Exa Corporation
May 24, 2017

Exa Reports First Quarter Fiscal 2018 Financial Results

First Quarter Total Revenue In-Line with Guidance and Profitability Metrics Above Guidance Range
FY 18 Business Visibility Improves

BURLINGTON, Mass., May 24, 2017 (GLOBE NEWSWIRE) -- Exa® Corporation (NASDAQ:EXA), a global innovator in simulation software for product engineering, today announced financial results for the first quarter fiscal 2018, which ended April 30, 2017.

Revenue Summary

First Quarter

  1Q18 (millions)  1Q17 (millions)  Growth
Rate
 Constant Currency
Growth Rate
Total Revenue$16.6$16.8(1)%0%
License Revenue$14.4$14.13%4%
Project Revenue$2.1$2.7(22)%(21)%
         

Due to rounding, totals do not equal the sum of line items in the table above.

"Our first-quarter revenue was within the upper half of our guidance range and both net income and adjusted EBITDA were better than our guided ranges," said Stephen Remondi, President and Chief Executive Officer of Exa. "Exiting Q1, we are encouraged that the business visibility into our customer renewal and consumption trends in the automotive end-market has improved, supporting increased optimism in our full year expectations.

"In addition, we are very excited by the interest and activity we have experienced from the oil and gas industry since our joint press release with BP, our first customer to license our DigitalROCKTM solutions.  We believe that our expansion into this new vertical significantly expands our addressable market and we look forward to it contributing to our growth in the quarters ahead."

First Quarter Fiscal 2018 Financial Highlights

Revenue

Profitability

Balance Sheet

Business Outlook

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

Second Quarter Fiscal 2018:

Full Year Fiscal 2018:

The above guidance assumes an exchange rate of 1.10 US dollars per Euro and 112 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 loss and non-GAAP net loss, to the comparable GAAP measures is provided below and in the attachments to this press release. 

Conference Call Information

What: Exa's first quarter fiscal 2018 financial results conference call
When: Wednesday, May 24, 2017
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 22240973, Domestic
  (404) 537-3406, Passcode 22240973, 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, 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 visualization and 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 currently focuses primarily on the ground transportation market, in which 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, and has recently expanded its technology offerings into the fields of aerospace and oil and gas production. 

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, 2017 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)
    
 April 30, January 31, 
  2017   2017 
ASSETS   
Current assets:   
Cash and cash equivalents$26,630  $24,552 
Accounts receivable 13,036   24,259 
Prepaid expenses and other current assets 3,121   2,898 
Total current assets 42,787   51,709 
Property and equipment, net 13,654   14,028 
Intangible assets, net 1,606   1,694 
Deferred tax assets 566   566 
Restricted cash 352   352 
Other assets 743   725 
Total assets$59,708  $69,074 
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$3,439  $4,616 
Accrued expenses 6,439   10,569 
Current portion of deferred revenue 27,649   29,006 
Current portion of capital lease obligations 1,538   1,737 
Total current liabilities 39,065   45,928 
Deferred revenue 35   238 
Capital lease obligations 539   914 
Deferred rent 2,260   2,391 
Other long-term liabilities 432   429 
Total liabilities 42,331   49,900 
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; 14,941,743 and 14,926,429 shares issued, respectively; 14,909,241 and 14,893,927 shares outstanding, respectively 15   15 
Additional paid-in capital 95,260   94,516 
Accumulated deficit (77,401)  (74,817)
Treasury stock (32,502 common shares, at cost) 0   0 
Accumulated other comprehensive loss (497)  (540)
Total stockholders' equity 17,377   19,174 
Total liabilities and stockholders' equity$59,708  $69,074 
    

 

EXA CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands, except share and per share data)
    
 Three Months Ended April 30,
  2017   2016 
Revenue:   
License revenue$14,430  $14,059 
Project revenue 2,126   2,726 
Total revenue 16,556   16,785 
Operating expenses (1):   
Cost of revenues 5,186   4,804 
Sales and marketing 3,420   3,331 
Research and development 6,404   6,211 
General and administrative (2) 4,013   3,449 
Total operating expenses 19,023   17,795 
Loss from operations (2,467)  (1,010)
Other (expense) income, net:   
Foreign exchange (loss) gain (214)  215 
Interest expense (16)  (47)
Interest income 14   10 
Other income, net: -   9 
Total other (expense) income, net (216)  187 
Loss before income taxes (2,683)  (823)
Benefit (provision) for income taxes 133   (120)
Net loss$(2,550) $(943)
Net loss per share:   
Basic$(0.17) $(0.06)
Diluted$(0.17) $(0.06)
Weighted average shares outstanding used in computing net loss per share:   
Basic 14,900,193   14,636,433 
Diluted 14,900,193   14,636,433 
    
Comprehensive loss:   
Net loss$(2,550) $(943)
Foreign currency translation adjustment 43   117 
Comprehensive loss$(2,507) $(826)
    
    
(1) Includes stock-based compensation expense as follows:   
 Three Months Ended April 30,
  2017   2016 
Cost of revenues$37  $44 
Sales and marketing 71   90 
Research and development 271   183 
General and administrative 246   172 
Total$625  $489 
    
    
(2) Includes amortization expense related to intangible assets as follows:   
 Three Months Ended April 30,
  2017   2016 
General and administrative 88   88 
        

 

EXA CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
     
  Three Months Ended April 30,
   2017   2016 
Cash flows provided by operating activities:    
Net loss $(2,550) $(943)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization  1,217   1,011 
Stock-based compensation expense  625   489 
Deferred rent expense  (139)  (6)
Deferred income taxes  -   (12)
Net change in operating assets and liabilities:    
Accounts receivable  11,162   17,863 
Prepaid expenses and other current assets  (224)  1,242 
Other assets  (18)  (45)
Accounts payable  131   (970)
Accrued expenses  (3,890)  (5,750)
Other liabilities  3   36 
Deferred revenue  (1,569)  (1,042)
Net cash provided by operating activities  4,748   11,873 
Cash flows used in investing activities:    
Purchases of property and equipment  (2,320)  (521)
Net cash used in investing activities  (2,320)  (521)
Cash flows used in financing activities:    
Proceeds from stock option exercises  99   57 
Acquisition of common stock for tax withholding obligations  (15)   
Payments of capital lease obligations  (574)  (751)
Net cash used in financing activities  (490)  (694)
Effect of exchange rate changes on cash  140   875 
Net increase in cash and cash equivalents  2,078   11,533 
Cash and cash equivalents, beginning of period  24,552   27,649 
Cash and cash equivalents, end of period $26,630  $39,182 
     
Supplemental cash flow disclosures:    
Cash paid for interest $16  $47 
Cash paid for income taxes $1,055  $1,137 
Supplemental disclosure of non-cash investing activities:    
Decrease in unpaid purchases of property and equipment $(1,571) $(426)
     

 

EXA CORPORATION
Reconciliation of historical Non-GAAP to GAAP measures
(Unaudited)
(in thousands, except per share data)
     
     
Adjusted EBITDA: Three Months Ended April 30,
   2017   2016 
     
Net loss $(2,550) $(943)
Add back:    
Depreciation and amortization  1,217   1,011 
Interest expense, net  2   37 
Other income, net  0   (9)
Foreign exchange loss (gain)  214   (215)
(Benefit) provision for income taxes  (133)  120 
EBITDA  (1,250)  1 
Stock-based compensation expense  625   489 
Adjusted EBITDA $(625) $490 
     
Non-GAAP operating loss: Three Months Ended April 30,
   2017   2016 
     
Operating loss $(2,467) $(1,010)
Add back:    
Stock-based compensation expense  625   489 
Amortization of acquired intangible assets  88   88 
Non-GAAP operating loss $(1,754) $(433)
     
Non-GAAP net loss: Three Months Ended April 30,
   2017   2016 
     
Net loss  (2,550)  (943)
Add back:    
Stock-based compensation expense  625   489 
Amortization of acquired intangible assets  88   88 
Income tax effect (1)  (250)  (202)
Non-GAAP net loss $(2,087) $(568)
     
Non-GAAP net loss, per diluted share: Three Months Ended April 30,
   2017   2016 
Net loss, per diluted share (2) $(0.17) $(0.06)
Add back:    
Stock-based compensation expense  0.04   0.03 
Amortization of acquired intangible assets  0.01   0.01 
Income tax effect (1)  (0.02)  (0.01)
Non-GAAP net loss, per diluted share (2)(3): $(0.14) $(0.04)
     
(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 14.9 million and 14.6 million for the three months ended April 30, 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
 July 31, 2017
  Year ended
 January 31, 2018
(in millions)     
Net loss$(3.1) - (2.4) $(6.1) - (3.7)
Add back:     
Depreciation and amortization 1.3  5.2
Interest expense, net 0.1  0.4
Provision for income taxes 0.1 - 0.0  1.9
EBITDA (1.6 - 1.0)  1.4 - 3.8
Stock-based compensation expense 1.1  4.4
Adjusted EBITDA$(0.5) - 0.1 $5.8 - 8.2
      
Non-GAAP net loss: Three months ended
 July 31, 2017
  Year ended
 January 31, 2018
(in millions)     
Net loss (3.1) - (2.4)  (6.1) - (3.7)
Add back:     
Stock-based compensation expense 1.1  4.4
Amortization of acquired intangible assets 0.1  0.4
Income tax effect (1) (0.4) - (0.5)  (1.7)
Non-GAAP net loss (2.3) - (1.7)  (3.0) - (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