UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 5, 2019
AVID TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 1-36254 | 04-2977748 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
75 Network Drive, Burlington, Massachusetts 01803
(Address of Principal Executive Offices) (Zip Code)
(978) 640-6789
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⎕ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⎕ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⎕ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⎕ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ⎕
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⎕
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Common Stock, $.01 par value | AVID | Nasdaq Global Select Market | ||
Item 2.02. Results of Operations and Financial Condition.
On August 5, 2019, Avid Technology, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended June 30, 2019 (the “Press Release”). The full text of the Press Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
The information contained in Item 2.02 is incorporated by reference herein.
Non-GAAP and Operational Measures. The attached Press Release includes financial measures that are not based on generally accepted accounting principles, or GAAP. These non-GAAP financial measures, which are not based on a comprehensive set of accounting rules or principles, include the following: non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income (Loss), Adjusted EBITDA, Adjusted EBITDA Margin, non-GAAP Interest and Other Expense, non-GAAP Income Tax Provision, non-GAAP Net Income (Loss), non-GAAP Net Income (Loss) Per Share, and Free Cash Flow.
• | Non-GAAP Gross Profit is defined as GAAP gross profit, excluding amortization of intangible assets and stock-based compensation expense. |
• | Non-GAAP Gross Margin is defined as GAAP gross margin, excluding amortization of intangible assets and stock-based compensation expense. |
• | Non-GAAP Operating Expenses are defined as GAAP operating expense excluding restructuring costs, stock-based compensation, amortization of intangible assets as well as other unusual items such as costs related to the restatement, M&A related activity, and efficiency program. |
• | Non-GAAP Operating Income (Loss) is defined as GAAP operating income (loss) excluding restructuring costs, stock-based compensation, amortization of intangible assets as well as other unusual items such as costs related to the restatement, M&A related activity, and efficiency program. |
• | Adjusted EBITDA is defined as non-GAAP operating income (loss) excluding depreciation expense. |
• | Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by GAAP Net Revenues. |
• | Non-GAAP Interest and Other Expense is defined as GAAP interest and other expense excluding one-time financing fees and loss on extinguishment of debt. |
• | Non-GAAP Income Tax Provision is defined as the provision for income taxes on non-GAAP profit (loss) before income taxes, which is non-GAAP Operating Income (Loss) excluding Non-GAAP Interest and Other Expense. |
• | Non-GAAP Net Income (Loss) is defined as Non-GAAP Operating Income (Loss) less Non-GAAP Interest and Other Expense, and Non-GAAP Income Tax Provision. |
• | Non-GAAP Net Income (Loss) Per Share is defined as non-GAAP Net Income (Loss) divided by weighted-average common shares outstanding. |
• | Free Cash Flow is defined as GAAP operating cash flow less capital expenditures. |
Reconciliations of these non-GAAP financial measures to their most comparable GAAP measures are contained in the tables accompanying the Press Release. The Press Release furnished herewith also includes forward-looking non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow and Non-GAAP Net Income (Loss) Per Share. Reconciliations of these forward-looking non-GAAP financial measures are not included in the Press Release furnished herewith due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible at this time. As a result, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.
These non-GAAP financial measures reflect how Avid manages its businesses internally. Avid’s non-GAAP measures may vary from how other companies present non-GAAP measures. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.
The Press Release furnished herewith also includes the operational metrics of Cloud-enabled software subscriptions, Recurring Revenue, Annual Contract Value and Revenue Backlog. Definitions of these operational metrics are included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com.
• | Cloud-enabled software subscriptions as of the end of a quarter represent the number of paid subscription licenses under an active contract as of that date, excluding any licenses that may be receiving service under an active contract but that are not paid for at that time by the customer, whether due to a promotion, cancellation or otherwise. For comparison purposes, subscription numbers for previous quarters have been adjusted from previously published numbers to (i) include multi-year and multi-seat licenses, and (ii) exclude certain terminated subscription licenses. |
• | Recurring Revenue is defined as the sum, without duplication, of subscription revenue, maintenance revenue and revenue under our long-term contractual agreements. |
• | LTM Recurring Revenue % is Recurring Revenue divided by Total Net Revenue for the most recent four quarters. |
• | Annual Contract Value is defined, as of a given date, as the sum of the following three components: (i) the annual value of all long-term contractual agreements in effect on such date, calculated by dividing the total value of each contract (excluding expected maintenance revenue included in (ii) below and expected subscription revenue included in (iii) below) divided by the total number of years of such contract, (ii) maintenance revenue for the quarter ended on such date, multiplied by four, and (iii) subscription revenue for the quarter ended on such date, multiplied by four. |
• | Revenue Backlog consists of firm orders received and includes both (i) orders where the customer has been invoiced in advance of our performance obligations being fulfilled and (ii) orders for future product deliveries or services that have not yet been invoiced by us. |
Limitation on Incorporation by Reference. The information furnished in Items 2.02 and 7.01, including the Press Release furnished herewith as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements. This Form 8-K, and the Press Release furnished herewith as Exhibit 99.1 contain forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary notes in the Press Release regarding these forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description |
99.1 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AVID TECHNOLOGY, INC. | ||
(Registrant) | ||
Date: August 5, 2019 | By: | /s/ Kenneth Gayron |
Name: | Kenneth Gayron | |
Title: | Executive Vice President and CFO | |
Exhibit 99.1
Avid Technology Announces Q2 2019 Results
Continued improvement in key financial metrics and Free Cash Flow
New Non-GAAP Net Income Per Share guidance introduced for 2019, given positive trajectory of the business
BURLINGTON, Mass., August 5, 2019 -- Avid® (NASDAQ: AVID), a leading technology provider that powers the media and entertainment industry, today announced its second quarter 2019 financial results, provided guidance for the third quarter of 2019, reaffirmed full-year 2019 guidance and introduced new Non-GAAP Net Income Per Share guidance for full-year 2019.
Second Quarter 2019 Financial and Business Highlights
• | Revenue was $98.7 million, up slightly year-over-year from $98.6 million. |
• | Gross margin was 57.4%, up 30 basis points year-over-year. Non-GAAP Gross Margin was 59.4%, up 20 basis points year-over-year. |
• | Operating expenses were $54.1 million, a decrease of 7% year-over-year. Non-GAAP Operating Expenses were $51.8 million, a decrease of 8% year-over-year. |
• | Operating income was $2.6 million, up from operating loss of ($2.1) million in Q2 2018. Non-GAAP Operating Income was $6.9 million, an increase of 188% year-over-year. |
• | Adjusted EBITDA was $9.4 million, an increase of 78% year-over-year. Adjusted EBITDA Margin was 9.5%, up 410 basis points year-over-year. |
• | GAAP net loss per common share was ($0.25), compared to net loss per common share of ($0.20) in Q2 2018. Non-GAAP Net Income per Share was $0.02, up from Non-GAAP Net Loss per Share of ($0.10) in Q2 2018. |
• | Net cash used in operating activities was ($2.7) million, compared to Net cash used in operating activities of ($5.9) million in Q2 2018. |
• | Free Cash Flow was ($4.5) million, an improvement of $4.2 million compared to Free Cash Flow of ($8.7) million in Q2 2018. |
• | Software revenue from subscriptions increased 17% year-over-year with approximately 147,000 cloud-enabled software subscriptions at the end of Q2 2019. |
• | Revenue through the Company’s e-commerce activities was up 19% year-over-year. |
• | Recurring Revenue was 58% of the Company’s revenue in the twelve months ending June 30, 2019, up from 51% in the twelve months ending June 30, 2018. |
• | Annual Contract Value was $246 million at the end of Q2 2019, up slightly from $245 million at the end of Q2 2018. |
“Despite some slight revenue headwinds in the second quarter related to our supply chain transition, I am pleased with our overall performance in the first half of 2019 as our results are in line with our plans. We are better positioned emerging from the first half than we have been in many years,” said Jeff Rosica, CEO and President of Avid. “We’re pleased that our strategic plan is delivering as expected, and that we’re on a good trajectory for the second half, aided by the delivery of significant new products to market in the second quarter, including new versions of our flagship creative tools, MediaCentral platform, and cloud storage.”
“While we continue to see year over year improvements in gross margin, Adjusted EBITDA, and Free Cash Flow, we faced certain headwinds during Q2 related to our supply chain transition that brought our Q2 results below expectations,” commented Ken Gayron, Executive Vice President and Chief Financial Officer of Avid. Mr. Gayron added, “That said, we continue to see the benefits from our Smart Savings initiatives which have enhanced our profitability and cash flow. We are well positioned as we enter the second half of 2019 to see continued year over year improvement in our key financial metrics.” Mr. Gayron further added, “We are
introducing Non-GAAP Net Income Per Share guidance for full-year 2019 to provide more information to investors to evaluate the progress we are making in our business model.”
Explanations regarding our use of non-GAAP financial measures and operational metrics and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled "Non-GAAP Financial Measures and Operational Metrics" and "Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures".
Third Quarter and Full-Year 2019 Guidance
For the third quarter of 2019, Avid is providing Revenue and Adjusted EBITDA guidance. Avid is also reaffirming its guidance for Revenue, Adjusted EBITDA and Free Cash Flow for full-year 2019 and introducing Non-GAAP Net Income Per Share guidance for full-year 2019.
($ millions, except per share amounts) | Q3 2019 | Full-Year 2019 |
Revenue | $101.0 - $109.0 | $420 - $430 |
Adjusted EBITDA | $13.5 - $18.5 | $60 - $65 |
Free Cash Flow | $12 - $17 | |
Non-GAAP Net Income Per Share | $0.60 - $0.72 | |
All guidance presented by the Company is inherently uncertain and subject to numerous risks and uncertainties. Avid’s actual future results of operations could differ materially from those shown in the table above. For a discussion of some of the key assumptions underlying the guidance, as well as the key risks and uncertainties associated with these forward-looking statements, please see “Forward-Looking Statements” below as well as the Avid Technology Q2 2019 Business Update presentation posted on Avid’s Investor Relations website http://ir.avid.com.
Conference Call
Avid will host a conference call to discuss its financial results for the second quarter on Monday, August 5, 2019 at 5:00 p.m. ET. The call will be open to the public and can be accessed by dialing 323-794-2551 and referencing confirmation code 2594566. You may also access the presentation slides and listen to the call on the Avid Investor Relations website. To listen via the website, go to the events tab at ir.avid.com for complete details prior to the start of the conference call. A replay of the call will also be available for a limited time on the Avid Investor Relations website shortly after the completion of the call.
Non-GAAP Financial Measures and Operational Metrics
Avid includes non-GAAP financial measures in this press release, including Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Expenses, Non-GAAP Operating Income, Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share. The Company also includes the operational metrics of Bookings, Cloud-enabled software subscriptions, Recurring Revenue and Annual Contract Value in this release. Avid believes the non-GAAP financial measures and operational metrics provided in this release provide helpful information to investors with respect to evaluating the Company’s performance. Unless noted, all financial and operating information is reported based on actual exchange rates. Definitions of the non-GAAP financial measures and operational metrics are included in our Form 8-K filed today. Reconciliations of the non-GAAP financial measures in this release to the Company's comparable GAAP financial measures for the periods presented are set forth below and are also included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com, which also includes definitions of all operational metrics.
The earnings release also includes forward-looking non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow. Reconciliations of these forward-looking non-GAAP financial measures are not included in the earnings release due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible at this time. As a result, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.
Forward-Looking Statements
Certain information provided in this press release, including the tables attached hereto, include forward-looking statements that involve risks and uncertainties, including projections and statements about our anticipated plans, objectives, expectations and intentions. Among other things, this press release includes estimated results of operations for the three months ending September 30, 2019 and the year ending December 31, 2019, which estimates are based on a variety of assumptions about key factors and metrics that will determine our future results of operations, including, for example, anticipated market uptake of new products and market-based cost inflation. Other forward-looking statements include, without limitation, statements based upon or otherwise incorporating judgments or estimates relating to future performance such as future operating results and expenses; earnings; backlog; revenue backlog conversion rate; product mix and free cash flow; Recurring Revenue and Annual Contract Value; our future strategy and business plans; our product plans, including products under development, such as cloud and subscription based offerings; our ability to raise capital and our liquidity. The projected future results of operations, and the other forward-looking statements in this release, are based on current expectations as of the date of this release and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to the effect on our sales, operations and financial performance resulting from: our liquidity; our ability to execute our strategic plan, and meet customer needs; our ability to retain and hire key personnel; our ability to produce innovative products in response to changing market demand, particularly in the media industry; our ability to successfully accomplish our product development plans; competitive factors; history of losses; fluctuations in our revenue based on, among other things, our performance and risks in particular geographies or markets; our higher indebtedness and ability to service it and meet the obligations thereunder; restrictions in our credit facilities; our move to a subscription model and related effect on our revenues and ability to predict future revenues; fluctuations in subscription and maintenance renewal rates; elongated sales cycles; fluctuations in foreign currency exchange rates; seasonal factors; adverse changes in economic conditions; variances in our revenue backlog and the realization thereof; and the possibility of legal proceedings adverse to our company. Moreover, the business may be adversely affected by future legislative, regulatory or other changes, including tax law changes, as well as other economic, business and/or competitive factors. The risks included above are not exhaustive. Other factors that could adversely affect our business and prospects are set forth in our public filings with the SEC. Forward-looking statements contained herein are made only as to the date of this press release and we undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
About Avid
Avid delivers the most open and efficient media platform, connecting content creation with collaboration, asset protection, distribution, and consumption. Avid’s preeminent customer community uses Avid’s comprehensive tools and workflow solutions to create, distribute and monetize the most watched, loved and listened to media in the world-from prestigious and award-winning feature films to popular television shows, news programs and televised sporting events, and celebrated music recordings and live concerts. With the most flexible deployment and pricing options, Avid’s industry-leading solutions include Media Composer®, Pro Tools®, Avid NEXIS®, MediaCentral®, iNEWS®, AirSpeed®, Sibelius®, Avid VENUE™, Avid FastServe®™, Maestro™, and
PlayMaker™. For more information about Avid solutions and services, visit www.avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn, or subscribe to Avid Blogs.
© 2019 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid NEXIS, Avid FastServe, AirSpeed, iNews, Maestro, MediaCentral, Media Composer, NewsCutter, PlayMaker, Pro Tools, Avid VENUE, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. All other trademarks are the property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.
Contacts
Investor Contact: | PR Contact: | |
Whit Rappole | Jim Sheehan | |
Avid | Avid | |
ir@avid.com | jim.sheehan@avid.com | |
(978) 275-2032 | (978) 640-3152 | |
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands except per share data)
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net revenues: | |||||||||||||||
Products | $ | 50,326 | $ | 46,379 | $ | 104,722 | $ | 92,789 | |||||||
Services | 48,375 | 52,236 | 97,298 | 103,763 | |||||||||||
Total net revenues | 98,701 | 98,615 | 202,020 | 196,552 | |||||||||||
Cost of revenues: | |||||||||||||||
Products | 28,058 | 26,347 | 55,658 | 52,642 | |||||||||||
Services | 12,195 | 13,986 | 24,682 | 27,971 | |||||||||||
Amortization of intangible assets | 1,788 | 1,950 | 3,738 | 3,900 | |||||||||||
Total cost of revenues | 42,041 | 42,283 | 84,078 | 84,513 | |||||||||||
Gross profit | 56,660 | 56,332 | 117,942 | 112,039 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 15,180 | 15,985 | 31,465 | 31,670 | |||||||||||
Marketing and selling | 26,129 | 27,759 | 51,007 | 53,891 | |||||||||||
General and administrative | 12,721 | 14,041 | 26,509 | 27,996 | |||||||||||
Amortization of intangible assets | 332 | 363 | 695 | 726 | |||||||||||
Restructuring costs, net | (269 | ) | 268 | 289 | 3,175 | ||||||||||
Total operating expenses | 54,093 | 58,416 | 109,965 | 117,458 | |||||||||||
Operating income (loss) | 2,567 | (2,084 | ) | 7,977 | (5,419 | ) | |||||||||
Interest and other expense, net | (13,290 | ) | (6,278 | ) | (18,475 | ) | (11,637 | ) | |||||||
Loss before income taxes | (10,723 | ) | (8,362 | ) | (10,498 | ) | (17,056 | ) | |||||||
Provision for income taxes | — | 144 | 438 | 399 | |||||||||||
Net loss | $ | (10,723 | ) | $ | (8,506 | ) | $ | (10,936 | ) | $ | (17,455 | ) | |||
Net loss per common share – basic and diluted | $ | (0.25 | ) | $ | (0.20 | ) | $ | (0.26 | ) | $ | (0.42 | ) | |||
Weighted-average common shares outstanding – basic and diluted | 42,560 | 41,587 | 42,305 | 41,496 | |||||||||||
AVID TECHNOLOGY, INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
(unaudited - in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP revenue | |||||||||||||||
Total net revenues | $ | 98,701 | $ | 98,615 | $ | 202,020 | $ | 196,552 | |||||||
Non-GAAP Gross Profit | |||||||||||||||
GAAP gross profit | 56,660 | 56,332 | 117,942 | 112,039 | |||||||||||
Amortization of intangible assets | 1,788 | 1,950 | 3,738 | 3,900 | |||||||||||
Stock-based compensation | 167 | 74 | 235 | 127 | |||||||||||
Non-GAAP Gross Profit | $ | 58,615 | $ | 58,356 | 121,915 | 116,066 | |||||||||
Non-GAAP Gross Margin | 59.4 | % | 59.2 | % | 60.3 | % | 59.1 | % | |||||||
Non-GAAP Operating Expenses | |||||||||||||||
GAAP operating expenses | 54,093 | 58,416 | 109,965 | 117,458 | |||||||||||
Less Amortization of intangible assets | (332 | ) | (363 | ) | (695 | ) | (726 | ) | |||||||
Less Stock-based compensation | (1,838 | ) | (1,478 | ) | (3,507 | ) | (2,128 | ) | |||||||
Less Restructuring costs, net | 269 | (268 | ) | (289 | ) | (3,175 | ) | ||||||||
Less Restatement costs | (6 | ) | (365 | ) | 2 | (592 | ) | ||||||||
Less Acquisition, integration and other costs | (274 | ) | 38 | (425 | ) | (44 | ) | ||||||||
Less Efficiency program costs | (155 | ) | (3 | ) | (158 | ) | (78 | ) | |||||||
Non-GAAP Operating Expenses | $ | 51,757 | $ | 55,977 | 104,893 | 110,715 | |||||||||
Non-GAAP Operating Income | |||||||||||||||
GAAP operating income (loss) | 2,567 | (2,084 | ) | 7,977 | (5,419 | ) | |||||||||
Amortization of intangible assets | 2,120 | 2,313 | 4,433 | 4,626 | |||||||||||
Stock-based compensation | 2,005 | 1,552 | 3,742 | 2,255 | |||||||||||
Restructuring costs, net | (269 | ) | 268 | 289 | 3,175 | ||||||||||
Restatement costs | 6 | 365 | (2 | ) | 592 | ||||||||||
Acquisition, integration and other costs | 274 | (38 | ) | 425 | 44 | ||||||||||
Efficiency program costs | 155 | 3 | 158 | 78 | |||||||||||
Non-GAAP Operating Income | $ | 6,858 | $ | 2,379 | 17,022 | 5,351 | |||||||||
Adjusted EBITDA | |||||||||||||||
Non-GAAP Operating Income (from above) | $ | 6,858 | $ | 2,379 | 17,022 | 5,351 | |||||||||
Depreciation | 2,564 | 2,913 | 4,992 | 6,274 | |||||||||||
Adjusted EBITDA | $ | 9,422 | $ | 5,292 | 22,014 | 11,625 | |||||||||
Adjusted EBITDA Margin | 9.5 | % | 5.4 | % | 10.9 | % | 5.9 | % | |||||||
Non-GAAP Net Income (Loss) | |||||||||||||||
Non-GAAP Operating Income (from above) | 6,858 | 2,379 | 17,022 | 5,351 | |||||||||||
Less: Non-GAAP interest and other expense | (5,994 | ) | (6,278 | ) | (11,179 | ) | (11,637 | ) | |||||||
Less: Non-GAAP income tax provision | 21 | (185 | ) | (455 | ) | (479 | ) | ||||||||
Non-GAAP Net Income (Loss) | $ | 885 | $ | (4,084 | ) | $ | 5,388 | $ | (6,765 | ) | |||||
Weighted-average common share outstanding - basic | 42,560 | 41,587 | 42,305 | 41,496 | |||||||||||
Weighted-average common share outstanding - diluted | 43,532 | 41,587 | 43,130 | 41,496 | |||||||||||
Non-GAAP Net Income (Loss) Per Share - basic and diluted | $ | 0.02 | $ | (0.10 | ) | $ | 0.13 | $ | (0.16 | ) | |||||
Free Cash Flow | |||||||||||||||
GAAP net cash (used in) provided by operating activities | (2,713 | ) | (5,871 | ) | 3,663 | (501 | ) | ||||||||
Capital expenditures | (1,809 | ) | (2,808 | ) | (3,576 | ) | (4,888 | ) | |||||||
Free Cash Flow | $ | (4,522 | ) | $ | (8,679 | ) | 87 | (5,389 | ) | ||||||
Free Cash Flow conversion of Adjusted EBITDA | (48.0 | )% | (164.0 | )% | 0.4 | % | (46.4 | )% | |||||||
These non-GAAP measures reflect how Avid manages its businesses internally. Avid’s non-GAAP measures may vary from how other companies present non-GAAP measures. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 50,955 | $ | 56,103 | |||
Restricted cash | 9,020 | 8,500 | |||||
Accounts receivable, net of allowances of $788 and $1,339 at June 30, 2019 and December 31, 2018, respectively. | 58,634 | 67,754 | |||||
Inventories | 34,105 | 32,956 | |||||
Prepaid expenses | 10,080 | 8,853 | |||||
Contract assets | 18,478 | 16,513 | |||||
Other current assets | 5,466 | 5,917 | |||||
Total current assets | 186,738 | 196,596 | |||||
Property and equipment, net | 20,132 | 21,582 | |||||
Intangible assets, net | — | 4,432 | |||||
Goodwill | 32,643 | 32,643 | |||||
Right of use assets | 33,324 | — | |||||
Long-term deferred tax assets, net | 1,122 | 1,158 | |||||
Other long-term assets | 8,142 | 9,432 | |||||
Total assets | $ | 282,101 | $ | 265,843 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 39,083 | $ | 39,239 | |||
Accrued compensation and benefits | 17,054 | 21,967 | |||||
Accrued expenses and other current liabilities | 40,899 | 37,547 | |||||
Income taxes payable | 1,791 | 1,853 | |||||
Short-term debt | 28,871 | 1,405 | |||||
Deferred revenue | 79,214 | 85,662 | |||||
Total current liabilities | 206,912 | 187,673 | |||||
Long-term debt | 200,227 | 220,590 | |||||
Long-term deferred revenue | 14,302 | 13,939 | |||||
Long-term lease liabilities | 31,216 | — | |||||
Other long-term liabilities | 5,267 | 10,302 | |||||
Total liabilities | 457,924 | 432,504 | |||||
Stockholders’ deficit: | |||||||
Common stock | 427 | 423 | |||||
Additional paid-in capital | 1,025,301 | 1,028,924 | |||||
Accumulated deficit | (1,197,946 | ) | (1,187,010 | ) | |||
Treasury stock at cost | — | (5,231 | ) | ||||
Accumulated other comprehensive loss | (3,605 | ) | (3,767 | ) | |||
Total stockholders’ deficit | (175,823 | ) | (166,661 | ) | |||
Total liabilities and stockholders’ deficit | $ | 282,101 | $ | 265,843 | |||
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
Six Months Ended | |||||||
June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (10,936 | ) | $ | (17,455 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 9,424 | 10,899 | |||||
Recovery from doubtful accounts | (48 | ) | (43 | ) | |||
Stock-based compensation expense | 3,743 | 2,255 | |||||
Non-cash provision for restructuring | — | 934 | |||||
Non-cash interest expense | 5,966 | 6,149 | |||||
Loss on extinguishment of debt | 2,878 | — | |||||
Unrealized foreign currency transaction losses (gains) | 105 | (921 | ) | ||||
Provision for deferred taxes | 43 | 5 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 9,168 | 13,525 | |||||
Inventories | (1,149 | ) | 653 | ||||
Prepaid expenses and other assets | (1,095 | ) | 2,454 | ||||
Accounts payable | (167 | ) | 3,426 | ||||
Accrued expenses, compensation and benefits and other liabilities | (6,106 | ) | (12,275 | ) | |||
Income taxes payable | (6 | ) | (37 | ) | |||
Deferred revenue and contract assets | (8,157 | ) | (10,070 | ) | |||
Net cash provided by (used in) operating activities | 3,663 | (501 | ) | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (3,576 | ) | (4,888 | ) | |||
Increase in other long-term assets | — | (17 | ) | ||||
Net cash used in investing activities | (3,576 | ) | (4,905 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | 79,289 | 22,688 | |||||
Repayment of debt | (714 | ) | (2,998 | ) | |||
Payments for repurchase of outstanding notes | (76,269 | ) | (1,725 | ) | |||
Proceeds from the issuance of common stock under employee stock plans | 309 | 256 | |||||
Common stock repurchases for tax withholdings for net settlement of equity awards | (1,895 | ) | (649 | ) | |||
Partial unwind capped call cash receipt | 27 | 2 | |||||
Payments for credit facility issuance costs | (5,979 | ) | — | ||||
Net cash (used in) provided by financing activities | (5,232 | ) | 17,574 | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (3 | ) | (401 | ) | |||
Net (decrease) increase in cash, cash equivalents and restricted cash | (5,148 | ) | 11,767 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 68,094 | 60,433 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 62,946 | $ | 72,200 | |||
Supplemental information: | |||||||
Cash and cash equivalents | $ | 50,955 | $ | 60,209 | |||
Restricted cash | 9,020 | 8,500 | |||||
Restricted cash included in other long-term assets | 2,971 | 3,491 | |||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 62,946 | $ | 72,200 | |||
AVID TECHNOLOGY, INC.
Supplemental Revenue Information
(unaudited - in millions)
Backlog Disclosure for Quarter Ended June 30, 2019 | ||||||||||||||||||||
June 30, | March 31, | June 30, | ||||||||||||||||||
2019 | 2019 | 2018 | ||||||||||||||||||
Revenue Backlog* | ||||||||||||||||||||
Deferred Revenue | $93.5 | $101.3 | $97.7 | |||||||||||||||||
Other Backlog | 351.3 | 358.4 | 350.5 | |||||||||||||||||
Total Revenue Backlog | $444.8 | $459.7 | $448.2 | |||||||||||||||||
The expected timing of recognition of revenue backlog as of June 30, 2019 is as follows: | ||||||||||||||||||||
2019 | 2020 | 2021 | Thereafter | Total | ||||||||||||||||
Deferred Revenue | $54.9 | $25.6 | $8.4 | $4.6 | $93.5 | |||||||||||||||
Other Backlog | 87.3 | 75.8 | 61.6 | 126.6 | 351.3 | |||||||||||||||
Total Revenue Backlog | $142.2 | $101.4 | $70 | $131.2 | $444.8 | |||||||||||||||
*A definition of Revenue Backlog is included in our Form 8-K filed today and the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com. | ||||||||||||||||||||