RightNow Technologies Reports First Quarter 2005 Financial Results Company to Expand Voice Recognition Initiative With Signing of Agreement to Purchase Convergent Voice Intellectual Property
Bozeman, MT (April 25, 2005) ¡ª RightNow? Technologies, Inc. (NASDAQ: RNOW), a leading provider of on demand CRM software solutions, today announced results for the first quarter ended March 31, 2005. RightNow reported consolidated revenue of $18.3 million for the first quarter of 2005, an increase of 43 percent from the first quarter of 2004. This represents the 29th consecutive quarter of revenue growth for RightNow.
Net income in the first quarter of 2005 was $801,000, or $0.02 per diluted share, compared to net income of $80,000, or $0.00 per diluted share, in the first quarter of 2004.
During the first quarter of 2005, RightNow added new and expanded existing client relationships, including such well-recognized brand names as British Telecom, Cabela's, Centers for Medicare and Medicaid, Electronic Arts Inc., Flyfone International Inc., Kentucky Virtual University, Rambus, Inc., Sprint Collaborative Services, and US Department of State. Additionally, Convergys, an outsourced call center partner with more than 3,000 agents currently deployed, expanded their RightNow purchase to include our full CRM suite as well as increase capacity. In total, RightNow added 60 new clients during the quarter and handled more than 166 million customer interactions in the first quarter of 2005.
"In a traditionally slow quarter for software, RightNow showed solid demand for our award-winning CRM suite. Our new applications for sales and marketing automation received praise and recognition from industry analysts such as Gartner and Forrester, and continued to gain traction with customers," Greg Gianforte, founder and chief executive officer of RightNow, said. "And, once again, RightNow's customers demonstrated high customer satisfaction ¨C as evidenced by our 90% customer retention rate."
Last week, RightNow also signed a definitive agreement to purchase the intellectual property and other assets of Convergent Voice, Inc. a provider of innovative voice automation solutions, and hire the core team that developed the platform. This acquisition, which the company anticipates will close in May 2005, will make RightNow the only on demand CRM provider with its own proprietary voice self-service solution. The Convergent Voice voice recognition technology integrates with RightNow's knowledgebase to improve the customer experience on automated telephone systems.
"The addition of the talent and technology of Convergent Voice will provide a significant long-term growth opportunity for RightNow. For the last two years, the company has licensed Convergent Voice's solutions to provide a more robust customer experience on automated response systems and in February RightNow was granted a patent on our voice technology," Gianforte said. "The integration of the company's products with Convergent Voice technology enables consumers to get the benefits of a website or call center interaction ¨C search a knowledgebase, create trouble tickets or incident reports, and check order status ¨C in the convenience of the telephone."
Susan Carstensen, chief financial officer, said: "We expect the acquisition will provide an additional platform for revenue growth in 2005 and beyond. Shifting the cost of the technology from a royalty to a fixed expense and adding the development team to our staff is expected to have a long term positive effect on margins, but is expected to be slightly dilutive to our earnings for the remainder of 2005."
The acquisition of Convergent Voice assets is expected to reduce EPS by one cent in the second quarter of 2005 and two to three cents for the full year. We expect that the acquisition will be accretive to earnings in 2006.
For the second quarter of 2005, revenue is anticipated to be in the range of $19.5 to $20.5 million and EPS in the range of $0.02 to $0.03 cents.
For the full year 2005, revenue is anticipated to in the range of $81 to $85 million, and EPS in the range of $0.13 to $0.17.
Quarterly Conference Call
RightNow Technologies will discuss its quarterly results via teleconference at 4:30 p.m. (ET)/2:30 p.m. (MT) today, April 25, 2005. To access the call, please dial (800) 289-0569 with confirmation code 9702094 at least five minutes prior to the start time. A live audio webcast of the call will also be available at www.shareholder.com/rnow/medialist.cfm. A replay of today's conference call will be available on the company Web site at www.shareholder.com/rnow/, under the Investor Webcasts menu, from 5:30 p.m. (MT) on April 25, 2005 until 10:00 p.m. (MT) May 16, 2005. RightNow Technologies, Inc. Consolidated Balance Sheets
(In thousands) (Unaudited) March 31, 2005 Dec 31, 2004 Assets Cash and cash equivalents $ 33,155 $ 18,944 Short-term investments 19,698 31,188 Accounts receivable 13,552 16,939 Term receivables, current 13,275 10,090 Allowance for doubtful accounts (1,627) (1,581) Net receivables 25,200 25,448 Prepaid expenses 1,272 1,255 Total current assets 79,325 76,835 Property and equipment, net 4,842 4,393 Term receivables, non-current 8,256 5,756 Intangible assets, net 996 1,113 Other 236 212 Total Assets $ 93,655 $ 88,309 Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity Accounts payable $2,493 $ 1,720 Commissions and bonuses payable 1,971 2,648 Other accrued liabilities 3,904 3,715 Current portion of deferred revenue 37,899 36,020 Total current liabilities 46,267 44,103 Deferred revenue, net of current portion 14,911 13,105 Stockholders' equity: Common stock 30 29 Warrants 203 291 Additional paid-in capital 73,042 72,367 Accumulated other comprehensive income (loss) (618) (605) Accumulated deficit (40,180) (40,981) Total stockholders' equity 32,477 31,101) Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity $ 93,655 $ 88,309 RightNow Technologies, Inc. Consolidated Operating Statements
(In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, 2005 2004 Revenue: Software, hosting and support $ 13,874 $ 10,720 Professional services 4,468 2,137 Total revenue 18,342 12,857 Cost of revenue: Software, hosting and support 2,064 1,579 Professional services 2,696 1,310 Total cost of revenue 4,760 2,889 Gross profit 13,582 9,968 Operating expenses: Sales and marketing 9,457 6,848 Research and development 2,161 1,805 General and administrative 1,410 1,153 Total operating expenses 13,028 9,806 Income from operations 554 162 Interest and other income (expense), net 292 (64) Income before income taxes 846 98 Provision for income taxes (45) (18) Net income $801 $80 Net income per share: Basic $0.03 $0.01 Diluted $0.02 $0.00 Shares used in the computation: Basic 29,816 14,792 Diluted 33,564 25,143 RightNow Technologies, Inc. Consolidated Statements of Cash Flows
(In thousands) (Unaudited) Three Months Ended March 31, 2005 2004 Operating activities: Net income $801 $80 Non-cash adjustments:: Depreciation and amortization 742 624 Provisions for losses on accounts receivable 52 85 Changes in operating accounts: Receivables (2,402) (1,550) Prepaid expenses (44) (261) Accounts payable 776 280 Commissions and bonuses payable (663) (175) Other accrued liabilities 208 300 Deferred revenue 3,819 1,117 Other (50) (167) Cash provided by operating activities 3,239 333 Investing activities: Net purchases of short-term investments 11,488 - Acquisition of property and equipment (1,078) (761) Cash provided by(used for)investing activities 10,410 (761) Financing activities: Proceeds from long-term debt - 878 Proceeds from issuance of common stock: Initial public offering, less offering costs paid - 172 Employee stock options and stock purchase plan 588 111 Repurchase of common stock - (2) Payments on long-term debt - (404) Cash provided (used) for financing activities 588 411 Effect of foreign exchange rates on cash and cash equivalents (26) 9 Increase (decrease) in cash and cash equivalents 14,211 (8) Cash and cash equivalents at beginning of period 18,944 8,360 Cash and cash equivalents at end of period $ 33,155 $ 8,352 RightNow Technologies, Inc. Metrics Mar 31, 2005 Dec 31, 2004 Sep 30, 2004 Jun 30, 2004 New clients 60 80 88 74 Active clients 1,273 1,232 1,185 1,159 Percentage of clients hosting 86% 87% 86% 85% Number of employees 438 403 387 354 Three Months Ended March 31, 2005 2004 Revenues by type: Recurring (term licenses, hosting & support) 58% 66 % Perpetual 18 17 Professional services 24 17 Revenues by geography: Americas 75 % 71 % Europe 15 19 Asia Pacific 10 10 Customer interactions (in millions) 166 102
About RightNow Technologies
RightNow (NASDAQ: RNOW) provides organizations with industry-leading on demand CRM solutions to build customer-focused businesses. RightNow's acclaimed technology, comprehensive services and commitment to customer success deliver high returns on investment for its customers. More than 1,300 organizations worldwide use RightNow solutions including British Airways, British Telecom, Cisco Systems, Continental Tire North America, John Deere, Nikon and the Social Security Administration. Founded in 1997, RightNow is headquartered in Bozeman, Montana, with additional offices in North America, Europe and Asia. For further information, please visit www.rightnow.com.
RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of the NASDAQ Stock Market.
RightNow Technologies, Inc. 40 Enterprise Blvd.
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management's future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, risks associated with our business model; the closing of the Convergent Voice asset acquisition and the successful integration of its core development team; our ability to develop or acquire, and gain market acceptance for new products, including our new sales and marketing automation products, in a cost-effective and timely manner; the gain or loss of key customers; competitive pressures and other factors such as the availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; the rate at which our present and future customers adopt our existing and future products and services; our ability to expand operations; fluctuations in our operating results due to changes in our mix of revenues, and our rate of growth; interruptions or delays in our hosting operations, breaches of our security measures; our ability to expand, retain and motivate our employees and manage our growth; and our plans for new product releases. Further information on potential factors that could affect our financial results is included in our Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.