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) November
19, 2014
Datawatch Corporation |
(Exact Name of Registrant as Specified in Its Charter) |
|
Delaware |
(State or Other Jurisdiction of Incorporation) |
000-19960 |
02-0405716 |
(Commission File Number) |
(IRS Employer Identification No.) |
|
|
Quorum Office Park |
|
271 Mill Road |
|
Chelmsford, Massachusetts |
01824 |
(Address of Principal Executive Offices) |
(Zip Code) |
(978) 441-2200 |
(Registrant’s Telephone Number, Including Area Code) |
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 (see General Instruction A.2. below):
| 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
November 19, 2014, Datawatch issued a press release reporting its financial results for its quarter and year ended September
30, 2014. A copy of the press release is attached as Exhibit 99.1 to this
report and is incorporated herein by reference.
The
information contained in this Item 2.02, including in Exhibit 99.1 attached hereto and incorporated herein by reference, is intended
to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section or Sections 11 and
12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibits shall not
be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Datawatch, whether made before
or after the date hereof, regardless of any general incorporation language in such filings.
| Item 9.01 | Financial Statements and Exhibits |
The following Exhibit is furnished as part
of this report:
| 99.1 | Press release issued by Datawatch Corporation, dated November 19, 2014. |
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.
|
DATAWATCH CORPORATION |
|
|
|
|
|
|
|
By: |
/s/ James Eliason |
|
|
Name: |
James Eliason |
|
Title: |
Chief Financial Officer |
Date: November 19, 2014
EXHIBIT INDEX
| 99.1 | Press release issued by Datawatch Corporation, dated November 19, 2014. |
Exhibit 99.1
Datawatch Announces Fiscal Fourth Quarter
2014 Financial Results
Chelmsford, Mass.—November 19,
2014—Datawatch Corporation (NASDAQ-CM: DWCH), a leading global provider of visual data discovery solutions, today announced
that total revenue for its fourth quarter ended September 30, 2014 was $9.05 million, an increase of 3% from revenue of $8.82 million
in the fourth quarter a year ago. License revenue for the fourth quarter of fiscal 2014 was $5.24 million, a decrease of 10% from
the $5.80 million recorded in the comparable quarter a year ago.
Net loss for the fourth quarter of fiscal
2014 was ($4.87) million, or ($0.44) per diluted share, compared to a net loss of ($2.68), or ($0.37) per diluted share, for the
year ago period. Excluding the effects of the non-cash amortization associated with the purchase of certain intellectual property
and other intangible assets, as well as non-cash stock compensation costs and restructuring charges, the Company’s non–GAAP
net loss for its fourth fiscal quarter of 2014 was ($1.93) million, or ($0.18) per diluted share, compared to a net loss of ($572,000),
or ($0.08) per diluted share in the fourth fiscal quarter of 2013.
Total revenue for fiscal year 2014 was
$35.08 million, a 16% increase from revenue of $30.30 million in fiscal year 2013. License revenue for 2014 was $20.63 million,
a 6% increase compared to $19.43 million in 2013. Net loss for 2014 was ($22.38) million, or ($2.24) per diluted share, as compared
to a net loss of ($4.20) million or ($0.63) per diluted share, for 2013. The Company’s non-GAAP net loss for fiscal year
2014 was ($10.06) million, or ($1.01) per diluted share, as compared to non-GAAP net income of $1.39 million, or $0.19 per diluted
share, for fiscal year 2013.
“While our expense trend in Q4 remained
in line with our plan, as it has throughout fiscal year 2014, our revenue performance in Q4 fell short of our goals and expectations,”
said Michael A. Morrison, president and chief executive officer of Datawatch. “As we have engaged in more streaming data
in motion use cases, including many in the capital markets vertical and the Internet of Things arena, the relative complexity of
these sales opportunities has led to some increases in the length of sales cycles, which provided a headwind to revenue performance.
We continued to improve sales execution, which led to the largest number of discrete license transactions in the history of the
company during our fiscal fourth quarter. These entry points establish a solid foundation for Datawatch to expand and grow our
footprint in these accounts in fiscal year 2015.”
Mr. Morrison added, “During fiscal
year 2014, our first full year as a visual data discovery vendor, we made meaningful progress with the integration of, and innovative
enhancements to, our technology stack, the refinement of our marketing message to a visualization-led agenda and the leadership
addition to our worldwide sales organization. Key trends in market dynamics play to Datawatch’s strengths and differentiation
– namely the rapid rise of Internet of Things applications, which require real-time visualization of streaming data in motion,
and the growing need for self-service data preparation capabilities as a prerequisite for visual data discovery – something
Datawatch has been doing for nearly 20 years. Our progress in fiscal 2014, our differentiated technology and these market trends
give us confidence in our strategy and plan as we enter fiscal year 2015.”
Fourth Quarter Business Highlights
| · | Datawatch appointed John Judge as Chief
Revenue Officer on August 28, 2014 to lead the worldwide sales and field operations for Datawatch. |
| · | Datawatch executed a record number of
transactions in Q4, including agreements with organizations globally of every size such as KPMG, Citigroup and Pharma Tech. Included
in these transactions were two key wins in the Internet of Things arena, one with Worldsensing, a market leader in machine-to-machine
technologies, to manage and visualize traffic and parking management operations, and the other with Avanti Gas Limited to manage
and visualize fleet logistics. |
| · | Datawatch and Omnesys Technologies, a
Thomson Reuters company and leading provider of multi-venue trading systems, entered into an OEM agreement to integrate Datawatch’s
visual data discovery software into Omnesys’ real-time trading solution to provide brokers with a consolidated real-time
order book and associated risk information. |
| · | Datawatch entered into partnerships with
10 new partners during Q4FY14, including Hortonworks, QuickPivot, and Paladyne – a subsidiary of Broadridge – and also
Internet of Things integration partners Eccella, an Informatica Vibe reseller, and Casne, a system integrator focused on OSIsoft. |
Fourth Quarter
Financial Highlights
| · | Cash and short-term investments were $47.67
million at September 30, 2014, down 5% from $50.17 million at June 30, 2014 and up 362% from $10.31 million at September 30, 2013. |
| · | Gross margin for the fourth fiscal quarter
of 2014 was 79.1%, compared to 78.6% for the third fiscal quarter of 2014 and 81.3% for the fourth fiscal quarter of 2013. |
| · | Days sales outstanding were 72 days at
September 30, 2014, compared to 61 days at June 30, 2014 and 60 days at September 30, 2013. |
| · | There were 10 six-figure deals in the
fourth fiscal quarter consistent with the fourth fiscal quarter of 2013. |
| · | The average deal size in the fourth fiscal
quarter was $41,000, as compared to $63,000 in the fourth fiscal quarter of 2013. |
Investor Conference
Call and Webcast
The senior management of Datawatch
will host a conference call and webcast to discuss the fourth quarter results tomorrow, Thursday, November 20, 2014 at 8:30 am
ET. To access the call, please dial 1-877-407-0782. Internationally, the call may be accessed by dialing 1-201-689-8567. The conference
call will be broadcast live on the Internet at: http://www.investorcalendar.com/IC/CEPage.asp?ID=173290. It is recommended that
listeners register to participate and download any necessary audio software from the website 15 minutes prior to the scheduled
call. The webcast will be available as a replay starting one hour after the call is completed at the same location.
About Datawatch Corporation
Datawatch Corporation (NASDAQ-CM: DWCH) provides visual data
discovery software that optimizes any data – regardless of its variety, volume, or velocity – delivering next
generation analytics to reveal valuable insights for improving business. Its unique ability to integrate structured, unstructured,
and semi-structured sources like reports, PDF files and EDI streams with real-time streaming data into visually rich analytic applications
allows users to dynamically discover key factors that impact any operational aspect of their business. This ability to perform
visual discovery against any data sets Datawatch apart in the big data and visualization markets. Organizations of every size,
worldwide use Datawatch products, including 93 of the Fortune 100. Datawatch is headquartered in Chelmsford, Massachusetts with
offices in New York, London, Munich, Stockholm, Singapore, Sydney and Manila, and with partners and customers in more than 100
countries worldwide. See the Whole Story for yourself by downloading the free trial at www.datawatch.com/free-trial.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements
as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such statements, including but not limited
to those relating to results of operations, contained herein are based on current expectations, but are subject to a number of
risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual
future results to differ materially from current expectations include the following: risks associated with a weak global economy;
risks associated with fluctuations in quarterly operating results due, among other factors, to the size and timing of large customer
orders; risks associated with acquisitions; the volatility of Datawatch’s stock price; limitations on the effectiveness of
internal controls; rapid technological change; Datawatch’s dependence on the introduction of new products and possible delays
in those introductions; competition in the software industry generally, and in the markets for visual data discovery products in
particular; Datawatch's dependence on its principal products, proprietary software technology and software licensed from third
parties; risks associated with third-party intellectual property rights and claims, risks associated with international sales and
operations; risks associated with indirect distribution channels; the adequacy of Datawatch’s sales returns reserve; risks
associated with a subscription sales model; Datawatch’s dependence on its ability to hire and retain skilled personnel; disruption
or failure of Datawatch’s technology systems that may result from a natural disaster, cyber-attack or other catastrophic
event; and uncertainty and additional costs that may result from evolving regulation of corporate governance and public disclosure.
Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly-available
documents, which include, but are not limited to, filings made by Datawatch from time to time with the Securities and Exchange
Commission, including but not limited to, those appearing in the Company's Annual Report on Form 10-K for the year ended September
30, 2013 and Forms 10-Q for the quarters ended December 31, 2013, March 31, 2014 and June 30, 2014. Any forward-looking statements
should be considered in light of those factors.
# # #
Investor Contact:
Datawatch Investor Relations
investor@datawatch.com
Phone: (978) 441-2200 ext. 8323
Media Contact:
Sarah Bernardi
Datawatch Corporation
Sarah_Bernardi@datawatch.com
Phone: (978) 441-2200 ext. 8387
Twitter: @datawatch
© 2014 Datawatch Corporation. Datawatch
and the Datawatch logo are trademarks or registered trademarks of Datawatch Corporation in the United States and/or other countries.
All other names are trademarks or registered trademarks of their respective companies.
DATAWATCH CORPORATION |
Condensed Consolidated Statements of Operations |
Amounts in Thousands (except per share data) |
(Unaudited) |
| |
Three Months Ended | | |
Twelve Months Ended |
|
| |
September 30, | | |
September 30, |
|
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
REVENUE: | |
| | | |
| | | |
| | | |
| | |
Software licenses | |
$ | 5,239 | | |
$ | 5,796 | | |
$ | 20,627 | | |
$ | 19,430 | |
Maintenance | |
| 3,489 | | |
| 2,658 | | |
| 12,845 | | |
| 9,700 | |
Professional services | |
| 323 | | |
| 363 | | |
| 1,615 | | |
| 1,166 | |
Total revenue | |
| 9,051 | | |
| 8,817 | | |
| 35,087 | | |
| 30,296 | |
| |
| | | |
| | | |
| | | |
| | |
COSTS AND EXPENSES: | |
| | | |
| | | |
| | | |
| | |
Cost of software licenses | |
| 1,000 | | |
| 904 | | |
| 4,013 | | |
| 2,505 | |
Cost of maintenance and services | |
| 889 | | |
| 743 | | |
| 3,351 | | |
| 2,440 | |
Sales and marketing | |
| 7,936 | | |
| 6,091 | | |
| 31,133 | | |
| 18,482 | |
Engineering and product development | |
| 2,243 | | |
| 1,531 | | |
| 9,074 | | |
| 3,893 | |
General and administrative | |
| 2,181 | | |
| 2,318 | | |
| 9,181 | | |
| 6,793 | |
Total costs and expenses | |
| 14,249 | | |
| 11,587 | | |
| 56,752 | | |
| 34,113 | |
| |
| | | |
| | | |
| | | |
| | |
LOSS FROM OPERATIONS | |
| (5,198 | ) | |
| (2,770 | ) | |
| (21,665 | ) | |
| (3,817 | ) |
Other expense | |
| 75 | | |
| (3 | ) | |
| (1,237 | ) | |
| (468 | ) |
| |
| | | |
| | | |
| | | |
| | |
LOSS BEFORE INCOME TAXES | |
| (5,123 | ) | |
| (2,773 | ) | |
| (22,902 | ) | |
| (4,285 | ) |
Income tax (benefit) provision | |
| (249 | ) | |
| (90 | ) | |
| (519 | ) | |
| (88 | ) |
| |
| | | |
| | | |
| | | |
| | |
NET LOSS | |
$ | (4,874 | ) | |
$ | (2,683 | ) | |
$ | (22,383 | ) | |
$ | (4,197 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share - Basic | |
$ | (0.44 | ) | |
$ | (0.37 | ) | |
$ | (2.24 | ) | |
$ | (0.63 | ) |
Net loss per share - Diluted | |
$ | (0.44 | ) | |
$ | (0.37 | ) | |
$ | (2.24 | ) | |
$ | (0.63 | ) |
Weighted Average Shares Outstanding - Basic | |
| 10,965 | | |
| 7,229 | | |
| 9,998 | | |
| 6,634 | |
Weighted Average Shares Outstanding - Diluted | |
| 10,965 | | |
| 7,229 | | |
| 9,998 | | |
| 6,634 | |
| |
| | | |
| | | |
| | | |
| | |
Non-GAAP Disclosure - Reconciliation of Net Loss to Net Loss Excluding the Effects of Certain Items: |
| |
| | | |
| | | |
| | | |
| | |
GAAP Net Loss | |
$ | (4,874 | ) | |
$ | (2,683 | ) | |
$ | (22,383 | ) | |
$ | (4,197 | ) |
Add-back Amortization of Intangibles & IP | |
| 870 | | |
| 606 | | |
| 3,479 | | |
| 2029 | |
Add-back Share-Based Compensation | |
| 1,948 | | |
| 1,401 | | |
| 8,446 | | |
| 3,323 | |
Add-back Severance & unamortized debt discount | |
| 126 | | |
| 104 | | |
| 399 | | |
| 231 | |
Subtotal of additions | |
| 2,944 | | |
| 2,111 | | |
| 12,324 | | |
| 5,583 | |
| |
| | | |
| | | |
| | | |
| | |
Net (Loss) Income (non-GAAP) | |
$ | (1,930 | ) | |
$ | (572 | ) | |
$ | (10,059 | ) | |
$ | 1,386 | |
Net (loss) income per share - Basic | |
$ | (0.18 | ) | |
$ | (0.08 | ) | |
$ | (1.01 | ) | |
$ | 0.21 | |
Net (loss) income per share - Diluted | |
$ | (0.18 | ) | |
$ | (0.08 | ) | |
$ | (1.01 | ) | |
$ | 0.19 | |
Weighted Average Shares Outstanding - Basic | |
| 10,965 | | |
| 7,229 | | |
| 9,998 | | |
| 6,634 | |
Weighted Average Shares Outstanding - Diluted | |
| 10,965 | | |
| 7,229 | | |
| 9,998 | | |
| 7,265 | |
DATAWATCH CORPORATION |
Condensed Consolidated Balance Sheets |
Amounts in Thousands |
(Unaudited) |
| |
September 30, | | |
September 30, | |
| |
2014 | | |
2013 | |
| |
| | | |
| | |
Cash and cash equivalents | |
$ | 47,668 | | |
$ | 10,312 | |
Accounts receivable, net | |
| 7,024 | | |
| 6,622 | |
Prepaid expenses and other current assets | |
| 1,872 | | |
| 984 | |
Total current assets | |
| 56,564 | | |
| 17,918 | |
| |
| | | |
| | |
Property and equipment, net | |
| 400 | | |
| 289 | |
Intangible and other assets, net | |
| 46,633 | | |
| 51,114 | |
| |
| | | |
| | |
| |
$ | 103,597 | | |
$ | 69,321 | |
| |
| | | |
| | |
| |
| | | |
| | |
Current portion of long-term debt | |
$ | - | | |
$ | 900 | |
Current portion of note payable | |
| - | | |
| 977 | |
Accounts payable and accrued expenses | |
| 3,809 | | |
| 4,914 | |
Deferred revenue - current portion | |
| 7,640 | | |
| 6,997 | |
Total current liabilities | |
| 11,449 | | |
| 13,788 | |
| |
| | | |
| | |
Long-term debt | |
| - | | |
| 2,108 | |
Other long-term liabilities | |
| 1,238 | | |
| 2,050 | |
Total long-term liabilities | |
| 1,238 | | |
| 4,158 | |
| |
| | | |
| | |
Total shareholders' equity | |
| 90,910 | | |
| 51,375 | |
| |
| | | |
| | |
| |
$ | 103,597 | | |
$ | 69,321 | |
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