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August 9, 2018

Determine Announces First Quarter Fiscal 2019 Financial Results

Sales Pipeline Activity and Expanding Focus on Customer Success and Advocacy Demonstrate Demand for Determine Cloud Platform Technology

CARMEL, IN – August 9, 2018 – Determine, Inc. (NASDAQ: DTRM), a pioneering leader in global Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) Cloud Platform solutions, announced financial results for its first quarter ended June 30th, 2018.

Q1 FY19 GAAP Financial Highlights:

  • GAAP Revenue was $6.0 million in Q1 FY2019, compared to $6.8 million in Q4 FY18, representing a 10.9% decrease quarter-over-quarter, and compared to $7.0 million in Q1 FY2018 GAAP revenue, representing a 13.6% decrease year-over-year.
  • GAAP gross profit percentage was 43.5% in Q1 FY2019, compared to 49.4% in Q4 FY2018, representing a 5.9 point decrease quarter-over-quarter, and compared to 52.7% in Q1 FY2018, representing a 9.2 point decrease year-over-year.
  • Deferred revenues decreased to $9.3 million in Q1 FY2019 from $9.6 million in Q4 FY2018.
  • GAAP net loss was $4.1 million or $0.27 per share in Q1 FY2019, compared to $2.8 million or $0.19 per share in Q4 FY2018, representing an additional loss of $0.08 per share quarter-over-quarter; in Q1 FY2018 the GAAP net loss was $2.1 million or $0.17 per share.
(in thousands, except per share amounts)
GAAPQ1Q4Q1ChangeChange
Financial MeasuresFY 2019FY 2018FY 2018Q/QY/Y
Revenue – total$ 6,040$ 6,776$ 6,988(10.9%)(13.6%)
Revenue – recurring$ 5,251$ 5,467$ 5,300(4.0%)(0.9%)
Revenue – non-recurring$ 789$ 1,309$ 1,688(39.7%)(53.3%)
Gross profit – total$ 2,627$ 3,344$ 3,685(21.4%)(28.7%)
Gross profit – recurring$ 3,145$ 3,378$ 3,514(6.9%)(10.5%)
Gross (loss)/profit – non-recurring$ (518)$ (34)$ 1711423.5%402.9%
Gross margin – total43.5%49.4%52.7%(5.9 pts)(9.2 pts)
Gross margin – recurring59.9%61.8%66.3%(1.9 pts)(6.4 pts)
Gross margin – non recurring(65.7%)(2.6%)10.1%(63.1 pts)(75.8 pts)
Net loss$ (4,069)$ (2,822)$ (2,110)44.2%92.8%
EPS$ (0.27)$ (0.19)$ (0.17)$ (0.08)$ (0.10)

Q1 FY2019 Non-GAAP Financial Highlights:

  • Non-GAAP revenue was $6.0 million in Q1 FY2019, compared to $6.8 million in Q4 FY2018, representing a 10.9% decrease quarter-over-quarter, and compared to $7.0 million in Q1 FY2018, representing a 13.6% decrease year-over-year.
  • Non-GAAP gross profit percentage was 48.5% in Q1 FY2019, compared to 53.5% in Q4 FY2018, representing a 5.0% decrease quarter-over-quarter, and 57.3% in Q1 FY2018, representing a 8.8% decrease year-over-year.
  • Non-GAAP net loss was $2.9 million or $0.20 per share in Q1 FY2019, compared to a net loss of $1.7 million or $0.12 per share in Q4 FY2018, representing a $0.08 additional loss per share quarter-over-quarter. Q1 FY2018 had a non-GAAP net loss of $1.0 million or $0.08 per share, representing a $0.12 additional loss per share year-over-year.
  • Billings decreased 15.2% to $5.7 million in Q1 FY2019 from $6.8 million in Q1 FY2018. Billings, a non-GAAP measure, are defined as revenue plus the change in deferred revenues.
  • Non-GAAP EBITDA was a $2.0 million loss in Q1 FY2019, compared to a loss of $0.2 million in Q1 FY2018, representing a decrease of $1.8 million year-over-year.
(in thousands, except per share amounts)
Non-GAAPQ1Q4Q1ChangeChange
Financial MeasuresFY 2019FY 2018FY 2018Q/QY/Y
Revenue – total$ 6,040$ 6,776$ 6,988(10.9%)(13.6%)
Revenue – recurring$ 5,251$ 5,467$ 5,300(4.0%)(0.9%)
Revenue – non-recurring$ 789$ 1,309$ 1,688(39.7%)(53.3%)
Gross profit – total$ 2,929$ 3,626$ 4,003(19.2%)(26.8%)
Gross profit – recurring$ 3,434$ 3,646$ 3,813(5.8%)(9.9%)
Gross (loss)/profit – non-recurring$ (505)$ (20)$ 1902425.0%(365.8%)
Gross margin – total48.5%53.5%57.3%(5.0 pts)(8.8 pts)
Gross margin – recurring65.4%66.7%71.9%(1.3 pts)(6.5 pts)
Gross margin – non recurring(64.0%)(1.5%)11.3%(62.4 pts)(75.3 pts)
Net loss$ (2,944)$ (1,726)$ (952)70.6%209.2%
EPS$ (0.20)$ (0.12)$ (0.08)$ (0.08)$ (0.12)
Billings$ 5,743$ 5,991$ 6,772(4.1%)(15.2%)

Our first quarter has been aggressively focused on further executing on our customer advocacy strategy, expanding and leveraging our partnership alliances, and pursuing our ideal target customer profile to fill our lead pipeline. The many customers across industries who brought their success stories to our Washington, DC and London User Group events were excited to share their Determine experiences and best practices, as well as test drive the advanced innovations on the Determine Cloud Platform and preview the new Determine CLM Salesforce App on Salesforce.com. Many of those customers are part of the growing roster of companies migrating to our source-to-pay and contract management cloud platform in order to expand their relationship with us and accelerate their business initiatives. Our partnerships through the DetermineAlliance Partner Program are also expanding and increasing in importance; we have built a robust pipeline of late-stage opportunities in just the past 120 days. Our pipeline has never been stronger or growing at a faster clip in both the US and Europe. Now we look forward to converting those highly-qualified opportunities into customer relationships that deliver meaningful recurring revenue growth in the coming quarters. We are very pleased to have an additional $2.0 million in borrowing capacity which has already been secured during the first part of Q2 FY2019. We plan to access such capital, as needed, to assist in optimizing our channel mix and growing our pipeline. Our continued aim is to deliver the Determine message to prospects who are looking to derive bottom-line value from best in class Source-to-Pay or Enterprise Contract Management solutions.”

Patrick Stakenas, President, CEO and Director, Determine, Inc.

Determine Business Highlights:

Conference Call and Webcast: Thursday, August 9, 2018 at 5:00 PM (Eastern Time)

Participant Conference Call Numbers:

Toll-Free: 1-877-407-0789

Toll/International: 1-201-689-8562

Participant Webcast Link: http://public.viavid.com/index.php?id=130716

Replay Dial-in Information:

Toll-Free: 1-844-512-2921

Toll/International: 1-412-317-6671

From: 08/09/18 @ 8:00 pm Eastern Time

To: 08/16/18 @ 11:59 pm Eastern Time

Replay Pin Number:13681976

Related: http://investor.determine.com

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 gross profit is 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.

Annualized Bookings is 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.

Forward-looking 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.

Supporting Resources

Determine Blog
Determine on LinkedIn
Determine on Twitter
Determine Resources

About Determine, Inc.

Determine, Inc. (NASDAQ: DTRM) is a leading global provider of SaaS Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) solutions. The Determine Cloud Platform provides procurement, legal and finance professionals analytics of their supplier, contract and financial performance. Our technologies empower customers to drive new revenue, identify savings, improve compliance and mitigate risk.

The Determine Cloud Platform seamlessly integrates with major ERP or third-party systems such as SAP, Oracle, Sage, QAD and Microsoft. Modular solutions can be configured to add more as needed to provide additional value beyond spend management. Our unified master database and business process approach empower users at every level to make more informed and smarter decisions.

For more information, please visit: www.determine.com.

Contact

Media Relations:
Mike Mitchell
Determine Inc.
+1.650.532.1590
pr@determine.com

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