SOURCE: TIBCO Software Inc.

TIBCO Software Inc.

September 19, 2013 16:05 ET

TIBCO Software Reports Third Quarter Results

Record Q3 Total Revenue of $271 Million; Non-GAAP EPS of $0.28

PALO ALTO, CA--(Marketwired - Sep 19, 2013) - TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fiscal third quarter, which ended on September 1, 2013.

Total revenue for the third quarter of fiscal 2013 was $270.9 million and net income was $21.3 million, or $0.13 per diluted share. This compares to total revenue of $255.0 million and net income of $26.1 million, or $0.15 per diluted share, as reported for the third quarter of fiscal 2012.

On a non-GAAP basis, net income for the third quarter of fiscal 2013 was $46.3 million or $0.28 per diluted share, compared with $45.9 million or $0.27 per diluted share for the third quarter of fiscal 2012. Non-GAAP operating income for the third quarter of fiscal 2013 was $64.2 million, resulting in a non-GAAP operating margin of 23.7%. This compares to non-GAAP operating income of $68.8 million, or a 27.0% non-GAAP operating margin in the third 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 27% for the third quarters of fiscal 2013 and 2012, respectively.

"We saw further signs of operational improvement this quarter, as our focus on execution generated renewed growth in our infrastructure business," said Vivek Ranadivé, TIBCO's chairman and chief executive officer. "Across an expanding set of industries, the world's leading companies are calling on TIBCO for innovative solutions to big data challenges and their own version of the Two-Second Advantage. Given the opportunity before us, we will continue to invest for growth and innovation, particularly in the areas of integration, analytics and cloud."

Third Quarter Fiscal 2013 Highlights

  • Total revenue of $270.9 million;
  • License revenue of $105.2 million;
  • Non-GAAP operating margin of 23.7%;
  • Non-GAAP EPS of $0.28;
  • Cash flow from operations of $58.3 million;
  • Broad mix of business across major industries including Financial Services, Retail, Life Sciences, Telecommunications, Manufacturing, Energy, Transportation & Logistics, Insurance, Government;
  • TIBCO closed 140 deals over $100k and had 18 deals over $1 million.

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 706-679-0841. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight ET on October 19, 2013 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 47967789.

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 third 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, TIBCO's ability to deliver growth, and TIBCO's ability to capitalize on the opportunities in the marketplace, 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 achieve improved performance and accelerate growth from its investments for growth and innovation, 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 June 2, 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)
 
     
    September 1,
2013
  November 30,
2012
             
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 666,211   $ 727,309
  Short-term investments     57,686     34,411
  Accounts receivable, net     183,131     234,100
  Prepaid expenses and other current assets     66,750     61,174
    Total current assets     973,778     1,056,994
             
Property and equipment, net     95,792     98,474
Goodwill     557,809     532,290
Acquired intangible assets, net     120,499     123,261
Long-term deferred income tax assets     90,222     64,549
Other assets     75,712     71,340
    Total assets   $ 1,913,812   $ 1,946,908
             
LIABILITIES AND EQUITY            
             
Current liabilities:            
  Accounts payable   $ 28,827   $ 22,809
  Accrued liabilities     110,067     133,596
  Accrued restructuring costs     5,314     893
  Deferred revenue     253,357     263,476
  Current portion of long-term debt     -     35,711
    Total current liabilities     397,565     456,485
             
Accrued restructuring costs, less current portion     203     643
Long-term deferred revenue     26,323     25,543
Long-term deferred income tax liabilities     2,213     3,208
Long-term income tax liabilities     52,005     26,263
Other long-term liabilities     4,509     4,015
Convertible debt     536,062     524,466
    Total long-term liabilities     621,315     584,138
    Total liabilities     1,018,880     1,040,623
             
Total equity     894,932     906,285
    Total liabilities and equity   $ 1,913,812   $ 1,946,908
             
             
             
TIBCO Software Inc.  
Condensed Consolidated Statements of Operations  
(unaudited)  
(in thousands, except net income per share)  
   
                       
  Three Months Ended     Nine Months Ended  
  September 1, 2013     September 2, 2012     September 1, 2013     September 2, 2012  
Revenue:                              
  License $ 105,209     $ 99,103     $ 265,738     $ 273,999  
  Service and maintenance   165,650       155,918       488,757       454,087  
    Total revenue   270,859       255,021       754,495       728,086  
                               
Cost of revenue:                              
  License   12,407       11,368       34,776       29,809  
  Service and maintenance   65,566       60,881       190,805       177,417  
    Total cost of revenue   77,973       72,249       225,581       207,226  
Gross profit   192,886       182,772       528,914       520,860  
                               
Operating expenses:                              
  Research and development   43,391       39,354       127,591       115,280  
  Sales and marketing   84,082       76,803       249,395       231,444  
  General and administrative   13,697       17,906       50,546       52,908  
  Amortization of acquired intangible assets   4,991       4,640       14,025       14,841  
  Acquisition related and other   630       845       1,525       2,170  
  Restructuring adjustment   8,886       72       8,871       (447 )
    Total operating expenses   155,677       139,620       451,953       416,196  
                               
Income from operations   37,209       43,152       76,961       104,664  
                               
  Interest income   249       366       672       842  
  Interest expense   (8,411 )     (8,713 )     (25,856 )     (14,573 )
  Other income (expense), net   153       (1,306 )     (1,258 )     242  
Income before provision for income taxes and noncontrolling interest    29,200       33,499       50,519       91,175  
                               
Provision for income taxes   7,900       7,400       10,900       17,900  
                               
Net income   21,300       26,099       39,619       73,275  
                               
Less: Net income attributable to noncontrolling interest   49       13       148       56  
Net income attributable to TIBCO Software Inc. $ 21,251     $ 26,086     $ 39,471     $ 73,219  
                               
Net income per share attributable to TIBCO Software Inc.:                              
  Basic $ 0.13     $ 0.16     $ 0.25     $ 0.46  
  Diluted $ 0.13     $ 0.15     $ 0.24     $ 0.43  
Shares used to compute net income per share attributable to TIBCO Software Inc.:                              
  Basic   160,638       159,308       161,012       160,402  
  Diluted   166,999       169,165       167,879       169,836  
                               
                               
       
TIBCO Software Inc.  
Condensed Consolidated Statements of Cash Flows  
(unaudited)  
(in thousands)  
   
             
    Nine Months Ended  
    September 1,
2013
    September 2,
2012
 
                 
Cash flows from operating activities:                
  Net income   $ 39,619     $ 73,275  
    Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation of property and equipment     11,616       10,992  
    Amortization of acquired intangible assets     26,965       26,719  
    Amortization of debt discount and transaction costs     14,258       6,820  
    Stock-based compensation     39,245       45,130  
    Deferred income tax     (13,292 )     (20,183 )
    Tax benefits related to stock benefit plans     9,691       14,455  
    Excess tax benefits from stock-based compensation     (13,442 )     (20,612 )
    Other non-cash adjustments, net     1,179       905  
  Changes in assets and liabilities:                
    Accounts receivable     49,181       (12,079 )
    Prepaid expenses and other assets     (19,568 )     (8,975 )
    Accounts payable     7,207       159  
    Accrued liabilities and restructuring costs     4,864       (5,576 )
    Deferred revenue     (11,119 )     54,285  
      Net cash provided by operating activities     146,404       165,315  
                 
Cash flows from investing activities:                
  Purchases of short-term investments     (38,261 )     -  
  Maturities and sales of short-term investments     15,346       -  
  Acquisitions, net of cash acquired     (53,917 )     (132,209 )
  Purchases of property and equipment     (10,695 )     (16,366 )
  Restricted cash pledged as security     (835 )     (1,169 )
  Other investing activities, net     (212 )     376  
      Net cash used in investing activities     (88,574 )     (149,368 )
                 
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 )     (151,785 )
  Proceeds from issuance of common stock     23,089       25,390  
  Repurchases of the Company's common stock     (105,289 )     (220,265 )
  Withholding taxes related to restricted stock net share settlement     (12,467 )     (17,383 )
  Excess tax benefits from stock-based compensation     13,442       20,612  
      Net cash provided by (used in) financing activities     (116,936 )     357,667  
                 
Effect of foreign exchange rate changes on cash and cash equivalents     (1,992 )     (6,488 )
                 
Net change in cash and cash equivalents     (61,098 )     367,126  
                 
Cash and cash equivalents at beginning of period     727,309       308,148  
                 
Cash and cash equivalents at end of period   $ 666,211     $ 675,274  
                 

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     Nine Months Ended  
    September 1,
2013
    September 2,
2012
    September 1,
2013
    September 2,
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   $ 37,209     $ 21,251     $ 43,152   $ 26,086     $ 76,961   $ 39,471     $ 104,664     $ 73,219  
                                                             
  Amortization of intangible assets - cost of revenue     4,597       4,597       4,714     4,714       12,940     12,940       11,878       11,878  
  Amortization of intangible assets - operating expense     4,991       4,991       4,640     4,640       14,025     14,025       14,841       14,841  
  Stock-based compensation - cost of revenue     1,914       1,914       1,313     1,313       5,386     5,386       3,711       3,711  
  Stock-based compensation - R&D expense     3,641       3,641       3,885     3,885       11,759     11,759       11,244       11,244  
  Stock-based compensation - S&M expense     3,121       3,121       5,380     5,380       12,782     12,782       15,367       15,367  
  Stock-based compensation - G&A expense     (766 )     (766 )     4,832     4,832       9,318     9,318       14,808       14,808  
  Acquisition related and other     630       630       845     845       1,525     1,525       2,170       2,170  
  Non-cash interest expense related to convertible debt     -       3,924       -     3,717       -     11,597       -       5,281  
  Restructuring adjustment     8,886       8,886       72     72       8,871     8,871       (447 )     (447 )
  Income tax adjustment for non-GAAP     -       (5,932 )     -     (9,582 )     -     (20,676 )     -       (28,008 )
                                                             
Non-GAAP   $ 64,223     $ 46,257     $ 68,833   $ 45,902     $ 153,567   $ 106,998     $ 178,236     $ 124,064  
                                                             
Diluted net income per share attributable to TIBCO Software Inc.:                                                            
                                                             
  GAAP           $ 0.13           $ 0.15           $ 0.24             $ 0.43  
                                                             
  Non-GAAP           $ 0.28           $ 0.27           $ 0.64             $ 0.73  
Shares used to compute diluted net income per share attributable to TIBCO Software Inc.:             166,999             169,165             167,879               169,836  
                                                             

Contact Information

  • Media Contact:
    Leslie Moore
    TIBCO Software Inc.
    (650) 846-5025
    Email Contact

    Investor Contact:
    Giuseppe Incitti
    TIBCO Software Inc.
    (650) 846-5637
    Email Contact