Hipcricket Inc.(fka HIPPQ)

[ciciagt]

Revenue Growth Accelerates 23% While Decreasing Operating Expenses 30%; Completes a $9.6 Million Capital Raise

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KIRKLAND, WA--(Marketwired - Oct 8, 2013) - Hipcricket®, Inc. (OTCBB: HIPP) (OTCQB: HIPP), the one-stop mobile advertising and marketing company, announces its operating results for the second quarter ended August 31, 2013.

Second Quarter Highlights
•Increased second quarter revenue 23% to $7.6 million from $6.2 million in the same period last year.
•Secured significant new customer relationships with Google and Mondelez International and expanded relationship with MGM International.
•Increased average annual revenue per customer 46% to approximately $105,000 from $72,000 on a trailing twelve month basis.
•Completed a $9.6 million financing subsequent to the end of the quarter, setting foundation for accelerating future growth.

Ivan Braiker, CEO of Hipcricket, commented, "We achieved accelerated year-over-year growth in the second quarter, compared to the first quarter of this year and the same quarter one year ago. We believe that improving market conditions, better company execution, and changing the corporate name to Hipcricket, Inc. as well as centralizing leadership in our Kirkland headquarters, puts us in an optimal position to continue this growth trend for the rest of the year. We have secured significant new customer relationships, most recently being contracted by Mondelez International and Google to build mobile websites for multiple global brands. Our expanded sales team is growing our pipeline, getting deeper into sales cycles, and closing business faster. Over the balance of the year, we will work to increase the number of brands we are working with and the number of products being used by our existing customers. We also will seek to add new clients to our existing base, which now includes 26 of the Fortune 100 companies. As we head into the end of the year, we decided now was an opportune point in our development as a company to secure additional funding for investment in our future."

Outlook

For the full fiscal year 2014 Hipcricket reiterates previous guidance that it expects revenue to be in the range of $34.0 - $35.4 million.

Second Quarter Financial Results

Revenue for second quarter of fiscal 2014 increased to $7.6 million, from $6.2 million for second quarter of fiscal 2013, an increase of 23%.

Operating expenses for the second quarter of fiscal 2014 were $7.6 million compared to $10.9 million in second quarter of fiscal 2013. Non-GAAP operating expenses, defined as total operating expenses adjusted for non-cash charges for second quarter fiscal 2014 decreased to $5.5 million from $7.8 million for second quarter fiscal 2013.

Net loss for the second quarter of fiscal 2014 was $3.4 million, or $0.03 per share, compared to a net loss of $2.3 million, or $0.02 per share, for the second quarter of fiscal 2013. Excluding non-cash charges and benefits, the non-GAAP loss for second quarter fiscal 2014 was $1.3 million compared with $4.1 million for second quarter fiscal 2013.

As of August 31, 2013, backlog decreased 1% to $18.7 million from $18.9 million compared to August 31, 2012.

Second quarter bookings (the dollar value of contracts signed during the second quarter) were $7.9 million, level with the same period last year.

Cash and cash equivalents as of August 31, 2013 were $360,000 with borrowings on our revolving credit facility of $1.7 million and an additional $1.7 million available under that facility.

Operating results and non-cash charges are shown below, including reconciliation of net loss to non-GAAP financial measurements noted above.

Funding

On October 4, 2013 Hipcricket closed a $9.6 million financing transaction. The investors purchased units of our securities at $0.40 per unit. Each unit consisted of one share of our common stock and a warrant to purchase 30% of one share of common stock. The warrants have a term of 5 years and have an exercise price of $0.60. An aggregate of 23.9 million shares of our common stock and warrants to purchase up to 7.2 million shares of our common stock were purchased in the financing.

Non-GAAP information and reconciliation to comparable GAAP financial measures (unaudited):

This press release includes financial measures defined as non-GAAP financial measures by the SEC. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles accepted in the United States of America ("GAAP"). Generally, a non-GAAP financial measure is a numerical measure that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We supplement our GAAP disclosures with Non-GAAP Operating Expenses and Non-GAAP Earnings (Losses). These amounts exclude non-cash items including share-based compensation expense, depreciation and amortization (including impairment charges), and acquisition related contingent consideration (including fair value adjustments and deferred income tax benefits). The following table reconciles Non-GAAP Operating Expenses and Non-GAAP Earnings (Losses) to the comparable GAAP measures (Unaudited):