SOURCE: Advent Software

Advent Software

April 29, 2013 16:15 ET

Advent Software Reports First Quarter 2013 Results

Company Achieves Record Profits and Strong First Quarter Bookings of $8.7 Million

SAN FRANCISCO, CA--(Marketwired - Apr 29, 2013) - 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, 2013.

"Advent had a great start to the year, with strong bookings and record operating margin," said Pete Hess, Chief Executive Officer at Advent. "Our focus is to help investment managers thrive by being the best at what our clients expect. Our efforts to accelerate the value we deliver to our clients are being recognized by the market as evidenced by our strong results this quarter."

FIRST QUARTER 2013 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue of $92.5 million for the first quarter of 2013, compared to $86.9 million in the first quarter of 2012, a 6% increase.

Operating income for the first quarter of 2013 was $16.2 million, or 17.5% of revenue, compared to $11.8 million or 13.6% of revenue for the first quarter of 2012.

Net income for the first quarter of 2013 was $12.1 million compared to $7.3 million in the first quarter of 2012, a 65% increase.

On a fully diluted basis, earnings per share in the first quarter of 2013 were $0.23 compared to $0.14 in the first quarter of 2012, a 67% increase.

Operating cash flow in the first quarter of 2013 was $17.2 million, compared with $13.6 million in the first quarter of 2012, a 27% increase.

Cash, cash equivalents and marketable securities totaled $247 million as of March 31, 2013, compared to $231 million as of December 31, 2012, a 7% increase. Total outstanding debt as of March 31, 2013 was $93 million compared to $95 million as of December 31, 2012. Total deferred revenue as of March 31, 2013 was $177 million, compared to $183 million as of December 31, 2012.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income for the first quarter of 2013 was $26.4 million, or 28.5% of revenue. This represents a 34% increase over the same period last year. On a fully diluted basis, non-GAAP earnings per share were $0.32 in the first quarter of 2013 and represent a 36% increase from non-GAAP diluted earnings per share of $0.24 in the first quarter of 2012. Adjusted EBITDA was $27.8 million for the first quarter of 2013, a 19% increase compared to $23.3 million over the same period in 2012.

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

FIRST QUARTER HIGHLIGHTS

  • Record First Quarter Bookings with Strong Renewals: The Annual Contract Value (ACV) of our new contract bookings in the first quarter of 2013 will contribute $8.7 million in annual revenue once the contracts are fully implemented and represent a 17% increase from the first quarter of 2012. The initial renewal rate for the fourth quarter of 2012 was 91%. The renewal rate from the third quarter of 2012 increased by two points to 96% as additional cash was collected.

  • Client Success: Advent had a strong first quarter, with a number of existing clients expanding their relationship with Advent, including Gramercy Funds Management, and many noteworthy new clients around the world, including Investec, Qant Edge, SinoPac Securities, and Welch, Hornsby, & Welch.

  • Award-Winning Solutions & Company: Advent continues to win accolades globally. Advent was awarded "Excellence in Alternative Investments" in the category of "Technology Provider" during the 3rd annual International Alternative Investment Review (IAIR) Hedge Fund Awards, which took place in Hong Kong. Advent was also named "Best Portfolio Management and Accounting Systems" by Markets Media at the inaugural 2013 Markets Choice Awards. Additionally, for the seventh year in a row, Advent has been named one of the Best Places to Work in the Bay Area by the San Francisco Business Times.

FINANCIAL GUIDANCE
Advent updates the following financial revenue guidance for the second quarter and operating margin guidance for fiscal year 2013:

         
         
Guidance   Q2 2013   FY 2013
Total Revenue ($M)   $93-$95   $373-$379
GAAP Operating Margin
(% of revenue)
  n/a   18.0-18.5%
Amortization of Intangibles
(% of revenue)
  n/a   3.0%
Stock Compensation Expense
(% of revenue)
  n/a   6.0%
Restructuring Charges
(% of revenue)
  n/a   0.5%
Non-GAAP Operating Margin
(% of revenue)
  n/a   27.5 - 28.0%
GAAP Effective Tax Rate
(% of Income Before Tax)
  n/a   30% - 35%
Non-GAAP Effective Tax Rate
(% of Income Before Tax)
  n/a   35%
Operating Cash Flow ($M)   n/a   $93 - $97
Capital Expenditures ($M)   n/a   $10 - $12
         
         

INVESTOR CALL

Advent Software, Inc. will host its Q1 2013 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q1 2013 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) 515-2911 and request conference ID #63438590. Telephone replay will be available through midnight May 6, 2013. The replay number for domestic callers is (888) 286-8010, and for international callers is (617) 801-6888, with the conference ID of #63296730.

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 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 2012 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 and Advent Software are registered trademarks 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  
  2013     2012  
ASSETS              
Current assets:              
  Cash and cash equivalents $ 76,122     $ 58,217  
  Short-term marketable securities   108,620       111,192  
  Accounts receivable, net   55,481       61,069  
  Deferred taxes, current   18,928       18,934  
  Prepaid expenses and other   26,693       25,868  
  Current assets of discontinued operation   88       88  
    Total current assets   285,932       275,368  
Property and equipment, net   35,156       37,269  
Goodwill   204,314       206,932  
Other intangibles, net   34,210       38,205  
Long-term marketable securities   61,837       61,552  
Deferred taxes, long-term   22,509       24,524  
Other assets   12,548       12,994  
Noncurrent assets of discontinued operation   1,609       1,609  
               
    Total assets $ 658,115     $ 658,453  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current liabilities:              
  Accounts payable $ 4,267     $ 5,190  
  Accrued liabilities   31,825       37,096  
  Deferred revenues   169,356       174,388  
  Income taxes payable   4,058       5,593  
  Current portion of long-term debt   10,000       10,000  
  Current liabilities of discontinued operation   319       262  
    Total current liabilities   219,825       232,529  
Deferred revenues, long-term   8,055       8,787  
Long-term income taxes payable   5,335       5,335  
Long-term debt   82,500       85,000  
Other long-term liabilities   12,504       13,139  
Noncurrent liabilities of discontinued operation   3,619       3,804  
               
    Total liabilities   331,838       348,594  
               
               
Stockholders' equity:              
  Common stock   508       505  
  Additional paid-in capital   461,599       453,585  
  Accumulated deficit   (142,226 )     (154,261 )
  Accumulated other comprehensive income   6,396       10,030  
    Total stockholders' equity   326,277       309,859  
               
    Total liabilities and stockholders' equity $ 658,115     $ 658,453  
               
               
               
ADVENT SOFTWARE, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(GAAP, Unaudited)  
           
           
  Three Months Ended March 31  
  2013     2012  
               
Net revenues:              
Recurring revenues $ 84,483     $ 78,720  
Non-recurring revenues   8,007       8,184  
               
    Total net revenues   92,490       86,904  
               
Cost of revenues (1):              
Recurring revenues   16,412       16,926  
Non-recurring revenues   9,568       9,668  
Amortization of developed technology   2,499       2,541  
               
    Total cost of revenues   28,479       29,135  
               
    Gross margin   64,011       57,769  
               
Operating expenses (1):              
Sales and marketing   17,204       18,446  
Product development   16,962       16,799  
General and administrative   10,360       9,669  
Amortization of other intangibles   957       956  
Restructuring charges   2,315       104  
               
    Total operating expenses   47,798       45,974  
               
Income from continuing operations   16,213       11,795  
Interest and other income (expense), net   (303 )     (172 )
               
Income from continuing operations before income taxes   15,910       11,623  
Provision for income taxes   3,853       4,306  
               
    Net income from continuing operations $ 12,057     $ 7,317  
               
Discontinued operation:              
    Net loss from discontinued operation (net of applicable taxes of $(15) and $(15), respectively)   (22 )     (23 )
               
Net income $ 12,035     $ 7,294  
               
Basic net income (loss) per share (2):              
    Continuing operations $ 0.24     $ 0.14  
    Discontinued operation   (0.00 )     (0.00 )
      Total operations $ 0.24     $ 0.14  
               
Diluted net income (loss) per share (2):              
    Continuing operations $ 0.23     $ 0.14  
    Discontinued operation   (0.00 )     (0.00 )
      Total operations $ 0.23     $ 0.14  
               
Weighted average shares used to compute net income per share:              
    Basic   50,563       51,024  
    Diluted   52,598       53,363  
               
(1) Includes stock-based employee compensation expense as follows:              
               
    Cost of recurring revenues $ 488     $ 585  
    Cost of non-recurring revenues   382       331  
      Total cost of revenues   870       916  
               
    Sales and marketing   1,523       1,657  
    Product development   1,326       1,460  
    General and administrative   1,298       856  
      Total operating expenses   4,147       3,973  
               
    Total stock-based employee compensation expense $ 5,017     $ 4,889  
               
(2) Net income per share is based on actual calculated values and totals may not sum due to rounding.  
   
   
   
ADVENT SOFTWARE, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
(Unaudited)  
           
           
  Three Months Ended March 31  
  2013     2012  
Cash flows from operating activities:              
  Net income $ 12,035     $ 7,294  
  Adjustment to net income for discontinued operation net loss   22       23  
  Net income from continuing operations   12,057       7,317  
               
  Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:              
    Stock-based compensation   5,017       4,889  
    Excess tax benefit from stock-based compensation   (403 )     (1,493 )
    Depreciation and amortization   6,400       6,377  
    Amortization of debt issuance costs   98       95  
    Provision for doubtful accounts   219       52  
    Provision for sales reserves   68       497  
    Deferred income taxes   1,724       (27 )
    Other   (45 )     (151 )
        Effect of statement of operations adjustments   13,078       10,239  
    Changes in operating assets and liabilities:              
      Accounts receivable   5,368       2,471  
      Prepaid and other assets   204       (1,264 )
      Accounts payable   (953 )     434  
      Accrued liabilities   (5,600 )     (8,325 )
      Deferred revenues   (5,833 )     (1,029 )
      Income taxes payable   (1,131 )     3,746  
        Effect of changes in operating assets and liabilities   (7,945 )     (3,967 )
               
Net cash provided by operating activities from continuing operations   17,190       13,589  
               
Cash flows from investing activities:              
  Cash used in acquisitions, net of cash acquired   -       (700 )
  Purchases of property and equipment   (959 )     (1,951 )
  Capitalized software development costs   -       (342 )
  Purchases of marketable securities   (39,715 )     (33,595 )
  Sales and maturities of marketable securities   41,371       34,224  
               
Net cash provided by (used in) investing activities from continuing operations   697       (2,364 )
               
Cash flows from financing activities:              
  Proceeds from common stock issued from exercises of stock options   3,492       1,267  
  Withholding taxes related to equity award net share settlement   (896 )     (782 )
  Repurchase of common stock   -       (6,788 )
  Repayment of debt   (2,500 )     (1,250 )
  Excess tax benefits from stock-based compensation   403       1,493  
               
Net cash provided by (used in) financing activities from continuing operations   499       (6,060 )
               
Net cash transferred to discontinued operation   (151 )     (142 )
               
Effect of exchange rate changes on cash and cash equivalents   (330 )     280  
               
Net change in cash and cash equivalents from continuing operations   17,905       5,303  
Cash and cash equivalents of continuing operations at beginning of period   58,217       65,525  
               
Cash and cash equivalents of continuing operations at end of period $ 76,122     $ 70,828  
               
               
  Three Months Ended March 31  
  2013     2012  
Supplemental disclosure of cash flow information              
Cash flows from discontinued operation:              
  Net cash used in operating activities $ (151 )   $ (142 )
  Net cash provided by investing activities   -       -  
  Net cash transferred from continuing operations   151       142  
  Net change in cash and cash equivalents from discontinued operation   -       -  
  Cash and cash equivalents of discontinued operation at beginning of period   -       -  
  Cash and cash equivalents of discontinued operation at end of period $ -     $ -  
               
    The cash flows from the discontinued operation, as presented in the condensed consolidated statement of cash flows, relate to the operations of MicroEdge, Inc.  
               
               
               
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 in accordance with generally accepted accounting principles in the United States of America (or GAAP), Advent uses non-GAAP measures of continuing operations' gross margin, operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses, income, 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 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 GAAP.  
                       
  Three Months Ended
March 31, 2013
    Three Months Ended
March 31, 2012
 
  Amount     % of Net Revenues     Amount     % of Net Revenues  
                           
GAAP gross margin $ 64,011     69.2 %   $ 57,769     66.5 %
  Amortization of acquired intangibles   1,898             1,896        
  Stock-based compensation   870             916        
Non-GAAP gross margin $ 66,779     72.2 %   $ 60,581     69.7 %
                           
GAAP operating income $ 16,213     17.5 %   $ 11,795     13.6 %
  Amortization of acquired intangibles   2,855             2,852        
  Stock-based compensation   5,017             4,889        
  Restructuring charges   2,315             104        
Non-GAAP operating income $ 26,400     28.5 %   $ 19,640     22.6 %
                           
GAAP net income $ 12,057           $ 7,317        
  Amortization of acquired intangibles   2,855             2,852        
  Stock-based compensation   5,017             4,889        
  Restructuring charges   2,315             104        
  Income tax adjustment (1)   (5,281 )           (2,508 )      
Non-GAAP net income $ 16,963           $ 12,654        
                           
GAAP net income $ 12,057           $ 7,317        
  Net interest   458             460        
  Provision for income taxes   3,853             4,306        
  Depreciation expense   2,945             2,881        
  Amortization expense   3,455             3,496        
  Stock-based compensation   5,017             4,889        
Adjusted EBITDA $ 27,785           $ 23,349        
                           
Diluted net income per share                          
  GAAP $ 0.23           $ 0.14        
  Non-GAAP $ 0.32           $ 0.24        
                           
Shares used to compute diluted net income per share   52,598             53,363        
   
(1) The estimated non-GAAP effective tax rate was 35% for the three months ended March 31, 2013 and 2012, respectively, and has been used to adjust the provision for income taxes for non-GAAP net income and non-GAAP diluted net income per share purposes.
   
   
   
ADVENT SOFTWARE, INC.
RECONCILIATION OF PROJECTED CONTINUING OPERATIONS' GAAP OPERATING INCOME %
TO NON-GAAP OPERATING INCOME %
(Preliminary and unaudited)
       
       
       
Advent provides projections for the non-GAAP measure of its continuing operations' operating income percentage. This non-GAAP measure excludes certain costs, expenses, gains and losses which we believe is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. Adjustments to our projected continuing operations' GAAP results are made with the intent of providing 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 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 Ending December 31, 2013
  Continuing Operations
  Operating Income %
       
  Projected GAAP 18.0% to 18.5%
       
    Projected amortization of acquired developed technology and other acquired intangible asset adjustment   3.0%  
    Projected stock-based compensation adjustment   6.0%  
    Projected restructuring charge adjustment   0.5%  
       
  Projected non-GAAP 27.5% to 28.0%
       

Contact Information

  • CONTACT
    Media Contact:
    Amanda Diamondstein-Cieplinska
    Advent Software, Inc.
    (415) 645-1668
    Email Contact

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