SOURCE: Advent Software

Advent Software

February 02, 2015 16:54 ET

Advent Software Reports Fourth Quarter and Full Year 2014 Results

Record Full-Year GAAP Operating Income of $84 Million, up 82%; Record Full-Year Operating Cash Flow of $115 Million, up 17%

SAN FRANCISCO, CA--(Marketwired - Feb 2, 2015) -  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 and fiscal year ended December 31, 2014.

FOURTH QUARTER AND FULL YEAR 2014 RESULTS

GAAP Results for Continuing Operations

The Company reported quarterly revenue of $100.7 million for the fourth quarter of 2014, compared to $97.6 million in the fourth quarter of 2013, a 3% increase. Revenue for the year ended December 31, 2014 was $396.8 million, compared to $383.0 million recorded in 2013, a 4% increase.

Operating income for the fourth quarter of 2014 was $22.4 million, or 22.3% of revenue, compared to $18.4 million or 18.9% of revenue for the fourth quarter of 2013. Operating income for the year ended December 31, 2014 was $83.7 million, or 21.1% of revenue, compared to $46.1 million, or 12.0% of revenue, for 2013. Advent's operating income for fiscal year 2013 included recapitalization charges of $6.0 million and stock compensation expense of $48.2 million, of which $26.7 million was due to the modification of equity awards.

Net income for the fourth quarter of 2014 was $14.7 million compared to $11.0 million in the fourth quarter of 2013, a 33% increase. Net income for the year ended December 31, 2014 was $50.3 million compared to $28.8 million for 2013, a 75% increase. On a fully diluted basis, earnings per share in the fourth quarter of 2014 were $0.27, compared to $0.20 in the fourth quarter of 2013. On a fully diluted basis, earnings per share for the year ended December 31, 2014 were $0.94, compared to $0.54 for 2013.

Operating cash flow in the fourth quarter of 2014 was $43.6 million, compared with $36.7 million in the fourth quarter of 2013, a 19% increase. Operating cash flow for the year ended December 31, 2014 totaled $115.2 million, compared with $98.6 million in 2013, a 17% increase.

Cash, cash equivalents, and marketable securities totaled $38.0 million as of December 31, 2014, compared to $33.8 million as of December 31, 2013. Total outstanding debt as of December 31, 2014 was $220 million compared to $305 million as of December 31, 2013. Deferred revenue as of December 31, 2014 was $204 million, compared to $194 million as of December 31, 2013.

Non-GAAP Results for Continuing Operations

Non-GAAP operating income for the fourth quarter of 2014 was $31.2 million, or 31.0% of revenue. This represents an 8% increase compared to $28.9 million, or 29.6% of revenue, in the fourth quarter of 2013. Non-GAAP operating income for the year ended December 31, 2014 was $125.8 million, or 31.7% of revenue. This represents a 9% increase compared to $115.3 million of non-GAAP operating income, or 30.1% of revenue, for 2013.

On a fully diluted basis, non-GAAP earnings per share were $0.36 in the fourth quarter of 2014 and represent a 13% increase from non-GAAP diluted net income per share of $0.32 in the fourth quarter of 2013. On a fully diluted basis, non-GAAP earnings per share were $1.44 for the year ended December 31, 2014, a 9% increase compared to $1.32 per share for 2013.

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

FOURTH QUARTER AND FULL YEAR 2014 HIGHLIGHTS

Strong Performance Across Key Metrics: Annualized recurring run rate was $383.4 million as of December 31, 2014, an increase of 7% over the prior year. The average full year renewal rate for the year ended December 31, 2014 was 98%, compared with 97% in 2013, an increase of 80 basis points. The Annual Contract Value (ACV) of our new contract bookings in the fourth quarter of 2014 will contribute $10.1 million in annual revenue once the contracts are fully implemented. This represents a 15% increase compared to $8.8 million of ACV in the fourth quarter of 2013.

Recognition as Market Leader in Investment Management Software: Advent's solutions received many industry awards and global honors during the fourth quarter. Advent was named "Best Fund Accounting and Reporting Software" at the HFM US Hedge Fund Services Awards 2014. Advent's Geneva® was named "Best Buy-Side Portfolio Accounting Platform," and Advent Portfolio Exchange® (APX) in conjunction with Advent Direct® Investor Management was named "Best Buy-Side CRM Platform" in the Buy-Side Technology Awards 2014. Internationally, Advent was recognized as "Best Technology Provider" at the Investment Week Fund Services Awards 2014 and as "Best Portfolio Management Solution" and "Best Client Communications and Reporting Solution" at the inaugural WealthBriefing Gulf Co-operation Council (GCC) Region Awards 2014 ceremony held in Dubai.

Product Upgrades Across the Advent Portfolio: Advent announced global availability of new releases to several key products that include compelling new functionality for asset and wealth management firms, alternative managers, family offices, and administrators. The updated products include Geneva®, Black Diamond(SM), Advent Portfolio Exchange® (APX), Moxy®, Advent Rules Manager®, and Advent Revenue Center®. In 2014, Advent introduced Advent Direct® Investor Management, the first solution to be released to selected clients on the Advent Direct® cloud platform.

INVESTOR CALL
Advent Software, Inc. has cancelled its Q4 and full year 2014 earnings conference call originally scheduled for 5:00 p.m. Eastern time today. The Company will be participating in a conference call hosted by SS&C Technologies Holdings, Inc. this afternoon at 5:30 p.m. ET. To join this call, dial (877) 312-8798 (US and Canada) or (253) 237-1193 (International), and request the "SS&C to Acquire Advent Software conference call"; conference ID# 77079438. Alternatively, a live audio webcast can be accessed via http://investor.ssctech.com. To expedite the registration process, you may pre-register for the event by clicking here. A replay of the conference call will be available one hour after the conference call, for 48 hours. The dial-in number is (855) 859-2056 (US and Canada) or (404) 537-3406 (International); access code# 77079438.

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."

FORWARD-LOOKING STATEMENTS
Any forward-looking statements included herein 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 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, the Advent logo, Advent Software, Geneva®, Advent Portfolio Exchange®, Moxy®, Advent Revenue Center®, Advent Rules Manager®, Advent Direct® are registered trademarks, and Black Diamond is a mark, of Advent Software, Inc. Any 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     December 31  
    2014     2013  
ASSETS                
  Current assets:                
  Cash and cash equivalents   $ 28,784     $ 33,828  
  Short-term marketable securities     7,298       -  
  Accounts receivable, net     61,870       58,717  
  Deferred taxes, current     28,275       24,898  
  Prepaid expenses and other     24,984       30,114  
  Current assets of discontinued operation     -       100  
    Total current assets     151,211       147,657  
Property and equipment, net     27,995       31,698  
Goodwill     202,290       207,818  
Other intangibles, net     18,803       27,392  
Long-term marketable securities     1,874       -  
Deferred taxes, long-term     18,358       23,020  
Other assets     13,245       17,372  
Noncurrent assets of discontinued operation     1,093       1,337  
                 
    Total assets   $ 434,869     $ 456,294  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
  Accounts payable   $ 12,041     $ 5,348  
  Dividends payable     6,750       -  
  Accrued liabilities     36,541       41,625  
  Deferred revenues     197,144       186,107  
  Income taxes payable     132       -  
  Current portion of long-term debt     20,000       20,000  
  Current liabilities of discontinued operation     572       600  
    Total current liabilities     273,180       253,680  
Deferred revenues, long-term     6,972       7,809  
Long-term income taxes payable     9,513       7,667  
Long-term debt     200,000       285,000  
Other long-term liabilities     7,821       11,171  
Noncurrent liabilities of discontinued operation     2,170       2,782  
                 
    Total liabilities     499,656       568,109  
                 
Stockholders' deficit:                
  Common stock     519       513  
  Additional paid-in capital     61,455       42,533  
  Accumulated deficit     (130,234 )     (165,870 )
  Accumulated other comprehensive income     3,473       11,009  
    Total stockholders' deficit     (64,787 )     (111,815 )
                     
    Total liabilities and stockholders' deficit   $ 434,869     $ 456,294  
                     
                     
                     
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
 
  2014     2013     2014     2013  
Net revenues:                              
Recurring revenues $ 92,937     $ 89,019     $ 365,290     $ 349,881  
Non-recurring revenues   7,727       8,560       31,530       33,078  
                               
    Total net revenues   100,664       97,579       396,820       382,959  
                               
Cost of revenues (1):                              
Recurring revenues   21,065       18,417       80,369       70,590  
Non-recurring revenues   6,705       8,956       30,380       40,044  
Amortization of developed technology   1,594       1,682       6,772       9,087  
                               
    Total cost of revenues   29,364       29,055       117,521       119,721  
                               
    Gross margin   71,300       68,524       279,299       263,238  
                               
Operating expenses (1):                              
Sales and marketing   19,309       20,098       74,996       79,065  
Product development   17,727       17,464       69,532       69,718  
General and administrative   10,894       10,842       43,010       54,737  
Amortization of other intangibles   803       912       3,391       3,775  
Recapitalization costs   -       -       -       6,041  
Restructuring charges   135       811       4,628       3,770  
                               
    Total operating expenses   48,868       50,127       195,557       217,106  
                               
Income from continuing operations   22,432       18,397       83,742       46,132  
Interest and other income (expense), net   (1,365 )     (2,603 )     (6,961 )     (7,213 )
                               
Income from continuing operations before income taxes   21,067       15,794       76,781       38,919  
Provision for income taxes   6,369       4,777       26,518       10,167  
                               
    Net income from continuing operations $ 14,698     $ 11,017     $ 50,263     $ 28,752  
                               
Discontinued operation:                              
    Net (loss) income from discontinued operation (net of applicable taxes of $6, $(16), $(32) and $34, respectively)   5       (18 )     (51 )     50  
                               
Net income $ 14,703     $ 10,999     $ 50,212     $ 28,802  
                               
Basic net income (loss) per share (2):                              
    Continuing operations $ 0.28     $ 0.22     $ 0.98     $ 0.56  
    Discontinued operation   (0.00 )     (0.00 )     (0.00 )     (0.00 )
      Total operations $ 0.28     $ 0.22     $ 0.97     $ 0.56  
                               
Diluted net income (loss) per share (2):                              
    Continuing operations $ 0.27     $ 0.20     $ 0.94     $ 0.54  
    Discontinued operation   (0.00 )     (0.00 )     (0.00 )     (0.00 )
      Total operations $ 0.27     $ 0.20     $ 0.94     $ 0.54  
                               
Weighted average shares used to compute net income (loss) per share:                              
    Basic   51,780       51,105       51,546       51,207  
    Diluted   54,072       53,844       53,608       53,378  
                               
Cash dividends declared per common share $ 0.13     $ -     $ 0.39     $ 9.00  
                               
(1) Includes stock-based employee compensation expense as follows:                              
                               
    Cost of recurring revenues $ 780     $ 844     $ 3,250     $ 3,491  
    Cost of non-recurring revenues   314       563       1,335       3,253  
      Total cost of revenues   1,094       1,407       4,585       6,744  
                                   
    Sales and marketing   2,269       2,345       10,026       13,265  
    Product development   1,882       1,922       7,735       8,863  
    General and administrative   1,555       1,908       7,025       19,307  
      Total operating expenses   5,706       6,175       24,786       41,435  
                               
    Total stock-based employee compensation expense $ 6,800     $ 7,582     $ 29,371     $ 48,179  
                               
(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)  
             
             
    Twelve Months Ended December 31  
    2014     2013  
Cash flows from operating activities:                
  Net income   $ 50,212     $ 28,802  
  Adjustment to net income for discontinued operation net loss (income)     51       (50 )
  Net income from continuing operations     50,263       28,752  
                   
  Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:                
    Stock-based compensation     29,371       48,179  
    Excess tax benefit from stock-based compensation     (10,257 )     (7,477 )
    Depreciation and amortization     21,201       24,393  
    Amortization of debt issuance costs     1,446       947  
    Loss on disposal of fixed assets     2,786       -  
    (Reduction of) provision for doubtful accounts     (30 )     278  
    Reduction of sales reserves     (521 )     (306 )
    Deferred income taxes     11,439       4,589  
    Other     (1,226 )     29  
        Effect of statement of operations adjustments     54,209       70,632  
    Changes in operating assets and liabilities:                
      Accounts receivable     (3,123 )     2,074  
      Prepaid and other assets     7,910       (1,762 )
      Accounts payable     5,938       27  
      Accrued liabilities     (11,492 )     (6,089 )
      Deferred revenues     10,720       11,047  
      Income taxes payable     733       (6,117 )
        Effect of changes in operating assets and liabilities     10,686       (820 )
                 
Net cash provided by operating activities from continuing operations     115,158       98,564  
                 
Cash flows from investing activities:                
  Purchases of property and equipment     (8,973 )     (5,616 )
  Capitalized software development costs     (1,873 )     (1,995 )
  Change in restricted cash     (173 )     -  
  Purchases of marketable securities     (9,240 )     (57,863 )
  Sales and maturities of marketable securities     100       228,619  
                 
Net cash (used in) provided by investing activities from continuing operations     (20,159 )     163,145  
                 
Cash flows from financing activities:                
  Proceeds from common stock issued from exercises of stock options     4,562       19,495  
  Proceeds from common stock issued under the employee stock purchase plan     6,362       6,293  
  Excess tax benefits from stock-based compensation     10,257       7,477  
  Withholding taxes related to equity award net share settlement     (6,619 )     (11,833 )
  Proceeds from debt     -       375,000  
  Repayment of debt     (85,000 )     (165,000 )
  Payment of cash dividend     (13,405 )     (470,133 )
  Repurchase of common stock     (15,141 )     (41,256 )
  Debit issuance costs     -       (5,725 )
                 
Net cash used in financing activities from continuing operations     (98,984 )     (285,682 )
                 
Net cash transferred to discontinued operation     (347 )     (375 )
                 
Effect of exchange rate changes on cash and cash equivalents     (712 )     (41 )
                 
Net change in cash and cash equivalents from continuing operations     (5,044 )     (24,389 )
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   $ 28,784     $ 33,828  
                 
    Twelve Months Ended December 31  
    2014     2013  
Supplemental disclosure of cash flow information:            
Noncash investing activities:                
  Capital expenditures included in accounts payable   $ 887     $ 131  
                 
Cash flows from discontinued operation of MicroEdge, Inc.:                
  Net cash used in operating activities   $ (347 )   $ (375 )
  Net cash transferred from continuing operations     347       375  
                 
                 
                 
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 December 31  
  2014     2013  
  Amount     % of Net Revenues     Amount     % of Net Revenues  
                           
GAAP gross margin $ 71,300     70.8 %   $ 68,525     70.2 %
  Amortization of acquired intangibles   1,070             1,177        
  Stock-based compensation   1,094             1,406        
Non-GAAP gross margin $ 73,464     73.0 %   $ 71,108     72.9 %
                           
GAAP operating income $ 22,432     22.3 %   $ 18,397     18.9 %
  Amortization of acquired intangibles   1,874             2,089        
  Stock-based compensation   6,800             7,581        
  Restructuring charges   135             811        
Non-GAAP operating income $ 31,241     31.0 %   $ 28,878     29.6 %
                           
GAAP net income $ 14,698           $ 11,017        
  Amortization of acquired intangibles   1,873             2,089        
  Stock-based compensation   6,800             7,581        
  Restructuring charges   135             811        
  Income tax adjustment (1)   (4,087 )           (4,420 )      
Non-GAAP net income $ 19,419           $ 17,078        
                           
GAAP net income $ 14,698           $ 11,017        
  Net interest   1,499             2,510        
  Provision for income taxes   6,369             4,778        
  Depreciation expense   2,666             2,895        
  Amortization expense   2,398             2,594        
  Stock-based compensation   6,800             7,581        
Adjusted EBITDA $ 34,430           $ 31,375        
                           
Diluted net income per share                          
  GAAP $ 0.27           $ 0.20        
  Non-GAAP $ 0.36           $ 0.32        
                           
Shares used to compute diluted net income per share   54,072             53,844        
   
(1) The estimated non-GAAP effective tax rate was 35% for the three months ended December 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 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.  
                       
  Twelve Months Ended December 31  
  2014     2013  
  Amount     % of Net Revenues     Amount     % of Net Revenues  
                           
GAAP gross margin $ 279,299     70.4 %   $ 263,238     68.7 %
  Amortization of acquired intangibles   4,642             6,841        
  Stock-based compensation   4,585             6,743        
Non-GAAP gross margin $ 288,526     72.7 %   $ 276,822     72.3 %
                           
GAAP operating income $ 83,742     21.1 %   $ 46,132     12.0 %
  Amortization of acquired intangibles   8,033             10,616        
  Stock-based compensation   29,371             48,178        
  Restructuring charges   4,629             3,770        
  Recapitalization costs   -             6,041        
  Transaction related fees   -             565        
Non-GAAP operating income $ 125,775     31.7 %   $ 115,302     30.1 %
                           
GAAP net income $ 50,263           $ 28,752        
  Amortization of acquired intangibles   8,033             10,616        
  Stock-based compensation   29,371             48,178        
  Restructuring charges   4,628             3,770        
  Recapitalization costs   -             6,692        
  Transaction related fees   -             565        
  Income tax adjustment (1)   (15,067 )           (27,892 )      
Non-GAAP net income $ 77,228           $ 70,681        
                           
GAAP net income $ 50,263           $ 28,752        
  Net interest   7,251             6,949        
  Provision for income taxes   26,518             10,237        
  Depreciation expense   11,037             11,531        
  Amortization expense   10,164             12,862        
  Stock-based compensation   29,371             48,178        
Adjusted EBITDA $ 134,604           $ 118,509        
                           
Diluted net income per share                          
  GAAP $ 0.94           $ 0.54        
  Non-GAAP $ 1.44           $ 1.32        
                           
Shares used to compute diluted net income per share   53,608             53,378        
   
(1) The estimated non-GAAP effective tax rate was 35% for the twelve months ended December 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.
   

Contact Information

  • CONTACTS
    Media Contact:
    Kendall Reischl
    Advent Software, Inc.
    (415) 645-1771
    Email Contact

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