Onvia, Inc. Reports First Quarter 2012 Results |
Revenue constant at $5.5 million compared to Q4
2011; Annual Contract Value stabilizes at $18.5
million SEATTLE, May 3, 2012/PRNewswire/ -- Onvia, Inc.(NASDAQ: ONVI), a leading provider of comprehensive government-business market intelligence, reported financial results for the first quarter ended March 31, 2012. Q1 2012 Highlights
Q1 2012 Operational Performance
Summary Q1 12 Q4 11 Change % Q1 11 Change % Annual Contract Value (ACV) (in millions) $ 18.5 $ 18.5 0% $ 20.8 -11% Content Licenses (in millions) 2.0 2.1 -5% 2.1 -5% Total Contract Value (in millions) $ 20.5 $ 20.6 0% $ 22.9 -10% Total Clients 4,300 4,500 -4% 5,600 -23% Annual Contract Value per Client (ACVC) $ 4,315 $ 4,114 5% $ 3,725 16% |
First Quarter 2012 Results
As expected, revenue for the first quarter of 2012
stabilized at $5.5 millioncompared to the
previous quarter and decreased 11% from $6.1
millionin the same year-ago period. Our year
over year revenue declined due to the planned reduction of
unprofitable contract value from non-strategic clients.
Revenues were constant compared to the fourth quarter
of 2011 because Annual Contract Value, or ACV, improved in
the first quarter of 2012. ACV represents the
aggregate annual value of our subscription
contracts.
ACV declined by 11% to $18.5 millionfrom $20.8 milliona year ago, but remained flat compared to the fourth quarter of 2011. ACV stabilized because the acquisition and retention of profitable client contracts continues to improve. Future improvements in client retention rates and new client acquisitions will be additive to the contract base and will drive future revenue growth. We expect revenue growth rates will stabilize and begin to grow in the second half of 2012. For more information about ACV, see "About Annual Contract Value (ACV)" below.
Annual Contract Value per Client increased 16% from Q1 2011 to an average of $4,315per client. ACVC improved in part by targeting more strategic clients and because renewals were weighted toward strategic clients with higher contract values.
Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization, including non-cash stock-based compensation) for the quarter decreased to $723,000, compared to Adjusted EBITDA of $1.1 millionin the same year-ago period. Net income was $60,000or $0.01 centsper diluted share, compared to net income of $393,000or $0.05 centsper diluted share in the first quarter of 2011. Throughout 2011, we recognized revenue on a higher base of unprofitable contracts that did not renew, but reduced our cost structure to support our new business model. This resulted in higher EBITDA and net income in the first quarter of last year.
Operating expenses in the first quarter of 2012 decreased 5% to $4.6 millioncompared to $4.9 millionin Q1 2011. General and administrative costs declined by 31% compared to the same period last year in part because of professional fees incurred to develop the Tax Benefits Preservation Plan (intended to protect Onvia's $73 millionin net operating loss carryforwards) and to evaluate the unsolicited expressions of interest to acquire Onvia last year.
At March 31, 2012, cash, cash equivalents and investments increased by $513,000despite declining revenues, compared to the end of 2011. As of March 31, 2012we held cash and investments of $12.0 millioncompared to $11.5 millionat the end of last year. Our cash balance increased due to lower operating expenses, the timing of capital expenditures and improving ACV.
2012 Initiatives
"Successful execution of Onvia's transformation
plan maximizes the advantages of our business model, which
include strong operating leverage with potential EBITDA
margins reaching 30%, significant free cash flows and no
federal income taxes," stated Hank Riner,
Onvia's Chief Executive Officer. "We expect
that Onvia will deliver highly predictable financial
performance and profitable sustainable growth."
"In the second year of our business transformation we are focused on four corporate initiatives," Mr. Riner continued. "First, we continue to drive improvement in our SMB sales organization to scale results. In the first quarter, we built on the momentum from last quarter, driving record SMB results in both acquisition and retention since we began our transformation in 2011. Average contract value for new SMB clients increased to $8,376in the first quarter 2012, an increase of 32% compared to $6,355in the same year ago quarter. We continue to emphasize domain knowledge expertise with the vertical alignment of both acquisition and retention teams, and focus on consultative selling to align Onvia's solutions to customer needs, objectives and challenges.
"Second, we added more structure to our Enterprise sales organization. During the quarter, we rolled out the methods we used for success in SMB to Enterprise sales which include vertical industry focus, consultative selling and a rigorous customer care program. We believe there is a strong market for our solutions in the Enterprise market, supported by the many success stories shared by our new and existing Enterprise clients."
Since the SMB and Enterprise selling processes are similar, we will report a blended ACVC for SMB and Enterprise Sales, instead of SMB ACVC in 2012. In the first quarter, our blended ACVC including both SMB and Enterprise acquisition was $9,359, up 32% from $7,110in the same quarter last year, and up 24% from $7,560in the fourth quarter of last year. Blended ACVC may fluctuate in sequential quarters until Enterprise results become more consistent.
"Third, we need to continue to execute on our product roadmap," continued Mr. Riner. "We reached a first milestone with the launch of Onvia 5 in the first quarter 2012. The new release has been very successful with positive market reaction to improved usability and navigation. In addition, we are expanding content collection to support our procurement awards and term contracts solution which will be released in July 2012. This expanded content coverage and our ongoing data normalization initiative is expected to differentiate our existing products in the market and support a new series of decision analytics tools to be released in 2013."
"Finally, we need to improve our marketing," Mr. Riner concluded. "Our marketing team is focused developing strategic messaging, delivering quality sales leads, and increasing client upgrades into higher value, differentiated products. The successful execution of these plans is expected to drive revenue growth, improve sales effectiveness and build our brand. We measure the success of our marketing initiatives through improvements in ACV and ACVC."
Conference Call
Onvia will hold a conference call later today (May 3,
2012) to discuss our first quarter results. CEO
Hank Rinerand CFO Cameron Waywill
host the call starting at 4:30 p.m. Eastern
time. A question and answer session will follow
management's presentation.
To participate in the call, dial the appropriate number 5-10 minutes prior to the start time, request the Onvia conference call and provide the conference ID:
Date: Thursday, May 3, 2012
Time: 4:30 p.m. Eastern time(1:30 p.m.
Pacific time)
Dial-In Number: 1-800-894-5910
International: 1-785-424-1052
Conference ID#: ONVIA
The conference call will be broadcast simultaneously and available for replay via the investor section of Onvia's website at www.onvia.com. If you have any difficulty connecting with the conference call, please contact Cameron Wayat 206-373-9034.
A replay of the call will be available after 7:30 p.m. Eastern timeon the same day and until June 3, 2012:
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pass-code: 11637
Use of Non-GAAP Financial Information
Adjusted EBITDA is not a financial measure calculated and
presented in accordance with U.S. generally accepted
accounting principles ("GAAP") and should not be
considered as an alternative to net income, operating
income or any other financial measures so calculated and
presented, nor as an alternative to cash flow from
operating activities as a measure of the company's
liquidity. Onvia defines Adjusted EBITDA as net
income / (loss) before interest expense and other non-cash
financing costs; taxes; depreciation; amortization; and
non-cash stock-based compensation. Other companies
(including Onvia's competitors) may define Adjusted
EBITDA differently. Onvia presents Adjusted EBITDA
because it believes Adjusted EBITDA to be an important
supplemental measure of performance that is commonly used
by securities analysts, investors and other interested
parties in the evaluation of companies in similar
industries and size. Management also uses this information
internally for forecasting and budgeting. It may not
be indicative of the historical operating results of Onvia
nor is it intended to be predictive of potential future
results. Investors should not consider Adjusted
EBITDA in isolation or as a substitute for analysis of
results as reported under GAAP. See
"Reconciliation of GAAP Net Income to Adjusted
EBITDA" below for further information on this non-GAAP
measure and for a reconciliation of GAAP Net Income to
Adjusted EBITDA for the periods indicated.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(in thousands)
(unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2012
2011
2011
GAAP net income
$ 60
$ 677
$ 393
Reconciling items from GAAP to Adjusted EBITDA
Interest and other income, net
(16)
(9)
(11)
Depreciation and amortization
659
625
639
Amortization of stock-based compensation
20
77
63
Income tax / (benefit)
-
(616)
-
Adjusted EBITDA
$ 723
$ 754
$ 1,084
About Annual Contract Value (ACV) and Quarterly Contract
Value per Client (QCVC)
Onvia also supplements its financial statements in this
release and in its annual report on Form 10-K and quarterly
reports on Form 10-Q with a calculation of Annual Contract
Value (ACV), which represents the annualized aggregate
revenue value of all subscription contracts as of the end
of the quarter. ACV is driven by Annual Contract
Value per Client (ACVC) and the number of clients. Most of
Onvia's revenues are generated from subscription
contracts, which are typically prepaid and have a minimum
term of one year, with revenues recognized ratably over the
term of the subscription. Onvia also receives
revenues from multi-year content distribution partnerships,
stand-alone management reports, document download services,
and list rental services, which are not included in the
calculation of ACV. ACV is not a financial measure
calculated and presented in accordance with U.S. generally
accepted accounting principles ("GAAP") and
should not be considered as an alternative to revenue or
any other financial measures so calculated. Management uses
this information as a basis for planning and forecasting
core business activity for future periods and believes it
is useful in understanding the results of its operations.
Quarterly Contract Value per Client (QCVC) is similar
to ACVC, but represents the average annual contract value
of all new and renewing client transactions signed during
the quarter only. We eliminated this metric in 2012,
because we believe that blended acquisition ACVC better
represents the trend in current period ACVC because it is
not affected by the mix of accounts renewing in the period.
Forward-Looking Statements
This release contains "forward-looking
statements" as defined in the Private Securities
Litigation Reform Act of 1995. Words such as
"believe," "intend," "plan,"
"expect," "should,"
"indicate" and similar expressions identify
forward-looking statements. In addition, statements
that are not historical should also be considered
forward-looking statements. Forward-looking
statements contained in this release may relate to, but are
not limited to, statements regarding Onvia's future
results of operations, the progress to be made by
Onvia's transformation plan, and Onvia's future
product and content offerings. Such statements are
based on current expectations that involve a number of
known and unknown risks, uncertainties and other factors,
which may cause actual events to be materially different
from those expressed or implied by such forward-looking
statements.
The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: Onvia's "targeted accounts" strategy may fail to increase contract value of new customers; identifying partners to distribute Onvia's content may be slower than expected; client adoption of Onvia's enterprise solutions may be slower than expected; Onvia's market driven product development process may fail to improve sales penetration and client retention rates; and Onvia's technology may fail to handle the increased demands on its infrastructure caused by increasing network traffic and the volume of aggregated data. Additional information on factors that may impact these forward-looking statements can be found in the "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections, as applicable, in Onvia's Annual Report on Form 10-K for the year December 31, 2011and Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.
Any forward-looking statement made by Onvia in this release is as of the date indicated. Factors or events that could cause Onvia's actual results to differ may emerge from time to time, and it is not possible for Onvia to predict all of them. Onvia assumes no obligation (and expressly disclaims any such obligation) to update any forward-looking statements contained in this presentation as a result of new information or future events or developments, except as may be required by law.
About Onvia, Inc.
For more than 12 years Onvia (NASDAQ: ONVI) has been
delivering the research, analytics and tools companies rely
on to succeed in the $5.5 trilliongovernment
market. Onvia tracks, analyzes and reports the
spending of tens of thousands of federal, state and local
government agencies, giving companies a single source for
conducting open, intelligent and efficient business with
government. Along with providing an exclusive suite
of integrated business tools for a wide variety of
industries, Onvia offers DemandStar, the automated
system that streamlines agency procurement processes.
For information about Onvia visit www.onvia.com.
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2012 and March 31, 2011
Three Months Ended March 31,
2012
2011
(Unaudited)
(In thousands, except per share data)
Revenue
Subscription
$ 4,703
$ 5,298
Content license
537
552
Management information reports
145
190
Other
111
103
Total revenue
5,496
6,143
Cost of revenue
860
905
Gross margin
4,636
5,237
Operating expenses:
Sales and marketing
2,747
2,647
Technology and development
1,042
1,041
General and administrative
803
1,168
Total operating expenses
4,592
4,855
Income from operations
44
382
Interest and other income, net
16
11
Net income
$ 60
$ 393
Unrealized gain on available-for-sale securities
-
1
Comprehensive income
$ 60
$ 394
Basic net income per common share
$ 0.01
$ 0.05
Diluted net income per common share
$ 0.01
$ 0.05
Basic weighted average shares outstanding
8,505
8,435
Diluted weighted average shares outstanding
8,799
8,537
ONVIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31,
2012
December 31,
2011
(Unaudited)
(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$ 4,613
$ 3,378
Short-term investments, available-for-sale
7,427
8,149
Accounts receivable, net of allowance for doubtful accounts of $66 and $37
1,162
1,124
Prepaid expenses and other current assets, current portion
645
478
Security deposits, current portion
-
45
Deferred tax assets, current portion
-
28
Total current assets
13,847
13,202
LONG TERM ASSETS:
Property and equipment, net of accumulated depreciation
1,338
1,275
Internal use software, net of accumulated amortization
6,051
6,175
Prepaid expenses and other assets, net of current portion
2
2
Security deposits, net of current portion
90
90
Deferred tax assets, net of valuation allowance
706
588
Total long term assets
8,187
8,130
TOTAL ASSETS
$ 22,034
$ 21,332
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$ 506
$ 609
Accrued expenses
679
709
Obligations under capital leases, current portion
123
-
Idle lease accrual, current portion
57
69
Unearned revenue, current portion
8,410
7,999
Deferred rent, current portion
153
-
Deferred tax liabilities
90
146
Total current liabilities
10,018
9,532
LONG TERM LIABILITIES:
Obligations under capital leases, net of current portion
47
-
Idle lease accrual, net of current portion
68
74
Unearned revenue, net of current portion
586
489
Deferred rent, net of current portion
527
568
Total long term liabilities
1,228
1,131
TOTAL LIABILITIES
11,246
10,663
STOCKHOLDERS' EQUITY:
Preferred stock; $.0001 par value: 2,000,000 shares authorized; no shares issued or outstanding
-
-
Common stock; $.0001 par value: 11,000,000 shares authorized; 8,515,515 and 8,494,290 shares issued; and 8,515,489 and 8,494,264 shares outstanding
1
1
Treasury stock, at cost: 26 and 26 shares
-
-
Additional paid in capital
352,821
352,762
Accumulated other comprehensive loss
1
1
Accumulated deficit
(342,035)
(342,095)
Total stockholders' equity
10,788
10,669
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 22,034
$ 21,332
Onvia, Inc.
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2012 and March 31, 2011
Three Months Ended March 31,
2012
2011
(Unaudited)
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$ 60
$ 393
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
659
639
Idle lease accrual
(18)
-
Stock-based compensation
20
63
Change in operating assets and liabilities:
Accounts receivable
(38)
215
Prepaid expenses and other assets
(166)
(31)
Accounts payable
(62)
(404)
Accrued expenses
(30)
(203)
Unearned revenue
508
(98)
Deferred rent
(35)
(27)
Net cash provided by operating activities
898
547
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment
(88)
(303)
Additions to internal use software
(358)
(321)
Purchases of investments
(3,313)
(2,784)
Sales of investments
1,263
-
Maturities of investments
2,772
758
Return of security deposits
45
135
Net cash provided by / (used in) investing activities
321
(2,515)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations
(22)
-
Proceeds from exercise of stock options
38
95
Net cash provided by financing activities
16
95
Net increase / (decrease)
1,235
(1,873)
Cash and cash equivalents, beginning of period
3,378
7,522
Cash and cash equivalents, end of period
$ 4,613
$ 5,649
SOURCE Onvia, Inc.
Cameron Way, Chief Financial Officer of Onvia, +1-206-373-9034, cway@onvia.com
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