SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended February 29, 2004
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
00030221
(Commission File number)
SABA SOFTWARE, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 94-3267638 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 2400 Bridge Parkway, Redwood Shores, CA |
94065-1166 | |
| (Address of principal executive offices) | (Zip Code) | |
(650) 696-3840
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
On March 31, 2004, 13,502,834 shares of the registrant’s Common Stock, $.001 par value, were outstanding.
FORM 10-Q
QUARTER ENDED FEBRUARY 29, 2004
INDEX
| Page | ||||
| Part I. | ||||
| Item 1. | ||||
| Condensed Consolidated Balance Sheets as of February 29, 2004 and May 31, 2003 |
1 | |||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
8 | ||
| Item 3. | 24 | |||
| Item 4. | 25 | |||
| Part II. | ||||
| Item 1. | 25 | |||
| Item 2. | 26 | |||
| Item 3. | 26 | |||
| Item 4. | 26 | |||
| Item 5. | 26 | |||
| Item 6. | 26 | |||
| 27 | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
| FEBRUARY 29, 2004 |
MAY 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 16,237 | $ | 17,566 | ||||
| Short-term investments |
152 | 3,631 | ||||||
| Accounts receivable, net |
9,806 | 9,315 | ||||||
| Prepaid expenses and other current assets |
1,050 | 1,218 | ||||||
| Total current assets |
27,245 | 31,730 | ||||||
| Property and equipment, net |
1,223 | 2,385 | ||||||
| Goodwill, net |
5,288 | 5,288 | ||||||
| Purchased intangible assets, net |
127 | 542 | ||||||
| Other assets |
958 | 891 | ||||||
| Total assets |
$ | 34,841 | $ | 40,836 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,308 | $ | 1,713 | ||||
| Accrued expenses |
5,908 | 6,527 | ||||||
| Deferred revenue |
11,139 | 9,497 | ||||||
| Short-term debt |
3,700 | — | ||||||
| Current portion of debt and lease obligations |
726 | 675 | ||||||
| Total current liabilities |
22,781 | 18,412 | ||||||
| Deferred revenue |
— | 31 | ||||||
| Accrued rent |
2,564 | 2,691 | ||||||
| Debt and lease obligations, less current portion |
804 | 1,242 | ||||||
| Total liabilities |
26,149 | 22,376 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, issuable in series: $0.001 par value; 5,000,000 authorized shares at February 29, 2004; none issued or outstanding |
— | — | ||||||
| Common stock: $0.001 par value; 200,000,000 authorized shares at February 29, 2004; 13,494,849 shares issued at February 29, 2004 and 13,328,680 shares issued at May 31, 2003 |
54 | 53 | ||||||
| Additional paid-in capital |
191,908 | 191,241 | ||||||
| Deferred stock compensation |
— | (45 | ) | |||||
| Treasury stock: 102,996 shares held at February 29, 2004 and at May 31, 2003, at cost |
(232 | ) | (232 | ) | ||||
| Accumulated deficit |
(182,820 | ) | (172,329 | ) | ||||
| Accumulated other comprehensive loss |
(218 | ) | (228 | ) | ||||
| Total stockholders’ equity |
8,692 | 18,460 | ||||||
| Total liabilities and stockholders’ equity |
$ | 34,841 | $ | 40,836 | ||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| THREE MONTHS ENDED |
NINE MONTHS ENDED |
|||||||||||||||
| FEBRUARY 29, 2004 |
FEBRUARY 28, 2003 |
FEBRUARY 29, 2004 |
FEBRUARY 28, 2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| License |
$ | 2,320 | $ | 3,150 | $ | 6,316 | $ | 13,039 | ||||||||
| Services |
5,515 | 6,478 | 17,940 | 20,752 | ||||||||||||
| Total revenues |
7,835 | 9,628 | 24,256 | 33,791 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| Cost of license |
27 | 24 | 178 | 100 | ||||||||||||
| Cost of services |
2,845 | 3,001 | 9,188 | 9,787 | ||||||||||||
| Amortization of acquired developed technology |
96 | 388 | 290 | 1,164 | ||||||||||||
| Total cost of revenues |
2,968 | 3,413 | 9,656 | 11,051 | ||||||||||||
| Gross profit |
4,867 | 6,215 | 14,600 | 22,740 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
2,310 | 3,002 | 7,516 | 9,027 | ||||||||||||
| Sales and marketing |
3,933 | 6,032 | 12,405 | 20,722 | ||||||||||||
| General and administrative |
872 | 1,723 | 3,188 | 4,845 | ||||||||||||
| Amortization (reversal) of deferred stock compensation and other stock compensation charges |
4 | (74 | ) | 45 | 1,890 | |||||||||||
| Amortization of purchased intangible assets |
41 | 234 | 125 | 751 | ||||||||||||
| Settlement of litigation |
— | — | 1,701 | — | ||||||||||||
| Total operating expenses |
7,160 | 10,917 | 24,980 | 37,235 | ||||||||||||
| Loss from operations |
(2,293 | ) | (4,702 | ) | (10,380 | ) | (14,495 | ) | ||||||||
| Interest income and other, net |
47 | 45 | 16 | 167 | ||||||||||||
| Loss before provision for income taxes |
(2,246 | ) | (4,657 | ) | (10,364 | ) | (14,328 | ) | ||||||||
| Provision for income taxes |
(45 | ) | (90 | ) | (127 | ) | (243 | ) | ||||||||
| Net loss |
$ | (2,291 | ) | $ | (4,747 | ) | $ | (10,491 | ) | $ | (14,571 | ) | ||||
| Basic and diluted net loss per share |
$ | (0.17 | ) | $ | (0.36 | ) | $ | (0.78 | ) | $ | (1.16 | ) | ||||
| Shares used in computing basic and diluted net loss per share |
13,473 | 13,183 | 13,384 | 12,611 | ||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| NINE MONTHS ENDED |
||||||||
| FEBRUARY 29, 2004 |
FEBRUARY 28, 2003 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ | (10,491 | ) | $ | (14,571 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
1,346 | 2,173 | ||||||
| Amortization of purchased intangible assets |
125 | 751 | ||||||
| Amortization of acquired developed technology |
290 | 1,164 | ||||||
| Amortization of deferred stock compensation |
45 | 895 | ||||||
| Other stock compensation charges |
— | 83 | ||||||
| Compensation expense resulting from acceleration of vesting of common stock |
— | 741 | ||||||
| Acceleration of deferred stock compensation for options cancelled in the option exchange program |
— | 171 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(476 | ) | 4,406 | |||||
| Prepaid expenses and other current assets |
168 | (318 | ) | |||||
| Other assets |
(11 | ) | (54 | ) | ||||
| Accounts payable |
(405 | ) | (193 | ) | ||||
| Accrued expenses |
1 | (759 | ) | |||||
| Accrued rent |
(126 | ) | (34 | ) | ||||
| Deferred revenue |
1,611 | (968 | ) | |||||
| Other liabilities |
(61 | ) | (37 | ) | ||||
| Net cash used in operating activities |
(7,984 | ) | (6,550 | ) | ||||
| Investing activities: |
||||||||
| Purchases of short-term investments |
— | (13,214 | ) | |||||
| Proceeds from redemptions and maturities of short-term investments |
3,474 | 17,174 | ||||||
| Purchases of property and equipment |
(184 | ) | (361 | ) | ||||
| Net cash provided by investing activities |
3,290 | 3,599 | ||||||
| Financing activities: |
||||||||
| Proceeds from issuance of common stock under stock plans |
92 | 297 | ||||||
| Proceeds from issuance of common stock in private placement, net of issuance costs |
— | |||||||