TIBCO Software Reports First Quarter Results

TIBCO Software Reports First Quarter Results 
Record Q1 Total Revenue of $253 Million; Record Q1 License Revenue of
$83 Million; Non-GAAP EPS of $0.19 
PALO ALTO, CA -- (Marketwired) -- 03/20/14 --  TIBCO Software Inc.
(NASDAQ: TIBX) today announced results for its fiscal first quarter,
which ended on March 2, 2014. 
Total revenue for the first quarter of fiscal 2014 was $252.9 million
and net income was $12.2 million, or $0.07 per diluted share. This
compares to total revenue of $237.8 million and net income of $9.5
million, or $0.06 per diluted share, as reported for the first
quarter of fiscal 2013. 
On a non-GAAP basis, net income for the first quarter of fiscal 2014
was $31.6 million or $0.19 per diluted share, compared with $31.1
million or $0.18 per diluted share for the first quarter of fiscal
2013. Non-GAAP operating income for the first quarter of fiscal 2014
was $47.2 million, resulting in a non-GAAP operating margin of 18.7%.
This compares to non-GAAP operating income of $44.0 million, or a
18.5% non-GAAP operating margin in the first quarter of fiscal 2013.
Non-GAAP results exclude amortization of acquired intangible assets,
stock-based compensation expense, acquisition related and other
expenses, restructuring activities and non-cash interest expense
related to convertible debt and assumes non-GAAP effective tax rates
of 26% and 19% for the first quarters of fiscal 2014 and 2013,
respectively. 
"We've started our year with a step in the right direction, showing a
record level of total revenue for a Q1," said Vivek Ranadive, TIBCO's
chairman and chief executive officer. "The world's leading companies
are increasingly focused on not just big but fast data, and how to
gain a real-time competitive edge from their information. Our unique
combination of technologies allows us to create a true business
advantage for our customers, or what we call the Two-Second
Advantage."  
First Quarter Fiscal 2014 Highlights  


 
--  Total revenue of $252.9 million;
--  License revenue of $83.0 million;
--  Non-GAAP operating margin of 18.7%;
--  Non-GAAP EPS of $0.19;
--  Cash flow from operations of $51.8 million;
--  Broad mix of business across major industries including Financial
    Services, Telecommunications, Energy, Transportation & Logistics,
    Manufacturin
g, Government, Retail, and Insurance;
--  TIBCO closed 126 deals over $100k and had 18 deals over $1 million.

  
Conference Call Details  
TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT
today to discuss its first 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 706-679-0841. Please
join the conference call at least 10 minutes early to register. A
replay of the conference call will be available until midnight ET on
April 20, 2014 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
7022353. 
About TIBCO  
TIBCO Software Inc. (NASDAQ: TIBX) is a global leader in
infrastructure and business intelligence software. Whether it's
optimizing inventory, cross-selling products, or averting crisis
before it happens, TIBCO uniquely delivers the Two-Second
Advantage(R) -- the ability to capture the right information at the
right time and act on it preemptively for a competitive advantage.
With a broad mix of innovative products and services, TIBCO is the
strategic technology partner trusted by businesses around the world.
Learn more about TIBCO at www.tibco.com.  
TIBCO, Two-Second Advantage, and TIBCO Software are trademarks or
registered trademarks of TIBCO Software Inc. or its subsidiaries in
the United States and/or other countries. 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 first quarter of fiscal year 2014 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 TIBCO's ability to provide products that create
a business advantage for its customers, 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 achieve improved
performance and accelerate growth from its investments for growth and
innovation, the impact of competition from alternative business
models and new product introductions, TIBCO's ability to offer
compelling, differentiated products, and the impact of competition
from companies that are larger or have greater resources than TIBCO.
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, 2013. TIBCO assumes no
obligation to update the forward-looking statements included in this
release.  


 
                                                                            
                                                                            
                             TIBCO Software Inc.                            
                    Condensed Consolidated Balance Sheets                   
                                 (unaudited)                                
                               (in thousands)                               
                                                                            
                                                  March 2,     November 30, 
                                                    2014           2013     
                                               -------------- --------------
                                                                            
                    ASSETS                                                  
                                                                            
Current assets:                                                             
  Cash and cash equivalents                    $      524,962 $      662,109
  Short-term investments                              235,131         83,842
  Accounts receivable, net                            205,521        231,194
  Prepaid expenses and other current assets            93,176         74,725
                                               -------------- --------------
    Total current assets                            1,058,790      1,051,870
                                                 
                           
Property and equipment, net                           102,867        101,050
Goodwill                                              588,191        582,091
Acquired intangible assets, net                       110,028        119,418
Long-term deferred income tax assets                   61,201         78,853
Other assets                                           71,247         72,831
                                               -------------- --------------
    Total assets                               $    1,992,324 $    2,006,113
                                               ============== ==============
                                                                            
            LIABILITIES AND EQUITY                                          
                                                                            
Current liabilities:                                                        
  Accounts payable                             $       36,327 $       37,701
  Accrued liabilities                                 104,271        125,112
  Accrued restructuring costs                           1,797          5,819
  Deferred revenue                                    271,902        258,315
                                               -------------- --------------
    Total current liabilities                         414,297        426,947
                                                                            
Long-term deferred revenue                             20,908         24,036
Long-term deferred income tax liabilities               1,118          1,334
Long-term income tax liabilities                       54,460         55,733
Other long-term liabilities                             6,519          4,788
Convertible debt                                      544,054        540,022
                                               -------------- --------------
    Total long-term liabilities                       627,059        625,913
                                               -------------- --------------
    Total liabilities                               1,041,356      1,052,860
                                               -------------- --------------
                                                                            
Total equity                                          950,968        953,253
                                               -------------- --------------
    Total liabilities and equity               $    1,992,324 $    2,006,113
                                               ============== ==============
                                                                            
                                                                            
                                                                            
                            TIBCO Software Inc.                             
              Condensed Consolidated Statements of Operations               
                                (unaudited)                                 
                (in thousands, except net income per share)                 
                                                                            
                                                                            
                                                    Three Months Ended      
                                               ---------------------------- 
                                                  March 2,       March 3,   
                                                    2014           2013     
                                               -------------  ------------- 
Revenue:                                                                    
  License                                      $      83,033  $      78,263 
  Service and maintenance                            169,846        159,527 
                                               -------------  ------------- 
    Total revenue                                    252,879        237,790 
                                               -------------  ------------- 
                                                                            
Cost of revenue:                                                            
  License                                             11,950         11,261 
  Service and maintenance                             65,582         62,376 
                                               -------------  ------------- 
    Total cost of revenue                             77,532         73,637 
                                               -------------  ------------- 
Gross profit                                         175,347        164,153 
                                               -------------  ------------- 
                                                                            
Operating expenses:                                                         
  Research and development                            43,616         41,625 
  Sales and marketing                                 85,791         80,089 
  General and administrative                          16,485         18,925 
  Amortization of acquired intangible assets           5,043          4,321 
  Acquisition related and other                           35            327 
  Restructuring adjustment                              (759)             7 
                                               -------------  ------------- 
    Total operating expenses                         150,211        145,294 
                                               -------------  ------------- 
Income from operations                                25,136         18,859 
                                                                            
  Interest income                                        279            198 
  Interest expense                                    (8,520)        (8,782)
  Other income (expense), net                           (323)          (842)
                                               -------------  ------------- 
Income before provision for income taxes                                    
                                                      16,572          9,433 
Provision for income taxes                             4,400           (100)
                                               -------------  ------------- 
Net income                                            12,172          9,533 
                                                                            
Less: Net income attributable to                                            
 noncontrolling interest                                  22             28 
                                               -------------  ------------- 
Net income attributable to TIBCO Software Inc. $      12,150  $       9,505 
                                               =============  ============= 
Net income per share attributable to TIBCO                                  
 Software Inc.:                                                             
Basic                                          $        0.07  $        0.06 
                                               =============  ============= 
Diluted                                        $        0.07  $        0.06 
   
                                            =============  ============= 
Shares used to compute net income per share                                 
 attributable to TIBCO Software Inc.:                                       
Basic                                                162,299        161,521 
                                               =============  ============= 
Diluted                                              167,369        169,130 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                            TIBCO Software Inc.                             
              Condensed Consolidated Statements of Cash Flows               
                                (unaudited)                                 
                               (in thousands)                               
                                                                            
                                                    Three Months Ended      
                                               ---------------------------- 
                                                  March 2,       March 3,   
                                                    2014           2013     
                                               -------------  ------------- 
                                                                            
Cash flows from operating activities:                                       
  Net income                                   $      12,172  $       9,533 
  Adjustments to reconcile net income to net                                
   cash provided by operating activities:                                   
    Depreciation of property and equipment             4,688          3,863 
    Amortization of acquired intangible assets        10,031          8,418 
    Amortization of debt discount and                                       
     transaction costs                                 4,907          4,713 
    Stock-based compensation                          12,763         16,392 
    Deferred income tax                                  424         (9,188)
    Tax benefits related to stock benefit                                   
     plans                                             1,162          4,486 
    Excess tax benefits from stock-based                                    
     compensation                                     (1,057)        (3,257)
    Other non-cash adjustments, net                      191            139 
  Changes in assets and liabilities:                                        
    Accounts receivable                               26,292         63,733 
    Prepaid expenses and other assets                 (3,943)        (2,426)
    Accounts payable                                  (1,833)         1,953 
    Accrued and tax liabilities including                                   
     restructuring costs                             (24,591)       (23,383)
    Deferred revenue                                  10,556        (11,752)
                                               -------------  ------------- 
      Net cash provided by operating                                        
       activities                                     51,762         63,224 
                                               -------------  ------------- 
                                                                            
Cash flows from investing activities:                                       
  Purchases of short-term investments               (165,998)             - 
  Maturities and sales of short-term                                        
   investments                                        16,373             51 
  Acquisitions, net of cash acquired                       -          2,280 
  Purchases of property and equipment                 (6,365)        (2,586)
  Restricted cash pledged as security                    629           (322)
                                               -------------  ------------- 
      Net cash used in investing activities         (155,361)          (577)
                                               -------------  ------------- 
                                                                            
Cash flows from financing activities:                                       
  Principal payments on debt                               -           (620)
  Proceeds from issuance of common stock               2,991          6,086 
  Repurchases of the Company's common stock          (35,799)       (21,871)
  Withholding taxes related to restricted                                   
   stock net share settlement                         (4,276)        (4,890)
  Excess tax benefits from stock-based                                      
   compensation                                        1,057          3,257 
                                               -------------  ------------- 
      Net cash used in financing activities          (36,027)       (18,038)
                                               -------------  ------------- 
  Effect of foreign exchange rate changes on                                
   cash and cash equivalents                           2,479            506 
                                               -------------  ------------- 
                                                                            
Net change in cash and cash equivalents             (137,147)        45,115 
                                                                            
Cash and cash equivalents at beginning of                                   
 period                                              662,109        727,309 
                                                                            
                                               -------------  ------------- 
Cash and cash equivalents at end of period     $     524,962  $     772,424 
                                               =============  ============= 

 
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. Mo
reover,
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 sam
e 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                
                           ------------------------------------------------ 
                                March 2, 2014            March 3, 2013      
                           -----------------------  ----------------------- 
                                       Net income               Net income  
                                      attributable             attributable 
                                        to TIBCO                 to TIBCO   
                           Operating    Software     Operating   Software   
                             Income       Inc.        Income       Inc.     
                           ---------  ------------  ---------- ------------ 
                                                                            
                                                                            
                                                                            
GAAP                       $  25,136  $     12,150  $   18,859 $      9,505 
                                
                                            
  Amortization of                                                           
   intangible assets -                                                      
   cost of revenue             4,988         4,988       4,097        4,097 
  Amortization of                                                           
   intangible assets -                                                      
   operating expense           5,043         5,043       4,321        4,321 
  Stock-based compensation                                                  
   - cost of revenue           1,930         1,930       1,603        1,603 
  Stock-based compensation                                                  
   - R&D expense               4,280         4,280       3,996        3,996 
  Stock-based compensation                                                  
   - S&M expense               4,402         4,402       5,239        5,239 
  Stock-based compensation                                                  
   - G&A expense               2,151         2,151       5,554        5,554 
  Acquisition related and                                                   
   other                          35            35         327          327 
  Non-cash interest                                                         
   expense related to                                                       
   convertible debt                -         4,032           -        3,819 
  Restructuring adjustment      (759)         (759)          7            7 
  Income tax adjustment                                                     
   for non-GAAP                    -        (6,695)          -       (7,395)
                                                                            
                           ---------  ------------  ---------- ------------ 
Non-GAAP                   $  47,206  $     31,557  $   44,003 $     31,073 
                           =========  ============  ========== ============ 
                                                                            
Diluted net income per                                                      
 share attributable                                                         
 toTIBCO Software Inc.:                                                     
                                                                            
  GAAP                                $       0.07             $       0.06 
                                      ============             ============ 
  Non-GAAP                            $       0.19             $       0.18 
                                      ============             ============ 
Shares used to compute                                                      
 diluted net income per                                                     
 share attributable to                                                      
 TIBCO Software Inc.:                      167,369                  169,130 
                                      ============             ============ 

  
Media Contact:
Leslie Moore
TIBCO Software Inc.
(650) 846-5025
lmoore@tibco.com 
Investor Contact:
Giuseppe Incitti
TIBCO Software Inc.
(650) 846-5637
gincitti@tibco.com 
 
 
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