- Second quarter revenue and profitability exceeded high end of our guidance
- 2012 revenue and non-GAAP profitability guidance increased
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 2010 & 2011 and the Kenexa World Conference from 2009-2011.
If you are looking for a new Talent Management System, or any HR system, don’t rely solely on “recommendations” or published reports. Do yourself a huge favor and talk to HRchitect first. After 15 years, 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 (NYSE: KNXA), a global provider of business solutions for human resources, recently announced operating results for the second quarter, ended June 30, 2012.
For the second quarter of 2012, Kenexa reported total GAAP revenue of $86.3 million. Non-GAAP revenue, which eliminates the GAAP adjustment to deferred revenue resulting from certain acquisitions, was $88.2 million for the second quarter of 2012, an increase of 24% compared to $71.3 million for the second quarter of 2011. Within total non-GAAP revenue, subscription revenue was $64.1 million for the second quarter of 2012, an increase of 23% compared with $52.2 million in the second quarter of 2011. Professional services and other revenue was $24.1 million for the second quarter of 2012, an increase of 26% compared to $19.1 million for the second quarter of 2011.
“We continued our strong operational performance in the second quarter with both revenue and non-GAAP profitability exceeding our guidance,” said Rudy Karsan, Chief Executive Officer of Kenexa. “While the economic environment remains volatile, HR executives are feeling increasing pressure from the C-level suite to transform their company’s workforce with improved talent and productivity levels. The short supply and significant demand for skilled knowledge workers is a growing challenge, and we see global organizations looking for a strategic HR partner to help them achieve their business goals. Kenexa is benefitting from this trend based on our highly differentiated value proposition based on our best-in-class SaaS platform, proprietary data and services.”
Karsan added, “We are increasing our revenue guidance for the full year 2012 based on the strength of our second quarter results and our ongoing business momentum. In addition, the growing number of blue chip customer wins for our Kenexa 2x SaaS platform and efficiency gains with our RPO customers are driving leverage in our business and contributing to our increased non-GAAP profitability guidance for 2012.”
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.”
Non-GAAP income from operations was $9.8 million for the three months ended June 30, 2012. This represented an 11.1% non-GAAP operating margin and an increase of 53% compared to non-GAAP income from operations of $6.4 million for the three months ended June 30, 2011.
Non-GAAP net income available to common shareholders was $7.6 million for the three months ended June 30, 2012, compared to $4.7 million for the three months ended June 30, 2011. Non-GAAP net income available to common shareholders was $0.27 per diluted share for the second quarter of 2012, above the Company’s guidance of $0.22 to $0.23 and based on 28.3 million weighted average shares outstanding. Non-GAAP net income available to common shareholders was $0.18 per diluted share for the second quarter of 2011, based on 25.8 million weighted average shares outstanding.
Kenexa’s loss from operations for the three months ended June 30, 2012, determined in accordance with GAAP, was $116 thousand, compared to income from operations of $416 thousand for the same period of 2011. GAAP net loss allocable to common shareholders was approximately $1.7 million, or ($0.06) per basic and diluted shares for the three months ended June 30, 2012, compared to net loss of $1.6 million, or ($0.06) per basic and diluted share, in the same period of 2011.
Kenexa had cash, cash equivalents and investments of $89.7 million at June 30, 2012, compared to $83.0 million at the end of the prior quarter. The Company generated $17.2 million in cash from operations for the second quarter and used $8.5 million associated with capital expenditures and capitalized investments. Deferred revenue was $96.4 million at June 30, 2012, an increase of 14% from June 30, 2011.
Other Second Quarter and Recent Highlights
- More than 100 “preferred partner” customers were added during the second quarter (defined as customers that spend more than $50,000 annually), an increase from the over 50 preferred partner customer additions in the year ago period.
- The average annualized revenue from the company’s top 80 customers, or P-cubed metric, was greater than $1.9 million in the second quarter of 2012, an increase from the over $1.5 million level in the second quarter of 2011.
- Announced the launch of Kenexa Hot Lava Mobile 3.0, a leading mobile solution used to develop, manage and analyze the results of independent device communications, snack learning, performance support, sales enablement and surveys. The launch of Hot Lava Mobile 3.0 marks Kenexa’s entry into the mobile learning marketplace. Kenexa added Hot Lava Mobile to its integrated human capital management product suite in February as part of its acquisition of OutStart.
Based on information as of today, August 7, 2012, the Company is issuing financial guidance as follows:
Third Quarter 2012*: The Company expects GAAP revenue to be $90.7 million to $93.7 million. Excluding the GAAP adjustment to deferred revenue resulting from certain acquisitions, the Company expects non-GAAP revenue to be $92 million to $95 million, and non-GAAP operating income to be $11 million to $12 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 28.4 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $0.29 to $0.32.
Full Year 2012*: The Company expects GAAP revenue to be $352 million to $359 million. Excluding the GAAP adjustment to deferred revenue, the Company expects non-GAAP revenue to be $359 million to $366 million, and non-GAAP operating income to be $40 million to $43 million. Assuming an effective tax rate for reporting purposes of approximately 20% and approximately 28.3 million shares outstanding, Kenexa expects its non-GAAP net income per diluted share to be $1.07 to $1.16.
* Kenexa’s non-GAAP guidance excludes stock-based compensation expense, amortization of acquired intangibles, acquisition-related fees, contingent consideration adjustment, the purchase accounting reduction for Salary.com’s and OutStart’s revenue, and accretion associated with a variable interest entity.
For more information on Kenexa, please visit www.kenexa.com
To learn more about HRchitect and how we can help your organization, please visit www.HRchitect.com. HRchitect is the leader in HR systems strategic consulting. As the premier Human Capital Management (HCM) and Talent Management Systems consulting firm, we offer end-to-end HR technology consulting services focused around strategic planning, evaluation/selection, project management and implementation of HR systems, Talent Management Systems, Talent Acquisition Systems, and Workforce Management software. After more than 15 years in business working on over 2000 successful engagements for more than 900 clients across the globe, HRchitect is a name you can trust as your one-stop shop for all your HR technology consulting needs.
Matt Lafata, HRchitect