Bazaarvoice, Inc.
Sep 7, 2016

Bazaarvoice, Inc. Announces its Financial Results for the First Fiscal Quarter of 2017

First fiscal quarter highlights include:

AUSTIN, Texas, Sept. 07, 2016 (GLOBE NEWSWIRE) -- Bazaarvoice, Inc. (Nasdaq:BV), which is creating the world's smartest network of active shoppers, brands and retailers, reported its financial results for the first fiscal quarter ended July 31, 2016.

"The first quarter was a very good start to fiscal 2017 as we continued to experience a number of positive trends that suggest the business is turning the corner," said Gene Austin, chief executive officer and president.  "We are well on our way to transforming Bazaarvoice from a ratings and review platform provider to a company that is creating the world's smartest shopper network.  We have three key assets that are all now producing value: our consumer generated content expertise, our network and our shopper data.  Our mission going forward is to fully unleash that value to our clients and our shareholders."

First Fiscal Quarter of 2017 Financial Details

Revenue:  Bazaarvoice reported revenue of $50.1 million for the first fiscal quarter of 2017, up 2.5% from the first fiscal quarter of 2016, which consisted of SaaS revenue of $47.8 million and net advertising revenue of $2.3 million.

GAAP net loss and net loss per share: GAAP net loss was $5.1 million, compared to a GAAP net loss of $10.2 million for the first fiscal quarter of 2016. GAAP net loss per share was $0.06 based upon weighted average shares outstanding of 82.2 million, compared to a loss of $0.13 for the first fiscal quarter of 2016 based upon weighted average shares outstanding of 80.2 million.

Adjusted EBITDA: During the first quarter of fiscal 2017 we updated our definition of Adjusted EBITDA to enhance comparability between ourselves and our peers. Adjusted EBITDA is defined as GAAP net loss adjusted for stock-based expense, contingent consideration related to acquisitions, depreciation and amortization (including amortization of capitalized internal-use software development costs), restructuring charges, integration and other costs related to acquisitions, other non-business costs and benefits, income tax expense and other (income) expense, net.  Our previous definition of Adjusted EBITDA excluded amortization of capitalized internal-use software development costs from adjusted depreciation and amortization and included capitalized stock-based compensation in stock-based expense. For a reconciliation of Adjusted EBITDA as previously defined to Adjusted EBITDA under our updated definition refer to Note 5 of the "Selected Quarterly Financial and Operational Metrics" table contained herein.

Based on our updated definition, Adjusted EBITDA for the first fiscal quarter of 2017 was $3.9 million compared to a loss of $1.3 million for the first fiscal quarter of 2016.  Based on our previous definition, Adjusted EBITDA for the first fiscal quarter of 2017 was $1.9 million compared to a loss of $3.3 million for the first fiscal quarter of 2016.

Non-GAAP net loss and net loss per share: Non-GAAP net loss was $0.2 million, compared to a non-GAAP net loss of $5.1 million for the first fiscal quarter of 2016. Non-GAAP net loss per share was $0.00 based upon weighted average shares outstanding of 82.2 million, compared to a net loss per share of $0.06 for the first fiscal quarter of 2016 based upon weighted average shares outstanding of 80.2 million.

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 first fiscal quarter of 2017. To access this call, dial (877) 407-3982 from the United States or (201) 493-6780 internationally with conference ID 13642992. 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 September 21, 2016 by dialing (877) 870-5176 from the United States or (858) 384-5517 internationally with recording access code 13642992.

About Bazaarvoice
Bazaarvoice is creating the world's smartest shopper network connecting more than one-half billion consumers monthly to thousands of retailers and brands. Our network enables Bazaarvoice's clients to engage consumers online, in-store and via mobile devices with industry leading solutions that include targeted shopper advertising and authentic consumer generated content, such as ratings and reviews, curated photos, social posts and videos. For more information visit http://www.bazaarvoice.com.

Non-GAAP Financial Measures

Adjusted EBITDA discussed in this press release is defined as our GAAP net loss adjusted for stock-based expense, contingent consideration related to acquisitions, depreciation and amortization (including amortization of capitalized internal-use software development costs), integration and other costs related to acquisitions, other non-business costs and benefits, income tax expense and other (income) expense, net. GAAP net loss is the most comparable GAAP measure to Adjusted EBITDA.

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, contingent consideration related to acquisitions, amortization of acquired intangible assets, integration and other costs related to acquisitions, and other non-business costs and benefits along with the associated income tax effect of these adjustments.

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 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; 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," "target" and similar 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, statements about driving future improvements in profitability, monetizing the Bazaarvoice network and driving revenue growth over the long term and other statements about management's beliefs, intentions or goals. 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; changes in accounting standards; our ability to realize efficiencies and to execute on our strategic initiatives; our limited operating history; our ability to operate in a new and unproven market; our ability to effectively manage growth; our ability to develop and launch new products; risks associated with the uncertainty of market acceptance of our new products; our ability to retain our existing customers and satisfy their obligations and needs and upsell to existing clients; our ability to attract and retain employees; our ability to maintain pricing for our products and services; our ability to manage expansion into new vertical industries; our ability to reduce our cost structure and improve operating efficiencies;  and the effects of increased competition and commoditization of products we offer, including pricing pressure, reduced profitability or loss of market share; risks and challenges associated with international sales; our ability to successfully identify, manage and integrate potential acquisitions; the impact of the Department of Justice stipulation regarding PowerReviews on our business; and other risks and potential factors that could affect our business and financial results identified in our Form 10-K for the fiscal year ended April 30, 2016 as filed with the Securities and Exchange Commission on June 20, 2016. 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
(in thousands)
(unaudited)
    
 July 31,
 2016
 April 30,
 2016
Assets   
Current assets:   
Cash and cash equivalents$43,508  $43,963 
Short-term investments48,298  50,682 
Accounts receivable, net38,027  39,597 
Prepaid expenses and other current assets8,990  8,415 
Total current assets138,823  142,657 
Property, equipment and capitalized internal-use software development costs, net31,420  31,649 
Goodwill139,155  139,155 
Acquired intangible assets, net9,135  9,607 
Other non-current assets4,174  5,214 
Total assets$322,707  $328,282 
Liabilities and stockholders' equity   
Current liabilities:   
Accounts payable$3,549  $6,110 
Accrued expenses and other current liabilities19,218  23,167 
Deferred revenue65,992  62,735 
Total current liabilities88,759  92,012 
Long-term liabilities:   
Revolving line of credit42,000  42,000 
Deferred revenue less current portion2,198  2,481 
Other liabilities, long-term7,056  7,255 
Total liabilities140,013  143,748 
Commitments and contingencies   
Stockholders' equity:   
Common stock8  8 
Additional paid-in capital441,143  437,239 
Accumulated other comprehensive loss (1,517) (878)
Accumulated deficit(256,940) (251,835)
Total stockholders' equity182,694  184,534 
Total liabilities and stockholders' equity$322,707  $328,282 
        


Bazaarvoice, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except net loss per share data)
(unaudited)
  
 Three Months Ended July 31,
 2016 2015
Revenue$50,093  $48,876 
Cost of revenue18,756  19,548 
Gross profit31,337  29,328 
Operating expenses:   
Sales and marketing15,304  19,166 
Research and development11,073  10,533 
General and administrative 8,259  8,238 
Restructuring charges327   
Acquisition-related and other176  702 
Amortization of acquired intangible assets309  309 
Total operating expenses35,448  38,948 
Operating loss(4,111) (9,620)
Other income (expense), net:   
Interest income142  77 
Interest expense(489) (571)
Other expense(512) (218)
Total other expense, net(859) (712)
Loss before income taxes(4,970) (10,332)
Income tax expense (benefit)135  (88)
Net loss$(5,105) $(10,244)
Net loss per share, basic and diluted$(0.06) $(0.13)
Basic and diluted weighted average number of shares outstanding82,214  80,174 
      


Bazaarvoice, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
  
 Three Months Ended July 31,
 2016  2015
Operating activities:   
Net loss$(5,105) $(10,244)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
Depreciation and amortization expense3,578  3,644 
Stock-based expense3,944  3,935 
Bad debt expense(179) 85 
Amortization of deferred financing costs59  59  
Other non-cash expense(39) 51 
Changes in operating assets and liabilities:   
Accounts receivable1,749   (1,076)
Prepaid expenses and other current assets(507) (48)
Other non-current assets869  (314)
Accounts payable(2,616) (808)
Accrued expenses and other current liabilities(4,442)  (4,162)
Deferred revenue2,974  2,498 
Other liabilities, long-term(156) 4 
Net cash provided by (used in) operating activities129  (6,376)
Investing activities:   
Proceeds from sale of discontinued operations  4,501 
Purchases of property, equipment and capitalized internal-use software development costs(2,760) (2,929)
Purchases of short-term investments(12,691) (15,155)
Proceeds from maturities of short-term investments15,010  18,172 
Net cash provided by (used in) investing activities(441) 4,589 
Financing activities:   
Proceeds from employee stock compensation plans395  1,101 
Net cash provided by financing activities395  1,101 
Effect of exchange rate fluctuations on cash and cash equivalents(538) 95 
Net change in cash and cash equivalents(455) (591)
Cash and cash equivalents at beginning of period43,963  54,041 
Cash and cash equivalents at end of period$43,508  $53,450 
Supplemental disclosure of non-cash investing and financing activities:   
Purchase of fixed assets recorded in accounts payable$83  $413 
Capitalized stock-based compensation$122  $114 
        


Bazaarvoice, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except net loss per share data)
(unaudited)
  
 Three Months Ended July 31,
 2016 2015
Non-GAAP net loss and net loss per share:   
GAAP net loss$(5,105) $(10,244)
Stock-based expense (1)3,944  3,935  
Restructuring charges (3)327   
Amortization of acquired intangible assets473  473 
Acquisition-related and other expense176  702 
Income tax adjustment for non-GAAP items(3)  
Non-GAAP net loss$(188) $(5,134)
GAAP basic and diluted shares82,214  80,174 
Non-GAAP basic and diluted net loss per share$0.00  $(0.06)
Adjusted EBITDA:   
GAAP net loss$(5,105) $(10,244)
Stock-based expense (1)3,944  3,935 
Depreciation and amortization (2)3,578  3,644 
Restructuring charges (3) 327   
Acquisition-related and other expense176  702 
Income tax expense (benefit)135  (88)
Total other expense, net859  712 
Adjusted EBITDA$ 3,914  $(1,339)
        
(1) During the first quarter of fiscal 2017 we updated our calculation of Adjusted EBITDA. As a result of this update prior period stock compensation amounts have been updated to conform to the current presentation. Under the new definition of Adjusted EBITDA the capitalized portion of stock-based compensation related to the capitalization of internal-use software is excluded from stock-based expense.
 
Stock-based expense includes the following:   
Cost of revenue$344  $472 
Sales and marketing580  1,084 
Research and development1,053  643 
General and administrative1,967  1,736 
Stock-based expense$3,944  $3,935 
         
(2) During the first quarter of fiscal 2017 we updated our calculation of Adjusted EBITDA. As a result of this update prior period depreciation and amortization amounts have been updated to conform to the current presentation. Our new definition of Adjusted EBITDA includes amortization of capitalized internal-use software development costs in depreciation and amortization.
 
Depreciation and amortization includes the following:   
Cost of revenue$2,592  $2,558 
Sales and marketing196  349 
Research and development231  209 
General and administrative250  220 
Amortization of acquired intangible assets309  308 
Depreciation and amortization$3,578  $3,644 
        
(3) In February 2016, the Company made the decision to suspend sales of its BV Local product, reduce its cost structure to improve operating efficiencies and align resources with its growth strategies. Costs associated with these restructuring activities include workforce reductions charges, and facilities charges related to the loss recorded on the sub-lease of excess office space at the Company's headquarters.
 


Bazaarvoice, Inc.
Selected Quarterly Financial and Operational Metrics
(in thousands, except active clients and full-time employees data)
(unaudited)
  
 Three Months Ended
 Oct 31, Jan 31, Apr 30, Jul 31, Oct 31, Jan 31, Apr 30, Jul 31,
 2014 2015 2015 2015 2015 2016 2016 2016
Revenue (1)$47,325  $49,562  $48,317  $48,876  $49,926  $50,255  $50,709  $50,093 
Cost of revenue17,414  17,988  18,148  19,548  19,146  18,920  19,253  18,756 
Gross profit29,911  31,574  30,169  29,328  30,780  31,335  31,456  31,337 
Operating expenses:               
Sales and marketing18,931  18,020  20,427  19,166  16,502  16,113  18,027  15,304 
Research and development9,306  8,779  9,880  10,533  10,354  10,199  10,391  11,073 
General and administrative8,100  6,932  7,582  8,238  7,643  6,940  7,577  8,259 
Restructuring charges            1,575  327 
Acquisition-related and other expense2,326  413  815  702  224  332  157  176 
Amortization of acquired intangible assets310  309  309  309  310  309  309  309 
Total operating expenses38,973  34,453  39,013  38,948  35,033  33,893  38,036  35,448 
Operating loss(9,062) (2,879) (8,844) (9,620) (4,253) (2,558) (6,580) (4,111)
Total other expense, net(588) (920) (521) (712) (475) (719) (384) (859)
Loss before income taxes(9,650) (3,799) (9,365)  (10,332) (4,728) (3,277) (6,964) (4,970)
Income tax expense (benefit)258  324  (540) (88) 124  (163) 165  135 
Net loss$(9,908) $(4,123) $(8,825) $(10,244) $(4,852) $(3,114) $(7,129) $(5,105)
Stock-based expense (2)$3,255  $3,015  $3,020  $3,935  $3,787  $3,762  $3,602  $3,944 
Depreciation and amortization (3)3,241  3,117  3,284  3,644  3,335   3,512  3,549  3,578 
Restructuring charges (4)            1,575  327 
Acquisition-related and other expense2,326  413  815  702  224  332  157  176 
Income tax expense (benefit)258  324  (540) (88)  124  (163) 165  135 
Total other expense, net588  920  521  712  475  719  384  859 
Adjusted EBITDA (5)$(240) $3,666  $(1,725) $(1,339) $3,093  $5,048  $2,303  $3,914 
Number of active clients (at period end) (6)1,243  1,292  1,331  1,337  1,360  1,383  1,399  1,397 
Full-time employees (at period end)814  825  826  834  855  817  756  766 
                                
(1)

Revenue includes the following:
               
SaaS$45,199  $46,429  $46,173  $46,830  $47,671  $47,884  $49,108  $47,799 
Advertising2,126  3,133  2,144  2,046  2,255  2,371  1,601  2,294 
Revenue$47,325  $49,562  $48,317  $48,876  $49,926  $50,255  $50,709  $50,093 
                                
(2) During the first quarter of fiscal 2017 we updated our calculation of Adjusted EBITDA. As a result of this update prior period stock compensation amounts have been updated to conform to the current presentation. Under the new definition of Adjusted EBITDA the capitalized portion of stock-based compensation related to the capitalization of internal-use software is excluded from stock-based expense.
 
 Three Months Ended
 Oct 31, Jan 31,  Apr 30, Jul 31, Oct 31, Jan 31, Apr 30, Jul 31,
 2014 2015 2015 2015 2015 2016 2016 2016
Stock-based expense includes the following:                
Cost of revenue$458  $451  $294  $472  $607  $585  $503  $344 
Sales and marketing1,162  867  950  1,084  643  686  543  580 
Research and development434  600  614  643  798  786  769  1,053 
General and administrative1,201   1,097  1,162  1,736  1,739  1,705  1,787  1,967 
Stock-based expense$3,255  $3,015  $3,020  $3,935  $3,787  $3,762  $3,602  $3,944 
                                
(3) During the first quarter of fiscal 2017 we updated our calculation of Adjusted EBITDA. As a result of this update prior period depreciation and amortization amounts have been updated to conform to the current presentation. Our new definition of Adjusted EBITDA includes amortization of capitalized internal-use software development costs in depreciation and amortization.
 
Depreciation and amortization includes the following:               
Cost of revenue$2,124  $2,189  $2,340  $2,558  $2,481  $2,559  $2,593  $2,592 
Sales and marketing303  221  220  349  197  210  201  196 
Research and development242  164  181  209  175  228  227  231 
General and administrative262  234   234  220  171  206  219   250 
Amortization of acquired intangible assets310  309  309  308   311  309  309  309 
Depreciation and amortization$3,241  $3,117  $3,284  $3,644  $3,335  $3,512  $3,549  $3,578 
                                
(4) In February 2016, the Company made the decision to suspend sales of its BV Local product, reduce its cost structure to improve operating efficiencies and align resources with its growth strategies. Costs associated with these restructuring activities include workforce reductions charges, and facilities charges related to the loss recorded on the sub-lease of excess office space at the Company's headquarters.
 
(5) During the first quarter of fiscal 2017 we updated our calculation of Adjusted EBITDA. As a result of this update prior period depreciation and amortization amounts have been updated to conform to the current presentation. Our new definition of Adjusted EBITDA includes amortization of capitalized internal-use software development costs in depreciation and amortization and excludes capitalized stock-based compensation related to internal-use software from stock-based expense. The following table presents a reconciliation of Adjusted EBITDA as previously defined to Adjusted EBITDA under the updated definition:
 
Adjusted EBITDA, previous definition$(1,795) $1,962  $(3,567)  $(3,269) $1,135  $3,075  $277  $1,874 
Add: Amortization of capitalized internal-use software development costs1,643  1,789  1,935  2,044  2,080  2,103  2,148  2,162  
Less: Capitalized portion of stock-based compensation(88) (85) (93) (114) (122) (130) (122) (122)
Adjusted EBITDA, current definition$(240) $3,666  $(1,725) $(1,339) $3,093  $5,048  $2,303  $3,914 
                                  
(6) Beginning as of our first fiscal quarter of 2016, we define an active client as an organization for which we have a contract and the client is launched as of the last day of the quarter, and we count organizations that are closely related as one client, even if they have signed separate contractual agreements.
 
All periods prior to the first fiscal quarter of 2016 discussed in this press release or presented in the accompanying financial tables have been revised to conform to this definition of an active client.
 
Investor Relations Contact:

Linda Wells

Bazaarvoice, Inc.

415-872-3612

linda.wells@bazaarvoice.com



Media Contact:

Andy North

Bazaarvoice, Inc.

512-551-6502

andy.north@bazaarvoice.com

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Source: Bazaarvoice, Inc.

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