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Advent Software Reports Third Quarter 2011 Results

Company Achieves 17% Revenue Growth Over Prior Year, With Record Quarterly Revenue of $85 Million (October 24, 2011)

SAN FRANCISCO, CA -- (Marketwire) -- 10/24/11 -- 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, 2011.

"Our third quarter results include record revenue of almost $85 million and strong operating cash flow of just under $24 million, which demonstrate the continued strength of Advent's business model," says Stephanie DiMarco, Founder and Chief Executive Officer of Advent. "Our financial results and healthy bookings continue to validate Advent's strategy is working. As we've seen throughout the past three years, our portfolio of products and services, combined with our focus on client satisfaction, enable us to succeed in various market conditions."

THIRD QUARTER 2011 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue from continuing operations of $84.6 million for the third quarter of 2011, up from $72.0 million in the third quarter of 2010, a 17% increase.


Operating income from continuing operations for the third quarter of 2011 was $10.6 million, or 13% of revenue, compared to $9.7 million or 14% of revenue for the third quarter of 2010.

Net income from continuing operations for the third quarter of 2011 was $6.8 million compared to $6.0 million in the third quarter of 2010, a 14% increase.

On a fully diluted basis, earnings per share from continuing operations in the third quarter of 2011 were $0.13 and represent a 15% increase from diluted earnings per share of $0.11 in the third quarter of 2010.

Operating cash flow from continuing operations in the third quarter of 2011 was $23.8 million, compared with $21.6 million in the third quarter of 2010, a 10% increase. Cash, cash equivalents and marketable securities totaled $58.9 million as of September 30, 2011.

The Company repurchased approximately 1,860,000 shares in the third quarter of 2011 at an average price of $22.26 per share.

Total deferred revenue as of September 30, 2011 was $162.3 million, compared to $159.3 million as of June 30, 2011, a 2% sequential increase.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income from continuing operations for the third quarter of 2011 was $18.5 million, or 22% of revenue. This represents a 17% increase when compared to $15.7 million from continuing operations, or 22% of revenue, in the third quarter of 2010. On a fully diluted basis, non-GAAP earnings per share from continuing operations were $0.22 in the third quarter of 2011 and represent a 15% increase from non-GAAP diluted earnings per share of $0.19 in the third quarter of 2010.

The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release.

THIRD QUARTER HIGHLIGHTS

  • Third Quarter Bookings: Annual Contract Value (ACV) in the third quarter of 2011 will contribute $8.5 million in annual revenue once the contracts are fully implemented.

  • SaaS Solutions Gain Traction: The third quarter saw strong demand for Advent's leading solutions delivered as a service. Black Diamond's cloud-based platform, which serves the US advisory market, continued to gain momentum, and Advent's SaaS (software-as-a-service) offering for the asset management market, Advent OnDemand, added its first EMEA clients this quarter. Additionally, Advent has several strategic partnerships with firms that offer the Company's products on a hosted basis to their clients, further expanding the reach of Advent's hosted offerings.

  • Enhanced Functionality Across Product Lines: Advent announced significant new features across the product suite in the third quarter, including: enhanced automation and data integration with popular mobile applications for Tamale RMS®; new Advent Portfolio Exchange® (APX) reports using Microsoft Reporting Services; and the addition of a detailed transaction data mining tool and a new report packaging tool in the Black Diamond platform.

  • Buy-Side Technology Award: Geneva® was named 'Best Buy-Side Portfolio Accounting Product' by Buy-Side Technology magazine for the fifth consecutive year.

FINANCIAL GUIDANCE
Advent updates the following financial guidance for the fourth quarter and fiscal year 2011:

---------------------------------------------------------------------------- Guidance Q4 2011 FY 2011 ---------------------------------------------------------------------------- Total Revenue ($M) $84-$86 $324-$326 ---------------------------------------------------------------------------- GAAP Operating Margin n/a 13% ---------------------------------------------------------------------------- Amortization of Intangibles (% of revenue) n/a 3% ---------------------------------------------------------------------------- Stock Compensation Expense (% of revenue) n/a 6% ---------------------------------------------------------------------------- Non-GAAP Operating Margin n/a 22% ---------------------------------------------------------------------------- Operating Cash Flow ($M) n/a $81-$85 ---------------------------------------------------------------------------- Capital Expenditures ($M) n/a $12-$15 ----------------------------------------------------------------------------

INVESTOR CALL
Advent Software, Inc. will host its Q3 2011 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q3 2011 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 866-804-6928 and request conference ID #94143757. A replay will be available through midnight, October 31, 2011. The replay number for domestic callers is 888-286-8010, and for international callers is 617-801-6888 and referencing conference ID #42168388. 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 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 accompanying tables entitled "Reconciliation of Selected GAAP Measures to Non-GAAP Measures."

FORWARD-LOOKING STATEMENTS
The financial projections under Financial Guidance, and statements regarding our revenue growth, market opportunity, market acceptance and demand for our products by clients in all market environments, including our SaaS solutions, international expansion and global execution, anticipated benefits and synergies related to our acquisition of Black Diamond Performance Reporting LLC and the continued momentum of our Tamale RMS product, and 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 Limited 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 2010 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, Advent OnDemand, Geneva and Moxy are registered trademarks 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) September 30 December 31 2011 2010 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 36,331 $ 81,948 Short-term marketable securities 20,615 70,075 Accounts receivable, net 56,668 49,960 Deferred taxes, current 16,436 16,358 Prepaid expenses and other 20,134 17,864 ------------- ------------- Total current assets 150,184 236,205 Property and equipment, net 41,647 41,524 Goodwill 206,415 145,580 Other intangibles, net 53,143 19,772 Long-term marketable securities 1,966 - Deferred taxes, long-term 34,559 33,591 Other assets 11,640 12,059 Noncurrent assets of discontinued operation 2,028 2,095 ------------- ------------- Total assets $ 501,582 $ 490,826 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 10,085 $ 6,737 Accrued liabilities 32,295 34,080 Deferred revenues 154,722 147,896 Income taxes payable 6,333 1,691 Current liabilities of discontinued operation 1,773 165 ------------- ------------- Total current liabilities 205,208 190,569 Deferred revenues, long-term 7,551 6,337 Other long-term liabilities 15,851 14,844 Noncurrent liabilities of discontinued operation 4,734 5,228 ------------- ------------- Total liabilities 233,344 216,978 ------------- ------------- Stockholders' equity: Common stock 507 520 Additional paid-in capital 419,428 411,600 Accumulated deficit (160,650) (146,887) Accumulated other comprehensive income 8,953 8,615 ------------- ------------- Total stockholders' equity 268,238 273,848 ------------- ------------- Total liabilities and stockholders' equity $ 501,582 $ 490,826 ============= ============= 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 -------------------- -------------------- 2011 2010 2011 2010 --------- --------- --------- --------- Net revenues: Recurring revenues $ 74,951 $ 63,492 $ 213,726 $ 185,339 Non-recurring revenues 9,615 8,495 26,237 22,608 --------- --------- --------- --------- Total net revenues 84,566 71,987 239,963 207,947 Cost of revenues (1): Recurring revenues 15,727 12,709 45,618 37,866 Non-recurring revenues 12,520 8,791 29,670 21,822 Amortization of developed technology 2,588 1,672 6,265 4,871 --------- --------- --------- --------- Total cost of revenues 30,835 23,172 81,553 64,559 --------- --------- --------- --------- Gross margin 53,731 48,815 158,410 143,388 Operating expenses (1): Sales and marketing 18,444 16,763 55,311 50,671 Product development 14,387 13,069 41,496 38,237 General and administrative 9,307 8,893 27,136 28,316 Amortization of other intangibles 960 331 1,851 977 Restructuring charges 57 26 131 610 --------- --------- --------- --------- Total operating expenses 43,155 39,082 125,925 118,811 --------- --------- --------- --------- Income from continuing operations 10,576 9,733 32,485 24,577 Interest income and other income (expense), net (815) 163 (837) (772) --------- --------- --------- --------- Income from continuing operations before income taxes 9,761 9,896 31,648 23,805 Provision for income taxes 2,935 3,915 9,848 8,734 --------- --------- --------- --------- Net income from continuing operations $ 6,826 $ 5,981 $ 21,800 $ 15,071 Discontinued operation: Net income (loss) from discontinued operation (net of applicable taxes of $(17), $(19), $1,311, and $(69), respectively) (27) (23) 1,773 (98) --------- --------- --------- --------- Net income $ 6,799 $ 5,958 $ 23,573 $ 14,973 ========= ========= ========= ========= Basic net income (loss) per share: Continuing operations $ 0.13 $ 0.12 $ 0.42 $ 0.29 Discontinued operation (0.00) (0.00) 0.03 (0.00) --------- --------- --------- --------- Total operations $ 0.13 $ 0.12 $ 0.45 $ 0.29 ========= ========= ========= ========= Diluted net income (loss) per share: Continuing operations $ 0.13 $ 0.11 $ 0.40 $ 0.28 Discontinued operation (0.00) (0.00) 0.03 (0.00) --------- --------- --------- --------- Total operations $ 0.13 $ 0.11 $ 0.43 $ 0.28 ========= ========= ========= ========= Weighted average shares used to compute net income per share: Basic 51,625 51,267 52,114 51,470 Diluted 53,625 54,232 54,590 54,277 (1) Includes stock-based employee compensation expense as follows: Recurring revenues $ 528 $ 466 $ 1,535 $ 1,308 Non-recurring revenues 381 294 973 846 --------- --------- --------- --------- Total cost of revenues 909 760 2,508 2,154 Sales and marketing 1,757 1,572 4,726 4,288 Product development 1,377 1,356 3,798 3,882 General and administrative 1,022 1,122 3,135 3,314 --------- --------- --------- --------- Total operating expenses 4,156 4,050 11,659 11,484 --------- --------- --------- --------- Total stock-based employee compensation expense $ 5,065 $ 4,810 $ 14,167 $ 13,638 ========= ========= ========= ========= ADVENT SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30 -------------------- 2011 2010 --------- --------- Cash flows from operating activities: Net income $ 23,573 $ 14,973 Adjustment to net income for discontinued operation (1,773) 98 --------- --------- Net income from continuing operations 21,800 15,071 Adjustments to reconcile net income to net cash provided by operating activities from continuing operations: Stock-based compensation 14,167 13,638 Depreciation and amortization 16,254 13,289 Loss on disposition of fixed assets - 22 Provision for doubtful accounts 159 148 Reduction of sales returns (212) (813) Non-cash impairment loss 500 - Deferred income taxes (395) (56) Other 39 353 --------- --------- Effect of statement of operations adjustments 30,512 26,581 Changes in operating assets and liabilities: Accounts receivable (4,669) (354) Prepaid and other assets (1,141) 4,770 Accounts payable 3,261 4,347 Accrued liabilities (4,552) (2,214) Deferred revenues 5,987 (3,889) Income taxes payable 4,412 7,548 --------- --------- Effect of changes in operating assets and liabilities 3,298 10,208 --------- --------- Net cash provided by operating activities from continuing operations 55,610 51,860 Cash flows from investing activities: Cash used in acquisitions, net of cash acquired (97,092) (4,719) Purchases of property and equipment (7,679) (14,995) Capitalized software development costs (2,280) (1,599) Purchases of marketable securities (38,907) (29,000) Sales and maturities of marketable securities 85,432 19,000 --------- --------- Net cash used in investing activities from continuing operations (60,526) (31,313) Cash flows from financing activities: Proceeds from common stock issued from exercises of stock options 5,482 10,943 Withholding taxes related to equity award net share settlement (5,111) (4,342) Proceeds from common stock issued under the employee stock purchase plan 3,146 2,929 Excess tax benefits from stock-based compensation 4,195 - Repurchase of common stock (51,582) (35,881) --------- --------- Net cash used in financing activities from continuing operations (43,870) (26,351) Net cash transferred (to) from discontinued operation 2,954 (76) Effect of exchange rate changes on cash and cash equivalents 215 (87) --------- --------- Net change in cash and cash equivalents from continuing operations (45,617) (5,967) Cash and cash equivalents of continuing operations at beginning of period 81,948 57,877 --------- --------- Cash and cash equivalents of continuing operations at end of period $ 36,331 $ 51,910 ========= ========= Nine Months Ended September 30 -------------------- 2011 2010 --------- --------- Supplemental disclosure of cash flow information Cash flow from discontinued operation: Net cash used in operating activities $ (50) $ (341) Net cash provided by investing activities 3,004 - Net cash transferred from (to) continuing operations (2,954) 76 Effect of exchange rates on cash and cash equivalents - (1) --------- --------- Net change in cash and cash equivalents from discontinued operations - (266) Cash and cash equivalents of discontinued operation at beginning of period - 266 --------- --------- 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 September 30, 2011 for Continuing Operations ----------------------------------------------- Gross Gross Operating Operating Net Margin Margin % Income Income % Income ------- -------- ---------- --------- ------- GAAP $53,731 64% $ 10,576 13% $ 6,826 Amortization of acquired developed technology 1,821 1,821 1,821 Amortization of other acquired intangibles - 960 960 Stock-based compensation - cost of revenues 909 909 909 Stock-based compensation - operating expenses - 4,156 4,156 Investment loss - - 500 Restructuring charges - 57 57 Income tax adjustment for non-GAAP (1) - - (3,422) ------- ---------- ------- Non-GAAP $56,461 67% $ 18,479 22% $11,807 ======= ========== ======= Diluted net income per share GAAP $ 0.13 Non-GAAP $ 0.22 Shares used to compute diluted net income per share 53,625 Three Months Ended September 30, 2010 for Continuing Operations ----------------------------------------------- Gross Gross Operating Operating Net Margin Margin % Income Income % Income ------- -------- ---------- --------- ------- GAAP $48,815 68% $ 9,733 14% $ 5,981 Amortization of acquired developed technology 845 845 845 Amortization of other acquired intangibles - 331 331 Stock-based compensation - cost of revenues 760 760 760 Stock-based compensation - operating expenses - 4,050 4,050 Restructuring charges - 26 26 Income tax adjustment for non-GAAP (1) - - (1,653) ------- ---------- ------- Non-GAAP $50,420 70% $ 15,745 22% $10,340 ======= ========== ======= Diluted net income per share GAAP $ 0.11 Non-GAAP $ 0.19 Shares used to compute diluted net income per share 54,232 (1) The estimated non-GAAP effective tax rate was 35% for the three months ended September 30, 2011 and 2010, 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, 2011 Continuing Operations Operating Income % -------------------- Projected GAAP 13% ==================== Projected amortization of acquired developed technology and other acquired intangible asset adjustment 3% Projected stock based compensation adjustment 6% -------------------- Projected non-GAAP 22% ====================

CONTACT
Media Contact:
Smita Topolski
Advent Software, Inc.
(415) 645-1668
Email Contact

Investor Relations Contact:
Heidi Flaherty
Advent Software, Inc.
(415) 645-1145
Email Contact


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