KANA Software Reports Second Quarter 2009 Financial Results
2009-07-29 22:09:02 -
MENLO PARK, CA -- (Marketwire) -- 07/29/09 -- KANA Software, Inc. (OTCBB: KANA), a world leader in multi-channel customer service, today announced financial results for the second quarter ended June 30, 2009.
-- KANA increased its cash position, reduced the combined total of its
payables and its accrued liabilities, and generated positive net cash flow
from operating activities in the second quarter of 2009.
-- The Company reported a net loss in accordance with accounting
principles generally accepted in the United States (GAAP) of $607,000, or
$0.01 per share for the second quarter of 2009, compared to a net loss of
$3.3 million or $0.08 per share in the first quarter of 2009 and compared
to a net loss of $137,000, or $0.00 per share for the second quarter of
2008.
-- For the second quarter of 2009, KANA reported non-GAAP net income of
$703,000, or $0.02 per share, compared to a non-GAAP net loss of $2.7
million or $0.07 per share in the first quarter of 2009, and compared to
non-GAAP net income of $549,000, or $0.01 per share, in the second quarter
of 2008. KANA's quarterly non-GAAP net income (loss) was calculated by
adding back accounting charges for stock-based compensation expense,
amortization of acquired intangible assets, and restructuring expense to
KANA's GAAP net loss.
-- KANA's total revenues for the second quarter of 2009 were $11.9
million, compared to $10.9 million in the first quarter of 2009 and
compared to $16.7 million in the second quarter of 2008.
-- Maintenance revenue in the second quarter of 2009 was $7.1 million,
compared to $6.6 million in the first quarter of 2009 and compared to $7.6
million in the second quarter of 2008. In the second quarter of 2009,
service revenue was $3.3 million, compared to $3.1 million in the first
quarter of 2009 and compared to $5.1 million for the second quarter of
2008, while license revenue was $1.5 million in the second quarter of 2009
compared to $1.2 million in the first quarter of 2009 and compared to $4.0
million in the second quarter of 2008.
-- KANA announced during the quarter the completion of a term sheet for
$1 million in subordinated debt financing as part of the recently extended
Loan & Security Agreement between the Company and Bridge Bank.
-- KANA continues to make improvements to its cost structure. In the
first two quarters of 2009, the Company's run rate is on track to reduce
annual costs by at least $16 million. The Company continues to expect 2009
total non-GAAP operating expenses to be at least 25% less than 2008 non-
GAAP operating expense. KANA has achieved these cost reductions in 2009
while maintaining its level of investment in both research and development
and customer support.
Company Highlights:
-- KANA announced during the second quarter that online travel service
provider priceline.com selected KANA 10, which provides customer-service
executives unprecedented control over the end-to-end Service Experience.
KANA and IBM made the announcement of priceline.com's selection
simultaneously with their announcement of the rollout of KANA 10, which is
built on IBM's industry-leading SOA foundation and enables its customers to
make changes in minutes instead of months. "Priceline.com wanted a
solution that increased our agility in accommodating varying business
conditions and changes in products to ensure our customers have the ideal
service experience," said priceline.com's Chief Technology Officer, Ron
Rose. "KANA 10, with its experience flow capability, provided us with the
ability to accomplish that."
-- Additional customers selecting KANA solutions during the second
quarter included Biogen Idec, Inc.; LoveFilm UK, Limited; and one of the
largest telecommunications companies in the United States.
-- KANA also announced that it has formed KANA Global Consulting
Services, a new business unit charged with providing strategic business
consulting, expertise in industry-specific business processes and delivery
of new technology solutions critical to helping major corporations deliver
superior service experiences for their customers. As part of the formation
of the new services unit, KANA is fully merging eVergance Partners LLC, its
management consulting services subsidiary, into KANA to streamline
operations and better align its strategic business services.
-- During the second quarter, KANA was named a Service Leader by CRM
magazine for the third consecutive year. KANA won the "Web Interaction
Management" category and was listed as a leader in the "Web Self-Service"
category. Also, KANA customer Xerox won a 2009 STAR Award for Best
Practices from the Service & Support Professionals Association (SSPA).
"Non-GAAP profitability, positive net operating cash flow, increased cash and immediate success for KANA 10 were the hallmarks of our second quarter," said Michael Fields, KANA's Chief Executive Officer. "By sustaining strong renewal maintenance revenue within a significantly lower operational cost structure, KANA succeeded in achieving non-GAAP profitability in the second quarter, even though a handful of deployment delays caused our overall revenue to come in slightly below the lower end of our guidance range. Excellent early traction for KANA 10, typified by the selection by priceline.com, bolsters our confidence in maintaining non-GAAP profitability in each of the two remaining quarters of the year.
KANA has positioned itself well for growth and sustainable profitability and is focused on market leadership in multi-channel customer service."
KANA said that it expects revenue of $12 million to $13.5 million and non-GAAP operating profitability in the third quarter of 2009.
Investor Conference Call Information
KANA's management team will host a conference call today at 4:30PM EDT (1:30PM PDT) in which it will discuss the Company's reported quarterly financial results and financial outlook. Investors are invited to listen to the call by dialing (866) 831-6270 or (617) 213-8858 and entering passcode #32622796. The conference call will also be broadcast from KANA's website. A digital recording will be provided by telephone two hours after the completion of the conference call, through midnight on August 1, 2009.
To access the replay, please dial (888) 286-8010 or (617) 801-6888 and enter passcode #76356713. The replay will also be available on the Company's website for one year.
About KANA
KANA is a world leader in multi-channel customer service. KANA's integrated solutions allow companies to deliver consistent, managed service across all channels, including email, chat, call centers and Web self-service, so customers have the freedom to choose the service they want, how and when they want it. KANA's clients report double-digit increases in customer satisfaction, while reducing call volumes by an average of 20 percent.
KANA's award-winning solutions have been proven in more than 600 companies worldwide, including approximately half of the world's largest 100 companies. For more information, visit www.KANA.com :
www.KANA.com .
Non-GAAP Financial Measures
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the attached table, which exclude certain expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.
Cautionary Note Regarding Forward-looking Statements Under the Private Securities Litigation Reform Act of 1995: Information in this release regarding KANA's forecasts, projections, expectations, beliefs, and intentions are forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to KANA as of the date of this release, which will likely change and we assume no obligation to update any such forward-looking statement. These statements include statements about anticipated revenue growth, profitability, market leadership, demand for KANA's software, and customers' expected benefits and results from KANA applications. These statements are not guarantees of future performance and actual results could differ materially from our current expectations.
Factors that could cause or contribute to such differences include, but are not limited to: competition in our marketplace, including introductions of new products or services, or reductions in prices, by competitors; risks associated with lack of market acceptance of KANA's products or services; inability to enhance and develop our products and services within budget and on schedule; inability to attract and retain qualified employees, to manage cash and expenditures or to expand sales; KANA's history of losses; the effect of potential military action and terrorist activities; and slow economic conditions, particularly as they affect spending by our prospective customers on multi-channel customer service and similar enterprise software products. These and other factors are risks associated with our business that may affect our operating results and are discussed in KANA's filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.
NOTE: KANA is a registered trademark of KANA Software, Inc. All other company and product names may be trademarks of their respective owners.
Kana Software, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenues:
License fees $ 1,518 $ 3,972 $ 2,717 $ 9,695
Services 10,395 12,681 20,088 25,243
-------- -------- -------- --------
Total revenues 11,913 16,653 22,805 34,938
-------- -------- -------- --------
Costs and expenses:
Cost of license fees 187 146 375 558
Cost of services 3,606 5,340 8,084 10,758
Amortization of acquired intangible
assets 125 125 250 250
Sales and marketing 2,235 5,028 5,237 11,272
Research and development 3,386 3,426 7,049 6,760
General and administrative 2,115 2,641 4,715 5,825
Restructuring expense (recovery) 805 - 805 (482)
-------- -------- -------- --------
Total costs and expenses 12,459 16,706 26,515 34,941
-------- -------- -------- --------
Loss from operations (546) (53) (3,710) (3)
Interest and other income
(expense), net (51) (64) (137) (167)
-------- -------- -------- --------
Loss before income tax expense (597) (117) (3,847) (170)
Income tax expense (10) (20) (26) (46)
-------- -------- -------- --------
Net loss $ (607) $ (137) $ (3,873) $ (216)
======== ======== ======== ========
Basic and diluted net loss per
share $ (0.01) $ (0.00) $ (0.09) $ (0.01)
======== ======== ======== ========
Shares used in computing basic and
diluted net loss per share 41,215 41,212 41,214 41,211
======== ======== ======== ========
Stock-based compensation included
in the expense line items:
Cost of services $ 67 $ 82 $ 150 $ 185
Sales and marketing 103 176 214 340
Research and development 71 96 134 173
General and administrative 139 207 316 424
-------- -------- -------- --------
$ 380 $ 561 $ 814 $ 1,122
======== ======== ======== ========
Reconciliation of GAAP net loss to
non-GAAP net income (loss):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net loss, GAAP $ (607) $ (137) $ (3,873) $ (216)
Non-GAAP adjustments:
Stock-based compensation 380 561 814 1,122
Restructuring expense
(recovery) 805 - 805 (482)
Amortization of acquired
intangible assets 125 125 250 250
-------- -------- -------- --------
Net income (loss), non-GAAP $ 703 $ 549 $ (2,004) $ 674
======== ======== ======== ========
Net income (loss) per share,
non-GAAP
Basic $ 0.02 $ 0.01 $ (0.05) $ 0.02
======== ======== ======== ========
Diluted $ 0.02 $ 0.01 $ (0.05) $ 0.02
======== ======== ======== ========
Shares used in per share
calculation
Basic 41,215 41,212 41,214 41,211
======== ======== ======== ========
Diluted 41,230 41,418 41,214 41,241
======== ======== ======== ========
Kana Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, 2009 December 31, 2008
---------------- -----------------
Assets
Cash and cash equivalents $ 2,939 $ 6,988
Accounts receivable, net 6,030 7,556
Other current assets 2,063 2,030
---------------- -----------------
Total current assets 11,032 16,574
Restricted cash, long-term 305 751
Property and equipment, net 1,544 1,923
Goodwill 12,415 12,415
Acquired intangible assets, net 1,476 1,726
Other assets 131 428
---------------- -----------------
Total Assets $ 26,903 $ 33,817
================ =================
Liabilities and Stockholders' Equity
(Deficit)
Line of credit $ 3,856 $ 6,000
Notes payable, current portion 247 1,821
Accounts payable 3,045 3,559
Accrued liabilities 5,088 5,143
Accrued restructuring 873 946
Deferred revenue 13,700 12,946
---------------- -----------------
Total current liabilities 26,809 30,415
Deferred revenue, long-term 242 86
Accrued restructuring, long-term 94 234
Notes payable, long-term - 13
Other long-term liabilities 451 479
---------------- -----------------
Total liabilities 27,596 31,227
Total stockholders' equity (deficit) (693) 2,590
---------------- -----------------
Total Liabilities and Stockholders'
Equity (Deficit) $ 26,903 $ 33,817
================ =================
Kana Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
OPERATING ACTIVITIES
Net loss $ (607) $ (137) $ (3,873) $ (216)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 325 287 662 587
Amortization of acquired intangible
assets 125 125 250 250
Employee and non-employee
stock-based compensation 380 561 814 1,122
Provision for doubtful accounts 9 (11) 9 5
Change in fair value of warrant
liability 2 - (4) -
Non-cash interest accretion 11 27 23 77
Restructuring costs (recovery) 341 - 341 (482)
Changes in operating assets and
liabilities:
Accounts receivable 415 (3,390) 1,484 (1,389)
Prepaid expenses and other assets (237) (95) 264 349
Accounts payable and accrued
liabilities (477) (255) (715) 50
Accrued restructuring (251) (289) (554) (695)
Deferred revenue 2 158 893 (609)
-------- -------- -------- --------
Net cash provided by (used in)
operating activities 38 (3,019) (406) (951)
-------- -------- -------- --------
INVESTING ACTIVITIES
Purchases of property and equipment (194) (377) (284) (844)
Acquisition, net of cash acquired - 85 - 85
Decrease in restricted cash 746 - 446 -
-------- -------- -------- --------
Net cash provided by (used in)
investing activities 552 (292) 162 (759)
-------- -------- -------- --------
FINANCING ACTIVITIES
(Repayments) borrowings on line of
credit, net 1,103 1,726 (2,144) 2,111
Borrowings on notes payable 227 - 227 -
Repayments under notes payable (1,534) (776) (1,814) (1,410)
-------- -------- -------- --------
Net cash provided by (used in)
financing activities (204) 950 (3,731) 701
-------- -------- -------- --------
Effect of exchange rate changes on
cash 59 (112) (74) (85)
-------- -------- -------- --------
Net increase (decrease) in cash and
cash equivalents 445 (2,473) (4,049) (1,094)
Cash and cash equivalents at
beginning of period 2,494 5,685 6,988 4,306
-------- -------- -------- --------
Cash and cash equivalents at end
of period $ 2,939 $ 3,212 $ 2,939 $ 3,212
======== ======== ======== ========
Contact:
Investors
KANA Software
650-614-8160
Email Contact :
www2.marketwire.com/mw/emailprcntct?id=F6717C3E615B5206
Press/Media
New Venture Communications for KANA
Ted Rossman
914-432-7083
Email Contact :
www2.marketwire.com/mw/emailprcntct?id=2C65E49E7E9F38FE
Lauren Dresnick
650-343-2735
Email Contact :
www2.marketwire.com/mw/emailprcntct?id=D12B36A30B4F7EBF
