Advent Software, Inc. (
F3Q10 Earnings Call
October 25, 2010, 5 p.m. EST
Heidi Flaherty - VP, Finance and IR
Stephanie DiMarco - CEO
Jim Cox - CFO
Peter Hess - President
David Scharf - JMP Securities
Tim Fox - Deutsche Bank North America
Gil Luria - Wedbush Securities
John Maietta - Needham & Company
Sasa Zorovic - Janney Montgomery Scott
Del Warmington - Delwar Capital Management
Previous Statements by ADVS
» Advent Software, Inc. Q2 2010 Earnings Call Transcript
» Advent Software Q1 2010 Earnings Call Transcript
» Advent Software, Inc. Q4 2009 Earnings Call Transcript
» Advent Software, Inc. Q3 2009 Earnings Call Transcript
Good day ladies and gentlemen and welcome to the Q3 2010 Advente Software Earnings Conference Call. My name is Crystal and I will be your operator for today. At this time, all participants are enlisted only merd. Later, we will conduct a question and answer session. If at any time you require operator assistant, please press * followed by 0 and we will be happy to assist you. As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Heidi Flaherty, Vice President of Finance and Investor Relations. Please proceed. Thanks Crystal. Thank you for joining us today for Advente 3rd Quarter 2010 Earnings Call. Hosting the call today are Stephanie DiMarco, Advente Chief Executive Officer and Jim Cox, Advente Chief Financial Officer. Also, with us today is our President, Peter Hess.
Let’s see if all participating in this call are aware of the regulations regarding forward-looking statements. Accordingly, we would like to know during the course of this conference call we will make forward-looking statements regarding future events or the future performance of the company. We wish to caution you that such statements are just predictions that involve risk and estimates actual events over the materially. We discuss a number of these risks in detail and the company peer reports and including our quarterly reports and foreign exchange Q and our 2009 annual report on inform 10K and any forward listening statements must be considered in the context of such risk and uncertainty.
The company disclaimed any intention obligation to publicly update or revise any forward listening statements whether as a result of an event or circumstances after the date, there of, or to expect the occurrence of an anticipation of an event . As a reminder, we include non-GAAP Financial measures in our disclosures. These non-GAAP Financial results are not meant to be compared in isolation or as a substitute for results compared on a GAAP bases. Please refer to the table entitled, tables entitled “Reconciliation of Selected Continuing Operations’ GAAP Measures to Non-GAAP Measures" in our earning series, which is filed with the SEC on a Form 8-K and available on our website for Reconciliation of GAAP to Non-GAAP Financial Measures. On that, I'll turn the call over to Stephanie.
Thanks Heidi, and welcome everyone. Thank you for joining us this afternoon. I'm pleased to report that Advente had a very strong 3rd quarter. We set a new quarterly record with revenues of $72 million, a 13% year over year growth. New bookings or ACD were $7.6 million of 12% year over year. GAAP Operating income was $9.7 million and Non-GAAP Operating income was $15.7 million producing a margin of 22%. Later in the call, I will talk more about our accomplishments and highlights. First, let me turn the call over to Jim, who will provide further details on the numbers.
Thanks Stephanie. Stephanie said there is a lot of great news to share about this quarter. Let me start with some operating statistics, including booking and renewals. Customer demand remains strong with $7.6 million in an annual contract value, term licenses and add that on-demand contract signed into the 3rd quarter. The trip present the 12% increase over the $6.8 million vote in the 3rd quarter of last year. With the San Francisco Giants going to the World Series, a big fallinology is appropriate to describe our poking performance, which is to say, we hit first cycle this quarter, we had home runs, several double and triples and a lot singles. Booking in Europe and Asia was quite strong, which is really gratifying given the recent investments we made in those regions. Train to Renewal. Our renewal rate is based on cash collections and therefore, we reported one quarter in arrears. We were please to see an initial renewal rate of 91% in the second quarter, up one point from the 1st quarter initial rate.
We continue to see slow and steady improvement in our renewal rate from 85% reported in the 1st quarter 2009. Additional collections from the first Q10 renewal increase our renewal rate from the 90% initially reported to an updated 95%. When all the cash is collected for our second quarter renewal, we’re expecting the initial 91% rate to increase by 2 - 4 points as it has historically. To report on financial as Stephanie says, was $72 million up 13% over the third quarter of 2009. Turvent primarily, by growth and return fee, other recurring revenue and client conference. Term fees increase as a national result of layering and result term license contact. Other recurring revenue increase year over year primarily as a result of the Tia Craft Data Services and Fidelity On Demand Contracts going on in September of last year. In addition, we recorded $1 million of revenue related to our Client Conference, which is a professional services in other revenue line.
For comparison purposes, we did not hold a Client Conference last year. Train to expense, cost of revenue for the 3rd quarter was $23 million up 10% over the same period last year. Gross margin was 68%, a improvement of 1 point over last year, primarily due to operating leverage. Gross margins are down 2 points subsequently from the 2nd quarter, that is driven by the annual Client Conference held in September of this year. The conference negatively impact our gross margins by 2 points this quarter. Third quarter operating expense was $39 million up 6% for the same period last year. Until the marketing expense was up $1.1 million year over year 7% as a result of the initial investments we have been making particularly in Asia and Europe, and the associated travel expenses with our global operations. Product Development expense increase $900,000 year-over-year or 7%, calculate $600,000 less of Product Development cost in the third quarter of this year compared to last year.