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8-K - FORM 8-K - RIGHTNOW TECHNOLOGIES INC | c62776e8vk.htm |
EX-99.2 - EX-99.2 - RIGHTNOW TECHNOLOGIES INC | c62776exv99w2.htm |
Exhibit 99.1
For Further Information, Contact:
Investor Relations:
|
Corporate Communications: | |
Todd Friedman or Stacie Bosinoff
|
Jaia Zimmerman | |
The Blueshirt Group
|
RightNow Technologies | |
415.217.7722
|
650.653.4441 Office | |
todd@blueshirtgroup.com
|
650.464.8462 Cell | |
stacie@blueshirtgroup.com
|
jzimmerman@rightnow.com |
RightNow Announces
Fourth Quarter and Full Year 2010 Financial Results
Fourth Quarter and Full Year 2010 Financial Results
Annual recurring revenue growth of 28%; revenue and earnings per share ahead of guidance.
BOZEMAN, Mont. (February 2, 2011)
RightNow® (NASDAQ: RNOW) today announced results for the
fourth quarter and year ended December 31, 2010.
Fourth quarter 2010 financial highlights included:
| Total revenue was $51.4 million, an increase of 24% over Q4 2009 | ||
| Recurring revenue was $41 million, an increase of 27% over Q4 2009 | ||
| Non-GAAP operating margin, which excludes the impact of stock-based compensation charges, was 14%, an increase of 600 basis points over Q4 2009 | ||
| Non-GAAP diluted earnings per share, which excludes stock-based compensation charges and a tax benefit, was $0.17 | ||
| Current software backlog was $149 million, an increase of 28% over Q4 2009 | ||
| 18 transactions greater than $1 million |
Full year 2010 financial highlights included:
| Total revenue was $185.5 million, an increase of 22% over FY 2009 | ||
| Recurring revenue was $147.3 million, an increase of 28% over FY 2009 | ||
| Non-GAAP operating margin, which excludes the impact of stock-based compensation charges, was 11%, an increase of 300 basis points over FY 2009 | ||
| Non-GAAP diluted earnings per share, which excludes stock-based compensation charges and a tax benefit, was $0.49 |
Total revenue was $51.4 million in the fourth quarter of 2010, compared to $41.6 million in the
fourth quarter of 2009, reflecting a 24% increase. Recurring revenue in the fourth quarter of 2010
increased 27% to $41 million from $32.2 million in the fourth quarter of 2009.
Net income in the fourth quarter of 2010 was $23.5 million or $0.64 per diluted share, compared to
net income of $2.6 million, or $0.08 per diluted share, in the fourth quarter of 2009. Net income
and net income per share in fourth quarter of 2010 were impacted by a tax benefit from a deferred
tax asset
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valuation allowance reversal of $19.7 million. Non-GAAP net income in the fourth quarter of
2010 was $5.9 million, or $0.17 per diluted share, compared to non-GAAP net income of $3.3 million
or $0.10 per diluted share, in the fourth quarter of 2009. Non-GAAP net income and earnings per
share in the fourth quarter, excludes stock-based compensation charges of $2.1 million and a tax
benefit of $19.7 million.
Total revenue was $185.5 million for the year ended December 31, 2010, compared to $152.7 million
for the year ended December 31, 2009, reflecting a 22% increase. Recurring revenue in the year
ended December 31, 2010 increased 28% to $147.3 million from $115.4 million in the year ended
December 31, 2009.
Net income in the year ended December 31, 2010 was $28.4 million or $0.83 per diluted share,
compared to net income of $5.9 million, or $0.18 per diluted share, in the year ended December 31,
2009. Net income and net income per share in year ended December 31, 2010 were impacted by a tax
benefit from a deferred tax asset valuation allowance reversal of $19.7 million. Non-GAAP net
income in the year ended December 31, 2010 was $16.5 million, or $0.49 per diluted share, compared
to non-GAAP net income of $12.7 million or $0.39 per diluted share, in the year ended December 31,
2009. Non-GAAP net income and earnings per share in the year ended December 31, 2010, excludes
stock-based compensation charges of $7.9 million and a tax benefit of $19.7 million.
New, renewed and expanded customer relationships during the fourth quarter of 2010 included
Activision, Belgacom, Hunter Douglas, Mercedes-Benz Financial Services, NetGear, Ricoh, 3M, and
University of Oxford.
We had an outstanding close to 2010 with growth across all areas of our business. As demonstrated
by our acquisition of Q-go, we are putting our balance sheet to work, adding incremental revenue
streams and leading edge technology that give us another layer of momentum to accelerate our
organic growth, said Greg Gianforte, CEO and founder. Our focus for 2011 is to invest in
profitable growth as we take advantage of the large CX market opportunity that we believe we are
squarely positioned to capture.
Jeff Davison, CFO, said, We are pleased to report 28% growth in annual recurring revenue and a
significant increase in operating income over fiscal year 2009. We delivered tremendous results
during this past year and we are excited about the opportunity that lies ahead in 2011.
RightNow Completes Q-go Acquisition
RightNow today announced that the Company has completed the acquisition of Q-go.com B.V. The
acquisition will be recorded in the Companys March 31, 2011 quarter end financial statements.
Guidance
The annual and quarterly GAAP net income and GAAP net income per share guidance includes estimated
expenses for amortization of acquired intangible assets. The amortization expense for acquired
intangibles will be finalized once the Q-go purchase price accounting valuation is complete.
| For the full year 2011, the Company expects total revenue be approximately $225 million, with recurring revenue growth expected to be approximately 23%. Net income per diluted share for the full year 2011 is expected to be approximately $0.06. Non-GAAP net income per diluted share, which excludes stock-based compensation, acquisition costs and amortization of acquired intangible assets, and amortization of debt issuance costs, is expected to be approximately $0.52 for the full year 2011. The Company expects approximately 36 million diluted shares outstanding for the full year 2011. |
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| For the first quarter of 2011, total revenue is expected to be approximately $52 million. First quarter net loss per diluted share is expected to be approximately $(0.04). First quarter non-GAAP net income per diluted share, which excludes stock-based compensation, acquisition costs and amortization of acquired intangible assets, and amortization of debt issuance costs, is expected to be approximately $0.08. The Company expects approximately 35.5 million diluted shares outstanding for the first quarter of 2011. |
Please refer to our Forward-Looking Guidance Reconciliation table for complete details on
adjustments between GAAP and non-GAAP guidance.
Quarterly Conference Call
RightNow Technologies will discuss its quarterly results today via teleconference at 2:30 p.m.
Mountain Time (4:30 p.m. Eastern Time) today. To access the call, please dial (877) 638 9569, or
outside the U.S. (914) 495-8536, at least five minutes prior to the 2:30 p.m. MT start time. A
live webcast of the call will also be available at http://investor.rightnow.com/index.cfm
under the Events & Presentations menu. An audio replay will be available between 5:30 p.m. MT
February 2, 2011 and 9:59 p.m. MT February 16, 2011 by calling (800) 642-1687 or (706) 645-9291,
with Conference ID 33943976. The replay will also be available on the Companys website at
http://investor.rightnow.com.
About RightNow Technologies
RightNow is helping rid the world of bad experiences one consumer interaction at a time, eight
million times a day. RightNow CX, the customer experience suite, helps organizations deliver
exceptional customer experiences across the web, social networks and contact centers, all delivered
via the cloud. With more than ten billion customer interactions delivered, RightNow is the customer
experience fabric for nearly 2,000 organizations around the globe. To learn more about RightNow, go
to www.rightnow.com.
RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark
of The NASDAQ Stock Market LLC.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
All statements included in this press release, other than statements or characterizations of
historical fact, are forward-looking statements. These forward-looking statements are based on our
current expectations, estimates and projections about our industry, managements beliefs, and
certain assumptions made by us, all of which are subject to change. Forward-looking statements can
often be identified by words such as anticipates, expects, intends, plans, predicts,
believes, seeks, estimates, may, will, should, would, could, potential,
continue, ongoing, similar expressions, and variations or negatives of these words and include,
but are not limited to, statements regarding projected results of operations and managements
future strategic plans. These forward-looking statements are not guarantees of future results and
are subject to risks, uncertainties and assumptions that could cause our actual results to differ
materially and adversely from those expressed in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, general economic
conditions; our success in transitioning to a new President and Chief Operating
Officer; the risks associated with purchasing Q-go, including our ability to retain and motivate
Q-gos employees; our ability to integrate and market Q-gos solutions to new customers; our
ability to retain Q-gos existing customers; the speed, quality and cost of our efforts to
integrate Q-gos solutions with our solution set; the security and reliability of Q-gos
service; and the risks associated with forecasting the impact of Q-go on combined
financial results; the risk that the guidance estimates in this release will differ from
the final purchase price valuation of Q-go; fluctuations in foreign currency exchange; our business
model; our ability to develop or acquire and gain market acceptance for new products and
enhancements to existing products in a cost-effective and timely manner; fluctuations in our
earnings as a result of potential changes to our valuation
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allowance(s) on our deferred tax assets; the gain or loss of key customers; competitive
pressures and other similar factors such as the availability and pricing of competing products and
technologies and the resulting effects on sales and pricing of our products; our ability to expand
or contract operations, manage expenses and grow profitability; the rate at which our present and
future customers adopt our existing and future products and services; fluctuations in our operating
results including our revenue mix and our rate of growth; fluctuations in backlog; the risk that
our investments in partner relationships and additional employees will not achieve expected
results; interruptions or delays in our hosting operations; breaches of our security measures; our
ability to protect our intellectual property from infringement, and to avoid infringing on the
intellectual property rights of third parties; any unanticipated ambiguities in fair value
accounting standards; the amount and timing of any stock repurchases under our stock repurchase
program; fluctuations in our operating results from the impact of stock-based compensation expense;
our ability to manage and expand our partner relationships; our ability to hire, retain and
motivate our employees and manage our growth; the impact of potential future acquisitions, if any;
and risks associated with our offering of convertible senior notes including the potential impact
on earnings per share calculations; and various other factors. Further information on
potential factors that could affect our financial results is included in our Annual Report on Form
10-K, quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange
Commission. The forward-looking statements in this release speak only as of the date they are
made. We undertake no obligation to revise or update publicly any forward-looking statement for
any reason.
FRNOW
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RightNow Technologies, Inc.
Consolidated Balance Sheets
(In thousands) (Unaudited)
Consolidated Balance Sheets
(In thousands) (Unaudited)
Dec. 31, | Dec. 31, | |||||||
2010 | 2009 | |||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 181,948 | $ | 41,546 | ||||
Short-term investments |
94,759 | 54,977 | ||||||
Accounts receivable |
39,338 | 34,267 | ||||||
Allowance for doubtful accounts |
(2,021 | ) | (1,914 | ) | ||||
Net receivables |
37,317 | 32,353 | ||||||
Deferred commissions |
5,418 | 6,394 | ||||||
Prepaid and other current assets |
4,662 | 2,434 | ||||||
Deferred tax assets |
3,801 | | ||||||
Total current assets |
327,905 | 137,704 | ||||||
Property and equipment, net |
10,702 | 10,122 | ||||||
Intangible assets, net |
14,124 | 11,141 | ||||||
Deferred commissions, non-current |
4,747 | 3,461 | ||||||
Other |
4,921 | 2,007 | ||||||
Deferred tax assets, non-current |
16,480 | | ||||||
Total Assets |
$ | 378,879 | $ | 164,435 | ||||
Liabilities and Stockholders Equity |
||||||||
Accounts payable |
$ | 10,463 | $ | 5,427 | ||||
Commissions and bonuses payable |
7,137 | 6,271 | ||||||
Other accrued liabilities |
13,363 | 11,146 | ||||||
Current portion of long-term debt |
| 22 | ||||||
Current portion of deferred revenue |
90,350 | 88,603 | ||||||
Total current liabilities |
121,313 | 111,469 | ||||||
Deferred revenue, net of current portion |
2,969 | 12,724 | ||||||
2.50% convertible senior notes due 2030 |
175,000 | | ||||||
Total liabilities |
299,282 | 124,193 | ||||||
Stockholders equity: |
||||||||
Common stock |
35 | 34 | ||||||
Additional paid-in capital |
136,717 | 112,439 | ||||||
Treasury stock, at cost |
(29,149 | ) | (15,007 | ) | ||||
Accumulated other comprehensive income |
1,953 | 1,125 | ||||||
Accumulated deficit |
(29,959 | ) | (58,349 | ) | ||||
Total stockholders equity |
79,597 | 40,242 | ||||||
Total Liabilities and Stockholders Equity |
$ | 378,879 | $ | 164,435 | ||||
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RightNow Technologies, Inc.
Consolidated Operating Statements
(In thousands, except per share amounts) (Unaudited)
Consolidated Operating Statements
(In thousands, except per share amounts) (Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenue: |
||||||||||||||||
Recurring revenue |
$ | 40,977 | $ | 32,172 | $ | 147,345 | $ | 115,395 | ||||||||
Professional services |
10,396 | 9,407 | 38,177 | 37,292 | ||||||||||||
Total revenue |
51,373 | 41,579 | 185,522 | 152,687 | ||||||||||||
Cost of revenue: |
||||||||||||||||
Recurring revenue |
5,855 | 5,813 | 23,609 | 20,948 | ||||||||||||
Professional services |
8,348 | 6,891 | 31,453 | 26,610 | ||||||||||||
Total cost of revenue |
14,203 | 12,704 | 55,062 | 47,558 | ||||||||||||
Gross profit |
37,170 | 28,875 | 130,460 | 105,129 | ||||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
21,888 | 17,705 | 79,395 | 64,751 | ||||||||||||
Research and development |
5,065 | 5,314 | 20,154 | 20,221 | ||||||||||||
General and administrative |
5,108 | 4,130 | 18,706 | 15,801 | ||||||||||||
Total operating expenses |
32,061 | 27,149 | 118,255 | 100,773 | ||||||||||||
Income from operations |
5,109 | 1,726 | 12,205 | 4,356 | ||||||||||||
Interest and other income (expense), net |
(311 | ) | 1,000 | 345 | 2,094 | |||||||||||
Income before income taxes |
4,798 | 2,726 | 12,550 | 6,450 | ||||||||||||
Benefit (provision) for income taxes |
18,708 | (119 | ) | 15,840 | (579 | ) | ||||||||||
Net income |
$ | 23,506 | $ | 2,607 | $ | 28,390 | $ | 5,871 | ||||||||
Net income per share: |
||||||||||||||||
Basic |
$ | 0.72 | $ | 0.08 | $ | 0.88 | $ | 0.18 | ||||||||
Diluted |
$ | 0.64 | $ | 0.08 | $ | 0.83 | $ | 0.18 | ||||||||
Shares used in the computation: |
||||||||||||||||
Basic |
32,562 | 31,815 | 32,156 | 31,752 | ||||||||||||
Diluted |
37,574 | 33,047 | 34,568 | 32,336 | ||||||||||||
Supplemental information of stock-based
compensation expense included in: |
||||||||||||||||
Cost of software, hosting and support |
$ | 125 | $ | 102 | $ | 482 | $ | 460 | ||||||||
Cost of professional services |
122 | 132 | 486 | 612 | ||||||||||||
Sales and marketing |
782 | 694 | 3,077 | 3,029 | ||||||||||||
Research and development |
237 | 254 | 988 | 1,178 | ||||||||||||
General and administrative |
870 | 500 | 2,821 | 2,507 | ||||||||||||
Total stock-based compensation |
$ | 2,136 | $ | 1,682 | $ | 7,854 | $ | 7,786 | ||||||||
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RightNow Technologies, Inc.
Consolidated Statements of Cash Flow
(In thousands) (Unaudited)
Consolidated Statements of Cash Flow
(In thousands) (Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating activities: |
||||||||||||||||
Net income |
$ | 23,506 | $ | 2,607 | $ | 28,390 | $ | 5,871 | ||||||||
Non-cash adjustments: |
||||||||||||||||
Depreciation and amortization |
2,023 | 2,081 | 7,772 | 7,491 | ||||||||||||
Stock-based compensation |
2,136 | 1,682 | 7,854 | 7,786 | ||||||||||||
Provision for losses on accounts receivable |
60 | 40 | 191 | 157 | ||||||||||||
Benefit for deferred tax asset valuation allowance reversal |
(19,732 | ) | | (19,732 | ) | | ||||||||||
Changes in operating accounts: |
||||||||||||||||
Receivables |
(2,605 | ) | 524 | (4,029 | ) | 11,255 | ||||||||||
Prepaid and other current assets |
368 | 526 | (948 | ) | (209 | ) | ||||||||||
Deferred commissions |
(1,040 | ) | (1,140 | ) | (314 | ) | (1,282 | ) | ||||||||
Accounts payable |
1,287 | 805 | 4,997 | 238 | ||||||||||||
Commissions and bonuses payable |
999 | 1,392 | 877 | 451 | ||||||||||||
Other accrued liabilities |
(824 | ) | (839 | ) | 2,122 | (424 | ) | |||||||||
Deferred revenue |
(727 | ) | (2,880 | ) | (8,388 | ) | (14,916 | ) | ||||||||
Other |
(455 | ) | (576 | ) | (298 | ) | (321 | ) | ||||||||
Cash provided by operating activities |
4,996 | 4,222 | 18,494 | 16,097 | ||||||||||||
Investing activities: |
||||||||||||||||
Net change in investments |
(63,513 | ) | 5,558 | (39,813 | ) | (15,833 | ) | |||||||||
Acquisition of property and equipment |
(1,233 | ) | (1,912 | ) | (6,708 | ) | (5,577 | ) | ||||||||
Intangible asset additions |
(1,101 | ) | (410 | ) | (4,560 | ) | (654 | ) | ||||||||
Business acquisition |
| | | (5,906 | ) | |||||||||||
Cash provided (used) in investing activities |
(65,847 | ) | 3,236 | (51,081 | ) | (27,970 | ) | |||||||||
Financing activities: |
||||||||||||||||
Convertible senior notes issuance costs |
(5,036 | ) | | (5,036 | ) | | ||||||||||
Proceeds from issuance of convertible senior notes |
175,000 | | 175,000 | | ||||||||||||
Proceeds from issuance of common stock |
8,184 | 1,352 | 12,820 | 1,748 | ||||||||||||
Excess tax benefit of stock options exercised |
982 | 11 | 3,603 | 243 | ||||||||||||
Common stock repurchased |
(14,142 | ) | | (14,142 | ) | (1,798 | ) | |||||||||
Payments on current and long-term debt |
| (12 | ) | (22 | ) | (46 | ) | |||||||||
Cash provided by financing activities |
164,988 | 1,351 | 172,223 | 147 | ||||||||||||
Effect of foreign exchange rates on cash and cash equivalents |
83 | 349 | 766 | 1,867 | ||||||||||||
Increase (decrease) in cash and cash equivalents |
104,220 | 9,158 | 140,402 | (9,859 | ) | |||||||||||
Cash and cash equivalents at beginning of period |
77,728 | 32,388 | 41,546 | 51,405 | ||||||||||||
Cash and cash equivalents at end of period |
$ | 181,948 | $ | 41,546 | $ | 181,948 | $ | 41,546 | ||||||||
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RightNow Technologies, Inc.
Reconciliation of Non-GAAP Measurements
(Amounts in thousands, except per share amounts) (Unaudited)
Reconciliation of Non-GAAP Measurements
(Amounts in thousands, except per share amounts) (Unaudited)
Earnings Per Share Reconciliation
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income as reported |
$ | 23,506 | $ | 2,607 | $ | 28,390 | $ | 5,871 | ||||||||
Add stock-based compensation (SBC) |
2,136 | 1,682 | 7,854 | 7,786 | ||||||||||||
Less deferred tax asset valuation allowance reversal |
(19,732 | ) | | (19,732 | ) | | ||||||||||
Less non-recurring litigation settlement gain |
| (1,000 | ) | | (1,000 | ) | ||||||||||
Net income before reconciling items |
$ | 5,910 | $ | 3,289 | $ | 16,512 | $ | 12,657 | ||||||||
Net income per share, as reported (basic) |
$ | 0.72 | $ | 0.08 | $ | 0.88 | $ | 0.18 | ||||||||
Net income per share, as reported (diluted)* |
$ | 0.64 | $ | 0.08 | $ | 0.83 | $ | 0.18 | ||||||||
Net income per share, before reconciling items (basic) |
$ | 0.18 | $ | 0.10 | $ | 0.51 | $ | 0.40 | ||||||||
Net income per share, before reconciling items (diluted)* |
$ | 0.17 | $ | 0.10 | $ | 0.49 | $ | 0.39 | ||||||||
Shares outstanding (basic), as reported |
32,562 | 31,815 | 32,156 | 31,752 | ||||||||||||
Shares outstanding (diluted), as reported* |
37,574 | 33,047 | 34,568 | 32,336 |
* | The 2010 computation of diluted net income per share was calculated using the if converted, methodology in accordance with FASB Accounting Standards Codification, Topic 260, Earnings Per Share. The computation assumes our convertible senior notes issued November 2010 were converted into 2,326 and 586 shares of our common stock during the fourth quarter and year ending December 31, 2010, respectively. Due to the converted share count assumption, we added back convertible note interest expense and debt amortization costs, net of tax, of $402 to GAAP and non-GAAP net income during the fourth quarter and year ending December 31, 2010 to calculate earnings per share. The convertible senior notes upon full conversion are convertible into 5,488 shares. |
Forward-Looking Guidance Reconciliation
GAAP | Adjustment | Non- GAAP | ||||||||||||||||||||||
First quarter ending March 31, 2011 |
||||||||||||||||||||||||
Net income (approximately) |
$ | (1,150) | [a] | 2,600 | [b] | 300 | [c] | 700 | [d] | 250 | $ | 2,700 | ||||||||||||
Net income per share
(approximately) |
$ | (0.04 | ) | $ | 0.08 | |||||||||||||||||||
Shares (diluted) |
32,600 | 35,500 | ||||||||||||||||||||||
Year ending December 31, 2011 |
||||||||||||||||||||||||
Net income (approximately) |
$ | 2,000 | [a] | 12,000 | [b] | 300 | [c] | 3,400 | [d] | 1,000 | $ | 18,700 | ||||||||||||
Net income per share
(approximately) |
$ | 0.06 | $ | 0.52 | ||||||||||||||||||||
Shares (diluted) |
36,000 | 36,000 |
[a] | Estimated stock-based compensation expense to be recorded for the periods indicated in accordance with FASB Accounting Standards Codification, Topic 718, Compensation-Stock Compensation, which is effective for periods beginning January 1, 2006. |
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[b] | Estimated acquisition costs associated with Q-go. | |
[c] | Estimated amortization expense of acquired intangible assets. | |
[d] | Estimated debt issuance amortization expenses. |
About Non-GAAP Financial Measures
Non-GAAP net income and diluted net income per share are supplemental measures of our
performance that are not required by, or presented in accordance with GAAP. These non-GAAP
financial measures are not intended to be used in isolation and should not be considered a
substitute for net income and net income per share or any other performance measure determined in
accordance with GAAP. We present non-GAAP net income and net income per share because we consider
each to be an important supplemental measure of our performance.
Management uses these non-GAAP financial measures to make operational decisions, evaluate the
Companys performance, prepare forecasts and determine compensation. Further, management believes
that both management and investors benefit from referring to these non-GAAP financial measures in
assessing the Companys performance when planning, forecasting and analyzing future periods.
Our stock-based compensation expenses are expected to vary depending on the number of new grants
issued, changes in our stock price, stock market volatility, expected option lives and risk-free
rates of return, all of which are difficult to estimate.
During the fourth quarter of 2010, we reversed $19.7 million of a deferred tax asset valuation
allowance as we determined it was more likely than not that we will utilize the deferred tax
assets.
During the fourth quarter of 2009, KANA Software, Inc. (KANA) paid us $1,000,000 pursuant to the
terms of a General Release and Settlement Agreement. We recorded this as a non-recurring gain in
other income. For further discussion related to the settlement please refer to our Form 10-Q
filed on November 6, 2009 and our Form 10-K for 2009 filed on March 9, 2010.
In calculating non-GAAP net income and net income per share, management excluded stock-based
compensation expenses, the deferred tax asset valuation allowance reversal, and the KANA settlement
gain to facilitate its review of the comparability of the Companys operating performance on a
period-to-period basis because such expenses and gain are not, in managements view, related to the
Companys ongoing operating performance. Management uses this view of its operating performance
for purposes of comparison with its business plan and individual operating budgets and resource
allocation.
Management further believes that these non-GAAP financial measures are useful to investors in
providing greater transparency to the information used by management in its operational decision
making. We believe that the use of non-GAAP net income and net income per share also facilitate a
comparison of RightNows underlying operating performance with that of other companies in our
industry, which use similar non-GAAP financial measures to supplement their GAAP results. Also,
management excluded the deferred tax asset valuation allowance reversal and KANA settlement gain
because they are considered non-recurring and therefore not helpful when comparing with our
historical, current, or future operating performance.
Calculating non-GAAP net income and net income per share have limitations as an analytical tool,
and readers should not consider these measures in isolation or as substitutes for GAAP net income
and GAAP net income per share. In the future, we expect to incur additional stock-based
compensation expenses and the exclusion of these expenses in the presentation of our non-GAAP
financial measures should not be construed as an inference that these costs are unusual, infrequent
or non-recurring. In the future we also expect to incur additional acquisition costs and
amortization associated with acquired intangible assets and we anticipate excluding these expenses
in the future presentation of our non-GAAP financial measures.
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These acquired intangible assets will be considered for impairment, but will be considered a
static expense, one that is not typically affected by operations during any particular period.
Lastly, we anticipate excluding amortization of debt issuance costs from our future presentation of
our non-GAAP financial measures as these costs are non-cash expenses that are not considered part
of ongoing operating results when assessing the performance of our business, and RightNow believes
that doing so facilitates comparisons to its historical operating results and to the results of
other companies in our industry.
Investors and potential investors are cautioned that there are material limitations associated with
the use of non-GAAP financial measures as an analytical tool, which include:
| Other companies inside and outside of our industry may calculate non-GAAP net income and net income per share differently than we do, limiting their usefulness as a comparative tool; and | ||
| The Companys income tax expense or benefit will be ultimately based on its GAAP taxable income and actual tax rates in effect, which may differ significantly from the effective tax rate used in our non-GAAP financial measures. |
In addition, the adjustments to our future GAAP financial measures reflecting the exclusion of
stock-based compensation expenses, amortization of acquired intangible assets, and amortization of
debt issuance costs are recurring and will be reflected in the Companys financial results for the
foreseeable future. The Company compensates for these limitations by providing specific
information regarding the GAAP amount excluded from the non-GAAP financial measures. The Company
further compensates for the limitations of our use of non-GAAP financial measures by presenting
comparable GAAP measures more prominently. The Company evaluates the non-GAAP financial measures
together with the most directly comparable GAAP financial measures.
Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial
measures contained within this press release with our GAAP net income and net income per share.
For more information, see the consolidated operating statements and reconciliation of non-GAAP
measurements contained in this press release.
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