UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of: September 2010
Commission File Number: 000-30827
CLICKSOFTWARE TECHNOLOGIES LTD.
-------------------------------
(Translation of registrant's name into English)
94 Em Hamoshavot Road
Petach Tikva 49527, Israel
--------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F |_|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulations S-T Rule 101(b)(1):_____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulations S-T Rule 101(b)(7):_____
Indicate by check mark, whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes |_| No |X|
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): ___
Attached hereto and incorporated by reference herein is management's
discussion and analysis of financial condition and results of operations with
respect to the six month period ended on June 30, 2010.
The GAAP financial statements in this Form 6-K of CLICKSOFTWARE
TECHNOLOGIES LTD. are incorporated by reference into the Form S-8
registration numbers 333-42000, 333-115003, 333-135435, 333-141307,
333-149825 333-158839 and 333-166028 and Form F-3 registration number
333-166046 of the Company, filed with the Securities and Exchange
Commission, to be a part thereof from the date on which this report is
submitted, to the extent not superseded by documents or reports
subsequently filed or furnished.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CLICKSOFTWARE TECHNOLOGIES LTD.
(Registrant)
By: /s/ Shmuel Arvatz
------------------------------------
Name: Shmuel Arvatz
Title: Executive Vice President and
Chief Financial Officer
Date: September 16, 2010
MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our consolidated
financial statements and related notes contained in our Annual Report on Form
20-F filed with the Securities and Exchange Commission on April 8, 2010 (the
"Annual Report") and other financial information contained in our Report on Form
6-K submitted to the Securities and Exchange Commission on July 21, 2010. In
addition to historical information, this discussion may contain forward looking
statements. In some cases, forward-looking statements are identified by
terminology such as "may," "will," "could," "should," "expects," "plans,"
"anticipates," "believes," "intends," "estimates," "predicts," "potential," or
"continue" or the negative of these terms or other comparable terminology. For
instance, statements as to our future plans and investment plans, as well as the
sufficiency of our capital resources to fund our operations in the future are
forward looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause actual results or
performance to differ materially from those projected. Factors that could cause
such differences include, but not limited to: Risks Related to Our Business;
Investments Risks; Risks Relating to Our Location in Israel and those other
risks and factors described under the heading "Risk Factors" in our Annual
Report. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. Except as
otherwise required by law, ClickSoftware is under no obligation to (and
expressly disclaims any such obligation to) update or alter its forward-looking
statements whether as a result of new information, future events, or otherwise.
We are a leading provider of software products and solutions for workforce
management and optimization for the service sector. We derive revenues from the
licensing of our software products and the provision of consulting and support
services. We also generate revenues from hosted solutions under a "software as a
service" (SaaS) model. Our products for resource optimization are aimed at the
service sector where the primary resources are people and their time - both
service delivery staff as well as customer time. Our products and solutions
incorporate best business practices, key business functions of service
operations, and sophisticated decision-making algorithms that enable our
customers to more efficiently manage their service operations in a scalable,
integrated manner. By offering scaled down versions of our products, or
specially developed versions for medium and small business (SMB), we now address
the needs of service sector companies of all sizes - from companies with 50,000
employees to companies with 5 employees. Recognizing that many large service
companies today outsource or utilize external contractors, we offer capabilities
in our products to support such operations under a variety of arrangements
between our client and its contractors. While other service management
applications, such as customer relationship management (CRM), enterprise asset
management (EAM) or inventory management, manage primarily data processing
aspects, our products drive optimized automatic and semi-automatic
decision-making processes. Our solutions have become the backbone of service
operations management in many leading organizations worldwide by addressing the
fundamental question of job fulfillment: Who does What, for Whom, With what,
Where and When.
The financial information below reflects the operations of the Company and its
subsidiaries on an unaudited, consolidated basis.
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RESULTS OF OPERATIONS
Our operating results for the six months ended June 30, 2010 and 2009 expressed
as a percentage of revenues are as follows:
SIX MONTHS ENDED JUNE 30,
-----------------------------
2010 2009
---- ----
Revenues:
Software license 37% 31%
Services 63 69
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Total Revenues 100 100
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Cost of revenues:
Software license 3 4
Services 35 29
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Total cost of revenues 38 33
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Gross profit 62 67
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Operating expenses:
Research and development expenses, net 11 11
Selling and marketing expenses 26 27
General and administrative expenses 8 11
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Total Operating expenses 45 49
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Operating income 17 18
Interest, net 0 1
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Net income before taxes 17 19
Tax (expense) income, net (2) 1
-----------------------------
Net income 15% 20%
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Our operating results for six months ended June 30, 2010 and 2009 are as
follows:
SIX MONTHS ENDED JUNE 30,
2010 2009
---- ----
(in thousands)
Revenues:
Software license $ 13,087 $ 8,360
Services 21,978 18,983
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Total revenues 35,065 27,343
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Cost of revenues:
Software license 1,031 990
Services 12,224 8,005
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Total cost of revenues 13,255 8,995
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Gross profit 21,810 18,348
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Operating expenses:
Research and development expenses, net 3,739 3,000
Selling and marketing expenses 9,173 7,507
General and administrative expenses 2,980 2,985
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Total operating expenses 15,892 13,492
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Operating income 5,918 4,856
Interest income, net 51 323
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Net income before taxes 5,969 5,179
Tax (expense) income, net (844) 367
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Net income $ 5,125 $ 5,546
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Comparison of the Six Months ended June 30, 2010 and 2009
Revenues
SIX MONTHS ENDED
JUNE 30,
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2010 2009 %
(in thousands) Change
Revenues:
Software license $13,087 $ 8,360 57%
Percentage of total revenues 37% 31%
Services 21,978 18,983 16%
Percentage of total revenues 63% 69%
--------------------------------
Total Revenues $35,065 $27,343 28%
--------------------------------
Revenues increased 28% to $35.1 million in the six months ended June 30, 2010,
compared with $27.3 million in the six months ended June 30, 2009. The growth in
revenues in the six months ended June 30, 2010 was mainly due to the increase in
license revenues and attributable to an increase in volume of products sold
mainly in the utilities market. In addition, the strengthening of other
currencies against the U.S. dollar increased our revenue growth from about 26%
to about 28%.
Revenues by Territory
--------------------------------------------------
SIX SIX
MONTHS MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
2010 % Revenues 2009 % Revenues
---- ---------- ---- ----------
(in thousands)
Revenues:
North America $13,693 39% $11,340 41%
Europe 19,050 54% 10,941 40%
Israel 335 1% 226 1%
Asia Pacific 1,987 6% 4,836 18%
------- -------
Total Revenues $35,065 100% $27,343 100%
------- -------
Revenues in Europe grew by $8.1 million or 74% to $19.1 million in the six
months ended June 30, 2010, compared with $10.9 million in the six months ended
June 30, 2009 due to increased demand to our products and services, mainly in
the utilities market. Revenues in North America grew by $2.4 million or 21% to
$13.7 million in the six months ended June 30, 2010, compared with $11.3 million
in the six months ended June 30, 2009 due to increased demand to our products
and services, mainly in the utilities market. Revenues in Asia Pacific decreased
by $2.8 or 59% to $2.0 million in the six months ended June 30, 2010, compared
with $4.8 million in the six months ended June 30, 2009 due to the substantial
completion of a large project in that region in 2009.
Software Licenses
Software license revenues increased 57% to $13.1 million in the six months ended
June 30, 2010, compared with $8.4 million in the six months ended June 30, 2009.
The growth in software license revenues in the six months ended June 30, 2010
was mainly due to the increase in the volume of products sold, mainly in the
utilities market.
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Services
Service revenues increased 16% to $22.0 million in the six months ended June 30,
2010, compared with $19.0 million in the six months ended June 30, 2009. The
growth in service revenues in the six months ended June 30, 2010 was mainly due
to an increase in services provided, particularly the increase in implementation
services and post-contract support agreements in Europe and North America which
were partially offset by a decrease in services revenues in the Asia-Pacific
region.
Cost of Revenues
Cost of revenues consists of cost of software license revenues and cost of
services. Cost of software license revenues consists of expenses related to
costs of software purchased or licensed for resale and media duplication and
packaging of our products. Cost of services consists of expenses related to
salaries and expenses of our professional services organizations, costs related
to third-party consultants and equipment costs
Cost of revenues was $13.3 million, or 38% of revenues, in the six months ended
June 30, 2010, compared with $9.0 million, or 33% of revenues, in the six months
ended June 30, 2009. The increase in cost of revenues in the six months ended
June 30, 2010 was primarily due to higher costs associated with meeting
increased demand for our services.
Cost of Software Licenses
Cost of software license revenues was $1.0 million, or 3% of revenues, in the
six months ended June 30, 2010, compared with $1.0 million, or 4% of revenues,
in the six months ended June 30, 2009. The decrease in cost of software license
revenues in percentage terms was primarily due to lower costs per unit for
third-party licenses and adaptors to other ERP and CRM systems sold during the
six months ended June 30, 2010.
Cost of Services
Cost of service revenues was $12.2 million, or 35% of revenues, in the six
months ended June 30, 2010, compared with $8.0 million, or 29% of revenues, in
the six months ended June 30, 2009. The increase in the cost of services
revenues was primarily due to increased demand for our services. As a result,
there was an increase in our related payroll expenses of $2.0 million, an
increase in subcontractors' costs of $1.1 million, an increase in travel costs
of $0.3 million, and an increase of $0.8 million in other costs, mainly overhead
and amortization of intangible assets. In addition, the strengthening of other
currencies against the U.S. Dollar in the six months ended June 30, 2010
compared to the comparable period in 2009 spread over the various expense items
above increased our costs by about $0.5 million.
Gross Profit
Gross profit was $21.8 million, or 62% of revenues, in the six months ended June
30, 2010 compared with $18.3 million, or 67% of revenues, in the six months
ended June 30, 2009. The increase in gross profit in the six months ended June
30, 2010 of $3.5 million, or 19%, was primarily due to the change in our revenue
mix toward higher license revenues which generate higher margins. Gross margins
decreased in the six months ended June 30, 2010 due to lower profitability from
our services, specifically our consultancy and implementation activities. The
relative lower profitability of our consultancy and implementation activities in
first half of 2010 is a reflection of the high profitability of certain projects
completed in 2009. Furthermore, we recently began projects relating to two newly
launched products, ClickMobile and ClickRoster, in which we were required to
initially invest additional resources to develop efficiencies in the
implementation process Gross margins also decreased relative to previous years
due to the increased use we made of subcontractors' services in order to keep up
with short-term demand.
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Operating Expenses
Operating expenses are categorized into research and development expenses,
selling and marketing expenses and general and administrative expenses. Total
operating expenses were $15.9 million, or 45% of revenues, in the six months
ended June 30, 2010, compared with $13.5 million, or 49% of revenues, in the six
months ended June 30, 2009.
The increase in absolute terms in operating expenses in the six months ended
June 30, 2010 compared to the six months ended June 30, 2009 of $2.4 million, or
18%, was primarily due to an increase in selling and marketing expenses and an
increase in research and development expenses. The increase in absolute terms in
the operating expenses was to support the expansion of the Company's business
and higher level of revenues. The increase in selling and marketing expenses is
attributable to an increase in our selling efforts.
Research and Development Expenses, Net
Research and development expenses consist primarily of personnel costs for
product development, net of grants received from the office of the chief
scientist, or the Chief Scientist, of the Israeli Ministry of Industry. Software
research and development costs incurred prior to the establishment of technology
feasibility are included in research and development expenses as incurred.
Software development costs incurred subsequent to the establishment of
technological feasibility through the period of general market availability of
the products are capitalized, if material, after consideration of various
factors, including net realizable value. To date, software development costs
that are eligible for capitalization have not been material and have been
expensed.
Research and development expenses, net of related grants, were $3.7 million, or
11% of revenues, in the six months ended June 30, 2010, compared with $3.0
million, or 11% of revenues, in the six months ended June 30, 2009. The increase
in absolute terms in research and development expenses was primarily due to an
increase of $0.6 million in payroll expenses. In addition, the strengthening of
other currencies against the U.S. dollar in the six months ended June 30, 2010
compared to the comparable period in 2009 spread over the various expense items
above increased our costs by about $0.2 million.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of personnel and related costs
for marketing and sales functions, including related travel, direct advertising
costs, expenditures on trade shows, market research and promotional printing.
Selling and marketing expenses were $9.2 million, or 26% of revenues, in the six
months ended June 30, 2010, compared with $7.5 million, or 27% of revenues, in
the six months ended June 30, 2009. The increase in absolute terms in the
selling and marketing expenses of $1.7 million, or 22%, was due to an increase
of $0.6 million in payroll expenses and an increase in our selling and marketing
activities of $1.1 million which is in line with the increase in our revenues.
In addition, the strengthening of other currencies against the U.S. dollar in
the six months ended June 30, 2010 compared to the comparable period in 2009
spread over the various expense items above increased our costs by about $0.3
million.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel and related
costs for corporate functions, including information services, finance, legal,
accounting, human resources, facilities, provision for doubtful accounts and
costs related to our status as a public company.
General and administrative expenses were $3.0 million, or 8% of revenues, in the
six months ended June 30, 2010, compared with $3.0 million, or 11% of revenues,
in the six months ended June 30, 2009. The stability of general and
administrative expenses in absolute terms is due to an increase of $0.1 million
in general and administrative expenses offset by a decrease of $0.1 million in
legal, accounting and local fees primarily due to acquisition-related costs that
occurred in the first half of 2009. In addition, the strengthening of other
currencies against the U.S. dollar in the six months ended June 30, 2010
compared to the comparable period in 2009 spread over the various expense items
above increased our costs by about $0.1 million.
Interest Income, Net
Interest includes interest income earned on our cash, cash equivalents and short
and long-term investments, offset by interest expense, and also includes the
effects of foreign currency fluctuations.
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Interest income net of interest expenses, was $0.1 million, or 0% of revenues,
in the six months ended June 30, 2010, compared with $0.3 million, or 1% of
revenues, in the six months ended June 30, 2009. The decrease in interest income
was attributable to a negative influence of foreign currency exchange rate
fluctuations.
Income Taxes, Net
Income taxes consist primarily of statutory income and state taxes and changes
in our deferred tax asset.
Tax expenses were $0.1 million, or 0% of revenues, in the six months ended June
30, 2010, compared with $0.1 million, or 0% of revenues, in the six months ended
June 30, 2009.
Deferred taxes were a $0.7 million expense, or 2% of revenues, in the six months
ended June 30, 2010, compared with a $0.4 million tax benefit, or 1% of
revenues, in the six months ended June 30, 2009. The decrease in the deferred
tax asset is a result of a decrease of loss carryforwards in Israel.
Net Income
Net income for the six months ended June 30, 2010 was $5.1 million, or $0.16 per
fully diluted share, or 15% of revenues, compared with net income of $5.5
million, or $0.18 per fully diluted share, or 20% of revenues, in the six months
ended June 30, 2009. In addition, the strengthening of other currencies against
the U.S. dollar in the six months ended June 30, 2010 compared to the comparable
period in 2009 spread over the various revenue and expense items above decreased
our net income by approximately $0.6 million.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and investments increased by $7.5 million, or 22%, to $42.5 million as
of June 30, 2010, compared with $35.0 million as of December 31, 2009. Our
primary sources of cash and investments during six months ended June 30, 2010
were cash flows of $8.0 million generated from operations and $0.6 million from
exercises of employee stock options. We invested $1.0 million in purchases of
equipment and leasehold improvements.
As of June 30, 2010, we had cash and cash equivalents of $21.0 million,
short-term investments of $21.0 million and long-term investments of $0.5
million. Our cash, short-term investments and long-term investments are invested
or deposited primarily in low-risk and predominantly U.S. dollar denominated
investments and bank deposits. The bank deposits are typically held in the form
of certificates of deposit for a period of more than three months and up to 12
months and bear fixed income interest. As of June 30, 2010, these bank deposits
had an average interest rate per annum of 0.9%.
Our capital requirements depend on numerous factors, including market demand and
acceptance of our products, the resources we devote to developing, marketing,
selling and supporting our products, the timing and extent of establishing
additional international operations, investments in computers, office equipment
and office fixtures and our acquisition activities. We intend to continue
investing significant resources in our selling and marketing, research and
development operations in the future and expect to continue investing in
computers, office equipment and office fixtures. We also intend to continue
exploring acquisition opportunities.
We believe that we have sufficient cash to fund our operations for at least the
next 12 months.
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