SOURCE: Advent Software

February 06, 2012 16:15 ET

Advent Software Achieves Record Quarterly Revenue of $86 Million and Record Annual Revenue of $326 Million for 2011

Company Reports Record ACV of $34 Million for the Year

SAN FRANCISCO, CA--(Marketwire - Feb 6, 2012) - Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services to the global investment management industry, announced today its financial results for the fourth quarter ended December 31, 2011.

"I am very proud of Advent's 2011 performance and strong fourth quarter finish. We achieved record revenue and record annual contract value, while simultaneously expanding non-GAAP operating margin to 22 percent for the year," said Stephanie DiMarco, Founder and Chief Executive Officer of Advent. "In addition to the Company's strong financial performance, we successfully executed on our core strategies to strengthen our portfolio of products and services and expand our global footprint and addressable market. As a result, we head into 2012 with great momentum for Advent's next phase of growth."

FOURTH QUARTER 2011 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue from continuing operations of $86.3 million for the fourth quarter of 2011, up from $75.6 million in the fourth quarter of 2010, a 14% increase. Total annual revenues from continuing operations for the year ended December 31, 2011 were $326.2 million, compared to $283.5 million recorded in 2010, a 15% increase.

Operating income from continuing operations for the fourth quarter of 2011 was $10.1 million, or 12% of revenue, compared to $11.7 million or 16% of revenue for the fourth quarter of 2010. Operating income from continuing operations for the year ended December 31, 2011 was $42.6 million, or 13% of revenue, compared to $36.3 million, or 13% of revenue, for 2010.

Net income from continuing operations for the fourth quarter of 2011 was $6.5 million compared to $9.2 million in the fourth quarter of 2010, a 29% decrease. Net income from continuing operations for the year ended December 31, 2011 was $28.3 million compared to $24.3 million for 2010, a 16% increase.

On a fully diluted basis, earnings per share from continuing operations in the fourth quarter of 2011 were $0.12, compared to diluted earnings per share of $0.17 in the fourth quarter of 2010. On a fully diluted basis, earnings per share from continuing operations for the year ended December 31, 2011 were $0.52, compared to $0.45 per share for 2010.

Operating cash flow from continuing operations in the fourth quarter of 2011 was $27.6 million, compared with $24.4 million in the fourth quarter of 2010, a 13% increase. Operating cash flow from continuing operations for the year ended December 31, 2011 was $83.2 million, compared with $76.2 million for 2010, a 9% increase. Cash, cash equivalents and short and long-term marketable securities totaled $136.3 million as of December 31, 2011, compared to $152.0 million as of December 31, 2010.

Total deferred revenues were $174.9 million as of December 31, 2011, compared to $154.2 million from continuing operations as of December 31, 2010, a 13% increase.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income from continuing operations for the fourth quarter of 2011 was $18.5 million, or 21% of revenue. This compares to $17.9 million from continuing operations, or 24% of revenue, in the fourth quarter of 2010. Non-GAAP operating income from continuing operations for the year ended December 31, 2011 was $72.2 million, or 22% of revenue. This represents a 20% increase compared to non-GAAP operating income of $60.2 million, or 21% of revenue for 2010.

On a fully diluted basis, non-GAAP earnings per share from continuing operations were $0.22 in the fourth quarter of 2011 and represent a 5% increase from non-GAAP diluted earnings per share of $0.21 in the fourth quarter of 2010. On a fully diluted basis, non-GAAP earnings per share from continuing operations were $0.86 for the year ended December 31, 2011, a 21% increase compared to $0.71 per share for 2010.

The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release.

FOURTH QUARTER HIGHLIGHTS

  • Strong Fundamental Business Metrics: The Annual Contract Value (ACV) of our new contract bookings in the fourth quarter of 2011 will contribute $13.7 million in annual revenue once the contracts are fully implemented. New clients represent a broad cross-section of the investment management industry, from hedge funds and asset managers to family offices, fund administrators and the growing advisory market. The renewal rate was 93% for the third quarter of 2011, a 2 point improvement over the same period last year.

  • Global Expansion and Execution: The fourth quarter saw strong demand for Advent's leading solutions outside of North America. Advent signed new contracts with firms in Europe, the Middle East, Africa, and Asia. Revenue from international operations accounted for 18% of total revenue in the fourth quarter and 18% for the full year 2011.

  • Launch of Advent Portfolio Exchange® (APX) 4.0 and Tradex® 4.0: Advent launched its most extensive update of APX to date. With this release, Advent introduced customizable dashboard capabilities to offer greater flexibility and control over report content and format -- delivering instant access to more information and with greater clarity. Tradex®, an easy to use web-based system, allows firms that distribute funds to replace labor-intensive manual procedures for fund share order processing with a highly automated work flow and can be tailored to a specific client and market needs. With these releases, Advent continues to set a new standard in comprehensive portfolio management for both asset managers and wealth managers around the globe.

Advent's Board of Directors appointed Advent's President Peter Hess to the position of Chief Executive Officer (CEO) and President, effective June 30, 2012. Stephanie DiMarco, Advent's founder and CEO, will step down as CEO at the end of June 2012. Ms. DiMarco continues to serve as a Director on Advent's Board and will be transitioning to an advisory role for the company's senior management.

FINANCIAL GUIDANCE
Advent provides the following financial guidance for the first quarter and fiscal year 2012:

Guidance Q1 2012 FY 2012
Total Revenue ($M) $86-$88 $361-$368
YoY Revenue Growth 14% - 17% 11% - 13%
GAAP Operating Margin n/a 14.0% - 14.5%
Amortization of Intangibles
(% of revenue)
n/a 3%
Stock Compensation Expense
(% of revenue)
n/a 6%
Non-GAAP Operating Margin n/a 23.0% - 23.5%
Operating Cash Flow ($M) n/a $90-$96
Capital Expenditures ($M) n/a $13-$15
Growth of Weighted Average Shares Outstanding, excluding any share repurchases n/a 0.25%-0.75% per quarter
Effective Tax Rate (GAAP) n/a 35% - 40%
Effective Tax Rate (non-GAAP) n/a 35%

INVESTOR CALL
Advent Software, Inc. will host its Q4 2011 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q4 2011 earnings presentation and trended disclosures file, which include highlights and detailed financial information, are currently available at http://investor.advent.com. To participate via phone, please dial (866) 356-3095 and request conference ID #51691155. A replay will be available through midnight, February 13, 2012. The replay number for domestic callers is (888) 286-8010, and for international callers is (617) 801-6888, with the conference ID of #68833003. The conference call will also be webcast live and then archived on http://investor.advent.com.

ABOUT ADVENT
Advent Software, Inc. (www.advent.com), a global firm, has provided trusted solutions to the world's leading financial professionals since 1983. Firms in more than 60 countries use Advent technology. Advent's quality software, data, services and tools enable financial professionals to improve service and communication to their clients, allowing them to grow their business while controlling costs. Advent is the only financial services software company to be awarded the Service Capability and Performance certification for being a world-class support organization. For more information on Advent products visit http://www.advent.com/about/resources/demos/pr.

ABOUT NON-GAAP FINANCIAL INFORMATION
This press release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), please see the accompanying tables entitled "Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures."

FORWARD-LOOKING STATEMENTS
The financial projections under Financial Guidance, and statements regarding our momentum and other forward-looking statements included in this presentation reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our Advent Portfolio Exchange®, Geneva®, Tradex®, and Moxy® products; the successful development, release and market acceptance of new products and product enhancements; uncertainties and fluctuations in the financial markets; the Company's ability to satisfy contractual performance requirements; difficulties in integrating merged businesses, such as Syncova Solutions Limited and Black Diamond Performance Reporting LLC, and achieving expected synergies and results; and other risks detailed from time to time in our SEC reports including, but not limited to, our quarterly reports on Form 10-Q and our 2010 annual report on Form 10-K. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Advent, the Advent logo, Advent Software, Advent Portfolio Exchange, Geneva and Moxy are registered trademarks of Advent Software, Inc, and Tradex is a registered mark in Norway and the European Union of Advent Norway AS. All other company names or marks mentioned herein are those of their respective owners.

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(GAAP, Unaudited)
December 31
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 65,525 $ 81,948
Short-term marketable securities 69,908 70,075
Accounts receivable, net 62,125 49,960
Deferred taxes, current 16,294 16,358
Prepaid expenses and other 23,660 17,864
Total current assets 237,512 236,205
Property and equipment, net 42,301 41,524
Goodwill 204,621 145,580
Other intangibles, net 49,521 19,772
Long-term marketable securities 917 -
Deferred taxes, long-term 30,751 33,591
Other assets 15,927 12,059
Noncurrent assets of discontinued operation 2,006 2,095
Total assets $ 583,556 $ 490,826
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,558 $ 6,737
Accrued liabilities 40,029 34,080
Deferred revenues 166,945 147,896
Income taxes payable 2,972 1,691
Short-term debt 5,000 -
Current liabilities of discontinued operation 488 165
Total current liabilities 225,992 190,569
Deferred revenues, long-term 7,926 6,337
Long-term debt 45,000 -
Other long-term liabilities 16,944 14,844
Noncurrent liabilities of discontinued operation 4,633 5,228
Total liabilities 300,495 216,978
Stockholders' equity:
Common stock 510 520
Additional paid-in capital 429,734 411,600
Accumulated deficit (154,053 ) (146,887 )
Accumulated other comprehensive income 6,870 8,615
Total stockholders' equity 283,061 273,848
Total liabilities and stockholders' equity $ 583,556 $ 490,826

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
Three Months Ended December 31 Twelve Months Ended December 31
2011 2010 2011 2010
Net revenues:
Recurring revenues $ 77,760 $ 66,715 $ 291,486 $ 252,054
Non-recurring revenues 8,525 8,839 34,762 31,447
Total net revenues 86,285 75,554 326,248 283,501
Cost of revenues (1):
Recurring revenues 16,711 13,395 62,329 51,261
Non-recurring revenues 9,953 7,353 39,623 29,175
Amortization of developed technology 2,555 1,503 8,820 6,374
Total cost of revenues 29,219 22,251 110,772 86,810
Gross margin 57,066 53,303 215,476 196,691
Operating expenses (1):
Sales and marketing 19,496 18,480 74,807 69,151
Product development 16,065 13,179 57,561 51,416
General and administrative 9,904 9,391 37,040 37,707
Amortization of other intangibles 956 295 2,807 1,272
Restructuring charges 565 230 696 840
Total operating expenses 46,986 41,575 172,911 160,386
Income from continuing operations 10,080 11,728 42,565 36,305
Interest income and other income (expense), net (406 ) (123 ) (1,243 ) (895 )
Income from continuing operations before income taxes 9,674 11,605 41,322 35,410
Provision for income taxes 3,143 2,357 12,991 11,091
Net income from continuing operations $ 6,531 $ 9,248 $ 28,331 $ 24,319
Discontinued operation:
Net income (loss) from discontinued operation (net of applicable taxes of $(114), $23, $1,197 and $(46), respectively) 66 (68 ) 1,839 (166 )
Net income $ 6,597 $ 9,180 $ 30,170 $ 24,153
Basic net income per share:
Continuing operations $ 0.13 $ 0.18 $ 0.55 $ 0.47
Discontinued operation - - 0.04 -
Total operations $ 0.13 $ 0.18 $ 0.58 $ 0.47
Diluted net income per share:
Continuing operations $ 0.12 $ 0.17 $ 0.52 $ 0.45
Discontinued operation - - 0.03 -
Total operations $ 0.12 $ 0.17 $ 0.56 $ 0.44
Weighted average shares used to compute net income per share:
Basic 50,848 51,706 51,797 51,535
Diluted 53,051 54,823 54,085 54,476
(1) Includes stock-based employee compensation expense as follows:
Cost of recurring revenues $ 619 $ 466 $ 2,154 $ 1,775
Cost of non-recurring revenues 341 295 1,314 1,140
Total cost of revenues 960 761 3,468 2,915
Sales and marketing 1,579 1,578 6,305 5,866
Product development 1,340 1,318 5,138 5,200
General and administrative 1,092 1,135 4,227 4,449
Total operating expenses 4,011 4,031 15,670 15,515
Total stock-based employee compensation expense $ 4,971 $ 4,792 $ 19,138 $ 18,430

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended December 31
2011 2010
Cash flows from operating activities:
Net income $ 30,170 $ 24,153
Adjustment to net income for discontinued operation (1,839 ) 166
Net income from continuing operations $ 28,331 $ 24,319
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Stock-based compensation 19,138 18,430
Depreciation and amortization 22,632 17,610
Loss on dispositions of fixed assets 2 22
Provision for doubtful accounts 230 188
Reduction of sales return reserves (187 ) (616 )
Non-cash impairment loss 500 -
Deferred income taxes 4,700 8,423
Other 101 241
Effect of statement of operations adjustments 47,116 44,298
Changes in operating assets and liabilities:
Accounts receivable (10,198 ) (5,619 )
Prepaid and other assets (6,977 ) 2,393
Accounts payable 3,734 1,997
Accrued liabilities 3,069 3,053
Deferred revenues 18,560 8,519
Income taxes payable (451 ) (2,742 )
Effect of changes in operating assets and liabilities 7,737 7,601
Net cash provided by operating activities from continuing operations 83,184 76,218
Cash flows from investing activities:
Cash used in acquisitions, net of cash acquired (97,092 ) (4,719 )
Purchases of property and equipment (11,252 ) (17,418 )
Capitalized software development costs (2,358 ) (2,144 )
Purchases of marketable securities (89,236 ) (46,496 )
Sales and maturities of marketable securities 87,428 36,496
Net cash used in investing activities from continuing operations (112,510 ) (34,281 )
Cash flows from financing activities:
Proceeds from common stock issued from exercises of stock options 7,189 14,020
Withholding taxes related to equity award net share settlement (5,775 ) (5,467 )
Proceeds from common stock issued under the employee stock purchase plan 6,158 5,793
Repurchase of common stock (51,582 ) (35,881 )
Proceeds from debt 50,000 -
Debt issuance costs (1,901 ) -
Excess tax benefits from stock-based compensation 7,055 3,878
Net cash provided by (used in) financing activities from continuing operations 11,144 (17,657 )
Net cash transferred from (to) discontinued operation 1,655 (112 )
Effect of exchange rate changes on cash and cash equivalents 104 (97 )
Net change in cash and cash equivalents from continuing operations (16,423 ) 24,071
Cash and cash equivalents of continuing operations at beginning of period 81,948 57,877
Cash and cash equivalents of continuing operations at end of period $ 65,525 $ 81,948
Twelve Months Ended December 31
2011 2010
Supplemental disclosure of cash flow information
Cash flow from discontiued operation:
Net cash used in operating activities $ (1,349 ) $ (377 )
Net cash provided by investing activities 3,004 -
Net cash transferred from (to) continuing operations (1,655 ) 112
Effect of exchange rates on cash and cash equivalents - (1 )
Net change in cash and cash equivalents from discontinued operations - (266 )
Cash and cash equivalents of discontinued operation at beginning of period - 266
Cash and cash equivalents of discontinued operation at end of period $ - $ -
ADVENT SOFTWARE, INC.
RECONCILIATION OF SELECTED CONTINUING OPERATIONS' GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
To supplement our condensed consolidated financial statements presented on a GAAP basis, Advent uses non-GAAP measures of continuing operations' operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP results are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.
Three Months Ended December 31, 2011 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 57,066 66 % $ 10,080 12 % $ 6,531
Amortization of acquired developed technology 1,899 1,899 1,899
Amortization of other acquired intangibles - 956 956
Stock-based compensation - cost of revenues 960 960 960
Stock-based compensation - operating expenses - 4,011 4,011
Restructuring charges - 565 565
Income tax adjustment for non-GAAP (1) - - (3,180 )
Non-GAAP $ 59,925 69 % $ 18,471 21 % $ 11,742
Diluted net income per share
GAAP $ 0.12
Non-GAAP $ 0.22
Shares used to compute diluted net income per share 53,051
Three Months Ended December 31, 2010 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 53,303 71 % $ 11,728 16 % $ 9,248
Amortization of acquired developed technology 831 831 831
Amortization of other acquired intangibles - 295 295
Stock-based compensation - cost of revenues 761 761 761
Stock-based compensation - operating expenses - 4,031 4,031
Restructuring charges - 230 230
Income tax adjustment for non-GAAP (1) - - (3,857 )
Non-GAAP $ 54,895 73 % $ 17,876 24 % $ 11,539
Diluted net income per share
GAAP $ 0.17
Non-GAAP $ 0.21
Shares used to compute diluted net income per share 54,823
(1) The estimated non-GAAP effective tax rate was 35% for the three months ended December 31, 2011 and 2010, respectively, and has been used to adjust the provision for income taxes for non-GAAP purposes.
ADVENT SOFTWARE, INC.
RECONCILIATION OF SELECTED CONTINUING OPERATIONS' GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
To supplement our condensed consolidated financial statements presented on a GAAP basis, Advent uses non-GAAP measures of continuing operations' operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP results are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.
Twelve Months Ended December 31, 2011 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 215,476 66 % $ 42,565 13 % $ 28,331
Amortization of acquired developed technology 6,019 6,019 6,019
Amortization of other acquired intangibles - 2,807 2,807
Stock-based compensation - cost of revenues 3,468 3,468 3,468
Stock-based compensation - operating expenses - 15,670 15,670
Acquisition related - 936 936
Investment loss - - 500
Restructuring charges - 696 696
Income tax adjustment for non-GAAP (1) - - (12,005 )
Non-GAAP $ 224,963 69 % $ 72,161 22 % $ 46,422
Diluted net income per share
GAAP $ 0.52
Non-GAAP $ 0.86
Shares used to compute diluted net income per share 54,085
Twelve Months Ended December 31, 2010 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 196,691 69 % $ 36,305 13 % $ 24,319
Amortization of acquired developed technology 3,325 3,325 3,325
Amortization of other acquired intangibles - 1,272 1,272
Stock-based compensation - cost of revenues 2,915 2,915 2,915
Stock-based compensation - operating expenses - 15,515 15,515
Restructuring charges - 840 840
Income tax adjustment for non-GAAP (1) - - (9,656 )
Non-GAAP $ 202,931 72 % $ 60,172 21 % $ 38,530
Diluted net income per share
GAAP $ 0.45
Non-GAAP $ 0.71
Shares used to compute diluted net income per share 54,476
(1) The estimated non-GAAP effective tax rate was 35% for the twelve months ended December 31, 2011 and 2010, respectively, and has been used to adjust the provision for income taxes for non-GAAP purposes.
Advent Software, Inc.
Reconciliation of Projected Continuing Operations' GAAP Operating Income %
to Non-GAAP Operating Income %
(Preliminary and unaudited)
Advent provides projections of non-GAAP measures of its continuing operations' operating income, which exclude certain costs, expenses, gains and losses which it believes is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our projected continuing operations' GAAP results are made with the intent of providing management and investors a more complete understanding continuing operations' underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP projections are among the information management uses as a basis for planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.
Twelve Months Ended December 31, 2012
Continuing Operations
Operating Income %
Projected GAAP 14.0% to 14.5%
Projected amortization of acquired developed technology and other acquired intangible asset adjustment 3%
Projected stock-based compensation adjustment 6%
Projected non-GAAP 23.0% to 23.5%

Contact Information

  • CONTACT
    Media Contact:
    Smita Topolski
    Advent Software, Inc.
    (415) 645-1668
    Email Contact

    Investor Relations Contact:
    Heidi Flaherty
    Advent Software, Inc.
    (415) 645-1145
    Email Contact