Datawatch's CEO Discusses F2Q12 Results - Earnings Call Transcript

Datawatch Corporation (DWCH)

F2Q12 Earnings Call

April 26, 2012, 4:30 p.m. ET

Executives

Dan Incropera – VP and Controller

Murray Fish – CFO and VP, Finance

Michael Morrison – President and CEO

Analysts

Steven Koffler – Con Brio Capital

Noah Steinberg – G2 Investment Partners

Presentation

Operator

Greetings, and welcome to the Datawatch Corporation Second 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 of Datawatch Corporation. Thank you, Mr. Incropera, you may now begin.

Dan Incropera

Good afternoon, everyone. Thank you for joining us today for the Datawatch Corporation’s second 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 4:00 p.m. 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 for you this afternoon’s agenda. I will present our Safe Harbor statement, followed by Murray who will provide a summary of our second 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 in regards to 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 and 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 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, our quarterly report on 10-Q for the quarter ended December 31, 2011, and other publically 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 Murray for a discussion of our financial results.

Murray Fish

Thank you, Dan. Good afternoon. For those of you who may have not seen our results released earlier today, our total revenues for the second quarter of fiscal year 2012 were 6.55 million as compared to 4.45 million for the second quarter of fiscal year 2011.

Revenue increased 2.09 million, or 47% quarter over quarter. For the second quarter of fiscal year 2012, revenues from licenses were 4.27 million as compared to 2.55 million for the second quarter of fiscal year 2011.

For the second quarter of fiscal year 2012, revenues from Maintenance were 1.86 million as compared to 1.5 million for the second quarter of fiscal year 2011.

In the second quarter of fiscal year 2012, revenues from services were 0.41 million as compared to 0.40 million for the second quarter of fiscal year 2011. The net income for the second quarter fiscal year 2012 was 160,000, or $0.02 per diluted share as compared to a net loss of 511,000 or negative $0.09 per diluted share for the second quarter of fiscal year 2011.

Net income for the second quarter of fiscal year 2012 was negatively impacted by a $126,000 charge related to conversion of our Worldwide User Conference scheduled for next month [inaudible] scheduled around the world, and a currency loss of 123,000 as we were required to repay trade funds to the U.S. from our UK subsidiary to conform to certain restrictions in our financing facility related to the intellectual property purchase on which I’ll provide more details momentarily.

Net income for the second quarter of fiscal year 2011 was negatively impacted by severance costs related to construction of sales and marketing operations of 641,000 or $0.11 per diluted share.

For the six months, our total revenues ending March 31, 2012, were 12.82 million as compared to 8.63 million for the six months ending March 31, 2011. Revenue increased by 4.18 million, or 49% year over year.

For the six months ended March 31, 2012, revenues from licenses were 8.48 million, as compared to 4.66 million for the six months ended March 31, 2011.

For the six months ending March 31, 2012, revenues from Maintenance were 3.58 million as compared to 3.04 million for the six months ending March 31, 2011.

For the six months ending March 31, 2012, revenues from Services were 0.76 million as compared to 0.93 million for the six months ending March 31, 2011.

The net income for the six months ending March 31, 2012 was 763,000, or $0.12 per diluted share as compared to a net loss of 282,000 or negative $0.05 per diluted share for the six months ending March 31, 2011.

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