Datawatch's CEO Discusses F2Q 2011 Results - Earnings Call Transcript

Datawatch Corporation ( DWCH)

F3Q 2011 Earnings Call

April 28, 2011 4:30 PM ET

Executives

Dan Incropera – Controller

Michael Morrison – President and CEO

Murray Fish – CFO, VP - Finance, Treasurer and Secretary

Presentation

Operator

Greetings and welcome to the Datawatch Corporation’s second quarter fiscal 2011 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Dan Incropera, Controller for Datawatch Corp. Sir, you may begin.

Dan Incropera

Good afternoon, everyone. Thank you for joining us today for the Datawatch Corporation second quarter of fiscal year 2011 earnings conference call. I am Dan Incropera, Vice President and Controller of Datawatch. Joining me today is Michael Morrison, our President and CEO; and Murray Fish, our Chief Financial Officer and Vice President of Finance.

You can obtain a copy of our earnings release which was distributed at 4:00 PM Eastern Time today by emailing us at investor@datawatch.com. This release is also available on our website at www.datawatch.com.

Let me first outline to you this afternoon’s agenda. Following a reading of our Safe Harbor statement, Michael will provide some general comments and an update on the business. Murray will then present a discussion of our second quarter fiscal year 2011 financial results. Following our prepared remarks, we will open up the call for question-and-answer session.

Before we begin, I’d like to review our Safe Harbor statement. While we do not share projections of our future performance, we do need to remind you that any statements we make that do not describe historical facts may constitute forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such statements are based on our current expectations, but are subject to a number of risks and uncertainties that could cause actual results to differ materially from current expectations.

For more information, I refer you to the descriptions of these risk factors found in our earnings release as well as the company’s Annual Report on Form 10-K for the year ended September 30, 2010, its quarterly report on Form 10-Q for the quarter ended December 31, 2010 and other publicly available documents filed with the SEC. Any forward-looking statements should be considered in light of those factors.

I will now turn the call over to Michael for a discussion of business results.

Michael Morrison

Thanks, Dan, and thank you all for joining us this afternoon. First off, I want to say that I am thrilled to be here and part of company that has the potential to be in my opinion a real game changer in our market. During my time in the software industry, I’ve had the privilege of working with great teams with people with terrific software products that delivered tremendous value to businesses. And to have that privilege again to work with an outstanding team of people and a unique product is exciting. Before I go further, I just want to pause to recognize that the higher senior management team here at Datawatch has steered this company through some very difficult economic times while continuing to maintain profitability and a positive cash flow.

I am going to turn the call over to Murray shortly, but first I’ll share some brief comments about our Q2 performance. Murray will then provide more detailed information on our financial performance, and I’ll come back and give you some insights on recent accomplishments and my vision for the company moving forward.

As for Q2, total revenues were $4.45 million, down 3% from total revenues a year ago. License revenues were $2.55 million, a 2% decline from the comparable quarter a year ago. Unfortunately this past quarter continued to trend of declining revenue for Datawatch, which we are firmly committed to reverse as we move forward. The total loss for the quarter was $511,000 or $0.09 per diluted share compared to a net loss of $97,000 or $0.02 per diluted share from a year ago.

The quarter included a restructuring charge of $641,000 or $0.11 per diluted share. Excluding the effects of the restructuring charge, non-GAAP net income would have been a $130,000 or $0.02 per diluted share. We ended the quarter with $7.75 million in cash and investments, up 10% from $7.05 million at the end of our last fiscal year.

I’ll now turn it over to Murray to give you more details on our financial results.

Murray Fish

Thank you, Michael. Good afternoon. For those of you who may not have seen our results released earlier today, our total revenues for the second quarter of 2011 was $4.45 million as compared to $4.57 from the second quarter fiscal year 2010. Revenue decreased by $117,000 or 3% quarter-over-quarter.

For the second quarter of fiscal year 2011, revenues from licenses were $2.55 million as compared to $2.59 million for the second quarter of fiscal year 2010. As a percentage of revenue, software license revenue accounted for 57% of revenue for both the second quarter of fiscal year 2011 and 2010. For the second quarter of fiscal year 2011, revenues from maintenance and services were $1.9 million as compared to $2.0 million for the second quarter of fiscal year 2010. As a percentage of revenue, maintenance and services accounted for 43% of revenues for both the second quarter of fiscal year 2011 and 2010.

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