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TIBCO Software Reports Fourth Quarter and Fiscal Year 2013 Results


December 19, 2013 - Palo Alto, CA

TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fourth quarter and fiscal year, which ended on November 30, 2013.

Total revenue for the fourth quarter of fiscal 2013 was $315.5 million and net income was $44.5 million, or $0.27 per diluted share. This compares to total revenue of $296.5 million and net income of $48.8 million, or $0.29 per diluted share, as reported for the fourth quarter of fiscal 2012.

On a non-GAAP basis, net income for the fourth quarter of fiscal 2013 was $70.8 million or $0.42 per diluted share, compared with $70.7 million or $0.42 per diluted share for the fourth quarter of fiscal 2012. Non-GAAP operating income for the fourth quarter of fiscal 2013 was $95.3 million, resulting in a non-GAAP operating margin of 30.2%. This compares to non-GAAP operating income of $98.2 million, or a 33.1% non-GAAP operating margin in the fourth quarter of fiscal 2012. 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 23% and 24% for the fourth quarters of fiscal 2013 and 2012, respectively.

"We saw strong, accelerating growth in the Americas and a return to growth in Asia this quarter, while closing a record 31 deals over $1 million in license revenue worldwide," said Vivek Ranadivé, TIBCO Chairman and CEO. "We are building momentum as we enter 2014, and I am very optimistic about our prospects in the year ahead."

Fourth Quarter Fiscal 2013 Highlights

  • Record total revenue of $315.5 million;
  • Record license revenue of $139.7 million;
  • Non-GAAP operating margin of 30.2%;
  • Non-GAAP EPS of $0.42;
  • Cash flow from operations of $59.6 million;
  • Broad mix of business across major industries including Financial Services, Telecommunications, Energy, Transportation & Logistics, Retail, Life Sciences, and Manufacturing; and
  • TIBCO closed 193 deals over $100k and had 31 deals over $1 million in license revenue.

Full Year Fiscal 2013 Highlights

  • Record total revenue of $1,070.0 million;
  • License revenue of $405.5 million;
  • Non-GAAP operating margin of 23.3%;
  • Non-GAAP EPS of $1.06;
  • Cash flow from operations of $206.0 million; and
  • Repurchased 6 million shares.

Conference Call Details
TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss fourth quarter and full year 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 10 minutes early to register. A replay of the conference call will be available until midnight ET on January 19, 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 19900317.

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® -- 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. 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 2013 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 improve its sales execution, and TIBCO's ability to build and maintain momentum, 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 implement successfully the changes designed to improve performance and drive growth, 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, 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, 2012 and Quarterly Report on Form 10-Q for the quarter ended September 1, 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)

November 30, November 30,
2013 2012
------------ ------------

ASSETS

Current assets:
Cash and cash equivalents $ 662,109 $ 727,309
Short-term investments 83,842 34,411
Accounts receivable, net 231,194 234,100
Prepaid expenses and other current assets 74,725 61,174
------------ ------------
Total current assets 1,051,870 1,056,994

Property and equipment, net 101,050 98,474
Goodwill 582,091 532,290
Acquired intangible assets, net 119,418 123,261
Long-term deferred income tax assets 78,853 64,549
Other assets 72,831 71,340
------------ ------------
Total assets $ 2,006,113 $ 1,946,908
============ ============

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable $ 37,701 $ 22,809
Accrued liabilities 125,112 133,596
Accrued restructuring costs 5,819 893
Deferred revenue 258,315 263,476
Current portion of long-term debt - 35,711
------------ ------------
Total current liabilities 426,947 456,485

Accrued restructuring costs, less current portion 87 643
Long-term deferred revenue 24,036 25,543
Long-term deferred income tax liabilities 1,334 3,208
Long-term income tax liabilities 55,733 26,263
Other long-term liabilities 4,701 4,015
Convertible debt 540,022 524,466
------------ ------------
Total long-term liabilities 625,913 584,138
------------ ------------
Total liabilities 1,052,860 1,040,623
------------ ------------

Total equity 953,253 906,285
------------ ------------
Total liabilities and equity $ 2,006,113 $ 1,946,908
============ ============



TIBCO Software Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except net income per share)

Three Months Ended Twelve Months Ended
------------------ ----------------------
November November November November
30, 2013 30, 2012 30, 2013 30, 2012
-------- -------- ---------- ----------
Revenue:
License $139,733 $136,307 $ 405,471 $ 410,306
Service and maintenance 175,722 160,220 664,479 614,307
-------- -------- ---------- ----------
Total revenue 315,455 296,527 1,069,950 1,024,613
-------- -------- ---------- ----------

Cost of revenue:
License 12,548 11,554 47,324 41,363
Service and maintenance 69,316 64,035 260,121 241,452
-------- -------- ---------- ----------
Total cost of revenue 81,864 75,589 307,445 282,815
-------- -------- ---------- ----------
Gross profit 233,591 220,938 762,505 741,798
-------- -------- ---------- ----------

Operating expenses:
Research and development 43,331 39,255 170,922 154,535
Sales and marketing 98,907 85,557 348,302 317,001
General and administrative 15,404 17,960 65,950 70,868
Amortization of acquired
intangible assets 4,827 4,813 18,852 19,654
Acquisition related and other (16) 502 1,509 2,672
Restructuring adjustment 3,682 (201) 12,553 (648)
-------- -------- ---------- ----------
Total operating expenses 166,135 147,886 618,088 564,082
-------- -------- ---------- ----------

Income from operations 67,456 73,052 144,417 177,716

Interest income 266 267 938 1,109
Interest expense (8,474) (8,823) (34,330) (23,396)
Other income (expense), net 841 (357) (417) (115)
-------- -------- ---------- ----------
Income before provision for
income taxes and noncontrolling
interest 60,089 64,139 110,608 155,314

Provision for income taxes 15,500 15,300 26,400 33,200

-------- -------- ---------- ----------
Net income 44,589 48,839 84,208 122,114

Less: Net income attributable to
noncontrolling interest 40 51 188 107

-------- -------- ---------- ----------
Net income attributable to TIBCO
Software Inc. $ 44,549 $ 48,788 $ 84,020 $ 122,007
======== ======== ========== ==========

Net income per share
attributable to TIBCO Software
Inc.:
Basic $ 0.28 $ 0.30 $ 0.52 $ 0.76
======== ======== ========== ==========
Diluted $ 0.27 $ 0.29 $ 0.50 $ 0.72
======== ======== ========== ==========

Shares used to compute net
income per share attributable
to TIBCO Software Inc.:
Basic 160,814 160,115 160,963 160,330
======== ======== ========== ==========
Diluted 167,758 169,284 167,848 169,698
======== ======== ========== ==========



TIBCO Software Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)

Twelve Months Ended
--------------------------
November 30, November 30,
2013 2012
------------ ------------

Cash flows from operating activities:
Net income $ 84,208 $ 122,114
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property and equipment 16,340 14,931
Amortization of acquired intangible assets 36,782 35,553
Amortization of debt discount and
transaction costs 19,093 11,465
Stock-based compensation 53,635 61,146
Deferred income tax (16,397) (20,351)
Tax benefits related to stock benefit plans 14,343 24,561
Excess tax benefits from stock-based
compensation (18,539) (30,311)
Other non-cash adjustments, net 1,442 1,486
Changes in assets and liabilities:
Accounts receivable 2,870 (37,171)
Prepaid expenses and other assets (13,860) (1,880)
Accounts payable 14,221 (3,036)
Accrued and tax liabilities including
restructuring costs 20,307 (1,542)
Deferred revenue (8,424) 60,395
------------ ------------
Net cash provided by operating activities 206,021 237,360
------------ ------------

Cash flows from investing activities:
Purchases of short-term investments (70,786) (41,409)
Maturities and sales of short-term investments 22,657 7,229
Acquisitions, net of cash acquired (74,898) (132,209)
Purchases of property and equipment (19,269) (23,723)
Restricted cash pledged as security (1,165) (1,169)
Other investing activities, net (212) 326
------------ ------------
Net cash used in investing activities (143,673) (190,955)
------------ ------------

Cash flows from financing activities:
Proceeds from issuance of convertible debt,
net - 584,450
Proceeds from revolving credit facility, net - 116,648
Principal payments on debt (35,711) (152,397)
Proceeds from issuance of common stock 30,702 33,417
Repurchases of the Company's common stock (130,741) (220,265)
Withholding taxes related to restricted stock
net share settlement (13,279) (18,212)
------------ ------------
Net cash provided by (used in) financing
activities (130,490) 373,952
------------ ------------
Effect of foreign exchange rate changes on cash
and cash equivalents 2,942 (1,196)
------------ ------------

Net change in cash and cash equivalents (65,200) 419,161

Cash and cash equivalents at beginning of period 727,309 308,148

------------ ------------
Cash and cash equivalents at end of period $ 662,109 $ 727,309
============ ============

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, November 30, 2013 2012 ---------------------- ---------------------- Net income Net income attributable attributable to TIBCO to TIBCO Operating Software Operating Software Income Inc. Income Inc. --------- ------------ --------- ------------ GAAP $ 67,456 $ 44,549 $ 73,052 $ 48,788 Amortization of intangible assets - cost of revenue 4,990 4,990 4,021 4,021 Amortization of intangible assets - operating expense 4,827 4,827 4,813 4,813 Stock-based compensation - cost of revenue 3,800 3,800 1,431 1,431 Stock-based compensation - R&D expense 4,129 4,129 3,887 3,887 Stock-based compensation - S&M expense 4,697 4,697 5,844 5,844 Stock-based compensation - G&A expense 1,764 1,764 4,854 4,854 Acquisition related and other (16) (16) 502 502 Non-cash interest expense related to convertible debt - 3,960 - 3,751 Restructuring adjustment 3,682 3,682 (201) (201) Income tax adjustment for non-GAAP - (5,550) - (7,030) --------- ------------ --------- ------------Non-GAAP $ 95,329 $ 70,832 $ 98,203 $ 70,660 ========= ============ ========= ============ Diluted net income per share attributable to TIBCO Software Inc.: GAAP $ 0.27 $ 0.29 ============ ============ Non-GAAP $ 0.42 $ 0.42 ============ ============Shares used to compute diluted net income per share attributable to TIBCO Software Inc.: 167,758 169,284 ============ ============ Twelve Months Ended --------------------------------------------- November 30, November 30, 2013 2012 ---------------------- ---------------------- Net income Net income attributable attributable to TIBCO to TIBCO Operating Software Operating Software Income Inc. Income Inc. --------- ------------ --------- ------------ GAAP $ 144,417 $ 84,020 $ 177,716 $ 122,007 Amortization of intangible assets - cost of revenue 17,930 17,930 15,899 15,899 Amortization of intangible assets - operating expense 18,852 18,852 19,654 19,654 Stock-based compensation - cost of revenue 9,186 9,186 5,142 5,142 Stock-based compensation - R&D expense 15,888 15,888 15,131 15,131 Stock-based compensation - S&M expense 17,479 17,479 21,211 21,211 Stock-based compensation - G&A expense 11,082 11,082 19,662 19,662 Acquisition related and other 1,509 1,509 2,672 2,672 Non-cash interest expense related to convertible debt - 15,557 - 9,032 Restructuring adjustment 12,553 12,553 (648) (648) Income tax adjustment for non-GAAP - (26,226) - (35,037) --------- ------------ --------- ------------Non-GAAP $ 248,896 $ 177,830 $ 276,439 $ 194,725 ========= ============ ========= ============ Diluted net income per share attributable to TIBCO Software Inc.: GAAP $ 0.50 $ 0.72 ============ ============ Non-GAAP $ 1.06 $ 1.15 ============ ============Shares used to compute diluted net income per share attributable to TIBCO Software Inc.: 167,848 169,698 ============ ============ 

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