Opower (NYSE: OPWR), the global leader in cloud-based software for the utility industry, today announced its financial results for the second quarter of 2015. The company ended the quarter with revenue of $35.8 million, an increase of 15 percent year-over-year.

"We delivered strong second quarter results and continue to execute on our strategy for 2015," said Dan Yates, chief executive officer of Opower. "We signed new clients and noted robust renewal and expansion activity in Q2."

Opower also announced a major new contract with a large U.S. utility worth more than $50 million over 6 years. The contract includes territory-wide deployment of Opower's Digital Engagement solution and a large Energy Efficiency program.

Yates added, "This large new contract combined with the steady drum beat of expansions and renewals across our client portfolio has further advanced our position as the market leader in customer engagement software for the utility industry."

Second Quarter 2015 Financial Highlights

Revenue
  • Total revenue for the second quarter of 2015 was $35.8 million, an increase of 15 percent from the comparable period in 2014.

Operating Loss
  • GAAP operating loss was $12.1 million, compared to an operating loss of $14.7 million for the comparable period in 2014.
  • Non-GAAP operating loss was $6.1 million, compared to a non-GAAP operating loss of $5.4 million for the comparable period in 2014.

Net Loss
  • GAAP net loss was $12.0 million, compared to a net loss of $14.8 million for the comparable period in 2014. GAAP net loss per share was $0.24, based on 51.1 million weighted-average common shares outstanding, compared to a GAAP net loss per share of $0.32 for the comparable period in 2014.
  • Non-GAAP net loss was $6.0 million, compared to a non-GAAP net loss of $5.5 million for the comparable period in 2014. Non-GAAP net loss per share was $0.12, based on 51.1 million non-GAAP weighted-average common shares outstanding, compared to a non-GAAP net loss per share of $0.12 for the comparable period in 2014.

Adjusted EBITDA
  • Adjusted EBITDA was a loss of $3.5 million, compared to a loss of $3.7 million for the comparable period in 2014.

Balance Sheet
  • The Company had $120.5 million in cash and cash equivalents at June 30, 2015.

Business Outlook

Opower is issuing the following guidance for the third quarter and full year of 2015, based on current expectations:
             
(in $ millions, except per share guidance)    

Third Quarter 2015
   

Full Year 2015
Revenue     37.9-38.5     144.0-149.0
Adjusted EBITDA (loss)     (4.6)-(4.0)     (20.0)-(16.0)
Non-GAAP net income/(loss)     (7.6)-(7.0)     (32.0)-(27.5)
Per share     (0.15)-(0.13)     (0.62)-(0.53)
       

Non-GAAP net income/(loss) in the table above for the third quarter and for the full year 2015 excludes stock-based compensation expense of $7.2 million and $26.5 million, respectively. Non-GAAP Adjusted EBITDA/(loss) also excludes $2.9 million in depreciation and amortization expenses in the third quarter and $11.4 million for the full year 2015.
 

Conference Call Information
 
What: Opower Second Quarter 2015 Financial Results Conference Call
 
When: Tuesday, August 11, 2015
 
Time: 5:00 p.m. ET
 
Live Call: (877) 201-0168, Domestic
(647) 788-4901, International
Conference ID: 83397570
 
Webcast:

investor.opower.com (live and replay)
 

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share, non-GAAP weighted-average common shares outstanding and adjusted EBITDA.

We define non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share as excluding the impact of stock-based compensation. The weighted-average shares outstanding used to calculate non-GAAP net loss per share gives effect to the conversion of the preferred stock as of the beginning of each of the periods presented.

We define adjusted EBITDA as net loss adjusted to exclude our income tax provision, other income (expense), including interest, depreciation and amortization, and stock-based compensation.

We believe that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Opower's financial condition and results of operations. We use these non-GAAP measures for financial, operational and budgetary decision-making purposes, and to compare our performance to that of prior periods for trend analyses. We believe that these non-GAAP financial measures provide useful information regarding past financial performance and future prospects, and permit us to analyze key financial metrics used to make operational decisions more thoroughly. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other software companies, many of which disclose similar non-GAAP financial measures.

We do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is their exclusion of significant income and expenses that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management on which income and expenses are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that is included in this press release, and not to rely on any single financial measure to evaluate our business.

About Opower

Opower (NYSE:OPWR) is an enterprise software company that is transforming the way utilities engage with their customers. Opower's customer engagement platform enables utilities to reach their customers at moments that matter through proactive and digitized communications that drive energy savings, increase customer engagement and satisfaction, and lower customer operation costs. Opower's software has been deployed to more than 95 utility partners around the world and reaches more than 50 million households and businesses. For more information, please visit www.opower.com and follow us on Twitter at @Opower.

Cautionary Language Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our revenue, net income and profitability metrics for the company's second quarter and full year 2015, and statements regarding our market position in our industry. These forward-looking statements are made as of the date of this press release and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, unpredictable sales cycles and implementation times; changes to the regulatory landscape could alter our customers' buying patterns; our ability to respond to evolving technological changes; our ability to retain and attract customers; the risk of technological developments and innovations by others; failure to manage growth and effectively scale the organization; failure to protect and enforce our intellectual property rights; assertions by third parties that we infringe their intellectual property rights; the risk of losing key employees; changes to current accounting rules; and general political or destabilizing events, including war, conflict or acts of terrorism. For a detailed discussion of these and other risk factors, please refer to the risks detailed in our filings with the Securities and Exchange Commission, including, without limitation, our Form 10-K filed on March 13, 2015 and any subsequently-filed quarterly reports on Form 10-Q and current reports on Form 8-K. Past performance is not necessarily indicative of future results. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
 

OPOWER, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)
 
  December 31,   June 30,
2014 2015
 
Assets
Current assets:
Cash and cash equivalents $ 125,725 $ 120,535
Accounts receivable, net 36,295 24,163
Prepaid expenses and other current assets   4,654     5,607  
Total current assets 166,674 150,305
- -
Property and equipment, net 17,672 18,262
Other assets   151     369  
Total assets $ 184,497   $ 168,936  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,400 $ 1,274
Accrued expenses 6,367 6,196
Deferred revenue 61,989 61,083
Accrued compensation and benefits 8,337 8,369
Other current liabilities   2,091     1,998  
Total current liabilities 80,184 78,920

 
Deferred revenue 2,280 796
Other liabilities   1,232     634  
Total liabilities   83,696     80,350  
 
Stockholders' equity:

 
Preferred stock - -
Common stock - -
Additional paid-in capital 226,093 236,876
Accumulated deficit (124,994 ) (147,995 )
Accumulated other comprehensive loss   (298 )   (295 )
Total stockholders' equity   100,801     88,586  
   

 
 
Total liabilities and stockholders' equity $ 184,497   $ 168,936  

 

 

 
 
OPOWER, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in thousands, except per share data)
 
  Three Months Ended   Six Months Ended
June 30, June 30,
2014   2015 2014   2015
 
Revenue:
Subscription $ 28,458 $ 32,164 $ 54,649 $ 62,550
Services   2,789     3,623     5,171     6,658  
Total revenue 31,247 35,787 59,820 69,208
 
Cost of revenue (1):
Subscription 7,772 9,853 14,608 18,283
Services   3,001     4,099     6,100     7,683  
Total cost of revenue 10,773 13,952 20,708 25,966
 
Gross profit 20,474 21,835 39,112 43,242
 
Operating expenses (1):
Sales and marketing 17,379 15,519 29,378 30,020
Research and development 12,200 13,722 22,954 25,935
General and administrative   5,551     4,714     8,769     9,289  
Total operating expenses   35,130     33,955     61,101     65,244  
 
Operating loss (14,656 ) (12,120 ) (21,989 ) (22,002 )
 
Other income (expense):
Gain (loss) on foreign currency (133 ) 146 162 (886 )
Interest expense (19 ) (11 ) (85 ) (12 )
Other, net   (25 )   16     143     12  
Loss before income taxes (14,833 ) (11,969 ) (21,769 ) (22,888 )
Provision for (benefit from) income taxes   (28 )   56     16     111  
Net loss $ (14,805 ) $ (12,025 ) $ (21,785 ) $ (22,999 )
 
Weighted-average common stock outstanding:
Basic and diluted 46,370 51,075 34,253 50,801
 
Net loss per share:
Basic and diluted $ (0.32 ) $ (0.24 ) $ (0.64 ) $ (0.45 )
 
(1) Stock-based compensation was allocated as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2014 2015 2014 2015
Subscription $ 105 $ 235 $ 120 $ 382
Services 429 365 493 630
Sales and marketing 4,226 2,380 4,975 4,268
Research and development 2,596 2,032 2,893 3,690
General and administrative   1,920     987     2,457     2,033  
Total stock-based compensation $ 9,276   $ 5,999   $ 10,938   $ 11,003  
 
 
OPOWER, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in thousands)
 
  Six Months Ended
June 30,
2014   2015
 
Operating Activities
Net loss $ (21,785 ) $ (22,999 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 2,989 5,166
Stock-based compensation expense 10,938 11,003
Other 323 879
 
Changes in operating assets and liabilities:
Accounts receivable (4,274 ) 12,014
Prepaid expenses and other current assets (1,049 ) (974 )
Other assets (51 ) (107 )
Accounts payable 278 (187 )
Accrued expenses 652 (880 )
Accrued compensation and benefits 1,607 39
Deferred revenue 11,569 (2,386 )
Other liabilities   (177 )   (139 )
Net cash provided by operating activities   1,020     1,429  
 
Investing Activities
Additions to property and equipment   (5,011 )   (4,319 )
Net cash used in investing activities   (5,011 )   (4,319 )
 
Financing Activities
Proceeds from issuance of common stock 1,451 1,408
Proceeds from initial public offering, net of underwriting discounts and commissions 123,955 -
Payment of offering costs (1,337 ) -
Taxes paid related to net share settlement of equity awards - (2,683 )
Payment of debt issuance costs - (96 )
Principal payments on capital lease obligations   (242 )   (306 )
Net cash provided by (used in) financing activities   123,827     (1,677 )
 
Effect of exchange rate changes on cash and cash equivalents 19 (623 )
 
Net increase (decrease) in cash and cash equivalents 119,855 (5,190 )
Cash and cash equivalents, beginning of period   28,819     125,725  
Cash and cash equivalents, end of period $ 148,674   $ 120,535  
 
 
OPOWER, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except per share data)
 
Three Months Ended Six Months Ended
June 30, June 30,
2014 2015 2014 2015
 
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss $ (14,805 ) $ (12,025 ) $ (21,785 ) $ (22,999 )
Provision for income taxes (28 ) 56 16 111
Other (income) expense, including interest 177 (151 ) (220 ) 886
Depreciation and amortization 1,642 2,646 2,989 5,166
Stock-based compensation   9,276     5,999     10,938     11,003  
Adjusted EBITDA $ (3,738 ) $ (3,475 ) $ (8,062 ) $ (5,833 )
 
Reconciliation of Cost of Revenue to Non-GAAP Cost of Revenue:
Cost of revenue $ 10,773 $ 13,952 $ 20,708 $ 25,966
Less: Stock-based compensation   534     600     613     1,012  
Non-GAAP cost of revenue $ 10,239   $ 13,352   $ 20,095   $ 24,954  
 
Reconciliation of Subscription Gross Margin to Non-GAAP Subscription Gross Margin:
Subscription gross margin 72.7 % 69.4 % 73.3 % 70.8 %
Add back: Subscription stock-based compensation   0.4 %   0.7 %   0.2 %   0.6 %
Non-GAAP Subscription gross margin   73.1 %   70.1 %   73.5 %   71.4 %
 
Reconciliation of Services Gross Margin to Non-GAAP Services Gross Margin:
Services gross margin -7.6 % -13.1 % -18.0 % -15.4 %
Add back: Services stock-based compensation   15.4 %   10.1 %   9.5 %   9.5 %
Non-GAAP Services gross margin   7.8 %   -3.0 %   -8.5 %   -5.9 %
 
Reconciliation of Gross Margin to Non-GAAP Gross Margin:
Gross margin 65.5 % 61.0 % 65.4 % 62.5 %
Add back: Stock-based compensation   1.7 %   1.7 %   1.0 %   1.5 %
Non-GAAP gross margin   67.2 %   62.7 %   66.4 %   64.0 %
 
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses:
Operating expenses $ 35,130 $ 33,955 $ 61,101 $ 65,244
Less: Stock-based compensation   8,742     5,399     10,325     9,991  
Non-GAAP operating expenses $ 26,388   $ 28,556   $ 50,776   $ 55,253  
 
Reconciliation of Operating Loss to Non-GAAP Operating Loss:
Operating loss $ (14,656 ) $ (12,120 ) $ (21,989 ) $ (22,002 )
Add back: Stock-based compensation   9,276     5,999     10,938     11,003  
Non-GAAP operating loss $ (5,380 ) $ (6,121 ) $ (11,051 ) $ (10,999 )
 
 
Reconciliation of Net Loss to Non-GAAP Net Loss:
Net loss $ (14,805 ) $ (12,025 ) $ (21,785 ) $ (22,999 )
Add back: Stock-based compensation   9,276     5,999     10,938     11,003  
Non-GAAP net loss $ (5,529 ) $ (6,026 ) $ (10,847 ) $ (11,996 )
 
Shares used in computing Non-GAAP Per Share Amounts:
Weighted-average common stock outstanding, basic and diluted 46,370 51,075 34,253 50,801
Add: Additional weighted-average shares giving effect to the conversion of preferred stock as of the beginning of the period   1,692     -     10,421     -  
Non-GAAP weighted-average common stock outstanding, basic and diluted   48,062     51,075     44,674     50,801  
Non-GAAP net loss per share $ (0.12 ) $ (0.12 ) $ (0.24 ) $ (0.24 )

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