Advent Software Reports First Quarter 2014 Results

SAN FRANCISCO, CA--(Marketwired - Apr 28, 2014) -  Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services to the global investment management industry, announced today its financial results for the first quarter ended March 31, 2014.

"Advent had a strong start to the year," said Pete Hess, Chief Executive Officer of Advent Software. "We are in a great position with solid profitability and excellent cash flow, and we continue to strengthen our competitive advantage while at the same time committing to further enhance shareholder value."

FIRST QUARTER 2014 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue of $96.8 million for the first quarter of 2014, compared to $92.5 million in the first quarter of 2013, a 5% increase.

Operating income for the first quarter of 2014 was $19.3 million, or 20.0% of revenue, compared to $16.2 million or 17.5% of revenue for the first quarter of 2013.

Net income for the first quarter of 2014 was $10.9 million, compared to $12.1 million in the first quarter of 2013. On a fully diluted basis, earnings per share in the first quarter of 2014 were $0.20, compared to $0.23 in the first quarter of 2013. In the first quarter of 2013, Advent benefited from the reinstatement of the federal research credit for 2012 and 2013, yielding a GAAP provisional tax rate of 24%.

Operating cash flow in the first quarter of 2014 was $20.9 million, compared with $17.2 million in the first quarter of 2013.

Cash and cash equivalents totaled $45 million as of March 31, 2014, compared to $34 million as of December 31, 2013. Total outstanding debt as of March 31, 2014 was $295 million compared to $305 million as of December 31, 2013.

Deferred revenue as of March 31, 2014 was $188 million, compared to $177 million as of March 31, 2013.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income for the first quarter of 2014 was $29.2 million, or 30.2% of revenue. This represents an 11% increase compared to $26.4 million in the first quarter of 2013.

On a fully diluted basis, non-GAAP earnings per share were $0.33 in the first quarter of 2014 and represent a 1% increase from $0.32 in the first quarter of 2013.

The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release.

BUSINESS HIGHLIGHTS

• Quarterly Dividend: Advent's Board of Directors has approved the payment of a quarterly cash dividend to its shareholders. The quarterly cash dividend payment of $0.13 per common share will be made on July 15, 2014 to shareholders of record as of June 30, 2014. 
• Award-Winning Solutions & Company: Advent's solutions continued to receive industry awards and win honors around the world during the first quarter. In the US, Advent was named "Best CRM System" by Family Wealth Report, and APX was named "Best Technology Platform" by Private Asset Management. Internationally, Advent was named "Best Technology Fund Accounting" by HFM Week European Hedge Fund Services and "Best Portfolio Management Software Provider" and "Best Fund Accounting & Reporting Software Provider" by MENA Fund Manager.
• Continued Client Success: Advent had a strong first quarter, with a number of existing clients expanding their relationship with Advent, including Schafer Cullen Capital Management, and many new noteworthy clients around the world, including Ashburton Investments, the investment arm of the First Rand Group.
  
  

FINANCIAL GUIDANCE

Advent updates the following financial guidance for the second quarter of 2014. Financial guidance for fiscal year 2014 remains unchanged.

Guidance		Q2 2014		FY 2014
Total Revenue ($M)		$96 - $98		$395 - $403
GAAP Operating Margin		n/a		21.0% - 21.5%
Stock Compensation Expense (% of revenue)		n/a		8.0%
Amortization of Intangibles (% of revenue)		n/a		2.0%
Non-GAAP Operating Margin		n/a		31.0% - 31.5%
Operating Cash Flow ($M)		n/a		$105 - $115
Capital Expenditures ($M)		n/a		$8 - $11
Effective Tax Rate (GAAP)		n/a		35% - 40%
Effective Tax Rate (non-GAAP)		n/a		35%

INVESTOR CALL
Advent Software, Inc. will host its Q1 2014 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q1 2014 earnings presentation and trended disclosures file, which include highlights and detailed financial information, are currently available at http://investor.advent.com. To participate via phone, please dial 866-700-5192 and request conference ID # 97740378. Telephone replay will be available through midnight May 5, 2014. The replay number for domestic callers is 888-286-8010, and for international callers is 617-801-6888, with the conference ID of # 38169624. The conference call will also be webcast live and then archived on http://investor.advent.com.

ABOUT ADVENT
Over the last 30 years of industry change, our core mission to help our clients focus on their unique strategies and deliver exceptional investor service has never wavered. With unparalleled precision and ahead of the curve solutions, we've helped over 4,300 firms in more than 50 countries -- from established global institutions to small start-up practices -- to grow their business and thrive. Advent technology helps firms minimize risk, work together seamlessly, and discover new opportunities in a constantly evolving world. Together with our clients, we are shaping the future of investment management. For more information on Advent products visit http://www.advent.com.

ABOUT NON-GAAP FINANCIAL INFORMATION
This press release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), please see the accompanying tables entitled "Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures" and "Reconciliation of Projected Continuing Operations' GAAP Operating Income % to Non-GAAP Operating Income %."

FORWARD-LOOKING STATEMENTS
The financial projections under Financial Guidance and any other forward-looking statements included in this presentation reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. In addition, any declarations of future quarterly dividends and establishment of future record and payment dates may not occur and are subject to the determination of the Advent Board of Directors. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our products; the successful development, release and market acceptance of new products and product enhancements; uncertainties and fluctuations in the financial markets; the Company's ability to declare future dividends; the Company's ability to satisfy contractual performance requirements and other risks detailed from time to time in our SEC reports including, but not limited to, our quarterly reports on Form 10-Q and our 2013 Annual Report on Form 10-K. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Advent, Advent Software, and the Advent and logo composite are registered trademarks of Advent Software, Inc.

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(GAAP, Unaudited)
				March 31				December 31
				2014				2013
ASSETS
Current assets:
	Cash and cash equivalents			$	44,964			$	33,828
	Accounts receivable, net				49,097				58,717
	Deferred taxes, current				24,898				24,898
	Prepaid expenses and other				29,094				30,114
	Current assets of discontinued operation				100				100
		Total current assets			148,153				147,657
Property and equipment, net					31,417				31,698
Goodwill					208,146				207,818
Other intangibles, net					25,248				27,392
Deferred taxes, long-term					21,966				23,020
Other assets					15,947				17,372
Noncurrent assets of discontinued operation					1,337				1,337
		Total assets		$	452,214			$	456,294
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
	Accounts payable			$	3,687			$	5,348
	Accrued liabilities				35,243				41,625
	Deferred revenues				179,314				186,107
	Current portion of long-term debt				20,000				20,000
	Current liabilities of discontinued operation				612				600
		Total current liabilities			238,856				253,680
Deferred revenues, long-term					8,501				7,809
Long-term income taxes payable					7,667				7,667
Long-term debt					275,000				285,000
Other long-term liabilities					10,634				11,171
Noncurrent liabilities of discontinued operation					2,630				2,782
		Total liabilities			543,288				568,109
Stockholders' deficit:
	Common stock				514				513
	Additional paid-in capital				51,890				42,533
	Accumulated deficit				(154,984	)			(165,870	)
	Accumulated other comprehensive income				11,506				11,009
		Total stockholders' deficit			(91,074	)			(111,815	)
		Total liabilities and stockholders' deficit		$	452,214			$	456,294

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
					Three Months Ended March 31
					2014				2013
Net revenues:
Recurring revenues					$	89,129			$	84,483
Non-recurring revenues						7,675				8,007
		Total net revenues				96,804				92,490
Cost of revenues (1):
Recurring revenues						18,627				16,412
Non-recurring revenues						8,055				9,568
Amortization of developed technology						1,800				2,499
		Total cost of revenues				28,482				28,479
		Gross margin				68,322				64,011
Operating expenses (1):
Sales and marketing						19,729				17,204
Product development						17,639				16,962
General and administrative						10,558				10,360
Amortization of other intangibles						909				957
Restructuring charges						174				2,315
		Total operating expenses				49,009				47,798
Income from continuing operations						19,313				16,213
Interest and other income (expense), net						(2,225	)			(303	)
Income from continuing operations before income taxes						17,088				15,910
Provision for income taxes						6,181				3,853
		Net income from continuing operations			$	10,907			$	12,057
Discontinued operation:
		Net loss from discontinued operation (net of applicable taxes of $(14) and $(15), respectively)				(21	)			(22	)
Net income					$	10,886			$	12,035
Basic net income (loss) per share (2):
		Continuing operations			$	0.21			$	0.24
		Discontinued operation				(0.00	)			(0.00	)
			Total operations		$	0.21			$	0.24
Diluted net income (loss) per share (2):
		Continuing operations			$	0.20			$	0.23
		Discontinued operation				(0.00	)			(0.00	)
			Total operations		$	0.20			$	0.23
Weighted average shares used to compute net income (loss) per share:
		Basic				51,358				50,563
		Diluted				53,807				52,598
(1)	Includes stock-based employee compensation expense as follows:
		Cost of recurring revenues			$	842			$	488
		Cost of non-recurring revenues				375				382
			Total cost of revenues			1,217				870
		Sales and marketing				2,635				1,523
		Product development				1,925				1,326
		General and administrative				1,851				1,298
			Total operating expenses			6,411				4,147
		Total stock-based employee compensation expense			$	7,628			$	5,017

(2)	Net income (loss) per share is based on actual calculated values and totals may not sum due to rounding.

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
						Three Months Ended March 31
						2014				2013
Cash flows from operating activities:
	Net income					$	10,886			$	12,035
	Adjustment to net income for discontinued operation net income						21				22
	Net income from continuing operations						10,907				12,057
	Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
		Stock-based compensation					7,628				5,017
		Excess tax benefit from stock-based compensation					(3,348	)			(403	)
		Depreciation and amortization					5,475				6,400
		Amortization of debt issuance costs					354				98
		(Reduction of) provision for doubtful accounts					(12	)			219
		(Reduction of) provision for sales reserves					(250	)			68
		Deferred income taxes					(135	)			1,724
		Other					130				(45	)
				Effect of statement of operations adjustments			9,842				13,078
		Changes in operating assets and liabilities:
			Accounts receivable				9,633				5,368
			Prepaid and other assets				2,094				204
			Accounts payable				(1,999	)			(953	)
			Accrued liabilities				(8,151	)			(5,600	)
			Deferred revenues				(5,852	)			(5,833	)
			Income taxes payable				4,401				(1,131	)
				Effect of changes in operating assets and liabilities			126				(7,945	)
Net cash provided by operating activities from continuing operations							20,875				17,190
Cash flows from investing activities:
	Purchases of property and equipment						(2,085	)			(959	)
	Capitalized software development costs						(472	)			-
	Purchases of marketable securities						-				(39,715	)
	Sales and maturities of marketable securities						-				41,371
Net cash (used in) provided by investing activities from continuing operations							(2,557	)			697
Cash flows from financing activities:
	Proceeds from common stock issued from exercises of stock options						1,246				3,492
	Excess tax benefits from stock-based compensation						3,348				403
	Withholding taxes related to equity award net share settlement						(1,581	)			(896	)
	Repayment of debt						(10,000	)			(2,500	)
Net cash (used in) provided by financing activities from continuing operations							(6,987	)			499
Net cash transferred to discontinued operation							(161	)			(151	)
Effect of exchange rate changes on cash and cash equivalents							(34	)			(330	)
Net change in cash and cash equivalents from continuing operations							11,136				17,905
Cash and cash equivalents of continuing operations at beginning of period							33,828				58,217
Cash and cash equivalents of continuing operations at end of period						$	44,964			$	76,122
						Three Months Ended March 31
						2014				2013
Supplemental disclosure of cash flow information:
Noncash investing activities:
	Capital expenditures included in accounts payable					$	469			$	-
Cash flows from discontinued operation of MicroEdge, Inc.:
	Net cash used in operating activities					$	(161	)		$	(151	)
	Net cash transferred from continuing operations						161				151

ADVENT SOFTWARE, INC.
RECONCILIATION OF SELECTED CONTINUING OPERATIONS' GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States of America (or GAAP), Advent uses non-GAAP measures of continuing operations' gross margin, operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses and income we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these non-GAAP results are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP.
			Three Months Ended March 31
			2014						2013
			Amount				% of Net Revenues		Amount				% of Net Revenues
GAAP gross margin			$	68,322			70.6%		$	64,011			69.3%
	Amortization of acquired intangibles			1,186						1,898
	Stock-based compensation			1,217						870
Non-GAAP gross margin			$	70,725			73.1%		$	66,779			72.3%
GAAP operating income			$	19,313			20.0%		$	16,213			17.5%
	Amortization of acquired intangibles			2,095						2,855
	Stock-based compensation			7,628						5,017
	Restructuring charges			174						2,315
Non-GAAP operating income			$	29,210			30.2%		$	26,400			28.5%
GAAP net income			$	10,907					$	12,057
	Amortization of acquired intangibles			2,095						2,855
	Stock-based compensation			7,628						5,017
	Restructuring charges			174						2,315
	Income tax adjustment (1)			(3,264	)					(5,281	)
Non-GAAP net income			$	17,540					$	16,963
GAAP net income			$	10,907					$	12,057
	Net interest			2,136						458
	Provision for income taxes			6,181						3,853
	Depreciation expense			2,766						2,945
	Amortization expense			2,709						3,455
	Stock-based compensation			7,628						5,017
Adjusted EBITDA			$	32,327					$	27,785
Diluted net income per share
	GAAP		$	0.20					$	0.23
	Non-GAAP		$	0.33					$	0.32
Shares used to compute diluted net income per share				53,807						52,598

(1)	The estimated non-GAAP effective tax rate was 35% for the three months ended March 31, 2014 and 2013, respectively, and has been used to adjust the provision for income taxes for non-GAAP net income and non-GAAP diluted net income per share purposes.

ADVENT SOFTWARE, INC.

RECONCILIATION OF PROJECTED CONTINUING OPERATIONS' GAAP OPERATING INCOME %

TO NON-GAAP OPERATING INCOME %

(Preliminary and unaudited)

Advent provides projections for the non-GAAP measure of its continuing operations' operating income percentage. This non-GAAP measure excludes certain costs and expenses which we believe is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. Adjustments to our projected continuing operations' GAAP results are made with the intent of providing management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP projections are among the information management uses as a basis for planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.

				Twelve Months Ending December 31, 2014
				Continuing Operations
				Operating Income %
	Projected GAAP			21.0%		to		21.5%
		Projected stock-based compensation adjustment				8.0%
		Projected amortization of acquired developed technology and other acquired intangible asset adjustment				2.0%
	Projected non-GAAP			31.0%		to		31.5%