For the fiscal first quarter of 2006, Unica reported record total revenue of $17.6 million, an increase of 20% compared with the first quarter of 2005. License revenue increased 23% to $8.5 million and maintenance and services revenue increased 18% to $9.1 million, from the prior year quarter. For the fiscal first quarter of 2006, maintenance revenue was $7.2 million, an increase of 26% from the prior year quarter, and services revenue was $1.9 million, a decline of 5% from the prior year quarter.
Yuchun Lee, chief executive officer of Unica Corporation, stated, "We are pleased with our fiscal first quarter results, which were highlighted by better than expected license revenue and profitability. During the quarter, we extended our EMM leadership position by broadening and deepening our product suite with the MarketSoft acquisition, investing in and adding to our partner channel and increasing our international presence." Lee added, "Organisations are increasingly looking for an integrated, end-to-end suite to automate and optimise their marketing operations. Our technology, partner network and domain expertise position us well to take advantage of this growing demand."
For the fiscal first quarter of 2006, Unica's income from operations, determined in accordance with generally accepted accounting principles (GAAP) was $1.8 million, a 41% increase from $1.3 million in the same period last year. GAAP net income for the fiscal first quarter of 2006 was $1.4 million, an increase of 43% from $1.0 million in the same period last year. GAAP diluted earnings per share were $0.07 for the first quarter of 2006, an increase of 40% from $0.05 in the same period last year.
Excluding stock-based compensation expense and amortisation of intangibles arising from business combinations, non-GAAP earnings per share on a fully diluted basis were $0.09 for the quarter ended December 31, 2005, an increase from $0.07 in the same period last year. Non-GAAP earnings per share assumes the conversion of Unica's preferred stock into common shares for the fiscal first quarter of 2005. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in the press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
Unica had cash, cash equivalents, and short-term investments of $57.0 million at December 31, 2005, a decrease from $60.1 million at the end of the prior quarter due to the acquisition of MarketSoft during the quarter. The Company was cash flow positive from operations for the quarter, generating $4.5 million in cash from operations. In addition to strong collections, cash flow was also driven by deferred revenue, which grew 10% sequentially and 31% year-over-year to $27.1 million at the end of fiscal first quarter of 2006.
Richard Darer, chief financial officer of Unica, stated, "The scalability of our business model is evidenced by strong year-over-year growth in cash flow and operating income, leading to another quarter of double digit margins. Strong license revenue combined with leverage from our partners drove better than expected first quarter profitability and is the reason we are raising our profitability outlook for fiscal 2006."
Additional First Quarter Business Highlights
-- Acquired MarketSoft Software Corporation, a privately held provider of lead management and event-detection solutions, for $7.26 million in cash
-- Continued to enjoy success with industry leaders across a broad range of vertical markets, including Financial Services, Telecommunications, Consumer Goods, Not-for-Profit, and Retail. New customers from these sectors include: American Medical Association, CNS, REI, and Sunrise in Switzerland
-- Increased international presence, closing the Company's first deals in Japan, Denmark and Indonesia. During the quarter, international operations represented 20% of Unica's revenue
-- Expanded the partner channel with the addition of new marketing service partners in the U.S., Singapore and Australia, and the completion of our first customer order with our marketing services partner in France
-- Nationwide Building Society won the Information Management Award for best CRM project of 2005 for the first phase of its Marketing Analytics project, which was supported by Unica's industry leading EMM suite
Unica also announced its expectations for the current quarter ending March 31, 2006 and updated the fiscal year ending September 30, 2006:
Second Quarter of Fiscal 2006
-- Revenue: Targeting $18.8 million with a certain amount of variability
-- Non-GAAP Operating Income: Expected to be $1.9 million with a certain amount of variability
-- Non-GAAP Diluted Earnings Per Share: Expected to be $0.08 based on an estimated weighted average of 20.5 million shares outstanding and an estimated effective tax rate of 34.5%
-- Fiscal Year 2006
-- Revenue: Targeting $78.0 million to $79.5 million
-- Non-GAAP Operating Income: Expected to be between $8.9 million and $9.4 million
-- Non-GAAP Diluted Earnings Per Share: Expected to be between $0.36 and $0.37, based on an estimated weighted average of 20.6 million outstanding shares and an estimated effective tax rate of 34.5%
The preceding information with respect to non-GAAP operating income and earnings per share excludes amortisation of intangibles arising from business combinations, stock-based compensation expense related to stock options granted at less than fair value of Unica's common stock, and stock-based compensation expense related to Statement of Financial Accounting Standards 123R, which Unica adopted commencing with the first quarter of fiscal 2006. Operating income and earnings per share estimates in accordance with GAAP are not being provided because Unica is unable to forecast accurately the number and timing of compensatory equity grants for the second quarter of fiscal 2006 or the full fiscal year 2006 and therefore cannot predict the amount of stock-based compensation expense that will be incurred during those periods.
CFO Transition Announced
The Company and Richard Darer have initiated a process to identify a chief financial officer replacement. The Company intends to select and announce a successor to Mr. Darer as soon as possible. Mr. Darer is staying with the Company to ensure a smooth transition process.
Mr. Darer said, "It has been my privilege to serve as Unica's CFO for the past four years, helping the Company grow revenue from a $4 million quarterly run rate to just under $18 million in the most recent quarter. It was truly exciting to help the Company complete two acquisitions and a successful IPO. The Company's strong balance sheet, profitable operations and solid financial controls give me confidence that it will be able to continue growing its leadership position in the EMM market."
Yuchun Lee, CEO of Unica, stated "Rick Darer has made a tremendous contribution to Unica. We are grateful to him for playing a key role in rapidly scaling Unica's revenue and profitability, an accomplishment few software companies have been able to achieve with similar consistency over the past four years. We appreciate Rick's help in ensuring a smooth transition process, and wish him the best of luck as he pursues other interests."