Exa Corporation
Nov 30, 2016

Exa Reports Third Quarter Fiscal 2017 Financial Results

License Revenue Increases 14% 
Profitability Metrics Continue to Strengthen

BURLINGTON, Mass., Nov. 30, 2016 (GLOBE NEWSWIRE) -- Exa® Corporation (NASDAQ:EXA), a global innovator in simulation software for product engineering, today announced financial results for the third quarter fiscal 2017, which ended October 31, 2016.

Revenue and Profitability Summary

Third Quarter

 3Q17
(millions)
3Q16
(millions)
Growth
Rate
Constant
Currency
Growth
Rate
Total Revenue$19.2 $17.0  13% 10%
License Revenue$16.0 $14.0  14% 11%
Project Revenue$3.2 $3.0  6% 4%
     
Net income (loss)$0.2 $(0.4) -  - 
Adjusted EBITDA$2.2 $1.5  46% - 
Adjusted EBITDA as % of revenue (1) 11.7% 9.0% -  - 

(1) Calculation based on amounts presented in the accompanying financial statement tables

"We continued our momentum in the third quarter and delivered revenue that was in the middle of our guidance range and profitability that was above the high end of our guidance range," said Stephen Remondi, President and Chief Executive Officer of Exa. "With license revenue increasing 14% from a year ago, we continue to drive a shift in mix to higher-margin, recurring license revenue. Strong renewal activity in the quarter sets us up for a healthy finish to fiscal 2017 and start to fiscal 2018. We are pleased to achieve this performance while making important investments that will enable us to further capitalize on our position in the market and continue our growth."

Third Quarter Fiscal 2017 Financial Highlights

Revenue

Profitability

Balance Sheet

Business Outlook

Based on information available as of today, Exa is providing fourth quarter and fiscal 2017 guidance as indicated below.

Fourth Quarter Fiscal 2017:

Full Year Fiscal 2017:

The above guidance assumes an exchange rate of 1.06 US dollars per Euro and 110.0 Japanese yen per US dollar for fiscal year 2017.

An explanation and reconciliation of historical and forward-looking non-GAAP measures presented above, including revenue on a constant currency basis, adjusted EBITDA, non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share, to the comparable GAAP measures is provided below and in the attachments to this press release. 

Conference Call Information 
What: Exa's third quarter fiscal 2017 financial results conference call 
When: Wednesday, November 30, 2016
Time: 5:00 p.m. ET
Webcast: http://investor.exa.com (live and replay)
Live Call: (877) 878-2664, Domestic
  (970) 315-0423, International
Replay: (855) 859-2056, Passcode 21951230, Domestic
  (404) 537-3406, Passcode 21951230, International

Non-GAAP Financial Measures 
To supplement our condensed consolidated financial statements, which are presented on a GAAP basis, we disclose revenue on a constant currency basis, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and Adjusted EBITDA. These non-GAAP measures are not in accordance with, or an alternative for, amounts determined in accordance with generally accepted accounting principles in the United States. The GAAP measure most comparable to revenue on a constant currency basis is GAAP revenue. The GAAP measure most comparable to non-GAAP operating income (loss) is GAAP income (loss) from operations. The GAAP measure most comparable to non-GAAP net income (loss) and Adjusted EBITDA is GAAP net income (loss).  The GAAP measure most comparable to non-GAAP net income (loss) per diluted share is GAAP net income (loss) per diluted share. A reconciliation of these non-GAAP financial measures to the corresponding GAAP measure is included below.

We define revenue on a constant currency basis as GAAP revenue, adjusted to reverse the impact of changes in the average exchange rates of currencies in which our international operations generated revenue and incurred expenses.

We define non-GAAP net income (loss) as net income (loss), excluding the after tax impact of non-cash, stock-based compensation expense and the amortization of acquired intangibles. We define EBITDA as net income (loss), excluding depreciation and amortization, interest expense, net, other income (expense), foreign exchange gain (loss) and benefit (provision) for income taxes, and we define Adjusted EBITDA as EBITDA, excluding non-cash, stock-based compensation expense.

Our management uses these non-GAAP measures when evaluating our operating performance and for internal planning and forecasting purposes. We believe that these measures help indicate underlying trends in our business, are important in comparing current results with prior period results, and are useful to investors and financial analysts in assessing our operating performance. For example, our international operations generate revenue and incur expenses that are denominated in foreign currencies. These amounts could be materially affected by currency fluctuations. Our principal exposures are to fluctuations in exchange rates for the United States dollar versus the Euro, British pound, Japanese yen, Chinese yuan and Korean won. Changes in currency exchange rates that are beyond our control can significantly affect our consolidated results of operations. We believe that disclosure of our revenue on a constant currency basis is useful as an indicator of demand for our solutions independent of the influence of currency exchange fluctuations. Management considers Adjusted EBITDA to be an important indicator of our operational strength and the performance of our business and a good measure of our historical operating trends. The non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP and, in particular, should not be considered a measure of our liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies. Investors should carefully consider the attached reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures.

About Exa Corporation

Exa (Nasdaq:EXA) (www.exa.com) Corporation's visualization and simulation software helps designers and engineers produce better vehicles and equipment. As a design evolves, Exa accurately predicts the performance of that design while providing actionable insight to optimize the performance of the product. With Exa, the need for costly physical prototypes and expensive late-stage changes is reduced. Now, designers and engineers are freed from the risk of producing compromised products that do not meet market and regulatory requirements. Some of the most successful product companies in the world use Exa, including BMW, Delphi, Denso, Fiat Chrysler, Ford, Hino, Honda, Hyundai, Jaguar Land Rover, Kenworth, Komatsu, MAN, Nissan, Peterbilt, Peugeot, Renault, Scania, Toyota, Volkswagen and Volvo Trucks.

Safe Harbor Statement

This press release, including the section entitled "Business Outlook," contains forward-looking statements describing our expectations concerning future events and our future financial performance. These statements are only predictions and may be inaccurate. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined under "Risk Factors" in our Annual Report on Form 10-K for the year ended January 31, 2016 and in our other SEC filings. These factors may cause our actual results to differ materially from those described in our forward-looking statements.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, our future results, levels of activity, performance or achievements may differ from our expectations. Other than as required by law, we do not undertake a responsibility to update any of the forward-looking statements after the date of this press release, even though our situation may change in the future.

EXA CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
     
  October 31, January 31, 
   2016   2016 
ASSETS    
Current assets:    
Cash and cash equivalents $25,033  $27,649 
Accounts receivable  16,663   32,072 
Prepaid expenses and other current assets  2,862   3,707 
Total current assets  44,558   63,428 
Property and equipment, net  10,897   12,032 
Intangible assets, net  1,782   2,044 
Deferred tax assets  432   428 
Restricted cash  352   352 
Other assets  744   737 
Total assets $58,765  $79,021 
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $1,218  $3,462 
Accrued expenses  8,739   12,199 
Current portion of deferred revenue  23,421   32,849 
Current portion of capital lease obligations  1,997   2,823 
Total current liabilities  35,375   51,333 
Deferred revenue  699   4,484 
Capital lease obligations  1,286   2,549 
Deferred rent  2,537   2,490 
Other long-term liabilities  719   678 
Total liabilities  40,616   61,534 
Commitments and contingencies    
Stockholders' equity :    
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued
  and outstanding
      
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,882,446 and
  14,663,621 shares issued, respectively; 14,849,944 and 14,631,119 shares
  outstanding, respectively
  15   15 
Additional paid-in capital  93,767   91,626 
Accumulated deficit  (75,151)  (73,685)
Treasury stock (32,502 common shares, at cost)  0   0 
Accumulated other comprehensive loss  (482)  (469)
Total stockholders' equity  18,149   17,487 
Total liabilities and stockholders' equity $58,765  $79,021 
         

 

EXA CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except share and per share data)
         
  Three Months Ended October 31, Nine Months Ended October 31,
   2016   2015   2016   2015 
Revenue:        
License revenue $15,967  $13,966  $44,836  $39,185 
Project revenue  3,191   2,998   8,219   8,002 
Total revenue  19,158   16,964   53,055   47,187 
Operating expenses (1):        
Cost of revenues  4,904   5,118   14,340   14,516 
Sales and marketing  3,357   2,336   10,080   7,264 
Research and development  6,234   6,143   18,468   18,265 
General and administrative (2)  3,952   3,456   10,858   9,849 
Total operating expenses  18,447   17,053   53,746   49,894 
Income (loss) from operations  711   (89)  (691)  (2,707)
Other (expense) income, net        
Foreign exchange (loss) gain  (99)  51   94   (172)
Interest expense  (30)  (60)  (116)  (179)
Interest income  12   3   33   8 
Other (expense) income, net  (3)  6   9   6 
Total other (expense) income, net  (120)  0   20   (337)
Income (loss) before income taxes  591   (89)  (671)  (3,044)
Provision for income taxes  (436)  (344)  (795)  (472)
Net income (loss) $155  $(433) $(1,466) $(3,516)
Net income (loss) per share:        
Basic $0.01  $(0.03) $(0.10) $(0.24)
Diluted $0.01  $(0.03) $(0.10) $(0.24)
Weighted average shares outstanding used in computing net
  income (loss) per share:
        
Basic  14,826,758   14,610,479   14,750,153   14,484,563 
Diluted  15,261,996   14,610,479   14,750,153   14,484,563 
         
Comprehensive income (loss):        
Net income (loss) $155  $(433) $(1,466) $(3,516)
Foreign currency translation adjustment  (55)  6   (13)  34 
Comprehensive income (loss) $100  $(427) $(1,479) $(3,482)
         
         
(1) Includes stock-based compensation expense as follows:        
  Three Months Ended October 31, Nine Months Ended October 31,
   2016   2015   2016   2015 
Cost of revenues $41  $64  $124  $186 
Sales and marketing  54   117   202   317 
Research and development  222   265   567   691 
General and administrative  215   215   565   572 
Total $532  $661  $1,458  $1,766 
         
         
(2) Includes amortization expense related to intangible assets as follows:      
  Three Months Ended October 31, Nine Months Ended October 31,
   2016   2015   2016   2015 
General and administrative $88  $88  $263  $263 
                 

 

EXA CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
     
  Nine Months Ended October 31,
   2016   2015 
Cash flows provided by operating activities:    
Net loss $(1,466) $(3,516)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization  2,987   2,487 
Stock-based compensation expense  1,458   1,766 
Deferred rent expense  286   472 
Deferred income taxes  (4)  4 
Net change in operating assets and liabilities:    
Accounts receivable  15,201   15,948 
Prepaid expenses and other current assets  1,044   54 
Other assets  (7)  11 
Accounts payable  (1,865)  694 
Accrued expenses  (3,755)  (2,946)
Other liabilities  40   (69)
Deferred revenue  (13,392)  (11,007)
Net cash provided by operating activities  527   3,898 
Cash flows used in investing activities:    
Purchases of property and equipment  (1,881)  (1,571)
Change in restricted cash     173 
Net cash used in investing activities  (1,881)  (1,398)
Cash flows used in financing activities:    
Proceeds from stock option and warrant exercises  453   1,168 
Payments of capital lease obligations  (2,151)  (2,131)
Net cash used in financing activities  (1,698)  (963)
Effect of exchange rate changes on cash  436   (136)
Net (decrease) increase in cash and cash equivalents  (2,616)  1,401 
Cash and cash equivalents, beginning of period  27,649   21,785 
Cash and cash equivalents, end of period $25,033  $23,186 
     
Supplemental cash flow disclosures:    
Cash paid for interest $116  $179 
Cash paid for income taxes $1,367  $1,214 
Supplemental disclosure of non-cash investing activities:    
Acquisition of equipment through capital leases $62  $4,351 
Construction costs funded by landlord tenant improvement allowance $  $554 
Decrease in unpaid purchases of property and equipment $(381) $ 
     

 

EXA CORPORATION
Reconciliation of historical Non-GAAP to GAAP measures
(Unaudited)
(in thousands, except per share data)
         
Adjusted EBITDA: Three Months Ended October 31, Nine Months Ended October 31,
   2016   2015   2016   2015 
         
Net income (loss) $155  $(433) $(1,466) $(3,516)
Add back:        
Depreciation and amortization  996   959   2,987   2,487 
Interest expense, net  18   57   83   171 
Other income, net  3   (6)  (9)  (6)
Foreign exchange loss (gain)  99   (51)  (94)  172 
Provision for income taxes  436   344   795   472 
EBITDA  1,707   870   2,296   (220)
Stock-based compensation expense  532   661   1,458   1,766 
Adjusted EBITDA $2,239  $1,531  $3,754  $1,546 
         
Non-GAAP operating income (loss): Three Months Ended October 31, Nine Months Ended October 31,
   2016   2015   2016   2015 
         
Operating income (loss) $711  $(89) $(691) $(2,707)
Add back:        
Stock-based compensation expense  532   661   1,458   1,766 
Amortization of acquired intangible assets  88   88   263   263 
Non-GAAP operating income (loss) $1,331  $660  $1,030  $(678)
         
Non-GAAP net income (loss): Three Months Ended October 31, Nine Months Ended October 31,
   2016   2015   2016   2015 
         
Net income (loss)  155   (433)  (1,466)  (3,516)
Add back:        
Stock-based compensation expense  532   661   1,458   1,766 
Amortization of acquired intangible assets  88   88   263   263 
Income tax effect (1)  (217)  (265)  (602)  (710)
Non-GAAP net income (loss) $558  $51  $(347) $(2,197)
         
Non-GAAP net income (loss), per diluted share: Three Months Ended October 31, Nine Months Ended October 31,
   2016   2015   2016   2015 
Net income (loss), per diluted share (2) $0.01  $(0.03) $(0.10) $(0.24)
Add back:        
Stock-based compensation expense  0.03   0.05   0.10   0.12 
Amortization of acquired intangible assets  0.01   0.01   0.02   0.02 
Income tax effect (1)  (0.01)  (0.02)  (0.04)  (0.05)
Non-GAAP net income (loss), per diluted share (2)(3): $0.04  $0.00  $(0.02) $(0.15)
         
(1)  The tax effect of non-cash stock-based compensation expense and non-cash amortization of acquired intangibles is estimated using a blended rate equivalent to our annual statutory United States federal tax rate and our estimated state tax rate. The tax effect is exclusive of any impact from valuation allowances established against our United States net deferred tax assets and other discrete items. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
         
(2)  Share amounts utilized on a fully diluted basis were approximately 15.3 million and 14.6 million for the three months ended October 31, 2016 and 2015, respectively, and 14.8 million and 14.5 million for the nine months ended October 31, 2016 and 2015, respectively.
         
(3)  Due to rounding, totals may not equal the sum of line items in the table above.
         

 

EXA CORPORATION
Reconciliation of forward looking Non-GAAP to GAAP measures
      
      
EBITDA and Adjusted EBITDA Three months ended
January 31, 2017
  Year ended
 January 31, 2017
(in millions)     
Net loss$(1.2) - (0.1) $(2.7) - (1.6)
Add back:     
Depreciation and amortization  1.1    4.1 
Interest expense, net  0.2    0.2 
Provision for income taxes  0.9    1.6 
EBITDA 1.0 - 2.1   3.2 - 4.3 
Stock-based compensation expense  0.5    2.0 
Adjusted EBITDA$1.5 - 2.6  $5.2 - 6.3 
      
Non-GAAP net (loss) income Three months ended
January 31, 2017
  Year ended
 January 31, 2017
(in millions)     
Net loss (1.2) - (0.1)  (2.7) - (1.6
Add back:     
Stock-based compensation expense  0.5    2.0 
Amortization of acquired intangible assets  0.1    0.4 
Income tax effect (1)  (0.2)   (0.9)
Non-GAAP net (loss) income (0.8) - 0.3   (1.2) - (0.1)
      
(1)  Non-GAAP financial information is adjusted using a blended rate equivalent to our annual statutory United States federal tax rate and our estimated state tax rate. The tax effect is exclusive of any impact from valuation allowances established against our United States net deferred tax assets and other discrete items. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
      


Media Contact:
Michelle Murray-Ross, Exa Corporation
+1 (781) 564-0251
michelle@exa.com

Investor Relations Contact:
Garo Toomajanian, ICR
+1 (781) 564-0337
investor@exa.com