UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2016
OR
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-35840
Model N, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware |
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77-0528806 |
(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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1600 Seaport Boulevard, Suite 400 Pacific Shores Center-Building 6 South Redwood City, California |
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94063 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(650) 610-4600
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter time period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |
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Accelerated filer |
x |
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Non-accelerated filer |
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(Do not check if a smaller reporting company) |
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Smaller reporting company |
o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of April 29, 2016, the registrant had 27,517,764 shares of common stock issued and outstanding.
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets as of March 31, 2016 and September 30, 2015 |
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3 |
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4 |
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5 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2016 and 2015 |
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6 |
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7 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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15 |
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Item 3. |
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26 |
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Item 4. |
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27 |
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Item 1. |
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28 |
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Item 1A. |
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28 |
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Item 2. |
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50 |
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Item 3. |
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50 |
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Item 4. |
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50 |
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Item 5. |
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50 |
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Item 6. |
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50 |
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51 |
2
MODEL N, INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited)
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As of |
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As of |
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March 31, |
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September 30, |
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2016 |
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2015 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
69,995 |
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$ |
91,019 |
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Accounts receivable, net of allowance for doubtful accounts of $0 as of March 31, 2016 and September 30, 2015 |
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22,454 |
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16,106 |
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Deferred cost of implementation services, current portion |
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1,067 |
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498 |
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Prepaid expenses |
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3,417 |
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3,229 |
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Other current assets |
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114 |
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109 |
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Total current assets |
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97,047 |
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110,961 |
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Property and equipment, net |
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7,042 |
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7,553 |
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Goodwill |
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6,939 |
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1,509 |
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Intangible assets, net |
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6,449 |
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317 |
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Other assets |
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1,420 |
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1,630 |
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Total assets |
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$ |
118,897 |
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$ |
121,970 |
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Liabilities And Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
1,507 |
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$ |
1,597 |
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Accrued employee compensation |
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7,603 |
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9,047 |
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Accrued liabilities |
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3,764 |
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3,464 |
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Deferred revenue, current portion |
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30,333 |
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22,039 |
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Total current liabilities |
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43,207 |
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36,147 |
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Deferred revenue, net of current portion |
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2,030 |
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1,942 |
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Other long-term liabilities |
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629 |
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819 |
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Total liabilities |
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45,866 |
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38,908 |
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Commitments and contingencies |
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Stockholders' equity: |
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Common Stock, $0.00015 par value; 200,000 shares authorized; 27,507 and 26,666 shares issued and outstanding at March 31, 2016 and September 30, 2015, respectively |
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4 |
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4 |
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Preferred Stock, $0.00015 par value; 5,000 shares authorized; no shares issued and outstanding |
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— |
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— |
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Additional paid-in capital |
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192,862 |
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186,159 |
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Accumulated other comprehensive loss |
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(491 |
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(466 |
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Accumulated deficit |
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(119,344 |
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(102,635 |
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Total stockholders' equity |
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73,031 |
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83,062 |
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Total liabilities and stockholders' equity |
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$ |
118,897 |
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$ |
121,970 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
MODEL N, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
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Three Months Ended March 31, |
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Six Months Ended March 31, |
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2016 |
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2015 |
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2016 |
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2015 |
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Revenues: |
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License and implementation |
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$ |
4,823 |
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$ |
9,741 |
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$ |
9,385 |
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$ |
19,422 |
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SaaS and maintenance |
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21,236 |
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12,935 |
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41,161 |
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25,355 |
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Total revenues |
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26,059 |
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22,676 |
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50,546 |
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44,777 |
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Cost of revenues: |
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License and implementation |
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3,601 |
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3,771 |
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7,018 |
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7,786 |
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SaaS and maintenance |
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10,238 |
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5,789 |
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19,250 |
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11,300 |
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Total cost of revenues |
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13,839 |
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9,560 |
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26,268 |
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19,086 |
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Gross profit |
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12,220 |
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13,116 |
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24,278 |
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25,691 |
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Operating expenses: |
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Research and development |
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6,175 |
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4,286 |
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11,459 |
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8,740 |
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Sales and marketing |
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8,307 |
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7,857 |
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16,014 |
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14,597 |
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General and administrative |
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6,644 |
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5,290 |
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13,364 |
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10,878 |
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Total operating expenses |
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21,126 |
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17,433 |
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40,837 |
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34,215 |
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Loss from operations |
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(8,906 |
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(4,317 |
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(16,559 |
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(8,524 |
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Interest income, net |
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(13 |
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(2 |
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(14 |
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(6 |
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Other (income) expenses, net |
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(12 |
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92 |
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45 |
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53 |
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Loss before income taxes |
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(8,881 |
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(4,407 |
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(16,590 |
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(8,571 |
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Provision for income taxes |
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29 |
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192 |
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119 |
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327 |
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Net loss |
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$ |
(8,910 |
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$ |
(4,599 |
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$ |
(16,709 |
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$ |
(8,898 |
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Net loss per share attributable to common stockholders: |
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Basic and diluted |
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$ |
(0.33 |
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$ |
(0.18 |
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$ |
(0.62 |
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$ |
(0.35 |
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Weighted average number of shares used in computing net loss per share attributable to common stockholders: |
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Basic and diluted |
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27,238 |
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25,880 |
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27,031 |
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25,597 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
MODEL N, INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(Unaudited)
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Three Months Ended March 31, |
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Six Months Ended March 31, |
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2016 |
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2015 |
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2016 |
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2015 |
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Net loss |
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$ |
(8,910 |
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$ |
(4,599 |
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$ |
(16,709 |
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$ |
(8,898 |
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Other comprehensive (loss) income, net |
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Change in foreign currency translation adjustment, net of taxes |
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— |
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13 |
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(25 |
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(68 |
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Total other comprehensive loss |
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$ |
(8,910 |
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$ |
(4,586 |
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$ |
(16,734 |
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$ |
(8,966 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
MODEL N, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Six Months Ended March 31, |
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2016 |
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2015 |
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Cash flows from operating activities: |
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Net loss |
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$ |
(16,709 |
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$ |
(8,898 |
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Adjustments to reconcile net loss to net cash used in operating activities |
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Depreciation and amortization |
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2,856 |
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1,883 |
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Stock-based compensation |
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5,158 |
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4,676 |
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Other non-cash charges |
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8 |
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135 |
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Changes in assets and liabilities: |
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Accounts receivable |
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(5,247 |
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(2,747 |
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Prepaid expenses and other assets |
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197 |
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(75 |
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Deferred cost of implementation services |
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(459 |
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(258 |
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Accounts payable |
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(311 |
) |
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1,289 |
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Accrued employee compensation |
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(1,443 |
) |
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(1,291 |
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Other accrued and long-term liabilities |
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324 |
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639 |
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Deferred revenue |
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7,404 |
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(2,613 |
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Net cash used in operating activities |
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(8,222 |
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(7,260 |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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(1,103 |
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(1,022 |
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Acquisition of business |
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(12,615 |
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— |
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Capitalization of software development costs |
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(615 |
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(1,250 |
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Net cash used in investing activities |
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(14,333 |
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(2,272 |
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Cash flows from financing activities: |
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Proceeds from exercise of stock options and employee stock purchase plan |
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1,545 |
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1,702 |
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Net cash provided by financing activities |
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1,545 |
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1,702 |
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Effect of exchange rate changes on cash and cash equivalents |
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(14 |
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(17 |
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Net decrease in cash and cash equivalents |
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(21,024 |
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(7,847 |
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Cash and cash equivalents |
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Beginning of period |
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91,019 |
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101,006 |
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End of period |
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$ |
69,995 |
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$ |
93,159 |
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Supplemental Disclosure of Cash Flow Data: |
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Non-cash Investing and Financing Activities: |
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Capitalized stock options in software development costs |
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— |
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109 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
MODEL N, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. |
The Company and Significant Accounting Policies and Estimates |
Model N, Inc. (Company) was incorporated in Delaware on December 14, 1999. The Company is a provider of revenue management solutions for the life science and technology industries. The Company’s solutions enable its customers to maximize revenues and reduce revenue compliance risk by transforming their revenue life cycle from a series of tactical, disjointed operations into a strategic end-to-end process, which enables them to manage the strategy and execution of pricing, contracting, incentives and rebates. The Company’s corporate headquarters are located in Redwood City, California, with additional offices in the United States, India, the United Kingdom and Switzerland.
Fiscal Year
The Company’s fiscal year ends on September 30. References to fiscal year 2016, for example, refer to the fiscal year ending September 30, 2016.
Basis for Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2015. There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the fiscal year ended September 30, 2015 included in the Annual Report on Form 10-K.
In the opinion of management, the unaudited interim consolidated financial statements include all the normal recurring adjustments necessary to present fairly the condensed consolidated financial statements. The results of operations for the three and six months ended March 31, 2016 were not necessarily indicative of the operating results for the full fiscal year 2016 or any future periods.
The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include revenue recognition, legal contingencies, income taxes, stock-based compensation, software development costs and valuation of intangibles. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors. However, actual results could differ significantly from these estimates.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount to which an entity expects to be entitled when products and services are transferred to customers. ASU 2014-09 was originally to be effective for the Company on October 1, 2017. In July 2015, the FASB affirmed a one-year deferral of the effective date of the new revenue standard. The standard will be effective for our fiscal year beginning October 1, 2018, at which time we may adopt the new standard under either the full retrospective method or the modified retrospective method. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements and have not determined whether the effect will be material.
7
MODEL N, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The new standard eliminates the requirement for an acquirer to retrospectively adjust provisional amounts recorded in a business combination to reflect new information about the facts and circumstances that existed as of the acquisition date and that, if known, would have affected measurement or recognition of amounts initially recognized. As an alternative, the standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. It requires that the acquirer record, in the financial statements of the period in which adjustments to provisional amounts are determined, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The new standard is effective prospectively for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.
In February 2016, the FASB issued guidance on the recognition and measurement of leases. Under the new guidance, lessees are required to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use asset on the balance sheet for most leases. The guidance retains the current accounting for lessors and does not make significant changes to the recognition, measurement, and presentation of expenses and cash flows by a lessee. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leases. The guidance will require modified retrospective application at the beginning of our first quarter of fiscal 2020, with optional practical expedients, but permits adoption in an earlier period. We are currently evaluating the impact this guidance will have on our consolidated financial statements.
In March 2016, the Financial Accounting Standards Board (“FASB”) issued guidance related to stock-based compensation, which changes the accounting for and classification of excess tax benefits and minimum tax withholdings on share-based awards. The guidance becomes effective for us at the beginning of our first quarter of fiscal 2018 but permits adoption in an earlier period. We are currently evaluating the impact this guidance will have on our consolidated financial statements.
2. |
Business Combinations |
On October 30, 2015, the Company acquired certain assets and liabilities of Channelinsight Inc. (CI), a privately held cloud-based channel data management solution provider. The Company paid a total purchase price of $12.6 million in cash. Pro forma results have not been presented as the Company does not consider the acquisition to be significant.
The purchase consideration was allocated to tangible, identifiable intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. This allocation resulted in provisional fair value allocated to intangible assets of $6.8 million and goodwill of $5.4 million. The goodwill is deductible for tax purposes. Intangible assets acquired included developed technology, backlog, patents, trade names and customer relationships, and are being amortized on a straight-line basis over their estimated useful lives of 1 to 10 years. The key factors attributable to the creation of goodwill by the transaction are synergies in skill-sets, operations, customer base and organizational cultures. The results of operations and the provisional fair values of the assets acquired and liabilities assumed have been included in the accompanying unaudited condensed financial statements since the acquisition date.
8
MODEL N, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
3. |
Consolidated Balance Sheet Components |
Components of property and equipment, and intangible assets consisted of the following:
Property and Equipment
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As of |
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As of |
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March 31, |
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September 30, |
|
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2016 |
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2015 |
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(in thousands) |
|
|||||
Computer software and equipment |
|
$ |
8,950 |
|
|
$ |
8,383 |
|
Furniture and fixtures |
|
|
679 |
|
|
|
673 |
|
Leasehold improvements |
|
|
883 |
|
|
|
875 |
|
Software development costs |
|
|
8,254 |
|
|
|
6,915 |
|
Total property and equipment |
|
|
18,766 |
|
|
|
16,846 |
|
Less: Accumulated depreciation and amortization |
|
|
(12,465 |
) |
|
|
(10,353 |
) |
Property and equipment, net |
|
|
6,301 |
|
|
|
6,493 |
|
Add: Construction in progress |
|
|
741 |
|
|
|
1,060 |
|
Total property and equipment, net |
|
$ |
7,042 |
|
|
$ |
7,553 |
|
|
|
|
|
|
|
|
|
|
Computer equipment acquired under the capital leases is included in property and equipment and consisted of the following:
|
|
As of |
|
|
As of |
|
||
|
|
March 31, |
|
|
September 30, |
|
||
|
|
2016 |
|
|
2015 |
|
||
|
|
(in thousands) |
|
|||||
Computer software and equipment |
|
$ |
777 |
|
|
$ |
793 |
|
Less: Accumulated depreciation and amortization |
|
|
(777 |
) |
|
|
(791 |
) |
Total computer software and equipment, net |
|
$ |
— |
|
|
$ |
2 |
|
|
|
|
|
|
|
|
|
|
Depreciation expense including depreciation of assets under capital leases totaled $1.2 million and $0.9 million for the three months ended March 31, 2016 and 2015, respectively, and $2.2 million and $1.7 million for the six months ended March 31, 2016 and 2015, respectively.
9
MODEL N, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Intangible Assets
|
|
Estimated |
|
As of |
|
|
As of |
|
||
|
|
Useful Life |
|
March 31, |
|
|
September 30, |
|
||
|
|
(in Years) |
|
2016 |
|
|
2015 |
|
||
|
|
|
|
(in thousands) |
|
|||||
Intangible Assets: |
|
|
|
|
|
|
|
|
|
|
Developed technology |
|
4 - 5 years |
|
$ |
5,313 |
|
|
$ |
2,213 |
|
Backlog |
|
3- 5 years |
|
|
280 |
|
|
|
100 |
|
Non-competition agreement |
|
3 years |
|
|
100 |
|
|
|
100 |
|
Customer relationships |
|
3 -10 years |
|
|
4,419 |
|
|
|
1,019 |
|
Trade name |
|
1 years |
|
|
110 |
|
|
|
— |
|
Total intangible assets |
|
|
|
|
10,222 |
|
|
|
3,432 |
|
Less: Accumulated amortization |
|
|
|
|
(3,773 |
) |
|
|
(3,115 |
) |
Total intangible assets, net |
|
|
|
$ |
6,449 |
|
|
$ |
317 |
|
|
|
|
|
|
|
|
|
|
|
|
The Company recorded amortization expense related to the acquired intangible assets of $0.4 million and $0.1 million for the three months ended March 31, 2016 and 2015, respectively, and $0.7 million and $0.1 million for the six months ended March 31, 2016 and 2015, respectively.
Estimated future amortization expense for the intangible assets as of March 31, 2016 is as follows:
2016 (remaining 6 months) |
|
$ |
764 |
|
2017 |
|
|
1,257 |
|
2018 |
|
|
1,175 |
|
2019 |
|
|
1,120 |
|
2020 and thereafter |
|
|
2,133 |
|
Total future amortization |
|
$ |
6,449 |
|
|
|
|
|
|
4. |
Goodwill |
The goodwill balance as of March 31, 2016, was the result of the business combination disclosed in Note 2 of these unaudited condensed consolidated financial statements. The activity for the six months ended March 31, 2016 consisted of the following:
Balance as at September 30, 2015 |
|
$ |
1,509 |
|
Add: Goodwill from acquisition of business |
|
|
5,430 |
|
Balance as at March 31, 2016 |
|
$ |
6,939 |
|
|
|
|
|
|
5. |
Fair Value of Financial Instruments |
The financial instruments of the Company consist primarily of cash and cash equivalents, accounts receivable, accounts payable and certain accrued liabilities. The Company regularly reviews its financial instruments portfolio to identify and evaluate such instruments that have indications of possible impairment. When there is no readily available market data, fair value estimates are made by the Company, which involves some level of management estimation and judgment and may not necessarily represent the amounts that could be realized in a current or future sale of these assets.
10
MODEL N, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value instruments defines a three-level valuation hierarchy for disclosures as follows:
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2—Input other than quoted prices included in Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs for similar assets and liabilities that are observable or can be corroborated by observable market data; and
Level 3—Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own models and involves some level of management estimation and judgment.
The Company’s Level 1 assets consist of U.S. treasury bills and money market funds. These instruments are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.
The table below sets forth the Company’s cash equivalents as of March 31, 2016 and September 30, 2015, which are measured at fair value on a recurring basis by level within the fair value hierarchy. The assets are classified based on the lowest level of input that is significant to the fair value measurement.
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
As of March 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund deposits |
|
$ |
59,935 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
59,935 |
|
Total |
|
$ |
59,935 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
59,935 |
|
As of September 30, 2015: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund deposits |
|
$ |
45,516 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
45,516 |
|
U.S. treasury bills |
|
|
35,000 |
|
|
|
— |
|
|
|
— |
|
|
|
35,000 |
|
Total |
|
$ |
80,516 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
80,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s cash equivalents as of March 31, 2016 and September 30, 2015 consisted of money market funds and treasury bills with original maturity dates of less than three months from the date of their respective purchase. Cash equivalents are classified as Level 1. The fair value of the Company’s money market funds approximated amortized cost and, as such, there were no unrealized gains or losses on money market funds as of March 31, 2016 and September 30, 2015. As of March 31, 2016 and September 30, 2015, amounts of $10.1 million and $10.5 million, respectively, were held in bank deposits.
6. |
Stock-based Compensation |
As of March 31, 2016, 4.3 million shares were available for future stock awards under the Company’s equity plans. There were no stock options granted during three months and six months ended March 31, 2016 and 2015, respectively.
11
MODEL N, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table summarized the stock option activity and related information under all equity plans:
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
||
|
|
Number of |
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
||||
|
|
Shares |
|
|
Exercised |
|
|
Contract |
|
|
Intrinsic |
|
||||
|
|
(thousands) |
|
|
Price |
|
|
Term (in Years) |
|
|
Value |
|
||||
Balance at September 30, 2015 |
|
|
1,119 |
|
|
$ |
6.29 |
|
|
|
4.68 |
|
|
$ |
4,904 |
|
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Exercised |
|
|
(132 |
) |
|
|
2.68 |
|
|
|
— |
|
|
|
|
|
Forfeited |
|
|
(12 |
) |
|
|
13.71 |
|
|
|
— |
|
|
|
|
|
Expired |
|
|
(30 |
) |
|
|
12.12 |
|
|
|
— |
|
|
|
|
|
Balance at March 31, 2016 |
|
|
945 |
|
|
$ |
6.54 |
|
|
|
4.02 |
|
|
$ |
4,420 |
|
Options exercisable as of March 31, 2016 |
|
|
944 |
|
|
$ |
6.53 |
|
|
|
4.02 |
|
|
$ |
4,420 |
|
Options vested and expected to vest as of March 31, 2016 |
|
|
923 |
|
|
$ |
6.39 |
|
|
|
3.96 |
|
|
$ |
4,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the Company’s restricted stock units activity under all equity plans:
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
Average |
|
|
|
|
Restricted Stock |
|
|
Grant Date |
|
||
|
|
Units Outstanding |
|
|
Fair Value |
|
||
|
|
(in thousands) |
|
|
|
|
|
|
Balance at September 30, 2015 |
|
|
2,302 |
|
|
$ |
12.32 |
|
Granted |
|
|
1,180 |
|
|
|
10.59 |
|
Released |
|
|
(571 |
) |
|
|
10.45 |
|
Forfeited |
|
|
(368 |
) |
|
|
11.37 |
|
Balance at March 31, 2016 |
|
|
2,543 |
|
|
$ |
12.12 |
|
|
|
|
|
|
|
|
|
|
Stock-based Compensation
Stock-based compensation is as follows:
|
|
Three Months Ended March 31, |
|
|
Six Months Ended March 31, |
|
||||||||||
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License and implementation |
|
$ |
220 |
|
|
$ |
166 |
|
|
$ |
420 |
|
|
$ |
304 |
|
SaaS and maintenance |
|
|
258 |
|
|
|
180 |
|
|
|
484 |
|
|
|
376 |
|
Total stock-based compensation in cost of revenue |
|
|
478 |
|
|
|
346 |
|
|
|
904 |
|
|
|
680 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
161 |
|
|
|
266 |
|
|
|
562 |
|
|
|
594 |
|
Sales and marketing |
|
|
650 |
|
|
|
727 |
|
|
|
1,243 |
|
|
|
1,374 |
|
General and administrative |
|
|
1,319 |
|
|
|
943 |
|
|
|
2,449 |
|
|
|
2,028 |
|
Total stock-based compensation in operating expense |
|
|
2,130 |
|
|
|
1,936 |
|
|
|
4,254 |
|
|
|
3,996 |
|
Stock-based compensation in operating loss |
|
|
2,608 |
|
|
|
2,282 |
|
|
|
5,158 |
|
|
|
4,676 |
|
Stock-based compensation capitalized as software development cost |
|
|
— |
|
|
|
58 |
|
|
|
— |
|
|
|
109 |
|
Total stock-based compensation |
|
$ |
2,608 |
|
|
$ |
2,340 |
|
|
$ |
5,158 |
|
|
$ |
4,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
MODEL N, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
7. |
Income Taxes |
The Company recorded an income tax expense of $29,000 and $192,000, representing effective income tax rates of (0.3)% and (4)%, for the three months ended March 31, 2016 and 2015, respectively; and $119,000 and $327,000, representing income rates of (0.7)% and (4)%, for the six months ended March 31, 2016 and 2015, respectively. The Company’s effective income-tax rates during these periods differ from the Company’s federal statutory rate of 34% primarily due to permanent differences for stock-based compensation and the impact of state income taxes and foreign tax rate differences, and the Company realized no benefit for current period losses due to maintaining a full valuation allowance against the U.S. and foreign net deferred tax assets.
&nb