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TIBCO Software Reports Q2 Non-GAAP EPS Grows 24% to $0.26

Total Revenue Grows 14% Over Q2 2011, or 20% on a Constant Currency Basis (June 28, 2012)

PALO ALTO, CA -- (Marketwire) -- 06/28/12 -- TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its second fiscal quarter, which ended on Sunday, June 3, 2012.

Total revenue for the second quarter of fiscal 2012 was $247.4 million and net income was $26.5 million, or $0.16 per diluted share. This compares to total revenue of $216.4 million and net income of $21.0 million, or $0.12 per diluted share, as reported for the second quarter of fiscal 2011.

On a non-GAAP basis, net income for the second quarter of fiscal 2012 was $43.6 million or $0.26 per diluted share, compared with $36.3 million or $0.21 per diluted share for the second quarter of fiscal 2011. Non-GAAP operating income for the second quarter of fiscal 2012 was $61.8 million, an increase of 22% over non-GAAP operating income of $50.8 million in the second quarter of fiscal 2011. Non-GAAP results exclude amortization of acquired intangible assets, stock-based compensation expense, acquisition related and other expenses, restructuring activities and non-cash interest expense related to convertible debt, and assume a non-GAAP effective tax rate of 27% and 26% for the second quarter of fiscal years 2012 and 2011, respectively.

"We delivered another quarter of continued growth, with total revenue and license revenue up by 20% and 17% respectively, after adjusting for currency movements," said Vivek Ranadivé, TIBCO's chairman and CEO. "A growing list of customers across industries and geographies are harnessing big data and becoming event-driven through the use of our infrastructure software platform -- whether for new demand generation, improved loyalty program returns, increased operational efficiencies, or superior risk management. In up markets and down, these remain priority initiatives that continue to create opportunities for TIBCO."


Second Quarter Fiscal 2012 Highlights

  • Record Q2 total revenue was $247.4 million, up 14% over last year on a reported basis and up 20% on a constant currency basis;
  • Record Q2 license revenue was $92.6 million, up 13% over last year on a reported basis and up 17% on a constant currency basis;
  • Q2 non-GAAP operating margin was 25%;
  • Q2 non-GAAP EPS was $0.26, up 24% over last year;
  • Repurchased 3.6 million shares;
  • Diversified mix of business across industries including Financial Services, Communications, Manufacturing, Energy, Life Sciences, Healthcare, and Retail;
  • TIBCO closed 137 deals over $100k and had 20 deals over $1 million; and
  • TIBCO expanded its business with leading companies and agencies in the second quarter such as Beijing Jurassic, DBS Bank, Dunkin' Brands, Equinix, ING Insurance, NFU Mutual, Nielsen, Novo Nordisk, Reed Smith LLP, Reliance Industries, and Vodafone Egypt.

Conference Call Details

TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its second 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 706-758-2055. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight PT on July 28, 2012 at www.tibco.com or via dial-in at 800-585-8367 or 404-537-3406. The pass code for both the call and the replay is 88581564.

About TIBCO

TIBCO Software Inc. (NASDAQ: TIBX) is a provider of infrastructure software for companies to use on-premise or as part of cloud computing environments. Whether it's optimizing claims, processing trades, cross-selling products based on real-time customer behavior, or averting a crisis before it happens, TIBCO provides companies the two-second advantage™ - the ability to capture the right information at the right time and act on it preemptively for a competitive advantage. More than 4,000 customers worldwide rely on TIBCO to manage information, decisions, processes and applications in real time. Learn more at www.tibco.com.

TIBCO, two-second advantage, and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc. in the United States and/or other countries. All 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.

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 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 second quarter of fiscal year 2012 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 statements regarding the ability of TIBCO's platform to help customers become event-driven, improve loyalty program performance, increase supply chain efficiencies, and deliver superior risk management, and TIBCO's belief that these will remain priority initiatives that create opportunities for TIBCO in up markets and down, 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 develop products that address changing market demands, the impact of competition from alternative business models and new product introductions, TIBCO's ability to offer differentiated products that capitalize on current technology trends, 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, 2011 and Quarterly Report on Form 10-Q for the quarter ended March 4, 2012. TIBCO assumes no obligation to update the forward-looking statements included in this release.

TIBCO Software Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands) June 3, November 30, 2012 2011 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 647,104 $ 308,148 Short-term investments 205 225 Accounts receivable, net 175,436 196,419 Prepaid expenses and other current assets 64,862 61,864 ------------- ------------- Total current assets 887,607 566,656 Property and equipment, net 93,526 89,871 Goodwill 516,687 451,821 Acquired intangible assets, net 140,156 97,258 Long-term deferred income tax assets 114,267 78,656 Other assets 64,069 48,676 ------------- ------------- Total assets $ 1,816,312 $ 1,332,938 ============= ============= LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 24,921 $ 25,802 Accrued liabilities 118,281 129,168 Accrued restructuring costs 997 6,792 Deferred revenue 231,634 210,234 Current portion of long-term debt 2,463 2,397 ------------- ------------- Total current liabilities 378,296 374,393 Accrued restructuring costs, less current portion 966 1,050 Long-term deferred revenue 21,904 14,876 Long-term deferred income tax liabilities 58,173 4,540 Long-term income tax liabilities 24,174 20,772 Other long-term liabilities 2,542 2,445 Long-term debt, less current portion 34,463 65,711 Convertible debt 516,998 - ------------- ------------- Total long-term liabilities 659,220 109,394 ------------- ------------- Total liabilities 1,037,516 483,787 ------------- ------------- Total equity 778,796 849,151 ------------- ------------- Total liabilities and equity $ 1,816,312 $ 1,332,938 ============= ============= TIBCO Software Inc. Condensed Consolidated Statements of Operations (unaudited) (in thousands, except net income per share) Three Months Ended Six Months Ended ------------------------ ------------------------ June 3, May 29, June 3, May 29, 2012 2011 2012 2011 ----------- ----------- ----------- ----------- Revenue: License $ 92,581 $ 81,974 $ 174,896 $ 152,059 Service and maintenance 154,782 134,447 298,169 249,703 ----------- ----------- ----------- ----------- Total revenue 247,363 216,421 473,065 401,762 ----------- ----------- ----------- ----------- Cost of revenue: License 9,401 9,710 18,441 18,637 Service and maintenance 59,486 52,017 116,536 96,037 ----------- ----------- ----------- ----------- Total cost of revenue 68,887 61,727 134,977 114,674 ----------- ----------- ----------- ----------- Gross profit 178,476 154,694 338,088 287,088 ----------- ----------- ----------- ----------- Operating expenses: Research and development 38,605 36,175 75,926 68,861 Sales and marketing 78,923 68,909 154,641 131,432 General and administrative 17,407 15,573 35,002 28,490 Amortization of acquired intangible assets 5,653 5,030 10,201 9,921 Acquisition related and other 929 278 1,325 823 Restructuring adjustment (400) - (519) (33) ----------- ----------- ----------- ----------- Total operating expenses 141,117 125,965 276,576 239,494 ----------- ----------- ----------- ----------- Income from operations 37,359 28,729 61,512 47,594 Interest income 221 448 476 930 Interest expense (4,395) (951) (5,860) (1,997) Other income (expense), net 572 (1,136) 1,548 (1,426) ----------- ----------- ----------- ----------- Income before provision for income taxes and noncontrolling interest 33,757 27,090 57,676 45,101 Provision for income taxes 7,200 6,000 10,500 7,996 ----------- ----------- ----------- ----------- Net income 26,557 21,090 47,176 37,105 Less: Net income attributable to noncontrolling interest 65 44 43 106 ----------- ----------- ----------- ----------- Net income attributable to TIBCO Software Inc. $ 26,492 $ 21,046 $ 47,133 $ 36,999 =========== =========== =========== =========== Net income per share attributable to TIBCO Software Inc.: Basic $ 0.17 $ 0.13 $ 0.29 $ 0.23 =========== =========== =========== =========== Diluted $ 0.16 $ 0.12 $ 0.28 $ 0.21 =========== =========== =========== =========== Shares used to compute net income per share attributable to TIBCO Software Inc.: Basic 160,437 161,911 160,949 161,207 =========== =========== =========== =========== Diluted 169,477 174,666 170,172 174,076 =========== =========== =========== =========== TIBCO Software Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Six Months Ended ---------------------------- June 3, May 29, 2012 2011 ------------- ------------- Cash flows from operating activities: Net income $ 47,176 $ 37,105 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 7,050 6,310 Amortization of acquired intangible assets 17,365 19,664 Amortization of debt discount and transaction costs 2,210 386 Stock-based compensation 29,718 23,268 Deferred income tax (9,281) (9,342) Tax benefits related to stock benefit plans 9,406 10,739 Excess tax benefits from stock-based compensation (16,484) (26,737) Other non-cash adjustments, net 531 (146) Changes in assets and liabilities: Accounts receivable 16,751 17,516 Prepaid expenses and other assets 4,290 3,237 Accounts payable (981) (1,222) Accrued liabilities and restructuring costs (20,373) (21,504) Deferred revenue 29,563 24,064 ------------- ------------- Net cash provided by operating activities 116,941 83,338 ------------- ------------- Cash flows from investing activities: Acquisitions, net of cash acquired (131,611) (22,579) Purchases of property and equipment (11,224) (3,837) Restricted cash pledged as security (1,149) (1,852) Other investing activities, net 414 1,348 ------------- ------------- Net cash used in investing activities (143,570) (26,920) ------------- ------------- Cash flows from financing activities: Proceeds from issuance of convertible debt, net 584,450 - Proceeds from revolving credit facility, net 116,648 - Principal payments on debt (151,182) (1,119) Proceeds from issuance of common stock 17,298 33,324 Repurchases of the Company's common stock (188,508) (72,329) Withholding taxes related to restricted stock net share settlement (15,116) (15,024) Excess tax benefits from stock-based compensation 16,484 26,737 ------------- ------------- Net cash provided by (used in) financing activities 380,074 (28,411) ------------- ------------- Effect of foreign exchange rate changes on cash and cash equivalents (14,489) 6,491 ------------- ------------- Net change in cash and cash equivalents 338,956 34,498 Cash and cash equivalents at beginning of period 308,148 243,989 ------------- ------------- Cash and cash equivalents at end of period $ 647,104 $ 278,487 ============= =============

About Non-GAAP Financial Measures

TIBCO provides non-GAAP measures for operating income, net income and net income per share data as supplemental information regarding TIBCO's business performance. TIBCO believes that these non-GAAP financial measures are useful to investors because they exclude non-operating charges. 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 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, gains and losses on equity investments, and the income tax effects of the foregoing, as well as adjustments for the impact of changes in the valuation allowance recorded against TIBCO's deferred tax assets when making operational decisions.

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 that used by TIBCO's management.

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 and/or analysts. However, TIBCO's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. In addition, some items such as restructuring charges that are excluded from non-GAAP net income and non-GAAP earnings per share can have a material impact on cash flows and stock compensation charges can have a significant impact on earnings. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. TIBCO has historically provided non-GAAP measures to the investment community as a supplement to its GAAP results, to enable investors to evaluate TIBCO's business performance
in the way that management does.

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

Amortization of Intangible Assets

TIBCO has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions TIBCO has made. 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 believes that eliminating this expense from its non-GAAP measures is useful to investors, because 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 TIBCO believes is not reflective of its business performance. The nature of the stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions and different award types, making the comparison of current results with forward-looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expenses may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods. 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 has incurred 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 believes that eliminating these expenses from its non-GAAP measures is useful to investors, because it 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.

Restructuring Activities

TIBCO has incurred 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.

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 operating income, 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 believes that excluding this expense from its non-GAAP measures is useful to investors 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.

TIBCO Software Inc. Reconciliation of GAAP to Non-GAAP Measures (unaudited) (in thousands, except net income per share) Three Months Ended --------------------------------------------------- June 3, May 29, 2012 2011 ------------------------- ------------------------ Net income Net income attributable attributable Operating to TIBCO Operating to TIBCO Income Software Inc. Income Software Inc. ---------- ------------- ---------- ------------- GAAP $ 37,359 $ 26,492 $ 28,729 $ 21,046 Amortization of intangible assets - cost of revenue 3,899 3,899 4,948 4,948 Amortization of intangible assets - operating expense 5,653 5,653 5,030 5,030 Stock-based compensation - cost of revenue 1,116 1,116 957 957 Stock-based compensation - R&D expense 3,354 3,354 3,003 3,003 Stock-based compensation - S&M expense 4,694 4,694 4,077 4,077 Stock-based compensation - G&A expense 5,231 5,231 3,750 3,750 Acquisition related and other 929 929 278 278 Non-cash interest expense related to convertible debt - 1,564 - - Restructuring adjustment (400) (400) - - Income tax adjustment for non- GAAP - (8,945) - (6,775) ---------- ------------- ---------- ------------- Non-GAAP $ 61,835 $ 43,587 $ 50,772 $ 36,314 ========== ============= ========== ============= Diluted net income per share attributable to TIBCO Software Inc.: GAAP $ 0.16 $ 0.12 ============= ============= Non-GAAP $ 0.26 $ 0.21 ============= ============= Shares used to compute diluted net income per share attributable to TIBCO Software Inc.: 169,477 174,666 ============= ============= Six Months Ended ---------------------------------------------------- June 3, May 29, 2012 2011 ------------------------- ------------------------- Net income Net income attributable attributable Operating to TIBCO Operating to TIBCO Income Software Inc. Income Software Inc. ---------- ------------- ---------- ------------- GAAP $ 61,512 $ 47,132 $ 47,594 $ 36,999 Amortization of intangible assets - cost of revenue 7,164 7,164 9,743 9,743 Amortization of intangible assets - operating expense 10,201 10,201 9,921 9,921 Stock-based compensation - cost of revenue 2,398 2,398 1,831 1,831 Stock-based compensation - R&D expense 7,359 7,359 5,652 5,652 Stock-based compensation - S&M expense 9,987 9,987 8,290 8,290 Stock-based compensation - G&A expense 9,976 9,976 7,495 7,495 Acquisition related and other 1,325 1,325 823 823 Non-cash interest expense related to convertible debt - 1,564 - - Restructuring adjustment (519) (519) (33) (33) Income tax adjustment for non- GAAP - (18,425) - (17,083) ---------- ------------- ---------- ------------- Non-GAAP $ 109,403 $ 78,162 $ 91,316 $ 63,638 ========== ============= ========== ============= Diluted net income per share attributable to TIBCO Software Inc.: GAAP $ 0.28 $ 0.21 ============= ============= Non-GAAP $ 0.46 $ 0.37 ============= ============= Shares used to compute diluted net income per share attributable to TIBCO Software Inc.: 170,172 174,076 ============= =============

Media Relations Contact:
Tiffany Anderson
TIBCO Software Inc.
(650) 846-8737
Email Contact

Investor Relations Contact:
Matthew Langdon
TIBCO Software Inc.
(650) 846-5747
Email Contact


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