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Unify Reports Fiscal 2011 First Quarter Financial Results

^{Published on 2010-08-31 13:20:34 - Market Wire}
 

ROSEVILLE, Calif.--([ BUSINESS WIRE ])--Unify Corp. (NASDAQ: UNFY), an information management and eDiscovery company, today announced financial results for its fiscal 2011 first quarter, ended July 31, 2010.

"We achieved solid revenue growth in both of our business segments and recorded significant non-GAAP net income as a result of our continued business momentum and the successful execution of our merger and acquisition strategy"

First Quarter Highlights

• Completed merger of leading eDiscovery solutions company, Daegis, on June 29, 2010
• Total revenue was $9.9 million, up 119%, compared to $4.5 million last year
• Archiving and eDiscovery revenue was $5.6 million, up 414%, compared to $1.1 million last year. Included in both total revenue and eDiscovery revenue was approximately one month of revenue from the Companya™s merger with Daegis
• Database and Development Products and Modernization Solutions revenue was $4.3 million, up 26%, compared to $3.4 million last year
• Gross margins increased to 77% from 73% in the fourth quarter of fiscal 2010
• Adjusted EBITDA was $893,000, including expenses of $1.4 million in professional fees related to the Daegis merger, as compared to a loss of $1.5 million last year (see attached reconciliation table)
• Net loss was $858,000, compared to a net loss of $2.2 million last year
• Non-GAAP net income was $1.7 million or $0.15 per share, compared to a loss of $1.2 million or $0.14 per share last year (see attached reconciliation table)
• Reiterated fiscal 2011 annual guidance of total revenue in the range of $52 to $58 million and clarified Adjusted EBITDA to be a minimum of $7.6 million, which had previously included an add back of $1.4 million of professional fee expenses associated with the Daegis merger.

Fiscal 2011 First Quarter Financial Results

The Company reported first quarter total revenues of $9.9 million, up 119%, compared to $4.5 million in the first quarter of fiscal 2010. Software license revenue decreased 4% to $1.3 million, compared to $1.4 million for the first quarter in 2010. Maintenance and hosting revenue was $5.3 million, an increase of 105%, compared to $2.6 million in the year ago quarter. Consulting and Implementation Services revenue was $3.3 million, up 517%, compared to $529,000 in the same quarter last year. Included in the first quartera™s revenue is one month of eDiscovery hosting and consulting services revenue from Unifya™s merger with Daegis, which closed on June 29, 2010, and therefore was not included in the prior year comparable amounts.

Gross margin was 77%, compared to 87% for the first quarter of last year. First quarter loss from operations was $309,000, compared to a loss from operations of $2.3 million for the first quarter of fiscal 2010. Net loss was $858,000 or $0.08 per diluted share for the first quarter, compared to a net loss of $2.2 million, or $0.27 per diluted share in the first quarter of fiscal 2010.

Adjusted EBITDA for the quarter was $893,000, compared to an Adjusted EBITDA loss of $1.5 million for the first quarter of 2010. Excluding $1.4 million of expenses for the professional fees paid in conjunction with the Daegis merger, Adjusted EBITDA would have been $2.3 million for the first quarter. Non-GAAP net income for the quarter was $1.7 million or $0.15 per diluted share, compared to a non-GAAP net loss of $1.2 million or $0.14 per diluted share in the same quarter of last year.

Unify ended the first quarter with cash and cash equivalents of $5.4 million at July 31, 2010, compared to $3.1 million reported at April 30, 2010. Long-term debt was $25.7 million and convertible long-term debt was $6.2 million at July 31, 2010. The Company had $12,000 in long-term debt and no long-term convertible debt as of April 30, 2010. The increase in cash and cash equivalents and long-term and convertible debt was due to the merger with Daegis, which was financed with $30 million in senior and revolving debt and seller carried convertible notes. The Companya™s accounts receivable increased to $13.2 million, as compared to $6.2 million as of April 30, 2010, primarily due to the merger with Daegis. Deferred revenue decreased to $8.0 million, as compared to $9.7 million as of April 30, 2010, which is consistent with previous years as a result of the lower volume of maintenance contracts that are renewed during the first quartera™s summer months.

Business Discussion

aWe achieved solid revenue growth in both of our business segments and recorded significant non-GAAP net income as a result of our continued business momentum and the successful execution of our merger and acquisition strategy,a said Todd Wille, chief executive officer of Unify.

aThe combination of our archiving business and one month of Daegisa™ eDiscovery business represented 56% of our total revenue and a significant increase over last year. Both archiving and eDiscovery represent fast growing market opportunities in which, post merger, we are well positioned to leverage and exploit. We are already demonstrating sales momentum and product synergies between these two businesses and we are in development of our new eDiscovery software platform, which we expect to launch before the end of fiscal 2011.

aOur database and development products and modernization and migration business also performed well in the first quarter, representing 44% of our total revenue and growing 26% year over year. Maintenance renewals remained consistent and we continue to see 50% contribution margins from this business. We expect this business segment to continue to perform well throughout the remainder of the year with the upcoming major release of Team Developer 6.0 and the continued traction we are seeing in our government modernization practice.

aLooking forward, we are extremely excited about fiscal 2011 and the opportunities for significant growth,a concluded Wille.

Fiscal 2011 Financial Guidance

In consideration of its merger with Daegis, Unify provided the following combined company guidance for fiscal year 2011 in its fourth quarter earnings press release. Unify is reiterating the revenue annual guidance and clarifying the Adjusted EBITDA guidance.

Unify expects GAAP revenue for fiscal 2011 to be in the range of $52 to $58 million. The Company is clarifying Adjusted EBITDA for fiscal 2011 to be a minimum of $7.6 million, which had previously included an add back of $1.4 million of professional fee expenses related to the Daegis merger. The revised definition for Adjusted EBITDA represents the traditional EBITDA plus an additional add back only for stock option compensation expense and now excludes an add back for professional fees and costs from the Daegis merger.

Investor Conference Call

Unify management will host a conference call today, August 31, 2010, at 2:00 p.m. PT (5:00 p.m. ET) to review the first quarter financial results. The call can be accessed by dialing 877-941-4775 or 480-629-9761 for international callers and providing the company name. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. In addition, the conference call will be available over the Internet at [ www.unify.com ] in the Investor Relations section. A replay of the call will be available approximately two hours following the end of the call through 11:59 p.m. EDT on September 7, 2010 by dialing 800-406-7325 or 303-590-3030 for international callers and using the following passcode: 4353248#.

About Unify

Unify is a software and services company with industry-leading solutions for eDiscovery, archiving, application development and migration, and data management. Unify is headquartered in Roseville, CA, with offices in San Francisco, CA, Rutherford, NJ, London, Munich, Calgary, Paris, Sao Paulo and Sydney. Visit [ www.unify.com ] or email [ info@unify.com ]. Follow Unify on Twitter at [ www.twitter.com/GoUnify ]. Follow [ http://www.daegis.com/dochunter ] Daegis at [ www.daegis.com ] or [ www.twitter/daegis ].

Use of Non-GAAP Financial Information

To supplement the Companya™s unaudited condensed consolidated financial statements presented in accordance with GAAP, Unify uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Companya™s results of operations as determined in accordance with GAAP. For more information on these non-GAAP financial measures including how they are calculated, please see the table in this release captioned aReconciliation of GAAP to Non-GAAPa which includes a reconciliation of the GAAP results to non-GAAP results.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that these statements involve risks and uncertainties and actual events or results may differ materially. When the words abelieves,a aexpects,a aplans,a aprojects,a aestimatesa and similar expressions are used, they identify forward-looking statements.These forward-looking statements are based on managementa™s current beliefs and assumptions and information currently available to management and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.Examples of forward-looking statements in the press release include the statements related to the Companya™s annual guidance and the statements made by Mr. Wille. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are general market and economic conditions, our ability to execute our business strategy and integrate acquired businesses, the effectiveness of our sales team and approach, our ability to target, analyze and forecast the revenue to be derived from a client and the costs associated with providing services to that client, the date during the course of a fiscal year that a new client is acquired, the length of the integration cycle for new clients and the timing of revenues and costs associated therewith, our client concentration given that the Company is currently dependent on a few large client relationships, potential competition in the marketplace, the ability to retain and attract employees, market acceptance of our service programs and pricing options, our ability to maintain our existing technology platform and to deploy new technology, our ability to sign new clients and control expenses, the possibility of the discontinuation of some client relationships, the financial condition of our clientsa™ business and other factors detailed in the Companya™s filings with the Securities and Exchange Commission, including our recent filings on Forms 10-K and 10-Q.