SOURCE: Advent Software

April 30, 2012 16:10 ET

Advent Software Reports First Quarter 2012 Results

Company Achieves Record Quarterly Revenue of $87 Million and Record First Quarter Bookings of Over $7 Million

SAN FRANCISCO, CA--(Marketwire - Apr 30, 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 first quarter ended March 31, 2012.

"I'm very proud of Advent's terrific first quarter financial performance," said Stephanie DiMarco, Founder and Chief Executive Officer of Advent. "Headlining our financial results was our best first quarter ever for new bookings with annual contract value of $7.4 million, a 45% increase over the same period last year. By staying focused on our strategy of broadening our product portfolio and growing our addressable market, 2012 is off to a great start, and we remain confident about the market opportunity ahead of us."

FIRST QUARTER 2012 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue of $86.9 million for the first quarter of 2012, compared to $75.3 million in the first quarter of 2011, a 15% increase.

Operating income for the first quarter of 2012 was $11.8 million, or 14% of revenue, compared to $11.5 million or 15% of revenue for the first quarter of 2011.

Net income for the first quarter of 2012 was $7.3 million compared to $7.9 million in the first quarter of 2011.

On a fully diluted basis, earnings per share in the first quarter of 2012 were $0.14 and flat when compared to the first quarter of 2011.

Operating cash flow in the first quarter of 2012 was $13.6 million, compared with $11.6 million in the first quarter of 2011, a 17% increase. Cash, cash equivalents and marketable securities totaled $141.1 million as of March 31, 2012, compared to $136.3 million as of December 31, 2011, a 3% increase.

The Company repurchased approximately 267,500 shares in the first quarter of 2012 at an average price of $25.38 per share.

Total deferred revenue as of March 31, 2012 was $174.3 million, compared to $174.9 million as of December 31, 2011.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income for the first quarter of 2012 was $19.6 million, or 23% of revenue. This represents an 11% increase over the same period last year. On a fully diluted basis, non-GAAP earnings per share were $0.24 in the first quarter of 2012 and represent a 14% increase from non-GAAP diluted earnings per share of $0.21 in the first quarter of 2011.

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

FIRST QUARTER HIGHLIGHTS

  • Continued Business Momentum in Key Metrics: The Annual Contract Value (ACV) of our new contract bookings in the first quarter of 2012 will contribute $7.4 million in annual revenue once the contracts are fully implemented. Recurring revenues reached 91% of total revenue in the first quarter and our reported renewal rates are among the highest since the fourth quarter of 2008.

  • Client Success: Advent saw continued success across all of its client segments, from large hedge fund managers and their service providers, to institutional asset managers, family offices, and independent advisory firms. New clients included: Driehaus Capital Management of Chicago and Hong Kong's Myriad Asset Management Limited. Existing clients that expanded their relationship with Advent or migrated to a new Advent platform from Axys® included: The Butterfield Fulcrum Group, Emery Howard Portfolio Management, Fifth Third Asset Management, Northside Capital Management, Sands Capital Management, Scout Investments, and Willis Investment Council. Additionally, Azentus Capital Management, a Hong Kong-based hedge fund led by former Goldman Sachs executives, went live on Geneva and Tamale RMS® in the first quarter.

  • Enhanced Functionality Across Product Lines: The Company launched a major new release of its platform for asset management today, which is comprised of Advent Portfolio Exchange®, Moxy®, Advent Rules Manager®, and Advent Revenue Center®. Enhancements include a new user experience, business intelligence reporting, dashboards, and more seamless integration across all of the products. Advent also released Syncova Essentials, a lighter, cloud-based version of the Syncova product which delivers automated data aggregation and management of margin and financing costs across multiple counterparties.

  • Award-Winning Solutions: Advent continues to win accolades around the world. Recent awards include: FTF News's Most Innovative Mobile Technology award for Advent's Black Diamond platform; HFMWeek named Advent as Best Technology for Start-Up Funds; and the Company was named Best IT Provider in the 2012 Hedge Fund Journal Service Provider Awards.

FINANCIAL GUIDANCE
Advent updates the following financial guidance for the second quarter and fiscal year 2012:

Guidance Q2 2012 FY 2012
Total Revenue ($M) $88-$90 $361-$368
YoY Revenue Growth 10% - 12% 11% - 13%
GAAP Operating Margin n/a 14.0% - 14.5%
Amortization of Intangibles (% of revenue) n/a 3%
Stock Compensation Expense (% of revenue) n/a 6%
Non-GAAP Operating Margin n/a 23.0% - 23.5%
Operating Cash Flow ($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 Q1 2012 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q1 2012 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 (800) 265-0241 and request conference ID #41807332. Telephone replay will be available through midnight May 7, 2012. The replay number for domestic callers is (888) 286-8010, and for international callers is (617) 801-6888, with the conference ID of #12436350.

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 GAAP Measures to Non-GAAP Measures."

FORWARD-LOOKING STATEMENTS
The financial projections under Financial Guidance, and statements regarding our momentum and market opportunities, and any 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®, 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 2011 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, Axys, Geneva and Moxy are registered trademarks of Advent Software, Inc., and Syncova is a mark of Advent Software, Inc. 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)
March 31 December 31
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 70,828 $ 65,525
Short-term marketable securities 70,258 69,908
Accounts receivable, net 59,518 62,125
Deferred taxes, current 16,300 16,294
Prepaid expenses and other 26,697 23,660
Total current assets 243,601 237,512
Property and equipment, net 41,482 42,301
Goodwill 206,476 204,621
Other intangibles, net 46,749 49,521
Long-term marketable securities - 917
Deferred taxes, long-term 30,747 30,751
Other assets 13,986 15,927
Noncurrent assets of discontinued operation 2,006 2,006
Total assets $ 585,047 $ 583,556
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,993 $ 10,558
Accrued liabilities 30,772 40,029
Deferred revenues 166,270 166,945
Income taxes payable 5,225 2,972
Short-term debt 5,000 5,000
Current liabilities of discontinued operation 475 488
Total current liabilities 218,735 225,992
Deferred revenues, long-term 8,068 7,926
Long-term debt 43,750 45,000
Other long-term liabilities 17,147 16,944
Noncurrent liabilities of discontinued operation 4,527 4,633
Total liabilities 292,227 300,495
Stockholders' equity:
Common stock 509 510
Additional paid-in capital 434,885 429,734
Accumulated deficit (151,825 ) (154,053 )
Accumulated other comprehensive income 9,251 6,870
Total stockholders' equity 292,820 283,061
Total liabilities and stockholders' equity $ 585,047 $ 583,556
ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
Three Months Ended March 31
2012 2011
Net revenues:
Recurring revenues $ 78,720 $ 67,327
Non-recurring revenues 8,184 7,999
Total net revenues 86,904 75,326
Cost of revenues (1):
Recurring revenues 16,926 14,788
Non-recurring revenues 9,668 7,239
Amortization of developed technology 2,541 1,516
Total cost of revenues 29,135 23,543
Gross margin 57,769 51,783
Operating expenses (1):
Sales and marketing 18,446 18,184
Product development 16,799 12,642
General and administrative 9,669 9,084
Amortization of other intangibles 956 320
Restructuring charges 104 26
Total operating expenses 45,974 40,256
Income from continuing operations 11,795 11,527
Interest income and other income (expense), net (172 ) 31
Income from continuing operations before income taxes 11,623 11,558
Provision for income taxes 4,306 3,654
Net income from continuing operations $ 7,317 $ 7,904
Discontinued operation:
Net income (loss) from discontinued operation (net of applicable taxes of $(15) and $1,344, respectively) (23 ) 1,824
Net income $ 7,294 $ 9,728
Basic net income per share:
Continuing operations $ 0.14 $ 0.15
Discontinued operation - 0.03
Total operations $ 0.14 $ 0.19
Diluted net income per share:
Continuing operations $ 0.14 $ 0.14
Discontinued operation - 0.03
Total operations $ 0.14 $ 0.18
Weighted average shares used to compute net income per share:
Basic 51,024 52,201
Diluted 53,363 55,339
(1) Includes stock-based employee compensation expense as follows:
Cost of recurring revenues $ 585 $ 503
Cost of non-recurring revenues 331 247
Total cost of revenues 916 750
Sales and marketing 1,657 1,500
Product development 1,460 1,175
General and administrative 856 1,034
Total operating expenses 3,973 3,709
Total stock-based employee compensation expense $ 4,889 $ 4,459
ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31
2012 2011
Cash flows from operating activities:
Net income $ 7,294 $ 9,728
Adjustment to net income for discontinued operation 23 (1,824 )
Net income from continuing operations $ 7,317 $ 7,904
Adjustments to reconcile net income to net cash providedby operating activities from continuing operations:
Stock-based compensation 4,889 4,459
Excess tax benefit from stock-based compensation (1,493 ) (1,344 )
Depreciation and amortization 6,377 4,417
Amortization of debt issuance costs 95 -
Provision for doubtful accounts 52 71
Provision for (reduction of) sales returns 497 (706 )
Deferred income taxes (27 ) (72 )
Other (151 ) 38
Effect of statement of operations adjustments 10,239 6,863
Changes in operating assets and liabilities:
Accounts receivable 2,471 509
Prepaid and other assets (1,264 ) (1,453 )
Accounts payable 434 (670 )
Accrued liabilities (8,325 ) (5,773 )
Deferred revenues (1,029 ) 961
Income taxes payable 3,746 3,252
Effect of changes in operating assets and liabilities (3,967 ) (3,174 )
Net cash provided by operating activities from continuing operations 13,589 11,593
Cash flows from investing activities:
Cash used in acquisitions, net of cash acquired (700 ) (24,648 )
Purchases of property and equipment (1,951 ) (1,436 )
Capitalized software development costs (342 ) (1,612 )
Purchases of marketable securities (33,595 ) (26,140 )
Sales and maturities of marketable securities 34,224 29,408
Net cash used in investing activities from continuing operations (2,364 ) (24,428 )
Cash flows from financing activities:
Proceeds from common stock issued from exercises of stock options 1,267 3,161
Withholding taxes related to equity award net share settlement (782 ) (2,608 )
Repurchase of common stock (6,788 ) -
Repayment of loan borrowing (1,250 ) -
Excess tax benefits from stock-based compensation 1,493 1,344
Net cash provided by (used in) financing activities from continuing operations (6,060 ) 1,897
Net cash transferred from (to) discontinued operation (142 ) 3,078
Effect of exchange rate changes on cash and cash equivalents 280 213
Net change in cash and cash equivalents from continuing operations 5,303 (7,647 )
Cash and cash equivalents of continuing operations at beginning of period 65,525 81,948
Cash and cash equivalents of continuing operations at end of period $ 70,828 $ 74,301
Three Months Ended March 31
2012 2011
Supplemental disclosure of cash flow information
Cash flow from discontiued operation:
Net cash used in operating activities $ (142 ) $ 74
Net cash provided by investing activities - 3,004
Net cash transferred from (to) continuing operations 142 (3,078 )
Effect of exchange rates on cash and cash equivalents - -
Net change in cash and cash equivalents from discontinued operations - -
Cash and cash equivalents of discontinued operation at beginning of period - -
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 March 31, 2012 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 57,769 66 % $ 11,795 14 % $ 7,317
Amortization of acquired developed technology 1,896 1,896 1,896
Amortization of other acquired intangibles - 956 956
Stock-based compensation - cost of revenues 916 916 916
Stock-based compensation - operating expenses - 3,973 3,973
Restructuring charges - 104 104
Income tax adjustment for non-GAAP (1) - - (2,508 )
Non-GAAP $ 60,581 70 % $ 19,640 23 % $ 12,654
Diluted net income per share
GAAP $ 0.14
Non-GAAP $ 0.24
Shares used to compute diluted net income per share 53,363
Three Months Ended March 31, 2011 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 51,783 69 % $ 11,527 15 % $ 7,904
Amortization of acquired developed technology 916 916 916
Amortization of other acquired intangibles - 320 320
Stock-based compensation - cost of revenues 750 750 750
Stock-based compensation - operating expenses - 3,709 3,709
Acquisition related expenses - 450 450
Restructuring charges - 26 26
Income tax adjustment for non-GAAP (1) - - (2,551 )
Non-GAAP $ 53,449 71 % $ 17,698 23 % $ 11,524
Diluted net income per share
GAAP $ 0.14
Non-GAAP $ 0.21
Shares used to compute diluted net income per share 55,339
(1)
The estimated non-GAAP effective tax rate was 35% for the three months ended March 31, 2012 and 2011, 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 technologyand 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