Bazaarvoice, Inc. (BV)

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Bazaarvoice (BV)

Q1 2014 Earnings Call

September 04, 2013 4:30 pm ET


James R. Offerdahl - Chief Financial Officer and Principal Accounting Officer

Stephen R. Collins - Chief Executive Officer and Director

Eugene Austin - President


Gregory Dunham - Goldman Sachs Group Inc., Research Division

Jennifer Swanson Lowe - Morgan Stanley, Research Division

Stephen Ju - Crédit Suisse AG, Research Division

Nandan Amladi - Deutsche Bank AG, Research Division

Karl Keirstead - BMO Capital Markets U.S.

Mark R. Murphy - Piper Jaffray Companies, Research Division

Brendan Barnicle - Pacific Crest Securities, Inc., Research Division

Daniel T. Cummins - B. Riley Caris, Research Division



Good day, and welcome to the Bazaarvoice's First Fiscal Quarter 2014 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jim Offerdahl, Chief Financial Officer, Finance, for Bazaarvoice. You may begin.

James R. Offerdahl

Thank you. Good afternoon, and welcome to today's conference call to discuss Bazaarvoice's financial results for the first fiscal quarter of 2014 ended July 31, 2013. I'm joined today by Stephen Collins, our Chief Executive Officer; and Gene Austin, our President.

Following prepared remarks from Stephen and me, we'll have a question-and-answer session. Please note that we are simultaneously webcasting this call on our Investor Relations website at The earnings release with our results for first fiscal quarter of 2014 was issued earlier today and is also posted on our Investor Relations website.

Please remember that certain statements made during this call, including those concerning our business outlook and guidance, growth plans and opportunities, potential acquisitions, sales execution and our ability to capitalize on our opportunities, are all forward-looking statements. Forward-looking statements are subject to a number of risks, uncertainties and assumptions that are described in our SEC filings, including the Risk Factor section of our Form 10-K for the fiscal year ended April 30, 2013, and our Form S-1 as filed with the SEC on July 12, 2012, and other documents that we may file with the SEC in the future.

Should any of the risks or uncertainties materialize or should any of our assumptions prove to be incorrect, actual results could differ materially and adversely from those anticipated or implied in these forward-looking statements. In addition, forward-looking statements are also based on currently available information, and we undertake no duty to update this information. Additional cautionary language regarding these forward-looking statements is further described in today's press release.

Finally, some of the numbers that we will discuss during this call will be presented on a non-GAAP basis. Today's press release, together with the accompanying tables, contains the calculations of these non-GAAP financial measures and a full reconciliation between each non-GAAP measure and its corresponding GAAP measure.

I would now like to turn the call over to Stephen.

Stephen R. Collins

Jim, thanks, and everyone, thank you for joining us today. As always, I'd like to begin by thanking our clients for their business and by thanking all the Bazaarvoice team members around the world, including our critically important moderators, for their hard work and dedication during the quarter just ended. And as I've done on each call as CEO, let me review our key near-term operating objectives that relate to our long-term strategy. Briefly, these are: to significantly increase global new account acquisition, to expand and strengthen our leadership team, to invest in growth opportunities for our network, to migrate our clients to our new technology platform and to win our litigation with the Department of Justice.

This quarter, we continue to make progress on all of these objectives. And if I could choose a theme for the quarter just ended, and our current quarter in fact, it would be that we are very much focused on operational excellence and integrating all the newer members of the leadership team, including our President, Gene Austin, who's with us today; and our Executive Vice President of Client Services, Marc Cannon, among others. I'm pleased to say that Gene and Marc and other new leaders hit the ground running on day one and have made tremendous strides in organizing for excellence in our operations. I'm sure it is not lost on our investors that we have built an entirely new senior leadership team over the last 6 months.

These changes and additions to the team, I believe, are critical for our company's future to take us to the next level. I can already see the positive impact that the team is having, bringing their considerable experience and operational discipline to bear throughout the company.

Before I move to the details of the quarter, let me update you on the status of our DOJ litigation. Nothing has changed in our disposition towards this litigation as we feel strongly that the acquisition of PowerReviews was a win for all our clients and for the marketplace. The trial is scheduled to start on September 23 and run for approximately 3 weeks. Litigation is unpredictable. But I am hopeful that on our next earnings call, we will have this behind us, and we'll be celebrating a favorable outcome.

So now on to our results. I'm pleased to report that we achieved revenue that exceeded our guidance. Revenue came in at $44.6 million, representing a year-over-year growth rate of 25%. With regard to the bottom line, we reported an adjusted EBITDA loss of $3.2 million and a non-GAAP loss per share of $0.05, both better than guidance and a substantial improvement as compared to the previous quarter.

I'd like to also mention that gross margin reached an all-time high at 70.5%, an increase of approximately 400 basis points since our initial public offering. Jim will provide additional details about margins, but this achievement has been the product of significant focus over the last 2 to 3 years involving important changes to our technology and processes. A big driver of this outcome has been steadily increasing employee-to-revenue productivity that has required a total company effort over a sustained period.

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