Kenexa Announces Financial Results for Third Quarter 2009…from Kenexa

 

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, recently announced operating results for the third quarter ended September 30, 2009. 

For the third quarter of 2009, Kenexa reported total revenues of $40.3 million, a sequential increase compared to $39.5 million for the second quarter of 2009 and compared to $54.0 million for the third quarter of 2008.  Subscription revenue was $33.2 million for the third quarter of 2009, compared to $43.0 million for the third quarter of 2008, while professional services and other revenue was $7.1 million for the third quarter of 2009, compared to $11.0 million for the third quarter of 2008.   

Rudy Karsan, Chief Executive Officer of Kenexa, stated, “We are pleased with the company’s financial results for the third quarter, which were consistent with or better than our expectations.  We are encouraged that our total revenue grew slightly on a sequential basis, deferred revenue grew 20% on a year-over-year basis and cash flows from operations were again solid with $6 million generated in the quarter.” 

Karsan added, “From a macro perspective, we expect to continue facing headwinds until the unemployment rate stabilizes.  We believe that Kenexa has weathered the most difficult stage of the economic challenges, and the company is well positioned when the spending environment ultimately improves.  Customers are increasingly engaging in strategic evaluations, and the power of Kenexa’s end-to-end value proposition is evidenced by a number of highly competitive wins for global, multi-element solutions during the third quarter.” 

Non-GAAP income from operations, which excludes share-based compensation expense and amortization of intangibles associated with previous acquisitions, was $4.3 million for the three months ended September 30, 2009, compared to $10.3 million for the three months ended September 30, 2008.  Non-GAAP net income, which excludes the above mentioned items, was $4.0 million.  Non-GAAP net income was $0.18 per basic and diluted share for the quarter ended September 30, 2009, which was above the company’s guidance of $0.13 to $0.16 as a result of a $0.02 per share contribution from a lower-than-expected tax rate.  Non-GAAP net income was $0.36 per basic and diluted share in the third quarter of 2008.  

Kenexa’s income from operations for the three months ended September 30, 2009, determined in accordance with GAAP, was $1.9 million, compared with income from operations of $7.5 million for the same period of 2008. GAAP net income was $1.6 million, or $0.07 per basic and diluted share, compared to net income of $5.4 million and $0.24 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 $50.2 million at September 30, 2009, an increase from $47.2 million at the end of the prior quarter.  The Company generated positive cash from operations of $6.1 million during the third quarter, which was partially offset by capital expenditures.  Deferred revenue was $44.2 million at September 30, 2009, an increase of approximately $2.0 million compared to the end of the second quarter 2009 and an increase of 20% from the end of the year ago period. 

Business Outlook
Based on information as of today, November 3, 2009, the Company is issuing guidance for the fourth quarter 2009 as follows: 

Fourth Quarter 2009: The Company expects revenue to be $38 million to $40 million, and non-GAAP operating income to be $3.3 million to $3.9 million. Assuming a 15% 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 $0.15. 

For more information on Kenexa, please visit www.kenexa.com

 

Matt Lafata, HRchitect

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