Datawatch Announces Preliminary First Quarter 2015 Financial Results

CHELMSFORD, Mass., Jan. 14 — Datawatch Corporation, a leading global provider of visual data discovery solutions, today announced preliminary results for its first fiscal quarter ended December 31, 2014.  The Company anticipates total revenue for the first quarter to be between $6.9 and $7.0 million, and non-GAAP net loss between $4.5 million and $4.6 million.  This compares to total revenue of $8.81 million and non–GAAP net loss of $1.98 million for the first fiscal quarter of 2014.  Non-GAAP net loss excludes the effects of the non-cash amortization associated with the purchase of certain intellectual property and other intangible assets and non-cash stock compensation costs.

The foregoing information is preliminary and subject to the Company’s normal quarter-end accounting process and external review by the Company’s independent accounting firm.

“Our performance in the first fiscal quarter of 2015 fell short of our expectations amid a period during which we transitioned our business to a new global sales leader, shifted the sales approach we take in dealing with our extensive customer base and implemented many operational changes,” said Michael A. Morrison, president and chief executive officer of Datawatch.  “In our November 2014 earnings call, we discussed aspects of the business where we needed to improve execution.  A subsequent full business review led us to implement strategic operational initiatives to improve sales execution, including the re-assessment and realignment of sales resources, which resulted in a 20% reduction in sales reps; the transition from a two-tier partner model to a direct model for our traditional Monarch customer base; changes in our forecasting and selling methodologies; new pipeline-building activities and more targeted lead generation programs.  Competitive and macro issues did not affect the quarter’s results, but the level of disruption from the operational changes was much greater than anticipated, resulting in the quarter’s shortfall.  We plan to discuss these operational changes in greater detail during our quarterly earnings call later this month.”

Morrison continued, “We have also taken steps to lower our expense structure by reducing our investment in legacy solutions and restructuring our international operations to align with local selling norms.  These moves are expected to produce approximately $3 million in annual cost savings, and will result in a one-time charge of approximately $300,000 in the fiscal first quarter and an additional charge of approximately $500,000 in the fiscal second quarter of this year.  We do not expect any revenue loss from these cost control changes, and we will continue to closely monitor and exercise discretion on investment decisions to ensure an appropriate return on the dollars we spend.”

Morrison concluded, “With these necessary operational improvements in place and the transition behind us, we have a heightened focus on re-accelerating our revenue growth.  We believe that our technology is highly differentiated, with our most recent product release providing additional features specifically targeted at the growing market for visual data discovery solutions against any data set at real-time speed.  We recognize we need to earn back our investors’ confidence by demonstrating an ability to execute consistently and we, as fellow shareholders, intend to work diligently to do so.”