Company profitable on a GAAP basis; generates strong year-over-year growth in Universal Content Management license revenues
EDEN PRAIRIE, MN, Nov. 3, 2005 — Stellent, Inc. (Nasdaq: STEL), a global provider of content management solutions, announced today financial results for the second quarter ended Sept. 30, 2005.
Second quarter fiscal 2006 revenues were $30.1 million, an increase of 8% over the $28.0 million reported for the same period last year. Revenues for the six-month period ended Sept. 30, 2005 were $58.7 million, a 16% increase over revenues of $50.6 million for the comparable period of fiscal 2005.
On a Generally Accepted Accounting Principles (GAAP) basis, net income for the quarter ended Sept. 30, 2005 was $0.6 million, or $0.02 per share on a basic and diluted share basis, compared with net income of $0.8 million, or $0.03 per share on a basic and diluted share basis, for the quarter ended Sept. 30, 2004. GAAP net income for the six months ended Sept. 30, 2005 was $1.6 million, or $0.06 per share on a basic and diluted share basis, compared with a net loss of $(3.1) million, or $(0.12) per share on a basic and diluted share basis, for the same period of fiscal 2005.
Non-GAAP net income was $2.2 million, or $0.08 per share on a basic and diluted share basis, for the quarter ended Sept. 30, 2005, compared with non-GAAP net income of $1.6 million, or $0.06 per share on a basic and diluted share basis, for the quarter ended Sept. 30, 2004. Non-GAAP net income for the six months ended Sept. 30, 2005 was $3.9 million, or $0.14 per share on a basic and diluted share basis, compared with net income of $1.7 million, or $0.07 per share on a basic and diluted share basis, for the same period of fiscal 2005.
Stellent believes the non-GAAP results better reflect its operating performance as they exclude the effects of non-cash or non-recurring charges primarily related to expenses such as acquisition-related sales, marketing and other costs; amortization of acquired intangible assets and unearned compensation; and restructuring or reorganization charges.
“We are pleased to have met or exceeded our second quarter financial targets, including achieving record quarterly revenues of $30.1 million and maintaining profitability on both a GAAP and non-GAAP basis,” said Robert Olson, president and chief executive officer for Stellent. “At the same time, we produced positive cash flow from operations, ending the quarter with a cash and marketable securities balance of approximately $70 million, up from $68.2 million last quarter.
“Stellent® Universal Content Management™ license revenue in particular showed strong, organic growth during the quarter, with 49 percent of this revenue generated from new customers. Specifically, we posted year-over-year Universal Content Management license revenue growth of 51 percent globally and 74 percent in North America, which substantially countered a decrease in year-over-year total license revenue attributable to one large OEM transaction that occurred in the September 2004 quarter. The strong growth in second quarter Universal Content Management license revenues was primarily driven by compliance and multi-site management initiatives. Universal Content Management services revenue also showed solid growth within the quarter.
“We secured 57 new customers during the second quarter – our strongest new customer adoption rate in more than two years – including Universal Content Management customers Trend Micro, Samsung Electronics, the U.S. Department of Homeland Security, the U.S. Army, Rite Aid, Moody’s Japan and American Express Incentive Services. A number of existing customers continued to expand their Stellent Universal Content Management implementations, including the Bureau of Land Management, Memorial Sloan-Kettering, UMB Financial, Bell Canada, Los Angeles Times, Wendy’s International, Argonne National Laboratory, O’Reilly Automotive, U.S. Department of Commerce and Regis Corp. Also during the second quarter, our Content Components Division signed or renewed contracts with companies such as KPMG, Canon, Ricoh, Kroll Ontrack, Postini and IronPort Systems.
“We solidified Stellent’s leadership position in our top three target markets — financial compliance, multi-site Web content management and enterprise content management (ECM) via a unified architecture — through significant product enhancements, receiving strong commendations from leading industry analysts. For example, we released version 7.5 of Stellent Site Studio, the multi-site Web content management component of Stellent Universal Content Management, during the second quarter. This new version enhances the experience of all users involved in multi-site management — information technology staff, Web developers, site designers, content contributors and content consumers — offering expanded Web site lifecycle management capabilities and more robust, flexible in-context contribution.
“On the compliance front, we expanded our retention management capabilities to allow users to apply disposition and retention rules to any content item, not just records. And, we were recently named in the ‘visionary’ quadrant in Gartner, Inc.’s ‘Magic Quadrant for Financial Compliance Process Management Software, 2005’1 report, which was published Oct. 24, 2005. This recognition reaffirms our position as one of the top pure-play content management vendors providing financial compliance solutions.
“Similarly, we recently received multiple industry accolades for our unified ECM product suite. We were named ‘the strongest pure-play ECM suite offering’ by Forrester in its Oct. 7, 2005 report, ‘The Forrester Wave™: Enterprise Content Management Suites, Q3 2005,’2 and KMWorld also named Stellent Universal Content Management 7.5 a ‘Trend-Setting Product of 2005,’ recognizing the system for its superior usability, flexibility and adoption, and low total cost of ownership. These rave reviews come on the heels of our second consecutive ‘Best of Show Award’ for the ‘Best Enterprise Content Management Suite,’ which we won at the AIIM 2005 Conference and Exposition earlier this year.
“We believe our mounting success in these key areas, as well as the markets for our OEM transformation technology, will help drive our ability to grow profitably, and increase market share and shareholder value during fiscal 2006.”
Other Recent Highlights
Customers
• 4,557 customers — comprised of 3,414 corporate content management customers; 506 OEM customers; and 637 corporate customers for desktop viewing and conversion technology — have selected Stellent solutions to power their content-centric business applications.
Corporate news
• Software Magazine named Stellent one of the world’s largest software providers for the seventh consecutive year.
• Stellent was recognized on Supply & Demand Chain Executive’s annual list of the top supply and demand chain vendors, the Supply & Demand Chain Executive 100.
• Stellent was selected to Manufacturing Business Technology’s 2005 Global 100, an annual list of the world’s top information technology (IT) providers to the manufacturing industry.
Products
• Stellent announced at ARMA 2005, the leading records management conference, new retention management capabilities for Stellent Universal Content Management 7.5. These capabilities leverage the industry-leading Stellent Records Management system, a Department of Defense (DoD) 5015.2 Chapter 2- and Chapter 4-certified solution. Stellent’s retention policy engine has been extended to cover general content, and to allow usage analytics and other factors to drive the content retention and disposition process.
• Stellent released version 7.5 of Stellent Site Studio, the multi-site Web content management component of the enterprise-scalable Stellent Universal Content Management system. The new version offers expanded site lifecycle management capabilities and more robust, flexible in-context contribution.
• KMWorld named Stellent Universal Content Management 7.5 a “Trend-Setting Product of 2005,” a distinction that recognizes trend-setting products for their superior usability, flexibility and adoption, and low total cost of ownership.
• Stellent received a 2005 WebAward from the Web Marketing Association for the Stellent Universal Content Management implementation at the Susan G. Komen Breast Cancer Foundation, the nation’s largest private funder of breast cancer research.
• Stellent announced expanded functionality for the Stellent Imaging and Business Process Management (BPM) product suite, which increases the system’s manageability and performance, and enhances information lifecycle management and usability.
• Stellent announced support for the recently released Sun StorEdge™ 5310 Compliance Archiving System, which couples the Sun StorEdge 5310 NAS Appliance with Sun StorEdge Compliance Archiving Software to provide compliance-enabling features for authenticity, integrity, ready access and security.
Partners
• Stellent signed three new reseller partners during its second quarter: Pomeroy IT Solutions of Hebron, Ky.; Telemach International, Inc. of Doylestown, Pa.; and Tushaus Computer Services, Inc. of Milwaukee, Wis.
Conference call
Stellent will host a conference call and Webcast for investors on Thursday, Nov. 3, 2005 at 4:00 p.m. Central Time. Callers in the United States can dial 1-877-282-0523, and international callers can dial 1-303-542-7976. Access to the live Webcast will be available via the investor relations area of Stellent’s Web site (www.stellent.com) on the day of the event. Investors unable to participate in the live conference call and Webcast may access a replay of the event via the investor relations area of Stellent’s Web site.
Industry analyst reports
1*Gartner “Magic Quadrant for Financial Compliance Process Management Software, 2005,” F. Caldwell, et al, Oct. 24, 2005. www.stellent.com/gartnerfcpmmq
2 Forrester “Enterprise Content Management Suites Scorecard Summary: Stellent” and “The Forrester Wave: Enterprise Content Management Suites, Q3 2005,” Forrester Research, Inc., October 2005. www.stellent.com/forresterecmwave
About Stellent, Inc.
Stellent, Inc. (www.stellent.com) is a global provider of content management software solutions that drive rapid success for customers by enabling fast implementations and generating quick, broad user adoption. With Stellent Universal Content Management, customers can easily deploy multiple line-of-business applications — such as public Web sites, secure intranets and extranets, compliance processes, and marketing brand management — and also scale the technology to support multi-site management and enterprise-wide content management needs.
More than 4,500 customers worldwide — including Procter & Gamble, Merrill Lynch, Los Angeles County, The Home Depot, British Red Cross, ING, Vodafone, Georgia Pacific, Bayer Corp., Coca-Cola FEMSA, Emerson Process Management and Genzyme Corp. — have selected Stellent solutions to power their content-centric business applications. Stellent is headquartered in Eden Prairie, Minn. and maintains offices throughout the United States, Europe, Asia-Pacific and Latin America.
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Any forward-looking statements in this release, including, without limitation, statements regarding growing profitability and increasing market share and shareholder value, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties including, without limitation, risks of intellectual property litigation, risks in technology development and commercialization, risks in product development and market acceptance of and demand for the Company`s products, risks of downturns in economic conditions generally and in the enterprise content management and unstructured information management markets specifically, risks associated with competition and competitive pricing pressures, risks associated with foreign sales and higher customer concentration and other risks detailed in the Company`s filings with the Securities and Exchange Commission.
Stellent and the Stellent logo are registered trademarks or trademarks of Stellent, Inc. in the USA and other countries. Outside In and Quick View Plus are registered trademarks of Stellent Chicago, Inc. in the USA and other countries. All other trade names are the property of their respective owner.
*The Magic Quadrant is copyrighted 2005 by Gartner, Inc. and reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner’s analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the “Leaders” quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
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