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Saba Software Inc. (SABA)
Q3 2010 Earnings Call
March 25, 2010 5:00 pm
William Slater – Chairman, Chief Executive Officer
Bobby Yazkani – Chief Executive Officer
Ryan Bergen – Craig-Hallum
Kevin Liu – B. Riley & Company
Previous Statements by SABA
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Good afternoon. Welcome and thank you for attending Saba Software’s third quarter fiscal 2010 conference call. With me today is Chairman and Chief Executive Officer Bobby Yazdani.
If you have not received today’s earnings release, you may download it at www.saba.com. During the course of this conference, we will be making forward-looking statements regarding our business outlook, future performance and expectations of future events. These statements are based solely on information available to us today and are subject to risks and uncertainties.
For information concerning factors that could cause actual results to differ materially from those in the forward-looking statements we encourage you to review our annual report on Form 10-K for the year ended May 31, 2009 and subsequent Saba periodic reports which are available through the investor relations section of our website at Saba.com or through the SEC’s website at sec.gov. We assume no duty or obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
In addition, we intend to discuss today both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP results is included with the financial statements accompanying our earnings release.
I will now turn the call over to Bobby Yazdani, Chairman and CEO of Saba Software.
Thank you Bill. Good afternoon, and thank you for joining Saba’s third quarter earnings call. Today, I will cover highlights of our third quarter and year to date performance, significant milestones achieved during the quarter and our expectations for the remainder of fiscal year 2010. I will then turn the call over to Bill Slater who will provide details on our third quarter financial results.
Let’s begin with the highlights from the third quarter. Saba’s focus on profitable growth, customer success and product innovation continues to contribute to our market leadership position. In the third quarter, we delivered solid financial results, experienced strong customer adoption of our solution as evidenced by major new customer wins, and expanded our footprint within our existing customer base with sales of new applications and new user licenses.
In the quarter, we won a competitive deal at IBM as they expanded their implementation of Saba Learning to include Saba Succession Planning and Morpheus Planning Solutions to be deployed globally. We also expanded our relationship with the Baker Hughes, one of our recent Saba performance wins, through a new contract for Saba Learning.
These wins underscore our momentum in supporting a broad range of people management needs or organizations with advanced requirements.
In addition to our earnings announcement today, we announced our Board of Directors approved a $5 million Saba stock buyback plan. We believe the current market value of our shares does not accurately reflect underlying value of the company and the repurchase program represents an attractive opportunity to deploy capital in a way that will benefit our shareholders.
In terms of financial highlights, total revenue in the fiscal third quarter was $26.7 million. Year to date revenues increased to $80 million, up 3.5% from $77.3 million during the first three quarters of fiscal 2009. Our license revenues were $5.5 million, up 17% over the prior year and up 65% year to date.
Saba Performance and Saba Succession and Worker’s Planning products accounted for 17% of total bookings in the quarter.
Turning to earnings, our non-GAAP EPS during the quarter was $0.07 per share on a fully diluted basis. Fiscal year, year to date non-GAAP net income was up 50% to $6.4 million or $0.22 per share on a fully diluted basis.
In terms of customer adoption during the third quarter, we strengthened our base of enterprise customers with 22 new customers bringing total new customers up to 72 during this fiscal year. In addition to the win at IBM and Baker Hughes mentioned earlier, we further strengthened our leadership position this past quarter with wins across the world with leading organizations including AstraZeneca, GE Security, FedEx, Novartis, UBS Financial Services, Union Bank and Westinghouse Electric.
Adoption of Saba Cloud solutions is accelerating and at the end of the quarter, our solutions reached over four million people with expanded customer adoption at enterprises including E-trade Financial, and [Komatsu].
On the product innovation front, during the third quarter Saba announced the general availability of Saba Compensation, broadening our Saba People Management suite to include learning, performance, compensation, succession planning, worker’s planning and collaborative technologies.
We also announced some exciting new innovations in our Saba Collaboration suite with the delivery of Saba Centra for iPhone and Saba Centra with access, making it easy and cost effective for mobile workers to access web conferences and virtual training from the iPhone from anywhere, any browsers.
Looking to our full fiscal year, we are increasing the bottom range of our guidance from $0.26 to $0.28. As we look ahead to fiscal 2011, we believe Saba is well positioned to achieve double-digit growth based on the investments we’ve made this fiscal year. Specifically, we increased our sales capacity in this fiscal year. We strengthened our alliances group to build on the momentum of our existing alliances partners while building relationships with new partners globally.