Avid® (NASDAQ: AVID), a leading technology provider that powers the
media and entertainment industry, today announced its financial
results for the fourth quarter and full year ended December 31,
2022.
As reported, fourth quarter revenue was $116.1 million, a
decrease of (2.5%) year-over-year, net income was $25.3 million, an
increase of 66.0% year-over-year, Adjusted EBITDA was $24.8
million, a decrease of (0.6%) year-over-year, net income per common
share was $0.57, an increase of $0.24 year-over-year, and Non-GAAP
Earnings per Share was $0.45, a decrease of ($0.01) year-over year.
Revenue was in the middle of our implied Q4 guidance range,
Adjusted EBITDA was below our implied Q4 guidance range and
Non-GAAP Earnings per Share was within our implied Q4 guidance
range.
During the fourth quarter, we recorded a one-time, non-cash
adjustment to revenue of ($3.3 million) related to a corrective
change in methodology for calculating standalone selling price for
subscription term-based licenses in the amount of $0.1 million for
FY 2020, ($2.1 million) for FY 2021 and ($1.3 million) for the nine
months ending September 30, 2022, as outlined in our 10-K filed
today. The adjustment related to the period from FY 2020 to FY 2022
and represented 0.3% of the total revenue over the three years. The
adjustment also negatively impacted net income and Adjusted EBITDA
in the fourth quarter, but had no impact on net cash provided by
operating activities, Free Cash Flow or ARR.
Excluding the adjustment, fourth quarter revenue would have been
$119.4 million, an increase of 0.3% year-over-year (or 4.4% at
constant currency), net income would have been $27.7 million, an
increase of 82.0% year-over year (or 97.3% at constant currency),
Adjusted EBITDA would have been $27.2 million, an increase of 9.2%
year-over year (or 17.9% at constant currency), net income per
common share would have been $0.63, an increase of $0.30 year-over
year (or an increase of $0.34 at constant currency) and Non-GAAP
Earnings per Share would have been $0.51, an increase of $0.05
year-over-year (or an increase of $0.10 at constant
currency). Excluding the adjustment, revenue and
Non-GAAP Earnings per Share would have been in the high end of our
implied Q4 guidance range and Adjusted EBITDA would have been
within our implied Q4 guidance range.
The recurring components of the Company’s revenue remained
strong during the fourth quarter as paid subscriptions reached
506,000 as of the end of 2022, an increase of 23.2% year-over-year.
Subscription ARR was $141.3 million (as of December 31, 2022), an
increase of 37.1% year-over-year, and total ARR was $244.9 million
(as of December 31, 2022), an increase of 10.2% year-over-year. At
constant currency, subscription ARR increased 38.8% year-over-year
and total ARR increased 13.4% year-over-year. In the
fourth quarter, integrated solutions revenue was $40.8 million, an
increase of 55% sequentially, as we continued to work to resolve
supply chain challenges. As a result of continued strong integrated
solutions orders during the fourth quarter, the backlog of
unshipped orders was reduced during the quarter but remained above
what we believe to be normal levels as of the end of 2022, at over
$20 million.
Net cash provided by operating activities was $22.5 million in
the fourth quarter and $48.0 million for FY 2022. Free Cash Flow
was $18.3 million in the fourth quarter and $32.8 million for FY
2022. Free Cash Flow was lower year-over-year due to a greater use
of cash in working capital, primarily from timing of cash billings
related to multi-year enterprise subscriptions. In addition, higher
capital expenditures, prepaid expenses due to our temporary Digital
Transformation Initiative (DTI) investments and capitalized
software development also negatively impacted Free Cash Flow. The
Company expects that Free Cash Flow will be higher in 2023, as
outlined in our guidance below.
Fourth Quarter 2022 Financial and Business
Highlights
- Paid Cloud-enabled software
subscriptions increased by approximately 23,100 during the quarter
to approximately 506,000 as of December 31, 2022, an increase of
23.2% year-over-year.
- Subscription ARR was $141.3 million,
an increase of 37.1% year-over-year. At constant currency,
Subscription ARR increased 38.8% year-over-year.
- Total ARR was $244.9 million, an
increase of 10.2% year-over-year. At constant currency, ARR
increased 13.4% year-over-year.
- Subscription revenue was $42.5
million, an increase of 24.6% year-over-year. At constant currency,
subscription revenue increased 29.6% year-over-year.
Excluding the one-time adjustment in the quarter, subscription
revenue would have increased 34.3% year-over-year and 39.2%
year-over-year at constant currency.
- Subscription and maintenance revenue
was $68.9 million, an increase of 5.3% year-over-year. At constant
currency, Subscription and maintenance revenue increased 9.3%
year-over-year. Excluding the one-time adjustment in
the quarter, subscription and maintenance revenue would have
increased 10.3% year-over-year and 14.3% year-over-year at constant
currency.
- Total revenue was $116.1 million, a
decrease of (2.5%) year-over-year. At
constant-currency, total revenue increased 1.7% year-over-year.
Excluding the one-time adjustment in the quarter, total revenue
would have increased 0.3% year-over-year and 4.4% year-over-year at
constant currency.
- Gross margin was 64.2%, a decrease
of (160 basis points) year-over-year and Non-GAAP Gross Margin was
64.6%, a decrease of (160 basis points)
year-over-year.
- Operating expenses were $58.0
million, a decrease of (5.2%) year-over-year. Non-GAAP
Operating Expenses were $52.5 million, a decrease of (5.9%)
year-over-year.
- Net income was $25.3 million, an
increase of 66.0% year-over-year, due in part to a one-time
non-cash tax benefit of $11.3 million in Q4 2022. Net
income was 21.8% of revenue. Non-GAAP Net Income was $19.9 million,
a decrease of (4.5%) year-over-year. Non-GAAP Net Income was 17.2%
of revenue. Excluding the one-time adjustment in the quarter, net
income would have increased 82.0% year-over-year and 97.3%
year-over-year at constant currency, and Non-GAAP Net Income would
have increased 7.1% year-over-year and 17.9% year-over-year at
constant currency.
- Adjusted EBITDA was $24.8 million, a
decrease of (0.6%) year-over-year. At constant-currency, Adjusted
EBITDA increased 8.0% year-over-year. Adjusted EBITDA Margin was
21.4%, an increase of 40 basis points year-over-year.
Excluding the one-time adjustment in the quarter, Adjusted EBITDA
increased 9.2% year-over-year and 17.9% year-over-year at constant
currency.
- Net income per common share was
$0.57, an increase of $0.24 year-over-year, due in part to the
one-time non-cash tax benefit in Q4 2022 mentioned above. Non-GAAP
Earnings per Share was $0.45, a decrease of ($0.01)
year-over-year. Excluding the one-time adjustment in
the quarter, Net income per common share would have increased $0.30
year-over-year and $0.34 year-over-year at constant currency, and
Non-GAAP Earnings per Share would have increased $0.05
year-over-year and $0.10 year-over-year at constant currency.
- Net cash provided by operating
activities was $22.5 million in the quarter, a decrease of ($4.6)
million compared to the prior year period.
- Free Cash Flow was $18.3 million in
the quarter, a decrease of ($6.7) million compared to the fourth
quarter of 2022, due to the items mentioned above.
- The Company repurchased 364,760
shares for $9.3 million during the fourth quarter, under the $115
million share repurchase authorization announced on September 9,
2021.
FY 2022 Financial and Business Highlights
- Paid Cloud-enabled software
subscriptions increased during the year by approximately 95,400 to
approximately 506,000 as of December 31, 2022, an increase of 23.2%
year-over-year.
- Subscription revenue was $151.3
million, an increase of 39.5% year-over-year. At constant currency,
subscription revenue increased 44.7% year-over-year.
Excluding the one-time adjustment in the fourth quarter,
subscription revenue would have increased 42.6% year-over-year and
47.7% year-over-year at constant currency.
- Subscription and maintenance revenue
was $261.2 million, up 13.1% year-over-year. At constant currency,
Subscription and maintenance revenue increased 16.4%
year-over-year. Excluding the one-time adjustment in
the fourth quarter, subscription and maintenance revenue would have
increased 14.6% year-over-year and 17.8% year-over-year at constant
currency.
- Total revenue was $417.4 million, an
increase of 1.8% year-over-year. At constant-currency, total
revenue increased 5.3% year-over-year. Excluding the
one-time adjustment in the fourth quarter, total revenue would have
increased 2.6% year-over-year and 6.1% year-over-year at constant
currency.
- Gross margin was 65.7%, an increase
of 90 basis points year-over-year. Non-GAAP Gross Margin was 66.2%,
an increase of 90 basis points year-over-year.
- Operating expenses were $220.6
million, an increase of 0.5% year-over-year. Non-GAAP Operating
Expenses were $203.3 million, an increase of 1.4%
year-over-year.
- Net income was $55.2 million, an
increase of 33.5% year-over-year, due in part to the one-time
non-cash tax benefit in Q4 2022 mentioned above. Net
income was 13.2% of revenue. Non-GAAP Net Income was $63.3 million,
an increase of 9.3% year-over-year. Non-GAAP Net Income was 15.2%
of revenue. Excluding the one-time adjustment in the
quarter, net income would have increased 39.4% year-over year and
59.2% year-over-year at constant currency, and Non-GAAP Net Income
would have increased 13.5% year-over-year and 26.4% year-over-year
at constant currency.
- Adjusted EBITDA was $81.6 million,
an increase of 8.1% year-over-year. At constant-currency, Adjusted
EBITDA increased 17.9% year-over-year. Adjusted EBITDA
Margin was 19.5%, an increase of 110 basis points year-over-year.
Excluding the one-time adjustment in the fourth quarter, Adjusted
EBITDA would have increased 11.3% year-over-year and 21.3%
year-over-year at constant currency.
- Net income per common share was
$1.23, an increase of $0.34 year-over-year, due in part to the
one-time non-cash tax benefit in Q4 2022 mentioned above. Non-GAAP
Earnings per Share was $1.41, an increase of $0.16
year-over-year. Excluding the one-time adjustment in
the quarter, Net income per common share would have increased $0.40
year-over-year and $0.55 year-over-year at constant currency, and
Non-GAAP Earnings per Share would have increased $0.22
year-over-year and $0.37 year-over-year at constant currency.
- Net cash provided by operating
activities was $48.0 million in 2022, a decrease of (23.2%)
year-over-year.
- Free Cash Flow was $32.8 million in
2022, a decrease of (41.1%) year-over-year, due to the items
mentioned above.
- LTM Recurring Revenue % was 84.5% of
the Company’s revenue for the year-ended 2022, up from 78.0% for
the prior year period.
- The Company repurchased 2,036,524
shares for $52.8 million during 2022, under the $115 million share
repurchase authorization announced on September 9, 2021.
Jeff Rosica, Avid’s Chief Executive Officer and President,
stated, “We remain pleased with the overall business performance in
the fourth quarter as we continue to see strong growth in our
software subscription business for both creative and enterprise
customers. Our customers continue to adopt our enterprise
subscription offerings, which, combined with creative subscription
growth, resulted in solid growth in ARR. In addition, we continued
making progress in resolving supply chain challenges in our
integrated solutions that we experienced throughout
2022.” Mr. Rosica added, “While the one-time, non-cash
adjustment to revenue we took in the fourth quarter impacted our
results for the quarter, absent this adjustment, we would have been
at the high-end of our implied Q4 guidance range for revenue and
Non-GAAP Earnings per Share, and so, as we start 2023, we are
confident in the underlying performance of the business as our
product innovations continue to drive strong customer demand for
our solutions.”
Ken Gayron, Executive Vice President and Chief Financial Officer
of Avid, said, “We continued to make substantial progress in
driving our higher gross margin subscription and maintenance
revenue during the fourth quarter, which together accounted for 59%
of our total revenue in the quarter. This growth, combined with
lower operating expenses, enabled us to deliver solid profitability
in 2022 and, we believe, positions us well as we enter 2023.” Mr.
Gayron continued, “Given the importance of ARR as a measure of the
growth of our subscription and maintenance business, we have added
ARR to our forward guidance for Q1 and FY 2023. Additionally, given
our high confidence in our strategy and long-term model, we
continued to repurchase shares in the fourth quarter under the
Company’s share repurchase program.”
First Quarter and Full Year 2023 Guidance
For the first quarter of 2023, Avid is providing guidance for
ARR, Revenue, Subscription & Maintenance Revenue, Non-GAAP
Earnings per Share, and Adjusted EBITDA. For the full year 2023,
Avid is providing guidance for ARR, Revenue, Subscription &
Maintenance Revenue, Non-GAAP Earnings per Share, Adjusted EBITDA,
and Free Cash Flow, as adjusted.
($ in
millions, except per share amounts) |
Q1 2023 Guidance |
ARR, at end of period |
$247 -
$251 |
Revenue |
$97 -
$105 |
Subscription & Maintenance Revenue |
$63 -
$67 |
Non-GAAP Earnings per Share |
$0.21 -
$0.29 |
Adjusted EBITDA |
$16 -
$20 |
Q1 Non-GAAP Earnings per Share assumes 44.2 million
shares outstanding. |
|
|
|
Full Year 2023 Guidance |
ARR, at end of period |
$270 -
$280 |
Revenue |
$447 -
$472 |
Subscription & Maintenance Revenue |
$292 -
$302 |
Non-GAAP Earnings per Share |
$1.53 -
$1.75 |
Adjusted EBITDA |
$95 -
$105 |
Free Cash Flow, as adjusted |
$50 -
$60 |
2023 Non-GAAP Earnings per Share assumes 43.5
million shares outstanding. Free Cash Flow, as
adjusted, excludes $7.0 million expected cash costs for
restructuring. |
All guidance presented by the Company is inherently uncertain
and subject to numerous risks and uncertainties. Avid’s actual
future results of operations could differ materially from those
shown in the table above. For a discussion of some of the key
assumptions underlying the guidance, as well as the key risks and
uncertainties associated with these forward-looking statements,
please see “Forward-Looking Statements” below as well as the Avid
Technology Q4 and FY 2022 Earnings presentation posted on Avid’s
Investor Relations website at ir.Avid.com.
Conference Call to Discuss Fourth Quarter and FY 2022
Results on March 1, 2023
Avid will host a conference call to discuss its financial
results for the fourth quarter and FY 2022 on Wednesday, March 1,
2023, at 5:30 p.m. ET. Participants may join the webcast in
listen-only mode and access the presentation slides using the link
on the Avid Investor Relations website, which can be found on the
Events & Presentations tab at ir.Avid.com. Please connect at
least 5 minutes in advance to ensure a timely connection to the
call. A replay of the call will also be available for a limited
time and can be accessed on the Events & Presentations tab of
the Avid Investor Relations website shortly after the completion of
the call.
Corrective Change in Methodology for Calculating
Standalone Selling Price
More information on the one-time, non-cash adjustment taken
during the fourth quarter to correct an immaterial error in
methodology for calculating standalone selling price for
subscription term-based licenses in prior periods is detailed in
Management's Discussion and Analysis and the Notes to Consolidated
Financial Statements in our 10-K filed today.
Non-GAAP Financial Measures and Operational
Metrics
Avid includes non-GAAP financial measures in this press release,
including Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow,
Non-GAAP Gross Margin, Non-GAAP Operating Expenses, Non-GAAP Net
Income, and Non-GAAP Earnings per Share. The Company also includes
the operational metrics of Cloud-enabled software subscriptions,
Annual Recurring Revenue, Recurring Revenue, LTM Recurring Revenue
% and Annual Contract Value in this release. Avid believes the
non-GAAP financial measures and operational metrics provided in
this release provide helpful information to investors with respect
to evaluating the Company’s performance. Unless noted, all
financial and operating information is reported based on actual
exchange rates. Constant currency growth rates are calculated using
the same historical budget exchange rates for both the historical
and current periods. Definitions of the non-GAAP financial measures
and the operational metrics are included in our Form 8-K filed
today. Reconciliations of the non-GAAP financial measures presented
in this press release to the Company's comparable GAAP financial
measures for the periods presented are set forth below and are
included in the supplemental financial and operational data sheet
available on our Investor Relations website at ir.Avid.com, which
also includes definitions of all operational metrics.
This press release also includes expectations for future
Adjusted EBITDA, Non-GAAP Earnings per Share and Free Cash Flow,
which are forward-looking non-GAAP financial measures.
Reconciliations of these forward-looking non-GAAP measures are not
included in this press release or elsewhere, due to the high
variability and difficulty in making accurate forecasts and
projections of some of the information excluded from the estimation
of the non-GAAP results, together with some of the excluded
information not being ascertainable or accessible at this time. As
a result, we are unable to quantify certain amounts that would be
required to be included in the most directly comparable GAAP
financial measure without unreasonable efforts.
Forward-Looking Statements
Certain information provided in this press release includes
forward-looking statements within the meaning of the Securities Act
of 1933 and the Securities Exchange Act of 1934, which are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Examples of forward-looking
statements include statements regarding our future financial
performance or position, results of operations, business strategy,
plans and objectives of management for future operations, and other
statements that are not historical fact. You can identify
forward-looking statements by their use of forward-looking words
such as “may”, “will”, “anticipate”, “expect”, “believe”,
“estimate”, “intend”, “plan”, “should”, “seek”, or other comparable
terms.
Readers of this press release should understand that these
forward-looking statements are not guarantees of performance or
results. Forward-looking statements provide our current
expectations and beliefs concerning future events and are subject
to risks, uncertainties, and factors relating to our business and
operations, all of which are difficult to predict and could cause
our actual results to differ materially from the expectations
expressed in or implied by such forward-looking statements.
These risks, uncertainties, and factors include, but are not
limited to: the effect of the continuing worldwide macroeconomic
uncertainty and its impacts, including inflation, market volatility
and fluctuations in foreign currency exchange and interest rates on
our business and results of operations, including impacts related
to acts of war, armed conflict, and cyber conflict, such as for
example, the Russian invasion of Ukraine, and related international
sanctions and reprisals; risks related to the impact of the ongoing
coronavirus (COVID-19) pandemic and subsequent variants on our
business, suppliers, consumers, customers and employees; economic,
social, and political instability, security concerns, and the risk
of war, armed conflict and/or cyber conflict, particularly
originating in, and complicated by, areas of heightened
geopolitical tension and open conflict such as Ukraine, where we
have outsourced research and development activities, Russia, and
bordering territories; our liquidity; our ability to execute our
strategic plan including our cost saving strategies, and to meet
customer needs; our ability to retain and hire key personnel; our
ability to produce innovative products in response to changing
market demand, particularly in the media industry; our ability to
successfully accomplish our product development plans; competitive
factors; history of losses; fluctuations in our revenue based on,
among other things, our performance and risks in particular
geographies or markets; the impact of changes in accounting
treatment interpretations over time; our higher indebtedness and
ability to service it and meet the obligations thereunder; our
ability to mitigate and remediate material weaknesses in our
internal controls; restrictions in our credit facilities; our move
to a subscription model and related effect on our revenues and
ability to predict future revenues; fluctuations in subscription
and maintenance renewal rates; elongated sales cycles; seasonal
factors; other adverse changes in external economic conditions;
variances in our revenue backlog and the realization thereof; risks
related to the availability and prices of raw materials, including
any negative effects caused by inflation, armed conflict and
related sanctions, weather conditions, or health pandemics;
disruptions, inefficiencies, and/or complications in our operations
and/or dynamic and unpredictable global supply chain, including
interruptions, delays, complications, and other impacts related to
armed conflict and/or cyber conflict and related international
sanctions and reprisals and the ongoing COVID-19 pandemic and
subsequent variants; the costs, disruption, and diversion of
management's attention due to the ongoing COVID-19 pandemic and
subsequent variants, armed conflict and/or cyber conflict and
related international sanctions and reprisals; the possibility of
legal proceedings adverse to our Company; and other risks described
in our reports filed from time to time with the U.S. Securities and
Exchange Commission. Moreover, the business may be adversely
affected by future legislative, regulatory or other changes,
including tax law changes, as well as other economic, business
and/or competitive factors. The risks included above are not
exhaustive. We caution readers not to place undue reliance on any
forward-looking statements included in this press release which
speak only as to the date of this press release. We undertake no
responsibility to update or revise any forward-looking statements,
except as required by law.
Avid Powers Greater Creators
People who create media for a living become greater creators
with Avid’s award-winning technology solutions to make, manage and
monetize today’s most celebrated video and audio content—from
iconic movies and bingeworthy TV series, to network news and
sports, to recorded music and the live stage. What began more than
35 years ago with our invention of nonlinear digital video editing
has led to individual artists, creative teams and organizations
everywhere subscribing to our powerful tools and collaborating
securely in the cloud. We continue to re-imagine the many ways
editors, musicians, producers, journalists and other content
creators will bring their stories to life. Discover the
possibilities at avid.com and join the conversation on social media
with the multitude of brilliant creative people who choose Avid for
a lifetime of success.
© 2023 Avid Technology, Inc., Avid and its logo are property of
Avid. All rights reserved. Other trademarks are property of their
respective owners.
Contacts
Investor
contact: |
PR
contact: |
Whit Rappole |
Jim Sheehan |
Avid |
Avid |
ir@Avid.com |
jim.sheehan@Avid.com |
AVID TECHNOLOGY, INC.
Consolidated Statements of Operations (unaudited -
in thousands except per share data)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net revenues: |
|
|
|
|
|
|
|
Subscriptions |
$ |
42,452 |
|
|
$ |
34,059 |
|
|
$ |
151,330 |
|
|
$ |
108,443 |
|
Maintenance |
|
26,463 |
|
|
|
31,414 |
|
|
|
109,845 |
|
|
|
122,411 |
|
Integrated solutions & other |
|
47,184 |
|
|
|
53,591 |
|
|
|
156,238 |
|
|
|
179,090 |
|
Total net revenues |
|
116,099 |
|
|
|
119,064 |
|
|
|
417,413 |
|
|
|
409,944 |
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
Subscriptions |
|
5,447 |
|
|
|
4,753 |
|
|
|
23,504 |
|
|
|
14,963 |
|
Maintenance |
|
4,534 |
|
|
|
5,846 |
|
|
|
19,913 |
|
|
|
22,981 |
|
Integrated solutions & other |
|
31,589 |
|
|
|
30,118 |
|
|
|
99,558 |
|
|
|
106,196 |
|
Total cost of revenues |
|
41,570 |
|
|
|
40,717 |
|
|
|
142,975 |
|
|
|
144,140 |
|
Gross profit |
|
74,529 |
|
|
|
78,347 |
|
|
|
274,438 |
|
|
|
265,804 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
17,035 |
|
|
|
16,920 |
|
|
|
66,904 |
|
|
|
65,559 |
|
Marketing and selling |
|
26,015 |
|
|
|
28,983 |
|
|
|
95,977 |
|
|
|
95,494 |
|
General and administrative |
|
14,948 |
|
|
|
15,158 |
|
|
|
57,189 |
|
|
|
57,372 |
|
Restructuring costs, net |
|
(2 |
) |
|
|
115 |
|
|
|
513 |
|
|
|
1,116 |
|
Total operating expenses |
|
57,996 |
|
|
|
61,176 |
|
|
|
220,583 |
|
|
|
219,541 |
|
|
|
|
|
|
|
|
|
Operating income |
|
16,533 |
|
|
|
17,171 |
|
|
|
53,855 |
|
|
|
46,263 |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(3,189 |
) |
|
|
(1,609 |
) |
|
|
(9,350 |
) |
|
|
(7,149 |
) |
Other income, net |
|
825 |
|
|
|
389 |
|
|
|
832 |
|
|
|
4,841 |
|
Income before income taxes |
|
14,169 |
|
|
|
15,951 |
|
|
|
45,337 |
|
|
|
43,955 |
|
(Benefit from) Provision for income taxes |
|
(11,091 |
) |
|
|
735 |
|
|
|
(9,904 |
) |
|
|
2,567 |
|
Net income |
$ |
25,260 |
|
|
$ |
15,216 |
|
|
$ |
55,241 |
|
|
$ |
41,388 |
|
|
|
|
|
|
|
|
|
Net income per common share – basic |
$ |
0.58 |
|
|
$ |
0.34 |
|
|
$ |
1.24 |
|
|
$ |
0.92 |
|
Net income per common share – diluted |
$ |
0.57 |
|
|
$ |
0.33 |
|
|
$ |
1.23 |
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding – basic |
|
43,836 |
|
|
|
45,061 |
|
|
|
44,531 |
|
|
|
45,101 |
|
Weighted-average common shares outstanding – diluted |
|
43,991 |
|
|
|
45,773 |
|
|
|
44,856 |
|
|
|
46,303 |
|
AVID TECHNOLOGY, INC.Reconciliations of
GAAP financial measures to Non-GAAP financial
measures(unaudited - in thousands except per share
data)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
GAAP revenue |
|
|
|
|
|
|
|
GAAP revenue |
$ |
116,099 |
|
|
$ |
119,064 |
|
|
$ |
417,413 |
|
|
$ |
409,944 |
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Profit |
|
|
|
|
|
|
|
GAAP gross profit |
$ |
74,529 |
|
|
$ |
78,347 |
|
|
$ |
274,438 |
|
|
$ |
265,804 |
|
Stock-based compensation |
|
461 |
|
|
|
439 |
|
|
|
2,064 |
|
|
|
1,801 |
|
Non-GAAP Gross Profit |
$ |
74,990 |
|
|
$ |
78,786 |
|
|
$ |
276,502 |
|
|
$ |
267,605 |
|
GAAP Gross Margin |
|
64.2 |
% |
|
|
65.8 |
% |
|
|
65.7 |
% |
|
|
64.8 |
% |
Non-GAAP Gross Margin |
|
64.6 |
% |
|
|
66.2 |
% |
|
|
66.2 |
% |
|
|
65.3 |
% |
|
|
|
|
|
|
|
|
Non-GAAP Operating Expenses |
|
|
|
|
|
|
|
GAAP operating expenses |
$ |
57,996 |
|
|
$ |
61,176 |
|
|
$ |
220,583 |
|
|
$ |
219,541 |
|
Less Amortization of intangible assets |
|
(37 |
) |
|
|
(73 |
) |
|
|
(189 |
) |
|
|
(388 |
) |
Less Stock-based compensation |
|
(5,029 |
) |
|
|
(3,208 |
) |
|
|
(14,440 |
) |
|
|
(12,681 |
) |
Less Restructuring costs, net |
|
2 |
|
|
|
(115 |
) |
|
|
(513 |
) |
|
|
(1,116 |
) |
Less Acquisition, integration and other costs |
|
(75 |
) |
|
|
(985 |
) |
|
|
(506 |
) |
|
|
(3,068 |
) |
Less Efficiency program costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(48 |
) |
Less Digital Transformation costs |
|
(371 |
) |
|
|
(1,028 |
) |
|
|
(1,685 |
) |
|
|
(1,836 |
) |
Less COVID-19 related expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(22 |
) |
Non-GAAP Operating Expenses |
$ |
52,486 |
|
|
$ |
55,767 |
|
|
$ |
203,250 |
|
|
$ |
200,382 |
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Income and Adjusted EBITDA |
|
|
|
|
|
|
|
GAAP net income |
$ |
25,260 |
|
|
$ |
15,216 |
|
|
$ |
55,241 |
|
|
$ |
41,388 |
|
Interest and other expense |
|
2,364 |
|
|
|
1,220 |
|
|
|
8,518 |
|
|
|
2,308 |
|
Provision for income taxes |
|
(11,091 |
) |
|
|
735 |
|
|
|
(9,904 |
) |
|
|
2,567 |
|
GAAP operating income |
$ |
16,533 |
|
|
$ |
17,171 |
|
|
$ |
53,855 |
|
|
$ |
46,263 |
|
Amortization of intangible assets |
|
37 |
|
|
|
73 |
|
|
|
189 |
|
|
|
388 |
|
Stock-based compensation |
|
5,490 |
|
|
|
3,647 |
|
|
|
16,504 |
|
|
|
14,482 |
|
Restructuring costs, net |
|
(2 |
) |
|
|
115 |
|
|
|
513 |
|
|
|
1,116 |
|
Acquisition, integration and other costs |
|
75 |
|
|
|
985 |
|
|
|
506 |
|
|
|
3,068 |
|
Efficiency program costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
48 |
|
Digital Transformation costs |
|
371 |
|
|
|
1,028 |
|
|
|
1,685 |
|
|
|
1,836 |
|
COVID-19 related expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
Non-GAAP Operating Income |
$ |
22,504 |
|
|
$ |
23,019 |
|
|
$ |
73,252 |
|
|
$ |
67,223 |
|
Depreciation |
|
2,301 |
|
|
|
1,932 |
|
|
|
8,324 |
|
|
|
8,255 |
|
Adjusted EBITDA |
$ |
24,805 |
|
|
$ |
24,951 |
|
|
|
81,576 |
|
|
|
75,478 |
|
GAAP net income margin |
|
21.8 |
% |
|
|
12.8 |
% |
|
|
13.2 |
% |
|
|
10.1 |
% |
Adjusted EBITDA Margin |
|
21.4 |
% |
|
|
21.0 |
% |
|
|
19.5 |
% |
|
|
18.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income |
|
|
|
|
|
|
|
GAAP net income |
$ |
25,260 |
|
|
$ |
15,216 |
|
|
$ |
55,241 |
|
|
$ |
41,388 |
|
Amortization of intangible assets |
|
37 |
|
|
|
73 |
|
|
|
189 |
|
|
|
388 |
|
Stock-based compensation |
|
5,490 |
|
|
|
3,647 |
|
|
|
16,504 |
|
|
|
14,482 |
|
Restructuring costs, net |
|
(2 |
) |
|
|
115 |
|
|
|
513 |
|
|
|
1,116 |
|
Acquisition, integration and other costs |
|
75 |
|
|
|
985 |
|
|
|
506 |
|
|
|
3,068 |
|
Efficiency program costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
48 |
|
Digital Transformation costs |
|
371 |
|
|
|
1,028 |
|
|
|
1,685 |
|
|
|
1,836 |
|
Gain on forgiveness of PPP Loan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,800 |
) |
COVID-19 related expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,748 |
|
Non-GAAP tax adjustments |
|
(11,313 |
) |
|
|
(198 |
) |
|
|
(11,316 |
) |
|
|
(382 |
) |
Non-GAAP Net Income |
$ |
19,918 |
|
|
$ |
20,866 |
|
|
$ |
63,322 |
|
|
$ |
57,914 |
|
Weighted-average common shares outstanding -
basic |
|
43,836 |
|
|
|
45,061 |
|
|
|
44,531 |
|
|
|
45,101 |
|
Weighted-average common shares outstanding -
diluted |
|
43,991 |
|
|
|
45,773 |
|
|
|
44,856 |
|
|
|
46,303 |
|
Net Income per Share (Basic) |
$ |
0.58 |
|
|
$ |
0.34 |
|
|
$ |
1.24 |
|
|
$ |
0.92 |
|
Net Income per Share (Diluted) |
$ |
0.57 |
|
|
$ |
0.33 |
|
|
$ |
1.23 |
|
|
$ |
0.89 |
|
Non-GAAP Earnings Per Share - basic |
$ |
0.45 |
|
|
$ |
0.46 |
|
|
$ |
1.42 |
|
|
$ |
1.28 |
|
Non-GAAP Earnings Per Share - diluted |
$ |
0.45 |
|
|
$ |
0.46 |
|
|
$ |
1.41 |
|
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
|
|
|
|
|
|
GAAP net cash provided by operating
activities |
$ |
22,456 |
|
|
$ |
27,071 |
|
|
$ |
48,019 |
|
|
$ |
62,489 |
|
Capital expenditures |
|
(4,184 |
) |
|
$ |
(2,069 |
) |
|
|
(15,251 |
) |
|
$ |
(6,819 |
) |
Free Cash Flow |
$ |
18,272 |
|
|
$ |
25,002 |
|
|
$ |
32,768 |
|
|
$ |
55,670 |
|
Free Cash Flow conversion of Adjusted EBITDA |
|
73.7 |
% |
|
|
100.2 |
% |
|
|
40.2 |
% |
|
|
73.8 |
% |
These non-GAAP measures reflect how Avid manages
its businesses internally. Avid’s non-GAAP measures may vary
from how other companies present non-GAAP measures. Non-GAAP
financial measures are not based on a comprehensive set of
accounting rules or principles. This non-GAAP information
supplements, and is not intended to represent a measure of
performance in accordance with, disclosures required by generally
accepted accounting principles, or GAAP. Non-GAAP financial
measures should be considered in addition to, not as a substitute
for or superior to, financial measures determined in accordance
with GAAP.
AVID TECHNOLOGY, INC.
Consolidated Balance Sheets (unaudited - in
thousands, except per share data)
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
35,247 |
|
|
$ |
56,818 |
|
Restricted cash |
|
2,413 |
|
|
|
2,416 |
|
Accounts receivable, net of allowances of $601 and $1,456 at
December 31, 2022 and 2021, respectively |
|
76,849 |
|
|
|
77,046 |
|
Inventories |
|
20,981 |
|
|
|
19,922 |
|
Prepaid expenses |
|
8,360 |
|
|
|
5,464 |
|
Contract assets |
|
32,295 |
|
|
|
18,903 |
|
Other current assets |
|
2,826 |
|
|
|
1,953 |
|
Total current assets |
|
178,971 |
|
|
|
182,522 |
|
Property and equipment, net |
|
23,684 |
|
|
|
16,028 |
|
Goodwill |
|
32,643 |
|
|
|
32,643 |
|
Right of use assets |
|
21,395 |
|
|
|
24,143 |
|
Deferred tax assets, net |
|
15,859 |
|
|
|
5,210 |
|
Other long-term assets |
|
14,901 |
|
|
|
13,454 |
|
Total assets |
$ |
287,453 |
|
|
$ |
274,000 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
45,904 |
|
|
$ |
26,854 |
|
Accrued compensation and benefits |
|
22,602 |
|
|
|
35,458 |
|
Accrued expenses and other current liabilities |
|
36,031 |
|
|
|
37,552 |
|
Income taxes payable |
|
62 |
|
|
|
868 |
|
Short-term debt |
|
9,710 |
|
|
|
9,158 |
|
Deferred revenue |
|
76,308 |
|
|
|
87,475 |
|
Total current liabilities |
|
190,617 |
|
|
|
197,365 |
|
Long-term debt |
|
172,958 |
|
|
|
160,806 |
|
Long-term deferred revenue |
|
17,842 |
|
|
|
10,607 |
|
Long-term lease liabilities |
|
20,470 |
|
|
|
23,379 |
|
Other long-term liabilities |
|
4,348 |
|
|
|
5,917 |
|
Total liabilities |
|
406,235 |
|
|
|
398,074 |
|
|
|
|
|
Stockholders’ deficit: |
|
|
|
Common stock |
|
462 |
|
|
|
455 |
|
Treasury stock |
|
(77,933 |
) |
|
|
(25,090 |
) |
Additional paid-in capital |
|
1,036,287 |
|
|
|
1,031,633 |
|
Accumulated deficit |
|
(1,071,718 |
) |
|
|
(1,126,959 |
) |
Accumulated other comprehensive loss |
|
(5,880 |
) |
|
|
(4,113 |
) |
Total stockholders’ deficit |
|
(118,782 |
) |
|
|
(124,074 |
) |
Total liabilities and stockholders’ deficit |
$ |
287,453 |
|
|
$ |
274,000 |
|
AVID TECHNOLOGY, INC.
Consolidated Statements of Cash Flows (unaudited -
in thousands)
|
Twelve Months Ended |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
Net income |
$ |
55,241 |
|
|
$ |
41,388 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
8,324 |
|
|
|
8,254 |
|
Provision for doubtful accounts |
|
1,056 |
|
|
|
694 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
2,579 |
|
Stock-based compensation expense |
|
16,555 |
|
|
|
13,737 |
|
Non-cash provision for restructuring |
|
495 |
|
|
|
956 |
|
Non-cash interest expense |
|
516 |
|
|
|
515 |
|
Gain on forgiveness of PPP loan |
|
— |
|
|
|
(7,800 |
) |
Loss on disposal of fixed assets |
|
548 |
|
|
|
— |
|
Unrealized foreign currency transaction (gains) |
|
(788 |
) |
|
|
(2,101 |
) |
(Benefit from) provision for deferred taxes |
|
(10,649 |
) |
|
|
1,591 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(859 |
) |
|
|
875 |
|
Inventories |
|
(1,059 |
) |
|
|
6,646 |
|
Prepaid expenses and other assets |
|
(7,238 |
) |
|
|
(1,156 |
) |
Accounts payable |
|
19,049 |
|
|
|
5,032 |
|
Accrued expenses, compensation and benefits and other
liabilities |
|
(16,066 |
) |
|
|
69 |
|
Income taxes payable |
|
(805 |
) |
|
|
(796 |
) |
Deferred revenue and contract assets |
|
(16,301 |
) |
|
|
(7,994 |
) |
Net cash provided by operating activities |
|
48,019 |
|
|
|
62,489 |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
Purchases of property and equipment |
|
(15,251 |
) |
|
|
(6,819 |
) |
Net cash used in investing activities |
|
(15,251 |
) |
|
|
(6,819 |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Proceeds from revolving line of credit |
|
44,000 |
|
|
|
— |
|
Repayment on revolving line of credit |
|
(44,000 |
) |
|
|
— |
|
Proceeds from long-term debt |
|
20,000 |
|
|
|
180,000 |
|
Repayment of debt |
|
(6,871 |
) |
|
|
(210,456 |
) |
Payments for repurchase of common stock |
|
(52,993 |
) |
|
|
(24,787 |
) |
Proceeds from the issuance of common stock under employee stock
plans |
|
928 |
|
|
|
808 |
|
Common stock repurchases for tax withholdings for net settlement of
equity awards |
|
(12,822 |
) |
|
|
(19,557 |
) |
Prepayment penalty on extinguishment of debt |
|
— |
|
|
|
(1,169 |
) |
Payments for credit facility issuance costs |
|
(942 |
) |
|
|
(2,574 |
) |
Net cash used in financing activities |
|
(52,700 |
) |
|
|
(77,735 |
) |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
(1,772 |
) |
|
|
(1,016 |
) |
Net (decrease) in cash, cash equivalents and restricted cash |
|
(21,704 |
) |
|
|
(23,081 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
60,556 |
|
|
|
83,637 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
38,852 |
|
|
$ |
60,556 |
|
Supplemental information: |
|
|
|
Cash and cash equivalents |
$ |
35,247 |
|
|
$ |
56,818 |
|
Restricted cash |
$ |
2,413 |
|
|
|
2,416 |
|
Restricted cash included in other long-term assets |
$ |
1,192 |
|
|
|
1,322 |
|
Total cash, cash equivalents and restricted cash shown in the
statement of cash flows |
$ |
38,852 |
|
|
$ |
60,556 |
|
AVID TECHNOLOGY, INC.
Supplemental Revenue Information (unaudited - in
millions)
Backlog Disclosure for Quarter Ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
December 31, |
September 30, |
December 31, |
|
|
|
|
2022 |
|
2022 |
|
2021 |
|
|
Revenue Backlog* |
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue |
$94.2 |
$76.7 |
$98.1 |
|
|
Other Backlog |
|
288.6 |
|
302.5 |
|
314.7 |
|
|
Total Revenue Backlog |
$382.8 |
$379.2 |
$412.8 |
|
|
|
|
|
|
|
|
The expected timing of recognition of revenue backlog as of
December 31, 2022 is as follows: |
|
|
|
|
|
|
|
|
|
2023 |
|
2024 |
|
2025 |
Thereafter |
Total |
|
|
|
|
|
|
Deferred Revenue |
$76.6 |
$10.2 |
$5.1 |
$2.3 |
$94.2 |
Other Backlog |
|
147.3 |
|
66.8 |
|
48.2 |
|
26.3 |
|
288.6 |
Total Revenue Backlog |
$223.9 |
$77.0 |
$53.3 |
$28.6 |
$382.8 |
|
|
|
|
|
|
*A definition of Revenue Backlog is included in our Form 10-K and
the supplemental financial and operational data sheet available on
our investor relations webpage at ir.avid.com. |
AVID TECHNOLOGY, INC. Impact of
one-time, non-cash revenue adjustment in Q4
2022 (unaudited - in millions)
Q4 2022 |
Q4 ImpliedGuidance1 |
Q4As Reported |
Adjustment2 |
ExcludingAdjustment |
Revenue |
$111 - $123 |
$116.1 |
$3.3 |
$119.4 |
Net income |
|
|
25.3 |
|
2.4 |
|
27.7 |
Non-GAAP Net Income |
|
|
19.9 |
|
2.4 |
|
22.4 |
Adj. EBITDA |
$26 - $30 |
|
24.8 |
|
2.4 |
|
27.2 |
Net income per common share
(diluted)3 |
|
$0.57 |
$0.06 |
$0.63 |
Non-GAAP Earnings per Share3 |
$0.44 - $0.54 |
$0.45 |
$0.06 |
$0.51 |
|
|
|
|
|
FY 2022 |
FY 2022Guidance1 |
FY 2022As Reported |
Adjustment2 |
ExcludingAdjustment |
Revenue |
$412 - $424 |
$417.4 |
$3.3 |
$420.7 |
Net income |
|
|
55.2 |
|
2.4 |
|
57.7 |
Non-GAAP Net Income |
|
|
63.3 |
|
2.4 |
|
65.8 |
Adj. EBITDA |
$83 - $87 |
|
81.6 |
|
2.4 |
|
84.0 |
Net income per common share
(diluted)4 |
|
$1.23 |
$0.06 |
$1.29 |
Non-GAAP Earnings per Share4 |
$1.40 - $1.50 |
$1.41 |
$0.06 |
$1.47 |
|
|
|
|
|
(1) Guidance provided November 8, 2022 |
(2) One-time, non-cash adjustment to revenue and the drop through
impact on the bonus during Q4 2022 |
(3) Weighted-average share count (diluted) 44.0M for Q4 2022 |
(4) Weighted-average share count (diluted) 44.9M for FY 2022 |
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