Avid Technology Inc. (AVID)

Q2 2010 Earnings Conference Call

July 22, 2010 2:00 pm ET


Tom Fitzsimmons - Director, IR

Gary Greenfield - CEO and President

Ken Sexton - EVP, CFO and CAO


Paul Coster - JPMorgan

Michael Olson - Piper Jaffray

Steven Frankel - Brigantine



Good day and welcome every one to Avid Technology Second Quarter 2010 Earnings Results Conference Call. Today's call is been recorded. For opening remarks and introduction I would like to turn the call over to the Director of Investor Relation, Mr. Tom Fitzsimmons. Please go ahead sir.

Tom Fitzsimmons

Good afternoon everyone. I am Tom Fitzsimmons, Director Investor Relations for Avid. I would like to welcome you to today's call. With me today are Gary Greenfield, Avid's Chairman and CEO and Ken Sexton, Executive Vice President, Chief Financial and Administrative Officer.

Before we begin, please note that this call includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about our performance. There are a number of factors that could cause actual events or results to different materials from those indicated by these statements; such as competitive changes, our ability to execute our strategic plan, or adverse changes and general economic conditions, other important events and factors appearing on our filings with the US Securities and Exchange Commission.

In addition, our forward-looking statements represent only our estimates as of today July 22, 2010 and should not be relied upon as representing our views on any subsequent date. We undertake no obligation to review or update these forward-looking statements.

During this call, we will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. They may not be comparable to similar non-GAAP measures used or reported by other companies. The non-GAAP measures do not reflect all the costs associated with the company's operations and are determined in accordance with GAAP.

The most directly comparable financial measures calculated in accordance with GAAP and a reconciliation of GAAP to non-GAAP measures are contained in the press release announcing this quarter's results and are available in the investor relation section of our website at www.avid.com. For the purpose of understanding our future business model, we will also provide some forward-looking analysis on this call, on a non-GAAP and GAAP basis. Some of our GAAP financial measures are not assessable on a forward-looking basis and the differences between our future GAAP and non-GAAP financial measures could be substantial. And now I would like to turn the call over to Gary.

Gary Greenfield

Thank you Tom, and welcome to our conference call for the second quarter of 2010. Avid delivered a solid top line for Q2, with revenue growth for the quarter on a year-to-date basis. Revenues for both audio and video grew for the quarter for the first time since 2007. We reduced our loss compared to the same period last year and moved closer to profitability however the strengthening dollar particularly against European currencies created a significant head win for both revenue and earnings in the second quarter as over 50% of our businesses is transacted outside the United States. I want to discuss more about the business in a moment but will turn over the call over to Ken so he can discuss our financial results in more detail.

Ken Sexton

Thank you, Gary. Revenue for the second quarter was $162.2 million as compared to a $150.5 million for the same period in 2009. The GAAP net loss for the second quarter was $12.9 million or $0.34 per share. This compares to a GAAP net loss in the second quarter of last year of $15.9 million or $0.43 per share. Our non-GAAP net loss which excludes amortization of intangible assets, stock based compensation, restructuring and other charges, acquisition costs and related tax adjustments was $2 million for the second quarter for $0.05 per share. This compares to a non-GAAP net loss of $0.15 per share for the second quarter of 2009 and now I would like to provide a bit of color on the results for the second quarter.

Overall, revenue for the second quarter was up 8% year-on-year which is the highest growth rate we reported since 2007. Revenue from acquisitions contributed about 3 percentage points of growth while change in currency exchange rates adversely impacted revenue by about 1.5 percentage points compared to last year's second quarter. Our video revenues were $93.5 million, up about 5% compared to the second quarter 2009. This is the first quarter of year-on-year growth for video, since the fourth quarter of 2007. We continue to see strengthening in the broadcast market, demand for our shared storage products and most of our broadcast news related products increased in the second quarter compared to a year ago.

In addition, the recent release of Media Composer 5.0 provided a nice boost to our professional editor product line during the quarter. In audio, we had another solid quarter. Second quarter revenue was $68.6 million which represents 11% year-on-year increase. We continue to see strong demand for our live systems line of products with our year-to-date revenue up 50% compared to the first six months of 2009.

Our professional audio products also continue to have good growth compared to a year ago. Sales of our recently acquired Euphonix products contributed nicely to the quarter and accounted for approximately 6 percentage points of our year-on-year revenue growth in audio.

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