Ann: QUARTER: DIL: Diligent Announces Second Quarter 2014 Results

• Release Date: 08/08/14 09:05
• Summary: QUARTER: DIL: Diligent Announces Second Quarter 2014 Results
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					DIL
08/08/2014 09:05
QUARTER

REL: 0905 HRS Diligent Board Member Services INC (NS)

QUARTER: DIL: Diligent Announces Second Quarter 2014 Results

August 8, 2014

Diligent Board Member Services, Inc. Announces Second-Quarter 2014 Financial
Results

August 8, 2014 --Diligent Board Member Services, Inc. ("Diligent" or the
"Company") (NZX: DIL) (www.boardbooks.com), provider of the world's most
widely used secure board portal, today announced financial results for the
second-quarter and six months ended June 30, 2014.

Alessandro Sodi, President and Chief Executive Officer of Diligent commented
on the results: "Revenue growth exceeded our expectations for the
second-quarter contributing to total revenue growth of 35% for the first half
of the year. Demand for our Boardbooks product remains strong as companies
continue to embrace the use of electronic board portals worldwide. Looking
forward, we have entered the second half of the year with solid momentum. We
will remain focused on our growth strategies of entering new markets and
expanding our product functionality and related use cases. We continue to see
real opportunities in these areas and remain confident of our ability to grow
in a disciplined way."

Second-Quarter 2014 Financial Highlights

- Revenue: For the quarter ended June 30, 2014, total revenue was $US 20.3
million, an increase of 30% compared with $US 15.6 million in the prior year.

- Gross Profit: Gross profit for the second quarter was $US 16.4 million, an
increase of 30% compared with $US 12.6 million in the prior year. Gross
margin was 80.5% compared with 80.8% in the second quarter of 2013.

- Adjusted EBITDA: For the quarter ended June 30, 2014, Adjusted EBITDA was
$US 5.9 million, an increase of 14% compared with $US 5.2 million in the
prior year. Adjusted EBITDA margin was 29.1% compared with 33.2% in the prior
year.

- Net Income: For the quarter ended June 30, 2014, net income was $US 2.5
million, an increase of 12% compared with $US 2.2 million in the prior year.
Diluted earnings per share was $US 0.02, compared with $US 0.02 in the prior
year.

Adjusted Net Income for second quarter was $US 3.5 million, an increase of
21% compared with $US 2.9 million in the prior year. Adjusted Net Income per
diluted share was $US 0.03, compared with $US 0.02 in the prior year.

- Balance Sheet: As of June 30, 2014, Diligent had $US 61.7 million in cash
balances and short-term investments and no bank debt, an increase of $US 1.1
million as compared to the cash and short-term investments on March 31, 2014.

Second Quarter and Other Recent Business Highlights

- Boardbooks Users: During the second quarter of 2014, the number of Diligent
Boardbooks users increased by approximately 5,500 to over 82,600 users.

- Revenue Retention Rate: In the second quarter, Diligent's annual revenue
retention rate (excluding upsells into the existing customer base) continued
to exceed 95%; which the Company believes places it among the best-in-class
for SaaS companies.

- Charlotte, NC Development Center: During the second quarter Diligent opened
a new Charlotte, North Carolina development center. To date, the Company has
hired 14 research and development employees to work in the Charlotte, NC
office and plans to expand the number of R&D staff in this location to
approximately 30 by the end of 2014.

Half-Year 2014 Financial Highlights

- Revenue: For the six months ended June 30, 2014, total revenue was $US 39.5
million, an increase of 35% compared with $US 29.3 million in the prior year.

- Gross Profit: Gross profit for the six months ended June 30, 2014 was $US
31.8 million, an increase of 35% compared with $US 23.6 million in the prior
year period. Gross margin was 80.5% compared with 80.3% in the prior year.

- Adjusted EBITDA: Adjusted EBITDA for the six months ended June 30, 2014 was
$US 12.3 million, an increase of 29% compared with $US 9.5 million in the
prior year period. Adjusted EBITDA margin was 31.2% compared with 32.5% in
the prior year.

- Net Income: For the six months ended June 30, 2014, net income was $US 4.4
million, an increase of 29% compared with $US 3.5 million in the prior year.
Diluted earnings per share was $US 0.04, compared with $US 0.03 in the prior
year period.

Adjusted Net Income for the six months ended June 30, 2014 was $US 7.2
million, an increase of 33% compared with $US 5.4 million in the prior year.
Adjusted Net Income per diluted share was $US 0.06, compared with $US 0.04 in
the prior year.

- Cash Flow: The Company generated $US 9.3 million in cash from operations
and invested $US 2.7 million in capital expenditures, yielding free cash flow
of $US 6.6 million for the six months ended June 30, 2014. Free cash flow was
$US 5.8 million in the prior year period.

A reconciliation of GAAP to non-GAAP financial measures has been provided in
the financial statement tables included in this press release. An explanation
of these measures is also included below under the heading "Non-GAAP
Financial Measures."

Revenue Outlook

As of August 8, 2014, Diligent is initiating revenue guidance for the
third-quarter 2014 and increasing guidance for the full year 2014, as
follows:
- Third-Quarter 2014: The Company expects revenue to be between $US 20.7
million and $US 21.0 million, or an increase of 20% to 22% year-over-year.
- Full Year 2014: The Company is increasing its annual revenue guidance to
between $US 81.5 million and $US 82.5 million, or an increase of 26% to 27%
over full year 2013, compared with the prior outlook for revenue of between
$US 80.5 million and $US 82.0 million.

Quarterly Conference Call

Diligent will host a conference call today at 9:30 a.m. NZST (5:30 p.m. USET)
to review the Company's financial results for the second-quarter and six
months ended June 30, 2014. To access this call participants should dial
0800-452-092 (New Zealand), 1-855-327-6837 (U.S.) or +1-631-982-4565
(international). A live webcast of the conference call will be accessible
from the investor relations section of Diligent's website at
http://boardbooks.com/investor-relations. A replay of this conference call
can also be accessed through August 15, 2014, by dialing 0800-452-092 (New
Zealand), 1-800-319-6413 (U.S.). The replay pass code is 78523.

About Diligent

Over 82,600 individual directors, executives and board teams worldwide rely
on Diligent Board Member Services, Inc. (NZX: DIL) to speed and simplify how
board materials are produced, delivered, reviewed and voted on. Providing the
world's most widely used secure board portal via iPad, Windows devices and
browsers - Diligent has pioneered ease of use, stringent security, and
superior training and support since 2001. Diligent Boardbooks provides
directors and management with immediate access to their most time sensitive
and confidential information along with the tools to review, discuss and
collaborate on it. It also helps administrative staff accelerate production
and delivery, and corporate executives streamline board communications and
decisions.

Diligent uses the Software-as-a-Service (SaaS) model to distribute its
Diligent Boardbooks application to the market and maintain the security and
integrity of its clients' data. Under this model, Diligent offers annual
renewable subscriptions for customer access to its Diligent Boardbooks
product which is hosted on Diligent's secure servers, and offers a complete
suite of related services including training, support, data migration and
data security/backup.

Non-GAAP Financial Measures

This earnings release presents Adjusted EBITDA, Adjusted Net Income, Adjusted
Net Income per share, and Free Cash Flow information, which are provided to
investors to supplement the results of operations reported in accordance with
accounting principles generally accepted in the United States of America
("GAAP"). We define these terms as follows:

- Adjusted EBITDA: operating income before depreciation and amortization
expense, stock based compensation expense, costs associated with the
investigation and restatement of our historical financial statements, and
other costs, such as the CEO's replacement awards and restatement bonuses.

- Adjusted Net Income: net income before costs relating to non cash stock
based compensation, costs associated with the investigation and restatement
of our historical financial statements, and other costs, such as the CEO's
replacement awards and restatement bonuses, net of tax.

- Free Cash Flow: cash flows provided by operating activities minus capital
expenditures.

These supplemental measures of the Company's performance are not required by,
or presented in accordance with GAAP. The Company's management uses these
non-GAAP financial measures internally in analyzing its financial results and
believes they are useful to investors, as a supplement to the corresponding
GAAP measures, in evaluating the Company's ongoing operational performance
and trends and in comparing its financial measures with other companies in
the same industry, many of which present similar non-GAAP financial measures
to help investors understand the operational performance of their businesses.
However, it is important to note that the particular items the Company
excludes from, or includes in, its non-GAAP financial measures may differ
from the items excluded from, or included in, similar non-GAAP financial
measures used by other companies in the same industry. Non-GAAP financial
measures should not be considered in isolation from, or a substitute for,
financial information prepared in accordance with GAAP. For a quantitative
reconciliation of Adjusted EBITDA and Adjusted Net Income to the most
directly comparable GAAP financial performance measure see Schedule 4:
Reconciliation of GAAP to Non-GAAP Operating Results in this earnings
release.

Safe Harbor Statement

Statements made in this press release that state Diligent's or management's
intentions, beliefs, expectations, or predictions for the future are
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995, including without limitation Diligent's
revenue outlook for the third quarter and full year 2014. Readers are
cautioned that these statements are only predictions and may differ
materially from actual future events or results. All forward
looking-statements are only as of the date of this press release and Diligent
undertakes no obligation to update or revise them. Such forward-looking
statements are subject to a number of risks, assumptions and uncertainties
that could cause Diligent's actual results to differ materially from those
projected in such forward-looking statements. For example, if we do not
successfully develop or introduce new product offerings, or enhancements to
our existing Diligent Boardbooks offerings, or keep pace with technological
changes that impact the use of our product offerings, or suffer security
breaches or service interruptions, we may lose existing customers or fail to
attract new customers and our financial performance and revenue growth may
suffer. Factors which could cause our actual results to differ materially
from those projected in forward-looking statements include, without
limitation, economic, competitive, regulatory and technological factors
affecting Diligent Board Member Services, Inc.'s operations, markets,
products, services and other factors set forth in the Company's Risk Factors
included in its Annual Report on Form 10-K/A filed with the SEC on May 20,
2014.

Investor inquiries:
Sonya Joyce
Ph: + 64 4 894 6912

Media inquiries:
Geoff Senescall
Ph: + 64 21 481 234
End CA:00253627 For:DIL    Type:QUARTER    Time:2014-08-08 09:05:47