Saba Announces Second Quarter 2008 Results
REDWOOD SHORES, Calif.—Jan. 8, 2008—Saba
Software, Inc. (NASDAQ:SABA), the premier people management software
and services provider, today reported financial results for its second
quarter of fiscal 2008 ended November 30, 2007.
Second Quarter Results
Total revenues in the second quarter of fiscal 2008 were $26.7
million, a 5% increase from $25.5 million in the first quarter of
fiscal 2008 and a 2% increase compared to $26.2 million in the same
quarter last year. License revenue in the second quarter of fiscal
2008 was $5.7 million, a 21% increase from $4.7 million in the first
quarter of fiscal 2008 and an 18% decrease compared to $6.9 million in
the same quarter last year. OnDemand revenue in the second quarter of
fiscal 2008 was $4.5 million, a 2% increase from $4.4 million in the
first quarter of fiscal 2008 and a 19% increase compared to $3.8
million in the same quarter last year.
On a GAAP basis, net loss was $1.0 million, or a loss of $0.04 per
share, in the second quarter of fiscal 2008 compared to a net loss of
$1.0 million, or a net loss of $0.04 per share, in the same quarter
last year. Cash generated from operations was $1.9 million during the
second quarter of fiscal 2008.
On a non-GAAP basis, net income in the second quarter of fiscal
2008 was $0.6 million, or $0.02 per share on a basic and diluted
basis, compared to non-GAAP net income of $2.0 million, or $0.07 per
share on a basic and diluted basis, in the second quarter of fiscal
2007.
Non-GAAP results are computed by adjusting GAAP results to exclude
the amortization of acquisition-related intangibles, stock-based
compensation expenses, and the write-down of acquired deferred revenue
to fair value. A reconciliation of GAAP to non-GAAP results is
included in the financial statements accompanying this press release.
"Our primary goal is profitable growth. In addition, we are
focused on generating cash and growing our recurring revenue streams,"
said Bobby Yazdani, Chairman and CEO of Saba. "We are making progress
toward all these objectives. During the first half of fiscal 2008, we
have met our financial milestones and confirm our expectations for
GAAP earnings during the second half of fiscal 2008. We grew cash
during the quarter and project we will be cash flow positive for the
balance of the year. Finally, our recurring revenues are forecasted to
grow by over 15% year-over-year and now make up 50% of our total
revenues," concluded Mr. Yazdani.
Saba also today announced that George de Urioste has joined the
company's board of directors and will serve as Chairman of the Audit
Committee. Mr. de Urioste recently was the COO and CFO of Chordiant
Software, a provider of enterprise software for customer service and
marketing processes. Previously he had been the Chairman and CEO of
Aeroprise, Inc., a private mobile workflow management software company
that he co-founded in 2000. Prior to Aeroprise, Mr. de Urioste was the
CFO and VP of Finance and Operations for Remedy Corporation, a
provider of enterprise software. In his six-year tenure at Remedy, he
was a member of the executive team that grew revenues from $2 million
to a $200 million run rate. Mr. de Urioste began his career in 1980 as
a CPA for Deloitte & Touche.
"It is a pleasure to welcome George to our board of directors and
as chairman of our audit committee," said Yazdani. "We believe that
his extensive background and leadership in finance, operations and
corporate governance will be particularly valuable as we continue to
expand and grow our company."
Recent Highlights
New Customers
-- Signed new customer contracts and expanded existing relationships
with a number of organizations worldwide, including:
National Institute of Health, Poste Italiane, Grupo de Santander,
Banamex, QBE Management Services Limited, Companhia Vaie do Rio
Doce, Bank of America, C&A, Mitel Networks, ABN AMRO (India),
DaimlerChrysler, State of Connecticut, Englishtown, Cisco, Sprint
United Management, The Institute of Internal Auditors, Calpine
Corporation, JLG Industries, Rockwell Automation, LSI Logic, Booz-
Allen Hamilton, Virgin Blue Airlines, Astra Zeneca, Freddie Mac,
and Department of Homeland Security/TSA
New Solutions
-- Introduced Saba Compensation, which will enable organizations to
move beyond simple "pay-for-performance" practices to drive
compensation decisions that are linked to talent and workforce
planning strategies. Saba Compensation is scheduled for general
availability in the third quarter of 2008.
-- Announced the next generation real-time learning platform, Saba
Centra 7.6. This new release enables community-based content
creation with an innovative recording studio, extends online
learning effectiveness with more accessible hands-on training and
drives usage of web conferencing and collaboration through
integration with popular business applications. Saba Centra 7.6 is
scheduled for limited availability in late January 2008.
-- Announced Saba Workforce Planning, which will provide organizations
with the dynamic decision support tools they need to model
different organizational scenarios to identify risk and take
action. Saba Workforce Planning is scheduled for limited
availability in late January 2008.
Alliances
-- Announced an alliance with Sify Technologies Ltd., one of the
largest Internet, network and e-commerce services companies in
India, to deliver a world-class learning platform and services for
customers in India.
-- Announced plans to work with IBM to develop and go-to-market with a
unified people management blueprint. This offering will enable
organizations to assess their current people management strategy,
leverage a roadmap to move to a more integrated approach to talent
management and adopt best practice methods and technology to
support this model on an ongoing basis. The power of Saba's
unified people management platform combined with IBM's industry-leading global services expertise will help customers achieve ROI
through systems consolidation and a holistic approach to talent
management.
-- Announced an alliance with Personnel Decisions International (PDI),
a global leader in human resources consulting, to offer PDI's
premier integrated competency architecture on Saba's people
management platform, Saba Enterprise. This integration will allow
organizations to build custom competency models to facilitate
employee development, growth, promotion and retention.
Achievements/Awards
-- Achieved SAP NetWeaver(R) platform-based portal integration for
Saba Enterprise Suite 5.4. The solution has been proven to
integrate with SAP(R) solutions, enabling Saba Enterprise Suite
functionality to be available to users of the SAP NetWeaver Portal
Release 6.0 throughout the enterprise.
Other Highlights
-- Concluded the annual Saba-Centra Global Summit user conference,
which gathered customers, partners and industry thought leaders
who shared strategic Human Capital Management (HCM) insights and
learned about new product innovations from Saba that will help
them shape the organization of the future.
-- Announced a 12 city North American roadshow entitled, "Best
Practices for Effective People Management." These events will
provide attendees with information about how to effectively
identify, develop and retain talent to increase ROI and improve
organizational productivity. The roadshow will run through mid-
February, 2008.
Business Outlook
The following statements are based on current expectations as of
the date of this release. These statements are forward-looking, and
actual results may differ materially. Saba does not undertake to
update these targets in any way or for any reason.
For its third quarter of fiscal 2008 (February 29, 2008), Saba
anticipates total revenues to range from $27 million to $28 million.
Saba anticipates GAAP net earnings per share for its third quarter
of fiscal 2008 (February 29, 2008) to range from a net loss of $0.02
to net income of $0.01 on a basic and diluted basis and non-GAAP net
earnings per share to range from net income of $0.04 to $0.06 on a
basic and diluted basis.
The non-GAAP outlook excludes the estimated non-cash amortization
of intangibles and acquired backlog ($1,000,000) and charges related
to stock-based compensation expenses ($700,000).
Conference Call
Saba will host a teleconference Tuesday, January 8, 2008,
commencing at 2:00 p.m. Pacific Time, to discuss the second quarter
financial results. All interested parties may listen by dialing
877-209-0397 or 612-332-0634, access code 899491, or by tuning into
the webcast at http://investor.saba.com.
A replay of the call is scheduled to be available by calling
800-475-6701 or 320-365-3844 and entering code 899491, after 5:30 p.m.
Pacific Time on January 8, 2008 through 11:59 p.m. Pacific Time on
January 22, 2008.
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the federal securities laws, including, without limitation:
statements regarding Saba's business outlook, including anticipated
GAAP revenue and GAAP and non-GAAP per share earnings (loss), non-cash
amortization of purchased intangibles, charges related to stock-based
compensation expense and amortization of acquired backlog, cash from
operations and growth in recurring revenues, as well as statements
regarding future releases of Saba's products and blueprint. Saba's
actual results could differ materially from those expressed in any
forward-looking statements. Risks and uncertainties Saba faces that
could cause results to differ materially include risks associated
with: dependence on growth of the markets for Saba's products,
dependence on acceptance of Saba's products by customers and channel
partners, the success of Saba's alliances, fluctuation in customer
spending, any changes in the length of Saba's sales cycle, new product
offerings or pricing changes introduced by our competitors,
technological changes that could make our products less attractive to
customers or require a new product development investments, dependence
on new product introductions and enhancements in order to meet the
changing needs of our customers and markets, and potential software
defects. Readers should also refer to the section entitled "Risk
Factors" on pages 11 through 21 of Saba's Annual Report on Form 10-K
for the fiscal year ended May 31, 2007 and similar disclosures in
subsequent Saba periodic SEC reports. The forward-looking statements
and risks stated in this press release are based on information
available to Saba today. Saba assumes no obligation to update them.
Legal Notice Regarding Non-GAAP Financial Information
Saba has provided its non-GAAP revenue, net income and net income
per share data in this press release as additional information for
investors. This measure is not in accordance with, or an alternative
to, generally accepted accounting principles ("GAAP"), is intended to
supplement GAAP financial information, and may be different from
non-GAAP measures used by other companies. Saba believes that the
presentation of non-GAAP financial measures provides useful
information to investors regarding its results of operations. Saba
believes it also provides an alternative method of assessing Saba's
operating results that Saba believes is focused on its core on-going
operations and may allow investors to perform additional meaningful
period-to-period comparisons of its operating results. In addition,
Saba's management team uses these measures for reviewing its financial
results, and for budget and planning purposes.
About Saba
Founded in 1997, Saba (NASDAQ:SABA) is the premier global provider
of strategic human capital management (HCM) software and services.
Saba's people management solutions are used by more than 1,200
organizations and over 17 million end users worldwide. Saba's
solutions increase organizational performance by aligning workforce
goals with organizational strategy; developing, managing and rewarding
their people; and improving collaboration.
Saba product offerings address all aspects of strategic HCM and
are available both on-premise and OnDemand (www.saba.com/products). To
ensure long-term customer success, our global services capabilities
and partnerships provide strategic consulting, comprehensive
implementation services, and ongoing worldwide support.
Saba customers include ABN AMRO, Alcatel-Lucent, Bank of
Tokyo-Mitsubishi UFJ, BMW, Caterpillar, CEMEX, Cisco Systems,
DaimlerChrysler, Dell, Deloitte Touche Tohmatsu, EDS, EMC Corporation,
FedEx Kinko's, Insurance Australia Group, Kaiser Permanente, Lockheed
Martin, Medtronic, National Australia Bank, Novartis, Petrobras,
Procter & Gamble, Renault, Royal Bank of Scotland, Scotiabank,
Singapore Ministry of Finance, Sprint, Standard Chartered Bank,
Stanford University, Swedbank, Tata Consultancy Services, Wyndham
International, Weyerhaeuser, Underwriters Laboratories, and the U.S.
Army and U.S. Navy.
Headquartered in Redwood Shores, California, Saba has offices on
five continents. For more information, please visit www.saba.com or
call +1-877-SABA-101 or +1-650-779-2791.
SABA, the Saba logo, Centra and the marks relating to Saba
products and services referenced herein are either trademarks or
registered trademarks of Saba Software, Inc. or its affiliates. All
other trademarks are the property of their respective owners.
Saba Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
November 30, May 31,
2007 2007 (A)
------------ ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,371 $ 18,088
Restricted cash 500 500
Accounts receivable, net 24,142 20,905
Prepaid expenses and other current
assets 2,490 2,767
------------ ----------
Total current assets 39,503 42,260
Property and equipment, net 4,524 3,669
Goodwill 38,293 38,293
Purchased intangible assets, net 14,396 16,414
Other assets 1,368 977
------------ ----------
Total assets $ 98,084 $ 101,613
============ ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,053 $ 4,772
Accrued compensation and related
expenses 5,582 5,746
Accrued expenses 4,567 5,949
Deferred revenue 26,337 27,886
Current portion of debt and lease
obligations 1,491 2,664
------------ ----------
Total current liabilities 44,030 47,017
Deferred revenue 2,363 1,598
Other long-term liabilities 1,293 -
Accrued rent 2,673 2,769
Debt and lease obligations, less current
portion 470 2,328
------------ ----------
Total liabilities 50,829 53,712
Stockholders' equity:
Common stock 29 29
Additional paid-in capital 254,121 251,408
Treasury stock (232) (232)
Accumulated deficit (206,722) (203,333)
Accumulated other comprehensive loss 59 29
------------ ----------
Total stockholders' equity 47,255 47,901
------------ ----------
Total liabilities and stockholders'
equity $ 98,084 $ 101,613
============ ==========
(A) Certain reclassifications have been made to prior year amounts in
order to conform to the current year presentation.
Saba Software, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three months ended Six months ended
November 30, November 30,
------------------ -----------------
2007 2006 (A) 2007 2006 (A)
--------- -------- -------- --------
Revenues:
License $ 5,704 $ 6,916 $10,434 $13,104
License updates and product
support 8,950 7,699 17,767 14,706
OnDemand 4,503 3,784 8,930 7,333
Professional services 7,575 7,798 15,053 14,213
--------- -------- -------- --------
Total revenues 26,732 26,197 52,184 49,356
--------- -------- -------- --------
Cost of revenues:
Cost of license 225 562 421 777
Cost of license updates and
product support 2,154 2,125 4,375 4,114
Cost of OnDemand 1,587 1,090 3,218 2,232
Cost of professional services 5,164 5,074 10,578 10,048
Amortization of acquired
developed technology 295 295 589 589
--------- -------- -------- --------
Total cost of revenues 9,425 9,146 19,181 17,760
--------- -------- -------- --------
Gross profit 17,307 17,051 33,003 31,596
Operating expenses:
Research and development 4,015 4,517 8,222 8,749
Sales and marketing 10,436 9,510 19,703 18,554
General and administrative 3,284 3,144 7,090 6,136
Amortization of purchased
intangible assets 634 634 1,269 1,269
--------- -------- -------- --------
Total operating expenses 18,369 17,805 36,284 34,708
--------- -------- -------- --------
Loss from operations (1,062) (754) (3,281) (3,112)
Interest expense and other, net 160 (117) 141 (186)
--------- -------- -------- --------
Loss before provision for income
taxes (902) (871) (3,140) (3,298)
Provision for income taxes 132 135 250 300
--------- -------- -------- --------
Loss after provision for income
taxes $(1,034) $(1,006) $(3,390) $(3,598)
========= ======== ======== ========
Basic and diluted net loss per
share $ (0.04) $ (0.04) $ (0.12) $ (0.13)
========= ======== ======== ========
Shares used in computing basic
and diluted net loss per share 29,003 28,517 28,931 28,363
========= ======== ======== ========
(A) Certain reclassifications have been made to prior year amounts in
order to conform to the current year presentation.
Saba Software, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(Unaudited)
The following table reflects Saba's non-GAAP results reconciled to
GAAP results as included in this release.
Three months ended Six months ended
November 30, November 30,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
GAAP net loss $(1,034) $(1,006) $(3,390) $(3,598)
Plus:
Fair value adjustment to
deferred revenue 9 1,504 21 3,694
Stock-based compensation
expense 595 499 1,924 1,007
Amortization of acquired
developed technology and
purchased intangible assets 1,009 1,009 2,018 2,018
--------- -------- -------- --------
Non-GAAP net income $ 579 $ 2,006 $ 573 $ 3,121
========= ======== ======== ========
Net income (loss) per share
GAAP net loss per share $ (0.04) $ (0.04) $ (0.12) $ (0.13)
Plus:
Fair value adjustment to
deferred revenue 0.00 0.05 0.00 0.13
Stock-based compensation
expense 0.02 0.02 0.07 0.04
Amortization of acquired
developed technology and
purchased intangible assets 0.03 0.04 0.07 0.07
--------- -------- -------- --------
Non-GAAP net income per share $ 0.02 $ 0.07 $ 0.02 $ 0.11
========= ======== ======== ========
Weighted average shares used to
compute net income (loss) per
share:
Basic 29,003 28,517 28,931 28,363
========= ======== ======== ========
Diluted 29,360 29,272 29,397 29,356
========= ======== ======== ========
Non-GAAP Financial Information:
To supplement the company's condensed consolidated financial
statements presented on a GAAP basis, Saba uses non-GAAP financial
measures. These measures are the result of adjustments made to exclude
certain charges and expenses for which the company believes that the
disclosure of such non-GAAP financial measures is appropriate to
enhance an overall understanding of its historical financial
performance. The company believes that the inclusion of these non-GAAP
financial measures provides consistency and comparability with its
historical financial results. In addition, the presentation allows
investors to see how management views the operating performance of the
company. This non-GAAP information is subject to material limitations
and is not intended to be used in isolation or as a substitute for
results prepared in accordance with U.S. generally accepted accounting
principles.
The adjustments and the basis for their exclusion are as follows:
Fair Value Adjustment to Deferred Revenue
The company includes revenue associated with Centra Software, Inc.
deferred revenue that was excluded as a result of purchase accounting
adjustments to fair value, as required by GAAP, as management believes
that it is reflective of ongoing operating results.
Stock-based Compensation Expense
The company's non-GAAP financial measures exclude share-based
compensation expenses, which consist of expenses for the issuance of
stock options and purchases of common stock under its Employee Stock
Purchase Plan, which Saba began recording under SFAS 123(R) in the
first quarter of fiscal 2007. The Company excludes share-based
compensation expenses from our non-GAAP financial measures because the
company believes that the information is not a meaningful indicator of
the Company's operating performance. Weighted average dilutive shares
is computed using the method required by SFAS 123(R) for both GAAP and
non-GAAP diluted net income per share.
Amortization of Acquired Developed Technology and Purchased
Intangible Assets
As a result of various acquisitions of companies and technologies,
the company has incurred charges for amortization of acquired
developed technology and purchased intangible assets and amortization
of acquired backlog that resulted in a reduction of revenue.
Management excludes these items from our non-GAAP financial measures
when evaluating its operating performance because it believes that it
provides for better comparability between periods and provides results
that are more reflective of the operating performance of the business.
Additionally, management believes that excluding these items
facilitates comparisons to the results of other companies in our
industry, which have their own unique acquisition histories.
CONTACT:
Saba Software, Inc.
Mike Martini, +1-650-581-2500
Chief Financial Officer
mmartini@saba.com
David Lebedeff, +1-650-696-1090
Vice President Investor Relations
dlebedeff@saba.com
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