EDISON, NJ , a leading provider of contract management software
and services for the enterprise, reported financial results for the
fourth quarter and year ended December 31, 2007.
Q4 2007 Financial Highlights
-- Net revenues increased for the sixth consecutive quarter to $11.5
million, up 7% sequentially and up 51% year over year
-- Recurring revenue up 37% vs. Q4 2006 to a record $5.6 million
-- Cash totals $29.0 million, including $1.5 million of positive cash
flow from operations in Q4
Financial Results for Q4 and Fiscal 2007
Net revenues for the fourth quarter totaled $11.5 million, an
increase of 7% from $10.7 million reported in the previous quarter
and an increase of 51% from $7.6 million reported for the fourth
quarter a year ago. For the full year 2007, net revenues totaled
$40.6 million, an increase of 37% from $29.6 million reported in
2006.
Net revenues exclude the portion of the gross value of license
and service contracts signed during the quarter that the company
will not recognize until future periods, including the portion of
new contracts related to multi-year software subscriptions. For
further analysis of the company's performance, see the discussion
of non-GAAP financial results below.
Total expenses in the quarter were $12.4 million, an increase of
3% from $12.0 million in the previous quarter and an increase of 2%
from $12.1 million in the same quarter a year ago. Total expenses
for the year were $50.8 million, an increase of 11% from $46.0
million reported for 2006.
Net loss per share was $(0.02), which was unchanged from the
previous quarter and an improvement of 78% from a net loss of
$(0.09) for the same quarter a year ago. For the full year, net
loss per share was $(0.19), a 42% improvement from a net loss per
share of $(0.33) in 2006.
Research and development expense totaled $3.5 million in the
fourth quarter, which decreased 7% from $3.8 million in the
previous quarter and was 9% higher than the $3.2 million expensed
in the fourth quarter of 2006. Research and development expense for
the full year totaled $15.6 million, an increase of 24% from $12.6
million in 2006.
Cash and short-term investments totaled $29.0 million at
December 31, 2007. This compares to $10.7 million at the previous
quarter-end and $17.2 million a year ago. The increase in cash in
the fourth quarter 2007 is attributed to net proceeds of $15.8
million from the issuance of convertible notes in December 2007 and
the contribution of $1.5 million from operations. Excluding the
funding proceeds, cash at the end of the fourth quarter totaled
$12.1 million.
Kevin M. Harris, I-many's CFO, commented, "Our R&D expense
ticked down another 7% this final quarter of 2007, which showed
substantial progress but still was not as low as we had targeted.
Additional R&D was intentionally spent on key product
improvements that were released ahead of schedule. Still, we
correctly foresaw the third quarter as representing the low water
mark of our cash reserves, as we built $1.5 million in cash in the
fourth quarter exclusive of the financing completed at year's end.
R&D is expected to stay flat in the first quarter of 2008 as we
work on an accelerated software development contract we booked in
the fourth quarter of 2007."
Results by Revenue Category
Recurring revenue generated from software subscriptions,
maintenance, support and hosting totaled a record $5.6 million in
the quarter, an increase of 12% from $5.0 million in the previous
quarter and an increase of 35% from $4.1 million generated in the
same period a year ago. For fiscal 2007, recurring revenues totaled
$19.7 million, an increase of 24% from $15.9 million recorded in
2006.
Services revenue from professional services totaled $3.8 million
in the quarter, an increase of 8% from $3.5 million reported in the
previous quarter and an increase of 11% from $3.4 million in the
same period a year ago. For fiscal 2007, revenue from professional
services totaled $13.5 million, an increase of 11% from $12.1
million recorded in 2006.
License revenue, representing one-time perpetual license fees
from product sales, totaled $2.1 million in the quarter, a decrease
of 5% from $2.2 million in the previous quarter and a substantial
increase from $49,000 in the same period a year ago. For the full
year, license revenue totaled $7.3 million, an increase of 359%
from the $1.6 million recorded in 2006.
Non-GAAP Financial Results
Management believes certain non-GAAP financial results may
present a useful picture of the company's progress as it continues
to include software subscriptions in its licensing mix. (See "Use
of Non-GAAP Financial Information," below.)
These non-GAAP results include the gross value of license
contracts signed, which the company calls "bookings," and which
totaled $4.2 million in the fourth quarter 2007. This represents an
increase of 9% from $3.9 million signed in the prior quarter and an
increase of 5% from $4.0 million signed in the fourth quarter 2006.
Bookings for the full year totaled $16.9 million, a 17% increase
from $14.4 million signed in 2006.
Unamortized software subscriptions expected to be recognized
over the next five years totaled $16.1 million. This represented a
decrease of 16% from $19.2 million at the end of the prior quarter
and an increase of 9% from $14.8 million at the end of the fourth
quarter 2006. The sequential quarter decrease was due to the
recognition of subscription revenue that exceeded the amount of new
subscriptions signed in the quarter as well as the conversion of
one subscription contract in the period to perpetual license. (The
company defines "unamortized software subscriptions" as the
remaining portion of non-cancellable subscription contracts that
have been signed but not yet recognized into revenue.)
The combined amount of deferred revenue and unamortized software
subscriptions totaled $30.9 million at the end of the fourth
quarter, a decrease of 9% from $33.8 million at the end of the
prior quarter and an increase of less than 1% from $30.8 million at
the end of the fourth quarter 2006. The sequential quarter decrease
is attributed to the recognition of subscription revenue that
exceeded the amount of new subscription bookings signed in the
quarter as well as the conversion of one subscription contract to a
perpetual license.
The amount of recurring revenue generated from subscription
contracts signed in prior periods and recorded in the fourth
quarter of 2007 reached $2.1 million, an increase of 62% from $1.3
million recorded in the previous quarter and an increase of 151%
from $824,000 recorded in the fourth quarter of 2006.
Other Q4 2007 Operational Highlights
-- 10 new license transactions exceeding $50,000 in gross value were
signed during the quarter, which was equal to the previous quarter and
compares to 11 in the same period a year ago. These new transactions
averaged approximately $353,000 in net software license value, as compared
to $292,000 in the previous quarter and $270,000 in the same period a year
ago. ("Net software license value" represents the perpetual license fee or
the net present value of non-cancellable subscription payments, exclusive
of the value of maintenance and support.) Two of these new transactions
were subscriptions. Seven were in the company's Life Sciences solutions
market and three in the Industry Solutions market segment. The company
signed one major new enterprise customer in Industry Solutions in the
fourth quarter of 2007.
-- The company released version 6.0 of I-many Contract Management Suite
for Life Sciences(TM) that for the first time provides fully interoperable
integration between all suite elements. Built on I-many's leading-edge
services-oriented architecture (SOA), the suite spans the entire contract
management continuum, from the core functions of contract authoring and
compliance to sophisticated analytics and business intelligence -- all in a
single, fully-integrated platform. The 6.0 release includes I-many CARS�
BI, a new advanced business intelligence reporting tool.
-- Eastman Kodak Company (NYSE: EK) announced it will roll out I-many's
Contract Management solution to its offices worldwide. Kodak will use the
solution to create a central repository for contracts so its teams around
the world can access this information from one central location. Kodak also
anticipates saving substantial time and expense by automating the processes
related to the internal approvals for contracts.
-- One of the world's largest pharmaceutical companies, with $50 billion
in annual revenues, extended its more than a decade-long relationship with
I-many by licensing additional elements of the I-many Contract Management
Suite for Life Sciences and committing to extensive custom and accelerated
software development.
-- IMPAX Laboratories, Inc. (NASDAQ: IPXL), a leading technology-based
specialty pharmaceutical company, extended its subscription to I-many CARS
and I-many Medicaid for an additional four years.
-- The world's leading producer of large and small jet engines for
commercial and military aircraft selected I-many Contract Manager to manage
its corporate commitments that drive $13.2 billion in annual revenue.
-- I-many was named to the Software 500 by Software Magazine for the
fourth consecutive year, ranking in the top 300 for 2007.
John A. Rade, I-many's chairman, president and CEO, said, "We
ended 2006 talking about how our strong pipeline of product
advancements and pending deals put us well on course to meeting our
goals for 2007 and creating an inflection point for I-many on
multiple levels -- and that's exactly what happened. In fact, we
met or exceeded our expectations across the board in terms of
revenues, new bookings, cash flow, and product development.
"In 2007, the successful roll out of our next generation I-many
Contract Management Suite for Life Sciences was greeted with
enthusiastic demand, as more than 25 of our life science customers
committed to the new platform. These wins not only further
solidified our industry leadership, but also fueled net revenue
growth to the highest quarterly level since the fourth quarter of
2002. We accomplished this while continuing to manage expenses,
resulting in our first positive operating cash flow quarter in
eight periods. These accomplishments have proven the unmatched
capabilities of our products and our ability to deliver them
expeditiously.
"We have begun 2008 on an even stronger platform than 2007,
including a rounded-out and highly-capable management team that is
supported by a very strong balance sheet. We foresee continued
expansion of our customer base, as well as further adoption of our
existing and new products from within this base, as the recognition
of the benefits of effective contract management continues to
spread. We anticipate launching into a new vertical market in 2008
with the intention and capability of realizing the success we've
enjoyed with our Life Science vertical. All-in-all, we expect 2008
to exceed the great success of 2007."
Fiscal 2008 Guidance
-- Net Revenue: $47 million to $52 million, or up 16% to 28% vs. 2007,
with at least $21 million expected to come from recurring revenue
(Subscription, Maintenance and Support, and Hosting).
-- Gross value of new license transactions at least $22 million.
-- Cash at year-end at least $25 million.
-- GAAP loss of $0.03 - $0.04 per share.
-- Non-cash expenses (depreciation, amortization, and stock option
charges) of $0.06 - $0.07 per share.
-- Cash flow positive from operations (net of any financing costs).
Conference Call
I-many will hold a conference call to discuss these fourth
quarter and 2007 year end results today at 4:30 p.m. Eastern Time.
I-many Chairman, President and CEO John A. Rade and CFO Kevin M.
Harris will host the presentation, followed by a question and
answer period.
Dial-In Number: 1-800-762-9058
International: 1-480-629-9041
Conference ID#: 3832186
The call is also being webcast and will be accessible via
I-many's investor section at www.imany.com.
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization and ask you to wait until the call begins. If you have
any difficulty connecting with the conference call, please contact
the Liolios Group at (949) 574-3860.
A replay of the call will be available after 7:30 p.m. Eastern
Time and until March 5, 2008:
Toll-free replay number: 1-800-406-7325
International replay number: 1-303-590-3030
Replay Pin#: 3832186
Use of Non-GAAP Financial Information
The company supplements its GAAP financial statements in this
release and in its annual report on Form 10-K with a reconciliation
of the non-GAAP gross value of license transactions to its reported
GAAP license revenues. This non-GAAP financial information is
provided as additional information for investors and is not in
accordance with or an alternative to GAAP. Following the balance
sheet and income statement, management has included a table that
show the results for the fourth quarter 2007 compared to the
comparable periods in 2006 for new license transactions including
subscription contracts, the recognition into reportable license
revenue of deferred non-subscription license transactions, and the
reconciliation of those numbers to total license revenue according
to GAAP. Management believes the inclusion of this table can
enhance an overall understanding of the company's past operational
performance and also its prospects for the future. This
reconciliation of license revenues is made with the intent of
providing both management and investors with a more complete
understanding of the revenue performance of the company, as opposed
to GAAP revenue results, which do not include the impact of
newly-executed subscription agreements and other deferred revenue
arrangements that are material to an understanding of the ongoing
performance of the company's business. Management uses this
information as a basis for planning and forecasting core business
activity in future periods and believes it is useful in
understanding our results of operations. The presentation of this
additional revenue information is not meant to be considered in
isolation or as a substitute for license revenue reported in
accordance with generally accepted accounting principles in the
United States.
About I-many
I-many, Inc. is a leading provider of contract management
software and services for the enterprise. With more than 280
customers across 21 industries worldwide, I-many is enabling
businesses to manage the entire contract lifecycle, from
pre-contract processes and contract management to active compliance
and contract optimization. The result is an end-to-end solution
that provides enterprises with greater levels of insight into
contract performance, allowing companies to improve profitability
and achieve measurable return on investment. For more information,
please visit www.imany.com.
This news release contains forward-looking statements, and
actual results may vary from those expressed or implied herein.
Factors that could affect these results include the risk of
unforeseen technical or practical impediments to planned software
development, which could affect the company's product release
timetable; the risk that the ratio of subscription license sales to
perpetual license sales could be higher than anticipated, possibly
leading to lower revenue in current periods and less cash than
predicted in the near term; the risk of lower demand for the
company's new products than management anticipates; the inherent
risks of large software implementation projects, which can cause
customer disagreements that could affect I-many's ability to
collect both services and license revenue, whether recognized or
deferred; the possibility that customers could cancel maintenance
and support services at the time of annual renewal, which could
decrease I-many's base of recurring revenue; the possibility that
extraordinary events outside the company's control could extend the
length of the sales cycle for the company's products or make the
market for the company's products more unpredictable; the risk that
the company will not be successful in opening new markets for its
products; and other risk factors set forth from time to time in the
company's filings with the Securities and Exchange Commission.
I-MANY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net Revenues:
Recurring $ 5,574 $ 4,115 $ 19,720 $ 15,853
Services 3,810 3,427 13,491 12,124
License 2,102 49 7,341 1,598
--------- --------- --------- ---------
Total net revenues 11,486 7,591 40,552 29,575
Operating expenses:
Cost of recurring revenue (1) 1,573 1,640 6,351 6,351
Cost of services (1) 2,428 2,885 11,034 10,589
Cost of third-party
technology 67 24 300 269
Amortization of acquired
intangible assets 46 46 185 482
Sales and marketing (1) 2,933 2,669 10,079 9,323
Research and development (1) 3,481 3,186 15,629 12,585
General and administrative
(1) 1,639 1,396 6,241 5,449
Depreciation 227 245 891 824
Restructuring and other
charges 2 35 93 103
--------- --------- --------- ---------
Total operating expenses 12,396 12,126 50,803 45,975
--------- --------- --------- ---------
Loss from operations (910) (4,535) (10,251) (16,400)
Other income, net 65 168 443 585
--------- --------- --------- ---------
Net loss ($ 845) ($ 4,367) ($ 9,808) ($ 15,815)
========= ========= ========= =========
Basic and diluted net loss per
common share ($ 0.02) ($ 0.09) ($ 0.19) ($ 0.33)
========= ========= ========= =========
Weighted average shares
outstanding 52,075 49,841 51,753 47,782
========= ========= ========= =========
Notes:
(1) Stock-based compensation
amounts included above:
Cost of recurring revenue $ 44 $ 15 $ 196 $ 133
Cost of services 42 104 336 225
Sales and marketing 132 162 337 190
Research and development 177 127 564 300
General and administrative 277 163 1,001 635
--------- --------- --------- ---------
Total stock-based
compensation expenses $ 672 $ 571 $ 2,434 $ 1,483
========= ========= ========= =========
I-MANY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
December 31,
2007 2006
---------- ----------
Assets
Current Assets:
Cash and cash equivalents $ 28,588 $ 17,232
Restricted cash 80 80
Accounts receivable 6,606 8,120
Other current assets 526 766
---------- ----------
Total current assets 35,800 26,198
Property and equipment, net 1,494 1,341
Restricted cash 351 427
Deferred charges and other assets 1,309 121
Acquired intangible assets, net 46 231
Goodwill 8,667 8,667
---------- ----------
Total assets $ 47,667 $ 36,985
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 9,438 $ 7,224
Current portion of deferred revenue 13,654 15,773
Current portion of capital lease obligations 276 154
---------- ----------
Total current liabilities 23,368 23,151
Convertible notes payable 17,000 --
Deferred revenue, net of current portion 1,664 1,256
Other long-term liabilities 1,012 1,124
Stockholders? equity 4,623 11,454
---------- ----------
Total liabilities and stockholders' equity $ 47,667 $ 36,985
========== ==========
Reconciliation of Gross Value of License Bookings to Reportable Product
Revenue
Three months ended 12 months ended
December 31, December 31,
2007 2006 2007 2006
-------- -------- -------- --------
(AMOUNTS IN THOUSANDS)
Gross value of license contracts sold:
Health and Life Sciences $ 3,586 $ 3,789 $ 15,543 $ 12,435
Industry Solutions 644 232 1,377 1,967
-------- -------- -------- --------
4,230 4,021 16,920 14,402
Add license revenue recorded in current
quarter from contracts sold in prior
periods:
Health and Life Sciences 767 0 1,824 0
Industry Solutions 142 0 861 0
-------- -------- -------- --------
909 0 2,685 0
Less value of license contracts sold in
current quarter and deferred to future
periods:
Health and Life Sciences 2,396 3,754 11,335 10,888
Industry Solutions 641 219 930 1,915
-------- -------- -------- --------
3,037 3,973 12,265 12,803
-------- -------- -------- --------
License revenue recorded:
Health and Life Sciences 1,957 35 6,032 1,547
Industry Solutions 145 13 1,308 52
-------- -------- -------- --------
$ 2,102 $ 48 $ 7,340 $ 1,599
======== ======== ======== ========
Note: Consistent with the company's reclassification of
subscription revenues, which are now included in Recurring revenue,
subscription revenues are no longer included in the amounts in the
line item titled, "Add license revenue recorded in current quarter
from contracts sold in prior periods." The results have been
updated with this reclassification for both the current and
comparable periods. This line item will still include fees from
perpetual license sales which had not been fully recognized as
revenue at the time of the sale.
Company Contact: I-many, Inc. Kevin Harris CFO 732-452-1515
Email Contact or Investor Relations: Liolios Group, Inc. Ron Both
or Geoffrey Plank 949-574-3860 Email Contact
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