Delaware | 1-36254 | 04-2977748 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
• | Non-GAAP Gross Profit is defined as GAAP gross profit, excluding amortization of intangible assets and stock-based compensation expense. |
• | Non-GAAP Gross Margin is defined as GAAP gross margin, excluding amortization of intangible assets and stock-based compensation expense. |
• | Non-GAAP Operating Expenses are defined as GAAP operating expense excluding restructuring costs, stock-based compensation, amortization of intangible assets as well as other unusual items such as costs related to the restatement, M&A related activity, and efficiency program. |
• | Non-GAAP Operating Income (Loss) is defined as GAAP operating income (loss) excluding restructuring costs, stock-based compensation, amortization of intangible assets as well as other unusual items such as costs related to the restatement, M&A related activity, and efficiency program. |
• | Adjusted EBITDA is defined as non-GAAP operating income (loss) excluding depreciation expense. |
• | Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by GAAP Net Revenues. |
• | Non-GAAP Interest and Other Expense is defined as GAAP interest and other expense excluding one-time financing fees and loss on extinguishment of debt. |
• | Non-GAAP Income Tax Provision is defined as the provision for income taxes on non-GAAP profit (loss) before income taxes, which is non-GAAP Operating Income (Loss) excluding Non-GAAP Interest and Other Expense; additionally, the Non-GAAP Income Tax provision excludes deferred tax expense or benefit associated with the creation or release of a valuation allowance for deferred tax assets. |
• | Non-GAAP Net Income (Loss) is defined as Non-GAAP Operating Income (Loss) less Non-GAAP Interest and Other Expense, and Non-GAAP Income Tax Provision. |
• | Non-GAAP Net Income (Loss) Per Share is defined as non-GAAP Net Income (Loss) divided by weighted-average common shares outstanding. |
• | Free Cash Flow is defined as GAAP operating cash flow less capital expenditures. |
• | Cloud-enabled software subscriptions as of the end of a quarter represent the number of paid subscription licenses under an active contract as of that date, excluding any licenses that may be receiving service under an active contract but that are not paid for at that time by the customer, whether due to a promotion, cancellation or otherwise. For comparison purposes, subscription numbers for previous quarters have been adjusted from previously published numbers to (i) include multi-year and multi-seat licenses, and (ii) exclude certain terminated subscription licenses. |
• | Recurring Revenue is defined as the sum of subscription revenue, maintenance revenue and revenue under our long-term contractual agreements. |
• | LTM Recurring Revenue % is Recurring Revenue divided by Total Net Revenue for the most recent four quarters. |
• | Annual Contract Value is defined, as of a given date, as the sum of the following three components: (i) the annual value of all long-term contractual agreements in effect on such date, calculated by dividing the total value of each contract (excluding expected maintenance revenue included in (ii) below and expected subscription revenue included in (iii) below) divided by the total number of years of such contract, (ii) maintenance revenue for the quarter ended on such date, multiplied by four, and (iii) subscription revenue for the quarter ended on such date, multiplied by four. |
• | Revenue Backlog consists of firm orders received and includes both (i) orders where the customer has been invoiced in advance of our performance obligations being fulfilled and (ii) orders for future product deliveries or services that have not yet been invoiced by us. |
Exhibit Number | Description |
99.1 |
AVID TECHNOLOGY, INC. | |
(Registrant) | |
Date: March 9, 2020 | By: /s/ Kenneth Gayron Name: Kenneth Gayron Title: Executive Vice President and CFO |
• | Subscription revenue was $15.8 million, up 53.6% year-over-year |
• | Subscription and Maintenance revenue was $49.3 million, up 10.3% year-over-year. |
• | Total revenue was $116.3 million, up 3.2% year-over-year. |
• | Gross Margin was 63.0%, up 400 basis points year-over-year. Non-GAAP Gross Margin was 63.2%, up 240 basis points year-over-year. |
• | Operating Expenses were $57.6 million, up 5.7% year-over-year. Non-GAAP Operating Expenses were $54.4 million, up 8.5% year-over-year. Fourth quarter operating expenses were impacted by higher R&D investment and growing webstore fees from increased transaction volume as well as temporary items related to timing of bonus accrual and higher sales commissions, while full-year 2019 operating expenses were down year-over-year. |
• | Operating Income was $15.7 million, up 30.2% year-over-year. Non-GAAP Operating Income was $19.0 million, up 3.6% year-over-year. |
• | Adjusted EBITDA was $21.2 million, down (0.5%) year-over-year. Adjusted EBITDA Margin was 18.2%, down (70) basis points year-over-year. |
• | Net income per common share was $0.35, up from $0.14 in Q4 2018, including a one-time benefit in Q4 2019 of $6.0 million, or $0.14 per share, related to a valuation allowance against certain deferred tax assets. Non-GAAP Net Income per Share was $0.28, flat year-over-year. |
• | Net cash provided by operating activities was $18.5 million, down ($1.5) million year-over-year, due in part to the timing of billings during Q4 2019 which resulted in a $6.0 million year-over-year increase in accounts receivable at year end 2019. |
• | Free Cash Flow was $17.0 million, down ($0.7) million year-over-year. |
• | Subscription revenue was $45.2 million, up 25.9% year-over-year, with approximately 188,000 cloud-enabled software subscriptions at the end of 2019, up 50% year over year. |
• | Subscription and Maintenance revenue was $175.6 million, up 0.3% year-over-year. |
• | Total revenue was $411.8 million, down (0.4%) year-over-year. On a constant-currency basis, revenue was up 1.0% year-over-year. |
• | Gross Margin was 60.5%, up 260 basis points year-over-year. Non-GAAP Gross Margin was 61.5%, up 170 basis points year-over-year. |
• | Operating Expenses were $217.0 million, down (3.8%) year-over-year largely driven by savings from operational efficiency initiatives. Non-GAAP Operating Expenses were $206.6 million, down (2.4%) year-over-year. |
• | Operating Income was $32.1 million, up 134.6% year-over-year. Non-GAAP Operating Income was $46.8 million, up 31.4% year-over-year. |
• | Adjusted EBITDA was $56.0 million, up 17.9% year-over-year. Adjusted EBITDA Margin was 13.6%, up 210 basis points year-over-year. |
• | Net income per common share was $0.17, up from net (loss) per common share of ($0.26) in 2018. Non-GAAP Net Income per Share was $0.51, up from $0.25 in 2018. |
• | Net cash provided by operating activities was $19.6 million, up 24.1% year-over-year. |
• | Free Cash Flow was $12.5 million, up 111.6% year-over-year. |
• | Recurring Revenue was 62% of the Company’s revenue in 2019 up from 56% in 2018. |
• | Annual Contract Value was $280 million at the end of 2019 up 13% from $248 million at the end of 2018, reflecting continuing growth in Avid’s high-margin subscription revenue plus maintenance revenues and revenues under long-term agreements. |
(in $ millions, except per share amounts) | Q1 2020 | Full Year 2020 |
Revenue | $95 - $105 | $417 - $437 |
Subscription & Maintenance Revenue | $43 - $47 | $180 - $190 |
Adjusted EBITDA | $10 - $16 | $66 - $74 |
Non-GAAP Net Income per Share | $0.84 - $0.93 | |
Free Cash Flow | $27 - $35 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net revenues: | |||||||||||||||
Products | $ | 59,812 | $ | 60,185 | $ | 207,445 | $ | 205,107 | |||||||
Services | 56,494 | 52,499 | 204,343 | 208,175 | |||||||||||
Total net revenues | 116,306 | 112,684 | 411,788 | 413,282 | |||||||||||
Cost of revenues: | |||||||||||||||
Products | 30,264 | 31,074 | 109,799 | 110,758 | |||||||||||
Services | 12,769 | 13,146 | 49,176 | 55,560 | |||||||||||
Amortization of intangible assets | — | 1,950 | 3,738 | 7,800 | |||||||||||
Total cost of revenues | 43,033 | 46,170 | 162,713 | 174,118 | |||||||||||
Gross profit | 73,273 | 66,514 | 249,075 | 239,164 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 16,018 | 14,836 | 62,343 | 62,379 | |||||||||||
Marketing and selling | 26,603 | 23,921 | 99,944 | 101,273 | |||||||||||
General and administrative | 14,816 | 13,574 | 53,362 | 55,230 | |||||||||||
Amortization of intangible assets | — | 361 | 694 | 1,450 | |||||||||||
Restructuring costs, net | 113 | 1,747 | 629 | 5,148 | |||||||||||
Total operating expenses | 57,550 | 54,439 | 216,972 | 225,480 | |||||||||||
Operating income | 15,723 | 12,075 | 32,103 | 13,684 | |||||||||||
Interest and other expense, net | (5,584 | ) | (5,725 | ) | (29,578 | ) | (23,087 | ) | |||||||
Income (loss) before income taxes | 10,139 | 6,350 | 2,525 | (9,403 | ) | ||||||||||
Provision for income taxes | (5,231 | ) | 447 | (5,076 | ) | 1,271 | |||||||||
Net income (loss) | $ | 15,370 | $ | 5,903 | $ | 7,601 | $ | (10,674 | ) | ||||||
Net income (loss) per common share – basic | $ | 0.36 | $ | 0.14 | $ | 0.18 | $ | (0.26 | ) | ||||||
Net income (loss) per common share – diluted | $ | 0.35 | $ | 0.14 | $ | 0.17 | $ | (0.26 | ) | ||||||
Weighted-average common shares outstanding – basic | 43,060 | 41,860 | 42,649 | 41,662 | |||||||||||
Weighted-average common shares outstanding – diluted | 43,737 | 42,430 | 43,495 | 41,662 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP revenue | |||||||||||||||
GAAP revenue | $ | 116,306 | $ | 112,684 | $ | 411,788 | $ | 413,282 | |||||||
Non-GAAP Gross Profit | |||||||||||||||
GAAP gross profit | $ | 73,273 | $ | 66,514 | $ | 249,075 | $ | 239,164 | |||||||
Amortization of intangible assets | — | 1,950 | 3,738 | 7,800 | |||||||||||
Stock-based compensation | 197 | 99 | 617 | 321 | |||||||||||
Non-GAAP Gross Profit | $ | 73,470 | $ | 68,563 | $ | 253,430 | $ | 247,285 | |||||||
Non-GAAP Gross Margin | 63.2 | % | 60.8 | % | 61.5 | % | 59.8 | % | |||||||
Non-GAAP Operating Expenses | |||||||||||||||
GAAP operating expenses | $ | 57,550 | $ | 54,439 | $ | 216,972 | $ | 225,480 | |||||||
Less Amortization of intangible assets | — | (361 | ) | (695 | ) | (1,450 | ) | ||||||||
Less Stock-based compensation | (1,973 | ) | (1,828 | ) | (7,341 | ) | (5,937 | ) | |||||||
Less Restructuring costs, net | (113 | ) | (1,747 | ) | (631 | ) | (5,148 | ) | |||||||
Less Restatement costs | 15 | (11 | ) | 18 | (826 | ) | |||||||||
Less Acquisition, integration and other costs | (988 | ) | (300 | ) | (1,446 | ) | (361 | ) | |||||||
Less Efficiency program costs | (59 | ) | (14 | ) | (250 | ) | (94 | ) | |||||||
Non-GAAP Operating Expenses | $ | 54,432 | $ | 50,178 | $ | 206,627 | $ | 211,664 | |||||||
Non-GAAP Operating Income | |||||||||||||||
GAAP operating income | $ | 15,723 | $ | 12,075 | $ | 32,103 | $ | 13,684 | |||||||
Amortization of intangible assets | — | 2,311 | 4,433 | 9,250 | |||||||||||
Stock-based compensation | 2,170 | 1,927 | 7,958 | 6,258 | |||||||||||
Restructuring costs, net | 113 | 1,747 | 631 | 5,148 | |||||||||||
Restatement costs | (15 | ) | 11 | (18 | ) | 826 | |||||||||
Acquisition, integration and other costs | 988 | 300 | 1,446 | 361 | |||||||||||
Efficiency program costs | 59 | 14 | 250 | 94 | |||||||||||
Non-GAAP Operating Income | $ | 19,038 | $ | 18,385 | $ | 46,803 | $ | 35,621 | |||||||
Adjusted EBITDA | |||||||||||||||
Non-GAAP Operating Income (from above) | $ | 19,038 | $ | 18,385 | $ | 46,803 | $ | 35,621 | |||||||
Depreciation | 2,166 | 2,924 | 9,202 | 11,891 | |||||||||||
Adjusted EBITDA | $ | 21,204 | $ | 21,309 | $ | 56,005 | $ | 47,512 | |||||||
Adjusted EBITDA Margin | 18.2 | % | 18.9 | % | 13.6 | % | 11.5 | % | |||||||
Non-GAAP Net Income | |||||||||||||||
Non-GAAP Operating Income (from above) | $ | 19,038 | $ | 18,385 | $ | 46,803 | $ | 35,621 | |||||||
Less: Non-GAAP Interest and other expense | (5,584 | ) | (5,725 | ) | (22,207 | ) | (23,087 | ) |
Less: Non-GAAP Income Tax | (1,299 | ) | (921 | ) | (2,417 | ) | (1,997 | ) | |||||||
Non-GAAP Net Income | $ | 12,155 | $ | 11,739 | $ | 22,179 | $ | 10,537 | |||||||
Weighted-average common shares outstanding - diluted | 43,737 | 42,430 | 43,495 | 41,662 | |||||||||||
Non-GAAP Earnings Per Share - diluted | $ | 0.28 | $ | 0.28 | $ | 0.51 | $ | 0.25 | |||||||
Free Cash Flow | |||||||||||||||
GAAP net cash provided by operating activities | $ | 18,529 | $ | 20,070 | $ | 19,641 | $ | 15,822 | |||||||
Capital expenditures | (1,556 | ) | (2,396 | ) | (7,185 | ) | (9,936 | ) | |||||||
Free Cash Flow | $ | 16,973 | $ | 17,674 | $ | 12,456 | $ | 5,886 | |||||||
Free Cash Flow conversion of Adjusted EBITDA | 80.0 | % | 82.9 | % | 22.2 | % | 12.4 | % |
December 31, | December 31, | ||||||
2019 | 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 69,085 | $ | 56,103 | |||
Restricted cash | 1,663 | 8,500 | |||||
Accounts receivable, net of allowances of $958 and $1,339 at December 31, 2019 and 2018, respectively | 73,773 | 67,754 | |||||
Inventories | 29,166 | 32,956 | |||||
Prepaid expenses | 9,425 | 8,853 | |||||
Contract assets | 19,494 | 16,513 | |||||
Other current assets | 6,125 | 5,917 | |||||
Total current assets | 208,731 | 196,596 | |||||
Property and equipment, net | 19,580 | 21,582 | |||||
Goodwill | 32,643 | 32,643 | |||||
Intangible assets, net | — | 4,432 | |||||
Right of use assets | 29,747 | — | |||||
Long-term deferred tax assets | 7,479 | 1,158 | |||||
Other long-term assets | 6,113 | 9,432 | |||||
Total assets | $ | 304,293 | $ | 265,843 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 39,888 | $ | 39,239 | |||
Accrued compensation and benefits | 19,524 | 21,967 | |||||
Accrued expenses and other current liabilities | 36,759 | 37,547 | |||||
Income taxes payable | 1,945 | 1,853 | |||||
Short-term debt | 30,554 | 1,405 | |||||
Deferred revenues | 83,589 | 85,662 | |||||
Total current liabilities | 212,259 | 187,673 | |||||
Long-term debt | 199,034 | 220,590 | |||||
Long-term deferred revenues | 14,312 | 13,939 | |||||
Long-term lease liabilities | 28,127 | — | |||||
Other long-term liabilities | 5,646 | 10,302 | |||||
Total liabilities | 459,378 | 432,504 | |||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value, 1,000 shares authorized; no shares issued or outstanding | $ | — | $ | — | |||
Common stock, $0.01 par value, 100,000 shares authorized; 43,247 shares issued, and 43,150 shares and 41,948 shares outstanding at December 31, 2019 and 2018, respectively | 430 | 423 | |||||
Additional paid-in capital | 1,027,824 | 1,028,924 | |||||
Accumulated deficit | (1,179,409 | ) | (1,187,010 | ) | |||
Treasury stock at cost, net of reissuances, 98 shares and 391 shares at December 31, 2019 and 2018, respectively | — | (5,231 | ) | ||||
Accumulated other comprehensive income | (3,930 | ) | (3,767 | ) | |||
Total stockholders’ equity | (155,085 | ) | (166,661 | ) | |||
Total liabilities and stockholders’ equity | $ | 304,293 | $ | 265,843 |
Twelve Months Ended | |||||||
December 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 7,601 | $ | (10,674 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 13,634 | 21,142 | |||||
Provision for doubtful accounts | 208 | 119 | |||||
Loss on convertible notes extinguishment | 2,878 | — | |||||
Stock-based compensation expense | 7,958 | 6,258 | |||||
Non-cash provision for restructuring | — | 1,083 | |||||
Non-cash interest expense | 6,143 | 8,987 | |||||
Unrealized foreign currency transaction losses (gains) | 971 | (996 | ) | ||||
(Benefit from) provision for deferred taxes | (6,309 | ) | 113 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (6,227 | ) | (6,689 | ) | |||
Inventories | 3,790 | (551 | ) | ||||
Prepaid expenses and other assets | (44 | ) | 5,832 | ||||
Accounts payable | 626 | 9,148 | |||||
Accrued expenses, compensation and benefits and other liabilities | (6,892 | ) | (8,853 | ) | |||
Income taxes payable | 91 | 38 | |||||
Deferred revenue and contract assets | (4,787 | ) | (9,135 | ) | |||
Net cash provided by operating activities | 19,641 | 15,822 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (7,185 | ) | (9,936 | ) | |||
Decrease (increase) in other long-term assets | — | 19 | |||||
Net cash used in investing activities | (7,185 | ) | (9,917 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | 79,292 | 22,688 | |||||
Repayment of debt | (1,438 | ) | (18,451 | ) | |||
Payments for repurchase of outstanding notes | (76,269 | ) | — | ||||
Proceeds from the issuance of common stock under employee stock plans | 309 | 355 | |||||
Common stock repurchases for tax withholdings for net settlement of equity awards | (3,586 | ) | (998 | ) | |||
Partial retirement of the convertible notes conversion feature and capped call option unwind | 27 | (58 | ) | ||||
Payments for credit facility issuance costs | (5,979 | ) | (1,000 | ) | |||
Net cash (used in) provided by financing activities | (7,644 | ) | 2,536 | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (331 | ) | (780 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 4,481 | 7,661 | |||||
Cash, cash equivalents and restricted cash at beginning of year | 68,094 | 60,433 | |||||
Cash, cash equivalents and restricted cash at end of year | $ | 72,575 | $ | 68,094 | |||
Supplemental information: | |||||||
Cash and cash equivalents | $ | 69,085 | $ | 56,103 | |||
Restricted cash | $ | 1,663 | $ | 8,500 | |||
Restricted cash included in other long-term assets | $ | 1,827 | $ | 3,491 | |||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 72,575 | $ | 68,094 |
Backlog Disclosure for Quarter Ended December 31, 2019 | ||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||
2019 | 2019 | 2018 | ||||||||||||||
Revenue Backlog* | ||||||||||||||||
Deferred Revenue | $97.9 | $85.0 | $99.6 | |||||||||||||
Other Backlog | 342.3 | 358.6 | 357.2 | |||||||||||||
Total Revenue Backlog | $440.2 | $443.6 | $456.8 | |||||||||||||
The expected timing of recognition of revenue backlog as of December 31, 2019 is as follows: | ||||||||||||||||
2020 | 2021 | 2022 | Thereafter | Total | ||||||||||||
Deferred Revenue | $83.6 | $8.3 | $3.8 | $2.2 | $97.9 | |||||||||||
Other Backlog | 115.8 | 86.3 | 68.2 | 72.0 | 342.3 | |||||||||||
Total Revenue Backlog | $199.4 | $94.6 | $72.0 | $74.2 | $440.2 | |||||||||||
*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. | ||||||||||||||||