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Advent Software Reports Second Quarter 2012 Results(Marketwire Via Acquire Media NewsEdge) SAN FRANCISCO, CA -- (Marketwire) -- 07/30/12 -- 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, 2012. "I am pleased to report Advent's second quarter financial results and am honored to lead Advent as we embark on an exciting phase in our evolution. Despite the challenging market environment, we achieved record quarterly revenues, record second quarter bookings and 22% non-GAAP operating margin," said Pete Hess, Chief Executive Officer of Advent. "Our strong performance was the result of continued demand for our market-leading solutions as we help transform our clients' businesses by eliminating boundaries between systems, information and people." SECOND QUARTER 2012 RESULTS GAAP Results for Continuing OperationsThe Company reported quarterly revenue of $89.7 million for the second quarter of 2012, compared to $80.1 million in the second quarter of 2011, a 12% increase. Operating income for the second quarter of 2012 was $12.1 million, or 13% of revenue, compared to $10.4 million or 13% of revenue for the second quarter of 2011. Net income for the second quarter of 2012 was $7.2 million compared to $7.1 million in the second quarter of 2011. On a fully diluted basis, earnings per share in the second quarter of 2012 were $0.14, up $0.01 when compared to the second quarter of 2011. Operating cash flow in the second quarter of 2012 was $14.9 million, compared with $20.2 million in the second quarter of 2011. Cash, cash equivalents and marketable securities totaled $134.8 million as of June 30, 2012, compared to $136.4 million as of December 31, 2011. The Company repurchased approximately 745,000 shares of its common stock in the second quarter of 2012 for a total cash outlay of $19.3 million and at an average price of $25.96 per share. Total deferred revenue as of June 30, 2012 was $163.6 million, compared to $174.9 million as of December 31, 2011. Non-GAAP Results for Continuing OperationsNon-GAAP operating income for the second quarter of 2012 was $20.0 million, or 22% of revenue. This represents a 14% increase compared to $17.5 million from continuing operations, or 22% of revenue, in the second quarter of 2011. On a fully diluted basis, non-GAAP earnings per share were $0.24 in the second quarter of 2012 and represent a 14% increase from non-GAAP diluted earnings per share of $0.21 in the second quarter of 2011. The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release. SECOND QUARTER HIGHLIGHTS Record Second Quarter Bookings: The Annual Contract Value (ACV) of our new contract bookings in the second quarter of 2012 will contribute $7.2 million in annual revenue once the contracts are fully implemented. Continued Momentum: New clients represented a broad cross-section of the investment management industry across all our platforms, from hedge funds and asset managers to family offices, fund administrators and the growing advisory market. New clients included Potamus Trading LLC, CI Investments, SeaStone Capital Management, Johns Hopkins University, Kylin Management LLC, H.D. Vest, Good Harbor Financial, LLC, Karpus Investment Management, and Madison Asset Management. In the second quarter, Advent also expanded into Brazil and signed Vinci Partners, a Brazilian investment management firm, who have chosen Geneva and Geneva World Investor to support management of their offshore investment strategies. Industry Recognition and Award-Winning Solutions: Advent's technology continued to receive industry awards and win honors around the world. Recent awards include: FTF News's Most Innovative Mobile Technology award; HFM European Hedge Fund Services Awards named Advent as Best Technology for Start-Up Funds; and the Company was named Best Technology Provider in the 2012 Citywealth Magic Circle Awards.FINANCIAL GUIDANCE Advent updates the following financial guidance for the third quarter and fiscal year 2012: ---------------------------------------------------------------------------- Guidance Q3 2012 FY 2012 ---------------------------------------------------------------------------- Total Revenue ($M) $89-$91 $358-$362 ---------------------------------------------------------------------------- YoY Revenue Growth 5% - 8% 10% - 11% ---------------------------------------------------------------------------- GAAP Operating Margin n/a 14.0% - 14.5% ---------------------------------------------------------------------------- Amortization of Intangibles (% of revenue) n/a 3% ---------------------------------------------------------------------------- Stock Compensation Expense (% of revenue) n/a 6% ---------------------------------------------------------------------------- Non-GAAP Operating Margin n/a 23.0% - 23.5% ---------------------------------------------------------------------------- Operating Cash Flow ($M) n/a $83-$86 ---------------------------------------------------------------------------- Capital Expenditures ($M) n/a $11-$13 ---------------------------------------------------------------------------- Growth of Weighted Average Shares Outstanding, excluding any share repurchases n/a 0.25%-0.75% per quarter ---------------------------------------------------------------------------- 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 2012 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q2 2012 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 (800) 259-0251 and request conference ID #74347526. Telephone replay will be available through midnight August 8, 2012. The replay number for domestic callers is (888) 286-8010, and for international callers is (617) 801-6888, with the conference ID of #97737359. The conference call will also be webcast live and then archived on http://investor.advent.com. ABOUT ADVENT Advent Software, Inc. (www.advent.com), a global firm, has provided trusted solutions to the world's leading financial professionals since 1983. Firms in more than 60 countries use Advent technology. Advent's quality software, data, services and tools enable financial professionals to improve service and communication to their clients, allowing them to grow their business while controlling costs. Advent is the only financial services software company to be awarded the Service Capability and Performance certification for being a world-class support organization. For more information on Advent products visit http://www.advent.com/about/resources/demos/pr. 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 (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 statements regarding our momentum and market opportunities, 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 Advent Portfolio Exchange®, Geneva®, and Moxy® 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 satisfy contractual performance requirements; difficulties in integrating merged businesses, such as Syncova Solutions Ltd and Black Diamond Performance Reporting LLC, and achieving expected synergies and results; 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 2011 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, Advent Portfolio Exchange, Geneva and Moxy are registered trademarks of Advent Software, Inc., and Syncova is a mark of Advent Software, Inc. All 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 2012 2011 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 52,250 $ 65,525 Short-term marketable securities 78,472 69,908 Accounts receivable, net 56,732 62,125 Deferred taxes, current 16,304 16,294 Prepaid expenses and other 25,728 23,660 ------------ ------------ Total current assets 229,486 237,512 Property and equipment, net 40,316 42,301 Goodwill 204,084 204,621 Other intangibles, net 44,383 49,521 Long-term marketable securities 4,056 917 Deferred taxes, long-term 27,906 30,751 Other assets 13,723 15,927 Noncurrent assets of discontinued operation 2,006 2,006 ------------ ------------ Total assets $ 565,960 $ 583,556 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 11,090 $ 10,558 Accrued liabilities 32,021 40,029 Deferred revenues 155,343 166,945 Income taxes payable 3,701 2,972 Short-term debt 5,000 5,000 Current liabilities of discontinued operation 748 488 ------------ ------------ Total current liabilities 207,903 225,992 Deferred revenues, long-term 8,262 7,926 Long-term debt 42,500 45,000 Other long-term liabilities 16,975 16,944 Noncurrent liabilities of discontinued operation 3,814 4,633 ------------ ------------ Total liabilities 279,454 300,495 ------------ ------------ Stockholders' equity: Common stock 507 510 Additional paid-in capital 438,598 429,734 Accumulated deficit (158,916) (154,053) Accumulated other comprehensive income 6,317 6,870 ------------ ------------ Total stockholders' equity 286,506 283,061 ------------ ------------ Total liabilities and stockholders' equity $ 565,960 $ 583,556 ============ ============ 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 -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- --------- Net revenues: Recurring revenues $ 80,942 $ 71,448 $ 159,662 $ 138,775 Non-recurring revenues 8,782 8,623 16,966 16,622 --------- --------- --------- --------- Total net revenues 89,724 80,071 176,628 155,397 Cost of revenues (1): Recurring revenues 17,820 15,103 34,746 29,891 Non-recurring revenues 10,936 9,911 20,604 17,150 Amortization of developed technology 2,573 2,161 5,114 3,677 --------- --------- --------- --------- Total cost of revenues 31,329 27,175 60,464 50,718 --------- --------- --------- --------- Gross margin 58,395 52,896 116,164 104,679 Operating expenses (1): Sales and marketing 19,711 18,683 38,157 36,867 Product development 16,501 14,467 33,300 27,109 General and administrative 9,198 8,745 18,867 17,829 Amortization of other intangibles 956 571 1,912 891 Restructuring (benefit) charges (34) 48 70 74 --------- --------- --------- --------- Total operating expenses 46,332 42,514 92,306 82,770 --------- --------- --------- --------- Income from continuing operations 12,063 10,382 23,858 21,909 Interest and other income (expense), net (803) (53) (975) (22) --------- --------- --------- --------- Income from continuing operations before income taxes 11,260 10,329 22,883 21,887 Provision for income taxes 4,063 3,259 8,369 6,913 --------- --------- --------- --------- Net income from continuing operations $ 7,197 $ 7,070 $ 14,514 $ 14,974 Discontinued operation: Net income (loss) from discontinued operation (net of applicable taxes of $162, $(16), $147, and $1,328, respectively) 245 (24) 222 1,800 --------- --------- --------- --------- Net income $ 7,442 $ 7,046 $ 14,736 $ 16,774 ========= ========= ========= ========= Basic net income per share (2): Continuing operations $ 0.14 $ 0.13 $ 0.29 $ 0.29 Discontinued operation 0.00 0.00 0.00 0.03 --------- --------- --------- --------- Total operations $ 0.15 $ 0.13 $ 0.29 $ 0.32 ========= ========= ========= ========= Diluted net income per share (2): Continuing operations $ 0.14 $ 0.13 $ 0.27 $ 0.27 Discontinued operation 0.00 0.00 0.00 0.03 --------- --------- --------- --------- Total operations $ 0.14 $ 0.13 $ 0.28 $ 0.30 ========= ========= ========= ========= Weighted average shares used to compute net income per share: Basic 50,754 52,490 50,887 52,345 Diluted 52,977 55,111 53,117 55,492 (1) Includes stock-based employee compensation expense as follows: Cost of recurring revenues $ 610 $ 504 $ 1,195 $ 1,007 Cost of non-recurring revenues 264 345 595 592 --------- --------- --------- --------- Total cost of revenues 874 849 1,790 1,599 Sales and marketing 1,729 1,469 3,386 2,969 Product development 1,438 1,246 2,898 2,421 General and administrative 1,043 1,079 1,899 2,113 --------- --------- --------- --------- Total operating expenses 4,210 3,794 8,183 7,503 --------- --------- --------- --------- Total stock-based employee compensation expense $ 5,084 $ 4,643 $ 9,973 $ 9,102 ========= ========= ========= ========= (2) Net income 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) (GAAP, Unaudited) Six Months Ended June 30 -------------------------- 2012 2011 ------------ ------------ Cash flows from operating activities: Net income $ 14,736 $ 16,774 Adjustment to net income for discontinued operation (222) (1,800) ------------ ------------ Net income from continuing operations $ 14,514 $ 14,974 Adjustments to reconcile net income to net cash provided by operating activities from continuing operations: Stock-based compensation 9,973 9,102 Excess tax benefit from stock-based compensation (3,118) (2,775) Depreciation and amortization 12,851 9,826 Amortization of debt issuance costs 190 - Gain on disposal of fixed assets (16) - Provision for doubtful accounts 200 94 Provision for (reduction of) sales returns 735 (235) Deferred income taxes 2,588 (183) Other (144) 136 ------------ ------------ Effect of statement of operations adjustments 23,259 15,965 Changes in operating assets and liabilities: Accounts receivable 5,109 (4,665) Prepaid and other assets 277 (1,923) Accounts payable 532 2,363 Accrued liabilities (7,020) (3,929) Deferred revenues (12,000) 3,031 Income taxes payable 3,847 5,998 ------------ ------------ Effect of changes in operating assets and liabilities (9,255) 875 ------------ ------------ Net cash provided by operating activities from continuing operations 28,518 31,814 Cash flows from investing activities: Cash used in acquisitions, net of cash acquired (700) (97,092) Purchases of property and equipment (3,720) (4,471) Capitalized software development costs (1,700) (1,887) Purchases of marketable securities (72,270) (28,604) Sales and maturities of marketable securities 60,344 60,933 ------------ ------------ Net cash used in investing activities from continuing operations (18,046) (71,121) Cash flows from financing activities: Proceeds from common stock issued from exercises of stock options 3,269 4,580 Withholding taxes related to equity award net share settlement (4,610) (4,761) Proceeds from common stock issued under the employee stock purchase plan 3,448 3,146 Repurchase of common stock (26,125) (10,163) Repayment of loan borrowing (2,500) - Excess tax benefits from stock-based compensation 3,118 2,775 ------------ ------------ Net cash used in financing activities from continuing operations (23,400) (4,423) Net cash transferred from (to) discontinued operation (337) 2,978 Effect of exchange rate changes on cash and cash equivalents (10) 261 ------------ ------------ Net change in cash and cash equivalents from continuing operations (13,275) (40,491) Cash and cash equivalents of continuing operations at beginning of period 65,525 81,948 ------------ ------------ Cash and cash equivalents of continuing operations at end of period $ 52,250 $ 41,457 ============ ============ Six Months Ended June 30 -------------------------- 2012 2011 ------------ ------------ Supplemental disclosure of cash flow information Cash flow from discontiued operation: Net cash used in operating activities $ (337) $ (26) Net cash provided by investing activities - 3,004 Net cash transferred from (to) continuing operations 337 (2,978) Effect of exchange rates on cash and cash equivalents - - ------------ ------------ Net change in cash and cash equivalents from discontinued operations - - Cash and cash equivalents of discontinued operation at beginning of period - - ------------ ------------ Cash and cash equivalents of discontinued operation at end of period $ - $ - ============ ============ 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 on a GAAP basis, Advent uses non-GAAP measures of continuing operations' operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses, gains and losses 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 adjusted 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 generally accepted accounting principles in the United States of America. Three Months Ended June 30, 2012 for Continuing Operations ----------------------------------------------------- Gross Gross Operating Operating Net Margin Margin % Income Income % Income --------- --------- ---------- --------- --------- GAAP $ 58,395 65% $ 12,063 13% $ 7,197 Amortization of acquired developed technology 1,901 1,901 1,901 Amortization of other acquired intangibles - 956 956 Stock-based compensation - cost of revenues 874 874 874 Stock-based compensation - operating expenses - 4,210 4,210 Restructuring benefit - (34) (34) Income tax adjustment for non-GAAP (1) - - (2,645) --------- ---------- --------- Non-GAAP $ 61,170 68% $ 19,970 22% $ 12,459 ========= ========== ========= Diluted net income per share GAAP $ 0.14 Non-GAAP $ 0.24 Shares used to compute diluted net income per share 52,977 Three Months Ended June 30, 2011 for Continuing Operations ---------------------------------------------------- Gross Gross Operating Operating Net Margin Margin % Income Income % Income --------- --------- ---------- --------- --------- GAAP $ 52,896 66% $ 10,382 13% $ 7,070 Amortization of acquired developed technology 1,384 1,384 1,384 Amortization of other acquired intangibles - 571 571 Stock-based compensation - cost of revenues 849 849 849 Stock-based compensation - operating expenses - 3,794 3,794 Acquisition related expenses - 486 486 Restructuring charges - 48 48 Income tax adjustment for non- GAAP (1) - - (2,852) --------- ---------- --------- Non-GAAP $ 55,129 69% $ 17,514 22% $ 11,350 ========= ========== ========= Diluted net income per share GAAP $ 0.13 Non-GAAP $ 0.21 Shares used to compute diluted net income per share 55,111 (1) The estimated non-GAAP effective tax rate was 35% for the three months ended June 30, 2012 and 2011, respectively, and has been used to adjust the provision for income taxes for non-GAAP purposes. ADVENT SOFTWARE, INC. RECONCILIATION OF PROJECTED CONTINUING OPERATIONS' GAAP OPERATING INCOME % TO NON-GAAP OPERATING INCOME % (Preliminary and unaudited) Advent provides projections of non-GAAP measures of its continuing operations' operating income, which exclude certain costs, expenses, gains and losses which it believes is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our projected continuing operations' GAAP results are made with the intent of providing management and investors a more complete understanding continuing operations' 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 Ended December 31, 2012 Continuing Operations Operating Income % -------------------------------------- Projected GAAP 14.0% to 14.5% ====================================== Projected amortization of acquired developed technology and other acquired intangible asset adjustment 3% Projected stock-based compensation adjustment 6% -------------------------------------- Projected non-GAAP 23.0% to 23.5% ====================================== CONTACT Media Contact: Amanda Diamondstein-Cieplinska Advent Software, Inc. (415) 645-1668 Email Contact Investor Relations Contact: Meg Pardo Advent Software, Inc. (415) 645-1584 Email Contact Source: Advent Software |