RightNow Announces Fourth Quarter and Full Year 2010 Financial Results

Published on February 2, 2011 in Computer Software, Technology

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Annual recurring revenue growth of 28%; revenue and earnings per share ahead of guidance

BOZEMAN, Mont. (February 02, 2011) – RightNow® (NASDAQ:RNOW) today announced results for the fourth quarter and year ended December 31, 2010.

Fourth quarter 2010 financial highlights included:

  • Total revenue was $51.4 million, an increase of 24% over Q4 2009
  • Recurring revenue was $41 million, an increase of 27% over Q4 2009
  • Non-GAAP operating margin, which excludes the impact of stock-based compensation charges, was 14%, an increase of 600 basis points over Q4 2009
  • Non-GAAP diluted earnings per share, which excludes stock-based compensation charges and a tax benefit, was $0.17
  • Current software backlog was $149 million, an increase of 28% over Q4 2009
  • 18 transactions greater than $1 million

Full year 2010 financial highlights included:

  • Total revenue was $185.5 million, an increase of 22% over FY 2009
  • Recurring revenue was $147.3 million, an increase of 28% over FY 2009
  • Non-GAAP operating margin, which excludes the impact of stock-based compensation charges, was 11%, an increase of 300 basis points over FY 2009
  • Non-GAAP diluted earnings per share, which excludes stock-based compensation charges and a tax benefit, was $0.49

Total revenue was $51.4 million in the fourth quarter of 2010, compared to $41.6 million in the fourth quarter of 2009, reflecting a 24% increase. Recurring revenue in the fourth quarter of 2010 increased 27% to $41 million from $32.2 million in the fourth quarter of 2009.

Net income in the fourth quarter of 2010 was $23.5 million or $0.64 per diluted share, compared to net income of $2.6 million, or $0.08 per diluted share, in the fourth quarter of 2009. Net income and net income per share in fourth quarter of 2010 were impacted by a tax benefit from a deferred tax asset valuation allowance reversal of $19.7 million. Non-GAAP net income in the fourth quarter of 2010 was $5.9 million, or $0.17 per diluted share, compared to non-GAAP net income of $3.3 million or $0.10 per diluted share, in the fourth quarter of 2009. Non-GAAP net income and earnings per share in the fourth quarter, excludes stock-based compensation charges of $2.1 million and a tax benefit of $19.7 million.

Total revenue was $185.5 million for the year ended December 31, 2010, compared to $152.7 million for the year ended December 31, 2009, reflecting a 22% increase. Recurring revenue in the year ended December 31, 2010 increased 28% to $147.3 million from $115.4 million in the year ended December 31, 2009.

Net income in the year ended December 31, 2010 was $28.4 million or $0.83 per diluted share, compared to net income of $5.9 million, or $0.18 per diluted share, in the year ended December 31, 2009. Net income and net income per share in year ended December 31, 2010 were impacted by a tax benefit from a deferred tax asset valuation allowance reversal of $19.7 million. Non-GAAP net income in the year ended December 31, 2010 was $16.5 million, or $0.49 per diluted share, compared to non-GAAP net income of $12.7 million or $0.39 per diluted share, in the year ended December 31, 2009. Non-GAAP net income and earnings per share in the year ended December 31, 2010, excludes stock-based compensation charges of $7.9 million and a tax benefit of $19.7 million.

New, renewed and expanded customer relationships during the fourth quarter of 2010 included Activision, Belgacom, Hunter Douglas, Mercedes-Benz Financial Services, NetGear, Ricoh, 3M, and University of Oxford.

“We had an outstanding close to 2010 with growth across all areas of our business. As demonstrated by our acquisition of Q-go, we are putting our balance sheet to work, adding incremental revenue streams and leading edge technology that give us another layer of momentum to accelerate our organic growth,” said Greg Gianforte, CEO and founder. “Our focus for 2011 is to invest in profitable growth as we take advantage of the large CX market opportunity that we believe we are squarely positioned to capture.”

Jeff Davison, CFO, said, “We are pleased to report 28% growth in annual recurring revenue and a significant increase in operating income over fiscal year 2009. We delivered tremendous results during this past year and we are excited about the opportunity that lies ahead in 2011.”

RightNow Completes Q-go Acquisition

RightNow today announced that the Company has completed the acquisition of Q-go.com B.V. The acquisition will be recorded in the Company’s March

Guidance

The annual and quarterly GAAP net income and GAAP net income per share guidance includes estimated expenses for amortization of acquired intangible assets. The amortization expense for acquired intangibles will be finalized once the Q-go purchase price accounting valuation is complete.

  • For the full year 2011, the Company expects total revenue be approximately $225 million, with recurring revenue growth expected to be approximately 23%. Net income per diluted share for the full year 2011 is expected to be approximately $0.06. Non-GAAP net income per diluted share, which excludes stock-based compensation, acquisition costs and amortization of acquired intangible assets, and amortization of debt issuance costs, is expected to be approximately $0.52 for the full year 2011. The Company expects approximately 36 million diluted shares outstanding for the full year 2011.
  • For the first quarter of 2011, total revenue is expected to be approximately $52 million. First quarter net loss per diluted share is expected to be approximately $(0.04). First quarter non-GAAP net income per diluted share, which excludes stock-based compensation, acquisition costs and amortization of acquired intangible assets, and amortization of debt issuance costs, is expected to be approximately $0.08. The Company expects approximately 35.5 million diluted shares outstanding for the first quarter of 2011.

Please refer to our “Forward-Looking Guidance Reconciliation” table for complete details on adjustments between GAAP and non-GAAP guidance.

Quarterly Conference Call

RightNow Technologies will discuss its quarterly results today via teleconference at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time) today. To access the call, please dial (877) 638 – 9569, or outside the U.S. (914) 495-8536, at least five minutes prior to the 2:30 p.m. MT start time. A live webcast of the call will also be available at http://investor.rightnow.com/index.cfm under the Events & Presentations menu. An audio replay will be available between 5:30 p.m. MT February 2, 2011 and 9:59 p.m. MT February 16, 2011 by calling (800) 642-1687 or (706) 645-9291, with Conference ID 33943976. The replay will also be available on the Company’s website at http://investor.rightnow.com.

About RightNow Technologies

RightNow is helping rid the world of bad experiences one consumer interaction at a time, eight million times a day. RightNow CX, the customer experience suite, helps organizations deliver exceptional customer experiences across the web, social networks and contact centers, all delivered via the cloud. With more than ten billion customer interactions delivered, RightNow is the customer experience fabric for nearly 2,000 organizations around the globe. To learn more about RightNow, go to www.rightnow.com.

RightNow is a registered trademark of RightNow Technologies,

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management’s future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, general economic conditions; our success in transitioning to a new President and Chief Operating Officer; the risks associated with purchasing Q-go, including our ability to retain and motivate Q-go’s

FRNOW

RightNow Technologies, Inc.
Consolidated Balance Sheets
(In thousands) (Unaudited)
Dec. 31, Dec. 31,
2010 2009
Assets
Cash and cash equivalents $ 181,948 $ 41,546
Short-term investments 94,759 54,977
Accounts receivable 39,338 34,267
Allowance for doubtful accounts (2,021 ) (1,914 )
Net receivables 37,317 32,353
Deferred commissions 5,418 6,394
Prepaid and other current assets 4,662 2,434
Deferred tax assets 3,801
Total current assets 327,905 137,704
Property and equipment, net 10,702 10,122
Intangible assets, net 14,124 11,141
Deferred commissions, non-current 4,747 3,461
Other 4,921 2,007
Deferred tax assets, non-current 16,480
Total Assets $ 378,879 $ 164,435
Liabilities and Stockholders’ Equity
Accounts payable $ 10,463 $ 5,427
Commissions and bonuses payable 7,137 6,271
Other accrued liabilities 13,363 11,146
Current portion of long-term debt 22
Current portion of deferred revenue 90,350 88,603
Total current liabilities 121,313 111,469
Deferred revenue, net of current portion 2,969 12,724
2.50% convertible senior notes due 2030 175,000
Total liabilities 299,282 124,193
Stockholders’ equity:
Common stock 35 34
Additional paid-in capital 136,717 112,439
Treasury stock, at cost (29,149 ) (15,007 )
Accumulated other comprehensive income 1,953 1,125
Accumulated deficit (29,959 ) (58,349 )
Total stockholders’ equity 79,597 40,242
Total Liabilities and Stockholders’ Equity $ 378,879 $ 164,435
RightNow Technologies, Inc.
Consolidated Operating Statements
(In thousands, except per share amounts) (Unaudited)
Three Months EndedDecember 31, Twelve Months EndedDecember 31,
2010 2009 2010 2009
Revenue:
Recurring revenue $ 40,977 $ 32,172 $ 147,345 $ 115,395
Professional services 10,396 9,407 38,177 37,292
Total revenue 51,373 41,579 185,522 152,687
Cost of revenue:
Recurring revenue 5,855 5,813 23,609 20,948
Professional services 8,348 6,891 31,453 26,610
Total cost of revenue 14,203 12,704 55,062 47,558
Gross profit 37,170 28,875 130,460 105,129
Operating expenses:
Sales and marketing 21,888 17,705 79,395 64,751
Research and development 5,065 5,314 20,154 20,221
General and administrative 5,108 4,130 18,706 15,801
Total operating expenses 32,061 27,149 118,255 100,773
Income from operations 5,109 1,726 12,205 4,356
Interest and other income (expense), net (311 ) 1,000 345 2,094
Income before income taxes 4,798 2,726 12,550 6,450
Benefit (provision) for income taxes 18,708 (119 ) 15,840 (579 )
Net income $ 23,506

Source: RightNow Technologies

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