SOURCE: Advent Software Inc.

Advent Software Inc.

October 25, 2010 16:15 ET

Advent Software Reports Strong Third Quarter 2010 Results

Company Achieves Record Quarterly Revenues of $72 Million and a 12% Increase in Annual Contract Value Over Prior Year

SAN FRANCISCO, CA--(Marketwire - October 25, 2010) - Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services to the global investment management industry, announced today financial results for the third quarter ended September 30, 2010.

"I am extremely pleased with our third quarter financial results. Once again, we performed well across all areas of our business," said Stephanie DiMarco, Founder and Chief Executive Officer of Advent. "There is a strong need for our products as firms increasingly look to more effectively manage risk and drive greater operational efficiency. Our domestic competitive position remains very strong, and I am excited to report that we are seeing excellent international growth."

THIRD QUARTER 2010 RESULTS

GAAP Results from Continuing Operations

The Company reported revenue from continuing operations of $72.0 million for the third quarter of 2010, compared to $63.8 million in the third quarter of 2009, a 13% increase.

Operating income from continuing operations for the third quarter of 2010 was $9.7 million, or 14% of revenue, which represented an increase of 67% compared with $5.8 million, or 9% of revenue, in the third quarter of 2009.

Net income from continuing operations for the third quarter of 2010 was $6.0 million compared to net income of $3.9 million in the third quarter of 2009, a 53% increase.

On a fully diluted basis, earnings per share from continuing operations in the third quarter of 2010 were $0.22 and represent a 47% increase from diluted earnings per share of $0.15 in the third quarter of 2009.

Operating cash flow from continuing operations in the third quarter of 2010 was $21.6 million, compared to $19.8 million in the third quarter of 2009, a 9% increase. Cash, cash equivalents and marketable securities of continuing operations totaled $122.0 million as of September 30, 2010.

The Company repurchased approximately 32,000 of its shares in the third quarter of 2010 at an average price of $45.89 per share.

Non-GAAP Results from Continuing Operations

Non-GAAP operating income from continuing operations for the third quarter of 2010 was $15.7 million, or 22% of revenue. This represents a 28% increase compared to $12.3 million from continuing operations, or 19% of revenue, in the third quarter of 2009. On a fully diluted basis, Non-GAAP earnings per share from continuing operations were $0.38 and represent a 27% increase from Non-GAAP diluted earnings per share of $0.30 in the third quarter of 2009.

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

THIRD QUARTER HIGHLIGHTS

    -- Healthy Trends in Fundamental Business Metrics: New term license
       and Advent OnDemand contracts signed in the third quarter of
       2010 are expected to contribute $7.6 million in annual revenue
       once they are fully implemented, a 12% increase over the third
       quarter of 2009.  The renewal rate improved to a 91% initial
       renewal rate for the second quarter of 2010, a 4 point
       improvement over the same period last year.
    -- Continued International Growth: Signaling continued
       international momentum in Asia, Europe and the Middle East,
       Advent signed new customers in Singapore, Bahrain, Sweden,
       Switzerland and the U.K. in the third quarter.  New customers
       included one of the largest multi-strategy hedge funds in Asia
       and a major global bank with operations in both Europe and Asia.
    -- Launch of Moxy® 7.0: Advent released the latest version of
       Moxy®, its industry leading trade order management solution.
       The new features and functionality included in Moxy® 7.0 help
       meet the demands of a more complex and faster-paced investment
       marketplace.  It is designed to support the growing trend
       towards model-driven portfolio construction and management,
       combined with increased concerns about compliance.
    -- Waters Magazine Award: For the second consecutive year,
       Advent was named 'Best Portfolio Management System Provider'
       by Waters Magazine in the publication's annual readers'
       choice rankings.
    -- Client Conference: With more than 1,100 attendees, Advent
       hosted a very successful client conference the week of
       September 21st in Las Vegas.

FINANCIAL GUIDANCE

Advent announces the following financial guidance for the fourth quarter
and fiscal year 2010:

                                              Q4 2010          FY 2010
                                            Continuing       Continuing
Guidance                                    Operations       Operations
                                          ---------------  ---------------
Total Revenue ($M)                         $ 72M - $ 74M    $280M - $282M
                                          ---------------  ---------------
Year over Year Growth                         9% - 12%         8% - 9%
                                          ---------------  ---------------
GAAP Operating Margin                           n/a           11% - 12%
                                          ---------------  ---------------
Amortization of Intangibles (% of revenue)      n/a            1% - 2%
                                          ---------------  ---------------
Stock Compensation Expense (% of revenue)       n/a            7% - 8%
                                          ---------------  ---------------
Non-GAAP Operating Margin                       n/a           20% - 21%
                                          ---------------  ---------------
Operating Cash Flow ($M)                        n/a         $ 77M - $ 82M
                                          ---------------  ---------------
Capital Expenditures ($M)                       n/a         $ 18M - $ 20M
                                          ---------------  ---------------

INVESTOR CALL

Advent Software, Inc. will host its Q3 2010 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q3 2010 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 800-299-6183 and request conference ID #15451023. A replay will be available through midnight, November 1, 2010, by calling 888-286-8010 and referencing conference ID #60812781. 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 50 countries use Advent's products and services. 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, our revenue growth, market acceptance and demand for our products and new product releases, our competitive position, market conditions and their impact on our business, international expansion, and the momentum of the business, 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®, Axys®, Geneva® and Moxy® products; the successful development, release and market acceptance of new products and product enhancements; continued uncertainties and fluctuations in the financial markets; 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 2009 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, and Moxy are registered marks of, and Advent OnDemand 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)



                                                September 30  December 31
                                                    2010          2009
                                                ------------  ------------
ASSETS
Current assets:
  Cash and cash equivalents                     $     51,910  $     57,877
  Short-term marketable securities                    70,126        31,273
  Accounts receivable, net                            44,735        44,246
  Deferred taxes, current                             15,145        15,081
  Prepaid expenses and other                          17,799        22,350
  Current assets of discontinued operation                 -           494
                                                ------------  ------------

    Total current assets                             199,715       171,321
Property and equipment, net                           41,534        33,945
Goodwill                                             146,460       144,827
Other intangibles, net                                21,007        22,965
Long-term marketable securities                            -        28,495
Deferred taxes, long-term                             40,500        40,502
Other assets                                           9,719        10,142
Noncurrent assets of discontinued operation            2,095         2,095
                                                ------------  ------------

Total assets                                    $    461,030  $    454,292
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                              $      9,087  $      4,708
  Accrued liabilities                                 28,526        31,066
  Deferred revenues                                  135,661       140,186
  Income taxes payable                                 9,190         1,616
  Current liabilities of discontinued operation          162           719
                                                ------------  ------------

    Total current liabilities                        182,626       178,295
Deferred revenues, long-term                           5,968         5,879
Other long-term liabilities                           14,073        12,969
Noncurrent liabilities of discontinued
 operation                                             5,200         5,115
                                                ------------  ------------

Total liabilities                                    207,867       202,258
                                                ------------  ------------

Stockholders' equity:
  Common stock                                           257           259
  Additional paid-in capital                         399,415       386,623
  Accumulated deficit                               (156,067)     (145,584)
  Accumulated other comprehensive income               9,558        10,736
                                                ------------  ------------

    Total stockholders' equity                       253,163       252,034
                                                ------------  ------------

Total liabilities and stockholders' equity      $    461,030  $    454,292
                                                ============  ============






                          ADVENT SOFTWARE, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)
                            (GAAP, Unaudited)



                                 Three Months Ended     Nine Months Ended
                                    September 30          September 30
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ----------

Net revenues:
Term license, maintenance and
 other recurring                $  61,971  $  55,346  $ 181,055  $  166,416
Perpetual license fees              2,755      2,370      7,796       7,633
Professional services and other     7,261      6,066     19,096      19,126
                                ---------  ---------  ---------  ----------

    Total net revenues             71,987     63,782    207,947     193,175

Cost of revenues (1):
Term license, maintenance and
 other recurring                   12,709     11,920     37,866      34,729
Perpetual license fees                 61         65        199         255
Professional services and other     8,730      7,628     21,623      23,190
Amortization of developed
 technology                         1,672      1,416      4,871       4,145
                                ---------  ---------  ---------  ----------

    Total cost of revenues         23,172     21,029     64,559      62,319
                                ---------  ---------  ---------  ----------

    Gross margin                   48,815     42,753    143,388     130,856

Operating expenses (1):
Sales and marketing                16,763     15,627     50,671      46,538
Product development                13,069     12,179     38,237      35,528
General and administrative          8,893      8,636     28,316      25,932
Amortization of other
 intangibles                          331        438        977       1,315
Restructuring charges                  26         36        610          92
                                ---------  ---------  ---------  ----------

    Total operating expenses       39,082     36,916    118,811     109,405
                                ---------  ---------  ---------  ----------

Income from continuing
 operations                         9,733      5,837     24,577      21,451
Interest income and other
 income (expense), net                163       (194)      (772)      1,585
                                ---------  ---------  ---------  ----------

Income from continuing
 operations before income taxes     9,896      5,643     23,805      23,036
Provision for income taxes          3,915      1,741      8,734       6,612
                                ---------  ---------  ---------  ----------

    Net income from continuing
     operations                 $   5,981  $   3,902  $  15,071  $   16,424

Discontinued operation:
    Net income (loss) from
     discontinued operation
     (net of applicable taxes
     of $(19), $223, $(69), and
     $1,409, respectively)            (23)       770        (98)      2,499
                                ---------  ---------  ---------  ----------
Net income                      $   5,958  $   4,672  $  14,973  $   18,923
                                =========  =========  =========  ==========
Basic net income (loss) per
 share:
    Continuing operations       $    0.23  $    0.15  $    0.59  $     0.65
    Discontinued operation          (0.00)      0.03      (0.00)       0.10
                                ---------  ---------  ---------  ----------
       Total operations         $    0.23  $    0.18  $    0.58  $     0.75
                                =========  =========  =========  ==========
Diluted net income (loss) per
 share:
    Continuing operations       $    0.22  $    0.15  $    0.56  $     0.63
    Discontinued operation          (0.00)      0.03      (0.00)       0.10
                                ---------  ---------  ---------  ----------
       Total operations         $    0.22  $    0.18  $    0.55  $     0.72
                                =========  =========  =========  ==========
Weighted average shares used to
 compute net income per share:
    Basic                          25,634     25,527     25,735      25,352
    Diluted                        27,116     26,630     27,139      26,244

(1) Includes stock-based
 employee compensation expense
 as follows:
    Cost of term license,
     maintenance and other
     recurring revenues         $     466  $     498  $   1,308  $    1,333
    Cost of professional
     services and other
     revenues                         294        336        846         967
                                ---------  ---------  ---------  ----------
          Total cost of
           revenues                   760        834      2,154       2,300

    Sales and marketing             1,572      1,650      4,288       4,265
    Product development             1,356      1,326      3,882       3,641
    General and administrative      1,122      1,388      3,314       3,769
                                ---------  ---------  ---------  ----------
          Total operating
           expenses                 4,050      4,364     11,484      11,675
                                ---------  ---------  ---------  ----------

    Total stock-based employee
     compensation expense       $   4,810  $   5,198  $  13,638  $   13,975
                                =========  =========  =========  ==========






                          ADVENT SOFTWARE, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (Unaudited)



                                                    Nine Months Ended
                                                       September 30
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------
Cash flows from operating activities:
  Net income                                    $     14,973  $     18,923
  Adjustment to net income for discontinued
   operation                                              98        (2,499)
                                                ------------  ------------
  Net income from continuing operations               15,071        16,424

  Adjustments to reconcile net income to net
   cash provided by operating activities from
   continuing operations:
    Stock-based compensation                          13,638        13,975
    Depreciation and amortization                     13,289        12,432
    Loss on dispositions of fixed assets                  22             9
    Provision for doubtful accounts                      148           268
    Provision for (reduction of) sales returns          (813)          454
    Gain on investments                                    -        (2,056)
    Deferred income taxes                                (56)           (1)
    Other                                                353           116
                                                ------------  ------------
        Effect of statement of operations
         adjustments                                  26,581        25,197
    Changes in operating assets and
     liabilities:
      Accounts receivable                               (354)        7,717
      Prepaid and other assets                         4,770         5,688
      Accounts payable                                 4,347           483
      Accrued liabilities                             (2,214)          (93)
      Deferred revenues                               (3,889)       (9,089)
      Income taxes payable                             7,548         5,250
                                                ------------  ------------
        Effect of changes in operating assets
         and liabilities                              10,208         9,956
                                                ------------  ------------

Net cash provided by operating activities from
 continuing operations                                51,860        51,577

Cash flows from investing activities:
  Cash used in acquisitions, net of cash
   acquired                                           (4,719)            -
  Purchases of property and equipment                (14,995)       (2,860)
  Capitalized software development costs              (1,599)       (2,000)
  Purchases of marketable securities                 (29,000)            -
  Sales and maturities of marketable securities       19,000             -
  Proceeds from disposition of fixed assets                -            37
  Proceeds from sale of investments                        -         2,056
  Change in restricted cash                                -         1,534
                                                ------------  ------------

Net cash used in investing activities from
 continuing operations                               (31,313)       (1,233)

Cash flows from financing activities:
  Proceeds from common stock issued from
   exercises of stock options                         10,943         6,318
  Withholding taxes related to equity award net
   share settlement                                   (4,342)       (2,026)
  Proceeds from common stock issued under the
   employee stock purchase plan                        2,929         2,946
  Repurchase of common stock                         (35,881)      (14,578)
  Repayment of long-term borrowing                         -       (25,000)
                                                ------------  ------------

Net cash used in financing activities from
 continuing operations                               (26,351)      (32,340)

Net cash transferred (to) from discontinued
 operation                                               (76)        5,662

Effect of exchange rate changes on cash and
 cash equivalents                                        (87)          400
                                                ------------  ------------

Net change in cash and cash equivalents from
 continuing operations                                (5,967)       24,066
Cash and cash equivalents of continuing
 operations at beginning of period                    57,877        45,098
                                                ------------  ------------

Cash and cash equivalents of continuing
 operations at end of period                    $     51,910  $     69,164
                                                ============  ============


                                                     Nine Months Ended
                                                        September 30
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------
Supplemental disclosure of cash flow
 information
Cash flow from discontinued operation:
  Net cash provided by (used in) operating
   activities                                   $       (341) $      4,283
  Net cash used in investing activities                    -          (715)
  Net cash transferred from (to) continuing
   operations                                             76        (5,662)
  Effect of exchange rates on cash and cash
   equivalents                                            (1)           (8)
                                                ------------  ------------
  Net change in cash and cash equivalents from
   discontinued operations                              (266)       (2,102)
  Cash and cash equivalents of discontinued
   operation at beginning of period                      266         3,253
                                                ------------  ------------
  Cash and cash equivalents of discontinued
   operation at end of period                   $          -  $      1,151
                                                ============  ============






                          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 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 September 30, 2010 for
                                        Continuing Operations
                          -------------------------------------------------
                            Gross     Gross   Operating Operating   Net
                           Margin   Margin %   Income   Income %   Income
                          --------- --------  --------- --------  --------

GAAP                      $  48,815    68%    $   9,733    14%    $  5,981

  Amortization of
   acquired developed
   technology                   845                 845                845
  Amortization of other
   acquired intangibles           -                 331                331
  Stock-based
   compensation - cost of
   revenues                     760                 760                760
  Stock-based
   compensation -
   operating expenses             -               4,050              4,050
  Restructuring charges           -                  26                 26
  Income tax adjustment
   for non-GAAP (1)               -                   -             (1,653)

                          ---------           ---------           --------
Non-GAAP                  $  50,420    70%    $  15,745    22%    $ 10,340
                          =========           =========           ========

Diluted net income per
 share
  GAAP                                                            $   0.22
  Non-GAAP                                                        $   0.38

Shares used to compute
 diluted net income per
 share                                                              27,116


                              Three Months Ended September 30, 2009 for
                                        Continuing Operations
                          -------------------------------------------------
                            Gross     Gross   Operating Operating   Net
                           Margin   Margin %   Income   Income %   Income
                          --------- --------  --------- --------  --------

GAAP                      $  42,753    67%    $   5,837     9%    $  3,902

  Amortization of
   acquired developed
   technology                   782                 782                782
  Amortization of other
   acquired intangibles           -                 438                438
  Stock-based
   compensation - cost of
   revenues                     834                 834                834
  Stock-based
   compensation -
   operating expenses             -               4,364              4,364
  Restructuring charges           -                  36                 36
  Income tax adjustment
   for non-GAAP (1)               -                   -             (2,493)

                          ---------           ---------           --------
Non-GAAP                  $  44,369    70%    $  12,291    19%    $  7,863
                          =========           =========           ========

Diluted net income per
 share
  GAAP                                                            $   0.15
  Non-GAAP                                                        $   0.30

Shares used to compute
 diluted net income per
 share                                                              26,630


(1) The estimated non-GAAP effective tax rate was 35% for the three months
    ended September 30, 2010 and 2009, 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, 2010
                                                 Continuing Operations
                                                   Operating Income %
                                              ----------------------------

    Projected GAAP                                11%      to      12%
                                              ============================

        Projected amortization of acquired
         developed technology and other
         acquired intangible asset
         adjustment                                1%      to       2%
        Projected stock based compensation
         adjustment                                7%      to       8%

                                              ----------------------------
    Projected non-GAAP                            20%      to      21%
                                              ============================

Contact Information

  • Media Contact:
    Jessica Miller
    Advent Software, Inc.
    (415) 645-1668
    Email Contact

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