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Advent Software Reports Second Quarter 2014 Results(Marketwire Via Acquire Media NewsEdge) SAN FRANCISCO, CA -- (Marketwired) -- 07/28/14 -- Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services to the global investment management industry, announced today its financial results for the second quarter ended June 30, 2014. "We are pleased to report that Advent had an excellent second quarter with record revenues, robust profitability, and growing operating cash flow," said Pete Hess, Chief Executive Officer of Advent. "Increasing demand for Advent's solutions, including Advent Direct® Investor Management, and continued client loyalty are evidence of our strong competitive position." SECOND QUARTER 2014 RESULTS GAAP Results for Continuing OperationsThe Company reported quarterly revenue of $100.4 million for the second quarter of 2014, compared to $96.1 million in the second quarter of 2013, a 4% increase. Operating income for the second quarter of 2014 was $21.8 million, or 21.7% of revenue, compared to a loss of $5.8 million for the second quarter of 2013. Advent's results for the second quarter of 2013 included costs associated with its recapitalization transaction. These costs, on a pre-tax basis, were composed of $6.7 million of third party costs which were not included in capitalized debt issue costs and $21.9 million of stock-based compensation expense associated with the modification of equity awards. Net income for the second quarter of 2014 was $12.7 million, compared to a loss of $4.2 million in the second quarter of 2013. On a fully diluted basis, earnings per share in the second quarter of 2014 were $0.24 compared to a loss of $0.08 in the second quarter of 2013. Operating cash flow in the second quarter of 2014 was $22.4 million, compared with $21.9 million in the second quarter of 2013. Cash and cash equivalents totaled $41 million as of June 30, 2014, compared to $45 million as of March 31, 2014. Total outstanding debt as of June 30, 2014 was $280 million compared to $295 million as of March 31, 2014. Deferred revenue as of June 30, 2014 was $183.1 million, compared to $187.8 million as of March 31, 2014. The Company repurchased approximately 426,000 shares of its common stock in the second quarter of 2014 for a total cash outlay of $12.4 million and at an average price of $29.11 per share. Non-GAAP Results for Continuing OperationsNon-GAAP operating income for the second quarter of 2014 was $33.2 million, or 33.1% of revenue, a 7% increase compared to $31.0 million, or 32.3% of revenue, in the second quarter of 2013. On a fully diluted basis, non-GAAP earnings per share were $0.38 in the second quarter of 2014 and represent a 4% increase from non-GAAP diluted net income per share of $0.37 in the second quarter of 2013. The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release. HIGHLIGHTS Advent's Black Diamond Platform Surpasses 500-Client Milestone. Advent's Black Diamond platform has surpassed 540 clients and has exceeded $245 billion in assets on its portfolio management, reporting, and rebalancing platform. The client base has increased by more than 125 percent and assets by more than 240 percent since its acquisition by Advent in June 2011. Award-Winning Solutions & Company: Advent's solutions continued to receive industry awards and win honors around the world during the second quarter. Advent was awarded "Best Fund Accounting and Reporting Systems Firm" by Hedgeweek, as well as "Best Client Reporting Solution" by FTF News. In Europe, Advent was named "Best Portfolio Management Solution" at Wealth Briefing European Awards 2014 and "Best Technology - Fund Accounting" at the HFM Week European Hedge Fund Service Awards. Continued Client Success: Advent had a strong second quarter, with a number of existing clients expanding their relationship with Advent, and many new noteworthy clients around the world, including Beta Capital Management, Carroll Financial Associates, Fiera Capital Corporation, Finix Services, Merced Capital L.P., Busey Wealth Management, Mesirow Financial Administrative Corp., William E. Hamm and Associates, Neon Capital Management, and the Georgia Division of Investment Services. Quarterly Dividend: Advent's Board of Directors declared its first quarterly cash dividend to its shareholders during the second quarter of 2014. The quarterly cash dividend payment of $0.13 per common share was paid on July 15, 2014 to shareholders of record on June 30, 2014. FINANCIAL GUIDANCEAdvent updates the following financial guidance for the third quarter and fiscal year 2014: ---------------------------------------------------------------------------- Guidance Q3 2014 FY 2014 ---------------------------------------------------------------------------- Total Revenue ($M) $99 - $102 $395 - $403 ---------------------------------------------------------------------------- GAAP Operating Margin n/a 20.0% - 20.5% ---------------------------------------------------------------------------- Stock Compensation Expense (% of revenue) n/a 8.5% ---------------------------------------------------------------------------- Amortization of Intangibles (% of revenue) n/a 2.0% ---------------------------------------------------------------------------- Restructuring (% of revenue) n/a 0.5% ---------------------------------------------------------------------------- Non-GAAP Operating Margin n/a 31.0% - 31.5% ---------------------------------------------------------------------------- Operating Cash Flow ($M) n/a $105 - $115 ---------------------------------------------------------------------------- Capital Expenditures ($M) n/a $8 - $11 ---------------------------------------------------------------------------- Effective Tax Rate (GAAP) n/a 35% - 40% ---------------------------------------------------------------------------- Effective Tax Rate (non-GAAP) n/a 35% ---------------------------------------------------------------------------- INVESTOR CALL Advent Software, Inc. will host its Q2 2014 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q2 2014 earnings presentation and trended disclosures file, which include highlights and detailed financial information, are currently available at http://investor.advent.com. To participate via phone, please dial 877-474-9504 and request conference ID # 25698158. Telephone replay will be available through midnight August 4, 2014. The replay number for domestic callers is 888-286-8010, and for international callers is 617-801-6888, with the conference ID of # 31161812. The conference call will also be webcast live and then archived on http://investor.advent.com. ABOUT ADVENT Over the last 30 years of industry change, our core mission to help our clients focus on their unique strategies and deliver exceptional investor service has never wavered. With unparalleled precision and ahead of the curve solutions, we've helped over 4,300 firms in more than 50 countries -- from established global institutions to small start-up practices -- to grow their business and thrive. Advent technology helps firms minimize risk, work together seamlessly, and discover new opportunities in a constantly evolving world. Together with our clients, we are shaping the future of investment management. For more information on Advent products visit http://www.advent.com. ABOUT NON-GAAP FINANCIAL INFORMATIONThis press release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), please see the accompanying tables entitled "Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures." FORWARD-LOOKING STATEMENTS The financial projections under Financial Guidance and any other forward-looking statements included in this presentation reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our products; the successful development, release and market acceptance of new products and product enhancements; uncertainties and fluctuations in the financial markets; the Company's ability to declare future dividends; the Company's ability to satisfy contractual performance requirements and other risks detailed from time to time in our SEC reports including, but not limited to, our quarterly reports on Form 10-Q and our 2013 Annual Report on Form 10-K. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Advent, the Advent logo, Advent Software, and Advent Direct are registered trademarks of Advent Software, Inc. Any other company names or marks mentioned herein are those of their respective owners. ADVENT SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (GAAP, Unaudited) June 30 December 31 2014 2013 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 41,332 $ 33,828 Accounts receivable, net 58,188 58,717 Deferred taxes, current 24,902 24,898 Prepaid expenses and other 26,507 30,114 Current assets of discontinued operation - 100 ----------- ----------- Total current assets 150,929 147,657 Property and equipment, net 31,585 31,698 Goodwill 208,471 207,818 Other intangibles, net 23,295 27,392 Deferred taxes, long-term 21,845 23,020 Other assets 14,763 17,372 Noncurrent assets of discontinued operation 1,337 1,337 ----------- ----------- Total assets $ 452,225 $ 456,294 =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 9,977 $ 5,348 Dividends payable 6,693 - Accrued liabilities 37,671 41,625 Deferred revenues 175,288 186,107 Current portion of long-term debt 20,000 20,000 Current liabilities of discontinued operation 618 600 ----------- ----------- Total current liabilities 250,247 253,680 Deferred revenues, long-term 7,854 7,809 Long-term income taxes payable 7,667 7,667 Long-term debt 260,000 285,000 Other long-term liabilities 9,938 11,171 Noncurrent liabilities of discontinued operation 2,478 2,782 ----------- ----------- Total liabilities 538,184 568,109 ----------- ----------- Stockholders' deficit: Common stock 514 513 Additional paid-in capital 55,828 42,533 Accumulated deficit (154,298) (165,870) Accumulated other comprehensive income 11,997 11,009 ----------- ----------- Total stockholders' deficit (85,959) (111,815) ----------- ----------- Total liabilities and stockholders' deficit $ 452,225 $ 456,294 =========== =========== ADVENT SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (GAAP, Unaudited) Three Months Ended Six Months Ended June 30 June 30 -------------------- -------------------- 2014 2013 2014 2013 --------- --------- --------- -------- Net revenues: Recurring revenues $ 92,534 $ 88,263 $ 181,664 $ 172,746 Non-recurring revenues 7,836 7,860 15,510 15,867 --------- --------- --------- --------- Total net revenues 100,370 96,123 197,174 188,613 Cost of revenues (1): Recurring revenues 20,589 17,979 39,216 34,391 Non-recurring revenues 7,514 10,019 15,569 19,587 Amortization of developed technology 1,688 2,398 3,488 4,897 --------- --------- --------- --------- Total cost of revenues 29,791 30,396 58,273 58,875 --------- --------- --------- --------- Gross margin 70,579 65,727 138,901 129,738 Operating expenses (1): Sales and marketing 18,299 23,217 38,029 40,421 Product development 17,204 17,923 34,843 34,885 General and administrative 10,713 22,641 21,270 33,001 Amortization of other intangibles 870 953 1,779 1,910 Recapitalization costs - 6,041 - 6,041 Restructuring charges 1,740 801 1,914 3,116 --------- --------- --------- --------- Total operating expenses 48,826 71,576 97,835 119,374 --------- --------- --------- --------- Income (loss) from continuing operations 21,753 (5,849) 41,066 10,364 Interest and other income (expense), net (1,948) (1,330) (4,173) (1,633) --------- --------- --------- --------- Income (loss) from continuing operations before income taxes 19,805 (7,179) 36,893 8,731 Provision (benefit) for income taxes 7,150 (3,024) 13,331 829 --------- --------- --------- --------- Net income (loss) from continuing operations $ 12,655 $ (4,155) $ 23,562 $ 7,902 Discontinued operation: Net (loss) income from discontinued operation (net of applicable taxes of $(10), $76, $(24) and $61, respectively) (16) 110 (37) 88 --------- --------- --------- --------- Net income (loss) $ 12,639 $ (4,045) $ 23,525 $ 7,990 ========= ========= ========= ========= Basic net income (loss) per share (2): Continuing operations $ 0.25 $ (0.08) $ 0.46 $ 0.15 Discontinued operation (0.00) 0.00 (0.00) 0.00 --------- --------- --------- --------- Total operations $ 0.25 $ (0.08) $ $ 0.46 $ 0.16 ========= ========= ========= ========= Diluted net income (loss) per share (2): Continuing operations $ 0.24 $ (0.08) $ 0.44 $ 0.15 Discontinued operation (0.00) 0.00 (0.00) 0.00 --------- --------- --------- --------- Total operations $ 0.24 $ (0.08) $ $ 0.44 $ 0.15 ========= ========= ========= ========= Weighted average shares used to compute net income (loss) per share: Basic 51,456 51,639 51,314 51,101 Diluted 53,540 51,639 53,486 52,243 Cash dividends declared per common share $ 0.13 - $ 0.13 - (1) Includes stock-based employee compensation expense as follows: Cost of recurring revenues $ 834 $ 1,306 $ 1,676 $ 1,794 Cost of non-recurring revenues 354 1,730 729 2,112 --------- --------- --------- --------- Total cost of revenues 1,188 3,036 2,405 3,906 Sales and marketing 2,661 6,523 5,296 8,046 Product development 1,923 3,532 3,848 4,858 General and administrative 1,912 14,098 3,763 15,396 --------- --------- --------- --------- Total operating expenses 6,496 24,153 12,907 28,300 --------- --------- --------- --------- Total stock-based employee compensation expense $ 7,684 $ 27,189 $ 15,312 $ 32,206 ========= ========= ========= ========= (2) Net income (loss) per share is based on actual calculated values and totals may not sum due to rounding. ADVENT SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30 ------------------------ 2014 2013 ----------- ----------- Cash flows from operating activities: Net income $ 23,525 $ 7,990 Adjustment to net income for discontinued operation net loss (income) 37 (88) ----------- ----------- Net income from continuing operations 23,562 7,902 Adjustments to reconcile net income to net cash providedby operating activities from continuing operations: Stock-based compensation 15,312 32,206 Excess tax benefit from stock-based compensation (6,841) (2,783) Depreciation and amortization 10,814 12,673 Amortization of debt issuance costs 713 239 (Reduction of) provision for doubtful accounts (6) 411 Reduction of sales reserves (555) (150) Deferred income taxes 7,763 1,791 Other 182 (148) ----------- ----------- Effect of statement of operations adjustments 27,382 44,239 Changes in operating assets and liabilities: Accounts receivable 535 5,282 Prepaid and other assets 5,661 (4,643) Accounts payable 3,675 3,582 Accrued liabilities (7,282) (3,472) Deferred revenues (10,219) (8,634) Income taxes payable - (5,190) ----------- ----------- Effect of changes in operating assets and liabilities (7,630) (13,075) ----------- ----------- Net cash provided by operating activities from continuing operations 43,314 39,066 Cash flows from investing activities: Purchases of property and equipment (4,370) (1,611) Capitalized software development costs (963) (1,916) Change in restricted cash (173) - Purchases of marketable securities - (57,863) Sales and maturities of marketable securities - 213,444 ----------- ----------- Net cash (used in) provided by investing activities from continuing operations (5,506) 152,054 Cash flows from financing activities: Proceeds from common stock issued from exercises of stock options 2,141 16,212 Proceeds from common stock issued under the employee stock purchase plan 3,493 3,211 Excess tax benefits from stock-based compensation 6,841 2,783 Withholding taxes related to equity award net share settlement (5,127) (6,509) Proceeds from debt - 225,000 Repayment of debt (25,000) (95,000) Repurchase of common stock (12,411) - Debit issuance costs - (5,725) ----------- ----------- Net cash (used in) provided by financing activities from continuing operations (30,063) 139,972 Net cash transferred to discontinued operation (223) (208) Effect of exchange rate changes on cash and cash equivalents (18) (358) ----------- ----------- Net change in cash and cash equivalents from continuing operations 7,504 330,526 Cash and cash equivalents of continuing operations at beginning of period 33,828 58,217 ----------- ----------- Cash and cash equivalents of continuing operations at end of period $ 41,332 $ 388,743 =========== =========== Six Months Ended June 30 ------------------------ 2014 2013 ----------- ----------- Supplemental disclosure of cash flow information: Noncash investing activities: Capital expenditures included in accounts payable $ 1,086 $ - Cash flows from discontinued operation of MicroEdge, Inc.: Net cash used in operating activities $ (223) $ (208) Net cash transferred from continuing operations 223 208 ADVENT SOFTWARE, INC. RECONCILIATION OF SELECTED CONTINUING OPERATIONS' GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except per share data) (Unaudited) To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States of America (or GAAP), Advent uses non-GAAP measures of continuing operations' gross margin, operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses and income we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these non-GAAP results are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Three Months Ended June 30 ------------------------------------------ 2014 2013 -------------------- -------------------- % of Net % of Net Amount Revenues Amount Revenues --------- --------- --------- --------- GAAP gross margin $ 70,579 70.3% $ 65,727 68.4% Amortization of acquired intangibles 1,192 1,883 Stock-based compensation 1,188 3,036 --------- --------- Non-GAAP gross margin $ 72,959 72.7% $ 70,646 73.5% ========= ========= GAAP operating income (loss) $ 21,753 21.7% $ (5,849) -6.1% Amortization of acquired intangibles 2,063 2,836 Stock-based compensation 7,684 27,189 Restructuring charges 1,740 801 Recapitalization costs - 6,041 --------- --------- Non-GAAP operating income $ 33,240 33.1% $ 31,018 32.3% ========= ========= GAAP net income (loss) $ 12,655 $ (4,155) Amortization of acquired intangibles 2,063 2,836 Stock-based compensation 7,684 27,189 Restructuring charges 1,740 801 Recapitalization costs - 6,692 Income tax adjustment (1) (3,802) (13,642) --------- --------- Non-GAAP net income $ 20,340 $ 19,721 ========= ========= GAAP net income (loss) $ 12,655 $ (4,155) Net interest 1,875 1,351 Provision (benefit) for income taxes 7,150 (3,024) Depreciation expense 2,781 2,920 Amortization expense 2,558 3,352 Stock-based compensation 7,684 27,189 --------- --------- Adjusted EBITDA $ 34,703 $ 27,633 ========= ========= Diluted net income (loss) per share GAAP $ 0.24 $ (0.08) Non-GAAP $ 0.38 $ 0.37 Shares used to compute GAAP diluted net income (loss) per share 53,540 51,639 Shares used to compute Non-GAAP diluted net income per share 53,540 53,772 (1) The estimated non-GAAP effective tax rate was 35% for the three months ended June 30, 2014 and 2013, respectively, and has been used to adjust the provision for income taxes for non-GAAP net income and non-GAAP diluted net income per share purposes. ADVENT SOFTWARE, INC. RECONCILIATION OF PROJECTED CONTINUING OPERATIONS' GAAP OPERATING INCOME % TO NON-GAAP OPERATING INCOME % (Preliminary and unaudited) Advent provides projections for the non-GAAP measure of its continuing operations' operating income percentage. This non-GAAP measure excludes certain costs and expenses which we believe is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. Adjustments to our projected continuing operations' GAAP results are made with the intent of providing management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP projections are among the information management uses as a basis for planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America. Twelve Months Ending December 31, 2014 Continuing Operations Operating Income % ------------------------- Projected GAAP 20.0 % to 20.5 % ======= ======= ======= Projected stock-based compensation adjustment 8.5 % Projected amortization of acquired developed technology and other acquired intangible asset adjustment 2.0 % Projected restructuring charge adjustment 0.5 % ------- ------- ------- Projected non-GAAP 31.0 % to 31.5 % ======= ======= ======= CONTACTS Media Contact: Amanda Diamondstein-Cieplinska Advent Software, Inc. (415) 645-1668 Email Contact Investor Relations Contact: Justin Ritchie Advent Software, Inc. (415) 645-1683 Email Contact Source: Advent Software |