Exhibit 99.1
PROS Holdings, Inc. Reports Fourth Quarter and Full Year 2010
Financial Results
| | • | | Fourth quarter GAAP total revenue of $20.2 million, exceeding the high end of revenue guidance. |
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| | • | | Full year GAAP total revenue of $71.0 million and non-GAAP total revenue of $74.2 million. |
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| | • | | Fourth quarter GAAP net income of $0.02 per share and non-GAAP net income of $0.08 per share. |
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| | • | | Cash and cash equivalents of $55.8 million and no debt. |
Houston, Texas — February 9, 2010 — PROS Holdings, Inc.(NYSE: PRO), a leading provider of pricing and margin optimization software solutions, today announced financial results for the fourth quarter and full year ended December 31, 2010.
Total revenue, in accordance with generally accepted accounting principles (“GAAP”), for the fourth quarter of 2010 was $20.2 million, exceeding the high end of the Company’s revenue guidance for the quarter. For the year ended December 31, 2010, GAAP revenue was $71.0 million and non-GAAP revenue was $74.2 million.
Andres Reiner, CEO, stated, “We are pleased that entering 2011, PROS is a stronger company as reflected by our growth and overall performance in 2010 and we believe PROS is in a strong position to seize the many opportunities ahead. We are confident that our growth strategies are taking hold. Awareness and adoption of PROS solutions are increasing, our customers are realizing outstanding value from our solutions, our partner ecosystem is expanding, and our product innovations continue to set new standards in the market. We believe this combination positions PROS as the software provider of choice for companies interested in improving revenues and profitability.”
For the quarter ended December 31, 2010, PROS reported a GAAP loss from operations of $0.3 million, the primary difference between GAAP and non-GAAP income from operations is share-based compensation expense of $2.5 million. For the fourth quarter of 2009, income from operations was $1.6 million. GAAP net income in the quarter was $0.6 million, or $0.02 per share, compared with GAAP net income of $1.2 million, or $0.04 per share, in the fourth quarter of 2009.
For the quarter ended December 31, 2010, non-GAAP income from operations was $2.9 million compared with $3.0 million for the same period in 2009. Non-GAAP net income was $2.2 million, or $0.08 per share, which includes the benefit of the Research and Experimentation (“R&E”) tax credit, compared with $2.3 million, or $0.09 per share, in the fourth quarter of 2009.
For the year ended December 31, 2010, loss from operations, in accordance with GAAP was $4.3 million compared with income from operations of $7.4 million for the year ended December 31, 2009. GAAP net loss for the year was $1.9 million, or $0.07 per share, compared with GAAP net income of $5.5 million, or $0.21 per share, in 2009.
For the year ended December 31, 2010, non-GAAP income from operations was $9.5 million compared with $12.8 million for the year ended December 31, 2009, as the Company invested in planned initiatives to drive long-term growth. Non-GAAP net income for the year was $6.8 million, or $0.25 per share, which includes the benefit of the R&E tax credit, compared with $9.5 million, or $0.36 per share, in 2009.
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The R&E tax credit was signed into law in the fourth quarter of 2010. As a result for GAAP, PROS recorded the benefit of the R&E tax credit for 2010 in the fourth quarter of 2010. The GAAP effect of the reinstatement of the R&E tax credit was $0.02 and $0.03 for the quarter and year ended December 31, 2010, respectively, and non-GAAP earnings per share increased $0.01 and $0.02 for the quarter and year ended December 31, 2010, respectively.
Charles Murphy, Executive Vice President and CFO, stated, “We are very pleased that our revenue exceeded the high end of our revenue guidance for the fourth quarter, as well as our second quarter of achieving significant year over year non-GAAP revenue growth. Even with our continued investments in support of long term growth, we were able to maintain a good level of profitability with a non-GAAP operating margin of 14.3% for the fourth quarter and 12.9% for the year. We are pleased with our strong balance sheet, with $55.8 million in cash and no debt, and our history of profitability. We believe our backlog growth will drive revenue growth on a full-year basis in 2011, while we continue making investment that will further strengthen our leadership position and drive longer-term growth opportunities.”
In the third quarter of 2010, the Company settled a legal dispute which resulted in a 2010 pre-tax charge to operating income of $6.2 million for the year, of which $3.1 million was a reduction of revenue and $3.1 million was an expense. The Company does not anticipate any future payment obligations related to the litigation.
The attached table provides a reconciliation of GAAP to non-GAAP income from operations and net income as well as net income per share available to common stockholders for the quarter and year ended December 31, 2010 and 2009.
Financial Outlook
Based on information as of today, PROS is providing the following outlook for the first quarter of 2011:
First Quarter of Fiscal Year 2011:
| | • | | The Company expects total revenue in the range of $20.5 million to $20.9 million. |
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| | • | | The Company is projecting GAAP income from operations of $0.8 million to $1.1 million and GAAP earnings per share of $0.02 to $0.03. |
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| | • | | The Company is projecting non-GAAP income from operations of $2.2 million to $2.5 million and non-GAAP earnings per share of $0.05 to $0.06. Non-GAAP income from operations for the first quarter excludes estimated non-cash share-based compensation charges of approximately $1.4 million. |
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| | • | | Earnings per share are based on an estimated weighted average of 27.3 million diluted shares outstanding. |
The GAAP and non-GAAP projections provided above are based on an estimated tax rate of 34%.
Backlog
We had backlog of $107.0 million as of December 31, 2010 as compared to backlog of $84.3 million as of December 31, 2009. The portion of our backlog as of December 31, 2010 reasonably expected to be recognized as revenue within the next twelve months is estimated to be $72.0 million.
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on February 9, 2010, at 4:30 p.m. (ET) to discuss the company’s financial results. To access this call, dial (800) 901-5259 (domestic) or (617) 786-4514 (international). The pass code for the call is 75495948. Additionally, a live web cast of the conference call will be available in the “Investor Relations” section of the Company’s web site at www.prospricing.com.
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Following the conference call, a replay will be available at (888) 286-8010 (domestic) or (617) 801-6888 (international). The replay pass code is 17466797. An archived web cast of this conference call will also be available in the “Investor Relations” section of the Company’s web site at www.prospricing.com.
About PROS
PROS Holdings, Inc. (NYSE: PRO) is a leading provider of prescriptive enterprise pricing and margin optimization software products, specializing in price analytics, price execution, and price optimization. By using PROS’ software products, companies gain insight into their pricing strategies, identify pricing-based profit leaks, optimize their pricing decision making and improve their business processes and financial performance. PROS’ software products implement advanced pricing science, which includes operations research, forecasting and statistics. PROS high performance software architecture supports real-time high volume transaction processing and allows PROS to handle the processing and database requirements of the most sophisticated and largest customers, including customers with 100’s of simultaneous users and sub-second electronic transactions.
PROS provides professional services to configure its software products to meet the specific pricing needs of each customer. Founded in 1985, PROS has implemented over 500 solutions across a range of industries in 50 countries. PROS is headquartered in Houston, Texas and has over 400 personnel, more than 110 with advanced degrees and over 25 with Ph.D.s. To learn more about PROS, please visit www.prospricing.com.
Forward-looking Statements
This press release contains forward-looking statements, including statements about PROS’ future financial performance, positioning of PROS, optimism of PROS management, successes and demand of customers in PROS’ target market of pricing and margin optimization, the growth of PROS pricing partner and influencer ecosystem, PROS’ markets, product development, the demand for PROS solutions, the performance of PROS solutions, the predictability of the PROS business and PROS’ effective tax rate and the continued reinstatement of the R&E tax credit. The forward-looking statements contained in this press release are based upon PROS’ historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates or expectations will be achieved. Factors that could cause actual results to differ materially from those described herein include risks related to: (a) a slowdown in the economy has on PROS’ sales cycles, prospects’ and customers’ spending decisions and timing of implementation decisions, (b) PROS’ ability to sell its solutions and successfully install and deliver the products and services at levels required to meet its future financial performance expectations, (c) PROS’ ability to develop and sell new products and product enhancements with the required technical specifications and functionality desired by customers, (d) the ability of the market for enterprise pricing and margin optimization software to grow, (e) the ability of the PROS revenue model to continue to provide the level of predictability to the PROS business which it historically has provided, (f) PROS’ ability to maintain its current level of gross margins, (g) PROS’ ability to maintain historical maintenance renewal rates, (h) PROS’ ability to deliver its solutions according to the acceptance criteria of its customers and the avoidance of dispute related thereto, (i) ability of PROS management to grow the business successfully, (j) PROS’ implementation of its solutions without modification or negotiation of contractual arrangements, (k) the amount of revenue we expect to derive from backlog and (l) the impact of currency fluctuations on our results of operations. Additional information relating to the uncertainty affecting the PROS business are contained in PROS’ filings with the Securities and Exchange Commission. These forward-looking statements represent PROS’ expectations as of the date of this press release. Subsequent events may cause these expectations to change, and PROS disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
PROS has provided in this release certain financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP revenue, gross profit, selling, general and administrative, research and development, income from operations, net income, diluted earnings per share and net cash provided by operating activities. PROS 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 PROS’ ongoing operational performance.
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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. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release. PROS use of non-GAAP financial measures may not be consistent with the presentations by similar companies in PROS industry.
Investor Contact:
PROS Investor Relations
Tel: 713-335-5879
e-mail:ir@PROSpricing.com
Media Contact:
PROS Corporate Communications
Tel: 713-335-5197
e-mail:corpcomm@PROSpricing.com
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PROS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
(Unaudited)
| | | | | | | | | |
| | | December 31, | |
| | | 2010 | | | 2009 | |
Assets: | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 55,845 | | | $ | 62,449 | |
| Short-term investments | | | 73 | | | | — | |
| Accounts and unbilled receivables, net of allowance of $1,020 and $1,300, respectively | | | 27,402 | | | | 12,035 | |
| Prepaid expenses and other current assets | | | 6,170 | | | | 4,143 | |
| | | | | | | |
| Total current assets | | | 89,490 | | | | 78,627 | |
| Restricted cash | | | 293 | | | | — | |
| Property and equipment, net | | | 3,248 | | | | 2,959 | |
| Other long term assets, net | | | 5,097 | | | | 3,743 | |
| | | | | | | |
| Total assets | | $ | 98,128 | | | $ | 85,329 | |
| | | | | | | |
| | | | | | | | | |
Liabilities and stockholders’ equity: | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 2,131 | | | $ | 1,198 | |
| Accrued liabilities | | | 1,998 | | | | 3,199 | |
| Accrued payroll and other employee benefits | | | 4,606 | | | | 4,510 | |
| Deferred revenue | | | 28,429 | | | | 14,099 | |
| Other current liabilities | | | — | | | | 4,866 | |
| | | | | | | |
| Total current liabilities | | | 37,164 | | | | 27,872 | |
| Long-term deferred revenue | | | 1,461 | | | | 2,418 | |
| | | | | | | |
| Total liabilities | | | 38,625 | | | | 30,290 | |
| | | | | | | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders’ equity: | | | | | | | | |
| Common stock, $0.001 par value, 75,000,000 shares authorized, 30,777,000 and 30,163,508 shares issued, respectively, 26,359,415 and 25,745,923 shares outstanding, respectively | | | 31 | | | | 30 | |
| Additional paid-in capital | | | 69,844 | | | | 63,439 | |
| Treasury stock, 4,417,585 common shares, at cost | | | (13,938 | ) | | | (13,938 | ) |
| Accumulated other comprehensive (loss) income | | | (11 | ) | | | — | |
| Retained earnings | | | 3,577 | | | | 5,508 | |
| | | | | | | |
| Total stockholders’ equity | | | 59,503 | | | | 55,039 | |
| | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 98,128 | | | $ | 85,329 | |
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PROS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months | | | | |
| | | Ended December 31, | | | Year Ended December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
Revenue: | | | | | | | | | | | | | | | | |
| License and implementation | | $ | 12,685 | | | $ | 10,280 | | | $ | 42,067 | | | $ | 43,684 | |
| Maintenance and support | | | 7,508 | | | | 6,641 | | | | 28,978 | | | | 25,099 | |
| | | | | | | | | | | | | |
| Total revenue | | | 20,193 | | | | 16,921 | | | | 71,045 | | | | 68,783 | |
| | | | | | | | | | | | | | | | | |
Cost of revenue: | | | | | | | | | | | | | | | | |
| License and implementation | | | 4,319 | | | | 3,471 | | | | 14,751 | | | | 13,893 | |
| Maintenance and support | | | 1,434 | | | | 1,146 | | | | 5,816 | | | | 4,752 | |
| | | | | | | | | | | | | |
| Total cost of revenue | | | 5,753 | | | | 4,617 | | | | 20,567 | | | | 18,645 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 14,440 | | | | 12,304 | | | | 50,478 | | | | 50,138 | |
| Gross margin | | | 71.5 | % | | | 72.7 | % | | | 71.1 | % | | | 72.9 | % |
| | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
| Selling, general and administrative | | | 9,617 | | | | 5,616 | | | | 34,101 | | | | 22,635 | |
| Research and development | | | 5,122 | | | | 5,137 | | | | 20,664 | | | | 20,136 | |
| | | | | | | | | | | | | |
| Total operating expenses | | | 14,739 | | | | 10,753 | | | | 54,765 | | | | 42,771 | |
| | | | | | | | | | | | | | | | | |
| (Loss) income from operations | | | (299 | ) | | | 1,551 | | | | (4,287 | ) | | | 7,367 | |
| | | | | | | | | | | | | | | | | |
| Other income: | | | | | | | | | | | | | | | | |
| Interest income | | | 16 | | | | 19 | | | | 69 | | | | 196 | |
| Other income | | | 25 | | | | — | | | | 25 | | | | — | |
| | | | | | | | | | | | | |
| (Loss) income before income tax provision | | | (258 | ) | | | 1,570 | | | | (4,193 | ) | | | 7,563 | |
| Income tax (benefit) provision | | | (889 | ) | | | 378 | | | | (2,262 | ) | | | 2,047 | |
| | | | | | | | | | | | | |
| Net (loss) income | | $ | 631 | | | $ | 1,192 | | | | (1,931 | ) | | | 5,516 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net (loss) earnings attributable to common stockholders per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.02 | | | $ | 0.05 | | | $ | (0.07 | ) | | $ | 0.21 | |
| Diluted | | $ | 0.02 | | | $ | 0.04 | | | $ | (0.07 | ) | | $ | 0.21 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares: | | | | | | | | | | | | | | | | |
| Basic | | | 26,234,825 | | | | 25,734,068 | | | | 26,089,850 | | | | 25,710,569 | |
| Diluted | | | 27,136,193 | | | | 26,736,311 | | | | 26,089,850 | | | | 26,430,817 | |
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PROS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
| | | | | | | | | |
| | | Year Ended December 31, | |
| | | 2010 | | | 2009 | |
Operating activities: | | | | | | | | |
| Net (loss) income | | $ | (1,931 | ) | | $ | 5,516 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation | | | 1,361 | | | | 1,283 | |
| Stock-based compensation | | | 6,964 | | | | 5,475 | |
| Excess tax benefits on vesting of restricted stock units | | | (958 | ) | | | — | |
| Deferred income taxes | | | (187 | ) | | | (1,563 | ) |
| Provision for doubtful accounts | | | (87 | ) | | | (566 | ) |
| Amortization of capitalized costs | | | — | | | | 203 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (14,619 | ) | | | 4,377 | |
| Unbilled receivables | | | (2,242 | ) | | | 1,932 | |
| Prepaid expenses and other | | | (2,738 | ) | | | (639 | ) |
| Accounts payable, accrued liabilities, accrued contract labor and accrued payroll | | | 654 | | | | (1,597 | ) |
| Other current liabilities | | | (4,866 | ) | | | — | |
| Deferred revenue | | | 13,373 | | | | (2,958 | ) |
| | | | | | | |
| Net cash (used in) provided by operating activities | | | (5,276 | ) | | | 11,463 | |
| | | | | | | | | |
Investing activities: | | | | | | | | |
| Purchases of property and equipment | | | (1,524 | ) | | | (1,111 | ) |
| Increase in restricted cash | | | (366 | ) | | | — | |
| | | | | | | |
| Net cash used in investing activities | | | (1,890 | ) | | | (1,111 | ) |
| | | | | | | | | |
Financing activities: | | | | | | | | |
| Proceeds from the exercise of stock options | | | 889 | | | | 118 | |
| Excess tax benefits on vesting of restricted stock units | | | 958 | | | | — | |
| Tax withholding related to net share settlement of restricted stock units | | | (1,285 | ) | | | — | |
| | | | | | | |
| Net cash provided by (used in) financing activities | | | 562 | | | | 118 | |
| | | | | | | |
| Net (decrease) increase in cash and cash equivalents | | | (6,604 | ) | | | 10,470 | |
Cash and cash equivalents: | | | | | | | | |
| Beginning of period | | | 62,449 | | | | 51,979 | |
| | | | | | | |
| End of period | | $ | 55,845 | | | $ | 62,449 | |
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PROS HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Dollars in thousands, except per share data)
(Unaudited)
We use these Non-GAAP financial numbers to assist us in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months | | | Quarter over | | | | | | | | | | | Year over | |
| | | Ended December 31, | | | Quarter | | | Year Ended December 31, | | | Year | |
| | | 2010 | | | 2009 | | | % change | | | 2010 | | | 2009 | | | % change | |
Total revenue | | $ | 20,193 | | | $ | 16,921 | | | | 19 | % | | $ | 71,045 | | | $ | 68,783 | | | | 3 | % |
| Non-GAAP adjustment: | | | | | | | | | | | | | | | | | | | | | | | | |
| Litigation settlement | | | — | | | | — | | | | | | | | 3,134 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Non-GAAP total revenue | | $ | 20,193 | | | $ | 16,921 | | | | 19 | % | | $ | 74,179 | | | $ | 68,783 | | | | 8 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
GAAP gross profit | | $ | 14,440 | | | $ | 12,304 | | | | 17 | % | | $ | 50,478 | | | $ | 50,138 | | | | 1 | % |
| Non-GAAP adjustment: | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP share-based compensation | | | 262 | | | | 232 | | | | | | | | 876 | | | | 872 | | | | | |
| Litigation settlement | | | — | | | | — | | | | | | | | 3,134 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Non-GAAP gross profit | | $ | 14,702 | | | $ | 12,536 | | | | 17 | % | | $ | 54,488 | | | $ | 51,010 | | | | 7 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP gross margin | | | 72.8 | % | | | 74.1 | % | | | | | | | 73.5 | % | | | 74.2 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
GAAP selling, general and administrative | | $ | 9,617 | | | $ | 5,616 | | | | 71 | % | | $ | 34,101 | | | $ | 22,635 | | | | 51 | % |
| Non-GAAP adjustment: | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP share-based compensation | | | 1,902 | | | | 810 | | | | | | | | 4,859 | | | | 2,938 | | | | | |
| Litigation & settlement expense | | | — | | | | — | | | | | | | | 3,040 | | | | — | | | | | |
| Separation compensation | | | 683 | | | | — | | | | | | | | 683 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Non- GAAP — selling, general and administrative | | $ | 7,032 | | | $ | 4,806 | | | | 46 | % | | $ | 25,519 | | | $ | 19,697 | | | | 30 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
GAAP research and development | | $ | 5,122 | | | $ | 5,137 | | | | (0 | )% | | $ | 20,664 | | | $ | 20,136 | | | | 3 | % |
| Non-GAAP adjustment: | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP share-based compensation | | | 339 | | | | 411 | | | | | | | | 1,229 | | | | 1,665 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Non- GAAP research and development | | $ | 4,783 | | | $ | 4,726 | | | | 1 | % | | $ | 19,435 | | | $ | 18,471 | | | | 5 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from operations | | $ | (299 | ) | | $ | 1,551 | | | nm | | | $ | (4,287 | ) | | $ | 7,367 | | | nm | |
| Non-GAAP adjustment: | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP share-based compensation | | | 2,503 | | | | 1,453 | | | | | | | | 6,964 | | | | 5,475 | | | | | |
| Litigation & settlement expense | | | — | | | | — | | | | | | | | 6,174 | | | | — | | | | | |
| Separation compensation | | | 683 | | | | — | | | | | | | | 683 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Non-GAAP income from operations | | $ | 2,887 | | | $ | 3,004 | | | | (4 | )% | | $ | 9,534 | | | $ | 12,842 | | | | (26 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP income from operations % | | | 14.3 | % | | | 17.8 | % | | | | | | | 12.9 | % | | | 18.7 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
GAAP (loss) net income | | $ | 631 | | | $ | 1,192 | | | | (47 | )% | | $ | (1,931 | ) | | $ | 5,516 | | | nm | |
| Non-GAAP adjustment: | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP share-based compensation | | | 2,503 | | | | 1,453 | | | | | | | | 6,964 | | | | 5,475 | | | | | |
| Litigation & settlement expense | | | — | | | | — | | | | | | | | 6,174 | | | | — | | | | | |
| Separation compensation | | | 683 | | | | — | | | | | | | | 683 | | | | — | | | | | |
| Tax impact of the reinstatement of the R&E tax credit | | | (413 | ) | | | — | | | | | | | | — | | | | — | | | | | |
| Tax impact related to non-GAAP adjustments | | | (1,196 | ) | | | (362 | ) | | | | | | | (5,048 | ) | | | (1,482 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Non-GAAP net income | | $ | 2,208 | | | $ | 2,283 | | | | (3 | )% | | $ | 6,842 | | | $ | 9,509 | | | | (28 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Shares used in computing non-GAAP earnings per share | | | 27,136 | | | | 26,736 | | | | | | | | 26,856 | | | | 26,431 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP diluted earnings per share | | $ | 0.08 | | | $ | 0.09 | | | | | | | $ | 0.25 | | | $ | 0.36 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Detail of non-GAAP share-based compensation expense: | | | | | | | | | | | | | | | | | | | | | | | | |
| Cost of revenue | | $ | 262 | | | $ | 232 | | | | | | | $ | 876 | | | $ | 872 | | | | | |
| Selling, general and administrative | | | 1,902 | | | | 810 | | | | | | | | 4,859 | | | | 2,938 | | | | | |
| Research and development | | | 339 | | | | 411 | | | | | | | | 1,229 | | | | 1,665 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total share-based compensation expense | | $ | 2,503 | | | $ | 1,453 | | | | | | | $ | 6,964 | | | $ | 5,475 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
GAAP net cash (used in) provided by operating activities | | | | | | | | | | | | | | $ | (5,276 | ) | | $ | 11,463 | | | | | |
| Non-GAAP adjustment: | | | | | | | | | | | | | | | | | | | | | | | | |
| Litigation & settlement expense | | | | | | | | | | | | | | | 11,056 | | | | — | | | | | |
| Tax impact related to non-GAAP adjustments | | | | | | | | | | | | | | | (3,759 | ) | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP net cash provided by operating activities | | | | | | | | | | | | | | $ | 2,021 | | | $ | 11,463 | | | | | |
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8
