Ann: QUARTER: DIL: Diligent Corporation Announces Second Quarter...

• Release Date: 11/08/15 09:23
• Summary: QUARTER: DIL: Diligent Corporation Announces Second Quarter 2015 Results
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QUARTER: DIL: Diligent Corporation Announces Second Quarter 2015 Results

August 11, 2015

Diligent Corporation Announces Second Quarter 2015 Financial Results

Total revenue of $US 24.1 million, up 18.5% year-over-year
23.4% revenue growth in Constant Currency
Adjusted EBITDA of $US 6.1 million & Adjusted Net Income per diluted share of
$US 0.02
Company increases 2015 annual revenue guidance

August 11, 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 second quarter and six months ended June 30, 2015.

Brian Stafford, President and Chief Executive Officer of Diligent, said, "We
are building solid momentum in the core business; we had a strong second
quarter, highlighted by revenue growth which exceeded the top end of our
guidance. We had our best quarter in new sales in two years both overall and
in the Americas, driven by continued strong demand for Diligent Boards and
improved execution on our growth initiatives. Based on our results for the
first six months of 2015, and our new business pipeline, we are raising our
full year 2015 revenue growth outlook. We are also pleased about our progress
on Diligent Teams, which is ready to go into a Beta phase, and we are excited
to announce a new D&O product module that we will begin selling in Q3.
Looking forward, we are making good progress but we still have a lot of
opportunities to increase our level of execution and I am confident that we
will continue to build momentum and further capitalize on our leading market
position."

Second Quarter 2015 Financial Highlights

o Revenue: For the quarter ended June 30, 2015, total revenue was $US 24.1
million, an increase of 18.5% compared with $US 20.3 million in the prior
year.  Diligent's reported revenue in the quarter was negatively impacted by
$US 1.0 million due to the strength of the U.S. dollar as compared to most
non-U.S. currencies in which we operate, consequently Diligent generated
23.4% constant currency revenue growth compared to Q2 2014.

o Gross Profit: Gross profit for the second quarter was $US 19.2 million, an
increase of 20% compared with $US 15.9 million in the prior year. Gross
margin was 79.5% compared with 78.4% in the second quarter of 2014.

o Adjusted EBITDA: For the quarter ended June 30, 2015, Adjusted EBITDA was
$US 6.1 million, an increase of 3% compared with $US 5.9 million in the prior
year. Adjusted EBITDA margin was 25.3% compared with 29.1% in the prior year.

o Net Income: For the quarter ended June 30, 2015, net income was $US 1.8
million compared with $US 2.5 million in the prior year. Diluted earnings per
share were $US 0.01, compared with $US 0.02 in the prior year.

Adjusted Net Income for the second quarter of 2015 was $US 3.0 million
compared with $US 3.5 million in the prior year. Adjusted Net Income per
diluted share was $US 0.02, compared with $US 0.03 in the prior year.

o Balance Sheet: As of June 30, 2015, Diligent had $US 64.3 million in cash
and cash equivalents and no bank debt, a decrease of approximately $US 1.0
million as compared to the cash and cash equivalents on March 31, 2015.

Second Quarter Business Highlights

o Client Agreements and Diligent Boards Users: As of June 30, 2015, total
client agreements were approximately 3,350 (net of cancellations). During the
second quarter of 2015, the number of contracted Diligent Boards users
increased to over 100,000 users.

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

o Product Enhancements: During the second quarter, Diligent productized a new
Directors and Officers questionnaire module on the core Diligent Boards
platform. The company plans to begin selling the D&O module in September of
2015.

Half-Year 2015 Financial Highlights

o Revenue: For the six months ended June 30, 2015, total revenue was $US 46.9
million, an increase of 19% compared with $US 39.5 million in the prior year.
Diligent's reported revenue for the six months was negatively impacted by
$1.7 million due to the stronger U.S. dollar, while Diligent generated a
23.2% constant currency revenue growth rate compared to the first six months
of 2014.

o Gross Profit: Gross profit for the six months ended June 30, 2015 was $US
37.6 million, an increase of 20% compared with $US 31.3 million in the prior
year period. Gross margin was 80.1% compared with 79.3% in the prior year.

o Adjusted EBITDA: Adjusted EBITDA for the six months ended June 30, 2015 was
$US 13.4 million, an increase of 9% compared with $US 12.3 million in the
prior year period. Adjusted EBITDA margin was 28.6% compared with 31.2% in
the prior year.

o Net Income: For the six months ended June 30, 2015, net income was $US 4.9
million compared with $US 4.4 million in the prior year. Diluted earnings per
share was $US 0.04, compared with $US 0.04 in the prior year period.

Adjusted Net Income for the six months ended June 30, 2015 was $US 7.1
million, compared with $US 7.2 million in the prior year. Adjusted Net Income
per diluted share was $US 0.06, compared with $US 0.06 in the prior year.

o Cash Flow: The Company used $US 0.5 million in cash from operations and
invested $US 4.8 million in capital expenditures, including capitalized
software development costs, for the six months ended June 30, 2015. For the
six month ended June 30, 2014, cash provided by operating activities was $US
9.3 million and capital expenditures were $US 2.7 million.

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 August 11, 2015, Diligent is initiating revenue guidance for the third
quarter 2015, increasing revenue guidance for the full year 2015, and
reiterating adjusted EBITDA margin guidance for the full year 2015 as
follows:
o Third Quarter 2015: The Company expects revenue to be between $US 25.3
million and $US 25.6 million, or an increase of 19% at the midpoint of the
range.
o Full Year 2015: The Company is increasing its annual revenue guidance to
between $US 98.5 million and $US 99.2 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 97 million and $US 99 million. Diligent continues
to expect 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 (5:30 p.m. US ET)
to review the Company's financial results for the second quarter ended June
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 August 17, 2015 at 11:59 p.m. USET, 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 3,300 clients
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:

o 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.

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

o 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 third 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 third 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]

Effective January 1, 2015, the Company began allocating facility and related
costs and certain costs associated with its Enterprise Resource Planning
system to Cost of revenues, Selling and marketing, General and
administrative, and Research and development. Previously such costs had been
presented within General and administrative expenses. Such costs are
allocated based on a department's proportionate share of total employee
headcount. The Company also changed the presentation of sales related
incentive commissions paid to account management personnel from Cost of
revenues to Selling and marketing. The Company determined that these changes
would better reflect industry practice and would provide more meaningful
information as well as increased transparency of its operations. To conform
the 2014 presentation to the current quarter's presentation, $US 0.6 million
was reclassified from General and administrative, of which $US 0.1 million
was included in Costs of revenues, $US 0.4 million was included in Selling
and marketing, and $US 0.1 million was included in Research and Development
for the three months ended June 30, 2014. To conform the 2014 presentation to
the current half-year presentation, $US 1.1 million was reclassified from
General and administrative, of which $US 0.1 million was included in Costs of
revenues, $US 0.8 million was included in Selling and marketing, and $US 0.2
million was included in Research and Development for the six months ended
June 30, 2014. Such reclassifications had no effect on previously reported
operating income, net income or retained earnings.
End CA:00268198 For:DIL    Type:QUARTER    Time:2015-08-11 09:23:59