Ariba Reports Results for Third Quarter of Fiscal Year 2012

Subscription revenue grows 25% year-over-year or 28% in constant currency
Network revenue up 27% year-over-year or 34% in constant currency

SUNNYVALE, Calif., July 26, 2012 – Ariba, Inc. (Nasdaq: ARBA), the world’s business commerce network, today announced results for the third quarter of fiscal year 2012 ended June 30, 2012.

Quarterly Financial and Operational Highlights from Continuing Operations:

  • Subscription revenue of $95.3 million, up 25% year-over-year or 28% in constant currency.
  • Network revenue of $47.3 million, up 27% year-over-year or 34% in constant currency.
  • Total revenue of $137.0 million, up 12% year-over-year or 15% in constant currency.
  • Loss of $0.01 per share from continuing operations; non-GAAP EPS of $0.25 from continuing operations, up 25% year-over-year.

Since providing third quarter guidance on April 26, 2012, currency rate fluctuations negatively impacted third quarter total revenue by approximately $1 million, primarily in Network revenue.

Results for the Third Quarter of Fiscal Year 2012

Revenue from Continuing Operations:

Total revenues from continuing operations were $137.0 million for the third quarter of fiscal year 2012, an increase of 12% or 15% in constant currency compared to $121.9 million for the third quarter of fiscal year 2011. Subscription and maintenance revenues for the third quarter of fiscal year 2012 were $108.0 million, an increase of 19% or 22% in constant currency compared to $91.0 million for the third quarter of fiscal year 2011. Within subscription and maintenance revenues, subscription software revenue was $95.3 million for the third quarter of fiscal year 2012, an increase of 25% or 28% in constant currency compared to $76.4 million for the third quarter of fiscal year 2011. Services and other revenues for the third quarter of fiscal year 2012 were $29.0 million compared to $30.9 million for the third quarter of fiscal year 2011.

Operating Income from Continuing Operations:

Operating income from continuing operations for the third quarter of fiscal year 2012 was $2.7 million, an increase of $13.6 million compared to an operating loss from continuing operations of $10.9 million for the third quarter of fiscal year 2011. Operating income from continuing operations for the third quarter of fiscal year 2012 included expenses of $4.7 million for amortization of intangible assets, $18.8 million for stock-based compensation, and M&A transaction expenses of $2.7 million.  Excluding these items, non-GAAP operating income for the third quarter of fiscal year 2012 was $28.8 million, representing a 21% non-GAAP operating margin and an increase of 39% compared to $20.7 million of non-GAAP operating income for the third quarter of fiscal year 2011. Non-GAAP operating income for the third quarter of fiscal year 2011 excluded expenses of $4.3 million for amortization of intangible assets, $14.0 million for stock-based compensation, and restructuring costs of $13.4 million.

Earnings Per Share from Continuing Operations:

The loss from continuing operations for the third quarter of fiscal year 2012 was $1.1 million, or $0.01 per share, compared to a loss from continuing operations of $12.3 million, or $0.13 per share, for the third quarter of fiscal year 2011. Non-GAAP net income from continuing operations was $25.1 million, or $0.25 per diluted share, an increase of 25% compared to $0.20 per diluted share for the third quarter of fiscal year 2011.

Balance Sheet and Cash Flow

Total cash, cash equivalents, investments and restricted cash were $286.6 million at June 30, 2012 up $24.5 million from March 31, 2012.  The company generated net cash flow from continuing operations of $26.6 million for the three months ended June 30, 2012.  Total deferred revenue was $138.6 million at June 30, 2012, compared to $134.5 million at June 30, 2011 and $142.6 million at March 31, 2012.

Constant Currency Information

We calculate constant currency revenue measures by translating foreign currencies using the average exchange rates from the previous year instead of the current year. We believe presenting revenue growth with constant currency revenue measures helps investors understand how currency exchange rate fluctuations have affected our revenue growth.  We recognize, however, that constant currency measures have limitations, particularly as the currency effects that are eliminated constitute a significant element of our revenue and could materially impact our performance. We caution the readers of our financial reports to consider constant currency measures only in addition to, and not as a substitute for or superior to, changes in revenue, operating expenses, operating profit, or other measures of financial performance prepared in accordance with GAAP.

About Ariba, Inc
Ariba, Inc. is the world’s business commerce network. Ariba combines industry-leading cloud-based applications with the world's largest web-based trading community to help companies discover and collaborate with a global network of partners. Using the Ariba® Network, businesses of all sizes can connect to their trading partners anywhere, at any time from any application or device to buy, sell and manage their cash more efficiently and effectively than ever before. Companies around the world use the Ariba Network to simplify inter-enterprise commerce and enhance the results that they deliver. Join them at: www.ariba.com
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Safe Harbor Statement under the Private Securities Litigation Reform Act 1995: Information and announcements in this release involve Ariba's expectations, beliefs, hopes, plans, intentions or strategies regarding the future and are forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to Ariba as of the date of the release, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to Ariba's operating and financial results to differ materially from current expectations include, but are not limited to: the impact of the credit crises on Ariba's results of operations and financial condition; delays in development or shipment of new versions of Ariba's products and services; lack of market acceptance of Ariba's existing or future products or services; inability to continue to develop competitive new products and services on a timely basis; introduction of new products or services by major competitors; the impact of any acquisitions, including difficulties with the integration process or the realization of benefits of a transaction; the impact of our disposition, including the potential disruption of our ongoing business; the ability to attract and retain qualified employees; long and unpredictable sales cycles and the deferrals of anticipated orders; declining economic conditions, including the impact of a recession; inability to control costs; changes in the company's pricing or compensation policies; significant fluctuations in our stock price; the outcome of and costs associated with pending or potential future regulatory or legal proceedings; the impact of our acquisitions and dispositions, including the disruption or loss of customer, business partner, supplier or employee relationships; and the level of costs and expenses incurred by Ariba as a result of such transactions. Factors and risks associated with its business, including a number of the factors and risks described above, are discussed in Ariba's Form 10-Q filed with the SEC on May 04, 2012.

For More Information

John Duncan
Ariba, Inc.
(678) 336-2980
Karen Master
Ariba, Inc.
412-297-8177