Bazaarvoice Inc - FORM 8-K - EX-99.1

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8-K - 8-K - Bazaarvoice Inc	d827797d8k.htm

Exhibit 99.1

Bazaarvoice, Inc. Announces its Financial Results for the Second Fiscal Quarter of 2015

Second fiscal quarter of 2015 highlights include:

•

Achieved revenue of $47.3 million, an increase of 15% year over year from $41.1 million in the second fiscal quarter of 2014

•

Improved GAAP net loss to $9.9 million from a loss of $14.6 million in the same period a year ago

•

Delivered Adjusted EBITDA loss of $1.8 million, an improvement from a loss of $5.5 million in the same period a year ago

•

Increased total active clients to 1,258, up 28% year over year

•

Strong client launches and new customer acquisition

•

Resolved previously announced Department of Justice investigation of post-divestiture conduct, with no material impact to the Company

AUSTIN, Texas, December 2, 2014 (GLOBE NEWSWIRE) -- Bazaarvoice, Inc. (Nasdaq:BV), the network connecting brands and retailers to the authentic voices of consumers wherever they shop, reported its financial results for the second fiscal quarter of 2015 ended October 31, 2014.

“Our second quarter results reflect continued progress on many fronts for Bazaarvoice. We delivered accelerated revenue growth of 15% year-over-year, significantly improved our EBITDA and resolved the DOJ investigation of post-divestiture conduct,” said Gene Austin, chief executive officer and president. “I am pleased with the progress we have made in rebuilding the business to date, especially in the areas of client retention and new product innovation.”

Second Fiscal Quarter of 2015 Financial Details

The divestiture of PowerReviews was completed on July 2, 2014. The terms of the transaction were approved by the Department of Justice (“DOJ”) on June 26, 2014. As a result of this, PowerReviews revenues, related expenses and loss on disposal, net of tax, are components of “loss from discontinued operations” in the Condensed Consolidated Statements of Operations since our fourth fiscal quarter of 2014 and all comparative fiscal quarters presented. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented.

Summary data below describes results from continuing operations and excludes results from discontinued operations.

Revenue from continuing operations: Bazaarvoice reported revenue of $47.3 million for the second fiscal quarter of 2015, up 15% from the second fiscal quarter of 2014, and consisted of SaaS revenue of $45.2 million and net media revenue of $2.1 million.

Adjusted EBITDA from continuing operations: Adjusted EBITDA for the second fiscal quarter of 2015 was a loss of $1.8 million, a significant improvement compared with a loss of $5.5 million for the second fiscal quarter of 2014.

GAAP net loss and net loss per share from continuing operations: GAAP net loss was $9.9 million, compared to a GAAP net loss of $14.6 million for the second fiscal quarter of 2014. GAAP net loss per share was $0.13 based upon weighted average shares outstanding of 78.3 million, compared to $0.20 for the second fiscal quarter of 2014 based upon weighted average shares outstanding of 75.1 million.

Non-GAAP net loss and net loss per share from continuing operations: Non-GAAP net loss was $3.8 million, compared to a non-GAAP net loss of $6.8 million for the second fiscal quarter of 2014. Non-GAAP net loss per share was $0.05 based upon weighted average shares outstanding of 78.3 million, compared to $0.09 for the second fiscal quarter of 2014 based upon weighted average shares outstanding of 75.1 million.

Clients: The number of active clients at the end of the second fiscal quarter of 2015 was 1,258 and the number of network clients at the end of the second fiscal quarter of 2015 was over 2,300. Annualized SaaS revenue per average active client for the second fiscal quarter of 2015 was approximately $147,000.

Number of Active Clients: Beginning as of our fourth fiscal quarter of 2014, we define an active client as an organization from which we are currently recognizing recurring revenue, and we count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our ability to increase our active client base is a leading indicator of our ability to grow revenue.

Further, due to the presentation of the PowerReviews business as discontinued operations since our fourth fiscal quarter of 2014 and subsequent divestiture in the first fiscal quarter of 2015, we have separated our active clients into two categories: 1) active clients from continuing operations and 2) active clients from discontinued operations. As a result of this analysis, each category could include a common client who may have organizations for which we recognized recurring revenue that have separate signed contractual agreements.

All periods prior to the fourth fiscal quarter of 2014 discussed in this press release or presented in the accompanying financial tables have been revised to conform to this definition of an active client.

Number of Network Clients

We define a network client as an organization that does not have recurring revenue. We count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our network client base in combination with our active client base is an indicator of the reach of our network.

Quarterly Conference Call

Bazaarvoice will host a conference call today at 4:30 p.m. Eastern Time to review the Company’s financial results for the second fiscal quarter of 2015. To access this call, dial (877) 407-3982 from the United States or (201) 493-6780 internationally with conference ID 13593685. A live webcast of the conference call can be accessed from the investor relations page of Bazaarvoice’s company website at investors.bazaarvoice.com. Following the completion of the call, a recorded replay will be available on the Company’s website, and a telephone replay will be available through December 16, 2014 by dialing (877) 870-5176 from the United States or (858) 384-5517 internationally with recording access code 13593685.

About Bazaarvoice

Bazaarvoice is a network that connects brands and retailers to the authentic voices of people where they shop. Each month, more than 500 million people view and share authentic opinions, questions, and experiences about tens of millions of products in the Bazaarvoice network. The Company’s technology platform amplifies these voices into the places that influence purchase decisions. Network analytics help marketers and advertisers provide more engaging experiences that drive brand awareness, consideration, sales, and loyalty. Headquartered in Austin, Texas, Bazaarvoice has offices across North America, Europe, and Asia-Pacific. For more information, visit www.bazaarvoice.com, read the blog at www.bazaarvoice.com/blog, and follow on Twitter at www.twitter.com/bazaarvoice.

Non-GAAP Financial Measures

Adjusted EBITDA for continuing operations discussed in this press release is defined as our GAAP net loss from continuing operations adjusted for stock-based expense, contingent consideration related to acquisition, adjusted depreciation and amortization (which excludes amortization of capitalized internal-use software development costs), integration and other costs related to acquisitions, other non-business costs and benefits, income tax expense and other (income) expense, net.

Adjusted EBITDA for discontinuing operations presented in the accompanying financial tables is defined as our GAAP net loss from discontinued operations adjusted for stock-based expense, adjusted depreciation and amortization (which excludes amortization of capitalized internal-use software development costs), impairment of acquired intangibles, integration and other costs related to the acquisition and the divestiture of PowerReviews, estimated loss on disposal of discontinued operations, other non-business costs and benefits, income tax expense and other (income) expense, net.

Non-GAAP net loss for continuing operations, which is used to calculate non-GAAP net loss per share for continuing operations, is defined as our GAAP net loss from continuing operations, adjusted to exclude stock-based expense, contingent consideration related to acquisition, amortization of acquired intangible assets, integration and other costs related to acquisitions, and other non-business costs and benefits along with the associated income tax effect of these adjustments.

Non-GAAP net loss for discontinued operations, which is used to calculate non-GAAP net loss per share for discontinued operations, is defined as our GAAP net loss from discontinued operations adjusted to exclude stock-based expense, amortization of acquired intangible assets, impairment of acquired intangibles, integration and other costs related to the acquisition and divestiture of PowerReviews, estimated loss on disposal of discontinued operations and other non-business costs and benefits along with the associated income tax effect of these adjustments.

Management presents these non-GAAP financial measures because it considers them to be important supplemental measures of core operating performance. Further, management has presented these non-GAAP financial measures separately for discontinued operations as it may prove useful to securities analysts and investors in evaluating the impact of the divestiture of PowerReviews on the Company’s continuing operating performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the Company’s operating performance against prior periods and the effectiveness of our business strategies, the preparation of operating budgets and to determine appropriate levels of operating and capital investments, as well as in communications with our board of directors concerning our financial performance. Management also believes that the non-GAAP financial measures provide additional insight for securities analysts and investors in evaluating the Company’s financial and operational performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired. However, these non-GAAP financial measures have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Furthermore, these non-GAAP financial measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate these non-GAAP financial measures in the same manner. We intend to provide these non-GAAP financial measures as part of our future financial results discussions; therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. A reconciliation of these non-GAAP measures to GAAP is provided in the accompanying tables.

Forward-looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management’s belief that we are well positioned to return to higher revenue growth rates over the long-term, management’s estimates regarding future revenue and financial performance, the ability to continue developing network solutions to leverage our consumer audience reach, content and data to create incremental value for clients, and other statements about management’s beliefs, intentions or goals. We may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, our expectations regarding our revenue, expenses, sales and operations; our limited operating history; our ability to operate in a new and unproven market; our ability to effectively manage growth, our ability to manage expansion into international markets and new vertical industries; our ability to successfully identify, manage and integrate potential acquisitions; and other risks and potential factors that could affect Bazaarvoice’s business and financial results identified in our Form 10-K for the fiscal year ended April 30, 2014 as filed with the Securities and Exchange Commission on June 26, 2014 and our Form 10-Q for the fiscal quarter ended July 31, 2014 as filed with the Securities and Exchange Commission on September 4, 2014. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We do not intend and undertake no duty to release publicly any updates or revisions to any forward-looking statements contained herein.

Investor Relations Contact:

Linda Wells

Bazaarvoice, Inc.

415-489-6045

linda.wells@bazaarvoice.com

Media Contact:

Matt Krebsbach

Bazaarvoice, Inc.

512-551-6612

matt.krebsbach@bazaarvoice.com

Bazaarvoice, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	October 31,			April 30,
	2014			2014
Assets
Current assets:
Cash and cash equivalents	$	32,855		$	31,934
Restricted cash		1,000			604
Short-term investments		48,639			40,700
Accounts receivable, net		40,032			39,099
Prepaid expenses and other current assets		13,191			8,212
Assets held for sale		—			33,745

Total current assets		135,717			154,294
Property, equipment and capitalized internal-use software development costs, net		17,949			17,005
Goodwill		139,155			139,155
Acquired intangible assets, net		12,443			13,388
Other non-current assets		3,577			3,428

Total assets	$	308,841		$	327,270

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,013		$	3,346
Accrued expenses and other current liabilities		26,739			27,071
Revolving line of credit		27,000			27,000
Deferred revenue		52,180			54,951
Liabilities held for sale		—			3,621

Total current liabilities		109,932			115,989
Deferred revenue less current portion		2,698			1,722
Deferred tax liability, long-term		1,666			1,730
Other liabilities, long-term		607			1,367

Total liabilities		114,903			120,808
Stockholders’ equity:
Common stock		8			8
Additional paid-in capital		407,590			398,201
Accumulated other comprehensive income (loss)		(112	)		328
Accumulated deficit		(213,548	)		(192,075	)

Total stockholders’ equity		193,938			206,462

Total liabilities and stockholders’ equity	$	308,841		$	327,270

Bazaarvoice, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except net loss per share data)

(unaudited)


	Three Months Ended October 31,						Six Months Ended October 31,
	2014			2013			2014			2013
Revenue	$	47,325		$	41,148		$	93,302		$	81,467
Cost of revenue		17,414			12,508			33,770			24,625

Gross profit		29,911			28,640			59,532			56,842

Operating expenses:
Sales and marketing		18,931			20,837			39,926			41,833
Research and development		9,306			9,793			19,036			18,717
General and administrative		8,100			3,639			15,993			12,175
Acquisition-related and other expense		2,326			8,283			2,818			15,787
Amortization of acquired intangible assets		310			283			619			565

Total operating expenses		38,973			42,835			78,392			89,077

Operating loss		(9,062	)		(14,195	)		(18,860	)		(32,235	)

Other income (expense), net:
Interest income		10			46			16			112
Interest expense		(250	)		(32	)		(482	)		(32	)
Other expense		(348	)		(263	)		(620	)		(326	)

Total other expense net		(588	)		(249	)		(1,086	)		(246	)

Loss from continuing operations before income taxes		(9,650	)		(14,444	)		(19,946	)		(32,481	)
Income tax expense (benefit)		258			130			270			(261	)

Net loss from continuing operations attributable to common stockholders		(9,908	)		(14,574	)		(20,216	)		(32,220	)
Income (loss) from discontinued operations, net of tax		—			420			(1,257	)		698

Net loss applicable to common stockholders	$	(9,908	)	$	(14,154	)	$	(21,473	)	$	(31,522	)

Basic and diluted loss per share:
Continuing operations	$	(0.13	)	$	(0.20	)	$	(0.26	)	$	(0.43	)
Discontinued operations		—			0.01		$	(0.02	)		0.01

Basic and diluted loss per share:	$	(0.13	)	$	(0.19	)	$	(0.28	)	$	(0.42	)

Basic and diluted weighted average number of shares outstanding		78,280			75,088			78,023			74,535

Bazaarvoice, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended October 31,						Six Months Ended October 31,
	2014			2013			2014			2013
Operating activities:
Net loss	$	(9,908	)	$	(14,154	)	$	(21,473	)	$	(31,522	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		3,240			3,843			6,050			7,319
Loss on disposal of discontinued operations, net of tax		—			—			1,537			—
Stock-based expense		3,343			3,648			6,589			7,656
Revaluation of contingent consideration		—			(3,270	)		—			(3,270	)
Bad debt expense		622			65			1,223			631
Excess tax benefit related to stock-based expense		—			(3	)		(1	)		(93	)
Other non-cash expense ⁽¹⁾		60			97			229			179
Changes in operating assets and liabilities:
Accounts receivable		(2,591	)		(4,296	)		(2,156	)		(1,789	)
Prepaid expenses and other current assets		(363	)		384			(508	)		28
Other non-current assets		114			(290	)		(205	)		(813	)
Accounts payable		247			460			455			(14	)
Accrued expenses and other current liabilities		1,033			2,832			(1,355	)		4,561
Deferred revenue		(4,143	)		(1,493	)		(1,794	)		(3,925	)
Other liabilities, long-term		(387	)		(298	)		(736	)		(537	)

Net cash used in operating activities		(8,733	)		(12,475	)		(12,145	)		(21,589	)
Investing activities:
Acquisitions, net of cash acquired, and purchase of intangible asset		—			—			—			(205	)
Proceeds from sale of discontinued operations		—			—			25,500			—
Purchases of property, equipment and capitalized internal-use software development costs		(2,958	)		(2,288	)		(6,238	)		(6,251	)
Increase in restricted cash		(500	)		—			(500	)		—
Purchases of short-term investments		(2,189	)		(8,956	)		(41,047	)		(34,117	)
Proceeds from maturities of short-term investments		16,360			18,649			28,015			39,899
Proceeds from sales of short-term investments ⁽¹⁾		5,012			1,053			5,012			17,071

Net cash provided by investing activities		15,725			8,458			10,742			16,397
Financing activities:
Proceeds from employee stock compensation plans		1,643			4,553			2,799			7,390
Excess tax benefit related to stock-based expense		—			3			1			93

Net cash provided by financing activities		1,643			4,556			2,800			7,483
Effect of exchange rate fluctuations on cash and cash equivalents		(484	)		198			(476	)		141

Net change in cash and cash equivalents		8,151			737			921			2,432
Cash and cash equivalents at beginning of period		24,704			26,740			31,934			25,045

Cash and cash equivalents at end of period	$	32,855		$	27,477		$	32,855		$	27,477

Supplemental disclosure of other cash flow information:
Cash paid for income taxes, net of refunds	$	256		$	(57	)	$	717		$	300
Cash paid for interest		229			—			451			—

⁽¹⁾	Prior period has been reclassified to conform with basis of presentation adopted in current period.

These Condensed Consolidated Statements of Cash Flows include combined cash flows from continuing operations along with discontinued operations.

Bazaarvoice, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures for Continuing Operations

(in thousands, except net loss per share data)

(unaudited)


	Three Months Ended October 31,						Six Months Ended October 31,
	2014			2013			2014			2013
Non-GAAP net loss and net loss per share from continuing operations:
GAAP net loss from continuing operations	$	(9,908	)	$	(14,574	)	$	(20,216	)	$	(32,220	)
Stock-based expense ⁽¹⁾		3,343			3,467			6,465			7,274
Contingent consideration related to acquisition⁽²⁾		—			(4,230	)		—			(3,860	)
Amortization of acquired intangible assets		472			283			945			565
Acquisition-related and other expense		2,326			8,283			2,818			15,787
Other stock-related expense ⁽⁴⁾		—			—			(430	)		—
Income tax adjustment for non-GAAP items		1			(53	)		1			(47	)

Non-GAAP net loss from continuing operations	$	(3,766	)	$	(6,824	)	$	(10,417	)	$	(12,501	)

GAAP basic and diluted shares		78,280			75,088			78,023			74,535

Non-GAAP basic and diluted net loss per share from continuing operations	$	(0.05	)	$	(0.09	)	$	(0.13	)	$	(0.17	)


Adjusted EBITDA from continuing operations:
GAAP net loss from continuing operations	$	(9,908	)	$	(14,574	)	$	(20,216	)	$	(32,220	)
Stock-based expense ⁽¹⁾		3,343			3,467			6,465			7,274
Contingent consideration related to acquisition⁽²⁾		—			(4,230	)		—			(3,860	)
Adjusted depreciation and amortization ⁽³⁾		1,598			1,202			2,932			2,255
Acquisition-related and other expense		2,326			8,283			2,818			15,787
Other stock-related expense ⁽⁴⁾		—			—			(430	)		—
Income tax expense (benefit)		258			130			270			(261	)
Total other (income) expense, net		588			249			1,086			246

Adjusted EBITDA from continuing operations:	$	(1,795	)	$	(5,473	)	$	(7,075	)	$	(10,779	)


⁽¹⁾ Stock-based expense includes the following:
Cost of revenue	$	458		$	236		$	772		$	554
Sales and marketing		1,162			1,324			2,106			2,551
Research and development		522			662			1,169			1,467
General and administrative		1,201			1,245			2,418			2,702

Stock-based expense	$	3,343		$	3,467		$	6,465		$	7,274


⁽²⁾ Contingent consideration related to acquisition includes the following:
(a) Revaluation of contingent consideration
General and administrative	$	—		$	(3,270	)	$	—		$	(3,270	)
(b) Contingent consideration included in compensation expense
General and administrative		—			(480	)		—			(295	)
Sales and marketing		—			(480	)		—			(295	)

Contingent consideration related to acquisition	$	—		$	(4,230	)	$	—		$	(3,860	)


Revaluation of contingent consideration is the decrease in fair value of the liability-classified contingent consideration related to the acquisition of Longboard Media, Inc. Contingent consideration included in compensation expense relates to certain Longboard Media, Inc. employees whose right to receive such compensation is forfeited if they terminate their employment. The contingent consideration was payable on Longboard Media’s achievement of certain performance goals for the period from January 1, 2013 to December 31, 2013. On October 31, 2013, the Company determined that the probability of the attainment of the underlying performance goals was remote and the resultant payout was estimated to be zero. As a result, the fair value of the liability-classified contingent consideration and the liability accrued for contingent consideration included in compensation expense were reduced to zero. On January 31, 2014, the Company concluded that the underlying performance goals were not met and the payout was zero. We exclude these items from our non-GAAP financial measures in order to facilitate the comparison of post-acquisition operating results.

Bazaarvoice, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures for Continuing Operations (continued)

(in thousands, except net loss per share data)

(unaudited)


⁽³⁾ Adjusted depreciation and amortization includes the following:
	Three Months Ended October 31,				Six Months Ended October 31,
	2014		2013		2014			2013
Cost of revenue	$	481	$	238	$	908		$	464
Sales and marketing		303		318		561			539
Research and development		242		226		441			415
General and administrative		262		137		403			272
Amortization of acquired intangible assets		310		283		619			565

Adjusted depreciation and amortization	$	1,598	$	1,202	$	2,932		$	2,255


⁽⁴⁾ Other stock-related expense includes the following:
General and administrative	$	—	$	—	$	(430	)	$	—

Other stock-related expense	$	—	$	—	$	(430	)	$	—

Other stock-related expense represents an estimated liability for taxes and related items in connection with our treatment of certain stock option grants. Since the estimated liability directly relates to stock option grants and as stock-based expenses are consistently excluded from our non-GAAP financial measures, we have excluded this estimated liability. During the six months ended October 31, 2014, the Company recorded a benefit of $0.4 million due to a reduction of this estimated liability.

Bazaarvoice, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures for Discontinued Operations

(in thousands, except net loss per share data)

(unaudited)


	Three Months Ended October 31,				Six Months Ended October 31,
	2014		2013		2014			2013
Non-GAAP net income (loss) and net earnings per share from discontinued operations:
GAAP net income (loss) from discontinued operations	$	—	$	420	$	(1,257	)	$	698
Stock-based expense ⁽¹⁾		—		181		124			382
Amortization of acquired intangible assets		—		1,471		—			2,943
Acquisition-related, divestiture-related and other expenses		—		—		682			—
Loss on disposal of discontinued operations, net of tax ⁽³⁾		—		—		1,537			—

Non-GAAP net income from discontinued operations	$	—	$	2,072	$	1,086		$	4,023

GAAP basic weighted average shares outstanding:		78,280		75,088		78,023			74,535
GAAP diluted weighted average shares outstanding;		79,394		78,196		79,130			77,738

Non-GAAP basic earnings per share from discontinued operations	$	—	$	0.03	$	0.01		$	0.06

Non-GAAP diluted earnings per share from discontinued operations	$	—	$	0.03	$	0.01		$	0.06


Adjusted EBITDA from discontinued operations:
GAAP net loss from discontinued operations	$	—	$	420	$	(1,257	)	$	698
Stock-based expense ⁽¹⁾		—		181		124			382
Adjusted depreciation and amortization ⁽²⁾		—		1,503		—			3,009
Acquisition-related, divestiture-related and other expenses		—		—		682			—
Income tax expense (benefit)		—		253		23			421
Total other income		—		—		—			(4	)
Estimated loss on disposal of discontinued operations, net of tax ⁽³⁾		—		—		1,537			—

Adjusted EBITDA from discontinued operations:	$	—	$	2,357	$	1,109		$	4,506


⁽¹⁾ Stock-based expense includes the following:
Cost of revenue	$	—	$	160	$	115		$	334
Sales and marketing		—		2		—			6
Research and development		—		17		4			36
General and administrative		—		2		5			6

Stock-based expense	$	—	$	181	$	124		$	382


⁽²⁾ Adjusted depreciation and amortization includes the following:
Cost of revenue	$	—	$	450	$	—		$	900
General and administrative		—		31		—			65
Amortization of acquired intangible assets		—		1,022		—			2,044

Adjusted depreciation and amortization	$	—	$	1,503	$	—		$	3,009

⁽³⁾

On July 2, 2014, the Company completed the sale of PowerReviews for a total cash consideration of $30.0 million. Of the $30.0 million sales price, $4.5 million has been placed into escrow as partial security for the Company’s indemnification obligations. The Company incurred a total loss of $10.7 million on the sale of PowerReviews. The loss on disposal of discontinued operations was determined by offsetting the total consideration from selling the PowerReviews business by any associated transaction costs and the net carrying value of the assets and liabilities held for sale as of July 2, 2014. Of the $10.7 million loss on disposal of discontinued operations, $9.2 million was recognized as an estimated loss on disposal of discontinued operations during the three months ended April 30, 2014; resulting in the incremental loss of $1.5 million loss being recognized in the six months ended October 31, 2014.

Bazaarvoice, Inc.

Selected Quarterly Financial and Operational Metrics for Continuing and Discontinued Operations

(in thousands, except active enterprise clients and full-time employees data)

(unaudited)


	Three Months Ended
	Jan 31,			Apr 30,			Jul 31,			Oct 31,			Jan 31,			Apr 30,			Jul 31,			Oct 31,
	2013			2013			2013			2013			2014			2014			2014			2014
Continuing Operations:
Revenue ⁽¹⁾	$	38,920		$	38,924		$	40,319		$	41,148		$	43,600		$	43,078		$	45,977		$	47,325
Cost of revenue		12,130			12,319			12,117			12,508			13,758			14,522			16,356			17,414

Gross profit		26,790			26,605			28,202			28,640			29,842			28,556			29,621			29,911
Operating expenses:
Sales and marketing⁽³⁾		20,103			22,095			20,996			20,837			20,765			23,884			20,995			18,931
Research and development		8,822			8,691			8,924			9,793			9,036			9,832			9,730			9,306
General and administrative⁽³⁾		8,125			9,672			8,536			3,639			7,674			6,521			7,893			8,100
Acquisition-related and other expense		1,583			7,819			7,504			8,283			31			366			492			2,326
Amortization of acquired intangible assets		267			282			282			283			282			288			309			310

Total operating expenses		38,900			48,559			46,242			42,835			37,788			40,891			39,419			38,973

Operating loss		(12,110	)		(21,954	)		(18,040	)		(14,195	)		(7,946	)		(12,335	)		(9,798	)		(9,062	)
Total other income (expense), net		8			(483	)		3			(249	)		(268	)		(316	)		(498	)		(588	)

Loss before income taxes		(12,102	)		(22,437	)		(18,037	)		(14,444	)		(8,214	)		(12,651	)		(10,296	)		(9,650	)
Income tax expense (benefit)		(2,295	)		583			(391	)		130			179			(418	)		12			258

Net loss from continuing operations		(9,807	)		(23,020	)		(17,646	)		(14,574	)		(8,393	)		(12,233	)		(10,308	)		(9,908	)

Stock-based expense ⁽²⁾		2,761			3,114			3,807			3,467			3,218			3,333			3,122			3,343
Contingent consideration related to acquisition ⁽³⁾		—			(410	)		370			(4,230	)		—			—			—			—
Adjusted depreciation and amortization ⁽⁴⁾		1,071			948			1,053			1,202			1,156			1,081			1,334			1,598
Acquisition-related and other expense		1,583			7,819			7,504			8,283			31			366			492			2,326
Other stock-related expense ⁽⁵⁾		—			1,428			—			—			—			—			(430	)		—
Income tax expense (benefit)		(2,295	)		583			(391	)		130			179			(418	)		12			258
Total other (income) expense, net		(8	)		483			(3	)		249			268			316			498			588

Adjusted EBITDA from continuing operations	$	(6,695	)	$	(9,055	)	$	(5,306	)	$	(5,473	)	$	(3,541	)	$	(7,555	)	$	(5,280	)	$	(1,795	)


Income (loss) from discontinued operations	$	(1,020	)	$	(124	)	$	278		$	420		$	430		$	(11,448	)	$	(1,257	)	$	—
Stock-based expense ⁽²⁾		378			267			201			181			122			139			124			—
Adjusted depreciation and amortization ⁽⁴⁾		1,391			1,589			1,506			1,503			1,492			1,482			—			—
Impairment of acquired intangible assets ⁽⁷⁾		—			—			—			—			—			2,500			—			—
Acquisition-related, divestiture-related and other expenses		438			(378	)		—			—			—			819			682			—
Other stock-related expense ⁽⁵⁾		—			772			—			—			—			—			—			—
Income tax expense (benefit)		2			1			168			253			261			(660	)		23			—
Total other (income) expense, net		(4	)		(10	)		(4	)		—			—			—			—			—
Estimated loss on disposal of discontinued operations, net of tax ⁽⁸⁾		—			—			—			—			—			9,192			1,537			—

Adjusted EBITDA from discontinued operations	$	1,185		$	2,117		$	2,149		$	2,357		$	2,305		$	2,024		$	1,109		$	—


Number of active clients from continuing operations (at period end) ⁽⁶⁾		943			885			922			980			1,011			1,133			1,197			1,258
Number of active clients from discontinued operations (at period end) ⁽⁶⁾		413			404			398			389			368			341			—			—

Full-time employees including employees attributable to discontinued operations (at period end)		796			783			776			798			794			799			787			814
Full-time employees attributable to discontinued operations (at period end)		35			29			28			27			25			24			—			—

⁽¹⁾ Revenue from continuing operations includes the following:
SaaS	$	37,071		$	38,057		$	38,863		$	39,896		$	40,645		$	41,924		$	44,324		$	45,199
Media		1,849			867			1,456			1,252			2,955			1,154			1,653			2,126

Revenue	$	38,920		$	38,924		$	40,319		$	41,148		$	43,600		$	43,078		$	45,977		$	47,325

Revenue from discontinued operations includes the following:
SaaS	$	3,639		$	4,316		$	4,179		$	4,335		$	4,338		$	3,947		$	2,517		$	—
Media		119			90			73			55			59			25			18			—

Revenue	$	3,758		$	4,406		$	4,252		$	4,390		$	4,397		$	3,972		$	2,535		$	—

Total revenue:
SaaS	$	40,710		$	42,373		$	43,042		$	44,231		$	44,983		$	45,871		$	46,841		$	45,199
Media		1,968			957			1,529			1,307			3,014			1,179			1,671			2,126

Revenue	$	42,678		$	43,330		$	44,571		$	45,538		$	47,997		$	47,050		$	48,512		$	47,325

Bazaarvoice, Inc.

Selected Quarterly Financial and Operational Metrics for Continuing and Discontinued Operations (continued)

(in thousands, except active enterprise clients and full-time employees data)

(unaudited)


	Three Months Ended
	Jan 31,		Apr 30,			Jul 31,		Oct 31,			Jan 31,		Apr 30,		Jul 31,		Oct 31,
	2013		2013			2013		2013			2014		2014		2014		2014

⁽²⁾ Stock-based expense from continuing operations includes the following:
Cost of revenue	$	167	$	149		$	318	$	236		$	285	$	316	$	314	$	458
Sales and marketing		706		841			1,227		1,324			873		1,072		944		1,162
Research and development		628		733			805		662			603		747		647		522
General and administrative		1,260		1,391			1,457		1,245			1,457		1,198		1,217		1,201

Stock-based expense from continuing operations	$	2,761	$	3,114		$	3,807	$	3,467		$	3,218	$	3,333	$	3,122	$	3,343


Stock-based expense from discontinued operations includes the following:
Cost of revenue	$	287	$	236		$	174	$	160		$	106	$	127	$	115	$	—
Sales and marketing		12		5			4		2			1		—		—		—
Research and development		53		24			19		17			13		6		4		—
General and administrative		26		2			4		2			2		6		5		—

Stock-based expense from discontinued operations	$	378	$	267		$	201	$	181		$	122	$	139	$	124	$	—


⁽³⁾ Contingent consideration related to acquisition includes the following:
(a) Revaluation of contingent consideration
General and administrative	$	—	$	(1,000	)	$	—	$	(3,270	)	$	—	$	—	$	—	$	—
(b) Contingent consideration included in compensation expense
General and administrative		—		295			185		(480	)		—		—		—		—
Sales and marketing		—		295			185		(480	)		—		—		—		—

Contingent consideration related to acquisition	$	—	$	(410	)	$	370	$	(4,230	)	$	—	$	—	$	—	$	—

Revaluation of contingent consideration is the decrease in fair value of the liability-classified contingent consideration related to the acquisition of Longboard Media, Inc. Contingent consideration included in compensation expense relates to certain Longboard Media, Inc. employees whose right to receive such compensation is forfeited if they terminate their employment. The contingent consideration was payable to Longboard Media’s achievement of certain performance goals for the period from January 1, 2013 to December 31, 2013. On October 31, 2013, the Company determined that the probability of the attainment of the underlying performance goals was remote and the resultant payout was estimated to be zero. As a result, the fair value of the liability-classified contingent consideration and the liability accrued for contingent consideration included in compensation expense were reduced to zero. On January 31, 2014, the Company concluded that the underlying performance goals were not met and the payout was zero. We exclude these items from our non-GAAP financial measures in order to facilitate the comparison of post-acquisition operating results.


	Three Months Ended
	Jan 31,		Apr 30,		Jul 31,		Oct 31,		Jan 31,		Apr 30,		Jul 31,			Oct 31,
	2013		2013		2013		2013		2014		2014		2014			2014
⁽⁴⁾ Adjusted depreciation and amortization from continuing operations includes the following:
Cost of revenue	$	232	$	231	$	226	$	238	$	229	$	244	$	427		$	481
Sales and marketing		173		120		221		318		298		275		258			303
Research and development		169		173		189		226		209		189		199			242
General and administrative		230		142		135		137		138		85		141			262
Amortization of acquired intangible assets		267		282		282		283		282		288		309			310

Adjusted depreciation and amortization from continuing operations	$	1,071	$	948	$	1,053	$	1,202	$	1,156	$	1,081	$	1,334		$	1,598


Adjusted depreciation and amortization from discontinued operations includes the following:
Cost of revenue	$	450	$	450	$	450	$	450	$	450	$	450	$	—		$	—
General and administrative		43		40		34		31		20		10		—			—
Amortization of acquired intangible assets		898		1,099		1,022		1,022		1,022		1,022		—			—

Adjusted depreciation and amortization from discontinued operations	$	1,391	$	1,589	$	1,506	$	1,503	$	1,492	$	1,482	$	—		$	—


⁽⁵⁾ Other stock-related expense from continuing operations includes the following:
General and administrative	$	—	$	1,428	$	—	$	—	$	—	$	—	$	(430	)	$	—

Other stock-related expense	$	—	$	1,428	$	—	$	—	$	—	$	—	$	(430	)	$	—


Other stock-related expense from discontinued operations includes the following:
General and administrative	$	—	$	772	$	—	$	—	$	—	$	—	$	—		$	—

Other stock-related expense	$	—	$	772	$	—	$	—	$	—	$	—	$	—		$	—

Other stock-related expense represents an estimated liability for taxes and related items in connection with our treatment of certain stock option grants. Since the estimated liability directly relates to stock option grants and as stock-based expenses are consistently excluded from our non-GAAP financial measures, we have excluded this estimated liability. During the three months ended July 31, 2014, the Company recorded a benefit of $0.4 million due to a reduction of this estimated liability.

Bazaarvoice, Inc.

Selected Quarterly Financial and Operational Metrics for Continuing and Discontinued Operations (continued)

(in thousands, except active enterprise clients and full-time employees data)

(unaudited)

⁽⁶⁾

Beginning as of our fourth fiscal quarter of 2014, we define an active client as an organization from which we are currently recognizing recurring revenue, and we count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our ability to increase our active client base is a leading indicator of our ability to grow revenue.

Further, due to the presentation of the PowerReviews business as discontinued operations, we have separated our active clients into two categories: 1) active clients from continuing operations and 2) active clients from discontinued operations. As a result of this analysis, each category could include a common client who may have organizations for which we recognized recurring revenue that have separate signed contractual agreements.

⁽⁷⁾

During the fourth fiscal quarter of 2014, the Company reported the results of operations and financial position of PowerReviews as “discontinued operations.” On the Condensed Consolidated Balance Sheet as of April 30, 2014, the assets and liabilities of PowerReviews were presented as “Assets held for sale” and “Liabilities held for sale.” The Company compared the carrying value of the asset group included in “assets held for sale” to the undiscounted cash flows to be generated by the asset group. The carrying value of the asset group exceeded the undiscounted cash flows and; as a result, the Company recorded an impairment change of $2.5 million for the three months ended April 30, 2014.

⁽⁸⁾

Bazaarvoice Inc - FORM 8-K - EX-99.1 - December 2, 2014

Attached files

Bazaarvoice Inc Reports