Siebel (NASDAQ:SEBL)
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Siebel Systems, Inc. (NASDAQ:SEBL), a leading provider
of customer-facing solutions, today announced financial results which
were in-line with preliminary financial results presented on October
5, 2005, for the quarter ended September 30, 2005.
Financial Results for the Third Quarter of 2005
Total revenues for the third quarter of 2005 were $347.9 million.
License revenues were $112.1 million. Maintenance revenues were $124.8
million. Services and other revenues were $110.9 million.
GAAP financial results include $8.5 million in restructuring and
other third quarter charges primarily related to facilities
restructuring. GAAP financial results also include $5.9 million in
third quarter charges related to the UpShot acquisition earnout and
legal expenses associated with the pending Oracle transaction. GAAP
operating income and operating margin for the third quarter of 2005
were $36.2 million and 10%, respectively. GAAP pre-tax income and
pre-tax margin for the third quarter of 2005 were $53.0 million and
15% of total revenues. GAAP net income, net margin and net income per
share for the third quarter of 2005 were $34.7 million, 10% of total
revenues and $0.06 per fully diluted share, respectively. The
effective tax rate for GAAP net income in the third quarter of 2005
was 35%.
Non-GAAP Financial Results for the Third Quarter of 2005(1)
Excluding $8.5M in restructuring and other charges primarily
related to facilities restructuring and excluding the $5.9 million in
charges related to the UpShot acquisition earnout and the pending
Oracle transaction, non-GAAP operating income and operating margin for
the third quarter of 2005 were $50.5 million and 15% of total
revenues, respectively. Non-GAAP pre-tax income and pre-tax margin for
the third quarter of 2005 were $67.4 million and 19% of total
revenues. Non-GAAP net income, net margin and net income per share for
the third quarter of 2005 were $48.5 million, 14% of total revenues
and $0.09 per fully diluted share, respectively. The effective tax
rate for non-GAAP net income in the third quarter of 2005 was 28%.
This differs from the GAAP effective tax rate due to the amount and
geographic mix of income, excluding restructuring and other charges.
Balance Sheet at September 30, 2005
The Company's cash, cash equivalents, and short-term investments
were $2.247 billion as of September 30, 2005. The Company generated
$18 million of cash in the quarter, before a dividend payment paid in
July, resulting in a net $5 million increase in cash, cash
equivalents, and short-term investments from the end of the second
quarter. Deferred revenue was $315 million as of September 30, 2005.
Days sales outstanding in accounts receivable were 59 days for the
third quarter of 2005.
"Siebel Systems' third quarter results reflect progress against
the goals we established six months ago to improve our revenue
generation capability, better align our cost structure with the scale
of our business, and invest in the products and technology that will
keep Siebel at the forefront of the CRM industry," said George T.
Shaheen, Chief Executive Officer of Siebel Systems. "Our improved
performance in the third quarter also reflects customer confidence in
the future of Siebel CRM following the proposed Oracle transaction. In
the third quarter, we met or exceeded our revenue guidance, achieved
year over year revenue growth across the board and exceeded our goals
in all geographic regions. We also achieved our target non-GAAP
operating margin of 15%, ahead of our original plan, by meeting our
headcount reduction objectives and containing total expenses to our
target for the quarter and thereby growing profitability over our
guidance and the levels achieved in the prior quarter and the third
quarter of last year. We are proud of Siebel's employees for their
focus, their professionalism and our improved performance."
Shaheen continued, "At CustomerWorld in Boston last week, we
hosted thousands of customers, prospects and partners. In keeping with
our commitment to invest for continued product and technology
leadership, we officially launched the next generation of CRM
innovation, Siebel Customer Adaptive Solutions, and we introduced
Siebel Component Assembly and Siebel Business Analytics 7.8 as key
elements of this new strategy. We believe customers and partners are
responding favorably to our continued product innovation and
leadership, and the expectation that, following completion of the
proposed Oracle transaction, Siebel solutions will remain at the core
of the combined company's CRM strategy. We remain dedicated to serving
our more than four thousand customers and our growing community of
over 3.7 million live users."
Other Quarterly Highlights
Over 3.7 Million Users Deployed: In the third quarter of 2005,
Siebel Systems deployed approximately 230,000 additional live CRM
users for a total of more than 3.7 million total live CRM users and
over 4,000 customers.
Select Wins: In the third quarter of 2005, Siebel Systems
concluded software licensing agreements with 74 new customers and 244
existing customers. These wins included Anheuser Busch, Blue Cross
Blue Shield Florida, BMO Financial Group, Clarke American,
Commonwealth Bank of Australia, Endesa Servicios, F. van Lanschot
Bankiers, The Healthcare Commission of the UK, Horizon Healthcare,
Inland Revenue Department of New Zealand, The National Australia Group
Europe UKLimited, Nokia, Pfizer, Wachovia, Westpac Banking
Corporation, Xinjiang (China) Telecom Company, and The Yellow Pages
Group.
Analytics Momentum: Customer Business Analytics accounted for $30
million in license revenue in the third quarter, up 68% sequentially
and up 10% year over year. The Company also recently released Siebel
Business Analytics Applications Version 7.8 at the third annual Siebel
Business Intelligence Summit. The latest release provides
next-generation BI and analytics solutions required for the
insight-driven enterprise, enabling organizations to provide
real-time, role-based intelligence in order to drive more effective
decisions, actions and customer interactions enterprise-wide.
Siebel 7.8 Momentum: Siebel Systems recently introduced version
7.8 of its industry-leading CRM solutions suite. Siebel 7.8
incorporates significant new and enhanced features - including
advanced order management and embedded analytics capabilities - that
enable companies to increase sales and service velocity by enabling
more efficient and effective product, pricing and promotions
management across multiple channels. Already, over 150 customers are
currently implementing or are in production on Siebel 7.8, and v7.X
represents more than 90% of all support activity.
Siebel CRM OnDemand Momentum: For the third quarter of 2005,
Siebel CRM OnDemand total contract value grew 49% year over year to
$11.3 million. With the addition of approximately 5,000 new users in
the third quarter, total subscribers increased 12% quarter over
quarter bringing the total to approximately 44,300 users. In addition,
Siebel Systems introduced Siebel CRM OnDemand Release 9, the fourth
release in 2005, offering seamless integration with Lotus Notes,
integration with Siebel Contact OnDemand, Siebel's hosted contact
center, and enhanced branding solutions and analytics.
Recent Management Additions: Subsequent to quarter end, Perry
Keating joined the Company as Senior Vice President of Global
Services. He is responsible for the company's Professional Services,
Business Consulting Services, Technical Training, and End User
Education business units. A highly seasoned technology executive with
more than fifteen years of senior leadership experience, Mr. Keating
most recently served as Senior Vice President, Global Enterprise
Solutions, at BearingPoint, where he led the company's Oracle, SAP and
Siebel Systems practices. Previously, he held executive and senior
management roles with PeopleSoft, Oracle Corporation, James Martin &
Co. and American Management Systems.
About Siebel Systems
Siebel Systems is a leading provider of software solutions and
services that drive value and loyalty in client-customer
relationships, providing best-in-class capabilities in on-premise and
hosted customer relationship management (CRM), business analytics, and
customer data integration. Siebel's new Customer Adaptive Solutions
enable organizations to model their customer-centric business
processes in order to drive the most effective customer interactions,
gain increased insight over time, and continually realign those
processes for systemic and consistent improvement. With more than $2
billion in R&D investments, 11-plus years of customer software
experience, an extensive global ecosystem of alliance partners, and
more than 4,000 customers and 3.7 million live users, Siebel is the
proven choice in helping organizations of all types and sizes achieve
customer-driven business results. For more information, visit
www.siebel.com.
For more information on Siebel Systems solutions and services,
please visit our Web site: CRM - http://www.siebel.com/crm; OnDemand
Solutions - http://www.crmondemand.com; Industry CRM -
http://www.siebel.com/industry-crm; Call Center & Service -
http://www.siebel.com/call-center; Sales Force Automation -
http://www.siebel.com/sales-force-automation; Marketing Automation -
http://www.siebel.com/marketing-automation; Business Intelligence -
http://www.siebel.com/business-intelligence; Integration Solutions -
http://www.siebel.com/integration-solutions; CRM Services -
http://www.siebel.com/crm-services
Siebel is a trademark of Siebel Systems, Inc. and may be
registered in certain jurisdictions.
This press release contains forward-looking statements that
involve risks and uncertainties. Future operating results of Siebel
Systems, Inc. may differ from that forecasted in the forward-looking
statements due to factors that include, but are not limited to, risks
associated with our pending merger with Oracle Corporation, financial,
economic, political and other uncertainties, the business software
applications market, dependence on the Internet, risks associated with
new versions and new products and risks associated with rapid
technological change. Further information on potential factors that
could affect the financial results of Siebel Systems, Inc. are
included in its Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and its other filings with the Securities and Exchange
Commission, which are available at www.sec.gov. Siebel Systems assumes
no obligation to update the information in this press release.
(1) The company historically uses the non-GAAP financial measures
of operating margin, operating income, pre-tax margin and pre-tax
income discussed above to evaluate internally and to report results of
its business. Siebel Systems believes that these measures best allow
its management and investors to understand its activities and
potential activities with customers. Siebel Systems believes that
inclusion of these non-GAAP financial measures provides consistency
and comparability with past reports of financial results, as well as
comparability to similar companies in the company's industry, most of
which present the same or similar non-GAAP financial measures to
investors.
GAAP financial results include $8.5 million in restructuring and
other third quarter charges primarily related to facilities actions.
GAAP financial results also include $5.9 million in third quarter
charges related to the UpShot acquisition earn out and legal expenses
associated with the pending Oracle transaction. The non-GAAP financial
measures exclude both of these amounts. The company believes that
providing specific financial information on all charges, including
amounts included and excluded from GAAP and non-GAAP financial
measures, best allows investors to understand both third quarter
restructuring and other measures and the company's ongoing business
activities during the quarter.
Management believes that its non-GAAP financial measures provide
an additional tool for investors to evaluate ongoing operating results
and trends. Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information prepared
in accordance with GAAP. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measure as detailed herein.
-0-
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Operating Pre-Tax Pre- Net Earnings
Income Operating Profit Tax Income Net Per
($K) Margin ($K) Margin ($K) Margin Share
--------- --------- -------- ------ -------- ------ -------
GAAP Measure $36,168 10.4% $53,001 15.2% $34,715 10.0% $0.06
--------- ------- -------- ------ -------- ------ -------
Adjustments
Restructuring
and other
charges $8,477 2.4% $8,477 2.4% $8,477 2.4% $0.02
Acquisition
earnout
and legal
expenses $5,873 1.7% $5,873 1.7% $5,873 1.7% $0.01
Associated
income tax
benefit - - - - $(572) (0.2)% $(0.00)
--------- ------- -------- ------ -------- ------ -------
Total
adjustments $14,350 4.1% $14,350 4.1% $13,778 3.9% $0.03
Non-GAAP
Measure $50,518 14.5% $67,351 19.3% $48,493 13.9% $0.09
--------- ------- -------- ------ -------- ------ -------
--------- ------- -------- ------ -------- ------ -------
SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)
Dec. 31, June 30, Sept. 30,
2004 2005 2005
------------ ------------ -----------
Assets
-------
Current assets:
Cash and cash equivalents $ 560,377 $ 567,081 $ 566,071
Short-term investments 1,686,111 1,674,660 1,681,105
------------ ------------ -----------
Total cash, cash
equivalents and
short-term
investments 2,246,488 2,241,741 2,247,176
Accounts receivable, net 293,527 207,594 229,190
Deferred income taxes 17,542 19,810 23,526
Prepaids and other 53,894 35,873 44,224
------------ ------------ -----------
Total current assets 2,611,451 2,505,018 2,544,116
Property and equipment, net 83,908 67,453 61,759
Goodwill 208,306 282,946 296,897
Intangible assets, net 23,004 38,759 35,769
Other assets 36,937 32,412 33,360
Deferred income taxes 123,828 116,487 116,487
------------ ------------ -----------
Total assets $ 3,087,434 $ 3,043,075 $ 3,088,388
------------ ------------ -----------
------------ ------------ -----------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 10,048 $ 21,861 $ 20,346
Accrued expenses 346,672 287,062 298,569
Restructuring obligations 30,639 38,800 37,276
Deferred revenue 357,223 331,436 315,170
------------ ------------ -----------
Total current
liabilities 744,582 679,159 671,361
Restructuring obligations, less
current portion 75,227 110,476 106,824
Other long-term liabilities,
less current portion 20,981 24,146 24,084
------------ ------------ -----------
Total liabilities 840,790 813,781 802,269
------------ ------------ -----------
Stockholders' equity:
Common stock; $0.001 par
value; 2,000,000 shares
authorized; 508,953, 521,365
and 528,010 shares issued
and outstanding, respectively 509 521 528
Additional paid-in capital 1,635,652 1,737,968 1,765,748
Deferred compensation (2,993) (11,559) (13,747)
Accumulated other
comprehensive income 70,541 26,478 22,989
Retained earnings 542,935 475,886 510,601
------------ ------------ -----------
Total stockholders'
equity 2,246,644 2,229,294 2,286,119
------------ ------------ -----------
Total liabilities and
stockholders' equity $ 3,087,434 $ 3,043,075 $ 3,088,388
------------ ------------ -----------
------------ ------------ -----------
SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2004 2005 2004 2005
--------- --------- --------- ---------
Revenues:
Software license $104,579 $112,128 $326,207 $265,434
Professional services,
maintenance and other 212,507 235,729 621,225 694,958
--------- --------- --------- ---------
Total revenues 317,086 347,857 947,432 960,392
--------- --------- --------- ---------
Cost of revenues:
Software license 3,010 4,327 9,054 12,107
Professional services,
maintenance and other 109,146 118,773 325,410 352,581
--------- --------- --------- ---------
Total cost of
revenues 112,156 123,100 334,464 364,688
--------- --------- --------- ---------
Gross margin 204,930 224,757 612,968 595,704
--------- --------- --------- ---------
Operating expenses:
Product development 70,310 64,036 219,070 211,901
Sales and marketing 76,668 92,469 241,618 270,889
General and
administrative 27,243 23,607 76,587 76,033
Restructuring and other
charges 6,742 8,477 6,307 83,044
Purchased in-process
product development - - 6,000 10,890
--------- --------- --------- ---------
Total operating
expenses 180,963 188,589 549,582 652,757
--------- --------- --------- ---------
Operating income
(loss) 23,967 36,168 63,386 (57,053)
Other income, net 11,524 16,833 33,076 48,265
--------- --------- --------- ---------
Income (loss) before
income taxes 35,491 53,001 96,462 (8,788)
Income taxes 17,161 18,286 39,631 10,504
--------- --------- --------- ---------
Net income (loss) $ 18,330 $ 34,715 $ 56,831 $(19,292)
--------- --------- --------- ---------
--------- --------- --------- ---------
Diluted net income (loss)
per share $ 0.03 $ 0.06 $ 0.11 $ (0.04)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in diluted share
computation 533,303 545,213 540,416 518,833
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic net income (loss)
per share $ 0.04 $ 0.07 $ 0.11 $ (0.04)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in basic share
computation 506,706 524,856 503,983 518,833
--------- --------- --------- ---------
--------- --------- --------- ---------
SIEBEL SYSTEMS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended
September 30,
---------------------
2004 2005
---------- ----------
Cash flows from operating activities:
Net income (loss) $ 56,831 $ (19,292)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Write-off of property and equipment
abandoned in restructurings 1,908 4,376
Write-off of purchased in-process product
development 6,000 10,890
Depreciation and amortization 94,069 62,349
Tax benefit from exercise of stock options 10,400 51,379
Deferred income taxes (1,647) (871)
Recovery of doubtful accounts and sales
returns (939) -
Unrealized foreign currency gain (4,002) (32,360)
Other, net (177) (1,615)
Changes in operating assets and
liabilities:
Accounts receivable 53,857 68,833
Prepaids and other 9,279 12,279
Accounts payable and accrued expenses (2,136) (46,275)
Restructuring obligations (38,120) 38,153
Deferred revenue 5,539 (37,309)
---------- ----------
Net cash provided by operating
activities 190,862 110,537
---------- ----------
Cash flows from investing activities:
Purchases of short-term investments, net of
sales (230,126) (18,258)
Purchases of property and equipment, net (7,790) (10,038)
Purchase consideration for acquired
businesses, net of cash received (76,556) (122,510)
Other, net 505 4,998
---------- ----------
Net cash used in investing activities (313,967) (145,808)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock,
net of repurchases 57,368 62,165
Dividends paid to shareholders - (13,042)
Repayments of capital lease obligations (9,398) (5,775)
---------- ----------
Net cash provided by financing
activities 47,970 43,348
---------- ----------
Effect of exchange rate fluctuations on cash (1,823) (2,383)
---------- ----------
Change in cash and cash equivalents (76,958) 5,694
Cash and cash equivalents, beginning of period 546,542 560,377
---------- ----------
Cash and cash equivalents, end of period $ 469,584 $ 566,071
---------- ----------
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