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Taleo Announces Strong First Quarter 2009 Results and Outstanding Cash Flow
Adds 19 New Taleo Enterprise Edition Customers; GAAP Revenue of $48.1 Million, an Increase of 34% Year-Over-Year; Generates $13.4 Million in Cash Flow From OperationsDUBLIN, CA -- May 07, 2009 -- Taleo (NASDAQ: TLEO), the leading provider of on demand talent management solutions, today announced its financial results for the quarter ended March 31, 2009.
Quarterly highlights include: "In this economy, we believe savvy businesses are focusing on Talent Management as a lever for cutting costs, while driving workforce productivity," said Michael Gregoire, Taleo Chairman and CEO. "Global companies are recognizing that Talent Management helps improve the way their businesses work, without sacrificing capabilities, and as a result, this was another strong quarter for us." Other significant achievements during the first quarter 2009 include: Taleo delivered the following financial results: Revenue: Total revenue, in accordance with accounting principles generally accepted in the United States, or GAAP, for the first quarter was $48.1 million, representing an increase of 34% on a year-over-year basis. Application revenue for the first quarter was $41.2 million, an increase of 37% on a year-over-year basis. Total non-GAAP revenue for the first quarter of 2009 was $48.6 million. Total non-GAAP application revenue for the first quarter was $41.7 million. The difference between GAAP and non-GAAP revenue reflects the amounts excluded from the GAAP revenue due to purchase accounting adjustments, which require the write down of deferred revenue associated with the Vurv acquisition in order to reflect fair value. Net Income (Loss) and Net Income (Loss) Per Share to Common Stockholders: Net loss was $(2.2) million for the first quarter, compared to net income of $0.6 million for the same period last year. The net loss was driven primarily from the $3.5 million in amortization expense related to the acquisition of Vurv, as well as increased third party costs related to the Company's revenue review. Net income (loss) for the first quarter of 2009 and 2008 includes share-based compensation expense of $2.4 million and $2.5 million, respectively. Net loss per fully diluted share was $(0.07) for the first quarter of 2009 based on 30.3 million weighted average shares outstanding compared to net income per fully diluted share of $0.02 for the same period in 2008 based on 28.9 million weighted average shares outstanding. Non-GAAP Net Income and Non-GAAP Net Income Per Share: Non-GAAP net income, which includes amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition, and excludes costs associated with the revenue review, share-based compensation expense, amortization of acquired intangibles and non-cash tax reserve, was $5.6 million for the first quarter of 2009, compared to a non-GAAP net income of $2.8 million in the same period last year. Non-GAAP net income per fully diluted share was $0.18 for the first quarter of 2009 based on 31.2 million weighted average shares outstanding compared to non-GAAP net income per fully diluted share of $0.10 for the same period in 2008 based on 28.9 million weighted average shares outstanding. Conference Call Details In conjunction with this announcement, Taleo will host a conference call 5:00pm EDT today to discuss the Company's first quarter 2009 financial results. A live and replay Webcast of the call will be available at the Investor Relations section of Taleo's website at www.taleo.com. The live call may be accessed by dialing 866.713.8567; International dial-in number: 617.597.5326; Participant passcode: 6028-7225. A live and replay Webcast of the call will be available at the Investor Relations section of Taleo's website at www.taleo.com. A replay of the call can also be accessed by dialing 888.286.8010 (domestic) or 617.801.6888 (international), and referencing passcode: 9891-1151. About Taleo Taleo (NASDAQ: TLEO) is the leader in on-demand unified talent management solutions that empower organizations of all sizes to assess, acquire, develop and align their workforces for improved business performance. Approximately 4,000 organizations use Taleo for talent acquisition and performance management, including 48 of the Fortune 100 and approximately 3,400 small and medium sized businesses across 200 countries and territories. Known for its strong configurability and usability, Taleo runs on a world-class infrastructure and offers 99.9% availability. Taleo's Talent Grid harnesses the resources of the Taleo community of customers, candidates, and partners to power the talent needs of companies around the world. Forward-looking Statements This release contains forward-looking statements, including statements regarding Taleo's future financial performance, new product development, market growth, the demand for Taleo's solutions, the impact of Taleo's acquisition of Vurv, and general business conditions. Any forward-looking statements contained in this press release are based upon Taleo's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Taleo's expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Taleo disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Further information on potential factors that could affect actual results is included in Part I, Item 1A of Taleo's Annual Report on Form 10-K, as filed with the SEC on April 30, 2009, and in other reports filed by Taleo with the SEC. Non-GAAP Financial Measures Taleo has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP revenue, non-GAAP net income and non-GAAP net income per share. Taleo uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Taleo's ongoing operational performance. Taleo believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with other companies in Taleo's industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP revenue discussed above includes amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition, and other non-GAAP measures include amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition and excludes costs associated with the revenue review, share-based compensation expense, amortization of acquired intangibles and non-cash tax reserve. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. As previously mentioned, a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release. -- GAAP revenues of $48.1 million for the first quarter of 2009, an
increase of 34% year-over-year; Non-GAAP revenues increased to $48.6
million, which includes amounts excluded from GAAP revenue due to the write-
down of deferred revenue required under purchase accounting associated with
the acquisition of Vurv Technology, Inc. ("Vurv") on July 1, 2008.-- Signed 166 new customers, including 19 new Taleo Enterprise
Edition(TM) customers and 147 new Taleo Business Edition(TM) customers,
despite an increasingly volatile global economic climate.-- GAAP net loss of $(2.2) million, or $(0.07) per share.
-- Record Non-GAAP net income of $5.6 million, or $0.18 per fully diluted
share.-- On pace to surpass 100 Enterprise and Business Edition Performance
Management customers by end of current quarter.-- Acquired 19 new Taleo Enterprise Edition customers. Demand for Taleo's
talent management solutions continued with the company signing 19 new
enterprise customers, bringing Taleo's enterprise customer base to over 670
organizations around the world. New Taleo Enterprise Edition customers
included: Aaron Rents, Batesville Casket Company, Bristow Group,
Healthways, Hitachi Data Systems, McAfee, NEW Customer Service Companies,
PlayStation (Sony Computer Entertainment of America) and Thomas Cook (UK).-- Signed 147 new Small and Medium-sized Customers. Taleo Business
Edition, a recruiting solution targeted at companies with less than 5,000
employees, now has approximately 3,400 customers. New Taleo Business
Edition customers include: Portland Energy Conservation, Colorado Springs
Utility, Major League Baseball, Kool Smiles, the City of Jacksonville and
M.A.R.S. International. New Taleo Business Edition Perform customers
include The Little Clinic, Texas First Bank and Imperial Toy Company.-- Continued to see unified Talent Management Adoption. Customers buying
Taleo's bundled Talent Management offering (both recruiting and performance
management solutions) include Dow Jones for Taleo Enterprise Edition, and
Medical College of Wisconsin for Taleo Business Edition.-- Performance Management momentum. Combined sales of Taleo Enterprise
Performance, available since the first quarter of 2008, and Taleo Business
Edition Perform, available since the fourth quarter of 2008, are on pace to
surpass 100 customers by June 30, 2009. Additionally, in the second quarter
of 2009 Taleo Enterprise Performance was announced as the 2009 CODiE Award
winner for the Best Human Resources Solution by the Software and
Information Industry Association (SIIA).-- Vurv renewals and conversions tracking at or above expectations. Vurv
customers committing to Taleo Enterprise Edition this quarter include:
Autodesk, St. Luke's Episcopal Health System, Language Line Services, Adesa
and Asurion.-- Taleo was recently awarded an "Outstanding" rating by the Service and
Support Professionals Association. One of the key tenets of the on-demand
software business is that you not only need to develop a strong software
solution, but also deliver that software with the highest level of service
and support. Taleo is the first and only Talent Management software vendor
to receive this distinction.
Taleo Corporation
Condensed Consolidated Statements of Operations
(All amounts in thousands except per share data)
(Unaudited)
Three Months Ended
March 31,
-------------------------
2009 2008
----------- -----------
(As
restated)
-----------
Revenue:
Application $ 41,204 $ 30,163
Consulting 6,879 5,666
----------- -----------
Total revenue 48,083 35,829
----------- -----------
Cost of revenue (note 1):
Application 8,929 6,254
Amortization of acquired intangibles 760 36
----------- -----------
Total cost of application revenue 9,689 6,290
Consulting 6,270 5,724
----------- -----------
Total cost of revenue 15,959 12,014
----------- -----------
Gross profit 32,124 23,815
----------- -----------
Operating expenses (note 1):
Sales and marketing 15,854 10,670
Research and development 8,552 7,033
General and administrative 9,765 6,587
----------- -----------
Total operating expenses 34,171 24,290
----------- -----------
----------- -----------
Loss from operations (2,047) (475)
----------- -----------
Other income / (expense):
Interest income 141 778
Interest expense (41) (45)
----------- -----------
Total other income 100 733
----------- -----------
Income / (loss) before provision / (benefit) for
income taxes (1,947) 258
Provision / (benefit) for income taxes 237 (303)
----------- -----------
Net income / (loss) attributable to Class A
common stockholders $ (2,184) $ 561
=========== ===========
Net income / (loss) per share attributable to
Class A common stockholders - basic $ (0.07) $ 0.02
=========== ===========
Net income / (loss) per share attributable to
Class A common stockholders - diluted $ (0.07) $ 0.02
=========== ===========
Weighted average Class A common shares - basic 30,262 25,369
=========== ===========
Weighted average Class A common shares - diluted 30,262 28,899
=========== ===========
NOTES
1. Includes share-based compensation
expense pursuant to SFAS 123(R)
Application cost of revenue $ 126 $ 127
Consulting cost of revenue 219 181
----------- -----------
Cost of revenue subtotal 345 308
Sales and marketing operating expense 458 635
Research and development operating
expense 279 299
General and administrative operating
expense 1,286 1,254
----------- -----------
Operating expense subtotal 2,023 2,188
Total share-based compensation expense $ 2,368 $ 2,496
=========== ===========
Taleo Corporation
Condensed Consolidated Statements of Operations (Continued)
(All amounts in thousands except per share data)
Reconciliation of GAAP net income / (loss) and
non-GAAP net income:
Three Months Ended
March 31,
-------------------------
2009 2008
----------- -----------
GAAP net income / (loss) reported above $ (2,184) $ 561
Add back:
Revenue
Non-GAAP application revenue 513 -
Non-GAAP service revenue 13 -
----------- -----------
Total Non-GAAP revenue 526 -
Expenses
Revenue review expense 1,354 -
Share-based compensation expense (SFAS
123(R)) 2,368 2,496
Amortization of acquired intangibles 3,572 109
Non-cash income tax reserve - (332)
----------- -----------
Total Non-GAAP expense 7,294 2,273
----------- -----------
Non-GAAP net income $ 5,636 $ 2,834
=========== ===========
Non-GAAP net income per share
Basic $ 0.19 $ 0.11
=========== ===========
Diluted $ 0.18 $ 0.10
=========== ===========
Reconciliation of basic and fully diluted share
count:
----------- -----------
Basic 30,262 25,369
----------- -----------
Add: Weighted Average - Series B common stock - 562
Weighted Average - stock options and
unreleased restricted stock 478 2,968
Weighted Average - Vurv escrow shares 478 -
----------- -----------
Diluted 31,218 28,899
----------- -----------
Taleo Corporation
Condensed Consolidated Balance Sheets
(All amounts in thousands)
(Unaudited)
March 31, December 31,
2009 2008
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 60,325 $ 49,462
Restricted cash 521 521
Accounts receivable, net 44,643 49,167
Prepaid expenses and other current assets 11,177 10,977
Investment credits receivable 4,868 6,087
----------- -----------
Total current assets 121,534 116,214
Property and equipment, net 24,320 25,250
Restricted cash 515 515
Goodwill 91,563 91,626
Other intangibles, net 41,230 44,802
Other assets 4,736 4,782
----------- -----------
Total assets $ 283,898 $ 283,189
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 24,291 $ 24,877
Deferred revenue - application services
and customer deposits 55,628 54,421
Deferred revenue - consulting services 16,034 16,221
Capital lease obligation, short-term 942 1,101
----------- -----------
Total current liabilities 96,895 96,620
Long-term deferred revenue - application
services and customer deposits 822 777
Long-term deferred revenue - consulting
services 10,288 9,594
Other liabilities 3,136 3,258
Capital lease obligation, long-term 353 519
----------- -----------
Total liabilities 111,494 110,768
----------- -----------
Stockholders' equity:
Capital stock - -
Additional paid-in capital 250,371 247,764
Accumulated deficit (78,102) (75,918)
Treasury stock (118) -
Accumulated other comprehensive income 253 575
----------- -----------
Total stockholders' equity 172,404 172,421
----------- -----------
Total liabilities and stockholders' equity $ 283,898 $ 283,189
=========== ===========
Taleo Corporation
Condensed Consolidated Statements of Cash Flows
(All amounts in thousands)
(Unaudited)
Three Months Ended
March 31,
2009 2008
----------- -----------
(As
restated)
Cash flows from operating activities:
Net income / (loss) $ (2,184) $ 561
Adjustments to reconcile net income / (loss) to
net cash provided by operating activities:
Depreciation and amortization 6,662 2,364
Amortization of tenant inducements (38) (38)
Stock-based compensation expense 2,368 2,496
Director fees settled with stock 64 59
Bad debt expense 400 (86)
Changes in assets and liabilities:
Accounts receivable 4,112 (4,163)
Prepaid expenses and other assets (279) (183)
Investment credits receivable 1,095 (682)
Accounts payable and accrued liabilities (651) 1,064
Deferred revenue and customer deposits 1,848 5,882
----------- -----------
Net cash provided by operating
activities 13,397 7,274
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (2,162) (1,902)
----------- -----------
Net cash used in investing activities (2,162) (1,902)
----------- -----------
Cash flows from financing activities:
Principal payments on capital lease obligations (325) (14)
Treasury stock acquired to settle employee
withholding liability (118) (253)
Proceeds from stock options exercised 176 414
----------- -----------
Net cash (used in) / provided by financing
activities (267) 147
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents (105) 29
----------- -----------
Increase in cash and cash equivalents 10,863 5,548
Cash and cash equivalents:
Beginning of period 49,462 86,135
----------- -----------
End of period $ 60,325 $ 91,683
=========== ===========
Supplemental cash flow disclosures:
Cash paid for interest $ 23 $ 1
----------- -----------
Cash paid for income taxes $ 201 $ -
----------- -----------
Supplemental disclosure of non-cash financing
and investing activities:
Property and equipment purchases included in
accounts payable and accrued liabilities $ 1,633 $ 2,811
Class B common stock exchanged for Class A
common stock $ - $ 96
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