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8-K - FORM 8-K - RIGHTNOW TECHNOLOGIES INCd246726d8k.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 Reports Third Quarter 2011 Financial Results

BOZEMAN, Mont. (October 24, 2011) — RightNow® (NASDAQ: RNOW) today announced results for the third quarter ended September 30, 2011.

Third quarter 2011 financial results were as follows:

Total revenue was $57.7 million in the third quarter of 2011, compared to $48.6 million in the third quarter of 2010, reflecting a 19% increase. Recurring revenue in the third quarter of 2011 increased 24% to $47.9 million from $38.6 million in the third quarter of 2010.

Net income in the third quarter of 2011 was $1.5 million, or $0.04 per diluted share, compared to net income of $2.9 million, or $0.09 per diluted share, in the third quarter of 2010. Non-GAAP net income in the third quarter of 2011 was $6.6 million, or $0.19 per diluted share, compared to non-GAAP net income of $5.1 million, or $0.15 per diluted share, in the third quarter of 2010.

Total revenue was $164.8 million for the nine months ended September 30, 2011, compared to $134.1 million for the nine months ended September 30, 2010, reflecting a 23% increase. Recurring revenue in the nine months ended September 30, 2011 increased 27% to $135.2 million from $106.4 million in the nine months ended September 30, 2010.

Net income in the nine months ended September 30, 2011 was $3.1 million, or $0.09 per diluted share, compared to net income of $4.9 million, or $0.15 per diluted share, in the nine months ended September 30, 2010. Non-GAAP net income in the nine months ended September 30, 2011 was $15.7 million, or $0.44 per diluted share, compared to non-GAAP net income of $10.6 million, or $0.32 per diluted share, in the nine months ended September 30, 2010.

Quarterly Conference Call and Financial Presentation at Analyst Day Cancelled

RightNow is cancelling the third quarter 2011 earnings conference call that was previously scheduled for Tuesday, October 25, 2011. Additionally, the Company is cancelling its financial presentation from RightNow’s Analyst Day at the Broadmoor Hotel, in Colorado Springs, CO on Tuesday, October 25, 2011. To access the previously announced Analyst Day webcast please visit the RightNow investor relations portion of our website.

 

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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, 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, the proposed merger between RightNow and Oracle; 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

 

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RightNow Technologies, Inc.

Consolidated Balance Sheets

(In thousands) (Unaudited)

 

     Sept. 30,
2011
    Dec. 31,
2010
 

Assets

    

Cash and cash equivalents

   $ 108,299      $ 181,948   

Short-term investments

     133,152        94,759   

Accounts receivable

     39,364        39,338   

Allowance for doubtful accounts

     (1,467     (2,021
  

 

 

   

 

 

 

Net receivables

     37,897        37,317   

Deferred commissions

     6,257        5,418   

Prepaid and other current assets

     5,447        4,662   

Deferred tax assets

     3,801        3,801   
  

 

 

   

 

 

 

Total current assets

     294,853        327,905   
  

 

 

   

 

 

 

Property and equipment, net

     13,603        10,702   

Intangible assets, net

     18,234        6,149   

Goodwill

     29,825        7,975   

Deferred commissions, non-current

     4,907        4,747   

Other

     5,012        4,921   

Deferred tax assets, non-current

     17,510        16,480   
  

 

 

   

 

 

 

Total Assets

   $ 383,944      $ 378,879   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Accounts payable

   $ 6,949      $ 10,463   

Commissions and bonuses payable

     5,489        7,137   

Other accrued liabilities

     16,796        13,363   

Current portion of deferred revenue

     94,889        90,350   
  

 

 

   

 

 

 

Total current liabilities

     124,123        121,313   
  

 

 

   

 

 

 

Deferred revenue, net of current portion

     2,256        2,969   

Deferred tax liability, non-current

     1,003        —     

Other long-term liabilities

     405        —     

2.50% Convertible senior notes due 2030

     175,000        175,000   
  

 

 

   

 

 

 

Total liabilities

     302,787        299,282   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     36        35   

Additional paid-in capital

     161,389        136,717   

Treasury stock, at cost

     (55,031     (29,149

Accumulated other comprehensive income

     1,606        1,953   

Accumulated deficit

     (26,843     (29,959
  

 

 

   

 

 

 

Total stockholders’ equity

     81,157        79,597   
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 383,944      $ 378,879   
  

 

 

   

 

 

 

 

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RightNow Technologies, Inc.

Consolidated Operating Statements

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

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2011     2010     2011     2010  

Revenue:

        

Recurring revenue

   $ 47,924      $ 38,613      $ 135,246      $ 106,368   

Professional services

     9,749        9,980        29,572        27,781   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     57,673        48,593        164,818        134,149   

Cost of revenue:

        

Recurring revenue

     9,042        5,923        24,114        17,754   

Professional services

     8,679        8,395        27,500        23,105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     17,721        14,318        51,614        40,859   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     39,952        34,275        113,204        93,290   

Operating expenses:

        

Sales and marketing

     24,685        20,006        72,148        57,507   

Research and development

     5,143        5,160        16,320        15,089   

General and administrative

     5,986        4,975        18,534        13,598   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     35,814        30,141        107,002        86,194   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     4,138        4,134        6,202        7,096   

Interest and other income (expense), net

     (1,253     454        (1,601     656   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     2,885        4,588        4,601        7,752   

Provision for income taxes

     (1,353     (1,693     (1,485     (2,868
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 1,532      $ 2,895      $ 3,116      $ 4,884   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

   $ 0.05      $ 0.09      $ 0.09      $ 0.15   

Diluted

   $ 0.04      $ 0.09      $ 0.09      $ 0.15   

Shares used in the computation:

        

Basic

     33,001        32,128        32,921        32,020   

Diluted

     35,652        33,659        35,750        33,515   

Supplemental information of Non-GAAP reconciling items included in:

        

Cost of recurring revenue

   $ 989      $ 127      $ 2,766      $ 357   

Cost of professional services

     531        128        1,405        364   

Sales and marketing

     1,661        818        4,276        2,295   

Research and development

     488        254        1,280        751   

General and administrative

     1,151        875        3,950        1,951   

Interest and other income (expense, net)

     253        —          (1,059     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Non-GAAP reconciling items (pre-tax)

   $ 5,073      $ 2,202      $ 12,618      $ 5,718   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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RightNow Technologies, Inc.

Consolidated Statements of Cash Flow

(In thousands) (Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2011     2010     2011     2010  

Operating activities:

        

Net income

   $ 1,532      $ 2,895      $ 3,116      $ 4,884   

Non-cash adjustments:

        

Depreciation and amortization

     3,574        1,812        9,694        5,749   

Impairment of internally developed software

     809          809     

Stock-based compensation

     3,841        2,202        10,568        5,718   

Provision for losses on accounts receivable

     25        50        66        131   

Foreign currency gain related to acquisition

     —          —          (1,819     —     

Changes in operating accounts, net of business acquisitions:

        

Receivables

     5,360        (963     2,379        (1,424

Prepaid and other current assets

     (618     552        (175     (1,316

Deferred commissions

     (324     (263     (979     726   

Accounts payable

     238        566        (4,175     3,710   

Commissions and bonuses payable

     (510     1,451        (1,667     (122

Other accrued liabilities

     (1,439     382        2,351        2,946   

Deferred revenue

     (1,839     (2,887     1,268        (7,661

Other

     658        176        (210     157   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash provided by operating activities

     11,307        5,973        21,226        13,498   

Investing activities:

        

Net change in investments

     971        6,935        (38,326     23,700   

Acquisition of property and equipment

     (2,476     (1,639     (7,624     (5,475

Intangible asset additions

     (1,836     (1,120     (4,919     (3,459

Business acquisitions, net of cash acquired

     —          —          (33,837     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash provided by (used in) investing activities

     (3,341     4,176        (84,706     14,766   

Financing activities:

        

Purchase of treasury stock

     (25,882     —          (25,882     —     

Proceeds from issuance of common stock

     4,416        3,068        12,792        4,636   

Excess tax benefit of stock options exercised

     865        1,491        1,314        2,621   

Payments on debt

     (11     —          (271     (22
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash provided by (used in) financing activities

     (20,612     4,559        (12,047     7,235   

Effect of foreign exchange rates on cash and cash equivalents

     (847     1,808        1,878        683   
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     (13,493     16,516        (73,649     36,182   

Cash and cash equivalents at beginning of period

     121,792        61,212        181,948        41,546   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 108,299      $ 77,728      $ 108,299      $ 77,728   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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RightNow Technologies, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measurements

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

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2011     2010     2011     2010  

Income from operations as reported

   $ 4,138      $ 4,134      $ 6,202      $ 7,096   

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

     7     9     4     5

Non-GAAP reconciling items (pre-tax)

        

Add stock-based compensation (“SBC”)

     3,854        2,202        10,581        5,718   

Add Q-go acquisition costs

     —          —          415        —     

Add amortization expense of acquired intangible assets

     966        —          2,681        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

   $ 8,958      $ 6,336      $ 19,879      $ 12,814   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     16     13     12     10

Net income as reported

   $ 1,532      $ 2,895      $ 3,116      $ 4,884   

Non-GAAP reconciling items (pre-tax)

        

Add stock-based compensation (“SBC”)

     3,854        2,202        10,581        5,718   

Add Q-go acquisition costs

     —          —          415        —     

Add amortization expense of acquired intangible assets

     966        —          2,681        —     

Add amortization of debt issuance expense

     253        —          760        —     

Less foreign currency gain

     —          —          (1,819     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income

   $ 6,605      $ 5,097      $ 15,734      $ 10,602   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share, as reported (basic)

   $ 0.05      $ 0.09      $ 0.09      $ 0.15   

Net income per share, as reported (diluted)

     0.04        0.09        0.09        0.15   

Non-GAAP Net income per share (basic)

     0.20        0.16        0.48        0.33   

Non-GAAP Net income per share (diluted)

     0.19        0.15        0.44        0.32   

Shares outstanding (basic), as reported

     33,001        32,128        32,921        32,020   

Shares outstanding (diluted), as reported

     35,652        33,659        35,750        33,515   

 

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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.

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 nine months ended September 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.

 

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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.

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