Advent Software Reports First Quarter 2013 Results

SAN FRANCISCO, CA--(Marketwired - Apr 29, 2013) - 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, 2013.

"Advent had a great start to the year, with strong bookings and record operating margin," said Pete Hess, Chief Executive Officer at Advent. "Our focus is to help investment managers thrive by being the best at what our clients expect. Our efforts to accelerate the value we deliver to our clients are being recognized by the market as evidenced by our strong results this quarter."

FIRST QUARTER 2013 RESULTS

GAAP Results for Continuing Operations
The Company reported quarterly revenue of $92.5 million for the first quarter of 2013, compared to $86.9 million in the first quarter of 2012, a 6% increase.

Operating income for the first quarter of 2013 was $16.2 million, or 17.5% of revenue, compared to $11.8 million or 13.6% of revenue for the first quarter of 2012.

Net income for the first quarter of 2013 was $12.1 million compared to $7.3 million in the first quarter of 2012, a 65% increase.

On a fully diluted basis, earnings per share in the first quarter of 2013 were $0.23 compared to $0.14 in the first quarter of 2012, a 67% increase.

Operating cash flow in the first quarter of 2013 was $17.2 million, compared with $13.6 million in the first quarter of 2012, a 27% increase.

Cash, cash equivalents and marketable securities totaled $247 million as of March 31, 2013, compared to $231 million as of December 31, 2012, a 7% increase. Total outstanding debt as of March 31, 2013 was $93 million compared to $95 million as of December 31, 2012. Total deferred revenue as of March 31, 2013 was $177 million, compared to $183 million as of December 31, 2012.

Non-GAAP Results for Continuing Operations
Non-GAAP operating income for the first quarter of 2013 was $26.4 million, or 28.5% of revenue. This represents a 34% increase over the same period last year. On a fully diluted basis, non-GAAP earnings per share were $0.32 in the first quarter of 2013 and represent a 36% increase from non-GAAP diluted earnings per share of $0.24 in the first quarter of 2012. Adjusted EBITDA was $27.8 million for the first quarter of 2013, a 19% increase compared to $23.3 million over the same period in 2012.

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

FIRST QUARTER HIGHLIGHTS

• Record First Quarter Bookings with Strong Renewals: The Annual Contract Value (ACV) of our new contract bookings in the first quarter of 2013 will contribute $8.7 million in annual revenue once the contracts are fully implemented and represent a 17% increase from the first quarter of 2012. The initial renewal rate for the fourth quarter of 2012 was 91%. The renewal rate from the third quarter of 2012 increased by two points to 96% as additional cash was collected.
  
  
• Client Success: Advent had a strong first quarter, with a number of existing clients expanding their relationship with Advent, including Gramercy Funds Management, and many noteworthy new clients around the world, including Investec, Qant Edge, SinoPac Securities, and Welch, Hornsby, & Welch.
  
  
• Award-Winning Solutions & Company: Advent continues to win accolades globally. Advent was awarded "Excellence in Alternative Investments" in the category of "Technology Provider" during the 3rd annual International Alternative Investment Review (IAIR) Hedge Fund Awards, which took place in Hong Kong. Advent was also named "Best Portfolio Management and Accounting Systems" by Markets Media at the inaugural 2013 Markets Choice Awards. Additionally, for the seventh year in a row, Advent has been named one of the Best Places to Work in the Bay Area by the San Francisco Business Times.
  

FINANCIAL GUIDANCE
Advent updates the following financial revenue guidance for the second quarter and operating margin guidance for fiscal year 2013:

Guidance		Q2 2013		FY 2013
Total Revenue ($M)		$93-$95		$373-$379
GAAP Operating Margin (% of revenue)		n/a		18.0-18.5%
Amortization of Intangibles (% of revenue)		n/a		3.0%
Stock Compensation Expense (% of revenue)		n/a		6.0%
Restructuring Charges (% of revenue)		n/a		0.5%
Non-GAAP Operating Margin (% of revenue)		n/a		27.5 - 28.0%
GAAP Effective Tax Rate (% of Income Before Tax)		n/a		30% - 35%
Non-GAAP Effective Tax Rate (% of Income Before Tax)		n/a		35%
Operating Cash Flow ($M)		n/a		$93 - $97
Capital Expenditures ($M)		n/a		$10 - $12

INVESTOR CALL

Advent Software, Inc. will host its Q1 2013 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q1 2013 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) 515-2911 and request conference ID #63438590. Telephone replay will be available through midnight May 6, 2013. The replay number for domestic callers is (888) 286-8010, and for international callers is (617) 801-6888, with the conference ID of #63296730.

The conference call will also be webcast live and then archived on http://investor.advent.com.

ABOUT ADVENT
Advent Software, Inc. (www.advent.com), a global firm, has provided trusted solutions to the world's leading financial professionals since 1983. Firms in more than 60 countries use Advent technology. Advent's quality software, data, services and tools enable financial professionals to improve service and communication to their clients, allowing them to grow their business while controlling costs. Advent is the only financial services software company to be awarded the Service Capability and Performance certification for being a world-class support organization. For more information on Advent products visit http://www.advent.com/about/resources/demos/pr.

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 (GAAP), please see the accompanying tables entitled "Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures."

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. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our Advent Portfolio Exchange^®, Geneva^®, and Moxy^® 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 satisfy contractual performance requirements; difficulties in integrating merged businesses, such as Syncova Solutions Limited and Black Diamond Performance Reporting LLC, and achieving expected synergies and results; 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 2012 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 and Advent Software are registered trademarks of Advent Software, Inc. All other company names or marks mentioned herein are those of their respective owners.

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(GAAP, Unaudited)
			March 31				December 31
			2013				2012
ASSETS
Current assets:
	Cash and cash equivalents		$	76,122			$	58,217
	Short-term marketable securities			108,620				111,192
	Accounts receivable, net			55,481				61,069
	Deferred taxes, current			18,928				18,934
	Prepaid expenses and other			26,693				25,868
	Current assets of discontinued operation			88				88
		Total current assets		285,932				275,368
Property and equipment, net				35,156				37,269
Goodwill				204,314				206,932
Other intangibles, net				34,210				38,205
Long-term marketable securities				61,837				61,552
Deferred taxes, long-term				22,509				24,524
Other assets				12,548				12,994
Noncurrent assets of discontinued operation				1,609				1,609
		Total assets	$	658,115			$	658,453
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	4,267			$	5,190
	Accrued liabilities			31,825				37,096
	Deferred revenues			169,356				174,388
	Income taxes payable			4,058				5,593
	Current portion of long-term debt			10,000				10,000
	Current liabilities of discontinued operation			319				262
		Total current liabilities		219,825				232,529
Deferred revenues, long-term				8,055				8,787
Long-term income taxes payable				5,335				5,335
Long-term debt				82,500				85,000
Other long-term liabilities				12,504				13,139
Noncurrent liabilities of discontinued operation				3,619				3,804
		Total liabilities		331,838				348,594
Stockholders' equity:
	Common stock			508				505
	Additional paid-in capital			461,599				453,585
	Accumulated deficit			(142,226	)			(154,261	)
	Accumulated other comprehensive income			6,396				10,030
		Total stockholders' equity		326,277				309,859
		Total liabilities and stockholders' equity	$	658,115			$	658,453

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
				Three Months Ended March 31
				2013				2012
Net revenues:
Recurring revenues				$	84,483			$	78,720
Non-recurring revenues					8,007				8,184
		Total net revenues			92,490				86,904
Cost of revenues (1):
Recurring revenues					16,412				16,926
Non-recurring revenues					9,568				9,668
Amortization of developed technology					2,499				2,541
		Total cost of revenues			28,479				29,135
		Gross margin			64,011				57,769
Operating expenses (1):
Sales and marketing					17,204				18,446
Product development					16,962				16,799
General and administrative					10,360				9,669
Amortization of other intangibles					957				956
Restructuring charges					2,315				104
		Total operating expenses			47,798				45,974
Income from continuing operations					16,213				11,795
Interest and other income (expense), net					(303	)			(172	)
Income from continuing operations before income taxes					15,910				11,623
Provision for income taxes					3,853				4,306
		Net income from continuing operations		$	12,057			$	7,317
Discontinued operation:
		Net loss from discontinued operation (net of applicable taxes of $(15) and $(15), respectively)			(22	)			(23	)
Net income				$	12,035			$	7,294
Basic net income (loss) per share (2):
		Continuing operations		$	0.24			$	0.14
		Discontinued operation			(0.00	)			(0.00	)
			Total operations	$	0.24			$	0.14
Diluted net income (loss) per share (2):
		Continuing operations		$	0.23			$	0.14
		Discontinued operation			(0.00	)			(0.00	)
			Total operations	$	0.23			$	0.14
Weighted average shares used to compute net income per share:
		Basic			50,563				51,024
		Diluted			52,598				53,363
(1) Includes stock-based employee compensation expense as follows:
		Cost of recurring revenues		$	488			$	585
		Cost of non-recurring revenues			382				331
			Total cost of revenues		870				916
		Sales and marketing			1,523				1,657
		Product development			1,326				1,460
		General and administrative			1,298				856
			Total operating expenses		4,147				3,973
		Total stock-based employee compensation expense		$	5,017			$	4,889
(2) Net income 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
					2013				2012
Cash flows from operating activities:
	Net income				$	12,035			$	7,294
	Adjustment to net income for discontinued operation net loss					22				23
	Net income from continuing operations					12,057				7,317
	Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
		Stock-based compensation				5,017				4,889
		Excess tax benefit from stock-based compensation				(403	)			(1,493	)
		Depreciation and amortization				6,400				6,377
		Amortization of debt issuance costs				98				95
		Provision for doubtful accounts				219				52
		Provision for sales reserves				68				497
		Deferred income taxes				1,724				(27	)
		Other				(45	)			(151	)
				Effect of statement of operations adjustments		13,078				10,239
		Changes in operating assets and liabilities:
			Accounts receivable			5,368				2,471
			Prepaid and other assets			204				(1,264	)
			Accounts payable			(953	)			434
			Accrued liabilities			(5,600	)			(8,325	)
			Deferred revenues			(5,833	)			(1,029	)
			Income taxes payable			(1,131	)			3,746
				Effect of changes in operating assets and liabilities		(7,945	)			(3,967	)
Net cash provided by operating activities from continuing operations						17,190				13,589
Cash flows from investing activities:
	Cash used in acquisitions, net of cash acquired					-				(700	)
	Purchases of property and equipment					(959	)			(1,951	)
	Capitalized software development costs					-				(342	)
	Purchases of marketable securities					(39,715	)			(33,595	)
	Sales and maturities of marketable securities					41,371				34,224
Net cash provided by (used in) investing activities from continuing operations						697				(2,364	)
Cash flows from financing activities:
	Proceeds from common stock issued from exercises of stock options					3,492				1,267
	Withholding taxes related to equity award net share settlement					(896	)			(782	)
	Repurchase of common stock					-				(6,788	)
	Repayment of debt					(2,500	)			(1,250	)
	Excess tax benefits from stock-based compensation					403				1,493
Net cash provided by (used in) financing activities from continuing operations						499				(6,060	)
Net cash transferred to discontinued operation						(151	)			(142	)
Effect of exchange rate changes on cash and cash equivalents						(330	)			280
Net change in cash and cash equivalents from continuing operations						17,905				5,303
Cash and cash equivalents of continuing operations at beginning of period						58,217				65,525
Cash and cash equivalents of continuing operations at end of period					$	76,122			$	70,828
					Three Months Ended March 31
					2013				2012
Supplemental disclosure of cash flow information
Cash flows from discontinued operation:
	Net cash used in operating activities				$	(151	)		$	(142	)
	Net cash provided by investing activities					-				-
	Net cash transferred from continuing operations					151				142
	Net change in cash and cash equivalents from discontinued operation					-				-
	Cash and cash equivalents of discontinued operation at beginning of period					-				-
	Cash and cash equivalents of discontinued operation at end of period				$	-			$	-
		The cash flows from the discontinued operation, as presented in the condensed consolidated statement of cash flows, relate to the operations of MicroEdge, Inc.

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, income, gains and losses 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, 2013							Three Months Ended March 31, 2012
		Amount				% of Net Revenues			Amount				% of Net Revenues
GAAP gross margin		$	64,011			69.2	%		$	57,769			66.5	%
	Amortization of acquired intangibles		1,898							1,896
	Stock-based compensation		870							916
Non-GAAP gross margin		$	66,779			72.2	%		$	60,581			69.7	%
GAAP operating income		$	16,213			17.5	%		$	11,795			13.6	%
	Amortization of acquired intangibles		2,855							2,852
	Stock-based compensation		5,017							4,889
	Restructuring charges		2,315							104
Non-GAAP operating income		$	26,400			28.5	%		$	19,640			22.6	%
GAAP net income		$	12,057						$	7,317
	Amortization of acquired intangibles		2,855							2,852
	Stock-based compensation		5,017							4,889
	Restructuring charges		2,315							104
	Income tax adjustment (1)		(5,281	)						(2,508	)
Non-GAAP net income		$	16,963						$	12,654
GAAP net income		$	12,057						$	7,317
	Net interest		458							460
	Provision for income taxes		3,853							4,306
	Depreciation expense		2,945							2,881
	Amortization expense		3,455							3,496
	Stock-based compensation		5,017							4,889
Adjusted EBITDA		$	27,785						$	23,349
Diluted net income per share
	GAAP	$	0.23						$	0.14
	Non-GAAP	$	0.32						$	0.24
Shares used to compute diluted net income per share			52,598							53,363

(1)	The estimated non-GAAP effective tax rate was 35% for the three months ended March 31, 2013 and 2012, 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, expenses, gains and losses 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, 2013
			Continuing Operations
			Operating Income %
	Projected GAAP		18.0%	to	18.5%
		Projected amortization of acquired developed technology and other acquired intangible asset adjustment		3.0%
		Projected stock-based compensation adjustment		6.0%
		Projected restructuring charge adjustment		0.5%
	Projected non-GAAP		27.5%	to	28.0%