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8-K - FORM 8-K - TIBCO SOFTWARE INCd556341d8k.htm

Exhibit 99.1

 

LOGO   

 

Media Contact:     Investor Contact:
Leslie Moore     Giuseppe Incitti
TIBCO Software Inc.     TIBCO Software Inc.
(650) 846-5025     (650) 846-5637
lmoore@tibco.com     gincitti@tibco.com

TIBCO SOFTWARE REPORTS SECOND QUARTER RESULTS

Total Revenue of $246 million; Non-GAAP EPS of $0.18

PALO ALTO, Calif., June 20, 2013 - TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fiscal second quarter which ended on June 2, 2013.

Total revenue for the second quarter of fiscal 2013 was $245.8 million and net income was $8.7 million, or $0.05 per diluted share. This compares to total revenue of $247.4 million and net income of $26.5 million, or $0.16 per diluted share, as reported for the second quarter of fiscal 2012.

On a non-GAAP basis, net income for the second quarter of fiscal 2013 was $29.7 million or $0.18 per diluted share, compared with $43.6 million or $0.26 per diluted share for the second quarter of fiscal 2012. Non-GAAP operating income for the second quarter of fiscal 2013 was $45.3 million, resulting in a non-GAAP operating margin of 18.4%. This compares to non-GAAP operating income of $61.8 million, or a 25.0% non-GAAP operating margin in the second quarter of fiscal 2012. Non-GAAP results exclude amortization of acquired intangible assets, stock-based compensation expense, acquisition related and other expenses, restructuring activities and non-cash interest expense related to convertible debt and assumes non-GAAP effective tax rates of 26% and 27% for the second quarter of fiscal 2013 and 2012, respectively.

“Improving sales execution remains our top priority. While work remains to be done, we saw signs of improvement and a healthier base of activity this quarter,” said Vivek Ranadivé, TIBCO’s chairman and chief executive officer. “Given the opportunity we see, we continue to invest for growth and innovation. Our ability to extract insights from static and real-time data and then operationalize those insights to help customers achieve the Two Second Advantage is a powerful driver and well-aligned with market needs in this era of big data.”

Second Quarter Fiscal 2013 Highlights

 

   

Total revenue of $245.8 million;

 

   

License revenue of $82.3 million;

 

   

Non-GAAP operating margin of 18.4%;

 

   

Non-GAAP EPS of $0.18;

 

   

Cash flow from operations of $24.9 million;

 

   

Broad mix of business across major industries including Financial Services, Communications, Energy, Retail, Manufacturing, Transportation & Logistics, Government, Life Sciences;

 

   

TIBCO closed 147 deals over $100k and had 12 deals over $1 million.


Conference Call Details

TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its second 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 July 20, 2013 at www.tibco.com or via dial-in at 800-585-8367 or 404-537-3406. The pass code for both the call and the replay is 91499868.

About TIBCO

TIBCO Software Inc. (NASDAQ: TIBX) is a provider of infrastructure software for companies to use on-premise or as part of cloud computing environments. Whether it’s optimizing claims, processing trades, cross-selling products based on real-time customer behavior, or averting a crisis before it happens, TIBCO provides companies the two-second advantage®—the ability to capture the right information at the right time and act on it preemptively for a competitive advantage. More than 4,000 customers worldwide rely on TIBCO to manage information, decisions, processes and applications in real time. Learn more at www.tibco.com.

###

TIBCO, two-second advantage and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc. in the United States and/or other countries. All 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.

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 section entitled “About Non-GAAP Financial Measures” and the accompanying table entitled “Reconciliation of GAAP to Non-GAAP Measures.”

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the federal securities laws. The final financial results for second quarter of fiscal year 2013 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 statements regarding TIBCO’s ability to improve its sales execution, TIBCO’s ability to deliver growth, and TIBCO’s ability to benefit from current IT trends, 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 implement successfully the changes designed to improve performance and drive growth, the impact of competition from alternative business models and new product introductions, TIBCO’s ability to offer differentiated products that capitalize on current technology trends, 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, 2012 and Quarterly Report on Form 10-Q for the quarter ended March 3, 2013. TIBCO assumes no obligation to update the forward-looking statements included in this release.


TIBCO Software Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)

 

     June 2,
2013
     November 30,
2012
 
ASSETS      

Current assets:

     

Cash and cash equivalents

   $ 662,769       $ 727,309   

Short-term investments

     63,785         34,411   

Accounts receivable, net

     187,703         234,100   

Prepaid expenses and other current assets

     64,408         61,174   
  

 

 

    

 

 

 

Total current assets

     978,665         1,056,994   

Property and equipment, net

     95,959         98,474   

Goodwill

     529,016         532,290   

Acquired intangible assets, net

     110,342         123,261   

Long-term deferred income tax assets

     80,920         64,549   

Other assets

     64,463         71,340   
  

 

 

    

 

 

 

Total assets

   $ 1,859,365       $ 1,946,908   
  

 

 

    

 

 

 
LIABILITIES AND EQUITY      

Current liabilities:

     

Accounts payable

   $ 32,672       $ 22,809   

Accrued liabilities

     109,562         133,596   

Accrued restructuring costs

     658         893   

Deferred revenue

     248,456         263,476   

Current portion of long-term debt

     —           35,711   
  

 

 

    

 

 

 

Total current liabilities

     391,348         456,485   

Accrued restructuring costs, less current portion

     334         643   

Long-term deferred revenue

     25,667         25,543   

Long-term deferred income tax liabilities

     2,545         3,208   

Long-term income tax liabilities

     31,656         26,263   

Other long-term liabilities

     4,690         4,015   

Convertible debt

     532,139         524,466   
  

 

 

    

 

 

 

Total long-term liabilities

     597,031         584,138   
  

 

 

    

 

 

 

Total liabilities

     988,379         1,040,623   
  

 

 

    

 

 

 

Total equity

     870,986         906,285   
  

 

 

    

 

 

 

Total liabilities and equity

   $ 1,859,365       $ 1,946,908   
  

 

 

    

 

 

 


TIBCO Software Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except net income per share)

 

     Three Months Ended     Six Months Ended  
     June 2,
2013
    June 3,
2012
    June 2,
2013
    June 3,
2012
 

Revenue:

        

License

   $ 82,266      $ 92,581      $ 160,529      $ 174,896   

Service and maintenance

     163,580        154,782        323,107        298,169   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     245,846        247,363        483,636        473,065   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue:

        

License

     11,108        9,401        22,369        18,441   

Service and maintenance

     62,863        59,486        125,239        116,536   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     73,971        68,887        147,608        134,977   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     171,875        178,476        336,028        338,088   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     42,575        38,605        84,200        75,926   

Sales and marketing

     85,224        78,923        165,313        154,641   

General and administrative

     17,924        17,407        36,849        35,002   

Amortization of acquired intangible assets

     4,713        5,653        9,034        10,201   

Acquisition related and other

     568        929        895        1,325   

Restructuring adjustment

     (22     (400     (15     (519
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     150,982        141,117        296,276        276,576   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     20,893        37,359        39,752        61,512   

Interest income

     225        221        423        476   

Interest expense

     (8,663     (4,395     (17,445     (5,860

Other income (expense), net

     (569     572        (1,411     1,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes and noncontrolling interest

     11,886        33,757        21,319        57,676   

Provision for income taxes

     3,100        7,200        3,000        10,500   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     8,786        26,557        18,319        47,176   

Less: Net income attributable to noncontrolling interest

     71        65        99        43   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to TIBCO Software Inc.

   $ 8,715      $ 26,492      $ 18,220      $ 47,133   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share attributable to TIBCO Software Inc.:

        

Basic

   $ 0.05      $ 0.17      $ 0.11      $ 0.29   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.05      $ 0.16      $ 0.11      $ 0.28   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used to compute net income per share attributable to TIBCO Software Inc.:

        

Basic

     160,887        160,437        161,199        160,949   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     167,507        169,477        168,320        170,173   
  

 

 

   

 

 

   

 

 

   

 

 

 


TIBCO Software Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

     Six Months Ended  
     June 2,
2013
    June 3,
2012
 

Cash flows from operating activities:

    

Net income

   $ 18,319      $ 47,176   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation of property and equipment

     7,839        7,050   

Amortization of acquired intangible assets

     17,377        17,365   

Amortization of debt discount and transaction costs

     9,460        2,210   

Stock-based compensation

     31,335        29,718   

Deferred income tax

     (15,007     (9,281

Tax benefits related to stock benefit plans

     5,278        9,406   

Excess tax benefits from stock-based compensation

     (7,139     (16,484

Other non-cash adjustments, net

     506        531   

Changes in assets and liabilities:

    

Accounts receivable

     43,573        16,751   

Prepaid expenses and other assets

     (2,633     4,290   

Accounts payable

     10,698        (981

Accrued liabilities and restructuring costs

     (17,264     (20,373

Deferred revenue

     (14,264     29,563   
  

 

 

   

 

 

 

Net cash provided by operating activities

     88,078        116,941   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of short-term investments

     (38,261     —     

Maturities and sales of short-term investments

     8,829        —     

Acquisitions, net of cash acquired

     (4,261     (131,611

Purchases of property and equipment

     (5,768     (11,224

Restricted cash pledged as security

     (668     (1,149

Other investing activities, net

     288        414   
  

 

 

   

 

 

 

Net cash used in investing activities

     (39,841     (143,570
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of convertible debt, net

     —          584,450   

Proceeds from revolving credit facility, net

     —          116,648   

Principal payments on debt

     (35,711     (151,182

Proceeds from issuance of common stock

     9,255        17,298   

Repurchases of the Company’s common stock

     (81,208     (188,508

Withholding taxes related to restricted stock net share settlement

     (9,899     (15,116

Excess tax benefits from stock-based compensation

     7,139        16,484   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (110,424     380,074   
  

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

     (2,353     (14,489
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (64,540     338,956   

Cash and cash equivalents at beginning of period

     727,309        308,148   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 662,769      $ 647,104   
  

 

 

   

 

 

 


About Non-GAAP Financial Measures

TIBCO provides non-GAAP measures for operating income, net income and net income per share data as supplemental information regarding TIBCO’s business performance. TIBCO believes that these non-GAAP financial measures are useful to investors because they exclude non-operating charges. 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 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, gains and losses on equity investments, and the income tax effects of the foregoing, as well as adjustments for the impact of changes in the valuation allowance recorded against TIBCO’s deferred tax assets when making operational decisions.

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 that used by TIBCO’s management.

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 and/or analysts. However, TIBCO’s management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. In addition, some items such as restructuring charges that are excluded from non-GAAP net income and non-GAAP earnings per share can have a material impact on cash flows and stock compensation charges can have a significant impact on earnings. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. TIBCO has historically provided non-GAAP measures to the investment community as a supplement to its GAAP results, to enable investors to evaluate TIBCO’s business performance in the way that management does.

The non-GAAP adjustments, and the basis for excluding them, are outlined below:

Amortization of Intangible Assets

TIBCO has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions TIBCO has made. 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 believes that eliminating this expense from its non-GAAP measures is useful to investors, because 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 TIBCO believes is not reflective of its business performance. The nature of the stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions and different award types, making the comparison of current results with forward-looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expenses may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods. 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 believes that eliminating these expenses from its non-GAAP measures is useful to investors, because it 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.

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.

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 believes that excluding this expense from its non-GAAP measures is useful to investors 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.


TIBCO Software Inc.

Reconciliation of GAAP to Non-GAAP Measures

(unaudited)

(in thousands, except net income per share)

 

    Three Months Ended     Six Months Ended  
    June 2,
2013
    June 3,
2012
    June 2,
2013
    June 3,
2012
 
    Operating
Income
    Net income
attributable to
TIBCO
Software Inc.
    Operating
Income
    Net income
attributable to
TIBCO
Software Inc.
    Operating
Income
    Net income
attributable to
TIBCO
Software Inc.
    Operating
Income
    Net income
attributable to
TIBCO
Software Inc.
 

GAAP

  $ 20,893      $ 8,715      $ 37,359      $ 26,492      $ 39,752      $ 18,220      $ 61,512      $ 47,133   

Amortization of intangible assets - cost of revenue

    4,246        4,246        3,899        3,899        8,343        8,343        7,164        7,164   

Amortization of intangible assets - operating expense

    4,713        4,713        5,653        5,653        9,034        9,034        10,201        10,201   

Stock-based compensation - cost of revenue

    1,869        1,869        1,116        1,116        3,472        3,472        2,398        2,398   

Stock-based compensation - R&D expense

    4,122        4,122        3,354        3,354        8,118        8,118        7,359        7,359   

Stock-based compensation - S&M expense

    4,422        4,422        4,694        4,694        9,661        9,661        9,987        9,987   

Stock-based compensation - G&A expense

    4,530        4,530        5,231        5,231        10,084        10,084        9,976        9,976   

Acquisition related and other

    568        568        929        929        895        895        1,325        1,325   

Non-cash interest expense related to convertible debt

    —          3,854        —          1,564        —          7,673        —          1,564   

Restructuring adjustment

    (22     (22     (400     (400     (15     (15     (519     (519

Income tax adjustment for non-GAAP

    —          (7,349     —          (8,945     —          (14,743     —          (18,425
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP

  $ 45,341      $ 29,668      $ 61,835      $ 43,587      $ 89,344      $ 60,742      $ 109,403      $ 78,163   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share attributable to TIBCO Software Inc.:

               

GAAP

    $ 0.05        $ 0.16        $ 0.11        $ 0.28   
   

 

 

     

 

 

     

 

 

     

 

 

 

Non-GAAP

    $ 0.18        $ 0.26        $ 0.36        $ 0.46   
   

 

 

     

 

 

     

 

 

     

 

 

 

Shares used to compute diluted net income per share attributable to TIBCO Software Inc.:

      167,507          169,477          168,320          170,173