Accelrys, Inc. (NASDAQ: ACCL) today reported financial results
for the fiscal quarter ended September 30, 2012, including a
14% year-over-year increase in Non-GAAP revenue.
Non-GAAP revenue for the quarter ended September 30, 2012
increased $5.4 million to $43.4 million from $38.0 million for the
same quarter of the previous year, or an increase of 14%. Non-GAAP
revenue for the nine months ended September 30, 2012,
increased $12.6 million to $126.8 million from $114.1 million for
the same period of the previous year, or an increase of 11%.
Non-GAAP net income was $6.3 million, or $0.11 per diluted
share, for the quarter ended September 30, 2012 compared to
non-GAAP net income of $5.4 million, or $0.10 per diluted share,
for the same quarter of the previous year. Non-GAAP net income was
$15.1 million, or $0.27 per diluted share, for the nine months
ended September 30, 2012 compared to non-GAAP net income of
$14.5 million, or $0.26 per diluted share, for the same period of
the previous year.
GAAP revenue for the quarter ended September 30, 2012
increased $4.2 million to $40.5 million from $36.3 million for the
same quarter of the previous year, or an increase of 12%. GAAP
revenue for the nine months ended September 30, 2012 increased
$13.8 million to $118.3 million from $104.6 million for the same
period of the previous year, or an increase of 13%.
GAAP net income was $0.6 million, or $0.01 per diluted share,
for the current quarter compared to GAAP net loss of $(2.2)
million, or $(0.04) per diluted share, for the same quarter of the
previous year. GAAP net loss was $(2.2) million, or $(0.04) per
diluted share, for the nine months ended September 30, 2012
compared to GAAP net loss of $(12.4) million, or $(0.22) per
diluted share, for the same period of the previous year.
“We delivered excellent results again this quarter, including
double digit revenue growth for the second quarter in a row,” said
Max Carnecchia, President & CEO of Accelrys. “We also just
concluded the acquisition of Aegis Analytical Corporation, thereby
continuing to execute on our strategy of extending our portfolio
from early research downstream into development, quality and
manufacturing. I am pleased to welcome the Aegis team to Accelrys
and look forward to the strategic value we will bring to our
customers through this combination.”
Recent Business Highlights:
- Announced the acquisition of Aegis
Analytical Corporation, expanding Accelrys' portfolio with
industry-leading enterprise process intelligence capabilities.
Aegis software will be become part of the Accelrys Process
Management and Compliance suite, providing organizations with
unmatched insights into their product development, quality and
manufacturing processes.
- Announced the new integrated Accelrys
Process Management and Compliance Suite, improving the way
businesses manage the scientific innovation lifecycle by bringing
products to market faster and at a lower cost, while meeting
critical quality and regulatory compliance objectives.
- Announced the latest release of
Accelrys Electronic Laboratory Notebook (formerly Symyx Notebook by
Accelrys), offering new capabilities that deliver a more complete
biology solution for the fastest growing area of drug discovery and
development.
Non-GAAP results for the three and nine months ended
September 30, 2012 exclude the impact of business combination
activities associated with the acquisitions of Contur Industry
Holding AB and Contur Software AB (collectively, “Contur”) and
VelQuest Corporation (“VelQuest”), both in 2011, and the merger
with Symyx Technologies, Inc. (“Symyx”) in 2010, and other
nonrecurring items.
Non-GAAP revenue, non-GAAP operating loss, and non-GAAP net
income for the three and nine months ended September 30, 2012
include fair value adjustments to deferred revenue ($2.9 million
and $8.4 million, respectively). Non-GAAP operating income for such
three and nine-month periods also excludes stock-based compensation
expense ($2.0 million and $5.6 million, respectively), business
consolidation, transaction and restructuring costs ($0.7 million
and $1.3 million, respectively) and purchased intangible asset
amortization ($4.2 million and $12.6 million, respectively), offset
by an adjustment to include acquisition-related cost of revenue
related to VelQuest non-GAAP revenue recognized during such periods
($0.5 million and $1.2 million, respectively). In addition to the
aforementioned items, non-GAAP net income for the same periods
includes fair value adjustments to deferred royalty income ($0.2
million and $0.6 million, respectively) and excludes additional
purchased intangible asset amortization ($0.4 million and $1.3
million, respectively) offset by removing the impact of the
amortization of note receivable discount related to our promissory
note receivable from Intermolecular, Inc. (“Intermolecular”) ($0.3
million and $0.7 million, respectively). Non-GAAP net income for
the nine months ended September 30, 2012 also excludes $2.1
million in other income resulting from our real estate related
activities.
Calendar Year 2012 Outlook
For the year ending December 31, 2012, the Company expects
non-GAAP revenue to be between $169 and $171 million, and non-GAAP
diluted earnings per share to be between $0.32 and $0.33 per
diluted share on fully diluted weighted average shares outstanding
of 56 million and using an effective tax rate of 40%.
Non-GAAP Financial Measures:
This press release describes financial measures for revenue,
operating income, net income, net income per diluted share and free
cash flow that exclude deferred revenue fair value adjustments,
acquisition-related cost of revenue, business consolidation,
transaction and restructuring costs, stock-based compensation
expense, purchased intangible asset amortization, royalty income
fair value adjustments, amortization of note receivable discount,
gain on sale of real estate, write-off of lease related assets and
income tax adjustments. These financial measures are not calculated
in accordance with generally accepted accounting principles (GAAP)
and are not based on any comprehensive set of accounting rules or
principles.
Management believes these non-GAAP financial measures provide a
useful measure of the Company's operating results, a meaningful
comparison with historical results and with the results of other
companies, and insight into the Company's ongoing operating
performance. Further, management and the Board of Directors utilize
these measures, in addition to GAAP measures, when evaluating and
comparing the Company's operating performance against internal
financial forecasts and budgets. These non-GAAP financial measures
should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
In addition, these non-GAAP financial measures may be different
from non-GAAP financial measures used by other companies.
For additional information on the items excluded by the Company
from its non-GAAP financial measures please refer to the
Form 8-K regarding this release that was furnished today to
the Securities and Exchange Commission.
The following table contains a reconciliation of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures (unaudited, amounts in thousands, except per share
amounts, including footnotes):
Three Months Ended Nine Months Ended
September 30, September 30, 2012
2011 2012 2011 GAAP revenue $ 40,499 $
36,251 $ 118,332 $ 104,577 Deferred revenue fair value adjustment1
2,911 1,732 8,426 9,571 Non-GAAP
revenue $ 43,410 $ 37,983 $ 126,758 $ 114,148
GAAP operating loss (942 ) (2,898 ) (7,851 ) (16,775
) Deferred revenue fair value adjustment1 2,911 1,732 8,426 9,571
Acquisition-related cost of revenue2 (454 ) — (1,159 ) — Business
consolidation, transaction and restructuring costs3 658 2,266 1,262
6,234 Stock-based compensation expense4 1,971 1,464 5,610 4,148
Purchased intangible asset amortization5 4,215 4,739
12,583 13,601 Non-GAAP operating income $ 8,359 $
7,303 $ 18,871 $ 16,779 Depreciation expense 851 956 2,453 2,877
Cash received for interest and royalty income 2,092 1,963 7,263
7,305 Cash (paid) for income taxes, net of refunds received (448 )
(215 ) (2,492 ) 1,335 Capital expenditures (998 ) (680 ) (3,289 )
(2,974 ) Non-GAAP free cash flow 9,856 9,327 22,806
25,322
GAAP net income (loss) $ 601 $ (2,206 ) $ (2,173 ) $ (12,440 )
Deferred revenue fair value adjustment1 2,911 1,732 8,426 9,571
Acquisition-related cost of revenue2 (454 ) — (1,159 ) — Business
consolidation, transaction and restructuring costs 3 658 2,266
1,262 6,234 Stock-based compensation expense4 1,971 1,464 5,610
4,148 Purchased intangible asset amortization5 4,639 5,330 13,854
15,374 Royalty income fair value adjustment6 200 200 600 603
Amortization of note receivable discount7 (274 ) — (662 ) — Gain on
sale of real estate8 — — (2,744 ) — Write-off of lease related
assets9 — — 670 — Income tax10 (3,909 ) (3,400 ) (8,616 ) (8,998 )
Non-GAAP net income $ 6,343 $ 5,386 $ 15,068 $
14,492 GAAP diluted net income (loss) per share $
0.01 $ (0.04 ) $ (0.04 ) $ (0.22 ) Deferred revenue fair value
adjustment1 0.05 0.03 0.15 0.17 Acquisition-related cost of
revenue2 (0.01 ) — (0.02 ) — Business consolidation, transaction
and restructuring costs3 0.01 0.04 0.02 0.11 Stock-based
compensation expense4 0.03 0.03 0.10 0.07 Purchased intangible
asset amortization5 0.08 0.10 0.25 0.27 Royalty income fair value
adjustment6 — — 0.01 0.01 Amortization of note receivable discount7
— — (0.01 ) — Gain on sale of real estate8 — — (0.05 ) — Write-off
of lease related assets9 — — 0.01 — Income tax10 (0.07 ) (0.06 )
(0.15 ) (0.16 ) Non-GAAP diluted net income per share11 $ 0.11
$ 0.10 $ 0.27 $ 0.26 Weighted average
shares used to compute net income per share: Basic 55,690 55,373
55,767 55,420 Diluted 56,396 55,631 56,532 56,036
1Deferred revenue fair value adjustment
relates to our merger with Symyx and acquisitions of Contur and
VelQuest, and adds back the impact of writing down the acquired
historical deferred revenue to fair value as required by purchase
accounting guidance.2Acquisition-related cost of revenue relates to
our acquisition of VelQuest, and adds back the impact of writing
down the acquired deferred cost of revenue as required by purchase
accounting guidance.3Business consolidation, transaction and
restructuring costs are included in the business consolidation,
transaction and restructuring costs line in our consolidated
statements of operations and consist of accounting, legal, and
other fees incurred in connection with our acquisition activities,
including our merger with Symyx and acquisitions of Contur and
VelQuest, as well as integration costs incurred in connection with
such transactions, including consultant and employee related costs
incurred during integration and transition periods. Also included
are contingent compensation costs relating to the Contur
acquisition as well as lease obligation exit costs, facility
closure costs and severance and other related costs incurred in
connection with the various restructuring activities commenced by
the Company.4Stock-based compensation expense is included in our
consolidated statements of operations as follows:
Three Months Ended Nine Months Ended
September 30, September 30, 2012
2011 2012 2011 Cost of revenue $ 204 $
79 $ 493 $ 216 Product development 490 356 1,246 823 Sales and
marketing 438 425 1,692 1,310 General and administrative 891 665
2,226 1,808 Business consolidation, transaction and restructuring
costs (52 ) (61 ) (47 ) (9 ) Total stock-based compensation expense
$ 1,971 $ 1,464 $ 5,610 $ 4,148
5Purchased intangible asset amortization is
included in our consolidated statements of operations as
follows:
Three Months Ended Nine Months Ended
September 30, September 30, 2012
2011 2012 2011 Amortization of
completed technology $ 2,108 $ 2,184 $ 6,263 $ 6,258 Purchased
intangible asset amortization 2,107 2,555 6,320 7,343 Royalty and
other income, net 424 591 1,271 1,773 Total
purchased intangible amortization expense $ 4,639 $ 5,330
$ 13,854 $ 15,374
6Royalty income fair value adjustment relates
to our merger with Symyx, and adds back the impact of writing down
deferred royalty income to fair value as required by purchase
accounting guidance.7Amortization of note receivable discount
adjusts the amortization of the discount on our promissory note
receivable from Intermolecular in connection with the sale of
intellectual property in November 2011.8Gain on sale of real estate
relates to the sale of real property, comprised of land and an
office building located in Santa Clara, California, which we sold
in June 2012. This property was acquired as a result of our merger
with Symyx and was not utilized in our ongoing
operations.9Write-off of lease related assets relates to the write
off in June 2012 of certain assets in connection with exiting the
lease of a restructured facility.10Income tax adjustments relate to
adjusting our non-GAAP operating results to reflect an effective
tax rate of 40% that would be applied if the Company was in a
taxable income position and was not able to utilize its net
operating loss carryforwards. The income tax adjustment also
excludes any impact of a release of our valuation allowance against
deferred tax assets.11Earnings per share amounts for the three and
nine months ended September 30, 2011 do not add due to
rounding.
Conference Call Details:
At 5:00 p.m. ET, October 31, 2012, Accelrys will conduct a
conference call to discuss its financial results. To participate,
please dial (866) 309-0459 (+ (937) 999-3232 outside the United
States) and enter the access code, 52587820, approximately 15
minutes before the scheduled start of the call. The conference call
will also be accessible live on the Investor Relations section of
the Accelrys website at www.accelrys.com.
A replay of the conference call will be available online at
www.accelrys.com and via telephone by dialing (855) 859-2056 (+1
(404) 537-3406 outside the United States) and entering access code,
52587820, beginning 8:00 p.m. ET on October 31, 2012 through 11:59
p.m. ET on December 31, 2012.
About Accelrys:
Accelrys (NASDAQ:ACCL), a leading scientific enterprise R&D
software and services company, supports industries and
organizations that rely on scientific innovation to differentiate
themselves. The industry-leading Accelrys Enterprise Platform
provides a broad, flexible scientific solution optimized to
integrate the diversity of science, experimental processes and
information requirements across the research, analytical,
development, and quality phases of product development. By
incorporating capabilities in applications for modeling and
simulation, enterprise lab management, and workflow and automation,
Accelrys enables scientific innovators to access, organize, analyze
and share data in unprecedented ways, ultimately enhancing
innovation, improving productivity and compliance, reducing costs
and speeding time from lab to market.
Headquartered in San Diego, Calif., Accelrys solutions are used
by more than 1,300 customers in the pharmaceutical, biotechnology,
energy, chemicals, aerospace, consumer packaged goods and
industrial products industries and employs more than 200 full-time
Ph.D. scientists. For more information about Accelrys, visit
www.accelrys.com.
Forward-Looking Statements:
Statements contained in this press release relating to the
Company's or management's intentions, hopes, beliefs, expectations
or predictions of the future, including, but not limited to,
statements relating to the Company's expected non-GAAP revenue and
diluted earnings per share for the year ending December 31, 2012
and statements relating to the Company's long-term prospects and
execution of its strategic growth and acquisition-related
initiatives, are forward-looking statements. Such forward-looking
statements are subject to a number of risks and uncertainties,
including, but not limited to, risks that the Company will not
achieve its expected non-GAAP revenue or diluted earnings per share
for the year ending December 31, 2012 and/or that the Company will
not successfully execute its strategic growth and
acquisition-related initiatives, in each case due to, among other
possibilities, an inability to withstand negative conditions in the
global economy or a lack of demand for or market acceptance of the
Company's products. Additional risks and uncertainties faced by the
Company are contained from time to time in the Company's filings
with the U.S. Securities and Exchange Commission, including, but
not limited to, the Company's Annual Report on Form 10-K for the
year ended December 31, 2011, quarterly reports on Form 10-Q and
current reports on Form 8-K. Collectively, these risks and
uncertainties could cause the Company's actual results to differ
materially from those projected in its forward-looking statements,
and the Company disclaims any intention or obligation to revise any
forward-looking statements whether as a result of new information,
future events or otherwise.
ACCELRYS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2012
2011 2012 2011 Revenue: License and
subscription revenue
$
23,195
$ 20,127 $ 66,291 $ 58,194 Maintenance on perpetual licenses 9,600
9,166 28,219 25,561 Content 2,919 4,248 9,494 12,568 Professional
services and other 4,785 2,710 14,328
8,254 Total revenue 40,499 36,251
118,332 104,577 Cost of revenue: Cost of revenue
9,839 8,349 29,734 26,564 Amortization of completed technology
2,108 2,184 6,263 6,258 Total
cost of revenue 11,947 10,533 35,997
32,822 Gross profit 28,552 25,718 82,335 71,755 Operating
expenses: Product development 9,658 8,261 28,957 25,198 Sales and
marketing 12,765 11,516 40,443 37,344 General and administrative
4,358 4,079 13,251 12,420 Business consolidation, transaction and
restructuring costs 606 2,205 1,215 6,225 Purchased intangible
asset amortization 2,107 2,555 6,320
7,343 Total operating expenses 29,494 28,616
90,186 88,530 Operating loss (942 ) (2,898 )
(7,851 ) (16,775 ) Royalty and other income, including gain on sale
of real estate, net
1,863 882 7,107 4,999 Income
(loss) before taxes 921 (2,016 ) (744 ) (11,776 ) Income tax
expense 320 190 1,429 664 Net
income (loss) $ 601 $ (2,206 ) $ (2,173 ) $ (12,440 )
Net income (loss) per share amounts: Basic $ 0.01 $ (0.04 )
$ (0.04 ) $ (0.22 ) Diluted $ 0.01 $ (0.04 ) $ (0.04 ) $ (0.22 )
Weighted average shares used to compute net income (loss) per
share: Basic 55,690 55,373 55,767 55,420 Diluted 56,396 55,373
55,767 55,420
ACCELRYS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands)
September 30, 2012 December 31,
2011 (unaudited) (audited) Assets Cash,
cash equivalents, and marketable securities1 $ 160,114 $ 143,624
Trade receivables, net 16,694 40,706 Notes receivable 34,836 34,720
Other assets, net2 175,388 188,836 Total assets $ 387,032
$ 407,886
Liabilities and stockholders’ equity
Current liabilities, excluding deferred revenue 22,935 36,582
Deferred revenue, including current portion3 79,786 86,012 Deferred
gain, including current portion4 25,974 25,974 Non-current
liabilities, excluding deferred revenue and deferred gain5 10,730
10,634 Total stockholders’ equity 247,607 248,684 Total
liabilities and stockholders’ equity $ 387,032 $ 407,886
1Cash, cash equivalents, and marketable
securities consist of the following line items in our consolidated
balance sheet: Cash and cash equivalents; Marketable securities;
Marketable securities, net of current portion; and Restricted
cash.2Other assets, net, consists of the following line items in
our consolidated balance sheet: Prepaid expenses, deferred tax
assets and other current assets; Property and equipment, net;
Goodwill; Purchased intangible assets, net; and Other assets.3Total
deferred revenue consists of the following line items in our
consolidated balance sheet: Current portion of deferred revenue;
and Deferred revenue, net of current portion.4Total deferred gain
consists of the following line items in our consolidated balance
sheet: Current portion of deferred gain on sale of intellectual
property; and Deferred gain on sale of intellectual property, net
of current portion.5Noncurrent liabilities, excluding deferred
revenue and deferred gain consists of the following line items in
our consolidated balance sheet: Accrued income tax; Accrued
restructuring charges, net of current portion and Lease-related
liabilities, net of current portion.
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