CONCUR TECHNOLOGIES, INC. BELLEVUE, Wash., Aug. 4, 2014 /PRNewswire/ -- Concur (Nasdaq: CNQR) today reported financial results for its third quarter ended June 30, 2014.
Concur reported total GAAP revenue for the third quarter of fiscal 2014 of $178.4 million. Excluding revenue from businesses that the company divested or intends to divest, non-GAAP revenue for the third quarter of 2014 was $177.0 million, up 28% from the year-ago quarter and up 6% from the prior quarter. GAAP net results attributable to Concur for the third quarter of fiscal 2014 were breakeven, or $(0.00) per share. Fiscal 2014 third quarter non-GAAP pretax income was $14.6 million, or $0.25 per share.
"We are participating in a major shift in the way companies manage their spending, and nowhere is that more evident than in the corporate travel industry. Our corporate customers and their travelers are embracing the vision of an open travel ecosystem, and an increasing number of suppliers, TMCs, and developers are looking to Concur's cloud platform to enable a new way to do business," said Steve Singh, Chairman and CEO of Concur. "In the past few months alone, United Airlines announced its support for TripLink; Starwood and IHG went live connecting their customers to TripLink; a new generation of suppliers serving the business traveler - including Uber and Airbnb -announced integrations with the Concur platform; and nine new TMCs became preferred partners in support of Concur's vision. All of this activity is adding to the foundation for Concur's long term strategic vision, and building new financial leverage on top of our historically strong core Travel & Expense automation solutions. In fact, driven almost entirely by the continued strength of Concur's core T&E products, in the third quarter on a non-GAAP basis, we exceeded expectations for revenue, earnings, cash flow from operations and free cash flow. We are focused on delivering increasing value for our customers by growing the reach of our platform and partnerships, expanding our vision deeper into the travel and expense ecosystem and extending our presence globally in new and current markets."
Financial Highlights
-- Total GAAP revenue was $178.4 million in the third quarter of fiscal
2014, including $1.4 million in revenue from businesses the company has
divested or intends to divest. Excluding the $1.4 million, non-GAAP
revenue was $177.0 million for the third quarter of fiscal 2014, an
increase of approximately 28% compared to the year-ago quarter and up 6%
sequentially.
-- GAAP pretax loss was $1.9 million for the third quarter of fiscal 2014,
compared to GAAP pretax income of $6.8 million for the year-ago quarter.
GAAP net profit/loss attributable to Concur was breakeven, or $0.00 per
share, for the third quarter of fiscal 2014, compared to GAAP net income
attributable to Concur of $2.8 million, or $0.05 per share, for the
year-ago quarter.
-- Non-GAAP pretax income was $14.6 million, or $0.25 per share, for the
third quarter of fiscal 2014, compared to $22.4 million, or $0.39 per
share, for the year-ago quarter. Please refer to "About Concur's
Non-GAAP Financial Measures" below for an explanation of our non-GAAP
financial measures used in this press release.
-- Non-GAAP operating margin was 9.9% for the third quarter of fiscal 2014,
compared to 17.6% for the year-ago quarter.
-- GAAP cash flows from operations were $25.5 million for the third quarter
of fiscal 2014.
Business Highlights
Concur is the leading provider of spend management solutions and services in the world, helping companies of all sizes transform the way they manage spend so they can focus on what matters most. Concur's solutions for corporate travel, expenses and invoicing enable companies to reimagine the way core processes work, deliver an effortless experience to employees in the office and on the road, and provide unprecedented transparency and visibility into spending activity. Concur's open platform includes a community of hundreds of developers and third-party service providers, whose services integrate seamlessly to extend the functionality of the platform.
Some of the highlights from the third quarter of fiscal 2014 included:
-- Rapidly expanding customer base: Concur continued to extend its
leadership position in spend management solutions and services with the
addition of more than one thousand new customers in the third quarter.
The Company experienced strong demand across all its markets, including
its core enterprise customer segment, the SMB market, and emerging
international markets as businesses of all sizes look to capitalize on
the benefits of an integrated travel and expense management solution.
-- Concur Platform Momentum: Concur's platform approach to expense
management helps capture spend wherever it happens. Customers and
partners continue to embrace this model to help businesses gain total
visibility into spend. In the third quarter, the Concur Platform
continued to build momentum with a new generation of supplier
partnerships, new product releases, and additional support from
Preferred TMC partners.
-- Supplier partnerships: Travel suppliers continue to meet the
evolving needs of their customers by signing on as TripLink
partners. Airlines, hotels, car rental providers and many other
companies are focused on building 1-to-1 relationships with
corporate travelers while maintaining the full support of the
corporate travel manager. TripLink enables that connection. In the
past few months, United Airlines became the first airline to sign on
as a TripLink partner, and Starwood Hotels and IHG went live with
their TripLink connections.
-- AirBnB - In order to accommodate the increasing number of business
travelers seeking cost-effective non-traditional accommodations,
later this year, Airbnb will release an integration through Concur
TripLink, enabling employers to gain full visibility into each
booking.
-- Uber - Uber's integration with the Concur platform now provides a
connected and effortless experience for all Concur business
travelers that use Uber. These travelers can request, ride, pay, and
automatically expense - all from their mobile phone. The integration
between Uber and the Concur platform enhances and expands customer
visibility into ground transportation spend.
-- Addison Lee - Concur travelers will now be able to book taxis from
premium UK minicab company Addison Lee through the Concur Travel
platform and automatically link an e-receipt to their expense
report. Addison Lee's 17,000 corporate account clients can now link
to the Concur profiles to seamlessly book ground transportation and
easily manage receipts.
-- New TripLink features: At the recent GBTA annual conference, Concur
announced Price-to-Beat and Travel Points. These new features for
Concur TripLink enable businesses of all sizes and TMCs to apply
their own gamification strategies to their travel and expense
programs, incenting travel booking behavior that fits within their
travel and expense policies and helping companies achieve
cost-effective travel management. Price-to-Beat provides
configurable price targets that are derived from predictive
analytics applied to one of the largest travel and expense datasets
in the industry to help travelers understand what they should expect
to spend on airfare and hotels. Travel Points enables organizations
to award points to travelers as an incentive for selecting
cost-effective options below the Price-to-Beat. When employees book
travel below the Price-to-Beat, they earn Travel Points, which can
be redeemed for future travel and used to foster individual and team
competition based around saving the company money.
-- TMC support: Every quarter, more TMCs are partnering with Concur
around the TripLink offering to provide a holistic view of travel
and spend and to deliver the best customer experience. There are
now 18 Preferred TMC Partners who are delivering a superior service
to their corporate clients by leveraging the full range of
TMC-facing and traveler-facing solutions from Concur. Frosch
Travel, Adtrav and Hurley Travel Experts are three of the most
recent additions who have joined the growing number of TMCs building
integrations to ensure full visibility into TripLink itineraries.
-- App Center momentum: Concur's clients are enjoying increasing
benefits by activating solutions from the Concur App Center,
connecting them to innovative products that leverage their Concur
investment to build even greater efficiency in their business. More
than 20 new apps have been added to the App Center since the end of
the second quarter.
-- IBM agreement: Concur announced a strategic alliance with IBM to jointly
market Concur's solutions to global enterprises. Under the terms of the
agreement, IBM will actively promote Concur's cloud-based expense
management solutions to its existing IBM Global Expense Reporting
Solutions (GERS) clients.
-- Continued strong progress on Government deployments: The Company
continues to implement its travel and expense management services to
U.S. government agencies under the U.S. General Services Administration
(GSA) E-Gov Travel Services 2 (ETS2) award, with half of Concur's
federal agency customers live and in production. Concur continues to
add new agency customers, and every quarter more government employees
are gaining access to Concur's solutions for managing online bookings,
travel authorizations and voucher processing.
-- Mobile Momentum
-- ExpenseIt user base growing rapidly: ExpenseIt® is changing the way
people capture receipts and file expenses, and the impact is
illustrated by rapid user adoption. In the third quarter, the
number of users more than doubled while the number of receipts
processed more than tripled.
-- Amazon Fire Support: Concur announced the availability of Concur
Mobile on the Amazon Appstore, accessible to all Amazon Fire Phone
users. Fire Phone enables Concur users to seamlessly access their
workspace and resources even when on the go.
-- Google Glass - TripIt was selected to bring its all-in-one travel
organizer to Google Glass. Tripit on Glass provides a new way for
travelers to access all their travel plans on Glass and get timely
trip information at eye level when faced with gate changes, flight
delays and cancellations.
-- Perfect Trip Fund influence continues to grow: Concur remains focused on
helping the next generation of emerging companies succeed by providing
funding, relationships and strategic counseling through the $150 million
Perfect Trip Fund. Concur recently completed a new investment in Table8.
The Company also is fulfilling its vision of helping portfolio companies
deliver value to our customers and the travel ecosystem, as evidenced by
the recent integration of Trover content into Tripit and Visage's launch
of International Travel Roaming Alerts with TMC partners including Gant
Travel. Perfect Trip Fund companies also experienced significant
milestones in the quarter with other companies in the travel industry,
including Room77's licensing agreement with Google and buuteeq's sale to
Priceline.
-- Concur sponsors PGA golfer Jason Day: Concur was proud to introduce PGA
TOUR professional, Jason Day, as an ambassador for Concur. Jason
perfectly represents the core values of Concur: a strong drive to win,
poise, character and commitment to family and community. The sponsorship
will promote the Concur brand name as well as explore different partner
and community engagement opportunities with Day.
-- Largest Fusion in history: Concur Fusion, the Company's premier annual
customer event, was held in May in New Orleans. The 2014 Fusion
conference was the largest Concur event to date with over 2,000
customers and partners in attendance at the four-day event. Standing
apart from any other software event or travel show, Fusion uniquely
brings together the largest number of corporate customers who are
focused on the entire spend management process from discovering and
booking travel through expense and invoice processing and reimbursement.
Business Outlook
The following statements are based on our current expectations and we do not undertake any duty to update them. These statements are forward-looking and inherently uncertain. Actual results may differ materially as a result of the factors identified below, the factors identified in our public filings made with the Securities and Exchange Commission, or other factors. Please also refer to "About Concur's Non-GAAP Financial Measures" below for an explanation of our non-GAAP financial measures and a reconciliation of those measures to GAAP equivalents.
-- Concur expects non-GAAP revenue for the fourth quarter of fiscal 2014 to
grow approximately 21% year-over-year from the fourth quarter of fiscal
2013. For the fourth quarter of fiscal 2014, Concur expects non-GAAP
pretax income per share to be $0.32. Non-GAAP revenue and pretax income
exclude the effects of businesses the company has divested or intends to
divest and non-cash related items such as stock-based compensation
expenses, amortization of intangible assets, and the accretion of the
discount on our convertible senior notes. It also excludes the non-cash
accounting implications and cash fees and expenses of acquisitions and
other related strategic activity in which the Company may deploy
capital.
-- Concur expects fiscal 2014 non-GAAP revenue to grow approximately 27%
year-over-year from fiscal 2013.
-- Concur expects fiscal 2014 non-GAAP pretax income per share to be at
least $0.93.
-- Concur expects fiscal 2014 non-GAAP operating margin to be approximately
10%.
-- Concur expects cash flows from operations in fiscal 2014 to be at least
$85 million, excluding excess tax benefits from share based
compensation, acquisition and other related costs, and noncontrolling
interest. The Company expects capital expenditures to be approximately
8% of fiscal 2014 revenue.
All company or product names are trademarks and/or registered trademarks of their respective owners.
This press release contains forward-looking statements that are inherently uncertain. These forward-looking statements, such as the statements made by Mr. Singh, are based on Concur's current expectations and involve many risks and uncertainties that could cause actual results to differ materially from current expectations. Factors that could cause or contribute to actual results differing from current expectations include, but are not limited to: potential difficulties in connection with recent business and asset acquisitions, including achievement of the anticipated benefits of these acquisitions or the broader integration of such businesses with Concur; adverse economic or market conditions, which may cause customers and prospects to delay or reduce purchases of our products and services, cause customers to reduce business travel and correspondingly reduce the use of our products and services, reduce the ability of customers, channel partners, vendors and suppliers to fulfill their obligations to us, increase volatility of our stock price and foreign exchange rates, and otherwise adversely affect our operations and financial performance; potential delays in market adoption and penetration of our subscription service offerings; potential difficulties associated with our deployment and support of our products and services; our ability to manage expected growth of our subscription service offerings; the scalability and security of our computer networks and hosting infrastructure for our subscription service offerings; risks associated with the privacy and protection of information while in our possession; potential increases in the rate of attrition of customers of our subscription service offerings; the level of investment in information technology by our customers; the level of business travel that may reduce the use of our products and services or inhibit new sales of our products and services; potential difficulties associated with strategic relationships and with development of new products and services; risks or difficulties associated with expansion into new geographic markets; uncertain market acceptance of recently-introduced or future products and services; and risks associated with our financing and investment activities.
Please refer to the Company's public filings made with the Securities and Exchange Commission at www.sec.gov for additional and more detailed information on risk factors that could cause actual results to differ materially from current expectations. Concur assumes no obligation to update the forward-looking information contained in this press release.
Concur Technologies, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Revenue $178,365 $138,710 $510,965 $388,878
Expenses:
Cost of operations 59,988 36,545 179,492 108,105
Sales and marketing 71,243 56,111 215,599 166,571
Systems development and
programming 21,034 12,724 62,967 40,750
General and administrative 25,904 20,924 76,361 60,836
Revaluation of contingent
consideration (627) (6,109) (2,270) (3,977)
Amortization of intangible assets 5,251 4,715 15,723 13,718
-----
Total expenses 182,793 124,910 547,872 386,003
------- ------- ------- -------
Operating income (loss) (4,428) 13,800 (36,907) 2,875
Other income (expense):
Interest income 573 502 2,047 1,546
Interest expense (11,133) (6,870) (33,016) (16,966)
Gain (loss) from equity
investments, net 13,291 (589) 11,025 (1,957)
Other, net (192) (22) (1,006) (583)
Total other income (expense) 2,539 (6,979) (20,950) (17,960)
----- ------ ------- -------
Income (loss) before income
tax (1,889) 6,821 (57,857) (15,085)
Income tax expense (benefit) (1,663) 4,237 22,947 2,502
------ ----- ------ -----
Consolidated net income
(loss) (226) 2,584 (80,804) (17,587)
Less: loss attributable to
noncontrolling interest 194 231 571 725
--- --- --- ---
Net income (loss)
attributable to Concur $(32) $2,815 $(80,233) $(16,862)
==== ====== ======== ========
Net income (loss) per share attributable to Concur
common stockholders:
Basic $ - $0.05 $(1.42) $(0.30)
Diluted $ - $0.05 $(1.42) $(0.30)
Weighted average shares used in computing net income
(loss) per share:
Basic 56,876 55,845 56,505 55,506
Diluted 56,876 59,290 56,505 55,506
Concur Technologies, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, 2014 September 30, 2013
------------- ------------------
Assets
Current assets:
Cash and cash
equivalents $475,032 $301,696
Short-term
investments 341,338 531,065
Accounts
receivable,
net of
allowance of
$4,846 and
$3,567 126,791 106,587
Deferred tax
assets, net 23,645 43,987
Deferred costs
and other
assets 59,757 55,341
---------------
Total current assets 1,026,563 1,038,676
Non-current assets:
Property and
equipment, net 97,297 82,414
Investments 116,112 101,756
Deferred costs
and other
assets 61,735 51,082
Intangible
assets, net 108,232 123,297
Deferred tax
assets, net 4,566 3,255
Goodwill 330,698 324,454
--------
Total assets $1,745,203 $1,724,934
========== ==========
Liabilities and equity
Current liabilities:
Accounts
payable $16,588 $15,036
Customer
funding
liabilities 45,335 37,039
Accrued
compensation 40,927 30,142
Acquisition-
related
liabilities 32 2,231
Acquisition-
related
contingent
consideration 1,000 3,182
Other accrued
expenses and
liabilities 30,310 34,537
Deferred
revenues 106,636 88,550
Convertible
senior notes,
net 275,868 265,426
--------------
Total current liabilities 516,696 476,143
Non-current liabilities:
Convertible
senior notes,
net 397,144 381,807
Deferred rent
and other
long-term
liabilities 11,694 10,373
Deferred
revenues 10,704 15,499
Tax liabilities 27,122 22,832
---------------
Total liabilities 963,360 906,654
Temporary equity: convertible
senior notes 11,632 22,074
Equity:
Concur stockholders' equity:
Common stock,
$0.001 par
value per
share 57 56
Authorized
shares:
195,000
Shares issued
and
outstanding:
56,891 and
56,044
Additional
paid-in
capital 990,110 939,423
Accumulated
deficit (221,912) (141,679)
Accumulated
other
comprehensive
loss 491 (1,815)
--------------
Total Concur stockholders'
equity 768,746 795,985
Noncontrolling interest 1,465 221
----- ---
Total equity 770,211 796,206
------- -------
Total liabilities, temporary
equity and stockholders'
equity $1,745,203 $1,724,934
========== ==========
Concur Technologies, Inc
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended June 30, Nine Months Ended June 30,
--------------------------- --------------------------
2014 2013 2014 2013
---- ---- ---- ----
Operating activities:
Consolidated net income (loss) $(226) $2,584 $(80,804) $(17,587)
Adjustments to reconcile consolidated net income (loss) to net
cash provided by operating activities:
Amortization of
intangible
assets 5,251 4,715 15,723 13,718
Depreciation
and
amortization
of property
and equipment 10,182 7,648 28,958 21,351
Accretion of
discount and
issuance costs
on notes 8,719 4,913 25,779 11,312
Share-based
compensation 16,990 14,684 67,066 46,131
Revaluation of
contingent
consideration (627) (6,109) (2,270) (3,977)
Deferred income
taxes (4,453) 4,769 19,903 1,552
Excess tax
benefits from
share-based
compensation (31) (352) (452) (717)
Loss (gain)
from equity
investments (13,291) 589 (11,025) 1,957
Payments of
contingent
consideration - - - (591)
Changes in
operating
assets and
liabilities,
net of effects
from
acquisitions:
Accounts receivable, net (9,349) (9,169) (19,927) (16,558)
Deferred costs and other
assets (5,325) (3,769) (9,396) (8,114)
Accounts payable 1,335 (1,327) 3,087 334
Accrued liabilities 5,977 (1,197) 10,332 (12,507)
Deferred revenues 10,319 10,035 13,384 15,458
------ ------ ------ ------
Net cash provided by operating
activities 25,471 28,014 60,358 51,762
------ ------ ------ ------
Investing activities:
Purchases of
investments (125,412) (317,926) (633,406) (571,111)
Maturities of
investments 257,752 137,465 822,795 349,950
Increase
(decrease) in
customer
funding
liabilities (6,648) 2,910 8,029 11,039
Proceeds from
sale of cost
method
investments 16,677 - 16,677 -
Investment in
and loans to
unconsolidated
affiliates (1,750) - (28,914) (17,326)
Capital
expenditures (12,641) (19,558) (39,420) (40,547)
Payments for
acquisitions,
net of cash
acquired (1,250) - (3,810) (9,564)
Payments of
contingent
consideration
related to
acquisition of
Etap - - - (1,266)
--------------
Net cash provided by (used in)
investing activities 126,728 (197,109) 141,951 (278,825)
------- -------- ------- --------
Financing activities:
Equity issuance
costs - (120) - (120)
Proceeds from
borrowings on
convertible
senior notes,
net - 474,949 - 474,949
Proceeds from
warrants - 23,753 - 23,753
Payments for
convertible
senior note
hedges - (58,161) - (58,161)
Investments in
consolidated
joint venture
by
noncontrolling
interest - 619 1,809 619
Payments on
repurchase of
common stock (484) (450) (925) (651)
Net proceeds
from share-
based equity
award activity 323 615 2,142 2,035
Proceeds from
employee stock
purchase plan
activity 988 767 2,674 2,351
Minimum tax
withholding on
restricted
stock awards (3) (15) (31,988) (19,362)
Excess tax
benefits from
share-based
compensation 31 352 452 717
Payments of
contingent
consideration - - - (2,497)
Repayments on
capital leases (2,066) - (3,899) -
Net cash provided by (used in)
financing activities (1,211) 442,309 (29,735) 423,633
------ ------- ------- -------
Effect of
foreign
currency
exchange rate
changes on
cash and cash
equivalents 780 (701) 762 (1,891)
Net increase in cash and cash
equivalents 151,768 272,513 173,336 194,679
Cash and cash equivalents at
beginning of period 323,264 224,440 301,696 302,274
Cash and cash equivalents at end
of period $475,032 $496,953 $475,032 $496,953
======== ======== ======== ========
Concur Technologies, Inc.
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(In thousands, except per share and margin data)
(Unaudited)
Three Months Ended June 30, Nine Months Ended June 30,
--------------------------- --------------------------
2014 2013 2014 2013
---- ---- ---- ----
Non-GAAP Revenue:
Revenue $178,365 $138,710 $510,965 $388,878
Business
operations
divested or to be
divested (1,357) - (6,652) -
Non-GAAP revenue $177,008 $138,710 $504,313 $388,878
================
Operating income (loss):
Operating income
(loss) $(4,428) $13,800 $(36,907) $2,875
Income (loss) from
operations as a %
of total revenue
(operating
margin) (2.5)% 9.9 % (7.2)% 0.7 %
Add back:
Share-based compensation 16,990 14,684 67,066 46,131
Amortization of intangibles 5,251 4,715 15,723 13,718
Acquisition and other related costs 110 1,130 1,052 2,611
Revaluation of contingent
consideration (627) (6,109) (2,270) (3,977)
Contingent consideration (included
in compensation expense) - (3,981) - (2,906)
Noncontrolling interest joint
venture 194 231 571 725
Business operations divested or to
be divested 1 - (453) -
Non-GAAP
operating income $17,491 $24,470 $44,782 $59,177
=================
Non-GAAP operating income as a %
of total revenue (Non-GAAP
operating margin) 9.9 % 17.6 % 8.9 % 15.2 %
Net income (loss) attributable to Concur:
Net income (loss)
attributable to
Concur $(32) $2,815 $(80,233) $(16,862)
Add back:
Share-based compensation 16,990 14,684 67,066 46,131
Amortization of intangibles 5,251 4,715 15,723 13,718
Acquisition and other related costs 110 1,130 1,052 2,611
Revaluation of contingent
consideration (627) (6,109) (2,270) (3,977)
Contingent consideration (included
in compensation expense) - (3,981) - (2,906)
Loss (gain) from equity investments (13,291) 589 (11,025) 1,957
Accretion of notes discount 7,861 4,316 23,232 10,059
Income tax expense (benefit) (1,663) 4,237 22,947 2,502
Business operations divested or to
be divested 1 - (453) -
Non-GAAP pretax
income
attributable to
Concur $14,600 $22,396 $36,039 $53,233
================
Diluted net income (loss) per share attributable to Concur:
Diluted net income
(loss) per share
attributable to
Concur $ - $0.05 $(1.42) $(0.30)
Add back:
Share-based compensation 0.29 0.26 1.15 0.81
Amortization of intangibles 0.09 0.08 0.28 0.24
Acquisition and other related costs - 0.02 0.02 0.05
Revaluation of contingent
consideration (0.01) (0.10) (0.04) (0.07)
Contingent consideration (included
in compensation expense) - (0.07) - (0.05)
Loss (gain) from equity investments (0.22) 0.01 (0.18) 0.03
Accretion of notes discount 0.14 0.07 0.41 0.18
Income tax expense (benefit) (0.04) 0.07 0.40 0.04
Business operations divested or to
be divested - - (0.01) -
Non-GAAP pretax
diluted income
per share
attributable to
Concur $0.25 $0.39 $0.61 $0.93
================
Shares used in calculation of GAAP and non-GAAP income (loss) per share:
GAAP basic shares 56,876 55,845 56,505 55,506
GAAP diluted
shares 56,876 59,290 56,505 55,506
Adjustment for
warrants
associated with
convertible
senior notes 896 (1,715) 1,484 -
Adjustment for
share based
equity awards 1,354 - 1,548 1,684
--------------
Non-GAAP diluted
shares 59,126 57,575 59,537 57,190
==============
Concur Technologies, Inc.
Reconciliation of GAAP Operating Expense to Non-GAAP Operating Expense
(In thousands, except per share and margin data)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Non-GAAP operating expense:
Cost of operations $55,645 $35,120 $160,520 $102,425
Sales and marketing 63,610 52,371 184,561 146,678
Systems development and programming 18,819 11,835 54,194 36,101
General and administrative 21,244 14,866 59,746 44,355
Total $159,318 $114,192 $459,021 $329,559
=====
Non-GAAP operating margin * 9.9 % 17.6 % 8.9 % 15.2 %
Non-GAAP pretax diluted income
per share attributable to
Concur * $0.25 $0.39 $0.61 $0.93
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Cost of operations $59,988 $36,545 $179,492 $108,105
Less:
Share-based compensation 2,868 1,349 12,441 5,410
Acquisition and other related costs - 2 - 4
Noncontrolling interest joint
venture 117 74 332 266
Business operations divested or to
be divested 1,358 - 6,199 -
Non-GAAP cost of operations $55,645 $35,120 $160,520 $102,425
======= ======= ======== ========
Sales and marketing $71,243 $56,111 $215,599 $166,571
Less:
Share-based compensation 7,480 7,213 30,603 22,198
Contingent consideration (included
in compensation expense) - (3,599) - (2,627)
Acquisition and other related costs - - - 22
Noncontrolling interest joint
venture 153 126 435 300
Non-GAAP sales and marketing $63,610 $52,371 $184,561 $146,678
======= ======= ======== ========
Systems development and
programming $21,034 $12,724 $62,967 $40,750
Less:
Share-based compensation 2,166 1,250 8,642 4,857
Contingent consideration (included
in compensation expense) - (382) - (279)
Acquisition and other related costs - - - 3
Noncontrolling interest joint
venture 49 21 131 68
Non-GAAP systems development
and programming $18,819 $11,835 $54,194 $36,101
======= ======= ======= =======
General and administrative $25,904 $20,924 $76,361 $60,836
Less:
Share-based compensation 4,476 4,872 15,380 13,666
Acquisition and other related costs 110 1,128 1,052 2,582
Noncontrolling interest joint
venture 74 58 183 233
Non-GAAP general and
administrative $21,244 $14,866 $59,746 $44,355
======= ======= ======= =======
* Please refer to the reconciliation of GAAP to non-GAAP financial measures on previous page.
CONCUR TECHNOLOGIES, INC.
About Concur's Non-GAAP Financial Measures
This release contains non-GAAP financial measures. The tables above reconcile the non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP").
Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Concur's non-GAAP financial measures do not reflect a comprehensive system of accounting and they differ from GAAP measures with similar names and from non-GAAP financial measures with the same or similar names that are used by other companies. We strongly urge investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this release and our consolidated financial statements, including the notes thereto, and the other financial information contained in our periodic filings with the Securities and Exchange Commission and not to rely on any single financial measure to evaluate our business.
Concur's management believes that its non-GAAP financial measures provide useful information to investors because it allows investors to view the business through the eyes of management. Further, Concur believes that its non-GAAP financial measures provide meaningful supplemental information regarding Concur's operating results because they exclude amounts that Concur excludes as part of its monitoring of operating results and assessing the performance of the business. In addition, Concur believes that its non-GAAP financial measures facilitate the comparison of results for current periods and the business outlook for future periods with results of past periods because the measures provide a special focus on the underlying operating performance of the business relative to expectations.
Concur presents the following non-GAAP financial measures in this release: non-GAAP revenues, non-GAAP operating income, non-GAAP operating margin, non-GAAP operating expense, non-GAAP pretax income, non-GAAP cost of operations, non-GAAP sales and marketing expenses, non-GAAP systems development and programming expenses, non-GAAP general and administrative expenses, non-GAAP diluted shares, and non-GAAP diluted pretax income per share. Concur excludes the following items as noted from these non-GAAP financial measures:
-- Share-based compensation. Concur's non-GAAP financial measures exclude
share-based compensation, which consists of expenses for restricted
stock units ("RSU"). Concur excludes these expenses from its non-GAAP
financial measures primarily because they are non-cash expenses that are
not considered part of ongoing operating results when assessing the
performance of our business. Excluding these amounts improves
comparability of the performance of the business across periods.
-- Amortization of intangible assets. In accordance with GAAP, operating
expenses include amortization of acquired intangible assets such as
customer relationships and technology. Concur excludes these items from
its non-GAAP financial measures because they are typically static
expenses that Concur does not consider part of ongoing operating results
when assessing the performance of our business, and Concur believes that
doing so facilitates comparisons to its historical operating results and
to the results of other companies in our industry, which have their own
unique acquisition histories.
-- Acquisition and other related costs. Concur excludes the effects of
acquisition and other related costs from its non-GAAP financial
measures. Acquisition and other related costs include transaction fees,
due diligence costs, travel expenses, and other one-time direct costs
associated with strategic activity in which we may deploy capital. Such
expenses are incurred in connection with our acquisitions and other
strategic investments, which generally would not have otherwise been
incurred in the periods presented as a part of our continuing
operations. Concur also believes it is useful for investors to
understand the effects of these items on our operations.
-- Revaluation of contingent consideration. The authoritative guidance on
business combinations requires contingent consideration to be recorded
at fair value on the acquisition date. The authoritative guidance also
requires that changes in the fair value of the contingent consideration
subsequent to the acquisition date be recorded in the consolidated
statements of operations. Concur excludes from its non-GAAP financial
measures the gains or losses from the fair value re-measurement of the
contingent consideration in order to facilitate the comparison of
post-acquisition operating results. Concur believes that it is useful
for investors to understand the effects of these items on our
operations.
-- Contingent consideration (included in compensation expense). Concur's
non-GAAP financial measures exclude contingent consideration included in
compensation expense which relates to the cash payment to certain TripIt
employees whose right to receive such payment is forfeited if they
terminate their employment prior to the required service period. The
contingent cash payment that these employees are entitled to receive is
part of the consideration that all TripIt shareholders received from
Concur in exchange for their TripIt shares. As the contingent payment
is subject to continued employment, GAAP requires that it be accounted
for as compensation expense and such expense is subject to revaluation
similar to the above mentioned "revaluation of contingent
consideration." Concur excludes this item from its non-GAAP financial
measures primarily because it is a component of the deal consideration
and it is not considered part of ongoing operating results when
assessing the performance of our business. The exclusion of these
expenses facilitates the comparison of post-acquisition operating
results.
-- Noncontrolling interest joint venture. Noncontrolling interest joint
venture includes income or loss from operations attributable to our
joint venture partner and is excluded from the calculation of non-GAAP
operating income because it is unrelated to our ownership in the
venture.
-- Loss (gain) from equity investments. Concur invests in the equity of
privately-held companies accounted for under the cost or equity method
of accounting. Upon sale of such investments, Concur recognizes a gain
or loss on the investment. Additionally, for investments under the
equity method, Concur records its proportionate share of investee income
or loss, and other adjustments required by the equity method. Concur's
non-GAAP financial measures exclude the equity investment gains and
losses from GAAP income because they are unrelated to our ongoing
operations and are significantly impacted by factors outside our direct
control.
-- Accretion of note discount. In accordance with GAAP, interest expense on
the convertible senior notes includes the accretion of the note
discount, which is a non-cash expense that Concur does not consider part
of ongoing operating results when assessing the performance of our
business.
-- Income tax expense (benefit). Concur excludes this expense (benefit)
from certain non-GAAP financial measures primarily because it is largely
a non-cash expense (benefit) that Concur does not consider a meaningful
component of our operating results when assessing the performance of our
business. The exclusion of this expense (benefit) facilitates the
comparison of our business outlooks for future periods with the results
from prior periods.
-- Business operations divested or to be divested. Concur has divested
certain businesses from prior acquisitions and expects to make
additional divestures in the future. As Concur does not expect these
business operations to contribute to Concur's ongoing operating results
in the future, Concur believes it is useful for investors to understand
the effects of these items on our current operating results.
Further, in the calculation of non-GAAP pretax income per share:
-- Non-GAAP pretax income is calculated by excluding the impacts of the
non-GAAP adjustments described above.
-- Non-GAAP diluted shares are calculated by including the anti-dilutive
impact of options to purchase shares of our own stock, which reduces the
potential economic dilution upon conversion of our convertible senior
notes. Under GAAP, the anti-dilutive impact of such call options
("Convertible Senior Notes Hedge") is not reflected in diluted shares.
Concur includes the anti-dilutive impact of the Convertible Senior Notes
Hedge, if any, in non-GAAP diluted shares because it is useful for
investors to understand their economic effects.
-- The dilutive effect of all unvested share-based awards, if any, are
included in the calculation of non-GAAP pretax income per share.
Except as noted below, Concur believes that all of the following considerations apply equally to each of the non-GAAP financial measures that we present:
-- Concur's management uses non-GAAP operating income (including the
derived non-GAAP operating margin), non-GAAP operating expense, non-GAAP
pretax income and non-GAAP diluted pretax income per share in internal
reports used by management in monitoring and making decisions regarding
Concur's business. For example, these measures are used in monthly
financial reports prepared for management, and in quarterly reports to
Concur's Board of Directors. Concur also uses non-GAAP pretax diluted
income per share as a measure to determine executive cash incentive
compensation.
-- Because share-based compensation, amortization of intangible assets,
accretion of discount on convertible senior notes and income tax expense
(benefit) are largely non-cash in nature, Concur believes that non-GAAP
operating income, non-GAAP operating expense, non-GAAP diluted shares,
non-GAAP pretax income and non-GAAP diluted pretax income per share
provide a more focused view of the operations of its business. In
particular, share-based compensation amounts are difficult to forecast
because the magnitude of the charges depends upon the volume and timing
of RSU grants. Excluding these amounts improves comparability of the
performance of the business across periods.
-- The principal limitation of Concur's non-GAAP financial measures is that
they exclude significant expenses that are required by GAAP to be
recorded. In addition, non-GAAP financial measures are subject to
inherent limitations because they reflect the exercise of judgments by
management about which charges are excluded from the non-GAAP financial
measures.
-- To mitigate this limitation, Concur presents its non-GAAP financial
measures in connection with its GAAP results, and recommends that
investors do not give undue weight to its non-GAAP financial measures.
About Concur
Concur is the leading provider of spend management solutions and services in the world, helping companies of all sizes transform the way they manage spend so they can focus on what matters most. Through Concur's open platform, the entire travel and expense ecosystem of customers, suppliers, and developers can access and extend Concur's T&E cloud. Concur's systems adapt to individual employee preferences and scale to meet the needs of companies from small to large. Learn more at http://www.concur.com or the Concur blog.
CONTACT: Press, Danielle Adams, Concur, 425-590-5085, Danielle.Adams@concur.com, or Investors, Todd Friedman, Concur, 415-734-4605, Todd.Friedman@concur.com
SOURCE Concur
