Salary.com, Inc. (NASDAQ: SLRY), a leading provider of on-demand
compensation management solutions, today announced financial
results for its first quarter of fiscal 2008, which ended June 30,
2007. First quarter revenue was $7.5 million, an increase of 46%
from the first quarter of fiscal 2007 and 18% sequentially. Cash
flow from operations was $1.6 million for the first quarter of
2008, compared to negative $0.7 million in the prior year and $1.1
million in the prior quarter. Bookings (defined as change in
deferred revenue added to revenue) were $8.1 million for the
quarter compared to $5.9 million in the prior year and $7.4 million
in the prior quarter. �We�re very pleased with our first quarter
results� stated Kent Plunkett, founder and chief executive officer.
�We exceeded financial expectations and continued our record of
strong revenue growth and positive operating cash flow. We
substantially grew our customer base and increased our footprint
with many existing customers through wider deployments across our
enterprise product portfolio. Additionally, we continued to execute
on plans to expand our proprietary datasets and capabilities in the
talent management market through strategic acquisitions and
partnerships. Our growth and momentum in the first quarter,
together with our strong financial results, underscore the
leadership position we have secured in the compensation category.�
Financial Highlights Revenue of $7.5 million Cash flow from
operations of $1.6 million Bookings of $8.1 million On a GAAP
basis, Salary.com reported a net loss attributable to common
stockholders of $1.4 million in the first quarter of fiscal 2008,
compared to a net loss of $963,000 in the first quarter of fiscal
2007 On a non-GAAP basis, excluding the impact of stock-based
compensation expense, amortization of intangibles, and accretion of
preferred stock, Salary.com reported a net loss attributable to
common stockholders of $556,000 in the first quarter of fiscal
2008, compared to a net loss of $538,000 in the first quarter of
fiscal 2007 Cash and equivalents of at the end of the first quarter
of 2008 were $39.9 million, compared to $49.0 million at the end of
fiscal 2007, primarily due to cash flow generated in the quarter
offset by the $10.3 million paid for the acquisition of ICR
Limited, L.C. in May 2007 Current deferred revenue grew to $16.1
million at the end of the first quarter, an increase from $15.5
million at the end of fiscal 2007. Total deferred revenue was $17.0
million at the end of the first quarter, which represented an
increase from $16.4 million at the end of fiscal 2007 Ken Goldman,
Salary.com�s senior vice president and chief financial officer
said, �Strong order activity and synergies from our acquisition of
ICR helped us achieve revenue that was better than anticipated in
the first quarter. Our operating cash flow results also benefited
from this activity, providing an accent on our record of positive
operating cash flow. Because of our high-visibility subscription
revenue model and market dynamics that are working in our favor, we
believe this momentum can continue.� Business Highlights As
announced on May 15, 2007, Salary.com acquired ICR Limited, L.C.
and ICR International Ltd. (ICR), a premier provider of specialty
consumer goods and global technology compensation data and software
� thereby expanding Salary.com�s global reach with proprietary
datasets across over 70 countries worldwide. During the first
quarter 225 net new enterprise subscribers were added, not
including new customer additions from the ICR acquisition or small
and medium business customers; bringing the total enterprise
subscriber count to more than 2,100 and total subscription
customers to above 4,100. New customer additions in the first
quarter included marquee names such as AmerisourceBergen
Corporation; Comcast Corporation; CSX Corporation; Elizabeth Arden,
Inc.; Expedia, Inc.; Hitachi Computer Products (America), Inc.;
John Hancock Life Insurance Company; The Motley Fool, Inc.; The
Pepsi Bottling Group, Inc.; The Rockefeller Foundation; and Sony
Ericsson Mobile Communications (USA), Inc. �Market demand and
awareness is building in the compensation management market as
increased recruiting pressure forces companies to take new
approaches to attracting and retaining talent. Salary.com is
benefiting from positive market momentum due to our leadership
position, domain expertise, proprietary data sets and on-demand
technology, and this success is reflected in our financial and
business results�, commented Plunkett. �We also announced strategic
agreements earlier today that expand our capabilities in the
emerging talent management segment�, he continued. �With the
acquisition of ITG Competency Group and the licensing agreement
with Schoonover Associates, Salary.com will significantly broaden
the capabilities and advantages of its talent management suite,
developing one of the most robust competency offerings in the
industry and providing the content foundation to support
competency-driven human resources and talent management products
and services.� Business Outlook Salary.com expects total revenue in
fiscal 2008 to be in the range of $33.7 million to $34.9 million,
an increase from prior guidance. Cash flow from operations is
expected to be in the range of $7.8 million to $8.2 million for the
full fiscal year, also an increase from prior guidance. Non-GAAP
loss, which excludes the non-cash impact of stock-based
compensation expense and amortization of intangibles, is expected
to be in the range of $5.0 million to $5.4 million. On a GAAP
basis, net loss for fiscal 2008 is expected to be in the range of
$8.8 to $9.2 million. Weighted average basic shares for the year
are estimated to be approximately 13.7 million shares. For the
second quarter of fiscal 2008, Salary.com expects total revenue in
the range of $7.7 million to $8.1 million. Non-GAAP loss, which
excludes the non-cash impact of stock-based compensation expense
and amortization of intangibles, is expected to be in the range of
$1.3 million to $1.7 million. GAAP loss for the second quarter of
fiscal 2008, is expected to be in the range of $2.3 million to $2.7
million. Weighted average shares for the quarter are estimated to
be approximately 13.6 million shares. Conference call What:
Salary.com first quarter 2008 financial results conference call and
webcast When: Tuesday, July 31, 2007 Time: 5:00 PM ET Live Call:
(800) 819-9193, domestic (913) 981-4911, international Replay:
(888) 203-1112, conference ID 3594155 (719) 457-0820, conference ID
3594155, international Webcast:
http://investor.salary.com/events.cfm (live and replay) About
Salary.com, Inc. Salary.com is a leading provider of on-demand
compensation management solutions helping businesses and
individuals manage pay and performance. Salary.com provides
companies of all sizes comprehensive on-demand software
applications that are tightly integrated with its own proprietary
compensation data sets, thereby automating the essential elements
of the compensation management process and significantly improving
the effectiveness of its client�s compensation spend. For more
information, visit www.salary.com. Safe Harbor Statement This
release contains "forward-looking" statements that are made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. These are statements that are
predictive in nature, that depend upon or refer to future events or
conditions, or that include words such as "may," "will," "expects,"
"projects," "anticipates," "estimates," "believes," "intends,"
"plans," "should," "seeks," and similar expressions. This press
release contains forward-looking statements relating to, among
other things, Salary.com�s expectations and assumptions concerning
future financial performance. Forward-looking statements involve
known and unknown risks and uncertainties that may cause actual
future results to differ materially from those projected or
contemplated in the forward-looking statements. Forward-looking
statements may be significantly impacted by certain risks and
uncertainties described in Salary.com�s filings with the Securities
and Exchange Commission. The risks and uncertainties referred to
above include, but are not limited to, risks associated with
possible fluctuations in our operating results and rate of growth,
our history of operating losses, the possibility that we will not
achieve GAAP profitability, our ability to close the ITG
acquisition on a timely basis, interruptions or delays in our
service or our Web hosting, our business model, breach of our
security measures, the emerging market in which we operate, our
ability to hire, retain and motivate our employees and manage our
growth, competition, our ability to continue to release and gain
customer acceptance of new and improved versions of our service,
successful customer deployment and utilization of our services,
fluctuations in the number of shares outstanding, foreign currency
exchange rates and interest rates. (SLRY-F) Salary.com, Inc.
Condensed Consolidated Balance Sheets June 30, March 31, 2007 2007
ASSETS (unaudited) Current assets: Cash and cash equivalents $
39,928,841 $ 49,016,389 Accounts receivable, net of allowance for
doubtful accounts 3,690,123 3,364,931 Prepaid expenses and other
current assets 604,226 891,483 Deferred customer acquisition costs,
current portion � 853,176 � 870,224 Total current assets �
45,076,366 � 54,143,027 � Property, equipment and software, net
1,992,205 1,937,250 Goodwill and intangibles assets, net 12,384,990
2,189,632 Other assets � 440,433 � 405,564 Total assets $
59,893,994 $ 58,675,473 � LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable and accrued compensation $
3,551,674 $ 2,506,311 Accrued expenses and other current
liabilities 1,365,332 1,104,714 Subscription payable 628,089
693,638 Deferred revenue, current portion � 16,082,157 � 15,506,966
Total current liabilities � 21,627,252 � 19,811,629 � Deferred
revenue, net of current portion � 902,953 � 880,688 Total
liabilities � 22,530,205 � 20,692,317 � Stockholders' equity:
Common stock 1,341 1,331 Additional paid-in capital 68,125,184
67,378,802 Accumulated deficit (30,761,344) (29,396,311)
Accumulated other comprehensive loss � (1,392) � (666) Total
stockholders' equity � 37,363,789 � 37,983,156 Total liabilities
and stockholders' equity $ 59,893,994 $ 58,675,473 Salary.com, Inc.
Consolidated Statements of Operations Three Months Ended June 30,
2007 2006 (unaudited) Revenue: � � Subscription revenues $
6,758,499 $ 4,441,198 Advertising revenues � 780,508 � � 714,408 �
Total revenues 7,539,007 5,155,606 � Cost of revenues (1) �
1,622,312 � � 1,051,548 � Gross profit � 5,916,695 � � 4,104,058 �
� Operating expenses: Research and development (1) 882,267 727,658
Sales and marketing (1) 3,898,480 2,687,204 General and
administrative (1) 2,927,139 1,447,856 Amortization of intangible
assets � 134,818 � � 53,249 � Total operating expenses � 7,842,704
� � 4,915,967 � � Loss from operations � (1,926,009 ) � (811,909 )
� Other income (expense): Interest income 560,675 4,385 Interest
expense - (24,268 ) Other income (expense) � 297 � � (2,500 ) Total
other income (expense) � 560,972 � � (22,383 ) � Net loss
(1,365,037 ) (834,292 ) Accretion of preferred stock � - � �
(128,999 ) Net loss attributable to common stockholders $
(1,365,037 ) $ (963,291 ) � Net loss attributable to common
stockholders per share - basic and diluted $ (0.10 ) $ (0.20 ) �
Weighted average shares outstanding - basic and diluted 13,358,488
4,724,163 � (1) Amounts include stock-based compensation expense,
as follows: � Three Months Ended June 30, 2007 � 2006 � � Cost of
revenues $ 94,806 $ 28,295 Research and development 2,126 19,236
Sales and marketing 201,918 69,373 General and administrative �
375,173 � � 126,562 � $ 674,023 � $ 243,466 � Salary.com, Inc.
Condensed Consolidated Statements of Cash Flows Three Months Ended
June 30, 2007 2006 (unaudited) Cash flows from operating
activities: Net loss $ (1,365,037 ) $ (834,292 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 403,977 222,132 Stock-based
compensation 674,023 243,466 Other non-cash items 59,070 49,589
Change in operating assets and liabilities � 1,840,546 � � (338,947
) Net cash provided by (used in) operating activities � 1,612,579 �
� (658,052 ) � Cash flows from investing activities: Cash paid for
acquisition of business (10,197,962 ) (367,500 ) Cash paid for
intangible assets (214,152 ) - Purchases of property and equipment
(115,404 ) (311,071 ) Capitalization of software development costs
� (162,392 ) � (93,156 ) Net cash used in investing activities �
(10,689,910 ) � (771,727 ) � Cash flows from financing activities:
Net proceeds from exercise (buyback) of common stock options and
warrants � (9,492 ) � 161,970 � Net cash provided by (used in)
financing activities � (9,492 ) � 161,970 � � Effect of exchange
rate changes on cash and cash equivalents � (725 ) � - � Decrease
in cash and cash equivalents (9,087,548 ) (1,267,809 ) � Cash and
cash equivalents, beginning of period � 49,016,389 � � 1,813,715 �
� Cash and cash equivalents, end of period $ 39,928,841 � $ 545,906
� Salary.com, Inc. Reconciliation of Non-GAAP Measures Three Months
Ended June 30, 2007 2006 (unaudited) (unaudited) Reconciliation of
GAAP loss from operations to non-GAAP loss from operations: � Loss
from operations $ (1,926,009 ) $ (811,909 ) Amortization of
intangible assets 134,818 53,249 Stock-based compensation � 674,023
� � 243,466 � Non-GAAP loss from operations $ (1,117,168 ) $
(515,194 ) � Reconciliation of GAAP net loss attributable to common
stockholders to non-GAAP net loss attributable to common
stockholders: � GAAP net loss attributable to common stockholders $
(1,365,037 ) $ (963,291 ) Accretion of preferred stock - 128,999
Amortization of intangible assets 134,818 53,249 Stock-based
compensation � 674,023 � � 243,466 � Non-GAAP net loss attributable
to common stockholders $ (556,196 ) $ (537,577 ) � Non-GAAP net
loss attributable to common stockholders per share $ (0.04 ) $
(0.11 ) � Weighted average shares outstanding - basic and diluted
13,358,488 4,724,163 The non-GAAP financial measures in the text of
this press release and accompanying non-GAAP supplemental
information represent financial measures used by Salary.com�s
management to evaluate the operating performance of the Company and
to conduct its business operations. Non-GAAP financial measures
discussed in the press release exclude amortization of intangible
assets, stock-based compensation and the accretion of preferred
stock. By excluding these non-cash charges, Salary.com can evaluate
its operations and can compare its results on a more consistent
basis to the results of other companies in the industry. Management
uses the non-GAAP financial measures for planning purposes,
including the preparation of operating budgets and to determine
appropriate levels of operating and capital investments. Management
also believes that the non-GAAP financial measures provide
additional insight for analysts and investors in evaluating the
Company�s financial and operational performance and in assisting
investors in comparing the Company�s financial performance to those
of other companies in the Company�s industry, many of which present
similar non-GAAP financial measures to investors. However, these
non-GAAP financial measures are not intended to be an alternative
to financial measures prepared in accordance with GAAP and should
not be considered in isolation from our GAAP results of operations.
Pursuant to the requirements of the SEC Regulation G, a detailed
reconciliation between the Company�s GAAP and non-GAAP financial
results is provided in this press release and investors are advised
to carefully review and consider this information as well as the
GAAP financial results that are disclosed in the Company�s SEC
filings.
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