SOURCE: TIBCO Software Inc.

TIBCO Software Inc.

June 28, 2012 16:05 ET

TIBCO Software Reports Q2 Non-GAAP EPS Grows 24% to $0.26

Total Revenue Grows 14% Over Q2 2011, or 20% on a Constant Currency Basis

PALO ALTO, CA--(Marketwire - Jun 28, 2012) - TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its second fiscal quarter, which ended on Sunday, June 3, 2012.

Total revenue for the second quarter of fiscal 2012 was $247.4 million and net income was $26.5 million, or $0.16 per diluted share. This compares to total revenue of $216.4 million and net income of $21.0 million, or $0.12 per diluted share, as reported for the second quarter of fiscal 2011. 

On a non-GAAP basis, net income for the second quarter of fiscal 2012 was $43.6 million or $0.26 per diluted share, compared with $36.3 million or $0.21 per diluted share for the second quarter of fiscal 2011. Non-GAAP operating income for the second quarter of fiscal 2012 was $61.8 million, an increase of 22% over non-GAAP operating income of $50.8 million in the second quarter of fiscal 2011. 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 assume a non-GAAP effective tax rate of 27% and 26% for the second quarter of fiscal years 2012 and 2011, respectively.

"We delivered another quarter of continued growth, with total revenue and license revenue up by 20% and 17% respectively, after adjusting for currency movements," said Vivek Ranadivé, TIBCO's chairman and CEO. "A growing list of customers across industries and geographies are harnessing big data and becoming event-driven through the use of our infrastructure software platform -- whether for new demand generation, improved loyalty program returns, increased operational efficiencies, or superior risk management. In up markets and down, these remain priority initiatives that continue to create opportunities for TIBCO."

Second Quarter Fiscal 2012 Highlights

  • Record Q2 total revenue was $247.4 million, up 14% over last year on a reported basis and up 20% on a constant currency basis;
  • Record Q2 license revenue was $92.6 million, up 13% over last year on a reported basis and up 17% on a constant currency basis;
  • Q2 non-GAAP operating margin was 25%;
  • Q2 non-GAAP EPS was $0.26, up 24% over last year;
  • Repurchased 3.6 million shares;
  • Diversified mix of business across industries including Financial Services, Communications, Manufacturing, Energy, Life Sciences, Healthcare, and Retail;
  • TIBCO closed 137 deals over $100k and had 20 deals over $1 million; and
  • TIBCO expanded its business with leading companies and agencies in the second quarter such as Beijing Jurassic, DBS Bank, Dunkin' Brands, Equinix, ING Insurance, NFU Mutual, Nielsen, Novo Nordisk, Reed Smith LLP, Reliance Industries, and Vodafone Egypt.

Conference Call Details

TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its second 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 PT on July 28, 2012 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 88581564.

About TIBCO

TIBCO Software Inc. (NASDAQ: TIBX) is a provider of infrastructure software for companies to use on-premise or as part of cloud computing environments. Whether it's optimizing claims, processing trades, cross-selling products based on real-time customer behavior, or averting a crisis before it happens, TIBCO provides companies the two-second advantage™ - the ability to capture the right information at the right time and act on it preemptively for a competitive advantage. More than 4,000 customers worldwide rely on TIBCO to manage information, decisions, processes and applications in real time. Learn more 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 second quarter of fiscal year 2012 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 the ability of TIBCO's platform to help customers become event-driven, improve loyalty program performance, increase supply chain efficiencies, and deliver superior risk management, and TIBCO's belief that these will remain priority initiatives that create opportunities for TIBCO in up markets and down, 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 develop products that address changing market demands, 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, 2011 and Quarterly Report on Form 10-Q for the quarter ended March 4, 2012. TIBCO assumes no obligation to update the forward-looking statements included in this release.

TIBCO Software Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
     
    June 3,
2012
  November 30,
2011
             
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 647,104   $ 308,148
  Short-term investments     205     225
  Accounts receivable, net     175,436     196,419
  Prepaid expenses and other current assets     64,862     61,864
    Total current assets     887,607     566,656
             
Property and equipment, net     93,526     89,871
Goodwill     516,687     451,821
Acquired intangible assets, net     140,156     97,258
Long-term deferred income tax assets     114,267     78,656
Other assets     64,069     48,676
    Total assets   $ 1,816,312   $ 1,332,938
             
LIABILITIES AND EQUITY            
             
Current liabilities:            
  Accounts payable   $ 24,921   $ 25,802
  Accrued liabilities     118,281     129,168
  Accrued restructuring costs     997     6,792
  Deferred revenue     231,634     210,234
  Current portion of long-term debt     2,463     2,397
    Total current liabilities     378,296     374,393
             
Accrued restructuring costs, less current portion     966     1,050
Long-term deferred revenue     21,904     14,876
Long-term deferred income tax liabilities     58,173     4,540
Long-term income tax liabilities     24,174     20,772
Other long-term liabilities     2,542     2,445
Long-term debt, less current portion     34,463     65,711
Convertible debt     516,998     -
    Total long-term liabilities     659,220     109,394
    Total liabilities     1,037,516     483,787
             
Total equity     778,796     849,151
    Total liabilities and equity   $ 1,816,312   $ 1,332,938
             
   
   
TIBCO Software Inc.  
Condensed Consolidated Statements of Operations  
(unaudited)  
(in thousands, except net income per share)  
                         
    Three Months Ended     Six Months Ended  
    June 3,
2012
    May 29,
2011
    June 3,
2012
    May 29, 2011  
Revenue:                                
  License   $ 92,581     $ 81,974     $ 174,896     $ 152,059  
  Service and maintenance     154,782       134,447       298,169       249,703  
    Total revenue     247,363       216,421       473,065       401,762  
                                 
Cost of revenue:                                
  License     9,401       9,710       18,441       18,637  
  Service and maintenance     59,486       52,017       116,536       96,037  
    Total cost of revenue     68,887       61,727       134,977       114,674  
Gross profit     178,476       154,694       338,088       287,088  
                                 
Operating expenses:                                
  Research and development     38,605       36,175       75,926       68,861  
  Sales and marketing     78,923       68,909       154,641       131,432  
  General and administrative     17,407       15,573       35,002       28,490  
  Amortization of acquired intangible assets     5,653       5,030       10,201       9,921  
  Acquisition related and other     929       278       1,325       823  
  Restructuring adjustment     (400 )     -       (519 )     (33 )
    Total operating expenses     141,117       125,965       276,576       239,494  
                                 
Income from operations     37,359       28,729       61,512       47,594  
                                 
  Interest income     221       448       476       930  
  Interest expense     (4,395 )     (951 )     (5,860 )     (1,997 )
  Other income (expense), net     572       (1,136 )     1,548       (1,426 )
Income before provision for income taxes and noncontrolling interest      33,757        27,090        57,676        45,101  
                                 
Provision for income taxes     7,200       6,000       10,500       7,996  
                                 
Net income     26,557       21,090       47,176       37,105  
                                 
Less: Net income attributable to noncontrolling interest     65       44       43       106  
                                 
Net income attributable to TIBCO Software Inc.   $ 26,492     $ 21,046     $ 47,133     $ 36,999  
                                 
Net income per share attributable to TIBCO Software Inc.:                                
  Basic   $ 0.17     $ 0.13     $ 0.29     $ 0.23  
  Diluted   $ 0.16     $ 0.12     $ 0.28     $ 0.21  
                                 
Shares used to compute net income per share attributable to TIBCO Software Inc.:                                
  Basic     160,437       161,911       160,949       161,207  
  Diluted     169,477       174,666       170,172       174,076  
                                 
   
   
TIBCO Software Inc.  
Condensed Consolidated Statements of Cash Flows  
(unaudited)  
(in thousands)  
             
    Six Months Ended  
    June 3,
2012
    May 29,
2011
 
                 
Cash flows from operating activities:                
  Net income   $ 47,176     $ 37,105  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation of property and equipment     7,050       6,310  
    Amortization of acquired intangible assets     17,365       19,664  
    Amortization of debt discount and transaction costs     2,210       386  
    Stock-based compensation     29,718       23,268  
    Deferred income tax     (9,281 )     (9,342 )
    Tax benefits related to stock benefit plans     9,406       10,739  
    Excess tax benefits from stock-based compensation     (16,484 )     (26,737 )
    Other non-cash adjustments, net     531       (146 )
  Changes in assets and liabilities:                
    Accounts receivable     16,751       17,516  
    Prepaid expenses and other assets     4,290       3,237  
    Accounts payable     (981 )     (1,222 )
    Accrued liabilities and restructuring costs     (20,373 )     (21,504 )
    Deferred revenue     29,563       24,064  
      Net cash provided by operating activities     116,941       83,338  
                 
Cash flows from investing activities:                
  Acquisitions, net of cash acquired     (131,611 )     (22,579 )
  Purchases of property and equipment     (11,224 )     (3,837 )
  Restricted cash pledged as security     (1,149 )     (1,852 )
  Other investing activities, net     414       1,348  
      Net cash used in investing activities     (143,570 )     (26,920 )
                 
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     (151,182 )     (1,119 )
  Proceeds from issuance of common stock     17,298       33,324  
  Repurchases of the Company's common stock     (188,508 )     (72,329 )
  Withholding taxes related to restricted stock net share settlement     (15,116 )     (15,024 )
  Excess tax benefits from stock-based compensation     16,484       26,737  
      Net cash provided by (used in) financing activities     380,074       (28,411 )
                 
Effect of foreign exchange rate changes on cash and cash equivalents     (14,489 )     6,491  
                 
Net change in cash and cash equivalents     338,956       34,498  
                 
Cash and cash equivalents at beginning of period     308,148       243,989  
                 
Cash and cash equivalents at end of period   $ 647,104     $ 278,487  

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 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.

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 operating income, 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     Six Months Ended  
    June 3,
2012
    May 29,
2011
    June 3,
2012
    May 29,
2011
 
 
 
 
 
 
 
 
 
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   $ 37,359     $ 26,492     $ 28,729   $ 21,046     $ 61,512     $ 47,132     $ 47,594     $ 36,999  
                                                               
  Amortization of intangible assets - cost of revenue     3,899       3,899       4,948     4,948       7,164       7,164       9,743       9,743  
  Amortization of intangible assets - operating expense     5,653       5,653       5,030     5,030       10,201       10,201       9,921       9,921  
  Stock-based compensation - cost of revenue     1,116       1,116       957     957       2,398       2,398       1,831       1,831  
  Stock-based compensation - R&D expense     3,354       3,354       3,003     3,003       7,359       7,359       5,652       5,652  
  Stock-based compensation - S&M expense     4,694       4,694       4,077     4,077       9,987       9,987       8,290       8,290  
  Stock-based compensation - G&A expense     5,231       5,231       3,750     3,750       9,976       9,976       7,495       7,495  
  Acquisition related and other     929       929       278     278       1,325       1,325       823       823  
  Non-cash interest expense related to convertible debt     -       1,564       -     -       -       1,564       -       -  
  Restructuring adjustment     (400 )     (400 )     -     -       (519 )     (519 )     (33 )     (33 )
  Income tax adjustment for non-GAAP     -       (8,945 )     -     (6,775 )     -       (18,425 )     -       (17,083 )
                                                               
Non-GAAP   $ 61,835     $ 43,587     $ 50,772   $ 36,314     $ 109,403     $ 78,162     $ 91,316     $ 63,638  
                                                               
Diluted net income per share attributable to TIBCO Software Inc.:                                                              
                                                               
    GAAP           $ 0.16           $ 0.12             $ 0.28             $ 0.21  
                                                               
    Non-GAAP           $ 0.26           $ 0.21             $ 0.46             $ 0.37  
Shares used to compute diluted net income per share attributable to TIBCO Software Inc.:             169,477             174,666               170,172               174,076  

Contact Information

  • Media Relations Contact:
    Tiffany Anderson
    TIBCO Software Inc.
    (650) 846-8737
    Email Contact

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