Exhibit 99.1
SERENA Software Reports Fourth Quarter Results;
Non-GAAP EPS of $0.22 and Software Licenses Revenue of $13.6 Million
SAN MATEO, Calif.--(BUSINESS WIRE)--Feb. 19, 2004--SERENA
Software, Inc. (Nasdaq:SRNA), an industry-leading supplier of software
that automates change to enterprise code and content, announced today
net income per diluted share, excluding amortization of intangible
assets, of $0.22 for the fiscal quarter ending January 31, 2004, up
16% over the same quarter a year ago and 16% sequentially. In the
fourth quarter of fiscal 2004, the Company exceeded consensus
expectations and posted sequential growth in license revenue and
maintenance revenue, as well as non-GAAP operating income, non-GAAP
net income and non-GAAP earnings per share.
Total revenues of $29.6 million in the fourth quarter of fiscal
2004 represented a 14% increase over the fourth quarter of fiscal
2003, and an 11% sequential increase over the third quarter. Software
licenses revenue was $13.6 million, maintenance revenue was $13.6
million, and services revenue was $2.4 million. License revenue from
software change management was 65% of total license revenue, with 23%
of license revenues coming from distributed systems platforms.
Excluding intangibles amortization, operating income for the
fourth quarter ended January 31, 2004 was $11.5 million and operating
margin excluding intangibles amortization was 39%, up from 36% in the
prior quarter.
Excluding intangibles amortization, net income and net income per
fully diluted share for the fourth quarter of fiscal 2004 increased
10% and 16%, respectively, to $8.6 million and $0.22 from $7.8 million
and $0.19 in the fourth quarter of fiscal 2003. Net income and net
income per diluted share computed in accordance with generally
accepted accounting principles decreased to $6.0 million and $0.15
from $6.7 million and $0.17 in the same quarter a year ago.
Cash flow from operations was $14.6 million in the fourth quarter
and total cash and investments at January 31, 2004 was $377 million or
$9.33 per diluted share. Total deferred revenue at January 31, 2004
was $39.2 million, a sequential increase of 10%, and Days Sales
Outstanding improved 5 days to 47 days in the fourth quarter. The
Company repurchased a total of 1,000,000 shares of common stock during
the fourth quarter and the Board authorized an additional 1,000,000
shares eligible for repurchase in the current quarter.
"We had an excellent quarter in all areas of our business", said
President and CEO Mark Woodward. "We produced solid results across the
board and were able to exceed consensus expectations. I was pleased
that we ended our fiscal year with 29% of license revenues generated
from our distributed systems business, the highest annual contribution
in our history. We are well positioned with a very strong balance
sheet to meet the challenges ahead."
The Company also announced guidance for the first quarter of
fiscal 2005. For the first quarter total revenues are expected to be
in the range of $27 million to $28 million and net income per fully
diluted share excluding intangibles amortization is expected to be
between $0.18 and $0.20.
Fourth Quarter Highlights
-- Announced the first product to deliver on our Next-Generation
SAFE(TM) Framework. Serena TeamTrack Version 6 sets a new
standard in usability with a real-time management dashboard
portal, role-based user interface and configurable,
out-of-the-box workflows.
-- Announced a partnership with Cognizant Technology Solutions.
This partnership allows Serena to strengthen its global
outsourcing offering and increase its presence in the
fast-growing offshore development market.
-- Announced and priced $220 million Private Placement of
Convertible Subordinated Notes. The notes, due 2023, bear
interest at a rate of 1.50% per year, are subordinated to all
present and future senior debt of Serena and are convertible
into common stock, under certain circumstances, at an initial
conversion rate of 45.0577 shares per $1,000 principal amount.
-- Announced that Dollar General selected Serena ChangeMan DS to
Support Dollar General's Back and Front-End Applications. This
solution ensures enforceable and repeatable processes across
the development life cycle.
-- Announced that Serena has extended its partnership with
SELESTA, a global distributor, to provide services for Serena
in additional territories. This partnership helps Serena
achieve greater visibility in France and Mexico.
-- Announced Serena's expansion of the Alliance Partner Program
into Europe, through recruiting Referral and Reseller Partners
to support sales efforts and fuel growth.
-- Announced a partnership with Software Engineering Services.
This partnership will help Serena increase its presence and
drive new business in the important government market.
-- Announced that Serena has elected Autodesk's Carl Bass to its
Board of Directors, expanding the number of Serena independent
Board members to 5.
Commentary Available
A conference call to discuss the preliminary results is scheduled
for 2:00 PM Pacific time today and may be accessed live via the
Internet at www.companyboardroom.com or www.serena.com/q4results.
Additionally investors can listen to the call by dialing 877-655-7651
or 706-679-5273 at least 5 minutes prior to the start time. A replay
of the call will be available through February 26, 2004 by dialing
706-645-9291, code #5257377.
About SERENA Software, Inc.
SERENA Software, Inc. is the Enterprise Change Management (ECM)
industry leader. For over twenty years Serena has focused exclusively
on providing solutions that help companies automate change to the
applications that run their businesses. Today its products are in use
at over 3,600 customer sites - including 46 of the Fortune 50.
Serena's Application Framework for Enterprises (SAFE(TM)) is the next
step in ECM, providing cross-platform, cross-process and
cross-organizational support across application life cycle processes.
This approach helps streamline development, improve productivity and
lower development costs, resulting in a highly efficient enterprise.
With headquarters in San Mateo, California, Serena serves customers
worldwide through local offices and an international network of
distributors. www.serena.com.
This press release contains "forward-looking statements" under the
Private Securities Reform Act of 1995. There can be no assurance that
future results will be achieved, and actual results could differ
materially from forecasts and estimates. Factors that could cause or
contribute to such differences include, but are not limited to, our
reliance on our mainframe products for revenue; the percentage of
license revenue typically closed at the end of each quarter making
estimation of operating results prior to the end of the quarter
extremely uncertain; weak economic conditions worldwide which may
continue to affect the overall demand for software and services, which
has resulted in and could continue to result in decreased revenues or
lower revenue growth rates; changes in revenue mix and seasonality;
our ability to deliver our products on the distributed systems
platform; dependence on revenues from our installed base; continued
demand for additional mainframe MIPS capacity; successful integration
of our recent acquisition; expansion of our international
organizations; and our ability to manage our growth. Information about
potential factors that could affect the Company's financial results is
included in the Company's Form 10K filed on April 29, 2003 and Form
10Q filed on December 8, 2003. Serena assumes no obligation to update
the forward-looking information contained in this press release.
Serena provides non-GAAP operating income, net income and earnings
per share data as additional information for its operating results.
These measures are not in accordance with, or an alternative for,
generally accepted accounting principles and may be different from
non-GAAP measures used by other companies. Serena's management
believes these non-GAAP measures are useful to investors because this
supplemental information facilitates comparisons to prior periods and
are more reflective of earnings on a cash basis. Management uses these
non-GAAP measures to evaluate its financial results. Investors are
encouraged to review the reconciliation of these non-GAAP financial
measures to the comparable GAAP results.
Trademarks
Serena, ChangeMan, Comparex and StarTool are registered trademarks
of SERENA Software Inc. All other products or company names mentioned
are used for identification purposes only, and may be trademarks of
their respective owners.
(C) 2004 SERENA Software, Inc. All Rights Reserved.
- FINANCIAL TABLES TO FOLLOW -
SERENA Software, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Fiscal Year Ended
January 31, January 31,
------------------- ---------------------
2004 2003 2004 2003
--------- --------- ---------- ----------
Revenue:
Software licenses $13,608 $12,792 $45,469 $44,250
Maintenance 13,568 11,519 51,050 44,476
Professional services 2,444 1,787 9,037 7,049
--------- --------- ---------- ----------
Total revenue 29,620 26,098 105,556 95,775
--------- --------- ---------- ----------
Cost of revenue:
Software licenses 155 278 668 1,224
Maintenance 1,663 1,357 6,378 5,548
Professional services 2,224 1,804 8,730 6,519
--------- --------- ---------- ----------
Total cost of revenue 4,042 3,439 15,776 13,291
--------- --------- ---------- ----------
Gross profit 25,578 22,659 89,780 82,484
--------- --------- ---------- ----------
Operating expenses:
Sales and marketing 8,149 6,873 29,158 26,361
Research and development 3,896 2,906 14,025 11,779
General and
administrative 1,993 2,111 7,342 7,311
Stock-based compensation -- 1 -- 23
Amortization of
intangible assets 2,664 1,081 8,545 4,486
--------- --------- ---------- ----------
Total operating
expenses 16,702 12,972 59,070 49,960
--------- --------- ---------- ----------
Operating income 8,876 9,687 30,710 32,524
Interest and other income,
net 449 1,094 2,944 4,726
--------- --------- ---------- ----------
Income before income
taxes 9,325 10,781 33,654 37,250
Income taxes 3,357 4,038 12,303 14,096
--------- --------- ---------- ----------
Net income $5,968 $6,743 $21,351 $23,154
--------- --------- ========== ==========
Net income, excluding
intangibles
amortization $ 8,632 $ 7,824 $ 29,896 $ 27,640
========= ========= ========== ==========
Net income per share:
Basic $0.15 $0.17 $0.53 $0.57
========= ========= ========== ==========
Diluted $0.15 $0.17 $0.53 $0.57
========= ========= ========== ==========
Diluted, excluding
intangibles
amortization $0.22 $0.19 $0.75 $0.68
========= ========= ========== ==========
Weighted average shares used
in per
share calculations:
Basic 38,731 40,592 39,707 40,367
========= ========= ========== ==========
Diluted 39,474 41,099 40,398 40,854
========= ========= ========== ==========
Reconciliation of U.S. GAAP
to Non-U.S. GAAP Financial
Information:
U.S. GAAP operating
income $8,876 $9,687 $30,710 $32,524
Add back: Amortization
of intangible assets 2,664 1,081 8,545 4,486
--------- --------- ---------- ----------
Non-U.S. GAAP operating
income $11,540 $10,768 $39,255 $37,010
========= ========= ========== ==========
U.S. GAAP net income $5,968 $6,743 $21,351 $23,154
Add back: Amortization
of intangible assets 2,664 1,081 8,545 4,486
--------- --------- ---------- ----------
Non-U.S. GAAP net
income $8,632 $7,824 $29,896 $27,640
========= ========= ========== ==========
SERENA Software, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Jan. 31, Jan. 31,
2004 2003
--------- ---------
Assets
Current assets
Cash and cash equivalents $257,281 $105,402
Restricted cash 3,300 --
Short-term investments 39,214 37,672
Accounts receivable, net 15,475 16,514
Deferred taxes, net 6,787 6,549
Deferred offering costs 335 --
Prepaid expenses and other current assets 1,003 744
--------- ---------
Total current assets 323,395 166,881
Long-term investments 70,692 48,374
Restricted cash, long-term 6,312 --
Property and equipment, net 3,209 3,078
Deferred taxes, net -- 561
Goodwill and other intangible assets, net 63,458 45,360
Deferred offering costs, long-term 6,323 --
Other assets 272 269
--------- ---------
Total assets $473,661 $264,523
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,232 $533
Income taxes payable 6,294 7,921
Accrued expenses 7,782 8,266
Interest on subordinated notes 413 --
Deferred revenue 29,496 26,010
--------- ---------
Total current liabilities 45,217 42,730
Deferred revenue, net of current portion 9,683 8,373
Deferred taxes, net 3,483 458
Subordinated notes, long-term 220,000 --
--------- ---------
Total liabilities 278,383 51,561
Stockholders' equity:
Total stockholders' equity 195,278 212,962
--------- ---------
Total liabilities and stockholders' equity $473,661 $264,523
========= =========
CONTACT: SERENA Software, Inc., San Mateo
Robert I. Pender, Jr., 650-522-6604
www.serena.com