Exhibit 99.1
SERENA Software Reports First Quarter Results;
Non-GAAP EPS up 41% to $0.24 and Licenses Revenue up 46% to $15.8 Million
SAN MATEO, Calif.--(BUSINESS WIRE)--May 20, 2004--SERENA Software,
Inc. (Nasdaq: SRNA), an industry-leading supplier of software that
automates change to enterprise applications, announced today net
income per diluted share on a Non-GAAP basis, of $0.24 for the first
fiscal quarter ending April 30, 2004, up 41% over the same quarter a
year ago. The results for the first quarter of fiscal 2005 include the
operations of Merant plc ("Merant") following the effective date of
the acquisition on April 23, 2004. In addition, without including the
results of Merant, Serena on a standalone basis met or exceeded
consensus expectations for license revenue and total revenue, as well
as non-GAAP operating income, non-GAAP net income and non-GAAP
earnings per share.
Total revenues of $33.7 million in the first quarter of fiscal
2005 represented a 38% increase over the first quarter of fiscal 2004,
and a 14% sequential increase over the fourth quarter. Software
licenses revenue was $15.8 million, up 46% over the same quarter a
year ago, maintenance revenue increased to $14.8 million, and services
revenue was $3.1 million. On a combined basis, license revenue from
software change management was 86% of total license revenue, with 53%
of license revenues coming from distributed systems platforms.
Non-GAAP operating income for the first quarter ended April 30,
2004 was $13.3 million and non-GAAP operating margin was 40%. Non-GAAP
net income and net income per diluted share for the first quarter of
fiscal 2005 increased 40% and 41%, respectively, to $9.7 million and
$0.24 from $6.9 million and $0.17 in the first quarter of fiscal 2004.
Net (loss) income and net (loss) income per share computed in
accordance with generally accepted accounting principles ("GAAP")
decreased to $(4.3) million and $(0.11) from $5.8 million and $0.14 in
the same quarter a year ago as a result of charges related to the
acquisition of Merant.
The first quarter of fiscal 2005 non-GAAP results exclude
amortization of intangible assets and charges relating to the purchase
accounting adjustments for the acquisition of Merant, including
acquired in-process research and development, deferred stock-based
compensation, the revenue impact of the deferred maintenance
write-down to fair value, amortization of capitalized software and
other intangible assets, and restructuring and acquisition related
charges. A reconciliation of non-GAAP to GAAP financial results is
included in this press release.
Serena on a standalone basis generated cash flow from operations
of $16.5 million in the first quarter and total deferred revenue at
April 30, 2004 was $44.3 million, a sequential increase of 13%. Days
sales outstanding improved 5 days to 42 days in the first quarter as
compared to the fourth quarter of 2004. Additionally, the Company's
board of directors authorized 1,000,000 shares eligible for repurchase
going forward.
"Both Serena and Merant produced solid results even as we brought
the companies together which is indicative of the positive response
our customers have had to the combination", said President and CEO
Mark Woodward. "We now are the largest independent software change
management vendor in market share and are looking to continue to grow.
The integration of the two companies is progressing nicely and we
should experience significant cost synergies this year while at the
same time focusing on revenue growth going forward."
The Company also announced non-GAAP guidance for the second
quarter of fiscal 2005, which will include a full quarter of results
from Merant. For the second quarter total revenues, eliminating the
reduction in maintenance revenue as a result of the purchase
accounting write-down of deferred revenue, are expected to be in the
range of $55 million to $58 million and non-GAAP net income per fully
diluted share is expected to be between $0.24 and $0.25.
First Quarter Highlights
-- Announced that the recommended cash and share offer by SERENA
Software, Inc. and by Lehman Brothers on its behalf (outside
the United States) for the entire issued and to be issued
share capital of Merant was declared unconditional in all
respects and the application for de-listing commenced.
-- Announced that Merant has attained the status of Microsoft
Gold Certified Partner. The highest level of Microsoft's
partner program for independent software vendors, Microsoft
Gold Certified Partner status is reserved for companies that
consistently provide the highest quality products built on
Microsoft platforms.
-- Announced Serena customer satisfaction levels remain in the
90th percentile for three years running. The latest results
show 97.5% of customers are satisfied with Serena overall and
a majority still regard Serena as "Best in Class," and "Much
Better" than the competition.
-- Announced that Merant Professional has won accolades from the
development community. Visual Studio Magazine readers selected
the popular software configuration management suite to win a
Readers Choice Merit Award.
-- Announced that Serena demonstrated its process management
solutions for SAP environments at the SAP 2004 ASUG Annual
Conference. The TeamTrack for SAP solution helps SAP customers
establish consistent application life cycle management
processes to reduce environment complexity and improve
enterprise efficiency.
-- Announced that Serena has strengthened its mainframe tools
suite. With Enhanced IMS and DB2 Support, new releases of
StarTool APM and StarTool FDM enable customers to improve
application performance and enterprise productivity.
-- Announced that Serena brings process management to the
mainframe. TeamTrack for ChangeMan enables customers to
improve enterprise collaboration and productivity. This
solution represents a significant step in Serena's delivery of
the SAFE architecture.
-- Announced the location and dates for the Annual Global User
Conference. Serena Xchange 2004 will be held at the Palace
Hotel in San Francisco September 12-15th. This event will
showcase next-generation ECM solutions based on Serena's
revolutionary framework.
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. These measures differ from
US GAAP in that they exclude the amortization of intangible assets and
charges relating to the purchase accounting adjustments for the
acquisition of Merant, including acquired in-process research and
development, deferred stock compensation, the revenue impact of the
deferred maintenance write-down to fair value, amortization of
capitalized software and intangible assets, stock based compensation
and restructuring and acquisition related charges. 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. The following table
reconciles the non-GAAP financial measures to GAAP:
Quarter Ended April 30,
----------------------------------
2004 2003
----------------- --------------
Net Net
Income Diluted Income Diluted
(Loss) EPS (Loss) EPS
--------- -------- ------- -------
Non-GAAP $ 9,659 $ 0.24 $6,895 $0.17
Acquired in-process research &
development (10,400) (0.26) -- --
Amortization of capitalized
software,
intangible assets and stock
based compensation (3,013) (0.08) 1,081 0.03
Revenue impact of deferred
maintenance
write-down, net of tax (38%) (391) (0.01) -- --
Restructuring and acquisition
charges,
net of tax (38%) (130) -- -- --
-------- ------- ------- -------
GAAP ($4,275) ($0.11) $5,814 $0.14
======== ======= ====== =====
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/Q105results.
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 May 26, 2004 by dialing
800-642-1687 or 706-605-9291 ID# 7322351.
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. With its acquisition of
Merant, Serena's products are now in use at over 15,000 customer sites
- -- including 49 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, the
successful integration of our recent Merant plc. acquisition; 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; our reliance on our mainframe products for revenue;
dependence on revenues from our installed base; continued demand for
additional mainframe MIPS capacity; 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 15, 2004. Serena
assumes no obligation to update the forward-looking information
contained in this press release.
Trademarks
Serena, TeamTrack, ChangeMan, Comparex and StarTool are registered
trademarks of SERENA Software Inc. SAFE is a trademark 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.
SERENA Software, Inc.
Condensed Consolidated Statements of (Loss) Income
(In thousands, except per share data)
(Unaudited GAAP)
Three Months Ended
April 30,
------------------
2004 2003
--------- -------
Revenue:
Software licenses $15,839 $10,852
Maintenance 14,765 11,911
Professional services 3,137 1,604
--------- -------
Total revenue 33,741 24,367
--------- -------
Cost of revenue:
Software licenses 326 212
Maintenance 1,563 1,504
Professional services 2,789 1,766
Amortization of acquired technology 2,045 1,081
--------- -------
Total cost of revenue 6,723 4,563
--------- -------
Gross profit 27,018 19,804
--------- -------
Operating expenses:
Sales and marketing 9,357 6,653
Research and development 4,949 3,039
General and administrative 2,048 1,740
Stock-based compensation 18 --
Amortization of intangible assets 950 --
Acquired in-process research and development 10,400 --
Restructuring, acquisition and other charges 210 --
--------- -------
Total operating expenses 27,932 11,432
--------- -------
Operating (loss) income (914) 8,372
Interest Income 1,315 1,005
Interest Expense (825) --
Amortization of debt issuance costs (461) --
--------- -------
(Loss) income before income taxes (885) 9,377
Income taxes 3,390 3,563
--------- -------
Net (loss) income ($ 4,275) $5,814
========= =======
Net (loss) income per share:
Basic ($ 0.11) $0.14
========= =======
Diluted ($ 0.11) $0.14
========= =======
Weighted average shares used in per share
calculations:
Basic 38,871 40,450
========= =======
Diluted 38,871 40,918
========= =======
SERENA Software, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited GAAP)
January
April 30, 31,
2004 2004
----------- ---------
Assets
Current assets
Cash and cash equivalents $423,272 $257,281
Restricted cash 3,300 3,300
Short-term investments 41,923 39,214
Accounts receivable, net 42,885 15,475
Deferred taxes 6,787 6,787
Prepaid expenses and other current assets 7,262 1,338
----------- ---------
Total current assets 525,429 323,395
Long-term investments 17,165 70,692
Restricted cash, non-current 6,352 6,312
Property and equipment, net 6,552 3,209
Goodwill, net 329,671 40,471
Other intangible assets, net 124,287 22,987
Other assets 5,007 6,595
----------- ---------
Total assets $1,014,463 $473,661
=========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,968 $1,232
Consideration payable to Merant shareholders 274,654 --
Income taxes payable 18,863 6,294
Accrued expenses 56,062 7,782
Accrued Interest on subordinated notes 1,238 413
Deferred revenue 60,393 29,496
----------- ---------
Total current liabilities 414,178 45,217
Deferred revenue, net of current portion 13,405 9,683
Long-term liabilities 3,566 --
Deferred taxes 45,203 3,483
Subordinated notes 220,000 220,000
----------- ---------
Total liabilities 696,352 278,383
Stockholders' equity:
Total stockholders' equity 318,111 195,278
----------- ---------
Total liabilities and stockholders' equity $1,014,463 $473,661
=========== =========
CONTACT: SERENA Software, Inc.
Robert I. Pender, Jr., 650-522-6604