Exhibit 99.1
Salary.com™ Reports 30th Consecutive Quarter of Revenue Growth
WALTHAM, Mass. – November 5, 2008 – Salary.com, Inc. (NASDAQ: SLRY), a leading provider of on-demand compensation and talent management solutions, today announced financial results for its second quarter of fiscal 2009, which ended September 30, 2008. Revenue in the second quarter was $10.5 million, an increase of 25% over the second quarter of fiscal 2008. Bookings were $11.2 million, an increase of 15% over the second quarter of fiscal 2008.
Kent Plunkett, founder and chief executive officer stated, “We are pleased to have met our top and bottom line objectives in the second quarter of fiscal 2009. During the quarter, Salary.com added over 400 new enterprise customers and expanded our product offerings with the acquisition of InfoBasis. In addition, our products are being more widely recognized by human capital management (HCM) industry analysts as a leader in integrated talent management. As a result, we believe that Salary.com is well positioned to weather the difficult economic environment and emerge with a strong market position and fundamental business.”
Second Quarter of Fiscal 2009 Financial Summary
| • | Second quarter fiscal 2009 revenue was $10.5 million. |
| • | On a GAAP basis, for the second quarter of fiscal 2009, Salary.com reported a net loss of $6.3 million, or ($0.42) per diluted share, compared to a net loss of $2.5 million, or ($0.18) per diluted share, in the second quarter of fiscal 2008. |
| • | On a non-GAAP basis, excluding the impact of stock-based compensation expense and amortization of intangibles, for the second quarter of fiscal 2009, Salary.com reported a net loss of $3.0 million, or ($0.19) per diluted share, compared to a net loss of $1.0 million, or ($0.08) per diluted share, in the second quarter of fiscal 2008. |
| • | Cash and cash equivalents at the end of the second quarter of fiscal 2009 were $28.0 million, compared to $34.7 million at end June 30, 2008, with the decrease primarily due to our acquisition of InfoBasis in August 2008 and our increased sales and marketing expenditures to fund previously disclosed growth initiatives. |
| • | Current deferred revenue grew to $22.2 million at the end of the second quarter of fiscal 2009, an increase from $22.0 million at the end of the first quarter. Total deferred revenue was $24.0 million at the end of the second quarter, an increase from $23.3 million at June 30, 2008 and $22.0 million at March 31, 2008. |
| • | Cash flow from operations was a net outflow of $1.0 million in the second quarter of fiscal 2009 and free cash flow, a non-GAAP measure, was an outflow of $1.2 million. |
Business Highlights
| • | Salary.com added over 400 new enterprise customers in the second quarter of fiscal 2009, bringing our enterprise customer count to over 3,300 (including 29% of the Fortune 500). |
| • | New customer additions in the second quarter of fiscal 2009 included Bissell Inc., Charles River Laboratories, Inc., Klipsch LLC, Snap-On Incorporated, Sony Pictures Entertainment, and Velcro Group Corporation. |
| • | In August, Salary.com acquired InfoBasis Limited, a leading competency-based, learning and development software company located in the United Kingdom for approximately $5 million. The |
acquisition broadens Salary.com’s product suite to include learning and development solutions, as well as increasing its global reach. |
• | In August, Salary.com announced a number of important new subscribers to its executive compensation benchmarking software, CompAnalyst Executive®. These customers include Guess?, Inc., Sonoco Products Company, Union Pacific Corp., and Cap, Inc. Also of note, Frederic W. Cook & Co., Inc. joined the list of consulting firms using Salary’s CompAnalyst Executive product. |
• | Express, a multi-channel retail brand with more than 580 stores across the United States, selected Salary.com’s TalentManager® solution to improve its employee performance review process, better manage compensation administration and more strategically link employee pay to performance. |
• | In the third quarter, Temper-Pedic International, Inc. chose Salary.com’s CompAnalyst® Market Data product to market internal positions and ensure they are paying competitive compensation for their industry and geographic markets. |
| • | In October, Salary.com was recognized by Bersin & Associates as an outstanding provider in a recent study on “The Essentials of Performance Management Practices.” Salary.com was also recognized by Human Resource Executive magazine who named Salary.com’s TalentManager Succession Planning top product of the year. |
Business Outlook
Bryce Chicoyne, Salary.com’s chief financial officer said, “Based on recent progress with our sales and marketing initiatives and the recognition of the company and its products as market leaders, we remain confident in the near- and long-term prospects for Salary.com. While we are seeing positive signs in our business despite an increasingly difficult economic environment, we are carefully balancing investments in our sales and marketing initiatives with expense management. Our management team remains committed to exiting the year with positive operating cash flow.”
For the third quarter of fiscal 2009, Salary.com expects total revenue in the range of $11.0 million to $11.5 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 $3.0 million to $3.5 million. GAAP net loss for the third quarter of fiscal 2009 is expected to be in the range of $6.0 to $6.5 million. Weighted average diluted shares for the quarter are estimated to be approximately 15.6 million shares.
Salary.com expects our full year revenue in fiscal 2009 to be in the range of $43.0 to $46.0 million, and cash flow from operations is expected to be a net outflow in the range of $2.0 million to $5.0 million, taking into consideration that the company has already experienced a cash outflow of $3.0 million in the first half of the 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 $3.3 million, is expected to be in the range of $11.3 to $14.3 million. On a GAAP basis, net loss for fiscal 2009 is expected to be in the range of $23.3 to $26.3 million. Weighted average diluted shares for the year are estimated to be approximately 15.1 million shares.
Conference call
| What: | Salary.com second quarter financial results conference call and webcast | |
| When: | Wednesday, November 5, 2008 | |
| Time: | 5:00 PM ET | |
| Live Call: | (888) 203-7337, domestic | |
| (719) 785-9450, international | ||
| Replay: | (888) 203-1112, conference ID 4843275, domestic | |
| (719) 457-0820, conference ID 4843275, 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, learning and development, 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, 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, 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)
Contact:
Media:
Rob Halpin
Version 2.0 Communications
617-426-2222
press@salary.com
Investors:
Salary.com, Inc.
Bryce Chicoyne, CFO, 781-464-7889
or
Integrated Corporate Relations
Garo Toomajanian, 781-464-7340
***
Exhibit 1
Salary.com, Inc.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
| September 30, 2008 | March 31, 2008 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 28,018 | $ | 37,727 | ||
Accounts receivable, net of allowance for doubtful accounts | 5,068 | 4,734 | ||||
Prepaid expenses and other current assets | 2,082 | 1,922 | ||||
Total current assets | 35,168 | 44,383 | ||||
Property, equipment and software, net | 2,273 | 1,566 | ||||
Goodwill and intangible assets, net | 25,656 | 19,091 | ||||
Other assets | 1,594 | 1,169 | ||||
Total assets | $ | 64,691 | $ | 66,209 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued compensation | $ | 4,331 | $ | 4,681 | ||
Accrued expenses and other current liabilities | 3,709 | 3,146 | ||||
Deferred revenue, current portion | 22,183 | 20,523 | ||||
Total current liabilities | 30,223 | 28,350 | ||||
Deferred revenue, net of current portion | 1,770 | 1,510 | ||||
Long term liabilities | 2,039 | 181 | ||||
Total liabilities | 34,032 | 30,041 | ||||
Total stockholders’ equity | ||||||
Total stockholders’ equity | 30,659 | 36,168 | ||||
Total liabilities and stockholders’ equity | $ | 64,691 | $ | 66,209 | ||
Exhibit 2
Salary.com, Inc.
Consolidated Statements of Operations
(in thousands, unaudited)
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues: | ||||||||||||||||
Subscription revenues | $ | 9,858 | $ | 7,781 | $ | 18,848 | $ | 14,539 | ||||||||
Advertising revenues | 688 | 687 | 1,313 | 1,468 | ||||||||||||
Total revenues | 10,546 | 8,468 | 20,161 | 16,007 | ||||||||||||
Cost of revenues (1) | 3,131 | 1,883 | 6,372 | 3,506 | ||||||||||||
Gross profit | 7,415 | 6,585 | 13,789 | 12,501 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development (1) | 2,296 | 1,227 | 4,105 | 2,109 | ||||||||||||
Sales and marketing (1) | 7,153 | 4,427 | 13,643 | 8,326 | ||||||||||||
General and administrative (1) | 3,941 | 3,620 | 7,937 | 6,547 | ||||||||||||
Amortization of intangible assets | 444 | 281 | 823 | 415 | ||||||||||||
Total operating expenses | 13,834 | 9,555 | 26,508 | 17,397 | ||||||||||||
Loss from operations | (6,419 | ) | (2,970 | ) | (12,719 | ) | (4,896 | ) | ||||||||
Other income: | ||||||||||||||||
Interest income | 206 | 514 | 457 | 1,075 | ||||||||||||
Other income (expense) | (30 | ) | 35 | (57 | ) | 35 | ||||||||||
Total other income | 176 | 549 | 400 | 1,110 | ||||||||||||
Loss before provision for income taxes | (6,243 | ) | (2,421 | ) | (12,319 | ) | (3,786 | ) | ||||||||
Provision for income taxes | 56 | 89 | 143 | 89 | ||||||||||||
Net loss | $ | (6,299 | ) | $ | (2,510 | ) | $ | (12,462 | ) | $ | (3,875 | ) | ||||
Net loss per share - basic and diluted | $ | (0.42 | ) | $ | (0.18 | ) | $ | (0.84 | ) | $ | (0.29 | ) | ||||
Weighted average shares outstanding - basic and diluted | 15,144 | 13,606 | 14,872 | 13,483 | ||||||||||||
(1) Amounts include stock-based compensation expense, as follows: |
| |||||||||||||||
| Three Months Ended September 30 | Six Months Ended September 30 | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Cost of revenues | $ | 407 | $ | 193 | $ | 807 | $ | 288 | ||||||||
Research and development | 521 | 117 | 788 | 119 | ||||||||||||
Sales and marketing | 720 | 380 | 1,437 | 582 | ||||||||||||
General and administrative | 829 | 469 | 1,433 | 844 | ||||||||||||
| $ | 2,477 | $ | 1,159 | $ | 4,465 | $ | 1,833 | |||||||||
Exhibit 3
Salary.com, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (6,299 | ) | $ | (2,510 | ) | $ | (12,462 | ) | $ | (3,875 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 1,167 | 561 | 2,183 | 964 | ||||||||||||
Stock-based compensation | 2,477 | 1,159 | 4,465 | 1,833 | ||||||||||||
Other non-cash items | (60 | ) | 2,123 | (5 | ) | 2,182 | ||||||||||
Change in operating assets and liabilities | 1,742 | 161 | 2,751 | 2,002 | ||||||||||||
Net cash provided by (used in) operating activities | (973 | ) | 1,494 | (3,068 | ) | 3,106 | ||||||||||
Cash flows from investing activities: | ||||||||||||||||
Cash paid for acquisition of business | (5,387 | ) | (1,781 | ) | (5,637 | ) | (11,979 | ) | ||||||||
Cash paid for intangible assets | (2 | ) | (9 | ) | (32 | ) | (223 | ) | ||||||||
Increase in restricted cash | (6 | ) | (300 | ) | (378 | ) | (300 | ) | ||||||||
Purchases of property and equipment | (221 | ) | (65 | ) | (548 | ) | (181 | ) | ||||||||
Capitalization of software development costs | (34 | ) | (72 | ) | (79 | ) | (234 | ) | ||||||||
Net cash used in investing activities | (5,650 | ) | (2,227 | ) | (6,674 | ) | (12,917 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Net proceeds from exercise (buyback) of common stock options and warrants | (5 | ) | 248 | 95 | 239 | |||||||||||
Repayments of notes payable | (64 | ) | — | (64 | ) | — | ||||||||||
Net cash provided by (used in) financing activities | (69 | ) | 248 | 31 | 239 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 3 | — | 2 | — | ||||||||||||
Decrease in cash and cash equivalents | (6,689 | ) | (485 | ) | (9,709 | ) | (9,572 | ) | ||||||||
Cash and cash equivalents, beginning of period | 34,707 | 39,929 | 37,727 | 49,016 | ||||||||||||
Cash and cash equivalents, end of period | $ | 28,018 | $ | 39,444 | $ | 28,018 | $ | 39,444 | ||||||||
Exhibit 4
Salary.com, Inc.
Reconciliation of Non-GAAP Measures
(in thousands, unaudited)
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Reconciliation of GAAP loss from operations to non-GAAP loss from operations: | ||||||||||||||||
Loss from operations | $ | (6,419 | ) | $ | (2,970 | ) | $ | (12,719 | ) | $ | (4,896 | ) | ||||
Amortization of intangible assets | 444 | 281 | 823 | 415 | ||||||||||||
Amortization of intangible assets (included in cost of revenues) | 425 | 28 | 822 | 47 | ||||||||||||
Stock-based compensation | 2,477 | 1,159 | 4,465 | 1,833 | ||||||||||||
Non-GAAP loss from operations | $ | (3,073 | ) | $ | (1,502 | ) | $ | (6,609 | ) | $ | (2,601 | ) | ||||
Reconciliation of GAAP net loss to non-GAAP net loss: | ||||||||||||||||
GAAP net loss | $ | (6,299 | ) | $ | (2,510 | ) | $ | (12,462 | ) | $ | (3,875 | ) | ||||
Amortization of intangible assets | 444 | 281 | 823 | 415 | ||||||||||||
Amortization of intangible assets (included in cost of revenues) | 425 | 28 | 822 | 47 | ||||||||||||
Stock-based compensation | 2,477 | 1,159 | 4,465 | 1,833 | ||||||||||||
Non-GAAP net loss | $ | (2,953 | ) | $ | (1,042 | ) | $ | (6,352 | ) | $ | (1,580 | ) | ||||
Non-GAAP net loss per share | $ | (0.19 | ) | $ | (0.08 | ) | $ | (0.43 | ) | $ | (0.12 | ) | ||||
Weighted average shares outstanding - basic and diluted | 15,144 | 13,606 | 14,872 | 13,483 | ||||||||||||
Reconciliation of GAAP cash flow from (used by) operations to non-GAAP free cash flow: | ||||||||||||||||
GAAP cash flow from (used by) operations | $ | (973 | ) | $ | 1,494 | $ | (3,068 | ) | $ | 3,106 | ||||||
Purchases of property and equipment | (221 | ) | (65 | ) | (548 | ) | (181 | ) | ||||||||
Capitalization of software development costs | (34 | ) | (72 | ) | (79 | ) | (234 | ) | ||||||||
Free cash flow | $ | (1,228 | ) | $ | 1,357 | $ | (3,695 | ) | $ | 2,691 | ||||||
Exhibit 5
SALARY.COM
Reconciliation of Certain GAAP to Non-GAAP Financial Measures
(In thousands, unaudited)
| Three months ended September 30, 2008 | ||||||||||||||
| US GAAP Results | Amortization of Intangible Assets | Stock-based Compensation Expense | Non-GAAP Results | |||||||||||
Cost of revenues | $ | 3,131 | $ | (425 | ) | $ | (407 | ) | $ | 2,299 | ||||
Research and development expenses | 2,296 | — | (521 | ) | 1,775 | |||||||||
Sales and marketing expenses | 7,153 | — | (720 | ) | 6,433 | |||||||||
General and administrative expenses | 3,941 | — | (829 | ) | 3,112 | |||||||||
Amortization of intangible assets | 444 | (444 | ) | — | — | |||||||||
Total operating expenses | $ | 13,834 | $ | (444 | ) | $ | (2,070 | ) | $ | 11,320 | ||||
| Three months ended September 30, 2007 | ||||||||||||||
| US GAAP Results | Amortization of Intangible Assets | Stock-based Compensation Expense | Non-GAAP Results | |||||||||||
Cost of revenues | $ | 1,883 | $ | (28 | ) | $ | (193 | ) | $ | 1,662 | ||||
Research and development expenses | 1,227 | — | (117 | ) | 1,110 | |||||||||
Sales and marketing expenses | 4,427 | — | (380 | ) | 4,047 | |||||||||
General and administrative expenses | 3,620 | — | (469 | ) | 3,151 | |||||||||
Amortization of intangible assets | 281 | (281 | ) | — | — | |||||||||
Total operating expenses | $ | 9,555 | $ | (281 | ) | $ | (966 | ) | $ | 8,308 | ||||
| Six months ended September 30, 2008 | ||||||||||||||
| US GAAP Results | Amortization of Intangible Assets | Stock-based Compensation Expense | Non-GAAP Results | |||||||||||
Cost of revenues | $ | 6,372 | $ | (822 | ) | $ | (807 | ) | $ | 4,743 | ||||
Research and development expenses | 4,105 | — | (788 | ) | 3,317 | |||||||||
Sales and marketing expenses | 13,643 | — | (1,437 | ) | 12,206 | |||||||||
General and administrative expenses | 7,937 | — | (1,433 | ) | 6,504 | |||||||||
Amortization of intangible assets | 823 | (823 | ) | — | — | |||||||||
Total operating expenses | $ | 26,508 | $ | (823 | ) | $ | (3,658 | ) | $ | 22,027 | ||||
| Six months ended September 30, 2007 | ||||||||||||||
| US GAAP Results | Amortization of Intangible Assets | Stock-based Compensation Expense | Non-GAAP Results | |||||||||||
Cost of revenues | $ | 3,506 | $ | (47 | ) | $ | (288 | ) | $ | 3,171 | ||||
Research and development expenses | 2,109 | — | (119 | ) | 1,990 | |||||||||
Sales and marketing expenses | 8,326 | — | (582 | ) | 7,744 | |||||||||
General and administrative expenses | 6,547 | — | (844 | ) | 5,703 | |||||||||
Amortization of intangible assets | 415 | (415 | ) | — | — | |||||||||
Total operating expenses | $ | 17,397 | $ | (415 | ) | $ | (1,545 | ) | $ | 15,437 | ||||
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 and stock-based compensation. 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.