Kenexa Corp. has a market cap of $318.65 million; its shares were traded at around $14.11 with a P/E ratio of 40.31 and P/S ratio of 2.02. Kenexa Corp. had an annual average earning growth of 8.1% over the past 5 years.KNXA is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: On January 20, 2009, we entered into an ownership interest transfer agreement with Shanghai Runjie Management Consulting Company, (“R and J”) in Shanghai, China for $1.3 million. The initial investment provided us with a 46% ownership in the new entity Shanghai Kenexa Human Resources Consulting Co., Ltd., (the “variable interest entity”) and a presence in China s human capital management market. The agreement with R and J also provided for a 1% annual ownership increase based upon adjusted EBITDA, as defined, for each of the years ended 2008, 2009 and 2010. In the third and fourth quarter of 2009, based upon the 2008 operating results for R and J, we paid an additional $0.2 million for an additional 1% ownership interest in the variable interest entity. The variable interest entity was financed with $0.3 million in initial equity contributions from us and R and J, and has no borrowings for which its assets would be used as collateral. On September 30, 2009 we provided $0.2 million of financing for the variable interest entity. The creditors of the variable interest entity do not have recourse to our other assets.
Consistent with our historical practices, revenue derived from subscription fees is recognized ratably over the term of the subscription agreement. We generally invoice our customers in advance in quarterly installments and typical payment terms provide that our customers pay us within 30 days of invoice. Amounts that have been invoiced are recorded in accounts receivable prior to the receipt of payment and in deferred revenue to the extent revenue recognition criteria have not been met. As of March 31, 2010, deferred revenue increased by $4.5 million or 9.1% to $54.5 million from $50.0 million at December 31, 2009. The increase in deferred revenue is a result of the increase in sales of our multiple elements or bundled arrangements. We generally price our solutions based on the number of software applications and services included and the number of customer employees. Accordingly, subscription fees are generally greater for larger organizations and for those that subscribe for a broader array of software applications and services.
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