Deltek Reports Q2 License Revenue of $22 Million, A 17% Increase
Record Total Revenues of $77 Million Increase 13% Year-Over-Year
HERNDON, Va. – August 7, 2008 – Deltek, Inc. (Nasdaq: PROJ), the leading provider of enterprise applications software for project-focused businesses, today announced financial results for its second quarter ended June 30, 2008.
License revenue for the second quarter of 2008 was $22.1 million, an increase of 17% from the second quarter of 2007. Q2 consulting services revenue increased 13% to $22.3 million, and maintenance and support revenue increased 11% to $28.3 million from the prior year period. Other revenue, which primarily consisted of revenue from Deltek Insight, our annual customer conference, increased 7% to $4.6 million. Total revenue for Q2 2008 increased 13% from Q2 2007 to $77.4 million, a new Company record.
GAAP net income for the second quarter of 2008 increased 21% to $5.4 million, or $0.12 per diluted share, compared to $4.5 million, or $0.11 per diluted share, in the second quarter of 2007.
Non-GAAP net income for the second quarter of 2008 increased 20% to $7.5 million, or $0.17 per diluted share, compared to $6.2 million, or $0.15 per diluted share, in the second quarter of 2007. Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. A reconciliation of GAAP to non-GAAP financial measures is provided in the tables at the end of this press release.
“Our strong Q2 license revenue, total revenue and profitability were driven by double digit license revenue growth in both the government contracting and A&E markets combined with increased operational focus across the Company,” said Kevin Parker, president and CEO of Deltek. “Our continued strength in the government contracting business is a direct result of our industry-leading position and a strong government spending environment, benefiting our customers. Our license revenue in the A&E market also grew significantly as a result of improved execution and focused sales and marketing initiatives, driving new sales to our installed base. Demand for our products remains strong due to the diverse nature of the companies we serve.”
During the quarter, Deltek made several important product announcements, including:
• The release of Deltek Performance Management Suite – This new project-focused business intelligence offering provides Deltek customers increased visibility into their businesses and projects. Its intuitive user interface enables people across the organization - from the CFO to individual project and sales managers - to create their own customized reports without the help of their IT departments. With minimal implementation effort and significantly reduced IT resource requirements, the Deltek Performance Management Suite provides world-class project and business management capabilities with a very low total cost of ownership.
• The release of wInsight 6.4, the newest addition to Deltek’s best-in-class Enterprise Project Management suite. wInsight 6.4 includes faster, streamlined reporting capabilities and unique DCMA “trip-wire” technology, which enables organizations to identify and quickly resolve potential project problems before they occur. These brand new early warning indicators provide real-time visibility into every project a company is managing, helping companies avoid audit surprises and better meet their earned value reporting requirements.
• The launch of GCS Premier 5.0, the market-leading project-focused accounting solution for small and medium-sized government contractors. This version introduces a new user interface that makes navigation faster and easier, improving user efficiency and assuring compliance. In addition, the new Premier Billing feature embeds functionality within Microsoft Excel 2007 to streamline billing processes. With GCS Premier 5.0, customers will benefit from greatly reduced billing times and improved cash flow due to increased billing accuracy.
• The release of Earned Value Essentials, a unique combination of technology and services that enable rapid deployment of sophisticated EVM capabilities to program management teams. By leveraging an organization's existing investment in project scheduling and cost accounting, the EV Essentials solution offers everything needed – from technology to training and processes - to enable an organization’s adoption and implementation of earned value management capabilities. Earned Value Essentials helps new adopters of EVM to get up and running quickly, increasing their return on investment and accelerating deployment and compliance.
In May, Deltek held its annual Insight customer conference, which attracted a record number of attendees, including nearly 3,500 business leaders and partner participants, who are involved in winning, planning, executing and managing projects of all sizes and types. The event showcased several major product announcements, the addition of new channel and technology partners, and the debut of the Deltek Project Excellence Awards, which recognize customers that achieve superior business performance through their use of Deltek products.
Conference Call Information
Deltek will host a conference call at 5:00 p.m. Eastern Time today to discuss the Company’s second quarter results. To access this call, dial 1-877-381-6419 in North America and 1-706-643-9496 outside North America. The conference call also will be available via webcast at http://investor.deltek.com. Those unable to participate in the live call may hear a rebroadcast by dialing 1-800-642-1687 in North America and 1-706-645-9291 outside North America. The confirmation number is 55235400. The rebroadcast and the webcast will be available for replay through August 14, 2008.
Deltek (NASDAQ: PROJ) is the leading provider of enterprise applications software designed specifically for project-focused businesses. For more than two decades, our software applications have enabled organizations to automate mission-critical business processes around the engagement, execution and delivery of projects. More than 12,000 customers worldwide rely on Deltek to measure business results, optimize performance, streamline operations and win new business. For more information, visit www.deltek.com.
Use of Non-GAAP Financial Measures
This press release and the related conference call described above contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income and adjusted EBITDA. The Company defines non-GAAP net income as GAAP net income before the net-of-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Non-GAAP operating income is defined as GAAP operating income before the pre-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Adjusted EBITDA is defined as GAAP net income before interest expenses (net of interest income), provision for income taxes, depreciation, amortization, stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, New Mountain Capital fees and restructuring charges.
The Company believes that the presentation of these non-GAAP financial measures provides useful information to its investors and lenders because these measures enhance their overall understanding of the Company’s financial performance and the prospects for the future of the Company’s ongoing business operations. The Company believes that by reporting these measures, it provides insight and consistency in its financial reporting and presents a basis for comparison of its business operations between current, past and future periods. In addition, the measures provide a basis for the Company to compare its financial results to those of other comparable publicly traded companies and are used by its management team to plan and forecast its business.
Adjusted EBITDA is also used as the basis for the Company’s calculations to determine compliance with its debt covenants and to assess its ability to borrow additional funds to finance or expand its operations.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP net income and adjusted EBITDA, which are set forth below.
This press release and related conference call contain forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “will,” “would” or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. Our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors or events that could cause our actual results to materially differ may emerge from time to time, and it is not possible for us to accurately predict all of them. Before you invest in our common stock, you should be aware that the occurrence of any such event or of any of the additional events described as risk factors in the Company’s filings with the Securities and Exchange Commission could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this press release or related conference call speaks only as of the date on which we make it. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.