Advent Software, Inc. (ADVS)
Q2 2010 Earnings Call Transcript
July 26, 2010 5:00 pm ET
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
John Maietta – Needham & Company
Gil Luria – Wedbush Securities
Sasa Zorovic – Janney Montgomery Scott
Saket Kalia – JP Morgan
Brian Murphy – Sidoti & Company
Del Warmington – Delwar Capital Management
Previous Statements by ADVS
» 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.
Welcome to the Q2 2010 Advent Software earnings conference call. My name is Keith, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Miss Heidi Flaherty, Vice President of Finance and Investor Relations. Please proceed, ma’am.
Good afternoon, everyone. Thank you for joining us today for Advent’s second quarter 2010 earnings call. Hosting our call today are Stephanie DiMarco, Advent’s Chief Executive Officer and Jim Cox, Advent’s Chief Financial Officer. Also with us today is our President, Peter Hess.
Most of you participating in this call are aware of the regulations regarding forward-looking statements. Accordingly, we would like to note that 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 risks and uncertainties and that actual events or results could differ materially.
We discuss a number of these risks in detail in the company’s SEC reports, including our quarterly report on Form 10-Q and our 2009 annual report on Form 10-K, and any forward-looking statements must be considered in the context of such risks and uncertainties.
The company disclaims any intention or obligation to publicly update or revise any forward-looking statements whether as a result of events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
As a reminder, we include non-GAAP financial measures in our disclosures. These non-GAAP financial results are not meant to be considered in isolation or as a substitute for results prepared on a GAAP basis. Please refer to the tables entitled “Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures” in our earnings release, which is filed with the SEC on a Form 8-K and available on our Web site for a reconciliation of the GAAP to non-GAAP financial measures.
I’ll now turn the call over to Stephanie.
Thanks, Heidi, and welcome everyone. Thank you for joining us this afternoon.
I’m pleased to report that Advent had a very strong second quarter. Revenues from continuing operations were $69 million, a new quarterly record and an increase of 10% year over year. New bookings or ACV, were $6.5 million, up 51% year over year.
GAAP operating income from continuing operations was $8 million and non-GAAP operating income was $14 million, representing a margin of 20%.
Diluted earnings per share from continuing operations were $0.18 on a GAAP basis and $0.33 on a non-GAAP basis. Operating cash flow from continuing operations was $18 million.
As the financial industry has moved beyond the crisis environment that characterize the first half of 2009, we are seeing continuing strong demand for our market-leading suite of software and services from customers around the world.
Later in the call, I will talk more about our accomplishments and highlights, but first let me turn the call over to Jim who will provide further details on the numbers.
Thanks, Stephanie. There are four areas I will cover today; first, bookings and revenue; second, expenses and profitability; third, cash and cash flows; and finally, guidance.
Customer demand remains strong with $6.5 of annual contract value or ACV for term license and Advent OnDemand contracts signed during the second quarter. This represents a 51% increase over the $4.3 million booked in the second quarter of last year. Both figures include Advent OnDemand bookings, which are now included in our ACV metric.
The ACV numbers reflect bookings strength across all of our geographies, all of our product lines, and deployment models. In addition, we’ve included in our Q2 2010 ACV number, one perpetual license contract that is economically similar to a 5-year term license agreement, except that the license is generally irrevocable after the fifth year’s payment of annual license and maintenance period fees.
Revenue in the second quarter was $69.3 million, up 10% over the second quarter of 2009 driven by growth in term fees, other recurring revenue and professional services revenues.
Term fees increased as a result of the invigorated bookings activity we’ve experienced over the last 12 months. Other recurring revenue increased year over year as a result of the TIAA-CREF data services and Fidelity on-demand contracts, which went live last September. Professional services revenue increased as a result of increased activity and utilization.
As a reminder, we defer all term license and professional services revenue on new contracts until we have substantially completed the implementation services. This deferral fluctuates considerably from quarter to quarter depending on project timelines. In the second quarter, the net revenue deferred for term implementations was $1.3 million. This revenue deferral had $400,000 of expense associated with it, which led to a 1-point reduction to operating margin in the quarter. For comparison, completion of term implementations in Q2 2009 increased revenue by $1.7 million and operating margin by 2%.