Delaware | 1-36254 | 04-2977748 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Exhibit Number | Description |
99.1 | Press Release announcing financial results, dated August 3, 2017 |
AVID TECHNOLOGY, INC. | |
(Registrant) | |
Date: August 3, 2017 | By: /s/ Brian E. Agle Name: Brian E. Agle Title: Senior Vice President and CFO |
• | GAAP Revenue was $102.4 million, in line with guidance. |
• | GAAP Gross Margin was 58.4%, Non-GAAP Gross Margin was 60.7%. |
• | GAAP Operating Expenses were $66.1 million, Non-GAAP Operating Expenses were $56.6 million, in line with guidance. |
• | GAAP Net Loss was $10.8 million, Adjusted EBITDA was $8.9 million, in line with guidance. |
• | GAAP Net Cash provided by Operating Activities was $2.5 million, Adjusted Free Cash Flow was $6.2 million, above the guidance range. |
• | Bookings and Constant Currency Bookings were $98.1 million and $104.3 million, respectively, in line with the guidance range. |
• | Increasing adoption of Avid’s cloud-enabled enterprise platform by large enterprise customers, with more than 48,000 enterprise users on the MediaCentral platform at the end of Q2 2017, representing a 27% increase year-over-year. |
• | More than 78,000 paying individual, cloud-enabled subscribers, a substantial majority of whom are new customers to Avid in the quarter, were in place at the end of Q2 2017, representing a 91% increase year-over-year. |
• | Reflecting the increase in both enterprise customers and subscriptions, bookings attributable to recurring revenue of $43 million represented 42% of total bookings in Q2 2017, up from 34% in Q2 2016, an increase of 19%. |
• | Increasing recurring revenue is positively impacting Avid’s revenue backlog of $488 million, which grew $23 million year-over-year and is increasing visibility. |
• | Further adoption of the shared services platform is helping to drive costs down and improve free cash flow. |
(in $ millions) | |
Bookings (Constant Currency) | $95 - $109 |
Bookings | $87 - $101 |
Revenue | $94 - $104 |
Non-GAAP Operating Expenses | $52 - $56 |
Adjusted EBITDA | $8 - $14 |
Adjusted Free Cash Flow | ($7) - $1 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net revenues: | |||||||||||||||
Products | $ | 47,655 | $ | 75,592 | $ | 98,661 | $ | 160,101 | |||||||
Services | 54,718 | 58,477 | 107,819 | 117,515 | |||||||||||
Total net revenues | 102,373 | 134,069 | 206,480 | 277,616 | |||||||||||
Cost of revenues: | |||||||||||||||
Products | 26,489 | 28,488 | 50,993 | 55,612 | |||||||||||
Services | 14,181 | 15,832 | 28,275 | 30,241 | |||||||||||
Amortization of intangible assets | 1,950 | 1,950 | 3,900 | 3,900 | |||||||||||
Total cost of revenues | 42,620 | 46,270 | 83,168 | 89,753 | |||||||||||
Gross profit | 59,753 | 87,799 | 123,312 | 187,863 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 16,991 | 21,433 | 35,879 | 42,838 | |||||||||||
Marketing and selling | 29,018 | 30,177 | 54,829 | 61,796 | |||||||||||
General and administrative | 13,644 | 16,818 | 28,075 | 34,537 | |||||||||||
Amortization of intangible assets | 363 | 782 | 726 | 1,568 | |||||||||||
Restructuring costs, net | 6,063 | (213 | ) | 7,046 | 2,564 | ||||||||||
Total operating expenses | 66,079 | 68,997 | 126,555 | 143,303 | |||||||||||
Operating (loss) income | (6,326 | ) | 18,802 | (3,243 | ) | 44,560 | |||||||||
Interest and other expense, net | (3,918 | ) | (5,159 | ) | (8,764 | ) | (9,342 | ) | |||||||
(Loss) income before income taxes | (10,244 | ) | 13,643 | (12,007 | ) | 35,218 | |||||||||
Provision for income taxes | 587 | 703 | 739 | 1,338 | |||||||||||
Net (loss) income | $ | (10,831 | ) | $ | 12,940 | $ | (12,746 | ) | $ | 33,880 | |||||
Net (loss) income per common share – basic | $ | (0.26 | ) | $ | 0.33 | $ | (0.31 | ) | $ | 0.86 | |||||
Net (loss) income per common share – diluted | (0.26 | ) | $ | 0.33 | $ | (0.31 | ) | $ | 0.85 | ||||||
Weighted-average common shares outstanding – basic | 40,953 | 39,678 | 40,863 | 39,622 | |||||||||||
Weighted-average common shares outstanding – diluted | 40,953 | 39,734 | 40,863 | 39,691 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Non-GAAP revenue | |||||||||||||||
GAAP revenue | $ | 102,373 | $ | 134,069 | $ | 206,480 | $ | 277,616 | |||||||
Amortization of acquired deferred revenue | — | 325 | — | 594 | |||||||||||
Non-GAAP revenue | 102,373 | 134,394 | 206,480 | 278,210 | |||||||||||
Pre-2011 Revenue | 360 | 7,798 | 765 | 17,136 | |||||||||||
Elim PCS | — | 15,200 | 1,700 | 32,800 | |||||||||||
Non-GAAP Revenue w/o Pre-2011 and Elim | 102,013 | 111,396 | 204,015 | 228,274 | |||||||||||
Non-GAAP gross profit | |||||||||||||||
GAAP gross profit | 59,753 | 87,799 | 123,312 | 187,863 | |||||||||||
Amortization of acquired deferred revenue | — | 325 | — | 594 | |||||||||||
Amortization of intangible assets | 1,950 | 1,950 | 3,900 | 3,900 | |||||||||||
Stock-based compensation | 420 | 152 | 484 | 332 | |||||||||||
Non-GAAP gross profit | 62,123 | 90,226 | 127,696 | 192,689 | |||||||||||
Pre-2011 Revenue | 360 | 7,798 | 765 | 17,136 | |||||||||||
Elim PCS | — | 15,200 | 1,700 | 32,800 | |||||||||||
Non-GAAP gross profit w/o Pre-2011 and Elim | 61,763 | 67,228 | 125,231 | 142,753 | |||||||||||
Non-GAAP operating expenses | |||||||||||||||
GAAP operating expenses | 66,079 | 68,997 | 126,555 | 143,303 | |||||||||||
Less Amortization of intangible assets | (363 | ) | (782 | ) | (726 | ) | (1,568 | ) | |||||||
Less Stock-based compensation | (1,563 | ) | (2,149 | ) | (2,909 | ) | (4,056 | ) | |||||||
Less Restructuring costs, net | (6,063 | ) | 213 | (7,046 | ) | (2,564 | ) | ||||||||
Less Restatement costs | (320 | ) | (68 | ) | (442 | ) | (148 | ) | |||||||
Less Acquisition, integration and other costs | (138 | ) | (279 | ) | (140 | ) | (794 | ) | |||||||
Less Efficiency program costs | (1,049 | ) | (1,286 | ) | (2,571 | ) | (2,001 | ) | |||||||
Non-GAAP operating expenses | 56,583 | 64,646 | 112,721 | 132,172 | |||||||||||
Non-GAAP operating income | |||||||||||||||
GAAP operating (loss) income | (6,326 | ) | 18,802 | (3,243 | ) | 44,560 | |||||||||
Amortization of acquired deferred revenue | — | 325 | — | 594 | |||||||||||
Amortization of intangible assets | 2,313 | 2,732 | 4,626 | 5,468 | |||||||||||
Stock-based compensation | 1,983 | 2,301 | 3,393 | 4,388 | |||||||||||
Restructuring costs, net | 6,063 | (213 | ) | 7,046 | 2,564 | ||||||||||
Restatement costs | 320 | 68 | 442 | 148 | |||||||||||
Acquisition, integration and other costs | 138 | 279 | 140 | 794 | |||||||||||
Efficiency program costs | 1,049 | 1,286 | 2,571 | 2,001 | |||||||||||
Non-GAAP operating income | 5,540 | 25,580 | 14,975 | 60,517 | |||||||||||
Adjusted EBITDA | |||||||||||||||
Non-GAAP operating income (from above) | 5,540 | 25,580 | 14,975 | 60,517 | |||||||||||
Depreciation | 3,335 | 3,811 | 6,906 | 7,422 | |||||||||||
Adjusted EBITDA | 8,875 | 29,391 | 21,881 | 67,939 | |||||||||||
Adjusted EBITDA margin | 9 | % | 22 | % | 11 | % | 24 | % | |||||||
Pre-2011 Revenue | 360 | 7,798 | 765 | 17,136 | |||||||||||
Elim PCS | — | 15,200 | 1,700 | 32,800 | |||||||||||
Adjusted EBITDA w/o Pre-2011 and Elim | 8,515 | 6,393 | 19,416 | 18,003 | |||||||||||
Adjusted free cash flow | |||||||||||||||
GAAP net cash provided by (used in) operating activities | 2,538 | (33,806 | ) | 6,072 | (45,016 | ) | |||||||||
Capital expenditures | (1,379 | ) | (2,803 | ) | (3,108 | ) | (7,321 | ) | |||||||
Free Cash Flow | 1,159 | (36,609 | ) | 2,964 | (52,337 | ) | |||||||||
Non-Operational / One-time Items | |||||||||||||||
Restructuring payments | 3,700 | 3,952 | 6,994 | 7,485 | |||||||||||
Restatement payments | 151 | — | 210 | — | |||||||||||
Acquisition, integration and other payments | 4 | 848 | 19 | 1,621 | |||||||||||
Efficiency program payments | 1,144 | 1,602 | 2,729 | 3,583 | |||||||||||
Sub-Total Non-Operational / One-Time Items | 4,999 | 6,402 | 9,952 | 12,689 | |||||||||||
Adjusted free cash flow | $ | 6,158 | $ | (30,207 | ) | $ | 12,916 | $ | (39,648 | ) | |||||
Adjusted free cash flow conversion of adjusted EBITDA | 69 | % | (103 | )% | 59 | % | (58 | )% |
June 30, | December 31, | ||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 47,434 | $ | 44,948 | |||
Accounts receivable, net of allowances of $8,445 and $8,618 at June 30, 2017 and December 31, 2016, respectively | 34,433 | 43,520 | |||||
Inventories | 41,219 | 50,701 | |||||
Prepaid expenses | 10,058 | 6,031 | |||||
Other current assets | 4,920 | 5,805 | |||||
Total current assets | 138,064 | 151,005 | |||||
Property and equipment, net | 23,977 | 30,146 | |||||
Intangible assets, net | 18,307 | 22,932 | |||||
Goodwill | 32,643 | 32,643 | |||||
Long-term deferred tax assets, net | 1,319 | 1,245 | |||||
Other long-term assets | 10,427 | 11,610 | |||||
Total assets | $ | 224,737 | $ | 249,581 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 27,495 | $ | 26,435 | |||
Accrued compensation and benefits | 29,141 | 25,387 | |||||
Accrued expenses and other current liabilities | 30,130 | 34,088 | |||||
Income taxes payable | 1,958 | 1,012 | |||||
Short-term debt | 5,000 | 5,000 | |||||
Deferred revenues | 129,858 | 146,014 | |||||
Total current liabilities | 223,582 | 237,936 | |||||
Long-term debt | 189,857 | 188,795 | |||||
Long-term deferred tax liabilities, net | 173 | 913 | |||||
Long-term deferred revenues | 74,181 | 79,670 | |||||
Other long-term liabilities | 11,699 | 12,178 | |||||
Total liabilities | 499,492 | 519,492 | |||||
Stockholders’ deficit: | |||||||
Common stock | 423 | 423 | |||||
Additional paid-in capital | 1,038,093 | 1,043,063 | |||||
Accumulated deficit | (1,283,894 | ) | (1,271,148 | ) | |||
Treasury stock at cost | (24,270 | ) | (32,353 | ) | |||
Accumulated other comprehensive loss | (5,107 | ) | (9,896 | ) | |||
Total stockholders’ deficit | (274,755 | ) | (269,911 | ) | |||
Total liabilities and stockholders’ deficit | $ | 224,737 | $ | 249,581 |
Six Months Ended | |||||||
June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (12,746 | ) | $ | 33,880 | ||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 11,531 | 12,890 | |||||
(Recovery) provision for doubtful accounts | (214 | ) | 367 | ||||
Stock-based compensation expense | 3,393 | 4,388 | |||||
Non-cash provision for restructuring | 2,477 | — | |||||
Non-cash interest expense | 5,214 | 5,394 | |||||
Unrealized foreign currency transaction losses | 4,763 | 1,578 | |||||
Benefit from deferred taxes | (746 | ) | (1,365 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 9,343 | 13,683 | |||||
Inventories | 9,482 | (5,829 | ) | ||||
Prepaid expenses and other assets | (3,287 | ) | (3,994 | ) | |||
Accounts payable | 980 | (10,373 | ) | ||||
Accrued expenses, compensation and benefits and other liabilities | (3,419 | ) | (13,910 | ) | |||
Income taxes payable | 991 | (510 | ) | ||||
Deferred revenues | (21,690 | ) | (81,215 | ) | |||
Net cash provided by (used in) operating activities | 6,072 | (45,016 | ) | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (3,108 | ) | (7,321 | ) | |||
Increase in other long-term assets | (23 | ) | (12 | ) | |||
Decrease (increase) in restricted cash | 1,700 | (4,544 | ) | ||||
Net cash used in investing activities | (1,431 | ) | (11,877 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | — | 100,000 | |||||
Repayment of debt | (2,500 | ) | (1,250 | ) | |||
Proceeds from the issuance of common stock under employee stock plans | 217 | 285 | |||||
Common stock repurchases for tax withholdings for net settlement of equity awards | (497 | ) | (441 | ) | |||
Proceeds from revolving credit facilities | — | 25,000 | |||||
Payments on revolving credit facilities | — | (30,000 | ) | ||||
Payments for credit facility issuance costs | — | (4,971 | ) | ||||
Net cash (used in) provided by financing activities | (2,780 | ) | 88,623 | ||||
Effect of exchange rate changes on cash and cash equivalents | 625 | 733 | |||||
Net increase in cash and cash equivalents | 2,486 | 32,463 | |||||
Cash and cash equivalents at beginning of period | 44,948 | 17,902 | |||||
Cash and cash equivalents at end of period | $ | 47,434 | $ | 50,365 |
June 30, | March 31, | June 30, | ||||||||||||||
Revenue Backlog* | 2017 | 2017 | 2016 | |||||||||||||
Pre-2011 | $ | 331 | $ | 691 | $ | 8,732 | ||||||||||
Post-2010 | $ | 203,708 | $ | 222,342 | $ | 258,420 | ||||||||||
Deferred Revenue | $ | 204,039 | $ | 223,033 | $ | 267,152 | ||||||||||
Other Backlog | $ | 283,765 | $ | 271,184 | $ | 197,591 | ||||||||||
Total Revenue Backlog | $ | 487,804 | $ | 494,217 | $ | 464,743 | ||||||||||
The expected timing of recognition of revenue backlog as of June 30, 2017 is as follows: | ||||||||||||||||
2017 | 2018 | 2019 | Thereafter | Total | ||||||||||||
Orders executed prior to January 1, 2011 | $ | 220 | $ | 112 | $ | — | $ | — | $ | 331 | ||||||
Orders executed or materially modified on or | $ | 73,221 | $ | 55,460 | $ | 30,583 | $ | 44,444 | $ | 203,708 | ||||||
after January 1, 2011 | ||||||||||||||||
Other Backlog | $ | 76,862 | $ | 91,361 | $ | 55,156 | $ | 60,385 | $ | 283,765 | ||||||
Total Revenue Backlog | $ | 150,303 | $ | 146,933 | $ | 85,739 | $ | 104,829 | $ | 487,804 | ||||||
*A definition of Revenue Backlog is included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com. | ||||||||||||||||
Note: current estimates could change based on a number of factors, including (i) the timing of delivery of products and services, (ii) customer cancellations or change order, (iii) changes in the estimated period of time Implied Maintenance Release PCS is provided to customers, including as a result of changes in business practices. |