UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended December 31, 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 000-26299
ARIBA, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0439730 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
807 11th Avenue
Sunnyvale, California 94089
(Address of principal executive offices)
(650) 390-1000
(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. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as described in Exchange Act Rule 12b-2). Yes x No ¨
The number of shares outstanding of the registrant’s common stock as of January 31, 2005 was 66,066,494.
ARIBA, INC.
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
| December 31, 2004 |
September 30, 2004 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 82,466 | $ | 74,031 | ||||
| Short-term investments |
47,219 | 37,227 | ||||||
| Restricted cash |
1,248 | 45,623 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $3,552 and $3,933 as of December 31, 2004 and September 30, 2004, respectively |
54,904 | 48,071 | ||||||
| Prepaid expenses and other current assets |
7,301 | 10,795 | ||||||
| Total current assets |
193,138 | 215,747 | ||||||
| Property and equipment, net |
21,747 | 21,909 | ||||||
| Long-term investments |
29,439 | 29,676 | ||||||
| Restricted cash, less current portion |
32,692 | 26,862 | ||||||
| Goodwill |
575,820 | 574,679 | ||||||
| Other intangible assets, net |
56,976 | 62,249 | ||||||
| Other assets |
2,557 | 2,767 | ||||||
| Total assets |
$ | 912,369 | $ | 933,889 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 16,675 | $ | 15,433 | ||||
| Accrued compensation and related liabilities |
29,320 | 31,171 | ||||||
| Accrued liabilities |
27,652 | 69,570 | ||||||
| Litigation liability |
37,000 | — | ||||||
| Restructuring obligations |
18,468 | 16,825 | ||||||
| Deferred revenue |
43,260 | 49,664 | ||||||
| Deferred income—Softbank |
12,878 | — | ||||||
| Total current liabilities |
185,253 | 182,663 | ||||||
| Deferred rent obligations |
21,590 | 21,406 | ||||||
| Restructuring obligations, less current portion |
45,812 | 41,042 | ||||||
| Deferred revenue, less current portion |
21,707 | 22,858 | ||||||
| Deferred income—Softbank, less current portion |
24,075 | — | ||||||
| Total liabilities |
298,437 | 267,969 | ||||||
| Minority interests |
874 | 19,547 | ||||||
| Commitments and contingencies (Note 4) |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock |
131 | 125 | ||||||
| Additional paid-in capital |
4,989,610 | 4,963,002 | ||||||
| Deferred stock-based compensation |
(23,166 | ) | (5,959 | ) | ||||
| Accumulated other comprehensive income |
5,664 | 1,634 | ||||||
| Accumulated deficit |
(4,359,181 | ) | (4,312,429 | ) | ||||
| Total stockholders’ equity |
613,058 | 646,373 | ||||||
| Total liabilities and stockholders’ equity |
$ | 912,369 | $ | 933,889 | ||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
| Three Months Ended December 31, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues: |
||||||||
| License |
$ | 17,122 | $ | 16,802 | ||||
| License—Softbank (Note 9) |
— | 1,874 | ||||||
| Subscription and maintenance |
30,503 | 21,044 | ||||||
| Subscription and maintenance—Softbank (Note 9) |
925 | 1,023 | ||||||
| Services and other |
38,379 | 11,988 | ||||||
| Total revenues |
86,929 | 52,731 | ||||||
| Cost of revenues: |
||||||||
| License |
694 | 1,367 | ||||||
| Subscription and maintenance |
6,595 | 5,384 | ||||||
| Services and other |
29,768 | 10,161 | ||||||
| Amortization of acquired technology and customer intangible assets |
4,700 | — | ||||||
| Total cost of revenues |
41,757 | 16,912 | ||||||
| Gross profit |
45,172 | 35,819 | ||||||
| Operating expenses: |
||||||||
| Sales and marketing |
24,673 | 13,555 | ||||||
| Research and development |
13,043 | 12,277 | ||||||
| General and administrative |
8,614 | 4,543 | ||||||
| Amortization of other intangible assets |
185 | — | ||||||
| Stock-based compensation (1) |
4,378 | 30 | ||||||
| Restructuring and integration |
1,817 | — | ||||||
| Litigation provision |
37,000 | — | ||||||
| Total operating expenses |
89,710 | 30,405 | ||||||
| (Loss) income from operations |
(44,538 | ) | 5,414 | |||||
| Interest and other income, net |
2,615 | 818 | ||||||
| Net (loss) income before income taxes and minority interests |
(41,923 | ) | 6,232 | |||||
| Provision (benefit) for income taxes |
4,813 | (272 | ) | |||||
| Minority interests in net income of consolidated subsidiaries |
16 | 413 | ||||||
| Net (loss) income |
$ | (46,752 | ) | $ | 6,091 | |||
| Net (loss) income per share—basic (2) |
$ | (0.75 | ) | $ | 0.14 | |||
| Weighted average shares—basic (2) |
62,707 | 45,000 | ||||||
| Net (loss) income per share—diluted (2) |
$ | (0.75 | ) | $ | 0.13 | |||
| Weighted average shares—diluted (2) |
62,707 | 46,280 | ||||||
| (1) | For the three months ended December 31, 2004 and 2003, stock-based compensation expense (benefit), net of the effects of cancellations, is attributable to various operating expense categories as follows (in thousands): |
| Three Months Ended December 31, |
|||||||
| 2004 |
2003 |
||||||
| Cost of revenues |
$ | 1,153 | $ | 39 | |||
| Sales and marketing |
2,113 | (20 | ) | ||||
| Research and development |
445 | 1 | |||||
| General and administrative |
667 | 10 | |||||
| Total |
$ | 4,378 | $ | 30 | |||
| (2) | Reflects the one-for-six reverse split of the Company’s outstanding common stock effected July 1, 2004. |
See accompanying notes to condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
| Three Months Ended December 31, |
||||||||
| 2004 |
2003 |
|||||||
| Operating activities: |
||||||||
| Net (loss) income |
$ | (46,752 | ) | $ | 6,091 | |||
| Adjustments to reconcile net (loss) income to net cash from operating activities: |
||||||||
| Provisions for (recovery of) doubtful accounts |
500 | (190 | ) | |||||
| Depreciation |
2,403 | 1,701 | ||||||
| Amortization of intangible assets |
5,471 | — | ||||||
| Stock-based compensation |
4,378 | 30 | ||||||
| Minority interests in net income of consolidated subsidiaries |
16 | 413 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(7,358 | ) | (1,509 | ) | ||||
| Prepaid expenses and other assets |
3,702 | (352 | ) | |||||
| Accounts payable |
1,242 | (474 | ) | |||||
| Accrued compensation and related liabilities |
(2,243 | ) | (1,222 | ) | ||||
| Accrued liabilities |
(5,176 | ) | 27,675 | |||||
| Restructuring obligations |
6,413 | (3,884 | ) | |||||
| Deferred revenue |
(5,498 | ) | (9,890 | ) | ||||
| Deferred income—Softbank |
20,000 | — | ||||||
| Net cash from operating activities |
(22,902 | ) | 18,389 | |||||
| Investing activities: |
||||||||
| Purchases of property and equipment |
(2,285 | ) | (471 | ) | ||||
| Sales of investments, net of purchases |
(9,965 | ) | 7,975 | |||||
| Acquisition of minority interest |
(3,500 | ) | — | |||||
| Allocation from (to) restricted cash, net |
38,545 | (25,791 | ) | |||||
| Net cash from investing activities |
22,795 | (18,287 | ) | |||||
| Financing activities: |
||||||||
| Proceeds from issuance of common stock |
5,029 | 410 | ||||||
| Net cash from financing activities |
5,029 | 410 | ||||||
| Effect of foreign exchange rate changes on cash and cash equivalents |
3,513 | 1,711 | ||||||
| Net change in cash and cash equivalents |
8,435 | |||||||