EX-99.1 2 d736773dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Bazaarvoice, Inc. Announces its Financial Results for the Fourth Fiscal Quarter and Fiscal Year

Ended April 30, 2014

Fourth fiscal quarter of 2014 and recent strategic highlights include:

 

    Achieved revenue of $47.1 million which includes revenues from the PowerReviews business, exceeding guidance

 

    Signed definitive agreement to divest PowerReviews for $30.0 million in cash

 

    Completed the strategic acquisition of FeedMagnet

 

    Achieved record quarter for client launches and net new client additions

 

    Launched three new products at our annual client summit

AUSTIN, Texas, June 4, 2014 — Bazaarvoice, Inc. (NASDAQ: BV), the network connecting brands and retailers to the authentic voices of consumers wherever they shop, reported its financial results for the fourth fiscal quarter and fiscal year ended April 30, 2014.

“The fourth quarter was our best quarter of the year on many fronts. We exceeded our revenue guidance, achieved great performance in net new client additions and customer launches, and delivered a nice year over year improvement in our adjusted EBITDA loss.” said Gene Austin, chief executive officer and president. “Given the strength of the fourth quarter, the launch of new offerings, and our overall view of the business heading into fiscal year 2015, we believe we are at or near our revenue growth rate bottom and we are confident our revenue growth rates will begin to accelerate by the third quarter of this fiscal year at the latest.”

Fourth Fiscal Quarter of 2014 Financial Details

On April 24, 2014, we entered into a Joint Stipulation with the U.S. Department of Justice (“DOJ”) to resolve the DOJ’s claims in the antitrust action challenging our 2012 acquisition of PowerReviews, Inc. (“PowerReviews”) and, together with the DOJ, we submitted a proposed order to the U.S. District Court for the Northern District of California (the “Court”). Under the terms of the Joint Stipulation and the proposed order, we are required to divest all of the net assets of the PowerReviews business. As a result of this, in accordance with accounting guidance, we have reported the results of operations and financial position of PowerReviews as discontinued operations within the condensed consolidated statements of operations and balance sheets for all periods presented. Accordingly, PowerReviews revenues, related expenses and an estimated loss on disposal, net of tax, are components of “loss from discontinued operations” in the Condensed Consolidated Statement of Operations. On the Condensed Consolidated Balance sheets the assets and liabilities of the discontinued operations of PowerReviews have been presented as ‘Assets held for sale’ and ‘Liabilities held for sale,’ respectively. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations.

For more information regarding discontinued operations, see the Frequently Asked Questions posted on the “Quarterly Results” section of our Investor Relations website at investors.bazaarvoice.com. Summary data below describes results from continuing operations and excludes results from discontinued operations.

Revenue from continuing operations: Bazaarvoice reported revenue of $43.1 million for the fourth quarter of 2014, up 11% from the fourth quarter of 2013, and consisted of SaaS revenue of $41.9 million and net media revenue of $1.2 million.


Adjusted EBITDA from continuing operations: Adjusted EBITDA for the fourth quarter of 2014 was a loss of $7.6 million, compared to a loss of $9.1 million for the fourth quarter of 2013.

GAAP net loss and net loss per share from continuing operations: GAAP net loss was $12.2 million, compared to a GAAP net loss of $23.0 million for the fourth quarter of 2013. GAAP net loss per share was $0.16 based upon weighted average shares outstanding of 77.2 million, compared to $0.32 for the fourth quarter of 2013 based upon weighted average shares outstanding of 73.1 million.

Non-GAAP net loss and net loss per share from continuing operations: Non-GAAP net loss was $8.4 million, compared to a non-GAAP net loss of $10.7 million for the fourth quarter of 2013. Non-GAAP net loss per share was $0.11 based upon weighted average shares outstanding of 77.2 million, compared to $0.15 for the fourth quarter of 2013 based upon weighted average shares outstanding of 73.1 million.

Fiscal Year 2014 Financial Details

Revenue from continuing operations: Bazaarvoice reported revenue of $168.1 million for the fiscal year ended April 30, 2014, up 15% from the fiscal year ended April 30, 2013, and consisted of SaaS revenue of $161.3 million and net media revenue of $6.8 million.

Adjusted EBITDA from continuing operations: Adjusted EBITDA for the fiscal year 2014 was a loss of $21.9 million, consistent with a loss of $21.9 million for the fiscal year 2013.

GAAP net loss and net loss per share from continuing operations: GAAP net loss was $52.8 million, compared to a GAAP net loss of $47.5 million for the fiscal year 2013. GAAP net loss per share was $0.70 based upon weighted average shares outstanding of 75.6 million, compared to $0.69 for the fiscal year 2013 based upon weighted average shares outstanding of 69.3 million.

Non-GAAP net loss and net loss per share from continuing operations: Non-GAAP net loss was $25.8 million, compared to a non-GAAP net loss of $24.2 million for fiscal year 2013. Non-GAAP net loss per share was $0.34 based upon weighted average shares outstanding of 75.6 million, compared to $0.35 for the fiscal year 2013 based upon weighted average shares outstanding of 69.3 million.

Clients: The number of active clients at the end of the fourth fiscal quarter and fiscal year 2014 was 1,133 and the number of network clients at the end of the fourth fiscal quarter and fiscal year 2014 was over 1,500. Annualized SaaS revenue per average active client for the fiscal year 2014 was approximately $156,000.

Number of Active Clients

Beginning as of our fourth quarter of fiscal 2014, we now define an active client as an organization from which we are currently recognizing recurring revenue, and we count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our ability to increase our active client base is a leading indicator of our ability to grow revenue.

Further, due to the presentation of the PowerReviews business as discontinued operations, we have separated our active clients into two categories: 1) active clients from continuing operations and 2) active clients from discontinued operations. As a result of this analysis, each category could include a common client who may have organizations for which we recognized recurring revenue that have separate signed contractual agreements.

All prior periods discussed in this press release or presented in the accompanying financial tables have been revised to conform to the current period definition of an active client.

Number of Network Clients

We define a network client as an organization that does not have recurring revenue. We count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our network client base in combination with our active client base is an indicator of the reach of our network.


Quarterly Conference Call

Bazaarvoice will host a conference call today at 4:30 p.m. Eastern Time to review the company’s financial results for the fourth quarter and fiscal year ended April 30, 2014. To access this call, dial (888) 481-2877 from the United States or (719) 325-2495 internationally with conference ID 9791906. A live webcast of the conference call can be accessed from the investor relations page of Bazaarvoice’s company website at investors.bazaarvoice.com. Following the completion of the call, a recorded replay will be available on the company’s website, and a telephone replay will be available through June 18, 2014 by dialing (877) 870-5176 from the United States or (858) 384-5517 internationally with recording access code 9791906.

About Bazaarvoice

Bazaarvoice is a network that connects brands and retailers to the authentic voices of people where they shop. Each month, more than 400 million people view and share authentic opinions, questions, and experiences about tens of millions of products in the Bazaarvoice network. The company’s technology platform amplifies these voices into the places that influence purchase decisions. Network analytics help marketers and advertisers provide more engaging experiences that drive brand awareness, consideration, sales, and loyalty. Headquartered in Austin, Texas, Bazaarvoice has offices across North America, Europe, and Asia-Pacific. For more information, visit www.bazaarvoice.com, read the blog at www.bazaarvoice.com/blog, and follow on Twitter at www.twitter.com/bazaarvoice.

Non-GAAP Financial Measures

Adjusted EBITDA for continuing operations discussed in this press release is defined as our GAAP net loss from continuing operations adjusted for stock-based expense, contingent consideration related to acquisition, adjusted depreciation and amortization (which excludes amortization of capitalized internal-use software development costs), integration and other costs related to acquisitions, other non-business costs and benefits, income tax expense and other (income) expense, net.

Adjusted EBITDA for discontinuing operations presented in the accompanying financial tables is defined as our GAAP net loss from discontinued operations adjusted for stock-based expense, adjusted depreciation and amortization (which excludes amortization of capitalized internal-use software development costs), impairment of acquired intangibles, integration and other costs related to the acquisition and the divestiture of PowerReviews, estimated loss on disposal of discontinued operations, other non-business costs and benefits, income tax expense and other (income) expense, net.

Non-GAAP net loss for continuing operations, which is used to calculate non-GAAP net loss per share for continuing operations, is defined as our GAAP net loss from continuing operations, adjusted to exclude stock-based expense, contingent consideration related to acquisition, amortization of acquired intangible assets, integration and other costs related to acquisitions, and other non-business costs and benefits along with the associated income tax effect of these adjustments.

Non-GAAP net loss for discontinued operations, which is used to calculate non-GAAP net loss per share for discontinued operations, is defined as our GAAP net loss from discontinued operations adjusted to exclude stock-based expense, amortization of acquired intangible assets, impairment of acquired intangibles, integration and other costs related to the acquisition and divestiture of PowerReviews, estimated loss on disposal of discontinued operations and other non-business costs and benefits along with the associated income tax effect of these adjustments.

Management presents these non-GAAP financial measures because it considers them to be important supplemental measures of core operating performance. Further management has presented these non-GAAP financial measures separately for discontinued operations as it may prove useful to securities analyst and investors in evaluating the impact of the anticipated divestiture of PowerReviews on the company’s continuing operating performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the company’s operating performance against prior periods and the effectiveness of our business strategies, the preparation of operating budgets and to determine


appropriate levels of operating and capital investments, as well as in communications with our board of directors concerning our financial performance. Management also believes that the non-GAAP financial measures provide additional insight for securities analysts and investors in evaluating the company’s financial and operational performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired. However, these non-GAAP financial measures have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Furthermore, these non-GAAP financial measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate these non-GAAP financial measures in the same manner. We intend to provide these non-GAAP financial measures as part of our future financial results discussions and; therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. A reconciliation of these non-GAAP measures to GAAP is provided in the accompanying tables.

Forward-looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would” and similar and “target” expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management’s expectation that revenue growth will begin to accelerate by the third quarter of fiscal year 2015, management’s estimates regarding future revenue and financial performance, the ability to continue developing network solutions to leverage our consumer audience reach, content and data to create incremental value for clients, and other statements about management’s beliefs, intentions or goals. We may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, our expectations regarding our revenue, expenses, sales and operations; our limited operating history; our ability to operate in a new and unproven market; our ability to effectively manage growth, especially in light of our announced management changes; our ability to manage expansion into international markets and new vertical industries; our ability to successfully identify, manage and integrate potential acquisitions; and other risks and potential factors that could affect Bazaarvoice’s business and financial results identified in our Form 10-K for the fiscal year ended April 30, 2013, our Form 10-Q for the fiscal quarter ended January 31, 2014, and Form S-1 as filed with the Securities and Exchange Commission on July 12, 2012. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We do not intend and undertake no duty to release publicly any updates or revisions to any forward-looking statements contained herein.

Investor Relations Contact:

Linda Wells

Bazaarvoice, Inc.

415-489-6045

linda.wells@bazaarvoice.com

Media Contact:

Matt Krebsbach

Bazaarvoice, Inc.

512-551-6612

matt.krebsbach@bazaarvoice.com


Bazaarvoice, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     April 30,     April 30,  
     2014     2013  

Assets

  

Current assets:

    

Cash and cash equivalents

   $ 31,934      $ 25,045   

Restricted cash

     604        604   

Short-term investments

     40,700        70,290   

Accounts receivable, net

     39,099        27,582   

Prepaid expenses and other current assets

     8,212        6,563   

Assets held for sale

     33,745        52,055   
  

 

 

   

 

 

 

Total current assets

     154,294        182,139   

Property, equipment and capitalized internal-use software development costs, net

     17,005        14,461   

Goodwill

     139,155        132,831   

Acquired intangible assets, net

     13,388        10,751   

Other non-current assets

     3,428        1,761   
  

 

 

   

 

 

 

Total assets

   $ 327,270      $ 341,943   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 3,346      $ 6,362   

Accrued expenses and other current liabilities

     27,071        29,959   

Revolving line of credit

     27,000        —     

Deferred revenue

     54,951        51,039   

Liabilities held for sale

     3,621        6,650   
  

 

 

   

 

 

 

Total current liabilities

     115,989        94,010   

Deferred revenue less current portion

     1,722        1,920   

Deferred tax liability, long-term

     1,730        2,032   

Other liabilities, long-term

     1,367        2,632   
  

 

 

   

 

 

 

Total liabilities

     120,808        100,594   

Stockholders’ equity:

    

Common stock

     8        7   

Additional paid-in capital

     398,201        370,397   

Accumulated other comprehensive income (loss)

     328        (146

Accumulated deficit

     (192,075     (128,909
  

 

 

   

 

 

 

Total stockholders’ equity

     206,462        241,349   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 327,270      $ 341,943   
  

 

 

   

 

 

 


Bazaarvoice, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except net loss per share data)

(unaudited)

 

     Three Months     Twelve Months  
     Ended April 30,     Ended April 30,  
     2014     2013     2014     2013  

Revenue

   $ 43,078      $ 38,924      $ 168,145      $ 146,812   

Cost of revenue

     14,522        12,319        52,905        47,350   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     28,556        26,605        115,240        99,462   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Sales and marketing

     23,884        22,095        86,482        73,114   

Research and development

     9,832        8,691        37,585        32,169   

General and administrative

     6,521        9,672        26,370        30,990   

Acquisition-related and other

     366        7,819        16,184        10,487   

Amortization of acquired intangible assets

     288        282        1,135        549   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     40,891        48,559        167,756        147,309   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (12,335     (21,954     (52,516     (47,847
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net:

        

Interest income

     7        107        143        217   

Other expense

     (323     (590     (973     (1,045
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     (316     (483     (830     (828
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (12,651     (22,437     (53,346     (48,675

Income tax expense (benefit)

     (418     583        (500     (1,172
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations attributable to common stockholders

     (12,233     (23,020     (52,846     (47,503

Loss from discontinued operations, net of tax

     (11,448     (124     (10,320     (16,249
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss applicable to common stockholders

   $ (23,681   $ (23,144   $ (63,166   $ (63,752
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted loss per share:

        

Continuing operations

   $ (0.16   $ (0.32   $ (0.70   $ (0.69

Discontinued operations

     (0.15     —          (0.14     (0.23
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted loss per share:

   $ (0.31   $ (0.32   $ (0.84   $ (0.92
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted weighted average number of shares outstanding

     77,165        73,121        75,564        69,336   


Bazaarvoice, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

     Three Months     Twelve Months  
     Ended April 30,     Ended April 30,  
     2014     2013     2014     2013  

Operating activities:

        

Net loss

   $ (23,681   $ (23,144   $ (63,166   $ (63,752

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

        

Depreciation and amortization expense

     3,901        3,427        15,068        10,900   

Impairment of acquired intangible assets

     2,500        —          2,500        —     

Estimated loss on disposal of discontinued operations, net of tax

     9,192        —          9,192        —     

Stock-based expense

     3,472        3,381        14,468        22,453   

Revaluation of contingent consideration

     —          (1,000     (3,270     (1,000

Bad debt expense

     469        1,216        1,902        2,859   

Excess tax benefit related to stock-based expense

     (120     (145     (216     (510

Other non-cash expense (benefit) (1)

     286        5        480        (5

Changes in operating assets and liabilities:

        

Accounts receivable

     3,721        (168     (12,081     (10,749

Prepaid expenses and other current assets

     (1,176     (2,023     (1,551     (1,766

Other non-current assets

     (130     (1,593     (1,603     (432

Accounts payable

     (3,570     453        (3,095     974   

Accrued expenses and other current liabilities

     (409     6,256        (2,623     13,283   

Deferred revenue

     3,225        3,986        2,040        8,633   

Other liabilities, long-term

     (585     253        (1,512     (2,699
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in operating activities

     (2,905     (9,096     (43,467     (21,811

Investing activities:

        

Acquisitions, net of cash acquired, and purchase of intangible asset

     (8,946     —          (9,616     (60,750

Purchases of property, equipment and capitalized internal-use software development costs

     (2,155     (2,849     (10,661     (10,853

Purchases of short-term investments

     (25,575     (16,250     (60,092     (90,828

Proceeds from maturities of short-term investments

     13,068        22,541        58,478        61,310   

Proceeds from sales of short-term investments (1)

     —          5,013        31,098        10,037   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (23,608     8,455        9,207        (91,084

Financing activities:

        

Proceeds from follow-on stock offering, net of costs

     —          —          —          51,943   

Proceeds from employee stock compensation plans

     2,460        1,756        13,499        11,226   

Proceeds from revolving line of credit

     27,000        —          27,000        —     

Excess tax benefit related to stock-based expense

     120        145        216        510   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     29,580        1,901        40,715        63,679   

Effect of exchange rate fluctuations on cash and cash equivalents

     175        (60     434        (106
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash and cash equivalents

     3,242        1,200        6,889        (49,322

Cash and cash equivalents at beginning of period

     28,692        23,845        25,045        74,367   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 31,934      $ 25,045      $ 31,934      $ 25,045   
  

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental disclosure of other cash flow information:

        

Cash paid for income taxes

   $ 763      $ 204      $ 1,493      $ 440   

Cash paid for interest

     137        —          137        —     

Supplemental disclosure of non-cash investing and financing activities:

        

Purchase of intangible asset recorded in accrued expenses and other current liabilities

   $ —        $ 205      $ —        $ 705   

Issuance of stock for acquisition

     —          —          —          125,497   

 

(1)  Prior period has been reclassified to conform with basis of presentation adopted in current period.

These Condensed Consolidated Statements of Cash Flows include combined cash flows from continuing operations along with discontinued operations.


Bazaarvoice, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures for Continuing Operations

(in thousands, except net loss per share data)

(unaudited)

 

     Three Months     Twelve Months  
     Ended April 30,     Ended April 30,  
     2014     2013     2014     2013  

Non-GAAP net loss and net loss per share from continuing operations:

        

GAAP net loss from continuing operations

   $ (12,233   $ (23,020   $ (52,846   $ (47,503

Stock-based expense (1)

     3,333        3,114        13,825        11,158   

Contingent consideration related to acquisition (2)

     —          (410     (3,860     (410

Amortization of acquired intangible assets

     317        282        1,164        549   

Acquisition-related and other expense

     366        7,819        16,184        10,487   

Other stock-related expense (4)

     —          1,428        —          1,428   

Income tax adjustment for non-GAAP items

     (191     39        (239     64   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss from continuing operations

   $ (8,408   $ (10,748   $ (25,772   $ (24,227
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP basic and diluted shares

     77,165        73,121        75,564        69,336   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP basic and diluted net loss per share from continuing operations

   $ (0.11   $ (0.15   $ (0.34   $ (0.35
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations:

        

GAAP net loss from continuing operations

   $ (12,233   $ (23,020   $ (52,846   $ (47,503

Stock-based expense (1)

     3,333        3,114        13,825        11,158   

Contingent consideration related to acquisition (2)

     —          (410     (3,860     (410

Adjusted depreciation and amortization (3)

     1,081        948        4,492        3,322   

Acquisition-related and other expense

     366        7,819        16,184        10,487   

Other stock-related expense (4)

     —          1,428        —          1,428   

Income tax expense (benefit)

     (418     583        (500     (1,172

Total other (income) expense, net

     316        483        830        828   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations:

   $ (7,555   $ (9,055   $ (21,875   $ (21,862
  

 

 

   

 

 

   

 

 

   

 

 

 

(1)       Stock-based expense includes the following:

        

Cost of revenue

   $ 316      $ 149      $ 1,155      $ 677   

Sales and marketing

     1,072        841        4,496        3,033   

Research and development

     747        733        2,817        2,840   

General and administrative

     1,198        1,391        5,357        4,608   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based expense

   $ 3,333      $ 3,114      $ 13,825      $ 11,158   
  

 

 

   

 

 

   

 

 

   

 

 

 

(2)       Contingent consideration related to acquisition includes the following:

        

(a) Revaluation of contingent consideration

        

General and administrative

   $ —        $ (1,000   $ (3,270   $ (1,000

(b) Contingent consideration included in compensation expense

        

General and administrative

     —          295        (295     295   

Sales and marketing

     —          295        (295     295   
  

 

 

   

 

 

   

 

 

   

 

 

 

Contingent consideration related to acquisition

   $ —        $ (410   $ (3,860   $ (410
  

 

 

   

 

 

   

 

 

   

 

 

 

Revaluation of contingent consideration is the decrease in fair value of the liability-classified contingent consideration related to the acquisition of Longboard Media, Inc. Contingent consideration included in compensation expense relates to certain Longboard Media, Inc. employees whose right to receive such compensation is forfeited if they terminate their employment. The contingent consideration was payable on Longboard Media’s achievement of certain performance goals for the period from January 1, 2013 to December 31, 2013. On October 31, 2013, the Company determined that the probability of the attainment of the underlying performance goals was remote and the resultant payout was estimated to be zero. As a result, the fair value of the liability-classified contingent consideration and the liability accrued for contingent consideration included in compensation expense were reduced to zero. On January 31, 2014, the Company concluded that the underlying performance goals were not met and the payout was zero. We exclude these items from our non-GAAP financial measures in order to facilitate the comparison of post-acquisition operating results.


Bazaarvoice, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures for Continuing Operations (continued)

(in thousands, except net loss per share data)

(unaudited)

 

     Three Months      Twelve Months  
     Ended April 30,      Ended April 30,  
     2014      2013      2014      2013  
(3)       Adjusted depreciation and amortization includes the following:                            

Cost of revenue

   $ 244       $ 231       $ 937       $ 891   

Sales and marketing

     275         120         1,112         601   

Research and development

     189         173         813         647   

General and administrative

     85         142         495         634   

Amortization of acquired intangible assets

     288         282         1,135         549   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted depreciation and amortization

   $ 1,081       $ 948       $ 4,492       $ 3,322   
  

 

 

    

 

 

    

 

 

    

 

 

 

(4)       Other stock-related expense includes the following:

           

General and administrative

   $ —         $ 1,428       $ —         $ 1,428   
  

 

 

    

 

 

    

 

 

    

 

 

 

Other stock-related expense

   $ —         $ 1,428       $ —         $ 1,428   
  

 

 

    

 

 

    

 

 

    

 

 

 

Other stock-related expense represents a non-recurring estimated liability for taxes and related items in connection with our treatment of certain stock option grants. Since the estimated liability directly relates to stock option grants and as stock-based expenses are consistently excluded from our non-GAAP financial measures, we have excluded this estimated liability.


Bazaarvoice, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures for Discontinued Operations

(in thousands, except net loss per share data)

(unaudited)

 

     Three Months     Twelve Months  
     Ended April 30,     Ended April 30,  
     2014     2013     2014     2013  

Non-GAAP net income (loss) and net earnings per share from discontinued operations:

        

GAAP net loss from discontinued operations

   $ (11,448   $ (124   $ (10,320   $ (16,249

Stock-based expense (1)

     139        267        643        11,295   

Amortization of acquired intangible assets

     1,472        1,549        5,888        4,965   

Impairment of acquired intangible assets (4)

     2,500        —          2,500        —     

Acquisition-related, divestiture-related and other expenses

     819        (378     819        1,725   

Other stock-related expense (3)

     —          772        —          772   

Estimated loss on disposal of discontinued operations, net of tax (5)

     9,192        —          9,192        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income from discontinued operations

   $ 2,674      $ 2,086      $ 8,722      $ 2,508   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP basic weighted average shares outstanding:

     77,165        73,121        75,564        69,336   

GAAP diluted weighted average shares outstanding;

     78,492        75,808        78,006        75,121   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP basic earnings per share from discontinued operations

   $ 0.03      $ 0.03      $ 0.12      $ 0.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted earnings per share from discontinued operations

   $ 0.03      $ 0.03      $ 0.11      $ 0.03   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from discontinued operations:

        

GAAP net loss from discontinued operations

   $ (11,448   $ (124   $ (10,320   $ (16,249

Stock-based expense (1)

     139        267        643        11,295   

Adjusted depreciation and amortization (2)

     1,482        1,589        5,983        5,114   

Impairment of acquired intangible assets (4)

     2,500        —          2,500        —     

Acquisition-related, divestiture-related and other expenses

     819        (378     819        1,725   

Other stock-related expense (3)

     —          772        —          772   

Income tax expense (benefit)

     (660     1        22        25   

Total other (income) expense, net

     —          (10     (4     (14

Estimated loss on disposal of discontinued operations, net of tax (5)

     9,192        —          9,192        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from discontinued operations:

   $ 2,024      $ 2,117      $ 8,835      $ 2,668   
  

 

 

   

 

 

   

 

 

   

 

 

 

(1)      Stock-based expense includes the following:

        

Cost of revenue

   $ 127      $ 236      $ 567      $ 1,057   

Sales and marketing

     —          5        7        1,239   

Research and development

     6        24        55        307   

General and administrative

     6        2        14        8,692   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based expense

   $ 139      $ 267      $ 643      $ 11,295   
  

 

 

   

 

 

   

 

 

   

 

 

 

(2)      Adjusted depreciation and amortization includes the following:

        

Cost of revenue

   $ 450      $ 450      $ 1,800      $ 1,590   

Sales and marketing

     —          —          —          —     

Research and development

     —          —          —          —     

General and administrative

     10        40        95        149   

Amortization of acquired intangible assets

     1,022        1,099        4,088        3,375   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted depreciation and amortization

   $ 1,482      $ 1,589      $ 5,983      $ 5,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

(3)      Other stock-related expense includes the following:

        

General and administrative

   $ —        $ 772      $ —        $ 772   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other stock-related expense

   $ —        $ 772      $ —        $ 772   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other stock-related expense represents a non-recurring estimated liability for taxes and related items in connection with our treatment of certain stock option grants. Since the estimated liability directly relates to stock option grants and as stock-based expenses are consistently excluded from our non-GAAP financial measures, we have excluded this estimated liability.

(4)    Prior to the classification as “assets held for sale”, the Company determined that the carrying value of the asset group exceeded the undiscounted cash flows expected to be generated. As a result, the Company recorded an impairment change of $2.5 million for the three months ended April 30, 2014.
(5)    Estimated loss on disposal of discontinued operations has been determined by estimating proceeds from selling the PowerReviews business, net of any associated transaction costs, less the net carrying value of the assets and liabilities held for sale as of April 30, 2014. Any material change between the estimated proceeds used for determining the loss on disposal and the actual proceeds due to the timing of executing a definitive agreement with a prospective buyer on or around the date of this 8-K filing may result in a revision of this estimated loss. Any such revisions will be reflected in the financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2014 and, if required, an amended Current Report on Form 8-K/A.


Bazaarvoice, Inc.

Selected Quarterly Financial and Operational Metrics for Continuing and Discontinued Operations

(in thousands, except active enterprise clients and full-time employees data)

(unaudited)

 

    Three Months Ended  
    Jul 31,     Oct 31,     Jan 31,     Apr 30,     Jul 31,     Oct 31,     Jan 31,     Apr 30,  
    2012     2012     2013     2013     2013     2013     2014     2014  

Continuing Operations:

               

Revenue (1)

  $ 33,820      $ 35,148      $ 38,920      $ 38,924      $ 40,319      $ 41,148      $ 43,600      $ 43,078   

Cost of revenue (2)

    11,229        11,672        12,130        12,319        12,117        12,508        13,758        14,522   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    22,591        23,476        26,790        26,605        28,202        28,640        29,842        28,556   

Operating expenses:

               

Sales and marketing (2), (4)

    13,751        17,165        20,103        22,095        20,996        20,837        20,765        23,884   

Research and development (2)

    7,160        7,496        8,822        8,691        8,924        9,793        9,036        9,832   

General and administrative (2), (4)

    6,660        6,533        8,125        9,672        8,536        3,639        7,674        6,521   

Acquisition-related and other expense

    —          1,085        1,583        7,819        7,504        8,283        31        366   

Amortization of acquired intangible assets

    —          —          267        282        282        283        282        288   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    27,571        32,279        38,900        48,559        46,242        42,835        37,788        40,891   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

    (4,980     (8,803     (12,110     (21,954     (18,040     (14,195     (7,946     (12,335

Total other income (expense), net

    (407     54        8        (483     3        (249     (268     (316
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss before income taxes

    (5,387     (8,749     (12,102     (22,437     (18,037     (14,444     (8,214     (12,651

Income tax expense (benefit)

    269        271        (2,295     583        (391     130        179        (418
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

    (5,656     (9,020     (9,807     (23,020     (17,646     (14,574     (8,393     (12,233
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based expense (3)

    2,243        3,040        2,761        3,114        3,807        3,467        3,218        3,333   

Contingent consideration related to acquisition (4)

    —          —          —          (410     370        (4,230     —          —     

Adjusted depreciation and amortization (5)

    595        708        1,071        948        1,053        1,202        1,156        1,081   

Acquisition-related and other expense

    —          1,085        1,583        7,819        7,504        8,283        31        366   

Other stock-related expense (6)

    —          —          —          1,428        —          —          —          —     

Income tax expense (benefit)

    269        271        (2,295     583        (391     130        179        (418

Total other (income) expense, net

    407        (54     (8     483        (3     249        268        316   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations

  $ (2,142   $ (3,970   $ (6,695   $ (9,055   $ (5,306   $ (5,473   $ (3,541   $ (7,555
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from discontinued operations

  $ (12,883   $ (2,222   $ (1,020   $ (124   $ 278      $ 420      $ 430      $ (11,448

Stock-based expense (3)

    10,095        555        378        267        201        181        122        139   

Adjusted depreciation and amortization (5)

    743        1,391        1,391        1,589        1,506        1,503        1,492        1,482   

Impairment of acquired intangible assets (8)

    —          —          —          —          —          —          —          2,500   

Acquisition-related, divestiture-related and other expenses

    1,384        281        438        (378     —          —          —          819   

Other stock-related expense (6)

    —          —          —          772        —          —          —          —     

Income tax expense (benefit)

    19        3        2        1        168        253        261        (660

Total other (income) expense, net

    (3     3        (4     (10     (4     —          —          —     

Estimated loss on disposal of discontinued operations, net of
tax (9)

    —          —          —          —          —          —          —          9,192   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from discontinued operations

  $ (645   $ 11      $ 1,185      $ 2,117      $ 2,149      $ 2,357      $ 2,305      $ 2,024   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Number of active clients from continuing operations (at period end) (7)

    843        866        943        885        922        980        1,011        1,133   

Number of active clients from discontinued operations (at period end) (7)

    340        356        413        404        398        389        368        341   

Full-time employees including employees attributable to discontinued operations (at period end)

    771        777        796        783        776        798        794        799   

Full-time employees attributable to discontinued operations (at period end)

    68        48        35        29        28        27        25        24   

(1)      Revenue from continuing operations includes the following:

               

SaaS

  $ 33,820      $ 35,148      $ 37,071      $ 38,057      $ 38,863      $ 39,896      $ 40,645      $ 41,924   

Media

    —          —          1,849        867        1,456        1,252        2,955        1,154   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

  $ 33,820      $ 35,148      $ 38,920      $ 38,924      $ 40,319      $ 41,148      $ 43,600      $ 43,078   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue from discontinued operations includes the following:

               

SaaS

  $ 1,803      $ 3,402      $ 3,639      $ 4,316      $ 4,179      $ 4,335      $ 4,338      $ 3,947   

Media

    39        76        119        90        73        55        59        25   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

  $ 1,842      $ 3,478      $ 3,758      $ 4,406      $ 4,252      $ 4,390      $ 4,397      $ 3,972   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue:

               

SaaS

  $ 35,623      $ 38,550      $ 40,710      $ 42,373      $ 43,042      $ 44,231      $ 44,983      $ 45,871   

Media

    39        76        1,968        957        1,529        1,307        3,014        1,179   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

  $ 35,662      $ 38,626      $ 42,678      $ 43,330      $ 44,571      $ 45,538      $ 47,997      $ 47,050   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(2)  To conform with the basis of presentation adopted in the three months ended July 31, 2013, the presentation of certain expense line items for prior periods has been adjusted to reflect the reclassification of bad debt expense from sales and marketing to general and administrative, and to allocate certain information technology costs from general and administrative to cost of revenue, sales and marketing, and research and development.


Bazaarvoice, Inc.

Selected Quarterly Financial and Operational Metrics for Continuing and Discontinued Operations (continued)

(in thousands, except active enterprise clients and full-time employees data)

(unaudited)

 

    Three Month Ended  
    Jul 31,     Oct
31,
    Jan
31,
    Apr
30,
    Jul
31,
    Oct 31,     Jan
31,
    Apr
30,
 
    2012     2012     2013     2013     2013     2013     2014     2014  

(3)         Stock-based expense from continuing operations includes the following:

               

Cost of revenue

  $ 100      $ 261      $ 167      $ 149      $ 318      $ 236      $ 285      $ 316   

Sales and marketing

    651        835        706        841        1,227        1,324        873        1,072   

Research and development

    560        919        628        733        805        662        603        747   

General and administrative

    932        1,025        1,260        1,391        1,457        1,245        1,457        1,198   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based expense from continuing operations

  $ 2,243      $ 3,040      $ 2,761      $ 3,114      $ 3,807      $ 3,467      $ 3,218      $ 3,333   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based expense from discontinued operations includes the following:

               

Cost of revenue

  $ 201      $ 333      $ 287      $ 236      $ 174      $ 160      $ 106      $ 127   

Sales and marketing

    1,179        43        12        5        4        2        1        —     

Research and development

    87        143        53        24        19        17        13        6   

General and administrative

    8,628        36        26        2        4        2        2        6   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based expense from discontinued operations

  $ 10,095      $ 555      $ 378      $ 267      $ 201      $ 181      $ 122      $ 139   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(4)         Contingent consideration related to acquisition includes the following:

               

(a) Revaluation of contingent consideration

  

General and administrative

  $ —        $ —        $ —        $ (1,000   $ —        $ (3,270   $ —        $ —     

(b) Contingent consideration included in compensation expense

  

General and administrative

    —          —          —          295        185        (480     —          —     

Sales and marketing

    —          —          —          295        185        (480     —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contingent consideration related to acquisition

  $ —        $ —        $ —        $ (410   $ 370      $ (4,230   $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Revaluation of contingent consideration is the decrease in fair value of the liability-classified contingent consideration related to the acquisition of Longboard Media, Inc. Contingent consideration included in compensation expense relates to certain Longboard Media, Inc. employees whose right to receive such compensation is forfeited if they terminate their employment. The contingent consideration was payable to Longboard Media’s achievement of certain performance goals for the period from January 1, 2013 to December 31, 2013. On October 31, 2013, the Company determined that the probability of the attainment of the underlying performance goals was remote and the resultant payout was estimated to be zero. As a result, the fair value of the liability-classified contingent consideration and the liability accrued for contingent consideration included in compensation expense were reduced to zero. On January 31, 2014, the Company concluded that the underlying performance goals were not met and the payout was zero. We exclude these items from our non-GAAP financial measures in order to facilitate the comparison of post-acquisition operating results.          
    Three Month Ended  
    Jul 31,     Oct
31,
    Jan
31,
    Apr
30,
    Jul
31,
    Oct 31,     Jan
31,
    Apr
30,
 
    2012     2012     2013     2013     2013     2013     2014     2014  

(5)        Adjusted depreciation and amortization from continuing operations
   includes the following:

               

Cost of revenue

  $ 197      $ 231      $ 232      $ 231      $ 226      $ 238      $ 229      $ 244   

Sales and marketing

    133        175        173        120        221        318        298        275   

Research and development

    144        161        169        173        189        226        209        189   

General and administrative

    121        141        230        142        135        137        138        85   

Amortization of acquired intangible assets

    —          —          267        282        282        283        282        288   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted depreciation and amortization from continuing operations

  $ 595      $ 708      $ 1,071      $ 948      $ 1,053      $ 1,202      $ 1,156      $ 1,081   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted depreciation and amortization from discontinued operations includes the following:

               

Cost of revenue

  $ 240      $ 450      $ 450      $ 450      $ 450      $ 450      $ 450      $ 450   

General and administrative

    23        43        43        40        34        31        20        10   

Amortization of acquired intangible assets

    480        898        898        1,099        1,022        1,022        1,022        1,022   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted depreciation and amortization from discontinued operations

  $ 743      $ 1,391      $ 1,391      $ 1,589      $ 1,506      $ 1,503      $ 1,492      $ 1,482   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(6)         Other stock-related expense from continuing operations includes the following:

               

General and administrative

  $ —        $ —        $ —        $ 1,428      $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other stock-related expense

  $ —        $ —        $ —        $ 1,428      $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other stock-related expense from discontinued operations includes the following:

               

General and administrative

  $ —        $ —        $ —        $ 772      $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other stock-related expense

  $ —        $ —        $ —        $ 772      $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other stock-related expense represents an estimated liability for taxes and related items in connection with our treatment of certain stock option grants. Since the estimated liability directly relates to stock option grants and as stock-based expenses are consistently excluded from our non-GAAP financial measures, we have excluded this estimated liability.


Bazaarvoice, Inc.

Selected Quarterly Financial and Operational Metrics for Continuing and Discontinued Operations (continued)

(in thousands, except active enterprise clients and full-time employees data)

(unaudited)

 

(7) Beginning as of our fourth quarter of fiscal 2014, we now define an active client as an organization from which we are currently recognizing recurring revenue, and we count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our ability to increase our active client base is a leading indicator of our ability to grow revenue.

 

     Further, due to the presentation of the PowerReviews business as discontinued operations, we have separated our active clients into two categories: 1) active clients from continuing operations and 2) active clients from discontinued operations. As a result of this analysis, each category could include a common client who may have organizations for which we recognized recurring revenue that have separate signed contractual agreements.

 

     All prior periods discussed in this press release or presented in the accompanying financial tables have been revised to conform to the current period definition of an active client.

 

(8)  The Company compared the carrying value of the asset group included in “assets held for sale” to the undiscounted cash flows to be generated by the asset group. The carrying value of the asset group exceeded the undiscounted cash flows and as a result, the Company recorded an impairment charge of $2.5 million for the three months ended April 30, 2014.

 

(9)  Estimated loss on disposal of discontinued operations has been determined by estimating proceeds from selling the PowerReviews business, net of any associated transaction costs, less the net carrying value of the assets and liabilities held for sale as of April 30, 2014. Any material change between the estimated proceeds used for determining the loss on disposal and the actual proceeds due to the timing of executing a definitive agreement with a prospective buyer on or around the date of this 8-K filing may result in a revision of this estimated loss. Any such revisions will be reflected in the financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2014 and, if required, an amended Current Report on Form 8-K/A.