Exa Corporation
Aug 28, 2017

Exa Reports Second Quarter Fiscal 2018 Financial Results

Second Quarter Total Revenue and Profitability Metrics In-Line with Guidance

BURLINGTON, Mass., Aug. 28, 2017 (GLOBE NEWSWIRE) -- Exa® Corporation (NASDAQ:EXA), a global innovator in simulation software for product engineering, today announced financial results for the second quarter fiscal 2018, which ended July 31, 2017.

Revenue Summary

Second Quarter

 2Q18 (millions)2Q17 (millions)Growth
Rate
Constant Currency
Growth Rate
Total Revenue$17.5$17.12%3%
License Revenue$15.2$14.83%4%
Project Revenue$2.3$2.3(2)%(2)%

"Our second-quarter financial results were all within our guided ranges," said Stephen Remondi, President and Chief Executive Officer of Exa. "In the second quarter we saw continued growth from the heavy vehicle and aerospace markets and the slower growth from the passenger car industry we expected. However, we are optimistic that bookings activity in the automotive market will catch up with demand in consumption trends, giving us confidence to guide improving revenue growth in the second half of the year."

"In addition, we are pleased by the stronger and broader initial demand for our DigitalROCK solutions among super-major, independent and national oil companies. By significantly expanding our addressable market, we believe this new vertical market will represent a material contribution to our near-term as well as long-term growth."

Second Quarter Fiscal 2018 Financial Highlights

Revenue

Profitability

Balance Sheet

Business Outlook

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

Third Quarter Fiscal 2018:

Full Year Fiscal 2018:

The above guidance assumes an exchange rate of 1.17 US dollars per Euro and 110 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 second quarter fiscal 2018 financial results conference call   
When: Monday, August 28, 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 69216214, Domestic 
  (404) 537-3406, Passcode 69216214, 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) 
    
 July 31,January 31,  
  2017  2017  
ASSETS   
Current assets:   
Cash and cash equivalents$18,429 $24,552  
Accounts receivable 15,444  24,259  
Prepaid expenses and other current assets 3,440  2,898  
Total current assets 37,313  51,709  
Property and equipment, net 13,475  14,028  
Intangible assets, net 1,519  1,694  
Deferred tax assets 541  566  
Restricted cash 352  352  
Other assets 906  725  
Total assets$54,106 $69,074  
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$2,678 $4,616  
Accrued expenses 7,097  10,569  
Current portion of deferred revenue 23,840  29,006  
Current portion of capital lease obligations 1,496  1,737  
Total current liabilities 35,111  45,928  
Deferred revenue 33  238  
Capital lease obligations 162  914  
Deferred rent 2,085  2,391  
Other long-term liabilities 441  429  
Total liabilities 37,832  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; 15,047,030 and
  14,926,429 shares issued, respectively; 15,014,528 and 14,893,927 shares
  outstanding, respectively
 15  15  
Additional paid-in capital 96,492  94,516  
Accumulated deficit (80,036) (74,817) 
Treasury stock (32,502 common shares, at cost) 0  0  
Accumulated other comprehensive loss (197) (540) 
Total stockholders' equity 16,274  19,174  
Total liabilities and stockholders' equity$54,106 $69,074  
    

 

EXA CORPORATION 
Condensed Consolidated Statements of Operations and Comprehensive Loss 
(Unaudited) 
(in thousands, except share and per share data) 
         
 Three Months Ended July 31, Six Months Ended July 31, 
  2017   2016   2017   2016  
Revenue:        
License revenue$15,200  $14,810  $29,630  $28,869  
Project revenue 2,253   2,302   4,379   5,028  
Total revenue 17,453   17,112   34,009   33,897  
Operating expenses (1):        
Cost of revenues 5,326   4,632   10,512   9,436  
Sales and marketing 3,493   3,392   6,913   6,723  
Research and development 6,800   6,023   13,204   12,234  
General and administrative (2) 4,201   3,457   8,214   6,906  
Total operating expenses 19,820   17,504   38,843   35,299  
Loss from operations (2,367)  (392)  (4,834)  (1,402) 
Other (expense) income, net:        
Foreign exchange (loss) gain (525)  (22)  (739)  193  
Interest expense (12)  (39)  (28)  (86) 
Interest income 18   11   32   21  
Other income, net    3      12  
Total other (expense) income, net (519)  (47)  (735)  140  
Loss before income taxes (2,886)  (439)  (5,569)  (1,262) 
Benefit (provision) for income taxes 251   (239)  384   (359) 
Net loss$(2,635) $(678) $(5,185) $(1,621) 
Net loss per share:        
Basic$(0.18) $(0.05) $(0.35) $(0.11) 
Diluted$(0.18) $(0.05) $(0.35) $(0.11) 
Weighted average shares outstanding used in computing net
  loss per share:
        
Basic 14,952,668   14,784,795   14,926,865   14,711,429  
Diluted 14,952,668   14,784,795   14,926,865   14,711,429  
         
Comprehensive loss:        
Net loss$(2,635) $(678) $(5,185) $(1,621) 
Foreign currency translation adjustment 300   (75)  343   42  
Comprehensive loss$(2,335) $(753) $(4,842) $(1,579) 
         
         
(1) Includes stock-based compensation expense as follows:        
 Three Months Ended July 31, Six Months Ended July 31, 
  2017   2016   2017   2016  
Cost of revenues$42  $39  $79  $83  
Sales and marketing 181   58   252   148  
Research and development 435   162   707   345  
General and administrative 456   178   701   350  
Total$1,114  $437  $1,739  $926  
         
         
(2) Includes amortization expense related to intangible assets as follows:        
 Three Months Ended July 31, Six Months Ended July 31, 
  2017   2016   2017   2016  
General and administrative$88  $88  $175  $175  

 

EXA CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
     
  Six Months Ended July 31,
   2017   2016 
Cash flows (used in) provided by operating activities:    
Net loss $(5,185) $(1,621)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    
Depreciation and amortization  2,429   1,991 
Stock-based compensation expense  1,739   926 
Deferred rent (income) expense  (294)  230 
Deferred income taxes  25   (13)
Net change in operating assets and liabilities:    
Accounts receivable  8,712   20,004 
Prepaid expenses and other current assets  (548)  997 
Other assets  (183)  (39)
Accounts payable  (107)  (910)
Accrued expenses  (3,273)  (5,102)
Other liabilities  12   47 
Deferred revenue  (5,435)  (9,777)
Net cash (used in) provided by operating activities  (2,108)  6,733 
Cash flows used in investing activities:    
Purchases of property and equipment  (3,780)  (836)
Net cash used in investing activities  (3,780)  (836)
Cash flows used in financing activities:    
Proceeds from stock option exercises  351   356 
Acquisition of common stock for tax withholding obligations  (148)  - 
Payments of capital lease obligations  (993)  (1,456)
Net cash used in financing activities  (790)  (1,100)
Effect of exchange rate changes on cash  555   741 
Net (decrease) increase in cash and cash equivalents  (6,123)  5,538 
Cash and cash equivalents, beginning of period  24,552   27,649 
Cash and cash equivalents, end of period $18,429  $33,187 
     
Supplemental cash flow disclosures:    
Cash paid for interest $28  $86 
Cash paid for income taxes $1,260  $1,117 
Supplemental disclosure of non-cash investing activities:    
Decrease in unpaid purchases of property and equipment $(2,110) $(337)
     

 

EXA CORPORATION   
Reconciliation of historical Non-GAAP to GAAP measures   
(Unaudited)   
(in thousands, except per share data)   
           
           
Adjusted EBITDA: Three Months Ended July 31, Six Months Ended July 31,  
   2017   2016   2017   2016   
           
Net loss $(2,635) $(678) $(5,185) $(1,621)  
Add back:          
Depreciation and amortization  1,212   980   2,429   1,991   
Interest (income) expense, net  (6)  28   (4)  65   
Other income, net     (3)     (12)  
Foreign exchange loss (gain)  525   22   739   (193)  
(Benefit) provision for income taxes  (251)  239   (384)  359   
EBITDA  (1,155)  588   (2,405)  589   
Stock-based compensation expense  1,114   437   1,739   926   
Adjusted EBITDA $(41) $1,025  $(666) $1,515   
           
Non-GAAP operating (loss) income: Three Months Ended July 31, Six Months Ended July 31,  
   2017   2016   2017   2016   
           
Operating loss $(2,367) $(392) $(4,834) $(1,402)  
Add back:          
Stock-based compensation expense  1,114   437   1,739   926   
Amortization of acquired intangible assets  88   88   175   175   
Non-GAAP operating (loss) income $(1,165) $133  $(2,920) $(301)  
           
Non-GAAP net loss: Three Months Ended July 31, Six Months Ended July 31,  
   2017   2016   2017   2016   
           
Net loss  (2,635)  (678)  (5,185)  (1,621)  
Add back:          
Stock-based compensation expense  1,114   437   1,739   926   
Amortization of acquired intangible assets  88   88   175   175   
Income tax effect (1)  (421)  (184)  (670)  (385)  
Non-GAAP net loss $(1,854) $(337) $(3,941) $(905)  
           
Non-GAAP net loss, per diluted share: Three Months Ended July 31, Six Months Ended July 31,  
   2017   2016   2017   2016   
Net loss, per diluted share (2) $(0.18) $(0.05) $(0.35) $(0.11)  
Add back:          
Stock-based compensation expense  0.07   0.03   0.12   0.06   
Amortization of acquired intangible assets  0.01   0.01   0.01   0.01   
Income tax effect (1)  (0.03)  (0.01)  (0.04)  (0.03)  
Non-GAAP net loss, per diluted share (2)(3): $(0.12) $(0.02) $(0.26) $(0.06)  
           
(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 15.0 million and 14.8 million for the three months ended July 31, 2017 and 2016, respectively, and 14.9 million and 14.7 million for the six months ended July 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
 October 31, 2017
  Year ended
 January 31, 2018
(in millions)     
Net income (loss)$(0.7) - 0.3 $(5.7) - (3.5)
Add back:     
Depreciation and amortization 1.3
  5.2
Interest expense, net 0.1
  0.4
Provision for income taxes 0.1
  1.9
EBITDA 0.8 - 1.8  1.8 - 4.0
Stock-based compensation expense 1.2
  4.2
Adjusted EBITDA$2.0 - 3.0 $6.0 - 8.2
      
Non-GAAP net income (loss): Three months ended
 October 31, 2017
  Year ended
 January 31, 2018
(in millions)     
Net income (loss) (0.7) - 0.3  (5.7) - (3.5)
Add back:     
Stock-based compensation expense 1.2
  4.2
Amortization of acquired intangible assets 0.1
  0.4
Income tax effect (1) (0.5)  (1.6)
Non-GAAP net income (loss) 0.1 - 1.1  (2.7) - (0.5)
      
      
(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