Salary.com, Inc. (NASDAQ: SLRY), a leading provider of on-demand
compensation and talent management solutions, today announced
financial results for its fourth quarter and full year fiscal 2008,
which ended March 31, 2008. Revenue in the fourth quarter was $9.3
million, an increase of 46% from the fourth quarter of fiscal 2007.
For the full year fiscal 2008, revenue of $34.5 million increased
50% compared to fiscal 2007. Cash flow from operations in the
fourth quarter of 2008 was a record $3.0 million, compared to $1.1
million in the fourth quarter of fiscal 2007. For the twelve months
ended March 31, 2008, cash flow from operations was $8.4 million,
an increase of 175% from fiscal 2007. Kent Plunkett, founder and
chief executive officer stated, �Salary.com continues to expand its
position as a leading provider of on-demand compensation and talent
management solutions. In the fourth quarter we delivered our 28th
consecutive quarter of revenue growth as we continued to deliver on
our growth strategy. In fiscal 2008 we posted 50% revenue growth
year over year and a 23% free cash flow margin, for an operating
performance in the top group among on-demand software companies.�
Today, Salary.com also announced the appointment of Bryce Chicoyne
as chief financial officer replacing Chris Power. There are no
known disagreements with Mr. Power on any matters relating to
Salary.com�s operations, policies or practices. �We are excited to
have Bryce join our team. Bryce�s skills in building strong finance
teams at growing technology companies make him an ideal fit for
Salary.com�s culture and stage of growth. Bryce will be an asset to
Salary.com as we continue our pace of rapid growth and expand our
market leadership position. We look forward to officially welcoming
Bryce during our fourth quarter 2008 earnings conference call
today,� said Plunkett. Chicoyne is a seasoned financial executive
and has extensive experience leading international financial
operations, completing acquisitions and developing strong financial
infrastructure for public companies. Mr. Chicoyne joins Salary.com
from Harvard Bioscience (NASDAQ: HBIO), where he held the position
of Chief Financial Officer from 2004 to 2008. In this role, he led
the successful acquisition of an international company, implemented
systems to comply with Section 404 of the Sarbanes-Oxley Act, and
built a strong finance team. During his tenure at Harvard
Bioscience, the company grew annual revenue nearly 30% to $83
million. �This is a great time to join the Salary.com team. I
believe that the company is well positioned to take advantage of
significant growth opportunities. I look forward to leading the
financial organization during this period of high growth,� said
Chicoyne. Fourth Quarter Financial Highlights -- Fourth quarter
revenue of $9.3 million. -- Record cash flow from operations of
$3.0 million in the quarter and free cash flow, a non-GAAP measure,
of $2.9 million. Cash flow from operations for the full year 2008
was $8.4 million, above Salary.com�s prior outlook. -- On a GAAP
basis, Salary.com reported fourth quarter fiscal 2008 net loss
attributable to common stockholders of $3.6 million, or ($0.26) per
diluted share, compared to a net loss of $4.1 million, or ($0.44)
per diluted share, in the fourth 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 $1.2 million, or ($0.09) per diluted share, in the
fourth quarter of fiscal 2008, compared to a net loss of $1.1
million, or ($0.12) per diluted share, in the fourth quarter of
fiscal 2007. -- Cash and cash equivalents at the end of the fourth
quarter of fiscal 2008 were $37.7 million, compared to $35.6
million at the end of the third quarter, with the increase
primarily resulting from healthy cash flow from operations in the
quarter. -- Current deferred revenue grew to $20.5 million at the
end of the fourth quarter, an increase from $19.4 million at the
end of the third quarter. Total deferred revenue was $22.0 million
at the end of the fourth quarter, which represented an increase
from $20.9 million at the end of the third quarter. Business
Highlights -- During the fourth quarter, Salary.com added nearly
240 new enterprise subscribers. Over the course of 2008, Salary.com
grew its enterprise customer base from over 1,800 to nearly 2,800
in fiscal 2008. -- New customer additions in the fourth quarter
included marquee names such as Applied Materials, Bertelsmann, Inc,
Greyhound Lines, Inc., Goya Foods, Martha Stewart Omnimedia, Scotts
Miracle-Gro, Singapore Airlines, and Rolex Watch USA. -- In March
2008, Salary.com released its first international dataset within
the existing CompAnalyst market pricing suite in Canada and
completed its first implementation. The Canadian version of
CompAnalyst will allow employers to market jobs in Canada using a
single, employer reported source of data and includes features such
as comparison data represented in Canadian dollars and
comprehensive data for over 600 benchmark job titles across 21
industries. -- Also in March, Salary.com announced that it
successfully earned the SAS 70 Type II Certification, an
internationally recognized auditing standard developed by the
American Institute of Certified Public Accountants (AICPA). -- As
announced April 16, 2008, Salary.com released the Hybrid Job
Valuation Report Tool, an enhancement to the Job Valuation Report,
to enable HR professionals and employers to accurately value
blended or hybrid jobs within their organizations to ensure
competitive pay packages for non-traditional positions. -- Also in
April, Salary.com announced the expansion of its talent management
offering with the launch of TalentManager� Professional Edition for
small and medium sized businesses. The professional edition is
specifically designed for the needs of small and medium sized
businesses with fewer than 500 full-time employees and aims to make
pay and performance processes easy and hassle free. -- Salary.com
announced key strategic alliances with Convergys Customer
Management Group Inc., InfoBasis Ltd. and Compensation Resources
Inc. to offer enhanced solutions and consulting services.
Salary.com will leverage partners to offer a full-suite of
content-rich compensation and talent management software and
advisory services to help customers deploy strategic talent
management initiatives and increase return on human capital
investment. Business Outlook Kent Plunkett, founder and chief
executive officer commented, �In fiscal 2009 we plan to
significantly increase our investment in sales and marketing to
pursue the large market opportunity we see for our expanded product
line in an underpenetrated market. While these investments will
have a near-term impact on operating cash flow and net income, we
believe they will accelerate the pace at which we will be able to
realize our longer-term growth objectives. We expect these
investments to allow Salary.com to grow our annual revenue to
between $65 and $72 million and increase our annual operating cash
flow to between $10 and $12 million by the end of fiscal 2010.
Additionally, we anticipate that these investments will position us
to achieve non-GAAP profitability in fiscal 2011.� For the first
quarter of fiscal 2009, Salary.com expects total revenue in the
range of $9.3 to $9.7 million. Non-GAAP net loss, which excludes
non-cash stock-based compensation expenses of approximately $2.2
million and amortization of intangibles of approximately $0.8
million, is expected to be in the range of $3.5 to $3.9 million.
GAAP loss for the first quarter of fiscal 2009 is expected to be in
the range of $6.5 to $6.9 million. Weighted average shares for the
quarter are estimated to be approximately 14.6 million shares.
Salary.com expects total revenue in fiscal 2009 to be in the range
of $45.0 to $49.0 million. Due to the increased investment in sales
and marketing mentioned above, cash flow from operations is
expected to be in the range of $0 to $1.0 million for the full
fiscal year. Non-GAAP net loss, which excludes non-cash impact of
stock-based compensation expense of approximately $9.0 million and
amortization of intangibles of approximately $3.0 million, is
expected to be in the range of $10.0 to $13.0 million. On a GAAP
basis, net loss for fiscal 2009 is expected to be in the range of
$22.0 to $25.0 million. Weighted average basic shares for the year
are estimated to be approximately 15.1 million shares. Conference
call � What: � Salary.com fourth quarter and fiscal year 2008
financial results conference call and webcast When: Wednesday, May
14, 2008 Time: 5:00 PM ET Live Call: (877) 397-0300, domestic (719)
325-4921, international Replay: (888) 203-1112, conference ID
7435715, domestic (719) 457-0820, conference ID 7435715,
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�s
highly configurable software applications, proprietary data and
consulting services help HR and compensation professionals
automate, streamline and optimize critical talent management
processes including: market pricing, compensation planning,
performance management, competency management and succession
planning. Built with compensation and competency data at the core,
Salary.com solutions provide businesses of all sizes with the most
productive and cost-effective way to manage and inspire their most
important asset � their people. 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 March 31, March 31, 2008 2007 ASSETS (unaudited)
Current assets: Cash and cash equivalents $ 37,726,997 $ 49,016,389
Accounts receivable, net of allowance for doubtful accounts
4,734,059 3,364,931 Prepaid expenses and other current assets
1,080,056 891,483 Deferred customer acquisition costs � 842,417 �
919,080 Total current assets � 44,383,529 � 54,191,883 � Property,
equipment and software, net 1,566,410 1,937,250 Goodwill and
intangible assets, net 19,091,172 2,189,632 Other assets �
1,168,403 � 356,708 Total assets $ 66,209,514 $ 58,675,473 �
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable and accrued compensation $ 4,681,387 $ 2,506,311 Accrued
expenses and other current liabilities 2,764,673 1,104,714
Subscription payable 381,571 693,638 Deferred revenue, current
portion � 20,523,225 � 15,506,966 Total current liabilities �
28,350,856 � 19,811,629 � Deferred revenue, net of current portion
1,509,573 880,688 Long term liabilities � 180,800 � - Total
liabilities � 30,041,229 � 20,692,317 � Total stockholders' equity
Total stockholders' equity � 36,168,285 � 37,983,156 Total
liabilities and stockholders' equity $ 66,209,514 $ 58,675,473
Salary.com, Inc. � � � Consolidated Statements of Operations �
Three Months Ended Year Ended March 31, March 31, 2008 2007 2008
2007 (unaudited) (unaudited) Revenue: Subscription revenues $
8,507,552 $ 5,738,251 $ 31,551,867 $ 20,502,788 Advertising
revenues � 806,232 � � 660,987 � � 2,955,331 � � 2,531,259 � Total
revenues 9,313,784 6,399,238 34,507,198 23,034,047 � Cost of
revenues (1) � 2,515,602 � � 1,676,726 � � 8,229,158 � � 5,334,018
� Gross profit � 6,798,182 � � 4,722,512 � � 26,278,040 � �
17,700,029 � � Operating expenses: Research and development (1)
1,463,853 1,308,462 4,941,351 4,115,635 Sales and marketing (1)
5,395,047 3,744,375 18,963,042 12,792,121 General and
administrative (1) 3,354,457 3,947,210 13,498,787 8,922,186
Amortization of intangible assets � 389,374 � � 24,250 � �
1,125,863 � � 125,998 � Total operating expenses � 10,602,731 � �
9,024,297 � � 38,529,043 � � 25,955,940 � � Loss from operations �
(3,804,549 ) � (4,301,785 ) � (12,251,003 ) � (8,255,911 ) � Other
income (expense): Interest income 336,410 291,244 1,906,172 297,690
Interest expense - (37,956 ) - (115,595 ) Other income (expense) �
(104,471 ) � (5,696 ) � (48,387 ) � (8,010 ) Total other income
(expense) � 231,939 � � 247,592 � � 1,857,785 � � 174,085 � Loss
before provision for income taxes (3,572,610 ) (4,054,193 )
(10,393,218 ) (8,081,826 ) Provision for income taxes � 65,900 � �
- � � 204,800 � � - � Net loss (3,638,510 ) (4,054,193 )
(10,598,018 ) (8,081,826 ) Accretion of preferred stock � - � �
(83,800 ) � - � � (470,796 ) Net loss attributable to common
stockholders $ (3,638,510 ) $ (4,137,993 ) $ (10,598,018 ) $
(8,552,622 ) � Net loss attributable to common stockholders per
share - basic and diluted $ (0.26 ) $ (0.44 ) $ (0.77 ) $ (1.42 ) �
Weighted average shares outstanding - basic and diluted 14,226,574
9,405,024 13,791,680 6,022,792 � (1) Amounts include stock-based
compensation expense, as follows: � Three Months Ended Year Ended
March 31, March 31, � 2008 � � 2007 � � 2008 � � 2007 � � Cost of
revenues $ 287,764 $ 204,147 $ 800,353 $ 437,177 Research and
development 201,112 298,036 458,680 504,609 Sales and marketing
504,266 472,515 1,777,764 986,090 General and administrative �
660,281 � � 1,903,955 � � 2,092,440 � � 2,437,435 � $ 1,653,423 � $
2,878,653 � $ 5,129,237 � $ 4,365,311 � Salary.com, Inc. � �
Condensed Consolidated Statements of Cash Flows � Three Months
Ended Year Ended March 31, March 31, 2008 2007 2008 2007
(unaudited) (unaudited) Cash flows from operating activities: Net
loss $ (3,638,510 ) $ (4,054,193 ) $ (10,598,018 ) $ (8,081,826 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 932,900 317,283 2,785,576
974,822 Stock-based compensation 1,653,423 2,878,653 5,129,237
4,365,311 Other non-cash items (8,790 ) 3,471 304,185 263,397
Change in operating assets and liabilities � 4,076,179 � �
1,945,106 � � 10,806,625 � � 5,545,634 � Net cash provided by
operating activities � 3,015,202 � � 1,090,320 � � 8,427,605 � �
3,067,338 � � Cash flows from investing activities: Cash paid for
acquisition of business (700,000 ) - (16,366,510 ) (660,000 ) Cash
paid for intangible assets (22,181 ) (42,776 ) (2,405,087 )
(1,542,776 ) Increase in restricted cash (7,383 ) - (738,706 ) -
Purchases of property and equipment (35,753 ) (353,232 ) (251,859 )
(1,301,342 ) Capitalization of software development costs �
(107,704 ) � (144,753 ) � (390,218 ) � (268,900 ) Net cash used in
investing activities � (873,021 ) � (540,761 ) � (20,152,380 ) �
(3,773,018 ) � Cash flows from financing activities: Net proceeds
from initial public offering - 49,923,141 - 48,023,316 Net proceeds
from exercise (buyback) of common stock options and warrants
(24,676 ) 49,932 439,320 685,704 Net repayments from revolving
lines of credit and term loan � - � � (4,327,778 ) � - � � (800,000
) Net cash provided by (used in) financing activities � (24,676 ) �
45,645,295 � � 439,320 � � 47,909,020 � � Effect of exchange rate
changes on cash and cash equivalents � (701 ) � (666 ) � (3,937 ) �
(666 ) Increase (decrease) in cash and cash equivalents 2,116,804
46,194,188 (11,289,392 ) 47,202,674 � Cash and cash equivalents,
beginning of period � 35,610,193 � � 2,822,201 � � 49,016,389 � �
1,813,715 � � Cash and cash equivalents, end of period $ 37,726,997
� $ 49,016,389 � $ 37,726,997 � $ 49,016,389 � Salary.com, Inc. � �
� Reconciliation of Non-GAAP Measures � Three Months Ended Year
Ended March 31, March 31, 2008 2007 2008 2007 (unaudited)
(unaudited) (unaudited) (unaudited) Reconciliation of GAAP loss
from operations to non-GAAP loss from operations: � Loss from
operations $ (3,804,549 ) $ (4,301,785 ) $ (12,251,003 ) $
(8,255,911 ) Amortization of intangible assets 389,374 24,250
1,125,863 125,998 Amortization of intangible assets (included in
cost of revenues) 365,018 7,146 671,966 27,146 Stock-based
compensation � 1,653,423 � � 2,878,653 � � 5,129,237 � � 4,365,311
� Non-GAAP loss from operations $ (1,396,734 ) $ (1,391,736 ) $
(5,323,937 ) $ (3,737,456 ) � 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 $ (3,638,510 ) $ (4,137,993 ) $ (10,598,018
) $ (8,552,622 ) Accretion of preferred stock - 83,800 - 470,796
Amortization of intangible assets 389,374 24,250 1,125,863 125,998
Amortization of intangible assets (included in cost of revenues)
365,018 7,146 671,966 27,146 Stock-based compensation � 1,653,423 �
� 2,878,653 � � 5,129,237 � � 4,365,311 � Non-GAAP net loss
attributable to common stockholders $ (1,230,695 ) $ (1,144,144 ) $
(3,670,952 ) $ (3,563,371 ) � Non-GAAP net loss attributable to
common stockholders per share $ (0.09 ) $ (0.12 ) $ (0.27 ) $ (0.59
) � Weighted average shares outstanding - basic and diluted
14,226,574 9,405,024 13,791,680 6,022,792 � Reconciliation of GAAP
cash flow from operations to non-GAAP free cash flow: � GAAP cash
flow from operations $ 3,015,202 $ 1,090,320 $ 8,427,605 $
3,067,338 Purchases of property and equipment (35,753 ) (353,232 )
(251,859 ) (1,301,342 ) Capitalization of software development
costs � (107,704 ) � (144,753 ) � (390,218 ) � (268,900 ) Free cash
flow $ 2,871,745 � $ 592,335 � $ 7,785,528 � $ 1,497,096 � 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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