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Demandware Announces Fourth Quarter And Year End 2015 Financial Results

Subscription revenue for the full year was $201.0 million, a 38% year over year increase from $145.9 million in 2014 and a 43% year over year increase on a constant currency basis

Live customers reached 331 at December 31, 2015, an increase of 24% from 267 last year

Live sites reached 1,506 at December 31, 2015, an increase of 32% from 1,143 last year

30 customers generated more than $100 million in gross merchandise value on the Demandware digital solution in 2015, up from 22 customers in 2014

Subscription dollar retention rate exceeded 120% in 2015 and customer churn was less than 5%

Contract backlog (consisting of unbilled committed minimum subscription fees plus deferred revenue) reached $594.6 million as of December 31, 2015, an increase of 29% over $461.7 million as of December 31, 2014 and up 30% on a constant currency basis

“We made clear progress on our 2015 objectives,” stated Tom Ebling, Chief Executive Officer, Demandware. “We have proven our model works for large enterprise retailers with 30 customers each transacting more than $100 million of gross merchandise value (GMV) on our platform, up from 22 last year. Our customers continue to take market share. Our 2015 comparable customer GMV growth of 25% on a constant currency basis was nearly double the market rate. We have expanded into Italy and Japan and have customers operating sites in approximately 50 countries. We are making excellent progress with Demandware Store, the first-of-its-kind cloud-based point of sale solution for the retail store, with several charter customers and over 40 demos with store-based retailers at NRF.

The planned rollouts of predictive merchandising and Demandware Store this year will further enhance our value proposition and position us to deliver on the promise of omnichannel.

We are uniquely positioned to lead the market for enterprise class retail commerce.”

Demandware signed significant new customers during the quarter, including Birkenstock, Boggi, Brown Thomas, Charlotte Russe, Destination Maternity, Graham & Brown, IKKS, Keen, Melissa & Doug, and Ubisoft.

Leading retailers such as Acumen Brands, Cortefiel, Dickies, The Jewellery Channel, Kendo, KUIU Ultralight Hunting, Nixon, Traeger Pellet Grills, and TSI Holdings launched initial sites on the Demandware Commerce Cloud during the quarter.

Existing customers like Clarins, Harman Industries, Hugo Boss, Jarden, L’Oreal, Movado, Pandora, Samsonite, and Wolverine Worldwide expanded their operations on the platform launching additional commerce sites during the quarter.

“We achieved strong results for the fourth quarter with subscription revenue at the high end of guidance and non-GAAP net income that exceeded expectations,” said Tim Adams, Chief Financial Officer, Demandware. “Year-end backlog was also solid. Two transactions pushed into 2016, which resulted in bookings growth of 22% on a constant currency basis. Even with these delays, we more than doubled our number of $2 million new deals year over year.”

Total revenue for the fourth quarter was $

. Total revenue for the full year was $

million in 2014.

Our GAAP net income for the fourth quarter of 2015 was $0.5 million, or $0.01 per basic and diluted share, as compared to GAAP net loss of $3.8 million, or $(0.11) per basic and diluted share, for the fourth quarter of 2014. Non-GAAP net income for the fourth quarter of 2015 was $14.5 million, or $0.40 per basic share and $0.38 per diluted share, as compared to non-GAAP net income of $1.9 million, or $0.06 per basic share and $0.05 per diluted share, for the fourth quarter of 2014.

Our GAAP net loss for the full year 2015 was $36.6 million, or $(1.02) per basic and diluted share, as compared to GAAP net loss of $27.1 million, or $(0.78) per basic and diluted share, in year 2014. Non-GAAP net income for the full year 2015 was $10.8 million, or $0.30 per basic share and $0.29 per diluted share, as compared to non-GAAP net income of $1.2 million, or $0.03 per basic and diluted share, in year 2014.

At December 31, 2015, we had $197.0 million in cash, cash equivalents and short term investments on the balance sheet, as compared to $243.7 million at December 31, 2014.

Refer to “Non-GAAP Financial Measures” below and the accompanying reconciliations for more detailed information about the non-GAAP measures used in this release.

Outlook

“We are pleased to provide guidance for 2016 that is consistent with both the top and bottom line growth targets we outlined at our recent investor day,” said Tom Ebling. “We have a strong pipeline heading into 2016, up nearly 40% on a constant currency basis, and our large deal activity has never been greater. In order to factor in the potential for longer closing timelines with large enterprise accounts and some softness in Europe, we believe it is prudent to widen our 2016 bookings growth target to 25% to 35% year over year. We expect GMV growth to remain strong, and with investments planned in both growth and innovation, we are confident that Demandware is well positioned to drive continued value creation for both our customers and our shareholders in 2016.”

For the 2016 year, the company expects:

$ and shares in millions

Comparable Customer GMV Growth

Bookings Growth

Churn Rate

Subscription Revenue

$260.0

$270.0

Total Revenue

$295.0

$305.0

Gross Margin (GAAP)

Gross Margin (Non-GAAP)

Operating Loss (GAAP)

$(52.0)

$(50.0)

Operating Income (Non-GAAP)

Net Loss (GAAP)

$(54.0)

Net Income (Non-GAAP)

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

Year over Year in Constant Currency

Quarterly Conference Call

To access the call which will take place today at 5:00 p.m. ET, please dial (

877) 260-9772

in the U.S. or +1 (

929) 387-3947

internationally. The

passcode for the call is: 36834744.

A live webcast of the call will...


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