Press Release
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Avid Technology Announces Third Quarter 2021 Results
12.4% Year-Over-Year Revenue Growth
56.4% Year-Over-Year Subscription Revenue Growth
Raises Subscription & Maintenance Revenue Guidance and Raises High-End of Revenue Guidance for Full-Year 2021
Total revenue increased 12.4% year-over-year in the third quarter to
The continued revenue growth resulted in GAAP net income per share of
Third Quarter 2021 Financial and Business Highlights
- Subscription revenue was
$28.0 million , an increase of 56.4% year-over-year. - Paid Cloud-enabled software subscriptions increased by 35.0% year-over-year to approximately 389,000 at
September 30, 2021 and increased by approximately 19,300 fromJune 30, 2021 . - Subscription & Maintenance revenue was
$58.7 million , an increase of 20.5% year-over-year. - Total revenue was
$101.6 million , an increase of 12.4% year-over-year. - LTM Recurring Revenue % was 77.1% of the Company’s revenue for the 12 months ended
September 30, 2021 , up from 71.2% for the 12 months endedSeptember 30, 2020 . - Annual Contract Value was
$328.0 million as ofSeptember 30, 2021 , a year-over-year increase of 20.6%, from$271.9 million as ofSeptember 30, 2020 . - Gross margin was 64.8%, an increase of 40 basis points year-over-year. Non-GAAP Gross Margin was 65.3%, an increase of 40 basis points year-over-year.
- Operating expenses were
$56.4 million , an increase of 24.8% year-over-year. Non-GAAP Operating Expenses were$51.3 million , an increase of 24.1% year-over-year. The prior year included significant temporary cost savings initiatives that were put in place due to the COVID-19 pandemic, including a$6.0 million benefit from temporary employee furloughs in the third quarter of 2020, which affect comparisons to the prior year period for operating expenses, net income, Adjusted EBITDA, net cash provided by operating activities and Free Cash Flow. - Net income was
$14.8 million , an increase of 85.0% year-over-year. Net income in the third quarter of 2021 included a one-time$7.9 million benefit from the forgiveness of the PPP loan and accrued interest. Non-GAAP Net Income was$12 .4 million, an increase of 1.9% year-over-year. Both net income and Non-GAAP Net Income in the third quarter of 2020 benefitted from the significant temporary cost savings discussed above. - Net income per common share was
$0.32 up from net income per common share of$0.18 in the third quarter of 2020. Net income per common share in the third quarter of 2021 included a one-time benefit of$0.17 per common share from the forgiveness of the PPP loan and accrued interest. Non-GAAP Net Income per Share was$0.27 , unchanged from the third quarter of 2020. Both net income per common share and Non-GAAP Net Income per Share in the third quarter of 2020 benefitted from the significant temporary cost savings discussed above. - Adjusted EBITDA was
$17.0 million , a decrease of 11.9% year-over-year. Adjusted EBITDA Margin was 16.8%, a year-over-year decrease of 460 basis points. Adjusted EBITDA in the third quarter of 2020 benefitted from the significant temporary cost savings discussed above. - Net cash provided by operating activities was
$16.5 million in the quarter, a decrease of$1.5 million compared to net cash provided by operating activities of$18.0 million in the prior year period. Free Cash Flow was$14.0 million in the quarter, a decrease of$1.5 million from$15.5 million in the prior year period. Both net cash provided by operating activities and Free Cash Flow in the third quarter of 2020 benefitted from the significant temporary cost savings discussed above. - Share repurchases under the
$115 million share repurchase authorization announced onSeptember 9, 2021 totaled approximately 412,000 shares for$11.2 million during the third quarter.
Full Year 2021 Guidance
Avid has revised its full-year 2021 guidance as shown in the table below.
($ in millions, except per share amounts) | Prior Guidance Full-Year 2021 |
New Guidance Full-Year 2021 |
Revenue | ||
Subscription & Maintenance Revenue | ||
Non-GAAP Net Income per Share | ||
Adjusted EBITDA | ||
Free Cash Flow |
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
Conference Call to Discuss Third Quarter 2021 Results on
Avid will host a conference call to discuss its financial results for the third quarter on
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 Margin, Non-GAAP Operating Expenses, Non-GAAP Net Income, and Non-GAAP Net Income per Share. The Company also includes the operational metrics of Cloud-enabled software subscriptions, Recurring Revenue, LTM 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 the operational metrics are included in our Form 8-K filed today. Reconciliations of the non-GAAP financial measures presented in this press release to the Company's comparable GAAP financial measures for the periods presented are set forth below and are included in the supplemental financial and operational data sheet available on our Investor Relations website at ir.Avid.com, which also includes definitions of all operational metrics.
This press release also includes expectations for future Adjusted EBITDA, Non-GAAP Net Income per Share and Free Cash Flow, which are forward-looking non-GAAP financial measures. Reconciliations of these forward-looking non-GAAP measures are not included in this press release or elsewhere, due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from the estimation of the non-GAAP results, together with some of the excluded information not being ascertainable or accessible at this time. As a result, we are 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 includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as “may”, “will”, “anticipate”, “expect”, “believe”, “estimate”, “intend”, “plan”, “should”, “seek”, or other comparable terms.
Readers of this press release should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements.
These risks, uncertainties, and factors include, but are not limited to: risks related to the impact of the coronavirus (COVID-19) outbreak and its variants on our business, suppliers, consumers, customers and employees; our liquidity; our ability to execute our strategic plan including our cost saving strategies, and to 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; risks related to the availability and prices of raw materials, including any negative effects caused by inflation, weather conditions, or health pandemics; disruptions or inefficiencies in our supply chain and/or operations, including from the COVID-19 outbreak; the costs, disruption, and diversion of management's attention due to the COVID-19 outbreak; the possibility of legal proceedings adverse to our Company; and other risks described in our reports filed from time to time with the
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™, FastServe®™ and Maestro™. For more information about Avid solutions and services, visit www.Avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn, or subscribe to
© 2021
Contacts
Investor contact: | PR contact: |
Avid | Avid |
ir@Avid.com | jim.sheehan@Avid.com |
Condensed Consolidated Statements of Operations | |||||||||||||||
(unaudited - in thousands, except per share data) | |||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net revenues: | |||||||||||||||
Products | $ | 36,850 | $ | 35,775 | $ | 107,295 | $ | 98,121 | |||||||
Services | 64,790 | 54,656 | 183,585 | 158,044 | |||||||||||
Total net revenues | 101,640 | 90,431 | 290,880 | 256,165 | |||||||||||
Cost of revenues: | |||||||||||||||
Products | 20,468 | 20,957 | 60,044 | 58,873 | |||||||||||
Services | 15,269 | 11,217 | 43,379 | 34,322 | |||||||||||
Total cost of revenues | 35,737 | 32,174 | 103,423 | 93,195 | |||||||||||
Gross profit | 65,903 | 58,257 | 187,457 | 162,970 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 17,129 | 13,623 | 48,639 | 42,116 | |||||||||||
Marketing and selling | 24,413 | 19,998 | 66,511 | 64,977 | |||||||||||
General and administrative | 14,901 | 10,796 | 42,214 | 34,144 | |||||||||||
Restructuring costs, net | (88 | ) | 723 | 1,001 | 1,008 | ||||||||||
Total operating expenses | 56,355 | 45,140 | 158,365 | 142,245 | |||||||||||
Operating income | 9,548 | 13,117 | 29,092 | 20,725 | |||||||||||
Interest expense, net | (1,646 | ) | (4,566 | ) | (5,547 | ) | (15,437 | ) | |||||||
Other income, net | 7,864 | 143 | 4,459 | 233 | |||||||||||
Income before income taxes | 15,766 | 8,694 | 28,004 | 5,521 | |||||||||||
Provision for income taxes | 991 | 707 | 1,832 | 1,546 | |||||||||||
Net income | $ | 14,775 | $ | 7,987 | $ | 26,172 | $ | 3,975 | |||||||
Net income per common share - basic | $ | 0.32 | $ | 0.18 | $ | 0.58 | $ | 0.09 | |||||||
Net income per common share - diluted | $ | 0.32 | $ | 0.18 | $ | 0.56 | $ | 0.09 | |||||||
Weighted-average common shares outstanding - basic | 45,564 | 44,019 | 45,115 | 43,665 | |||||||||||
Weighted-average common shares outstanding - diluted | 46,428 | 44,758 | 46,449 | 44,498 | |||||||||||
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures | ||||||||||||||||
(unaudited - in thousands) | ||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
GAAP Revenue | ||||||||||||||||
GAAP Revenue | $ | 101,640 | $ | 90,431 | $ | 290,880 | $ | 256,165 | ||||||||
Non-GAAP Gross Profit | ||||||||||||||||
GAAP Gross Profit | 65,903 | 58,257 | 187,457 | 162,970 | ||||||||||||
Stock-based compensation | 444 | 433 | 1,362 | 908 | ||||||||||||
Non-GAAP Gross Profit | $ | 66,347 | $ | 58,690 | $ | 188,819 | $ | 163,878 | ||||||||
GAAP Gross Margin | 64.8 | % | 64.4 | % | 64.4 | % | 63.6 | % | ||||||||
Non-GAAP Gross Margin | 65.3 | % | 64.9 | % | 64.9 | % | 64.0 | % | ||||||||
Non-GAAP Operating Expenses | ||||||||||||||||
GAAP Operating Expenses | 56,355 | 45,140 | 158,365 | 142,245 | ||||||||||||
Less Amortization of intangible assets | (105 | ) | (105 | ) | (315 | ) | (306 | ) | ||||||||
Less Stock-based compensation | (3,337 | ) | (2,865 | ) | (9,473 | ) | (7,224 | ) | ||||||||
Less Restructuring costs, net | 88 | (723 | ) | (1,001 | ) | (1,008 | ) | |||||||||
Less Acquisition, integration and other costs | (876 | ) | - | (2,083 | ) | 183 | ||||||||||
Less Efficiency program costs | - | (79 | ) | (48 | ) | (445 | ) | |||||||||
Less Digital Transformation costs | (808 | ) | (808 | ) | - | |||||||||||
Less COVID-19 related expenses | (3 | ) | (22 | ) | (251 | ) | ||||||||||
Non-GAAP Operating Expenses | $ | 51,317 | $ | 41,365 | $ | 144,615 | $ | 133,194 | ||||||||
Non-GAAP Operating Income and Adjusted EBITDA | ||||||||||||||||
GAAP net income | 14,775 | 7,987 | 26,172 | 3,975 | ||||||||||||
Interest and other expense | (6,218 | ) | 4,423 | 1,088 | 15,204 | |||||||||||
Provision for income taxes | 991 | 707 | 1,832 | 1,546 | ||||||||||||
GAAP Operating Income | 9,548 | 13,117 | 29,092 | 20,725 | ||||||||||||
Amortization of intangible assets | 105 | 105 | 315 | 306 | ||||||||||||
Stock-based compensation | 3,781 | 3,297 | 10,835 | 8,132 | ||||||||||||
Restructuring costs, net | (88 | ) | 723 | 1,001 | 1,008 | |||||||||||
Acquisition, integration and other costs | 876 | - | 2,083 | (183 | ) | |||||||||||
Efficiency program costs | - | 79 | 48 | 445 | ||||||||||||
Digital Transformation costs | 808 | 808 | - | |||||||||||||
COVID-19 related expenses | - | 3 | 22 | 251 | ||||||||||||
Non-GAAP Operating Income | $ | 15,030 | $ | 17,324 | $ | 44,204 | $ | 30,684 | ||||||||
Depreciation | 2,002 | 2,004 | 6,323 | 6,317 | ||||||||||||
Adjusted EBITDA | $ | 17,032 | $ | 19,328 | $ | 50,527 | $ | 37,001 | ||||||||
GAAP net income margin | 14.5 | % | 8.8 | % | 9.0 | % | 1.6 | % | ||||||||
Adjusted EBITDA Margin | 16.8 | % | 21.4 | % | 17.4 | % | 14.4 | % | ||||||||
Non-GAAP Net Income | ||||||||||||||||
GAAP net income | 14,775 | 7,987 | 26,172 | 3,975 | ||||||||||||
Amortization of intangible assets | 105 | 105 | 315 | 306 | ||||||||||||
Stock-based compensation | 3,781 | 3,297 | 10,835 | 8,132 | ||||||||||||
Restructuring costs, net | (88 | ) | 723 | 1,001 | 1,008 | |||||||||||
Acquisition, integration and other costs | 876 | - | 2,083 | (183 | ) | |||||||||||
Efficiency program costs | - | 79 | 48 | 445 | ||||||||||||
Digital Transformation costs | 808 | 808 | - | |||||||||||||
Gain on forgiveness of PPP Loan | (7,800 | ) | (7,800 | ) | - | |||||||||||
COVID-19 related expenses | - | 3 | 22 | 251 | ||||||||||||
Loss on Extinguishment of debt | - | - | 3,748 | - | ||||||||||||
Tax impact of non-GAAP adjustments | (25 | ) | 5 | (184 | ) | (35 | ) | |||||||||
Non-GAAP Net Income | $ | 12,432 | $ | 12,199 | $ | 37,048 | $ | 13,899 | ||||||||
Weighted-average share count (Basic) | 45,564 | 44,019 | 45,115 | 43,665 | ||||||||||||
Weighted-average share count (Diluted) | 46,428 | 44,758 | 46,449 | 44,498 | ||||||||||||
Non-GAAP Earnings per Share (Basic) | $ | 0.27 | $ | 0.28 | $ | 0.82 | $ | 0.32 | ||||||||
Non-GAAP Earnings per Share (Diluted) | $ | 0.27 | $ | 0.27 | $ | 0.80 | $ | 0.31 | ||||||||
Free Cash Flow | ||||||||||||||||
Net cash provided by operating activities | 16,521 | 17,955 | 35,418 | 8,843 | ||||||||||||
Capital expenditures | (2,475 | ) | (2,407 | ) | (4,750 | ) | (5,619 | ) | ||||||||
Free Cash Flow | $ | 14,046 | $ | 15,548 | $ | 30,668 | $ | 3,224 | ||||||||
Free Cash Flow conversion from Adjusted EBITDA | 82.5 | % | 80.4 | % | 60.7 | % | 8.7 | % | ||||||||
Condensed Consolidated Balance Sheets | |||||||||
(unaudited - in thousands) | |||||||||
2021 | 2020 | ||||||||
Assets | |||||||||
Current Assets | |||||||||
Cash and Cash Equivalents | $ | 50,485 | $ | 79,899 | |||||
Restricted Cash | 1,422 | 1,422 | |||||||
Accounts receivable, net of allowances of |
|||||||||
at |
58,125 | 78,614 | |||||||
Inventories | 22,215 | 26,568 | |||||||
Prepaid Expenses | 6,766 | 6,044 | |||||||
Contract Assets | 22,612 | 18,579 | |||||||
Other Current Assets | 2,335 | 2,366 | |||||||
Total Current Assets | 163,960 | 213,492 | |||||||
Property and Equipment, Net | 15,211 | 16,814 | |||||||
32,643 | 32,643 | ||||||||
Right of Use Assets | 25,202 | 29,430 | |||||||
Deferred Tax Assets, Net | 5,413 | 6,801 | |||||||
Other Long-Term Assets | 6,462 | 5,958 | |||||||
Total Assets | $ | 248,891 | $ | 305,138 | |||||
Liabilities and Stockholders' Deficit | |||||||||
Current Liabilities | |||||||||
Accounts Payable | $ | 22,413 | $ | 21,823 | |||||
Accrued Compensation and Benefits | 26,320 | 29,105 | |||||||
Accrued Expenses and Other Current Liabilities | 34,511 | 42,264 | |||||||
Income Taxes Payable | 1,447 | 1,664 | |||||||
Short-Term Debt | 9,159 | 4,941 | |||||||
Deferred Revenues | 76,658 | 87,974 | |||||||
Total Current Liabilities | 170,508 | 187,771 | |||||||
Long-Term Debt | 162,990 | 202,759 | |||||||
Long-Term Deferred Revenues | 10,109 | 11,284 | |||||||
Long-Term Lease Liabilities | 24,466 | 28,462 | |||||||
Other Long-Term Liabilities | 7,249 | 7,786 | |||||||
Total Liabilities | 375,322 | 438,062 | |||||||
Stockholders' Deficit | |||||||||
Common Stock | 454 | 442 | |||||||
Treasury Stock | (11,169 | ) | - | ||||||
APIC | 1,030,116 | 1,036,658 | |||||||
Accumulated Deficit | (1,142,175 | ) | (1,168,347 | ) | |||||
Accumulated Other Comprehensive Loss | (3,657 | ) | (1,677 | ) | |||||
Total Stockholders' Deficit | (126,431 | ) | (132,924 | ) | |||||
Total Liabilities and Stockholders' Deficit | $ | 248,891 | $ | 305,138 | |||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(unaudited - in thousands) | ||||||||||
Nine Months Ended |
||||||||||
2021 | 2020 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 26,172 | $ | 3,975 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 6,323 | 6,317 | ||||||||
Provision for doubtful accounts | 401 | 1,349 | ||||||||
Stock-based compensation expense | 10,216 | 8,132 | ||||||||
Non-cash provision for restructuring | 841 | 653 | ||||||||
Non-cash interest expense | 386 | 3,408 | ||||||||
Loss on extinguishment of debt | 2,579 | - | ||||||||
Gain on extinguishment of PPP loan | (7,800 | ) | - | |||||||
Unrealized foreign currency transaction (gains) loss | (1,400 | ) | 219 | |||||||
Benefit from (provision for) deferred taxes | 1,388 | 997 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | 20,089 | 12,741 | ||||||||
Inventories | 4,353 | 788 | ||||||||
Prepaid expenses and other assets | (1,343 | ) | 1,390 | |||||||
Accounts payable | 590 | (26,440 | ) | |||||||
Accrued expenses, compensation and benefits and other liabilities | (10,635 | ) | 7,752 | |||||||
Income taxes payable | (217 | ) | 81 | |||||||
Deferred revenue and contract assets | (16,525 | ) | (12,519 | ) | ||||||
Net cash provided by operating activities | 35,418 | 8,843 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property and equipment | (4,750 | ) | (5,619 | ) | ||||||
Net cash used in investing activities | (4,750 | ) | (5,619 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from revolving line of credit | - | 22,000 | ||||||||
Repayment from revolving line of credit | - | (22,000 | ) | |||||||
Proceeds from long-term debt | 180,000 | 7,800 | ||||||||
Repayment of debt | (208,142 | ) | (1,474 | ) | ||||||
Payments for repurchase of common stock | (10,526 | ) | - | |||||||
Payments for repurchase of outstanding Notes | - | (28,867 | ) | |||||||
Proceeds from the issuance of common stock under employee stock plans | 363 | 252 | ||||||||
Common stock repurchases for tax withholdings for net settlement of equity awards | (17,108 | ) | (2,610 | ) | ||||||
Prepayment penalty on extinguishment of debt | (1,169 | ) | - | |||||||
Partial unwind capped call cash receipt | - | 875 | ||||||||
Payments for credit facility issuance costs | (2,574 | ) | (289 | ) | ||||||
Net cash used in by financing activities | (59,156 | ) | (24,313 | ) | ||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (927 | ) | 1,394 | |||||||
Net decrease in cash, cash equivalents, and restricted cash | (29,415 | ) | (19,695 | ) | ||||||
Cash, cash equivalents and restricted cash at beginning of the period | 83,638 | $ | 72,575 | |||||||
Cash, cash equivalents and restricted cash at end of the period | $ | 54,223 | $ | 52,880 | ||||||
Supplemental information: | ||||||||||
Cash and cash equivalents | $ | 50,485 | 49,142 | |||||||
Restricted cash | 1,422 | 1,664 | ||||||||
Restricted cash included in other long-term assets | 2,316 | 2,074 | ||||||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 54,223 | $ | 52,880 | ||||||
Supplemental Revenue Information | ||||||||||
(unaudited - in millions) | ||||||||||
2021 | 2021 | 2020 | ||||||||
Revenue Backlog* | ||||||||||
Deferred Revenue | ||||||||||
Other Backlog | 315.0 | 309.4 | 321.7 | |||||||
Total Revenue Backlog | ||||||||||
The expected timing of recognition of revenue backlog as of |
||||||||||
2021 | 2022 | 2023 | Thereafter | Total | ||||||
Deferred Revenue | ||||||||||
Other Backlog | 35.7 | 120.5 | 75.7 | 83.1 | ||||||
Total Revenue Backlog | ||||||||||
*A definition of Revenue Backlog is included in our Form 10-K and the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com. |
Source: Avid Technology, Inc.