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TIBCO Software Reports Third Quarter Results(Marketwire Via Acquire Media NewsEdge) PALO ALTO, CA -- (Marketwired) -- 09/18/14 -- TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fiscal third quarter, which ended on August 31, 2014. On a GAAP basis, total revenue for the third quarter of fiscal 2014 was $255.6 million, compared with $270.9 million for the third quarter of fiscal year 2013, and software revenue was $85.9 million, compared with $108.0 million. Within software revenue, license revenue was $76.7 million, compared with $105.1 million, while subscription revenue was $9.2 million, compared with $2.9 million. Net income was $2.6 million, or $0.02 per diluted share, compared to $21.3 million, or $0.13 per diluted share, in the third quarter of fiscal 2013. On a non-GAAP basis, total revenue for the third quarter of fiscal 2014 was $259.6 million, compared with $270.9 million for the third quarter of fiscal year 2013, and software revenue was $89.9 million, compared with $108.0 million. Non-GAAP subscription revenue within software revenue more than quadrupled to $13.2 million from last year and includes $4.0 million for the acquisition-related accounting effects on deferred revenue. Non-GAAP operating income for the third quarter of fiscal 2014 was $40.7 million, resulting in a non-GAAP operating margin of 15.7% compared to $64.2 million, or a margin of 23.7% in the third quarter of fiscal 2013. Non-GAAP net income was $23.3 million or $0.14 per diluted share, compared with $46.3 million or $0.28 per diluted share for the third quarter of fiscal 2013, which assumes non-GAAP effective tax rates of 36% and 23% for the third quarters of fiscal 2014 and 2013, respectively. Non-GAAP results exclude acquisition-related accounting effects on deferred revenue, amortization of acquired intangible assets, stock-based compensation expense, acquisition and other related expenses, restructuring activities, and non-cash interest expense related to convertible debt, net of tax effects. "This quarter, we accelerated a number of strategic and operational changes that resulted in strong growth of subscription sales and a solid sequential improvement in our Spotfire business," said Vivek Ranadivé, TIBCO's chairman and chief executive officer. "The migration of perpetual to subscription-based licensing, together with less-than-expected revenue in Europe, had an impact on our overall software revenue results this quarter. We continue to believe, however, that reaching a broader base of customers through subscription pricing and building a solid base of recurring revenue is the right long-term strategy for TIBCO." Third Quarter Fiscal 2014 Highlights Total non-GAAP revenue of $259.6 million; comprised of software revenue of $89.9 million, and services and maintenance revenue of $169.7 million; Non-GAAP operating margin of 15.7%; Non-GAAP EPS of $0.14 Non-GAAP subscription revenue of $13.2 million was up 76% sequentially from the second quarter of fiscal year 2014, driven by the addition of Jaspersoft® and the growth of other hosted offerings; Signed over 100 customers to new Analytics subscription contracts; Non-GAAP subscription revenue represented 15% of software revenue; non-GAAP recurring revenue, including subscription and maintenance revenue, represented 47% of total revenue; Closed 110 deals over $100k and had 14 deals over $1 million in license revenue; Launched TIBCO Engage™, a new technology platform that leverages both TIBCO's Fast Data platform and integration technology to harness the opportunities within customer experience management; TIBCO Spotfire®, TIBCO StreamBase® and TIBCO ActiveMatrix BusinessWorks™ all named leaders in Forrester and Gartner Inc. product reviews; Broad mix of business across major industries including financial services, telecommunications, energy, transportation & logistics, manufacturing, government, retail, and insurance. Conference Call DetailsTIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its third 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 706-679-0841. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight ET on October 18, 2014 at www.tibco.com or via dial-in at 855-859-3406 or 404-537-3406. The passcode for both the call and the replay is 96108737. About TIBCOTIBCO Software Inc. (NASDAQ: TIBX) is a global leader in infrastructure and business intelligence software. Whether it's optimizing inventory, cross-selling products, or averting crisis before it happens, TIBCO uniquely delivers the Two-Second Advantage® -- the ability to capture the right information at the right time and act on it preemptively for a competitive advantage. With a broad mix of innovative products and services, TIBCO is the strategic technology partner trusted by businesses around the world. Learn more about TIBCO at www.tibco.com. TIBCO, TIBCO Software, ActiveMatrix BusinessWorks, Jaspersoft, Spotfire, StreamBase, TIBCO Engage and Two-Second Advantage are trademarks or registered trademarks of TIBCO Software Inc. or its subsidiaries in the United States and/or other countries. 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. Use of Non-GAAP Financial InformationThis 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 StatementsThis release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws. The final financial results for the third quarter of fiscal year 2014 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 whether the migration to subscription-based licensing will help us reach a broader base of customers and build a solid base of recurring revenue and whether we will be able to harness the opportunities within customer experience management through TIBCO Engage 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 achieve improved performance and accelerate growth from its investments for growth and innovation, the impact of competition from alternative business models and new product introductions, TIBCO's ability to offer compelling, differentiated products, 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, 2013 and Quarterly Report on Form 10-Q for the quarter ended June 1, 2014. TIBCO assumes no obligation to update the forward-looking statements included in this release. TIBCO Software Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands) August 31, November 30, 2014 2013 -------------- -------------- ASSETS Current assets: Cash and cash equivalents $ 354,366 $ 662,109 Short-term investments 178,088 83,842 Accounts receivable, net 194,896 231,194 Prepaid expenses and other current assets 97,550 74,725 -------------- -------------- Total current assets 824,900 1,051,870 Property and equipment, net 109,683 101,050 Goodwill 704,526 582,091 Acquired intangible assets, net 148,897 119,418 Long-term deferred income tax assets 78,909 78,853 Other assets 90,328 72,831 -------------- -------------- Total assets $ 1,957,243 $ 2,006,113 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,314 $ 37,701 Accrued liabilities 103,898 125,112 Accrued restructuring costs 970 5,819 Deferred revenue 262,978 258,315 -------------- -------------- Total current liabilities 393,160 426,947 Long-term deferred revenue 24,774 24,036 Long-term income tax liabilities 64,225 57,067 Other long-term liabilities 7,596 4,788 Convertible debt 552,266 540,022 -------------- -------------- Total long-term liabilities 648,861 625,913 -------------- -------------- Total liabilities 1,042,021 1,052,860 -------------- -------------- Total stockholder's equity 915,222 953,253 -------------- -------------- Total liabilities and stockholders' equity $ 1,957,243 $ 2,006,113 ============== ============== TIBCO Software Inc. Condensed Consolidated Statements of Operations (unaudited) (in thousands, except net income per share) Three Months Ended Nine Months Ended ------------------------ ------------------------ August 31, September 1, August 31, September 1, 2014 2013 2014 2013 ---------- ------------ ---------- ------------ Revenue: Software $ 85,938 $ 107,981 $ 254,766 $ 275,235 Service and maintenance 169,664 162,878 506,013 479,260 ---------- ------------ ---------- ------------ Total revenue 255,602 270,859 760,779 754,495 ---------- ------------ ---------- ------------ Cost of revenue: Software 15,774 14,599 44,228 40,108 Service and maintenance 65,160 63,374 193,695 185,473 ---------- ------------ ---------- ------------ Total cost of revenue 80,934 77,973 237,923 225,581 ---------- ------------ ---------- ------------ Gross profit 174,668 192,886 522,856 528,914 ---------- ------------ ---------- ------------ Operating expenses: Research and development 41,866 43,391 128,179 127,591 Sales and marketing 93,222 84,082 269,343 249,395 General and administrative 17,286 13,697 52,542 50,546 Amortization of acquired intangible assets 4,494 4,991 14,350 14,025 Acquisition related and other 272 630 1,180 1,525 Restructuring charges (credits) (108) 8,886 954 8,871 ---------- ------------ ---------- ------------ Total operating expenses 157,032 155,677 466,548 451,953 ---------- ------------ ---------- ------------ Income from operations 17,636 37,209 56,308 76,961 Interest income 237 249 759 672 Interest expense (8,632) (8,411) (25,718) (25,856) Other income (expense), net 128 153 (879) (1,258) ---------- ------------ ---------- ------------ Income before provision for income taxes 9,369 29,200 30,470 50,519 Provision for income taxes 6,700 7,900 14,100 10,900 ---------- ------------ ---------- ------------ Net income 2,669 21,300 16,370 39,619 Less: Net income attributable to noncontrolling interest 37 49 37 148 ---------- ------------ ---------- ------------ Net income attributable to TIBCO Software Inc. $ 2,632 $ 21,251 $ 16,333 $ 39,471 ========== ============ ========== ============ Net income per share attributable to TIBCO Software Inc.: Basic $ 0.02 $ 0.13 $ 0.10 $ 0.25 ========== ============ ========== ============ Diluted $ 0.02 $ 0.13 $ 0.10 $ 0.24 ========== ============ ========== ============ Shares used to compute net income per share attributable to TIBCO Software Inc.: Basic 163,429 160,638 162,904 161,012 ========== ============ ========== ============ Diluted 166,267 166,999 166,831 167,879 ========== ============ ========== ============ TIBCO Software Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Nine Months Ended ---------------------------- August 31, September 1, 2014 2013 ------------- ------------- Cash flows from operating activities: Net income $ 16,370 $ 39,619 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 14,424 11,616 Amortization of acquired intangible assets 30,506 26,965 Amortization of debt discount and transaction costs 14,869 14,258 Stock-based compensation 31,902 39,245 Deferred income taxes (3,931) (13,292) Tax benefits related to stock benefit plans 4,404 9,691 Excess tax benefits from stock-based compensation (11,300) (13,442) Other non-cash adjustments, net 645 1,179 Changes in assets and liabilities: Accounts receivable 37,766 49,181 Prepaid expenses and other assets (8,946) (19,568) Accounts payable and accrued liabilities (57,341) 12,071 Deferred revenue (7,664) (11,119) ------------- ------------- Net cash provided by operating activities 61,704 146,404 ------------- ------------- Cash flows from investing activities: Purchases of short-term investments (207,302) (38,261) Maturities and sales of short-term investments 110,263 15,346 Acquisitions, net of cash acquired (181,415) (53,917) Purchases of property and equipment (23,472) (10,695) Other investing activities, net 1,378 (1,047) ------------- ------------- Net cash used in investing activities (300,548) (88,574) ------------- ------------- Cash flows from financing activities: Principal payments on debt - (35,711) Proceeds from issuance of common stock 30,814 23,089 Repurchases of common stock (95,588) (105,289) Withholding taxes related to restricted stock net share settlement (10,613) (12,467) Excess tax benefits from stock-based compensation 11,300 13,442 ------------- ------------- Net cash used in financing activities (64,087) (116,936) ------------- ------------- Effect of foreign exchange rate changes on cash and cash equivalents (4,812) (1,992) ------------- ------------- Net change in cash and cash equivalents (307,743) (61,098) Cash and cash equivalents at beginning of period 662,109 727,309 ------------- ------------- Cash and cash equivalents at end of period $ 354,366 $ 666,211 ============= ============= About Non-GAAP Financial Information TIBCO provides non-GAAP measures for revenue, operating income, net income and net income per share data as supplemental information regarding TIBCO's business performance. 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 used by TIBCO's management. 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 from revenue the acquisition-related accounting adjustment to deferred revenue assumed in business combinations and 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, as well as the income tax effects of the foregoing. 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 or analysts. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. The non-GAAP adjustments, and the basis for excluding them, are outlined below: Acquisition-related Revenue Adjustment Business combination accounting rules require TIBCO to reduce the deferred revenue assumed in a business combination to the fair value of the future obligations from subscription and maintenance contracts assumed. As such, GAAP revenue subsequent to an acquisition of a business does not reflect the full amount of revenue of these assumed subscription and maintenance contracts that would have otherwise been recorded had the acquisition not occurred. This non-GAAP adjustment is intended to include, and thus reflect, the full amount of such revenue. Management includes this item for the purposes of calculating non-GAAP revenue, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO's management believes this adjustment to revenue is useful to investors as a measure of ongoing performance of its business because, although it does not control if customers renew their subscription or maintenance contracts, TIBCO has historically experienced high renewal rates on subscription and maintenance contracts. Amortization of Intangible Assets TIBCO incurs amortization expense from intangible assets related to prior acquisitions. Management excludes these items for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. 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 can be inconsistent in amount from period to period. The stock-based compensation expense can be significantly impacted by the type of compensation instrument, the vesting conditions and judgment used to assess if these conditions will be met in the future. 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 incurs 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 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. 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 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 excludes this expense from its non-GAAP measures 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. Restructuring Activities TIBCO incurs 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. TIBCO Software Inc. Reconciliation of GAAP to Non-GAAP Measures (unaudited) (in thousands, except net income per share) Three Months Ended ------------------------------------------------------------ August 31, 2014 September 1, 2013 ----------------------------- ----------------------------- Net income Net income attributable attributable Operating to Operating to Revenue Income TIBCO Revenue Income TIBCO Software Software Inc. Inc. -------- -------- ---------- -------- -------- ---------- GAAP $255,602 $ 17,636 $ 2,632 $270,859 $ 37,209 $ 21,251 Acquisition- related revenue adjustment 3,969 3,969 3,969 - - - Amortization of intangible assets - cost of revenue 5,815 5,815 4,597 4,597 Amortization of intangible assets - operating expense 4,494 4,494 4,991 4,991 Stock-based compensation - cost of revenue 1,476 1,476 1,914 1,914 Stock-based compensation - R&D expense 3,198 3,198 3,641 3,641 Stock-based compensation - S&M expense 1,910 1,910 3,121 3,121 Stock-based compensation - G&A expense 1,995 1,995 (766) (766) Acquisition related and other 272 272 630 630 Non-cash interest expense related to convertible debt - 4,143 - 3,924 Restructuring adjustment (108) (108) 8,886 8,886 Income tax adjustment for non-GAAP - (6,452) - (5,932) -------- -------- ---------- -------- -------- ---------- Non-GAAP $259,571 $ 40,657 $ 23,344 $270,859 $ 64,223 $ 46,257 ======== ======== ========== ======== ======== ========== Diluted net income per share attributable to TIBCO Software Inc.: GAAP $ 0.02 $ 0.13 ========== ========== Non-GAAP $ 0.14 $ 0.28 ========== ========== Shares used to compute diluted net income per share attributable to TIBCO Software Inc. 166,267 166,999 ========== ========== Nine Months Ended ------------------------------------------------------------ August 31, 2014 September 1, 2013 ----------------------------- ----------------------------- Net income Net income attributable attributable Operating to Operating to Revenue Income TIBCO Revenue Income TIBCO Software Software Inc. Inc. -------- --------- ---------- -------- --------- ---------- GAAP $760,779 $ 56,308 $ 16,333 $754,495 $ 76,961 $ 39,471 Acquisition- related revenue adjustment 5,670 5,670 5,670 - - - Amortization of intangible assets - cost of revenue 16,156 16,156 12,940 12,940 Amortization of intangible assets - operating expense 14,350 14,350 14,025 14,025 Stock-based compensation - cost of revenue 5,045 5,045 5,386 5,386 Stock-based compensation - R&D expense 10,464 10,464 11,759 11,759 Stock-based compensation - S&M expense 9,144 9,144 12,782 12,782 Stock-based compensation - G&A expense 7,249 7,249 9,318 9,318 Acquisition related and other 1,180 1,180 1,525 1,525 Non-cash interest expense related to convertible debt - 12,244 - 11,597 Restructuring adjustment 954 954 8,871 8,871 Income tax adjustment for non-GAAP - (20,937) - (20,676) -------- --------- ---------- -------- --------- ---------- Non-GAAP $766,449 $ 126,520 $ 77,852 $754,495 $ 153,567 $ 106,998 ======== ========= ========== ======== ========= ========== Diluted net income per share attributable to TIBCO Software Inc.: GAAP $ 0.10 $ 0.24 ========== ========== Non-GAAP $ 0.47 $ 0.64 ========== ========== Shares used to compute diluted net income per share attributable to TIBCO Software Inc. 166,831 167,879 ========== ========== Media Contact: Lindsay Andrews Sard Verbinnen & Co. (415) 618-8750 Email Contact Investor Contact: John Ederer TIBCO Software Inc. (650) 846-8696 Email Contact Source: TIBCO Software Inc. |