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Responsys Inc (MKTG) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2011

Responsys Inc

CIK: 1084817 Ticker: MKTG

EXHIBIT 99.1

Responsys Announces Fourth Quarter 2011 Results

SAN BRUNO, Calif., Feb. 28, 2012 (GLOBE NEWSWIRE) -- Responsys, Inc. (Nasdaq:MKTG), the leading provider of email and cross-channel marketing solutions, today announced financial results for the fourth quarter and fiscal year ended December 31, 2011.

"We are pleased with our fourth quarter performance," said Dan Springer, CEO and Chairman of Responsys. "Our customers' marketing activities were robust in the period, driving solid messaging volumes and revenue ahead of our guidance. EPS was also ahead of our guidance, reflecting both strong revenue and lower-than-planned spend in certain areas. Our growth continues to be influenced by the strong need for marketing organizations to be able to market to their customers across the digital channels of email, social, mobile, the web and display."

For the fourth quarter of 2011, total revenue increased 21% to $37.2 million, up from $30.7 million in the fourth quarter of 2010.

Subscription revenue for the fourth quarter of 2011 was $26.7 million, up 20% as compared to $22.3 million in the fourth quarter of 2010. Professional services revenue for the fourth quarter of 2011 was $10.5 million, up 26% as compared to $8.3 million in the fourth quarter of 2010.

GAAP net income for the fourth quarter of 2011 was $2.0 million compared to $5.5 million in the fourth quarter of 2010. GAAP net income attributable to common stockholders for the fourth quarter of 2011 was $2.0 million, or $0.04 per share on a diluted basis. This compares to GAAP net income attributable to common stockholders for the fourth quarter of 2010 of $1.4 million, or $0.09 per share on a diluted basis. GAAP net income attributable to common stockholders is computed after determining the net income allocable to preferred stockholders prior to their conversion into common stock in conjunction with the IPO.

Non-GAAP net income for the fourth quarter of 2011 was $3.3 million, or $0.06 per share on a non-GAAP diluted basis1, as compared to non-GAAP net income of $5.3 million, or $0.12 per share on a non-GAAP diluted basis1, for the fourth quarter of 2010. A reconciliation of the comparable GAAP to non-GAAP financial measures used in this press release is included in the attached tables.

For fiscal 2011, revenue was $134.9 million, up 43% as compared to $94.1 million in 2010. Subscription revenue was $94.5 million, up 36%, and professional services revenue was $40.4 million, up 63%. 

GAAP net income for 2011 was $8.0 million compared to $8.6 million in 2010. GAAP net income attributable to common stockholders for 2011 was $5.2 million, or $0.12 per share on a diluted basis. This compares to GAAP net income attributable to common stockholders in 2010 of $1.2 million, or $0.08 per share on a diluted basis. 

Non-GAAP net income was $11.0 million in 2011, or $0.21 per share on a non-GAAP diluted basis1, compared to non-GAAP net income of $9.6 million in 2010, or $0.22 per share on a non-GAAP diluted basis1

Business Outlook

Based on information available as of February 28, 2012, Responsys is issuing guidance for 2012 as follows:

For the full year, the Company expects revenue to be in the range of $160-$163 million. Non-GAAP net income is expected to be $10-$11 million, or approximately $0.19-$0.21 per diluted share.  Non-GAAP net income excludes an estimated $2.3 million in amortization of acquired intangibles and $6.7 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on weighted average diluted shares outstanding of 54.2 million.

For the first quarter of 2012, the Company expects revenue to be in the range of $35-$36 million. Non-GAAP net income is expected to be approximately $0.04 per diluted share. Non-GAAP net income excludes an estimated $0.6 million in amortization of acquired intangibles and $1.7 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on estimated weighted average diluted shares outstanding of 53.7 million.

Non-GAAP net income for the first quarter and fiscal year 2012 assumes an effective non-GAAP tax rate of 40%.

Conference Call Information for Today, Tuesday, February 28, 2012

Responsys will host a conference call to discuss the results today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. To access the call from the U.S., please dial (877) 548-9590 or (914) 495-8541 outside the U.S. A live webcast of the call will also be available at http://investors.responsys.com/events.cfm under the Events and Presentations menu. An audio replay will be available until March 5, 2012 by calling (855) 859-2056 or (404) 537-3406 outside the U.S., using conference ID 42580924. The replay will also be available on our website at http://investors.responsys.com/.

Business Description

Responsys is the leading provider of email and cross-channel marketing solutions that enable companies to engage in relationship marketing across the interactive channels customers are embracing today—email, mobile, social, the web and display.  With Responsys solutions, marketers can create, execute, and automate highly dynamic campaigns and lifecycle marketing programs that are designed to grow revenue, increase marketing efficiency, and strengthen customer loyalty. Responsys' New School Marketing vision, flexible on-demand application suite, and customer success-focused services aim to deliver high ROI, increased levels of automation and fast time-to-value. Founded in 1998, Responsys is headquartered in San Bruno, California and has offices throughout the world. Responsys serves world-class brands such as: American Family Mutual Insurance Company, Avis Europe, Continental Airlines, Deutsche Lufthansa, Dollar Thrifty, LEGO, LinkedIn, Newegg, Qantas, Southwest Airlines, and United Healthcare. For more information about Responsys, visit responsys.com.

The Responsys, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9558

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures including non-GAAP operating income, non-GAAP net income, and non-GAAP net income per share on a diluted basis1. Non-GAAP operating income, non-GAAP net income, and non-GAAP net income per share on a diluted basis1 exclude the amortization of acquired intangible assets, stock-based compensation expense, the gain on the acquisition of Eservices, and the fair value adjustments for call and put options related to Eservices, net of related income tax effects, as applicable. Non-GAAP net income per share on a diluted basis1 is not adjusted for the impact of unamortized stock-based compensation on the computation of diluted shares under GAAP. The Company believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company's management uses these non-GAAP measures to compare the Company's performance to that of prior periods and uses these measures in financial reports prepared for management and the Company's board of directors. The Company 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 the Company's financial measures with other software-as-a-service companies, many of which present similar non-GAAP financial measures to investors.

The Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant elements that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management in determining these non-GAAP financial measures. In order to compensate for these limitations, management of the Company presents its non-GAAP financial measures in connection with its GAAP results. The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which is included in this press release, and not to rely on any single financial measure to evaluate the Company's business.

Forward Looking Statements

The financial projections under Business Outlook, and other forward-looking statements included in this presentation, reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. These risks and uncertainties include: our ability to acquire and retain customers; whether customers purchase additional functionality and increase their usage; pricing pressures and competitive factors; the uncertain impact of overall global economic conditions, including on customers, prospective customers and partners, renewal rates and length of sales cycles; the fact that the market for cross-channel marketing solutions is at an early stage of development and may not develop as rapidly as we anticipate; outages or security breaches; our ability to develop, and market acceptance of, new products and services; the impact of any discovered product defects; our ability to manage our growth, both domestically and internationally; our ability to successfully expand our sales force and its effectiveness; our ability to maintain profitability; and other risks detailed from time to time in our SEC reports including, but not limited to, our most recent quarterly report on Form 10-Q. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Responsys, Inc.
Condensed Consolidated Balance Sheets (Unaudited; in thousands)
   
  As of December 31,
  2011 2010
Assets    
Current assets:    
Cash and cash equivalents  $73,456  $13,884
Short-term investments  21,300  –
Accounts receivable, net  20,706  18,101
Deferred taxes  5,393  7,288
Prepaid expenses and other current assets  3,599  5,347
Total current assets  124,454  44,620
Property and equipment – net  14,663  10,822
Goodwill   14,048  1,301
Intangible assets – net  3,386  529
Deferred taxes – noncurrent  5,057  5,190
Investment in unconsolidated affiliates  34  8,057
Other assets  904  1,381
Total assets  $162,546  $71,900
     
Liabilities and stockholders' equity  
Current liabilities:    
Accounts payable   $1,739  $1,162
Accrued compensation  6,916  3,516
Other accrued liabilities  2,914  3,866
Current portion of capital lease obligations  879  387
Current portion of deferred revenue  7,387  8,642
Total current liabilities  19,835  17,573
Capital lease obligations – noncurrent  1,154  –
Deferred revenue – noncurrent  323  382
Other long-term liabilities  977  770
Total liabilities  22,289  18,725
Commitments and contingencies    
Stockholders' equity:    
Convertible preferred stock  –  62,028
Common stock  5  1
Additional paid-in capital  155,428  12,860
Accumulated deficit  (14,794)  (22,765)
Accumulated other comprehensive income (loss)  (382)  1,051
Total stockholders' equity  140,257  53,175
Total liabilities and stockholders' equity  $162,546  $71,900
       
       
Responsys, Inc.
Condensed Consolidated Statements of Income (Unaudited; in thousands, except per share data)
     
  Three Months Ended December 31, Year Ended December 31,
  2011 2010 2011 2010
         
Revenue:        
Subscription  $26,734  $22,346  $94,501  $69,284
Professional services  10,510  8,326  40,438  24,787
Total revenue  37,244  30,672  134,939  94,071
         
Cost of revenue:      
Subscription  7,633  5,668  27,918  20,221
Professional services  9,901  6,733  36,747  20,697
Total cost of revenue  17,534  12,401  64,665  40,918
Gross profit  19,710  18,271  70,274  53,153
         
Operating expenses:      
Research and development  3,557  3,112  13,544  10,597
Sales and marketing  9,637  5,730  33,300  20,849
General and administrative  3,181  1,813  11,463  8,225
Gain on acquisition  –  –  (2,220)  –
Total operating expenses  16,375  10,655  56,087  39,671
Operating income  3,335  7,616  14,187  13,482
Other income (expense), net  (70)  1,700  (268)  1,171
Income before income taxes  3,265  9,316  13,919  14,653
Provision for income taxes  (1,269)  (3,760)  (5,824)  (5,821)
Equity in net loss of unconsolidated affiliates  (34)  (63)  (124)  (234)
Net income  $1,962  $5,493  $7,971  $8,598
         
Net income attributable to common stockholders:    
Basic  $1,962  $938  $5,019  $802
Diluted  $1,962  $1,385  $5,190  $1,179
         
Net income per share attributable to common stockholders:    
Basic  $0.04  $0.11  $0.14  $0.09
Diluted  $0.04  $0.09  $0.12  $0.08
         
Shares used in computation of net income per share attributable to common stockholders:
Basic  47,452  8,566  35,278  8,527
Diluted  53,424  14,622  41,734  14,464
     
     
Responsys, Inc.
Calculation of Non-GAAP Gross Profits, Non-GAAP Operating Income, Non-GAAP Taxes, Non-GAAP Net Income, and Non-GAAP Net Income per Share
(Unaudited; in thousands, except per share data)
   
         
  Three Months Ended December 31, Year Ended December 31,
  2011 2010 2011 2010
Gross profit:        
GAAP gross profit        
Subscription  $19,101  $16,678  $66,583  $49,063
Professional services  609  1,593  3,691  4,090
Total GAAP gross profit  19,710  18,271  70,274  53,153
Add back:        
Stock-based compensation      
Subscription  121  118  381  316
Professional services  219  87  623  207
Total non-GAAP gross profit  $20,050  $18,476  $71,278  $53,676
         
Operating income:      
GAAP operating income  $3,335  $7,616  $14,187  $13,482
Add back:        
Amortization of intangible assets  569  54  2,325  247
Stock-based compensation  1,292  935  3,713  2,506
Deduct:        
Gain on acquisition  --  --  (2,220)  --
Total non-GAAP operating income  $5,196  $8,605  $18,005  $16,235
         
Income before income taxes:      
GAAP income before income taxes  $3,265  $9,316  $13,919  $14,653
Add back:        
Amortization of intangible assets  569  54  2,325  247
Stock-based compensation  1,292  935  3,713  2,506
Deduct:        
Fair value adjustment for call and put options related to Eservices  –  (1,514)  –  (1,493)
Gain on acquisition  –  –  (2,220)  –
Total non-GAAP income before taxes  $5,126  $8,791  $17,737  $15,913
         
Provision for income taxes:      
GAAP provision for income taxes  $(1,269)  $(3,760)  $(5,824)  $(5,821)
Tax effect from:        
Amortization of intangible assets  (178)  (22)  (723)  (99)
Stock-based compensation  (387)  (271)  (939)  (727)
Fair value adjustment for call and put options related to Eservices  --  606  --  597
Gain on acquisition  --  --  888  --
Total non-GAAP provision for income taxes  $(1,834)  $(3,447)  $(6,598)  $(6,050)
         
Net income:        
GAAP net income  $1,962  $5,493  $7,971  $8,598
Add back:        
Amortization of intangible assets  569  54  2,325  247
Stock-based compensation  1,292  935  3,713  2,506
Deduct:        
Fair value adjustment for call and put options related to Eservices  –  (1,514)  –  (1,493)
Gain on acquisition  –  –  (2,220)  –
Income tax effect of non-GAAP items  (565)  313  (774)  (229)
Total non-GAAP net income  $3,258  $5,281  $11,015  $9,629
         
Non-GAAP net income per share1:      
Basic  $0.07  $0.14  $0.25  $0.25
Diluted  $0.06  $0.12  $0.21  $0.22
         
Shares used in computing non-GAAP net income per share:    
Basic shares:        
Weighted-average common shares used in computing basic net income  
per common share  47,452  8,566  35,278  8,527
Less: weighted-average preferred shares outstanding due to conversion upon IPO  –  –  (20,574)  –
Conversion of preferred shares  –  30,159  30,159  30,159
Weighted-average shares outstanding used in calculating non-GAAP basic net income per share  47,452  38,725  44,863  38,686
         
Diluted shares:        
Weighted-average shares outstanding used in calculating non-GAAP diluted net income per  
common share  53,424  14,622  41,734  14,464
Less: weighted-average preferred shares outstanding due to conversion upon IPO  –  –  (20,574)  –
Conversion of preferred shares  –  30,159  30,159  30,159
Weighted-average shares outstanding used in calculating non-GAAP diluted net income per share  53,424  44,781  51,319  44,623
 
1 Non-GAAP net income per share on a non-GAAP diluted basis is derived by dividing non-GAAP net income by non-GAAP diluted weighted-average shares outstanding. The non-GAAP diluted weighted-average shares outstanding was computed to give effect to the conversion of the Series A, Series B, Series C, Series D, and Series E convertible preferred stock using the as-if converted method into common shares as though the conversion had occurred as of the beginning of the period. The conversion of the Series A, Series B, Series C, Series D, and Series E convertible preferred stock occurred on April 27, 2011, after our initial public offering.
         
Responsys, Inc.        
Stock-Based Compensation Expense        
(Unaudited; in thousands) Three Months Ended December 31,   Year Ended December 31,
   2011  2010  2011  2010
Cost of revenue  $ 340  $ 205  $ 1,004  $ 523
Research and development  208  92  610  331
Sales and marketing  317  279  861  694
General and administrative  427  359  1,238  958
Total costs and expenses  $ 1,292  $ 935  $ 3,713  $ 2,506
     
     
Responsys, Inc.
Condensed Consolidated Statements of Cash Flow
(Unaudited; in thousands)
   
  Year Ended December 31,
  2011 2010
     
Cash flows from operating activities:    
Net income  $7,971  $8,598
Adjustments to reconcile net income to net cash provided by operating activities:  
Provision for bad debts  (79)  63
Depreciation and amortization  9,669  5,779
Stock-based compensation  3,713  2,506
Gain on acquisition  (2,220)  -- 
Net change in call and put options  --   (1,517)
Other  88  -- 
Deferred tax assets  4,375  4,605
Excess tax benefits from stock-based compensation  (1,387)  (172)
Equity in net loss of unconsolidated affiliates  124  234
Changes in operating assets and liabilities - net of business acquired:  
Accounts receivable  (491)  (4,420)
Prepaid expenses and other current assets  (307)  (1,552)
Other assets  (668)  -- 
Accounts payable  (116)  604
Accrued compensation  2,874  312
Other accrued liabilities  1,069  438
Deferred revenue  (1,699)  3,440
Other long-term liabilities  84  502
Net cash provided by operating activities  23,000  19,420
     
Cash flows from investing activities:    
Purchases of property and equipment  (7,535)  (7,917)
Addition of capitalized software development costs  (439)  (430)
Business acquisition, net of cash received  (6,101)  (325)
Purchase of short-term investments  (24,131)  -- 
Redemption of short-term investments  2,750  -- 
Investment in unconsolidated affiliates  (381)  (7,013)
Net cash used in investing activities  (35,837)  (15,685)
     
Cash flows from financing activities:    
Proceeds from exercise of stock options  1,189  322
Proceeds from early exercise of stock options  153  643
Proceeds from initial public offering, net  72,182  -- 
Repurchase of common stock  --   (5,700)
Payments of offering costs  (1,674)  (735)
Principal payments on capital lease obligations  (752)  (417)
Excess tax benefits from stock-based compensation  1,387  172
Net cash provided by (used in) financing activities  72,485  (5,715)
Effect of foreign exchange rate changes on cash and cash equivalents  (76)  114
Net increase in cash and cash equivalents  59,572  (1,866)
Cash and cash equivalents at beginning of period  13,884  15,750
Cash and cash equivalents at end of period  $73,456  $13,884
CONTACT: Carolyn Love (Public Relations)
         Responsys, Inc.
         (415) 867-2301
         clove@responsys.com

         Carla Cooper (Investor Relations)
         Responsys, Inc.
         (650) 452-1484
         ccooper@responsys.com

The following information was filed by Responsys Inc (MKTG) on Tuesday, February 28, 2012 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Ticker: MKTG
CIK: 1084817
Form Type: 10-K Annual Report
Accession Number: 0001193125-12-143801
Submitted to the SEC: Fri Mar 30 2012 4:44:05 PM EST
Accepted by the SEC: Fri Mar 30 2012
Period: Saturday, December 31, 2011
Industry: Prepackaged Software

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