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Bazaarvoice, Inc. Announces Its Financial Results For The Third Fiscal Quarter Of 2013

Forward-looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties.  All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would" and similar and "target" expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, our ability to address the strategic priorities of our clients, including our ability to deliver more online word of mouth content, site monetization and tools to increase traffic and conversion. We may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on our forward-looking statements.  These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, our expectations regarding our revenue, expenses, sales and operations; our limited operating history; our ability to integrate the operations of Longboard Media, Inc. as announced in our release on Form 8-K on November 5, 2012; our ability to operate in a new and unproven market; our ability to effectively manage growth, especially in light of our announced management changes; our ability to manage expansion into international markets and new vertical industries; our ability to successfully identify, manage and integrate potential acquisitions; and other risks and potential factors that could affect Bazaarvoice's business and financial results identified in our Form 10-K for the fiscal year ended April 30, 2012, our Form 10-Q for the fiscal quarter ended October 31, 2012 and Form S-1 as filed with the Securities and Exchange Commission on July 12, 2012. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We do not intend and undertake no duty to release publicly any updates or revisions to any forward-looking statements contained herein.

 
Bazaarvoice, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
     
  January 31, April 30,
  2013 2012
ASSETS  
Current assets:    
Cash and cash equivalents  $ 23,845  $ 74,367
Restricted cash  604  500
Short-term investments  81,646  50,834
Accounts receivable, net  30,310  17,977
Prepaid expenses and other current assets  4,624  3,873
Total current assets  141,029  147,551
Property, equipment and capitalized internal-use software development costs, net  13,431  8,868
Goodwill  141,833  -- 
Acquired intangible assets, net  53,465  -- 
Other non-current assets  190  448
Total assets  $ 349,948  $ 156,867
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 6,189  $ 2,523
Accrued expenses and other current liabilities  23,289  12,725
Deferred revenue  50,755  42,152
Total current liabilities  80,233  57,400
Deferred revenue less current portion  2,162  3,434
Deferred tax liability, long-term  1,393  31
Other liabilities, long-term  6,836  2,404
Total liabilities  90,624  63,269
Stockholders' equity:    
Common stock  7  6
Additional paid-in capital  365,115  158,769
Accumulated other comprehensive loss  (33)  (20)
Accumulated deficit  (105,765)  (65,157)
Total stockholders' equity  259,324  93,598
Total liabilities and stockholders' equity  $ 349,948  $ 156,867
 
Bazaarvoice, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except net loss per share data)
         
  Three Months Nine Months
  Ended January 31, Ended January 31,
  2013 2012 2013 2012
Revenue  $ 42,678  $ 27,602  $ 116,966  $ 74,705
Cost of revenue  14,217  9,514  40,949  26,116
Gross profit  28,461  18,088  76,017  48,589
Operating expenses:        
Sales and marketing   20,710  12,152  53,882  35,469
Research and development  8,914  6,059  24,356  13,978
General and administrative  8,783  5,934  32,463  15,848
Acquisition-related and other  2,021  --   4,771  -- 
Amortization of acquired intangible assets  1,165  --   2,543  -- 
Total operating expenses  41,593  24,145  118,015  65,295
Operating loss  (13,132)  (6,057)  (41,998)  (16,706)
Other income (expense), net:        
Interest income  61  4  110  17
Other income (expense)  (49)  (341)  (451)  (805)
Total other income (expense), net  12  (337)  (341)  (788)
Loss before income taxes  (13,120)  (6,394)  (42,339)  (17,494)
Income tax expense (benefit)  (2,293)  181  (1,731)  468
Net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Accretion of redeemable convertible preferred stock  --   (10)  --   (35)
Net loss applicable to common stockholders  $ (10,827)  $ (6,585)  $ (40,608)  $ (17,997)
Net loss per share applicable to common stockholders:        
Basic and diluted   $ (0.15)  $ (0.34)  $ (0.60)  $ (0.93)
Basic and diluted weighted average number of shares outstanding  71,940  19,613  68,115  19,284
 
Bazaarvoice, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
         
  Three Months Nine Months
  Ended January 31, Ended January 31,
  2013 2012 2013 2012
         
OPERATING ACTIVITIES        
Net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Depreciation and amortization expense  3,138  837  7,473  2,247
Stock-based expense  3,139  2,503  19,072  5,758
Bad debt expense  860  78  1,643  925
Excess tax benefit related to stock-based compensation  (93)  --   (365)  -- 
Changes in operating assets and liabilities:        
Accounts receivable  (5,781)  (2,888)  (10,581)  (8,394)
Prepaid expenses and other current assets  485  1,606  257  529
Other non-current assets  1,277  (148)  1,161  (361)
Accounts payable  (2,655)  (222)  521  2,005
Accrued expenses and other current liabilities  4,493  937  7,027  5,125
Deferred revenue  3,313  2,764  4,647  9,971
Other liabilities, long-term  (4,090)  (262)  (2,952)  1
Net cash used in operating activities  (6,741)  (1,370)  (12,705)  (156)
INVESTING ACTIVITIES        
Acquisitions, net of cash acquired, and purchase of intangible asset  (30,437)  --   (60,750)  -- 
Purchases of property, equipment and capitalized internal-use software development costs  (2,173)  (986)  (8,004)  (3,806)
Purchases of short-term investments  (7,861)  --   (74,578)  -- 
Proceeds from sale of short-term investments  22,618  --   43,783  -- 
Increase in restricted cash  --   --   --   (250)
Net cash used in investing activities  (17,853)  (986)  (99,549)  (4,056)
FINANCING ACTIVITIES        
Payments of initial stock offering costs  --   (1)  --   (938)
Proceeds from follow-on stock offering, net of costs  --   --   51,943  -- 
Proceeds from exercise of stock options  3,274  696  9,470  2,478
Excess tax benefit related to stock-based compensation  93  --   365  -- 
Net cash provided by financing activities  3,367  695  61,778  1,540
Effect of exchange rate fluctuations on cash and cash equivalents  (44)  (34)  (46)  (73)
Net decrease in cash and cash equivalents  (21,271)  (1,695)  (50,522)  (2,745)
Cash and cash equivalents at beginning of period  45,116  14,000  74,367  15,050
Cash and cash equivalents at end of period  $ 23,845  $ 12,305  $ 23,845  $ 12,305
Supplemental disclosure of other cash flow information:        
Cash paid for income taxes  $ --   $ 87  $ 236  $ 105
Supplemental disclosure of non-cash investing and financing activities:        
Accretion of redeemable convertible preferred stock  $ --   $ 10  $ --   $ 35
Accrued stock offering costs  --   666  --   1,600
Issuance of stock for acquisition  5,802  --   125,497  -- 
 
Bazaarvoice, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
(in thousands, except net loss per share data)
         
  Three Months Nine Months
  Ended January 31, Ended January 31,
  2013 2012 2013 2012
Non-GAAP net loss and net loss per share:        
GAAP net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Stock-based expense (1)  3,139  2,503  19,072  5,758
Amortization of acquired intangible assets  1,615  --   3,683  -- 
Acquisition-related and other expense  2,021  --   4,771  -- 
Income tax adjustment for non-GAAP items  (34)  --   25  -- 
Non-GAAP net loss  $ (4,086)  $ (4,072)  $ (13,057)  $ (12,204)
         
GAAP basic and diluted shares  71,940  19,613  68,115  19,284
Assumed preferred stock conversion  --   27,897  --   27,897
Non-GAAP basic and diluted shares  71,940  47,510  68,115  47,181
Non-GAAP basic and diluted net loss per share  $ (0.06)  $ (0.09)  $ (0.19)  $ (0.26)
         
Adjusted EBITDA:        
GAAP net loss  $ (10,827)  $ (6,575)  $ (40,608)  $ (17,962)
Stock-based expense (1)  3,139  2,503  19,072  5,758
Adjusted depreciation and amortization (2)  2,462  569  5,899  1,552
Acquisition-related and other expense  2,021  --   4,771  -- 
Income tax expense (benefit)  (2,293)  181  (1,731)  468
Total other (income) expense, net  (12)  337  341  788
Adjusted EBITDA  $ (5,510)  $ (2,985)  $ (12,256)  $ (9,396)
         
(1) Stock-based expense includes the following:        
Cost of revenue  $ 443  $ 319  $ 1,320  $ 986
Sales and marketing  710  419  3,405  1,233
Research and development  674  356  2,370  920
General and administrative  1,312  1,409  11,977  2,619
Stock-based expense  $ 3,139  $ 2,503  $ 19,072  $ 5,758
         
(2) Adjusted depreciation and amortization includes the following:        
Cost of revenue  $ 682  $ 210  $ 1,800  $ 631
Sales and marketing  173  120  481  373
Research and development  169  134  474  295
General and administrative  273  105  601  253
Amortization of acquired intangible assets  1,165  --   2,543  -- 
Adjusted depreciation and amortization  $ 2,462  $ 569  $ 5,899  $ 1,552
 
Bazaarvoice, Inc.
Selected Quarterly Financial and Operational Metrics
(unaudited)
(in thousands, except active enterprise clients and full-time employees data)
                 
  Three Months Ended
  Apr 30, Jul 31, Oct 31, Jan 31, Apr 30, Jul 31, Oct 31, Jan 31,
  2011 2011 2011 2012 2012 2012 2012 2013
Revenue (1)  $ 19,281  $ 22,088  $ 25,015  $ 27,602  $ 31,431  $ 35,662  $ 38,626  $ 42,678
Cost of revenue  7,293  7,797  8,805  9,514  10,325  12,633  14,099  14,217
Gross profit  11,988  14,291  16,210  18,088  21,106  23,029  24,527  28,461
Operating expenses:                
Sales and marketing  10,116  11,192  12,125  12,152  14,257  15,322  17,850  20,710
Research and development  2,999  3,343  4,576  6,059  6,811  7,494  7,948  8,914
General and administrative  3,598  5,099  4,815  5,934  6,047  16,196  7,484  8,783
Acquisition-related and other  --   --   --   --   --   1,384  1,366  2,021
Amortization of acquired intangible assets  --   --   --   --   --   480  898  1,165
Total operating expenses  16,713  19,634  21,516  24,145  27,115  40,876  35,546  41,593
Operating loss  (4,725)  (5,343)  (5,306)  (6,057)  (6,009)  (17,847)  (11,019)  (13,132)
Total other income (expense), net  205  (84)  (367)  (337)  (15)  (404)  51  12
Net loss before income taxes  (4,520)  (5,427)  (5,673)  (6,394)  (6,024)  (18,251)  (10,968)  (13,120)
Income tax expense (benefit)  139  109  178  181  343  288  274  (2,293)
Net loss  (4,659)  (5,536)  (5,851)  (6,575)  (6,367)  (18,539)  (11,242)  (10,827)
Stock-based expense (2)  1,279  1,558  1,697  2,503  1,952  12,338  3,595  3,139
Adjusted depreciation and amortization (3)  449  471  512  569  552  1,338  2,099  2,462
Acquisition-related and other expense  --   --   --   --   --   1,384  1,366  2,021
Income tax expense (benefit)  139  109  178  181  343  288  274  (2,293)
Total other (income) expense, net  (205)  84  367  337  15  404  (51)  (12)
Adjusted EBITDA  $ (2,997)  $ (3,314)  $ (3,097)  $ (2,985)  $ (3,505)  $ (2,787)  $ (3,959)  $ (5,510)
Number of active enterprise clients (at period end) (4)  571  640  701  737  790  1,076  1,109  1,179
Full-time employees (at period end)  494  520  566  608  640  771  777  796
                 
(1) Revenue includes the following:                
SaaS  $ 19,281  $ 22,088  $ 25,015  $ 27,602  $ 31,431  $ 35,662  $ 38,626  $ 40,710
Media  --   --   --   --   --   --   --   1,968
Revenue  $ 19,281  $ 22,088  $ 25,015  $ 27,602  $ 31,431  $ 35,662  $ 38,626  $ 42,678
(2) Stock-based expense includes the following:                
Cost of revenue  $ 235  $ 323  $ 344  $ 319  $ 234  $ 294  $ 583  $ 443
Sales and marketing  307  402  412  419  636  1,825  870  710
Research and development  176  204  360  356  406  642  1,054  674
General and administrative  561  629  581  1,409  676  9,577  1,088  1,312
Stock-based expense  $ 1,279  $ 1,558  $ 1,697  $ 2,503  $ 1,952  $ 12,338  $ 3,595  $ 3,139
(3) Adjusted depreciation and amortization includes the following:                
Cost of revenue  $ 194  $ 207  $ 214  $ 210  $ 194  $ 437  $ 681  $ 682
Sales and marketing  113  129  124  120  117  133  175  173
Research and development  50  68  93  134  136  144  161  169
General and administrative  92  67  81  105  105  144  184  273
Amortization of acquired intangible assets  --   --   --   --   --   480  898  1,165
Adjusted depreciation and amortization  $ 449  $ 471  $ 512  $ 569  $ 552  $ 1,338  $ 2,099  $ 2,462
                 
(4) In connection with our acquisition of PowerReviews, which closed in June 2012, we expanded the types of clients that we serve. To reflect differences among our clients and the services that we offer, we now define our clients as "active enterprise clients" and "active network clients," the definitions of which are set forth herein and in our Form 10-Q for the fiscal quarter ended October 31, 2012. Historical references to active clients for periods prior to the closing of the acquisition include both active enterprise clients and active network clients on an aggregate basis. As a result of this prospective nomenclature change resulting from our acquisition of PowerReviews, active clients and active client retention rates for periods prior to June 2012 and after June 2012 may not be directly comparable as we have not made this distinction retrospectively. This change also has a corresponding impact on metrics that are driven by the number of clients, such as revenue per active client.
CONTACT: Bazaarvoice Investor Relations Contact:
         Bazaarvoice Investor Relations
         Seth Potter
         ICR, Inc. on behalf of Bazaarvoice, Inc.
         646-277-1230
         seth.potter@icrinc.com
         
         Media Contact:
         Emily Brady
         Brady PR on behalf of Bazaarvoice, Inc.
         650-692-6107
         emily@bradypr.com

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