Exhibit 99.1
Guidance Software Reports 2009 Fourth Quarter and Year End Results
| • | Revenue Increases 9 Percent Sequentially |
| • | Q4 2009 non GAAP EPS $0.01 |
| • | Deferred Revenues Reach Record Levels |
| • | Q4 2009 Cash Flow from Operations of $7.3 million |
PASADENA, Calif., February 17, 2010 (Business Wire) – Guidance Software, Inc. (NASDAQ: GUID) The World Leader in Digital Investigations™ today reported its financial results for the fourth quarter and year ended December 31, 2009.
For the fourth quarter of fiscal 2009, Guidance Software reported total revenue of $20.8 million, an increase of $1.8 million, or 9 percent, from the third quarter of fiscal 2009. Product revenue was $10.2 million in the fourth quarter of 2009, an increase of $1.7 million, or 20 percent, from the third quarter. Services and maintenance revenue was $10.6 million compared to $10.5 million in the third quarter. For the fourth quarter of fiscal 2008 total revenue was $25.2 million, product revenue was $14.2 million, and services and maintenance revenue was $11.0 million.
For the year ended December 31, 2009, total revenue was $74.9 million compared to $91.5 million for the year ended December 31, 2008.
The Company experienced strong growth in the number of new EnCase® Enterprise customers added during the fourth quarter, as well as the overall number of deals closed during the quarter. “We continued to make substantial progress in the fourth quarter, particularly compared to the first half of the year, and are pleased to report another quarter of sequential revenue growth. Together with a fresh slate of products scheduled for 2010, including Version 4 of EnCase eDiscovery, the industry’s first fully integrated eDiscovery solution, and the continued benefits from our reduced cost structure, we are well positioned for growth in 2010,” said Victor Limongelli, President and CEO of Guidance Software.
For the fourth quarter of fiscal 2009, the Company reported a GAAP net loss of $0.6 million, or ($0.02) per share, compared to a GAAP net loss of $2.2 million, or ($0.09) per share, in the third quarter of fiscal 2009. For the fourth quarter of fiscal 2008, GAAP net loss was $1.6 million, or ($0.07) per share.
On a non-GAAP basis, excluding share-based compensation and restructuring costs, the Company reported pre-tax net income of $0.2 million, or $0.01 per share, in the fourth quarter of 2009. For the fourth quarter of fiscal 2008 non-GAAP pre-tax net income was $1.2 million, or $0.05 per share.
For the year ended December 31, 2009, the Company reported a GAAP net loss of $13.9 million, or ($0.60) per share, compared to a net loss of $10.6 million, or ($0.46) per share, for the prior year. Excluding share-based compensation and restructuring expenses, non-GAAP pre-tax loss for the year ended December 31, 2009 was $8.1 million, or ($0.35) per share, compared to non-GAAP pre-tax income of $347,000, or $0.01 per share, in the prior year. For 2008, non-GAAP pre-tax income excludes share-based compensation.
“In addition to achieving our fourth quarter financial targets, the Company generated $7.3 million in cash from operations for the quarter and finished the year with a very strong balance sheet,” said Barry Plaga, Chief Financial Officer of Guidance Software. “The Company had cash and cash equivalents of $36.6 million and no debt as of December 31, 2009, while deferred revenue increased to a record $36.1 million, an increase of $2.8 million over the previous year.”
Fourth Quarter 2009 Highlights
| • | The Company added 48 new EnCase Enterprise customers in the fourth quarter of 2009 as compared to 41 in the fourth quarter of 2008; the total number of EnCase Enterprise customers gained over the life of the product now exceeds 800, including over half of the Fortune 100 and over twenty-five percent of the Fortune 500. |
| • | The Company also added 19 new EnCase eDiscovery customers in the fourth quarter of 2009, compared to 29 in the comparable period in 2008. Of the 19 new EnCase eDiscovery customers, 15 chose a perpetual license (compared to 15 in 2008) and 4 selected the Company’s flexible Pay-Per-Use pricing option (compared to 14 in 2008). The total number of EnCase eDiscovery customers since the product’s release now exceeds 220, including 20 percent of the Fortune 100. In addition to the 19 new EnCase eDiscovery customers, two pre-existing Pay-Per-Use customers converted to perpetual licenses in Q4. |
| • | In December 2009, the Company announced a business alliance with KMPG LLP to offer services that leverage Guidance Software’s EnCase eDiscovery software and KPMG’s Forensic Technology Services. |
| • | In January 2010, the Company announced the anticipated release in the second quarter of 2010 of Version 4 of EnCase eDiscovery, the industry’s first fully integrated eDiscovery solution. It will provide customers’ legal and IT teams with one integrated software solution that delivers all of the functionality that organizations desire for in-house electronic discovery, including: |
| • | Legal Hold |
| • | Pre-collection Analytics |
| • | Identification, Preservation, and Collection |
| • | Processing, Analysis, and Early Case Assessment |
| • | First-Pass Review |
Financial Outlook:
For 2010, the Company is expecting revenue growth of approximately 8-12 percent over 2009, reaching $80-$84 million, and expects non-GAAP, pre-tax earnings per share to be approximately breakeven.
Conference Call Information:
The Company will host a conference call today at 2:00 p.m. pacific time, 5:00 p.m. eastern time to discuss its quarterly results. Participants should call (888) 695-0608 (North America) or (719) 325-2191 (International) and should dial in at least 5 minutes prior to the conference call.
A webcast and replay of the call may also be found on the Internet through Guidance Software’s Investor Relations web site athttp://investors.guidancesoftware.com/events.cfm. Registered users may access this content over the internet, and there is no cost to register. If you have not already registered, please do so at least 15 minutes prior to the start of the conference call.
An audio-only replay of the call will be available by calling (719) 457-0820, passcode 6187144, available from 7:00 pm eastern time, February 17, 2010 through midnight eastern time, February 23, 2010.
Forward Looking Statements:
This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from current expectations.
There can be no assurance that demand for the Company’s products will continue at current or greater levels, or that the Company will continue to grow revenues, or be profitable.
There are also risks that the Company’s pursuit of providing network security and eDiscovery technology might not be successful, or that if successful, it will not materially enhance the Company’s financial performance; that the Company could fail to retain key employees; that changes in customer requirements and other general economic and political uncertainties could impact the Company’s relationship with its customers; and that delays in product development, competitive pressures or technical difficulties could impact timely delivery of next-generation products; and other risks and uncertainties that are described from time to time in Guidance Software’s periodic reports and registration statements filed with the Securities and Exchange Commission.
The Company specifically disclaims any responsibility for updating these forward-looking statements.
About Guidance Software:
Guidance Software is recognized worldwide as the industry leader in digital investigative solutions. Its EnCase® platform provides the foundation for government, corporate and law enforcement organizations to conduct thorough, network-enabled, and court-validated computer investigations of any kind, such as responding to eDiscovery requests, conducting internal investigations, responding to regulatory inquiries or performing data and compliance auditing - all while maintaining the integrity of the data. There are more than 30,000 licensed users of the EnCase® technology worldwide, the EnCase Enterprise platform is used by over half of the Fortune 100, and thousands attend Guidance Software’s renowned training programs annually. Validated by numerous courts, corporate legal departments, government agencies and law enforcement organizations worldwide, EnCase has been honored with industry awards and recognition fromLaw Technology News, KMWorld, Government Security News, and Law Enforcement Technology. For more information about Guidance Software, visitwww.guidancesoftware.com.
Source: Guidance Software
Rasmus van der Colff
626-229-9191 x107
Investor Relations
investorrelations@guidancesoftware.com
GUID-F
Guidance Software, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenues: | ||||||||||||||||
Product revenue | $ | 10,234 | $ | 14,159 | $ | 34,068 | $ | 48,245 | ||||||||
Services and maintenance revenue | 10,556 | 10,998 | 40,822 | 43,221 | ||||||||||||
Total revenues | 20,790 | 25,157 | 74,890 | 91,466 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of product revenue | 819 | 916 | 2,793 | 3,143 | ||||||||||||
Cost of services and maintenance revenue | 4,350 | 5,647 | 17,898 | 22,805 | ||||||||||||
Total cost of revenues | 5,169 | 6,563 | 20,691 | 25,948 | ||||||||||||
Gross profit | 15,621 | 18,594 | 54,199 | 65,518 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 9,087 | 10,212 | 36,475 | 39,714 | ||||||||||||
Research and development | 3,628 | 3,558 | 14,225 | 13,022 | ||||||||||||
General and administrative | 2,917 | 4,923 | 13,497 | 18,054 | ||||||||||||
Depreciation | 1,069 | 1,026 | 4,427 | 4,098 | ||||||||||||
Total operating expenses | 16,701 | 19,719 | 68,624 | 74,888 | ||||||||||||
Operating loss | (1,080 | ) | (1,125 | ) | (14,425 | ) | (9,370 | ) | ||||||||
Interest income and other, net | 44 | 75 | 120 | 741 | ||||||||||||
Loss before income taxes | (1,036 | ) | (1,050 | ) | (14,305 | ) | (8,629 | ) | ||||||||
Income tax provision (benefit) | (465 | ) | 567 | (380 | ) | 1,967 | ||||||||||
Net loss | $ | (571 | ) | $ | (1,617 | ) | $ | (13,925 | ) | $ | (10,596 | ) | ||||
Net loss per share | $ | (0.02 | ) | $ | (0.07 | ) | $ | (0.60 | ) | $ | (0.46 | ) | ||||
Shares used in per share calculation - basic | 22,961 | 23,255 | 23,093 | 23,160 | ||||||||||||
Shares used in per share calculation - diluted | 22,961 | 23,255 | 23,093 | 23,160 | ||||||||||||
Supplemental Financial Data | ||||||||||||||||
Non-GAAP income (loss) before income taxes excluding share-based compensation and restructuring expense | $ | 190 | $ | 1,194 | $ | (8,060 | ) | $ | 347 | |||||||
Non-GAAP income (loss) before income taxes per share excluding share-based compensation and restructuring expense | $ | 0.01 | $ | 0.05 | $ | (0.35 | ) | $ | 0.01 | |||||||
Guidance Software, Inc.
Calculation of Pre-Tax Non-GAAP Income (Loss)
(unaudited)
(in thousands, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Calculation of pre-tax non-GAAP income (loss): | ||||||||||||||||
GAAP net loss | $ | (571 | ) | $ | (1,617 | ) | $ | (13,925 | ) | $ | (10,596 | ) | ||||
Add: | ||||||||||||||||
Income tax provision | (465 | ) | 567 | (380 | ) | 1,967 | ||||||||||
Restructuring expense | — | — | 302 | — | ||||||||||||
Share-based compensation expense (including payroll taxes paid by the Company) | 1,226 | 2,244 | 5,943 | 8,976 | ||||||||||||
Non-GAAP income (loss) before income taxes excluding share-based compensation expense and restructuring expense | $ | 190 | $ | 1,194 | $ | (8,060 | ) | $ | 347 | |||||||
Per share non-GAAP loss before income taxes excluding share-based compensation expense and restructuring expense: | ||||||||||||||||
Basic | $ | 0.01 | $ | 0.05 | $ | (0.35 | ) | $ | 0.01 | |||||||
Diluted | $ | 0.01 | $ | 0.05 | $ | (0.35 | ) | $ | 0.01 | |||||||
Shares used in per share calculations: | ||||||||||||||||
Basic | 22,961 | 23,255 | 23,093 | 23,160 | ||||||||||||
Diluted | 22,961 | 23,255 | 23,093 | 23,160 | ||||||||||||
Detail of Share-based Compensation Expense: | ||||||||||||||||
Cost of product revenue | 5 | 6 | 23 | 36 | ||||||||||||
Cost of service and maintenance revenue | 213 | 461 | 1,098 | 1,788 | ||||||||||||
Selling and marketing | 425 | 774 | 1,992 | 2,923 | ||||||||||||
Research and development | 305 | 371 | 1,320 | 1,433 | ||||||||||||
General and administrative | 278 | 632 | 1,510 | 2,796 | ||||||||||||
Total share-based compensation expense | 1,226 | 2,244 | 5,943 | 8,976 | ||||||||||||
Detail of Restructuring Expense: | ||||||||||||||||
Cost of product revenue | — | — | 13 | — | ||||||||||||
Cost of service and maintenance revenue | — | — | 89 | — | ||||||||||||
Selling and marketing | — | — | 98 | — | ||||||||||||
Research and development | — | — | — | — | ||||||||||||
General and administrative | — | — | 102 | — | ||||||||||||
Total Realignment Expenses | — | — | 302 | — | ||||||||||||
Guidance Software, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| December 31, 2009 | September 30, 2009 | December 31, 2008 | ||||||||||
| (unaudited) | ||||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 36,585 | $ | 30,237 | $ | 36,006 | ||||||
Trade receivables, net | 16,932 | 20,467 | 24,993 | |||||||||
Prepaid expenses, inventory and other current assets | 2,233 | 2,310 | 2,356 | |||||||||
Total current assets | 55,750 | 53,014 | 63,355 | |||||||||
Long-term assets: | ||||||||||||
Property and equipment, net | 12,835 | 13,628 | 15,041 | |||||||||
Other assets | 434 | 434 | 448 | |||||||||
Total long-term assets | 13,269 | 14,062 | 15,489 | |||||||||
Total assets | $ | 69,019 | $ | 67,076 | $ | 78,844 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 3,226 | $ | 2,552 | $ | 3,826 | ||||||
Accrued liabilities | 4,143 | 5,799 | 5,953 | |||||||||
Capital lease obligations | 75 | 45 | 115 | |||||||||
Deferred revenue | 32,336 | 29,457 | 30,004 | |||||||||
Total current liabilities | 39,780 | 37,853 | 39,898 | |||||||||
Long-term liabilities: | ||||||||||||
Rent incentives | 1,929 | 2,086 | 2,523 | |||||||||
Capital lease obligations | 96 | 21 | 48 | |||||||||
Deferred revenue | 3,752 | 4,262 | 3,281 | |||||||||
Total long-term liabilities | 5,777 | 6,369 | 5,852 | |||||||||
Stockholders’ equity: | ||||||||||||
Common stock | 23 | 23 | 23 | |||||||||
Additional paid-in capital | 62,683 | 61,339 | 56,622 | |||||||||
Treasury stock | (2,080 | ) | (1,915 | ) | (312 | ) | ||||||
Accumulated deficit | (37,164 | ) | (36,593 | ) | (23,239 | ) | ||||||
Total stockholders’ equity | 23,462 | 22,854 | 33,094 | |||||||||
Total liabilities and stockholders’ equity | $ | 69,019 | $ | 67,076 | $ | 78,844 | ||||||
Guidance Software, Inc
Unaudited Cash Flow Summary
(in thousands)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Operating Activities: | ||||||||||||||||
Net loss | $ | (571 | ) | $ | (1,617 | ) | $ | (13,925 | ) | $ | (10,596 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation & amortization | 1,069 | 1,026 | 4,427 | 4,098 | ||||||||||||
Provision (benefit) for doubtful accounts | (150 | ) | 180 | (252 | ) | 1,407 | ||||||||||
Share-based compensation | 1,226 | 2,244 | 5,943 | 8,976 | ||||||||||||
Excess tax benefit from share-based compensation | — | (168 | ) | — | (168 | ) | ||||||||||
Deferred taxes | — | — | — | 1,386 | ||||||||||||
Loss on disposal of assets | 1 | 18 | 1 | 90 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade receivables | 3,685 | 809 | 8,313 | (5,307 | ) | |||||||||||
Prepaid expenses, inventory & other current assets | 77 | 336 | 137 | 548 | ||||||||||||
Accounts payable | 1,356 | (491 | ) | (86 | ) | (1,503 | ) | |||||||||
Accrued liabilities | (1,812 | ) | (1,243 | ) | (2,402 | ) | (830 | ) | ||||||||
Deferred revenue | 2,370 | 3,419 | 2,803 | 6,084 | ||||||||||||
Net cash provided by operating activities | 7,251 | 4,513 | 4,959 | 4,185 | ||||||||||||
Investing Activities: | ||||||||||||||||
Purchase of marketable debt securities | — | — | — | (9,947 | ) | |||||||||||
Sale of marketable debt securities | — | 5,000 | — | 9,947 | ||||||||||||
Purchase of property and equipment | (839 | ) | (2,508 | ) | (2,576 | ) | (5,980 | ) | ||||||||
Proceeds from sale of property and equipment | 6 | — | 6 | — | ||||||||||||
Net cash provided by (used in) investing activities | (833 | ) | 2,492 | (2,570 | ) | (5,980 | ) | |||||||||
Financing Activities: | ||||||||||||||||
Proceeds from the exercise of stock options | 118 | — | 118 | 962 | ||||||||||||
Repurchases of common stock | (164 | ) | (61 | ) | (1,768 | ) | (312 | ) | ||||||||
Principal payments on capital lease obligations | (24 | ) | (106 | ) | (160 | ) | (608 | ) | ||||||||
Excess tax benefit from share-based compensation | — | 168 | — | 168 | ||||||||||||
Net cash provided by (used in) financing activities | (70 | ) | 1 | (1,810 | ) | 210 | ||||||||||
Net increase (decrease) in cash and cash equivalents | 6,348 | 7,006 | 579 | (1,585 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 30,237 | 29,000 | 36,006 | 37,591 | ||||||||||||
Cash and cash equivalents at end of period | $ | 36,585 | $ | 36,006 | $ | 36,585 | $ | 36,006 | ||||||||