Exa Corporation
Sep 1, 2015

Exa Reports Second Quarter Fiscal 2016 Financial Results

Revenue Increases 15% on a Constant Currency Basis

BURLINGTON, Mass., Sept. 1, 2015 (GLOBE NEWSWIRE) -- Exa® Corporation (NASDAQ:EXA), a leading innovator of simulation software for product design and engineering, today announced financial results for the second quarter of fiscal 2016, which ended July 31, 2015.

Revenue Summary

  2Q16 (in
millions)
2Q15 (in
millions)
Growth
Rate
Constant Currency
Growth Rate
Total Revenue $15.5 $14.8 4% 15%
License Revenue $13.0 $12.3 5% 16%
Project Revenue $2.5 $2.5 -2% 10%

"In the second quarter we continued our trend of delivering healthy constant currency revenue growth. License revenue grew faster than the overall growth rate at 16% on a constant currency basis. Project revenue growth was 10% on a constant currency basis and continues to support our efforts to demonstrate the strong value of our solutions to new customers and departments. Our focus continues to be converting our expanding project pipeline into even stronger license revenue growth," said Stephen Remondi, President and Chief Executive Officer of Exa. "In addition, we continue to be optimistic about the growing adoption of ExaCLOUD as it facilitates customer implementation of our technology and we are making additional capacity investments to meet the growing demand. Revenue growth expectations for the year reflect our confidence, as customers increasingly leverage simulation to design their new products and as they continue to replace physical prototyping across our target markets."

Second Quarter Fiscal 2016 Financial Highlights

Revenue

Profitability

Balance Sheet

Business Outlook

Based on information available as of today, Exa is providing third quarter and fiscal 2016 guidance as indicated below.

Third Quarter Fiscal 2016:

Full Year Fiscal 2016:

The above guidance assumes an exchange rate of 1.13 US dollars per Euro and 118.0 Japanese yen per US dollar for fiscal year 2016.

An explanation and reconciliation of historical and forward-looking non-GAAP measures presented above, including revenue on a constant currency basis, adjusted EBITDA 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 second quarter fiscal 2016 financial results conference call 
When: Tuesday, September 1, 2015
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 11332061, Domestic
  (404) 537-3406, Passcode 11332061, 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 income from operations, 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 income from operations 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 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, Ford, Hyundai, Jaguar Land Rover, Kenworth, MAN, Nissan, Peterbilt, 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, 2015 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
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
     
  July 31, January 31,
  2015 2015
ASSETS    
Current assets:    
Cash and cash equivalents  $ 30,406  $ 21,785
Accounts receivable  6,303  27,462
Prepaid expenses and other current assets  3,375  3,098
Total current assets  40,084  52,345
Property and equipment, net  6,208  6,961
Intangible assets, net  2,220  2,395
Deferred tax assets  261  260
Other assets  1,024  1,092
Total assets  $ 49,797  $ 63,053
     
LIABILITIES AND STOCKHOLDERS' EQUITY     
Current liabilities:    
Accounts payable  $ 1,731  $ 1,620
Accrued expenses  6,345  10,585
Current portion of deferred revenue  19,575  26,863
Current portion of capital lease obligations  1,824  2,390
Total current liabilities  29,475  41,458
Deferred revenue  25  38
Capital lease obligations  862  1,602
Deferred rent  871  472
Other long-term liabilities  498  592
Total liabilities  31,731  44,162
     
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;    
14,636,756 and 13,874,744 shares issued, respectively;     
14,604,254 and 13,842,242 shares outstanding, respectively  15  14
Additional paid-in capital  90,410  88,181
Accumulated deficit  (71,961)  (68,878)
Treasury stock (32,502 common shares, at cost) 0 0
Accumulated other comprehensive loss  (398)  (426)
Total stockholders' equity   18,066  18,891
Total liabilities and stockholders' equity   $ 49,797  $ 63,053
 
 
EXA CORPORATION
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,
  2015 2014 2015 2014
         
Revenue:        
License revenue  $ 12,977  $ 12,316  $ 25,219  $ 23,976
Project revenue  2,478  2,527  5,004  4,637
Total revenues  15,455  14,843  30,223  28,613
Operating expenses (1):        
Cost of revenues  4,755  4,632  9,398  9,228
Sales and marketing  2,440  2,509  4,928  5,076
Research and development  5,952  5,404  12,122  10,506
General and administrative (2)  3,126  3,217  6,393  6,339
Total operating expenses  16,273  15,762  32,841  31,149
Loss from operations  (818)  (919)  (2,618)  (2,536)
Other (expense) income, net:        
Foreign exchange (loss) gain  (171)  175  (223)  131
Interest expense  (54)  (94)  (119)  (177)
Interest income  2  2  5  6
Other income, net  --   3  --   3
Total other (expense) income, net  (223)  86  (337)  (37)
Loss before income taxes  (1,041)  (833)  (2,955)  (2,573)
Provision for income taxes  (154)  (176)  (128)  (15,656)
Net loss   $ (1,195)  $ (1,009)  $ (3,083)  $ (18,229)
         
Net loss per share:        
Basic  $ (0.08)  $ (0.07)  $ (0.21)  $ (1.34)
Diluted  $ (0.08)  $ (0.07)  $ (0.21)  $ (1.34)
Weighted average shares outstanding used in computing net loss per share:        
Basic  14,535,539 13,775,250  14,420,562 13,639,866
Diluted  14,535,539 13,775,250  14,420,562 13,639,866
         
         
Comprehensive loss:        
Net loss  $ (1,195)  $ (1,009)  $ (3,083)  $ (18,229)
Foreign currency translation adjustments  (12)  (75)  28  (34)
Comprehensive loss  $ (1,207)  $ (1,084)  $ (3,055)  $ (18,263)
         
         
(1) Includes stock-based compensation expense as follows:      
         
  Three Months Ended July 31, Six Months Ended July 31,
  2015 2014 2015 2014
         
 Cost of revenues  $ 53  $ 44  $ 122  $ 82
 Sales and marketing  85  86  200  161
 Research and development  185  191  426  347
 General and administrative  168  179  357  280
 Total  $ 491  $ 500  $ 1,105  $ 870
         
(2) Includes amortization expense related to intangible assets as follows:      
         
  Three Months Ended July 31, Six Months Ended July 31,
  2015 2014 2015 2014
         
 General and administrative  $ 87  $ 88  $ 175  $ 175
 
 
EXA CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
     
  Six Months Ended July 31,
  2015 2014
Cash flows provided by operating activities:    
Net loss  $ (3,083)  $ (18,229)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization 1,528 1,394
Stock-based compensation expense 1,105 870
Deferred rent expense (179) (187)
Deferred income taxes  --  15,215
Net change in operating assets and liabilities:    
Accounts receivable 21,302 19,403
Prepaid expenses and other current assets (276) (374)
Other assets 68 (35)
Accounts payable 112 181
Accrued expenses (3,635) (4,058)
Other liabilities (93) 2
Deferred revenue (7,251) (9,387)
Net cash provided by operating activities 9,598 4,795
     
Cash flows used in investing activities:    
Purchases of property and equipment (626) (577)
Net cash used in investing activities (626) (577)
     
Cash flows used in financing activities:    
Proceeds from stock option and warrant exercises 1,130 416
Payments of capital lease obligations (1,301) (1,358)
Net cash used in financing activities (171) (942)
     
Effect of exchange rate changes on cash  (180) (61)
     
Net increase in cash and cash equivalents 8,621 3,215
     
Cash and cash equivalents, beginning of period  21,785  28,753
Cash and cash equivalents, end of period  $ 30,406  $ 31,968
     
Supplemental cash flow disclosures:    
Cash paid for interest  $ 119  $ 177
Cash paid for income taxes  $ 1,043  $ 1,149
Supplemental disclosure of non-cash investing and financing activities:    
Acquisition of equipment through capital leases  $ --   $ 1,700
 
 
EXA CORPORATION
Reconciliation of historical Non-GAAP to GAAP measures
(Unaudited)
(in thousands, except per share data)
         
Adjusted EBITDA:        
  Three Months Ended Six Months Ended
  July 31, July 31,
  2015 2014 2015 2014
         
Net loss  $ (1,195)  $ (1,009)  $ (3,083)  $ (18,229)
Add back:        
Depreciation and amortization  778  731  1,528  1,394
Interest expense, net  52  92  114  171
Other income, net  --   (3)  --   (3)
Foreign exchange loss (income)  171  (175)  223  (131)
Provision for income taxes  154  176  128  15,656
EBITDA  (40)  (188)  (1,090)  (1,142)
Stock-based compensation expense  491  500  1,105  870
Adjusted EBITDA  $ 451  $ 312  $ 15  $ (272)
         
Non-GAAP operating loss:        
  Three Months Ended Six Months Ended
  July 31, July 31,
  2015 2014 2015 2014
         
Operating loss  $ (818)  $ (919)  $ (2,618)  $ (2,536)
Add back:        
Stock-based compensation expense  491  500  1,105  870
Amortization of acquired intangible assets  87  88  175  175
Non-GAAP operating loss  $ (240)  $ (331)  $ (1,338)  $ (1,491)
         
Non-GAAP net loss:        
  Three Months Ended Six Months Ended
  July 31, July 31,
  2015 2014 2015 2014
         
Net loss  $ (1,195)  $ (1,009)  $ (3,083)  $ (18,229)
Add back:        
Stock-based compensation expense  491  500  1,105  870
Amortization of acquired intangible assets  87  88  175  175
Income tax effect (1)  (199)  (203)  (445)  (363)
Non-GAAP net loss  $ (816)  $ (624)  $ (2,248)  $ (17,547)
         
Non-GAAP net loss per diluted share:        
  Three Months Ended Six Months Ended
  July 31, July 31,
  2015 2014 2015 2014
         
Net loss per diluted share (2)  $ (0.08)  $ (0.07)  $ (0.21)  $ (1.34)
Add back:        
Stock-based compensation expense  0.03  0.04  0.08  0.06
Amortization of acquired intangible assets  0.01  0.01  0.01  0.01
Income tax effect (1)  (0.02)  (0.02)  (0.03)  (0.03)
Non-GAAP net loss, per diluted share (2)(3):  $ (0.06)  $ (0.05)  $ (0.16)  $ (1.29)
         
         
(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 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 14.5 million and 13.8 million for the three months ended July 31, 2015 and 2014, respectively, and 14.4 million and 13.6 million for the six months ended July 31, 2015 and 2014, 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 Year Ended
(in millions)  October 31, 2015  January 31, 2016
     
Net loss $ (1.3) - (0.9) $ (6.1) - (5.4)
Add back:    
Depreciation and amortization  1.0  3.8
Interest expense, net  0.1  0.5
Provision for income taxes 0.1 - 0.2  1.6
EBITDA (0.1) - 0.4 (0.2) - 0.5 
Stock-based compensation expense 0.5 2.0
Adjusted EBITDA $ 0.4 - 0.9 $ 1.8 - 2.5
     
     
Non-GAAP net loss:    
     
  Three Months Ended Year Ended
(in millions)   October 31, 2015  January 31, 2016
     
Net loss $ (1.3) - (0.9) $ (6.1) - (5.4)
Add back:    
Stock-based compensation expense 0.5 2.0
Amortization of acquired intangibles 0.1  0.4
Income tax effect (1) (0.3) - (0.2) (0.9) - (0.8)
Non-GAAP net loss $ (1.0) - (0.5) $ (4.6) - (3.8)
     
(1) Non-GAAP financial information is adjusted using a blended rate equivalent to our 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.
CONTACT: 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

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Source: Exa Corporation

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