SOURCE: Taleo

May 06, 2008 04:06 ET

Taleo Reports Strong Results for First Quarter 2008

Talent Management Leader Posts Record Quarterly Revenue

DUBLIN, CA--(Marketwire - May 6, 2008) - Taleo (NASDAQ: TLEO), the leading provider of on demand talent management solutions, today announced record financial results for the first quarter ended March 31, 2008.

Quarterly Highlights Include:

--  Record revenues of $37.2 million for the first quarter of 2008, an
    increase of 30% year-over-year, and 8% quarter over quarter.
--  Customer base grew to over 1,700 customers with more than 1.2 million
    users.
    

"Our strong first quarter results build on the momentum we established in 2007 as we continue to see demand for our talent management solutions from companies of all sizes across the globe," stated Michael Gregoire, president and CEO of Taleo. "To extend our ability to meet this demand, today we announced a definitive agreement to acquire Vurv Technology, Inc., a privately held talent management company with more than 1,700 customers across the globe."

Other significant achievements during the first quarter 2008 include:

--  Acquired 197 new customers. Corporate demand for Taleo's talent
    management solutions continued with the company signing 197 new customers
    in Q1 bringing Taleo's customer base to over 1,700 organizations around the
    world. New customers included Burns & McDonnell, CIBER, InfoPrint Solutions
    Company and Vail Resorts.
--  Achieved significant international growth. International revenues grew
    by 52% over the same period last year and represented 11% of total
    revenues. New international customers included Merck KGaA, Renault SA and
    TuV SuD Asia Pacific Pte Ltd.
--  Launched Taleo Performance™. This revolutionary new Performance
    Management solution was declared generally available, and Freeport-McMoRan
    Copper & Gold Inc. and TeleTech Holdings Inc. both went live on the
    solution. Also, Children's Healthcare of Atlanta purchased Taleo
    Performance in early April of 2008 to align their workforce with corporate
    objectives and achieve higher retention and workforce productivity.
--  Expanded SMB Reach. Taleo Business Edition™, a recruiting solution
    targeted at companies with less than 3,000 employees, grew revenues by 145%
    over last year, further establishing Taleo as the leader for SMB
    Recruiting. New customers included Columbia Sportswear, Reunion.com,
    EntertainmentCruises.com, City of Evanston, IL, BJETS India Private Limited
    and URS Australia.
--  Expanded User Base. Taleo grew its global presence by adding more than
    170,000 new users to bring the total number of users to over 1.2 million
    worldwide, working with candidates in 25 languages and 190 countries and
    territories.
--  Demonstrable Unsurpassed Scale and Stability. During Q1, Taleo
    processed more than 340,000 hires, from over 8.9 million applicants through
    its on demand platform.
    

"During the first quarter, we expanded our unified talent management platform beyond recruiting with the addition of Taleo Performance and extended our reach further into the SMB and international markets," said Gregoire. "Our proven ability to execute, build innovative solutions and expand our global market coverage gives us a solid position as we move through 2008."

Taleo delivered the following results for the first quarter ended March 31, 2008:

Revenue: Total revenue for the first quarter was $37.2 million, representing an increase of 30% on a year-over-year basis. Application revenue for the first quarter was $30.2 million, an increase of 28% on a year-over-year basis.

Net Income and Net Income Per Share to Common Stockholders: Net income in accordance with accounting principles generally accepted in the United States, or GAAP, was $1.6 million for the first quarter, compared to net income of $0.9 million for the same period last year. Net income for the first quarter of 2008 and 2007 includes share-based compensation expense of $2.5 million and $1.4 million, respectively, pursuant to the adoption on January 1, 2006 of Financial Accounting Standards Board (FASB) Statement No. 123(R), "Share-Based Payment" (SFAS 123(R)), which requires companies to expense the fair value of employee stock options and similar stock based compensation awards. Net income per fully diluted share was $0.06 for the first quarter of 2008 based on 28.9 million weighted average shares outstanding compared to net income per fully diluted share of $0.03 for the same period in 2007 based on 26.0 million weighted average shares outstanding.

Non-GAAP Net Income and Non-GAAP Net Income Per Share: Non-GAAP net income, which excludes share-based compensation expense pursuant to SFAS 123(R), amortization of acquired intangibles, and non-cash income tax and tax valuation adjustments was $3.9 million for the first quarter of 2008, compared to a non-GAAP net income of $2.3 million in the same period last year. Non-GAAP net income per fully diluted share was $0.14 for the first quarter of 2008 based on 28.9 million weighted average shares outstanding compared to non-GAAP net income per fully diluted share of $0.09 for the same period in 2007 based on 26.0 million weighted average shares outstanding.

Conference Call Details

In conjunction with this announcement, Taleo will host a conference call today at 8:30 a.m. EDT to discuss the company's first quarter 2008 financial results. To access this call, dial 800-573-4840 (domestic) or 617-224-4326 (international) and reference passcode: 5190-1870. A replay of the call can also be accessed by dialing 888-286-8010 (domestic) or 617-801-6888 (international), and by referencing passcode: 77749780.

About Taleo

Taleo (NASDAQ: TLEO) is the leader in on demand unified talent management solutions that empower organizations of all sizes, around the world to assess, acquire, develop and align their workforce for improved business performance. More than 1,700 organizations use Taleo, including 35 of the Fortune 100, for talent acquisition and performance management, with over 1.2 million users hiring 3.6 million employees from 86 million candidates in more than 190 countries and territories. Known for its strong configurability and usability, Taleo's talent management platform runs on a world-class infrastructure and offers 99.9% availability.

Forward-looking Statements

This release contains forward-looking statements, including statements regarding Taleo's future financial performance, new product development, market growth, the demand for 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 10-K, as filed with the SEC on March 14, 2008, 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. As noted, the non-GAAP financial measures discussed above exclude share-based compensation expense pursuant to SFAS 123(R), amortization of acquired intangibles and non-cash income tax and tax valuation adjustments. 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 as detailed above. As previously mentioned, a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.


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




                                                March 31,    December 31,
                                                  2008           2007
                                              -------------  -------------
ASSETS
   Current assets:
      Cash and cash equivalents               $      91,683  $      86,135
      Restricted cash                                   289            288
      Accounts receivable, net                       34,415         30,255
      Prepaid expenses and other current
       assets                                         5,750          5,912
      Investment credit receivable                    5,214          4,734
                                              -------------  -------------
      Total current assets                          137,351        127,324

   Property and equipment, net                       21,925         23,178
   Restricted Cash                                      838            838
   Other assets                                       2,373          2,147
   Goodwill                                           9,749          9,785
   Other Intangibles, net                             1,295          1,404
                                              -------------  -------------
   Total assets                               $     173,531  $     164,676
                                              =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
      Accounts payable and accrued
       liabilities                            $      21,842  $      20,623
      Deferred revenue & customer deposits           39,888         36,752
      Capital lease obligation, short-term               25             38
                                              -------------  -------------
      Total current liabilities                      61,755         57,413

   Customer deposits and long term deferred
    revenue                                           1,482            273
   Other liabilities                                  3,868          4,535
   Capital lease obligation, long-term                   14             16
   Class B redeemable common stock                        -              -
                                              -------------  -------------
   Total liabilities                                 67,119         62,237
                                              -------------  -------------

                                              -------------  -------------
   Exchangeable share obligation                        224            331
                                              -------------  -------------

   Stockholders' equity:
      Capital stock                                       -              -
      Additional paid-in capital                    154,639        151,593
      Accumulated deficit                           (49,786)       (51,387)
      Treasury stock                                   (448)          (195)
      Accumulated other comprehensive income          1,783          2,097
                                              -------------  -------------
      Total stockholders' equity                    106,188        102,108
                                              -------------  -------------
   Total liabilities and stockholders' equity $     173,531  $     164,676
                                              =============  =============





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


                                              Three Months Ended March 31,
                                              ----------------------------
                                                  2008           2007
                                              -------------  -------------

Revenue:
     Application                              $      30,201  $      23,655
     Consulting                                       7,038          5,062
                                              -------------  -------------
       Total revenue                                 37,239         28,717
                                              -------------  -------------
Cost of revenue (note 1):
     Application                                      6,254          5,048
     Amortization of acquired intangibles                36             52
                                              -------------  -------------
       Total cost of application revenue              6,290          5,100
     Consulting                                       5,724          3,789
                                              -------------  -------------
       Total cost of revenue                         12,014          8,889
                                              -------------  -------------
                                              -------------  -------------
Gross profit                                         25,225         19,828
                                              -------------  -------------
Operating expenses (note 1):
     Sales and marketing                             10,670          8,517
     Research and development                         7,033          5,403
     General and administrative                       6,567          5,394
                                              -------------  -------------
       Total operating expenses                      24,270         19,314
                                              -------------  -------------
                                              -------------  -------------
Income from operations                                  955            514
                                              -------------  -------------

Other income / (expense):
     Interest income                                    778            673
     Interest expense                                   (45)           (19)
                                              -------------  -------------
       Total other income                               733            654
                                              -------------  -------------
Income before provision for income tax                1,688          1,168
     Provision for income taxes                          87            260
                                              -------------  -------------
Net income attributable to Class A common
 stockholders                                 $       1,601  $         908
                                              =============  =============
Net income attributable to Class A common
 stockholders - basic                         $        0.06  $        0.04
                                              =============  =============
Net income attributable to Class A common
 stockholders - diluted                       $        0.06  $        0.03
                                              =============  =============
Weighted average Class A common shares -
 basic                                               25,369         22,804
                                              =============  =============
Weighted average Class A common shares -
 diluted                                             28,899         26,014
                                              =============  =============
NOTES
1. Includes share-based compensation
   expense pursuant to SFAS 123(R)
           Application cost of revenue        $         127  $          63
           Consulting cost of revenue                   181             90
                                              -------------  -------------
           Cost of revenue subtotal                     308            153

           Sales and marketing operating
            expense                                     635            360
           Research and development
            operating expense                           299            243
           General and administrative
            operating expense                         1,234            629
                                              -------------  -------------
           Operating expense subtotal                 2,168          1,232

                                              -------------  -------------
   Total share-based compensation
    expense                                   $       2,476  $       1,385
                                              =============  =============





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


Reconciliation of GAAP net income and
 non-GAAP net income:
                                               Three Months Ended March 31,
                                              -----------------------------
                                                  2008           2007
                                              -------------  --------------
GAAP net income reported above                $       1,601  $          908
Add back:
     Share-based compensation expense
      (SFAS 123(R))                                   2,476           1,385
     Amortization of acquired intangibles               109              52
     Non-cash income tax and tax valuation
      adjustments                                      (262)              -
                                              -------------  --------------
                                                      2,323           1,437

                                              -------------  --------------
Non-GAAP net income                           $       3,924  $        2,345
                                              =============  ==============

Non-GAAP net income per share:
     Basic                                    $        0.15  $         0.10
                                              =============  ==============
     Fully diluted                            $        0.14  $         0.09
                                              =============  ==============



Reconciliation of basic and fully diluted
 share count:
                                              -------------  --------------
Weighted average Class A common shares -
 basic                                               25,369          22,804
                                              -------------  --------------
Add: Weighted average - Series B common stock           562           1,680
     Weighted average - warrants & options            2,968           1,530
                                              -------------  --------------
Weighted average Class A common shares -
 diluted                                             28,899          26,014
                                              -------------  --------------



                            Taleo Corporation
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (All amounts in thousands)
                                (Unaudited)


                                                   Three Months Ended
                                                        March 31,
                                                  2008           2007
                                              -------------  -------------
Cash flows from operating activities:
  Net income                                  $       1,601  $         908
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                     2,364          1,268
    Amortization of tenant inducements                  (38)           (55)
    Stock-based compensation expense                  2,476          1,385
    Director fees settled with stock                     59             40
    Bad debt expense                                    (86)            95
    Interest earned on restricted cash                    -              1
    Changes in working capital accounts:
      Accounts receivable                            (4,163)        (8,422)
      Prepaid expenses and other assets                (112)          (596)
      Investment credit receivable                     (682)         1,775
      Accounts payable and accrued
       liabilities                                    1,382          7,065
      Deferred revenue & customer deposits            4,479         10,513
                                              -------------  -------------
         Net cash provided by operating
          activities                                  7,280         13,977
                                              -------------  -------------
Cash flows from investing activities:
  Acquisition of property and equipment              (1,902)          (746)
  Restricted cash - decrease                              -          2,507
  Acquisition of business                                 -         (3,072)
                                              -------------  -------------
         Net cash used in investing
          activities                                 (1,902)        (1,311)
                                              -------------  -------------
Cash flows from financing activities:
  Principal payments on capital lease
   obligations                                          (14)          (142)
  Payments to repurchase common stock                  (253)           (75)
  Proceeds from stock options and warrants
   exercised                                            414          2,542
                                              -------------  -------------
         Net cash provided by financing
          activities                                    147          2,325
                                              -------------  -------------
Effect of exchange rate changes on cash and
 cash equivalents                                        23            157
                                              -------------  -------------
Increase in cash and cash equivalents                 5,548         15,148
Cash and cash equivalents:
  Beginning of period                                86,135         58,785
                                              -------------  -------------
  End of period                               $      91,683  $      73,933
                                              =============  =============
Supplemental cash flow disclosures:
  Cash paid for interest                      $           1  $           4
                                              -------------  -------------
  Cash paid for income taxes                  $           -  $           -
                                              -------------  -------------
Supplemental disclosure of non-cash financing
 and investing activities:
  Property and equipment purchases included
   in accounts payable and accrued
   liabilities                                $       2,811  $         229
  Class B common stock exchanged for Class A
   common stock                               $          96  $         219
  Treasury stock acquired to settle payroll
   taxes                                      $         253  $         166

Contact Information

  • Media Contact:
    Nicole Pack
    Horn Group
    415-905-4035
    e-mail: npack@horngroup.com

    Investor Relations Contact:
    Carolyn Bass
    Market Street Partners
    415-445-3234
    e-mail: ir@taleo.com