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November 20, 2014

Datawatch Reveals Fourth Quarter 2014 Financial Results

CHELMSFORD, Mass.Nov. 20 — Datawatch Corporation, a leading global provider of visual data discovery solutions, today announced that total revenue for its fourth quarter ended September 30, 2014 was $9.05 million, an increase of 3% from revenue of $8.82 million in the fourth quarter a year ago.  License revenue for the fourth quarter of fiscal 2014 was $5.24 million, a decrease of 10% from the $5.80 million recorded in the comparable quarter a year ago.

Net loss for the fourth quarter of fiscal 2014 was ($4.87) million, or ($0.44) per diluted share, compared to a net loss of ($2.68), or($0.37) per diluted share, for the year ago period.  Excluding the effects of the non-cash amortization associated with the purchase of certain intellectual property and other intangible assets, as well as non-cash stock compensation costs and restructuring charges, the Company’s non–GAAP net loss for its fourth fiscal quarter of 2014 was ($1.93) million, or ($0.18) per diluted share, compared to a net loss of ($572,000), or ($0.08) per diluted share in the fourth fiscal quarter of 2013.

Total revenue for fiscal year 2014 was $35.08 million, a 16% increase from revenue of $30.30 million in fiscal year 2013.  License revenue for 2014 was $20.63 million, a 6% increase compared to $19.43 million in 2013.  Net loss for 2014 was ($22.38) million, or($2.24) per diluted share, as compared to a net loss of ($4.20) million or ($0.63) per diluted share, for 2013.  The Company’s non-GAAP net loss for fiscal year 2014 was ($10.06) million, or ($1.01) per diluted share, as compared to non-GAAP net income of $1.39 million, or$0.19 per diluted share, for fiscal year 2013.

“While our expense trend in Q4 remained in line with our plan, as it has throughout fiscal year 2014, our revenue performance in Q4 fell short of our goals and expectations,” said Michael A. Morrison, president and chief executive officer of Datawatch.  “As we have engaged in more streaming data in motion use cases, including many in the capital markets vertical and the Internet of Things arena, the relative complexity of these sales opportunities has led to some increases in the length of sales cycles, which provided a headwind to revenue performance.  We continued to improve sales execution, which led to the largest number of discrete license transactions in the history of the company during our fiscal fourth quarter.  These entry points establish a solid foundation for Datawatch to expand and grow our footprint in these accounts in fiscal year 2015.”

Mr. Morrison added, “During fiscal year 2014, our first full year as a visual data discovery vendor, we made meaningful progress with the integration of, and innovative enhancements to, our technology stack, the refinement of our marketing message to a visualization-led agenda and the leadership addition to our worldwide sales organization.  Key trends in market dynamics play to Datawatch’s strengths and differentiation – namely the rapid rise of Internet of Things applications, which require real-time visualization of streaming data in motion, and the growing need for self-service data preparation capabilities as a prerequisite for visual data discovery – something Datawatch has been doing for nearly 20 years.  Our progress in fiscal 2014, our differentiated technology and these market trends give us confidence in our strategy and plan as we enter fiscal year 2015.”

Fourth Quarter Business Highlights

  • Datawatch appointed John Judge as Chief Revenue Officer on August 28, 2014 to lead the worldwide sales and field operations for Datawatch.
  • Datawatch executed a record number of transactions in Q4, including agreements with organizations globally of every size such as KPMG, Citigroup and Pharma Tech.   Included in these transactions were two key wins in the Internet of Things arena, one with Worldsensing, a market leader in machine-to-machine technologies, to manage and visualize traffic and parking management operations, and the other with Avanti Gas Limited to manage and visualize fleet logistics.
  • Datawatch and Omnesys Technologies, a Thomson Reuters company and leading provider of multi-venue trading systems, entered into an OEM agreement to integrate Datawatch’s visual data discovery software into Omnesys’ real-time trading solution to provide brokers with a consolidated real-time order book and associated risk information.
  • Datawatch entered into partnerships with 10 new partners during Q4FY14, including Hortonworks, QuickPivot, and Paladyne – a subsidiary of Broadridge – and also Internet of Things integration partners Eccella, an Informatica Vibe reseller, and Casne, a system integrator focused on OSIsoft.

Fourth Quarter Financial Highlights

  • Cash and short-term investments were $47.67 million at September 30, 2014, down 5% from $50.17 million at June 30, 2014 and up 362% from $10.31 million at September 30, 2013.
  • Gross margin for the fourth fiscal quarter of 2014 was 79.1%, compared to 78.6% for the third fiscal quarter of 2014 and 81.3% for the fourth fiscal quarter of 2013.
  • Days sales outstanding were 72 days at September 30, 2014, compared to 61 days at June 30, 2014 and 60 days at September 30, 2013.
  • There were 10 six-figure deals in the fourth fiscal quarter consistent with the fourth fiscal quarter of 2013.
  • The average deal size in the fourth fiscal quarter was $41,000, as compared to $63,000 in the fourth fiscal quarter of 2013.
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