Covisint Corporation
Nov 3, 2016

Covisint Corporation Announces Second Quarter Fiscal 2017 Financial Results

DETROIT, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Covisint Corporation (Nasdaq:COVS), the leading Cloud Platform for building Identity and Internet of Things (IoT) applications, today announced financial results for the second quarter of fiscal 2017, which ended September 30, 2016.

"During the second quarter, we delivered total revenue of $17.2 million, which included $14.6 million in subscription revenue. Our margins remain strong and we finished the quarter with nearly $35 million in cash, which was ahead of our expectations. We remain focused on driving subscription revenue sales growth, particularly within our core automotive vertical, while aggressively managing our cash position through strong expense management. We are raising our Fiscal Year End 2017 cash guidance to $33 million and expect to be cash flow break-even for Fiscal Year 2018," said Covisint CEO, Sam Inman. 

Second Quarter Fiscal 2017 Financial Highlights

Revenue

Profitability

Balance Sheet

Second Quarter Fiscal 2017 Business Highlights

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), Covisint monitors non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Each of these financial measures excludes the impact of certain items (the impact of stock award compensation expense, the amortization and impairment of intangible assets and amounts incurred for capitalized internal software costs) and, therefore, has not been calculated in accordance with GAAP.

Covisint monitors these non-GAAP measures to evaluate its ongoing operational performance and enhance an overall understanding of its past financial performance. Covisint believes that these non-GAAP metrics help illustrate underlying trends in its business that could otherwise be masked by the effect of the expenses that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Furthermore, Covisint uses these measures to establish budgets and operational goals for managing its business and evaluating its performance. Covisint also believes that these non-GAAP measures provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods against other companies in its industry.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors.

Conference Call and Webcast Information

Covisint management will hold a conference call at 5:00 p.m. (Eastern time) today to discuss these results. The U.S. toll free dial-in for the conference call is 1-877-407-4018, and the international dial-in number is 1-201-689-8471. No passcode is required. A live webcast of the conference call will also be available on the company's website at investors.covisint.com.

For those unable to participate in the conference call, a replay will be available after the conclusion of the earnings call on November 3, 2016, through November 10, 2016. The U.S. toll-free replay dial-in number is 1-844-512-2921 and the international replay dial-in number is 1-412-317-6671. The replay passcode is 13647593.

About Covisint Corporation

Covisint is the leading Cloud Platform for building Identity and Internet of Things (IoT) applications. Our Cloud Platform technology facilitates the rapid development of identification, authorization and connection of complex networks of people, processes, systems and things.

The Covisint Cloud Platform supports customers in their endeavors to securely identify, authenticate and connect users, devices, applications and information. It supports 2,000 organizations who connect more than 212,000 business partners and customers that support $4 billion in ecommerce transactions annually. Learn more at http://www.covisint.com/.

Forward-looking Statements

This press release contains forward-looking statements, including statements regarding Covisint's future financial performance, market growth, the demand for Covisint's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Covisint's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Covisint's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Covisint disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts; the extent we are able to maintain pricing with our customers at renewal;  the continued growth of the market for our solutions; the success of our channel partner and certified partner strategies; competition from current competitors and new market entrants; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales for our solutions; and other risk and uncertainties. Further information on potential factors that could affect actual results is included in Covisint's reports filed with the SEC.

 
COVISINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(Unaudited)
 
 September 30, 2016 March 31, 2016
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$34,814  $39,681 
Accounts receivable, net of allowance for doubtful accounts of $72 and $39 as of September 30, 2016 and March 31, 2016, respectively 9,243   12,836 
Prepaid expenses 2,069   2,167 
Other current assets 689   1,603 
Total current assets 46,815   56,287 
PROPERTY AND EQUIPMENT, NET 6,460   7,847 
CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET 10,920   11,486 
OTHER:   
Goodwill 25,385   25,385 
Deferred costs 381   580 
Deferred tax asset, net 169   171 
Other assets 205   289 
Total other assets 26,140   26,425 
TOTAL ASSETS$90,335  $102,045 
LIABILITIES AND SHAREHOLDERS' EQUITY   
CURRENT LIABILITIES:   
Accounts payable$4,654  $5,061 
Accrued commissions 1,911   1,071 
Deferred revenue 16,504   15,952 
Accrued expenses 1,565   2,377 
Total current liabilities 24,634   24,461 
DEFERRED REVENUE 655   3,595 
ACCRUED LIABILITIES 2,355   2,327 
DEFERRED TAX LIABILITY, NET 364   353 
Total liabilities 28,008   30,736 
COMMITMENTS AND CONTINGENCIES   
SHAREHOLDERS' EQUITY:   
Preferred stock, no par value - authorized 5,000,000 shares; none issued and outstanding   
Common stock, no par value - authorized 50,000,000 shares; issued and outstanding 40,797,757 (40,490,928 issued and outstanding as of March 31, 2016)   
Additional paid-in capital 163,038   161,997 
Retained deficit (100,442)  (90,527)
Accumulated other comprehensive loss (269)  (161)
Total shareholders' equity 62,327   71,309 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$90,335  $102,045 

See notes to consolidated financial statements.

 
COVISINT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Thousands, Except Per Share Data)
(Unaudited)
 
 Three Months Ended
 September 30,
 Six Months Ended
 September 30,
 2016 2015 2016 2015
REVENUE$17,170  $18,393  $34,616  $36,875 
COST OF REVENUE 8,873   8,469   17,094   18,246 
GROSS PROFIT 8,297   9,924   17,522   18,629 
OPERATING EXPENSES:       
Research and development 2,962   3,127   6,738   6,790 
Sales and marketing 7,053   7,183   14,264   14,659 
General and administrative 3,187   3,730   6,395   7,817 
Total operating expenses 13,202   14,040   27,397   29,266 
OPERATING LOSS (4,905)  (4,116)  (9,875)  (10,637)
Other income (expense) 17   (33)  33   (31)
LOSS BEFORE INCOME TAX PROVISION (4,888)  (4,149)  (9,842)  (10,668)
INCOME TAX PROVISION (BENEFIT) 24   (23)  73   44 
NET LOSS($4,912) ($4,126) ($9,915) ($10,712)
Basic and diluted loss per share($0.12) ($0.10) ($0.24) ($0.27)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX       
Foreign currency translation adjustments (13)  (85)  (108)  (82)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX (13)  (85)  (108)  (82)
COMPREHENSIVE LOSS($4,925) ($4,211) ($10,023) ($10,794)

See notes to consolidated financial statements.

 
COVISINT CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(In Thousands, Except Per Share Data)
(Unaudited)
 
  THREE MONTHS ENDED
SEPTEMBER 30,
 SIX MONTHS ENDED
SEPTEMBER 30,
  2016 2015 2016 2015
Gross profit $8,297  $9,924  $17,522  $18,629 
Gross margin  48%  54%  51%  51%
Adjustments:        
Stock compensation expense  16   22   21   52 
% of total revenue % % % %
Amortization of capitalized software  1,150   905   1,995   1,809 
% of total revenue  7%  5%  5%  5%
Non-GAAP gross profit $9,463  $10,851  $19,538  $20,490 
Non-GAAP gross margin  55%  59%  56%  56%
         
         
       
  THREE MONTHS ENDED
SEPTEMBER 30,
 SIX MONTHS ENDED
SEPTEMBER 30,
  2016 2015 2016 2015
Cost of revenue $8,873  $8,469  $17,094  $18,246 
Adjustments:        
Stock compensation expense  16   22   21   52 
Amortization of capitalized software  1,150   905   1,995   1,809 
         
Non-GAAP cost of revenue $7,707  $7,542  $15,078  $16,385 
         
         
  THREE MONTHS ENDED
SEPTEMBER 30,
 SIX MONTHS ENDED
SEPTEMBER 30,
  2016 2015 2016 2015
Research and development $2,962  $3,127  $6,738  $6,790 
Adjustments:        
Capitalized internal software costs  (740)  (1,126)  (1,428)  (1,526)
Stock compensation expense  11   28   15   54 
         
Non-GAAP research and development $3,691  $4,225  $8,151  $8,262 
         
         
         
  THREE MONTHS ENDED
SEPTEMBER 30,
 SIX MONTHS ENDED
SEPTEMBER 30,
  2016 2015 2016 2015
Sales and marketing $7,053  $7,183  $14,264  $14,659 
Adjustments:        
Stock compensation expense  69   232   118   341 
Amortization of customer relationship agreements        
         
Non-GAAP sales and marketing $6,984  $6,951  $14,146  $14,318 
         
         
  THREE MONTHS ENDED
SEPTEMBER 30,
 SIX MONTHS ENDED
SEPTEMBER 30,
  2016 2015 2016 2015
General and administrative $3,187  $3,730  $6,395  $7,817 
Adjustments:        
Stock compensation expense  340   391   773   1,375 
Amortization of trademarks        
         
Non-GAAP general and administrative $2,847  $3,339  $5,622  $6,442 
         
         
  THREE MONTHS ENDED
SEPTEMBER 30,
 SIX MONTHS ENDED
SEPTEMBER 30,
  2016 2015 2016 2015
Net loss ($4,912) ($4,126) ($9,915) ($10,712)
Adjustments:        
Capitalized internal software costs  (740)  (1,126)  (1,428)  (1,526)
Stock compensation expense  436   673   927   1,822 
Amortization of capitalized software and other intangibles  1,150   905   1,995   1,809 
Non-GAAP net loss ($4,066) ($3,674) ($8,421) ($8,607)
         
         
  THREE MONTHS ENDED
SEPTEMBER 30,
 SIX MONTHS ENDED
SEPTEMBER 30,
  2016 2015 2016 2015
Diluted EPS ($0.12) ($0.10) ($0.24) ($0.27)
Adjustments:        
Capitalized internal software costs  (0.02)  (0.03)  (0.04)  (0.04)
Stock compensation expense  0.01   0.02   0.02   0.05 
Amortization of capitalized software and other intangibles  0.03   0.02   0.05   0.04 
Non-GAAP diluted EPS ($0.10) ($0.09) ($0.21) ($0.22)


 
COVISINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
 Six Months Ended
 September 30,
 2016 2015
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:   
Net loss($9,915) ($10,712)
Adjustments to reconcile net loss to cash provided by (used in) operations:   
Depreciation and amortization 3,587   3,497 
Deferred income taxes 23   48 
Stock award compensation 927   1,822 
Other   5 
Net change in assets and liabilities:   
Accounts receivable 3,565   2,723 
Other assets 1,285   3,658 
Accounts payable and accrued expenses (72)  (1,625)
Deferred revenue (2,360)  (2,986)
Net cash used in operating activities (2,960)  (3,570)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:   
Purchase of:   
Property and equipment (188)  (3,451)
Capitalized software (1,428)  (1,526)
Proceeds from asset disposals   29 
Net cash used in investing activities (1,616)  (4,948)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:   
Vendor financing payments (369)  (369)
Net proceeds from exercise of stock awards 121   486 
Net cash provided by (used in) financing activities (248)  117 
EFFECT OF EXCHANGE RATE CHANGES ON CASH (43)  19 
NET CHANGE IN CASH (4,867)  (8,382)
CASH AT BEGINNING OF PERIOD 39,681   50,077 
CASH AT END OF PERIOD$34,814  $41,695 

See notes to consolidated financial statements.


Investor Relations Contact
866-319-7659
investors@covisint.com

Media Contact
Brad Schechter, Vice President, Corporate Marketing
248-483-2097
bschecht@covisint.com

For Sales and Marketing Information
Covisint Corporation, 26533 Evergreen Road, Suite 500, Southfield, MI 48076, 800-229-4125
http://www.covisint.com