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SMALL BUSINESS
Taleo Delivers Strong Third Quarter Results
Posts Record Revenue of $50.7 Million; Generates $13.6 Million in Cash Flow From Operations; Adds More Than 40 New Performance Management Customers; Increases Sales Across Enterprise Segment for Full Talent Management Suite of Solutions
DUBLIN, CA -- (Marketwire) -- 10/28/09 -- Taleo Corporation (NASDAQ: TLEO), the leading provider of on demand talent management solutions, today announced its financial results for the quarter ended September 30, 2009.
Summary quarterly highlights:
-- GAAP revenues of $50.7 million for the third quarter of 2009, an
increase of 9% year-over-year.
-- GAAP application revenue increased to $44.9 million, growth of 20%
year-over-year and 5% quarter-over-quarter.
-- GAAP net loss of $(1.1) million or $(0.04) per share.
-- Non-GAAP net income of $6.7 million, or $0.20 per fully diluted share.
-- Cash flow from operations of $13.6 million; total year-to-date cash
flow from operations increases to $30.1 million.
-- Signed 167 new customers, including 17 new Taleo Enterprise customers
and 150 new Taleo Business Edition customers.
-- Closed 7 large enterprise deals with annual contract values in excess
of $250,000.
-- Signed more than 40 new performance management customers across both
enterprise and SMB segments, increasing the company's total performance
management customer base to more than 160.
-- Announced an agreement to acquire the remaining shares of strategic
partner Worldwide Compensation, Inc.
-- Launched the Talent Grid 'cloud community' set of online exchanges to
the market, and announced plans to deliver Taleo 10 in the fourth quarter
of 2009.
"Strategic talent management is driving innovation, growth and business success for companies of all sizes," said Michael Gregoire, Taleo Chairman and CEO. "Those that are locking in their growth plans for 2010 are choosing Taleo to transform how they optimize their businesses by using the most advanced talent management system, Taleo. An example of this is Harris Teeter, the grocery store chain, which standardized their recruiting on Taleo in Q2 2008, and based on the positive impact on their business, expanded their use of Taleo this quarter."
Significant achievements included:
-- Acquired 17 new enterprise customers, and closed 7 large enterprise
deals with annual contract values in excess of $250,000. New enterprise
customers include: Cognizant Technology Solutions, Shaw Industries, U.S.
Cellular, Lifespan, Xcel Energy, Itron, Atmos Energy, and Centegra Health
System.
-- Signed 150 new small and medium-sized customers. Taleo Business
Edition, a talent management solution targeted at companies with less than
5,000 employees, now has more than 3,500 customers. New Taleo Business
Edition customers include: Skymall, Medical Management Resource Group,
Wesley Homes, vCustomer Corp., RQ Construction, Lakeside Schools, TIB Bank,
Talyst and Communications Infrastructure Group.
-- Received Human Resource Executive magazine's Product of the Year award
for Taleo Perform, the company's performance management solution for small-
to-medium sized businesses.
-- Continued momentum in enterprise talent management suite sales. Sales
this quarter included both new and existing customers, with several long-
standing Taleo recruiting customers choosing to power their talent
management initiatives with Taleo's performance management solutions and
new customer Penske Truck Leasing selecting Taleo to start with a unified
offering.
-- Strong quarter in new performance management deals across both
enterprise and SMB segments. Taleo now has more than 160 performance
management customers, up from roughly 120 at the end of the second quarter
of 2009. New enterprise performance management customers include: RSC
Equipment Rental, SavaSeniorCare, Talisman Energy and a Fortune 500
customer closed through IBM.
-- Hosted its annual user conference, Taleo WORLD, in Las Vegas to its
largest audience of customers, prospects, partners and industry
influencers.
-- Announced plans to deliver to market a complete Talent Management
suite of solutions for enterprise and small-to-medium sized businesses,
called Taleo 10. The enterprise solution includes a unified interface
across all components, and new capabilities in recruiting, development
planning, and also mobile/social networking enablement. The SMB solution
will add compensation management functionality. Taleo 10 is expected to be
generally available in the fourth quarter of 2009.
-- Launched the Talent Grid to offer customers and partners online access
to a broad collection of talent management domain expertise. The Talent
Grid is comprised of the Knowledge Exchange, providing an online customer
community for best practices; the Solution Exchange, providing a wide range
of partner solutions; and the Talent Exchange, providing a global network
of candidates and careers.
-- Announced plans to acquire the remaining shares of strategic partner
Worldwide Compensation, Inc., adding best-in-class compensation management
functionality to our suite of unified talent management applications.
-- Continued to achieve Vurv customer conversions and commitments to
convert to Taleo. Recent Vurv customers committing to Taleo include:
Northrup Grumman, Perot Systems, Magellan Health Services, Adventist Health
System, United Stationers, Harland Clarke and Total System Services.
Taleo delivered the following financial results:
Revenue: Total revenue for the third quarter was $50.7 million, representing an increase of 9% on a year-over-year basis. Application revenue for the third quarter was $44.9 million, an increase of 20% on a year-over-year basis.
Net Income (Loss) and Net Income (Loss) Per Share to Common Stockholders: Net loss was $(1.1) million for the third quarter, compared to a net loss of $(5.9) million for the same period last year. Net loss includes $3.6 million in amortization expense related to the acquisition of Vurv, stock-based compensation expense of $3.1 million and $1.1 million of other expense related to the write-off of the Worldwide Compensation purchase option. Net loss per share was $(0.04) for the third quarter of 2009 based on 30.9 million weighted average shares outstanding compared to a net loss per share of $(0.20) for the same period in 2008 based on 29.4 million weighted average shares outstanding.
Non-GAAP Net Income and Non-GAAP Net Income Per Share: Non-GAAP net income was $6.7 million for the third quarter of 2009, compared to non-GAAP net income of $5.1 million in the same period last year. Non-GAAP net income includes amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition, and excludes stock-based compensation expense, amortization of acquired intangibles, restructuring and severance expense and the write-off of the Worldwide Compensation purchase option. Non-GAAP net income per fully diluted share was $0.20 for the third quarter of 2009 based on 33.9 million weighted average shares outstanding compared to non-GAAP net income per fully diluted share of $0.15 for the same period in 2008 based on 33.3 million weighted average shares outstanding.
Conference Call Details
The company will issue a pre-recorded webcast and transcript of prepared remarks regarding the quarter at 1:30pm PDT (4:30pm EDT), both of which will be available on the Investor Relations section of www.taleo.com. The company will then host a live Q&A call at 2:30pm PDT (5:30pm EDT), with Michael Gregoire, Chairman and CEO, and Katy Murray, CFO. This call will also be available via webcast on the Investor Relations section of www.taleo.com.
About Taleo
Taleo Corporation (NASDAQ: TLEO) is the leading global provider of on-demand, unified talent management software solutions. Our goal is to help our customers improve business results through better talent management. We offer recruiting, performance management, compensation, internal mobility, onboarding, analytics and other software solutions that help our customers attract and retain high quality talent, more effectively match workers' skills to business needs, reduce the time and costs associated with manual and inconsistent processes, ease the burden of regulatory compliance, and increase workforce productivity through better alignment of workers' goals and career plans with corporate objectives.
Forward-looking Statements
This release contains forward-looking statements, including statements regarding Taleo's future financial performance, new product development, the release of Taleo 10, market growth, the demand for Taleo's solutions, the impact of Taleo's acquisition of Vurv, and general business conditions. Any forward-looking statements contained in this press release are based upon Taleo'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 Taleo's expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Taleo 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. Further information on potential factors that could affect actual results is included in Part II, Item 1A of Taleo's Quarterly Report on Form 10-Q/A, for the period ending June 30, 2009, as filed with the SEC on October 27, 2009, and in other reports filed by Taleo with the SEC.
Non-GAAP Financial Measures
Taleo has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP revenue, non-GAAP net income and non-GAAP net income per share. Taleo uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Taleo's ongoing operational performance. Taleo believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with other companies in Taleo's industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP revenue discussed above includes amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition, and other non-GAAP measures include amounts excluded from GAAP revenue due to the write down of the deferred revenue associated with purchase accounting for the Vurv acquisition and exclude costs associated with the restatement-related revenue review, stock-based compensation expense, amortization of acquired intangibles, restructuring and severance expense, non-cash tax valuation adjustment and non-cash income tax audit settlement. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. As previously mentioned, a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.
A historical reconciliation of GAAP to non-GAAP financial measures for past periods can be located on the investor relations section of www.taleo.com (see www.taleo.com -- About Taleo -- Investor Relations -- Restated Financials GAAP & Non-GAAP Reconciliation, and www.taleo.com -- About Taleo -- Investor Relations -- Quarterly Report to Restated Financials GAAP & Non-GAAP Reconciliation).
Taleo Corporation
Condensed Consolidated Statements of Operations
(All amounts in thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
As As
Revenue: restated restated
-------- --------
Application $ 44,870 $ 37,469 $128,988 $ 98,362
Consulting 5,866 9,177 18,924 22,015
-------- -------- -------- --------
Total revenue 50,736 46,646 147,912 120,377
-------- -------- -------- --------
Cost of revenue (note 1):
Application 9,838 9,106 28,620 21,690
Amortization of acquired
intangibles 761 760 2,281 831
-------- -------- -------- --------
Total cost of application
revenue 10,599 9,866 30,901 22,521
Consulting 6,203 7,245 18,758 18,607
-------- -------- -------- --------
Total cost of revenue 16,802 17,111 49,659 41,128
-------- -------- -------- --------
-------- -------- -------- --------
Gross profit 33,934 29,535 98,253 79,249
-------- -------- -------- --------
Operating expenses (note 1):
Sales and marketing 13,671 13,844 41,103 36,289
Sales - amortization of
acquired intangibles 2,810 2,035 8,433 2,182
Research and development 8,666 8,444 26,138 22,948
General and administrative 8,486 9,430 25,742 23,147
Restructuring and severance - 1,330 - 1,611
-------- -------- -------- --------
Total operating expenses 33,633 35,083 101,416 86,177
-------- -------- -------- --------
-------- -------- -------- --------
Income / (loss) from operations 301 (5,548) (3,163) (6,928)
-------- -------- -------- --------
Other income / (expense):
Interest income 52 261 246 1,556
Interest expense (42) (58) (130) (144)
Worldwide Compensation purchase
option write-off (1,084) - (1,084) -
-------- -------- -------- --------
Total other income / (expense) (1,074) 203 (968) 1,412
-------- -------- -------- --------
Loss before provision / (benefit)
for income tax (773) (5,345) (4,131) (5,516)
Provision / (benefit) for
income taxes 329 561 (831) 89
-------- -------- -------- --------
Loss attributable to Class A common
stockholders $ (1,102) $ (5,906) $ (3,300) $ (5,605)
======== ======== ======== ========
Loss per share attributable to
Class A common stockholders -
basic and diluted $ (0.04) $ (0.20) $ (0.11) $ (0.21)
======== ======== ======== ========
Weighted average Class A common
shares - basic and diluted 30,883 29,388 30,540 26,818
======== ======== ======== ========
NOTES
1. Includes stock-based
compensation expense
Application cost of revenue $ 189 $ 158 $ 480 $ 428
Consulting cost of revenue 346 252 875 704
-------- -------- -------- --------
Cost of revenue subtotal 535 410 1,355 1,132
Sales and marketing operating
expense 846 858 2,178 2,470
Research and development
operating expense 441 380 1,114 1,071
General and administrative
operating expense 1,241 1,354 3,518 3,795
-------- -------- -------- --------
Operating expense subtotal 2,528 2,592 6,810 7,336
-------- -------- -------- --------
Total stock-based compensation
expense $ 3,063 $ 3,002 $ 8,165 $ 8,468
======== ======== ======== ========
Taleo Corporation
Condensed Consolidated Statements of Operations (Continued)
(All amounts in thousands except per share data)
Reconciliation of GAAP net loss and
non-GAAP net income:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
As As
restated restated
-------- --------
GAAP net loss reported above $ (1,102) $ (5,906) $ (3,300) $ (5,605)
Add back:
Revenue
Non-GAAP application revenue 53 3,619 825 3,619
Non-GAAP service revenue - 233 13 233
-------- -------- -------- --------
Total Non-GAAP revenue 53 3,852 838 3,852
Expenses
Revenue review expense - - 1,631 -
Stock-based compensation
expense 3,063 3,002 8,165 8,468
Amortization of acquired
intangibles 3,571 2,795 10,714 3,013
Restructuring and severance
expense - 1,330 - 1,611
Non-cash tax valuation
adjustment - - - (332)
Non-cash income tax audit
settlement - - (1,335) -
-------- -------- -------- --------
6,634 7,127 19,175 12,760
Other Expense - Worldwide
Compensation purchase option
write-off 1,084 - 1,084 -
-------- -------- -------- --------
Non-GAAP net income $ 6,669 $ 5,073 $ 17,797 $ 11,007
======== ======== ======== ========
Non-GAAP net income per share
Basic $ 0.22 $ 0.17 $ 0.58 $ 0.41
======== ======== ======== ========
Diluted $ 0.20 $ 0.15 $ 0.55 $ 0.36
======== ======== ======== ========
Reconciliation of basic and fully
diluted share count:
-------- -------- -------- --------
Basic 30,883 29,388 30,540 26,818
-------- -------- -------- --------
Add: Weighted Average - Series B
common stock - 462 - 495
Weighted Average - options and
unreleased restricted stock 2,715 2,940 1,390 2,954
Weighted Average - Vurv escrow
shares 300 478 418 160
-------- -------- -------- --------
Diluted 33,898 33,268 32,348 30,427
-------- -------- -------- --------
Taleo Corporation
Condensed Consolidated Balance Sheets
(All amounts in thousands)
(Unaudited)
September 30, December 31,
2009 2008
------------- -------------
ASSETS As restated
-------------
Current assets:
Cash and cash equivalents $ 76,513 $ 49,462
Restricted cash 617 521
Accounts receivable, net 46,155 49,167
Prepaid expenses and other current
assets 10,622 10,977
Investment credits receivable 6,973 6,087
------------- -------------
Total current assets 140,880 116,214
Property and equipment, net 24,198 25,250
Restricted cash 210 515
Goodwill 91,027 91,626
Other intangibles, net 34,116 44,802
Other assets 5,470 4,782
------------- -------------
Total assets $ 295,901 $ 283,189
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 21,094 $ 24,877
Deferred revenue - application services
and customer deposits 55,714 54,421
Deferred revenue - consulting services 16,841 16,221
Capital lease obligation, short-term 573 1,101
------------- -------------
Total current liabilities 94,222 96,620
Long-term deferred revenue - application
services and customer deposits 631 777
Long-term deferred revenue - consulting
services 12,424 9,594
Other liabilities 4,239 3,258
Capital lease obligation, long-term 162 519
------------- -------------
Total liabilities 111,678 110,768
------------- -------------
Stockholders' equity:
Capital stock - -
Additional paid-in capital 264,224 250,168
Accumulated deficit (81,622) (78,322)
Treasury stock (543) -
Accumulated other comprehensive income 2,164 575
------------- -------------
Total stockholders' equity 184,223 172,421
------------- -------------
Total liabilities and stockholders' equity $ 295,901 $ 283,189
============= =============
Taleo Corporation
Consolidated Statements of Cash Flows
(All amounts in thousands)
(Unaudited)
Nine Months Ended
September 30,
2009 2008
------------- -------------
As restated
-------------
Cash flows from operating activities:
Net loss $ (3,300) $ (5,605)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 20,581 10,582
Loss on disposal of fixed assets 17 -
Amortization of tenant inducements (114) (114)
Tenant inducements from landlord 6 -
Stock-based compensation expense 8,165 8,468
Director fees settled with stock 186 172
Worldwide Compensation purchase
option write-off 1,084 -
Bad debt expense 704 259
Changes in working capital accounts:
Accounts receivable 2,248 (4,539)
Prepaid expenses and other assets (845) (2,483)
Investment credit receivable (112) (2,055)
Accounts payable and accrued liabilities (2,744) (3,413)
Deferred revenue & customer deposits 4,175 12,412
------------- -------------
Net cash provided by operating
activities 30,051 13,684
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (7,720) (5,853)
Restricted cash - decrease 210 210
Purchase of investment - (2,498)
Acquisition of business, net of cash
acquired - (49,646)
------------- -------------
Net cash used in investing
activities (7,510) (57,787)
------------- -------------
Cash flows from financing activities:
Principal payments on loan and capital lease
obligations (1,376) (344)
Treasury stock acquired to settle employee
withholding liability (661) (791)
Excess tax benefit from stock options 257 -
Proceeds from stock options exercised and
ESPP shares 5,566 8,221
------------- -------------
Net cash provided by financing
activities 3,786 7,086
------------- -------------
Effect of exchange rate changes on cash and
cash equivalents 724 (114)
------------- -------------
Increase in cash and cash equivalents 27,051 (37,131)
Cash and cash equivalents:
Beginning of period 49,462 86,135
------------- -------------
End of period $ 76,513 $ 49,004
============= =============
Supplemental cash flow disclosures:
Cash paid for interest $ 54 $ 33
------------- -------------
Cash paid for income taxes $ 273 $ 207
------------- -------------
Supplemental disclosure of non-cash financing
and investing activities:
Property and equipment purchases included
in accounts payable and accrued
liabilities $ 1,530 $ 2,691
Class B common stock exchanged for Class A
common stock $ - $ 96
Stock and stock options issued in
connection with Vurv acquisition $ - $ 75,189
Investor Contact:
Nate Swanson
925-452-3156
e-mail: nswanson@taleo.com
Media Contact:
Jaime Spuhler
904-493-8851
e-mail: jspuhler@taleo.com