UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 000-31409
MOTIVE, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 74-2834515 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 12515 Research Boulevard, Building 5 Austin, Texas |
78759-2220 | |
| (Address of principal executive offices) | (Zip code) | |
(512) 339-8335
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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
As of September 30, 2004, there were 25,681,464 outstanding shares of the common stock of Motive, Inc.
FORM 10-Q QUARTERLY REPORT
QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | ||||
| Item 1. |
Financial Statements |
|||
| Consolidated Condensed Balance Sheets at September 30, 2004 (unaudited) and December 31, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to the Consolidated Condensed Financial Statements (unaudited) |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. |
31 | |||
| Item 4. |
32 | |||
| PART II – OTHER INFORMATION | ||||
| Item 1. |
33 | |||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
33 | ||
| Item 3. |
34 | |||
| Item 4. |
34 | |||
| Item 5. |
34 | |||
| Item 6. |
34 | |||
Page 2
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
| September 30, 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 79,721 | $ | 28,433 | ||||
| Accounts receivable, net |
11,783 | 21,276 | ||||||
| Prepaid expenses and other current assets |
3,142 | 2,437 | ||||||
| Total current assets |
94,646 | 52,146 | ||||||
| Restricted cash |
— | 15,000 | ||||||
| Property and equipment, net |
6,567 | 7,008 | ||||||
| Goodwill |
56,569 | 59,143 | ||||||
| Acquired technology, net |
8,221 | 8,903 | ||||||
| Other intangibles, net |
9,216 | 11,593 | ||||||
| Other assets |
3,486 | 4,650 | ||||||
| Total assets |
$ | 178,705 | $ | 158,443 | ||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 5,318 | $ | 5,651 | ||||
| Accrued liabilities |
7,203 | 17,684 | ||||||
| Deferred revenue |
12,673 | 13,886 | ||||||
| Current portion of long-term debt |
1,566 | 278 | ||||||
| Total current liabilities |
26,760 | 37,499 | ||||||
| Deferred revenue |
6,434 | 7,347 | ||||||
| Long-term debt, net of current portion |
4,500 | 6,026 | ||||||
| Related party subordinated debt, net |
— | 10,757 | ||||||
| Total liabilities |
37,694 | 61,629 | ||||||
| Redeemable convertible preferred stock: |
||||||||
| Preferred Stock: $0.001 par value; 47,000,000 shares authorized, 10,322,056 shares issued and outstanding at December 31, 2003 |
— | 119,785 | ||||||
| Stockholders’ equity (deficit): |
||||||||
| Common stock: $0.001 par value; 150,000,000 shares authorized, 25,681,464 shares issued and outstanding at September 30, 2004 (unaudited); 25,000,000 shares authorized, 9,723,131 shares issued and outstanding at December 31, 2003 |
26 | 10 | ||||||
| Additional paid-in capital |
234,261 | 69,734 | ||||||
| Deferred stock compensation |
(2,227 | ) | (4,168 | ) | ||||
| Accumulated comprehensive loss |
(593 | ) | (181 | ) | ||||
| Accumulated deficit |
(90,456 | ) | (88,366 | ) | ||||
| Total stockholders’ equity (deficit) |
141,011 | (22,971 | ) | |||||
| Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
$ | 178,705 | $ | 158,443 | ||||
See accompanying notes
Page 3
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||
| Revenue: |
|||||||||||||||
| License fees |
$ | 14,488 | $ | 8,995 | $ | 39,569 | $ | 26,613 | |||||||
| Services: |
|||||||||||||||
| Services |
8,522 | 6,231 | 24,651 | 18,145 | |||||||||||
| Acquired in business combination |
1,510 | 4,732 | 6,998 | 20,562 | |||||||||||
| Total services revenue |
10,032 | 10,963 | 31,649 | 38,707 | |||||||||||
| Total revenue |
24,520 | 19,958 | 71,218 | 65,320 | |||||||||||
| Cost of revenue: |
|||||||||||||||
| License fees |
152 | 682 | 503 | 1,751 | |||||||||||
| Amortization of acquired technology |
234 | 117 | 682 | 331 | |||||||||||
| Services |
6,932 | 7,638 | 21,553 | 23,216 | |||||||||||
| Total cost of revenue |
7,318 | 8,437 | 22,738 | 25,298 | |||||||||||
| Gross margin |
17,202 | 11,521 | 48,480 | 40,022 | |||||||||||
| Operating expenses: |
|||||||||||||||
| Sales and marketing |
8,490 | 8,041 | 24,307 | 23,925 | |||||||||||
| Research and development |
4,750 | 4,518 | 13,667 | 12,041 | |||||||||||
| General and administrative |
2,212 | 2,067 | 6,427 | 6,038 | |||||||||||
| Amortization of intangibles |
802 | 571 | 2,377 | 1,618 | |||||||||||
| Amortization of deferred stock compensation (1) |
443 | 77 | 1,931 | 358 | |||||||||||
| Business restructuring charge |
— | — | — | 1,422 | |||||||||||
| Total operating expenses |
16,697 | 15,274 | 48,709 | 45,402 | |||||||||||
| Income (loss) from operations |
505 | (3,753 | ) | (229 | ) | (5,380 | ) | ||||||||
| Interest income (expense), net |
59 | (470 | ) | (2,469 | ) | (1,418 | ) | ||||||||
| Other income, net |
1,300 | 5,939 | 1,717 | 6,081 | |||||||||||
| Income (loss) before income taxes |
1,864 | 1,716 | (981 | ) | (717 | ) | |||||||||
| Provision for income taxes |
241 | 130 | 1,109 | 1,517 | |||||||||||
| Net income (loss) |
$ | 1,623 | $ | 1,586 | $ | (2,090 | ) | $ | (2,234 | ) | |||||
| Basic income (loss) per share |
$ | 0.06 | $ | 0.16 | $ | (0.14 | ) | $ | (0.23 | ) | |||||
| Diluted income (loss) per share |
$ | 0.06 | $ | 0.08 | $ | (0.14 | ) | $ | (0.23 | ) | |||||
| Shares used in computing basic income (loss) per share |
25,627 | 9,731 | 15,401 | 9,892 | |||||||||||
| Shares used in computing diluted income (loss) per share |
27,058 | 20,765 | 15,401 | 9,892 | |||||||||||
(1) If the amortization of deferred stock compensation were allocated to specific operating statement line items, it would be allocated as follows: |
| ||||||||||||||
| Cost of services revenue |
$ | 15 | $ | 8 | $ | 100 | $ | (9 | ) | ||||||
| Sales and marketing |
97 | 7 | 665 | 128 | |||||||||||
| Research and development |
97 | 10 | 595 | 41 | |||||||||||
| General and administrative |
234 | 52 | 571 | 198 | |||||||||||
| $ | 443 | $ | 77 | $ | 1,931 | $ | 358 | ||||||||
See accompanying notes
Page 4
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| (unaudited) | ||||||||
| Cash flows from operating activities |
||||||||
| Net loss |
$ | (2,090 | ) | $ | (2,234 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation |
2,578 | 3,013 | ||||||
| Amortization of deferred stock compensation |
1,931 | 358 | ||||||
| Amortization and write-off of debt discount |
1,743 | 360 | ||||||
| Amortization of intangibles |
3,059 | |||||||