INDIANAPOLIS--(BUSINESS WIRE)--Global cross-channel digital marketing software-as-a-service leader ExactTarget (NYSE:ET) announced results today for its first quarter ended March 31, 2013.
"Our first quarter revenue growth was outstanding at 39 percent on a GAAP basis and 40 percent on an adjusted basis, making us one of the fastest growing software-as-a-service companies in the world," said Scott Dorsey, ExactTarget chairman, chief executive officer and co-founder. "ExactTarget has emerged as the digital marketing platform of choice for many of the world's most innovative B2C and B2B brands.”
First Quarter 2013 Financial Highlights:
Three Months Ended March 31, 2013:
- Revenue: $88.9 million, a 39 percent increase compared to the first quarter of 2012. Non-U.S. revenue was $16.9 million, a 55 percent increase compared to the first quarter of 2012.
- Adjusted Revenue: $89.4 million, a 40 percent increase compared to the first quarter of 2012, before the impact of adjusting deferred revenue to fair value under purchase accounting.
- Recurring Subscription Revenue: $68.9 million (excludes $2.7 million of revenue related to utilization above the contracted level), a 37 percent increase compared to the first quarter of 2012. Adjusted recurring subscription revenue was $69.4 million, a 38 percent increase compared to the first quarter of 2012, before the impact of adjusting deferred revenue to fair value under purchase accounting.
- Net Loss: $(11.6) million compared to $(4.7) million in the first quarter of 2012. Net loss attributable to common stockholders in the first quarter of 2013 was $(0.17) per share on a basic and diluted basis, compared to $(0.32) per share on a basic and diluted basis in the first quarter of 2012.
- Adjusted Net Loss: $(5.8) million, or $(0.08) per share on a basic and diluted basis, compared to $(2.2) million, or $(0.15) per share on a basic and diluted basis, in the first quarter of 2012.
- Operating Cash Flow: $(3.4) million compared to $3.6 million in the first quarter of 2012.
- Adjusted EBITDA: $0.3 million compared to $3.0 million in the first quarter of 2012.
Recent Business Highlights:
- Expanded the company's global footprint with new offices in Singapore and Toronto. The company's global operations now include offices in Australia, Brazil, Canada, France, Germany, Singapore, Sweden, the United Kingdom and the United States.
- Earned ISO27001 certification for information security, a global designation recognizing the company's data protection systems, processes and controls.
- Named a “Visionary” in the ''Gartner Magic Quadrant for CRM Lead Management'' (Chris Fletcher, April 23, 2013).
- Named Atlanta's "Best Workplace" in the small business category for the second consecutive year - a recognition based on employee satisfaction measured two months after ExactTarget's acquisition of Atlanta-based Pardot.
- Launched the ExactTarget CONNECT Global Tour with an event in Sao Paulo, Brazil. The tour, which will also include events in Sydney and Toronto, is expected to attract more than 2,000 marketers and feature award-winning authors, thought leaders and executives.
Business Outlook:
As of May 9, 2013, ExactTarget is issuing guidance for the second quarter of 2013 and increasing its outlook for full-year 2013 as follows:
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Second Quarter 2013:
- Adjusted Revenue: expected to be $91.0 million to $92.0 million, excluding the impact of adjusting deferred revenue to fair value under purchase accounting.
- Adjusted Net (Loss) / Income: expected to be $(7.0) million to $(8.0) million.
- Adjusted Net (Loss) / Income per Share: expected to be $(0.10) per share to $(0.12) per share on a basic and diluted basis assuming weighted average shares outstanding of approximately 69 million shares.
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Full Year 2013:
- Adjusted Revenue: expected to be $376.0 million to $379.0 million, excluding the impact of adjusting deferred revenue to fair value under purchase accounting. This is an increase from prior guidance of $370.0 million to $374.0 million.
- Adjusted Net (Loss) / Income: expected to be $(20.0) million to $(22.0) million.
- Adjusted Net (Loss) / Income per Share: expected to be $(0.29) per share to $(0.31) per share on a basic and diluted basis. This assumes weighted average shares outstanding of approximately 70 million shares.
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Conference Call Information |
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| What: | ExactTarget First Quarter 2013 Financial Results Conference Call | ||
| When: | Thursday, May 9, 2013 | ||
| Time: | 5 p.m. Eastern | ||
| 877.474.9502 (Domestic) | |||
| 857.244.7555 (International) | |||
| Webcast: |
www.ExactTarget.com/Investor (Live and Replay) |
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| Replay: | 888.286.8010, Conference ID 57066694 (Domestic) | ||
| 617.801.6888, Conference ID 57066694 (International) | |||
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NOTE: Audio replay will be available until May 16, 2013 |
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About the Magic Quadrant
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
About ExactTarget
ExactTarget is a leading global provider of cross-channel digital marketing software-as-a-service solutions that empower organizations of all sizes to communicate with their customers through email, mobile, social media, Web and marketing automation. ExactTarget's suite of integrated applications enables marketers to plan, automate, deliver and optimize data-driven digital marketing and real-time communications to drive customer engagement, increase sales and improve return on marketing investment. Headquartered in Indianapolis, Indiana with offices in Asia, Australia, Europe, North America and South America, ExactTarget trades on the New York Stock Exchange under the ticker symbol “ET.” For more information, visit www.ExactTarget.com.
Website Information
We routinely post important information for investors on our website www.ExactTarget.com in the "Investor Relations" section. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation Fair Disclosure. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.
Non-GAAP Financial Measures
This press release includes information about non-GAAP financial measures, including Adjusted Revenue, Adjusted Recurring Subscription Revenue, Non-GAAP Gross Margins, Non-GAAP Operating Expenses, Adjusted EBITDA, Adjusted Net (Loss) / Income and Adjusted Net (Loss) / Income per Share. We believe these measures provide important supplemental information regarding our operating performance and are often used by investors and analysts in their evaluation of companies such as ours. In addition, we use Adjusted EBITDA as a key measurement of our operating performance because it assists us in comparing our operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted Revenue is calculated as GAAP revenue plus the impact of adjusting deferred revenue to fair value under purchase accounting. Adjusted Recurring Subscription Revenue is a key metric we use to evaluate our business. It is defined as the total amount of contractually-committed subscription revenue under each of our client agreements, plus the impact of adjusting deferred revenue to fair value under purchase accounting, less revenue related to utilization above the contracted level. Non-GAAP Gross Margins and Non-GAAP Operating Expenses are calculated after adjusting for the impact of certain non-cash items such as stock-based compensation and amortization of intangibles, and in the case of Non-GAAP Gross Margins, adding back the impact of adjusting deferred revenue to fair value under purchase accounting. Adjusted EBITDA is calculated as Net (Loss) / Income before (1) other (income) expense, which includes interest income, interest expense and other income and expense, (2) income tax expense (benefit), (3) depreciation and amortization of property and equipment, (4) amortization of intangible assets, (5) stock-based compensation, and (6) the impact of adjusting deferred revenue to fair value under purchase accounting. Adjusted Net (Loss) / Income is calculated as Net (Loss) / Income before (1) amortization of intangible assets, (2) stock-based compensation, and (3) the impact of adjusting deferred revenue to fair value under purchase accounting. Adjusted Net (Loss) / Income per Share is calculated as Adjusted Net (Loss) / Income divided by weighted average shares outstanding on a GAAP basis. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Adjusted Revenue, Adjusted Recurring Subscription Revenue, Non-GAAP Gross Margins, Non-GAAP Operating Expenses, Adjusted EBITDA, Adjusted Net (Loss) / Income and Adjusted Net (Loss) / Income per Share reflect an additional way of viewing aspects of our operations that we believe, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures set forth on the last page of this press release, provide a more complete understanding of factors and trends affecting our business.
Safe Harbor Statement
This press release contains forward-looking statements about expected financial metrics such as Adjusted Revenue, Adjusted Recurring Subscription Revenue, Non-GAAP Gross Margins, Non-GAAP Operating Expenses, Adjusted EBITDA, Adjusted Net (Loss) / Income and Adjusted Net (Loss) / Income per Share. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties referred to above include - but are not limited to - risks associated with: possible fluctuations in the company’s financial and operating performance; attracting and retaining clients; defects or errors in the company’s solutions; unexpected decreases in clients’ use of email; ability to gain customer acceptance of cross-channel marketing; changes in domestic and international data privacy regulations; compromises of the company’s security measures; infrastructure scalability; third-party hardware and software; competition; the company’s ability to hire, retain and motivate employees and manage the company’s domestic and international growth; successful client deployment and utilization of the company’s existing and future solutions; changes in the company’s sales cycle; various financial aspects of the company’s subscription model; unexpected increases in attrition or decreases in new business; the emerging markets in which the company operates; unique aspects of entering or expanding in international markets; litigation related to intellectual property and other matters, and any related claims, negotiations and settlements; unanticipated changes in the company’s effective tax rate; fluctuations in the number of shares we have outstanding and the price of such shares; foreign currency exchange rates; interest rates; and general developments in the economy, financial markets, and credit markets. Further information on these and other factors that could affect the company’s financial results is included in our most recent annual report on Form 10-K, as filed with the Securities and Exchange Commission ("SEC"). Additional information will also be set forth in our quarterly report on Form 10-Q for the three months ended March 31, 2013, and other filings that we make with the SEC. These documents are or will be available on the SEC Filings section of the Investor Information section of the company’s website at www.ExactTarget.com/investor.
Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. ExactTarget, Inc. assumes no obligation and does not intend to update these forward-looking statements.
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EXACTTARGET, INC. |
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Condensed Consolidated Balance Sheets |
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(in thousands, except share data) |
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| As of | As of | |||||||
| March 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Assets | (unaudited) | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 54,305 | $ | 69,192 | ||||
| Short-term investments | 46,709 | 40,217 | ||||||
| Accounts receivable, net | 55,509 | 55,911 | ||||||
| Prepaid expenses and other current assets | 16,524 | 14,597 | ||||||
| Total current assets | 173,047 | 179,917 | ||||||
| Property and equipment, net | 67,726 | 67,944 | ||||||
| Goodwill and intangible assets, net | 134,151 | 135,574 | ||||||
| Other non-current assets | 3,302 | 3,631 | ||||||
| Total assets | $ | 378,226 | $ | 387,066 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 7,403 | $ | 9,070 | ||||
| Accrued liabilities | 13,752 | 14,338 | ||||||
| Accrued compensation and related expenses | 15,745 | 18,503 | ||||||
| Deferred revenue | 59,376 | 57,592 | ||||||
| Total current liabilities | 96,276 | 99,503 | ||||||
| Other non-current liabilities | 5,680 | 5,946 | ||||||
| Total liabilities | $ | 101,956 | $ | 105,449 | ||||
| Stockholders’ equity: | ||||||||
| Common stock, $0.0005 par value. Authorized 300,000,000 shares; Issued and | ||||||||
| outstanding 69,240,516 and 68,544,290 shares at March 31, 2013 and | ||||||||
| December 31, 2012, respectively | 35 | 34 | ||||||
| Additional paid in capital | 456,426 | 449,801 | ||||||
| Accumulated other comprehensive loss | (1,491 | ) | (1,122 | ) | ||||
| Accumulated deficit | (178,700 | ) | (167,096 | ) | ||||
| Total stockholders' equity | 276,270 | 281,617 | ||||||
| Total liabilities and stockholders' equity | $ | 378,226 | $ | 387,066 | ||||
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EXACTTARGET, INC. |
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Condensed Consolidated Statements of Operations |
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(unaudited; in thousands, except share and per share data) |
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| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Revenue: | ||||||||
| Subscription | $ | 71,629 | $ | 51,147 | ||||
| Professional services | 17,254 | 12,910 | ||||||
| Total revenue | 88,883 | 64,057 | ||||||
| Cost of revenue: | ||||||||
| Subscription(1)(2) | 18,503 | 12,710 | ||||||
| Professional services(1) | 13,717 | 11,131 | ||||||
| Total cost of revenues | 32,220 | 23,841 | ||||||
| Gross profit | 56,663 | 40,216 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing(1)(2) | 38,265 | 25,215 | ||||||
| Research and development(1) | 17,994 | 11,160 | ||||||
| General and administrative(1)(2) | 12,105 | 8,270 | ||||||
| Total operating expenses | 68,364 | 44,645 | ||||||
| Operating loss | (11,701 | ) | (4,429 | ) | ||||
| Other income / (expense), net | 97 | (254 | ) | |||||
| Net loss | $ | (11,604 | ) | $ | (4,683 | ) | ||
| Net loss per common share - basic and diluted | $ | (0.17 | ) | $ | (0.32 | ) | ||
| Weighted average number of common shares outstanding - basic and diluted | 68,803,774 | 14,732,963 | ||||||
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(1) Includes stock-based compensation expense as follows: |
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| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| Cost of revenue - subscription | $ | 131 | $ | 98 | |||
| Cost of revenue - professional services | 275 | 223 | |||||
| Sales and marketing | 998 | 712 | |||||
| Research and development | 1,026 | 374 | |||||
| General and administrative | 1,211 | 771 | |||||
| Total stock-based compensation | $ | 3,641 | $ | 2,178 | |||
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(2) Includes intangible asset amortization expense as follows: |
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| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| Cost of revenue - subscription | $ | 1,083 | $ | 75 | |||
| Sales and marketing | 500 | 132 | |||||
| General and administrative | 68 | 113 | |||||
| Total amortization of intangible assets | $ | 1,651 | $ | 320 | |||
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EXACTTARGET, INC. |
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Condensed Consolidated Statements of Cash Flows |
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(unaudited; in thousands) |
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| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (11,604 | ) | $ | (4,683 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 7,827 | 5,215 | ||||||
| Provision for / (recovery of) bad debt and credit allowances | 609 | (181 | ) | |||||
| Stock-based compensation | 3,641 | 2,178 | ||||||
| Other | (6 | ) | 38 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (802 | ) | 1,388 | |||||
| Prepaid expenses and other assets | (1,455 | ) | 671 | |||||
| Accounts payable and accrued liabilities | (1,080 | ) | (889 | ) | ||||
| Accrued compensation and related expenses | (2,729 | ) | (4,268 | ) | ||||
| Deferred revenue | 2,220 | 4,143 | ||||||
| Net cash provided by (used in) operating activities | (3,379 | ) | 3,612 | |||||
| Cash flows from investing activities: | ||||||||
| Business combination | — | (806 | ) | |||||
| Purchases of property and equipment | (7,305 | ) | (4,801 | ) | ||||
| Purchases of marketable securities | (9,195 | ) | — | |||||
| Sales of marketable securities | 2,492 | — | ||||||
| Net cash used in investing activities | (14,008 | ) | (5,607 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments on capital leases | (197 | ) | (194 | ) | ||||
| Net payments on term loan and revolving line of credit | — | (16,667 | ) | |||||
| Proceeds from issuance of common stock from option exercises | 2,985 | 467 | ||||||
| Payments of contingent consideration | — | (456 | ) | |||||
| Proceeds from issuance of common stock, net of issuance costs | — | 169,709 | ||||||
| Net cash provided by financing activities | 2,788 | 152,859 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (288 | ) | (34 | ) | ||||
| Increase (decrease) in cash and cash equivalents | (14,887 | ) | 150,830 | |||||
| Cash and cash equivalents, beginning of the period | 69,192 | 60,705 | ||||||
| Cash and cash equivalents, end of the period | $ | 54,305 | $ | 211,535 | ||||
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EXACTTARGET, INC. |
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Reconciliation of GAAP to Non-GAAP Financial Measures |
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(unaudited; in thousands, except share and per share data) |
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| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| Revenue: | |||||||
| Subscription | $ | 71,629 | $ | 51,147 | |||
| Deferred revenue adjustment - purchase accounting | 517 | — | |||||
| Adjusted subscription revenue | 72,146 | 51,147 | |||||
| Professional services revenue | 17,254 | 12,910 | |||||
| Total adjusted revenue | $ | 89,400 | $ | 64,057 | |||
| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| Revenue: | |||||||
| United States | $ | 71,976 | $ | 53,137 | |||
| Deferred revenue adjustment - purchase accounting | 426 | — | |||||
| Adjusted United States revenue | 72,402 | 53,137 | |||||
| International | 16,907 | 10,920 | |||||
| Deferred revenue adjustment - purchase accounting | 91 | — | |||||
| Adjusted International revenue | 16,998 | 10,920 | |||||
| Total adjusted revenue | $ | 89,400 | $ | 64,057 | |||
| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| Recurring subscription revenue | $ | 68,910 | $ | 50,195 | |||
| Deferred revenue adjustment - purchase accounting | 517 | — | |||||
| Adjusted recurring subscription revenue | $ | 69,427 | $ | 50,195 | |||
| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| Gross margin: | |||||||
| Subscription gross margin | $ | 53,126 | $ | 38,437 | |||
| Deferred revenue adjustment - purchase accounting | 517 | — | |||||
| Stock-based compensation | 131 | 98 | |||||
| Intangible asset amortization | 1,083 | 75 | |||||
| Non-GAAP subscription gross margin | 54,857 | 38,610 | |||||
| Professional services gross margin | 3,537 | 1,779 | |||||
| Stock-based compensation | 275 | 223 | |||||
| Non-GAAP professional services gross margin | 3,812 | 2,002 | |||||
| Total non-GAAP gross margin | $ | 58,669 | $ | 40,612 | |||
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EXACTTARGET, INC. |
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Reconciliation of GAAP to Non-GAAP Financial Measures |
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(unaudited; in thousands, except share and per share data) |
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| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Sales and marketing expenses | $ | 38,265 | $ | 25,215 | ||||
| Stock-based compensation | 998 | 712 | ||||||
| Amortization of intangible assets | 500 | 132 | ||||||
| Non-GAAP sales and marketing expenses | $ | 36,767 | $ | 24,371 | ||||
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Research and development expenses | $ | 17,994 | $ | 11,160 | ||||
| Stock-based compensation | 1,026 | 374 | ||||||
| Non-GAAP research and development expenses | $ | 16,968 | $ | 10,786 | ||||
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| General and administrative expenses | $ | 12,105 | $ | 8,270 | ||||
| Stock-based compensation | 1,211 | 771 | ||||||
| Amortization of intangible assets | 68 | 113 | ||||||
| Non-GAAP general and administrative expenses | $ | 10,826 | $ | 7,386 | ||||
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Net loss | $ | (11,604 | ) | $ | (4,683 | ) | ||
| Deferred revenue adjustment - purchase accounting | 517 | — | ||||||
| Stock-based compensation | 3,641 | 2,178 | ||||||
| Amortization of intangible assets | 1,651 | 320 | ||||||
| Adjusted net loss | (5,795 | ) | (2,185 | ) | ||||
| Income tax expense | — | — | ||||||
| Depreciation and amortization of property and equipment | 6,176 | 4,895 | ||||||
| Other (income) / expense, net | (97 | ) | 254 | |||||
| Adjusted EBITDA | $ | 284 | $ | 2,964 | ||||
| Weighted average shares outstanding used in computing per share amounts - basic & diluted | 68,803,774 | 14,732,963 | ||||||
| Adjusted net loss per share - basic & diluted | $ | (0.08 | ) | $ | (0.15 | ) | ||
