RightNow(R) Technologies, Inc. (Nasdaq: RNOW), today announced results for the second quarter ended June 30, 2006. RightNow reported its 34th consecutive quarter of revenue growth, with second quarter consolidated revenue of $26.9 million, an increase of 28 percent from the second quarter of 2005.
The net loss in the second quarter of 2006 was $(1.8) million or $(0.05) per diluted share, including $(0.02) related to the post-acquisition operating results of Salesnet, compared to net income of $1.6 million, or $0.05 per diluted share, in the second quarter of 2005. Second quarter 2006 non-GAAP net income per diluted share was $0.00, which excludes stock-based compensation charges of $(0.05) per diluted share.
Revenue for the six month period ended June 30, 2006 was $51.5 million, or 31 percent more than the comparable 2005 period. The net loss for the six months ended June 30, 2006 was $(2.2) million, or $(0.07) per diluted share, as compared to net income of $2.4 million, or $0.07 per diluted share, for the six months ended June 30, 2005.
RightNow added 70 new customers and handled 223 million customer interactions during the second quarter. Including the addition of the Salesnet customers, we now have over 1,700 customers. New, renewed and expanded customer relationships during the second quarter of 2006 included Authentium, Briggs Corporation, CIGNA, Datamail, iRobot, Monster.com, New Balance Athletic Shoe, Sharper Image Corporation, US Government Printing Office, and Vodafone NZ.
"RightNow continues to gain momentum from the combination of our industry leading customer experience solutions and the growing mainstream acceptance of On Demand solutions among large enterprises," said Greg Gianforte, founder and CEO. "Our sales pipeline is the strongest ever, driven by our expanding product footprint and the high levels of customer satisfaction we have enjoyed since our earliest days."
Susan Carstensen, CFO, stated "Bookings of $33.2 million and cash from operations of $6.9 million in the quarter bring our year-to-date totals to approximately $71 million and $13 million, respectively, for increases of 49 percent and 123 percent, respectively, over last year. We are reiterating our guidance of 40 - 50 percent bookings growth and 70 - 115 percent cash flow growth for 2006. One positive trend to note is that term licenses as a percentage of revenue continue to increase, as they have over the last 5 quarters providing additional visibility into our results."
Guidance
* The Company expects to record amortization of intangible assets related
to the purchase of Salesnet of approximately $250,000 per quarter.
Additionally, the Company now expects that perpetual license revenue
will make up 18 to 22 percent of revenue, compared to previous guidance
of 20 to 25 percent.
* For the third quarter of 2006, revenue is anticipated to be in the range
of $28.0 to $29.0 million. The net (loss) per diluted share is expected
to be in the range of $(0.01) to $(0.04) cents, including $(0.01) from
the amortization of acquired intangible assets. Excluding the effect of
stock-based compensation, non-GAAP net income per diluted share is
expected to be in the range of $0.00 to $0.03 cents.
* For the full year 2006, the Company reiterates its bookings growth
guidance of 40 to 50 percent, with cash from operations of $26 to
$32 million. Accounting for the lower mix of perpetual revenue, revenue
is anticipated to be in the range of $111 to $114 million, and the net
loss per share in the range of $(0.07) to $(0.12) cents. Excluding the
effect of stock-based compensation, non-GAAP net income per diluted
share for the year is expected to be in the range of $0.04 to
$0.09 cents.
Quarterly Conference Call
RightNow Technologies will discuss its quarterly results via teleconference at 4:30 p.m. (ET)/2:30 p.m. (MT) today, July 24, 2006. To access the call, please dial (800) 289-0494, or outside the U.S. dial (913) 981-5520, at least five minutes prior to the start time. An audio webcast of the call will also be available at http://www.shareholder.com/rnow/medialist.cfm. A replay of today's conference call will be available on the company Web site at http://www.shareholder.com/rnow/, under the Investor Webcasts menu, from 5:30 p.m. (MT) on July 24, 2006 until 10:00 p.m. (MT) August 7, 2006. You may also access a replay of today's call by dialing (719) 457-0820 or (888) 203-1112 with the replay passcode 3693249.
About RightNow Technologies
RightNow (Nasdaq: RNOW) is leading the industry beyond CRM to high-impact Customer Experience Management solutions. More than 1,500 companies around the world turn to RightNow to drive a superior customer experience across the frontlines of their business. As a win-on-service strategy becomes a business imperative, Customer Experience Management solutions have become essential for business success. Founded in 1997, RightNow is headquartered in Bozeman, Montana, with additional offices in North America, Europe and Asia. For further information, please visit http://www.rightnow.com.
RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of the NASDAQ Stock Market.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management's future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, risks associated with our business model; our ability to develop or acquire, and gain market acceptance for new products in a cost-effective and timely manner; the gain or loss of key customers; our ability to successfully retain customers and employees of Salesnet, Inc. and to integrate Salesnet's products and processes following our recent acquisition of that company; competitive pressures; our ability to expand operations; fluctuations in our earnings as a result of the impact of stock-based compensation expense; interruptions or delays in our hosting operations; breaches of our security measures; our ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; and our ability to expand, retain and motivate our employees and manage our growth. Further information on potential factors that could affect our financial results is included in our Annual Report on Form 10-K, quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
FRNOW
RightNow Technologies, Inc.
Consolidated Balance Sheets
(In thousands) (Unaudited)
June 30, Dec 31,
2006 2005
Assets
Cash and cash equivalents $30,546 $40,874
Short-term investments 35,203 23,314
Accounts receivable 26,250 25,462
Term receivables, current 19,255 15,376
Allowance for doubtful accounts (2,331) (2,209)
Net receivables 43,174 38,629
Prepaid & other current assets 2,514 1,993
Total current assets 111,437 104,810
Property and equipment, net 8,620 6,451
Term receivables, non-current 15,765 10,697
Intangible assets, net 9,592 1,487
Other 107 231
Total Assets $145,521 $123,676
Liabilities and Stockholders' Equity
Accounts payable $3,221 $2,308
Commissions and bonuses payable 3,066 2,910
Other accrued liabilities 5,749 5,733
Current portion of long-term debt 35 30
Current portion of deferred revenue 56,222 48,673
Total current liabilities 68,293 59,654
Long-term debt, less current portion 123 117
Deferred revenue, net of current portion 31,012 19,250
Stockholders' equity:
Common stock 32 32
Additional paid-in capital 81,856 78,312
Accumulated other comprehensive loss (312) (401)
Accumulated deficit (35,483) (33,288)
Total stockholders' equity 46,093 44,655
Total Liabilities Stockholders' Equity $145,521 $123,676
RightNow Technologies, Inc.
Consolidated Operating Statements
(In thousands, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Revenue:
Software, hosting
and support $20,636 $16,864 $39,946 $30,738
Professional services 6,272 4,214 11,593 8,682
Total revenue 26,908 21,078 51,539 39,420
Cost of revenue:
Software, hosting
and support 3,159 2,276 5,930 4,340
Professional services 4,941 2,879 9,045 5,575
Total cost of revenue 8,100 5,155 14,975 9,915
Gross profit 18,808 15,923 36,564 29,505
Operating expenses:
Sales and marketing 14,852 10,557 28,578 20,014
Research and
development 3,476 2,426 6,606 4,587
General and
administrative 2,709 1,586 4,765 2,996
Total operating
expenses 21,037 14,569 39,949 27,597
Income (loss) from
operations (2,229) 1,354 (3,385) 1,908
Interest and other
income (expense), net 768 331 1,440 623
Income (loss) before
income taxes (1,461) 1,685 (1,945) 2,531
Provision for income
taxes (294) (126) (250) (171)
Net income (loss) $(1,755) $1,559 $(2,195) $2,360
Net income (loss)
per share:
Basic $(0.05) $0.05 $(0.07) $0.08
Diluted $(0.05) $0.05 $(0.07) $0.07
Shares used in the
computation:
Basic 32,172 30,232 32,057 30,025
Diluted 32,172 33,367 32,057 33,477
Supplemental information
of stock-based
compensation expense
included in:
Cost of software,
hosting and support $55 $-- $93 $--
Cost of professional
services 137 -- 234 --
Sales and marketing 535 -- 901 --
Product development 233 -- 392 --
General and
administrative 718 -- 841 --
Total stock-based
compensation $1,678 $-- $2,461 $--
RightNow Technologies, Inc.
Consolidated Statements of Cash Flow
(In thousands, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Operating activities:
Net income (loss) $(1,755) $1,559 $(2,195) $2,360
Non-cash adjustments:
Depreciation and
amortization 1,337 828 2,442 1,570
Stock-based compensation 1,678 -- 2,461 --
Provision for losses
on accounts receivable 7 (8) (241) 44
Changes in operating accounts:
Receivables 1,386 (5,866) (8,412) (8,268)
Prepaid expenses 8 67 (159) 23
Accounts payable 56 2 744 778
Commissions and bonuses
payable (752) 588 35 (75)
Other accrued liabilities (694) 371 (191) 579
Deferred revenue 5,349 4,941 18,325 8,760
Other 244 82 107 32
Cash provided by operating
activities 6,864 2,564 12,916 5,803
Investing activities:
Net change in short-term
investments (8,140) (4,483) (11,889) 7,005
Acquisition of property
and equipment (2,770) (1,070) (3,910) (2,148)
Business acquisitions (8,731) (1,012) (8,731) (1,012)
Other -- -- (10) --
Cash provided (used) by
investing activities (19,641) (6,565) (24,540) 3,845
Financing activities:
Proceeds from issuance
of common stock 567 1,217 999 1,805
Payments on long-term debt (7) -- (14) --
Cash provided by financing
activities 560 1,217 985 1,805
Effect of foreign exchange
rates on cash and
cash equivalents 319 (79) 311 (105)
Increase (decrease) in
cash and cash equivalents (11,898) (2,863) (10,328) 11,348
Cash and cash equivalents
at beginning of period 42,444 33,155 40,874 18,944
Cash and cash equivalents
at end of period $30,546 $30,292 $30,546 $30,292
RightNow Technologies, Inc.
Reconciliation of Non-GAAP Measurements
(Amounts in thousands, except per share amounts) (Unaudited)
Diluted Earnings Per Share Reconciliation
Three Months Six Months
Ended Ended
June 30, 2006 June 30, 2006
Net (loss) as reported $(1,755) $(2,195)
Add stock-based compensation ("SBC") 1,678 2,461
Net income (loss) before SBC $(77) $266
Diluted net (loss) per share, as reported $(0.05) $(0.07)
Diluted net income (loss) per share,
before SBC (0.00) 0.01
Diluted shares outstanding, as reported 32,172 32,057
Diluted shares outstanding, excluding
the effect of SBC 32,172 33,965
Forward-Looking Guidance Reconciliation
GAAP Guidance Non-GAAP Guidance
Third quarter ending
September 30, 2006 From To Adjustment From To
Net income
(loss) $(1,300) $(300) $1,300 [a] $-- $1,000
Diluted EPS $(0.04) $(0.01) $0.00 $0.03
Diluted shares 32,300 32,300 2,000 [b] 34,300 34,300
Year ending
December 31, 2006
Net income
(loss) $(3,900) $(2,300) $5,300 [a] $1,400 $3,000
Diluted EPS $(0.12) $(0.07) $0.04 $0.09
Diluted shares 32,500 32,500 2,000 [b] 34,500 34,500
[a] Estimated stock-based compensation expense to be recorded for the
periods indicated in accordance with Statement of Financial Accounting
Standards No. 123R, Share-Based Payments, ("SFAS 123R") which is
effective for periods beginning January 1, 2006. Periods prior to
2006 do not include stock-based compensation expense.
[b] Estimated adjustment for the dilutive effect of outstanding common
stock equivalents.
[c] Estimated adjustment for the dilutive effect of outstanding common
stock equivalents.
About Non-GAAP Financial Measures
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies.
RightNow's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding RightNow's operating results because they facilitate the comparison of results for future periods with results from past periods. RightNow adopted SFAS 123R on January 1, 2006 using the modified prospective method. Results of prior periods have not been restated to conform with the 2006 presentation. We believe the calculation of diluted net income per share, calculated without stock-based compensation expense, provides a meaningful comparison to our diluted net income per share figures reported for 2005 and prior years.