Exhibit 99.1
Salary.com™ Reports Record Financial Results for Third Quarter 2008
Third quarter revenue up 52% on a year-over-year basis;
Record quarterly operating cash flow of $2.3 million reported
WALTHAM, Mass. – January 31, 2008 – 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, visitwww.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)
Contact:
Media:
Schwartz Communications
Bill Keeler, 781-684-0770
Investors:
Salary.com, Inc.
Chris Power, CFO, 781-464-7889
or
Integrated Corporate Relations
Garo Toomajanian, 781-464-7340
Salary.com, Inc.
Condensed Consolidated Balance Sheets
| December 31, 2007 | March 31, 2007 | |||||
| (unaudited) | ||||||
ASSETS | ||||||
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 | ||||
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 December 31, | Nine Months Ended 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 December 31, | Nine Months Ended 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 December 31, | Nine Months Ended 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 December 31, | Nine Months Ended 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.