Press Release

Determine Announces 1st Quarter Fiscal Year 2018 Financial Results
Year-over-Year revenue increases, plus capital raise positions Determine for continued growth

CARMEL, Ind., Aug. 10, 2017 (GLOBE NEWSWIRE) -- Determine, Inc. (NASDAQ:DTRM), the pioneering leader in global Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) Cloud Platform solutions, announced financial results for its first quarter ended June 30, 2017.

Q1 FY18 GAAP Financial Highlights:

               
   (in thousands, except per share amounts)      
  GAAP Financial Measures     Q1 Q4 Q1 Change Change  
  FY 2018 FY 2017 FY 2017  Q/Q   Y/Y  
  Revenue - total $ 6,988   $ 7,535   $ 6,492     (7.3 %)   7.6 %  
  Revenue - recurring $ 5,300   $ 5,628   $ 5,068     (5.8 %)   4.6 %  
  Revenue - non-recurring $ 1,688   $ 1,907   $ 1,424     (11.5 %)   18.5 %  
  Gross profit - total $ 3,685   $ 3,973   $ 3,385     (7.2 %)   8.9 %  
  Gross profit - recurring $ 3,514   $ 3,696   $ 3,462     (4.9 %)   1.5 %  
  Gross profit/ (loss) - non-recurring $ 171   $ 277   $ (77 )   (38.3 %)   322.1 %  
  Gross margin - total   52.7 %   52.7 %   52.1 % 0.0 pts 0.6 pts  
  Gross margin - recurring   66.3 %   65.7 %   68.3 % 0.6 pts (2.0 pts)  
  Gross margin - non recurring   10.1 %   14.5 %   (5.4 %) (4.4 pts) 15.5 pts  
  Net loss $ (2,110 ) $ (1,708 ) $ (2,342 )   23.5 %   (9.9 %)  
  EPS $ (0.17 ) $ (0.14 ) $ (0.21 ) $ (0.03 ) $ 0.04  
               
  • GAAP revenue was $7.0 million in Q1 FY2018, compared to $7.5 million in Q4 FY2017, representing a 7.3% decrease quarter-over-quarter, and compared to $6.5 million in Q1 FY2017 GAAP revenue, representing a 7.6% increase year-over-year.
  • GAAP gross profit percentage was 52.7% in Q1 FY2018, compared to 52.7% in Q4 FY2017, and 52.1% in Q1 FY2017, remaining consistent both quarter-over-quarter and year-over-year.
  • Deferred revenues decreased to $9.9 million in Q1 FY2018 from $10.1 million in Q4 FY2017.
  • GAAP net loss was $2.1 million or $0.17 per share in Q1 FY2018, compared to $1.7 million or $0.14 per share in Q4 FY2017, representing an additional loss of $0.03 per share quarter-over-quarter; in Q1 FY2017 the GAAP net loss was $2.3 million or $0.21 per share.

Q1 FY18 Non-GAAP Financial Highlights:

             
 (in thousands, except per share amounts)        
Non-GAAP Financial Measures  Q1 Q4 Q1 Change Change  
 FY 2018  FY 2017  FY 2017  Q/Q  Y/Y  
Revenue - total $ 6,988   $ 7,535   $ 6,500     (7.3 %)   7.5 %  
Revenue - recurring $ 5,300   $ 5,628   $ 5,076     (5.8 %)   4.4 %  
Revenue - non-recurring $ 1,688   $ 1,907   $ 1,424     (11.5 %)   18.5 %  
Gross profit - total $ 4,003   $ 4,297   $ 3,710     (6.8 %)   7.9 %  
Gross profit - recurring $ 3,813   $ 3,967   $ 3,737     (3.9 %)   2.0 %  
Gross profit/(loss) - non-recurring $ 190   $ 330   $ (27 )   (42.4 %)   803.7 %  
Gross margin - total   57.3 %   57.0 %   57.1 % 0.3 pts 0.2 pts  
Gross margin - recurring   71.9 %   70.5 %   73.6 % 1.4 pts (1.7 pts)  
Gross margin - non recurring   11.3 %   17.3 %   (1.9 %) (6.0 pts) 13.2 pts  
Net loss $ (952 ) $ (428 ) $ (1,285 )   122.4 %   (25.9 %)  
EPS $ (0.08 ) $ (0.04 ) $ (0.11 ) $ (0.04 ) $ 0.03  
Billings $ 6,772   $ 7,582   $ 6,280     (10.7 %)   7.8 %  
             
  • Non-GAAP revenue was $7.0 million in Q1 FY2018, compared to $7.5 million in Q4 FY2017, representing a 7.3% decrease quarter-over-quarter, and compared to $6.5 million in Q1 FY2017, representing a 7.5% increase year-over-year.
  • Non-GAAP gross profit percentage was 57.3% in Q1 FY2018, compared to 57.0% in Q4 FY2017, and 57.1% in Q1 FY2017, remaining consistent both quarter-over-quarter and year-over-year.
  • Non-GAAP net loss was $1.0 million or $0.08 per share in Q1 FY2018, compared to a net loss of $0.4 million or $0.04 per share in Q4 FY2017, representing a $0.04 additional loss per share quarter-over-quarter. Q1 FY2017 had a non-GAAP net loss of $1.3 million or $0.11 per share, representing a $0.03 improvement per share year-over-year.
  • Billings increased 7.8% to $6.8 million in Q1 FY2018 from $6.3 million in Q1 FY2017. Billings, a non-GAAP measure, are defined as revenue plus the change in deferred revenues.
  • Non-GAAP EBITDA was a $0.2 million loss in Q1 FY2018, compared to a loss of $0.8 million in Q1 FY2017, representing an improvement of $0.6 million year-over-year.

“The business is off to a solid start from a financial perspective, and I’m pleased to report we are in a good position across our key measures. As we move forward into Fiscal 2018, our focus and our charter are on new business growth. The additional resources we secured during our recently completed capital raise combined with the industry leading capabilities of the Determine Cloud Platform will power our efforts to meeting our growth charter. We intend to build a robust business with a long-term view — we have the right talent, resources, and solutions to make it happen.”

Patrick Stakenas, President and CEO, Determine, Inc.

Q1 FY2018 Determine Business Highlights:

  • Determine Announces Pricing of Registered Direct Offering of Common Stock:
    Determine completed the sale of 2,184,000 shares of common stock at a price of $2.50 per share in a registered direct offering for total gross proceeds of $5.46 million.
     
  • Determine joins Russell Microcap® Index:
    Determine joined the Russell Microcap® Index at the conclusion of the Russell indexes annual reconstitution, effective after the US market opened on June 26th. Membership means automatic inclusion in the appropriate growth and value style indexes.
     
  • Annualized Bookings: The sales team delivered $700,000 in Annualized Bookings for the quarter, with 100% of new customers selecting the Determine Cloud Platform for their Source-to-Pay or Enterprise Contract Lifecycle Management needs.
     
  • Top 50 Providers to Know:  Determine was recognized for the third year in a row in Top 50 Providers to Know by Spend Matters. The ranking highlights firms that continue to lead the charge on new procurement technologies and services driving innovation and changing the way companies do business.
     
  • Determine Cloud Platform Named as an E-Procurement Leader in the Spend Matters SolutionMap
    Determine was recognized as a Value and Solution Leader in the Spend Matters SolutionMapSM vendor comparison ranking. E-procurement capabilities on the Determine Cloud Platform scored a hat trick across five personas, landing in the Value Leader quadrant every time. The company ranked in the top third for customer value, innovation, ROI and TCO, along with numerous solution technology categories as well.
     
  • Q1 FY2018 Customer Announcements:  During Q1 FY2018, Determine announced numerous customer accounts in the US and Europe across its Determine Cloud Platform Source-to-Pay and Enterprise Contract Lifecycle Management solutions. Determine announced customers in its portfolio across key verticals including financial, web hosting, transportation, pharmaceutical and real estate, among others.
    -- Pharmaceutical leader Orion Corporation selects Determine to optimize their global Source-to-Contract effectiveness:
    Orion Corporation, the leading Finnish global pharmaceutical and diagnostics company, selected Determine to optimize its source-to-contract effectiveness on the Determine Cloud Platform
    -- Determine, Inc. Drives the Future with New Customer Scania (Great Britain) Limited. Scania (Great Britain) Limited, one of the leading suppliers in the UK of trucks, buses, coaches and engines, has selected the Determine Cloud Platform to drive its efficiency and future growth in Purchasing.
    -- U.K. Train Operator c2c is All Aboard on the Determine Cloud Platform:
    Award-winning U.K.-based train operator c2c, part of leading European train operator Trenitalia, has selected the Determine Cloud Platform to advance their strategic sourcing processes and contract management effectiveness.
     
  • New Global Alliance Leadership:  On May 2, 2017, Determine appointed Sean Regan as Vice President of Global Alliances.  Sean brings over a decade of strategic alliance, business development and sales management experience in the technology and SaaS sector to Determine. He most recently held senior positions at SciQuest (now JAGGAER), Spend Radar (acquired by SciQuest) and CDW, a multi-brand technology solutions provider.
     
  • Determine Expands Platformance Footprint with Determine Cloud Platform 17.6 Release:
    The 17.6 Release of the Determine Cloud Platform further expands the advanced capabilities Determine customers have for Source-to-Pay efficiency and effectiveness. Each new release of the Determine Cloud Platform opens up additional potential for organizations seeking the most innovative solutions to their immediate and long-term challenges. Determine Cloud Platform Release 17.6 continues to dial up the innovation - and capabilities - available to firms.
     
  • Determine Continues Thought Leadership: In Q1 FY2018, Determine continued to provide meaningful educational resources to inform our customers and prospects on the ever-changing Source-to-Pay and Enterprise Contract Lifecycle Management landscape:
    -- Determine, Inc. Sponsors Webinar With Spend Matters: Solving the Procurement-Finance Alignment Problem – It’s Doable!:
    Determine sponsored a live webinar with Spend Matters on the topic of Procurement – Finance alignment, showing companies how to reduce misalignment to unlock value. The webinar shared the results of Determine’s research study that focused on optimizing the Procurement-Finance relationship.
    -- Determine and Ardent Partners Co-Host Webinar – CPO Rising 2017: Tools of the Trade:
    Determine and Ardent Partners of Boston hosted a live webinar sharing the most important highlights in the most recent CPO Rising 2017: Tools of the Trade. It offered a comprehensive view into what is happening in the world of procurement, the industry’s hot trends and key benchmark findings.
    -- Determine Hosts Webinar featuring Independent Research Firm Managing Services Complexity: Understanding Services Spend in 2017:
    Determine hosted a live webinar with guest Forrester which explored the growing - and increasingly critical - area of Services Procurement. Topics showed companies, governments and other organizations how to develop a holistic approach to optimizing services procurement across the enterprise.

Conference Call and Webcast Thursday, August 10, 2017 at 5:00 PM (Eastern Time)

Participant Conference Call Numbers:

Toll-Free: 1-877-407-0789

Toll/International: 1-201-689-8562

Participant Webcast Link: http://public.viavid.com/index.php?id=125745

Replay Dial-in Information:

Toll-Free: 1-844-512-2921

Toll/International: 1-412-317-6671

From:  08/10/17 @ 8:00 pm Eastern Time

To:    08/17/17 @ 11:59 pm Eastern Time

Replay Pin Number:  13667846

Related: http://investor.determine.com

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including non-GAAP revenue, non-GAAP gross profit, non-GAAP net income and non-GAAP earnings per share, which we believe are helpful in understanding our past financial performance and future results. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “GAAP to Non-GAAP Reconciliations”. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The difference between GAAP and non-GAAP revenue is due to the impact of revaluing the deferred revenue balances acquired from primarily b-pack as required by GAAP purchase accounting.

The difference between GAAP and non-GAAP gross profit is the difference in GAAP versus non-GAAP revenues as well as the elimination of the amortization of acquisition related intangibles, stock based compensation and severance expense from the costs of revenue. Non-GAAP net loss excludes the non-GAAP gross profit items as well as acquisition related costs.

Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods; as such, we believe it is useful for investors to understand the effects of these items on our total operations. Further, please note that our non-GAAP revenue is intended to reflect the full amount of revenues that would have been otherwise recorded by the acquired entities of Iasta and b-pack, while our non-GAAP gross profit also excludes the amortization of intangibles that occurred due to the acquisition of the entities of Iasta and b-pack.

Annualized Bookings are an operating measure not derived from the company’s revenues or any other amounts presented in accordance with GAAP in the company’s statement of income, balance sheet or statement of cash flows or other equivalent statements.

Forward-looking Statements

Certain statements in this release and elsewhere by Determine are forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding business outlook, assessment of market conditions, anticipated financial and operating results, strategies, product and channel development, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance or achievements of the company or industry results, to differ materially from those expressed, or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward-looking statements include, but are not limited to fluctuations in demand for Determine’s products and services, risks of losing key personnel or customers, protection of the company’s intellectual property and government policies and regulations, including, but not limited to those affecting the company’s industry. Determine undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Additional risk factors concerning the company can be found in the company’s most recent Form 10-K as filed by the company with the Securities and Exchange Commission.

Supporting Resources

Determine blog

Determine on LinkedIn

Determine on Twitter

Determine Resources

About Determine, Inc.

Determine, Inc. (NASDAQ:DTRM) is a leading global provider of SaaS Source-to-Pay and Enterprise Contract Lifecycle Management (ECLM) solutions. The Determine Cloud Platform provides procurement, legal and finance professionals analytics of their supplier, contract and financial performance. Our technologies empower customers to drive new revenue, identify savings, improve compliance and mitigate risk.

The Determine Cloud Platform seamlessly integrates with major ERP or third-party systems such as SAP, Oracle, Sage, QAD and Microsoft. Modular solutions can be configured to add more as needed to provide additional value beyond spend management. Our unified master database and business process approach empower users at every level to make more informed and smarter decisions.

For more information, please visit: www.determine.com.

 
 
Determine, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
   
  Three Months Ended
  June 30,
  2017
  2016
             
Revenues:
           
Recurring revenues   $ 5,300     $ 5,068  
Non-recurring revenues     1,688       1,424  
Total revenues     6,988       6,492  
                 
Cost of revenues:                
Cost of recurring revenues     1,786       1,606  
Cost of non-recurring revenues     1,517       1,501  
Total cost of revenues     3,303       3,107  
                 
Gross profit:                
Recurring gross profit     3,514       3,462  
Non-recurring profit (loss)     171       (77 )
Total gross profit     3,685       3,385  
                 
Operating expenses:                
Research and development     1,066       947  
Sales and marketing     2,496       2,803  
General and administrative     2,072       1,756  
Total operating expenses     5,634       5,506  
                 
Loss from operations     (1,949 )     (2,121 )
                 
Other expense, net     (178 )     (291 )
Net loss before income tax     (2,127 )     (2,412 )
                 
Benefit from income taxes     17         70  
Net loss    $   (2,110 )   $   (2,342 )
                 
Basic and diluted net loss per share   $   (0.17 )   $   (0.21 )
             
             


Determine, Inc.
GAAP to Non-GAAP Reconciliations
(In thousands)
(Unaudited)
   
  Three Months Ended
  June 30,
  2017
  2016
Reconciliation of total revenue:            
U.S. GAAP as reported   $ 6,988     $ 6,492  
Adjustments:                
Deferred revenue adjustment     -       8  
Non-GAAP revenue   $ 6,988     $ 6,500  
                 
Reconciliation of gross profit:                
U.S. GAAP as reported   $ 3,685     $ 3,385  
Adjustments:                
Deferred revenue adjustment     -       8  
Amortizaton of acquisition     252       254  
Stock based compensation     28       63  
Severance     38       -  
Non-GAAP gross profit   $ 4,003     $ 3,710  
             
Reconciliation to non-GAAP net loss:            
Net loss attributable to Determine, Inc.   $ (2,110 )   $ (2,342 )
Stock-based compensation expense     586       528  
Deferred revenue adjustment     -       8  
Amortization on intangibles     531       534  
Benefit for income taxes     -       (13 )
Severance costs     41       -  
Non-GAAP net loss   $ (952 )   $ (1,285 )
             
Non-GAAP basic and diluted net loss per share     $ (0.08 )   $ (0.11 )
                 
Weighted average shares outstanding for basic                
and diluted net loss per share     12,249       11,413  
                 
                 


Determine, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
(Unaudited)
       
  Three Months Ended
  June 30,
  2017   2016
               
Net loss
  $ (2,110 )   $ (2,342 )
Foreign currency translation adjustments, net      311       (26 )
Other comprehensive loss     (114 )     -  
Comprehensive loss   $ (1,913 )   $ (2,368 )
                 


Determine, Inc.
 Condensed Consolidated Balance Sheets
(In thousands)
         
    June 30,   March 31,
    2017   2017
    (Unaudited)   (Audited)
ASSETS                
Current assets                
Cash and cash equivalents   $ 13,656     $ 9,429  
Accounts receivable, net     6,688       7,042  
Restricted cash     26       34  
Prepaid expenses and other current assets     1,443       1,553  
Total current assets     21,813       18,058  
                 
Property and equipment, net     84       85  
Capitalized software, net     2,578       2,341  
Goodwill     14,904       14,448  
Other intangibles, net     5,441       5,860  
Other assets     1,531       1,599  
Total assets   $ 46,351     $ 42,391  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Current liabilities                
Credit facility   $ 11,861     $ 11,861  
Accounts payable     1,996       2,478  
Accrued payroll and related liabilities     1,972       1,729  
Other accrued liabilities     2,423       2,042  
Deferred revenue     9,828       10,070  
Income tax payable     120       23  
COFACE loan     130       174  
Total current liabilities     28,330       28,377  
                 
Long-term deferred revenue       36         10  
Convertible note, net of debt discount       6,845         7,599  
Other long-term liabilities       1,306         1,306  
Total liabilities       36,517         37,292  
                 
Total stockholders' equity       9,834         5,099  
Total liabilities and stockholders' equity   $   46,351     $   42,391  
                 
                 


Determine, Inc.
 Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
         
    Three Months Ended
    June 30,   June 30,
    2017   2016
                 
Operating activities                
Net loss   $ (2,110 )   $ (2,342 )
Adjustments to reconcile net loss to net cash provided by (used in)                
operating activities:                
Depreciation and amortization     971       772  
Stock-based compensation expense     586       528  
Interest expense paid in kind as convertible note debt     219       -  
Accrued restructuring costs     -       (403 )
Income tax benefit     (17 )     (70 )
Unrealized currency translation gains     (252 )     -  
Changes in assets and liabilities:                
Accounts receivable, net     354       840  
Prepaid expenses and other current assets     103       63  
Other assets     228       (104 )
Accounts payable     (482 )     (687 )
Accrued payroll and related liabilities     243       203  
Other accrued liabilities and other long-term liabilities     383       91  
Deferred revenue     (216 )     (212 )
Net cash provided by (used in) operating activities     10       (1,321 )
                 
Investing activities                
Purchase of property and equipment     (7 )     (22 )
Capitalized software development costs, net     (569 )     (329 )
Net cash used in investing activities     (576 )     (351 )
                 
Financing activities                
Proceeds from issuance of stock, net of issuance costs     4,939       -  
Net employee withholding taxes paid in connection to issuance of restricted stock      (24 )     (20 )
Issuance of common stock under employee stock purchase plan     -       4  
Credit facility borrowing     -       3,000  
Credit facility payment     -       (1,139 )
Repayment of loan     (44 )     (58 )
Proceeds from exercise of stock options     1       -  
Issuance of debt, net of costs     -       144  
Net cash provided by financing activities       4,872         1,931  
                 
 Effect of exchange rate changes on cash       (79 )       (26 )
                 
Net increase in cash and cash equivalents     4,227       233  
Cash and cash equivalents at beginning of the period       9,429         9,418  
Cash and cash equivalents at end of the period   $   13,656     $   9,651  
                 
                 


Determine, Inc.
Billings Reconciliation
(In thousands)
(Unaudited)
           
      Three Months Ended
      June 30,   June 30,
      2017   2016
           
Total revenues $ 6,988     $ 6,492  
Deferred revenue:      
End of period   9,864       10,154  
Beginning of period   10,080       10,366  
Change in deferred revenue   (216 )     (212 )
Total billings (total revenues plus the change in deferred revenue)  $ 6,772     $ 6,280  
           
           
Determine, Inc.
Non-GAAP EBITDA Reconciliation
(In thousands)
(unaudited)
       
  Three Months Ended
  June 30,
  2017   2016
Reconciliation to non-GAAP EBITDA net loss:          
Non-GAAP net loss $ (952 )   $ (1,285 )
Interest     439       366  
Depreciation   348       230  
Income tax benefit   (17 )     (70 )
Non-GAAP EBITDA net loss $ (182 )   $ (759 )
               

 

Media Relations Contacts:
Rose Lee
Determine Inc.
+1.650.532.1590
pr@determine.com

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Determine, Inc.