Datawatch Corporation
Jul 22, 2015

Datawatch Announces Third Quarter 2015 Financial Results

CHELMSFORD, Mass., July 22, 2015 (GLOBE NEWSWIRE) -- Datawatch Corporation (NASDAQ:DWCH), a leading global provider of managed analytics solutions, today announced that total revenue for its third fiscal quarter of 2015 ended June 30, 2015 was $7.78 million, an increase of 4% from revenue of $7.46 million in the second fiscal quarter but a decrease of 16% from revenue of $9.23 million in the third quarter a year ago.  License revenue for the third quarter of fiscal 2015 was $4.12 million, an increase of 5% from the $3.91 million recorded in the second fiscal quarter but a decrease of 26% from the $5.58 million recorded in the comparable quarter a year ago.  Net loss for the third quarter of fiscal 2015 was ($4.12) million, or ($0.36) per diluted share, compared to a net loss of ($5.16) million, or ($0.48) per diluted share, for the year ago period.  Excluding the effects of the non-cash amortization associated with the purchase of certain intellectual property and other intangible assets, non-cash stock compensation costs, and severance costs, the Company's non-GAAP net loss for its third fiscal quarter of 2015 was ($2.04) million, or ($0.18) per diluted share, compared to net loss of ($2.60) million, or ( $0.24) per diluted share in the third fiscal quarter of 2014.

"We continue to make strides in improving our sales execution, expanding awareness of Datawatch in the market and producing meaningful innovation to our product platform," said Michael A. Morrison, president and chief executive officer of Datawatch.  "The sequential increase in revenue performance was accompanied by an increase in win rates - which indicates that we are focused on the right kind of competitive opportunities, where our unique multi-structured data preparation, real-time visualization and enterprise governance capabilities are meaningful differentiators."

Mr. Morrison added, "We also made important progress with our partner channel during the quarter, which is a critical element of our long-term strategic growth plan.  In April, Dell Software announced a partnership with Datawatch to OEM our visualization capabilities directly into its Statistica advanced analytics platform.  This combination of two leading technologies creates an offering without equal in the industry and represents a promising revenue generator, one where we are already beginning to see substantive potential.  We also closed new OEM deals with Lipper, Fincad and FlexTrade, and extended existing OEM deals with Bloomberg and NASDAQ.  Most encouraging, our enhanced data preparation capabilities have reinvigorated existing partners and expanded our partner pipeline with prospects whose solutions require complementary data preparation, giving us confidence in the partnership contribution model we have outlined previously."

He concluded, "On the last day of the quarter, Datawatch announced the release of Monarch version 13, our flagship data preparation solution.  The new product release significantly extends the range of data sources that we address and provides a simple point-and-click interface built on top of the world's most powerful data preparation engine.  This release allows a user to immediately visualize prepared data not just in Datawatch Designer, but in other popular BI and advanced analytic tools such as Dell Statistica, Tableau, Qlik, IBM Watson Analytics, Tibco Spotfire, SAS, SAP Lumira, Excel and many others.  On the one day it was available in the third quarter, more than two dozen customers made purchases."

James L. Eliason, chief financial officer, commented, "Our non-GAAP net loss declined significantly from prior quarters of FY15 due to the full effect of the re-structuring actions we took during the first half of FY 2015, which reduced overall expenses by almost 20% compared to Q3 of FY 2014, as well as the sequential increase in overall revenues.  In addition, our deferred revenue balance increased by approximately $410,000 or 6% on a sequential basis, primarily attributable to a 95% sequential increase in deferred license revenue, driven by a change in pricing policy to a subscription basis for smaller sized Monarch orders."  

Third Quarter 2015 Business Highlights

Third Quarter 2015 Financial Highlights

Conference Call

Datawatch's third quarter of fiscal year 2015 earnings conference call will take place on Thursday, July 23, 2015 at 8:30 a.m. Eastern Time. To access the conference call, the toll-free dial in number is (877) 407-0782. Internationally, the call may be accessed by dialing (201) 689-8567. The conference call will be broadcast live on the Internet at: http://www.investorcalendar.com/IC/CEPage.asp?ID=174136.  It is recommended that listeners register to participate and download any necessary audio software from the website 15 minutes prior to the scheduled call. An archived replay of the broadcast will be available for 30 days at the same location.

About Datawatch Corporation
Datawatch Corporation (NASDAQ:DWCH) provides the only Managed Analytics Platform that brings together self-service data preparation with visual data discovery.  Its software bridges the gap between the ease that business user's demand and the automation and governance needed by IT. Users can quickly discover key factors that improve their business by transforming data from multi-structured sources, as well as real-time streaming data, into visually rich analytic applications. Organizations of every size, worldwide use Datawatch products, including 93 of the Fortune 100. Datawatch is headquartered in Chelmsford, Massachusetts with offices in New York, London, Frankfurt, Stockholm, Singapore, Melbourne and Manila, and with partners and customers in more than 100 countries worldwide.  Learn more at www.datawatch.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such statements, including but not limited to those relating to results of operations, contained herein are based on current expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual future results to differ materially from current expectations include the following: risks associated with the continuing weak global economy; risks associated with fluctuations in quarterly operating results due, among other factors, to the long sales cycle with enterprise customers and the size and timing of large customer orders; risks associated with acquisitions, including the acquisition and integration of Panopticon; the risk that our goodwill resulting from acquisitions may become impaired and require a write-down; limitations on the effectiveness of internal controls; rapid technological change; Datawatch's dependence on the introduction of new products and product enhancements and possible delays in those introductions; competition in the software industry generally, and in the markets for next generation analytics in particular; Datawatch's dependence on its principal products, proprietary software technology and software licensed from third parties; Datawatch's concentration of customers in the financial sector; risks associated with international sales and operations; risks associated with indirect distribution channels and co-marketing arrangements, many of which were only recently established; the adequacy of Datawatch's sales returns reserve; risks associated with a subscription sales model; Datawatch's dependence on its ability to hire and retain skilled personnel; disruption or failure of Datawatch's technology systems that may result from a natural disaster, cyber-attack, security breach or other catastrophic event; and uncertainty and additional costs that may result from evolving regulation of corporate governance and public disclosure. Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly-available documents, which include, but are not limited to, filings made by Datawatch from time to time with the Securities and Exchange Commission, including but not limited to, those appearing in the Company's Annual Report on Form 10-K for the year ended September 30, 2014 and Form 10-Q for the quarters ending December 31, 2014 and March 31, 2015.  Any forward-looking statements should be considered in light of those factors.

© 2015 Datawatch Corporation. Datawatch and the Datawatch logo are trademarks or registered trademarks of Datawatch Corporation in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.

- Financial tables to follow -



DATAWATCH CORPORATION
 Condensed Consolidated Statements of Operations
 Amounts in Thousands (except per share data)
 (Unaudited)
            
   Three Months Ended Nine Months Ended  
     June 30,  June 30,  
    2015   2014    2015   2014   
             
 REVENUE:          
  Software licenses  $  4,117  $  5,580  $   11,203  $  15,387   
  Maintenance    3,311     3,236     10,016     9,357   
  Professional services     348     412     980     1,293   
   Total revenue    7,776     9,228     22,199     26,037   
             
 COSTS AND EXPENSES:          
  Cost of software licenses     697     999     2,293     3,013   
  Cost of maintenance and services    557     979     2,519     2,462   
  Sales and marketing    6,513     8,241     21,304     23,198   
  Engineering and product development    1,988     1,942     6,697     6,830   
  General and administrative    2,204     2,185     6,779     7,000   
  Impairment of goodwill and long lived intangible assets    -       -     32,009      -   
   Total costs and expenses    11,959     14,346     71,601     42,503   
            
 LOSS  FROM OPERATIONS    (4,183)    (5,118)    (49,402)    (16,466)  
 Other income (expense)    (36)    14     (38)    (1,313)  
             
 LOSS BEFORE INCOME TAXES    (4,219)    (5,104)    (49,440)    (17,779)  
 Income tax expense (benefit)     (96)    53     (2,632)    (270)  
            
 NET LOSS $  (4,123) $  (5,157) $  (46,808) $ (17,509)  
             
Net loss per share - Basic $  (0.36) $  (0.48) $  (4.14) $  (1.81)  
Net loss per share - Diluted $  (0.36) $  (0.48) $  (4.14) $  (1.81)  
Weighted Average Shares Outstanding - Basic    11,448     10,826     11,307     9,654   
Weighted Average Shares Outstanding - Diluted    11,448     10,826     11,307     9,654   
            
 Non-GAAP Disclosure - Reconciliation of Net Loss to Net Loss Excluding the Effects of Certain Items:
            
 GAAP Net Loss  $   (4,123) $   (5,157) $   (46,808) $  (17,509)  
  Add-back Impairment of Goodwill & Long-Lived Assets     -      -      32,009      -    
  Add-back Amortization of Intangibles & IP      572      870      2,014      2,609    
  Add-back Share-Based Compensation      1,486       1,686      4,025      6,505    
  Add-back Severance & Unamortized Debt Discount     29      -      1,640      273    
  Subtotal of additions     2,087       2,556      39,688      9,387    
            
 Net (Loss) Income (non-GAAP)  $   (2,036) $   (2,601) $  (7,120) $  (8,122)  
Net (loss) income per share - Basic  $  (0.18 ) $  (0.24) $  (0.63) $   (0.84)  
Net (loss) income per share - Diluted  $  (0.18) $  (0.24) $  (0.63) $  (0.84)  
Weighted Average Shares Outstanding - Basic     11,448      10,826      11,307      9,654    
Weighted Average Shares Outstanding - Diluted     11,448      10,826      11,307      9,654    
            


DATAWATCH CORPORATION
 Condensed Consolidated Balance Sheets
 Amounts in Thousands 
 (Unaudited)
     
     
   June 30,  September 30,
   2015   2014 
     
 Cash and cash equivalents $  36,319  $  47,668 
 Accounts receivable, net    6,382     7,024 
 Prepaid expenses and other current assets    2,245     1,633 
  Total current assets    44,946     56,325 
     
 Property and equipment, net    589      400 
 Intangible and other assets, net    14,731     46,872 
     
  $  60,266  $   103,597 
      
     
 Accounts payable and accrued expenses $  4,234  $  3,809 
 Deferred revenue - current portion    7,132     7,401 
 Deferred tax liability - current portion    239     239 
  Total current liabilities    11,605     11,449 
     
 Other long-term liabilities    521     1,238 
  Total long-term liabilities     521     1,238 
     
  Total shareholders' equity    48,140     90,910 
     
  $  60,266  $   103,597 
     

 

Investor Contact:

Datawatch Investor Relations

investor@datawatch.com

Phone: (978) 441-2200 ext. 8323



Media Contact:

Sarah Bernardi

Datawatch Corporation

Sarah_Bernardi@datawatch.com

Phone: (978) 441-2200 ext. 8387

Twitter: @datawatch

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Source: Datawatch Corporation

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