Fourth Quarter total revenue of $US
22.2 million, up 22% year-over-year Fiscal Year 2014 total revenue
of $US 83.1 million, up 28% year-over-year
Diligent Board Member Services, Inc. ("Diligent" or the "Company")
(NZX:DIL) (www.boardbooks.com), provider of the world's most widely
used secure board portal, today announced financial results for the
fourth quarter and fiscal year ended December 31, 2014.
Alessandro Sodi, President and Chief Executive Officer of
Diligent, stated, "We ended 2014 on a high note generating fourth
quarter revenue that exceeded the high-end of our guidance range
and full year revenue growth of 28% year-over-year. Our results
demonstrate strong demand for Diligent Boardbooks and the continued
execution of our growth strategy."
Mr. Sodi continued, "Looking to 2015, we will continue to make
investments to strengthen our leading solution, as we also work to
introduce new and complimentary use cases and expand our global
sales and marketing platforms to position Diligent for its next
stage of growth. Consistent with this strategy, we plan to
introduce a new SaaS collaboration solution called Diligent Teams
during the third quarter of 2015. The launch of Diligent Teams will
be an important milestone in the evolution of the Company, as we
look to extend our best-of-breed technology beyond the boardroom
and deliver even greater value to our customers."
Fourth Quarter 2014 Financial Highlights
- Revenue: For the quarter ended December 31,
2014, total revenue was $US 22.2 million, an increase of 22%
compared with $US 18.2 million in the prior year.
- Gross Profit: Gross profit for the fourth
quarter was $US 18.0 million, an increase of 26% compared with $US
14.2 million in the prior year. Gross margin was 81.2% in the
fourth quarter of 2014 compared with 78.3% in the prior year
period.
- Adjusted EBITDA: For the quarter ended
December 31, 2014, Adjusted EBITDA was $US 5.5 million, compared
with $US 6.4 million in the prior year. Adjusted EBITDA margin was
24.6% in the fourth quarter of 2014 compared with 35.4% in the
prior year period.
- Net Income: For the quarter ended December 31,
2014, net income was $US 1.8 million, compared with $US 0.6 million
in the prior year. Diluted earnings per share were $US 0.01,
compared with $US 0.00 in the prior year.
Adjusted Net Income for the fourth
quarter was $US 2.5 million, compared with $US 3.7 million in the
prior year. Adjusted Net Income per diluted share was $US 0.02,
compared with $US 0.03 in the prior year.
Fourth Quarter and Recent Business
Highlights
- Boardbooks Users and Client Agreements: During
the fourth quarter of 2014, the number of Diligent Boardbooks®
users increased by approximately 5,100 to over 92,000 users. As of
December 31, 2014, total client agreements exceeded 3,000.
- Revenue Retention Rate: In the fourth quarter,
Diligent's annual revenue retention rate (excluding upsells into
the existing customer base) continued to exceed 95%; which the
Company believes places it among the best-in-class for SaaS
companies.
- Industry Awards: Diligent was recently honored
with two awards for its customer service and support excellence. In
December 2014, Diligent was named a gold winner in the "Most
Customer Friendly Company of the Year" category in the Best in Biz
Awards 2014. In January 2015, Diligent was awarded an International
Service Excellence Award from the Customer Service Institute of
America.
Fiscal Year 2014 Financial Highlights
- Revenue: For the year ended December 31, 2014,
total revenue was $US 83.1 million, an increase of 28% compared
with $US 64.8 million in the prior year.
- Gross Profit: Gross profit for the year ended
December 31, 2014 was $US 67.1 million, an increase of 30% compared
with $US 51.8 million in the prior year. Gross margin for the year
ended December 31, 2014 was 80.7% compared with 80.0% in the prior
year.
- Adjusted EBITDA: For the year ended December
31, 2014, Adjusted EBITDA was $US 24.6 million, an increase of 10%
compared with $US 22.4 million in the prior year. Adjusted EBITDA
margin for the year ended December 31, 2014 was 29.6% compared with
34.6% in the prior year.
- Net Income: For the year ended December 31,
2014, net income was $US 8.9 million, an increase of 43% compared
with $US 6.3 million in the prior year. Diluted earnings per share
were $US 0.07 for the year ended December 31, 2014, compared with
$US 0.05 in the prior year.
Adjusted Net Income for the year ended
December 31, 2014 was $US 12.9 million, an increase of 1% compared
with $US 12.8 million in the prior year. Adjusted Net Income per
diluted share was $US 0.11 for the year ended December 31, 2014,
compared with $US 0.11 in the prior year.
- Balance Sheet and Cash Flow: As of December
31, 2014, Diligent had $US 70.8 million in cash and cash
equivalents and short-term investments and no bank debt, compared
with $56.1 million in cash and cash equivalents and short-term
investments as of December 31, 2013.
The Company generated $US 24.4 million
in cash from operations and invested $US 7.2 million in capital
expenditures, yielding free cash flow of $US 17.2 million for the
year ended December 31, 2014. Free cash flow was $US 23.8 million
in fiscal 2013.
A reconciliation of GAAP to non-GAAP financial measures has been
provided in the financial statement tables included in this press
release. An explanation of these measures is also included below
under the heading "Non-GAAP Financial Measures."
Financial Outlook
As of the date of this announcement, Diligent's guidance for its
first quarter and full year 2015 is as follows:
- First Quarter 2015: The Company expects
revenue to be between $US 22.5 million and $US 22.7 million, or an
increase of 18% to 19% year-over-year.
- Full Year 2015: The Company expects revenue to
be between $US 97.0 million and $US 99.0 million, or an increase of
17% to 19% in comparison to full year 2014. Diligent expects
adjusted EBITDA margin for full year 2015 to be between 24% and
26%.
Quarterly Conference Call
Diligent will host a conference call at 9:30 a.m. NZDT on March
2, 2015 (3:30 p.m. US ET on March 1) to review the Company's
financial results for the fourth quarter and fiscal year ended
December 31, 2014. To access this call participants should dial
0800 452 092 (New Zealand), 1-855-327-6837 (U.S.) or
+1-778-327-3988 (international). A live webcast of the conference
call will be accessible from the investor relations section of
Diligent's website at
http://investor.boardbooks.com/investor-relations/events-and-presentations/.
A replay of this conference call can also be accessed through March
9, 2015 at 9:00 a.m. USET, by dialing 0800 452 092 (New Zealand),
1-800-319-6413 (U.S.). The replay pass code is 78523.
About Diligent
Over 92,000 individual directors, executives and board teams
worldwide rely on Diligent Board Member Services, Inc. (NZX:DIL) to
speed and simplify how board materials are produced, delivered,
reviewed and voted on. Providing the world's most widely used
secure board portal via iPad, Windows devices and browsers –
Diligent has pioneered ease of use, stringent security, and
superior training and support since 2001. Diligent Boardbooks
provides directors and management with immediate access to their
most time sensitive and confidential information along with the
tools to review, discuss and collaborate on it. It also helps
administrative staff accelerate production and delivery, and
corporate executives streamline board communications and
decisions.
Diligent uses the Software-as-a-Service (SaaS) model to
distribute its Diligent Boardbooks application to the market and
maintain the security and integrity of its clients' data. Under
this model, Diligent offers annual renewable subscriptions for
customer access to its Diligent Boardbooks product which is hosted
on Diligent's secure servers, and offers a complete suite of
related services including training, support, data migration and
data security/backup.
Non-GAAP Financial Measures
This earnings release presents Adjusted EBITDA, Adjusted Net
Income and Adjusted Net Income per share information, which are
provided to investors to supplement the results of operations
reported in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). We define these
terms as follows:
- Adjusted EBITDA: operating income before depreciation and
amortization expense, stock based compensation expense, costs
associated with the investigation and restatement of our historical
financial statements, and non-recurring costs related to the CEO's
performance cash awards and restatement bonuses.
- Adjusted Net Income: net income before costs relating to
non-cash stock based compensation, costs associated with the
investigation and restatement of our historical financial
statements, and non-recurring costs related to the CEO's
performance cash awards and restatement bonuses, net of tax.
These supplemental measures of the Company's performance are not
required by, or presented in accordance with GAAP. The Company's
management uses these non-GAAP financial measures internally in
analyzing its financial results and believes they are useful to
investors, as a supplement to the corresponding GAAP measures, in
evaluating the Company's ongoing operational performance and trends
and in comparing its financial measures with other companies in the
same industry, many of which present similar non-GAAP financial
measures to help investors understand the operational performance
of their businesses. However, it is important to note that the
particular items the Company excludes from, or includes in, its
non-GAAP financial measures may differ from the items excluded
from, or included in, similar non-GAAP financial measures used by
other companies in the same industry. Non-GAAP financial measures
should not be considered in isolation from, or a substitute for,
financial information prepared in accordance with GAAP. For a
quantitative reconciliation of Adjusted EBITDA and Adjusted Net
Income to the most directly comparable GAAP financial performance
measure see Schedule 4: Reconciliation of GAAP to Non-GAAP
Operating Results in this earnings release.
Safe Harbor Statement
Statements made in this press release that state Diligent's or
management's intentions, beliefs, expectations, or predictions for
the future are forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995, including without
limitation Diligent's revenue outlook for the first quarter and
full year 2015 and the anticipated release of the Diligent Teams
product. Readers are cautioned that these statements are only
predictions and may differ materially from actual future events or
results. All forward looking-statements are only as of the date of
this press release and Diligent undertakes no obligation to update
or revise them. Such forward-looking statements are subject to a
number of risks, assumptions and uncertainties that could cause
Diligent's actual results to differ materially from those projected
in such forward-looking statements. For example, if we do not
successfully develop or introduce new product offerings, or
enhancements to our existing Diligent Boardbooks offerings, or keep
pace with technological changes that impact the use of our product
offerings, or suffer security breaches or service interruptions, we
may lose existing customers or fail to attract new customers and
our financial performance and revenue growth may suffer. Factors
which could cause our actual results to differ materially from
those projected in forward-looking statements include, without
limitation, economic, competitive, regulatory and technological
factors affecting Diligent Board Member Services, Inc.'s
operations, markets, products, services and other factors set forth
in the Company's Risk Factors included in its Annual Report on Form
10-K/A filed with the SEC on May 20, 2014.
Diligent Board Member
Services, Inc. |
Schedule 1: Unaudited
Condensed Consolidated Statements of Income |
(in $US thousands,
except per share amounts) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
|
|
|
Revenues |
$ 22,161 |
$ 18,184 |
$ 83,054 |
$ 64,757 |
Cost of revenues (excluding depreciation
and amortization) |
4,174 |
3,942 |
16,001 |
12,959 |
Gross profit |
17,987 |
14,242 |
67,053 |
51,798 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling and marketing |
3,749 |
2,528 |
11,833 |
9,617 |
General and administrative (1) |
7,285 |
6,473 |
28,371 |
20,137 |
Research and development |
2,766 |
1,409 |
8,025 |
4,497 |
Depreciation and amortization |
831 |
515 |
2,784 |
1,645 |
Investigation and restatement |
-- |
2,289 |
916 |
5,571 |
Total operating
expenses |
14,631 |
13,214 |
51,929 |
41,467 |
|
|
|
|
|
Operating income |
3,356 |
1,028 |
15,124 |
10,331 |
|
|
|
|
|
Other expense, net: |
|
|
|
|
Interest expense, net |
(75) |
(33) |
(45) |
(91) |
Foreign exchange transaction
loss |
(50) |
(87) |
(75) |
(236) |
Total other expense,
net |
(125) |
(120) |
(120) |
(327) |
|
|
|
|
|
Income before provision for income
taxes |
3,231 |
908 |
15,004 |
10,004 |
Income tax expense |
1,456 |
259 |
6,078 |
3,744 |
Net income |
$ 1,775 |
$ 649 |
$ 8,926 |
$ 6,260 |
|
|
|
|
|
Accrued preferred stock dividends |
(82) |
(89) |
(335) |
(359) |
Net income attributable to common
stockholders |
$ 1,693 |
$ 560 |
$ 8,591 |
$ 5,901 |
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ 0.01 |
$ 0.00 |
$ 0.07 |
$ 0.05 |
Diluted |
$ 0.01 |
$ 0.00 |
$ 0.07 |
$ 0.05 |
Weighted average shares outstanding: |
|
|
|
|
Basic |
117,791 |
116,443 |
117,109 |
116,427 |
Diluted |
122,160 |
121,215 |
121,117 |
121,729 |
___________________________ |
(1) Within general and
administrative expenses Diligent has recorded expense of $US 0 and
$US 2.1 million for the CEO's performance cash awards and $US 0 and
$US 708,000 for restatement bonuses for the three and twelve months
ended December 31, 2014, respectively. For the three and
twelve months ended December 31, 2013, Diligent has recorded
expense of $US 1.1 and $US 2.1 million for the CEO's performance
cash awards and $US 228,000 and $US 228,000 for restatement
bonuses, respectively. |
|
|
Diligent Board Member
Services, Inc. |
Schedule 2: Unaudited
Condensed Consolidated Balance Sheets |
(in $US thousands,
except share and per share amounts) |
|
|
|
|
December 31,
2014 |
December 31,
2013 |
|
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 70,809 |
$ 43,583 |
Short-term investments |
-- |
12,497 |
Accounts receivable, net |
1,754 |
1,750 |
Deferred commissions |
1,353 |
1,532 |
Prepaid expenses and other current
assets |
3,233 |
1,936 |
Deferred tax assets |
2,768 |
3,111 |
Income tax receivable |
-- |
1,430 |
Total current assets |
79,917 |
65,839 |
|
|
|
Property and equipment, net |
12,203 |
8,228 |
Intangible assets, net |
260 |
-- |
Deferred tax assets |
6,804 |
3,607 |
Security deposits |
801 |
676 |
Other assets |
436 |
-- |
Total assets |
$ 100,421 |
$ 78,350 |
|
|
|
LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 2,197 |
$ 2,402 |
Accrued expenses and other
liabilities |
11,468 |
8,856 |
Income taxes payable |
1,552 |
-- |
Deferred revenue |
32,238 |
27,428 |
Obligations under capital leases |
623 |
847 |
Total current
liabilities |
48,078 |
39,533 |
|
|
|
Non-current
liabilities: |
|
|
Deferred revenue, less current
portion |
12,138 |
10,471 |
Obligations under capital leases |
34 |
767 |
Other non-current liabilities |
3,899 |
2,634 |
Total non-current
liabilities |
16,071 |
13,872 |
Total liabilities |
64,149 |
53,405 |
Commitments and
contingencies |
-- |
-- |
Redeemable preferred
stock: |
|
|
Series A convertible redeemable preferred
stock, $.001 par value, 50,000,000 shares authorized 30,000,000 and
32,667,123 shares issued and outstanding (liquidation value
$4,835) |
3,000 |
3,261 |
Stockholders' equity: |
|
|
Common Stock, $.001 par value,
250,000,000 shares authorized, 86,895,778 and 83,776,155 shares
issued and outstanding |
87 |
84 |
Additional paid-in capital |
32,631 |
28,861 |
Retained earnings/(accumulated
deficit) |
1,706 |
(7,220) |
Accumulated other comprehensive
loss |
(1,152) |
(41) |
Total stockholders'
equity |
33,272 |
21,684 |
Total liabilities, redeemable
preferred stock and stockholders' equity |
$ 100,421 |
$ 78,350 |
|
|
Diligent Board Member
Services, Inc. |
Schedule 3: Unaudited
Condensed Consolidated Statements of Cash Flows |
(in $US
thousands) |
|
|
|
|
Year Ended
December 31, |
|
2014 |
2013 |
|
|
|
Cash flows from operating
activities: |
|
|
Net income |
$ 8,926 |
$ 6,260 |
Adjustments to reconcile net income
to net cash provided by operating activities: |
|
|
Deferred taxes |
(2,855) |
(1,278) |
Excess tax benefits realized from
share-based compensation |
(154) |
(302) |
Depreciation and amortization |
2,784 |
1,645 |
Share-based compensation |
3,033 |
2,581 |
Changes in operating assets and
liabilities: |
|
|
Accounts receivable |
(3) |
(209) |
Deferred commissions |
180 |
549 |
Prepaid expenses and other current
assets |
(1,297) |
(871) |
Security deposits |
-- |
11 |
Other non-current assets |
(436) |
-- |
Accounts payable and accrued
expenses |
3,293 |
4,677 |
Income taxes payable |
3,135 |
(2,518) |
Deferred revenue |
6,477 |
13,964 |
Other non-current liabilities |
1,344 |
2,508 |
Other |
-- |
45 |
Net cash provided by operating
activities |
24,427 |
27,062 |
Cash flows from investing
activities: |
|
|
Purchases of short-term investments |
-- |
(17,495) |
Proceeds from maturity of short-term
investments |
12,497 |
5,101 |
Restricted cash-security deposits |
(124) |
(462) |
Purchases of property and equipment |
(6,964) |
(3,309) |
Purchases of intangible assets |
(275) |
-- |
Net cash provided by (used in)
investing activities |
5,134 |
(16,165) |
Cash flows from financing
activities: |
|
|
Payment of preferred stock dividend |
(359) |
(120) |
Proceeds from exercise of stock
options |
19 |
73 |
Excess tax benefits realized from
share-based compensation |
154 |
302 |
Repayments of obligations under capital
leases |
(956) |
(626) |
Payments of obligations under software
licensing agreements |
(82) |
(145) |
Net cash used in financing
activities |
(1,224) |
(516) |
Effect of exchange rates on cash and cash
equivalents |
(1,111) |
(109) |
Net increase in cash and cash
equivalents |
27,226 |
10,272 |
Cash and cash equivalents at
beginning of year |
43,583 |
33,311 |
Cash and cash equivalents at end of
year |
$ 70,809 |
$ 43,583 |
|
|
Diligent Board Member
Services, Inc. |
Schedule 4:
Reconciliation of GAAP to Non-GAAP Operating Results |
(in $US thousands,
except per share amounts) |
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Operating Income |
$3,356 |
$1,028 |
$15,124 |
$10,331 |
(+) D&A |
$831 |
$515 |
$2,784 |
$1,645 |
EBITDA |
$4,187 |
$1,543 |
$17,908 |
$11,976 |
(+) Investigations & Restatement |
0 |
2,289 |
916 |
5,571 |
(+) CEO Performance Cash Awards and
Restatement Bonuses |
0 |
1,253 |
2,756 |
2,277 |
(+) Stock Based Comp |
1,265 |
1,356 |
3,033 |
2,581 |
Adj. EBITDA |
$5,452 |
$6,441 |
$24,613 |
$22,405 |
Adj. EBITDA Margin |
24.6% |
35.4% |
29.6% |
34.6% |
__________________________ |
(1) Adjusted EBITDA is
calculated as operating income plus depreciation and amortization
expense, stock based compensation, costs associated with the
investigation and restatement of our historical financial
statements, and the CEO's performance cash awards and restatement
bonuses. |
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Net Income |
$1,775 |
$649 |
$8,926 |
$6,260 |
(+) Investigations & Restatement |
0 |
2,289 |
916 |
5,571 |
(+) CEO Performance Cash Awards and
Restatement Bonuses |
0 |
1,253 |
2,756 |
2,277 |
(+) Stock Based Comp |
1,265 |
1,356 |
3,033 |
2,581 |
(-) Income tax effect of
adjustments |
(512) |
(1,832) |
(2,714) |
(3,900) |
Adj. NET INCOME |
$2,528 |
$3,715 |
$12,917 |
$12,789 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
Basic |
117,791 |
116,443 |
117,109 |
116,427 |
Weighted average shares outstanding
Diluted |
122,160 |
121,215 |
121,117 |
121,729 |
Earnings per share
Basic: |
$0.02 |
$0.03 |
$0.11 |
$0.11 |
Earnings per share
Diluted: |
$0.02 |
$0.03 |
$0.11 |
$0.11 |
|
__________________________ |
(1) Adjusted net income is
calculated as GAAP net income excluding the impacts of non-cash
stock based compensation, costs associated with the investigation
and restatement of our historical financial statements, and the
CEO's performance cash awards and restatement bonuses, net of
tax. |
CONTACT: Investor inquiries:
Sonya Joyce
Ph: + 64 4 894 6912
Media inquiries:
Geoff Senescall
Ph: + 64 21 481 234