SOURCE: Advent Software

July 30, 2012 16:15 ET

Advent Software Reports Second Quarter 2012 Results

Company Achieves Record Quarterly Revenue of $90 Million and Record Second Quarter Bookings of Over $7 Million

SAN FRANCISCO, CA--(Marketwire - Jul 30, 2012) - Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services to the global investment management industry, announced today its financial results for the second quarter ended June 30, 2012.

"I am pleased to report Advent's second quarter financial results and am honored to lead Advent as we embark on an exciting phase in our evolution. Despite the challenging market environment, we achieved record quarterly revenues, record second quarter bookings and 22% non-GAAP operating margin," said Pete Hess, Chief Executive Officer of Advent. "Our strong performance was the result of continued demand for our market-leading solutions as we help transform our clients' businesses by eliminating boundaries between systems, information and people."

SECOND QUARTER 2012 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue of $89.7 million for the second quarter of 2012, compared to $80.1 million in the second quarter of 2011, a 12% increase.

Operating income for the second quarter of 2012 was $12.1 million, or 13% of revenue, compared to $10.4 million or 13% of revenue for the second quarter of 2011. 

Net income for the second quarter of 2012 was $7.2 million compared to $7.1 million in the second quarter of 2011.

On a fully diluted basis, earnings per share in the second quarter of 2012 were $0.14, up $0.01 when compared to the second quarter of 2011. 

Operating cash flow in the second quarter of 2012 was $14.9 million, compared with $20.2 million in the second quarter of 2011. Cash, cash equivalents and marketable securities totaled $134.8 million as of June 30, 2012, compared to $136.4 million as of December 31, 2011.

The Company repurchased approximately 745,000 shares of its common stock in the second quarter of 2012 for a total cash outlay of $19.3 million and at an average price of $25.96 per share.

Total deferred revenue as of June 30, 2012 was $163.6 million, compared to $174.9 million as of December 31, 2011.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income for the second quarter of 2012 was $20.0 million, or 22% of revenue. This represents a 14% increase compared to $17.5 million from continuing operations, or 22% of revenue, in the second quarter of 2011. On a fully diluted basis, non-GAAP earnings per share were $0.24 in the second quarter of 2012 and represent a 14% increase from non-GAAP diluted earnings per share of $0.21 in the second quarter of 2011.

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

SECOND QUARTER HIGHLIGHTS

  • Record Second Quarter Bookings:  The Annual Contract Value (ACV) of our new contract bookings in the second quarter of 2012 will contribute $7.2 million in annual revenue once the contracts are fully implemented. 

  • Continued Momentum: New clients represented a broad cross-section of the investment management industry across all our platforms, from hedge funds and asset managers to family offices, fund administrators and the growing advisory market. New clients included Potamus Trading LLC, CI Investments, SeaStone Capital Management, Johns Hopkins University, Kylin Management LLC, H.D. Vest, Good Harbor Financial, LLC, Karpus Investment Management, and Madison Asset Management. In the second quarter, Advent also expanded into Brazil and signed Vinci Partners, a Brazilian investment management firm, who have chosen Geneva and Geneva World Investor to support management of their offshore investment strategies.

  • Industry Recognition and Award-Winning Solutions: Advent's technology continued to receive industry awards and win honors around the world. Recent awards include: FTF News's Most Innovative Mobile Technology award; HFM European Hedge Fund Services Awards named Advent as Best Technology for Start-Up Funds; and the Company was named Best Technology Provider in the 2012 Citywealth Magic Circle Awards.

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

Guidance   Q3 2012   FY 2012
Total Revenue ($M)   $89-$91   $358-$362
  YoY Revenue Growth   5% - 8%   10% - 11%
GAAP Operating Margin   n/a   14.0% - 14.5%
Amortization of Intangibles (% of revenue)   n/a   3%
Stock Compensation Expense (% of revenue)   n/a   6%
Non-GAAP Operating Margin   n/a   23.0% - 23.5%
Operating Cash Flow ($M)   n/a   $83-$86
Capital Expenditures ($M)   n/a   $11-$13
Growth of Weighted Average Shares Outstanding, excluding any share repurchases   n/a   0.25%-0.75% per quarter
Effective Tax Rate (GAAP)   n/a   35% - 40%
Effective Tax Rate (non-GAAP)   n/a   35%
         
         

INVESTOR CALL

Advent Software, Inc. will host its Q2 2012 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q2 2012 earnings presentation and trended disclosures file, which include highlights and detailed financial information, are currently available at http://investor.advent.com. To participate via phone, please dial (800) 259-0251 and request conference ID #74347526. Telephone replay will be available through midnight August 8, 2012. The replay number for domestic callers is (888) 286-8010, and for international callers is (617) 801-6888, with the conference ID of #97737359.

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 statements regarding our momentum and market opportunities, and any other forward-looking statements included in this presentation reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our Advent Portfolio Exchange®, Geneva®, and Moxy® products; the successful development, release and market acceptance of new products and product enhancements; uncertainties and fluctuations in the financial markets; the Company's ability to satisfy contractual performance requirements; difficulties in integrating merged businesses, such as Syncova Solutions Ltd and Black Diamond Performance Reporting LLC, and achieving expected synergies and results; and other risks detailed from time to time in our SEC reports including, but not limited to, our quarterly reports on Form 10-Q and our 2011 annual report on Form 10-K. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Advent, the Advent logo, Advent Software, Advent Portfolio Exchange, Geneva and Moxy are registered trademarks of Advent Software, Inc., and Syncova is a mark of Advent Software, Inc. All other company names or marks mentioned herein are those of their respective owners.

ADVENT SOFTWARE, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
(GAAP, Unaudited)  
             
    June 30     December 31  
    2012     2011  
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 52,250     $ 65,525  
  Short-term marketable securities     78,472       69,908  
  Accounts receivable, net     56,732       62,125  
  Deferred taxes, current     16,304       16,294  
  Prepaid expenses and other     25,728       23,660  
    Total current assets     229,486       237,512  
Property and equipment, net     40,316       42,301  
Goodwill     204,084       204,621  
Other intangibles, net     44,383       49,521  
Long-term marketable securities     4,056       917  
Deferred taxes, long-term     27,906       30,751  
Other assets     13,723       15,927  
Noncurrent assets of discontinued operation     2,006       2,006  
                 
    Total assets   $ 565,960     $ 583,556  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 11,090     $ 10,558  
  Accrued liabilities     32,021       40,029  
  Deferred revenues     155,343       166,945  
  Income taxes payable     3,701       2,972  
  Short-term debt     5,000       5,000  
  Current liabilities of discontinued operation     748       488  
    Total current liabilities     207,903       225,992  
Deferred revenues, long-term     8,262       7,926  
Long-term debt     42,500       45,000  
Other long-term liabilities     16,975       16,944  
Noncurrent liabilities of discontinued operation     3,814       4,633  
                 
    Total liabilities     279,454       300,495  
                 
                 
Stockholders' equity:                
  Common stock     507       510  
  Additional paid-in capital     438,598       429,734  
  Accumulated deficit     (158,916 )     (154,053 )
  Accumulated other comprehensive income     6,317       6,870  
    Total stockholders' equity     286,506       283,061  
                   
    Total liabilities and stockholders' equity   $ 565,960     $ 583,556  
   
   
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  
    2012     2011     2012     2011  
                                 
Net revenues:                                
Recurring revenues   $ 80,942     $ 71,448     $ 159,662     $ 138,775  
Non-recurring revenues     8,782       8,623       16,966       16,622  
                                 
  Total net revenues     89,724       80,071       176,628       155,397  
                                 
Cost of revenues (1):                                
Recurring revenues     17,820       15,103       34,746       29,891  
Non-recurring revenues     10,936       9,911       20,604       17,150  
Amortization of developed technology     2,573       2,161       5,114       3,677  
                                 
  Total cost of revenues     31,329       27,175       60,464       50,718  
                                 
  Gross margin     58,395       52,896       116,164       104,679  
                                 
Operating expenses (1):                                
Sales and marketing     19,711       18,683       38,157       36,867  
Product development     16,501       14,467       33,300       27,109  
General and administrative     9,198       8,745       18,867       17,829  
Amortization of other intangibles     956       571       1,912       891  
Restructuring (benefit) charges     (34 )     48       70       74  
                                 
  Total operating expenses     46,332       42,514       92,306       82,770  
                                 
Income from continuing operations     12,063       10,382       23,858       21,909  
Interest and other income (expense), net     (803 )     (53 )     (975 )     (22 )
                                 
Income from continuing operations before income taxes     11,260       10,329       22,883       21,887  
Provision for income taxes     4,063       3,259       8,369       6,913  
                                 
  Net income from continuing operations   $ 7,197     $ 7,070     $ 14,514     $ 14,974  
                                 
Discontinued operation:                                
  Net income (loss) from discontinued operation (net of applicable taxes of $162, $(16), $147, and $1,328, respectively)     245       (24 )     222       1,800  
                                 
Net income   $ 7,442     $ 7,046     $ 14,736     $ 16,774  
                                 
Basic net income per share (2):                                
  Continuing operations   $ 0.14     $ 0.13     $ 0.29     $ 0.29  
  Discontinued operation     0.00       0.00       0.00       0.03  
    Total operations   $ 0.15     $ 0.13     $ 0.29     $ 0.32  
                                 
Diluted net income per share (2):                                
  Continuing operations   $ 0.14     $ 0.13     $ 0.27     $ 0.27  
  Discontinued operation     0.00       0.00       0.00       0.03  
    Total operations   $ 0.14     $ 0.13     $ 0.28     $ 0.30  
                                 
Weighted average shares used to compute net income per share:                                
  Basic     50,754       52,490       50,887       52,345  
  Diluted     52,977       55,111       53,117       55,492  
                                 
(1) Includes stock-based employee compensation expense as follows:  
                                 
  Cost of recurring revenues   $ 610     $ 504     $ 1,195     $ 1,007  
  Cost of non-recurring revenues     264       345       595       592  
      Total cost of revenues     874       849       1,790       1,599  
                                 
  Sales and marketing     1,729       1,469       3,386       2,969  
  Product development     1,438       1,246       2,898       2,421  
  General and administrative     1,043       1,079       1,899       2,113  
      Total operating expenses     4,210       3,794       8,183       7,503  
                                 
  Total stock-based employee compensation expense   $ 5,084     $ 4,643     $ 9,973     $ 9,102  
                                 
(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)  
(GAAP, Unaudited)  
             
    Six Months Ended June 30  
    2012     2011  
Cash flows from operating activities:                
  Net income   $ 14,736     $ 16,774  
  Adjustment to net income for discontinued operation     (222 )     (1,800 )
  Net income from continuing operations   $ 14,514     $ 14,974  
                   
  Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:                
    Stock-based compensation     9,973       9,102  
    Excess tax benefit from stock-based compensation     (3,118 )     (2,775 )
    Depreciation and amortization     12,851       9,826  
    Amortization of debt issuance costs     190       -  
    Gain on disposal of fixed assets     (16 )     -  
    Provision for doubtful accounts     200       94  
    Provision for (reduction of) sales returns     735       (235 )
    Deferred income taxes     2,588       (183 )
    Other     (144 )     136  
        Effect of statement of operations adjustments     23,259       15,965  
    Changes in operating assets and liabilities:                
      Accounts receivable     5,109       (4,665 )
      Prepaid and other assets     277       (1,923 )
      Accounts payable     532       2,363  
      Accrued liabilities     (7,020 )     (3,929 )
      Deferred revenues     (12,000 )     3,031  
      Income taxes payable     3,847       5,998  
        Effect of changes in operating assets and liabilities     (9,255 )     875  
                 
Net cash provided by operating activities from continuing operations     28,518       31,814  
                 
Cash flows from investing activities:                
  Cash used in acquisitions, net of cash acquired     (700 )     (97,092 )
  Purchases of property and equipment     (3,720 )     (4,471 )
  Capitalized software development costs     (1,700 )     (1,887 )
  Purchases of marketable securities     (72,270 )     (28,604 )
  Sales and maturities of marketable securities     60,344       60,933  
                 
Net cash used in investing activities from continuing operations     (18,046 )     (71,121 )
                 
Cash flows from financing activities:                
  Proceeds from common stock issued from exercises of stock options     3,269       4,580  
  Withholding taxes related to equity award net share settlement     (4,610 )     (4,761 )
  Proceeds from common stock issued under the employee stock purchase plan     3,448       3,146  
  Repurchase of common stock     (26,125 )     (10,163 )
  Repayment of loan borrowing     (2,500 )     -  
  Excess tax benefits from stock-based compensation     3,118       2,775  
                 
Net cash used in financing activities from continuing operations     (23,400 )     (4,423 )
                 
Net cash transferred from (to) discontinued operation     (337 )     2,978  
                 
Effect of exchange rate changes on cash and cash equivalents     (10 )     261  
                 
Net change in cash and cash equivalents from continuing operations     (13,275 )     (40,491 )
Cash and cash equivalents of continuing operations at beginning of period     65,525       81,948  
                 
Cash and cash equivalents of continuing operations at end of period   $ 52,250     $ 41,457  
                 
                 
      Six Months Ended June 30  
      2012       2011  
Supplemental disclosure of cash flow information                
Cash flow from discontiued operation:                
  Net cash used in operating activities   $ (337 )   $ (26 )
  Net cash provided by investing activities     -       3,004  
  Net cash transferred from (to) continuing operations     337       (2,978 )
  Effect of exchange rates on cash and cash equivalents     -       -  
  Net change in cash and cash equivalents from discontinued operations     -       -  
  Cash and cash equivalents of discontinued operation at beginning of period     -       -  
  Cash and cash equivalents of discontinued operation at end of period   $ -     $ -  
                 
                 
ADVENT SOFTWARE, INC.  
RECONCILIATION OF SELECTED CONTINUING OPERATIONS' GAAP MEASURES TO NON-GAAP MEASURES  
(In thousands, except per share data)  
(Unaudited)  
                             
To supplement our condensed consolidated financial statements presented on a GAAP basis, Advent uses non-GAAP measures of continuing operations' operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP results are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.  
                             
                             
    Three Months Ended June 30, 2012 for Continuing Operations  
    Gross   Gross     Operating     Operating     Net  
    Margin   Margin %     Income     Income %     Income  
                                   
GAAP   $ 58,395   65 %   $ 12,063     13 %   $ 7,197  
                                   
  Amortization of acquired developed technology     1,901           1,901             1,901  
  Amortization of other acquired intangibles     -           956             956  
  Stock-based compensation - cost of revenues     874           874             874  
  Stock-based compensation - operating expenses     -           4,210             4,210  
  Restructuring benefit     -           (34 )           (34 )
  Income tax adjustment for non-GAAP (1)     -           -             (2,645 )
                                   
Non-GAAP   $ 61,170   68 %   $ 19,970     22 %   $ 12,459  
                                   
Diluted net income per share                                  
  GAAP                             $ 0.14  
  Non-GAAP                             $ 0.24  
                                   
Shares used to compute diluted net income per share                               52,977  
                           
    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  
                                 
(1) The estimated non-GAAP effective tax rate was 35% for the three months ended June 30, 2012 and 2011, respectively, and has been used to adjust the provision for income taxes for non-GAAP purposes.  
 
 
ADVENT SOFTWARE, INC.
RECONCILIATION OF PROJECTED CONTINUING OPERATIONS' GAAP OPERATING INCOME %
TO NON-GAAP OPERATING INCOME %
(Preliminary and unaudited)
             
Advent provides projections of non-GAAP measures of its continuing operations' operating income, which exclude certain costs, expenses, gains and losses which it believes is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our projected continuing operations' GAAP results are made with the intent of providing management and investors a more complete understanding continuing operations' underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP projections are among the information management uses as a basis for planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.
             
    Twelve Months Ended December 31, 2012
    Continuing Operations
    Operating Income %
             
Projected GAAP   14.0%   to   14.5%
             
  Projected amortization of acquired developed technology and other acquired intangible asset adjustment       3%    
  Projected stock-based compensation adjustment       6%    
             
Projected non-GAAP   23.0%   to   23.5%
             

Contact Information

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

    Investor Relations Contact:
    Meg Pardo
    Advent Software, Inc.
    (415) 645-1584
    Email Contact