Fourth Quarter & Year End 2013 Earnings Report
David Ehrhardt, CEO Chris Mack, CFO February 12, 2014
© 2014 Apptix, Inc. All Rights Reserved.
Fourth Quarter & Year End 2013 Highlights Strong Bookings Trend Continues; Implementation Still Lagging
- USD 7.4 million annualized bookings in 2013, up 24% over 2012
- 509 thousand users under contract as of December 31, 2013; up 33% over Dec 2012
– Backlog of USD 1.1 million of QRR (107 thousand users); increased 18% Q/Q
- New partner install base onboarding times extending to 6 months
- Speedway pushes Q2 new users (40 thousand users and USD 300 QRR) to late 2014 for onboarding
– Channels driving H2 and YTD bookings
- 70% of H2 bookings and 61% of 2013 bookings from Channels
- Consistency in bookings beginning to materialize; shrinking onboarding time increasingly a focus
– Churn saw an uptick in Q4 pushing annual rate to 11%
- Memory management issues within upgraded load balancers resulted in connectivity challenges early in the quarter
- Anticipate return to normalized levels in Q1-14
- Business continues positive net income and cash flow trends
- Continue to invest most operating margin gains into sales and onboarding resources
Key Performance Indicators
| \$ in Millions |
Trend |
Q4 - 13 |
Q3 - 13 |
Q/Q |
Q4 - 12 |
Y/Y |
| Users - Billable * |
|
403,000 |
405,000 |
0% |
381,000 |
6% |
| Users - Under Contract * |
|
509,000 |
502,000 |
1% |
384,000 |
33% |
| Backlog (QRR) |
|
\$1.05 |
\$0.89 |
18% |
\$0.21 |
399% |
| Revenues |
|
\$10.15 |
\$10.43 |
-3% |
\$10.90 |
-7% |
| Gross Margins |
|
72% |
69% |
3% |
72% |
0% |
| EBIT |
|
\$0.35 |
\$0.50 |
-29% |
\$0.69 |
-49% |
| Net Earnings |
|
\$0.06 |
\$0.18 |
-68% |
\$0.44 |
-87% |
* User/customer data shown as actual
- Revenue of USD 10.15 million in Q4-13; down 3% Q/Q and 7%Y/Y
- Revenue backlog of ~ USD 1.1 million QRR (contracted and in process of implementing)
- Q4 bookings of USD 327 thousand QRR, down 45% Q/Q ; up 30% Y/Y
- Fourth quarter traditionally seasonally low bookings quarter
- Due to complexity of contracts and customer requirements, onboarding can be up to 6 months
- Net income of USD 58 thousand; down 68 % Q/Q and down 87% Y/Y
- Attributed to revenue declines (churn) ahead of onboarding of current year bookings
- Billable user counts flat Q/Q; up 6% Y/Y to 403,000
- Net user churn of 11% annualized due to spike in Q4-13; pricing churn is ~3%
- Total Users under contract now exceeds 509,000 (including backlog)
Comparative Cash Flows
| Cash Flow Statement: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4-12 |
|
Q1-13 |
|
Q2-13 |
|
Q3-13 |
|
|
Q4-13 |
|
|
|
| Net income |
\$ |
438 |
\$ |
366 |
\$ |
175 |
\$ |
182 |
\$ |
58 |
|
|
|
| Depreciation, amortization and impairment |
|
1,000 |
|
939 |
|
967 |
|
1,196 |
|
1,286 |
|
|
|
| Stock based compensation |
|
45 |
|
36 |
|
41 |
|
28 |
|
24 |
|
|
|
| Net changes in working capital & FX impact |
|
278 |
|
(150) |
|
(286) |
|
(577) |
|
525 |
|
|
|
| Cash from operating activities |
|
1,761 |
|
1,191 |
|
897 |
|
829 |
|
1,893 |
|
|
|
| Fixed asset purchases, net of financings |
|
(119) |
|
(51) |
|
(34) |
|
(283) |
|
(132) |
|
|
|
| Debt and lease related payments |
|
(1,003) |
|
(915) |
|
(877) |
|
(933) |
|
(819) |
|
|
|
| Cash used in financing & investing activities |
|
(1,122) |
|
(966) |
|
(911) |
|
(1,216) |
|
(951) |
|
|
|
| Change in cash position during the period |
|
639 |
|
225 |
|
(14) |
|
(387) |
|
942 |
|
|
|
| Beginning period cash |
|
1,719 |
|
2,358 |
|
2,583 |
|
2,569 |
|
2,182 |
|
|
|
| Ending period cash |
\$ |
2,358 |
\$ |
2,583 |
\$ |
2,569 |
\$ |
2,182 |
\$ |
3,124 |
|
|
|
- Consistent, positive operating cash flow trend continues across the business
- New credit facility in place January 2013
- Liquidity of USD 4.1 million, including cash balances and available borrowings
`
Strategic Priorities Address Growth Challenges
Reaching an Inflection Point
- Selling Above Churn Level YTD (QRR basis)
- USD 7.4 million of bookings in 2013, an increase of 24% year over year
- Bookings exceed churn by over 70%; but "net bookings" resides in backlog
- Onboarding backlog key focus for H1-14
2014 Priorities
- Accelerate development of channel network
- Channel is primary "go-to-market" strategy; drive resource allocation in favor of channel
- Run rate production from existing partners remains a focus
- Shrinking on-boarding time
- New partner install base on-boarding times have grown to 6 months
- Turning backlog regularly will help overcome consistency of even low churn levels
- Expand uptake of service portfolio
- Key to fighting pricing pressures
- Value differentiator to both partners and end customers
- Protecting the base continued focus on operational excellence
© 2014 Apptix, Inc. All Rights Reserved.