Advent Software : Reports Fourth Quarter and Full Year 2014 Results

SAN FRANCISCO, CA--(Marketwired - Feb 2, 2015) -  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 fourth quarter and fiscal year ended December 31, 2014.

FOURTH QUARTER AND FULL YEAR 2014 RESULTS

GAAP Results for Continuing Operations

The Company reported quarterly revenue of $100.7 million for the fourth quarter of 2014, compared to $97.6 million in the fourth quarter of 2013, a 3% increase. Revenue for the year ended December 31, 2014 was $396.8 million, compared to $383.0 million recorded in 2013, a 4% increase.

Operating income for the fourth quarter of 2014 was $22.4 million, or 22.3% of revenue, compared to $18.4 million or 18.9% of revenue for the fourth quarter of 2013. Operating income for the year ended December 31, 2014 was $83.7 million, or 21.1% of revenue, compared to $46.1 million, or 12.0% of revenue, for 2013. Advent's operating income for fiscal year 2013 included recapitalization charges of $6.0 million and stock compensation expense of $48.2 million, of which $26.7 million was due to the modification of equity awards.

Net income for the fourth quarter of 2014 was $14.7 million compared to $11.0 million in the fourth quarter of 2013, a 33% increase. Net income for the year ended December 31, 2014 was $50.3 million compared to $28.8 million for 2013, a 75% increase. On a fully diluted basis, earnings per share in the fourth quarter of 2014 were $0.27, compared to $0.20 in the fourth quarter of 2013. On a fully diluted basis, earnings per share for the year ended December 31, 2014 were $0.94, compared to $0.54 for 2013.

Operating cash flow in the fourth quarter of 2014 was $43.6 million, compared with $36.7 million in the fourth quarter of 2013, a 19% increase. Operating cash flow for the year ended December 31, 2014 totaled $115.2 million, compared with $98.6 million in 2013, a 17% increase.

Cash, cash equivalents, and marketable securities totaled $38.0 million as of December 31, 2014, compared to $33.8 million as of December 31, 2013. Total outstanding debt as of December 31, 2014 was $220 million compared to $305 million as of December 31, 2013. Deferred revenue as of December 31, 2014 was $204 million, compared to $194 million as of December 31, 2013.

Non-GAAP Results for Continuing Operations

Non-GAAP operating income for the fourth quarter of 2014 was $31.2 million, or 31.0% of revenue. This represents an 8% increase compared to $28.9 million, or 29.6% of revenue, in the fourth quarter of 2013. Non-GAAP operating income for the year ended December 31, 2014 was $125.8 million, or 31.7% of revenue. This represents a 9% increase compared to $115.3 million of non-GAAP operating income, or 30.1% of revenue, for 2013.

On a fully diluted basis, non-GAAP earnings per share were $0.36 in the fourth quarter of 2014 and represent a 13% increase from non-GAAP diluted net income per share of $0.32 in the fourth quarter of 2013. On a fully diluted basis, non-GAAP earnings per share were $1.44 for the year ended December 31, 2014, a 9% increase compared to $1.32 per share for 2013.

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

FOURTH QUARTER AND FULL YEAR 2014 HIGHLIGHTS

Strong Performance Across Key Metrics: Annualized recurring run rate was $383.4 million as of December 31, 2014, an increase of 7% over the prior year. The average full year renewal rate for the year ended December 31, 2014 was 98%, compared with 97% in 2013, an increase of 80 basis points. The Annual Contract Value (ACV) of our new contract bookings in the fourth quarter of 2014 will contribute $10.1 million in annual revenue once the contracts are fully implemented. This represents a 15% increase compared to $8.8 million of ACV in the fourth quarter of 2013.

Recognition as Market Leader in Investment Management Software: Advent's solutions received many industry awards and global honors during the fourth quarter. Advent was named "Best Fund Accounting and Reporting Software" at the HFM US Hedge Fund Services Awards 2014. Advent's Geneva® was named "Best Buy-Side Portfolio Accounting Platform," and Advent Portfolio Exchange® (APX) in conjunction with Advent Direct® Investor Management was named "Best Buy-Side CRM Platform" in the Buy-Side Technology Awards 2014. Internationally, Advent was recognized as "Best Technology Provider" at the Investment Week Fund Services Awards 2014 and as "Best Portfolio Management Solution" and "Best Client Communications and Reporting Solution" at the inaugural WealthBriefing Gulf Co-operation Council (GCC) Region Awards 2014 ceremony held in Dubai.

Product Upgrades Across the Advent Portfolio: Advent announced global availability of new releases to several key products that include compelling new functionality for asset and wealth management firms, alternative managers, family offices, and administrators. The updated products include Geneva®, Black Diamond(SM), Advent Portfolio Exchange® (APX), Moxy®, Advent Rules Manager®, and Advent Revenue Center®. In 2014, Advent introduced Advent Direct® Investor Management, the first solution to be released to selected clients on the Advent Direct® cloud platform.

INVESTOR CALL
Advent Software, Inc. has cancelled its Q4 and full year 2014 earnings conference call originally scheduled for 5:00 p.m. Eastern time today. The Company will be participating in a conference call hosted by SS&C Technologies Holdings, Inc. this afternoon at 5:30 p.m. ET. To join this call, dial [phone] (US and Canada) or [phone] (International), and request the "SS&C to Acquire Advent Software conference call"; conference ID# 77079438. Alternatively, a live audio webcast can be accessed via http://investor.ssctech.com. To expedite the registration process, you may pre-register for the event by clicking here. A replay of the conference call will be available one hour after the conference call, for 48 hours. The dial-in number is [phone] (US and Canada) or [phone] (International); access code# 77079438.

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."

FORWARD-LOOKING STATEMENTS
Any forward-looking statements included herein 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. 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, the Advent logo, Advent Software, Geneva®, Advent Portfolio Exchange®, Moxy®, Advent Revenue Center®, Advent Rules Manager®, Advent Direct® are registered trademarks, and Black Diamond is a mark, of Advent Software, Inc. Any other company names or marks mentioned herein are those of their respective owners.

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(GAAP, Unaudited)
				December 31				December 31
				2014				2013
ASSETS
	Current assets:
	Cash and cash equivalents			$	28,784			$	33,828
	Short-term marketable securities				7,298				-
	Accounts receivable, net				61,870				58,717
	Deferred taxes, current				28,275				24,898
	Prepaid expenses and other				24,984				30,114
	Current assets of discontinued operation				-				100
		Total current assets			151,211				147,657
Property and equipment, net					27,995				31,698
Goodwill					202,290				207,818
Other intangibles, net					18,803				27,392
Long-term marketable securities					1,874				-
Deferred taxes, long-term					18,358				23,020
Other assets					13,245				17,372
Noncurrent assets of discontinued operation					1,093				1,337
		Total assets		$	434,869			$	456,294
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
	Accounts payable			$	12,041			$	5,348
	Dividends payable				6,750				-
	Accrued liabilities				36,541				41,625
	Deferred revenues				197,144				186,107
	Income taxes payable				132				-
	Current portion of long-term debt				20,000				20,000
	Current liabilities of discontinued operation				572				600
		Total current liabilities			273,180				253,680
Deferred revenues, long-term					6,972				7,809
Long-term income taxes payable					9,513				7,667
Long-term debt					200,000				285,000
Other long-term liabilities					7,821				11,171
Noncurrent liabilities of discontinued operation					2,170				2,782
		Total liabilities			499,656				568,109
Stockholders' deficit:
	Common stock				519				513
	Additional paid-in capital				61,455				42,533
	Accumulated deficit				(130,234	)			(165,870	)
	Accumulated other comprehensive income				3,473				11,009
		Total stockholders' deficit			(64,787	)			(111,815	)
		Total liabilities and stockholders' deficit		$	434,869			$	456,294

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
				Three Months Ended December 31								Twelve Months Ended December 31
				2014				2013				2014				2013
Net revenues:
Recurring revenues				$	92,937			$	89,019			$	365,290			$	349,881
Non-recurring revenues					7,727				8,560				31,530				33,078
		Total net revenues			100,664				97,579				396,820				382,959
Cost of revenues (1):
Recurring revenues					21,065				18,417				80,369				70,590
Non-recurring revenues					6,705				8,956				30,380				40,044
Amortization of developed technology					1,594				1,682				6,772				9,087
		Total cost of revenues			29,364				29,055				117,521				119,721
		Gross margin			71,300				68,524				279,299				263,238
Operating expenses (1):
Sales and marketing					19,309				20,098				74,996				79,065
Product development					17,727				17,464				69,532				69,718
General and administrative					10,894				10,842				43,010				54,737
Amortization of other intangibles					803				912				3,391				3,775
Recapitalization costs					-				-				-				6,041
Restructuring charges					135				811				4,628				3,770
		Total operating expenses			48,868				50,127				195,557				217,106
Income from continuing operations					22,432				18,397				83,742				46,132
Interest and other income (expense), net					(1,365	)			(2,603	)			(6,961	)			(7,213	)
Income from continuing operations before income taxes					21,067				15,794				76,781				38,919
Provision for income taxes					6,369				4,777				26,518				10,167
		Net income from continuing operations		$	14,698			$	11,017			$	50,263			$	28,752
Discontinued operation:
		Net (loss) income from discontinued operation (net of applicable taxes of $6, $(16), $(32) and $34, respectively)			5				(18	)			(51	)			50
Net income				$	14,703			$	10,999			$	50,212			$	28,802
Basic net income (loss) per share (2):
		Continuing operations		$	0.28			$	0.22			$	0.98			$	0.56
		Discontinued operation			(0.00	)			(0.00	)			(0.00	)			(0.00	)
			Total operations	$	0.28			$	0.22			$	0.97			$	0.56
Diluted net income (loss) per share (2):
		Continuing operations		$	0.27			$	0.20			$	0.94			$	0.54
		Discontinued operation			(0.00	)			(0.00	)			(0.00	)			(0.00	)
			Total operations	$	0.27			$	0.20			$	0.94			$	0.54
Weighted average shares used to compute net income (loss) per share:
		Basic			51,780				51,105				51,546				51,207
		Diluted			54,072				53,844				53,608				53,378
Cash dividends declared per common share				$	0.13			$	-			$	0.39			$	9.00
(1) Includes stock-based employee compensation expense as follows:
		Cost of recurring revenues		$	780			$	844			$	3,250			$	3,491
		Cost of non-recurring revenues			314				563				1,335				3,253
			Total cost of revenues		1,094				1,407				4,585				6,744
		Sales and marketing			2,269				2,345				10,026				13,265
		Product development			1,882				1,922				7,735				8,863
		General and administrative			1,555				1,908				7,025				19,307
			Total operating expenses		5,706				6,175				24,786				41,435
		Total stock-based employee compensation expense		$	6,800			$	7,582			$	29,371			$	48,179
(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)
						Twelve Months Ended December 31
						2014				2013
Cash flows from operating activities:
	Net income					$	50,212			$	28,802
	Adjustment to net income for discontinued operation net loss (income)						51				(50	)
	Net income from continuing operations						50,263				28,752
	Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
		Stock-based compensation					29,371				48,179
		Excess tax benefit from stock-based compensation					(10,257	)			(7,477	)
		Depreciation and amortization					21,201				24,393
		Amortization of debt issuance costs					1,446				947
		Loss on disposal of fixed assets					2,786				-
		(Reduction of) provision for doubtful accounts					(30	)			278
		Reduction of sales reserves					(521	)			(306	)
		Deferred income taxes					11,439				4,589
		Other					(1,226	)			29
				Effect of statement of operations adjustments			54,209				70,632
		Changes in operating assets and liabilities:
			Accounts receivable				(3,123	)			2,074
			Prepaid and other assets				7,910				(1,762	)
			Accounts payable				5,938				27
			Accrued liabilities				(11,492	)			(6,089	)
			Deferred revenues				10,720				11,047
			Income taxes payable				733				(6,117	)
				Effect of changes in operating assets and liabilities			10,686				(820	)
Net cash provided by operating activities from continuing operations							115,158				98,564
Cash flows from investing activities:
	Purchases of property and equipment						(8,973	)			(5,616	)
	Capitalized software development costs						(1,873	)			(1,995	)
	Change in restricted cash						(173	)			-
	Purchases of marketable securities						(9,240	)			(57,863	)
	Sales and maturities of marketable securities						100				228,619
Net cash (used in) provided by investing activities from continuing operations							(20,159	)			163,145
Cash flows from financing activities:
	Proceeds from common stock issued from exercises of stock options						4,562				19,495
	Proceeds from common stock issued under the employee stock purchase plan						6,362				6,293
	Excess tax benefits from stock-based compensation						10,257				7,477
	Withholding taxes related to equity award net share settlement						(6,619	)			(11,833	)
	Proceeds from debt						-				375,000
	Repayment of debt						(85,000	)			(165,000	)
	Payment of cash dividend						(13,405	)			(470,133	)
	Repurchase of common stock						(15,141	)			(41,256	)
	Debit issuance costs						-				(5,725	)
Net cash used in financing activities from continuing operations							(98,984	)			(285,682	)
Net cash transferred to discontinued operation							(347	)			(375	)
Effect of exchange rate changes on cash and cash equivalents							(712	)			(41	)
Net change in cash and cash equivalents from continuing operations							(5,044	)			(24,389	)
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						$	28,784			$	33,828
						Twelve Months Ended December 31
						2014				2013
Supplemental disclosure of cash flow information:
Noncash investing activities:
	Capital expenditures included in accounts payable					$	887			$	131
Cash flows from discontinued operation of MicroEdge, Inc.:
	Net cash used in operating activities					$	(347	)		$	(375	)
	Net cash transferred from continuing operations						347				375

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 December 31
		2014							2013
		Amount				% of Net Revenues			Amount				% of Net Revenues
GAAP gross margin		$	71,300			70.8	%		$	68,525			70.2	%
	Amortization of acquired intangibles		1,070							1,177
	Stock-based compensation		1,094							1,406
Non-GAAP gross margin		$	73,464			73.0	%		$	71,108			72.9	%
GAAP operating income		$	22,432			22.3	%		$	18,397			18.9	%
	Amortization of acquired intangibles		1,874							2,089
	Stock-based compensation		6,800							7,581
	Restructuring charges		135							811
Non-GAAP operating income		$	31,241			31.0	%		$	28,878			29.6	%
GAAP net income		$	14,698						$	11,017
	Amortization of acquired intangibles		1,873							2,089
	Stock-based compensation		6,800							7,581
	Restructuring charges		135							811
	Income tax adjustment (1)		(4,087	)						(4,420	)
Non-GAAP net income		$	19,419						$	17,078
GAAP net income		$	14,698						$	11,017
	Net interest		1,499							2,510
	Provision for income taxes		6,369							4,778
	Depreciation expense		2,666							2,895
	Amortization expense		2,398							2,594
	Stock-based compensation		6,800							7,581
Adjusted EBITDA		$	34,430						$	31,375
Diluted net income per share
	GAAP	$	0.27						$	0.20
	Non-GAAP	$	0.36						$	0.32
Shares used to compute diluted net income per share			54,072							53,844

(1)	The estimated non-GAAP effective tax rate was 35% for the three months ended December 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 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.
		Twelve Months Ended December 31
		2014							2013
		Amount				% of Net Revenues			Amount				% of Net Revenues
GAAP gross margin		$	279,299			70.4	%		$	263,238			68.7	%
	Amortization of acquired intangibles		4,642							6,841
	Stock-based compensation		4,585							6,743
Non-GAAP gross margin		$	288,526			72.7	%		$	276,822			72.3	%
GAAP operating income		$	83,742			21.1	%		$	46,132			12.0	%
	Amortization of acquired intangibles		8,033							10,616
	Stock-based compensation		29,371							48,178
	Restructuring charges		4,629							3,770
	Recapitalization costs		-							6,041
	Transaction related fees		-							565
Non-GAAP operating income		$	125,775			31.7	%		$	115,302			30.1	%
GAAP net income		$	50,263						$	28,752
	Amortization of acquired intangibles		8,033							10,616
	Stock-based compensation		29,371							48,178
	Restructuring charges		4,628							3,770
	Recapitalization costs		-							6,692
	Transaction related fees		-							565
	Income tax adjustment (1)		(15,067	)						(27,892	)
Non-GAAP net income		$	77,228						$	70,681
GAAP net income		$	50,263						$	28,752
	Net interest		7,251							6,949
	Provision for income taxes		26,518							10,237
	Depreciation expense		11,037							11,531
	Amortization expense		10,164							12,862
	Stock-based compensation		29,371							48,178
Adjusted EBITDA		$	134,604						$	118,509
Diluted net income per share
	GAAP	$	0.94						$	0.54
	Non-GAAP	$	1.44						$	1.32
Shares used to compute diluted net income per share			53,608							53,378

(1)	The estimated non-GAAP effective tax rate was 35% for the twelve months ended December 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.