Concur Exceeds Revenue and Earnings Expectations for First Quarter of Fiscal 2011
Strong execution across the business fuels stronger-than-expected growth, driving continued innovation and investment against strategic initiatives
REDMOND, Wash., Feb. 2, 2011 - Concur (Nasdaq: CNQR), a leading provider of integrated travel and expense management services, today reported financial results for its first fiscal quarter ended December 31, 2010.
Concur reported total revenue for the first quarter of fiscal 2011 of $80.2 million. Total revenue for the quarter was up 19% from the year-ago quarter and up 4% from the prior quarter. Fiscal 2011 first quarter net income was $3.7 million, or $0.07 per share, exceeding company expectations.
“The first quarter of fiscal 2011 was another very strong quarter - exceeding our expectations for revenue and earnings for the quarter,” said Steve Singh, chairman and CEO of Concur. “With the acquisition of TripIt and the formation of Concur Japan, we continue to expand our foundation for strong growth in the decade ahead. With the first quarter of fiscal 2011 nicely ahead of our expectations - and in light of our revenue expectations for the second quarter - we are comfortable with our expectation coming into the fiscal year for our fiscal 2011 revenue growth rate to exceed that of fiscal 2010.”
Singh continued, “Strong demand for our services, in combination with the strength of our business model, affords us the opportunity to invest against long-term growth initiatives. Our investment in expanding distribution capacity is driving strong customer growth and showing up in the predictability and strength of our business results. Our continued investment in innovation enables Concur to participate in an ever-greater portion of the travel and expense process. Our continued efforts to drive scale into our operations positions us to effectively handle our global growth while maintaining world-class service.”
— Total revenue was $80.2 million for the first quarter of fiscal 2011, up
19% compared to the year-ago quarter, and up 4% sequentially.
— Net income was $3.7 million, or $0.07 per share, for the first quarter
of fiscal 2011, compared to $6.4 million, or $0.12 per share, for the
year-ago quarter. The first quarter of fiscal 2011 includes
approximately $4.6 million of interest expense resulting from the
convertible debt issued in the third quarter of fiscal 2010.
— Non-GAAP pre-tax income was $16.2 million, or $0.30 per share, for the
first quarter of fiscal 2011, compared to $15.7 million, or $0.30 per
share, for the year-ago quarter. Non-GAAP net income was $12.1 million,
or $0.22 per share, for the first quarter of fiscal 2011, compared to
$9.9 million, or $0.19 per share, for the year-ago quarter. Please
refer to “About Concur’s Non-GAAP Financial Measures” below for an
explanation of our non-GAAP financial measures used in this press
— Non-GAAP operating margin was 22% for the first quarter of fiscal 2011,
down from 23% for the year-ago quarter.
— Cash flows from operations were ahead of expectations at $10.9 million
for the first quarter of fiscal 2011.
Recent Business Highlights
— Concur acquired privately held TripIt - the market leader in mobile trip
management. In addition to helping travelers easily organize and share
travel plans no matter where they book, TripIt’s open platform taps into
a vast reservoir of third-party innovation, integrating applications
from over 700 partners to provide compelling value for the business
traveler while they are on the road. This acquisition fundamentally
supports and extends the Concur Connect Platform strategy of creating
new sources of value for our ecosystem partners along with new revenue
streams for Concur beyond our traditional subscription revenue model.
— Concur signed a definitive agreement to establish a new joint venture in
Tokyo, Japan, known as Concur Japan. With investment from SunBridge
Corporation, the firm responsible for the Salesforce.com Japan joint
venture, and Marc Benioff, acting as a minority direct investor, this
joint venture positions Concur to meet the demands of the increasing
number of corporations in Japan and throughout Asia that are turning to
cloud computing and mobile solutions to help them control expenses.
— Concur chairman and CEO Steve Singh and Concur GM and EVP Gregg Brockway
were both named to Business Travel Magazine’s annual list of the 25 Most
Influential Executives in the business travel industry for 2011. This is
the seventh consecutive year that Mr. Singh has been recognized by this
prestigious industry list.
— Concur will host more than 1,300 attendees at Fusion - the company’s
premier client event - February 15-18, 2011 in Las Vegas, Nevada. Due to
overwhelming demand, the conference is sold out.
The following statements are based on our current expectations and we do not undertake any duty to update them. These statements are forward-looking and inherently uncertain. Actual results may differ materially as a result of the factors identified below, the factors identified in our public filings made with the Securities and Exchange Commission, or other factors. Please also refer to “About Concur’s Non-GAAP Financial Measures” below for an explanation of our non-GAAP financial measures and a reconciliation of those measures to GAAP equivalents.
— Concur expects revenue for the second quarter of fiscal 2011 to grow
approximately 15.5% year-over-year from the second quarter of fiscal
2010, and expects the fiscal 2011 revenue growth rate to be above the
fiscal 2010 revenue growth rate.
— For the second quarter of fiscal 2011, Concur expects non-GAAP pre-tax
income per share to be $0.24. Non-GAAP pre-tax income excludes the
effects of non-cash related items such as stock-based compensation
expenses, amortization of intangible assets, and the accretion of the
discount on our senior convertible notes. It also excludes the non-cash
accounting implications and cash fees and expenses of acquisitions and
other related strategic activity in which we may deploy capital.
— With the acquisition of TripIt, Concur expects fiscal 2011 non-GAAP
operating margin to be 21.5% or more for the year as a whole.
— Concur expects cash flows from operations in fiscal 2011 to be between
$84 million and $87 million, excluding one-time acquisition and other
related costs, and capital expenditures to be between $25 million and
All company or product names are trademarks and/or registered trademarks of their respective owners.
This press release contains forward-looking statements that are inherently uncertain. These forward-looking statements, such as the statements made by Mr. Singh, are based on Concur’s current expectations and involve many risks and uncertainties that could cause actual results to differ materially from current expectations. Factors that could cause or contribute to actual results differing from current expectations include, but are not limited to: potential difficulties or delays in connection with the TripIt acquisition, the anticipated benefits of the acquisition, or the broader integration of the Concur and TripIt businesses; adverse economic or market conditions, which may cause customers and prospects to delay or reduce purchases of our products and services, cause customers to reduce business travel and correspondingly reduce the use of our products and services, reduce the ability of customers, channel partners, vendors and suppliers to fulfill their obligations to us, increase volatility of our stock price and foreign exchange rates, and otherwise adversely affect our operations and financial performance; potential delays in market adoption and penetration of our subscription service offerings; potential difficulties associated with our deployment and support of our products and services; our ability to manage expected growth of our subscription service offerings; the scalability and security of the hosting infrastructure for our subscription service offerings; risks associated with the privacy and protection of information while in our possession; potential increases in the rate of attrition of customers of our subscription service offerings; the level of investment in information technology by our customers; the level of business travel that may reduce the use of our products and services or inhibit new sales of our products and services; potential difficulties associated with strategic relationships and with development of new products and services; risks associated with expansion into new geographic markets; uncertain market acceptance of recently-introduced or future products and services; and risks associated with our financing activities.
Please refer to the company’s public filings made with the Securities and Exchange Commission at http://www.sec.gov for additional and more detailed information on risk factors that could cause actual results to differ materially from current expectations. Concur assumes no obligation to update the forward-looking information contained in this press release.
Concur Technologies, Inc. Income Statements (In thousands, except per share data) (Unaudited) Three Months Ended December 31, ----- 2010 2009 ---- ---- Revenues $80,235 $67,653 Expenses (1): Cost of operations 22,309 19,174 Sales and marketing 27,389 20,772 Systems development and programming 7,402 6,890 General and administrative 12,454 8,711 Amortization of intangible assets 1,720 1,855 Total expenses 71,274 57,402 ------ ------ Operating income 8,961 10,251 Other income (expense): Interest income 683 311 Interest expense (4,560) (103) Other, net (181) (160) ---- ---- Total other (expense) income, net (4,058) 48 ------ --- Income before income tax 4,903 10,299 Income tax expense 1,252 3,866 Net income $3,651 $6,433 ====== ====== Net income per share available to common stockholders: Basic $0.07 $0.13 Diluted 0.07 0.12 Weighted average shares used in computing net income per share: Basic 52,444 49,046 Diluted 54,714 52,519 (1) Includes share-based compensation as follows: Cost of operations $653 $484 Sales and marketing 3,361 1,707 Systems development and programming 818 500 General and administrative 1,713 808 ----- --- Total share-based compensation $6,545 $3,499 ====== ====== Concur Technologies, Inc. Balance Sheets (In thousands, except per share amounts) (Unaudited) September December 31, 30, 2010 2010 ---- ---- Assets Current assets: Cash and cash equivalents $326,062 $329,098 Short-term investments 280,324 301,597 Restricted cash 1,940 2,535 Accounts receivable, net of allowance of $2,015 and $2,374 51,820 52,340 Deferred tax assets 16,635 18,810 Deferred costs and other assets 27,340 26,640 ------ ------ Total current assets 704,121 731,020 Non-current assets: Property and equipment, net 36,612 36,229 Investments 8,318 6,045 Deferred costs and other assets 25,786 25,441 Intangible assets, net 34,460 36,398 Deferred tax assets 14,673 12,675 Goodwill 194,506 194,989 Total assets $1,018,476 $1,042,797 ========== ========== Liabilities and stockholders' equity Current liabilities: Accounts payable $4,422 $5,413 Customer funding liabilities 36,845 66,985 Accrued compensation 10,969 20,944 Other accrued expenses and liabilities 16,092 14,390 Deferred revenues 45,359 44,358 ------ ------ Total current liabilities 113,687 152,090 Non-current liabilities: Senior convertible notes, net 230,888 228,128 Deferred rent 1,194 1,149 Deferred revenues 14,474 15,453 Tax liabilities 8,405 8,151 ----- ----- Total liabilities 368,648 404,971 Commitments and contingencies Stockholders' equity: Convertible preferred stock, par value $0.001 per share - - Authorized shares: 5,000; No shares issued or outstanding Common stock, $0.001 par value per share 53 52 Authorized shares: 195,000 Shares issued and outstanding: 52,555 and 52,379 Additional paid-in capital 747,791 739,781 Accumulated deficit (94,919) (99,536) Accumulated other comprehensive loss (3,097) (2,471) ------ ------ Total stockholders' equity 649,828 637,826 Total liabilities and stockholders' equity $1,018,476 $1,042,797 ========== ========== Concur Technologies, Inc. Cash Flow Statements (In thousands) (Unaudited) Three Months Ended December 31, ----- 2010 2009 --- --- Operating activities: Net income $3,651 $6,433 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets 1,720 1,855 Depreciation 4,556 4,132 Accretion of discount and issuance costs on notes 2,760 - Net change in sales allowances (358) (329) Share-based compensation 6,545 3,499 Deferred income taxes 1,391 3,493 Excess tax benefits from share-based compensation (145) - Changes in operating assets and liabilities: Accounts receivable 806 2,311 Deferred costs and other assets (1,195) (707) Accounts payable (971) 515 Accrued liabilities (7,955) (8,911) Deferred revenues 101 1,858 --- ----- Net cash provided by operating activities 10,906 14,149 ------ ------ Investing activities: Purchases of investments (82,946) (37,259) Maturities of investments 104,504 40,639 Decrease in customer funding liabilities, net of changes in restricted cash (29,573) (14,419) Investment in unconsolidated affiliate (2,272) - Purchases of property and equipment (4,776) (3,645) Payments for acquisitions, net of cash acquired (108) (1,162) ---- ------ Net cash provided used in investing activities (15,171) (15,846) Financing activities: Net proceeds from share-based equity award activity 765 1,114 Proceeds from employee stock purchase plan activity 381 285 Excess tax benefits from share-based compensation 145 - Repayments of debt and capital leases (199) (272) ---- ---- Net cash provided by financing activities 1,092 1,127 ----- ----- Effect of foreign currency exchange rate changes on cash and cash equivalents 137 106 --- --- Net decrease in cash and cash equivalents (3,036) (464) Cash and cash equivalents at beginning of period 329,098 119,185 Cash and cash equivalents at end of period $326,062 $118,721 ======== ======== Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share and margin data) (Unaudited) Three Months Ended December 31, ----- 2010 2009 --- --- Operating income: Operating income $8,961 $10,251 Income from operations as a % of total revenue (Operating Margin) 11% 15% Add back: Share-based compensation 6,545 3,499 Acquisition and other related costs 575 - Amortization of intangible assets 1,720 1,855 ----- ----- Non-GAAP operating income $17,801 $15,605 ======= ======= Non-GAAP operating income as a % of total revenue (Non-GAAP Operating Margin) 22% 23% Net income: Net income $3,651 $6,433 Add back: Share-based compensation 6,545 3,499 Acquisition and other related costs 575 - Amortization of intangible assets 1,720 1,855 Accretion of discount on senior convertible notes 2,462 - Income tax expense 1,252 3,866 ----- ----- Non-GAAP pre-tax income 16,205 15,653 Income tax expense (1) 4,139 5,710 ----- ----- Non-GAAP net income $12,066 $9,943 ======= ====== Diluted net income per share: Diluted net income per share $0.07 $0.12 Add back: Share-based compensation 0.12 0.07 Acquisition and other related costs 0.01 - Amortization of intangible assets 0.03 0.04 Accretion of discount on senior convertible notes 0.05 - Income tax expense 0.02 0.07 ---- ---- Non-GAAP diluted pre-tax income per share 0.30 0.30 Income tax expense (1) 0.08 0.11 ---- ---- Non-GAAP diluted net income per share $0.22 $0.19 ===== ===== Shares used in calculation of diluted non- GAAP income per share: 54,714 52,519 (1) The effective tax rate used for the period: 25.54% 36.48%
CONCUR TECHNOLOGIES, INC.
About Concur’s Non-GAAP Financial Measures
This release contains non-GAAP financial measures. The tables above reconcile the non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Concur’s non-GAAP financial measures do not reflect a comprehensive system of accounting, and they differ from GAAP measures with similar names and from non-GAAP financial measures with the same or similar names that are used by other companies. We strongly urge investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this release, and our consolidated financial statements, including the notes thereto, and the other financial information contained in our periodic filings with the Securities and Exchange Commission and not to rely on any single financial measure to evaluate our business.
Concur’s management believes that its non-GAAP financial measures provide useful information to investors because it allows investors to view the business through the eyes of management. Further, Concur believes that its non-GAAP financial measures provide meaningful supplemental information regarding Concur’s operating results because they exclude amounts that Concur excludes as part of its monitoring of operating results and assessing the performance of the business. In addition, Concur believes that its non-GAAP financial measures facilitate the comparison of results for current periods and the business outlook for future periods with results of past periods because the measures provide a special focus on the underlying operating performance of the business relative to expectations.
Concur presents the following non-GAAP financial measures in this release: non-GAAP operating income; non-GAAP operating margin; non-GAAP pre-tax income, non-GAAP net income, non-GAAP diluted pre-tax income per share and non-GAAP diluted net income share. Concur excludes the following items as noted from these non-GAAP financial measures:
— Share-based compensation. Concur’s non-GAAP financial measures exclude
share-based compensation, which consist of expenses for stock options
and restricted stock units (“RSU”). Concur excludes these expenses from
its non-GAAP financial measures primarily because they are non-cash
expenses that it does not consider part of ongoing operating results
when assessing the performance of our business, and the exclusion of
these expenses facilitates the comparison of results and business
outlook for future periods with results for prior periods.
— Acquisition and other related costs. New authoritative guidance on
business combinations requires us to record in the income statement,
certain items that at the time of an acquisition would have been
recorded to goodwill under the old authoritative guidance. We have
excluded the effect of acquisition-related expenses from certain
non-GAAP financial measures in order to facilitate the comparison of our
business outlook for future periods with results from prior periods when
such expenses were recorded to Goodwill. We also believe it is useful
for investors to understand the effects of these items on our
operations. Acquisition and other related costs include transaction
fees, due diligence costs, travel expenses, and other one-time direct
costs associated with strategic activity in which we may deploy capital.
— Amortization of intangible assets. In accordance with GAAP, operating
expenses include amortization of software and other technology assets,
other purchased intangible assets such as customer lists and covenants
not to compete. Concur excludes these items from its non-GAAP financial
measures because they are non-cash expenses that Concur does not
consider part of ongoing operating results when assessing the
performance of our business, and Concur believes that doing so
facilitates comparisons to its historical operating results and to the
results of other companies in our industry, which have their own unique
— Accretion of discount on senior convertible notes. In accordance with
GAAP, interest expense on the senior convertible notes includes the
accretion of the discount, which is a non-cash expense that Concur does
not consider part of ongoing operating results when assessing the
performance of our business.
— Income tax expense. Concur excludes this expense from certain non-GAAP
financial measures primarily because it is largely a non-cash expense
that Concur does not consider a meaningful component of our operating
results when assessing the performance of our business, and the
exclusion of this expense facilitates the comparison of our business
outlook for future periods with results for prior periods, which did not
include income tax expense.
Except as noted below, Concur believes that all of the following considerations apply equally to each of the non-GAAP financial measures that we present:
— Concur’s management uses non-GAAP operating income (including the
derived non-GAAP operating margin), non-GAAP pre-tax income, non-GAAP
net income, non-GAAP diluted pre-tax income per share and non-GAAP
diluted net income per share in internal reports used by management in
monitoring and making decisions regarding Concur’s business. For
example, these measures are used in monthly financial reports prepared
for management, and in quarterly reports to Concur’s Board of Directors.
Concur also uses non-GAAP pre-tax diluted income per share as a measure
to determine executive cash incentive compensation.
— Because share-based compensation, amortization of intangible assets,
accretion of discount on senior convertible notes and income tax expense
are largely non-cash in nature, Concur believes that non-GAAP operating
income, non-GAAP pre-tax income, non-GAAP net income, non-GAAP diluted
pre-tax income per share and non-GAAP diluted net income per share
provide a more focused view of the operations of its business. In
particular, share-based compensation amounts are difficult to forecast,
because the magnitude of the charges depends upon the volume and timing
of stock option and RSU grants - which are unpredictable and can vary
dramatically from period to period - and external factors such as
interest rates and the trading price and volatility of Concur’s common
stock. Excluding these amounts improves comparability of the performance
of the business across periods.
— The principal limitation of Concur’s non-GAAP financial measures is that
they exclude significant expenses that are required by GAAP to be
recorded. In addition, non-GAAP financial measures are subject to
inherent limitations because they reflect the exercise of judgments by
management about which charges are excluded from the non-GAAP financial
— To mitigate this limitation, Concur presents its non-GAAP financial
measures in connection with its GAAP results, and recommends that
investors do not give undue weight to its non-GAAP financial measures.
Concur notes that the dilutive effect of outstanding stock options is
reflected in fully-diluted shares outstanding used in calculating GAAP
net income per share, non-GAAP diluted pre-tax income per share and
non-GAAP diluted net income per share.
Concur® is a leading provider of integrated travel and expense management solutions for companies of all sizes. Concur’s easy-to-use web-based and mobile solutions help companies and their employees control costs and save time. Learn more at http://www.concur.com.
Web Site: http://www.concur.com