TIBCO Software Reports Record First Quarter Financial Results

PALO ALTO, Calif., March 27 /PRNewswire-FirstCall/ -- TIBCO Software Inc. (Nasdaq: TIBX) today announced record results for its first quarter, which ended on March 2, 2008.

PALO ALTO, Calif., March 27 /PRNewswire-FirstCall/ — TIBCO Software Inc. (Nasdaq: TIBX) today announced record results for its first quarter, which ended on March 2, 2008.

Total revenue for the first quarter of fiscal 2008 was $146.6 million and net income was $5.5 million, or $0.03 per diluted share. This compares to total revenue of $125.7 million and net income of $10.4 million, or $0.05 per diluted share, as reported for the first quarter of fiscal 2007. Cash flow from operations was $60.2 million in the quarter compared with $42 million in the first quarter a year ago. This quarter's performance included results from Spotfire, Inc., which was acquired in the third quarter of fiscal 2007. Overall, TIBCO's results for total revenue, operating margin and earnings per share were at the upper end of or exceeded previously provided guidance.

On a non-GAAP basis, net income for the first quarter of fiscal 2008 was $14.1 million or $0.07 per diluted share, compared with $15.2 million or $0.07 per diluted share for the first quarter of fiscal 2007. Non-GAAP operating income for the first quarter of fiscal 2008 was $18.9 million, resulting in a non-GAAP operating margin of 13%. This compares to non-GAAP operating income of $19.4 million, resulting in a non-GAAP operating margin of 15% in the first quarter of fiscal 2007. Non-GAAP results exclude stock-based compensation expense and amortization of acquired intangible assets, and assume a non-GAAP effective tax rate of 34% for fiscal 2008 and 37% for fiscal 2007.

"TIBCO delivered a healthy start to our fiscal year with our Q1 results," said Vivek Ranadive, TIBCO's chairman and chief executive officer. "Our innovative technology offerings are seeing increased demand, especially in light of the growing adoption of SOA and infrastructure software."

First Quarter Fiscal 2008 Highlights — Total revenue rose 17% year over year to $146.6 million. — License revenue rose 11% year over year to $57.8 million. — Services and maintenance revenue rose 21% year over year to $88.8 million. — Cash flow from operations rose 43% from a year ago to $60.2 million. — Total deferred revenue rose 41% from a year ago to $149.4 million. — The number of license deals over $100,000 rose 16% from a year ago to 87, with 14 deals over $1 million. — TIBCO expanded its business with leading companies in Q1 such as AT&T Mobility, Alberta Electric Systems Operator, Deutsche Bank AG, Emirates Bank, Fannie Mae, Infinity Property & Casualty Co., Kuwait Middle East Financial Investment Company, LexisNexis, Live Nation, National Australia Bank, Pioneer Investments and Reliance Communications.

Conference Call Details

TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its first quarter results.

The conference call will be hosted by Thomson Financial and may be accessed over the internet at http://www.tibco.com or via dial-in at (877) 719-9799 or (719) 325-4824. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight on April 27, 2008 at http://www.tibco.com or via dial-in at (888) 203-1112 or (719) 457-0820. The pass code for both the call and the replay is 4035043.


TIBCO digitized Wall Street in the '80s with its event-driven "Information Bus" software, which helped make real-time business a strategic differentiator in the '90s. Today, TIBCO's infrastructure software gives customers the ability to constantly innovate by connecting applications and data in a service-oriented architecture, streamlining activities through business process management, and giving people the information and intelligence tools they need to make faster and smarter decisions, what we call The Power of Now. TIBCO serves more than 3,000 customers around the world with offices in 40 countries and an ecosystem of over 200 partners. Learn more at http://www.tibco.com.

TIBCO, The Power of Now, Spotfire and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc. in the United States and/or other countries. All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only.

About Non-GAAP Financial Information

This press release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), please see the section entitled "About Non-GAAP Financial Measures" and the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Measures."

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws. The final financial results for first quarter of fiscal year 2008 may differ materially from the preliminary results presented in this release due to factors that include, but are not limited to, risks associated with the final review of the results and preparation of financial statements. In addition, forward-looking statements such as statements regarding the future strength of the market opportunity for infrastructure software and TIBCO's ability to capitalize on such opportunity are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks include but are not limited to: adverse changes in general economic or market conditions resulting in delays or reductions in information technology spending; successful execution of TIBCO's business plans; and competitive factors, including but not limited to pricing pressures, industry consolidation and new product introductions. Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K for the year ended November 30, 2007. TIBCO assumes no obligation to update the forward-looking statements included in this release.

TIBCO Software Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands) March 2, November 30, 2008 2007 ASSETS Current assets: Cash and cash equivalents $203,242 $170,237 Short-term investments 83,222 95,534 Accounts receivable, net 113,580 161,730 Prepaid expenses and other current assets 49,039 53,540 Total current assets 449,083 481,041 Property and equipment, net 109,629 111,390 Goodwill 409,635 412,256 Acquired intangible assets, net 104,151 110,930 Long-term deferred income tax assets 40,805 35,307 Other assets 46,023 47,535 Total assets $1,159,326 $1,198,459 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,299 $12,076 Accrued liabilities 75,662 95,526 Accrued excess facilities costs 4,927 5,421 Deferred revenue 138,018 127,200 Current portion of long-term debt 1,951 1,924 Total current liabilities 228,857 242,147 Accrued excess facilities costs, less current portion 9,557 10,811 Long-term deferred revenue 11,374 14,319 Long-term deferred income tax liabilities 18,107 25,821 Long-term income tax liabilities 11,843 – Long-term debt, less current portion 44,060 44,558 Other long-term liabilities 4,756 5,006 Total long-term liabilities 99,697 100,515 Total liabilities 328,554 342,662 Minority interest 407 401 Total stockholders' equity 830,365 855,396 Total liabilities and stockholders' equity $1,159,326 $1,198,459 TIBCO Software Inc. Condensed Consolidated Statements of Operations (unaudited) (in thousands, except net income per share) Three Months Ended March 2, March 4, 2008 2007 Revenue: License revenue $57,753 $52,185 Service and maintenance revenue: Service and maintenance 86,858 71,939 Reimbursable expenses 1,967 1,530 Total service and maintenance revenue 88,825 73,469 Total revenue 146,578 125,654 Cost of revenue: License 7,280 4,071 Service and maintenance 35,770 30,828 Total cost of revenue 43,050 34,899 Gross Profit 103,528 90,755 Operating expenses: Research and development 25,454 21,015 Sales and marketing 54,388 42,949 General and administrative 13,798 12,752 Amortization of acquired intangible assets 4,140 2,470 Total operating expenses 97,780 79,186 Income from operations 5,748 11,569 Interest income 3,258 6,390 Interest expense (842) (368) Other income (expense), net 238 (1,265) Income before provision for income taxes and minority interest 8,402 16,326 Provision for income taxes 2,833 5,923 Minority interest, net of tax 55 12 Net income $5,514 $10,391 Net income per share: Basic $0.03 $0.05 Diluted $0.03 $0.05 Shares used to compute net income per share: Basic 186,315 208,398 Diluted 190,064 216,306 TIBCO Software Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended March 2, March 4, 2008 2007 Cash flows from operating activities: Net income $5,514 $10,391 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 4,015 4,080 Amortization of acquired intangible assets 7,957 3,872 Stock-based compensation 5,150 3,936 Deferred income tax (5,368) (588) Tax benefits related to stock benefit plans 3,887 1,991 Excess tax benefits from stock-based compensation (3,801) (2,561) Minority interest, net of tax 55 12 Other non-cash adjustments, net 67 (76) Changes in assets and liabilities: Accounts receivable 47,491 46,844 Prepaid expenses and other assets 1,096 558 Accounts payable (3,778) (1,700) Accrued liabilities and excess facilities costs (9,776) (24,759) Deferred revenue 7,666 (48) Net cash provided by operating activities 60,175 41,952 Cash flows from investing activities: Purchases of short-term investments (34,999) (70,900) Maturities and sales of short-term investments 48,264 51,477 Purchases of private equity investments (9) (20) Proceeds from private equity investments 222 – Purchases of property and equipment (2,256) (2,607) Restricted cash pledged as security (124) (725) Net cash provided by (used for) investing activities 11,098 (22,775) Cash flows from financing activities: Proceeds from issuance of common stock 3,464 9,428 Repurchases of the Company's common stock (45,271) (41,814) Excess tax benefits from stock-based compensation 3,801 2,561 Principal payments on long-term debt (471) (620) Proceeds from minority investors – 189 Net cash used for financing activities (38,477) (30,256) Effect of foreign exchange rate changes on cash and cash equivalents 209 (682) Net change in cash and cash equivalents 33,005 (11,761) Cash and cash equivalents at beginning of period 170,237 138,912 Cash and cash equivalents at end of period $203,242 $127,151

About Non-GAAP Financial Measures

TIBCO provides non-GAAP measures for operating income, net income and net income per share data as supplemental information regarding TIBCO's business performance. TIBCO believes that these non-GAAP financial measures are useful to investors because they exclude non-operating charges. TIBCO's management excludes these non-operating charges when it internally evaluates the performance of TIBCO's business and makes operating decisions, including internal budgeting, performance measurement and the calculation of bonuses and discretionary compensation, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential revenue generation activities of TIBCO. Accordingly, management excludes gains and losses on equity investments, costs related to formal restructuring plans, stock-based compensation related to employee stock options, the amortization of acquired intangible assets and charges for acquired in-process research and development, and the income tax effects of the foregoing, as well as adjustments for the impact of changes in the valuation allowance recorded against TIBCO's deferred tax assets when making operational decisions.

TIBCO believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand TIBCO's financial performance on a trended basis across historical periods. In addition, it allows investors to evaluate TIBCO's performance using the same methodology and information as that used by TIBCO's management.

Non-GAAP measures are subject to material limitations as these measures are not in accordance with, or a substitute for, GAAP and thus TIBCO's definition may be different from similar non-GAAP measures used by other companies and/or analysts. However, TIBCO's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. In addition, some items such as restructuring charges that are excluded from non-GAAP net income and non-GAAP earnings per share can have a material impact on cash flows and stock compensation charges can have a significant impact on earnings. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. TIBCO has historically provided non-GAAP measures to the investment community as a supplement to its GAAP results, to enable investors to evaluate TIBCO's business performance in the way that management does.

The non-GAAP adjustments, and the basis for excluding them, are outlined below:

Stock-based Compensation

TIBCO incurs stock-based compensation expense under SFAS 123(R). TIBCO excludes this item for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share because it is a non-cash expense that TIBCO believes is not reflective of its business performance. The nature of the stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions and different award types, making the comparison of current results with forward-looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expenses may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods (including prior periods following the adoption of SFAS 123(R)). The exclusion of stock-based compensation from the non-GAAP measures also allows a consistent comparison of TIBCO's relative historical financial performance, since the method for accounting for stock-based compensation changed at the beginning of fiscal 2006 when TIBCO adopted SFAS 123(R). Finally, TIBCO believes that non-GAAP measures of profitability that exclude stock-based compensation are widely used by analysts and investors in the software industry.

Amortization of Intangible Assets

TIBCO has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions TIBCO has made. Management excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO believes that eliminating this expense from its non-GAAP measures is useful to investors, because the amortization of intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of TIBCO's acquisition transactions, which also vary substantially in frequency from period to period.

The following table is a reconciliation of GAAP measures to non-GAAP for the first quarter and year ended March 2, 2008.

TIBCO Software Inc. Reconciliation of GAAP to Non-GAAP Measures (unaudited) (in thousands, except net income per share) Three Months Ended, March 2, 2008 March 4, 2007 Operating Net Operating Net Income Income Income Income GAAP $5,748 $5,514 $11,569 $10,391 Amortization of intangible assets – cost of revenue 3,817 3,817 1,402 1,402 Amortization of intangible assets – operating expense 4,140 4,140 2,470 2,470 Stock-based compensation – cost of revenue 595 595 481 481 Stock-based compensation – R&D expense 1,019 1,019 868 868 Stock-based compensation – S&M expense 1,730 1,730 1,220 1,220 Stock-based compensation – G&A expense 1,806 1,806 1,367 1,367 Income tax adjustment for non-GAAP (1) (4,480) (3,007) Non-GAAP $18,855 $14,141 $19,377 $15,192 Diluted net income per share: GAAP $0.03 $0.05 Non-GAAP $0.07 $0.07 Shares used to compute diluted net income per share 190,064 216,306 (1) The estimated non-GAAP effective tax rate was 34% and 37% for the first quarter of fiscal 2008 and 2007, respectively, and has been used to adjust the provision for income taxes for non-GAAP purposes.

SOURCE TIBCO Software Inc.

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