Hummingbird Ltd. (NASDAQ: HUMC, TSX: HUM), a leading global provider of integrated enterprise content management (ECM) solutions, and network connectivity solutions, today reported financial and operating results for the second quarter ended March 31, 2006. The financial figures in this release are reported in U.S. dollars in accordance with U.S. generally accepted accounting principles, except where noted.
Financial Highlights
Total sales for the quarter ended March 31, 2006 were $64.2 million, representing an increase of 18.3% from the quarter ended March 31, 2005. Enterprise Content Management revenues for the quarter were $46.7 million, a 22.3% increase from the same quarter last year. Connectivity revenues for the quarter were $17.5 million, increased from $16.1 million in the second quarter last year, and improved from the prior quarter's Connectivity revenue of $16.8 million. Total license revenues were $26.9 million, up 15.9% from the second quarter last year.
Adjusted net income(1) in the current quarter was $5.9 million, improved from $3.7 million in the same period last year. Adjusted diluted earnings per share (based on adjusted net income) for the first quarter were $0.34 up from $0.21 for the corresponding period last year.
During the quarter the company recorded restructuring and other charges totaling $0.7 million. Of this amount, $0.6 million relates primarily to severance and related costs taken after the Company reviewed its global operations to align costs with revenues, and to recognize cost efficiencies.
Operating expenses for the current quarter excluding amortization of intangibles, stock-based compensation expense, and restructuring and other charges, were $48.0 million, compared to $42.7 million in the second quarter of the previous fiscal year. For the second quarter of fiscal 2006, Hummingbird reported a net income of $4.9 million, compared to net loss of $1.2 million for the same quarter in 2005. The diluted earnings per share of $0.28 in the current quarter compares to a diluted loss per share of $0.07 for the second quarter of the prior year.
Sales for the six months ended March 31, 2006 were $126.3 million, an increase of 16.8% over the previous year. Hummingbird Enterprise revenues for the current six months were $92.0 million, up from $74.8 million or 23% from the same period last year.
Operating expenses excluding amortization of intangibles, stock-based compensation expense, and restructuring and other charges, were $94.7 million for the six months ended March 31, 2006, compared to $81.1 million in the same period last year. Net income for this period was $5.5 million resulting in diluted earnings per share of $0.32, compared to a net loss of $2.9 million and a diluted loss per share of $0.17 in the six months ended March 31, 2005
Adjusted net income for the six months ended March 31, 2006 was $11.5 million compared to $9.8 million in the same period in 2005. Adjusted diluted earnings per share, based on adjusted net income, was $0.66 compared to $0.56 for the six months ended March 31, 2005.
Total assets as at March 31, 2006 were $399.4 million, compared to $385.9 million as at December 31, 2005. The Company's cash position, including short-term investments, was $94.3 million as at March 31, 2006. Cash flow from operations generated in the current quarter was $10.6 million. Deferred revenue was $80.5 million as at March 31, 2006 compared to $75.7 million as at December 31, 2005.
(1)Adjusted net income is presented because management considers it to be a better metric to evaluate and compare the performance of the Company's core business, since it excludes certain non-cash and non-recurring expenses. In addition, it is the primary method that management uses to plan and forecast the Company's results. Adjusted net income is not a recognized profitability measure under U.S. GAAP, and the Company's method of calculating adjusted net income may differ from, and accordingly may not be comparable to, similarly titled measures used by other companies. Adjusted net income should not be considered in isolation and its presentation should not be construed an alternative to net income determined in accordance with U.S. GAAP, as an indicator of the Company's performance.
Operational Highlights
Hummingbird Expands Strategic Relationship with Microsoft
On February 7 Hummingbird announced an expanded strategic relationship with Microsoft to enhance technical integration, to provide early support for next generation Microsoft products and to provide closer field alignment in delivering high-value content lifecycle management solutions to mutual customers. Hummingbird's historic close relationship and superior integration with Microsoft benefits customers by allowing them to transform the Microsoft Windows-based desktop into a solutions enablement platform without requiring users to leave the familiar user interface. The tight integration of Hummingbird Enterprise and the Microsoft platform allows customers to preserve and maximize the value of their Microsoft IT investments, while concurrently enhancing the user acceptance of content management solutions due to ease of deployment and usability. This enables Microsoft and Hummingbird customers to accelerate solutions delivery, mitigate risk, improve efficiency and utilize business content as a powerful competitive advantage.
Hummingbird Records Management Solution Gains Certification Under VERS
On February 2 Hummingbird announced that it had achieved certification with the Victorian Electronic Records Strategy (VERS), an essential certification standard for records management software solutions utilized by Australian government agencies and businesses. Originally developed by the State of Victoria's Public Records Office Victoria (PROV) to assist government agencies in dealing with the problem of capturing, managing and preserving electronic records, VERS is now the accepted certification standard right across Australia and is quickly gaining acceptance with government entities around the world. This certification adds to Hummingbird's comprehensive list of records management software certifications which include The National Archives (TNA) specification in the UK, and the DoD 5015.2 standard, an essential qualification for records management solutions used by the U.S. Department of Defense and other U.S. federal agencies.
Recognized Market Leader in Serving the Legal Marketplace
During the quarter the Company celebrated the 12th anniversary of Hummingbird's LegalKEY® Practice Support system, the market leading proactive compliance solution for the world's foremost legal firms. LegalKEY solutions are widely recognized as the industry standard and Hummingbird continues to maintain its significant lead in the legal marketplace. Hummingbird's LegalKEY Practice Support solutions were awarded "Best of Breed System of the Year" at the 2006 Legal Technology Awards hosted by Legal Business Magazine publisher Legalease. The world's largest law firm, nine of the top ten legal firms globally, over 60% of the AmLaw 100 and over 70% of the AmLaw 50 have invested in Hummingbird LegalKEY solutions to deliver unrivalled service to their clients, while ensuring the very highest standards of compliance.
Hummingbird Forms Customer Advisory Board
On February 6 Hummingbird announced the formation of a Customer Advisory Board to enhance the way in which the Company serves and supports the user community across all its markets. This Advisory Board is modeled after the Company's highly successful Legal CIO Advisory Board initiative which has steered the direction of the industry leading Hummingbird Enterprise for Legal solution set. The Board's broad reaching industry expertise will help Hummingbird prioritize user requirements, serve as a valuable resource in the development of innovative business solutions, and expand the Company's capabilities and growth opportunities across multiple markets.
Awards and Recognition
Hummingbird is proud of the significant industry recognition it received during the quarter confirming the strength of Hummingbird Enterprise™ as an industry leading Enterprise Content Management platform. Hummingbird was first to recognize the value proposition of interoperable ECM capabilities and today boasts a fully integrated ECM suite. This market acknowledgement of Hummingbird's thought leadership and domain expertise reinforces the Company's current first mover advantage in establishing a highly differentiated strategy around a flexible business solution framework.
- Forrester Wave™ report names Hummingbird as a 'Strong Performer' in Contract
Life-Cycle Management
- Forrester Wave™ report names Hummingbird as a 'Strong Performer' in Enterprise
Content Management Suites
- Forrester Wave™ report names Hummingbird as a 'Strong Performer' in
Transactional-Content-Centric Applications
- Forrester Wave™ report names Hummingbird as a 'Leader' in Business-Content-
Centric Applications
- KMWorld recognized Hummingbird as one of the '100 Companies that Matter in
Knowledge Management' for the sixth consecutive year
Financial Highlights
Total sales for the quarter ended March 31, 2006 were $64.2 million, representing an increase of 18.3% from the quarter ended March 31, 2005. Enterprise Content Management revenues for the quarter were $46.7 million, a 22.3% increase from the same quarter last year. Connectivity revenues for the quarter were $17.5 million, increased from $16.1 million in the second quarter last year, and improved from the prior quarter's Connectivity revenue of $16.8 million. Total license revenues were $26.9 million, up 15.9% from the second quarter last year.
Adjusted net income(1) in the current quarter was $5.9 million, improved from $3.7 million in the same period last year. Adjusted diluted earnings per share (based on adjusted net income) for the first quarter were $0.34 up from $0.21 for the corresponding period last year.
During the quarter the company recorded restructuring and other charges totaling $0.7 million. Of this amount, $0.6 million relates primarily to severance and related costs taken after the Company reviewed its global operations to align costs with revenues, and to recognize cost efficiencies.
Operating expenses for the current quarter excluding amortization of intangibles, stock-based compensation expense, and restructuring and other charges, were $48.0 million, compared to $42.7 million in the second quarter of the previous fiscal year. For the second quarter of fiscal 2006, Hummingbird reported a net income of $4.9 million, compared to net loss of $1.2 million for the same quarter in 2005. The diluted earnings per share of $0.28 in the current quarter compares to a diluted loss per share of $0.07 for the second quarter of the prior year.
Sales for the six months ended March 31, 2006 were $126.3 million, an increase of 16.8% over the previous year. Hummingbird Enterprise revenues for the current six months were $92.0 million, up from $74.8 million or 23% from the same period last year.
Operating expenses excluding amortization of intangibles, stock-based compensation expense, and restructuring and other charges, were $94.7 million for the six months ended March 31, 2006, compared to $81.1 million in the same period last year. Net income for this period was $5.5 million resulting in diluted earnings per share of $0.32, compared to a net loss of $2.9 million and a diluted loss per share of $0.17 in the six months ended March 31, 2005
Adjusted net income for the six months ended March 31, 2006 was $11.5 million compared to $9.8 million in the same period in 2005. Adjusted diluted earnings per share, based on adjusted net income, was $0.66 compared to $0.56 for the six months ended March 31, 2005.
Total assets as at March 31, 2006 were $399.4 million, compared to $385.9 million as at December 31, 2005. The Company's cash position, including short-term investments, was $94.3 million as at March 31, 2006. Cash flow from operations generated in the current quarter was $10.6 million. Deferred revenue was $80.5 million as at March 31, 2006 compared to $75.7 million as at December 31, 2005.
(1)Adjusted net income is presented because management considers it to be a better metric to evaluate and compare the performance of the Company's core business, since it excludes certain non-cash and non-recurring expenses. In addition, it is the primary method that management uses to plan and forecast the Company's results. Adjusted net income is not a recognized profitability measure under U.S. GAAP, and the Company's method of calculating adjusted net income may differ from, and accordingly may not be comparable to, similarly titled measures used by other companies. Adjusted net income should not be considered in isolation and its presentation should not be construed an alternative to net income determined in accordance with U.S. GAAP, as an indicator of the Company's performance.
Operational Highlights
Hummingbird Expands Strategic Relationship with Microsoft
On February 7 Hummingbird announced an expanded strategic relationship with Microsoft to enhance technical integration, to provide early support for next generation Microsoft products and to provide closer field alignment in delivering high-value content lifecycle management solutions to mutual customers. Hummingbird's historic close relationship and superior integration with Microsoft benefits customers by allowing them to transform the Microsoft Windows-based desktop into a solutions enablement platform without requiring users to leave the familiar user interface. The tight integration of Hummingbird Enterprise and the Microsoft platform allows customers to preserve and maximize the value of their Microsoft IT investments, while concurrently enhancing the user acceptance of content management solutions due to ease of deployment and usability. This enables Microsoft and Hummingbird customers to accelerate solutions delivery, mitigate risk, improve efficiency and utilize business content as a powerful competitive advantage.
Hummingbird Records Management Solution Gains Certification Under VERS
On February 2 Hummingbird announced that it had achieved certification with the Victorian Electronic Records Strategy (VERS), an essential certification standard for records management software solutions utilized by Australian government agencies and businesses. Originally developed by the State of Victoria's Public Records Office Victoria (PROV) to assist government agencies in dealing with the problem of capturing, managing and preserving electronic records, VERS is now the accepted certification standard right across Australia and is quickly gaining acceptance with government entities around the world. This certification adds to Hummingbird's comprehensive list of records management software certifications which include The National Archives (TNA) specification in the UK, and the DoD 5015.2 standard, an essential qualification for records management solutions used by the U.S. Department of Defense and other U.S. federal agencies.
Recognized Market Leader in Serving the Legal Marketplace
During the quarter the Company celebrated the 12th anniversary of Hummingbird's LegalKEY® Practice Support system, the market leading proactive compliance solution for the world's foremost legal firms. LegalKEY solutions are widely recognized as the industry standard and Hummingbird continues to maintain its significant lead in the legal marketplace. Hummingbird's LegalKEY Practice Support solutions were awarded "Best of Breed System of the Year" at the 2006 Legal Technology Awards hosted by Legal Business Magazine publisher Legalease. The world's largest law firm, nine of the top ten legal firms globally, over 60% of the AmLaw 100 and over 70% of the AmLaw 50 have invested in Hummingbird LegalKEY solutions to deliver unrivalled service to their clients, while ensuring the very highest standards of compliance.
Hummingbird Forms Customer Advisory Board
On February 6 Hummingbird announced the formation of a Customer Advisory Board to enhance the way in which the Company serves and supports the user community across all its markets. This Advisory Board is modeled after the Company's highly successful Legal CIO Advisory Board initiative which has steered the direction of the industry leading Hummingbird Enterprise for Legal solution set. The Board's broad reaching industry expertise will help Hummingbird prioritize user requirements, serve as a valuable resource in the development of innovative business solutions, and expand the Company's capabilities and growth opportunities across multiple markets.
Awards and Recognition
Hummingbird is proud of the significant industry recognition it received during the quarter confirming the strength of Hummingbird Enterprise™ as an industry leading Enterprise Content Management platform. Hummingbird was first to recognize the value proposition of interoperable ECM capabilities and today boasts a fully integrated ECM suite. This market acknowledgement of Hummingbird's thought leadership and domain expertise reinforces the Company's current first mover advantage in establishing a highly differentiated strategy around a flexible business solution framework.
- Forrester Wave™ report names Hummingbird as a 'Strong Performer' in Contract
Life-Cycle Management
- Forrester Wave™ report names Hummingbird as a 'Strong Performer' in Enterprise
Content Management Suites
- Forrester Wave™ report names Hummingbird as a 'Strong Performer' in
Transactional-Content-Centric Applications
- Forrester Wave™ report names Hummingbird as a 'Leader' in Business-Content-
Centric Applications
- KMWorld recognized Hummingbird as one of the '100 Companies that Matter in
Knowledge Management' for the sixth consecutive year
