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8-K - FORM 8-K - RIGHTNOW TECHNOLOGIES INCc64346e8vk.htm
EX-99.2 - EX-99.2 - RIGHTNOW TECHNOLOGIES INCc64346exv99w2.htm
Exhibit 99.1
(RIGHTNOW LOGO)
For Further Information, Contact:
         
Investor Relations:
      Corporate Communications:
Todd Friedman or Stacie Bosinoff
      Jaia Zimmerman
The Blueshirt Group
      RightNow Technologies
415.217.7722
      650.653.4441 Office
todd@blueshirtgroup.com
      650.464.8462 Cell
stacie@blueshirtgroup.com
      jzimmerman@rightnow.com
RightNow Announces First Quarter 2011 Financial Results
Company reports recurring revenue growth of 27%.
BOZEMAN, Mont. (April 27, 2011) — RightNow® (NASDAQ: RNOW) today announced results for the first quarter ended March 31, 2011.
First quarter 2011 financial highlights included:
    Total revenue was $52.3 million, an increase of 24% over Q1 2010
 
    Recurring revenue was $41.9 million, an increase of 27% over Q1 2010
 
    GAAP diluted earnings per share was $0.04 and Non-GAAP diluted earnings per share was $0.10. A reconciliation of Non-GAAP measures can be found at the back of this release.
 
    Non-GAAP operating margin was 10%, an increase of 400 basis points over Q1 2010
 
    Current software backlog was $142 million, an increase of 38% over Q1 2010
Total revenue was $52.3 million in the first quarter of 2011, compared to $42.1 million in the first quarter of 2010, reflecting a 24% increase. Recurring revenue in the first quarter of 2011 increased 27% to $41.9 million from $33.0 million in the first quarter of 2010.
Net income in the first quarter of 2011 was $1.4 million or $0.04 per diluted share, compared to net income of $585,000 or $0.02 per diluted share, in the first quarter of 2010. During the first quarter of 2011, the Company recorded a $1.8 million foreign currency gain associated with the Q-go acquisition, which was excluded from non-GAAP net income and non-GAAP net income per share. Non-GAAP net income in the first quarter of 2011 was $3.7 million, or $0.10 per diluted share, compared to non-GAAP net income of $2.3 million or $0.07 per diluted share, in the first quarter of 2010.
New, renewed and expanded customer relationships during the first quarter of 2011 included Activision, Arbor Networks, Cabela’s, CARFAX, The Container Store, CyberDefender, DeVry, Electronic Arts, Ellie Mae Inc., Equifax, HauteLook, KLM/AirFrance, and Logitech.
“We carried strong momentum from 2010 into the first quarter, executing against our strategy by expanding our presence with global organizations and growing our product footprint with the acquisition of

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Q-go,” said Greg Gianforte, CEO and founder. “We are well-positioned to continue our success, as customers recognize our unique ability to help them manage their customer experiences and demonstrate measurable returns on their investments.”
Jeff Davison, CFO, said, “We are pleased to report 27% growth in recurring revenue and a significant increase in operating income over the first quarter of 2010. We are leveraging our solid execution and strong balance sheet to increase investments in sales and marketing to continue to drive further profitable growth.”
Guidance
    For the full year 2011, the Company expects total revenue to be approximately $226 million, with recurring revenue growth expected to be approximately 24%. 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, amortization of debt issuance costs, and a foreign currency gain related to the Q-go acquisition, is expected to be approximately $0.55 for the full year 2011. The Company expects approximately 36 million diluted shares outstanding for the full year 2011.
 
    For the second quarter of 2011, total revenue is expected to be approximately $54 million. Second quarter net loss per diluted share is expected to be approximately $(0.02). Second quarter non-GAAP net income per diluted share, which excludes stock-based compensation, amortization of acquired intangible assets, and amortization of debt issuance costs, is expected to be approximately $0.12. The Company expects approximately 36 million diluted shares outstanding for the second 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). 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 April 27, 2011 and 9:59 p.m. MT May 11, 2011 by calling (800) 642-1687 or (706) 645-9291, with Conference ID 55927048. The replay will also be available during the same time period 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, Inc. NASDAQ is a registered trademark of The NASDAQ Stock Market LLC.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

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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, business and profit growth 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, our business model; our success in transitioning to a new President and Chief Operating Officer; our ability to develop or acquire and gain market acceptance for new products and enhancements to existing products in a cost-effective and timely manner; general economic conditions; fluctuations in foreign currency exchange; the gain or loss of key customers; competitive pressures and other similar factors such as the availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; our ability to expand or contract operations, manage expenses and grow profitability; the rate at which our present and future customers adopt our existing and future products and services; fluctuations in our operating results including our revenue mix and our rate of growth; fluctuations in backlog; the risk that our investments in partner relationships and additional employees will not achieve expected results; interruptions or delays in our hosting operations; breaches of our security measures; our ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; any unanticipated ambiguities in fair value accounting standards; the amount and timing of any stock repurchases under our stock repurchase program; fluctuations in our operating results from the impact of stock-based compensation expense; our ability to manage and expand our partner relationships; our ability to hire, retain and motivate our employees and manage our growth; the risks associated with our recent acquisition of Q-go, including our ability to retain and motivate Q-go’s employees; our ability to integrate and market Q-go’s solutions to new customers; our ability to retain Q-go’s existing customers; the speed, quality and cost of our efforts to integrate Q-go’s solutions with our solution set; the security and reliability of Q-go’s service; and the risks associated with forecasting the impact of Q-go on combined financial results; the impact of potential future acquisitions, if any; and risks associated with our offering of convertible senior notes including the potential impact on earnings per share calculations; and various other factors. Further information on potential factors that could affect our financial results is included in our Annual Report on Form 10-K, quarterly reports on Form 10-Q, and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
FRNOW

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RightNow Technologies, Inc.
Consolidated Balance Sheets

(In thousands) (Unaudited)
                 
    March 31,     Dec. 31,  
    2011     2010  
Assets
               
Cash and cash equivalents
  $ 131,998     $ 181,948  
Short-term investments
    117,659       94,759  
Accounts receivable
    34,558       39,338  
Allowance for doubtful accounts
    (1,800 )     (2,021 )
 
           
Net receivables
    32,758       37,317  
Deferred commissions
    5,461       5,418  
Prepaid and other current assets
    5,406       4,662  
Deferred tax assets
    3,806       3,801  
 
           
Total current assets
    297,088       327,905  
 
           
 
               
Property and equipment, net
    12,644       10,702  
Intangible assets, net
    19,115       6,149  
Goodwill
    31,953       7,975  
Deferred commissions, non-current
    4,649       4,747  
Other
    4,669       4,921  
Deferred tax assets, non-current
    16,713       16,480  
 
           
Total Assets
  $ 386,831     $ 378,879  
 
           
 
               
Liabilities and Stockholders’ Equity
               
Accounts payable
  $ 12,114     $ 10,463  
Commissions and bonuses payable
    4,678       7,137  
Other accrued liabilities
    15,193       13,363  
Current portion of deferred revenue
    86,244       90,350  
 
           
Total current liabilities
    118,229       121,313  
 
           
 
               
Deferred revenue, net of current portion
    1,939       2,969  
Other long-term liabilities
    453        
2.50% Convertible senior notes due 2030
    175,000       175,000  
 
           
Total liabilities
    295,621       299,282  
 
           
 
               
Stockholders’ equity:
               
Common stock
    36       35  
Additional paid-in capital
    145,359       136,717  
Treasury stock, at cost
    (29,149 )     (29,149 )
Accumulated other comprehensive income
    3,533       1,953  
Accumulated deficit
    (28,569 )     (29,959 )
 
           
Total stockholders’ equity
    91,210       79,597  
 
           
Total Liabilities and Stockholders’ Equity
  $ 386,831     $ 378,879  
 
           

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RightNow Technologies, Inc.
Consolidated Operating Statements

(In thousands, except per share amounts) (Unaudited)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Revenue:
               
Recurring revenue
  $ 41,913     $ 33,025  
Professional services
    10,416       9,077  
 
           
Total revenue
    52,329       42,102  
 
               
Cost of revenue:
               
Recurring revenue
    7,326       5,879  
Professional services
    9,410       7,332  
 
           
Total cost of revenue
    16,736       13,211  
 
           
 
               
Gross profit
    35,593       28,891  
 
               
Operating expenses:
               
Sales and marketing
    22,550       18,724  
Research and development
    5,596       5,132  
General and administrative
    6,171       4,299  
 
           
Total operating expenses
    34,317       28,155  
 
           
 
               
Income from operations
    1,276       736  
 
               
Interest and other income (expense), net
    768       183  
 
           
 
               
Income before income taxes
    2,044       919  
Provision for income taxes
    (654 )     (334 )
 
           
Net income
  $ 1,390     $ 585  
 
           
 
               
Net income per share:
               
Basic
  $ 0.04     $ 0.02  
Diluted
  $ 0.04     $ 0.02  
Shares used in the computation:
               
Basic
    32,585       31,929  
Diluted
    35,482       33,431  
 
               
Supplemental information of stock-based compensation expense included in:
               
Cost of recurring revenue
  $ 204     $ 113  
Cost of professional services
    298       114  
Sales and marketing
    977       751  
Research and development
    307       257  
General and administrative
    953       520  
 
           
Total stock-based compensation
  $ 2,739     $ 1,755  
 
           

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RightNow Technologies, Inc.
Consolidated Statements of Cash Flow
(In thousands) (Unaudited)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Operating activities:
               
Net income
  $ 1,390     $ 585  
Non-cash adjustments:
               
Depreciation and amortization
    2,802       2,065  
Stock-based compensation
    2,739       1,755  
Provision for losses on accounts receivable
    20       50  
Foreign currency gain on acquisition
    (1,819 )      
Changes in operating accounts, net of business acquisitions:
               
Receivables
    8,029       2,449  
Prepaid and other current assets
    (342 )     (1,499 )
Deferred commissions
    140       445  
Accounts payable
    885       2,045  
Commissions and bonuses payable
    (2,512 )     (1,243 )
Other accrued liabilities
    609       1,511  
Deferred revenue
    (8,428 )     (4,614 )
Other
    (16 )     (39 )
 
           
Cash provided by operating activities
    3,497       3,510  
 
               
Investing activities:
               
Net change in investments
    (22,886 )     (342 )
Acquisition of property and equipment
    (3,117 )     (1,640 )
Intangible asset additions
    (1,491 )     (1,034 )
Business acquisition, net of cash acquired
    (33,837 )      
 
           
Cash used in investing activities
    (61,331 )     (3,016 )
 
               
Financing activities:
               
Proceeds from issuance of common stock
    5,311       1,159  
Excess tax benefit of stock options exercised
    591       327  
Payments on current and long-term debt
    (240 )     (12 )
 
           
Cash provided by financing activities
    5,662       1,474  
 
               
Effect of foreign exchange rates on cash and cash equivalents
    2,222       (400 )
 
           
 
               
Increase (decrease) in cash and cash equivalents
    (49,950 )     1,568  
 
               
Cash and cash equivalents at beginning of period
    181,948       41,546  
 
           
Cash and cash equivalents at end of period
  $ 131,998     $ 43,114  
 
           

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RightNow Technologies, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measurements
(Amounts in thousands, except per share amounts) (Unaudited)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Income from operations as reported
  $ 1,276     $ 736  
Income from operations as a % of total revenue (operating margin)
    2 %     2 %
Add stock-based compensation (“SBC”)
    2,739       1,755  
Add Q-go acquisition costs
    415        
Add amortization expense of acquired intangible assets
    731        
 
           
Non-GAAP income from operations
  $ 5,161     $ 2,491  
 
           
Non-GAAP income from operations as a % of total revenue (Non-GAAP operating margin)
    10 %     6 %
 
               
Net income as reported
  $ 1,390     $ 585  
Add stock-based compensation (“SBC”)
    2,739       1,755  
Add Q-go acquisition costs
    415        
Add amortization expense of acquired intangible assets
    731        
Add amortization of debt issuance expense
    254        
Less foreign currency gain
    (1,819 )      
 
           
Non-GAAP Net income
  $ 3,710     $ 2,340  
 
           
 
               
Net income per share, as reported (basic)
  $ 0.04     $ 0.02  
Net income per share, as reported (diluted)
  $ 0.04     $ 0.02  
Non-GAAP Net income per share (basic)
  $ 0.11     $ 0.07  
Non-GAAP Net income per share (diluted)
  $ 0.10     $ 0.07  
 
               
Shares outstanding (basic), as reported
    32,585       31,929  
Shares outstanding (diluted), as reported
    35,482       33,431  
Forward-Looking Guidance Reconciliation
                                                         
                                                    Non-  
    GAAP     Adjustment     GAAP  
Second quarter ending June 30, 2011
                                                       
Net income (approximately)
  $ (650) [a]     3,600 [b]     [c]     950 [d]     250             $ 4,150  
Net income per share (approximately)
  $ (0.02 )                                           $ 0.12  
Shares (diluted)
    36,000                                               36,000  
 
                                                       
Year ending
December 31, 2011
                                                       
Net income (approximately)
  $ 2,000 [a]     14,500 [b]     400 [c]     3,600 [d]     1,000 [e]     (1,800 )   $ 19,700  
Net income per share (approximately)
  $ 0.06                                             $ 0.55  
Shares (diluted)
    36,000                                               36,000  

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[a]   Estimated stock-based compensation expense to be recorded for the periods indicated in accordance with FASB Accounting Standards Codification, Topic 718, Compensation-Stock Compensation, which is effective for periods beginning January 1, 2006.
 
[b]   Estimated acquisition costs associated with Q-go.
 
[c]   Estimated amortization expense of acquired intangible assets.
 
[d]   Estimated debt issuance amortization expenses.
 
[e]   Estimated foreign currency gain associated with acquisition of Q-go.
About Non-GAAP Financial Measures
Non-GAAP net income and diluted net income per share are supplemental measures of our performance that are not required by, or presented in accordance with GAAP. These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for net income and net income per share or any other performance measure determined in accordance with GAAP. We present non-GAAP net income and net income per share because we consider each to be an important supplemental measure of our performance.
Management uses these non-GAAP financial measures to make operational decisions, evaluate the Company’s performance, prepare forecasts and determine compensation. Further, management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance when planning, forecasting and analyzing future periods.
Our stock-based compensation expenses are expected to vary depending on the number of new grants issued, changes in our stock price, stock market volatility, expected option lives and risk-free rates of return, all of which are difficult to estimate.
During the first quarter of 2011, we recorded a $1.8 million foreign currency gain related to our acquisition of Q-go.
In calculating non-GAAP income from operations, net income and net income per share, management excluded stock-based compensation expenses, acquisition costs and amortization associated with acquired intangible assets, debt amortization expenses, and the foreign gain associated with our acquisition of Q-go (debt amortization expense was not included and foreign currency was not excluded from non-GAAP income from operations because these amounts were not recorded as operating income), to facilitate its review of the comparability of the Company’s operating performance on a period-to-period basis because such expenses and gain are not, in management’s view, related to the Company’s ongoing operating performance. Management uses this view of its operating performance for purposes of comparison with its business plan and individual operating budgets and resource allocation.
Management further believes that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision making. We believe that the use of non-GAAP net income and net income per share also facilitate a comparison of RightNow’s underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.
Calculating non-GAAP financial measures have limitations as an analytical tool, and readers should not consider these measures in isolation or as substitutes for GAAP operating income, net income and net income per share. In the future, we expect to incur additional stock-based compensation expenses and the exclusion of these expenses in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. In the future, we also expect to incur additional acquisition costs and amortization associated with acquired intangible assets and we anticipate excluding these expenses in the future presentation of our non-GAAP financial measures. These acquired intangible assets will be considered for impairment, but will be considered a static expense,

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one that is not typically affected by operations during any particular period. Lastly, we anticipate excluding amortization of debt issuance costs from our future presentation of our non-GAAP financial measures as these costs are non-cash expenses that are not considered part of ongoing operating results when assessing the performance of our business, and RightNow believes that doing so facilitates comparisons to its historical operating results and to the results of other companies in our industry.
Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, which include:
    Other companies inside and outside of our industry may calculate non-GAAP net income and net income per share differently than we do, limiting their usefulness as a comparative tool; and
 
    The Company’s income tax expense or benefit will be ultimately based on its GAAP taxable income and actual tax rates in effect, which may differ significantly from the effective tax rate used in our non-GAAP financial measures.
In addition, the adjustments to our future GAAP financial measures reflecting the exclusion of stock-based compensation expenses, amortization of acquired intangible assets, and amortization of debt issuance costs are recurring and will be reflected in the Company’s financial results for the foreseeable future. The Company compensates for these limitations by providing specific information regarding the GAAP amount excluded from the non-GAAP financial measures. The Company further compensates for the limitations of its use of non-GAAP financial measures by presenting comparable GAAP with equal or greater prominence. The Company evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial measures.
Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP net income and net income per share. For more information, see the consolidated operating statements and reconciliation of non-GAAP measurements contained in this press release.
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