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| 8-K - DEMANDWARE, INC. 8-K - Demandware Inc | a50743435.htm |
Exhibit 99.1
Demandware Announces Third Quarter 2013 Financial Results
Record Number of New Live Customer and New Live Site Launches
Enterprise Scale Retailers Continue to Turn to the Cloud for Digital Commerce
BURLINGTON, Mass.--(BUSINESS WIRE)--November 5, 2013--Demandware®, Inc. (NYSE: DWRE), the industry-leading provider of enterprise cloud commerce solutions, today announced strong financial results for its third quarter ended September 30, 2013.
Third Quarter Highlights
- Subscription revenue for the third quarter was $22.6 million, a 39% year over year increase from $16.3 million in the third quarter of 2012
- Total revenue for the third quarter was $24.5 million, a 31% year over year increase from $18.7 million in the third quarter of 2012
- 184 live customers at September 30, 2013, an increase of 34% from 137 last year
- 741 live revenue generating sites at September 30, 2013, an increase of 43% from 517 last year
- New Digital Store solution extends Demandware Commerce into the physical store
Subscription revenue in the third quarter was $22.6 million, a 39% increase over $16.3 million in the third quarter of 2012. On a comparable basis, excluding the $1.2 million in subscription revenue in the third quarter of 2012 from Neckermann GmbH, a Demandware customer that filed for insolvency proceedings on October 1, 2012, subscription revenue for the third quarter grew 50%. Total revenue for the third quarter was $24.5 million, a 31% increase from $18.7 million a year ago. Excluding the $1.7 million in total revenue from Neckermann in the third quarter of 2012, total revenue grew 44%.
“The strong momentum we saw in the first half continued in the third quarter,” stated Tom Ebling, Chief Executive Officer, Demandware. “We signed new contracts with enterprise scale retailers, like Jack Wolfskin and Payless ShoeSource. L’Oreal, an existing Demandware customer since 2010, also signed a new agreement that will significantly expand its global digital operations on the Demandware Commerce platform. The world’s largest and most demanding companies are turning to and growing on our omni-channel cloud solution. Our platform is enabling them to better manage the paradigm shift in retail being created by the convergence of traditional in store shopping and digital commerce. During the quarter, we also delivered on other key strategic initiatives which included extending the reach of Demandware Commerce further into brick and mortar retailers and strengthening our global presence, particularly in the Asia Pacific region. As we continue to execute on our growth strategy, we are in an even better position to capture significant market share in the multi-billion dollar market for digital commerce.”
- Demandware signed new contracts with companies around the globe including Eu Yan Sang in the Asia Pacific region, Hancock Fabrics and Payless ShoeSource in North America, and L’Oreal, M&Co (Mackays Stores), Rituals Cosmetics, and Stokke AS in Europe.
- Leading retailers and brands such as Avenue Stores, Cole Haan, HappyChic, Love Culture, Scotch & Soda, SkyMall, Sunbeam Products (Jarden Consumer Solutions) and World Kitchen, were among the companies that launched new initial sites on the Demandware Commerce platform during the third quarter.
- Existing customers like american golf, Dermalogica, Lacoste, Puma, Pure Fishing, Otterbox, PANDORA (with PFSWeb), Reitmans and Tempur Sealy International, Inc. (with eCommera) expanded their operations on the Demandware Commerce platform in the third quarter.
“The record number of new live customers and new live revenue generating sites launching on Demandware Commerce not only demonstrate the successful execution of our land and expand strategy, but also put us and our customers in a strong position for the upcoming holiday shopping season,” stated Scott Dussault, Demandware Chief Financial Officer. “Our proven track record with industry-leading retailers coupled with our investments in sales resulted in another extremely strong quarter for new customer acquisition, particularly with larger enterprise scale retailers. We are confident we are making the right investments in sales and marketing and research and development to drive our growth, platform performance and continual innovation in 2014 and beyond.”
Demandware’s loss from operations for the third quarter of 2013 was $6.8 million, as compared to a loss from operations of $3.6 million for the same period in 2012, reflecting the company's increased investments to support the growth of its business.
Demandware’s GAAP net loss for the third quarter of 2013 was $6.3 million, or $(0.20) per share attributable to common stockholders, as compared to a net loss of $3.5 million, or $(0.12) per share attributable to common stockholders, for the third quarter of 2012. Non-GAAP net loss for the third quarter of 2013 was $2.8 million, or $(0.09) per share, as compared to non-GAAP net loss of $1.3 million, or $(0.04) per share, for the third quarter of 2012. (1)
(1)Non-GAAP net loss excludes expenses related to stock-based compensation. Non-GAAP net loss per share excludes expenses related to stock-based compensation and the accretion of redeemable preferred stock.
Quarterly Conference Call
To access the call which will take place today at 8:30 a.m. ET, please dial (866) 318-8619 in the U.S. or +1 (617) 399-5138 internationally. The Passcode for the call is: 93778580. A live webcast of the call will also be available on the investor relations section of the company’s website. An audio replay will be available for one week following the conclusion of the call through November 12, 2013. The replay number is (888) 286-8010 in the U.S. or +1 (617) 801-6888 internationally. The Passcode for the replay is: 86779488. The replay will also be available as a webcast on Demandware’s Investor Relations website.
About Demandware
Demandware, a leader in digital commerce, enables the world’s premier retailers to move faster and grow faster in the changing face of retail. Demandware’s enterprise cloud platform minimizes the costs and complexities of running global, omni-channel commerce operations, and empowers retailers to respond with speed and agility to new market opportunities and continually evolving consumer expectations. For more information, visit www.demandware.com, call +1-888-553-9216 or email info@demandware.com.
Forward-looking Statements
This release contains forward-looking statements, including statements regarding Demandware's future financial performance, market growth, the demand for Demandware's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Demandware's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Demandware's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Demandware disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts for our solution; the seasonality of our business; our ability to manage our growth; the continued growth of the market for on-demand software; the timing and success of solutions offered by our competitors; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure and costs associated with operating as a public company; failure to protect our intellectual property; changes in current tax or accounting rules; and other risk and uncertainties. Further information on potential factors that could affect actual results is included in Demandware’s reports filed with the SEC.
Non-GAAP Financial Measures
Demandware has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP net loss and non-GAAP net loss per share. Demandware uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Demandware’s ongoing operational performance. Demandware 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 its financial measures with other companies in Demandware's industry, many of which present similar non-GAAP financial measures to investors. Non-GAAP net loss and non-GAAP net loss per share exclude expenses related to stock-based compensation and the accretion of redeemable preferred stock. These amounts are often difficult to predict and often excluded by other companies to help investors understand the operational performance of their business. Non-GAAP financial measures that the Company uses may differ from measures that other companies may use. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.
| Demandware, Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (unaudited, in thousands) | |||||||||
|
September 30, |
December 31, |
||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 69,567 | $ | 58,877 | |||||
| Short-term investments | 45,658 | 48,251 | |||||||
| Accounts receivable — net of allowance for doubtful accounts and credit memos | 20,053 | 19,214 | |||||||
| Prepaid expenses and other current assets | 4,571 | 3,452 | |||||||
| Total current assets | 139,849 | 129,794 | |||||||
| Property and equipment, net | 9,106 | 8,377 | |||||||
| Other assets | 1,622 | 1,157 | |||||||
| Total assets | $ | 150,577 | $ | 139,328 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Current portion of notes payable | $ | 3,218 | $ | 3,021 | |||||
| Accounts payable | 1,444 | 3,168 | |||||||
| Accrued expenses | 17,423 | 8,348 | |||||||
| Deferred revenue | 18,766 | 11,105 | |||||||
| Deferred rent | 175 | 127 | |||||||
| Total current liabilities | 41,026 | 25,769 | |||||||
| Long-term liabilities: | |||||||||
| Deferred revenue | 18,854 | 15,647 | |||||||
| Notes payable | 1,881 | 2,353 | |||||||
| Deferred rent | 915 | 969 | |||||||
| Total liabilities | 62,676 | 44,738 | |||||||
| Stockholders' equity: | |||||||||
| Common stock | 309 | 298 | |||||||
| Additional paid-in capital | 186,945 | 170,997 | |||||||
| Accumulated other comprehensive gain (loss) | 19 | (17 | ) | ||||||
| Accumulated deficit | (99,372 | ) | (76,688 | ) | |||||
| Total stockholders’ equity | 87,901 | 94,590 | |||||||
| Total liabilities and stockholders' equity | $ | 150,577 | $ | 139,328 | |||||
| Demandware, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (unaudited; in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription | $ | 22,563 | $ | 16,250 | $ | 62,274 | $ | 45,061 | ||||||||
| Services | 1,916 | 2,456 | 5,926 | 8,095 | ||||||||||||
| Total revenue | 24,479 | 18,706 | 68,200 | 53,156 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Subscription | 4,325 | 3,501 | 12,369 | 9,407 | ||||||||||||
| Services | 2,726 | 2,990 | 7,706 | 8,598 | ||||||||||||
| Total cost of revenue | 7,051 | 6,491 | 20,075 | 18,005 | ||||||||||||
| Gross profit | 17,428 | 12,215 | 48,125 | 35,151 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 12,918 | 8,496 | 38,474 | 24,402 | ||||||||||||
| Research and development | 5,439 | 3,935 | 15,556 | 11,490 | ||||||||||||
| General and administrative | 5,840 | 3,350 | 16,594 | 9,751 | ||||||||||||
| Total operating expenses | 24,197 | 15,781 | 70,624 | 45,643 | ||||||||||||
| Loss from operations | (6,769 | ) | (3,566 | ) | (22,499 | ) | (10,492 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 49 | 50 | 166 | 97 | ||||||||||||
| Interest expense | (55 | ) | (109 | ) | (202 | ) | (263 | ) | ||||||||
| Other income (expense) | 628 | 193 | 325 | (455 | ) | |||||||||||
| Other income (expense), net | 622 | 134 | 289 | (621 | ) | |||||||||||
| Loss before income taxes | (6,147 | ) | (3,432 | ) | (22,210 | ) | (11,113 | ) | ||||||||
| Income tax expense | 110 | 39 | 474 | 235 | ||||||||||||
| Net loss | $ | (6,257 | ) | $ | (3,471 | ) | $ | (22,684 | ) | $ | (11,348 | ) | ||||
| Accretion of redeemable preferred stock | - | - | - | (1,172 | ) | |||||||||||
| Net loss attributable to common stockholders | $ | (6,257 | ) | $ | (3,471 | ) | $ | (22,684 | ) | $ | (12,520 | ) | ||||
| Net loss per share attributable to common stockholders, | ||||||||||||||||
| basic and diluted | $ | (0.20 | ) | $ | (0.12 | ) | $ | (0.75 | ) | $ | (0.57 | ) | ||||
| Weighted average common shares outstanding, basic and | ||||||||||||||||
| diluted | 30,710 | 29,200 | 30,314 | 22,158 | ||||||||||||
| Demandware, Inc. | ||||||||||||
| Stock-Based Compensation Expense | ||||||||||||
| (unaudited, in thousands) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Cost of subscription revenue | $ | 84 | $ | 57 | $ | 294 | $ | 119 | ||||
| Cost of services revenue | 274 | 233 | 889 | 492 | ||||||||
| Sales and marketing | 1,055 | 559 | 3,130 | 1,236 | ||||||||
| Research and development | 815 | 484 | 2,550 | 1,035 | ||||||||
| General and administration | 1,261 | 856 | 3,970 | 1,920 | ||||||||
| Total | $ | 3,489 | $ | 2,189 | $ | 10,833 | $ | 4,802 | ||||
| Demandware, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
| (unaudited, in thousands) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net loss | $ | (6,257 | ) | $ | (3,471 | ) | $ | (22,684 | ) | $ | (11,348 | ) | ||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 1,098 | 892 | 3,293 | 2,432 | ||||||||||||
| Gain on disposal of property and equipment | - | (3 | ) | - | (3 | ) | ||||||||||
| Re-measurement of preferred stock warrant liability | - | - | - | 426 | ||||||||||||
| Bad debt expense | 380 | - | 433 | - | ||||||||||||
| Stock-based compensation | 3,489 | 2,189 | 10,833 | 4,802 | ||||||||||||
| Deferred rent expense | - | 144 | (9 | ) | 382 | |||||||||||
| Other non-cash reconciling items | 157 | 65 | 467 | 93 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | (245 | ) | (1,039 | ) | (1,272 | ) | 1,296 | |||||||||
| Prepaid expenses and other current assets | (81 | ) | (385 | ) | (544 | ) | (1,259 | ) | ||||||||
| Other long term assets | (245 | ) | 78 | (286 | ) | 182 | ||||||||||
| Accounts payable | (648 | ) | (134 | ) | (1,437 | ) | 733 | |||||||||
| Accrued expenses | 4,594 | 1,167 | 9,008 | 1,442 | ||||||||||||
| Deferred revenue | 208 | 134 | 10,867 | 4,545 | ||||||||||||
| Net cash provided by (used in) operating activities | 2,450 | (363 | ) | 8,669 | 3,723 | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Purchase of property and equipment | (365 | ) | (503 | ) | (4,335 | ) | (3,659 | ) | ||||||||
| Purchase of marketable securities | (17,045 | ) | (21,258 | ) | (47,694 | ) | (46,577 | ) | ||||||||
| Sale and maturity of marketable securities | 11,214 | 9,499 | 49,823 | 9,499 | ||||||||||||
| Increase in restricted cash and other assets | (13 | ) | (3 | ) | (167 | ) | (168 | ) | ||||||||
| Net cash used in investing activities | (6,209 | ) | (12,265 | ) | (2,373 | ) | (40,905 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Proceeds from initial public offering, net of underwriting discounts and commissions | - | - | - | 94,116 | ||||||||||||
| Proceeds from exercise of stock options | 3,565 | 627 | 5,126 | 1,030 | ||||||||||||
| Deferred offering costs | - | (96 | ) | - | (1,561 | ) | ||||||||||
| Proceeds from issuance of notes payable | - | 157 | 1,997 | 2,757 | ||||||||||||
| Payments of equipment notes | (714 | ) | (712 | ) | (2,146 | ) | (1,977 | ) | ||||||||
| Payments of software financing agreement | (239 | ) | (242 | ) | (706 | ) | (242 | ) | ||||||||
| Net cash provided by (used in) financing activities | 2,612 | (266 | ) | 4,271 | 94,123 | |||||||||||
| EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 204 | 43 | 123 | 6 | ||||||||||||
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (943 | ) | (12,851 | ) | 10,690 | 56,947 | ||||||||||
| CASH AND CASH EQUIVALENTS — Beginning of period | 70,510 | 84,737 | 58,877 | 14,939 | ||||||||||||
| CASH AND CASH EQUIVALENTS — End of period | $ | 69,567 | $ | 71,886 | $ | 69,567 | $ | 71,886 | ||||||||
| Demandware, Inc. | ||||||||||||||||
| Calculation of Non-GAAP Operating Loss, Non-GAAP Net Loss, and Non-GAAP Net Loss Per Share | ||||||||||||||||
| (unaudited; in thousands, except per share data) | ||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Operating loss: | ||||||||||||||||
| GAAP operating loss | $ | (6,769 | ) | $ | (3,566 | ) | $ | (22,499 | ) | $ | (10,492 | ) | ||||
| Add back: | ||||||||||||||||
| Stock-based compensation | 3,489 | 2,189 | 10,833 | 4,802 | ||||||||||||
| Non-GAAP operating loss | $ | (3,280 | ) | $ | (1,377 | ) | $ | (11,666 | ) | $ | (5,690 | ) | ||||
| Net loss: | ||||||||||||||||
| GAAP net loss | $ | (6,257 | ) | $ | (3,471 | ) | $ | (22,684 | ) | $ | (11,348 | ) | ||||
| Add back: | ||||||||||||||||
| Stock-based compensation | 3,489 | 2,189 | 10,833 | 4,802 | ||||||||||||
| Non-GAAP net loss | $ | (2,768 | ) | $ | (1,282 | ) | $ | (11,851 | ) | $ | (6,546 | ) | ||||
| Non-GAAP net loss per share, basic and diluted | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.39 | ) | $ | (0.30 | ) | ||||
CONTACT:
Investor Relations Contact:
Erica Smith
Vice
President, Investor Relations, Demandware
Office: 781-425-1222
Email:
esmith@demandware.com