Exhibit 99.1
[SELECTICA LOGO]
SELECTICA ANNOUNCES SECOND QUARTER FISCAL 2005
FINANCIAL RESULTS AND PROVIDES UPDATED GUIDANCE
SAN JOSE, CALIF. - OCTOBER 21, 2004 - Selectica, Inc. (Nasdaq: SLTC), a leading
provider of solutions for automating the sales Opportunity-to-Order process,
today announced financial results for the second fiscal quarter ended September
30, 2004.
Revenue was $7.2 million in the second quarter of fiscal 2005, compared with
$9.9 million for the same period in the previous year. Net loss for the quarter
was $4.1 million, or ($0.12) per share, compared with $3.2 million, or ($0.10)
per share, in the second quarter of fiscal 2004.
Commenting on second quarter results, Stephen Bennion, Executive Vice President
and Chief Financial Officer, stated, "Our financial results for the second
quarter were slightly better than our expectations, due to the accelerated
completion of a major deployment. New bookings were lower than planned due to
continued softness in the market for enterprise software and the relatively high
price point of our current enterprise product offerings. There is, however,
increasing awareness of the fundamental gap between CRM and ERP applications
that represents the sales Opportunity-to-Order space and we are executing well
on bringing our breakthrough Enterprise Productivity Suite and the related
vertical applications to the marketplace. This exciting product suite will
provide significantly greater out-of-box functionality at a more attractive
price point."
FINANCIAL HIGHLIGHTS
Licenses represented 32% of revenue, and services represented 68% of revenue in
the second quarter of fiscal 2005. Overall gross margin was 54% in the second
quarter, compared with 57% in the previous year period. The decrease in gross
margin is primarily attributable to the lower percentage of license revenue for
the second quarter of fiscal 2005.
Total operating expenses were $8.4 million compared with $9.2 million in the
second quarter of fiscal 2004. Higher general and administrative expenses in the
second quarter of fiscal 2005 continued to reflect higher audit and
Sarbanes-Oxley compliance costs, as well as higher quarterly legal expenses for
patent litigation and other legal related matters.
Selectica's financial position remains strong with approximately $110 million in
cash, cash equivalents and investments, and no long-term debt at September 30,
2004. The Company repurchased 96,000 shares of its common stock during the
second quarter for a
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total cost of approximately $376,000, and expects to continue repurchasing
shares as market conditions permit.
OPERATIONAL HIGHLIGHTS
During the second quarter, the Company completed development of the latest
version of its platform, version 7.0. This release addresses many of the
requirements of the Company's enterprise customers. Most importantly, it
provides a comprehensive, modular platform for the Company's EPS vertical
applications.
Selectica also established two key relationships during the quarter by signing
an agreement with its first European reseller and also becoming a Platinum
partner in salesforce.com's sforce Ready solution program. As a Platinum
partner, Selectica has developed a version of its flagship offering, Selectica
Configurator, which integrates seamlessly with the salesforce.com service. The
Company believes that the increased exposure to salesforce.com's user base
resulting from this relationship will have a positive impact on sales in future
quarters.
In a separate announcement issued today, Vincent G. Ostrosky was named
Selectica's new Chairman, President and Chief Executive Officer. Commenting on
the appointment and the outlook for Selectica, Mr. Bennion said, "As a leading
authority on business transformation processes, Vince is ideally suited to
enhance Selectica's position in the marketplace and increase shareholder value.
We believe the addition of Vince Ostrosky and the introduction of our new EPS
suite will serve as strong catalysts for driving a higher level of bookings as
market conditions become more favorable."
OUTLOOK
Selectica currently expects third quarter fiscal 2005 revenue to range from $7.5
million to $8.0 million. Guidance is slightly lower than previously stated due
to a shift in revenue from the third to the second quarter. This shift is
attributed to the accelerated completion of a major deployment in the second
quarter. Net loss per share for the third quarter is expected to range from
$0.10 to $0.12.
Under the leadership and direction of Mr. Ostrosky, Selectica will launch its
new Enterprise Productivity Suite(TM) (EPS) during the third quarter. Mr.
Ostrosky's extensive background in designing, enhancing and delivering business
processes as well as his proven leadership will play a vital role in positioning
Selectica and its suite of products in the marketplace. EPS Manufacturing, the
Company's first vertical application for the manufacturing industry, will be the
focus of EPS sales efforts in the third quarter. The product has received
positive reviews from analysts as well as prospective and current customers.
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ABOUT OPPORTUNITY-TO-ORDER
The Opportunity-to-Order space is a critical area for enterprises with
inefficient business processes that sit between CRM and ERP applications.
Opportunity-to-Order business processes consist of guided selling, sales
configuration, pricing, quoting, and contract compliance, among others.
Implementing an Opportunity-to-Order solution can help companies reduce revenue
leakage from a wide range of business processes, reduce costs, get products to
market faster, and improve sales productivity across all channels.
ABOUT SELECTICA, INC.
Selectica, Inc. enables enterprises to reduce costs and enhance revenue from
complex product and services offerings. Selectica solutions unify customers'
business processes to correctly configure, price, and quote offerings across
multiple distribution channels. As a result, Selectica's products are designed
to improve profitability by reducing process costs, optimizing pricing,
eliminating rework and concessions, and avoiding high-risk business.
Selectica customers represent manufacturing and service leaders including: ABB,
Applied Bio Systems, Bell Canada, Cisco, Dell, General Electric, Fireman's Fund
Insurance Company, Hitachi, Juniper Networks, Rockwell Automation and Tellabs.
Selectica is headquartered in San Jose, CA. The company's Web site is
www.selectica.com.
FORWARD LOOKING STATEMENTS
The statements contained in this release that are not purely historical are
forward-looking statements within the meaning of Section 21E of the Securities
and Exchange Act of 1934, including statements regarding Selectica's and its
customers' expectations, beliefs, hopes, intentions or strategies regarding the
future and expectations regarding performance improvements or increases in sales
attributable to Selectica's products. All forward-looking statements included in
this document are based upon information available to Selectica as of the date
hereof, and Selectica assumes no obligation to update any such forward-looking
statement. Actual results could differ materially from current expectations.
Factors that could cause or contribute to such differences include, but are not
limited to, the factors and risks discussed in Selectica's Annual Report on Form
10-K for the fiscal year ended March 31, 2004 and in other reports filed by
Selectica with the Securities and Exchange Commission.
Contact:
At Selectica: At Financial Relations Board:
Robert Dougherty Tony Rossi
Investor Relations Investor Relations
408-570-9700 310-407-6563
FINANCIAL TABLES FOLLOW
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SELECTICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED SIX MONTHS
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09/30/04 09/30/03 09/30/04 09/30/03
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(UNAUDITED) (UNAUDITED)
Revenues:
License $ 2,276 $ 4,325 $ 4,332 $ 9,029
Services 4,917 5,591 10,604 12,674
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Total revenues 7,193 9,916 14,936 21,703
Cost of revenues:
License 214 327 413 591
Services 3,067 3,932 6,219 9,286
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Total cost of revenues 3,281 4,259 6,632 9,877
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Gross profit 3,912 5,657 8,304 11,826
Research and development 3,201 3,573 6,456 6,796
Sales and marketing 3,180 4,164 6,155 8,158
General and administrative 2,112 1,453 4,096 2,752
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Total operating expenses 8,493 9,190 16,707 17,706
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Loss from operations (4,581) (3,533) (8,403) (5,880)
Interest income (expense) 515 334 738 833
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Net loss $ (4,066) $ (3,199) $ (7,665) $ (5,047)
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Basic and diluted, net loss per share $ (0.12) $ (0.10) $ (0.24) $ (0.16)
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Weighted-average shares used in computing basic
and diluted, loss per share 32,564 30,915 32,540 30,777
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SELECTICA, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
09/30/04 3/31/2004*
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UNAUDITED
ASSETS
Cash, cash equivalents, and investments $ 109,900 $ 118,774
Accounts receivable 1,824 697
Prepaid expenses and other current assets 2,365 2,597
Property and equipment, net 3,490 3,620
Other assets 721 728
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Total assets $ 118,300 $ 126,416
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,345 $ 644
Accrued payroll and related liabilities 1,738 1,726
Other accrued liabilities 3,413 4,251
Deferred revenues 7,339 7,756
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Total liabilities 13,835 14,377
Total stockholders' equity 104,465 112,039
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Total liabilities and stockholders' equity $ 118,300 $ 126,416
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* Amounts derived from audited financial statements at the date indicated