Halogen Announces Second Quarter 2015 Results

  • Delivers total revenue growth of 18%, including 19% recurring revenue growth

OTTAWA, Aug. 6, 2015 /CNW/ - Halogen Software Inc. ("Halogen" or the "Company") (TSX: HGN), a leading provider of cloud-based talent management solutions, today announced its financial results for the three months ended June 30, 2015. All figures are stated in United States dollars unless otherwise noted.

Second Quarter 2015 Financial and Operational Highlights

  • Recurring revenue increased 19% from Q2 2014 to a record $14.6 million, representing 91% of total revenue in the quarter.
  • Total revenue increased 18% from Q2 2014 to a record $16.1 million.
  • Revenue generated in international markets outside Canada and the United States increased 27% over Q2 2014.
  • Deferred revenue rose 16% year-over-year to $33.1 million at quarter end.
  • Net customer adds included a broad set of verticals and geographies, including names such as G8 Education Limited, Responsive Management Inc., Hotel Dieu Grace Healthcare, Oman Arab Bank, NSK Europe Ltd, Double Negative Ltd., Ampacet Corporation, and Crain Communications Inc.
  • Dollar retention continued to be more than 100%1 and customer retention of approximately 90%2.
  • Total cash and investments of $40.4 million at June 30, 2015 compared to $44.2 million at December 31, 2014.
  • Continued a Normal Course Issuer Bid to purchase up to a maximum of 600,000 common shares. In the second quarter the Company purchased and cancelled 56,643 shares for $0.4 million resulting in a total of 70,043 shares for $0.5 million as of June 30, 2015.

"We are pleased with the continued growth in our recurring revenue in the second quarter of 19% year-over-year, in line with our previous guidance," said Leslie Rechan, Halogen's interim CEO. "Our performance demonstrates that we continue to deliver differentiated talent management solutions to our global customers. I'm looking forward to working with the entire Halogen team to continue to build momentum and ensuring we have world class capabilities in place to capitalize on our multi-billion dollar addressable market opportunity."

Financial Review

Halogen's recurring revenue in the second quarter of 2015 was $14.6 million, a 19% increase over Q2 2014. Total revenue increased 18% over Q2 2014 to $16.1 million, driven by growth in the Company's customer base, along with the sale of additional seats and modules to existing customers. In the second quarter of 2015, approximately 79% of revenue was generated from customers located in the United States (79% in Q2 2014), 10% in Canada (11% in Q2 2014) and 11% in international markets (10% in Q2 2014).

Gross margin was $11.6 million, or 72% of total revenue, in the second quarter of 2015, compared to $9.8 million, or 72% of total revenue, in Q2 2014.

Net loss was $2.3 million in the second quarter of 2015 as compared to a loss of $2.6 million in Q2 2014. Adjusted EBITDA3 was $(1.6) million in Q2 2015 compared to $(2.4) million in Q2 2014; Adjusted EBITDA per share was $(0.07) per share in Q2 2015, compared to $(0.11) per share in Q2 2014.

 



Adjusted EBITDA reconciliation

3 months ended Jun. 30,

($000's except per share amounts)

2015

2014

Net income (loss)

$ (2,280)

$ (2,571)

Interest (income) expense and other, net

(20)

(70)

Foreign exchange (gain) loss

(539)

(868)

Income tax expense

90

39

Depreciation and amortization

994

817

Share-based compensation

164

216

Adjusted EBITDA

$ (1,591)

$ (2,437)

Adjusted EBITDA per share

$ (0.07)

$ (0.11)

 

Total cash and investments was $40.4 million at June 30, 2015 compared to $44.2 million at December 31, 2014. Deferred revenue was $33.1 million at quarter-end, compared to $28.4 million at June 30, 2014 and $32.8 million at December 31, 2014.

Third Quarter and Full Year 2015 Financial Guidance

For the third quarter of 2015, the Company is expecting:

  • Recurring revenue in the range of $14.8 to $15.0 million
  • Total revenue in the range of $16.4 to $16.6 million

For the full year 2015, the Company reiterates its expectation of:

  • Recurring revenue in the range of $59.3 to $59.9 million
  • Total revenue in the range of $65.4 to $66.0 million

Second quarter 2015 Financial Statements and Management's Discussion and Analysis
Halogen's Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three and six month periods ended June 30, 2015 will be available on SEDAR (www.sedar.com) and on the Halogen website at http://ir.halogensoftware.com.

Conference Call and Webcast
Halogen will hold a conference call to discuss its second quarter 2015 results today (Thursday, August 6, 2015) at 5:00 p.m. (ET). The call will be hosted by Les Rechan, Interim President and CEO, and Pete Low, CFO.  To participate in the call, please dial 647-427-7450 or 1-888-231-8191 (Conference ID: 80367227) ten minutes prior to the scheduled start of the call. A replay of the conference call will be available until 12:00 midnight (ET) August 13, 2015 by calling 416-849-0833 or 1-855-859-2056. The conference call will be webcast live at http://bit.ly/1RghrcE.

Forward-looking Statements
Certain statements in this release, including those that express management's expectations or estimates of our future performance, are "forward-looking statements" which reflect the Company's current expectations and projections about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy and financial needs. In some cases, these forward-looking statements can be identified by words or phrases such as "may", "might", "will", "expect", "anticipate", "estimate", "intend", "plan", "indicate", "seek", "believe", "estimates", "predicts" or "likely", or the negative of these terms, or other similar expressions intended to identify forward-looking statements.

The Company has based these forward-looking statements on its current expectations and projections at the time the statements were originally made or at the time the information was originally provided, about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy and financial needs. Forward-looking statements are based on certain assumptions and analyses made by the Company in light of the experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, and are subject to risks and uncertainties. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and it cannot assure that actual results will be consistent with these forward-looking statements. Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including without limitation, those risks and uncertainties discussed in the Company's Prospectus and other filings on SEDAR.

If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking statements prove incorrect, actual results might vary materially from those expressed or implied by the forward-looking statements contained herein. These factors should be considered carefully and prospective investors should not place undue reliance on these forward-looking statements. Although the forward-looking statements contained herein are based upon what the Company currently believes to be reasonable assumptions, the Company cannot assure prospective investors that actual results, performance or achievements will be consistent with these forward-looking statements. The Company does not intend, and the Company does not assume, any obligation to update or revise these forward-looking statements to reflect new events or circumstances.

About Halogen Software
Halogen Software (TSX: HGN) offers an organically built cloud-based talent management suite that reinforces and drives higher employee performance across all talent programs — whether that is recruiting, performance management, learning and development, succession planning or compensation. With over 2,100 customers worldwide, Halogen Software has been recognized as a market leader by major business analysts and has garnered the highest customer satisfaction ratings in the industry. Halogen Software's powerful, yet simple-to-use solutions, which also include industry-vertical editions, are used by organizations that want to build a world-class workforce that is aligned, inspired and focused on delivering exceptional results. For more information, visit: http://www.halogensoftware.com. Subscribe to Halogen Software's TalentSpace blog: http://www.halogensoftware.com/blog/  or follow Halogen Software on Twitter: http://twitter.com/HalogenSoftware.

 

________________________________
1 Calculated by taking the annualized recurring revenue of customers at the beginning of a 12-month period and dividing it into annualized recurring revenue for those same customers at the end of the period.
2 Calculated as the percentage of customers at the beginning of a 12-month period who remain as customers at the end of the period.
3 Adjusted EBITDA is a non-IFRS measure defined by the Company as earnings before interest income or expense, other income, depreciation and amortization, share-based compensation, foreign exchange gains or losses and loss related to change in fair value of redeemable preferred shares. Adjusted EBITDA per share is calculated by dividing the Adjusted EBITDA by the weighted average number of shares outstanding in each period. Adjusted EBITDA and Adjusted EBITDA per share do not have a uniform definition. Our definition will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our non-IFRS measure of Adjusted EBITDA and Adjusted EBITDA per share should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with IFRS. There are inherent limitations with non-IFRS measures; we compensate for these limitations by reconciling Adjusted EBITDA to the most comparable IFRS financial measure. Management encourages investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view our non-IFRS financial measures in conjunction with the most comparable IFRS financial measures.

 

 

HALOGEN SOFTWARE INC.

Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)

Three and six month periods ended June 30, 2015 and 2014

(in United States dollars, tabular amounts in thousands, except share and per share data)

(Unaudited)






Three Months Ended June 30,


Six Months Ended June 30,


2015

2014


2015

2014







Revenue







Recurring

$ 14,592

$ 12,300


$ 28,964

$ 24,388


Professional services

1,480

1,329


3,016

2,711


License

-

-


-

60


16,072

13,629


31,980

27,159

Cost of revenue







Recurring

3,240

2,893


6,367

5,341


Professional services

1,233

883


2,223

1,749


License

-

4


-

9


4,473

3,780


8,590

7,099

Gross margin

11,599

9,849


23,390

20,060

Expenses







Sales and marketing

8,651

7,318


16,098

14,303


Research and development

3,330

3,212


6,525

5,995


General and administrative

2,367

2,789


4,930

5,181


Foreign exchange (gain) loss

(539)

(868)


2,775

201


13,809

12,451


30,328

25,680

Operating income (loss)

(2,210)

(2,602)


(6,938)

(5,620)

Interest and other income

20

70


49

137

Income (loss) before income taxes

(2,190)

(2,532)


(6,889)

(5,483)

Income tax expense (recovery)

90

39


116

44

NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

$ (2,280)

$ (2,571)


$ (7,005)

$ (5,527)

Basic and diluted earnings (loss) per share

$ (0.10)

$ (0.12)


$  (0.32)

$ (0.25)







Weighted average number of basic and diluted common shares outstanding

21,962,889

21,792,247


21,933,691

21,745,338

 

HALOGEN SOFTWARE INC.

Condensed Consolidated Interim Statements of Financial Position

As at June 30, 2015 and December 31, 2014

(in United States dollars, tabular amounts in thousands)

(Unaudited)






June 30,

 2015


December 31,

 2014





ASSETS




Current assets





Cash and cash equivalents

$ 40,363


$ 44,247


Trade receivables (net)

9,701


12,386


Prepaid expenses

2,825


2,234






52,889


58,867

Non-current assets





Property and equipment

7,029


7,995


Intangible assets

2,014


1,982


Other long-term assets

168


231


$ 62,100


$ 69,075

LIABILITIES




Current liabilities





Trade payables and accrued liabilities

$ 6,671


$ 7,793


Derivative liabilities

1,826


1,025


Deferred revenue

33,079


32,836


Deferred leasehold inducement

341


341


41,917


41,995

Non-current liabilities





Deferred leasehold inducement

453


623


42,370


42,618





SHAREHOLDERS' EQUITY








Share capital

70,274


69,806

Share compensation reserve

1,536


1,443

Retained earnings (deficit)

(52,080)


(44,792)


19,730


26,457


$ 62,100


$ 69,075

 

HALOGEN SOFTWARE INC.

Condensed Consolidated Interim Statements of Cash Flows

Three and six month periods ended June 30, 2015 and 2014

(in United States dollars, tabular amounts in thousands)

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2015

2014


2015

2014







CASH PROVIDED BY (USED IN):












OPERATING ACTIVITIES






Net income (loss)

$ (2,280)

$ (2,571)


$ (7,005)

$ (5,527)

Items not affecting cash:







Depreciation and amortization

994

817


1,965

1,564


Share-based compensation

164

216


321

356


Unrealized foreign exchange (gain) loss

(1,073)

(908)


1,573

125


Deferred leasehold inducement

(85)

(56)


(170)

141

Net changes in non-cash working capital items

279

4,105


1,257

2,661


(2,001)

1,603


(2,059)

(680)

INVESTING ACTIVITIES






Purchase of property and equipment

(355)

(1,607)


(566)

(2,000)

Purchase of intangible assets

(365)

(742)


(465)

(794)

Change in other long-term assets

41

(213)


63

(213)

Maturity of investments

3

4,579


3

9,515

Purchase of investments

-

(47)


(3)

(94)


(676)

1,970


(968)

6,414

FINANCING ACTIVITIES






Issuance of share capital

458

118


463

158

Repurchase of Class A common shares

(413)

-


(505)

-

Repayment of long-term debt

-

(13)


-

(53)


45

105


(42)

105

Effect of exchange rate changes on cash and cash equivalents

(42)

243


(815)

236







INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(2,674)

3,921


(3,884)

6,075

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

43,037

39,559


44,247

37,405

CASH AND CASH EQUIVALENTS, END OF PERIOD

$ 40,363

$ 43,480


$ 40,363

$ 43,480

 

 

SOURCE Halogen Software

For further information: Investor relations: William Maina, T: 1-613-270-1011, ext. 5904, NA Toll Free: 1-866-566-7778, ext. 5904, E: ir@halogensoftware.com; Media relations: Connie Costigan, T: 1-613-270-1011, ext. 4334, NA Toll Free: 1-866-566-7778, ext. 4334, E: ccostigan@halogensoftware.com

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