EX-99.1 2 exhibit991q32016.htm EXHIBIT 99.1 Q3 FY 16 8-K
NEWS RELEASE
26533 Evergreen Rd., Suite 500 • Southfield, Michigan 48076
(800) 229-4125

For Immediate Release     
February 4, 2016
    


Covisint Corporation Announces Third Quarter Fiscal 2016 Financial Results


DETROIT - February 4, 2016 -- Covisint Corporation (Nasdaq: COVS), the leading Cloud Platform for building Identity and Access Management (IAM) and Internet of Things (IoT) solutions, today announced financial results for the third quarter of fiscal 2016, which ended December 31, 2015.

"While Covisint’s total revenue for the quarter was in line with our expectations, we are disappointed with our results for subscription revenue. I remain confident that the steps we are taking are the right ones, however, results from the transition we embarked upon last year are taking longer to materialize,” said Covisint Chairman and CEO, Sam Inman. “We continue to make excellent progress in other areas of the business. In particular, we have made much more progress in a shorter period of time than we expected in enhancing the Covisint Cloud platform. We are also pleased with the progress we have made in redefining our brand and positioning our company in the marketplace.”

Third Quarter Fiscal 2016 Financial Highlights

Revenue
•
Total revenue was $19.2 million, a decrease of 12% compared to $21.8 million in the prior year period.
•
Subscription revenue was $15.3 million, a decrease of 3% compared to $15.7 million in the prior year period. Subscription revenue increased 9% excluding subscription revenue related to exited business.
•
Services revenue was $3.9 million, a decrease of 36% compared to $6.1 million in the prior year period. The decline is primarily attributable to the Company’s stated strategy to shift this business to certified service partners.

Profitability
•
GAAP gross margin was 54%, compared to 54% in the prior fiscal quarter and 34% in the prior year period.
•
Non-GAAP gross margin was 58%, compared to 59% in the prior fiscal quarter and 42% in the prior year period.




•
GAAP net loss was $4.1 million or ($0.10) per diluted share, compared to net loss of $7.0 million or ($0.18) per diluted share in the prior year.
•
Non-GAAP net loss was $3.8 million or ($0.09) per diluted share, compared to net loss of $4.3 million or ($0.11) per diluted share in the prior year.


Balance Sheet
•
The Company had $37.6 million in cash, cash equivalents at December 31, 2015, compared with $41.7 million at September 30, 2015.

Third Quarter Fiscal 2016 Business Highlights

•
Selected by a leading European Automotive OEM as their global standard for identity management. Through this new five-year, non-cancellable agreement, this customer will use Covisint's cloud identity management services as the core technology behind their digital transformation initiative, enabling faster and more secure information exchange across their ecosystem of over 100,000 people, systems and things.
•
Chief Security Officer, David Miller presented on securing the Internet of Things at Gartner Symposium/ITExpo. During the session titled “Simply Securing the IoT as Connectivity Complexity Continues to Mount”, Miller discussed how leveraging a secure cloud platform unlocks the value of IoT for complex, connected product initiatives.
•
Spoke on securing the connection between the cloud and car at the Connected Mobility Summit. The session addressed the security and privacy challenges to be expected as vehicles become part of the Internet of Things. Additionally, visitors were able to see live demonstrations on how the Covisint platform has enabled Hyundai’s Blue Link system in a Hyundai Sonata Eco.


Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), Covisint monitors non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Each of these financial measures excludes the impact of certain items (the impact of stock award compensation




expense, the amortization and impairment of intangible assets and amounts incurred for capitalized internal software costs) and, therefore, has not been calculated in accordance with GAAP.

Covisint monitors these non-GAAP measures to evaluate its ongoing operational performance and enhance an overall understanding of its past financial performance. Covisint believes that these non-GAAP metrics help illustrate underlying trends in its business that could otherwise be masked by the effect of the expenses that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Furthermore, Covisint uses these measures to establish budgets and operational goals for managing its business and evaluating its performance. Covisint also believes that these non-GAAP measures provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods against other companies in its industry.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors.

Conference Call and Webcast Information

Covisint management will hold a conference call at 5:00 p.m. (Eastern time) today to discuss these results. The U.S. toll free dial-in for the conference call is 1-877-407-4018, and the international dial-in number is 1-201-689-8471. No passcode is required. A live webcast of the conference call will also be available on the company's website at investors.covisint.com.

For those unable to participate in the conference call, a replay will be available after the conclusion of the earnings call on February 4, 2016, through February 11, 2016. The U.S. toll-free replay dial-in number is 1-877-870-5176 and the international replay dial-in number is 1-858-384-5517. The replay passcode is 13628057.

About Covisint Corporation





Covisint is the leading Cloud Platform for building Identity and Internet of Things (IoT) applications, and enables the identification, authorization and connection of complex networks of people, processes, systems and things.

Covisint's open, developer-friendly, enterprise-class Cloud Platform facilitates the rapid development and deployment of the Internet of Things (IoT), Identity Management (IdM) and Connected Supply Chain solutions - enabling customers to securely identify, authenticate and connect users, devices, applications and information. Covisint has been successfully operating globally at enterprise scale for more than 12 years. Today, the Covisint Platform enables more than 3,000 organizations to connect with more than 212,000 business partners and customers, and supports more than $4 billion in ecommerce transactions annually. Learn more at http://www.covisint.com/.

•
Covisint on Twitter
•
Covisint on LinkedIn
•
Covisint on Facebook

Forward-looking Statements

This press release contains forward-looking statements, including statements regarding Covisint's future financial performance, market growth, the demand for Covisint's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Covisint's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Covisint's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Covisint disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts; the extent we are able to maintain pricing with our customers at renewal; the continued growth of the market for our solutions; the success of our channel partner and certified partner strategies; competition from current competitors and new market entrants; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales for our solutions; and other risk and uncertainties. Further




information on potential factors that could affect actual results is included in Covisint's reports filed with the SEC.

Investor Relations Contact
866.319.7659
investors@covisint.com

Media Contact
Brad Schechter
Vice President, Corporate Marketing, Covisint
248.483.2097
bschecht@covisint.com

For Sales and Marketing Information
Covisint Corporation, 26533 Evergreen Road, Suite 500, Southfield, MI 48076, 800-229-4125
http://www.covisint.com





COVISINT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
 
December 31, 2015
 
March 31, 2015
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash

$37,615

 

$50,077

Accounts receivable, net
9,628

 
15,348

Deferred tax asset, net
41

 
16

Prepaid expenses
2,461

 
3,160

Other current assets
1,866

 
4,209

Total current assets
51,611

 
72,810

PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
8,642

 
8,809

CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET
10,600

 
10,646

OTHER:
 
 
 
Goodwill
25,385

 
25,385

Deferred costs
733

 
1,736

Deferred tax asset, net
1,350

 
1,528

Other assets
367

 
928

Total other assets
27,835

 
29,577

TOTAL ASSETS

$98,688

 

$121,842

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable

$5,038

 

$7,703

Accrued commissions
2,814

 
3,286

Deferred revenue
12,180

 
18,029

Accrued expenses
2,154

 
3,344

Deferred tax liability, net
1,495

 
1,597

    Total current liabilities
23,681

 
33,959

DEFERRED REVENUE
1,642

 
3,914

ACCRUED LIABILITIES AND OTHER
2,542

 
2,622

Total liabilities
27,865

 
40,495

COMMITMENTS AND CONTINGENCIES
 
 
 
 SHAREHOLDERS' EQUITY:
 
 
 
Common Stock
—

 
—

Additional paid-in capital
161,418

 
157,004

Retained deficit
(90,417
)
 
(75,633
)
Accumulated other comprehensive loss
(178
)
 
(24
)
Total shareholders' equity
70,823

 
81,347

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$98,688

 

$121,842











COVISINT CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
REVENUE

$19,162

 

$21,755

 

$56,037

 

$65,077

COST OF REVENUE
8,822

 
14,384

 
27,068


43,976

GROSS PROFIT
10,340

 
7,371

 
28,969

 
21,101

 
54
%
 
34
%
 
52
%
 
32
%
OPERATING EXPENSES:
 
 
 
 
 
 
 
Research and development
3,100

 
2,865

 
9,890


8,564

Sales and marketing
8,564

 
7,006

 
23,223


24,781

General and administrative
2,699

 
4,455

 
10,516


14,112

Total operating expenses
14,363

 
14,326

 
43,629

 
47,457

OPERATING LOSS
(4,023
)
 
(6,955
)
 
(14,660
)
 
(26,356
)
Other income (expense)
3

 
15

 
(28
)
 
54

LOSS BEFORE INCOME TAXES
(4,020
)
 
(6,940
)
 
(14,688
)
 
(26,302
)
INCOME TAX PROVISION
52

 
21

 
96

 
79

NET LOSS

($4,072
)
 

($6,961
)
 

($14,784
)
 

($26,381
)
 
 
 
 
 
 
 
 
DILUTED EPS COMPUTATION
 
 
 
 
 
 
 
Numerator: Net loss

($4,072
)
 

($6,961
)
 

($14,784
)
 

($26,381
)
Denominator:


 
 
 
 
 
 
  Weighted-average common shares outstanding
39,791

 
38,423

 
39,400

 
37,962

  Dilutive effect of stock awards
—

 
—

 
—

 
—

  Total shares
39,791

 
38,423

 
39,400

 
37,962

Diluted EPS

($0.10
)
 

($0.18
)
 

($0.38
)
 

($0.69
)
 

 

 
 
 
 






COVISINT CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(In Thousands, Except Per Share Data)
(Unaudited)
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
Gross profit

$10,340

 

$7,371

 

$28,969

 

$21,101

Gross profit %
54
%
 
34
%
 
52
%
 
32
%
Adjustments:
 
 
 
 
 
 
 
Stock compensation expense—cost of revenue
15

 
(1
)
 
68


583

% of total revenue
—
%
 
—
%
 
—
%
 
1
%
Cost of revenue—amortization of capitalized software
802

 
1,728

 
2,611


5,103

% of total revenue
4
%
 
8
%
 
5
%
 
8
%
Adjusted gross profit

$11,157

 

$9,098

 

$31,648

 

$26,787

Adjusted gross profit %
58
%
 
42
%
 
56
%
 
41
%
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
Cost of revenue

$8,822

 

$14,384

 

$27,068

 

$43,976

Adjustments:
 
 
 
 
 
 
 
Stock compensation expense
15

 
(1
)
 
68

 
583

Cost of revenue - amortization of capitalized software
802

 
1,728

 
2,611

 
5,103

 
 
 
 
 
 
 
 
Cost of revenue, non-GAAP

$8,005

 

$12,657

 

$24,389

 

$38,290

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
Research and development

$3,100

 

$2,865

 

$9,890

 

$8,564

Adjustments:
 
 
 
 
 
 
 
Capitalized internal software costs
(1,039
)
 
(869
)
 
(2,565
)
 
(2,298
)
Stock compensation expense
23

 
55

 
76

 
149

 
 
 
 
 
 
 
 
Research and development, non-GAAP

$4,116

 

$3,679

 

$12,379

 

$10,713

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
Sales and marketing

$8,564

 

$7,006

 

$23,223

 

$24,781

Adjustments:
 
 
 
 
 
 
 
Stock compensation expense
69

 
424

 
410

 
1,369

Amortization of customer relationship agreements
—

 
77

 
—

 
294

 
 
 
 
 
 
 
 
Sales and marketing, non-GAAP

$8,495

 

$6,505

 

$22,813

 

$23,118

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
General and administrative

$2,699

 

$4,455

 

$10,516

 

$14,112

Adjustments:
 
 
 
 
 
 
 
Stock compensation expense
410

 
1,221

 
1,785

 
3,470

 
 
 
 
 
 
 
 
General and administrative, non-GAAP

$2,289

 

$3,234

 

$8,731

 

$10,642

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
Net loss

($4,072
)
 

($6,961
)
 

($14,784
)
 

($26,381
)
Adjustments:
 
 
 
 
 
 
 
Capitalized internal software costs
(1,039
)
 
(869
)
 
(2,565
)
 
(2,298
)
Stock compensation expense
517

 
1,699

 
2,339

 
5,571

Amortization of capitalized software and other intangibles
802

 
1,805

 
2,611

 
5,397

Net loss, non-GAAP

($3,792
)
 

($4,326
)
 

($12,399
)
 

($17,711
)
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED DECEMBER 31,
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
 
2015
 
2014
Diluted EPS

($0.10
)
 

($0.18
)
 

($0.38
)
 

($0.69
)
Adjustments:

 

 
 
 
 
Capitalized internal software costs
(0.02
)
 
(0.02
)
 
(0.07
)
 
(0.06
)
Stock compensation expense
0.01

 
0.04

 
0.06

 
0.14

Amortization of capitalized software and other intangibles
0.02

 
0.05

 
0.07

 
0.14

Diluted EPS, non-GAAP

($0.09
)
 

($0.11
)
 

($0.32
)
 

($0.47
)






COVISINT CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
 
NINE MONTHS ENDED DECEMBER 31,
 
2015
 
2014
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
 
 
 
Net loss

($14,784
)
 

($26,381
)
Adjustments to reconcile net loss to cash provided by (used in) operations:
 
 
 
Depreciation and amortization
5,144

 
7,091

Deferred income taxes
64

 
(8
)
Stock award compensation
2,339

 
5,571

Net change in assets and liabilities, net of effects from currency fluctuations:
 
 
 
Accounts receivable
5,684

 
7,626

Other assets
4,611

 
2,713

Accounts payable and accrued expenses
(2,600
)
 
105

Deferred revenue
(8,101
)
 
(11,134
)
Net cash (used in) operating activities
(7,643
)
 
(14,417
)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
 
 
 
Purchase of:
 
 
 
Property and equipment
(3,772
)
 
(1,975
)
Capitalized software
(2,565
)
 
(2,298
)
Proceeds from asset disposals
33

 
—

Net cash (used in) investing activities
(6,304
)
 
(4,273
)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
 
 
 
Cash payments from former parent company
—

 
23,999

Cash payments to former parent company
—

 
(13,879
)
Vendor financing payments
(548
)
 
—

Net proceeds from exercise of stock awards
2,074

 
2,404

Net cash provided by financing activities
1,526

 
12,524

EFFECT OF EXCHANGE RATE CHANGES ON CASH
(41
)
 
(45
)
NET CHANGE IN CASH
(12,462
)
 
(6,211
)
CASH AT BEGINNING OF PERIOD
50,077

 
49,536

CASH AT END OF PERIOD

$37,615

 

$43,325