TIBCO Software Reports Fourth Quarter and Fiscal Year 2012 Financial Results

Full Year Revenue Exceeds $1 Billion for the First Time; Non-GAAP EPS of $1.15

Marketwired

PALO ALTO, CA--(Marketwire - Dec 20, 2012) - TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fourth quarter and fiscal year, which ended on November 30, 2012.

Total revenue for the fourth quarter of fiscal 2012 was $296.5 million and net income was $48.8 million, or $0.29 per diluted share. This compares to total revenue of $289.5 million and net income of $51.9 million, or $0.30 per diluted share, as reported for the fourth quarter of fiscal 2011.

On a non-GAAP basis, net income for the fourth quarter of fiscal 2012 was $70.7 million or $0.42 per diluted share, compared with $72.2 million or $0.42 per diluted share for the fourth quarter of fiscal 2011. Non-GAAP operating income for the fourth quarter of fiscal 2012 was $98.2 million, resulting in a non-GAAP operating margin of 33%. This compares to non-GAAP operating income of $99.8 million, or a 34% non-GAAP operating margin in the fourth quarter of fiscal 2011. Non-GAAP results exclude amortization of acquired intangible assets, stock-based compensation expense, acquisition related and other expenses and restructuring activities and assumes a non-GAAP effective tax rate of 26% for fiscal 2012 and 28% for fiscal 2011.

"Despite weakness in our Americas infrastructure business in Q4, TIBCO delivered another record year of revenue and profitability in 2012," said Vivek Ranadivé, TIBCO's chairman and chief executive officer. "As we enter 2013, we are confident about our market position and see many avenues of growth for our business. The world continues to accelerate its shift towards operating in real-time, requiring companies to find more and better ways to integrate their businesses and understand the information and events that drive performance. This trend continues to create demand for our event-driven platform. Our focus in the new year is on investing for innovation and growth, delivering extreme value to our customers, and executing with consistency."

Fourth Quarter Fiscal 2012 Highlights

  • Total revenue of $296.5 million;
  • License revenue of $136.3 million;
  • Non-GAAP operating margin of 33%;
  • Non-GAAP EPS of $0.42;
  • Cash flow from operations of $72.0 million;
  • Strong mix of business across major industries including Financial Services, Energy, Telecommunications, Life Sciences, Manufacturing, and Retail; and
  • TIBCO closed 195 deals over $100k and had 25 deals over $1 million.

Full Year Fiscal 2012 Highlights

  • Record total revenue of $1,024.6 million;
  • License revenue of $410.3 million;
  • Non-GAAP operating margin of 27%;
  • Record non-GAAP EPS of $1.15, vs. $1.01 for fiscal 2011;
  • Cash flow from operations of $237.4 million; and
  • Repurchased 7.6 million shares.

Conference Call Details

TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its fourth quarter results. The conference call will be hosted by InterCall and may be accessed over the internet at www.tibco.com or via dial-in at 877-293-9114 or 706-758-2055. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight PT on January 20, 2013 at www.tibco.com or via dial-in at 800-585-8367 or 404-537-3406. The pass code for both the call and the replay is 77950749.

About TIBCO
TIBCO Software Inc. (NASDAQ: TIBX) is a provider of infrastructure software for companies to use on-premise or as part of cloud computing environments. Whether it's optimizing claims, processing trades, cross-selling products based on real-time customer behavior, or averting a crisis before it happens, TIBCO provides companies the two-second advantage® -- the ability to capture the right information at the right time and act on it preemptively for a competitive advantage. More than 4,000 customers worldwide rely on TIBCO to manage information, decisions, processes and applications in real time. Learn more at www.tibco.com.

TIBCO, two-second advantage, and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc. in the United States and/or other countries. All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only.

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 section entitled "About Non-GAAP Financial Measures" and the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Measures."

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws. The final financial results for fourth quarter of fiscal year 2012 may differ materially from the preliminary results presented in this release due to factors that include, but are not limited to, risks associated with the final review of the results and preparation of financial statements. In addition, forward-looking statements such as statements regarding future avenues of growth for TIBCO's business, growing demand for TIBCO's event-driven platform, TIBCO's ability to invest in innovation and growth, TIBCO's ability to deliver extreme value to customers, and TIBCO's ability to execute with consistency, are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks include but are not limited to: risks arising from adverse changes and uncertainty in domestic and global economies, TIBCO's ability to develop products that address changing market demands, the impact of competition from alternative business models and new product introductions, TIBCO's ability to offer differentiated products that capitalize on current technology trends, the impact of competition from companies that are larger or have greater resources than TIBCO, and TIBCO's ability to execute on its strategy. Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K for the year ended November 30, 2011 and Quarterly Report on Form 10-Q for the quarter ended September 2, 2012. TIBCO assumes no obligation to update the forward-looking statements included in this release.

 
TIBCO Software Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
         
         
    November 30,
    2012   2011
             
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 727,309   $ 308,148
  Short-term investments     34,411     225
  Accounts receivable, net     234,100     196,419
  Prepaid expenses and other current assets     61,174     61,864
    Total current assets     1,056,994     566,656
             
Property and equipment, net     98,474     89,871
Goodwill     532,290     451,821
Acquired intangible assets, net     123,261     97,258
Long-term deferred income tax assets     64,549     78,656
Other assets     71,340     48,676
    Total assets   $ 1,946,908   $ 1,332,938
             
LIABILITIES AND EQUITY            
             
Current liabilities:            
  Accounts payable   $ 22,809   $ 25,802
  Accrued liabilities     133,596     129,168
  Accrued restructuring costs     893     6,792
  Deferred revenue     263,476     210,234
  Current portion of long-term debt     35,711     2,397
    Total current liabilities     456,485     374,393
             
Accrued restructuring costs, less current portion     643     1,050
Long-term deferred revenue     25,543     14,876
Long-term deferred income tax liabilities     3,208     4,540
Long-term income tax liabilities     26,263     20,772
Other long-term liabilities     4,015     2,445
Long-term debt, less current portion     -     65,711
Convertible debt     524,466     -
    Total long-term liabilities     584,138     109,394
    Total liabilities     1,040,623     483,787
             
Total equity     906,285     849,151
    Total liabilities and equity   $ 1,946,908   $ 1,332,938
             
             
                       
TIBCO Software Inc.  
Condensed Consolidated Statements of Operations  
(unaudited)  
(in thousands, except net income per share)  
                       
                       
  Three Months Ended
November 30,
    Year Ended
November 30,
 
  2012     2011     2012     2011  
Revenue:                              
  License $ 136,307     $ 134,706     $ 410,306     $ 377,618  
  Service and maintenance   160,220       154,805       614,307       542,628  
    Total revenue   296,527       289,511       1,024,613       920,246  
                               
Cost of revenue:                              
  License   11,554       9,743       41,363       35,309  
  Service and maintenance   64,035       59,604       241,452       212,066  
    Total cost of revenue   75,589       69,347       282,815       247,375  
Gross profit   220,938       220,164       741,798       672,871  
                               
Operating expenses:                              
  Research and development   39,255       38,271       154,535       143,173  
  Sales and marketing   85,557       81,752       317,001       285,366  
  General and administrative   17,960       16,330       70,868       59,990  
  Amortization of acquired intangible assets   4,813       4,596       19,654       19,149  
  Acquisition related and other   502       154       2,672       1,840  
  Restructuring adjustment   (201 )     8,816       (648 )     8,926  
    Total operating expenses   147,886       149,919       564,082       518,444  
                               
Income from operations   73,052       70,245       177,716       154,427  
                               
  Interest income   267       198       1,109       1,374  
  Interest expense   (8,823 )     (1,083 )     (23,396 )     (4,020 )
  Other income (expense), net   (357 )     83       (115 )     (1,846 )
                               
Income before provision for income taxes and noncontrolling interest   64,139       69,443       155,314       149,935  
                               
Provision for income taxes   15,300       17,504       33,200       37,300  
                               
Net income   48,839       51,939       122,114       112,635  
                               
Less: Net income attributable to noncontrolling interest   51       61       107       229  
                               
Net income attributable to TIBCO Software Inc. $ 48,788     $ 51,878     $ 122,007     $ 112,406  
                               
Net income per share attributable to TIBCO Software Inc.:                              
  Basic $ 0.30     $ 0.32     $ 0.76     $ 0.70  
  Diluted $ 0.29     $ 0.30     $ 0.72     $ 0.65  
                               
Shares used to compute net income per share attributable to TIBCO Software Inc.:                              
  Basic   160,115       161,586       160,330       161,469  
  Diluted   169,284       171,978       169,698       173,272  
                               
                               
           
TIBCO Software Inc.  
Condensed Consolidated Statements of Cash Flows  
(unaudited)  
(in thousands)  
           
  Year Ended
November 30,
 
  2012     2011  
               
Cash flows from operating activities:              
  Net income $ 122,114     $ 112,635  
  Adjustments to reconcile net income to net cash provided by operating activities:              
    Depreciation of property and equipment   14,931       13,145  
    Amortization of acquired intangible assets   35,553       34,661  
    Amortization of debt discount and transaction costs   11,465       772  
    Stock-based compensation   61,146       48,867  
    Deferred income tax   (20,351 )     1,266  
    Tax benefits related to stock benefit plans   24,561       8,552  
    Excess tax benefits from stock-based compensation   (30,311 )     (41,950 )
    Other non-cash adjustments, net   1,486       476  
  Changes in assets and liabilities:              
    Accounts receivable   (37,171 )     (3,312 )
    Prepaid expenses and other assets   (1,880 )     4,859  
    Accounts payable   (3,036 )     501  
    Accrued liabilities and restructuring costs   (1,542 )     7,015  
    Deferred revenue   60,395       20,563  
      Net cash provided by operating activities   237,360       208,050  
               
Cash flows from investing activities:              
  Purchases of short-term investments   (41,409 )     (76 )
  Maturities and sales of short-term investments   7,229       1,451  
  Acquisitions, net of cash acquired   (132,209 )     (63,610 )
  Purchases of property and equipment   (23,723 )     (13,971 )
  Restricted cash pledged as security   (1,169 )     (3,234 )
  Other investing activities, net   326       -  
    Net cash used in investing activities   (190,955 )     (79,440 )
               
Cash flows from financing activities:              
  Proceeds from issuance of convertible debt, net   584,450       -  
  Proceeds from revolving credit facility, net   116,648       30,000  
  Principal payments on debt   (152,397 )     (2,269 )
  Proceeds from issuance of common stock   33,417       80,610  
  Repurchases of the Company's common stock   (220,265 )     (194,059 )
  Withholding taxes related to restricted stock net share settlement   (18,212 )     (17,922 )
  Excess tax benefits from stock-based compensation   30,311       41,950  
    Net cash provided by (used in) financing activities   373,952       (61,690 )
               
Effect of foreign exchange rate changes on cash and cash equivalents   (1,196 )     (2,761 )
               
Net change in cash and cash equivalents   419,161       64,159  
               
Cash and cash equivalents at beginning of period   308,148       243,989  
               
Cash and cash equivalents at end of period $ 727,309     $ 308,148  
               
               

About Non-GAAP Financial Measures

TIBCO provides non-GAAP measures for operating income, net income and net income per share data as supplemental information regarding TIBCO's business performance. TIBCO believes that these non-GAAP financial measures are useful to investors because they exclude non-operating charges. TIBCO's management excludes these non-operating charges when it internally evaluates the performance of TIBCO's business and makes operating decisions, including internal budgeting, performance measurement and the calculation of bonuses and discretionary compensation, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential revenue generation activities of TIBCO. Accordingly, management excludes stock-based compensation related to employee stock options, amortization of acquired intangible assets, costs related to formal restructuring activities, acquisition-related and other expenses, non-cash interest expense related to convertible debt, gains and losses on equity investments, and the income tax effects of the foregoing, as well as adjustments for the impact of changes in the valuation allowance recorded against TIBCO's deferred tax assets when making operational decisions.

TIBCO believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand TIBCO's financial performance on a trended basis across historical periods. In addition, it allows investors to evaluate TIBCO's performance using the same methodology and information as that used by TIBCO's management.

Non-GAAP measures are subject to material limitations as these measures are not in accordance with, or a substitute for, GAAP and thus TIBCO's definition may be different from similar non-GAAP measures used by other companies and/or analysts. However, TIBCO's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. In addition, some items such as restructuring charges that are excluded from non-GAAP net income and non-GAAP earnings per share can have a material impact on cash flows and stock compensation charges can have a significant impact on earnings. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. TIBCO has historically provided non-GAAP measures to the investment community as a supplement to its GAAP results, to enable investors to evaluate TIBCO's business performance in the way that management does.

The non-GAAP adjustments, and the basis for excluding them, are outlined below:

Amortization of Intangible Assets

TIBCO has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions TIBCO has made. Management excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO believes that eliminating this expense from its non-GAAP measures is useful to investors, because the amortization of intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of TIBCO's acquisition transactions, which also vary substantially in frequency from period to period.

Stock-based Compensation

TIBCO incurs stock-based compensation expense. TIBCO excludes this item for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share because it is a non-cash expense that TIBCO believes is not reflective of its business performance. The nature of the stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions and different award types, making the comparison of current results with forward-looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expenses may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods. Finally, TIBCO believes that non-GAAP measures of profitability that exclude stock-based compensation are widely used by analysts and investors in the software industry.

Acquisition-related and Other Expenses

TIBCO incurs acquisition-related and other expenses which consist of costs incurred after the issuance of a definitive term sheet for a particular transaction (whether or not such transaction is ultimately completed, remains in process or is not completed) and include legal, banker, accounting and other advisory fees of third parties and severance costs for employees of the acquired company that are terminated within 90 days of the acquisition date. Management excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO believes that eliminating these expenses from its non-GAAP measures is useful to investors, because it generally would not have otherwise incurred such expenses in the periods presented as part of its continuing operations. The acquisition-related and other expenses are not recurring with respect to past transactions, can be inconsistent in amount and frequency from period to period and are significantly impacted by the timing and magnitude of TIBCO's acquisitions. While these expenses are not recurring with respect to past transactions, TIBCO generally will incur these expenses in connection with any future acquisitions.

Restructuring Activities

TIBCO incurs restructuring expenses, included in its GAAP presentation of operating expense, primarily due to workforce related charges such as payments for severance and benefits and estimated costs of exiting and terminating facility lease commitments related to a formal restructuring plan. TIBCO excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share, when it evaluates the continuing business performance of TIBCO. TIBCO believes that these items are not consistently recurring and do not necessarily reflect expected future operating expense, nor does TIBCO believe that they provide a meaningful evaluation of current versus past business results or the expense levels required to support TIBCO's operating plan.

Non-Cash Interest Expense Related to Convertible Debt

TIBCO is required to recognize non-cash interest expense related to its 2.25% convertible senior notes issued in April 2012 as an imputed interest expense. Management excludes this incremental non-cash interest expense for purposes of calculating non-GAAP net income and non-GAAP net income per share. Under the relevant accounting guidance, TIBCO is required to separate the conversion option as an equity component from the debt and account for the debt in a manner that reflects TIBCO's non-convertible debt borrowing rate. This results in the debt component of the convertible notes being treated as though it was issued at a discount, with the debt discount being accreted as additional non-cash interest expense over the term of the notes using the effective interest method. TIBCO believes that excluding this expense from its non-GAAP measures is useful to investors because this incremental interest expense does not represent a cash outflow for the company and is not meaningful in evaluating current versus past business results. Finally, TIBCO believes that non-GAAP measures of profitability that exclude non-cash interest accretion expense are widely used by analysts and investors.

 
TIBCO Software Inc.
Reconciliation of GAAP to Non-GAAP Measures
(unaudited)
(in thousands, except net income per share)
   
                                           
  Three Months Ended November 30,     Year Ended November 30,  
  2012     2011     2012     2011  
  Operating Income     Net income attributable to TIBCO Software Inc.     Operating Income   Net income attributable to TIBCO Software Inc.     Operating Income     Net income attributable to TIBCO Software Inc.     Operating Income   Net income attributable to TIBCO Software Inc.  
                                                           
GAAP $ 73,052     $ 48,788     $ 70,245   $ 51,878     $ 177,716     $ 122,007     $ 154,427   $ 112,406  
                                                           
  Amortization of intangible assets - cost of revenue   4,021       4,021       3,277     3,277       15,899       15,899       15,512     15,512  
  Amortization of intangible assets - operating expense   4,813       4,813       4,596     4,596       19,654       19,654       19,149     19,149  
  Stock-based compensation - cost of revenue   1,431       1,431       1,167     1,167       5,142       5,142       4,715     4,715  
  Stock-based compensation - R&D expense   3,887       3,887       2,856     2,856       15,131       15,131       11,441     11,441  
  Stock-based compensation - S&M expense   5,844       5,844       4,350     4,350       21,211       21,211       17,206     17,206  
  Stock-based compensation - G&A expense   4,854       4,854       4,308     4,308       19,662       19,662       15,505     15,505  
  Acquisition related and other   502       502       154     154       2,672       2,672       1,840     1,840  
  Non-cash interest expense related to convertible debt   -       3,751       -     -       -       9,032       -     -  
  Restructuring adjustment   (201 )     (201 )     8,816     8,816       (648 )     (648 )     8,926     8,926  
  Income tax adjustment for non-GAAP   -       (7,030 )     -     (9,217 )     -       (35,037 )     -     (31,431 )
                                                           
Non-GAAP $ 98,203     $ 70,660     $ 99,769   $ 72,185     $ 276,439     $ 194,725     $ 248,721   $ 175,269  
                                                           
Diluted net income per share attributable to TIBCO Software Inc.:                                                          
                                                           
  GAAP         $ 0.29           $ 0.30             $ 0.72           $ 0.65  
                                                           
  Non-GAAP         $ 0.42           $ 0.42             $ 1.15           $ 1.01  
Shares used to compute diluted net income per share attributable to TIBCO Software Inc.:           169,284             171,978               169,698             173,272  
                                                           
Contact:
Media Relations
Leslie Moore
TIBCO Software Inc.
(650) 846-5025
Email Contact

Investor Relations
Matthew Langdon
TIBCO Software Inc.
(650) 846-5747
Email Contact

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