DETROIT, Feb. 09, 2017 (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 third quarter of fiscal 2017, which ended December 31, 2016.

"During the third quarter, we achieved total revenue of $16.6 million, which included $14.7 million in subscription revenue. We finished the quarter with over $30 million in cash, which was in-line with our expectations. Earlier, we announced our shift in focus towards our core heritage, the automotive vertical. I have been pleased with the progress we have made and the make-up of our new team. The quality of our pipeline is improving, and we are seeing new account opportunities, not only in Cloud Identity, but also in Connected Car," said Covisint CEO, Sam Inman. 

Third Quarter Fiscal 2017 Financial Highlights

Revenue
  • Total revenue was $16.6 million, a decrease of 13% compared to $19.2 million in the same period last year.
  • Subscription revenue was $14.7 million, a decrease of 3% compared to $15.3 million in the same period last year.
  • Services revenue was $1.9 million, a decrease of 51% compared to the same period last year.

Profitability
  • GAAP gross margin was 49%, compared to 48% in the prior fiscal quarter and 54% in the same period last year.
  • Non-GAAP gross margin was 56%, compared to 55% in the prior fiscal quarter and 58% in the same period last year.
  • GAAP net loss was $4.4 million or ($0.11) per diluted share, compared to net loss of $4.1 million or ($0.10) per diluted share in the same period last year.
  • Non-GAAP net loss was $3.5 million or ($0.09) per diluted share, compared to net loss of $3.8 million or ($0.09) per diluted share in the same period last year.

Balance Sheet
  • The Company had $30.4 million in cash and cash equivalents at December 31, 2016, compared with $34.8 million at September 30, 2016. 

Third Quarter Fiscal 2017 Business Highlights

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles in the United States ("GAAP"), Covisint monitors non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income (loss), and 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), and 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-G0AAP 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 February 9, 2017, through February 16, 2017. The U.S. toll-free replay dial-in number is 1-844-512-2921 and the international replay dial-in number is 1-412-317-6671. The replay passcode is 13653476.

About Covisint Corporation

Covisint is the connected company - we securely connect ecosystems of people, systems and things to enable new service offerings, optimize operations, develop new business models and ultimately enable the connected economy. Today, we support more than 2,000 organizations and connect to more than 212,000 business partners and customers worldwide. Learn more at 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 risks 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, Except Share Data)
(Unaudited)
 
  December 31, 2016   March 31, 2016
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 30,438     $ 39,681  
Accounts receivable, net of allowance for doubtful accounts of $93 and $39 as of December 31, 2016 and March 31, 2016, respectively   8,266       12,836  
Prepaid expenses   2,281       2,167  
Other current assets   629       1,603  
Total current assets   41,614       56,287  
PROPERTY AND EQUIPMENT, NET   5,731       7,847  
CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET   10,514       11,486  
OTHER:      
Goodwill   25,385       25,385  
Deferred costs   291       580  
Deferred tax asset, net   170       171  
Other assets   173       289  
Total other assets   26,019       26,425  
TOTAL ASSETS $ 83,878     $ 102,045  
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 6,267     $ 5,061  
Accrued commissions   1,993       1,071  
Deferred revenue   12,589       15,952  
Accrued expenses   1,525       2,377  
Total current liabilities   22,374       24,461  
DEFERRED REVENUE   423       3,595  
ACCRUED LIABILITIES   2,310       2,327  
DEFERRED TAX LIABILITY, NET   382       353  
Total liabilities   25,489       30,736  
COMMITMENTS AND CONTINGENCIES      
SHAREHOLDERS' EQUITY:      
Preferred stock, no par value - authorized 5,000,000 shares; none issued and outstanding          
Common stock, no par value - authorized 50,000,000 shares; issued and outstanding 40,865,897 (40,490,928 issued and outstanding as of March 31, 2016)          
Additional paid-in capital   163,644       161,997  
Accumulated deficit   (104,842 )     (90,527 )
Accumulated other comprehensive loss   (413 )     (161 )
Total shareholders' equity   58,389       71,309  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 83,878     $ 102,045  

See notes to consolidated financial statements.

COVISINT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Thousands, Except Per Share Data)
(Unaudited)
 
  Three Months Ended  December 31,   Nine Months Ended  December 31,
  2016   2015   2016   2015
REVENUE $ 16,646     $ 19,162     $ 51,261     $ 56,037  
COST OF REVENUE   8,500       8,822       25,594       27,068  
GROSS PROFIT   8,146       10,340       25,667       28,969  
OPERATING EXPENSES:              
Research and development   2,578       3,100       9,315       9,890  
Sales and marketing   7,128       8,564       21,392       23,223  
General and administrative   2,813       2,699       9,207       10,516  
Total operating expenses   12,519       14,363       39,914       43,629  
OPERATING LOSS   (4,373 )     (4,023 )     (14,247 )     (14,660 )
Other income (expense)   13       3       46       (28 )
LOSS BEFORE INCOME TAX PROVISION   (4,360 )     (4,020 )     (14,201 )     (14,688 )
INCOME TAX PROVISION   40       52       114       96  
NET LOSS ($ 4,400 )   ($ 4,072 )   ($ 14,315 )   ($ 14,784 )
Basic and diluted loss per share ($ 0.11 )   ($ 0.10 )   ($ 0.35 )   ($ 0.38 )
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX              
Foreign currency translation adjustments   (144 )     (72 )     (252 )     (154 )
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX   (144 )     (72 )     (252 )     (154 )
COMPREHENSIVE LOSS ($ 4,544 )   ($ 4,144 )   ($ 14,567 )   ($ 14,938 )

See notes to consolidated financial statements.

COVISINT CORPORATION
RECONCILIATION OF U.S. GAAP TO NON-U.S. GAAP
(In Thousands, Except Per Share Data)
(Unaudited)
   
  Three Months Ended   Nine Months Ended
 December 31,  December 31,
    2016     2015     2016     2015
Gross profit $ 8,146     $ 10,340     $ 25,667     $ 28,969  
Gross margin   49 %     54 %     50 %     52 %
Adjustments:              
Stock compensation expense   16       15       38       68  
Amortization of capitalized software   1,152       802       3,147       2,611  
Non-U.S. GAAP gross profit $ 9,314     $ 11,157     $ 28,852     $ 31,648  
Non-U.S. GAAP gross margin   56 %     58 %     56 %     56 %
   
   
  Three Months Ended   Nine Months Ended
 December 31,  December 31,
    2016     2015     2016     2015
Cost of revenue $ 8,500     $ 8,822     $ 25,594     $ 27,068  
Adjustments:              
Stock compensation expense   16       15       38       68  
Amortization of capitalized software   1,152       802       3,147       2,611  
Non-U.S. GAAP cost of revenue $ 7,332     $ 8,005     $ 22,409     $ 24,389  
   
   
  Three Months Ended   Nine Months Ended
 December 31,  December 31,
    2016     2015     2016     2015
Research and development $ 2,578     $ 3,100     $ 9,315     $ 9,890  
Adjustments:              
Capitalized internal software costs   (746 )     (1,039 )     (2,175 )     (2,565 )
Stock compensation expense   11       23       26       76  
Non-U.S. GAAP research and development $ 3,313     $ 4,116     $ 11,464     $ 12,379  
   
   
  Three Months Ended   Nine Months Ended
 December 31,  December 31,
    2016     2015     2016     2015
Sales and marketing $ 7,128     $ 8,564     $ 21,392     $ 23,223  
Adjustments:              
Stock compensation expense   93       69       211       410  
Non-U.S. GAAP sales and marketing $ 7,035     $ 8,495     $ 21,181     $ 22,813  
   
   
  Three Months Ended   Nine Months Ended
 December 31,  December 31,
    2016     2015     2016     2015
General and administrative $ 2,813     $ 2,699     $ 9,207     $ 10,516  
Adjustments:              
Stock compensation expense   371       410       1,144       1,785  
Non-U.S. GAAP general and administrative $ 2,442     $ 2,289     $ 8,063     $ 8,731  
   
   
  Three Months Ended   Nine Months Ended
 December 31,  December 31,
    2016     2015     2016     2015
Net loss ($ 4,400 )   ($ 4,072 )   ($ 14,315 )   ($ 14,784 )
Adjustments:              
Capitalized internal software costs   (746 )     (1,039 )     (2,175 )     (2,565 )
Stock compensation expense   491       517       1,419       2,339  
Amortization of capitalized software and other intangibles   1,152       802       3,147       2,611  
Non-U.S. GAAP net loss ($ 3,503 )   ($ 3,792 )   ($ 11,924 )   ($ 12,399 )
   
   
  Three Months Ended   Nine Months Ended
 December 31,  December 31,
    2016     2015     2016     2015
Diluted EPS ($ 0.11 )   ($ 0.10 )   ($ 0.35 )   ($ 0.38 )
Adjustments:              
Capitalized internal software costs   (0.02 )     (0.02 )     (0.05 )     (0.07 )
Stock compensation expense   0.01       0.01       0.03       0.06  
Amortization of capitalized software and other intangibles     0.03       0.02       0.08       0.07  
Non-U.S. GAAP Diluted EPS ($ 0.09 )   ($ 0.09 )   ($ 0.29 )   ($ 0.32 )
 

 
COVISINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
  Nine Months Ended  December 31,
    2016     2015
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:      
Net loss ($ 14,315 )   ($ 14,784 )
Adjustments to reconcile net loss to cash provided by (used in) operations:      
Depreciation and amortization   5,410       5,144  
Deferred income taxes   50       64  
Stock award compensation   1,419       2,339  
Other   3        
Net change in assets and liabilities:      
Accounts receivable   4,497       5,684  
Other assets   1,236       4,611  
Accounts payable and accrued expenses   1,809       (2,600 )
Deferred revenue   (6,475 )     (8,101 )
Net cash used in operating activities   (6,366 )     (7,643 )
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:      
Purchase of:      
Property and equipment   (189 )     (3,772 )
Capitalized software   (2,175 )     (2,565 )
Proceeds from asset disposals         33  
Net cash used in investing activities   (2,364 )     (6,304 )
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:      
Vendor financing payments   (614 )     (548 )
Net proceeds from exercise of stock awards   239       2,074  
Net cash provided by (used in) financing activities   (375 )     1,526  
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (138 )     (41 )
NET CHANGE IN CASH   (9,243 )     (12,462 )
CASH AT BEGINNING OF PERIOD   39,681       50,077  
CASH AT END OF PERIOD $ 30,438       $ 37,615  

See notes to consolidated financial statements.
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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