Avid Technology Announces Q1 2019 Results
Avid (NASDAQ: AVID) has announced its first quarter 2019 financial results, provided guidance for the second quarter of 2019 and reaffirmed full-year 2019 guidance.
First Quarter 2019 Financial and Business Highlights
- Revenue was $103.3 million, the second consecutive quarter of 5 percent year-over-year growth.
- Gross margin was 59.3 percent, up 240 basis points year-over-year. Non-GAAP Gross Margin was 61.3 percent, up 240 basis points year-over-year.
- Operating expenses were $55.9 million, a decrease of 5 percent year-over-year. Non-GAAP Operating Expenses were $53.1 million, a decrease of 3 percent year over year.
- Operating income was $5.4 million, up from operating loss of ($3.3) million in Q1 2018. Non-GAAP Operating Income was $10.2 million, an increase of $7.2 million year-over-year.
- Adjusted EBITDA was $12.6 million, an increase of 99 percent year-over-year. Adjusted EBITDA Margin was 12.2 percent, up 570 basis points year-over-year.
- GAAP net loss per common share was ($0.01), up from net loss per common share of ($0.22) in Q1 2018. Non-GAAP Earnings per Share was $0.11, up from Non-GAAP Loss per Share of ($0.06) in Q1 2018.
- Net cash provided by operating activities was $6.4 million, up from $5.4 million in Q1 2018.
- Free Cash Flow was $4.6 million, up from $3.3 million in Q1 2018.
- Software revenue from subscriptions increased 10 percent year-over-year with approximately 137,000 cloud-enabled software subscriptions at the end of Q1 2019.
- Revenue through the Company’s e-commerce activities was up 33 percent year-over-year.
- Recurring Revenue was 57 percent of the Company’s revenue in the twelve months ending March 2019, up from 50 percent in the twelve months ending March 2018.
- Annual Contract Value was $237 million at the end of Q1 2019, up from $222 million at the end of Q1 2018.
“We are pleased that the momentum Avid generated at the end of last year has continued throughout the first quarter of this year, underscoring our continued success in executing our strategy,” said Jeff Rosica, CEO and President of Avid. He continued, “We are focused on delivering meaningful product innovations to the market, including several new products in Q2, that we expect will support our growth in the second half of 2019 and beyond. We expect this renewed growth combined with greater discipline in our operations will drive increased profitability and deliver greater shareholder value.”
“We started 2019 with strong momentum, as evidenced by our improving revenue, gross margin and Adjusted EBITDA,” commented Ken Gayron, Executive Vice President and Chief Financial Officer of Avid. Mr. Gayron added, “As a result of the improvement in our financial performance, we have secured $100 million in additional bank debt at a reduced interest rate and more favorable terms to support our business strategy. Since the proceeds will be used to repurchase our outstanding convertible notes, there will be an immaterial change in the total debt for the Company once the transactions are completed.”
With respect to the financing agreement, on April 8, 2019, the Company signed an amendment to its existing financing agreement adding a new $100 million term loan to be used to repurchase outstanding 2.00 percent convertible notes due June 2020 (the “Convertible Notes”). The amended agreement provides flexible capital through May 2023 at a reduced interest rate of LIBOR +6.25 percent. On April 11, 2019, the Company launched a tender offer for the Convertible Notes which is anticipated to expire on May 9, 2019.
Explanations regarding our use of non-GAAP financial measures and operational metrics and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled “Non-GAAP Financial Measures and Operational Metrics” and “Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures”.
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