Salary.com, Inc. (NASDAQ: SLRY), a leading provider of on-demand
HRMS/payroll, compensation and talent management solutions, today
announced financial results for its third quarter of fiscal 2009,
which ended December 31, 2008. Revenue in the third quarter was
$11.0 million, an increase of 20% over the third quarter of fiscal
2008. Bookings were $14.4 million, an increase of 21% over the
third quarter of fiscal 2008.
Kent Plunkett, founder and chief executive officer stated,
�Salary.com�s third quarter results were highlighted by our 31st
quarter of consecutive revenue growth. During the quarter we made a
significant strategic investment and broadened our product
footprint with the acquisition of Genesys Software Systems,
positioning us uniquely in the marketplace.� Plunkett continued,
"Our recent cost reduction program demonstrates that we remain
committed to achieving positive operating cash flow in fiscal 2010.
We will continue to manage expenses aggressively against the
difficult economic backdrop. We believe this discipline, combined
with our solid financial position, recurring revenue model, and our
best-in-breed transactional and strategic talent management
solutions, enhances Salary.com�s long-term position as a leader in
the on-demand HCM space.�
Third Quarter of Fiscal 2009 Financial Summary
- Third quarter fiscal 2009
revenue was $11.0 million.
- On a GAAP basis, for the third
quarter of fiscal 2009, Salary.com reported a net loss of $5.2
million, or ($0.33) per diluted share, compared to a net loss of
$3.1 million, or ($0.22) per diluted share, in the third quarter of
fiscal 2008.
- On a non-GAAP basis, excluding
the impact of stock-based compensation expense and amortization of
intangibles, for the third quarter of fiscal 2009, Salary.com
reported a net loss of $2.6 million, or ($0.16) per diluted share,
compared to a net loss of $848,000, or ($0.06) per diluted share,
in the third quarter of fiscal 2008.
- Cash and cash equivalents at the
end of the third quarter of fiscal 2009 were $23.5 million,
compared to $28.0 million at September 30, 2008.
- Current deferred revenue grew to
$25.3 million at the end of the third quarter of fiscal 2009, an
increase from $22.2 million at the end of the second quarter. Total
deferred revenue was $27.3 million at the end of the third quarter,
an increase from $24.0 million at September 30, 2008 and $23.3
million at June 30, 2008.
- Cash flow from operations was a
net outflow of $3.7 million in the third quarter of fiscal
2009.
Business Highlights
- Salary.com added over 250 new
enterprise customers in the third quarter of fiscal 2009, bringing
enterprise customer count to over 3,500 (including 29% of the
Fortune 500).
- New customer additions in the
third quarter of fiscal 2009 included Burlington Coat Factory
Warehouse Corporation, Live Nation, Inc., OfficeMax, Inc.,
PerkinElmer, Inc., and Xerox Corporation.
- Lisa Rowan, Program Director of
HR Learning & Talent Strategies at IDC highlighted Salary.com
in her most recent IDC MarketScape: Worldwide Integrated Talent
Management 2008 Vendor Analysis, saying �Salary.com�s strengths
include deep compensation data and functionality, a strong
competency framework and available libraries, affordability for
partners and a broad partner base. Salary.com has the opportunity
to present itself as an affordable alternative and will benefit
from breadth of capability as it continues to fill out its
suite."
- In December, Salary.com�s board
of directors authorized a $2.5 million share repurchase program.
During the third quarter, Salary.com repurchased approximately
25,000 shares at an average purchase price of $2.10. The company
remains active in repurchasing shares.
- In December, Salary.com acquired
Genesys Software Systems, a leading provider of on-demand human
resource management systems (HRMS), benefits and payroll services.
The acquisition broadens Salary.com�s product suite to add
transactional talent management solutions to the company�s
strategic talent management products and services.
Business Outlook
Bryce Chicoyne, Salary.com�s chief financial officer said, �We
are pleased with the company�s solid revenue growth in the third
quarter and believe the steps we took to lower our cost structure
will allow Salary.com to achieve positive operating cash flow in
fiscal 2010. Salary.com�s growing leadership position in talent
management and compensation management, broadening product lines,
acquisition of Genesys, and prudent cost management provide us
confidence that Salary.com will successfully execute through this
difficult economic environment and emerge well positioned for
long-term success.�
For the fourth quarter of fiscal 2009, Salary.com expects total
revenue in the range of $11.0 million to $11.8 million. Non-GAAP
net loss, which excludes non-cash stock-based compensation expenses
of approximately $3.3 million, amortization of intangibles of
approximately $1.2 million and severance charges of approximately
$1.0 million, is expected to be in the range of $3.2 million to
$4.0 million. GAAP net loss for the fourth quarter of fiscal 2009
is expected to be in the range of $8.7 million to $9.5 million.
Weighted average diluted shares for the quarter are estimated to be
approximately 16.1 million shares.
Salary.com expects full year revenue in fiscal 2009 to be in the
range of $42.2 million to $43.0 million. Non-GAAP net loss, which
excludes non-cash impact of stock-based compensation expense of
approximately $9.4 million, amortization of intangibles of
approximately $3.7 million and severance charges of approximately
$1.0 million, is expected to be in the range of $12.2 million to
$13.0 million. On a GAAP basis, net loss for fiscal 2009 is
expected to be in the range of $26.3 million to $27.1 million.
Weighted average diluted shares for the year are estimated to be
approximately 15.5 million shares.
Conference call
� What: Salary.com third quarter financial results conference call
and webcast When: Thursday, February 5, 2009 Time: 5:00 PM ET Live
Call: (888) 337-8168, domestic (719) 325-2479, international
Replay: (888) 203-1112, conference ID 2013014, domestic (719)
457-0820, conference ID 2013014, international Webcast:
http://investor.salary.com/events.cfm (live and replay)
About Salary.com, Inc.
Salary.com is a leading provider of on-demand HRMS/payroll
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, learning and development,
payroll, 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 within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. 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,
the impact of a global economic recession and uncertainty in the
information technology spending environment, potential disruption
to our business from our workforce reduction, 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 or our expectations for Non-GAAP net
loss, 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, our ability to
generate additional revenues from our investments in sales and
marketing, 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)
� � �
Exhibit 1
�
Salary.com, Inc. Condensed Consolidated Balance
Sheets (in thousands, unaudited) �
December 31,
March 31, ASSETS 2008 2008 Current
assets: Cash and cash equivalents $ 23,474 $ 37,727 Accounts
receivable, net of allowance for doubtful accounts 7,470 4,734
Prepaid expenses and other current assets � 2,030 � 1,922 Total
current assets before funds held for clients 32,974 44,383 Funds
held for clients � 11,561 � - Total current assets � 44,535 �
44,383 � Property, equipment and software, net 3,007 1,566 Goodwill
and intangible assets, net 33,000 19,091 Other assets � 1,726 �
1,169 Total assets $ 82,268 $ 66,209 �
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and
accrued compensation $ 3,342 $ 4,681 Accrued expenses and other
current liabilities 3,419 3,146 Revolving credit facility 7,300 -
Deferred revenue, current portion � 25,317 � 20,523 Total current
liabilities before client funds obligations 39,378 28,350 Client
funds obligations � 11,561 � - Total current liabilities � 50,939 �
28,350 � Deferred revenue, net of current portion 1,986 1,510 Long
term liabilities � 1,785 � 181 Total liabilities � 54,710 � 30,041
� Total stockholders' equity Total stockholders' equity � 27,558 �
36,168 Total liabilities and stockholders' equity $ 82,268 $ 66,209
�
Exhibit 2
�
Salary.com, Inc. Consolidated Statements of
Operations (in thousands, unaudited) � � � � � � �
Three Months Ended Nine Months Ended December
31, December 31, �
2008 � �
2007 � �
2008 � �
2007 � Revenues: Subscription revenues $
10,267 $ 8,505 $ 29,115 $ 23,044 Advertising revenues � 735 � � 681
� � 2,048 � � 2,149 � Total revenues 11,002 9,186 31,163 25,193 �
Cost of revenues (1) � 2,961 � � 2,208 � � 9,333 � � 5,714 � Gross
profit � 8,041 � � 6,978 � � 21,830 � � 19,479 � � Operating
expenses: Research and development (1) 2,211 1,368 6,317 3,478
Sales and marketing (1) 6,715 5,242 20,357 13,568 General and
administrative (1) 3,749 3,598 11,726 10,144 Amortization of
intangible assets � 495 � � 321 � � 1,288 � � 736 � Total operating
expenses � 13,170 � � 10,529 � � 39,688 � � 27,926 � Loss from
operations � (5,129 ) � (3,551 ) � (17,858 ) � (8,447 ) � Other
income: Interest income 61 495 518 1,570 Other income (expense) �
(52 ) � 21 � � (109 ) � 56 � Total other income � 9 � � 516 � � 409
� � 1,626 � Loss before provision for income taxes (5,120 ) (3,035
) (17,449 ) (6,821 ) Provision for income taxes � 36 � � 49 � � 179
� � 139 � Net loss $ (5,156 ) $ (3,084 ) $ (17,628 ) $ (6,960 ) �
Net loss per share - basic and diluted $ (0.33 ) $ (0.22 ) $ (1.17
) $ (0.51 ) � Weighted average shares outstanding - basic and
diluted 15,643 13,976 15,130 13,648 �
(1) Amounts include stock-based
compensation expense, asfollows:
Three Months Ended Nine Months Ended December
31, December 31, �
2008 � �
2007 � �
2008 � �
2007 � � Cost of revenues $ 298 $ 224 $
1,105 $ 513 Research and development 282 139 1,070 258 Sales and
marketing 574 692 2,011 1,273 General and administrative � 523 � �
588 � � 1,956 � � 1,432 � $ 1,677 � $ 1,643 � $ 6,142 � $ 3,476 � �
Exhibit 3
�
Salary.com, Inc.
Condensed Consolidated Statements of Cash Flows (in
thousands, unaudited) � � � � � � �
Three Months Ended
Nine Months Ended December 31, December 31, �
2008 � �
2007 � �
2008 � �
2007 � �
Cash flows from operating activities: Net loss $ (5,156 ) $ (3,084
) $ (17,628 ) $ (6,960 ) Adjustments to reconcile net loss to net
cash provided by (used in) operating activities: � Depreciation and
amortization 1,256 871 3,439 1,853 Stock-based compensation 1,677
1,643 6,142 3,476 Other non-cash items (93 ) 44 396 313 Change in
operating assets and liabilities � (1,420 ) � 2,832 � � 847 � �
6,730 � Net cash provided by (used in) operating activities �
(3,736 ) � 2,306 � � (6,804 ) � 5,412 � � Cash flows from investing
activities: Cash paid for acquisition of businesses, net of cash
acquired (7,024 ) (3,688 ) (12,661 ) (15,667 ) Cash paid for
intangible assets - (2,160 ) (32 ) (2,383 ) Increase in restricted
cash (5 ) (431 ) (383 ) (731 ) Purchases of property and equipment
(985 ) (35 ) (1,533 ) (216 ) Capitalization of software development
costs (18 ) (48 ) (97 ) (282 ) Net increase in assets held to
satisfy client funds obligations � (6,488 ) � - � � (6,488 ) � - �
Net cash used in investing activities � (14,520 ) � (6,362 ) �
(21,194 ) � (19,279 ) � Cash flows from financing activities: Net
proceeds from exercise (buyback) of common stock options and
warrants 47 225 142 464 Net proceeds from line of credit and notes
payable 7,235 - 7,171 - Net increase in client funds obligations �
6,488 � � - � � 6,488 � � - � Net cash provided by (used in)
financing activities � 13,770 � � 225 � � 13,801 � � 464 � � Effect
of exchange rate changes on cash and cash equivalents � (58 ) � (3
) � (56 ) � (3 ) Decrease in cash and cash equivalents (4,544 )
(3,834 ) (14,253 ) (13,406 ) � Cash and cash equivalents, beginning
of period � 28,018 � � 39,444 � � 37,727 � � 49,016 � � Cash and
cash equivalents, end of period $ 23,474 � $ 35,610 � $ 23,474 � $
35,610 � �
Exhibit 4
�
Salary.com, Inc.
Reconciliation of Non-GAAP Measures (in thousands,
unaudited) � � � � � � �
Three Months Ended Nine
Months Ended December 31, December 31, �
2008 � �
2007 � �
2008 � �
2007 �
Reconciliation of GAAP loss from operations to non-GAAP loss from
operations: � � Loss from operations $ (5,129 ) $ (3,551 ) $
(17,858 ) $ (8,446 ) Amortization of intangible assets 495 321
1,288 736 Amortization of intangible assets (included in cost of
revenues) 403 272 1,226 307 Stock-based compensation � 1,677 � �
1,643 � � 6,142 � � 3,476 � Non-GAAP loss from operations $ (2,554
) $ (1,315 ) $ (9,202 ) $ (3,927 ) � Reconciliation of GAAP net
loss to non-GAAP net loss: � GAAP net loss $ (5,156 ) $ (3,084 ) $
(17,628 ) $ (6,960 ) Amortization of intangible assets 495 321
1,288 736 Amortization of intangible assets (included in cost of
revenues) 403 272 1,226 307 Stock-based compensation � 1,677 � �
1,643 � � 6,142 � � 3,476 � Non-GAAP net loss $ (2,581 ) $ (848 ) $
(8,972 ) $ (2,441 ) � Non-GAAP net loss per share $ (0.16 ) $ (0.06
) $ (0.59 ) $ (0.18 ) � Weighted average shares outstanding - basic
and diluted 15,643 13,976 15,130 13,648 �
Exhibit 5
�
SALARY.COM Reconciliation of Certain GAAP to Non-GAAP
Financial Measures (In thousands, unaudited) � � � � � �
�
Three months ended December 31, 2008
US GAAP Results
�
Amortization of
Intangible Assets
�
Stock-based
Compensation Expense
�
Non-GAAP Results
� Cost of revenues $ 2,961 $ (403 ) $ (298 ) $ 2,260 � Research and
development expenses 2,211 - (282 ) 1,929 Sales and marketing
expenses 6,715 - (574 ) 6,141 General and administrative expenses
3,749 - (523 ) 3,226 Amortization of intangible assets � 495 � (495
) � - � � - Total operating expenses $ 13,170 $ (495 ) $ (1,379 ) $
11,296 �
Three months ended December 31, 2007
US GAAP Results
�
Amortization of
Intangible Assets
�
Stock-based
Compensation Expense
�
Non-GAAP Results
� Cost of revenues $ 2,208 $ (272 ) $ (224 ) $ 1,712 � Research and
development expenses 1,368 - (139 ) 1,229 Sales and marketing
expenses 5,242 - (692 ) 4,550 General and administrative expenses
3,598 - (588 ) 3,010 Amortization of intangible assets � 321 � (321
) � - � � - Total operating expenses $ 10,529 $ (321 ) $ (1,419 ) $
8,789 � �
Nine months ended December 31, 2008
US GAAP Results
�
Amortization of
Intangible Assets
�
Stock-based
Compensation Expense
�
Non-GAAP Results
� Cost of revenues $ 9,333 $ (1,226 ) $ (1,105 ) $ 7,002 � Research
and development expenses 6,317 - (1,070 ) 5,247 Sales and marketing
expenses 20,357 - (2,011 ) 18,346 General and administrative
expenses 11,726 - (1,956 ) 9,770 Amortization of intangible assets
� 1,288 � (1,288 ) � - � � - Total operating expenses $ 39,688 $
(1,288 ) $ (5,037 ) $ 33,363 � �
Nine months ended December 31,
2008
US GAAP Results
�
Amortization of
Intangible Assets
�
Stock-based
Compensation Expense
�
Non-GAAP Results
� Cost of revenues $ 5,714 $ (307 ) $ (513 ) $ 4,894 � Research and
development expenses 3,477 - (258 ) 3,219 Sales and marketing
expenses 13,568 - (1,273 ) 12,295 General and administrative
expenses 10,144 - (1,432 ) 8,712 Amortization of intangible assets
� 736 � (736 ) � - � � - Total operating expenses $ 27,925 $ (736 )
$ (2,963 ) $ 24,226 �
Exhibit 6
�
Salary.com, Inc. Reconciliation of Non-GAAP
Measures (in thousands, unaudited) � � �
Three Months
Ended December 31, �
2008 �
2007
Calculated bookings: � Revenue $ 11,002 $ 9,186 Change in deferred
revenue � 3,350 � 2,647 Calculated bookings $ 14,352 $ 11,833
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 severance costs. By excluding these
non-cash and non-recurring 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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