SOURCE: TIBCO Software Inc.

TIBCO Software Inc.

September 23, 2010 16:10 ET

TIBCO Software Grows Both License Revenue and Total Revenue by 23% Over Q3 2009

Non-GAAP EPS Increases to $0.17

PALO ALTO, CA--(Marketwire - September 23, 2010) - TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its third quarter, which ended on August 29, 2010.

Total revenue for the third quarter of fiscal 2010 was $184.5 million and net income was $17.4 million, or $0.10 per diluted share. This compares to total revenue of $150.3 million and net income of $14.9 million, or $0.09 per diluted share, as reported for the third quarter of fiscal 2009.

On a non-GAAP basis, net income for the third quarter of fiscal 2010 was $29.8 million or $0.17 per diluted share, compared with $22.1 million or $0.13 per diluted share for the third quarter of fiscal 2009. Non-GAAP operating income for the third quarter of fiscal 2010 was $45.0 million, an increase of 39% over non-GAAP operating income of $32.5 million in Q3 2009. This implies an expansion of non-GAAP operating margins of 280 basis points, from 21.6% in Q3 2009 to 24.4% in Q3 2010. Non-GAAP results exclude stock-based compensation expense, amortization of acquired intangible assets, restructuring expenses, and acquisition related and other expenses and assume non-GAAP effective tax rates of 31% and 32% for the third fiscal quarters of 2010 and 2009, respectively.

"The mainstream appeal of our software platform was once again on display this quarter, with a broad mix of demand across industry, geography, and product line," said Vivek Ranadivé, TIBCO's chairman and chief executive officer. "License revenue grew 23% over last year, driven by our powerful catalysts in event-driven applications, analytics, and business process management. Companies and agencies of all types are looking for their Two-Second Advantage™, and TIBCO is well-positioned -- with the people, the products, and the experience -- to help them achieve it."

Third Quarter Fiscal 2010 Highlights

--  Total revenue increased 23% year over year to $184.5 million;
--  License revenue increased 23% year over year to $70.6 million;
--  Non-GAAP operating margin was 24.4%;
--  Cash flow from operations was $31.9 million;
--  Repurchased 2.7 million shares;
--  Diverse mix of business across major industries including Financial
    Services, Telecommunications, Manufacturing, Energy, Government,
    Transportation & Logistics, and Life Sciences;
--  TIBCO closed 112 deals over $100k and had 13 deals over $1 million; and
--  TIBCO expanded its business with leading companies and agencies in
    the third quarter such as Atlantic Lottery Corporation, BM&F
    Bovespa S.A., CBH Group, Christopher & Banks, First National Bank,
    iiNet Limited, Macy's, Orient Overseas Container Lines, Qualcomm,
    STMicroelectronics, Singapore Airlines, and Société Générale Corporate
    & Investment Banking.

Conference Call Details

TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its third quarter results. The conference call will be hosted by InterCall and may be accessed over the Internet at www.tibco.com or via dial-in at (877) 293-9114 or (706) 758-2055. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight on October 23, 2010 at www.tibco.com or via dial-in at (800) 642-1687 or (706) 645-9291. The pass code for both the call and the replay is 98141391.

About TIBCO

TIBCO's technology digitized Wall Street in the '80s with event-driven "Information Bus" software, which helped make real-time business a strategic differentiator in the '90s. Today, TIBCO's infrastructure software gives customers the ability to constantly innovate by connecting applications and data in a service-oriented architecture, streamlining activities through business process management, and giving people the information and intelligence tools they need to make faster and smarter decisions, what we call The Power of Now®. TIBCO serves more than 3,000 customers around the world with offices in more than 20 countries and an ecosystem of over 200 partners. Learn more at www.tibco.com.

TIBCO, The Power of Now, Two-Second Advantage and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc. in the United States and/or other countries. All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only.

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 section entitled "About Non-GAAP Financial Measures" and the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Measures."

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws. The final financial results for third quarter of fiscal year 2010 may differ materially from the preliminary results presented in this release due to factors that include, but are not limited to, risks associated with the final review of the results and preparation of financial statements. In addition, forward-looking statements such as statements regarding our continued ability to provide products and expertise to help customers achieve their Two-Second Advantage are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks include but are not limited to: our ability to differentiate our solutions from those of our competitors, and our ability to execute successfully on our product plans. Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K for the year ended November 30, 2009 and Quarterly Report on Form 10-Q for the quarter ended May 30, 2010. TIBCO assumes no obligation to update the forward-looking statements included in this release.

                            TIBCO Software Inc.
                  Condensed Consolidated Balance Sheets
                                (unaudited)
                              (in thousands)


                                                  August 29,   November 30,
                                                     2010        2009 (1)
                                                 ------------  ------------

                        ASSETS

Current assets:
  Cash and cash equivalents                      $    288,831  $    292,529
  Short-term investments                                  252           307
  Accounts receivable, net                            124,211       154,744
  Prepaid expenses and other current assets            51,080        52,657
                                                 ------------  ------------
    Total current assets                              464,374       500,237

Property and equipment, net                            89,245        94,631
Goodwill                                              390,406       374,285
Acquired intangible assets, net                        91,263        83,060
Long-term deferred income tax assets                   81,834        70,057
Other assets                                           46,874        44,069
                                                 ------------  ------------
    Total assets                                 $  1,163,996  $  1,166,339
                                                 ============  ============

                 LIABILITIES AND EQUITY

Current liabilities:
  Accounts payable                               $     16,715  $     18,350
  Accrued liabilities                                  87,322        96,595
  Accrued excess facilities costs                       4,020         5,848
  Deferred revenue                                    175,970       159,241
  Current portion of long-term debt                     2,238         2,148
                                                 ------------  ------------
    Total current liabilities                         286,265       282,182

Accrued excess facilities costs, less current
 portion                                                  720         1,083
Long-term deferred revenue                             14,242        15,353
Long-term deferred income tax liabilities              12,091         9,257
Long-term income tax liabilities                       14,887        17,045
Long-term debt, less current portion                   38,687        40,377
Other long-term liabilities                             2,976         3,561
                                                 ------------  ------------
    Total long-term liabilities                        83,603        86,676
                                                 ------------  ------------
    Total liabilities                                 369,868       368,858
                                                 ------------  ------------

Total equity                                          794,128       797,481
                                                 ------------  ------------
    Total liabilities and equity                 $  1,163,996  $  1,166,339
                                                 ============  ============


(1) On December 1, 2009, TIBCO adopted a new accounting standard related to
    the presentation of noncontrolling interest. Prior period results have
    been adjusted to conform with this new accounting standard.




                            TIBCO Software Inc.
              Condensed Consolidated Statements of Operations
                                (unaudited)
                (in thousands, except net income per share)


                              Three Months Ended      Nine Months Ended
                            ----------------------  ----------------------
                            August 29,  August 30,  August 29,  August 30,
                               2010      2009 (1)      2010      2009 (1)
                            ----------  ----------  ----------  ----------
Revenue:
  License                   $   70,567  $   57,257  $  186,837  $  152,563
  Service and maintenance      113,909      92,995     325,953     273,255
                            ----------  ----------  ----------  ----------
    Total revenue              184,476     150,252     512,790     425,818
                            ----------  ----------  ----------  ----------

Cost of revenue:
  License                        8,992       6,050      24,587      20,353
  Service and maintenance       41,057      32,253     115,389      95,902
                            ----------  ----------  ----------  ----------
    Total cost of revenue       50,049      38,303     139,976     116,255
                            ----------  ----------  ----------  ----------
Gross profit                   134,427     111,949     372,814     309,563
                            ----------  ----------  ----------  ---------- 

Operating expenses:
  Research and development      30,773      26,449      88,974      77,843
  Sales and marketing           59,072      50,657     168,621     144,228
  General and administrative    12,390      11,227      35,643      33,172
  Amortization of acquired
   intangible assets             4,106       3,107      11,790      10,559
  Acquisition related and
   other (2)                       906           -       2,540           -
  Restructuring                    561           -       6,832           -
                            ----------  ----------  ----------  ----------
    Total operating
     expenses                  107,808      91,440     314,400     265,802
                            ----------  ----------  ----------  ----------
Income from operations          26,619      20,509      58,414      43,761

  Interest income                  398         219         826       2,053
  Interest expense              (1,138)       (673)     (3,103)     (2,212)
  Other income (expense),
   net                            (879)        471        (966)      1,672
                            ----------  ----------  ----------  ----------
Income before provision for
 income taxes and
 noncontrolling interest        25,000      20,526      55,171      45,274

Provision for income taxes       7,536       5,629      14,336      14,579
                            ----------  ----------  ----------  ----------
Net income                      17,464      14,897      40,835      30,695

Less: Net income
 attributable to
 noncontrolling interest           109          31         241         126
                            ----------  ----------  ----------  ----------
Net income attributable to
 TIBCO Software Inc.        $   17,355  $   14,866  $   40,594  $   30,569
                            ==========  ==========  ==========  ==========
Net income per share
 attributable to TIBCO
 Software Inc.:
  Basic                     $     0.11  $     0.09  $     0.25  $     0.18
                            ==========  ==========  ==========  ==========
  Diluted                   $     0.10  $     0.09  $     0.24  $     0.18
                            ==========  ==========  ==========  ==========
Shares used to compute net
 income per share
 attributable to TIBCO
 Software Inc.:
  Basic                        160,238     168,036     161,274     170,318
                            ==========  ==========  ==========  ==========
  Diluted                      171,192     172,194     170,305     172,473
                            ==========  ==========  ==========  ==========


(1) On December 1, 2009, TIBCO adopted a new accounting standard related to
    the presentation of noncontrolling interest. Prior period results have
    been adjusted to conform with this new accounting standard.

(2) Prior to the adoption of new amended guidance for business combinations
    effective December 1, 2009, the majority of acquisition related and
    other expenses were capitalized.





                            TIBCO Software Inc.
              Condensed Consolidated Statements of Cash Flows
                                (unaudited)
                              (in thousands)


                                                     Nine Months Ended
                                                 -------------------------
                                                  August 29,    August 30,
                                                     2010         2009 (1)
                                                 -----------   -----------

Cash flows from operating activities:
  Net income                                     $    40,835   $    30,695
  Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation of property and equipment           10,020        11,175
     Amortization of acquired intangible assets       23,235        20,567
     Stock-based compensation                         23,093        17,155
     Deferred income tax                             (11,282)       (7,662)
     Tax benefits related to stock benefit plans      18,502        11,995
     Excess tax benefits from stock-based
      compensation                                   (11,729)       (7,960)
     Other non-cash adjustments, net                      39         1,125
  Changes in assets and liabilities:
     Accounts receivable                              32,903        33,470
     Prepaid expenses and other assets                 3,315         3,553
     Accounts payable                                 (3,354)       (2,976)
     Accrued liabilities and excess facilities
      costs                                          (19,546)      (21,076)
     Deferred revenue                                  7,378        (4,774)
                                                 -----------   -----------
       Net cash provided by operating activities     113,409        85,287
                                                 -----------   -----------

Cash flows from investing activities:
  Maturities and sales of short-term investments         169        10,966
  Acquisitions, net of cash acquired                 (42,578)      (26,811)
  Proceeds from private equity investments                32           117
  Purchases of property and equipment                 (4,319)       (4,108)
  Restricted cash pledged as security                 (3,669)       (2,559)
                                                 -----------   -----------
       Net cash used in investing activities         (50,365)      (22,395)
                                                 -----------   -----------

Cash flows from financing activities:
  Proceeds from issuance of common stock              28,759        15,219
  Repurchases of the Company's common stock         (101,538)      (64,639)
  Excess tax benefits from stock-based
   compensation                                       11,729         7,960
  Principal payments on long-term debt                (2,944)       (1,515)
                                                 -----------   -----------
       Net cash used in financing activities         (63,994)      (42,975)
                                                 -----------   -----------

Effect of foreign exchange rate changes on cash
 and cash equivalents                                 (2,748)       10,786
                                                 -----------   -----------

Net change in cash and cash equivalents               (3,698)       30,703

Cash and cash equivalents at beginning of
 period                                              292,529       254,400

                                                 -----------   -----------
Cash and cash equivalents at end of period       $   288,831   $   285,103
                                                 ===========   ===========


(1) On December 1, 2009, TIBCO adopted a new accounting standard related to
    the presentation of noncontrolling interest. Prior period results have
    been adjusted to conform with this new accounting standard.

About Non-GAAP Financial Measures

TIBCO provides non-GAAP measures for operating income, net income and net income per share data as supplemental information regarding TIBCO's business performance. TIBCO believes that these non-GAAP financial measures are useful to investors because they exclude non-operating charges. TIBCO's management excludes these non-operating charges when it internally evaluates the performance of TIBCO's business and makes operating decisions, including internal budgeting, performance measurement and the calculation of bonuses and discretionary compensation, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential revenue generation activities of TIBCO. Accordingly, management excludes stock-based compensation related to employee stock options, amortization of acquired intangible assets, costs related to formal restructuring activities, acquisition-related and other expenses, gains and losses on equity investments, and the income tax effects of the foregoing, as well as adjustments for the impact of changes in the valuation allowance recorded against TIBCO's deferred tax assets when making operational decisions.

TIBCO believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand TIBCO's financial performance on a trended basis across historical periods. In addition, it allows investors to evaluate TIBCO's performance using the same methodology and information as that used by TIBCO's management.

Non-GAAP measures are subject to material limitations as these measures are not in accordance with, or a substitute for, GAAP and thus TIBCO's definition may be different from similar non-GAAP measures used by other companies and/or analysts. However, TIBCO's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. In addition, some items such as restructuring charges that are excluded from non-GAAP net income and non-GAAP earnings per share can have a material impact on cash flows and stock compensation charges can have a significant impact on earnings. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. TIBCO has historically provided non-GAAP measures to the investment community as a supplement to its GAAP results, to enable investors to evaluate TIBCO's business performance in the way that management does.

The non-GAAP adjustments, and the basis for excluding them, are outlined below:

Amortization of Intangible Assets

TIBCO has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions TIBCO has made. Management excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO believes that eliminating this expense from its non-GAAP measures is useful to investors, because the amortization of intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of TIBCO's acquisition transactions, which also vary substantially in frequency from period to period.

Stock-based Compensation

TIBCO incurs stock-based compensation expense. TIBCO excludes this item for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share because it is a non-cash expense that TIBCO believes is not reflective of its business performance. The nature of the stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions and different award types, making the comparison of current results with forward-looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expenses may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods. Finally, TIBCO believes that non-GAAP measures of profitability that exclude stock-based compensation are widely used by analysts and investors in the software industry.

Acquisition-related and Other Expenses

TIBCO has incurred acquisition-related and other expenses which consist of costs incurred after the issuance of a definitive term sheet for a particular transaction (whether or not such transaction is ultimately completed, remains in process or is not completed) and include legal, banker, accounting and other advisory fees of third parties and severance costs for employees of the acquired company that are terminated within 90 days of the acquisition date. Management excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO believes that eliminating these expenses from its non-GAAP measures is useful to investors, because it generally would not have otherwise incurred such expenses in the periods presented as part of its continuing operations. The acquisition-related and other expenses are not recurring with respect to past transactions, can be inconsistent in amount and frequency from period to period and are significantly impacted by the timing and magnitude of TIBCO's acquisitions. While these expenses are not recurring with respect to past transactions, TIBCO generally will incur these expenses in connection with any future acquisitions.

Restructuring Activities

TIBCO has incurred restructuring expenses, included in its GAAP presentation of operating expense, primarily due to workforce related charges such as payments for severance and benefits and estimated costs of exiting and terminating facility lease commitments related to a formal restructuring plan. TIBCO excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share, when it evaluates the continuing business performance of TIBCO. TIBCO believes that these items are not consistently recurring and do not necessarily reflect expected future operating expense, nor does TIBCO believe that they provide a meaningful evaluation of current versus past business results or the expense levels required to support TIBCO's operating plan.

                            TIBCO Software Inc.
                Reconciliation of GAAP to Non-GAAP Measures
                                (unaudited)
                (in thousands, except net income per share)


                                        Three Months Ended
                        ---------------------------------------------------
                            August 29, 2010           August 30, 2009
                        ------------------------- -------------------------
                                      Net income                Net income
                                     attributable              attributable
                                       to TIBCO                  to TIBCO
                         Operating     Software    Operating     Software
                          Income         Inc.       Income         Inc.
                        -----------  -----------  -----------  -----------


GAAP                    $    26,619  $    17,355  $    20,509  $    14,866

 Amortization of
  intangible assets -
  cost of revenue             3,911        3,911        2,873        2,873
 Amortization of
  intangible assets -
  operating expense           4,106        4,106        3,107        3,107
 Stock-based
  compensation - cost
  of revenue                    786          786          658          658
 Stock-based
  compensation - R&D
  expense                     2,286        2,286        1,486        1,486
 Stock-based
  compensation - S&M
  expense                     3,154        3,154        1,906        1,906
 Stock-based
  compensation - G&A
  expense                     2,643        2,643        1,925        1,925
 Acquisition related
  and other                     906          906            -            -
 Restructuring                  561          561            -            -
 Income tax adjustment
  for non-GAAP (1)                -       (5,903)           -       (4,765)
                        -----------  -----------  -----------  -----------
Non-GAAP                $    44,972  $    29,805  $    32,464  $    22,056
                        ===========  ===========  ===========  ===========

Diluted net income per
 share attributable to
 TIBCO Software Inc.:

  GAAP                               $      0.10               $      0.09
                                     ===========               ===========
  Non-GAAP                           $      0.17               $      0.13
                                     ===========               ===========
Shares used to compute
 diluted net income per
 share attributable to
 TIBCO Software Inc.:                    171,192                   172,194
                                     ===========               ===========


                                        Nine Months Ended
                        ---------------------------------------------------
                            August 29, 2010           August 30, 2009
                        ------------------------- -------------------------
                                      Net income                Net income
                                     attributable              attributable
                                       to TIBCO                  to TIBCO
                         Operating     Software    Operating     Software
                          Income         Inc.       Income         Inc.
                        -----------  -----------  -----------  -----------


GAAP                    $    58,414  $    40,594  $    43,761  $    30,569

 Amortization of
  intangible assets -
  cost of revenue            11,445       11,445       10,008       10,008
 Amortization of
  intangible assets -
  operating expense          11,790       11,790       10,559       10,559
 Stock-based
  compensation - cost
  of revenue                  2,109        2,109        1,900        1,900
 Stock-based
  compensation - R&D
  expense                     5,826        5,826        4,140        4,140
 Stock-based
  compensation - S&M
  expense                     7,980        7,980        5,318        5,318
 Stock-based
  compensation - G&A
  expense                     7,178        7,178        5,797        5,797
 Acquisition related
  and other                   2,540        2,540            -            -
 Restructuring                6,832        6,832            -            -
 Income tax adjustment
  for non-GAAP (1)                -      (20,328)           -      (11,980)
                        -----------  -----------  -----------  -----------
Non-GAAP                $   114,114  $    75,966  $    81,483  $    56,311
                        ===========  ===========  ===========  ===========

Diluted net income per
 share attributable to
 TIBCO Software Inc.:
  GAAP                               $      0.24               $      0.18
                                     ===========               ===========
  Non-GAAP                           $      0.45               $      0.33
                                     ===========               ===========
Shares used to compute
 diluted net income per
 share attributable to
 TIBCO Software Inc.:                    170,305                   172,473
                                     ===========               ===========


 (1) The estimated non-GAAP effective tax rate was 31% and 32% for fiscal
     2010 and 2009, respectively, and has been used to adjust the provision
     for income taxes for non-GAAP purposes.

Contact Information

  • Media Relations Contact:
    Holly Burkhart
    TIBCO Software Inc.
    (650) 846-5624
    Email Contact

    Investor Relations Contact:
    Matthew Langdon
    TIBCO Software Inc.
    (650) 846-5747
    Email Contact