Datawatch Corporation (NASDAQ-CM:DWCH), a leading global provider
of self-service data preparation and fast data analytics solutions,
today announced that total revenue for its third quarter of fiscal
2017 ended June 30, 2017 was $9.07 million, an increase of 23% from
total revenue of $7.38 million in the third quarter of fiscal 2016.
License revenue for the third quarter of fiscal 2017 was $4.91
million, a 34% increase from the $3.67 million recorded in the same
quarter a year ago. Deferred revenue as of June 30, 2017 was
$11.00 million, a 23% increase compared to $8.92 million as of June
30, 2016. Total bookings for the third quarter of fiscal 2017
were $9.90 million, a 29% increase from the $7.68 million of
bookings recorded in the same quarter a year ago.
Net loss for the third quarter of fiscal 2017 was ($0.50)
million, or ($0.04) per diluted share, compared to a net loss of
($5.37) million, or ($0.45) per diluted share, for the year ago
period. Excluding the effects of the amortization associated
with the purchase of certain intellectual property and other
intangible assets, non-cash share-based compensation and deferred
tax valuation allowance, the Company’s non–GAAP net income for its
third quarter of fiscal 2017 was $0.22 million, or $0.02 per
diluted share, compared to a non-GAAP net loss of ($2.90) million,
or ($0.25) per diluted share, for the third quarter of fiscal
2016.
“Demand for modern analytic solutions such as our Monarch data
preparation and analytics platform is being driven by three
factors: the growing need to access and organize data stored in an
increasing number of disparate systems and formats, the transition
to cloud-based infrastructure and applications, and the secular
trend toward self-service for business analysts,” said Michael A.
Morrison, president and chief executive officer of Datawatch. “Our
disciplined business strategy and consistent sales execution are
enabling us to successfully meet this growing demand and establish
ourselves as a leading player in this dynamic market segment.”
He added, “We are very encouraged by the early market reaction
to our recently-released Monarch Swarm, our next generation
cloud-based offering that adds capabilities for data cataloguing,
collaboration, governance and data socialization to our robust
self-service data preparation and analytics platform. We are
particularly pleased with the positive feedback from IT department
customers, who recognize that with Monarch Swarm, they can support
the self-service data preparation and analytics needs of business
analysts while maintaining critical governance, auditability and
control over the organization’s information assets.”
Mr. Morrison concluded, “The momentum we have generated since
the beginning of this fiscal year is continuing into our fiscal
fourth quarter, which gives us confidence that we will surpass our
internal goals for growth and operating profitability for fiscal
2017. Our relentless focus on customer success,
market-leading product innovation and disciplined sales execution
remain at the core of our business strategy and should serve us
well as we close out fiscal 2017 and move into fiscal 2018.”
James L. Eliason, chief financial officer, commented, “For the
second consecutive quarter, we produced positive operating cash
flow and, for the first time in nearly four years, we generated
positive net income on a non-GAAP basis. In addition,
the key metrics by which we monitor our progress -- deferred
revenue balances, subscription bookings and subscription revenue --
all continue to trend up in a healthy fashion.”
Third Quarter Fiscal 2017 Business
Highlights
- Kronos, a leading provider of human capital management and
workforce management software solutions, selected Datawatch Monarch
as the data preparation platform for its Workforce Ready Suite to
accelerate the onboarding of new customers.
- Baker Tilly Virchow Krause LLP, a full-service accounting and
advisory services firm, selected Datawatch Monarch as its standard
platform for self-service data preparation to help healthcare
organizations optimize revenue cycle operations for a variety of
reimbursement methodologies, including value-based care
strategies.
- AstraZeneca, a global science-led biopharmaceutical company,
selected Datawatch Monarch for use by analysts in its office of
finance to streamline business processes and accelerate the time to
insight for its supply chain.
- Within days of the release of Monarch Swarm in April 2017, one
of the world’s leading integrated oil and gas companies became its
first customer, leveraging the collaboration and governance
capabilities of Monarch Swarm to prepare and manage data related to
oil and natural gas exploration, field development and production
for consumption through IBM Watson Analytics.
Third Quarter Fiscal 2017 Financial
Highlights
- Cash and short-term investments were $29.4 million at June 30,
2017, up from $27.8 million at March 31, 2017 and up from $28.8
million at June 30, 2016.
- Gross margin (excluding IP amortization expense) for the third
quarter of fiscal 2017 was 91%, as compared to 88% for the third
quarter of fiscal 2016.
- Days sales outstanding were 60 days at June 30, 2017, compared
to 69 days at June 30, 2016.
- There were seven six-figure deals in the third quarter this
fiscal year, compared to three in the third quarter of fiscal
2016.
- The average deal size in the third quarter of fiscal 2017 was
$39,000, an increase from $35,000 in the third quarter of fiscal
2016.
- Deferred revenue reached $11.0 million at June 30, 2017, the
highest in the company’s history, and a 23% increase from $8.9
million at June 30, 2016.
Conference Call
Datawatch’s third quarter of fiscal year 2017 earnings
conference call will take place today, Wednesday, July 19, 2017 at
5:30 p.m. Eastern Time. The toll-free number to access the
conference call is (866) 682-6100. Internationally, the call
may be accessed by dialing (862) 255-5401. The conference call will
be broadcast live on the Internet
at: http://www.investorcalendar.com/IC/CEPage.asp?ID=176035.
It is recommended that listeners register to participate and
download any necessary audio software from the website 15 minutes
prior to the scheduled call. An archived replay of the broadcast
will be available for 90 days at the same location.
About Datawatch Corporation
Datawatch Corporation (NASDAQ-CM:DWCH) enables ordinary users to
deliver extraordinary results with all their data. Only
Datawatch can unlock data from the widest variety of sources and
prepare it for use with visualization tools or other business
processes. When real-time visibility to rapidly changing data
is critical, Datawatch enables you to visualize streaming data for
the most demanding business environments such as capital markets.
Organizations of all sizes in more than 100 countries worldwide use
Datawatch products including 93 of the Fortune 100. Datawatch is
headquartered in Bedford, Massachusetts with offices in New York,
London, Frankfurt, Stockholm, Singapore, and Manila. To learn
more about Datawatch or download a free version of its enterprise
software, please visit: www.datawatch.com.
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 fluctuations in quarterly
operating results due, among other factors, to the long sales cycle
with enterprise customers and the size and timing of large customer
orders; risks associated with acquisitions; the risk that our
goodwill resulting from acquisitions may become impaired and
require a write-down; limitations on the effectiveness of internal
controls; rapid technological change; Datawatch’s dependence on the
introduction of new products and product enhancements and possible
delays in those introductions; competition in the software industry
generally, and in the markets for next generation analytics in
particular; Datawatch's dependence on its principal products,
proprietary software technology and software licensed from third
parties; Datawatch’s concentration of customers in the financial
sector; risks associated with international sales and operations;
risks associated with indirect distribution channels and
co-marketing arrangements, many of which were only recently
established; 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, security breach or
other catastrophic event; risks related to actions by activist
stockholders, including the amount of related costs incurred by
Datawatch and the disruption caused to Datawatch’s business
activities by these actions; 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, 2016 and its subsequently filed Form 10-Q
reports. Any forward-looking statements should be considered
in light of those factors.
Use of Non-GAAP Financial Information
We define non-GAAP net (loss) income as U.S. Generally Accepted
Accounting Principles (“GAAP”) net (loss) income plus (i)
amortization associated with the purchase of certain intellectual
property and other intangible assets (ii) share-based compensation
and, (iii) Sweden non-cash deferred tax valuation allowance, minus
the payment received in respect of a stockholder’s short-swing
stock trading profits. We discuss non-GAAP net (loss) income in our
quarterly earnings releases and certain other communications as we
believe non-GAAP net (loss) income is an important measure that is
not calculated according to GAAP. We use non-GAAP net (loss) income
in internal forecasts and models when establishing internal
operating budgets, supplementing the financial results and
forecasts reported to our Board of Directors and evaluating
short-term and long-term operating trends in our operations. We
believe that non-GAAP net (loss) income assists in providing an
enhanced understanding of our underlying operational measures to
manage the business, to evaluate performance compared to prior
periods and the marketplace, and to establish operational goals. We
believe that these non-GAAP financial adjustments are useful to
investors because they allow investors to evaluate the
effectiveness of the methodology and information used by management
in our financial and operational decision-making.
Non-GAAP net (loss) income is a non-GAAP financial measure and
should not be considered in isolation or as a substitute for
financial information provided in accordance with GAAP. This
non-GAAP financial measure may not be computed in the same manner
as similarly titled measures used by other companies. We expect to
continue to incur expenses similar to the non-GAAP net (loss)
income financial adjustments described above, and investors should
not infer from our presentation of this non-GAAP financial measure
that these costs are unusual, infrequent or non-recurring.
The table below entitled “Non-GAAP Disclosure - Reconciliation
of Net (Loss) Income to Non-GAAP Net Loss” reconciles the Company’s
GAAP net (loss) income to the Company’s non-GAAP net loss.
|
DATAWATCH CORPORATION |
Condensed Consolidated Statements of Operations |
Amounts in Thousands (except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE: |
|
|
|
|
|
|
|
|
|
Software
licenses |
|
$ |
4,912 |
|
|
$ |
3,669 |
|
|
$ |
14,158 |
|
|
$ |
10,461 |
|
|
Maintenance |
|
|
3,728 |
|
|
|
3,335 |
|
|
|
10,844 |
|
|
|
10,417 |
|
|
Professional services |
|
|
426 |
|
|
|
372 |
|
|
|
1,057 |
|
|
|
977 |
|
|
Total
revenue |
|
|
9,066 |
|
|
|
7,376 |
|
|
|
26,059 |
|
|
|
21,855 |
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES: |
|
|
|
|
|
|
|
|
|
Cost of
software licenses |
|
|
230 |
|
|
|
879 |
|
|
|
1,666 |
|
|
|
2,067 |
|
|
Cost of
maintenance and services |
|
|
618 |
|
|
|
499 |
|
|
|
1,694 |
|
|
|
1,707 |
|
|
Sales and
marketing |
|
|
4,521 |
|
|
|
4,773 |
|
|
|
13,393 |
|
|
|
15,621 |
|
|
Engineering and product development |
|
|
2,203 |
|
|
|
2,196 |
|
|
|
6,600 |
|
|
|
6,089 |
|
|
General
and administrative |
|
|
2,037 |
|
|
|
2,593 |
|
|
|
6,570 |
|
|
|
7,453 |
|
|
Total
costs and expenses |
|
|
9,609 |
|
|
|
10,940 |
|
|
|
29,923 |
|
|
|
32,937 |
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS |
|
|
(543 |
) |
|
|
(3,564 |
) |
|
|
(3,864 |
) |
|
|
(11,082 |
) |
|
Other income
(expense) |
|
|
52 |
|
|
|
(4 |
) |
|
|
702 |
|
|
|
(19 |
) |
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES |
|
|
(491 |
) |
|
|
(3,568 |
) |
|
|
(3,162 |
) |
|
|
(11,101 |
) |
|
Income tax expense |
|
|
(8 |
) |
|
|
(1,806 |
) |
|
|
(17 |
) |
|
|
(1,599 |
) |
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(499 |
) |
|
$ |
(5,374 |
) |
|
$ |
(3,179 |
) |
|
$ |
(12,700 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss
per share - Basic |
|
$ |
(0.04 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.26 |
) |
|
$ |
(1.08 |
) |
|
Net loss
per share - Diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.26 |
) |
|
$ |
(1.08 |
) |
|
Weighted
Average Shares Outstanding - Basic |
|
|
12,106 |
|
|
|
11,815 |
|
|
|
12,023 |
|
|
|
11,717 |
|
|
Weighted
Average Shares Outstanding - Diluted |
|
|
12,106 |
|
|
|
11,815 |
|
|
|
12,023 |
|
|
|
11,717 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Disclosure - Reconciliation of Net (Loss) Income to
Net Loss Excluding the Effects of Certain Items: |
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Loss |
|
$ |
(499 |
) |
|
$ |
(5,374 |
) |
|
$ |
(3,179 |
) |
|
$ |
(12,700 |
) |
|
Add-back Amortization of Intangibles & IP |
|
|
88 |
|
|
|
533 |
|
|
|
1,116 |
|
|
|
1,673 |
|
|
Add-back Share-Based Compensation |
|
|
633 |
|
|
|
145 |
|
|
|
1,515 |
|
|
|
2,169 |
|
|
Add-back Swedish Deferred Tax Valuation Allowance |
|
|
- |
|
|
|
1,794 |
|
|
|
- |
|
|
|
1,794 |
|
|
Exclude payment received from a stockholder's short-swing stock
trading profit |
|
|
- |
|
|
|
- |
|
|
|
(707 |
) |
|
|
- |
|
|
Subtotal of adjustments |
|
|
721 |
|
|
|
2,472 |
|
|
|
1,924 |
|
|
|
5,636 |
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
(non-GAAP) |
|
$ |
222 |
|
|
$ |
(2,902 |
) |
|
$ |
(1,255 |
) |
|
$ |
(7,064 |
) |
|
Net
(loss) income per share - Basic |
|
$ |
0.02 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.60 |
) |
|
Net
(loss) income per share - Diluted |
|
$ |
0.02 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.60 |
) |
|
Weighted Average Shares Outstanding - Basic |
|
|
12,106 |
|
|
|
11,815 |
|
|
|
12,023 |
|
|
|
11,717 |
|
|
Weighted Average Shares Outstanding - Diluted |
|
|
12,106 |
|
|
|
11,815 |
|
|
|
12,023 |
|
|
|
11,717 |
|
|
|
DATAWATCH CORPORATION |
Condensed Consolidated Balance Sheets |
Amounts in Thousands |
(Unaudited) |
|
|
|
|
|
|
|
June 30, |
|
September 30, |
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
29,429 |
|
$ |
28,034 |
|
Accounts receivable,
net |
|
|
6,153 |
|
|
6,932 |
|
Prepaid expenses and
other current assets |
|
|
2,139 |
|
|
2,265 |
|
Total
current assets |
|
|
37,721 |
|
|
37,231 |
|
|
|
|
|
|
Property and equipment,
net |
|
|
1,122 |
|
|
1,210 |
|
Intangible and other
assets, net |
|
|
8,881 |
|
|
9,990 |
|
|
|
|
|
|
|
|
$ |
47,724 |
|
$ |
48,431 |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses |
|
$ |
3,984 |
|
$ |
4,077 |
|
Deferred revenue -
current portion |
|
|
10,756 |
|
|
9,630 |
|
Total
current liabilities |
|
|
14,740 |
|
|
13,707 |
|
|
|
|
|
|
Other long-term
liabilities |
|
|
681 |
|
|
766 |
|
Total
long-term liabilities |
|
|
681 |
|
|
766 |
|
|
|
|
|
|
Total
shareholders' equity |
|
|
32,303 |
|
|
33,958 |
|
|
|
|
|
|
|
|
$ |
47,724 |
|
$ |
48,431 |
|
|
© 2017 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.
Source: Datawatch
Investor Contact:
Datawatch Investor Relations
investor@datawatch.com
Phone: (978) 441-2200 ext. 8323
Media Contact:
Frank Moreno
Datawatch Corporation
Frank_Moreno@datawatch.com
Phone: (978) 441-2200 ext. 8322
Twitter: @datawatch
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