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Advent Software Reports Third Quarter 2014 Results(Marketwire Via Acquire Media NewsEdge) SAN FRANCISCO, CA -- (Marketwired) -- 10/27/14 -- 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 third quarter ended September 30, 2014. "Advent posted another solid performance in the quarter, with excellent profitability and robust cash flow," said Pete Hess, Chief Executive Officer of Advent. "We had great attendance at AdventConnect, our annual client conference, and clients and prospects responded enthusiastically to the many enhancements we showcased across our solution suite, as evidenced by our strong renewals and healthy bookings this quarter." THIRD QUARTER 2014 RESULTS GAAP Results for Continuing OperationsAdvent reported quarterly revenue of $99.0 million for the third quarter of 2014, compared to $96.8 million in the third quarter of 2013, a 2% increase. Operating income for the third quarter of 2014 was $20.2 million, or 20.5% of revenue, compared to operating income of $17.4 million in the third quarter of 2013, a 17% increase. Net income for the third quarter of 2014 was $12.0 million, compared to net income of $9.8 million in the third quarter of 2013. On a fully diluted basis, earnings per share for the third quarter of 2014 were $0.22 compared to $0.18 in the third quarter of 2013, a 22% increase. Operating cash flow for the third quarter of 2014 was $28.3 million, compared with $22.8 million in the third quarter of 2013, a 24% increase. Cash and cash equivalents totaled $37 million as of September 30, 2014, compared to $41 million as of June 30, 2014. Total outstanding debt as of September 30, 2014 was $255 million compared to $280 million as of June 30, 2014. Deferred revenue as of September 30, 2014 was $184 million, compared to $183 million as of June 30, 2014. During the quarter, Advent's Board of Directors approved a quarterly dividend of $0.13 per share. The cash dividend payment was made on October 15, 2014 to shareholders of record of Advent's common stock at the close of business on September 30, 2014. Non-GAAP Results for Continuing OperationsNon-GAAP operating income for the third quarter of 2014 was $32.1 million, or 32.4% of revenue, an 11% increase compared to $29.0 million, or 30.0% of revenue, in the third quarter of 2013. On a fully diluted basis, non-GAAP earnings per share were $0.37 for the third quarter of 2014 and represent an 18% increase from non-GAAP diluted net income per share of $0.31 in the third quarter of 2013. The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release. HIGHLIGHTS Solid Third Quarter Bookings with Strong Renewals: The Annual Contract Value (ACV) of our new contract bookings in the third quarter of 2014 will contribute $7.2 million in annual revenue once the contracts are fully implemented. The initial renewal rate for the second quarter of 2014 was 95%. The renewal rate from the first quarter of 2014 increased by three points to 97% as additional cash was collected. Continued Client Success: New customers added in the third quarter include St. Denis J. Villere & Company, Ziegler Capital Management, LLC, Churchill Management Company, and Prince Street Capital Management, LLC, while Raymond James Investment Services Ltd and Somerset Capital Management Limited deepened their Advent relationships by buying additional products. AdventConnect 2014 Showcases Product Upgrades: Advent showcased enhancements across its product suite at AdventConnect including: new capabilities within Geneva® to address regulations like FATCA and AIFMD; improved CRM workflow, platform reporting enhancements, and Salesforce integration for APX; and in Black Diamond(SM), Advent unveiled the new investor experience, along with upgrades to rebalancing and data mining functionality. The company also further strengthened Moxy® and Advent Rules Manager® with enhanced real-time pricing among many other new capabilities. Award-Winning Solutions & Company: Advent Portfolio Exchange® (APX) was awarded "Best Client Reporting System" at the Systems in the City Awards 2014 ceremony in London. FINANCIAL GUIDANCEAdvent updates the following financial guidance for the fourth quarter and fiscal year 2014: ---------------------------------------------------------------------------- Guidance Q4 2014 FY 2014 ---------------------------------------------------------------------------- Total Revenue ($M) $99 - $102 $395 - $398 ---------------------------------------------------------------------------- GAAP Operating Margin n/a 20.5% - 21.0% ---------------------------------------------------------------------------- Stock Compensation Expense (% of revenue) n/a 8.0% ---------------------------------------------------------------------------- Amortization of Intangibles (% of revenue) n/a 2.0% ---------------------------------------------------------------------------- Restructuring (% of revenue) n/a 1.0% ---------------------------------------------------------------------------- Non-GAAP Operating Margin n/a 31.5% - 32.0% ---------------------------------------------------------------------------- Operating Cash Flow ($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 Q3 2014 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q3 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 877-546-5020 and request conference ID # 79682130. Telephone replay will be available through midnight November 6, 2014. The replay number for domestic callers is 888-286-8010, and for international callers is 617-801-6888, with the conference ID of # 32551486. 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" and "Reconciliation of Projected Continuing Operations' GAAP Operating Income % to Non-GAAP Operating Income %". 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, Geneva®, Advent Portfolio Exchange®, Moxy® and Advent Rules Manager® are registered trademarks, and Black Diamond is a mark, 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) September 30 December 31 2014 2013 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 36,692 $ 33,828 Accounts receivable, net 55,280 58,717 Deferred taxes, current 24,897 24,898 Prepaid expenses and other 24,724 30,114 Current assets of discontinued operation - 100 ------------- ------------- Total current assets 141,593 147,657 Property and equipment, net 28,502 31,698 Goodwill 205,178 207,818 Other intangibles, net 21,004 27,392 Deferred taxes, long-term 21,213 23,020 Other assets 14,055 17,372 Noncurrent assets of discontinued operation 1,337 1,337 ------------- ------------- Total assets $ 432,882 $ 456,294 ============= ============= LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 10,155 $ 5,348 Dividends payable 6,712 - Accrued liabilities 34,677 41,625 Deferred revenues 176,288 186,107 Current portion of long-term debt 20,000 20,000 Current liabilities of discontinued operation 632 600 ------------- ------------- Total current liabilities 248,464 253,680 Deferred revenues, long-term 7,250 7,809 Long-term income taxes payable 7,667 7,667 Long-term debt 235,000 285,000 Other long-term liabilities 8,447 11,171 Noncurrent liabilities of discontinued operation 2,324 2,782 ------------- ------------- Total liabilities 509,152 568,109 ------------- ------------- Stockholders' deficit: Common stock 516 513 Additional paid-in capital 58,394 42,533 Accumulated deficit (142,765) (165,870) Accumulated other comprehensive income 7,585 11,009 ------------- ------------- Total stockholders' deficit (76,270) (111,815) ------------- ------------- Total liabilities and stockholders' deficit $ 432,882 $ 456,294 ============= ============= ADVENT SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (GAAP, Unaudited) Three Months Ended Nine Months Ended September 30 September 30 -------------------- -------------------- 2014 2013 2014 2013 --------- --------- --------- --------- Net revenues: Recurring revenues $ 90,689 $ 88,116 $ 272,352 $ 260,862 Non-recurring revenues 8,293 8,651 23,804 24,518 --------- --------- --------- --------- Total net revenues 98,982 96,767 296,156 285,380 Cost of revenues (1): Recurring revenues 20,088 17,782 59,304 52,173 Non-recurring revenues 8,106 11,501 23,675 31,088 Amortization of developed technology 1,690 2,508 5,178 7,405 --------- --------- --------- --------- Total cost of revenues 29,884 31,791 88,157 90,666 --------- --------- --------- --------- Gross margin 69,098 64,976 207,999 194,714 Operating expenses (1): Sales and marketing 17,658 18,546 55,687 58,967 Product development 16,962 17,369 51,805 52,254 General and administrative 10,846 10,894 32,115 43,895 Amortization of other intangibles 809 953 2,588 2,863 Recapitalization costs - - - 6,041 Restructuring charges (benefit) 2,579 (157) 4,494 2,959 --------- --------- --------- --------- Total operating expenses 48,854 47,605 146,689 166,979 --------- --------- --------- --------- Income from continuing operations 20,244 17,371 61,310 27,735 Interest and other income (expense), net (1,423) (2,977) (5,596) (4,610) --------- --------- --------- --------- Income from continuing operations before income taxes 18,821 14,394 55,714 23,125 Provision for income taxes 6,818 4,561 20,149 5,390 --------- --------- --------- --------- Net income from continuing operations $ 12,003 $ 9,833 $ 35,565 $ 17,735 Discontinued operation: Net (loss) income from discontinued operation (net of applicable taxes of $(14), $(16), $(38) and $45, respectively) (20) (20) (57) 68 --------- --------- --------- --------- Net income $ 11,983 $ 9,813 $ 35,508 $ 17,803 ========= ========= ========= ========= Basic net income (loss) per share (2): Continuing operations $ 0.23 $ 0.19 $ 0.69 $ 0.35 Discontinued operation (0.00) (0.00) (0.00) 0.00 --------- --------- --------- --------- Total operations $ 0.23 $ 0.19 $ 0.69 $ 0.35 ========= ========= ========= ========= Diluted net income (loss) per share (2): Continuing operations $ 0.22 $ 0.18 $ 0.66 $ 0.33 Discontinued operation (0.00) (0.00) (0.00) 0.00 --------- --------- --------- --------- Total operations $ 0.22 $ 0.18 $ 0.66 $ 0.33 ========= ========= ========= ========= Weighted average shares used to compute net income (loss) per share: Basic 51,579 51,576 51,464 51,241 Diluted 53,877 53,937 53,574 53,329 Cash dividends declared per common share $ 0.13 - $ 0.26 - (1) Includes stock-based employee compensation expense as follows: Cost of recurring revenues $ 793 $ 853 $ 2,469 $ 2,647 Cost of non-recurring revenues 293 578 1,022 2,690 --------- --------- --------- --------- Total cost of revenues 1,086 1,431 3,491 5,337 Sales and marketing 2,461 2,874 7,757 10,920 Product development 2,005 2,083 5,853 6,941 General and administrative 1,707 2,003 5,470 17,399 --------- --------- --------- --------- Total operating expenses 6,173 6,960 19,080 35,260 --------- --------- --------- --------- Total stock-based employee compensation expense $ 7,259 $ 8,391 $ 22,571 $ 40,597 ========= ========= ========= ========= (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) Nine Months Ended September 30 ------------------------ 2014 2013 ----------- ----------- Cash flows from operating activities: Net income $ 35,508 $ 17,803 Adjustment to net income for discontinued operation net loss (income) 57 (68) ----------- ----------- Net income from continuing operations 35,565 17,735 Adjustments to reconcile net income to net cash provided by operating activities from continuing operations: Stock-based compensation 22,571 40,597 Excess tax benefit from stock-based compensation (9,003) (4,220) Depreciation and amortization 16,138 18,903 Amortization of debt issuance costs 1,079 593 Loss on disposal of fixed assets 2,786 - (Reduction of) provision for doubtful accounts (6) 290 Reduction of sales reserves (538) (196) Deferred income taxes 10,370 6,281 Other (500) (45) ----------- ----------- Effect of statement of operations adjustments 42,897 62,203 Changes in operating assets and liabilities: Accounts receivable 3,443 4,181 Prepaid and other assets 7,789 (860) Accounts payable 3,919 3,843 Accrued liabilities (12,279) (9,801) Deferred revenues (9,841) (10,210) Income taxes payable 84 (5,190) ----------- ----------- Effect of changes in operating assets and liabilities (6,885) (18,037) ----------- ----------- Net cash provided by operating activities from continuing operations 71,577 61,901 Cash flows from investing activities: Purchases of property and equipment (6,845) (2,161) Capitalized software development costs (1,427) (2,556) Change in restricted cash (173) - Purchases of marketable securities - (57,863) Sales and maturities of marketable securities - 228,619 ----------- ----------- Net cash (used in) provided by investing activities from continuing operations (8,445) 166,039 Cash flows from financing activities: Proceeds from common stock issued from exercises of stock options 3,171 18,382 Proceeds from common stock issued under the employee stock purchase plan 3,493 3,211 Excess tax benefits from stock-based compensation 9,003 4,220 Withholding taxes related to equity award net share settlement (5,665) (8,043) Proceeds from debt - 375,000 Repayment of debt (50,000) (120,000) Payment of cash dividend (6,693) (470,133) Repurchase of common stock (12,878) (41,256) Debit issuance costs - (5,725) ----------- ----------- Net cash used in financing activities from continuing operations (59,569) (244,344) Net cash transferred to discontinued operation (383) (358) Effect of exchange rate changes on cash and cash equivalents (316) (75) ----------- ----------- Net change in cash and cash equivalents from continuing operations 2,864 (16,837) 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 $ 36,692 $ 41,380 =========== =========== Nine Months Ended September 30 ------------------------ 2014 2013 ----------- ----------- Supplemental disclosure of cash flow information: Noncash investing activities: Capital expenditures included in accounts payable $ 1,019 $ 738 Cash flows from discontinued operation of MicroEdge, Inc.: Net cash used in operating activities $ (383) $ (358) Net cash transferred from continuing operations 383 358 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 September 30 ------------------------------------------- 2014 2013 --------------------- --------------------- % of Net % of Net Amount Revenues Amount Revenues --------- ---------- --------- ---------- GAAP gross margin $ 69,098 69.8% $ 64,976 67.1% Amortization of acquired intangibles 1,194 1,883 Stock-based compensation 1,087 1,431 --------- --------- Non-GAAP gross margin $ 71,379 72.1% $ 68,290 70.6% ========= ========= GAAP operating income $ 20,244 20.5% $ 17,371 18.0% Amortization of acquired intangibles 2,002 2,836 Stock-based compensation 7,259 8,391 Restructuring charges (benefit) 2,579 (157) Transaction related fees - 565 --------- --------- Non-GAAP operating income $ 32,084 32.4% $ 29,006 30.0% ========= ========= GAAP net income $ 12,003 $ 9,833 Amortization of acquired intangibles 2,002 2,836 Stock-based compensation 7,259 8,391 Restructuring charges (benefit) 2,579 (157) Transaction related fees - 565 Income tax adjustment (1) (3,914) (4,549) --------- --------- Non-GAAP net income $ 19,929 $ 16,919 ========= ========= GAAP net income $ 12,003 $ 9,833 Net interest 1,741 2,631 Provision for income taxes 6,818 4,561 Depreciation expense 2,825 2,771 Amortization expense 2,499 3,460 Stock-based compensation 7,259 8,391 --------- --------- Adjusted EBITDA $ 33,145 $ 31,647 ========= ========= Diluted net income per share GAAP $ 0.22 $ 0.18 Non-GAAP $ 0.37 $ 0.31 Shares used to compute diluted net income per share 53,877 53,937 (1) The estimated non-GAAP effective tax rate was 35% for the three months ended September 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 20.5% to 21.0% ============================= Projected stock-based compensation adjustment 8.0% Projected amortization of acquired developed technology and other acquired intangible asset adjustment 2.0% Projected restructuring charge adjustment 1.0% ----------------------------- Projected non-GAAP 31.5% to 32.0% ============================= CONTACTS Media Contact: Kendall Reischl Advent Software, Inc. (415) 645-1771 Email Contact Investor Relations Contact: Justin Ritchie Advent Software, Inc. (415) 645-1683 Email Contact Source: Advent Software |