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. Ron Hanscome, VP of Product Strategy with Kenexa appeared on the HRchitect WebMingle on June 26, 2009 and Derek Bluestone, VP Product Marketing appeared on June 17, 2010. 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. Simply put, do not invest in any kind of HR technology without consulting with the experts first. HRchitect is here to help!
Kenexa (Nasdaq: KNXA), a global provider of business solutions for human resources, recently announced operating results for the second quarter ended June 30, 2010.
For the second quarter of 2010, Kenexa reported total revenue of $44.9 million, an increase of 14% compared to $39.5 million for the second quarter of 2009. Within total revenue, subscription revenue was $36.1 million for the second quarter of 2010, an increase of 6% compared with $34.0 million in the second quarter of 2009. Professional services and other revenue was $8.8 million for the second quarter of 2010, an increase of 61% compared to $5.5 million for the second quarter of 2009.
“We are pleased with the company’s performance in the second quarter, which was highlighted by accelerated revenue growth that exceeded our guidance, continued strong growth in deferred revenue and cash from operations that materially exceeded our reported profitability,” said Rudy Karsan, Chief Executive Officer of Kenexa.
Karsan added, “The pace of economic recovery remains uncertain, however, our longer-term confidence continues to grow. Kenexa is competing for and winning opportunities with a growing number of the largest Global 5,000 organizations. In addition, we believe our competitive position is growing stronger as a result of our technology innovation and increased investments to raise awareness relative to Kenexa’s unique end-to-end, integrated HR value proposition. As a result, we are increasing the company’s full year revenue growth target to approach or exceed double digit levels in 2010, and we are continuing to invest in sales and R&D to position Kenexa for market share gains as the economy and IT spending environment improve.”
Non-GAAP income from operations, which excludes share-based compensation expense and amortization of acquired intangibles was $3.8 million for the three months ended June 30, 2010, compared to $4.4 million for the three months ended June 30, 2009. Non-GAAP net income available to common shareholders which excludes the items listed above was $3.1 million for the three months ended June 30, 2010, compared to $4.1 million for the three months ended June 30, 2009, which also excludes one-time charges related to the retirement of a line of credit facility. Non-GAAP net income available to common shareholders was $0.13 per diluted share for the quarter ended June 30, 2010, compared to $0.18 per diluted share in the second quarter of 2009.
Kenexa’s income from operations for the three months ended June 30, 2010, determined in accordance with GAAP, was $1.7 million, compared to $1.9 million for the same period of 2009. GAAP net income allocable to common shareholders was $1.0 million, or $0.04 per diluted share for the three months ended June 30, 2010, compared to net income of $1.3 million, or $0.06 per diluted share in the same period of 2009.
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, cash equivalents and investments of $65.5 million at June 30, 2010, an increase from $62.6 million at the end of the prior quarter. The Company generated cash from operations of $7.2 million during the second quarter, which was partially offset by capital expenditures. Deferred revenue was $57.8 million at June 30, 2010, an increase of $3.3 million compared to the end of the first quarter 2010 and an increase of 37% from June 30, 2009.
Other Second Quarter and Recent Highlights
- On July 26, 2010, Kenexa announced the acquisition of The Centre for High Performance Development (Holdings) Limited (CHPD). CHPD’s extensive research on leadership development and training will add to Kenexa’s existing research and content portfolio.
- More than 30 “preferred partner” customers were added during the quarter (defined as customers that spend more than $50,000 annually).
- The average annual revenue from the Company’s top 80 customers was greater than $1.1 million, an increase from the over $1.0 million level in recent quarters.
- John Nies was elected as the company’s lead independent director, reinforcing Kenexa’s commitment to best practices in the area of corporate governance. Mr. Nies has been a member of Kenexa’s board of directors since 2002 and is currently a Managing Director of JMH Capital, LLC, a private equity investment firm.
Based on information as of August 3, 2010, the Company is issuing guidance for the third quarter and full year 2010 as follows:
Third Quarter 2010*: The Company expects revenue to be $45 million to $47 million, and non-GAAP operating income to be $3.4 million to $3.6 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 23.2 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.12 to $0.13.
Full Year 2010*: The Company expects revenue to be $177.5 million to $181.5 million, and non-GAAP operating income to be $14.5 million to $16.5 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 23.2 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.52 to $0.59.
*includes the anticipated contribution from the acquisition of Centre for High Performance Development (CHPD). Management currently expects CHPD to contribute approximately $1.0 million and $2.5 million to Kenexa’s revenue for the third quarter and full year 2010, respectively. The acquisition is not expected to have a material impact on Kenexa’s non-GAAP operating income or non-GAAP net income per diluted share.