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