0001136261-12-000579.txt : 20121105 0001136261-12-000579.hdr.sgml : 20121105 20121105161333 ACCESSION NUMBER: 0001136261-12-000579 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20121105 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20121105 DATE AS OF CHANGE: 20121105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICESOURCE INTERNATIONAL, INC. CENTRAL INDEX KEY: 0001310114 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35108 FILM NUMBER: 121180205 BUSINESS ADDRESS: STREET 1: 634 SECOND STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94107 BUSINESS PHONE: 4159016030 MAIL ADDRESS: STREET 1: 634 SECOND STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94107 FORMER COMPANY: FORMER CONFORMED NAME: SERVICESOURCE INTERNATIONAL LLC DATE OF NAME CHANGE: 20041129 8-K 1 body8k.htm 8-K _


PDF as a courtesy

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

________________

FORM 8-K

________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 5, 2012

________________

ServiceSource International, Inc.
(Exact name of Registrant as specified in its charter)

________________

         

Delaware

 

001-35108

 

81-0578975

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

634 Second Street
San Francisco, California 94107
(Address of principal executive offices, including zip code)

(415) 901-6030
(Registrant's telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report)

________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02 - Results of Operations and Financial Condition.

On November 5, 2012, ServiceSource International, Inc. issued a press release announcing its results for the quarter ended September 30, 2012. A copy of the press release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated by reference herein.

The information in this current report on Form 8-K and the exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1

  

Press release dated November 5, 2012

 

 

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 5, 2012

 

SERVICESOURCE INTERNATIONAL, INC.

By:

 

/s/ Paul D. Warenski           

Name:

 

Paul D. Warenski

Title:

 

Executive Vice President, General Counsel and Secretary

 

 

 

 

 


EXHIBIT INDEX

 

Exhibit
Number

 

Description

99.1

  

Press release dated November 5, 2012     PDF

     

 

 

 

 

 


EX-99.1 2 exh99-1.htm PRESS RELEASE _

ServiceSource Reports Third Quarter 2012 Financial Results

  • Reports revenue of $59.1 million, up 18% year-over-year
  • Achieves Adjusted EBITDA of $4.8 million, up 60% year-over-year and non-GAAP EPS of $0.02 per diluted share
  • Releases Renew OnDemand, the world's only cloud service application suite specially built to maximize recurring revenue

SAN FRANCISCO, November 5, 2012 - ServiceSource® (Nasdaq: SREV), the global leader in recurring revenue management, today announced financial results for the quarter ended September 30, 2012.

"During our third quarter, in the face of some challenging headwinds, we hit several key milestones, including strong new additions to ACV and expansions in our customer base, revenue at the high end of the range and outperformance on EBITDA. In addition, we released Renew OnDemand™, the industry's only purpose-built cloud application for maximizing recurring revenue," stated Mike Smerklo, Chairman and CEO of ServiceSource.

Revenue for the third quarter of fiscal 2012 was $59.1 million, an increase of 18% compared with $50.1 million in the third quarter last year.

Adjusted EBITDA for the quarter, which excludes stock-based compensation, was $4.8 million, compared with $3.0 million for the third quarter of 2011.

GAAP net loss for the third quarter of 2012 was $3.6 million or $0.05 per share, compared with a net loss of $2.8 million, or $0.04 per share, in the same period last year.

Non-GAAP net income for the third quarter of 2012, which excludes stock-based compensation and the amortization of internally-developed software, was $1.9 million, or $0.02 per diluted share. This represented an increase over the third quarter of 2011 non-GAAP net income of $1.1 million, or $0.01 per diluted share.

David Oppenheimer, CFO added, "While we continue to be encouraged by our execution around our core growth strategies, our positive long-term outlook is balanced in the near-term by challenges in converting ACV to revenue for a handful of new engagements, the timing of signing new ACV in the year and weakening economic conditions, which are adversely impacting certain customers in our portfolio. As a result, we are revising our guidance with respect to revenue growth for the fourth quarter and fiscal 2012."

Recent Business Highlights

  • ServiceSource released Renew OnDemand, the world's only cloud application suite built specifically to maximize recurring revenue.
  • The company signed new customers, Qualcomm and CCH, a Wolters Kluwer business, as well as expansion agreements with BMC, Google and Microsoft, among others.

  • The Company was named among the Top 500 Software Companies by Software Magazine, and Montclair Advisors listed ServiceSource as one of the 2012 Top 250 SaaS companies in the world.

Business Outlook

The Company provided the following commentary on its expected business outlook:

  • Fourth quarter 2012: The Company expects revenue for the fourth quarter of 2012 to be in the range of $62.0 to $64.0 million, adjusted EBITDA of approximately $3.0 to $4.0 million, GAAP net loss of $5.8 to $6.8 million and non-GAAP net loss per share to be between breakeven a penny and two cents.
  • Adjusted EBITDA and non-GAAP net income exclude stock-based compensation and amortization of internally-developed software. Non-GAAP earnings per share assume a tax rate of 40% and 80 million fully diluted shares outstanding.

  • Full year 2012: Based on fourth quarter outlook, the Company is revising its revenue guidance for 2012 to be $238.0 to $240.0 million. Revised 2012 adjusted EBITDA guidance is estimated to be $15.5 to $16.5 million, GAAP net loss of $47.5 to $48.5 million and non-GAAP net income per diluted share in the range of six to eight cents. The Company's guidance for GAAP net loss reflects the $33.1 million one-time, non-cash tax charge recorded in the second quarter of 2012. Adjusted EBITDA and non-GAAP net income exclude stock-based compensation, the one-time tax charge and amortization of internally-developed software. Non-GAAP earnings per share assume a tax rate of 40% and 79 million shares outstanding.

Quarterly Conference Call

ServiceSource will discuss its quarterly results today via teleconference at 1:30 p.m. Pacific Time. To access the call within the U.S., please dial (877) 293-5486, or outside the U.S. (914) 495-8592, at least five minutes prior to the start time. A live webcast of the call will also be available at http://ir.servicesource.com/events.cfm under the Events & Presentations menu. A replay of the webcast will also be available on the Company's website at http://ir.servicesource.com.

About ServiceSource International, Inc.

ServiceSource is the global leader in recurring revenue management. The world's most successful companies rely on us to maximize subscription, maintenance and support revenue; improve customer retention; and increase business predictability and insight. ServiceSource delivers results with Renew OnDemand™, the world's only cloud application built specifically to manage and grow recurring revenue, which can be combined with our industry-leading services and unique pay-for-performance model.


With over a decade of experience focused exclusively in growing recurring revenue, our services and applications are based on proven best practices and global benchmarks. The Company is headquartered in San Francisco, and has over $7 billion under management for customers in more than 150 countries and 40 languages.

ServiceSource, and any ServiceSource product or service names or logos mentioned above, are trademarks of ServiceSource International, Inc. All other trademarks used herein belong to their respective owners.

For more information on ServiceSource, visit http://www.servicesource.com. To connect with ServiceSource, visit us on Twitter, Facebook, LinkedIn and YouTube.

Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding ServiceSource's future expected financial results, including its positive long-term outlook, the timing and our ability to convert ACV into revenue, our ability to improve the renewal rates of our customers, economic conditions and their impact on our customers, and the availability of our Renew OnDemand platform and its expected economic impact. These forward-looking statements are based on our current assumptions and beliefs, and involve risks and uncertainties that could cause our results to differ materially from those expressed or implied in our forward-looking statements. Those risks and uncertainties include, without limitation, changes in market conditions that impact our ability to generate service revenue on our customers' behalf; errors in estimates as to the service revenue we can generate for our customers; risks associated with material defects or errors in our software or the effect of data security breaches; our ability to effectively sell and implement our Renew OnDemand platform without significant disruptions to our customer base; our ability to adapt our solution to changes in the market or new competition; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our periodic reports and registration statements filed with the Securities and Exchange Commission, and can be obtained online at the Commission's website at http://www.sec.gov. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements.


The following tables reconcile (i) the business outlook net income (loss) to adjusted EBITDA; (ii) the business outlook net income (loss) to non-GAAP net income; and (iii) the business outlook net income (loss) per share to non-GAAP diluted earnings per share for the fourth quarter and full fiscal year.

Business Outlook
Reconcilation of Net Income (Loss) to Adjusted EBITDA
($ in thousands, except per share amounts)
                       
          Three Months Ended   Twelve Month Ended
          December 31, 2012   December 31, 2012
               
                       
GAAP Net income (loss) range         $ (6,800) -- $ (5,800)   $ (48,500) -- $ (47,500)
Income tax (benefit) / expense             250        31,800 
Interest & other expense, net             50        350 
Depreciation & Amortization             3,500        10,600 
EBITDA range         $ (3,000) -- $ (2,000)   $ (5,750) -- $ (4,750)
Stock-based compensation             6,000        21,250 
Adjusted EBITDA Range         $ 3,000  -- $ 4,000    $ 15,500  -- $ 16,500 
                       
                       
GAAP to Non-GAAP Reconcillation                      
                       
                       
GAAP net income (loss) range         $ (6,800) -- $ (5,800)   $ (48,500) -- $ (47,500)
Non-GAAP adjustments:                      
Stock-based compensation             6,000        21,250 
Amortization of internally-developed software             1,450        3,500 
Income tax effect on non-GAAP adjustments and                       
     impact of normalizing the effective income tax rate         290    (110)   28,980    28,580 
Non-GAAP net income         $ 940  -- $ 1,540    $ 5,230  -- $ 5,830 
                       
                       
GAAP diluted net income (loss) per share         $ (0.09) --  $ (0.07)   $ (0.61) -- $ (0.60)
Non-GAAP adjustments:                      
Stock-based compensation             0.08        0.27 
Amortization of internally-developed software             0.02        0.04 
Income tax effect on non-GAAP adjustments and                       
     impact of normalizing the effective income tax rate             0.00        0.36 
Non-GAAP diluted net income per share         $ 0.01  --  $ 0.02    $ 0.06  --  $ 0.08 
                       
Shares used in calculating diluted net income per                      
share on a non-GAAP basis              80,000        79,000 

ServiceSource International, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                   
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2012   2011   2012   2011
                   
Net revenue     $ 59,090    $ 50,088    $ 176,358    $ 144,722 
Cost of revenue (1)     34,544    28,034    101,002    82,399 
Gross profit     24,546    22,054    75,356    62,323 
Operating expenses                  
     Sales and marketing (1)     13,512    12,144    41,158    34,664 
     Research and development (1)     4,416    3,547    13,295    9,650 
     General and administrative (1)     10,000    8,969    30,639    24,692 
Total operating expenses     27,928    24,660    85,092    69,006 
Loss from operations     (3,382)   (2,606)   (9,736)   (6,683)
Interest expense     (70)   (27)   (180)   (349)
Other income (expense), net     190    309    (124)   (662)
Loss before income taxes     (3,262)   (2,324)   (10,040)   (7,694)
Income tax provision (benefit)     322    501    31,589    (21,152)
Net income (loss)     $ (3,584)   $ (2,825)   $ (41,629)   $ 13,458 
                   
Net income (loss) per common share:                  
     Basic     $ (0.05)   $ (0.04)   $ (0.56)   $ 0.21 
     Diluted     $ (0.05)   $ (0.04)   $ (0.56)   $ 0.19 
                   
Weighted-average shares used in computing net income                   
(loss) per common share:                  
     Basic     74,667    69,464    73,994    69,989 
     Diluted     74,667    69,464    73,994    72,208 
                   
(1) Includes stock-based compensation expense as follows:                  
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2012   2011   2012   2011
Cost of revenue     $    763    $    470    $ 2,050    $ 1,286 
Sales and marketing     2,180    1,111    5,836    2,981 
Research and development     562    327    1,455    864 
General and administrative     2,148    1,060    5,919    2,973 
Total stock-based compensation     $ 5,653    $ 2,968    $ 15,260    $ 8,104 


ServiceSource International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
         
    September 30,   December 31,
    2012   2011
Assets        
Current assets:        
     Cash and cash equivalents   $ 110,277    $ 65,983 
     Short-term investments   -     42,882 
     Accounts receivable, net   58,506    54,095 
     Current portion of deferred income taxes   363    3,526 
     Prepaid expenses and other   6,965    7,945 
Total current assets   176,111    174,431 
Property and equipment, net   35,332    26,840 
Deferred income taxes, net of current portion   1,496    30,238 
Other assets, net   1,193    1,118 
Goodwill   6,334    6,334 
Total assets   $ 220,466    $ 238,961 
         
Liabilities and Stockholders' Equity        
Current liabilities:        
     Accounts payable   $ 5,577    $ 8,617 
     Accrued taxes   1,026    924 
     Accrued compensation and benefits   16,775    21,749 
     Other accrued liabilities (including deferred revenue
     of $2,815 and $593 at September 30, 2012
     and December 31, 2011, respectively)
  9,237    7,639 
Current portion of capital lease obligations   733    706 
Total current liabilities   33,348    39,635 
Long-term obligations   6,060    2,310 
Total liabilities   39,408    41,945 
Stockholders' equity:        
     Common stock    
     Treasury stock   (441)   (441)
     Additional paid-in capital   203,667    177,796 
     Retained earnings (accumulated deficit)   (22,213)   19,416 
     Accumulated other comprehensive income   37    238 
Total stockholders' equity   181,058    197,016 
Total liabilities and stockholders' equity   $ 220,466    $ 238,961 


ServiceSource International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
      Nine Months Ended
      September 30,
      2012   2011
Cash flows from operating activities          
Net income (loss)     $ (41,629)   $ 13,458 
     Adjustments to reconcile net income (loss) to net           
          cash used in operating activities:          
          Depreciation and amortization     7,092    7,109 
          Loss on disposal of fixed assets     -     46 
          Amortization of deferred financing costs     135    325 
          Accretion on premium on short-term investments     577    87 
          Deferred income taxes     32,534    (22,229)
          Stock-based compensation     15,260    8,104 
          Tax benefit from stock-based compensation     (266)   (2,382)
     Changes in operating assets and liabilities:          
          Accounts receivable     (4,237)   6,433 
          Prepaid expenses and other     734    (2,169)
          Accounts payable     (1,087)   73 
          Accrued taxes     85    3,201 
          Accrued compensation and benefits     (5,094)   3,410 
          Accrued payables to customers     -     (30,640)
          Other accrued liabilities     5,050    789 
Net cash provided by (used in) operating activities     9,154    (14,385)
           
Cash flows from investing activities          
Acquisition of property and equipment     (17,049)   (8,784)
Purchases of short-term investments, net     (31,100)   (47,854)
Sales of marketable securities     52,050    961 
Maturities of marketable securities     21,415    1,000 
Net cash provided by (used in) investing activities     25,316    (54,677)
           
Cash flows from financing activities          
Net proceeds from issuance of common stock in initial public offering and follow-on offering     -     111,105 
Proceeds from revolving credit facility     -     23,424 
Repayment of revolving credit facility     -     (23,424)
Repayments of long-term debt and capital leases     (234)   (15,747)
Payments of deferred debt issuance costs     -     (200)
Proceeds from common stock issuances     10,279    7,198 
Tax benefit from stock-based compensation     266    2,382 
Net cash provided by financing activities     10,311    104,738 
           
Net increase (decrease) in cash and cash equivalents     44,781    35,676 
Effect of exchange rate changes on cash and cash equivalents     (487)   (35)
Cash and cash equivalents at beginning of period     65,983    22,652 
Cash and cash equivalents at end of period     $ 110,277    $ 58,293 
           
* Activity in 2011 resulted from $18.1 million in payments to Oracle/Sun and the related settlement of          
     accrued payables owed to Oracle/Sun and amounts owed to the Company by Oracle/Sun.          


Use of Non-GAAP Financial Measures

To supplement its financial statements presented in accordance with generally accepted accounting principles, or GAAP, ServiceSource also provides investors with non-GAAP gross profit, net income, net income per share and Adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the closest GAAP financial measure is presented in the financial tables below under the heading, "GAAP to Non-GAAP Reconciliation."

ServiceSource believes that the non-GAAP financial information provided in this release can assist investors in understanding and assessing its on-going core operations and prospects for the future and provides an additional tool for investors to use in comparing ServiceSource's financial results with other companies in the industry, many of which present similar non-GAAP financial measures to investors.

Non-GAAP gross profit consists of gross profit plus stock based compensation and amortization of internally-developed software.

Non-GAAP net income consists of net income (loss) plus stock-based compensation, amortization of internally-developed software and applying an income tax rate of 40% reflecting our estimated tax expense on our core operations. Accordingly, our non-GAAP calculation of net income has excluded a one-time, non-cash income tax charge of $33.1 million recorded during the period ended June 30, 2012 related to a valuation allowance for a substantial portion of the company's deferred tax assets. Results for the nine months ended September 30, 2011 reflect a one-time tax benefit related to the conversion of ServiceSource from a limited liability corporation to a Delaware corporation, which has also been excluded from the calculation of non-GAAP net income. Stock-based compensation expenses are expected to vary depending on the number of new grants issued, changes in the company's stock price, stock market volatility, expected option lives and risk-free rates of return, all of which are difficult to estimate.

EBITDA consists of net income (loss) plus depreciation and amortization, interest expense, other expenses, net, and income tax expense and a deduction for income tax benefit. Adjusted EBITDA consists of EBITDA plus non-cash, stock-based compensation expense. ServiceSource uses Adjusted EBITDA as a measure of operating performance because it assists the company in comparing performance on a consistent basis, as it removes from the operating results the impact of the company's capital structure.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States.

 


ServiceSource International, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(In thousands)
(Unaudited)
                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2012   2011   2012   2011
         
Net income (loss)   $ (3,584)   $ (2,825)   $ (41,629)   $ 13,458 
Income tax provision (benefit)   322    501    31,589    (21,152)
Interest expense   70    27    180    349 
Other income (expense), net   (190)   (309)   124    662 
Depreciation   2,504    2,621    7,092    7,109 
EBITDA   (878)   15    (2,644)   426 
Stock-based compensation   5,653    2,968    15,260    8,104 
Adjusted EBITDA   $ 4,775    $ 2,983    $ 12,616    $ 8,530 

 

 

 

 

 


ServiceSource International, Inc.
GAAP To Non-GAAP Reconciliation
(Dollars in thousands, except per share amounts)
(unaudited)
                       
        Three Months Ended   Nine Months Ended
        September 30,   September 30,
        2012   2011   2012   2011
Gross Profit                
     GAAP gross profit   $ 24,546    $ 22,054    $ 75,356    $ 62,323 
     Non-GAAP adjustments:                
          Stock-based compensation       ( A ) 763    470    2,050    1,286 
          Amortization of internally-developed software       ( B ) 432    389    890    1,196 
     Non-GAAP gross profit         $ 25,741    $ 22,913    $ 78,296    $ 64,805 
                       
Gross Profit %                      
     GAAP gross profit         42%   44%   43%   43%
     Non-GAAP adjustments:                      
          Stock-based compensation       ( A ) 1%   1%   1%   1%
          Amortization of internally-developed software       ( B ) 1%   1%   1%   1%
     Non-GAAP gross profit         44%   46%   44%   45%
Certain totals do not add due to rounding                      
Operating Expenses                      
GAAP operating expenses         $ 27,928    $ 24,660    $ 85,092    $ 69,006 
Stock-based compensation       ( A ) (4,890)   (2,498)   (13,210)   (6,818)
Amortization of internally-developed software       ( B ) (355)   (789)   (1,167)   (1,922)
Non-GAAP operating expenses         $ 22,683    $ 21,373    $ 70,715    $ 60,266 
                       
Net Income (Loss)                      
     GAAP net income (loss)         $ (3,584)   $ (2,825)   $ (41,629)   $ 13,458 
     Non-GAAP adjustments:                      
          Stock-based compensation       ( A ) 5,653    2,968    15,260    8,104 
          Amortization of internally-developed software       ( B ) 787    1,178    2,057    3,118 
          One-time tax items       ( C ) -     -     33,072    (21,417)
          Income tax effect on non-GAAP adjustments and                       
          impact of normalizing the effective income tax rate       ( D ) (949)   (228)   (4,394)   (1,147)
     Non-GAAP net income          $ 1,907    $ 1,093    $ 4,366    $ 2,116 
                       
Diluted Net Income (Loss) Per Share                      
     GAAP diluted net income (loss) per share          $ (0.05)   $ (0.04)   $ (0.56)   $ 0.19 
     Non-GAAP adjustments:                      
          Stock-based compensation       ( A ) 0.07    0.04    0.20    0.11 
          Amortization of internally-developed software       ( B ) 0.01    0.01    0.03    0.04 
          One-time tax items       ( C ) -     -     0.42    (0.30)
          Income tax effect on non-GAAP adjustments and                       
          impact of normalizing the effective income tax rate       ( D ) (0.01)   0.00    (0.06)   (0.01)
     Non-GAAP diluted net income per share          $ 0.02    $ 0.01    $ 0.03    $ 0.03 
Shares used in calculating diluted net income per share on a non-GAAP basis         79,859    77,093    78,220    72,208 


Footnotes to GAAP to Non-GAAP Reconciliation

( A )

Stock-based compensation. Included in our GAAP presentation of cost of revenue and operating expenses, stock-based compensation consists of expenses for stock options and awards and purchase rights under our stock purchase plan. We exclude stock-based compensation expense from our non-GAAP measures because some investors may view it as not reflective of our core operating performance as it is a non-cash expense.

( B )

Amortization of internally-developed software. Included in our GAAP presentation of cost of revenue and operating expenses, amortization of internally-developed software reflects non-cash expense for certain software purchases and software developed or obtained for internal use. We exclude these expenses from our non-GAAP measures because we believe they are not indicative of our core operating performance.

( C )

One-time tax items. We elected to be treated as a corporation under Subchapter C of Chapter 1 of the United States Internal Revenue Code, effective March 1, 2011, and therefore became subject to federal and state tax expense beginning March 1, 2011. As a result of this tax election, we recorded a net deferred tax asset and a one-time non-cash tax benefit of $21.4 million in the first quarter of 2011. During the second quarter of 2012, we recorded a $33.1 million non-cash charge against a substantial portion of our deferred tax assets, much of which was recorded in connection with electing to be treated as a corporation, because the recoverability of these items for financial reporting purposes is uncertain. We have excluded these items from our non-GAAP measures because they are non-recurring and unique, they are non-cash in nature and are not indicative of our core operating performance.

( D )

Income tax effect on non-GAAP adjustments and impact of normalizing the effective income tax rate. This adjusts the provision for income taxes to reflect the effect of the non-GAAP items A, B and C noted above on our non-GAAP net income and adjusts the income tax rate to a normalized effective tax rate of 40%.

 

 

 


ServiceSource International, Inc.  
Revenue by Segment  
(In thousands)  
(unaudited)  
                   
    Three Months Ended September 30,  
    2012   2011  
        % of       % of  
    $   Revenue   $   Revenue  
                   
NALA   $ 37,647    64%    $ 31,952    64%   
EMEA   14,159    24%    12,365    25%   
APJ   7,284    12%    5,771    11%   
    $ 59,090    100%    $ 50,088    100%   
                   
                   
    Nine Months Ended September 30,  
    2012   2011  
        % of       % of  
    $   Revenue   $   Revenue  
     
NALA   $ 110,720    63%    $ 88,383    61%   
EMEA   45,425    26%    41,612    29%   
APJ   20,213    11%    14,727    10%   
    $ 176,358    100%    $ 144,722    100%   

Investor Relations Contact for ServiceSource:

Mike Magaro
ServiceSource International, Inc.
(415) 901-1168
mmagaro@servicesource.com

 

 

 


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