Exa Corporation
Mar 16, 2017

Exa Reports Fourth Quarter and Full Year Fiscal 2017 Financial Results

Fourth Quarter Recurring License Revenue Increases 12%
Fourth Quarter Profitability Metrics Above Guidance Ranges
Full Year Fiscal 2017 License Revenue Increases 14%

BURLINGTON, Mass., March 16, 2017 (GLOBE NEWSWIRE) -- Exa® Corporation (NASDAQ:EXA), a global innovator in simulation software for product engineering, today announced financial results for the fourth quarter and full year fiscal 2017, which ended January 31, 2017.

Revenue Summary

Fourth Quarter

 4Q17 (millions)  4Q16 (millions)  Growth  
Rate
Constant Currency  
Growth Rate
Total Revenue  $19.5$18.37%6%
License Revenue  $16.0$14.312%11%
Project Revenue  $3.5$3.9(11)%(11)%

Fiscal 2017

 FY17 (millions)  FY16 (millions)  Growth  
Rate
Constant Currency  
Growth Rate
Total Revenue  $72.6$65.411%9%
License Revenue  $60.8$53.514%12%
Project Revenue  $11.7$11.9(2)%(3)%


"We executed well during the fourth quarter, delivering net income and adjusted EBITDA that both exceeded our guidance, with revenue that was within the lower half of our guidance range," said Stephen Remondi, President and Chief Executive Officer of Exa. "For the full year, we produced top line year over year growth with license revenue increasing 14% or 12% on a constant currency basis. We also continued to realize our operating leverage potential as demonstrated by a 4.2 percentage point increase in adjusted EBITDA margin over FY 16.

"The combined prospects of reduced environmental regulations regarding fuel economy and vehicle emissions and a border adjustment tax have created tentative near-term deployment commitments from some of our customers in the ground transportation market. This uncertainty is reflected in our outlook for FY18. Nonetheless, we remain confident in the underlying demand dynamics in this market segment and the potential of our solutions to deliver significant value to our customers under various macro and regulatory environments.    

"We are also excited to announce that Exa recently signed a significant commercial agreement for our first license customer of our Exa DigitalROCK™ solution supporting the Oil and Gas industry.  We believe that our continued investments in new markets and applications of our technology will enable us to return to our long-term target growth rates."

Fourth Quarter Fiscal 2017 Financial Highlights

Revenue

Profitability

Full Year Fiscal 2017 Financial Highlights

Revenue

Profitability

Balance Sheet

Business Outlook

Based on information available as of today, Exa is providing first quarter and fiscal 2018 guidance as indicated below.

First Quarter Fiscal 2018:

Full Year Fiscal 2018:

The above guidance assumes an exchange rate of 1.06 US dollars per Euro and 113 Japanese yen per US dollar for fiscal year 2018.

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) and non-GAAP net income (loss), to the comparable GAAP measures is provided below and in the attachments to this press release. 

Conference Call Information
 
What:Exa's fourth quarter and full year fiscal 2017 financial results conference call 
When:Thursday, March 16, 2017
Time:5:00 p.m. ET
Webcast:  http://investor.exa.com (live and replay)
Live Call:(877) 878-2664, Domestic
Replay:(970) 315-0423, International
 (855) 859-2056, Passcode 85707668, Domestic
 (404) 537-3406, Passcode 85707668, 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, non-GAAP net income, non-GAAP net income 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 is GAAP income from operations. The GAAP measure most comparable to Non-GAAP net income and Adjusted EBITDA is GAAP net income.  The GAAP measure most comparable to Non-GAAP net income per diluted share is GAAP net income 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 as net income, excluding the after-tax impact of non-cash, stock-based compensation expense and the amortization of acquired intangibles. We define EBITDA as net income, excluding depreciation and amortization, interest expense, other income (expense), foreign exchange gain (loss) and 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 simulation software helps designers and engineers enhance the performance of their products, reduce product development costs and improve the efficiency of their design and engineering processes. 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. Exa continues to generate the majority of its revenue from the ground transportation market, in which some of the most successful product companies in the world use Exa, including BMW, Cummins, Denso, FAW, Fiat Chrysler, Ford, General Motors, Hino, Honda, Hyundai, Jaguar Land Rover, Kenworth, Komatsu, MAN, Michelin, Nissan, Peterbilt, Peugeot, Renault, Scania, Tesla, Toyota, Volkswagen and Volvo Trucks.  In recent years, Exa has expanded its technology offerings into the aerospace and oil and gas industries. 

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, Form 10-Q for the quarter ended October 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 
(in thousands, except share and per share data) 
      
  January 31,  
   2017   2016  
ASSETS     
Current assets:     
Cash and cash equivalents $  24,552  $  27,649  
Accounts receivable    24,259     32,072  
Prepaid expenses and other current assets    2,898     3,707  
Total current assets    51,709     63,428  
Property and equipment, net    14,028     12,032  
Intangible assets, net    1,694     2,044  
Deferred tax assets    566     428  
Restricted cash    352     352  
Other assets    725     737  
Total assets $  69,074  $  79,021  
LIABILITIES AND STOCKHOLDERS' EQUITY     
Current liabilities:     
Accounts payable $  4,616  $  3,462  
Accrued expenses    10,569     12,199  
Current portion of deferred revenue    29,006     32,849  
Current portion of capital lease obligations    1,737     2,823  
Total current liabilities    45,928     51,333  
Deferred revenue    238     4,484  
Capital lease obligations    914     2,549  
Deferred rent    2,391     2,490  
Other long-term liabilities    429     678  
Total liabilities    49,900     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; 14,926,429 and         
  14,663,621 shares issued, respectively; 14,893,927 and 14,631,119 shares         
  outstanding, respectively    15     15  
Additional paid-in capital    94,516     91,626  
Accumulated deficit    (74,817)    (73,685) 
Treasury stock (32,502 common shares, at cost)  0   0  
Accumulated other comprehensive loss    (540)    (469) 
Total stockholders' equity    19,174     17,487  
Total liabilities and stockholders' equity $  69,074  $  79,021  
      

 

EXA CORPORATION 
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 
(in thousands, except share and per share data) 
         
 Three Months Ended January 31, Year Ended January 31, 
  2017   2016   2017   2016  
Revenue:        
License revenue$  16,001  $  14,314  $  60,837  $  53,499  
Project revenue   3,524     3,946     11,743     11,948  
Total revenue   19,525     18,260     72,580     65,447  
Operating expenses (1):        
Cost of revenues   5,087     5,601     19,427     20,117  
Sales and marketing   3,776     2,886     13,856     10,150  
Research and development   5,851     5,875     24,319     24,140  
General and administrative (2)   3,724     3,917     14,582     13,766  
Total operating expenses   18,438     18,279     72,184     68,173  
Income (loss) from operations   1,087     (19)    396     (2,726) 
Other income (expense), net        
Foreign exchange gain (loss)   72     (150)    166     (322) 
Interest expense   (24)    (57)    (140)    (236) 
Interest income   11     4     44     12  
Other income, net   4     1     13     7  
Total other income (expense), net   63     (202)    83     (539) 
Income (loss) before taxes   1,150     (221)    479     (3,265) 
Provision for income taxes   (816)    (1,070)    (1,611)    (1,542) 
Net income (loss)$  334  $  (1,291) $  (1,132) $  (4,807) 
Net income (loss) per share:        
Basic$  0.02  $  (0.09) $  (0.08) $  (0.33) 
Diluted$  0.02  $  (0.09) $  (0.08) $  (0.33) 
Weighted average shares outstanding used in computing net income (loss) per share:        
Basic   14,865,379     14,628,465     14,779,117     14,520,834  
Diluted   15,303,425     14,628,465     14,779,117     14,520,834  
         
Comprehensive income (loss):        
Net income (loss)$  334  $  (1,291) $  (1,132) $  (4,807) 
Foreign currency translation adjustment   (58)    (77)    (71)    (43) 
Comprehensive income (loss):$  276  $  (1,368) $  (1,203) $  (4,850) 
         
         
(1) Includes stock-based compensation expense as follows:       
 Three Months Ended January 31, Year Ended January 31, 
  2017   2016   2017   2016  
Cost of revenues$  38  $  48  $  162  $  234  
Sales and marketing   67     88     269     405  
Research and development   225     195     792     886  
General and administrative   205     179     770     751  
Total$  535  $  510  $  1,993  $  2,276  
         
         
(2) Includes amortization expense related to intangible assets as follows:     
 Three Months Ended January 31, Year Ended January 31, 
  2017   2016   2017   2016  
General and administrative$  87  $  87  $  350  $  350  


EXA CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
     
  Year Ended January 31, 
   2017   2016 
Cash flows provided by operating activities:    
Net loss $  (1,132) $  (4,807)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization    4,077     3,520 
Stock-based compensation expense    1,993     2,276 
Deferred rent expense    255     576 
Deferred income taxes    (90)    (73)
Net change in operating assets and liabilities:    
Accounts receivable    7,779     (4,563)
Prepaid expenses and other current assets    805     (887)
Other assets    12     (170)
Accounts payable    (349)    1,408 
Accrued expenses    (2,059)    2,158 
Other liabilities    (298)    (20)
Deferred revenue    (8,125)    10,538 
Net cash provided by operating activities    2,868     9,956 
Cash flows used in investing activities:    
Purchases of property and equipment    (4,065)    (2,250)
Change in restricted cash    —     173 
Net cash used in investing activities    (4,065)    (2,077)
Cash flows used in financing activities:    
Proceeds from stock option and warrant exercises    890     1,184 
Acquisition of common stock for tax withholding obligations    (13)    — 
Payments of capital lease obligations    (2,783)    (2,966)
Net cash used in financing activities    (1,906)    (1,782)
Effect of exchange rate changes on cash    6     (233)
Net (decrease) increase in cash and cash equivalents    (3,097)    5,864 
Cash and cash equivalents, beginning of period    27,649     21,785 
Cash and cash equivalents, end of period $  24,552  $  27,649 
     
Supplemental cash flow disclosures:    
Cash paid for interest $  140  $  236 
Cash paid for income taxes $  1,691  $  1,483 
Supplemental disclosure of non-cash investing activities:    
Acquisition of equipment through capital leases $  62  $  4,351 
Construction costs funded by landlord tenant improvement allowance $  —  $  1,051 
Increase in unpaid purchases of property and equipment $  1,586  $  621 


EXA CORPORATION  
Reconciliation of historical Non-GAAP to GAAP measures  
(Unaudited)  
(in thousands, except per share data)  
          
          
Adjusted EBITDA: Three Months Ended January 31,  Year Ended January 31, 
   2017   2016   2017   2016  
          
Net income (loss) $  334  $  (1,291) $  (1,132) $  (4,807) 
Add back:                 
Depreciation and amortization    1,090     1,033     4,077     3,520  
Interest expense, net    13     53     96     224  
Other income, net    (4)    (1)    (13)    (7) 
Foreign exchange (gain) loss    (72)    150     (166)    322  
Provision for income taxes    816     1,070     1,611     1,542  
EBITDA    2,177     1,014     4,473     794  
Stock-based compensation expense    535     510     1,993     2,276  
Adjusted EBITDA $  2,712  $  1,524  $  6,466  $  3,070  
          
Non-GAAP operating income (loss): Three Months Ended January 31,  Year Ended January 31, 
   2017   2016   2017   2016  
          
Operating income (loss) $  1,087  $  (19) $  396  $  (2,726) 
Add back:         
Stock-based compensation expense    535     510     1,993     2,276  
Amortization of acquired intangible assets    87     87     350     350  
Non-GAAP operating income (loss) $  1,709  $  578  $  2,739  $  (100) 
          
Non-GAAP net income (loss): Three Months Ended January 31,  Year Ended January 31, 
   2017   2016   2017   2016  
          
Net income (loss)    334     (1,291)    (1,132)    (4,807) 
Add back:         
Stock-based compensation expense    535     510     1,993     2,276  
Amortization of acquired intangible assets    87     87     350     350  
Income tax effect (1)    (218)    (209)    (820)    (919) 
Non-GAAP net income (loss) $  738  $  (903) $  391  $  (3,100) 
          
Non-GAAP net income (loss), per diluted share Three Months Ended January 31,  Year Ended January 31, 
   2017   2016   2017   2016  
Net income (loss), per diluted share (2) $  0.02  $  (0.09) $  (0.08) $  (0.33) 
Add back:         
Stock-based compensation expense    0.03     0.03     0.13     0.16  
Amortization of acquired intangible assets    0.01     0.01     0.02     0.02  
Income tax effect (1)    (0.01)    (0.01)    (0.06)    (0.06) 
Non-GAAP net income (loss), per diluted share (2)(3): $  0.05  $  (0.06) $  0.03  $  (0.21) 
          
(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 January 31, 2017 and 2016, respectively, and 14.8 million and 14.5 million for  
the years ended January 31, 2017 and 2016, 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
 April 30, 2017
  Year ended
 January 31, 2018
(in millions)     
Net loss$(3.7) - (3.1 $(6.4) - (3.7
Add back:       
Depreciation and amortization   1.2     5.2 
Interest expense, net   0.1     0.4 
Provision for income taxes 0.1   1.9 
EBITDA (2.3 - 1.7  1.1 - 3.8 
Stock-based compensation expense 0.8   4.4 
Adjusted EBITDA$(1.5) - (0.9 $5.5 - 8.2 
      
Non-GAAP net loss: Three months ended
 April 30, 2017
  Year ended
 January 31, 2018
(in millions)     
Net loss (3.7) - (3.1)  (6.4) - (3.7
Add back:       
Stock-based compensation expense 0.8   4.4 
Amortization of acquired intangible assets 0.1     0.4 
Income tax effect (1) (0.3)  (1.7)
Non-GAAP net loss (3.1) - (2.5)  (3.3) - (0.6
      
(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