Datawatch Announces Second Quarter 2015 Financial Results

CHELMSFORD, Mass., April 22 — Datawatch Corporation, a leading global provider of self-service data preparation and visual data discovery solutions, today announced that total revenue for its second fiscal quarter of 2015 ended March 31, 2015 was $7.46 million, a decrease of 7% from revenue of $8.00 million in the second quarter a year ago and an increase of 7% from revenue of $6.96 million in the first fiscal quarter. License revenue for the second quarter of fiscal 2015 was $3.91 million, a decrease of 11% from the $4.38 million recorded in the comparable quarter a year ago and an increase of 23% from the $3.18 million recorded in the first fiscal quarter. Net loss for the second quarter of fiscal 2015 was ($5.81) million, or ($0.50) per diluted share, compared to a net loss of ($6.74) million, or ($0.70) 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, non-cash stock compensation costs, and severance costs, the Company’s non–GAAP net loss for its second fiscal quarter of 2015 was ($3.25) million, or ($0.28) per diluted share, compared to net loss of ($2.78) million, or ($0.29) per diluted share in the second fiscal quarter of 2014.

“As we detailed last quarter, we remain laser focused on improving our sales execution, creating broader market awareness for our highly differentiated platform offering and delivering continuous product innovation,” said Michael A. Morrison, president and chief executive officer of Datawatch. “With regard to market awareness, Datawatch’s inclusion in Gartner’s 2015 Magic Quadrant for Business Intelligence and Analytics Platforms, which was released by Gartner in late February, was a milestone for Datawatch and has already generated growing inbound interest.”

Mr. Morrison added, “Equally important, at the end of the quarter, Datawatch announced the highly-anticipated latest release of our Managed Analytics Platform, the only solution in the market that provides data preparation capabilities tightly integrated with real-time visual data discovery, as well as data preparation as a stand-alone offering. With this latest release, Datawatch is now the only vendor that can scale from individual analysts using self-service data preparation and visualizations on their desktops all the way up to the enterprise – not just with structured data but with multi-structured data as well, where the growth in data volumes is ‘unprecedented’ according to Gartner.”

“Our work to realign the go-to-market organization to focus the direct selling force on vertical industries, create a more robust inside selling machine and target the partner program to highly qualified managed analytics opportunities began to gain traction last quarter. The response from the publication of the Gartner Magic Quadrant and to our new Managed Analytics Platform release has brought positive attention to what we believe is our compelling product differentiation and we intend to capitalize on this rising market interest.”

James L. Eliason, chief financial officer, commented, “Continuing the efforts we began in Q1 to rebalance investments to match the go-to-market model, we reduced the workforce at the end of the second quarter by nearly 15%. This action resulted in a severance charge in the second fiscal quarter of $1.2 million and will lower our operating expenses by approximately $4 million on an annualized basis.”

Second Quarter 2015 Business Highlights

• Datawatch was positioned for the first time in Gartner’s 2015 Magic Quadrant for Business Intelligence and Analytic Platforms, the only new vendor in 2015 to debut in this prestigious research.
• Datawatch launched the Managed Analytics Platform for self-service data preparation and visual data discovery, extending its technology leadership in delivering self-service data preparation and visualization for individual analysts through to the enterprise, while embracing the most challenging multi-structured data sets.
• Datawatch added new customers and expanded a number of customer engagements globally through its focused self-service data preparation and visualization sales approach, including Nomura, HSBC, PricewaterhouseCoopers, State of Wisconsin, Thomas Cook and Partners Healthcare.
• Datawatch was named to KMWorld Magazine’s “100 Companies that Matter in Knowledge Management” for the fourth year running.

Second Quarter 2015 Financial Highlights

• Cash and short-term investments were $38.49 million at March 31, 2015, down 11% from $43.19 million at December 31, 2014 and down 28% from $53.92 million at March 31, 2014.
• Gross margin (excluding IP amortization expense) for the second fiscal quarter of 2015 was 83%, compared to 85% for the first fiscal quarter of 2015 and 88% for the second fiscal quarter of 2014.
• Days sales outstanding were 69 days at March 31, 2015, compared to 81 days at December 31, 2014 and 57 days at March 31, 2014.
• There were 5 six-figure deals in the second fiscal quarter compared to 9 six-figure deals in the second fiscal quarter of 2014 and 4 six-figure deals in the first fiscal quarter.
• The average deal size in the second fiscal quarter was $31,000 as compared to $44,000 in the second fiscal quarter of 2014.