| Media Contact: | | | | IR Contact: |
Jaime Spuhler | | | | Nate Swanson |
| T: 904.493.8851 | | | | T: 925.452. 3156 |
| jspuhler@taleo.com | | | | nswanson@taleo.com |
Taleo Delivers Strong Second Quarter Results
-Application revenue increases 4% quarter-over-quarter and 40% year-over-year
-GAAP EPS of $0.01; Non-GAAP EPS of $0.17
-Increased demand for Talent Management suite sales
-Closes 8 large enterprise deals, including largest international deal to date
DUBLIN, CA – July 30, 2009 - -- Taleo (NASDAQ: TLEO), the leading provider of on demand talent management solutions, today announced its financial results for the quarter ended June 30, 2009.
Quarterly highlights include:
-- GAAP revenues of $49.2 million for the second quarter of 2009, an increase of 30% year-over-year. Non-GAAP revenues increased to $49.5 million, which includes amounts excluded from GAAP revenue due to the write down of deferred revenue required under purchase accounting associated with the acquisition of Vurv Technology, Inc. (“Vurv”) on July 1, 2008.
-- Signed 146 new customers, including 12 new enterprise customers and 134 new Business Edition customers.
-- Closed 8 large enterprise deals with annual contract values in excess of $250,000, including one international deal in excess of $1 million in annual contract value.
-- Increased demand for enterprise Talent Management suite sales, including Recruiting and Performance or Compensation management offerings.
-- Record number of new Performance Management customers and three Compensation Management deals with strategic partner Worldwide Compensation.
-- GAAP net income of $234,000, or $0.01 per fully diluted share.
-- Non-GAAP net income of $5.6 million, or $0.17 per fully diluted share.
"Businesses of all sizes are taking a new look at priorities and ROI, and are recognizing the value of Talent Management products and practices to their success,” said Michael Gregoire, Taleo Chairman and CEO. "We are seeing this in the growing adoption of our unified set of Talent Management software solutions, as Taleo transforms and leads the industry.”
Other significant achievements included:
-- Acquired 12 new enterprise customers and closed 8 large enterprise deals with annual contract values in excess of $250,000, bringing Taleo's enterprise customer base to over 700 organizations around the world. New enterprise customers include: New South Wales Government, Nordstrom, SunTrust Bank, Meijer, NCR Corporation, L-3 Communications, Corrections Corporation of America and PricewaterhouseCoopers (Belgium).
-- Increased momentum in enterprise Talent Management suite sales. New customers buying Taleo's Talent Management suite offering include Vermeer Corporation, Stream Global Services and Oakley, which purchased Taleo’s Recruiting, Performance and Compensation Management solutions.
-- Record quarter in total Performance Management deals in both enterprise and Business Edition segments, including Veolia Group, CPS Energy, Phoebe Putney Memorial Hospital, Dow Jones and Company and Books-A-Million, and closed three Compensation Management deals with strategic partner Worldwide Compensation.
-- Signed 134 new Small and Medium-sized Customers. Taleo Business Edition, a recruiting solution targeted at companies with less than 5,000 employees, now has more than 3,400 customers. New Taleo Business Edition customers include: MTV Networks, Public Policy of California, City of Artesia, Imperial Toy Company and Emprise Bank.
-- Vurv conversions and commitments to convert to Taleo continues to track to expectations. Recent Vurv customers committing to Taleo include: American Family Insurance Group, Barclay’s Global Investors NA, Direct Supply, Wegman’s Food Markets, Hasbro, the City of College Station and Austin Industrial.
Taleo delivered the following financial results:
Revenue: Total revenue, in accordance with accounting principles generally accepted in the United States, or GAAP, for the second quarter was $49.2 million, representing an increase of 30% on a year-over-year basis. Application revenue for the second quarter was $43.0 million, an increase of 40% on a year-over-year basis. Total non-GAAP revenue for the second quarter of 2009 was $49.5 million, an increase of 31% year-over-year. Total non-GAAP application revenue for the second quarter was $43.3 million. The difference between GAAP and non-GAAP revenue reflects the amounts excluded from the GAAP revenue due to purchase accounting adjustments, which require the write down of deferred revenue associated with the Vurv acquisition in order to reflect fair value.
Net Income (Loss) and Net Income (Loss) Per Share to Common Stockholders: Net income was $234,000 for the second quarter, compared to a net loss of $(45,000) for the same period last year. Net income includes $3.6 million in amortization expense related to the acquisition of Vurv, as well as increased third party costs related to the Company's restatement-related revenue review. Net income for the second quarter of 2009 also includes share-based compensation expense of $2.6 million. Net income per fully diluted share was $0.01 for the second quarter of 2009 based on 32.6 million weighted average shares outstanding compared to a net loss per fully diluted share of $(0.00) for the same period in 2008 based on 25.7 million weighted average shares outstanding.
Non-GAAP Net Income and Non-GAAP Net Income Per Share: Non-GAAP net income, which includes amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition, and excludes costs associated with the restatement-related revenue review, share-based compensation expense, amortization of acquired intangibles, restructuring and severance expense, non-cash tax valuation adjustment and non-cash income tax audit settlement, was $5.6 million for the second quarter of 2009, compared to a non-GAAP net income of $3.1 million in the same period last year. Non-GAAP net income per fully diluted share was $0.17 for the second quarter of 2009 based on 32.6 million weighted average shares outstanding compared to non-GAAP net income per fully diluted share of $0.11 for the same period in 2008 based on 29.1 million weighted average shares outstanding.
In conjunction with this announcement, Taleo will host a conference call 5:00pm EDT today to discuss the Company's second quarter 2009 financial results. A live and replay Webcast of the call will be available at the Investor Relations section of Taleo's website at www.taleo.com.
Taleo (NASDAQ: TLEO) is the leader in on-demand unified talent management solutions that empower organizations of all sizes to assess, acquire, develop and align their workforces for improved business performance. Approximately 4,100 organizations use Taleo for talent acquisition and performance management, including 46 of the Fortune 100 and approximately 3,400 small and medium sized businesses across 200 countries and territories. Known for its strong configurability and usability, Taleo runs on a world-class infrastructure and achieves 99.9% availability. Taleo's Talent Grid will harness the resources of the Taleo community of customers, candidates, and partners to power the talent needs of companies around the world.
Forward-looking Statements
This release contains forward-looking statements, including statements regarding Taleo’s future financial performance, new product development, market growth, the demand for Taleo’s solutions, the impact of Taleo’s acquisition of Vurv, and general business conditions. Any forward-looking statements contained in this press release are based upon Taleo's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Taleo's expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Taleo disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Further information on potential factors that could affect actual results is included in Part II, Item 1A of Taleo’s Quarterly Report on Form 10-Q, as filed with the SEC on May 11, 2009, and in other reports filed by Taleo with the SEC.
Non-GAAP Financial Measures
Taleo has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP revenue, non-GAAP net income and non-GAAP net income per share. Taleo uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Taleo's ongoing operational performance. Taleo believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with other companies in Taleo's industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP revenue discussed above includes amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition, and other non-GAAP measures include amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition and exclude costs associated with the restatement-related revenue review, share-based compensation expense, amortization of acquired intangibles, restructuring and severance expense, non-cash tax valuation adjustment and non-cash income tax audit settlement. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. As previously mentioned, a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.
| |
| Condensed Consolidated Balance Sheets | |
| (All amounts in thousands) | |
| (Unaudited) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | June 30, | | | December 31, | |
| | | 2009 | | | 2008 | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 61,969 | | | $ | 49,462 | |
| Restricted cash | | | 521 | | | | 521 | |
| Accounts receivable, net | | | 45,539 | | | | 49,167 | |
| Prepaid expenses and other current assets | | | 11,337 | | | | 10,977 | |
| Investment credits receivable | | | 5,909 | | | | 6,087 | |
| Total current assets | | | 125,275 | | | | 116,214 | |
| | | | | | | | | |
| Property and equipment, net | | | 26,394 | | | | 25,250 | |
| Restricted cash | | | 305 | | | | 515 | |
| Goodwill | | | 91,025 | | | | 91,626 | |
| Other intangibles, net | | | 37,671 | | | | 44,802 | |
| Other assets | | | 6,504 | | | | 4,782 | |
| Total assets | | $ | 287,174 | | | $ | 283,189 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 21,784 | | | $ | 24,877 | |
| Deferred revenue - application services and customer deposits | | | 54,682 | | | | 54,421 | |
| Deferred revenue - consulting services | | | 15,044 | | | | 16,221 | |
| Capital lease obligation, short-term | | | 758 | | | | 1,101 | |
| Total current liabilities | | | 92,268 | | | | 96,620 | |
| | | | | | | | | |
| Long-term deferred revenue - application services and customer deposits | | | 547 | | | | 777 | |
| Long-term deferred revenue - consulting services | | | 12,168 | | | | 9,594 | |
| Other liabilities | | | 4,347 | | | | 3,258 | |
| Capital lease obligation, long-term | | | 232 | | | | 519 | |
| Total liabilities | | | 109,562 | | | | 110,768 | |
| | | | | | | | | |
| Stockholders' equity: | | | | | | | | |
| Capital stock | | | - | | | | - | |
| Additional paid-in capital | | | 254,434 | | | | 247,764 | |
| Accumulated deficit | | | (77,868 | ) | | | (75,918 | ) |
| Treasury stock | | | (221 | ) | | | - | |
| Accumulated other comprehensive income | | | 1,267 | | | | 575 | |
| Total stockholders' equity | | | 177,612 | | | | 172,421 | |
| Total liabilities and stockholders' equity | | $ | 287,174 | | | $ | 283,189 | |
| | | | | | | | | |
| | | | | | | | | |
| Taleo Corporation | |
| Condensed Consolidated Statements of Operations | |
| (All amounts in thousands except per share data) | |
| (Unaudited) | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended |
| | | June 30, | | | June 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | As restated | | | | | | As restated | |
| Revenue: | | | | | | | | | | | | |
| Application | | $ | 43,011 | | | $ | 30,730 | | | $ | 84,215 | | | $ | 60,893 | |
| Consulting | | | 6,179 | | | | 7,172 | | | | 13,058 | | | | 12,839 | |
| Total revenue | | | 49,190 | | | | 37,902 | | | | 97,273 | | | | 73,732 | |
| | | | | | | | | | | | | | | | | |
| Cost of revenue (note 1): | | | | | | | | | | | | | | | | |
| Application | | | 9,830 | | | | 6,320 | | | | 18,759 | | | | 12,574 | |
| Amortization of acquired intangibles | | | 760 | | | | 36 | | | | 1,520 | | | | 72 | |
| Total cost of application revenue | | | 10,590 | | | | 6,356 | | | | 20,279 | | | | 12,646 | |
| Consulting | | | 6,238 | | | | 5,559 | | | | 12,508 | | | | 11,283 | |
| Total cost of revenue | | | 16,828 | | | | 11,915 | | | | 32,787 | | | | 23,929 | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 32,362 | | | | 25,987 | | | | 64,486 | | | | 49,803 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses (note 1): | | | | | | | | | | | | | | | | |
| Sales and marketing | | | 14,229 | | | | 11,759 | | | | 27,269 | | | | 22,356 | |
| Sales - amortization of acquired intangibles | | | 2,810 | | | | 73 | | | | 5,623 | | | | 146 | |
| Research and development | | | 8,865 | | | | 7,365 | | | | 17,417 | | | | 14,398 | |
| General and administrative | | | 7,627 | | | | 7,200 | | | | 17,393 | | | | 13,788 | |
| Restructuring and severance | | | - | | | | 281 | | | | - | | | | 281 | |
| Total operating expenses | | | 33,531 | | | | 26,678 | | | | 67,702 | | | | 50,969 | |
| | | | | | | | | | | | | | | | | |
| Loss from operations | | | (1,169 | ) | | | (691 | ) | | | (3,216 | ) | | | (1,166 | ) |
| | | | | | | | | | | | | | | | | |
| Other income / (expense): | | | | | | | | | | | | | | | | |
| Interest income | | | 54 | | | | 518 | | | | 194 | | | | 1,296 | |
| Interest expense | | | (47 | ) | | | (41 | ) | | | (88 | ) | | | (86 | ) |
| Total other income | | | 7 | | | | 477 | | | | 106 | | | | 1,210 | |
| | | | | | | | | | | | | | | | | |
| Income / (loss) before benefit from income tax | | | (1,162 | ) | | | (214 | ) | | | (3,110 | ) | | | 44 | |
| | | | | | | | | | | | | | | | | |
| Benefit from income taxes | | | (1,396 | ) | | | (169 | ) | | | (1,160 | ) | | | (472 | ) |
| | | | | | | | | | | | | | | | | |
| Net income / (loss) attributable to Class A common stockholders | | $ | 234 | | | $ | (45 | ) | | $ | (1,950 | ) | | $ | 516 | |
| | | | | | | | | | | | | | | | | |
| Net income / (loss) per share attributable to Class A common stockholders - basic | | $ | 0.01 | | | $ | (0.00 | ) | | $ | (0.06 | ) | | $ | 0.02 | |
| | | | | | | | | | | | | | | | | |
| Net income / (loss) per share attributable to Class A common stockholders - diluted | | $ | 0.01 | | | $ | (0.00 | ) | | $ | (0.06 | ) | | $ | 0.02 | |
| | | | | | | | | | | | | | | | | |
| Weighted average Class A common shares - basic | | | 30,417 | | | | 25,708 | | | | 30,341 | | | | 25,538 | |
| | | | | | | | | | | | | | | | | |
| Weighted average Class A common shares - diluted | | | 32,611 | | | | 25,708 | | | | 30,341 | | | | 28,994 | |
| | | | | | | | | | | | | | | | | |
| NOTES | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
1. Includes share-based compensation expense pursuant to (SFAS 123(R)) | | | | | | | | | | | | | | | | |
| Application cost of revenue | | $ | 141 | | | $ | 134 | | | $ | 267 | | | $ | 260 | |
| Consulting cost of revenue | | | 264 | | | | 192 | | | | 483 | | | | 373 | |
| Cost of revenue subtotal | | | 405 | | | | 326 | | | | 750 | | | | 633 | |
| | | | | | | | | | | | | | | | | |
| Sales and marketing operating expense | | | 711 | | | | 887 | | | | 1,169 | | | | 1,522 | |
| Research and development operating expense | | | 339 | | | | 287 | | | | 618 | | | | 586 | |
| General and administrative operating expense | | | 1,128 | | | | 1,255 | | | | 2,414 | | | | 2,510 | |
| Operating expense subtotal | | | 2,178 | | | | 2,429 | | | | 4,201 | | | | 4,618 | |
| | | | | | | | | | | | | | | | | |
| Total share-based compensation expense | | $ | 2,583 | | | $ | 2,755 | | | $ | 4,951 | | | $ | 5,251 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Taleo Corporation | |
| Condensed Consolidated Statements of Operations (Continued) | |
| (All amounts in thousands except per share data) | |
| | | | | | | | | | | | | |
| Reconciliation of GAAP net income / (loss) and non-GAAP net income: | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | As restated | | | | | | As restated | |
| GAAP net income / (loss) reported above | | $ | 234 | | | $ | (45 | ) | | $ | (1,950 | ) | | $ | 516 | |
| Add back: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Revenue | | | | | | | | | | | | | | | | |
| Non-GAAP application revenue | | | 260 | | | | - | | | | 773 | | | | - | |
| Non-GAAP service revenue | | | - | | | | - | | | | 13 | | | | - | |
| Total Non-GAAP revenue | | | 260 | | | | - | | | | 786 | | | | - | |
| | | | | | | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | | | | | |
| Revenue review expense | | | 277 | | | | - | | | | 1,631 | | | | - | |
| Share-based compensation expense (SFAS 123(R)) | | | 2,583 | | | | 2,755 | | | | 4,951 | | | | 5,251 | |
| Amortization of acquired intangibles | | | 3,570 | | | | 109 | | | | 7,143 | | | | 218 | |
| Restructuring and severance expense | | | - | | | | 281 | | | | - | | | | 281 | |
| Non-cash tax valuation adjustment | | | - | | | | - | | | | - | | | | (332 | ) |
| Non-cash income tax audit settlement | | | (1,335 | ) | | | - | | | | (1,335 | ) | | | - | |
| | | | 5,095 | | | | 3,145 | | | | 12,390 | | | | 5,418 | |
| | | | | | | | | | | | | | | | | |
| Non-GAAP net income | | $ | 5,589 | | | $ | 3,100 | | | $ | 11,226 | | | $ | 5,934 | |
| | | | | | | | | | | | | | | | | |
| Non-GAAP net income per share | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.18 | | | $ | 0.12 | | | $ | 0.37 | | | $ | 0.23 | |
| Diluted | | $ | 0.17 | | | $ | 0.11 | | | $ | 0.36 | | | $ | 0.20 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Reconciliation of basic and fully diluted share count: | | | | | | | | | | | | | | | | |
| Basic | | | 30,417 | | | | 25,708 | | | | 30,341 | | | | 25,538 | |
| Add: Weighted Average - Series B common stock | | | - | | | | 462 | | | | - | | | | 512 | |
| Weighted Average - options and unreleased restricted stock | | | 1,716 | | | | 2,900 | | | | 497 | | | | 2,944 | |
| Weighted Average - Vurv escrow shares | | | 478 | | | | - | | | | 478 | | | | - | |
| Diluted | | | 32,611 | | | | 29,070 | | | | 31,316 | | | | 28,994 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Taleo Corporation | |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |
| (All amounts in thousands) | |
| (Unaudited) | |
| | | | | | | |
| | | Six Months Ended June 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| | | | | | | |
| | | | | | As restated | |
| Cash flows from operating activities: | | | | | | |
| Net income / (loss) | | $ | (1,950 | ) | | $ | 516 | |
| Adjustments to reconcile net income / (loss) to net cash provided by operating activities: | |
| Depreciation and amortization | | | 13,589 | | | | 4,726 | |
| Loss disposal of fixed assets | | | 16 | | | | - | |
| Amortization of tenant inducements | | | (76 | ) | | | (76 | ) |
| Share-based compensation expense | | | 4,951 | | | | 5,251 | |
| Director fees settled with stock | | | 126 | | | | 119 | |
| Bad debt expense | | | 528 | | | | 100 | |
| Changes in working capital accounts: | | | | | | | | |
| Accounts receivable | | | 2,897 | | | | 631 | |
| Prepaid expenses and other assets | | | (1,795 | ) | | | (3,648 | ) |
| Investment credit receivable | | | 509 | | | | (1,393 | ) |
| Accounts payable and accrued liabilities | | | (3,549 | ) | | | 3,877 | |
| Deferred revenue & customer deposits | | | 1,206 | | | | 9,039 | |
| Net cash provided by operating activities | | | 16,452 | | | | 19,142 | |
| Cash flows from investing activities: | | | | | | | | |
| Purchases of property and equipment | | | (5,340 | ) | | | (3,625 | ) |
| Restricted cash - decrease | | | 210 | | | | 210 | |
| Net cash used in investing activities | | | (5,130 | ) | | | (3,415 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Principal payments on capital lease obligations | | | (630 | ) | | | (24 | ) |
| Treasury stock acquired to settle employee withholding liability | | | (339 | ) | | | (572 | ) |
| Proceeds from stock options exercised and ESPP shares | | | 1,711 | | | | 3,426 | |
| Net cash provided by financing activities | | | 742 | | | | 2,830 | |
| Effect of exchange rate changes on cash and cash equivalents | | | 443 | | | | 43 | |
| Increase in cash and cash equivalents | | | 12,507 | | | | 18,600 | |
| Cash and cash equivalents: | | | | | | | | |
| Beginning of period | | | 49,462 | | | | 86,135 | |
| End of period | | $ | 61,969 | | | $ | 104,735 | |
| Supplemental cash flow disclosures: | | | | | | | | |
| Cash paid for interest | | $ | 40 | | | $ | 1 | |
| Cash paid for income taxes | | $ | 271 | | | $ | - | |
| Supplemental disclosure of non-cash financing and investing activities: | | | | | | | | |
| Property and equipment purchases included in accounts payable and accrued liabilities | | $ | 3,467 | | | $ | 2,487 | |
| Class B common stock exchanged for Class A common stock | | $ | - | | | $ | 96 | |
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Investor Contact : Nate Swanson 925-452-3156 e-mail: nswanson@taleo.com | |
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