Keynote Reports Fiscal First Quarter 2009 Results
Keynote Systems (Nasdaq:KEYN), the global leader in on-demand mobile and Internet test & measurement solutions for continuously improving the online experience, reported financial results for its fiscal first quarter ended December 31, 2008.
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Umang Gupta, chairman and CEO of Keynote, said: “We kicked off 2009 with a strong first quarter, exceeding our revenue and earnings expectations and generating positive operating and free cash flows. Our business did well across the board – in both Mobile and Internet products. This was due primarily to the fact that we had the best quarter in our history for load testing engagements during this holiday season and Keynote SIGOS had a better than expected December resulting in its highest annual bookings to date in calendar 2008.”
First Quarter 2009 Financial Summary
Revenue for the first quarter of fiscal year 2009 was $20.6 million, up from $17.7 million in the first quarter of fiscal year 2008. Under generally accepted accounting principles (GAAP), net income for the first quarter of fiscal year 2009 was $886,000, or $0.06 per diluted share, reflecting top-line growth and better operating efficiencies. This compares to a net loss of $744,000, or $0.04 per share, for the first quarter of fiscal year 2008. The non-GAAP net income for the first quarter of fiscal year 2009 was $2.6 million, or $0.18 per diluted share, compared to $1.1 million, or $0.06 per diluted share, for the first quarter of fiscal year 2008. The Company defines non-GAAP net income as net income adjusted for provision for income tax, stock-based compensation expense, and amortization of purchased intangibles less cash taxes from on-going operations. Non-GAAP net income per share equals non-GAAP net income divided by the diluted weighted average shares outstanding for the period.
Management also believes the non-GAAP figure of earnings before interest, taxes, depreciation and amortization (EBITDA) provides a useful measure of operations. EBITDA for the first quarter of fiscal year 2009 was $3.6 million, or 17% of revenue, compared to $1.5 million, or 8% of revenue, for the first quarter of fiscal year 2008.
Cash Flow and Deferred Revenue Summary
In the first quarter of fiscal year 2009, cash provided by operating activities was $2.0 million, compared to $330,000 in the first quarter of fiscal year 2008. Cash used for purchases of property, equipment and software totaled $661,000 for the first quarter of fiscal year 2009, compared to $1.4 million for the first quarter of fiscal year 2008. Keynote defines free cash flow as cash flow from operations less cash used for purchases of property, equipment, and software and acquired technology. The Company generated free cash flow of $1.4 million, compared to first quarter of fiscal year 2008 in which the Company used $1.0 million of free cash flow. At December 31, 2008, Keynote had $50.9 million in total cash, cash equivalents and short-term investments.
Keynote’s net deferred revenue was $19.8 million at December 31, 2008, compared to $22.3 million at December 31, 2007. Keynote’s gross deferred revenue, defined as the sum of net deferred revenue and unpaid deferred revenue, was $27.6 million at December 31, 2008, compared to $28.8 million at December 31, 2007.
The total shares outstanding, net of treasury shares, at December 31, 2008 was 14.2 million, compared to 17.8 million at December 31, 2007.
Operational Metrics Summary
As of December 31, 2008, Keynote’s total worldwide customer base was approximately 2,800 companies. Keynote currently provides its services to 46 percent of the comScore Media Metrix’s top 50 Web sites and approximately 45 percent of the Fortune 100 companies. As of December 31, 2008, Keynote measured approximately 15,000 Internet pages, as compared to 11,840 Internet pages in the same quarter a year ago.
Expectations for the Second Quarter of Fiscal Year 2009
The statements in this section of this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Keynote currently expects the following for the second fiscal quarter ending March 31, 2009:
* Total revenue is expected to be between $19.0 million and $19.5 million.
* GAAP earnings (loss) per share are expected to be between ($0.02) and $0.02.
* Non-GAAP earnings per share are expected to be between $0.10 and $0.13.
The above guidance was based on the following assumptions. Foreign exchange rates do not change materially. Total stock-based compensation expense and amortization of intangible assets is currently expected to be approximately $1.5 million. Depreciation is expected to be approximately $1.5 million. Interest income, net is expected to be approximately $300,000, assuming no material changes in interest rates and currently planned uses of cash. Cash paid for income taxes from on-going operations is expected to be approximately $50,000. In addition, we expect to make a special cash tax payment of approximately $4.0 million to the German authorities for taxes associated with prior operations and with IP migration that was previously recognized through the fiscal year 2008 provision for income taxes. Basic weighted average shares outstanding are expected to be approximately 14.2 million shares and diluted weighted average shares outstanding are expected to be approximately 14.3 million shares, assuming no additional issuances of equity or equity-related securities and significant changes in the Company’s stock price.
Conference Call
Keynote will host a conference call and simultaneous webcast at 2:00 pm (PST) today, January 27, 2009. To access the call in the U.S., please dial (866) 271-6228; international callers please dial (706) 679-4457, approximately 10 minutes prior to the start of the conference call. The webcast of the call will be available at the investor section of the Company’s web site at http://www.keynote.com. The replay will be available after the call by telephone by dialing (800) 642-1687 in the U.S. and (706) 645-9291 internationally; the pass code is 80489465. The webcast is at the investor section of the Company’s web site at http://www.keynote.com.