Covisint Corporation
Covisint Corp (Form: 8-K, Received: 02/09/2017 16:12:09)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): February 9, 2017


Covisint Corporation
(Exact Name of Registrant as Specified in its Charter)


Commission File Number: 001-36088

Michigan
(State or other jurisdiction of incorporation or organization)
26-2318591
(I.R.S. Employer Identification No.)

26533 Evergreen Road, Suite 500, Southfield, Michigan

(Address of Principal Executive Offices)

48076
(Zip Code)


(Registrant’s telephone number, including area code): (248) 483-2000



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02. Results of Operations and Financial Condition.

On February 9, 2017, Covisint Corporation (“Covisint”) issued a press release announcing financial results for its third quarter of the fiscal year ended March 31, 2017 and certain other information.  A copy of the press release is furnished with the Report as Exhibit 99.1. The Registrant intends to hold an investor call and webcast to discuss these results on February 9, 2017, at 5:00 p.m. Eastern Time. Additional presentation materials relating to such call are furnished hereto as Exhibit 99.2 and are incorporated herein by reference.

Forward-Looking Statements

Certain statements in this Current Report on Form 8-K, including but not limited to statements set forth in the attached press release and additional presentation materials, may constitute forward-looking statements. These forward looking statements involve a number of known and unknown risks, uncertainties and other factors that may cause such forward-looking statements not to be realized and that could cause actual results to differ materially from Covisint’s expectations in these statements. For more information about other risks that could affect the forward-looking statements herein, please see Covisint’s most recent annual report on Form 10-K, quarterly report on Form 10-Q, and other filings made with the Securities and Exchange Commission. Covisint expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations, or any change in events or circumstances on which those statements are based, unless otherwise required by law.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

99.1
Press Release, dated February 9, 2017.
99.2
Presentation materials dated February 9, 2017.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COVISINT CORPORATION


Date: February 9, 2017                        By:     /s/ Enrico Digirolamo    
Enrico Digirolamo
Chief Financial Officer









INDEX OF EXHIBITS


Exhibit No.
Description
99.1
Press Release, dated February 9, 2017
 
99.2
Presentation materials dated February 9, 2017
 




NEWS RELEASE
26533 Evergreen Rd., Suite 500 Southfield, Michigan 48076
(800) 229-4125

For Immediate Release     
February 9, 2017


Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results


DETROIT - February 9, 2017 -- Covisint Corporation (Nasdaq: COVS), the leading Cloud Platform for building Identity and Internet of Things (IoT) applications, today announced financial results for the third quarter of fiscal 2017, which ended December 31, 2016.

"During the third quarter, we achieved total revenue of $16.6 million, which included $14.7 million in subscription revenue. We finished the quarter with over $30 million in cash, which was in-line with our expectations. Earlier, we announced our shift in focus towards our core heritage, the automotive vertical. I have been pleased with the progress we have made and the make-up of our new team. The quality of our pipeline is improving, and we are seeing new account opportunities, not only in Cloud Identity, but also in Connected Car,” said Covisint CEO, Sam Inman.

Third Quarter Fiscal 2017 Financial Highlights

Revenue
Total revenue was $16.6 million, a decrease of 13% compared to $19.2 million in the same period last year.
Subscription revenue was $14.7 million, a decrease of 3% compared to $15.3 million in the same period last year.
Services revenue was $1.9 million, a decrease of 51% compared to the same period last year.
 
Profitability
GAAP gross margin was 49%, compared to 48% in the prior fiscal quarter and 54% in the same period last year .
Non-GAAP gross margin was 56%, compared to 55% in the prior fiscal quarter and 58% in the same period last year .
GAAP net loss was $4.4 million or ($0.11) per diluted share, compared to net loss of $4.1 million or ($0.10) per diluted share in the same period last year .
Non-GAAP net loss was $3.5 million or ($0.09) per diluted share, compared to net loss of $3.8 million or ($0.09) per diluted share in the same period last year .






Page 2
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017

Balance Sheet
The Company had $30.4 million in cash and cash equivalents at December 31, 2016, compared with $34.8 million at September 30, 2016.

Third Quarter Fiscal 2017 Business Highlights
Featured in Forrester report, The Future of Identity And Access Management , October, 2016.
Showcased the Covisint IoT Platform at the Gartner Symposium / ITxpo in Orlando, in October, 2016.
Recognized as a winner at the 2016 Sogeti IoT Hackathon in November, 2016, finishing second for our Connected Baggage Tracking solution built for the world's largest airline.
Highlighted by Gartner analyst Earl Perkins for our Identity for IoT capabilities at Gartner Identity and Access Management Summit in Las Vegas, November, 2016.
Closed agreements with Chinese automotive OEMs, SAIC General Motors (SGM) and NextEV to launch their supplier engagement platforms in December, 2016.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles in the United States (“GAAP”), Covisint monitors non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), and 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), and 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.


Page 3
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017

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 February 9, 2017, through February 16 , 2017. 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 13653476 .

About Covisint Corporation

Covisint is the connected company - we securely connect ecosystems of people, systems and things to enable new service offerings, optimize operations, develop new business models and ultimately enable the connected economy. Today, we support more than 2,000 organizations and connect to more than 212,000 business partners and customers worldwide. Learn more at www.covisint.com .

Covisint on Twitter
Covisint on LinkedIn
Covisint on Facebook

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 risks and uncertainties. Further information on potential factors that could affect actual results is included in Covisint's reports filed with the SEC.


Page 4
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017

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



Page 5
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017

COVISINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(Unaudited)
 
December 31, 2016
 
March 31, 2016
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents

$30,438

 

$39,681

Accounts receivable, net of allowance for doubtful accounts of $93 and $39 as of December 31, 2016 and March 31, 2016, respectively
8,266

 
12,836

Prepaid expenses
2,281

 
2,167

Other current assets
629

 
1,603

Total current assets
41,614

 
56,287

PROPERTY AND EQUIPMENT, NET
5,731

 
7,847

CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET
10,514

 
11,486

OTHER:
 
 
 
Goodwill
25,385

 
25,385

Deferred costs
291

 
580

Deferred tax asset, net
170

 
171

Other assets
173

 
289

Total other assets
26,019

 
26,425

TOTAL ASSETS

$83,878

 

$102,045

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable

$6,267

 

$5,061

Accrued commissions
1,993

 
1,071

Deferred revenue
12,589

 
15,952

Accrued expenses
1,525

 
2,377

Total current liabilities
22,374

 
24,461

DEFERRED REVENUE
423

 
3,595

ACCRUED LIABILITIES
2,310

 
2,327

DEFERRED TAX LIABILITY, NET
382

 
353

Total liabilities
25,489

 
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 40,865,897 (40,490,928 issued and outstanding as of March 31, 2016)

 

Additional paid-in capital
163,644

 
161,997

Accumulated deficit
(104,842
)
 
(90,527
)
Accumulated other comprehensive loss
(413
)
 
(161
)
Total shareholders' equity
58,389

 
71,309

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$83,878

 

$102,045


See notes to consolidated financial statements.



Page 6
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017

COVISINT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Thousands, Except Per Share Data)
(Unaudited)
 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
2016
 
2015
 
2016
 
2015
REVENUE

$16,646

 

$19,162

 

$51,261

 

$56,037

COST OF REVENUE
8,500

 
8,822

 
25,594

 
27,068

GROSS PROFIT
8,146

 
10,340

 
25,667

 
28,969

OPERATING EXPENSES:
 
 
 
 
 
 
 
Research and development
2,578

 
3,100

 
9,315

 
9,890

Sales and marketing
7,128

 
8,564

 
21,392

 
23,223

General and administrative
2,813

 
2,699

 
9,207

 
10,516

Total operating expenses
12,519

 
14,363

 
39,914

 
43,629

OPERATING LOSS
(4,373
)
 
(4,023
)
 
(14,247
)
 
(14,660
)
Other income (expense)
13

 
3

 
46

 
(28
)
LOSS BEFORE INCOME TAX PROVISION
(4,360
)
 
(4,020
)
 
(14,201
)
 
(14,688
)
INCOME TAX PROVISION
40

 
52

 
114

 
96

NET LOSS

($4,400
)
 

($4,072
)
 

($14,315
)
 

($14,784
)
Basic and diluted loss per share

($0.11
)
 

($0.10
)
 

($0.35
)
 

($0.38
)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
 
 
 
 
 
 
 
Foreign currency translation adjustments
(144
)
 
(72
)
 
(252
)
 
(154
)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
(144
)
 
(72
)
 
(252
)
 
(154
)
COMPREHENSIVE LOSS

($4,544
)
 

($4,144
)
 

($14,567
)
 

($14,938
)

See notes to consolidated financial statements.



Page 7
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017


COVISINT CORPORATION
RECONCILIATION OF U.S. GAAP TO NON-U.S. GAAP
(In Thousands, Except Per Share Data)
(Unaudited)



 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
Gross profit
 

$8,146

 

$10,340

 

$25,667

 

$28,969

Gross margin
 
49
%
 
54
%
 
50
%
 
52
%
Adjustments:
 
 
 
 
 
 
 
 
Stock compensation expense
 
16

 
15

 
38

 
68

Amortization of capitalized software
 
1,152

 
802

 
3,147

 
2,611

Non-U.S. GAAP gross profit
 

$9,314

 

$11,157

 

$28,852

 

$31,648

Non-U.S. GAAP gross margin
 
56
%
 
58
%
 
56
%
 
56
%





 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
Cost of revenue
 

$8,500

 

$8,822

 

$25,594

 

$27,068

Adjustments:
 
 
 
 
 
 
 
 
Stock compensation expense
 
16

 
15

 
38

 
68

Amortization of capitalized software
 
1,152

 
802

 
3,147

 
2,611

Non-U.S. GAAP cost of revenue
 

$7,332

 

$8,005

 

$22,409

 

$24,389






 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
Research and development
 

$2,578

 

$3,100

 

$9,315

 

$9,890

Adjustments:
 
 
 
 
 
 
 
 
Capitalized internal software costs
 
(746
)
 
(1,039
)
 
(2,175
)
 
(2,565
)
Stock compensation expense
 
11

 
23

 
26

 
76

Non-U.S. GAAP research and development
 

$3,313

 

$4,116

 

$11,464

 

$12,379



Page 8
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017



 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
Sales and marketing
 

$7,128

 

$8,564

 

$21,392

 

$23,223

Adjustments:
 
 
 
 
 
 
 
 
Stock compensation expense
 
93

 
69

 
211

 
410

Non-U.S. GAAP sales and marketing
 

$7,035

 

$8,495

 

$21,181

 

$22,813




 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
General and administrative
 

$2,813

 

$2,699

 

$9,207

 

$10,516

Adjustments:
 
 
 
 
 
 
 
 
Stock compensation expense
 
371

 
410

 
1,144

 
1,785

Non-U.S. GAAP general and administrative
 

$2,442

 

$2,289

 

$8,063

 

$8,731




 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
Net loss
 

($4,400
)
 

($4,072
)
 

($14,315
)
 

($14,784
)
Adjustments:
 
 
 
 
 
 
 
 
Capitalized internal software costs
 
(746
)
 
(1,039
)
 
(2,175
)
 
(2,565
)
Stock compensation expense
 
491

 
517

 
1,419

 
2,339

Amortization of capitalized software and other intangibles
 
1,152

 
802

 
3,147

 
2,611

Non-U.S. GAAP net loss
 

($3,503
)
 

($3,792
)
 

($11,924
)
 

($12,399
)



 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
Diluted EPS
 
($0.11)
 
($0.10)
 
($0.35)
 
($0.38)
Adjustments:
 
 
 
 
 
 
 
 
Capitalized internal software costs
 
(0.02
)
 
(0.02
)
 
(0.05
)
 
(0.07
)
Stock compensation expense
 
0.01

 
0.01

 
0.03

 
0.06

Amortization of capitalized software and other intangibles
 
0.03

 
0.02

 
0.08

 
0.07

Non-U.S. GAAP Diluted EPS
 

($0.09
)
 

($0.09
)
 

($0.29
)
 

($0.32
)



Page 9
Covisint Corporation Announces Third Quarter Fiscal 2017 Financial Results
February 9, 2017

COVISINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
 
Nine Months Ended 
 December 31,
 
2016
 
2015
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
 
 
 
Net loss

($14,315
)
 

($14,784
)
Adjustments to reconcile net loss to cash provided by (used in) operations:
 
 
 
Depreciation and amortization
5,410

 
5,144

Deferred income taxes
50

 
64

Stock award compensation
1,419

 
2,339

Other
3

 

Net change in assets and liabilities:
 
 
 
Accounts receivable
4,497

 
5,684

Other assets
1,236

 
4,611

Accounts payable and accrued expenses
1,809

 
(2,600
)
Deferred revenue
(6,475
)
 
(8,101
)
Net cash used in operating activities
(6,366
)
 
(7,643
)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
 
 
 
Purchase of:
 
 
 
Property and equipment
(189
)
 
(3,772
)
Capitalized software
(2,175
)
 
(2,565
)
Proceeds from asset disposals

 
33

Net cash used in investing activities
(2,364
)
 
(6,304
)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
 
 
 
Vendor financing payments
(614
)
 
(548
)
Net proceeds from exercise of stock awards
239

 
2,074

Net cash provided by (used in) financing activities
(375
)
 
1,526

EFFECT OF EXCHANGE RATE CHANGES ON CASH
(138
)
 
(41
)
NET CHANGE IN CASH
(9,243
)
 
(12,462
)
CASH AT BEGINNING OF PERIOD
39,681

 
50,077

CASH AT END OF PERIOD

$30,438

 

$37,615



See notes to consolidated financial statements.


2/9/2017 1 Covisint Corporation Third Quarter Fiscal 2017 Results February 9, 2017


 
This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, any projections of financial information; any statements about historical results that may suggest trends for our business and results of operations; any statements of the plans, strategies and objectives of management for future operations; any statements of expectation or belief regarding future events, potential markets or market size, technology developments, or enforceability of our intellectual property rights; and any statements of assumptions underlying any of the foregoing. These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. Actual results could differ materially from our current expectations as a result of many factors, including but not limited to: our ability to attract new customers; the extent to which customers renew their contracts for our solutions; the extent we are able to maintain pricing with our customers at renewal; the seasonality of our business; our ability to manage our growth; 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; our ability to penetrate new vertical markets; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure and costs associated with operating as a public company; and failure to protect our intellectual property. These and other risks and uncertainties associated with our business are described in Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended December 31, 2016. We assume no obligation and do not intend to update these forward-looking statements. In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These historical and forward-looking non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP measures is included in the appendix to this presentation. Covisint is a registered trademark of Covisint Corporation. This presentation also contains additional trademarks and service marks of ours and of other companies. We do not intend our use or display of other companies’ trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Forward Looking Statements 2


 
3 Q3 FY17: Financial Overview Key Metrics ($ in thousands) Guidance Summary * Excludes the impact of stock compensation and the expensing of certain R&D costs (rather than capitalizing such costs), refer to the reconciliation of quarterly results on slide 6 and the reconciliation of guidance on slide 7. ** Y/Y growth FY17 Subscription Revenue** (3) - (5)% About 15% of Total Revenue Non-GAAP Net Loss* $(11) – (12) mil Cash on Hand (EOP) $33 mil Total Shares Outstanding 41.0 mil Services Revenue Q3 FY 17 Y/Y Q/Q Subscription Revenue $ 14,735 (3%) 1% Services Revenue $ 1,911 (51%) (25%) Total Revenue $ 16,646 (13%) (3%) Q3 FY 17 Y/Y Q/Q Gross Profit $ 8,146 (21%) (2%) Gross Margin 49% Stock Compensation Expense $ 16 Amortization of Capitalized Software $ 1,152 Non-GAAP Gross Profit* $ 9,314 (17%) (2%) Non-GAAP Gross Margin 56% Net Loss $ (4,400) Stock Compensation Expense $ 491 Capitalized internal software costs $ (746) Amortization of Capitalized Software $ 1,152 Non-GAAP Net Loss* $ (3,503) Net Change in Cash $ (4,376) Net proceeds from exercise of stock awards $ (118) Vendor Financing Payment $ 245 Effect of Exchange Rate Changes on Cash $ 95 Free Cash Flow $ (4,154) Highlights • C sh at $30 million • Non-GAAP Gross Margin in line with expectations • Cash Flow better than expectations • Expect Cash Flow break-even in Fiscal 2018


 
Q3 FY17 Highlights 4 • Market Continues to Develop Around Our Key Components • Internet of Things • Cloud Identity and Access Management • Primary Focus Remains on Building Sales Momentum • Increased focused on the automotive market • Rebuilt sales and account executive teams with specific auto industry experience • Improved pipeline of opportunity • Manage Cash Position Through Strong Expense Management • Finished Q3 FY17 with $30.4 million in cash • Expect cash flow break-even for FY18


 
Appendix


 
6 Q3 FY17: Non-GAAP Reconciliation ($ in thousands, except per share) Net Change in Cash $ (4,376) Net proceeds from exercise of stock awards $ (118) Vendor Financing Payment $ 245 Effect of Exchange Rate Changes on Cash $ 95 Free Cash Flow $ (4,154) Q3'FY17 General and administrative 2,813 Adjustments: Stock compensation expense 371 General and administrative, non-GAAP 2,442 Q3'FY17 Net loss (4,400) Adjustments: Capitalized internal software costs (746) Stock compensation expense 491 Amortization of capitalized software and other intangibles 1,152 Net loss, non-GAAP (3,503) Q3'FY17 Diluted EPS (0.11) Adjustments: Capitalized internal software costs (0.02) Stock compensation expense 0.01 Amortization of capitalized software and other intangibles 0.03 Diluted EPS, non-GAAP (0.09) Q3'FY17 Cost of revenue 8,500 Adjustments: Stock compensation expense 16 Amortization of capitalized software and other intangibles 1,152 Cost of revenue, non-GAAP 7,332 Q3'FY17 Research and development 2,578 Adjustments: Capitalized internal softwar costs (746) Stock compensation expense 11 Research and development, non-GAAP 3,313 Q3'FY17 Sales and marketing 7,128 Adjustments: Stock compensation expense 93 Sales and marketing, non-GAAP 7,035


 
7 Non-GAAP Forecast Reconciliation ($ in millions) Forecast Net Loss (14.0) - (16.0) Capitalized internal software costs (3.0) - (2.4) Stock compensation expense 1.8 - 2.0 Amortization of capitalized software 4.2 - 4.4 Forecast Non-GAAP Net Loss (11.0) - (12.0) Forecast Net Change in Cash (6.2) - (7.2) Net proceeds from exercise of stock awards (0.2) - (0.2) Vendor Financing Payment 0.6 - 0.6 Effect of exchange rate changes on cash 0.1 - 0.1 Forecast Free Cash Flow (5.7) - (6.7) FY 17