SOURCE: Advent Software

April 28, 2014 16:15 ET

Advent Software Reports First Quarter 2014 Results

Record First Quarter Operating Cash Flow of $20.9 Million, up 21%, and Annualized Recurring Run Rate of $376 Million, up 6%, Compared to the Prior Year

SAN FRANCISCO, CA--(Marketwired - Apr 28, 2014) -  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, 2014.

"Advent had a strong start to the year," said Pete Hess, Chief Executive Officer of Advent Software. "We are in a great position with solid profitability and excellent cash flow, and we continue to strengthen our competitive advantage while at the same time committing to further enhance shareholder value."

FIRST QUARTER 2014 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue of $96.8 million for the first quarter of 2014, compared to $92.5 million in the first quarter of 2013, a 5% increase.

Operating income for the first quarter of 2014 was $19.3 million, or 20.0% of revenue, compared to $16.2 million or 17.5% of revenue for the first quarter of 2013.

Net income for the first quarter of 2014 was $10.9 million, compared to $12.1 million in the first quarter of 2013. On a fully diluted basis, earnings per share in the first quarter of 2014 were $0.20, compared to $0.23 in the first quarter of 2013. In the first quarter of 2013, Advent benefited from the reinstatement of the federal research credit for 2012 and 2013, yielding a GAAP provisional tax rate of 24%.

Operating cash flow in the first quarter of 2014 was $20.9 million, compared with $17.2 million in the first quarter of 2013.

Cash and cash equivalents totaled $45 million as of March 31, 2014, compared to $34 million as of December 31, 2013. Total outstanding debt as of March 31, 2014 was $295 million compared to $305 million as of December 31, 2013.

Deferred revenue as of March 31, 2014 was $188 million, compared to $177 million as of March 31, 2013.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income for the first quarter of 2014 was $29.2 million, or 30.2% of revenue. This represents an 11% increase compared to $26.4 million in the first quarter of 2013.

On a fully diluted basis, non-GAAP earnings per share were $0.33 in the first quarter of 2014 and represent a 1% increase from $0.32 in the first quarter of 2013.

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

BUSINESS HIGHLIGHTS

  • Quarterly Dividend: Advent's Board of Directors has approved the payment of a quarterly cash dividend to its shareholders. The quarterly cash dividend payment of $0.13 per common share will be made on July 15, 2014 to shareholders of record as of June 30, 2014. 
  • Award-Winning Solutions & Company: Advent's solutions continued to receive industry awards and win honors around the world during the first quarter. In the US, Advent was named "Best CRM System" by Family Wealth Report, and APX was named "Best Technology Platform" by Private Asset Management. Internationally, Advent was named "Best Technology Fund Accounting" by HFM Week European Hedge Fund Services and "Best Portfolio Management Software Provider" and "Best Fund Accounting & Reporting Software Provider" by MENA Fund Manager.
  • Continued Client Success: Advent had a strong first quarter, with a number of existing clients expanding their relationship with Advent, including Schafer Cullen Capital Management, and many new noteworthy clients around the world, including Ashburton Investments, the investment arm of the First Rand Group.

FINANCIAL GUIDANCE

Advent updates the following financial guidance for the second quarter of 2014. Financial guidance for fiscal year 2014 remains unchanged.

         
Guidance   Q2 2014   FY 2014
 Total Revenue ($M)   $96 - $98   $395 - $403
 GAAP Operating Margin   n/a   21.0% - 21.5%
 Stock Compensation Expense (% of revenue)   n/a   8.0%
 Amortization of Intangibles (% of revenue)   n/a   2.0%
 Non-GAAP Operating Margin   n/a   31.0% - 31.5%
 Operating Cash Flow ($M)   n/a   $105 - $115
 Capital Expenditures ($M)   n/a   $8 - $11
 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 2014 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q1 2014 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 866-700-5192 and request conference ID # 97740378. Telephone replay will be available through midnight May 5, 2014. The replay number for domestic callers is 888-286-8010, and for international callers is 617-801-6888, with the conference ID of # 38169624. The conference call will also be webcast live and then archived on http://investor.advent.com.

ABOUT ADVENT
Over the last 30 years of industry change, our core mission to help our clients focus on their unique strategies and deliver exceptional investor service has never wavered. With unparalleled precision and ahead of the curve solutions, we've helped over 4,300 firms in more than 50 countries -- from established global institutions to small start-up practices -- to grow their business and thrive. Advent technology helps firms minimize risk, work together seamlessly, and discover new opportunities in a constantly evolving world. Together with our clients, we are shaping the future of investment management. For more information on Advent products visit http://www.advent.com.

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 in the United States of America (GAAP), please see the accompanying tables entitled "Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures" and "Reconciliation of Projected Continuing Operations' GAAP Operating Income % to Non-GAAP Operating Income %."

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. In addition, any declarations of future quarterly dividends and establishment of future record and payment dates may not occur and are subject to the determination of the Advent Board of Directors. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our 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 declare future dividends; the Company's ability to satisfy contractual performance requirements 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 2013 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, Advent Software, and the Advent and logo composite are registered trademarks of Advent Software, Inc.

   
   
ADVENT SOFTWARE, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
(GAAP, Unaudited)  
   
    March 31     December 31  
    2014     2013  
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 44,964     $ 33,828  
  Accounts receivable, net     49,097       58,717  
  Deferred taxes, current     24,898       24,898  
  Prepaid expenses and other     29,094       30,114  
  Current assets of discontinued operation     100       100  
    Total current assets     148,153       147,657  
Property and equipment, net     31,417       31,698  
Goodwill     208,146       207,818  
Other intangibles, net     25,248       27,392  
Deferred taxes, long-term     21,966       23,020  
Other assets     15,947       17,372  
Noncurrent assets of discontinued operation     1,337       1,337  
                 
    Total assets   $ 452,214     $ 456,294  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
  Accounts payable   $ 3,687     $ 5,348  
  Accrued liabilities     35,243       41,625  
  Deferred revenues     179,314       186,107  
  Current portion of long-term debt     20,000       20,000  
  Current liabilities of discontinued operation     612       600  
    Total current liabilities     238,856       253,680  
Deferred revenues, long-term     8,501       7,809  
Long-term income taxes payable     7,667       7,667  
Long-term debt     275,000       285,000  
Other long-term liabilities     10,634       11,171  
Noncurrent liabilities of discontinued operation     2,630       2,782  
                 
    Total liabilities     543,288       568,109  
                 
                 
Stockholders' deficit:                
  Common stock     514       513  
  Additional paid-in capital     51,890       42,533  
  Accumulated deficit     (154,984 )     (165,870 )
  Accumulated other comprehensive income     11,506       11,009  
    Total stockholders' deficit     (91,074 )     (111,815 )
                   
    Total liabilities and stockholders' deficit   $ 452,214     $ 456,294  
                     
                     
                     
ADVENT SOFTWARE, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(GAAP, Unaudited)  
             
    Three Months Ended March 31  
    2014     2013  
Net revenues:                
Recurring revenues   $ 89,129     $ 84,483  
Non-recurring revenues     7,675       8,007  
                 
    Total net revenues     96,804       92,490  
                 
Cost of revenues (1):                
Recurring revenues     18,627       16,412  
Non-recurring revenues     8,055       9,568  
Amortization of developed technology     1,800       2,499  
                 
    Total cost of revenues     28,482       28,479  
                 
    Gross margin     68,322       64,011  
                 
Operating expenses (1):                
Sales and marketing     19,729       17,204  
Product development     17,639       16,962  
General and administrative     10,558       10,360  
Amortization of other intangibles     909       957  
Restructuring charges     174       2,315  
                 
    Total operating expenses     49,009       47,798  
                 
Income from continuing operations     19,313       16,213  
Interest and other income (expense), net     (2,225 )     (303 )
                 
Income from continuing operations before income taxes     17,088       15,910  
Provision for income taxes     6,181       3,853  
                 
    Net income from continuing operations   $ 10,907     $ 12,057  
                 
Discontinued operation:                
    Net loss from discontinued operation (net of applicable taxes of $(14) and $(15), respectively)     (21 )     (22 )
                 
Net income   $ 10,886     $ 12,035  
                 
Basic net income (loss) per share (2):                
    Continuing operations   $ 0.21     $ 0.24  
    Discontinued operation     (0.00 )     (0.00 )
      Total operations   $ 0.21     $ 0.24  
                 
Diluted net income (loss) per share (2):                
    Continuing operations   $ 0.20     $ 0.23  
    Discontinued operation     (0.00 )     (0.00 )
      Total operations   $ 0.20     $ 0.23  
                 
Weighted average shares used to compute net income (loss) per share:                
    Basic     51,358       50,563  
    Diluted     53,807       52,598  
                 
                 
                 
(1)  Includes stock-based employee compensation expense as follows:                
    Cost of recurring revenues   $ 842     $ 488  
    Cost of non-recurring revenues     375       382  
      Total cost of revenues     1,217       870  
                     
    Sales and marketing     2,635       1,523  
    Product development     1,925       1,326  
    General and administrative     1,851       1,298  
      Total operating expenses     6,411       4,147  
                 
    Total stock-based employee compensation expense   $ 7,628     $ 5,017  
   
(2) Net income (loss) 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  
    2014     2013  
Cash flows from operating activities:            
  Net income   $ 10,886     $ 12,035  
  Adjustment to net income for discontinued operation net income     21       22  
  Net income from continuing operations     10,907       12,057  
                   
  Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:                
    Stock-based compensation     7,628       5,017  
    Excess tax benefit from stock-based compensation     (3,348 )     (403 )
    Depreciation and amortization     5,475       6,400  
    Amortization of debt issuance costs     354       98  
    (Reduction of) provision for doubtful accounts     (12 )     219  
    (Reduction of) provision for sales reserves     (250 )     68  
    Deferred income taxes     (135 )     1,724  
    Other     130       (45 )
        Effect of statement of operations adjustments     9,842       13,078  
    Changes in operating assets and liabilities:                
      Accounts receivable     9,633       5,368  
      Prepaid and other assets     2,094       204  
      Accounts payable     (1,999 )     (953 )
      Accrued liabilities     (8,151 )     (5,600 )
      Deferred revenues     (5,852 )     (5,833 )
      Income taxes payable     4,401       (1,131 )
        Effect of changes in operating assets and liabilities     126       (7,945 )
                 
Net cash provided by operating activities from continuing operations     20,875       17,190  
                 
Cash flows from investing activities:                
  Purchases of property and equipment     (2,085 )     (959 )
  Capitalized software development costs     (472 )     -  
  Purchases of marketable securities     -       (39,715 )
  Sales and maturities of marketable securities     -       41,371  
                 
Net cash (used in) provided by investing activities from continuing operations     (2,557 )     697  
                 
Cash flows from financing activities:                
  Proceeds from common stock issued from exercises of stock options     1,246       3,492  
  Excess tax benefits from stock-based compensation     3,348       403  
  Withholding taxes related to equity award net share settlement     (1,581 )     (896 )
  Repayment of debt     (10,000 )     (2,500 )
                 
Net cash (used in) provided by financing activities from continuing operations     (6,987 )     499  
                 
Net cash transferred to discontinued operation     (161 )     (151 )
                 
Effect of exchange rate changes on cash and cash equivalents     (34 )     (330 )
                 
Net change in cash and cash equivalents from continuing operations     11,136       17,905  
Cash and cash equivalents of continuing operations at beginning of period     33,828       58,217  
                 
Cash and cash equivalents of continuing operations at end of period   $ 44,964     $ 76,122  
                 
    Three Months Ended March 31  
    2014     2013  
Supplemental disclosure of cash flow information:                
Noncash investing activities:                
  Capital expenditures included in accounts payable   $ 469     $ -  
                 
Cash flows from discontinued operation of MicroEdge, Inc.:                
  Net cash used in operating activities   $ (161 )   $ (151 )
  Net cash transferred from continuing operations     161       151  
                   
                   
                   
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 and income 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
    2014   2013
    Amount     % of Net Revenues   Amount     % of Net Revenues
                         
GAAP gross margin   $ 68,322     70.6%   $ 64,011     69.3%
  Amortization of acquired intangibles     1,186           1,898      
  Stock-based compensation     1,217           870      
Non-GAAP gross margin   $ 70,725     73.1%   $ 66,779     72.3%
                         
GAAP operating income   $ 19,313     20.0%   $ 16,213     17.5%
  Amortization of acquired intangibles     2,095           2,855      
  Stock-based compensation     7,628           5,017      
  Restructuring charges     174           2,315      
Non-GAAP operating income   $ 29,210     30.2%   $ 26,400     28.5%
                         
GAAP net income   $ 10,907         $ 12,057      
  Amortization of acquired intangibles     2,095           2,855      
  Stock-based compensation     7,628           5,017      
  Restructuring charges     174           2,315      
  Income tax adjustment (1)     (3,264 )         (5,281 )    
Non-GAAP net income   $ 17,540         $ 16,963      
                         
GAAP net income   $ 10,907         $ 12,057      
  Net interest     2,136           458      
  Provision for income taxes     6,181           3,853      
  Depreciation expense     2,766           2,945      
  Amortization expense     2,709           3,455      
  Stock-based compensation     7,628           5,017      
Adjusted EBITDA   $ 32,327         $ 27,785      
                         
Diluted net income per share                        
  GAAP   $ 0.20         $ 0.23      
  Non-GAAP   $ 0.33         $ 0.32      
                         
Shares used to compute diluted net income per share     53,807           52,598      
   
(1) The estimated non-GAAP effective tax rate was 35% for the three months ended March 31, 2014 and 2013, 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 and expenses 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, 2014
      Continuing Operations
      Operating Income %
               
  Projected GAAP   21.0%   to   21.5%
               
    Projected stock-based compensation adjustment       8.0%    
    Projected amortization of acquired developed technology and other acquired intangible asset adjustment       2.0%    
               
  Projected non-GAAP   31.0%   to   31.5%
               

Contact Information

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

    Investor Relations Contact:
    Justin Ritchie
    Advent Software, Inc.
    (415) 645-1683
    Email Contact