
         revenue                                      14,046        11,313
     Professional services                            10,236         6,485
                                                ------------  ------------
        Total cost of revenue                         24,282        17,798
                                                ------------  ------------

                                                ------------  ------------
Gross profit                                          47,215        37,248
                                                ------------  ------------
Operating expenses (Note 1):
     Sales and marketing                              20,709        14,937
     Sales - amortization of acquisition-related
      intangibles                                      2,777         2,123
     Research and development                         13,807        10,054
     General and administrative                       12,129        10,298
                                                ------------  ------------
         Total operating expenses                     49,422        37,412
                                                ------------  ------------
                                                ------------  ------------ 
Loss from operations                                  (2,207)         (164)
                                                ------------  ------------
Other income (expense):
     Interest income                                      86           127
     Interest expense                                    (26)          (34)
     Gain on remeasurement of previously held
      interest in Worldwide Compensation, Inc.             -           885
        Total other income, net                           60           978
                                                ------------  ------------

Income (loss) before provision for (benefit
 from) income taxes                                   (2,147)          814
     Provision for (benefit from) income taxes            23            (4)
                                                ------------  ------------

Income (loss) attributable to Class A common
 stockholders                                   $     (2,170) $        818
                                                ============  ============
Income (loss) per share attributable to Class A
 common stockholders - basic                    $      (0.05) $       0.02
                                                ============  ============
Income (loss) per share attributable to Class A
 common stockholders - diluted                  $      (0.05) $       0.02
                                                ============  ============

Weighted average Class A common shares - basic        40,602        39,156
                                                ============  ============
Weighted average Class A common shares -
 diluted                                              40,602        40,338
                                                ============  ============

NOTES
1. Includes stock-based compensation expense
     Subscription and support cost of revenue   $        221  $        176
     Professional services cost of revenue      $        524           362
                                                ------------  ------------
     Cost of revenue subtotal                            745           538
     Sales and marketing operating expense      $      1,161           884
     Research and development operating
      expense                                   $        786           464
     General and administrative operating
      expense                                   $      1,401         1,291
                                                ------------  ------------
     Operating expense subtotal                        3,348         2,639

                                                ------------  ------------
   Total stock-based compensation expense       $      4,093  $      3,177
                                                ============  ============



                            Taleo Corporation
        Condensed Consolidated Statements of Operations (continued)
             (All amounts in thousands except per share data)
                                (Unaudited)

Reconciliation of GAAP net income (loss) to non-GAAP net income:

                                                    Three Months Ended
                                                        March 31,
                                                --------------------------
                                                    2011          2010
                                                ------------  ------------

GAAP net income (loss) reported above           $     (2,170) $        818
Add back:
Revenue
     Non-GAAP subscription and support revenue         1,664           153
     Non-GAAP professional services revenue            1,098             -
                                                ------------  ------------
       Total Non-GAAP revenue                          2,762           153

Expenses
     Acquisition-related transaction costs             1,547           539
     Stock-based compensation expense                  4,093         3,177
     Amortization of acquisition-related
      intangibles                                      4,276         3,074
                                                ------------  ------------
                                                       9,916         6,790

Other income (expense)
     Gain on remeasurement of previously held
      interest in Worldwide Compensation, Inc.             -          (885)
                                                ------------  ------------
                                                           -          (885)
Income taxes
     Income taxes associated with certain
      non-GAAP adjustments                              (528)            -
                                                ------------  ------------
Non-GAAP net income                             $      9,980  $      6,876
                                                ============  ============

Non-GAAP net income per share
     Basic                                      $       0.25  $       0.18
                                                ============  ============
     Diluted                                    $       0.23  $       0.16
                                                ============  ============

Reconciliation of basic and fully diluted share
 count:
                                                ------------  ------------
Basic                                                 40,602        39,156
                                                ------------  ------------
Add:
     Weighted Average options and unreleased
      restricted stock, without consideration
      for the treasury stock method                    3,178         3,242
                                                ------------  ------------
Diluted                                               43,780        42,398
                                                ------------  ------------




                            Taleo Corporation
                  Condensed Consolidated Balance Sheets
                        (All amounts in thousands)
                                (Unaudited)

                                                  March 31,   December 31,
                                                    2011          2010
                                                ------------  ------------
ASSETS
  Current assets:
      Cash and cash equivalents                 $    145,781  $    141,588
      Accounts receivable, net                        60,606        58,120
      Prepaid expenses and other current assets       17,970        18,065
      Investment credits receivable                    6,206         6,034
                                                ------------  ------------
      Total current assets                           230,563       223,807

  Property and equipment, net                         24,436        26,552
  Restricted cash                                     11,553           218
  Goodwill                                           206,418       206,418
  Other intangibles, net                              55,311        59,478
  Other assets                                         7,237         7,363
                                                ------------  ------------
  Total assets                                  $    535,518  $    523,836
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
      Accounts payable and accrued liabilities  $     37,240  $     36,377
      Deferred revenue - subscription and
       support and customer deposits                  86,524        79,704
      Deferred revenue - professional services        18,523        19,692
      Capital lease obligations, short-term               86           105
                                                ------------  ------------
      Total current liabilities                      142,373       135,878

  Long-term deferred revenue - subscription and
   support and customer deposits                       1,778           150
  Long-term deferred revenue - professional
   services                                            8,491        10,006
  Other liabilities                                    9,327         9,241
  Capital lease obligations, long-term                    33            46
                                                ------------  ------------
  Total liabilities                                  162,002       155,321
                                                ------------  ------------

  Stockholders' equity:
      Capital stock                                        1             1
      Additional paid-in capital                     450,148       442,514
      Accumulated deficit                            (78,779)      (76,609)
      Treasury stock                                  (1,889)         (776)
      Accumulated other comprehensive income           4,035         3,385
                                                ------------  ------------
      Total stockholders' equity                     373,516       368,515
                                                ------------  ------------
  Total liabilities and stockholders' equity    $    535,518  $    523,836
                                                ============  ============



                            Taleo Corporation
              Condensed Consolidated Statements of Cash Flows
                        (All amounts in thousands)
                                (Unaudited)
                                                    Three Months Ended
                                                        March 31,
                                                --------------------------
                                                    2011          2010
                                                ------------  ------------
Cash flows from operating activities:
 Net income (loss)                              $     (2,170) $        818
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Depreciation and amortization                       7,925         6,321
   Loss on disposal of fixed assets                        -            58
   Amortization of tenant inducements                    (48)          (44)
   Tenant inducements from landlord                        -           114
   Stock-based compensation expense                    4,093         3,177
   Excess tax benefits on the exercise of stock
    options                                              (95)          (16)
   Director fees paid with stock in lieu of cash          64            60
   Gain on remeasurement of previously held
    interest in Worldwide Compensation, Inc.               -          (885)
   Bad debt provision (reduction)                         50           (93)
   Changes in assets and liabilities, net of
    effect of acquisitions:
     Accounts receivable                              (2,477)        2,360
     Prepaid expenses and other assets                   509        (2,186)
     Investment credits receivable                         -          (714)
     Accounts payable and accrued liabilities          2,117         2,001
     Deferred revenues and customer deposits           5,599           438
                                                ------------  ------------
         Net cash provided by operating
          activities                                  15,567        11,409
                                                ------------  ------------
Cash flows from investing activities:
 Purchases of property and equipment                  (2,344)       (6,482)
 Change in restricted cash                           (11,335)            -
 Acquisition of business, net of cash acquired             -       (13,381)
 Cash advance to Cytiva Software Inc.                    (78)            -
 Acquisition of trademark intangible                    (150)            -
                                                ------------  ------------
         Net cash used in investing activities       (13,907)      (19,863)
                                                ------------  ------------
Cash flows from financing activities:
 Principal payments on capital lease
  obligations                                           (282)         (414)
 Payments for expenses associated with 2009
  equity offering                                          -          (678)
 Excess tax benefits on the exercise of stock
  options                                                 95            16
 Treasury stock acquired to settle employees
  withholding liability                               (1,112)         (474)
 Proceeds from stock options exercised and ESPP
  shares                                               3,382         2,307
                                                ------------  ------------
         Net cash provided by financing
          activities                                   2,083           757
                                                ------------  ------------
Effect of exchange rate changes on cash and
 cash equivalents                                        450           169
                                                ------------  ------------
Increase (decrease) in cash and cash
 equivalents                                           4,193        (7,528)
Cash and cash equivalents:
 Beginning of period                                 141,588       244,229
                                                ------------  ------------
 End of period                                  $    145,781  $    236,701
                                                ============  ============

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