E.Piphany (NASDAQ:EPNY)
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Epiphany, Inc. (Nasdaq:EPNY) today announced results for
the quarter ended June 30, 2005.
For the quarter ended June 30, 2005, the company reported revenues
of $16.7 million, compared to revenues of $20.4 million in the second
quarter of 2004. Second quarter license revenues were $3.9 million,
service revenues were $5.1 million and maintenance revenues were $7.8
million, representing 23%, 30% and 47% of total revenues,
respectively. Net loss under generally accepted accounting principles
("GAAP") for the quarter was $8.3 million, or $(0.11) per share,
compared to net loss under GAAP of $3.6 million, or $(0.05) per share,
for the second quarter of 2004. Excluding the amortization of
purchased technology, stock-based compensation and restructuring
costs, on a non-GAAP basis, net loss for the quarter was $6.1 million,
or $(0.08) per share, compared to non-GAAP net loss of $3.3 million,
or $(0.04) per share, for the second quarter of 2004.
For the six months ended June 30, 2005, the company reported
revenues of $32.9 million, compared to revenues of $40.7 million in
the same period of 2004. Net loss under generally accepted accounting
principles ("GAAP") for the six months ended June 30, 2005 was $14.7
million, or $(0.19) per share, compared to net loss under GAAP of $7.8
million, or $(0.10) per share for the same period of 2004.
Acquisition by SSA Global Technologies
In a separate press release issued after the market close today,
SSA Global Technologies, Inc. (Nasdaq:SSAG) announced a definitive
agreement to acquire Epiphany in an all-cash transaction valued at
approximately $329 million. Under the terms of the agreement, which
has been approved by the boards of directors of both companies, each
Epiphany stockholder will have the right to receive an amount of cash
equal to $4.20 per share. The acquisition is subject to customary
closing conditions, including approval of the transaction by
Epiphany's stockholders and receipt of regulatory approvals. There
will be a conference call to discuss the transaction today at 5:00
p.m. EST/2:00 p.m. PST. The live discussion can be accessed by dialing
1-800-706-7741 or 1-617-614-3471, passcode 65084584. A webcast of the
analyst and investor conference call will also be available on the
Internet at http://investor.ssaglobal.com and http://ir.epiphany.com.
For those investors and analysts who are unable to listen to the live
call, a replay of the webcast will be available for 90 days on each
website. As a result of its pending acquisition, Epiphany has
cancelled its previously scheduled earnings call for today.
Forward-Looking Statements
This press release contains forward-looking statements relating to
our ability to complete a merger with SSA. Actual results could differ
materially from such forward-looking statements. Factors that could
cause actual results to differ materially from the forward-looking
statements include the failure to satisfy one or more conditions to
the completion of the merger, including the receipt of Epiphany
stockholder approval and regulatory approvals. Our proposed merger
with SSA involves a high degree of risk. Whether or not the merger is
completed, we will incur substantial expenses in pursuing the merger.
In addition, if the merger is terminated under specified
circumstances, we may be required to pay SSA a substantial termination
fee. If the merger is not completed for any reason, our relationships
with customers, partners and employees, and our financial results,
could be harmed. Certain of these factors, and others, are described
in more detail in our public reports filed with the Securities and
Exchange Commission, such as those discussed in the "Risk Factors"
section included in our Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q and in our prior press releases. Epiphany assumes no duty
to update forward-looking statements.
Non-GAAP Information
This press release includes certain non-GAAP financial measures,
including non-GAAP net loss and net loss per share amounts, that
exclude the amortization of purchased technology, stock-based
compensation and restructuring costs. These non-GAAP financial
measures are not prepared in accordance with generally accepted
accounting principles and may be different from non-GAAP financial
measures used by other companies. Non-GAAP financial measures should
not be considered as a substitute for measures of financial
performance prepared in accordance with GAAP. Epiphany's management
believes that these non-GAAP financial measures provide meaningful
supplemental information regarding the performance of the Company's
business operations. These measures also facilitate management's
internal comparisons to our historical operating results and to our
competitors' operating results, operational forecasting and budgeting.
Epiphany has reported similar non-GAAP financial measures to our
investors in the past and believes that the inclusion of comparative
numbers at this time provides consistency in our financial reporting.
Investors and potential investors are encouraged to review the
reconciliation of the non-GAAP financial measures contained within
this press release with their most directly comparable GAAP financial
results.
Additional Information and Where to Find It
Epiphany has agreed to file a proxy statement in connection with
the proposed merger and related transactions. The proxy statement will
be mailed to the stockholders of Epiphany. Epiphany's stockholders are
urged to read the proxy statement and other relevant materials when
they become available because they will contain important information
about Epiphany, the Merger and related transactions. Investors and
security holders may obtain free copies of these documents (when they
are available) and other documents filed with the Securities and
Exchange Commission (the "SEC") at the SEC's web site at www.sec.gov.
In addition, investors and security holders may obtain free copies of
the documents filed with the SEC by Epiphany by going to Epiphany's
Investor Relations page on its corporate website at www.epiphany.com
or by contacting Todd Friedman at Epiphany at 475 Concar Drive, San
Mateo, California 94402 or by phone at (650) 356-3800.
In addition, Epiphany and its officers and directors may be deemed
to be participants in the solicitation of proxies from Epiphany's
stockholders with respect to the merger. A description of any
interests that Epiphany's officers and directors have in the merger
and related transactions will be available in the proxy statement. In
addition, SSA may be deemed to have participated in the solicitation
of proxies from Epiphany's stockholders in favor of the approval of
the merger agreement and related transactions. Information concerning
SSA's directors and executive officers is set forth in SSA's final
prospectus for its initial public offering, which was filed with the
SEC on May 26, 2005. This document is available free of charge at the
SEC's web site at www.sec.gov or by going to SSA's Investor Relations
page on its corporate website at www.ssaglobal.com.
About Epiphany
Epiphany(R) provides CRM software solutions that increase
profitability at the largest consumer-oriented companies by making
every customer interaction intelligent. With over 475 customers --
including nearly 35 percent of the Fortune 100 -- Epiphany powers deep
customer insights and optimizes each relationship from both a revenue
generation and customer retention viewpoint. Built on the industry's
most advanced, service-oriented architecture, Epiphany software
solutions address problems that span business silos, departmental
functions and geographic locations, and result in rapid, measurable
ROI. With a suite of blended marketing, sales and service solutions,
Epiphany enables global organizations to align touch points, processes
and technologies around the most valuable enterprise asset -- the
customer. With worldwide headquarters in San Mateo, CA, Epiphany
serves customers in more than 40 countries worldwide. For more
information please visit www.epiphany.com.
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EPIPHANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ----------------
2005 2004 2005 2004
------- ------- -------- -------
Revenues:
Product license $ 3,857 $ 7,638 $ 8,149 $14,744
Services 5,059 5,059 9,258 10,594
Maintenance 7,777 7,729 15,513 15,317
------- ------- -------- -------
Total revenues 16,693 20,426 32,920 40,655
------- ------- -------- -------
Cost of revenues:
Product license 168 387 534 802
Services 4,344 4,352 8,295 8,850
Maintenance 1,401 1,370 2,837 2,646
Amortization of purchased
technology - - - 679
------- ------- -------- -------
Total cost of revenues 5,913 6,109 11,666 12,977
------- ------- -------- -------
Gross profit 10,780 14,317 21,254 27,678
------- ------- -------- -------
Operating expenses:
Research and development 6,021 6,368 12,651 13,041
Sales and marketing 6,900 8,953 14,237 17,384
General and administrative 5,405 3,136 9,483 5,841
Restructuring costs 2,163 375 2,400 1,011
Stock-based compensation 77 - 154 -
------- ------- -------- -------
Total operating expenses 20,566 18,832 38,925 37,277
- -
Operating income (loss) (9,786) (4,515) (17,671) (9,599)
Other income, net 1,588 903 3,061 1,831
------- ------- -------- -------
Net income (loss) before
provision for taxes (8,198) (3,612) (14,610) (7,768)
Provision for taxes 101 35 110 81
------- ------- -------- -------
Net income (loss) $(8,299)$(3,647)$(14,720)$(7,849)
======= ======= ======== =======
Diluted net income (loss) per
share $ (0.11)$ (0.05)$ (0.19)$ (0.10)
Basic net income (loss)
per share $ (0.11)$ (0.05)$ (0.19)$ (0.10)
Shares used in computing basic
and diluted per share
calculation 77,076 75,765 76,863 75,377
======= ======= ======== =======
EPIPHANY, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION
(in thousands, except per share amounts)
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ----------------
2005 2004 2005 2004
------- ------- -------- -------
GAAP net income (loss) $(8,299)$(3,647)$(14,720)$(7,849)
Less: Amortization of purchased
technology - - - 679
Less: Restructuring costs 2,163 375 2,400 1,011
Less: Stock-based compensation 77 - 154 -
------- ------- -------- -------
Net loss excluding restructuring
costs and certain non-cash
items $(6,059)$(3,272)$(12,166)$(6,159)
======= ======= ======== =======
Diluted net income (loss) per
share $ (0.08)$ (0.04)$ (0.16)$ (0.08)
Basic net income (loss) per share $ (0.08)$ (0.04)$ (0.16)$ (0.08)
Shares used in computing basic and
diluted per share calculation 77,076 75,765 76,863 75,377
======= ======= ======== =======
EPIPHANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31
ASSETS 2005 2004
---------------------------------------------- ----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $ 18,856 $ 18,080
Short-term investments 147,382 131,090
Accounts receivable, net 7,019 11,677
Prepaid expenses and other assets 3,913 4,849
Short-term restricted cash & investments 542 266
----------- -----------
Total current assets 177,712 165,962
Long-term investments 72,930 96,404
Long-term restricted cash & investments 4,054 5,432
Property and equipment, net 3,043 4,621
Goodwill, net 81,499 81,499
Other assets 243 301
----------- -----------
$ 339,481 $ 354,219
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------
Current liabilities:
Accounts payable $ 1,860 $ 1,194
Accrued liabilities 7,252 7,186
Accrued compensation 5,208 5,850
Current portion of restructuring costs 4,107 5,532
Deferred revenue 13,976 14,011
----------- -----------
Total current
liabilities 32,403 33,773
Restructuring costs, net of current portion 15,660 15,904
Other long-term liabilities 207 232
----------- -----------
Total liabilities 48,270 49,909
Commitment and Contingencies
Stockholders' equity:
Common stock 7 7
Additional paid-in capital 3,833,250 3,831,571
Deferred Compensation (1,013) (1,166)
Accumulated and other comprehensive
income (loss) (2,441) (2,230)
Accumulated deficit (3,538,592) (3,523,872)
----------- -----------
Total stockholders'
equity 291,211 304,310
----------- -----------
$ 339,481 $ 354,219
=========== ===========
EPIPHANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 30,
-------------------
2005 2004
--------- ---------
Cash flow from operating activities:
Net loss $(14,720) $(7,849)
Adjustments to reconcile net loss to net cash
used in
operating activities:
Depreciation and amortization 1,646 2,163
Stock-based compensation 154 -
Non-cash restructuring costs 335 -
Amortization of purchased intangibles - 679
Changes in operating assets and liabilities:
Accounts receivable 4,658 2,243
Prepaid expenses and other assets 994 1,500
Accounts payable 666 (291)
Accrued liabilities and compensation (601) (4,149)
Restructuring costs (1,633) (3,062)
Deferred revenue (35) (1,175)
--------- ---------
Net cash used in operating activities (8,536) (9,941)
--------- ---------
Cash flows from (used) in investing activities:
Purchases of property and equipment (573) (668)
Loss on disposal of property and equipment 133 68
Restricted cash 1,102 932
Proceeds from maturities of investments 130,690 178,944
Purchases of investments (123,624) (179,349)
--------- ---------
Net cash provided (used) by investing
activities 7,728 (73)
--------- ---------
Cash flows from financing activities:
Proceeds from sale of common stock, net of
repurchases 1,676 5,832
--------- ---------
Net cash provided by financing
activities 1,676 5,832
--------- ---------
Effect of foreign exchange rates on cash and cash
equivalents (92) (244)
--------- ---------
Net increase in cash and cash equivalents 776 (4,426)
Cash and cash equivalents at beginning of period 18,080 30,468
--------- ---------
Cash and cash equivalents at end of period $18,856 $26,042
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