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 Management Systems vendors that businesses should consider. Ron Hanscome, VP of Product Strategy with Kenexa will participate on the HRchitect WebMingle on June 26, 2009.
Kenexa (Nasdaq: KNXA), a global provider of talent acquisition and retention solutions, today announced operating results for the first quarter ended March 31, 2009.
For the first quarter of 2009, Kenexa reported total revenue of $38.8 million for the first quarter of 2009, compared to $48.2 million reported for the first quarter of 2008. Subscription revenue was $33.3 million for the first quarter of 2009, compared to $39.2 million for the first quarter of 2008, while professional services and other revenue was $5.6 million for the first quarter of 2009, compared to $9.1 million for the first quarter of 2008.
Rudy Karsan, Chief Executive Officer of Kenexa, stated, “While the business environment is challenging and we expect it to remain so for the remainder of the year, there are a number of positive developments related to Kenexa and the talent management market. During the first quarter, sales and renewals of Kenexa’s talent acquisition solutions remained solid, which was a primary contributor to the solid growth of our deferred revenue. This performance, combined with the company’s continued focus on operational efficiency, enabled Kenexa to generate a record level of cash flows from operations for a first fiscal quarter, expanding its already large cash balance.”
Karsan added, “We are encouraged to see a growing number of customers evaluating talent management vendors based on their ability to provide a comprehensive, integrated suite of solutions. We believe Kenexa is uniquely positioned to meet this demand based on our differentiated business model, industry leading product breadth and depth and continued global expansion, including our recently announced entry into China. We believe these factors enable Kenexa to deliver an unmatched value proposition to HR organizations, and they are among the reasons we remain highly confident in Kenexa’s long-term market position.”
Non-GAAP income from operations, which excludes share-based compensation expense, amortization of intangibles associated with previous acquisitions, a non-cash goodwill impairment charge, severance expenses and professional fees related to our Chinese expansion, was $3.9 million for the three months ended March 31, 2009, compared to $9.1 million for the three months ended March 31, 2008 and represented a 10% non-GAAP operating margin. Non-GAAP net income was $3.2 million, or $0.14 per basic and diluted share, for the quarter ended March 31, 2009, compared to $7.3 million, or $0.31 per basic and diluted share in the first quarter of 2008.
As a result of a substantial decrease in the Company’s stock price, reflecting the very difficult market conditions of recent months and the impact on its operations, the Company evaluated its goodwill for potential impairment as of March 31, 2009 in accordance with accounting requirements. Based on the results of this evaluation, the Company reported a non-cash goodwill impairment charge of $33.3 million, on a pretax tax basis. While the impairment charge reduced reported operating results under generally accepted accounting principles (GAAP), it is non-cash in nature and does not affect Kenexa’s liquidity or cash flow from operations.
Kenexa’s loss from operations for the three months ended March 31, 2009, determined in accordance with GAAP, was $33.6 million, compared with income from operations of $6.5 million for the same period of 2008. GAAP net loss was $34.3 million, or $(1.52) per basic and diluted share, compared to net income of $4.8 million and $0.20 per basic and diluted share in the same period of 2008. The results above include the non-cash goodwill impairment charge.
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 short and long-term investments of $46.7 million at March 31, 2009, an increase from $42.8 million at the end of the prior quarter. The Company generated positive cash from operations of $8.9 million and deferred revenue was $41.4 million at March 31, 2009, an increase of $2.8 million compared to $38.6 million at the end of the fourth quarter 2008.
Business Outlook
Based on information as of today, May 11, 2009, the Company is issuing guidance for the second quarter 2009 as follows:
Second Quarter 2009: The Company expects revenue to be $36 million to $39 million, non-GAAP operating income to be $3.6 million to $4.6 million. Assuming a 23% effective tax rate for reporting purposes and 22.7 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
Posted by mattlafata 
