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8-K - FORM 8-K - BROADSOFT, INC. | w82667e8vk.htm |
Exhibit 99.1
May 9, 2011
BroadSoft Reports Record First Quarter 2011 Financial Results
GAITHERSBURG, MD, May 9, 2011 BroadSoft, Inc. (Nasdaq:BSFT), the leading global provider of
software that enables fixed-line, mobile and cable service providers to deliver real time voice and
multimedia communications services over their IP-based networks, today announced financial results
for the quarter ended March 31, 2011.
Financial Highlights for the First Quarter of 2011
Total revenue increased 67% year-over-year to $29.7 million
License revenue increased 73% year-over-year to $15.2 million
| GAAP gross profit increased to 80% of total revenue; non-GAAP gross profit increased to 81% of total revenue |
| GAAP income from operations increased to $4.1 million; non-GAAP income from operations increased to $5.5 million |
| GAAP diluted EPS increased to $0.13 per common share; non-GAAP diluted EPS increased to $0.18 per common share |
Results for the three months ended March 31, 2011
Total revenue rose to $29.7 million in the first quarter of 2011, an increase of 67% compared to
$17.8 million in the first quarter of 2010.
Net income for the first quarter of 2011 was $3.7 million, or $0.13 per diluted common share,
compared to a net loss of $(2.6) million, or $(0.41) per basic and diluted common share, in the
first quarter of 2010. GAAP results for the first quarter of 2011 included $1.1 million of
non-cash stock-based compensation expense and $0.2 million of amortization expense for acquired
intangible assets.
On a non-GAAP basis, net income in the first quarter of 2011 was $5.0 million, or $0.18 per diluted
common share, compared to a non-GAAP net loss of $(2.1) million, or $(0.11) per basic and diluted
common share, in the first quarter of 2010. Non-GAAP net income for these periods excluded the
impact of non-cash stock-based compensation expense and amortization expense for acquired
intangible assets, and for the three months ended March 31, 2010, the loss per basic and diluted
share included an adjustment for the preferred stock conversion.
Management Commentary
BroadSoft is off to a great start in 2011, delivering record first quarter financial results
driven by continued strong demand for our hosted unified communications and SIP trunking
applications from both new and existing customers, said Michael Tessler, president and chief
executive officer, BroadSoft. We are confident that our leadership position in the market for
voice application servers, combined with accelerating demand from our service provider customers,
will lead to solid growth in our business in 2011.
We posted a strong first quarter, marked by a 73% increase in license revenue compared to the year
ago period led by robust demand from our North American service provider customers, said Jim
Tholen, chief financial officer, BroadSoft. Moreover, our margins and profitability improved
significantly relative to last years first quarter. In addition, we generated $3.1 million in cash flow from operations
during the first quarter and ended the quarter with cash, cash equivalents and marketable
securities totaling $69.8 million.
Guidance
For the second quarter of 2011, BroadSoft anticipates revenue of $28.0 to $29.0 million, which
represents growth of 41% to 46% over second quarter 2010 revenue of $19.8 million. The Company
expects to achieve second quarter earnings on a non-GAAP basis of
$0.09 to $0.11 per
diluted common
share and on a GAAP basis, $0.03 to $0.05 per diluted common share.
For the full year 2011, BroadSoft is
increasing its guidance and now expects revenue of $121.0 to
$125.0 million, reflecting growth of 27% to 31% over 2010 revenue of $95.6 million. The
Company anticipates full year 2011 earnings on a non-GAAP basis of
$0.67 to $0.77 per diluted
common share and on a GAAP basis, $0.45 to $0.55 per diluted common share.
The above second quarter and full year guidance does not reflect the impact of a potential release of a tax valuation allowance relating to net deferred tax assets.
The Company currently expects this release could occur as early as the second quarter of 2011 and that the release of the valuation allowance
would be recorded as an income tax benefit, which would significantly increase the Companys
reported net income for the period in which the release occurs.
Conference Call
BroadSoft will discuss its first quarter results and business outlook today via teleconference at
8:00 a.m. Eastern Time. To participate in the teleconference, callers can dial the toll free
number 1-877-312-5517 (U.S. callers only) or +1-760-666-3772 (from outside the U.S.). The
conference call can also be heard live via audio webcast at
http://investors.broadsoft.com/events.cfm. To help ensure the conference begins on time,
please dial in or connect via the web five minutes prior to the scheduled start time.
For those unable to participate in the live call, an audio replay will be available between 11:00
a.m. Eastern Time May 9, 2011 and 11:59 p.m. Eastern Time May 26, 2011 by calling 1-800-642-1687 or
+1-706-645-9291, with Conference ID 14326033. A recording of the call will be available two hours
following the conclusion of the call at http://investors.broadsoft.com until June 9, 2011.
Use of Non-GAAP Financial Measures
BroadSoft has provided in this release, and will provide on this mornings teleconference,
financial information that has not been prepared in accordance with generally accepted accounting
principles, or GAAP. BroadSoft uses these non-GAAP financial measures internally in analyzing its
financial results and believes they are useful to investors, as a supplement to GAAP measures, in
evaluating BroadSofts ongoing operational performance. BroadSofts management regularly uses these
non-GAAP financial measures to understand and manage its business and believes that these non-GAAP
financial measures provide meaningful supplemental information regarding the Companys performance
by excluding certain non-cash expenses, and may include additional adjustments for items that are
infrequent in nature. BroadSoft believes that the use of these non-GAAP financial measures
provides an additional tool for investors to use in evaluating ongoing operating results and trends
and in comparing its financial results with other companies in BroadSofts industry, many of which
present similar non-GAAP financial measures to investors. A reconciliation of the non-GAAP
financial measures included in this release and to be discussed on this mornings teleconference to
the most directly comparable GAAP financial measures is set forth below.
Non-GAAP net income (loss) and net income (loss) per share. We define non-GAAP net income (loss)
as net income (loss) plus stock-based compensation expense and amortization expense for acquired
intangible assets. We define non-GAAP income (loss) per share as non-GAAP net income (loss)
divided by the weighted average shares outstanding. Also, in calculating non-GAAP net income
(loss) per share for the three months ended March 31, 2010, we adjusted the GAAP weighted average
shares outstanding to include shares of redeemable convertible preferred stock on an
as-if-converted to common stock basis. We consider these non-GAAP financial measures to be
useful metrics for management and our investors because they exclude the effect of certain non-cash
expenses so that management and our investors can compare BroadSofts core business operating
results over multiple periods.
Non-GAAP gross margin, license gross margin and maintenance and services gross margin.
We define non-GAAP gross margin as gross margin plus stock-based compensation expense and
amortization expense for acquired intangible assets. We consider non-GAAP gross margin to be a
useful metric for management and our investors because it excludes the effect of certain non-cash
expenses so that management and its investors can compare BroadSofts sales margins over multiple
periods. Where we provide further breakdown of non-GAAP gross margin between license and
maintenance and services, we add back the stock-based compensation expense and amortization expense, as
applicable, to the related gross margin.
Non-GAAP income (loss) from operations. We define non-GAAP income (loss) from operations as income
(loss) from operations plus stock-based compensation expense and amortization expense for acquired
intangible assets. We consider non-GAAP income (loss) from operations to be a useful metric for
management and our investors because it excludes the effect of certain non-cash expenses so that
management and our investors can compare BroadSofts core business operating results over multiple
periods. Where we provide further breakdown of non-GAAP operating expenses for sales and
marketing, research and development and general and administrative, we deduct stock-based
compensation expense included in the applicable expense item.
The presentation of non-GAAP net income (loss), non-GAAP net income (loss) per share, non-GAAP
gross margin, non-GAAP income (loss) from operations and other non-GAAP financial measures in this
release and on this mornings teleconference is not meant to be a substitute for net income
(loss), net income (loss) per share, gross margin, income (loss) from operations or other
financial measures presented in accordance with GAAP, but rather should be evaluated in conjunction
with such data. Our definition of non-GAAP net income (loss), non-GAAP net income (loss) per
share, non-GAAP gross margin, non-GAAP income (loss) from operations and other non-GAAP
financial measures may differ from similarly titled non-GAAP measures used by other companies and
may differ from period to period. In reporting non-GAAP measures in the future, management may
make other adjustments for expenses and gains that it does not consider reflective of core
operating performance in a particular period and may modify non-GAAP net income (loss), non-GAAP
net income (loss) per share, non-GAAP gross margin, non-GAAP income (loss) from operations and
such other non-GAAP measures by excluding these expenses and gains.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by
their use of terms and phrases such as anticipate,
confident, enable, expect, will, believe,
potential and other similar terms and phrases, and such forward-looking statements include, but
are not limited to, the statements regarding the Companys future financial performance set forth
under the heading Guidance. The outcome of the events described in these forward-looking
statements is subject to known and unknown risks, uncertainties and other factors that could cause
actual results to differ materially from the results anticipated by these forward-looking
statements, including, but not limited to: the Companys dependence on the success of BroadWorks®
and on its service provider customers to sell services using its applications; claims that the
Company infringes the intellectual property rights of others; the Companys dependence in large
part on service providers continued deployment of, and investment in, their IP-based networks; the Companys financial results in the
second quarter of 2011 and its outlook for the remainder of the year; and
the Companys ability to expand its product offerings, as well as those factors contained in the
Risk Factors section of the Companys Form 10-Q for the quarter ended March 31, 2011 filed with
the Securities and Exchange Commission, or SEC, on May 9, 2011, and in the Companys other filings
with the SEC. All information in this release is as of May 9, 2011. Except as required by law, the
Company undertakes no obligation to update publicly any forward-looking statement made herein for
any reason to conform the statement to actual results or changes in the Companys expectations.
About BroadSoft
BroadSoft provides software that enables fixed-line, mobile and cable service providers to deliver
voice and multimedia services over their IP-based networks. The Companys software, BroadWorks,
enables service providers to provide enterprises and consumers with a range of cloud-based, or
hosted, IP multimedia communications, such as hosted IP private branch exchanges, video calling,
unified communications, collaboration and converged mobile and fixed-line services.
Financial Statements
The financial statements set forth below are not the complete set of the Companys financial
statements for the quarter and are presented below without footnotes. Readers are encouraged to
obtain and carefully review BroadSofts Quarterly Report on Form 10-Q for the quarter ended March
31, 2011, including all financial statements contained therein and the footnotes thereto, when it
is filed with the SEC. Once filed with the SEC, the Form 10-Q may be retrieved from the SECs
website at www.sec.gov or from BroadSofts website at www.broadsoft.com.
Contact Information
For further information contact:
Investor Relations:
Monica Gould
+1-212-871-3927
monica@blueshirtgroup.com
Monica Gould
+1-212-871-3927
monica@blueshirtgroup.com
Industry Analyst / Media Relations:
Elaine Myada
+1-240-720-9558
emyada@broadsoft.com
Elaine Myada
+1-240-720-9558
emyada@broadsoft.com
Brian Lustig
+1-301-775-6203
brian@lustigcommunications.com
+1-301-775-6203
brian@lustigcommunications.com
BroadSoft, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
Condensed Consolidated Balance Sheets
(unaudited)
March | December | |||||||
31, 2011 | 31, 2010 | |||||||
(In thousands, except share and per share data) |
||||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 47,421 | $ | 47,254 | ||||
Short-term investments |
20,608 | 13,703 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $24 and $38
at March 31, 2011 and December 31, 2010, respectively |
37,093 | 40,491 | ||||||
Other current assets |
4,979 | 4,866 | ||||||
Total current assets |
110,101 | 106,314 | ||||||
Long-term assets: |
||||||||
Property and equipment, net |
3,657 | 3,590 | ||||||
Long-term investments |
1,762 | 4,970 | ||||||
Restricted cash |
972 | 972 | ||||||
Intangible assets, net |
3,470 | 3,709 | ||||||
Goodwill |
6,226 | 6,226 | ||||||
Other long-term assets |
1,224 | 1,575 | ||||||
Total long-term assets |
17,311 | 21,042 | ||||||
Total assets |
$ | 127,412 | $ | 127,356 | ||||
Liabilities and stockholders equity: |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 8,117 | $ | 12,439 | ||||
Notes payable and bank loans, current portion |
1,182 | 1,170 | ||||||
Deferred revenue, current portion |
56,133 | 57,437 | ||||||
Total current liabilities |
65,432 | 71,046 | ||||||
Notes payable and bank loans |
402 | 800 | ||||||
Deferred revenue, net of current portion |
1,647 | 1,827 | ||||||
Other long-term liabilities |
1,134 | 1,138 | ||||||
Total liabilities |
68,615 | 74,811 | ||||||
Stockholders equity: |
||||||||
Common stock, par value $0.01 per share; 100,000,000 shares
authorized at March 31, 2011 and December 31, 2010, respectively;
26,158,944 and 25,452,227 shares issued and outstanding at
March 31, 2011 and December 31, 2010, respectively |
262 | 255 | ||||||
Additional paid-in capital |
145,156 | 142,508 | ||||||
Accumulated other comprehensive loss |
(1,834 | ) | (1,736 | ) | ||||
Accumulated deficit |
(84,787 | ) | (88,482 | ) | ||||
Total stockholders equity |
58,797 | 52,545 | ||||||
Total liabilities and stockholders equity |
$ | 127,412 | $ | 127,356 | ||||
BroadSoft, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(In thousands, except per | ||||||||
share amounts) | ||||||||
Revenue: |
||||||||
Licenses |
$ | 15,191 | $ | 8,784 | ||||
Maintenance and services |
14,463 | 9,021 | ||||||
Total revenue |
29,654 | 17,805 | ||||||
Cost of revenue: |
||||||||
Licenses |
1,276 | 1,217 | ||||||
Maintenance and services |
4,315 | 3,385 | ||||||
Amortization of intangibles |
239 | 192 | ||||||
Total cost of revenue |
5,830 | 4,794 | ||||||
Gross profit |
23,824 | 13,011 | ||||||
Operating expenses: |
||||||||
Sales and marketing |
8,484 | 7,101 | ||||||
Research and development |
6,816 | 4,491 | ||||||
General and administrative |
4,386 | 3,273 | ||||||
Total operating expenses |
19,686 | 14,865 | ||||||
Income (loss) from operations |
4,138 | (1,854 | ) | |||||
Other (income) expense: |
(23 | ) | 489 | |||||
Income (loss) before income taxes |
4,161 | (2,343 | ) | |||||
Provision for income taxes |
466 | 281 | ||||||
Net income (loss) |
$ | 3,695 | $ | (2,624 | ) | |||
Net income (loss) per common share available
to BroadSoft, Inc. common stockholders: |
||||||||
Basic |
$ | 0.14 | $ | (0.41 | ) | |||
Diluted |
$ | 0.13 | $ | (0.41 | ) | |||
Weighted average common shares outstanding: |
||||||||
Basic |
25,704 | 6,393 | ||||||
Diluted |
28,277 | 6,393 | ||||||
Stock-based compensation expense included
above: |
||||||||
Cost of revenue |
$ | 66 | $ | 35 | ||||
Sales and marketing |
334 | 111 | ||||||
Research and development |
247 | 66 | ||||||
General and administrative |
455 | 109 |
BroadSoft, Inc.
Summary of Condensed Consolidated Cash Flow Activity
(unaudited)
Summary of Condensed Consolidated Cash Flow Activity
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Net cash provided by operating activities |
$ | 3,106 | $ | 2,464 | ||||
Net cash used in investing activities |
(4,157 | ) | (1,007 | ) | ||||
Net cash provided by (used in) financing activities |
1,167 | (206 | ) |
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Non-GAAP gross profit: |
||||||||
GAAP gross profit |
$ | 23,824 | $ | 13,011 | ||||
(percent of total revenue) |
80 | % | 73 | % | ||||
Plus: |
||||||||
Stock-based compensation expense |
66 | 35 | ||||||
Amortization of acquired intangible assets |
239 | 192 | ||||||
Non-GAAP gross profit |
$ | 24,129 | $ | 13,238 | ||||
(percent of total revenue) |
81 | % | 74 | % | ||||
GAAP license gross profit |
$ | 13,676 | $ | 7,375 | ||||
(percent of related revenue) |
90 | % | 84 | % | ||||
Plus: |
||||||||
Stock-based compensation expense |
30 | 17 | ||||||
Amortization of acquired intangible assets |
239 | 192 | ||||||
Non-GAAP license gross profit |
$ | 13,945 | $ | 7,584 | ||||
(percent of related revenue) |
92 | % | 86 | % | ||||
GAAP maintenance and services gross profit |
$ | 10,148 | $ | 5,636 | ||||
(percent of related revenue) |
70 | % | 62 | % | ||||
Plus: |
||||||||
Stock-based compensation expense |
36 | 18 | ||||||
Non-GAAP maintenance and services gross profit |
$ | 10,184 | $ | 5,654 | ||||
(percent of related revenue) |
70 | % | 63 | % |
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Non-GAAP income (loss) from operations: |
||||||||
GAAP income (loss) from operations |
$ | 4,138 | $ | (1,854 | ) | |||
(percent of total revenue) |
14 | % | (10 | )% | ||||
Plus: |
||||||||
Stock-based compensation expense |
1,102 | 321 | ||||||
Amortization of acquired intangible assets |
239 | 192 | ||||||
Non-GAAP income (loss) from operations |
$ | 5,479 | $ | (1,341 | ) | |||
(percent of total revenue) |
18 | % | (8 | )% | ||||
GAAP operating expense |
$ | 19,686 | $ | 14,865 | ||||
Less: |
||||||||
Stock-based compensation expense |
1,036 | 286 | ||||||
Non-GAAP operating expense |
$ | 18,650 | $ | 14,579 | ||||
(as percent of total revenue) |
63 | % | 82 | % | ||||
GAAP sales and marketing expense |
$ | 8,484 | $ | 7,101 | ||||
Less: |
||||||||
Stock-based compensation expense |
334 | 111 | ||||||
Non-GAAP sales and marketing expense |
$ | 8,150 | $ | 6,990 | ||||
(as percent of total revenue) |
27 | % | 39 | % | ||||
GAAP research and development expense |
$ | 6,816 | $ | 4,491 | ||||
Less: |
||||||||
Stock-based compensation expense |
247 | 66 | ||||||
Non-GAAP research and development expense |
$ | 6,569 | $ | 4,425 | ||||
(as percent of total revenue) |
22 | % | 25 | % | ||||
GAAP general and administrative expense |
$ | 4,386 | $ | 3,273 | ||||
Less: |
||||||||
Stock-based compensation expense |
455 | 109 | ||||||
Non-GAAP general and administrative expense |
$ | 3,931 | $ | 3,164 | ||||
(as percent of total revenue) |
13 | % | 18 | % |
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(In thousands, except per share data) | ||||||||
Non-GAAP net income (loss) and income (loss) per share: |
||||||||
GAAP net income (loss) |
$ | 3,695 | $ | (2,624 | ) | |||
Plus: |
||||||||
Stock-based compensation expense |
1,102 | 321 | ||||||
Amortization of acquired intangible assets |
239 | 192 | ||||||
Non-GAAP net income (loss) |
$ | 5,036 | $ | (2,111 | ) | |||
GAAP net income (loss) per basic common share |
$ | 0.14 | $ | (0.41 | ) | |||
Plus: |
||||||||
Adjustment for preferred stock conversion (1) |
| 0.27 | ||||||
Stock-based compensation expense |
0.04 | 0.02 | ||||||
Amortization of acquired intangible assets |
0.01 | 0.01 | ||||||
Non-GAAP net income (loss) per basic common share |
$ | 0.19 | $ | (0.11 | ) | |||
GAAP net income per diluted common share (2) |
$ | 0.13 | ||||||
Plus: |
||||||||
Stock-based compensation expense |
0.04 | |||||||
Amortization of acquired intangible assets |
0.01 | |||||||
Non-GAAP net income per diluted common share |
$ | 0.18 | ||||||
Non-GAAP weighted average shares outstanding: (3) |
||||||||
GAAP weighted average shares outstanding |
6,393 | |||||||
Add: |
||||||||
Adjustment for convertible preferred stock
conversion |
12,962 | |||||||
Non-GAAP weighted average shares outstanding |
19,355 |
(1) | For purposes of the calculation of non-GAAP net income (loss) per basic and diluted common share for the three months ended March 31, 2010, GAAP weighted average shares outstanding was adjusted as if the conversion of all shares of redeemable convertible preferred stock into common stock occurred at the beginning of the period. | |
(2) | Net income (loss) per diluted common share for the three months ended March 31, 2010 is not presented because the effect of the share equivalents is anti-dilutive given the Companys losses for this period. As a result, non-GAAP net (loss) per diluted common share is equal to non-GAAP net (loss) per basic common share. | |
(3) | For the calculation of GAAP weighted average shares outstanding, the shares of common stock underlying shares of redeemable convertible preferred stock were not included for the period prior to the Companys initial public offering of its |
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Unaudited)
common stock, whereas for the non-GAAP weighted average shares outstanding, the conversion of all
shares of redeemable convertible preferred stock was assumed to have occurred at the beginning of
the three months ended March 31, 2010.
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Unaudited)
Three Months Ending | Year Ending | |||||||||||||||
June 30, 2011 | December 31, 2011 | |||||||||||||||
Low End | High End | Low End | High End | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Non-GAAP net income: |
||||||||||||||||
GAAP net income |
$ | 715 | $ | 1,515 | $ | 12,700 | $ | 15,600 | ||||||||
Plus: |
||||||||||||||||
Stock-based compensation expense |
1,525 | 1,525 | 5,462 | 5,462 | ||||||||||||
Amortization of acquired intangible assets |
245 | 245 | 938 | 938 | ||||||||||||
Non-GAAP net income |
$ | 2,485 | $ | 3,285 | $ | 19,100 | $ | 22,000 | ||||||||
Non-GAAP net income per share: |
||||||||||||||||
GAAP net income per diluted common share |
$ | 0.03 | $ | 0.05 | $ | 0.45 | $ | 0.55 | ||||||||
Plus: |
||||||||||||||||
Stock-based compensation expense |
0.05 | 0.05 | 0.19 | 0.19 | ||||||||||||
Amortization of acquired intangible assets |
0.01 | 0.01 | 0.03 | 0.03 | ||||||||||||
Non-GAAP net income per diluted common share |
$ | 0.09 | $ | 0.11 | $ | 0.67 | $ | 0.77 | ||||||||