February 21, 2013

Bazaarvoice, Inc. Announces its Financial Results for the Third Fiscal Quarter of 2013

Third fiscal quarter of 2013 and recent strategic highlights include:

  • SaaS revenue for the third quarter increased by 47% year-over-year to $40.7 million
  • Net media revenue for the third quarter was $2.0 million reflecting $4.7 million earned from advertisers less the amount due to publishers
  • Number of active enterprise clients totaled 1,179 at the end of the period
  • Jim Offerdahl was appointed Chief Financial Officer
  • Integrated Longboard Media into Bazaarvoice Media

AUSTIN, Texas, Feb. 21, 2013 (GLOBE NEWSWIRE) -- Bazaarvoice, Inc. (Nasdaq:BV), a leading social and e-commerce software company, reported its financial results for the third fiscal quarter of 2013 ended January 31, 2013.

"I am pleased with the operational performance during the third quarter as we continue to invest in our opportunity as a company, said Stephen Collins, Chief Executive Officer and President. "Our clients, both retailers and brands, are requesting more online word of mouth content, site monetization and tools to increase traffic and conversion. The addressable market on a global scale is substantial, as our comprehensive suite of solutions provides our clients with the ability to address all of their key strategic priorities."

Third Fiscal Quarter of 2013 Financial Details

Revenue: Bazaarvoice reported revenue of $42.7 million, up 55% from the third quarter of 2012, which consisted of SaaS revenue of $40.7 million and net media revenue of $2.0 million. Net media revenue reflects $4.7 million earned from advertisers less the amount due to publishers.

Adjusted EBITDA: Adjusted EBITDA was a loss of $5.5 million, compared to a loss of $3.0 million for the third quarter of 2012.

GAAP net loss and net loss per share: GAAP net loss was $10.8 million, compared to a GAAP net loss of $6.6 million for the third quarter of 2012. GAAP net loss per share was $0.15 based upon weighted average shares outstanding of 71.9 million, compared to $0.34 for the third quarter of 2012 based upon weighted average shares outstanding of 19.6 million.

Non-GAAP net loss and net loss per share: Non-GAAP net loss was $4.1 million, compared to a non-GAAP net loss of $4.1 million for the third quarter of 2012. Non-GAAP net loss per share was $0.06 based upon weighted average shares outstanding of 71.9 million, compared to $0.09 for the third quarter of 2012 based upon weighted average shares outstanding of 47.5 million.

Clients: The number of active enterprise clients at the end of the third quarter was 1,179, and the number of active network clients at the end of the third quarter was approximately 1,250. Annualized SaaS revenue per average active enterprise client for the third quarter was approximately $142,000. Active enterprise client retention rate for the third quarter was approximately 97%.

In connection with our acquisition of PowerReviews, which closed in June 2012, we expanded the types of clients that we serve. To reflect differences among our clients and the services that we offer, we now define our clients as "active enterprise clients" and "active network clients," the definitions of which are set forth herein. Historical references to active clients for periods prior to the closing of the acquisition include both active enterprise clients and active network clients on an aggregate basis. As a result of this prospective nomenclature change, active clients and active client retention rates for periods prior to June 2012 and after June 2012 may not be directly comparable as we have not made this distinction retrospectively. This change also has a corresponding impact on metrics that are driven by the number of clients, such as revenue per active client.

Quarterly Conference Call

Bazaarvoice will host a conference call today at 4:30 p.m. Eastern Time to review the company's financial results for the third fiscal quarter of 2013 ended January 31, 2013. To access this call, dial (888) 254-2801 from the United States or (913) 312-0962 internationally with conference ID 4950676. A live webcast of the conference call can be accessed from the investor relations page of Bazaarvoice's company website at investors.bazaarvoice.com. Following the completion of the call, a recorded replay will be available on the company's website, and a telephone replay will be available through March 7, 2013 by dialing (877) 870-5176 from the United States or (858) 384-5517 internationally with recording access code 4950676.

About Bazaarvoice

Bazaarvoice, a leading social and e-commerce software company, assists clients in bringing the voice of the customer to the center of business strategy. With over 2,000 clients globally, including over half of the Internet Retailer 500, over 20 percent of the Fortune 500 and over one-third of the Fortune 100, Bazaarvoice helps clients to leverage social data derived from online word of mouth content to increase sales, acquire new customers, improve marketing effectiveness, enhance consumer engagement across channels, increase success of new product launches, improve existing products and services, effectively scale customer support, decrease product returns and enable retailers to launch and manage on-site advertising solutions and site monetization strategies. This online word of mouth content can be syndicated across Bazaarvoice's global network of client websites, shopper media sites and mobile devices, making the user-generated content that digital consumers trust accessible at multiple points of purchase. Headquartered in Austin, Texas, Bazaarvoice has offices in Amsterdam, London, Munich, New York, Paris, San Francisco, Stockholm and Sydney. For more information, visit www.Bazaarvoice.com, read the blog at www.Bazaarvoice.com/blog, and follow on Twitter at www.twitter.com/Bazaarvoice.

The Bazaarvoice logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=13784

Number of Active Enterprise Clients

We define an active enterprise client as an organization that has implemented either the Bazaarvoice Conversations platform or the PowerReviews Enterprise platform and from which we are currently recognizing revenue, and we count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our ability to increase our enterprise client base is a leading indicator of our ability to grow revenue.

Number of Active Network Clients

We define an active network client as an organization that has implemented one or more of our solutions but has not implemented either the Bazaarvoice Conversations or PowerReviews Enterprise platforms. Such solutions may include our Connections solutions, Media solutions or Express platform. We count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our network client base in combination with our enterprise client base is an indicator of the reach of our network.

Non-GAAP Financial Measures

Adjusted EBITDA discussed in this press release is defined as net loss adjusted for stock-based expense, adjusted depreciation and amortization (which excludes amortization of capitalized internal-use software development costs), integration and other costs related to acquisitions, income tax expense and other (income) expense, net. Non-GAAP net loss, which is used to calculate non-GAAP net loss per share, is defined as our GAAP net loss adjusted to exclude stock-based expense, amortization of acquired intangible assets, integration and other costs related to acquisitions along with the associated income tax effect of these adjustments. Non-GAAP basic and diluted loss per share for the third fiscal quarter of 2012 ended January 31, 2012 has been calculated assuming the conversion of all outstanding shares of our preferred stock into 27,897,031 shares of our common stock as of the first day of the beginning of the period. Management presents these non-GAAP financial measures because it considers them to be important supplemental measures of core operating performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the company's operating performance against prior periods and the effectiveness of our business strategies, the preparation of operating budgets and to determine appropriate levels of operating and capital investments, as well as and in communications with our board of directors concerning our financial performance.  Management also believes that the non-GAAP financial measures provide additional insight for securities analysts and investors in evaluating the company's financial and operational performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired.  However, these non-GAAP financial measures have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Furthermore, these non-GAAP financial measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate these non-GAAP financial measures in the same manner. We intend to provide these non-GAAP financial measures as part of our future financial results discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. A reconciliation of these non-GAAP measures to GAAP is provided in the accompanying tables.

Forward-looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties.  All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would" and similar and "target" expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, our ability to address the strategic priorities of our clients, including our ability to deliver more online word of mouth content, site monetization and tools to increase traffic and conversion. We may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on our forward-looking statements.  These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, our expectations regarding our revenue, expenses, sales and operations; our limited operating history; our ability to integrate the operations of Longboard Media, Inc. as announced in our release on Form 8-K on November 5, 2012; our ability to operate in a new and unproven market; our ability to effectively manage growth, especially in light of our announced management changes; our ability to manage expansion into international markets and new vertical industries; our ability to successfully identify, manage and integrate potential acquisitions; and other risks and potential factors that could affect Bazaarvoice's business and financial results identified in our Form 10-K for the fiscal year ended April 30, 2012, our Form 10-Q for the fiscal quarter ended October 31, 2012 and Form S-1 as filed with the Securities and Exchange Commission on July 12, 2012. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We do not intend and undertake no duty to release publicly any updates or revisions to any forward-looking statements contained herein.

 
Bazaarvoice, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
     
  January 31, April 30,
  2013 2012
ASSETS  
Current assets:    
Cash and cash equivalents  $ 23,845  $ 74,367
Restricted cash  604  500
Short-term investments  81,646  50,834
Accounts receivable, net  30,310  17,977
Prepaid expenses and other current assets  4,624  3,873
Total current assets  141,029  147,551
Property, equipment and capitalized internal-use software development costs, net  13,431  8,868
Goodwill  141,833  -- 
Acquired intangible assets, net  53,465  -- 
Other non-current assets  190  448
Total assets  $ 349,948  $ 156,867
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 6,189  $ 2,523
Accrued expenses and other current liabilities  23,289  12,725
Deferred revenue  50,755  42,152
Total current liabilities  80,233  57,400
Deferred revenue less current portion  2,162  3,434
Deferred tax liability, long-term  1,393  31
Other liabilities, long-term  6,836  2,404
Total liabilities  90,624  63,269
Stockholders' equity:    
Common stock  7  6
Additional paid-in capital  365,115  158,769
Accumulated other comprehensive loss  (33)  (20)
Accumulated deficit  (105,765)  (65,157)
Total stockholders' equity  259,324  93,598
Total liabilities and stockholders' equity  $ 349,948  $ 156,867
 
Bazaarvoice, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except net loss per share data)
         
  Three Months Nine Months
  Ended January 31, Ended January 31,
  2013 2012 2013 2012
Revenue  $ 42,678  $ 27,602  $ 116,966  $ 74,705
Cost of revenue  14,217  9,514  40,949  26,116
Gross profit  28,461  18,088  76,017  48,589
Operating expenses:        
Sales and marketing   20,710  12,152  53,882  35,469
Research and development  8,914  6,059  24,356  13,978
General and administrative  8,783  5,934  32,463  15,848
Acquisition-related and other  2,021  --   4,771  -- 
Amortization of acquired intangible assets  1,165  --   2,543  -- 
Total operating expenses  41,593  24,145  118,015  65,295
Operating loss  (13,132)  (6,057)  (41,998)  (16,706)
Other income (expense), net:        
Interest income  61  4  110  17
Other income (expense)  (49)  (341)  (451)  (805)
Total other income (expense), net  12  (337)  (341)  (788)
Loss before income taxes  (13,120)  (6,394)  (42,339)  (17,494)
Income tax expense (benefit)  (2,293)  181  (1,731)  468
Net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Accretion of redeemable convertible preferred stock  --   (10)  --   (35)
Net loss applicable to common stockholders  $ (10,827)  $ (6,585)  $ (40,608)  $ (17,997)
Net loss per share applicable to common stockholders:        
Basic and diluted   $ (0.15)  $ (0.34)  $ (0.60)  $ (0.93)
Basic and diluted weighted average number of shares outstanding  71,940  19,613  68,115  19,284
 
Bazaarvoice, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
         
  Three Months Nine Months
  Ended January 31, Ended January 31,
  2013 2012 2013 2012
         
OPERATING ACTIVITIES        
Net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Depreciation and amortization expense  3,138  837  7,473  2,247
Stock-based expense  3,139  2,503  19,072  5,758
Bad debt expense  860  78  1,643  925
Excess tax benefit related to stock-based compensation  (93)  --   (365)  -- 
Changes in operating assets and liabilities:        
Accounts receivable  (5,781)  (2,888)  (10,581)  (8,394)
Prepaid expenses and other current assets  485  1,606  257  529
Other non-current assets  1,277  (148)  1,161  (361)
Accounts payable  (2,655)  (222)  521  2,005
Accrued expenses and other current liabilities  4,493  937  7,027  5,125
Deferred revenue  3,313  2,764  4,647  9,971
Other liabilities, long-term  (4,090)  (262)  (2,952)  1
Net cash used in operating activities  (6,741)  (1,370)  (12,705)  (156)
INVESTING ACTIVITIES        
Acquisitions, net of cash acquired, and purchase of intangible asset  (30,437)  --   (60,750)  -- 
Purchases of property, equipment and capitalized internal-use software development costs  (2,173)  (986)  (8,004)  (3,806)
Purchases of short-term investments  (7,861)  --   (74,578)  -- 
Proceeds from sale of short-term investments  22,618  --   43,783  -- 
Increase in restricted cash  --   --   --   (250)
Net cash used in investing activities  (17,853)  (986)  (99,549)  (4,056)
FINANCING ACTIVITIES        
Payments of initial stock offering costs  --   (1)  --   (938)
Proceeds from follow-on stock offering, net of costs  --   --   51,943  -- 
Proceeds from exercise of stock options  3,274  696  9,470  2,478
Excess tax benefit related to stock-based compensation  93  --   365  -- 
Net cash provided by financing activities  3,367  695  61,778  1,540
Effect of exchange rate fluctuations on cash and cash equivalents  (44)  (34)  (46)  (73)
Net decrease in cash and cash equivalents  (21,271)  (1,695)  (50,522)  (2,745)
Cash and cash equivalents at beginning of period  45,116  14,000  74,367  15,050
Cash and cash equivalents at end of period  $ 23,845  $ 12,305  $ 23,845  $ 12,305
Supplemental disclosure of other cash flow information:        
Cash paid for income taxes  $ --   $ 87  $ 236  $ 105
Supplemental disclosure of non-cash investing and financing activities:        
Accretion of redeemable convertible preferred stock  $ --   $ 10  $ --   $ 35
Accrued stock offering costs  --   666  --   1,600
Issuance of stock for acquisition  5,802  --   125,497  -- 
 
Bazaarvoice, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
(in thousands, except net loss per share data)
         
  Three Months Nine Months
  Ended January 31, Ended January 31,
  2013 2012 2013 2012
Non-GAAP net loss and net loss per share:        
GAAP net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Stock-based expense (1)  3,139  2,503  19,072  5,758
Amortization of acquired intangible assets  1,615  --   3,683  -- 
Acquisition-related and other expense  2,021  --   4,771  -- 
Income tax adjustment for non-GAAP items  (34)  --   25  -- 
Non-GAAP net loss  $ (4,086)  $ (4,072)  $ (13,057)  $ (12,204)
         
GAAP basic and diluted shares  71,940  19,613  68,115  19,284
Assumed preferred stock conversion  --   27,897  --   27,897
Non-GAAP basic and diluted shares  71,940  47,510  68,115  47,181
Non-GAAP basic and diluted net loss per share  $ (0.06)  $ (0.09)  $ (0.19)  $ (0.26)
         
Adjusted EBITDA:        
GAAP net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Stock-based expense (1)  3,139  2,503  19,072  5,758
Adjusted depreciation and amortization (2)  2,462  569  5,899  1,552
Acquisition-related and other expense  2,021  --   4,771  -- 
Income tax expense (benefit)  (2,293)  181  (1,731)  468
Total other (income) expense, net  (12)  337  341  788
Adjusted EBITDA  $ (5,510)  $ (2,985)  $ (12,256)  $ (9,396)
         
(1) Stock-based expense includes the following:        
Cost of revenue  $ 443  $ 319  $ 1,320  $ 986
Sales and marketing  710  419  3,405  1,233
Research and development  674  356  2,370  920
General and administrative  1,312  1,409  11,977  2,619
Stock-based expense  $ 3,139  $ 2,503  $ 19,072  $ 5,758
         
(2) Adjusted depreciation and amortization includes the following:        
Cost of revenue  $ 682  $ 210  $ 1,800  $ 631
Sales and marketing  173  120  481  373
Research and development  169  134  474  295
General and administrative  273  105  601  253
Amortization of acquired intangible assets  1,165  --   2,543  -- 
Adjusted depreciation and amortization  $ 2,462  $ 569  $ 5,899  $ 1,552
 
Bazaarvoice, Inc.
Selected Quarterly Financial and Operational Metrics
(unaudited)
(in thousands, except active enterprise clients and full-time employees data)
                 
  Three Months Ended
  Apr 30, Jul 31, Oct 31, Jan 31, Apr 30, Jul 31, Oct 31, Jan 31,
  2011 2011 2011 2012 2012 2012 2012 2013
Revenue (1)  $ 19,281  $ 22,088  $ 25,015  $ 27,602  $ 31,431  $ 35,662  $ 38,626  $ 42,678
Cost of revenue  7,293  7,797  8,805  9,514  10,325  12,633  14,099  14,217
Gross profit  11,988  14,291  16,210  18,088  21,106  23,029  24,527  28,461
Operating expenses:                
Sales and marketing  10,116  11,192  12,125  12,152  14,257  15,322  17,850  20,710
Research and development  2,999  3,343  4,576  6,059  6,811  7,494  7,948  8,914
General and administrative  3,598  5,099  4,815  5,934  6,047  16,196  7,484  8,783
Acquisition-related and other  --   --   --   --   --   1,384  1,366  2,021
Amortization of acquired intangible assets  --   --   --   --   --   480  898  1,165
Total operating expenses  16,713  19,634  21,516  24,145  27,115  40,876  35,546  41,593
Operating loss  (4,725)  (5,343)  (5,306)  (6,057)  (6,009)  (17,847)  (11,019)  (13,132)
Total other income (expense), net  205  (84)  (367)  (337)  (15)  (404)  51  12
Net loss before income taxes  (4,520)  (5,427)  (5,673)  (6,394)  (6,024)  (18,251)  (10,968)  (13,120)
Income tax expense (benefit)  139  109  178  181  343  288  274  (2,293)
Net loss  (4,659)  (5,536)  (5,851)  (6,575)  (6,367)  (18,539)  (11,242)  (10,827)
Stock-based expense (2)  1,279  1,558  1,697  2,503  1,952  12,338  3,595  3,139
Adjusted depreciation and amortization (3)  449  471  512  569  552  1,338  2,099  2,462
Acquisition-related and other expense  --   --   --   --   --   1,384  1,366  2,021
Income tax expense (benefit)  139  109  178  181  343  288  274  (2,293)
Total other (income) expense, net  (205)  84  367  337  15  404  (51)  (12)
Adjusted EBITDA  $ (2,997)  $ (3,314)  $ (3,097)  $ (2,985)  $ (3,505)  $ (2,787)  $ (3,959)  $ (5,510)
Number of active enterprise clients (at period end) (4)  571  640  701  737  790  1,076  1,109  1,179
Full-time employees (at period end)  494  520  566  608  640  771  777  796
                 
(1) Revenue includes the following:                
SaaS  $ 19,281  $ 22,088  $ 25,015  $ 27,602  $ 31,431  $ 35,662  $ 38,626  $ 40,710
Media  --   --   --   --   --   --   --   1,968
Revenue  $ 19,281  $ 22,088  $ 25,015  $ 27,602  $ 31,431  $ 35,662  $ 38,626  $ 42,678
(2) Stock-based expense includes the following:                
Cost of revenue  $ 235  $ 323  $ 344  $ 319  $ 234  $ 294  $ 583  $ 443
Sales and marketing  307  402  412  419  636  1,825  870  710
Research and development  176  204  360  356  406  642  1,054  674
General and administrative  561  629  581  1,409  676  9,577  1,088  1,312
Stock-based expense  $ 1,279  $ 1,558  $ 1,697  $ 2,503  $ 1,952  $ 12,338  $ 3,595  $ 3,139
(3) Adjusted depreciation and amortization includes the following:                
Cost of revenue  $ 194  $ 207  $ 214  $ 210  $ 194  $ 437  $ 681  $ 682
Sales and marketing  113  129  124  120  117  133  175  173
Research and development  50  68  93  134  136  144  161  169
General and administrative  92  67  81  105  105  144  184  273
Amortization of acquired intangible assets  --   --   --   --   --   480  898  1,165
Adjusted depreciation and amortization  $ 449  $ 471  $ 512  $ 569  $ 552  $ 1,338  $ 2,099  $ 2,462
                 
(4) In connection with our acquisition of PowerReviews, which closed in June 2012, we expanded the types of clients that we serve. To reflect differences among our clients and the services that we offer, we now define our clients as "active enterprise clients" and "active network clients," the definitions of which are set forth herein and in our Form 10-Q for the fiscal quarter ended October 31, 2012. Historical references to active clients for periods prior to the closing of the acquisition include both active enterprise clients and active network clients on an aggregate basis. As a result of this prospective nomenclature change resulting from our acquisition of PowerReviews, active clients and active client retention rates for periods prior to June 2012 and after June 2012 may not be directly comparable as we have not made this distinction retrospectively. This change also has a corresponding impact on metrics that are driven by the number of clients, such as revenue per active client.
CONTACT: Bazaarvoice Investor Relations Contact:

         Bazaarvoice Investor Relations

         Seth Potter

         ICR, Inc. on behalf of Bazaarvoice, Inc.

         646-277-1230

         seth.potter@icrinc.com



         Media Contact:

         Emily Brady

         Brady PR on behalf of Bazaarvoice, Inc.

         650-692-6107

         emily@bradypr.com

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