Advent Software Reports Third Quarter 2012 Results

Tue Oct 30, 2012 4:15pm EDT

* Reuters is not responsible for the content in this press release.

  SAN FRANCISCO, CA, Oct 30 (Marketwire) -- 
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, 2012.

    "Advent is pleased to report solid financial results for the third
quarter, which included strong quarterly revenues, healthy operating cash
flows, and over 23% non-GAAP operating margin," said Pete Hess, Chief
Executive Officer of Advent. "While there have been some headwinds in the
market, these results demonstrate the resiliency of our business model.
We are excited to have added prestigious clients in the quarter and our
competitive position remains very strong."

    THIRD QUARTER 2012 RESULTS

    GAAP Results for Continuing Operations
 The Company reported quarterly
revenue of $90.2 million for the third quarter of 2012, compared to $84.6
million in the third quarter of 2011, a 7% increase.

    Operating income for the third quarter of 2012 was $12.6 million, or 14%
of revenue, compared to $10.6 million or 13% of revenue for the third
quarter of 2011. 

    Net income for the third quarter of 2012 was $7.7 million compared to
$6.8 million in the third quarter of 2011.

    On a fully diluted basis, earnings per share in the third quarter of 2012
were $0.15, up $0.02 when compared to the third quarter of 2011. 

    Operating cash flows in the third quarter of 2012 totaled $25.3 million,
compared with $23.8 million in the third quarter of 2011. Cash, cash
equivalents and marketable securities totaled $143.5 million as of
September 30, 2012, compared to $136.4 million as of December 31, 2011.

    The Company repurchased approximately 639,000 shares of its common stock
in the third quarter of 2012 for total cash outlays of $15.2 million at
an average price of $23.71 per share. 

    Total deferred revenue as of September 30, 2012 was $162.4 million,
compared to $174.9 million as of December 31, 2011.

    Non-GAAP Results for Continuing Operations
 Non-GAAP operating income for
the third quarter of 2012 was $20.8 million, or 23% of revenue. This
represents a 13% increase compared to $18.5 million of non-GAAP operating
income, or 22% of revenue, in the third quarter of 2011. On a fully
diluted basis, non-GAAP earnings per share were $0.26 in the third
quarter of 2012 and represent a 17% increase from non-GAAP diluted
earnings per share of $0.22 in the third quarter of 2011.

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

    THIRD QUARTER HIGHLIGHTS


--  Third Quarter Bookings: The Annual Contract Value (ACV) of our new
    contract bookings in the third quarter of 2012 will contribute $7.1
    million in annual revenue once the contracts are fully implemented.
    New clients represented a broad cross-section of the investment
    management industry, from hedge funds and asset managers to family
    offices, fund administrators and the growing advisory market. New
    clients included BTG Pactual, the largest independent investment bank
    in Latin America, Tiedeman Trust Company, Stephens Inc., Clarfeld
    Financial Advisors, Clariden Leu, a Swiss private bank based in
    Zurich, and Rand Merchant Bank, a leading African investment bank
    headquartered in South Africa. In the third quarter, Advent also
    signed its first hedge fund client in mainland China.
    
    
--  Enhanced Functionality Across Product Lines: Advent hosted our annual
    client conference in September during which a number of product
    announcements were made across the platforms, including: the
    availability of a multi-custodial rebalancing solution and an
    alternative investments solution within the Black Diamond platform;
    the launch of the new Interest Rate Swaps (IRS) functionality for the
    Syncova(R) product; the launch of Geneva(R) 9.0 which includes
    integrated solutions targeted at new market segments, and the beta
    release of major enhancements to the cloud-enabled, end-to-end
    platform for asset management*.
    
    
--  Industry Recognition and Award-Winning Solutions: Advent was awarded
    "Best Portfolio Management System Provider" in Waters Magazine's
    annual readers' choice rankings. Advent Portfolio Exchange(R) (APX)
    -- Advent's end-to-end portfolio management solution for asset and
    wealth management -- was named "Best in Class" in the CEB TowerGroup
    Portfolio Management Systems Technology Analysis in all four
    technology categories assessed: Portfolio Tools, Advisory Experience,
    Workflow Management and Enterprise Support. APX was also awarded
    "Excellence in Performance Measurement" by the FSO Knowledge Xchange.
    


    

FINANCIAL GUIDANCE 
 Advent updates the following financial guidance
for the fourth quarter and fiscal year 2012:



----------------------------------------------------------------------------    
            Guidance                   Q4 2012          FY 2012
----------------------------------------------------------------------------
Total Revenue ($M)                          $89-$93         $356-$360
----------------------------------------------------------------------------
  YoY Revenue Growth                        4% - 8%          9% - 10%
----------------------------------------------------------------------------
GAAP Operating Margin                         n/a         13.0% - 13.2%
----------------------------------------------------------------------------
Amortization of Intangibles (% of
 revenue)                                     n/a               3%
----------------------------------------------------------------------------
Stock Compensation Expense (% of revenue)     n/a               6%
----------------------------------------------------------------------------
Restructuring Charge (% of revenue)           n/a               1%
----------------------------------------------------------------------------
Non-GAAP Operating Margin                     n/a         23.0% - 23.2%
----------------------------------------------------------------------------
Operating Cash Flow ($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 third quarter 2012
earnings conference call at 5:00 p.m. Eastern time today. The third
quarter 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 (888) 895-5479 and request conference ID #33664446. Telephone replay
will be available through midnight November 6, 2012. The replay number
for domestic callers is (888) 843-7419, and for international callers is
(630) 652-3042, with the conference ID of #33664446.

    The conference call will also be webcast live and then archived on
http://investor.advent.com.

    * Advent's platform for asset management offers Advent Portfolio
Exchange(R) (APX), Moxy(R), Advent Rules Manager(R), Advent Revenue
Center(R), Advent(R) General Ledger Exchange (Advent(R) GLX), Advent
Tradex(R), Advent Corporate Actions(R) (ACA), and Advent Custodial
Data(R) (ACD) for clients to select among in order to support key
workflows and data across the entire investment process.

    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 Continuing
Operations' GAAP Measures to Non-GAAP Measures." 

    FORWARD-LOOKING STATEMENTS 
 The financial projections under Financial
Guidance, and statements regarding our organizational structure,
operating efficiencies, margin expansion 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(R), Geneva(R), and Moxy(R) products; the
successful development, release and market acceptance of new products,
services and enhancements; uncertainties and fluctuations in the
financial markets; the Company's ability to satisfy contractual
performance requirements; difficulties in achieving organizational
objectives and 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 SOFTWARE, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                               (In thousands)
                             (GAAP, Unaudited)

                                                September 30   December 31
                                                    2012           2011
                                               -------------  ------------- 
ASSETS
Current assets:
  Cash and cash equivalents                    $      50,682  $      65,525 
  Short-term marketable securities                    92,776         69,908 
  Accounts receivable, net                            53,775         62,125 
  Deferred taxes, current                             16,306         16,294 
  Prepaid expenses and other                          23,299         23,660 
                                               -------------  ------------- 
    Total current assets                             236,838        237,512 
Property and equipment, net                           39,263         42,301 
Goodwill                                             206,335        204,621 
Other intangibles, net                                41,523         49,521 
Long-term marketable securities                            -            917 
Deferred taxes, long-term                             26,389         30,751 
Other assets                                          12,574         15,927 
Noncurrent assets of discontinued operation            2,006          2,006 
                                               -------------  ------------- 

    Total assets                               $     564,928  $     583,556 
                                               =============  ============= 

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                             $       8,492  $      10,558 
  Accrued liabilities                                 31,787         40,029 
  Deferred revenues                                  154,201        166,945 
  Income taxes payable                                 5,303          2,972 
  Short-term debt                                      5,000          5,000 
  Current liabilities of discontinued
   operation                                             591            488 
                                               -------------  ------------- 
    Total current liabilities                        205,374        225,992 
Deferred revenues, long-term                           8,183          7,926 
Long-term debt                                        41,250         45,000 
Other long-term liabilities                           17,049         16,944 
Noncurrent liabilities of discontinued
 operation                                             3,704          4,633 
                                               -------------  ------------- 

    Total liabilities                                275,560        300,495 
                                               -------------  ------------- 

Stockholders' equity:
  Common stock                                           502            510 
  Additional paid-in capital                         441,721        429,734 
  Accumulated deficit                               (162,243)      (154,053)
  Accumulated other comprehensive income               9,388          6,870 
                                               -------------  ------------- 
    Total stockholders' equity                       289,368        283,061 
                                               -------------  ------------- 

    Total liabilities and stockholders' equity $     564,928  $     583,556 
                                               =============  ============= 

                           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
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  --------- 

Net revenues:
Recurring revenues               $  81,090  $  74,951  $ 240,752  $ 213,726 
Non-recurring revenues               9,084      9,615     26,050     26,237 
                                 ---------  ---------  ---------  --------- 

  Total net revenues                90,174     84,566    266,802    239,963 

Cost of revenues (1):
Recurring revenues                  17,216     15,727     51,962     45,618 
Non-recurring revenues              13,011     12,520     33,615     29,670 
Amortization of developed
 technology                          2,586      2,588      7,700      6,265 
                                 ---------  ---------  ---------  --------- 

  Total cost of revenues            32,813     30,835     93,277     81,553 
                                 ---------  ---------  ---------  --------- 

  Gross margin                      57,361     53,731    173,525    158,410 

Operating expenses (1):
Sales and marketing                 17,965     18,444     56,122     55,311 
Product development                 17,077     14,387     50,377     41,496 
General and administrative           8,752      9,307     27,619     27,136 
Amortization of other
 intangibles                           955        960      2,867      1,851 
Restructuring (benefit) charges        (17)        57         53        131 
                                 ---------  ---------  ---------  --------- 

  Total operating expenses          44,732     43,155    137,038    125,925 
                                 ---------  ---------  ---------  --------- 

Income from continuing
 operations                         12,629     10,576     36,487     32,485 
Interest and other income
 (expense), net                       (130)      (815)    (1,105)      (837)
                                 ---------  ---------  ---------  --------- 

Income from continuing
 operations before income taxes     12,499      9,761     35,382     31,648 
Provision for income taxes           4,812      2,935     13,181      9,848 
                                 ---------  ---------  ---------  --------- 

  Net income from continuing
   operations                    $   7,687  $   6,826  $  22,201  $  21,800 

Discontinued operation:
  Net income (loss) from
   discontinued operation (net
   of applicable taxes of $(13),
   $(17), $134, and $1,311,
   respectively)                        11        (27)       233      1,773 

                                 ---------  ---------  ---------  --------- 
Net income                       $   7,698  $   6,799  $  22,434  $  23,573 
                                 =========  =========  =========  ========= 

Basic net income per share (2):
  Continuing operations          $    0.15  $    0.13  $    0.44  $    0.42 
  Discontinued operation              0.00       0.00       0.00       0.03 
                                 ---------  ---------  ---------  --------- 
    Total operations             $    0.15  $    0.13  $    0.44  $    0.45 
                                 =========  =========  =========  ========= 

Diluted net income per share
 (2):
  Continuing operations          $    0.15  $    0.13  $    0.42  $    0.40 
  Discontinued operation              0.00       0.00       0.00       0.03 
                                 ---------  ---------  ---------  --------- 
    Total operations             $    0.15  $    0.13  $    0.43  $    0.43 
                                 =========  =========  =========  ========= 

Weighted average shares used to
 compute net income per share:
  Basic                             50,401     51,625     50,722     52,114 
  Diluted                           52,248     53,625     52,764     54,590 

(1) Includes stock-based
 employee compensation expense
 as follows:

  Cost of recurring revenues     $     615  $     528  $   1,810  $   1,535 
  Cost of non-recurring revenues       331        381        926        973 
                                 ---------  ---------  ---------  --------- 
    Total cost of revenues             946        909      2,736      2,508 

  Sales and marketing                1,877      1,757      5,263      4,726 
  Product development                1,440      1,377      4,338      3,798 
  General and administrative         1,108      1,022      3,007      3,135 
                                 ---------  ---------  ---------  --------- 
    Total operating expenses         4,425      4,156     12,608     11,659 
                                 ---------  ---------  ---------  --------- 

  Total stock-based employee
   compensation expense          $   5,371  $   5,065  $  15,344  $  14,167 
                                 =========  =========  =========  ========= 

(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)

                                                    Nine Months Ended
                                                       September 30
                                               ---------------------------- 
                                                    2012           2011
                                               -------------  ------------- 
Cash flows from operating activities:
  Net income                                   $      22,434  $      23,573 
  Adjustment to net income for discontinued
   operation                                            (233)        (1,773)
                                               -------------  ------------- 
  Net income from continuing operations        $      22,201  $      21,800 

  Adjustments to reconcile net income to net
   cash provided by operating activities from
   continuing operations:
    Stock-based compensation                          15,344         14,167 
    Excess tax benefit from stock-based
     compensation                                     (4,693)        (4,195)
    Depreciation and amortization                     19,372         16,254 
    Amortization of debt issuance costs                  285              - 
    Provision for doubtful accounts                      209            159 
    Provision for (reduction of) sales returns         1,019           (212)
    Non-cash impairment loss                               -            500 
    Deferred income taxes                              4,043           (395)
    Other                                               (521)            39 
                                               -------------  ------------- 
        Effect of statement of operations
         adjustments                                  35,058         26,317 
    Changes in operating assets and
     liabilities:
      Accounts receivable                              8,062         (4,669)
      Prepaid and other assets                         4,137         (1,141)
      Accounts payable                                (2,066)         3,261 
      Accrued liabilities                             (7,137)        (4,552)
      Deferred revenues                              (13,506)         5,987 
      Income taxes payable                             7,024          8,607 
                                               -------------  ------------- 
        Effect of changes in operating assets
         and liabilities                              (3,486)         7,493 
                                               -------------  ------------- 

Net cash provided by operating activities from
 continuing operations                                53,773         55,610 

Cash flows from investing activities:
  Cash used in acquisitions, net of cash
   acquired                                             (700)       (97,092)
  Purchases of property and equipment                 (5,383)        (7,679)
  Capitalized software development costs              (1,942)        (2,280)
  Purchases of marketable securities                 (91,926)       (38,907)
  Sales and maturities of marketable
   securities                                         69,600         85,432 
                                               -------------  ------------- 

Net cash used in investing activities from
 continuing operations                               (30,351)       (60,526)

Cash flows from financing activities:
  Proceeds from common stock issued from
   exercises of stock options                          4,211          5,482 
  Withholding taxes related to equity award
   net share settlement                               (5,257)        (5,111)
  Proceeds from common stock issued under the
   employee stock purchase plan                        3,448          3,146 
  Repurchase of common stock                         (41,275)       (51,582)
  Repayment of debt                                   (3,750)             - 
  Excess tax benefits from stock-based
   compensation                                        4,693          4,195 
                                               -------------  ------------- 

Net cash used in financing activities from
 continuing operations                               (37,930)       (43,870)

Net cash transferred (to) from discontinued
 operation                                              (593)         2,954 

Effect of exchange rate changes on cash and
 cash equivalents                                        258            215 
                                               -------------  ------------- 

Net change in cash and cash equivalents from
 continuing operations                               (14,843)       (45,617)
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                   $      50,682  $      36,331 
                                               =============  ============= 

                                                    Nine Months Ended
                                                       September 30
                                               ---------------------------- 
                                                    2012           2011
                                               -------------  ------------- 
Supplemental disclosure of cash flow
 information
Cash flow from discontiued operation:
  Net cash used in operating activities        $        (593) $         (50)
  Net cash provided by investing activities                -          3,004 
  Net cash transferred from (to) continuing
   operations                                            593         (2,954)
  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                  $           -  $           - 
                                               =============  ============= 

The cash flows from the discontinued operation, as presented in the
condensed consolidated statement of cash flows, relate to the operations of 
MicroEdge.

                           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, 2012 for
                                         Continuing Operations
                           ------------------------------------------------ 
                             Gross    Gross   Operating  Operating    Net
                            Margin  Margin %    Income    Income %   Income 
                           -------- --------  ---------  ---------  ------- 

GAAP                       $ 57,361       64% $  12,629         14% $ 7,687 

  Amortization of acquired
   developed technology       1,894               1,894               1,894 
  Amortization of other
   acquired intangibles           -                 955                 955 
  Stock-based compensation
   - cost of revenues           946                 946                 946 
  Stock-based compensation
   - operating expenses           -               4,425               4,425 
  Restructuring benefit           -                 (17)                (17)
  Income tax adjustment
   for non-GAAP (1)               -                   -              (2,434)

                           --------           ---------             ------- 
Non-GAAP                   $ 60,201       67% $  20,832         23% $13,456 
                           ========           =========             ======= 

Diluted net income per
 share
  GAAP                                                              $  0.15 
  Non-GAAP                                                          $  0.26 

Shares used to compute
 diluted net income per
 share                                                               52,248 

                               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 

(1) The estimated non-GAAP effective tax rate was 35% for the three months
    ended September 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 Ending
                                                       December 31, 2012
                                                     Continuing Operations
                                                      Operating Income %
                                                  --------------------------

Projected GAAP                                      13.0%     to      13.2% 
                                                  ==========================

  Projected amortization of acquired developed
   technology and other acquired intangible asset
   adjustment                                                 3%
  Projected stock-based compensation adjustment               6%
  Projected restructuring charge adjustment                   1%

                                                  --------------------------
Projected non-GAAP                                  23.0%     to      23.2% 
                                                  ==========================


    


CONTACT
Media Contact:
Amanda Diamondstein-Cieplinska
Advent Software, Inc.
(415) 645-1668
adiamond@advent.com

Investor Relations Contact:
Meg Pardo
Advent Software, Inc.
(415) 645-1584
mpardo@advent.com 

Copyright 2012, Marketwire, All rights reserved.

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