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Avid Technology Announces Preliminary Q3 2019 Results and Revises Full-Year 2019 Guidance
Revenue for the third quarter is expected to be between
On a GAAP basis, operating income for the third quarter is expected to be between
The revenue shortfall during the third quarter was due primarily to:
- Greater than expected challenges implementing the new supply chain model, including ramping up the new production lines, which resulted in approximately
$8.1 millionof hardware orders that were unfilled at the end of the third quarter that the Company expects to ship during the fourth quarter. The Company remains confident that the transition to the new outsourced manufacturing partner will deliver the cost structure improvements and reductions in inventory that the Company has previously disclosed.
- The balance of the revenue shortfall was due to product sales to enterprise clients that fell short of expectations, and that mainly impacted revenue in the storage and media management product categories.
These negative factors were partially offset by expected strong results in the Company’s subscription software revenue and an expected sequential increase in maintenance revenue.
“Although we are disappointed with our performance during the third quarter, we remain enthusiastic about the long-term trajectory of the Company and the opportunity for improving growth and profitability,” said
During the third quarter of 2019, the Company achieved the following:
- Software subscriptions were approximately 170,000 as of
September 30, 2019, up 46% over September 30, 2018. The increase in subscriptions of 23,000 during the quarter represents the largest ever quarterly increase.
- Software subscription revenue for the third quarter is expected to be between
$10.0 million and $10.5 million. From a cash perspective, software subscription billings increased approximately 49% year-over-year in the third quarter, slightly ahead of the increase in the number of subscriptions, due in part to pricing increases during the third quarter.
- Maintenance revenue for the third quarter is expected to be between
$32.8 million and $33.8 million, sequentially up from the second quarter of 2019. During 2019, the Company has been experiencing a headwind from ending the sale of support contracts for certain legacy storage products at the end of 2018, which reduced maintenance revenues year-over-year by approximately ($2.2) millionin the third quarter, and which is expected to fully dissipate on a sequential basis by the second quarter of 2020.
- Annual Contract Value was approximately
$258 millionas of September 30, 2019, up approximately 4% year-over year, and LTM Recurring Revenue was approximately 59% for the twelve months ended September 30, 2019.
- Net cash provided by (used in) operating activities for the third quarter is expected to be between
($3.0) millionand ($2.0) million. Free Cash Flow for the third quarter is expected to be between ($5.1) millionand ($4.1) million, an improvement of between $1.3 million and $2.3 millionover the third quarter of 2018.
- Cash balance at
September 30, 2019was $52.3 million. Total debt at September 30, 2019was $229.3 million.
These preliminary, unaudited results are based on management’s preliminary review of operations for the quarter ended
Explanations regarding our use of non-GAAP financial measures and operational metrics and related definitions are provided in the section below entitled "Non-GAAP Financial Measures and Operational Metrics".
Mr. Rosica continued, “While challenging in the short term, we believe the transition to the new manufacturing partner will create longer term cost efficiencies and will provide a working capital benefit from lower inventory levels as we move to more of a lean supply chain. We expect both maintenance and subscription revenues to grow sequentially in the third quarter. All these factors combined with the expected third quarter results contribute to our revised full year 2019 guidance.”
Revised Full Year 2019 Guidance
Avid is updating its guidance for revenue, Adjusted EBITDA and Non-GAAP Net Income per Share, and reaffirming its guidance for Free Cash Flow for full-year 2019. While the Company believes the factors that negatively impacted revenue in the third quarter are largely temporary, it does not expect to recover all of the revenue shortfall during the fourth quarter, and so is updating its full-year 2019 guidance.
|($ millions, except per share amounts)||Prior
|Revenue||$420 - $430||$405 - $415|
|Adjusted EBITDA||$60 - $65||$55 - $60|
|Free Cash Flow||$12 - $17||$12 - $17|
|Non-GAAP Net Income per Share||$0.60 - $0.72||$0.50 - $0.60|
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.
Third Quarter 2019 Earnings Release and Conference Call scheduled for
Avid also announced that Mr. Rosica and
Conference call information:
- Date & time:
Thursday, November 7, 2019, 5:00pm EST
- Dial-in number: +1 334-777-6978
- Confirmation code: 7163009
- Webcast link (listen only) and presentation slides: http://ir.avid.com
- Replay number: +1 719-457-0820, passcode: 7163009
A replay of the conference call and webcast will be available for a limited time by dialing the replay number above or by visiting Avid’s investor relations website at ir.avid.com.
Non-GAAP Financial Measures and Operational Metrics
Avid includes non-GAAP financial measures in this press release, including Adjusted EBITDA and Free Cash Flow. The Company defines Adjusted EBITDA as GAAP operating income excluding amortization of intangible assets, stock-based compensation, restructuring costs, net, restatement costs, acquisition integration and other costs, and depreciation expense. The Company defines Free Cash Flow as net cash (used in) provided by operating activities less capital expenditures. The Company also includes the operational metrics of 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
The earnings release also includes forward-looking non-GAAP financial measures, including Adjusted EBITDA , Free Cash Flow and Non-GAAP Net Income per Share. Reconciliations of these forward-looking non-GAAP financial measures are not included in this 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.
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 year ending
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
Contacts Investor contact:
Whit RappoleAvid firstname.lastname@example.org (978) 275-2032 PR contact: Jim SheehanAvid email@example.com (978) 640-3152
Source: Avid Technology, Inc.