Demandware Announces Record Fourth Quarter and Year End 2013 Financial Results2014-2-11
Burlington, Mass. – February 11, 2014 - Demandware®, Inc. (NYSE: DWRE), the industry’s leading provider of enterprise cloud commerce solutions, today announced record financial results for its fourth quarter and year ended December 31, 2013.
Record full year subscription revenue of $95.7 million, a 50% comparable increase year over year
Record full year total revenue $103.7 million, a 43% comparable increase year over year
Record full year GAAP subscription gross margin of 82%
Record full year GAAP total gross margin of 73%
Live customers reached 204 at year end, an increase of 35% from 151 at year end 2012
Live sites reached 820 at year end, an increase of 42% from 579 at year end 2012
Average revenue per customer expanded to $515,000 in 2013
17 customers generated more than $100 million in gross merchandise value over the Demandware Commerce platform in 2013, up from 14 customers in 2012
Subscription dollar retention rate exceeded 100% in 2013 and customer churn was less than 5%
Contract backlog (consisting of unbilled committed minimum subscription plus deferred revenue) reached $348.6 million as of December 31, 2013, an increase of 67% over $208.2 million as of December 31, 2012
“2013 was an outstanding year for Demandware,” stated Tom Ebling, Chief Executive Officer of Demandware. “We had the best year in the company’s history for new customer acquisition and our new wins spanned the globe from North America, to Europe to Asia Pacific. Larger, more complex enterprise customers are moving to Demandware for a single, unified platform to manage digital commerce businesses, and they recognize that the best alternative for true omni-channel consumer engagement is in the cloud. While our new customer acquisition positions us well for future growth, our live customers drove our outperformance in the fourth quarter and throughout 2013. Our strong new customer acquisition and our robust pipeline give us more confidence than ever before that enterprises are moving mission critical applications into the cloud. We believe that with our execution in 2013, we enter 2014 well positioned as the leader in enterprise-class, cloud-based digital commerce solutions.”
Subscription revenue in the fourth quarter was $33.5 million, a 46% increase over $22.9 million in the fourth quarter of 2012. Total revenue for the fourth quarter was $35.5 million, a 35% increase from $26.3 million in the fourth quarter of 2012. On a comparable basis, excluding the $162,000 in subscription revenue recognized in the fourth quarter of 2012 from Neckermann GmbH, a Demandware customer that filed for insolvency proceedings on October 1, 2012, subscription revenue for the fourth quarter grew 47%. Excluding the $1.3 million in total revenue recognized in the fourth quarter of 2012 from Neckermann, total revenue grew 42%.
Total subscription revenue for the full year 2013 was $95.7 million, an increase of 41% over $67.9 million a year ago. Total revenue for the year ended December 31, 2013 reached $103.7 million, an increase of 31% over $79.5 million in 2012. Excluding the $4.3 million in subscription revenue recognized from Neckermann in 2012, subscription revenue grew 50% in 2013. Excluding $6.8 million in total revenue recognized from Neckermann in 2012 total revenue grew 43% in 2013.
Demandware signed significant new contracts during the quarter including Floor & Decor, Eloquii, Marlies Dekkers, Jonathan Alder, Jaques Vert Group, Quiksilver, and Vestis Retail Group (Bob’s Stores and Eastern Mountain Sports).
Ashley Stewart, Charlotte Olympia, Diesel USA Inc., Johnston & Murphy, Karstadt, Dogeared, Rituals Cosmetics, Rocky Brands, Sandro, Sleep Train, and Wet Seal launched new initial sites during the quarter.
Existing customers like Beats Electronics, Black Diamond, Icebreaker, Jarden Consumer Solutions, Jimmy Choo (part of the Labelux Group), Scotch & Soda, Skullcandy and World Kitchen launched new commerce sites for new geographies or for new brands on the Demandware Commerce platform.
“We clearly made the right strategic decision to invest in our business in 2013,” stated Scott Dussault, Demandware Chief Financial Officer. “Our investments in sales and marketing contributed significantly to the 67% year over year increase in our backlog and our new customer acquisition beat all previous records for customer count, average annual subscription contract value (ACV), total contract commitment and new large enterprise account signings. The ACV per customer for new customer contracts signed in 2013 exceeded $400,000, which demonstrates that we are not only gaining traction in large enterprise accounts but also shows that our mission critical solution delivers tangible value to customers. This year, we plan to continue to invest in sales and marketing and research and development to ensure that we capture market share as quickly as possible and that we widen our technological lead against our competition.”
Demandware’s income from operations for the fourth quarter of 2013 was $1.7 million, as compared to income from operations of $3.3 million for the same period in 2012. For the year ended December 31, 2013, Demandware’s loss from operations was $20.8 million, as compared to a loss from operations of $7.2 million for the year ended December 31, 2012.
Demandware’s net income for the fourth quarter of 2013 was $1.8 million, or $0.06 per basic share and $0.05 per diluted share attributable to common stockholders, as compared to net income of $3.2 million, or $0.11 per basic share and $0.10 per diluted share attributable to common stockholders, for the fourth quarter of 2012. Demandware’s GAAP net loss for the year ended December 31, 2013 was $20.9 million, or $(0.68) per basic and diluted share attributable to common stockholders, as compared to a net loss of $8.1 million, or $(0.39) per basic and diluted share attributable to common stockholders, for the year ended December 31, 2012.
Non-GAAP net income for the fourth quarter of 2013 was $5.7 million, or $0.18 per basic share and $0.16 per diluted share, as compared to non-GAAP net income of $5.5 million, or $0.18 per basic share and $0.17 per diluted share, for the fourth quarter of 2012. Non-GAAP net loss for the year ended December 31, 2013 was $6.2 million, or $(0.20) per basic and diluted share, as compared to non-GAAP net loss of $1.1 million, or $(0.04) per basic share and diluted share, for 2012.
(1) Non-GAAP net income and net loss excludes expenses related to stock-based compensation. Non-GAAP net income and net loss per share excludes expenses related to stock-based compensation and the accretion of redeemable preferred stock. See a reconciliation of the GAAP financial measures to the non-GAAP financial measures provided in the tables below.
To access the call at 8:30 a.m. ET today, please dial +1 (866) 318-8611 in the U.S. or +1 (617) 399-5130 internationally. The passcode for the call is: 22636320. A live webcast of the call will also be available on the investor relations section of the company’s website. An audio replay will be available for one week following the conclusion of the call through February 18, 2014. The replay number is +1 (888) 286-8010 in the U.S. or +1 (617) 801-6888 internationally. The passcode for the replay is: 86170410. The replay will also be available as a webcast on Demandware’s Investor Relations Web site.
Demandware, a leader in digital commerce, enables the world’s premier retailers to move faster and grow faster in the changing face of retail. Demandware’s enterprise cloud platform minimizes the costs and complexities of running global, omni-channel commerce operations, and empowers retailers to respond with speed and agility to new market opportunities and continually evolving consumer expectations. For more information, visit www.demandware.com, call +1-888-553-9216 or email firstname.lastname@example.org.
This release contains forward-looking statements, including statements regarding Demandware's future financial performance, market growth, the demand for Demandware's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Demandware's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Demandware's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Demandware disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts for our solution; the loss of a key customer or significant reduction of business from one of our largest customers; any change to our variable pricing model; the seasonality of our business; our ability to manage our growth; the continued growth of the market for on-demand software; the timing and success of solutions offered by our competitors; unpredictable macro-economic conditions; the loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure and costs associated with operating as a public company; security and privacy breaches or outages; failure to protect our intellectual property or intellectual property infringement claims; changes in current tax or accounting rules; and other risks and uncertainties. Further information on potential factors that could affect actual results is included in Demandware’s reports filed with the SEC.
Non-GAAP Financial Measures
Demandware has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP net income and net loss and non-GAAP net income and net loss per share. Demandware uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Demandware’s ongoing operational performance. Demandware believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with other companies in Demandware's industry, many of which present similar non-GAAP financial measures to investors. Non-GAAP net income and net loss and non-GAAP net income and net loss per share exclude expenses related to stock-based compensation and the accretion of redeemable preferred. These amounts are often difficult to predict and often excluded by other companies to help investors understand the operational performance of their business. Non-GAAP financial measures that the Company uses may differ from measures that other companies may use. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.