136 Enterprise Boulevard
PO Box 9300
Bozeman, MT 59718-9300
406.522.4200 P
406.522.4227 F
FOR IMMEDIATE RELEASE
For Further Information, Contact:
Investor Relations: Corporate Communications:
Todd Friedman or Stacie Bosinoff Kathleen O’Boyle
The Blueshirt Group RightNow Technologies
415.217.7722 406.556.3428 Desk
todd@blueshirtgroup.com 415.407.8308 Cell
stacie@blueshirtgroup.com Kathleen.oboyle@rightnow.com
RIGHTNOW TECHNOLOGIES REPORTS
THIRD QUARTER FINANCIAL RESULTS
Company exceeds third quarter revenue and earnings expectations
and raises guidance
BOZEMAN, MONT. (October 24, 2007) RightNow Technologies, Inc. (NASDAQ:RNOW), today announced financial results for the third quarter ended September 30, 2007. RightNow reported total revenue of $29.2 million for the third quarter of 2007 as compared to $30.1 million in the year-ago quarter. Third quarter 2007 results reflect 31% growth in recurring revenue year-over-year and the impact of the Company’s business model shift away from perpetual licenses in 2007.
The net loss in the third quarter of 2007 was $(3.6) million or $(0.11) per share, compared to a net loss of $(0.5) million or $(0.02) per share, in the third quarter of 2006. Non-GAAP net loss in the second quarter 2007 was $(2.4) million or $(0.07) per share, compared to non-GAAP net income of $0.6 million or $0.02 per share in the same quarter last year.
Revenue for the nine month period ending September 30, 2007 was $81.4 million, compared to $81.6 million in the same 2006 period. Recurring revenue for the nine month period increased 34% year-over-year. The net loss for the nine months ended September 30, 2007 was $(15.3) million or $(0.46) per share, as compared to $(2.7) million or $(0.08) per share in the comparable 2006 period. Non-GAAP net loss for the nine months ended September 30, 2007 was $(10.8) million or $(0.33) per share, as compared to non-GAAP net income of $0.9 million or $0.03 per share, in the year-earlier period.
Greg Gianforte, founder and CEO, stated, “Our partner channels delivered excellent results this past quarter, both in terms of closed deals and growth in pipeline opportunities. We posted strong results in the public sector, retail, high-tech and telecom segments, driven in part by the ease with which RightNow 8 can be adapted to different verticals. And we’re most pleased that our customers, Electronic Arts and Shaklee, finished first and runner-up, respectively, in this year’s Gartner North America CRM Excellence Award.”
New, renewed and expanded customer relationships during the third quarter of 2007 included the Army, Briggs Corporation, Cadbury Schweppes Americas Beverages, EasyJet Airline Company Ltd, Helio, HSN, Tiscali UK, United Illuminating Company and USPS-Helpdesk.
Susan Carstensen, CFO, added, “The business model changes we made earlier this year are paying dividends in the form of successive quarterly growth in recurring revenue and improving net margins. Looking ahead, we are raising our revenue and earnings guidance for the fourth quarter and full year.”
Guidance
| · | For the fourth quarter of 2007, the Company is raising its guidance and now expects revenue of approximately $29.5 million, which includes a $1 million sequential increase in recurring revenue offset in part by a seasonal decrease in professional services revenue. Full year revenue is expected to be approximately $111 million. |
| · | The Company expects the net loss per share for the fourth quarter of 2007 to be in the range of $(0.10) to $(0.11). Non-GAAP net loss per share, which excludes stock-based compensation, is expected to be in the range of $(0.06) to $(0.07). The full year net loss per share is expected to be in the range of $(0.56) to $(0.57) and the non-GAAP loss per share in the range of $(0.39) to $(0.40). |
| · | Cash flow from operations for the full year 2007 is expected to be in the range of $15 million to $20 million. |
RightNow will host a call this afternoon, Wednesday October 24, at 4:30 p.m. Eastern time to discuss these results. To access the call, please dial (877) 502-9272, or outside the U.S. (913) 981-5581, at lease five minutes prior to the start time. An audio webcast of the call will also be available at www.shareholder.com/rnow/medialist.cfm. A replay of today’s conference call will be available on the company’s web site at www.shareholder.com/rnow/, under the Investor Webcasts menu beginning at 7:30 p.m. (ET) on October 24, 2007 until 11:59 p.m. Wednesday, November 7, 2007. You may also access a replay of today’s call by dialing (888) 203-1112 or (719) 457-0820, with replay passcode 7041187.
About RightNow Technologies
RightNow (NASDAQ: RNOW) delivers the high-impact technology solutions and services organizations need to cost-efficiently deliver a consistently superior customer experience across their frontline service, sales and marketing touch-points. Approximately 1,800 corporations and government agencies worldwide depend on RightNow to achieve their strategic objectives and better meet the needs of those they serve. RightNow is headquartered in Bozeman, Montana. For more information, please visit www.rightnow.com.
RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of the NASDAQ Stock Market.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management’s future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, risks associated with our business model, including recent changes we made to our model; our ability to develop or acquire, and gain market acceptance for, new products in a cost-effective and timely manner; the market success of our RightNow 8 product; the gain or loss of key customers; competitive pressures; our ability to expand operations; fluctuations in our earnings as a result of the impact of stock-based compensation expense; interruptions or delays in our hosting operations; breaches of our security measures; our ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; and our ability to expand, retain and motivate our employees and manage our growth. Further information on potential factors that could affect our financial results is included in our Annual Report on Form 10-K, quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
FRNOW
RightNow Technologies, Inc.
Consolidated Balance Sheets
(In thousands) (Unaudited)
| | Sep 30, | | Dec 31, |
| | 2007 | | 2006 |
Assets | | | |
| Cash and cash equivalents | $ 33,109 | | $ 39,208 |
| Short-term investments | 56,823 | | 39,127 |
| Accounts receivable | 24,690 | | 32,021 |
| Term receivables, current | 13,773 | | 23,806 |
| Allowance for doubtful accounts | (2,009) | | (2,621) |
| Net receivables | 36,454 | | 53,206 |
| Prepaid and other current assets | 5,786 | | 2,498 |
| Total current assets | 132,172 | | 134,039 |
| | | | |
| Property and equipment, net | 10,451 | | 10,073 |
| Term receivables, non-current | 11,170 | | 24,805 |
| Intangible assets, net | 7,865 | | 8,836 |
| Other | 1,356 | | 489 |
Total Assets | $ 163,014 | | $ 178,242 |
| | | | |
| | | | |
| | | | |
Liabilities and Stockholders’ Equity | | | |
| Accounts payable | $ 4,249 | | $ 4,417 |
| Commissions and bonuses payable | 2,889 | | 4,069 |
| Other accrued liabilities | 10,606 | | 7,588 |
| Current portion of long-term debt | 42 | | 31 |
| Current portion of deferred revenue | 69,665 | | 67,560 |
| Total current liabilities | 87,451 | | 83,665 |
| | | | |
| Long-term debt, less current portion | 79 | | 85 |
| Deferred revenue, net of current portion | 37,139 | | 47,018 |
| | | | |
| Stockholders’ equity: | | | |
| Common stock | 33 | | 33 |
| Additional paid-in capital | 92,486 | | 86,069 |
| Accumulated other comprehensive loss | (551) | | (332) |
| Accumulated deficit | (53,623) | | (38,296) |
| Total stockholders’ equity | 38,345 | | 47,474 |
Total Liabilities Stockholders’ Equity | $ 163,014 | | $ 178,242 |
| | | | |
RightNow Technologies, Inc.
Consolidated Operating Statements
(In thousands, except per share amounts) (Unaudited)
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2007 | | 2006 | | 2007 | | 2006 |
| Revenue: | | | | | | | |
Software, hosting and support Recurring * Perpetual | $ 21,813 553 | | $ 16,710 7,044 | | $ 61,379 1,499 | | $ 45,770 17,930 |
| Professional services | 6,880 | | 6,334 | | 18,535 | | 17,927 |
| Total revenue | 29,246 | | 30,088 | | 81,413 | | 81,627 |
| | | | | | | | |
| Cost of revenue: | | | | | | | |
| Software, hosting and support | 4,604 | | 3,667 | | 13,563 | | 9,597 |
| Professional services | 5,667 | | 4,969 | | 15,874 | | 14,014 |
| Total cost of revenue | 10,271 | | 8,636 | | 29,437 | | 23,611 |
| | | | | | | | |
| Gross profit | 18,975 | | 21,452 | | 51,976 | | 58,016 |
| | | | | | | | |
| Operating expenses: | | | | | | | |
| Sales and marketing | 16,516 | | 16,535 | | 48,031 | | 45,113 |
| Research and development | 4,308 | | 3,740 | | 12,947 | | 10,346 |
| General and administrative | 2,680 | | 2,333 | | 8,718 | | 7,098 |
| Total operating expenses | 23,504 | | 22,608 | | 69,696 | | 62,557 |
| | | | | | | | |
| Loss from operations | (4,529) | | (1,156) | | (17,720) | | (4,541) |
| | | | | | | | |
| Interest and other income, net | 1,004 | | 740 | | 2,717 | | 2,180 |
| | | | | | | | |
| Loss before income taxes | (3,525) | | (416) | | (15,003) | | (2,361) |
| Provision for income taxes | (59) | | (103) | | (324) | | (353) |
| Net loss | $ (3,584) | | $ (519) | | $ (15,327) | | $ (2,714) |
| | | | | | | | |
| | | | | | | | |
| Net loss per share: | | | | | | | |
| Basic | $(0.11) | | $(0.02) | | $(0.46) | | $(0.08) |
| Diluted | $(0.11) | | $(0.02) | | $(0.46) | | $(0.08) |
| | | | | | | | |
| Shares used in the computation: | | | | | | | |
| Basic | 33,094 | | 32,316 | | 32,979 | | 32,144 |
| Diluted | 33,094 | | 32,316 | | 32,979 | | 32,144 |
| Supplemental information of stock-based compensation expense included in: | | | | | | | |
| Cost of software, hosting and support | $ 84 | | $ 52 | | $ 221 | | $ 145 |
| Cost of professional services | 217 | | 124 | | 491 | | 358 |
| Sales and marketing | 542 | | 529 | | 1,931 | | 1,430 |
| Product development | 166 | | 230 | | 681 | | 622 |
| General and administrative | 199 | | 179 | | 1,177 | | 1,020 |
| Total stock-based compensation | $ 1,208 | | $ 1,114 | | $ 4,501 | | $ 3,575 |
| | | | | | | | |
| * Recurring revenue includes software, hosting and support revenue from term license and subscription agreements, and post contract support services. |
RightNow Technologies, Inc.
Consolidated Statements of Cash Flow
(In thousands, except per share amounts) (Unaudited)
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2007 | | 2006 | | 2007 | | 2006 |
| Operating activities: | | | | | | | |
| Net loss | $ (3,584) | | $ (519) | | $ (15,327) | | $ (2,714) |
| Non-cash adjustments: | | | | | | | |
| Depreciation and amortization | 1,869 | | 1,556 | | 5,424 | | 3,998 |
| Stock-based compensation | 1,208 | | 1,114 | | 4,501 | | 3,575 |
| Provision for losses on accounts receivable | 401 | | 292 | | 345 | | 51 |
| Changes in operating accounts: | | | | | | | |
| Receivables | 6,933 | | (8,117) | | 30,584 | | (16,529) |
| Prepaid expenses | (803) | | (225) | | (3,886) | | (384) |
| Accounts payable | 1,001 | | (808) | | (192) | | (64) |
| Commissions and bonuses payable | (47) | | 932 | | (1,219) | | 967 |
| Other accrued liabilities | (912) | | 435 | | 2,839 | | 244 |
| Deferred revenue | (2,143) | | 15,184 | | (9,013) | | 33,509 |
| Other | (130) | | (8) | | (140) | | 99 |
| Cash provided by operating activities | 3,793 | | 9,836 | | 13,916 | | 22,752 |
| | | | | | | | |
| Investing activities: | | | | | | | |
| Net change in short-term investments | (3,912) | | (1,638) | | (17,696) | | (13,527) |
| Acquisition of property and equipment | (1,426) | | (1,020) | | (4,764) | | (4,930) |
| Business acquisitions | - | | - | | - | | (8,731) |
| Other | 1 | | - | | (60) | | (10) |
| Cash used by investing activities | (5,337) | | (2,658) | | (22,520) | | (27,198) |
| | | | | | | | |
| Financing activities: | | | | | | | |
| Proceeds from issuance of common stock | 509 | | 363 | | 1,688 | | 1,362 |
| Tax benefit of stock options exercised | 19 | | - | | 228 | | - |
| Payments on long-term debt | (10) | | (9) | | (25) | | (23) |
| Cash provided by financing activities | 518 | | 354 | | 1,891 | | 1,339 |
| | | | | | | | |
| Effect of foreign exchange rates on cash and | | | | | | | |
| cash equivalents | 293 | | 36 | | 614 | | 347 |
| | | | | | | | |
| Increase (decrease) in cash and cash equivalents | (733) | | 7,568 | | (6,099) | | (2,760) |
| | | | | | | | |
| Cash and cash equivalents at beginning of period | 33,842 | | 30,546 | | 39,208 | | 40,874 |
| Cash and cash equivalents at end of period | $ 33,109 | | $ 38,114 | | $ 33,109 | | $ 38,114 |
| | | | | | | | |
RightNow Technologies, Inc.
Reconciliation of Non-GAAP Measurements
(Amounts in thousands, except per share amounts) (Unaudited)
Diluted Earnings Per Share Reconciliation
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2007 | 2006 | | 2007 | 2006 |
| Net loss as reported | $ (3,584) | $ (519) | | $ (15,327) | $ (2,714) |
| Add stock-based compensation (“SBC”) | 1,208 | 1,114 | | 4,501 | 3,575 |
| Net income (loss) before SBC | $ (2,376) | $ 595 | | $ (10,826) | $ 861 |
| | | | | | |
| Net loss per share, as reported | $(0.11) | $(0.02) | | $(0.46) | $(0.08) |
| Net income (loss) per share, before SBC | $(0.07) | $0.02 | | $(0.33) | $ 0.03 |
| | | | | | |
| Shares outstanding, as reported | 33,094 | 32,316 | | 32,979 | 32,144 |
| Shares outstanding, excluding the effect of SBC | 33,094 | 33,926 | | 32,979 | 33,953 |
| | | | | | |
Forward-Looking Guidance Reconciliation
| | GAAP Guidance | | | | Non-GAAP Guidance |
Fourth quarter ending Dec 31, 2007 | From | | To | | Adjustment | | From | | To |
| Net loss | $ (3,600) | | $ (3,300) | | $ 1,250 [a] | | $ (2,350) | | $ (2,050) |
| EPS | $ (0.11) | | $ (0.10) | | | | $ (0.07) | | $ (0.06) |
| Shares | 33,300 | | 33,300 | | | | 33,300 | | 33,300 |
| | | | | | | | | | |
Year ending December 31, 2007 | | | | | | | | | |
| Net loss | $ (19,000) | | $ (18,600) | | $ 5,750 [a] | | $ (13,250) | | $ (12,850) |
| EPS | $ (0.57) | | $ (0.56) | | | | $ (0.40) | | $ (0.39) |
| Shares | 33,200 | | 33,200 | | | | 33,200 | | 33,200 |
| | | | | | | | | | |
| | | | | | | | | | |
[a] Estimated stock-based compensation expense to be recorded for the periods indicated in accordance with Statement of Financial Accounting Standards No. 123R, Share-Based Payments, (“SFAS 123R”) which is effective for periods beginning January 1, 2006. Periods prior to 2006 do not include stock-based compensation expense.
About Non-GAAP Financial Measures
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies.
RightNow’s management believes that these non-GAAP financial measures provide meaningful supplemental information regarding RightNow’s operating results because they facilitate the comparison of results for future periods with results from past periods. RightNow adopted SFAS 123R on January 1, 2006 using the modified prospective method. Results of prior periods have not been restated to conform with the 2006 and subsequent years’ presentation. We believe the calculation of diluted net income per share, calculated without stock-based compensation expense, provides a meaningful comparison to our diluted net income per share figures reported for 2005 and prior years.
