Model N Announces Third Quarter Fiscal 2014 Financial Results

 
 
Model N Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
    June 30,     September 30,
2014 2013
Assets
Current assets:
Cash and cash equivalents $ 103,170 $ 103,350
Accounts receivable, net 17,946 16,140
Deferred cost of implementation services, current portion 249 491
Prepaid expenses 2,463 3,225
Other current assets   413     342  
Total current assets 124,241 123,548
Property and equipment, net 6,801 7,871
Goodwill 1,509 1,509
Intangible assets, net 670 918
Other assets   1,256     626  
Total assets $ 134,477   $ 134,472  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 255 $ 468
Accrued employee compensation 11,532 13,941
Accrued liabilities 2,002 2,848
Deferred revenue, current portion 26,264 19,131
Capital lease obligations, current portion   26     318  
Total current liabilities 40,079 36,706
Long-term liabilities:
Deferred revenue, net of current portion 2,480 3,507
Other long-term liabilities   678     641  
Total long-term liabilities   3,158     4,148  
Total liabilities   43,237     40,854  
 
Stockholders' equity:
Common stock 4 3
Preferred stock - -
Additional paid-in capital 168,530 156,032
Accumulated other comprehensive loss (224 ) (302 )
Accumulated deficit   (77,070 )   (62,115 )
Total stockholders' equity   91,240     93,618  
Total liabilities and stockholders' equity $ 134,477   $ 134,472  
 
               
Model N Inc.
Condensed Consolidated Statements of Operations
(dollars and shares in thousands, except per share amounts)
(unaudited)
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Revenues:
License and implementation $ 8,073 $ 16,419 $ 27,449 $ 43,362
SaaS and maintenance   11,196     10,828     34,029     30,785  
Total revenues 19,269 27,247 61,478 74,147
Cost of revenues:
License and implementation 3,812 7,527 12,955 19,887
SaaS and maintenance   5,302     4,865     15,917     14,169  
Total cost of revenues   9,114     12,392     28,872     34,056  
Gross profit   10,155     14,855     32,606     40,091  
Operating expenses:
Research and development 4,814 4,063 14,362 12,665
Sales and marketing 6,664 5,256 18,293 16,362
General and administrative 5,403 3,883 14,518 11,518
Restructuring   (43 )       26      
Total operating expenses   16,838     13,202     47,199     40,545  
(Loss) income from operations (6,683 ) 1,653 (14,593 ) (454 )
Interest (income) expense, net (3 ) 85 (10 ) 326
Other expenses, net   24     (48 )   111     664  
(Loss) income before income taxes (6,704 ) 1,616 (14,694 ) (1,444 )
Provision for income taxes   96     81     261     230  
Net (loss) income   (6,800 )   1,535     (14,955 )   (1,674 )
Net (loss) income attributable to common stockholders   (6,800 )   1,535     (14,955 )   (1,674 )
Net (loss) income per share attributable to common stockholders:
Basic $ (0.27 ) $ 0.07   $ (0.62 ) $ (0.12 )
Diluted $ (0.27 ) $ 0.06   $ (0.62 ) $ (0.12 )

Weighted average number of shares used in computing net (loss) income per share attributable to common stockholders

Basic   24,794     22,798     24,214     13,647  
Diluted   24,794     26,072     24,214     13,647  
 
               
Model N Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Cash flows from operating activities:
Net (loss) income $ (6,800 ) $ 1,535 $ (14,955 ) $ (1,674 )
Adjustments to reconcile net(loss) income to net cash used in operating activities:
Depreciation 829 477 2,543 1,414
Amortization of intangible assets 83 82 248 247
Stock-based compensation 2,662 1,807 7,450 3,306
Loss on disposal of property and equipment 2 2
Amortization of debt discount 61 81
Changes in fair value of preferred stock warrant liability - 671
Provision for doubtful accounts - 9
Deferred income taxes 9 31 29 90

Changes in operating assets and liabilities, net of acquired assets and liabilities:

Accounts receivable 2,448 (5,035 ) (1,806 ) (7,767 )
Prepaid expenses and other assets (159 ) (370 ) 128 (1,861 )
Deferred cost of implementation services 176 15 265 305
Accounts payable (38 ) 1,592 (212 ) 1,899
Accrued employee compensation 435 2,275 (2,342 ) 2,699
Other accrued and long-term liabilities (374 ) (308 ) (906 ) 1,271
Deferred revenue   3,022     (331 )   6,106     (1,376 )
Net cash provided by (used in) operating activities   2,293     1,833     (3,452 )   (684 )
Cash flows from investing activities:
Purchases of property and equipment (985 ) (339 ) (1,503 ) (811 )
Capitalization of software development costs (976 ) (2,698 )
Purchase of short-term investments       -         (63 )
Net cash used in investing activities   (985 )   (1,315 )   (1,503 )   (3,572 )
Cash flows from financing activities:
Proceeds from initial public offering, net of offering costs of $7.6 million 101,064
Proceeds from exercise of stock options and employee stock purchase plan 211 255 5,049 768
Payments for deferred offering costs (6 ) (586 ) (6 ) (2,562 )
Principal payments on capital lease obligations (71 ) (144 ) (292 ) (442 )
Principal payments on loan       (3,958 )       (5,208 )
Net cash provided by (used in) financing activities   134     (4,433 )   4,751     93,620  
Effect of exchange rate changes on cash and cash equivalents   4     (31 )   24     (54 )
Net change in cash and cash equivalents 1,446 (3,946 ) (180 ) 89,310
Cash and cash equivalents at beginning of period   101,724     109,024     103,350     15,768  
Cash and cash equivalents at end of period $ 103,170   $ 105,078   $ 103,170   $ 105,078  
 
 
Model N Inc.
Reconciliation of GAAP to Non-GAAP Operating Results
(dollars and shares in thousands, except per share amounts)
(unaudited)
    Three months ended June 30,     Nine months ended June 30,
2014     2013 2014     2013

Reconciliation from GAAP net income (loss) to adjusted EBITDA

GAAP net (loss) income : $ (6,800 ) $ 1,535 $ (14,955 ) $ (1,674 )
Reversal of non-GAAP expenses:
Stock-based compensation 2,662 1,807 7,450 3,306
Depreciation and amortization 912 559 2,791 1,661
LeapFrogRx compensation charges 80 200 381 614
Restructuring (43 ) 26
Interest (income) expense, net (3 ) 85 (10 ) 326
Other expenses (income), net 24 (48 ) 111 664
Provision for income taxes   96     81     261     230  
Adjusted EBITDA $ (3,072 ) $ 4,219   $ (3,945 ) $ 5,127  
 
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Reconciliation from GAAP gross profit to non-GAAP gross profit:
GAAP gross profit: $ 10,155 $ 14,855 $ 32,606 $ 40,091
Reversal of non-GAAP expenses:
Stock-based compensation (a) 373 455 1,328 773
Amortization of intangible assets (b) 61 60 182 181
LeapFrogRx compensation charges (c)   50     126     238     383  
Non-GAAP gross profit $ 10,639   $ 15,496   $ 34,354   $ 41,428  
Percentage of revenue 55.2 % 56.9 % 55.9 % 55.9 %
 
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Reconciliation from GAAP gross profit to non-GAAP gross profit:
for license and implementation:
GAAP gross profit - license and implementation: $ 4,261 $ 8,892 $ 14,494 $ 23,475
Reversal of non-GAAP expenses:
Stock-based compensation (a)   206     240     752     370  
Non-GAAP gross profit - license and implementation $ 4,467   $ 9,132   $ 15,246   $ 23,845  
Percentage of revenue 55.3 % 55.6 % 55.5 % 55.0 %
 
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Reconciliation from GAAP gross profit to non-GAAP gross profit:
for SaaS and maintenance:
GAAP gross profit - SaaS and maintenance: $ 5,894 $ 5,963 $ 18,112 $ 16,616
Reversal of non-GAAP expenses:
Stock-based compensation (a) 167 215 576 403
Amortization of intangible assets (b) 61 60 182 181
LeapFrogRx compensation charges (c)   50     126     238     383  
Non-GAAP gross profit - SaaS and maintenance $ 6,172   $ 6,364   $ 19,108   $ 17,583  
Percentage of revenue 55.1 % 58.8 % 56.2 % 57.1 %

 

Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Reconciliation from GAAP research and development to non-GAAP research and development:
GAAP research and development: $ 4,814 $ 4,063 $ 14,362 $ 12,665
Reversal of non-GAAP expenses:
Stock-based compensation (a) (310 ) (305 ) (972 ) (457 )
LeapFrogRx compensation charges (c)   (1 )   (1 )   (10 )   (32 )
Non-GAAP research and development $ 4,503   $ 3,757   $ 13,380   $ 12,176  
 
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Reconciliation from GAAP sales and marketing to non-GAAP sales and marketing:
GAAP sales and marketing: $ 6,664 $ 5,256 $ 18,293 $ 16,362
Reversal of non-GAAP expenses:
Stock-based compensation (a) (721 ) (686 ) (1,931 ) (1,399 )
Amortization of intangible assets (b) (22 ) (22 ) (66 ) (65 )
LeapFrogRx compensation charges (c)   (11 )   (56 )   (65 )   (144 )
Non-GAAP sales and marketing $ 5,910   $ 4,492   $ 16,231   $ 14,754  
 
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
 
Reconciliation from GAAP general and administrative to non-GAAP general and administrative:
GAAP general and administrative: $ 5,403 $ 3,883 $ 14,518 $ 11,518
Reversal of non-GAAP expenses:
Stock-based compensation (a) (1,258 ) (361 ) (3,219 ) (677 )
LeapFrogRx compensation charges (c)   (18 )   (17 )   (68 )   (55 )
Non-GAAP general and administrative $ 4,127   $ 3,505   $ 11,231   $ 10,786  
 
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Reconciliation from GAAP (loss) income from operations to non-GAAP (loss) income from operations:
GAAP net (loss) income from operations: $ (6,683 ) $ 1,653 $ (14,593 ) $ (454 )
Reversal of non-GAAP expenses:
Stock-based compensation (a) 2,662 1,807 7,450 3,306
Amortization of intangible assets (b) 83 82 248 246
LeapFrogRx compensation charges (c) 80 200 381 614
Restructuring (e)   (43 )       26      
Non-GAAP (loss) income from operations $ (3,901 ) $ 3,742   $ (6,488 ) $ 3,712  
 
Three months ended June 30, Nine months ended June 30,
2014 2013 2014 2013
Numerator:
Reconciliation between GAAP and non-GAAP net (loss) income:
GAAP net (loss) income: $ (6,800 ) $ 1,535 $ (14,955 ) $ (1,674 )
Reversal of non-GAAP expenses:
Stock-based compensation (a) 2,662 1,807 7,450 3,306
Amortization of intangible assets (b) 83 82 248 246
LeapFrogRx compensation charges (c) 80 200 381 614
Changes in fair value of preferred stock warrant liability (d) 670
Restructuring (e)   (43 )       26      
Non-GAAP net income (loss) attributable to Model N Inc. common stockholders $ (4,018 ) $ 3,624   $ (6,850 ) $ 3,162  
Denominator:

Reconciliation between GAAP and non-GAAP weighted average shares used in computing diluted net (loss) income per share attributable to Model N Inc. common stockholders:

Weighted average number of shares used in computing GAAP diluted net (loss) income per share 24,794 26,072 24,214 13,647
Assuming the conversion of preferred stock at the beginning of each period 4,515
Effect of dilutive securities (stock options, restricted stock unis, warrants and ESPP)               2,846  
Weighted average shares used in computing non-GAAP diluted net income (loss) per common share   24,794     26,072     24,214     21,008  
GAAP diluted net (loss) income per share attributable to Model N Inc. common stockholders $ (0.27 ) $ 0.06   $ (0.62 ) $ (0.12 )
Non-GAAP diluted net (loss) income per share attributable to Model N Inc. common stockholders $ (0.16 ) $ 0.14   $ (0.28 ) $ 0.15  
 

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