Avid Technology, Inc.
May 4, 2016

Avid Announces Strong First Quarter 2016 Financial Results Driven by New Product Innovation and Efficiency Gains

Solid Quarterly Revenue and Adjusted EBITDA Growth

Adjusted Free Cash Flow In Line with Guidance

Companywide Cost Efficiencies Program on Track & Yielding Results

Avid Everywhere Momentum Builds with Continued Shift towards Recurring Revenue and Increased Media Central Platform Adoption

BURLINGTON, Mass., May 04, 2016 (GLOBE NEWSWIRE) -- Avid® (Nasdaq:AVID) announced its first quarter 2016 financial results today, provided second quarter 2016 financial guidance and reaffirmed its guidance for the full year 2016.

Q1 2016 Non-GAAP Highlights

Avid Everywhere Momentum Continues

"Our work so far in 2016 demonstrates the continued momentum of the Avid Everywhere strategy, the increased adoption of the Avid MediaCentral Platform by our global base of customers and strong progress as we move steadily towards completing the transformation," said Louis Hernandez, Jr, Chairman, President, and CEO of Avid.  "I'm excited to see the impact of our groundbreaking product innovations that we launched earlier this month at the National Association of Broadcasters conference, including the first of its kind NEXIS shared storage, which won Best of Show and ProTools cloud collaboration, which brings the power of the MediaCentral platform to the entire audio creative market.  At AvidConnect, we were also excited to showcase the first certified applications from our partners and a deep platform integration with Adobe's Premiere Pro editing solution, validating our strategy and welcoming an outstanding partner to the platform.  We also continue to execute our efficiency program as expected, which leverages our platform-based approach to achieve a leaner and more directed cost structure.  As more customers fully embrace the power of the platform in 2016, we expect that we will be well positioned to increase long-term sustainable shareholder value."

Avid's 2016 second quarter financial guidance is set forth in the table below. The Company also re-affirmed its full year 2016 guidance, as originally provided on March 15, 2016. The second quarter 2016 guidance reflects partial year realization of the cost efficiency program, as well as the cash spend required to implement the program during the first half of 2016.  The previously announced growth initiatives are expected to have a more pronounced positive financial impact in the second half of 2016 leading to improved cash flow generation.

Q2 2016 Financial Guidance (in millions)

Bookings (Constant Currency) $105-$120
Bookings $99-$115
Non-GAAP Revenue $105-$120
Adjusted EBITDA $3-$9
Adjusted Operating Expenses $62-$65
Adjusted Free Cash Flow ($32.5)-($27.5)
   

Guidance and Financial and Operational Metrics

All guidance presented by the Company is inherently uncertain and subject to numerous risks and uncertainties.  Our actual future results of operations and cash flows 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 Q1 2016 Business Update presentation posted on Avid's investor relations website.

Avid includes non-GAAP financial measures in this press release, including non-GAAP revenue, adjusted EBITDA, adjusted free cash flow, non-GAAP operating income (loss), non-GAAP operating income (loss) per share, adjusted operating expenses and non-GAAP gross margin. The Company also includes the operational metric of bookings, revenue backlog and recurring revenue bookings 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 information is reported based on actual exchange rates.  Definitions of the non-GAAP financial measures 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 the operational metrics.

Conference Call

A conference call to discuss Avid's financial results for the first quarter of 2016 will be held on Wednesday, May 4, 2016 at 5:00 p.m. ET.  The call will be open to the public and can be accessed by dialing 719-325-2463 and referencing confirmation code 4563906.  You may also 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 on the Avid Investor Relations website shortly after the completion of the call. 

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 2016, 2017 and 2018, 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, overall market growth rates in the range of 3.0-3.3%, realization of identified efficiency programs 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; bookings; backlog; revenue backlog conversion rate; product mix and free cash flow; our long-term and recent cost savings initiatives and the anticipated benefits therefrom; our future strategy and business plans; our product plans, including products under development, such as cloud and subscription based offerings; our liquidity and ability to raise capital; the anticipated benefits of the Orad acquisition, including estimated synergies, including effects on future financial and operating results; 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, including cost savings initiatives, 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; 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; the identified material weaknesses in our internal control over financial reporting; and the possibility of legal proceedings adverse to our company. Moreover, the business may be adversely affected by future legislative, regulatory or 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.

About Avid

Through Avid Everywhere™, Avid delivers the industry's most open, innovative and comprehensive media platform connecting content creation with collaboration, asset protection, distribution and consumption. Media organizations and creative professionals use Avid solutions to create the most listened to, most watched and most loved media in the world—from the most prestigious and award-winning feature films, to the most popular television shows, news programs and televised sporting events, as well as a majority of today's most celebrated music recordings and live concerts. Industry leading solutions include Pro Tools®, Media Composer®, ISIS®, Avid NEXIS™, Interplay®, ProSet and RealSet, Maestro, PlayMaker, and Sibelius®. 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.

© 2016 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid Everywhere, Avid NEXIS, iNEWS, Interplay, ISIS, AirSpeed, MediaCentral, Media Composer, Pro Tools, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. The Interplay name is used with the permission of the Interplay Entertainment Corp. which bears no responsibility for Avid products. All other trademarks are the property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.

     
AVID TECHNOLOGY, INC.    
Condensed Consolidated Statements of Operations    
(unaudited - in thousands, except per share data)    
      
   Three Months Ended
   March 31,
    2016   2015 
      
Net revenues:    
 Products $84,509  $80,029 
 Services  59,038   39,557 
 Total net revenues  143,547   119,586 
      
Cost of revenues:    
 Products  27,124   31,797 
 Services  14,410   15,695 
 Amortization of intangible assets  1,950   - 
 Total cost of revenues  43,484   47,492 
      
Gross profit  100,063   72,094 
      
Operating expenses:    
 Research and development  21,404   23,173 
 Marketing and selling  31,619   28,045 
 General and administrative  17,730   19,387 
 Amortization of intangible assets  786   374 
 Restructuring costs, net  2,777   - 
 Total operating expenses  74,316   70,979 
      
Operating income  25,747   1,115 
      
Interest and other expense, net  (4,183)  (723)
Income before income taxes  21,564   392 
      
Provision for income taxes  635   561 
Net income (loss) $20,929  $(169)
      
Net income (loss) per common share - basic and diluted $0.53  $(0.00)
      
Weighted-average common shares outstanding - basic  39,566   39,387 
Weighted-average common shares outstanding - diluted  39,640   39,387 
      

 

AVID TECHNOLOGY, INC.    
Reconciliations of GAAP financial measures to Non-GAAP financial measures  
(unaudited - in thousands)    
  Three Months Ended
  March 31,
Non-GAAP revenue  2016   2015 
GAAP revenue $   143,547   $   119,586  
Amortization of acquired deferred revenue  269   - 
Non-GAAP revenue    143,816      119,586  
     
Non-GAAP gross profit    
GAAP gross profit    100,063      72,094  
Amortization of acquired deferred revenue  269   - 
Amortization of intangible assets  1,950   - 
Stock-based compensation  179   254 
Non-GAAP gross profit    102,461      72,348  
     
Non-GAAP operating expenses    
GAAP operating expenses    74,316      70,979  
Less Amortization of intangible assets  (786)  (374)
Less Stock-based compensation  (1,919)  (2,208)
Less Restructuring costs, net  (2,777)  - 
Less Restatement costs  (80)  (1,807)
Less Acquisition, integration and other costs  (515)  (2,342)
Less Efficiency program costs  (716)  - 
Non-GAAP operating expenses    67,523      64,248  
     
Non-GAAP operating income    
GAAP operating income    25,747      1,115  
Amortization of acquired deferred revenue  269   - 
Amortization of intangible assets  2,736   374 
Stock-based compensation  2,098   2,462 
Restructuring costs, net  2,777   - 
Restatement costs  80   1,807 
Acquisition, integration and other costs  515   2,342 
Efficiency program costs  716   - 
Non-GAAP operating Income    34,938      8,100  
     
Adjusted EBITDA    
Non-GAAP operating income (from above)    34,938      8,100  
Depreciation and amortization  3,611   3,677 
Adjusted EBITDA    38,549      11,777  
     
Adjusted free cash flow    
GAAP net cash (used in) provided by operating activities    (11,209)    4,630  
Capital expenditures  (4,518)  (2,940)
Restructuring payments  3,533   428 
Restatement payments  -   2,117 
Acquisition, integration and other payments  773   - 
Efficiency program payments  1,981   - 
Adjusted free cash flow $   (9,440) $   4,235  
     
     
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)    
     
  March 31, December 31,
   2016   2015 
ASSETS    
Current assets:    
Cash and cash equivalents $87,830  $17,902 
Accounts receivable, net of allowances of $8,816 and $9,226 at March 31, 2016 and December 31, 2015, respectively  43,732   58,807 
Inventories  51,652   48,073 
Prepaid expenses  10,475   6,548 
Other current assets  6,029   6,119 
Total current assets  199,718   137,449 
     
Property and equipment, net  36,664   35,481 
Intangible assets, net  30,494   33,219 
Goodwill  32,643   32,643 
Long-term deferred tax assets, net  2,070   2,011 
Other long-term assets  10,174   7,123 
Total assets $311,763  $247,926 
     
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Current liabilities:    
Accounts payable $31,325  $45,511 
Accrued compensation and benefits  27,974   28,124 
Accrued expenses and other current liabilities  36,078   35,354 
Income taxes payable  588   1,023 
Short-term debt  -   5,000 
Deferred revenues  178,959   189,887 
Total current liabilities  274,924   304,899 
     
Long-term debt  192,130   95,950 
Long-term deferred tax liabilities, net  2,672   3,443 
Long-term deferred revenues  129,463   158,495 
Other long-term liabilities  16,179   14,711 
Total liabilities  615,368   577,498 
     
Stockholders' deficit:    
Common stock  423   423 
Additional paid-in capital  1,055,358   1,055,838 
Accumulated deficit  (1,298,389)  (1,319,318)
Treasury stock at cost  (56,063)  (58,336)
Accumulated other comprehensive loss  (4,934)  (8,179)
Total stockholders' deficit  (303,605)  (329,572)
Total liabilities and stockholders' deficit $311,763  $247,926 
     

 

AVID TECHNOLOGY, INC.   
Condensed Consolidated Statements of Cash Flows   
(unaudited - in thousands)   
        
     Three Months Ended
     March 31,
      2016   2015 
        
Cash flows from operating activities:   
 Net income (loss)$20,929  $(169)
 Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:   
  Depreciation and amortization 6,347   4,051 
  Provision (recovery) for doubtful accounts 319   (206)
  Stock-based compensation expense 2,098   2,461 
  Non-cash interest expense 3,878   - 
  Unrealized foreign currency transaction losses (gains) 2,936   (6,690)
  (Benefit) provision for deferred taxes (784)  5 
  Changes in operating assets and liabilities, net of effects from acquisitions:   
   Accounts receivable 14,800   3,097 
   Inventories (3,579)  8,276 
   Prepaid expenses and other current assets (4,061)  (2,510)
   Accounts payable (14,216)  (3,440)
   Accrued expenses, compensation and benefits and other liabilities (960)  1,627 
   Income taxes payable 1,093   267 
   Deferred revenues (40,009)  (2,139)
Net cash (used in) provided by operating activities (11,209)  4,630 
        
Cash flows from investing activities:   
 Purchases of property and equipment (4,518)  (2,940)
 Increase in other long-term assets (8)  (13)
 Increase in restricted cash (4,544)  - 
Net cash used in investing activities (9,070)  (2,953)
        
Cash flows from financing activities:   
 Proceeds from long-term debt 100,000   - 
 Proceeds from the issuance of common stock under employee stock plans -   719 
 Common stock repurchases for tax withholdings on net settlement of equity awards (307)  (793)
 Proceeds from revolving credit facilities 25,000   8,000 
 Payments on revolving credit facilities (30,000)  (8,000)
 Payments for credit facility issuance costs (4,919)  (582)
Net cash provided by (used in) financing activities 89,774   (656)
        
Effect of exchange rate changes on cash and cash equivalents 433   (586)
Net increase in cash and cash equivalents 69,928   435 
Cash and cash equivalents at beginning of period 17,902   25,056 
Cash and cash equivalents at end of period$87,830  $25,491 
        

 

AVID TECHNOLOGY, INC.         
Supplemental Revenue Information         
(unaudited - in thousands)         
           
  March 31, December 31, March 31,    
 Revenue Backlog* 2016   2015   2015     
           
 Pre-2011$16,529  $25,868  $66,928     
 Post-2010$  291,893  $  322,514  $  345,748     
 Deferred Revenue$   308,422   $   348,382   $   412,676      
 Other Backlog$188,550  $203,704  $115,965     
 Total Revenue Backlog$496,972  $552,086  $528,641     
           
 Post 2010 $   480,443   $   526,218   $   461,713      
           
 The expected timing of recognition of revenue backlog as of March 31, 2016 is as follows:
           
   2016   2017   2018  Thereafter Total
 Orders executed prior to January 1, 2011$15,434  $952  $144  $-  $16,530 
 Orders executed or materially modified on or after January 1, 2011$124,222  $71,502  $40,592  $55,577  $291,893 
 Other Backlog$94,986  $35,140  $15,678  $42,745   $188,549 
 Total Revenue Backlog$  234,642  $   107,594   $   56,414   $  98,322  $   496,972  
           
 *A definition of Revenue Backlog is included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com.
 Note: current estimates could change based on a number of factors, including (i) the timing of delivery of products and services, (ii) customer cancellations or change order, (iii) changes in the estimated period of time Implied Maintenance Release PCS is provided to customers, including as a result of changes in business practices.
  


Media Contact
Sara Griggs
Avid
310.821.0801
sara.griggs@avid.com

Investor Contact
Jonathan Huang
Avid
978.640.5126
jonathan.huang@avid.com