Opsware (NASDAQ:OPSW)
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Opsware Inc. (Nasdaq:OPSW):
-- Q2 non-EDS revenue totals $19.9 million, up 121%
year-over-year
-- Q2 revenue grows to $25.1 million, up 78% year-over-year
-- Annual revenue growth rate accelerating to 67% this year vs.
62% last year
Opsware Inc. (Nasdaq:OPSW), the leading provider of IT automation
software, today reported results for its second quarter ended July 31,
2006, highlighted by 121% year-over-year growth in non-EDS revenue.
Net revenue for the second quarter ended July 31, 2006, totaled
$25.1 million, up 78% from the same quarter last year and above the
company's previous guidance of $23.0 to $23.5 million.
Non-EDS revenue grew to $19.9 million in the second quarter, a
121% increase over the same quarter last year. A chart depicting
Opsware's historical non-EDS revenue growth is included in this
release.
Non-EDS Derived Bookings (which equals net revenue, plus the
change in deferred revenue, plus the change in advances from
customers, all excluding the impact of EDS) totaled $17.0 million in
the second quarter, a 59% increase from the same quarter last year.
Non-EDS Derived Bookings increased 14% sequentially. A chart depicting
Opsware's historical non-EDS derived bookings growth is included in
this release.
Non-GAAP net income in the second quarter was $1.0 million or
$0.01 per share, above the company's guidance of $0.00 per share.
GAAP net loss in the second quarter was $(3.8) million or $(0.04)
per share. Non-GAAP net income in the second quarter excludes non-cash
charges of approximately $0.7 million relating to previous
acquisitions and $4.0 million of non-cash stock-based compensation. A
reconciliation between net income (loss) on GAAP and non-GAAP bases is
provided in a table immediately following the Condensed Consolidated
Statements of Operations attached to this release.
The company raised its full year revenue expectation to $102
million.
"Q2 was a strong quarter and I'm pleased with our results. We grew
non-EDS revenue by 121%, far outpacing the competition, and we reached
the key milestone of non-GAAP profitability," said Ben Horowitz,
president and CEO of Opsware Inc. "During Q2 we also shipped the
Opsware System 6 suite, the most important release in our company's
history."
Financial Outlook
Management provides the following guidance for its third quarter
ending October 31, 2006:
-- Net revenue is expected to range between $25 and $26 million.
-- Non-GAAP EPS is expected to be $0.00.
Management provides the following guidance for its fiscal year
ending January 31, 2007:
-- Net revenue is expected to be $102 million.
-- Non-GAAP EPS is expected to be $0.03.
The company will provide additional detail on its financial
results on the conference call referenced below.
About the Conference Call and Webcast
Opsware management will host a conference call today, August 24,
2006, beginning at 5:00 a.m. PT (8:00 a.m. ET) to discuss today's
announcement. Interested parties may access the conference call by
dialing (800) 810-0924. A live audio version and replay of the
conference call will be available on the Investor Relations section of
Opsware's web site at http://investor.opsware.com.
About Non-GAAP Financial Information
When used in connection with historical results or forward-looking
guidance, non-GAAP net income (loss), non-GAAP profitability and
non-GAAP EPS each exclude non-cash stock-based compensation expense
and non-cash charges relating to past acquisitions. With respect to
historical results, a reconciliation between both net income (loss)
and net income (loss) per share on GAAP and non-GAAP bases is provided
in a table immediately following the Condensed Consolidated Statement
of Operations attached to this release. With respect to
forward-looking guidance, a reconciliation between EPS on GAAP and
non-GAAP bases has not been provided because EPS on a GAAP basis
depends in part upon the amount of stock based compensation expense,
which expense is dependent upon our future stock price and other
factors that cannot be determined at this time.
To supplement our consolidated financial statements presented on a
GAAP basis, we believe that these non-GAAP measures better reflect our
core operating results and thus are appropriate to enhance the overall
understanding of our past financial performance and our prospects for
the future. These adjustments to our GAAP results are made with the
intent of providing both management and investors a more complete
understanding of our underlying operational results and trends and our
performance. Management uses these non-GAAP measures to evaluate its
financial results, develop budgets and manage expenditures. The
presentation of additional information is not meant to be considered
in isolation or as a substitute for net loss or net loss per share
prepared in accordance with GAAP.
About Opsware Inc. (Nasdaq:OPSW)
Opsware Inc. is the world's leading IT automation and utility
computing software company. The growth of the Internet is driving a
shift from client/server computing to Web architecture. With this
shift comes an overwhelming proliferation of servers, network devices
and applications, creating massive complexity that makes an automated
IT model a necessity. The Opsware System automates the complete IT
lifecycle and delivers utility computing by enabling IT to
automatically provision, patch, configure, secure, change, scale,
audit, recover, consolidate, migrate, and reallocate servers, network
devices and applications. Over 350 of the world's largest companies,
outsourcers and government agencies use Opsware to deliver this new,
automated model of IT. For more information on Opsware Inc., please
visit our web site at www.opsware.com.
This press release contains forward-looking statements within the
meaning of the federal securities laws, including forecasts of our
expected revenue and earnings per share and the "Financial Outlook"
section. These forward-looking statements are based on current
information and expectations, and are subject to risks and
uncertainties that could cause actual events or results to differ
materially from these statements, including without limitation: that
the IT automation software market is relatively new and may not
develop as we expect, that our market is highly competitive and
subject to rapid and significant change, that enterprise software
spending and budgets may fluctuate depending on economic conditions
and that our revenue and operating results may vary significantly from
period to period, including due to the timing of signing contracts
with customers, delays in product releases, and our dependence on
closing a small number of relatively large transactions each quarter.
In addition, please see the section entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Form 10-Q for the quarter ended April
30, 2006 that we filed with the Securities and Exchange Commission,
and subsequent filings with the SEC. We assume no obligation to update
the information in this press release or to revise any forward-looking
statements.
The graphics displaying non-EDS revenue and derived bookings in
this press release solely present historical data, and are not
necessarily indicative of results in future periods. Continued growth
is subject to several risks and uncertainties, including those
described in our SEC filings as referenced in the preceding paragraph.
Opsware is a service mark and trademark of Opsware Inc.
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OPSWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
July January
31, 2006 31, 2006
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 96,765 $ 101,898
Accounts receivable, net 21,058 17,867
Prepaid expenses and other current assets 5,997 6,546
--------- ---------
Total current assets 123,820 126,311
Property and equipment, net 5,208 3,944
Restricted cash 2,274 2,296
Prepaid rent 1,190 1,540
Other assets 433 380
Intangibles, net 6,135 7,613
Goodwill 27,523 27,668
--------- ---------
Total assets $ 166,583 $ 169,752
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,381 $ 1,217
Other accrued liabilities 13,108 11,389
Advances from customers -- 721
Deferred revenue, current portion 25,126 29,473
Accrued restructuring costs, current portion 298 298
Capital lease obligations, current portion 16 14
--------- ---------
Total current liabilities 40,929 43,112
Capital lease obligations, net of current
portion 65 74
Deferred revenue, net of current portion 1,117 1,838
Accrued restructuring costs, net of current
portion 1,029 1,190
--------- ---------
Total liabilities 43,140 46,214
--------- ---------
Stockholders' equity:
Common stock 100 100
Additional paid-in capital 616,414 609,455
Deferred stock compensation -- (2,606)
Accumulated deficit (492,835) (483,270)
Accumulated other comprehensive loss (236) (141)
--------- ---------
Total stockholders' equity 123,443 123,538
--------- ---------
Total liabilities and stockholders'
equity $ 166,583 $ 169,752
========= =========
OPSWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
Three Months Six Months
Ended Ended
July 31, July 31,
----------------- -------------------
2006 2005 2006 2005
-------- -------- --------- ---------
Revenue:
License revenue $17,907 $ 9,888 $ 33,268 $ 18,037
Services revenue 7,227 4,235 13,862 8,701
-------- -------- --------- ---------
Net revenue 25,134 14,123 47,130 26,738
-------- -------- --------- ---------
Cost and expenses:
Cost of license revenue 360 260 866 340
Cost of services revenue(a) 5,096 3,222 10,079 6,164
Cost of developed technology 412 412 824 816
Research and development(a) 7,614 5,644 14,956 11,336
Sales and marketing(a) 11,946 5,747 22,852 10,824
General and administrative(a) 4,457 3,100 8,703 5,767
Restructuring recoveries, net -- -- -- (18)
Amortization of other
acquisition-related
intangibles 327 327 654 648
In-process research and
development charges -- -- -- 1,190
-------- -------- --------- ---------
Total cost and expenses 30,212 18,712 58,934 37,067
-------- -------- --------- ---------
Loss from operations (5,078) (4,589) (11,804) (10,329)
Loss on sale of assets and
liabilities from Managed
Services Business -- (11) -- (44)
Interest and other income, net 1,311 686 2,293 1,332
-------- -------- --------- ---------
Loss before income taxes (3,767) (3,914) (9,511) (9,041)
Provision for income taxes -- 10 54 12
-------- -------- --------- ---------
Net loss $(3,767) $(3,924) $ (9,565) $ (9,053)
======== ======== ========= =========
Basic and diluted net loss per
share $ (0.04) $ (0.04) $ (0.10) $ (0.09)
======== ======== ========= =========
Shares used in computing basic
and diluted net loss per share 99,686 97,912 99,525 97,729
======== ======== ========= =========
(a) Includes stock-based compensation expense of the following:
Cost of services revenue $ 366 $ 2 $ 702 $ 5
Research and development 1,287 274 2,494 592
Sales and marketing 1,311 58 2,492 151
General and administrative 1,079 288 2,001 28
-------- -------- --------- ---------
Total stock-based compensation
expense $ 4,043 $ 622 $ 7,689 $ 776
======== ======== ========= =========
A reconciliation between GAAP and non-GAAP net income (loss) is as
follows: (unaudited)
Three Months Six Months
Ended Ended
July 31, 2006 July 31, 2006
------------- -------------
GAAP net loss $ (3,767) $ (9,565)
Non-cash charge related to equity
transactions 4,043 7,689
Cost of developed technology 412 824
Amortization of other acquisition-
related intangibles 327 654
------------- -------------
Non-GAAP net income (loss) $ 1,015 $ (398)
============= =============
GAAP diluted net loss per share $ (0.04) $ (0.10)
============= =============
Non-GAAP diluted net income per share $ 0.01 $ 0.00
============= =============
Shares used in computing non-GAAP diluted
net income per share 106,214 99,525
============= =============
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