Press Releases


Taleo Announces Third Quarter 2006 Financial Results

Dublin, Calif., — November 13, 2006 – Taleo Corporation (Nasdaq: TLEO), the leading provider of on demand talent management solutions, today announced financial results for its fiscal third quarter ended September 30, 2006.

Business Highlights Include: 

  • Q3 2006 revenue increased by 25% year-over-year to $24.9 million.
  • Q3 2006 recurring application revenue increased by 27% year-over-year to over $20.3 million.
“In the quarter we continued to see steady demand for our talent management solutions.  We added 110 new customers – 15 large enterprise customers and 95 SMB customers bringing our total customer count to over 720,” stated Michael Gregoire, president and CEO of Taleo.  “We are pleased to report strong organic growth that was driven by both new business sales and service engagements as well as strong cross sales of our new Taleo OnBoarding™ and Taleo Reporting and Analytics™ products to our installed base of customers.”

“We are also very excited to announce today that Taleo is developing a new suite of Performance Management applications,” commented Gregoire.   “According to IDC, the Performance Management market is the fastest growing segment of talent management with an estimated market size of $495 million in 2008.  Furthermore, our customers have expressed strong interest in a performance management offering from us. In response to this significant market opportunity and customer demand, Taleo will develop and deliver a fully integrated enterprise-class product that will be highly differentiated from the current competitive offerings. We anticipate these new offerings will be available in the fall of 2007.”

Taleo announced the following results for the quarter ended September 30, 2006:

Revenue: Total revenue for the third quarter was $24.9 million, an increase of 25% on a year-over-year basis.  Recurring application revenue for the third quarter was $20.3 million, an increase of 27% on a year-over-year basis. 

Net Loss and Loss Per Share: Net Loss in accordance with accounting principles generally accepted in the United States, or GAAP, was $(0.8) million for the third quarter, compared to a net loss of $(1.6) million for the same period last year.  Net loss for the third quarter of 2006 includes share-based payment expense of $1.2 million pursuant to the adoption on January 1, 2006 of Financial Accounting Standards Board (FASB) Statement No. 123R, “Share-Based Payment” (SFAS 123R), which requires companies to expense the fair value of employee stock options and similar stock based compensation awards.  Net loss per share was $(0.04) for the third quarter of 2006 based on 20.4 million weighted average shares outstanding compared to net loss per share of $(16.74) for the same period in 2005 based on 149 thousand weighted average shares outstanding. 

Non-GAAP Net Income/Loss and Non-GAAP Income/Loss Per Share: Non-GAAP net income, which excludes restructuring costs and other charges, loss on disposal of fixed assets, stock compensation expense, share-based payment expense pursuant to SFAS 123R, amortization of acquired intangibles, fees for early retirement of indebtedness, net adjustment for tax valuation allowances, and accretion of dividends and issuance costs on preferred stock, was $0.9 million for the third quarter of 2006, compared to a non-GAAP net income of $171 thousand in the same period last year.  Non-GAAP net income per share was $0.04 for the third quarter of 2006 based on 25.7 million weighted average shares outstanding compared to non-GAAP net income per share of $0.01 for the same period in 2005 based on 18.9 million weighted average shares outstanding. 

Additional Third Quarter Business Highlights:
  • Taleo added 110 new customers in the quarter, bringing total customers to over 720. 
  • New Taleo customers added in the third quarter of 2006 include the following leading companies across a wide variety of industries:  The Gallup Organization, Ministry Healthcare, Phelps Dodge, Phoenix Children’s Hospital, Alcatel Australia, QuickSilver, Kaatar, MySQL, Unified Western Grocers, and Metropolitan Library System.
  • Taleo customers have used Taleo solutions to process 51 million candidates and enable more than 1.75 million hires since inception.
  • The Company announced the opening of an office in Singapore to support local market demand.  Taleo’s Singapore office will provide additional support to help address the local needs of its global customers and support the growing market demand in Asia Pacific for talent management solutions.
  • Taleo received several awards and industry recognition including: “HR Product of the Year” award by Human Resource Executive Magazine for Taleo Analytics & Reporting™;  the CIO 100 Award from CIO Magazine, and the 2006 Enterprise All-Star Award Network World Magazine,  in recognition of the Company’s leadership and innovation with its on demand technology infrastructure.
  • Taleo launched a new services offering, Taleo Talent Intelligence.  This new services offering compliments the award winning Taleo Reporting and Analytics solution - a strategic and powerful new way to measure, analyze, and optimize talent for improved business performance.
Conference Call Details
In conjunction with this announcement, Taleo will host a conference call today at 4:30 pm (EDT) to discuss the company's third quarter 2006 financial results.  To access this call, dial 800-688-0836 (domestic) or 617-614-4072 (international) using passcode 24182063. A replay of this conference call will be available through November 26, 2006, at 888-286-8010 (domestic) or 617-801-6888 (international). The replay passcode is 61035593. A live webcast of this conference call will be available on the "Investor Relations" page of the Company's Web site, (www.taleo.com) and a replay will be archived on the Web site as well.

About Taleo Corporation
Taleo (Nasdaq: TLEO) delivers on demand talent management solutions that enable organizations of all sizes to assess, acquire, develop and align their workforce for improved business performance. Taleo’s customers use its suite of solutions to improve their talent management processes to reduce the time and costs associated with these processes and to enhance the quality, productivity and satisfaction of their workforces. Taleo currently has more than 720 corporate customers with approximately 750,000 registered users who use our services to fill positions in almost 100 countries. For more information visit www.taleo.com.

Forward-looking Statements
This release contains forward-looking statements, including statements regarding Taleo’s future financial performance, new product development, market growth, the demand for Taleo’s solutions and general business conditions.  Any forward-looking statements contained in this press release are based upon Taleo's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Taleo's expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Taleo disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including the possibility that the market for enterprise software does not develop as anticipated; the volatility of our stock price due to the difficulty in predicting operating results and the long sales cycle for our software; failure to develop new software products or enhance existing products; failure to retain key staff; the failure to maintain historical maintenance renewal rates; and the failure to properly protect our proprietary rights and intellectual property.  Further information on potential factors that could affect actual results is included in Item 1A of Taleo’s Annual Report on Form 10-K, as filed with the SEC on April 17, 2006, in Item 1A of Taleo Quarterly Report on Form 10-Q, as filed with the SEC on August 14, 2006, and in other reports filed by Taleo with the SEC.

Non-GAAP Financial Measures
Taleo has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP net income (loss) and non-GAAP earnings (loss) per share. Taleo uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Taleo's ongoing operational performance. Taleo believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with other companies in Taleo’s industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial measures discussed above exclude restructuring costs and other charges, loss on disposal of fixed assets, stock compensation expense, share-based payment expense pursuant to SFAS 123R, amortization of acquired intangibles, fees for early retirement of indebtedness, net adjustment for tax valuation allowances, and accretion of dividends and issuance costs on preferred stock.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. As previously mentioned, a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.



Taleo Corporation
Condensed Consolidated Balance Sheets
(All amounts in thousands)
      (Unaudited)          
                 
                 
      Sept 30, June 30   March 31,   Dec 31,
      2006 2006   2006   2005
ASSETS              
  Current assets:            
    Cash and cash equivalents $ 52,989 $ 63,050   $ 62,731   $ 59,346
    Restricted cash 972 961   779   1,110
    Accounts receivable 24,230 17,070   20,517   15,026
    Prepaid expenses and other current assets 4,906 3,729   4,021   3,010
    Investment credit receivable 4,010 3,461   2,815   4,944
    Total current assets 87,107 88,271   90,863   83,436
                 
  Property and Equipment            
    Property and equipment 24,433 23,087   16,548   16,217
    Accumulated depreciation - Property and equipment (11,685) (10,877)   (9,624)   (9,088)
    Government Assistance           0
  Property and equipment, net 12,748 12,210   6,924   7,129
  Restricted Cash 1,053 1,048   1,248   936
  Other assets 435 274   382   283
  Goodwill 6,027 6,027   6,027   5,947
  Other Intangibles, net 541 791   1,040   1,289
  Total assets $ 107,911 $ 108,621   $ 106,484   $ 99,020
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY            
  Current liabilities:            
    Capital lease obligation, current $ 501 $ 602   $ 581   $ 583
    Accounts payable and accrued liabilities 13,579 14,918   11,267   13,063
    Contingent shares issuable 80 80   80   81
    Customer deposits 1,152 1,654   2,397   342
    Deferred revenue 16,149 16,415   17,724   10,870
    Total current liabilities 31,461 33,669   32,049   24,939
                 
  Customer deposits and long term deferred revenue 303 303   187   114
  Other liabilities 889 105   129   155
  Capital lease obligation, long term 46 95   256   399
  Class B redeemable common stock - -   -   -
  Total liabilities 32,699 34,172   32,621   25,607
                 
  Exchangeable share obligation 833 1,352   1,713   1,715
                 
  Stockholders' equity:            
    Capital stock - -   -   -
    Additional paid-in capital 130,621 128,518   125,934   124,947
    Accumulated deficit (56,880) (56,123)   (54,295)   (53,701)
    Deferred compensation - -   -   (21)
    Treasury Stock (86)          
    Accumulated other comprehensive income 724 702   511   473
    Total Stockholders' equity 74,379 73,097   72,150   71,698
  Total liability and stockholders' equity $ 107,911 $ 108,621   $ 106,484   $ 99,020


 Taleo Corporation
Condensed Consolidated Statements of Operations
(All amounts in thousands exept per share data)
(Unaudited)
                   
      Three Months Ended   Nine Months Ended
      September 30   September 30
      2006   2005   2006   2005
          (Restated)       (Restated)
Revenue:                
  Application   $ 20,274   $ 15,987   $ 57,521   $ 46,090
  Consulting   4,609   3,916   12,998   11,277
  Total revenue   24,883   19,903   70,519   57,367
                   
Cost of revenue (note 1):                
  Application   4,754   3,876   13,563   11,481
  Amortization of acquired intangibles   250   250   748   720
  Total cost of application revenue   5,004   4,126   14,311   12,201
  Consulting   3,084   2,839   9,617   7,866
  Total cost of revenue   8,088   6,965   23,928   20,067
                   
Gross profit   16,795   12,938   46,591   37,300
                   
Operating expenses (note 1):                
  Sales and marketing   7,391   5,471   21,663   16,641
  Research and development   4,844   3,741   14,444   11,857
  General and administrative (note 2)   5,792   3,361   15,566   8,342
  Restructuring costs and other charges   426   -   426   804
  Total operating expenses   18,453   12,573   52,099   37,644
                   
Loss from operations   (1,658)   365   (5,508)   (344)
                   
Other income (expense):                
  Interest income   746   138   2,232   295
  Interest expense   (24)   (2,120)   (67)   (2,757)
  Other (expense) income, net   -   -   -   -
  Total other income (expense)   722   (1,982)   2,165   (2,462)
                   
Loss before provision for income tax   (936)   (1,617)   (3,343)   (2,806)
                   
  Income tax benefit   (179)   -   (164)   -
                   
Net loss   $ (757)   $ (1,617)   $ (3,179)   $ (2,806)
                   
Accretion of dividends and                
  issuance cost on preferred stock   -   (877)   -   (2,596)
                   
Net loss attributable to Class A common stockholders   $ (757)   $ (2,494)   $ (3,179)   $ (5,402)
                   
Net loss attributable to Class A common stockholders - basic and diluted   $ (0.04)   $ (16.74)   $ (0.16)   $ (52.96)
                   
Weighted average Class A common shares - basic and diluted   20,384   149   19,477   102
                   
NOTES                
                   
1. Includes share-based payments expense pursuant to adoption of SFAS 123R as of January 1, 2006.            
  Application COS   $ 55       $ 143    
  Service COS   68       159    
  COS Subtotal   123       302    
                   
  Sales & Marketing Operating Cost   287       750    
  R&D Operating Cost   217       494    
  G&A Operating Cost   555       1,848    
  SG&A Subtotal   1,059       3,092    
                   
  Total share-based payments expense   $ 1,182       $ 3,394    
                   
2. Includes $366 of stock compensation expense under SFAS 123 related to a warrant issued to an external consultant        
  in the nine months ended September 30, 2005.