Datawatch's CEO Discusses F1Q2012 Results - Earnings Call Transcript

Datawatch Corporation ( DWCH)

F1Q2012 Earnings Conference Call

January 26, 2012 4:30 PM EST

Executives

Dan Incropera – VP and Controller

Michael Morrison – President and CEO

Murray Fish – CFO and VP, Finance

Analysts

Matthew Dodson – Edmunds White Partners

Frank Sparacino – First Analysis

Presentation

Operator

Greetings and welcome to the Datawatch Corporation First Quarter 2012 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. Thank you. You may now begin.

Dan Incropera

Thank you. Good afternoon, everyone. Thank you for joining us today for the Datawatch Corporation first quarter fiscal year 2012 earnings conference call. I am Dan Incropera, Vice President and Controller at 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 o’clock 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 initial comments on our quarter, followed by Murray who will present a discussion of our first quarter fiscal year 2012 financial results. Michael will then provide an update on our business initiatives and operating results. Following our prepared remarks, we will open up the call for a question-and-answer session.

Before we begin, I’d like to review our Safe Harbor statement with you. 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 that are subject to a number of risks and uncertainties that could cause actual results to differ materially from current expectations.

For more information, I’d 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, 2011, 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 some opening remarks on our first quarter.

Michael Morrison

Thanks Dan, and welcome to everyone joining us on today’s call. I’d like to say a few words at the outset about Q1 performance. Our Q1 results established a strong start to fiscal 2012, a reflect and acceleration of the year-over-year growth that we first saw last quarter.

Total revenue for Q1 was $6.27 million, up 50% from total revenue in the same quarter a year-ago. License revenue was $4.21 million, up 99% year-over-year, and incidentally more than the total revenue from the first quarter of fiscal 2011. Net income for the quarter was $603,000 or $0.09 per diluted share, which was a nice increase compared to net income of $229,000 or $0.04 per diluted share from a year-ago. And we’re growing our cash balances; at the end of the quarter we had $9.65 million in cash and investments, up 15% from $8.38 million at the end of fiscal year 2011, representing more than $1.50 per diluted share.

With the Super Bowl right around the corner, I can’t help lapse [ph] into a bit of a football reference here. While these Q1 results are certainly gratifying, we at Datawatch are not ready to do any kind of Aaron Rodgers Championship Belt to answer Rob Gronkowski [inaudible] and spike in the end zone. Q1 was a hard fought first down on 32 in our own territory. There is still long field ahead and a lot of work to do before we are in any kind of position to celebrate. With that, said, and I know speak for each and every Datawatch employee, but I’d say that we are committed as a team to put in the effort required to keep driving Datawatch’s top line growth and shareholder value as we continue to execute on our strategy.

I’ll now turn the call over to Murray Fish, our Chief Financial Officer, 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 first quarter of fiscal year 2012 was $6.27 million as compared to $4.18 million for the first quarter of fiscal year 2011. Revenue increased by $2.09 million or 50% quarter-over-quarter. For the first quarter of fiscal year 2012, revenues from licenses were $4.21 million as compared to $2.11 million for the first quarter of fiscal year 2011. As a percentage of revenue, software license revenue accounted for 67% of revenue after the first quarter of fiscal year 2012 as compared to 51% for the first quarter of fiscal year 2011.

For the first quarter of fiscal year 2012, revenues from maintenance were $1.72 million as compared to $1.54 million for the first quarter of fiscal year 2011. As a percentage of revenue, maintenance accounted for 27% of revenues for the first quarter of 2012 as compared to 37% of revenues for the first quarter of fiscal year 2011. For the first quarter fiscal year 2012, revenues from services were $0.35 million as compared to $0.53 million for the first quarter of fiscal year 2011. As a percentage of revenue, services accounted for 6% of revenues for the first quarter of fiscal year 2012 as compared to 13% of revenues for the first quarter of fiscal year 2011.

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