DETROIT, June 06, 2016 (GLOBE NEWSWIRE) -- Covisint Corporation (Nasdaq:COVS), the leading Cloud Platform for building Identity and Internet of Things (IoT) applications, today announced financial results for the fourth quarter and full fiscal year ended March 31, 2016.

"Fiscal 2016 continued to be a transition year where we faced many challenges and delivered mixed results.  We achieved significant year-over-year margin improvement, driven by our transition out of the services business and the healthcare application market.  In addition, our team made significant improvement in our operating costs.  However, we are disappointed with our results for subscription revenue.  It is evident that the transition we began two years ago is taking longer than we had anticipated, particularly with regards to our effort to grow our ASR bookings to meet our objectives in subscription revenue," said Covisint Chairman and CEO, Sam Inman." 

Inman continued, "As we look out to Fiscal 2017 and beyond, we are focused on keeping our current strategic alliances and partners approach in place, while we shift our direct sales model from general territorial selling to larger, strategic teams focused on the automotive and automotive related sectors.  These teams will focus primarily on strategic use cases, where we have strong experience and have been successful expanding our footprint with existing automotive customers - while leveraging our success to penetrate new global automotive accounts."

Fiscal 2016 Financial Results

Revenue
  • Total revenue was $76.0 million, a decrease of 14% compared to $88.5 million in the prior year.
  • Subscription revenue was $63.4 million, a decrease of 4% compared to $66.3 million in the prior fiscal year.
  • Services revenue was $12.7 million, a decrease of 43% compared to $22.3 million in the prior fiscal year.  The decline is primarily attributable to the Company's stated strategy to shift this business to certified service partners.

Profitability
  • GAAP gross margin was 54%, compared to 25% in the prior year.
  • Non-GAAP gross margin was 59%, compared to 43% in the prior year.
  • GAAP net loss was $14.9 million or ($0.38) per diluted share, compared to net loss of $38.6 million or ($1.01) per diluted share in the prior year.
  • Non-GAAP net loss was $12.9 million or ($0.33) per diluted share, compared to net loss of $19.9 million or ($0.52) per diluted share in the prior year.

Fourth Quarter Fiscal 2016 Financial Highlights

Revenue
  • Total revenue was $20.0 million, a decrease of 15% compared to $23.5 million in the prior year period.
  • Subscription revenue was $17.2 million, a decrease of 6% compared to $18.4 million in the prior year period.
  • Services revenue was $2.8 million, a decrease of 45% compared to $5.1 million in the prior year period.  The decline is primarily attributable to the Company's stated strategy to shift this business to certified service partners.

Profitability
  • GAAP gross margin was 61%, compared to 54% in the prior fiscal quarter and 4% in the prior year period.
  • Non-GAAP gross margin was 65%, compared to 58% in the prior fiscal quarter and 47% in the prior year period.
  • GAAP net loss was $0.1 million or ($0.00) per diluted share, compared to net loss of $12.2 million or ($0.32) per diluted share in the prior year.
  • Non-GAAP net loss was $0.5 million or ($0.01) per diluted share, compared to net loss of $2.2 million or ($0.06) per diluted share in the prior year.

Balance Sheet
  • The Company had $39.7 million in cash and cash equivalents at March 31, 2016, compared with $37.6 million at December 31, 2015. 

Fourth Quarter Fiscal 2016 Business Highlights
  • Unveiled next-generation connected vehicle experience at CTS and CES 2016. The showcase illustrated building deeper consumer and dealership engagement through connected devices and systems, adjusting settings in the head unit by individual driver through managing driver identities, setting boundaries (such as geo-fence) and prompting vehicle or "thing" action when approaching or exceeding such boundaries, and controlling vehicle action with a mobile device through IoT services enabled by a cloud platform.
  • Presented on "Key Success Factors in Powering Ride Sharing and Multimodal Transportation in Connected Environments" at CTS 2016. Session addressed fundamental connected vehicle considerations when enabling a ride-sharing model, such as interoperability, data governance, security and privacy.
  • Announced investment in European operations, appointed Nigel Clarke as Vice President, EMEA Sales to increase EMEA footprint. Expansion includes establishing new London office and focus on continuing investment in existing customer markets and expand into new markets by leveraging existing partnerships.
  • Recognized as Supplier of the Year by SAIC General Motors, recognizing suppliers who have made significant contributions to SAIC GM in the last year. In the spirit of the conference theme, Lead in Redefining the Future of Innovation and Technology, Covisint was the only IT vendor to receive an award.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), Covisint monitors non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Each of these financial measures excludes the impact of certain items (the impact of stock award compensation expense, the amortization and impairment of intangible assets and amounts incurred for capitalized internal software costs) and, therefore, has not been calculated in accordance with GAAP.

Covisint monitors these non-GAAP measures to evaluate its ongoing operational performance and enhance an overall understanding of its past financial performance. Covisint believes that these non-GAAP metrics help illustrate underlying trends in its business that could otherwise be masked by the effect of the expenses that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share. Furthermore, Covisint uses these measures to establish budgets and operational goals for managing its business and evaluating its performance. Covisint also believes that these non-GAAP measures provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods against other companies in its industry.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors.

Conference Call and Webcast Information

Covisint management will hold a conference call at 5:00 p.m. (Eastern time) today to discuss these results. The U.S. toll free dial-in for the conference call is 1-877-407-4018, and the international dial-in number is 1-201-689-8471. No passcode is required. A live webcast of the conference call will also be available on the company's website at investors.covisint.com.

For those unable to participate in the conference call, a replay will be available after the conclusion of the earnings call on June 6, 2016, through June 13, 2016. The U.S. toll-free replay dial-in number is 1-877-870-5176 and the international replay dial-in number is 1-858-384-5517. The replay passcode is 13635460.

About Covisint Corporation

Covisint is the leading Cloud Platform for building Identity and Internet of Things (IoT) applications. Our Cloud Platform technology facilitates the rapid development of identification, authorization and connection of complex networks of people, processes, systems and things.

Covisint's Platform supports customers in their endeavors to securely identify, authenticate and connect users, devices, applications and information. It supports 3,000 organizations who connect more than 212,000 business partners and customers that support $4 billion in ecommerce transactions annually. Learn more at http://www.covisint.com/.

Forward-looking Statements

This press release contains forward-looking statements, including statements regarding Covisint's future financial performance, market growth, the demand for Covisint's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Covisint's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Covisint's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Covisint disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts; the extent we are able to maintain pricing with our customers at renewal;  the continued growth of the market for our solutions; the success of our channel partner and certified partner strategies; competition from current competitors and new market entrants; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales for our solutions; and other risk and uncertainties. Further information on potential factors that could affect actual results is included in Covisint's reports filed with the SEC.
COVISINT CORPORATION
 
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
 
  March 31, 2016   March 31, 2015
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 39,681     $ 50,077  
Accounts receivable, net   12,836       15,348  
Deferred tax asset, net       16  
Prepaid expenses   2,167       3,160  
Other current assets   1,603       4,209  
Total current assets   56,287       72,810  
PROPERTY AND EQUIPMENT, NET   7,847       8,809  
CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET   11,486       10,646  
OTHER:      
Goodwill   25,385       25,385  
Deferred costs   580       1,736  
Deferred tax asset, net   171       1,528  
Other assets   289       928  
Total other assets   26,425       29,577  
TOTAL ASSETS $ 102,045     $ 121,842  
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 5,061     $ 7,703  
Accrued commissions   1,071       3,286  
Deferred revenue   15,952       18,029  
Accrued expenses   2,377       3,344  
Deferred tax liability, net       1,597  
Total current liabilities   24,461       33,959  
DEFERRED REVENUE   3,595       3,914  
ACCRUED LIABILITIES   2,327       2,622  
DEFERRED TAX LIABILITY, NET   353      
Total liabilities   30,736       40,495  
COMMITMENTS AND CONTINGENCIES      
SHAREHOLDERS' EQUITY:      
Common Stock      
Additional paid-in capital   161,997       157,004  
Retained deficit   (90,527 )     (75,633 )
Accumulated other comprehensive loss   (161 )     (24 )
Total shareholders' equity   71,309       81,347  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 102,045     $ 121,842  
               

COVISINT CORPORATION
 
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
 
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
  2016   2015     2016     2015
REVENUE $ 19,987     $ 23,457     $ 76,024     $ 88,534  
COST OF REVENUE   7,885       22,428     $ 34,953       66,404  
GROSS PROFIT   12,102       1,029       41,071       22,130  
    61 %     4 %     54 %     25 %
OPERATING EXPENSES:              
Research and development   3,129       1,852       13,019       10,416  
Sales and marketing   6,225       7,812       29,448       32,593  
General and administrative   2,770       3,528       13,286       17,640  
Total operating expenses   12,124       13,192       55,753       60,649  
OPERATING LOSS   (22 )     (12,163 )     (14,682 )     (38,519 )
Other (expense) income   5       15       (23 )     69  
LOSS BEFORE INCOME TAX PROVISION   (17 )     (12,148 )     (14,705 )     (38,450 )
INCOME TAX PROVISION   93       33       189       112  
NET LOSS $ (110 )   $ (12,181 )   $ (14,894 )   $ (38,562 )
               
DILUTED EPS COMPUTATION              
Numerator:  Net loss $ (110 )   $ (12,181 )   $ (14,894 )   $ (38,562 )
Denominator:              
Weighted-average common shares outstanding   40,440       38,998       39,658       38,217  
Dilutive effect of stock awards              
Total shares   40,440       38,998       39,658       38,217  
Diluted EPS $     $ (0.32 )   $ (0.38 )   $ (1.01 )
                               

COVISINT CORPORATION
 
RECONCILIATION OF GAAP TO NON-GAAP
(In Thousands, Except Per Share Data)
(Unaudited)
 
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
    2016       2015       2016       2015  
Gross profit $ 12,102     $ 1,029     $ 41,071     $ 22,130  
Gross profit %   61 %     4 %     54 %     25 %
Adjustments:              
Stock compensation expense—cost of revenue   3       30       71       613  
% of total revenue %   %   %     1 %
Cost of revenue—amortization of capitalized software   787       9,976       3,398       15,079  
% of total revenue   4 %     43 %     5 %     17 %
Adjusted gross profit $ 12,892     $ 11,035     $ 44,540     $ 37,822  
Adjusted gross profit %   65 %     47 %     59 %     43 %
               
               
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
    2016       2015       2016       2015  
Cost of revenue $ 7,885     $ 22,428     $ 34,953     $ 66,404  
Adjustments:              
Stock compensation expense   3       30       71       613  
Cost of revenue - amortization of capitalized software   787       9,976       3,398       15,079  
               
Cost of revenue, non-GAAP $ 7,095     $ 12,422     $ 31,484     $ 50,712  
               
               
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
    2016       2015       2016       2015  
Research and  development $ 3,129     $ 1,852     $ 13,019     $ 10,416  
Adjustments:              
Capitalized internal software costs   (1,673 )     (1,210 )     (4,238 )     (3,508 )
Stock compensation expense   2       26       78       175  
               
Research and  development, non-GAAP $ 4,800     $ 3,036     $ 17,179     $ 13,749  
               
               
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
    2016       2015       2016       2015  
Sales and marketing $ 6,225     $ 7,812     $ 29,448     $ 32,593  
Adjustments:              
Stock compensation expense   91       201       501       1,570  
Amortization of customer relationship agreements       529           823  
               
Sales and marketing, non-GAAP $ 6,134     $ 7,082     $ 28,947     $ 30,200  
               
               
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
    2016       2015       2016       2015  
General and administrative $ 2,770     $ 3,528     $ 13,286     $ 17,640  
Adjustments:              
Stock compensation expense   381       404       2,166       3,874  
               
General and administrative, non-GAAP $ 2,389     $ 3,124     $ 11,120     $ 13,766  
               
               
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
    2016       2015       2016       2015  
Net loss $ (110 )   $ (12,181 )   $ (14,894 )   $ (38,562 )
Adjustments:              
Capitalized internal software costs   (1,673 )     (1,210 )     (4,238 )     (3,508 )
Stock compensation expense   478       661       2,817       6,232  
Amortization of capitalized software and other intangibles   787       10,505       3,398       15,902  
Net loss, non-GAAP $ (518 )   $ (2,225 )   $ (12,917 )   $ (19,936 )
               
               
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
    2016       2015       2016       2015  
Diluted EPS $     $ (0.32 )   $ (0.38 )   $ (1.01 )
Adjustments:              
Capitalized internal software costs   (0.04 )     (0.03 )     (0.11 )     (0.09 )
Stock compensation expense   0.01       0.02       0.07       0.16  
Amortization of capitalized software and other intangibles   0.02       0.27       0.09       0.42  
Diluted EPS, non-GAAP $ (0.01 )   $ (0.06 )   $ (0.33 )   $ (0.52 )
                               

 
COVISINT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
  THREE MONTHS ENDED MARCH 31,   TWELVE MONTHS ENDED MARCH 31,
  2016   2015   2016   2015
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:              
Net loss $ (110 )   $ (12,181 )   $ (14,894 )   $ (38,562 )
Adjustments to reconcile net loss to cash provided by (used in) operations:              
Depreciation and amortization   1,646       2,483       6,772       9,574  
Capitalized software and other intangible asset impairment         8,751               8,751  
Deferred income taxes   84       19       148       11  
Stock award compensation   478       661       2,817       6,232  
Other   (1 )     307       18       307  
Net change in assets and liabilities              
Accounts receivable   (3,210 )     (1,249 )     2,474       6,377  
Other assets   786       593       5,397       3,306  
Accounts payable and accrued expenses   (1,556 )     4,814       (4,157 )     4,919  
Deferred revenue   5,660       5,524       (2,441 )     (5,610 )
Net cash (used in) operating activities   3,777       9,722       (3,866 )     (4,695 )
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:              
Purchase of:              
Property and equipment   (45 )     (1,978 )     (3,817 )     (3,953 )
Capitalized software   (1,673 )     (1,211 )     (4,238 )     (3,509 )
Proceeds from asset disposals           33      
Net cash (used in) investing activities   (1,718 )     (3,189 )     (8,022 )     (7,462 )
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:              
Cash payments from former parent company               23,999  
Cash payments to former parent company               (13,879 )
Vendor financing payments   (180 )         (728 )    
Net proceeds from exercise of stock awards   117       461       2,191       2,865  
Net cash provided by financing activities   (63 )     461       1,463       12,985  
EFFECT OF EXCHANGE RATE CHANGES ON CASH   70       (242 )     29       (287 )
NET CHANGE IN CASH   2,066       6,752       (10,396 )     541  
CASH AT BEGINNING OF PERIOD   37,615       43,325       50,077       49,536  
CASH AT END OF PERIOD $ 39,681     $ 50,077     $ 39,681     $ 50,077  
 

 
Investor Relations Contact866-319-7659investors@covisint.comMedia ContactBrad Schechter, Vice President, Corporate Marketing248-483-2097bschecht@covisint.comFor Sales and Marketing InformationCovisint Corporation, 26533 Evergreen Road, Suite 500, Southfield, MI 48076, 800-229-4125http://www.covisint.com

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