EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Ariba Reports Results for Third Quarter of Fiscal Year 2009

Company posts 20% year-over-year growth in 12-month subscription software backlog

SUNNYVALE, Calif., July 30, 2009 — Ariba, Inc. (Nasdaq: ARBA), the leading spend management solutions provider, today announced results for the third quarter of fiscal year 2009 ended June 30.

Quarterly Financial and Operational Highlights:

 

   

Total revenues of $83.9 million

 

   

GAAP EPS of $0.05 and non-GAAP EPS of $0.17

 

   

Subscription software revenue of $37.9 million, up 25% year-over-year

 

   

12-month subscription software backlog of $128.6 million, up 20% year-over-year

 

   

Cash flow from operations of $20.0 million, ending cash and investments of $177.2 million

“Despite a continued weak macroeconomic environment, Ariba posted another solid quarter,” said Bob Calderoni, Chairman and CEO, Ariba. “Our spend management strategy has proven to be effective even in these challenging times, and our business model is generating excellent earnings and cash flow.”

Results for the Third Quarter of Fiscal Year 2009

Revenue:

Total revenues for the third quarter of fiscal year 2009 were $83.9 million, as compared to $85.0 million for the third quarter of fiscal year 2008. Subscription and maintenance revenues for the current quarter were $55.4 million, as compared to $49.3 million for the third quarter of fiscal year 2008. Within subscription and maintenance revenues, subscription software revenue was $37.9 million for the current quarter, as compared to $30.3 million for the third quarter of fiscal year 2008. Services and other revenues for the current quarter were $28.5 million, as compared to $35.7 million for the third quarter of fiscal year 2008.

Earnings Per Share:

Net income for the third quarter of fiscal year 2009 was $3.9 million, or $0.05 per share, as compared to a net loss for the third quarter of fiscal year 2008 of $4.3 million, or $0.05 per share. Net income for the third quarter of fiscal year 2009 included charges of $1.6 million for amortization of intangible assets, $7.6 million for stock-based compensation, and a $1.4 million charge for severance and termination benefit costs. Excluding these items, Non-GAAP net income for the current quarter was $14.6 million, or $0.17 per diluted share, as compared to non-GAAP net income for the third quarter of fiscal year 2008 of $10.9 million, or $0.13 per share.

Balance Sheet and Cash:

Total cash, investments and restricted cash were $177.2 million at June 30, 2009, up $17.5 million from March 31, 2009. Net cash flow from operations for the three months ended June 30, 2009 was $20.0 million, as compared to $8.7 million for the three months ended June 30, 2008. Accounts receivable, on an average days-sales-outstanding basis, were 25 days for the third quarter of fiscal year 2009, as compared to 31 days for the third quarter of fiscal year 2008, and down one day from the previous quarter. Total deferred revenues were $116.3 million at June 30, 2009, up $5.1 million from March 31, 2009.


Customer Acquisition and Transactions for the Quarter:

During the quarter, 226 companies of all sizes purchased Ariba solutions to drive their spend management strategies, including: Apria Healthcare, Commonwealth Bank of Australia, Credit Suisse Group, Dollar Tree Stores, Inc., Hewlett-Packard Company, Kohls, Inc., KONE Corporation, Morgan Stanley, Nestle S.A., Novo Nordisk, Republic Services, Inc., The PNC Financial Services Group, and Telefonica, S.A. Ariba added 39 new customers in the third quarter and closed 12 transactions over $1 million, including four software deals. On-demand product deals totalled 171.

Conference Call Information

Ariba will hold a conference call today at 2:00 p.m. PT / 5:00 p.m. ET to discuss its results for the third quarter of fiscal year 2009. To join the call, please dial (877) 407-8031 in the United States and Canada, or (201) 689-8031 if calling internationally. The conference call also will be webcast live, and can be accessed on the investor relations section of the company’s website at www.ariba.com.

A replay of the conference call will be available for two weeks by calling (877) 660-6853 in the United States and Canada or (201) 612-7415 internationally and entering account number: 286 and conference ID number:327389.

About Ariba, Inc.

Ariba, Inc. is the leading provider of on-demand spend management solutions. Our mission is to transform the way companies of all sizes, across all industries, and geographies operate by delivering technology, service, and network solutions that enable them to holistically source, contract, procure, pay, manage, and analyze their spend and supplier relationships. Delivered on demand, our enterprise-class offerings empower companies to achieve greater control of their spend and drive continuous improvements in financial and supply chain performance. More than 1,000 companies, including more than half of the companies on the Fortune 100, use Ariba solutions to manage their spend from sourcing and orders through invoicing and payment. For more information, visit www.ariba.com.

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Copyright © 1996 – 2009 Ariba, Inc.

Ariba, the Ariba logo, AribaLIVE, SupplyWatch, Ariba.com, Ariba.com Network and Ariba Spend Management. Find it. Get it. Keep it. are registered trademarks of Ariba, Inc. Ariba Spend Management, Ariba. This is Spend Management, Ariba Solutions Delivery, Ariba Analysis, Ariba Buyer, Ariba Category Management, Ariba Category Procurement, Ariba Contract Compliance, Ariba Contracts, Ariba Contract Management, Ariba Contract Workbench, Ariba Data Enrichment, Ariba eForms, Ariba Invoice, Ariba Payment, Ariba Sourcing, Ariba Spend Visibility, Ariba Travel and Expense, Ariba Procure-to-Pay, Ariba Workforce, Ariba Supplier Network, Ariba Supplier Connectivity, Ariba Supplier Performance Management, Ariba Content Procurement, Ariba PunchOut, Ariba QuickSource, PO-Flip, Ariba Spend Management Knowledge Base, Ariba Ready, Ariba Supply Lines, Ariba Supply Manager, Ariba LIVE, It’s Time for Spend Management and Supplier Lifecycle Management are trademarks or service marks of Ariba, Inc. All other brand or product names may be trademarks or registered trademarks of their respective companies or organizations in the United States and/or other countries.

Ariba Safe Harbor

Safe Harbor Statement under the Private Securities Litigation Reform Act 1995: Information and announcements in this release involve Ariba's expectations, beliefs, hopes, plans, intentions or strategies regarding the future and are forward-looking statements


that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to Ariba as of the date of the release, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to Ariba's operating and financial results to differ materially from current expectations include, but are not limited to: the impact of the credit crises and related economic downturn on Ariba’s results of operations and financial condition; delays in development or shipment of new versions of Ariba's products and services; lack of market acceptance of Ariba's existing or future products or services; inability to continue to develop competitive new products and services on a timely basis; introduction of new products or services by major competitors; the ability to attract and retain qualified employees; difficulties in assimilating acquired companies, long and unpredictable sales cycles and the deferrals of anticipated orders; declining economic conditions, including the impact of a recession; inability to control costs; changes in the company's pricing or compensation policies; significant fluctuations in our stock price; the outcome of and costs associated with pending or potential future regulatory or legal proceedings; the impact of our acquisitions, including the disruption or loss of customer, business partner, supplier or employee relationships; and the level of costs and expenses incurred by Ariba as a result of such transactions. Factors and risks associated with its business, including a number of the factors and risks described above, are discussed in Ariba's Form 10-Q filed with the SEC on May 6, 2009.

Investor Contact:

John Duncan

Ariba, Inc.

(650) 390-1200

Investor@ariba.com

Media Contact:

Karen Master

Ariba, Inc.

(412) 297-8177

kmaster@ariba.com


Ariba, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited; in thousands)

 

     June 30,
2009
    September 30,
2008
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 112,186      $ 86,804   

Short-term investments

     16,746        —     

Accounts receivable, net

     22,596        28,968   

Prepaid expenses and other current assets

     11,775        7,859   
                

Total current assets

     163,303        123,631   

Property and equipment, net

     14,474        19,773   

Long-term investments

     19,036        20,525   

Restricted cash, less current portion

     29,241        29,641   

Goodwill

     406,507        406,507   

Other intangible assets, net

     19,172        23,965   

Other assets

     3,210        3,419   
                

Total assets

   $ 654,943      $ 627,461   
                

LIABILITIES AND STOCKHOLDERS' EQUITY

    

Current liabilities:

    

Accounts payable

   $ 7,529      $ 12,202   

Accrued compensation and related liabilities

     21,111        21,480   

Accrued liabilities

     16,153        15,677   

Restructuring obligations

     18,147        19,925   

Deferred revenue

     107,461        95,519   
                

Total current liabilities

     170,401        164,803   

Deferred rent obligations

     15,476        18,174   

Restructuring obligations, less current portion

     35,945        41,121   

Deferred revenue, less current portion

     8,842        6,396   

Other long-term liabilities

     6,322        5,949   
                

Total liabilities

     236,986        236,443   
                

Stockholders' equity:

    

Common stock

     177        174   

Additional paid-in capital

     5,179,361        5,154,137   

Accumulated other comprehensive loss

     (3,967     (3,094

Accumulated deficit

     (4,757,614     (4,760,199
                

Total stockholders' equity

     417,957        391,018   
                

Total liabilities and stockholders' equity

   $ 654,943      $ 627,461   
                


Ariba, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited; in thousands, except per share data)

 

     Three Months Ended
June 30,
    Nine Months Ended June
30,
 
     2009     2008     2009     2008  

Revenues:

        

Subscription and maintenance

   $   55,411      $   49,278      $   164,348      $   136,102   

Services and other

     28,463        35,738        90,306        106,426   
                                

Total revenues

     83,874        85,016        254,654        242,528   
                                

Cost of revenues:

        

Subscription and maintenance

     12,158        10,101        35,638        29,423   

Services and other

     18,551        23,689        56,873        72,324   

Amortization of acquired technology and customer intangible assets

     1,388        4,675        4,163        12,869   
                                

Total cost of revenues

     32,097        38,465        96,674        114,616   
                                

Gross profit

     51,777        46,551        157,980        127,912   
                                

Operating expenses:

        

Sales and marketing

     25,515        28,682        79,019        83,226   

Research and development

     10,787        13,617        32,142        40,878   

General and administrative

     9,301        11,702        33,116        37,010   

Other income - Softbank

     —          —          —          (566

Insurance reimbursement

     —          —          (7,527     —     

Amortization of other intangible assets

     210        210        630        529   

Restructuring and integration costs (benefit)

     1,438        (694     10,837        3,834   

Litigation provision

     —          —          —          5,900   
                                

Total operating expenses

     47,251        53,517        148,217        170,811   
                                

Income (loss) from operations

     4,526        (6,966     9,763        (42,899

Interest and other (expense) income, net

     (265     2,353        (6,020     8,560   
                                

Income (loss) before income taxes

     4,261        (4,613     3,743        (34,339

Provision for income taxes

     367        (326     1,158        666   
                                

Net income (loss)

   $ 3,894      $ (4,287   $ 2,585      $ (35,005
                                

Net income (loss) per share - basic

   $ 0.05      $ (0.05   $ 0.03      $ (0.46

Net income (loss) per share - diluted

   $ 0.05      $ (0.05   $ 0.03      $ (0.46

Weighted average shares - basic

     83,444        78,585        82,269        76,479   

Weighted average shares - diluted

     85,447        78,585        84,712        76,479   


Ariba, Inc. and Subsidiaries

Cash Flows

(Unaudited; in thousands)

 

     Three Months Ended
June 30,
 
     2009     2008  

Operating activities:

    

Net income (loss)

   $ 3,894      $ (4,286

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Provision for doubtful accounts

     493        167   

Depreciation

     1,932        2,022   

Amortization of intangible assets

     1,598        4,885   

Stock-based compensation

     7,640        9,552   

Restructuring and integration costs (benefit)

     1,438        (694

Changes in operating assets and liabilities:

    

Accounts receivable

     399        1,007   

Prepaid expense and other assets

     (704     83   

Accounts payable

     619        1,296   

Accrued compensation and related liabilities

     3,739        (1,768

Accrued liabilities

     (460     (2,039

Deferred revenue

     5,284        5,166   

Restructuring obligations

     (5,847     (6,670
                

Net cash provided by operating activities

     20,025        8,721   
                

Investing activities:

    

Cash paid for acquisitions, net of cash acquired

     —          (163

Purchases of property and equipment

     (1,352     (2,512

Purchases of investments, net of sales

     (17,995     1,758   

Allocation from restricted cash, net

     14        (53
                

Net cash used in investing activities

     (19,333     (970
                

Financing activities:

    

Proceeds from issuance of common stock, net

     162        836   

Repurchase of common stock

     (1,015     (1,883
                

Net cash used in financing activities

     (853     (1,047
                

Effect of exchange rates on cash and cash equivalents

     (289     (690

Net change in cash and cash equivalents

     (450     6,014   

Cash and cash equivalents at beginning of period

     112,636        72,529   
                

Cash and cash equivalents at end of period

   $   112,186      $   78,543   
                


Non-GAAP Financial Measures

The accompanying press release dated July 30, 2009 contains non-GAAP financial measures. The following table reconciles the non-GAAP financial measures in the press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP revenues, non-GAAP cost of revenues, gross profit, operating expenses, income (loss) from operations, net income (loss) and net income (loss) per share amounts.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, GAAP financial measures, which should be considered as the primary financial metrics for evaluating our financial performance. Significantly, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. Instead, they are based on subjective determinations by management designed to supplement our GAAP financial measures. They are subject to a number of important limitations and should be considered only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For example, our non-GAAP financial measures have the effect of excluding a purchase accounting adjustment, costs and expenses from our operating results that should be properly considered under a system of accrual accounting. In addition, our non-GAAP financial measures differ from GAAP measures with the same names, may vary over time and may differ from non-GAAP financial measures with the same or similar names used by other companies. Accordingly, investors should exercise caution when evaluating our non-GAAP financial measures.

Despite these limitations, we believe our non-GAAP financial measures provide meaningful supplemental information about our operating results, primarily because they exclude a purchase accounting adjustment and costs and expenses that we do not believe are indicative of the ongoing operating performance of our business and our senior management. Although these items should properly be considered in our GAAP financial measures, we believe they should be excluded when evaluating our current operating performance. The non-GAAP financial measures disclosed in the accompanying press release are used by our Board of Directors and senior management to evaluate our current operating performance, are used in evaluating the performance of our senior management, and are used in our budget and planning processes. We believe that our non-GAAP financial measures are helpful to investors by facilitating comparisons of our current and prior operating results and by facilitating comparisons of our operating results with those of other software companies.


Ariba, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Operating Results

(Unaudited; in thousands, except per share data)

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP operating results for the period indicated below:

 

     Three Months Ended
June 30, 2009
    Three Months Ended
June 30, 2008
 

Revenue reconciliation:

    

GAAP revenue

   $ 83,874      $ 85,016   

Purchase accounting adjustment

     —          1,440   
                

Total non-GAAP revenues

   $ 83,874      $ 86,456   
                
     Three Months Ended
June 30, 2009
    Three Months Ended
June 30, 2008
 

Expense reconciliation:

    

GAAP revenue

   $ 83,874      $ 85,016   

Less: GAAP net income (loss)

     3,894        (4,287
                

Total GAAP expenses

     79,980        89,303   

Amortization of intangible assets

     (1,598     (4,885

Stock-based compensation

     (7,640     (9,552

Restructuring and integration

     (1,438     694   
                

Total non-GAAP operating expenses

   $ 69,304      $ 75,560   
                
     Three Months Ended
June 30, 2009
    Three Months Ended
June 30, 2008
 

Net income (loss) reconciliation:

    

GAAP net income (loss)

   $ 3,894      $ (4,287

Purchase accounting adjustment

     —          1,440   

Amortization of intangible assets

     1,598        4,885   

Stock-based compensation

     7,640        9,552   

Restructuring and integration

     1,438        (694
                

Non-GAAP net income

   $ 14,570      $ 10,896   
                
     Three Months Ended
June 30, 2009
    Three Months Ended
June 30, 2008
 

Net income (loss) per share reconciliation:

    

GAAP net income (loss) per share - basic

   $ 0.05      $ (0.05

Purchase accounting adjustment

     —          0.02   

Amortization of intangible assets

     0.02        0.06   

Stock-based compensation

     0.09        0.12   

Restructuring and integration

     0.02        (0.01
                

Non-GAAP net income per share - basic

   $ 0.17      $ 0.14   
                

Non-GAAP net income per share - diluted

   $ 0.17      $ 0.13   

Weighted average shares - basic

     83,444        78,585   

Weighted average shares - diluted

     85,447        81,394   


Ariba, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Operating Results

(Unaudited; in thousands, except per share data)

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP operating results for the period indicated below:

 

     Nine Months Ended
June 30, 2009
    Nine Months Ended
June 30, 2008
 

Revenue reconciliation:

    

GAAP revenue

   $ 254,654      $ 242,528   

Purchase accounting adjustment

     355        4,103   
                

Total non-GAAP revenues

   $ 255,009      $ 246,631   
                
     Nine Months Ended
June 30, 2009
    Nine Months Ended
June 30, 2008
 

Expense reconciliation:

    

GAAP revenue

   $ 254,654      $ 242,528   

Less: GAAP net income (loss)

     2,585        (35,005
                

Total GAAP expenses

     252,069        277,533   

Amortization of intangible assets

     (4,793     (13,398

Stock-based compensation

     (25,262     (30,870

Restructuring and integration

     (10,837     (3,834

Litigation provision

     —          (5,900

Other-than-temporary impairment of long-term investment

     (1,414     —     
                

Total non-GAAP operating expenses

   $ 209,763      $ 223,531   
                
     Nine Months Ended
June 30, 2009
    Nine Months Ended
June 30, 2008
 

Net income (loss) reconciliation:

    

GAAP net income (loss)

   $ 2,585      $ (35,005

Purchase accounting adjustment

     355        4,103   

Amortization of intangible assets

     4,793        13,398   

Stock-based compensation

     25,262        30,870   

Restructuring and integration

     10,837        3,834   

Litigation provision

     —          5,900   

Other-than-temporary impairment of long-term investment

     1,414        —     
                

Non-GAAP net income

   $ 45,246      $ 23,100   
                
     Nine Months Ended
June 30, 2009
    Nine Months Ended
June 30, 2008
 

Net (loss) income per share reconciliation:

    

GAAP net loss per share - basic

   $ 0.03      $ (0.46

Purchase accounting adjustment

     0.00        0.05   

Amortization of intangible assets

     0.06        0.18   

Stock-based compensation

     0.31        0.40   

Restructuring and integration

     0.13        0.05   

Litigation provision

     —          0.08   

Other-than-temporary impairment of long-term investment

     0.02        —     
                

Non-GAAP net income per share - basic

   $ 0.55      $ 0.30   
                

Non-GAAP net income per share - diluted

   $ 0.53      $ 0.28   

Weighted average shares - basic

     82,269        76,479   

Weighted average shares - diluted

     84,712        81,332   


Discussion of Specific Items Excluded From Non-GAAP Financial Measures

Our non-GAAP financial measures include a purchase accounting adjustment related to deferred revenues and generally exclude costs and expenses for (i) amortization of intangible assets related to acquisitions, (ii) stock-based compensation, (iii) restructuring and integration, (iv) litigation provision and (v) other-than-temporary impairment of long-term investments. We exclude these items because we believe they are not closely related to the ongoing operating performance of our business and the performance of our senior management and are generally excluded from our budget and planning process. In addition to these reasons, we believe our non-GAAP financial measures are also helpful to investors by facilitating comparisons of our operating results over different time periods and by facilitating comparisons of our financial performance with that of other companies. In addition, except for costs and expenses related to restructuring and integration, these items are non-cash items that do not affect cash flows.

(1) Purchase accounting adjustment – deferred revenue. As announced on December 17, 2007, Ariba acquired Procuri, Inc. In accordance with the fair value provisions of EITF 01-3, Accounting in a Business Combination for Deferred Revenue of an Acquiree, acquired deferred revenue of approximately $4.5 million was recorded on the opening balance sheet, which was approximately $5.9 million lower than the historical carrying value. Although this purchase accounting requirement has no impact on the Company's business or cash flow, it adversely impacts the Company's reported GAAP revenue primarily for the first twelve months post- acquisition. In order to provide investors with financial information that facilitates comparison of both historical and future results, the Company has provided non-GAAP financial measures which exclude the impact of the purchase accounting adjustment. The Company believes that this non-GAAP financial adjustment is useful to investors because it allows investors to (a) evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making and (b) compare past and future reports of financial results of the Company as the revenue reduction related to acquired deferred revenue will not recur when related subscription terms are renewed in future periods.

(2) Amortization of Acquired Intangible Assets. In accordance with GAAP, we amortize intangible assets acquired in connection with acquisitions over the estimated useful lives of the assets. We exclude these amortization costs in our non-GAAP financial measures because they (i) result from prior acquisitions, rather than the ongoing operating performance of our business, and (ii) absent additional acquisitions, are expected to decline over time as the remaining carrying amounts of these assets are amortized. We believe excluding these costs helps investors compare our financial performance with that of other companies with different acquisition histories. However, as with impairment charges, we recognize that amortization costs provide a helpful measure of the financial impact and performance of prior acquisitions and consider our non-GAAP financial measures in conjunction with our GAAP financial results that include amortization costs.


(3) Stock-Based Compensation Expenses. We exclude stock-based compensation expense associated with stock options and stock granted to employees and non-executive directors in our non-GAAP financial measures. While stock-based compensation is a significant component of our expenses, we believe that investors wish to be able to exclude the effects of stock-based compensation expense in comparing our financial performance with that of other companies.

(4) Restructuring and integration. We recorded restructuring related to lease abandonment accruals and/(or) severance and related benefits in the three and nine months ended June 30, 2009 and 2008. We exclude this from our non-GAAP financial measures because it is unrelated to our ongoing operations and is significantly impacted by factors outside our control. We believe excluding restructuring and integration helps investors compare our operating performance with that of other companies. We recognize, however, that restructuring and integration will impact cash flows and that we and investors should carefully consider the impact of these costs on future cash flows.

(5) Litigation provision. We recorded a litigation provision related to a patent infringement matter in the nine months ended June 30, 2008. We exclude this from our non-GAAP financial measures because it is unrelated to our ongoing operations. We believe excluding the litigation provision helps investors compare our operating performance with that of other companies. We recognize, however, that the litigation provision will impact cash flows and that we and investors should carefully consider the impact of these costs on future cash flows.

(6) Other-than-temporary impairment of long-term investments. We recorded an other-than temporary impairment of a long-term investment in the nine months ended June 30, 2009. We exclude this from our non-GAAP financial measures because it is unrelated to our ongoing operations. We believe excluding the other-than-temporary impairment helps investors compare our operating performance with that of other companies. We recognize, however, that the other-than-temporary impairment may impact cash flows and that we and investors should carefully consider the impact of these costs on future cash flows.