SOURCE: TIBCO Software Inc.

TIBCO Software Inc.

September 18, 2014 16:05 ET

TIBCO Software Reports Third Quarter Results

PALO ALTO, CA--(Marketwired - Sep 18, 2014) -  TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fiscal third quarter, which ended on August 31, 2014.

On a GAAP basis, total revenue for the third quarter of fiscal 2014 was $255.6 million, compared with $270.9 million for the third quarter of fiscal year 2013, and software revenue was $85.9 million, compared with $108.0 million. Within software revenue, license revenue was $76.7 million, compared with $105.1 million, while subscription revenue was $9.2 million, compared with $2.9 million. Net income was $2.6 million, or $0.02 per diluted share, compared to $21.3 million, or $0.13 per diluted share, in the third quarter of fiscal 2013. 

On a non-GAAP basis, total revenue for the third quarter of fiscal 2014 was $259.6 million, compared with $270.9 million for the third quarter of fiscal year 2013, and software revenue was $89.9 million, compared with $108.0 million. Non-GAAP subscription revenue within software revenue more than quadrupled to $13.2 million from last year and includes $4.0 million for the acquisition-related accounting effects on deferred revenue. Non-GAAP operating income for the third quarter of fiscal 2014 was $40.7 million, resulting in a non-GAAP operating margin of 15.7% compared to $64.2 million, or a margin of 23.7% in the third quarter of fiscal 2013. Non-GAAP net income was $23.3 million or $0.14 per diluted share, compared with $46.3 million or $0.28 per diluted share for the third quarter of fiscal 2013, which assumes non-GAAP effective tax rates of 36% and 23% for the third quarters of fiscal 2014 and 2013, respectively. Non-GAAP results exclude acquisition-related accounting effects on deferred revenue, amortization of acquired intangible assets, stock-based compensation expense, acquisition and other related expenses, restructuring activities, and non-cash interest expense related to convertible debt, net of tax effects.

"This quarter, we accelerated a number of strategic and operational changes that resulted in strong growth of subscription sales and a solid sequential improvement in our Spotfire business," said Vivek Ranadivé, TIBCO's chairman and chief executive officer. "The migration of perpetual to subscription-based licensing, together with less-than-expected revenue in Europe, had an impact on our overall software revenue results this quarter. We continue to believe, however, that reaching a broader base of customers through subscription pricing and building a solid base of recurring revenue is the right long-term strategy for TIBCO."

Third Quarter Fiscal 2014 Highlights

  • Total non-GAAP revenue of $259.6 million; comprised of software revenue of $89.9 million, and services and maintenance revenue of $169.7 million;
  • Non-GAAP operating margin of 15.7%;
  • Non-GAAP EPS of $0.14
  • Non-GAAP subscription revenue of $13.2 million was up 76% sequentially from the second quarter of fiscal year 2014, driven by the addition of Jaspersoft® and the growth of other hosted offerings;
  • Signed over 100 customers to new Analytics subscription contracts;
  • Non-GAAP subscription revenue represented 15% of software revenue; non-GAAP recurring revenue, including subscription and maintenance revenue, represented 47% of total revenue;
  • Closed 110 deals over $100k and had 14 deals over $1 million in license revenue;
  • Launched TIBCO Engage™, a new technology platform that leverages both TIBCO's Fast Data platform and integration technology to harness the opportunities within customer experience management;
  • TIBCO Spotfire®, TIBCO StreamBase® and TIBCO ActiveMatrix BusinessWorks™ all named leaders in Forrester and Gartner Inc. product reviews;
  • Broad mix of business across major industries including financial services, telecommunications, energy, transportation & logistics, manufacturing, government, retail, and insurance.

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 18, 2014 at www.tibco.com or via dial-in at 855-859-3406 or 404-537-3406. The passcode for both the call and the replay is 96108737.

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, TIBCO Software, ActiveMatrix BusinessWorks, Jaspersoft, Spotfire, StreamBase, TIBCO Engage and Two-Second Advantage are trademarks or registered trademarks of TIBCO Software Inc. or its subsidiaries in the United States and/or other countries. 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.

Use of 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 the third quarter of fiscal year 2014 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 whether the migration to subscription-based licensing will help us reach a broader base of customers and build a solid base of recurring revenue and whether we will be able to harness the opportunities within customer experience management through TIBCO Engage 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 compelling, differentiated products, 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, 2013 and Quarterly Report on Form 10-Q for the quarter ended June 1, 2014. 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 31,
2014
  November 30,
2013
             
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 354,366   $ 662,109
  Short-term investments     178,088     83,842
  Accounts receivable, net     194,896     231,194
  Prepaid expenses and other current assets     97,550     74,725
    Total current assets     824,900     1,051,870
             
Property and equipment, net     109,683     101,050
Goodwill     704,526     582,091
Acquired intangible assets, net     148,897     119,418
Long-term deferred income tax assets     78,909     78,853
Other assets     90,328     72,831
    Total assets   $ 1,957,243   $ 2,006,113
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 25,314   $ 37,701
  Accrued liabilities     103,898     125,112
  Accrued restructuring costs     970     5,819
  Deferred revenue     262,978     258,315
    Total current liabilities     393,160     426,947
             
Long-term deferred revenue     24,774     24,036
Long-term income tax liabilities     64,225     57,067
Other long-term liabilities     7,596     4,788
Convertible debt     552,266     540,022
    Total long-term liabilities     648,861     625,913
    Total liabilities     1,042,021     1,052,860
             
Total stockholder's equity     915,222     953,253
    Total liabilities and stockholders' equity   $ 1,957,243   $ 2,006,113
             
             
             
TIBCO Software Inc.  
Condensed Consolidated Statements of Operations  
(unaudited)  
(in thousands, except net income per share)  
                         
    Three Months Ended     Nine Months Ended  
    August 31,
2014
    September 1,
2013
    August 31,
2014
    September 1,
2013
 
Revenue:                                
  Software   $ 85,938     $ 107,981     $ 254,766     $ 275,235  
  Service and maintenance     169,664       162,878       506,013       479,260  
    Total revenue     255,602       270,859       760,779       754,495  
                                 
Cost of revenue:                                
  Software     15,774       14,599       44,228       40,108  
  Service and maintenance     65,160       63,374       193,695       185,473  
    Total cost of revenue     80,934       77,973       237,923       225,581  
Gross profit     174,668       192,886       522,856       528,914  
                                 
Operating expenses:                                
  Research and development     41,866       43,391       128,179       127,591  
  Sales and marketing     93,222       84,082       269,343       249,395  
  General and administrative     17,286       13,697       52,542       50,546  
  Amortization of acquired intangible assets     4,494       4,991       14,350       14,025  
  Acquisition related and other     272       630       1,180       1,525  
  Restructuring charges (credits)     (108 )     8,886       954       8,871  
    Total operating expenses     157,032       155,677       466,548       451,953  
                                 
Income from operations     17,636       37,209       56,308       76,961  
                                 
  Interest income     237       249       759       672  
  Interest expense     (8,632 )     (8,411 )     (25,718 )     (25,856 )
  Other income (expense), net     128       153       (879 )     (1,258 )
Income before provision for income taxes                                
  9,369       29,200       30,470       50,519  
                                 
Provision for income taxes     6,700       7,900       14,100       10,900  
                                 
Net income     2,669       21,300       16,370       39,619  
                                 
Less: Net income attributable to noncontrolling interest     37       49       37       148  
                                 
Net income attributable to TIBCO Software Inc.   $ 2,632     $ 21,251     $ 16,333     $ 39,471  
                                 
Net income per share attributable to TIBCO Software Inc.:                                
  Basic   $ 0.02     $ 0.13     $ 0.10     $ 0.25  
  Diluted   $ 0.02     $ 0.13     $ 0.10     $ 0.24  
                                 
Shares used to compute net income per share attributable to TIBCO Software Inc.:                                
  Basic     163,429       160,638       162,904       161,012  
  Diluted     166,267       166,999       166,831       167,879  
                                 
                                 
   
TIBCO Software Inc.  
Condensed Consolidated Statements of Cash Flows  
(unaudited)  
(in thousands)  
             
    Nine Months Ended  
    August 31,
2014
    September 1,
2013
 
                 
Cash flows from operating activities:                
  Net income   $ 16,370     $ 39,619  
  Adjustments to reconcile net income to net cash provided by                
  operating activities:                
    Depreciation of property and equipment     14,424       11,616  
    Amortization of acquired intangible assets     30,506       26,965  
    Amortization of debt discount and transaction costs     14,869       14,258  
    Stock-based compensation     31,902       39,245  
    Deferred income taxes     (3,931 )     (13,292 )
    Tax benefits related to stock benefit plans     4,404       9,691  
    Excess tax benefits from stock-based compensation     (11,300 )     (13,442 )
    Other non-cash adjustments, net     645       1,179  
    Changes in assets and liabilities:                
      Accounts receivable     37,766       49,181  
      Prepaid expenses and other assets     (8,946 )     (19,568 )
      Accounts payable and accrued liabilities     (57,341 )     12,071  
      Deferred revenue     (7,664 )     (11,119 )
        Net cash provided by operating activities     61,704       146,404  
                 
Cash flows from investing activities:                
  Purchases of short-term investments     (207,302 )     (38,261 )
  Maturities and sales of short-term investments     110,263       15,346  
  Acquisitions, net of cash acquired     (181,415 )     (53,917 )
  Purchases of property and equipment     (23,472 )     (10,695 )
  Other investing activities, net     1,378       (1,047 )
        Net cash used in investing activities     (300,548 )     (88,574 )
                 
Cash flows from financing activities:                
  Principal payments on debt     -       (35,711 )
  Proceeds from issuance of common stock     30,814       23,089  
  Repurchases of common stock     (95,588 )     (105,289 )
  Withholding taxes related to restricted stock net share settlement     (10,613 )     (12,467 )
  Excess tax benefits from stock-based compensation     11,300       13,442  
        Net cash used in financing activities     (64,087 )     (116,936 )
Effect of foreign exchange rate changes on cash and cash equivalents     (4,812 )     (1,992 )
                 
Net change in cash and cash equivalents     (307,743 )     (61,098 )
                 
Cash and cash equivalents at beginning of period     662,109       727,309  
                 
Cash and cash equivalents at end of period   $ 354,366     $ 666,211  
                 

About Non-GAAP Financial Information

TIBCO provides non-GAAP measures for revenue, operating income, net income and net income per share data as supplemental information regarding TIBCO's business performance. 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 used by TIBCO's management. 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 from revenue the acquisition-related accounting adjustment to deferred revenue assumed in business combinations and 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, as well as the income tax effects of the foregoing.

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 or analysts. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure.

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

Acquisition-related Revenue Adjustment
Business combination accounting rules require TIBCO to reduce the deferred revenue assumed in a business combination to the fair value of the future obligations from subscription and maintenance contracts assumed. As such, GAAP revenue subsequent to an acquisition of a business does not reflect the full amount of revenue of these assumed subscription and maintenance contracts that would have otherwise been recorded had the acquisition not occurred. This non-GAAP adjustment is intended to include, and thus reflect, the full amount of such revenue. Management includes this item for the purposes of calculating non-GAAP revenue, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO's management believes this adjustment to revenue is useful to investors as a measure of ongoing performance of its business because, although it does not control if customers renew their subscription or maintenance contracts, TIBCO has historically experienced high renewal rates on subscription and maintenance contracts.

Amortization of Intangible Assets
TIBCO incurs amortization expense from intangible assets related to prior acquisitions. Management excludes these items for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. 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 can be inconsistent in amount from period to period. The stock-based compensation expense can be significantly impacted by the type of compensation instrument, the vesting conditions and judgment used to assess if these conditions will be met in the future. 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 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.

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 excludes this expense from its non-GAAP measures 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.

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.

                               
TIBCO Software Inc.  
Reconciliation of GAAP to Non-GAAP Measures  
(unaudited)  
(in thousands, except net income per share)  
                               
  Three Months Ended  
  August 31, 2014     September 1, 2013  
            Net income               Net income  
      Operating     attributable         Operating     attributable  
  Revenue   Income     to TIBCO     Revenue   Income     to TIBCO  
            Software Inc.               Software Inc.  
                                           
GAAP $ 255,602   $ 17,636     $ 2,632     $ 270,859   $ 37,209     $ 21,251  
                                           
  Acquisition-related revenue adjustment   3,969     3,969       3,969       -     -       -  
  Amortization of intangible assets - cost of revenue         5,815       5,815             4,597       4,597  
  Amortization of intangible assets - operating expense         4,494       4,494             4,991       4,991  
  Stock-based compensation - cost of revenue         1,476       1,476             1,914       1,914  
  Stock-based compensation - R&D expense         3,198       3,198             3,641       3,641  
  Stock-based compensation - S&M expense         1,910       1,910             3,121       3,121  
  Stock-based compensation - G&A expense         1,995       1,995             (766 )     (766 )
  Acquisition related and other         272       272             630       630  
  Non-cash interest expense related to convertible debt         -       4,143             -       3,924  
  Restructuring adjustment         (108 )     (108 )           8,886       8,886  
  Income tax adjustment for non-GAAP         -       (6,452 )           -       (5,932 )
                                           
Non-GAAP $ 259,571   $ 40,657     $ 23,344     $ 270,859   $ 64,223     $ 46,257  
                                           
Diluted net income per share attributable to TIBCO Software Inc.:                                          
    GAAP               $ 0.02                   $ 0.13  
    Non-GAAP               $ 0.14                   $ 0.28  
Shares used to compute diluted net income per share attributable to TIBCO Software Inc.                 166,267                     166,999  
                                           
                                           
  Nine Months Ended  
  August 31, 2014     September 1, 2013  
          Net income              Net income   
    Operating  attributable    Operating  attributable 
  Revenue  Income     to TIBCO Revenue  Income   to TIBCO
      Software Inc.      Software Inc. 
                                       
GAAP $ 760,779   $ 56,308   $ 16,333     $ 754,495   $ 76,961   $ 39,471  
                                       
  Acquisition-related revenue adjustment   5,670     5,670     5,670       -     -     -  
  Amortization of intangible assets - cost of revenue         16,156     16,156             12,940     12,940  
  Amortization of intangible assets - operating expense         14,350     14,350             14,025     14,025  
  Stock-based compensation - cost of revenue         5,045     5,045             5,386     5,386  
  Stock-based compensation - R&D expense         10,464     10,464             11,759     11,759  
  Stock-based compensation - S&M expense         9,144     9,144             12,782     12,782  
  Stock-based compensation - G&A expense         7,249     7,249             9,318     9,318  
  Acquisition related and other         1,180     1,180             1,525     1,525  
  Non-cash interest expense related to convertible debt         -     12,244             -     11,597  
  Restructuring adjustment         954     954             8,871     8,871  
  Income tax adjustment for non-GAAP         -     (20,937 )           -     (20,676 )
                                       
Non-GAAP $ 766,449   $ 126,520   $ 77,852     $ 754,495   $ 153,567   $ 106,998  
                                       
Diluted net income per share attributable to TIBCO Software Inc.:                                      
    GAAP             $ 0.10                 $ 0.24  
    Non-GAAP             $ 0.47                 $ 0.64  
Shares used to compute diluted net income per share attributable to TIBCO Software Inc.               166,831                   167,879  
                                       
                                       

Contact Information

  • Media Contact:
    Lindsay Andrews
    Sard Verbinnen & Co.
    (415) 618-8750
    Email Contact

    Investor Contact:
    John Ederer
    TIBCO Software Inc.
    (650) 846-8696
    Email Contact