ITRA Intraware (MM)

Intraware, Inc. (Nasdaq:ITRA), the leading provider of on-demand digital asset and entitlement management solutions, today reported financial results for the first quarter of its 2009 fiscal year, ended May 31, 2008. During the first quarter of fiscal 2009, the company: Signed a leading data storage and archive solutions vendor as a new SubscribeNet� customer; Signed eight SubscribeNet contract renewals or extensions and three professional services statements of work; Achieved $3.3 million in contract renewals, new professional services statements of work, and variable billings; Increased total annual contract value of its SubscribeNet customers by approximately $200,000, to $11.5 million; Generated approximately $0.4 million positive cash flow from operations; and Added over 280,000 end users to the SubscribeNet service, to a total of 2.7 million end users Total revenues for the first quarter of fiscal 2009 were $3.2 million, compared to $2.7 million in the same period of fiscal 2008, and $3.1 million during the fourth quarter of fiscal 2008. Gross profit margin for the first quarter of fiscal 2009 was 67%, an improvement from 62% in the same period for fiscal 2008, and the same as the fourth quarter of fiscal 2008. Net loss for the first quarter of fiscal 2009 was $(223,000), or $(0.04) per basic and diluted share, compared to a net loss of $(467,000), or $(0.08) per basic and diluted share, in the first quarter of fiscal 2008, and a net loss of $(274,000), or $(0.04) per basic and diluted share in the fourth quarter of fiscal 2008. These results included non-cash, stock-based compensation expense recognized in accordance with Statement of Financial Accounting Standards (SFAS) 123(R), Share Based Payment totaling $268,000 in the first quarter of fiscal 2009, compared to $233,000 in the first quarter of fiscal 2008, and $154,000 in the fourth quarter of fiscal 2008. �The momentum we built in fiscal 2008 has carried into the first quarter of fiscal 2009,� said Peter Jackson, Intraware�s Chairman, Chief Executive Officer and President. �Specifically, we acquired a leading data storage customer and signed eight contract renewals or extensions. We also increased the contract value of our SubscribeNet bookings, added over 280,000 end users and remained cash flow positive.� Operating Highlights The total annual contract value of the SubscribeNet customer base at the end of the first quarter of fiscal 2009 was $11.5 million, a net increase of approximately $200,000 over the fourth quarter of fiscal 2008. Intraware defines total annual contract value as the aggregate annual service fees paid or expected to be paid by Intraware�s customers for services provided during the then-current annual periods of the customers� respective contracts with the company. Total annual contract value assumes service fees must be paid, or scheduled for payment, based on a minimum 12-month history of prior charges and payments, irrespective of contractual minimums. Total annual contract value includes amounts that have been recognized as revenue as well as amounts that may be recognized as revenue in the future. Contract value is not necessarily indicative of current or future revenue in any given fiscal period. During the first quarter of fiscal 2009, Intraware made investments in its flagship SubscribeNet service, including: Providing customers with the ability to customize and manage more of their own HTML content; Upgrading Intraware�s Aspera Connect client; and Expanding email template conditional content capabilities. These improvements provide SubscribeNet customers with improved site functionality and greater control over the content that is displayed to their end users. In addition, during the first quarter of fiscal 2009, Intraware continued to develop its zAthlete social networking website. Several new upgrades were made to the website, including: Improved content in the Premier section; Improved socializing capabilities within zAthlete team sites; and Enhanced functionality with sophisticated calendaring and texting notification capabilities. These enhancements represent a significant catalyst for the increased memberships and website visits Intraware experienced in the quarter. Business Outlook For the second quarter of fiscal 2009, Intraware expects revenues to be between $3.2 million and $3.3 million and expects a GAAP net loss per basic and diluted share to range between $(0.04) and $(0.07). Conference Call and Web Cast Information Management will host a conference call to discuss its financial and operating results from the first quarter of fiscal 2009 beginning at 2:00 p.m. Pacific Daylight Time today. A live broadcast of the conference call may be heard by dialing 877-681-3376 (international participants dial 719-325-4821) and entering confirmation code 7856604, or via web cast at http://www.shareholder.com/intraware/MediaRegister.cfm?MediaID=29204. For those unable to participate in the live call, a replay will be available approximately two hours after the conclusion of the call, and can be accessed by dialing 888-203-1112 (international participants dial 719-457-0820) and entering the confirmation code 7856604. Intraware will be taking live questions only from professional investors, but the call is open to all interested parties on a listen-only basis. Intraware will also answer individual investors� questions submitted before the call. Questions should be sent to management via email at ir@intraware.com. About Intraware, Inc. Intraware, Inc. provides digital services that enable enterprise technology publishers to tie together licensing and software processes into a clean, simple customer experience. The Intraware SubscribeNet service (patents pending) is a web-based delivery and support platform that enables technology companies to deliver, track and manage the software, licenses and other digital content they distribute to their customers. 99.6 percent of Fortune 500 companies and 90 percent of Global Fortune 1000 companies have downloaded software or license keys on the SubscribeNet platform. More than two million end users from those companies and others have used the service. SubscribeNet powers business-to-business technology providers including IBM, Progress Software Inc., EMC Corporation, Sybase Inc., and McKesson Ireland Limited. Intraware is headquartered in Orinda, California and can be reached at 888.446.8729 or http://www.intraware.com. Forward Looking Statements The foregoing information contains certain �forward-looking statements� within the meaning of the United States Private Securities Litigation Reform Act of 1995, including statements regarding or relating to Intraware�s financial results for future periods, trends in its financial results in general, and growth of the company�s product base, and the company�s potential to grow. These statements are based on management�s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in political, economic, business, competitive, market and regulatory factors. In particular, factors that could cause actual results to differ include risks related to: lower than expected sales and higher than expected costs in the current and future quarters; the possibility that sales will fall short of expectations or that the Intraware services will not meet customer expectations; the concentration of a substantial portion of Intraware�s revenues in a small number of customers, which makes Intraware�s revenues and contract value vulnerable to unexpected decreases due to cancellations resulting from mergers, in-house development of alternate systems, or other factors; increases in spending on product development or acquisition, which are not offset by revenue increases; any significant reduction in corporate technology spending due to macroeconomic factors, geopolitical events or other occurrences; any significant failure by customers to pay service fees owed to Intraware under their respective contracts; an inability by Intraware to reduce operating costs quickly enough to offset any unexpected weakness in sales; the introduction or aggressive marketing of competitive services and products by other companies; unexpected costs, delays or distractions associated with our new products and offerings; and the failure of our new products and offerings to achieve significant user adoption. These and other risks are more fully described in the periodic reports and registration statements filed with the Securities and Exchange Commission and can be obtained online at the Commission�s website at http://www.sec.gov. Readers should consider the information contained in this release together with other information we make publicly available about Intraware for a more informed overview of the company. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. � 2008 Intraware, Inc. Intraware and SubscribeNet are registered trademarks of Intraware, Inc. Any other company or product names mentioned herein may be trademarks of their respective owners. INTRAWARE, INC. � STATEMENTS OF OPERATIONS � (in thousands, except per share amounts) � (unaudited) � � For the three months ended May 31, 2008 � � May 31, 2007 � Revenues $ 3,246 $ 2,744 Cost of revenues � 1,066 � � 1,053 � Gross profit � 2,180 � � 1,691 � Operating expenses: Sales and marketing 813 707 Product development 469 458 General and administrative 1,224 1,116 Loss (gain) on disposal of assets � (3 ) � 22 � Total operating expenses � 2,503 � � 2,303 � Loss from operations (323 ) (612 ) Interest and other income � 100 � � 145 � Net loss $ (223 ) $ (467 ) � Basic and diluted net loss per share $ (0.04 ) $ (0.08 ) Weighted average shares - basic and diluted � 6,268 � � 6,151 � INTRAWARE, INC. � BALANCE SHEETS � (in thousands, except per share amounts) � (unaudited) � � � May 31, 2008 � � February 29, 2008 ASSETS Current assets: Cash and cash equivalents $ 12,649 $ 12,519 Accounts receivable, net 1,614 1,547 Costs of deferred revenue 524 526 Other current assets � 462 � � 401 � Total current assets 15,249 14,993 Costs of deferred revenue, less current portion 179 224 Property and equipment, net 436 477 Capitalized software, net 706 603 Other assets � 243 � � 241 � Total assets $ 16,813 � $ 16,538 � � LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 652 $ 622 Accrued expenses 790 1,154 Deferred revenue � 3,477 � � 3,052 � Total current liabilities 4,919 4,828 Deferred revenue, less current portion � 901 � � 811 � Total liabilities � 5,820 � � 5,639 � Commitments and contingencies Redeemable convertible preferred stock; $0.0001 par value; 10,000 shares authorized: Series A; 14 shares issued and outstanding at May 31, 2008 and February 29, 2008, (aggregate liquidation preference of $250 at May 31, 2008 and February 29, 2008) 224 224 Series B; 1 shares issued and outstanding at May 31, 2008 and February 29, 2008, (aggregate liquidation preference of $6,000 at May 31, 2008 and February 29, 2008) � 5,701 � � 5,701 � Total redeemable convertible preferred stock � 5,925 � � 5,925 � Stockholders� equity: Common stock; $0.0001 par value; 50,000 shares authorized; 6,285 and 6,249 shares issued and outstanding at May 31, 2008 and February 29, 2008, respectively 1 1 Additional paid-in-capital 166,951 166,634 Accumulated deficit � (161,884 ) � (161,661 ) Total stockholders� equity � 5,068 � � 4,974 � Total liabilities, redeemable convertible preferred stock and stockholders� equity $ 16,813 � $ 16,538 � INTRAWARE, INC. � STATEMENTS OF CASH FLOWS � (in thousands) � (unaudited) � � For the three months ended May 31, 2008 � � May 31, 2007 Cash flows from operating activities: Net loss $ (223 ) $ (467 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 127 84 Stock-based compensation 268 233 Loss (gain) on disposal of assets (3 ) 22 Changes in assets and liabilities: Accounts receivable (66 ) (217 ) Costs of deferred revenue 55 3 Other assets (64 ) (153 ) Accounts payable 194 (162 ) Accrued liabilities (371 ) (404 ) Deferred revenue � 522 � � 92 � Net cash provided by (used in) operating activities � 439 � � (969 ) Cash flows from investing activities: Purchases of property and equipment (168 ) (20 ) Capitalized software (172 ) (54 ) Proceeds from disposal of assets � 3 � � - � Net cash used in investing activities � (337 ) � (74 ) Cash flows from financing activities: Proceeds from issuance of common stock 65 268 Amounts paid to satisfy withholding tax related to restricted shares granted � (37 ) � - � Net cash provided by financing activities � 28 � � 268 � Net increase (decrease) in cash and cash equivalents 130 (775 ) Cash and cash equivalents at beginning of the period � 12,519 � � 12,260 � Cash and cash equivalents at end of the period $ 12,649 � $ 11,485 � � Supplemental non-cash activity: Purchases of property and equipment included in accounts payable $ 19 $ 30