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Demandware Announces First Quarter 2016 Financial Results

BURLINGTON, Mass., Apr 27, 2016 (BUSINESS WIRE) -- Demandware®, Inc. DWRE, -0.33% the industry-leading provider of enterprise cloud commerce solutions, today announced financial results for its first quarter ended March 31, 2016.

First Quarter Highlights

  • Subscription revenue for the first quarter was $56.8 million, a 31% year over year increase from $43.2 million in the first quarter of 2015
  • Live customers reached 349 at March 31, 2016, an increase of 25% from 279 last year
  • Live sites reached 1,590 at March 31, 2016, an increase of 28% from 1,241 last year

“We made excellent progress against our 2016 goals, delivering on key customer, technology, and financial objectives,” stated Tom Ebling, CEO, Demandware. “We continue to expand up market, signing larger customers while driving above-market growth in our customer base. From a technology perspective, we rolled out meaningful enhancements to our platform, including enabling predictive recommendations for all digital customers, and remain on track to release Demandware Store to US customers in the fourth quarter. In addition, we were pleased to be named as a leader in the Gartner Magic Quadrant for Digital Commerce, the only cloud-based provider to be placed in this category, and a validation of our dedication and commitment to innovation and to our customers.”

  • Demandware signed significant new customers during the quarter, including Belk, BoConcept, Duluth Trading, Figleaves, Fragrance Direct, Mitchell Gold + Bob Williams, Sonos, Timex, and Wolford.
  • Leading retailers such as Acushnet, Avenue 32, Charles Tyrwhitt, Christopher & Banks, Ivyrevel, Pret A Manger, Stonewall Kitchen, Trimtex Sport, TTS Group, and W. Atlee Burpee launched initial sites on the Demandware Commerce Cloud.
  • Existing customers like BabyOne, Jarden Corp, L’Oreal, Samsonite, TSI Holdings, Warehouse Fashions, Williamson-Dickie, Wolverine Worldwide, and World Wrestling Entertainment expanded their operations on the platform launching additional commerce sites.

“Total revenue exceeded our guidance range driven by strength in our services business,” said Tim Adams, Chief Financial Officer. “Furthermore, we delivered $2 million of non-GAAP net income to shareholders versus a non-GAAP loss a year ago. These results show a strong start to the year, and we remain confident in the future given our growth investments, which we believe will both strengthen our leadership position and enable us to deliver even more value to our shareholders.”

Total revenue for the first quarter of 2016 was $67.1 million, a 33% increase from $50.3 million in the first quarter of 2015. Our GAAP net loss for the first quarter of 2016 was $11.7 million as compared to a GAAP net loss of $5.2 million for the first quarter of 2015. Non-GAAP net income for the first quarter of 2016 was $2.2 million as compared to non-GAAP net loss of $0.1 million for the first quarter of 2015. [(1)]

At March 31, 2016, we had $195.8 million in cash, cash equivalents and short term investments on the balance sheet, as compared to $197.0 million at December 31, 2015.

[(1)] Indicates a non-GAAP measure. Refer to “Non-GAAP Financial Measures” below and the accompanying reconciliations for more detailed information about these non-GAAP measures.

Outlook

Tim Adams remarked, “We are raising our 2016 revenue guidance by $3 million to reflect the first quarter outperformance in services. With this additional services revenue, we are raising our guidance for operating income and net income by approximately $2 million. Otherwise, our guidance framework is consistent with the outlook we provided at the start of the year. We remain enthusiastic about the value we can bring to our shareholders and customers alike.”

For 2016, the company expects:

Current Current Prior Prior
FY’16 FY’16 FY’16 FY’16 Change Q2’16 Q2’16
$ and shares in millions Low High Low High Mid Low High
Comparable Customer GMV Growth (1) 17% 19% 17% 19%
Bookings Growth (1) 25% 35% 25% 35%
Churn Rate <5% <5% <5% <5%
Subscription Revenue $260.0 $270.0 $260.0 $270.0 $58.0 $60.0
Total Revenue $298.0 $308.0 $295.0 $305.0 $3.0 $67.5 $69.5
Gross Margin (GAAP) 71% 71% 71% 71%
Gross Margin (Non-GAAP) 74% 74% 74% 74%
Operating Loss (GAAP) $(50.0) $(48.0) $(52.0) $(50.0) $2.0
Operating Income (Non-GAAP) $10.0 $12.0 $8.0 $10.0 $2.0
Net Loss (GAAP) $(52.0) $(50.0) $(54.0) $(52.0)

$2.0

Net Income (Non-GAAP) $8.0 $10.0 $6.0 $8.0 $2.0
Basic weighted average shares outstanding 37 37 37 37 37 37
Diluted weighted average shares outstanding 40 40 40 40 39 39

(1) 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 (855) 312-3345 in the U.S. or +1 (330) 863-8743 internationally. The passcode for the call is: 90165558. A live webcast of the call will also be available on the investor relations section of the company’s website. An audio replay will be available following the conclusion of the call through May 4, 2016. The replay number is (855) 859-2056 in the U.S. or +1 (404) 537-3406 internationally. The passcode for the replay is: 90165558. The replay will also be available as a webcast on Demandware’s Investor Relations website.

About Demandware

Demandware, the category defining leader of enterprise cloud commerce solutions, empowers the world’s leading retailers to continuously innovate in our complex, consumer-driven world. Demandware’s open cloud platform provides unique benefits including seamless innovation, the LINK ecosystem of integrated best-of-breed partners, and community insight to optimize customer experiences. These advantages enable Demandware customers to lead their markets and grow faster. For more information, visit www.demandware.com, call +1-888-553-9216 or email info@demandware.com.

Demandware is a registered trademark of Demandware, Inc.

Forward-looking Statements

This release contains forward-looking statements, including statements regarding Demandware's future financial performance, market growth, the demand for Demandware's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Demandware's historical performance and its current plans, estimates and expectations and are not a representation...


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