Date of Report (Date of Earliest Event Reported):
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May 1, 2012
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Kenexa Corporation
(Exact Name of Issuer as Specified in Charter)
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Pennsylvania
(State or Other Jurisdiction of Incorporation or Organization)
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000-51358
(Commission File Number)
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23-3024013
(I.R.S. Employer Identification Number)
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650 East Swedesford Road, Wayne, Pennsylvania
(Address of Principal Executive Offices)
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19087
(Zip Code)
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(610) 971-9171
(Registrant’s Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
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[ ]
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
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[ ]
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
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Exhibit No.
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Description
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99.1
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Press Release, entitled “Kenexa Announces Financial Results for First Quarter 2012,” issued by the company on May 1, 2012.
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99.2 | Kenexa First Quarter Results Conference Call Script: May 1, 2012. |
KENEXA CORPORATION
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Date: May 3, 2012
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By:
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/s/ Donald F. Volk
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Donald F. Volk
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Chief Financial Officer
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Exhibit No.
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Description
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99.1
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Press Release, entitled “Kenexa Announces Financial Results for First Quarter 2012,” issued by the company on May 1, 2012.
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99.2 | Kenexa First Quarter Results Conference Call Script: May 1, 2012. |
·
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Kenexa, in collaboration with Capita plc, signed a contract to work in partnership to deliver the Recruitment Partnering Project (RPP) for the United Kingdom’s Ministry of Defense. Kenexa is providing the recruitment technology and assessment solutions to Capita in delivery of this project, which is responsible for the entire process of attracting and recruiting soldiers and officers to the Regular and Territorial British Army.
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·
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More than 70 “preferred partner” customers were added during the first quarter (defined as customers that spend more than $50,000 annually), an increase from the over 50 preferred partner customer additions in the year ago period.
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·
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The average annualized revenue from the company’s top 80 customers, or P-cubed metric, was greater than $1.8 million in the first quarter of 2012, an increase from the over $1.4 million level in the first quarter of 2011.
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·
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Kenexa announced a partnership with Daesign, a specialist provider of games-based simulated environments and Autonomous Virtual Actors to develop talent attraction, assessment, development and engagement solutions for the marketplace.
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·
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Kenexa was chosen as a Top Recruitment Technology Provider, being honored at the Pentagon by the Military Spouse Corporate Career Network (MSCCN) for its partnership to provide a recruitment technology platform that helps veterans, their spouses and family members identify and obtain new employment.
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Mark Derowitsch
Kenexa
(402) 419-5216
mark.derowitsch@kenexa.com
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March 31,
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December 31,
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|||||||
2012
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2011
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(unaudited)
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||||||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 66,690 | $ | 67,459 | ||||
Short-term investments
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16,332 | 51,807 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $2,832 and $3,045
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60,584 | 52,664 | ||||||
Unbilled receivables
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4,026 | 3,385 | ||||||
Income tax receivable
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29 | 196 | ||||||
Deferred income taxes
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5,763 | 5,477 | ||||||
Prepaid expenses and other current assets
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10,864 | 9,555 | ||||||
Total current assets
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164,288 | 190,543 | ||||||
Long-term investments
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- | 9,710 | ||||||
Property and equipment, net
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19,686 | 18,632 | ||||||
Software, net
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28,596 | 27,179 | ||||||
Goodwill
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75,001 | 43,265 | ||||||
Intangible assets, net
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89,738 | 73,074 | ||||||
Deferred income taxes, non-current
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25,383 | 35,092 | ||||||
Deferred financing costs, net
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301 | 354 | ||||||
Other long-term assets
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7,941 | 7,795 | ||||||
Total assets
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$ | 410,934 | $ | 405,644 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$ | 10,492 | $ | 7,909 | ||||
Notes payable, current
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11 | 11 | ||||||
Term loan, current
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5,000 | 5,000 | ||||||
Commissions payable
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3,972 | 3,673 | ||||||
Accrued compensation and benefits
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12,360 | 18,061 | ||||||
Other accrued liabilities
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15,318 | 13,970 | ||||||
Deferred revenue
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90,445 | 81,795 | ||||||
Capital lease obligations
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237 | 282 | ||||||
Total current liabilities
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137,835 | 130,701 | ||||||
Revolving credit line and term loan
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23,750 | 25,000 | ||||||
Capital lease obligations, less current portion
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25 | 218 | ||||||
Deferred revenue, less current portion
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6,106 | 7,042 | ||||||
Deferred income taxes
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1,526 | 1,823 | ||||||
Other long-term liabilities
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5,538 | 5,330 | ||||||
Total liabilities
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174,780 | 170,114 | ||||||
Commitments and Contingencies
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Temporary equity
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Noncontrolling interest
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4,828 | 4,990 | ||||||
Shareholders' equity
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Preferred stock, $0.01 par value; authorized 10,000,000 shares; issued and outstanding: none
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- | - | ||||||
Common stock, par value $0.01; authorized 100,000,000 shares; shares issued and outstanding: 27,295,336 and 27,124,276, respectively
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273 | 271 | ||||||
Additional paid-in capital
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388,001 | 385,511 | ||||||
Accumulated deficit
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(151,829 | ) | (149,376 | ) | ||||
Accumulated other comprehensive loss
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(5,119 | ) | (5,866 | ) | ||||
Total shareholders' equity
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231,326 | 230,540 | ||||||
Total liabilities and shareholders' equity
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$ | 410,934 | $ | 405,644 | ||||
Kenexa Corporation and Subsidiaries
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Consolidated Statements of Operations
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(In thousands, except share and per share data)
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Three Months Ended
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March 31,
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2012
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2011
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(unaudited)
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Revenue:
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Subscription
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$ | 55,336 | $ | 46,203 | ||||
Other
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22,466 | 13,775 | ||||||
Total revenues
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77,802 | 59,978 | ||||||
Cost of revenues
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32,269 | 23,345 | ||||||
Gross profit
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45,533 | 36,633 | ||||||
Operating expenses:
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Sales and marketing
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17,533 | 14,275 | ||||||
General and administrative
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14,067 | 12,748 | ||||||
Research and development
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6,432 | 4,445 | ||||||
Depreciation and amortization
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10,523 | 7,918 | ||||||
Total operating expenses
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48,555 | 39,386 | ||||||
Loss from operations
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(3,022 | ) | (2,753 | ) | ||||
Interest expense, net
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(284 | ) | (440 | ) | ||||
Loss before income taxes
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(3,306 | ) | (3,193 | ) | ||||
Income tax benefit
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668 | 26 | ||||||
Net loss
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$ | (2,638 | ) | $ | (3,167 | ) | ||
Loss allocated to noncontrolling interest
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184 | - | ||||||
Net loss allocable to common shareholders'
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$ | (2,454 | ) | $ | (3,167 | ) | ||
Basic and diluted net loss per share
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$ | (0.09 | ) | $ | (0.14 | ) | ||
Weighted average common shares - basic & diluted
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27,180,819 | 23,042,809 | ||||||
Reconciliation of GAAP to Non-GAAP Financial Measures
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(Unaudited and in thousands, except for per share amounts)
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Three Months Ended
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March 31,
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2012
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2011
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(unaudited)
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(unaudited)
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Revenue and Gross Profit:
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GAAP subscription revenue
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$ | 55,336 | $ | 46,203 | ||||
Deferred revenue associated with acquisitions
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2,274 | 2,986 | ||||||
Non-GAAP subscription revenue
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57,610 | 49,189 | ||||||
Other revenue
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22,466 | 13,775 | ||||||
Non-GAAP revenue
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$ | 80,076 | $ | 62,964 | ||||
GAAP cost of revenues
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$ | 32,269 | $ | 23,345 | ||||
Share-based compensation expense
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85 | 46 | ||||||
Cost of revenue adjustment
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85 | 46 | ||||||
Non-GAAP gross profit
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$ | 47,892 | $ | 39,665 | ||||
Expenses:
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GAAP operating expenses
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$ | 48,555 | $ | 39,386 | ||||
Share-based compensation expense
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(1,832 | ) | (1,081 | ) | ||||
Amortization of acquired intangibles
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(5,378 | ) | (3,531 | ) | ||||
Acquisition-related fees
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(290 | ) | (83 | ) | ||||
Total operating expense adjustment
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(7,500 | ) | (4,695 | ) | ||||
Non-GAAP operating expenses
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$ | 41,055 | $ | 34,691 | ||||
Results:
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GAAP loss from operations
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$ | (3,022 | ) | $ | (2,753 | ) | ||
Deferred revenue associated with acquisitions
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2,274 | 2,986 | ||||||
Cost of revenue adjustment
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85 | 46 | ||||||
Operating expense adjustment
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7,500 | 4,695 | ||||||
Non-GAAP income from operations
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$ | 6,837 | $ | 4,974 | ||||
GAAP net loss allocable to common shareholders'
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$ | (2,454 | ) | $ | (3,167 | ) | ||
Deferred revenue associated with acquisitions
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2,274 | 2,986 | ||||||
Cost of revenue adjustment
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85 | 46 | ||||||
Operating expense adjustment
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7,500 | 4,695 | ||||||
Non-GAAP net income allocated to common shareholders'
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$ | 7,405 | $ | 4,560 | ||||
Non-GAAP estimated income tax adjustment
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(2,015 | ) | (866 | ) | ||||
Non-GAAP net income allocated to common shareholders
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$ | 5,390 | $ | 3,694 | ||||
GAAP basic net loss per share
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$ | (0.09 | ) | $ | (0.14 | ) | ||
Non-GAAP basic net income per share
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$ | 0.20 | $ | 0.16 | ||||
GAAP diluted net loss per share
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$ | (0.09 | ) | $ | (0.14 | ) | ||
Non-GAAP diluted net income per share
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$ | 0.19 | $ | 0.15 | ||||
Weighted average shares - basic
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27,180,819 | 23,042,809 | ||||||
Dilutive effect of options and restricted stock
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951,210 | 1,019,169 | ||||||
Weighted average shares - diluted
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28,132,029 | 24,061,978 | ||||||
Three Months Ended
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March 31,
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2012 | 2011 | |||||||
Classification of non-GAAP measures:
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(unaudited)
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(unaudited)
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Gross profit
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$ | 45,533 | $ | 36,633 | ||||
Add: share-based compensation expense
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85 | 46 | ||||||
Add: deferred revenue associated with acquisitions
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2,274 | 2,986 | ||||||
Non-GAAP gross profit
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$ | 47,892 | $ | 39,665 | ||||
Sales and marketing
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$ | 17,533 | $ | 14,275 | ||||
Less: share-based compensation expense
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(291 | ) | (153 | ) | ||||
Less: acquisition-related fees
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- | (2 | ) | |||||
Non-GAAP sales and marketing
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$ | 17,242 | $ | 14,120 | ||||
General and administrative
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$ | 14,067 | 12,748 | |||||
Less: share-based compensation expense
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(1,408 | ) | (837 | ) | ||||
Less: acquisition-related fees
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(290 | ) | (81 | ) | ||||
Non-GAAP general and administrative
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$ | 12,369 | $ | 11,830 | ||||
Research and development
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$ | 6,432 | $ | 4,445 | ||||
Less: share-based compensation expense
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(133 | ) | (91 | ) | ||||
Non-GAAP research and development
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$ | 6,299 | $ | 4,354 | ||||
Kenexa Corporation and Subsidiaries
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Consolidated Statements of Cash Flows
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(in thousands)
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Three months ended
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March 31,
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2012
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2011
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(unaudited)
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Cash flows from operating activities
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Net loss from operations
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$ | (2,638 | ) | $ | (3,167 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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10,523 | 7,918 | ||||||
Amortization of bond premium
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366 | - | ||||||
Realized loss on available-for-sale securities
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19 | - | ||||||
Share-based compensation expense
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1,917 | 1,127 | ||||||
Amortization of deferred financing costs
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53 | 53 | ||||||
Bad debt (recoveries) expense, net
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(486 | ) | 248 | |||||
Deferred income tax benefit
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(713 | ) | (270 | ) | ||||
Changes in assets and liabilities, net of business combinations
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Accounts and unbilled receivables
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(4,019 | ) | (6,339 | ) | ||||
Prepaid expenses and other current assets
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(1,028 | ) | 202 | |||||
Income taxes receivable
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193 | 17 | ||||||
Other long-term assets
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269 | 1,265 | ||||||
Accounts payable
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1,730 | (70 | ) | |||||
Accrued compensation and other accrued liabilities
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(7,410 | ) | (5,595 | ) | ||||
Commissions payable
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159 | (389 | ) | |||||
Deferred revenue
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3,222 | 5,690 | ||||||
Other liabilities
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(441 | ) | (89 | ) | ||||
Net cash provided by operating activities
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1,716 | 601 | ||||||
Cash flows from investing activities
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Capitalized software and purchases of property and equipment
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(7,135 | ) | (6,593 | ) | ||||
Purchases of available-for-sale securities
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(1,469 | ) | - | |||||
Sales of available-for-sale securities
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46,270 | - | ||||||
Acquisitions and variable interest entity, net of cash acquired
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(41,101 | ) | (9,682 | ) | ||||
Net cash used in investing activities
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(3,435 | ) | (16,275 | ) | ||||
Cash flows from financing activities
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Borrowings under revolving credit line and term loan
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- | 3,000 | ||||||
Repayments under revolving credit line and term loan
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(1,250 | ) | (25,750 | ) | ||||
Repayments of notes payable
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(74 | ) | (87 | ) | ||||
Repayments of capital lease obligations
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(237 | ) | (282 | ) | ||||
Proceeds from common stock issued through Employee Stock Purchase Plan
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161 | 108 | ||||||
Shares authorized, but not issued, to settle employees withholding liability
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(72 | ) | - | |||||
Net proceeds from option exercises
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2,014 | 5,479 | ||||||
Net cash provided by (used in) financing activities
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542 | (17,532 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents
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408 | 408 | ||||||
Net decrease in cash and cash equivalents
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(769 | ) | (32,798 | ) | ||||
Cash and cash equivalents at beginning of year
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67,459 | 52,455 | ||||||
Cash and cash equivalents at end of year
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$ | 66,690 | $ | 19,657 | ||||
Supplemental disclosures of cash flow information
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Cash paid during the period for:
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Interest expense
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$ | 290 | $ | 397 | ||||
Income taxes
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$ | 1,028 | $ | 1,009 | ||||
Income taxes refunded
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$ | 204 | $ | - | ||||
Noncash investing and financing activities
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Capital lease obligations incurred
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$ | - | $ | 568 | ||||
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each is a multi-million dollar engagement
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-
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each was based on the strength of our technology alone,
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and each was for multiple solutions, with the core solution being our applicant tracking system, and complementary solutions including our assessments, competencies, interviewing and onboarding modules.
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·
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Cost of revenue, $32.3 million
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·
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Sales and marketing, $17.5 million
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·
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R&D, $6.4 million, and
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·
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G&A, $14.1 million
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