HRchitect featured Kenexa in our 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. Derek Bluestone, VP Product Marketing appeared on the HRchitect WebMingle on June 17, 2010. HRchitect’s Matt Lafata, one of the industry’s leading talent management systems analysts, attended the Kenexa Analyst Day in May, 2010 and the Kenexa World Conference in 2009 and 2010.
If you are looking for a new Talent Management System, or any HR system, talk to HRchitect first. HRchitect has 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 always available to help!
Kenexa (Nasdaq: KNXA), a global provider of business solutions for human resources, today announced operating results for the fourth quarter and full year, ended December 31, 2010.
For the fourth quarter of 2010, Kenexa reported total GAAP revenue of $61.0 million, with non-GAAP revenue of $64.1 million after eliminating the $3.1 million GAAP adjustment to Salary.com’s deferred revenue. Non-GAAP revenue increased 64% compared to $39.1 million for the fourth quarter of 2009. In 2009, all revenues are reported using GAAP. Within total non-GAAP revenue, subscription revenue was $48.6 million for the fourth quarter of 2010, an increase of 46% compared with $33.3 million in the fourth quarter of 2009. Professional services and other revenue was $15.5 million for the fourth quarter of 2010, an increase of 170% compared to $5.7 million for the fourth quarter of 2009.
“We are pleased with the Company’s performance in the fourth quarter, which was highlighted by revenue and profitability that were better than our expectations,” said Rudy Karsan, Chief Executive Officer of Kenexa. “The fourth quarter represented a strong close to a successful year for Kenexa. In the face of a challenging economic environment, we returned the Company’s total revenue to solid organic growth, expanded our market opportunity and value proposition with the acquisition of Salary.com, and increased investments in sales, marketing and R&D to position Kenexa for continued market share gains as the economic environment improves.“
Karsan added, “We are still early in the new year, but we are more optimistic about the economic environment and jobs market for 2011 as compared to our view in recent quarters. We believe Kenexa is well positioned to benefit from the increased level of investment in our business, and our optimism is reflected by the solid increase in our revenue growth outlook for 2011.”
Non-GAAP income from operations, which excludes share-based compensation expense, amortization of acquired intangibles, fees related to our acquisitions and the purchase accounting adjustment to Salary.com’s deferred revenue, was $7.4 million for the three months ended December 31, 2010. This was above the Company’s guidance of $6.0 million to $6.9 million and represented an increase of 123% compared to non-GAAP income from operations of $3.3 million for the three months ended December 31, 2009.
Non-GAAP net income available to common shareholders, which excludes the items listed above as well as the accretion of the noncontrolling interest in our variable interest entity, was $5.4 million for the three months ended December 31, 2010, compared to $2.9 million for the three months ended December 31, 2009. Non-GAAP net income available to common shareholders was $0.23 per diluted share for the quarter ended December 31, 2010, above the Company’s guidance of $0.19 to $0.22 and up 77% compared to $0.13 per diluted share in the fourth quarter of 2009.
Kenexa’s loss from operations for the three months ended December 31, 2010, determined in accordance with GAAP, was $3.6 million, compared to income from operations of $0.8 million for the same period of 2009. GAAP net loss available to common shareholders was approximately $6.9 million, or loss of $0.30 per basic share for the three months ended December 31, 2010, compared to net income of $0.3 million, or $0.01 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 and cash equivalents of $52.5 million at December 31, 2010, a decrease from $90.4 million at the end of the prior quarter due to payments associated with the Salary.com acquisition. The Company generated cash from operations of $3.3 million during the fourth quarter of 2010 and $11.5 million excluding non-recurring payments and fees associated with the Salary.com acquisition. Deferred revenue was $76.1 million at December 31, 2010, an increase of 52% from December 31, 2009.
Other Fourth Quarter and Recent Highlights
- More than 50 “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 $1.2 million, an increase from the $1.0 million level in the fourth quarter of 2009.
- Kenexa joined with General Information Services (GIS) and Sterling Infosystems, leading providers of background screening services, to provide full-service background screenings for Kenexa’s Integrated Talent Management solutions, including Kenexa 2x BrassRing™ and Kenexa 2x Recruit™.
Full Year 2010 Financial Results
For the full year 2010, Kenexa reported total GAAP revenue of $196.3 million, with non-GAAP revenue of $199.4 million after eliminating the $3.1 million GAAP adjustment to Salary.com’s deferred revenue. Non-GAAP revenue increased 26% compared to $157.7 million for the full year 2009. Subscription revenue was $157.7 million and professional services revenue was $41.7 million for the full year 2010, compared to $133.9 million and $23.8 million, respectively, in the year ago period.
Non-GAAP income from operations, which excludes share-based compensation expense, amortization of acquired intangibles, expenses related to our acquisitions and the deferred revenue write-down related to the Salary.com acquisition, was $17.7 million for the year ended December 31, 2010, representing a 9% non-GAAP operating margin and compared to $15.9 million in the year ended December 31, 2009. Non-GAAP net income was $14.4 million, or $0.62 per diluted share, for the year ended December 31, 2010, compared to $0.62 in the year ago period.
Kenexa’s loss from operations for the full year 2010, determined in accordance with GAAP, was $0.3 million compared with a loss from operations of $29.0 million for 2009. GAAP net loss was $5.8 million or loss of $0.25 per basic share for the full year 2010, compared to a net loss of $31.1 million or a loss of $1.38 per basic share for the full year 2009. GAAP loss from operations, net loss and loss per share included the impact of a non-cash goodwill impairment charge of $33.3 million for the full year 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.”
Business Outlook
Based on information as of today, February 8, 2011, the Company is issuing financial guidance as follows:
First Quarter 2011*: The Company expects GAAP revenue to be $57.0 million to $59.0 million. Excluding the GAAP adjustment to Salary.com’s deferred revenue, the Company expects non-GAAP revenue to be $60.0 million to $62.0 million, and non-GAAP operating income to be $4.4 million to $4.8 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 23.5 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.13 to $0.14.
Full Year 2011*: The Company expects GAAP revenue to be $240 million to $248 million. Excluding the GAAP adjustment to Salary.com’s deferred revenue, the Company expects non-GAAP revenue to be $248 million to $256 million, and non-GAAP operating income to be $21.0 million to $27.0 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 24 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.62 to $0.82.
* Kenexa’s non-GAAP results will exclude stock based compensation expense, amortization of intangibles associated with acquisitions, fees related to closing the Salary.com acquisition and the purchase accounting reduction to Salary.com’s revenue.
For more information on Kenexa, please visit www.kenexa.com
Matt Lafata, HRchitect
Posted by mattlafata 
