Attached files

file filename
8-K - FORM 8-K - RIGHTNOW TECHNOLOGIES INCd8k.htm
EX-99.2 - SUPPLEMENTAL FINANCIAL DATA OF RIGHTNOW TECHNOLOGIES, INC. - RIGHTNOW TECHNOLOGIES INCdex992.htm

Exhibit 99.1

LOGO

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 Second Quarter 2011 Financial Results

Company reports recurring revenue growth of 31%, and earnings per share ahead of guidance.

BOZEMAN, Mont. (July 27, 2011) RightNow® (NASDAQ: RNOW) today announced results for the second quarter ended June 30, 2011.

Second quarter 2011 financial highlights included:

 

   

Total revenue was $54.8 million, an increase of 26% over Q2 2010

 

   

Recurring revenue was $45.4 million, an increase of 31% over Q2 2010

 

   

GAAP diluted earnings per share was $0.01 and Non-GAAP diluted earnings per share was $0.15. A reconciliation of Non-GAAP measures can be found at the back of this release.

 

   

Non-GAAP operating margin was 11%, an increase of 200 basis points over Q2 2010

 

   

Current software backlog was $152 million, an increase of 43% over Q2 2010

Total revenue was $54.8 million in the second quarter of 2011, compared to $43.5 million in the second quarter of 2010, reflecting a 26% increase. Recurring revenue in the second quarter of 2011 increased 31% to $45.4 million from $34.7 million in the second quarter of 2010.

Net income in the second quarter of 2011 was $194,000 or $0.01 per diluted share, compared to net income of $1.4 million or $0.04 per diluted share in the second quarter of 2010. Non-GAAP net income in the second quarter of 2011 was $5.4 million, or $0.15 per diluted share, compared to non-GAAP net income of $3.2 million or $0.09 per diluted share in the second quarter of 2010.

“We executed well and delivered an outstanding second quarter with revenue and earnings ahead of guidance,” said Greg Gianforte, CEO and founder. “Our accelerating growth rate is allowing us to further expand our sales capacity and raise our expectations for recurring revenue growth in 2011. We continue to provide robust customer experience solutions with fast return on investment and innovative products that are easy to use, enabling us to deliver high value for our customers around the world. Market trends are creating a demand for RightNow CX and we believe we are well positioned to continue our momentum.”

 

-more-


Total revenue was $107.1 million for the six months ended June 30, 2011, compared to $85.6 million for the six months ended June 30, 2010, reflecting a 25% increase. Recurring revenue in the six months ended June 30, 2011 increased 29% to $87.3 million from $67.8 million in the six months ended June 30, 2010.

Net income in the six months ended June 30, 2011 was $1.6 million or $0.04 per diluted share, compared to net income of $2.0 million, or $0.06 per diluted share in the six months ended June 30, 2010. Non-GAAP net income in the six months ended June 30, 2011 was $9.1 million, or $0.26 per diluted share, compared to non-GAAP net income of $5.5 million or $0.16 per diluted share in the six months ended June 30, 2010.

Guidance

 

   

For the full year 2011, the Company is raising its recurring revenue growth expectation to 27% from 24%. Total revenue is expected to be approximately $226 million. Net income per diluted share for the full year 2011 is expected to be approximately $0.08. Non-GAAP net income per diluted share, which excludes stock-based compensation, acquisition costs and amortization of acquired intangible assets, amortization of debt issuance costs, and a foreign currency gain related to the Q-go acquisition, is expected to be approximately $0.58 for the full year 2011. The Company expects approximately 36 million diluted shares outstanding for the full year 2011.

 

   

For the third quarter of 2011, total revenue is expected to be approximately $57 million. Third quarter net income per diluted share is expected to be approximately breakeven. Third quarter non-GAAP net income per diluted share, which excludes stock-based compensation, amortization of acquired intangible assets, and amortization of debt issuance costs, is expected to be approximately $0.15. The Company expects approximately 36.3 million diluted shares outstanding for the third 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). 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 July 27, 2011 and 9:59 p.m. MT August 10, 2011 by calling (800) 642-1687 or (706) 645-9291, with Conference ID 76695707. The replay will also be available during the same time period on the Company’s 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.

 

-more-


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, management’s 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, business and profit growth and management’s 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, 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; general economic conditions; fluctuations in foreign currency exchange; 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 risks associated with prior and future acquisitions; 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 on 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

 

-more-


RightNow Technologies, Inc.

Consolidated Balance Sheets

(In thousands) (Unaudited)

 

     June 30,     Dec. 31,  
     2011     2010  

Assets

    

Cash and cash equivalents

   $ 121,792      $ 181,948   

Short-term investments

     134,133        94,759   

Accounts receivable

     45,703        39,338   

Allowance for doubtful accounts

     (1,774     (2,021
                

Net receivables

     43,929        37,317   

Deferred commissions

     5,963        5,418   

Prepaid and other current assets

     5,488        4,662   

Deferred tax assets

     3,810        3,801   
                

Total current assets

     315,115        327,905   
                

Property and equipment, net

     13,003        10,702   

Intangible assets, net

     19,512        6,149   

Goodwill

     32,392        7,975   

Deferred commissions, non-current

     4,966        4,747   

Other

     4,365        4,921   

Deferred tax assets, non-current

     16,756        16,480   
                

Total Assets

   $ 406,109      $ 378,879   
                

Liabilities and Stockholders’ Equity

    

Accounts payable

   $ 6,819      $ 10,463   

Commissions and bonuses payable

     6,030        7,137   

Other accrued liabilities

     18,465        13,363   

Current portion of deferred revenue

     97,792        90,350   
                

Total current liabilities

     129,106        121,313   
                

Deferred revenue, net of current portion

     2,355        2,969   

Other long-term liabilities

     446        —     

2.50% Convertible senior notes due 2030

     175,000        175,000   
                

Total liabilities

     306,907        299,282   
                

Stockholders’ equity:

    

Common stock

     36        35   

Additional paid-in capital

     152,268        136,717   

Treasury stock, at cost

     (29,149     (29,149

Accumulated other comprehensive income

     4,422        1,953   

Accumulated deficit

     (28,375     (29,959
                

Total stockholders’ equity

     99,202        79,597   
                

Total Liabilities and Stockholders’ Equity

   $ 406,109      $ 378,879   
                

 

-more-


RightNow Technologies, Inc.

Consolidated Operating Statements

(In thousands, except per share amounts) (Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2011     2010     2011     2010  

Revenue:

        

Recurring revenue

   $ 45,409      $ 34,730      $ 87,322      $ 67,755   

Professional services

     9,407        8,724        19,823        17,801   
                                

Total revenue

     54,816        43,454        107,145        85,556   

Cost of revenue:

        

Recurring revenue

     7,746        5,952        15,072        11,831   

Professional services

     9,411        7,378        18,821        14,710   
                                

Total cost of revenue

     17,157        13,330        33,893        26,541   
                                

Gross profit

     37,659        30,124        73,252        59,015   

Operating expenses:

        

Sales and marketing

     24,913        18,777        47,463        37,501   

Research and development

     5,581        4,797        11,177        9,929   

General and administrative

     6,377        4,324        12,548        8,623   
                                

Total operating expenses

     36,871        27,898        71,188        56,053   
                                

Income from operations

     788        2,226        2,064        2,962   

Interest and other income (expense), net

     (1,116     19        (348     202   
                                

Income (loss) before income taxes

     (328     2,245        1,716        3,164   

Benefit (provision) for income taxes

     522        (841     (132     (1,175
                                

Net income

   $ 194      $ 1,404      $ 1,584      $ 1,989   
                                

Net income per share:

        

Basic

   $ 0.01      $ 0.04      $ 0.05      $ 0.06   

Diluted

   $ 0.01      $ 0.04      $ 0.04      $ 0.06   

Shares used in the computation:

        

Basic

     33,171        32,000        32,880        31,965   

Diluted

     36,048        33,427        35,792        33,430   

Supplemental information of Non-GAAP reconciling items included in:

        

Cost of recurring revenue

   $ 995      $ 117      $ 1,777      $ 230   

Cost of professional services

     546        122        874        236   

Sales and marketing

     1,580        726        2,615        1,477   

Research and development

     443        240        792        497   

General and administrative

     1,408        556        2,799        1,076   

Interest and other income (expense, net)

     253        —          (1,312     —     
                                

Total Non-GAAP reconciling items (pre-tax)

   $ 5,225      $ 1,761      $ 7,545      $ 3,516   
                                

 

-more-


RightNow Technologies, Inc.

Consolidated Statements of Cash Flow

(In thousands) (Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2011     2010     2011     2010  

Operating activities:

        

Net income

   $ 194      $ 1,404      $ 1,584      $ 1,989   

Non-cash adjustments:

        

Depreciation and amortization

     3,318        1,872        6,120        3,937   

Stock-based compensation

     3,988        1,761        6,727        3,516   

Provision for losses on accounts receivable

     21        31        41        81   

Foreign currency gain on acquisition

     —          —          (1,819     —     

Changes in operating accounts, net of business acquisitions:

        

Receivables

     (11,010     (2,910     (2,981     (461

Prepaid and other current assets

     785        (369     443        (1,868

Deferred commissions

     (795     544        (655     989   

Accounts payable

     (5,298     1,099        (4,413     3,144   

Commissions and bonuses payable

     1,355        (329     (1,157     (1,573

Other accrued liabilities

     3,181        1,053        3,790        2,564   

Deferred revenue

     11,535        (160     3,107        (4,774

Other

     (852     18        (868     (19
                                

Cash provided by operating activities

     6,422        4,014        9,919        7,525   

Investing activities:

        

Net change in investments

     (16,411     17,107        (39,297     16,765   

Acquisition of property and equipment

     (2,031     (2,195     (5,148     (3,836

Intangible asset additions

     (1,592     (1,305     (3,083     (2,339

Business acquisition, net of cash acquired

     —          —          (33,837     —     
                                

Cash provided by (used in) investing activities

     (20,034     13,607        (81,365     10,590   

Financing activities:

        

Proceeds from issuance of common stock

     3,065        409        8,376        1,568   

Excess tax benefit of stock options exercised

     (142     802        449        1,130   

Payments on current and long-term debt

     (20     (10     (260     (22
                                

Cash provided by financing activities

     2,903        1,201        8,565        2,676   

Effect of foreign exchange rates on cash and cash equivalents

     503        (724     2,725        (1,125
                                

Increase (decrease) in cash and cash equivalents

     (10,206     18,098        (60,156     19,666   

Cash and cash equivalents at beginning of period

     131,998        43,114        181,948        41,546   
                                

Cash and cash equivalents at end of period

   $ 121,792      $ 61,212      $ 121,792      $ 61,212   
                                

 

-more-


RightNow Technologies, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measurements

(Amounts in thousands, except per share amounts) (Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2011     2010     2011     2010  

Income from operations as reported

   $ 788      $ 2,226      $ 2,064      $ 2,962   

Income from operations as a % of total revenue (operating margin)

     1     5     2     3

Non-GAAP reconciling items (pre-tax)

        

Add stock-based compensation (“SBC”)

     3,988        1,761        6,727        3,516   

Add Q-go acquisition costs

     —          —          415        —     

Add amortization expense of acquired intangible assets

     984        —          1,715        —     
                                

Non-GAAP income from operations

   $ 5,760      $ 3,987      $ 10,921      $ 6,478   
                                

Non-GAAP income from operations as a % of total revenue (Non-GAAP operating margin)

     11     9     10     8

Net income as reported

   $ 194      $ 1,404      $ 1,584      $ 1,989   

Non-GAAP reconciling items (pre-tax)

        

Add stock-based compensation (“SBC”)

     3,988        1,761        6,727        3,516   

Add Q-go acquisition costs

     —          —          415        —     

Add amortization expense of acquired intangible assets

     984        —          1,715        —     

Add amortization of debt issuance expense

     253        —          507        —     

Less foreign currency gain

     —          —          (1,819     —     
                                

Non-GAAP Net income

   $ 5,419      $ 3,165      $ 9,129      $ 5,505   
                                

Net income per share, as reported (basic)

   $ 0.01      $ 0.04      $ 0.05      $ 0.06   

Net income per share, as reported (diluted)

     0.01        0.04        0.04        0.06   

Non-GAAP Net income per share (basic)

     0.16        0.10        0.28        0.17   

Non-GAAP Net income per share (diluted)

     0.15        0.09        0.26        0.16   

Shares outstanding (basic), as reported

     33,171        32,000        32,880        31,965   

Shares outstanding (diluted), as reported

     36,048        33,427        35,792        33,430   

 

-more-


Forward-Looking Guidance Reconciliation

 

     GAAP     Adjustment     Non-GAAP  

Third quarter ending September 30, 2011

                            

Net income (approximately)

   $ 0        [a]        4,100        [b]         —          [c]         950        [d]         250           $ 5,300   

Net income per share (approximately)

   $ 0.00                              $ 0.15   

Shares (diluted)

     36,250                                36,250   

Year ending December 31, 2011

                            

Net income (approximately)

   $ 2,800        [a]     

 

15,000

  

    [b]         400        [c]         3,600        [d]         1,000        [e]         (1,800   $ 21,000   

Net income per share (approximately)

   $ 0.08                              $ 0.58   

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.
[b] Estimated acquisition costs associated with Q-go.
[c] Estimated amortization expense of acquired intangible assets.
[d] Estimated debt issuance amortization expenses.
[e] Foreign currency gain associated with acquisition of Q-go.

About Non-GAAP Financial Measures

Non-GAAP net income, operating margin 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, operating margin 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 Company’s 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 Company’s 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.

In calculating non-GAAP income from operations, operating margin, net income and net income per share, management excluded stock-based compensation expenses, acquisition costs and amortization associated with acquired intangible assets and debt amortization expenses (debt amortization expense was not included in non-GAAP income from operations because the amount was not recorded as operating income), to facilitate its review of the comparability of the Company’s operating performance on a period-to-period basis because such expenses and gain are not, in management’s view, related to the Company’s 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.

 

-more-


During the first quarter of 2011, we recorded a $1.8 million foreign currency gain related to our acquisition of Q go. This gain was excluded from our six months ended June 30, 2011 non-GAAP net income and net income per share calculations (the gain was not included in non-GAAP income from operations because the amount was not recorded to operating income).

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, operating margin and net income per share also facilitate a comparison of RightNow’s underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.

Calculating non-GAAP financial measures have limitations as an analytical tool, and readers should not consider these measures in isolation or as substitutes for GAAP operating income, net income and 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. 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 Company’s 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 Company’s 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 its use of non-GAAP financial measures by presenting comparable GAAP with equal or greater prominence. 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, operating margin and net income per share. For more information, see the consolidated operating statements and reconciliation of non-GAAP measurements contained in this press release.

***

 

-more-