HRchitect featured Kenexa in our May 2008 release of The Suite Life of Integrated Talent Management and also includes them in our list of top Talent Acquisition Systems and top Talent Management Systems vendors that businesses should consider. Kenexa participated in the Talent Management Systems panel and the Talent Acquisition Systems panel on June 10, 2009 as part of theHRshow event. Ron Hanscome, VP of Product Strategy with Kenexa appeared on the HRchitect WebMingle on June 26, 2009. If you are looking for a new Talent Management System, or any HR system, talk to HRchitect first. We have unparalleled knowledge of the HR and Talent Management vendor community and can save you time and money in selection and implementation.
Kenexa (Nasdaq: KNXA), a global provider of business solutions for human resources, today announced operating results for the second quarter ended June 30, 2009.
For the second quarter of 2009, Kenexa reported total revenues of $39.5 million, a sequential increase compared to $38.8 million for the first quarter of 2009 and compared to $56.4 million for the second quarter of 2008. Subscription revenue was $34.0 million for the second quarter of 2009, compared to $43.7 million for the second quarter of 2008, while professional services and other revenue was $5.5 million for the second quarter of 2009, compared to $12.8 million for the second quarter of 2008.
Rudy Karsan, Chief Executive Officer of Kenexa, stated, “Headwinds created by the challenging economic environment and jobs market continued during the second quarter. While we expect current macro conditions to persist for the next several quarters, we were encouraged that our second quarter total revenue grew sequentially, deferred revenue continued to grow and interest levels in our broad suite of solutions remained high.” Karsan added, “We believe our unique breadth and expertise across software, employee science, HR business processes and consulting services will become increasingly important from a long-term perspective. A growing number of customers are engaging in strategic evaluations, and we believe they will deploy more comprehensive solutions and move ahead with strategic services engagements when the economic environment improves and IT budgets are more available.”
Non-GAAP income from operations, which excludes share-based compensation expense and amortization of intangibles associated with previous acquisitions, was $4.4 million for the three months ended June 30, 2009, a sequential increase from $3.9 million in the first quarter of 2009 and compared to $10.9 million for the three months ended June 30, 2008. Non-GAAP net income, which excludes one-time charges related to the retirement of a line of credit facility in addition to the above mentioned items, was $4.1 million based on a 12% non-GAAP tax rate. Non-GAAP net income was $0.18 per basic and diluted share for the quarter ended June 30, 2009, a sequential increase compared to $0.14 in the first quarter of 2009 and compared to $0.39 per basic and diluted share in the second quarter of 2008.
Kenexa’s income from operations for the three months ended June 30, 2009, determined in accordance with GAAP, was $1.9 million, compared with income from operations of $7.9 million for the same period of 2008. GAAP net income was $1.3 million, or $0.06 per basic and diluted share, compared to net income of $6.0 million and $0.26 per basic and diluted share in the same period of 2008.
A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Kenexa had cash and cash equivalents and investments of $47.2 million at June 30, 2009, an increase from $46.7 million at the end of the prior quarter. The Company generated positive cash from operations of $7.5 million during the second quarter, which was offset primarily by capital expenditures and earn out payments associated with previous acquisitions. Deferred revenue was $42.2 million at June 30, 2009, an increase of approximately $0.8 million compared to the end of the first quarter 2009 and an increase of 9% from the end of the year ago period.
Karsan added, “Throughout the economic slowdown, Kenexa continued to focus on driving profitability and cash flow. We will continue to operate with this focus in mind, and we are also planning to selectively increase investments in R&D and sales and marketing as we currently expect the buying environment to begin improving at some point during 2010. These incremental investments will leverage those already made in the development and launch of our Kenexa 2x platform, continued enhancements to our best-in-class Kenexa Recruiter BrassRing solution, as well as our recent rebranding initiative. We believe that Kenexa has weathered the most difficult stage of the economic storm, and we remain confident in the company’s long-term market position and opportunity.”
Business Outlook
Based on information as of today, August 4, 2009, the Company is issuing guidance for the third quarter 2009 as follows:
Third Quarter 2009: The Company expects revenue to be $37 million to $40 million, and non-GAAP operating income to be $3.7 million to $4.6 million. Assuming a 23% effective tax rate for reporting purposes and 22.9 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.13 to $0.16.
For more information on Kenexa, please visit www.kenexa.com
Matt Lafata, HRchitect
