Interwoven Announces Third Quarter Financial Results
1 January 1970 Interwoven, Inc. (Nasdaq: IWOV), provider of Enterprise Content Management (ECM) solutions for business, today announced financial results for the three and nine months ended September 30, 2006.
Interwoven reported total revenues of $50.9 million for the third quarter of 2006, an increase of 16% from total revenues of $43.9 million for the third quarter last year. Net income for the third quarter of 2006, calculated in accordance with generally accepted accounting principles, was $1.8 million, or $0.04 per share, compared to net loss of $184,000, or roughly break even on a per share basis, for the same period last year. On a non-GAAP basis, Interwoven reported a net income of $5.2 million for the third quarter of 2006, or $0.12 per share, compared to non-GAAP net income of $2.9 million, or $0.07 per share, for the third quarter last year. Non-GAAP results exclude restructuring and excess facilities charges, stock-based compensation charges, amortization of intangible assets, and the related tax impact of these adjustments and, in the case of non-GAAP per share results, include the dilutive impact of common stock options.
For the nine months ended September 30, 2006, Interwoven reported total revenues of $146.4 million, an increase of 15% from total revenues of $127.5 million for same period last year. Net income for the nine months ended September 30, 2006, calculated in accordance with generally accepted accounting principles, was $2.1 million, or $0.05 per share, compared to a net loss of $499,000, or $0.01 per share, for same period last year. On a non-GAAP basis, Interwoven reported net income of $13.1 million for the nine months ended September 30, 2006, or $0.30 per share, compared to non-GAAP net income of $7.9 million, or $0.19 per share, for the same period last year. Non-GAAP results exclude restructuring and excess facilities charges, expenses associated with the retirement of the company's former chief executive officer recorded in the first quarter of 2006, stock-based compensation charges, amortization of intangible assets, and the related tax impact of these adjustments and, in the case of non-GAAP per share results, include the dilutive impact of common stock options.
Reconciliations of net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles and non-GAAP net income and non-GAAP net income per share are provided in the tables immediately following the consolidated statements of operations. Additional information about the company's non-GAAP financial measures can be found under the caption "Non-GAAP Financial Information" below.
"We are extremely pleased with our excellent financial results in Q3," said Interwoven's president Max Carnecchia. "Our revenues for the third quarter increased 16% over last year and, so far for the first nine months of 2006, our revenues have increased 15% over last year. Our strategy is working, our team is executing and we are clearly focused on increasing market share."
Customer Acquisition
Interwoven continued its strong global customer momentum in the third quarter by adding 68 new customers. As a result, Interwoven now has nearly 3,700 customers worldwide.
New customers that selected Interwoven in the third quarter include Advanta Bank, Analog Devices, ATK Thiokol, Fortis Investments, Hermes Precisa (HPA), Hunton & Williams, M|C Communications, Merchant & Gould, Mitsui & Co. USA, Prudential Insurance Co., Shin Kong Bank, TD Securities, Welch Allyn, and many others.
In the third quarter, Interwoven also received orders from existing customers, including: adidas, Amazon.com, Applied Biosystems, Avon, Astellas Pharma, Barclays, Bird & Bird, Blue Cross Blue Shield, Brodies, Campbell Soup, Canon, Cartoon Network, Ceridian, Chunghwa Telecom, Citibank, Deloitte Consulting, Elsevier Limited, Fujitsu, General Motors, Harrah's, Howard Hughes Medical Institute, Kohler Company, Library of Congress, MasterCard, Mazda, Mitsubishi Securities, NASD, NEC, Novo Nordisk, OCBC, The Principal Life Insurance Co., Samsonite, Smithsonian Institution, Visa International, White & Case, and many others.
In the quarter, Interwoven continued its record of delivering software products and services that enable enterprises to provide richer customer experiences across multiple touchpoints. As an example, Analog Devices, a leader in high performance signal processing solutions, replaced its existing Web content management software with Interwoven's solution. Analog Devices tested Interwoven against its existing software and selected Interwoven because its test results indicated that Interwoven's solution is more scalable, more flexible, more open, reduces the cost of ownership, and provides unique functionality that will enable Analog Devices to provide superior support to its customers worldwide.
M|C Communications, a premier medical education and event management company, selected Interwoven as a foundation for its future business growth. For a major expansion of its online and offline business, M|C Communications needed to enable teams of physicians, educators, and medical reviewers from several institutions to collaborate to create complex educational materials for its customers, to be delivered with marketing information through print and online channels. Comparative tests and evaluations of software from several vendors indicated to M|C Communications that only Interwoven offered a comprehensive solution that met its needs for both collaborative document management and web content management.
Interwoven secured key wins in the professional services market, with sales to law firms, accounting firms, and corporate legal departments, including our first law firm in India, J. Sagar Associates, and a major firm in Singapore, Allen & Gledhill. Of several new competitive conversions this quarter, one of note was Hunton & Williams, one of the largest law firms in North America, with over 800 attorneys. In addition to the dozens of new law firms added in the quarter, Interwoven also added several accounting firms as new customers, bringing the total to over 60 accounting firm customers worldwide. The company also completed sales to major corporate departments, including Prudential Insurance. Prudential's corporate legal and compliance departments purchased Interwoven's collaborative document management and record management offerings to enable the secure creation, management, retention and ultimate disposal of its corporate documents.
In the financial services market, Interwoven continued to add some of the largest global financial institutions as customers in the third quarter. One example was Grupo Santander, the world's tenth-largest financial group by market value, headquartered in Madrid, Spain. Santander purchased Interwoven's OTC Derivatives Solution to replace its internally-developed systems to automate over-the-counter derivatives confirmation. This win is a classic example of the value Interwoven's solutions provide to its financial services customers, enabling increased internal efficiencies while mitigating compliance risks.
Solution and Product Leadership
During the third quarter, Interwoven delivered enhancements to several of its products:
* Interwoven TeamSite, the industry's top product for Web content
management, was upgraded to make it easier to execute, manage, and
control complex projects that span multiple Websites and multiple
delivery channels. Enhancements included improved support for Linux, a
next-generation drag-and-drop builder to create and manage workflows to
automate the business processes that drive Web publishing, single sign-
on enhancements, and FormsPublisher improvements that make it even
faster for business users to quickly add and change Web content. These
enhancements reduce the total cost of ownership and accelerate time
to market.
* A new Adobe InDesign plug-in enables both Mac and PC users to use
Interwoven MediaBin's power from inside the Adobe product, so InDesign
users can place, manipulate, extract, and share images, publications,
and media, strengthening brand consistency, accelerating campaigns, and
reducing marketing costs.
* Interwoven also delivered enhancements to the Interwoven Composite
Application Provisioning Solution, Interwoven WorkSite, and Interwoven
MetaTagger.
Company Developments
* Max Carnecchia Appointed President -- The Interwoven board of directors
appointed Max Carnecchia as Interwoven's president. Mr. Carnecchia had
been serving as Interwoven's interim president since early this year.
Prior to his appointment as interim president, Mr. Carnecchia served as
Interwoven's senior vice president of worldwide sales. Prior to joining
Interwoven in 2001, Mr. Carnecchia held positions with several
companies, among them IBM, Intel, and Group 1 Software.
* Ben Kiker Appointed SVP and CMO -- Ben Kiker joined Interwoven as its
senior vice president and chief marketing officer. Previously, Mr.
Kiker was vice president of Americas marketing for Siebel Systems. Prior
to Siebel, Mr. Kiker was the chief marketing officer for Onyx Software,
where he led all marketing functions, including product management,
corporate marketing, and channel support. He also held senior marketing
positions for Clarify, Vantive, Octel, and Aspect Communications.
* Interwoven GearUp '06 Europe Conference -- Earlier this month, hundreds
of Interwoven customers and partners joined industry experts and media
at Interwoven's GearUp '06 Europe conference in London, England. The
filled-to-capacity event, with more than twice as many customers
attending as last year, enabled Interwoven users to share information
and best practices. Dozens of presentations were given by Interwoven and
its customers, including AXA Group, DLA Piper, Eurocontrol, Garrigues,
HBOS, Hilton Hotels, HSBC, SJ Berwin, SKY Italia, Telenor, Tesco, and
more. Partners sponsoring with Interwoven included Microsoft, Sun
Microsystems, Avenue A| Razorfish, Tikit, LexisNexis, eCopy, Morningstar
Systems, SDL International, and others.
Non-GAAP Financial Information
To supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles, Interwoven uses measures of operating results, net income (loss), net income (loss) per share, and shares used in the net income (loss) per share calculation, which are adjusted to exclude restructuring charges, retirement benefit costs associated with the retirement of the company's former chief executive officer recorded in the first quarter of 2006, stock-based compensation, amortization of intangible assets, and the related tax impact of these adjustments and, where applicable, to include the dilutive impact of common stock options. These non- GAAP results are not in accordance with, or an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America, and the company's non-GAAP measures may be different from non-GAAP measures used by other companies. Interwoven believes that the presentation of non-GAAP results provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Interwoven also believes that where the adjustments used in calculating non-GAAP net income and non-GAAP net income per share are based on specific, identified charges that impact different line items in the consolidated statements of operations (including cost of revenues-license, cost of revenues-support and service, sales and marketing, research and development, and general and administrative expenses), it is useful to investors to know how these specific line items in the consolidated statements of operations are affected by these adjustments. For its internal budgets, Interwoven's management uses consolidated financial statements that do not include restructuring and excess facilities charges, retirement benefit costs associated with retirement of the company's former chief executive officer, stock-based compensation, amortization of intangible assets, and the related tax impact of these adjustments. Interwoven uses these non-GAAP measures in assessing corporate performance and determining incentive compensation. Readers are advised to review and consider carefully the financial information prepared in accordance with accounting principles generally accepted in the United States of America contained in this press release and Interwoven's periodic filings with the Securities and Exchange Commission.
Conference Call Information
Interwoven's 2006 third quarter results and its business outlook for the fourth quarter of 2006 will be discussed today, October 26, 2006 at 2:00 p.m. PT (5:00 p.m. ET).
Live dial-in number: (719) 457-2630
Replay number: (719) 457-0820 or (888) 203-1112
Pass code: 4656841
Audio Web cast instructions will be available on Interwoven's Website at http://www.interwoven.com/investors . The call replay will be available starting October 26, 2006 at approximately 5:00 p.m. PT for a limited period.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking" statements, including statements about historical results that may suggest trends in our business. These statements are based on estimates and information available to us at the time of this press release and are not guarantees of future performance. Our forward-looking statements include management quotations, statements about customer momentum, solutions and products, activities with strategic business alliances, and statements about technology leadership. Actual results could differ materially from our current expectations as a result of many factors including: our ability to develop new products, services, features and functionality successfully and on a timely basis; customer acceptance of our solutions; changes in customer spending on enterprise content management initiatives; our ability to cross-sell and up-sell additional products into our installed base of customers; the success of our strategic business alliances; intense competition in our markets; changes in key personnel, the introduction of new products or services by competitors; and the ongoing consolidation in our markets. These and other risks and uncertainties associated with our business are described in our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Forms 8-K, which are on file with the Securities and Exchange Commission and available through http://www.sec.gov.
About Interwoven
Interwoven, Inc., provider of Enterprise Content Management solutions for business, enables organizations to unify people, content and processes to minimize business risk, accelerate time-to-value and sustain lower total cost of ownership. Interwoven delivers deep industry-specific solutions which reduce business process cycle time from initial collaboration through design, production, sales, marketing, legal review, IT and service. Interwoven leads the industry with a service-oriented architecture today and easy-to-use, best-in-class components and solutions. Today, nearly 3,700 companies, law firms, and professional services organizations worldwide are Interwoven customers including adidas, Airbus, Avaya, Cisco, DLA Piper, the Federal Reserve Bank, FedEx, HSBC, LexisNexis, Microsoft, Samsung, Shell International, Samsonite, White & Case, and Yamaha. Interwoven is headquartered in Sunnyvale, Calif., with offices around the world. For more information visit: http://www.interwoven.com .
INTERWOVEN, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
2006 2005 2006 2005
Revenues:
License $ 18,580 $ 17,417 $ 54,657 $ 48,500
Support and service 32,335 26,522 91,745 78,958
Total revenues 50,915 43,939 146,402 127,458
Cost of revenues:
License 4,426 3,951 13,015 10,781
Support and service 13,140 10,731 37,324 30,987
Total cost of revenues 17,566 14,682 50,339 41,768
Gross profit 33,349 29,257 96,063 85,690
Operating expenses:
Sales and marketing 18,877 17,966 56,446 51,965
Research and development 8,902 7,639 25,984 23,649
General and administrative 3,964 3,673 13,015 10,403
Amortization of
intangible assets 828 834 2,484 2,472
Restructuring and
excess facilities charges 41 35 (887) (598)
Total operating expenses 32,612 30,147 97,042 87,891
Income (loss) from operations 737 (890) (979) (2,201)
Interest income and other, net 1,631 984 4,436 2,605
Income before provision
for income taxes 2,368 94 3,457 404
Provision for income taxes 595 278 1,350 903
Net income (loss) $1,773 $(184) $2,107 $(499)
Basic net income (loss)
per common share $0.04 $(0.00) $0.05 $(0.01)
Shares used in computing basic
net income (loss)
per common share 43,045 41,988 42,701 41,586
Diluted net income (loss)
per common share $0.04 $(0.00) $0.05 $(0.01)
Shares used in computing diluted
net income (loss)
per common share 43,922 41,988 43,446 41,586
INTERWOVEN, INC.
Consolidated Balance Sheets
(In thousands)
Assets Sept. 30, 2006 Dec. 31, 2005
(Unaudited)
Current assets:
Cash and cash equivalents $79,019 $73,618
Short-term investments 81,349 63,581
Accounts receivable, net 29,851 31,542
Prepaid expenses and other current assets 6,524 5,193
Total current assets 196,743 173,934
Property and equipment, net 4,873 5,044
Goodwill 191,620 191,595
Other intangible assets, net 13,904 25,527
Other assets 2,037 2,506
Total assets $409,177 $398,606
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $4,772 $4,491
Accrued liabilities 27,484 22,198
Restructuring and excess facilities accrual 6,520 7,266
Deferred revenues 53,112 54,010
Total current liabilities 91,888 87,965
Accrued liabilities 2,504 2,761
Restructuring and excess facilities accrual 3,966 9,681
Total liabilities 98,358 100,407
Commitments and contingencies
Stockholders' equity:
Preferred stock -- --
Common stock 43 42
Additional paid-in capital 715,235 705,908
Deferred stock-based compensation -- (1,002)
Accumulated other comprehensive loss (176) (359)
Accumulated deficit (404,283) (406,390)
Total stockholders' equity 310,819 298,199
Total liabilities and stockholders' equity $409,177 $398,606
INTERWOVEN, INC.
Impact of Non-GAAP Adjustments on Reported Net Income (Loss)
(In thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
Sept. 30, 2006 Sept. 30, 2005
As Adjust- Non- As Adjust- Non-
reported ments* GAAP reported ments* GAAP
Revenues:
License $18,580 $-- $18,580 $17,417 $-- $17,417
Support and service 32,335 -- 32,335 26,522 -- 26,522
Total revenues 50,915 -- 50,915 43,939 -- 43,939
Cost of revenues:
License (1) 4,426 (3,643) 783 3,951 (3,099) 852
Support and
service (2) 13,140 (157) 12,983 10,731 (77) 10,654
Total cost
of revenues 17,566 (3,800) 13,766 14,682 (3,176) 11,506
Gross profit 33,349 3,800 37,149 29,257 3,176 32,433
Operating expenses:
Sales and
marketing (2) 18,877 (352) 18,525 17,966 (78) 17,888
Research and
development (2) 8,902 (230) 8,672 7,639 (4) 7,635
General and
administrative (2) 3,964 (232) 3,732 3,673 (167) 3,506
Amortization of
intangible assets (1) 828 (828) -- 834 (834) --
Restructuring and excess
facilities charges (3) 41 (41) -- 35 (35) --
Total
operating expenses 32,612 (1,683) 30,929 30,147 (1,118) 29,029
Income (loss)
from operations 737 5,483 6,220 (890) 4,294 3,404
Interest income
and other, net 1,631 -- 1,631 984 -- 984
Income before taxes 2,368 5,483 7,851 94 4,294 4,388
Provision for
income taxes (4) 595 2,074 2,669 278 1,214 1,492
Net income (loss) $1,773 $3,409 $5,182 $(184) $3,080 $2,896
Net income
(loss) per share $0.04 $0.12 $(0.00) $0.07
Shares used in
computing net
income (loss)
per share (5) 43,922 43,922 41,988 42,509
(1) For the three months ended September 30, 2006 and 2005, adjustments
reflect the reversal of $3.6 million and $3.1 million, respectively,
associated with the amortization of purchased technology and $828,000
and $834,000, respectively, associated with the amortization of
intangible assets.
(2) As of January 1, 2006, the Company adopted Statement of Financial
Accounting Standard No. 123R, Share-based Payment. For the three
months ended September 30, 2006, adjustments reflect the reversal of
stock-based compensation expense of $157,000 in cost of revenues
-- support and service, $352,000 in sales and marketing, $230,000 in
research and development and $232,000 in general and administrative.
For the three months ended September 30, 2005, adjustments reflect
the reversal of amortization of deferred stock-based compensation of
$77,000 in cost of revenues -- support and service, $78,000 in sales
and marketing, $4,000 in research and development and $167,000 in
general and administrative.
(3) For the three months ended September 30, 2006 and 2005, adjustments
reflect the reversal of $41,000 and $35,000, respectively, in
adjustments associated with the Company's restructuring and excess
facilities accrual.
(4) For the three months ended September 30, 2006 and 2005, adjustments
reflect an additional tax provision of $2.1 million and $1.2 million,
respectively, associated with the non-GAAP adjustments.
(5) For the three months ended September 30, 2005, the shares used in
computing non-GAAP net income per share include the dilutive impact
of common stock options of 521,000 shares.
INTERWOVEN, INC.
Impact of Non-GAAP Adjustments on Reported Net Income (Loss)
(In thousands, except per share data)
(Unaudited)
Nine Months Ended Nine Months Ended
Sept. 30, 2006 Sept. 30, 2005
As Adjust- Non- As Adjust- Non-
reported ments* GAAP reported ments* GAAP
Revenues:
License $54,657 $-- $54,657 $48,500 $-- $48,500
Support and service 91,745 -- 91,745 78,958 -- 78,958
Total revenues 146,402 -- 146,402 127,458 -- 127,458
Cost of revenues:
License (1) 13,015 (10,763) 2,252 10,781 (8,549) 2,232
Support and
service (2) 37,324 (494) 36,830 30,987 (123) 30,864
Total cost
of revenues 50,339 (11,257) 39,082 41,768 (8,672) 33,096
Gross profit 96,063 11,257 107,320 85,690 8,672 94,362
Operating expenses:
Sales and
marketing (2) 56,446 (967) 55,479 51,965 (334) 51,631
Research and
development (2) 25,984 (590) 25,394 23,649 (146) 23,503
General and
administrative
(2) (3) 13,015 (1,959) 11,056 10,403 (516) 9,887
Amortization
of intangible
assets (1) 2,484 (2,484) -- 2,472 (2,472) --
Restructuring and excess
facilities charges (4) (887) 887 -- (598) 598 --
Total operating
expenses 97,042 (5,113) 91,929 87,891 (2,870) 85,021
Income (loss)
from operations (979) 16,370 15,391 (2,201) 11,542 9,341
Interest income
and other, net 4,436 -- 4,436 2,605 -- 2,605
Income
before taxes 3,457 16,370 19,827 404 11,542 11,946
Provision for
income taxes (5) 1,350 5,391 6,741 903 3,159 4,062
Net income (loss) $2,107 $10,979 $13,086 $(499) $8,383 $7,884
Net income
(loss) per share $0.05 $0.30 $(0.01) $0.19
Shares used in
computing net
income (loss)
per share (6) 43,446 43,446 41,586 42,147
(1) For the nine months ended September 30, 2006 and 2005, adjustments
reflect the reversal of $10.8 million and $8.5 million, respectively,
associated with the amortization of purchased technology and
$2.5 million and $2.5 million, respectively, associated with the
amortization of intangible assets.
(2) As of January 1, 2006, the Company adopted Statement of Financial
Accounting Standard No. 123R, Share-based Payment. For the nine
months ended September 30, 2006, adjustments reflect the reversal of
stock-based compensation expense of $494,000 in cost of revenues
-- support and service, $967,000 in sales and marketing, $590,000 in
research and development and $339,000 in general and administrative.
For the nine months ended September 30, 2005, adjustments reflect the
reversal of amortization of deferred stock-based compensation of
$123,000 in cost of revenues -- support and service, $334,000 in
sales and marketing, $146,000 in research and development and
$516,000 in general and administrative.
(3) For the nine months ended September 30, 2006, adjustments reflect the
reversal of $1.6 million in benefit costs associated with the
retirement of the Company's former chief executive officer recorded
in the first quarter of 2006.
(4) For the nine months ended September 30, 2006 and 2005, adjustments
reflect the reversal of $887,000 and $598,000, respectively, in
adjustments associated with the Company's restructuring and excess
facilities accrual.
(5) For the nine months ended September 30, 2006 and 2005, adjustments
reflect an additional tax provision of $5.4 million and $3.2 million,
respectively, associated with the non-GAAP adjustments.
(6) For the nine months ended September 30, 2005, the shares used in
computing non-GAAP net income include the dilutive impact of common
stock options of 561,000, respectively.
Source: prnewswire
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