Kenexa Announces Financial Results for First Quarter 2012…from Kenexa

 

  • Signed three new Fortune 50 customers to multi-product deals
  • 2012 revenue and non-GAAP profitability guidance increased

 

HRchitect featured Kenexa in our release of The Suite Life of Integrated Talent Management and also includes them in our list of top Talent Acquisition Systems and top Talent Management Systems vendors that businesses should consider. Derek Bluestone, VP Product Marketing appeared on the HRchitect WebMingle on June 17, 2010. HRchitect’s Matt Lafata, one of the industry’s leading talent management systems analysts, attended the Kenexa Analyst Day in 2010 & 2011 and the Kenexa World Conference from 2009-2011.

If you are looking for a new Talent Management System, or any HR system, don’t rely solely on “recommendations” or published reports. Do yourself a huge favor and talk to HRchitect first. After 15 years, HRchitect has unparalleled knowledge of the HR and Talent Management vendor community and can save you time and money in selection and implementation. Simply put, do not invest in any kind of HR technology without consulting with the experts first. HRchitect is always available to help!

 

Kenexa (NYSE: KNXA), a global provider of business solutions for human resources, today announced operating results for the first quarter, ended March 31, 2012.

For the first quarter of 2012, Kenexa reported total GAAP revenue of $77.8 million. Non-GAAP revenue, which eliminates the GAAP adjustment to deferred revenue resulting from certain acquisitions, was $80.1 million for the first quarter of 2012, an increase of 27% compared to $63.0 million for the first quarter of 2011. Within total non-GAAP revenue, subscription revenue was $57.6 million for the first quarter of 2012, an increase of 17% compared with $49.2 million in the first quarter of 2011. Professional services and other revenue was $22.5 million for the first quarter of 2012, an increase of 63% compared to$13.8 million for the first quarter of 2011.

“We started 2012 on a strong note with both revenue and non-GAAP profitability exceeding our guidance. In addition to signing a multi-million dollar agreement with the UK’s Ministry of Defense, we added three new Fortune 50 customers during the first quarter. These wins further reinforce that Kenexa has the best-in-class, SaaS recruiting platform for large, global organizations, and they follow Kenexa winning the three largest talent management deal opportunities during 2011 that we are aware of,” said Rudy Karsan, Chief Executive Officer of Kenexa.

Karsan added, “We are optimistic about our outlook for the balance of 2012 and believe that Kenexa is well positioned to realize continued market share gains. We increasingly see HR organizations seeking a holistic solution to address their challenges, and Kenexa’s highly differentiated product offerings and unparalleled content and domain expertise are resonating in the market.”

Non-GAAP income from operations, which excludes share-based compensation expense, amortization of acquired intangibles, the purchase accounting impact of deferred revenue, and acquisition related fees, was $6.8 million for the three months ended March 31, 2012. This represented an 8.5% non-GAAP operating margin and an increase of 36% compared to non-GAAP income from operations of $5.0 million for the three months ended March 31, 2011.

Non-GAAP net income available to common shareholders, which excludes the items listed above and includes a tax adjustment on the non-GAAP items, was $5.4 million for the three months ended March 31, 2012, compared to $3.7 million for the three months endedMarch 31, 2011. Non-GAAP net income available to common shareholders was $0.19 per diluted share for the first quarter of 2012, above the Company’s guidance of $0.15 to $0.17and based on 28.1 million weighted average shares outstanding. Non-GAAP net income available to common shareholders was $0.15 per diluted share for the first quarter of 2011, based on 24.1 million weighted average shares outstanding.

Kenexa’s loss from operations for the three months ended March 31, 2012, determined in accordance with GAAP, was $3.0 million, compared to a loss from operations of $2.8 million for the same period of 2011. GAAP net loss allocable to common shareholders was approximately $2.5 million, or ($0.09) per basic and diluted shares for the three months ended March 31, 2012, compared to net loss of $3.2 million, or ($0.14) per basic and diluted share, in the same period of 2011.

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Kenexa had cash, cash equivalents and investments of $83.0 million at March 31, 2012, compared to $129.0 million at the end of the prior quarter. The decrease in cash was primarily the result of the $41.1 million paid for the acquisition of OutStart. The Company generated $1.7 million in cash from operations for the first quarter and used $7.1 million associated with capital expenditures and capitalized investments. Deferred revenue was$96.6 million at March 31, 2012, an increase of 18% from March 31, 2011.

Other First Quarter and Recent Highlights

Kenexa, in collaboration with Capita plc, signed a contract to work in partnership to deliver the Recruitment Partnering Project (RPP) for the United Kingdom’s Ministry of Defense. Kenexa is providing the recruitment technology and assessment solutions to Capita in delivery of this project, which is responsible for the entire process of attracting and recruiting soldiers and officers to the Regular and Territorial British Army.

More than 70 “preferred partner” customers were added during the first quarter (defined as customers that spend more than $50,000 annually), an increase from the over 50 preferred partner customer additions in the year ago period.

The average annualized revenue from the company’s top 80 customers, or P-cubed metric, was greater than $1.8 million in the first quarter of 2012, an increase from the over $1.4 million level in the first quarter of 2011.

Kenexa announced a partnership with Daesign, a specialist provider of games-based simulated environments and Autonomous Virtual Actors to develop talent attraction, assessment, development and engagement solutions for the marketplace.

Kenexa was chosen as a Top Recruitment Technology Provider, being honored at the Pentagon by the Military Spouse Corporate Career Network (MSCCN) for its partnership to provide a recruitment technology platform that helps veterans, their spouses and family members identify and obtain new employment.

Business Outlook

Based on information as of today, May 1, 2012, the Company is issuing financial guidance as follows:

Second Quarter 2012*: The Company expects GAAP revenue to be $84 million to $86 million. Excluding the GAAP adjustment to deferred revenue resulting from certain acquisitions, the Company expects non-GAAP revenue to be $86 million to $88 million, and non-GAAP operating income to be $8.3 million to $8.7 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 28.3 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.22 to $0.23.

Full Year 2012*: The Company expects GAAP revenue to be $348 million to $358 million. Excluding the GAAP adjustment to deferred revenue, the Company expects non-GAAP revenue to be $355 million to $365 million, and non-GAAP operating income to be $37 million to $41 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 28.6 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.98 to $1.09.

The above 2012 guidance represents an increase from our prior guidance of non-GAAP revenue of $352 million to $362 million, non-GAAP operating income of $36 million to $40 million, and non-GAAP net income per diluted share of $0.95 to $1.07.

* Kenexa’s non-GAAP guidance excludes stock-based compensation expense, amortization of acquired intangibles, acquisition-related fees, the purchase accounting reduction for Salary.com’s and OutStart’s revenue, and accretion associated with a variable interest entity.

For more information on Kenexa, please visit www.kenexa.com

To learn more about HRchitect and how we can help your organization, please visit www.HRchitect.com. HRchitect is the leader in HR systems strategic consulting.  As the premier Human Capital Management (HCM) and Talent Management Systems consulting firm, we offer end-to-end HR technology consulting services focused around strategic planning, evaluation/selection, project management and implementation of HR systems, Talent Management Systems, Talent Acquisition Systems, and Workforce Management software. After more than 15 years in business working on over 1800 successful engagements for more than 800 clients across the globe, HRchitect is a name you can trust as your one-stop shop for all your HR technology consulting needs.

 

Matt Lafata, HRchitect

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