EX-99.1 2 f37571exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
Interwoven Announces Record Fourth Quarter and Year-End Financial Results
Fourth Quarter License Revenue Growth of 19%; Full Year Non-GAAP Net Income Growth of 47%
SAN JOSE, Calif., – January 31, 2008 - Interwoven, Inc. (NASDAQ: IWOV), a global leader in content management solutions, today announced financial results for the three months and year ended December 31, 2007.
Interwoven reported total revenues of $62.9 million for the fourth quarter of 2007, an increase of 17% from total revenues of $53.9 million for the fourth quarter of 2006. Net income for the fourth quarter of 2007, calculated in accordance with generally accepted accounting principles, was $10.7 million, or $0.23 per share, compared to net income of $4.3 million, or $0.10 per share, for the same period in 2006. On a non-GAAP basis, Interwoven reported a net income of $8.2 million for the fourth quarter of 2007, or $0.18 per share, compared to non-GAAP net income of $6.3 million, or $0.14 per share, for the fourth quarter of 2006.
For the year ended December 31, 2007, Interwoven reported total revenues of $225.7 million, an increase of 13% from total revenues of $200.3 million for 2006. Net income for the year ended December 31, 2007, calculated in accordance with generally accepted accounting principles, was $23.7 million, or $0.51 per share, compared to a net income of $6.4 million, or $0.15 per share, for 2006. On a non-GAAP basis, Interwoven reported net income of $28.3 million for the year ended December 31, 2007, or $0.61 per share, compared to non-GAAP net income of $19.3 million, or $0.44 per share, for 2006.
Reconciliations of net income and net income per share calculated in accordance with generally accepted accounting principles and non-GAAP net income and non-GAAP net income per share are provided in the tables immediately following the consolidated statements of operations. Additional information about the company’s non-GAAP financial measures can be found under the caption “Non-GAAP Financial Information” below.
On November 1, 2007, Interwoven completed the acquisition of Optimost LLC and the results of Optimost have been included in the company’s financial statements since that date. Since November 1, Optimost’s subscription revenues were $1.5 million, with an operating loss of approximately $250,000.
In the fourth quarter of 2007, net income in accordance with GAAP includes a tax benefit of approximately $4.2 million resulting from the reversal of a portion of the company’s valuation allowance against its deferred tax assets.
As of December 31, 2007, cash, cash equivalents and investments totaled $157.3 million and deferred revenues totaled $62.0 million.
“Across the board, we turned in a tremendous fourth quarter and full-year performance,” said Joe Cowan, CEO at Interwoven. “Our fourth quarter and full-year revenues and earnings were the highest we’ve ever recorded, and add to our strong foundation for continued growth. Now more than ever, organizations are putting Interwoven at the core of their efforts to grow their business, increase profitability and business agility, and improve customer relationships.”
Customer Success Highlights
  •   During the quarter, Interwoven added 108 customers, bringing the company’s total to over 4,200 customers worldwide.
 
  •   Notable customer orders included: adidas, American Medical Association, Bank of America, Bobcat Corporation, CalPERS, Canadian Broadcasting Corporation, Cendant,  Chunghwa Telecom, CNBC, Cummins Inc, Drinker Biddle & Reath LLP, Digi-Key, DLA Piper, Education Management Corporation, Edward Nathan Sonnenbergs, ENI, Macy’s, Northrop Grumman, Philips International, Plesner Svane Gronborg, Postecom, Qantas Airways, Reed Smith LLP, Rohm & Haas, Royal Bank of Canada, State of New South Wales, T. Rowe Price, and Wachovia.

 

 

Recent Company Highlights
  •   Interwoven Acquires Optimost and Builds Market Momentum – On November 1, Interwoven announced that it completed the acquisition of Optimost LLC, a pioneer of software and services for Website optimization. The acquisition combines Optimost’s real-time multivariable testing and Website optimization capabilities with Interwoven’s content management solutions to provide marketers with the industry’s most complete set of capabilities for creating, deploying, testing, analyzing, and optimizing targeted content to Website visitors. In the two months following the acquisition, Interwoven generated strong momentum and demand for the Optimost solution, with key wins at Amnesty International, Butlins, and Digi-Key.
 
  •   NASDAQ Selects Interwoven to Join New Internet Index – During the fourth quarter, Interwoven announced that it was selected by NASDAQ for inclusion in its recently launched Internet Index (NASDAQ: QNET). The Index tracks the performance of companies engaged in a broad range of internet-related services including internet access providers, internet search engines, web hosting, website design, and internet retail commerce. Other companies selected for the index include Amazon, eBay, Google, Priceline.com, and Shutterfly.
Product News and Industry Leadership Highlights
  •   Interwoven Composite Application Provisioning Solution Enhanced – In the fourth quarter, Interwoven announced an enhanced version of the Interwoven Composite Application Provisioning (CAP) solution. The Interwoven CAP solution is designed to allow businesses to automate and standardize the deployment of custom Web applications, resulting in improved efficiency and time-to-market. The new version, Interwoven CAP 3.0, provides improved end-to-end automation, graphical reporting, and a more intuitive user interface.
 
  •   Interwoven Universal Search Gains Traction with Key Customer Wins – During the fourth quarter, sales of the recently launched Interwoven Universal Search – Professional Services Edition gained momentum with several customer transactions. For example, DLA Piper, a leading international law firm, selected Interwoven Universal Search to enable staff in Europe, the Middle East, and Asia to search the organization’s knowledge repositories, and to provide fee-earners with immediate and highly accurate results for ensuring optimal sharing of firm expertise.
 
  •   Interwoven Recognized in the Forrester Wave: Marketing Asset Management, Q1 2008 – In January 2008, the independent research firm Forrester released a new report evaluating providers of marketing asset management solutions. The report names Interwoven a “strong performer” and states “Interwoven brings together a unique and compelling set of offerings.” The report also states “Interwoven’s recent acquisition of Optimost, a Website testing and optimization company, offers a tantalizing glimpse of how different parts of the marketing content supply chain can integrate.”
Non-GAAP Financial Information
To supplement the company’s consolidated financial statements presented in accordance with generally accepted accounting principles, Interwoven uses measures of operating results, net income, net income per share, and shares used in the net income per share calculation, which are adjusted to exclude restructuring charges, retirement benefit costs associated with the retirement of the company’s former chief executive officer recorded in the first quarter of 2006, stock-based compensation, amortization of intangible assets and the related tax impact of these adjustments, and the costs associated with the company’s voluntary review of historical stock option grant procedures and related accounting. These non-GAAP results are not in accordance with, or an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies. Interwoven believes that the presentation of non-GAAP results provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Interwoven also believes that where the adjustments used in calculating non-GAAP net income and non-GAAP net income per share are based on specific, identified charges that impact different line items in the consolidated statements of operations (including cost of revenues-license, cost of revenues-support and service, sales and marketing, research and development, and general and administrative expenses), it is useful to investors to know how these specific line items in the consolidated statements of operations are affected by these adjustments. For its internal budgets, Interwoven’s management uses consolidated financial statements that do not include restructuring and excess facilities charges, retirement benefit

 

 

costs associated with retirement of the company’s former chief executive officer, stock-based compensation, amortization of intangible assets, and the related tax impact of these adjustments, and the costs associated with the company’s voluntary review of historical stock option grant procedures and related accounting. Interwoven uses these non-GAAP measures in assessing corporate performance and determining incentive compensation. Readers are advised to review and consider carefully the financial information prepared in accordance with accounting principles generally accepted in the United States of America contained in this press release and Interwoven’s periodic filings with the Securities and Exchange Commission.
Conference Call Information

Interwoven’s 2007 fourth quarter and full-year results and its financial outlook for the first quarter of 2008 will be discussed today, January 31, 2008 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).
         
Conference Call Details:    
 
 
  Date:   Thursday, January 31, 2008 
 
  Time:   2:00 p.m. PT (5:00 p.m. ET) 
 
  Live Dial-in #:   888-747-4632 or 913-312-0969 
 
  Replay Dial-in #:   888-203-1112 or 719-457-0820 
 
  Replay Passcode:   1410918 
Audio Webcast instructions will be available on Interwoven’s Website at http://www.interwoven.com/investors. The call replay will be available starting on January 31, 2008 at approximately 5:00 p.m. Pacific Time for a limited time period.
Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking” statements, including statements about historical results that may suggest trends in our business. These statements are based on estimates and information available to us at the time of this press release and are not guarantees of future performance. Our forward-looking statements include statements about customer demand. Actual results could differ materially from our current expectations as a result of many factors including: our ability to develop new products, services, features and functionality successfully and on a timely basis; customer acceptance of our solutions; changes in customer spending on enterprise content management initiatives; our ability to cross-sell and up-sell additional products into our installed base of customers; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; the success of our strategic business alliances; intense competition in our markets; changes in key personnel; the introduction of new products or services by competitors; and the ongoing consolidation in our markets. These and other risks and uncertainties associated with our business are described in our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Forms 8-K, which are on file with the Securities and Exchange Commission and available through www.sec.gov.
About Interwoven

Interwoven is a global leader in content management solutions. Interwoven’s software and services enable organizations to effectively leverage content to drive business growth by improving the customer experience, increasing collaboration, and streamlining business processes in dynamic environments. Our unique approach combines user-friendly simplicity with robust IT performance and scalability to unlock the value of content. Today, more than 4,200 enterprise and professional services organizations worldwide have chosen Interwoven, including: adidas, Airbus, Avaya, Cisco, DLA Piper, the Federal Reserve Bank, FedEx, HSBC, LexisNexis, Microsoft, Samsung, Shell, Samsonite, White & Case, and Yamaha. Over 20,000 developers and over 300 partners enrich and extend Interwoven’s offerings. To learn more about Interwoven, please visit www.interwoven.com.
Investor Relations Contact:

Contact:
Keren Ackerman
Interwoven, Inc.
(408) 953-7284
kackerman@interwoven.com

 

 

Media Relations Contact:

Randy Cairns
Interwoven, Inc.
(408) 953-7111
rcairns@interwoven.com

 

 

INTERWOVEN, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)
                                 
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2007     2006     2007     2006  
    (Unaudited)                  
Revenues:
                                
License
   $ 24,932     $ 21,021     $ 86,788     $ 75,678  
Support and service
     37,953       32,896       138,880       124,641  
 
                        
Total revenues
     62,885       53,917       225,668       200,319  
 
                                
Cost of revenues:
                                
License
     1,981       3,352       7,886       16,367  
Support and service
     14,666       12,932       55,214       50,256  
 
                        
Total cost of revenues
     16,647       16,284       63,100       66,623  
 
                        
 
                                
Gross profit
     46,238       37,633       162,568       133,696  
 
                                
Operating expenses:
                                
Sales and marketing
     24,193       20,668       83,201       77,114  
Research and development
     9,519       9,085       37,447       35,069  
General and administrative
     6,878       3,772       24,620       16,787  
Amortization of intangible assets
     759       828       3,229       3,312  
Restructuring and excess facilities charges (recoveries)
     83       (15 )     148       (902 )
 
                        
Total operating expenses
     41,432       34,338       148,645       131,380  
 
                        
 
                                
Income from operations
     4,806       3,295       13,923       2,316  
 
                                
Interest income and other, net
     2,297       1,888       9,270       6,324  
 
                        
 
                                
Income before provision for income taxes
     7,103       5,183       23,193       8,640  
Provision (benefit) for income taxes
     (3,581 )     853       (485 )     2,203  
 
                        
 
                                
Net income
   $ 10,684     $ 4,330     $ 23,678     $ 6,437  
 
                        
 
                                
Basic net income per common share
   $ 0.24     $ 0.10     $ 0.53     $ 0.15  
 
                        
 
                                
Shares used in computing basic net income per common share
     45,287       43,813       45,068       42,979  
 
                        
 
                                
Diluted net income per common share
   $ 0.23     $ 0.10     $ 0.51     $ 0.15  
 
                        
 
                                
Shares used in computing diluted net income per common share
     46,477       45,337       46,524       43,995  
 
                        

 

 

INTERWOVEN, INC.

Consolidated Balance Sheets

(In thousands)
                 
    December 31,  
    2007     2006  
ASSETS
Current assets:
                
Cash and cash equivalents
   $ 68,453     $ 74,119  
Short-term investments
     88,896       102,342  
Accounts receivable, net
     39,079       34,492  
Prepaid expenses and other current assets
     8,252       5,371  
 
            
Total current assets
     204,680       216,324  
Property and equipment, net
     16,247       4,815  
Goodwill
     217,698       190,935  
Other intangible assets, net
     20,960       10,655  
Other assets
     8,773       3,558  
 
            
Total assets
   $ 468,358     $ 426,287  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
                
Current liabilities:
                
Accounts payable
   $ 4,378     $ 1,897  
Accrued liabilities
     30,586       31,684  
Restructuring and excess facilities accrual
     1,618       5,132  
Deferred revenues
     61,977       57,317  
 
            
Total current liabilities
     98,559       96,030  
 
                
Accrued liabilities
     7,816       2,733  
Restructuring and excess facilities accrual
     2,016       3,564  
 
            
Total liabilities
     108,391       102,327  
 
                
Commitments and contingencies
                
 
                
Stockholders’ equity:
                
Preferred stock
     ¾       ¾  
Common stock
     45       44  
Additional paid-in capital
     766,781       754,904  
Accumulated other comprehensive gain (loss)
     415       (36 )
Accumulated deficit
     (407,274 )     (430,952 )
 
            
Total stockholders’ equity
     359,967       323,960  
 
            
Total liabilities and stockholders’ equity
   $ 468,358     $ 426,287  
 
            

 

 

INTERWOVEN, INC.

Impact of Non-GAAP Adjustments on Reported Net Income

(In thousands, except per share amounts)
(Unaudited)
                                                 
    Three Months Ended     Three Months Ended  
    December 31, 2007     December 31, 2006  
    As reported     Adjustments*     Non-GAAP     As reported     Adjustments*     Non-GAAP  
Revenues:
                                                
License
   $ 24,932     $ ¾     $ 24,932     $ 21,021     $ ¾     $ 21,021  
Support and service
     37,953       ¾       37,953       32,896       ¾       32,896  
 
                                    
Total revenues
     62,885       ¾       62,885       53,917       ¾       53,917  
 
                                                
Cost of revenues:
                                                
License (1)
     1,981       (936 )     1,045       3,352       (2,421 )     931  
Support and service (2)
     14,666       (223 )     14,443       12,932       (178 )     12,754  
 
                                    
Total cost of revenues
     16,647       (1,159 )     15,488       16,284       (2,599 )     13,685  
 
                                    
 
Gross profit
     46,238       1,159       47,397       37,633       2,599       40,232  
 
Operating expenses:
                                                
Sales and marketing (2)
     24,193       (608 )     23,585       20,668       (360 )     20,308  
Research and development (2)
     9,519       (331 )     9,188       9,085       (378 )     8,707  
General and administrative (2) (3)
     6,878       (2,413 )     4,465       3,772       (145 )     3,627  
Amortization of intangible assets (1)
     759       (759 )     ¾       828       (828 )     ¾  
Restructuring and excess facilities charges (recoveries) (4)
     83       (83 )     ¾       (15 )     15       ¾  
 
                                    
Total operating expenses
     41,432       (4,194 )     37,238       34,338       (1,696 )     32,642  
 
                                    
 
                                                
Income from operations
     4,806       5,353       10,159       3,295       4,295       7,590  
 
                                                
Interest income and other, net
     2,297       ¾       2,297       1,888       ¾       1,888  
 
                                    
 
                                                
Income before provision for income taxes
     7,103       5,353       12,456       5,183       4,295       9,478  
 
                                                
Provision (benefit) for income taxes (5)
     (3,581 )     7,816       4,235       853       2,369       3,222  
 
                                    
 
                                                
Net income
   $ 10,684     $ (2,463 )   $ 8,221     $ 4,330     $ 1,926     $ 6,256  
 
                                    
 
                                                
Diluted net income per common share
   $ 0.23             $ 0.18     $ 0.10             $ 0.14  
 
                                        
 
                                                
Shares used in computing diluted net income per common share
     46,477               46,477       45,337               45,337  
 
                                        
 
(1)   For the three months ended December 31, 2007 and 2006, adjustments reflect the reversal of $936,000 and $2.4 million, respectively, associated with the amortization of purchased technology and $759,000 and $828,000, respectively, associated with the amortization of intangible assets.
 
(2)   For the three months ended December 31, 2007 and 2006, adjustments reflect the reversal of stock-based compensation expense of $223,000 and $178,000, respectively, in cost of revenues – support and service, $608,000 and $360,000, respectively, in sales and marketing, $331,000 and $378,000, respectively, in research and development and $482,000 and $145,000, respectively, in general and administrative.

 

 

(3)   For the three months ended December 31, 2007, adjustment reflects the reversal of $1.9 million in expenses incurred in connection with the Company’s voluntary review of historical stock option grant procedures and related accounting.
 
(4)   For the three months ended December 31, 2007 and 2006, adjustments reflect the reversal of $83,000 and $(15,000), respectively, in adjustments associated with the Company’s restructuring and excess facilities accrual.
 
(5)   For the three months ended December 31, 2007 and 2006, adjustments reflect an additional tax provision of $7.8 million and $2.4 million, respectively, associated with the non-GAAP adjustments. In the three months ended December 31, 2007, net income in accordance with GAAP includes a tax benefit of approximately $4.2 million resulting from the reversal of a portion of the Company’s valuation allowance against its deferred tax assets.

 

 

INTERWOVEN, INC.

Impact of Non-GAAP Adjustments on Reported Net Income

(In thousands, except per share amounts)
(Unaudited)
                                                 
    Year Ended     Year Ended  
    December 31, 2007     December 31, 2006  
    As reported     Adjustments*     Non-GAAP     As reported     Adjustments*     Non-GAAP  
Revenues:
                                                
License
   $ 86,788     $ ¾     $ 86,788     $ 75,678     $  ¾     $ 75,678  
Support and service
     138,880       ¾       138,880       124,641       ¾       124,641  
 
                                    
Total revenues
     225,668       ¾       225,668       200,319       ¾       200,319  
 
                                                
Cost of revenues:
                                                
License (1)
     7,886       (4,365 )     3,521       16,367       (13,184 )     3,183  
Support and service (2)
     55,214       (683 )     54,531       50,256       (672 )     49,584  
 
                                    
Total cost of revenues
     63,100       (5,048 )     58,052       66,623       (13,856 )     52,767  
 
                                    
 
                                                
Gross profit
     162,568       5,048       167,616       133,696       13,856       147,552  
 
                                                
Operating expenses:
                                                
Sales and marketing (2)
     83,201       (1,933 )     81,268       77,114       (1,327 )     75,787  
Research and development (2)
     37,447       (982 )     36,465       35,069       (968 )     34,101  
General and administrative (2) (3)
     24,620       (8,868 )     15,752       16,787       (2,104 )     14,683  
Amortization of intangible assets (1)
     3,229       (3,229 )     ¾       3,312       (3,312 )     ¾  
Restructuring and excess facilities charges (recoveries) (4)
     148       (148 )     ¾       (902 )     902       ¾  
 
                                    
Total operating expenses
     148,645       (15,160 )     133,485       131,380       (6,809 )     124,571  
 
                                    
 
                                                
Income from operations
     13,923       20,208       34,131       2,316       20,665       22,981  
 
                                                
Interest income and other, net (5)
     9,270       (472 )     8,798       6,324       ¾       6,324  
 
                                    
 
                                                
Income before provision for income taxes
     23,193       19,736       42,929       8,640       20,665       29,305  
 
                                                
Provision (benefit) for income taxes (6)
     (485 )     15,081       14,596       2,203       7,760       9,963  
 
                                    
 
                                                
Net income
   $ 23,678     $ 4,655     $ 28,333     $ 6,437     $ 12,905     $ 19,342  
 
                                    
 
                                                
Diluted net income per common share
   $ 0.51             $ 0.61     $ 0.15             $ 0.44  
 
                                        
 
                                                
Shares used in computing diluted net income per common share
     46,524               46,524       43,995               43,995  
 
                                        
 
(1)   For the years ended December 31, 2007 and 2006, adjustments reflect the reversal of $4.4 million and $13.2 million, respectively, associated with the amortization of purchased technology and $3.2 million and $3.3 million, respectively, associated with the amortization of intangible assets.
 
(2)   For the years ended December 31, 2007 and 2006, adjustments reflect the reversal of stock-based compensation expense of $683,000 and $672,000, respectively, in cost of revenues – support and service, $1.9 million and $1.3 million, respectively, in sales and marketing, $982,000 and $968,000, respectively, in research and development and $1.5 million and $484,000, respectively, in general and administrative.
 
(3)   For the year ended December 31, 2007, adjustments reflects the reversal of $6.6 million in expenses incurred in connection with the Company’s voluntary review of historical stock option grant procedures and related accounting

 

 

    and the reversal of $758,000 in expenses incurred associated with the Company’s new corporate headquarters while in the process of completing tenant improvements. For the year ended December 31, 2006, adjustments reflect the reversal of $1.6 million in benefit costs associated with the retirement of the Company’s Chief Executive Officer.
 
(4)   For the years ended December 31, 2007 and 2006, adjustments reflect the reversal of $148,000 and $(902,000), respectively, in adjustments associated with the Company’s restructuring and excess facilities accrual.
 
(5)   For the year ended December 31, 2007, adjustment reflects the reversal of recoveries from amounts of $472,000 held in escrow related to the settlement of certain claims associated with the acquisition of Scrittura, Inc.
 
(6)   For the years ended December 31, 2007 and 2006, adjustments reflect an additional tax provision of $15.1 million and $7.8 million, respectively, associated with the non-GAAP adjustments. For the year ended December 31, 2007, net income in accordance with GAAP includes a tax benefit of approximately $4.2 million resulting from the reversal of a portion of the Company’s valuation allowance against its deferred tax assets.