Exhibit 99.1
PLATO Learning Reports First Quarter 2009 Results
MINNEAPOLIS--(BUSINESS WIRE)--March 3, 2009--PLATO Learning, Inc. (NASDAQ: TUTR):
First Quarter Highlights
- Subscription Revenue up 24%; Subscription Orders up 18%
- Gross Margins Improve to 58% From 46% in Q108
- Net Income of $259,000, or $0.01 per Share, vs. Net Loss of $3.9 million, or ($0.16) per Share, in Q108
- PLE™ Orders Increase 38%
PLATO Learning, Inc. (NASDAQ: TUTR), a leading provider of K–adult e-learning solutions, today announced results for its fiscal 2009 first quarter ended January 31, 2009.
Total revenue for the first quarter was $16.0 million, compared to $16.1 million in the first quarter of 2008. Subscription revenue increased 24% to $9.9 million from $8.0 million in the first quarter last year. License fee revenue declined to $1.0 million from $2.3 million in the first quarter of 2008 on lower orders for the Company’s legacy perpetual products. Subscription orders grew 18% to $6.7 million compared to $5.6 million in the prior year. Improved gross margins and operating efficiencies resulted in the Company reporting a first quarter profit of $259,000, or $0.01 per share, compared to a net loss of ($3.9) million, or ($0.16) per share, a year ago. Total orders for the quarter were $10.8 million, compared to $10.6 million in the first quarter of fiscal 2008.
Vin Riera, PLATO Learning President and CEO said, “The achievement of profitability in the first quarter is a strong indication of the progress we’re making in our business. We continue to deliver solid increases in subscription orders and revenues in the quarter, and the leverage of our software-as-a-service (SaaS) business model resulted in significant improvements in gross margins and operating expenses compared to a year ago.
“In addition to the significant improvements in our financial results, we are very pleased by the continued market success of our instructional solutions delivered on PLE™. During the first quarter we added 71 school districts and community colleges as first-time subscribers to PLE™, bringing our total PLE™ customer base to more than 1,240 educational institutions across the U.S., a 49% increase over the first quarter of fiscal 2008. New PLATO Learning customers accounted for more than half of the total PLE™ customers added in the quarter. Registered users of PLE™ grew to 1.3 million at January 31, 2009, a 108% increase compared to this time last year. While overall economic conditions remain challenging, we believe our industry leading instructional solutions delivered on our PLE™ platform will lead to continued growth of our SaaS business going forward,” Mr. Riera concluded.
Subscription margins in the first quarter improved 19 percentage points to approximately 60%, resulting in an improvement in total gross margins for the quarter to 58%, compared to 46% in the same quarter last year. The improvement in subscription margins reflects a 24% growth in subscription revenues, and a decline in subscription product amortization due to lower capitalized software development, and impairments, in fiscal 2008. Operating expenses in the first quarter decreased more than 20% to $9.1 million, compared to $11.4 million in the same quarter last year. Earnings before interest, taxes, depreciation and amortization (EBITDA, a non-GAAP measure), were $3.0 million in the first quarter of 2009, compared to $0.4 million in the first quarter of 2008.
Cash and cash equivalents at January 31, 2009 were $12.3 million, compared to $20.0 million at December 31, 2008. The quarterly decline in cash reflects the normal seasonality of the education market, and approximately $3.0 million in non-recurring cash payments, including $1.7 million in severance paid to terminated employees, and $1.3 million in non-recurring royalty payments.
Guidance
Mr. Riera continued, “We achieved strong double digit subscription order and revenue growth in the first quarter, but given the general economic environment and unclear outlook for education spending, we continue to remain cautious regarding the outlook for the remainder of fiscal 2009. Therefore we are reaffirming our previously provided guidance that we expect high-single-digit subscription order growth, and low double-digit subscription revenue growth in fiscal 2009. Cash balances at the end of the first quarter finished where we expected. Cash is expected to decline modestly at the end of the second quarter, our seasonal low point historically, to between $9.0 million and $10.0 million, and build again in the back half of the fiscal year as we move through the primary K-12 buying season. We continue to expect cash balances to end fiscal year 2009 at or slightly above $20 million.
“We are very pleased to have achieved profitability in the first quarter. Profitability for fiscal 2009 remains our goal; however, we are not providing that guidance at this time,” Mr. Riera concluded.
Conference Call
A conference call to discuss this announcement is scheduled for today, March 3, 2009, at 3:45 pm CT (4:45 pm ET). The dial-in number for this call is 800-240-5318 in the U.S. and Canada, and 303-242-0002 internationally. Attendees should call 10 minutes prior to the start of the call and inform the operator they are participating in PLATO Learning’s call. A recording of the call will be available from 6:00 pm CT (7:00 pm ET) on March 3, 2009, until midnight on March 10, 2009. To access the recording, call 800-405-2236 in the U.S. and Canada and 303-590-3000 internationally. At the prompt, enter pass code number 11127124#.
Additionally, investors have the opportunity to listen to the conference call over the Internet through PLATO Learning’s web site at http://www.plato.com/Investor-Relations/Conference-Calls.aspx.
About PLATO Learning
PLATO Learning is a leading provider of computer-based and e-learning instruction for kindergarten through adult learners, offering curricula in reading, writing, math, science, social studies, and life and job skills. The Company also offers innovative online assessment and accountability solutions and standards-based professional development services. With over 6,000 hours of objective-based, problem-solving courseware, plus assessment, alignment and curriculum management tools, we create standards-based curricula that facilitate learning and school improvement.
PLATO Learning is a publicly held company traded as TUTR on the NASDAQ market. PLATO Learning’s online educational software is primarily marketed to K–12 schools and colleges. The Company also sells to job training programs, correctional institutions, military education programs, corporations, and individuals.
PLATO Learning is headquartered at 10801 Nesbitt Avenue South, Bloomington, Minnesota 55437, 952.832.1000 or 800.869.2000. The Company has sales representatives located throughout the U.S., as well as international distributors in Canada, the United Kingdom and South Africa. For more information, please visit http://www.plato.com.
The announcement includes the use of non-GAAP financial measures that are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures have been used in this announcement because the Company believes they are useful to investors by providing greater transparency to supplemental information used in the Company’s internal financial and operational analysis. Investors are encouraged to review the reconciliations attached to this announcement of the non-GAAP financial measures used in this announcement to their most directly comparable GAAP financial measures.
This announcement includes forward-looking statements. PLATO Learning has based these forward-looking statements on its current expectations and projections about future events. Although PLATO Learning believes that its assumptions made in connection with the forward-looking statements are reasonable, no assurances can be given that its assumptions and expectations will prove to have been correct. These forward-looking statements are subject to various risks, uncertainties and assumptions. PLATO Learning undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward looking statements made are subject to the risks and uncertainties as those described in the Company's most recent filings with the Securities and Exchange Commission on Forms 10-K and 10-Q. Actual results may differ materially from anticipated results.
PLATO®, Straight Curve® and Academic Systems® are registered trademarks of PLATO Learning, Inc. PLATO Learning is a trademark of PLATO Learning, Inc.
PLATO Learning, Inc. and Subsidiaries | ||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||
(In thousands, except per share amounts) | ||||||||||
Three Months Ended | ||||||||||
January 31, | ||||||||||
2009 | 2008 | |||||||||
REVENUES | ||||||||||
Subscriptions | $ | 9,868 | $ | 7,969 | ||||||
License fees | 1,004 | 2,251 | ||||||||
Services | 5,165 | 5,915 | ||||||||
Total revenues | 16,037 | 16,135 | ||||||||
COST OF REVENUES | ||||||||||
Subscriptions | 3,888 | 4,649 | ||||||||
License fees | 439 | 1,423 | ||||||||
Services | 2,428 | 2,595 | ||||||||
Total cost of revenues | 6,755 | 8,667 | ||||||||
GROSS PROFIT | 9,282 | 7,468 | ||||||||
OPERATING EXPENSES | ||||||||||
Sales and marketing | 5,887 | 7,005 | ||||||||
General and administrative | 2,424 | 2,950 | ||||||||
Product maintenance and development | 567 | 1,076 | ||||||||
Amortization of intangibles | 213 | 388 | ||||||||
Total operating expenses | 9,091 | 11,419 | ||||||||
OPERATING INCOME (LOSS) | 191 | (3,951 | ) | |||||||
Other income, net | 68 | 192 | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 259 | (3,759 | ) | |||||||
Income tax expense | - | 152 | ||||||||
NET INCOME (LOSS) | $ | 259 | $ | (3,911 | ) | |||||
INCOME (LOSS) PER SHARE | ||||||||||
Basic | $ | 0.01 | $ | (0.16 | ) | |||||
Diluted | $ | 0.01 | $ | (0.16 | ) | |||||
WEIGHTED AVERAGE COMMON | ||||||||||
SHARES OUTSTANDING | ||||||||||
Basic | 23,983 | 23,790 | ||||||||
Diluted | 24,260 | 23,790 |
PLATO Learning, Inc. and Subsidiaries | |||||||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||||||
(In thousands) | |||||||||||
January 31, | October 31, | ||||||||||
2009 | 2008 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 12,274 | $ | 20,018 | |||||||
Accounts receivable, net | 4,702 | 6,834 | |||||||||
Other current assets | 6,744 | 7,408 | |||||||||
Total current assets | 23,720 | 34,260 | |||||||||
Equipment and leasehold improvements, net | 3,187 | 3,589 | |||||||||
Product development costs, net | 23,760 | 24,086 | |||||||||
Identified intangible assets, net | 3,388 | 3,723 | |||||||||
Other long-term assets | 2,934 | 3,309 | |||||||||
Total assets | $ | 56,989 | $ | 68,967 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 1,579 | $ | 3,085 | |||||||
Accrued compensation | 2,378 | 3,996 | |||||||||
Other accrued liabilities | 3,158 | 6,909 | |||||||||
Deferred revenue | 31,931 | 36,005 | |||||||||
Total current liabilities | 39,046 | 49,995 | |||||||||
Long-term deferred revenue | 7,284 | 8,916 | |||||||||
Total liabilities | 46,330 | 58,911 | |||||||||
Stockholders' equity: | |||||||||||
Common stock | 241 | 240 | |||||||||
Additional paid-in capital | 171,443 | 171,143 | |||||||||
Treasury stock at cost | (315 | ) | (315 | ) | |||||||
Accumulated deficit | (159,532 | ) | (159,790 | ) | |||||||
Accumulated other comprehensive loss | (1,178 | ) | (1,222 | ) | |||||||
Total stockholders' equity | 10,659 | 10,056 | |||||||||
Total liabilities and stockholders' equity | $ | 56,989 | $ | 68,967 |
PLATO Learning, Inc. and Subsidiaries | |||||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||||
(In thousands) | |||||||||||||
Three Months Ended | |||||||||||||
January 31, | |||||||||||||
2009 | 2008 | ||||||||||||
OPERATING ACTIVITIES: | |||||||||||||
Net income (loss) | $ | 259 | $ | (3,911 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||||||
Deferred income taxes | - | 152 | |||||||||||
Depreciation and amortization | 2,840 | 4,360 | |||||||||||
Stock-based compensation | 264 | (162 | ) | ||||||||||
Other adjustments | 14 | 3 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable | 2,132 | 4,707 | |||||||||||
Other current and long-term assets | 994 | 386 | |||||||||||
Accounts payable | (1,506 | ) | (407 | ) | |||||||||
Other current and long-term liabilities | (5,366 | ) | (2,301 | ) | |||||||||
Deferred revenue | (5,706 | ) | (4,812 | ) | |||||||||
Total adjustments | (6,334 | ) | 1,926 | ||||||||||
Net cash used in operating activities | (6,075 | ) | (1,985 | ) | |||||||||
INVESTING ACTIVITIES: | |||||||||||||
Capitalized internal product development costs | (1,648 | ) | (3,170 | ) | |||||||||
Purchases of equipment and leasehold improvements | (98 | ) | (127 | ) | |||||||||
Net cash used in investing activities | (1,746 | ) | (3,297 | ) | |||||||||
FINANCING ACTIVITIES: | |||||||||||||
Net proceeds from issuance of common stock | 37 | 59 | |||||||||||
Repayments of capital lease obligations | (3 | ) | (11 | ) | |||||||||
Net cash provided by financing activities | 34 | 48 | |||||||||||
EFFECT OF CURRENCY EXCHANGE RATE CHANGES | |||||||||||||
ON CASH AND CASH EQUIVALENTS | 43 | 30 | |||||||||||
Net decrease in cash and cash equivalents | (7,744 | ) | (5,204 | ) | |||||||||
Cash and cash equivalents at beginning of period | 20,018 | 24,297 | |||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 12,274 | $ | 19,093 |
PLATO Learning, Inc. | |||||||||||
Supplemental Financial Information | |||||||||||
(Unaudited) | |||||||||||
Order Information ($000s) | |||||||||||
Order Value ($000) | |||||||||||
Three Months Ended January 31, | |||||||||||
2009 | 2008 | % Change | |||||||||
Subscriptions | 6,674 | 5,639 | 18 | % | |||||||
License fees | 1,031 | 1,483 | (30 | %) | |||||||
Services | 3,134 | 3,480 | (10 | %) | |||||||
$ | 10,839 | $ | 10,602 | 2 | % |
Reconciliation of Deferred Revenue Backlog to Deferred Revenue ($000): | ||||||||||||
As of January 31, | ||||||||||||
2009 | 2008 | % Change | ||||||||||
Deferred revenue, including unbilled | ||||||||||||
amounts under long-term, non-cancellable | ||||||||||||
subscription agreements: | ||||||||||||
Subscriptions | $ | 38,360 | $ | 30,661 | 25 | % | ||||||
License fees | 488 | 600 | (19 | %) | ||||||||
Services | 9,696 | 13,121 | (26 | %) | ||||||||
Deferred Revenue Backlog | 48,544 | 44,382 | 9 | % | ||||||||
Less: Unbilled amounts under | ||||||||||||
non-cancelable agreements | (9,329 | ) | (4,594 | ) | 103 | % | ||||||
Deferred Revenue | $ | 39,215 | $ | 39,788 | (1 | %) | ||||||
PLATO Learning, Inc. | ||||||||||
Supplemental Financial Information | ||||||||||
(Unaudited) | ||||||||||
Reconciliation of GAAP Net Income (Loss) To Non-GAAP Earnings before | ||||||||||
Interest, Taxes, Depreciation and Amortization ("EBITDA") ($000) | ||||||||||
Three Months Ended | ||||||||||
January 31, | ||||||||||
2009 | 2008 | |||||||||
Net income (loss) | $ | 259 | $ | (3,911 | ) | |||||
Income taxes | - | 152 | ||||||||
Interest, net | (82 | ) | (192 | ) | ||||||
Depreciation and amortization | 2,797 | 4,316 | ||||||||
EBITDA | $ | 2,974 | $ | 365 | ||||||
CONTACT:
PLATO Learning, Inc.
Rob Rueckl, 952-832-1000
Chief Financial Officer
or
MKR Group
Todd Kehrli, 323-468-2300
or
Charles Messman, 323-468-2300