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8-K - FORM 8-K - TIBCO SOFTWARE INCd791494d8k.htm

Exhibit 99.1

 

LOGO

 

Media Contact:    Investor Contact:
Lindsay Andrews    John Ederer
Sard Verbinnen & Co.    TIBCO Software Inc.
(415) 618-8750    (650) 846-8696
landrews@sardverb.com    jederer@tibco.com

TIBCO SOFTWARE REPORTS THIRD QUARTER RESULTS

PALO ALTO, Calif., September 18, 2014 - 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 EngageTM, 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 BusinessWorksTM 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 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 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 TIBCO

TIBCO 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 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 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,
2014
     November 30,
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 stockholders’ 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,
2014
    September 1,
2013
    August 31,
2014
    September 1,
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,
2014
    September 1,
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  
     Revenue      Operating
Income
    Net income
attributable to
TIBCO Software
Inc.
    Revenue      Operating
Income
    Net income
attributable to
TIBCO Software
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  
     Revenue      Operating
Income
     Net income
attributable to
TIBCO Software
Inc.
    Revenue      Operating
Income
     Net income
attributable to
TIBCO Software
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