Ann: QUARTER: DIL: Diligent Announces Third Quarter 2015 Results

• Release Date: 10/11/15 09:03
• Summary: QUARTER: DIL: Diligent Announces Third Quarter 2015 Results
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10/11/2015 09:03
QUARTER
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QUARTER: DIL: Diligent Announces Third Quarter 2015 Results

November 10, 2015

Diligent Corporation Announces Third Quarter 2015 Financial Results

Total revenue of $US 24.9 million, up 16% year-over-year
23% revenue growth in Constant Currency
Adjusted EBITDA of $US 5.0 million & Adjusted Net Income per diluted share of
$US 0.03

November 10, 2015 -- Diligent Corporation ("Diligent" or the "Company") (NZX:
DIL), the Software-as-a-Service (SaaS) based platform for the secure
electronic production, distribution and collaboration of confidential
information to boards, committees and leadership teams, today announced
financial results for the third quarter and nine months ended September 30,
2015.

Brian Stafford, President and Chief Executive Officer of Diligent, said, "We
continued to build strong sales momentum in the third quarter, which from a
bookings perspective was the largest quarter in gross sales that we have had
in two years, led by significant upsells from our existing customers. We are
still building momentum in our new growth markets with nearly as many newly
signed customers in those markets in Q3 as we had signed in the first half of
the year. In addition, our new D&O product module has received robust
interest and early sales traction from our customers. From an operational
perspective, we continue to be focused on implementing sustainable systems
and process improvements - such as our recent deployment of salesforce.com
and Marketo - that will allow us to efficiently scale and support our rapid
growth."

Third Quarter 2015 Financial Highlights

- Revenue: For the quarter ended September 30, 2015, total revenue was $US
24.9 million, an increase of 16% compared with $US 21.4 million in the third
quarter of 2014, and was negatively impacted by $US 1.4 million due to the
strength of the U.S. dollar as compared to most non-U.S. currencies in which
we operate. On a constant currency basis, revenue in the third quarter was
$US 26.3 million, an increase of 23% compared to Q3 2014.

- Gross Profit: Gross profit for the third quarter was $US 19.8 million, an
increase of 18% compared with $US 16.8 million in the third quarter of 2014.
Gross margin was 80% compared with 78% in the third quarter of 2014.

- EBITDA: For the quarter ended September 30, 2015, EBITDA was $US 3.1
million compared with $US 5.6 million in the third quarter of 2014.

- Adjusted EBITDA: For the quarter ended September 30, 2015, Adjusted EBITDA
was $US 5.0 million compared with $US 6.8 million in the third quarter of
2014. Adjusted EBITDA margin was 20% compared with 32% in the third quarter
of 2014.

- Net Income: For the quarter ended September 30, 2015, net income was $US
1.7 million compared with $US 2.7 million in the third quarter of 2014.
Diluted earnings per share were $US 0.01, compared with $US 0.02 in the third
quarter of 2014.

- Adjusted Net Income: Adjusted Net Income for the third quarter of 2015 and
2014 was $US 3.4 million. Adjusted Net Income per diluted share was $US 0.03
for the third quarter of 2015 and 2014.

- Balance Sheet: As of September 30, 2015, Diligent had $US 68.8 million in
cash and cash equivalents and no external debt, an increase of approximately
$US 4.5 million as compared to cash and cash equivalents on June 30, 2015.

Third Quarter Business Highlights and Other Recent Announcements

- New Management Appointments: In September, Diligent announced the
appointment of Michael Stanton as Chief Financial Officer and Melinda Lee
Ferguson as Chief Sales Officer of Diligent.

- Customer Agreements and Diligent Boards Users: As of September 30, 2015,
total customer agreements were more than 3,500 (net of cancellations). During
the third quarter of 2015, the number of contracted Diligent Boards users
increased to more than 107,000 users.

- Revenue Retention Rate: In the third quarter, Diligent's annual revenue
retention rate, excluding upsells into the existing customer base, continued
to exceed 95%. Diligent's annual revenue retention rate, including upsells
into the existing customer base, exceeded 100% .

- New Product Releases: Diligent released the Diligent Teams and Diligent D&O
products in September As of September 30, 2015, more than ten customers had
adopted Diligent D&O.

- Systems & Process Investments: In the third quarter, Diligent made some
significant one-time and recurring investments in enterprise applications to
drive operational improvement and efficiency across the organization. During
the quarter, the Company deployed both salesforce.com and Marketo to drive
greater analytics, measurement and predictability across sales and marketing
management.  Additionally, the Company continued to invest in one-time
professional services around data and processes related to its implementation
of NetSuite. In total, one-time investments in new systems and processes
exceeded $1.0 million in the quarter.

- Acquisition of BoardLink: On October 19 (U.S. ET), Diligent announced that
it acquired all assets of BoardLink, a SaaS provider of board and leadership
team collaboration solutions, from Thomson Reuters (NYSE: TRI) for
approximately $10 million in an all cash transaction. The acquisition of
BoardLink adds more than 250 customers and approximately 9,000 users to
Diligent.

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."

Financial Outlook

As of November 10, 2015, Diligent is initiating revenue guidance for the
fourth quarter 2015, and updating revenue guidance for the full year 2015.
Management's updated full year 2015 guidance primarily reflects the negative
impact of foreign currency on our reported revenue growth due to a
strengthening U.S. dollar as well as the contribution of the BoardLink
acquisition.
- Fourth Quarter 2015: The Company expects revenue to be between $US 26.6
million and $US 26.9 million, or an increase of 21% at the midpoint of the
range.
- Full Year 2015: The Company is revising its annual revenue guidance to
between $US 98.5 million and $US 98.8 million, or an increase of 19% over
full year 2014 at the midpoint of the range, compared with the prior outlook
for revenue of between $US 98.5 million and $US 99.2 million. Diligent
expects adjusted EBITDA margin for full year 2015 to be between 24% and 26%.

Quarterly Conference Call

Diligent will host a conference call today at 9:30 a.m. NZT (3:30 p.m. U.S.
ET) to review the Company's financial results for the third quarter ended
September 30, 2015. To access this call participants should dial 0800 452 092
(New Zealand), 1-855-327-6837 (U.S.) or +1-778-327-3988 (international). A
live webcast of the conference call will be accessible from the investor
relations section of Diligent's website at
http://investor.diligent.com/News-and-Events/. A replay of this conference
call can also be accessed through November 16, 2015 at 11:59 p.m. U.S. ET, by
dialing 0800 452 092 (New Zealand), or 1-800-319-6413 (U.S.). The replay pass
code is 78523.

About Diligent

Diligent is the leading provider of secure corporate governance and
collaboration solutions for boards and senior executives. Over 3,500
customers in more than 60 countries and on all seven continents rely on
Diligent to provide secure, intuitive access to their most time-sensitive and
confidential information, ultimately helping them make better decisions. The
Diligent Boards (formerly Diligent Boardbooks) solution speeds and simplifies
how board materials are produced, delivered and collaborated on via any
device, removing the security concerns of doing this by courier, email and
file sharing. Diligent is a publicly listed company (NZX: DIL) with nearly
$US 100 million in annual recurring revenue, based on previously reported
revenue retention rates. Visit www.diligent.com to learn more.

Non-GAAP Financial Measures

This earnings release presents constant currency revenue growth, Adjusted
EBITDA, Adjusted Net Income and Adjusted Net Income per share 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:

- Constant Currency: We operate on a global basis, with a significant portion
of our net revenues generated outside of the U.S. Accordingly, fluctuations
in foreign currency exchange rates can affect our results of operations.
Therefore, to supplement financial results presented in accordance with GAAP,
certain financial information is presented excluding the impact of foreign
currency exchange translations to provide a framework for assessing how our
underlying businesses performed excluding the impact of foreign currency
exchange translations ("constant currency"). Constant currency information
compares results between periods as if exchange rates had remained constant
period-over-period. We calculate constant currency information by translating
current and prior-period operating results for entities reporting in
currencies other than U.S. dollars into U.S. dollars using average foreign
currency exchange rates for the prior year fiscal period. The constant
currency calculations do not adjust for the impact of revaluing specific
transactions denominated in a currency that is different to the functional
currency of that entity when exchange rates fluctuate. The constant currency
information we present may not be comparable to similarly titled measures
reported by other companies.

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

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 fourth quarter and full year 2015. 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 Boards 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. In addition, Diligent's fourth quarter and full-year 2015 revenue
outlook is not expressed in constant currencies, and actual results will
continue to be impacted by currency exchange rate fluctuations. 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
Corporation'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 filed with the SEC on March 16, 2015.

Investor inquiries:  Media inquiries:
William Maina
NZ toll free: 0800 995 082
International: +1-646-277-1236
[email protected]
 Geoff Senescall
Ph: + 64 21 481 234
or
ICR, Inc. for Diligent
Laura Anderson,
Ph: 1-203-682-8267
[email protected]

Michael Stanton
Chief Financial Officer
End CA:00273104 For:DIL    Type:QUARTER    Time:2015-11-10 09:03:38