SOURCE: Advent

July 25, 2011 16:15 ET

Advent Software Reports Second Quarter 2011 Results

Company Achieves 16% Revenue Growth Over Prior Year, With Record Quarterly Revenue of $80 Million

SAN FRANCISCO, CA--(Marketwire - Jul 25, 2011) - 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 second quarter ended June 30, 2011.

"Advent is pleased to report record quarterly revenues, which reflect the strength of Advent's financial model and solid global execution," said Stephanie DiMarco, Founder and Chief Executive Officer of Advent. "We believe the market opportunity for Advent is large, and our long-term strategy positions us well for the future. Our 16 percent growth proves that our strategy, execution and business model are delivering results for clients in all market environments."

SECOND QUARTER 2011 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue from continuing operations of $80.1 million for the second quarter of 2011, compared to $69.3 million in the second quarter of 2010, a 16% increase.

Operating income from continuing operations for the second quarter of 2011 was $10.4 million, or 13% of revenue, up from $7.6 million or 11% of revenue for the second quarter of 2010.

Net income from continuing operations for the second quarter of 2011 was $7.1 million compared to $4.8 million in the second quarter of 2010, a 46% increase.

On a fully diluted basis, earnings per share from continuing operations in the second quarter of 2011 were $0.13 and represent a 43% increase from diluted earnings per share of $0.09 in the second quarter of 2010.

Operating cash flow from continuing operations in the second quarter of 2011 was $20.2 million, compared with $17.8 million in the second quarter of 2010, a 14% increase. Cash, cash equivalents and marketable securities from continuing operations totaled $78.5 million as of June 30, 2011.

The Company repurchased approximately 382,000 shares in the second quarter of 2011 at an average price of $26.58 per share.

Total deferred revenue from continuing operations as of June 30, 2011 was $159.3 million, compared to $156.5 million as of March 31, 2011, a 2% increase sequentially.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income from continuing operations for the second quarter of 2011 was $17.5 million, or 22% of revenue. This represents a 26% increase when compared to $13.8 million from continuing operations, or 20% of revenue, in the second quarter of 2010. On a fully diluted basis, non-GAAP earnings per share from continuing operations were $0.21 in the second quarter of 2011 and represent a 26% increase from non-GAAP diluted earnings per share of $0.16 in the second quarter of 2010.

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

SECOND QUARTER HIGHLIGHTS

  • Second Quarter Bookings: The term license and Advent OnDemand® contracts signed in the second quarter of 2011 will contribute $6.6 million in annual revenue once they are fully implemented.
  • Acquisition of Black Diamond Performance Reporting: On June 1, 2011, the Company completed its acquisition of Black Diamond Performance Reporting, LLC, a leading provider of web-based, outsourced portfolio management and reporting platforms for independent advisors. Under the terms of the agreement, Advent acquired all of the outstanding ownership units of Black Diamond for $72 million in cash, net of cash acquired. The completion of the acquisition accelerates Advent's ability to help advisors succeed by giving them an innovative platform coupled with choice and flexibility when selecting technology. Additionally, Reed Colley, Black Diamond's Founder and Chief Executive Officer joined Advent's executive management team.
  • Global Execution: Advent saw continued momentum for Tamale RMS®, its industry-leading research management solution, signing customers in a wide range of market segments and geographies. New clients included Kohlberg Kravis Roberts & Company and Oaktree Capital Management, L.P. Additionally, Temasek, Singapore's largest sovereign wealth fund, and Tamale's largest installation to date, went live on Tamale RMS® in the second quarter.
  • Launch of Geneva® 8.5: Advent launched the newest version of Geneva®, which includes integrated solutions that meet the needs of new market segments. Geneva® 8.5 is one of the only solutions available that provides portfolio-through-fund and investor-level accounting on a single platform and extends the platform's portfolio management functionality into the front and middle office. Geneva® was named winner in the 'Best Fund Accounting and Reporting Systems' category by HFM Week and named the 'Best Portfolio Management System Provider' by Waters Magazine in the publication's annual readers' choice rankings, both for the third consecutive year.

FINANCIAL GUIDANCE
Advent updates the following financial guidance for the third quarter and fiscal year 2011:

Guidance Q3 2011 FY 2011
Total Revenue ($M) $81-$83 $319-$323
GAAP Operating Margin n/a 13% - 14%
Amortization of Intangibles (% of revenue) n/a 1%-2%
Stock Compensation Expense (% of revenue) n/a 6%-7%
Non-GAAP Operating Margin n/a 21%-22%
Operating Cash Flow ($M) n/a $81-$85
Capital Expenditures ($M) n/a $12-$15

INVESTOR CALL
Advent Software, Inc. will host its Q2 2011 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q2 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 800-291-5365 and request conference ID #73758442. A replay will be available through midnight, August 1, 2011. The replay number for domestic callers is 888-286-8010, and for international callers is 617-801-6888 and referencing conference ID #99330220. 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 revenue growth, market opportunity, market acceptance and demand for our products by clients in all market environments, international expansion and global execution , anticipated benefits and synergies related to our acquisition of Black Diamond Performance Reporting LLC and the continued momentum of our Tamale RMS product , 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® 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, Advent OnDemand, Geneva and Moxy 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)
June 30 December 31
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 41,457 $ 81,948
Short-term marketable securities 37,078 70,075
Accounts receivable, net 56,729 49,960
Deferred taxes, current 16,440 16,358
Prepaid expenses and other 21,409 17,864
Total current assets 173,113 236,205
Property and equipment, net 41,345 41,524
Goodwill 208,398 145,580
Other intangibles, net 56,591 19,772
Deferred taxes, long-term 34,560 33,591
Other assets 11,506 12,059
Noncurrent assets of discontinued operation 2,028 2,095
Total assets $ 527,541 $ 490,826
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,188 $ 6,737
Accrued liabilities 32,542 34,080
Deferred revenues 152,001 147,896
Income taxes payable 5,144 1,691
Current liabilities of discontinued operation 1,669 165
Total current liabilities 200,544 190,569
Deferred revenues, long-term 7,293 6,337
Other long-term liabilities 16,245 14,844
Noncurrent liabilities of discontinued operation 4,836 5,228
Total liabilities 228,918 216,978
Stockholders' equity:
Common stock 524 520
Additional paid-in capital 424,161 411,600
Accumulated deficit (137,854 ) (146,887 )
Accumulated other comprehensive income 11,792 8,615
Total stockholders' equity 298,623 273,848
Total liabilities and stockholders' equity $ 527,541 $ 490,826
ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
Three Months Ended June 30 Six Months Ended June 30
2011 2010 2011 2010
Net revenues:
Recurring revenues $ 71,448 $ 61,728 $ 138,775 $ 121,847
Non-recurring revenues 8,623 7,544 16,622 14,113
Total net revenues 80,071 69,272 155,397 135,960
Cost of revenues (1):
Recurring revenues 15,103 12,730 29,891 25,157
Non-recurring revenues 9,911 6,373 17,150 13,031
Amortization of developed technology 2,161 1,683 3,677 3,199
Total cost of revenues 27,175 20,787 50,718 41,387
Gross margin 52,896 48,485 104,679 94,573
Operating expenses (1):
Sales and marketing 18,683 17,048 36,867 33,908
Product development 14,467 13,107 27,109 25,168
General and administrative 8,745 9,872 17,829 19,423
Amortization of other intangibles 571 331 891 646
Restructuring charges 48 555 74 584
Total operating expenses 42,514 40,913 82,770 79,729
Income from continuing operations 10,382 7,572 21,909 14,844
Interest income and other income (expense), net (53 ) (229 ) (22 ) (935 )
Income from continuing operations before income taxes 10,329 7,343 21,887 13,909
Provision for income taxes 3,259 2,496 6,913 4,819
Net income from continuing operations $ 7,070 $ 4,847 $ 14,974 $ 9,090
Discontinued operation:
Net income (loss) from discontinued operation (net of applicable taxes of $(16), $(17), $1,328, and $(50), respectively) (24 ) (27 ) 1,800 (75 )
Net income $ 7,046 $ 4,820 $ 16,774 $ 9,015
Basic net income (loss) per share:
Continuing operations $ 0.13 $ 0.09 $ 0.29 $ 0.18
Discontinued operation (0.00 ) (0.00 ) 0.03 (0.00 )
Total operations $ 0.13 $ 0.09 $ 0.32 $ 0.17
Diluted net income (loss) per share:
Continuing operations $ 0.13 $ 0.09 $ 0.27 $ 0.17
Discontinued operation (0.00 ) (0.00 ) 0.03 (0.00 )
Total operations $ 0.13 $ 0.09 $ 0.30 $ 0.17
Weighted average shares used to compute net income per share:
Basic 52,490 51,399 52,345 51,571
Diluted 55,111 54,107 55,492 54,211
(1) Includes stock-based employee compensation expense as follows:
Recurring revenues $ 504 $ 428 $ 1,007 $ 842
Non-recurring revenues 345 262 592 552
Total cost of revenues 849 690 1,599 1,394
Sales and marketing 1,469 1,418 2,969 2,716
Product development 1,246 1,317 2,421 2,526
General and administrative 1,079 1,118 2,113 2,192
Total operating expenses 3,794 3,853 7,503 7,434
Total stock-based employee compensation expense $ 4,643 $ 4,543 $ 9,102 $ 8,828
ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30
2011 2010
Cash flows from operating activities:
Net income $ 16,774 $ 9,015
Adjustment to net income for discontinued operation (1,800 ) 75
Net income from continuing operations 14,974 9,090
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Stock-based compensation 9,102 8,828
Depreciation and amortization 9,826 8,819
Loss on dispositions of fixed assets - 20
Provision for doubtful accounts 94 65
Reduction of sales returns (235 ) (624 )
Deferred income taxes (183 ) (60 )
Other 136 358
Effect of statement of operations adjustments 18,740 17,406
Changes in operating assets and liabilities:
Accounts receivable (4,665 ) (2,711 )
Prepaid and other assets (1,923 ) 3,246
Accounts payable 2,363 4,092
Accrued liabilities (3,929 ) (4,382 )
Deferred revenues 3,031 (329 )
Income taxes payable 3,223 3,899
Effect of changes in operating assets and liabilities (1,900 ) 3,815
Net cash provided by operating activities from continuing operations 31,814 30,311
Cash flows from investing activities:
Cash used in acquisitions, net of cash acquired (97,092 ) (4,719 )
Purchases of property and equipment (4,471 ) (9,952 )
Capitalized software development costs (1,887 ) (1,407 )
Purchases of marketable securities (28,604 ) (3,000 )
Sales and maturities of marketable securities 60,933 3,000
Net cash used in investing activities from continuing operations (71,121 ) (16,078 )
Cash flows from financing activities:
Proceeds from common stock issued from exercises of stock options 4,580 5,506
Withholding taxes related to equity award net share settlement (4,761 ) (3,163 )
Proceeds from common stock issued under the employee stock purchase plan 3,146 2,929
Excess tax benefits from stock-based compensation 2,775 -
Repurchase of common stock (10,163 ) (34,399 )
Net cash used in financing activities from continuing operations (4,423 ) (29,127 )
Net cash transferred (to) from discontinued operation 2,978 (31 )
Effect of exchange rate changes on cash and cash equivalents 261 (311 )
Net change in cash and cash equivalents from continuing operations (40,491 ) (15,236 )
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 $ 41,457 $ 42,641
Six Months Ended June 30
2011 2010
Supplemental disclosure of cash flow information
Cash flow from discontinued operation:
Net cash used in operating activities $ (26 ) $ (296 )
Net cash provided by investing activities 3,004 -
Net cash transferred from (to) continuing operations (2,978 ) 31
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 June 30, 2011 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 52,896 66 % $ 10,382 13 % $ 7,070
Amortization of acquired developed technology 1,384 1,384 1,384
Amortization of other acquired intangibles - 571 571
Stock-based compensation - cost of revenues 849 849 849
Stock-based compensation - operating expenses - 3,794 3,794
Acquisition related expenses - 486 486
Restructuring charges - 48 48
Income tax adjustment for non-GAAP (1) - - (2,852 )
Non-GAAP $ 55,129 69 % $ 17,514 22 % $ 11,350
Diluted net income per share
GAAP $ 0.13
Non-GAAP $ 0.21
Shares used to compute diluted net income per share 55,111

Three Months Ended June 30, 2010 for Continuing Operations
Gross Gross Operating Operating Net
Margin Margin % Income Income % Income
GAAP $ 48,485 70 % $ 7,572 11 % $ 4,847
Amortization of acquired developed technology 845 845 845
Amortization of other acquired intangibles - 331 331
Stock-based compensation - cost of revenues 690 690 690
Stock-based compensation - operating expenses - 3,853 3,853
Restructuring charges - 555 555
Income tax adjustment for non-GAAP (1) - - (2,270 )
Non-GAAP $ 50,020 72 % $ 13,846 20 % $ 8,851
Diluted net income per share
GAAP $ 0.09
Non-GAAP $ 0.16
Shares used to compute diluted net income per share 54,107
(1) The estimated non-GAAP effective tax rate was 35% for the three months ended June 30, 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 of 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, 2011
Continuing Operations
Operating Income %
Projected GAAP 13% to 14%
Projected amortization of acquired developed technology and other acquired intangible asset adjustment 1% to 2%
Projected stock based compensation adjustment 6% to 7%
Projected non-GAAP 21% to 22%

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