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Selectica Announces Earnings for Second Quarter Fiscal 2013

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SAN MATEO, CA -- (Marketwire) -- 10/25/12 -- Selectica, Inc. (NASDAQ: SLTC), provider of software that accelerates sales cycles and streamlines contract processes, today announced financial results for its second quarter of fiscal 2013, ended September 30, 2012.

"I'm pleased with our accelerated revenue growth; we are now outpacing the market," said Jason Stern, President and CEO at Selectica. "And while revenue was up, we were also able to keep expenses flat for the third successive quarter, leading to a non-GAAP net loss of less than $250,000."

The company's net loss on a GAAP basis was $0.9 million in Q2 FY2013, down 57% compared to Q2 FY2012.

Financial highlights

Selectica delivered the following financial results for the second quarter of fiscal 2013:

Recurring revenue: Selectica grew recurring revenue from $2.2 million in Q2 FY 2012 to $3.0 million in Q2 FY2013, a year-over-year increase of 36%. Recurring revenue in Q1 FY2013 was $2.6 million.

Billings: Billings for Q2 FY2013 were $3.8 million, compared to $3.0 million in Q2 FY2012, a 27% increase year-over-year. Billings were $4.1 million in Q1 FY2013. The company defines billings, a non-GAAP financial measure, as revenue recognized during the period plus the change in deferred revenue from the beginning to the end of the period. Please refer to the financial tables below for a reconciliation of this non-GAAP measure to GAAP.

Deferred revenue: In Q2 FY2013, the company had deferred revenue of $5.8 million, a 76% year-over-year increase over Q2 FY2012, when deferred revenue was $3.3 million. In Q1 FY2013, deferred revenue was $6.7 million.



Business highlights
Business highlights from Q2 FY2013 include:

Seventh patent issued for Selectica sales configuration technology: Selectica announced its newest patent for the declarative constraint engine that powers Selectica Guided Selling and enables customers to use dynamic, rather than static, components to configure products and services with a large number of options and possible solutions. •Recognized as an important participant in cloud computing: In JMP Securities' September 24, 2012, report on salesforce.com, titled "CRM: JMP Visits 10 Growth Companies at Dreamforce," Selectica was featured as one of the growth companies in the salesforce.com partner ecosystem. •New version of Selectica Contract Lifecycle Management (CLM): In July 2012, Selectica released the latest version of its flagship contract lifecycle management (CLM) product, featuring Contract Blueprints, a set of pre-configured, best-practice contract types that enable users to get started with contract management quickly. The release also offered improvements in the product's Microsoft Word integration, eSignature, and audit trail capabilities. •Introduction of Selectica Guided Selling for Salesforce on the Salesforce AppExchange: Also in July, Selectica announced availability of its configure-price-quote (CPQ) offering Selectica Guided Selling for Salesforce on the Salesforce AppExchange. The application brings the proven benefits of Selectica sales configuration technology to the cloud and makes them available to organizations with revenues of $100 million to several billion dollars. •Bronze Stevie award winner: Selectica Guided Selling received a Bronze Stevie Award in the "Best New Software Product or Service of the Year, Cloud Application or Service" category of the 10th Annual American Business Awards.

Additional results

Total revenues for Q2 FY2013 were $4.7 million, compared to $3.5 million for Q2 FY2012, a year-over-year increase of 34%. Total revenues were $4.2 million in Q1 FY2013.

Net loss for Q2 FY2013 was $0.9 million, or $(0.32) per share, compared to a net loss of $2.1 million, or $(0.74) per share in Q2 FY2012, and a net loss of $0.7 million, or $(0.25) per share, in Q1 FY2013.

Complete financial results for Q2 FY2013 can be found in the attached financial tables.

About Selectica, Inc.
Selectica, Inc. (NASDAQ: SLTC) develops innovative software that the world's most successful companies rely on to improve the effectiveness of their sales and contracting processes. Our guided selling, sales configuration, and contract lifecycle management solutions support the Global 2000 and growing mid-size firms in closing billions of dollars' worth of business each year. Our patented technology, delivered through the cloud, makes it easy for customers in industries like high-tech, telecommunications, manufacturing, healthcare, financial services, and government contracting to overcome product and channel complexity, increase deal value, and accelerate time to revenue.

For more information:

•Visit the Selectica website to learn more about the company and its products and customers (http://www.selectica.com) •Follow @Selectica_Inc on Twitter to stay up to date with industry news and updates (http://twitter.com/Selectica_Inc) •Visit "Done Deal," the Selectica blog, to read articles, advice, and commentary on how to optimize deal processes (http://www.selectica.com/blog) •Watch Selectica videos on YouTube to see what Selectica and its products can do (http://www.youtube.com/user/SelecticaVideos) •Browse the Selectica resource center to find guides and resources on how to improve sales and contracting processes (http://www.selectica.com/resources)

Non-GAAP financial measures
Selectica provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand the company's past financial performance and future results, the company is providing non-GAAP financial measures to supplement the financial results that it provides in accordance with GAAP. The method the company uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies.

Forward-looking statements
Certain statements in this release and elsewhere by Selectica 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, 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 the on-going global recession; fluctuations in demand for Selectica's products and services; government policies and regulations, including, but not limited to those affecting the company's industry; and risks related to the company's past stock granting policies and related restatement of financial statements. Selectica 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, filed by the company with the Securities and Exchange Commission.


SELECTICA, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended ---------------------------- ---------------------------- September 30, September 30, September 30, September 30, 2012 2011 2012 2011 ------------- ------------- ------------- -------------Revenues: Recurring revenues $ 2,960 $ 2,162 $ 5,596 $ 4,335 Non-recurring revenues 1,695 1,370 3,235 2,950 ------------- ------------- ------------- ------------- Total revenues 4,655 3,532 8,831 7,285 ------------- ------------- ------------- -------------Cost of revenues: Recurring cost of revenues 407 257 738 512 Non-recurring cost of revenues 1,347 1,278 2,574 2,316 ------------- ------------- ------------- ------------- Total cost of revenues 1,754 1,535 3,312 2,828 ------------- ------------- ------------- -------------Gross profit: Recurring gross profit 2,553 1,905 4,858 3,823 Non-recurring gross profit 348 92 661 634 ------------- ------------- ------------- ------------- Total gross profit 2,901 1,997 5,519 4,457 ------------- ------------- ------------- -------------Operating expenses: Research and development 861 810 1,792 1,706 Sales and marketing 1,726 1,415 3,245 2,594 General and administrative 698 843 1,568 1,774 Fees related to comprehensive settlement agreement 500 500 500 500 ------------- ------------- ------------- ------------- Total operating expenses 3,785 3,568 7,105 6,574 ------------- ------------- ------------- -------------Loss from operations (884) (1,571) (1,586) (2,117)Loss on early extinguishment of note payable - 470 - 470Interest and other income (expense), net (5) (38) (12) (88) ------------- ------------- ------------- -------------Net loss $ (889) $ (2,079) $ (1,598) $ (2,675) ============= ============= ============= =============Basic and diluted net loss per share $ (0.32) $ (0.74) $ (0.57) $ (0.95) ============= ============= ============= =============Reconciliation to non-GAAP net loss:Net loss $ (889) $ (2,079) $ (1,598) $ (2,675)Stock-based compensation expense $ 153 $ 179 $ 361 $ 288Loss on early extinguishment of note payable - 470 - 470Fees related to comprehensive settlement agreement 500 500 500 500 ------------- ------------- ------------- -------------Non-GAAP netloss $ (236) $ (930) $ (737) $ (1,417) ============= ============= ============= ============= ------------- ------------- ------------- -------------Non-GAAP basic and diluted net loss per share $ (0.08) $ (0.33) $ (0.26) $ (0.50) ============= ============= ============= =============Weighted average shares outstanding for basic and diluted net loss per share 2,818 2,820 2,815 2,826 ============= ============= ============= ============= SELECTICA, INC. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) September 30, March 31, 2012 2012 -------------- --------------ASSETSCurrent assets Cash and cash equivalents $ 12,052 $ 15,877 Short-term investments - 199 Accounts receivable 3,682 2,446 Prepaid expenses and other current assets 512 531 -------------- -------------- Total current assets 16,246 19,053Property and equipment, net 368 362Other assets 39 39 -------------- -------------- Total assets $ 16,653 $ 19,454 ============== ==============LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities Credit facility $ 6,000 $ 6,000 Accounts payable 876 395 Accrued payroll and related liabilities 739 1,771 Other accrued liabilities 87 88 Deferred revenue 4,811 5,394 -------------- -------------- Total current liabilities 12,513 13,648 -------------- -------------- Long-term deferred revenue 964 1,327 Other long-term liabilities 33 41 -------------- -------------- Total liabilities 13,510 15,016 -------------- --------------Stockholders' equity 3,143 4,438 -------------- -------------- Total liabilities and stockholders' equity $ 16,653 $ 19,454 ============== ============== SELECTICA, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended ------------------------------ September 30, September 30, 2012 2011 -------------- --------------Operating activitiesNet loss $ (1,598) $ (2,675)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation 101 139Loss on disposition of property and equipment - 1Stock-based compensation expense 361 288Changes in assets and liabilities: Accounts receivable (net) (1,236) 987 Prepaid expenses and other current assets 19 50 Other assets - (39) Accounts payable 481 (315) Accrued payroll and related liabilities (1,031) 321 Other accrued liabilities and long term liabilities (9) (243) Deferred revenues (946) (793) -------------- --------------Net cash used in operating activities $ (3,858) $ (2,279)Investing activities Purchase of capital assets (107) (98) Proceeds from maturities of short-term investments 199 (1,398) -------------- --------------Net cash provided by (used in) investing activities $ 92 $ (1,496)Financing activities Payments on note payable to Versata - (4,268) Purchase of treasury shares - (472) Borrowings under credit facility - 4,713 Repurchases of common stock, net of issuance (59) (7) -------------- --------------Net cash used in financing activities $ (59) $ (34)Net decrease in cash and cash equivalents (3,825) (3,809)Cash and cash equivalents at beginning of the period 15,877 16,822 -------------- --------------Cash and cash equivalents at end of the period $ 12,052 $ 13,013 ============== ============== SELECTICA, INC. Billings Reconciliation (In thousands) (Unaudited) Three Months Ended Six Months Ended ---------------------------- ---------------------------- September 30, September 30, September 30, September 30, 2012 2011 2012 2011 ------------- ------------- ------------- -------------Total revenues $ 4,655 $ 3,532 $ 8,831 $ 7,285Deferred revenue:End of period 5,775 3,337 5,775 3,337Beginning of period 6,664 3,857 6,721 4,320 ------------- ------------- ------------- -------------Change in deferred revenue (889) (520) (946) (983) ------------- ------------- ------------- -------------Total billings (total revenues plus the change in deferred revenue) $ 3,766 $ 3,012 $ 7,885 $ 6,302 ============= ============= ============= =============



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