Valence Technology, Inc. (



F4Q 2011 Earnings Call

July 26, 2011 5:00 pm ET


Randy Jonkers – Chief Financial Officer

John Farr – President and Chief Executive Officer


Sarkus Sherbetchyan – B. Riley & Company



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Good afternoon. My name is Christen and I will be your conference operator today. At this time, I would like to welcome everyone to the Fiscal Year 2011 Fourth Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions) Thank you.

I will now turn the call over to our host, Mr. Randy Jonkers, CFO. Please go ahead sir.

Randy Jonkers

Thank you. Good afternoon and thank you for joining us. While we wait for others to join, I will go over the standard disclaimer regarding remarks on this call.

This conference call may contain forward-looking statements within the meaning of the federal securities laws, including statements regarding the company's or management's intentions, hopes, beliefs, expectations and strategies for the future. Forward-looking statements may include, without limitation, statements regarding the following; future investments, sales, market growth and direction, competition, revenue growth, operating margins, and profitability.

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A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in Pervasive's most recent filings with the Securities and Exchange Commission. Pervasive does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this conference call.

Also, and as a reminder, our non-GAAP results for the quarters ending June 30, 2011 and 2010 exclude the amortization of purchased intangibles and stock-based compensation expense and present income taxes at a statutory rate of 34%. We believe that the non-GAAP results described in today's press release and in this conference call are useful for an understanding of our ongoing operations and to assist the investor community in comparing Pervasive's non-GAAP results from period to period as well as comparing our results with those of similar companies.

We use these non-GAAP results to compare our performance to that of prior periods for analysis of trends, to evaluate the company's financial strengths, develop budgets, manage expenditures, and develop our financial outlook. Non-GAAP results are supplemental and are not intended as a substitute for GAAP results. Note that our call today is being broadcast simultaneously via the Pervasive website. Welcome to those listeners.

In this call, we will cover two primary agenda items. First, I will provide some additional financial metrics from our fourth quarter fiscal quarter to supplement those already provided from our press release today. Then John will update you on our current operations and our plans looking forward into our next fiscal year. Today, we’ve released financial results for the fourth quarter of our fiscal year 2011. The results were consistent with our updated guidance provided on July 13.

By geography, our Q4 revenue was as follows. Domestic revenue totaled approximately $10 million in Q4 or 73% of our revenue. Our international revenue, principally Europe and Japan, totaled $3.7 million or 27% of our revenue in Q4. At a product level, our database products represented approximately 61% of our business and our integration products represented approximately 35% in Q4, while our Business Exchange, DataSolutions and DataRush products accounted for the remainder.

We had 252 employees at the end of Q4, which represents an increase of 5 employees from the end of the third quarter.

Now looking forward and to supplement the Q1 guidance provided in today’s press release. We anticipate cash flow from operation to be between $1 million and $2 million for the first quarter of fiscal year 2012.

For EPS calculation purposes, we expect our GAAP basis and non-GAAP fully diluted share counts for the fourth quarter of fiscal year 2012 to be approximately 16 million and 16.5 million shares respectively. Note that this share count estimate excludes the impact of any future share repurchases. Also as in prior quarter, we’re not providing specific guidance beyond Q1.

Now, let me turn the call over to John Farr, CEO of Pervasive Software.

John Farr

Thanks, Randy. The corporate level highlights for our June quarter include the completion of our 42


consecutive quarter of profitability representing consistent profitability now for the last 10 consecutive fiscal years.

Our database team closing a significant transaction near the very end of the quarter for $900,000, allowing us to exceed both our previous revenue and earnings guidance and what was already shaping up to be a nice quarter. Our integration team taming within a mere $44,000 of a new total revenue record resulting in our seventh consecutive year-over-year quarterly revenue increase in our integration business.

Our Business Xchange team achieving a new quarterly record revenue level albeit on a relatively smaller revenue base. And the advancement of our emerging businesses Pervasive DataCloud, with some very exciting work, we are doing with Intuit and Pervasive DataRush, with the recent announcement of Pervasive TurboRush for Hive and with very good visibility of recent Bay Area big data events including speaking new versions for two of Pervasive’s leading technologist.

We continue to invest in strategic opportunities to emulate in a rapidly evolving market as reflected by over 25% of our revenues invested in research and development. And we completed our 21


consecutive quarter of active share repurchases.

Now we turn more specifically to the June quarter highlights and updates within the various product groups. Our investments in the database business have enabled us to maintain annual revenue levels for this relatively mature and very profitable product line at the $26 million to $29 million level in each of the past five fiscal year plus the various larger compliance related transactions we have disclosed from time to time.

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