Interwoven Announces Second Quarter Financial Results
Revenues of $49.0 million; non-GAAP profit of $0.10 per share; 77 new customers
SUNNYVALE, Calif - July 20, 2006 - Interwoven, Inc. (Nasdaq: IWOV), provider of Enterprise Content Management (ECM) solutions for business, today announced financial results for the three and six months ended June 30, 2006.
Interwoven reported total revenues of $49.0 million for the second quarter, an increase of 20% from total revenues of $41.0 million for the second quarter last year. Net income for the second quarter of 2006, calculated in accordance with generally accepted accounting principles, was $1.8 million, or $0.04 per share, as compared to net loss of $66,000, or roughly break even on a per share basis, for the same period last year. On a non-GAAP basis, Interwoven reported a net income of $4.3 million for the second quarter of 2006, or $0.10 per share, compared to a non-GAAP net income of $2.5 million, or $0.06 per share, for the same period last year. Non-GAAP results exclude restructuring and excess facilities charges, stock-based compensation charges, amortization of intangible assets, and the related tax impact of these adjustments and include the dilutive impact of common stock options.
For the six months ended June 30, 2006, Interwoven reported total revenues of $95.5 million, an increase of 14% from total revenues of $83.5 million for same period last year. Net income for the six months ended June 30, 2006, calculated in accordance with generally accepted accounting principles, was $334,000, or $0.01 per share, compared to a net loss of $315,000, or $0.01 per share, for same period last year. On a non-GAAP basis, Interwoven reported net income of $7.9 million for the six months ended June 30, 2006, or $0.18 per share, compared to a non-GAAP net income of $5.0 million, or $0.12 per share, for the same period last year. Non-GAAP results exclude restructuring and excess facilities charges, charges associated with the retirement of the company's Chief Executive Officer recorded in the first quarter of 2006, stock-based compensation charges, amortization of intangible assets, and the related tax impact of these adjustments and include the dilutive impact of common stock options.
A reconciliation of net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles and non-GAAP net income and non-GAAP net income per share is provided in the tables immediately following the consolidated statements of operations. Additional information about the company's non-GAAP financial measures can be found under the caption "Non-GAAP Financial Information" below.
"Q2 was an excellent quarter for Interwoven in which we saw a 20% growth in total revenues, a 74% growth in non-GAAP net income and solid GAAP net income. With sales in 39 countries, each geography made a solid contribution to our strong results" said Max Carnecchia, Interim President at Interwoven. "Our focused solutions strategy has continued to bring greater clarity to our planning and execution."
Customer Acquisition Interwoven continued its strong global customer momentum in its second quarter by adding 77 new customers. As a result, Interwoven now has more than 3,600 customers worldwide.
New customers that selected Interwoven in the second quarter included: Calyon Corporate and Investment Bank, Cathay United Bank, China United Telecommunications, Indianapolis Institute of Art, Porterbrook Leasing, Priceline.com, Qatar Airways, San Francisco Museum of Modern Art, Synplicity, Telekom Malaysia, University of Michigan, Willcom, and many more.
Interwoven also added several new professional services customers including De Brauw Blackstone Westbroek; Grant Thornton; GVA Grimley; Miller Brown & Dannis; Morris, Nichols, Arsht & Tunnell; Thomson Playford; and others.
In the second quarter, Interwoven also received orders from existing customers, including: ABN Amro, AllianceBernstein, American Airlines, Blue Cross Blue Shield of Tennessee, BP-Amoco, Citigroup, Dow Chemical, Epson, Fannie Mae, FedEx, Fortis Banque, Harrah's, Hilton, Kohler Company, New York Daily News, Reader's Digest, and many others. Reorders from professional services firms included: Davis Wright Tremaine, Freshfields Bruckhaus Deringer, Heller Ehrman, Howrey, Shearn Delamore, and many more.
In the quarter, Interwoven continued its focus of delivering software products and services that enable enterprises to provide richer customer experiences across multiple touchpoints. As an example, Telekom Malaysia purchased Interwoven solutions to provide a consistent experience to its customers across its websites and call centers, as well as to streamline its product development. The company expects to integrate the Interwoven solution with its Siebel CRM system to provide consistent, accurate information to customers and to its call center representatives. Telekom Malaysia plans to use Interwoven's document management capabilities for its product development process to manage and collaborate on projects, and to accelerate time-to-market.
In another example, Qatar Airways purchased the Interwoven Customer Experience Solution to improve its online presence. The company chose Interwoven because Interwoven's ease of use will enable the business people who are closest to the customer to contribute directly to websites, so customers may receive high-quality, relevant information; and because Interwoven manages multilingual content through a single infrastructure, enabling Qatar Airways to provide consistent brands, messages, and services worldwide. Additionally, Qatar Airways was impressed by Interwoven's significant presence in the airlines sector and customers that provided solid references.
In the professional services market, Freshfields Bruckhaus Deringer, a long-time Interwoven customer and a leading international law firm with 2,400 lawyers in 28 offices around the world, serves as an example of how Interwoven works closely with customers to build specialized solutions that satisfy customer needs. Freshfields acted as a test customer for Interwoven's integration with BlackBerry mobile devices, enabling a small number of Freshfield attorneys to work with the module during its development. After the BlackBerry integration was released in April, , Freshfields purchased BlackBerry integration modules for its 2,000 attorneys because the module empowers the delivery of enhanced customer service through greater mobile email and document management capabilities.
In financial services, Interwoven continued to grow with several new customer wins and successful implementations with existing customers. The success in financial services was the result of selling Interwoven solutions that improve customer service, streamline compliance and improve organizational efficiency.
Solution and Product Leadership During the second quarter, Interwoven continued to extend its leadership position in key solution and product areas:
Interwoven Customer Experience Solution-In the quarter, Interwoven introduced this new solution, which enables the consistent global delivery of persuasive content across multiple channels, resulting in higher customer satisfaction, increased brand and service consistency, reduced time-to-market for product launches and campaigns, and increased operational efficiencies. Independent research firm InfoTrends published a special report entitled "Interwoven: A Focus on the Experience," which gives high marks to the new solution. The InfoTrends report states, "With a focus on the customer experience, or the information consumer, we really begin to see tangible business benefits that go beyond cost-cutting and efficiency." Customers have demonstrated enthusiasm for the solution's business benefits, leading to sales to such companies as Brandit, FedEx, Masonite Corporation, Telekom Malyasia, Willcom, and others.
Interwoven TeamSite-The world's foremost enterprise-scale web content management system is a key part of the Interwoven Customer Experience Solution. During the second quarter, Interwoven released enhancements to Interwoven TeamSite making it simpler for non-technical users to execute, manage, and control complex projects that span multiple websites and multiple delivery channels. By providing timely, relevant persuasive content through accelerated administration and contribution, quality control, and cross-channel integration, the new version of Interwoven TeamSite helps companies improve customer satisfaction and deliver an optimal customer experience across global markets.
Interwoven Composite Application Provisioning Solution-In June, Interwoven launched its new Interwoven Composite Application Provisioning (CAP) Solution, which automates and streamlines the way composite applications are modified and deployed, providing global enterprises with accelerated agility to meet changing customer needs, respond quickly to shifts in business trends, and comply with regulatory requirements. In most large enterprises, composite applications comprise the majority of revenue-generating and customer-facing applications, yet changes to this crucial software can be time-consuming, costly, and error-prone. Companies using the Interwoven CAP Solution have reduced provisioning costs, eliminated errors, and delivered applications to market faster than before. This new solution extends Interwoven's proven capabilities in content and application provisioning, and is particularly valuable for enterprises that deploy service-oriented architectures (SOAs). Intranet Journal called the Interwoven CAP Solution "the next step in composite applications," and independent research firm IDC published a report stating that CAP is "a ready and stable product with solid customers who can speak to the value of the solution."
Professional Services Solutions-As a result of continued success with professional services firms during the quarter, Interwoven customers now include 64 of the Am Law 100 and 120 the Am Law 200 firms (the definitive rankings of the largest American law firms). Interwoven now serves more top U.K. law firms than any other ECM vendor, and more European law firms rely on the Interwoven Matter-Centric Collaboration solution-to improve client service and increase operational efficiency-than any competing ECM solution. In addition to legal services firms, Interwoven made sales in other professional services categories during the quarter, including sales to 4 of the 20 largest accounting firms, plus sales to large firms providing real estate services and construction services. During the quarter, Interwoven released a new integration for BlackBerry mobile devices, enabling professional services firms and other organizations to deliver enhanced customer service through greater mobile email and document management capabilities. Also during the quarter, several firms purchased Interwoven's integration with Microsoft SharePoint, and Interwoven's co-selling partnership with Microsoft secured several new customers.
Financial Services Solutions-In the quarter, several financial services companies purchased the Interwoven Customer Experience Solution to improve client service. Others obtained Interwoven solutions to accelerate interactions, to streamline compliance, to provide auditability and security, and to improve operational efficiency. In addition, Interwoven sold its Dealer Solution to investment companies, its OTC Derivatives Solution for companies that trade in over-the-counter (OTC) derivatives investments, and released a new BuySide Solution. The new solution is the first to enable buy-side financial institutions to achieve increased regulatory compliance and reduce trade processing times by automating and validating the confirmation process for OTC derivative instruments such as interest rate, credit, equity, foreign exchange, and energy trades.
Company Developments
New Member Appointed to Board of Directors-Charles M. Boesenberg, the former CEO and chairman of NetIQ, has been appointed to the Interwoven Board of Directors. Chuck Boesenberg brings to the Interwoven board his more than 30 years of experience in accelerating growth for high-tech companies. He has held senior executive positions at IBM and Apple Computer, and has served as president and CEO of Central Point Software, Magellen Corporation, and Integrated Systems, and as president of MIPS Computer Systems. Boesenberg is a member of the boards of Callidus Software and Onyx Software, and has served on the boards of Macromedia, Symantec, Epicor, and Maxtor.
Interwoven GearUp '06 Conference-During the first week of the quarter, hundreds of Interwoven customers, partners, and ECM industry experts recently convened at Interwoven's annual GearUp '06 Conference in Hollywood, Florida. The global event featured more than 70 presentations from Interwoven and prominent customers and partners, including addidas, Allstate, Altria, Avaya, Blue Cross Blue Shield of Massachusetts, Cingular Wireless, CXO Media Inc. (publisher of CIO Magazine and CSO Magazine), DuPont, Fujitsu, HSBC, John Hancock, Microsoft, Pillsbury Winthrop Shaw Pittman, Sansui, Staples, Sun Microsystems, SunTrust, and others.
Non-GAAP Financial Information To supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles, Interwoven uses measures of operating results, net income (loss), net income (loss) per share, and shares used in the net income (loss) per share calculation, which are adjusted to exclude restructuring charges, retirement benefit costs associated with the retirement of the company's Chief Executive Officer recorded in the first quarter of 2006, stock-based compensation, amortization of intangible assets, and the related tax impact of these adjustments and to include the dilutive impact of common stock options. These non-GAAP results are not in accordance with, or an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America, and the company's non-GAAP measures may be different from non-GAAP measures used by other companies. Interwoven believes that the presentation of non-GAAP results provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Interwoven also believes that where the adjustments used in calculating non-GAAP net income and non-GAAP net income per share are based on specific, identified charges that impact different line items in the consolidated statements of operations (including cost of sales-license, cost of sales-support and service, sales and marketing, research and development, and general and administrative expenses), that it is useful to investors to know how these specific line items in the consolidated statements of operations are affected by these adjustments. In particular, as Interwoven begins to apply Statement of Financial Accounting Standard No. 123R ("SFAS No. 123R"), Share-based Payment, it believes that it is useful to investors to understand how the expenses associated with the application of SFAS 123R are reflected on its consolidated statements of operations. For its internal budgets, Interwoven's management uses consolidated financial statements that do not include restructuring and excess facilities charges, retirement benefit costs associated with retirement of the company's Chief Executive Officer, stock-based compensation, amortization of intangible assets, and the related tax impact of these adjustments. Interwoven uses these non-GAAP measures in assessing corporate performance and determining incentive compensation. Readers are advised to review and consider carefully the financial information prepared in accordance with accounting principles generally accepted in the United States of America contained in this press release and Interwoven's periodic filings with the Securities and Exchange Commission.
Conference Call Information Interwoven's 2006 second quarter results and its business outlook for the third quarter of 2006 will be discussed today, July 20, 2006 at 2:00 p.m. PT (5:00 p.m. ET).
Live Dial-in number: (303) 262-2052 Replay number: (719) 457-0820 or (888) 203-1112 Pass code: 4334692
Audio Web cast instructions will be available on Interwoven's Website at http://www.interwoven.com/investors. The call replay will be available starting July 20, 2006 at approximately 5:00 p.m. PT for a limited period.
Cautionary Statement Regarding Forward-Looking Statements This press release contains "forward-looking" statements, including statements about historical results that may suggest trends in our business. These statements are based on estimates and information available to us at the time of this press release and are not guarantees of future performance. Our forward-looking statements include management quotations, statements about customer momentum, solutions and products, activities with strategic business alliances, and statements about technology leadership. Actual results could differ materially from our current expectations as a result of many factors including: our ability to develop new products, services, features and functionality successfully and on a timely basis; customer acceptance of our solutions; changes in customer spending on enterprise content management initiatives; our ability to cross-sell and up-sell additional products into our installed base of customers; the success of our strategic business alliances; intense competition in our markets; changes in key personnel, the introduction of new products or services by competitors; and the ongoing consolidation in our markets. These and other risks and uncertainties associated with our business are described in our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Forms 8-K, which are on file with the Securities and Exchange Commission and available through www.sec.gov.
About Interwoven
Interwoven, Inc. (NASDAQ: IWOV) is a global leader in content management solutions. Interwoven's software and services enable organizations to maximize online business performance and organize, find, and govern business content. Interwoven solutions unlock the value of content by delivering the right content to the right person in the right context at the right time. Over 4,700 of the world's leading companies, professional services firms, and governments have chosen Interwoven, including Airbus, Amnesty International USA, Avaya, BT, Cisco, Citi, Delta Air Lines, DLA Piper, FedEx, Grant Thornton, Hilton Hotels, HKMP LLP, Hong Kong Trade and Development Council, HSBC, LexisNexis, MasterCard, Microsoft, Samsung, Shell, Sky Italia, Qantas Airways, Tesco, Virgin Mobile, and White & Case. A community of over 25,000 developers and over 300 partners enrich and extend Interwoven's offerings. To learn more about Interwoven, please visit www.interwoven.com.
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