Disruptive new ‘Source to Pay and Enterprise Contract Lifecycle Management’ cloud platform on track for fall delivery
CARMEL, IN August 10, 2016 – Determine, Inc. (NASDAQ: DTRM), a leading global provider of SaaS enterprise Source to Pay and Enterprise Contract Lifecycle Management, including cloud-based strategic sourcing, supplier management, contract management and procure-to-pay solutions, announced financial results for its first quarter ended June 30, 2016.
Q1 FY2017 GAAP Financial Highlights:
- GAAP revenue was $6.5 million in Q1 FY2017, compared to $6.2 million in Q1 FY2016, representing a 4.5% increase in year-over-year growth.
- GAAP gross profit percentage decreased to 52.1% in Q1 FY2017, compared to 53.2% in Q1 FY2016, a decrease of 1.1 percentage point.
- Deferred revenues increased 23.1% to $10.2 million in Q1 FY2017 from $ 8.2 million in Q1 FY2016.
|(in thousands, except per share amounts)|
|Financial Measures||FY 2017||FY 2016||FY 2016||Q/Q||Y/Y|
|Revenue – total||$ 6,492||$ 6,680||$ 6,215||(2.8%)||4.5%|
|Revenue – recurring||$ 5,068||$ 4,981||$ 5,095||1.7%||-0.5%|
|Revenue – non-recurring||$ 1,424||$ 1,699||$ 1,120||(16.2%)||27.2%|
|Gross profit – total||$ 3,385||$ 3,296||$ 3,308||2.7%||2.3%|
|Gross profit – recurring||$ 3,462||$ 3,137||$ 3,665||10.4%||-5.6%|
|Gross profit/(loss) – non-recurring||$ (77)||$ 159||$ (357)||(148.2%)||-78.5%|
|Gross margin – total||52.1%||49.3%||53.2%||2.8 pts||(1.1 pts)|
|Gross margin – recurring||68.3%||63.0%||71.9%||5.3 pts||(3.6 pts)|
|Gross margin – non recurring||(5.4%)||9.4%||(31.9%)||(14.9 pts)||26.5 pts|
|Net loss||$ (2,342)||$ (4,810)||$ (2,942)||(51.3%)||(20.4%)|
|EPS||$ (0.21)||$ (0.42)||$ (0.32)||$ 0.22||$ 0.12|
Q1 FY2017 Non-GAAP Financial Highlights:
- Non-GAAP revenue increased 3.5% to $6.5 million in Q1 FY2017 from $6.3 million in Q1 FY 2016. The difference between GAAP and Non-GAAP revenue is due to the Iasta and b-pack purchase accounting deferred revenue adjustment.
- Non-GAAP gross profit percentage remained relatively flat at 57.1% in Q1 FY2017, compared to 57.5% in Q1 FY 2016. The difference between GAAP and Non-GAAP gross profit is due to the Iasta and b-pack purchase accounting deferred revenue adjustment and the amortization of intangibles.
- Billings increased 4.1% to $6.3 million in Q1 FY2017 from $6.0 million in Q1 FY2016. Billings, a non-GAAP measure, are defined as revenues plus the change in deferred revenues.
|(in thousands, except per share amounts)|
|Financial Measures||FY 2017||FY 2016||FY 2016||Q/Q||Y/Y|
|Revenue – total||$ 6,500||$ 6,696||$ 6,277||(2.9%)||3.5%|
|Revenue – recurring||$ 5,067||$ 4,997||$ 5,157||1.6%||(1.6%)|
|Revenue – non-recurring||$ 1,424||$ 1,699||$ 1,120||(16.2%)||27.1%|
|Gross profit – total||$ 3,710||$ 3,660||$ 3,609||1.4%||2.8%|
|Gross profit – recurring||$ 3,737||$ 3,419||$ 3,915||9.3%||(4.5%)|
|Gross profit/(loss) – non-recurring||$ (27)||$ 241||$ (306)||(111.1%)||(91.3%)|
|Gross margin – total||57.1%||54.7%||57.5%||2.4 pts||(0.4 pts)|
|Gross margin – recurring||73.6%||68.4%||75.9%||5.2 pts||(2.3 pts)|
|Gross margin – non recurring||(1.9 %)||14.1%||(27.3%)||(16.0 pts)||25.4 pts|
|Net loss||$ (1,284)||$ (2,245)||$ (1,715)||(42.8%)||(25.1%)|
|EPS||$ (0.11)||$ (0.20)||$ (0.19)||0.09||$ 0.07|
|Billings||$ 6,280||$ 8,027||$ 6,031||(21.8%)||4.1%|
Coming out of this quarter, our momentum is strong as we are on track to release our integrated Source to Pay and Enterprise Contract Lifecycle Management unified suite offering on the Determine Cloud Platform. Market analysts, customers and prospects alike continue to share their enthusiasm for our new combined offering. As expected, our new ARR bookings were a bit lighter than in prior quarters, which we believe is a temporary change reflecting our pivot to the new platform. Our sales pipeline continues to build in a promising manner as prospects and current customers begin to become educated about the new integrated offering. From an operational perspective, we saw the meaningful results from the expense actions taken in the last quarter to manage and streamline the business, and we are committed to continue to efficiently drive the business towards profitability. As we continue to deliver through this critical product inflection point, I am optimistic about our upcoming quarter.”
— Patrick Stakenas, President and CEO of Determine
Q1 FY2017 Business Highlights:
- Executive Focus on Customer Success and Revenue Growth: In May 2016, David Bush was promoted to the new position of Chief Revenue Officer responsible for driving revenue across the Determine unified suite solutions worldwide, as well as managing global customer and partner alliance relations. In addition, Rose Lee was promoted to the role of Chief Customer Officer. Ms. Lee is responsible for Determine’s brand, global customer support, lead generation, marketing communication, market research and public relations.
- Top 50 Providers to Know: In Q1 FY2017, Determine was recognized as Top 50 Providers to Know for 2016 by Spend Matters. Jason Busch, founder and head of strategy at Spend Matters, specifically called out the value of the new integrated cloud platform to customers and prospects. “The Determine Cloud Platform provides their customers a robust suite of integrated applications, which includes spend analytics, supplier management, sourcing, contract management, procure to pay, and financial management,” said Mr. Busch. “This list is the product of intense debate, discussion and refinement each year by our analysts. This year saw new coverage areas and increased competition among providers in existing segments. Determine earned a deserved spot as one of the procurement providers worth getting to know in 2016.”
- Determine Scores Number 1 Out-of-the-Box Procure-to-Pay Suite: During Q1 FY2017, Gartner’s 2016 Magic Quadrant (MQ) for Procure-to-Pay Suites named Determine as #1 for “out of the box” P2P functionality for projects. Acknowledgement as a MQ participant is noteworthy today given the highly competitive marketplace and that the Gartner P2P MQ has decreased the number of providers reviewed by more than 40% from its 2015 analysis.
- New Headquarters Move from Silicon Valley to Silicon Prairie: On June 12, Determine officially relocated its headquarters from San Mateo, California to the Silicon Prairie, in Carmel, Indiana. The new Carmel, Indiana headquarters offers a centralized strategic location for our employees to maintain connectivity with the company’s global offices and customers. Indiana’s tech sector is thriving and offers an extremely solid business environment and a rich pool of talented employees.
- New Customer Expansions: In Q1 FY2017, the company engaged numerous new customer accounts in the US and Europe across its Determine SaaS suite of Source to Pay and Enterprise Contract Lifecycle Management solutions. The company added new customers in key verticals including: energy, financial, healthcare products, airlines, agricultural production, consumer goods, manufacturing, and retail.
- Thought Leadership: During fiscal Q1 of 2017, the company continued to support its customers and prospects by providing meaningful educational resources designed to help business decision-makers increase their ROI, increase savings or reduce risk by leveraging the Determine SaaS Source to Pay with Enterprise Lifecycle Contract Management solutions. The company held a highly effective webinars addressing:
- Paperless Payment: What e-payment can do for you and your organization, presented in collaboration with Andrew Bartolini, Managing Partner & Chief Research Officer at Ardent Partners.
- Self-Service Contract Lifecycle Management for corporate business users, presented in conjunction with the International Association for Contract and Commercial Management (IACCM), CEO Tim Cummins.
Conference Call and Webcast; Wednesday, August 10, 2016 at 5:00 PM Eastern
Participant Conference Call Numbers:
Participant Webcast Link: http://public.viavid.com/index.php?id=120646
Replay Dial-in Information:
From: 08/10/16 @ 8:00 pm Eastern Time
To: 08/17/16 @ 11:59 pm Eastern Time
Replay Pin Number: 13642532
Non-GAAP Financial Measures
To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including non-GAAP revenue, non-GAAP gross profit, non-GAAP net income and non-GAAP earnings per share, which we believe are helpful in understanding our past financial performance and future results. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “GAAP to Non-GAAP Reconciliations”. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.
The difference between GAAP and non-GAAP revenue is due to the impact of revaluing the deferred revenue balances acquired from primarily b-pack as required by GAAP purchase accounting.
The difference between GAAP and non-GAAP gross profit is the difference in GAAP versus non-GAAP revenues as well as the elimination of the amortization of acquisition related intangibles, stock based compensation and severance expense from the costs of revenue. Non-GAAP net loss excludes the non-GAAP gross profit items as well as acquisition related costs.
Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods; as such, we believe it is useful for investors to understand the effects of these items on our total operations. Further, please note that our non-GAAP revenue is intended to reflect the full amount of revenues that would have been otherwise recorded by the acquired entities of Iasta and b-pack, while our non-GAAP gross profit also excludes the amortization of intangibles that occurred due to the acquisition of the entities of Iasta and b-pack.
Bookings are an operating measure not derived from the company’s revenues or any other amounts presented in accordance with GAAP in the company’s statement of income, balance sheet or statement of cash flows or other equivalent statements.
Certain statements in this release and elsewhere by Determine are forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding business outlook, assessment of market conditions, anticipated financial and operating results, strategies, product and channel development, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance or achievements of the company or industry results, to differ materially from those expressed, or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward-looking statements include, but are not limited to fluctuations in demand for Determine’s products and services, risks of losing key personnel or customers, protection of the company’s intellectual property and government policies and regulations, including, but not limited to those affecting the company’s industry. Determine undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Additional risk factors concerning the company can be found in the company’s most recent Form 10-K as filed by the company with the Securities and Exchange Commission.
About Determine, Inc.
Determine, Inc. (NASDAQ: DTRM) is a leading global provider of SaaS Source to Pay and Enterprise Contract Lifecycle Management (ECLM) solutions. Our visionary technologies allow our customers to effectively manage the full scope of Source to Pay and ECLM using our Determine Cloud Platform. Our Source to Pay software suite includes strategic sourcing, supplier management, contract management and procure-to-pay applications.
The Determine Cloud Platform gives procurement, finance and legal professionals the ability to deliver profound insights through analysis of their supplier relationships and contractual requirements. Our customers leverage the Determine Cloud Platform to discover previously unseen supplier and spend data; make more informed and smarter business decisions; drive new revenue; control costs; improve workflow efficiencies; and mitigate risk.
Our customers benefit from the Determine Cloud Platform’s robust suite of integrated applications. Whether they start with a full-suite implementation or choose to implement just one application and build over time, each additional application allows for the automatic sharing of data already in place on the Determine Cloud Platform.
For more information, please visit: www.determine.com.