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Avid Technology Issues Business Update in Response to Global Impact of COVID-19
Expects to report record growth in new paid subscriptions in first quarter, resulting in improving subscription and maintenance revenue
Revises first quarter guidance and withdraws full-year 2020 guidance given the impact of COVID-19 on the business environment
Company believes it maintains sufficient near-term liquidity with approximately
Company to report first quarter 2020 results on
The COVID-19 situation rapidly evolved and intensified following the Company’s Q4 2019 earnings report on
The Company is undertaking what it believes to be appropriate measures to safeguard its employees and workplaces, as well as to ensure its business continuity and customer support. In these trying times, Avid is committed to supporting its customers and keeping their operations running, enabling its employees to work and collaborate remotely, and working to maintain the highest levels of service as well as to be proactive in its efforts to mitigate and minimize any potential disruptions for its customers.
In spite of the unanticipated challenges caused by the pandemic, Avid’s management believes the Company’s long-term strategy has improved its ability to respond to the COVID 19 situation. Importantly, the Company’s shift towards Recurring Revenue-based business, its robust product innovation strategy to help customers move to secure cloud based offerings that can be accessed remotely, and its continued focus on improving its cost structure have all been instrumental in mitigating the impact of the COVID-19 situation on the Company.
Other preliminary first quarter results include:
- Record growth in cloud-enabled software subscriptions of approximately 30,000 in the first quarter, raising the total number to approximately 218,000 at
March 31, 2020.
- During the first quarter, Avid signed a new, significant multi-million dollar cloud services agreement with a major media company to enable the customer to globally deploy cloud-based business continuity solutions to ensure productions can continue with remote workers, including those working-from-home, which will be delivered beginning in the second quarter of 2020.
- Avid continues to aggressively reduce its operating expenses and capital expenditures to offset the decline in revenues for products and professional services. Additionally, the Company expects to realize an unplanned savings of approximately
$3 millionin the first half of 2020, resulting from its cancellation of major trade show appearances.
- Avid had cash and cash equivalents of approximately
$81 millionat March 31, 2020. During the first quarter, the Company drew $22 millionon its existing revolving credit facility out of an abundance of caution given the volatility in the markets. Avid believes it continues to operate with sufficient near-term liquidity and maintains ample cushion on its financial covenants.
“As the impacts of COVID-19 evolved rapidly and became highly visible across the global economy, generally, and the media business, specifically, during March, we saw an impact on our business during the second half of March, which typically contributes meaningfully to our quarterly results,” said
Conference Call to Discuss First Quarter 2020 Results on
Avid will host a conference call to discuss its financial results for the first quarter of 2020 on
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 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 programs, and depreciation expense. The Company defines Free Cash Flow as GAAP operating cash flow less capital expenditures. The Company also includes the operational metrics of Cloud based software subscriptions and Recurring Revenue in this release. Recurring Revenue is defined as the sum, without duplication, of subscription revenue, maintenance revenue, and revenue under our long-term contractual agreements. Cloud-enabled software subscriptions as of a given date 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. 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.
Certain information provided in this press release includes forward-looking statements within the meaning of the federal securities laws. 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: 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 impact of the recent coronavirus (COVID-19) outbreak on our business, suppliers, consumers, customers and employees; 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
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
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Source: Avid Technology, Inc.