Fourth Quarter Recurring License Revenue Increases 12% Fourth Quarter Profitability Metrics Above Guidance Ranges Full Year Fiscal 2017 License Revenue Increases 14%

BURLINGTON, Mass., March 16, 2017 (GLOBE NEWSWIRE) -- Exa ® Corporation (NASDAQ:EXA), a global innovator in simulation software for product engineering, today announced financial results for the fourth quarter and full year fiscal 2017, which ended January 31, 2017.

Revenue Summary

Fourth Quarter
  4Q17 (millions)   4Q16 (millions)   Growth  Rate Constant Currency  Growth Rate
Total Revenue   $ 19.5 $ 18.3 7 % 6 %
License Revenue   $ 16.0 $ 14.3 12 % 11 %
Project Revenue   $ 3.5 $ 3.9 (11 )% (11 )%

Fiscal 2017
  FY17 (millions)   FY16 (millions)   Growth  Rate Constant Currency   Growth Rate
Total Revenue   $ 72.6 $ 65.4 11 % 9 %
License Revenue   $ 60.8 $ 53.5 14 % 12 %
Project Revenue   $ 11.7 $ 11.9 (2 )% (3 )%

"We executed well during the fourth quarter, delivering net income and adjusted EBITDA that both exceeded our guidance, with revenue that was within the lower half of our guidance range," said Stephen Remondi, President and Chief Executive Officer of Exa. "For the full year, we produced top line year over year growth with license revenue increasing 14% or 12% on a constant currency basis. We also continued to realize our operating leverage potential as demonstrated by a 4.2 percentage point increase in adjusted EBITDA margin over FY 16.

"The combined prospects of reduced environmental regulations regarding fuel economy and vehicle emissions and a border adjustment tax have created tentative near-term deployment commitments from some of our customers in the ground transportation market. This uncertainty is reflected in our outlook for FY18. Nonetheless, we remain confident in the underlying demand dynamics in this market segment and the potential of our solutions to deliver significant value to our customers under various macro and regulatory environments.    

"We are also excited to announce that Exa recently signed a significant commercial agreement for our first license customer of our Exa DigitalROCK™ solution supporting the Oil and Gas industry.  We believe that our continued investments in new markets and applications of our technology will enable us to return to our long-term target growth rates."

Fourth Quarter Fiscal 2017 Financial Highlights

Revenue
  • Total revenue for the fourth quarter of fiscal 2017 was $19.5 million, an increase of 7% compared to $18.3 million in the comparable period in fiscal 2016. On a constant currency basis, total revenue increased 6% when compared with the corresponding period in fiscal 2016.
  • License revenue was $16.0 million for the fourth quarter of fiscal 2017, compared to $14.3 million in the comparable period in fiscal 2016, representing an increase of 12%, or 11% on a constant currency basis.
  • Project revenue was $3.5 million for the fourth quarter of fiscal 2017, compared to $3.9 million in the comparable period in fiscal 2016, representing a decrease of 11%, or 11% on a constant currency basis.

Profitability
  • GAAP income from operations was $1.1 million in the fourth quarter of fiscal 2017, compared to a loss of $(19) thousand in the comparable period in fiscal 2016.
  • Non-GAAP operating income was $1.7 million in the fourth quarter of fiscal 2017, compared to income of $0.6 million in the comparable period in fiscal 2016.
  • GAAP net income was $0.3 million in the fourth quarter of fiscal 2017, compared to a loss of $(1.3) million for the comparable period in fiscal 2016. GAAP net income per share was $0.02, based on 14.9 million basic weighted average shares outstanding, compared to GAAP net loss per share of $(0.09) for the comparable period in fiscal 2016, based on 14.6 million diluted weighted average shares outstanding.
  • Adjusted EBITDA was $2.7 million in the fourth quarter of fiscal 2017, compared to $1.5 million in the comparable period in fiscal 2016.
  • Non-GAAP net income was $0.7 million, or $0.05 per diluted share in the fourth quarter of fiscal 2017, compared to a loss of $(0.9) million, or $(0.06) per diluted share, in the comparable period in fiscal 2016.

Full Year Fiscal 2017 Financial Highlights

Revenue
  • Total revenue for the full year fiscal 2017, which ended January 31, 2017, was $72.6 million, an increase of 11% compared to $65.4 million in fiscal 2016. On a constant currency basis, total revenue increased 9% when compared with fiscal 2016.   
  • License revenue was $60.8 million in fiscal 2017, compared to $53.5 million in fiscal 2016, an increase of 14%, or 12% on a constant currency basis.
  • Project revenue was $11.7 million in fiscal 2017, compared to $11.9 million in fiscal 2016, a decrease of 2%, or 3% on a constant currency basis.

Profitability
  • GAAP income from operations was $0.4 million in fiscal 2017, compared to a loss of $(2.7) million in fiscal 2016.
  • Non-GAAP income from operations was $2.7 million in fiscal 2017, compared to a loss of $(0.1) million in fiscal 2016.
  • GAAP net loss was $(1.1) million in fiscal 2017, compared to a loss of $(4.8) million in fiscal 2016. GAAP net loss per share was $(0.08), based on 14.8 million diluted weighted average shares outstanding, compared to GAAP net loss per share of $(0.33) in fiscal 2016, based on 14.5 million diluted weighted average shares outstanding.
  • Adjusted EBITDA was $6.5 million in fiscal 2017, compared to $3.1 million in fiscal 2016.
  • Adjusted EBITDA margin increased 4.2 percentage points in fiscal 2017 to 8.9%, compared to 4.7% in fiscal 2016.
  • Non-GAAP net income was $0.4 million, or $0.03 per diluted share in fiscal 2017, compared to a loss of $(3.1) million, or $(0.21) per diluted share, in fiscal 2016.

Balance Sheet
  • The company had $24.6 million in cash and cash equivalents as of January 31, 2017, compared to $25.0 million as of October 31, 2016.          

Business Outlook

Based on information available as of today, Exa is providing first quarter and fiscal 2018 guidance as indicated below.

First Quarter Fiscal 2018:

  • Total revenue is expected to be in the range of $16.0 million to $17.0 million.
  • Adjusted EBITDA loss is expected to be in the range of $(1.5) million to $(0.9) million.
  • GAAP net loss is expected to be in the range of $(3.7) million to $(3.1) million.
  • Non-GAAP net loss is expected to be in the range of $(3.1) million to $(2.5) million.
  • Basic share count for the first quarter is estimated to be 14.9 million shares.
  • Diluted share count for the first quarter is estimated to be 15.5 million shares.

Full Year Fiscal 2018:
  • Total revenue is expected to be in the range of $75.0 million to $80.0 million.
  • Adjusted EBITDA is expected to be in the range of $5.5 million to $8.2 million.
  • GAAP net loss is expected to be in the range of $(6.4) million to $(3.7) million.
  • Non-GAAP net loss is expected to be in the range of $(3.3) million to $(0.6) million.
  • Basic share count for the full year is estimated to be 15.0 million shares.
  • Diluted share count for the full year is estimated to be 15.8 million shares.

The above guidance assumes an exchange rate of 1.06 US dollars per Euro and 113 Japanese yen per US dollar for fiscal year 2018.

An explanation and reconciliation of historical and forward-looking non-GAAP measures presented above, including revenue on a constant currency basis, adjusted EBITDA, non-GAAP operating income (loss) and non-GAAP net income (loss), to the comparable GAAP measures is provided below and in the attachments to this press release. 
Conference Call Information
 
What: Exa's fourth quarter and full year fiscal 2017 financial results conference call 
When: Thursday, March 16, 2017
Time: 5:00 p.m. ET
Webcast:   http://investor.exa.com (live and replay)
Live Call: (877) 878-2664, Domestic
Replay: (970) 315-0423, International
  (855) 859-2056, Passcode 85707668, Domestic
  (404) 537-3406, Passcode 85707668, International

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are presented on a GAAP basis, we disclose revenue on a constant currency basis, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share and Adjusted EBITDA. These non-GAAP measures are not in accordance with, or an alternative for, amounts determined in accordance with generally accepted accounting principles in the United States. The GAAP measure most comparable to revenue on a constant currency basis is GAAP revenue. The GAAP measure most comparable to non-GAAP operating income is GAAP income from operations. The GAAP measure most comparable to Non-GAAP net income and Adjusted EBITDA is GAAP net income.  The GAAP measure most comparable to Non-GAAP net income per diluted share is GAAP net income per diluted share. A reconciliation of these non-GAAP financial measures to the corresponding GAAP measure is included below.

We define revenue on a constant currency basis as GAAP revenue, adjusted to reverse the impact of changes in the average exchange rates of currencies in which our international operations generated revenue and incurred expenses.

We define Non-GAAP net income as net income, excluding the after-tax impact of non-cash, stock-based compensation expense and the amortization of acquired intangibles. We define EBITDA as net income, excluding depreciation and amortization, interest expense, other income (expense), foreign exchange gain (loss) and provision for income taxes, and we define Adjusted EBITDA as EBITDA, excluding non-cash, stock-based compensation expense.

Our management uses these non-GAAP measures when evaluating our operating performance and for internal planning and forecasting purposes. We believe that these measures help indicate underlying trends in our business, are important in comparing current results with prior period results, and are useful to investors and financial analysts in assessing our operating performance. For example, our international operations generate revenue and incur expenses that are denominated in foreign currencies. These amounts could be materially affected by currency fluctuations. Our principal exposures are to fluctuations in exchange rates for the United States dollar versus the Euro, British pound, Japanese yen, Chinese yuan and Korean won. Changes in currency exchange rates that are beyond our control can significantly affect our consolidated results of operations. We believe that disclosure of our revenue on a constant currency basis is useful as an indicator of demand for our solutions independent of the influence of currency exchange fluctuations. Management considers Adjusted EBITDA to be an important indicator of our operational strength and the performance of our business and a good measure of our historical operating trends. The non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP and, in particular, should not be considered a measure of our liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies. Investors should carefully consider the attached reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures.

About Exa Corporation

Exa (Nasdaq:EXA) ( www.exa.com) Corporation's simulation software helps designers and engineers enhance the performance of their products, reduce product development costs and improve the efficiency of their design and engineering processes. As a design evolves, Exa accurately predicts the performance of that design while providing actionable insight to optimize the performance of the product. With Exa, the need for costly physical prototypes and expensive late-stage changes is reduced. Now, designers and engineers are freed from the risk of producing compromised products that do not meet market and regulatory requirements. Exa continues to generate the majority of its revenue from the ground transportation market, in which some of the most successful product companies in the world use Exa, including BMW, Cummins, Denso, FAW, Fiat Chrysler, Ford, General Motors, Hino, Honda, Hyundai, Jaguar Land Rover, Kenworth, Komatsu, MAN, Michelin, Nissan, Peterbilt, Peugeot, Renault, Scania, Tesla, Toyota, Volkswagen and Volvo Trucks.  In recent years, Exa has expanded its technology offerings into the aerospace and oil and gas industries. 

Safe Harbor Statement

This press release, including the section entitled "Business Outlook," contains forward-looking statements describing our expectations concerning future events and our future financial performance. These statements are only predictions and may be inaccurate. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined under "Risk Factors" in our Annual Report on Form 10-K for the year ended January 31, 2016, Form 10-Q for the quarter ended October 31, 2016 and in our other SEC filings. These factors may cause our actual results to differ materially from those described in our forward-looking statements.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, our future results, levels of activity, performance or achievements may differ from our expectations. Other than as required by law, we do not undertake a responsibility to update any of the forward-looking statements after the date of this press release, even though our situation may change in the future.

 

EXA CORPORATION  
Condensed Consolidated Balance Sheets  
(in thousands, except share and per share data)  
           
    January 31,    
      2017       2016    
ASSETS          
Current assets:          
Cash and cash equivalents   $   24,552     $   27,649    
Accounts receivable       24,259         32,072    
Prepaid expenses and other current assets       2,898         3,707    
Total current assets       51,709         63,428    
Property and equipment, net       14,028         12,032    
Intangible assets, net       1,694         2,044    
Deferred tax assets       566         428    
Restricted cash       352         352    
Other assets       725         737    
Total assets   $   69,074     $   79,021    
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Accounts payable   $   4,616     $   3,462    
Accrued expenses       10,569         12,199    
Current portion of deferred revenue       29,006         32,849    
Current portion of capital lease obligations       1,737         2,823    
Total current liabilities       45,928         51,333    
Deferred revenue       238         4,484    
Capital lease obligations       914         2,549    
Deferred rent       2,391         2,490    
Other long-term liabilities       429         678    
Total liabilities       49,900         61,534    
Commitments and contingencies          
Stockholders' equity :          
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares                  
  issued and outstanding       —         —    
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,926,429 and                  
  14,663,621 shares issued, respectively; 14,893,927 and 14,631,119 shares                  
  outstanding, respectively       15         15    
Additional paid-in capital       94,516         91,626    
Accumulated deficit       (74,817 )       (73,685 )  
Treasury stock (32,502 common shares, at cost)     0       0    
Accumulated other comprehensive loss       (540 )       (469 )  
Total stockholders' equity       19,174         17,487    
Total liabilities and stockholders' equity   $   69,074     $   79,021    
           

 
EXA CORPORATION  
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)  
(in thousands, except share and per share data)  
                 
  Three Months Ended January 31,   Year Ended January 31,  
    2017       2016       2017       2016    
Revenue:                
License revenue $   16,001     $   14,314     $   60,837     $   53,499    
Project revenue     3,524         3,946         11,743         11,948    
Total revenue     19,525         18,260         72,580         65,447    
Operating expenses (1):                
Cost of revenues     5,087         5,601         19,427         20,117    
Sales and marketing     3,776         2,886         13,856         10,150    
Research and development     5,851         5,875         24,319         24,140    
General and administrative (2)     3,724         3,917         14,582         13,766    
Total operating expenses     18,438         18,279         72,184         68,173    
Income (loss) from operations     1,087         (19 )       396         (2,726 )  
Other income (expense), net                
Foreign exchange gain (loss)     72         (150 )       166         (322 )  
Interest expense     (24 )       (57 )       (140 )       (236 )  
Interest income     11         4         44         12    
Other income, net     4         1         13         7    
Total other income (expense), net     63         (202 )       83         (539 )  
Income (loss) before taxes     1,150         (221 )       479         (3,265 )  
Provision for income taxes     (816 )       (1,070 )       (1,611 )       (1,542 )  
Net income (loss) $   334     $   (1,291 )   $   (1,132 )   $   (4,807 )  
Net income (loss) per share:                
Basic $   0.02     $   (0.09 )   $   (0.08 )   $   (0.33 )  
Diluted $   0.02     $   (0.09 )   $   (0.08 )   $   (0.33 )  
Weighted average shares outstanding used in computing net income (loss) per share:                
Basic     14,865,379         14,628,465         14,779,117         14,520,834    
Diluted     15,303,425         14,628,465         14,779,117         14,520,834    
                 
Comprehensive income (loss):                
Net income (loss) $   334     $   (1,291 )   $   (1,132 )   $   (4,807 )  
Foreign currency translation adjustment     (58 )       (77 )       (71 )       (43 )  
Comprehensive income (loss): $   276     $   (1,368 )   $   (1,203 )   $   (4,850 )  
                 
                 
(1) Includes stock-based compensation expense as follows:              
  Three Months Ended January 31,   Year Ended January 31,  
    2017       2016       2017       2016    
Cost of revenues $   38     $   48     $   162     $   234    
Sales and marketing     67         88         269         405    
Research and development     225         195         792         886    
General and administrative     205         179         770         751    
Total $   535     $   510     $   1,993     $   2,276    
                 
                 
(2) Includes amortization expense related to intangible assets as follows:          
  Three Months Ended January 31,   Year Ended January 31,  
    2017       2016       2017       2016    
General and administrative $   87     $   87     $   350     $   350    

EXA CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
         
    Year Ended January 31,  
      2017       2016  
Cash flows provided by operating activities:        
Net loss   $   (1,132 )   $   (4,807 )
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization       4,077         3,520  
Stock-based compensation expense       1,993         2,276  
Deferred rent expense       255         576  
Deferred income taxes       (90 )       (73 )
Net change in operating assets and liabilities:        
Accounts receivable       7,779         (4,563 )
Prepaid expenses and other current assets       805         (887 )
Other assets       12         (170 )
Accounts payable       (349 )       1,408  
Accrued expenses       (2,059 )       2,158  
Other liabilities       (298 )       (20 )
Deferred revenue       (8,125 )       10,538  
Net cash provided by operating activities       2,868         9,956  
Cash flows used in investing activities:        
Purchases of property and equipment       (4,065 )       (2,250 )
Change in restricted cash       —         173  
Net cash used in investing activities       (4,065 )       (2,077 )
Cash flows used in financing activities:        
Proceeds from stock option and warrant exercises       890         1,184  
Acquisition of common stock for tax withholding obligations       (13 )       —  
Payments of capital lease obligations       (2,783 )       (2,966 )
Net cash used in financing activities       (1,906 )       (1,782 )
Effect of exchange rate changes on cash       6         (233 )
Net (decrease) increase in cash and cash equivalents       (3,097 )       5,864  
Cash and cash equivalents, beginning of period       27,649         21,785  
Cash and cash equivalents, end of period   $   24,552     $   27,649  
         
Supplemental cash flow disclosures:        
Cash paid for interest   $   140     $   236  
Cash paid for income taxes   $   1,691     $   1,483  
Supplemental disclosure of non-cash investing activities:        
Acquisition of equipment through capital leases   $   62     $   4,351  
Construction costs funded by landlord tenant improvement allowance   $   —     $   1,051  
Increase in unpaid purchases of property and equipment   $   1,586     $   621  

EXA CORPORATION   
Reconciliation of historical Non-GAAP to GAAP measures   
(Unaudited)   
(in thousands, except per share data)   
                   
                   
Adjusted EBITDA:   Three Months Ended January 31,     Year Ended January 31,  
      2017       2016       2017       2016    
                   
Net income (loss)   $   334     $   (1,291 )   $   (1,132 )   $   (4,807 )  
Add back:                                  
Depreciation and amortization       1,090         1,033         4,077         3,520    
Interest expense, net       13         53         96         224    
Other income, net       (4 )       (1 )       (13 )       (7 )  
Foreign exchange (gain) loss       (72 )       150         (166 )       322    
Provision for income taxes       816         1,070         1,611         1,542    
EBITDA       2,177         1,014         4,473         794    
Stock-based compensation expense       535         510         1,993         2,276    
Adjusted EBITDA   $   2,712     $   1,524     $   6,466     $   3,070    
                   
Non-GAAP operating income (loss):   Three Months Ended January 31,     Year Ended January 31,  
      2017       2016       2017       2016    
                   
Operating income (loss)   $   1,087     $   (19 )   $   396     $   (2,726 )  
Add back:                  
Stock-based compensation expense       535         510         1,993         2,276    
Amortization of acquired intangible assets       87         87         350         350    
Non-GAAP operating income (loss)   $   1,709     $   578     $   2,739     $   (100 )  
                   
Non-GAAP net income (loss):   Three Months Ended January 31,     Year Ended January 31,  
      2017       2016       2017       2016    
                   
Net income (loss)       334         (1,291 )       (1,132 )       (4,807 )  
Add back:                  
Stock-based compensation expense       535         510         1,993         2,276    
Amortization of acquired intangible assets       87         87         350         350    
Income tax effect (1)       (218 )       (209 )       (820 )       (919 )  
Non-GAAP net income (loss)   $   738     $   (903 )   $   391     $   (3,100 )  
                   
Non-GAAP net income (loss), per diluted share   Three Months Ended January 31,     Year Ended January 31,  
      2017       2016       2017       2016    
Net income (loss), per diluted share (2)   $   0.02     $   (0.09 )   $   (0.08 )   $   (0.33 )  
Add back:                  
Stock-based compensation expense       0.03         0.03         0.13         0.16    
Amortization of acquired intangible assets       0.01         0.01         0.02         0.02    
Income tax effect (1)       (0.01 )       (0.01 )       (0.06 )       (0.06 )  
Non-GAAP net income (loss), per diluted share (2)(3):   $   0.05     $   (0.06 )   $   0.03     $   (0.21 )  
                   
(1)  The tax effect of non-cash stock-based compensation expense and non-cash amortization of acquired intangibles is estimated using a blended rate equivalent to our annual statutory United States   
federal tax rate and our estimated state tax rate.  The tax effect is exclusive of any impact from valuation allowances established against our United States net deferred tax assets and other discrete items. Due  
to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-  
GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.    
                   
(2)  Share amounts utilized on a fully diluted basis were approximately 15.3 million and 14.6 million for the three months ended January 31, 2017 and 2016, respectively, and 14.8 million and 14.5 million for   
the years ended January 31, 2017 and 2016, respectively.  
                   
(3)  Due to rounding, totals may not equal the sum of line items in the table above.  

 
EXA CORPORATION
Reconciliation of forward looking Non-GAAP to GAAP measures
           
           
EBITDA and Adjusted EBITDA   Three months ended   April 30, 2017     Year ended   January 31, 2018
(in millions)          
Net loss $ (3.7) - (3.1   $ (6.4) - (3.7
Add back:              
Depreciation and amortization     1.2         5.2  
Interest expense, net     0.1         0.4  
Provision for income taxes   0.1       1.9  
EBITDA   (2.3 - 1.7     1.1 - 3.8  
Stock-based compensation expense   0.8       4.4  
Adjusted EBITDA $ (1.5) - (0.9   $ 5.5 - 8.2  
           
Non-GAAP net loss:   Three months ended   April 30, 2017     Year ended   January 31, 2018
(in millions)          
Net loss   (3.7) - (3.1 )     (6.4) - (3.7
Add back:              
Stock-based compensation expense   0.8       4.4  
Amortization of acquired intangible assets   0.1         0.4  
Income tax effect (1)   (0.3 )     (1.7 )
Non-GAAP net loss   (3.1) - (2.5 )     (3.3) - (0.6
           
(1)  Non-GAAP financial information is adjusted using a blended rate equivalent to our annual statutory United States federal tax rate and our estimated state tax rate. The tax effect is exclusive of any impact from valuation allowances established against our United States net deferred tax assets and other discrete items. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

 

 

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