Saba Software Inc. (SABA, Financial) filed Quarterly Report for the period ended 2011-11-30.
Saba Software Inc. has a market cap of $217.8 million; its shares were traded at around $7.41 with and P/S ratio of 1.8.
Cost of Subscription Revenue. Cost of subscription revenue increased by $0.5 million, or 14%, for the three months ended November 30, 2011 compared to the three months ended November 30, 2010. The subscription gross margin increased to 77% for the three months ended November 30, 2011 from 75% for the three months ended November 30, 2010. The increase in cost of subscription revenue was primarily the result of increases in third party data center service fees, license product costs and compensation costs associated with the increase in subscription revenue. The increase in subscription gross margin for the three months ended November 30, 2011 compared to the same period in the prior year was due to a 23% increase in subscription revenue with a corresponding increase in subscription revenue costs of only 14% for the three months ended November 30, 2011 compared to the same period in prior year. Cost of subscription revenue increased by $1.0 million, or 12%, for the six months ended November 30, 2011 compared to the six months ended November 30, 2010. The subscription gross margin increased to 77% for the six months ended November 30, 2011 from 74% for the six months ended November 30, 2010. The increase in cost of subscription revenue was primarily the result of increases in third party hosting data center fees, license product costs and compensation costs associated with the increase in subscription revenue. The increase in subscription gross margin for the six months ended November 30, 2011 compared to the same period in the prior year was due a 24% increase in subscription revenue with a corresponding increase in subscription revenue costs of only 12% for the six months ended November 30, 2011 compared to the same period in prior year.
Cost of License Revenue. Cost of license revenue increased by $56,000, or 30%, for the three months ended November 30, 2011 compared to the three months ended November 30, 2010, due to an increase in royalty expense. Gross margin on license revenue decreased to 76% for the three months ended November 30, 2011 from 90% for the three months ended November 30, 2010. The decrease in gross margin is primarily the result of a decrease in license revenue relative to the fixed cost of license revenue, including amortization of acquired technologies. Cost of license revenue decreased by $13,000, or 3%, for the six months ended November 30, 2011 compared to the six months ended November 30, 2010, due to a reduction in royalty expense. Gross margin on license revenue decreased to 86% for the six months ended November 30, 2011 from 89% for the six months ended November 30, 2010. The decrease in gross margin is primarily the result of a decrease in license revenue relative to the fixed cost of license revenue, including amortization of acquired technologies.
With the increasing adoption of our cloud-based offerings, we believe that billings, which are total revenues plus the change in deferred revenue, are a key operating metric. The prevailing trend among SaaS companies is to provide billings information. For the three months ended November 30, 2011, billings were $33.8 million, or an increase of 10%, compared to $30.8 million for the three months ended November 30, 2010. For the six months ended November 30, 2011, billings were $62.5 million, or an increase of 14%, compared to $55.1 million for the six months ended November 30, 2010. We also track our renewal rate on subscription services on a dollar basis, which for the three months ended November 30, 2011 was 92% compared to 94% for the three months ended November 30, 2010. Our renewal rate on subscription services on a dollar basis for both the six months ended November 30, 2011 and 2010 was 93%.
Net cash used in operating activities for the six months ended November 30, 2011 increased by $5.3 million to $7.8 million from $2.5 million in net cash used in operating activities for the six months ended November 30, 2010. The increase was primarily attributable to a $7.9 million increase in net loss for the six months ended November 30, 2011, a reduction in accounts receivable of $4.4 million, an increase in accounts payable of $0.8 million and a reduction in other assets of $0.6 million, offset by an increase of $4.2 million in compensation and other accruals and deferred revenue of $4.0 million.
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Saba Software Inc. has a market cap of $217.8 million; its shares were traded at around $7.41 with and P/S ratio of 1.8.
Highlight of Business Operations:
Total Revenues. Total revenues increased by $1.2 million, or 4%, for the three months ended November 30, 2011 compared to the three months ended November 30, 2010. Total revenues increased by $4.7 million, or 8%, for the six months ended November 30, 2011 compared to the six months ended November 30, 2010. As a percentage of total revenues, revenues from customers outside the United States represented 34% and 37% for the three months ended November 30, 2011 and 2010, respectively. As a percentage of total revenues, revenues from customers outside the United States represented 36% for both the six months ended November 30, 2011 and 2010. The only foreign country in which revenues represented more than 10% of total revenues was the United Kingdom, which represented 15% for both the three months ended November 30, 2011 and 2010, and 14% for both the six months ended November 30, 2011 and 2010.Cost of Subscription Revenue. Cost of subscription revenue increased by $0.5 million, or 14%, for the three months ended November 30, 2011 compared to the three months ended November 30, 2010. The subscription gross margin increased to 77% for the three months ended November 30, 2011 from 75% for the three months ended November 30, 2010. The increase in cost of subscription revenue was primarily the result of increases in third party data center service fees, license product costs and compensation costs associated with the increase in subscription revenue. The increase in subscription gross margin for the three months ended November 30, 2011 compared to the same period in the prior year was due to a 23% increase in subscription revenue with a corresponding increase in subscription revenue costs of only 14% for the three months ended November 30, 2011 compared to the same period in prior year. Cost of subscription revenue increased by $1.0 million, or 12%, for the six months ended November 30, 2011 compared to the six months ended November 30, 2010. The subscription gross margin increased to 77% for the six months ended November 30, 2011 from 74% for the six months ended November 30, 2010. The increase in cost of subscription revenue was primarily the result of increases in third party hosting data center fees, license product costs and compensation costs associated with the increase in subscription revenue. The increase in subscription gross margin for the six months ended November 30, 2011 compared to the same period in the prior year was due a 24% increase in subscription revenue with a corresponding increase in subscription revenue costs of only 12% for the six months ended November 30, 2011 compared to the same period in prior year.
Cost of License Revenue. Cost of license revenue increased by $56,000, or 30%, for the three months ended November 30, 2011 compared to the three months ended November 30, 2010, due to an increase in royalty expense. Gross margin on license revenue decreased to 76% for the three months ended November 30, 2011 from 90% for the three months ended November 30, 2010. The decrease in gross margin is primarily the result of a decrease in license revenue relative to the fixed cost of license revenue, including amortization of acquired technologies. Cost of license revenue decreased by $13,000, or 3%, for the six months ended November 30, 2011 compared to the six months ended November 30, 2010, due to a reduction in royalty expense. Gross margin on license revenue decreased to 86% for the six months ended November 30, 2011 from 89% for the six months ended November 30, 2010. The decrease in gross margin is primarily the result of a decrease in license revenue relative to the fixed cost of license revenue, including amortization of acquired technologies.
With the increasing adoption of our cloud-based offerings, we believe that billings, which are total revenues plus the change in deferred revenue, are a key operating metric. The prevailing trend among SaaS companies is to provide billings information. For the three months ended November 30, 2011, billings were $33.8 million, or an increase of 10%, compared to $30.8 million for the three months ended November 30, 2010. For the six months ended November 30, 2011, billings were $62.5 million, or an increase of 14%, compared to $55.1 million for the six months ended November 30, 2010. We also track our renewal rate on subscription services on a dollar basis, which for the three months ended November 30, 2011 was 92% compared to 94% for the three months ended November 30, 2010. Our renewal rate on subscription services on a dollar basis for both the six months ended November 30, 2011 and 2010 was 93%.
Net cash used in operating activities for the six months ended November 30, 2011 increased by $5.3 million to $7.8 million from $2.5 million in net cash used in operating activities for the six months ended November 30, 2010. The increase was primarily attributable to a $7.9 million increase in net loss for the six months ended November 30, 2011, a reduction in accounts receivable of $4.4 million, an increase in accounts payable of $0.8 million and a reduction in other assets of $0.6 million, offset by an increase of $4.2 million in compensation and other accruals and deferred revenue of $4.0 million.
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