Applix Reports 45% Increase in Quarterly License and Total Revenue; License Revenue Rises 54% for Full Year
biz.yahoo.com
Thursday February 8, 4:05 pm ET
Company provides outlook for 2007: continued segment leading revenue growth
WESTBOROUGH, Mass.--(BUSINESS WIRE)--Applix, Inc. (Nasdaq: APLX), a global leader in performance management applications, today reported that revenue for the quarter ended December 31, 2006 was $16.04 million, a 45 percent increase over revenue of $11.08 million in the fourth quarter of 2005. License revenue for the fourth quarter of 2006 was $9.63 million, a 45 percent increase compared to $6.64 million for the same period a year ago.
Net income for the fourth quarter of 2006, as reported in accordance with U.S. generally accepted accounting principles (GAAP), was $5.97 million, or $0.34 per diluted share, compared to a net income of $2.48 million, or $0.15 per diluted share, for the year ago period. Fourth quarter 2006 net income included a tax benefit of $4.18 million, or $0.24 per diluted share, from the reversal of a valuation allowance on domestic net operating losses.
Fourth quarter 2006 non-GAAP net income was $2.96 million, or $0.17 per diluted share, reflecting the exclusion of the tax benefit from the valuation allowance reversal, approximately $631,000 of stock-based compensation charges primarily associated with the Company's adoption on January 1, 2006 of Statement of Financial Accounting Standard No. 123®, "Share-Based Payment," approximately $255,000 of amortization charges primarily associated with the Company's acquisition of Temtec International B.V. in June 2006, approximately $358,000 of legal expenses related to the Securities and Exchange Commission (SEC) investigation and the related income tax benefit of $76,000 on these non-GAAP operating adjustments. In the fourth quarter of 2005, non-GAAP net income was $2.71 million, or $0.16 per diluted share, reflecting the exclusion of stock-based compensation, amortization charges and SEC investigation-related legal expenses of approximately $170,000, $62,000 and $19,000, respectively, and the related income tax benefit of $19,000 on these non-GAAP operating adjustments. The SEC investigation was settled with respect to Applix in January 2006, with no monetary penalty assessed.
David C. Mahoney, President and Chief Executive Officer of Applix, said, "This strong fourth quarter performance capped off an outstanding year for Applix. As we entered 2006, we saw a distinct opportunity to extend our leadership position in the mid-market with our highly differentiated product offerings and we aggressively pursued and invested in that goal throughout the year. Our success in the fourth quarter and for 2006 is proof that this unique combination of market dynamics and technology leadership has placed Applix in a strong position heading into 2007.
"Our solid execution in 2006 has also led to a number of firsts and major accomplishments for Applix and our customers. Included among these are a record number of six figure deals, our successful acquisition and integration of Temtec, the accolades our products continue to win from industry analysts and customers alike, as well as several strategic management team additions. Together, these achievements signify that as an organization, we are approaching a pivotal point in our history. We are eager to build upon this position and to focus on taking advantage of the rapidly growing market opportunity we have ahead of us."
He added, "Next week we will announce the first of several planned major product cycles for Applix TM1, our core technology. Each of these releases represent key advances that will enable our global customers to maximize the applications against which Applix can be deployed and increase the number of users who can leverage the power of the industry's most agile business analytics software. Consistent with our intention to sustain our industry leading growth, we also anticipate launching a new marketing campaign to further raise our visibility and to communicate our strong value proposition within the broad mid-market where the Applix platform is by far the best solution, and where our competitors have been largely absent. On this basis, we are today sharing expectations for another year of high growth for Applix in 2007 - growth levels generally associated with far newer and younger companies and certainly well above those of our competitors. We intend to pursue our aggressive mission with discipline and tenacity."
Fourth Quarter Business Highlights
* Applix expanded its customer base dramatically in the fourth quarter by adding more than 100 new customers, and nearly 300 for the full year, excluding those gained from the Temtec acquisition. New customers include Patterson Companies, Arbitron, General Dynamics, T-Systems, N. Brown Group and Intel.
* Applix added new solution partners T4G Limited, JCB Partners and ARCS Solutions in the U.S., along with Alpha Life in the Ukraine.
* Applix announced that TM1 was positioned in the "Visionaries" quadrant of the Gartner Magic Quadrant for CPM Suites.
* Applix announced that its stock now trades on the Nasdaq Global Select Market, the premier listing, as of December 11, 2006.
* Applix announced that TM1 was supporting IBM Information Server, allowing users to view, analyze and plan with real-time data in complex models across the enterprise.
Following the close of the quarter, Applix announced the promotion of Michael Morrison to Chief Operating Officer from Senior Vice President of Sales and Marketing and expanded its senior management team with the appointments of Ben Plummer as Senior Vice President of Worldwide Marketing and Strategic Alliances and Mary Murphy as Vice President of Human Resources. Applix also announced that it had once again scored at the highest levels in customer satisfaction and speed of implementation in the annual OLAP Survey 6, which is based upon customer surveys, and had the highest customer satisfaction ratings of the BPM core vendors on the BPM Partners' Pulse Survey.
Fourth Quarter Financial Highlights
* Cash and short-term investments totaled $27.21 million at 12/31/06, up from $24.94 million at 12/31/05.
* Gross margin for the fourth quarter of 2006 was 89.4%, compared to 90.9% in the fourth quarter of 2005.
* Days sales outstanding was 75 days at 12/31/06, compared to 67 days at 9/30/06 and 65 days at 12/31/05, primarily reflecting higher license sales and calendar year maintenance renewals in December 2006.
* A record 24 customers purchased more than $100,000 in software licenses in the fourth quarter of 2006, up from 18 in the third quarter of 2006 and 15 in the fourth quarter of 2005. For the full year 2006, the number of customers who purchased more than $100,000 in software licenses more than doubled to 67 from 33 in 2005.
* Average license deal size for transactions over $20,000 was between $65,000 - $70,000 in the fourth quarter of 2006, down from between $80,000 - $85,000 in the third quarter of 2006, but consistent with the fourth quarter of 2005, and the number of deals of this size increased nearly 50% compared to both earlier periods. For the full year 2006, the average license deal size for transactions over $20,000 was between $70,000 - $75,000, up from $55,000 - $60,000 in 2005.
Total operating expenses for the fourth quarter of 2006 were $12.78 million, compared to $7.14 million in the year ago quarter, and $11.04 million in the third quarter of 2006, reflecting higher sales compensation costs associated with stronger revenue growth, planned higher sales and marketing program expenses, significantly higher stock-based compensation charges, amortization of acquisition-related intangible assets and increased operating expenses associated with the company's acquisition of Temtec. Also included in the fourth quarter 2006 expenses was approximately $358,000 in legal expenses, including indemnification costs, related to the SEC investigation. In the fourth quarter of 2005, these expenses were approximately $19,000. For the full year 2006, SEC investigation-related legal and consulting expenses were approximately $996,000, compared to approximately $119,000 in 2005.
Milt Alpern, Senior Vice President and CFO of Applix, commented, "We are very pleased with the strong results we posted for the fourth quarter and year in 2006, even as we increased our investments in sales and marketing significantly to drive top-line growth. With these investments, we do expect that in 2007, we will increase their leveragability and that, as a result, these costs as a percentage of total revenue will begin to decline, enabling operating margins to expand. Other important achievements in 2006 include consistently strong gross margins, at 89.6% for the full year, and positive net cash flow for the fourth quarter and year resulting in a nine percent annual increase in our cash and short-term investments balances, despite net cash outlays in 2006 of approximately $6.4 million associated with our acquisition of Temtec in June. This continued progress provides the basis for our forecast for continued strong growth in 2007."
Full Year 2006 Results
Total revenue for 2006 was $52.17 million, a 41 percent increase over $36.98 million for 2005, and above the company's most recent forecast for total revenues of between $49 - $51 million. License revenue was $30.11 million for 2006, a 54 percent increase over $19.49 million in 2005, and again, higher than the company's most recent forecast for license revenues of between $28 - $29 million. On a GAAP basis, net income for 2006 was $9.54 million, or $0.56 per diluted share, including the tax benefit from the reversal of the valuation allowance on domestic net operating losses, compared to $6.74 million, or $0.41 per diluted share, in 2005, including a $320,000 or $0.02 per diluted share benefit from the favorable settlement of a UK tax matter. Non-GAAP net income for 2006 was $9.10 million, or $0.54 per diluted share, excluding stock-based compensation charges of approximately $2.27 million, or $0.13 per diluted share, amortization charges of approximately $667,000, or $0.04 per diluted share, SEC investigation-related expenses of approximately $996,000, or $0.06 per diluted share, and the related income tax benefit of $198,000, or $0.01 per diluted share, on these non-GAAP operating adjustments, as well as the tax benefit from the reversal of the valuation allowance on net operating losses. For 2005, non-GAAP net income was $6.93 million, or $0.42 per diluted share, excluding stock-based compensation, amortization charges and SEC investigation-related expenses of approximately $215,000, $250,000 and $119,000, respectively, and the related income tax benefit of $75,000 on these non-GAAP operating adjustments. Non-GAAP net income for 2005 also excludes the tax benefit from the settlement of the UK tax matter of $320,000.
Financial Outlook for 2007
Applix is today providing its financial outlook for the Company for 2007. The Company is targeting total revenue of $67 - $70 million and license revenue of $38.5 - $40.5 million. Applix is targeting diluted earnings per share for 2007 on a GAAP basis between $0.31 - $0.38, based upon an assumed weighted average number of diluted shares of 18,000,000 and an estimated effective tax rate of 40%. The increase in the effective tax rate to 40% is primarily due to the reversal of the valuation allowance on domestic net operating losses. On a non-GAAP basis, excluding the expected annual impact of stock-based compensation charges of $3.0 million, or $0.17 per diluted share, amortization costs of $863,000, or $0.05 per diluted share, SEC investigation-related expenses of $400,000, or $0.02 per diluted share, and the related income tax benefit of $1.7 million, or $0.09 per diluted share, on these non-GAAP operating adjustments, the company's forecast for annual earnings is between $0.46 - $0.53 per diluted share. Neither forecast reflects the impact of foreign exchange, which cannot be predicted. |
