Salary.com, Inc. (NASDAQ: SLRY), a leading provider of on-demand
compensation and talent management solutions, today announced
financial results for its third quarter of fiscal 2008, which ended
December 31, 2007. Third quarter revenue was $9.2 million, an
increase of 52% from the third quarter of fiscal 2007 and 8%
sequentially. Cash flow from operations was $2.3 million for the
third quarter of fiscal 2008, compared to $1.4 million in the third
quarter of fiscal 2007 and $1.5 million in the prior quarter.
Year-to-date operating cash flow was $5.4 million, compared to $2.0
million in the same period in the prior year, an increase of over
170%. Total deferred revenue was $20.9 million at the end of the
quarter, an increase of 36% year-over-year and 14% sequentially.
Kent Plunkett, founder and chief executive officer stated, �Q3 was
a solid quarter, highlighted by record revenue, expansion of our
customer base, and continued strong cash flow generation. In the
third quarter we expanded our product offerings with enriched data
sets for our compensation management solutions and we added key
competencies to our talent management solution, which gained
additional traction in the quarter.� Financial Highlights --
Revenue of $9.2 million. -- Cash flow from operations of $2.3
million and free cash flow, a non-GAAP measure, of $2.2 million. --
On a GAAP basis, Salary.com reported a net loss attributable to
common stockholders of $3.1 million, or ($0.22) per diluted share,
in the third quarter of fiscal 2008, compared to a net loss of $2.2
million, or ($0.43) per diluted share, in the third 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 $848,000, or ($0.06) per
diluted share, in the third quarter of fiscal 2008, compared to a
net loss of $1.0 million, or ($0.20) per diluted share, in the
third quarter of fiscal 2007. -- Cash and cash equivalents at the
end of the third quarter of fiscal 2008 were $35.6 million,
compared to $39.4 million at the end of the second quarter, with
the decrease resulting from the acquisition completed during the
quarter, partially offset by cash from operations. -- Current
deferred revenue grew to $19.4 million at the end of the third
quarter, an increase from $17.2 million at the end of the second
quarter. Total deferred revenue was $20.9 million at the end of the
third quarter, which represented an increase from $18.3 million at
the end of the second quarter. Chris Power, Salary.com�s chief
financial officer said, �With revenue at the upper end of
expectations and continued cost management, we produced a smaller
non-GAAP net loss than had been anticipated. This demonstrates our
business model leverage and also contributed to healthy operating
cash flow in the quarter.� Business Highlights -- As announced on
December 27, 2007, Salary.com acquired the assets of Schoonover
Associates, Inc. and established the industry's premier competency
management data and consulting services group, headed by Dr.
Stephen Schoonover. This addition further enhances Salary.com�s
proprietary datasets and bolsters the company�s talent management
offerings. -- As announced on January 2, 2008, Chris Power joined
Salary.com as chief financial officer. Mr. Power was chief
financial officer of Global Operations at Monster Worldwide where
he led a team of 300 professionals across more than 30 countries
and was responsible for all financial operations and strategic
planning for Monster Worldwide and its business units. -- During
the third quarter, over 250 new enterprise subscribers were added,
bringing the total enterprise subscriber count to more than 2,700.
-- New customer additions in the third quarter included marquee
names such as: Harry Winston, Lord & Taylor LLC, P.F. Chang�s
China Bistro, Inc., Quiksilver, Inc., Starent Networks Corporation,
United States Fire Insurance Company AKA Crum and Forster, and
JumpTV Inc. Plunkett added, �Companies continue to focus on
employee retention and development to build a more effective and
more efficient workforce. Customers recognize that Salary.com�s
domain expertise, broad and deep datasets, on-demand software, and
services offerings permit them to execute their talent management
initiatives to improve overall workforce performance. Salary.com
continues to be a beneficiary of these trends with rapid adoption
of our leading compensation and talent management solutions
improving both our market position and our financial position.�
Business Outlook For the fourth quarter of fiscal 2008, Salary.com
expects total revenue in the range of $9.6 to $10.1 million.
Non-GAAP net loss, which excludes non-cash stock-based compensation
expenses of approximately $1.6 million and amortization of
intangibles of approximately $0.8 million, is expected to be in the
range of $1.1 to $1.3 million. GAAP loss for the fourth quarter of
fiscal 2008 is expected to be in the range of $3.4 to $3.6 million.
Weighted average shares for the quarter are estimated to be
approximately 14.2 million shares. Salary.com expects total revenue
in fiscal 2008 to be in the range of $34.8 to $35.3 million, a
slight increase compared to the company�s prior outlook. Cash flow
from operations is expected to be in the range of $7.8 to $8.2
million for the full fiscal year, consistent with the company�s
prior outlook. Non-GAAP net loss, which excludes non-cash impact of
stock-based compensation expense of approximately $5.0 million and
amortization of intangibles of approximately $1.8 million, is
expected to be in the range of $3.6 to $3.8 million. On a GAAP
basis, net loss for fiscal 2008 is expected to be in the range of
$10.4 to $10.6 million. Weighted average basic shares for the year
are estimated to be approximately 13.8 million shares. Conference
call � What: Salary.com third quarter fiscal 2008 financial results
conference call and webcast When: Thursday, January 31, 2008 Time:
5:00 PM ET Live Call: (877) 604-9667, domestic (719) 325-4891,
international Replay: (888) 203-1112, conference ID 4865874 (719)
457-0820, conference ID 4865874, 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 and talent 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 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. 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 expand our
customer base and product and service offerings, 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, integration and performance of acquired businesses, 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 and general
economic factors, as well as those risks and uncertainties
described in Salary.com�s filings with the Securities and Exchange
Commission. Salary.com expressly disclaims any obligation to update
any forward-looking statements. (SLRY-F) � � Salary.com, Inc.
Condensed Consolidated Balance Sheets � December 31, March 31, 2007
2007 ASSETS (unaudited) Current assets: Cash and cash equivalents $
35,610,193 $ 49,016,389 Accounts receivable, net of allowance for
doubtful accounts 5,722,287 3,364,931 Prepaid expenses and other
current assets 483,564 891,483 Deferred customer acquisition costs,
current portion � 817,795 � 870,224 Total current assets �
42,633,839 � 54,143,027 � Property, equipment and software, net
1,678,370 1,937,250 Goodwill and intangible assets, net 19,672,145
2,189,632 Other assets � 1,633,490 � 405,564 Total assets $
65,617,844 $ 58,675,473 � LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable and accrued compensation $
3,328,950 $ 2,506,311 Accrued expenses and other current
liabilities 2,973,905 1,104,714 Subscription payable 435,319
693,638 Deferred revenue, current portion � 19,399,718 � 15,506,966
Total current liabilities � 26,137,892 � 19,811,629 � Deferred
revenue, net of current portion 1,509,137 880,688 Other long-term
liabilities � 118,900 � - Total liabilities � 27,765,929 �
20,692,317 � Total stockholders' equity Total stockholders' equity
� 37,851,915 � 37,983,156 Total liabilities and stockholders'
equity $ 65,617,844 $ 58,675,473 � � � � Salary.com, Inc.
Consolidated Statements of Operations Three Months Ended Nine
Months Ended December 31, December 31, 2007 2006 2007 2006
(unaudited) (unaudited) Revenue: Subscription revenues $ 8,505,001
$ 5,483,659 $ 23,044,314 $ 14,764,539 Advertising revenues �
681,237 � � 553,898 � � 2,149,100 � � 1,870,272 � Total revenues
9,186,238 6,037,557 25,193,414 16,634,811 � Cost of revenues (1) �
2,207,843 � � 1,483,719 � � 5,713,555 � � 3,657,293 � Gross profit
� 6,978,395 � � 4,553,838 � � 19,479,859 � � 12,977,518 � �
Operating expenses: Research and development (1) 1,368,336
1,181,066 3,477,498 2,807,174 Sales and marketing (1) 5,242,386
3,396,088 13,567,991 9,047,745 General and administrative (1)
3,597,532 1,973,933 10,144,327 4,974,978 Amortization of intangible
assets � 320,938 � � 24,250 � � 736,489 � � 101,748 � Total
operating expenses � 10,529,192 � � 6,575,337 � � 27,926,305 � �
16,931,645 � � Loss from operations � (3,550,797 ) � (2,021,499 ) �
(8,446,446 ) � (3,954,127 ) � Other income (expense): Interest
income 494,868 348 1,569,763 6,446 Interest expense - (26,080 ) -
(77,639 ) Other income (expense) � 21,086 � � (114 ) � 56,079 � �
(2,314 ) Total other income (expense) � 515,954 � � (25,846 ) �
1,625,842 � � (73,507 ) Loss before provision for income taxes
(3,034,843 ) (2,047,345 ) (6,820,604 ) (4,027,634 ) Provision for
income taxes � 49,400 � � - � � 138,900 � � - � Net loss (3,084,243
) (2,047,345 ) (6,959,504 ) (4,027,634 ) Accretion of preferred
stock � - � � (128,999 ) � - � � (386,998 ) Net loss attributable
to common stockholders $ (3,084,243 ) $ (2,176,344 ) $ (6,959,504 )
$ (4,414,632 ) � Net loss attributable to common stockholders per
share - basic and diluted $ (0.22 ) $ (0.43 ) $ (0.51 ) $ (0.90 ) �
Weighted average shares outstanding - basic and diluted 13,975,690
5,112,639 13,647,881 4,915,880 � (1) Amounts include stock-based
compensation expense, as follows: � Three Months Ended Nine Months
Ended December 31, December 31, 2007 2006 2007 2006 � Cost of
revenues $ 224,549 $ 177,752 $ 512,589 $ 233,030 Research and
development 138,821 169,434 257,568 206,573 Sales and marketing
691,648 377,434 1,273,498 513,575 General and administrative �
588,132 � � 274,438 � � 1,432,159 � � 533,480 � $ 1,643,150 � $
999,058 � $ 3,475,814 � $ 1,486,658 � � Salary.com, Inc. Condensed
Consolidated Statements of Cash Flows � Three Months Ended � Nine
Months Ended December 31, December 31, 2007 � 2006 2007 � 2006
(unaudited) (unaudited) Cash flows from operating activities: Net
loss $ (3,084,243 ) $ (2,047,345 ) $ (6,959,504 ) $ (4,027,634 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 871,087 225,848 1,852,672
657,539 Stock-based compensation 1,643,150 999,058 3,475,814
1,486,658 Other non-cash items 44,620 209,477 312,975 259,926
Change in operating assets and liabilities � 2,831,709 � �
2,020,850 � � 6,730,446 � � 3,600,528 � Net cash provided by
operating activities � 2,306,323 � � 1,407,888 � � 5,412,403 � �
1,977,017 � � Cash flows from investing activities: Cash paid for
acquisition of business (3,687,925 ) (292,500 ) (15,666,510 )
(660,000 ) Cash paid for intangible assets (2,160,181 ) (1,500,000
) (2,382,906 ) (1,500,000 ) Increase in restricted cash (431,323 )
- (731,323 ) - Purchases of property and equipment (34,949 )
(359,687 ) (216,106 ) (948,110 ) Capitalization of software
development costs � (48,084 ) � (30,991 ) � (282,513 ) � (124,147 )
Net cash used in investing activities � (6,362,462 ) � (2,183,178 )
� (19,279,358 ) � (3,232,257 ) � Cash flows from financing
activities: Net proceeds from exercise (buyback) of common stock
options and warrants 225,021 386,486 463,995 635,773 Net proceeds
from revolving lines of credit - 527,778 - 3,527,778 Stock issuance
costs � - � � (1,899,825 ) � - � � (1,899,825 ) Net cash provided
by (used in) financing activities � 225,021 � � (985,561 ) �
463,995 � � 2,263,726 � � Effect of exchange rate changes on cash
and cash equivalents � (2,911 ) � - � � (3,236 ) � - � Increase
(decrease) in cash and cash equivalents (3,834,029 ) (1,760,851 )
(13,406,196 ) 1,008,486 � Cash and cash equivalents, beginning of
period � 39,444,222 � � 4,583,052 � � 49,016,389 � � 1,813,715 � �
Cash and cash equivalents, end of period $ 35,610,193 � $ 2,822,201
� $ 35,610,193 � $ 2,822,201 � � Salary.com, Inc. Reconciliation of
Non-GAAP Measures � Three Months Ended � Nine Months Ended December
31, December 31, 2007 � 2006 2007 � 2006 (unaudited) (unaudited)
(unaudited) (unaudited) Reconciliation of GAAP loss from operations
to non-GAAP loss from operations: � Loss from operations $
(3,550,797 ) $ (2,021,499 ) $ (8,446,446 ) $ (3,954,127 )
Amortization of intangible assets 320,938 24,250 736,489 101,748
Amortization of intangible assets (included in cost of revenues)
272,080 - 306,948 - Stock-based compensation � 1,643,150 � �
999,058 � � 3,475,814 � � 1,486,658 � Non-GAAP loss from operations
$ (1,314,629 ) $ (998,191 ) $ (3,927,195 ) $ (2,365,721 ) �
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 $ (3,084,243 ) $
(2,176,344 ) $ (6,959,504 ) $ (4,414,632 ) Accretion of preferred
stock - 128,999 - 386,998 Amortization of intangible assets 320,938
24,250 736,489 101,748 Amortization of intangible assets (included
in cost of revenues) 272,080 - 306,948 - Stock-based compensation �
1,643,150 � � 999,058 � � 3,475,814 � � 1,486,658 � Non-GAAP net
loss attributable to common stockholders $ (848,075 ) $ (1,024,037
) $ (2,440,253 ) $ (2,439,228 ) � Non-GAAP net loss attributable to
common stockholders per share $ (0.06 ) $ (0.20 ) $ (0.18 ) $ (0.50
) � Weighted average shares outstanding - basic and diluted
13,975,690 5,112,639 13,647,881 4,915,880 � Reconciliation of GAAP
cash flow from operations to non-GAAP free cash flow: � GAAP cash
flow from operations $ 2,306,323 $ 1,407,888 $ 5,412,403 $
1,977,017 Purchases of property and equipment (34,949 ) (359,687 )
(216,106 ) (948,110 ) Capitalization of software development costs
� (48,084 ) � (30,991 ) � (282,513 ) � (124,147 ) Free cash flow $
2,223,290 � $ 1,017,210 � $ 4,913,784 � $ 904,760 � 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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