Interwoven's Q1 2007 Conference Call

| About: Interwoven, Inc. (IWOV)

I listened to Interwoven, Inc.'s (IWOV) conference call yesterday afternoon. This article should be read in conjunction with my prior Interwoven article.

Because the company is still in the process of a voluntary review of its past option grants, its financial statements have not been completed and cannot be released. Consequently, the information was rather sparse. I will highlight in point form key points.

  • Joe Cowan, the newly hired CEO, was excited to be at the company.
    o Of all his employment options to choose from, he chose IWOV because it is a company with accelerating opportunities to grow and prosper (of course, he is going to say positive things, right?).
  • Revenue for the first quarter was $52.7M, slightly ahead of the consensus figure $52.45M and 13% from first quarter last year.
  • License revenues were $19.6M, an increase of 12% from same quarter last year; and Support and Services revenues were up $33.1M, an increase of 15%.
  • The company generated $11.9M during the quarter and the company now has $188.3M in cash and cash equivalents.
  • Deferred revenue increased to $62.3M, an increase of $4.5M from $57.8M; deferred revenue is largely maintenance renewals, which is a good thing.
  • The company gained 74 new customers, for a total customer base of 3,866 customers.
  • Employee head count increased to 779 employees, up from 774 employees at 2006 year end; this is important because it shows that, although revenues are still increasing at a healthy rate, the company is able to leverage its employees to generate more revenue per employee and, I hope, increase margins.
  • 44.8M shares outstanding (I am not positive on this item).
  • Days Sales Outstanding [DSO] is 56 days, at the lower end of its historical range.
  • Company believes it is still doing well against its competitors by taking away their customers.
  • The company guided revenues for the next quarter at $53M–$56M, within the general range of the consensus figure of $54.8M.
  • Like other investors and analysts, I would like to have better and more information that comes with the financial statements. But until the company completes its option review process, investors will have to work with limited information.

    My overall impression is that the company is continuing to do well. I note that the stock fell yesterday and again after hours. Perhaps some investors were hoping that the company would greatly exceed the consensus forecasts and raise guidance substantially.

    In terms of share price today, I am not sure what to expect. My guess is that the results from Yahoo (NASDAQ:YHOO), Intel (NASDAQ:INTC), and IBM (NYSE:IBM) will have some bearing on the markets in general as well as Interwoven. Because the company is continuing to hit the consensus numbers, I do not believe that there is any cause for concern. The light hiring might be indicative of increasing margins and profitability.

    Joe Cowan hinted at customer momentum and continued strong growth. As of right now, I am inclined to continue holding the stock until at least the next quarter's results are released. I want to gain more insight into the company's performance and its longer-term growth prospects.

    As an aside, for those interested, the company has provided a more comprehensive profile (pdf) than I provided in my earlier post.

    Disclosure: I remain long Interwoven stock.