8/4/2016 1
Covisint Corporation
First Quarter Fiscal 2017 Results
August 4, 2016
This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the
assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements other than
statements of historical fact could be deemed forward-looking, including, but not limited to, any projections of financial information; any statements about
historical results that may suggest trends for our business and results of operations; any statements of the plans, strategies and objectives of management for
future operations; any statements of expectation or belief regarding future events, potential markets or market size, technology developments, or enforceability
of our intellectual property rights; and any statements of assumptions underlying any of the foregoing.
These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. Actual
results could differ materially from our current expectations as a result of many factors, including but not limited to: our ability to attract new customers; the
extent to which customers renew their contracts for our solutions; the extent we are able to maintain pricing with our customers at renewal; the seasonality of our
business; our ability to manage our growth; 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; our ability to penetrate new vertical markets; unpredictable macro-economic
conditions; the loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure
and costs associated with operating as a public company; and failure to protect our intellectual property. These and other risks and uncertainties associated with
our business are described in Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended June 30, 2016. We assume no obligation and
do not intend to update these forward-looking statements.
In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These historical and forward-looking non-GAAP measures
are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and
non-GAAP measures is included in the appendix to this presentation.
Covisint is a registered trademark of Covisint Corporation. This presentation also contains additional trademarks and service marks of ours and of other
companies. We do not intend our use or display of other companies’ trademarks or service marks to imply a relationship with, or endorsement or sponsorship of
us by, these other companies.
Forward Looking Statements
2
FY17 Priorities
3
• Drive Subscription Revenue Sales Growth
• Direct sales strategy focused on the automotive and auto-related sector
• Use cases include: Connected Vehicle, Consumer Experience, Dealer Intelligence Systems, Supply
Chain Enablement, Internet of Things, and Cloud Identity as a Service
• Large white space opportunity among major OEMs
• Enhanced development of additional strategic partnerships
• Manage Cash Position Through Strong Expense Management
• Targeted Investments in Marketing to Drive Awareness and Enablement
• Further develop standing and recognition with leading industry analysts in auto and technology
• Establish strong thought leadership cadence and awareness in areas of focus, including
Connected Transportation, Internet of Things, and Identity and Access Management
4
Q1 FY17: Financial Overview
Key Metrics ($ in thousands)
Guidance Summary
Highlights
• Cash at $42 million
• Non-GAAP Gross Margin improved from 52% to 58% year over
year
• Cash Flow better than plan
* Excludes the impact of stock compensation and the expensing of certain R&D costs (rather than capitalizing such costs), refer to the reconciliation of Q1 results on
slide 6 and the reconciliation of guidance on slide 7.
** Y/Y growth
FY17 Q2FY17
Subscription Revenue** Flat (5)%
15-20% of 15-20% of
Total Revenue Total Revenue
Non-GAAP Net Loss* $(11) – (12) mil $(4) – (5) mil
Cash on Hand (EOP) $30 mil $34 mil
Total Shares Outstanding 40.7 mil 40.5 mil
Services Revenue
Q1 FY 17 Y/Y Q/Q
Subscription Revenue $ 14,596 (7%) (15%)
Services Revenue $ 2,849 1% 2%
Total Revenue $ 17,445 (6%) (13%)
Q1 FY 17 Y/Y Q/Q
Gross Profit $ 9,225 6% (24%)
Gross Margin 53%
Stock Compensation Expense $ 5
Amortization of Capitalized Software $ 844
Non-GAAP Gross Profit* $ 10,074 5% (22%)
Non-GAAP Gross Margin 58%
Net Loss $ (5,003)
Stock Compensation Expense $ 491
Capitalized internal software costs $ (688)
Amortization of Capitalized Software $ 844
Non-GAAP Net Loss* $ (4,356)
Net Change in Cash $ 2,078
Net proceeds from exercise of stock awards $ (45)
Vendor Financing Repaym t $ 127
Effect of Exchange Rate Changes on Cash $ 43
Free Cash Flow $ 2,203
Appendix
6
Q1 FY17: Non-GAAP Reconciliation
($ in thousands, except per share)
Q1'FY17
General and administrative 3,208
Adjustments:
Stock compensation expense 433
General and administrative, non-GAAP 2,775
Q1'FY17
Net loss (5,003)
Adjustments:
Capitalized internal software costs (688)
Stock compensation expense 491
Amortization of capitalized software and other intangibles 844
Net loss, non-GAAP (4,356)
Q1'FY17
Diluted EPS (0.12)
Adjustments:
Capitalized internal software costs (0.02)
Stock compensation expense 0.01
Amortization of capitalized software and other intangibles 0.02
Diluted EPS, non-GAAP (0.11)
Q1'FY17
Cost of revenue 8,220
Adjustments:
Stock compensation expense 5
Cost of revenue - amortization of capitalized software 844
Cost of revenue, non-GAAP 7,371
Q1'FY17
Research and development 3,776
Adjustments:
Capitalized internal software costs (688)
Stock compensati n expe se 4
Research and development, non-GAAP 4,460
Q1'FY17
Sales and marketing 7,210
Adjustments:
Stock compensation expense 49
Sales and marketing, non-GAAP 7,161
Net Change in Cash $ 2,078
Net proceeds from exercise of stock awards $ (45)
Vendor Financing Repayment $ 127
Effect of Exchange Rate Changes on Cash $ 43
Free Cash Flow $ 2,203
7
Non-GAAP Forecast Reconciliation
($ in millions)
Forecast Net Loss (12.0) - (16.0) (3.8) - (6.2)
Capitalized internal software costs (5.0) - (3.0) (1.5) - (0.5)
Stock compensation expense 2.5 - 3.0 0.5 - 0.7
Amortization of capitalized software 3.5 - 4.0 0.8 - 1.0
Forecast Non-GAAP Net Loss (11.0) - (12.0) (4.0) - (5.0)
Forec st Net Change in Cash (9.0) - (11.0) (7.0) - (9.0)
Net proceeds from exercise of stock awards - - - - - -
Vendor Financing Repayment - - - - - -
Effect of exchange rate changes on cash - - - - - -
Forecast Free Cash Flow (9.0) - (11.0) (7.0) - (9.0)
FY 17 Q1 FY17