Positive Start to Diligent’s 2013 Year Demonstrated by Strong Revenues, New Sales and Cash Balances
NEW YORK, APRIL 16, 2013 — Diligent Board Member Services (NZX: DIL) (www. boardbooks.com) has provided an update for the first quarter 2013, demonstrating continued strength of revenues, new sales and cash balances.
Diligent produced revenue of $US 15.1 million for the first quarter 2013, an increase of 84% compared to the first quarter of 2012. New sales for the first quarter of 2013 were $US 6.6 million, an increase of 2% on the comparable 2012 period.
Of note, the Americas represented 65% of new sales for the period, totaling $US 4.3 million. Client upgrades, a valuable source of new sales, totaled $US 1.9 million for the first quarter of 2013, an increase of 29% compared to first quarter 2012. Cumulative sales significantly increased to $US 58.4 million at the end of the first quarter of 2013, up from $US 32.4 million at end first quarter of 2012, an increase of 80%.
Alex Sodi, Diligent’s President and CEO, said, “We are extremely pleased with our performance in the first quarter of 2013. Revenue growth was driven by consistent demand for the Diligent Boardbooks secure iPad app and the success of our recurring revenue model. Revenue growth was also driven by our client retention rate of 97% for the trailing 12 months ending March 31, 2013, which we believe is among the best for Software-as-a-Service (SaaS) companies like Diligent.”
“This strong start to 2013 is further evidence of the increasing global demand for the Diligent Boardbooks product and our winning business formula,” he continued. “In our view this includes: a unique user experience; a best-in-class, multi-tenant SaaS offering; market leadership; a powerful SaaS business model; scalable technology that easily adapts to customer requirements, and superior customer service and training.”
During the first quarter, Diligent signed a total of 201 net new client agreements compared to 205 in the same quarter last year. Diligent now serves a total of 2,009 public and private companies, with 2,830 boards and over 58,000 users worldwide. Diligent has many types of clients ranging from large publicly listed companies to smaller not-for-profit organizations. Diligent now services 276 Fortune 1000 companies and 15.2% of NYSE listed companies, of which 47 were added in the first quarter 2013. In addition, we serve 34% of the FTSE 100 Index (UK) and 35% of the ASX 20 Index (Australia).
Diligent continued to demonstrate balance sheet strength during the first quarter of 2013. Diligent’s cash flow position increased by $US 3.1 million in the first quarter of 2013, resulting in total cash balances of $US 36.5 million on hand as of March 31, 2013. Diligent’s cash position for the quarter was negatively impacted by US income tax payments of $US 1.8 million, which includes $US 1.4 million for the 2012 fiscal year taxes accrued at the end of 2012.
Diligent’s cash position for the quarter was also affected by direct costs related to the Special Committee of $US 0.9 million, of which $US 0.6 million were expensed in Q1 2013. Diligent is still in the process of identifying additional expenses that may need to be accrued in Q1 2013 as a result of the Special Committee’s activities.
During the quarter, Diligent engaged Deloitte & Touche LLP (Deloitte) as its auditors for 2013. Deloitte is a global company with deep technical knowledge and extensive industry experience that suits the expansive nature of Diligent’s business. Diligent sees this as a further step in its growth as a company.
For the full Quarterly Update for first quarter 2013, including the Reconciliation of Cumulative Sales to Revenue and Deferred Revenue, visit http://boardbooks.com/wp-content/uploads/2013/04/DIL-Q1-2013-QuarterlyReport-April-16.pdf.
Notes: Non-GAAP Financial Measures: The Company uses New Sales and Cumulative Sales as non-GAAP financial performance measurements. New Sales represents the annual license and subscription fees due from clients under their agreements with Diligent which were signed during the Fiscal Quarter, assuming such agreements continue in effect for twelve months following the Fiscal Quarter. This also includes net additions/deductions to license and subscription fees due from clients under previously existing agreements. Cumulative Sales represents the total amount of license and subscription fees due from clients during the next twelve months under agreements in effect at the end of the Fiscal Quarter. This figure is adjusted for foreign exchange fluctuations. New Sales and Cumulative Sales are provided to investors to supplement the results of operations reported in accordance with GAAP.
The Company’s management uses these nonGAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating the Company’s ongoing operational performance and trends and in comparing its financial measures with other companies in the same industry, many of which present similar non-GAAP financial measures to help investors understand the operational performance of their businesses. However, it is important to note that the particular items the Company excludes from, or includes in, its nonGAAP financial measures may differ from the items excluded from, or included in, similar nonGAAP financial measures used by other companies in the same industry. Non-GAAP financial measures should not be considered in isolation from, or a substitute for, financial information prepared in accordance with GAAP. This document contains forward-looking statements within the meaning of the safe harbour provision of the Securities Litigation Reform Act of 1995. Terms such as “expect,” “believe,” “continue,” and “intend,” as well as similar comments, are forward-looking in nature. Important factors that could cause actual results to differ materially from Diligent’s expectations include: our Special Committee investigation identified a number of instances in which we were not, or may not have been, in compliance with applicable New Zealand and US regulatory obligations and such instances may expose us to potential regulatory actions and/or contingent liabilities; certain of our past stock issuances and stock option grants may expose us to potential contingent liabilities, including potential rescission rights; we are subject to New Zealand Stock Exchange Listing Rules and compliance with securities and financial reporting laws and regulations in the US and New Zealand and face higher costs and compliance risks than a typical US public company due to the need to comply with these dual regulatory regimes; as of December 31, 2012 we identified material weaknesses in our internal controls over financial reporting and concluded that our disclosure controls were not effective; we must address the material weaknesses in our internal controls, which otherwise may impede our ability to produce timely and accurate financial statements; our business is highly competitive and we face the risk of declining customer renewals or upgrades, and we may fail to manage our growth effectively. Please refer to Diligent’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2012 filed with the Securities and Exchange Commission for further information.