SOURCE: TIBCO Software Inc.

TIBCO Software Inc.

December 19, 2013 16:05 ET

TIBCO Software Reports Fourth Quarter and Fiscal Year 2013 Results

Record Full Year Revenue of $1.1 Billion; Non-GAAP EPS of $1.06; Record Fourth Quarter Revenue of $315 Million; Non-GAAP EPS of $0.42

PALO ALTO, CA--(Marketwired - Dec 19, 2013) -  TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fourth quarter and fiscal year, which ended on November 30, 2013.

Total revenue for the fourth quarter of fiscal 2013 was $315.5 million and net income was $44.5 million, or $0.27 per diluted share. This compares to total revenue of $296.5 million and net income of $48.8 million, or $0.29 per diluted share, as reported for the fourth quarter of fiscal 2012.

On a non-GAAP basis, net income for the fourth quarter of fiscal 2013 was $70.8 million or $0.42 per diluted share, compared with $70.7 million or $0.42 per diluted share for the fourth quarter of fiscal 2012. Non-GAAP operating income for the fourth quarter of fiscal 2013 was $95.3 million, resulting in a non-GAAP operating margin of 30.2%. This compares to non-GAAP operating income of $98.2 million, or a 33.1% non-GAAP operating margin in the fourth quarter of fiscal 2012. Non-GAAP results exclude amortization of acquired intangible assets, stock-based compensation expense, acquisition related and other expenses, restructuring activities and non-cash interest expense related to convertible debt and assumes non-GAAP effective tax rates of 23% and 24% for the fourth quarters of fiscal 2013 and 2012, respectively.

"We saw strong, accelerating growth in the Americas and a return to growth in Asia this quarter, while closing a record 31 deals over $1 million in license revenue worldwide," said Vivek Ranadivé, TIBCO Chairman and CEO. "We are building momentum as we enter 2014, and I am very optimistic about our prospects in the year ahead." 

Fourth Quarter Fiscal 2013 Highlights

  • Record total revenue of $315.5 million;
  • Record license revenue of $139.7 million;
  • Non-GAAP operating margin of 30.2%;
  • Non-GAAP EPS of $0.42;
  • Cash flow from operations of $59.6 million;
  • Broad mix of business across major industries including Financial Services, Telecommunications, Energy, Transportation & Logistics, Retail, Life Sciences, and Manufacturing; and
  • TIBCO closed 193 deals over $100k and had 31 deals over $1 million in license revenue.

Full Year Fiscal 2013 Highlights

  • Record total revenue of $1,070.0 million;
  • License revenue of $405.5 million;
  • Non-GAAP operating margin of 23.3%;
  • Non-GAAP EPS of $1.06;
  • Cash flow from operations of $206.0 million; and
  • Repurchased 6 million shares.

Conference Call Details
TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss fourth quarter and full year 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 706-679-0841. Please join the conference call 10 minutes early to register. A replay of the conference call will be available until midnight ET on January 19, 2014 at www.tibco.com or via dial-in at 800-585-8367 or 404-537-3406. The pass code for both the call and the replay is 19900317.

About TIBCO
TIBCO Software Inc. (NASDAQ: TIBX) is a global leader in infrastructure and business intelligence software. Whether it's optimizing inventory, cross-selling products, or averting crisis before it happens, TIBCO uniquely delivers the Two-Second Advantage® -- the ability to capture the right information at the right time and act on it preemptively for a competitive advantage. With a broad mix of innovative products and services, TIBCO is the strategic technology partner trusted by businesses around the world. Learn more about TIBCO at www.tibco.com.

TIBCO, 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 (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 fourth quarter of fiscal year 2013 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 TIBCO's ability to improve its sales execution, and TIBCO's ability to build and maintain momentum, 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: risks arising from adverse changes and uncertainty in domestic and global economies, TIBCO's ability to implement successfully the changes designed to improve performance and drive growth, the impact of competition from alternative business models and new product introductions, TIBCO's ability to offer differentiated products that capitalize on current technology trends, and the impact of competition from companies that are larger or have greater resources than TIBCO. 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, 2012 and Quarterly Report on Form 10-Q for the quarter ended September 1, 2013. TIBCO assumes no obligation to update the forward-looking statements included in this release.

 
TIBCO Software Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
     
    November 30,
2013
  November 30,
2012
         
ASSETS        
         
Current assets:            
  Cash and cash equivalents   $ 662,109   $ 727,309
  Short-term investments     83,842     34,411
  Accounts receivable, net     231,194     234,100
  Prepaid expenses and other current assets     74,725     61,174
    Total current assets     1,051,870     1,056,994
             
Property and equipment, net     101,050     98,474
Goodwill     582,091     532,290
Acquired intangible assets, net     119,418     123,261
Long-term deferred income tax assets     78,853     64,549
Other assets     72,831     71,340
    Total assets   $ 2,006,113   $ 1,946,908
             
LIABILITIES AND EQUITY            
             
Current liabilities:            
  Accounts payable   $ 37,701   $ 22,809
  Accrued liabilities     125,112     133,596
  Accrued restructuring costs     5,819     893
  Deferred revenue     258,315     263,476
  Current portion of long-term debt     -     35,711
    Total current liabilities     426,947     456,485
             
Accrued restructuring costs, less current portion     87     643
Long-term deferred revenue     24,036     25,543
Long-term deferred income tax liabilities     1,334     3,208
Long-term income tax liabilities     55,733     26,263
Other long-term liabilities     4,701     4,015
Convertible debt     540,022     524,466
    Total long-term liabilities     625,913     584,138
    Total liabilities     1,052,860     1,040,623
             
Total equity     953,253     906,285
    Total liabilities and equity   $ 2,006,113   $ 1,946,908
             
             
             
TIBCO Software Inc.  
Condensed Consolidated Statements of Operations  
(unaudited)  
(in thousands, except net income per share)  
                         
    Three Months Ended     Twelve Months Ended  
    November 30, 2013     November 30, 2012     November 30, 2013     November 30, 2012  
Revenue:                                
  License   $ 139,733     $ 136,307     $ 405,471     $ 410,306  
  Service and maintenance     175,722       160,220       664,479       614,307  
    Total revenue     315,455       296,527       1,069,950       1,024,613  
                                 
Cost of revenue:                                
  License     12,548       11,554       47,324       41,363  
  Service and maintenance     69,316       64,035       260,121       241,452  
    Total cost of revenue     81,864       75,589       307,445       282,815  
Gross profit     233,591       220,938       762,505       741,798  
                                 
Operating expenses:                                
  Research and development     43,331       39,255       170,922       154,535  
  Sales and marketing     98,907       85,557       348,302       317,001  
  General and administrative     15,404       17,960       65,950       70,868  
  Amortization of acquired intangible assets     4,827       4,813       18,852       19,654  
  Acquisition related and other     (16 )     502       1,509       2,672  
  Restructuring adjustment     3,682       (201 )     12,553       (648 )
    Total operating expenses     166,135       147,886       618,088       564,082  
Income from operations     67,456       73,052       144,417       177,716  
                                 
  Interest income     266       267       938       1,109  
  Interest expense     (8,474 )     (8,823 )     (34,330 )     (23,396 )
  Other income (expense), net     841       (357 )     (417 )     (115 )
Income before provision for income taxes and noncontrolling interest    
60,089
     
64,139
     
110,608
     
155,314
 
                                 
Provision for income taxes     15,500       15,300       26,400       33,200  
                                 
Net income     44,589       48,839       84,208       122,114  
                                 
Less: Net income attributable to noncontrolling interest     40       51       188       107  
                                 
Net income attributable to TIBCO Software Inc.   $ 44,549     $ 48,788     $ 84,020     $ 122,007  
                                 
Net income per share attributable to TIBCO Software Inc.:                                
  Basic   $ 0.28     $ 0.30     $ 0.52     $ 0.76  
  Diluted   $ 0.27     $ 0.29     $ 0.50     $ 0.72  
                                 
Shares used to compute net income per share attributable to TIBCO Software Inc.:                                
  Basic     160,814       160,115       160,963       160,330  
  Diluted     167,758       169,284       167,848       169,698  
                                 
                                 
                                 
TIBCO Software Inc.  
Condensed Consolidated Statements of Cash Flows  
(unaudited)  
(in thousands)  
             
    Twelve Months Ended  
    November 30,
2013
    November 30,
2012
 
                 
Cash flows from operating activities:                
  Net income   $ 84,208     $ 122,114  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation of property and equipment     16,340       14,931  
    Amortization of acquired intangible assets     36,782       35,553  
    Amortization of debt discount and transaction costs     19,093       11,465  
    Stock-based compensation     53,635       61,146  
    Deferred income tax     (16,397 )     (20,351 )
    Tax benefits related to stock benefit plans     14,343       24,561  
    Excess tax benefits from stock-based compensation     (18,539 )     (30,311 )
    Other non-cash adjustments, net     1,442       1,486  
  Changes in assets and liabilities:                
    Accounts receivable     2,870       (37,171 )
    Prepaid expenses and other assets     (13,860 )     (1,880 )
    Accounts payable     14,221       (3,036 )
    Accrued and tax liabilities including restructuring costs     20,307       (1,542 )
    Deferred revenue     (8,424 )     60,395  
      Net cash provided by operating activities     206,021       237,360  
                 
Cash flows from investing activities:                
  Purchases of short-term investments     (70,786 )     (41,409 )
  Maturities and sales of short-term investments     22,657       7,229  
  Acquisitions, net of cash acquired     (74,898 )     (132,209 )
  Purchases of property and equipment     (19,269 )     (23,723 )
  Restricted cash pledged as security     (1,165 )     (1,169 )
  Other investing activities, net     (212 )     326  
      Net cash used in investing activities     (143,673 )     (190,955 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of convertible debt, net     -       584,450  
  Proceeds from revolving credit facility, net     -       116,648  
  Principal payments on debt     (35,711 )     (152,397 )
  Proceeds from issuance of common stock     30,702       33,417  
  Repurchases of the Company's common stock     (130,741 )     (220,265 )
  Withholding taxes related to restricted stock net share settlement     (13,279 )     (18,212 )
      Net cash provided by (used in) financing activities     (130,490 )     373,952  
Effect of foreign exchange rate changes on cash and cash equivalents     2,942       (1,196 )
                 
Net change in cash and cash equivalents     (65,200 )     419,161  
                 
Cash and cash equivalents at beginning of period     727,309       308,148  
                 
Cash and cash equivalents at end of period   $ 662,109     $ 727,309  
                 

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, non-cash interest expense related to convertible debt, 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 incurs 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 incurs 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.

Non-Cash Interest Expense Related to Convertible Debt
TIBCO is required to recognize non-cash interest expense related to its 2.25% convertible senior notes issued in April 2012 as an imputed interest expense. Management excludes this incremental non-cash interest expense for purposes of calculating non-GAAP net income and non-GAAP net income per share. Under the relevant accounting guidance, TIBCO is required to separate the conversion option as an equity component from the debt and account for the debt in a manner that reflects TIBCO's non-convertible debt borrowing rate. This results in the debt component of the convertible notes being treated as though it was issued at a discount, with the debt discount being accreted as additional non-cash interest expense over the term of the notes using the effective interest method. TIBCO believes that excluding this expense from its non-GAAP measures is useful to investors because this incremental interest expense does not represent a cash outflow for the company and is not meaningful in evaluating current versus past business results. Finally, TIBCO believes that non-GAAP measures of profitability that exclude non-cash interest accretion expense are widely used by analysts and investors.

                                 
TIBCO Software Inc.
Reconciliation of GAAP to Non-GAAP Measures
(unaudited)
(in thousands, except net income per share)
                                 
    Three Months Ended   Twelve Months Ended
    November 30,
2013
  November 30,
2012
  November 30,
2013
  November 30,
2012
    Operating Income   Net income attributable to TIBCO Software Inc.   Operating Income   Net income attributable to TIBCO Software Inc.   Operating Income   Net income attributable to TIBCO Software Inc.   Operating Income   Net income attributable to TIBCO Software Inc.
   
   
   
                                 
GAAP   $ 67,456   $ 44,549   $ 73,052   $ 48,788   $ 144,417   $ 84,020   $ 177,716   $ 122,007
                                 
  Amortization of intangible assets - cost of revenue   4,990   4,990   4,021   4,021   17,930   17,930   15,899   15,899
  Amortization of intangible assets - operating expense   4,827   4,827   4,813   4,813   18,852   18,852   19,654   19,654
  Stock-based compensation - cost of revenue   3,800   3,800   1,431   1,431   9,186   9,186   5,142   5,142
  Stock-based compensation - R&D expense   4,129   4,129   3,887   3,887   15,888   15,888   15,131   15,131
  Stock-based compensation - S&M expense   4,697   4,697   5,844   5,844   17,479   17,479   21,211   21,211
  Stock-based compensation - G&A expense   1,764   1,764   4,854   4,854   11,082   11,082   19,662   19,662
  Acquisition related and other   (16)   (16)   502   502   1,509   1,509   2,672   2,672
  Non-cash interest expense related to convertible debt   -   3,960   -   3,751   -   15,557   -   9,032
  Restructuring adjustment   3,682   3,682   (201)   (201)   12,553   12,553   (648)   (648)
  Income tax adjustment for non-GAAP   -   (5,550)   -   (7,030)   -   (26,226)   -   (35,037)
                                 
Non-GAAP   $ 95,329   $ 70,832   $ 98,203   $ 70,660   $ 248,896   $ 177,830   $ 276,439   $ 194,725
                                 
Diluted net income per share attributable to TIBCO Software Inc.:                                
                                 
  GAAP       $ 0.27       $ 0.29       $ 0.50       $ 0.72
                                   
  Non-GAAP       $ 0.42       $ 0.42       $ 1.06       $ 1.15
Shares used to compute diluted net income per share attributable to TIBCO Software Inc.:       167,758       169,284       167,848       169,698
                                 

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