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8-K - FORM 8-K - TIBCO SOFTWARE INCd600328d8k.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 THIRD QUARTER RESULTS

Record Q3 Total Revenue of $271 million; Non-GAAP EPS of $0.28

PALO ALTO, Calif., September 19, 2013 - TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fiscal third quarter, which ended on September 1, 2013.

Total revenue for the third quarter of fiscal 2013 was $270.9 million and net income was $21.3 million, or $0.13 per diluted share. This compares to total revenue of $255.0 million and net income of $26.1 million, or $0.15 per diluted share, as reported for the third quarter of fiscal 2012.

On a non-GAAP basis, net income for the third quarter of fiscal 2013 was $46.3 million or $0.28 per diluted share, compared with $45.9 million or $0.27 per diluted share for the third quarter of fiscal 2012. Non-GAAP operating income for the third quarter of fiscal 2013 was $64.2 million, resulting in a non-GAAP operating margin of 23.7%. This compares to non-GAAP operating income of $68.8 million, or a 27.0% non-GAAP operating margin in the third 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 23% and 27% for the third quarters of fiscal 2013 and 2012, respectively.

“We saw further signs of operational improvement this quarter, as our focus on execution generated renewed growth in our infrastructure business,” said Vivek Ranadivé, TIBCO’s chairman and chief executive officer. “Across an expanding set of industries, the world’s leading companies are calling on TIBCO for innovative solutions to big data challenges and their own version of the Two-Second Advantage. Given the opportunity before us, we will continue to invest for growth and innovation, particularly in the areas of integration, analytics and cloud.”

Third Quarter Fiscal 2013 Highlights

 

    Total revenue of $270.9 million;

 

    License revenue of $105.2 million;

 

    Non-GAAP operating margin of 23.7%;

 

    Non-GAAP EPS of $0.28;

 

    Cash flow from operations of $58.3 million;

 

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

 

    TIBCO closed 140 deals over $100k and had 18 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 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 19, 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 47967789.

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 third 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 capitalize on the opportunities in the marketplace, 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 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 June 2, 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)

 

     September 1,
2013
     November 30,
2012
 
ASSETS      

Current assets:

     

Cash and cash equivalents

   $ 666,211       $ 727,309   

Short-term investments

     57,686         34,411   

Accounts receivable, net

     183,131         234,100   

Prepaid expenses and other current assets

     66,750         61,174   
  

 

 

    

 

 

 

Total current assets

     973,778         1,056,994   

Property and equipment, net

     95,792         98,474   

Goodwill

     557,809         532,290   

Acquired intangible assets, net

     120,499         123,261   

Long-term deferred income tax assets

     90,222         64,549   

Other assets

     75,712         71,340   
  

 

 

    

 

 

 

Total assets

   $ 1,913,812       $ 1,946,908   
  

 

 

    

 

 

 
LIABILITIES AND EQUITY      

Current liabilities:

     

Accounts payable

   $ 28,827       $ 22,809   

Accrued liabilities

     110,067         133,596   

Accrued restructuring costs

     5,314         893   

Deferred revenue

     253,357         263,476   

Current portion of long-term debt

     —           35,711   
  

 

 

    

 

 

 

Total current liabilities

     397,565         456,485   

Accrued restructuring costs, less current portion

     203         643   

Long-term deferred revenue

     26,323         25,543   

Long-term deferred income tax liabilities

     2,213         3,208   

Long-term income tax liabilities

     52,005         26,263   

Other long-term liabilities

     4,509         4,015   

Convertible debt

     536,062         524,466   
  

 

 

    

 

 

 

Total long-term liabilities

     621,315         584,138   
  

 

 

    

 

 

 

Total liabilities

     1,018,880         1,040,623   
  

 

 

    

 

 

 

Total equity

     894,932         906,285   
  

 

 

    

 

 

 

Total liabilities and equity

   $ 1,913,812       $ 1,946,908   
  

 

 

    

 

 

 


TIBCO Software Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except net income per share)

 

     Three Months Ended     Nine Months Ended  
     September 1,
2013
    September 2,
2012
    September 1,
2013
    September 2,
2012
 

Revenue:

        

License

   $ 105,209      $ 99,103      $ 265,738      $ 273,999   

Service and maintenance

     165,650        155,918        488,757        454,087   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     270,859        255,021        754,495        728,086   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue:

        

License

     12,407        11,368        34,776        29,809   

Service and maintenance

     65,566        60,881        190,805        177,417   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     77,973        72,249        225,581        207,226   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     192,886        182,772        528,914        520,860   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     43,391        39,354        127,591        115,280   

Sales and marketing

     84,082        76,803        249,395        231,444   

General and administrative

     13,697        17,906        50,546        52,908   

Amortization of acquired intangible assets

     4,991        4,640        14,025        14,841   

Acquisition related and other

     630        845        1,525        2,170   

Restructuring adjustment

     8,886        72        8,871        (447
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     155,677        139,620        451,953        416,196   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     37,209        43,152        76,961        104,664   

Interest income

     249        366        672        842   

Interest expense

     (8,411     (8,713     (25,856     (14,573

Other income (expense), net

     153        (1,306     (1,258     242   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes and noncontrolling interest

     29,200        33,499        50,519        91,175   

Provision for income taxes

     7,900        7,400        10,900        17,900   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     21,300        26,099        39,619        73,275   

Less: Net income attributable to noncontrolling interest

     49        13        148        56   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to TIBCO Software Inc.

   $ 21,251      $ 26,086      $ 39,471      $ 73,219   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share attributable to TIBCO Software Inc.:

        

Basic

   $ 0.13      $ 0.16      $ 0.25      $ 0.46   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.13      $ 0.15      $ 0.24      $ 0.43   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

     160,638        159,308        161,012        160,402   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     166,999        169,165        167,879        169,836   
  

 

 

   

 

 

   

 

 

   

 

 

 


TIBCO Software Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

     Nine Months Ended  
     September 1,
2013
    September 2,
2012
 

Cash flows from operating activities:

    

Net income

   $ 39,619      $ 73,275   

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

    

Depreciation of property and equipment

     11,616        10,992   

Amortization of acquired intangible assets

     26,965        26,719   

Amortization of debt discount and transaction costs

     14,258        6,820   

Stock-based compensation

     39,245        45,130   

Deferred income tax

     (13,292     (20,183

Tax benefits related to stock benefit plans

     9,691        14,455   

Excess tax benefits from stock-based compensation

     (13,442     (20,612

Other non-cash adjustments, net

     1,179        905   

Changes in assets and liabilities:

    

Accounts receivable

     49,181        (12,079

Prepaid expenses and other assets

     (19,568     (8,975

Accounts payable

     7,207        159   

Accrued liabilities and restructuring costs

     4,864        (5,576

Deferred revenue

     (11,119     54,285   
  

 

 

   

 

 

 

Net cash provided by operating activities

     146,404        165,315   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of short-term investments

     (38,261     —     

Maturities and sales of short-term investments

     15,346        —     

Acquisitions, net of cash acquired

     (53,917     (132,209

Purchases of property and equipment

     (10,695     (16,366

Restricted cash pledged as security

     (835     (1,169

Other investing activities, net

     (212     376   
  

 

 

   

 

 

 

Net cash used in investing activities

     (88,574     (149,368
  

 

 

   

 

 

 

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     (151,785

Proceeds from issuance of common stock

     23,089        25,390   

Repurchases of the Company’s common stock

     (105,289     (220,265

Withholding taxes related to restricted stock net share settlement

     (12,467     (17,383

Excess tax benefits from stock-based compensation

     13,442        20,612   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (116,936     357,667   
  

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

     (1,992     (6,488
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (61,098     367,126   

Cash and cash equivalents at beginning of period

     727,309        308,148   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 666,211      $ 675,274   
  

 

 

   

 

 

 


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     Nine Months Ended  
     September 1,
2013
    September 2,
2012
    September 1,
2013
    September 2,
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

   $ 37,209      $ 21,251      $ 43,152       $ 26,086      $ 76,961       $ 39,471      $ 104,664      $ 73,219   

Amortization of intangible assets - cost of revenue

     4,597        4,597        4,714         4,714        12,940         12,940        11,878        11,878   

Amortization of intangible assets - operating expense

     4,991        4,991        4,640         4,640        14,025         14,025        14,841        14,841   

Stock-based compensation - cost of revenue

     1,914        1,914        1,313         1,313        5,386         5,386        3,711        3,711   

Stock-based compensation - R&D expense

     3,641        3,641        3,885         3,885        11,759         11,759        11,244        11,244   

Stock-based compensation - S&M expense

     3,121        3,121        5,380         5,380        12,782         12,782        15,367        15,367   

Stock-based compensation - G&A expense

     (766     (766     4,832         4,832        9,318         9,318        14,808        14,808   

Acquisition related and other

     630        630        845         845        1,525         1,525        2,170        2,170   

Non-cash interest expense related to convertible debt

     —          3,924        —           3,717        —           11,597        —          5,281   

Restructuring adjustment

     8,886        8,886        72         72        8,871         8,871        (447     (447

Income tax adjustment for non-GAAP

     —          (5,932     —           (9,582     —           (20,676     —          (28,008
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Non-GAAP

   $ 64,223      $ 46,257      $ 68,833       $ 45,902      $ 153,567       $ 106,998      $ 178,236      $ 124,064   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

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

                  

GAAP

     $ 0.13         $ 0.15         $ 0.24        $ 0.43   
    

 

 

      

 

 

      

 

 

     

 

 

 

Non-GAAP

     $ 0.28         $ 0.27         $ 0.64        $ 0.73   
    

 

 

      

 

 

      

 

 

     

 

 

 

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

       166,999           169,165           167,879          169,836