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CORRECTING and REPLACING -- Determine Announces Second Quarter Fiscal 2019 Financial Results

/EIN News/ -- Determine Cloud Platform Technology Continues to Attract New Customers in US and Europe and Increase Customer Migration and Expansion

CARMEL, Ind., Nov. 16, 2018 (GLOBE NEWSWIRE) -- On November 13, 2018, the Company issued a press release reporting financial results for the second fiscal quarter ended September 14, 2018. On November 15, 2018, the Company issued a new version of the release to update the presentation of two items: 1) non-GAAP EPS for the six months ended September 20, 2018 and 2) Reconciliation of Cash for the six months ended September 30, 2017.

___________________________________________________________________

CARMEL, Ind. – November 13, 2018 – Determine, Inc. (NASDAQ: DTRM), a pioneering leader in global Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) Cloud Platform solutions, announced financial results for its second quarter ended September 30th, 2018.

Q2 FY2019 GAAP Financial Highlights:

  • GAAP Revenue was $5.7 million in Q2 FY2019, compared to $6.0 million in Q1 FY19, representing a 5.1% decrease quarter-over-quarter, and compared to $6.9 million in Q2 FY2018 GAAP Revenue, representing a 16.8% decrease year-over-year.
  • GAAP gross profit percentage was 48.1% in Q2 FY2019, compared to 43.5% in Q1 FY2019, representing a 4.6 point increase quarter-over-quarter, and compared to 49.8% in Q2 FY2018, representing a 1.7 point decrease year-over-year.
  • Deferred revenues decreased to $8.0 million from $9.3 million in Q1 FY2019.
  • GAAP net loss was $3.6 million, or $0.24 per share in Q2 FY2019, compared to $4.1 million or $0.27 per share in Q1 FY2019, representing a gain of $0.03 per share quarter-over-quarter; in Q2 FY2018, the GAAP net loss was $2.7 million or $0.18 per share.
               
   (in thousands, except per share amounts)      
  GAAP Financial Measures     Q2 Q1 Q2 Change Change  
  FY 2019 FY 2019 FY 2018  Q/Q   Y/Y  
  Revenue - total $ 5,734   $ 6,040   $ 6,888     (5.1 %)   (16.8 %)  
  Revenue - recurring $ 5,044   $ 5,251   $ 5,545     (3.9 %)   (9.0 %)  
  Revenue - non-recurring $ 690   $ 789   $ 1,343     (12.5 %)   (48.6 %)  
  Gross profit - total $ 2,759   $ 2,627   $ 3,432     5.0 %   (19.6 %)  
  Gross profit - recurring $ 3,115   $ 3,145   $ 3,371     (1.0 %)   (7.6 %)  
  Gross (loss)/profit - non-recurring $ (356 ) $ (518 ) $ 61     (31.3 %)   (683.6 %)  
  Gross margin - total   48.1 %   43.5 %   49.8 % 4.6 pts (1.7 pts)  
  Gross margin - recurring   61.8 %   59.9 %   60.8 % 1.9 pts 1.0 pts  
  Gross margin - non recurring   (51.6 %)   (65.7 %)   4.5 % 14.1 pts (56.1 pts)  
  Net loss $ (3,583 ) $ (4,069 ) $ (2,671 )   (11.9 %)   34.1 %  
  EPS $ (0.24 ) $ (0.27 ) $ (0.18 ) $ 0.03   $ (0.06 )  
               

Q2 FY2019 Non-GAAP Financial Highlights:

  • Non-GAAP revenue was $5.7 million in Q2 FY2019, compared to $6.0 million in Q1 FY2019, representing a 5.1% decrease quarter-over-quarter, and compared to $6.9 million in Q2 FY2018, representing a 16.8% decrease year-over-year.
  • Non-GAAP gross profit percentage was 52.8% in Q2 FY2019, compared to 48.5% in Q1 FY2019, representing a 4.4% increase quarter-over-quarter, and 54.9% in Q2 FY2018, representing a 2.1% decrease year-over-year.
  • Non-GAAP net loss was $2.6 million in Q2 FY2019, or $0.17 per share, compared to a net loss of $2.9 million in Q1 FY2019, or $0.20 per share, representing a $0.03 increase quarter-over-quarter.  Q2 FY2018 had a non-GAAP net loss of $1.5 million or $0.10 per share, representing a $0.07 decrease year-over-year.
  • Billings decreased 25.4% to $4.5 million in Q2 FY2019 from $6.0 million in Q2 FY2019.  Billings, a non-GAAP measure, are defined as revenue plus the change in deferred revenues.
  • Non-GAAP EBITDA was a $1.5 million loss in Q2 FY2019, compared to a loss of $0.6 million in Q2 FY2018, representing a decrease of $0.9 million year-over-year.
           
   (in thousands, except per share amounts)        
  Non-GAAP Financial Measures  Q2 Q1 Q2 Change Change  
   FY 2019  FY 2019  FY 2018  Q/Q  Y/Y  
  Revenue - total $ 5,734   $ 6,040   $ 6,888     (5.1 %)   (16.8 %)  
  Revenue - recurring $ 5,044   $ 5,251   $ 5,545     (3.9 %)   (9.0 %)  
  Revenue - non-recurring $ 690   $ 789   $ 1,343     (12.5 %)   (48.6 %)  
  Gross profit - total $ 3,030   $ 2,929   $ 3,784     3.5 %   (19.9 %)  
  Gross profit - recurring $ 3,372   $ 3,434   $ 3,675     (1.8 %)   (8.2 %)  
  Gross (loss)/profit - non-recurring $ (342 ) $ (505 ) $ 109     32.3 %   (413.8 %)  
  Gross margin - total   52.8 %   48.5 %   54.9 %   4.4 pts   (2.1 pts)  
  Gross margin - recurring   66.9 %   65.4 %   66.3 %   1.5 pts   0.6 pts  
  Gross margin - non recurring   (49.6 %)   (64.0 %)   8.1 %   14.4 pts   (57.7 pts)  
  Net loss $ (2,557 ) $ (2,944 ) $ (1,506 )   13.2 %   (69.8 %)  
  EPS $ (0.17 ) $ (0.20 ) $ (0.10 ) $ 0.03   $ (0.07 )  
  Billings $ 4,468   $ 5,743   $ 5,991     (22.2 %)   (25.4 %)  
               

“Helping companies - and entire industries - work smarter and more efficiently is the guiding principle on which Determine was founded. We are now aggressively expanding the application of those two concepts across the company as we position for increased success, most notably in our customer acquisition and management teams.

Recently, Determine announced that Gérard Dahan has taken over leadership of worldwide marketing, sales and customer management as Determine’s newly named Global Chief Revenue and Marketing Officer. This is one part of our diligence in reshaping and streamlining our ecosystem of stakeholders, roles, responsibilities, KPIs and compensation. While it’s still early in the process, the entire company is rallying around the new Sales, Marketing and Customer Management structure to support its success.

In terms of fiscal efficiency, Determine has been vigorously eliminating costs, including over $2 million in annual expenses across the board since mid-year. The company will continue to make additional cost management adjustments opportunistically.

We are continuing to efficiently and effectively deliver the Determine message to prospects and customers who seek to derive bottom-line value from our best-in-class modular Source-to-Pay and Enterprise Contract Management Solutions.”

Patrick Stakenas, President and CEO and Director, Determine, Inc.

Determine Business Highlights:

Conference Call and Webcast: Tuesday, November 13, 2018 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=132114 
 
Replay Dial-in Information:
 
Toll-Free: 1-844-512-2921
 
Toll/International: 1-412-317-6671
 
From: 11/13/18 at 8:00 pm Eastern Time
 
To: 11/20/18 at 11:59 pm Eastern Time
 
Replay Pin Number: 13684754
 
Relatedhttp://investor.determine.com
 

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 gross profit is 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 is 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.

Supporting Resources

Determine blog

Determine on LinkedIn

Determine on Twitter

Determine Resources

About Determine, Inc.

Determine, Inc. (NASDAQ: DTRM) is a leading global provider of SaaS Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) solutions. The Determine Cloud Platform provides procurement, legal and finance professionals analytics of their supplier, contract and financial performance. Our technologies empower customers to drive new revenue, identify savings, improve compliance and mitigate risk.

The Determine Cloud Platform seamlessly integrates with major ERP or third-party systems such as SAP, Oracle, Sage, QAD and Microsoft. Modular solutions can be configured to add more as needed to provide additional value beyond spend management. Our unified master database and business process approach empower users at every level to make more informed and smarter decisions.

For more information, please visit: determine.com.

Contact

Media Relations:
Mike Mitchell
Determine, Inc.
+1.650.532.1590
pr@determine.com

   
   
Determine, Inc.  
Condensed Consolidated Statements of Operations and Comprehensive Loss  
(In thousands, except per share amounts)  
(Unaudited)  
      Three Months Ended   Six Months Ended    
      9/30/2018   9/30/2017   9/30/2018   9/30/2017    
                       
Revenues:                    
  Recurring revenues $ 5,044     $ 5,545     $ 10,295     $ 10,845      
  Non-recurring revenues   690       1,343       1,479       3,031      
  Total revenues   5,734       6,888       11,774       13,876      
                                       
Cost of revenues:                                  
  Cost of recurring revenues   1,929       2,174       4,035       3,960      
  Cost of non-recurring revenues   1,046       1,282       2,353       2,799      
  Total cost of revenues   2,975       3,456       6,388       6,759      
                                       
Gross profit:                                  
  Recurring gross profit   3,115       3,371       6,260       6,885      
  Non-recurring gross (loss) profit   (356 )     61       (874 )     232      
  Total gross profit   2,759       3,432       5,386       7,117      
                                       
Operating expenses:                                  
  Research and development   1,195       1,008       2,371       2,074      
  Sales and marketing   2,491       2,694       5,582       5,190      
  General and administrative   2,225       1,805       4,230       3,877      
  Total operating expenses   5,911       5,507       12,183       11,141      
                                       
Loss from operations   (3,152 )     (2,075 )     (6,797 )     (4,024 )    
                                       
Other expense, net   (419 )     (568 )     (755 )     (746 )    
Net loss before income tax   (3,571 )     (2,643 )     (7,552 )     (4,770 )    
                                       
Provision for benefit from income taxes   (12 )     (28 )     (100 )     (11 )    
Net loss   $ (3,583 )   $ (2,671 )   $ (7,652 )   $ (4,781 )    
                                       
Basic and diluted net loss per share $ (0.24 )   $ (0.18 )   $ (0.50 )   $ (0.35 )    
                                       
                       
Determine, Inc.            
GAAP to Non-GAAP Reconciliations            
(In thousands)            
(Unaudited)            
      Three Months Ended   Six Months Ended    
      9/30/2018   9/30/2017   9/30/2018   9/30/2017    
Reconciliation of total revenue:                  
  U.S. GAAP as reported $ 5,734     $ 6,888     $ 11,774     $ 13,876      
Non-GAAP revenue $ 5,734     $ 6,888     $ 11,774     $ 13,876      
                       
Reconciliation of gross profit:                  
  U.S. GAAP as reported $ 2,759     $ 3,432     $ 5,386     $ 7,117      
  Adjustments:                  
  Amortization of acquisition   250       260       503       511      
  Stock based compensation   17       92       58       121      
  Severance   4       -       12       38      
Non-GAAP gross profit $ 3,030     $ 3,784     $ 5,959     $ 7,787      
                       
Reconciliation to non-GAAP net loss:                  
Net loss   $ (3,583 )   $ (2,671 )   $ (7,652 )   $ (4,781 )    
Stock-based compensation expense   534       621       1,071       1,206      
Amortization on intangibles   457       542       1,000       1,074      
Severance costs   35       2       80       43      
Non-GAAP net loss $ (2,557 )   $ (1,506 )   $ (5,501 )   $ (2,458 )    
                       
Non-GAAP basic and diluted net loss per share $ (0.17 )   $ (0.10 )   $ (0.36 )   $ (0.18 )    
                       
Weighted-average shares of common stock used in computing basic and diluted net loss per share attributable to common shareholders   15,101       14,784       15,154       13,545      
                       
                       
Determine, Inc.  
Condensed Consolidated Statements of Operations and Comprehensive Loss  
(In thousands)  
(Unaudited)  
                       
      Three Months Ended   Six Months Ended    
      September 30,   September 30,   September 30,   September 30,    
        2018       2017       2018       2017      
Statements of comprehensive loss:                  
Consolidated net loss $ (3,583 )   $ (2,671 )   $ (7,652 )   $ (4,781 )    
Foreign currency translation adjustments, net   (60 )     460       (457 )     771      
Other comprehensive income   -       103       -       (11 )    
Comprehensive loss $ (3,643 )   $ (2,108 )   $ (8,109 )   $ (4,021 )    
                       
                       
Determine, Inc.  
 Condensed Consolidated Balance Sheets  
(In thousands)  
                       
      September 30,   March 31,            
      2018   2018            
      (Unaudited)   (Audited)            
  ASSETS                  
  Current assets                  
    Cash and cash equivalents $ 7,532     $ 9,928              
    Accounts receivable, net of allowance for doubtful accounts   3,880       6,605              
    Restricted cash   26       28              
    Prepaid expenses and other current assets   2,185       1,542              
    Total current assets   13,623       18,103              
                       
  Property and equipment, net   120       90              
  Capitalized software development costs, net   3,343       2,994              
  Goodwill   15,026       15,458              
  Other intangibles, net   2,824       3,952              
  Other assets   1,646       1,467              
    Total assets $ 36,582     $ 42,064              
                       
                       
  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                  
  Current liabilities                  
    Credit facility $ 13,805     $ 12,128              
    Accounts payable   2,453       2,371              
    Accrued payroll and related liabilities   1,950       1,986              
    Other accrued liabilities   2,749       2,239              
    Deferred revenue   7,957       9,487              
    Income tax payable   52       48              
    Total current liabilities   28,966       28,259              
                       
    Long-term deferred revenue   51       84              
    Convertible note, net of debt discount   7,922       7,475              
    Other long-term liabilities   1,739       1,306              
    Total liabilities   38,678       37,124              
                               
  Total stockholders' equity (deficit)   (2,096 )     4,940              
    Total liabilities and stockholders' equity (deficit) $ 36,582     $ 42,064              
                               
                               
Determine, Inc.  
 Condensed Consolidated Statements of Cash Flows  
(In thousands)  
(Unaudited)  
                       
      Six Months Ended        
      September 30, 2018   September 30, 2017            
                               
Operating activities                          
Net loss   $   (7,652 )   $   (4,781 )            
Adjustments to reconcile net loss to net cash used in operating activities:                          
                         
                               
  Depreciation and amortization     2,142         1,993              
  Stock-based compensation expense     1,000         1,206              
  Interest expense paid in kind as convertible note debt     447         394              
  Income tax expense (benefit)     101         13              
  Unrealized currency translation losses (gains)     199         (357 )            
  Changes in assets and liabilities:                          
  Accounts receivable, net     1,952         438              
  Prepaid expenses and other current assets     128         (51 )            
  Other assets     60         571              
  Accounts payable     82         (272 )            
  Accrued payroll and related liabilities     (36 )       220              
  Other accrued liabilities and other long-term liabilities     584         187              
  Deferred revenue     (1,563 )       (1,113 )            
Net cash used in operating activities     (2,556 )       (1,552 )            
                               
Investing activities                          
  Purchase of property and equipment     (58 )       (17 )            
  Capitalized software development costs, net     (1,379 )       (1,162 )            
Net cash used in investing activities     (1,437 )       (1,179 )            
                               
Financing activities                          
  Credit facility borrowing     21,822         17,002              
  Credit facility payment     (20,156 )       (16,893 )            
  Proceeds from issuance of stock, net of issuance costs     -          4,909              
  Issuance of stock under employee stock purchase plan     72         73              
  Net employee withholding taxes paid in connection to issuance of restricted stock     (7 )       (41 )            
  Repayment of loan     -          (97 )            
  Proceeds from exercise of stock options     -          1              
Net cash provided by financing activities     1,731         4,954              
                               
  Effect of exchange rate changes on cash     (136 )       102              
                               
Net (decrease) increase in cash, cash equivalents and restricted cash   (2,398 )     2,325              
Cash, cash equivalents and restricted cash at beginning of the period     9,956         9,463              
Cash, cash equivalents and restricted cash at end of the period $   7,558     $   11,788              
                               
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:                          
Cash and cash equivalents $   7,532     $   11,761              
Restricted cash     26         27              
Total cash, cash equivalents and restricted cash $   7,558     $   11,788              
                               
                               
Determine, Inc.  
Billings Reconciliation  
(In thousands)  
(Unaudited)  
                       
      Three Months Ended   Six Months Ended    
      9/30/2018   9/30/2017   9/30/2018   9/30/2017    
                       
Total revenues $   5,734     $   6,888     $   11,774     $   13,876      
Deferred revenue:                  
End of period     8,008         8,967         8,008         8,967      
Beginning of period     9,274         9,864         9,571         10,080      
Change in deferred revenue     (1,266 )       (897 )       (1,563 )       (1,113 )    
Total billings (total revenues plus the change in deferred revenue) $   4,468     $   5,991     $   10,211     $   12,763      
                       
                       
Determine, Inc.  
Non-GAAP EBITDA Reconciliation  
(In thousands)  
(unaudited)  
                       
      Three Months Ended   Six Months Ended    
      9/30/2018   9/30/2017   9/30/2018   9/30/2017    
Reconciliation to non-GAAP EBITDA net loss:                  
Non-GAAP net loss $   (2,557 )   $   (1,506 )   $   (5,501 )   $   (2,458 )    
Interest       459       453         794       893      
Depreciation     538       424         1,043       771      
Income tax expense (benefit)     11       27         100       10      
Non-GAAP EBITDA net loss $   (1,549 )   $   (602 )   $   (3,564 )   $   (784 )    
                       

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